EXHIBIT 10.1

 
OPERATING AGREEMENT

OF

WILSONVILLE OTS LLC

BETWEEN

GRAMOR WILSONVILLE OTS LLC

AND

ROIC OREGON, LLC

 
 

 
 
 

--------------------------------------------------------------------------------

 
TABLE OF CONTENTS
 

   
Page
     
ARTICLE 1
ORGANIZATION AND PURPOSES OF COMPANY
1
1.1
Organization
1
1.2
Purposes and Powers
1
1.3
Partnership Tax Status; No Personal Liability
1
1.4
Real Estate Investment Trust
1
ARTICLE 2
MANAGEMENT
2
2.1
Management by Manager
2
2.2
Authority of Manager
2
2.3
Responsibilities of the Manager
2
2.4
Authority and Duties of the Manager
2
2.5
Major Decisions
3
2.6
ROIC Approval
4
2.7
Unanimous Decisions
5
2.8
Construction Financing
5
2.9
Development Agreement
5
2.10
Property Management Agreement
6
2.11
Failure of Closing to Occur
6
2.12
Resignation or Removal of Manager
6
2.13
Compensation and Reimbursement of Manager
7
2.14
Indemnification
7
2.15
Signature Authority
8
ARTICLE 3
RIGHTS OF MEMBERS
8
3.1
Voting Rights
8
3.2
Approval of Members
8
3.3
Meetings; Other Action by Members
8
3.4
Withdrawal
9
ARTICLE 4
CONFLICTS OF INTEREST
9
4.1
Duty of Loyalty
9
4.2
Loans and Other Transactions with Company
9

 
 

--------------------------------------------------------------------------------

 
ARTICLE 5
CONTRIBUTIONS; CAPITAL ACCOUNTS
9
5.1
Initial and Additional Contributions
9
5.2
Effect of Failure to Contribute
10
5.3
Guarantees
11
5.4
Maintenance of Capital Accounts
12
5.5
Tax Matters Partner
13
5.6
Subchapter K
13
5.7
Section 754
13
5.8
Depreciation
13
5.9
Return of Contributions, etc
13
5.10
Taxes of Taxing Jurisdictions
13
ARTICLE 6
ALLOCATIONS
14
6.1
Allocation of Profits and Losses
14
6.2
Limitation on Allocation of Losses
14
6.3
Special Allocations
14
6.4
Curative Allocations
16
6.5
Other Allocation Rules
16
6.6
Tax Allocations:  Code Section 704(c)
17
ARTICLE 7
DISTRIBUTIONS
18
7.1
Non-Liquidating Distributions
18
7.2
Liquidating Distributions
19
7.3
General
19
7.4
Amounts Withheld
19
ARTICLE 8
ADDITIONAL MEMBERS
19
8.1
Admission of Additional Member
19
8.2
Accounting
19
ARTICLE 9
TRANSFERS OF INTERESTS
20
9.1
Restriction on Transfers
20
9.2
Permitted Transfers
20

 
ii

--------------------------------------------------------------------------------

 
9.3
Conditions to Permitted Transfers
20
9.4
Rights and Obligations of Assignees and Assignors
20
9.5
Admission of Assignee as Substitute Member
21
9.6
Effect of Admission of Substitute Member
22
9.7
Gramor Buyout Right; ROIC Option to Purchase
22
9.8
Distributions and Allocations to Transferred Interests
23
ARTICLE 10
DISSOLUTION AND WINDING UP
24
10.1
Exercise of Voting Rights
24
10.2
Dissolution Events
24
10.3
Winding Up
24
10.4
Establishment of Trust or Reserves
25
10.5
Notices of Dissolution Event, etc
25
ARTICLE 11
BOOKS, RECORDS AND ACCOUNTINGS
25
11.1
Books and Records
25
11.2
Reports
26
11.3
Rights of Members; Inspection
27
ARTICLE 12
ADOPTION AND AMENDMENT
28
ARTICLE 13
MISCELLANEOUS
28
13.1
Application of Oregon Law
28
13.2
Construction
28
13.3
Counterparts; Facsimiles
28
13.4
Waiver of Partition
28
13.5
Execution of Additional Instruments
28
13.6
Headings
28
13.7
Heirs, Successors and Assigns
29
13.8
Notices and Consents, etc
29
13.9
Severability
29
13.10
Waivers
29
13.11
Arbitration of Disputes
29

 
iii

--------------------------------------------------------------------------------

 
 
13.12
Entire Agreement
29

 
 
 
 
 
 
 
 
 

 
 
iv

--------------------------------------------------------------------------------

 
OPERATING AGREEMENT
OF
WILSONVILLE OTS LLC

OPERATING AGREEMENT of WILSONVILLE OTS LLC, an Oregon limited liability company
(“Company”), entered into by each of the Members of the Company identified on
Exhibit A, and any other Persons that may hereafter become Members or successors
to interests in the Company, effective as of July 14, 2010.  Capitalized terms
used in this Agreement shall have the meanings ascribed thereto in Schedule A.
 
ARTICLE 1
ORGANIZATION AND PURPOSES OF COMPANY
 
1.1 Organization.  The Company was created by the execution and filing of the
Articles under the Act on March 9, 2009. The Members hereby agree to conduct the
Company’s business and affairs consistent with this Agreement, the Act and the
Articles.
 
1.2 Purposes and Powers.  The primary purpose of the Company shall be to
acquire, own, develop, operate, manage, lease, rent, dispose of and otherwise
deal with the real property (“Project”) to be purchased by the Company pursuant
to that certain Real Estate Purchase and Sale Agreement dated August 20, 2009
with Fred Meyer Stores, Inc. (“Seller”), as amended, attached hereto as Exhibit
E (“Purchase Agreement”).  The Company also may engage in any other lawful
business that is permitted by the Act or the laws of any jurisdiction in which
the Company may do business and is approved by a Majority of the
Members.  The Company shall have all powers provided for in the Act.
 
1.3 Partnership Tax Status; No Personal Liability.  Although the Members intend
for the Company to be a partnership for state and federal income tax purposes,
the Company is an Oregon limited liability company and not a general or limited
partnership.  No Member or Manager shall have personal liability for any Company
operations, debts, obligations or liability merely as a result of being a Member
or Manager.
 
1.4 Real Estate Investment Trust.  The Members and Manager agree and acknowledge
that one of the Members, or an affiliated related entity, is a real estate
investment trust under applicable law (the “REIT Member”).  Each Member, other
than the REIT Member, shall (and each shall cause each of its Affiliates to)
take any action (and refrain from taking any action) as reasonably requested by
the REIT Member, that the REIT Member, in good faith, believes is necessary or
advisable in order to protect the status of the REIT Investor as a REIT; it
being agreed by each such Member that the REIT Investor and its Affiliates are
third-party beneficiaries of the provisions of this Section 1.4, and accordingly
shall have, and be permitted to enforce, all corresponding rights, interest and
claims under and pursuant to this Section 1.4 and be entitled to any and all
benefits under and pursuant to this Section 1.4.
 
 
 

--------------------------------------------------------------------------------

 
ARTICLE 2
MANAGEMENT
 
2.1 Management by Manager.  Pursuant to the Articles, the Company is
manager-managed.  The Company shall have one Manager, who may but need not be a
Member.  The Members hereby appoint Gramor as the initial Manager.  The Manager
shall devote to the Company and apply to the accomplishment of Company purposes
so much of the Manager’s time and attention as in the judgment of the Manager is
reasonably necessary to manage and operate properly and prudently the business
and affairs of the Company.
 
2.2 Authority of Manager.  Except for Major Decisions, or as otherwise provided
in this Agreement, the management of the business and affairs of the Company,
including all of its day-to-day activities, shall be undertaken exclusively by
the Manager.  No Member in the capacity of member shall have any power or
authority to bind the Company in any way, to pledge its credit or to render it
liable for any purpose.
 
2.3 Responsibilities of the Manager.  The Manager shall do all things reasonably
necessary to finance, market, operate and maintain the Project.
 
2.4 Authority and Duties of the Manager.  Subject to Sections 2.5, 2.6 and 2.7,
the following matters shall be considered day-to-day activities that may be
approved and undertaken by the Manager without a vote of the Members:
 
(a) Acquire the Property on behalf of the Company and negotiate, finalize and
execute documents necessary to acquire the Property on the terms and conditions
set forth in the Purchase Agreement;
 
(b) Following substantial completion of construction of the Project, prepare and
submit annual Operating Budgets to the Members for approval as provided in
Section 2.5;
 
(c) Manage the land use and entitlement process for the Property and the
Project;
 
(d) Prepare budgets and undertake action in accordance with the terms of an
Approved Budget, including without limitation the payment of all obligations of
the Company;
 
(e) Except as otherwise provided in this Agreement, engage in making contracts,
incurring liabilities with respect to the Project in accordance with an Approved
Budget;
 
(f) Engage in the management of all marketing and leasing and sales efforts with
respect to the Project or any portion thereof;
 
(g) Establish and manage the Company’s bank accounts;
 
 
2

--------------------------------------------------------------------------------

 
(h) Obtain and maintain policies of insurance that are commercially reasonable,
both during the construction of the Project and thereafter during the operations
of the Project, including general liability insurance, casualty loss replacement
cost insurance in the full replacement cost of the Project (including earthquake
coverage), with commercially reasonable coverage limits, inflation protection
endorsement and deductibles;
 
(i) Cause the Company’s certified public accountants to prepare the Company’s
tax returns (or any extensions thereof), including any Federal, State of local
tax returns required to be filed by the Company; the Manager shall furnish each
Member within forty-five (45) days of the end of each fiscal year or as soon
thereafter as such information is available from the Company a copy of the
Federal tax returns, all State returns, and such information as may be needed to
enable such Member to file its Federal income tax return and any required State
income tax return; the Manager shall cause the Company to pay, out of available
cash flow and other assets of the Company, any taxes payable by the Company; and
 
(j) Sell the residential parcel of approximately one acre in accordance with the
Approved Budget; provided, however, that the Manager shall consult with the
Members regarding the terms of sale prior to entering into an agreement to sell
such property.
 
2.5 Major Decisions.  The Manager shall use diligent efforts to keep the Members
fully informed regarding all material matters relating to the Company and its
operation and assets and shall promptly inform the Members of any major or
significant or material Company matters including all Major Decisions so that
the Members may exercise their rights under this Agreement. Notwithstanding any
other provisions of this Agreement, each of the following matters (“Major
Decisions”) shall require the approval of a Majority of the Members, and in any
event the consent of ROIC, unless a greater percentage is set forth below:
 
(a) Approval of acquisition, construction or permanent financing for the
Project;
 
(b) Any distribution of cash or property to Members except in accordance with
ARTICLE 7;
 
(c) Admission of any Additional Member or Substitute Member to the Company;
 
(d) Engaging in any transaction between the Company, on one hand, and the
Manager or a Member, or any Affiliate of the Manager or a Member, on the other
hand, except as expressly contemplated by this Agreement or approved by the
Members in accordance with this Agreement;
 
(e) Except as provided in Section 2.6, commence any lawsuit or other dispute
resolution procedure, including arbitration, on behalf of the Company, or settle
or take any other significant action in a lawsuit or other dispute resolution
procedure to which the Company is a
 
 
3

--------------------------------------------------------------------------------

 
party, except in any such case for lawsuits or other dispute resolution
procedures in the ordinary course to enforce tenant leases, collect rents and
the like.
 
(f) Any changes or modification with respect to the zoning, development or use
of the Property that would materially change the scope and design of the
Project;
 
(g) Entry into any partnership, joint venture, limited liability company or any
other entity;
 
(h) Assuming or incurring any debt or liability not in accordance with an
Approved Budget, including without limitation, any Project financing not
contemplated in an Approved Budget;
 
(i) Any modification of the Development Budget that results in an overall
increase in the “hard costs” set forth in the Development Budget, provided,
however, that changes and reallocations to line items in the Approved Budget to
reflect actual savings or use of the contingency shall not require Member
approval;
 
(j) Approval of annual Operating Budgets or any material modification of any
Approved Budget;
 
(k) Approval of all leases and the form lease to be used for the Project
tenants; provided, however, that if ROIC fails to respond to a request for
approval of a lease within ten (10) days after receipt, ROIC shall be deemed to
have approved such lease;
 
(l) Call for any Additional Contributions to the Company; and
 
(m) Any action in contravention of this Agreement, unless a higher level of
consent is required (in which case the consent required to approve such action
shall be required to approve the contravening act); and
 
2.6 ROIC Approval.  ROIC shall be solely responsible for making decisions and
approving the following items on behalf of the Company:
 
(a) The decision to terminate the Manager for Cause under this Agreement;
 
(b) the decision to pursue a claim against the Manager;
 
(c) appointment of a replacement Manager;
 
(d) Approval of any amendment to the Development Agreement, the Management
Agreement or any agreement with an Affiliate of the Manager;
 
 
4

--------------------------------------------------------------------------------

 
(e) the decision to enforce the Company’s rights under the Development
Agreement, pursue a claim against the Developer or to terminate the Developer
pursuant to the terms of the Development Agreement;
 
(f) the decision to enforce the Company’s rights under the Management Agreement,
pursue a claim against the property manager or to terminate the property manager
pursuant to the terms of the Management Agreement; and
 
(g) the decision to enforce the Company’s rights under any other agreement with
the Manager or an affiliate of the Manager.
 
2.7 Unanimous Decisions.  Notwithstanding any other provision of this Agreement,
each of the following matters shall be submitted to a vote of Members for
approval.  Approval shall require the affirmative vote of all Members as to:
 
(a) Dissolution or liquidation of the Company;
 
(b) Merging or consolidating the Company with any other entity;
 
(c) Any action that would change the nature of the business of the Company or
make it impossible for the Company to operate in the ordinary course of
business;
 
(d) Approval of any loans that will be recourse to all of the Members;
 
(e) Executing or delivering any general assignment of assets for the benefit of
creditors of the Company; and
 
(f) Filing or consenting to the filing of any proceeding under any state or
federal bankruptcy or debt-release statute for the Company.
 
2.8 Construction Financing.  ROIC, or an Affiliate of ROIC, shall have a first
right to provide construction financing to the Company on commercially
reasonable terms acceptable to the Manager and the other Member, (ii) if ROIC or
its Affiliate does not propose the terms of any construction financing for the
Company in a timely manner, the Members shall not unreasonably withhold their
approval of any construction loan or refinancing loan that is thereafter
proposed by the Manager that is on commercially reasonable terms, (iii) each
Member shall promptly respond (meaning within not more than 10 Business Days) in
writing to any request for approval of any construction loan or any refinancing
loan and (iv) the failure by ROIC to comply with the requirements of clauses
(ii) and (iii) with respect to any construction loan proposed by the Manager in
accordance with clause (iii) shall constitute a “Construction Loan Impasse”;
 
2.9 Development Agreement.  The Company will enter into a Development Agreement
with Gramor Development, Inc., an Affiliate of Gramor, substantially in the form
attached as Exhibit B (“Development Agreement”), pursuant to which Gramor
Development,
 
 
5

--------------------------------------------------------------------------------

 
Inc. will proceed with the development of the Project in accordance with the
Development Budget attached as Exhibit C.  Pursuant and subject to the
conditions contained in the Development Agreement, Gramor Development, Inc. will
be entitled to $500,000 in development management fees payable in $33,333
increments over a fifteen (15)-month period as provided therein and to the
payment to it by the Company of an additional $200,000 of development management
fees in a lump sum either (a) immediately following the distribution by the
Company of all accrued and previously undistributed Preferential Return on
Capital in accordance with Section 7.1 or (b) immediately prior to and in
connection with the closing of any purchase by ROIC under the option provided
for in Section 9.7(b), whichever is earlier.
 
2.10 Property Management Agreement.  The Manager or an Affiliate shall act as
the property manager of the Project on the terms and subject to the conditions
contained in a Property Management Agreement substantially in the form attached
as Exhibit D.
 
2.11 Failure of Closing to Occur.  In the event that the closing of the
acquisition of the Real Estate shall not occur, subject to extension as agreed
upon between the Company (which extension shall require the approval of ROIC to
any date after December 31, 2010) and Seller, then:  (1) the Company shall
engage in no other activities, (2) Gramor shall cause the dissolution and
orderly liquidation of the Company (subject to enforcing the Company’s rights
under the Purchase Agreement for the return of any deposit), and (3) each of
Gramor and ROIC shall bear its own out-of-pocket costs; provided, however, that,
notwithstanding the foregoing (x) if the failure to close is caused by facts or
circumstances that constitute a breach or default of a Member or an Affiliate
under this Agreement or the Development Agreement, then such Member shall
reimburse the other Member for its costs and expenses under or in connection
with this Agreement, and, without limitation on the foregoing, shall bear 100%
of any forfeited deposit under the Purchase Agreement and neither such
defaulting Member nor any Affiliate thereof shall pursue the acquisition of any
interest in the Property for the 24-month period after the dissolution of the
Company, and (y) if clause (x) does not apply and if a Member or an Affiliate
acquires an interest in the Property without the other Member or an Affiliate,
or assigns or sells rights to acquire an interest in the Property to a third
party, on or before the date that is twelve (12) months after the dissolution of
the Operating Company and the Company, then the acquiring or assigning Member
shall bear 100% of all acquisition costs and all legal costs of formation and
shall promptly reimburse the other Member and its Affiliates for any such costs
paid or incurred by them.
 
2.12 Resignation or Removal of Manager.  The Manager shall serve until the
Manager resigns as Manager by written notice to the Members or is removed for
Cause pursuant to Section 2.6(a).  The resignation of the Manager shall take
effect upon receipt of notice thereof or at such later time as shall be
specified in such notice.  Unless otherwise specified in any notice of
resignation, the acceptance of such resignation shall not be necessary to make
it effective.  The resignation or removal of a Manager who is also a Member
shall not affect the Manager’s rights as a Member and shall not constitute a
withdrawal of the Manager in any capacity as a Member.
 
 
6

--------------------------------------------------------------------------------

 
Any vacancy in the position of Manager shall be filled by appointment by ROIC
except as otherwise provided in Article 12.  “Cause” shall mean:
 
(a) fraud, deceit, breach of trust, misappropriation of any funds of the Project
or of the Company, comingling of any such funds with Manager’s own Funds or
funds held by others, or breach of its fiduciary duties as Manager under this
Agreement;
 
(b) failure to comply with the terms, conditions, covenants or provisions of
this Agreement within fifteen (15) days after written notice from Company
stating with reasonable particularity the failure of performance by Manager or
if such failure cannot be fully cured in such fifteen (15) day period, failure
to commence cure within such fifteen (15) day period and thereafter diligently
and promptly to proceed to cure as soon as possible but in no event longer than
ninety (90) days after the effective date of the notice;
 
(c) filing of a voluntary petition in bankruptcy or the filing of an involuntary
petition of bankruptcy and the failure to secure a dismissal of such petition
within thirty (30) days after filing.
 
2.13 Compensation and Reimbursement of Manager.  Except as may otherwise be
agreed from time to time by a Majority of the Members, the Manager shall not
receive any compensation for services provided with respect to the Project
pursuant to this Agreement.  Provided that the expenses are included in the
Approved Budget, the Manager shall be reimbursed on a monthly basis, or such
other basis as the Manager may reasonably determine, for all out-of-pocket
expenses the Manager incurs on behalf of the Company, including without
limitation in connection with the formation and organization of the Company and
amounts paid by the Manager to any Person to perform services for the benefit of
the Company.  To the extent that the expenses are included in the amounts paid
to Gramor pursuant to Section 5.1(b) they shall not be eligible for
reimbursement under this Section 2.13.
 
2.14 Indemnification.  To the fullest extent provided or allowed by the laws of
Oregon, the Company shall indemnify the organizer, the Manager, the tax matters
partner and each Member from and against all costs, losses, liabilities,
damages, claims and expenses (including, without limitation, attorneys’ fees and
costs as incurred on trial and on appeal) incurred in the capacity of organizer,
manager (or as an agent thereof), tax matters partner or member or in any other
capacity on behalf of the Company, including, without limitation, claims arising
from any such Person’s actions or inactions taken or omitted as an organizer,
manager (or an agent thereof), tax matters partner or a member or in any other
capacity in furtherance of the business or affairs of the Company, whether taken
prior to or subsequent to the formation of the Company; provided that the
foregoing shall not eliminate or limit the Manager’s or a Member’s liability
for:
 
(a)           Any breach of the duty of loyalty to the Company or the Members as
described in this Agreement;

 
7

--------------------------------------------------------------------------------

 
(b)           Acts or omissions not in good faith which involve intentional
misconduct or a knowing violation of law;

(c)           Any unlawful distribution under the Act; or

(d)           Any transaction not expressly approved or ratified by a Majority
of the Members or permitted under this Agreement from which the Manager derives
an improper personal benefit.

2.15 Signature Authority.  The signature of the Manager shall be necessary and
sufficient to bind the Company, and a copy of this Agreement may be shown to the
appropriate parties in order to confirm the same.
 
ARTICLE 3
RIGHTS OF MEMBERS
 
3.1 Voting Rights.  All Members with a voting interest (other than a Member
that, pursuant to Section 5.2(b) or Section 9.4(b), has ceased to be entitled to
vote) shall be entitled to vote on or consent to any matter submitted to a vote
of, or requiring consent from, the Members.  A Member entitled to vote may
exercise by vote or consent that number of votes set forth with respect to such
Member on Exhibit A.
 
3.2 Approval of Members.  Any action or transaction that requires the approval
of the Members under the Act, the Articles or this Agreement shall be authorized
upon the affirmative vote, implementing action or written consent of a Majority
of the Members, unless either this Agreement or the Articles expressly imposes a
higher standard for approval by the Members, in which case the specified
approval of the Members shall be required for such action or transaction. Any
Member (including the Manager) that has an interest in the outcome of a matter
submitted to the Members for a vote may vote and have such vote as a Member
counted upon such matter.
 
3.3 Meetings; Other Action by Members.  Any Member or Manager may call a meeting
of the Members on at least 10 and not more than 30 days’ prior written notice
specifying the time and place.  The latter shall be either the principal
executive office of the Company or such other place within the Portland
metropolitan area as is specified in the notice of such meeting given by such
Member or Manager.  Members may participate in or conduct meetings through
telephonic or other means of communication by which all Members (or proxy
holders) participating may simultaneously communicate with each other.  Members
may take any action without a meeting, either by written consent describing the
action taken or by implementing action (including but not limited to execution
of documents), effective as of the date of signature by the necessary Members or
such other date as is set forth therein.  Any such consent or evidence of
implementing action shall be maintained in the Company records. The attendance
of a Member at a meeting shall constitute a waiver of objection to lack of
notice or defective notice of the meeting, unless the Member objects at the
beginning of the meeting to holding the meeting
 
8

--------------------------------------------------------------------------------

 
or transacting business at the meeting.  A waiver of notice by a Member, given
either before or after a meeting, shall be equivalent to the giving of notice of
the meeting to such Member.  There shall be no quorum requirement for any
meeting of Members but any action that requires a vote of Members shall be
approved at a meeting only upon receiving the vote of a Majority of the Members
or such other vote as is required under the Articles or this Agreement.  Action
not within the purposes described in a meeting notice may be taken at the
meeting provided that such action is approved at the meeting by a Majority of
the Members or such other greater vote as is required under the Articles or this
Agreement.
 
3.4 Withdrawal.  Notwithstanding any provision of the Act to the contrary, no
Member has the power to withdraw voluntarily from the Company.  A Member that
purports to withdraw voluntarily from the Company prior to any dissolution of
the Company shall be in breach of this Agreement, shall be liable to the Company
for any damages arising directly or indirectly from such purported withdrawal,
shall cease to be a Member but shall continue to hold Economic Rights in the
Company as an Assignee, and shall not be entitled to any distribution from the
Company by reason of such withdrawal.
 
ARTICLE 4
CONFLICTS OF INTEREST
 
4.1 Duty of Loyalty.  The Manager and each Member may engage in other business
activities and may pursue business opportunities competitive with the business
and operations of the Company without presenting any such opportunity to the
Company or the Members, and the Company, the Manager and each Member hereby
waives any right or claim to participate therein. Notwithstanding the foregoing,
however, unless otherwise expressly approved or ratified by a Majority of the
Members or otherwise permitted under this Agreement, the Manager and each Member
shall account to the Company and hold as trustee for the Company any benefit or
any profits derived by such Member or Manager from any transaction connected
with the formation, conduct or winding up of the Company or from any use of
Company Property by such Member or Manager not permitted under this Agreement,
including, without limitation, any information developed for the Company or any
opportunity expressly offered to the Company.
 
4.2 Loans and Other Transactions with Company.  The Company may borrow money or
transact other business with the Manager or a Member as permitted under this
Agreement or, if not expressly permitted, with the approval of a Majority of the
Members. The rights and obligations of a Member or Manager that lends money to
or transacts business with the Company in accordance with the foregoing shall be
the same as those of a Person that is not a Member or Manager, subject to other
applicable law.  No transaction with the Company shall be voidable solely
because a Member or a Manager has a direct or indirect interest in the
transaction if the transaction is expressly permitted by this Agreement or is
approved or ratified as provided either in this Agreement or in the Act.
 
 
9

--------------------------------------------------------------------------------

 
ARTICLE 5
CONTRIBUTIONS; CAPITAL ACCOUNTS
 
5.1 Initial and Additional Contributions.  The Members will have the following
Contribution obligations to the Company:
 
(a) In connection with Gramor’s execution and delivery of this Agreement, Gramor
is assigning its right to purchase the real estate pursuant to the Purchase
Agreement.  Gramor has conducted the due diligence on the real estate to be
acquired for the Project and represents and warrants that the statements set
forth on Schedule 5.1(a) are true and correct as of the date of this Agreement
and will be true and correct as of the closing date for the acquisition of the
real property pursuant to the terms of the Purchase Agreement.
 
(b) In connection with ROIC’s execution and delivery of this Agreement, ROIC
shall contribute to the Company the amount set forth on Exhibit A as the amount
of ROIC’s beginning Contribution and initial Capital Account, which is an amount
equal to 95% of the out-of-pocket costs and expenses incurred by Gramor for
purposes of the Company and the Project prior to the date of this Agreement, it
being agreed that upon such Contribution the Company shall distribute such
amount to Gramor in reimbursement for 95% of such costs and expenses.  Schedule
5.1(b) sets forth the detail of the out-of –pocket costs and expenses incurred
and paid by Gramor for the purposes of the Company.  ROIC shall not become a
Member or have any interest under this Agreement unless and until ROIC makes
such Contribution.  Following such Contribution by ROIC and distribution to
Gramor, the Members shall have the initial Capital Accounts set forth on
Exhibit A reflecting the 5% of such costs and expenses funded by Gramor (which
shall be deemed to be a beginning Contribution by Gramor) and the 95% of such
costs and expenses funded by ROIC.  The Preferential Return on Capital shall be
calculated on Gramor’s Contribution from the date of this Agreement rather than
the date of the expenditure of such funds for pre-development costs and
expenses.
 
(c) Upon any call of the Manager from time to time under this Section 5.1(b),
the Members will make cash Contributions to the Company in the proportions of
95% from ROIC and 5% from Gramor of the amount specified by the Manager;
provided that the aggregate amount called for and contributed by the Members
under this Section 5.1(b) shall not exceed $5,000,000 minus the amount of the
beginning Contributions made as provided in Section 5.1(a).  All Contributions
by the Members under Section 5.1(a) and this Section 5.1(b) shall constitute
“Initial Contributions.”  In connection with any call by the Manager under this
Section 5.1(b), the Manager shall give notice to each Member of the amount
called at least 10 Business Days before the date specified in such notice as the
due date for such Contribution.
 
(d) After the completion of the funding of the Initial Contributions, the
Manager may, with the approval of a Majority of the Members, call for additional
Contributions by the Members by a notice given to each Member at least 10
Business Days before the date the called-for Contribution is specified in such
notice to be due.  Any such Contributions shall be
 
 
10

--------------------------------------------------------------------------------

 
made in the proportions of 95% by ROIC and 5% by Gramor and shall constitute
“Additional Contributions.”
 
(e) Except as otherwise provided in Section 5.2(b), if applicable, a
Preferential Return on Capital will accrue on all Contributions for purposes of
determining amounts allocable and distributable to the Members in accordance
with Articles 6 and 7.
 
5.2 Effect of Failure to Contribute.  If any Member fails to contribute such
Member’s proportionate share of any Initial Contributions or Additional
Contributions called for by the Manager in accordance with Section 5.1(b) or
Section 5.1(c) within the time period for making the same specified in the
capital call, such Member shall be in default and any fully contributing Member
with respect to such Contribution may, but shall not be required to, make up any
or all of such shortfall.  Any Member so contributing more than its percentage
share of any such Contribution may elect in writing at the time of funding any
portion of the shortfall to treat the amount funded by the contributing Member
either as a Contribution to the Company or as a loan to the defaulting Member,
with the following consequences:
 
(a)           If such Member elects Contribution treatment, a Preferential
Return on Capital but at a rate of eighteen percent (18%) per annum will apply
to the portion of the Contribution made by such Member to cover any of the
shortfall; or

(b)           If such Member elects loan treatment, the amount contributed to
the Company on behalf of the defaulting Member shall be treated as a loan to the
defaulting Member and a deemed Contribution by such Member and shall not bear
any Preferential Return on Capital.  Any such loan shall bear interest at a rate
per annum equal to eighteen percent (18%) per annum and shall be secured by a
grant to the fully contributing Members of a security interest in the defaulting
Member’s interest in the Company, which security interest (i) is hereby granted
without more, effective in each case as of the date of each and every such loan,
and (ii) may be evidenced by a UCC filing made by the fully contributing Member
with a copy to the defaulting Member.  The defaulting Member may repay such loan
at any time in whole or in part without penalty but with accrued and unpaid
interest thereon.  During the term of any such loan, all distributions of cash
from the Company allocable to the defaulting Member shall, on behalf of the
defaulting Member, be distributed to the fully contributing Member until such
time as all principal and interest on the loan has been paid in full.  During
such loan term, the voting rights of the defaulting Member under this Agreement
or the Act shall be suspended as contemplated by Section 3.1.

5.3 Guarantees.  ROIC and Gramor and, if required by any third-party lender,
Barry Cain, will provide any necessary guarantees of both the construction
financing and the carve-outs from any permanent non-recourse financing.  Any
such financing shall contemplate the possible purchase of the interest of Gramor
by ROIC or its designee pursuant to the option provided for in Section 9.7(b)
and provide for a release of Gramor and any Affiliate from any guarantee
provided by the same if and when any such purchase occurs.  In the event of any
call on any such guarantee, ROIC shall be responsible for paying 95% of the
amount called on the guarantee and
 
 
11

--------------------------------------------------------------------------------

 
Gramor (with, if applicable, Barry Cain) shall be responsible for paying 5% of
the amount called on the guarantee.  If either ROIC or Gramor pays more than its
percentage share under the guarantee, the other will have a right of
contribution with respect to excess amount paid.  Any amount paid by ROIC or
Gramor either under the guarantee or under the contribution arrangement provided
for in the foregoing sentence will be treated as an Additional Contribution by
the Member obligated to pay the same and shall accrue a Preferential Return on
Capital when paid thereby either directly under the guarantee or pursuant to the
right of contribution provided for in this Section 5.3.
 
5.4 Maintenance of Capital Accounts.  The Company shall establish and maintain
Capital Accounts with respect to each Member in accordance with the following:
 
(a)           Each Member’s Capital Account shall be increased by such Member’s
Contributions, such Member’s distributive share of Profits and any items in the
nature of income or gain that are specially allocated pursuant to IRC § 704(b)
and the amount of any Company liabilities assumed by such Member or that are
secured by any Property distributed to such Member.

(b)           Each Member’s Capital Account shall be decreased by the amount of
cash and the Gross Asset Value of any Company Property (other than cash)
distributed to such Member pursuant to any provision of this Agreement, such
Member’s distributive share of Losses and any items in the nature of expenses or
losses that are specially allocated pursuant to IRC § 704(b) and the amount of
any liabilities of such Member assumed by the Company or secured by any property
contributed by such Member to the Company if not otherwise taken into account in
computing the amount of any Contribution by the Member.

(c)           If the Company at any time distributes any of its assets in-kind
to any Member, the Capital Accounts shall be adjusted to account for that
Member’s allocable share (as determined under Article 6) of the Profits or
Losses that would have been realized by the Company had it sold the assets that
were distributed at their respective fair market values immediately prior to
their distribution.

(d)           Upon a Transfer of all or a portion of a Member’s Economic Rights
in accordance with the terms of this Agreement, the Assignee shall succeed to
the Capital Account of the Member to the extent such Capital Account relates to
the Transferred interest.

(e)           The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulation § 1.704-1(b) and shall be interpreted and applied in a manner
consistent therewith.  If the Manager shall determine that it is prudent to
modify the manner in which the Capital Accounts, or any adjustments thereto
(including, without limitation, adjustments relating to liabilities secured by
Contributions or distributed property or to liabilities assumed by the Company
or Members), are computed in order to comply therewith, the Manager may make any
such modifications but only if such modifications are not likely to have a
material effect on the

 
12

--------------------------------------------------------------------------------

 
amounts distributed to any Member pursuant to Article 10 upon the dissolution of
the Company.  The Company may with the approval of the Manager also 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
Regulation § 1.704-1(b)(2)(iv)(q), and make any appropriate modifications if
unanticipated events might otherwise cause this Agreement not to comply with
Regulation § 1.704-1(b).  In determining the amount of any liability for
purposes of Sections 5.4(a) and 5.4(b), there shall be taken into account
IRC § 752(c) and any other applicable federal tax provisions.  Notwithstanding
anything herein to the contrary, this Agreement shall not be construed as
creating a deficit restoration obligation or as otherwise personally obligating
any Member to make any contribution not expressly provided for by this Agreement
or called for in accordance with this Agreement.
 
5.5 Tax Matters Partner.  The Manager shall from time to time designate one of
the Members to act as the tax matters partner of the Company pursuant to IRC
§ 6231(a)(7).  Gramor shall be the tax matters partner until any subsequent
appointment in accordance herewith. Any Member designated as tax matters partner
shall take such action as may be necessary to cause each other Member to become
a notice partner within the meaning of IRC § 6223 and shall otherwise act in
compliance with the provisions of this Agreement.  Gramor shall deliver all tax
returns to the Members for their review prior to filing.
 
5.6 Subchapter K.  No election shall be made by the Manager or any Member to
cause the Company to be excluded from the application of the provisions of IRC
Subchapter K.
 
5.7 Section 754.  The Manager may cause the Company to file an election under
IRC § 754 to cause the basis of Company Property to be adjusted for federal
income tax purposes as provided in IRC §§ 734 and 743.
 
5.8 Depreciation.  The Company shall use for federal and state income tax
purposes any reasonable method of depreciation selected by the Manager.
 
5.9 Return of Contributions, etc.  No Member shall have the right to withdraw or
be repaid any Contribution except as provided in this Agreement.  Each Member
shall look solely to the assets of the Company for the return of Contributions
and shall have no right or power to demand or receive any specific Property from
the Company in any case in which the Member is entitled to any Company
Property.  No Member shall have priority over any other Member as to the return
of Contributions or the receipt of distributions or allocations.  The Members
shall be entitled to the Preferential Return on Capital in accordance with the
terms of this Agreement but no interest shall accrue on any Contribution or the
balance in any Capital Account.
 
5.10 Taxes of Taxing Jurisdictions.  To the extent that the laws of any taxing
jurisdiction require, each Member requested to do so by the Manager or any other
Member will submit an agreement indicating that the Member will make timely
income tax payments to the taxing jurisdiction and that the Member accepts
personal jurisdiction of the taxing jurisdiction
 
13

--------------------------------------------------------------------------------

 
with regard to the collection of income taxes attributable to the Member’s
income and any interest and penalties assessed on such income.  If the Member
fails to provide such agreement, the Company may withhold and pay over to such
taxing jurisdiction the amount of tax, penalty and interest determined under the
laws of the taxing jurisdiction with respect to such income.  Any such payments
with respect to the income of a Member shall be treated as a distribution for
purposes of Article 7.  The Company may, where permitted by the rules of any
taxing jurisdiction, file a composite, combined or aggregate tax return
reflecting the income of the Company and pay the tax, interest and penalties of
some or all of the Members on such income to the taxing jurisdiction, in which
case the Company shall inform the Members affected thereby of the amount of such
tax interest and penalties so paid.
 
ARTICLE 6
ALLOCATIONS
 
6.1 Allocation of Profits and Losses.  Except as provided in Section 6.2 and
after giving effect to any special allocations under IRC § 704(b) and
Sections 6.3 through 6.6, to the extent applicable, Profits and Losses for any
Fiscal Year shall be allocated to the Members as follows:
 
(a) First, to the extent that cash is distributed to a Member with respect to
accrued Preferential Return on Capital, there shall be allocated to such Member,
in the Fiscal Year of the distribution or as soon thereafter as is possible,
Profits in an amount up to but not exceeding the amount of Distributed but
Unmatched Preferential Return (as hereinafter defined) as of the end of such
Fiscal Year.  Each allocation of Profits shall be made in proportion to the
Distributed but Unmatched Preferential Return as of the end of the Fiscal Year
of the Members entitled to receive the allocation.  For purposes of this
Section 6.1(a), the term “Distributed but Unmatched Preferential Return” means
Preferential Return on Capital that has been distributed but has not at any time
been matched by a allocation under this Section 6.1(a); and
 
(b) Second, in the case of Profits, to each Member in an amount up to, but not
exceeding, the aggregate amount of Losses previously allocated to that Member in
accordance with the second sentence of Section 6.2; and
 
(c) Third, in the case of Profits or Losses, to each Member in accordance with
Percentage Interests
 

6.2 Limitation on Allocation of Losses.  Losses allocated to a Member pursuant
to Section 6.1(c) shall not exceed the maximum amount of Losses that can be so
allocated without causing that Member to have an Adjusted Capital Account
Deficit at the end of any Fiscal Year.  If some but not all of the Members would
have Adjusted Capital Account Deficits as a consequence of an allocation of
Losses pursuant to Section 6.1(c), the foregoing limitation shall
 
14

--------------------------------------------------------------------------------

 
be applied on a Member-by-Member basis so as to allocate the maximum permissible
Losses to each Member under Regulation § 1.704-1(b)(2)(ii)(d).
 
6.3 Special Allocations
 
(a)           Minimum Gain Chargeback.  Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
ARTICLE 6, 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 Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Person’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations 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 Sections 1.704-2(f)(6)
and 1.704-2(j)(2) of the Regulations.  This Section 6.3(a) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
 
(b)           Member Minimum Gain Chargeback.  Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of
this ARTICLE 6, if there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each
Person who has a share of the Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Section
1.704-2(i)(5) of the Regulations, 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 Person’s share of the net decrease in Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(4).  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 Sections 1.704-2(i)(4)
and 1.704-2(j)(2) of the Regulations.  This Section 6.3(b) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the
Regulations and shall be interpreted consistently therewith.
 
(c)           Qualified Income Offset.  In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or Section
1.704-1(b)(2)(ii)(d)(6) of the 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 Regulations, the Capital
Account of such Member as quickly as possible, provided that an allocation
pursuant to this Section 6.3(c) shall be made only if and to the extent that
such Member would have an Adjusted Capital Account Deficit after all other
allocations provided for
 
15

--------------------------------------------------------------------------------

 
in this ARTICLE 6 have been tentatively made as if this Section 6.3(c) were not
in the Agreement.
 
(d)           Gross Income Allocation.  In the event any Member has a deficit
Capital Account at the end of any Fiscal Year which is in excess of the sum of
 
(1)           the amount such Member is obligated to restore pursuant to any
provision of this Agreement, and
 
(2)           the amount such Member is deemed to be obligated to restore
pursuant to the next to the last sentences of Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(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 6.3(d) shall be made only
if and to 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 6
have been made as if Section 6.3(c) hereof and this Section 6.3(d) were not in
the Agreement.
 
(e)           Nonrecourse Deductions.  Nonrecourse Deductions for any Fiscal
Year shall be specially allocated to the Members in proportion to their
Percentage Interests.
 
(f)           Member Nonrecourse Deductions.  Any Member Nonrecourse Deductions
for any Fiscal Year 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 Regulations
Section 1.704-2(i)(1).
 
(g)           Allocations Relating to Taxable Issuance of Company
Interests.  Any income, gain, loss or deduction realized as a direct or indirect
result of the issuance of an interest by the Company to a Member (the “Issuance
Items”) shall be allocated among the Members so that, to the extent possible,
the net amount of such Issuance Items, together with all other allocations under
this Agreement to each Member, shall be equal to the net amount that would have
been allocated to each such Member if the Issuance Items had not been realized.
 
6.4 Curative Allocations.  The allocations set forth in this Agreement (the
“Regulatory Allocations”) are intended to comply with certain requirements of
the 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 6.4.  Therefore, notwithstanding any
other provision of this ARTICLE 6 (other than the Regulatory Allocations), the
Manager shall make such offsetting special allocations of Company income, gain,
loss or deduction in whatever manner the Manager determines appropriate so that,
after such offsetting allocations are made, each Member’s Capital Account is, to
the extent possible, equal to the Capital Account such Member would have had if
the Regulatory Allocations were not part of the Agreement and all Company items
were allocated pursuant to this Agreement.  In exercising discretion under this
Section 6.4, the Manager shall take into account future Regulatory
 
16

--------------------------------------------------------------------------------

 
Allocations under this Agreement, although not yet made, that are likely to
offset other Regulatory Allocations previously made under this Agreement.
 
6.5 Other Allocation Rules.
 
(a)           For purposes of determining the Profits, Losses, or any other
items allocable to any period, Profits, Losses, and any such other items shall
be determined on a daily, monthly, quarterly or other basis, as determined by
the Manager using any permissible method under Code Section 706 and the
Regulations thereunder.
 
(b)           In making any allocation among the Members of income or gain from
the sale or other disposition of Company Property, the ordinary income portion,
if any, of such income and gain resulting from the recapture of cost recovery or
other deductions shall be allocated among those Members who were previously
allocated (or whose predecessors-in-interest were previously allocated) the cost
recovery deductions or other deductions resulting in the recapture items, in
proportion to the amount of such cost recovery deductions or other deductions
previously allocated to them.
 
(c)           The Members are aware of the income tax consequences of the
allocations made by this ARTICLE 6 and hereby agree to be bound by the
provisions of this ARTICLE 6 in reporting their shares of Company income and
loss for income tax purposes.
 
(d)           Solely for purposes of determining a Member’s proportionate share
of the “excess nonrecourse liabilities” of the Company within the meaning of
Regulations Section 1.752-3(a)(3), the Members’ interests in Company Profits are
equal to their respective Percentage Interests.
 
(e)           To the extent permitted by Section 1.704-2(h)(3) of the
Regulations, the Managers shall endeavor to treat distributions of Net Cash From
Operations or Net Cash From Sales or Refinancings as having been made from the
proceeds of a Nonrecourse Liability or a Member Nonrecourse Debt only to the
extent that such distributions would cause or increase an Adjusted Capital
Account Deficit for any Member.
 
6.6 Tax Allocations:  Code Section 704(c).  In accordance with Code Section
704(c) and the 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.
 
In the event the Gross Asset Value of any Company asset is adjusted as provided
on Schedule A, 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 Gross Asset Value in
the same manner as under Code Section 704(c) and the Regulations thereunder.
 
 
17

--------------------------------------------------------------------------------

 
Any elections or other decisions relating to such allocations shall be made by
the Manager 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 Person’s Capital Account or share of
Profits, Losses, other items, or distributions pursuant to any provision of this
Agreement.
 
ARTICLE 7
DISTRIBUTIONS
 
7.1 Non-Liquidating Distributions.  The Company shall from time to time
distribute Net Operating Cash Flow or Net Cash From Sales or Refinancings to the
Members in accordance with the following at such times and in such amounts as
the Manager determines to be appropriate; provided that before making any
distribution under either Section 7.1(a)(iii) or Section 7.1(b)(iii), the
Company shall first have paid Gramor Development, Inc. all development
management fees owed it under the Development Agreement (except the Final Fee),
as provided in and subject to Section 4.1 thereof:
 
(a)           In the case of Net Operating Cash Flow:

 
(i)
First, to the Members, pro rata, up to the amount of accrued but previously
undistributed Preferential Return on Capital on unreturned Initial Capital
Contributions;

 
(ii)
Second, to the Members, pro rata, up to the amount of accrued but previously
undistributed Preferential Return on Capital on unreturned Additional
Contributions;

 
(iii)
Third, to the Members, pro rata, in return of their Additional Contributions to
the extent not previously returned through distributions hereunder; and

 
(iv) 
Fourth, to the Members in accordance with their Percentage Interests.

(b)           In the case of Net Cash From Sales or Refinancings:

 
(i)
First, to the Members, pro rata, up to the amount of accrued but previously
undistributed Preferential Return on Capital on unreturned Initial Capital
Contributions;

 
(ii)
Second, to the Members, pro rata, up to the amount of accrued but previously
undistributed Preferential Return on Capital on unreturned Additional
Contributions;

 
18

--------------------------------------------------------------------------------

 

 
(iii)
Third, to the Members, pro rata, in return of their Additional Contributions to
the extent not previously returned through distributions hereunder;

 
(iv)
Fourth, to the Members, pro rata, in return of their Initial Contributions to
the extent not previously returned through distributions hereunder; and

 
(v) 
Fifth, to the Members in accordance with their Percentage Interests.

7.2 Liquidating Distributions.  Notwithstanding the provisions of Section 7.1,
if the Company is dissolved and its business and affairs are wound up,
distributions shall be made pursuant to Section 10.3.
 
7.3 General.  No Member shall have the right or power to demand or receive a
distribution in a form other than cash, and no Member shall be required or
compelled to accept a distribution of any asset in kind to the extent that the
interest distributed would exceed the Member’s pro rata share of operating or
liquidating distributions, as the case may be.  No Member shall have the right
to receive interest on any distribution to the Member by the
Company.  Notwithstanding anything contained in this Agreement or the Articles
to the contrary, no distribution shall be made to a Member in violation of the
Act.
 
7.4 Amounts Withheld.  All amounts withheld pursuant to any provision of any
federal, state or local tax law with respect to any payment, distribution or
allocation to the Members shall be treated as amounts distributed to the Members
pursuant to this Article 7 for all purposes under this Agreement.  The Company
is authorized to withhold from distributions, or with respect to allocations,
and to pay over to any federal, state or local government any amounts required
to be so withheld pursuant to any federal, state or local law and shall allocate
any such amounts to the Members with respect to which such amount was withheld.
 
ARTICLE 8
ADDITIONAL MEMBERS
 
8.1 Admission of Additional Member.  One or more Additional Members may be
admitted if the Manager and a Majority of the Members consent to any such
admission. Any Additional Member shall make such Contribution as is agreed upon
in writing by the Company and the Additional Member, which writing shall specify
the value of the Additional Member’s Contribution, the time for making such
Contribution and the respective Percentage Interest of each Member following
such Contribution.  Each of the Members acknowledges and agrees that it is
intended that any dilution of Percentage Interests arising out of the admission
of any Additional Member will be proportionate among the Members based on their
Percentage Interests immediately preceding such admission.  Notwithstanding the
foregoing, a Person shall not become an Additional Member unless and until such
Person becomes a party to this Agreement as a Member by signing a counterpart
signature page to this Agreement and executing such documents and instruments as
the Manager may reasonably request to confirm such Person
 
19

--------------------------------------------------------------------------------

 
as a Member in the Company and such Person’s agreement to be bound by the terms
and conditions of this Agreement.
 
8.2 Accounting.  No Additional Member shall be entitled to any retroactive
allocation of any income, gain, loss or deduction of the Company.  The Company
may at the time an Additional Member is admitted close the Company books (as
though the Company’s tax year had ended) or make pro rata allocations of income,
gain, loss or deduction to an Additional Member for that portion of the
Company’s tax year in which such Member was admitted in accordance with the
provisions of IRC § 706(d) and the federal tax regulations thereunder.
 
ARTICLE 9
TRANSFERS OF INTERESTS
 
9.1 Restriction on Transfers.  Except as otherwise permitted by Section 9.2, no
Member or Assignee shall Transfer all or any portion of such Person’s interest
in the Company. Any purported Transfer not permitted under Section 9.2 shall be
null and void and of no force or effect whatsoever.
 
9.2 Permitted Transfers.  Subject to the conditions and restrictions set forth
in Sections 9.3 and 9.4, a Member or Assignee may at any time Transfer all or
any portion of such Person’s interest in the Company either (a) to any other
Member or as otherwise permitted under Section 9.7 or (b) with the consent of a
Majority of the Members (which may be withheld in the sole and absolute
discretion of any Member), to any other transferee.
 
9.3 Conditions to Permitted Transfers.  A Transfer shall not be permitted under
Section 9.2 unless and until the following conditions are satisfied:
 
(a)           The Assignor and Assignee have executed and delivered to the
Company such documents and instruments of conveyance as may be necessary or
appropriate in the opinion of counsel to the Company to effect such Transfer and
to confirm the agreement of the Assignee to be bound by the provisions of this
Agreement.

(b)           The Assignor and/or Assignee have reimbursed the Company for all
costs and expenses that the Company reasonably incurs in connection with the
Transfer.

(c)           The Assignor and Assignee have provided to the Company the
Assignee’s taxpayer identification number, sufficient information to determine
the Assignee’s initial tax basis in the interest Transferred and any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns and other legally required information statements
or returns.  Without limiting the generality of the foregoing, the Company shall
not be required to make any distribution otherwise provided for in this
Agreement with respect to any interest Transferred until it has received such
information.

 
20

--------------------------------------------------------------------------------

 
9.4 Rights and Obligations of Assignees and Assignors.
 
(a)           A Transfer by any Member or other Person shall not itself dissolve
the Company or, except as otherwise provided in this Agreement, entitle the
Assignee to become a Member or exercise any rights of a Member, including,
without limitation, any Management Rights.

(b)           A Transfer by any Member, including, without limitation, any
involuntary Transfer, shall eliminate the Member’s power and right to vote (in
proportion to the extent of the interest Transferred) on any matter submitted to
the Members, and, for voting purposes, such interest shall not be counted as
outstanding in proportion to the extent of the interest Transferred. The
Transfer shall also eliminate the Member’s entitlement to any Management Rights
associated with the Transferred interest, including without limitation rights to
information, but shall not cause the Member to be released from any liability to
the Company solely as a result of the Transfer.

(c)           An Assignee not admitted as a Substitute Member shall be entitled
only to the Economic Rights with respect to the interest Transferred and shall
have no Management Rights (including, without limitation, rights to any
information or accounting of the affairs of the Company or to inspect the books
or records of the Company) with respect to the interest Transferred, other than
the right to receive such information as the Assignee may reasonably require for
tax purposes.  If the Assignee becomes a Substitute Member, the voting rights
associated with the interest Transferred shall be restored and be held by the
Substitute Member along with all other Management Rights with respect to the
interest Transferred.  The Assignee shall have no liability as a Member solely
as a result of the Transfer.

(d)           If a court of competent jurisdiction charges an interest in the
Company with the payment of an unsatisfied amount of a judgment, to the extent
so charged the judgment creditor shall be treated as an Assignee.

9.5 Admission of Assignee as Substitute Member.  Any transferee already a Member
shall be automatically admitted as a Substitute Member with respect to the
interest in the Company transferred to such Member.  Any other transferee shall
be admitted to the Company as a Substitute Member with the Management Rights of
a Member only upon satisfaction of all of the following conditions:
 
(a)           A Majority of the Members consent to such admission, which consent
may be given or arbitrarily withheld in the sole and absolute discretion of each
Member;

(b)           The Assignee becomes a party to this Agreement as a Member by
executing a counterpart signature page to this Agreement and executing such
documents and instruments as the Manager may reasonably request as necessary or
appropriate to confirm such Assignee as a Member in the Company and such
Assignee’s agreement to be bound by the terms and conditions of this Agreement;

 
21

--------------------------------------------------------------------------------

 
(c)           The Assignee pays or reimburses the Company for all reasonable
legal, filing and publication costs that the Company incurs in connection with
the admission of the Assignee as a Member with respect to the interest
Transferred; and

(d)           If the Assignee is not a natural person of legal majority, the
Assignee provides the Company with evidence reasonably satisfactory to counsel
for the Company of the authority of the Assignee to become a Member and to be
bound by the terms and conditions of this Agreement.

9.6 Effect of Admission of Substitute Member.  A Substitute Member shall have,
to the extent of the interest Transferred, the rights and powers, and be subject
to the restrictions and liabilities, of a Member and shall be liable for any
obligations of the Assignor to make Contributions but shall not be obligated for
liabilities unknown to the Substitute Member at the time of becoming a Member
and not ascertainable from the Articles.  Notwithstanding the admission of a
Substitute Member, the Assignor shall not be released from any liability the
Assignor may have to the Company.
 
9.7 Gramor Buyout Right; ROIC Option to Purchase.
 
(a) In the event of any Construction Loan Impasse, Gramor shall have the right
but not the obligation to give a “Buyout Notice” to ROIC under this Section
9.7(a) electing to purchase either directly or through a designee, or to have
the Company purchase and liquidate, all, but not less than all, of ROIC’s
interest in the Company for an amount equal to all unreturned Contributions of
ROIC to the Company plus all accrued and undistributed Preferential Return on
Capital on such Contributions.  Any acquisition or liquidation under this
Section 9.7(a) of the interest of ROIC shall be closed on the date specified by
Gramor in a notice to ROIC that is within 60 days after Gramor’s delivery of the
Buyout Notice by the payment or distribution to ROIC in cash of the Buyout
Amount.  In connection with the purchase, if applicable, Gramor shall have
obtained and shall deliver on the Closing Date a release of ROIC and any
Affiliates from any guarantees provided by ROIC or its Affiliates in connection
with the Project, in form and content reasonably satisfactory to Gramor and all
affected Affiliates.
 
(b) ROIC shall have an option to purchase the interest in the Company of Gramor
in accordance with this Section 9.7(b).  By notice given by ROIC to Gramor
within 30 days after notice from Gramor to ROIC of the Stabilization of the
Project, ROIC shall have the right to elect to purchase all but not less than
all of the interest in the Company of Gramor in accordance with the following:
 
(i)           The option shall be exercisable for an amount (“Option Price”)
equal to the amount that Gramor would receive upon a sale of the Project and
accompanying dissolution and liquidation of the Company in accordance with
Article 10 assuming a sale of all Company Property for an amount equal to the
value of the Project determined by capitalizing the Scheduled Net Operating
Income at a 7.75% capitalization rate.  Upon any notice of exercise of
 
22

--------------------------------------------------------------------------------

 
the option given by ROIC to Gramor, the Manager shall calculate the value of the
Project in accordance with the foregoing and determine the Option Price in
accordance with the methodology described above.  For purposes of such
calculation, deductions or discounts sometimes taken into account for valuation
purposes, including without limitation for lack of marketability, for minority
interest, for prepayment penalties under the terms of any indebtedness and for
brokerage commissions, shall not be taken into account in determining the Option
Price but, if applicable, the Option Price shall be reduced by the amount of any
deemed loan payable by Gramor under Section 5.2(b) as provided therein.  The
term “Stabilization of the Project” shall mean the achievement by the Project of
a 90% occupancy rate based on signed leases of the leasable square footage of
the Project.  The term “Scheduled Net Operating Income” shall mean at the time
calculated scheduled annual rents under signed leases and pro forma annual rents
for unleased leaseable square footage in the Project (in each case ignoring any
free rent periods) less 5% vacancy.  Upon any exercise of the option by notice
given by ROIC, ROIC shall be bound to purchase and Gramor shall be bound to sell
for the Option Price.
 
(ii)           The closing of a purchase pursuant to the option shall occur on a
date that is not more than 30 days after the date of the determination of the
Option Price in accordance with Section 9.7(b)(i) (“Closing Date”) and is
specified by notice given by ROIC or, if ROIC has not specified such a date
within 20 days after the date of determination of the Option Price, in a notice
given by Gramor.
 
(iii)           At the closing on the Closing Date, ROIC or is designee shall
pay Gramor the Option Price in cash and Gramor shall deliver an assignment, in
form and content reasonably satisfactory to ROIC (or its designee), warranting
to good and unencumbered title to the interest being transferred, subject only
to the restrictions and provisions of this Agreement and if applicable, any
liens on Gramor’s interest in the Company required to have been granted to
lenders to the Company.  In connection with the purchase, ROIC shall have
obtained and shall deliver on the Closing Date a release of Gramor and any
Affiliates from any guarantees provided by Gramor or its Affiliates (including,
if applicable, Barry Cain) in connection with the Project, in form and content
reasonably satisfactory to Gramor and all affected Affiliates.  Gramor may
choose to receive, in lieu of cash consideration, all or part of Gramor’s net
proceeds in ROIC’s affiliate REIT, Retail Opportunity Investments Corp, ticker
(ROIC).  In such event, ROIC shall, at Gramor’s sole cost and expense, prepare
all necessary documents and otherwise cooperate with Gramor to enable such
portion of the transaction contemplated by this Agreement to be consummated as a
tax deferred UPREIT Exchange.  ROIC shall (i) refrain from taking any action
that could impair the tax deferred status of the transaction contemplated by
this Section 9.7(b)(iii) (the “Transaction”) for a period of five (5) years
after closing and (ii) guaranty for a period of five (5) years after closing the
tax free nature of the portion of the Transaction that Gramor elects to
consummate as a tax deferred UPREIT Exchange.  The lock up period for the
Operating Partnership Units involved in said portion of the Transaction shall be
one (1) year from closing.  For all purposes with respect to the Transaction,
the value of ROIC stock shall be the average daily market price for said stock
between the effective date of the purchase and sale agreement and close of
business of the New York Stock Exchange on the day before closing of the
Transaction.  Gramor shall be solely responsible to pay any and all attorney
fees and all other

 
23

--------------------------------------------------------------------------------

 
fees and costs incurred by ROIC and Gramor with respect to the preparation of
the documents and additional steps necessary under this provision.  Since ROIC
has no issuable warrants, it is understood that Gramor, at any time before or
after the closing of this transaction, may purchase warrants on the open market
for resale or retention for the purpose of exercising such warrants, or portion
thereof at such time and under such conditions as are provided in such
warrants.  Gramor shall, with ROIC’s guidance, comply with all applicable SEC
and other regulations relating to such transactions and disclosure thereof.
 
9.8 Distributions and Allocations to Transferred Interests.  Upon any Transfer
during any Fiscal Year made in compliance with the provisions of this Article 9,
Profits, Losses, each item thereof and all other items attributable to such
interest for such Fiscal Year shall be divided and allocated between the
Assignor and the Assignee by taking into account their varying interests during
such Fiscal Year in accordance with IRC § 706(d), using any conventions
permitted by law and selected by the Company.  All distributions on or before
the date of such Transfer shall be made to the Assignor and all distributions
thereafter shall be made to the Assignee.  In furtherance and not in limitation
of the foregoing, if Gramor’s interest is purchased by ROIC pursuant to the
option provided for in Section 9.7(b), Gramor shall participate in all
allocations and distributions to the Members through the Closing Date.
 
ARTICLE 10
DISSOLUTION AND WINDING UP
 
10.1 Exercise of Voting Rights.  Each Member may, in the sole discretion of such
Member, vote as the Member sees fit with respect to any matter requiring a vote
of the Members under this Agreement or the Act, including, without limitation, a
dissolution of the Company.
 
10.2 Dissolution Events.  Notwithstanding that, pursuant to the Articles, the
duration of the Company is perpetual, the Members intend and agree that the
Company shall dissolve and commence winding up and liquidating upon the first to
occur of any of the following (each, a ”Dissolution Event”):
 
(a)           Any sale of all or substantially all of the Company Property; or
 
(b)           The vote of a Majority of the Members to dissolve, wind up and
liquidate the Company.
 
Notwithstanding anything in the Act to the contrary, to the maximum extent
permitted by law, the Dissolution Events are the exclusive events that may cause
the Company to dissolve, and the Company shall not dissolve prior to the
occurrence of a Dissolution Event notwithstanding the occurrence of any event
specified in the Act or any other event that might otherwise cause a
dissolution.
 
 
24

--------------------------------------------------------------------------------

 
10.3 Winding Up.  Upon the occurrence of a Dissolution Event, the Company shall
continue solely for the purposes of winding up its affairs in an orderly manner,
satisfying the claims of its creditors and Members and liquidating or
distributing its assets to the extent necessary therefor.  Neither the Manager
nor any Member shall take any action that is inconsistent with, or not necessary
to or appropriate for, the orderly winding up of the Company’s business and
affairs.  The Manager (or, if there is none then serving, a Majority of the
Members, acting as Manager) shall oversee the winding up and dissolution of the
Company, cause the Company Property to be distributed in kind or to be
liquidated as promptly as is consistent with obtaining the fair value thereof
and, subject to Section 10.4, cause the proceeds therefrom and any remaining
Property, to the extent sufficient therefor, to be applied and distributed in
the following order:
 
(a)           First, to the payment and discharge of all of the Company’s debts
and liabilities to creditors, including any Member to the extent permitted under
the Act;
 
(b)           Second, to the payment and discharge of any remaining debts or
liabilities of the Company to any Member; and
 
(c)           Third, to the Members in accordance with positive balances in
their Capital Accounts, after giving effect to all Contributions, distributions
and allocations for all periods, in each case after the Capital Accounts have
been adjusted as provided in Article 6 and no later than the earlier of (i) the
end of the taxable year in which the date of the liquidation of the Company
occurs or (ii) 90 days after the date of the liquidation of the Company.
 
The Manager or a Member that performs more than de minimis services in
completing the winding up and termination of the Company pursuant to this
Article 10 shall be entitled to receive reasonable compensation for the services
performed.
 
10.4 Establishment of Trust or Reserves.  In the reasonable discretion of the
Manager a pro rata portion of the distributions that would otherwise be made to
the Members pursuant to this Article 10 may be:
 
(a) Distributed to a trust established for the benefit of the Members for the
purposes of liquidating Company assets, collecting amounts owed to the Company
and paying any contingent or unforeseen liabilities or obligations of the
Company.  The assets of any such trust shall be distributed to the Members from
time to time, in the reasonable discretion of the Manager (or a Majority of the
Members if there is no Manager then serving) in the same proportions as the
amount distributed to such trust by the Company would otherwise have been
distributed to the Members pursuant to Section 10.3; or
 
(b) Withheld to provide a reasonable reserve for Company liabilities (contingent
or otherwise) and to reflect the unrealized portion of any installment
obligations
 
25

--------------------------------------------------------------------------------

 
owed to the Company; provided that such withheld amounts shall be distributed to
the Members as soon as practicable.
 
10.5 Notices of Dissolution Event, etc.  If any Dissolution Event occurs, the
Manager shall, within 30 days thereafter, provide notice thereof to each Member
and take such other actions as the Manager determines to be necessary or
appropriate.
 
ARTICLE 11
BOOKS, RECORDS AND ACCOUNTINGS
 
11.1 Books and Records.  At the expense of the Company, the Manager shall
maintain records and accounts of all operations and expenditures of the
Company.  Records and accounts shall be kept on the accrual method of
accounting.  The fiscal year of the Company shall be the calendar year.  At a
minimum the Company shall keep at its principal place of business the following
records:
 
(a)           A current list of the full name and last known business, residence
or mailing address of each Member and Manager, both past and present;
 
(b)           A copy of the Articles and all amendments thereto, together with
executed copies of any powers of attorney pursuant to which any amendment has
been executed;
 
(c)           Copies of the Company’s federal, state and local income tax
returns and reports, if any, for the three most recent years;
 
(d)           Copies of the Company’s currently effective written Operating
Agreement and all amendments thereto, copies of any writings permitted or
required under the Act and copies of any financial statements of the Company for
the three most recent years;
 
(e)           Minutes of any meetings of the Members and any consents obtained
from Members for actions taken without a meeting; and
 
(f)           To the extent not contained in this Agreement, a statement
prepared and certified as accurate by the Manager that describes (i) the amount
of cash and a description and statement of the agreed value of other Property or
consideration contributed by each Member or that each Member has agreed to
contribute in the future, (ii) the times at which or events on the occurrence of
which any additional Contributions agreed to be made by each Member, if any, are
to be made and (iii) if agreed upon, the time at which or the events upon which
the Company is to be dissolved and its affairs wound up.
 
11.2 Reports.
 
 
26

--------------------------------------------------------------------------------

 
(a) Within 45 days after the end of each Fiscal Year of the Company or as soon
thereafter as is reasonably practicable, the Company shall furnish to each
Member an annual report consisting of at least the following to the extent
applicable:
 
(i)           A copy of the Company’s federal, state and local income tax return
for that Fiscal Year;
 
(ii)           A set of audited financial statements for the Company for the
Fiscal Year prepared in accordance with generally accepted accounting
principles; drafts thereof shall be provided to ROIC for review within thirty
(30) days of the end of each fiscal year; and
 
(iii)           Any additional information that the Members may require for the
preparation of their individual federal and state income tax returns.
 
(b) Within 15 days after the end of each calendar month, the Company shall
furnish to each Member a monthly and year-to-date balance sheet and profit and
loss statement prepared in accordance with generally accepted accounting
principles and a statement of changes in the Member’s capital accounts, a
variance report comparing actual costs and revenues with budgeted costs and
expenses and revenues on a category basis, along with a reasonably detailed
explanation of all material with significant variances and all changes in any
timetables related thereto, a leasing report that shall describe in reasonable
detail all leasing efforts and leasing prospects, letters of intent and leases
made, identified, or entered into during such period, a rent roll, a bank
statement with reconciliations, if applicable, a calculation by Manager of the
amount of Net Operating Cash flow for the preceding calendar year and a
calculation by Manager of the anticipated distributions, if any, to Members
pursuant to ARTICLE 7, including a calculation of the undistributed Preferential
Return on Capital Amounts, if any, and any additional information that the
Members may require as supporting schedules to the above.
 
(c) The Manager shall provide the Members with copies of construction progress
reports delivered by the general contractor, at regular intervals, but in any
event not less frequently than monthly,
 
(d) Within 15 days after the end of each calendar month, the Manager shall
provide the Members with monthly status reports which shall include the
following:  (a) an operating statement and report of financial condition of the
Company for such period; (b) a variance report, comparing actual costs and
expenses and revenues with budgeted costs and expenses and revenues on a
category basis along with a reasonably detailed explanation of all material or
significant variances and all changes in any time schedules relating thereto;
(c) a leasing report, which shall describe in reasonable detail all leasing
efforts and leasing prospects, letters of intent and leases made, identified or
entered into during such period, and a current rent roll; (d) bank statements
and bank reconciliations, (e) if applicable, a calculation by Manager of the
amount of Net Operating Cash Flow for the preceding calendar month and a
calculation by Manager of the respective distributions if any, to Members
pursuant to ARTICLE 7, including a
 
 
27

--------------------------------------------------------------------------------

 
calculation of the undistributed Preferential Return on Capital amounts, if any,
and (f) any additional information that the Members may require as supporting
schedules to the foregoing.
 
(e) In addition, if the Company indemnifies or advances expenses to a Manager or
Member in connection with a proceeding by or in the right of the Company, the
Company shall report the indemnification or advance in writing to the Members.
 
(f) The Manager shall pay from gross cash proceeds from Company operations any
taxes payable by the Company.
 
(g) The Manager will also provide to its Members any additional financial
information and materials reasonably requested by the Members or their auditors.
 
11.3 Rights of Members; Inspection.  Each Member shall have the right to receive
the reports and information required to be provided by the Act, the Articles or
this Agreement. Upon reasonable request, each Member, and any authorized
representative of any Member, shall have the right, during ordinary business
hours, to inspect and copy, at the requesting Member’s expense, the books and
records that the Company is required to maintain and keep by the Act, the
Articles or this Agreement.
 
ARTICLE 12
ADOPTION AND AMENDMENT
 
This Agreement shall be adopted and be effective only upon execution by all of
the Members shown as signatories hereto.  This Agreement and the Articles may be
amended, restated or modified from time to time by a Majority of the Members
then entitled to vote, consent to or otherwise decide any matter submitted to
the Members, as determined pursuant to this Agreement; provided that any
amendment that would change the number of managers of the Company shall require
the affirmative vote of all Members then entitled to vote.  Subject to the
foregoing, neither the Manager nor any Member shall have any vested rights under
this Agreement that may not be modified from time to time through an amendment
to this Agreement.
 
ARTICLE 13
MISCELLANEOUS
 
13.1 Application of Oregon Law.  This Agreement, and the application or
interpretation hereof, shall be governed exclusively by its terms and by the
laws of Oregon, and specifically the Act, without regard to choice of law rules.
 
13.2 Construction.  Whenever required by the context in this Agreement, the
singular number shall include the plural and vice versa, and any gender shall
include the masculine, feminine and neuter genders.  The term “Member” when used
in any provision relating to
 
 
28

--------------------------------------------------------------------------------

 
Capital Accounts or any other tax or financial matter shall be deemed to include
any Person having Economic Rights under this Agreement.
 
13.3 Counterparts; Facsimiles.  This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.  Facsimile signatures of the parties on this Agreement
or any amendment of this Agreement shall be deemed original signatures, and each
Member or other party shall forward the original signed version of such document
promptly following facsimile transmission.
 
13.4 Waiver of Partition.  Each Member specifically waives any direct or
indirect right of partition such Member may have or may hereafter acquire that
would enable such Member to cause any Company Property to be the subject of a
suit for partition.
 
13.5 Execution of Additional Instruments.  Each Member hereby agrees to execute
such other and further statements of interest and holdings, designations, powers
of attorney and other instruments necessary to effectuate the purposes of this
Agreement or comply with any laws, rules or regulations applicable to the
Company.
 
13.6 Headings.  The headings in this Agreement are inserted for convenience only
and do not describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof.
 
13.7 Heirs, Successors and Assigns.  Each and all of the covenants, terms,
provisions and agreements contained in this Agreement shall be binding upon and
inure to the benefit of the parties and, to the extent permitted by this
Agreement, their respective heirs, legal representatives and permitted
successors and assigns.
 
13.8 Notices and Consents, etc.  Any notice, demand or communication required or
permitted to be given by any provision of this Agreement shall be in writing and
shall be deemed to have been sufficiently given or served for all purposes if
delivered personally to the party or to an executive officer of the party to
which the same is directed or, if sent by registered or certified mail, postage
and charges prepaid, addressed to the Manager’s, Member’s or Company’s address,
as shown in the records of the Company.  Except as otherwise provided herein,
any such notice shall be deemed to be given 5 Business Days after the date on
which the same was deposited in the United States mails.
 
13.9 Severability.  If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid, illegal or unenforceable
to any extent, the remainder of this Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.
 
13.10 Waivers.  The failure of any party to seek redress for violation of or to
insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a
 
29

--------------------------------------------------------------------------------

 
subsequent act, which would have originally constituted a violation, from having
the effect of an original violation.
 
13.11 Arbitration of Disputes.  Any action to enforce or interpret this
Agreement, or to resolve disputes with respect to this Agreement as
between:  the Company and a Member, or between or among the Members or between
the Manager and Members or between the Company and the Manager, will be settled
by arbitration in accordance with the rules of the Arbitration Services of
Portland.  Any party may commence arbitration by sending a written demand for
arbitration to the other parties.  Such demand will set forth the nature of the
matter to be resolved by arbitration.  The arbitration will be in Portland,
Oregon.  The substantive law of the State of Oregon will be applied by the
arbitrator to the resolution of the dispute.  The parties will share equally all
costs of arbitration.  The prevailing party will be entitled to reimbursement of
attorney fees, costs and expenses incurred in connection with the
arbitration.  All decisions of the arbitrator will be final, binding and
conclusive on all parties.  Judgment may be entered upon any such decision in
accordance with applicable law in any court having jurisdiction thereof.  The
arbitrator (if permitted under applicable law) or such court may issue a writ of
execution to enforce the arbitrator’s decision.
 
13.12 Entire Agreement.  The Articles, this Agreement and any other document to
be furnished pursuant to the provisions hereof embody the entire agreement and
understanding of the parties as to the subject matter contained herein.  There
are no restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to in such
documents.  This Agreement and such documents supersede all prior agreements and
understandings among the parties with respect to the subject matter hereof.
 
[signature page follows]
 
 
 
 
30

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the Members have executed this Agreement effective as of the
date first set forth above.
 
Members:
GRAMOR WILSONVILLE OTS LLC,
 
an Oregon limited liability company
     
By:  Gramor Investments, Inc.,
 
an Oregon corporation
     
By  /s/ Barry A. Cain
 
Barry A. Cain, President
         
ROIC OREGON, LLC
         
By  /s/ Stuart A. Tanz
 
[Name/Title]
 
Stuart A. Tanz
 
CEO

Manager Acknowledged and Appointment Accepted:

GRAMOR WILSONVILLE OTS LLC,
an Oregon limited liability company

By:  Gramor Investments, Inc.,
an Oregon corporation

By  /s/ Barry A. Cain
Barry A. Cain, President
 
 
31

--------------------------------------------------------------------------------

 
TABLE OF DEFINITIONS

Schedule A
 

 
Page
Act
i
Additional Contributions
i
Additional Member
i
Adjusted Capital Account Deficit
i
Affiliate
i
Agreement
i
Articles
i
Assignee
i
Assignor
ii
Business Day
ii
Buyout Notice
ii
Capital Account
ii
Cause
ii
Closing Date
ii
Company
ii
Company Property
ii
Construction Loan Impasse
ii
Contribution
ii
Depreciation
ii
Development Agreement
ii
Dissolution Event
ii
Distributed but Unmatched Preferential Return
ii
Economic Rights
iii
Fiscal Year
iii
Gramor
iii
Gross Asset Value
iii
Initial Contributions
iv
IRC
iv
Majority of the Members
iv
Management Rights
iv
Manager
iv
Member
iv
Net Cash From Sales or Refinancings
iv
Net Operating Cash Flow
iv
Option Price
v
Percentage Interest
v
Person
v
Preferential Return on Capital
v
Profits and Losses
v
Project
vi
Property
vi
Purchase Agreement
vi
ROIC
vi

 
 
 

--------------------------------------------------------------------------------

 
 
Scheduled Net Operating Income
vi
Stabilization of the Project
vi
Substitute Member
vi
Transfer
vi
Regulation
vii

 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
DEFINITIONS

The following terms used in the foregoing Operating Agreement shall have the
following meanings (unless otherwise expressly provided therein):
 
“Act” shall mean the Oregon Limited Liability Company Act, as amended from time
to time.
 
“Additional Contributions” shall have the meaning set forth in Section 5.1(c).

“Additional Member” shall mean a Member, other than a Substitute Member, that
has acquired both Economic Rights and Management Rights from the Company after
the date of this Agreement.
 
“Adjusted Capital Account Deficit” shall mean, 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)           The Capital Account shall be increased by any amounts such Member
is obligated to restore pursuant to any provision of this Agreement or is deemed
to be obligated to restore pursuant to the next to the last sentences of
Regulation §§ 1.704-2(g)(1) and 1.704-2(i)(5); and

(b)           The Capital Account shall be decreased by the items described in
Regulation §§ 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6).

This definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Regulation § 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

“Affiliate” shall mean, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such
Person.  For purposes of this definition, the terms “controls,” “is controlled
by” or “is under common control with” shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities or
other voting interests, by contract or otherwise.
 
“Agreement” shall mean this Operating Agreement, as amended or restated from
time to time.
 
“Approved Budget” means either the Development Budget or the Operating Budget or
any other budget or budget amendment approved pursuant to this Agreement (also
collectively, as “Approved Budgets”).
 
 
 

--------------------------------------------------------------------------------

 
Schedule A
 
“Articles” shall mean the Articles of Organization of the Company previously
filed with the Secretary of State of Oregon, as amended or restated from time to
time.
 
“Assignee” shall mean an Owner of Economic Rights that has not been admitted as
a Substitute Member, including an owner of Economic Rights pursuant to a
Transfer permitted under Article 9 or an owner of Economic Rights of a Member
whose membership in the Company has been terminated under the Act or this
Agreement.
 
“Assignor” shall mean a Person that either voluntarily or involuntarily
Transfers an interest in the Company.
 
“Business Day” shall mean any day other than Saturday, Sunday or any legal
holiday on which banks in Portland, Oregon are closed.
 
“Buyout Notice” shall have the meaning set forth in Section 9.7(a).

“Capital Account” shall mean the account maintained with respect to a Member in
accordance with Section 5.4.
 
“Cause” shall have the meaning set forth in Section 2.12.
 
“Closing Date” shall have the meaning set forth in Section 9.7(b)(ii).
 
“Company” shall mean the Oregon limited liability company governed by this
Agreement.
 
“Company Minimum Gain” shall mean the same as “partnership minimum gain” as set
forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
 
“Company Property” shall mean any Property owned by the Company.
 
“Construction Loan Impasse” shall have the meaning set forth in Section 2.2(c).

“Contribution” shall mean, with respect to any Member, the amount of all cash
and the Gross Asset Value of all other Property contributed by such Member to
the capital of the Company pursuant to this Agreement, net of liabilities
secured by such contributed Property that the Company is considered to assume or
take subject to pursuant to IRC § 752.
 
“Depreciation” shall mean, for each Fiscal Year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable for
federal income tax purposes 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 that bears the same ratio to such beginning
Gross Asset Value as
 
ii

--------------------------------------------------------------------------------

 
Schedule A
 
the federal income tax depreciation, amortization or other cost recovery
deduction for such Fiscal Year bears to such beginning adjusted tax basis;
provided 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 the Company.
 
“Development Agreement” shall have the meaning set forth in Section 2.3.

“Development Budget” shall mean the budget for the development of the Project
attached as Exhibit C.

“Dissolution Event” shall mean any of the events described in Section 10.2.
 
“Distributed but Unmatched Preferential Return” shall have the meaning set forth
in Section 6.1(a).

“Economic Rights” shall mean a Member’s share of the Profits, Losses or any
other items allocable to any period and distributions of Company Property
pursuant to the Articles and this Agreement but shall not include any Management
Rights.
 
“Fiscal Year” shall mean the Company’s fiscal year, which shall be determined
pursuant to IRC § 706.
 
“Gramor” shall mean Gramor Wilsonville OTS LLC, an Oregon limited liability
company.
 
“Gross Asset Value” shall mean with respect to any asset that 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 the Manager;

(b)           The Gross Asset Values of all Company assets shall be adjusted to
equal their respective gross fair market values, as determined by the Manager,
as of the following times:

(i)           The acquisition of an additional interest in the Company by any
new or existing Member in exchange for more than a de minimis Contribution;

(ii)           The distribution by the Company to a Member of more than a
de minimis amount of Property as consideration for an interest in the Company;
and

 
iii

--------------------------------------------------------------------------------

 
Schedule A
(iii)           The liquidation of the Company within the meaning of Regulation
§ 1.704-1(b)(2)(ii)(g);

provided, however, that adjustments pursuant to clauses (i) and (ii) of this
definition shall be made only if the Manager reasonably determines that such
adjustments are necessary or appropriate to reflect the relative Economic Rights
of the Members;

(c)           The Gross Asset Value of any 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 the Manager; and

(d)           The Gross Asset Values of assets shall be increased (or decreased)
to reflect any adjustments to the adjusted basis of such assets pursuant to
IRC § 734(b) or IRC § 743(b), but only to the extent that such adjustments are
taken into account in determining Capital Accounts pursuant to Regulation
§ 1.704-1(b)(2)(iv)(m) and clause (f) of the definition of Profits and Losses;
provided, however, that Gross Asset Values shall not be adjusted pursuant to
this clause (d) to the extent the Manager determines that an adjustment pursuant
to clause (b) of this definition is necessary or appropriate in connection with
a transaction that would otherwise result in an adjustment pursuant to this
clause (d).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
any of clauses (a), (b) or (d) of this definition, 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.  Notwithstanding any
provision of the Articles or the Act apparently to the contrary, ORS 63.185(4)
shall not apply in the event an additional or substitute Member is admitted to
the Company.

“Initial Contributions” shall have the meaning set forth in Section 5.1(b).
 
“Invested Capital” shall mean for each Member the sum of the aggregate
Contributions made by the Member (other than any Contribution deemed made by a
defaulting Member under Section 5.2(b)), less the total cash distributions made
to the Member under Sections 7.1(a)(iii), 7.1(b)(iii), and 7.1(b)(iv) in return
of such Member’s Contributions.
 
“IRC” shall mean the Internal Revenue Code of 1986, as amended, or corresponding
provisions of subsequent superseding federal revenue laws.
 
“Major Decisions” shall have the meaning set forth in Section 2.5.
 
“Majority of the Members” shall mean, at any time, the Member or Members
(including any proxy holder acting on behalf of a Member) holding more than
50 percent of the
 
iv

--------------------------------------------------------------------------------

 
Schedule A
votes held by Members then entitled to vote, consent to or otherwise decide any
matter submitted to the Members.
 
“Management Rights” shall mean the right of a Member to participate in the
management of the Company, including rights to information and to consent or
approve actions of the Members.
 
“Manager” shall mean the Person appointed as the Manager pursuant to the terms
of this Agreement.
 
“Member” shall mean each Member identified on Exhibit A as a Member and any
Person that may hereafter become an Additional or Substitute Member, but only
for so long as such Member is a Member under the terms of this Agreement, and,
solely for purposes of Economic Rights, shall also have the meaning set forth in
Section 13.2.
 
“Member Nonrecourse Debt” shall have the meaning set forth in Section
1.704-2(b)(4) of the Regulations for “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 Regulations.
 
“Member Nonrecourse Deductions” shall have the meaning set forth in Sections
1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations for “partner nonrecourse
deductions”.
 
“Net Cash From Sales or Refinancings” shall mean the net cash proceeds from all
sales and other dispositions (other than in the ordinary course of business) and
all refinancings of Company Property, less any portion thereof used to establish
reserves, all as determined by the Manager, and shall include all principal and
interest payments with respect to any note or other obligation received by the
Company in connection with sales and other dispositions (other than in the
ordinary course of business) of Company Property.
 
“Net Operating Cash Flow” shall mean the gross cash proceeds from Company
operations (including sales and dispositions of Company Property in the ordinary
course of business) less the portion thereof used to pay or establish reserves
for all Company expenses, debt payments, capital improvements, replacements, and
contingencies, all as determined by the Manager.  The foregoing shall not be
reduced by depreciation, amortization, cost recovery deductions, or similar
allowances but shall be increased by any reductions of reserves previously
established pursuant to the first sentence of this definition or of the
definition of Net Cash From Sales or Refinancings.
 
 
v

--------------------------------------------------------------------------------

 
Schedule A
 
“Nonrecourse Deductions” shall have the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
 
“Nonrecourse Liability” shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
 
“Option Price” shall have the meaning set forth in Section 9.7(b)(i).

“Operating Budget” shall mean the budget for the day to day operations of the
Project upon completion of construction and issuance of a final certificate of
occupancy for the Project.

“Percentage Interest” shall mean the percentage interest for each Member set
forth opposite the name of such Member on Exhibit A unless and until
(a) adjusted by agreement of all affected Members, (b) adjusted in accordance
with Section 8.1 if applicable or (c) in respect of any Member, reduced or
increased by reason of any Transfer permitted under this Agreement.
 
“Person” shall mean any natural person or entity, and the heirs, executors,
administrators, legal representatives, successors and assigns of each such
Person where the context so permits.
 
“Preferential Return on Capital” shall mean a cumulative, annually
compounding,  preferential return on Invested Capital of a Member equal to nine
percent (9%) per annum.
 
“Profits” and “Losses” shall mean, for each Fiscal Year, an amount equal to the
Company’s taxable income or loss for such Fiscal Year, determined in accordance
with IRC § 703(a) (for this purpose, all items of income, gain, loss or
deduction required to be stated separately pursuant to IRC § 703(a)(1) shall be
included in taxable income or loss) after any allocation of gross income in
accordance with Section 6.1(a), 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 shall be
added to such taxable income or loss;

(b)           Any expenditures of the Company described in IRC § 705(a)(2)(B) or
treated as IRC § 705(a)(2)(B) expenditures pursuant to Regulation
§ 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)           If the Gross Asset Value of any Company asset is adjusted pursuant
to clause (b) or (c) of the definition of Gross Asset Value, 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;

 
vi

--------------------------------------------------------------------------------

 
Schedule A
 
(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 Company Property
disposed of, 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, computed in
accordance with the definition of Depreciation;

(f)           To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to IRC § 734(b) or IRC § 743(b) is required pursuant to
Regulation § 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 complete
liquidation of a Member’s Economic Rights, 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 in any clause of this
definition, any items that are specially allocated pursuant to IRC § 704(b)
(which shall be allocated by applying rules analogous to those set forth in
clauses (a) through (f) of this definition) shall not be taken into account in
computing Profits or Losses.

“Project” shall have the meaning set forth in Section 1.2.
 
“Property” shall mean any property, real or personal, tangible or intangible,
including cash and any legal or equitable interest in such property, but
excluding services and promises to perform services in the future.
 
“Purchase Agreement” shall have the meaning set forth in Section 1.2.
 
“Regulation(s)” shall mean proposed, temporary and final federal tax regulations
in effect as of the date the Articles were filed and the corresponding sections
of any regulations subsequently issued that amend or supersede such regulations.
 
“ROIC” means ROIC Oregon, LLC.
 
“Scheduled Net Operating Income” shall have the meaning set forth in
Section 9.7(b)(i).
 
“Seller” shall have the meaning set forth in Section 1.2.
 
“Stabilization of the Project” shall have the meaning set forth in Section
9.7(b)(i).
 
 
vii

--------------------------------------------------------------------------------

 
Schedule A
 
“Substitute Member” shall mean an owner of Economic Rights admitted to all
rights of membership in the Company and thereby the holder of all Management
Rights of a Member.
 
“Transfer” shall mean with respect to any interest in the Company, as a noun,
any voluntary or involuntary assignment, sale or other transfer or disposition
of such interest and, as a verb, voluntarily or involuntarily to assign, sell or
otherwise transfer or dispose of such interest.  Pursuant to the Act, a
“transfer” shall not include a pledge or the granting of a security interest,
lien or other encumbrance in or against, any interest in the Company.
 
 
 
 
 
 
viii

--------------------------------------------------------------------------------

 
EXHIBIT A

MEMBERS, INITIAL CAPITAL ACCOUNTS AND PERCENTAGE INTERESTS

 
Members
Beginning
Contributions
Initial
Capital Accounts
Percentage
Interests
Number
of Votes
 
Gramor Wilsonville OTS LLC
 
 
$42,542.28
 
$42,542.28
 
50%
 
50
 
ROIC Oregon, LLC
 
 
$808,303.23
 
$808,303.23
 
50%
 
50

 
 
 
 
 

--------------------------------------------------------------------------------

 
EXHIBIT B

DEVELOPMENT AGREEMENT
 
 
 
 
 
 
 

 
 
 

--------------------------------------------------------------------------------

 
EXHIBIT C

DEVELOPMENT BUDGET

WILSONVILLE OLD TOWN SQUARE
                 
COST PROFORMA
                     
July 2010
                                                                     
LAND
                     
total site
    251,622  
sf
    13.93  
/sf
    3,506,000  
TOTAL LAND
    251,622  
sf
    13.93  
/sf
    3,506,000                                
HARD COST CONSTRUCTION
                           
fred meyer
    0  
sf
    0.00  
/sf
    0  
retail b-shell
    6,445  
sf
    92.82  
/sf
    600,000  
retail -b ti
    6,445  
sf
    40.00  
/sf
    260,000  
retail c - shell
    10,153  
sf
    104.45  
/sf
    1,060,000  
retail c - ti
    10,153  
sf
    40.00  
/sf
    410,000  
retail d1 - shell
    5,319  
sf
    104.40  
/sf
    560,000  
retail d1 - ti
    5,319  
sf
    40.00  
/sf
    210,000  
retail d2 - shell
    5,416  
sf
    109.80  
/sf
    590,000  
retail d2 - ti
    5,416  
sf
    40.00  
/sf
    220,000  
retail e - shell
    10,508  
sf
    83.29  
/sf
    880,000  
retail e - ti
    10,508  
sf
    40.00  
/sf
    420,000  
retail f - shell (restaurant)
    4,968  
sf
    106.82  
/sf
    530,000  
retail f - ti
    4,968  
sf
    100.00  
/sf
    500,000  
retail j - shell
    7,000  
sf
    85.00  
/sf
    600,000  
retail j - ti
    7,000  
sf
    40.00  
/sf
    280,000  
existing church renovation
    1,281  
sf
    156.13  
/sf
    200,000  
sitework - retail
    201,524  
sf
    12.13  
/sf
    2,444,000  
off sitework (frontage +Bailey)
 
32.6% of $2.7 mil +$110,000
        990,200  
contingency excluding reimburse lines
        5.00 %       366,000  
TOTAL HARD COSTS
                      $ 11,120,000  
 
                           
SOFT COSTS
                           
architect- building
                        600,000  
landscape architect
                        15,000  
civil
                        20,000  
survey
                        17,000  
environmental testing
                        13,000  
construction testing/soils
                        45,000  
appraisal
                        12,000  
lender's inspection
                        5,000  
legal
                        50,000  
development/building fees (includes rest)
              250,600  
traffic impact fee (includes, restaurants)
                  1,050,000  
marketing
                        30,000  

 
 

--------------------------------------------------------------------------------

 
title insurance/closing costs
                  20,000  
taxes
                        28,000  
insurance
                        15,000  
project mgmt 4% of total cost
                  700,000  
off-site interest payment
                        9,750  
leasing commission
                        0  
soft cost contingency
    5 %                 110,000  
TOTAL SOFT COSTS
                      $ 2,990,000                                
FINANCING
                           
fees-construction
    1.00                   140,000  
fees-permanent
    1.00                   150,000  
loan interest
    7.00 %                 750,000  
TOTAL FINANCING
                      $ 1,040,000                                
TOTAL COSTS
                      $ 18,660,000                                              
               

 
 
-ii-

--------------------------------------------------------------------------------

 
EXHIBIT D

PROPERTY MANAGEMENT AGREEMENT
 
 
 
 

 
 
 

--------------------------------------------------------------------------------

 
EXHIBIT E

PURCHASE AGREEMENT
 
 
 
 
 

 
 
 

--------------------------------------------------------------------------------

 
SCHEDULE 5.1(a)

GRAMOR REPRESENTATIONS & WARRANTIES

In connection with Gramor’s execution and delivery of this Agreement, Gramor is
assigning its right to purchase the real estate pursuant to the Purchase
Agreement.  Gramor has conducted the due diligence on the real estate to be
acquired for the Project and represents and warrants that the statements set
forth on this Schedule 5.1(a) are true and correct as of the date of this
Agreement and will be true and correct as of the closing date for the
acquisition of the real property pursuant to the terms of the Purchase
Agreement.

1.  
The costs and expenses set forth on Schedule 5.1(b) are the actual costs and
expenses without mark-up and are true and correct and relate solely to the
development of the Project.

2.  
The Company has no other members and has conducted its business since March 9,
2010, in accordance with all applicable law.  The Company and the Manager have
disclosed all material agreements, encumbrances and all other information that a
purchaser or investor would consider material in determining whether to invest
in the Company.

3.  
The Company and its Manager have conducted all of the due diligence on the
acquisition of the real estate pursuant to the terms of the Purchase Agreement
and as such represent and warrant to Company’s and Manager’s current actual
knowledge that the Property (as defined in the Purchase Agreement)

a.  
suits the needs for the intended development, including but not limited to all
zoning and other laws and regulations, the property has all available access to
public streets, utilities and infrastructure and is economically viable for its
intended use;

b.  
is free from all environmental contamination and hazardous materials;

c.  
has procured a survey sufficient for the issuance of an ALTA extended coverage
owner’s policy of title insurance without boundary, encroachment or survey
exceptions;

d.  
is free from all encumbrances and defects of title and will be transferred by
warranty deed subject only to the permitted encumbrances approved by Company;
and

e.  
is not subject to any claim or pending litigation;

 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
SCHEDULE 5.1(b)
OUT OF POCKET COSTS
AND EXPENSES INCURRED BY GRAMOR

               
 Invoices thru - 07/14/10
                                     
Ctrl# and Expense Category
 
Amount
         
710000  Land
    518,370.36            
740000  Architect
    273,680.42            
741000  Legal Fees
    29,459.65            
741500  Environmental Testing
    5,299.50            
742000  Soils Tests
    4,900.00            
743500  Permits
    17,499.67            
745000  Marketing/Operating Costs
    1,285.91            
747500  Title Ins & Closing Costs
    350.00            
Total Costs:
  $ 850,845.51            
Reimbursement amount of 95%
  $ 808,303.23  

 
 
 
 
 

--------------------------------------------------------------------------------

 
SCHEDULE 5.1(b)
OUT OF POCKET COSTS AND EXPENSES INCURRED BY GRAMOR
 

                                               
 Invoices thru - 07/14/10
                     
Invoice
Invoice
     
Expense
 
Check
Check
   
Ctrl#
Number
Date
Job
Property
Payee
Account
Amount
Number
Date
 
Description
                       
710000  Land
                     
P-131841
110352_1209
12/8/09
1103-52
1103-52
11fredme
18100
500,000.00
10522
12/11/09
 
Earnest Money Deposit
P-137658
71410
7/14/10
1103-52
1103-52
oliva
18100
18,370.36
     
Interest on Earnest
             
518,370.36
                               
740000  Architect
                   
P-112419
118580
2/26/08
1103-52
1103-52
11groupm
18500
690.00
10445
4/24/08
 
2080070
P-113422
118997
4/1/08
1103-52
1103-52
11groupm
18500
6,910.00
10445
4/24/08
 
2080070.00 Schematic
P-114993
119398
4/30/08
1103-52
1103-52
11groupm
18500
17,843.33
10456
6/3/08
 
2080070.00 Schematic
P-116047
119805
5/28/08
1103-52
1103-52
11groupm
18500
34,301.79
10477
9/22/08
 
2080070.00 Schematic
P-117454
120228
7/2/08
1103-52
1103-52
11groupm
18500
29,237.80
10485
10/14/08
 
2080070.00 Schematic
P-117465
1000454
8/12/08
1103-52
1103-52
11groupm
18500
160.07
10492
12/18/08
 
2080070.00 Schematic
P-118611
1000732
9/3/08
1103-52
1103-52
11groupm
18500
36,929.44
10492
12/18/08
 
2080070.00 Schematic
P-119291
1001227
10/6/08
1103-52
1103-52
11groupm
18500
14,463.40
10502
2/25/09
 
2080070 Schem design
P-120578
1001566
11/4/08
1103-52
1103-52
11groupm
18500
31,823.92
10509
5/1/09
 
2080070.00 Prof svcs
P-122195
1001985
12/8/08
1103-52
1103-52
11groupm
18500
5,830.91
10509
5/1/09
 
2080070.00 Design Rev
P-122196
1002295
1/13/09
1103-52
1103-52
11groupm
18500
3,566.40
10516
6/19/09
 
2080070.00 Schem
P-122197
105733
12/4/08
1103-52
1103-52
11fordg
18500
97.27
10501
2/25/09
 
Copies
P-123148
1002738
2/3/09
1103-52
1103-52
11groupm
18500
2,064.78
10516
6/19/09
 
2080070.00 Prof svcs
P-124674
1003058
3/3/09
1103-52
1103-52
11groupm
18500
995.00
10516
6/19/09
 
2080070.01 Site pricing
P-127582
3314894
6/25/09
1103-52
1103-52
11fordg
18500
16.00
10518
8/14/09
 
Copies
P-129306
3373330
8/14/09
1103-52
1103-52
11fordg
18500
321.54
10523
12/18/09
 
Copies

 
 
 

--------------------------------------------------------------------------------

 
P-130178
1006188
10/2/09
1103-52
1103-52
11groupm
18500
3,571.71
10525
12/18/09
 
2080070.02 Prof svcs
P-131441
1006489
11/3/09
1103-52
1103-52
11groupm
18500
1,345.00
10537
3/23/10
 
2080070.02 Prof svcs
P-131828
3491704
12/7/09
1103-52
1103-52
11fordg
18500
16.00
10536
3/23/10
 
Copies
P-132203
1006960
12/8/09
1103-52
1103-52
11groupm
18500
583.10
10537
3/23/10
 
2080070.02 Prof svcs
P-135608
1008595
4/6/10
1103-52
1103-52
11groupm
18500
82,912.96
10558
6/1/10
 
2080070.03 prof svcs
             
273,680.42
                               
741000  Legal Fees
                   
P-124672
3365872
2/19/09
1103-52
1103-52
11stoelr
18500
2,212.00
10517
6/19/09
 
Legal fees
P-124673
3369315
3/11/09
1103-52
1103-52
11stoelr
18500
513.50
10517
6/19/09
 
Legal fees
P-126146
3381573
5/12/09
1103-52
1103-52
11stoelr
18500
39.50
10519
8/14/09
 
Legal fees
P-126147
3375578
4/22/09
1103-52
1103-52
11stoelr
18500
1,728.50
10519
8/14/09
 
Legal fees
P-127065
3387863
6/9/09
1103-52
1103-52
11stoelr
18500
2,567.50
10527
12/18/09
 
Legal fees
P-127583
3393799
7/8/09
1103-52
1103-52
11stoelr
18500
395.00
10527
12/18/09
 
Legal fees
P-129305
3399897
8/10/09
1103-52
1103-52
11stoelr
18500
1,422.00
10527
12/18/09
 
Legal fees
P-129537
3407498
9/15/09
1103-52
1103-52
11stoelr
18500
1,264.00
10527
12/18/09
 
Legal fees
P-130174
3411430
10/6/09
1103-52
1103-52
11stoelr
18500
1,316.00
10532
2/17/10
 
Legal fees
P-131442
3417339
11/5/09
1103-52
1103-52
11stoelr
18500
2,115.00
10539
3/23/10
 
Legal fees
P-132204
3423732
12/7/09
1103-52
1103-52
11stoelr
18500
1,739.00
10539
3/23/10
 
Legal fees
P-133026
3430506
1/12/10
1103-52
1103-52
11stoelr
18500
4,845.00
10549
4/29/10
 
Legal fees
P-133839
3435962
2/4/10
1103-52
1103-52
11stoelr
18500
2,380.00
10554
6/1/10
 
Legal fees
P-134641
3441943
3/8/10
1103-52
1103-52
11stoelr
18500
552.50
10554
6/1/10
 
Legal fees
P-135434
40037
3/31/10
1103-52
1103-52
11ssgray
18500
672.60
10548
4/29/10
 
Legal fees
P-135837
3448114
4/8/10
1103-52
1103-52
11stoelr
18500
1,785.00
     
Legal fees
P-136364
3454283
5/11/10
1103-52
1103-52
11stoelr
18500
2,252.50
     
Legal fees
P-136690
4178337
5/19/10
1103-52
1103-52
11perki
18500
1,660.05
     
Legal fees
             
29,459.65
                               
741500  Environmental Testing
                 
P-125158
20150
4/6/09
1103-52
1103-52
11geodes
18500
2,220.00
10515
6/19/09
 
GRAMORDEV-3-01 Prof
P-126148
20356
5/4/09
1103-52
1103-52
11geodes
18500
2,576.50
10515
6/19/09
 
Fred Meyer Site svcs

 
 
ii

--------------------------------------------------------------------------------

 
P-133055
21407
10/8/09
1103-52
1103-52
11geodes
18500
503.00
10529
1/27/10
 
GRAMORDEV-3-01 Sept
             
5,299.50
                               
742000  Soils Tests
                   
P-112420
91411
2/15/08
1103-52
1103-52
11geo
18500
4,900.00
10444
4/24/08
 
1.12E+08
             
4,900.00
                               
743500  Permits
                   
P-102816
103153
4/27/07
1103-52
1103-52
11fordg
18500
23.12
10371
6/26/07
 
Copies to Ankrom Moisan
P-131079
160_1109
11/18/09
1103-52
1103-52
citywils
18500
160.00
10521
11/19/09
 
Class 1 Bldg C & G
P-136046
560_0510
5/10/10
1103-52
1103-52
citywils
18500
560.00
10552
5/11/10
 
Bldg F Class II App Fee
P-137299
1675655_0610
6/18/10
1103-52
1103-52
citywils
18500
16,756.55
10561
6/18/10
 
Bldg permit plan rev fees
             
17,499.67
                               
745000  Marketing/Operating Costs
                 
P-117302
2158_0708
8/7/08
1103-52
1103-52
11bankca
18500
2.95
10463
8/14/08
 
4.89E+15
P-117317
Copier_1103
8/11/08
1103-52
1103-52
11gdi
18500
255.00
10484
10/14/08
 
Copies
P-123109
2969893
2/12/09
1103-52
1103-52
11fordg
18500
19.31
10513
6/19/09
 
Copies Fred Meyer
P-125577
Copier_0509
5/8/09
1103-52
1103-52
11gdi
18500
139.50
10514
6/19/09
 
Copies Enviro Phs 1
P-128353
Copier_0809
8/18/09
1103-52
1103-52
11gdi
18500
180.00
10524
12/18/09
 
Copies mktg brochures
P-129220
1523
8/31/09
1103-52
1103-52
11rivcit
18500
75.33
10526
12/18/09
 
August
P-132469
2132
12/31/09
1103-52
1103-52
11rivcit
18500
16.20
10538
3/23/10
 
December
P-133378
585412-94_0210
2/2/10
1103-52
1103-52
1128740
18500
50.00
10530
2/4/10
 
585412-94 Wilsonville
P-133579
971E68060
2/6/10
1103-52
1103-52
11united
18500
100.60
10531
2/11/10
 
January
P-133844
51054
1/31/10
1103-52
1103-52
11intcal
18500
67.81
10535
2/25/10
 
Conf calls
P-134004
2417
2/28/10
1103-52
1103-52
11rivcit
18500
20.25
10538
3/23/10
 
February
P-135145
2575
3/31/10
1103-52
1103-52
11rivcit
18500
16.20
10547
4/29/10
 
March
P-135308
971E68140
4/3/10
1103-52
1103-52
11united
18500
20.21
10545
4/8/10
 
971E68 March

 
 
iii

--------------------------------------------------------------------------------

 
P-135567
1740108343
3/31/10
1103-52
1103-52
11intcal
18500
103.57
10546
4/22/10
 
Conf calls 484825
P-136495
Copier_0510
5/19/10
1103-52
1103-52
11gdi
18500
135.00
     
ICSC Brochures
P-136900
971E68230
6/5/10
1103-52
1103-52
11united
18500
83.98
10559
6/9/10
 
971E68 May
             
1,285.91
                               
747500  Title Ins & Closing Costs
                 
P-124892
467791
4/10/09
1103-52
1103-52
11chitit
18500
350.00
10512
6/19/09
 
50-yr title srch envir lev
             
350.00
                               
Total Costs:
           
$850,845.51
                               
Reimbursement amount of 95%
       
$808,303.23
       

 
 
 
 
 
 iv

--------------------------------------------------------------------------------