AMERIFIRST CAPITAL GROUP, LLC

PRESENTS AMERICAN COMMERCE CENTER - PROPOSED STRUCTURE EXAMPLE

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Operating Agreement Outline
for American Commerce Center

Purpose of the Agreement

The purpose of the agreement will be to detail the terms and conditions of the company that will develop a small bay business park and service center space for the trades and skilled small business.
Ownership

The ownership is a Limited Liability Company (LLC) to be formed.

Managing General Partner

The Managing General Partner will be the development partner.

Contribution - Financial Partner

The financial partner agrees to contribute the cash required to capitalize the partnership and contribute the cash necessary to develop the property. This amount could be equal the cost of the site. The cash provided by the financial partner will be reimbursed to the financial partner out of the cash flow of the property.

The financial partner will receive 100% of the annual net cash flow and net sale proceeds until all the capital is returned (FIFO). Once the capital is returned, the financial partner will receive 50% of the annual net cash flow and net sale proceeds. The financial partner will receive 50% of the annual tax benefits. The financial partner agrees to guarantee the debt.

Contribution - Development Partner

The development partner agrees to contribute his time, energy, and expertise to accomplish a variety of tasks such as:

A.

Site selection,
B. contract for the sale of the site,
C. obtain the construction and permanent funds,
D. compose various leasing, management, and financial reports,
E. coordinate activities with third parties and other professionals such as
engineers, architects and contractors,
F. obtain the necessary approvals and permits from the appropriate municipality or governing authority,
G. manage the day-to-day operations of the development until the punch list is completed and the Certificate of Occupancy is issued by the controlling municipality,
H. permit, contract and complete the tenant improvements, and
I. manage the day-to-day operations of leasing and property management.

 

The development partner's net cash flow is subordinated to the cash required to capitalize the development. Once all the capital (equity) is returned to the financial partner, the development partner will receive 50% of the annual net cash flow and net sale proceeds. The development partner does not make capital contributions unless (or until) he receives his portion of the annual cash flow. The development partner will receive 50% of the annual tax benefits and the development partner agrees to guarantee the debt.

Exchange

The development partner contributes various development fees in exchange for the financial partner contributing any preferred rate of return on equity. The development partner does make a per diem.

Cash Flow

The cash flow generated by the rent on the occupied property has the following priority: (1) to pay expenses including debt service, (2) to fund a reserve for future maintenance and repairs, (3) to fund the financial partner for the cash contribution, and (4) once all the capital is returned to the financial partner, a distribution to the partners based on a percent of ownership.

Reserves

Cost in excess of the construction budget or negative cash flow from operations will be taken from the construction budget contingency or the balance in the operating reserve. The financial partner will be required to contribute funds if the development suffers a financial reversal.

Exit Strategy

It is agreed and understood that the purpose of this LLC is to develop, occupy, and hold this asset for the long term.

Mediation

The use of the courts should be avoided. In the event of a claim or a controversy arising out of this agreement, we mutually agree to use mediation or arbitration to resolve any and all differences. The parties hereto agree to mediation or binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.



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