UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(
d
) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): December 18, 2015
Bluerock
Residential Growth REIT, Inc.
(Exact Name of Registrant as Specified
in Its Charter)
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Maryland
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001-36369
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26-3136483
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(State or other jurisdiction of incorporation
or organization)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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712 Fifth Avenue, 9th Floor
New York, NY 10019
(Address of principal executive
offices)
(212) 843-1601
(Registrant’s telephone
number, including area code)
None
(Former name or former address,
if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT
The disclosure below describes the material
agreements related to and the material features of our investment in
the
Lake Boone property
. All figures provided below are approximate.
On December 18, 2015, Bluerock Residential
Growth REIT, Inc., or the Company, through a wholly-owned subsidiary of our operating partnership, Bluerock Residential Holdings,
L.P., a Delaware limited partnership, or the Operating Partnership, completed a
convertible preferred equity investment in a multi-tiered joint venture along with Bluerock Special Opportunity + Income
Fund II, LLC, or Fund II, an affiliate of our Manager, and an affiliate of TriBridge Residential, LLC, or TriBridge, to develop
an approximately 245-unit Class A multifamily community
on 7.3 acres of land in Raleigh,
North Carolina
, or the Lake Boone Property
. The material features of our investment
in
the
joint venture, BR-TBR
Lake Boone NC
Venture,
LLC, or the
Lake Boone
JV, and the
Lake Boone
Property, are described below.
The
Lake Boone
Property
The
Lake
Boone
Property will be an approximately 245-unit Class A multifamily community situated on 7.3 acres, featuring studio,
one-, two- and three-bedroom unit layouts averaging approximately 821 square feet. Unit interiors will be condominium-quality,
featuring nine-foot ceilings, high-end stainless steel appliances, granite countertops, upgraded lighting, and garden bath tubs.
The community will be developed with best-in-class lifestyle amenities including a resort-style pool, fitness center, and business
and media centers. The Lake Boone Property will be located in the northwest Raleigh submarket, directly adjacent to Rex Hospital,
a UNC Healthcare-affiliated hospital with approximately 5,400 employees. The Lake Boone Property will be located in the center
of three desirable Raleigh submarkets –Crabtree Valley, North Hills and Cameron Village – and will be two miles from
the Crabtree Valley Mall and six miles from downtown Raleigh.
Ownership Structure of the Lake Boone Property
Following our investment in the Lake Boone
JV, as described below, the ownership structure of the Lake Boone Property is such that: (i) the Lake Boone Property is owned by
BR-TBR Lake Boone NC Owner, LLC, a Delaware limited liability company, or the Lake Boone Property Owner, (ii) the Lake Boone Property
Owner is wholly-owned by the Lake Boone JV, (iii) the Lake Boone JV is a joint venture entity owned 90.0% by BR Lake Boone JV Member,
LLC, or the BR Lake Boone Member, and 10.0% by TriBridge, and (v) the BR Lake Boone Member is owned 80.0% by BRG Lake Boone NC,
LLC, a wholly-owned subsidiary of the Operating Partnership, or BRG Lake Boone, and 20.0% by Fund II, as more fully described below.
Acquisition of the Lake Boone Property
On December 18, 2015, in connection with
our investment in the Lake Boone JV, TriBridge acquired the Lake Boone Property from
TBR
Lake Boone Owner
, LLC,
a Georgia limited liability company
and
an affiliate of TriBridge
, or the Seller,
and TriBridge immediately contributed
the Lake Boone Property and associated development rights to the Lake Boone JV through a direct deed to the Lake Boone Property
Owner. The total purchase price for the Lake Boone Property was approximately $5.5 million, subject to normal and customary pro-rations
and other closing adjustments. The purchase price plus funding for the Lake Boone JV, in the aggregate amount of approximately
$12.0 million, was funded as follows:
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1.
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To effectuate the BR Lake Boone Member’s acquisition of a 90.0% direct interest in the Lake Boone JV (and a 90.0% indirect
interest in the Lake Boone Property), we, through BRG Lake Boone and Fund II, funded approximately $10.8 million.
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2.
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To effectuate its acquisition of a 10.0% direct interest in the Lake Boone JV (and a 10.0% indirect interest in the Lake Boone
Property), TriBridge contributed the Lake Boone Property and associated development rights, at cost, with an agreed value of approximately
$1.2 million.
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Operating Agreement for the BR Lake Boone
Member
To fund the BR Lake Boone Member’s
obligation to the Lake Boone JV, we, through BRG Lake Boone, funded approximately $9.9 million of our total capital commitment
of approximately $11.9 million to the BR Lake Boone Member, to acquire 100% of the preferred membership interests in the BR Lake
Boone Member through BRG Lake Boone, and Fund II fully funded its capital commitment of approximately $3.0 million to the BR Lake
Boone Member to acquire 100% of the common membership interests in the BR Lake Boone Member. At the beginning of month 13, we anticipate
funding the balance of our capital commitment in the amount of approximately $2.0 million to BR Lake Boone Member. Once fully funded,
we will have funded our full proportional 80% share of a preferred return reserve in the aggregate amount of approximately $4.0
million.
Under the operating agreement for the BR
Lake Boone Member, our preferred membership interest earns and will be paid on a current basis a preferred return at the annual
rate of 15.0% of the outstanding amount of our net capital contributions. The BR Lake Boone Member may call for additional
capital contributions in accordance with the requirements of the approved budget for the Lake Boone Property, and we are obligated
to fund our share thereof (limited by the amount of our capital commitment of approximately $11.9 million) within ten (10) days
of our receipt of written notice of any such capital call, or the preferred return on our outstanding net capital contributions
will be reduced to 7.0% annually from the end of such call period.
We are not required to make any additional
capital contributions beyond our total capital commitment of approximately $11.9 million to the BR Lake Boone Member. However,
if the BR Lake Boone Member makes an additional capital call and Fund II does not fully fund its pro rata portion of the same,
then we may elect, though we are not obligated, to fund such shortfall as an additional capital contribution, in which case those
contributions will accrue a preferred return at the rate of 20.0% per annum.
The BR Lake Boone Member is required to
redeem our preferred membership interests on the earlier of the date that is six (6) months following the maturity of the construction
loan (as hereinafter defined) (including any extensions thereof but excluding refinancing), or any acceleration thereof. On the
redemption date, the BR Lake Boone Member is required to pay us an amount equal to our outstanding net capital contributions to
the BR Lake Boone Member plus any accrued but unpaid preferred return. If the BR Lake Boone Member does not redeem our preferred
membership interest in full on the required redemption date, then any of our net capital contributions remaining outstanding will
thereafter accrue a preferred return at the rate of 20.0% per annum from the redemption date.
Distributions of operating cash flow of
the BR Lake Boone Member will be made monthly (as cash flow permits) (i) first, to pay us all of our accrued but unpaid preferred
return on our capital contributions, (ii) next, to pay us all of our accrued but unpaid preferred return on our additional capital
contributions, and (iii) finally, to the common member in accordance with its membership interest; provided, however, after the
redemption date, all operating cash flow will be paid to us until our preferred membership interest is fully redeemed.
Upon a sale, refinancing or other capital
transaction regarding the Lake Boone Property, the net proceeds will be distributed by the BR Lake Boone Member in the following
order of priority: (i) to repay any debts or obligations; (ii) to fund any reserves determined in good faith by the BR Lake Boone
Member’s manager and approved by us; (iii) to us to repay our outstanding additional capital contributions and any preferred
returns accrued thereon; (iv) to us to repay our budgeted capital contributions and any preferred returns accrued thereon; (v)
to the common member in accordance with its positive capital account; and (vi) to the common member in accordance with its common
membership interest.
We have the right, in our sole discretion,
to convert our preferred membership interest in the BR Lake Boone Member into a common membership interest for a period of six
(6) months from and after the date upon which 70% of the units in the Lake Boone Property have been leased, or the Conversion Trigger
Date. Assuming that we and Fund II have made all of our budgeted capital contributions as required and all accrued preferred returns
have been paid to us, then upon conversion, we will receive a common membership interest of 71.5% of the aggregate common membership
interest in the BR Lake Boone Member, or the Expected Interest, and the common membership percentage of Fund II will be adjusted
accordingly. If the circumstances as of the Conversion Trigger Date are substantially different from the capital investment assumptions
resulting in our receipt of the Expected Interest, then we and Fund II are required to confer and determine in good faith a new
common membership interest percentage relative to our conversion.
If we convert to a common membership interest,
(i) we will no longer have any rights to any preferred returns on, or of, capital contributions to the BR Lake Boone Member, (ii)
the BR Lake Boone Member will no longer be obligated to redeem us, and (iii) we will become the sole manager of the BR Lake Boone
Member.
Prior to the exercise of the conversion
right, Fund II, an affiliate of our Manager, will be the manager of the BR Lake Boone Member, and will have the power and authority
to govern the business of the BR Lake Boone Member, subject to the approval of certain “major decisions” by members
holding a majority of the membership interests and subject to the further requirement that our economic interests and other rights
in and to the Lake Boone Property may not be diluted or altered in a manner to cause a material adverse economic effect on us without
our prior written consent. These major decisions include: (i) confessing a judgment against the BR Lake Boone Member; (ii) admitting
a new member (except under limited circumstances); and (iii) making any loans or becoming a guarantor of any loans. Additionally,
the following actions are subject to our sole approval (so long as we own a preferred membership interest): (i) causing the BR
Lake Boone Member to approve any major decision of the Lake Boone JV or the Lake Boone Property Owner; (ii) approving any amendment
of the operating agreement of the Lake Boone JV; (iii) filing or consenting to any bankruptcy, insolvency or similar action or
proceeding regarding the BR Lake Boone Member, the Lake Boone JV or the Lake Boone Property Owner; (iv) dissolving or liquidating
the BR Lake Boone Member; (v) distributing any cash or property other than in accordance with the operating agreement of the BR
Lake Boone Member; (vi) merging or consolidating the BR Lake Boone Member; (vii) amending the operating agreement of the BR Lake
Boone Member; and (viii) causing the BR Lake Boone Member, the Lake Boone JV or the Lake Boone Property Owner to enter into a transaction
that would violate the provisions of the Lake Boone JV’s operating agreement designed to protect our status as a REIT.
Prior to the conversion of our preferred
membership interest into a common membership interest, if any, the BR Lake Boone Member’s manager may be removed by us for
“cause,” which includes the declaration of a default by the lender for the Lake Boone Property, and any good faith
assertion by us that the act of the manager constitutes fraud, gross negligence, willful misconduct, bad faith or material violation
of law, breach of fiduciary duty, or any material breach of the BR Lake Boone Member’s operating agreement not cured within
sixty (60) days (or ninety (90) days if such cure cannot be completed in sixty (60) days, but the manager is diligently pursuing
such cure). If the BR Lake Boone Member’s manager is removed for cause, then we may appoint a replacement manager.
Following the conversion of our preferred
membership interest into a common membership interest, if any, Fund II will be automatically removed as manager of the BR Lake
Boone Member and we will become the sole manager, removable only by a majority of the membership interests for actions constituting
fraud or gross negligence causing a material diminution in value.
The
foregoing description of the operating agreement for the BR Lake Boone Member is a summary and is qualified in its entirety
by the terms thereof, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and incorporated by reference
into this Item 1.01.
Lake Boone JV Agreement
The Lake Boone JV is the owner of a 100%
membership interest in the Lake Boone Property Owner, which is the title holder of the Lake Boone Property.
On December 18, 2015, the BR Lake Boone Member invested approximately
$10.8 million to acquire a 90.0% equity interest in the Lake Boone JV, and TriBridge Co-Invest 29, LLC, an affiliate of TriBridge,
or the TriBridge Member, contributed the Lake Boone Property and associated development rights, at cost, with an agreed value of
approximately $1.2 million, to the Lake Boone JV (through a direct deed to the Lake Boone Property Owner) in exchange for an initial
capital contribution credit in the amount of approximately $1.2 million, to acquire a 10.0% equity interest in the Lake Boone JV,
and the BR Lake Boone Member and the TriBridge Member entered into a joint venture operating agreement for the Lake Boone JV, or
the Lake Boone JV Agreement. The Lake Boone JV Agreement contains terms, conditions, and indemnities that are customary and standard
for joint ventures in the real estate industry.
Management and
Major Decisions
The BR Lake Boone Member and the TriBridge
Member are each co-managers of the Lake Boone JV, and have appointed a management committee to act on decisions of the managers
under the Lake Boone JV Agreement. Decisions of the management committee are subject to major decisions that are reserved to the
members. These major decisions include: (i) commencing, responding to or settling any litigation involving the Lake Boone JV, the
Lake Boone Property or the Lake Boone Property Owner in amounts in excess of $25,000; (ii) admission of additional members, subject
to certain permitted affiliate transfers; (iii) taking actions that would cause a default under the construction loan (as hereinafter
defined) or expose a party to liability under a loan guaranty; (iv) pledging an interest in the Lake Boone Property; (v) consenting
to, authorizing or effecting the commencement of a proceeding for a bankruptcy; (vi) any amendment to the certificate of formation
or operating agreement of the Lake Boone JV or the Lake Boone Property Owner; (vii) subject to certain limited exceptions, borrowing
any funds other than the construction loan; (viii) entering into or causing the Lake Boone Property Owner to enter into any agreement
with an affiliated party; (ix) entering into any reorganization, merger or consolidation of the Lake Boone JV or the Lake Boone
Property Owner; (x) acquiring any real property other than the Lake Boone Property; (xi) making loans using funds of the Lake Boone
JV (xii) any sale, refinance or other capital transaction involving the Lake Boone JV or the Lake Boone Property, subject to certain
provisions of the Lake Boone JV Agreement; (xiii) approving the annual operating budget or modifications thereto; (xiv) making
any expenditure or incurring any obligation that varies from the total project or operating budget, except as expressly permitted
in Lake Boone JV Agreement; (xv) material modification or further material development of the preliminary drawings or the final
bid set of construction drawings and specifications for the Lake Boone Property, and any material changes to the final plans, except
as provided in the Lake Boone JV Agreement; (xvi) selecting the general contractor or any co-developer for the Lake Boone Property;
(xvii) entering into any agreement obligating the Lake Boone JV or the Lake Boone Property Owner to make aggregate expenditures
exceeding $50,000 in any one year; (xviii) determination of reserve amounts; and (xix) issuing any capital call, except as provided
in the Lake Boone JV Agreement (such decisions collectively referred to as the JV Major Decisions).
To the extent the BR Lake Boone Member
and the TriBridge Member are not able to agree on a JV Major Decision that requires unanimity on or after the fifth anniversary
of the first date upon which the Lake Boone Property achieves stabilization, either party may initiate a buy-sell proceeding compelling
the other member to purchase the initiating party’s membership interest or sell to the initiating party the non-initiating
party’s membership interest, or otherwise compel the sale of the Lake Boone Property.
Notwithstanding the
major decisions provisions of the Lake Boone JV Agreement, (a) the BR Lake Boone Member will have the right to cause the Lake Boone
Property Owner to refinance the construction loan on commercially reasonable terms as approved by the TriBridge Member in its reasonable
discretion; (b) the BR Lake Boone Member will have the sole right to act on behalf of the Lake Boone JV or the Lake Boone Property
Owner with respect to the enforcement of rights under the Development Agreement and Property Management Agreement; and (c) following
a Conversion (as hereinafter defined), if any, the BR Lake Boone Member will have the right to make all major decisions without
the consent of the TriBridge Member, and the buy/sell provisions of the Lake Boone JV Agreement will thereafter cease to be effective.
Development Agreement
and Development Cost Overruns
The Lake Boone Property Owner entered into
a development agreement effective October 30, 2015, or the Development Agreement, with TriBridge Residential Development, LLC,
a Georgia limited liability company and an affiliate of the TriBridge Member, or the Developer, providing for development services
for the Lake Boone Property. The Developer has arranged with Cambridge Swinerton Builders, Inc., a third-party general contractor,
a guaranteed maximum price contract for construction services for the Lake Boone Property in the maximum amount of $25,689,691.
Under the terms of the Development Agreement, the Developer will be entitled to earn a development fee, or the Development Fee,
of three percent (3%) of the total development budget (exclusive of the Development Fee, land acquisition costs and any financing
fee or acquisition fee paid to Developer or its affiliates), payable thirty percent (30%) upon closing of the construction loan,
with the balance paid on a proportional basis over the remainder of the development period as construction proceeds are made available
from draws against the construction loan for the Lake Boone Property; provided, that until the closing of the construction loan,
the Developer will be entitled to take advance draws of the Development Fee as set forth in the Development Agreement, which advance
draw amounts will be deducted from future draws of the Development Fee made following the closing of the construction loan until
repaid in full.
The BR Lake Boone Member and the TriBridge
Member have agreed to a development budget pursuant to which the Lake Boone Property will be developed (subject to revisions thereto
as may be required by changes in the budget mandated by the construction lender or other change approved under the Development
Agreement). Under the terms of the Lake Boone JV Agreement, the management committee (after request from the TriBridge Member)
may call for additional capital contributions to fund any development cost overruns attributable to hard and/or soft costs over
the budgeted items in the development budget. In the instance of an additional capital call for cost overruns attributable to force
majeure events, real estate taxes, insurance premiums, discretionary changes, certain post-completion operating deficits, hard
costs exceeding one hundred ten percent (110%) of budgeted hard costs for each category of materials, overruns attributable to
interest due under the construction loan occurring after issuance of temporary certificates of occupancy for all buildings at the
Lake Boone Property (collectively referred to herein as Permitted Overruns), such additional capital contributions are to be made
90.0% by the BR Lake Boone Member, and 10.0% by the TriBridge Member. In the instance of an additional capital call for a soft
cost overrun, such additional capital contributions are to be made 50.0% by the BR Lake Boone Member and 50.0% by the TriBridge
Member. If either the BR Lake Boone Member or the TriBridge Member fails to contribute their proportional share of such additional
capital contributions, then (i) the nonpaying member’s voting rights and rights to participate in the management of the business
of the Lake Boone JV (including but not limited to as a manager for management committee participation, and for major decisions)
will automatically be suspended until paid in full, and (ii) the paying member may (but will not be obligated to) contribute the
unpaid portion of the nonpaying member’s additional capital contribution as a shortfall funding, or a Shortfall Funding.
Shortfall Funding contributions are entitled to receive a priority return at a 20.0% Internal Rate of Return (as that term is defined
in the Lake Boone JV Agreement).
Additional
Capital Contributions
The Lake Boone JV
Agreement provides that in certain instances either the BR Lake Boone Member or the TriBridge Member, and in other instances the
management committee, may call for additional capital contributions to fund cash flow deficits caused by certain cost overruns.
The BR Lake Boone Member and the TriBridge Member each also have the right to unilaterally call for additional capital contributions
under the Lake Boone JV Agreement to fund on a timely basis certain shortfalls in debt service payments or other payments
that if unpaid would constitute a payment default under the construction loan.
Any additional capital contributions are
to be made 90.0% by the BR Lake Boone Member and 10.0% by the TriBridge Member. Any such additional capital contributions will
be funded on a priority return basis and will be entitled to a priority return at a 16.0% Internal Rate of Return (as that term
is defined in the Lake Boone JV Agreement). The remedies set forth above for failure to make additional capital contributions apply
equally to failures to make loan-related additional capital contributions.
Distributions
Pursuant to the provisions of the Lake
Boone JV Agreement, distributions are generally made as follows: (i) first, pari passu, to the members in accordance with accrued
but unpaid priority contribution priority returns until paid in full, and then pari passu to the members in accordance with accrued
but unpaid shortfall funding priority returns until paid in full, (ii) second, pari passu, to the members in accordance with accrued
but unpaid additional capital contribution priority returns until paid in full, (iii) third, to the members, pari passu, in accordance
with their ownership percentages until each member has received an Internal Rate of Return of 9.5% on their initial capital contributions,
(iv) fourth, pari passu, to each member who funded a Mandatory Cost Overrun Funding Obligation (which term refers to any capital
call attributable to a permitted overrun or soft cost overrun caused by, or any other additional capital required by the Lake Boone
JV or the Lake Boone Property Owner because of, (a) a default action of such member or its affiliates under Section 6.06 of the
Lake Boone JV Agreement, or (b) a default by the TriBridge Member or one of its affiliates under the Development Agreement or Property
Management Agreement), the amount of such Mandatory Cost Overrun Funding Obligation, without any return thereof; (v) fifth, (a)
80.0% to the BR Lake Boone Member, and (b) 20.0% to the TriBridge Member, until the BR Lake Boone Member has received an Internal
Rate of Return on all capital contributions of 12.0%, (vi) sixth, (a) 70.0% to the BR Lake Boone Member, and (b) 30.0% to the TriBridge
Member, until the BR Lake Boone Member has received an Internal Rate of Return on all capital contributions of 16.0%, and (vii)
thereafter, (a) 50.0% to the BR Lake Boone Member, and (b) 50.0% to the TriBridge Member.
Conversion of Ownership
of the Lake Boone Property
The Lake Boone JV
Agreement provides that no earlier than the first to occur of (i) a sale of the Lake Boone Property, (ii) a refinancing of the
construction loan, or (iii) completion of development of the Lake Boone Property, nor later than the date that is two years after
completion of development of the Lake Boone Property, the TriBridge Member may elect to cause the Lake Boone JV to initiate a conversion
of the equity ownership interests in the Lake Boone JV into tenancy in common interests in the Lake Boone Property, or the Conversion,
by providing written notice to the BR Lake Boone Member stating the TriBridge Member’s intention to effect the Conversion.
Once triggered by such notice, the Members will each obtain two brokers’ opinions of value with respect to the Lake Boone
Property, the average of which (using the stabilized valuation assuming a ninety-five percent (95%) occupancy rate) will constitute
the determined value of the Lake Boone Property, or the Determined Value. In the event that the brokers’ opinions of value
differ by more than five percent (5.0%), the BR Lake Boone Member and the TriBridge Member will cooperate in good faith to obtain
an appraisal of the Lake Boone Property, and the valuation established in that appraisal shall thereafter constitute the Determined
Value.
In order to effectuate
a Conversion, the Determined Value as of the date of Conversion must be sufficient such that, if the Lake Boone Property were hypothetically
liquidated at the Determined Value and a seventy-five percent (75%) share of the distributions attributable thereto were allocated
to the BR Lake Boone Member, the BR Lake Boone Member would receive at least its full share of distributions under the first three
categories of distributions as noted above (which correspond to subsections (a), (b) and (c) of Section 9.01 of the Lake Boone
JV Agreement(, namely, with respect to payment of its priority capital contribution priority return, shortfall funding priority
return, additional capital contribution priority return, and an Internal Rate of Return of nine and one-half percent (9.5%) on
its initial capital contribution (such amount referred to herein as the Conversion Hurdle Return).
So long as the Determined
Value is sufficient to provide the BR Lake Boone Member with the Conversion Hurdle Return, then within thirty (30) days of receipt
of notice of Conversion from the TriBridge Member, the Lake Boone JV shall, at the TriBridge Member’s sole cost and expense,
cause the equity ownership interests in the Lake Boone JV to be converted into tenancy in common interests in the Lake Boone Property.
The Conversion will be effectuated through transactions including (i) redemption of the TriBridge Member’s membership interests
in the Lake Boone JV, and causing the Lake Boone Property Owner, in consideration therefor, to convey a twenty-five percent (25%)
tenant in common ownership interest to a newly formed entity wholly-owned by the TriBridge Member, or the TriBridge Co-Tenant,
and (ii) causing the Lake Boone Property Owner (at that point wholly owned and controlled by BR Lake Boone Member through the Lake
Boone JV, and for purposes of this section, referred to as the BR Co-Tenant) to enter into, with the TriBridge Co-Tenant, a commercially
reasonable form of Tenant in Common Agreement, or TIC Agreement, to result in (iii) the TriBridge Co-Tenant and the BR Co-Tenant
owning, respectively, twenty-five percent (25%) and seventy-five percent (75%) tenant in common interests in the Lake Boone Property.
Any such Conversion will otherwise be subject to the applicable terms of the Lake Boone JV Agreement, and thereafter, to the TIC
Agreement. The TriBridge Member has certain other Conversion opportunities as set forth in the Lake Boone JV Agreement.
Financing and Refinancing
The BR Lake Boone Member and the TriBridge
Member are required to use commercially reasonable efforts to secure a construction loan on behalf of the Lake Boone Property Owner.
If necessary in order to secure the construction loan, the TriBridge Member must, or must cause certain of its affiliates to, provide
such guaranties or indemnities requested by the lender, subject to the TriBridge Member’s approval of the terms of such guaranties
or indemnities. If the construction loan requires a recourse guaranty, the BR Lake Boone Member or its affiliate may be require
to provide recourse support for such guaranty, and the BR Lake Boone Member and the TriBridge Member have agreed to make certain
adjustments in their respective distributions under the Lake Boone JV Agreement in such event. The final terms of the construction
loan and the construction lender are subject to approval by both the BR Lake Boone Member and the TriBridge Member.
Under the Lake Boone JV Agreement, prior
to any Conversion, the BR Lake Boone Member will have the right to cause the Lake Boone Property Owner to refinance the construction
loan, subject to (i) certain approval rights of the TriBridge Member, (ii) payment in full of the construction loan, (iii) the
absence of any requirement for any guaranty by the TriBridge Member or any of its affiliates, except a commercially reasonable
form of non-recourse carveout guaranty substantially similar to such non-recourse carveout guaranty executed by the BR Lake Boone
Member or its affiliate in connection with the refinancing; and (iv) a minimum refinancing amount equal to the sum of (a) the
amount required to fully repay the construction loan and any outstanding construction-related trade debt and (b) certain other
amounts in payment of certain distributions and returns to the members, and repayment of any funded mandatory cost overrun funding
obligations.
To the extent the
TriBridge Member does not use a mortgage broker to originate the construction loan, the TriBridge Member will be entitled to a
debt procurement fee equal to the lesser of (i) $125,000 and (ii) the product of 50 basis points (0.5%) and the principal amount
of the construction loan, or the Financing Fee. The Financing Fee shall be payable by the Lake Boone JV, and the BR Lake Boone
Member will contribute the required equity to fund the same, which will be counted as part of the BR Lake Boone Member's initial
capital contribution to the Lake Boone JV.
Development of the Lake Boone
Property
Once fully developed, the Lake Boone Property
will consist of an approximately 245-unit, Class A multifamily community situated on 7.3 acres, featuring studio, one-, two- and
three-bedroom unit layouts averaging approximately 821 square feet. The total projected development cost for the Lake Boone Property,
including land acquisition, is approximately $40.0 million, or approximately $163,000 per unit.
The Lake Boone Property
is expected to be completed at the end of the fourth quarter of 2017, with leasing expected to commence prior thereto.
Upon completion of development of the Lake
Boone Property, the Lake Boone JV intends to cause the Lake Boone Property Owner to enter into a property management agreement,
or the Property Management Agreement, with TriBridge Residential Property Management Advisors, LLC, a Georgia limited liability
company and an affiliate of the TriBridge Member, or the Management Company, to serve as initial property manager for the Lake
Boone Property. Any management fee paid to the future property manager will not exceed the greater of (i) $5,000 per month, and
(ii) three percent (3%) of annual gross cash revenues, payable monthly, commencing when the Lake Boone JV authorizes the Management
Company to commence leasing activities at the Lake Boone Property.
As of the date hereof, the Lake Boone Property
Owner has not received all required City of Raleigh approvals for the proposed development of the Lake Boone Property. TriBridge
has indicated that such approvals will be issued by the City of Raleigh within thirty (30) days. The BR Lake Boone Member has the
right the initiate the buy/sell provisions of the Lake Boone JV Agreement, and the management committee of the Lake Boone JV has
the right to force a sale of the Lake Boone Property, if such approvals have not been received by March 31, 2016, subject to further
conditions as set forth in the Lake Boone JV Agreement.
|
ITEM 9.01
|
FINANCIAL STATEMENTS AND EXHIBITS.
|
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
10.1
|
|
Limited Liability Company Agreement of BR-TBR Lake Boone NC Owner, LLC, by and between BR-TBR Lake Boone NC Venture, LLC and Michael L. Konig, dated effective as of July 15, 2015
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|
|
|
|
10.2
|
|
Operating Agreement of BR-TBR Lake Boone NC Venture, LLC by and between TriBridge Co-Invest 29, LLC and BR Lake Boone JV Member, LLC, dated as of November 30, 2015
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|
|
|
|
|
10.3
|
|
Operating Agreement of BR Lake Boone JV Member, LLC, by and between BRG Lake Boone NC, LLC and Bluerock Special Opportunity + Income Fund II, LLC, dated as of July 15, 2015
|
|
10.4
|
|
Limited Liability Company Agreement of BRG Lake Boone NC, LLC, by Bluerock Residential Holdings, L.P., dated as of July 28, 2015
|
|
|
|
|
|
10.5
|
|
Contribution Agreement by and between TriBridge Co-Invest 29, LLC and BR-TBR Lake Boone NC Venture, LLC, dated as of November 30, 2015
|
|
|
|
|
|
10.6
|
|
Development Agreement, by and between BR-TBR Lake Boone NC Owner, LLC and Tribridge Residential Development, LLC, dated as of October 30, 2015
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
BLUEROCK RESIDENTIAL GROWTH REIT, INC.
|
|
|
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|
|
DATE: December 24, 2015
|
By:
|
/s/ Michael L. Konig
|
|
|
|
Michael L. Konig
|
|
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|
Chief Operating Officer
|
EXHIBIT INDEX
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
10.1
|
|
Limited Liability Company Agreement of BR-TBR Lake Boone NC Owner, LLC, by and between BR-TBR Lake Boone NC Venture, LLC and Michael L. Konig, dated effective as of July 15, 2015
|
|
|
|
|
|
10.2
|
|
Operating Agreement of BR-TBR Lake Boone NC Venture, LLC by and between TriBridge Co-Invest 29, LLC and BR Lake Boone JV Member, LLC, dated as of November 30, 2015
|
|
|
|
|
|
10.3
|
|
Operating Agreement of BR Lake Boone JV Member, LLC, by and between BRG Lake Boone NC, LLC and Bluerock Special Opportunity + Income Fund II, LLC, dated as of July 15, 2015
|
|
|
|
|
|
10.4
|
|
Limited Liability Company Agreement of BRG Lake Boone NC, LLC, by Bluerock Residential Holdings, L.P., dated as of July 28, 2015
|
|
|
|
|
|
10.5
|
|
Contribution Agreement by and between TriBridge Co-Invest 29, LLC and BR-TBR Lake Boone NC Venture, LLC, dated as of November 30, 2015
|
|
|
|
|
|
10.6
|
|
Development Agreement, by and between BR-TBR Lake Boone NC Owner, LLC and Tribridge Residential Development, LLC, dated as of October 30, 2015
|
Exhibit 10.1
LIMITED LIABILITY COMPANY AGREEMENT
OF
BR-TBR LAKE BOONE NC OWNER, LLC
This Limited Liability
Company Agreement (together with the schedules attached hereto, this “
Agreement
”) of BR-TBR LAKE BOONE NC OWNER,
LLC, a Delaware limited liability company (the “
Company
”), is entered into among BR-TBR LAKE BOONE NC VENTURE,
LLC, a Delaware limited liability company, as the sole member (the “
Member
”) and Michael L. Konig (the “
Springing
Member
”). Capitalized terms used and not otherwise defined herein have the meanings set forth on
Schedule A
hereto.
The Member, by execution
of this Agreement, hereby forms the Company as a limited liability company pursuant to and in accordance with the Delaware Limited
Liability Company Act (6
Del. C.
§
18-101
et
seq
.), as amended from time to time (the “
Act
”), and this Agreement, and the Member hereby agrees as
follows:
Section 1.
Name
.
The name of the limited
liability company formed hereby is BR-TBR Lake Boone NC Owner, LLC.
Section 2.
Principal
Business Office
.
The principal business
office of the Company shall be located at 1575 Northside Drive, Building 100, Suite 200, Atlanta, GA 30318 or such other location
as may hereafter be determined by the Member.
Section 3.
Registered
Office
.
The address of the
registered office of the Company in the State of Delaware is c/o National Registered Agents, Inc., 160 Greentree Drive, Suite
101, Dover, DE 19904.
Section 4.
Registered
Agent
.
The name and address
of the registered agent of the Company for service of process on the Company in the State of Delaware is National Registered Agents,
Inc., 160 Greentree Drive, Suite 101, Dover, DE 19904.
Section 5.
Member
.
(a)
Initial
Member
. The mailing address of the Member is set forth on
Schedule B
attached hereto. The Member was admitted to the
Company as a member of the Company upon its execution of a counterpart signature page to this Agreement.
(b)
Special
Member
. Upon the occurrence of any event that causes the Member to cease to be a member of the Company (other than (i) upon
an assignment by the Member of all of its limited liability company interest in the Company and the admission of the transferee,
or (ii) the resignation of the Member and the admission of an additional member of the Company, (a “
Member Cessation
Event
”)), the Springing Member shall, without any action of any Person and simultaneously with the Member Cessation
Event, automatically be admitted to the Company as a Special Member and shall continue the Company without dissolution. No Special
Member may resign from the Company or transfer its rights as Special Member unless a successor Special Member has been admitted
to the Company as Special Member by executing a counterpart to this Agreement. The Special Member shall automatically cease to
be a member of the Company upon the admission to the Company of a substitute member. The Special Member shall be a member of the
Company that has no interest in the profits, losses and capital of the Company and has no right to receive any distributions of
Company assets. Pursuant to Section 18-301 of the Act, a Special Member shall not be required to make any capital contributions
to the Company and shall not receive a limited liability company interest in the Company. A Special Member, in its capacity as
Special Member, may not bind the Company. Except as required by any mandatory provision of the Act, a Special Member, in its capacity
as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Company,
including, without limitation, the merger, consolidation or conversion of the Company. In order to implement the admission to
the Company of the Special Member, the Springing Member shall execute a counterpart to this Agreement. Prior to his admission
to the Company as Special Member, Michael L. Konig shall not be a member of the Company.
The Company shall at
all times have a Springing Member. No resignation or removal of the Springing Member, and no appointment of a successor Springing
Member, shall be effective unless and until such successor shall have executed a counterpart to this Agreement. In the event of
a vacancy in the position of the Springing Member, the Member shall, as soon as practicable, appoint a successor Springing Member
to fill such vacancy. By signing this Agreement, the Springing Member agrees that, should such Springing Member become a Special
Member, such Springing Member will be subject to and bound by the provisions of this Agreement applicable to a Special Member.
Section 6.
Certificates
.
Christopher Vohs is
hereby designated as an “authorized person” within the meaning of the Act, and has executed, delivered and filed the
Certificate of Formation of the Company with the Secretary of State of the State of Delaware. Upon the filing of the Certificate
of Formation with the Secretary of State of the State of Delaware, his powers as an “authorized person” ceased, and
the Member thereupon became the designated “authorized person” and shall continue as the designated “authorized
person” within the meaning of the Act. The Member shall execute, deliver and file any other certificates (and any amendments
and/or restatements thereof) necessary for the Company to qualify to do business in North Carolina and in any other jurisdiction
in which the Company may wish to conduct business. The existence of the Company as a separate legal entity shall continue until
cancellation of the Certificate of Formation as provided in the Act.
Section 7.
Purposes
.
(a)
Sole
Purpose
. The sole purpose to be conducted or promoted by the Company is to engage in the following activities: (a) to acquire,
develop, own, manage and operate the Project; (b) to enter into and perform its obligations under the Loan Documents; (c) to refinance
the Project in connection with a permitted repayment of the Loan; and (d) to transact any lawful business permitted to be transacted
by limited liability companies organized under the laws of the State of Delaware that is related or incidental to and necessary,
convenient or advisable for the accomplishment of the above mentioned purposes.
(b)
Limitations
Upon Certain Activities
.
|
|
(i)
|
Until the Loan is paid in full, the Company shall remain
a Single Purpose Entity.
|
|
|
(ii)
|
A “
Single Purpose Entity
” means a limited
liability company which, at all times since its formation and thereafter:
|
|
|
(A)
|
shall not engage in any business or activity, other than
the ownership, operation and maintenance of the Project and activities incidental thereto;
|
|
|
(B)
|
shall not acquire, own, hold, lease, operate, manage, maintain,
develop or improve any assets other than the Project and such Personalty as may be necessary for the operation of the Project
and shall conduct and operate its business as presently conducted and operated;
|
|
|
(C)
|
shall preserve its existence as an entity duly organized,
validly existing and in good standing under the laws of Delaware and shall do all things necessary to observe organizational formalities;
|
|
|
(D)
|
shall not merge or consolidate with any other Person;
|
|
|
(E)
|
shall not take any action to dissolve, wind-up, terminate
or liquidate in whole or in part; to sell, transfer or otherwise dispose of all or substantially all of its assets; to change
its legal structure; transfer or permit the direct or indirect transfer of any membership interests, other than Transfers permitted
under the Loan Agreement; issue additional membership interests; or seek to accomplish any of the foregoing;
|
|
|
(F)
|
shall not, without the prior unanimous written consent
of all of the Members: (A) file any insolvency, or reorganization case or proceeding, to institute proceedings to have the Company
be adjudicated bankrupt or insolvent, (B) institute proceedings under any applicable insolvency law, (C) seek any relief under
any law relating to relief from debts or the protection of debtors, (D) consent to the filing or institution of bankruptcy or
insolvency proceedings against the Company, (E) file a petition seeking, or consent to, reorganization or relief with respect
to the Company under any applicable federal or state law relating to bankruptcy or insolvency, (F) seek or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for the Company or a substantial
part of its property, (G) make any assignment for the benefit of creditors of the Company, (H) admit in writing the Company’s
inability to pay its debts generally as they become due, or (I) take action in furtherance of any of the foregoing;
|
|
|
(G)
|
shall not amend or restate its organizational documents
if such change would modify the special purpose entity requirements set forth in the Loan Agreement;
|
|
|
(H)
|
shall not own any subsidiary or make any investment in
any other Person;
|
|
|
(I)
|
shall not commingle its assets with the assets of any other
Person and shall hold all of its assets in its own name;
|
|
|
(J)
|
shall not incur any debt, secured or unsecured, direct
or contingent (including, without limitation, guaranteeing any obligation), other than the following; provided, no Member will
be required to contribute any additional capital to satisfy this covenant, (A) the Loan and (B) customary unsecured trade payables
incurred in the ordinary course of developing, constructing, owning and operating the Project provided the same are not evidenced
by a promissory note, do not exceed, in the aggregate, at any time a maximum amount of two percent (2%) of the original principal
amount of the Loan and are paid within sixty (60) days of the date incurred;
|
|
|
(K)
|
shall maintain its records, books of account, bank accounts,
financial statements, accounting records and other entity documents separate and apart from those of any other Person and shall
not list its assets as assets on the financial statement of any other Person; provided, however, that the Company’s assets
may be included in a consolidated financial statement of its Affiliate provided that (A) appropriate notation shall be made on
such consolidated financial statements to indicate the separateness of the Company from such Affiliate and to indicate that the
Company’s assets and credit are not available to satisfy the debts and other obligations of such Affiliate or any other
Person and (B) such assets shall also be listed on the Company’s own separate balance sheet;
|
|
|
(L)
|
except for capital contributions or capital distributions
permitted under the terms and conditions of its organizational documents, shall only enter into any contract or agreement with
any member or Affiliate of the Company upon terms and conditions that are commercially reasonable and substantially similar to
those that would be available on an arm’s-length basis with third parties;
|
|
|
(M)
|
shall not maintain its assets in such a manner that will
be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person;
|
|
|
(N)
|
shall not assume or guaranty (excluding any guaranty that
has been executed and delivered in connection with the Loan) the debts or obligations of any other Person, hold itself out to
be responsible for the debts of another Person, pledge its assets to secure the obligations of any other Person or otherwise pledge
its assets for the benefit of any other Person, or hold out its credit as being available to satisfy the obligations of any other
Person;
|
|
|
(O)
|
shall not make or permit to remain outstanding any loans
or advances to any other Person except for those investments permitted under the documents evidencing and/or securing the Loan
and shall not buy or hold evidence of indebtedness issued by any other Person (other than cash or investment-grade securities);
|
|
|
(P)
|
shall file its own tax returns separate from those of any
other Person, except to the extent that the Company is treated as a “disregarded entity” for tax purposes and is not
required to file tax returns under applicable law, and shall pay any taxes required to be paid under applicable law;
|
|
|
(Q)
|
shall hold itself out to the public as a legal entity separate
and distinct from any other Person and conduct its business solely in its own name, shall correct any known misunderstanding regarding
its separate identity and shall not identify itself or any of its Affiliates as a division or department of any other Person;
|
|
|
(R)
|
shall maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of its contemplated business operations and shall
pay its debts and liabilities from its own assets as the same shall become due, provided that no member of the Company will be
required to contribute any additional capital to satisfy this covenant;
|
|
|
(S)
|
shall allocate fairly and reasonably shared expenses with
Affiliates (including, without limitation, shared office space) and use separate stationery, invoices and checks bearing its own
name;
|
|
|
(T)
|
shall pay (or cause to be paid on behalf of the Company
from the Company’s funds) its own liabilities (including, without limitation, salaries of its own employees) from its own
funds;
|
|
|
(U)
|
shall not acquire obligations or securities of its members
or Affiliates;
|
|
|
(V)
|
except as contemplated or permitted by the Development
Agreement, shall not permit any Affiliate or constituent party independent access to its bank accounts;
|
|
|
(W)
|
shall maintain a sufficient number of employees (if any)
in light of its contemplated business operations and pay the salaries of its own employees, if any, only from its own funds;
|
|
|
(X)
|
shall satisfy each of the following conditions:
|
|
|
(i)
|
be formed and organized under Delaware law;
|
|
|
(ii)
|
have one springing member who is
a natural person;
|
|
|
(iii)
|
otherwise comply with all Rating
Agencies criteria for single member limited liability companies (including the delivery
of Delaware single member limited liability company opinions acceptable in all respects
to lenders and to the Rating Agencies; and
|
|
|
(iv)
|
at all times the Company will have one and only one member.
|
The provisions of this
Section 7(b)
shall govern and supersede any other provision of this Agreement to the contrary.
Section 8.
Powers
.
The Company, and the
Member on behalf of the Company, (a) shall have and exercise all powers necessary, convenient or incidental to accomplish its
purposes as set forth in
Section 7
and (b) shall have and exercise all of the powers and rights conferred upon limited
liability companies formed pursuant to the Act.
Section 9.
Management
.
The business and affairs
of the Company shall be managed by or under the direction of the Member. The Member shall have the power to do any and all acts
necessary, convenient or incidental to or for the furtherance of the purposes described herein, including all powers, statutory
or otherwise. Subject to
Section 7
, the Member has the authority to bind the Company.
Section 10.
Officers
.
(a)
Officers
.
The Company may have such officers, representatives or agents as are appointed from time to time by the Member (the “
Officers
”).
The initial Officers of the Company are hereby designated by the Member as listed on
Schedule C
. The additional or successor
Officers shall be chosen by the Member and shall consist of a President, a Secretary and a Treasurer. The Member may also choose
one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person.
The Member may appoint such other Officers and agents as it shall deem necessary or advisable who shall hold their offices for
such terms as shall be determined from time to time by the Member. The salaries of all Officers and agents of the Company shall
be fixed by or in the manner prescribed by the Member. The Officers shall hold office until their successors are chosen and qualified.
Any Officer may be removed at any time, with or without cause, by the Member. Any vacancy occurring in any office of the Company
shall be filled by the Member.
(b)
Powers
of the Officers
. Notwithstanding anything else in this Agreement, the Officers shall have the authority to act on behalf of
and bind the Company only to the extent that
the Member approves such action in each particular instance. For the sake
of clarity and without limiting the foregoing, the Officers shall not have the power and authority to take any action without
the specific approval or consent of the Member to take such action.
(c)
President
.
The President shall be the chief executive officer of the Company, shall be responsible for the general and active management
of the business of the Company and, subject to
Section 10(b)
, shall see that all specific orders and resolutions of the
Member are carried into effect. When expressly authorized by the Member, the President or any other Officer authorized by the
President or the Member shall execute all bonds, mortgages and other contracts, except where required or permitted by law or this
Agreement to be otherwise signed and executed.
(d)
Vice
President
. In the absence of the President or in the event of the President’s inability to act, the Vice President,
if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Member, or in
the absence of any designation, then in the order of their election), shall perform the duties of the President, expressly authorized
by the Member, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. In
accordance with
Section 10(b)
, the Vice Presidents, if any, shall perform such other duties and have such other powers
as the Member may from time to time prescribe.
(e)
Secretary
and Assistant Secretary
. The Secretary shall be responsible for filing legal documents and maintaining records for the Company.
The Secretary shall record all the proceedings of the meetings of the Company in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The Secretary shall give, or shall cause to be given, notice of
all meetings of the Member, if any, and, subject to
Section 10(b)
, shall perform such other duties as may be prescribed
by the Member or the President, under whose supervision the Secretary shall serve. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Member (or if there be no such determination, then in order
of their election), shall, in the absence of the Secretary or in the event of the Secretary’s inability to act, perform
the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Member
may from time to time prescribe in accordance with
Section 10(b)
.
(f)
Treasurer
and Assistant Treasurer
. The Treasurer shall have the custody of the Company funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all moneys and other valuable
effects in the name and to the credit of the Company in such depositories as may be designated by the Member. The Treasurer shall
disburse the funds of the Company as may be expressly ordered by the Member, taking proper vouchers for such disbursements, and
shall render to the President and to the Member an account of all of the Treasurer’s transactions and of the financial condition
of the Company. The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined
by the Member (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer
or in the event of the Treasurer’s inability to act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties and have such other powers as the Member may from time to time prescribe in accordance with
Section
10(b)
.
(g)
Officers
as Agents
. The Officers, to the extent their powers are vested in them by specific action of the Member not inconsistent with
this Agreement, are agents of the Company for the purpose of the Company’s business and the actions of the Officers taken
in accordance with such powers shall bind the Company.
(h)
Duties
of Officers
. Except to the extent otherwise provided herein, each Officer shall have a fiduciary duty of loyalty and care
similar to that of officers of business corporations organized under the General Corporation Law of the State of Delaware.
Section 11.
Limited
Liability
.
Except as otherwise
expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be the debts, obligations and liabilities solely of the Company, and the Member shall not be obligated personally for any
such debt, obligation or liability of the Company solely by reason of being a Member of the Company.
Section 12.
Capital
Contributions
.
The Member has contributed
to the Company property listed on
Schedule B
attached hereto.
Section 13.
Additional
Contributions
.
The Member is not
required to make any additional capital contribution to the Company. However, the Member may make additional capital contributions
to the Company at any time upon the written consent of such Member. To the extent that the Member makes an additional capital
contribution to the Company, the Member shall revise
Schedule B
of this Agreement.
Section 14.
Allocation
of Profits and Losses
.
The Company’s
profits and losses shall be allocated to the Member.
Section 15.
Distributions
.
Distributions shall
be made to the Member at the times and in the aggregate amounts determined by the Member. Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not be required to make a distribution to the Member on account of its
interest in the Company if such distribution would violate Section 18-607 of the Act or any other applicable law or, until the
Loan is paid in full, any provision of the Loan Documents.
Section 16.
Books
and Records
.
The Officers shall
keep or cause to be kept complete and accurate books of account and records with respect to the Company’s business. The
books of the Company shall at all times be maintained by the Officers. The Member and its duly authorized representatives shall
have the right to examine the Company’s books, records and documents during normal business hours. The Company’s books
of account shall be kept using the method of accounting determined by the Member. The Company’s independent auditor, if
any, shall be an independent public accounting firm selected by the Member.
Section 17.
Other
Business
.
The Member and any
Affiliate of the Member may engage in or possess an interest in other business ventures (unconnected with the Company) of every
kind and description, independently or with others notwithstanding any provision to the contrary at law or in equity. The Company
shall not have any rights in or to such independent ventures or the income or profits therefrom by virtue of this Agreement.
Section 18.
Exculpation
and Indemnification
.
(a) Neither
the Member nor any Officer, employee or agent of the Company nor any employee, representative, agent or Affiliate of the Member
(collectively, the “
Covered
Persons
”) shall, to the fullest extent permitted by law, be liable to the
Company or any other Person that is a party to or is otherwise 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 a
Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person’s gross negligence
or willful misconduct.
(b) To
the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any
loss, damage or claim incurred by such Covered Person 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 no Covered Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Covered Person by reason of such Covered Person’s gross negligence or willful misconduct
with respect to such acts or omissions;
provided
,
however
, that any indemnity under this
Section 18
by the
Company shall be provided out of and to the extent of Company assets only, and the Member shall not have personal liability on
account thereof.
(c) To
the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in this
Section 18
.
(d) A
Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such
other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company,
including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts
pertinent to the existence and amount of assets from which distributions to the Member might properly be paid.
(e) 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 other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company
or to any other Covered Person for its good faith reliance on the provisions of this Agreement or any approval or authorization
granted by the Company or any other Covered Person. The provisions of this Agreement, to the extent that they restrict or eliminate
the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the Member to replace such
other duties and liabilities of such Covered Person.
(f) The
foregoing provisions of this
Section 18
shall survive any termination of this Agreement.
Section 19.
Assignments
.
Subject to any transfer
restrictions contained in the Loan Documents, the Member may assign its limited liability company interest in the Company. If
the Member transfers all of its limited liability company interest in the Company pursuant to this
Section 19
, the transferee
shall be admitted to the Company as a member of the Company upon its execution of an instrument signifying its 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 prior to the transfer and, immediately following such admission, the transferor
Member shall cease to be a member of the Company.
Section 20.
Admission
of Additional Members
.
One or more additional
members of the Company may be admitted to the Company with the written consent of the Member. Notwithstanding the foregoing, until
the Loan is paid in full, the Company shall only have one member at any time.
Section 21.
Dissolution
.
(a) The
Company shall be dissolved, and its affairs shall be wound up upon the first to occur of the following: (i) 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 Company is continued without dissolution in a
manner permitted by this Agreement or the Act or (ii) the entry of a decree of judicial dissolution of the Company under Section
18-802 of the Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member
of the Company or that causes the Member to cease to be a member of the Company, to the fullest extent permitted by law, the personal
representative of such member is hereby authorized to, and shall, within 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 existence of 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 or the Member in the Company.
(b) Notwithstanding
any other provision of this Agreement, the Bankruptcy of the Member or any additional member shall not cause the Member or additional
member, respectively, to cease to be a member of the Company and upon the occurrence of such an event, the Company shall continue
without dissolution.
(c) In
the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the
sale of the assets and property of the Company in an orderly manner), and the assets and property of the Company shall be applied
in the manner, and in the order of priority, set forth in Section 18-804 of the Act.
(d) 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 Member in the manner provided for in this Agreement and (ii)
the Certificate of Formation shall have been canceled in the manner required by the Act.
Section 22.
No
Third-Party Rights
.
Nothing in this Agreement
shall be deemed to create any right in any Person (other than Covered Persons) not a party hereto, and this Agreement shall not
be construed in any respect to be a contract in whole or in part for the benefit of any third Person.
Section 23.
Severability
of Provisions
.
Each provision of
this Agreement shall be considered severable and if for any reason any provision or provisions herein are determined to be invalid,
unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the
operation of or affect those portions of this Agreement which are valid, enforceable and legal.
Section 24.
Entire
Agreement
.
This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof.
Section 25.
Governing
Law
.
This Agreement shall
be governed by and construed under the laws of the State of Delaware (without regard to conflict of laws principles), all rights
and remedies being governed by said laws.
Section 26.
Amendments
.
This Agreement may
be modified, altered, supplemented or amended pursuant to a written agreement executed and delivered by the Member.
Section 27.
Counterparts
.
This Agreement may
be executed in any number of counterparts, each of which shall be deemed an original of this Agreement and all of which together
shall constitute one and the same instrument.
Section 28.
Notices
.
Any notices required
to be delivered hereunder shall be in writing and personally delivered, mailed or sent by telecopy, electronic mail or other similar
form of rapid transmission, and shall be deemed to have been duly given upon receipt (a) in the case of the Company, to the Company
at its address in
Section 2
, (b) in the case of the Member, to the Member at its address as listed on
Schedule B
attached hereto and (c) in the case of either of the foregoing, at such other address as may be designated by written notice to
the other party.
Section 29.
Effectiveness
.
Pursuant to Section
18-201 (d) of the Act, this Agreement shall be effective as of the time of the filing of the Certificate of Formation with the
Office of the Delaware Secretary of State on July 15, 2015.
IN WITNESS WHEREOF,
the undersigned, intending to be legally bound hereby, has duly executed this Limited Liability Company Agreement effective as
of the 15
th
day of July, 2015.
|
|
MEMBER:
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|
|
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BR-TBR LAKE BOONE NC VENTURE, LLC
, a Delaware limited liability company
|
|
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By:
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BR LAKE BOONE JV MEMBER, LLC, a Delaware limited liability company, its co-Manager
|
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By:
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Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited liability company,
its Manager
|
|
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By:
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BR SOIF II Manager, LLC, a Delaware limited liability company, its Manager
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By:
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/s/ Jordan Ruddy
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Name:
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Jordan Ruddy
|
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Title:
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Authorized Signatory
|
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By:
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TRIBRIDGE CO-INVEST 29, LLC, a Georgia limited liability company, its co-Manager
|
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By:
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TriBridge Investments II, LLC, a Georgia limited liability company, its Managing Member
|
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By:
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TBR 2015, LLC, a Georgia limited liability company, its Managing Member
|
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By:
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/s/ Rilee Walker
|
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Name:
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Rilee Walker
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Title:
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Manager
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SPRINGING MEMBER:
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/s/ Michael L. Konig
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Michael L. Konig
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SCHEDULE A
Definitions
A.
Definitions
When used in this
Agreement, the following terms not otherwise defined herein have the following meanings:
“
Affiliate
”
means, with respect to any Person, any other Person directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such Person.
“
Agreement
”
means this Limited Liability Company Agreement of the Company, together with the schedules attached hereto, as amended, restated
or supplemented or otherwise modified from time to time.
“
Bankruptcy
”
means, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (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 proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation 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 Person or of all or any substantial part
of its properties, or (vii) if 120 days after the commencement of any proceeding against the Person seeking reorganization,
arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding
has not been dismissed, or if within 90 days after the appointment without such Person’s consent or acquiescence of a trustee,
receiver or liquidator of such Person or of all or any substantial part of its properties, the appointment is not vacated or stayed,
or within 90 days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of “Bankruptcy”
is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18-101(1)
and 18-304 of the Act.
“
Certificate
of Formation
” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware,
as amended or amended and restated from time to time.
“
Company
”
means BR-TBR Lake Boone NC Owner, LLC, a Delaware limited liability company.
“
Control
”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities or general partnership or managing member interests, by contract or
otherwise. “Controlling” and “Controlled” shall have correlative meanings. Without limiting the generality
of the foregoing, a Person shall be deemed to Control any other Person in which it owns, directly or indirectly, a majority of
the ownership interests.
“
Development
Agreement
” means that certain development agreement by and between the Company and TriBridge Residential Development,
LLC.
“
Lender
”
means the construction lender for the Project, and its successors and assigns of the Loan.
“
Loan
”
shall have the meaning assigned to that term in the Loan Agreement.
“
Loan Agreement
”
means that certain Loan Agreement by and between Lender and the Company, as amended, restated, supplemented or otherwise modified
from time to time.
“
Loan Documents
”
shall have the meaning assigned to that term in the Loan Agreement.
“
Member
”
means BR-TBR Lake Boone NC Venture, LLC, a Delaware limited liability company, as the initial member of the Company, and includes
any Person admitted as an additional member of the Company or a substitute member of the Company pursuant to the provisions of
this Agreement, each in its capacity as a member of the Company.
“
Member Cessation
Event
” has the meaning assigned to that term in
Section 5(b)
hereof.
“
Person
”
means any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership, association,
joint stock company, trust, unincorporated organization, or other organization, whether or not a legal entity, and any governmental
authority.
“
Personalty
”
shall have the meaning assigned to that term in the Loan Documents.
“
Project
”
shall have the meaning assigned to that term in the Loan Agreement.
“
Rating Agencies
”
shall have the meaning assigned to that term in the Loan Agreement.
“
Single Purpose
Entity
” has the meaning assigned to that term in
Section 7(b)
hereof.
“
Special
Member
” means, upon such Springing Member’s admission to the Company as a member of the Company, the Person bound
by this Agreement as Special Member in such Person's capacity as a member of the Company. A Special Member shall only have the
rights and duties expressly set forth in this Agreement.
“
Springing
Member
” means Michael L. Konig or any successor to him.
“
Transfers
”
shall have the meaning assigned to that term in the Loan Agreement.
B.
Rules
of Construction
Definitions in this
Agreement apply equally to both the singular and plural forms of the defined terms. The words “include” and “including”
shall be deemed to be followed by the phrase “without limitation.” The terms “herein,” “hereof”
and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section,
paragraph or subdivision. The Section titles appear as a matter of convenience only and shall not affect the interpretation of
this Agreement. All Section, paragraph, clause, Exhibit or Schedule references not attributed to a particular document shall be
references to such parts of this Agreement.
SCHEDULE B
Member
|
Name
|
|
Mailing Address
|
|
Capital Contribution
|
|
|
Membership
Interest
|
|
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BR-TBR Lake Boone NC Venture, LLC
|
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1575 Northside Drive, Building 100, Suite 200, Atlanta, GA 30318
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$
|
100.00
|
|
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100
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%
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SCHEDULE C
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OFFICERS
|
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TITLE
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|
|
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Jordan Ruddy
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|
President
|
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Christopher Vohs
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Treasurer
|
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Michael Konig
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Secretary
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James Babb
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Vice President
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James Schroder
|
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Vice President
|
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Bobby West
|
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Vice President
|
|
Lee Walker
|
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Vice President
|
Exhibit 10.2
OPERATING AGREEMENT
OF BR-TBR LAKE BOONE NC VENTURE, LLC
THIS OPERATING AGREEMENT
(this “
Agreement
”) is made and entered into as of this 30th day of November, 2015, by and between TRIBRIDGE
CO-INVEST 29, LLC, a Georgia limited liability company (the “
TriBridge Member
”) and BR LAKE BOONE JV MEMBER,
LLC, a Delaware limited liability company (the “
BR Member
”).
BACKGROUND INFORMATION
:
A. BR-TBR
Lake Boone NC Venture, LLC (the “
Company
”) was formed effective as of the 15th day of July, 2015 by the filing
of its Certificate of Formation with the Secretary of State of Delaware.
B. The
Company is the sole member of BR-TBR Lake Boone NC Owner, LLC, a Delaware limited liability company (the “
Borrower
”).
C. The
Borrower shall hold legal title to the Property (as defined below) and shall be the borrower under the Construction Loan (as defined
below).
D. The
TriBridge Member and the BR Member desire to enter into this Agreement to reflect the current business arrangement among the Members.
NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agree as
follows:
ARTICLE
1.
DEFINITIONS
In addition to terms
defined in the body of this Agreement, the following terms used in this Operating Agreement shall have the following meanings (unless
otherwise expressly provided herein):
“Act” means
the Delaware Limited Liability Company Act, as amended from time to time.
“Additional Capital
Contributions.” With respect to each Member, all additional Capital Contributions made by such Member in excess of their
Initial Capital Contribution amounts, excluding Priority Capital Contributions, Shortfall Fundings and Mandatory Cost Overrun Funding
Obligations.
“Additional Capital
Contribution Priority Return.” Repayment of a Member’s Additional Capital Contributions at a sixteen percent (16.0%)
Internal Rate of Return.
“Adjusted Capital
Account Deficit.” The deficit balance, if any, in the Member’s Capital Account as of the end of the relevant taxable
year, after giving effect to the following adjustments: (a) the deficit shall be decreased by the amounts which the Member is deemed
obligated to restore pursuant to Regulation Section 1.704-1(b)(2)(ii)(c); and (b) the deficit shall be increased by the items described
in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6).
“Affiliate.”
(i) Any officer, director, trustee, partner, manager, employee or holder of fifty-one percent (51%) or more of any class of the
voting securities of or equity interest in such Person; or (ii) any corporation, partnership, limited liability company, trust
or other entity controlling, controlled by or under common control with such Person. Notwithstanding the foregoing, any entity
in which does not meet the above definition but which has an economic interest in the Project and in which any of the Principals
have any ownership or management role shall be nevertheless an “Affiliate.”
“Available Cash.”
The cash funds of the Company on hand as of a particular time after payment of all current operating expenses of the Company as
of such time, less any Reserve(s) as elsewhere determined under this Agreement.
“Bankruptcy.”
The filing by a Person of a voluntary petition or otherwise initiating proceedings (a) to have the Person adjudicated insolvent;
(b) seeking an order for relief of the Person as debtor under the United States Bankruptcy Code; (c) seeking any composition, reorganization,
readjustment, liquidation, dissolution, or similar relief under the present or any future federal bankruptcy laws or any other
present or future applicable federal, state, or other statute or law relative to bankruptcy, insolvency, or other relief for debtors
with respect to the Person; or (d) seeking the appointment of any trustee, receiver, conservator, assignee, sequestrator, custodian,
liquidator (or other similar official) of the Person, or of all or any substantial part of its property, or make any general assignment
for the benefit of creditors of the Person.
“BR Co-Tenant”
shall have the meaning ascribed in Section 6.07(a).
“BR Co-Tenant
Manager” shall have the meaning ascribed in Section 6.07(e)(ii).
“Brown Co-Tenants”
shall mean Eldorado, LLC and Coyote Capital, LLC, each an Ohio limited liability company agreement.
“Brown TIC Management
Agreement” shall mean that certain TIC Management Agreement to be entered in connection with a Conversion if there is one
or more Brown Co-Tenants, which will give the BR Member or its Affiliate (and, but only to the extent any Principal or Affiliate
of the TriBridge Member is a guarantor on any then existing Loan Guaranty, the TriBridge Member) certain control rights over the
Brown Co-Tenant(s).
“Capital Account.”
A capital account maintained in accordance with the rules contained in Treas. Reg. Section 1.704-1(b)(2) as maintained in accordance
with applicable rules under the Code and as set forth in Treas. Reg. Section 1-704-1(b)(2)(4) as amended from time to time.
“Capital Contribution.”
The total amount of cash and the Gross Asset Value of any property contributed or agreed to be contributed to the Company by each
Member pursuant to terms of this Agreement (minus any liabilities that the Company assumes or takes subject to).
“Capital Percentage.”
The Capital Percentage of each Member is set forth on
Exhibit A
, except as otherwise adjusted under the Agreement.
“Capital Proceeds”
means (a) the net proceeds of a Capital Transaction after (i) payment of all expenses associated with the Capital Transaction,
(ii) repayment of all secured and unsecured Company debts as of the date of the Capital Transaction (other than an obligation incurred
in order to effect a refinancing (including a Refinancing) which is the applicable Capital Transaction) required to be paid in
connection with such Capital Transaction or that the Management Committee determine should be paid in connection with such Capital
Transaction, and (iii) such amounts retained as Reserves, and (b) any amounts included in Reserves derived from Capital Contributions
and/or Capital Transactions which the Members reasonably determine to distribute;
provided that
, if after reasonable good
faith negotiations the Members cannot agree then the Management Committee shall decide, and
provided further
, after a Conversion,
the BR Member in its sole but reasonable discretion shall determine the distributions from Reserves, if any.
“Capital Transaction”
means (i) a transaction pursuant to which the indebtedness secured by the Project is financed or refinanced by the Borrower, including
a Refinancing; (ii) a sale or other disposition, condemnation, exchange or casualty not followed by reconstruction, or other disposition,
whether by foreclosure or otherwise, of the Project or any part thereof by the Borrower; or (iii) an insurance recovery or any
other transaction with respect to the Borrower which, in accordance with generally accepted accounting principles, is considered
capital in nature.
“Certificate
of Formation.” The certificate of formation of the Company filed with the Delaware Secretary of State as required by the
Act, as such certificate of formation may be amended or amended and restated from time to time.
“Code.”
The Internal Revenue Code of 1986, as amended from time to time.
“Construction
Lender.” The construction lender that makes the Construction Loan to Borrower.
“Construction
Loan.” The construction loan obtained by Borrower to redevelop the Project.
“Cost Savings”
means the amount by which the total costs of developing and constructing the Project are less than the Total Project Budget.
“Cost-Sharing
Agreement.” That certain Agreement Regarding Purchase and Sale Contract & Acquisition Loan Fees and Deposits by and between
Affiliates of the Members and dated June 26, 2015, as amended.
“Contribution
Agreement” means that certain Contribution Agreement between the Company, as “buyer”, the TriBridge Member, as
“seller,” and TBR Lake Boone Owner, LLC ("Current Owner") dated as of October 30, 2015, pursuant to which
the Members intend to effectuate the Company’s and the Borrower’s acquisition of the Property for development of the
Project. For the avoidance of doubt, all references within this Agreement to the “buyer” or the “seller”
of the Property in the context of the Contribution Agreement shall refer to the manner in which such parties are designated as
such under the Contribution Agreement, and the parties acknowledge that the transaction that is the subject of the Contribution
Agreement is a contribution of property, rather than a purchase and sale.
“Co-Tenants”
shall mean, as applicable, the BR Co-Tenant, TriBridge Co-Tenant and Brown Co-Tenant(s).
“Debt Service”
means, for any period, principal, interest and other required payments (including any required loan rebalancing payments, except
to the extent that such loan rebalancing is required by the Lender as a result of a Hard Cost Overrun or Soft Cost Overrun) owing
on any Loan of the Company or the Borrower. Debt Service as used in this Agreement shall not mean any principal amounts due under
the Loan at maturity or as a result of an acceleration after a default thereunder, or in connection with closing a Refinancing.
“Debt Service
Shortfall” means for any period, the amount by which (i) the Company’s share of Debt Service exceeds (ii) the sum of
(a) Available Cash for such period and (b) the Company’s share of amounts actually available to be released from Reserves
(including Reserves under the Construction Loan, as hereinafter defined, or any subsequent Loan) during such period for payment
of Debt Service.
“Depreciation”
means, for each fiscal year or other period, an amount equal to the depreciation, amortization and other cost recovery deductions
allowable with respect to an asset for such fiscal year or other period, except that if the Gross Asset Value of an asset differs
from its adjusted basis for federal income tax purposes at the beginning of such fiscal year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization
and other cost recovery deductions for such fiscal year or other period bears to such beginning adjusted tax basis;
provided,
however
, if the adjusted basis for federal income tax purposes of an asset at the beginning of such fiscal year or other period
is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected
by the Managers.
“Default Action”
is as defined in Section 6.06.
“Developer.”
TriBridge Residential Development, LLC, a Georgia limited liability company.
“Development
Agreement.” That certain Development Agreement between the Borrower and Developer dated as of October 30, 2015, as the same
may be amended from time to time.
“Discretionary
Changes” means any modifications or changes that the Members agree to make to the Plans or the Project (and any applicable
corresponding changes to the Estimated Budget or Total Project Budget) that (i) are not required to complete the construction of
the Project as originally contemplated by the Plans and (ii) are not necessitated by design or construction deficiencies in or
government-mandated revisions of the Plans or the Project. Discretionary Changes include, for example, upgrades/downgrades of interior
or exterior finishes, additional/fewer Project amenities, and increases/decreases in square footage.
“Distributions.”
The distributions payable (or deemed payable) to a Member.
“Economic Interest.”
A Member’s or Economic Interest Owner’s share of one or more of the Company’s Profits, Losses and distributions
of the Company’s assets pursuant to this Operating Agreement and the Act, but shall not include any right to vote on, consent
to or otherwise participate in any decision of the Members or Managers.
“Economic Interest
Owner.” The owner of an Economic Interest who is not a Member.
“Equity Gap Contributions”
shall have the meaning ascribed in Section 8.04(f).
“Entity.”
Any general partnership, limited partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative
or association or any foreign trust or foreign business organization.
“Estimated Budget”.
The estimated budget for full development of the Project annexed hereto as
Exhibit C
.
“Fiscal Year.”
The Company’s fiscal year, which shall be the calendar year.
“Force Majeure
Event” shall mean acts of God, war, riots, civil insurrections, hurricanes, tornados, floods, other weather events beyond
normal conditions as determined by NOAA, earthquakes, epidemics or plagues, acts or campaigns of terrorism or sabotage, unusually
significant interruptions to financial markets or to domestic or international transportation, trade restrictions, delays caused
by any governmental or quasi-governmental entity, shortages of materials, natural resources or labor, labor strikes, governmental
prohibitions or regulations including unforeseen and unreasonable administrative delays in obtaining building permits.
“Foreign Corrupt
Practices Act” shall mean the Foreign Corrupt Practices Act of the United States, 15 U.S.C. Sections 78a, 78m, 78dd-1, 78dd-2,
78dd-3, and 78ff, as amended, if applicable, or any similar law of the jurisdiction where the Property is located or where the
Company or any of its Subsidiaries transacts business or any other jurisdiction, if applicable.
“GMP Contract”
shall have the meaning ascribed in Section 5.12.2.
“Gross Asset
Value.”
With respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
(a) The
initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset
on the date of the contribution, as agreed to and set forth in
Exhibit A
and, otherwise, as determined by the Managers;
(b) The
Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values in accordance with
Regulations Section 1.704-1(b)(2)(iv)(g) (taking Code Section 7701(g) into account), as determined by agreement of the Managers,
as of the following times: (1) the acquisition of an additional Membership Interest by any new or existing Member in exchange for
more than a
de minimis
Capital Contribution; (2) the distribution by the Company to a Member of more than a
de minimis
amount of property as consideration for a Membership Interest; (3) the grant of a Membership Interest in the Company (other
than a
de minimis
interest) as consideration for the provision of services to or for the benefit of the Company by a new
or existing Member acting in a Member capacity or in anticipation of being a Member;
provided, however,
that an adjustment
pursuant to clauses (1), (2) and (3) shall be made only if the Managers reasonably determine that such adjustment is necessary
or appropriate to reflect the relative economic interests of the Members in the Company; and (4) the liquidation of the Company
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(
g
);
(c) The
Gross Asset Value of any Company asset distributed to any Member (taking Code Section 7701(g) into account) shall be adjusted to
equal the gross fair market value of such asset on the date of distribution as reasonably determined by the Managers; and
(d) The
Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Code Section 732(d), 734(b) or 743(b), but only to the extent that the adjustment is taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(
m
), provided that Gross Asset Values will not be adjusted
under this paragraph (d) to the extent that the Managers reasonably determine that an adjustment under paragraph (b) above is necessary
or appropriate in connection with a transaction that would otherwise result in an adjustment under this paragraph (d).
(e) If
the Gross Asset Value of an asset has been determined or adjusted pursuant to paragraph (a), (b) (c) or (d) hereof, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing
Profits and Losses.
(f) In
all other cases, Gross Asset Value of any Company asset means the adjusted basis of such asset for federal income tax purposes.
“Hard Costs”
means all items under the category heading “Hard Cost” in the Total Project Budget. Notwithstanding the foregoing,
in no event shall Permitted Overruns or Debt Service constitute Hard Costs.
“Hard Cost Overrun”
means, from time to time, the amount by which the aggregate Hard Costs incurred in connection with the development and construction
of the Project as of the date of measurement exceed the portion of the Total Project Budget (i.e. for avoidance of doubt, not the
Estimated Budget) allocated to Hard Costs, including any contingency in the Total Project Budget then available and any cost savings
achieved within the Total Project Budget (i.e. whether a hard cost or soft cost contingency) permitted by the Lender. Hard Cost
Overruns include, without duplication, loan rebalancing payments required by a Lender in connection with the Loan, but only to
the extent that such loan rebalancing payments are required by the Lender as a result of an actual Hard Cost Overrun. Hard Cost
Overruns also include overruns resulting from Non-Discretionary Changes but not overruns resulting from Discretionary Changes.
Notwithstanding the foregoing, in no event shall Permitted Overruns or Hard Cost Overruns constitute Hard Cost Overrun Exceptions.
“Hard Cost Overrun
Exceptions” shall mean that portion of Hard Costs exceeding one hundred ten percent (110%) of the budgeted Hard Costs for
each category (i.e., not aggregated) of lumber, copper, steel, concrete and drywall materials. Hard Cost Overrun Exceptions shall
be funded as Additional Capital Contributions by the Members in accordance with their Capital Percentage.
“Initial Capital
Contribution.” The initial contribution to the capital of the Company made by a Member pursuant to this Operating Agreement
as set forth in Section 8.01.
“Initial Members.”
Those persons identified on
Exhibit A
attached hereto and made a part hereof by this reference, who have executed this Agreement.
“Internal Rate
of Return” and “IRR.” As of any date, the internal rate of return on the sum of the applicable Capital Contributions
made by a Member (including giving credit for the 3:1 multiplier on the Member's Priority Capital Contributions as may occur under
Section 8.04(d)), to such date calculated to be that discount rate (expressed on a per annum basis) which, when compounded annually
and applied to such Capital Contributions and the corresponding Distributions with respect thereto, causes the net present value,
as of such date, of such Distributions and Capital Contributions to equal zero. For this purpose, Capital Contributions and Distributions
shall be assumed to have occurred as of the first of the month nearest the actual date such Capital Contribution or Distribution
is made. The formula used to calculate IRR on monthly cash flows shall be: ((1+ IRR Hurdle) ^ (1/12)-1.
“Lender”
shall mean any lender that makes a Loan to Borrower.
“Loan”
shall mean the Construction Loan or any subsequent mortgage loan obtained by Borrower to refinance the Construction Loan.
“Loan Guaranty”
shall have the meaning ascribed in Section 6.05(b).
“Managers.”
The BR Member and the TriBridge Member, or any other Person(s) that succeed such Persons in their capacities as Managers.
“Mandatory BR
Cost Overrun Funding Obligation” shall have the meaning ascribed in Section 8.04(a).
“Mandatory Cost
Overrun Funding Obligation” shall have the meaning ascribed in Section 8.04(a).
“Mandatory TriBridge
Cost Overrun Funding Obligation” shall have the meaning ascribed in Section 8.04(a).
“Member.”
Each of the parties who executes a counterpart of this Operating Agreement as a Member and each of the parties who may hereafter
become Members. To the extent a Manager has purchased a Membership Interest in the Company, he will have all the rights of a Member
with respect to such Membership Interest, and the term “Member” as used herein shall include a Manager to the extent
he has purchased such Membership Interest in the Company. [If a Person is a Member immediately prior to the purchase or other acquisition
by such Person of an Economic Interest, such Person shall have all the rights of a Member with respect to such purchased or otherwise
acquired Membership Interest or Economic Interest, as the case may be.] The initial Capital Percentages associated with the Membership
Interests of the Members are set forth on
Exhibit A
attached hereto and incorporated herein by reference.
“Membership Interest.”
A Member’s entire interest in the Company including such Member’s Economic Interest and the right to participate in
the management of the business and affairs of the Company, including the right to vote on, consent to, or otherwise participate
in any decision or action of or by the Members granted pursuant to this Operating Agreement or the Act.
“Minimum Gain.”
The same meaning set forth in Regulation Section 1.704-2(d). Minimum Gain shall be computed separately for each Member in a manner
consistent with the Regulations under Code Section 704(b).
“Net Cash Flow”
means, for any period, the total annual cash gross receipts during such period derived from the Project and any and all sources,
other than Capital Contributions or as a result of a Capital Transaction during such period, together with any amounts included
in Reserves (other than Reserve amounts derived from Capital Contributions or Capital Transactions) or working capital from prior
periods which the Managers reasonably determine to distribute, less the (i) Debt Service, (ii) the Operating Expenses paid during
such period, and (iii) any increases or replacements in Reserves (other than from Capital Contributions or Net Cash from a Capital
Transaction) during such period. For purposes hereof, Net Cash Flow determined at the Borrower level shall be deemed to be the
Net Cash Flow for the Company, without any duplication.
“Non-Discretionary
Changes” means any modifications or changes that the Members are required to make to the Plans or to the Project or construction
deficiencies (other than Discretionary Changes). Non-Discretionary Changes include, for example, changes to the Plans or the constructed
portions of the Project to correct design or construction deficiencies or to implement government-mandated revisions, or concealed
conditions to the extent not attributable to Force Majeure (other than Discretionary Changes).
“Nonrecourse
Deductions.” The same meaning set forth in Regulation Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a taxable
year of the Company equals the net increase, if any, in the amount of Minimum Gain during that taxable year, determined according
to the provisions of Regulation Section 1.704-2(c).
“Operating Agreement.”
This Operating Agreement as originally executed and as amended from time to time, also referred to herein as the “Agreement,”
from time to time.
“Operating Expenses”
for the purposes herein, means the cash expenditures made by the Borrower in connection with owning and operating the Project or
otherwise conducting its business.
“Permitted Overruns”
shall mean cost overruns incurred in connection with the Project arising from any of the following: (a) Force Majeure Events; (b)
real estate taxes; (c) insurance premiums; (d) Discretionary Changes; (e) post-Project Completion operating deficits including
for regularly scheduled debt service obligations (but excluding principal components except as part of standard monthly debt service
payments); (f) Hard Cost Overrun Exceptions; and (g) overruns attributable to interest due under the Construction Loan occurring
after issuance of temporary certificate of occupancy for all buildings at the Project.
“Person.”
Any individual or Entity, and the heirs, executors, administrators, legal representatives, successors, and assigns of such “Person”
where the context so permits.
“Principals”
mean Steve Broome, Lee Walker and Robert West.
“Priority Capital
Contributions” shall have the meaning ascribed in Section 8.04(d).
“Priority Contribution
Priority Return.” Repayment of a Member’s Priority Capital Contributions at a nine and one-half percent (9.5%) Internal
Rate of Return.
“Profits or Losses”
means, for each Fiscal Year or other period, an amount equal to the Company’s taxable loss or income, respectively, for such
Fiscal Year or period, determined in accordance with Section 703(a) of the Code (and for this purpose, all items of income, gain,
loss, or reduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income
or loss), with the following adjustments:
(a) Any
income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(b) Any
expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures pursuant
to Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses shall be subtracted
from such taxable income or loss;
(c) In
the event the Gross Asset Value of any Company asset is adjusted pursuant to paragraph (b) or (c) of the definition thereof, the
amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing
Profits or Losses;
(d) Gain
or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of notwithstanding that the adjusted
tax basis of such property differs from its Gross Asset Value;
(e) In
lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for the Fiscal Year or other period;
(f) To
the extent an adjustment to the tax basis of any Company asset pursuant to Code Section 734(b) is required pursuant to Treasury
Regulation §1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution
other than a complete liquidation of Member’s interest in the Company, the amount of such adjustment shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes of computing Profits or Losses; and
(g) Any
items which are specially allocated pursuant to Article 10 hereof shall not be taken into account in computing Profits or Losses
but shall be determined by applying rules analogous to those set forth in paragraphs (a) through (d) of this definition.
If the profit or loss
for such Fiscal Year or other period, as adjusted in the manner provided herein, is a positive amount, such amount shall be the
Profits for such Fiscal Year or other period; and if negative, such amount shall be the Losses for such Fiscal Year or other period.
“Project”
An approximately 245-unit Class A rental apartment complex to be constructed upon the Property.
"Project Completion"
or “Completion” shall mean issuance of a final certificate of occupancy for all buildings, a certificate of substantial
completion issued by the architect of the Project and an outstanding punchlist with a cost to complete less than $100,000.
"Project Stabilization"
shall mean issuance of a final certificate of occupancy for the Project and ninety percent (90%) of the Project's units under arm's
length executed leases for at least sixty (60) days.
“Property.”
That certain property located in Raleigh, North Carolina which is more particularly described in
Exhibit B
attached hereto
and incorporated herein upon which the Borrower intends to develop the Project.
“Refinancing”
shall have the meaning ascribed to Section 6.05(d).
“REIT”
shall mean a real estate investment trust as defined in Code Section 856.
“REIT Member”
shall mean any Member, if such Member is a REIT or a direct or indirect subsidiary of a REIT.
“REIT Requirements”
shall mean the requirements for qualifying as a REIT under the Code and Regulations.
“Reserves.”
With respect to any fiscal period, funds set aside or amounts allocated to reserves for the Project during such period which shall
be maintained in amounts deemed sufficient by the Members as provided under Section 7.07 for working capital, capital expenditures,
repairs, replacements and anticipated expenditures for paying taxes, insurance, Debt Service or other costs or expenses incident
to the ownership or operation of the Company’s business.
“Right of First
Refusal” shall mean that certain Right of First Refusal Agreement executed contemporaneously herewith.
“Shortfall Funding”
shall have the meaning ascribed in Section 8.04(c).
“Shortfall Funding
Priority Return.” Repayment of a Member’s Shortfall Funding at a twenty percent (20.0%) Internal Rate of Return.
“Soft Cost(s)”
means
all items under the category heading “Soft Cost” in the Total Project Budget. Soft Costs include, without limitation,
interest on the Construction Loan until receipt of a temporary certificate of occupancy for all buildings (after which point, any
such overrun for interest expense shall be a Permitted Overrun), architectural and engineering fees, legal fees incurred by the
Company or Borrower, entitlement and permitting fees and charges. Notwithstanding the foregoing, in no event shall costs relating
to Permitted Overruns or Debt Service after Project Completion constitute Soft Costs.
“Soft Cost Overrun” means,
from time to time, the amount by which the aggregate Soft Costs incurred in connection with the development and construction of
the Project as of the date of measurement exceed the portion of the Total Project Budget (i.e. for avoidance of doubt, not the
Estimated Budget) allocated to Soft Costs, including any available contingency in the Total Project Budget (i.e. whether a hard
cost or soft cost contingency) any funds in the interest reserve established pursuant to the Construction Loan (if permitted by
Lender and any cost savings achieved within the Total Projection Budget. Soft Cost Overruns include, without duplication, loan
rebalancing payments required by the Construction Lender in connection with the Construction Loan, but only to the extent that
such loan rebalancing payments are required by the Construction Lender as a result of an actual Soft Cost Overrun. Soft Cost Overruns
also include overruns resulting from Non-Discretionary Changes but not overruns resulting from Discretionary Changes.
“Total Project
Budget.” The Estimated Budget, as updated from time to time hereafter by the mutual consent of all of the Members and, upon
the closing of the Construction Loan, the form of project budget approved by the Construction Lender. For the avoidance of doubt,
the form of Total Project Budget shall (a) separately demarcate Soft Costs and Hard Costs as defined herein, and the Hard Cost
category shall include separate line items at least for lumber, copper, steel, concrete and drywall, and (b) be inclusive of the
costs incurred by or on behalf of the Members under the Cost Share Agreement.
“Transferring
Member.” A Member or Economic Interest Owner who sells, assigns, pledges, hypothecates or otherwise transfers for consideration
or gratuitously all or any portion of its Membership Interest or Economic Interest.
“Treasury Regulations”
or “Regulations.” The Federal Income Tax Regulations, including any temporary regulations, promulgated under the Code,
as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“TriBridge Change
of Control” shall be deemed to have occurred if any two or more of the three Principals should cease to be actively involved
as decision-making principals in the day to day operations and management of TriBridge Residential, LLC, TriBridge Investments,
LLC, TriBridge Residential Property Management Advisors, TriBridge Residential Development, LLC, and the TriBridge Member.
“TriBridge Co-Tenant”
shall have the meaning ascribed in Section 6.07(a).
ARTICLE
2.
FORMATION OF COMPANY
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2.01
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Formation
. On July 15, 2015, the Company was formed
as a Delaware limited liability company by executing and delivering the Certificate of Formation to the Secretary of State of
Delaware in accordance with the provisions of the Act.
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2.02
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Name
. The name of the Company is BR-TBR Lake Boone
NC Venture, LLC. The Company may do business under that name and under any other name or names upon which the Members select.
If the Company does business under a name other than that set forth in its Certificate of Formation, then the Company shall file
a trade name certificate as required by law.
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2.03
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Principal Place of Business
. The principal place
of business of the Company is 1575 Northside Drive, Building 100, Suite 200, Atlanta, GA 30318. The Company may locate its places
of business at any other place or places as the Managers may from time to time deem advisable.
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2.04
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Registered Office and Registered Agent
. The Company’s
initial registered office and the name of its initial registered agent shall be as set forth in the Certificate of Formation.
The registered office and registered agent may be changed from time to time by filing the address of the new registered office
and/or the name of the new registered agent with the Secretary of State of Delaware pursuant to the Act and the applicable rules
promulgated thereunder.
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2.05
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Term
. The term of the Company commenced on the
date the Certificate of Formation was filed with the Secretary of State of Delaware and shall continue thereafter in perpetuity
unless earlier dissolved in accordance with the provisions of this Operating Agreement or the Act.
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ARTICLE
3.
BUSINESS OF COMPANY
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3.01
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Permitted Businesses
. The business of the Company
shall be:
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(a) To
directly, or indirectly through Borrower, acquire, develop, sell, exchange, construct, improve, subdivide, mortgage, lease, maintain,
transfer, operate, own as an investment and/or otherwise engage in all general business activities related or incidental to the
ownership and development of the Project and any replacement or successor project, either directly or indirectly through ownership
of one or more other Entities engaged in the foregoing; and
(b) To
engage in all activities necessary, customary, convenient, or incident to any of the foregoing.
ARTICLE
4.
NAMES AND ADDRESSES OF INITIAL MEMBERS
The
names and addresses of the Initial Members are set forth on
Exhibit A
attached hereto and by this reference made a part
hereof.
ARTICLE
5.
RIGHTS AND DUTIES OF MANAGERS
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5.01
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Management
. The business and affairs of the Company
shall be managed by its Managers. Except for situations in which the approval of the Members is expressly required by this Operating
Agreement, the Managers shall have full and complete authority, power and discretion to manage and control the business, affairs
and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities
customary or incident to the management of the Company’s business. The Managers will delegate the day-to-day administration
and management of the development and construction of the Project to the Developer pursuant to the terms, conditions and obligations
of the Development Agreement. So long as the Project’s property manager is an Affiliate of the TriBridge Member or the TriBridge
Member has not been removed as a Manager under Section 5.09, the Managers hereby delegate to the TriBridge Member the responsibility
to implement any Operating Budget approved in accordance with the terms of this Operating Agreement.
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5.02
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Number, Tenure and Qualifications
. The Company
shall have two (2) Managers, and the BR Member and the TriBridge Member shall serve as the initial Managers. Subject to the foregoing,
each Manager shall hold office until its successor shall have been elected and qualified or until his earlier death, resignation,
or removal. Subject to the foregoing and Section 5.10, the Managers shall be elected by the affirmative vote of all Members.
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5.03
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Certain Powers of Managers
. Subject to the terms
of Sections 5.04 and 7.07 below which Sections shall control and supersede over any conflicting provisions in this Section 5.03,
and to the extent the following powers have not been delegated to the Developer under the Development Agreement or the Management
Company under the Management Agreement during the term of effectiveness of those agreements, in which case any such powers are
reserved exclusively to Developer and/or Management Company, as applicable,
either Manager
shall have power and authority, on behalf of the Company or in the Company’s capacity as a member of Borrower, as applicable:
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(a) To
cause Borrower to acquire the Property and to construct and develop the Project.
(b) To
invest any Company funds (by way of example but not limitation) in time deposits, short-term governmental obligations, or other
investments, provided the funds in any such investment vehicle are insured by the Federal Deposit Insurance Corporation (or its
successor or replacement).
(c) To
execute all instruments and documents, including, without limitation, checks; drafts; notes and other negotiable instruments; purchase
and sale agreements, mortgages or deeds of trust; security agreements; financing statements; deeds, contracts, settlement statements,
agreements, affidavits and any other documents providing for the acquisition, mortgage or disposition of the Company’s or
Borrower’s property; assignments; bills of sale; leases; partnership agreements; operating agreements of other limited liability
companies; and any other instruments or documents necessary to the business of the Company.
(d) To
purchase liability and other insurance to protect employees, officers, property and business.
(e) Subject
to Section 5.14, to employ accountants, engineers, architects, surveyors, attorneys, managing agents, leasing agents, and other
experts to perform services for the Company and to compensate them from Company funds.
(f) To
create offices and designate officers, who need not be Members. Any such persons appointed to be officers of the Company may or
may not be employees of the Company, any Member, or any Affiliate thereof. Any officers so appointed shall have such authority
and perform such duties as the Managers may, from time to time, expressly delegate to them in writing and the officers so appointed
shall serve at the pleasure of the Managers.
(g) To
do and perform all other acts as may be necessary or appropriate to the conduct of the Company’s business, to the extent
such acts are not reserved unto the Members pursuant to Section 7.07 of this Agreement or the Developer pursuant to the Development
Agreement.
Unless authorized to
do so by this Operating Agreement or by the Managers, no attorney-in-fact, employee or other agent of the Company shall have any
power or authority to bind the Company in any way, to pledge its credit or to render it liable pecuniary for any purpose. No Member
shall have any power or authority to bind the Company unless the Member has been authorized by the Managers or Members to act as
an agent of the Company in accordance with the previous sentence.
5.04
Management
Committee
.
(a) The
Managers and Members hereby establish a management committee (the “
Management Committee
”) for the Company for
the purpose of the Managers considering and undertaking any of the actions authorized pursuant to Section 5.03. The Management
Committee shall consist of four (4) individuals appointed to act as “representatives” of the Manager and Member that
appointed him or her (the “
Representatives
”) as follows: (i) BR Member shall be entitled to designate two (2)
Representatives to represent the BR Member as Manager and Member; and (ii) TriBridge Member shall be entitled to designate two
(2) Representatives to represent the TriBridge Member as Manager and Member. The initial members of the Management Committee are
set forth on
Exhibit A
.
(b) Each
Representative as a member of the Management Committee, subject to this Section 5.04(b), shall hold office until death, resignation
or removal at the pleasure of the Manager and/or Member that appointed him or her. If a vacancy occurs on the Management Committee,
the Manager with the right to appoint and remove such vacating Representative shall appoint his or her successor. A Manager shall
lose its right to have its Representatives vote on any item as of the date on which such Manager ceases to be a Manager, including
by means of removal under Section 5.09. If the BR Member transfers all or a portion of its membership interest to a transferee
permitted by Section 12.02(a), such transferee shall automatically, and without any further action or authorization by any Manager
or Member, succeed to the rights and powers of the BR Member under this Section 5.04 as may be agreed to between the BR Member
which is transferring the membership interest, on the one hand, and the permitted transferee to which the membership interest is
being transferred, on the other hand, including the shared or unilateral right to appoint the Representatives that the BR Member
was theretofore entitled to appoint pursuant to this Section 5.04. If the TriBridge Member transfers all or a portion of its
membership interest to a transferee permitted pursuant to Section 12.02(b), such permitted transferee shall automatically, and
without any further action or authorization by any Manager or Member, succeed to the rights and powers of the TriBridge Member
under this Section 5.04 as may be agreed to between the TriBridge Member which is transferring the membership interest, on the
one hand, and the permitted transferee to which the membership interest is being transferred, on the other hand, including the
shared or unilateral right to appoint the Representatives that the TriBridge Member was theretofore entitled to appoint pursuant
to this Section 5.04.
(c) The
Management Committee shall meet (which shall only meet if five (5) day prior written notice of the meeting is delivered to the
Members) at least once every quarter (unless waived by mutual agreement of the Managers) and as otherwise required. The only Representatives
required to constitute a quorum for a meeting of the Management Committee shall be one (1) Representative appointed by BR Member
and one (1) Representative appointed by TriBridge Member;
provided, however,
if any Representative fails to attend any meeting
and as a result thereof the Company is unable to obtain a quorum, and thereafter such Representative fails to agree to reschedule
and attend any such meeting within fifteen (15) days after receipt of written notice that the Company was unable to obtain a quorum
(the
“
Absent Representative
”)
, then a quorum can be obtained without
the attendance of a Representative of the Manager or Member who selected the Absent Representative.
(d) Each
of the two (2) Representatives appointed by BR Member shall be entitled to cast two (2) votes on any matter that comes before the
Management Committee and each of the Representatives appointed by TriBridge Member shall be entitled to cast one (1) vote on any
matter that comes before the Management Committee. Approval by the Management Committee of any matter (other than matters which
are Major Decisions under Section 7.07, or which are reserved to the Developer pursuant to the Development Agreement, or which
may be made unilaterally by a Member, but only as expressly set forth in this Agreement) shall require the affirmative vote of
at least a majority of the votes of the Representatives then in office voting at a duly held meeting of the Management Committee.
(e) Any
meeting of the Management Committee may be held by conference telephone call, video conference or through similar communications
equipment by means of which all persons participating in the meeting can communicate with each other. Participation in a telephonic
and/or video conference meeting held pursuant to this Section 5.04(e) shall constitute presence in person at such meeting.
(f) Any
action required or permitted to be taken at a meeting of the Management Committee may be taken without a meeting, without prior
notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by Representatives
having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which
all Representatives entitled to vote thereon were present and voted. All consents shall be filed with the minutes of the proceedings
of the Management Committee.
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5.05
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Limitation of Liability
. No Manager has guaranteed
nor shall have any obligation with respect to the return of a Member’s Capital Contributions or profits from the operation
of the Company. Each Manager shall be entitled to rely on information, opinions, reports or statements, including but not limited
to financial statements or other financial data prepared or presented in accordance with the provisions of the Act. No Manager
shall be liable to the Company or to any Member for good faith negligence or for honest mistakes of judgment or losses or liabilities
due to such good faith mistakes or due to the negligence, dishonesty, unlawful acts or bad faith of any employee, broker or other
agent, accountant, attorney, other professional or person employed by the Company provided that such person was selected, engaged,
retained and supervised by such Manager with reasonable care. No Manager shall have any liability to the Company or to any Member
for any loss suffered by the Company which arises out of any action or inaction of such Manager if, prior thereto, such Manager,
in good faith, determined that such course of conduct was in, and not opposed to, the best interests of the Company and such course
of conduct did not constitute willful misconduct or a material breach of this Agreement or gross negligence. It is the express
intention of the parties that the Managers’ standard of care be limited to acting in a manner reasonably believed by them
in good faith to be in accordance with their authority under this Agreement, that the Managers’ obligations be limited to
those expressly provided in this Agreement, and that any duties of loyalty or care and any and all other fiduciary duties arising
at law or in equity, if any, are hereby strictly limited to accord with the provisions of this Section 5.05 and to the performance
by the Managers of their express obligations under this Agreement, and any broader duty is hereby waived by the other Members.
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5.06
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Managers Have No Exclusive Duty to Company
. A
Manager shall not be required to manage the Company as his or its sole and exclusive function and he or it (or any Manager) may
have other business interests and may engage in other activities in addition to those relating to the Company. Neither the Company
nor any Member shall have any right, by virtue of this Operating Agreement, to share or participate in such other investments
or activities of a Manager or to the income or proceeds derived therefrom. A Manager shall incur no liability to the Company or
to any of the Members as a result of engaging in any other business or venture.
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5.07
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Bank Accounts
. The Management Committee may from
time to time open bank accounts, brokerage accounts and other accounts in the name of the Company, and the Managers shall be the
sole signatories thereon, unless the Management Committee determines otherwise.
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5.08
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Resignation
. Any Manager of the Company may resign
at any time by giving written notice to the Members of the Company. The resignation of any Manager shall take effect upon receipt
of notice thereof or at such later time as shall be specified in such notice; and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective. The resignation of a Manager shall also constitute the resignation
of such Manager’s Representatives on the Management Committee. The resignation of a Manager who is also a Member shall not
affect the Manager’s rights as a Member and shall not constitute a withdrawal of a Member.
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5.09
Removal
of Managers
. At a meeting called expressly for that purpose, a Manager may be removed, by the affirmative vote of all Members
(excluding the Membership Interests of BR Member or its permitted transferee in the event BR Member or its permitted transferee
is the subject of such removal vote and excluding the Membership Interests of TriBridge Member or its permitted transferee in the
event TriBridge Member or its permitted transferee is the subject of such removal vote), only in the event of any of the following
(each a “
Removal Event
”): (a) a material breach of this Agreement on the part of such Manager or its affiliated
Member, which breach shall continue uncured for thirty (30) calendar days after the giving of written notice thereof to such Manager
specifying the nature of such breach; provided, however, in the event such breach is incapable of being cured within said thirty
(30) calendar days, then a reasonable period of time shall be afforded to effect such cure not to exceed an additional thirty (30)
days; (b) a Default Action by a Member (or an Affiliate of such Member) affiliated with such Manager; (c) gross negligence or willful
misconduct on the part of such Manager or any of its Affiliates (including any Affiliated developer or property manager);
provided,
however,
with regard to such acts by Affiliates, only to the extent such acts result in a material adverse effect on the Project,
Borrower or the Company; or (d) in the case of a Manager designated by TriBridge Member, the termination of the Development Agreement
as a result of an event of default by Developer thereunder or the termination of the Management Agreement as a result of a For
Cause Termination (as defined herein). The removal of a Manager as a result of a Removal Event shall also constitute the removal
of such Manager’s Representatives on the Management Committee. The removal of a Manager who is also a Member shall not affect
the Manager’s rights as a Member and shall not constitute a withdrawal of a Member.
In addition, if the
TriBridge Member’s Manager is removed as Manager pursuant to clause (b) of the preceding paragraph as a result of the occurrence
of an event described in one or more of subsection (2) or subsection (3) of the definition of a Default Action and same results
in material harm to the Company, Borrower, Property or the Project (such items, if applicable, an “Egregious Act”),
then (x) the BR Member shall have the right to cause the Company and the Borrower to terminate the Developer under the Development
Agreement and/or to terminate the Management Company under the Management Agreement, in which case TriBridge Member shall forfeit
all further rights to develop and manage the Project, including without limitation as provided in Sections 5.12 and 5.15, and (y)
if the Egregious Act occurs prior to a Conversion, then the TriBridge Member shall thereafter forfeit its right to (i) the promoted
Distributions that would have been otherwise distributable to it under Sections 9.01(e), (f) and/or (g) (in which case any such
Distributions after Sections 9.01(d) shall be solely in accordance with the Members’ Capital Percentages), and to (ii) effectuate
a Conversion pursuant to Section 6.07.
In any instance where
TriBridge Member is removed as Manager and/or the Developer is removed as Developer under the Development Agreement and/or the
Management Company is removed as property manager under the Management Agreement, regardless of the cause of such removal, the
BR Member shall exercise commercially reasonable efforts to seek to cause the TriBridge Member and/or any Affiliate that executed
a guaranty to be prospectively released from any Loan Guaranty;
provided, that,
if the BR Member is unable to obtain such
release despite its commercially reasonable efforts to do so, then, unless the Removal was as a result of an Egregious Act, in
which case the BR Member shall have none of the indemnification obligations below with regard to the matters (i.e. the Egregious
Act) giving rise to the TriBridge Member's removal as Manager and/or the Developer's removal as Developer under the Development
Agreement and/or the Management Company's removal as property manager under the Management Agreement, Bluerock Residential Holdings,
L.P. ("
BR REIT Indemnitor
") shall, and by joining in the execution of this Agreement does hereby agree to, indemnify,
defend and hold harmless the TriBridge Member and/or any Affiliate having delivered such Loan Guaranty (each, a “
TriBridge
Indemnified Party
”) with respect to any costs, expenses, damages, fees, losses and other amounts (including, without
limitation, attorney's fees and costs) arising for the first time under such Loan Guaranty
after
the date of any such removal
and are
not
the result of any independent breach by a TriBridge Indemnified Party of the TriBridge Indemnified Parties’
obligations under such Loan Guaranty (such indemnification right to the extent applicable being without prejudice to any other
indemnification right available under
Section 15
hereof). For the avoidance of doubt, the BR Member’s inability, following
the exercise of commercially reasonable efforts, to obtain the prospective release under a Loan Guaranty shall not preclude the
BR Member from exercising its Removal and related rights in accordance with the express terms above.
In connection with BR
REIT Indemnitor's obligations hereunder, each defense indemnification obligation of BR REIT Indemnitor as set forth in this Agreement
shall be subject to the following provisions: the TriBridge Indemnified Party, or the TriBridge Member of behalf of the same, shall
notify BR REIT Indemnitor of the applicable claim against the TriBridge Indemnified Party within ten (10) business days after it
has received written notice of such claim and shall reasonably cooperate (at BR REIT Indemnitor’s cost) with BR REIT Indemnitor
in the defense of such claim, but failure to notify BR REIT Indemnitor within ten (10) business days shall excuse BR REIT Indemnitor
from its obligations only to the extent BR REIT Indemnitor is materially prejudiced in its ability to defend the action by such
failure. If BR REIT Indemnitor fails to undertake to defend the TriBridge Indemnified Party against a claim within forty five (45)
days after the aforesaid delivery of written notice of the claim and thereafter fails to discharge its obligations in a commercially
reasonable manner, then the TriBridge Indemnified Party may defend against and settle such claim on commercially reasonable terms,
and BR REIT Indemnitor shall be liable for the costs and expenses, including attorneys' fees, actually incurred by a TriBridge
Indemnified Party in effecting the defense, as well as for any such settlement. BR REIT Indemnitor will not be obligated for any
settlement made without the approval of BR REIT Indemnitor, unless BR REIT Indemnitor has wrongfully refused to take up defense
of the related claim upon demand of a TriBridge Indemnified Party after timely notice and opportunity to defend through trial and
all appellate levels. Unless a TriBridge Indemnified Party otherwise agrees, BR REIT Indemnitor may not settle a claim against
a TriBridge Indemnified Party on terms that (i) provide for a criminal sanction or fine against a TriBridge Indemnified Party,
(ii) admit to criminal liability on the part of a TriBridge Indemnified Party or (iii) provide for injunctive relief against a
TriBridge Indemnified Party.
In addition, to the
extent that BR Member or its Affiliate is required to execute a Recourse Guaranty (hereinafter the “BR Guarantor”),
in any instance where Bluerock Member is removed as Manager, regardless of the cause of such removal (unless such removal is occasioned
by the Bluerock Member removing itself and replacing itself with another entity to serve as Manager), the TriBridge Member shall
exercise commercially reasonable efforts to seek to cause the BR Guarantor to be prospectively released from any such Recourse
Guaranty;
provided, that,
if the TriBridge Member is unable to obtain such release despite its commercially reasonable efforts
to do so, then, unless the Removal was as a result of an Egregious Act, in which case the TriBridge Member shall have none of the
indemnification obligations below with regard to the matters (i.e. the Egregious Act) giving rise to the BR Member's removal as
Manager, TriBridge Residential, LLC ("TriBridge
Indemnitor
") shall, and by joining in the execution of this Agreement
does hereby agree to, indemnify, defend and hold harmless the BR Guarantor (the “BR
Indemnified Party
”) with
respect to any costs, expenses, damages, fees, losses and other amounts (including, without limitation, attorney's fees and costs)
arising for the first time under such Recourse Guaranty
after
the date of any such removal and are
not
the result
of any independent breach by the BR Indemnified Party of its obligations under such Recourse Guaranty (such indemnification right
to the extent applicable being without prejudice to any other indemnification right available under
Section 15
hereof).
For the avoidance of doubt, the TriBridge Member’s inability, following the exercise of commercially reasonable efforts,
to obtain the prospective release of BR Guarantor under a Recourse Guaranty shall not preclude the TriBridge Member from exercising
its Removal and related rights in accordance with the express terms above.
In connection with TriBridge
Indemnitor's obligations hereunder, each defense indemnification obligation of TriBridge Indemnitor as set forth in this Agreement
shall be subject to the following provisions: the BR Indemnified Party, or the BR Member of behalf of the same, shall notify TriBridge
Indemnitor of the applicable claim against the BR Indemnified Party within ten (10) business days after it has received written
notice of such claim and shall reasonably cooperate (at TriBridge Indemnitor’s cost) with TriBridge Indemnitor in the defense
of such claim, but failure to notify TriBridge Indemnitor within ten (10) business days shall excuse TriBridge Indemnitor from
its obligations only to the extent TriBridge Indemnitor is materially prejudiced in its ability to defend the action by such failure.
If TriBridge Indemnitor fails to undertake to defend the BR Indemnified Party against a claim within forty five (45) days after
the aforesaid delivery of written notice of the claim and thereafter fails to discharge its obligations in a commercially reasonable
manner, then the BR Indemnified Party may defend against and settle such claim on commercially reasonable terms, and TriBridge
Indemnitor shall be liable for the costs and expenses, including attorneys' fees, actually incurred by the BR Indemnified Party
in effecting the defense, as well as for any such settlement. TriBridge Indemnitor will not be obligated for any settlement made
without the approval of TriBridge Indemnitor, unless TriBridge Indemnitor has wrongfully refused to take up defense of the related
claim upon demand of a TriBridge Indemnified Party after timely notice and opportunity to defend through trial and all appellate
levels. Unless a BR Indemnified Party otherwise agrees, TriBridge Indemnitor may not settle a claim against the BR Indemnified
Party on terms that (i) provide for a criminal sanction or fine against the BR Indemnified Party, (ii) admit to criminal liability
on the part of the BR Indemnified Party or (iii) provide for injunctive relief against the BR Indemnified Party.
5.10 Intentionally
Omitted
5.11 Intentionally
Omitted
5.12
Development
and Development Fee
.
5.12.1
Development
Agreement
. The Borrower and Developer shall enter into a commercially reasonable form of Development Agreement, including a
Development Fee payable to Developer as described below. Developer will cause the Project to be constructed in accordance with
the Plans and the Total Project Budget (including reasonable change orders within the scope of authority provided by Lender) as
mutually agreed upon by Developer and BR Member, and subject in all instances to the adequate funding of the Project by Construction
Lender and the Borrower. The Developer shall use commercially reasonable efforts to cause the Project’s design professionals
to provide certified documentation at Project Completion that the construction has been completed in accordance with the approved
Plans.
5.12.2
General
Contractor
. Developer shall be responsible for selecting an arm’s-length, third-party general contractor reasonably acceptable
to BR Member and TriBridge Member; provided, however, that the BR Member and the TriBridge Member agree that Cambridge Swinerton
Builders, Inc. is an acceptable general contractor (the “
GC
”), and arranging a commercially reasonable guaranteed
maximum price contract for construction of the Project (the “
GMP Contract
”) for execution and approval by the
Borrower;
provided, that,
BR Member's and Construction Lender’s approval of the GMP Contract is required, which approval,
in the case of the BR Member, shall not be unreasonably withheld, conditioned or delayed.
5.12.3
Development
Fee
. Under and subject to the Development Agreement, Developer will be entitled to earn a Development Fee equal to three percent
(3%) of the Total Project Budget (less (i) $5,469,200 representing the cost of Land, (ii) the Development Fee, (iii) the Financing
Fee and (iv) the Acquisition Fee). The Development Fee shall compensate Developer for all development management and project management
services (including financial reporting) through Project completion as determined under the Construction Loan. To the extent permitted
by Construction Lender, the Development Fee shall be paid through construction draws, paid thirty percent (30%) upon closing of
the Construction Loan (the "
30% Draw
"), and with the balance paid in equal monthly installments (subject to the
terms of the Development Agreement). Notwithstanding the foregoing, until the closing of the Construction Loan, Developer shall
be entitled to take draws of the Development Fee in the following manner:
1. On a monthly
basis, beginning on December 1, 2015, Developer shall be entitled to draw an amount equal to the full Development Fee divided by
twenty-four (24) (each a "
Pre-Construction Loan Closing Draw
").
2. At such
time as the Construction Loan closes, Developer shall be entitled to draw for the 30% Draw less an amount equal to the sum of all
Pre-Construction Loan Closing Draws paid to Developer.
3. From and
after the closing of the Construction Loan, the Developer shall be entitled to draw the remaining unpaid portion of the Development
Fee in monthly installments over the course of the "Development Period" as contemplated in (and subject to the provisions
of) Section 11.1 of the Development Agreement.
5.12.4
Development
Information
. During the construction process, Developer will provide to Borrower, Company and BR Member copies of all Loan-related
and draw-related information, including but not limited to monthly copies of the construction draws, construction draw top sheets
with budget-versus-actual information to Borrower, Company and BR Member, plus full physical access to the Project and all documentation
in connection with the development and construction of the Project.
5.12.5
Developer
Contribution
. Without limitation, and for no additional charge, or credit to the TriBridge Member’s Capital Account,
TriBridge Member shall cause its Affiliates (including Developer) to contribute, in the manner contemplated under the Contribution
Agreement and to the extent applicable solely to the Project, to the Borrower all of their (a) ownership and contract rights in
and to the subject lands and/or purchase agreements, (b) rights to any and all design and construction plans for the Project (free
and clear of all liabilities), (c) other tangible and intangible rights associated with the Project and (d) other items and rights
appurtenant to the development of the Project (collectively, the “
Developer Rights
”). TriBridge Member confirms
that all such Developer Rights are in fact owned or controlled by Developer. Without limitation, the TriBridge Member shall cause
any Affiliate (i.e. other than the Developer) who owns or who have rights to any approvals, permits or other development rights
relating to the Project to contribute the same to the Borrower, for no additional charge, in the manner contemplated in Section
15.16 of the Contribution Agreement.
5.12.6
BR
Member’s Owner Representative
. The BR Member will be entitled to staff the Project with an owner’s representative
throughout the construction period to oversee, supervise and assist the Developer in the administration of the Project as needed
by the Developer. The reasonable cost of the owner’s representative, which shall not exceed $50,000, will be capitalized
into the Total Project Budget and paid from the construction draws to the extent approved by Lender (or, to the extent not so paid,
added to the Capital Account of the BR Member).
5.12.7
Warranties
.
TriBridge Member shall cause the Developer to use commercially reasonable efforts to cause the GC to warrant to the Borrower and
the Company the construction of the Project for twelve (12) months after the final certificate of occupancy is received for the
Project such that the GC must promptly correct and repair, at its sole cost and expense, all defects discovered during such period.
The Company may assign such warranty and any subcontractor warranties to any third party who purchases the Project from the Borrower
during such period on terms and conditions reasonably acceptable to the GC.
5.13
Acquisition
Fee
. At the Closing of the acquisition of the Property, the TriBridge Member or its designee shall earn an acquisition fee
equal to $55,000, which shall be contributed proportionally by the BR Member and TriBridge Member and shall be counted as part
of their Initial Capital Contribution.
5.14
Estimated
Budget, Total Project Budget and Operating Budget
.
5.14.1
Estimated
Budget and Total Project Budget
. The Members have attached the current agreed form of Estimated Budget to this Agreement as
Exhibit C
. For the avoidance of doubt, in connection with entering into the Construction Loan if the Lender approves the
Estimated Budget, then the Estimated Budget shall automatically become the Total Project Budget. If the Construction Lender does
not approve the Estimated Budget, the Members shall amend
Exhibit C
by attaching a revised Total Project Budget that has
been approved by the Construction Lender. Subject to the approval of the Total Project Budget by the Lender, the Members hereby
authorize Developer to construct the Project in accordance with the Estimated Budget, with such modifications as may be agreed
to by the Members pursuant to Section 7.07.
5.14.2
Operating
Budget and Capital Budget after Construction
. (a) Other than with respect to the construction of the Project, the Borrower
shall operate the Project under a business plan and an annual Operating Budget (once approved, the “
Approved Operating
Budget
”) and annual Capital Budget (once approved, the “
Approved Capital Budget
,” which together with
the Approved Operating Budget, are sometimes herein collectively referred to as the “
Approved Budgets
”) commencing
for the 12-month period beginning as of the date of issuance of the first temporary certificate of occupancy for the Project. So
long as the TriBridge Member’s Affiliate is serving as the Management Company of the Project under the Management Agreement,
the TriBridge Member shall deliver to the Members for approval the initial proposed Operating Budget and Capital Budget sixty (60)
days prior to the anticipated date of issuance of the first temporary certificate of occupancy for the Project. The Members shall
engage in mutual good faith negotiations to agree upon the initial forms of the Approved Budgets,
provided however,
if within
such 60 days the Members are not able to agree then the Management Committee shall make the determination in its sole but reasonable
discretion taking into account the criteria set forth in the final sentence of this paragraph;
provided further
, if a Conversion
has occurred then the BR Member in its sole but reasonable discretion shall make the determination taking into account the criteria
set forth in the final sentence of this paragraph. Notwithstanding the preceding sentence, to the extent the Loan Guaranty consists
of any Recourse Guaranty, then rather than the Management Committee making a determination in the manner set forth in the immediately
preceding sentence, the determination of the initial Approved Budget shall require the unanimous consent of the Members, in their
reasonable discretion, taking into account the criteria set forth in the final sentence of this paragraph. Thereafter, so long
as the TriBridge Member’s Affiliate is serving as the Management Company of the Project under the Management Agreement, the
TriBridge Member shall deliver by October 15th for each following calendar year the proposed Operating and Capital Budgets for
such calendar year. If for any reason the proposed budgets are not timely submitted, or if the TriBridge Member’s Affiliate
is not serving as the Management Company of the Project under the Management Agreement when they are due, then the proposed budgets
shall be submitted by the Management Committee. Any Approved Operating Budget shall include amounts deemed appropriate for all
expense line items of the type normally included in the Operating Budget for the Project, taking into account the requirements
of all tenant leases and that, in establishing the Approved Budgets, the Members (and, as applicable, the Management Committee
and, after a Conversion, the BR Member) shall be obligated to act reasonably and in good faith, taking into account past performance
of the Project, leasing trends and competitive properties within the market where the Project is located, the age of the Project
and the units at the time such Approved Budgets are established, and such other factors as reasonably prudent owners and managers
of multifamily assets substantially similar to the Project would take into account in order to maximize profitability thereof.
(b) If after
adoption of the initial Approved Budgets for the Project any subsequently proposed Operating Budget is not approved by the beginning
of the year to which it relates, the Management Company shall operate the Project on the basis of the previous year’s Approved
Operating Budget, adjusted by (i) assuming that the revenue from the Project will increase to 103% of the revenues collected in
the prior year (annualized for the initial year, if a stub period), (ii) assuming that the Controllable Expenses (defined below)
will increase to 103% of the amount of the actual Controllable Expenses incurred in the prior year (annualized for the initial
year, if a stub period), and (iii) increasing or decreasing all Uncontrollable Expenses (defined below) by any anticipated or known
increases or decreases in such Uncontrollable Expenses. “
Uncontrollable Expenses
” shall mean the following expenses
with respect to the Project: taxes; insurance; utilities; unanticipated material repairs that are essential to preserve or protect
the Project; debt service; and costs due to a change in law. “
Controllable Expenses
” shall mean all expenses,
other than Uncontrollable Expenses, with respect to the Project. Notwithstanding the foregoing to the contrary, if, prior to the
commencement of a calendar year the parties have not agreed on the Capital Budget, there shall be no changes in budgeted capital
expenditures under the prior Approved Capital Budget; provided, however, that any incomplete capital projects shall continue to
be funded until completed. Furthermore, no material deviation (Controllable Expenses that would result in an excess of the annual
budgeted amount set forth in the Approved Budget in any one accounting category by more than three percent (3%)) as to any Approved
Budget approved in accordance with the terms herein shall be permitted without the prior approval of the Management Committee.
5.15
Management
Company
. (a) On or about a date which is sixty (60) days prior to the anticipated date of issuance of the first temporary certificate
of occupancy for the Project, the Managers shall cause the Borrower to enter into an industry standard third party form of property
management agreement (the “
Management Agreement
”), in the form attached as
Schedule 5.15
hereto and incorporated
herein by reference, with TriBridge Residential Property Management Advisors, LLC to serve as initial property manager (“
Management
Company
”) to manage, lease-up and operate the Property pursuant to the Management Agreement. The Management Agreement
shall require that Management Company operate the Project in a first class manner, and in accordance with the standards and conditions
for the type, style, class, use and location of the Project, consistent with the Project’s Operating Budget and providing
for payment of a management fee in an amount not to exceed the greater of (i) $5,000 per month, and (ii) three percent (3%) of
annual gross cash revenues, payable monthly commencing when the Company authorizes the Management Company to commence leasing activities
at the Project. Subject to a No Cause Termination as provided in subsection (b) below, or a termination under Section 29(b), (c),
(d) or (h) of the Management Agreement (a “
For Cause Termination
”), the Management Agreement shall automatically
be renewed annually.
(b) Notwithstanding
the foregoing, following the earlier to occur of either Conversion or the date which is two (2) years following Project Completion,
the BR Member may cause the Company or the Borrower to terminate the Management Agreement for any reason or no reason at all (a
“
No Cause Termination
”). In the event of a No Cause Termination, the BR Member and TriBridge Member shall then
work in a commercially reasonable manner to select a replacement property manager for the Project, which selection shall be subject
to the approval of both BR Member and TriBridge Member, such approval not to be unreasonably withheld, conditioned or delayed by
either party; further, in the event of any removal of Manager (i.e. either through a For Cause Termination or a No Cause Termination),
the BR Member shall exercise commercially reasonable efforts to seek to cause the TriBridge Member and/or any Affiliate that executed
a guaranty to be prospectively released from any Loan Guaranty;
provided, that,
if the BR Member is unable to obtain such
release despite its commercially reasonable efforts to do so, then, unless the Removal was as a result of an Egregious Act, in
which case the BR Member shall have none of the indemnification obligations below with regard to the matters (i.e. the Egregious
Act) giving rise to the TriBridge Member's removal as Manager and/or the Developer's removal as Developer under the Development
Agreement and/or the Management Company's removal as property manager under the Management Agreement, then BR REIT Indemnitor shall,
and by joining in the execution of this Agreement does hereby agree to, indemnify, defend and hold harmless the TriBridge Member
and/or any Affiliate having delivered such Loan Guaranty (each, a “
TriBridge Indemnified Party
”) with respect
to any costs, expenses, damages, fees, losses and other amounts (including, without limitation, attorney's fees and costs) arising
for the first time under such Loan Guaranty
after
the date of any such removal and are
not
the result of any independent
breach by a TriBridge Indemnified Party of the TriBridge Indemnified Parties’ obligations under such Loan Guaranty (such
indemnification right to the extent applicable being without prejudice to any other indemnification right available under
Section
15
hereof). For the avoidance of doubt, the BR Member’s inability, following the exercise of commercially reasonable
efforts, to obtain the prospective release under a Loan Guaranty shall not preclude the BR Member from exercising its Removal and
related rights in accordance with the express terms above.
In connection with
BR REIT Indemnitor's obligations hereunder, each defense indemnification obligation of BR REIT Indemnitor as set forth in this
Agreement shall be subject to the following provisions: the TriBridge Indemnified Party, or the TriBridge Member of behalf of the
same, shall notify BR REIT Indemnitor of the applicable claim against the TriBridge Indemnified Party within ten (10) business
days after it has received written notice of such claim and shall reasonably cooperate (at BR REIT Indemnitor’s cost) with
BR REIT Indemnitor in the defense of such claim, but failure to notify BR REIT Indemnitor within ten (10) business days in the
defense shall excuse BR REIT Indemnitor from its obligations only to the extent BR REIT Indemnitor is materially prejudiced in
its ability to defend the action by such failure. If BR REIT Indemnitor fails to undertake to defend the TriBridge Indemnified
Party against a claim within forty five (45) days after the aforesaid delivery of written notice of the claim and thereafter fails
to discharge its obligations in a commercially reasonable manner, then the TriBridge Indemnified Party may defend against and settle
such claim on commercially reasonable terms, and BR REIT Indemnitor shall be liable for the costs and expenses, including attorneys'
fees, actually incurred by a TriBridge Indemnified Party in effecting the defense, as well as for any such settlement. BR REIT
Indemnitor will not be obligated for any settlement made without the approval of BR REIT Indemnitor, unless BR REIT Indemnitor
has wrongfully refused to take up defense of the related claim upon demand of a TriBridge Indemnified Party after timely notice
and opportunity to defend through trial and all appellate levels. Unless a TriBridge Indemnified Party otherwise agrees, BR REIT
Indemnitor may not settle a claim against a TriBridge Indemnified Party on terms that (i) provide for a criminal sanction
or fine against a TriBridge Indemnified Party, (ii) admit to criminal liability on the part of a TriBridge Indemnified Party or
(iii) provide for injunctive relief against a TriBridge Indemnified Party.
(c) If BR Member elects
to exercise the No Cause Termination Right, the Right of First Refusal shall terminate as of the effective date of the termination
of the Management Agreement.
(d) The BR Member (either
as Manager or through its Representatives on the Management Committee) shall act on behalf of the Company and Borrower in regard
to enforcement of rights under the Management Agreement with respect to the decision whether to exercise a For Cause Termination.
(e) For purposes of
determining the “first year” of the Management Agreement, the first year term shall be deemed to expire on the date
which is twelve (12) months following the delivery of all units within the Project by the GC.
5.16
Operation
in Accordance with REOC/REIT Requirements
.
5.16.1 The
Members acknowledge that BR Member or one or more of its Affiliates (an “
BR Affiliate
”) intends to qualify as
a “real estate operating company” or “venture capital operating company” within the meaning of U.S. Department
of Labor Regulation 29 C.F.R. §2510.3-101 (a “
REOC
”), and agree that the Company and its Subsidiaries shall
be operated in a manner that will enable BR Member and such BR Affiliate to so qualify;
provided, however,
notwithstanding
anything contained in this Section 5.16 to the contrary, in no event shall the foregoing require any loss of voting or decision
rights to the TriBridge Member or result in any adverse effect on the economic rights of the TriBridge Member. Except as disclosed
to BR Member, TriBridge Member (a) shall not fund any Capital Contribution with the ‘plan assets’ of any ‘employee
benefit plan’ within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, or any
‘plan’ as defined by Section 4975 of the Internal Revenue Code of 1986, as amended.
5.16.2 Except
for the Project, neither the Company nor its Subsidiaries shall hold any investment, incur any indebtedness or otherwise take any
action that would cause any Member of the Company (or any Person holding an indirect interest in the Company through an entity
or series of entities treated as partnerships for U.S. federal income tax purposes) to realize any “unrelated business taxable
income” as such term is defined in Code Sections 511 through 514, unless specifically agreed to by the Members in writing.
No Manager or Member shall be liable for any income or other taxes, damages, costs or expenses incurred by the Company or any Member
by reason of the recognition by the Company of UBTI, unless caused by its own willful misconduct or gross negligence and not related
to the Project.
5.16.3 The
Company
(and any direct or indirect Subsidiary of the Company
)
may not engage in any activities or hold any assets
that would constitute or result in the occurrence of a REIT Prohibited Transaction as defined herein. Notwithstanding anything
to the contrary contained in this Agreement, during the time a REIT Member is a Member of the Company, none of the Company, any
direct or indirect Subsidiary of the Company, nor any Member of the Company shall take or refrain from taking any action which,
or the effect of which, would constitute or result in the occurrence of a REIT Prohibited Transaction by the Company or any direct
or indirect
Subsidiary thereof, including without limiting the generality of the foregoing, but in amplification thereof:
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5.16.3.1
|
Entering into any lease, license, concession or other
agreement or permitting any sublease, license, concession or other agreement that provides for rent or other payment based in
whole or in part on the income or profits of any person, excluding for this purpose a lease that provides for rent based in whole
or in part on a fixed percentage or percentages of gross receipts or gross sales of any person without reduction for any costs
of the lessee (and in the case of a sublease, without reduction for any sublessor costs);
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5.16.3.2
|
Leasing, as a lessor, personal property, excluding for
this purpose a lease of personal property that is entered into in connection with a lease of real property where the rent attributable
to the personal property is less than fifteen percent (15%) of the total rent provided for under the lease;
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5.16.3.3
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Acquiring or holding any debt investments, excluding
for these purposes “debt” solely between wholly-owned Subsidiaries of the Company, unless (i) the amount of interest
income received or accrued by the Company under such loan does not, directly or indirectly, depend in whole or in part on the
income or profits of any person, and (ii) the debt is fully secured by mortgages on real property or on interests in real property.
Notwithstanding anything to the contrary herein, in the case of debt issued to the Company by a Subsidiary which is treated as
a “taxable REIT subsidiary” of the REIT Member, such debt shall be secured by a mortgage or similar security interest,
or by a pledge of the equity ownership of a subsidiary of such taxable REIT subsidiary;
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5.16.3.4
|
Acquiring or holding, directly or indirectly, more than
ten percent (10%) of the outstanding securities of any one issuer (by vote or value) other than an entity which either (i) is
taxable as a partnership or a disregarded entity for United States federal income tax purposes, (ii) has properly elected to be
a taxable REIT subsidiary of the REIT Member by jointly filing with REIT, IRS Form 8875, or (iii) has properly elected to be a
real estate investment trust for U.S. federal income tax purposes;
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5.16.3.5
|
Entering into any agreement where the Company receives
amounts, directly or indirectly, for rendering services to the tenants of any property that is owned, directly or indirectly,
by the Company other than (i) amounts received for services that are customarily furnished or rendered in connection with the
rental of real property of a similar class in the geographic areas in which the Property is located where such services are either
provided by (A) an Independent Contractor (as defined in Section 856(d)(3) of the Code) who is adequately compensated for such
services and from which the Company or REIT Member do not, directly or indirectly, derive revenue, or (B) a taxable REIT subsidiary
of REIT Member who is adequately compensated for such services, or (ii) amounts received for services that are customarily furnished
or rendered in connection with the rental of space for occupancy only (as opposed to being rendered primarily for the convenience
of the Project’s tenants);
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5.16.3.6
|
Entering into any agreement where a material amount of
income received or accrued by the Company under such agreement, directly or indirectly, does not qualify as either (i) “rents
from real property,” or (ii) “interest on obligations secured by mortgages on real property or on interests in real
property,” in each case as such terms are defined in Section 856(c) of the Code;
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5.16.3.7
|
Holding cash of the Company available for operations
or distribution in any manner other than a traditional bank checking or savings account;
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5.16.3.8
|
Selling or disposing of any property, subsidiary or other
asset of the Company prior to (i) the completion of a two (2) year holding period with such period to begin on the date the Company
acquires a direct or indirect interest in such property
and begins to hold such property, subsidiary or asset for the production
of rental income, and (ii) the satisfaction of any other requirements under Section 857 of the Code necessary for the avoidance
of a prohibited transaction tax on the REIT; provided, that such restriction shall not affect, restrict or be deemed to modify
(i) either Member’s right to exercise its buy-sell rights under
Section 12.06
; (ii) BR Member’s rights pursuant
to
Section 6.05(d)
; or (iii) either party's rights pursuant to Section 6.05(e).
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5.16.3.9
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To the extent of Available Cash and Reserves, failing
to make current cash distributions to REIT Member each year in an amount which does not at least equal the taxable income allocable
to REIT Member for such year.
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5.16.4 Notwithstanding
the foregoing provisions of Section 5.16.3, the Company may enter into a REIT Prohibited Transaction if it receives the prior written
approval of the REIT Member specifically acknowledging that the REIT Member is approving a REIT Prohibited Transaction pursuant
to this Section 5.16.4. For purposes of this Section 5.16.4, “REIT Prohibited Transactions” shall mean any of the actions
specifically set forth in Sections 5.16.3 (1) through (9).
5.17
FCPA
.
In compliance with the Foreign Corrupt Practices Act, each Member will not, and will ensure that its officers, directors, employees,
shareholders, members, agents and Affiliates, acting on its behalf or on the behalf of the Company or any of its Subsidiaries or
Affiliates do not, for a corrupt purpose, offer, directly or indirectly, promise to pay, pay, promise to give, give or authorize
the paying or giving of anything of value to any official representative or employee of any government agency or instrumentality,
any political party or officer thereof or any candidate for office in any jurisdiction, except for any facilitating or expediting
payments to government officials, political parties or political party officials the purpose of which is to expedite or secure
the performance of a routine governmental action by such government officials or political parties or party officials. The term
“routine governmental action” for purposes of this provision shall mean an action which is ordinarily and commonly
performed by the applicable government official in (i) obtaining permits, licenses, or other such official documents which such
Person is otherwise legally entitled to; (ii) processing governmental papers; (iii) providing police protection, mail pick-up and
delivery or scheduling inspections associated with contract performance or inspections related to transit of goods across country;
(iv) providing phone service, power and water supply, loading and unloading of cargo, or protecting perishable products or commodities
from deterioration; or (v) actions of a similar nature. The term routine governmental action does not include any decision by a
government official whether, or on what terms, to award new business to or to continue business with a particular party, or any
action taken by an official involved in the decision making process to encourage a decision to award new business to or continue
business with a particular party. Each Member agrees to notify immediately the other Member of any request that such Member or
any of its officers, directors, employees, shareholders, members, agents or Affiliates, acting on its behalf, receives to take
any action that may constitute a violation of the Foreign Corrupt Practices Act.
ARTICLE
6.
RIGHTS AND OBLIGATIONS OF MEMBERS
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6.01
|
Limitation on Liability
. Each Members’ liability
shall be limited as set forth in this Operating Agreement, the Act and other applicable law.
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6.02
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No Liability for Company Obligations
. No Member
will have any personal liability for any debts or losses of the Company beyond its respective Capital Contributions, except as
provided by law or otherwise provided by separate agreement among the Members.
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6.03
|
List of Members
. Upon written request of any Member,
the Company shall provide a list showing the names, addresses and Membership Interest and Economic Interest of all Members and
any other information required by Section 18-305 of the Act and maintained pursuant to Section 11.02.
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6.04
|
Dissenters’ Rights
. No Member shall have
appraisal or dissenters’ rights pursuant to Section 18-210 of the Act.
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6.05
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Financing and Recourse Obligations; Refinancing Right
With Respect to Construction Loan; Special Rights to Call for Capital to Avoid or Cure Imminent Loan Defaults
.
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(a) BR
Member and TriBridge Member will use commercially reasonable efforts to secure a Construction Loan from a Construction Lender,
with Borrower serving as the borrower. The final terms of the Construction Loan and the Construction Lender shall be subject to
mutual approval by both BR Member and TriBridge Member, such approval not to be unreasonably withheld, conditioned or delayed.
(b) The
TriBridge Member and/or an Affiliate of the TriBridge Member acceptable to Construction Lender shall be obligated to provide, or
cause its Affiliate to provide (subject to the reasonable requirements of the Construction Lender), any required recourse guaranty
or indemnity, including, without limitation, any project completion and repayment guaranties (provided, however, any repayment
guaranty shall be subject to Schedule 6.05(f) of this Agreement) (each, a “
Recourse Guaranty
”) and any “bad
boy” non-recourse carveout guaranty and/or any environmental indemnification agreement (each a “
Non-Recourse Carveout
Guaranty
”);
provided, however,
the terms and conditions of such guaranty or indemnity shall be in a form and content
reasonably acceptable to TriBridge Member (each, as the same may be amended or restated from time to time and any subsequent guaranty
delivered in connection with any permanent or non-recourse financing subsequent to the Construction Loan, a “
Loan Guaranty
”).
The BR Member, in its sole and absolute discretion may, if it elects to do so, provide or cause one of its Affiliates to provide,
a commercially reasonable form of Non-Recourse Carveout Guaranty on terms and conditions satisfactory to BR Member in its sole
discretion and in substantially the same form as signed by the TriBridge Member. The BR Member or its Affiliate shall be required
to execute a repayment guaranty if and when contemplated in accordance with
Schedule 6.05(f)
of this Agreement (and under
no other circumstances). Except as set forth in the immediate prior sentence, neither the BR Member nor any Affiliate of BR Member
shall be required to execute a Recourse Guaranty or Non-Recourse Carveout Guaranty. Notwithstanding the foregoing, should the Members
select a Recourse Construction Loan (as defined in Schedule 6.05(f) below), then the respective rights and obligations of the parties
shall be as set forth in Schedule 6.05(f) to this Agreement.
(c) To
the extent TriBridge Member does not use a mortgage broker to originate the Construction Loan (i.e., no commission or fee is due
to a third party broker at or in connection with the closing or procurement of the Construction Loan), but rather procures the
Construction Loan on its own accord, TriBridge Member shall earn a debt procurement fee equal to the lesser of (i) $125,000 and
(ii) the product of 50 basis points (0.5%) and the principal amount of the Construction Loan (the “
Financing Fee
”).
The Financing Fee shall be payable by the Company, and the BR Member shall contribute the required equity to fund the same, which
shall be counted as part of the BR Member's Initial Capital Contribution.
(d) Notwithstanding
the Major Decisions provisions of this Agreement, prior to Conversion, subject to subsections (i)-(iii) below, BR Member shall
have the unilateral right to cause Borrower to refinance the Construction Loan (a “
Refinancing
”);
provided,
that:
(i)(A) prior to closing
the Refinancing the BR Member must provide the terms of such proposed Refinancing to the TriBridge Member (including without limitation
a copy of a fully negotiated term sheet or similar evidence of the terms of the proposed Refinancing), and (B) the TriBridge Member
shall have ten (10) days from the date it receives the terms of such new proposed Refinancing from the BR Member to approve the
Refinancing, such approval not to be unreasonably withheld, conditioned or delayed (for avoidance of doubt, the BR Member shall
not have the right to cause the Refinancing if the TriBridge Member has not unreasonably withheld, delayed or conditioned its approval
of the Refinancing);
(ii) in connection with
the closing of the Refinancing, the BR Member shall cause the Construction Loan to be paid off in full. The TriBridge Member and
its Affiliates shall not be required to execute any new loan guaranties except, if required by the Refinancing, a commercially
reasonable form of Non-Recourse Carveout Guaranty that is substantially similar to any Non-Recourse Carveout Guaranty that BR Member
or one of its Affiliates enters into in connection with the Refinancing; and
(iii) the Refinancing
shall be in an amount equal to the sum of:
(A) the amount
required to fully repay the Construction Loan and any outstanding construction-related trade debt;
(B) (1) if
there is no Conversion in connection with the Refinancing, all items under subsections (a) and (b) of Section 9.01, or (2) if there
is a Conversion in connection with the Refinancing, all items under subsections (a) and (b) of Section 9.02;
(C)(1) if there
is no Conversion in connection with the Refinancing, a nine and one-half percent (9.5%) annualized return on (but not of) the Members’
Initial Capital Contribution (pari passu based on their respective Initial Capital Contributions), or (2) if there is a Conversion
in connection with the Refinancing, a nine and one-half percent (9.5%) annualized return on (but not of) the Co-Tenants’
Initial Capital Contribution (based on the 75/25 split described in subsection (c) of Section 9.02), and
(D) the amount
to repay any funded Mandatory Cost Overrun Funding Obligation.
The sum of
clauses (A), (B), (C) and (D) are, collectively, the “
Minimum Refinancing Amount
”.
(e) Notwithstanding anything
contained in this Agreement to the contrary, at any time and from time to time, either Member may unilaterally make a call for
Additional Capital Contributions to fund on a timely basis any Debt Service Shortfall or any other payment that if unpaid
would constitute an imminent (i.e., actual or probable within three (3) months) payment default under the Construction Loan or
any subsequent Loan, and if the other Member fails or refuses to timely contribute its proportional share of such Additional Capital
Contribution such that a resulting default would occur thereunder, then (i) the provisions of Section 8.04(c) shall apply with
regard to each Member’s obligation to fund its share of the capital call and the consequences of failing to do so;
provided,
however,
(ii) to the extent that the capital call is to (A) pay for a balloon payment due in connection with a default thereunder
or upon maturity of the Construction Loan or any subsequent Loan or (B) fund principal paydown in connection with a restructuring
or to fund “gap equity” that may be required in order for the Borrower to qualify for or close a new Loan to pay off
the Construction Loan or any subsequent Loan if it were to fall in default (i.e., the Equity Gap funding obligations to refinance
the Construction Loan with a Loan are governed by Section 8.04(f) but do not apply with respect to any restructurings of any Loan
undertaken in connection with the Refinancing or subsequent refinancing of it), then with respect to any matter under subsection
(ii), only the provisions of subsections (iii) and (iv) below shall apply (not Section 8.04).
(iii) If
subsection (e)(ii) has been triggered (i.e., a payment in the nature of principal is required to prevent or cure a default under
the Construction Loan or any subsequent Loan), neither party shall be obligated under this Agreement to fund its share of the called
capital. Rather, the parties shall instead undertake good faith negotiations to arrive at a commercially reasonable solution but
if they are unable to do so within fourteen (14) days, then, except as provided in subsection (iv) below, either party may engage
the Lender in negotiations on behalf of the Borrower to address the default. If despite good faith efforts no commercially reasonable
and mutually satisfactory resolution has been reached within thirty (30) days, then either party may cause the Borrower to sell
the Project (in which case they shall jointly control the sale process) or exercise the buy-sell contained in Section 12.06 below
(notwithstanding the “lockout” period therein).
(iv) Notwithstanding
the provisions of subsection (iii) above, if the reason for the default was due to the actions solely of one Member or its Affiliates,
unless such action is attributable to Force Majeure, in which event the foregoing shall not apply (and the other Member and its
Affiliates are not otherwise in default under this Agreement or responsible for the default under any Loan Guaranty), then subsection
(iii) above shall not apply and the other Member shall have the right, notwithstanding any other provision in this Agreement, to
(1) control the negotiations with the Lender to restructure and/or modify the Construction Loan or any subsequent Loan on commercially
reasonable terms, (2) obtain commercially reasonable supplemental loans secured by assets of the Borrower to cure the default,
(3) seek to refinance the Construction Loan or any subsequent Loan on commercially reasonable terms, (4) cause the Borrower to
sell the Project (and it shall control the sale process), or (5) exercise the buy-sell contained in Section 12.06 below (notwithstanding
the “lockout” period therein).
(f) In
connection with the Construction Loan to be obtained by the BR Member and the TriBridge Member pursuant to Section 6.05(a) of this
Agreement, the Members have agreed to make certain adjustments, as more particularly set forth in Schedule 6.05(f), to the way
in which distributions of Net Cash Flow and Capital Proceeds are to be made, and to the Conversion Split (as defined in Section
6.07 below), in the event the Construction Loan is a Recourse Construction Loan.
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6.06
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Default
. If any Member or its Affiliate commits
any Default Action (as defined below), then, provided the other Member and/or its Affiliate is not in material breach or default
hereunder and has not otherwise committed a Default Action, in addition to any other legal or equitable remedy available to the
non-breaching Member (or pursuant to the terms of this Agreement, including under Section 5.09), the non-breaching Member shall
be entitled to recover its actual damages, including reasonable attorney’s fees (but specifically excluding special, consequential,
punitive or exemplary damages) sustained by the non-breaching Member as a result of such Default Action. The following actions
are collectively referred to as “
Default Actions
”: (1) Bankruptcy of a Member; (2) fraud, willful misconduct
or gross negligence on the part of a Member or its Affiliates in connection with the business or affairs of the Company or Borrower;
(3) willful misappropriation of Company or Borrower funds; (4) material breach or violation of this Agreement (but expressly excluding
a Member’s failure to make an Additional Capital Contribution); (5) the transfer of a Membership Interest (or, in the case
of the TriBridge Member, the occurrence of a TriBridge Change of Control) in violation of this Agreement; (6) any action or omission
that, to the extent caused solely by a Member’s (or its Affiliate’s) actions or omissions, results in Lender asserting
liability under a Non-Recourse Carveout Guaranty (but expressly excluding therefrom, any liquidity based Non-Recourse Carveout
Guaranty provision); (7) withdrawal of a Member in violation of this Agreement; (8) solely with respect to the TriBridge Member,
the Bankruptcy of any Affiliate of the TriBridge Member that triggers a default under the terms of the Construction Loan or any
subsequent Loan or any Loan Guaranty; and (9) solely with respect to the BR Member, the Bankruptcy of Bluerock Residential Growth
REIT, Inc. following the date that it first acquires a direct or indirect common interest in the Company or the Project;
provided,
that,
the non-defaulting Member shall provide notice to the defaulting Member of the occurrence of any Default Action under
clauses (1), (4), (5), (6), (7), (8) or (9) and the defaulting Member shall have thirty (30) days from the receipt of such notice
to cure such Default Action;
provided, however,
that if more than thirty (30) days is reasonably required to cure such
Default Action and if the defaulting Member has commenced to cure within the original thirty (30) day cure period and diligently
continues to cure such default, then the defaulting Member shall receive such additional time as is reasonably necessary to cure
the Default Action (not to exceed an additional thirty (30) days). For any Default Action under clause (3) caused by an employee
of the Member or its Affiliate, no Default Action shall be deemed to exist if the Member (a) terminates the employment of said
employee; and (b) restores the misappropriated funds immediately (i.e. within five (5) business days notice of the same)
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6.07
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Conversion of Project Ownership
.
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(a)
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Not earlier than the first to occur of: (i) a sale of
the Project, (ii) a Refinancing or (iii) Project Completion, nor later than the date which is two years after Project Completion,
TriBridge Member may elect to cause the Company to initiate the tenancy in common-related adjustments and processes set forth
in this Section 6.07 (the "
Conversion
") by sending written notice to BR Member stating TriBridge Member’s
intention to effect the Conversion (the “
Notice
”). Once triggered by a Notice given by TriBridge Member, the
Members shall each promptly obtain two brokers’ opinions of value with respect to the Project (each, a “
BOV
”),
and the average of such BOVs (using the stabilized valuation for the Project assuming a ninety-five percent (95%) occupancy rather
than an "as-is" or existing valuation) shall constitute the Project’s “
Determined Value
.” However,
in the event that the BOVs differ by more than five percent (5%), BR Member and TriBridge Member shall cooperate in good faith
to obtain an appraisal of the Project, using the same stabilized value methodology described above, from a duly licensed national
firm with at least ten (10) years of appraisal experience in multi-family properties in the region where the Project is located,
which appraisal shall be obtained as soon as possible, and the valuation established in that appraisal shall thereafter constitute
the Determined Value. Within thirty (30) days of the Notice, and so long as the Determined Value is sufficient under the provisions
set forth in this paragraph below, the Company shall, at TriBridge Member’s sole cost and expense, cause the conversion
of the equity ownership interests in the Company into tenancy in common interests in the Project, through necessary transactions
(and to the extent applicable, subject to Schedule 6.05(f)), including (i) redemption of TriBridge Member’s membership interests
in the Company and causing the Borrower, in consideration therefor, to convey a twenty-five percent (25%) tenant in common ownership
interest to a newly formed entity wholly-owned by TriBridge Member (the “
TriBridge Co-Tenant
”), and (ii) causing
the Borrower (at that point wholly owned and controlled by BR Member through the Company, the “
BR Co-Tenant
”)
to enter into with the TriBridge Co-Tenant a commercially reasonable form of Tenant in Common Agreement (“
TIC Agreement
”),
to result in (iii) the TriBridge Co-Tenant and the BR Co-Tenant owning, respectively, twenty-five percent (25%) and seventy-five
percent (75%) tenant in common interests in the Project (the “
Conversion Split
”). In order to effectuate a
Conversion, the Determined Value of the Project as of the date of Conversion must be sufficient such that, if the Project were
hypothetically liquidated at the Determined Value, a seventy-five percent (75%) share of the distributions if allocated to the
BR Member would at least fully satisfy its share of distributions under subsections (a), (b) and (c) of Section 9.01 if made at
the same percentage (i.e., if a seventy-five percent (75%) pro rata share of the distributions were applied through the waterfall
in Section 9.01, the BR Member under Section 9.01 would have received a full IRR on all of its Priority Capital Contributions,
Shortfall Fundings, Additional Capital Contributions and Initial Capital Contributions) (a “
Conversion Hurdle Return
”).
In all instances the Determined Value, for purposes of running projected distributions through Section 9.01, shall be reduced
by one and one-half percent (1.5%) to account for deemed transaction costs.
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(b)
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In the event of a Refinancing prior to a Conversion,
TriBridge Member may elect to effect the Conversion as set forth in Section 6.07(a) if (i) based on the Refinancing lender’s
appraisal of the Project supporting the Refinancing the Conversion Hurdle Return would be met based on a hypothetical sale at
that price (less one and one-half percent (1.5%) for deemed transaction costs) and (ii) the Refinancing lender approves the tenancy
in common structure agreed to by TriBridge Member and BR Member. If the Conversion is effectuated in connection with a Refinancing,
any distributions of Refinancing loan proceeds following the payoff of the Construction Loan shall be distributed in accordance
with Section 9.02. TriBridge Member shall solely bear the costs and expenses associated with the Conversion. If the Refinancing
lender’s appraised value is not sufficient to meet the Conversion Hurdle Return or if the Refinancing lender disapproves
of the tenancy in common structure, the Refinancing may proceed in accordance with Section 6.05(d).
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(c)
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In connection with any sale or other disposition of the
Project prior to a Conversion (a “
Disposition
”), if the net proceeds would be at least sufficient to allow
BR Member to realize the Conversion Hurdle Return upon such Disposition, then TriBridge Member may elect to effectuate a Conversion
as set forth in Section 6.07(a). If the Conversion is effectuated in connection with a Disposition, the Conversion Split shall
apply for all distributions and all customary closing costs, but TriBridge Member shall solely bear the costs and expenses associated
with the Conversion.
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(d)
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In lieu of Conversion, or at any time after TriBridge
Member has been removed as Management Company for any reason other than a For Cause Termination, the parties agree to discuss
in good faith the possibility of permitting, at TriBridge Member’s election, the redemption of TriBridge from the Company
in exchange for common units of limited partnership interest in Bluerock Residential Holdings, L.P. equal to the extrapolated
value of TriBridge Co-Tenant’s interest in the Project based on the Determined Value.
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(e)
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In connection with any Conversion pursuant to this Section
6.07:
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i.
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Although the intention of effectuating a Conversion is
to divide the Project as a tenancy in common where BR Co-Tenant owns a seventy-five percent (75%) tenant in common interest in
the Project and TriBridge Co-Tenant owns a twenty-five percent (25%) tenant in common interest in the Project, the Members acknowledge
that the Brown Co-Tenants may own a separate interest in the Project following Conversion, which will reduce TriBridge Co-Tenant’s
TIC Interest commensurately, and as such will be permitted by the Members if it does not adversely affect the economics under
Section 6.07(a), (b) or (c) and does not adversely affect the Company’s or Borrower’s ability to close a Refinancing.
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ii.
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Any TriBridge Co-Tenant shall be managed by a newly formed
entity comprised of BR Member or its Affiliate (the "
BR Co-Tenant Manager
”), which shall afford the Bluerock
Co-Tenant Manager the right to make decisions on behalf of the TriBridge Co-Tenant to the extent that BR Member would have decision
making authority within the Company absent the Conversion (for avoidance of doubt, after the Conversion, none of TriBridge Member
and/or TriBridge Co-Tenants shall have any rights under Sections 7.07 or 12.06, or in connection with the TIC Agreement or any
Brown TIC Management Agreement);
provided, however,
TriBridge Member shall retain the right to determine whether the TriBridge
Co-Tenant wishes to consummate a tax-deferred exchange under Section 1031 of the Internal Revenue Code following any Disposition
of the Project; and the BR Co-Tenant Manager shall be automatically removed from the TriBridge Co-Tenant upon any such Disposition.
BR Co-Tenant Manager shall be fully indemnified and held harmless by TriBridge Co-Tenant for any losses or damages incurred by
BR Co-Tenant Manager arising from its role as manager of TriBridge Co-Tenant, except for such losses or damages arising from its
own fraud, bad faith or gross negligence resulting in material adverse harm to the TriBridge Co-Tenant or its members.
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iii.
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Any rights and all obligations of any of the Brown Co-Tenants
shall be subject to a form of tenancy in common management agreement which vests in favor of the BR Member (or an Affiliate thereof)
the ability to fully “control” the Project (notwithstanding any TIC Agreement), which control may manifest through
the creation of a manager entity, wholly owned by the Company, which shall be appointed a manager of the Brown-Co-Tenants for
the duration of time that the Brown Co-Tenants own the Project, for purposes of exerting such control. If the parties (including
the Brown Co-Tenants) are unable to mutually agree upon a form of tenancy in common management agreement, then, notwithstanding
any contrary provision of this Agreement, the Conversion may not occur.
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ARTICLE
7.
MEETINGS OF MEMBERS
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7.01
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Meetings
. Meetings of the Members, for any purpose
or purposes, may be called by the Managers or any Member.
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7.02
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Place of Meetings
. The Persons calling any meeting
may designate any place in Atlanta, Georgia as the place of meeting for any meeting of the Members. If no designation is made,
the place of meeting shall be the principal executive office of the Company in the State of Georgia.
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7.03
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Notice of Meetings
. Written notice stating the
place, day and hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered not less than
two (2) nor more than five (5) days before the date of the meeting, either personally or by mail, by or at the direction of the
Managers or Person calling the meeting, to each Member entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered two (2) calendar days after being deposited in the United States mail, addressed to the Member at its address
as it appears on the books of the Company, with postage thereon prepaid. Notice provided in accordance with this Section shall
be effective notwithstanding anything in the Act to the contrary.
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7.04
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Meeting of all Members
. If all of the Members
shall meet at any time and place, either within or outside of the State of Georgia, and consent to the holding of a meeting at
such time and place, such meeting shall be valid without call or notice, and at such meeting any lawful action may be taken.
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7.05
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Record Date
. For the purpose of determining Members
entitled to notice of or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment
of any distribution, or in order to make a determination of Members for any other purpose, the date on which notice of the meeting
is mailed or the date on which such distribution is made, as the case may be, shall be the record date for such determination
of Members unless the Managers shall otherwise specify another record date. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this Section, such determination shall apply to any adjournment thereof.
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7.06
|
Quorum
. All of the Members, represented in person
or by proxy, shall constitute a quorum at any meeting of Members.
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7.07
|
Manner of Acting
. The affirmative vote of the
TriBridge Member and the BR Member shall be required to approve these actions in their reasonable discretion (each, a “
Major
Decision
”):
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(a) do
any act (x) in contravention of the Company’s Certificate of Formation or this Operating Agreement or the Borrower’s
organizational documents, the Act or any other law, rule, regulation or requirement of any governmental authority or agency, or
(y) to amend the Company’s Certificate of Formation, Operating Agreement or the Borrower’s organizational documents;
(b) do
any act not specifically authorized herein which would make it impossible or impractical to own the Project or to otherwise carry
on the ordinary business of the Company or the Borrower;
(c) possess
any property of the Company or assign the rights of the Company in any specific property of the Company for other than a Company
purpose;
(d) change
or reorganize the Company or Borrower into any other legal form or to cause any merger of the Company or Borrower with another
entity;
(e) commence,
or respond to, or settle any litigation involving the Company, the Borrower or the Project in amounts in excess of $25,000;
(f) consent
to, authorize or effect the commencement of proceeding for a Company or Borrower Bankruptcy;
(g) permit
or cause the Company or the Borrower to purchase or invest in real property
other than
acquiring the Property in accordance
with the Contribution Agreement. With respect to the Property, the Members agree that notwithstanding anything herein to the contrary
the Management Committee shall have the sole right on behalf of the Company to cause the Company and Borrower to close under the
Contribution Agreement and/or to enforce the Company’s and Borrower’s remedies thereunder if either the TriBridge Member
or Current Owner fails or refuses to close thereunder or if the conditions precedent to the Company’s and Borrower’s
obligation to close set forth therein (collectively, the “Closing Conditions”) are not timely satisfied;
provided
however,
it shall be a Major Decision to determine on behalf of Borrower and the Company
not
to close on the Property
under the Contribution Agreement if all Closing Conditions have been satisfied and the TriBridge Member and Current Owner are otherwise
ready, willing and able to do so thereunder. The terms of the Cost Sharing Agreement shall be applicable in the event of any termination
of the Contribution Agreement.
(h) make
loans using funds of the Company or Borrower;
(i) except
as expressly provided in Section 12.02, the admission of additional Members to the Company or to Borrower;
(j) enter
into or cause the Borrower to enter into any transaction with a Member and/or any Affiliate thereof, except as expressly authorized
herein;
(k) in
the event of a fire, other casualty or partial condemnation of the Project, a determination whether to construct or reconstruct
improvements located in the Project, where such construction or reconstruction would cost in excess of One Hundred Thousand Dollars
($100,000) and is not required under the terms and provisions of any Loan or lease affecting the damaged or condemned portion of
the Project in question;
(l) make
any expenditure or incur any obligation that varies from the Total Project Budget or Operating Budget, as applicable (except as
otherwise set forth in clauses (p), (q) and (r) below));
(m) take
any action which would cause a default under the Construction Loan or any subsequent Loan or that would otherwise reasonably be
expected to expose the TriBridge Member, BR Member or any Affiliate thereof to liability under any Loan Guaranty;
(n) approve
any Operating Budget or make any modifications thereto (except as otherwise set forth in clauses (p), (q) and (r) below);
(o) changes
to the Company’s or Borrower’s business plan, leasing strategy, rental rates (subject to approved use of daily pricing
software), etc.;
(p)
create
or incur any debt or enter into any one or more agreements or contractual commitments, on behalf of the Project exceeding in the
aggregate for any one year, $50,000 (other than such items which are a part of an Approved Budget or as set out in clauses (q)
and (r) below). For avoidance of doubt, this Section shall not apply to Refinancings or matters arising under Section 6.05(e)(iii)
or (iv), or the entering into of subcontractor agreements governed in the manner set forth in clauses (q) and (r) below).
(q) any
revisions, modifications to, or deviations from the Estimated Budget and/or the Total Project Budget;
provided, however,
TriBridge Member will have the right, without BR Member’s consent, to deviate from the Total Project Budget up to $350,000.00
in the aggregate with respect to changes to the Plans (as defined in clause (r) below) that are not Material Changes (as defined
in clause (r) below);
(r) any
material modification or further material development of the preliminary drawings for the Project, or the final bid set of construction
drawings and specifications (collectively, such approved plans, drawings and specifications, the “
Plans
”), and
any Material Changes (defined below) to the final Plans. “
Material Change
” to the final Plans will mean any
individual change to the Plans which results in the Company or Borrower incurring costs in excess of $75,000 per occurrence (up
to $350,000.00 in the aggregate). The TriBridge Member shall have the right to make changes to the Plans which are not Material
Changes without the consent of the BR Member. Should TriBridge Member present any Material Change to BR Member for approval as
required hereunder, BR Member shall either approve or disapprove such Material Change to the Plans within ten (10) business days
of the receipt of all information requested by BR Member in connection with such request for approval. Any disapproval by BR Member
will include a statement of BR Member’s reasons for such disapproval. If BR Member fails to respond within such ten (10)
business day period, such request will be deemed approved;
(s) select
the general contractor or any co-developer for the Project, the Members agreeing to approve Cambridge Swinerton Builders, Inc.
as the general contractor of the Project;
(t) approve
the GMP Contract for the completion of the Project and any other material agreement related thereto;
provided, that,
for
avoidance of doubt, BR Member’s approval will not be required with respect to the selection of subcontractors or the subcontracts
entered into with such subcontractors as long as such subcontracts are in compliance with the Total Project Budget;
(u) except
in connection with a Refinancing (governed by Section 6.05(d)), or an exercise of rights under Section 6.05(e)(iii) or (iv), any
sale of the Project, refinancing or restructuring of a Loan or any other capital transaction involving the Project or the Company;
(v) determination
of Reserves; and
(w) except
as set forth in Section 6.05(e) or Section 8.04, issuing any capital call.
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7.08
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Major Decisions From and After Conversion
. Notwithstanding
Section 7.07, from and after a Conversion, BR Member shall have the right to make all Major Decisions without the approval or
consent of TriBridge Member and the buy/sell provisions set forth in Section 12.06 shall cease to be effective and enforceable;
provided, however, notwithstanding the foregoing, the rights of the TriBridge Member pursuant to Section 6.05(e) shall not, by
virtue of this Section 7.08, be affected following a Conversion.
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7.09
|
Enforcement of Rights under Development Agreement
and Management Agreement
. Notwithstanding any other provision of this Agreement, including without limitation Section 7.07,
BR Member shall have the sole right to act on behalf of the Company or Borrower (either as Manager or through the Management Committee)
with respect to the enforcement of rights by the Company or Borrower under the Development Agreement and Management Agreement.
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7.010
|
Proxies
. A Member may vote in person or by proxy
executed in writing by the Member or by a duly authorized attorney-in-fact. Such written proxy shall be delivered to the Company.
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7.011
|
Action by Members Without a Meeting
. Action required
or permitted to be taken by the Members at a meeting may be taken without a meeting if the action is evidenced by one or more
written consents describing the action taken, signed by all of the Members. Action take under this Section is effective when the
Members required to approve such action have signed the consent, unless the consent specifies a different effective date. The
record date for determining Members entitled to take action without a meeting shall be the date the first Member signs a written
consent.
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7.012
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Waiver of Notice
. Pursuant to Section 18-302(c)
of the Act, when any notice is required to be given to any Member, a waiver thereof in writing signed by the person entitled to
such notice, whether before, at, or after the time stated therein, shall be equivalent to the giving of such notice.
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7.013
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Meeting by Telephone; Action by Consent
. Pursuant
to Section 18-302(d) of the Act, Members may also meet by conference telephone call if all Members can hear one another on such
call and the requisite notice is given or waived.
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7.014
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Notwithstanding any contrary or inconsistent provision
in this Agreement, in the event that Final Concurrent Site Plan Review approval by the City of Raleigh, North Carolina with regard
to Lots 1 through 6 of the Villages of Lake Boone Trail, as shown in Map Book 2015, Page 2011 of the records of Wake County, North
Carolina (the “Final Approval”) is not obtained by March 31, 2016, or if it becomes definitively apparent prior to
that date that the Final Approval will not be forthcoming in the form requested (in either case, a “Failure to Obtain Final
Approval”), then, only to the extent Timely Approval Right Notice (as defined below) has been issued (a) the Management
Committee shall have the right on behalf of the Company to cause the Company and Borrower to sell the Project on commercially
reasonable terms; provided however, if the Management Committee determines to do so, the Company and Borrower shall use commercially
reasonable efforts to seek to sell the Project for its maximum available fair market value or (b) the BR Member shall have the
right to initiate (and it solely shall be entitled to initiate) the Buy/Sell provisions set forth in Section 12.06 (said rights
collectively referred to herein as the "Failure to Obtain Final Approval Rights"). TriBridge Member shall be given written
notice of any intention to exercise any such Failure to Obtain Final Approval Right on or before April 5, 2015 ("Timely Approval
Right Notice"), in which case, if Timely Approval Right Notice is timely given, the right to exercise any Failure to Obtain
Final Approval Right may be extinguished by the TriBridge Member (a "TBR Extinguishment") by the TriBridge Member repaying
to the BR Member on or before April 20, 2016 cash in an amount equal to the BR Member's unreturned Capital Contribution and accrued
returns thereon. For the avoidance of doubt, the TBR Extinguishment right can only be triggered by the Management Committee or
the BR Member giving the Timely Approval Right Notice, and is not an independent buyout right in favor of the TriBridge Member.
In the event the TriBridge Member does not timely exercise and perform its TBR Extinguishment right, and the Management Committee
goes forward with a sale of the Project, then, upon such subsequent sale, the Company shall distribute the net proceeds as provided
in Section 9.01 above.
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ARTICLE
8.
CONTRIBUTIONS TO THE COMPANY AND CAPITAL
ACCOUNTS
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8.01
|
Members’ Initial Capital Contributions
.
Not later than the closing of the Contribution Agreement, each Member shall contribute such amount of cash or property as will
constitute an allocation under the Capital Percentages to the BR Member and to the TriBridge Member, respectively, of the required
equity to close under the Contribution Agreement and fund the development of the Project as governed by the Estimated Budget or
Total Project Budget, as applicable, and at such time the Members shall insert the applicable figures in
Exhibit “A”
hereto (including the contribution by the BR Member and the TriBridge Member for the Acquisition Fee and/or by the BR Member
for the Financing Fee, as applicable) (the “
Initial Capital Contributions
”). The Members acknowledge and agree
that, for purposes of all IRR calculations on all Initial Capital Contributions, the date of initial funding shall be deemed to
be September 15, 2015. The Members further acknowledge and agree that all costs related to the pursuit of the Project under the
Cost-Sharing Agreement previously incurred by a Member or its Affiliate either (i) shall be deemed an Initial Capital Contribution
of such Member and reduce the amount otherwise to be contributed by it to the Company or (ii) shall be refunded to such Member.
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The Members
acknowledge that, simultaneously with the closing under the Contribution Agreement, the TriBridge Member will be making its Initial
Capital Contribution to the Company as a contribution of 100% of the fee simple interest in the Property, subject to and encumbered
only by the indebtedness set forth on
Exhibit D
hereto (the "
Property Indebtedness
"), with a value (net
of such Property Indebtedness) of $1,200,000.00 (the "
TBR Net Initial Capital Value
"), and that the TriBridge
Member shall receive a credit in the amount of the TBR Net Initial Capital Value towards its Initial Capital Contribution upon
the contribution of the Property to the Company as provided under the Contribution Agreement. The Members acknowledge that 100%
of the agreed value of the Initial Capital Contribution made by the TriBridge Member is attributable to the Property as and when
contributed. The Members acknowledge and agree that, simultaneously with the closing under the Contribution Agreement (including
the TriBridge Member causing the Current Owner to contribute ownership of the Property to the TriBridge Member and then the TriBridge
Member’s immediate contribution of ownership of the Property to Borrower), a portion of the BR Member's Initial Capital Contribution
in the amount of the Property Indebtedness shall be distributed by the Company to Borrower, whereupon the Borrower shall repay
the Property Indebtedness as a condition of the Company’s and Borrower's acquisition of the Property under the Contribution
Agreement; provided, however, to the extent Current Owner fails to pay such amounts (i.e. other than the Property Indebtedness)
required to payoff and discharge the Deed of Trust (as defined in
Exhibit D
hereto) at the Disbursement Closing (as defined
in the Contribution Agreement), then Borrower shall have no obligation to repay the Property Indebtedness.
The Members acknowledge that
this Agreement is being executed prior to the closing of the Contribution Agreement. Accordingly, the amounts of each Member's
Initial Capital Contribution are subject to finalization of the Total Project Budget, the amount of the Construction Loan, and
all pre-development costs and costs to close under the Contribution Agreement; it in all events being the intention of the Members
that (excluding the impact of BR Member solely funding the equity required to pay the Financing Fee, if applicable) they shall
economically allocate as their respective Initial Capital Contributions the amount of required equity based on their respective
Capital Percentages, with respect to which the BR Member acknowledges the TriBridge Member may meet its obligation by contributing
the Property and adjusting the amount paid on the Property Indebtedness so as to constitute a true 10% contribution of value. For
example, should the amount of capital required from the TriBridge Member pursuant to this Section 8.01 change between the date
of the execution of this Agreement and the finalization of the amounts noted above, then the Property Indebtedness shall be adjusted
to result in either a greater or lesser amount (as applicable) of TBR Net Initial Capital Value, which amount shall correspond
to the amount of capital required of the TriBridge Member contemplated in this Section 8.01; provided, however, that under no circumstances
shall the sum of the Property Indebtedness and the TBR Net Initial Capital Value exceed $5,469,200.00 without the sole approval
of the BR Member.
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8.02
|
Additional Contributions
. Except as set forth
in Section 6.05(e) or this Article 8, no Member shall be required to make any Capital Contributions to the Company.
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8.03
|
Loans to Company
. To the extent approved by the
Managers and Members pursuant to Section 7.07, any Member may make a secured or unsecured loan to the Company or the Borrower.
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8.04
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Additional Capital Contributions
.
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(a)
Permitted
Overruns and Soft Cost Overruns
. Except as separately addressed in Section 8.04(b) for Hard Cost Overruns, in the event the
Borrower is reasonably expected to incur a Permitted Overrun or Soft Cost Overrun not caused by a Default Action of the TriBridge
Member, the BR Member or their respective Affiliates, and the incurrence of such cost is expected to result in the Borrower or
the Company having an imminent cash deficit, and such funds are not obtained pursuant to
Section 8.03
above, the TriBridge
Member as Manager shall in the first instance determine the amount of required funds (but if it fails to timely do so, the BR Member
as Manager may do so), and shall notify the Management Committee of same and recommend that the Management Committee make a request
for a capital call for such funds pursuant to this
Section 8.04(a)
. Upon the receipt of the recommendation, the Management
Committee shall evaluate such recommendation in good faith and shall determine whether such capital call is reasonably required
under the circumstances. In the event that the Management Committee determines that it is appropriate to make such capital call
the Management Committee shall so notify the Members, and the TriBridge Member and the BR Member shall have fifteen (15) days to
make Capital Contributions in the amount of: (1) in the instance of additional capital for a Permitted Overrun, of its pro-rata
share (i.e. based upon its Capital Percentage) of the necessary funds; and (2) in the instance of additional capital for a Soft
Cost Overrun, fifty percent (50%) by BR Member and fifty percent (50%) by TriBridge Member (each, an “
Additional Capital
Contribution
”). Notwithstanding the foregoing, should the Management Committee fail to reasonably and timely determine
that a call for capital is required pursuant to this Section 8.04(a), the TriBridge Member, as Manager may, in the place of the
Management Committee, make the call for capital to the Members; and further notwithstanding the foregoing, either Member may make
the call for capital contemplated in this Section 8.04(a) if doing so pursuant to Section 6.05(e). All such Additional Capital
Contributions shall be entitled to receive an Additional Capital Contribution Priority Return.
Notwithstanding the foregoing:
(i) the TriBridge Member must on its own account solely fund into the Company any capital call attributable to any Permitted Overrun
or Soft Cost Overrun caused by, or any other additional capital required by the Company or the Borrower because of, a Default Action
of the TriBridge Member or its Affiliates or a default by TriBridge Member or one of its Affiliates under the Development Agreement
or Management Agreement
(a “
Mandatory TriBridge Cost Overrun Funding Obligation
”)
(to be paid back as provided in Section 9.01(d) or 9.02(d) below, as applicable, but without any interest or return thereon); and
(ii) the BR Member must on its own account solely fund into the Company any capital call attributable to any Permitted Overrun
or Soft Cost Overrun caused by, or any other additional capital required by the Company or the Borrower because of, a Default Action
of the BR Member or its Affiliates (a “
Mandatory BR Cost Overrun Funding Obligation
” and, generically with the
Mandatory TriBridge Cost Overrun Funding Obligation, the “
Mandatory Cost Overrun Funding Obligation
”) (to be
paid back as provided in Section 9.01(d) and 9.02(d) below, but without any interest or return thereon).
(b)
Hard
Cost Overruns
. In the event the Borrower is reasonably expected to incur a Hard Cost Overrun (following application of any
available contingency reserve and cost savings to offset the Hard Cost Overrun as permitted by the Construction Lender), the TriBridge
Member as Manager shall determine the amount of required funds to satisfy the Hard Cost Overrun, inclusive of Hard Cost Overrun
Exceptions (but if it does not reasonably or timely act, BR Member as Manager may do so), and shall promptly notify the Management
Committee of same and recommend that the Management Committee make a capital call for such funds pursuant to this Section 8.04(b).
Upon the receipt of the recommendation with respect to any such Hard Cost Overrun, the Management Committee shall evaluate such
recommendation in good faith and shall determine whether such capital call is reasonably required under the circumstances. In the
event that the Management Committee elects to make such capital call, it shall so notify the Members, and (i) TriBridge Member
shall be required to fund one hundred percent (100%) of the Hard Cost Overrun, exclusive of any Hard Cost Overrun Exceptions, as
a Mandatory TriBridge Cost Overrun Funding Obligation, within fifteen (15) days of notification, and (ii) TriBridge Member and
BR Member shall have fifteen (15) days from notification to make an Additional Capital Contribution equal to its pro-rata share
(i.e. based upon its Capital Percentage) of the necessary funds to satisfy any Hard Cost Overrun Exceptions. All Additional Capital
Contributions pursuant to clause (ii) in the foregoing sentence shall be entitled to receive an Additional Capital Contribution
Priority Return. The Mandatory TriBridge Cost Overrun Funding Obligation shall be paid back as provided in Section 9.01(d) and
9.02(d) below, but without any interest or return thereon.
(c)
Failure
to Make Additional Capital Contributions
. In the event a Member fails to make all of its Additional Capital Contribution (“
Defaulting
Member
”) as required in Section 6.05(e)(i), Section 8.04(a), Section 8.04(b), Section 8.04(e) or Section 8.04(f) on the
due date (the “
Contribution Default Date
”), the following shall apply (noting, however, that any failure to
meet any required Mandatory Cost Overrun Funding Obligation is separately addressed under Section 8.04(d) below):
(i) the
Defaulting Member’s voting rights and rights to participate in the management of the business of the Company (including but
not limited to as a Manager for Management Committee participation, and for Major Decisions) shall automatically be suspended until
paid in full; and
(ii) the
non-Defaulting Member(s) may (but shall not be obligated to) contribute the unpaid portion of the Defaulting Member’s Additional
Capital Contribution (a “
Shortfall
”) as a shortfall funding (a “
Shortfall Funding
”). If there
is more than one non-Defaulting Member desiring to make the Shortfall Funding on behalf of the Defaulting Member to cover the Shortfall,
then such non-Defaulting Members shall be entitled to contribute the Defaulting Member’s Additional Capital Contribution
in such amounts as they may agree among each other, or, in the absence of such agreement, in proportion to their respective Capital
Percentages. Except with respect to Shortfall Fundings made pursuant to Section 8.04(d), which shall receive the Priority Contribution
Priority Return, Shortfall Funding contributions are entitled to receive the Shortfall Funding Priority Return.
(d) In
addition to any other rights available under this Agreement, if, as provided in Section 8.04(c)(ii) above, a non-Defaulting Member
contributes a Shortfall amount on behalf of a Defaulting Member solely in connection with a Mandatory Cost Overrun Funding Obligation,
then the amount so contributed shall be deemed a “
Priority Capital Contribution
” pursuant to this Section 8.04(d),
in which case the non-Defaulting Member shall be credited with Priority Capital Contributions at a 3:1 ratio for each such dollar
of Shortfall/Priority Capital Contribution so made on behalf of the Defaulting Member and shall receive a Priority Contribution
Priority Return. For example, if the TriBridge Member fails to fund its share of a Mandatory TriBridge Cost Overrun Funding Obligation,
then the BR Member shall have the right but not the obligation to fund such amount to the Company as a Priority Capital Contribution
and, to the extent that it does, shall be credited at a 3:1 ratio (meaning, for every $100,000 of Priority Capital Contribution
made by the BR Member for that purpose, the BR Member would be credited with having made $300,000 of Priority Capital Contributions).
For the sake of clarity, this Section 8.04(d) shall not apply to Additional Capital Contributions required pursuant to Sections
6.05(e)(i), 8.04(a), 8.04(b), 8.04(e) or 8.04(f), unless they otherwise constitute a Mandatory Cost Overrun Funding Obligation.
(e)
Increases
in Estimated Budget
. In the event of an increase between the Estimated Budget and the Total Project Budget, BR Member and TriBridge
Member shall each make an Additional Capital Contribution equal to its pro-rata share (i.e. based upon its Capital Percentage)
of the necessary funds to the extent such increase represents an increase over the Estimated Budget by One Million Five Hundred
Thousand Dollars ($1,500,000.00) or less, with any excess amount to be funded one hundred percent (100%) by TriBridge Member as
a Mandatory TriBridge Cost Overrun Funding Obligation. Notwithstanding the foregoing, TriBridge Member shall have the unilateral
right to adjust the amount of the Construction Loan to fund any excess beyond the Initial Capital Contributions required under
the Total Project Budget.
(f)
Construction
Loan Refinancing Deficiency
. Notwithstanding the foregoing, if in connection with any Refinancing, the amount of the Refinancing
(or to qualify for such Refinancing) is insufficient to fully pay the Minimum Refinancing Amount (any such deficiency, an "
Equity
Gap
"), then each Member shall make an Additional Capital Contribution equal to its pro-rata share (i.e. based upon its
Capital Percentage) of the Equity Gap;
provided, however,
in the event an Equity Gap exists in connection with a Refinancing
that accompanies a Conversion, BR Member shall make an Additional Capital Contribution equal to seventy-five percent (75%) of the
Equity Gap and TriBridge Member shall make an Additional Capital Contribution equal to twenty-five percent (25%) of the Equity
Gap (collectively, “
Equity Gap Contributions
”).
(g)
Cost
Savings
. With the approval of the Construction Lender, the TriBridge Member may reallocate Cost Savings within Hard Costs or
Soft Costs to other line items within either such category of the Total Project Budget (including the contingency for Hard Costs
or Soft Costs) in order to pay for Hard Cost Overruns before having to make a capital call to pay for such Hard Cost Overruns or
to pay for Soft Cost Overruns before having to make a capital call to pay for such Soft Cost Overruns. The TriBridge Member shall
provide to the BR Member, on a monthly basis, a list of any proposed Cost Savings to be reallocated to another line item of the
Total Project Budget, identifying the line item from which the Cost Savings originated and the line item to which the Cost Savings
were reallocated if approved by the Construction Lender. In the event Construction Lender approves a construction draw on the Construction
Loan to pay the aggregate Cost Savings to Borrower, then in such event TriBridge Member shall be entitled to one hundred percent
(100%) of the proceeds derived from such funding draw on the Construction Loan up to $250,000, with any excess amounts to be treated
as Capital Proceeds.
(h) The
remedies provided in Sections 6.05(e) and 8.04 with respect to any Member’s failure to make any Additional Capital Contribution
shall be the sole and exclusive remedies of the Non-Defaulting Member for such failure.
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8.05
|
Withdrawal or Reduction of Members’ Contributions
to Capital
.
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(a) A
Member shall not receive out of the Company’s property any part of such Member’s Capital Contributions until all liabilities
of the Company, except liabilities to Members on account of their Capital Contributions, have been paid or there remains property
of the Company sufficient to pay them.
(b) A
Member, irrespective of the nature of such Member’s Capital Contribution, has only the right to demand and receive cash in
return for such Capital Contribution.
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8.06
|
Maintenance of Capital Accounts
. The Company shall
establish and maintain a Capital Account for each Member and Economic Interest Owner. Each Member’s Capital Account shall
be increased by (a) the amount of any Capital Contribution contributed by the Member to the Company, (b) the fair market value
of any property, as determined by the Company and the Member by arm’s length agreement at the time of contribution (net
of liabilities assumed by the Company or subject to which the Company takes such property within the meaning of Section 752 of
the Code), and (c) the Member’s share of Profits and of any separately allocated items of income or gain (including any
gain or income allocated to the Member to reflect the difference between the book value and tax basis of assets contributed by
such Member). Each Member’s Capital Account shall be decreased by (a) the amount of any money distributed to the Member
by the Company (excluding payments received by a Member from the Company as repayment of a loan by the Company to the Member),
(b) the fair market value of any property distributed to the Member (net of liabilities of the Company assumed by the Member or
subject to which the Member takes such property within the meaning of Section 752 of the Code), and (c) the Member’s share
of Losses and of any separately allocated items of deduction or loss (including any loss or deduction allocated to the Member
to reflect the difference between the book value and tax basis of assets contributed by the Member).
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ARTICLE
9.
DISTRIBUTIONS
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9.01
|
Distributions Generally
. Subject to the applicability
of Section and Schedule 6.05(f), Distributions of Net Cash Flow and Capital Proceeds (other than from a Refinancing effectuated
in connection with a Conversion which shall be addressed in accordance with Section 9.02 below) shall be distributed and applied
by the Managers in the following order and priority:
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(a) First,
pari passu to each Member based on its Priority Contribution Priority Return until paid in full, and then pari passu to each Member
based on its Shortfall Funding Priority Return until paid in full;
(b) Next,
pari passu to each Member based on its Additional Capital Contribution Priority Return until paid in full;
(c) Next,
to the Members, pari passu, in accordance with their Capital Percentages, until such time as the Members have received an Internal
Rate of Return of nine and one-half percent (9.5%) on all Initial Capital Contributions;
(d) Next,
on a pari passu basis, to each Member who funded a Mandatory Cost Overrun Funding Obligations the amount of such Mandatory Cost
Overrun Funding Obligation, without any return thereof;
(e) Next,
eighty percent (80.0%) to the BR Member and twenty percent (20.0%) to the TriBridge Member, until such time as the BR Member has
received an Internal Rate of Return on all Initial Capital Contributions of twelve percent (12%); and
(f) Next,
seventy percent (70.0%) to the BR Member and thirty percent (30.0%) to the TriBridge Member, until such time as the BR Member has
received an Internal Rate of Return on all Initial Capital Contributions of sixteen percent (16%); and
(g) Thereafter,
fifty percent (50.0%) to BR Member and fifty percent (50.0%) to TriBridge Member.
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9.02
|
Distributions of Capital Proceeds from a Refinancing
in Connection with Conversion
. Subject to the applicability of Section and Schedule 6.05(f), Distributions of Capital
Proceeds from a Refinancing effectuated in connection with a Conversion shall be distributed and applied by the Managers in the
following order and priority:
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(a) First,
pari passu to each Co-Tenant based on its Priority Contribution Priority Return until paid in full, and then pari passu to each
Co-Tenant based on its Shortfall Funding Priority Return until paid in full;
(b) Next,
pari passu to each Co-Tenant based on its Additional Capital Contribution Priority Return until paid in full;
(c) Next,
seventy-five percent (75%) to the BR Co-Tenant and twenty-five percent (25%) to the TriBridge Co-Tenant until a nine and one-half
percent (9.5%) annualized return on the BR Co-Tenant’s Initial Capital Contribution has been paid in full;
(d) Next,
on a pari passu basis, to each Member who funded a Mandatory Cost Overrun Funding Obligations the amount of such Mandatory Cost
Overrun Funding Obligation, without any return thereof;
(e) Next,
the remainder seventy-five percent (75%) to BR Co-Tenant and twenty-five percent (25%) to the TriBridge Co-Tenant.
[The Members agree that
the TIC Agreement to be entered into in connection with a Conversion shall contain a provision substantively similar to this Section
9.02 (whereby distributions of Capital Proceeds and Net Cash Flow shall occur pursuant to this Section 9.02) and incorporate all
applicable definitions.]
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9.03
|
Limitation Upon Distributions
. No distribution
shall be made to Members if prohibited by Section 18-607 of the Act.
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9.04
|
Interest On and Return of Capital Contributions
.
No Member shall be entitled to interest on its Capital Contribution or to return of its Capital Contribution, except as otherwise
specifically provided for herein.
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ARTICLE
10.
ALLOCATIONS OF NET PROFITS AND NET
LOSSES
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10.01
|
Allocation of Profits and Losses
.
Profits
and Losses for any Fiscal Year or other period of the Company will be allocated to the Members as follows:
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(a)
Allocations
of Profits and Losses for Capital Account Purposes
. After giving effect to the special allocations set forth in Sections 10.02
and 10.03, Profits and Losses of the Company for any Fiscal Year or portion thereof shall be allocated among the Capital Accounts
of the Members in such a manner that would cause, to the extent possible, the Capital Accounts of the Members as of the end of
a Fiscal Year or portion thereof, after adjustment for all contributions and distributions during the year, and after adjustment
for the special allocations set forth in Sections 10.02 and 10.03 (including the allocations of such Members’ shares of the
“partnership minimum gain” and “partner nonrecourse debt minimum gain” (as such terms are used in Regulation
Section 1.704-2) not otherwise required to be taken into account during such period), to equal the aggregate distributions
that the Members would be entitled to receive pursuant to Section 9.01 and/or 9.02, as applicable, in each case determined
as if (i) all assets of the Company, including cash, were sold for their Gross Asset Values (which, for the avoidance of doubt,
shall not be “booked up” to fair market value for this purpose outside of an actual liquidation), (ii) all Company
liabilities, including the Company’s share of any liability of any entity treated as a partnership for U.S. federal income
tax purposes in which the Company is a partner, were satisfied in cash according to their terms (each nonrecourse liability is
limited to the book value of the assets securing such liability) and (iii) the remaining proceeds were distributed in accordance
with Section 9.01. The Managers, based on the advice of the Company’s tax advisors, shall have the authority to correct
or adjust any allocation provision hereunder as it determines to be necessary or appropriate (and not unfairly discriminatory against
any Member) for such allocations, in the aggregate, to be made in the manner provided in the first sentence of this Section 10.01.
(b)
Limitations
on Losses for Capital Account Purposes
. Notwithstanding anything in Section 10.01(a) to the contrary, the Managers will
not allocate any item of loss or deduction to a Member that would cause or increase a deficit balance in such Member’s Capital
Account (as increased by such Member’s share of “partnership minimum gain” and “partner nonrecourse debt
minimum gain”, as such terms are defined in Regulations Section 1.704-2 and applied to the Members of the Company),
and will make special allocations of the Profits or Losses of the Company among the Members as necessary to cause the allocations
under this Section 10.01 to be respected under Code Section 704(b) and Regulations Section 1.704 1(b)(1). The Managers
shall, to the extent possible and in whatever manner they deem appropriate, make subsequent curative allocations of other items
of income, gain, loss and deduction to offset any such special tax allocations.
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10.02
|
Special Allocations
. The following special allocations
shall be made in the following order:
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(a)
Minimum
Gain Chargeback
. Notwithstanding any other provision of this Article 10, if there is a net decrease in Company Minimum Gain
during any Company Fiscal Year, each Member shall be specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined
in accordance with Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined
in accordance with Section 1.704-2(f) of the Regulations. This Section 10.02(a) is intended to comply with the minimum
gain chargeback requirement in such Section of the Regulations and shall be interpreted consistently therewith.
(b)
Member
Minimum Gain Chargeback
. Notwithstanding any other provision of this Article 10, except Section 10.02(a), if there is
a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Company Fiscal Year, each Member who
has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent
years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be
so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Regulations. This Section 10.02(b) is
intended to comply with the minimum gain chargeback requirement in such Section of the Regulations and shall be interpreted
consistently therewith.
(c)
Qualified
Income Offset
. In the event any Member unexpectedly receives any adjustments, allocations, or Distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Company income and gain shall be specially allocated to each such Member
in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit
of such Member as quickly as possible, provided that an allocation pursuant to this Section 10.02(c) shall be made if and
only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in
this Article 10 have been tentatively made as if this Section 10.02(c) were not in the Agreement.
(d)
Gross
Income Allocation
. In the event any Member has a deficit Capital Account at the end of any Company Fiscal Year that is in excess
of the sum of (i) the amount such Member is obligated to restore, and (ii) the amount such Member is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), 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 10.02(d) shall be made if and only 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 10 have been tentatively made as if Section 10.02(c)
hereof and this Section 10.02(d) were not in the Agreement.
(e)
Nonrecourse
Deductions
. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members in accordance
with their respective Capital Percentages.
(f)
Member
Nonrecourse Deductions
. Any Member Nonrecourse Deductions for any fiscal year or other period shall be specially allocated
to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Regulations Section 1.704-2(i).
(g)
Section 754
Adjustment
. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b)
or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant
to such Section of the Regulations.
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10.03
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Curative Allocations
.
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(a) The
allocations set forth in Sections 10.01(b) and 10.2 (the “
Regulatory Allocations
”) are intended to comply with
certain requirements of the Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss
or deduction pursuant to this Section 10.03. Therefore, notwithstanding any other provision of this Article 10 (other than
the Regulatory Allocations), the Managers shall make such offsetting special allocations of Company income, gain, loss or deduction
in whatever manner they determine appropriate so that, after such offsetting allocations are made, each Member’s Capital
Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations
were not part of the Agreement and all Company items were allocated pursuant to Section 10.01.
(b) The
Managers shall have reasonable discretion, with respect to each Company Fiscal Year, to (i) apply the provisions of Section 10.03(a)
hereof in whatever manner is likely to minimize the economic distortions that might otherwise result from the Regulatory Allocations,
and (ii) divide all allocations pursuant to Section 10.03(a) hereof among the Members in a manner that is likely to minimize
such economic distortions.
(a) Except
as set forth in this Section 10.04, allocations for income tax purposes of items of income, gain, loss, deduction, and credits,
and basis therefor, shall be made in the same manner as allocations for book purposes set forth in Sections 10.01, 10.02 and 10.03
hereof. In applying this Section 10.04, each item of income, gain, expense and loss for a period not specially allocated shall
be allocated in the same proportions as the allocation of Profits and Losses for such period.
(b) In
the event of a contribution of property other than cash to the Company, income, gain, loss and deduction with respect to such contributed
property shall be shared among the Members for tax purposes so as to take account of the variation between the basis of the property
to the Company and its fair market value at the time of contribution in accordance with Code Section 704(c) and the Regulations
thereunder.
(c) In
the event the book value of any Company asset is adjusted to equal its fair market value in accordance with Regulations Sections
1.704-1(b)(2)(iv)(d) and 1.704-1(b)(2)(iv)(f), subsequent allocations of income, gain, loss and deduction with respect to such
asset shall take into account any variation between the adjusted basis of such asset for federal income tax purposes and its fair
market value pursuant to Code Section 704(c) and the Regulations thereunder.
(d) In
accordance with Sections 704(b) and 704(c) of the Code and applicable Treasury Regulations, including Treasury Regulations Section 1.704-1(b)(4)(i),
items of income, gain, deduction and loss with respect to any property that is properly reflected on the books of the Company at
a book value that differs from the adjusted tax basis of such property within the meaning of the Regulation 1.704-1(b)(2)(iv)(g)(1)
(“
Book Property
”) (and, if necessary, any other property of the Company) shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the adjusted basis of the Book Property to the Company
for federal income tax purposes and its book value.
(e) To
the extent of any recapture income resulting from the sale or other taxable disposition of assets of the Company, the amount of
any gain from such disposition allocated to a Member (or a successor in interest) for federal income tax purposes pursuant to the
above provisions shall be deemed to be recapture income to the extent that such Member has been allocated or has claimed any deduction
directly or indirectly giving rise to the treatment of such gain as recapture income.
(f) The
items of income, gain, deduction and loss for tax purposes allocated to the Members pursuant to this Section 10.04 shall not
be reflected in the Members’ Capital Accounts. Any elections or other decisions relating to such allocations shall be made
by the Managers in any manner that reasonably reflects the purpose and intent of this Agreement and is consistent with the economic
arrangement among the Members.
(g) Pursuant
to Treasury Regulations Section 1.752-3(a)(3), the Members hereby agree to allocate excess nonrecourse liabilities of the
Company in accordance with their respective Capital Percentages.
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10.05
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Varying Interest in Company
. Allocations to any
Member whose Membership Interest changes during a Company Fiscal Year or to any Member who is a Member for less than a full Company
Fiscal Year, whether by reason of the admission of a Member, the withdrawal of a Member, a non-pro rata contribution of capital
to the Company or any other event described in Section 706(d)(1) of the Code and the Regulations issued thereunder, shall
be made in accordance with Section 706(d) of the Code and the Regulations promulgated thereunder to take into account the
varying Interests of the Members in the Company during the Company Fiscal Year.
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ARTICLE
11.
BOOKS AND RECORDS
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11.01
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Accounting Period
. The Company’s accounting
period shall be the calendar year.
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11.02
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Records
. Proper and complete records and books
of accounts shall be kept or shall be caused to be kept by the Managers in which shall be entered fully and accurately all transactions
and other matters relating to the Company’s business in such detail and completeness as is customary and usual for businesses
of the type engaged in by the Company. The Company shall keep at its principal place of business the following records:
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(a) A
current list of the full name and last known address of each Member, Economic Interest Owner and Manager;
(b) Copies
of records to enable a Member to determine the relative voting rights, if any, of the Members;
(c) A
copy of the Certificate of Formation of the Company and all amendments thereto;
(d) Copies
of the Company’s federal, state and local income tax returns and reports, if any, for the three most recent years;
(e) Copies
of the Company’s written Operating Agreement, together with any amendments thereto;
(f) Copies
of any financial statements of the Company for the three (3) most recent years.
The
books and records shall at all times be maintained at the principal office of the Company and shall be open to the reasonable inspection
and examination of the Members, Economic Interest Owners, or their duly authorized representatives during reasonable business hours.
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11.03
|
Reports and Financial Statements
.
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(a) Within
fifteen (15) days of the end of each Fiscal Year, the TriBridge Member shall cause each Member to be furnished with the following
annual reports computed as of the last date of the Fiscal Year: (i) an unaudited balance sheet of the Company; (ii) an unaudited
statement of the Company’s profit and loss; and (iii) a statement of the Members’ Capital Accounts and changes therein
in such Fiscal Year.
(b) Within
fifteen (15) days of the end of each quarter of each Fiscal Year, the TriBridge Member shall cause to be furnished to the BR Member
such information as reasonably requested by the BR Member, and to the extent not readily available, which may be reasonably prepared
by the TriBridge Member at the expense of the Company, as is necessary for any REIT Member (whether a direct or indirect owner)
to determine its qualification as a REIT and its compliance with REIT Requirements as shall be requested by the BR Member. Further,
the TriBridge Member shall cooperate in a reasonable manner at the request of any Member, at the expense of the Company, to work
in good faith with any designated accountants or auditors of such Member or its Affiliates so that such Member or its Affiliate
is able to comply with any public reporting, attestation, certification and other requirements under the Securities Exchange Act
of 1934, as amended, applicable to such entity, and to work in good faith with the designated accountants or auditors of the Member
or any of its Affiliates in connection therewith, including for purposes of testing internal controls and procedures of such Member
or its Affiliates.
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11.04
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Tax Returns
. The BR Member shall cause the preparation
and timely filing of all tax returns required to be filed by the Company pursuant to the Code and all other tax returns deemed
necessary and required in each jurisdiction in which the Company does business and shall submit such returns to the Members for
their review, comment and approval at least ten (10) days prior to the due date or extended due date thereof and shall thereafter
cause the same to be filed in a timely manner (including extensions). No later than the due date or extended due date, the BR
Member shall deliver or cause to be delivered to each Member a copy of the tax returns for the Company and such Subsidiaries with
respect to such Fiscal Year, together with such information with respect to the Company and such Subsidiaries as shall be necessary
for the preparation by such Member of its U.S. federal and state income or other tax and information returns.
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ARTICLE
12.
TRANSFERABILITY
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12.01
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General Prohibition
. Except as provided in Sections
12.02 and 12.06 hereof, in which event no consent from any party shall be required to effectuate the transfer(s) described therein,
no Member or Economic Interest Owner may assign, convey, sell, transfer, liquidate, encumber, or in any way alienate (collectively
a “
Transfer
”), all or any part of its Interest without the prior written consent of the Members, which consent
may be given or withheld in the sole discretion of any Member;
provided, however,
that nothing contained herein shall prohibit
any transfers of direct or indirect equity interests in the TriBridge Member so long as, in the case of the TriBridge Member,
such transfers do not result in a TriBridge Change of Control
.
Any attempted Transfer of all or any portion of an Interest
without the necessary consent, or as otherwise permitted hereunder, shall be null and void and shall have no effect whatsoever.
Upon the transfer of a Membership Interest in accordance with this Article 12, the Capital Percentages of the transferring Member
and of the transferee shall be adjusted accordingly. Notwithstanding anything contained herein to the contrary, no Transfers shall
be permitted that would violate the terms of any Loan documents.
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12.02
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Affiliate Transfers
. Notwithstanding anything
to the contrary contained in this Agreement, the following Transfers shall not require the approval set forth in Section 12.01,
to the extent otherwise permissible under the Construction Loan or any subsequent Loan:
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(a) Any
Transfer by a BR Member or a Bluerock Transferee of up to one hundred percent (100%) of its Interest to any Affiliate of Bluerock
Real Estate, L.L.C. to the extent such transferee has sufficient available capital to perform all obligations of the transferring
BR Member which exist or which may arise under this Agreement, including but not limited to (A) Bluerock Residential Growth REIT,
Inc. (“
BR REIT
”) or any Person that is directly or indirectly owned by BR REIT; (B) Bluerock Special Opportunity
+ Income Fund, LLC (“
BR SOIF
”) or any Person that is directly or indirectly owned by BR SOIF; (C) Bluerock Special
Opportunity + Income Fund II, LLC (“
BR SOIF II
”) or any Person that is directly or indirectly owned by BR SOIF
II, (D) Bluerock Special Opportunity + Income Fund III, LLC (“
BR SOIF III
”) or any Person that is directly or
indirectly owned by BR SOIF III, (E) Bluerock Growth Fund, LLC (“
BR Growth
”) or any Person that is directly
or indirectly owned by BR Growth, and/or (F) Bluerock Growth Fund II, LLC (“
BR Growth II
”) or any Person that
is directly or indirectly owned by BR Growth II (collectively, a “
Bluerock Transferee
”);
provided, that,
following the date the BR REIT first acquires a direct or indirect common interest in the Company or the Project, in all instances,
BR REIT shall either retain, direct or indirectly, more than fifty percent (50%) of the ownership interests in the BR Member or
otherwise retain the power to control, directly or indirectly, the major activities of BR Member such that BR REIT can consolidate
the Project on its audited financial statements; and
(b) Upon
Project Completion, any Transfer (other than a Transfer that would result in a TriBridge Change of Control) by TriBridge Member
or a TriBridge Transferee of up to one hundred percent (100%) of its Interest to any Affiliate of the TriBridge Member that has
sufficient capital to perform the obligations of the TriBridge Member hereunder (a “
TriBridge Transferee
”).
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12.03
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Conditions of Transfer and Assignment
. A transferee
of an Interest pursuant to 12.01 or 12.02 shall become a Member only if the following conditions have been satisfied:
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(a) the
transferor, his legal representative or authorized agent must have executed a written instrument of transfer of such Interest in
form and substance satisfactory to the Managers;
(b) the
transferee must have executed a written agreement, in form and substance satisfactory to the Managers, to assume all of the duties
and obligations of the transferor under this Operating Agreement with respect to the transferred Interest and to be bound by and
subject to all of the terms and conditions of this Operating Agreement;
(c) the
transferor, his legal representative or authorized agent, and the transferee must have executed a written agreement, in form and
substance satisfactory to the Managers to indemnify and hold the Company, the Managers and the other Members harmless from and
against any loss or liability arising out of the transfer;
(d) the
transferee must have executed such other documents and instruments as the Managers may deem necessary to effect the admission of
the transferee as a Member; and
(e) unless
waived by the Managers, the transferee or the transferor must have paid the expenses incurred by the Company in connection with
the admission of the transferee to the Company.
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12.04
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Transfers of Economic Interest Only
. A permitted
transferee of an Economic Interest who does not become a Member shall be an Economic Interest Owner only and shall be entitled
only to the transferor’s Economic Interest to the extent assigned. Such transferee shall not be entitled to vote on any
question regarding the Company, and the Capital Percentage associated with the transferred Economic Interest shall not be considered
to be outstanding for voting purposes.
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12.05
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Successors as to Economic Rights
. References in
this Operating Agreement to Members shall also be deemed to constitute a reference to Economic Interest Owners where the provision
relates to economic rights and obligations. By way of illustration and not limitation, such provisions would include those regarding
Capital Accounts, distributions, allocations, and contributions. A transferee shall succeed to the transferor’s Capital
Contributions and Capital Account to the extent related to the Economic Interest transferred, regardless of whether such transferee
becomes a Member.
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(a) In
the event the TriBridge Member and BR Member are deadlocked and are unable to agree unanimously on any Major Decision that requires
unanimity (for avoidance of doubt, the determination of whether to undergo Conversion is not a Major Decision, but rather an act
which the TriBridge Member may take, subject to the limitations set forth herein, unilaterally), and the TriBridge Member and BR
Member are unable through good faith and the exercise of their reasonable efforts to break such deadlock for a period of fifteen
(15) days following notice from such Member to the other Member that a deadlock exists with regard to a Major Decision, the deadlock
may be broken by the invocation of the provisions of this Section 12.06;
provided, however,
except as otherwise provided
in Section 6.05, this Section 12.06 may be invoked if and only if such deadlock occurs after the fifth (5th) anniversary of the
first date upon which the Project achieves Project Stabilization. Prior to invoking the provisions of this Section, the TriBridge
Member and BR Member shall in good faith meet within fifteen (15) days of such deadlock, and use their reasonable efforts to resolve
any disagreements regarding any Major Decision. As used in this Section 12.06, “deadlock” shall mean the inability
of the TriBridge Member and BR Member to unanimously agree with respect to a Major Decision that requires unanimity.
(b) Either
Member may initiate the buy/sell procedure by providing a written notice (the “
Value Notice
”) to the other Member.
The Member which initiates the buy/sell procedure, is referred to herein as the “
Offeror
.” The Member who receives
the Value Notice is referred to herein as the “
Offeree
.” The Value Notice shall include an offer by the Offeror
to purchase all (and not less than all) of the Membership Interest(s) owned by the Offeree and an offer by the Offeror to sell
all (and not less than all) of the Membership Interest(s) owned by the Offeror to the Offeree, based upon an amount representing
the Offeror's estimate of the gross sales price at which the Project would be sold (the “
Stated Amount
”), and
which shall be used in the calculations of the purchase price of the Membership Interest(s) pursuant to Section 12.06(e).
(c) The
Offeree shall have thirty (30) days from its receipt of the Value Notice to provide a written notice (the “
Election Notice
”)
to the Offeror stating either that the Offeree will sell all (and not less than all) its Membership Interest(s) to the Offeror
or that the Offeree will purchase all (and not less than all) the Offeror’s Membership Interest(s) at the purchase price
referenced in Section 12.06(b) hereof. If the Offeree fails to give a timely Election Notice, the Offeree shall be deemed to have
elected to sell all (and not less than all) its Membership Interest(s) to the Offeror. The Election Notice shall specify the date
of closing (the “
Buy-Sell Closing Date
”), which date shall be at least thirty (30) days after the giving of
the Election Notice, but in any event not later than the ninetieth (90th) day after such notice. If the Offeree fails to provide
an Election Notice, the Buy-Sell Closing Date shall be held on the first Business Day which is at least ninety (90) days after
the giving of the Value Notice.
(d) The
Member (or Members) that finally becomes obligated to sell its or their Membership Interest(s) is sometimes referred to herein
collectively as the “
Seller
.” The Member that finally becomes obligated to purchase the other Member’s
or Members’ Membership Interest(s) is sometimes referred to herein as the “
Buyer
.” Within five (5) business
days of the delivery of the Election Notice (or upon the deemed election by Offerree to sell all its Membership Interest(s) to
Offeror) the Buyer shall deposit with a mutually agreeable escrow agent (and if the parties fail to agree on such escrow agent,
Calloway Title & Escrow, L.L.C. in Atlanta, Georgia), as earnest money, an amount equal to Two Hundred Fifty Thousand and No/100
Dollars ($250,000.00) as earnest money, which shall be applicable to the purchase price for the Membership Interests payable at
closing.
(e) The
aggregate purchase price for the Seller’s Membership Interest(s) pursuant to this Section 12.06 shall be that amount which
would be distributed to the Seller pursuant to Section 9.01 above (after giving effect to all applicable provisions of this Agreement,
but after liquidating all Reserves then existing and without establishing any additional Reserves) if all of the property then
held by the Borrower were sold on the Buy-Sell Closing Date for a gross sales price equal to the Stated Amount and all liabilities
and obligations of the Borrower were satisfied from the proceeds from such sales price and any remaining proceeds were distributed
to the Members in accordance with Section 9.01. No Member shall be entitled to any sales fee or commission if either Member exercises
the buy/sell procedure set forth in this Section 12.06.
(f) The
closing of a purchase of Membership Interest(s) pursuant to this Section 12.06 shall be held on the Buy-Sell Closing Date, subject
to the terms and conditions specified herein.
(g) As
of the effective date of any transfer of a Membership Interest(s) pursuant to this Section 12.06, the Buyer shall assume all obligations
of the Seller with respect to the Membership Interest so transferred, including any liability of the Seller or any Affiliate thereof
with respect to any Company liabilities. Upon such transfer, the Seller’s rights and obligations under this Agreement shall
terminate with respect to such transferred Membership Interest, except as to indemnity rights of such Member under this Agreement
attributable to acts or events occurring prior to the effective date of such transfer.
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12.07
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Escrow and Closing of Buy-Sell
.
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(a)
Closing
Time and Location
. Except as otherwise provided for in this Agreement, the closing of any offer of a Membership Interest between
the Members pursuant to Section 12.06 shall take place at a mutually agreed upon location in Atlanta, Georgia.
(b)
Required
Documents
. Prior to or at the closing, Seller shall supply to Buyer all documents customarily required (or reasonably required
by Buyer) to make a good and sufficient conveyance of such Membership Interest to the Buyer, which documents shall be in form and
substance reasonably satisfactory to the Buyer and Seller. All payments shall be by wire transfer of immediately available funds.
(c)
Conditions
Precedent to Closing
. The obligation of Buyer to pay the purchase price shall be conditioned upon the Membership Interest being
transferred free and clear of all liens, claims and encumbrances. This condition is for the sole benefit of Buyer and may be waived
by Buyer in whole or in part in its sole discretion.
(d)
Closing
Costs
. Each party shall pay its own attorneys’ fees and expenses incurred in connection with the closing, and costs of
the escrow or closing, including, without limitation all premiums for title insurance and any escrow fees, recording charges, and
transfer taxes arising from the closing of the buy-sell transaction, shall be borne or allocated in the manner customary in the
area in which the Project is located and, to the extent no custom exists, shall be shared equally by Seller and Buyer. Unless previously
deducted in determining the price for the Membership Interest, the Buyer shall deduct from the price otherwise payable to the Seller
an amount equal to all liens, claims and encumbrances of a definite or ascertainable amount, if any, which encumber the Seller’s
Membership Interest being transferred which are not released or repaid on or prior to the closing (if Buyer elects to waive the
conditions set forth in Section 12.07(c)).
(e)
Warranty
of Title
. The Seller shall represent, warrant and agree that its Membership Interest being sold hereunder is free of all liens,
claims and encumbrances (except liens, claims or encumbrances that were deducted in determining the applicable price of the Membership
Interest) and that the Seller shall defend, indemnify and hold harmless the Buyer from any such liens, claims and encumbrances.
(f)
Closing
of Buy-Sell Transaction
. At the closing of a sale of a Membership Interest by one Member to the other Member pursuant to Section
12.06 hereof, the following shall occur:
(i) The
Seller shall convey and assign to the Buyer or its designee the entire Membership Interest of the Seller, free and clear of all
liens, claims and encumbrances (other than liens, claims and encumbrances that were waived by Buyer and deducted in determining
the applicable price of the Membership Interest), and the Seller and the Buyer shall execute all documents which may be reasonably
required to give effect to the sale and purchase of such Membership Interest.
(ii) The
Buyer shall pay or cause to be paid to the Seller the applicable purchase price for the Membership Interest being purchased in
cash or by wire transfer at the closing (and the earnest money deposited pursuant to Section 12.06(d) shall be applied towards
the Purchase Price as a credit in favor of Buyer).
(iii) Notwithstanding
any provision herein to the contrary, it shall be a condition or requirement of any offer and the closing to obtain a release of
the Seller and the Seller’s Affiliates from any personal liability arising out of any and all Loan Guaranties.
12.08
Default
.
(a)
Events
of Default
. The failure of a Member to perform any of the obligations set forth in Sections 12.06 or 12.07 with respect to
an offer of its Membership Interest or purchase of the other Member’s Membership Interest shall constitute an event of default
(“
Event of Default
”) on the part of the Member with respect to whom such failure occurs.
(b)
Remedies
.
Upon the occurrence of an Event of Default, the non-defaulting Member may exercise, in addition to all other rights and remedies
provided in this Agreement or available at law or in equity, any one or more of the remedies provided for in Section 12.08 (c)
below.
(c)
Remedies
for Failure to Transfer Membership Interest
.
(i)
Seller’s
Failure
. In the event that the Seller fails to make conveyance of its Membership Interest pursuant to its obligations herein,
then the Buyer shall have the option: (A) to demand and receive specific
performance of the Seller’s obligations to convey its Membership Interest as provided for herein; (B) to recover damages
on account of the Seller’s failure to make conveyance (which rights shall be in addition to the right granted under subparagraph
(A) above, if the Buyer so elects); or (C) to terminate the obligations of the parties to proceed with the sale of the Membership
Interest, whereupon the position of the parties shall revert to the status quo ante as if no notice to purchase from either party
to the other had been given under the provisions of this Agreement.
(ii)
Buyer’s
Failure
. In the event that the Buyer defaults in the closing of a purchase of a Membership Interest as herein provided, then
the Seller shall have the option to: (A) elect to purchase the Buyer’s Membership Interest on the terms and conditions otherwise
set forth herein, by notice to the Buyer of the Seller’s intention so to do, given within fifteen (15) days after such default
in which event the Seller shall become the Buyer and the Buyer shall become the Seller, and all the applicable terms, conditions
and provisions of this Agreement with respect to such sales shall govern, except that the closing thereof shall take place thirty
(30) days after such date of notice from the Seller (now the Buyer) to the Buyer (now the Seller) and except that the purchase
price shall be ten percent (10%) less than the price which the Seller (now the Buyer) would have had to pay had such Buyer (now
the Seller) originally elected to sell its Membership Interest; or (B) terminate the Seller’s obligation to convey its Membership
Interest to the Buyer by notice to the Buyer, in which case the position of the parties shall revert to the status quo ante as
if no notice from either party to the other had been given under the provisions of this Agreement and receive, as liquidated damages
and not as a penalty, the earnest money deposited pursuant to Section 12.06(d) above, the parties agreeing that damages in such
instance would be difficult to ascertain and that the earnest money constitutes a reasonable liquidation of such damages.
12.09
Specific
Performance
. It is expressly agreed that the remedy at law for breach of any of the obligations set forth in this Article 12
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 party to comply fully with each of said obligations, and (ii) the uniqueness of each Member’s business
and assets and the relationship of the Members. Accordingly, each of the aforesaid obligations and restrictions shall be, and is
hereby expressly made, enforceable by specific performance.
ARTICLE
13.
ISSUANCE OF ADDITIONAL MEMBERSHIP
INTERESTS
Except as otherwise
provided for herein, any Person approved by all of the Members may become a Member in the Company by the issuance by the Company
of Membership Interests for such consideration as all of the Members shall determine. No new Members shall be entitled to any retroactive
allocation of losses, income or expense deductions incurred by the Company. The Managers may, upon the approval of all the existing
Members, at the time a Member is admitted, close the Company books (as though the Company’s tax year had ended) or make pro
rata allocations of loss, income and expense deductions to a new Member for that portion of the Company’s tax year in which
a Member was admitted in accordance with the provisions of Section 706(d) of the Code and the Treasury Regulations promulgated
thereunder.
ARTICLE
14.
DISSOLUTION AND TERMINATION
(a) The
Company shall be dissolved upon the occurrence of any of the following events:
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i.
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by the unanimous written agreement of all Members; or
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ii.
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by a decree of judicial dissolution under the Act.
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To the maximum extent
permitted under the Act, the Company shall not dissolve upon an event of dissociation with respect to the last remaining Member,
but instead the legal successor to such Member shall automatically become a Member of the Company with all rights and obligations
appurtenant thereto.
(b) If
a Member who is an individual dies or a court of competent jurisdiction adjudges him to be incompetent to manage his person or
his property, the Member’s executor, administrator, guardian, conservator, or other legal representative may exercise all
of the Member’s rights for the purpose of settling his estate or administering his property, but such person shall be a holder
of an Economic Interest and shall not have the rights of a Member. Further, such Person shall be subject to the provisions of Article
12.
|
|
14.02
|
Effect of Dissolution
. Upon dissolution, the Company
shall cease to carry on its business, except as permitted by Section 18-803 of the Act.
|
|
|
14.03
|
Winding Up, Liquidation and Distribution of Assets
.
|
(a) Upon
dissolution, an accounting shall be made by the Company’s independent accountants of the accounts of the Company and of the
Company’s assets, liabilities and operations, from the date of the last previous accounting until the date of dissolution.
The Managers or if none, the Person or Persons selected by the Members (the “
Liquidators
”) shall immediately
proceed to wind up the affairs of the Company.
(b) If
the Company is dissolved and its affairs are to be wound up, the Liquidators shall:
i. Sell
or otherwise liquidate all of the Company’s assets as promptly as practicable;
ii. Allocate
any profit or loss resulting from such sales to the Members and Economic Interest Owners in accordance with Article 10 hereof as
if the Company had distributed all distributable Capital Proceeds in accordance with Article 9 hereof;
iii. Discharge
all liabilities of the Company, including liabilities to Members and Economic Interest Owners who are creditors, to the extent
otherwise permitted by law, other than liabilities to Members and Economic Interest Owners for distributions, and establish such
Reserves as may be reasonably necessary to provide for contingent liabilities of the Company; and
iv. Distribute
the remaining proceeds to the Members in accordance with Section 9.01.
(c) In
the final Fiscal Year of the Company, before making the final distributions provided for in Section 14.03(b)(iv), Profits and Losses
shall be credited or charged to Capital Accounts of the Members (which Capital Accounts shall be first adjusted to take into account
all distributions other than liquidating distributions made during the Fiscal Year) in the manner provided in Article 10. The allocations
and distributions provided for in this Agreement are intended to result in the Capital Account of each Member immediately prior
to the liquidation distributions of the Company’s assets pursuant to Section 14.03(b)(iv) being equal to the amount distributable
to such Member pursuant to Section 14.03(b)(iv). The Managers are authorized to make appropriate adjustments in the allocation
of Profits and Losses and, if necessary, items of gross income and gross deductions of the Company, for the year of liquidation
of the Company (or, if earlier, the year in which all or substantially all of the Company’s assets are sold, transferred
or disposed of) as necessary to cause the amount of each Member’s Capital Account immediately prior to the distribution of
the Company’s assets pursuant to Section 14.03(b)(iv) to equal the amount distributable to such Member pursuant to Section
14.03(b)(iv). Notwithstanding the foregoing, nothing in this Section 14.03(c) shall affect the amounts distributable to the Members
under Section 14.03(b)(iv).
(d) Notwithstanding
anything to the contrary in this Operating Agreement, upon a liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g) of
the Treasury Regulations, if any Member has a deficit Capital Account (after giving effect to all contributions, distributions,
allocations and other Capital Account adjustments for all taxable years, including the year during which such liquidation occurs),
such Member shall have no obligation to make any Capital Contribution, and the negative balance of such Member’s Capital
Account shall not be considered a debt owed by such Member to the Company or to any other Person for any purpose whatsoever.
(e) Upon
completion of the winding up, liquidation and distribution of the assets, the Company shall be deemed terminated.
(f) The
Liquidators shall comply with any applicable requirements of applicable law pertaining to the winding up of the affairs of the
Company and the final distribution of its assets.
|
|
14.04
|
Certificate of Cancellation
. When all debts, liabilities
and obligations have been paid and discharged or adequate provisions have been made therefor and all of the remaining property
and assets have been distributed to the Members, a Certificate of Cancellation may be executed and filed with the Secretary of
State of Delaware in accordance with Section 18-203 of the Act.
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14.05
|
Return of Contribution Nonrecourse to Other Members
.
Except as provided by law or as expressly provided in this Operating Agreement, upon dissolution, each Member shall look solely
to the assets of the Company for the return of its Capital Contribution. If the Company property remaining after the payment or
discharge of the debts and liabilities of the Company is insufficient to return the cash contribution of one or more Members,
such Member or Members shall have no recourse against any other Member.
|
ARTICLE
15.
INDEMNIFICATION
|
|
15.01
|
Indemnification by Company
. The Managers, the
Members and their respective members, managers, agents, employees and representatives (each, an “
Indemnitee
”)
shall be indemnified by the Company to the fullest extent permitted by law, against any losses, judgments, liabilities, expenses
and amounts paid in settlement of any claims sustained by it or any of them in connection with the Company (each, a “
Claim
”),
provided that (i) such course of conduct was, in good faith, intended to be in, and not opposed to, the best interests of the
Company and such liability or loss was not the result of willful misconduct, or a material breach of this Agreement or gross negligence
on the part of such Indemnitee, and (ii) any such indemnification will only be recoverable from the assets of the Company and
the Members shall not have any liability on account thereof except any obligations to return distributions received from the Company
that are required to be returned to the Company in respect of such indemnification obligations under applicable law. No Member
shall be authorized to make a call for Additional Capital Contributions to satisfy the Company’s indemnification obligations
under this Section 15.01.
|
|
|
15.02
|
Indemnification by Members for Misconduct
.
|
(a) The
TriBridge Member hereby indemnifies, defends and holds harmless the Company, the BR Member, each Bluerock Transferee and each of
their subsidiaries and their officers, directors, members, managers, partners, shareholders, employees, agents and appointees from
and against all losses, costs, expenses, damages, claims and liabilities (including reasonable attorneys’ fees) incurred
to the extent arising out of any fraud, gross negligence or willful misconduct on the part of, or by, the TriBridge Member or its
Affiliates.
(b) The
BR Member hereby indemnifies, defends and holds harmless the Company, the TriBridge Member, each TriBridge Transferee and each
of their subsidiaries and their officers, directors, members, managers, partners, shareholders, employees, agents and appointees
from and against all losses, costs, expenses, damages, claims and liabilities (including reasonable attorneys’ fees) incurred
to the extent arising out of any fraud, gross negligence or willful misconduct on the part of, or by, BR Member or its Affiliates.
ARTICLE
16.
MISCELLANEOUS PROVISIONS
|
|
16.01
|
Application of Delaware Law
. This Operating Agreement,
and the application and interpretation thereof, shall be governed exclusively by its terms and by the laws of the State of Delaware,
and specifically the Act.
|
|
|
16.02
|
No Action for Partition
. No Member or Economic
Interest Owner has any right to maintain any action for partition with respect to the property of the Company.
|
|
|
16.03
|
Construction
. Whenever the singular number is
used in this Operating Agreement and when required by the context, the same shall include the plural and vice versa, and the masculine
gender shall include the feminine and neuter genders and vice versa.
|
|
|
16.04
|
Headings
. The headings in this Operating Agreement
are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent
of this Operating Agreement or any provision hereof.
|
|
|
16.05
|
Waivers
. The failure of any party to seek redress
for violation of or to insist upon the strict performance of any covenant or condition of this Operating Agreement shall not prevent
a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.
|
|
|
16.06
|
Rights and Remedies Cumulative
. The rights and
remedies provided by this Operating Agreement are cumulative and the use of any one right or remedy by any party shall not preclude
or waive the right not to use any or all other remedies. Such rights and remedies are given in addition to any other rights the
parties may have by law, statute, ordinance or otherwise.
|
|
|
16.07
|
Severability
. If any provision of this Operating
Agreement or the application thereof to any person or circumstance shall be invalid, illegal or unenforceable to any extent, the
remainder of this Operating Agreement and the application thereof shall not be affected and shall be enforceable to the fullest
extent permitted by law.
|
|
|
16.08
|
Heirs, Successors and Assigns
. Each and all of
the covenants, terms, provisions and agreements herein contained shall be binding upon and inure to the benefit of the parties
hereto and, to the extent permitted by this Operating Agreement, their respective heirs, legal representatives, successors and
assigns.
|
|
|
16.09
|
Creditors
. None of the provisions of this Operating
Agreement shall be for the benefit of or enforceable by any creditors of the Company or by any Person not a party hereto.
|
16.10
Counterparts
.
This Operating Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same instrument.
16.11
Federal
Income Tax Elections
. All elections required or permitted to be made by the Company under the Code shall be made by the Members.
16.12
Certification
of Non-Foreign Status
. In order to comply with Section 1445 of the Code and the applicable Treasury Regulations thereunder,
in the event of the disposition by the Company of a United States real property interest as defined in the Code and Treasury Regulations,
each Member shall provide to the Company, an affidavit stating, under penalties of perjury, (i) the Member’s address, (ii) United
States taxpayer identification number, and (iii) that the Member is not a foreign person as that term is defined in the Code and
Treasury Regulations. Failure by any Member to provide such affidavit by the date of such disposition shall authorize the Managers
to withhold ten percent (10%) of each such Member’s distributive share of the amount realized by the Company on the disposition.
16.13
Notices
.
Any and all notices, offers, demands or elections required or permitted to be made under this Agreement (“
Notices
”)
shall be in writing and shall be delivered either by personally delivering it by hand or Federal Express or similar commercial
courier service to the person to whom Notice is directed, or by electronic mail, or by depositing it with the United States Postal
Service, certified mail, return receipt requested, with adequate postage prepaid, addressed to the appropriate party (and marked
to a particular individual’s attention). Notice shall be deemed given and effective (i) when hand-delivered if by personal
delivery or Federal Express or similar commercial courier service, (ii) as of the date and time it is transmitted by electronic
mail if there is a written or electronic record of the date, time and email address to which the Notice was sent, or (iii) on the
third (3rd) business day (which term means a day when the United States Postal Service, or its legal successor (“
Postal
Service
”) is making regular deliveries of mail on all of its regularly appointed week-day rounds in Dover, Delaware)
following the day (as evidenced by proof of mailing) upon which such Notice is deposited, postage pre-paid, certified mail, return
receipt requested, with the Postal Service. Rejection or other refusal by the addressee to accept the Notice shall be deemed to
be receipt of the Notice. In addition, the inability to deliver the Notice because of a change of address of the party of which
no Notice was given to the other party as provided on
Exhibit A
hereof shall be deemed to be the receipt of the Notice sent.
The addresses to which Notice is to be sent shall be those set forth below on
Exhibit A
or such other address as shall be
designated in writing to Managers. Managers shall keep a list of all designated addresses and such list shall be available to any
Member upon request thereof. Such addresses may be changed by designating the change of address to the Managers in writing.
16.14
Amendments
.
Any amendment to this Agreement shall be made in writing and signed by Members holding all of the Capital Percentages;
provided,
however,
the Managers shall have the right upon any transfer of Membership Interests or admission of any new Member in accordance
with the express terms herewith to unilaterally amend this Agreement without a writing signed by all Members to substitute
Exhibit
“A”
attached hereto with an updated
Exhibit “A”
reflecting all of the current Members and their
respective Capital Percentages.
16.15
Invalidity
.
The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof,
and the Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. If any particular
provision herein is construed to be in conflict with the provisions of the Act, the Act shall control and such invalid or unenforceable
provisions shall not affect or invalidate the other provisions hereof, and this Agreement shall be construed in all respects as
if such conflicting provision were omitted.
16.16
Captions
.
Titles and captions are inserted for convenience only and in no way define, limit, extend or describe the scope or intent of this
Agreement or any of its provisions and in no way are to be construed to affect the meaning or construction of this Agreement or
any of its provisions.
16.17
Banking
.
All funds of the Company shall be deposited in its name in an account or accounts as shall be designated from time to time by the
Managers. All funds of the Company shall be used solely for the business of the Company. All withdrawals from the Company bank
accounts shall be made only upon check signed by the Managers or by such other persons as the Managers may designate from time
to time.
16.18
Governing
Law; Jurisdiction
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
The parties hereto agree that any suit brought to enforce this Agreement shall be venued only in any court of competent jurisdiction
in the State of New York, Borough of Manhattan, and, by execution and delivery of this Agreement, each of the parties to this Agreement
hereby irrevocably accepts and waives all objection to, the exclusive jurisdiction of the aforesaid courts in connection with any
suit brought to enforce this Agreement, and irrevocably agrees to be bound by any judgment rendered thereby. Each of the parties
hereto hereby agrees that service of process in any such proceeding may be made by giving notice to such party in the manner and
at the place set forth in 16.13 herein. The parties irrevocably and voluntarily waive any right they may have to a trial by jury
in respect of any claim arising under this Agreement.
16.19
Further
Assurances
. The Members each agree to cooperate, and to execute and deliver in a timely fashion any and all additional documents
or instruments necessary to effectuate the purposes of the Company and this Agreement or necessary to comply with any laws, rules
or regulations.
16.20
Time
.
TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND TO ANY PAYMENTS, ALLOCATIONS AND DISTRIBUTIONS SPECIFIED UNDER THIS AGREEMENT.
16.21
Investment
Representations and Indemnity Agreement
. In addition to the restrictions on transfer set forth above, each Member understands
that Members must bear the economic risk of this investment for an indefinite period of time because the Membership Interests are
not registered under the Securities Act of 1933, as amended (the “
1933 Act
”) or the securities laws of any state
or other jurisdiction. Each Member has been advised that there is no public market for the Membership Interests and that the Membership
Interests are not being registered under the 1933 Act upon the basis that the transactions involving its sale are exempt from such
registration requirements and that reliance by the Company on such exemption is predicated in part on the Member’s representations
set forth in this Agreement. Each Member acknowledges that no representations of any kind concerning the Project or the future
intent or ability to offer or sell the Membership Interest in a public offering or otherwise have been made to the Member by the
Company or any other Person or entity. Each Member understands that the Company makes no covenant, representation or warranty with
respect to the registration of securities under the Securities Exchange Act of 1933, as amended, or its dissemination to the public
of any current financial or other information concerning the Company. Accordingly, each Member acknowledges that there is no assurance
that there will ever by any public market for the Membership Interests, and that the Member may not be able to publicly offer or
sell any thereof. Furthermore, each Member (and his/her/its assignees and transferees) agrees to indemnify the other Members, the
Managers, the Company and any director, officer, employee, affiliate or legal counsel of such parties, from any and all losses,
damage, liability, claims and expenses incurred, suffered or sustained by any of them in any manner because of the falsity of any
representation contained in this Section including, without limitation, liability for violation of the Securities Laws of the United
States or of any state which violation would not have occurred had such representation been true.
16.22
No
Partnership Interest for Non-Tax Purposes
. The Members have formed the Company under the Act and expressly disavow any intention
to form a partnership under Delaware’s Uniform Partnership Act, Delaware’s Uniform Limited Partnership Act, or the
Partnership Act or laws of any other state. The Members do not intend to be partners one to another or partners as to any third
party. To the extent any Member, by word or action, represents to another person that any other Member is a partner or that the
Company is a partnership, the Member making such wrongful representations shall be liable to any other Member who incurs personal
liability by reason of such wrongful representation.
16.23
Entire
Agreement
. This Agreement, along with the Cost-Sharing Agreement, contains the entire understanding among the parties hereto
with respect to the subject matter hereof. This Agreement supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except for the Cost-Sharing Agreement, which shall survive in accordance
with its terms.
[signatures on following
pages]
IN WITNESS WHEREOF
,
the parties have executed this Agreement as of the date first written above.
|
|
BR MEMBER:
|
|
|
|
|
|
BR LAKE BOONE JV MEMBER, LLC,
|
|
|
a Delaware limited liability company
|
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|
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|
|
By:
|
Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited liability company, its Manager
|
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|
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|
|
By:
|
BR SOIF II Manager, LLC, a Delaware limited liability company, its Manager
|
|
|
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|
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|
|
|
|
By:
|
/s/ Jordan Ruddy
|
|
|
|
|
Name:
|
Jordan Ruddy
|
|
|
|
|
Title:
|
Authorized Signatory
|
|
|
TRIBRIDGE MEMBER:
|
|
|
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TRIBRIDGE CO-INVEST 29, LLC
,
|
|
|
a Georgia limited liability company
|
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|
|
By:
|
TriBridge Investments II, LLC,
|
|
|
|
a Georgia limited liability company,
|
|
|
|
its Managing Member
|
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|
|
By:
|
TBR 2015, LLC,
|
|
|
|
|
a Georgia limited liability company, its Managing Member
|
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By:
|
/s/ Robert H. West
|
|
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|
|
Title:
|
Manager
|
BR
REIT Indemnitor Joinder
The undersigned, Bluerock Residential Holdings,
L.P., a Delaware limited partnership, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby duly executes with proper authority and joins in the execution of this Agreement, and agrees to be bound by the obligations
of the undersigned set forth in Section 5.09 and Section 5.15 of this Agreement.
The undersigned is an Affiliate of the
BR Member, will derive substantial benefits from the transactions described in the Agreement and acknowledges that the execution
of this Joinder is a material inducement and condition to the TriBridge Member's execution of the Agreement. The undersigned represents
and warrants that it has the legal right, power, authority and capacity to execute this Joinder, that such execution does not violate
the organizational documents of, or any other agreement or instrument by which the undersigned is bound, and that this Joinder
is binding and enforceable against the undersigned.
BLUEROCK RESIDENTIAL HOLDINGS, L.P.,
a Delaware limited partnership
|
By:
|
Bluerock Residential Growth REIT, Inc.,
|
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a Maryland corporation, its general partner
|
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By:
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/s/ Michael Konig
|
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Name:
|
Michael Konig
|
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|
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Title:
|
Authorized Signatory
|
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TRIBRIDGE
RESIDENTIAL Indemnitor Joinder
The undersigned, TriBridge Residential,
LLC, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby duly executes with
proper authority and joins in the execution of this Agreement, and agrees to be bound by the obligations of the undersigned set
forth in Section 5.09 of this Agreement.
The undersigned is an Affiliate of the
TriBridge Member, will derive substantial benefits from the transactions described in the Agreement and acknowledges that the execution
of this Joinder is a material inducement and condition to the BR Member's execution of the Agreement. The undersigned represents
and warrants that it has the legal right, power, authority and capacity to execute this Joinder, that such execution does not violate
the organizational documents of, or any other agreement or instrument by which the undersigned is bound, and that this Joinder
is binding and enforceable against the undersigned.
|
TRIBRIDGE RESIDENTIAL, LLC,
|
|
a Georgia limited liability company
|
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By:
|
/s/ Robert H. West
|
|
|
Name:
|
Robert H. West
|
|
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Title:
|
Vice President
|
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List of Exhibits
:
|
Exhibit A
|
Information Regarding Members
|
|
Exhibit B
|
Property
|
|
Exhibit C
|
Estimated Budget
|
|
Exhibit D
|
Property Indebtedness
|
Exhibit A
INFORMATION REGARDING MEMBERS
Member Name
and Address
|
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Initial
Capital Contribution
|
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Capital
Percentage
|
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BR LAKE BOONE JV MEMBER, LLC
c/o Bluerock Real Estate, LLC
712 Fifth Avenue, 9
th
Floor
New York, NY 10019
|
|
$
|
10,800.00
|
*
|
|
|
90.0
|
%
|
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|
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|
|
|
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TriBridge Co-Invest 29, LLC
1575 Northside Drive
Building 100, Suite 200
Atlanta, GA 30318
|
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$
|
1,200,000
|
*
|
|
|
10.0
|
%
|
|
|
|
|
|
|
|
|
|
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Total
|
|
$
|
12,000,000
|
*
|
|
|
100
|
%
|
*To be updated after closing the acquisition
of the Property under the Contribution Agreement and finalization of the Total Project Budget and the amount of the Construction
Loan.
MANAGEMENT COMMITTEE:
TriBridge Member
1. Steve
Broome
2. Bobby
West
BR Member
1. James Babb
2. Michael Konig
Exhibit B
LEGAL DESCRIPTION OF PROPERTY
LOT 5
Beginning at the intersection of the common
property line of Lot 2 and Lot 5 and the proposed western right of way of Landmark drive for the Point of Beginning; thence with
said common property line North 90°00'00" West a distance of 206.82 feet to a point; thence South 42°51'56" West
a distance of 53.07 feet to a point; thence South 42°51'56" West a distance of 11.70 feet to a point; thence South 90°00'00"
West a distance of 167.04 feet to a point; thence North 90°00'00" West a distance of 148.75 feet to a point on the common
property line of Rex Hospital, Inc.; thence with said common property line North 02°02'27" West a distance of 123.67 feet
to a point; thence North 01°27'47" East a distance of 67.99 feet to a point; thence North 01°46'30" East a distance
of 229.73 feet to a point; thence leaving said common line North 89°41'51" East a distance of 191.82 feet to a point;
thence North 60°48'38" East a distance of 5.84 feet to a point; thence North 73°01'16" East a distance of 6.77
feet to a point; thence North 89°12'09" East a distance of 3.91 feet to a point; thence North 88°22'36" East
a distance of 2.52 feet to a point; thence North 72°01'11" East a distance of 7.90 feet to a point; thence North 71°41'16"
East a distance of 2.53 feet to a point; thence North 61°01'39" East a distance of 26.49 feet to a point; thence North
37°58'10" East a distance of 13.14 feet to a point; thence North 44°40'07" East a distance of 1.30 feet to a
point; thence North 66°56'39" East a distance of 8.53 feet to a point; thence North 88°37'38" East a distance
of 19.21 feet to a point; thence North 59°35'06" East a distance of 43.12 feet to a point; thence North 88°42'05"
East a distance of 29.61 feet to a point; thence North 69°11'56" East a distance of 11.97 feet to a point; thence North
58°48'14" East a distance of 6.44 feet to a point; thence North 54°24'57" East a distance of 8.12 feet to a point;
thence North 60°36'33" East a distance of 32.51 feet to a point; thence North 38°25'21" East a distance of 4.45
feet to a point; thence North 24°19'31" East a distance of 7.67 feet to a point; thence South 83°46'51" East
a distance of 9.55 feet to a point; thence North 83°26'13" East a distance of 21.80 feet to a point; thence North 82°45'29"
East a distance of 16.12 feet to a point; thence North 74°15'03" East a distance of 2.78 feet to a point; thence North
51°04'07" East a distance of 15.01 feet to a point; thence North 89°50'43" East a distance of 12.92 feet to a
point; thence South 54°59'54" East a distance of 17.05 feet to a point; thence South 18°25'25" East a distance
of 5.90 feet to a point; thence South 05°29'37" West a distance of 8.08 feet to a point; thence South 43°32'19"
East a distance of 7.58 feet to a point; thence North 77°37'40" East a distance of 3.09 feet to a point; thence North
70°21'51" East a distance of 11.09 feet to a point; thence North 81°04'41" East a distance of 12.50 feet to a
point; thence North 76°21'01" East a distance of 18.23 feet to a point; thence North 79°21'31" East a distance
of 39.37 feet to a point; thence South 02°48'05" West a distance of 58.07 feet to a point; thence South 87°13'57"
East a distance of 5.00 feet to a point on the proposed western right of way of Landmark Drive; thence with said proposed right
of way South 02°46'03" West a distance of 416.99 feet to the Point of Beginning, containing 258,505 square feet or 5.93
acres.
LOT 6
Beginning at the intersection of the common
property line of Lot 1 and Lot 6 and the proposed eastern right of way of Landmark Drive for the Point of Beginning; thence with
said proposed right of way North 02°46'03" East a distance of 344.92 feet to a point; thence leaving said proposed right
South 87°13'57" East a distance of 5.00 feet to a point; thence North 02°46'03" East a distance of 70.52 feet
to a point; thence South 87°00'00" East a distance of 139.41 feet to a point on the common property line of Meredith Partners
LLC.; thence with said common property line South 02°47'30" West a distance of 415.46 feet to a point on the common property
line of Lot 1; thence with said common property line North 87°00'00" West a distance of 144.24 feet to the Point of Beginning,
containing 59,607 square feet or 1.37 acres.
Exhibit C
ESTIMATED BUDGET
|
Land Closing Costs
|
|
|
|
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Purchase Price
|
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$
|
5,469,200
|
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|
Subtotal
|
|
$
|
5,469,200
|
|
|
|
|
|
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|
|
Soft Costs
|
|
|
|
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|
Land Closing Costs
|
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|
103,341
|
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|
Project Feasibility Costs
|
|
|
120,700
|
|
|
Design Costs
|
|
|
1,076,750
|
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|
Legal Costs
|
|
|
400,000
|
|
|
Real Estate Taxes
|
|
|
236,413
|
|
|
Insurance Costs
|
|
|
199,627
|
|
|
Financing Costs
|
|
|
317,353
|
|
|
Government Costs
|
|
|
1,135,000
|
|
|
Misc. Direct Costs
|
|
|
245,000
|
|
|
FF&E Costs
|
|
|
536,600
|
|
|
Interest Reserve
|
|
|
688,154
|
|
|
Operating Deficit Reserve
|
|
|
578,894
|
|
|
Development Fee
|
|
|
997,400
|
|
|
Development Contingency
|
|
|
1,196,229
|
|
|
Marketing Costs
|
|
|
150,000
|
|
|
Subtotal
|
|
$
|
7,981,460
|
|
|
|
|
|
|
|
|
Hard Costs
|
|
|
|
|
|
GMAX
|
|
|
25,700,000
|
|
|
Utility Relocation
|
|
|
145,961
|
|
|
Hard Cost Contingency
|
|
|
771,000
|
|
|
Subtotal
|
|
$
|
26,616,961
|
|
|
|
|
|
|
|
|
Total Uses
|
|
$
|
40,067,621
|
|
Hard Cost Overrun Exceptions –
GMP Schedule of Values
|
Lumber
|
|
$
|
1,759,881
|
|
|
Steel
|
|
$
|
395,441
|
|
|
Concrete
|
|
$
|
147,670
|
|
|
Drywall
|
|
$
|
432,331
|
|
|
Copper
|
|
|
Cannot be quantified at this time
|
|
Exhibit D
PROPERTY INDEBTEDNESS
Indebtedness in the amount of $4,269,200.00,
which amount is secured by that certain Deed of Trust, Assignment and Security Agreement, dated December 20, 2012, by and among
TBR Lake Boone Owner, LLC, a Georgia limited liability company, as Trustee under the TBR Lake Boone Trust Agreement, dated December
20, 2012, Chicago Title Insurance Company, as Trustee, and Atlantic Capital Bank, as beneficiary (the "Deed of Trust").
Schedule
5.15
Form
of Property Management Agreement
[see attached]
Schedule
6.05(
f
)
Recourse
Construction loan adjustments
As of the date of this
Agreement, the Members have not yet selected a Construction Loan. The Members have agreed to source a Construction Loan in the
manner set forth in Section 6.05 of this Agreement. Because the terms of the Construction Loan regarding repayment recourse are
unknown as of the date of this Agreement, the Members have agreed to the following adjustments to (x) both distributions of Net
Cash Flow and Capital Proceeds and (y) the Conversion Split, in order to reflect certain assumptions of repayment recourse by the
BR Member, or its Affiliate, in the event the Construction Loan is a Recourse Construction Loan. Section 6.05(f) and this Schedule
6.05(f) are inapplicable with respect to the completion guaranty that is expected to be required for any such Construction Loan,
which shall be solely the responsibility of the TriBridge Member or its Affiliate(s) to deliver.
To the extent the Construction
Loan has a repayment Recourse Guaranty, then in such instance:
1. The TriBridge Member, or its Affiliate
(each a "
TBR Guarantor
"), shall provide recourse support for the repayment Recourse Guaranty with regard to and
be solely obligated for the first $3,000,000.00 of indebtedness of the Construction Loan guarantied under such repayment Recourse
Guaranty ("
Amount to be Guarantied
"); and
2. if such Repayment Recourse Guaranty
requires an Amount to be Guarantied in excess of $3,000,000.00, then the BR Member, or its Affiliate ("
BR Guarantor
"),
shall provide recourse support for the repayment Recourse Guaranty with regard to the next $3,000,000.00 of Amount to be Guarantied;
and
3. if such repayment Recourse Guaranty
requires an Amount to be Guarantied in excess of $6,000,000.00 (any Construction Loan with a repayment Recourse Guaranty requiring
an Amount to be Guarantied in excess of $6,000,000.00, a "
Recourse Construction Loan
"), then the BR Guarantor
shall provide recourse support for the repayment Recourse Guaranty with regard to any Amount to be Guarantied in excess of $6,000,000.00
(an "
Excess Recourse Guaranty
").
4. Notwithstanding anything contained in
this Agreement to the contrary, in the event the Construction Loan is a Recourse Construction Loan, the TriBridge Member at the
time of execution of the Recourse Construction Loan shall have the right to cause the TBR Guarantor to provide recourse support
(i.e. in lieu of the BR Guarantor) for the Excess Recourse Guaranty (i.e. for avoidance of doubt, that portion of any repayment
Recourse Guaranty applicable to the Amount to be Guarantied in excess of $6,000,000.00), in which event: (i) the Adjustments (as
hereinafter defined) shall not become effective, and Section 5 of this Schedule 6.05(f) shall be
void ab initio
, and (ii)
the TriBridge Member shall have the same right to unilaterally cause a Refinancing of the Construction Loan as the BR Member enjoys
pursuant to Section 6.05(d) of this Agreement (for the avoidance of doubt, each of the BR Member and the TriBridge Member shall
have the unilateral right to cause a Refinancing under such (limited) circumstances and the BR Member shall, reciprocally, have
all the same rights as the TriBridge Member had when the BR Member had the right under Section 6.05(d) to unilaterally cause Borrower
to refinance the Construction Loan).
5. In the event the BR Guarantor has provided
an Excess Recourse Guaranty, then the following adjustments (collectively, the "
Adjustments
") shall immediately
become effective:
I. Section 9.01 and Section 9.02
of the Agreement shall be amended by deleting Section 9.01 and Section 9.02 in their entirety, and in lieu thereof, substituting
the following in replacement thereof:
9.01
Distributions
Generally
. Distributions of Net Cash Flow and Capital Proceeds (other than from a Refinancing effectuated in connection with
a Conversion which shall be addressed in accordance with Section 9.02 below) shall be distributed and applied by the Managers in
the following order and priority:
(g) First,
pari passu to each Member based on its Priority Contribution Priority Return until paid in full, and then pari passu to each Member
based on its Shortfall Funding Priority Return until paid in full;
(h) Next,
pari passu to each Member based on its Additional Capital Contribution Priority Return until paid in full;
(i) Next,
to the Members, pari passu, in accordance with their Capital Percentages, until such time as the Members have received an Internal
Rate of Return of nine and one-half percent (9.5%) on all Initial Capital Contributions;
(j) Next,
on a pari passu basis, to each Member who funded a Mandatory Cost Overrun Funding Obligations the amount of such Mandatory Cost
Overrun Funding Obligation, without any return thereof;
(k) Next,
eighty percent (80.0%) to the BR Member and twenty percent (20.0%) to the TriBridge Member, until such time as the BR Member has
received an Internal Rate of Return on all Initial Capital Contributions of fifteen percent (15%); and
(l) Next,
seventy percent (70.0%) to the BR Member and thirty percent (30.0%) to the TriBridge Member, until such time as the BR Member has
received an Internal Rate of Return on all Initial Capital Contributions of twenty percent (20%); and
(m) Thereafter,
fifty percent (50.0%) to BR Member and fifty percent (50.0%) to TriBridge Member.
9.02
Distributions
of Capital Proceeds from a Refinancing in Connection with Conversion
. Distributions of Capital Proceeds from a Refinancing
effectuated in connection with a Conversion shall be distributed and applied by the Managers in the following order and priority:
(a) First,
pari passu to each Co-Tenant based on its Priority Contribution Priority Return until paid in full, and then pari passu to each
Co-Tenant based on its Shortfall Funding Priority Return until paid in full;
(b) Next,
pari passu to each Co-Tenant based on its Additional Capital Contribution Priority Return until paid in full;
(c) Next,
eighty-five percent (85%) to the BR Co-Tenant and fifteen percent (15%) to the TriBridge Co-Tenant until a nine and one-half percent
(9.5%) annualized return on the BR Co-Tenant’s Initial Capital Contribution has been paid in full;
(d) Next,
on a pari passu basis, to each Member who funded a Mandatory Cost Overrun Funding Obligations the amount of such Mandatory Cost
Overrun Funding Obligation, without any return thereof;
(e) Next,
the remainder eighty-five percent (85%) to BR Co-Tenant and fifteen percent (15%) to the TriBridge Co-Tenant.
II. Section 6.05(d)(iii)(C)(2)
shall be amended by deleting the phrase "75/25", and in lieu thereof, replacing it with the phrase "85/15".
III. Section 6.07 shall
be amended by:
(a)
deleting all instances of the phrase "twenty-five percent (25%)", and in lieu thereof, substituting the phrase "fifteen
percent (15%)"; and
(b) deleting
all instances of the phrase "seventy-five percent (75%)", and in lieu thereof, substituting the phrase "eighty-five
percent (85%)".
Exhibit 10.3
LIMITED LIABILITY
COMPANY AGREEMENT
OF
BR
LAKE BOONE JV Member, LLC
A DELAWARE LIMITED
LIABILITY COMPANY
LIMITED LIABILITY
COMPANY AGREEMENT
OF
BR
Lake boone jv Member, LLC
A DELAWARE
LIMITED LIABILITY COMPANY
THE UNITS
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT
”) OR UNDER THE SECURITIES
LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND SUCH LAWS. THE UNITS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION, OR ANY OTHER REGULATORY AUTHORITY. ACCORDINGLY, THESE SECURITIES MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED OR CONVEYED
IN THE ABSENCE OF REGISTRATION OF THE SAME PURSUANT TO THE APPLICABLE SECURITIES LAWS UNLESS AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY IS FIRST OBTAINED THAT SUCH REGISTRATION IS NOT THEN NECESSARY. ANY TRANSFER CONTRARY HERETO SHALL BE VOID.
THIS
LIMITED LIABILITY COMPANY AGREEMENT OF BR LAKE BOONE JV Member, LLC
(herein referred to
as the “
Agreement
”), is made and entered into as of July 15, 2015 (the “Effective Date”), by and
among
BRG Lake Boone NC, LLC
, a Delaware limited liability company, as the Class A Member (“
BRG
”), and
Bluerock Special Opportunity + Income Fund II, LLC
, a Delaware limited liability company (“
SOIF II
”),
as the Class B Member (BRG and SOIF II, together with any additional members hereinafter admitted, are referred to as the “
Members
”).
RECITALS
A. The
Company was formed as a Delaware limited liability company in accordance with the Delaware Limited Liability Company Act, as amended
from time to time (the “
Act
”) on July 15, 2015.
B. The
Company was formed to hold a membership interest in the Company Subsidiary (as defined below) (the “
Subsidiary Interest
”).
C. The
Company Subsidiary currently holds (or will as of closing of the acquisition hold) all of the membership interests in BR-TBR Lake
Boone NC Owner, LLC, a Delaware limited liability company (the “
Property Owner
”) which will in turn own the
fee interest in the Property (as defined below).
D. The
Members desire to set forth their agreement and understanding with respect to the operation of the Company as a Delaware limited
liability company from and after the date hereof.
NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises, covenants, and conditions herein contained, the
receipt and sufficiency of which are hereby acknowledged, the undersigned Members hereby covenant and agree as follows:
ARTICLE
1
DEFINITIONS
For
purposes of this Agreement, the following terms have the meanings set forth below:
1.1 “
Accountant
”
shall mean the certified public accounting firm that, from time to time, represents the Company.
1.2
“
Act
” shall have the meaning set forth in the preamble to this Agreement.
1.3 “
Additional
Capital Contributions
” shall have the meaning set forth in
Section 5.3
hereof.
1.4 “
Adjustment
Period
” shall mean a period of time as follows: The first Adjustment Period shall commence on the date hereof and each
succeeding Adjustment Period shall commence on the date immediately following the last day of the immediately preceding Adjustment
Period; each Adjustment Period shall end on the earliest to occur after the commencement of such Adjustment Period of (i) the
last day of each Fiscal Year as now exists or as may, from time to time, be selected by the Manager, (ii) a Capital Date, (iii)
the day immediately preceding the date of the “liquidation” of a Member’s Membership Interest in the Company
(within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations), (iv) the day immediately preceding the date
of an increase in the Membership Interest of a Member, or (v) the date on which the Company is terminated under
Article 3
or
Section 12.1
of this Agreement.
1.5 “
Affiliate
”
shall mean (i) any Entity more than five percent (5%) of the issued and outstanding stock of which, or more than five percent
(5%) interest in which, is owned, directly or indirectly, by any Member or (ii) any Entity that now or hereafter owns, directly
or indirectly, more than a ten percent (10%) interest in the Company or in any Member or (iii) any Entity who is an agent, trustee,
officer, director, employee, member or shareholder or member of the family (or any member of the family of any agent, trustee,
officer, director, employee, partner, member or shareholder) of the Company or of any Member or (iv) any Entity that, directly
or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company
or any Member. The term “control” (including the terms “controlled by” and “under common control
with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies
of an Entity, whether through the ownership of voting securities, by contract or otherwise. The term “family” shall
be deemed to include spouses, children, parents, brothers and sisters, and the spouse, children, parents, brothers and sisters
of such spouse’s children, parents, brothers and sisters.
1.6 “
Agreement
”
shall mean this Limited Liability Company Agreement of BR Lake Boone JV Member, LLC, as it now exists and as it may from time
to time hereafter be amended, restated or supplemented or otherwise modified from time to time.
1.7 “
Annual
Financial Statements
” shall have the same meaning as set forth in
Section 13.3
hereof.
1.8 “
Bankruptcy
”
shall mean, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (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 proceedings, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation 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 Person or of all or any substantial part of its properties,
or (vii) (A) if one hundred twenty (120) days after the commencement of any proceeding against the Person seeking reorganization,
arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, the proceeding has
not been dismissed, or (B) if within ninety (90) days after the appointment without such Person’s consent or acquiescence
of a trustee, receiver or liquidator of such Person 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.
1.9 “
Basic
Documents
” shall mean the (a) documents to be executed by the Property Owner in favor of the Lender as of the closing
of the Loan, and all documents and certificates contemplated thereby or delivered in connection therewith; and (b) all similar
documentation required by and delivered to any successor Lender and/or Mortgagee.
1.10 “
Benefit
Plan Investor
” shall mean (i) any “employee benefit plan” as defined by the Employee Retirement Income Security
Act of 1974, as amended (“
ERISA
”), regardless of whether it is subject to ERISA, (ii) any plan as defined in
Section 4975 of the IRC, and (iii) any entity deemed for any purpose of ERISA or Section 4975 of the IRC to hold assets of any
such employee benefit plan or plan due to investments made in such entity by such employee benefit plans and plans.
1.11 “
BGF
”
shall mean Bluerock Growth Fund, LLC, a Delaware limited liability company.
1.12 “
BGF
II
” shall mean Bluerock Growth Fund II, LLC, a Delaware limited liability company.
1.13 “
BRG
”
shall have the meaning set forth in the introductory paragraph hereof.
1.14 “
Budgeted
Development Capital Calls
” shall have the meaning as set forth in
Section 5.3(a)
hereof.
1.15 “
Capital
Accounts
” shall mean the capital accounts established by the Company for each Member pursuant to
Section 5.5
hereof. Capital Accounts shall be determined and maintained throughout the full term of the Company for each Member in accordance
with the rules of this definition. The balance of each Member’s Capital Account, as of any particular date, shall be an
amount equal to the sum of the following:
(a) The
cumulative amount of cash and the value of all other property that has been contributed to the capital of the Company by such
Member as a Capital Contribution; plus
(b) The
cumulative amount of the Company’s Net Profit and Gain that has been allocated to such Member hereunder; minus
(c) The
cumulative amount of the Company’s Net Loss and Loss that has been allocated to such Member hereunder; and minus
(d) The
cumulative amount of cash and the agreed upon value of all other property that has been distributed by the Company to such Member
(other than in repayment of any loans).
A Member’s
Capital Account shall also be increased or decreased to reflect any items described in Section 1.704-1(b)(2)(iv) of the Treasury
Regulations that are required to be reflected in such Member’s Capital Account and that are not otherwise taken into account
in computing such Capital Account under this definition.
1.16 “
Capital
Contributions
” shall mean all amounts paid by a Member for its Membership Interests and any Additional Capital Contributions
or Class A Priority Capital Contributions made by a Member.
1.17 “
Capital
Date
” shall mean the date on which any Gain or Loss is recognized by the Company.
1.18 “
Capital
Transaction
” shall mean any (i) direct or indirect sale or other disposition of the Property or substantially all of
the assets of the Company (including the Subsidiary Interest, the membership interests held by Company Subsidiary in Property
Owner, or the Property) outside the ordinary and customary course of business, (ii) payment, on account of a casualty, for the
Property or substantially all of the assets of the Company, Company Subsidiary or Property Owner to the extent such assets are
not replaced or repaired, (iii) refinancing of any indebtedness incurred by the Company, the Company Subsidiary or Property Owner,
including the Obligations, and (iv) similar items or transactions relating to the Property, the Subsidiary Interest, the membership
interests held by Company Subsidiary in Property Owner, or substantially all of the assets of the Company, the Company Subsidiary
or Property Owner, the proceeds of which under generally accepted accounting principles are deemed attributable to capital.
1.19 “
Cash
Flow From Operations
” shall mean, for a given period, the amount of cash received by the Company from the Company Subsidiary
and/or Property Owner other than on account of a Capital Transaction, minus administrative expenses of the Company, all determined
in accordance with cash basis accounting principles, consistently applied.
1.20 “
Certificate
of Formation
” shall mean the Certificate of Formation of the Company filed with the Secretary of State of the State
of Delaware on July 15, 2015, as amended or amended and restated from time to time.
1.21 “
Class
A Capital Commitment
” shall mean the amount of the Capital Contribution committed to be made by the Class A Member (including
the projected amount of the Class A Preferred Reserve that will be required of the Company), exclusive of any Class A Priority
Capital Contribution, as set forth on
Schedule I
to this Agreement. The Class A Capital Commitment represents the total
amount of projected capital, together with the Class B Members’ initial Capital Contributions, that will be required of
the Company by the Company Subsidiary and/or Property Owner to develop and lease-up the Project, as estimated under the Project
Budget.
1.22 “
Class
A Capital Contributions
” shall mean the amount of the Capital Contribution made by a Class A Member (including any Class
A Preferred Reserve), but exclusive of any Class A Priority Capital Contribution.
1.23 “
Class
A Mandatory Redemption Date
” shall mean that date which is the earlier of six (6) months following the maturity date
of the Loan (including the exercise of any extensions, but not any refinancings thereof), or any earlier acceleration or due date
thereof.
1.24 “
Class
A Member
” shall mean BRG and, with respect to those Units transferred from a Class A Member, any Person who has been
admitted as a Substitute Member as to the Class A Membership Interest transferred. An assignee of a Membership Interest who receives
Units from a Class A Member shall not be considered a Class A Member.
1.25 “
Class
A Membership Interest
” shall mean, with respect to any Class A Member, the membership interest allocated to such Class
A Member, which membership interest will be determined by using a fraction in which the number of Units owned by such Class A
Member is the numerator and the aggregate number of Units that are then owned by all Class A Members is the denominator. The foregoing
determination is also referred to as “Pro Rata as to the Class A Membership Interest”.
1.26 “
Class
A Preferred Reserve
” shall have the meaning set forth in
Section 5.2
hereof.
1.27 “
Class
A Priority Capital Contribution
” shall have the meaning set forth in
Section 5.3(b)
hereof.
1.28 “
Class
A Sinking Fund
” shall have the meaning set forth in
Section 6.6(a)
hereof.
1.29 “
Class
A Units
” shall mean the Units held by the Class A Members.
1.30 “
Class
A Unit Redemption Amount
” shall mean, as of the date of redemption of the Class A Units pursuant to
Section 10.5
hereof, the sum of (i) the aggregate Net Capital Contributions of the Class A Members plus (ii) the accrued but unpaid Current
Class A Return and the accrued but unpaid Priority Class A Return of the Class A Members.
1.31 “
Class
B Capital Commitment
” shall mean the amount of the Capital Contribution committed to be made by the Class B Member (including
the projected amount of the Class A Preferred Reserve that will be required of the Company), as set forth on
Schedule I
to this Agreement. The Class B Capital Commitment represents the total amount of projected capital, together with the Class A
Member’s Class A Capital Commitment, that will be required of the Company by the Company Subsidiary and/or Property Owner
to develop and lease-up the Project, as estimated under the Project Budget.
1.32 “
Class
B Capital Contributions
” shall mean the amount of the Capital Contribution made by a Class B Member (including any Class
A Preferred Reserve).
1.33 “
Class
B Member
” shall mean SOIF II, and, with respect to those Units transferred from a Class B Member, any Person who has
been admitted as a Substitute Member as to the Class B Membership Interest transferred. An assignee of a Membership Interest who
receives Units from a Class B Member shall not be considered a Class B Member.
1.34 “
Class
B Membership Interest
” shall mean with respect to any Class B Member the membership interest allocated to such Class
B Member, which membership interest will be determined by using a fraction in which the number of Units owned by such Class B
Member is the numerator and the aggregate number of Units that are then owned by all Class B Members is the denominator. The foregoing
determination is also referred to as “Pro Rata as to the Class B Membership Interest”.
1.35 “
Class
B Units
” shall mean the Units held by the Class B Members.
1.36 “
Company
”
shall mean BR Lake Boone JV Member, LLC, a Delaware limited liability company, as it may from time to time be constituted.
1.37 “
Company
Subsidiary
” shall mean BR-TBR Lake Boone NC Venture, LLC, a Delaware limited liability company, as it may from time
to time be constituted.
1.38 “
Company
Subsidiary LLC Agreement
” shall mean the Limited Liability Company Agreement of Company Subsidiary effective as of July
15, 2015, as may be amended or restated from time to time.
1.39 “
Conversion
Date
” shall have the meaning set forth in
Section 10.4(b)
hereof.
1.40 “
Conversion
Notice
” shall have the meaning set forth in
Section 10.4(a)
hereof.
1.41 “
Conversion
Period
” shall mean the six (6) month period of time that commences on the Conversion Trigger Date.
1.42 “
Conversion
Right
” shall mean the Class A Member’s right to convert its Class A Units to Class B Units, as provided in
Section
10.4
hereof.
1.43
“
Conversion Trigger Date
” shall mean the date on which seventy percent (70%)
of the Project’s
apartments have been leased.
1.44 “
Conversion
Units
” shall have the meaning set forth in
Section 10.4(b)
hereof.
1.45
“
Covered Person
” shall have the meaning set forth in
Section 17.4(a)
hereof.
1.46 “
Current
Class A Return
” shall mean an amount equal to the product of fifteen percent (15.0%) per annum, determined on the basis
of 365 or 366 days, as the case may be, for the actual number of days in the period for which the Current Class A Return is being
determined, times the sum of the Net Class A Capital Contributions, commencing on the date the initial Class A Capital Contribution
is made.
1.47
“
Default Event
” shall have the meaning as set forth in
Section 8.6(c)
hereof.
1.48
“
Entity
” shall mean any Person or other business entity, other than an individual.
1.49 “
Federal
Court
” shall have the meaning set forth in
Section 17.16
hereof.
1.50
“
Fiscal Year
” shall mean the fiscal year of the Company as set forth in
Section 13.2
hereof.
1.51
“
Gain
” shall mean the gain recognized by the Company for federal income tax purposes in any Adjustment Period
by reason of a Capital Transaction.
1.52 “
IRC
”
shall mean the Internal Revenue Code of 1986, Title 26 of the United States Code, as the same may now or hereafter be amended.
1.53 “
Lender
”
shall mean the holder of the Loan, and its successors and/or assigns.
1.54 “
Liquidating
Trustee
” shall have the meaning as set forth in
Section 12.4
hereof.
1.55 “
Loan
”
shall mean that certain construction loan to be hereafter borrowed by the Property Owner, as the same will be more specifically
described in the Basic Documents, including any successor in interest to the Loan.
1.56
“
Loss
” shall mean the loss recognized by the Company for federal income tax purposes in any Adjustment Period
by reason of a Capital Transaction.
1.57 “
Majority
” shall mean a collection of Members owning, in the aggregate,
more than 50% of the Membership Interests of all Members and, in the context of voting, means a collection of Members who
approve, consent to, or vote in favor of a matter before the Members and who own, in the aggregate, more than 50% of the
Membership Interests of all Members entitled to vote thereon. When used in the context of a class of Membership Interests,
“Majority” shall mean a collection of those class Members owning, in the aggregate, more than 50% of the
Membership Interests of all Members of that class, and, in the context of voting, means a collection of class Members who
approve, consent to, or vote in favor of a matter before the class Members and who own, in the aggregate, more than 50% of
the class Membership Interests of all class Members entitled to vote thereon.
1.58 “
Management
Committee
” shall mean the management committee of the Company Subsidiary as more fully described in the Company Subsidiary
LLC Agreement.
1.59 “
Manager
”
or “
Managers
” shall mean the Person or Persons selected to be the manager or managers of the Company from time
to time by either a Majority of the Class B Members or pursuant to
Section 7.4
herein. The initial Manager is SOIF II.
A Member simply by virtue of its status as a member in the Company shall
not
be a Manager of the Company unless
so selected by a Majority of the Class B Members or pursuant to
Section 7.4
herein. A Manager does not have to be a Member.
The term “Manager” as used herein shall specifically mean all of the then incumbent Managers of the Company where
the context requires.
1.60 “
Material
Action
” means to file any insolvency, or reorganization case or proceeding, to institute proceedings to have the Company
be adjudicated bankrupt or insolvent, to institute proceedings under any applicable insolvency law, to seek any relief under any
law relating to relief from debts or the protection of debtors, or consent to the institution of bankruptcy or insolvency proceedings
against the Company or file a petition seeking, or consent to, reorganization or relief with respect to the Company under any
applicable federal or state law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or a substantial part of its property, or make any assignment for the
benefit of creditors of the Company, or admit in writing the Company’s inability to pay its debts generally as they become
due, or take action in furtherance of any such action.
1.61 “
Member
”
or “
Members
” shall mean the Persons listed above as Members and any other Persons who shall subsequently be
admitted as Substitute Members, each in its capacity as a member of the Company, including both Class A Members and Class B Members.
1.62 “
Membership
Interest
” shall mean, with respect to any Member, the membership interest allocated to such Member, which membership
interest will be determined by using a fraction in which the number of Units owned by a Member is the numerator and the aggregate
number of Units that are then outstanding is the denominator.
1.63 “
Minimum
Gain
” shall mean, as of any particular date, an amount determined with respect to the Company on such date in accordance
with Section 1.704-1(b)(4)(ii)(c) of the Treasury Regulations interpreting the IRC.
1.64 “
Mortgage
”
shall mean any deed to secure debt, mortgage, deed of trust, security agreement or other similar instrument at any time and from
time to time constituting a lien upon, security interest in or security title to any of the assets of the Company, the Company
Subsidiary or the Property Owner.
1.65 “
Mortgagee
”
shall mean the holder of a Mortgage.
1.66 “
Net
Cash Proceeds
” shall mean the proceeds received by the Company from a Capital Transaction less (i) any amounts retained
by a Mortgagee and (ii) any costs incurred by the Company, the Company Subsidiary or the Property Owner in connection with such
Capital Transaction not paid to an Affiliate of a Member.
1.67 “
Net
Class A Capital Contributions
” shall mean the Class A Capital Contributions, less all distributions made to the Class
A Members under
Section 6.8(f)
hereof.
1.68 “
Net
Class A Priority Capital Contributions
” shall mean the Class A Priority Capital Contributions, less all distributions
made to the Class A Members under
Section 6.8(d)
hereof.
1.69 “
Net
Capital Contributions
” shall mean, with respect to any Member, its aggregate Capital Contributions less any distributions
delineated as return of Capital Contributions.
1.70 “
Net
Profit
” or “
Net Loss
” shall mean, for each Adjustment Period, the Company’s taxable income
or taxable loss for such Adjustment Period, as determined under Section 703(a) of the IRC and Section 1.703-1 of the Treasury
Regulations interpreting the IRC (for this purpose, all items of income, gain, loss or deduction are required to be stated separately
pursuant to Section 703(a)(1) of the IRC and shall be included in taxable income or taxable loss), with the following adjustments:
(a) any
tax-exempt income, as described in Section 705(a)(1)(B) of the IRC, realized by the Company during such Adjustment Period shall
be taken into account in computing such Net Profit or Net Loss as if it were taxable income;
(b) any
expenditures of the Company described in Section 705(a)(2)(B) of the IRC for such Adjustment Period, including any items treated
under Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations interpreting the IRC as items described in Section 705(a)(2)(B)
of the IRC, shall be taken into account in computing such Net Profit or Net Loss as if they were deductible items;
(c) any
items of income, deduction, gain or loss that are specially allocated pursuant to
Section 6.4
,
Section 6.5
and
Section
6.9
herein shall not be taken into account in computing Net Profit or Net Loss;
(d) if
the Company’s taxable income or taxable loss for such Adjustment Period, as adjusted in the manner provided above, is a
positive amount, such amount shall be the Company’s Net Profit for such Adjustment Period, and if negative, such amount
shall be the Company’s Net Loss for such Adjustment Period.
1.71 “
Obligations
”
shall mean the indebtedness, liabilities and obligations of the Company, Company Subsidiary or Property Owner under or in connection
with the Basic Documents or any related document in effect as of any date of determination.
1.72 “
Person
”
shall mean any individual, corporation, partnership, joint venture, limited liability company, limited liability partnership,
association, joint stock company, trust, unincorporated organization or other organization, whether or not a legal entity, and
any governmental authority.
1.73 “
Priority
Class A Return
” shall have the meaning set forth in
Section 5.3(b)
.
1.74 “
Project
”
shall mean an approximately 245–unit Class A rental apartment complex to be constructed on the Property and owned by Property
Owner, as more fully described in the Company Subsidiary LLC Agreement.
1.75 “
Project
Budget
” shall mean the Total Project Budget for the construction of the Project as those terms are used in the Company
Subsidiary LLC Agreement.
1.76 “
Property
”
shall mean that certain real property located in Raleigh, North Carolina and more fully described in the Company Subsidiary LLC
Agreement in which a fee interest is held by Property Owner and upon which the Project is to be located.
1.77 “
Property
Owner
” shall have the meaning set forth in the preamble of this Agreement.
1.78 “
Property
Owner LLC Agreement
” shall mean the Limited Liability Company Agreement of the Property Owner.
1.79 “
Receipt
Date
” shall have the meaning set forth in
Section 10.4(a)
hereof.
1.80 “
Representative
”
means a representative to the Management Committee.
1.81 “
Securities
Act
” shall have the meaning set forth in
Article 16
hereof.
1.82 “
SOIF
II
” shall have the meaning set forth in the introductory paragraph above.
1.83 “
SOIF
III
” shall mean Bluerock Special Opportunity+ Income Fund III, LLC, a Delaware limited liability company.
1.84 “
State
Courts
” shall have the meaning set forth in
Section 17.16
hereof.
1.85 “
Subsidiary
Interest
” shall have the meaning set forth in the preamble to this Agreement.
1.86
“
Substitute Member
” shall mean a transferee of a Member’s Membership Interest who has complied with the
requirements under
Article 10
of this Agreement and is a member of the Company.
1.87 “
Tax
Rate
” shall mean, for any Fiscal Year, the sum of (i) the highest then marginal income tax rate for individual taxpayers
as set forth in the IRC and (ii) the highest then marginal income tax rate for individual taxpayers in effect in the State of
Delaware.
1.88 “
Taxing
Jurisdiction
” means the federal, state, local, or foreign government that collects tax, interest, or penalties, however
designated, on any Member’s share of the income or gain attributable to the Company.
1.89 “
Treasury
Regulations
” shall mean the Income Tax Regulations promulgated under the IRC, as such regulations may be amended from
time to time including corresponding provisions of succeeding regulations.
1.90 “
Unit
”
shall mean one or more of the units of limited liability company interest, or fractional portions thereof, representing a Member’s
ownership rights in the Company, classified as Class A or Class B. Except as may be specifically otherwise provided in this Agreement
(e.g.,
Section 10.4
), a Member will be issued one (1) Unit for each dollar of Capital Contributions made by such Member.
ARTICLE
2
NAME, OFFICE, REGISTERED AGENT, AND
MEMBER’S NAMES AND MAILING ADDRESSES
2.1
Name
:
The name of the limited liability company is:
“BR LAKE
BOONE JV MEMBER, LLC”
2.2
Principal
Business Office
. The address of the principal business office of the Company shall be located at 712 Fifth Avenue, 9
th
Floor, New York, New York 10019,
and shall also be at such other place or places as the Manager may hereafter determine.
2.3
Registered
Office
. The address of the registered office of the Company in the State of Delaware is c/o National Registered Agents, Inc.,
160 Greentree Dr., Suite 101, Dover, Delaware 19904.
2.4
Registered
Agent
. The name and address of the registered agent of the Company for service of process on the Company in the State of Delaware
is National Registered Agents, Inc., 160 Greentree Dr., Suite 101, Dover, Delaware 19904.
2.5
Members’
Names and Number of Units
. The names and addresses of the Members, number of Class A and Class B Units owned by each Member,
Class A Membership Interests, and Class B Membership Interests are set forth on
Schedule I
to this Agreement.
ARTICLE
3
DURATION
The
term of the Company shall commence on the date of the filing of a Certificate of Formation with the Office of the Secretary of
State of the State of Delaware, and its duration shall be perpetual. The existence of the Company as a separate legal entity shall
continue until cancellation of the Certificate of Formation.
ARTICLE
4
PURPOSE
The
Company is organized for the purpose of: (i) acquiring, owning, holding, financing, hypothecating, pledging and disposing of the
Subsidiary Interest; and (ii) engaging in any lawful business, purpose or activity that may be undertaken by a limited liability
company organized under and governed by the Act. The Company shall possess and may exercise all of the powers and privileges granted
by the Act, by any other law or by this Agreement, together with any powers incidental thereto, including such powers and privileges
as are necessary or convenient to the conduct, promotion or attainment of the business, purposes or activities of the Company.
ARTICLE
5
CAPITAL CONTRIBUTIONS, MEMBERSHIP INTERESTS, ETC.
5.1
Admission
of Member
. The Members are admitted to the Company as the sole equity members of the Company upon their respective execution
and delivery of a counterpart signature page to this Agreement.
5.2
Capital
Contribution of the Members; Payment
. The Members have made their respective initial Capital Contributions to the Company
as set forth on
Schedule I
to this Agreement, and shall contribute such additional amounts of capital as provided in this
Agreement. The Members agree that the Class A Member’s Class A Capital Commitment, and the Class B Member’s Class
B Capital Commitment, include their proportionate share of an interest reserve calculated at a fifteen percent (15%) annual interest
rate on the funded portion of the Class A Member’s Class A Capital Commitment, which interest reserve shall be segregated
by the Company from all other Capital Contributions made by the Members pursuant to their respective Class A Capital Commitment
and Class B Capital Commitment, and from all other funds held by the Company, and shall be solely used to establish a specific
reserve to the benefit of the Class A Member (the “
Class A Preferred Reserve
”). Except as otherwise provided
in
Section 6.7
and
Section 10.4(b)
, the funds on deposit in the Class A Preferred Reserve shall be earmarked and
used specifically for the monthly draw and payment of a portion of the Current Class A Return equivalent to a 15% annualized return
on all Class A Capital Contributions, and the Manager shall not have the authority to use the funds in the Class A Preferred Reserve
for any other purpose without the prior written approval of the Class A Member (or if there is more than one Class A Member, Members
owning a Majority of the Class A Membership Interests). Until such time as the Class A Units are redeemed or converted to Class
B Units as provided in
Section 10.4
, the Company must at all times maintain an adequate amount in the Class A Preferred
Reserve to pay the Current Class A Return on a current basis.
5.3
Additional
Contributions
.
(a) To
the extent necessary and as required of the Company by the Company Subsidiary and/or Property Owner to develop and lease-up the
Project under the Project Budget, the Manager may call for additional capital from the Members, to the extent of their respective
Class A Capital Commitment and Class B Capital Commitment (“
Budgeted Development Capital Calls
”). If Class
A Member fails to fund its share of any Budgeted Development Capital Calls within ten (10) days of written notification of the
need therefor, its Current Class A Return shall be as of that date reduced to seven percent (7%) per annum. All other capital
calls shall be made as and in the amount determined by the Manager, including but not limited to the funding of any Current Class
A Return after payments thereon are drawn from the Class A Preferred Reserve, Priority Class A Return, or if additional funds
are required by or called for pursuant to the Company Subsidiary LLC Agreement and/or Property Owner LLC Agreement (all such additional
funds, other than Budgeted Development Capital Calls, are referred to as “
Additional Capital Contribution(s)
”).
For the avoidance of doubt, to the extent that Cash Flow From Operations is insufficient to allow the Company, after taking into
account any draws from the Class A Preferred Reserve as provided in
Section 6.7
, to pay the Class A Return and Priority
Class A Return in full on a monthly basis as required under
Section 6.6(b)
and
Section 6.6(c)
, Manager shall be
obligated to make a call for Additional Capital Contributions in such amounts as are necessary in order to allow the Company to
do so, and all such capital called for that purpose shall be distributed as provided in
Section 6.6(b)
and
Section 6.6(c)
.
Additional Capital Contributions shall be solely the obligation of the Class B Members, and the Class A Member shall have no obligation
to make Additional Capital Contributions. All additional funds contributed by the Class B Members shall be contributed as additional
capital to the Company by the Class B Members Pro Rata as to the Class B Membership Interest (or in any such other percentages
as they shall agree) within ten (10) days of written notification of the need therefor; provided, that no Additional Capital Contributions
funded shall be distributed to the Members without the prior written consent of the Class A Member. Any Additional Capital Contributions
made by the Class B Members (beyond the amount of its/their Class B Capital Commitment) will be treated on the same basis and
parity as the initial Capital Contributions of the Class B Members made in accordance with
Section 5.2
above.
(b) If
the Class B Members fail to contribute all of their share (based on 80% Class A Member share and 20% Class B Member share) of
any Budgeted Development Capital Call or to make all of an Additional Capital Contribution, the Class A Member may, but shall
not be obligated to, contribute as additional capital to the Company (if there is more than one Class A Member, Pro Rata as to
the Class A Membership Interest (or in any such other percentages as they shall agree)) all or a portion of the amount that the
Class B Members failed to fund. Any such Capital Contributions made by the Class A Member shall be referred to as the “
Class
A Priority Capital Contributions.
” Any Class A Priority Capital Contributions made by the Class A Member will be treated
on the same basis as its prior Capital Contributions of the Class A Member made in accordance with
Section 5.2
above, except
that the Current Class A Return on such Class A Priority Capital Contributions shall be twenty percent (20%) per annum (the “
Priority
Class A Return
”) and the Class A Member shall have a priority return of its Priority Class A Return and Class A Priority
Capital Contributions in distributions from Capital Transactions and Liquidations, as set forth in
Section 6.8
.
(c) Additional
Capital Contributions shall be made in cash unless the Manager and Class A Member agree otherwise.
(d) Except
as provided in
Section 5.2
,
Section 5.3(a)
and
Section 5.3(b)
, no Capital Contributions may be made to the
Company without the prior written consent of the Class A Member.
5.4
Return
of Capital Contributions; Interest on Capital Contributions
.
(a) No
Member shall have the right to withdraw his Capital Contributions or demand or receive the return of its Capital Contributions
or any part thereof, except as provided in
Section 10.5
with respect to the Class A Member and as otherwise provided in
this Agreement.
(b) The
Manager shall not be liable for the return of the Capital Contributions of the Members. If and to the extent that any such return
is required, such return shall be made solely from the assets of the Company.
(c) The
Company shall not pay interest on the Capital Contributions of any Member, except as otherwise provided in this Agreement.
5.5
Capital
Accounts
. The Capital Accounts of the Company shall be established and maintained for each Member hereunder in accordance
with the federal income tax accounting practices and rules established under Section 704(b) of the IRC and the Treasury Regulations
thereunder.
5.6
Membership
Interests
. The Class A Membership Interest and Class B Membership Interest in the Company are set forth on
Schedule I
to this Agreement.
5.7
Admission
of Additional Members
. The Company shall not be permitted to admit additional Members hereunder without consent of: (1) the
Manager and (2) the Members owning a Majority of (a) the Membership Interests and (b) the Class A Membership Interest, to the
extent outstanding. Except as expressly permitted in this Agreement, no other Person shall be admitted as a Member of the Company,
and no additional interest in the Company shall be issued, without such approval of a Majority of the Membership Interests and
the Class A Membership Interest.
ARTICLE
6
ALLOCATION AND DISTRIBUTION OF CERTAIN ITEMS
6.1
Net
Profit
.
After giving effect to the special allocations set
forth in
Section 6.4
,
Section 6.5
and
Section 6.9
, all
Net Profit shall be allocated
to
the Members’ Capital Accounts in the following manner and
order of priorities:
(a) After
giving effect to the allocations contained in
Section 6.1(b)
, the Company’s Net Profit shall be allocated one hundred
percent to the Class B Members’ Capital Accounts.
(b) To
the extent Net Loss was allocated to the Members’ Capital Accounts pursuant to
Section 6.2(a)
, then prior to making
the allocations under
Section 6.1(a)
, Net Profit shall be allocated to the Members’ Capital Accounts in an amount
equal to and in the reverse order that such Net Loss was allocated.
6.2
Net
Loss
. After giving effect to the special allocations set forth in
Section 6.4
,
Section 6.5
, and
Section 6.9
,
all Net Loss shall be allocated to the Members’ Capital Accounts in the following manner and order of priorities:
(a) After
giving effect to the allocations contained in
Section 6.2(b)
, the Company’s Net Loss shall be allocated in the following
manner and order of priorities:
(i) First,
one hundred percent (100%) to the Class B Members’ Capital Accounts until the cumulative Net Loss allocated to the Class
B Members’ Capital Accounts pursuant to this
Section 6.2(a)(i)
equals the amount of the Class B Members’ capital
contributions to the Company;
(ii) Second,
one hundred percent (100%) to the Class A Members’ Capital Accounts until the cumulative Net Loss allocated to the Class
A Members’ Capital Accounts pursuant to this
Section 6.2(a)(ii)
equals the amount of the Class A Members’ capital
contributions to the Company; and
(iii) Third,
the balance, to the Members who bear the risk of such loss or if no Members bears the risk of loss, one hundred percent (100%)
to the Class B Members’ Capital Accounts.
(b) To
the extent Net Profit was allocated to the Members’ Capital Accounts pursuant to
Section 6.1(a)
, then prior to making
any allocations of Net Loss under
Section 6.2(a)
, Net Loss shall be allocated to the Members’ Capital Accounts in
an amount equal to and in the reverse order that such Net Profit were allocated.
6.3
Composition
of Special Allocation Items
. Except as required otherwise under the IRC or the Regulations issued thereunder, all special
allocations of income, gain or deduction made pursuant to
Section 6.4
,
Section 6.5
and
Section 6.9
shall
consist of a proportionate part of each item of gross income, gain or deduction, as the case may be, that the Company recognizes
in the year such allocation is to be made.
6.4
Special
Current Class A Return Allocations
. Prior to the allocations contained in
Section 6.1
and
Section 6.2
, items
of income and Gain shall be specially allocated to the Class A Members in proportion to and to the extent of the excess, if any,
of (i) the cumulative Current Class A Return distributed to each Member pursuant to
Section 6.6(b)
,
Section 6.7(a)
and
Section 6.8(e)
hereof from the commencement of the Company to a date thirty (30) days after the end of such Adjustment
Period, over (ii) the cumulative items of income and Gain allocated to such Member pursuant to this
Section 6.4
for all
prior Adjustment Periods.
6.5
Special
Priority Class A Return Allocations
. Prior to the allocations contained in
Section 6.1
and
Section 6.2
, items
of income and Gain shall be specially allocated to the Class A Members in proportion to and to the extent of the excess, if any,
of (i) the cumulative Priority Class A Return distributed to each Member pursuant to
Section 6.6(c)
,
Section 6.7(b)
and
Section 6.8(c)
hereof from the commencement of the Company to a date thirty (30) days after the end of such Adjustment
Period, over (ii) the cumulative items of Gain allocated to such Member pursuant to this
Section 6.5
for all prior Adjustment
Periods.
6.6
Distributions
of Cash Flow From Operations
. Distributions of Cash Flow From Operations shall be made monthly. Distributions made pursuant
to this
Section 6.6
shall be made monthly to the Members in the following order of priority:
(a) On
and after the Class A Mandatory Redemption Date, to the Class A Members until such Class A Members have received distributions
in an amount equal to the Class A Unit Redemption Amount; provided, that, if distributions of Cash Flow From Operations to be
made under this
Section 6.6(a)
are insufficient to fully satisfy the Class A Unit Redemption Amount, all Cash Flow From
Operations shall be segregated in a separate account of the Company (the “
Class A Sinking Fund
”) until such
time as distributions to be made under this
Section 6.6(a)
plus the amounts in the Class A Sinking Fund are sufficient,
and are used, to fully satisfy the Class A Unit Redemption Amount;
(b) Second,
to the Class A Members (to be shared among them, pro rata, according to their respective unpaid Current Class A Return) until
such Class A Members have received distributions in an amount equal to their respective unpaid Current Class A Return (as may
be modified by Section 6.14) until it is paid in full pursuant to this Section 6.6(b), Section 6.7(a) and Section 6.8(e);
(c) Third,
to the Class A Members (to be shared among them, pro rata, according to their respective unpaid Priority Class A Return) until
such Class A Members have received distributions in an amount equal to their respective unpaid Priority Class A Return (as may
be modified by
Section 6.14
) until it is paid in full pursuant to this
Section 6.6(c)
,
Section 6.7(b)
and
Section 6.8(c)
; and
(d) Fourth,
to the Class B Members pro rata, in accordance with their respective Class B Membership Interests.
For the avoidance
of doubt, to the extent that Cash Flow From Operations is insufficient to allow the Company, after taking into account any draws
from the Class A Preferred Reserve as provided in Section 6.7, to pay the Class A Return and Priority Class A Return in full on
a monthly basis, Manager shall be obligated to make a call for Additional Capital Contributions in such amount as are necessary
in order to allow the Company to do so, and all such capital called for that purpose shall be distributed as provided in
Section
6.6(b)
and
Section 6.6(c)
above.
6.7
Distributions
from Class A Preferred Reserve
. The Manager shall cause distributions to be made from the Class A Preferred Reserve on a monthly
basis as necessary in order to pay a portion of the unpaid Current Class A Return equivalent to a 15% annualized return on all
Class A Capital Contributions;
provided however
, from and after the occurrence of a Default Event, the Manager shall cause
distributions to be made from the Class A Preferred Reserve on a monthly basis as necessary in order to pay any unpaid Current
Class A Return and all unpaid Priority Class A Return, in the following order of priority:
(a) To
the Class A Members (to be shared among them, pro rata, according to their respective unpaid Current Class A Return) until such
Class A Members have received distributions in an amount equal to their respective unpaid Current Class A Return (as may be modified
by
Section 6.14
) until it is paid in full pursuant to
Section 6.6(b)
, this
Section 6.7(a)
and
Section
6.8(e)
; and
(b) Second,
to the Class A Members (to be shared among them, pro rata, according to their respective unpaid Priority Class A Return) until
such Class A Members have received distributions in an amount equal to their respective unpaid Priority Class A Return (as may
be modified by
Section 6.14
) until it is paid in full pursuant to
Section 6.6(c)
, this
Section 6.7(b)
and
Section 6.8(c)
.
6.8
Distributions
From Capital Transactions and on Liquidations
. Net Cash Proceeds in connection with Capital Transactions and/or in connection
with the liquidation of the Company shall be distributed within thirty (30) days of the completion of the applicable event. Distributions
made pursuant to this
Section 6.8
shall be made in the following amounts and order of priority:
(a) To
discharge the debts and obligations of the Company;
(b) To
fund reasonable and necessary reserves (i) as determined in good faith by the Manager and (ii) approved by the Class A Members;
(c) To
the Class A Members (to be shared among them, pro rata, according to their respective unpaid Priority Class A Return) until such
Class A Members have received distributions of Net Cash Proceeds in an amount equal to their respective unpaid Priority Class
A Return until it is paid in full pursuant to
Section, 6.6(c)
,
Section 6.7(b)
and this
Section 6.8(c)
;
(d) To
the Class A Members (to be shared among them, pro rata, according to their respective Net Class A Priority Capital Contributions)
until such Class A Members have received distributions of Net Cash Proceeds in an amount equal to their respective Net Class A
Priority Capital Contributions until it is paid in full pursuant to this
Section 6.8(d)
;
(e) To
the Class A Members (to be shared among them, pro rata, according to their respective unpaid Current Class A Return) until such
Class A Members have received distributions of Net Cash Proceeds in an amount equal to their respective unpaid Current Class A
Return until it is paid in full pursuant to this
Section 6.8(e)
,
Section 6.7(a)
and
Section 6.6(b)
;
(f) To
the Class A Members (to be shared among them, pro rata, according to their respective aggregate Net Class A Capital Contributions),
until such Class A Members have received distributions of Net Cash Proceeds in the amount equal to their respective aggregate
Net Class A Capital Contributions until they are repaid in full pursuant to this
Section 6.8(f)
;
(g) To
the Class B Members pro rata, in accordance with (and in reduction of) their respective positive Capital Accounts; and
(h) To
the Class B Members pro rata, in accordance with their respective Class B Membership Interests.
6.9
Special
Tax Allocations
. The allocations in this
Section 6.9
shall be given effect before giving effect to the allocations
contained in
Section 6.1
through
Section 6.5
:
(a) Notwithstanding
any provision contained herein to the contrary, if the amount of Net Loss and Loss for any Adjustment Period that would otherwise
be allocated to a Member hereunder would cause or increase a deficit balance in such Member’s Capital Account to an amount
in excess of the sum of such Member’s share of Minimum Gain as of the last day of such Adjustment Period, then a proportionate
part of such Net Loss and Loss equal to such excess shall be allocated proportionately first to the other Members in an amount
up to, but not in excess of, the amount that would cause or increase a deficit balance in each of such Member’s Capital
Accounts to an amount equal to the sum of their respective shares of Minimum Gain as of the last day of such Adjustment Period.
For purposes of this
Section 6.9(a)
, each Member’s Capital Account shall be computed as of the last day of such Adjustment
Period in the manner provided in the definition of Capital Account, but shall be reduced for the items described in Section 1.704-1(b)(2)(ii)-(d)(4),
(5) and (6) of the Treasury Regulations interpreting the IRC.
(b) Notwithstanding
any provision in this Agreement to the contrary, if any of the Members, as of the last day of any Adjustment Period, has a deficit
balance in its Capital Account that exceeds the sum of its share of Minimum Gain as of such last day, then all items of income
and gain of the Company (consisting of a prorata portion of each item of Company income, including gross income and Gain) for
such Adjustment Period shall be allocated to such Members in the amount and in the proportions required to eliminate such excess
as quickly as possible. For purposes of this
Section 6.9(b)
, a Member’s Capital Account shall be computed as of the
last day of an Adjustment Period in the manner provided in the definition of Capital Account, but shall be increased by any allocation
of income to such Member for such Adjustment Period under
Section 6.9(c)
.
(c) Notwithstanding
any provision in this Agreement to the contrary, if there is a net decrease in the Minimum Gain during any Adjustment Period,
then all items of gross income and Gain of the Company for such Adjustment Period (and, if necessary, for subsequent Adjustment
Periods) shall be allocated to each Member in proportion to, and to the extent of, an amount equal to the greater of (i) the portion
of such Member’s share of the net decrease that is allocable to the disposition of Company property subject to one or more
nonrecourse liabilities of the Company or (ii) the deficit balance in such Member’s Capital Account (determined before any
allocation for such Adjustment Period) in excess of the sum of such Member’s share of the Minimum Gain as of the close of
such Adjustment Period. The items required to be allocated to the Members under this
Section 6.9(c)
shall be determined
in accordance with Section 1.704-2(f) of the Treasury Regulations.
(d) Notwithstanding
any other provision contained herein, any item of Company loss, deduction or IRC Section 705(a)(2)(B) expenditure that is attributable
to a nonrecourse liability of the Company for which any Member bears the economic risk of loss (e.g., a Member or an Affiliate
makes the nonrecourse loan to the Company) shall be allocated to the Member or Members who bear the economic risk of loss with
respect to such liability to the extent required in Section 1.704-2(i) of the Treasury Regulations interpreting the IRC.
6.10
Curative
Allocations.
The allocations set forth in
Section 6.9
(the “
Regulatory Allocations
”) are intended
to comply with the requirements of the Treasury Regulations. The Regulatory Allocations may not be consistent with the manner
in which the Members intend to divide Company distributions. Accordingly, notwithstanding any other provision of this
Article
6
(other than the Regulatory Allocations), the Manager may make such offsetting special allocations of income, gain, loss,
or deduction in whatever manner it determines appropriate so as to prevent the Regulatory Allocations from distorting the manner
in which the Company’s distributions would otherwise be divided among the Members. In general, the Members anticipate that
this will be accomplished by specially allocating other profit, losses, gain, and deductions among the Members so that, after
such offsetting special allocations are made, the amount of each Member’s Capital Account will be, to the extent possible,
equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not a part of this Agreement
and all Company items had been allocated to the Members solely pursuant to
Section 6.1
through
Section 6.5
.
6.11
IRC
Section 704(c) Tax Allocations
. In accordance with IRC Section 704(c) and the Treasury Regulations thereunder, income, gain,
loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company
for federal income tax purposes and its fair market value. Any elections or other decisions relating to such allocations
shall be made by the Manager in its sole discretion.
6.12
Distribution
Limitations
. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required
to make a distribution to the Members on account of their interests in the Company if such distribution would violate the Act
or any other applicable law or would constitute a default under any Basic Document.
6.13
Amounts
Withheld for Taxes or Paid on Composite Returns
. All amounts withheld pursuant to the IRC or any provision of any state or
local tax law with respect to any payment, distribution or allocation to the Company or one or more of the Members shall be treated
as amounts paid or distributed, as the case may be, to the Members for whom such amounts were withheld pursuant to this Article
for all purposes under this Agreement. The Manager may allocate any such amount among the Members in any manner that is in accordance
with applicable law. The Company is authorized to withhold from payments and distributions to one or more Members, or with respect
to allocations to one or more Members, and to pay over to any federal, state or local government, any amounts so withheld under
this Agreement, the IRC or any provisions of any other federal, state, or local law, and shall allocate any such amounts to the
Members for whom such amounts were withheld. To the extent required by any provision of any state or local tax law, the Company
shall file a composite tax return on behalf of one or more of its Members and shall report and pay income taxes required by law
to be paid with such composite tax returns to any Taxing Jurisdiction, and any such amounts shall be treated as a distribution
to the Member for whom such composite tax return is filed. The Company shall have the power and authority to determine (a) whether
a Member should be included in a composite tax return required to be filed by any provision of any applicable tax law, and (b)
whether the Member is subject to withholding, pursuant to this
Section 6.13
, on payments, distributions or allocations
from the Company. A Member shall be limited to an action against the applicable Taxing Jurisdiction(s) with respect to any claims
based on over-withholding or over-payment on a composite tax return, and neither the Company, nor the Manager shall have any liability
to any Member with respect to any withholding or composite tax return filings or payments made pursuant to this
Section 6.13
.
6.14
Timing
of Distributions of Current Class A Return and Priority Class A Return
. Distributions of Current Class A Return under
Section
6.6(b)
or
Section 6.8(e)
and Priority Class A Return under
Section 6.6(c)
or
Section 6.8(c)
will be made
on a monthly basis on or before the 10
th
day of each calendar month following the calendar month to which the Current
Class A Return or Priority Class A Return relates. If a distribution of Current Class A Return or Priority Class A Return is not
made on or before the 10
th
day of a calendar month (a “
Delayed Distribution
”), the Current Class
A Return and the Priority Class A Return (if any) shall be calculated by increasing the annual percentage rate therein by 3.5%
from the 11
th
day of such calendar month until such time as all Delayed Distributions are made.
ARTICLE
7
APPOINTMENT OF MANAGER; OBLIGATIONS, REPRESENTATIONS AND
WARRANTIES OF THE MANAGER
7.1
Appointment
of the Manager
. Subject to
Section 8.6
, the business and affairs of the Company shall be managed by or under the direction
of the Manager. The Manager shall hold office until such Manager’s earlier dissolution, death, resignation, expulsion or
removal. Any successor Manager shall be appointed by a Majority of the Class B Membership Interest prior to the Conversion Date
and by a Majority of the Membership Interest on and after the Conversion Date, unless otherwise provided in this Agreement. A
Manager need not be a Member. A Member shall not be deemed to be a Manager simply by virtue of being a Member. The initial Manager
designated by the Class B Members is SOIF II.
7.2
Compensation
of Manager; Removal of Manager
. The Manager shall receive no compensation for serving as the Manager of the Company. The Manager
shall be reimbursed for all reasonable expenses incurred in managing the Company. The Manager and Affiliates of a Member or the
Manager may provide services to the Company, the Company Subsidiary, the Property Owner and the Property in addition to those
contemplated to be provided by a Manager and receive additional compensation therefor; provided that any fee paid by the Company,
the Company Subsidiary or the Property Owner for such services shall be at rates customarily charged for similar services by Persons
engaged in the same or substantially similar activities in the relevant geographical area and the provisions of each such contract
shall be at least as favorable to the Company as the terms reasonably expected by the Manager to be available in an arm’s-length
transaction with an independent third party and, provided further, that any such contract with an Affiliate of the Manager, Class
B Members and/or their Affiliates must be approved by the Class A Members, which approval will not be unreasonably withheld, conditioned
or delayed. Unless otherwise restricted by law or the Basic Documents, the Manager may resign by written notice to the Company,
in which case if there are no persons or entities appointed by or willing to serve as Manager under the Class B Members, then
any vacancy may be filled by the written consent of the Members owning a Majority of the Class A Membership Interests. Notwithstanding
the foregoing and except as provided in
Section 7.4
, a Manager may not be removed or expelled as the Manager and no additional
Manager may be appointed unless there is cause for removal. For purposes hereof, “cause for removal” shall mean (i)
an event of default under the Loan or Basic Documents has been declared by the Lender, (ii) the assertion by the Class A Members
that any action by the Manager constitutes fraud against the Company, the Company Subsidiary, the Class A Members, or the Project,
(iii) the good faith assertion by the Class A Members that any action or failure to act by the Manager constitutes (or constituted)
gross negligence, willful misconduct, bad faith or a material violation of law in the performance of its duties to the Company,
(iv) the assertion by the Class A Members of a violation by the Manager of its fiduciary obligations to the Company, and (v) the
good faith assertion by the Class A Members of any material breach by the Manager of the material terms of this Agreement; provided,
however, that such alleged breach of this Agreement by the Manager described in subpart (v) has not been cured by the Manager
within sixty (60) days after such time as it may be demonstrated that the Manager had actual knowledge of such alleged material
breach; provided, however that if such breach cannot reasonably be cured within such sixty (60) day period and the Manager is
diligently pursuing such cure, the sixty (60) day period shall be extended to ninety (90) days.
In
the event that a “cause for removal” described in the definition of “cause for removal” above occurs,
upon the giving of written notice by the Class A Members to the Manager that the Manager is replaced, then the current Manager
shall be replaced by the Manager designated in such notice (the “
Class A Manager
”) and the Class A Manager
shall be the sole Manager of the Company with all powers of the Manager of the Company and the initial Manager shall have no further
rights as and shall immediately cease to act as Manager of the Company, and notwithstanding anything in this Agreement to the
contrary, such Class A Manager may not thereafter be removed without the consent of the Class A Members.
7.3
Manager
as Agent
. To the extent of its powers set forth in this Agreement and subject to
Section 8.6
, the Manager is an agent
of the Company for the purpose of the Company’s business, and the actions of the Manager taken in accordance with such powers
set forth in this Agreement shall bind the Company.
7.4
Manager
Following Class A Conversion Date
. As of the date of closing of BRG’s exercise of its Conversion right as provided in
Section 10.4
(the “
Conversion Date
”), SOIF II, and any then current Manager shall each and all be deemed
to have automatically resigned as Managers and cease to be Managers of the Company, whereupon BRG shall become the sole Manager
of the Company. Notwithstanding
Section 7.2
, on and after the Conversion, the Manager may only be removed by a Majority
Vote of the Members for an act or omission by the Manager related to the Company constituting gross negligence or fraud causing
a material diminution of value in the Company or the Subsidiary Interest.
ARTICLE
8
STATUS OF THE MANAGER’S POWERS
AND TRANSFERABILITY OF INTERESTS
8.1
Control
and Responsibility
. Except as otherwise expressly provided herein, the Manager shall be responsible for the management of
the Company business and shall have all powers conferred by law as well as those that are necessary, advisable or consistent in
connection therewith. Except as otherwise provided in
Section 8.6(d)
as to the Class A Member, any note, contract, management
agreement, deed, bill of sale, assignment, conveyance, mortgage, lease or other commitment purporting to bind the Company or any
third party to any action shall be executed and delivered by the Manager on behalf of the Company and no other signature whatsoever
shall be required.
8.2
Status
of Manager’s Interests
. The Manager shall not have the right to transfer or assign the interests it holds as Manager
in the Company; provided, however, to the extent that BRG or a BRG Transferee Transfers all or a portion of its Interest in accordance
with Article 10 to a BRG Transferee, then after a Conversion such BRG Transferee may be appointed as an additional Manager under
Section 7.1
by BRG or a BRG Transferee then holding all or a portion of an Interest without any further action or authorization
by any Member.
8.3
No
Right to Partition
. To the fullest extent permitted by law, neither the Members nor the Manager shall have the right to bring
an action for partition or any sale for division against the Company or any of its properties. Except as otherwise expressly provided
in this Agreement, to the fullest extent permitted by law, each of the Members hereby irrevocably waives any right or power that
such Person might have to cause the Company or any of its assets to be partitioned, to cause the appointment of a receiver for
all or any portion of the assets of the Company, to compel any sale of all or any portion of the assets of the Company pursuant
to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation,
winding up or termination of the Company. To the fullest extent permitted by law, each of the Members hereby irrevocably waives
any right or power that such Person might have to reject this Agreement in any bankruptcy or insolvency proceedings relating to
such Person. The Members shall not have any interest in any specific assets of the Company, and the Members shall not have the
status of a creditor with respect to any distribution pursuant to Agreement. The interest of the Members in the Company is personal
property.
8.4
Extent
of Obligation
. The Manager shall devote such time to the business and affairs of the Company as the Manager shall reasonably
deem necessary to conduct properly such business and affairs in accordance with this Agreement and applicable law.
8.5
Rights
and Powers
. In addition to any other rights and powers that it may possess under applicable law or by virtue of this Agreement,
but in any event subject to Section 8.6 hereof and the Basic Documents to the contrary, the Manager shall have the full and absolute
power and authority to bind the Company and take any and all actions and do anything and everything it deems necessary or appropriate
in performing its duties hereunder and shall have all rights and powers required or appropriate to its management of the Company
business (and indirectly the business of the Company Subsidiary and/or the Property Owner), including, but not limited to, the
following specific rights and powers. If there is more than one Manager at any time, any action taken by the Managers must be
agreed to by each Manager.
8.6
Limitations
on Authority of the Manager
.
(a) It
is expressly understood that the Manager shall not do or perform any of the following acts on behalf of the Company without first
obtaining the approval of the Members holding at least a Majority of the Membership Interests:
(i) any
act in contravention of this Agreement;
(ii) any
act that would make it impossible to carry on the ordinary business of the Company, the Company Subsidiary or the Property Owner;
(iii) confess
a judgment against the Company;
(iv) possess
Company (or Company Subsidiary or Property Owner) property or assign the rights of the Company (or Company Subsidiary or Property
Owner) in specific Company (or Company Subsidiary or Property Owner) property for other than Company (or Company Subsidiary or
Property Owner) purposes;
(v) admit
a Person as a Manager, except as provided in
Section 7.2
;
(vi) admit
a Person as a Member except as otherwise provided herein;
(vii) continue
the business of the Company in contravention of
Section 12.1
; or
(viii) cause
or permit the Company to extend credit to or to make any loans or become surety, guarantor, endorser, or accommodation endorser
for any Entity.
(b) It
is expressly understood that, without first obtaining the approval of a Majority of the Class A Membership Interests, in their
sole and absolute discretion, and subject to the Basic Documents, the Manager shall not undertake or perform any of the actions
set forth in
Section 8.6(a)
if doing so would cause any dilution of or material adverse economic effect upon the Class
A Member’s Membership Interest or its rights under this Agreement or the Company Subsidiary LLC Agreement or the Property
Owner LLC Agreement, nor may the Manager undertake or perform any of the following acts on behalf of the Company without first
obtaining the approval of a Majority of the Class A Membership Interests, in their sole and absolute discretion, subject to the
Basic Documents:
(i) cause
the Company to approve any Major Decision (as defined in
Section 7.07
of the Company Subsidiary LLC Agreement, or any successor
section thereto);
(ii) cause
the Company to approve any amendment to the Company Subsidiary LLC Agreement;
(iii) file
or consent to any filing of any reorganization, receivership, insolvency, bankruptcy or other similar proceedings as to the Company,
the Company Subsidiary or the Property Owner pursuant to any federal or state law affecting debtor and creditor rights;
(iv) to
the fullest extent permitted by law, dissolve or liquidate the Company;
(v) distribute
any cash or property of the Company other than as provided in this Agreement;
(vi) merge
or consolidate with any other Entity;
(vii) amend,
modify or alter this Agreement, except as otherwise provided herein; or
(viii) cause
the Company, the Company Subsidiary or the Property Owner to consent to any REIT Prohibited Transaction, as defined in the Company
Subsidiary LLC Agreement.
(c) Any
action or failure to act by the Manager to comply with the provisions of
Section 8.6(a)
or
Section 8.6(b)
, or any
other breach of this Agreement by the Manager or any Class B Member, shall constitute a “
Default Event
.”
(d) Notwithstanding
any provision herein to the contrary, on and after the Conversion Date (if applicable), any decision to be made by the Company
or its Representatives on the Management Committee, or pursuant to
Section 7.07
or
Section 12.06
of the Company
Subsidiary LLC Agreement, shall only require the approval of and be subject to the direction of BRG and not any other Member of
the Company;
provided
,
further
, that on and after the Conversion Date (if applicable) only BRG, and not
any other Member of the Company, shall have the power and authority to exercise the powers and privileges of the Company as manager
of the Company Subsidiary.
ARTICLE
9
STATUS OF MEMBERS
9.1
Liability
.
Except as otherwise provided by the Act, a Member shall not be bound by, or be personally liable for, the expenses, liabilities
or obligations of the Company, solely by reason of being a Member.
9.2
Business
of the Company
. Except as otherwise provided herein, a Member shall take no part in the conduct or control of the business
of the Company and shall have no right or authority to act for or to bind the Company in any manner whatsoever. Whenever this
Agreement provides for the approval or action of the Class B Members, unless specifically stated otherwise, such approval or action
shall be made by the Class B Members owning a Majority of the Class B Membership Interest. Whenever this Agreement provides for
the approval or action of the Class A Members, unless specifically stated otherwise, such approval or action shall be made by
the Class A Member (or if there is more than one Class A Member, the Class A Members owning a Majority of the Class A Membership
Interest).
9.3
Status
of Member’s Interest
. Except as otherwise provided in this Agreement, a Member’s Membership Interest shall be
fully paid and non-assessable. No Member shall have the right to withdraw or reduce its Capital Contribution to the Company except
as a result of (i) the dissolution and termination of the Company or (ii) as otherwise provided in this Agreement and in accordance
with applicable law.
ARTICLE
10
TRANSFER OF MEMBERSHIP INTEREST; CLASS A CONVERSION RIGHT AND REDEMPTION
10.1
Sale,
Assignment, Transfer or Other Disposition of Membership Interest
.
(a)
Prohibited
Transfers
. Except as otherwise provided in this
Article 10
, or as approved by the Manager, no Member shall
have the right to sell, transfer, assign, pledge or encumber (“
Transfer
”) all or any part of its Membership
Interest, whether legal or beneficial, in the Company, and any attempt to so Transfer such Membership Interest (and such Transfer)
shall be null and void and of no effect. Notwithstanding the foregoing, any Member shall have the right, with the consent of the
other Members, at any time to pledge to a lender or creditor, directly or indirectly, all or any part of its Membership Interest
in the Company for such purposes as it deems necessary in the ordinary course of its business and operations.
(b)
Affiliate
Transfers
.
(i) Subject
to the provisions of
Section 10.1(b)(ii)
hereof, and subject in each case to the prior written approval of each
Member (such approval not to be unreasonably withheld), any Member may Transfer all or any portion of its Membership Interest
in the Company at any time to an Affiliate of such Member, provided that such Affiliate shall remain an Affiliate of such Member
at all times that such Affiliate holds such Membership Interest. If such Affiliate shall thereafter cease being an Affiliate of
such Member while such Affiliate holds such Membership Interest, such cessation shall be a non-permitted Transfer and shall be
deemed
void ab initio
, whereupon the Member having made the Transfer shall, at its own and sole expense, cause such
putative transferee to disgorge all economic benefits and otherwise indemnify the Company and the other Member(s) against loss
or damage under the Basic Documents.
(ii) Notwithstanding
anything to the contrary contained in this Agreement, the following Transfers shall not require the approval set forth in
Section
10.1(b)(i)
:
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(a)
|
Intentionally Omitted
|
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(b)
|
Any Transfer by SOIF II or
a SOIF II Transferee of up to one hundred percent (100%) of its Membership Interest to any Affiliate of SOIF II, including but
not limited to (A) BRG or any Person that is directly or indirectly owned by BRG; (B) SOIF III or any Person that is directly
or indirectly owned by SOIF III; (C) BGF or any Person that is directly or indirectly owned by BGF; and/or (D) BGF II or any Person
that is directly or indirectly owned by BGF II (collectively, a “
SOIF II Transferee
”);
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(c)
|
Any Transfer by BRG or a BRG
Transferee of up to one hundred percent (100%) of its Membership Interest to any Affiliate of BRG, including but not limited to
(A) SOIF II or any Person that is directly or indirectly owned by SOIF II; (B) SOIF III or any Person that is directly or indirectly
owned by SOIF III; (C) BGF or any Person that is directly or indirectly owned by BGF and/or (D) BGF II or any Person that is directly
or indirectly owned by BGF II (collectively, a “
BRG Transferee
”);
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provided however,
as to
Section 10.1(b)(ii)(a)
, this
Section 10.1(b)
, and Section
10.1(c)
, and as to
Section 10.1(b)(i)
,
no Transfer shall be permitted and shall be
void ab initio
if it shall violate any “Transfer” provision
of the Basic Documents. Upon the execution by any such SOIF II Transferee or BRG Transferee of such documents necessary to admit
such party into the Company and to cause the SOIF II Transferee or BRG Transferee (as applicable) to become bound by this Agreement,
the SOIF II Transferee or BRG Transferee (as applicable) shall become a Member, without any further action or authorization by
any Member.
(c)
Admission
of Transferee; Partial Transfers
. Notwithstanding anything in this
Article 10
to the contrary, no Transfer
of Membership Interests in the Company shall be permitted unless the potential transferee is admitted as a Member under this
Section
10.1(c)
:
(i) If
a Member Transfers all or any portion of its Membership Interest in the Company, such transferee may become a Member if (i) such
transferee executes and agrees to be bound by this Agreement, (ii) the transferor and/or transferee pays all reasonable legal
and other fees and expenses incurred by the Company in connection with such assignment and substitution and (iii) the transferor
and transferee execute such documents and deliver such certificates to the Company and the remaining Members as may be required
by applicable law or otherwise advisable; and
(ii) Notwithstanding
the foregoing, any Transfer or purported Transfer of any Membership Interest, whether to another Member or to a third party, shall
be of no effect and
void ab initio
, and such transferee shall not become a Member or an owner of the purportedly transferred
Membership Interest, if the Manager determines in its sole discretion that:
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(a)
|
the Transfer would require
registration of any Membership Interest under, or result in a violation of, any federal or state securities laws;
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(b)
|
the Transfer would result
in a termination of the Company under IRC Section 708(b);
|
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(c)
|
as a result of such Transfer
the Company would be required to register as an investment company under the Investment Company Act of 1940, as amended, or any
rules or regulations promulgated thereunder;
|
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(d)
|
if as a result of such Transfer
the aggregate value of Membership Interests held by “benefit plan investors” including at least one benefit plan investor
that is subject to ERISA, could be “significant” (as such terms are defined in U.S. Department of Labor Regulation
29 C.F.R. 2510.3-101(f)(2)) with the result that the assets of the Company could be deemed to be “plan assets” for
purposes of ERISA;
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(e)
|
as a result of such Transfer,
the Company would or may have in the aggregate more than one hundred (100) members and material adverse federal income tax consequences
would result to a Member. For purposes of determining the number of members under this
Section 10.1(c)(ii)(e)
, a Person
(the “
Beneficial Owner
”) indirectly owning an interest in the Company through a partnership, grantor trust
or S corporation (as such terms are used in the IRC) (the “
Flow-Through Entity
”) shall be considered a
member, but only if (i) substantially all of the value of the Beneficial Owner’s interest in the Flow-Through Entity is
attributable to the Flow-Through Entity’s interest (direct or indirect) in the Company and (ii) in the sole discretion of
the Manager, a principal purpose of the use of the Flow-Through Entity is to permit the Company to satisfy the 100-member limitation;
or
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(f)
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the transferor failed to comply
with the provisions of
Section 10.1(b)(i)
or
Section 10.1(b)(ii)
.
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The Manager
may require the provision of a certificate as to the legal nature and composition of a proposed transferee of a Membership Interest
of a Member and from any Member as to its legal nature and composition and shall be entitled to rely on any such certificate in
making such determinations under this
Section 10.1(c)
.
10.2
Withdrawals
.
Each of the Members does hereby covenant and agree that it will not withdraw, resign, retire or disassociate from the Company,
except as a result of a Transfer of its entire Membership Interest in the Company permitted under the terms of this Agreement
and that it will carry out its duties and responsibilities hereunder until the Company is terminated, liquidated and dissolved
under
Article 12
. No Member shall be entitled to receive any distribution or otherwise receive the fair market value
of its Membership Interest in compensation for any purported resignation or withdrawal not in accordance with the terms of this
Agreement.
10.3
Death,
Incapacity or Dissolution of a Member
.
(a) The
death, insanity or incompetency of a Member who is an individual shall not, in and of itself, cause the termination or dissolution
of the Company. Thereafter, the legally authorized personal representative of such Member shall have all the rights of a Member
for the purpose of settling or managing his estate, and shall have such power as such party possessed to make an assignment of
his interest in the Company in accordance with the terms hereof and to join with such assignee in making application to substitute
such assignee as a Member, provided all of the provisions of this Agreement are complied with by the holder of such Member’s
interest.
(b) The
dissolution or other cessation to exist as a legal entity of any Member that is not an individual shall not, in and of itself,
cause the termination or dissolution of the Company. Thereafter, the authorized representative of such entity, possessed of the
rights of such Member for the purpose of winding up, in any orderly fashion, and disposing of the business of such entity, shall
have such power as such entity possessed to make an assignment of its interest in the Company in accordance with the terms hereof
and to join with such assignee in making application to substitute such assignee as a Member, provided all of the provisions of
this Agreement are complied with by the holder of such Member’s interest.
10.4
BRG
Class A Conversion Right
. During the Conversion Period and for so long as BRG holds Class A Units in the Company, BRG shall
have the right to convert all, but not less than all, of its Class A Units into Class B Units in accordance with this
Section
10.4
.
(a) During
the Conversion Period, and so long as BRG then holds a Majority of the Class A Membership Interests, BRG may deliver a notice
to the Company (a “
Conversion Notice
”) indicating that BRG is exercising its conversion right under this
Section
10.4
. From and after the date of the Company’s receipt of the Conversion Notice (the “
Receipt Date
”),
Current Class A Return and Priority Class A Return shall cease to accrue on BRG’s Net Capital Contributions to the Company;
however, BRG shall retain all other rights of a Class A Member until the Conversion Date.
(b) Within
one (1) day of the date of the Receipt Date of the Conversion Notice, the Company shall simultaneously issue to BRG a number of
Class B Units as determined in accordance with
Section 10.4(c)
below (the “
Conversion Units
”), cancel
all of BRG’s Class A Units, and return to BRG any remaining funds in the Class A Preferred Reserve. The date of such issuance,
cancellation and return of funds shall be referred to in this Agreement as the “
Conversion Date
.” From and
after the Conversion Date, BRG shall cease to be a Class A Member and, if not previously admitted as a Class B Member, shall be
admitted as a Class B Member with no further action required by the Company, the Manager or the Members. The Manager shall amend
Schedule I
as of the Conversion Date to reflect the conversion, including but not limited to an updated enumeration of
all Class B Units and Membership Interests as of the Conversion Date.
(c) The
number of Conversion Units to be issued to BRG on the Conversion Date shall equal the number of Class B Units that would cause
the Class B Membership Interest acquired by BRG pursuant to this
Section 10.4
to hold a proportional seventy one and one-half
percent (71.5%) Class B Membership Interest and a Capital Account in an amount equal to the same proportion. The foregoing conversion
ratio assumes the Members have fully funded their respective initial Capital Contributions, that the Class A Capital Commitment
and Class B Capital Commitment have been fully funded, that the Project was developed and funded as provided in the Project Budget,
that Additional Capital Contributions have been made by the Class B Members as projected, and that all Current Class A Returns
and Priority Class A Returns have been paid. In the event that the Class B Members’ Capital Contributions were substantially
more than projected, the Members will confer and in good faith determine a commensurate conversion ratio.
10.5
Class
A Mandatory Redemption
.
(a) Notwithstanding
the restrictions on Transfer contained in this
Article 10
, but subject to the Basic Documents, the Company shall redeem
all, but not less than all, of the Class A Units on the Class A Mandatory Redemption Date for payment of the Class A Unit Redemption
Amount in immediately available funds to the Class A Members, unless prohibited by law, and in such event, on the earliest practicable
date such redemption would not be prohibited by law; provided, however, this
Section 10.5
shall not be applicable to the
extent the Class A Member has exercised its Conversion Right under
Section 10.4
prior to the Class A Mandatory Redemption
Date.
(b) Subjection
to
Section 10.5(a)
, on the Class A Mandatory Redemption Date (or earliest practicable date), upon receipt of the Class
A Unit Redemption Amount, the Class A Member shall transfer its Class A Units to the Company free and clear of any and all liens,
encumbrances or other restrictions and execute and acknowledge a written instrument of assignment, together with such other instruments
as the Manager, in its reasonable discretion, may deem necessary or desirable to effect the Transfer to the Company of the Class
A Units, all in form and substance reasonably satisfactory to the Manager.
(c) Without
limiting the generality of any other provision of this Agreement, following the redemption of the Class A Units, the Class A Members
shall have no rights in the Company.
(d) To
the extent the Company does not redeem the Class A Units on the Class A Mandatory Redemption Date, the Class A Units shall continue
to accrue the Current Class A Return except that the Current Class A Return shall be twenty percent (20%) per annum on and after
the Class A Mandatory Redemption Date until and through the date the Class A Unit Redemption Amount is paid in full.
ARTICLE
11
CESSATION OF A MEMBER
A
Member shall cease to be a Member of the Company upon the assignment of all of the Member’s Membership Interest in the Company.
ARTICLE
12
DISSOLUTION AND TERMINATION OF THE COMPANY
12.1
Dissolution
and Termination
. The Company shall be dissolved, and its affairs shall be wound up upon the first to occur of the following:
(i) the decision of the Manager, with the written concurrence of the Members owning more than fifty percent (50%) of the Membership
Interests, that it would be in the best interest of the Company to dissolve; (ii) the termination of the legal existence of the
last remaining Member or the occurrence of any other event that terminates the continued membership of the last remaining Member
in the Company unless the Company is continued without dissolution in a manner permitted by this Agreement or the Act; (iii) the
entry of a decree of judicial dissolution under the Act; or (iv) the filing by the Secretary of State of a Certificate of Dissolution.
Upon the occurrence of any event that causes the last remaining Member to cease to be a Member (other than upon continuation of
the Company without dissolution upon (i) an assignment by the last remaining Member of all of its Membership Interest and the
admission of the transferee pursuant to
Article 10
, or (ii) the resignation of the last remaining Member and the admission
of an additional member of the Company pursuant to
Article 10
), 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, effective as of the occurrence
of the event that terminated the continued membership of such Member in the Company.
(a) Notwithstanding
any other provision of this Agreement, the Bankruptcy of a Member shall not cause such Member to cease to be a Member and upon
the occurrence of such an event, the Company shall continue without dissolution.
(b) In
the event of dissolution, the Company shall conduct only such activities as are necessary to wind up its affairs (including the
sale of the assets of the Company in an orderly manner), and the assets of the Company shall be applied in the manner, and in
the order of priority, set forth in
Section 12.2
.
(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 canceled in the manner required by the Act.
12.2
Distribution
Upon Dissolution
. Upon the dissolution of the Company, the Manager shall take full account of the Company assets and liabilities,
the assets shall be liquidated as promptly as is consistent with obtaining fair value thereof, and the proceeds therefrom, to
the extent sufficient therefor, after payment of or due provision for all debts, liabilities and obligations of the Company as
required by the Act and applicable law, shall be applied and distributed in accordance with
Section 6.8
hereof. In the
event it becomes necessary or desirable, in the sole discretion of the Manager, to make a distribution of the Company property
in kind, then such property shall be transferred and conveyed to the Members, or their assigns, so as to vest in each of them
as a tenant-in-common, a percentage interest in the whole of said property equal to the percentage interest he or she would have
received had the aforesaid property not been distributed in kind.
12.3
Time
.
A reasonable time, as determined by the Manager, from the date of an event of dissolution, shall be allowed for the orderly liquidation
of the assets of the Company and the discharge of Company liabilities.
12.4
Liquidating
Trustee.
In the event of a dissolution of the Company, liquidation of the assets of the Company and discharge of its liabilities
may, in the sole discretion of the Manager, be carried out by a liquidation trustee or receiver, who shall be selected by the
Manager and shall be a bank or trust company or other person or firm having experience in managing, liquidating or otherwise handling
property of the type then owned by the Company. This trustee (the “
Liquidating Trustee
”) shall not be personally
liable for the debts of the Company but otherwise shall have such obligations and authorities as are given the Manager pursuant
to this Agreement.
12.5
Statement
of Termination
. The Members shall be furnished by the Manager with a statement prepared, at Company expense, by the Accountant
that shall set forth the assets and liabilities of the Company as of the date of complete liquidation and distribution as herein
provided. Such statement shall also schedule the receipts and disbursements made with respect to the termination hereunder.
ARTICLE
13
ACCOUNTING AND REPORTS
13.1
Books
and Records
.
(a) The
Manager shall maintain full and accurate books of the Company, showing all receipts and expenditures, assets and liabilities,
profits and losses, and all other records necessary for recording the Company’s business and affairs, including those sufficient
to record the allocations and distributions provided for in
Article 6
and
Section 12.2
hereof. Such books and records
shall be open for the inspection and examination by any Member, in person or by its duly authorized representative, at reasonable
times at the offices of the Company upon prior written notice.
(b) The
Company books and records shall be kept in accordance with Generally Accepted Accounting Principles and any change in method shall
be made by the Manager in its sole discretion.
13.2
Fiscal
Year
. The annual accounting period of the Company shall be the calendar year. The cutoff date of the accounting period shall
be the last day of the calendar month.
13.3
Reports
.
The Company shall create an internally prepared annual statement showing the revenue and expenses of the Company, the balance
sheet thereof and a statement of change in cash flow at the end of each Fiscal Year (the “
Annual Financial Statements
”).
The Annual Financial Statements shall be mailed to each Member within fifteen (15) days following the end of the Fiscal Year for
which such statements were prepared. Each Member’s Schedule K-1 will be mailed to the Member no later than thirty (30) days
after the end of each Fiscal Year of the Company. The Company shall transmit all reports received under Section 11.03 of the Company
Subsidiary LLC Agreement to the Class A Members immediately upon the Company’s receipt of such reports.
13.4
Bank
Accounts
. All funds of the Company shall be deposited in its name in such checking and savings accounts or time certificates
as shall be designated by the Manager. Withdrawals therefrom shall be made upon such signature(s) as the Manager may designate.
13.5
Tax
Returns
. In addition to the Annual Financial Statements, the Manager shall, at Company expense, cause all tax returns for
the Company to be timely prepared and filed with the appropriate authorities.
13.6
Tax
Matters
. SOIF II is hereby charged with the responsibility for all tax-related matters affecting the Company and is hereby
designated as the “
Tax Matters Representative
”. It shall, within ten (10) days of receipt thereof, forward
to each Member a photocopy of any relevant correspondence relating to the Company received from any Federal and/or State taxing
authority (the “
Taxing Authority
”). It shall, within five (5) days thereof, advise each Member in writing of
the substance of any material conversation held with any representative of a Taxing Authority. Any reasonable costs incurred by
the Tax Matters Representative for retaining accountants and/or attorneys on behalf of the Company in connection with any Taxing
Authority audit of the Company shall be expenses of the Company. The Tax Matters Representative shall, if applicable, comply with
all requirements concerning the registration of tax shelters pursuant to Section 6111 of the IRC and the Treasury Regulations
thereunder, and Form 8264 (or any successor thereto), including, but not limited to, registering the Company with the Taxing Authority
and furnishing to each Member any identification numbers assigned by any Taxing Authority to the Company.
ARTICLE
14
SPECIAL LIMITED POWER OF ATTORNEY
14.1
Grant
of Power
.
(a) Each
Member does hereby irrevocably constitute and appoint the Manager as its true and lawful attorney, in its name, place and stead,
to make, execute, sign, acknowledge, swear to (where appropriate), and file or record:
(i) any
articles, certificates, documents or instruments (including this Agreement) that may be required to be filed by the Company under
applicable laws of any jurisdiction(s) to the extent that the Manager deems such filing(s) to be necessary or required;
(ii) any
and all amendments or modifications of the instruments described in
Section 14.1(a)(i)
above; provided, that such amendments
or modifications are necessary to effect the terms and intent of this Agreement, including, for example, but not limited to, the
substitution of a Member, and to evidence or effect the consent, approval or acceptance of the Member to any action approved by
the Member where this Agreement provides that such consent, approval or acceptance by the Member binds the Member with regard
thereto;
(iii) all
certificates and other instruments that may be required to effect the dissolution and termination of the Company pursuant to the
terms of this Agreement; and
(iv) any
and all consents or other instruments deemed necessary or desirable by the Manager for the admission of the Member and Substitute
Members, pursuant to the terms of this Agreement;
(b) It
is expressly understood and intended by the Members that the grant of the foregoing powers of attorney are coupled with an interest
and are irrevocable.
(c) The
foregoing powers of attorney are durable powers of attorney and shall not be affected by the disability, incompetency, and/or
incapacity of the principal. Furthermore, the foregoing powers of attorney shall survive the death of any Member who shall die
during the term of the Company.
(d) The
foregoing powers of attorney may be exercised by the Manager acting for any Member individually.
14.2
Limitation
on Powers
. To the fullest extent permitted by law, the foregoing power of attorney shall in no way cause a Member to be liable
in any manner for the acts or omissions of the Manager.
14.3
Substitute
Members
. Each Substitute Member, upon admission to the Company, shall be deemed to have appointed, ratified and reaffirmed
the appointment of the Manager as its true and lawful attorney for the purposes and on the same terms as set forth in
Article
14
hereof.
ARTICLE
15
AMENDMENTS
(a) Except
as otherwise provided herein, this Agreement may only be amended by the unanimous written consent of all Members.
(b) This
Agreement shall be amended by the Manager without the consent of the Members whenever:
(i) to
reflect the transfer of Units, the admission of a Member, the change in any Unit, the change in the Membership Interests, or any
other alteration in the matters set forth on
Schedule I
; and
(ii) it
is necessary or appropriate, in the opinion of counsel for the Company, to satisfy the requirements of the IRC, Treasury Regulations
thereunder or administrative guidelines or interpretations relating thereto, to maintain the status of partnership taxation or
to satisfy the requirements of federal and/or state securities laws.
(c) Notwithstanding
anything herein to the contrary, no amendment shall be made to this Agreement that, in the opinion of counsel for the Company:
(i) is
in violation of the provisions of applicable law; or
(ii) would
result in the Company being treated as other than a partnership for federal income tax purposes.
ARTICLE
16
INVESTMENT REPRESENTATION
Each
of the Members, by executing this Agreement, represents and warrants to the Company and the Manager as follows:
(a) Each
Member or individual executing this Agreement on behalf of an Entity that is a Member hereby represents and warrants that such
Member has acquired such Member’s Membership Interest for investment solely for such Member’s own account with the
intention of holding such Membership Interest for investment, without any intention of participating directly or indirectly in
any distribution of any portion of such Membership Interest, including an economic interest, and without the financial participation
of any other Person in acquiring such Membership Interest.
(b) Each
Member hereby acknowledges that such Member is aware that such Member’s Membership Interest has not been registered (i)
under the Securities Act of 1933, as amended (the “
Securities Act
”), (ii) under applicable Delaware securities
laws or (iii) under any other state securities laws. Each Member further understands and acknowledges that his representations
and warranties contained in this
Article 16
are being relied upon by the Company as the basis for the exemption of the
Members’ Membership Interests from the registration requirements of the Securities Act and from the registration requirements
of applicable state securities laws. Each Member further acknowledges that the Company will not and has no obligation to recognize
any sale, transfer, or assignment of all or any part of such Member’s Membership Interest, including an economic interest
in the Company to any Person unless and until the provisions of this Agreement hereof have been fully satisfied.
(c) Each
Member hereby acknowledges that prior to its execution of this Agreement, such Member received a copy of this Agreement and that
such Member has examined this Agreement or caused this Agreement to be examined by such Member’s representative or attorney.
Each Member hereby further acknowledges that such Member or such Member’s representative or attorney is familiar with this
Agreement and with the Company’s business plans. Each Member acknowledges that such Member or such Member’s representative
or attorney has made such inquiries and requested, received, and reviewed any additional documents necessary for such Member to
make an informed investment decision and that such Member does not desire any further information or data relating to the Company.
Each Member hereby acknowledges that such Member understands that the purchase of such Member’s Membership Interest is a
speculative investment involving a high degree of risk and hereby represents that such Member has a net worth sufficient to bear
the economic risk of such Member’s investment in the Company and to justify such Member’s investing in a highly speculative
venture of this type.
ARTICLE
17
MISCELLANEOUS
17.1
Meetings
.
Meetings of the Company may be called by the Manager and shall be called by the Manager upon the written request of the Members
holding at least twenty-five (25%) percent of the Membership Interests.
17.2
Members’
Action by Consent in Lieu of Meeting.
Any action required by law to be taken at any annual or special meeting of Members,
or any action which may be taken at a meeting of the Members, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken is signed by the Members having not less than the Membership
Interests that would be necessary to authorize such action at a meeting at which all Members entitled to vote thereon were present
and voted. Such consents shall have the same force and effect as the unanimous consent of the Members at a meeting duly held.
Such consents shall be filed with the minutes of the meetings of the Members.
17.3
Other
Ventures
. Notwithstanding any duty otherwise existing at law or in equity, except as otherwise provided in this Agreement
to the contrary, any of the Members, the Manager, BRG’s direct and indirect parents, SOIF II’s members, SOIF III’s
members, BGF’s members, BGF II’s members or any of their Affiliates may engage in or possess an interest in other
profit-seeking or business ventures of every nature and description, independently or with others, including those that may compete
with the Company without any obligation to share any profits therefrom with the Company or the Members. The doctrine of corporate
opportunity or any analogous doctrine, shall not apply to any Member, Manager, member of a Member or Manager, direct or indirect
parent of BRG, member of SOIF II, SOIF III, BGF or BGF II, or any of their Affiliates. No Member, Manager, member of a Member
or Manager, direct or indirect parent of BRG, member of SOIF II, SOIF III, BGF or BGF II, or any of their Affiliates who acquires
knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for the Company shall
have any duty to communicate or offer such opportunity to the Company, and such Member, Manager, member of a Member or Manager,
direct or indirect parent of BRG, member of SOIF II, SOIF III, BGF or BGF II, or Affiliate shall not be liable to the Company
or to the other Members for breach of any fiduciary or other duty by reason of the fact that such Member, Manager, member of a
Member or Manager, direct or indirect parent of BRG, member of SOIF II, SOIF III, BGF or BGF II, or Affiliate pursues or acquires
for, or directs such opportunity to, another Person or does not communicate such opportunity or information to the Company. Neither
the Company nor any Member shall have any rights or obligations by virtue of this Agreement or the relationship created hereby
in or to such independent ventures or the income or profits or losses derived therefrom, and the pursuit of such ventures, even
if competitive with the activities of the Company, shall not be deemed wrongful or improper.
Nothing
in this Agreement shall be deemed to preclude any Member, Manager, member of a Member or Manager, direct or indirect parent of
BRG, member of SOIF II, SOIF III, BGF or BGF II, or any Affiliate of any Member, Manager, member of a Member or Manager, direct
or indirect parent of BRG, or member of SOIF II, SOIF III, BGF or BGF II, from conducting its business in any manner it may elect,
including, without limitation, entering into any transaction with any Person affiliated in any way with such Person, provided
that no such conduct of its business shall result in a breach by such Member or Manager of its obligations under this Agreement.
17.4
Exculpation
and Indemnification
.
(a) To
the fullest extent permitted by applicable law, neither the Members, the Manager, SOIF II, BRG, direct or indirect parent of BRG,
the members of SOIF II, nor any officer, manager, director, employee, agent or Affiliate of the foregoing (collectively, the “
Covered
Persons
”) shall be liable to the Company or any other Person who 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 a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person’s
gross negligence or willful misconduct.
(b) To
the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any
loss, damage or claim incurred by such Covered Person 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 no Covered Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Covered Person by reason of such Covered Person’s gross negligence or willful misconduct
with respect to such acts or omissions;
provided
,
however
, that any indemnity under this
Section 17.4
by
the Company shall be provided out of and to the extent of Company assets only, and the Members and the Manager shall not have
personal liability on account thereof; and
provided
,
further
, that so long as any Obligations are outstanding, no
indemnity payment from funds of the Company (as distinct from funds from other sources, such as insurance) of any indemnity under
this
Section 17.4
shall be payable from amounts allocable to any other Person pursuant to the Basic Documents.
(c) To
the fullest extent permitted by applicable law, expenses (including reasonable legal fees) incurred by a Covered Person defending
any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized
in this
Section 17.4
.
(d) A
Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such
other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company,
including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts
pertinent to the existence and amount of assets from which distributions to the Members might properly be paid.
(e) 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 any other Member, any Covered Person acting under this Agreement or otherwise shall not be liable to the Company
or any Member for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict or eliminate the duties and liabilities of a Covered Person to the Company or its members otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Covered Person.
(f) Any
liability of the Company shall be satisfied out of the income or assets of the Company (including the proceeds of any insurance
that the Company may recover) and no Member shall have any liability with respect thereto.
(g) Notwithstanding
the foregoing provisions, any indemnification set forth herein shall be fully subordinate to the Loan, and to the fullest extent
permitted by law, shall not constitute a claim against the Company in the event that the Company’s Cash Flow From Operations
(including any additional capital contributions by the Members, if any) are insufficient to pay all of its monthly obligations
to creditors.
(h) The
foregoing provisions of this
Section 17.4
shall survive any termination of this Agreement.
17.5
Notices
.
All notices under this Agreement shall be in writing, duly signed by the party giving such notice, and transmitted by registered
or certified mail (and such notice shall be deemed delivered three (3) business days after deposit in the mail) or by a national
overnight delivery service, such as Federal Express (and such notice will be deemed delivered the next business day after it is
deposited with such delivery service) addressed as follows:
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(a)
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If given to the Company:
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BR Lake Boone JV Member,
LLC
c/o Bluerock Real Estate,
L.L.C.
712
Fifth Avenue, 9
th
Floor
New
York, NY 10019
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(b)
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If given to the Manager:
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c/o Bluerock Real Estate,
L.L.C.
712
Fifth Avenue, 9
th
Floor
New
York, NY 10019
(c) If
given to any Member, at the address set forth on
Schedule I
to this Agreement, or at such other address as any Member may
hereafter designate by notice to the Company and all other Members.
Any
party to this Agreement may change the address to which notices are to be sent in accordance with this
Section 17.5
by
notifying the other parties hereto in writing of such new address.
17.6
Captions
.
Article and Section titles or captions contained in this Agreement are inserted only as a matter of convenience and for reference
and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.
17.7
Identification
.
Whenever the singular number is used in this Agreement and when required by the context, the same shall include the plural, and
vice versa; and the masculine gender shall include the feminine and neuter genders, and vice versa. The words “include”
and “including” shall be deemed to be followed by the phrase “without limitation.” The terms “herein,”
“hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not
to any particular Section, paragraph or subdivision.
17.8
Counterparts
.
This Agreement may be executed in any number of counterparts and all of such counterparts shall be deemed an original and for
all purposes constitute one agreement binding on the parties hereto, notwithstanding that all parties are not signatory to the
same counterpart.
17.9
Governing
Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard
to principles of conflict of laws.
17.10
Members’
Competence
. Anything in this Agreement to the contrary notwithstanding, no Member, or any Assignee of the Membership Interest
thereof, shall be a person or organization prohibited by law from becoming such. Any assignment of an interest in the Company
to any Person not meeting such standard shall be, to the fullest extent permitted by law, void and ineffectual and shall not bind
the Company.
17.11
Binding
Agreement
. Except as otherwise provided herein to the contrary, this Agreement shall be binding upon and inure to the benefit
of the parties hereto, their personal representatives, successors and assigns, and shall be enforceable in accordance with its
terms.
17.12
Severability
.
If any provision of this Agreement shall be declared invalid or unenforceable, the remainder of this Agreement will continue in
full force and effect so far as the intent of the parties can be carried out, and the parties further understand and agree that
any non-waiveable provision of the Act shall supersede any provision of the Agreement.
17.13
Entire
Agreement
. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof.
17.14
Benefits
of Agreement; No Third-Party Rights
. None of the provisions of this Agreement shall be for the benefit of or enforceable by
any creditor of the Company or by any creditor of the Members. Nothing in this Agreement shall be deemed to create any right in
any Person (other than Covered Persons) not a party hereto, and this Agreement shall not be construed in any respect to be a contract
in whole or in part for the benefit of any third Person (other than Covered Persons).
17.15
Member’s
Rights
. In addition to all other rights and remedies that a Member may
have at law and in equity, including, but not limited to, under the Act, a Member may bring any action against the Manager, another
Member and/or the Company to enforce the terms and provisions of this Agreement, to obtain a judgment for damages for a breach
of this Agreement, and/or to cause the Manager and/or a Member to perform its obligations under this Agreement.
17.16
Jurisdiction
and Venue
. Regardless of what venue would otherwise be permissive or required, the Members and Managers stipulate that all
actions arising under or affecting this Agreement shall be brought in the appropriate city and/or county courts in the City of
New York, State of New York (the “
State Courts
”) or the United States District Court for the Southern District
of New York in the State of New York (the “
Federal Court
”), the Members and Managers agreeing that such forums
are mutually convenient and bear a reasonable relationship to this Agreement.
17.17
Consent
to Jurisdiction and Service of Process.
The parties irrevocably submit to the jurisdiction of the State Courts and the Federal
Court for the purpose of any suit, action, or other proceeding arising under or affecting this Agreement. In addition to all other
proper forms of service of process, the Members and Managers hereby agree that service of process may be accomplished by providing
such service in accordance with the notice provisions of
Section 17.5
.
17.18
Attorneys’
Fees
. In any action or suit arising out of this Agreement, the prevailing party, as determined by the trier of fact, shall
be entitled to recover from the other party its reasonable attorneys’ fees and costs incurred in such action or suit. Reasonable
attorneys’ fees shall be based upon such fees actually incurred at the customary hourly rates of attorneys in the New York,
New York area for the expertise required and shall not be based upon any statutory presumptions or rates.
17.19
Waiver
of Right to Jury Trial
. The Manager and Members do each hereby waive to the fullest extent of the law their right to a jury
trial in regard to any matter, issue, dispute or other claim which arises out of this Agreement or the transactions contemplated
by this Agreement. The Manager and each Member represent to one another that each has sought the advice of legal counsel in waiving
its right to a jury trial and makes such waiver willingly and freely.
[SIGNATURES
APPEAR ON THE IMMEDIATELY FOLLOWING PAGES]
COMPANY
AND MANAGER SIGNATURES
The
Company and the Manager, agreeing to be bound by the foregoing, execute this Agreement effective as of the 15
th
day
of July, 2015.
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COMPANY:
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BR LAKE BOONE JV MEMBER, LLC
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By:
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Bluerock Special Opportunity + Income Fund II, LLC, a Delaware
limited liability company, its Manager
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By:
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BR SOIF II Manager, LLC, a Delaware limited liability
company, its Manager
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By:
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/s/ Jordan Ruddy
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Jordan Ruddy, Authorized Signatory
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MANAGER:
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BLUEROCK SPECIAL OPPORTUNITY + INCOME FUND II, LLC, a Delaware limited liability
company
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By:
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BR SOIF II Manager, LLC, a Delaware limited liability company, its Manager
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By:
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/s/ Jordan Ruddy
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Jordan Ruddy, Authorized Signatory
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MEMBER
SIGNATURE
The
undersigned Member, agreeing to be bound by the foregoing executes this Agreement effective as of the 15
th
day of July,
2015.
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CLASS A MEMBER:
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BRG LAKE BOONE NC, LLC, a Delaware limited liability
company
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By:
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Bluerock Residential Holdings, L.P., a Delaware limited partnership, its Sole Member
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By:
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Bluerock Residential Growth REIT, Inc., a Maryland corporation, its General Partner
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By:
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/s/ Michael Konig
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Name:
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Michael Konig
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Its:
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COO
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CLASS B MEMBER:
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BLUEROCK SPECIAL OPPORTUNITY + INCOME FUND II, LLC,
a Delaware limited liability company
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By:
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BR SOIF II Manager, LLC, a Delaware limited liability
company, its Manager
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By:
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/s/ Jordan Ruddy
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Jordan Ruddy, Authorized Signatory
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SCHEDULE
I
Class A Member
: BRG Lake
Boone NC, LLC
Class A Capital Commitment: $11,929,090
Class A Initial Capital Contribution:
$9,918,364 (inclusive of $1,608,581 funded into the Class A Preferred Reserve)*
Class B Member: Bluerock Special
Opportunity + Income Fund II, LLC
Class B Capital Commitment: $2,982,272**
*Represents Class A Member’s
share of one-half of the projected reserves required to pay Current Class A Return.
**Includes Class B Member’s
share of all projected reserves required to pay Current Class A Return.
Exhibit 10.4
LIMITED LIABILITY COMPANY AGREEMENT
OF
BRG LAKE BOONE NC, LLC
THIS LIMITED LIABILITY
AGREEMENT (“
Agreement
”) of BRG LAKE BOONE NC, LLC, a Delaware limited liability company (the “
Company
”),
effective as of July 28, 2015, is entered into by Bluerock Residential Holdings, L.P., a Delaware limited partnership, as the sole
member of the Company (the “
Member
”).
RECITALS
A. The
Member has caused the Company to be organized as a Delaware limited liability company in accordance with the Delaware Limited Liability
Company Act, as amended and in force from time to time (the “
Act
”).
B. The
undersigned desires to execute this Agreement in order to set forth the terms and conditions under which the management, business,
and financial affairs of the Company will be conducted.
AGREEMENT
NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual promises, covenants, and conditions herein contained, the receipt and sufficiency
of which are hereby acknowledged, the undersigned hereby covenants and agrees as follows:
ARTICLE I
PURPOSE AND POWERS OF COMPANY
1.01
Purpose
.
The Company’s purpose is to acquire, hold, invest in, sell or otherwise dispose of assets which it shall from time to time
own, and to engage in any and all other related business activities.
1.02
Powers
.
The Company shall have all powers of a limited liability company organized under the Act and not proscribed by the Act, its Certificate
of Formation, or this Agreement.
ARTICLE II
NAME AND ADDRESS OF INITIAL MEMBER
2.01
Name
and Address
. The name, address, and initial membership interest of the initial Member is as follows:
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Name/Address
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Membership Interest
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Bluerock Residential Holdings, L.P.,
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100%
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a Delaware limited partnership
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712 Fifth Avenue, 9
th
Floor
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New York, New York 10019
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ARTICLE III
MANAGEMENT BY SOLE MEMBER
3.01
In
General
. The powers of the Company shall be exercised by, or under the authority of, and the business and affairs of the Company
shall be managed under the direction of, the Member. Subject to the other provisions of this Agreement, the Member shall be entitled
to make all decisions and take all actions for the Company, including the execution of all documents, agreements, certificates,
and other writings in the name of, and on behalf of, the Company.
3.02
Indemnification
.
The Company shall indemnify, defend, and hold harmless the Member (including its partners, officers, agents, employees, and affiliates)
to the fullest extent permitted under the Act against any and all liability, damage, loss, cost, or expense (including, without
limitation, attorneys’ fees) incurred by the Member arising out of any transaction or course of conduct relating to the business
and affairs of the Company.
3.03
Elimination
of Liability
. In any proceeding brought in the right of the Company or by or on behalf of the Member, the damages assessed
against a Member arising out of a single transaction, occurrence, or course of conduct shall not exceed one dollar, unless the
Member engaged in willful misconduct or a knowing violation of the criminal law.
3.04
Advances
.
Expenses (including legal fees and expenses) of the Member (including its partners, officers, agents, employees, and affiliates)
incurred by the Member arising out of any transaction or course of conduct relating to the business and affairs of the Company
may be paid by the Company in advance of the final disposition of any proceeding relating thereto.
ARTICLE IV
CONTRIBUTIONS TO THE COMPANY AND DISTRIBUTIONS
4.01
Member
Capital Contributions
. The Member, upon execution of this Agreement, shall have contributed as the Member’s initial capital
contribution the cash and/or other property set forth on
Exhibit A
attached hereto.
4.02
Distributions
and Allocations
. All distributions of cash or other property (except upon the Company’s dissolution which shall be governed
by the applicable provisions of the Act) and all allocations of income, profits, and loss shall be made 100% to the Member in accordance
with its membership interest in the Company.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.01
Governing
Law
. This Agreement shall be construed, enforced, and interpreted in accordance with the laws of the State of Delaware without
regard to conflicts of law provisions and principles thereof.
5.02
Amendments
.
No amendment or modification of this Agreement shall be effective unless approved in writing by the Member.
5.03
Construction
.
Whenever the singular is used in this Agreement and when required by the context, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders, and vice versa.
5.04
Headings
.
The headings in this Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent, or intent of this Agreement or any provision hereof.
5.05
Heirs,
Successors, and Assigns
. Each and all of the covenants, terms, provisions, and agreements herein contained shall be binding
upon, and inure to the benefit of, the parties hereto and, to the extent permitted by this Agreement, their respective heirs, legal
representatives, successors, and assigns.
5.06
Creditors
.
None of the provisions of this Agreement shall be for the benefit of, or enforceable by, any creditor of the Company or the Member.
[SIGNATURES ON FOLLOWING PAGE]
The undersigned hereby
agree, acknowledge, and certify that the foregoing constitutes the sole and entire Limited Liability Company Agreement of the Company,
effective as of the date first written above.
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SOLE MEMBER
:
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Bluerock residential holdings, l.p.,
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a Delaware limited partnership
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By:
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Bluerock Residential Growth REIT, Inc.,
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a Maryland corporation
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Its:
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General Partner
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By:
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/s/
Michael Konig
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Name:
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Michael Konig
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Title:
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Authorized
Signatory
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EXHIBIT A
Initial Capital Contribution of the Member
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Members
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Cash or Property
Contributed
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Amount
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Bluerock Residential Holdings, L.P.
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$
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100
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TOTAL
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$
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100
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Exhibit 10.5
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT
(this “
Agreement
”) is made and entered into as of this 30
th
day of October, 2015, by and between
TRIBRIDGE CO-INVEST 29, LLC
, a Georgia limited liability company (“
Seller
”) and
BR-TBR LAKE BOONE
NC VENTURE,
LLC
,
a Delaware limited
liability company (“
Buyer
”), and is joined in as to certain matters by
TBR LAKE BOONE OWNER, LLC, A GEORGIA
LIMITED LIABILITY COMPANY, AS TRUSTEE UNDER THE TBR LAKE BOONE TRUST AGREEMENT DATED DECEMBER 20, 2012
(“
Current Owner
”).
WITNESSETH THAT
:
WHEREAS, Current Owner
owns that certain real property described on
Exhibit “A”
attached hereto (the “
Original Parcel
”);
WHEREAS, TriBridge,
an affiliate of Current Owner and Seller, has applied to the City of Raleigh, North Carolina (the “
City
”) for
preliminary subdivision approval of the Original Parcel into legally permissible lots (the "
Original Parcel Subdivision
")
as depicted on the preliminary subdivision plat (the “
Preliminary Plat
”) set forth on
Exhibit “B-1”
attached hereto, with the lots identified as Lot 5 and Lot 6 on such Preliminary Plat and as described by metes and bounds on
Exhibit
“B-2”
attached hereto being hereinafter collectively referred to as the "
Land.
" The lots identified
as Lots 1 through 4 and Lots 7 through 12 in
Exhibit "B-1"
shall hereinafter collectively be referred to
as “
Current Owner’s Retained Land
.” For the avoidance of doubt, Current Owner’s Retained Land shall
be retained by Current Owner and is not included in the contribution as set forth herein;
WHEREAS, in connection
with the Original Parcel Subdivision, the City has granted approval (with conditions) to TriBridge’s subdivision plan (and
the Preliminary Plat) in accordance with that certain Official Notice of Preliminary Subdivision Plan Decision, dated May 18, 2015,
a copy of which is attached hereto as
Exhibit "B-3"
and by this reference made a part hereof ("
Preliminary
Subdivision Approval
");
WHEREAS, pursuant to
the Operating Agreement of Seller dated effective as of the Disbursement Closing Date (as defined below) (the “
Seller
Operating Agreement
”), on the Disbursement Closing Date, Current Owner’s beneficial owners shall contribute their
interests in the Property to Seller and shall cause the Property to be conveyed to Seller, on and subject to the terms and conditions
set forth therein; and
WHEREAS, upon the contribution
of the Property to Seller, Seller wishes in turn to immediately contribute all of its interest in the Property to Buyer and convey
the Property to BR-TBR Owner (as defined below), but only upon the terms and conditions hereinafter set forth. Notwithstanding
the use of the defined terms “Seller” and “Buyer,” the parties acknowledge and agree that the transaction
that is the subject of this Agreement is a contribution of property, rather than a purchase and sale.
NOW, THEREFORE, in
consideration of Ten Dollars ($10.00), the Earnest Money, the mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally
bound, do hereby agree as follows:
Section 1
.
Definitions and
Exhibits
.
1.1
Definitions
.
For purposes of this Agreement, each of the following terms, when used herein with an initial capital letter, shall have the meaning
ascribed to it as follows:
Affiliate
. Affiliate
means (i) in the case of an individual, any relative (by blood, adoption or marriage) of such Person; (ii) any Person, directly
or indirectly controlling, controlled by or under common control with the specified Person; (iii) any Person owning or controlling
ten percent (10%) or more of the membership interests or outstanding voting securities of such specified Person; (iv) any employee,
partner, officer, director, member or trustee of such specified Person; and (v) if any Person who is an Affiliate is an employee,
partner, officer, director, member or trustee of another Person, such other Person. For purposes of this definition, the term “controlling,”
“controlled by,” or “under common control with” shall mean the possession, direct or indirect on an exclusive
or non-exclusive basis, of the power to direct or cause the direction of the management and policies of a person or entity, whether
through the ownership of voting securities, by contract, or otherwise, subject to customary voting rights of majority interest
holders.
Agreement
. This
Contribution Agreement.
Anti-Terrorism Law
means U.S. Executive Order 13224, as amended; the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701-06
et
seq
.; the Iraqi Sanctions Act, Pub.L. 101-513, 104 Stat. 2047-55; the United Nations Participation Act, 22 U.S.C. Section 287c;
the Antiterrorism and Effective Death Penalty Act Pub. L. 104-132, 110 Stat. 1214; the International Security and Development Cooperation
Act, 22 U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List Governments Sanctions
Regulations, 31 C.F.R. Part 596; and the Foreign Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597.
Bluerock Member
means BR Lake Boone JV Member, LLC, a Delaware limited liability company.
BR-TBR Owner
means
BR-TBR Lake Boone NC Owner, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Buyer.
Business Days
.
Business Days are weekdays excluding Federal or State of North Carolina or State of New York official holidays.
Closing
. The
closing and consummation of the contribution of the Property pursuant hereto, which shall occur at the Disbursement Closing. Unless
otherwise expressly referenced herein to the contrary, the term “Closing” shall mean the Disbursement Closing and not
the Dry Closing.
Closing Date
.
The date on which the Dry Closing or the Disbursement Closing, as applicable, shall occur. Unless otherwise expressly referenced
herein to the contrary, the term “Closing Date” shall mean the date of the Disbursement Closing and not the date of
the Dry Closing.
Closing Documents
.
Those documents listed in Section 8.3 hereof.
Contract Date
.
The date upon which this Agreement shall be deemed effective, which shall be the date first above written.
Cost-Share Agreement
shall mean that certain Agreement Regarding Purchase and Sale Contract & Acquisition Loan Fees and Deposits, by and between
TriBridge and Bluerock Real Estate, L.L.C., a Delaware limited liability company (“
Bluerock
”).
Cost-Share Agreement
Amendment
shall mean that certain First Amendment to Agreement Regarding Purchase and Sale Contract & Acquisition Loan
Fees and Deposits, by and among Seller, TriBridge, Bluerock, and Bluerock Member, and joined in by Current Owner to evidence Current
Owner’s obligation to honor the Right of First Refusal granted thereunder.
Current Owner’s
Retained Land ROFR
shall mean that certain Right of First Refusal Agreement for Current Owner’s Retained Land to be executed
and delivered by Current Owner and TriBridge, in favor of Bluerock.
Deed
. The Special
Warranty Deed to be executed by Seller in the form attached hereto as
Exhibit “E”
.
Developer
. TriBridge
Residential Development, LLC, a Georgia limited liability company.
Development/Entity
Conditions
means collectively the following items:
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(i)
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Buyer, through BR-TBR Owner, shall have finally negotiated
a Development Agreement with Developer and both BR-TBR Owner and Developer shall have executed and delivered same;
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(ii)
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Buyer, through BR-TBR Owner, shall have finally negotiated
a Property Management Agreement with Property Manager, and both BR-TBR Owner and Property Manager shall have executed and delivered
same;
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(iii)
|
Buyer, through BR-TBR Owner, shall have approved a Guaranteed
Maximum Price general contract ("
GMAX
") for construction of the proposed new improvements on the Land (the “
Proposed
Development
”) on terms and conditions reasonably acceptable to Buyer and BR-TBR Owner; provided, however, that the following
shall constitute reasonably acceptable terms to Buyer and BR-TBR Owner: (i) the general contractor shall be Cambridge Swinerton
Builders, Inc., and (ii) the guaranteed maximum price in the GMAX shall not exceed $25,689,691.00 (all other aspects of the GMAX
are subject to the approval of Buyer and BR-TBR Owner in their reasonable discretion); and
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(iv)
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Seller and Bluerock Member shall have finally negotiated,
executed and delivered a joint venture operating agreement for Buyer (the “
Venture Agreement
”).
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(v)
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The Cost-Share Agreement Amendment shall have been finally
negotiated, executed and delivered by all necessary parties thereto.
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(vi)
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The Current Owner’s Retained Land ROFR shall have
been finally negotiated, executed and delivered by all necessary parties thereto; and
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(vii)
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Intentionally Omitted.
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Disbursement Closing Outside
Date
shall mean December 31, 2015.
Disclosures
. The
disclosures described in Section 7 hereof.
Earnest Money
.
The amounts deposited by Bluerock Member in escrow with Escrow Agent as earnest money pursuant to the terms and conditions of Section
3 hereof, together with any interest earned thereon (which shall follow principal) and also together with any additional amounts
required to be deposited as additional earnest money pursuant to the terms hereof.
Environmental Laws
.
The following, as the same may have been amended: the Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. § 9601,
et
seq
.; the Resource Conservation Act of 1976, 42 U.S.C. § 6921,
et
seq
.;
the Toxic Substance Control Act, 15 U.S.C. § 2601,
et
seq
.; the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. § 136; the Federal Water Pollution Control Act, 33 U.S.C. § 1251,
et
seq
.; the Hazardous
Materials Transportation Act, 49 U.S.C. § 1801,
et
seq
.; the Federal Solid Waste Disposal Act. 42 U.S.C. §
6901,
et
seq
.; the Clean Air Act, 42 U.S.C. § 7401,
et
seq
.; and any other legislation or ordinance
of any Governmental Authority identified by its terms as pertaining to Hazardous Substances.
Escrow Agent
.
Calloway Title & Escrow, L.L.C. acting pursuant to the terms and conditions of the Escrow Agreement and Section 3 hereof.
Escrow Agreement
.
That certain Earnest Money and Document Escrow Agreement of even date herewith among Seller, Buyer, Bluerock Member, Current Owner
and Escrow Agent referred to in Section 3 hereof and attached hereto as
Exhibit “C”
and by this reference
made a part hereof.
Governmental Authority
.
Governmental Authority means any federal, state, or municipal government, branch, authority, district, agency, court, tribunal,
department, officer, official, board, commission or other instrumentality.
Hazardous Substances
.
Petroleum, including crude oil or any fraction thereof, asbestos, polychlorinated biphenyls, and any other substance the generation,
use, storage, or disposal of which is regulated by the Environmental Laws.
Inspection Period
.
As defined in Section 6.3 hereof.
Intangibles
means all right, title, interest and estate of Seller in, to and under (a) all transferable Warranties, permits, licenses,
certificates of occupancy, approvals, utility rights, development rights and similar rights related to the Land, if any, whether
granted by governmental authorities or private persons; (b) other non-confidential and non-proprietary records assigned to Seller
by Current Owner and used in connection with the ownership of the Land; and (c) the non-exclusive right to use the name “Lake
Boone Trail” and derivatives thereof (for avoidance of doubt, Current Owner shall retain the right to also use the name "Lake
Boone Trail" and derivatives thereof). Intangibles shall not include the current internet address – www.thevillageslbt.com
- or website used in connection with the Original Parcel or any real or personal property used with respect to the ownership or
operation of Current Owner’s Retained Land.
Land
. All those
tracts or parcels of land described and depicted as Lots 5 and 6 on the Preliminary Plan attached as
Exhibit “B-1”
hereto and further described on
Exhibit “B-2”
hereto.
Permitted Title
Exceptions
. (i) Real estate taxes and governmental assessments, both general and special, not yet due and payable; (ii) applicable
zoning and building ordinances, subject to the terms of this Agreement; and (iii) matters shown on the title commitment obtained
by Buyer, other than Required Cure Items, which are not timely objected to by Buyer (or which are subject to objections by Buyer,
but such objections have either been cured by or on behalf of Seller, or Buyer has elected to close over notwithstanding Seller’s
refusal or inability to cure, or to cause Current Owner to cure, such objections pursuant to the process described in Section 5
of this Agreement).
Person
.
An individual, corporation, partnership, association, limited liability company, joint stock company, trust or unincorporated organization.
Personalty
means
all furniture, appliances, fixtures, equipment, machinery, building materials, supplies, inventory and other tangible personal
property owned by Seller, used in connection with the ownership, maintenance, use, leasing, service or operation of the Land or
Improvements, and located on the Land or to be located on the Land on the Closing Date, but specifically excluding (i) any
personal property owned, financed or leased by Current Owner associated with the use or ownership of Current Owner’s Retained
Land, or (ii) any tangible personal property owned by Property Manager.
Phase I Permit Entity
means LBT Apartment Phase I Owner, LLC, a North Carolina limited liability company.
Plans
means all
site plans, surveys, as built plans and specifications, floor plans and soil and substrata studies in Current Owner’s or
Seller’s possession or control or in the possession or control of the Property Manager and which relate to the Property.
Property
. All
of Seller’s right, title and interest in, to and under the following property:
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(ii)
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All rights of way or use, licenses, tenements, hereditaments,
appurtenances and easements now or hereafter belonging or pertaining to any of the foregoing, except those, if any, reserved to
Current Owner or relating to and solely for the use of Current Owner’s Retained Land; and
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(iii)
|
All buildings and other improvements (collectively, “
Improvements
”)
located on the Land; and
|
Property Management
Agreement
means the Property Management Agreement between the Property Manager and BR-TBR Owner.
Property Manager
means TriBridge Residential Property Management Advisors, LLC, a Georgia limited liability company.
Recording Office
means the Register of Deeds Office for Wake County, North Carolina.
Related Assets
means all right, title, interest and estate of Seller in, to and under all Intangibles and all Plans.
Right of First Refusal
shall have the meaning ascribed to such term in Section 7(c) of the Cost-Share Agreement Amendment.
Subdivision
. The
subdivision of the Original Parcel into separate lots in accordance with the Preliminary Subdivision Approval and the Preliminary
Plat.
Subdivision Plat
.
The plat identifying the Subdivision which is to be recorded in the Recording Office in accordance with the Subdivision.
Title Insurer
.
Calloway Title & Escrow, LLC.
TriBridge
. TriBridge
Residential, LLC, a Georgia limited liability company.
Warranties
means
the written warranties and guaranties in the possession or control of Seller or Property Manager covering all or a part of the
Property and the Improvements, and manufacturers’ warranties relating to any Personalty but expressly excluding therefrom
any portion of a warranty which may be applicable to Current Owner’s Retained Land.
1.2
Exhibits
.
All exhibits and other attachments hereto form an integral part of this Agreement, all of which are incorporated into this Agreement
as fully as if the contents thereof were set out in full herein at each point of reference thereto.
Section 2
.
Contribution Agreement
.
Subject to and in accordance
with the terms and provisions hereof, Seller agrees to contribute all of its interest in the Property, and to convey the Property
to BR-TBR Owner, at the Disbursement Closing in exchange for a credit to Seller’s “Capital Account” (as such
term is defined in the Venture Agreement) under the Venture Agreement (the “
Capital Account Credit
”) in the
estimated amount of $1,200,000.00. Buyer acknowledges and agrees that, in addition to the Permitted Title Exceptions, such contribution
of the Property shall be made subject to the Existing Financing on the Property in the estimated allocated amount of $4,269,200.00
(the “
Bluerock Member Acquisition Contribution Amount
”). The actual amount of the Capital Account Credit and
the Bluerock Member Acquisition Contribution Amount at the Disbursement Closing shall be determined pursuant to the Venture Agreement;
provided, however, that under all circumstances the sum of the Capital Account Credit and the Bluerock Member Acquisition Contribution
Amount shall equal $5,469,200.00, and further provided, however, unless differing amounts for the Capital Account Credit appear
in the Venture Agreement with regard to the Capital Account Credit , the amounts set forth above shall be deemed final with respect
to the amount of the Capital Account Credit and the Bluerock Member Acquisition Contribution Amount. Notwithstanding the foregoing,
however, it shall be a condition precedent to Buyer’s obligations to accept the contribution of the Property hereunder (the
“
Release Condition
”) that the Existing Financing is satisfied and released from record title to the Property
at the Disbursement Closing upon the Bluerock Member’s funding of its initial capital contribution under the Venture Agreement
(same to be in the amount of the Bluerock Member Acquisition Contribution Amount), which amount shall be paid to Escrow Agent and
used for the sole purpose (when combined with other funds to be made available by Seller and Current Owner) of obtaining the release
of the Property from the Existing Financing.
Section 3
.
Earnest Money
.
3.1
Earnest
Money
. Contemporaneously with the Dry Closing, Bluerock Member, on behalf of Buyer, shall deposit with Escrow Agent the sum
of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) (the "
Earnest Money
"). The Earnest Money shall
be held, invested and disbursed pursuant to the respective terms and provisions hereof and of the Escrow Agreement.
3.2
Disbursement
.
Whenever the Earnest Money is by the terms hereof to be disbursed by Escrow Agent, Current Owner, Seller, Buyer and Bluerock Member
agree promptly to execute and deliver such notice or notices as shall be necessary, if any, or, in the opinion of Escrow Agent,
appropriate to authorize Escrow Agent to make such disbursement. Notwithstanding the foregoing, in no event shall Current Owner
or Seller have any right to contest the return of the Earnest Money to Bluerock Member in connection with any termination of this
Agreement by Buyer on or prior to the expiration of the Inspection Period, and Escrow Agent is hereby authorized to return the
Earnest Money to Bluerock Member without instructions from Current Owner or Seller in connection with the same.
Section 4
.
Reserved.
Section 5
.
Title
to the Property & Zoning/Subdivision Issues
.
5.1 Seller
shall convey fee simple title to the Property to BR-TBR Owner by the Deed, which shall expressly be made subject to the Permitted
Title Exceptions. Buyer shall have until November 25, 2015 to examine title to the Property and that certain boundary survey prepared
by The John R. McAdams Company, Inc. dated July 28, 2015 (as same may be updated prior to Closing, the “
Survey
”)
and to give written notice to Seller of any title or Survey objections which Buyer may have. If Buyer fails to give any notice
to Seller by such date, Buyer shall be deemed to have waived such right to object to any title exceptions or defects. If Buyer
does give Seller timely notice of objection to any other title exceptions or defects, Seller shall then have the right, but not
the obligation, for a period of five (5) days after such notice, to reasonably cure or satisfy, or to cause Current Owner (which
Current Owner agrees to do where Seller commits to Buyer that same will be done) to reasonably cure or satisfy by the Closing,
such objections and to notify Buyer in writing within such five (5) day period of the action so taken to cure or satisfy, or undertaken
to cure or satisfy such objections. If Seller fails to timely provide such written notice or if such objections are not so timely
and reasonably cured or satisfied or undertaken to be cured or satisfied by Seller or Current Owner (with the reasonable approval
of Buyer with regard to any such undertaking), then Buyer shall, within five (5) days after receipt by Buyer of such written notice
describing with reasonable specificity the action so taken to cure or satisfy and annexing thereto a copy of each document or instrument
proffered to correct such objection (or if no such written notice is given by Seller, then within five (5) days of the expiration
of Seller’s five (5) day response period), elect, by written notice to be received by Seller on or before the later to occur
of (1) such fifth (5th) day or (2) the expiration of the Inspection Period, either to (i) terminate this Agreement, in which case
the Earnest Money shall be promptly returned to Bluerock Member by Escrow Agent, and the parties shall have no further rights or
obligations hereunder, except for those which expressly survive any such termination; or (ii) waive its objections hereunder and
proceed with the transaction pursuant to the remaining terms and conditions of this Agreement.
5.2 If
Buyer fails to give Seller notice of its election by such time, it shall be deemed to have elected the option contained in Section
5.1(ii) above. If Seller does so reasonably cure or satisfy in writing, or undertake in writing to reasonably cure or satisfy,
such objection, then this Agreement shall continue in full force and effect; provided however that in the event that any such defect
shall remain uncured as of the Disbursement Closing Date, then the terms and provisions of Section 9.2 shall apply.
5.3 Neither
Seller nor Current Owner shall further voluntarily alter or encumber in any way title to the Property after the Contract Date without
Buyer’s consent, which consent may be granted or withheld in Buyer’s sole and absolute discretion, but the response
shall not be unreasonably delayed. Seller shall give Buyer notice of any such proposed encumbrance and Buyer shall then have five
(5) days in which to elect, by written notice to be received by Seller on or before such fifth (5th) day, either to (i) consent
to the encumbrance (a “
Consented Change
”); or (ii) object thereto, in which event Buyer shall set forth and
deliver in writing to Seller its reasons for doing so. If Buyer has not given Seller notice of its election by the end of the fifth
(5th) day, Buyer shall be deemed to have elected to have provided its consent to the requested encumbrance. Notwithstanding anything
in this Agreement to the contrary, Seller and Current Owner shall in any event be obligated to cure and remove from record title
against the Property by the Disbursement Closing or in the alternative, cause the Title Insurer to affirmatively insure over such
matter in a manner satisfactory to Buyer in its reasonable discretion, regardless of whether Buyer includes same in a written objection
notice, all matters or items (collectively, the “
Required Cure Items
”): (i) that are mortgage, deed to secure
debt or deed of trust liens and related UCC security interests against the Property (provided that Seller shall not be required
to remove or cause the removal of UCC financing statements filed by tenants of the Property or other third parties as debtor thereunder),
including, without limitation, that certain deed of trust recorded in the Recording Office in Deed Book 15072, page 1858 (and any
UCC financing statements related thereto) (the “
Existing Financing
”), the satisfaction and release of the Existing
Financing at the Disbursement Closing being also the Release Condition; (ii) that are real estate tax liens (or personal property
tax liens with respect to the Personalty) against the Property, other than liens for taxes and assessments not yet delinquent;
(iii) that have arisen after the Contract Date and that are not Consented Changes or the result of Buyer’s actions; (iv)
that constitute a
lis pendens
against record title to the Land, including, without limitation, that certain letter issued
by the City on June 26, 2015 asserting violations of the City’s Housing Code that is recorded in the Recording Office as
Instrument #15R002984 (the “
Housing Code Violation Notice
”); and (v) that constitute monetary liens or judgments
or mechanic’s or materialmen’s lien claimants who performed work on the Property (unless done at the instance or on
behalf of Buyer or its agent) (each a “
Lien Claimant
”). Seller or Current Owner may cure any objection with
respect to a claim of lien by a Lien Claimant by recording a bond and causing the Title Insurer to insure against collection of
same out of the Property to the satisfaction of the Title Company and the reasonable satisfaction of Buyer. In the event that any
Required Cure Item shall remain uncured as of the date of the Disbursement Closing, then same shall constitute a default by Seller
and the terms and provisions of Section 9.2 shall apply thereto. Whether or not Buyer shall have furnished to Seller any notice
of title objections pursuant to the foregoing provisions of this Agreement, Buyer may, at or prior to the Disbursement Closing,
notify Seller in writing of any objections to title or survey matters and first identified by the Title Company or the Surveyor
to the extent such matters first arise between (a) the effective date of the title commitment or the Survey; and (b) the Disbursement
Closing Date; provided, however, that Buyer must notify Seller of any such objections within five (5) Business Days of Buyer’s
first receipt of the updated title commitment, updated Survey or other document, whichever first provides notice of the condition
giving rise to any such objection. With respect to any objections to title or survey matters set forth in such notice, Seller shall
have the same option to cure and Buyer shall have the same option to accept title subject to such matters or to terminate this
Agreement as those which apply to any notice of objections made by Buyer pursuant to Section 5.1 above.
5.4 Buyer,
Current Owner and Seller covenant to work together in a commercially reasonable, good faith manner to agree upon the final form
of a Reciprocal Easement Agreement ("
REA
") to be delivered, to the extent possible, at the Disbursement Closing,
pursuant to which BR-TBR Owner shall have the right to use certain roadway improvements located upon Lots 2 through 4 of Current
Owner’s Retained Land (Lots 1 through 4 of Current Owner’s Retained Land being referred to collectively as the “
Retail
Parcels
”) and the right to connect sanitary sewer line(s) to a trunk line to be located on the Retail Parcels in the
manner shown on the Preliminary Plat and in the Pending Infrastructure Permit. The REA shall also include authorization for the
encroachment of the existing buildings on the Retail Parcels onto the Land and also authorization for the encroachment of the existing
buildings on the Land onto the Retail Parcels, until the earlier to occur of: 1 year after the Disbursement Closing or such time
as any such existing building has been demolished, with all parties to the REA being required to construct any new buildings or
improvements solely upon their own land and not to cause same to encroach upon the land of any other party. The REA shall also
provide for sharing of maintenance costs for the following common elements: lighting, signage and landscaping. Buyer, Current Owner
and Seller further covenant to work together in a commercially reasonable, good faith manner to agree upon the final form of a
limited parking easement to benefit Panera, LLC, the proposed lessee of Lot 1 of the Retail Parcels (the “
Proposed Parking
Easement
”), to be delivered, to the extent possible, at the Disbursement Closing (the REA and such Proposed Parking Easement
are hereinafter collectively referred to as the “
Easements
”). For the avoidance of doubt, the delivery of the
Easements shall not be a condition precedent to Buyer's or Seller's obligations to close hereunder; provided, however, Buyer, Current
Owner and Seller shall, to the extent same are not finalized prior to the Disbursement Closing, continue to negotiate in good faith
following the Disbursement Closing the final forms of the REA and the Proposed Parking Easement (Buyer agreeing to provide the
Proposed Parking Easement subject to finalizing the form and content of the same in the commercially reasonable and good faith
manner set forth above). Under no circumstances shall the REA or the Proposed Parking Easement be recorded against record title
to the Land (or the Original Parcel) prior to the Disbursement Closing without Buyer’s consent. This Section 5.4 shall survive
Closing.
5.5 The
following matters shall constitute “Consented Changes” (i.e. Buyer shall have no consent rights with regard to the
following): (i) the recordation of any instrument which is contemplated or otherwise required as a condition precedent to recording
the Subdivision Plat pursuant to the Preliminary Subdivision Approval, (ii) changes to the boundaries of the parcels from the boundaries
shown on the Preliminary Plat, which changes are required by the City as part of final approval of the Subdivision and Subdivision
Plat, and (iii) changes to the site plan, which site plan is a part of the Pending Zoning Case, which are necessary to obtain final
rezoning as contemplated in Section 7.18 below; provided, however, in all instances, Seller shall provide Buyer with prior written
notification of any such changes. Notwithstanding the foregoing to the contrary, to the extent any of the changes enumerated in
Section 5.5(i)-(iii) above result in: (i) a diminution in the unit count of BR-TBR Owner’s intended use of the Property as
a 245 multi-family project ("
Intended Use
"); (ii) impairment of any access to the Land or any appurtenant easement
associated with the Land; (iii) an increase in the total project budget of Buyer and BR-TBR Owner to develop the Intended Use by
$250,000.00 or more; (iv) a material delay (i.e. more than sixty (60) days) in the development schedule for the Proposed Development;
or (v) any change in the boundary lines of the Land that would result in a two percent (2%) or greater decrease in the total acreage
amount of either Lot 5 or Lot 6 (individually and collectively, as the context requires, hereinafter referred to as "
Material
Impact to the Land
"), then such changes shall not be deemed Consented Changes, and Seller and Current Owner covenant and
agree that they may only institute such changes with the prior written consent of Buyer, which consent may be withheld in Buyer’s
sole discretion.
Section 6
.
Limitation
on Warranties and Buyer’s Inspection
.
6.1
Limitation
on Warranties
.
Seller, Current Owner
and Buyer acknowledge that Buyer shall inspect the Property and shall examine, review and inspect the books and records relating
to the ownership and operation of the Property pursuant to the terms hereof. Except as expressly set forth in this Agreement or
in any instrument delivered by Seller or Current Owner to Buyer at Closing (collectively, “
Seller’s/Current Owner’s
Representations
”), Buyer, through BR-TBR Owner, shall acquire the Property “AS IS, WHERE IS” without any
obligation of Seller or Current Owner to perform any repairs, improvements, maintenance or other work to the Property or any part
thereof, and without, except as expressly set forth herein to the contrary, any warranties, express or implied, of any kind from
Seller, including, but not limited to, warranties of fitness, merchantability, fitness for a particular purpose, habitability,
tenantability or environmental condition. Seller expressly disclaims any representations and warranties with respect to the Property,
except for Seller’s/Current Owner’s Representations, including any representations by any brokers or salesmen, and
Buyer does hereby acknowledge that, by accepting the contribution of the Property, Buyer is relying only upon those representations
of Seller and Current Owner concerning the Property expressly set forth as such in this Agreement. Further, in the event BR-TBR
Owner acquires the Property, and subject to Seller’s/Current Owner’s Representations contained herein, Buyer, on behalf
of itself, BR-TBR Owner and their respective successors and assigns, waives its right to recover from, and forever releases and
discharges, Seller, Seller’s Affiliates (including Current Owner), the partners, trustees, beneficiaries, shareholders, members,
managers, directors, officers, employees and agents and representatives of each of them, and their respective heirs, successors,
personal representatives and assigns, from any and all demands, claims, legal or administrative proceedings, losses, liabilities,
damages, penalties, fines, liens, judgments, costs or expenses whatsoever (including, without limitation, court costs and attorneys’
fees and disbursements), whether direct or indirect, known or unknown, foreseen or unforeseen, that may arise on account of or
in any way be connected with (i) the physical condition of the Property including, without limitation, all structural and seismic
elements, all mechanical, electrical, plumbing, sewage, heating, ventilating, air conditioning and other systems, the environmental
condition of the Property and the presence of Hazardous Materials on, under or about the Property; or (ii) any law or regulation
applicable to the Property, including, without limitation, any Environmental Law and any other federal, state or local law. This
provision shall expressly survive the Closing.
Notwithstanding
the acknowledgements set forth in this Section 6.1, such provisions shall not apply to any finally adjudicated judgment with respect
to any fraudulent or intentional misrepresentation by Seller or Current Owner or other fraudulent action by Seller or Current Owner
.
Further, notwithstanding anything in the foregoing to the contrary: (a) Buyer and BR-TBR Owner shall have the right to defend government
and third party claims by alleging that Seller or Current Owner (or someone acting on either such entity’s behalf, including
any Affiliate), not Buyer or BR-TBR Owner, is liable for such claims and Buyer has no obligation to indemnify Seller or Current
Owner for governmental or third party claims asserted before or after Closing as a result of any act or omission taken or failed
to be taken by or on Seller’s or Current Owner’s behalf prior to Closing; and (b) the provisions set forth in this
Section 6.1 shall not apply to third-party tort claims relating to the Property and occurring during Current Owner’s or Seller’s
ownership thereof. Additionally, Seller and Buyer hereby acknowledge and agree that the provisions set forth in this Section 6.1
are not intended to be and shall not be construed as a waiver of similar claims against the predecessors-in-title to Current Owner
and Seller with respect to the Property (“
Predecessors
”), or any such Predecessor’s officers, member,
managers, directors, partners, employees, agents or contractors, or any other person acting on behalf of any such Predecessors.
Notwithstanding any provision to the contrary in this Section 6.1, nothing in this Section 6.1 shall limit Seller’s or Current
Owner’s express covenants set forth in this Agreement or the documents delivered by Seller or Current Owner at Closing, or
Buyer’s right to enforce the same.
6.2
Buyer’s
Inspection
. Subject to any rights or restrictions under any of the Permitted Title Exceptions, Buyer and its agents shall have
the right, from time to time prior to the Closing, to enter upon the Property to examine the same and the condition thereof, and
to conduct such surveys and to make such engineering and other inspections, tests and studies as Buyer shall determine to be reasonably
necessary, all at Buyer’s sole cost and expense; provided, however, Buyer shall not conduct any environmental investigations
of the Land beyond a Phase I environmental site assessment and a geotechnical survey to evaluate soil conditions (i.e. no sampling
or drilling or other physically intrusive testing) without first obtaining the prior written consent of Current Owner and Seller
(same not to be unreasonably withheld); any request for such consent shall be made in writing, and if not granted or denied in
a writing received by Buyer within five (5) days of Seller’s receipt of such request, then such request shall be deemed to
have been denied by Seller and Current Owner (if such consent is withheld, prior to the expiration of the Inspection Period, Buyer
shall have the right to terminate this Agreement and Bluerock Member shall receive a full refund of the Earnest Money). Current
Owner and Seller shall have the right to have their representative present with Buyer during all examinations or surveys of the
Property conducted by Buyer and Buyer agrees to give Current Owner and Seller reasonable advance notice (in no event less than
twenty-four (24) hours via telephone of such examinations or surveys to Stephen Broome at 404-367-6010) and to conduct such examinations
or surveys during normal business hours where feasible. Buyer agrees to conduct all examinations and surveys of the Property in
a manner that will not unreasonably harm or damage the Property, and agrees to restore the Property to substantially the same existing
condition immediately prior to such examinations if Closing does not occur. Buyer hereby indemnifies and holds Current Owner and
Seller harmless to the extent any claims for injury or death to persons, damage to property or other losses, damages or claims,
including, in each instance, attorneys’ fees and litigation costs, arising out of any action of any person or firm entering
the Property on Buyer’s behalf as aforesaid, which indemnity shall survive the Closing or any termination of this Agreement
without the Closing having occurred. Buyer shall maintain and shall ensure that Buyer’s consultants and contractors maintain
commercial general liability insurance in an amount not less than One Million and No/100 Dollars ($1,000,000), combined single
limit, and in form and substance adequate to insure against all liability of Buyer and its consultants and contractors, respectively,
and each of their respective agents, employees and contractors, arising out of inspections and testing of the Property or any part
thereof made on Buyer’s behalf. Buyer agrees to provide to Current Owner and Seller a certificate of insurance with regard
to each applicable liability insurance policy prior to any entry upon the Property by Buyer or its consultants or contractors,
as the case may be, pursuant to this Agreement. Notwithstanding the foregoing, in no event shall Buyer have any liability to Current
Owner or Seller, nor any obligation to indemnify, defend or hold Current Owner, Seller or their related parties harmless with respect
to (i) pre-existing conditions upon the Property, and/or (ii) the grossly negligent or willful actions of Current Owner, Seller
or parties under such entities’ control, and/or (iii) damage to the Improvements, but only to the extent BR-TBR Owner acquires
the Property.
6.3
Formal
Inspection Period
. Notwithstanding Buyer’s right of inspection contained in Section 6.2 above, Buyer shall have the period
commencing on the Contract Date and expiring at 5:00 P.M., Atlanta, Georgia time on November 25, 2015 (the “
Inspection
Period
”) in which to make such investigations and studies with respect to the Property as Buyer deems appropriate. If
Buyer does not terminate this Agreement by written notice to be delivered to Seller on or before the expiration of the Inspection
Period, then Buyer’s rights under this Section 6.3 shall be deemed to have been waived by Buyer and this Agreement shall
remain in full force and effect without any longer being subject to this Section 6.3. If Buyer does terminate this Agreement by
written notice delivered to Seller on or before the expiration of the Inspection Period, the Earnest Money shall be promptly refunded
to Bluerock Member by Escrow Agent, and the parties shall have no further rights or obligations hereunder, except for those which
expressly survive any such termination. For the avoidance of doubt, the foregoing provisions of this Section 6.2 shall in no event
be a limitation on Buyer’s right to terminate this Agreement in accordance with Section 8.2 of this Agreement.
6.4
Survey
.
The Deed to be delivered by Seller to BR-TBR Owner at the Closing (and the deed to be delivered by Current Owner to Seller) shall
contain a legal description of the Land as same is depicted on the Subdivision Plat which legal description shall be one and the
same as the metes and bounds description of the Land contained in
Exhibit “B-2”
attached hereto.
6.5
Delivery
of Information
. Seller and Current Owner hereby represent and warrant that copies of all of the following materials, to the
extent in such entities’ possession, custody or control, have been made available to Buyer or the Bluerock Member prior to
the Contract Date: (i) environmental site assessments of the Property; (ii) engineering, geological or soils reports relating to
the Property; (iii) Current Owner’s title insurance policy relating to the Property; (iv) the most recently obtained boundary
surveys and topographical surveys of the Property; (v) all licenses, permits and subdivision or zoning reports, ordinances or approvals
relating to the Property; (vi) copies of all ad valorem tax statements for the Property for the current year and 2014; (vii) copies
of all architectural and engineered drawings provided by designers, engineers and architects, including any associated with the
planned redevelopment of the Property; (viii) copies of all leases and Service Contracts currently in effect for the Property;
(ix) all environmental reports, letters and any other items relating to any and all environmental issues on the Property; and (x)
to the extent not set forth above, those items set forth in
Exhibit “J”
attached hereto and incorporated
herein by reference (collectively, the “
Property Information
”).
6.6
Service
Contracts
. Seller shall terminate or shall cause Current Owner (which Current Owner agrees to do) to terminate at Seller’s
sole expense all existing vendor agreements, equipment contracts and leases, maintenance and repair contracts, and all other contracts
and agreements relating to the leasing, management, maintenance, and operation of the Property in effect on the Contract Date (collectively,
the “
Service Contracts
”), and neither Seller nor Current Owner shall enter into any such new contracts during
the pendency of this Agreement without Buyer’s consent. Seller shall provide evidence of such terminations at Closing. Notwithstanding
the foregoing to the contrary, Seller and Current Owner shall cooperate with Buyer so that Buyer can obtain an assignment at Closing
of any assignable Service Contracts that are deemed necessary by Buyer for its operation of the Property after Closing. Notwithstanding
the foregoing, Buyer acknowledges that certain Service and Marketing Agreement dated December 1, 2009 by and between Time Warner
Entertainment Advance/Newhouse Partnership, d/b/a Time Warner Cable through its East Carolina Division, and PRG Landmark Associates,
LLC (the “
Time Warner Agreement
”), a copy of which has been delivered to Buyer, which presently encumbers the
Original Parcel. The Time Warner Agreement cannot be terminated, though its current term is to expire in December of 2016,
and Current Owner agrees that any extension of the Time Warner Agreement shall exclude the Property therefrom. Following
Closing, each of Current Owner and BR-TBR Owner shall contribute its respective prorata share towards the expense of the Time Warner
Agreement, to be calculated monthly on a per unit basis for all units on the Original Parcel, to the extent any fees are due under
the Time Warner Agreement with respect to the Property after the Disbursement Closing. Current Owner agrees that the Time Warner
Agreement shall not be amended or modified in any manner that would negatively impact the Property without Buyer’s prior
consent, such consent not to be unreasonably withheld. This Section 6.6 shall survive Closing.
6.7
Operations
.
Current Owner agrees that it will maintain its general liability insurance in effect as of the date of this Agreement with respect
to the Property (or, if such insurance is cancelled or expires, will obtain comparable insurance to the extent it is available
on commercially reasonable terms) until the earlier of (i) the Current Owner’s contribution of the Property to Seller, or
(ii) the termination by Current Owner or Seller of Current Owner’s obligation to contribute the Property to Seller. Unless
Buyer agrees otherwise in writing, no new leases or other rights of occupancy with regard to the Property shall be granted by Current
Owner or Seller while this Agreement remains in effect.
Section 7
.
Representations, Warranties
& Covenants
.
Seller and Current
Owner hereby warrant, represent and, where applicable, covenant to Buyer and BR-TBR Owner as follows:
7.1
No
Litigation
. Except as described in
Exhibit “G”
attached hereto and by this reference made a part
hereof, neither Current Owner nor Seller has received any written notice of any actual, pending or threatened litigation or proceeding
by any organization, person, individual or governmental agency against such entities with respect to the Property or against the
Property which, if adversely determined, would have a material adverse effect on the Property or Current Owner’s or Seller’s
ability to consummate the transactions herein described. There are no bankruptcy or other debtor relief proceedings currently pending
involving Current Owner or Seller.
7.2
No
Condemnation
. Neither Current Owner nor Seller has any knowledge of any action or proceeding pending, instituted or threatened
(in writing) for condemnation or other taking of all or any part of the Property by friendly acquisition or statutory proceeding.
7.3
Authority
.
7.3.1 Seller
is a validly formed limited liability company under the laws of the State of Georgia, is not subject to any involuntary proceeding
for dissolution or liquidation thereof, and has obtained all requisite authorizations and therefore has full unconditional authority
to enter into this Agreement with Buyer and to consummate and close the contribution of the Property pursuant hereto.
7.3.2 Current
Owner is a validly formed limited liability company under the laws of the State of Georgia, is not subject to any involuntary proceeding
for dissolution or liquidation thereof, and has obtained all requisite authorizations and therefore has full unconditional authority
to enter into this Agreement with Buyer, to perform its obligations hereunder, and to consummate and close the contribution of
the Property to Seller pursuant to the Seller Operating Agreement.
7.4
Environmental
Matters
. Neither Current Owner nor Seller has received any written complaint, order, citation, or notice from any Governmental
Authority with regard to the presence of Hazardous Substances or other environmental problems or violations of Environmental Law
affecting the Property, nor does either of Current Owner or Seller have knowledge of any such violations of Environmental Law being
in existence with respect to the Property, except to the extent set forth in that certain Phase I Report delivered to Buyer by
Seller and Current Owner with respect to the Property.
7.5
Appeals
Assessments
. Neither Current Owner nor Seller has received any notice or has any knowledge of any pending or threatened (in
writing) liens, special assessments, impositions or increases in assessed valuations to be made against the Property.
7.6
Service
Contracts
. There are no material service, supply, development, construction, equipment rental or similar agreements in the
possession or control of Current Owner, Seller or Property Manager, to which Current Owner, Seller or Property Manager is a party
affecting the Property except the Service Contracts. Except as otherwise provided in Section 6.6 above, Seller shall terminate
at its sole expense or cause Current Owner to terminate at its sole expense (which Current Owner agrees to do) all Service Contracts
prior to Closing and provide evidence thereof to Buyer at (or prior to) Closing.
7.7
No
Violation
. Neither Current Owner nor Seller has received written notice from any governmental authority alleging any violation
or breach of any law or municipal or county ordinances, with respect to Current Owner, Seller or the Property (or any part thereof)
or with respect to the existing use, occupancy, operation, maintenance or construction thereof. Seller and Current Owner shall
furnish Buyer with a copy of all written notices received by such entities from any governmental authority of any violation of
any law, statute, ordinance, regulation or order of any governmental or public authority relating to the Property within five (5)
Business Days following receipt thereof, but, if received by such date, in no event later than two (2) Business Days prior to the
Closing Date. Seller and Current Owner shall protect, indemnify, defend and hold Buyer (and Bluerock Member) and BR-TBR Owner harmless
of and from all claims by the City relating to the existing condition of the Improvements on the Property, including, without limitation,
claims identified in the Housing Code Violation Notice. Such obligation shall survive Closing for an unlimited duration.
7.8
No
Employees
. There are no employees at the Property whose employment with Seller or Current Owner will survive the Closing Date.
Seller shall be responsible for paying or causing Current Owner to pay (which Current Owner agrees to do) any and all wages, benefits
and other amounts owing to such employees at the Property for periods prior to the Closing and shall hold Buyer, Bluerock Member
and BR-TBR Owner harmless from any liability arising from the same.
7.9
Possession
at Closing Free of All Tenancies
. Seller shall deliver possession of the Property to BR-TBR Owner at Closing free of all occupants
and any rights of physical occupancy by any party other than Seller, subject in all instances to the rights of any easement holder
(or other parties in interest) under a Permitted Title Exception.
7.10
No
Pending Changes
. As of the Contract Date, aside from the pending infrastructure site permit application filed by the Phase
I Permit Entity (the “
Pending Infrastructure Permit
”), the Subdivision and the Pending Zoning Case (as defined
below) or any previous re-zoning request which has been rescinded, neither Seller nor Current Owner has received written notice
of (a) any pending or contemplated change in any regulation, code, ordinance, law, or private restriction from any governmental
authority, or (b) any pending or threatened judicial or administrative action, applicable to the Property, or (c) any action pending
or threatened by adjacent land owners, other than Seller or Current Owner, any of which would result in any material change in
the condition of the Property, or any part thereof, or (d) would adversely limit or impede the operation of or public access to
the Property.
7.11
No
Banned Person
. Neither Seller, nor Current Owner, nor any person holding a direct or indirect ownership interest in such entities,
is described in, covered by or specially designated pursuant to, or affiliated with any person described in, covered by or specially
designated pursuant to, any Anti-Terrorism Law or any list issued by any department or agency of the United States of America in
connection with any Anti-Terrorism Law.
7.12
Phase
I Permit Entity
. Current Owner has formed the Phase I Permit Entity as a North Carolina limited liability company, and Current
Owner is the sole owner of 100% of the membership interests of the Phase I Permit Entity and owns said membership interests free
and clear of any lien, encumbrance, option, warrant or rights of purchase. The Phase I Permit Entity has applied for the following
permits and approvals with respect to the Property: the Pending Zoning Case and the Pending Infrastructure Permit.
7.13
FIRPTA
.
Neither Current Owner nor Seller is a “foreign person” as defined in Section 1445 of the Internal Revenue Code of 1986,
as amended, and the Income Tax Regulations thereunder.
7.14
No
Adverse Claims
.
7.14.1 Subject
to any matters of public record for which a
lis pendens
or other filing has been made against record title to the Property,
no party has any claim to the Property by reason of any purchase or contribution agreement (other than Seller and Buyer), option
to purchase, right of first refusal, land installment contract, lease or other similar agreement or instrument, entered into or
issued by Seller or Current Owner, that will survive following Closing hereunder.
7.14.2 The
execution and delivery of this Agreement by Seller and the performance by Seller of its obligations under this Agreement and the
completion of the contribution of the Property contemplated by this Agreement will not result in (1) a breach of, or a default
under, any contract, agreement, commitment or other document or instrument to which Seller is party or by which Seller or the Property
is bound or (2) a violation of any law, ordinance, regulation or rule of any governmental authority applicable to Seller or
any judgment, order or decree of any court or governmental authority that is binding on Seller.
7.14.3 The
execution and delivery of this Agreement by Current Owner and the performance by Current Owner of its obligations under this Agreement
and the completion of the contribution of the Property by Current Owner to Seller under the Seller Operating Agreement will not
result in (1) a breach of, or a default under, any contract, agreement, commitment or other document or instrument to which
Current Owner is party or by which Current Owner or the Property is bound or (2) a violation of any law, ordinance, regulation
or rule of any governmental authority applicable to Current Owner or any judgment, order or decree of any court or governmental
authority that is binding on Current Owner.
7.15
No
Mark-Up
. $5,469,200.00 represents Seller’s cost in the Property, without any mark-up.
7.16
Abandonment
of Still Forest Place
. Current Owner covenants that, prior to the Disbursement Closing, Still Forest Place shall be abandoned
as a public right-of-way and such instruments as are necessary to confirm the abandonment thereof by the City, and reversion of
title to the land within the Still Forest Place right-of-way back to Current Owner (if necessary, such that title to same will
be conveyed first to Seller and subsequently to BR-TBR Owner), shall be recorded in the Recording Office (the “
Still Forest
Place Abandonment
”).
7.17
Subdivision
Approval
.
7.17.1 Current
Owner and the Phase I Permit Entity covenant to use commercially reasonable good faith efforts to, prior to the Disbursement Closing
Outside Date: (i) satisfy all conditions set forth in the Preliminary Subdivision Approval required in order to receive the City’s
authorization to record the Subdivision Plat; (ii) receive the City’s authorization to record the Subdivision Plat; and (iii)
cause the Subdivision Plat to be recorded in the Recording Office (collectively, the "
Subdivision Conditions
").
Neither Current Owner nor Phase I Permit Entity shall cause the Subdivision Plat to be recorded without first having provided a
copy thereof to Buyer for its review (subject to Current Owner’s right to make changes without Buyer’s approval as
set forth below or as set forth in Section 5.5). Current Owner and the Phase I Permit Entity further covenant to not modify or
amend the Preliminary Subdivision Approval or the Preliminary Plat in any manner that would constitute a Material Impact to the
Land (for avoidance of doubt, any modification that does not constitute a Material Impact to the Land is not subject to this sentence),
nor take any action to rescind the Preliminary Subdivision Approval or submit a new subdivision application to the City for all
or any portion of the Original Parcel that would constitute a Material Impact to the Land, without receiving Buyer’s prior
written consent, which consent may be withheld in Buyer’s sole discretion. Notwithstanding the foregoing, if any such modification
of the Preliminary Subdivision Approval or the Preliminary Plat is required by the City in connection with granting final approval
to record the Subdivision Plat, then Buyer’s consent shall not be required if such modification does not constitute a Material
Impact to the Land, but Current Owner and Seller shall provide notice to Buyer of the same if such modification would constitute
a Material Impact to the Land, and Buyer’s prior written consent thereto shall be required (which consent may be withheld
in Buyer’s sole discretion).
7.17.2 Current
Owner and the Phase I Permit Entity covenant to use commercially reasonable good faith efforts to satisfy all the Subdivision Conditions;
provided, however, failure to satisfy the Subdivision Conditions due to the City's failure to authorize or approve recording of
the Subdivision Plat or other third parties' failure to execute the requisite documents to fulfill the Subdivision Conditions,
after Current Owner and the Phase I Permit Entity have used commercially reasonable good faith efforts to fulfill any conditions
precedent pertaining thereto and used commercially reasonable good faith efforts to obtain such authorizations or approvals, shall
not constitute a default by Current Owner or Seller of any obligations in this Section 7.17.
7.17.3 Notwithstanding
the foregoing in this Section 7.17.3 to the contrary, Current Owner and the Phase I Permit Entity acknowledge that their respective
obligations pertaining to any Subdivision Conditions (or any applicable prerequisites thereunder) that can be satisfied by the
payment of any fees or other quantifiable amounts in accordance with published schedules (i.e. as opposed to a third party making
monetary demands to perform the act that would otherwise satisfy the Subdivision Condition) shall not be limited to commercially
reasonable good faith efforts but instead shall be affirmative covenants by each of Current Owner and the Phase I Permit Entity,
with the failure to timely perform or satisfy same constituting a default by Current Owner and Seller for which Buyer shall be
entitled to exercise the remedies provided in Section 9.2 below.
7.18
Zoning
Approvals
.
7.18.1 Current
Owner and the Phase I Permit Entity covenant to use commercially reasonable good faith efforts to prosecute to successful completion,
prior to the Disbursement Closing Outside Date, that certain (i) Administrative Site Review Application currently pending with
the City [entitled “Villages at Lake Boone Trail Phase I, SR-9-2015”] (the “
Pending Zoning Case
”),
and (ii) the Pending Infrastructure Permit, such that at the Disbursement Closing the Property shall be properly zoned for use
as multi-family residential apartments and all City approvals necessary for the Proposed Development (aside from building &
other “vertical” development-related permits) shall have been obtained (collectively, the “
Required Zoning
Conditions
”). Neither Current Owner nor the Phase I Permit Entity shall cause the Pending Zoning Case to be finalized
by the City without first having provided a copy of the proposed approvals/conditions thereunder to Buyer for its review (subject
to Current Owner’s right to make changes without Buyer’s approval as set forth below or as set forth in Section 5.5).
Except for the Pending Zoning Case, there shall be no pending applications or proceedings that could change the zoning status of
the Property. Current Owner and the Phase I Permit Entity covenant and agree (i) not to withdraw the Pending Zoning Case without
Buyer’s prior written consent, and (ii) not modify or amend the Pending Zoning Case in any manner that would constitute a
Material Impact to the Land without receiving Buyer’s prior written consent, which consent may be withheld in Buyer’s
sole discretion. Notwithstanding the foregoing, if any such modification of the Pending Zoning Case is required by the City to
obtain final approval from the City thereof, then Buyer’s consent shall not be required if such modification does not Materially
Impact the Land, but Current Owner and Seller shall provide notice to Buyer of the same if such modification would constitute a
Material Impact to the Land, and Buyer’s prior written consent thereto shall be required (same may be withheld in Buyer’s
sole discretion).
7.18.2 Current
Owner and the Phase I Permit Entity covenant to use commercially reasonable good faith efforts to satisfy the Required Zoning Conditions;
provided, however, failure to satisfy the Required Zoning Conditions due to the lack of required cooperation from the City or other
third parties, after Current Owner and the Phase I Permit Entity have used commercially reasonable good faith efforts to fulfill
any conditions precedent pertaining thereto and used commercially reasonable good faith efforts to obtain such cooperation, shall
not constitute a default by Current Owner or Seller under this Section 7.18.
7.18.3 Notwithstanding
the foregoing in this Section 7.18.3 to the contrary, Current Owner and the Phase I Permit Entity acknowledge that their respective
obligations pertaining to any Required Zoning Conditions (or any applicable prerequisites thereunder) that can be satisfied by
the payment of any fees or other quantifiable amounts in accordance with published schedules (i.e. as opposed to a third party
making monetary demands to perform the act that would otherwise satisfy the Required Zoning Conditions ) shall not be limited to
commercially reasonable good faith efforts but instead shall be affirmative covenants by each of Current Owner and the Phase I
Permit Entity, with the failure to timely perform or satisfy same constituting a default for which Buyer shall be entitled to exercise
the remedies provided in Section 9.2 below.
7.19
Remedies
& Survival
. The representations made by Seller, Current Owner and/or the Phase I Permit Entity in this Agreement are true
and correct, and the warranties, covenants and agreements made by such entities are in full force and effect and binding on such
entities as of the Contract Date, and shall be true and correct in all material respects, and in full force and effect, and shall
be deemed to have been reaffirmed and restated by such entities, subject to modifications which do not constitute a breach of a
representation or warranty when the same was made on the Contract Date, as of the Disbursement Closing Date. During the pendency
of this Agreement, Seller and Current Owner shall have the right to disclose to Buyer in writing, promptly upon obtaining actual
knowledge of, changes in any such entities’ representations and warranties made hereunder (each a “
Disclosure
”
and collectively, the “
Disclosures
”), which Disclosures shall thereafter be updated by Seller and Current Owner
to the Disbursement Closing Date. If any Disclosure would constitute a material adverse claim to the Property, Seller or Buyer
or if any covenant made by Current Owner, Seller or the Phase I Permit Entity shall be determined to be untrue or unsatisfied as
of the Disbursement Closing Date, then Buyer, at its sole option, and as its sole remedy (except as otherwise provided in this
Section 7.19), may either (a) close and consummate the transactions contemplated by this Agreement, without reduction in the amount
of the Capital Account Credit; or (b) terminate this Agreement by written notice to Seller, whereupon Escrow Agent shall return
the Earnest Money to Bluerock Member, and the parties shall have no rights or obligations hereunder, except for those which expressly
survive any such termination. Those representations and warranties made herein by Current Owner or Seller which are qualified to
knowledge or to the best of such entities’ knowledge are made based upon the actual (i.e. not constructive or imputed) knowledge
of Stephen Broome; provided, however, Current Owner and Seller represent and warrant that such individual is in the best position
to have knowledge regarding the subject matter of the representations made herein. Notwithstanding the foregoing, no representation,
warranty, covenant or agreement made in this Agreement by any of Seller, Current Owner or the Phase I Permit Entity shall survive
the Disbursement Closing relative to any matters known to Buyer to be untrue or incorrect at the Disbursement Closing. The representations,
warranties and covenants made by Seller, Current Owner and the Phase I Permit Entity in this Agreement shall survive the Disbursement
Closing for nine (9) months after the Disbursement Closing Date (the “
Survival Period
”) and shall terminate
thereafter, unless a suit is filed thereupon in a court of competent jurisdiction on or before the nine (9) month anniversary of
the Disbursement Closing Date, in which event same shall terminate after a final resolution in court (after expiration of all appeal
periods without a successful appeal) or other final settlement. Notwithstanding the foregoing, in no event shall the foregoing
operate to excuse Seller, Current Owner or the Phase I Permit Entity from breaching any representation or warranty when made or
breaching any covenant made by any of such entities hereunder, in which event the terms of Section 9.2 shall govern and control.
Section 8
.
Closing
.
8.1
Time
and Place
. The parties shall conduct the Closing in two stages. The first stage of the Closing (the "
Dry Closing
")
shall occur on November 25, 2015, subject to the extension rights below (the “
Dry Closing Date
”). At the Dry
Closing, the parties shall place into escrow all Closing deliveries as described below in Sections 8.3 and 8.4 (and with regard
to the Closing Statement, counterpart signature pages which will be affixed to the final Closing Statement to be completed at the
Disbursement Closing described in the following sentence). The second stage of the Closing (the "
Disbursement Closing
")
shall occur on the date which is five (5) Business Days following the recordation of the Subdivision Plat (the “
Disbursement
Closing Date
”), but in all instances on or before the Disbursement Closing Outside Date. On the Disbursement Closing,
Escrow Agent shall release all items from escrow for recordation and disbursement in accordance with the final Closing Statement
(same to be completed at such Disbursement Closing).
Each Closing shall be
handled through escrow with the Escrow Agent or at such other location mutually agreed to by Seller and Buyer, by 4:00 p.m. local
time. The parties agree that Closing may be conducted by escrow through the Escrow Agent, subject to the terms of this Agreement
and the Escrow Agreement.
8.2
Buyer’s
Conditions to Closing
. In addition to any other conditions set forth in this Agreement, the obligation of Buyer to close hereunder
shall in all respects be conditioned upon the satisfaction of each of the following conditions precedent prior to or simultaneously
with Closing (except as otherwise noted below):
8.2.1 Seller’s
and Current Owner’s representations and warranties contained herein shall be true and correct in all material respects at
each of the Dry Closing and the Disbursement Closing, without regard to any knowledge-based qualifications except those expressly
set forth herein;
8.2.2 Seller,
Current Owner and the Phase I Permit Entity shall have complied with their respective obligations set forth herein, including,
without limitation, delivery by Seller and Current Owner, as applicable, of all documents at the Dry Closing and satisfaction of
all Required Cure Items by the Disbursement Closing;
8.2.3 All
of the Development/Entity Conditions shall have been satisfied by the Dry Closing Date;
8.2.4 The
Title Insurer shall issue at the Disbursement Closing, or is unconditionally committed at the Disbursement Closing to issue, to
BR-TBR Owner an ALTA standard coverage owner's title policy (the "
Title Policy
") in accordance with the title
commitment approved by Buyer, insuring BR-TBR Owner’s title to the Land in the amount of $5,469,200.00, subject only to the
standard exceptions and exclusions from coverage contained in such Title Policy (other than those that can be removed by Seller’s
delivery of the Closing Documents) and the Permitted Title Exceptions. This condition shall only be deemed satisfied if the Title
Insurer is prepared to issue (i) a subdivision endorsement, which may include the ALTA 26-06 - Subdivision (Adopted 10-16-08) (the
"
Subdivision Endorsement
") and (ii) a non-imputation endorsement protecting against denials of coverage based
on the imputed knowledge of Seller, each to be issued at the time of the Disbursement Closing.
8.2.5 The
Still Forest Place Abandonment shall have been completed, and evidence confirming same shall be provided to Buyer, prior to the
Disbursement Closing.
8.2.6 Current
Owner shall have conveyed fee simple title to the Property to Seller by the Disbursement Closing, subject only to the Permitted
Title Exceptions and the Existing Financing (but only as to the Bluerock Member Acquisition Contribution Amount, and no greater
amount), and the Release Condition shall be satisfied at the Disbursement Closing.
8.2.7 The
Subdivision Conditions shall have been satisfied by the Disbursement Closing.
8.2.8 The
Required Zoning Conditions shall have been satisfied by the Disbursement Closing.
8.2.9 If
the Development/Entity Conditions are not satisfied by the Dry Closing, Buyer may (a) waive such Development/Entity Conditions
and proceed to the Dry Closing on the Dry Closing Date, or (b) extend (by written notice delivered prior to the then scheduled
Dry Closing Date) the Dry Closing Date for one (1) week for four (4) successive periods (i.e., the total extension will not exceed
four (4) weeks) to attempt to satisfy such Development/Entity Conditions. If Buyer (or Seller pursuant to Section 8.6 below) has
extended the Dry Closing Date but the Development/Entity Conditions have not been satisfied by the extended Dry Closing Date, then
Buyer may (a) waive such Development/Entity Conditions and proceed to the Dry Closing or (b) terminate this Agreement by delivery
of written notice to Escrow Agent and Seller, in which event the Earnest Money shall be returned to Bluerock Member and thereafter
the parties hereto shall have no further rights or obligations hereunder, except for those which expressly survive such termination.
If any of the other closing conditions in this Section 8.2 expressly applicable to the Dry Closing (aside from the Development/Entity
Conditions, same being addressed above) are not met at the Dry Closing, Buyer may (a) waive such condition and proceed to the Dry
Closing on the Dry Closing Date or (b) terminate this Agreement by delivery of written notice to Escrow Agent and Seller, in which
event the Earnest Money shall be returned to Bluerock Member and thereafter the parties hereto shall have no further rights or
obligations hereunder, except for those which expressly survive such termination. Nothing in this Section 8.2.9 shall limit Buyer’s
remedies set forth in Section 9.2 below where the applicable closing condition for the Dry Closing is not satisfied due to the
default of Seller (or Current Owner or the Phase I Permit Entity, as applicable).
8.2.10 If
the closing conditions set forth in this Section 8.2 applicable to the Disbursement Closing (collectively, the “
Disbursement
Closing Conditions
”) are not met at the Disbursement Closing, Buyer may (a) waive such condition and proceed to the Disbursement
Closing on the Disbursement Closing Date (unless the unsatisfied condition is (1) the recordation of the Subdivision Plat, in which
case the Disbursement Closing shall occur on the fifth (5
th
) Business Day following Buyer’s waiver of such condition,
or (2) the conditions set forth in Section 8.2.6 hereof, in which case the Disbursement Closing shall occur on the date on which
such Section 8.2.6 conditions can be satisfied (subject to the Disbursement Outside Closing Date)), or (b) extend (by written notice
delivered prior to the then scheduled Disbursement Closing Date) the Disbursement Closing Date for one (1) week for four (4) successive
periods (i.e., the total extension will not exceed four (4) weeks); provided, however, in no event shall the Disbursement Closing
be extended beyond the Disbursement Closing Outside Date. If Buyer (or Seller pursuant to Section 8.6 below) has extended the Disbursement
Closing Date but the Disbursement Closing Conditions have not been satisfied by the earlier of the extended Disbursement Closing
Date or the Disbursement Closing Outside Date, then Buyer may (a) waive such condition and proceed to the Disbursement Closing
or (b) terminate this Agreement by delivery of written notice to Escrow Agent and Seller, in which event (x) the Earnest Money
shall be returned to Bluerock Member; and (y) the parties hereto shall have no further rights or obligations hereunder, except
for those which expressly survive such termination. Nothing in this Section 8.2.10 shall limit Buyer’s remedies set forth
in Section 9.2 below where any Disbursement Closing Condition is not satisfied due to the default of Seller (or as applicable,
the Phase I Permit Entity or Current Owner).
8.2.11 Notwithstanding
the foregoing in this Section 8.2 to the contrary, if the conditions set forth in Section 8.2.6 above are not satisfied, then Closing
cannot occur hereunder unless and until such conditions have been satisfied, and if same have not been satisfied by the Disbursement
Closing Outside Date, then same shall constitute an automatic termination of this Agreement and an automatic default by Seller
hereunder for which Buyer shall be entitled to exercise its remedies set forth in Section 9.2 below.
8.3
Closing
Documents
. At the Dry Closing (except as otherwise noted below), Seller shall deliver to Escrow Agent the following documents
(all of which shall be duly executed and witnessed by Seller, Current Owner and/or Phase I Permit Entity, as applicable, which
documents Buyer agrees to cause BR-TBR Owner to execute where required):
8.3.1 A
Deed, in the form attached as
Exhibit "E"
hereto and by this reference made a part hereof, conveying
to BR-TBR Owner all of Seller’s right, title and interest in and to the Property. The deed to be delivered by Current Owner
to Seller (the “
Current Owner Deed
”) shall be on the same form attached as
Exhibit "E"
hereto, with only transaction-specific changes being made thereto, and same shall be executed by Current Owner and delivered into
escrow at the Dry Closing.
8.3.2 An
Affidavit of Title, in the form attached as
Exhibit "F"
hereto and by this reference made a part hereof,
same to be updated by Seller at the Disbursement Closing. Current Owner shall execute an affidavit of title on the same form attached
as
Exhibit "F"
hereto, with only transaction-specific changes being made thereto, and same shall be
delivered into escrow at the Dry Closing and updated by Current Owner at the Disbursement Closing.
8.3.3 Such
evidence as Buyer and the Title Insurer shall reasonably require as to the authority of the parties acting on behalf of Seller
to enter into this Agreement and to discharge the obligations of Seller pursuant hereto, same to be updated by Seller at the Disbursement
Closing. Similar evidence as to Current Owner shall also be provided by Current Owner at the Disbursement Closing.
8.3.4 Signature
pages for the Closing Statement (the Closing Statement shall be updated by the parties on the Disbursement Closing Date to reflect
updated amounts).
8.3.5 A
Non-Foreign Affidavit in the form attached as
Exhibit "H"
hereto and by this reference made a part
hereof. Current Owner shall execute a Non-Foreign Affidavit on the same form attached as
Exhibit "H"
hereto, with only transaction-specific changes being made thereto, and same shall be delivered into escrow at the Dry Closing.
8.3.6 A
1099 certificate.
8.3.7 A
certificate
(“
Closing Certificate
”),
dated
as
of
the
Dry Closing
Date, and to
be updated at the Disbursement Closing, and
duly executed
by Seller, Current Owner and Phase I Permit Entity,
in the form of
Exhibit "I"
attached hereto
,
stating
that
the
representations
and
warranties
of
Seller, Current Owner and Phase I Permit Entity
contained
in
Section
7
of this
Agreement
are
true
and
correct
in
all
material
respects
as
of
the
Closing Date
(with
appropriate
modifications
to
reflect
any
changes
therein
or
identifying
any
representation
or
warranty
which
is
not,
or
no
longer
is,
true
and
correct
and
explaining
the
state
of
facts
giving
rise
to
the
change). The inclusion of any change or exception in such certificate shall not prejudice Buyer’s rights under
this Agreement with respect to the subject matter of such change or exception, and shall not excuse Seller or Current Owner for
breaching any representation or warranty when made as of the Contract Date.
8.3.8 A
bill of sale and assignment for the Personalty and the Related Assets. Current Owner shall execute a similar bill of sale and assignment
for the Personalty and the Related Assets, with only transaction-specific changes being made thereto, and same shall be delivered
into escrow at the Dry Closing.
8.3.9 At
the Disbursement Closing, the Easements, to the extent in final form, but not otherwise.
8.3.10 All
documents required to satisfy the Release Condition and to cause the Existing Financing deed of trust and any Uniform Commercial
Code financing statements against Current Owner or Seller to be released from record title or terminated, as applicable (collectively,
the “
Release Condition Documents
”).
8.3.11 Such
additional documents as shall be reasonably required by Title Insurer to issue the Title Policy or complete the conveyance of the
Property contemplated by this Agreement to BR-TBR Owner, including a gap indemnity if required by the Title Insurer.
Simultaneously with the
Disbursement Closing and if not previously delivered to BR-TBR Owner or located at the Property, Seller will deliver to BR-TBR
Owner, outside of the Closing escrow, originals or, if originals are not in the possession or control of Current Owner, Seller
or the Property Manager, copies (if in Seller’s, Current Owner’s or Property Manager's possession or control) of (i) all
Related Assets, and (ii) all manufacturer’s warranties and manuals relating to any Personalty that is part of the Property.
8.4
Deliveries
at Closing
. At the applicable Closing:
8.4.1 Escrow
Agent shall deliver the Closing Documents to BR-TBR Owner at the Disbursement Closing, other than the Deed, the Current Owner Deed
and the Release Condition Documents, all of same to be recorded in the Recording Office (or other appropriate recording/filing
office).
8.4.2 Buyer
shall cause BR-TBR Owner to deliver to Escrow Agent: a counterpart to the Closing Statement at the Dry Closing; if a signatory
to the Easements, to the extent in final form, but not otherwise, the Easements at the Disbursement Closing; and a counterpart
to the bill of sale and assignment at the Dry Closing. All documents delivered by Buyer or BR-TBR Owner at the Dry Closing shall
be held in escrow by the Escrow Agent and either (i) returned to Buyer if the Disbursement Closing does not occur or (ii) released
from escrow at the Disbursement Closing on the terms set forth herein.
8.4.3 Buyer
shall deliver to Escrow Agent at the Disbursement Closing immediately available funds in the Bluerock Member Acquisition Contribution
Amount.
8.4.4 Escrow
Agent shall release the Earnest Money to the Bluerock Member upon consummation of the Disbursement Closing.
8.4.4 Seller
and Current Owner shall deliver such additional documents as shall be reasonably required by Title Insurer to issue the Title Policy
or complete the transfer of the Property to BR-TBR Owner.
8.5
Costs
.
8.5.1
Reimbursement
of RE Taxes
. Seller or Current Owner shall cause all state, county, city or other ad valorem property taxes and assessments
on the Property (“
RE Taxes
”) to be paid for the tax period in which the Disbursement Closing occurs, and for
any period prior to the current tax period, at or prior to the Disbursement Closing. At the Disbursement Closing, Buyer shall reimburse
Current Owner in an amount equal to BR-TBR Owner’s pro rata share of RE Taxes for those days in such tax period during which
BR-TBR Owner will own the Property (such pro rata share to be based on the Land’s acreage compared to the Original Parcel’s
total acreage if the Property is not separately assessed at Closing). Notwithstanding anything to the contrary contained herein,
if the RE Taxes are reduced for any period subsequent to the Disbursement Closing, Seller agrees that any such reduction shall
belong to Buyer and Buyer shall have no obligation to prorate the same in favor of Seller. If the RE Taxes are increased for the
tax period after Closing due to improvements to the Property made by Buyer, the increased portion of such RE Taxes shall be the
obligation of Buyer.
8.5.1.1 To
the extent the Property is not separately assessed for RE Taxes at the Disbursement Closing, (i) Current Owner, Seller and BR-TBR
Owner shall work cooperatively after the Disbursement Closing to cause the Property to be separately assessed for RE Taxes; (ii)
Current Owner and Seller shall remain obligated to pay all RE Taxes as and when same are owing attributable to the Property until
the Property is separately assessed for RE Taxes, with BR-TBR Owner to reimburse Current Owner or Seller, as applicable (or BR-TBR
Owner to make a contribution in anticipation of Current Owner or Seller paying the same), in either case within thirty (30) days
of demand for a proportionate share of RE Taxes based on the acreage of the Land compared to total acreage of the Current Owner’s
Retained Land and the value of the Improvements compared to the total value of all improvements on the Current Owner’s Retained
Land at the time RE Taxes are assessed. Should BR-TBR Owner fail to pay to Current Owner or Seller BR-TBR Owner’s portion
of such RE Taxes in the time period set forth above, either Current Owner or Seller shall have the right, but not the obligation,
to pay same on BR-TBR Owner’s behalf, and BR-TBR Owner shall reimburse such entity for such payments no later than thirty
(30) days after demand by such entity, and, if such reimbursement is not then timely made, then (x) such amounts shall bear interest
at a rate equal to ten percent (10%) per annum until such time as all such amounts are paid in full and (y) Current Owner and Seller
shall have the right to impose and enforce a lien against the Land for payment of such overdue amounts (and interest thereon as
aforesaid).
8.5.1.2 Should
Current Owner and Seller fail to pay such RE Taxes as and when same are owing, BR-TBR Owner shall have the right, but not the obligation,
to pay same on such entities’ behalf, and Seller shall reimburse BR-TBR Owner for such payments no later than thirty (30)
days after demand by BR-TBR Owner, and, if such reimbursement is not then timely made, then (x) such amounts shall bear interest
at a rate equal to ten percent (10%) per annum until such time as all such amounts are paid in full and (y) BR-TBR Owner shall
have the right to impose and enforce a lien against Current Owner’s Retained Land for payment of such overdue amounts (and
interest thereon as aforesaid).
8.5.2
Other
Closing Costs
. At the Disbursement Closing, Seller and Buyer shall pay their own respective costs incurred with respect to
the consummation of the contribution of the Property as contemplated herein, including, without limitation, attorneys’ fees.
Notwithstanding the foregoing, it is expressly agreed that Seller shall pay any and all transfer taxes incident to the conveyance
of title to the Property to BR-TBR Owner and the cost of the Survey, and Buyer shall cause BR-TBR Owner to pay the cost of recording
the Deed, the costs of examination of title to the Property and owner's title insurance therefor, any mortgage recording or intangibles
tax and all other taxes, costs, fees or expenses relating to BR-TBR Owner’s financing of the Property. All costs associated
with recording the Subdivision Plat (and obtaining the City’s approval to record same) shall be borne by Current Owner. All
costs associated with preparing and recording the deed from Current Owner to Seller for the Property shall be borne by Seller.
Sanitary sewer taxes and other utility charges, if any, with respect to the Property shall be prorated between Seller and Buyer
at the Disbursement Closing. All expenses associated with obtaining the release of the Existing Financing and obtaining and recording
the Release Condition Documents shall be borne by Seller. None of the expenditures made by Seller pursuant to this Section 8.5
shall be credited to Seller’s Capital Account under the Venture Agreement unless approved by Bluerock Member.
8.6
Seller’s
Closing Conditions
.
8.6.1 Intentionally
Omitted.
8.6.2 The
Subdivision Conditions and the Required Zoning Conditions shall have been satisfied by Current Owner and the Phase I Permit Entity.
8.6.3 Current
Owner shall have conveyed the Property to Seller as of the Disbursement Closing, subject only to the Permitted Title Exceptions
and the Existing Financing (but only as to the Bluerock Member Acquisition Contribution Amount, and no greater amount).
8.6.4 If
the closing condition set forth in Section 8.6.1 is not met at the Disbursement Closing, Seller may, subject to Buyer’s rights
under Section 8.2 above, (a) waive such condition and proceed to Closing on the Disbursement Closing Date, or (b) extend (by written
notice delivered prior to the then scheduled Disbursement Closing Date) the Disbursement Closing Date for one (1) week for four
(4) successive periods (i.e., the total extension will not exceed four (4) weeks); provided, however, in no event shall the Disbursement
Closing be extended beyond the Disbursement Closing Outside Date. If Seller (or Buyer pursuant to Section 8.2 above) has extended
the Disbursement Closing Date but the closing condition set forth in Section 8.6.1 has not been satisfied by the extended Disbursement
Closing Date, then Seller may (a) waive such condition and proceed to the Disbursement Closing or (b) terminate this Agreement
by delivery of written notice to Escrow Agent and Buyer, in which event (x) the Earnest Money shall be returned to Bluerock Member
and (y) the parties hereto shall have no further rights or obligations hereunder, except for those which expressly survive such
termination. Nothing in this Section 8.6.4 shall limit Seller’s remedies set forth in Section 9.1 below where the closing
condition set forth in Section 8.6.1 is not satisfied due solely to the default of Buyer.
8.6.5 If
the closing conditions set forth in Section 8.6.2 above are not met at the Disbursement Closing, Seller have no right to terminate
this Agreement as a result thereof, but Seller may, subject to Buyer’s rights under Section 8.2 above, (a) waive such condition
and proceed to the Disbursement Closing on the Disbursement Closing Date (unless the unsatisfied condition is the recordation of
the Subdivision Plat, in which case the Disbursement Closing shall occur on the fifth (5) Business Day following Buyer’s
waiver of such condition) or (b) extend (by written notice delivered prior to the then scheduled Disbursement Closing Date) the
Disbursement Closing Date for one (1) week for four (4) successive periods (i.e., the total extension will not exceed four (4)
weeks) so as to allow additional time to satisfy such condition; provided, however, in no event shall the Disbursement Closing
be extended beyond the Disbursement Closing Outside Date. If Seller (or Buyer pursuant to Section 8.2 above) has extended the Disbursement
Closing Date but the closing conditions set forth in Section 8.6.2 above have not been satisfied by the earlier of the extended
Disbursement Closing Date or the Disbursement Closing Outside Date, then Seller may (a) waive such condition and proceed to the
Disbursement Closing or (b) terminate this Agreement by delivery of written notice to Escrow Agent and Buyer, in which event the
Earnest Money shall be returned to Bluerock Member and thereafter the parties hereto shall have no further rights or obligations
hereunder, except for those which expressly survive such termination. Nothing in this Section 8.6.5 shall limit Seller’s
remedies set forth in Section 9.1 below where the closing conditions set forth in Section 8.6.2 are not satisfied due solely to
the default of Buyer.
8.6.6 In
the event of any termination of this Agreement pursuant to Sections 8.2.9, 8.2.10, 8.2.11, 8.6.4 or 8.6.5 above, absent a default
by Buyer hereunder, the Right of First Refusal shall be applicable (and shall survive the termination of this Agreement) (same
being incorporated herein by this reference as if it were set out in full in this Agreement), and Seller and Current Owner hereby
covenant and agree to honor same.
8.6.7 Current
Owner acknowledges and agrees that no additional conditions exist that will need to be satisfied in order to release the Closing
Documents from escrow at the Disbursement Closing or as a prerequisite to Current Owner’s obligation to complete the conveyance
of the Property to Seller aside from the Disbursement Closing Conditions.
Section 9.
Default
and Remedies
.
9.1
Buyer’s
Default
. In the event of a default by Buyer under the terms of this Agreement, Escrow Agent shall disburse the Earnest Money
to Current Owner (and not to Seller), and Seller and Current Owner shall be entitled, as their sole and exclusive remedy hereunder,
to have Current Owner retain the Earnest Money as full liquidated damages for such default of Buyer, whereupon this Agreement shall
terminate and the parties shall have no further rights or obligations hereunder, except for those which expressly survive any such
termination. It is hereby agreed that Seller’s and Current Owner’s damages in the event of a default by Buyer hereunder
are uncertain and difficult to ascertain, and that the Earnest Money constitutes a reasonable liquidation of such damages and is
intended not as a penalty, but as full liquidated damages. Buyer covenants not to bring any action or suit challenging the amount
of liquidated damages provided hereunder in the event of such default. Notwithstanding anything to the contrary contained herein,
this provision shall in no way affect or impair Seller’s or Current Owner’s right of recovery under any indemnity given
by Buyer in favor of Seller or Current Owner under this Agreement. This provision shall expressly survive the termination of this
Agreement.
9.2
Seller’s
Default
. If the contribution of the Property as contemplated hereunder is not consummated due to a default by Seller, Current
Owner or the Phase I Permit Entity hereunder (including, but not limited to a breach of any representation, warranty or covenant
by Seller, Current Owner or the Phase I Permit Entity contained herein), then Buyer shall be entitled, as its sole remedy for such
default, either (a) to terminate the Agreement, in which case Buyer shall be entitled to receive (i) from Seller and/or Current
Owner, jointly and severally (and to bring an action against such entities if they fail to comply) for reimbursement of Buyer’s
direct third party out-of-pocket costs and expenses actually incurred in connection with this Agreement (collectively, “
Buyer’s
Expenses
”), including reasonable attorneys’ fees, and the inspection, acquisition and financing of the Property,
including, without limitation, any forfeited good faith and/or rate lock deposits, in a maximum amount not to exceed an aggregate
of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00), plus (ii) the return of the Earnest Money to Bluerock Member, payment
of both of which shall operate to terminate this Agreement and release Seller, Current Owner and the Phase I Permit Entity from
any and all further liability hereunder other than with respect to the Right of First Refusal (same shall be applicable and shall
survive the termination of this Agreement, and Current Owner covenants and agrees to honor same under such circumstances), (b)
to waive the default by Seller or Current Owner and close the contribution notwithstanding the default by Seller or Current Owner,
or (c) to enforce specific performance of Seller’s and Current Owner’s obligations to execute and deliver the
documents and perform their respective obligations as contained hereunder (for the sake of clarity, Buyer shall be entitled to
pursue a claim for specific performance against Current Owner for the direct conveyance of the Property to Buyer, and/or a claim
for specific performance of Current Owner’s stated obligation to convey the Property to Seller), provided such suit for specific
performance be brought within three (3) months of the Disbursement Closing Outside Date or shall otherwise be deemed void; provided,
however, in the event specific performance is unavailable as a remedy to Buyer because of Seller’s or Current Owner’s
intentional acts (such as conveying the Property to a third party prior to Closing), then Buyer shall be entitled to bring an action
against Seller and Current Owner, jointly and severally, for its actual damages (i.e. for the benefit of Buyer’s bargain).
Notwithstanding anything to the contrary contained herein, this Section 9.2 shall in no way affect or impair Buyer’s
right of recovery under any indemnity expressly given by Seller or Current Owner in favor of Buyer under this Agreement or Buyer’s
ability to recover amounts due to Buyer or BR-TBR Owner under other agreements relating to the Property, including, without limitation,
the Cost Share Agreement (as amended by the Cost-Share Agreement Amendment) or the Venture Agreement. This provision shall expressly
survive the termination of this Agreement.
9.3
Misrepresentation
or Breach by or on Behalf of Seller
. In the event of a misrepresentation or breach of a warranty or covenant by Seller, Current
Owner or the Phase I Permit Entity, which is first discovered by Buyer during the Survival Period, Buyer shall notify Seller and
Current Owner, in writing, of the specifics of such default, and Buyer’s sole recourse shall be to file an action or proceeding
against Seller or Current Owner, jointly and severally, for the actual damages (to the exclusion of any consequential or punitive
damages) suffered by Buyer as a direct result of such default. No action or proceeding thereon of any kind whatsoever shall be
valid or enforceable, at law or in equity, if not commenced in the appropriate jurisdiction within the Survival Period. The representations
and warranties of Seller and Current Owner set forth herein, as same may be updated by the Closing Certificate, shall survive Closing
for the Survival Period. Except with respect to a fraudulent misrepresentation or other default by Seller or Current Owner
for which the Agreement is terminated under Section 9.2, in which event Section 9.2 shall apply, no claim for a breach of any representation
or warranty of Seller or Current Owner shall be actionable or payable (a) if the breach in question results from or is based on
a condition, state of facts or other matter which was known to Buyer prior to the Disbursement Closing, (b) unless the valid claims
for all such breaches collectively aggregate Twenty-Five Thousand and No/100 Dollars ($25,000.00) or more, in which event the full
amount of such valid claims shall be actionable, up to but not exceeding the amount of the Cap (as defined below), and (c) unless
written notice containing a description of the specific nature of such breach shall have been given by Buyer to Seller and Current
Owner prior to the expiration of the Survival Period and an action shall have been commenced by Buyer against Seller or Current
Owner within the Survival Period. In the event of any breach by Seller or Current Owner of its respective representations,
warranties or covenants contained herein which Buyer first discovers after Closing and provides timely notice as aforesaid, Seller
and Current Owner, jointly and severally, shall indemnify and hold Buyer harmless from and against any and all loss, damage, cost
or expense resulting therefrom up to but not exceeding the Cap. Seller and Current Owner shall not be liable to Buyer to
the extent Buyer’s claim is satisfied from any insurance policy. As used herein, the term "
Cap
" shall mean
the total aggregate amount of Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00). In no event shall Seller’s
and Current Owner’s aggregate liability to Buyer for any and all breaches of any representation or warranty of such entities
in this Agreement (as same may be updated in the Closing Certificate) exceed the amount of the Cap, and Buyer hereby waives and
disclaims any right to damages or compensation for any and all such breaches in excess of the Cap; provided, however, nothing herein
shall limit Buyer’s rights or remedies under Section 9.2 above in connection with Buyer exercising its rights pursuant to
such Section 9.2 (as contemplated in the fourth sentence of this Section 9.3).
Section 10
.
Condemnation
.
10.1
Condemnation
.
If, prior to the Disbursement Closing, all or any material part (including, without limitation, any portion thereof which would
result in increased design costs, any diminution in unit count, access or overall layout with regard to the Proposed Development)
of any improvement or acreage of the Property is subject to a bona fide threat of condemnation by a body having the power of eminent
domain, or is taken by eminent domain or condemnation, or sale in lieu thereof, then Buyer, by written notice to Seller, to be
received within thirty (30) calendar days of Buyer’s receiving Seller’s notice of such threat, condemnation or taking,
or by the Disbursement Closing Date, whichever is earlier, may elect to terminate this Agreement. If this Agreement is so terminated,
Bluerock Member shall be entitled to receive a refund of the Earnest Money from Escrow Agent, whereupon the parties shall have
no further rights or obligations hereunder, except for those which expressly survive any such termination.
10.2
Awards
.
If Buyer does not elect to terminate this Agreement following any notice of a threat of taking or taking by condemnation, as provided
above, this Agreement shall remain in full force and effect and the conveyance of the Property contemplated herein, less any interest
taken by eminent domain or condemnation, or sale in lieu thereof, shall be effected with no further adjustments. At the Disbursement
Closing, Seller and Current Owner shall each assign, transfer and set over to Buyer all of their respective right, title and interest
in and to any awards, payments or proceeds for the actual value of the property subject to condemnation, up to but not in excess
of $5,469,200.00, that have been or may thereafter be made for any such taking or sale in lieu thereof, to the extent such awards,
payments or proceeds shall not have theretofore been used for restoration of the Property pursuant to a plan of restoration approved
in writing by Buyer. To the extent Buyer elects to not terminate this Agreement pursuant to Section 10.1, neither Current Owner
nor Seller shall accept, settle or finalize any award with regard to any taking without Buyer’s prior written consent.
Section 11
.
Assignment
.
11.1
Assignment
by Buyer
. Except as herein expressly provided, Buyer shall not, without the prior written consent of Seller, which Seller may
withhold in its sole and absolute discretion, assign any of Buyer’s rights hereunder or any part thereof to any person, firm,
partnership, corporation or other entity. If any assignment is made with the consent of Seller, then the sale contemplated by this
Agreement shall be consummated in the name of, and by and through the authorized officials of, any such assignee but Buyer shall
remain liable hereunder. Notwithstanding the foregoing, Buyer shall have the right to assign this Agreement without Seller's consent
to one (1) or more Affiliates of Buyer or Bluerock. Buyer shall give Seller written notice of the assignment of this Agreement
to the Affiliate and shall provide Seller with a copy of the fully-executed assignment agreement. The Affiliate shall assume the
obligations of Buyer under this Agreement, provided, however, that such assignment shall not relieve Buyer of its obligations under
this Agreement unless and until Closing occurs.
11.2
Assignment
by Seller or Current Owner
.
11.2.1 From
and after the Contract Date, Seller shall not, without the prior written consent of Buyer, which consent Buyer may withhold in
its sole discretion, assign, transfer, convey, hypothecate or otherwise directly or indirectly dispose of all or any part of its
right, title and interest in the Property.
11.2.2 From
and after the Contract Date, Current Owner shall not, without the prior written consent of Buyer, which consent Buyer may withhold
in its sole discretion, assign, transfer, convey, hypothecate or otherwise directly or indirectly dispose of all or any part of
its right, title and interest in the Property, other than the contribution and conveyance of the Property contemplated under the
Seller Operating Agreement and this Agreement.
Section 12
.
Cooperation with Future Development/Sharing of Amenities
.
12.1 Current
Owner and the Phase I Permit Holder hereby covenant and agree that each shall cooperate, fully and in good faith and at their own
expense (provided that any application or other fees attributable solely to the Property shall be paid by Buyer and not Current
Owner), with Buyer after the Disbursement Closing to facilitate the Proposed Development, including, without limitation, taking
the following actions as and when requested by Buyer or required by the City:
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·
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Assist Buyer in completing any requirements imposed under the Original Parcel Subdivision that
also involve Current Owner’s Retained Land adjoining the Property, including dedicating to the City any land or easements
required as part of the Original Parcel Subdivision and recording any declarations or cross access easements associated therewith;
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·
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Complete infrastructure construction plans for shared stormwater devices (if any) and have same
approved by the City, construct any required infrastructure items, the cost thereof to be prorated between the parties as specified
in the REA, and make any required payments to the City’s stormwater facility replacement fund;
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·
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Assist Buyer in completing any requirements imposed under the Pending Zoning Case or City Zoning
Ordinance No. (2013) 238ZC693, and any amendments thereto (“
Zoning Ordinance
”), that also involve Current Owner’s
Retained Land, including dedicating to the City any easements required as part of the Pending Zoning Case or the Zoning Ordinance
and recording any declarations or restrictive covenants associated therewith;
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·
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Perform all obligations under Condition #10 of the Zoning Ordinance (Current Owner hereby confirms
that Conditions #6 & #7 of the Zoning Ordinance have been completed, and Buyer shall not be obligated to pay any portion of
the contribution to the City referenced in such Condition #7);
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·
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Grant easements over Current Owner’s Retained Land as contemplated by the REA for access
to Lake Boone Trail or provision of utility services to the Land or to comply with applicable drainage/stormwater disposal requirements.
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12.2 Current
Owner represents and warrants that 245 dwelling units shall be the allowable residential density of the Property, and covenants
that Current Owner shall not allow development on Current Owner’s Retained Land that would reduce such stated allowable residential
density of the Property.
12.3 The
provisions of this Section 12 shall survive Closing for an indefinite period and shall be enforceable by Buyer by all available
legal remedies. Buyer shall be entitled to recover its attorneys’ fees and litigation costs in any successful action to enforce
Current Owner’s or the Phase I Permit Holder’s requirements under this Section 12.
Section 13
.
Brokerage Commissions
. Current Owner, Buyer and Seller each warrant and represent to the others that it has not employed
a real estate broker or agent in connection with the transactions contemplated hereby. Each party agrees to indemnify and hold
the others harmless from any loss or cost suffered or incurred by it as a result of such other entity’s representation herein
being untrue. This Section 13 shall expressly survive the Closing hereunder.
Section 14
.
Notices
.
Wherever any notice
or other communication is required or permitted hereunder, such notice or other communication shall be in writing and shall be
delivered by hand, by nationally-recognized overnight express delivery service, by U. S. registered or certified mail, return
receipt requested, postage prepaid, or by electronic transfer (by e-mail of a letter in “pdf” format) to the addresses
set out below or at such other addresses as are specified by written notice delivered in accordance herewith:
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Seller:
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tribridge co-invest 29, llc
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c/o TriBridge Residential
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1575 Northside Drive NW
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Suite 200, Building 100
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Atlanta, GA 30318
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Attn: Bobby West
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Telephone: 404-784-3454
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E-mail: bobbyw@tribridgeresidential.com
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With a copy to:
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Nelson Mullins Riley &
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Scarborough LLP
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201 17
th
Street, Suite 1700
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Atlanta, Georgia 30363
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Attn: Eric R. Wilensky, Esq.
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Telephone: 404-322-6469
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E-mail: eric.wilensky@nelsonmullins.com
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Current Owner:
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TBR LAKE BOONE OWNER, LLC, AS
TRUSTEE UNDER THE TBR LAKE BOONE
TRUST AGREEMENT DATED DECEMBER 20, 2012
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c/o TriBridge Residential
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1575 Northside Drive NW
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Suite 200, Building 100
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Atlanta, GA 30318
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Attn: Bobby West
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Telephone: 404-784-3454
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E-mail: bobbyw@tribridgeresidential.com
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With a copy to:
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Nelson Mullins Riley &
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Scarborough LLP
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201 17
th
Street, Suite 1700
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Atlanta, Georgia 30363
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Attn: Eric R. Wilensky, Esq.
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Telephone: 404-322-6469
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E-mail: eric.wilensky@nelsonmullins.com
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Buyer:
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Br-TBR Lake boone venture, llc
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1575 Northside Drive NW
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Suite 200, Building 100
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Atlanta, GA 30318
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Attn: Bobby West
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Telephone: 404-784-3454
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E-mail: bobbyw@tribridgeresidential.com
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With a copy to:
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Nelson Mullins Riley &
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Scarborough LLP
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201 17
th
Street, Suite 1700
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Atlanta, Georgia 30363
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Attn: Eric R. Wilensky, Esq.
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Telephone: 404-322-6469
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E-mail: eric.wilensky@nelsonmullins.com
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With a copy to:
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BLUEROCK REAL ESTATE, L.L.C.
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712 Fifth Avenue, 9th Floor
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New York, New York 10019
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Attn: Michael Konig, Esq.
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Telephone: 908-415-8869
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E-mail: mkonig@bluerockre.com
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Any notice or other
communication mailed as hereinabove provided shall be deemed effectively given (a) on the date of delivery, if delivered by hand;
(b) on the date mailed if sent by overnight express delivery or if sent by U.S. mail; or (c) on the date of transmission, if sent
by electronic transfer device. If any notice mailed is properly addressed but returned for any reason, such notice shall be deemed
to be effective notice and to be given on the date of mailing. Any notice sent by the law firm representing a party hereto, shall
be deemed to be a notice sent by the party represented by said law firm.
Section 15
.
Miscellaneous
.
15.1
Governing
Law; Headings; Rules of Construction
. This Agreement shall be governed by and construed in accordance with the internal laws
of the State of North Carolina, without reference to the conflicts of laws or choice of law provisions thereof. The titles of sections
and subsections herein have been inserted as a matter of convenience of reference only and shall not control or affect the meaning
or construction of any of the terms or provisions herein. All references herein to the singular shall include the plural, and vice
versa. The parties agree that this Agreement is the result of negotiation by the parties, each of whom was represented by counsel,
and thus, this Agreement shall not be construed against the maker thereof. Each party hereby covenants that it has the power to
enter into this Agreement, to perform its obligations under this Agreement and to complete the contribution of the Property as
outlined herein. Each party covenants that it has taken all action necessary to authorize the execution and delivery of this Agreement,
the performance by it of its obligations under this Agreement and the completion of the contribution of the Property as outlined
herein. Each party covenants that the person signing this Agreement on its behalf is authorized to do so.
15.2
No
Waiver
. Neither the failure of either party to exercise any power given such party hereunder or to insist upon strict compliance
by the other party with its obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof
shall constitute a waiver of either party's right to demand exact compliance with the terms hereof.
15.3
Entire
Agreement
. This Agreement and the documents and agreements incorporated herein (including the Venture Agreement and the Cost-Share
Agreement (as amended by the Cost-Share Agreement Amendment)) contain the entire agreement of the parties hereto with respect to
the Property, and no representations, inducements, promises or agreements, oral or otherwise, between the parties not embodied
herein or incorporated herein by reference shall be of any force or effect. Except as specifically provided herein to the contrary,
all disclaimers, waivers, releases, covenants, undertakings and obligations under this Agreement will survive the Disbursement
Closing, and all representations and warranties contained in this Agreement will survive the Disbursement Closing for the Survival
Period, and will not be merged into the Deed or other documents delivered pursuant to this Agreement.
15.4
Binding
Effect
. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors and assigns (subject to Section 11 above).
15.5
Amendments
.
No amendment to this Agreement shall be binding on any of the parties hereto unless such amendment is in writing and is executed
by the party against whom enforcement of such amendment is sought.
15.6
Possession
.
Vacant possession of the Property shall be granted by Seller to BR-TBR Owner no later than the Disbursement Closing Date, subject
only to the Permitted Title Exceptions.
15.7
Date
For Performance
. If the time period or date by which any right, option or election provided under this Agreement must be exercised,
or by which any act required hereunder must be performed, or by which the Closing must be held, expires on a Saturday, Sunday or
legal or bank holiday in the State where the Land is located or of the Federal Government, then such time period shall be automatically
extended through the close of business on the next regularly scheduled Business Day.
15.8
Recording
.
Seller and Buyer agree that they will not record this Agreement and that they will not record a short form of this Agreement, except
that Buyer or BR-TBR Owner may record a lis pendens in connection with a suit for special performance timely brought pursuant to
Section 9.2.
15.9
Counterparts
.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which,
when taken together, shall constitute but one and the same instrument.
15.10
Time
of the Essence
. Time shall be of the essence of this Agreement and each and every term and condition hereof.
15.11
Severability
.
This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations, and is intended, and shall for all purposes be deemed to be, a single, integrated document setting forth
all of the agreements and understandings of the parties hereto, and superseding all prior negotiations, understandings and agreements
of such parties. If any term or provision of this Agreement or the application thereof to any person or circumstance shall for
any reason and to any extent be held to be invalid or unenforceable, then such term or provision shall be ignored, and to the maximum
extent possible, this Agreement shall continue in full force and effect, but without giving effect to such term or provision.
15.12
No
Offer Until Executed
. The submission of this Agreement to Buyer for examination or consideration does not constitute an offer
to contribute the Property, and this Agreement shall become effective, if at all, only upon the full execution and delivery thereof
by Buyer, Seller, Current Owner, Phase I Permit Entity, TriBridge and Bluerock Member.
15.13
Cooperation
with Exchange
. Buyer agrees to reasonably cooperate with Current Owner and Seller by executing such documents or taking such
action as such entities reasonably request in connection with any tax deferred exchange pursuant to Section 1031 of the Internal
Revenue Code of 1986, as amended, provided that (i) the transaction contemplated by this Agreement shall not be conditioned upon
completion of such exchange; (ii) neither Buyer nor BR-TBR Owner shall be required to take title to any real property in connection
with any such exchange; and (iii) neither Buyer nor BR-TBR Owner shall incur any costs or liability by reason of any such exchange.
Current Owner and Seller agree to reasonably cooperate with Buyer by executing such documents or taking such action as Buyer (or
BR-TBR Owner) reasonably requests in connection with any tax deferred exchange pursuant to Section 1031 of the Internal Revenue
Code of 1986, as amended, provided that (i) the transaction contemplated by this Agreement shall not be conditioned upon completion
of such exchange; (ii) Seller shall not be required to take title to any real property in connection with any such exchange; and
(iii) Current Owner and Seller shall not incur any costs or liability by reason of any such exchange.
15.14
Attorneys’
Fees
. Should either party employ attorneys to enforce any of the provisions hereof, the party against whom any final judgment
is entered agrees to pay the prevailing party all reasonable costs, charges, and expenses, including attorneys’ fees, expended
or incurred in connection therewith.
15.15
Further
Cooperation
. In addition to the acts and deeds recited herein and contemplated to be performed, executed and/or delivered by
either party at Closing, each party agrees to perform, execute and deliver, but without any obligation to incur any additional
liability or expense, on or after the Closing any further deliveries and assurances as may be reasonably necessary to consummate
the transactions contemplated hereby or to further perfect the contribution and conveyance of the Property to BR-TBR Owner.
15.16
Permits and
Approvals
. In connection with the Proposed Development upon the Property, TriBridge and the Phase I Permit Entity have made
application for certain zoning approvals and land use permits that Buyer and BR-TBR Owner will need to complete the Proposed Development
upon the Property. The table below contains the specific permit or approval and the party who made application for the same (or
if having made application, has been granted the same) (collectively, the “
Existing/Pending Approvals
”:
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Permit/Approval/Application
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Party who has made
application/secured approval
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Approval Affects
|
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Preliminary Subdivision Approval
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TriBridge
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Original Parcel
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Pending Zoning Case (Site Plan Approval)
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Phase I Permit Entity
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Lots 1-6
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Pending Infrastructure Permit
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Phase I Permit Entity
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Lots 1-6
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TriBridge and the Phase
I Permit Entity join in the execution of this Agreement to evidence their agreement to cooperate with Buyer and BR-TBR Owner following
the Closing Date to allow BR-TBR Owner to avail itself of the Existing/Pending Approvals. To the extent an Existing/Pending Approval
is assignable and only affects the Land (i.e. rather than an area that includes the Land as well as other portions of Current Owner’s
Retained Land), then TriBridge or the Phase I Permit Entity, as applicable, shall assign the same to BR-TBR Owner at the Disbursement
Closing. To the extent an Existing/Pending Approval is not assignable or otherwise affects an area that includes the Land as well
as other portions of Current Owner’s Retained Land, then TriBridge or the Phase I Permit Entity, as applicable, shall take
all steps necessary (at such entity’s sole expense) to ensure that BR-TBR Owner may avail itself of such Existing/Pending
Approval after the Disbursement Closing in connection with the Proposed Development of the Property, but shall have no obligation
to assign to BR-TBR Owner such Existing/Pending Approval. This Section 15.16 shall survive the Closing for an indefinite period
and shall be enforceable by Buyer or BR-TBR Owner by all available legal remedies. Buyer shall be entitled to recover its attorneys’
fees and litigation costs in any successful action to enforce TriBridge’s or the Phase I Permit Holder’s requirements
under this Section 15.16.
15.17
Joint
and Several Liability
. Seller and Current Owner hereby acknowledge and agree that Current Owner and Seller shall be jointly
and severally liable for the indemnities, obligations and liabilities under and pursuant to Sections 7.7, 7.8, 9.2, 9.3 and 13
hereof.
[SIGNATURES PROVIDED ON THE FOLLOWING PAGES]
IN WITNESS WHEREOF,
each of the parties hereto has caused this Agreement to be executed and sealed by its authorized signatory, effective as of the
Contract Date.
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SELLER
:
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TRIBRIDGE CO-INVEST 29, LLC
,
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a Georgia limited liability company
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By:
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TriBridge Investments II, LLC, a Georgia limited liability company, its Manager and Class B Member
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By:
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/s/ Robert H. West
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Name:
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Robert H. West
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Title:
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Authorized Signatory
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Current Owner hereby
joins in the execution of this Agreement with respect to its representations and warranties set forth in Section 7 (and elsewhere)
of this Agreement, and to evidence its agreement to perform its covenants and obligations as identified in the Agreement.
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TBR LAKE BOONE OWNER, LLC,
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A GEORGIA LIMITED LIABILITY COMPANY, AS TRUSTEE UNDER THE TBR LAKE BOONE TRUST AGREEMENT, DATED DECEMBER 20, 2012
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By:
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TriBridge Co-Invest 10, LLC,
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a Georgia limited liability company, its Sole Member
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By:
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JLC Southeast Investments, LLC, as its Manager
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By:
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/s/ Robert H. West
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Name:
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Robert H. West
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Title:
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Authorized Signatory
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BUYER
:
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BR-TBR LAKE BOONE NC VENTURE,
LLC
,
a Delaware limited liability company
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By:
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BR LAKE BOONE JV MEMBER, LLC, a Delaware limited liability company. its co-Manager
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By:
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Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited liability company, its Manager
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By:
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BR SOIF II Manager, LLC, a Delaware limited liability company, its Manager
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By:
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/s/ Michael Konig
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Name:
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Michael Konig
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Title:
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Authorized Signatory
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By:
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TRIBRIDGE CO-INVEST 29, LLC, a Georgia limited liability company, its co-Manager
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By:
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TriBridge Investments II, LLC, a Georgia limited liability company, its Manager and Class B Member
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By:
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/s/ Robert H. West
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Name:
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Robert West
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Title:
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Authorized Signatory
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Bluerock Member hereby
joins in the execution of this Agreement with respect to its rights and obligations hereunder as to the Earnest Money.
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BR LAKE BOONE JV MEMBER, LLC
,
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a Delaware limited liability company
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By:
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Bluerock Special Opportunity + Income Fund II, LLC, a Delaware limited liability company, its Manager
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By:
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BR SOIF II Manager, LLC, a Delaware limited liability company, its Manager
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By:
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/s/ Michael Konig
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Name:
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Michael Konig
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Title:
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Authorized Signatory
|
TriBridge and the Phase I Permit Entity
hereby join in the execution of this Agreement to evidence their agreement to perform their respective covenants and obligations
as identified in the Agreement, including, without limitation, those set forth in Sections 7.17, 7.18, 12 and 15.16 herein.
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TRIBRIDGE RESIDENTIAL, LLC
,
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a Georgia limited liability company
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By:
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/s/ Robert H. West
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Name:
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Robert West
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Title:
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Authorized Signatory
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LBT APARTMENT PHASE I OWNER, LLC
,
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a North Carolina limited liability company
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By:
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TriBridge Residential, LLC, a Georgia limited liability company, its sole member
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By:
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/s/ Robert H. West
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Name:
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Robert West
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Title:
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Authorized Signatory
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EXHIBIT A
LEGAL DESCRIPTION OF ORIGINAL PARCEL
EXHIBIT B-1
PRELIMINARY SUBDIVISION PLAT
EXHIBIT B-2
METES AND BOUNDS LEGAL DESCRIPTION
OF LOTS 5 & 6
LOT 5
Beginning at the intersection of the common
property line of Lot 2 and Lot 5 and the proposed western right of way of Landmark drive for the Point of Beginning; thence with
said common property line North 90°00'00" West a distance of 206.82 feet to a point; thence South 42°51'56" West
a distance of 53.07 feet to a point; thence South 42°51'56" West a distance of 11.70 feet to a point; thence South 90°00'00"
West a distance of 167.04 feet to a point; thence North 90°00'00" West a distance of 148.75 feet to a point on the common
property line of Rex Hospital, Inc.; thence with said common property line North 02°02'27" West a distance of 123.67 feet
to a point; thence North 01°27'47" East a distance of 67.99 feet to a point; thence North 01°46'30" East a distance
of 229.73 feet to a point; thence leaving said common line North 89°41'51" East a distance of 191.82 feet to a point;
thence North 60°48'38" East a distance of 5.84 feet to a point; thence North 73°01'16" East a distance of 6.77
feet to a point; thence North 89°12'09" East a distance of 3.91 feet to a point; thence North 88°22'36" East
a distance of 2.52 feet to a point; thence North 72°01'11" East a distance of 7.90 feet to a point; thence North 71°41'16"
East a distance of 2.53 feet to a point; thence North 61°01'39" East a distance of 26.49 feet to a point; thence North
37°58'10" East a distance of 13.14 feet to a point; thence North 44°40'07" East a distance of 1.30 feet to a
point; thence North 66°56'39" East a distance of 8.53 feet to a point; thence North 88°37'38" East a distance
of 19.21 feet to a point; thence North 59°35'06" East a distance of 43.12 feet to a point; thence North 88°42'05"
East a distance of 29.61 feet to a point; thence North 69°11'56" East a distance of 11.97 feet to a point; thence North
58°48'14" East a distance of 6.44 feet to a point; thence North 54°24'57" East a distance of 8.12 feet to a point;
thence North 60°36'33" East a distance of 32.51 feet to a point; thence North 38°25'21" East a distance of 4.45
feet to a point; thence North 24°19'31" East a distance of 7.67 feet to a point; thence South 83°46'51" East
a distance of 9.55 feet to a point; thence North 83°26'13" East a distance of 21.80 feet to a point; thence North 82°45'29"
East a distance of 16.12 feet to a point; thence North 74°15'03" East a distance of 2.78 feet to a point; thence North
51°04'07" East a distance of 15.01 feet to a point; thence North 89°50'43" East a distance of 12.92 feet to a
point; thence South 54°59'54" East a distance of 17.05 feet to a point; thence South 18°25'25" East a distance
of 5.90 feet to a point; thence South 05°29'37" West a distance of 8.08 feet to a point; thence South 43°32'19"
East a distance of 7.58 feet to a point; thence North 77°37'40" East a distance of 3.09 feet to a point; thence North
70°21'51" East a distance of 11.09 feet to a point; thence North 81°04'41" East a distance of 12.50 feet to a
point; thence North 76°21'01" East a distance of 18.23 feet to a point; thence North 79°21'31" East a distance
of 39.37 feet to a point; thence South 02°48'05" West a distance of 58.07 feet to a point; thence South 87°13'57"
East a distance of 5.00 feet to a point on the proposed western right of way of Landmark Drive; thence with said proposed right
of way South 02°46'03" West a distance of 416.99 feet to the Point of Beginning, containing 258,505 square feet or 5.93
acres.
LOT 6
Beginning at the intersection of the common
property line of Lot 1 and Lot 6 and the proposed eastern right of way of Landmark Drive for the Point of Beginning; thence with
said proposed right of way North 02°46'03" East a distance of 344.92 feet to a point; thence leaving said proposed right
South 87°13'57" East a distance of 5.00 feet to a point; thence North 02°46'03" East a distance of 70.52 feet
to a point; thence South 87°00'00" East a distance of 139.41 feet to a point on the common property line of Meredith Partners
LLC.; thence with said common property line South 02°47'30" West a distance of 415.46 feet to a point on the common property
line of Lot 1; thence with said common property line North 87°00'00" West a distance of 144.24 feet to the Point of Beginning,
containing 59,607 square feet or 1.37 acres.
EXHIBIT B-3
SUBDIVISION APPROVAL FROM CITY OF
RALEIGH
EXHIBIT C
FORM OF EARNEST MONEY AND DOCUMENT
ESCROW AGREEMENT
See attached.
EXHIBIT D
RESERVED
EXHIBIT E
FORM OF DEED
|
Excise
Tax $_____
|
Recording
Time, Book and Page
|
Parcel Identifier No. _____________
Verified by __________ County on the ___
day of
, 2015; By: ___________________________________
Mail after recording to Grantee
This instrument was prepared by:
|
Brief Description for the index
|
|
NORTH CAROLINA SPECIAL WARRANTY DEED
THIS DEED made this ____
day of
_________, 20______, by and between
|
GRANTOR
______________________
Mailing Address:
______________________
______________________
|
GRANTEE
______________________
Mailing Address:
______________________
______________________
|
|
Enter in appropriate block for each party: name, address, and, if appropriate, character of entity, e.g., corporation or partnership.
|
The designation Grantor and Grantee as
used herein shall include said parties, their heirs, successors, and assigns, and shall include singular, plural, masculine, feminine
or neuter as required by context.
WITNESSETH, that the Grantor, for a valuable
consideration paid by the Grantee, the receipt of which is hereby acknowledged, has and by these presents does grant, transfer,
bargain, sell and convey unto the Grantee in fee simple all that certain lot or parcel of land situated in the city of ___________,
_____________ County, North Carolina and more particularly described as follows (the “Property”):
SEE ATTACHED EXHIBIT A FOR
LEGAL DESCRIPTION
A map showing the parcel described above
in Map Book _______, Page ______, of the ___________ County Public Registry.
The Property herein conveyed does not include
the primary residence of a Grantor.
The Property hereinabove described was
acquired by Grantor by instrument recorded in Book _____ at Page ______, _________________ County Public Registry.
TO HAVE AND TO HOLD the aforesaid Property
and all privileges and appurtenances thereto belonging to the Grantee in fee simple forever.
And the Grantor covenants with the Grantee
that Grantor is seized of the Property in fee simple, has the right to convey the same in fee simple and has done nothing to impair
such title as Grantor received, and Grantor will warrant and defend the title against the lawful claims of all persons claiming
by, under or through Grantor.
This conveyance is SUBJECT TO all restrictions,
conditions, reservations, easements and other matters of record and ad valorem taxes for the current and subsequent years.
IN WITNESS WHEREOF, the Grantor has duly executed the foregoing
as of the day and year first above written.
|
_______________________
|
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By:
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Name:
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Title:
|
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State of __________________ – County
of _________________
I, the undersigned, a Notary Public of
the County and State aforesaid, certify that _______________________, personally appeared before me this day and acknowledged that
he is the __________ of _________________, a _____________________, and that by authority duly given and as the act of the limited
partnership, he executed of the foregoing instrument.
Witness my hand and official seal, this the _____ day of ____________,
20___.
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Notary Public
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printed name of Notary
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EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT F
FORM OF AFFIDAVIT OF TITLE
OWNER AFFIDAVIT
AND INDEMNITY AGREEMENT
(NO RECENT IMPROVEMENTS)
PARTIES
:
All parties identified
in this section must execute this Agreement.
Owner:
(NOTE: There can be more than
one Owner if the Property has been owned by multiple parties or has been conveyed within the 120-Day Lien Period.
A separate
Agreement is required for each successive owner in the 120-Day Lien Period.)
PROPERTY:
See
Exhibit A
attached hereto.
DEFINITIONS
:
The following capitalized terms as
used in this Agreement shall have the following meanings:
|
|
·
|
Improvement: All
or any part of any building, structure, erection, alteration, demolition, excavation, clearing, grading, filling, trees and shrubbery,
driveways, and private roadways on the Property as defined below.
|
|
|
·
|
Labor, Services or
Materials: Labor or professional design (including architectural, engineering, landscaping) or surveying services or materials
or rental equipment for which a lien can be claimed under NCGS Chapter 44A, Article 2.
|
|
|
·
|
Contractor: Any person
or entity who has performed or furnished or has contracted to perform or furnish Labor, Services or Materials pursuant to a contract,
either express or implied, with the Owner of real property for the making of an Improvement thereon. (Note that services by architects,
engineers, landscapers, surveyors, furnishers of rental equipment and contracts for construction on Property of Improvements are
often provided before there is visible evidence of construction.)
|
|
|
·
|
120-Day Lien Period:
The 120 days immediately preceding the date of this Agreement.
|
|
|
·
|
Owner: Any person
or entity, as defined in NCGS Chapter 44A, Article 2, who has or has had any interest in the Property within the 120-Day
Lien Period. For the purposes of this Agreement, the term Owner includes: (i) a landlord of the Property; (ii) a person
with rights to purchase the Property under a contract and for whom an Improvement is made and who ordered the Improvement to be
made; and (iii) the Owner’s successors in interest and agents of the Owner acting within their authority.
|
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|
·
|
Company: The title
insurance company providing the title policy for the transaction contemplated by the parties herein.
|
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|
·
|
Property: The real
estate described above and on Exhibit A and any leaseholds, tenements, hereditaments, and improvements placed thereon.
|
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·
|
Land: The parcel
or parcels of real property on which the Improvements are located and known as: _______________.
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|
·
|
All defined terms
shall include the singular or plural as required by context.
|
AGREEMENT
:
For good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and as an inducement to the purchase of the Property
by _____________________ and the issuance of a title insurance policy or policies by Company insuring title to the Property without
exception to liens for Labor, Services or Materials; Owner first being duly sworn, deposes, says and agrees:
1. Certifications:
Owner certifies that at no time during the 120-Day Lien Period have any Labor, Services or Materials been furnished in connection
with a contract with Owner, express or implied, for Improvements to the Property (including architectural, engineering, landscaping
or surveying services or materials or rental equipment that have not been paid for which a lien can be claimed under NCGS Chapter 44A)
nor have any Labor, Services or Materials been furnished on the Property prior to the 120-Day Lien Period that will or may be completed
after the date of this affidavit other than repairs and/or alterations to pre-existing Improvements have been made and Owner certifies
such repairs and/or alterations have been completed and those providing Labor, Services or Materials for the repairs have been
paid in full. The Owner further certifies that no Mechanics Lien Agent has been appointed.
2. Reliance
and Indemnification:
This Agreement may be relied upon by the purchaser in the purchase of the Property, a lender to make a
loan secured by a deed of trust encumbering the Property and the Company in issuance of a title insurance policy or policies insuring
title to the Property without exception to matters certified in this Agreement. The provisions of this Agreement shall survive
the closing of this transaction and shall be binding upon Owner and anyone claiming by, through or under Owner.
3. Entire
Agreement:
This Agreement and any attachments hereto represent the entire agreement between the Owner and the Company, and
no prior or contemporaneous agreement or understanding inconsistent herewith (whether oral or written) pertaining to such matters
is effective.
No modification of this Agreement, and no waiver of any of its
terms or conditions, shall be effective unless made in writing and approved by the Company.
4. As
to possession:
Owner certifies that there are no tenants in possession of the Property.
THIS AFFIDAVIT IS EXPRESSLY LIMITED TO THOSE CLAIMS ARISING
OUT OF OR RELATED TO SERVICES, LABOR, OR MATERIALS REQUESTED BY OR CONTRACTED FOR BY THE OWNER AND SHALL SPECIFICALLY EXCLUDE CLAIMS
ARISING OUT OF OR RELATED TO ACTS OF OR DIRECTED BY TENANTS OR PURCHASER OR ITS AGENTS OR CONTRACTORS.
[SIGNATURE AND NOTARIAL ACKNOWLEDGMENT PAGE
FOLLOWS]
|
PROVIDING
A FALSE AFFIDAVIT IS A CRIMINAL OFFENSE
|
|
EXECUTION
BY OWNER
|
|
|
|
(Affix
Official/Notarial Seal)
|
|
_______________________,
a ________________________
|
State
of _____________ County of
_______________
|
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|
Signed
and sworn to (or affirmed) before me this day by
|
|
|
By:
_____________________________________________
|
____________________________________________
|
|
|
Printed
or Typed Name/Title:
_________________________
|
____________________
[insert name(s) of principal(s)].
|
|
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|
Date:
__________________________
|
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|
By:
_____________________________________________
|
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|
Printed
or Typed Name/Title:
_________________________
|
_________________________________
,
Notary Public
|
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|
My
Commission Expires:
________________________
|
|
|
|
|
|
Exhibit A to Title Affidavit
Legal Description
EXHIBIT G
LITIGATION AFFECTING THE PROPERTY
EXHIBIT H
FORM OF NON-FOREIGN AFFIDAVIT
NON-FOREIGN AFFIDAVIT
The undersigned deponent
(the “
Deponent
”), having personally appeared before the undersigned notary public and first having been duly
sworn according to law, deposes and says under oath as follows:
1. Deponent
is presently a ____________ of ____________________
,
a _______________________________
(the “
Seller
”).
2. In
such capacity, the Deponent has personal knowledge of the facts sworn to in this affidavit and such facts are true and correct.
3. The
Seller is the owner of certain real estate, a description of which is set forth on
Exhibit A
attached hereto and made
a part hereof, together with all fixtures, improvements, easements and appurtenances related thereto (collectively, the “
Property
”).
4. Deponent
understands that Section 1445 of the United States Internal Revenue Code of 1986 (as amended, the “
Code
”), provides
that a transferee of a U.S. real property interest must withhold tax if the transferor is a “foreign person” (as defined
in the Code). For U.S. tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to
a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform
[BUYER Name: ______________________,
a ____________________ (the “
Transferee
”)
that withholding of tax is not required upon the disposition of a U.S. real property interest by the Seller, Deponent hereby certifies
the following:
(a) The
Seller is not a “non-resident alien” for purposes of United States income taxation or otherwise a “foreign person,”
as defined in Section 1445 of the Code.
(b) The
Seller is not a disregarded entity as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax Regulations issued under the
Code.
(c) The
Seller’s United States taxpayer identification number is ______________________.
(d) The
address (and, if different, the mailing address) of the Seller is ____________________________.
(e) The
Seller owns 100% of the aforesaid Property.
(f) Deponent
is making this Affidavit pursuant to the provisions of Section 1445 of the Code in connection with the conveyance of the real property
described on
Exhibit A
, attached hereto and incorporated herein by reference, by the Seller to Transferee, which conveyance
constitutes the disposition by the Seller of a United States real property interest, for the purpose of establishing that Transferee
is not required to withhold tax pursuant to Section 1445 of the Code in connection with such disposition.
(g) Deponent
acknowledges that this Affidavit may be disclosed to the Internal Revenue Service by Transferee, that this Affidavit is made under
penalty of perjury, and that any false statement made herein could be punished by fine, imprisonment or both.
5. Under
penalty of perjury, I declare that I have examined the foregoing Affidavit and hereby certify that it is true, correct and complete
and I further declare that I have the authority to make this affidavit and the certifications contained herein on behalf of the
Seller.
Certified, sworn to and subscribed before
me this ___ day of ____________, 2015.
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Notary Public
|
|
Name:
|
|
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|
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My Commission Expires:
|
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(NOTARIAL SEAL)
|
|
|
EXHIBIT I
FORM OF CLOSING CERTIFICATE
Closing Certificate of Current Owner,
Seller and Phase I Permit Entity
THIS CLOSING CERTIFICATE
is made as of _________________ ___, 2015 by each of
TBR Lake Boone Owner, LLC, a Georgia limited liability company, as Trustee
under the TBR Lake Boone Trust Agreement dated December 20, 2012
(“Current Owner”),
TriBridge Co-Invest 29,
LLC
, a Georgia limited liability company (“Seller”) and LBT Apartment Phase I Owner, LLC, a North Carolina limited
liability company (“Phase I Permit Entity”), in favor of
BR-TBR Lake Boone NC Venture, LLC
and
BR-TBR Lake
Boone NC Owner
, each a Delaware limited liability company (collectively, the “Buyer”).
Current Owner and Seller
each hereby certifies to Buyer that the representations and warranties of each of Current Owner and Seller set forth in Sections
7, 12.2, and 13 of that certain Contribution Agreement between Seller and Buyer (the “Agreement”) dated as of October
30, 2015, are true and correct in all material respects as of the date hereof, except as to the following:
[Update at Disbursement
Closing]
Phase I Permit Entity
hereby certifies to Buyer that the representations and warranties of Phase I Permit Entity set forth in Sections 7, 12.2 and 15.15
of the Agreement are true and correct in all material respects as of the date hereof, except as to the following:
[Update at Disbursement
Closing]
The representations
and warranties set forth in Section 7 of the Agreement, as updated by this Closing Certificate, will survive for the periods set
forth in the Agreement.
This certificate is
delivered pursuant to Section 8.3.7 of the Agreement.
[SIGNATURES ON FOLLOWING
PAGES]
|
|
CURRENT OWNER:
|
|
|
|
|
|
TBR LAKE BOONE OWNER, LLC,
A GEORGIA LIMITED LIABILITY COMPANY,
AS TRUSTEE UNDER THE TBR LAKE BOONE
TRUST AGREEMENT, DATED DECEMBER 20, 2012
|
|
|
|
|
|
|
By:
|
TriBridge Co-Invest 10, LLC,
a Georgia limited liability company, its Sole Member
|
|
|
|
|
|
|
|
By:
|
JLC Southeast Investments, LLC, as its Manager
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Title:
|
|
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|
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|
|
|
SELLER:
|
|
|
|
|
|
TRIBRIDGE CO-INVEST 29, LLC
,
|
|
|
a Georgia limited liability company
|
|
|
|
|
|
|
By:
|
TriBridge Investments II, LLC, a Georgia limited liability company, its Manager and Class B Member
|
|
|
|
|
|
|
|
By
|
|
|
|
|
|
Name:
|
|
|
|
|
|
Title:
|
|
|
|
PHASE I PERMIT ENTITY:
|
|
|
|
|
|
LBT APARTMENT PHASE I OWNER, LLC
,
|
|
|
a North Carolina limited liability company
|
|
|
|
|
|
|
By:
|
TriBridge Residential, LLC, a Georgia limited liability company, its sole member
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
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EXHIBIT J
Supplement
to SELLER AND CURRENT OWNER DeliVeries
|
|
·
|
Environmental – phase 1, asbestos
|
|
|
·
|
Environmental – all other environmental information regarding the property, no further action letter, etc
|
|
|
·
|
Geotech reports, test pit reports and other Geological reports
|
|
|
·
|
The most recently obtained boundary surveys and topographical surveys of the Property
|
|
|
·
|
Zoning ordinance or zoning confirmation letter
|
|
|
·
|
Utility availability letters (water, sewer, electricity, gas)
|
|
|
·
|
Copies of all ad valorem tax statements for the Property for the current year; and
|
|
|
·
|
Copies of all architectural and engineered drawing provided by designers, engineers and architects
|
|
|
·
|
Copies of easements on property
|
Exhibit 10.6
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT,
made and entered into as of this 30
th
day of October, 2015, by and between
BR-TBR LAKE BOONE NC OWNER, LLC
,
a Delaware limited liability company (hereinafter referred to as
“Owner”
), and
TRIBRIDGE RESIDENTIAL
DEVELOPMENT, LLC
,
a Georgia limited liability company
(hereinafter referred to as
“Developer”
).
WITNESSETH:
WHEREAS, Owner is the
owner of those certain tracts or parcels of land located lying and being in the City of Raleigh, Wake County, North Carolina being
more particularly described on
Schedule "A"
attached hereto and by this reference made a part hereof (the
“Property”
);
WHEREAS, Owner is desirous
of engaging Developer as an independent contractor for the purpose of performing the Development Work (defined herein) upon the
terms, conditions and covenants herein described; and
WHEREAS, Developer
is desirous of performing the Development Work as an independent contractor of Owner.
NOW, THEREFORE, for
and in consideration of the above premises, the sum of Ten Dollars ($10.00) in hand paid by each party to the other, and the mutual
promises, obligations and agreements contained herein, Owner and Developer, intending to be legally bound, do hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the
following terms shall have the following meanings:
“
Affiliate
”
means with respect to any Person, (i) any relative of the Person in question, if such Person is an individual, or (ii) any other
Person directly or indirectly controlled by, controlling or under common control with the Person in question (whether directly
or indirectly through one or more intermediaries), or (iii) any shareholder, member or partner of any Person described in (ii)
above. For the purpose of this definition, “control” means the possession, directly or indirectly, of the power to
decide, affirmatively (by direction) or negatively (by veto), management and policies, whether through the ownership of voting
securities or by contract or otherwise.
“
Agreement
”
shall mean this Development Agreement, together with all amendments hereto, all exhibits attached hereto and all other instruments
and documents incorporated herein by reference.
“
Architect
”
shall mean the architect engaged by Owner in connection with the design and construction of the Project.
“
Architect’s
Contract
” shall mean the architect’s contract entered into by Owner and Architect providing for the plans, drawings,
specifications, contract administration and related materials necessary or appropriate for the construction of the Project.
“
BR
Investor
” shall mean BR Lake Boone JV Member, LLC, a Delaware limited liability company.
“
Budget
Category
” shall mean the line item categories of costs and/or expenses set forth on
Exhibit A
attached
hereto and by this reference made a part hereof.
“
Business
Day
” means a day which is not a Saturday or Sunday or a legally recognized public holiday in the United States of America,
the State of New York or the State of North Carolina.
“
Completion
Date
” shall mean, with respect to the Development Work, the date upon which the last of the following shall have occurred:
(i) the construction and equipping of the Project shall have been substantially completed in accordance with the Architect’s
Contract and the Construction Contract (inclusive of landscaping plans, to the extent that landscaping can feasibly be installed
due to the season), including completion of all punch list items, as evidenced by a certificate to such effect from the Architect
and the Specialists and Consultants (exclusive, however, of any interior designer), provided, however, that punch list items which
in the aggregate do not exceed $100,000 (exclusive of seasonal landscaping work) shall be deemed completed for the purpose of this
requirement, (ii) all required utilities are available, (iii) all permits for the construction and equipping of the Project have
been issued, and (iv) a certificate of occupancy has been issued with respect to the Project by the appropriate governmental authority.
“
Construction
Contract
” shall mean that certain Construction Agreement, as may be modified, between the Owner and Contractor for the
construction of the Project in a form to be approved by and executed by Owner.
“Construction
Lender”
shall mean any lender making a Construction Loan.
"
Construction
Loan
" shall mean that certain loan, by and between Owner and any lender, secured by the Project, for the purpose of financing
the Project.
“
Contractor
”
shall mean such general contractor(s) as may be recommended by Developer and approved and retained by Owner from time to time to
construct the Project.
“
Developer
”
shall have the meaning set forth in the Preamble.
“
Development
Budget
” shall mean the final budget, approved by Owner and the Construction Lender for the Project, of all expenses estimated
and projected to be incurred with respect to the planning, design, development and construction of the Development Work, as such
initial budget may, from time to time, be amended in accordance with this Agreement. A preliminary budget is attached hereto as
Exhibit D
; provided, however, the preliminary budget is for illustrative purposes only and shall not govern with
respect to this Agreement.
“
Development
Consultant
” shall mean the development consultant to the extent selected by BR Investor to the extent contemplated in
the LLC Agreement to monitor and review, on behalf of Owner at Owner’s expense, the construction and development of the Project.
For avoidance of doubt, if BR Investor fails to select a Development Consultant, then there shall be no Development Consultant.
“
Development
Costs
” shall mean all costs set forth on the Development Budget and incurred in connection with the Development Work.
“
Development
Fee
” shall mean the fee payable by Owner to Developer pursuant to the provisions of Section 11.1 of this Agreement with
respect to the Development Functions.
“
Development
Functions
” shall mean those obligations, responsibilities and functions of Developer set forth in this Agreement.
“
Development
Period
” shall mean the period commencing on the date hereof and terminating on the date upon which Final Completion is
achieved.
“
Development
Work
” shall mean the work described on
Exhibit B
attached hereto and by reference made a part hereof.
“
Development
Work Control Report
” shall have the meaning set forth in Section 6.2 hereof.
“
Draw
Request
” shall have the meaning set forth in Section 6.2 hereof.
“
Event
of Default
” shall mean any one or more of the events described in Section 12.4 of this Agreement.
“
Final
Completion
” shall have the meaning set forth in the Construction Contract, or if such term is not defined in the Construction
Contract, the corresponding definition in the Construction Contract applicable to the satisfaction of all construction related
obligations and meeting the requirements for the final release of all retainage thereunder.
“
Force
Majeure
” shall mean acts of God, war, riots, civil insurrections, hurricanes, tornados, floods, earthquakes, epidemics
or plagues, acts or campaigns of terrorism or sabotage, interruptions to domestic or international transportation, trade restrictions,
delays caused by any governmental or quasi-governmental entity, shortages of materials, natural resources or labor, labor strikes,
governmental prohibitions or regulations including administrative delays in obtaining building permits, inability to obtain materials,
delay by any utility provider to install or restore utility services at the Project, or any other cause beyond the reasonable control
of the Developer.
“
Key
Persons
” shall have the meaning set forth in Section 3.3 hereof.
“
LLC
Agreement
” shall mean that certain Operating Agreement of Venture dated on or about the date hereof, as the same may
be amended from time to time.
“
Members
”
shall mean the members of the Venture as defined in the LLC Agreement.
“
Monthly
Draw Package
” shall have the meaning set forth in Section 6.2.1 hereof.
“
Monthly
Financial Reporting Package
” shall have the meaning set forth in Section 6.2 hereof.
“
Monthly
Reports
” shall have the meaning set forth in Section 6.2 hereof.
“
Owner
”
shall have the meaning set forth in the Preamble.
“
Person
”
shall mean an individual, partnership, corporation, limited liability company, trust, real estate investment trust, unincorporated
association, joint stock company or other entity or association.
“
Plans
and Specifications
” shall mean the plans and specifications with respect to the Project approved in writing by Owner,
including, without limitation, the plans and specifications more particularly described on
Exhibit C
attached hereto
and by reference made a part hereof.
“
Prime
Rate
” shall mean the rate of interest published in The Wall Street Journal from time to time as the “Prime Rate”
and, if such prime rate is not available, a rate of interest which is a reasonable substitute therefor as mutually agreed to by
Owner and Developer.
“
Project
”
shall mean the demolition of the existing buildings and construction of the apartment project and associated site work intended
to be completed upon the Property as a result of the Development Work.
“
Project
Development Schedule
” shall have the meaning set forth in Section 3.2.1(m) hereof.
“
Property
”
shall have the meaning set forth in the Recitals.
“
Property
Manager
” shall mean the management agent selected by the Owner to provide property management services in respect of
the Project.
“
Specialists
and Consultants
” shall have the meaning set forth in Section 3.2.1(b) hereof.
“
Term
”
shall have the meaning set forth in Section 12.1 hereof.
"Venture"
shall mean BR-TBR LAKE BOONE NC VENTURE, LLC, a Delaware limited liability company.
ARTICLE 2
ENGAGEMENT OF DEVELOPER
2.1
Engagement
.
Owner hereby engages Developer as the exclusive development manager with respect to the Development Work during the Term of this
Agreement as provided herein, for the purpose of managing, arranging, supervising and coordinating the planning, design, permitting,
scheduling, construction and completion of the Development Work, all in accordance with and subject to the terms, conditions and
limitations herein set forth. Developer hereby accepts such engagement and hereby agrees to diligently perform its duties and the
Development Functions hereunder, which performance shall be carried out in a manner at least equal to the standard of care and
quality of services rendered by the leading and most reputable companies performing the same or similar type professional services
in connection with institutional grade multifamily apartments in the area of the Property. Developer further agrees to apply commercially
reasonable business practices in the performance of its duties hereunder, and to comply with all laws and regulations applicable
thereto.
2.2
Relationship
.
With respect to Owner, Developer shall at all times be an independent contractor. No provision hereof shall be construed to constitute
Developer or any of its officers or employees as an employee or employees of Owner, nor shall any provision of this Agreement be
construed as creating a partnership or joint venture between Developer and Owner. Neither Owner nor Developer shall have the power
to bind the other party except pursuant to the terms of this Agreement. This Agreement is not intended to provide or create any
agency relationship between Owner and Developer, and Developer shall have no right or authority, express or implied, to commit
or otherwise obligate Owner in any manner whatsoever, except as expressly provided herein, and Developer agrees that it shall not
hold itself out as having authority to act on behalf of Owner in any manner, except as expressly provided herein.
ARTICLE 3
RESPONSIBILITIES OF DEVELOPER
3.1
General Responsibility
.
Developer’s general responsibility hereunder as Owner’s development manager shall be to manage, arrange, supervise
and coordinate, in all respects, the planning, design, construction, leasing, and completion of the Development Work.
3.2
Development
Functions
. In discharging its general responsibility hereunder with respect to the Development Work, Developer shall perform
and discharge the specific responsibilities set forth in this Section 3.2, subject to the terms of this Agreement.
3.2.1
Pre-Development
Phase
. During the pre-development phase of the Development Work, Developer’s responsibilities will include, without limitation,
the following:
(a) Preparing
and refining the Development Budget, the initial draft of which is attached to this Agreement as
Exhibit D
and which
shall be finalized prior to the Closing of the Construction Loan and approved by the Construction Lender. The final Development
Budget shall be that version attached to the executed Construction Loan Agreement between Owner and the Construction Lender. The
Development Budget shall be broken down into such major categories as Owner may request of Developer, including without limitation,
estimated costs of procuring and maintaining entitlements and other permits, design costs, demolition costs, construction costs
(both hard and soft costs), marketing costs, project administration costs, financing costs and contingencies, but in all respects
separated as between the items constituting “hard costs” and the items constituting “soft costs”, as the
same is approved by the Construction Lender. Developer shall be responsible for arranging a commercially reasonable guaranteed
maximum price contract for the Project, subject to BR Investor’s consent, same not to be unreasonably withheld, and consent
of any Construction Lender.
(b) Recommending
to Owner planning, architectural, engineering, demolition, interior design and other specialists and consultants for the Development
Work (collectively, the
“Specialists and Consultants”
), coordinating the process for the selection by Owner
of such Specialists and Consultants for the Development Work (including a competitive bidding process), reviewing and analyzing
proposals from such Specialists and Consultants, and, following approval thereof by Owner, preparation and/or review and evaluation
of proposed contracts between Owner and such Specialists and Consultants, and the negotiation of such proposed contracts (it being
understood that all contracts shall be signed by Owner and, therefore, are subject to Owner’s prior approval);
(c) Assisting
Owner in establishing the design criteria of the Development Work;
(d) Supervising
the preparation of boundary and topographic surveys of the Property or applicable portions thereof;
(e) Supervising
the preparation of environmental site assessments and geotechnical reports of the Property to the extent not yet prepared by or
on behalf of Owner by Developer;
(f) Supervising
the preparation of site plans showing the location of roads, utilities, buildings, parking areas and other improvements to be constructed
in connection with the Development Work;
(g) Supervising
the preparation of preliminary drawings and specifications in accordance with the approved design criteria;
(h) Defining
the concept for the proposed Project including, without limitation, uses, sizes, physical arrangements and utility requirements;
(i) Analyzing
the entitlements required for the proposed Project including zoning, parking requirements, traffic studies, site plan approvals,
wetlands permits, DOT access permits, resubdivision requirements, offsite improvements, environmental approvals, etc.;
(j) If applicable,
analyzing major tenant restrictions in the supplemental agreements, leases, and other documents pertaining to the Project;
(k) Assessing
the potential tenants, rents, leasing pace, tenant concessions, and other enticements to tenants;
(l) Preparing
preliminary financial analyses of the proposed Project and recommending whether the proposed Project has sufficient probability
of a successful implementation to warrant continuing with the Development Work; and
(m) Prepare
for Owner’s and Construction Lender’s review and approval a detailed project development schedule for the Project (
“Project
Development Schedule”
), including subcategories for permitting, design, demolition and construction of the Project. The
Project Development Schedule shall be reviewed by Developer and updated on a regular basis by the Contractor and any revisions
will be promptly submitted to Owner and the Construction Lender for review and approval.
3.2.2
Design
Development Phase
. During the design development phase of the Development Work, which shall continue after commencement of
the construction phase as to those elements of the Development Work for which final Plans and Specifications, final Development
Budget items, and final changes to the Construction Contract have not then been approved by Owner, Developer shall coordinate with
Owner, Development Consultant and with the Architect and the Specialists and Consultants, to obtain final drawings and specifications
(including mock-ups and color samples) acceptable to Owner, and Developer’s responsibilities will include, without limitation,
the following:
(a) Securing,
on Owner’s behalf, the necessary entitlements and any easements or rights required over adjoining property from the owner(s)
thereof to construct (and operate) the proposed Project (all such easements, entitlements and terms thereof are subject to Owner’s
prior written approval);
(b) Cooperating
and coordinating with the Property Manager;
(c) Confirming
leasing assumptions, construction costs, offsite improvement costs, and other costs to implement the Project;
(d) Preparing
a recommendation to proceed or not proceed with the construction phase of the Development Work;
(e) Reviewing,
commenting on and coordinating changes in preliminary design and working drawings, specifications and site plans that are requested
by Owner or Development Consultant;
(f) Working
with Owner, Development Consultant and with the Architect and the other Specialists and Consultants to enhance compatibility of
architectural drawings with other elements of the Development Work such as interior design;
(g) Preparing
a description of standard interior finishes for the interior of the Development Work, together with a proposed budget for the installation
of such finishes, for Owner’s approval;
(h) Obtaining
cost estimates from Specialists and Consultants and/or contractors and preparing revisions to the Development Budget for the construction
phase in light of design development;
(i) Advising
Owner and Development Consultant with respect to preferred construction methods;
(j) With
the Architect and other appropriate Specialists and Consultants, undertaking cost analysis, value engineering and constructability
reviews for the Project and evaluating design alternatives;
(k) Coordinating
the finalization and approval by Owner of final drawings and specifications, including landscaping plans, mechanical and electrical
drawings, architectural appearance, and interior design schemes for common areas;
(l) Preparing
and/or reviewing and evaluating agreements with Contractor, which agreements may require Contractor or specified major subcontractors
to furnish payment and performance bonds for work on the Development Work, if such requirement is requested in writing by Owner
or Development Consultant, and, if requested by Owner or Development Consultant, negotiating such agreements (it being understood
that all agreements with the Contractor shall be signed by Owner and, therefore, subject to Owner’s prior approval);
(m) Administering
and overseeing the selection by Contractor of major subcontractors and others as appropriate for construction of any improvements
Owner authorizes to be constructed on the Development Work;
(n) Obtaining,
through Contractor and Developer and on behalf of Owner, all building, development, demolition and other permits and governmental
approvals necessary to commence construction of the Development Work.
3.2.3
Construction
Phase
. Once construction of the Development Work commences, Developer will serve as a general construction consultant, and
Developer’s responsibilities with respect to the Development Work will include, without limitation, the following:
(a) Making
visits to the job site as and when necessary to perform its obligations pursuant to, and in accordance with, the terms of this
Agreement to review the work and progress of construction with Contractor and with the Architect and the other Specialists and
Consultants, including, without limitation, observing Contractor’s final testing, start-up and initial operation, which initial
operation shall be in good working order, of all utilities, operational systems and equipment. Developer shall oversee the testing
and delivery of all building systems in consultation with Owner to ensure complete working operation prior to acceptance by the
Owner;
(b) Consulting
with Owner and Development Consultant regarding proposed changes and modifications to the Plans and Specifications which are material
in nature (i.e. which will result in increases to the Development Budget of more than $75,000 per change, and $350,000 in the aggregate,
provided, however, that for any changes and modifications that do not reach such levels Developer may implement such changes at
its discretion), obtaining Owner’s written approval, subject to Section 4.1, as a condition of implementation of any changes
and modifications, coordinating issuance of change orders if and when changes as described above are approved in writing by Owner,
Contractor, and other necessary parties;
(c) Responding
promptly (and in writing if requested) to any questions from Owner and/or Development Consultant regarding the work or progress
of construction, construction methods, scheduling, and the like;
(d) Coordinating
the turnover of portions of the Development Work as and when the same are appropriately completed, including performing walk-throughs
to identify punch list items and timely ensuring the follow through completion of all such punch list items;
(e) Coordinating,
overseeing and managing in a commercially reasonable and efficient manner all efforts by all appropriate parties to complete the
Development Work in accordance with the Plans and Specifications thereof and within the Project Development Schedule, as the same
may be amended from time to time with the approval of all necessary parties, such efforts to include, without limitation, assisting
in the scheduling of inspections and the preparation and timely disposition of all punch lists;
(f) Coordinating,
overseeing and managing in a commercially reasonable and efficient manner all efforts by all appropriate parties to timely complete
the punch list items identified by Development Consultant, Owner, Architect, Specialists and Consultants, Contractor and Developer;
(g) Managing
compliance by Contractor with the Construction Contract, including, without limitation, monitoring insurance certificates of the
Contractor and all subcontractors, submission of applications for payment and supporting documentation;
(h) Causing
the Contractor to maintain at the Project site for Owner and Development Consultant one record copy of all contracts, drawings,
specifications, addenda, change orders and other modifications, in good order and marked currently in readable form to record changes
and selections made during construction, and in addition, approved shop drawings, product data, samples and similar required submittals.
Developer shall further cause the Contractor to maintain records, in duplicate, of principal building layout lines, elevations
of the bottom of the footings, floor levels and key site elevations certified by a qualified surveyor or professional engineer.
All such, and all other, project and construction related documents shall be always available to Owner for inspection and shall
be copied for Owner by Developer at Owner’s expense on reasonable written notice;
(i) Arranging
for the delivery, storage, protection and security of Owner-purchased materials, systems and equipment that are a part of the Project
until such items are incorporated into the Project;
(j) Facilitating
and implementing in a commercially reasonable and expedient manner all close-out duties to complete the Development Work;
(k) Obtaining,
or causing the Contractor to obtain, on behalf of Owner, a permanent certificate of occupancy (or other appropriate and necessary
governmental permission to occupy) with respect to the portions of the Development Work which will require the same;
(l) Obtaining
all final warranties (and all related documentation), to the extent provided for in the Construction Contract from Contractor and
any subcontractors with respect to the Development Work and construction of the Project and all materials provided in connection
therewith for the benefit of Owner, and using commercially reasonable efforts to obtain from Architect certified documentation
that construction of all Development Work has been completed in accordance with the Plans and Specifications; and
(m) Subject
in all cases to the approval of the Owner and the Construction Lender under the Construction Loan, facilitating and implementing
the process of submitting Draw Requests for approvals, collecting and providing all applicable back up and documentation necessary
for such Draw Requests to be processed by the Construction Lender in accordance with the terms of the Construction Loan and overseeing
the proper expenditure or distribution of all such funds to the parties entitled thereto once released by the Construction Lender
or Owner for purposes of paying such related expenses. Developer shall be responsible for all associated accounting and record
keeping on behalf of Owner with respect to any Draw Requests and fund disbursements, and in connection therewith shall provide
contemporaneous notices to the Owner of any Draw Requests submitted in connection with the Development Work and the construction
of the Project along with copies of all documentation submitted in connection with any Draw Request and any disbursements from
the Construction Lender related thereto. Developer will further cooperate with Owner in providing complete access (upon reasonable
written notice) to all associated records of Developer in connection therewith, at Owner’s cost.
3.2.4
All
Phases
. During all phases of the Development Work, Developer’s responsibilities will include, without limitation, the
following:
(a) Providing
Owner and Development Consultant with the Monthly Reports as provided in Section 6.2 hereof so as to keep Owner fully apprised
of the progress of development;
(b) Preparing
and submitting to Owner and Development Consultant supplements and refinements to the Development Budget for Owner’s approval
as development of the Development Work moves through its various phases to completion;
(c) Monitoring
the Project Development Schedule and the progress of development and construction of the Project in comparison thereto;
(d) Notifying
Owner and Development Consultant of any actual or anticipated change in the Project Development Schedule of which Developer becomes
aware, including promptly advising Owner of any delays in the Project Development Schedule and the reasons for any such delay;
(e) Recommending
to Owner and Development Consultant any application of contingency (which application of contingency shall be subject to Owner’s
prior written approval);
(f) Advising
Owner with respect to obtaining any variances or rezoning of such portion of the land included within the Development Work as are
necessary or appropriate to cause the Development Work to be in compliance with applicable codes, laws, regulations and ordinances.
Upon receipt of Owner’s written approval, make or agree to any changes to the site-plan, subdivision or zoning of the Development
Work or any portion thereof;
(g) Advising
Owner with respect to (1) all dealings with all governmental authorities who have control over the development of the Development
Work and the construction of all improvements, and (2) the contest by Owner of any law, regulation or rule which Owner deems to
adversely affect the Development Work;
(h) Coordinating
and managing the performance of Contractor, the Architect and the other Specialists and Consultants under their respective contracts
with Owner and giving or making Owner’s instructions, requirements and approvals provided for in such contracts after obtaining
Owner’s written approval with respect thereto;
(i) Using
commercially reasonable and diligent efforts to resolve and settle any conflict among Contractor, the Architect and the Specialists
and Consultants and keeping Owner and Development Consultant fully informed with respect to such conflicts and settlement discussions;
(j) Assisting
Owner and Development Consultant with respect to Owner’s negotiations with all applicable utility companies, whether governmental
or otherwise, for the installation of all applicable utility services to the Project on a timely basis, with Owner bearing the
cost of all required utility deposits and costs of installation;
(k) Organizing
and coordinating a schedule of monthly draw meetings or teleconferences to be attended by Developer, Owner and Development Consultant,
which such schedule shall set forth the dates on which the monthly draw meetings will be held;
(l) Reviewing
applications for payment submitted by Contractor and other Specialists and Consultants and preparing documentation for all requests
for payments from Owner, in form and content sufficient to permit Owner and Development Consultant to determine the appropriateness
of such payments;
(m) Coordinating
the performance of any tests and inspections required by any Construction Lender or governmental authority;
(n) Subject
to the terms of this Agreement, taking whatever actions are appropriate to accomplish completion of the Development Work in accordance
with the Project Development Schedule, within the approved Development Budget, and in accordance with standards and specifications
approved by Owner and in compliance with the Plans and Specifications and applicable law;
(o) Subject
to the terms of this Agreement, using reasonable efforts to comply or cause compliance by the appropriate party with the Owner’s
obligations relating to the development of the Project undertaken by Owner in any written agreement (including loan agreements,
mortgages and leases) and notifying Owner and Development Consultant promptly in the event Developer becomes aware of any noncompliance;
(p) In addition
to, and in furtherance of, the obligations under subparagraph 3.2.3 (m) above, sending to Owner and Development Consultant the
Monthly Draw Package and, at Owner's request, copies of all notices received by Developer from the Architect, Contractor, the Specialists
and Consultants and governmental authorities;
(q) Advising
Owner with respect to any master planning issues relating to the Development Work, including, but not limited to, traffic planning
issues, historic preservation issues, aesthetic issues relating to buildings and sites, and building occupancy criteria issues;
(r) Timely
filing on behalf of, and as agent for, Owner any notices of completion required or permitted to be filed and taking such action
as may be required to obtain required licenses or permits;
(s) Recording
and reporting to Owner and Development Consultant the progress of the construction of the Development Work, which reports shall
be made on a monthly basis in accordance with Section 6.2;
(t) Causing
complete and accurate files, books of account and other records of all development and construction costs and expenses of the Development
Work incurred by Owner to be prepared and maintained;
(u) Cooperating
in all respects with Owner, the Members of the Owner, and their respective agents and representatives (including, without limitation,
Development Consultant) in connection with construction of the Project and the performance of the Development Work; and
(v) Performing
generally such other acts and things as may be required in accordance with this Agreement for the full and complete supervision
and coordination of the planning, design, development and construction of the Development Work and advising and consulting with
Owner and Development Consultant with respect thereto.
No delegation by Developer
of any of its obligations hereunder (except pursuant to Owner-approved agreements with Specialists and Consultants) shall be permitted
without the prior written consent of Owner in its sole discretion and no such delegation shall relieve Developer of any responsibility
or liability with respect to such obligations hereunder.
3.2.5
Completion
of the Development Work
. Developer hereby agrees to diligently use its commercially reasonable efforts and shall devote sufficient
time and personnel to cause the Development Work to be completed in compliance with the time parameters established therefor by
Owner as herein provided and in compliance with such contractual obligations of Owner, including obligations under loan agreements,
mortgages and leases, and to cause the construction of those improvements approved by Owner within the Development Work to be completed
on or before the projected completion date of the Development Work (as determined from the Project Development Schedule), in accordance
with the Development Budget (as the same may be revised as contemplated herein) for the Development Work, and in compliance with
applicable law and the Plans and Specifications, to the extent the Owner has provided funds therefore to the extent required under
this Agreement, but in all instances, subject to delays caused by Force Majeure, no later than twenty four (24) months as determined
by the issuance of a final certificate of occupancy for the Project, measured from Effective Date.
3.3
Employees
.
Developer shall have in its employ at all times a sufficient number of capable employees to enable Developer to properly perform
its duties and obligations under this Agreement including, without limitation, managing, arranging, supervising and coordinating
activities necessary to achieve completion of the Development Work in accordance with the Project Development Schedule. Except
as expressly included in the Development Budget, or as otherwise provided in Section 11.2 hereof, Developer shall be responsible
out of Developer’s own funds for all costs and expenses related to the employment of such personnel. All persons employed
by Developer in the performance of its responsibilities hereunder shall be the employees of Developer and not of Owner (provided
that any independent contractors shall not be deemed employees of either Developer or Owner), and shall be exclusively controlled
by Developer and not by Owner, and Owner shall have no liability, responsibility or authority with respect thereto. The identity
of the “Development Manager” and other key personnel involved in the development of the Development Work are listed
on
Exhibit E
attached hereto (
“Key Persons”
) and by reference made a part hereof.
3.4
Information
.
Developer shall use reasonable efforts to keep Owner and Development Consultant fully informed on an up-to-date basis of the progress
of the development, design and construction of any work to be accomplished in connection with this Agreement, including (a) all
scheduled meetings to be held with governmental officials, (b) all meetings of the Development Work construction team, which may
include Owner and Development Consultant and the contractors, architects and engineers engaged in connection therewith, and (c)
any defaults, or potential defaults, of any material nature under this Agreement or any of the agreements entered into in connection
with this Agreement (including, without limitation, loan agreements, mortgages and leases). All notices, Monthly Reports, documents
and other such information required to be delivered by Developer to Owner under this Agreement shall be delivered to the parties
set forth in Section 13.7 hereof.
3.5
Mechanic’s
Liens
. If any mechanic’s lien or other encumbrance shall be filed against the Project or the Property or any portion
thereof because of any negligence or willful misconduct by Developer, whether or not arising from the development of the Project
or subsequent repair, maintenance, alteration or otherwise, unless such lien shall be filed as a result of Owner’s breach
of its obligations hereunder or Owner's negligence or willful misconduct, Developer shall, at its own cost and expense, cause the
same to be discharged of record, bonded over (as provided under applicable laws of the state in which the Project is located and
subject to any additional requirements of any Construction Lender) and/or insured over (in form and amount as required by any Construction
Lender) by the title insurer for the benefit of Owner and/or any Construction Lender, within thirty (30) days after the filing
of any such mechanic’s lien or such earlier period required under any applicable loan documents. So long as Developer complies
with the preceding sentence, Developer may contest any such lien or encumbrance so long as such contest does not create an imminent
danger of foreclosure of such lien or encumbrance. If Developer fails to comply with the foregoing provisions, Owner shall have
the option, on ten (10) Business Days’ prior notice to Developer, to discharge, bond or insure over any such lien, charge,
order or encumbrance, and Developer shall reimburse Owner for all reasonable costs and expenses thereof, including reasonable attorneys’
fees and costs (provided that Owner may, at its option, elect to offset such sums against the next installment of the Development
Fee that may be due and payable to Developer under this Agreement).
3.6
Warranties
and Guarantees
. Developer shall secure in the name of Owner all warranties and guarantees of the work by the Contractor, suppliers
and manufacturers of components of the Project (including using commercially reasonable efforts to cause all Contractors and subcontractors
to warrant their work for twelve (12) months after final certificate of occupancy has been issued and to obtain the right to assign
such warranties to any subsequent owner of the Property). Such warranties shall be assigned to Owner. After final completion of
the Project and during the period of time which any particular warranty survives, Developer shall assist Owner with enforcing any
warranties or guarantees with respect to the Project upon request and shall be reimbursed for its reasonable out-of-pocket costs
in connection therewith. If there is an opportunity to purchase extended warranties or guarantees from the Contractor or any subcontractor,
manufacturer or supplier with respect to the mechanical systems, roof or structural components of the Project, Developer shall
present such opportunity to Owner promptly upon Developer being made aware of the availability thereof. If Owner so elects, Developer
shall purchase such extended warranty or guaranty at Owner’s cost for Owner’s benefit and Owner shall reimburse Developer
for the cost of such extended warranty.
ARTICLE 4
DEVELOPMENT BUDGET
4.1
Implementation
of Development Budget
. Developer is hereby authorized and directed to implement the Development Work in compliance with the
Development Budget and as otherwise provided in this Agreement. Developer may, subject to the terms of this Agreement, make any
expenditures and incur any obligations provided for in the Development Budget, as it may be revised from time to time as provided
herein. Developer shall use prudence and diligence and shall employ its commercially reasonable efforts to ensure that the actual
costs incurred for each Budget Category as set forth in the Development Budget shall not exceed such category in the Development
Budget. Developer shall advise Owner in Monthly Reports if it appears that the total costs in any Budget Category specified in
the Development Budget is reasonably expected to exceed the amount budgeted therefor. All expenses shall be charged to the proper
Budget Category in the Development Budget, and no expenses may be classified or reclassified for the purpose of avoiding an excess
in the budgeted amount of a Budget Category without Owner’s prior written approval. The Developer shall be permitted to make
any reallocations among line items and/or to apply savings and contingency amounts under the Development Budget without Owner’s
prior approval to the extent TriBridge Co-Invest 29, LLC has such rights in the LLC Agreement. Developer shall secure Owner’s
prior written approval before incurring and paying any cost which exceeds the budgeted amount therefor in the Development Budget.
4.2
Revision
of Development Budget
. If Developer at any time determines that the Development Budget for the Development Work is not compatible
with the then-prevailing status of the Development Work and does not or is not reasonably expected to adequately provide for the
completion of the Development Work under the remaining and unspent portion of the applicable categories of the Development Budget,
Developer shall promptly prepare and submit to Owner and Development Consultant an appropriate revision of the Development Budget
for Owner’s consideration. Any such revision shall require the prior written approval of Owner (not to be unreasonably withheld,
conditioned or delayed) and consent of the Construction Lender as provided in the Construction Loan documents, and if Owner objects
to any such revision or if any required authorization from the Construction Lender has not been obtained, then the Developer will
not have the authority to incur any cost or expense reflected in the proposed revision.
4.3
Emergencies
.
Notwithstanding any limitations herein provided, but subject in all events to the terms of the Construction Loan, Developer may
spend funds in reasonable amounts or incur reasonable expenses on behalf of Owner in circumstances which Developer reasonably and
in good faith believes constitute an Emergency (any circumstance in which immediate harm to person or property is present an "Emergency").
Developer shall, in any case, notify Owner and Development Consultant as soon as reasonably practicable, both orally and in writing,
of the existence of such Emergency, of the action taken by Developer with respect thereto and the related cost thereof.
ARTICLE 5
AUTHORITY OF DEVELOPER
5.1
General Authority
.
Developer shall carry out and discharge the responsibilities and obligations of Developer under this Agreement (including, without
limitation, all of the responsibilities imposed upon Developer under Article 3 hereof); provided, however, that Developer shall
have no right or authority, express or implied, to commit or otherwise obligate Owner in any manner whatsoever except to the extent
specifically provided herein or otherwise specifically authorized in writing by Owner or any agent or manager of Owner to whom
such approval authority may, from time to time, have been delegated.
5.2
Execution
of Documents and Agreements
. Owner agrees to review any contracts or agreements submitted by Developer to Owner for Owner’s
signature and to execute any such contracts or agreements approved by Owner so as to not cause any undue delay in the Project Development
Schedule.
5.3
Certain Owner
Approvals
. Notwithstanding any provisions of this Agreement (including, without limitation, Section 4.1 hereof), but without
limiting the other restrictions on Developer’s authority contained herein, Developer shall not take any action, expend any
sum, make any decision, give any consent, approval or authorization, enter into any agreement or incur any obligation with respect
to any of the following matters unless and until the same have been approved in writing by Owner (which approvals Owner shall grant
or withhold within three (3) Business Days after receipt of a written request, provided that if any Construction Lender’s
consent or approval is required therefor under the Construction Loan documents or under the LLC Agreement, then such three (3)
Business Day period shall be tolled until any Construction Lender’s or Owner's consent or approval, as the case may be, is
granted):
(a) Entering
into any construction or architectural contracts or any contract with any Specialists or Consultants or any other contract related
to, or in connection with, the Development Work or any amendments to such contracts, or taking any action, omitting to take action
or giving any notice, the taking, omission or giving of which will (i) result in the release or discharge of any party to any such
contract, or (ii) consent to any other party to any contract to assign or otherwise transfer its rights or obligations thereunder.
(b) Authorizing
the preparation of any architectural plans, specifications and drawings which materially affect design of the Development Work.
(c) Subject
to Section 3.2.3(b) of this Agreement, authorizing or approving any proposed change in construction or in the Plans and Specifications
therefor as previously approved by Owner or in the cost thereof, or any other change which would materially affect design, value
or quality of the Development Work.
(d) Entering
into or amending any agreement or other arrangement for the furnishing to or by Owner of goods or services, to the extent Owner’s
obligation under such agreement or arrangement exceeds, in any calendar year, Thirty Thousand Dollars ($30,000).
(e) Commence,
settle or otherwise compromise any litigation for or on behalf of Owner.
(f) Except
as expressly provided in this Agreement, commit or otherwise obligate Owner in any manner with any party including, without limitation,
any governmental authority, utility company, lender, tenant, Specialist or Consultant, Contractor or Architect.
ARTICLE 6
ACCOUNTING AND REPORTS
6.1
Books of
Account
. Developer shall maintain or cause to be maintained for a period of not less than two (2) years after the Completion
Date of the Development Work, proper and complete records and books of account which shall fully and accurately reflect the planning,
design, permitting, scheduling, construction, leasing and completion of the Development Work. All entries to such books of account
shall be supported by sufficient documentation to permit Owner, the Members of Owner, Development Consultant and any of their respective
auditors to ascertain that said entries are properly and accurately recorded. Such books of account shall be located at Developer’s
principal office and shall be maintained in accordance with Developer's standard accounting methods consistently applied. Developer
shall keep vouchers, statements, receipted bills and invoices and all other records covering all collections, if any, disbursements
and other data prior to final completion of construction. During the requisite two (2) year period, at Owner’s request the
originals of all such accounts and records, including all correspondence, shall be delivered to Owner without charge therefor.
Records and accounts shall be maintained on a basis sufficient to permit the preparation therefrom of financial statements in accordance
with generally accepted accounting principles and shall be adequate to provide Owner, the Members of Owner and their respective
representatives with all financial information as may reasonably be needed by any of the foregoing. Upon the expiration of
the
requisite two (2) year period or later
, if Developer seeks to destroy such records, Developer shall provide BR Investor and
Owner with the opportunity to copy or maintain the original records and accounts at no additional cost. This Section 6.1 shall
survive any termination of this Agreement.
6.2
Monthly Reports
.
On a date to be specified by Owner for each calendar month during the Development Period for the Development Work, Developer shall
prepare a
“Draw Request
,” a “
Development Work Control Report”
and a
“Monthly Financial
Reporting Package”
with respect to the Development Work, and shall cause the same to be delivered to Owner and Development
Consultant certified by Developer as true, complete and correct (collectively, the
“Monthly Reports”
).
6.2.1
Draw
Request; Monthly Draw Package
. The Draw Request for the month shall include a Development Work cost summary spreadsheet which
shall be a static financial account of all costs incurred (hard and soft) substantially in the form of the monthly draw package
attached hereto as
Exhibit F
(as the same may be modified by any requirements of any Construction Lender that is
disbursing such funds on behalf of Owner) and with which Developer shall submit (or cause the Contractor to submit) AIA documents
G 702 Application for Payment (approved and notarized, where applicable, by the Architect) and G 703 Continuation Sheet for each
direct contract in place, along with completed lien waivers (the
“Monthly Draw Package”
) and statement of any
funding required from Owner.
6.2.2
Development
Work Control Report
. The Development Work Control Report shall include an updated Project Development Schedule, and a comparison
of the amount of actual costs incurred as of the effective date of such report to the budgeted costs as of such date, shown on
a line item basis using the same categories or line items set forth in the applicable Development Budget. The Development Work
Control Report shall also include information with respect to the status of claims, contractor defaults, Force Majeure events or
other such problems encountered during the Development Period, and shall otherwise be in a form and contain types of information
satisfactory to Owner. Any written reports received by Developer from the Contractor, Architect or the Specialists or Consultants
shall be shared with Owner upon Owner's written request.
6.2.3
Monthly
Financial Reporting Package
. The Monthly Financial Reporting Package shall include the following statements: (i) a balance
sheet as of the twenty-fifth (25th) day of the preceding calendar month, (ii) the Draw Request as of the twenty-fifth (25th) day
of the preceding calendar month, (iii) a reconciliation between the Draw Request and the Development Budget as of the twenty-fifth
(25th) day of the preceding calendar month, reflecting a comparison of the amount of actual costs incurred as of such date to the
budgeted costs as set forth in the Development Budget and (iv) a monthly bank statement and reconciliation. All documents shall
be type written and shall not have any handwritten changes to dollar values. Any handwritten changes of a non-dollar nature shall
be initialed and dated by the person who made the change. Each such report shall be certified by an officer of Developer. Neither
the giving of notice by Developer to Owner of excess expenditures in any month nor the payment of such excess expenditures, shall
act to amend or otherwise modify the Development Budget unless such modification is specifically approved by Owner in writing.
Developer shall provide the reports set forth in this Section 6.2.3 on or before the twenty-fifth (25
th
) day of the
month following the month for which reporting is being provided.
6.3
Examination
of Books and Records
. Owner, the Members of Owner, and their respective agents and representatives, at Owner’s expense,
shall have the right at all reasonable times during normal business hours and upon at least twenty-four (24) hours’ advance
notice, to audit, examine, and make copies of or extracts from the books of account and records maintained by Developer with respect
to the Development Work. If Owner shall notify Developer of either weaknesses in internal controls or errors in record keeping,
Developer shall correct such weaknesses and errors as soon as possible after they are disclosed to Developer. Developer shall notify
Owner in writing of the actions taken to correct such weaknesses and errors. If any such audit shall disclose any overpayment by
Owner to Developer, written notice of such overpayment shall be provided to Developer and the amount of such overpayment shall
be promptly reimbursed by Developer to Owner together with interest at the Prime Rate plus one percent (1%) from the date of overpayment
by Owner until the date repaid by Developer. This Section 6.3 shall survive any termination of this Agreement.
6.4
REIT Compliance
.
Within fifteen (15) days of the end of each quarter of each fiscal year of Venture, upon receipt of a written request therefor,
Developer shall cause to be furnished to Venture (or any member of Venture making the request) such information as reasonably requested
by such party, and to the extent not readily available, which may be reasonably prepared by the Developer at the expense of the
requesting party, as is necessary for any such party (whether a direct or indirect owner) to determine its qualification as a Real
Estate Investment Trust and its compliance with REIT Requirements (as defined in the LLC Agreement) as shall be requested by the
requesting party. Further, the Developer shall cooperate in a reasonable manner at the request of Venture (or any member of Venture
making the request), at the expense of the requesting party, to work in good faith with any designated accountants or auditors
of such requesting party or its affiliates so that such requesting party or its affiliate is able to comply with any public reporting,
attestation, certification and other requirements under the Securities Exchange Act of 1934, as amended, applicable to such entity,
and to work in good faith with the designated accountants or auditors of such requesting party or any of its affiliates in connection
therewith, including for purposes of testing internal controls and procedures of such requesting party or its affiliates.
ARTICLE 7
DEVELOPMENT COSTS
7.1
Payment of
Costs
. Except as otherwise provided in this Agreement and the LLC Agreement, all costs and expenses incurred in connection
with the development of the Development Work shall be the sole responsibility of Owner.
7.2
Method of
Payment of Development Costs
. On a date to be specified by Owner for each month (in no event earlier than the 10
th
day of any month in question), Developer shall deliver to Owner and Development Consultant the Monthly Report detailing the Development
Costs incurred prior to the twenty-fifth (25th) day of the preceding month and the amounts that need to be paid. Owner shall, subject
to the provisions of Section 8.2 below, within fifteen (15) calendar days (or such longer period as necessary to obtain Construction
Lender’s approval or consent and to obtain the corresponding disbursement of loan proceeds under the Construction Loan, as
applicable, or as otherwise approved by Owner), advance the funds to Developer necessary for payment and Developer shall promptly
thereafter make such payments, or Owner may elect to make such payments directly.
ARTICLE 8
OWNER’S FUNDS
8.1
Separate
Accounts
. Payments made by Owner (and the Construction Lender under the Construction Loan, if applicable) pursuant to an approved
Monthly Report may be made, at Owner’s (or any such Construction Lender’s) discretion, directly to the parties to whom
payment is owed or may be made to an account of Owner over which Developer has signature authority for further disbursement to
the Architect(s), Contractor, the Specialists and Consultants, suppliers, tenants and other creditors. Such account or accounts
shall be subject to withdrawal only upon the signature or signatures of individuals approved by Owner. Owner shall have the right
at any time to terminate Developer’s authority with respect to such accounts. Such account or accounts shall be maintained
by Owner in such financial institutions as may be selected by Owner. All such funds shall be and shall remain the property of Owner
and shall be disbursed by Developer in payment of the obligations of Owner incurred in connection with the development and construction
of the Project and the performance of the Development Work, or, subject to the provisions of Section 8.2 below, shall be disbursed
to Owner at Owner’s request. Developer shall not commingle Owner’s funds with the funds of any other Person and shall
disburse Owner’s funds only in accordance with Draw Requests approved by Owner and, if applicable, the Construction Lender
under the Construction Loan.
8.2
Owner’s
Duty to Provide Funds
. Except as otherwise provided herein, Owner agrees that Owner will provide, as and when necessary, all
such amounts as are required to pay when due all current obligations of Owner in connection with the development and construction
of the Project and the performance of the Development Work, including all obligations of Owner to Developer hereunder. Lien waivers
will be accepted not more than one (1) month in arrears. In addition to the actual lien waivers, a “lien waiver summary spreadsheet”
shall be supplied by either Contractor or Developer such that a Development Work-to-date review of lien waivers submitted can be
reviewed. Developer shall promptly notify Owner with a reasonably detailed explanation if there are insufficient funds in the account
described in Section 8.1 above. Provided Developer has delivered the Monthly Draw Package in accordance with the provisions of
Article 7 and Owner and any applicable Construction Lender has approved same, the Development Costs set forth in such Monthly Draw
Package shall be payable as provided in Section 7.2.
8.3
Investment
of Owner’s Funds
. If at any time there are in the bank account or accounts established pursuant to Section 8.1 above,
funds of Owner, from whatever sources, temporarily exceeding the immediate cash needs of the Development Work, Developer shall
promptly advise Owner of the existence of such excess funds, and Developer may (and at the direction of Owner shall) invest such
excess funds in such savings accounts, certificates of deposit, United States Treasury obligations, commercial paper, money market
accounts, repos, and the like, as Owner shall direct, provided that the form of any such investment shall be consistent with Developer’s
need to be able to liquidate any such investment to meet the cash needs of the Development Work from time to time. All interest
or other income resulting from such investment shall be the property of Owner and shall be held and disbursed by Developer in accordance
with this Article 8.
ARTICLE 9
INDEMNITY; LIABILITY; PLANS
9.1
Indemnity
of Owner
. Developer hereby agrees to indemnify, defend and hold harmless Owner and its respective officers, directors, shareholders,
partners, managers, members, parents, subsidiaries, trustees, beneficiaries, investment advisors, licensees, agents, employees
and successors and assigns (each, an
“Indemnified Party”
), to the extent of any and all claims, demands, losses,
liabilities, actions, lawsuits and other proceedings, judgments and awards, and costs and expenses (including without limitation
reasonable and actual attorneys’ fees and court costs incurred in connection with the enforcement of this indemnity or otherwise),
suffered or incurred by such Indemnified Party to the extent of (i) fraud, gross negligence or willful misconduct of Developer
in connection with this Agreement or Developer’s services or work hereunder, (ii) Developer acting outside the scope of its
duties or authority hereunder, (iii) any Event of Default, or (iv) any violation by Developer of applicable law. Developer shall
have the right to defend, and shall defend, at its expense and by counsel of its own choosing (subject to the applicable Indemnified
Party’s approval of such counsel, not to be unreasonably withheld), against any claim or liability to which the indemnity
agreement set forth in this Section 9.1 would apply. Any settlement of any such claim or liability by Developer shall be subject
to the reasonable approval of the applicable Indemnified Party. The right of any Indemnified Party to be defended hereunder, to
defend or settle any such claim shall be limited to those cases where Developer has failed or refused to defend after written notice
to Developer or to where any Indemnified Party to be defended hereunder reasonably determines that a conflict of interest exists.
Developer or Owner, as applicable, shall regularly apprise the other of the status of all proceedings.
9.2
Survival
of Indemnity
. The provisions of Section 9.1 hereof shall survive the completion of Developer’s services hereunder or
any termination of this Agreement.
9.3
No Obligation
to Third Parties
. Except as otherwise provided in Section 9.1 hereof, none of the responsibilities and obligations of Developer
or Owner under this Agreement shall in any way or in any manner be deemed to create any liability of Developer or Owner to, or
any rights in, any Person other than Owner or Developer.
9.4
Ownership
of Plans
. As between Owner and Developer, all plans, drawings and specifications prepared for Owner pursuant to this Agreement
shall remain the property of Owner whether or not the Development Work is completed, and Developer shall not make use of any of
such plans, drawings or specifications for any other Development Work or for any other purpose.
9.5
Nature of
Developer’s Duties and Responsibilities
. Owner hereby acknowledges that Developer’s duties and responsibilities
hereunder with respect to the development and construction of the Project and the performance of the Development Work consist only
in managing, arranging, supervising and coordinating the planning, design, permitting, scheduling, construction, and completion
of the Development Work and the performance of the other Development Functions and duties under this Agreement which relate to
the Development Work, all in accordance with, and subject to the limitations of, the terms of this Agreement; that Developer is
not itself preparing any architectural or engineering plans, designs, specifications or performing any construction required for
the development or completion of the Development Work; and that Developer is not responsible for, and will not be liable for, any
work, act, omission, negligence, gross negligence or intentional misconduct of any other party (other than parties affiliated with
Developer) employed by Owner or performing work for Owner in connection with the Development Work. Nothing in this Section 9.5
shall be deemed to relieve Developer from any responsibility or liability it may have for fraud, gross negligence, willful misconduct
or a breach by Developer of its obligations under this Agreement.
ARTICLE 10
INSURANCE
10.1
Insurance
Requirements
. Throughout the Term of this Agreement, insurance with respect to the Development Work shall be carried and maintained
in force in accordance with the provisions contained in
Exhibit G
attached hereto and incorporated herein by this
reference, with the premiums and other costs and expenses for such required insurance to be borne as provided in
Exhibit
G
attached hereto. A copy of a certificate of insurance in force, issued by the insurer as provided in
Exhibit G
attached hereto, shall be delivered by the party required to maintain such insurance to the other party on or before the commencement
of development activities on the Property, and with respect to renewal or replacement policies, not less than thirty (30) calendar
days prior to the expiration of the policy being renewed or replaced.
10.2
Waiver of
Subrogation
. Each insurance policy maintained by Owner and Developer with respect to the Development Work shall contain a waiver
of subrogation clause, so that no insurer shall have any claim over or against Owner or Developer, as the case may be, by way of
subrogation or otherwise, with respect to any claims which are insured under any such policy.
ARTICLE 11
COMPENSATION OF DEVELOPER
11.1
Development
Fee for the Development Work
.
(a) For
and in consideration of the services rendered by Developer with respect to the Development Work, Owner shall, subject to and in
accordance with the terms and provisions of this Agreement and the Construction Loan, pay to Developer during each month of the
Term, the Development Costs for the applicable month together with the applicable monthly installment of the Development Fee. The
Development Fee shall be three percent (3%) of the total Development Budget (less the Development Fee, land acquisition costs and
any financing fee or acquisition fee paid to Developer or its Affiliate).
(b) The
Development Fee shall be deemed earned and payable, subject to any lender requirements under the Construction Loan, as follows:
thirty percent (30%) upon closing of the Construction Loan (the "
30% Draw
") with the balance paid in equal monthly
installments over the remainder of the Development Period reflected in the Project Development Schedule, payable together with
the Development Costs for the applicable month in accordance with the provisions of Section 7.2. Owner agrees to use commercially
reasonable efforts to negotiate terms in the Construction Loan documents to reflect the payment schedule set forth in this Section
11.1(b). To the extent the Construction Loan provides for a different schedule for the funding and payment of the Development Fee,
the payment provisions set forth herein shall be deemed automatically modified and amended to comply with the terms of the Construction
Loan, including any modification to the timing of the payment of any unpaid amount of the Development Fee not disbursed through
the Monthly Draws under the Construction Loan until Final Completion as provided for in the Construction Loan. Notwithstanding
the foregoing, until the closing of the Construction Loan, Developer shall be entitled to take draws of the Development Fee in
the following manner:
1. On a monthly
basis, Developer shall be entitled to draw an amount equal to the full Development Fee divided by twenty-four (24) (the "
Pre-Construction
Loan Closing Draw
").
2. At such
time as the Construction Loan closes, Developer shall be entitled to draw for the 30% Draw less an amount equal to the sum of all
Pre-Construction Loan Closing Draws paid to Developer.
3. From and
after the closing of the Construction Loan, the Developer shall be entitled to draw the remaining unpaid portion of the Development
Fee in monthly installments over the course of the over the remainder of the Development Period reflected in the Project Development
Schedule, payable together with the Development Costs for the applicable month in accordance with the provisions of Section 7.2.
(c) The
Development Fee shall not exceed the amount listed in the Development Budget annexed hereto as
Exhibit D
as the “Development
Fee”, nor the amount listed in the final Development Budget approved by Owner at the time of the Construction Loan closing
and commencement of construction, provided, however, that if there is material change in the scope of the Development Work, Developer
and Owner shall negotiate in good faith to adjust, upward or downward, as applicable the Development Fee to reflect the increase
or decrease in the Development Budget resulting from such change in scope.
11.2
Reimbursement
of Advances
. Developer shall not be required to advance any of its own funds for the payment of any costs and expenses incurred
by or on behalf of Owner in connection with the Development Work, but if Developer, pursuant to authority granted to Developer
by Owner in writing, advances Developer’s own funds in payment of any of such costs and expenses covered by the Development
Budget or that Developer is permitted to incur hereunder, Owner agrees to reimburse Developer for such costs and expenses. The
amounts to be reimbursed by Owner to Developer pursuant to this Section 11.2 shall be paid monthly, within thirty (30) calendar
days after receipt by Owner of a bill therefor accompanied by supporting statements, invoices, documents or, if such bill and supporting
documentation is not available due to the nature of the cost or expense incurred, an explanation in reasonable detail from Developer
of the costs and expenses to be reimbursed.
11.3
Late Payments
.
Any amounts or sums due from Owner to Developer under this Agreement which are not paid when due (where such non-payment continues
for sixty (60) calendar days after written notice from Developer to Owner specifying the payment Owner has failed to make) shall
bear interest at the Prime Rate plus one percent (1%) from the date such payment was due.
11.4
Duplicate
Payments
. Any particular fees payable or expenses or costs reimbursed to Developer under this Agreement shall not be paid or
reimbursable to Developer or any Affiliate of Developer under any other agreement, and any fees payable or expense or cost reimbursed
to Developer or any Affiliate of Developer under any other agreement shall not be paid or reimbursed to Developer under this Agreement,
it being the intention and agreement of the parties that Developer and its Affiliates shall be paid or reimbursed only once for
any particular fee or reimbursable expense or cost.
ARTICLE 12
TERM AND TERMINATION
12.1
Term
.
The term of this Agreement (the
“Term”
) shall commence on the date of this Agreement and shall continue until
the date upon which Final Completion is achieved, unless this Agreement is earlier terminated pursuant to the provisions contained
in this Agreement.
12.2
Intentionally
Omitted.
12.3
Termination
Upon Sale; Change in Control
. This Agreement shall be terminable by Owner upon written notice to Developer of (a) the sale
by Owner of all of its right, title and interest in and to the entire Property (including any sale by assignment, foreclosure,
deed in lieu of foreclosure, foreclosure or sale of all of the ownership interests in Owner, or otherwise); or (b) the sale by
Owner of all of its right, title and interest in and to the entire Project (including any sale by assignment, foreclosure, deed
in lieu of foreclosure, foreclosure or sale of all of the ownership interests in Owner, or otherwise), (c) the sale or other transfer
of the membership interest held by TriBridge Co-Invest 29, LLC in Venture (other than to an affiliate thereof as permitted under
the LLC Agreement) or (d) any sale or transaction or series of transactions which results in a TriBridge Change of Control, as
defined in the LLC Agreement.
12.4
Developer
Default
. Upon the happening of any Event of Default by Developer, Owner shall have the absolute unconditional right, in addition
to all other rights and remedies available to Owner at law or in equity, to terminate this Agreement by giving written notice of
such termination to Developer. Any one or more of the following events shall constitute an
“Event of Default”
by Developer under this Agreement:
(a) If Developer
shall fail to observe, perform or comply with any term, covenant, agreement or condition of this Agreement which is to be observed,
performed or complied with by Developer under the provisions of this Agreement, and such failure shall continue uncured for thirty
(30) calendar days after the giving of written notice thereof by Owner to Developer specifying the nature of such failure, unless
such failure can be cured but is not susceptible of being cured within said thirty (30) calendar day period, in which event such
a failure shall not constitute an Event of Default if Developer commences curative action within said thirty (30) calendar day
period, and thereafter prosecutes such action to completion with all due diligence and dispatch and completes such cure within
one hundred fifty (150) calendar days after the giving of such notice;
(b) If Developer
shall make a general assignment for the benefit of creditors;
(c) If any
petition shall be filed by or against Developer in any court, whether or not pursuant to any statute of the United States or of
any State, in any bankruptcy, reorganization, dissolution, liquidation, composition, extension, arrangement or insolvency proceedings,
and Developer files, consents to or directly or indirectly acquiesces to such petition;
(d) If,
in any proceeding, a receiver, trustee, liquidator or similar court-appointed agent be appointed for all or a substantial portion
of the property or assets of Developer, and same shall not be discharged within thirty (30) calendar days after such appointment;
(e) If (i)
Developer shall intentionally fail or willfully refuse, in bad faith, to perform any of its duties or obligations hereunder, (ii)
Developer shall misappropriate any funds of Owner or the Construction Lender in the possession or control of Developer (unless
such misappropriation is caused by an employee of Developer and such employee's employment is immediately terminated and the misappropriated
funds are restored within five (5) Business Days of such misappropriation), (iii) Developer shall commit willful misconduct, gross
negligence or an act of fraud against Owner or otherwise in connection with the Construction Loan, the Project or the Development
Work, or (iv) if TriBridge Co-Invest 29, LLC is removed as a "manager" of the Venture; or
(f) Failure
to achieve the Completion Date by the date of completion required by Owner's Construction Lender under the applicable loan documents
governing Owner's Construction Loan, subject to the following sentence. Such date shall be adjourned to the extent the failure
to achieve the Completion Date by such date is caused by Force Majeure and Developer promptly notifies Owner of the delay arising
from said Force Majeure, to the extent such failure is not otherwise a default (i.e. beyond applicable grace periods, including,
without limitation, any applicable "force majeure" provisions) under the Construction Loan.
12.5
Default
of Owner
. If Owner fails to comply with or perform in any respect any of the material terms and provisions to be complied with
or any of the obligations to be performed by Owner under this Agreement, and such failure continues uncured for a period of thirty
(30) calendar days after written notice to Owner specifying the nature of such default (or such longer period of time as may be
needed in the exercise by Owner of due diligence to effect a cure of any non-monetary default), then Developer shall have the right,
in addition to all other rights and remedies available to Developer at law or in equity, at its option, to terminate this Agreement
by giving written notice thereof to Owner, in which event Owner shall promptly pay to Developer, in cash, the sums payable to Developer
upon termination as provided in Section 12.6 hereof, and upon the payment of such amounts, subject to Sections 3.6, 6.1, 6.3, 9.2
and 12.7 hereof, Owner and Developer shall have no further rights, duties, liabilities or obligations whatsoever under this Agreement
(Developer hereby waiving all other rights and remedies that may be available under applicable law).
12.6
Obligation
for Fees and Expenses Upon Termination
. Upon any termination of this Agreement pursuant to Sections 12.3 or 12.5 herein, Owner
shall pay to Developer all amounts due to Developer as of the date of termination pursuant to the terms of this Agreement (including,
without limitation, any earned but unpaid installments of the Development Fee), and upon the payment of all such amounts payable
under this Section, subject to Sections 3.6, 6.1, 6.3, 9.2 and 12.7 hereof, Owner and Developer shall have no further rights, duties,
liabilities or obligations whatsoever under this Agreement (unless such termination is effective only as to a portion of the Development
Work). The foregoing notwithstanding, unpaid portions of the Development Fee otherwise payable to Developer shall not be payable
to Developer in the event that this Agreement has terminated as a result of acts that are the subject of Subsections (c) and (d)
of Section 12.3 or if the Project is foreclosed or transferred pursuant to a deed in lieu as a result of the acts or omissions
of Developer or its Affiliates.
12.7
Actions
Upon Termination
. Upon any termination of this Agreement, Developer shall promptly account for and deliver to Owner any monies
due Owner under this Agreement, whether received before or after such termination, and shall deliver to Owner or to such other
Person as Owner shall designate in writing, all materials, supplies, equipment, keys, contracts, documents and books and records
pertaining to this Agreement or the development of the Property within the possession or control of Developer. Developer shall
also furnish all such information, take all such other action and shall cooperate with Owner as Owner shall reasonably require
in order to effectuate an orderly and systematic termination of Developer’s duties and activities hereunder and an orderly
and systematic transfer of duties to Developer’s successor. This Section 12.7 of this Agreement shall survive any termination
of this Agreement.
ARTICLE 13
MISCELLANEOUS
13.1
Governing
Law; Venue
. This Agreement shall be governed by and construed in accordance with the laws of the state in which the Project
is located. Each party hereby consents to the exclusive venue and jurisdiction of any state or federal court located within New
York, waives personal service of any and all process upon such party, consents to service of process by registered mail directed
to such party at the address stated in Section 13.7, and acknowledges that service so made shall be deemed to be completed upon
actual delivery thereof (whether accepted or refused). In addition, each party consents and agrees that venue of any action instituted
under this Agreement or any agreement executed in connection herewith shall be proper only in New York, and each party hereby waives
any objection to venue.
13.2
Counterparts
.
This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same Agreement.
13.3
Entire Agreement
.
This Agreement contains the entire understanding among the parties and supersedes any prior understanding and agreements between
them respecting the within subject matter, subject only to the LLC Agreement. There are no representations, agreements, arrangements
or understandings, oral or written, between or among the parties hereto relating to the subject matter of this Agreement which
are not fully expressed herein.
13.4
Severability
.
This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provision of this Agreement, or the application thereof to any Person or circumstance, shall, for
any reason and to any extent, be invalid or unenforceable, the remainder of this Agreement and the application of such provision
to other Persons or circumstances shall not be affected thereby, but rather shall be enforced to the greatest extent permitted
by law.
13.5
Section
Headings
. The section headings are inserted only as a matter of convenience and for reference and in no way define, limit or
describe the scope or intent of this Agreement or in any way affect this Agreement.
13.6
No Partnership;
Competition
. Owner shall not and does not by this Agreement in any way or for any purpose become a partner of Developer in
the conduct of its business, or otherwise, or a joint venturer of or a member of a joint enterprise with Developer, but rather
Developer is and shall, for all purposes of this Agreement and the development of the Development Work, be deemed an “independent
contractor” of Owner. It is expressly understood and agreed by the parties hereto that either party may engage in any other
business or investment, including the ownership of, or investment in, real estate and the development, operation, leasing and management
of office, retail and residential apartment units and buildings and that the other party hereto shall have no rights in and to
any such business or investment or the income or profit derived therefrom.
13.7
Notices
.
All notices or other communications required or permitted hereunder shall be in writing and shall be delivered or sent, as the
case may be, by any of the following methods: (a) personal delivery with signed receipt; (b) nationally recognized overnight commercial
carrier or delivery service providing a receipt of delivery; (c) registered or certified mail (with postage prepaid and return
receipt requested); or (d) by electronic mail, provided that confirmation of delivery thereof is received and a confirmation copy
is delivered within one (1) Business Day thereafter by one of the methods set forth in clauses (a), (b) or (c) of this Section
13.7. The effective date of any such notice or other communication shall be deemed to be the earlier of (i) if personally delivered,
the date of delivery to the address of the party to receive such notice; (ii) if delivered by overnight commercial carrier or delivery
service, one (1) Business Day following the receipt of such communication by such carrier or service from the sender, as shown
on the sender’s delivery invoice from such carrier or service, as the case may be; (iii) if mailed, three (3) Business Days
after the date of posting as shown on the sender’s registry or certification receipt; or (iv) if delivered by electronic
mail, upon the date of transmission (provided a notice of transmission failure is not received by the sender (for avoidance of
doubt, an "automatic out-of office reply" shall not constitute a notice of transmission failure), provided such additional
notice is given as described in clause (d) of this Section 13.7. Any reference herein to the date of receipt, delivery, or giving,
as the case may be, of any notice or other communication shall refer to the date such communication becomes effective under the
terms of this Section 13.7. The addresses for purposes of the giving of notices hereunder are:
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If to Developer:
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TriBridge Residential Development, LLC
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1575 Northside Drive NW
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Suite 200, Building 100
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Atlanta, GA 30318
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Attn: Bobby West
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Email:
bobbyw@tribridgeres.com
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With a copy to:
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TriBridge Residential Development, LLC
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1575 Northside Drive NW
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Suite 200, Building 100
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Atlanta, GA 30318
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Attn: Katherine Mosley
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Email:
katherinem@tribridgeres.com
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With a copy to:
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Nelson Mullins Riley & Scarborough LLP
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201 17th Street NW, Suite 1700
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Atlanta, GA 30363
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Attn: Eric R. Wilensky
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Email:
eric.wilensky@nelsonmullins.com
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If to Owner:
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TriBridge Residential, LLC
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1575 Northside Drive NW
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Suite 200, Building 100
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Atlanta, GA 30318
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Attn: Bobby West
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Email:
bobbyw@tribridgeres.com
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With a copy to:
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Bluerock Real Estate, L.L.C.
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712 Fifth Avenue
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9th Floor
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New York, NY 10019
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Attn: James Babb and Michael Konig, Esq.
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Email:
jbabb@bluerockre.com
and
mkonig@bluerockre.com
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and
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Nelson Mullins Riley & Scarborough LLP
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201 17th Street NW, Suite 1700
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Atlanta, GA 30363
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Attn: Eric R. Wilensky
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Email:
eric.wilensky@nelsonmullins.com
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and
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Kaplan Voekler Cunningham & Frank PLC
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1401 East Cary Street
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Richmond, VA 23219
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Attn: Robert G. Boyle, Jr.
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Email:
rboyle@kv-legal.com
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13.8
Assignment
.
(a) Except
as otherwise provided in Section 13.8(b) below, neither party hereto shall have the right to assign this Agreement or any of its
rights hereunder without the prior written consent of the other party, and any such assignment in the absence of such written consent
shall for all purposes be deemed null and void.
(b) Notwithstanding
the provisions of Section 13.8(a) hereof, Owner shall have the absolute right and privilege, at its sole option and in its sole
discretion, at any time and from time to time, to assign Owner’s rights and interests under this Agreement, subject to the
provisions hereof and all of the rights of Developer hereunder, in whole or in part, to any Affiliate of Owner or to any person
or entity owning an interest in or participating with Owner in the acquisition, ownership or development of all or any portion
of the Property, Project or Development Work. Owner may also assign this Agreement to a Lender as collateral in connection with
any related Construction Loan procured by Owner and, in any such case, Developer will execute any Construction Lender required
documentation in connection therewith.
13.9
Successors
and Assigns
. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Whenever the terms “Owner” and “Developer” are used herein, they shall
be deemed to mean and include Owner and Developer and their respective successors and permitted assigns in the same manner and
to the same extent as if specified each time said terms appear herein.
13.10
Estoppel
Certificates
. Each party hereto shall, from time to time, upon not less than fifteen (15) calendar days notice from the other
party, execute and deliver to the other party a certificate stating that this Agreement is unmodified and in full force and effect,
or, if modified, that this Agreement is in full force and effect as modified, and stating the modifications and stating whether
or not, to the best of the certifying party’s knowledge, the other party is in default in any respect under this Agreement,
and, if in default, specifying the nature and character of such default.
13.11
Amendment
.
This Agreement may not be amended, altered or modified except by an instrument in writing and signed by the parties hereto. The
foregoing notwithstanding, the Developer and Owner agree to modify and amend this Agreement in the manner and to the extent reasonably
required by any Construction Lender (or any prospective lender) under the Construction Loan in order to obtain the Construction
Loan or in order to obtain satisfactory terms, in Owner’s reasonable discretion, under the Construction Loan.
13.12
Construction
.
The parties agree that they have both participated equally in the negotiation and preparation of this Agreement and no court construing
this Agreement or the rights of the parties hereunder shall be prejudiced toward either party by reason of the rule of construction
that a document is to be construed more strictly against the party or parties who prepared the same.
13.13
No Waiver
.
No waiver by either party of any default of any other party or of any event, circumstance or condition permitting a party to terminate
this Agreement shall constitute a waiver of any other default of the other party or of any other event, circumstance or condition,
permitting such termination, whether of the same or of any other nature or type and whether preceding, concurrent or succeeding;
and no failure on the part of either party to exercise any right it may have by the terms hereof or by law upon the default of
the other party and no delay in the exercise of such right shall prevent the exercise thereof by the non-defaulting party at any
time when the other party may continue to be so in default, and no such failure or delay and no waiver of default shall operate
as a waiver of any other default, or as a modification in any respect of the provisions of this Agreement. The subsequent acceptance
of any payment or performance pursuant to this Agreement shall not constitute a waiver of any preceding default by a defaulting
party or of any preceding event, circumstance or condition permitting termination hereunder, other than default in the payment
of the particular payment or the performance of the particular matter so accepted, regardless of the non-defaulting party’s
knowledge of the preceding default or the preceding event, circumstance or condition, at the time of accepting such payment or
performance, nor shall the non-defaulting party’s acceptance of such payment or performance after termination constitute
a reinstatement, extension or renewal of this Agreement or revocation of any notice or other act by the non-defaulting party.
13.14
Attorneys’
Fees
. Should any litigation be commenced between the parties hereto or their representatives concerning any provision of this
Agreement or the rights and duties of any Person in relation thereto, the party or parties prevailing in such litigation shall
be entitled, in addition to such other relief as may be granted, to an award of all actual attorneys’ fees and costs incurred
in such litigation, without regard to any schedule or rule of court purporting to restrict such an award, including, without limitation,
actual attorneys’ fees, costs and expenses incurred in connection with (a) enforcing, perfecting and executing such judgment,
(b) post-judgment motions; (c) contempt proceedings; (d) garnishment, levee, and debtor and third-party examinations; (e) discovery;
and (f) bankruptcy litigation.
13.15
Mutual
Waivers of Jury Trial
. Developer and Owner each hereby expressly, irrevocably, fully and forever releases, waives and relinquishes
any and all rights to trial by jury in any claim, demand, action, suit, proceeding or cause of action in which Developer or Owner
is a party, which in any way (directly or indirectly) arises out of, results from or relates to any of the following, in either
case whether now existing or hereafter arising and whether based on contract or tort or any other legal basis: (a) this Agreement,
any past, present or future act, omission, conduct or activity with respect to this Agreement; (b) any transaction, event or occurrence
contemplated by this Agreement; (c) the performance of any obligation or the exercise of any right under this Agreement; or (d)
the enforcement of this Agreement. Developer and Owner each understands that trial by jury is a federal and state constitutional
right and Developer and Owner each acknowledge that it is their intent to waive such rights herein. Developer and Owner each further
acknowledge that the consideration specified in this Agreement includes consideration for waivers of trial by jury by Developer
and Owner.
13.16
Equitable
Remedies
. Each party hereto shall, in addition to all other rights provided herein or as may be provided by law, and subject
to the limitations set forth herein, be entitled to all equitable remedies including those of specific performance and injunction,
to enforce such party’s rights hereunder.
13.17
Remedies
Cumulative
. Each right, power, and remedy provided for herein or now or hereafter existing at law, in equity, by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for herein
or now or hereafter existing at law, in equity, by statute or otherwise, and the exercise or beginning of the exercise or the forbearance
of exercise by any party of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise
by such party of any or all of such other rights, powers or remedies.
[
Signature Pages Follow
]
IN WITNESS WHEREOF,
Owner and Developer have caused this Agreement to be executed on the day, month and year first above dated.
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OWNER
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BR-TBR LAKE BOONE NC OWNER, LLC
, a Delaware limited liability company
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By:
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/s/ Michael Konig
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Title:
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Authorized Signatory
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[
Signature Page to Development Agreement
]
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DEVELOPER
:
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TRIBRIDGE RESIDENTIAL DEVELOPMENT, LLC
, a Georgia limited liability company
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By:
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/s/ Robert West
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Title:
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Authorized Signatory
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[
Signature Page to Development Agreement
]
Schedule "A"
Legal Description
LOT 5
Beginning at the intersection of the common
property line of Lot 2 and Lot 5 and the proposed western right of way of Landmark drive for the Point of Beginning; thence with
said common property line North 90°00'00" West a distance of 206.82 feet to a point; thence South 42°51'56" West
a distance of 53.07 feet to a point; thence South 42°51'56" West a distance of 11.70 feet to a point; thence South 90°00'00"
West a distance of 167.04 feet to a point; thence North 90°00'00" West a distance of 148.75 feet to a point on the common
property line of Rex Hospital, Inc.; thence with said common property line North 02°02'27" West a distance of 123.67 feet
to a point; thence North 01°27'47" East a distance of 67.99 feet to a point; thence North 01°46'30" East a distance
of 229.73 feet to a point; thence leaving said common line North 89°41'51" East a distance of 191.82 feet to a point;
thence North 60°48'38" East a distance of 5.84 feet to a point; thence North 73°01'16" East a distance of 6.77
feet to a point; thence North 89°12'09" East a distance of 3.91 feet to a point; thence North 88°22'36" East
a distance of 2.52 feet to a point; thence North 72°01'11" East a distance of 7.90 feet to a point; thence North 71°41'16"
East a distance of 2.53 feet to a point; thence North 61°01'39" East a distance of 26.49 feet to a point; thence North
37°58'10" East a distance of 13.14 feet to a point; thence North 44°40'07" East a distance of 1.30 feet to a
point; thence North 66°56'39" East a distance of 8.53 feet to a point; thence North 88°37'38" East a distance
of 19.21 feet to a point; thence North 59°35'06" East a distance of 43.12 feet to a point; thence North 88°42'05"
East a distance of 29.61 feet to a point; thence North 69°11'56" East a distance of 11.97 feet to a point; thence North
58°48'14" East a distance of 6.44 feet to a point; thence North 54°24'57" East a distance of 8.12 feet to a point;
thence North 60°36'33" East a distance of 32.51 feet to a point; thence North 38°25'21" East a distance of 4.45
feet to a point; thence North 24°19'31" East a distance of 7.67 feet to a point; thence South 83°46'51" East
a distance of 9.55 feet to a point; thence North 83°26'13" East a distance of 21.80 feet to a point; thence North 82°45'29"
East a distance of 16.12 feet to a point; thence North 74°15'03" East a distance of 2.78 feet to a point; thence North
51°04'07" East a distance of 15.01 feet to a point; thence North 89°50'43" East a distance of 12.92 feet to a
point; thence South 54°59'54" East a distance of 17.05 feet to a point; thence South 18°25'25" East a distance
of 5.90 feet to a point; thence South 05°29'37" West a distance of 8.08 feet to a point; thence South 43°32'19"
East a distance of 7.58 feet to a point; thence North 77°37'40" East a distance of 3.09 feet to a point; thence North
70°21'51" East a distance of 11.09 feet to a point; thence North 81°04'41" East a distance of 12.50 feet to a
point; thence North 76°21'01" East a distance of 18.23 feet to a point; thence North 79°21'31" East a distance
of 39.37 feet to a point; thence South 02°48'05" West a distance of 58.07 feet to a point; thence South 87°13'57"
East a distance of 5.00 feet to a point on the proposed western right of way of Landmark Drive; thence with said proposed right
of way South 02°46'03" West a distance of 416.99 feet to the Point of Beginning, containing 258,505 square feet or 5.93
acres.
LOT 6
Beginning at the intersection of the common
property line of Lot 1 and Lot 6 and the proposed eastern right of way of Landmark Drive for the Point of Beginning; thence with
said proposed right of way North 02°46'03" East a distance of 344.92 feet to a point; thence leaving said proposed right
South 87°13'57" East a distance of 5.00 feet to a point; thence North 02°46'03" East a distance of 70.52 feet
to a point; thence South 87°00'00" East a distance of 139.41 feet to a point on the common property line of Meredith Partners
LLC.; thence with said common property line South 02°47'30" West a distance of 415.46 feet to a point on the common property
line of Lot 1; thence with said common property line North 87°00'00" West a distance of 144.24 feet to the Point of Beginning,
containing 59,607 square feet or 1.37 acres.
EXHIBIT A
BUDGET CATEGORIES
Purchase Price
Closing Costs
Project Feasibility Costs
Design Costs
Legal Costs
Real Estate Taxes
Insurance Costs
Financing Costs
Government Costs
Misc. Direct Costs
Construction Costs (to include specifically):
Lease-Up Period Operating Costs
Capitalized Development Fee
Development Contingency
Marketing Costs
EXHIBIT B
DESCRIPTION OF THE DEVELOPMENT WORK
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1.
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Acquisition of the Property;
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2.
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Engineering and Design,
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3.
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Permits, approvals and entitlements,
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4.
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Demolition of existing buildings
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5.
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Construction of Project, and
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6.
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Delivery/Turnover of units to Property Manager.
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EXHIBIT C
PLANS AND SPECIFICATIONS
[see attached]
EXHIBIT D
DEVELOPMENT BUDGET
EXHIBIT E
KEY PERSONS
EXHIBIT F
SAMPLE MONTHLY DRAW PACKAGE
[see attached]
EXHIBIT G
INSURANCE REQUIREMENTS
[To be attached upon Closing of Construction
Loan, but in all events shall include applicable worker’s compensation coverage, which Developer shall cause to be carried
by the Contractor]