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Home My WebLink AboutSW3191204_Articles of Incorporation_20200515dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS OPERATING AGREEMENT OF ARKA HEIGHTS, LLC (A North Carolina Limited Liability Company) DATED AS OF January 1, 2020 THE MEMBERSHIP INTERESTS REPRESENTED BY THIS OPERATING AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE NORTH CAROLINA SECURITIES ACT, OR SIMILAR LAWS OR ACTS OF OTHER STATES IN RELIANCE UPON EXEMPTIONS UNDER THOSE ACTS. THE SALE OR OTHER DISPOSITION OF THE MEMBERSHIP INTERESTS IS RESTRICTED AS STATED IN THIS OPERATING AGREEMENT, AND IN ANY EVENT IS PROHIBITED UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT AND ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES ACTS AND LAWS. BY ACQUIRING THE MEMBERSHIP INTERESTS REPRESENTED BY THIS OPERATING AGREEMENT, EACH MEMBER REPRESENTS THAT IT WILL NOT SELL OR OTHERWISE DISPOSE OF ITS MEMBERSHIP INTERESTS WITHOUT REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID ACTS AND THE RULES AND REGULATIONS ISSUED THEREUNDER. dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS TABLE OF CONTENTS Page Article I - FORMATION OF THE COMPANY.............................................................................I 1.1 Formation.......................................................................................................................1 1.2 Name..............................................................................................................................1 1.3 Registered Office and Registered Agent........................................................................1 1.4 Principal Place of Business............................................................................................1 1.5 Purposes and Powers......................................................................................................1 1.6 Term...............................................................................................................................1 1.7 Nature of Membership Interests.....................................................................................I Article II - DEFINITIONS...............................................................................................................2 2.1 Definitions......................................................................................................................2 Article III - MANAGEMENT OF THE COMPANY.....................................................................9 3.1 Management...................................................................................................................9 3.2 Limitations on Power and Authority of Managers........................................................9 3.3 Compensation and Expenses........................................................................................10 3.4 Indemnification of Managers.......................................................................................10 3.5 Limitation on Liability.................................................................................................10 3.6 Liability for Return of Capital Contribution................................................................10 3.7 Incapacity of a Manager...............................................................................................10 Article IV - RIGHTS AND OBLIGATIONS OF MEMBERS.....................................................10 4.1 Names and Addresses of Member...............................................................................10 4.2 No Management by Members......................................................................................11 4.3 Designation of Managers.............................................................................................11 4.4 Action by Members......................................................................................................11 4.5 Limited Liability..........................................................................................................11 4.6 Incapacity of a Member............................................................................................... I I Article V - CAPITAL CONTRIBUTIONS AND LOANS...........................................................11 5.1 Initial Capital Contributions........................................................................................11 5.2 Loans............................................................................................................................11 5.3 Additional Capital Contributions.................................................................................12 5.4 Interest on Capital Contributions.................................................................................12 5.5 Capital Accounts..........................................................................................................12 Article VI - ALLOCATIONS, ELECTIONS AND REPORTS....................................................13 6.1 Profits and Losses........................................................................................................13 6.2 Nonrecourse Deductions..............................................................................................13 6.3 Member Nonrecourse Deductions...............................................................................14 6.4 Allocations Between Transferor and Transferee.........................................................14 6.5 Gains from Capital Transactions.................................................................................14 i dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 6.6 Contributed Property....................................................................................................14 6.7 Minimum Gain Chargeback.........................................................................................15 6.8 Member Minimum Gain Chargeback..........................................................................15 6.9 Qualified Income Offset..............................................................................................15 6.10 Gross Income Allocation---------------------------------------------------------------------------------------------15 6.11 Section 754 Adjustment...............................................................................................16 6.12 Curative Allocations....................................................................................................16 6.13 Compliance with Treasury Regulations.......................................................................16 6.14 Tax Withholding..........................................................................................................16 Article VII - DISTRIBUTIONS....................................................................................................16 7.1 Company Cash Flow....................................................................................................16 7.2 Proceeds from Capital Transactions............................................................................17 7.3 Distributions in Liquidation.........................................................................................17 7.4 Limitation Upon Distributions.....................................................................................17 7.5 Withholding.................................................................................................................17 Article VIII - TRANSFER OF INTERESTS AND ADMISSION OF MEMBERS .....................17 8.1 Restrictions on Transfer...............................................................................................17 8.2 Conditions Precedent to Transfers...............................................................................18 8.3 Substituted Members...................................................................................................18 8.4 Rights of Transferee.....................................................................................................18 Article IX - BUY-SELL.................................................................................................................18 9.1 Buy-Sell.......................................................................................................................18 9.2 Buy -Sell Notice............................................................................................................19 9.3 Member's Purchase Option..........................................................................................19 9.4 Assignment of Purchase Option...................................................................................19 9.5 Agreement on Valuation..............................................................................................20 9.6 Closing. Except as otherwise provided in this Article IX..........................................20 9.7 Effect of the Rule Against Perpetuities........................................................................20 9.8 Effect on Withdrawing Member's Membership Interest.............................................20 9.9 Failure to Exercise Purchase Option............................................................................21 9.10 Put/Call Option............................................................................................................ 21 9.11 Continuing Obligations................................................................................................21 Article X - DISSOLUTION AND LIQUIDATION OF THE COMPANY..................................21 10.1 Dissolution Events.......................................................................................................21 10.2 Liquidation...................................................................................................................22 10.3 Articles of Dissolution -................................................................................................ 22 Article XI - MISCELLANEOUS...................................................................................................23 11.1 Other Activities of Members and Managers................................................................22 11.2 Records........................................................................................................................23 11.3 Reserves.......................................................................................................................23 11.4 Notices.........................................................................................................................23 11.5 Amendments................................................................................................................23 III dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 11.6 Additional Documents ................................................. 11.7 Representations of Members ........................................ 11.8 Survival of Rights........................................................ 11.9 Interpretation and Governing Law ............................... 11.10 Severability-................................................................. 11.11 Agreement in Counterparts .......................................... 11.12 Tax Matters Member .................................................... 11.13 Creditors Not Benefited ............................................... Attachments: ............................................23 ............................................23 ............................................23 ............................................24 --------------------------------------------24 ............................................24 ............................................24 ............................................24 Schedule I - Names, Addresses, Initial Capital Contributions and Membership Interests of the Members III dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS OPERATING AGREEMENT OF ARKA HEIGHTS, LLC THIS OPERATING AGREEMENT of ARKA HEIGHTS, LLC (the "Company"), a limited liability company organized pursuant to the North Carolina Limited Liability Company Act, is executed effective as of the date set forth on the cover page of this Agreement, by and among the Company, its Managers LATHA NELLURI, a North Carolina resident ("Operating Manager I'), and RAM KALAGARA, a North Carolina resident ("Operating Manager 2"), and each undersigned Member of the Company. ARTICLE I - FORMATION OF THE COMPANY 1.1 Formation. The Company was formed on OCTOBER 21, 2019, upon the filing of the Articles of Organization of the Company with the Secretary of State. In consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the rights and obligations of the parties and the administration and dissolution and winding -up of the Company shall be governed by this Agreement, the Articles of Organization and the Act. 1.2 Name. The name of the Company is as set forth on the cover page of this Agreement. Managers may change the name of the Company from time to time as they deem advisable, provided appropriate amendments to this Agreement and the Articles of Organization and necessary filings under the Act are first obtained. 1.3 Registered Office and Registered Agent. The Company's registered office within the State of North Carolina and its registered agent at such address shall be as determined from time to time by the Managers. 1.4 Principal Place of Business. The principal place of business of the Company within the State of North Carolina shall be at such place or places as Managers may from time to time deem necessary or advisable. 1.5 Purposes and Powers. (a) The purpose and business of the Company shall be to engage in the purchase, development, ownership, lease and sale of real property and any other lawful business for which limited liability companies may be organized under the Act. (b) The Company shall have any and all powers which are necessary or desirable to carry out the purposes and business of the Company, to the extent the same may be legally exercised by limited liability companies under the Act. 1.6 Term. The Company shall continue in existence for a period of 99 years, unless the Company is dissolved and its affairs wound up in accordance with the provisions of this Agreement or the Act. 1.7 Nature of Membership Interests. The Membership Interests of the Members in the Company shall be personal property for all purposes. Legal title to all Company assets shall be held in dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS the name of the Company. Neither any Member nor a successor, representative or assign of any Member, shall have any right, title or interest in or to any Company property or the right to partition any property owned by the Company. ARTICLE II - DEFINITIONS 2.1 Definitions. The following terms used in this Agreement shall have the following meanings (unless otherwise expressly provided herein): "Act" means the North Carolina Limited Liability Company Act, as amended from time to time. "Adjusted Capital Account Deficit" means, with respect to any Member, the deficit balance, if any, in such Member's Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (a) Credit to such Capital Account any amounts to which such Member is obligated to restore or is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(1)(5); and (b) Debit to such Capital Account the items described in Sections 1.704- 1(b)(2)(10(d)(4), 1.704-1(b)(2)(10(d)(5), and 1.704-1(b)(2)(11)(d)(6) of the Treasury Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(11)(d) of the Treasury Regulations and shall be interpreted consistently therewith. "Adjusted Capital Contributions" means, as of any day, a Member's Capital Contributions adjusted as follows: (a) Increased by the amount of any Company liabilities which, in connection with Distributions, are assumed by such Member or are secured by any property distributed to such Member, and (b) Reduced by the amount of cash and the Gross Asset Value of any Company property distributed to such Member and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company. In the event a Member Transfers all or any portion of such Member's Membership Interest in accordance with the terms of this Agreement, the transferee shall succeed to the Adjusted Capital Contribution of the transferor to the extent it relates to the transferred Membership Interest or portion thereof. "Affiliate" of a specified Person means (i) any Person directly or indirectly controlling, controlled by or under common control with the specified Person; (ii) any Person owning or controlling ten percent or more of the outstanding voting securities of the specified Person; (iii) any officer, director or partner of the specified Person; (iv) if the specified Person is an officer, director or partner, any entity for which the specified Person acts in such capacity; or (v) any person otherwise related to such Person within the meaning of Section 267(b) of the Code or Section 707(b)(1) of the Code. dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS "Agreement" means this OPERATING AGREEMENT of the Company, as amended from time to time. "Articles of Organization" means the Articles of Organization of the Company filed with the Secretary of State, as amended or restated from time to time. "Buy -Sell Event" shall have the meaning ascribed thereto in Section 9.1. "Buy -Sell Notice" shall have the meaning ascribed thereto in Section 9.2. "Call" shall have the meaning ascribed thereto in Section 9.10. "Capital Account" means, with respect to any Member, the capital account maintained for such Member in accordance with this Agreement. "Capital Contribution" means all contributions of cash or property (valued for this purpose at initial Gross Asset Value) made by a Member or the Member's predecessor in interest. "Capital Transaction" means any transactions undertaken by the Company or by any entity in which the Company owns an interest, which, were it to generate proceeds, would produce Company Sales Proceeds or Company Refinancing Proceeds. "Closing" shall have the meaning ascribed thereto in Section 9.6. "Code" means the Internal Revenue Code of 1986, as amended from time to time (and any corresponding provisions of succeeding law). "Company" means ARKA HEIGHTS, LLC, a North Carolina limited liability company. "Company Cash Flow" for any period means the excess, if any, of (A) the sum of (i) all gross receipts from any source for such period, other than from Company loans, Capital Transactions and Capital Contributions, and (ii) any funds released by the Company from previously established reserves, over (B) the sum of (i) all cash expenses paid by the Company for such period (including any compensation or reimbursements to Managers and/or any Affiliates of Managers); (ii) all amounts paid by the Company in such period on account of the amortization of the principal of any debts or liabilities of the Company (including loans from any Member); (iii) capital expenditures of the Company; and (iv) a reasonable reserve for future expenditures as provided by Section 11.3; provided, however, that the amounts referred to in (B) (i), (ii) and (iii) above shall be taken into account only to the extent not funded by Capital Contributions, loans or paid out of previously established reserves. Such term shall also include all other funds deemed available for distribution and designated as Company Cash Flow by Managers. "Company Minimum Gain" means gain as defined in Treasury Regulations Section 1.704-2(d). "Company Refinancing Proceeds" means (i) the cash realized from the financing or refinancing of all or any portion of the Property or other Company assets, less the retirement of any related mortgage loans and the payment of all expenses relating to the transaction and a reasonable reserve for future expenditures as provided by Section 11.3 and (ii) the Company's allocable portion of cash realized by an entity in which the Company owns an interest from such entity financing or refinancing all or any portion of such entity's assets, less the retirement of any related mortgage loans and dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS the payment of all expenses relating to such transaction and a reasonable reserve for future expenditures as provided by Section 11.3. "Company Sales Proceeds" means (i) the cash realized from the sale, exchange, condemnation, casualty or other disposition of all or any portion of the Property or other Company assets, less the retirement of any related mortgage loans and the payment of all expenses relating to the transaction and a reasonable reserve for future expenditures as provided by Section 11.3 and (ii) the Company's allocable portion of cash realized by an entity in which the Company owns an interest from the sale, exchange, condemnation, casualty or other disposition of all or any portion of such entity's assets, less the retirement of any related mortgage loans and the payment of all expenses relating to such transaction and a reasonable reserve for future expenditures as provided by Section 11.3. "Depreciation" means, for each Fiscal Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Fiscal Year, 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, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by Managers. "Disinterested Member" means (i) in the case of a proposed Transfer of a Membership Interest as provided in Article VIII below, a Member who is not an Affiliate of either the Member whose Membership Interest is to be Transferred or the proposed transferee of the Membership Interest or (ii) a Member who is not an Interested Party as defined in Section 11.1(b) hereof. "Distribution" means any money or other property distributed to a Member with respect to the Member's Membership Interest, but shall not include any payment to a Member for materials or services rendered nor any reimbursement to a Member for expenses permitted in accordance with this Agreement. "Encumbrance" means any lien, pledge, encumbrance, collateral assignment or hypothecation. "Fiscal Year" means an annual accounting period ending December 31 of each year during the term of the Company, unless otherwise specified by Managers. "Gains from Capital Transactions" means the gains realized by the Company as a result of or upon any sale, exchange, condemnation or other disposition of capital assets of the Company or any entity in which the Company shall own an interest (which assets shall include Code Section 1231 assets and all real and personal property) or as a result of or upon the damage to or destruction of such capital assets. "Gross Asset Value" means, 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, as determined by the contributing Member and Managers, provided that, if the contributing Member is a 4 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS Manager, the determination of the fair market value of a contributed asset shall be determined by appraisal; (b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by Managers, as of the following times: (i) the acquisition of an additional interest in the Company (other than upon the initial formation of the Company) by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an interest in the Company; and (iii) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(11)(g); provided, however, that the adjustments pursuant to clauses (i) and (ii) above shall be made only if Managers reasonably determine that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company; (c) The Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined by the distributee and Managers, provided that, if the distributee is a Manager, the determination of the fair market value of the distributed asset shall be determined by appraisal; 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 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and subsections (f) of the definition of Profits and Losses herein and 6.11 hereof, provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) hereof to the extent Managers determine that an adjustment pursuant to subsection (b) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this Section (d). If the Gross Asset Value of an asset has been determined or adjusted pursuant to subsection (a), subsection (b), or subsection (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, Gains from Capital Transactions or Losses. "Incapacity" shall mean the occurrence of any of the following events with respect to any Person: (i) final dissolution, (ii) judicial determination of insolvency, (iii) assignment for the benefit of creditors, (iv) filing of a voluntary petition in bankruptcy, (v) any proceeding or suit under the bankruptcy laws against such Person that is not dismissed within sixty (60) days; (vi) appointment without such Person's consent or acquiescence of a trustee, receiver or liquidator of such Person or of any substantial part of such Person's properties that is not vacated within sixty (60) days or (vii) with respect to a Person who is an individual, the death or entry of an order by a court of competent jurisdiction of legal incapacity of such Person. "Initiating Member' shall have the meaning ascribed thereto in Section 9.10. "Interest Rate" means the "prime rate" of interest charged by Bank of America, N.A., from time -to -time. dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS "Interested Party" shall have the meaning ascribed thereto in Section 11.1(b). "Liquidator" shall have the meaning ascribed thereto in Section 10.2. "Majority in Interest" means, with respect to (i) Members or (ii) Disinterested Members, a combination of any Members or a single Member of such designated group who, in the aggregate, own(s) more than fifty percent (51%) of the Membership Interests of all Members in such designated group. Any reference to a Majority in Interest herein shall at all times mean fifty-one percent (51%). "Majority of Managers" means a combination of Managers constituting more than fifty percent (50%) of the number of managers then designated and qualified as Managers of the Company. "Manager' means Operating Manager 1 and Operating Manager 2 in his/its capacity as a manager of the Company, and subsequently, any other Person that succeeds either Manager or any other Persons elected to act as a Manager of the Company as provided in this Agreement. "Managers" refers to such Persons as a group. "Member" means each Person designated as a member of the Company on Schedule I hereto or any other Person admitted as a member of the Company in accordance with this Agreement or the Act. "Members" refers to such Persons as a group. "Member Minimum Gain" means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury Regulations Section 1.704- 2(1)- "Member Nonrecourse Debt" means any nonrecourse debt (for the purposes of Treasury Regulations Section 1.1001-2) of the Company for which any Member bears the "economic risk of loss," within the meaning of Treasury Regulations Section 1.752-2. "Member Nonrecourse Deductions" means deductions as described in Treasury Regulations Section 1.704-2(1). The amount of Member Nonrecourse Deductions with respect to Member Nonrecourse Debt for any Fiscal Year equals the excess, if any, of (A) the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such Fiscal Year, over (B) the aggregate amount of any Distributions during that Fiscal Year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt to the extent such Distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704-2(1). "Membership Interest" means all of a Member's rights and interests in the Company, including without limitation, the Member's share of the Profits and Losses of the Company, the right to receive distributions of the Company's assets, any right to vote and any right to participate in the management of the Company as provided in the Act and this Agreement, and to the extent not inconsistent with this Agreement, in the Act. "Nonrecourse Deductions" means deductions as set forth in Treasury Regulations Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a given Fiscal Year equals the excess, if any, of (A) the net increase, if any, in the amount of Company Minimum Gain during such Fiscal Year, over (B) the aggregate amount of any Distributions during such Fiscal Year of proceeds of a Nonrecourse dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS Liability that are allocable to an increase in Company Minimum Gain, determined according to the provisions of Treasury Regulations Section 1.704-2(h). "Nonrecourse Liability" means any Company liability (or portion thereof) for which no Member bears the "economic risk of loss," within the meaning of Treasury Regulations Section 1.752-2. "Offeree Members" shall have the meaning ascribed thereto in Section 9.10. "Operating Manager 1" means, LATHA NELLURI, a North Carolina resident. Responsibilities of Operating Manager 1 include filing taxes, document management, day-to-day operations of the Company, collection of rent, legal matters, and maintenance and repair of real estate owned by the company unless a Property manager is identified. "Operating Manager 2" means RAM KALAGARA, a North Carolina resident. Responsibilities of Operating Manager 2 include performing duties of Operating Manager 1 when said Manager is unavailable or unable to perform such duties. "Percentage Interest' means the percentage interest of each Member as set forth opposite such Member's name on Schedule I hereto. "Person" means an individual, a trust, an estate, a domestic corporation, a foreign corporation, a professional corporation, a partnership, a limited partnership, a limited liability company, a foreign limited liability company, an unincorporated association or any other entity. "Priority Capital Contributions" shall have the meaning ascribed thereto in Section 5.3. "Profits" and "Losses" means, for each Fiscal Year, an amount equal to the Company's taxable income or loss for such year or period (excluding Gains from Capital Transactions), determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) 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 and Losses pursuant to this definition (excluding Gains from Capital Transactions) shall be added to such taxable income or loss; (b) 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 Treasury Regulations 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 Subsection (ii) or (iii) of the definition of Gross Asset Value hereof, 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, dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 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 such fiscal year or other period, computed in accordance with the definition of Depreciation set out hereof, (f) 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 Treasury 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 a 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) Notwithstanding any other provision of this definition of Profits and Losses, any items which are specially allocated pursuant to Sections 6.2, 6.3, 6.7, 6.8, 6.9, 6.10, 6.11 or 6.12 hereof shall not be taken into account in computing Profits or Losses. The amounts of the items of Company income, gain, loss or deduction available to be specially allocated pursuant to Sections 6.2, 6.3, 6.7, 6.8, 6.9, 6.10, 6.11 or 6.12 hereof shall be determined by applying rules analogous to those set forth in Sections (a) through (f) above. "Pro e " means (i) any and all property owned by the Company, real and/or personal (including, without limitation, intangible property) and (ii) any and all of the improvements constructed on any real property. "Purchase Offer" shall have the meaning ascribed thereto in Section 9.10. "Purchase Option" shall have the meaning ascribed thereto in Section 9.3. "Purchase Option Assignee" shall have the meaning ascribed thereto in Section 9.4. "Purchasing Members" shall have the meaning ascribed thereto in Section 9.3. "Put" shall have the meaning ascribed thereto in Section 9.10. "Put/Call" shall have the meaning ascribed thereto in Section 9.10. "Re ug latory Allocations" shall have the meaning ascribed thereto in Section 6.12. "Sale Offer" shall have the meaning ascribed thereto in Section 9.10. "Secretary of State" means the Secretary of State of North Carolina. "Securities Act" shall have the meaning ascribed thereto in Section 8.2. "Tax Matters Member" means the member designated by the Managers as the "tax matters partner," as that term is defined in the Code and Treasury Regulations. dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS "Transfer" means sell, assign, transfer, lease or otherwise dispose of property, including without limitation an interest in the Company. "Treasury Regulations" means the Income Tax Regulations and Temporary Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Withdrawing Member" shall have the meaning ascribed thereto in Section 9.2. ARTICLE III - MANAGEMENT OF THE COMPANY 3.1 Management. The Company shall be managed by two Managers — Operating Manager 1 and Operating Manager 2. Except as otherwise may be expressly provided in this Agreement or the Articles of Organization, all decisions with respect to the management of the business and affairs of the Company shall be made by the action of a Majority of Managers taken at a meeting or evidenced by a written consent, resolution or agreement executed by a Majority of Managers. Meetings of the Managers may be held on such terms and after such notice as the Managers may establish. The Managers shall have full and complete authority, power and discretion to manage and control the business of the Company, to make all decisions regarding those matters and to perform any and all other acts customary or incident to the management of the Company's business, except only as to those acts as to which approval by all of the Members is expressly required by the Articles of Organization, this Agreement, the Act or other applicable law. The Managers may delegate responsibility for the day-to-day management of the Company to any individual Manager or Person retained by the Managers who shall have and exercise on behalf of the Company all powers and rights necessary or convenient to carry out such management responsibilities. 3.2 Limitations on Power and Authority of Managers. Notwithstanding anything herein to the contrary, the written consent of a Majority of Interest of the Members (at least 51%) shall be required for: (a) Any act in contravention of this Agreement; (b) Any amendment to this Agreement affecting the Members' allocations or distributions hereunder or subjecting the Members to additional liability hereunder; (c) Any act which would make it impossible to carry on the ordinary business of the Company; (d) Any approval of financing relating to the Property whether construction, interim, permanent or otherwise, including any fees or commissions incurred in connection therewith or any refinancing or modification of such financing; (e) Any acquisition, improvement, Transfer, selling or conveying, or mortgaging or otherwise placing any encumbrance upon Company's interest in the Property or any portion thereof, including any fees or commissions incurred in regard thereto; (f) Any assumption, guarantee, endorsement by the Company or the Company otherwise becoming liable for the obligations of any other Person; (g) Any expenditure of $15,000 or more by the Company or any creation of a contractual obligation that would obligate the Company in the amount of $15,000 or more; dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS (h) Entering into any contractual relationship with a property manager or tenants ; or. (i) Any contractual relationship with any Affiliate of a Member or Manager (after full disclosure of all material facts as to the relationship or interest of said Member or Manager and as to the contract or transaction to be entered into with the Company). 3.3 Compensation and Expenses. The Managers shall not receive any compensation from the Company specifically for serving as Managers, but the Company will reimburse Managers for expenses incurred by the Managers in connection with their service to the Company. Nothing contained in this Section 3.3 is intended to affect the Percentage Interests of Managers who are also Members or the amounts that may be payable to the Managers by reason of their respective Percentage Interests. 3.4 Indemnification of Managers. The Company shall indemnify the Managers to the fullest extent permitted or required by the Act, as amended from time to time, and the Company may advance expenses incurred by a Manager upon the approval of the remaining Managers and the receipt by the Company of the signed statement of such Manager agreeing to reimburse the Company for such advance in the event it is ultimately determined that such Manager is not entitled to be indemnified by the Company against such expenses. The provisions of this Section 3.4 shall apply also to any Person to whom the Managers have delegated management authority as provided in Section 3.1, whether or not such Person is a Manager or Member. 3.5 Limitation on Liability. No Manager of the Company shall be liable to the Company for monetary damages for an act or omission in such Person's capacity as a Manager, except as provided in the Act for (i) acts or omissions which a Manager knew at the time of the acts or omissions were clearly in conflict with the interests of the Company; (ii) any transaction from which a Manager derived an improper personal benefit; or (iii) acts or omissions occurring prior to the date this provision becomes effective. If the Act is amended to authorize further elimination of or limitations on the liability of a Manager, then the liability of Managers shall be eliminated or limited to the fullest extent permitted by the Act as so amended. Any repeal or modification of this Section shall not adversely affect the right or protection of a Manager existing at the time of such repeal or modification. The provisions of this Section 3.5 shall apply also to any Person to whom the Managers have delegated management authority as provided in Section 3.1, whether or not such Person is a Manager or Member. 3.6 Liability for Return of Capital Contribution. The Managers shall not be liable for the return of the Capital Contributions of the Members, and upon dissolution, the Members shall look solely to the assets of the Company. 3.7 Incapacity of a Manager. A Manager shall cease to have any power as a Manager, any voting rights or rights of approval hereunder upon the Incapacity of such Manager; and each Manager, its personal representative, estate or successor upon the occurrence of any such event shall automatically be deemed to have resigned as Manager of the Company as of the date immediately preceding the date of any such Incapacity. Upon such resignation, the Members of the Company shall designate a new Manager in accordance with Section 4.3 set forth below, effective as of the date of such resignation. ARTICLE IV - RIGHTS AND OBLIGATIONS OF MEMBERS 4.1 Names and Addresses of Members. The names, addresses and Membership Interests of the Members are as reflected in Schedule I attached hereto and incorporated by reference, which Schedule shall be as amended by the Company as of the effectiveness of any Transfer or subsequent issuance of any Membership Interest. 10 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 4.2 No Management by Members. Except with respect to certain approval rights set forth in this Agreement, the Members in their capacity as Members shall not take part in the management or control of the business, nor transact any business for the Company, nor shall they have power to sign for or to bind the Company. 4.3 Designation of Managers. There shall at all times be two Managers who shall be designated by the Members from time to time. 4.4 Action by Members. Except as specifically provided otherwise in this Agreement, any action to be taken by the Members under the Act or this Agreement may be taken (i) by a vote of a Majority in Interest of the Members taken at a meeting of the Members held on such terms, and after such notice as the Managers may establish; provided, however, that notice of a meeting of Members must be given to all Members entitled to vote at the meeting at least five (5) days before the date of the meeting and specify a reasonable time and location for the meeting, or (ii) by written action of a Majority in Interest of the Members; provided, however, that any action requiring the consent of all Members under this Agreement, the Act or other applicable law taken by written action must be signed by all Members. A Member may vote in person or by written proxy filed with the Company before or at the time of the meeting. No notice need be given of action proposed to be taken by written action, or an approval given by written action, unless specifically required by this Agreement, the Act or other applicable law. Such written actions must be kept with the records of the Company. 4.5 Limited Liability. The Members shall not be required to make any contribution to the capital of the Company except as set forth in Article V, nor shall the Members in their capacity as such be bound by, or personally liable for, any expense, liability or obligation of the Company except to the extent of their interest in the Company and the obligation to return Distributions made to them under certain circumstances as required by the Act. The Members shall be under no obligation to restore a deficit capital account upon the dissolution of the Company or the liquidation of any of their Membership Interests. 4.6 Bankruptcy or Incapacity of a Member. A Member shall cease to have any power as a Member or Manager, any voting rights or rights of approval hereunder upon the Member's death, bankruptcy, insolvency, dissolution, assignment for the benefit of creditors, or legal incapacity; and upon the occurrence of any such event such Member's legal representative, estate or successor, shall have only the rights, powers and privileges of a transferee enumerated in Section 8.4 and shall be liable for all of the Member's obligations under this Agreement. In no event shall a legal representative, estate or successor become a substitute Member unless the requirements of Section 8.3 are satisfied. ARTICLE V - CAPITAL CONTRIBUTIONS AND LOANS 5.1 Initial Capital Contributions. On or prior to the date hereof, the Members have each contributed property to the Company as set forth as the initial Capital Contribution opposite their names on Schedule I attached hereto. 5.2 Loans. In the event that the Managers determine at any time (or from time to time) that additional funds are required by the Company for or in respect of its business or to pay any of its obligations, expenses, costs, liabilities or expenditures (including, without limitation, any operating deficits), then subject to Section 3.2, the Managers may borrow all or part of such additional funds on behalf of the Company, with interest payable at then -prevailing rates, from any Member or Manager or from commercial banks, savings and loan associations or other commercial lending institutions. 11 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 5.3 Additional Capital Contributions. If the Managers determine that additional funds are required for the purposes set forth in Section 5.2 of this Agreement and that all or any portion of such additional funds should be contributed to the Company as additional Capital Contributions, the Managers may propose to the Members that the Members make additional Capital Contributions. Upon unanimous agreement of the Members to make such additional Capital Contributions, the Members shall make the necessary additional Capital Contributions to the Company in proportion to their respective Percentage Interests. Any Member that does not wish to make additional Capital Contributions shall not be required to contribute; however, all other Member(s) shall be entitled to contribute the additional capital determined by the Manager in amounts proportionate to the Percentage Interest of the contributing Member relative to the Percentage Interest of all of the Members contributing additional capital. To the extent that any additional capital is contributed to the Company by less than all of the Members or otherwise not in proportion to the Members' Percentage Interests, such additional capital (the "Priority Capital Contributions") shall be returned to the contributing Members before other distributions in accordance with Section 7.1 and Section 7.2 below. 5.4 Interest on Capital Contributions. No interest shall accrue or be paid on any contribution to the capital of the Company. 5.5 Capital Accounts. A Capital Account shall be established for each Member and shall be credited with each Member's initial and any additional Capital Contributions. All contributions of property to the Company by a Member shall be valued and credited to the Member's Capital Account at such property's Gross Asset Value on the date of contribution. All distributions of property to a Member by the Company shall be valued and debited against such Member's Capital Account at such property's Gross Asset Value on the date of distribution. Each Member's Capital Account shall at all times be determined and maintained pursuant to the principles of this Section 5.4 and Treasury Regulations Section 1.704-1(b)(2)(iv). Each Member's Capital Account shall be increased in accordance with such Regulations by: (a) The amount of Profits allocated to the Member pursuant to this Agreement; (b) The amount of all Gains from Capital Transactions allocated to the Member pursuant to this Agreement; and (c) The amount of any Company liabilities assumed by the Member or which are secured by any Company property distributed to such Member. Each Member's capital account shall be decreased in accordance with such Regulations by: (a) The amount of Losses allocated to the Member pursuant to this Agreement; (b) The amount of Company Cash Flow distributed to the Member pursuant to this Agreement; (c) The amount of Company Sales Proceeds and Company Refinancing Proceeds distributed to the Member pursuant to this Agreement; and (d) The amount of any liabilities of the Member assumed by the Company or which are secured by any property contributed by such Member to the Company. 12 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS In addition, each Member's Capital Account shall be subject to such other adjustments as may be required in order to comply with the capital account maintenance requirements of Section 704(b) of the Code. In the event that the Managers shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities that are secured by contributed or distributed property or that are assumed by the Company or the Members), are computed in order to comply with such Treasury Regulations, the Managers may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member upon dissolution of the Company. The Managers also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company's balance sheet, as computed for book purposes, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulations Section 1.704-1(b). ARTICLE VI - ALLOCATIONS, ELECTIONS AND REPORTS 6.1 Profits and Losses. (a) Profits. After giving effect to the Regulatory Allocations, Profits for any Fiscal Year shall be allocated among the Members in the following order: (i) first, to Members in proportion to, and in reverse order of, the Losses allocated to such Members by Section 6.1(b) until the aggregate Profits allocated to such Members pursuant to this Section 6.1(a)(1) for such Fiscal Year and all previous Fiscal Years are equal to the aggregate Losses allocated to such Members pursuant to Section 6.1(b) for all previous Fiscal Years; and (ii) second, to the Members in accordance with their respective Percentage Interests. (b) Losses. After giving effect to the Regulatory Allocations, Losses of the Company and all items of tax credit and tax preference shall be allocated among the Members in accordance with their respective Percentage Interests. Losses allocated pursuant to this Section 6.1(b) shall not exceed the maximum amount of Losses that can be so allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. In the event some but not all of the Members would have Adjusted Capital Account Deficits as a consequence of an allocation of Losses pursuant to this Section 6.1(b), the limitation set forth in this Section 6.1(b) shall be applied on a Member by Member basis so as to allocate the maximum possible Losses to each Member under Section 1.704-1(b)(2)(11)(d) of the Treasury Regulations. (c) In the event the Percentage Interests vary during any Fiscal Year, Profits and Losses and all items of tax credit and tax preference for such Fiscal Year shall be allocated among the Members on a daily basis in accordance with their varying Percentage Interests during the Fiscal Year. 6.2 Nonrecourse Deductions. Nonrecourse Deductions shall be allocated among the Members in accordance with their respective Percentage Interests. 13 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 6.3 Member Nonrecourse Deductions. Any Member Nonrecourse Deductions 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 Treasury Regulations Section 1.704-2(1). 6.4 Allocations Between Transferor and Transferee. In the event of the Transfer of all or any part of a Member's Membership Interest (in accordance with the provisions of this Agreement) at any time other than at the end of a Fiscal Year, or the admission of a new Member (in accordance with the terms of this Agreement), the transferring Member or new Member's share of the Company's income, gain, loss, deductions and credits, as computed both for accounting purposes and for federal income tax purposes, shall be allocated between the transferor Member and the transferee Member, or the new Member and the other Members, as the case may be, in the same ratio as the number of days in such Fiscal Year before and after the date of the Transfer or admission; provided, however, that if there has been a sale or other disposition of the assets of the Company (or any part thereof) during such Fiscal Year, then upon the mutual agreement of all the Members (excluding the new Member and the transferring Member), the Company shall treat the periods before and after the date of the Transfer or admission as separate Fiscal Years and allocate the Company's net income, gain, net loss, deductions and credits for each of such deemed separate Fiscal Years. Notwithstanding the foregoing, the Company's "allocable cash basis items," as that term is used in Section 706(d)(2)(B) of the Code, shall be allocated as required by Section 706(d)(2) of the Code and the Treasury Regulations thereunder. 6.5 Gains from Capital Transactions. Gains from Capital Transactions during any Fiscal Year shall be allocated as follows: (a) First, to those Members whose Capital Accounts immediately prior to the Capital Transaction were negative, in an amount sufficient to increase the Capital Accounts to zero, but in the event sufficient gain is not recognized to do so, then among them pro rata in proportion to their negative Capital Accounts; (b) Second, to the Members in an amount equal to the difference between the sum of the Company Sales Proceeds and Company Refinancing Proceeds to be distributed to each of the Members as provided in Section 7.2 and the Capital Accounts of each respective Member as adjusted (if necessary) by paragraph (a) above, but in the event sufficient gain is not recognized to do so, then among the Members in an amount which, when credited to the Capital Accounts of the Members, results in the Members' Capital Accounts bearing the same ratio to one another as the ratio of the distribution of Company Sales Proceeds and Company Refinancing Proceeds to each of the Members, as provided in Section 7.2; and thereafter (c) Any remaining gain shall be allocated among the Members in accordance with their respective Percentage Interests as of the date of the Capital Transaction giving rise to the gain. 6.6 Contributed Property. In accordance with Code 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 initial Gross Asset Value at the time of contribution. In the event the Gross Asset Value of any Company asset is adjusted pursuant to Section 2.1 hereof, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its 14 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS Gross Asset Value in the same manner as under Code Section 704(c) and the Treasury Regulations thereunder. Any elections or other decisions relating to such allocations shall be made by Managers in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 6.6 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Profits, Losses, other items or Distributions pursuant to any provision of this Agreement. 6.7 Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any 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 Treasury Regulation 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 Treasury Regulations Sections 1.704-2(f) and 1.704-20)(2). This Section 6.7 is intended to comply with the minimum gain chargeback requirement in Treasury Regulation 1.704- 2(f) and shall be interpreted consistently therewith. 6.8 Member Minimum Gain Chargeback. If there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt, as defined in Treasury Regulations Section 1.704- 2(1)(4), during any Fiscal Year, each Member who has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704- 2(1)(5), shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member's share of the net decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704-2(1)(4) and (5). 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 Treasury Regulations Section 1.704-2(1)(4). This Section 6.8 is intended to comply with the Member Minimum Gain chargeback requirement in Treasury Regulations Section 1.704(1)(4) and shall be interpreted consistently therewith. 6.9 Qualified Income Offset. If any Member unexpectedly receives an adjustment, allocation or distribution as described in Treasury Regulations Section 1.704-1(b)(2)(10(d)(4) through (6) which causes or increases a deficit capital account balance in such Member's Capital Account (as determined in accordance with such Regulations) 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 Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 6.9 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 VI have been tentatively made as if this Section 6.9 were not in the Agreement. This provision is intended to be a "qualified income offset," as defined in Treasury Regulation Section 1.704-1(b)(2)(11)(d), such Regulations being specifically incorporated herein by reference. 6.10 Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any Company Fiscal Year which is in excess of the sum of (i) the amount such Member is obligated to restore and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(1)(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 6.10 shall be made if and only to 15 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 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 VI have been tentatively made as if this Section 6.10 and Section 6.9 hereof were not in this Agreement. 6.11 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 Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member's interest in the Company, 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 accordance with their interests in the Company in the event that Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom such distribution was made in the event that Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies. 6.12 Curative Allocations. The allocations set forth in Sections 6.1(b), 6.2, 6.3, 6.7, 6.8, 6.9, 6.10, 6.11 hereof (the "Regulatory Allocations") are intended to comply with certain requirements of the Treasury 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 6.12. Therefore, notwithstanding any other provision of this Article VI (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 Sections 6.1(a). In exercising their discretion under this Section 6.12, Managers shall take into account future Regulatory Allocations under Sections 6.7 and 6.8 that, although not yet made, are likely to offset other Regulatory Allocations previously made under Sections 6.2 and 6.3. 6.13 Compliance with Treasury Regulations. The above provisions of this Article VI notwithstanding, it is specifically understood that the Managers may, without the consent of any Members, make such elections, tax allocations and adjustments as the Managers deem necessary or appropriate to maintain to the greatest extent possible the validity of the tax allocations set forth in this Agreement, particularly with regard to Treasury Regulations under Code Section 704(b). 6.14 Tax Withholding. The Company shall be authorized to pay, on behalf of any Member, any amounts to any federal, state or local taxing authority, as may be necessary for the Company to comply with tax withholding provisions of the Code or the North Carolina General Statutes or other income tax or revenue laws of any taxing authority. To the extent the Company pays any such amounts that it may be required to pay on behalf of a Member, such amounts shall be treated as a cash Distribution to such Member and shall reduce the amount otherwise distributable to such Member. ARTICLE VII - DISTRIBUTIONS 7.1 Company Cash Flow. To the extent available, the Company Cash Flow shall be distributed by Managers (i) first, to the contributing Members in proportion to their unreturned Priority Capital Contributions (including any interest thereon) in complete payment of such Priority Capital Contributions, and (ii) thereafter, to the Members in accordance with the Member's respective Percentage Interests except as otherwise provided hereunder. dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 7.2 Proceeds from Capital Transactions. Company Refinancing Proceeds and Company Sales Proceeds, to the extent available, shall be distributed by Managers to the Members within thirty (30) days of the Capital Transaction giving rise to such proceeds as follows: (a) First, to the contributing Members in proportion to their unreturned Priority Capital Contributions (including any interest thereon) in complete payment of such Priority Capital Contributions. (b) Second, to the Members in proportion to their unreturned Capital Contributions in complete payment of such Capital Contributions. (c) Third, to the Members in proportion to their Percentage Interests. 7.3 Distributions in Liquidation. Upon liquidation of the Company, all of the Company's property shall be sold as provided in Section 10.2 and Profits and Losses allocated accordingly. Proceeds from the liquidation of the Company shall be distributed in accordance with the provisions of Section 10.2. 7.4 Limitation Upon Distributions. No Distribution shall be declared and paid if payment of such Distribution would cause the Company to violate any limitation on distributions provided in the Act. 7.5 Withholding. In the event any federal, foreign, state or local jurisdiction requires the Company to withhold taxes or other amounts with respect to any Member's allocable share of Profits, Company Cash Flow, Company Sales Proceeds, taxable income or any portion thereof, or with respect to distributions, the Company shall withhold from distributions or other amounts then due to such Member an amount necessary to satisfy the withholding responsibility. In such a case, the Member for whom the Company has paid the withholding tax shall be deemed to have received the withheld distribution or other amount due and to have paid the withholding tax directly. In the event it is anticipated that at the due date of the Company's withholding obligation the Member's share of cash distributions or other amounts due is less than the amount of the withholding obligation, the Member with respect to which the withholding obligation applies shall pay to the Company the amount of such shortfall within ten (10) days after notice by the Company. In the event a Member fails to make the required payment when due hereunder, and the Company nevertheless pays the withholding, in addition to the Company's remedies for breach of this Agreement, the amount paid shall be deemed a recourse loan from the Company to such Member bearing interest at the Interest Rate, and the Company shall apply all distributions or payments that would otherwise be made to such Member toward payment of the loan and interest, which payments or distributions shall be applied first to interest and then to principal until the loan is repaid in full. ARTICLE VIII - TRANSFER OF INTERESTS AND ADMISSION OF MEMBERS 8.1 Restrictions on Transfer. Without the prior written consent of a Majority in Interest of the Disinterested Members (which consent may be given or withheld in their sole discretion), (a) no Member may voluntarily or involuntarily Transfer, or create or suffer to exist any Encumbrance against, all or any part of such Member's record or beneficial interest in the Company and (b) no Person may be admitted to the Company as a Member. Except for withdrawals in connection with a Transfer of a Membership Interest permitted by this Agreement, no Member may withdraw from the Company without the consent of a Majority in Interest of the Disinterested Members. Notwithstanding the foregoing, a Member shall be permitted to Transfer its Membership Interest in the Company from time to time, without the prior written consent of the Members as provided herein, to (i) the children or grandchildren of that Member, or a trust for their benefit for estate planning purposes provided that the transferring 17 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS Member retains control of voting rights and rights of approval with respect to such Membership Interest or (ii) to a Person that is an Affiliate of such Member provided that the transferring Member controls such Person through ownership of more than fifty percent (50%) of the interests in such Person and control of the day-to-day management of such Person; provided, however, that any such transferee under cause (i) or (ii) above shall not be admitted as a substitute Member of the Company without compliance with Section 8.3 below. 8.2 Conditions Precedent to Transfers. Any purported Transfer or Encumbrance otherwise complying with Section 8.1 will be ineffective until the transferor and transferee of the interest furnish to the Company the instruments and assurances the Managers may request, including without limitation, if requested, an opinion of counsel satisfactory to the Company that the interest in the Company being Transferred or Encumbered has been registered or is exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws. No Transfer or Encumbrance will be effective if it would result in the "termination" of the Company under Section 708 of the Code unless all of the Managers give their prior written consent to the Transfer or Encumbrance. If a Manager or its Affiliate is a transferor, the approval required by this Section 8.2 will be the approval of a Majority in Interest of the Disinterested Members. 8.3 Substituted Members. No assignee or transferee of a Membership Interest shall be admitted as a substituted Member of the Company unless, in addition to compliance with the conditions set forth in Section 8.2, all of the following conditions are satisfied: (a) The assignee or transferee has executed and delivered all documents deemed appropriate by the Managers to reflect such Person's admission to the Company and agreement to be bound by this Agreement; (b) A Majority in Interest of the Disinterested Members shall have consented in writing to such substitution, the granting or denial of which shall be in the sole discretion of such Disinterested Members; and (c) If requested by the Managers, payment has been made to the Company of all costs and expenses of admitting such transferee or assignee as a substituted Member. 8.4 Rights of Transferee. Unless admitted to the Company in accordance with Section 8.3, and subject to Sections 8.1 and 8.2, the transferee of a Membership Interest or a part thereof shall not be entitled to any of the rights, powers or privileges of its predecessor in interest, except that such transferee shall be entitled to receive and be credited or debited with its proportionate share of Profits, Losses, Gains from Capital Transactions, Company Cash Flow, Company Sales Proceeds, Company Refinancing Proceeds and Distributions in liquidation. 8.5 Special Stipulations. Notwithstanding anything herein to the contrary, the parties hereby agree that the terms set forth on Exhibit A, attached hereto and incorporated herein by reference, shall control the transfer of membership interests in the Company. ARTICLE IX - BUY -SELL 9.1 Buy -Sell. Each of the following events shall constitute a "Buy -Sell Event" under this Agreement: Member; (a) The death, declaration of legal incompetence or dissolution and winding -up of a 18 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS (b) A judicial determination of the insolvency of any Member; (c) Any filing of a petition or suit under the bankruptcy laws by or against a Member that is not dismissed within 60 days; (d) Any purported voluntary or involuntary Transfer or Encumbrance of all or any part of a Member's Membership Interest in a manner not expressly permitted by this Agreement; (e) Any material breach of this Agreement by a Member which is not cured within 10 days after the Company delivers written notice of such breach to the Member; (f) Any instance in which the spouse of a Member commences against a Member, or a Member is named in, a Domestic Proceeding; or (g) Any withdrawal by a Member from the Company other than as may be expressly permitted by this Agreement. 9.2 Buy -Sell Notice. Upon the occurrence of a Buy -Sell Event, the Member to whom such event has occurred (the "Withdrawing Member'), or its executor, administrator or other legal representative in the event of death or declaration of legal incompetency, shall give notice of the Buy -Sell Event (the "Buy -Sell Notice") to the other Members within ten (10) days after its occurrence. If the Withdrawing Member fails to give the Buy -Sell Notice, any other Member (other than a Withdrawing Member) may give the notice at any time thereafter and by so doing commence the buy -sell procedure provided for in this Article IX. 9.3 Member's Purchase Option. Upon the occurrence of a Buy -Sell Event, each of the Members, except the Withdrawing Member and any other Withdrawing Member, shall have an option to purchase (the "Purchase Option") the Withdrawing Member's Membership Interest at Closing on the terms and conditions set forth in this Article IX. This right will be allocated among the Members who elect to purchase (the "Purchasing Members") in the proportion they mutually agree upon, or, in the absence of agreement, in the ratio that each of the Purchasing Member's Percentage Interest bears to the aggregate Percentage Interests of all Purchasing Members. The Purchasing Members must give notice of their election to exercise their Purchase Option to the Withdrawing Member and all other Members within thirty (30) days following delivery of the Buy -Sell Notice. 9.4 Assignment of Purchase Option. If at the occurrence of a Buy -Sell Event, there exist only two (2) then -current Members (including the Withdrawing Member), the Member that is not withdrawing shall have the option during the thirty (30) day period set forth in Section 9.3 to assign all or part of its Purchase Option to any Person other than the Withdrawing Member (the "Purchase Option Assignee") by notifying the Withdrawing Member and the Company of such assignment in writing. After delivery of such notice, the Purchase Option Assignee shall have the option to purchase the Withdrawing Member's Membership Interest (to the extent so assigned) on the same terms and conditions as would apply to the Member from which the Purchase Option was assigned; provided, however, that the Purchase Option Assignee shall not have the rights of assignment set forth in this Section 9.4. Notwithstanding any other provision of Article VIII or this Article IX, any Purchase Option Assignee which exercises its Purchase Option, as provided herein, (i) shall only have those rights as specified in Section 8.4 above, (ii) shall not be admitted as a substitute Member without full compliance with Section 8.3 and (iii) shall be subject to the Buy -Sell restrictions imposed under this Article IX. In the event the Purchase Option Assignee does not exercise the Purchase Option, the Purchase Option Assignee shall have no further rights under this Agreement. 19 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 9.5 Agreement on Valuation. Unless otherwise agreed in writing by the purchaser(s) and seller within sixty (60) days of the receipt of a Buy -Sell Notice, the purchase price for the Withdrawing Member's Membership Interest shall be determined by a single appraisal of the value of the Withdrawing Member's Membership Interest, as of the date the Buy -Sell Event occurred, made by an appraiser agreed upon by the purchaser(s) and seller, which appraisal shall be final. If the parties cannot agree on a single appraiser, the purchase price for the Withdrawing Member's Membership Interest shall be determined by three appraisers, one selected by the purchaser(s), one selected by the seller and the third selected by the two appraisers. The value determined as of the date of the Buy -Sell Event by a majority of the appraisers will be final. The costs of appraisal shall be borne equally between the purchaser(s) as a group and the seller. The purchase price to be paid for the Withdrawing Member's Membership Interest will be reduced by the amount of any distributions made by the Company to the Withdrawing Member from the date the Buy -Sell Event occurred with respect to the Withdrawing Member to the Closing. 9.6 Closing. Except as otherwise provided in this Article IX, the closing (the "Closing") of the purchase of any Membership Interest pursuant to this Article IX shall take place on the date agreed upon by the purchaser(s) and seller, but not later than ninety (90) days after the delivery of the Buy -Sell Notice or Sale Offer (as defined in Section 9.10 below), as applicable. The purchase price for each Membership Interest being purchased will be payable at Closing at the election of the purchaser either (1) in cash or (ii) by delivery of a promissory note payable annually at the Interest Rate last published prior to the occurrence of the Buy -Sell Event or Sale Offer, as applicable, amortized over five years and secured by a pledge of the Membership Interest being purchased. The purchase price will bear interest from the date of the occurrence of the Buy -Sell Event until the Closing at the Interest Rate. Upon payment of the purchase price, the Member selling its Membership Interest shall execute and deliver such assignments and other instruments as may be reasonably necessary to evidence and carry out the Transfer of its Membership Interest to the purchaser(s). In connection with the sale of any Membership Interest under this Article IX, unless otherwise agreed by the purchaser(s) and seller, the purchaser(s) will assume the seller's allocable portion of Company obligations to the extent related to the transferred interest as well as the seller's individual obligations to the extent related to the transferred interest, other than income tax liabilities of the seller. Notwithstanding any other provision of Article VIII or this Article IX, any transferee, assignee or purchaser of a Member's interest, as provided herein, shall only have those rights as specified in Section 8.4 above, and shall not be admitted as a substitute Member without full compliance with Section 8.3. 9.7 Effect of the Rule Against Perpetuities. Notwithstanding any other provision of this Agreement, all options and rights to purchase or sell created by this Agreement shall expire on the later of (a) twenty-one (21) years after the death of the last remaining child, living as of the date of this Agreement, of any Member who is a member of the Company at the time of its organization, or (b) twenty-one (21) years after the death of the last to die of the individual Members who are members of the Company at the time of its organization. 9.8 Effect on Withdrawing Member's Membership Interest. From the date of the occurrence of the Buy -Sell Event to the date of the Transfer of the Withdrawing Member's Membership Interest under this Article IX, the Percentage Interest represented by the Withdrawing Member's Membership Interest will be excluded from any calculation of aggregate Percentage Interests for purposes of any approval required of Members under this Agreement. Without limiting the generality of any other provision of this Agreement, upon the exercise of the Purchase Option, the Withdrawing Member, without further action, will have no rights in the Company or against the Company, any Member or any Manager other than the right to receive payment for its Membership Interest in accordance with this Article IX. 20 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 9.9 Failure to Exercise Purchase Option. In the event the Members or Purchase Option Assignee, if any, do not exercise their Purchase Options, the Withdrawing Member or its executor, administrator or other legal representative in the event of death or declaration of legal incompetency, may Transfer its economic rights in the Membership Interest of the Withdrawing Member to any Person; provided, however that any transferee of the Withdrawing Member's Membership Interest, as provided herein, (i) shall only have those rights as specified in Section 8.4, (ii) shall not be admitted as a substitute Member without full compliance with Section 8.3 and (iii) shall be subject to the Buy -Sell restrictions imposed under this Article IX. 9.10 Put/Call Option. Notwithstanding anything in this Article IX to the contrary, at any time prior to a Buy/Sell Event, any Member (the "Initiating Member") may institute the procedure provided for in this Section 9.10 (the "Put/Call"), in order to effect the termination of the Initiating Member's Membership Interest in the Company by offering to sell all but not less than all of such Member's Membership Interest (the "Put") to the other Members in proportion to such Member's Percentage Interests (the "Offeree Members"). If any Offeree Member chooses not to purchase its proportionate share of the Initiating Member's Membership Interest, the remaining Offeree Member(s) shall have the right to purchase the additional Membership Interests. If the Offeree Members choose not to purchase all of such Membership Interest, the Offeree Members shall be obligated to sell all and not less than all of such Member's Membership Interest to the Initiating Member in accordance with the procedure described below (the "Call"). To initiate the Put/Call, the Initiating Member must deliver written notice to the Offeree Members and to the Company which shall contain the following: (i) a statement of intent to rely upon this provision; (ii) an offer to sell ("Sale Offer') all and not less than all of the Initiating Member's Membership Interest to the Offeree Members at the price, upon the terms and conditions and on the closing date set forth therein; and (iii) an offer to purchase ("Purchase Offer") all and not less than all of the Offeree Members' Membership Interests at the same price (adjusted to take account of any difference in the proportionate Membership Interests of the Initiating Member and the Offeree Members) and upon the same terms and conditions and on the closing date set forth in the Sale Offer, which Purchase Offer shall become operative if the Sale Offer is not accepted. Within thirty (30) days after the Initiating Member delivers the Sale Offer, the Offeree Members shall determine whether to accept the Sale Offer or the Purchase Offer. If the Offeree Members accept the Sale Offer, then the Offeree Members shall purchase all of the Initiating Member's Membership Interest in accord- ance with the terms of the Sale Offer. If the Offeree Members reject (or are deemed to have rejected by failing to respond within said thirty (30) day period) the Sale Offer, then the Initiating Member shall purchase all of the Offeree Members' Membership Interests in accordance with the Purchase Offer. The purchase and sale contemplated by the Sale Offer or Purchase Offer, as the case may be, shall take place as one and the same transaction in the manner and on the closing date described in the Sale Offer, at the principal office of the Company during normal business hours. 9.11 Continuing Obligations. Notwithstanding anything in this Article IX to the contrary, any Member who Transfers such Member's Membership Interest pursuant to this Article IX shall cooperate with the remaining Member(s) in regard to any continuing obligations of Company that existed on the date of the Transfer of such Membership Interest, including without limitation any guaranties or any loan or equity commitments conditioned upon the guaranty and/or participation of the transferor Member. The remaining Member(s) shall make reasonable good faith efforts to release the transferor Member from any such obligations and shall be required to indemnify, defend and hold the transferor Member harmless from any claims in regard to such obligations arising subsequent to the date of the Transfer of such Membership Interest. ARTICLE X - DISSOLUTION AND LIQUIDATION OF THE COMPANY 10.1 Dissolution Events. The Company will be dissolved upon the happening of any of the following events: 21 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS (a) All or substantially all of the assets of the Company are sold, exchanged or otherwise transferred (unless the Managers notify the Members that they have elected to continue the business of the Company, in which event the Company will continue until the Managers give notice electing to dissolve the Company); (b) All Members sign a document stating their election to dissolve the Company; (c) Ninety (90) calendar days after the Incapacity of the last remaining Member of the Company, unless within that 90 day period, one or more Persons are designated or otherwise admitted, with their consent, as Members of the Company, either as an assignee of such remaining Member's Membership Interest or otherwise; or (d) The entry of a decree of judicial dissolution under N.C.G.S. Section 57C-6-02 or the filing by the Secretary of State of a certificate of dissolution under N.C.G.S. Section 57C-6- 03, provided the Company is not later reinstated or the dissolution is not later set aside. 10.2 Liquidation. Upon the happening of any of the events specified in Section 10.1, the Managers, or any liquidating trustee elected by the Members (as applicable, the "Liquidator"), will commence as promptly as practicable to wind up the Company's affairs unless such Liquidator determines that an immediate liquidation of Company assets would cause undue loss to the Company, in which event the liquidation may be deferred for a time determined by the Liquidator to be appropriate. Assets of the Company may be liquidated or distributed in kind, as the Liquidator determines to be appropriate. The Members will continue to share Company Cash Flow, Profits and Losses during the period of liquidation in the manner set forth in Articles VI and VIL The proceeds from liquidation of the Company, including repayment of any debts of Members to the Company, and any Company assets that are not sold in connection with the liquidation will be applied in the following order of priority: (a) To payment of the debts and satisfaction of the other obligations of the Company, including without limitation debts and obligations to Members; (b) To the establishment of any reserves deemed appropriate by the Liquidator for any liabilities or obligations of the Company, which reserves will be held for the purpose of paying liabilities or obligations and, at the expiration of a period the Liquidator deems appropriate, will be distributed in the manner provided in Section 10.2(c); (c) To the payment to the Members of the positive balances in their respective Capital Accounts, pro rata, in proportion to the positive balances in those Capital Accounts after giving effect to all allocations under Article VI and all distributions under Article VII for all prior periods, including the period during which the process of liquidation occurs; and (d) To the Members in proportion to their Percentage Interests. 10.3 Articles of Dissolution. Upon the dissolution and commencement of the winding up of the Company, the Managers shall cause Articles of Dissolution to be executed on behalf of the Company and filed with the Secretary of State, and the Managers shall execute, acknowledge and file any and all other instruments necessary or appropriate to reflect the dissolution of the Company. 22 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS ARTICLE XI - MISCELLANEOUS 11.1 Other Activities of Members and Managers. Any Member or Manager may engage in or possess an interest in other business ventures of any nature or description, independently or with others, subject to compliance with its duties and obligations under this Agreement and under the Act 11.2 Records. The records of the Company will be maintained at the Company's principal place of business, or at such other place selected by the Managers, provided that the Company keep at its principal place of business the records required by the Act to be maintained there. Appropriate records in reasonable detail will be maintained to reflect income tax information for the Members. Each Member, at such Member's expense, may inspect and make copies of the records maintained by the Company and may require an audit of the books of account maintained by the Company to be conducted by independent accountants for the Company. The Company shall meet or have a conference call on a monthly and quarterly basis. 11.3 Reserves. The Managers may cause the Company to create reasonable reserve accounts to be used exclusively to fund Company operating deficits and for any other valid Company purpose. The Managers shall in their sole discretion determine the amount of payments to such reserve accounts. The Company shall at all times maintain a minimum of $10,000.00 in its reserve account. 11.4 Notices. The Managers shall notify the Members of any change in the name, principal or registered office or registered agent of the Company. Any notice or other communication required by this Agreement must be in writing. Notices and other communications will be deemed to have been given when delivered by hand or dispatched by means of electronic facsimile transmission or nationally recognized air courier, or on the third business day after being deposited in the United States mail, postage prepaid. In each case, notice hereunder shall be addressed to the Member to whom the notice is intended to be given at such Member's address set forth on Schedule I to this Agreement or, in the case of the Company, to its principal place of business. A Member may change its notice address by notice in writing to the Company and to each other Member given in accordance with this Section 11.4. 11.5 Amendments. No provision of this Agreement or the Articles of Organization may be amended, nor will any waiver of any term of this Agreement be effective, unless in writing and signed by all of the Members. 11.6 Additional Documents. Each party hereto agrees to execute and acknowledge all documents and writings which the Managers may deem necessary or expedient in the creation of the Company and the achievement of its purposes, including but not limited to Articles of Organization and any amendments or cancellation thereof. 11.7 Representations of Members. Each Member represents and warrants to the Company and every other Member that such it (i) is fully aware of, and is capable of bearing, the risks relating to an investment in the Company; (ii) understands that its interest in the Company has not been registered under the Securities Act or the securities law of any jurisdiction in reliance upon exemptions contained in those laws; (iii) has requested and obtained all information that such Member deems necessary or prudent to make an investment in the Company; and (iv) has acquired its interest in the Company for its own account, with the intention of holding the interest for investment and without any intention of participating directly or indirectly in any redistribution or resale of any portion of the interest in violation of the Securities Act or any applicable law. 11.8 Survival of Rights. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. 23 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS 11.9 Interpretation and Governing Law. When the context in which words are used in this Agreement indicates that such is the intent, words in the singular number shall include the plural and vice versa. The masculine gender shall include the feminine and neuter. The Article and Section headings or titles shall not define, limit, extend or interpret the scope of this Agreement or any particular Article or Section. This Agreement shall be governed and construed in accordance with the laws of the State of North Carolina without giving effect to the conflicts of laws provisions thereof. 11.10 Severability. If any provision, sentence, phrase or word of this Agreement or the application thereof to any person or circumstance shall be held invalid, the remainder of this Agreement, or the application of such provision, sentence, phrase or word to persons or circumstances, other than those as to which it is held invalid, shall not be affected thereby. 11.11 Agreement in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature pages and this Agreement may be executed by the affixing of the signatures of each of the Members to one of such counterpart signature pages; all of such signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. 11.12 Tax Matters Partner. For purposes of this Agreement, the Managers shall designate one Member as the Tax Matters Partner as required by the Code Section 6231(a)(7) and the accompanying Treasury Regulations. 11.13 Creditors Not Benefited. Nothing in this Agreement is intended to benefit any creditor of the Company or of any Member. No creditor of the Company or of any Member will be entitled to require Managers to solicit or accept any loan or additional Capital Contribution for the Company or to enforce any right which the Company or any Member may have against a Member, whether arising under this Agreement or otherwise. 11.14 Conflict; Independent Counsel. By executing this Agreement, each Member acknowledges that the law firm of Hinson Faulk, PA. ("Law Firm") prepared this Agreement on behalf of, and in the course of its representation of, the Company and that: (a) each Member has been advised by the Law Firm that a conflict exists among their individual interests; (b) each Member has been advised by the Law Firm to seek the advice of independent counsel; and (c) each Member has had the opportunity to seek the advice of independent counsel. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 24 dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS IN WITNESS WHEREOF, the undersigned, being all of the Members and Managers of the Company, have caused this Agreement to be duly adopted by the Company and do hereby assume and agree to be bound by and to perform all of the terms and provisions set forth in this Agreement. COMPANY: ARKA HEIGHTS, LLC, a North Carolina limited liability company By Its Managers: /J/J dotloop verified 0 2/19/20 5:39 PM EST LL5Q-D635-OPFL-F8JJ Latha Nelluri, Operating Manager 1 dotloop verified OZ/01/2DF0 6:A- 1 PM K EST O 02/ 0 Ram Kalagara, Operating Manager 2 dotloop verified �e MANAGERS: 'vzv WV6K-TTF8Z-V5QK-B6TV Latha Nelluri, Operating Manager 1 %��dotloopp verifed DPZ1/Z6 -B5 PM EST O JDPZ-6Z65-BSXS-NFLF Ram Kalagara, Operating Manager 2 MEMBERS: SM CAPITAL, LLC, a North Carolina limited liability company dotloop verifed ONBP-205:39 PM EST wu 02/19/ 0 5.19 NM EST Latha Nelluri, Manager INDCAP, LLC, a North Carolina limited liability company !f�� dotloop ve 02 /01/2 0 rifed EST 881-UVHX-JXU Ram Kalagara, Manager 25 dotloop signature verification: dtlp.us/ESTp-tWi9-bnRS SCHEDULEI Names and Addresses of Members: SM CAPITAL, LLC 10214 Benderloch Dr Charlotte, NC 28277 INDCAP, LLC 11516 Turning Hawk Rd Charlotte, NC 28277 Capital Contribution Percentage Interest $ 2,000,000 50% $ 2,000,000 50% Total $ 4, 000,000 100% dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS EXHIBIT "A" Period Expenses Limitations 0-3 years • No appraisal needed • Member need to sell the whole stock in • Can get capital only (initial the company, not partial investment) • Need to be sold to members only (to one • Can refinance only if lower or combination) rate is available, in such case • Majority of members need to agree all refinance costs need to be paid by seller • If refinance at lower rate is not available, seller will be on the loan • If legal work for LLC is needed, all costs need to be aid by seller 3 — 5 years • Seller can appraise the value, • Member need to sell the whole stock in buyer need to agree on the the company, not partial value • Need to be sold to members only (to one • Can refinance only if lower or combination) rate is available, in such . Majority of members need to agree cases, all refinance costs need to be paid by seller • If refinance at lower rate is not available, seller will be on the loan • If legal work for LLC is needed, all costs need to be aid by seller >5 years • Arrive at a fair market -value • Member can sell the whole stock in the Process: Seller can appraise company, not partial the value, members can • Seller to give the first right of purchase to disagree the value and order members. He should send `intent to sell' their own appraisal. In case of notice to members with a price and dispute between these two appraisal value and give a lead time of 30 appraisals, a third appraisal days. Incase no member shows interest to can be ordered and this buy in 30 days, seller can approach appraiser need to be identified outside parties. jointly by seller and members. . Can be sold to outside parties also • Can refinance only if lower . Outside party need to be an individual rate is available, in such person only and can't be an entity. cases, all refinance costs need to be paid by seller 0 If refinance at lower rate is dotloop signature verification: dt1p.us/ESTp-tWi9-bnRS not available, seller will be on the loan • If legal work for LLC is needed, all costs need to be aid by seller Liquidation • Majority of members need to agree for this of the • Members need to form a 3-people company and committee to oversee the liquidation close • These 3 people need to be selected by majority of members • In case the members are unable to form this team, they will hire a legal counsel to oversee the proceedings