OPERATING AGREEMENT
OF
CRIT-NC, LLC
This OPERATING AGREEMENT of CRIT-NC, LLC (the "LLC") is made as of December
9, 1997, between Cornerstone Realty Income Trust, Inc. (the "Member") and the
LLC.
ARTICLE I
FORMATION, PURPOSES, AND MEMBERS
1.1 FORMATION. The Member acknowledges the formation of the LLC under the
Virginia Limited Liability Company Act (as amended from time to time, the
"Act").
1.2 PURPOSE; OPERATIONS.
(A) BUSINESS PURPOSE. The purpose of the LLC is to engage in any lawful
business specified by the Member. Without limiting the generality of the
foregoing, the LLC shall own and operate certain residential apartment complexes
in North Carolina, and may do all things incidental or related to, or necessary
or convenient for, the accomplishment of the foregoing.
(B) LIMITED LIABILITY. No Member, Manager (as defined below), or agent
of the LLC shall have any personal obligation for any liabilities of the LLC
solely by reason of being a Member, Manager, or agent, except as provided by
law.
(C) NAMES. The LLC may conduct business under its own name and under
such assumed names as it deems appropriate or convenient.
(D) QUALIFICATIONS IN OTHER JURISDICTIONS. If required by law, the LLC
shall promptly qualify or register to transact business in all jurisdictions
other than Virginia in which it conducts business.
1.3 MEMBERS. Members shall include only the undersigned initial Member and
any Member subsequently admitted in writing to the LLC. The name, address, and
Membership Interest of the initial Member are listed on Exhibit A.
ARTICLE II
MANAGEMENT
2.1 MANAGEMENT BY MEMBER. The LLC shall be managed by the Member. The
Member shall have full responsibility for and all rights and powers relating to
managing the
-1-
business and affairs of the LLC. The Member may, but shall not be required to,
delegate any of its rights, powers, and duties to a manager or managers (whether
one or more, the "Manager"). Any Manager may be given such title or titles as
shall be specified by the Member.
2.2 POWERS OF MEMBER. The Member may act on behalf of the LLC in all the
matters described in Section 13.1-1009 of the Act.
ARTICLE III
REIMBURSEMENT OF EXPENSES
3.1 EXPENSES; REIMBURSEMENT. The LLC shall bear all expenses and
liabilities incurred with respect to the organization, operation, and management
of the LLC. A Member or Manager shall be entitled to reimbursement from the LLC
for any LLC expenses or liabilities incurred by the Member or Manager, provided
that the expenses or liabilities did not arise as a result of the Member's or
Manager's willful misconduct or a knowing violation of the criminal law.
ARTICLE IV
CONTRIBUTIONS AND DISTRIBUTIONS
4.1 CONTRIBUTIONS. The Member has contributed to the LLC the property
described on Exhibit A in exchange for all of the interests in the LLC. The
Member is not obligated to make any additional capital contributions to the LLC
but may, in its discretion, make additional capital contributions to the LLC.
4.2 DISTRIBUTIONS. The Member may distribute to the Members, annually or
more frequently, cash and non-cash assets not required for LLC operations or
reserves.
ARTICLE V
DISSOLUTION
5.1 EVENTS OF DISSOLUTION. The LLC shall dissolve only upon the first to
occur of:
(A) ELECTION OF MEMBER. The written election of the Member to dissolve
the LLC; or
(B) DISPOSITION OF ASSETS. The sale, transfer, or other disposition of
substantially all of the non-cash assets of the LLC.
5.2 WINDING UP. Upon the dissolution of the LLC, the Member shall wind up
the affairs of the LLC. The Member shall determine the time, manner, and terms
of any sale or sales
-2-
of LLC property pursuant to such winding up, having due regard to the activity
and the condition of the LLC and relevant market and economic conditions.
5.3 CERTIFICATE OF CANCELLATION. Upon completion of the winding up of the
LLC, the LLC shall terminate and a Certificate of Cancellation shall be filed
with the Virginia State Corporation Commission, together with any other
documents required to effectuate the termination.
ARTICLE VI
ADMINISTRATIVE PROVISIONS
6.1 OFFICES. The initial principal office, registered office, and
registered agent shall be as set forth in the Articles of Organization. The
Member may change the principal office, the registered office, or the registered
agent at any time.
6.2 INFORMATION AND RECORDS. The Member shall keep full and accurate books
of account, records, and supporting documents at the principal office of the
LLC. Upon reasonable notice, any designated representative of the Member shall
have access to such books, records, and documents during reasonable business
hours and may inspect and make copies of any of them at the Member's expense.
ARTICLE VII
MISCELLANEOUS
7.1 AMENDMENT. This Agreement may only be amended by the written consent of
the sole Member, or, if additional Members are admitted, by the unanimous
written consent of the Members.
7.2 DEFINITIONS. Unless the context otherwise requires, the terms used in
this Agreement shall have the same definitions set forth in the Act.
7.3 GOVERNING LAW. This Agreement shall be governed by the Act and other
applicable laws of the Commonwealth of Virginia, without giving effect to its
conflicts of laws rules.
-3-
IN WITNESS WHEREOF, the Member and the LLC have executed this Agreement as
of the date indicated above.
The Member:
Cornerstone Realty Income Trust, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
By: ___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Chief Financial Officer
The LLC:
CRIT-NC, LLC
By: Cornerstone Realty Income Trust, Inc.,
Sole Member
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
By: ___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Chief Financial Officer
-4-
EXHIBIT A
TO THE
OPERATING AGREEMENT
OF
CRIT-NC, LLC
Capital
Name and Business Contribution
Address of Percentage
Member Description Contribution Date Interest
------ ----------- ----------------- --------
Cornerstone Realty Income $1,000 December 9, 1997 100%
Trust, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-5-
