LIMITED LIABILITY COMPANY AGREEMENT OF BRTL LLC Dated as of: June 2, 2011 TABLE OF CONTENTS

(i)           credit to such Capital Account any amounts that such Member is deemed obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

 

(ii)           debit to such Capital Account the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2) (ii)(d)(6).

(i)           To each Member’s Capital Account there shall be credited (A) such Member’s Capital Contributions and (B) such Member’s distributive share of Profits and any items in the nature of income or gain that are specially allocated pursuant to Section 6.03;

 

(ii)           To each Member’s Capital Account there shall be debited (A) the amount of money and the Gross Asset Value of any Property distributed to such Member pursuant to any provision of this Agreement and (B) such Member’s distributive share of Losses and any items in the nature of expenses or losses that are specially allocated pursuant to Section 6.03; and

 

(iii)           In the event an Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Transferred Interest.

(i)           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;

(ii)           the Gross Asset Values of all items of Property shall be adjusted to equal their respective gross fair market values (taking Code Section 7701(g) into account) as of the following times:  (A) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (B) the distribution by the Company to a Member of more than a de minimis amount of Property as consideration for an interest in the Company; (C) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and (D) in connection with the grant of an 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 an existing Member acting in a member capacity, or by a new Member acting in a partner capacity in anticipation of being a Member; provided that an adjustment described in subclauses (A), (B) and (D) of this clause (ii) shall be made only if the Members reasonably determine that such adjustment is necessary to reflect the relative economic interests of the Members in the Company;

 

(iii)           the Gross Asset Value of any item of Property distributed to any Member shall be adjusted to equal the gross fair market value (taking Code Section 7701(g) into account) of such item on the date of distribution; and

 

(iv)           the Gross Asset Values of each item of Property shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to (A) Regulations Section 1.704-1(b)(2)(iv)(m) and (B) clause (vi) of the definition of “Profits” and “Losses” or Section 6.03(d) hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this clause (d) to the extent that an adjustment pursuant to clause (b) above is required in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (iv).

(i)           any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition of “Profits” and “Losses” shall be added to such taxable income or loss;

 

(ii)           any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this definition of “Profits” and “Losses,” shall be subtracted from such taxable income or loss;

(iii)           in the event the Gross Asset Value of any item of Property is adjusted pursuant to clause (ii) or (iii) of the definition of Gross Asset Value, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of such item of Property) or an item of loss (if the adjustment decreases the Gross Asset Value of such item of Property) from the disposition of such item of Property and shall be taken into account for purposes of computing Profits or Losses;

 

(iv)           gain or loss resulting from any disposition of 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;

 

(v)           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 such Allocation Year, computed in accordance with the definition of “Depreciation;” and

 

(vi)           to the extent an adjustment to the adjusted tax basis of any item of Property pursuant to Code Section 734(b) is required, pursuant to Regulations Section 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 in liquidation of an Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the item of Property) or loss (if the adjustment decreases such basis) from the disposition of such item of Property and shall be taken into account for purposes of computing Profits or Losses.

SECTION 1.02.          Other Defined Terms.  As used in this Agreement, unless otherwise specified, each accounting term used herein is used herein with the respective meaning ascribed to such accounting term in accordance with the United States GAAP.  All defined terms used in this Agreement that are not defined in this Article I shall have the respective meanings set forth elsewhere in this Agreement.

 

SECTION 1.03.          Governing Law.  This Agreement shall be governed by, interpreted under and construed in accordance with the internal substantive laws of the State of Delaware applicable to contracts executed and to be performed wholly within that State without giving effect to the choice or conflict of laws principles or provisions thereof that would apply the law of any other jurisdiction.

 

SECTION 1.04.          Rules of Construction.  Unless otherwise specified herein, all references herein to Articles, Sections or Exhibits are to Articles, Sections or Exhibits of this Agreement. Titles, captions and headings of the sections, articles and other subdivisions of this Agreement are for convenience of reference only and shall not affect the construction or interpretation of any provision of this Agreement. Words such as “herein,” “hereinafter,” “hereof,” “hereto,” “hereby” and “hereunder,” and words of like import, unless the context requires otherwise, refer to this Agreement taken as a whole and not to any particular Section, Article or other provision hereof. As used in this Agreement, the masculine, feminine and neuter genders shall be deemed to include the others if the context requires, and if the context requires, the use of the singular shall include the plural and vice versa. The terms “include” and “including” shall be construed as if followed by the phrase “without limitation.” This Agreement is the product of mutual negotiations among the Parties and their respective counsels, and no Party shall be deemed the draftsperson hereof or of any portion or provision hereof. Accordingly, in the event of any ambiguity or inconsistency in any provision of this Agreement, the same shall not be interpreted against any Party as the party responsible for drafting or providing such provision.

(a) From and after the Effective Date, the Members hereby agree to continue the Company as a limited liability company under and pursuant to the Delaware Act, upon and subject to the terms and conditions set forth in this Agreement.

 

(b) The Percentage Interest of each Member shall be personal property for all purposes.  The Managing Member is hereby authorized to file and record any amendments to the Certificate of Formation and such other documents as may be approved or permitted by this Agreement or required or appropriate under the Delaware Act or the laws of any other jurisdiction in which the Company may conduct business or own property.

 

(c) Mark Lundy, who is hereby confirmed to have been as an “authorized person” within the meaning of the Delaware Act, has executed, delivered and filed the certificate of formation of the Company (the “Certificate of Formation”) 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 Managing Member thereupon became the designated “authorized person” of the Company and shall continue as the designated “authorized person” of the Company within the meaning of the Delaware Act.  The Managing 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 the State of New York and in any other jurisdiction(s) in which the Company may wish to conduct business.

 

 

 

SECTION 2.02.          Name and Principal Place of Business.

 

(a) The name of the Company shall be BRTL LLC.  All business of the Company shall be conducted under such name, and title to all assets of the Company shall be held in such name.  The name of the Company shall not be changed without the approval of all of the Members.

 

(b) The principal place of business and office of the Company shall be initially located at the offices of the Managing Member at 60 Cutter Mill Road, Suite 303, Great Neck, New York 11021.  The Managing Member may at any time upon at least thirty (30) days’ notice to TL (i) change such principal office and place of business or (ii) change or establish such additional offices or places of business of the Company as it may deem necessary or appropriate for the operation of the Company’s business.

 

 

(a) The term of the Company commenced on the date of the filing of the Certificate of Formation in the office of the Secretary of State of the State of Delaware and shall continue until the dissolution and liquidation of the Company in accordance with the terms hereof or applicable law.  The Company shall cease acquiring Company Loan Investments on the fifth (5th) anniversary of the Effective Date (the “Investment Period”) unless the Investment Period is extended pursuant to Section 2.03(b) or the Company is earlier dissolved and terminated pursuant to Article IX or applicable law or one of the Members sends a Wind-Up Notice.

 

(b) The Investment Period may be extended up to two (2) times (unless the Company is earlier dissolved or liquidated or one of the Members sends a Wind-Up Notice), each for one (1) year, with the approval of all of the Members, such request for extension to be submitted by either Member no later than (i) March 4, 2016, in the case of the first such extension, or (ii) March 4, 2017, in the case of the second extension.

 

(c)           Notwithstanding anything contained herein to the contrary, either Member may provide written notice to the other Member at any time that such Member desires to terminate the Investment Period in which case the Investment Period shall terminate sixty (60) days following the date of such notice (a “Wind-Up Notice”).

 

(d)           After the termination of the Investment Period for any reason, the BRT Member’s obligation to offer loans to the Company pursuant to Section 4.03 shall terminate.

 

SECTION 2.04.          Registered Agent, Registered Office and Foreign Qualification.  Unless otherwise determined by the Managing Member, the name of the Company’s registered agent for service of process shall be United Corporate Services, Inc., and the address of the Company’s registered agent and the address of the Company’s registered office in the State of Delaware shall be c/o United Corporate Services, Inc., 874 Walker Road, Suite C, Dover, Delaware 19904,.  Such agent and such office may be changed from time to time by the Managing Member.  Either Member, or any other Person authorized by the Managing Member, is hereby authorized, for the purpose of authorizing or qualifying the Company to do business in any state, territory or dependency of the United States in which it is necessary or expedient for the Company to transact business, to do any and all acts and things necessary to obtain from such state, territory or dependency any such authorization or qualification.

 

 

 

 

SECTION 2.05.          Purpose.  The purpose of the Company shall be:

 

(a) to acquire Approved Loan Investments from Original Lender either directly or through a Subsidiary;

 

(b) to administer and manage such Company Loan Investments (including, as necessary, enforce such Company Loan Investments, including foreclosing and otherwise realizing on any real property or other collateral securing such Company Loan Investments);

 

(c) to conduct all activities reasonably necessary or desirable to accomplish the foregoing purposes and to do anything necessary or incidental to any of the foregoing, which in each case, is not a breach of this Agreement, including to manage or operate any real property acquired in connection with a Foreclosed Company Loan or otherwise in accordance with the terms of this Agreement; and

 

(d) to engage in any other business or activity approved in writing by the Members (and the Members acknowledge and agree that each of the foregoing matters in clauses (a) through (c) is part of the ordinary business of the Company).

 

SECTION 2.06.          Internal Business Activities and Maintenance of Separateness.  In order to carry on its business purpose, and in support thereof, the Company (except as otherwise provided herein or otherwise agreed to in writing by the Members) is authorized to, and shall, at all times:

 

(a)            maintain books and records separate from any other Person, and, without limiting the generality of the foregoing, maintain its own bank accounts in its own name and use separate invoices, bank accounts and checks;

 

(b)            hold itself out to the public and all other Persons as a legal entity separate and apart from any Member and other Person and promptly correct any known misunderstanding regarding its separate identity and status;

 

(c)            observe all formalities required by the Delaware Act and its organizational documents and operating agreement and otherwise comply with all organizational formalities to maintain its separate existence;

 

(d)            file its own tax returns as may be required under applicable law to the extent (1) not part of a consolidated group filing a consolidated return or (2) not treated as a division for tax purposes of another taxpayer, and pay any taxes so required to be paid under applicable law;

 

 

 

(e)             not commingle assets with those of any other Person, including any Member;

 

(f)             pay its own liabilities out of its own funds and not hold out the credit or assets of any other Person (including any Member) as being able to satisfy any obligations of the Company;

 

(g)            maintain and periodically prepare separate financial statements and not consolidate its financial statements with any other Person for any purpose (provided, however, that the Company’s assets may be included in a consolidated financial statement with each of TL and BRT, provided that (in each case) appropriate notation shall be made in such consolidated financial statements to indicate the separateness of the Company and to indicate that the Company’s assets and credit are not available to satisfy the debts and other obligations of TL or BRT, as applicable);

 

(h)            maintain an “arms-length relationship” with its Members and other Affiliates of the Company or of any Member;

 

(i)              not hold out its credit or assets as being available to satisfy the obligations of any other Person (including any Member);

 

(j)             not incur any indebtedness, secured or unsecured, direct or indirect, absolute or contingent, with any Members or other Affiliate of the Company or of any Member, and not pledge any of its assets for the benefit of any Members or other Affiliate of the Company or of any Member; and

 

(k)            not make any loans or advances to any Member or other Affiliate of the Company or of any Member or acquire the securities of (or otherwise make any investment in) any Member or other Affiliate of the Company or of any Member.

 

SECTION 2.07.          Limitations on Activities of the Company.  The Company shall not engage in any other business or activity except as set forth in Section 2.05 without the prior written approval of all Members.

SECTION 3.01.          Admission of Members.  The TL Member and the BRT Member are the initial members of the Company.  Except with the prior written approval of all Members, no other Person shall be admitted as a member of the Company and no additional Interests shall be issued.

 

SECTION 3.02.          Limitation on Liability.

 

(a)    Except as otherwise expressly provided in the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company, solely by reason of being a member of the Company.  Except as otherwise expressly provided in the Delaware Act, but subject to the provisions of subclause (b) of this Section 3.02, the liability of each Member shall be limited to the amount of Capital Contributions required to be made by such Member in accordance with the provisions of this Agreement, but only when and to the extent the same shall become due and payable pursuant to the provisions of this Agreement.  Further, no general or limited partner in, or shareholder, member or other holder of any equity interest of, any Member or any Executive Officer, Director or employee of any of the foregoing or any of their Affiliates shall be obligated personally for any debt, obligation or other liability of the Company solely by reason of his, her or its being any such general or limited partner, shareholder, member or other holder of any equity interest or such Executive Officer, Director or employee.  Further, failure of the Company to observe any formalities or requirements relating to the exercise of its powers or the management of its business or affairs under this Agreement or the Delaware Act shall not be grounds for any Member, or any general or limited partner in, or shareholder, member or other holder of any equity interest of, any Member or any Executive Officer, Director or employee of any of the foregoing or any of their Affiliates to be held liable or obligated for any debt, obligation or other liability of the Company.

 

 

 

(b)    Notwithstanding any other provision of this Agreement to the contrary, (i) each Member’s liability under this Agreement, if any, is explicitly limited to the assets of such Member and (ii) neither the Company nor any Member shall have any recourse against any assets of an Affiliate of another Member or any past, present or future officers, agents, shareholders, incorporators, directors, principals (direct or indirect), affiliates, partners, members or representatives of another Member or any of the assets or property of any of the foregoing, for the payment or collection of any amount, judgment, judicial process, arbitration award, fees or costs or for any other obligation or claim arising out of or based upon this Agreement.

 

(c)           The provisions of this Section 3.02 shall survive the termination or expiration of this Agreement.

 

SECTION 3.03.          Third-Party Debt Liability.  Except as may be expressly agreed to in writing by any Member with respect to any Third Party Financing, the Parties intend that no Member, or any of its Affiliates, shall have any liability under or in connection with any third-party debt, including liability with regard to any environmental matters, recourse carve-outs, fraud, intentional misconduct, theft or other commonly called “bad acts” or with regard to any other matter, unless otherwise approved by the Members or pursuant to an agreement entered into by such Member; provided, however, that the foregoing shall not be deemed to release any Party from its obligations hereunder to the other Parties or from any damages resulting from any breach of such obligations.

 

SECTION 3.04.          Compensation of Members.  Except for the distributions to be made to the Members as provided under Articles VII and IX or as otherwise may be expressly provided in this Agreement, no Member (including, as relevant, in its capacity as the Managing Member, the Tax Matters Member or the Liquidating Member or otherwise) shall be entitled to any compensation or other payment from the Company.

 

SECTION 3.05.          Percentage Interests.  With regard to each Member separately, the initial Percentage Interest of each Member will be as set forth in Section 1.01 (in each case, subject to adjustment as provided in this Agreement).  The Percentage Interests of the Members may be adjusted only as set forth in this Agreement.

 

 

 

SECTION 3.06.          Return of Capital.  No Member shall be liable for the return of the Capital Contributions (or any portion thereof) of any other Member, it being expressly understood and agreed that any such return shall be made solely from the assets of the Company.  No Member shall be entitled to withdraw or receive a return of any part of its Capital Contributions or Capital Account, to receive interest on its Capital Contributions or Capital Account or to receive any distributions from the Company, except as expressly provided for in this Agreement or under applicable law (and for purposes of this Section 3.06, Capital Account shall be deemed to also include the capital account of any Member for financial or book purposes or as set forth in the Delaware Act or under common law).

 

SECTION 3.07.          Ownership.  All assets of the Company shall be owned by the Company, subject to the terms and provisions of this Agreement.

 

SECTION 3.08.          Waiver of Partition; Nature of Interests in the Company.  Except as otherwise expressly provided for in this Agreement, each of the Members hereby irrevocably waives any right or power that such Member might have:

 

(a)            to cause the Company or the assets of the Company to be partitioned;

 

(b)            to cause the appointment of a receiver for all or any portion of the assets of the Company;

 

(c)            to compel any sale of all or any portion of the assets of the Company; or

 

(d)            to file a complaint, or to institute any proceeding at law or in equity, to cause the termination, dissolution or liquidation of the Company.

 

No Member shall have any interest in any specific assets of the Company (including the Loan Portfolio or any Company Loan Investments).

 

SECTION 3.09.          TL Member Restrictions.  During the Investment Period, the TL Member agrees that it shall advise the BRT Member either in writing (which may be by e-mail) if the TL Member or its Affiliate has entered or desires to enter into a senior mortgage loan (other than loans which are intended for full or partial securitization or which include prepayment penalties or non-recourse provisions on principal) (i) with a borrower first introduced to the TL Member or any of its Affiliates by the BRT Member or any of its Affiliates and which the BRT Member or any of its Affiliates has consummated a loan within the prior twelve (12) months and (ii) which loan has a term of less than three (3) years, including extensions, and an interest rate greater than the then applicable prime rate (as published by the Wall Street Journal) plus 5%.  Within five (5) Business Days after receipt of such notice from the TL Member or any time after the BRT Member has knowledge that the TL Member or its Affiliate entered into such a loan, the BRT Member shall advise the TL Member whether it preliminarily desires such loan to be transferred to the Company as a Company Loan Investment and whether it desires any additional information with respect to such loan.  If the BRT Member fails to respond within five (5) Business Day of notice of such loan from the TL Member, the TL Member shall have no obligation to transfer such loan to the Company.  In the event the BRT Member requests additional information with respect to such loan, the TL Member shall provide such information as is consistent with the information the BRT Member is required to deliver under Section 4.03(e) with respect to a Loan hereunder to the extent such information is in the TL Member’s or its Affiliate’s possession, and the BRT Member shall confirm to the TL Member in writing within five (5) Business Days after receipt of such information whether it desires such loan to be transferred to the Company or requires additional information.  If the BRT Member fails to confirm within such five (5) Business Day of period, the TL Member shall have no obligation to transfer such loan to the Company.  In the event the BRT Member elects to have such loan transferred to the Company, the provisions of Section 5.02(a) shall apply (mutatis mutandis with such changes as may be necessary to reflect the situation) and upon receipt of the BRT Member’s Capital Contribution with respect to such loan, the TL Member shall cause the loan to be transferred to the Company pursuant to the Assignment Documents.  Upon the transfer of such loan to the Company, the TL Member or its Affiliate, as applicable, shall deposit with the Company for distribution pursuant to this Agreement the amount of any points or other fees paid to the TL Member or its Affiliate with respect to such Loan (exclusive, however, of any portion of such fee that would not be payable with respect to Company Loan Points pursuant to clauses (a), (b) and (d) of the definition thereof).  This Section 3.09 shall only survive until the end of the Investment Period.

(a)             Except as otherwise provided in this Agreement, including, without limitation, Section 4.02, the business and affairs of the Company shall be controlled and managed by the Managing Member.  The Managing Member shall, in all cases, act in all material respects in accordance with customary industry standards and Customary Practices and in accordance with this Agreement.  The Managing Member shall assure that it is provided with, and has, the services of appropriately skilled personnel (including, to the extent relevant and to the extent each is employed or otherwise retained by the Managing Member or any of its Affiliates, Jeffrey Gould, Mitchell Gould, David Kalish, Mark H. Lundy and George Zweier), who shall dedicate sufficient time and effort to the performance of the services and responsibilities contemplated hereunder to be provided by the Managing Member in order to facilitate its ability to perform effectively such services and responsibilities. The Managing Member shall consult regularly with the Members in exercising its authority under this Agreement.

 

(b)            Without limiting the generality of the foregoing Section 4.01(a), and except as otherwise provided in this Agreement, the Managing Member, at the Company’s cost, in each case subject to the terms of this Agreement, (i) shall, acting for and on behalf of the Company: (A) establish the policies and operating procedures of the Company; (B) implement all Major Decisions that have been approved in the manner provided for herein; (C) make decisions (other than (I) Major Decisions and (II) such other decisions as are reserved to one or more of the Members hereunder) as to all matters that the Company has authority to undertake; (ii) may perform, or cause to be performed, all of the Company’s obligations under any agreement to which the Company is a party; and (iii) may enter into contracts on behalf of the Company and make such expenditures as are required to operate and manage the Company in accordance with Customary Practices. All decisions made, and actions taken, by the Managing Member in accordance with the foregoing Section 4.01(a) and this Section 4.01(b) shall be binding on the Company.

 

 

 

(c)        The Members hereby designate the BRT Member to act as the Managing Member of the Company.  The TL Member shall have the exclusive right to remove the BRT Member as the Managing Member (effective upon notice thereto) and appoint its designee as the Managing Member under the following circumstances: (i) the TL Member has the right to remove the Asset Manager pursuant to the Asset Management Agreement, (ii) gross negligence, willful misconduct, bad faith or felony act on the part of the Managing Member, (iii) reckless disregard of its office or duties or breach by the Managing Member of any of its obligations and responsibilities under this Agreement, which reckless disregard or breach is not cured within thirty (30) days after the Managing Member receives written notice thereof from the TL Member identifying such reckless disregard or breach with specificity; provided that if the applicable reckless disregard or breach is not capable of being cured within such thirty (30) day period, but the Managing Member commenced to cure such reckless disregard or breach within such thirty (30) day period, such cure period shall be extended for an additional forty-five (45) days, or (iv) subject to Sections 7.06(e) and 9.13(c), failure to pay amounts owing under Sections 7.06 and 9.13, which failure is not cured within ten (10) days after the BRT Member receives written notice thereof from the TL Member.

 

SECTION 4.02.          Major Decisions.

 

(a)             Notwithstanding any provision to the contrary in this Article IV (other than as may be expressly set forth in this Article IV or this Agreement), no action shall be taken, sum expended, decision made or obligation incurred by or on behalf of the Company with regard to the following matters (each a “Major Decision”) unless the same are approved in writing by all of the Members:

 

(i)           any hiring, employment or other engagement of any officer or other employee of the Company, including, without limitation, the Company Accountants, other than (x) Holtz Rubenstein Reminick LLP whom the Members agree shall be the initial Company Accountants, (y) engaging counsel and other professionals in connection with a foreclosure or other enforcement action related to a Non-Performing Company Loan being undertaken in accordance with the last paragraph of this Section 4.02(a) and (z) Independent Third Parties pursuant to clause (xiv) below;

 

(ii)           any delegation of any of powers, duties, responsibilities and management functions of the Managing Member, the Tax Matters Member or the Liquidating Member;

 

(iii)          any financing or refinancing of the Company or any assets of the Company (which include any Third Party Financing);

 

 

 

(iv)          any sale or other transfer of any Company Loan Investment, other than (A) pursuant to a Repurchase Agreement, or (B) in connection with an assignment of a loan when paid in full;

 

(v)          except as required by GAAP or applicable law, selecting or varying depreciation and accounting methods and making other decisions with respect to treatment of various transactions for state or federal income tax purposes or other financial purposes not otherwise specifically provided for herein, provided that such methods and decisions shall be consistent with the other provisions of this Agreement;

 

(vi)          determining any reserves to be established prior to the distributions to the Members as provided herein, other than the Loan Workout Reserve and the reserve pursuant to Section 7.06(d);

 

(vii)         the approval of any contract or other arrangement with any Affiliate of any Member, the Managing Member, the Tax Matters Member or the Liquidating Member;

 

(viii)       subject to the last paragraph of this Section 4.02(a), the institution of legal action or proceeding (exclusive of a foreclosure action or other enforcement action with respect to any Company Loan Investment or real property or other collateral securing any Company Loan Investment), or the settlement or compromise of any legal action or proceeding (exclusive of any such foreclosure action or other enforcement action with respect to any Company Loan Investment or real property or other collateral securing any Company Loan Investment), involving more than $50,000 or the settlement or compromise of any uninsured claim or legal action or proceeding against the Company involving more than $50,000;

 

(ix)          any election to admit any other Person as a member to the Company or the issuance of any Interest to any Person other than a Member, except as may be expressly permitted elsewhere in this Agreement; any election (A) to dissolve the Company other than in accordance with the terms of this Agreement, (B) to merge the Company with or into any other entity or (C) to file a bankruptcy or similar insolvency petition on behalf of the Company;

 

(x)           any election pursuant to Code Section  ###-###-####-3 to have the Company treated as a corporation for federal income tax purposes;

 

(xi)          the extension of the maturity date of any Company Loan Investment or any other extension or renewal of any Company Loan Investment not expressly contemplated in the applicable loan documents;

 

(xii)         any changes to the Investment Approval Process or the definition of Non-Performing Company Loan;

 

(xiii)        changes to the Standard Loan Documents forms;

 

 

 

(xiv)        subject to the last paragraph of this Section 4.02(a), (I) incurring costs or fees with Independent Third Parties in excess of $5,000 in any one instance or $25,000 in the aggregate for any fiscal year, other than (A) costs that are to be paid with funds from Borrowers, or (B) costs or fees previously approved in connection with a decision made under clause (xv) below, or (II) incurring costs or fees in connection with protective advances for any Company Loan Investment made in accordance with Customary Practices in excess of $25,000 in any one instance or $50,000 in the aggregate for any fiscal year, other than (A) costs that are to be paid with funds from Borrowers, or (B) costs or fees previously approved in connection with a decision made under clause (xv) below;

 

(xv)         subject to the last paragraph of this Section 4.02(a), any decision relating to loan work-outs, modifications, material waivers, sale or other disposition of or foreclosure action related to any Company Loan Investment, acquisition of any property secured by a Company Loan Investment through foreclosure, deed-in-lieu or other remedy and decisions relating to the management (other than day-to-day management in the ordinary course of business), leasing (other than residential leases with Independent Third Parties in the ordinary course of business), financing, sale or other disposition of any property that was secured by a Company Loan Investment which has been acquired by the Company, and material waivers related to any of the foregoing;

 

(xvi)        any decision to increase the Maximum Contribution Amount.

 

Notwithstanding anything contained in the Major Decisions or this Agreement to the contrary, the Managing Member may commence and prosecute a foreclosure or other enforcement action with respect to any Non-Performing Company Loan pursuant to Customary Practices and incur costs and expenses in connection therewith without the prior written consent of all of the Members, except that (x) the Managing Member shall not consummate a foreclosure sale with respect to any Non-Performing Company Loan without the prior approval of the all of the Members in accordance with this Section 4.02(a), (y) if funds are not available from the Loan Workout Reserve to cover costs and expenses in connection with any such foreclosure or other enforcement action, the Managing Member shall not expend with respect to any Non-Performing Company Loan more than $50,000 in the aggregate with respect to such Non-Performing Company Loan (which funds may be taken from the Company’s cash flow or contributed as capital pursuant to Section 5.02(b)) without the prior written consent of all of the Members, and (z) the Managing Member shall provide the Members with written notice of any foreclosure or other enforcement action commenced with respect to any Non-Performing Company Loan promptly after the commencement thereof and shall provide copies of any documents or notices delivered to the applicable Borrower or filed with any court in connection therewith.  In addition, the Managing Member may cause a newly formed Subsidiary to take title to a property subject to a Company Loan Investment pursuant to a walk-away guaranty where the lender is obligated to take title provided certain conditions precedent are satisfied, provided that the Managing Member may not waive any conditions precedent set forth in the applicable Loan Document to so taking title without the prior written consent of the TL Member.  In the event a walk-away guaranty permits the lender to take title at its option, the Managing Member may not cause the Company or a Subsidiary to take title without the TL Member’s consent.

 

 

 

(b)            Major Decisions may be introduced for consideration of the Members by the Managing Member or any Member.  Any provision to the contrary herein notwithstanding, the Managing Member shall have no power or authority to authorize or approve any Major Decision, or, unless the same has been approved in writing by all Members, to take any material action or make any material decision with regard thereto.

 

(c)            Notwithstanding anything contained herein to the contrary, the Members shall endeavor to resolve any dispute related to a Major Decision within thirty (30) days (or shorter period if any Member reasonably believes that a shorter resolution period is required in order to avoid a default or liability by the Company or any of its Subsidiaries) (the “Resolution Period”) after such Major Decision has been introduced by the Managing Member or any Member to the Members.  In the event that a Major Decision introduced by the Managing Member or any Member is not approved by all of the Members prior to the end of the Resolution Period, such Major Decision shall not be pursued by the Company and the Managing Member shall have no authority to implement such Major Decision.

 

(d)            Notwithstanding anything contained herein to the contrary, in the event the Members fail to agree to a Major Decision of the type described in Section 4.02(a)(xv) prior to the end of the Resolution Period, the applicable Company Loan Investment or underlying real property, as the case may be, shall marketed for sale by an Approved Broker and sold to the highest bidder for all cash (or, subject to the unanimous consent of the Members, with seller financing) and on such other terms (such as closing date, due diligence period, if any) that the Managing Member shall agree in consultation with the Approved Broker and counsel to the Company, provided that such terms shall be consistent with the then applicable market and are not less favorable to one Member than the other.  The buyer may include any of the Members or their Affiliates.  Any disputes under this clause (d) with respect to a sale of a Company Loan Investment or underlying real property shall be resolved pursuant to arbitration under Article XIII.

 

SECTION 4.03.          Investment Approval Process.

 

(a)             The TL Member shall, from time to time, give written notice (which may be by e-mail) to the Managing Member designating up to three (3) individuals as the TL Member’s designee(s) to receive notice of, and the right to attend and participate in, any meeting of the Loan Committee that may occur with respect to a Loan.  The designees of the TL Member shall be permitted (at such designee’s election, either in person or by conference telephone) to attend any meeting of the Loan Committee and (subject to the terms and conditions of this Agreement) to approve or disapprove, on behalf of the TL Member, any Loan proposed to be made by the BRT Member or its Affiliate as a Loan to be acquired by the Company.  The TL Member may, at any time and from time to time, change the individuals so designated and may designate alternative individuals as to serve as its designee(s) for such purpose in the event another individual so designated is unavailable or otherwise unable to act as such designee.  The individuals who have been so designated by the TL Member are herein referred to as the “Designees.”  The BRT Member shall assure that simultaneously with members of the Loan Committee being given notice of any meeting at which any proposed or prospective Loan is to be discussed or considered for approval, the Designees of the TL Member are given notice of such meeting.  The Designees’ only role at any Loan Committee meeting shall be that of an observer, to enable the TL Member to obtain information relevant to its investment decision pursuant to Section 4.03(c) hereof and neither the Designees nor the TL Member shall vote on any decision as to whether the Original Lender shall make any Loan presented to the Loan Committee.

 

 

 

(b)            In order to provide the TL Member with the requisite information for its decision as to whether the Company should invest in a potential Company Loan Investment, the BRT Member shall perform initial due diligence of any potential Company Loan Investment pursuant to Customary Practices and, if requested by the TL Member, an appraisal of the potential real property collateral (which appraisal shall be at the cost of the TL Member if not the obligation of the potential Borrower, provided that if there are sufficient Loan Origination Deposits for such Loan after payment of all other expenses related to such Loan the appraisal shall be paid therefrom).  In the event the BRT Member or its Affiliate determines that it desires to make the applicable Loan, the BRT Member or its Affiliate shall prepare a Committee Report and the TL Investment Template (which may be prepared and submitted prior to the completion of due diligence) which shall be presented to the Designees for review.  The TL Investment Template shall contain such information as is in the possession of the BRT Member and its Affiliates with respect to such Loan.  For the avoidance of doubt, the BRT Member shall be required to present a Committee Report and a TL Investment Template for consideration by the Designees for all Loans that the BRT Member or its Affiliates consider for investment or making, including for any Loan that the BRT Member or its Affiliates consummate after the date hereof prior to preparation of a Committee Report or TL Investment Template.  Notwithstanding anything to the contrary set forth in this Agreement, the BRT Member or any Affiliate thereof may consummate any Loan presented to the Loan Committee at any time and on such terms that it determines in its sole discretion, including, without limitation, making changes to the Standard Loan Documents as it determines in its sole discretion for a new Loan or electing not to use all of the Standard Loan Documents and the right to close Loans prior to a Committee Report and a TL Investment Template being sent to the TL Member, but the foregoing shall not in any way be interpreted as the BRT Member not having to comply with this Section 4.03 which compliance shall be required with respect to each Loan presented to the Loan Committee whether or not consummated prior to the Committee Report and the TL Investment Template being delivered to the Designees, and if the TL Member approves such Loan and funds its Capital Contributions relating thereto in accordance with this Agreement, the BRT Member agrees that it shall transfer, or cause the Original Lender to transfer, such Loan to the Company pursuant to the terms hereof, but if the TL Member does not approve such Loan or fails to fund its Capital Contribution with respect to a Loan after approving the same in accordance with the terms of this Agreement, the Original Lender may sell, offer participations in, dispose of or otherwise transfer such Loan as it sees fit.  In the event the TL Member disapproves a Loan and the BRT Member or its Affiliate later considers a Loan with the same potential Borrower for the same real estate collateral, but with materially different terms or terms more favorable to the lender, the BRT Member or its Affiliate shall be required to resubmit such Loan to the Loan Committee and the Designees for its consideration hereunder.

 

(c)            Within two (2) Business Days following the receipt by the Designees of the Committee Report and the TL Investment Template with respect to a Loan, the TL Member shall indicate its initial approval or disapproval of such Loan as a potential Company Loan Investment.  The TL Member shall be deemed to have disapproved such Loan as a prospective Company Loan Investment if it has not responded within said two (2) Business Day period.  If the TL Member has indicated its initial approval of a Loan as a prospective Company Loan Investment, then, within one (1) week of the initial approval by the TL Member of such prospective Company Loan Investment, the TL Member shall advise the Managing Member whether, subject Sections 4.03(e) and 4.04, it has approved such prospective Company Loan Investment and whether there are any remaining due diligence items or information which it requires.  Failure to respond within such one (1) week period shall be deemed a disapproval of the Loan.  Any Loan approved pursuant to this Section 4.03(c) shall be an “Approved Loan Investment”.  The BRT Member and the TL Member agree that they shall monitor the due diligence deliveries for any Approved Loan Investment pursuant to a due diligence checklist agreed between them.

 

 

 

(d)            Notwithstanding anything contained herein to the contrary, in the event any Member shall reasonably request any additional information with respect to any Loan (including any third party market study or appraisal) after submission of the applicable Committee Report, then, as soon as reasonably practical after such request is made, the Managing Member shall use reasonable efforts to obtain such additional information (at the requesting Member’s expense to the extent same is not paid by the Borrower) and provide same to the Members.  The Member requesting such information shall have two (2) Business Days following its receipt of such information or notice that the BRT Member will not provide such information to determine whether to approve or disapprove such prospective Company Loan Investment.

 

(e)             Notwithstanding the TL Member’s approval of a prospective Company Loan Investment, the TL Member shall not be obligated to fund its portion of an Approved Loan Investment unless and until it receives the items below in form and substance satisfactory to the TL Member in its sole discretion:

 

(i)            all outstanding due diligence items or findings (without duplication of those items listed below) obtained by the Original Lender.

 

(ii)           fully executed copies of the Loan Documents, together with the final versions of the Loan Documents blacklined against the Standard Loan Documents, and evidence that the prospective Company Loan Investment has been advanced by the Original Lender;

 

(iii)          the final “Phase 1” environmental report or other environmental audit (or reliance letter on the same) for the benefit of the Original Lender its successors and assigns with respect to the real property that is intended to secure such loan;

 

(iv)          evidence of title insurance with respect to the real property that is intended to secure such loan;

 

(v)           written confirmation as to the proper zoning and permitted use of the real property that is intended to secure such loan;

 

(vi)          copies of all applicable certificates of occupancy with respect to the real property that is intended to secure such loan;

 

 

 

(vii)         copies of appropriate authorizing resolutions, confirmation of signing authority and legal opinions with respect to all applicable Loan Documents for such loan;

 

(viii)        copies of insurance certificates evidencing that the applicable Borrower has obtained (as provided for in the applicable Loan Documents for such loan) appropriate fire, liability, comprehensive and replacement insurance with respect to the real property that is intended to secure such loan, with the lender and its successors and assigns listed as a loss payee or additional insured, as applicable, with respect to each insurance policy;

 

(ix)          evidence that all Taxes due and payable with respect to the real property that is intended to secure such loan shall have been paid in full and discharged or escrowed with the lender or the title company;

 

(x)           confirmation from the Original Lender that to its knowledge and without further investigation there has been no material adverse change with respect to (x) the collateral securing the prospective Company Loan Investment, (y) the business, profits, operations or financial condition of the applicable Borrower, or (z) the ability of the applicable Borrower to repay the principal and interest of the prospective Company Loan Investment as it becomes due or to satisfy any of Borrower’s obligations under the applicable Loan Documents;

 

(xi)           an estimate of the Approved Excess Expenses;

 

(xii)          copies of any material agreements with respect to the applicable real estate collateral;

 

(xiii)         a copy of the Borrower’s organizational chart; and

 

(xiv)        evidence that all third party reports, title insurance and surveys inure to the benefit of the Original Lender’s successors and assigns.

 

The foregoing items shall be provided to the extent in the possession of the Original Lender or any of its Affiliates; however, for the avoidance of doubt, the TL Member shall be under no obligation to contribute capital hereunder with respect to the acquisition by the Company of any Approved Company Loan unless the TL Member receives (or, in its sole discretion, waives the receipt of) such items.  The TL Member shall have seven (7) Business Days after receipt of all of the items set forth in this clause (e) or notice from the BRT Member that it is not providing any further items not yet provided with respect to an Approved Company Loan to advise the BRT Member whether such items are satisfactory to the TL Member and whether, subject to Section 4.04, it intends to fund its Capital Contribution with respect to such Approved Company Loan.

 

(f)             The BRT Member shall be obligated to transfer, or to cause the Original Lender to transfer, any prospective Company Loan Investment to the Company in the event such prospective Company Loan Investment is approved and funded by the TL Member as provided in this Section 4.03 and Section 5.02(a).

 

 

 

(g)            Any Loan that is not approved by the TL Member within specified time frames set forth in this Section 4.03 shall be deemed disapproved, time being of the essence, in which case the Original Lender or an Affiliate thereof may make and/or retain such loan for its own account and/or dispose of all or any portion of such Loan as it sees fit.

 

(h)            In the event the BRT Member fails to advise the TL Member of any Loan pursuant to the terms of this Agreement within ten (10) Business Days after such Loan has been consummated by the BRT Member or its Affiliate, upon the TL Member’s knowledge of such Loan or subsequent disclosure thereof by the BRT Member or its Affiliate, the BRT Member shall be required to provide the TL Member with such information with respect to such Loan as it would have been required to provide under this Agreement had the BRT Member complied with the terms hereof.  If the TL Member then elects for such Loan to be transferred to the Company in accordance with the terms of this Agreement, the BRT Member shall cause the Original Lender to do so in accordance with the terms of this Agreement.  Upon the transfer of such Loan to the Company, the Original Lender shall deposit with the Company for distribution pursuant to this Agreement the amount of any Company Loan Points with respect to such Loan, including any BRT Retained Points, which shall be the TL Member’s sole remedy.

 

SECTION 4.04.         Transfer of Loans to the Company.  The Managing Member shall cause the Company to acquire an Approved Loan Investment within one (1) Business Day after the Members have made the Capital Contributions to acquire such Loan pursuant to Section 5.02(a), but not less that two (2) Business Days after the Original Lender has funded its acquisition of such Approved Loan Investment, provided, however, that if the TL Member notifies the BRT Member that a material adverse change with respect to the Approved Loan Investment has occurred prior to the Company’s actual acquisition of the Approved Loan Investment from the Original Lender (as determined by the TL Member in its sole discretion), then, at the TL Member’s election, the Company shall not acquire the Approved Loan Investment from the Original Lender (even if the TL Member has funded its portion of the cost thereof pursuant to Section 5.02(a)) and the Original Lender shall be free to hold such Loan for its own account and/or dispose of all or a portion of such Loan as it sees fit.  In connection with such acquisition by the Company of any Company Loan Investment the following shall occur:

 

(a) The Managing Member shall provide the Members with fully executed copies of the Assignment Documents; and

 

(b) Original Lender shall transfer to the Company the Company Loan Points.

 

SECTION 4.05.          Limitation on Other Members’ Rights to Manage the Company.  Except as expressly provided in this Agreement, no Member, other than the Managing Member, shall have any right or power to participate in or have any control over the Company’s business, affairs or operations or to act for or to bind the Company in any matter whatsoever; provided, however, that the foregoing shall not be deemed to limit or impair, or to adversely affect, the right of any Member to withhold its consent to any Major Decision or the effect of any Member’s failure to grant any such consent.

 

SECTION 4.06.          Accounting and Fiscal Year.  The books of the Company shall be kept on the accrual basis in accordance with U.S. generally accepted accounting practices and principles consistently applied (“GAAP”), and the Company shall report its operations for tax purposes on the accrual method.  The taxable year of the Company shall end on December 31 of each year unless a different taxable year shall be required by the Code.

 

 

 

SECTION 4.07.          Books and Records.  The Managing Member shall maintain, or cause to be maintained, in a manner customary and consistent with good accounting principles, practices and procedures, a comprehensive system of office records, books and accounts (which records, books and accounts shall be and remain the property of the Company) in which shall be entered fully and accurately each and every financial transaction with respect to the operations of the Company.  Bills, receipts and vouchers shall be maintained on file by the Managing Member.  The Managing Member shall maintain said books and accounts in a safe manner and separate from any records not having to do directly with the Company.  The Managing Member shall cause audits to be performed and audited statements and income tax returns to be prepared as required by Section 4.10.  Such books and records of account shall be prepared and maintained by the Managing Member at the principal place of business of the Company or such other place or places as may from time to time be determined by the Managing Member.

 

SECTION 4.08.          Access to Books and Records.  The Company shall provide each Member and its accountants or other representatives, and the Managing Member shall cause the Company to provide each Member and its accountants or other representatives, with free and unlimited access during normal business hours upon reasonable prior notice to the Managing Member to, and the ability to make copies of, all books and records relating to the Company and its operations, including the Loan Portfolio.

 

SECTION 4.09.          Provision of Financial Statements and Reports.  The Company shall provide each Member, and the Managing Member shall cause the Company to provide each Member, with the following:

 

(a)            within three (3) Business Days following the end of each calendar month (i) a Status Report with respect to the status of each of the Company Loan Investments as of the end of such calendar month, (ii) details of cash receipts and cash disbursements of the Company together with a description of the revenue and expense items to which they relate to, and (iii) details on the accruals and income and expenses during the month;

 

(b)            within fifteen (15) Business Days following the end of each calendar month, an estimated balance sheet and income statement prepared in accordance with GAAP with a report detailing each Member’s capital account balance as of such calendar month;

 

(c)            within five (5) Business Days following the end of each Fiscal Quarter, a Portfolio Management Report for such Fiscal Quarter;

 

(d)            within fifteen (15) Business Days following the end of each Fiscal Quarter,  details on any impairments to assets to be recognized on the books of the Company for the end of the applicable Fiscal Quarter

 

(e)            within thirty (30) days following the end of each Fiscal Quarter (other than the last Fiscal Quarter) of each Fiscal Year, unaudited financial statements of the Company for such Fiscal Quarter and for such Fiscal Year through the end of such Fiscal Quarter, which financial statements shall include a statement of profit and loss and of cash flows of the Company for each of the periods covered thereby and a balance sheet of the Company as of the end of such Fiscal Quarter, in each case been prepared in accordance with GAAP applied on a consistent basis;

 

 

 

(f)            within sixty (60) days following the end of each Fiscal Year, audited financial statements of the Company for such Fiscal Year, which financial statements shall include a statement of profit and loss and of cash flows of the Company for such Fiscal Year and a balance sheet of the Company as of the end of such Fiscal Year, in each case been prepared in accordance with GAAP applied on a consistent basis;

 

(g)            within sixty (60) days following the end of each Fiscal Year, the Form K-1 and other documentation required by each Member for the purposes of determining such Member’s income (or loss) for such Fiscal Year attributable to such Member’s interest in the Company; and

 

(h)            promptly after any request therefor, such other information and reports as any Member may from time to time reasonably request with respect to the Company, its business and operations and/or the Loan Portfolio and the performance thereof.

 

SECTION 4.10.          Reports.  The Managing Member shall prepare the financial reports and other information that the Members may determine are appropriate, including those provided for in Section 4.09.  In addition, promptly after the end of each Fiscal Year, the Managing Member will cause the Company Accountant to prepare and deliver to each Member a report setting forth in sufficient detail all such information and data with respect to business transactions effected by or involving the Company during such Fiscal Year as will enable the Company and each Member to timely prepare its federal, state and local income tax returns in accordance with the laws, rules and regulations then prevailing.  The Managing Member will also cause the Company Accountant to prepare federal, state and local tax returns required of the Company, submit those returns to the Members for their approval as early as practicable but in no event later than sixty (60) calendar days following the end of the preceding Fiscal Year and will file the tax returns after they have been approved by the Members.  In the event any Member shall not in good faith be able to approve any such tax return prior to the date required for the filing thereof, the Managing Member will timely obtain an extension of such date if such extension is available under applicable law.  The Managing Member shall prepare and distribute the reports and statements described in this Section 4.10.  All decisions as to accounting principles shall be made by the Managing Member, subject to the provisions of this Agreement.

 

SECTION 4.11.         The Company Accountant.  The Company shall retain the Company Accountant as its regular accountant and auditor.  The fees and expenses of the Company Accountant (such fees and expenses, collectively, the “Accounting Fees”), inclusive of any such fees related to the preparation of any tax returns, shall be a Company operating expense.

 

SECTION 4.12.          Reserves.  Subject to Section 4.02(a), the Managing Member may establish Reserves agreed to by the Members (i) to satisfy requirements of applicable law, (ii) to make payments on or with respect to the Third Party Financing or (iii) for other Operating Expenses.

 

 

 

SECTION 4.13.          Tax Matters.

 

(a)            Tax Matters Member.  The Managing Member is specifically authorized to act as the Company’s “Tax Matters Member” and shall act as the Company’s “tax matters partner” within the meaning of Section 6231(a)(7) of the Code and in any similar capacity under state or local law.  The Tax Matters Member shall have the authority, but only with the consent of the TL Member (not to be unreasonably withheld, conditioned or delayed), to make any and all elections for federal, state, local and foreign tax purposes, including any election, if permitted by applicable law:  (i) to make the election provided for in Code Section 6231(a)(1)(B)(ii), (ii) to adjust the basis of any Company assets pursuant to Code Sections 754, 734(b) and 743(b), or comparable provisions of state, local or foreign law, in connection with Transfers of Interests and Company distributions; (iii) to extend the statute of limitations for assessment of tax deficiencies against the Members with respect to adjustments to the Company’s federal, state, local or foreign tax returns; and (iv) to the extent provided in Code Sections 6221 through 6231 and similar provisions of federal, state, local or foreign law, to represent the Company and the Members before taxing authorities or courts of competent jurisdiction in tax matters affecting the Company or the Members in their capacities as Members and to file any tax returns and execute any agreements or other documents relating to or affecting such tax matters, including agreements or other documents that bind the Members with respect to such tax matters or otherwise affect the rights of the Company and the Members.  The Tax Matters Member shall take no actions (other than ministerial actions) without the consent of the TL Member (not to be unreasonably withheld, conditioned or delayed).

 

(b)            Tax Information.  Necessary tax information shall be delivered to each Member as soon as practicable after the end of each Fiscal Year but not later than sixty (60) days after the end of each Fiscal Year.

 

(c)            Treatment as a Partnership.  The Members intend for the Company to be treated as a partnership under the Code.  The Members shall take reporting positions on their respective federal, state and local income tax returns consistent with the positions determined for the Company by the Tax Matters Member.  The Tax Matters Member shall cause all federal, state and local income and other tax returns to be timely filed by the Company.

 

SECTION 4.14.          Reimbursement for Certain Expenses.  The Company shall reimburse the Original Lender or its applicable Affiliate for Loan Origination Expenses that are in excess of the corresponding Loan Origination Deposits with respect to any Company Loan Investment acquired by the Company, provided that the BRT Member has submitted to the TL Member an estimate of such excess expenses prior such Loan being acquired by the Company (the “Approved Excess Expenses”).  For the avoidance of doubt, the TL Member shall be required to fund pursuant to Section 5.02(a) its proportionate share based on its Contribution Percentage of any such Approved Excess Expenses for any Company Loan Investment acquired by the Company.  The Loan Origination Expenses that the Company is obligated under this Section 4.14 to reimburse to the BRT Member or its applicable Affiliate are herein referred to as the “Reimbursable Loan Origination Expenses.”

 

 

 

SECTION 4.15.          Obligation of the Managing Member to Bear Expenses.

 

(a)            The Managing Member shall bear (and shall pay so as not to subject the Company to any obligation to pay, except as provided in this Agreement) (a) all costs and expenses related to the performance of the duties and obligations of the Managing Member, the Tax Matters Member and the Liquidating Member hereunder and (b) all personnel and other overhead and related costs and expenses (including rent, utilities and expenses for telecommunications, printing, mailing and courier service and any travel or entertainment expenses) and other operating costs with respect to the operation of the Company’s business.

 

(b)            Subject to Section 12.12, the Company shall bear and pay the following, but (except with the prior written consent of all of the Members) only the following, expenses:  (i) all Taxes payable by the Company, (ii) all Accounting Fees incurred by the Company, (iii) all legal and other expenses incurred by the Company and payable to an Independent Third Party in connection with (A) the enforcement of any Company Loan Investment (including the foreclosure under any related mortgage or pledge agreement or other Loan Documents or other realization upon any real property or other collateral securing such Company Loan Investment and any costs or expenses related to the repair, preservation or improvement of any real property securing any Company Loan Investment, including (if applicable) after the Company has acquired such real property in connection with a foreclosure sale or otherwise) (all such legal and other expenses, collectively, “Foreclosure Expenses”) or (B) the enforcement of any contract to which the Company is a party, (iv) all payments of interest, principal and any other amounts (including any points and other fees payable by the Company to any Third Party Lender in connection with any Third Party Financing) that are payable by the Company to any Third Party Lender in connection with any Third Party Financing, (v) all legal and other similar expenses incurred by the Company and payable to an Independent Third Party in connection with the preparation and negotiation of any loan agreement or other documentation relating to any Third Party Financing, (vi) all legal and other expenses incurred by the Company and payable to an Independent Third Party in connection with the dissolution and liquidation of the Company as contemplated under Article IX (vii) any Reimbursable Loan Origination Expenses, (viii) all costs and expenses in connection with the formation of the Company (but not in connection with the negotiation of the Company’s Limited Liability Company Agreement which costs shall be borne individually by the Members) and the on-going corporate maintenance of the Company, including payment of annual dues, registration fees, taxes and similar ministerial fees, (ix) the Asset Management Fee and (x) all other expenses expressly permitted to be paid pursuant to the terms of this Agreement (all of the costs and expenses referred to in the foregoing clauses (i) through (x) are herein referred to collectively as the “Operating Expenses”).  Notwithstanding anything contained in this Section 4.15 to the contrary, the Managing Member shall be authorized to apply any Loan Origination Deposits in payment of any corresponding Loan Origination Expenses.

 

SECTION 4.16.          Holding of REIT Qualifying Assets.  If any Member or a direct or indirect parent of any Member is a real estate investment trust and such Member is not a taxable REIT subsidiary, at the request of such Member, the Managing Members shall promptly dispose of any asset of the Company that generates gross income of a character that is not described in Section 856(c)(3) of the Code, causes or threatens to cause such Member to fail to satisfy the requirements of Section 856(c)(4) of the Code or produces income from a prohibited transaction within the meaning of Section 857(b)(6) of the Code.

 

 

 

 

SECTION 4.17.          Asset Management.

 

(a)            The Managing Member shall cause the Company to enter into the Asset Management Agreement with the Asset Manager, such agreement in form and substance satisfactory to the Members, with respect to the management and servicing of the Company.  The Asset Manager shall service the Company Loan Investments on a day-to-day basis in accordance with Accepted Servicing Practices (as defined in the Asset Management Agreement).  In the event of any Termination Event (as defined in the Asset Management Agreement) which remains uncured by the Asset Manager beyond any applicable notice and cure period, the TL Member shall have the right, as provided in the Asset Management Agreement, to remove the Asset Manager and designate a replacement in accordance with the terms of the Asset Management Agreement.  The Managing Member shall cause the Company to perform under the Asset Management Agreement, subject to the terms of this Agreement.

 

(b)            The Company shall pay an annual fee to the Asset Manager, quarterly in arrears, equal to (A) one-half percent (1/2%) of the weighted average of the aggregate outstanding principal amounts of the Company Loan Investments (exclusive of any Non-Performing Company Loans) during such Fiscal Quarter (provided that, for any Fiscal Quarter that is less than three (3) full calendar months, the foregoing amount shall be pro rated based upon the length of such Fiscal Quarter compared to the corresponding three full calendar months) plus (B) one percent (1%) of the weighted average of the aggregate outstanding principal amounts of the Non-Performing Company Loan (provided that, for any Fiscal Quarter that is less than three full calendar months, the foregoing amount shall be pro rated based upon the length of such Fiscal Quarter compared to the corresponding three (3) full calendar months), if any.  The Asset Management Fee when owing shall be paid to the Asset Manager prior to any distributions to the Members pursuant to Section 7.01 hereof.

(a)            Upon confirmation that a prospective Company Loan Investment made by the Original Lender has been approved by the TL Member in accordance with Section 4.03, the Managing Member shall provide written notice thereof to each Member and, in such notice, shall make a call upon such Member for a capital contribution to the Company in an amount equal to such Member’s Contribution Percentage of (x) the principal amount of such Company Loan Investment anticipated to be acquired by the Company and (y) any Approved Excess Expenses in connection therewith any(any such written notice, a “Capital Call Notice”).  Each Capital Call Notice under this Section 5.02(a) shall specify the principal amount of such Company Loan Investment anticipated to be acquired by the Company and the applicable Approved Excess Expenses.  Within five (5) Business Days following its receipt of any such Capital Call Notice, subject to Section 4.04, each Member shall contribute to the capital of the Company, in immediately available funds, its Contribution Percentage of the principal amount of such Company Loan Investment anticipated to be acquired by the Company and applicable Approved Excess Expenses, if any, as set forth in such Capital Call Notice; provided, however, that no Member shall be obligated to make any such additional contribution to the capital of the Company to the extent that the amount of such additional contribution, when aggregated with all capital contributions that have theretofore been made by such Member to the capital of the Company (including pursuant to Section 5.01) and that have not been repaid or returned to such Member as contemplated under Section 7.01(a) would exceed such Member’s Maximum Contribution Amount; provided, further, that (i) the BRT Member shall not be required to contribute its Contribution Percentage with respect to such Company Loan Investment and applicable Approved Excess Expenses which amount shall be deemed contributed upon consummation of the acquisition by the Company of the applicable Company Loan Investment, and (ii) the amount contributed by the TL Member shall be paid by the Company to the Original Lender upon receipt by the Company.

(b)            In the event the Managing Member, acting in good faith and in accordance with Customary Practices, determines that the Company does not have sufficient cash in the Loan Workout Reserve to cover (i) Foreclosure Expenses, (ii) protective advances with respect to any Non-Performing Company Loan, (iii) enforcement costs in connection with enforcing lender rights with respect to any Non-Performing Company Loan, or (iv) carrying costs for real property acquired pursuant to foreclosure or other enforcement action with respect to any Non-Performing Company Loan, and that have been incurred retained or are anticipated to be incurred by the Company in each case in accordance with the terms of this Agreement and Customary Practices, the Managing Member may deliver a Capital Call Notice to the Members to provide capital contributions to the Company to fund such costs and expenses in accordance with their applicable Contribution Percentages.  Such Capital Call Notice shall include the amount of such capital call and, in reasonable detail, the anticipated application of the amount being requested.  Within ten (10) days following its receipt of such Capital Call Notice, the Members shall contribute to the capital of the Company, in immediately available funds, their applicable Contribution Percentage of the costs and expenses detailed in the Capital Call Notice.

SECTION 5.03.    No Further Capital Contributions.  Except as expressly provided in this Agreement or with the prior written consent of all the Members, no Member shall be required to contribute any other or further capital to the Company (subject, however, to the last sentence of Section 7.05), nor shall any Member be required or entitled to loan any funds to the Company.  No Member will have any obligation to restore any negative or deficit balance in its Capital Account upon liquidation or dissolution of the Company (and for purposes of this Section 5.03, Capital Account shall be deemed to also include the capital account of any Member for financial or book purposes or as set forth in the Delaware Act or under common law).  Notwithstanding any other provision of this Agreement to the contrary, nothing contained herein will, or is intended or will be deemed to benefit any creditor of the Company or any creditor of any Member, and no such creditor shall have any rights, interests or claims hereunder, be entitled to any benefits or be entitled to require the Company or any Member to demand, solicit or accept any loan, advance or Additional Capital Contribution for or to the Company or to enforce any rights that the Company or any Member may have against any other Member or that any Member may have against the Company, pursuant to this Agreement or otherwise.