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ROUDASUSH, INC. as,/ ./L,4/ /! ,/%00 .4 Fnindud COrMnNie la'. /CV` JLr,U 13 1,9 p,4 CERTIFIED LAND SURVEYORS SCALE: _..�. DATE: CMr.H.s Nlr Ylryld. e..w.MY.,.a e.w%to lee Ra. FILE NO (700 :O..• :f. P.•-• 249 . . .u•- • :8.......• OPERATING AGREEMENT OF CROZET NEW TOWN ASSOCIATES,LLC November 1,2014 OPERATING AGREEMENT OF CROZET NEW TOWN ASSOCIATES, LLC THIS OPERATING AGREEMENT (this "Agreement") of Crozet New Town Associates, LLC, a Virginia limited liability company (the "Company"), is effective as of the 1St day of November, 2014, by and among the parties executing it below and those persons or entities who hereafter join it by execution and delivery of an Additional Member Signature Page that is duly accepted by the Company in substantially the form attached hereto as Schedule 1 (collectively, the "Members"). The Members hereby agree as follows: ARTICLE I Formation,Name and Purpose 1.1 Formation. The Members: (a) acknowledge the formation of the Company pursuant to the Articles of Organization dated September 3, 2014, and filed with the Clerk's Office of the Virginia State Corporation Commission. (b) confirm and agree to their status as Members of the Company, upon the terms and conditions set forth in this Agreement; and (c) execute and adopt this Agreement as an Operating Agreement of the Company pursuant to Section 13.1-1023 of the Virginia Limited Liability Company Act (Virginia Code Sections 13. 1-1000 through 13.1-1073, as amended from time to time, the "Act"), 1.2 Name. The name of the Company is "Crozet New Town Associates, LLC." The Company may change its name or adopt such trade or fictitious names as it may deem appropriate. The name of the Company shall be the exclusive property of the Company, and no Member shall have any rights in the Company's name or any derivation thereof, even if the name contains such Member's own name or a derivation thereof. 1.3 Governing Law. This Agreement and all questions with respect to the rights and obligations of the parties, the construction, enforcement and interpretation hereof, and the formation, administration and termination of the Company, shall be governed by the Act and other applicable laws of the Commonwealth of Virginia. 1.4 Defined Terms. Except when the context may otherwise require, each capitalized term used in this Agreement shall have the meaning specified in the section where such capitalized term is defined or as set forth in the Glossary of Terms attached as Exhibit A. Operating Agreement of Crozet New Town Associates,LLC Page 1 of 16 1.5 Purpose. The sole purpose of the Company shall be to acquire, plan, develop, manage, market and sell residential, commercial or mixed-use real estate, in the Commonwealth of Virginia or elsewhere, together with such other activities as may be necessary, advisable or convenient to the promotion or conduct of the business of the Company. Initially, the Company intends to acquire certain property in Albemarle County as shown on attached Exhibit B, "The Property" and to develop said property in general accordance with attached Exhibit C, "Vision and Intent". ARTICLE II Members-Status,Rights and Obligations 2.1 Members. The Members as of the effective date of this Agreement are the persons named on Schedule 1, each of whom has signed this Agreement. The address of each such Member is set forth on Schedule 1. The Managers are authorized and directed to update Schedule 1 to reflect changes of address, or changes in Interests or changes in the Members' respective Capital Contributions which are made from time to time and which are consistent with the terms of this Agreement, or assignments of Interests which are made in conformity with the provisions of Section 8 of this Agreement. 2.2 Membership Interests. The Members agree that each Member's ownership interest in the Company, hereinafter referred to generally as a "Membership Interest" or an "Interest," shall be as set forth on Schedule 1, as amended from time to time. 2.3 Votes by Members. As provided by the provisions of the Code of Virginia §13.1- 1022(B) (1950) (as amended), the Members shall vote on all matters with respect to which they are entitled to vote under this Agreement in the percentages set forth on Schedule 1. 2.4 Other Activities. Except as expressly otherwise provided herein, any Member and the Managers may engage in or possess any interest in other business ventures of any nature and description, independently or with others, even if such activity competes with the business of the Company, and neither the Company nor any Member shall have any rights in or to any such independent venture or the income or profits derived therefrom. 2.5 Information Rights. Members shall have rights to receive copies from the Managers of the information set forth in § 13.1-1028A of the Act. In addition, not less frequently than semi-annually,the Managers shall prepare and distribute to the Members a report of the Company's activities since the prior report. The report shall contain detailed information, financial and otherwise, describing the Company's financial condition, the extent to which the Company is fulfilling its purposes, and any other information the Managers deem relevant. The Managers shall prepare and deliver, or cause to be prepared and delivered, to the Members, within a reasonable time after the close of each fiscal year, a Schedule K-1, and such other reports setting forth in sufficient detail all such information and data with respect to the transactions effected by or involving the Company during such fiscal years as shall enable the Company and each Member to prepare its federal, state, and local income tax returns in accordance with the laws, rules, and regulation then prevailing. Operating Agreement of Crozet New Town Associates,LLC Page 2 of 16 ARTICLE III Management of the Company 3.1 General Authority of the Managers. Except as otherwise expressly provided in the Act, the Articles, or this Agreement, all decisions with respect to management of the Company shall be made by the Managers. The Managers shall, except as specifically limited in this Agreement, have full, exclusive and complete discretion in the management and control of the Company for the purposes set forth in Section 1.5. The Managers agree to manage and control the affairs of the Company to the best of their ability and to conduct the operation of the Company contemplated under this Agreement in a careful and prudent manner and in accordance with the Act and good industry practice. The Managers shall observe all customary and organizational formalities in the operation of the Company, including, but not limited to, holding such member meetings as are required by law, creating and managing annual budgets, holding the Company out to creditors and the public as a separate and distinct legal entity, and conducting the Company's business in the Company's name. Unless prohibited elsewhere in this agreement or by law, either Manager may execute contracts, agreements, notes, checks and other documents related to Company business on behalf of the LLC. The Managers may, from time to time modify the powers and authority delegated herein or designate other persons as officers of the Company with such powers and authority as the Managers may deem necessary or appropriate for the smooth and efficient operation of the Company. Such powers and authority shall be granted in writing, signed by the Managers and attached as an addendum to this Operating Agreement. With respect to any Company activity which requires the execution of any written instruments on behalf of the Company (including, but not limited to, any deeds of conveyance, closing statements, promissory notes, deeds of trust, assignments of rents and leases or any other instrument deemed reasonably necessary by the Managers to carry out the purposes set forth in Section 1.5), either of the Managers may act as a signatory on behalf of the Company, and the execution by such Manager shall constitute an action taken in the name of the Company which may be relied upon as contemplated by Section 3.5. 3.2 Duties. Subject to any limitations expressly set forth in this Agreement, the Managers shall perform or cause to be performed, at the Company's expense, all acts reasonably required to cause the Company to carry on its business and to perform its contractual and financial obligations. Managers shall establish and approve annual operating and project related budgets and distribute such budgets to the Members within 15 days of Managers' approval. Members holding 2/3rds or more of the Interests may veto a Manager approved budget by giving written notice to the Managers within 15 days following Member's receipt of such budget. If any Member fails to provide written notice of any veto to the Managers within 15 days of such Member's receipt, the budget shall be deemed approved by such Member. To the extent a budget is timely vetoed, the Managers shall work diligently to establish, approve and distribute a new budget to Members which new budget shall be subject to the foregoing process. Notwithstanding any budget approval, the Managers may, in their absolute and sole discretion, reallocate costs and contingency funds under such budget without Member review, provided the Operating Agreement of Crozet New Town Associates,LLC Page 3 of 16 total amount does not exceed the then current approved budget. To the extent that, at any time, a Member fails to timely veto a budget and such budget is deemed approved, the Managers shall give written notice to such Member of such automatic approval, and the Member shall have no right to appeal the approval. Subject to the foregoing limitation, and without limiting the generality of the Managers' duties and responsibilities, the Managers are expressly authorized on behalf of the Company to take all of such actions without further action of the Members. 3.3 Limitations on Managers'Authority. Notwithstanding anything contained in this Agreement to the contrary, the Managers shall not have the power to take any of the following acts without the written consent or approval of Members owning at least two-thirds (2/3) of the Interests: (a) do any act in contravention of this Agreement; (b) confess a judgment against the company or execute any document containing a confession of judgment provision; (c) change or reorganize the Company into any other legal form; (d) lend Company funds to any person or entity or guaranty the loan of any person; (e) require any Member to make any contribution not provided for in this Agreement. (f) sell the Company, or real property owned by the Company, or change, or reorganize the Company into another form; (g) pledge assets of the Company as security for any personal loan or debt; (h) obtain the guarantee of a Member in connection with any indebtedness of the Company when such guarantee would be disproportionate to such Member's Interest or would not be provided by all Members. (i) admit additional Members. 3.4 Appointment and Removal of Managers;Appointment of New Managers. Initially, Frank R. Stoner and John N. Stoner shall act as co-Managers of the LLC. Any Manager may be immediately relieved of his duties and powers as Manager for any reason by written notice from the Members owning at least eighty percent (80%) of the Interests in their absolute and sole discretion. Any Manager who fails to perform in accordance with, or to comply with terms and conditions of, this Agreement, or who acts in any unlawful or grossly negligent manner, may be immediately relieved of his duties and powers as Manager by written notice from the Members owning at least two-thirds (2/3) of the Interests. Any dispute between Managers and Members over removal of a Manager for cause may, at the request of either party, be referred to a qualified third party arbitrator and the decision of the arbitrator shall be binding upon all parties to the Operating Agreement of Crozet New Town Associates,LLC Page 4 of 16 dispute . The Members owning at least two-thirds (2/s) of the Interests shall appoint a new Manager whenever the person or entity serving as Manager dies, is permanently disabled, resigns or is removed pursuant to the terms and provisions of this Section. If there are co-Managers, there shall be no requirement to appoint a new Manager unless both Managers die, are permanently disabled, resign, or are removed pursuant to the terms and provisions of this Section. 3.5 Reliance by Other Persons. Any person dealing with the Company, other than a Member, may rely on the authority of the Managers in taking any action in the name of the Company if the Managers provides to such person a copy of the applicable provision of this Operating Agreement and, if required, the resolution or written consent of the Members granting such authority, certified in writing by such Managers to be genuine and correct and not to have been revoked, superseded or otherwise amended. 3.6 Fees to Managers. No fee shall be paid to the Managers for their services managing the Company, except as otherwise specifically provided in Section 3.9. 3.7 Limitation on Liability. The Managers shall not be liable, responsible or accountable to the Company or any Member in damages or otherwise for any acts, or for any failure to act, performed in good faith; provided, however, that the Managers shall not be relieved of its fiduciary obligations to any Member and the Company imposed by law, or for fraud, bad faith or gross negligence. 3.8 Reimbursement. All expenditures incurred with respect to the organization, capitalization, financing, operation and management of the Company shall be borne by the Company, provided such costs are reflected in a budget that has been reviewed and approved in advance by Members owning at least two-thirds (2/3) of the Interests. The Managers shall be entitled to reimbursement from the Company for all such expenditures advanced by the Managers. 3.9 Members and Affiliates Dealing with the Company. Subject to obtaining any consent required under this Agreement, the Managers may appoint, employ, contract, or otherwise deal with any person, including individuals with whom the Managers or Members are related, and business entities in which a Manager or a Member has a financial interest, for transacting Company business, including any acts or services for the Company; provided, however, that the fees or other payments and terms of contracts with such parties shall not be less favorable to the Company than would be generally obtainable from unaffiliated parties. The Members shall disclose to the Company in advance any affiliations they have with any party with which the Company employs or otherwise contracts with for any purpose. 3.10 Indemnification. The Company shall indemnify the Managers to the full extent permitted by the Act. No Member or Manager shall be indemnified by the Company for acts of willful misconduct, gross negligence, or a knowing violation of the criminal law. Operating Agreement of Crozet New Town Associates,LLC Page 5 of 16 ARTICLE IV Capital Contributions and Financial Obligations of Members 4.1 Initial Capital Contributions. The capital of the Company as of the effective date of this Agreement consists of the capital contributions reflected on Schedule 1 attached hereto. 4.2 Additional Capital Contribution Requirements. The Managers shall use their best efforts to arrange for institutional financing to cover the Company's operating and capital expenses to the extent that the Company's revenues are insufficient for such purposes. If the Company requires additional funds, the Managers may, in the Managers' reasonable discretion, call for the Members to make voluntary Additional Capital Contributions to fund the Company's reasonably anticipated short term operating deficits or other reasonably anticipated near term expenses for which Company revenues are inadequate (each, a "Capital Call"). Each Member's Capital Account shall be credited with the amount of any Additional Capital Contributions made pursuant to this Section 4.2. 4.3 Failure to make Additional Capital Contributions. (a) If a Member (a "Non-Contributing Member") does not deliver to the Company the full amount of any requested Capital Call pursuant to Section 4.2 within ten (10) days of the date required, then the other Members (the "Contributing Members") may, but shall not be required to, make a priority loan to the Company in an amount equal to some, all or none of the shortfall. If any of the Contributing Members makes such a priority loan to the Company, such loan shall accrue interest thereon at the Default Rate and the Non-Contributing Member shall not be entitled to receive any distributions of Net Cash until such loan has been repaid to the Contributing Member(s) pursuant to Sections 6.1(b) and 6.2(b) hereof. Each Member hereby pledges to the Company and to each other a security interest in its Membership Interest hereunder, and authorizes the Company to record a UCC-1 Financing Statement evidencing the security interest created hereby in each such jurisdiction as may be appropriate. (b) Any loan made to the Company on behalf of a Non-Contributing Member pursuant to Section 4.3(a) which remains outstanding for six (6) months or more from the date of the loan, may be converted by the holder thereof to a capital contribution at any time after such 6-month period by written notice to the Non-Contributing Member. If the Non-Contributing Member fails to contribute to the Company an amount equal to the outstanding balance of such loan (plus interest thereon) within twenty (20) days following receipt of such notice, then the Managers may (with the assistance of qualified disinterested business appraiser selected by the Managers) recalculate the Members' respective Membership Interests to reflect the deemed purchase of an interest by the Contributing Member and the deemed sale of an interest by the Non-Contributing Member. 4.4 Capital Accounts. Each Member shall have a capital account that shall be maintained in accordance with Section 704 of the Internal Revenue Code, and the Treasury Regulations thereunder. Each Member's Capital Account shall be credited with the amount of cash and the fair market value of other property contributed by such Member to the Company's capital, net of liabilities assumed by the Company and liabilities to which such property is subject; and increased by such Member's share of Net Income and items of income and gain Operating Agreement of Crozet New Town Associates,LLC Page 6 of 16 specifically allocated to such Member (if any) pursuant to this Agreement; and decreased by the amount of cash and the fair market value of other property distributed by the Company to such Member, net of liabilities assumed by such Member and liabilities to which such property is subject; and decreased by such Member's share of Net Loss and items of loss and deduction specifically allocated to such Member (if any) pursuant to this Agreement. 4.5 Return of Capital Contributions. No Member shall be entitled to withdraw any part of such Member's capital contributions or Capital Account or to receive any distribution from the Company, except as specifically provided in this Agreement. Except as otherwise provided herein, there shall be no obligation to return to any Member or withdrawn Member any part of such Member's capital contributions to the Company so long as the Company continues in existence. 4.6 Loans not to be Treated as Capital Contributions. Loans or advances by any Member to the Company shall not be considered capital contributions and shall not increase the Capital Account of the lending or advancing Member, except as provided for in Section 4.3(b). Unless otherwise agreed by members holding 2/3rds of the Interests, the amount of any loan from a Member to the Company shall bear interest at a rate per annum equal to the greater of six percent(6%) or the Wall Street Journal (WSJ) Prime Rate plus three percent(3%). 4.7 Guaranties. If any Member guarantees any obligation of the Company and such guarantor makes any payment in connection with such guaranty, the Company hereby indemnifies such Member to the full extent of the Company's assets, and no distributions shall be made to the Members until the guarantor has been fully reimbursed for such payment (together with interest at the Default Rate) in connection with the guaranty; provided, however, that no Member shall be required to contribute money or other property to the Company to enable the Company to satisfy its obligation to reimburse the guarantor. 4.8 Compensation for Guarantees. If some Members provide guarantees on behalf of the Company and others do not, or, if some Members provide guarantees that are disproportionate to their Membership Interest, and other Members do not, the Members providing such guarantees shall be entitled to compensation for the guarantee when others do not make such guarantee or it is disproportionate to the interest held by the guaranteeing Member. The rate of compensation shall not exceed the rate that would be charged by an unrelated third party and be in general accordance with accepted practice within the industry. Compensation must be approved by the Managers. If all Members are providing unlimited or proportional guarantees, no member shall be entitled to a fee for his/her guarantee. ARTICLE V Profit and Loss Allocations 5.1 Allocations Generally. After giving effect to the special allocations set forth in Sections 5.2 and 5.3 hereof, Profits or Losses for any fiscal year shall be allocated in the following order and priority: Operating Agreement of Crozet New Town Associates,LLC Page 7 of 16 (a) Profits. Profits shall be allocated in the following order and priority: (i) First, to the Members who received prior allocations of Losses pursuant to Section 5.1(b)(ii), in the reverse order that such prior Losses were allocated, until the cumulative Profits allocated pursuant to this Section 5.1(a)(i) equal the cumulative prior allocations of Losses under Section 5.1(b)(ii). (ii) Next, to the Members who received distributions pursuant to Sections 6.1 and 6.2 until the cumulative Profits allocated pursuant to this Section 5.1(a)(ii) equal the cumulative amount of such distributions made pursuant to Sections 6.1 and 6.2. Allocations of Profit pursuant to this Section 5.1(a)(ii) shall be made in the same order as the distributions made pursuant to Sections 6.1 and 6.2. (iii) Next, to the Members, pro rata, according to their relative Interests. (b) Losses. Except as provided in Section 5.1(c), Losses shall be allocated in the following order and priority: (i) First, to the Members who received prior allocations of Profits pursuant to Section 5.1(a)(iii) above, in the reverse order that such Profits were allocated, until the cumulative Losses allocated pursuant to this Section 5.1(b)(i) equal the cumulative prior allocations of Profits under Section 5.1(a)(iii). (ii) Next,to the Members,pro rata, according to their relative Interests. (c) In the event that the allocation of Losses pursuant to Section 5.1(b) above would result in a Member having an Adjusted Capital Account Deficit at the end of any fiscal year and at such time there are other Members who will not, as a result of such allocation, have an Adjusted Capital Account Deficit, then all Losses in excess of the amount which can be allocated until the foregoing circumstance occurs shall be allocated among the Members who do not have Adjusted Capital Account Deficits on a proportionate basis according to their Interests until each such Member would similarly be caused to have an Adjusted Capital Account Deficit. At such time as a further allocation of Losses can not be made without causing some Member to have an Adjusted Capital Account Deficit, then all remaining Losses for such fiscal year shall be allocated in accordance with the ratio described in Section 5.1(b)(iii) above. 5.2-5.6 Intentially removed 5.7 Returns and Other Elections. The Managers shall cause the preparation and timely filing of all tax returns required to be filed by the Company pursuant to the Code and all other tax returns deemed necessary and required in each jurisdiction in which the Company does business. Copies of such returns, or pertinent information therefrom, shall be furnished to the Members within a reasonable time after the end of the Company's fiscal year. All elections permitted to be made by the Company under federal or state laws, including but not limited to any election under Section 754 of the Code, shall be made by the Managers. Operating Agreement of Crozet New Town Associates,LLC Page 8 of 16 ARTICLE VI Distributions 6.1 Distributions. All distributions of cash or other property, whether Net Cash or Capital Proceeds (except distributions upon the Company's dissolution which shall be governed by Article VII), shall be made in the following order and priority: (a) First, to any Member or other guarantor who made a payment on account of any guaranty described in Section 4.9 to repay the unpaid principal balance and any accumulated but unpaid interest(at the Default Rate) on such guaranty payment; (b) Next, to any Contributing Member who made a loan pursuant to Section 4.3 (which loan was not converted to a capital contribution by a Contributing Member, to repay the unpaid principal balance and any accumulated but unpaid interest on such loan; (c) Finally, to the Members, pro rata in accordance with their respective Interests. Amounts paid as interest under Section 6.1(a) or Section 6.1(b) shall be treated as guaranteed payments under Section 707(c) of the Code. 6.2 Tax Distributions. The Company shall distribute to the Members the amount necessary (as reasonably determined by the Managers) to cover the income taxes payable by the Members on income earned by the Company that is allocated and taxable to the Members assuming each Member is in the highest combined individual federal, state and local tax bracket applicable to any Member. Distributions under this Section 6.2 shall be made when such taxes are due, including the payment of estimated taxes, and shall be netted against distributions made under Sections 6.1. Amounts otherwise distributable to a Member pursuant to this Section 6.2 shall be reduced by all prior distributions made to a Member pursuant to Sections 6.1. 6.3 Reserves. The Managers shall have the right to determine how much Net Cash, if any, of the Company shall be distributed among the Members each year. The Managers shall have the right to establish, maintain and expend reserves to provide for working capital, future investments, debt service and such other purposes as the Managers deems necessary or advisable. 6.4 Timing. Except as provided in Sections 6.2 and Article VII hereof, all distributions of cash and property shall be made at such times and in such amounts as determined by the Managers. 6.5 Withholding. All other provisions hereof notwithstanding, the Company's obligation, and the Managers' authority, to make any distribution is subject to the restrictions governing distributions under the Act and such other pertinent governmental restrictions as are now and may hereafter become effective. All amounts withheld pursuant to the Code or any provisions Operating Agreement of Crozet New Town Associates,LLC Page 9 of 16 of state or local tax law with respect to any payment or distribution to the Members from the Company shall be treated as amounts distributed to the relevant Member or Members pursuant to this Article VI. ARTICLE VII Term and Termination of the Company 7.1 Term of the Company. The term of the Company shall continue until terminated as provided in this Agreement. 7.2 Events of Dissolution. The Company shall be dissolved upon the occurrence of the first to occur of any of the following events: (a) the approval of Members owning at least eighty percent (80%) of the Interests (b) the entry of a decree of judicial dissolution of the Company as provided in the Act; (c) death of Member, when such Member's permitted assignee or transferee requests withdrawal from the LLC and no existing Member or new assignee/transferee is willing or able to purchase the deceased Member's interest (d) the Company becoming insolvent or bankrupt; or (e) the Managers determining that the Company should be dissolved. 7.3 Conclusion of Affairs. In the event of the dissolution of the Company, the Managers shall proceed promptly to wind up the affairs of the Company. Except as otherwise provided in this Agreement, the Members and their successors in interest shall continue to share distributions and allocations during the period of winding up in the same manner as before the dissolution. The Managers shall have reasonable discretion to determine the time, manner and terms of any sale or sales of Company property pursuant to such winding up, having due regard to the activity and the condition of the Company and relevant market and financial and economic conditions, and consistent with its obligations to the Members. 7.4 Liquidating Distributions. After paying or providing for the payment of all debts and liabilities of the Company and all expenses of winding up, and subject to the right of the Managers to set up such reserves as it may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company, the proceeds of the liquidation, and any other remaining assets of the Company, shall be distributed to or for the benefit of the Members (and their successors in interest) in accordance with Section 6.1. Upon any such dissolution, all assets of the Company shall be sold and the proceeds distributed, or the assets distributed in kind if the Members (other than an Withdrawing Member or a Member who is in default of a material provision of this Agreement) unanimously so elect. Operating Agreement of Crozet New Town Associates,LLC Page 10 of 16 7.5 Termination. Within a reasonable time following the completion of the winding up of the Company, the Managers shall supply to each Member a statement which shall set forth the assets and liabilities of the Company as of the date of complete winding up and each Member's portion of the distributions pursuant to this Agreement. Upon completion of the winding up of the Company and the distribution of all Company assets, the Company shall terminate, and the Managers shall execute and record a Certificate of Cancellation of the Company, as well as any and all other documents required to effectuate the dissolution and termination of the Company 7.6 No Release from Obligations. No dissolution of the Company shall release or relieve any of the parties hereto of their contractual obligations under this Operating Agreement. 7.7 No Recourse Against Members. Except as provided by law, upon dissolution, each Member shall look solely to the assets of the Company for the return of its, his or her Capital Contribution. If the Company property remaining after the payment or discharge of the debts and liabilities of the Company is insufficient to return the Capital Contribution of each Member, such Member shall have no recourse against any other Member. ARTICLE VIII Assignment, Death, Withdrawal and Restrictions on Transfer 8.1 Assignment Generally. Each Member hereby covenants and agrees not to sell, assign, transfer, mortgage, pledge, encumber, hypothecate or otherwise dispose of all or any part of such Member's Interest in the Company to any person, firm, corporation, trust or other entity without the advance written consent of the Managers. 8.2 Permitted Transfers of Interests. Any Member may, by will or trust agreement, provide that his or her Interest will pass to his or her spouse or children, or to a trust for the benefit of his or her spouse or children, upon such Member's death. No permitted assignee or transferee of all or part of an Interest in the Company shall have the right to become a substituted Member unless: (a) the assignee or transferee has executed an instrument reasonably satisfactory to the Managers accepting and adopting the terms and provisions of this Agreement; (b) the assignor or the assignee or transferee has paid any reasonable expenses incurred by the Company in connection with admission as a substituted Member; and (c) the Managers consent to such person becoming a substituted Member. 8.4 Members Acquiring Membership Interest from Company. The Managers may, with the consent of all of the Members, admit additional Members who will acquire an Interest from the Company, upon payment of an initial Capital Contribution in such amount as the Operating Agreement of Crozet New Town Associates,LLC Page 11 of 16 '4410' '441110e Managers deems appropriate and upon execution of this Operating Agreement by the new Member. 8.5 Effect of Prohibited Action. Any transfer or other action in violation of this Article shall be void ab initio and of no force or effect whatsoever. 8.6 Rights of an Assignee. If an assignee or transferee of an Interest is not admitted as a Member because of the failure to satisfy the foregoing requirements of this Article VIII, such assignee shall nevertheless be entitled to receive such distributions from the Company as the assigning Member would have been entitled to receive under Articles VI and VII of this Operating Agreement with respect to such Interest had the assigning Member retained such Interest. 8.7 Absolute Prohibition. Notwithstanding any other provision in this Article VIII, the Interest of a Member, in whole or in part, or any rights to distributions therefrom, shall not be sold, exchanged, conveyed, assigned, pledged, hypothecated, subjected to a security interest or otherwise transferred or encumbered, if in the reasonable opinion of counsel for the Company, as a result thereof, the Company would be terminated for federal income tax purposes or such action would result in a violation of federal or state securities laws. 8.8 Withdrawal Event. (a) Upon the occurrence of a Withdrawal Event (as such term is defined in Section 8.8(f)), the affected Member (the "Withdrawing Member") shall give notice to the Managers and the other Members of the existence of such a Withdrawal Event within fifteen (15) days after the date of such Withdrawal Event; and the non-Withdrawing Members shall have an option to purchase all, but not less than all, of the Withdrawing Member's Interest at the price and on the terms and conditions set forth in this Section 8.8, and to continue the Company. In the event of failure or refusal on the part of the Withdrawing Member to give such notice, the non- Withdrawing Members may give the notice in order to begin the option periods provided in this Section. Within sixty (60) days after receipt of such notice, the non-Withdrawing Members (or any of them) shall give the Withdrawing Member written notice of his or their desire to purchase the Withdrawing Member's Interest. The parties shall then proceed in good faith to attempt to negotiate the terms and purchase price of the Interest. If the purchase price and terms are agreed upon by the parties, then the purchase price shall be paid and the Interest transferred in accordance with such agreement. (b) If the Members fail to reach agreement on the value of an Offering Member's Interest within thirty (30) days of the Withdrawal Event, the Company shall be appraised by a disinterested qualified appraiser selected by the Managers no later than forty (40) days after the Withdrawal Event; the cost of which appraisal shall be paid by the Withdrawing Member and the Non-Withdrawing Members in the same proportion as their Interests bear to one another. The appraiser shall proceed to promptly determine the fair market value of the Withdrawing Member's Interest, taking into consideration any outstanding indebtedness, liabilities, liens and obligations of the Company, any outstanding loans of the Company to the Withdrawing Member, and the relative Interests of the Members. However, the value of the Withdrawing Member's Operating Agreement of Crozet New Town Associates,LLC Page 12 of 16 interest shall not be reduced or increased based on the percentage of ownership. The determination of such fair market value by the appraiser shall be final and binding upon all parties. (c) Within thirty (30) days following receipt of the appraiser's report, the non- Withdrawing Members shall notify the Withdrawing Member whether they elect to purchase the Withdrawing Member's Interest at the appraised fair market value. If the non-Withdrawing Members elect to purchase the Withdrawing Member's Interest, the purchase price shall be paid in full in cash on a date set by the non-Withdrawing Members within sixty (60) days after the later of the date of the notice of election to purchase or the date of receipt of the appraiser's report. Upon the payment of the purchase price, the Withdrawing Member shall execute and deliver such assignments and other instruments as may be reasonably necessary to evidence and render fully effective the transfer of the affected Interest, it being understood that the transferees shall assume (as between the parties and only to the extent the Withdrawing Member may have personal liability) the Withdrawing Member's portion of Company obligations, as well as his or its individual obligations with regard to the Company, other than income tax liabilities of the Withdrawing Member and liabilities arising out of willful misconduct or gross negligence. The non-Withdrawing Members may also decide that they shall not exercise such option but that such option shall be assigned to any other person or entity selected by the non-Withdrawing Members. If more than one non-Withdrawing Member elects to purchase the Withdrawing Member's Interest, the Withdrawing Member's Interest, and the purchase price for such interest, shall be allocated among the non-Withdrawing Members who have elected to acquire such interest. (d) If none of the non-Withdrawing Members, or their permitted assignees, have exercised their option during the sixty (60) day period, the option shall expire at the end of such sixty (60) day period and the Withdrawing Member shall continue as a Member. (e) The Members agree that the methods provided for in this Section 8.8 to determine the price of a Withdrawing Member's Interest are fair and equitable, both as to dates used and in all other respects; and are administratively superior to other methods; and each Member waives any rights he may have or be said to have to use any other method or procedure to determine the value of such interest. (f) The following events shall constitute "Withdrawal Events" as used in this Section 8.8: (i) a Member becoming insolvent or bankrupt (in which case such insolvent or bankrupt Member shall be the Withdrawing Member), (ii) a deadlock in the management of the Company (in which case all of the Members shall be eligible to be the Withdrawing Members and any one or more of the Members may elect to purchase the Interest(s) of the other Member(s) as provided in this Section 8.8), or, (iii) a written approval for withdrawal, signed by the withdrawing Member and the Managers. If the permitted assignee or transferee of a deceased or mentally incompetent Member's interest requests withdrawal from the LLC and no existing Member(s) or permitted transferee elects to purchase the interest under the terms and conditions herein, the Company shall be dissolved in accordance with Article VII Operating Agreement of Crozet New Town Associates,LLC Page 13 of 16 ARTICLE IX Administrative Provisions 9.1 Principal Office. (a) The principal place of business and principal office of the Company shall be 300 Second Street NE, Charlottesville, Virginia 22902, which is located in the City of Charlottesville, Virginia. The Company may relocate the principal place of business and principal office and have such additional offices as the Members may deem advisable. (b) The registered office of the Company in Virginia shall be Milestone Partners, 300 Second Street NE, Charlottesville, Virginia 22902, and the agent at such address shall be Frank R. Stoner IV. The Managers shall have the power,on behalf of the Company, to designate, where required, a registered agent (or other agent for receipt of service of process) in each state or other jurisdiction in which the Company transacts business and to designate, to the extent required, an office, place of business, or mailing address, within or without that state or other Jurisdiction for such purpose. 9.2 Bank Accounts. (a) Funds of the Company shall be deposited in such account or accounts as shall be determined by the Managers. Funds may be withdrawn from such accounts only for bona fide and legitimate Company purposes. Company funds may from time to time be invested in such securities, money market funds, certificates of deposit, or other liquid assets as the Managers deems appropriate. (b) The Managers shall not be accountable or liable for any loss of Company funds resulting from failure or insolvency of the depository institution, so long as the deposit of such funds was in compliance with this Agreement. 9.3 Books and Records. (a) At all times during the term of the Company, the Managers shall keep, or cause to be kept, full and accurate books of account, records and supporting documents, which shall reflect, completely, accurately and in reasonable detail, each transaction of the Company (including, without limitation, transactions with the Managers or affiliates). The books of account shall be maintained and tax returns prepared and filed based on the method of accounting determined by the Managers. The books of account, records and all documents and other writings of the Company shall be kept and maintained at the principal office of the Company. Each Member or his designated representative shall, upon reasonable notice to the Managers, have access to such financial books, records and documents during reasonable business hours and may inspect and make copies of any of them at his own expense. Operating Agreement of Crozet New Town Associates,LLC Page 14 of 16 (b) The Managers shall cause the Company to keep at its principal office all books and records required to be maintained by the Act and the other laws of tile Commonwealth of Virginia. 9.4 Notices. Unless otherwise provided herein, any offer, acceptance, election, approval, consent, certification, request, waiver, notice or other communication required or permitted to be given hereunder (hereinafter collectively referred to as a "Notice"), shall be given by enclosing the same in an envelope addressed to the Member to whom the Notice is to be given at the appropriate address set forth on Schedule 1 hereto or at such other address as any Member hereafter may designate to the others in accordance with the provisions of this Section 9.4, and delivered in person or deposited in the U.S. Mail, postage prepaid or by UPS or FedEx. In addition, any other Members shall be sent a copy of all such Notices, by delivery in person or by U.S. Mail, postage prepaid or by UPS or Federal Express. 9.5 Tax Year and Accounting Matters. The tax year of the Company shall be the calendar year. The Company shall adopt methods of accounting determined by the Managers upon the advice of the certified public accounting firm servicing the Company. 9.6 Tax Elections. The Managers may cause the Company to make, refrain from making, or revoke all tax elections provided for under the Code and the Treasury Regulations. 9.7 Tax Matters Member. The Managers shall designate the person(s) who will serve as the "Tax Matters Member" for federal income tax purposes. ARTICLE X Miscellaneous Provisions 10.1 Amendment. Except as provided by law or as otherwise set forth herein, this Agreement may only be modified or amended by a written instrument which evidences the approval of the all the Members. .Notwithstanding anything to the contrary in this Agreement, Schedule 1 hereto may be amended from time to time by the Managers to the extent required to reflect accurately the then current status of the information contained thereon. 10.2 Intentionally removed. 10.3 Severability. Each provision of this Agreement shall be considered severable, and if for any reason any provision or provisions hereof are determined to be invalid, such invalidity shall not impair the operation of, or affect, those portions of this Agreement which are valid, and this Agreement shall remain in full force and effect and shall be construed and enforced in all respects as if such invalid or unenforceable provision or provisions had been omitted. 10.4 Burden and Benefit upon Successors. Except as expressly otherwise provided herein, this Agreement is binding upon, and inures to the benefit of, the parties hereto and their respective heirs, executors, administrators, personal and legal representatives, successors and permitted assigns. Notwithstanding anything in this Agreement to the contrary, the covenants, Operating Agreement of Crozet New Town Associates,LLC Page 15 of 16 agreements and undertakings of the Members, including by way of illustration and not limitation, the covenants, agreements and undertakings set forth in Section 4.2. are not for the benefit of, and shall not he enforceable by, any creditor of the Company or any Member. It is the Members' intent to preserve and enjoy to the fullest extent allowed by law the insulation and exculpation from personal liability for Company losses and obligations provided for in the Act. 10.5 Intentionally removed 10.6 Counterparts. This Agreement may be executed in any number of counterparts. each of which shall be an original but all of which together shall constitute one instrument, binding upon all parties hereto. notwithstanding that all of such parties may not have executed the same counterpart. IN WITNESS WHEREOF, the parties have executed this Agreement. MEMBERS: MILESTONE IA ESTMrS1-,6R0 1P.LLC B : Alp A A FRA.' . STONER, IV, MANAGING MEMBER JOHNN. STONER LAWRENCE D. I JOWELL Operating Agreement of Crozet New Town Associates, LEC Page 16 of 16 agreements and undertakings of the Members,including by way of illustration and not limitation, the covenants, agreements and undertakings set forth in Section 4.2, are not for the benefit of, and shall not be enforceable by,any creditor of the Company or any Member. It is the Members' intent to preserve and enjoy to the fullest extent allowed by law the insulation and exculpation from personal liability for Company losses and obligations provided for in the Act. 10.5 Intentionally removed 10.6 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart. IN WITNESS WHEREOF,the parties have executed this Agreement. MEMBERS: MILESTONE INVESTMENT GROUP,LLC BY: FRANK R.STONER,IV,MANAGING MEMBER JOHN N.STONER ,LA NCE D.HOWELL Operating Agreement of Crozet New Town Associates,LLC Page 16 of 16 EXHIBIT A TO OPERATING AGREEMENT OF CROZET NEW TOWN ASSOCIATES, LLC GLOSSARY OF TERMS For purposes of this Agreement, the following terms shall have the meanings indicated. This is not an exclusive list of defined terms for purposes of this Agreement. Some terms are defined elsewhere in this Agreement. "Act" means the Limited Liability Company Act, Code §§ 13.1-1000 through 13.1-1073 (as amended from time to time), as in effect in Virginia (or any corresponding provisions of succeeding law). "Additional Capital Contribution" shall mean any Capital Contribution delivered by a Member pursuant to Section 4.2 or Section 4.3 hereof, whether requested or required by the Managers. "Adjusted Capital Account" means, with respect to any Member or assignee, such Person's Capital Account (as defined below) as of the end of the relevant period increased by any amounts which such Person is obligated to restore, or is deemed to be obligated to restore pursuant to the next to last sentences of Treasury Regulations §§ 1.704-2(g)(1) (share of minimum gain) and 1.704-2(i)(5) (share of Member nonrecourse debt minimum gain). "Adjusted Capital Account Deficit" has the meaning ascribed thereto in Section 1.704- 1(b)(2)(ii)(d) of the Treasury Regulations. "Affiliate" means any person or entity controlling or controlled by or under common control with the Company including, without limitation (i) any person who has a familial relationship, by blood, marriage or otherwise with any Member or employee of the Company, or any affiliate thereof and (ii) any person which receives compensation for administrative, legal or accounting services from the Company or any affiliate thereof. For purposes of this definition, "control" when used with respect to any specified entity, means the ownership of greater than fifty percent (50%) of the ownership interests of such entity, and/or the power to direct the management and policies of such entity, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; the terms "controlling" and "controlled" have meanings correlative to the foregoing "Agreed Value" shall mean with respect to any noncash asset of the Company an amount determined and adjusted in accordance with the following provisions: Operating Agreement of Crozet Redevelopment Associates,LLC Exhibit A-Page 1 of 7 °•dr (a) The initial Agreed Value of any noncash asset contributed to the capital of the Company by any Member shall be its gross fair market value, as agreed to by the contributing Member and the Company. (b) The initial Agreed Value of any noncash asset acquired by the Company other than by contribution by a Member shall be its adjusted basis for federal income tax purposes. (c) The initial Agreed Values of all the Company's noncash assets, regardless of how those assets were acquired, shall be reduced by depreciation or amortization, as the case may be, determined in accordance with the rules set forth in Treasury Regulations § 1.704-1(b)(2)(iv)(f) and (g). (d) The Agreed Values, as reduced by depreciation or amortization, of all noncash assets of the Company, regardless of how those assets were acquired, shall be adjusted from time to time to equal their gross fair market values, as determined by the Managers. For purposes of determining the fair market value of a security as of a particular day pursuant to this definition of Agreed Value, the fair market value of a security that is traded on a national exchange shall be the closing price on the date prior to the date of the valuation, and the fair market value of a security that is traded over-the-counter shall be the closing bid price on the date prior to the date of the valuation. If the exchange or over-the-counter market is not open on the date prior to the date a valuation is required, the values shall be determined as of the next preceding date on which the exchanges or markets were open. Closing prices and closing bid prices shall be determined from whatever publicly available source the Managers deem reliable. Unless the Managers specifically determine a different fair market value, the fair market value of any Company asset that is not cash or a marketable security shall be deemed to equal such asset's adjusted tax basis. "Agreement"means this Operating Agreement as amended from time to time. "Capital Account" means with respect to each Member or an assignee of a Member an account which shall be maintained and adjusted in accordance with the following provisions: (a) To each Person's Capital Account there shall be credited such Person's Capital Contributions, such Person's distributive share of Profits, any other items in the nature of income or gain that are specially allocated to such Person pursuant to the Treasury Regulatory Allocations hereof, and the amount of any Company liabilities that are assumed by such Person or that are secured by such Company assets distributed to such Person. (b) To each Person's Capital Account there shall be debited the amount of cash and the Agreed Value of any Company assets distributed to such Person pursuant to any provision of this Agreement, such Person's distributive share of Losses, any other items in the nature of loss or deduction that are allocated to such Person pursuant to the Regulatory Allocations hereof, and the amount of any liabilities of such Person that are assumed by the Company or that are secured by any property contributed by such Person to the Company. Operating Agreement of Crozet Redevelopment Associates,LLC Exhibit A-Page 2 of 7 In the event that any Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Interest. In the event the Agreed Values of the Company assets are adjusted pursuant to the provisions hereof, the Capital Accounts of all Members shall be adjusted simultaneously to reflect the aggregate adjustments as if the Company recognized Profits or Losses equal to the amount of such aggregate adjustment. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulation §1.704-1(b), and shall be interpreted and applied in a manner consistent with such regulations. "Capital Contribution" means, with respect to any Member, the amount of money and the initial Agreed Value of any property (other than money) contributed to the Company with respect to the Interest of such Member, including Additional Capital Contributions. The initial capital of the Company consists of the capital contributions of the Members, plus any capital contributed by Members. Each Member's initial capital account shall be equal to capital contributed. "Capital Proceeds" means any proceeds from any capital transaction of the Company, including, but not limited to, sales of Company assets outside of the ordinary course of business, any sale of all or any portion of the Project or the Property, and refinancings of Company indebtedness. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor federal revenue law. "Company" means Crozet New Town Associates, LLC, a Virginia limited liability company. "Company Minimum Gain" shall have the meaning set forth in Treasury Regulations Section 1.704-2(b)(2)and 1.704-2(d)with respect to partnership minimum gain. "Contributing Member" shall have the meaning set forth in Section 4.3 hereof. "Default Rate" the greater of six percent (6%) or the Wall Street Journal (WSJ) Prime Rate plus three hundred basis points (3%). "Depreciation" means, for each fiscal year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other Operating Agreement of Crozet Redevelopment Associates,LLC Exhibit A-Page 3 of 7 period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managers. "Event of Bankruptcy" shall mean, with respect to any Person, the occurrence of any of the events set forth below: (a) Making an assignment for the benefit of creditors; (b) Filing a voluntary petition in bankruptcy; (c) Being adjudged bankrupt or insolvent or having entered against him an order for relief in any bankruptcy or insolvency proceeding; (d) Filing a petition or answer seeking for him any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law or regulation; (e) Seeking, consenting to or acquiescing in, the appointment of a trustee or receiver for, or liquidation of the Person or of all or any substantial part of his properties; (f) Filing an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Person in any proceeding described in (a) through (e) above; or (g) The continuation of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, for one hundred twenty (120) days after the commencement thereof or the appointment of a trustee, receiver or liquidator for the Person or all or any substantial part of the Person's properties without the Person's agreement or acquiescence, which appointment is not vacated or stayed for one hundred twenty (120) days or, if the appointment is stayed, one hundred twenty (120) days after the expiration of the stay during which period the appointment is not vacated. "Fiscal Year" means, with respect to the first year of the Company, the period beginning upon the formation of the Company and ending on the next December 31, with respect to subsequent years of the Company, the calendar year, and, with respect to the last year of the Company, the portion of the calendar year ending with the date of the final liquidating distributions. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes,except as follows: Operating Agreement of Crozet Redevelopment Associates,LLC Exhibit A-Page 4 of 7 (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 Member who contributes such asset and the Managers; (b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by the Managers, as of the following times: (i) the acquisition of an additional interest in the Company following its initial capitalization by any new or existing Member in exchange for more than a de minimus Capital Contribution or for services; (ii) the distribution by the Company to a Member of more than a de minimus 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-I(b)(2)(ii)(g); provided, however, that the adjustments pursuant to clauses (i) and (ii) above shall be made only if the 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 the gross fair market value of such asset on the date of distribution; 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 the last sentence of Section 5.2 hereof; provided, however, that Gross Asset Values shall not be adjusted under this paragraph) d to the extent the Managers determine that an adjustment pursuant to paragraph (b) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph(d). If the Gross Asset Value of an asset has been determined or adjusted pursuant to paragraph (a), (b), or (d) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses. "Interest" shall mean all of the rights of each Member or assignee with respect to the Company. With respect to any provision of this Agreement requiring the vote, approval, consent or similar action by the Members or a group of Members with respect to any matter, unless otherwise specified, reference to a majority (or a specified percentage) in Interest of the Members or group thereof means Members whose Interests constitute a majority (or specified percentage) of the Interests of the Members or group of Members, determined as the date of such vote, approval, consent or action unless an earlier record date has been established for determining the Members entitled to participate in such action, in which case the determination shall be made as of the earlier record date. "Interests"means the Interests owned by one or more of the Members. "Managers" means Frank R. Stoner and John N. Stoner, initially, and either of them, or any successor, may be referred to herein as a"Manager". Operating Agreement of Crozet Redevelopment Associates,LLC Exhibit A-Page 5 of 7 "Members" means Milestone Investment Group, LLC, John N. Stoner, Lawrence D. Howell and such other persons or entities who may be admitted as Members from time to time, and their respective permitted successors and assigns, subject to the provisions of this Agreement. "Member Nonrecourse Debt" shall have the meaning set forth in Treasury Regulations Section 1.704-2(b)(4) with respect to partner nonrecourse debt. "Member Nonrecourse Debt Minimum Gain" shall mean 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 Section 1.704-2(i)(3) of the Treasury Regulations. "Member Nonrecourse Deductions" has the meaning set forth in Treasury Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2). "Net Cash" means the gross cash proceeds to the Company from all sources (including without limitation Company operations, and reserves from prior periods), including cash received as Capital Proceeds, less the portion thereof used to pay or establish reasonable reserves for all Company expenses including insurance, taxes, working capital, debt service, and contingencies, all as determined in the Managers' reasonable discretion. "Net Cash" shall not be reduced by depreciation, amortization, cost recovery deductions or similar allowances. "Net Income" or "Net Loss" shall mean the income or loss, as the case may be, of the Company for a period as determined in accordance with Section 703(a)(1) of the Code, including each item of income, gain, loss or deduction required to be separately stated, but excluding gain or loss from sale of the Company's assets not in the ordinary course of business and items specifically allocated under Article V of this Agreement. "Non-Contributing Member" shall have the meaning set forth in Section 4.3 hereof. "Nonrecourse Deductions" shall have the meaning set forth in Sections 1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations. "Nonrecourse Liability" shall have the meaning set forth in Section 1.704-2(b)(3) of the Treasury Regulations. "Person" means any natural person, Company (whether general or limited and regardless of the jurisdiction in which formed or whose laws govern the Company), trust, estate, association, corporation, limited liability Company, custodian, nominee, governmental instrumentality or agency, body politic or any other entity in its own or any representative capacity. "Prime Rate" means that interest rate reported in the Wall Street Journal as the prime rate of interest; changes in the Prime Rate are to be effective on the date of each such change. Operating Agreement of Crozet Redevelopment Associates,LLC Exhibit A-Page 6 of 7 "Profits and Losses" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code §703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code § 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 or Losses pursuant to this definition shall be added to such taxable income or loss; (b) Any expenditures of the Company described in Code §705(a)(2)(B) or treated as Code § 705(a)(2)(B) expenditures pursuant to Treasury Regulation §1.704- 1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this Section, shall be subtracted from such taxable income or loss; (c) Gain or loss resulting from any disposition of any Company asset with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Agreed Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Agreed Value; (d) 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 above; and (e) Notwithstanding any other provision of this definition, any items that are allocated pursuant to the Regulatory Allocations shall not be taken into account in computing Profits or Losses, except as provided in the Regulatory Allocations Exhibit. "Regulatory Allocations" means those allocations of items of Company income, gain, loss or deduction set forth on the Regulatory Allocations Exhibit and designed to enable the Company to comply with the alternate test for economic effect prescribed in Treasury Regulations § 1.704-1(b)(2)(ii)(d), and the safe-harbor rules for allocations attributable to nonrecourse liabilities prescribed in Treasury Regulations § 1.704-2. "Treasury Regulations" means the Income Tax Treasury Regulations promulgated under the Code, as such Treasury Regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Unreturned Capital" means on any date the excess, if any, of(a) the aggregate Capital Contributions of a Member as of such date, over (b) the aggregate distributions to such Member pursuant to Section 6.1(b) hereof as of such day. Operating Agreement of Crozet Redevelopment Associates,LLC Exhibit A-Page 7 of 7 SCHEDULE 1 Members' Names,Addresses, Interests, and Capital Contributions as of November 1, 2014 Initial Name and Address Interest Capital Contributions Milestone Investment Group, LLC by: Frank R. Stoner 300 Second Street NE 12.5% $12.50 Charlottesville, VA 22902 Manager John N. Stoner 230 Chestnut Oak Lane 12.5% $12.50 Charlottesville, VA 22903 Manager Lawrence D. Howell Grundwiesstrasse 32 75% $75.00 8700 Kuesnacht,Switzerland TOTALS 100% $100.00 EXHIBIT B The Property -;,,. "`"7 ,,,,///iA--ii.----ir------lii ,„,-.-,,-,-1 4 ''' ,,,,,c,/4/ ‘;,',-..,'.z.,,,/,ii/ ,..,„/e,4. cli_,J icol .,,-; , ,./I yrs° ''.---4)('`)/is,,' ,--,,,,,,,,, ,o,------1 _:,r,„,.?,up''' ,,* ,„, ..--'.7 ;'''' /c\y\N-'5:>. 4,ivf,,... ."-',' k „./4„:::4 ., ,,,.a ,.„....„3. .0 cy i 00 'S'f' OR E AVE e �y ` '` ester A,...lp cuelkl,l [� f,:::\ ..'� 9r1' 'i \\., �,,� L I.-...,..., .--a-1 p b �f. z Crozet,, /. � (/ � '� rpzeUPo`t ofmc ',-, q ei �t S[at o. C ' ,...:,,\ jj I ya. ,'">'4."-" �a �,"`v.� � IHR 9 NOJC,D RD ,, _ � � � � -,..,.w :UNFL E•LN dil- ., ..z. ,„_,,,.......,. ....,,. *All f a ( q . r fi 1#11 11 II/ ll''''1 q 'E 'il'4i1.-1'.!.C.:;'''';.::'.!7'''';;44;41i4ljr— \___,________. ,,,, &...........,,..tzli.L,/III b --- £,p r•, �, '1'°f a ,f� ,, 411,0$1' ii YAG v,JLII - a,;o u' ite � �. attars.. ilk ...p73_0(zit. it ,...,....,....._.,,c—ir-,n, I �wx Ybemeneornces Ae �ir # v.xe� ifit),!/1717 -.0.,:gotoi00it Tip,,,f. ` �.b'-:1,..„...�° M.o�+m,aswavwmas.rnv•e�.mre�v mecanma.v,<ao,avim�m<�aoo,e�sa2� EXHIBIT C Vision and Intent The Barnes Lumber Company Property and the CSX Property, shown in Exhibit B, are located in the heart of downtown Crozet, in western Albemarle County, Virginia. Crozet had a population of approximately 6,000 residents in 2013. Albemarle County estimates that the population will grow to a maximum of 16,000 and has labeled Crozet as one of its "designated growth areas". The members of Crozet New Town Associates believe that, over time, increasing population will create demand for more housing and commercial growth and that property values in downtown Crozet will appreciate over time at a rate higher than the market average. In addition, the Members believe that Crozet needs and will, over time, support a downtown district that includes retail, commercial (office & flex) and residential space in an attractive urban form that is appropriate in scale for a small town. The Members believe that high quality public and park space will be essential to the vitality and success of downtown Crozet. The goals of the Company can broadly be described as follows: 1. Add value to assets acquired by the Company. The means by which we intend to add value may include, but is not limited to, the following: a. Rezoning from current Heavy Industrial (HI) designation (with proffered restrictions) to Downtown Crozet District(DCD) with conditions, as needed,to insure that the rezoned property is marketable and can be developed profitably. b. Cash proffer relief—in conjunction with any rezoning effort, the Company will seek relief from the financial burden of cash proffers and seek to amend the County's current cash proffer policy to help facilitate such relief. c. Special Use Permits—The Company will seek special use permits or zoning text amendments to modify the current zoning code in ways that increase flexibility of use within the Downtown Crozet District. If these are not possible for the entire property, the Company may seek incremental rezonings or permits for specific sites on the property. d. Community engagement—The Company will encourage constructive dialog with representatives of the Crozet community e. Community investment—The Company will encourage the Community to participate in downtown development by establishing a community based entity that can advocate for downtown Crozet, raise funds from public and private sources, and invest in high priority initiatives like public infrastructure,job creation and affordable housing. f. High quality design—The Company will encourage participation of leading design and development consulting firms to help develop and market an attractive, functional vision for downtown Crozet that has broad based community support and creates the vitality necessary to foster more demand and development at higher prices in downtown. g. A long range parking plan for downtown Crozet—The Company will encourage Albemarle County to develop and implement a long range parking plan for downtown Crozet that supports the dense urban forms that are encouraged by the Crozet Master Plan and the current zoning ordinance. h. Vehicular connection to Rte 240 at the east end of the Property—The Company will encourage continued dialog and research regarding the feasibility of a road connection under the railroad tracks at the east end of the Property. It may fund, or partially fund an engineering study to determine feasibility and cost. The connection will provide a much needed alternative to the single point of access from 240, under the railroad off Crozet Avenue. i. Economic Development—The Company will encourage Albemarle County to agressively seek appropriate businesses to locate in Crozet and provide the economic incentives to be competitive with other localities that are seeking the same or similar businesses. j. Speculative Development in strategic locations within the property, where financially justified and deemed necessary to help create a sense of place and/or help stimulate other development on the property. For example, the Company may develop certain residential areas with the expressed purpose of bringing more population downtown who will, in turn, create more demand for goods and services downtown. k. Marketing - The Company may engage in certain marketing and public relations activities designed to bring more attention to downtown Crozet from prospective businesses and residents, as well as the community at large. These efforts may include encouraging and/or funding a portion of the cost of a Crozet web site. 1. Sale of individual parcels of land for development and construction by others. 2. Create a fun, meaningful and fulfilling investment for Members. 3. Generate market or better investment returns for LLC Members. 4. Make a positive and lasting contribution to the Community There is no defined schedule for development and/or sale of the Barnes Lumber property. The Company will undertake the activities listed under Goal #1, and any others authorized by the Managers, whenever the time is deemed appropriate by the Managers and Members of the LLC. The anticipated holding period for some portions of the Barnes Lumber Property could be 10 years or more and Members acknowledge that maximizing returns on this investment will require patience.