EXHIBIT 10.1
205 DEMONBREUN REALTY HOLDING COMPANY LLC
LIMITED LIABILITY COMPANY AGREEMENT
DATED AS OF JULY 18, 2014

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LIMITED LIABILITY COMPANY AGREEMENT OF 205 DEMONBREUN REALTY HOLDING COMPANY LLC
(the “Company”), dated as of July 18, 2014, by and among WMG REALTY HOLDING
COMPANY LLC, a Delaware limited liability company (“Common Member”), and QARTH
HOLDINGS NT-II, LLC, a Delaware limited liability company (“Preferred Member”),
and such other persons as shall hereinafter become members as hereinafter
provided (Common Member and Preferred Member, each a “Member” and, collectively,
the “Members”).
Preliminary Statement
WHEREAS, the Company was formed as a Delaware limited liability company pursuant
to the filing of a Certificate of Formation in the office of the Secretary of
State of the State of Delaware on February 11, 2014 (the “Certificate”); and
WHEREAS, the Members desire to enter into this Agreement to provide for the
regulation and establishment of the affairs of the Company, the conduct of the
Company’s business and the relations among them as Members of the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Members hereby agree as follows:
Agreement
ARTICLE I
Definitions
Section 1.1    Definitions. The following terms shall have the following
meanings for purposes of this Agreement:
“Additional Member” means each Member that is admitted to the Company after the
Wipeout Date.
“Affiliate” means, with respect to any Person, any other Person who Controls, is
Controlled by or is under common Control with such Person. For purposes hereof,
each of (i) the Common Member Principals, (ii) the initial Property Manager,
(iii) the initial Parking Manager, (iv) the initial Construction Manager and (v)
the initial Architect is deemed an Affiliate of Common Member.
“Agreement” means this Limited Liability Company Agreement, as it may be
amended, supplemented, restated or otherwise modified from time to time.
“Appraisal Notice” has the meaning set forth in Section 10.6(d).
“Appraised Value” means the sum of the values of the Company Assets (i) as
determined by agreement between Preferred Member and Common Member within twenty
(20) Business Days after the date of an Appraisal Notice or (ii) failing such
agreement, as determined by an Appraiser appointed by agreement between
Preferred Member and Common Member within ten (10) Business Days of the
expiration of the twenty (20) Business Day period during

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which Preferred Member and Common Member attempt to jointly determine the
Appraised Value or (iii) failing such agreement to appoint, as determined by an
Appraiser appointed by agreement between two other Appraisers, one of whom shall
be appointed by Preferred Member and one shall be appointed by Common Member.
The Appraiser will determine (and will be instructed by the Members to
determine) the Appraised Value by deriving the fair market value of the Company
Assets utilizing customary appraisal methodology.
“Appraiser” means a certified member of the Appraisal Institute with a national
practice who has at least ten (10) years’ standing and established experience in
appraising properties of the same type and in the geographic area as any Company
Assets that are the subject of such appraisal.
“Approved Fund” means any Fund (defined as any Person (other than an individual)
that is (or will be) engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the ordinary
course of its business) that is administered or managed by (a) an Affiliate of a
Preferred Member or (b) an entity or an Affiliate of an entity that administers
or manages Preferred Member.
“Architect” means (i) initially, Loewenberg Architect LLC, an Illinois limited
liability company; or (ii) upon the removal or resignation of the initial
Architect as a result of (x) a material default by the initial Architect after
the lapse of any applicable notice and cure periods under the Architect
Agreement, (y) to the extent applicable, the exercise by Preferred Member of the
rights afforded to it pursuant to Section 4.3(c) in connection with a material
default by the initial Architect after the lapse of any applicable notice and
cure periods under the Architect Agreement, or (z) the occurrence of a Material
Non-Compliance Event or the removal of Common Member as Manager hereunder, any
successor Architect designated and appointed by Preferred Member; or (iii) upon
the removal or resignation of the initial Architect for any reason other than
those set forth in the foregoing clause (ii), any successor Architect designated
by the Manager and approved by the Members (provided, however, that Preferred
Member shall be deemed to have approved any successor Architect that is an
architectural company that has provided architectural services for no less than
ten (10) high rise residential construction projects in the United States of
similar design and complexity as the Property and with no less than two thousand
(2,000) residential units (each, a “Pre-Approved Architect”)).
“Architect Agreement” means that certain Standard Form of Agreement between
Owner and Architect dated August 8, 2013, by and between the Company and the
Architect.
“Authorized Person” has the meaning set forth in Section 4.4(a).
“Bankruptcy Event” means, with respect to any Person, (i) the voluntary or
involuntary commencement of a case by or against such Person under Title 11 of
the United States Code (the “Bankruptcy Code”) or any under any bankruptcy,
insolvency, reorganization, debt arrangement, dissolution or similar provision
of state law now or hereafter in effect; (ii) the consent by such Person to any
such case or to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person; (iii) such Person makes a general assignment for the
benefit of creditors or agrees to a similar procedure under state law; (iv) the
entry of an order for relief under the Bankruptcy Code

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against such Person; (v) the imposition of a judicial or statutory lien on all
or a substantial part of such Person’s assets, if such lien is not discharged
(whether by bonding or otherwise) within one hundred twenty (120) days after the
imposition thereof; and/or (vi) such Person or its board of directors, members,
partners or managers shall vote to implement, or otherwise consent to, any of
the foregoing. Notwithstanding the preceding sentence, the involuntary
commencement of a bankruptcy case under the Bankruptcy Code shall not be deemed
a “Bankruptcy Event” if such case was not directly or indirectly solicited by or
on behalf such Person and such case is dismissed ninety (90) days after the
filing of the involuntary petition for relief.
“Book Basis” means, with respect to any asset of the Company, the asset’s
adjusted basis for federal income tax purposes, except as follows:
(i)    The initial Book Basis of any asset contributed by a Member to the
Company shall be the gross fair market value of such asset.
(ii)    The Book Basis of the Company Assets shall be adjusted to equal their
respective gross fair market values if the Manager determines (subject to
Preferred Member consent) to restate Capital Accounts in accordance with the
Regulations.
(iii)    The Book Basis of any item of Company Assets 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 Manager (subject to Preferred Member
consent).
(iv)    The Book Basis of Company Assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraphs (vi) of the
definitions of “Net Profits” and “Net Losses” herein; provided, however, that
Book Basis shall not be adjusted pursuant to this subparagraph (iv) to the
extent that an adjustment pursuant to subparagraph (ii) is required in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).
If the Book Basis of an asset has been determined or adjusted pursuant to
subparagraph (i), (ii) or (iv), such Book Basis shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset for purposes of
computing Net Profits and Net Losses.
“Broker” means, collectively, Jones Lang LaSalle, SilverPeak Real Estate
Partners and Masood Bhatti.
“Budget and Plan” means (i) prior to Substantial Completion, the comprehensive
budget and plan for the development and construction of the Improvements,
including (a) a reasonably detailed categorization of all hard costs and soft
costs to be incurred in connection therewith, and (b) a schedule for the
construction and development of the Improvements, and (ii) from and after
Substantial Completion, the comprehensive budget and plan for the operation,
capital expenditures, marketing and lease-up of the Property, including (w) a
schedule for the marketing and initial lease-up of the Property, (x) a marketing
plan for the rental of the Property or any portion thereof (including the
Parking Facility), (y) the initial leasing plan for the Property

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(including the Parking Facility) and (z) a capitalization plan for the Property,
in each case as modified from time to time in accordance with Section 4.5.
“Business Day” means any day other than Saturday, Sunday or any other day on
which commercial banks in New York, New York are closed for commercial banking
business.
“Capital Account” means, when used with respect to any Member, the capital
account maintained for such Member in accordance with Section 5.4 hereof, as
such capital account may be increased or decreased from time to time pursuant to
the provisions of Section 5.4.
“Capital Contributions” means the amount of money and/or the agreed upon net
fair market value of property contributed to the Company by a Member or its
predecessor in interest on the date of contribution and shall include the
contributions of such Member made pursuant to Sections 4.11(c), 5.1 and 10.1(c)
(but specifically excluding Protective Contributions made by Preferred Member
pursuant to Section 5.2).
“Capital Event” means any (i) direct or indirect exchange, sale, transfer or
other disposition or liquidation of the Property or any interest therein other
than tangible personal property that is not sold or transferred in connection
with the sale or transfer of real property or a leasehold interest in real
property and is otherwise sold or transferred in the ordinary course of business
to an unaffiliated third party, master leases and ground leases for all or
substantially all of the Property, but excluding leases for space in the
Property, (ii) condemnation or deed-in-lieu of condemnation of the Property or
any material portion thereof, (iii) casualty with respect to the Property or any
material portion thereof, or (iv) refinancing of the Senior Loan or any other
indebtedness that results in proceeds in excess of the sum of (a) the amount of
the Senior Loan or other indebtedness then being refinanced, and (b) costs and
reserves relating to such refinancing.
“Certificate” has the meaning set forth in the preliminary statement.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute. Any reference herein to a particular provision of the
Code shall mean, where appropriate, the corresponding provision in any successor
statute.
“Common Member” has the meaning set forth in the caption to this Agreement.
“Common Member Affiliate Agreement” has the meaning set forth in Section 4.3(c).
“Common Member’s knowledge,” or “to the knowledge of Common Member,” or, during
such time as Common Member is serving as Manager hereunder, “to the Manager’s
knowledge,” or “to the knowledge of the Manager” means the actual knowledge,
without further investigation or inquiry, of each of the Common Member
Principals without regard to the knowledge (actual or implied) of any current or
former employees, agents or contractors of Common Member.

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“Common Member Operating Agreement” means the limited liability company
agreement of Common Member, as may be amended, restated, supplemented and/or
otherwise modified from time to time.
“Common Member Principals” means (i) initially, each of James Loewenberg, Joel
M. Carlins and David J. Carlins, or (ii) upon the departure for any reason of
any of the initial Common Member Principals, a qualified individual nominated by
Common Member and approved by Preferred Member in its reasonable discretion
within thirty (30) days after such departure.
“Company” has the meaning set forth in the caption to this Agreement.
“Company Assets” means any and all real property, personal property and other
assets directly or indirectly owned by the Company or any Subsidiary, including
the Property.
“Company Nonrecourse Debt” has the meaning given the term “nonrecourse
liability” in Regulation § 1.752‑1(a)(2).
“Company Nonrecourse Deductions” has the meaning given the term “nonrecourse
deductions” in Regulation § 1.704-2(b)(1) and Regulation § 1.704-2(b)(2). The
amount of Company Nonrecourse Deductions for a Fiscal Year is determined in
accordance with Regulation § 1.704‑2(c).
“Completion Guaranty” has the meaning set forth in Section 4.10(c)(i).
“Construction Consultant” has the meaning set forth in Section 4.3(e).
“Construction Contract” means that certain Guaranteed Maximum Price Agreement,
dated as of the date hereof, by and between Contractor and the Company, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
“Construction Manager” means (i) initially, Magellan Project Services LLC, an
Illinois limited liability company; or (ii) upon the removal or resignation of
the initial Construction Manager as a result of (x) a material default by the
initial Construction Manager after the lapse of any applicable notice and cure
periods under the Development Management Agreement, (y) to the extent
applicable, the exercise by Preferred Member of the rights afforded to it
pursuant to Section 4.3(c) in connection with a material default by the initial
Construction Manager after the lapse of any applicable notice and cure periods
under the Development Management Agreement, or (z) the occurrence of a Material
Non-Compliance Event or the removal of Common Member as Manager hereunder, any
successor Construction Manager designated and appointed by Preferred Member; or
(iii) upon the removal or resignation of the initial Construction Manager for
any reason other than those set forth in the foregoing clause (ii), any
successor Construction Manager designated by the Manager and approved by the
Members (provided, however, that Preferred Member shall be deemed to have
approved any successor Construction Manager that is a real estate company or
construction management company that has developed or managed no less than ten
(10) high rise residential construction projects within

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the United States of similar design and complexity as the Property and with no
less than two thousand (2,000) residential units (each, a “Pre-Approved
Construction Manager”)).
“Contractor” means James McHugh Construction Co., an Illinois corporation.
“Control” (including its correlative meanings, “Controlled by” and “under common
Control with”) means possession, directly or indirectly, of the power to direct
or cause the direction of management or policies of the Person in question
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
“Critical Decision Request” means a written request from the Manager for
approval of any of any of the following matters: change orders, changes in scope
of construction work, change to the Budget and Plan, approval of application or
reallocation of contingency, approval of senior lender draws, waiver of
insurance or bonding requirements or any other matter reasonably believed by the
Manager to require immediate action by the Company, which request shall include
the following statement set forth in all capital letters: “NOTE: PREFERRED
MEMBER’S FAILURE TO RESPOND TO THIS NOTICE WITHIN [INSERT FOR FIRST REQUEST:
THREE (3) BUSINESS DAYS] [INSERT FOR SECOND REQUEST: TWO (2) BUSINESS DAYS]
[INSERT FOR THIRD REQUEST: ONE (1) BUSINESS DAY] FOLLOWING PREFERRED MEMBER’S
RECEIPT SHALL BE DEEMED APPROVAL OF THE MATTER SUBMITTED FOR APPROVAL.”
“Current Rate” means thirteen percent (13%) per annum; provided that upon the
occurrence and during the continuance of a Material Non-Compliance Event, the
Current Rate shall be increased to nineteen percent (19%) per annum. In no event
shall the Current Rate be greater than the maximum amount allowed by law.
“Current Return” means a return accruing on the Net Preferred Equity Investment
from and after the date hereof until repaid in accordance with this Agreement.
The Current Return shall accrue on a daily basis and compound monthly, and be
calculated by adding, for each day in the period for which the calculation is
being made, an amount equal to the product of (i) the applicable Current Rate
divided by three hundred sixty (360), multiplied by (ii) the Net Preferred
Equity Investment as of such date. The determination of the Current Return shall
be definitively calculated in good faith by the Preferred Member, who shall
provide notice thereof, in reasonable detail, to the Company promptly upon
completion of such calculation.
“Current Return Reserve” has the meaning set forth in Section 10.1(a).
“Deferred Return” means, as of any date of determination, the excess of the
accrued and unpaid Preferred Equity Total Return minus the accrued and unpaid
Current Return.
“Depreciation” means, for each Fiscal Year, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable with respect to an
asset for such taxable year, except that if the Book Basis of an asset differs
from its adjusted basis for federal income tax purposes at the beginning of such
Fiscal Year, Depreciation shall be an amount which bears the same ratio to such
beginning Book Basis as the federal income tax depreciation, amortization, or
other cost recovery deduction for such taxable year bears to such beginning
adjusted tax basis; provided, however, that if the adjusted basis for federal
income tax purposes

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of an asset at the beginning of such taxable year is zero, Depreciation shall be
determined with reference to such beginning Book Basis using any reasonable
method selected by the Manager and reasonably approved by Preferred Member.
“Desired Tax Classification” has the meaning set forth in Section 4.9.
“Development Fee” has the meaning set forth in Section 4.10(e).
“Development Management Agreement” means that certain Development Management
Agreement, dated as of the date hereof, by and between the Company and the
Construction Manager.
“Distribution” means any cash, securities, property or other assets distributed
to a Member by the Company.
“Distribution Date” means the first (1st) day of every calendar month occurring
while any portion of the Preferred Member Interest remains outstanding;
provided, however, that if such day is not a Business Day, then the Distribution
Date shall be the next Business Day.
“Draw Package” means the draw package constituting the documents and other items
set forth on Schedule 6.9(b) hereto. Common Member shall submit each Draw
Package in accordance with the provisions of Section 6.9.
“Eligible Assignee” means (a) an Affiliate of Preferred Member and (b) an
Approved Fund.
“Environmental Indemnity” has the meaning set forth in Section 4.10(c)(iii).
“Escrow Agreement” means that certain Construction Loan Escrow Agreement, dated
as of the date hereof, among the Title Company, the Company and Senior Lender,
as the same may be amended, modified, restated or supplemented from time to
time.
“Excess Cash” has the meaning set forth in Section 10.1(c).
“Exercise Date” has the meaning set forth in Section 10.6(c).
“Exit Amount” means an amount equal to one percent (1%) of the Preferred Equity
Investment, payable to Preferred Member in accordance with this Agreement.
“First Option to Extend” has the meaning set forth in Section 10.3(c).
“Fiscal Year” means the fiscal year for the Company that is designated by the
Members. As of the date hereof, the Fiscal Year is a calendar year.
“Giarratana Principal” means (i) initially, Anthony D. Giarratana, or (ii) if
the initial Giarratana Principal at any time fails to (a) exclusively Control
SoBro Development Company LLC (including with respect to the granting or
withholding of all consents, approvals and other decisions required or permitted
to be given or made by SoBro Development Company

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LLC under the Common Member Operating Agreement) or (b) serve as a manager
appointed to the board of managers of Common Member with the right to
participate in the management of the business and affairs of Common Member
(including with respect to Major Actions and Construction Major Actions (as such
terms are defined and used in the Common Member Operating Agreement), a
qualified individual nominated by Common Member and approved by Preferred Member
in its reasonable discretion within thirty (30) days after any such failure.
“Governmental Entity” means any court, tribunal, department, body, board,
bureau, administrative agency or commission or other governmental authority or
instrumentality, whether federal, state, local or foreign.
“Guarantor” means, individually or collectively as the context may require,
(i) initially, each of Elcano II LLC, an Illinois limited liability company, and
DJ2 LLC, an Illinois limited liability company, or (ii) any creditworthy entity
nominated by Common Member that is able to demonstrate (including by furnishing
financial statements reasonably requested by Preferred Member that reflect the
true, correct and complete financial condition of such entity) to Preferred
Member’s satisfaction that such entity (a) complies (and will continue to
comply) with the covenants relating to Net Worth and Liquidity set forth in
Section 11.3 applicable to such replacement Guarantor and (b) is capable in all
respects of satisfying the applicable obligations of such Guarantor under this
Agreement and each Guaranty to which it is a party.
“Guaranty” means, as the context may require, any one of, or each of, the
Completion Guaranty, the Non-Recourse Carveout Guaranty and the Environmental
Indemnity.
“Improvements” means the improvements to be constructed on the Property in
accordance with the Plans and Specifications.
“Intent to Cure Notice” has the meaning set forth in Section 4.3(d).
“Interest” means the interest of a Member in the Company, including the right of
such Member in the capital, profits and losses of, and Distributions from, the
Company, and the right of such Member to any and all benefits to which such
Member may be entitled under this Agreement (including the Preferred Member
Interest).
“Liquidator” means (i) the Manager or (ii) such other Person who is appointed by
the Manager in accordance with applicable law to take all actions related to the
winding up of the Company’s business and the distribution of the Company’s
assets.
“Liquid Assets” has the meaning set forth in Section 11.3.
“LLC Act” means the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101,
et seq., as it may be amended from time to time, and any successor to such
statute.
“Magellan SoBro” means Magellan SoBro Company LLC, an Illinois limited liability
company and a member of Common Member.
“Major Decisions” has the meaning set forth in Section 4.1(a).

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“Manager” has the meaning set forth in Section 4.1(a).
“Manager Change of Control” means either of the following events or occurrences:
(i) Common Member resigns as the Manager; or (ii) any breach of the covenants
contained in Sections 12.2(c) or 12.2(d).
“Manager Default” means:
(i) the commission by (or at the direction of) any of the Manager, Common Member
or any of the Common Member Principals of fraud, willful misconduct or gross
negligence in the performance of its duties and obligations under this
Agreement, in each case (and to the extent applicable) subject to a
Non-Executive Cure Right;
(ii) Preferred Member notifies the Manager of the Manager’s or Common Member’s
failure to perform any of its obligations under this Agreement (other than a
failure that constitutes a Material Non-Compliance Event) and such failure has
not been cured within thirty (30) days after such notice; provided, however,
that if such default is incapable of being cured within such thirty (30) day
period and the Manager has undertaken (within such period) and continues to
diligently conduct all measures that are necessary to remedy such failure (as
determined by Preferred Member), such thirty-day cure period shall be extended
for an additional sixty (60) days;
(iii) subject to the proviso at the end of this clause (iii), any of the Common
Member Principals being indicted for a felony involving dishonesty or moral
turpitude (as defined by the United States Department of State, or its
successor, in connection with immigration matters) (provided, however, that any
indictment of a Common Member Principal that would otherwise constitute a
Manager Default pursuant to this clause (iii) shall not constitute a Manager
Default so long as each of the following conditions are satisfied: (x) Common
Member (or an Affiliate thereof) indemnifies the Company and Preferred Member
for one hundred percent (100%) of any and all losses (including reasonable
attorneys’ fees) sustained or incurred by the Company and Preferred Member as a
direct or indirect result of such indictment (including as a direct or indirect
result of the circumstances underlying the indictment) within fifteen (15) days
after request by the Company or Preferred Member therefor, (y) Common Member
causes the removal (at its sole expense) of all persons (including the
applicable Common Member Principal(s)) involved in the circumstances underlying
the indictment from all involvement with the Company or the Company Assets
within thirty (30) days after the date of the indictment, and (z) no more than
two indictments of any Common Member Principals have previously occurred that
would have constituted a Manager Default but for the application of this
proviso);
(iv) the occurrence of any Manager Change of Control; or
(v) (a) any Bankruptcy Event with respect to the Manager or (b) any Bankruptcy
Event with respect to any Person Controlling the Manager or any of the Common
Member Principals solely to the extent that such Bankruptcy Event causes (or,
based on any legal theories then subscribed to by federal courts exercising
bankruptcy jurisdiction, would reasonably be

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likely to cause) the substantive consolidation of the assets and liabilities of
any such Person with those of the Manager and/or the Company.
“Material Non-Compliance Event” has the meaning set forth in Section 10.5.
“Member” has the meaning set forth in the caption to this Agreement.
“Member Nonrecourse Debt” means a nonrecourse debt of the Company within the
meaning of Section 1.704-2(b)(4) of the Regulations.
“Member Nonrecourse Deductions” means the items of loss, deduction, and
expenditure attributable to Member Nonrecourse Debt within the meaning of
Section 1.704-2(i)(2) of the Regulations.
“Monthly Payment” has the meaning set forth in Section 10.1(b).
“Net Capital Proceeds” means the sum of (i) the gross proceeds received by the
Company from a Capital Event, (ii) the amount of any Capital Contributions made
by Common Member pursuant to Section 4.11(c), and (iii) any reduction in
Reserves previously established from Net Capital Proceeds, less the sum of (a)
all costs and expenses incurred in connection therewith, (b) the principal of
and interest on any indebtedness of the Company (including the Senior Loan) that
is then required to be and is paid, in whole or part, with such proceeds, and
(c) any additions to Reserves from such proceeds or any such Reserves that the
Manager reinvests in the Company.
“Net Cash Flow” means, for the period commencing on the first day of each
calendar month and ending on the last day of each calendar month, the sum of (i)
any cash receipts of the Company during such period from all operating sources
other than Capital Contributions and Net Capital Proceeds, and (ii) any
reduction in Reserves established from such receipts in prior fiscal periods;
less the sum of (a) all cash disbursements for operations of the Company during
such fiscal period, including disbursements for operating expenses and debt
service, but excluding cash disbursements paid out of Reserves and Capital
Contributions and Net Capital Proceeds and distributions to the Members, and (b)
additions to Reserves (other than from Net Capital Proceeds) during such period.
“Net Losses” means, for each Fiscal Year or other period, an amount equal to the
excess of (a) the Company’s items of loss and deduction for such year or other
period over (b) the Company’s items of income and gain for such year or other
period, determined in accordance with Section 703(a) of the Code (including all
items of income, gain, loss and deduction required to be stated separately under
Section 703(a)(1) of the Code), with the following adjustments:
(i)    Any income of the Company that is exempt from federal income tax, and not
otherwise taken into account in computing Net Losses, will be considered an item
of income.
(ii)    Gain or loss resulting from any disposition of any Company Asset with
respect to which gain or loss is recognized for federal income tax purposes will
be computed by reference to the Book Basis of such asset, notwithstanding that
the adjusted tax basis of such asset may differ from its Book Basis.

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(iii)    Any increase or decrease to Capital Accounts as a result of any
adjustment to the Book Basis of Company Assets pursuant to Regulations Section
1.704 1(b)(2)(iv)(f) shall constitute an item of income or loss, respectively.
(iv)    Any expenditures of the Company described in Section 705(a)(2)(B) of the
Code or treated as Section 705(a)(2)(B) expenditures under Regulations Section
1.704 1(b)(2)(iv)(i), and not otherwise taken into account in computing Net
Losses, will be considered an item of deduction.
(v)    In lieu of depreciation, amortization and other cost recovery deductions
taken into account in computing taxable income or loss, there will be taken into
account the Depreciation for the taxable year or other period as determined
hereunder.
(vi)    To the extent an adjustment to the adjusted tax basis of any of the
Company Assets pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Member’s Interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Net Losses.
(vii)    Notwithstanding any other provision of this definition, any items of
income, gain, loss or deduction which are specially allocated pursuant to
Section 6.2 shall not be taken into account in computing Net Losses.
The amounts of items of Company income, gain, loss or deduction available to be
specially allocated pursuant to Section 6.2 shall be determined by applying
rules comparable to those set forth in subparagraphs (i)-(vi) above.
“Net Operating Income” means, for any period, Gross Revenues for such period
minus Operating Expenses for such period, computed, for all purposes hereunder,
as follows (capitalized terms used but not otherwise defined in this definition
of “Net Operating Income” shall have the meanings given to such terms in the
Senior Loan Agreement):
(i)    Gross Revenues shall be projected for the twelve (12) month period
following the last day of the applicable calendar quarter, computed on a
trailing three-month annualized basis, and shall (1) specifically exclude Rents
from (v) retail Tenants that have not physically occupied their leased premises
under a Retail Lease for at least ninety (90) days, (w) Tenants that are in
default of their rental obligations and have been in default for greater than
thirty (30) days, (x) Tenants under month‑to‑month tenancies under a Retail
Lease, and (y) Tenants under a Retail Lease, who are the subject of any
voluntary or involuntary bankruptcy, insolvency, liquidation, reorganization or
similar proceeding, and (2) be adjusted based on an occupancy rate equal to the
lesser of (x) the Property’s actual occupancy rate, and (y) a ninety-five
percent (95%) occupancy rate, and (3) exclude percentage rents; and
(ii)    Operating Expenses shall be determined for the twelve (12) month period
trailing the last day of the applicable calendar quarter, and shall (1) include
a capital expenditure

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reserve of Two Hundred Dollars ($200) per Unit per year, and (2) include a
management fee equal to the greater of the Property’s actual management fee or
three percent (3%) of Gross Revenues; provided that Operating Expenses shall be
reduced proportionately in the event that Gross Revenues are limited to an
occupancy rate of ninety-five percent (95%).
“Net Preferred Equity Investment” means, as of any date of determination, an
amount equal to the Preferred Equity Investment, reduced by (i) all
distributions made pursuant to Section 6.5(e) or all distributions pursuant to
Section 10.6(d)(i)(3) to the extent made in respect of clause (vii) of the
definition of “Wipeout Preferred Amount”, and (ii) any payment actually made
pursuant to Sections 10.1(d), 10.1(e), 10.3(c)(vii), 10.3(d)(vii), 10.3(a) or
10.4(a)(ii).
“Net Profits” means, for each Fiscal Year or other period, an amount equal to
the excess of (a) the Company’s items of income and gain for such year or other
period over (b) the Company’s items of deduction and loss for such year or other
period, determined in accordance with Section 703(a) of the Code (including all
items of income, gain, loss and deduction required to be stated separately under
Section 703(a)(1) of the Code), with the following adjustments:
(i)    Any income of the Company that is exempt from federal income tax, and not
otherwise taken into account in computing Net Profits, will be considered an
item of income.
(ii)    Gain or loss resulting from any disposition of any Company Asset with
respect to which gain or loss is recognized for federal income tax purposes will
be computed by reference to the Book Basis of such asset, notwithstanding that
the adjusted tax basis of such asset may differ from its Book Basis.
(iii)    Any increase or decrease to Capital Accounts as a result of any
adjustment to the Book Basis of Company Assets pursuant to Regulations Section
1.704 1(b)(2)(iv)(f) shall constitute an item of income or loss, respectively.
(iv)    Any expenditures of the Company described in Section 705(a)(2)(B) of the
Code or treated as Section 705(a)(2)(B) expenditures under Regulations Section
1.704 1(b)(2)(iv)(i), and not otherwise taken into account in computing Net
Profits, will be considered an item of deduction.
(v)    In lieu of depreciation, amortization and other cost recovery deductions
taken into account in computing taxable income or loss, there will be taken into
account the Depreciation for the taxable year or other period as determined
hereunder.
(vi)    To the extent an adjustment to the adjusted tax basis of any of the
Company Assets pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Member’s Interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Net Profits.

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(vii)    Notwithstanding any other provision of this Paragraph, any items of
income, gain, loss or deduction which are specially allocated pursuant to
Section 6.2 of this Agreement shall not be taken into account in computing Net
Profits.
The amounts of items of Company income, gain, loss or deduction available to be
specially allocated pursuant to Section 6.2 of this Agreement shall be
determined by applying rules comparable to those set forth in subparagraphs
(i)-(vi) above.
“Net Worth” has the meaning set forth in Section 11.3.
“Non-Executive Cure Right” means that an action or omission taken or omitted by
any employee or agent of a Person (which action would otherwise constitute a
Manager Default) shall not constitute a Manager Default so long as the following
conditions are satisfied:
(a)    such employee or agent was not any of the Common Member Principals;
(b)    such action or omission was not committed at the direction of, or with
the knowledge of, or as a result of the grossly negligent supervision of, any of
the Common Member Principals;
(c)    Common Member or an applicable Affiliate causes the full restitution to
the Company of any and all losses sustained by the Company as a result of such
action or omission within ten (10) Business Days after any Common Member
Principal acquires knowledge of such action or omission;
(d)    within one (1) Business Day after the date that a Common Member Principal
acquires knowledge of such action or omission, and subject to compliance with
all relevant local employment laws, Common Member or its applicable Affiliate
causes the removal (at its sole expense) of all Persons who took or omitted to
take such action (as applicable) from all involvement with the Company or the
Company Assets; and
(e)    no more than two actions or omissions have previously occurred that would
have constituted a Manager Default but for the Manager’s Non-Executive Cure
Right.
“Non-Recourse Carveout Guaranty” has the meaning set forth in Section
4.10(c)(ii).
“Objection Notice” has the meaning set forth in Section 4.5(b).
“Out-of-Balance” means, with respect to the Improvements, as of any date of
determination, the aggregate amount of costs of the Improvements remaining to be
paid as of such date exceeds the sum of (a) the balance of the Preferred Equity
Investment Reserve as of such date, plus (b) cash on hand at the Company as of
such date that is not otherwise obligated to be distributed or reserved
hereunder, plus (c) the unused commitment of the Senior Loan as of such date;
provided, however, that the Manager may apply amounts from a related
“contingency” line item to a line item that would otherwise show a deficit (i)
without Preferred Member’s consent solely in the event that the amount
reallocated does not exceed one hundred twenty five percent (125%) of the cost
to complete based on the percentage of construction trade

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items completed to date (provided, further, that Common Member must specifically
illustrate in each monthly Draw Package all such reallocations of any line
items), or (ii) with Preferred Member’s consent (in its sole and absolute
discretion) if the amount reallocated exceeds one hundred twenty five percent
(125%) of the cost to complete based on the percentage of construction trade
items completed to date. Further, the Manager may apply amounts from another
line item to a line item that would otherwise show a deficit if Common Member
reasonably demonstrates to Preferred Member that the reduced line item retains a
sufficient amount to cover all estimated expenses for such line item and
Preferred Member is reasonably satisfied that the Manager has shown demonstrable
cost savings for such line item; provided, however, that in the event the
Improvements are Out-of-Balance, Common Member may, to the extent possible and
permitted by the Senior Loan Documents, deposit an amount of cash sufficient to
place Improvements “in balance”.
“Parking Facility” means that certain parking facility consisting of
approximately 516 parking spaces located at the Property.
“Parking Management Agreement” has the meaning set forth in Section 4.10(b).
“Parking Manager” means (i) initially, Premier Parking of Tennessee, LLC; or
(ii) upon the removal or resignation of the initial Parking Manager as a result
of (x) a material default by the initial Parking Manager after the lapse of any
applicable notice and cure periods under the Parking Management Agreement, (y)
to the extent applicable, the exercise by Preferred Member of the rights
afforded to it pursuant to Section 4.3(c) in connection with a material default
by the initial Parking Manager after the lapse of any applicable notice and cure
periods under the Parking Management Agreement, or (z) the occurrence of a
Material Non-Compliance Event or the removal of Common Member as Manager
hereunder, any successor Parking Manager designated and appointed by Preferred
Member; or (iii) upon the removal or resignation of the initial Parking Manager
for any reason other than those set forth in the foregoing clause (ii), any
successor Parking Manager designated by the Manager and approved by the Members
(provided, however, that Preferred Member shall be deemed to have approved any
successor Parking Manager that is a real estate company or property manager that
has managed no less than two thousand five hundred (2,500) parking space units
within the United States (each, a “Pre-Approved Parking Manager”)).
“Permitted Transfer” shall mean, in each instance:
(a)    with respect to Preferred Member, any direct or indirect Transfer, in
whole or in part, so long as Preferred Member’s direct Interest in the Company
is held by one or more Eligible Assignees;
(b)    with respect to Common Member, any direct or indirect Transfer of an
interest in Common Member (as opposed to a direct Transfer of Common Member’s
Interest in the Company), in whole or in part, (i) between the members of Common
Member (including the exercise of the buy/sell provisions set forth in the
Common Member Operating Agreement) or (ii) as to the interests in Common Member
held by Wanxiang America Real Estate Group LLC, an Illinois limited liability
company, any pledge of such interests in favor of one or more lenders of any
Affiliate of Wanxiang America Real Estate Group LLC (provided that such
lender(s) shall

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have no right to be admitted as a member of Common Member), in each case so long
as any such Transfer (x) is not prohibited under the terms of the Senior Loan
Documents and (y) does not result in a Manager Change of Control;
(c)    any Transfer made pursuant to, and in accordance with, Section 4.11; and
(d)    with respect to members of Common Member, any Transfer of an equity
interest in any Upstream Owner to (i) another Upstream Owner, (ii) an Affiliate
of the transferring member, or (iii) a third party, in each case so long as any
such Transfer (x) is not prohibited under the terms of the Senior Loan Documents
and (y) does not result in a Manager Change of Control. As used herein, the term
“Upstream Owner” shall mean any Person having a direct or indirect legal,
beneficial or other ownership interest in Common Member (e.g., if Common Member
is a limited liability company, and one of Common Member’s members is a limited
partnership, whose partner is a corporation, then such limited partnership,
corporation and the shareholders of such corporation would each be an Upstream
Owner).
“Person” or “person” means an individual, corporation, association, partnership,
limited liability company, trust, joint venture, business trust or
unincorporated organization or other entity or organization, or a Governmental
Entity.
“Plans and Specifications” means, collectively, the plans, specifications,
construction plan and timetable prepared with respect to the Improvements and
set forth in the Budget and Plan, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof, all of which plans and specifications describe and show the construction
of the Improvements and the labor and materials necessary for the construction
thereof.
“Post-Wipeout Contributions” means all Capital Contributions made to the Company
after the Wipeout Date.
“Pre-Approved Architect” has the meaning set forth in clause (iii) of the
definition of “Architect”.
“Pre-Approved Construction Manager” has the meaning set forth in clause (iii) of
the definition of “Construction Manager”.
“Pre-Approved Parking Manager” has the meaning set forth in clause (iii) of the
definition of “Parking Manager”.
“Pre-Approved Property Manager” has the meaning set forth in clause (iii) of the
definition of “Property Manager”.
“Preferred Equity Disbursement” has the meaning set forth in Section 6.9(a).
“Preferred Equity Extension Yield” means, as of the last day of the last full
calendar month prior to the applicable extension date, the ratio, expressed as a
percentage, of (i) the Net Operating Income to (ii) the sum of (a) the Net
Preferred Equity Investment and (b) the then outstanding Senior Loan Amount.

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“Preferred Equity First Extended Redemption Date” means the day that is the one
(1) year anniversary of the Preferred Equity Original Redemption Date (or, if
such day is not a Business Day, the immediately succeeding Business Day).
“Preferred Equity Investment” means the sum of Preferred Member’s Capital
Contributions made (or deemed made) pursuant to the terms and provisions of this
Agreement.
“Preferred Equity Investment Reserve” has the meaning set forth in Section
6.9(a).
“Preferred Equity Original Redemption Date” means the third (3rd) anniversary of
the date hereof (or, if such day is not a Business Day, the immediately
succeeding Business Day).
“Preferred Equity Redemption Amount” means, as of any date of determination, an
amount equal to the sum of (i) the Net Preferred Equity Investment as of such
date, plus (ii) any accrued and unpaid Preferred Equity Total Return as of such
date, plus (iii) any outstanding Protective Contributions (including any accrued
and unpaid return thereon) as of such date, plus (iv) the Exit Amount.
“Preferred Equity Redemption Date” means, as the context may require, the
Preferred Equity Original Redemption Date, the Preferred Equity First Extended
Redemption Date or the Preferred Equity Second Extended Redemption Date.
“Preferred Equity Second Extended Redemption Date” means the day that is the one
(1) year anniversary of the Preferred Equity First Extended Redemption Date (or,
if such day is not a Business Day, the immediately succeeding Business Day).
“Preferred Equity Total Rate” means fourteen percent (14%) per annum; provided
that upon the occurrence and during the continuance of a Material Non-Compliance
Event, the Preferred Equity Total Rate shall be increased to nineteen percent
(19%) per annum. In no event shall the Preferred Equity Total Rate be greater
than the maximum amount allowed by law.
“Preferred Equity Total Return” means a return accruing on the Net Preferred
Equity Investment from and after the date hereof until repaid in accordance with
this Agreement. The Preferred Equity Total Return shall accrue on a daily basis
and compound monthly, and be calculated by adding, for each day in the period
for which the calculation is being made, an amount equal to the product of (i)
the applicable Preferred Equity Total Rate divided by three hundred sixty (360),
multiplied by (ii) the Net Preferred Equity Investment as of such date. All
payments and distributions made in respect of the Current Return and/or Deferred
Return shall also reduce the accrued and unpaid Preferred Equity Total Return.
The determination of the Preferred Equity Total Return shall be definitively
calculated in good faith by the Preferred Member, who shall provide notice
thereof, in reasonable detail, to the Company promptly upon completion of such
calculation.
“Preferred Equity Yield Protection Amount” means, as of any date of
determination prior to the Preferred Equity Yield Protection Date, an amount
equal to the Preferred Equity Total Return that would accrue for the period
commencing as of such date and

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ending on the Preferred Equity Yield Protection Date based on the Preferred
Equity Total Rate in effect at the time the Preferred Equity Yield Protection
Amount is paid, discounted at the reinvestment rate defined as the
then-applicable yield for US Treasury bonds with a maturity date equal to the
Preferred Equity Yield Protection Date (as such Treasury yields are published in
the Wall Street Journal).
“Preferred Equity Yield Protection Date” the day that is immediately after the
second (2nd) anniversary of the date hereof (or, if such day is not a Business
Day, the immediately succeeding Business Day).
“Preferred Member” has the meaning set forth in the introductory paragraph of
this Agreement.
“Preferred Member Interest” means the Interest in the Company issued to
Preferred Member in consideration of the Preferred Equity Investment.
“Property” means that certain approximately 252,397 square foot apartment and
retail project with approximately 516 parking spaces located at 2nd Avenue South
and Demonbreun Street, Nashville, Tennessee.
“Property Management Agreement” has the meaning set forth in Section 4.10(a).
“Property Manager” means (i) initially, NNP Residential LLC, an Illinois limited
liability company; or (ii) upon the removal or resignation of the initial
Property Manager as a result of (x) a material default by the initial Property
Manager after the lapse of any applicable notice and cure periods under the
Property Management Agreement, (y) to the extent applicable, the exercise by
Preferred Member of the rights afforded to it pursuant to Section 4.3(c) in
connection with a material default by the initial Property Manager after the
lapse of any applicable notice and cure periods under the Property Management
Agreement, or (z) the occurrence of a Material Non-Compliance Event or the
removal of Common Member as Manager hereunder, any successor Property Manager
designated and appointed by Preferred Member; or (iii) upon the removal or
resignation of the initial Property Manager for any reason other than those set
forth in the foregoing clause (ii), any successor Property Manager designated by
the Manager and approved by the Members (provided, however, that Preferred
Member shall be deemed to have approved any successor Property Manager that is a
real estate company or a property manager that has provided property management
services for no less than ten (10) high rise residential properties within the
United States with no less than two thousand (2,000) residential units (each, a
“Pre-Approved Property Manager”)).
“Protective Contribution” has the meaning set forth in Section 5.2.
“Qualified Transferee” means (a) any Person that (i) has total assets (in name
or under management or advisement) in excess of Two Hundred Fifty Million
Dollars ($250,000,000) and (except with respect to a pension advisory firm,
asset manager, registered investment advisor or manager or similar fiduciary)
either (x) capital/statutory surplus or shareholder’s equity of at least Fifty
Million Dollars ($50,000,000) or (y) market capitalization of at least Three
Hundred Fifty Million Dollars ($350,000,000), and (ii) is regularly engaged in
the business of making or owning (or, in the case of a pension advisory firm,
asset manager,

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registered investment advisor or manager or similar fiduciary, regularly engaged
in managing investments in) commercial real estate loans (including mezzanine
loans to direct or indirect owners of commercial properties), owning or
operating commercial properties or making investments in commercial real estate
or (b) any Person Controlled by, Controlling or under common Control with,
individually or in the aggregate, one or more of the Persons described in the
foregoing clause (a).
“Regulations” means the regulations promulgated under the Code.
“REIT” has the meaning set forth in Section 4.8.
“REIT Affiliate” has the meaning set forth in Section 4.8.
“Required Accounting Standards” shall mean United States generally accepted
accounting principles, consistently applied, or such other methods of accounting
that are acceptable to Preferred Member in its reasonable discretion.
“Reserves” means funds or other amounts set aside or otherwise allocated or
designated by the Manager (in the exercise of its reasonable discretion) for any
purpose strictly required to operate the Company or the Property, excluding,
however, the amount of any reserves held and maintained (i) by Senior Lender
pursuant to the Senior Loan Documents and (ii) by the Company or Preferred
Member in the Preferred Equity Investment Reserve and the Current Return
Reserve.
“Residual Interest” means the amount that Common Member would receive in
distributions pursuant to Section 6.5(f) if the Company sold all of the Company
Assets to a third party for their Appraised Value as of the Wipeout Date, paid
all of the Company’s and each Subsidiary’s (if any) liabilities (and liabilities
secured by the Company Assets), including customary closing costs of such
hypothetical sale, and promptly distributed the resulting Net Capital Proceeds
in accordance with this Agreement. The foregoing calculation of the Residual
Interest shall be made (i) jointly by Preferred Member and Common Member within
twenty (20) Business Days after the Wipeout Date or (ii) failing such agreement,
by a certified accountant appointed by agreement between Preferred Member and
Common Member within ten (10) Business Days of the expiration of the twenty (20)
Business Day period during which Preferred Member and Common Member attempt to
jointly determine the Residual Interest or (iii) failing such agreement to
appoint, by a certified accountant appointed by agreement between two other
certified accountants, one of whom shall be appointed by Preferred Member and
one shall be appointed by Common Member.
“ROFO Acceptance” has the meaning set forth in Section 9.3(a).
“ROFO Deposit Period” has the meaning set forth in Section 9.3(c).
“ROFO Market Period” has the meaning set forth in Section 9.3(b).
“ROFO Notice” has the meaning set forth in Section 9.3(a).
“ROFO Notice Period” has the meaning set forth in Section 9.3(a).

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“ROFO Offer” has the meaning set forth in Section 9.3(a).
“ROFO Purchase Price” has the meaning set forth in Section 9.3(a).
“ROFO Rejection” has the meaning set forth in Section 9.3(a).
“ROFO Sale” has the meaning set forth in Section 9.3.
“Second Option to Extend” has the meaning set forth in Section 10.3(d).
“Senior Lender” means, individually and collectively, as applicable, the
financial institutions that are parties to the Senior Loan Agreement as lenders
and any of their respective successors or assignees as permitted thereunder.
“Senior Loan” means the senior secured mortgage financing provided by Senior
Lender to the Company pursuant to the Senior Loan Documents, and any
replacement, renewal, extension, substitution, addition, supplement,
modification, amendment or refinancing thereof entered into in accordance with
the terms of this Agreement.
“Senior Loan Agreement” means that certain Construction Loan Agreement, dated as
of the date hereof, between the Company, as borrower, and Senior Lender, as
lender, as the same may be amended, modified or supplemented from time to time,
and any loan agreement entered into in connection with any replacement, renewal,
substitution, extension, modification or amendment of such Senior Loan Agreement
entered into in accordance with the terms of this Agreement.
“Senior Loan Amount” means the amount of the Debt (as such term is defined and
used in the Senior Loan Agreement) owed by the Company under the Senior Loan
Documents.
“Senior Loan Default” means any “Event of Default” as defined in the Senior Loan
Agreement.
“Senior Loan Documents” means the Senior Loan Agreement and the “Loan Documents”
as defined in the Senior Loan Agreement, and any loan agreement, promissory note
or other evidence of indebtedness and all mortgages and security agreements,
assignments, financing statements, pledges, guarantees and collateral security
agreements delivered in connection with any replacement, renewal, extension,
substitution, addition, supplement, amendment or modification of such Senior
Loan Documents entered into in accordance with the terms of this Agreement.
“Senior Loan Monetary Default” means the failure of the Company to pay any
principal, interest, prepayment premium, extension fee or other similar amounts
when due and payable under the Senior Loan as and when due under any of the
Senior Loan Documents (after the expiration of any applicable grace and/or cure
periods).
“Senior Loan Non-Monetary Default” means any “Default” as defined in the Senior
Loan Agreement other than any Senior Loan Monetary Default.

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“Shortfall” has the meaning set forth in Section 10.1(b).
“Subsidiary” means any entity directly or indirectly owned in whole or in part
by the Company.
“Substantial Completion” means the occurrence of each of the following events
and conditions on or before the twenty-sixth (26th) full calendar month after
the date hereof: (i) the substantial completion of the Improvements, (ii) the
issuance of a temporary or final certificate of occupancy that indicates the
Improvements have been substantially completed other than for routine “punch
list items,” and (iii) the receipt by the Manager of a certificate from the
Architect indicating the same, in each case in accordance with the Budget and
Plan and subject to Preferred Member’s approval.
“Survey” means a survey of the Property prepared by a surveyor licensed in the
State of Tennessee and reasonably satisfactory to Preferred Member and the
company or companies issuing the title insurance policy with respect to the
Property, and containing a certification of such surveyor reasonably
satisfactory to Preferred Member.
“Supplemental Capital Contribution” has the meaning set forth in Section
10.1(c).
“Tax Authority” has the meaning set forth in Section 6.7.
“Title Company” means Portfolio Title Insurance Company LLC, as agent for Old
Republic National Title Insurance Company.
“Transfer” has the meaning set forth in Section 9.1(a).
“Transferee” has the meaning set forth in Section 9.1(b).
“Wanxiang Principal” means (i) initially, Lawrence J. Krueger, or (ii) if the
initial Wanxiang Principal at any time fails to serve as a manager appointed to
the board of managers of Common Member with the right to participate in the
management of the business and affairs of Common Member (including with respect
to Major Actions and Construction Major Actions (as such terms are defined and
used in the Common Member Operating Agreement), a qualified individual nominated
by Common Member and approved by Preferred Member in its reasonable discretion
within thirty (30) days after any such failure.
“Wipeout Date” means the date that is twenty (20) Business Days after the
delivery of a Wipeout Notice.
“Wipeout Notice” has the meaning set forth in Section 10.6(a)(i).
“Wipeout Preferred Amount” means, at any time after the Wipeout Date, an amount
equal to the sum at such time of (i) any outstanding Protective Contributions
(including accrued and unpaid return thereof), (ii) any accrued and unpaid
Current Return, (iii) any accrued and unpaid Deferred Return, (iv) the Exit
Amount, (v) the Preferred Equity Yield Protection Amount (if applicable), (vi)
any and all fees and expenses and other amounts due and payable to Preferred
Member (or its Affiliates) hereunder or under any of the Guaranties, and (vii)
the Net

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Preferred Equity Investment; provided, however, that distributions made in
accordance with Section 10.6(d)(i)(3) shall be deemed to pay such amounts in the
same order as provided in Section 6.5.
“Withheld Member” has the meaning set forth in Section 6.7.
Section 1.2    Terms Generally. The definitions in Section 1.1 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. Unless the context requires otherwise, the words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The terms “hereunder,” “herein” and words of
similar import shall mean this entire Agreement as a whole unless reference to a
specific section of this Agreement is made. All references in this Agreement to
a section or article shall mean a section or article of this Agreement, unless
otherwise expressly specified.
ARTICLE II
General Provisions
Section 2.1    Formation. One or more Persons has acted as the organizer or
organizers of the Company by preparing, executing and filing with the Delaware
Secretary of State the Certificate pursuant to the LLC Act, as such Certificate
may have been or may be amended from time to time. The Company was formed under
the name 205 Demonbreun Realty Holding Company LLC. The acts of such Persons are
hereby authorized and ratified. The Manager is hereby designated as an
authorized person, within the meaning of the LLC Act, to execute, deliver and
file any amendments and/or restatements thereof and any other certificates
necessary for the Company to qualify to do business in a jurisdiction in which
the Company may wish to conduct business. The execution by the Manager of any of
the foregoing certificates (and any amendments and/or restatements thereof)
shall be sufficient.
Section 2.2    Name. The Company shall conduct its activities under the name of
205 Demonbreun Realty Holding Company LLC.
Section 2.3    Term. The Company’s existence shall be perpetual, unless sooner
dissolved, wound up or terminated in accordance with Article VIII of this
Agreement or the LLC Act.
Section 2.4    Purpose; Powers. (a) Subject to Section 2.6, the purpose of the
Company shall be to conduct and engage in the following activities: (i) to
directly or indirectly (through Subsidiaries or other Persons) acquire,
purchase, own, hold, manage, develop, operate, improve, rent, lease, finance,
encumber, sell, transfer, exchange, dispose of, invest in or otherwise deal with
the Property and any direct or indirect interest therein or any securities of
any kind issued by any Person primarily engaged in such activities, (ii) to own,
directly or indirectly, a limited liability company, partnership or other
interest in, and act as manager, managing member, general partner or limited
partner of any Subsidiaries formed in accordance with this Agreement, and
(iii) to exercise all powers enumerated in the LLC Act necessary to the conduct,
promotion or attainment of the purposes set forth herein and for the protection
and benefit of the Company.

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(b)    The Company is authorized and empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to, or convenient for the
furtherance and accomplishment of its purposes and for the protection and
benefit of the Company, including all acts and things permitted under the LLC
Act and this Agreement.
(c)    All of the foregoing purposes and powers may be exercised, if at all,
subject to the limitation, in each case, that if such action constitutes a Major
Decision, appropriate approval must be obtained in accordance with Section
4.3(a).
Section 2.5    Place of Business; Registered Office and Registered Agent. The
Company shall maintain a registered office at The Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801, or such other office as is
approved by the Manager. The Company shall maintain an office and principal
place of business at 225 North Columbus Drive, Suite 100, Chicago, Illinois
60601, or such other place as the Manager shall designate. The Manager shall
give the Members reasonable prior notice of any change of the Company’s
principal place of business. The name and address of the Company’s registered
agent as of the date of this Agreement is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801.
Section 2.6    SPE Provisions. Unless otherwise expressly consented to in
writing by Preferred Member, the Company shall (and Common Member (whether in
its capacity as a Member or Manager hereunder) shall cause the Company to):
(a)    be organized solely for the purpose of owning the Property;
(b)    not engage in any business unrelated to the acquisition, development,
ownership, operation, leasing, managing and maintenance of the Property;
(c)    not have any assets other than those related to the Property;
(d)    not engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation, merger, asset sale (except as expressly permitted by
this Agreement and the Senior Loan Agreement), transfer of membership interests
or the like (except as expressly permitted by this Agreement and the Senior Loan
Agreement), or amendment of its certificate of formation or operating agreement
(except as expressly permitted by this Agreement and the Senior Loan Agreement);
(e)    intend to remain solvent and maintain adequate capital in light of its
contemplated business operations (provided, however, that the foregoing shall
not be interpreted to require Preferred Member to make any capital contributions
to the Company);
(f)    not fail to correct any known misunderstanding regarding the separate
identity of the Company;
(g)    maintain its accounts, books and records separate from any other Person
and will file its own tax returns;
(h)    maintain its books, records and agreements as official records;

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(i)    not commingle its funds or assets with those of any other Person;
(j)    hold its assets in its own name;
(k)    conduct its business in its name only, and not use any trade name (it
being understood that advertisements using the name of the Property in lieu of
the Company shall not constitute conducting business in another name for
purposes of this clause);
(l)    maintain its financial statements, accounting records and other entity
documents separate from any other Person;
(m)    pay its own liabilities, including the salaries of its own employees (if
any), out of its own funds and assets (provided, however, that the foregoing
shall not be interpreted to require Preferred Member to make any capital
contributions to the Company);
(n)    observe all limited liability company formalities;
(o)    maintain an arm’s-length relationship with its Affiliates;
(p)    have no indebtedness other than the Permitted Indebtedness (as such term
is used and defined in the Senior Loan Agreement);
(q)    not assume or guarantee or become obligated for the debts of any other
Person or hold out its credit as being available to satisfy the obligations of
any other Person except for the Senior Loan and as provided in the Guaranties;
(r)    not acquire obligations or securities of its members;
(s)    allocate fairly and reasonably shared expenses, including shared office
space, and use separate invoices and checks;
(t)    except in connection with the Senior Loan and the Preferred Equity
Investment, not pledge its assets for the benefit of any other Person;
(u)    hold itself out and identify itself as a separate and distinct entity
under its own name and not as a division or part of any other Person;
(v)    maintain its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from those
of any other Person;
(w)    not make loans to any Person;
(x)    not identify its members or any Affiliate of any of them, as a division
of it;
(y)    not enter into or be a party to any transaction with its members or
Affiliates except in the ordinary course of its business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arm’s-length transaction with an unrelated third party; and

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(z)    have no obligation to indemnify its officers or members, or has such an
obligation that is fully subordinated to the Debt (as such term is used and
defined in the Senior Loan Agreement) and will not constitute a claim against it
if cash flow in excess of the amount required to pay the Debt is insufficient to
pay such obligation.
ARTICLE III
Members
Section 3.1    Name and Address. The name, address and initial Capital
Contributions of each of the Members as of the date of this Agreement are set
forth on Schedule 3.1 hereto. Such Schedule shall be amended from time to time
by the Manager to reflect the admission or withdrawal of a Member or the
Transfer of Interests in accordance with the terms of this Agreement and other
modifications to or changes in the information set forth therein. The Manager
shall promptly distribute such amendments in writing to each of the Members.
Section 3.2    Limitation of Liability; Indemnification. Subject to Section 3.3,
each Member’s liability to the Company, to any other Member or to any other
third party shall be limited to the maximum extent permitted by law. A Member
shall not be personally liable for any indebtedness, liability or obligation of
the Company, except that such Member shall remain liable for the payment of its
Capital Contribution. The Company shall indemnify, defend and hold harmless each
Member from and against all claims and demands to the maximum extent permitted
under the LLC Act, except those resulting from such Member’s fraud, gross
negligence, willful misconduct or intentional disregard of the terms of this
Agreement. The Company shall indemnify, defend and hold harmless the Manager
from and against all claims and demands to the maximum extent permitted under
the LLC Act, except those resulting from the Manager’s fraud, gross negligence,
willful misconduct or intentional disregard of the terms of this Agreement or
any other Manager Default. Notwithstanding the foregoing or anything to the
contrary herein, any indemnification set forth in this Agreement shall be fully
subordinate to the Current Return and, to the fullest extent permitted by law,
shall not constitute a claim against the Company in the event that the Company’s
cash flow is insufficient to pay the Current Return.
Section 3.3    Liability of a Member to the Company. (a) A Member that
rightfully receives the return of any portion of a Capital Contribution is
liable to the Company only to the extent now or hereafter provided by and
required under the LLC Act. A Member who receives a Distribution in violation of
subsection (a) of Article 18-607 of the LLC Act, and who knew at the time of the
Distribution that the Distribution violated subsection (a) of Article 18-607 of
the LLC Act, shall be liable to the Company for the amount of the Distribution.
A member who receives a Distribution in violation of subsection (a) of Article
18-607 of the LLC Act, and who did not know at the time of the Distribution that
the Distribution violated subsection (a) of Article 18-607 of the LLC Act, shall
not be liable for the amount of the Distribution. A Member who receives a
Distribution from the Company shall have no liability under this Agreement or
applicable law for the amount of the Distribution after the expiration of three
(3) years from the date of the Distribution unless an action to recover the
Distribution from such Member is commenced prior to the expiration of the said
three-year period and an adjudication of liability against such Member is made
in the said action.

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(b)    Except as otherwise expressly authorized by any provision of this
Agreement, no Member is an agent of the Company solely by virtue of being a
Member, and no Member has (or shall hold itself out as having) authority to
sign, act for or bind the Company solely by virtue of being a Member, all of
such powers being vested in the Manager (as set forth herein). Any Member that
executes any document or instrument or otherwise takes any action to bind the
Company in violation of this Section 3.3 shall be solely responsible for, and
shall indemnify, defend and hold harmless the Company and each other Member
against, any damage, loss, liability, or expense, including reasonable
attorneys’ fees, as and when incurred, that the Company, or such other Member,
as the case may be, may at any time become subject to or liable for by reason of
the actions specified above. The provisions of this Section 3.3 shall survive
the termination of this Agreement.
Section 3.4    Action by Members Without a Meeting. Whenever the Members of the
Company are required or permitted to take any action by vote, such action may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing (including in electronic format), setting forth the
action so taken, shall be signed by the Members who hold voting interests having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all of the Members entitled to vote
thereon were present and voted and shall be delivered to the administrative
office of the Company, or to an employee or agent of the Company.
Section 3.5    Certain Duties and Obligations of the Members. (a) The Members
shall take all action which may be reasonably necessary or appropriate (i) for
the formation and continuation of the Company as a limited liability company
under the laws of the State of Delaware and (ii) for the development,
maintenance, preservation and operation of the business of the Company in
accordance with the provisions of this Agreement and applicable laws and
regulations. The Manager shall take all action which is reasonably necessary and
appropriate to form or qualify the Company to conduct the business in which the
Company is engaged under the laws of any jurisdiction in which the Company is
doing business and to continue in effect such formation or qualification. No
Member shall cause any Bankruptcy Event to occur with respect to the Company
without the consent of all the other Members.
(b)    No Member shall take any action so as to cause the Company to be
classified for federal income tax purposes as an association taxable as a
corporation and not as a partnership.
(c)    The provisions of this Agreement, to the extent that they restrict or
reduce the duties and/or liabilities of a Member or Manager otherwise existing
at law or in equity (including under the LLC Act), shall replace the other
duties and liabilities of such Member or Manager (as the case may be).
(d)    Each Member (including Common Member in its capacity as Manager) shall
defend and indemnify the Company and the other Members against, and shall hold
it and them harmless from, any damage, loss, liability, or expense, including
reasonable attorneys’ fees, as and when incurred, in connection with or
resulting from such indemnifying Member’s (or its Affiliates’, including, in the
case of Common Member, the Common Member Principals’ and/or the Property
Manager’s) material misrepresentation, gross negligence, malfeasance, fraud,
theft,

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misappropriation, gross negligence, willful misconduct, breach of Article IX,
breach of Section 3.3(b) or breach of the last sentence of Section 3.5(a).
ARTICLE IV
Management and Operation of the Company
Section 4.1    Authority, Appointment and Removal of the Manager. (a) Subject to
the proviso at the end of this sentence and the last sentence of this Section
4.1(a), and subject to the provisions of Section 4.1(c)(v), the full right,
power, authority and discretion to conduct the business and affairs of the
Company, and to do all things necessary to carry on the business of the Company,
shall be vested in a manager (who may, but need not be, a Member; such Person,
the “Manager”), acting alone and without the consent of any other Member. Any
third party dealing with the Company may, without any inquiry, rely upon any
instrument or agreement executed and delivered by the Manager on behalf of the
Company as constituting the binding act and deed of the Company. Notwithstanding
the foregoing or anything to the contrary contained in this Agreement, (i) the
Manager may not take any of the actions or make any of the decisions listed on
Schedule 4.1(a) annexed hereto (each, a “Major Decision”) without (in each
instance) appropriate approval in accordance with Section 4.3(a), (ii) Preferred
Member shall unilaterally have the full right, power and authority, without the
consent of the Manager or any other Member, to take any of the actions described
in Sections 4.3(b), 4.3(c), 4.3(d), 4.3(e), 5.2, 10.2 and 10.6, (iii) Preferred
Member shall have the right to propose to the Manager that it cause the Company
or any Subsidiary to take any Major Decision (but, for so long as Common Member
is serving as Manager hereunder and there exists no Material Non-Compliance
Event, Preferred Member shall have no right to cause the Company to take any
Major Decision unless and until the Manager shall have approved such Major
Decision in the manner, and at the time, set forth herein describing Preferred
Member’s approval rights with respect to Major Decisions), and (iv) Preferred
Member shall have the right to take any other action that this Agreement
expressly authorizes Preferred Member to take. If (x) the Manager sends a
Critical Decision Request to Preferred Member, and (y) Preferred Member fails to
respond to such Critical Decision Request by the date referenced therein and
such failure by Preferred Member continues beyond (A) the date referenced in a
second Critical Decision Request relating to the same matter(s) as the first
Critical Decision Request and (B) the date referenced in a third Critical
Decision Request relating to the same matter(s) as the first and second Critical
Decision Requests, then Preferred Member shall be deemed to have granted its
approval of the matter(s) referenced in such third Critical Decision Request as
of the last day on which Preferred Member is required to respond to such third
Critical Decision Request. Notwithstanding anything to the contrary contained in
this Agreement, (1) any failure by Preferred Member to respond to the Manager’s
written request to approve any proposed Major Action (that does not constitute a
Critical Decision Request) within ten (10) Business Days after Preferred
Member’s receipt of such written request shall be deemed to be a denial of
Preferred Member’s approval of such Major Decision, and (2) the Manager shall
have no authority to perform any act in respect of the Company or any Subsidiary
in violation of any of the provisions of this Agreement or any of the Senior
Loan Documents.
(b)    Common Member is hereby appointed as the Manager, and may only be removed
or replaced as specifically provided in this Section 4.1(b). The Manager may not
resign as Manager. Notwithstanding anything to the contrary contained herein, if
(and only if) a Material Non-Compliance Event occurs, then, in addition to any
other rights or remedies

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available to Preferred Member under this Agreement (including pursuant to
Section 10.6), Preferred Member shall have the right (but not the obligation) to
remove and replace the Manager, which removal shall be effective upon the
Manager’s receipt of written notice of such removal from Preferred Member.
(c)    Without limiting the generality of the foregoing, upon the removal of the
Manager pursuant to the terms hereof: (i) the former Manager shall account to
the Company with respect to all uncompleted business of the Manager, (ii) the
successor Manager shall be selected by Preferred Member, (iii) the former
Manager shall not impede, interfere with, hinder or delay, and shall not permit
any Affiliate of the former Manager or Subsidiary to impede, interfere with,
hinder or delay, any effort or action on the part of Preferred Member (or the
successor Manager if not Preferred Member) to cure any Senior Loan Default,
(iv) the former Manager shall have no further rights as the “Manager” under this
Agreement, (v) the former Manager (in its capacity as a Member) shall not have
any veto, consent or voting rights with respect to any action or decision of the
Company or any Subsidiary (including any veto, consent or voting rights with
respect to any Major Decision) other than with respect to the actions set forth
on Schedule 4.1(c) hereto, which shall require the consent of Common Member,
(vi) the former Manager (in its capacity as Manager and a Member) shall no
longer have any further rights to reimbursement by the Company under Section
4.6, and (vii) the provisions of Section 10.6 shall apply.
(d)    Common Member acknowledges and agrees that the rights and authority
granted to Preferred Member in this Article IV were material inducements and
conditions precedent to Preferred Member’s willingness to make its investment in
the Company and that Preferred Member would have refused to make its investment
absent such rights and authority, and Common Member agrees to promptly and
timely execute and deliver any documents, instruments or certificates as
Preferred Member or its designee may reasonably request to enforce Preferred
Member’s rights hereunder.
Section 4.2    Responsibilities of Manager. (a) Subject to the terms and
conditions of this Agreement (including Section 4.3(a)), the Manager shall, have
the power, authority and obligation to (i) manage the business of the Company,
including the day to day management and operation of the business and affairs of
the Company in accordance with this Agreement, (ii) perform all other acts
customary or incidental to the management of the Company, (iii) implement all
Major Decisions that have been approved in accordance with Section 4.3(a),
(iv) manage the Company consistent with the other terms and conditions of this
Agreement, and (v) discharge the Company’s obligations. The Manager accepts and
agrees to perform its duties and undertake its responsibilities set forth in
this Agreement, to act in good faith and in the best interests of the Company
and (without limiting the generality of the foregoing) to exercise commercially
reasonable efforts to carry out the intents and purposes of this Agreement.
Subject to the terms and conditions of this Agreement (including Section 4.3(a))
and the Senior Loan Documents, the Manager is, to the extent of its rights and
powers set forth in this Agreement, the “manager” of the Company within the
meaning of Section 18-101 of the LLC Act for the purpose of conducting the
Company’s business and the actions of the Manager taken in accordance with such
rights and powers shall bind the Company.

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(b)    In addition to the general responsibilities of the Manager set forth in
Section 4.2(a), the Manager shall perform the services and discharge the
responsibilities set forth on Schedule 4.2 hereto.
(c)    All persons engaged by the Manager in connection with its services
hereunder shall be either Manager’s employees or its agents or independent
contractors and in any event shall not be employees of the Company. The Manager
shall be solely responsible for the salaries of its employees and any employee
benefits to which such employees may claim to be entitled. The Manager shall
indemnify and hold harmless the Company, each Subsidiary, the Members and any of
their agents, officers, partners, members, employees, representatives,
directors, shareholders or the like from any loss, cost, expense, claim or
damage in connection with the failure or claimed failure of the Manager to fully
comply with all applicable laws and regulations having to do with worker’s
compensation, social security, unemployment insurance, hours of labor, working
conditions, and other employer-employee related subjects with respect to
Manager’s employees.
(d)    Except as provided in Section 4.10 and for the reimbursement of any
reasonable, actual out-of-pocket expenses incurred by the Manager in accordance
with Section 4.6, the Manager shall not be entitled to any compensation or
reimbursement for its services hereunder without the express approval of the
Members. Any such approval must expressly acknowledge that such compensation or
reimbursement is to be paid to the Manager.
Section 4.3    Certain Specified Rights of Preferred Member. (a) Notwithstanding
any provision of this Agreement to the contrary, the Manager shall not take or
cause the Company to take any Major Decision without in each instance first
obtaining the written approval of Preferred Member therefor, which approval may
be given or withheld by Preferred Member in its sole and absolute discretion;
provided, however, that notwithstanding the foregoing, Preferred Member hereby
agrees that it shall not unreasonably withhold its approval of Major Decisions 6
(solely with respect to retail leases), 7, 11, 19, 31, 34 and 35 set forth on
Schedule 4.1(a) hereto.
(b)    In addition to other rights reserved or granted to the Preferred Member
in this Agreement or at law, Preferred Member and its agents and representatives
shall have the right, at any time and from time to time, upon reasonable notice
(which shall not be deemed to require notice of more than two (2) Business Days)
and during normal business hours to:
(i)    inspect the Property (provided, however, that (x) during construction of
the Property, Preferred Member agrees that it shall (and it shall cause its
agents and representatives to) comply with the safety procedures and rules
established by the Contractor, and (y) any inspection by Preferred Member (or
its agents and representatives) shall not unreasonably interfere with the
operations on the Property;
(ii)    review (x) the books and records required to be maintained under Article
VII, and (y) any information and reports relating to the management, operations,
policies or strategies of the Property or assets of the Company or any
Subsidiary;
(iii)    discuss, provide advice and consult with the Manager with respect to
the business, financial and other operations of the Company and/or any
Subsidiary and any

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other matters materially affecting the business and affairs of the Company
and/or any Subsidiary and submit business proposals or suggestions to Manager
from time to time with the requirement that one or more members of the
management of Manager, discuss such proposals or suggestions with the Members
within a reasonable period after such submission;
(iv)    call periodic meetings with the Manager at the Manager’s offices, at
reasonable times and on reasonable notice; and
(v)    obtain on behalf of, and at the expense of, Preferred Member, an
appraisal of the Property not more than once every twelve (12) months.
(c)    Notwithstanding any provision of this Agreement to the contrary,
Preferred Member shall have the exclusive right, power and authority to act on
behalf of the Company (or any applicable Subsidiary) with respect to the
negotiation and approval of any agreement or arrangement (each, a “Common Member
Affiliate Agreement”) between the Company (or any Subsidiary) on the one hand,
and Common Member or any Affiliate thereof, on the other hand, as well as the
enforcement and/or waiver of the rights and remedies of the Company (or any
applicable Subsidiary) and defaults under any Common Member Affiliate Agreement
(including the exercise or waiver of any applicable right of termination in
accordance with the terms hereof or thereof).
(d)    Notwithstanding any provision of this Agreement to the contrary, if the
Manager fails to perform or comply with, or to cause the performance of or
compliance with, any obligation or duty imposed on it pursuant to this
Agreement, then Preferred Member shall have the right to provide the Manager
with written notice (each, an “Intent to Cure Notice”) of its intention to
exercise the rights afforded to Preferred Member pursuant to the last sentence
of this Section 4.3(d). Upon the receipt by the Manager of an Intent to Cure
Notice, the Manager shall have the right to cure such failure (subject to
Preferred Member’s satisfaction) within a period of time commencing upon the
Manager’s receipt of the Intent to Cure Notice and ending on the earlier to
occur of (i) the date that is thirty (30) days after receipt by the Manager of
the Intent to Cure Notice and (ii) the date that is five (5) days prior to the
expiration of any cure period under any of the Senior Loan Documents applicable
to such failure by the Manager (and, for the avoidance of doubt, if the Manager
cures such failure within the foregoing cure period (subject to Preferred
Member’s satisfaction), then Preferred Member shall not be entitled to exercise
the rights otherwise afforded to it pursuant to the last sentence of this
Section 4.3(d) solely with respect to such failure that has been cured by the
Manager). In the event that the Manager fails to timely cure any such failure
(subject to Preferred Member’s satisfaction) or at any time notifies Preferred
Member that it does not intend to cure such failure, then, without limiting any
other remedy available to Preferred Member (including pursuant to Section 10.6),
Preferred Member may perform or comply with, or cause the performance of or
compliance with, that obligation or duty (including by taking any action or
making any decision with respect to the Company, any Subsidiary or the Property
to cure any Senior Loan Default in accordance with Section 5.2, Section 10.6 or
otherwise) and any reasonable out-of-pocket expense arising from that
performance or compliance, other than any expense that would have been incurred
by the Company had the Manager so acted, will be borne by the Manager.

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(e)    Each of the Members hereby acknowledges and agrees that Preferred Member
shall engage Inspection & Valuation International, Inc. (the “Construction
Consultant”) to, among other things, review each Draw Package and oversee the
construction of the Property for conformity with the Budget and Plan. The fee of
the Construction Consultant shall be treated as an expense of the Company and
shall be promptly reimbursed to Preferred Member upon request therefor; provided
however, that the Construction Consultant fee shall not exceed Four Thousand
Five Hundred Dollars ($4,500) per month. The Company shall not be responsible
for any fee of the Construction Consultant other than the fee described in this
Section 4.3(e).
Section 4.4    Officers and Authorized Persons. (a) The Manager may designate
one or more individuals as officers or agents of the Company, who may but need
not have titles, and shall exercise and perform such powers and duties as shall
be assigned and delegated to them from time to time by the Manager. Any such
officer or agent (an “Authorized Person”) may be removed by the decision of the
Manager at any time, with or without cause. Each Authorized Person shall hold
office until his or her successor is elected and qualified, unless earlier
removed in accordance with this Section 4.4. Any number of offices may be held
by the same individual.
(b)    The Authorized Persons, to the extent of their powers set forth in this
Agreement or otherwise vested in them by action of the Manager not inconsistent
with this Agreement or any of the Senior Loan Documents, are agents of the
Company for the purpose of the Company’s business and the actions of the
Authorized Persons taken in accordance with such powers shall bind the Company.
Section 4.5    Budget and Plan. (a) Attached hereto as Schedule 4.5 is the
Budget and Plan applicable for the remainder of Fiscal Year 2014.
(b)    Not later than sixty (60) days prior to the beginning of each Fiscal Year
beginning with Fiscal Year 2015, the Manager shall prepare for the Property and
present to Preferred Member a proposed revised budget and plan for the Property
for such Fiscal Year (containing such detail as reasonably requested by
Preferred Member). Such proposed budget and plan shall not be deemed the Budget
and Plan for such Fiscal Year until accepted by the express written approval of
Preferred Member, which approval shall not be unreasonably delayed, conditioned
or withheld. Not later than thirty (30) days after receipt by Preferred Member
of a proposed budget and plan, Preferred Member may deliver a notice (an
“Objection Notice”) to the Manager stating that Preferred Member objects to any
information contained in, or omitted from, such proposed budget and plan and
setting forth, in reasonable details, the nature of such objections. If
Preferred Member fails to deliver an Objection Notice or an approval notice
within such thirty (30) day period and such failure to respond continues for (i)
an additional five (5) Business Days after the Manager (in a second notice)
notifies Preferred Member of such failure and (ii) an additional five (5)
Business Days after the Manager (in a third notice) notifies Preferred Member of
such failure, then such failure shall be deemed an approval of the Manager’s
proposed budget and plan in its entirety. Upon receipt of any Objection Notice,
the Manager shall modify the proposed budget and plan, taking into account
Preferred Member’s objections, and shall resubmit the same to Preferred Member
for its approval within fifteen (15) days thereafter, and Preferred Member may
deliver further Objection Notices (if any) within fifteen (15) days thereafter
(in which event, the re-submission and review process described above in this
sentence shall continue until the budget and plan in question is accepted and

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consented to by Preferred Member). As to any portion of a proposed budget and
plan that is the subject of an Objection Notice, the Budget and Plan for the
immediately preceding Fiscal Year shall be deemed to control pending resolution
by the Manager and Preferred Member of the disputed items to the extent it is
applicable thereto; provided that (x) such Budget and Plan shall be revised to
include recurring non-discretionary expenses including real estate taxes,
insurance premiums, required debt service payments and utilities expenses
reflecting actual changes in the price therefor, and (y) as to any “capital”
portion of a Budget and Plan (as applicable) that is the subject of an Objection
Notice, no capital expenditures shall be made on behalf of the Company or any
Subsidiary as to the Budget and Plan without the express written approval of
each of the Members.
(c)    Not later than thirty (30) days prior to Substantial Completion, the
Manager shall prepare for the Property the initial proposed budget and plan
referenced in clause (ii) of the definition thereof, which shall be subject to
the review and approval process set forth in Section 4.5(b) (other than the last
sentence thereof).
Section 4.6    Company Expenses. Each of the Members hereby acknowledges and
agrees that Common Member shall be responsible for (a) all formation and
organizational expenses with respect to the entities constituting each of the
Members and (b) all costs and expenses incurred by the Members in connection
with the formation of the Company and any Subsidiaries and the negotiation and
execution of this Agreement. Preferred Member hereby acknowledges that Common
Member previously advanced One Hundred Eighty-Five Thousand Dollars ($185,000)
to Preferred Member to be applied to the costs and expenses referenced in the
preceding sentence. Except as set forth in this Agreement (including in Section
4.1(c)), each of the Members, as applicable, shall be entitled to reimbursement
from the Company in the amount of (i) all reasonable actual out-of-pocket
verifiable third-party charges and expenses incurred by such Member relating to
the Company’s bank, custodial and depositary accounts, including bookkeeping,
tax and accounting services, and (ii) all other reasonable actual out-of-pocket
verifiable third-party expenses incurred by the Manager in connection with the
operation of the Company or performing its duties as Manager hereunder
(specifically excluding office overhead of the Manager and the compensation of
the Manager’s employees or consultants), in each case in accordance with the
then applicable Budget and Plan. Except as expressly provided in this Agreement,
no Member shall be entitled to reimbursement from the Company or Capital
Contribution credit for any costs or expenses incurred by such Member.
Section 4.7    Subsidiaries. All of the provisions of this Agreement regarding
the management and governance of the Company shall apply to the management and
governance of any Subsidiary, whether any such Subsidiary is managed or
controlled directly or indirectly by the Company or any other Subsidiary, as
member, manager, partner, stockholder or otherwise. Any action to be taken by
any of the Subsidiaries shall for all purposes hereof be construed as an action
taken by the Company and shall be subject to the same rights and limitations
granted and imposed on the Members under this Agreement, subject to any
additional rights and limitations granted or imposed in the governing documents
of such Subsidiary. Any and all references herein to the Company or any Manager
or Member causing or directing any action on behalf of a Subsidiary shall be
deemed to refer to the Company causing (or such Manager or Member causing the
Company to cause), in its capacity as a member, manager, partner, stockholder or
otherwise of such Subsidiary, such action to be taken for and on behalf of such
Subsidiary. The

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Manager shall perform, with no additional compensation, the same or
substantially identical services for each Subsidiary (if any) as the Manager
performs for the Company, subject to the terms, conditions, limitations and
restrictions set forth in this Agreement. The Manager agrees to perform such
duties, and in such circumstances and with regard to such duties, the Manager
shall be subject to the same standards of conduct and shall have the same duties
and obligations in performing or such services on behalf of each such Subsidiary
as are set forth in this Agreement. Without limiting the generality of the
foregoing (and notwithstanding anything contained herein to the contrary), any
action or decision to be taken or made by or on behalf of a Subsidiary that, if
taken or made by or on behalf of the Company, would constitute a Major Decision
will (in each instance) require appropriate approval in accordance with Section
4.3(a).
Section 4.8    REIT Specific Provisions. One or more Affiliates of Preferred
Member (each, a “REIT Affiliate”) has elected to be treated as a real estate
investment trust (a “REIT”) under Code Sections 856 et seq. In order to maintain
its status as a REIT, each REIT Affiliate must comply with numerous and complex
rules and regulations set forth in the Code and the Regulations, many of which
are applied on Preferred Member on a quarterly and/or annual basis, and the
management and operation of the Company will have a material effect on the
ability of each REIT Affiliate to continue to maintain its status as a REIT.
Accordingly, notwithstanding any other provision of this Agreement or any
non-mandatory provision of the LLC Act, the Company, the Manager and the Members
shall conduct the business of the Company and the Subsidiaries (if any), and
shall exercise all rights and powers provided in this Agreement and in the
operating agreements of each of the Subsidiaries (if any), in such a manner that
will allow each REIT Affiliate to remain qualified as a REIT, including so that:
(a)    the Company shall operate in a manner so as to satisfy the gross income
and asset tests applicable to a REIT under Code Section 856(c)(1)-(4) as though
the Company were a REIT, and shall engage in no hedging transactions;
(b)    the Company and the Manager shall cooperate with Preferred Member to
provide Preferred Member with (i) any information reasonably requested for the
purposes of verifying that the Company’s income constitutes qualifying “rents
from real property” as defined in Code Section 856(d) and Regulations Section
1.856-4, including the completion of questionnaires and any necessary updates as
reasonably requested, cataloging the services provided to tenants and the manner
of delivery of any such services at the Property and (ii) any other reasonably
requested information necessary for Preferred Member to comply with the
requirements necessary to qualify as a REIT under Code Section 856. To the
extent necessary to ensure that rents paid at the Property qualify as “rents
from real property” as defined in Code Section 856(d), the Manager, upon the
request of Preferred Member, shall discontinue the provision of certain services
provided to tenants at the Property or take such other commercially reasonable
steps to ensure that such services and income derived therefrom qualify as
“rents from real property”; and
(c)    the Company shall not engage in any transactions that could reasonably be
characterized as a “prohibited transaction” subject to tax under Code Section
857(b)(6) without Preferred Member’s prior written consent therefor.

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Section 4.9    Tax Classification. It is the intent of the Members that the
Company shall always be operated in a manner consistent with its treatment as a
“partnership” for federal, state and local income and franchise tax purposes and
each of the Company’s Subsidiaries (if any) shall be operated in a manner
consistent with its treatment as a “disregarded entity” or a “partnership” for
federal, state and local income and franchise tax purposes (collectively, the
“Desired Tax Classification”). In accordance therewith, (a) no Member shall file
any election with any taxing authority to have the Company or any Subsidiary
treated otherwise, and (b) each Member hereby represents, covenants, and
warrants that it shall not maintain a position inconsistent with such treatment.
The Manager agrees that, except as otherwise required by applicable law, it
(i) will not cause or permit the Company or any Subsidiary to elect (A) to be
excluded from the provisions of Subchapter K of the Code (except that where
appropriate, a Subsidiary may be treated as a “disregarded entity”), or (B) to
be treated as a corporation or an association taxable as a corporation for any
tax purposes; (ii) will cause the Company and each Subsidiary (if any) to make
any election reasonably determined to be necessary or appropriate in order to
ensure the Desired Tax Classification for all tax purposes; (iii) will cause the
Company and each Subsidiary (if any) to file any required tax returns in a
manner consistent with the Desired Tax Classification; and (iv) has not taken,
and will not take, any action that would be inconsistent with the treatment of
the Company and each Subsidiary (if any) in accordance with the Desired Tax
Classification.
Section 4.10    Property and Parking Management; Development. (a) Not later than
sixty (60) days prior to the first occupancy of the residential apartments on
the Property, the Company will enter into a property management agreement for
the Property (other than the Parking Facility) with the Property Manager (the
“Property Management Agreement”) substantially in the form attached hereto as
Schedule 4.10(a). The Property Management Agreement shall (i) provide for a
property management fee in an amount equal to three percent (3%) of the actual
monthly gross collections from the Property (excluding collections from the
Parking Facility), but in any event not less than Ten Thousand Dollars ($10,000)
per month, and (ii) permit immediate termination thereof (at Preferred Member’s
sole and absolute discretion) without notice upon the occurrence of a Material
Non-Compliance Event. Notwithstanding anything to the contrary contained in this
Agreement or the Property Management Agreement, (x) any property management
agreement for the Property between the Company and a property manager that is
not Affiliated with Common Member shall permit the termination thereof by the
Company for any or no reason with thirty (30) days prior notice to the property
manager thereunder, and (y) Preferred Member shall have the unilateral right,
power and authority (without the consent of the Manager or any other Member) to
cause the Company to exercise any termination rights, take any enforcement
action and grant or withhold any consents or waivers with respect to any
property management agreement for the Property between the Company and a
property manager that is Affiliated with Common Member as if Preferred Member
were a party to such document.
(b)    Not later than sixty (60) days prior to the first occupancy of the
Parking Facility, the Company will enter into a management and leasing agreement
for the Parking Facility with the Parking Manager (the “Parking Management
Agreement”) substantially in the form attached hereto as Schedule 4.10(b). The
Parking Management Agreement shall (i) provide for a fee in an amount equal to
three percent (3%) of the actual monthly gross collections from the Parking
Facility (and, for the avoidance of doubt, excluding collections from any
portion of the Property other than the Parking Facility), and (ii) permit
immediate termination thereof (at

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Preferred Member’s sole and absolute discretion) without notice upon the
occurrence of a Material Non-Compliance Event. Notwithstanding anything to the
contrary contained in this Agreement or the Parking Management Agreement, (x)
any parking management agreement for the Parking Facility between the Company
and a parking manager that is not Affiliated with Common Member shall permit the
termination thereof by the Company for any or no reason with thirty (30) days
prior notice to the parking manager thereunder, and (y) Preferred Member shall
have the unilateral right, power and authority (without the consent of the
Manager or any other Member) to cause the Company to exercise any termination
rights, take any enforcement action and grant or withhold any consents or
waivers with respect to any parking management agreement for the Parking
Facility between the Company and a parking manager that is Affiliated with
Common Member as if Preferred Member were a party to such document.
(c)    On the date hereof, (i) Guarantors will execute and deliver a guaranty
(the “Non-Recourse Carveout Guaranty”) in the form attached hereto as Schedule
4.10(c)(ii), (ii) Elcano II LLC will execute and deliver a completion guaranty
(the “Completion Guaranty”) in the form attached hereto as Schedule 4.10(c)(i),
and (iii) Guarantors and the Company will execute and deliver an environmental
indemnity agreement (the “Environmental Indemnity”) in the form attached hereto
as Schedule 4.10(c)(iii). For the avoidance of doubt, any liability incurred by
Guarantors and Common Member (or their Affiliates) pursuant to the Completion
Guaranty, the Environmental Indemnity or the Non-Recourse Carveout Guaranty
shall be deemed expenses of Guarantors and Common Member, as applicable, and
shall not be deemed expenses of the Company or Capital Contributions to the
Company.
(d)    The Company shall pay to the Construction Manager a construction
management fee with respect to the Property in an amount equal to one and
one-half percent (1.5%) of all hard costs of overseeing construction management
of the Property in accordance with the Budget and Plan. The initial payment of
the construction management fee shall be made on the date hereof; provided,
however, that if hard costs have not been incurred in accordance with the Budget
and Plan within ninety (90) days after the date hereof, any portion of the
construction management fee paid to the Construction Manager prior to the
incurrence of hard costs in accordance with the Budget and Plan shall be
promptly returned to the Company and paid in accordance with the following
sentence. Each subsequent payment of the construction management fee shall be
made in accordance with the applicable Draw Package. Notwithstanding the
foregoing or anything to the contrary contained herein, upon the occurrence of a
Material Non-Compliance Event, Preferred Member shall have the right (in its
sole and absolute discretion) to immediately terminate (without notice) the
Construction Manager and, following such termination, no additional construction
management fees shall be payable to the initial Construction Manager under this
Section 4.10(d) or otherwise.
(e)    The Company shall pay to Common Member a development fee with respect to
the Property in an amount equal to five percent (5%) of all hard costs of
developing and constructing the Property (the “Development Fee”) in accordance
with the Budget and Plan. Preferred Manager acknowledges and agrees that Common
Member shall be permitted to assign its development obligations to the
development manager for the Property designated and appointed by the Company in
accordance with the terms of this Agreement and serving in such capacity
pursuant to the approved Development Management Agreement and, in the event of
such assignment, the Development Fee shall be payable solely to such development
manager for

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the Property at the times, and in the manner, set forth herein. An amount equal
to fifty percent (50%) of the total Development Fee shall be payable to Common
Member (or the development manager for the Property, as applicable) through
Substantial Completion as follows: (i) the initial payment of such portion of
the Development Fee shall be made on the date hereof (provided, however, that if
hard costs have not been incurred in accordance with the Budget and Plan within
ninety (90) days after the date hereof, any portion of the Development Fee paid
to Common Member prior to the incurrence of hard costs in accordance with the
Budget and Plan shall be promptly returned to the Company and paid in accordance
with the following clause, and (ii) each subsequent portion of the Development
Fee shall be payable in accordance with the applicable Draw Package. The
remaining fifty percent (50%) of the total Development Fee shall be payable to
Common Member (or the development manager for the Property, as applicable) upon
Substantial Completion in accordance with the Budget and Plan. Notwithstanding
the foregoing or anything to the contrary contained herein, upon the occurrence
of a Material Non-Compliance Event, Preferred Member shall have the right (in
its sole and absolute discretion) to immediately terminate (without notice) the
Development Management Agreement and, following such termination, no additional
development fees (including the Development Fee) shall be payable to Common
Member or, to the extent applicable, the development manager for the Property
under this Section 4.10(e), the Development Management Agreement or otherwise.
Notwithstanding anything to the contrary contained in this Agreement or the
Development Management Agreement, (x) any development management agreement for
the Property between the Company and a development manager that is not
Affiliated with Common Member shall permit the termination thereof by the
Company for any or no reason with thirty (30) days prior notice to the
development manager thereunder, and (y) Preferred Member shall have the
unilateral right, power and authority (without the consent of the Manager or any
other Member) to cause the Company to exercise any termination rights, take any
enforcement action and grant or withhold any consents or waivers with respect to
any development management agreement for the Property between the Company and a
development manager that is Affiliated with Common Member as if Preferred Member
were a party to such document.
Section 4.11    Allowed Sale. Notwithstanding anything to the contrary contained
in this Agreement, at any time following the date hereof, the Manager shall be
permitted to cause a sale to a bona fide third party buyer (directly or
indirectly through a sale of all of the Interests in the Company) of the
Property (an “Allowed Sale”), so long as the following conditions are satisfied:
(a)    The Manager shall provide the Members written notice of such pending
Allowed Sale no later than thirty (30) days prior to the consummation thereof
(which notice shall be revocable and which closing date for the proposed Allowed
Sale may be extended by written notice to Preferred Member);
(b)    Such Allowed Sale will not result in a Senior Loan Default; and
(c)    The sum of (i) the Net Capital Proceeds of such Allowed Sale, plus (ii)
any Capital Contributions made by Common Member to supplement the Net Capital
Proceeds of such Allowed Sale will be sufficient to redeem the Net Preferred
Equity Investment upon distribution thereof in accordance with Section 6.5.

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Each of the Members hereby acknowledges and agrees that (i) the business plan
for the Property contemplates a hold period of three (3) to five (5) years after
the date hereof (provided, however, that the foregoing shall not in any way
restrict, diminish or otherwise affect the right or ability of Common Member to
consummate an Allowed Sale or redeem the Preferred Member Interest pursuant to
the applicable terms of this Agreement), and (ii) an Allowed Sale shall not
constitute a Major Decision or require Preferred Member’s consent and, in the
event of an Allowed Sale consisting of the sale of all of the Interests,
Preferred Member expressly agrees it shall convey its Interest at the closing of
such Allowed Sale.
ARTICLE V
Capital Contributions; Protective Contributions
Section 5.1    Capital Contributions. (a) Each of the Members hereby
acknowledges and agrees that on the date hereof, Preferred Member is deemed to
have made a Capital Contribution as of the date hereof in the amount of the
Preferred Equity Investment (as reflected on Schedule 3.1 hereto), and Common
Members has made or is deemed to have made the initial Capital Contribution set
forth on Schedule 3.1 hereto.
(b)    In the event it is determined by the Manager that funds are required
(i) in connection with any of the purposes set forth in Section 2.4, (ii) to pay
for fees, costs or expenses payable by the Company pursuant to this Agreement or
(iii) otherwise to meet the Company’s then existing obligations, then Common
Member shall make further Capital Contributions in such amounts; provided,
however, that any Capital Contributions made by Common Member pursuant to
Section 4.11(c) and this Section 5.1(b) shall be subordinate to all
Distributions and all other amounts payable to Preferred Member under this
Agreement.
(c)    Notwithstanding anything to the contrary contained in this Agreement,
Preferred Member shall not have any obligation to contribute additional capital
or property to the Company in excess of the Preferred Equity Investment;
provided, however, that Preferred Member shall have the right (but not the
obligation) to make Protective Contributions in accordance with Section 5.2.
Section 5.2    Protective Contributions. If at any time (a) the Company is
subject to a Senior Loan Default or (b) the Company or Common Member fails to
pay any monthly installment of the Current Return within five (5) Business Days
following the applicable Distribution Date, then in either case Preferred Member
may, but is not obligated to, make a special contribution of capital to the
Company (each, a “Protective Contribution”) in accordance with this Section 5.2,
the proceeds of which shall be exclusively used to cure such Senior Loan Default
(in the case of clause (a) above) or supplement any Shortfall (in the case of
clause (b) above). Each Protective Contribution shall (a) entitle Preferred
Member to a return on such Protective Contribution equal to nineteen percent
(19%) per annum, compounded monthly, (b) be repaid on a priority basis from Net
Cash Flow (in accordance with Section 6.4 or Section 10.6(d)(i), as applicable)
and Net Capital Proceeds (in accordance with Section 6.5 or 10.6(d)(i), as
applicable), and (c) require the repayment of any and all amounts outstanding in
respect of such Protective Contribution on the earlier of (i) the redemption of
the Preferred Member Interest in accordance with Section 10.4 or (ii) the
applicable Preferred Equity Redemption Date. Common Member may repay any
Protective Contribution at any time prior to the applicable

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mandatory repayment date of such Protective Contribution by funding to the
Company an amount equal to the amount of the unreturned Protective Contribution,
together with any unpaid accrued return thereon, for immediate payment to
Preferred Member. The Capital Account of Preferred Member shall not be credited
with the amount of any Protective Contribution and the repayment of a Protective
Contribution, and the payment or reimbursement of any return thereon, shall not
reduce the Capital Account of Preferred Member. For the avoidance of doubt, so
long as a Protective Contribution is outstanding, the rights of Preferred Member
shall continue until such Protective Contribution is repaid in full.
Section 5.3    Return of Capital. Except as otherwise provided in this
Agreement, no Member may withdraw any portion of the capital of the Company, and
no Member is entitled to the return of that Member’s Capital Contribution(s).
Under circumstances requiring a return of any Capital Contributions, no Member
shall have the right to receive property other than cash, except as may be
specifically provided in this Agreement. No Member may withdraw or resign from
the Company unless specifically provided in this Agreement.
Section 5.4    Capital Accounts. A Capital Account shall be maintained for each
Member. Said Capital Account shall be kept in accordance with the provisions of
Section 1.704-1(b)(2)(iv) of the Regulations. Without limiting the foregoing,
each Member’s Capital Account shall be (a) increased by the net agreed value of
each Capital Contribution made by such Member, allocations to such Member of the
Net Profits and any other allocations to such Member of income pursuant to
Section 6.2, and (b) decreased by the net agreed value of each Distribution made
to such Member by the Company, allocations to such Member of Net Losses and
other allocations to such Member pursuant to Section 6.2. Subject to Preferred
Member consent, the Manager shall restate Capital Accounts upon any event for
which such restatement is permitted pursuant to the Regulations promulgated
under Code Section 704(b).
Section 5.5    Transfers. Upon a permitted sale or other transfer of an Interest
in the Company, the Capital Account of the Member transferring its Interest
shall become the Capital Account of the Person to whom such Interest is sold or
transferred in accordance with Section 1.704‑1(b)(2)(iv) of the Regulations.
Section 5.6    Deficit Capital Account. Notwithstanding anything to the contrary
contained herein, no Member shall have any liability to restore all or any
portion of a deficit balance in a Capital Account. A deficit balance in a
Member’s Capital Account is not an asset of the Company.
Section 5.7    Modifications. The manner in which Capital Accounts are to be
maintained pursuant to this Agreement is intended to comply with the
requirements of Section 704(b) of the Code. If Preferred Member determines in
writing that the manner in which Capital Accounts are to be maintained pursuant
to this Agreement should be modified to comply with Section 704(b) of the Code,
then the method in which Capital Accounts are maintained shall be so modified;
provided, however, that any change in the manner of maintaining Capital Accounts
shall not materially alter the economic agreement between or among the Members.

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ARTICLE VI
Allocations; Distributions
Section 6.1    Allocation of Profits and Losses; Guaranteed Payments. (a) All
amounts distributable or payable to Preferred Member, other than (i) in return
of Preferred Member’s Capital Contributions or Protective Contributions, (ii) as
reimbursement of expenses or (iii) any similar item, shall be treated as a
guaranteed payment pursuant to section 707(c) of the Code.
(b)    After the application of Section 6.1(a), for purposes of maintaining the
Capital Accounts of the Company, Net Profits or Net Losses for any tax year (or
portion thereof) shall all be allocated to Common Member. Notwithstanding the
foregoing, if the Capital Account balance of Common Member is at or below zero
and the Capital Account balance of Preferred Member is positive, (i) Net Losses
shall be allocated first to Preferred Member to eliminate its positive Capital
Amount balance and then to Common Member and (ii) subsequent Net Profits shall
be allocated first to Common Member to eliminate its deficit Capital Account
balance, if any, and then to Preferred Member to reverse the prior allocation of
Net Profits to it pursuant to clause (i) of this Section 6.1(b).
Section 6.2    Required Special Allocations. Notwithstanding the terms of
Section 6.1:
(a)    Any Member Nonrecourse Deductions shall be specially allocated to the
Member(s) that bear(s) the economic risk of loss with respect to the Member
Nonrecourse Debt to which the Member Nonrecourse Deductions are attributable in
accordance with Section 1.704-2(i)(1) of the Regulations.
(b)    Appropriate allocations of income, gain, loss or deduction shall be made
to the extent required to comply with the “qualified income offset” provisions
of Section 1.704-1(b)(2)(ii)(d) of the Regulations, the Company “minimum gain
chargeback” provisions of Section 1.704-2(f) of the Regulations, and the Member
“minimum gain chargeback” provisions of Section 1.704-2(i)(4) of the
Regulations, all issued pursuant to Section 704(b) of the Code. To the extent
permitted by such Regulations, the allocations in such year and subsequent years
shall be further adjusted so that the cumulative effect of all the allocations
shall be the same as if all such allocations were made pursuant to Section 6.1
hereof without regard to Section 6.2(a) and this Section 6.2(b).
(c)    In the event any Member has a deficit Capital Account balance at the end
of a Fiscal Year that is in excess of the amount (if any) such member is deemed
to be obligated to restore pursuant to the Regulations, taking into account all
other allocations and adjustments under this Agreement (made as if this Section
6.2(c) were not in this Agreement), each such Member shall be specially
allocated items of Company income and gain in the amount of such excess as
quickly as possible.
(d)    Any Company Nonrecourse Deductions for a Fiscal Year shall be specially
allocated to Common Member.
(e)    In accordance with Code § 704(c) (and the principles thereof) and the
Regulations issued with respect thereto, income, gain, loss and deduction with
respect to any property contributed to the capital of the Company, or after
Company property has been revalued

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under Regulation § 1.704-1(b)(2)(iv), shall, solely for tax purposes, be
allocated among the Members so as to take into account any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its Book Basis. Allocations pursuant to this Section 6.2(e) are solely for
purposes of federal, state and local taxes and shall not affect, or in any way
be taken into account in computing, any Member’s Capital Account or share of Net
Profit, Net Loss, other items, or distributions pursuant to any provision of
this Agreement.
(f)    Net Profits, Net Losses, income, gain, deductions and credits allocated
to a Company interest transferred, issued, or reissued during a Fiscal Year
shall be allocated to the Persons who were the holders of such Company interest
during such Fiscal Year, using any method selected by the Manager to the extent
permitted by the Code.
Section 6.3    Distributions Generally. Subject to the provisions of Article X
(including Section 10.6(d)), (a) the Manager shall make Distributions of Net
Cash Flow on or before each applicable Distribution Date in the order of
priority set forth in Section 6.4, and (b) the Manager shall make Distributions
of Net Capital Proceeds immediately following the Capital Event to which they
relate in the order of priority set forth in Section 6.5. Notwithstanding any
provisions to the contrary in this Agreement, the Company shall not make a
Distribution if such Distribution would violate the LLC Act or any of the Senior
Loan Documents.
Section 6.4    Distributions of Net Cash Flow. Subject to the provisions of
Article X (including Sections 10.1 and 10.6(d)), all Net Cash Flow shall be
distributed to the Members in the following order of priority:
(a)    First, all Net Cash Flow shall be distributed one hundred percent (100%)
to Preferred Member until any outstanding Protective Contributions (including
any accrued and unpaid return thereon) have been paid in full;
(b)    Second, any remainder of such Net Cash Flow (after the distribution of
such Net Cash Flow in the manner described in clause (a) above) shall be
distributed one hundred percent (100%) to Preferred Member until any accrued and
unpaid Current Return has been paid in full; and
(c)    Thereafter, any remainder of such Net Cash Flow (after the distribution
and payment of such Net Cash Flow in the manner described in clauses (a) and (b)
above) shall be distributed one hundred percent (100%) to Common Member.
Section 6.5    Distributions of Net Capital Proceeds. Subject to the provisions
of Article X (including Sections 10.1 and 10.6(d)), all Net Capital Proceeds
shall be distributed to the Members in the following order of priority:
(a)    First, all Net Capital Proceeds shall be distributed one hundred percent
(100%) to Preferred Member until any outstanding Protective Contributions
(including any accrued and unpaid return thereon) have been paid in full;
(b)    Second, any remainder of such Net Capital Proceeds (after the
distribution of such Net Capital Proceeds in the manner described in clause (a)
above) shall be distributed

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one hundred percent (100%) to Preferred Member until any accrued and unpaid
Current Return has been paid in full;
(c)    Third, any remainder of such Net Capital Proceeds (after the distribution
and payment of such Net Capital Proceeds in the manner described in clauses (a)
and (b) above) shall be distributed one hundred percent (100%) to Preferred
Member until any accrued and unpaid Deferred Return has been paid in full;
(d)    Fourth, any remainder of such Net Capital Proceeds (after the
distribution and payment of such Net Capital Proceeds in the manner described in
clauses (a), (b) and (c) above) shall be distributed one hundred percent (100%)
to Preferred Member until each of (i) the Exit Amount, (ii) solely if an Allowed
Sale is consummated prior to the Preferred Equity Yield Protection Date, the
Preferred Equity Yield Protection Amount, and (iii) any and all fees and
expenses and other amounts due and payable to Preferred Member (or its
Affiliates) hereunder or under any of the Guaranties has been paid in full;
(e)    Fifth, any remainder of such Net Capital Proceeds (after the distribution
and payment of such Net Capital Proceeds in the manner described in clauses (a),
(b), (c) and (d) above) shall be distributed one hundred percent (100%) to
Preferred Member until the Net Preferred Equity Investment has been paid in
full; and
(f)    Thereafter, any remainder of such Net Capital Proceeds (after the
distribution and payment of such Net Capital Proceeds in the manner described in
clauses (a), (b), (c), (d) and (e) above) shall be distributed one hundred
percent (100%) to Common Member.
Section 6.6    Disbursements from Current Return Reserve. Notwithstanding
anything to the contrary contained herein, during construction of the
Improvements, the Current Return shall be paid to Preferred Member from the
Current Return Reserve. For the period commencing at such time that the
operation of the Property begins to generate revenue and ending at such time
that the Current Return Reserve is released pursuant to Section 10.1 hereof, the
Current Return shall be paid from Net Cash Flow and Net Capital Proceeds, as
applicable. Notwithstanding anything to the contrary contained herein, to the
extent there is insufficient Net Cash Flow or Net Capital Proceeds on the date
that such Net Cash Flow or Net Capital Proceeds is required to be distributed
hereunder to pay to Preferred Member all amounts payable to it pursuant to
Sections 6.4(a), 6.4(b), 6.5(a), 6.5(b) and 6.5(c), or Section 10.6(d)(i), as
applicable, Preferred Member shall release from the Current Return Reserve
maintained in accordance with Section 10.1 to itself the amount of any such
shortfall on such date (which amount when applied shall be deemed, for all
purposes of this Agreement, to have been distributed to Preferred Member in
accordance with Sections 6.4(a), 6.4(b), 6.5(a), 6.5(b) and/or 6.5(c), or
Section 10.6(d)(i), as applicable.
Section 6.7    Offset. The Company may offset all amounts owing to the Company
by a Member against any Distribution to be made to such Member.
Section 6.8    Withholding. Notwithstanding any other provision contained in
this Agreement, in the event that the Company is required to withhold and remit
any taxes to the Internal Revenue Service or any other taxing authority (the
“Tax Authority”) with respect to any

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Member (the “Withheld Member”), then each such Withheld Member shall be required
to make additional Capital Contributions at such times and in such amounts as
determined by the Manager and Preferred Member sufficient to fund, or reimburse
the Company for, such obligations of the Company. Such capital contributions
shall not be deemed Capital Contributions for purposes of this Agreement (but
shall increase the Capital Account balance of such Member), and shall not change
the Distributions that would otherwise be made to such Withheld Member. The
amount of any such taxes remitted by the Company with respect to a Withheld
Member for any year shall be a reduction of such Member’s Capital Account
balance as if such amount were distributed to such Member but, provided that
such Member has made the contribution required by the previous sentence, shall
not reduce the actual cash Distribution to be made to such Member pursuant to
this Agreement. Notwithstanding the foregoing, the Company (in lieu of all or a
portion of a capital contribution to be made pursuant to this Section 6.8) shall
offset any Distribution to be made to a Member against all or any portion of
such contribution that would otherwise be required and thereby reduce the
contribution required to be made by such Member.
Section 6.9    Preferred Equity Investment Reserve; Disbursements. (a)
Simultaneously with the execution of this Agreement, (i) the Company shall
establish and maintain with Preferred Member (or as may be directed by Preferred
Member), at all times while the Preferred Member Interest remains outstanding, a
reserve held and controlled solely by Preferred Member in an account in its name
(the “Preferred Equity Investment Reserve”), and (ii) Preferred Member shall
deposit a portion of the Preferred Equity Investment in an amount equal to
Seventeen Million Eight Hundred Eighty-Eight Thousand Forty-Nine Dollars
($17,888,049) into the Preferred Equity Investment Reserve. Subject to Sections
6.9(c), 6.9(d) and 6.9(f), as applicable, and in accordance with Section 6.9(e),
Preferred Member shall (or shall cause the Company to) release from the
Preferred Equity Investment Reserve to the construction escrow created by the
Escrow Agreement such amounts (each, a “Preferred Equity Disbursement”) as
requested by Common Member in accordance with Section 6.9(b). Notwithstanding
anything to the contrary contained in this Agreement, (x) the aggregate amount
of all Preferred Equity Disbursements shall not in any event exceed the amount
of the Preferred Equity Investment, (y) Preferred Member shall not have any
obligation to replenish funds released from, or deposit additional funds in, the
Preferred Equity Investment Reserve, and (z) Preferred Member shall not have any
obligation to release funds from, and nothing contained in this Agreement shall
be interpreted to entitle Common Member to any portion of the funds held in, the
Preferred Equity Investment Reserve, in each case other than as set forth in
this Section 6.9.
(b)    Common Member shall request each Preferred Equity Disbursement by
delivering to Preferred Member an irrevocable Draw Package, which shall be duly
executed by an officer or agent of Common Member and appropriately completed,
which specifies, among other things, (i) the amount of the requested Preferred
Equity Disbursement, which shall be in the minimum amount of Fifty Thousand
Dollars ($50,000), and (ii) the date of the requested Preferred Equity
Disbursement, which shall be a Business Day. Common Member shall give each Draw
Package to each of the Construction Consultant and Preferred Member not later
than 2:00 p.m. at least ten (10) Business Days before the Business Day upon
which the requested Preferred Equity Disbursement is to be made.

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(c)    Notwithstanding anything to the contrary herein, the disbursement of the
initial Preferred Equity Disbursement is subject to the following conditions:
(i)    Preferred Member shall have received evidence reasonably satisfactory to
it that the initial Capital Contribution of Common Member in the amount set
forth on Schedule 3.1 has been contributed to the Company as of the date hereof
in accordance with Section 5.1(a) and expended by the Company in accordance with
the Budget and Plan (such determination to be made in Preferred Member’s sole
and absolute discretion);
(ii)    Common Member shall have delivered to Preferred Member, the Draw Package
for such Preferred Equity Disbursement in accordance with this Agreement;
(iii)    On the date such initial Preferred Equity Disbursement is to be made
and after giving effect to such initial Preferred Equity Disbursement, no
Material Non-Compliance Event shall have occurred, and no event or condition
that, with the giving of notice or the passage of time or both, would constitute
a Material Non-Compliance Event, and Common Member shall so certify in writing;
(iv)    Preferred Member shall have received and approved all applicable
environmental studies and reports for the Property, in each case issued by
environmental consultants acceptable to Preferred Member in form and substance
satisfactory to the Preferred Member;
(v)    Preferred Member shall have received and approved all applicable
financial reports and certifications of Common Member and Guarantors as may be
required by Preferred Member, in each case in form and substance satisfactory to
the Preferred Member;
(vi)    Preferred Member shall have received (i) true and complete copies of
(x) all material architectural and design contracts (including the Architect
Agreement), all material construction and development contracts (including the
Construction Contract, all material subcontracts for labor or materials to be
furnished in respect of the Property, and the Development Management Agreement),
all material engineering and other analyses prepared in respect of the Property,
and all other material agreements with respect to the design, development and
construction of the Property (it being understood by the Members that the term
“material,” as used to modify any contract, agreement or understanding
referenced in the foregoing clause (x), shall mean any contract, agreement or
understanding pursuant to which the Company is obligated to pay amounts (either
in any single instance or in the aggregate) equal to, or in excess of, Two
Hundred Fifty Thousand Dollars ($250,000)), and (y) the Budget and Plan, in each
case in the form, substance and scope of which shall be acceptable to Preferred
Member and the Construction Consultant, (ii) a schedule of values, including a
trade payment breakdown, setting forth a description of all contracts let by the
Company and/or the Contractor for the design, engineering, construction and
equipping of the Improvements as of the date hereof, (iii) an initial sworn
statement of the Contractor, approved by Preferred Member, the Architect and the
Construction Consultant covering all work done and to be done, together with
lien waivers covering all work and materials for which payments have been made
by the Company prior to the disbursement of the initial Preferred Equity
Disbursement, (iv) evidence that the Company has obtained the performance bonds
and labor and material payment bonds required pursuant to

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this Agreement, and (v) such other papers, materials and documents as Preferred
Member may reasonably require with respect to the design, development and
construction of the Property;
(vii)    Preferred Member shall have completed its costing analysis with respect
to the Improvements in form and substance satisfactory to Preferred Member, and
in connection with the foregoing, shall have received and approved in form and
substance satisfactory to Preferred Member: (i) if requested by Preferred
Member, a soils report for the Property; (ii) two (2) sets of the Plans and
Specifications contained in the Budget and Plan, certified as complete by the
Person(s) that prepared them, together with evidence of all necessary or
appropriate approvals of Governmental Entities or private parties; (iii) copies
of all agreements which are material to completion of the Improvements; and (iv)
copies of all building permits and similar permits, licenses, approvals,
development agreements and other authorizations of governmental agencies or
private parties required in connection with the construction, design and
development of the Property and the Improvements;
(viii)    Common Member shall have, to the satisfaction of Preferred Member in
its sole and absolute discretion, fulfilled its obligations pursuant to Section
10.1;
(ix)    Preferred Member shall have received:
(1)    true and complete copies of the Guaranties executed by the parties
thereto;
(2)    all documents evidencing the formation, organization, valid existence,
good standing, and due authorization of and for Common Member, the Company and
Guarantors, and the authorization for the execution, delivery, and performance
of this Agreement and the Guaranties;
(3)    legal opinions issued by counsel for Common Member and Guarantors,
covering due authorization, execution and delivery and enforceability of this
Agreement and the Guaranties and also containing such other legal opinions as
Preferred Member shall reasonably require, subject to customary exceptions,
exclusions and assumptions;
(4)    current bankruptcy, federal tax lien and judgment searches;
(5)    evidence that no litigation or proceedings shall be pending or threatened
(which may be evidenced through a representation and warranty) which could or
might cause a material adverse change with respect to the Company, Common
Member, Guarantors or the Property;
(6)    evidence (on the applicable portion of the Survey and Plans and
Specifications) establishing to the satisfaction of Preferred Member that the
Property when constructed will have adequate water supply, storm and sanitary
sewerage facilities, telephone, gas, electricity, fire and police protection,
means of ingress and egress to and from the Property and public highways and any
other required public utilities and that the Property is benefited by insured
easements as may be required for any of the foregoing;

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(7)    evidence that the Improvements are not located in an area designated by
the Secretary of Housing and Urban Development as a special flood hazard area,
or flood hazard insurance acceptable to Preferred Member in its sole discretion;
(8)    evidence indicating compliance of the portions of the Property with
applicable zoning requirements acceptable to Preferred Member;
(9)    evidence that all easements reasonably required for the construction,
maintenance or operation of the Property;
(10)    copies of all leases into which the Company has entered; and
(11)    such other documents or items as Preferred Member or its counsel may
reasonably require.
(d)    In addition to any applicable conditions precedent set forth elsewhere in
this Section 6.9, the disbursement of any Preferred Equity Disbursements
following the initial Preferred Equity Disbursement is, in each case, subject to
the following conditions:
(i)    Common Member shall have delivered to Preferred Member, the Draw Package
for such Preferred Equity Disbursement in accordance with this Agreement;
(ii)    On the date such Preferred Equity Disbursement is to be made and after
giving effect to such Preferred Equity Disbursement, the following shall be true
and correct:
(1)    The representations and warranties set forth in Section 12.2 are true and
correct in all material respects (except to the extent that such representation
and warranty is qualified by materiality, in which case such representation and
warranty must be true in all respects) as if made on such date (except for
representations and warranties expressly made as of a specified date, which
shall be true and correct in all material respects (except to the extent that
such representation and warranty is qualified by materiality, in which case such
representation and warranty must be true in all respects) as of such date);
(2)    No Material Non-Compliance Event shall have occurred, and no event or
condition that, with the giving of notice or the passage of time or both, would
constitute a Material Non-Compliance Event, and Common Member shall so certify
in writing; and
(3)    The Improvements shall not be Out-of-Balance (and Common Member shall
have delivered calculations relating thereto reasonably satisfactory to the
Preferred Member).
(iii)    Common Member shall have delivered to Preferred Member (i) a copy of
each applicable contractor’s application for payment to the Company, signed by
the Architect and confirmed (such confirmation not to be unreasonably withheld,
delayed or conditioned) by the Construction Consultant, on forms acceptable to
Preferred Member, (ii) paid invoices or receipts and unconditional statutory
lien waivers for all construction work and costs

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included in the previous Draw Package (provided, however, lien waivers may be
conditioned on the receipt of payment for the amounts set forth therein, so long
as unconditional waivers are provided within thirty (30) days), and evidence
reasonably satisfactory to Preferred Member that all prior disbursements have
been used for purposes described in this Agreement or the corresponding previous
Draw Package; (iii) if requested by Preferred Member, evidence that any
inspection required by any Governmental Entity has been completed with results
satisfactory to that Governmental Entity and a detailed itemization of the
Construction Contract and allocated costs of any work to be performed thereunder
on forms as may be reasonably acceptable to Preferred Member, (iv) such
certifications of job progress from Common Member and/or the Company, in form
reasonably satisfactory to Preferred Member, as Preferred Member may reasonably
request, and (v) if requested by Preferred Member, any of the papers, materials
or documents referenced in Sections 6.9(c)(vi) and 6.9(c)(vii) entered into on,
or effective as of, any date following the date hereof. Preferred Member shall
have the right to inspect all books, records and accounts relating to such work,
and may, at its option, require execution by the Company and any contractors,
subcontractors, laborers and materialmen of such affidavits, endorsements and
releases as Preferred Member deems reasonably necessary;
(iv)    The Construction Consultant shall have reviewed and approved (such
approval not to be unreasonably withheld, delayed or conditioned) as adequate
and in conformance with the terms of this Agreement the Plans and Specifications
and all engineering reports and any subsequent change orders to each
Construction Contract or modification to the Plans and Specifications, form of
Draw Package attached hereto as Schedule 6.9(b) and the Budget and Plan, each
review of which shall be completed on or before ten (10) Business Days after
receipt of such Plans and Specifications, engineering reports, modifications or
change orders;
(v)    Preferred Member shall have received, in form and substance reasonably
satisfactory to Preferred Member, such other assurances, certificates, lien
waivers, documents or consents related to the construction of the Improvements
as Preferred Member may reasonably require; and
(vi)    Under the Construction Contract, (1) at the time of the second draw, the
general contractor for the Property shall have binding trade contracts for at
least fifty percent (50%) of the costs and expenses under the Budget and Plan
(which the Members acknowledge shall include general contractor’s fee, general
conditions and insurance costs) subject to such binding contracts as verified by
the Construction Consultant, and (2) at the time of the third draw, general
contractor shall have binding trade contracts for at least sixty percent (60%)
of the costs and expenses under the Budget and Plan (which the Members
acknowledge shall include general contractor’s fee, general conditions and
insurance costs), subject to such binding contracts as verified by the
Construction Consultant, and (3) by the fourth draw, general contractor shall
have binding trade contracts for at least seventy percent (70%) of the costs and
expenses under the Budget and Plan (which the Members acknowledge shall include
general contractor’s fee, general conditions and insurance costs) subject to
such binding contracts as verified by the Construction Consultant.

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The submission by Common Member to Preferred Member of each Draw Package shall
be deemed to be a representation and warranty by Common Member that each of the
statements set forth above in Section 6.9(d)(ii) is true and correct as of the
date of such document.
(e)    Subject to all conditions precedent set forth in Sections 6.9(c) and
6.9(d) and the circumstances set forth in Section 6.9(f), the proceeds of the
Preferred Equity Disbursements shall be disbursed in accordance with the
applicable Draw Package to pay for costs of construction actually incurred,
subject to a five percent (5%) retention. In no event will Preferred Member make
disbursements of Preferred Equity Disbursements (i) more frequently than
monthly, or (ii) in excess of the percentage of construction completed. The
maximum amount of Preferred Equity Disbursements which Common Member may request
for the Improvements or for any component or phase thereof shall be as set forth
in the applicable Draw Package. Preferred Member shall not be obligated to
disburse Preferred Equity Disbursements for the payment of any cost if the
amount of such cost, together with the amounts of other costs included within
the same “line-item” in the applicable Draw Package for which requests for
disbursements have previously been submitted and approved, exceeds the amount
set forth in the applicable Draw Package for such line-item, unless Common
Member furnishes to the Company and Preferred Member documentary evidence
satisfactory to Preferred Member that any such excess cost is offset by a
reduction, in nature reasonably satisfactory to Preferred Member, of at least an
equal amount in another line-item in the Draw Package, and Preferred Member
approves a revision to the Draw Package. At its option, Preferred Member may
make disbursements to cover any expenses or charges which are to be borne by
Common Member, including but not limited to, the cost of any required legal
fees, appraisals, inspections, certifications or surveys. All disbursements of
Preferred Equity Disbursements shall be applied by Common Member solely for the
purposes for which the funds have been disbursed.
(f)    Notwithstanding anything to the contrary set forth in this Agreement,
Preferred Member may withhold disbursement of Preferred Equity Disbursements
under the following circumstances:
(i)    Preferred Member may withhold any Preferred Equity Disbursements if the
request therefor is not accompanied by executed unconditional statutory lien
waivers for all work done pursuant to the Construction Contract supplied through
the date of the immediately preceding request for Preferred Equity
Disbursements;
(ii)    Five percent (5%) of each disbursement of Preferred Equity Disbursements
shall be deposited into an escrow account maintained by an escrow agent in
accordance with the terms of the Senior Loan Agreement until (i) each of the
Construction Consultant and the Architect has certified and confirmed, on
appropriate form acceptable to Preferred Member, that the Property and the
relevant Improvements have achieved Substantial Completion in accordance with
the Budget and Plan, and (ii) each applicable Governmental Entity shall have
duly inspected and approved the relevant Improvements and issued the appropriate
permit, license or certificate to evidence such approval;
(iii)    Any one or more disbursements of Preferred Equity Disbursements may be
withheld in whole or in part if Preferred Member or the Construction Consultant
determines that the requested Preferred Equity Disbursements would cause the
total amount

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disbursed with respect to the relevant Improvements (or any component thereof
which represents a separate Draw Package “line item”) to exceed the applicable
limitations with respect to such Improvements (or component) set forth in the
applicable Draw Package; or
(iv)    Either of Preferred Member or the Construction Consultant determines at
any time that the Improvements are not being constructed in accordance with the
Plans and Specifications and all governmental requirements.
(g)    Notwithstanding anything to the contrary contained in this Agreement, in
the event that the conditions precedent set forth in Section 6.9(c) are not met
prior to the date that is three (3) full calendar months after the date hereof,
Preferred Member shall provide written notice to Common Member informing it of
the same. If the conditions precedent set forth in Section 6.9(c) are not met
within thirty (30) days after receipt by Common Member of such written notice,
then such event shall constitute a Material Non-Compliance Event for all
purposes hereunder, Preferred Member may (if it so elects) immediately disburse
to itself the entire balance of the Preferred Equity Investment Reserve, and
Preferred Member shall have no further obligation to disburse any amounts from
the Preferred Equity Investment Reserve.
ARTICLE VII
Taxes; Books and Records; Information
Section 7.1    Tax Returns. The Manager shall cause to be prepared and filed all
necessary federal, state and local income tax returns for the Company (and each
Subsidiary, if any). Within a reasonable time period before filing any such tax
return, the Manager shall submit a draft thereof to the Members for their review
and comment. In addition, Manager, within a reasonable time after a request by
any Member therefor, shall from time to time provide to the members any tax
projections requested by such Member. Each Member shall furnish to the Manager
all pertinent information in its possession relating to Company operations that
is necessary to enable the Company’s income tax returns to be prepared and
filed.
Section 7.2    Tax Elections. The Company’s (and each Subsidiary’s, if any) tax
returns shall include such elections, and shall otherwise be completed, as the
Manager shall determine, subject to Section 4.3(a). Neither the Company nor any
Member may make an election for the Company or any Subsidiary to be taxed as a
corporation under the Code or any similar provisions of applicable state law,
and no provisions of this Agreement shall be interpreted to authorize any such
election.
Section 7.3    Tax Matters Partner. (a) The Manager shall act as the “tax
matters partner” of the Company, as provided in the regulations pursuant to
Section 6231 of the Code. Each Member hereby approves such designation and
agrees to execute, certify, acknowledge, deliver, swear to, file and record at
the appropriate public offices such documents as may be deemed necessary or
appropriate to evidence such approval. To the extent and in the manner provided
by applicable Code sections and regulations thereunder, the Manager (i) shall
furnish the name, address, profits interest and taxpayer identification number
of each Member to the IRS and (ii) shall inform each Member of administrative or
judicial proceedings for the adjustment of Company items required to be taken
into account by a Member for income tax purposes.

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(b)    Notwithstanding the foregoing, in exercising its authority as tax matters
partner: (i) the Manager shall give prompt notice to the Members of the receipt
of any written notice of (w) any intention by any taxing authority to examine
Company income tax returns, (x) the beginning of an administrative or judicial
tax proceedings at the Company level, (y) the final Company administrative
adjustment relating to the Company pursuant to Section 6223 of the Code or state
or local equivalent, and (z) any request for the waiver of any applicable
statute of limitations with respect to the filing of any tax return by the
Company; (ii) during the pendency of any administrative or judicial proceeding
at the Company or Subsidiary level relating to income tax matters, the Manager
shall furnish to each Member reports concerning the status of such proceeding at
least once quarterly and more often as necessary to keep each Member reasonably
informed of the progress of such proceeding; (iii) without the consent of
Preferred Member, the Manager shall not enter into any extension of the period
of limitations for making assessments or bind Preferred Member to any settlement
agreement in respect of any administrative or judicial proceeding at the Company
level relating to federal, state, or local income tax matters, and (iv) the
Manager shall promptly notify each of the Members if the Company (or the
Manager) does not intend to file for judicial review with respect to any final
Company administrative adjustment relating to the Company.
Section 7.4    General Accounting Matters. At all times during the existence of
the Company, the Manager shall keep or cause to be kept at the Company’s
principal office true and complete books of account in accordance with the
Required Accounting Standards, including: (a) a current list of the full name
and business address of each Member; (b) a copy of the Certificate and all
amendments thereto; (c) copies of the Company’s federal, state and local income
tax returns and reports for the seven (7) most recent years; (d) copies of this
Agreement and any financial statements of the Company for the seven (7) most
recent years, and (e) all documents and information required under the LLC Act.
Such books and records shall be available for examination and copying (at the
expense of the Member who requests them) at such office by any Member and its
duly authorized representatives.
Section 7.5    Accounting Basis for Tax Reporting Purposes; Fiscal Year. The
books and records of the Company shall be kept on the accrual method of
reporting for tax and financial reporting purposes. References to the taxable
year of the Company shall mean its taxable year as determined under the Code, or
if the context requires, its taxable year for state or local tax purposes.
Section 7.6    Reports. (a) In furtherance of the Manager’s obligations under
this Agreement, the Manager (at the expense of the Company) shall provide (or
cause to be provided) to the Members the following reports with respect to the
Company and the Property, each in form reasonably approved by Preferred Member;
provided, however, that Preferred Member may from time to time in its reasonable
discretion change the content of such reports):
(b)    On or prior to the fifteenth (15th) calendar day following the end of
each calendar month, the information for such month that is described in
Schedule 7.6(a) hereto, in form reasonably satisfactory to Preferred Member;

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(c)    On or prior to the thirtieth (30th) calendar day following the end of
each calendar quarter, the information for such quarter that is described in
Schedule 7.6(b) hereto, in form reasonably satisfactory to Preferred Member;
(d)    On or prior to the one hundred twentieth (120th) day following the end of
each calendar year, the information for such year that is described in Schedule
7.6(d) hereto (with the information described in Schedule 7.6(c) to be prepared
by the Manager and certified by a manager or financial officer of the Manager in
accordance with the terms and provisions of this Agreement), in form reasonably
satisfactory to Preferred Member;
(e)    Within sixty (60) days following the end of each calendar year, the
information relating to the prior year that is described in Schedule 7.6(d); and
(f)    The Manager shall provide to Preferred Member true, correct and complete
copies of all reports, analyses, recommendations and other documents and
requests required pursuant to Exhibit D of the Property Management Agreement in
accordance with the provisions thereof.
(g)    With reasonable promptness, the Manager shall provide Preferred Member
with such other information and reports as Preferred Member may reasonably
request from time to time, in form reasonably satisfactory to Preferred Member.
Section 7.7    Bank Accounts. All receipts, funds and income of the Company or
any Subsidiary shall be deposited in the name of the Company in such banks or
other financial institutions as are determined by the Manager. Withdrawals from
said banks or other financial institutions (including the writing of checks or
making wire transfers therefrom) shall be made only on signatures of such person
or persons as shall be authorized by the Manager.
Section 7.8    Accounting Period. The accounting period of the Company shall be
the Fiscal Year.
Section 7.9    Certain Notices; Correspondence with Senior Lender. (a) The
Manager shall, promptly after obtaining knowledge of any of the following
events, deliver written notice to Preferred Member of (i) any Material
Non-Compliance Event or (ii) the filing of any action, suit or proceeding
against or affecting the Manager, the Company, Common Member or the Property
that, if adversely determined could, singly or collectively, (x) impair the
validity or enforceability of this Agreement or any of the Guaranties, or (y)
adversely affect the Company’s ability to pay the Preferred Return or redeem the
Preferred Member Interest from and after the applicable Preferred Equity
Redemption Date in accordance with the terms and provisions of this Agreement.
(b)    The Manager shall, immediately after receipt or delivery (as applicable),
provide Preferred Member with copies of all notices, reports and correspondence
that was delivered to, or received from, Senior Lender in connection with the
Senior Loan.

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ARTICLE VIII
Dissolution
Section 8.1    Dissolution. The Company shall be dissolved and subsequently
terminated upon the occurrence of the first of the following events:
(a)    unanimous written agreement of the Members to dissolve and subsequently
terminate the Company;
(b)    any other event that terminates the continued membership of any Member,
but only if all of the remaining Members agree in writing to dissolve the
Company;
(c)    the entry of a decree of judicial dissolution under the LLC Act;
(d)    the occurrence of any other event of dissolution under the provisions of
this Agreement or, subject to the provisions of this Agreement to the contrary,
the LLC Act; and
(e)    if all or substantially all of the Company Assets are sold or otherwise
disposed of and the proceeds thereof distributed.
Section 8.2    Winding-up. When the Company is dissolved, the business and
property of the Company shall be wound up and liquidated by the Liquidator. The
Liquidator shall use its best efforts to reduce to cash and cash equivalent
items such Company Assets as the Liquidator shall deem it advisable to sell,
subject to obtaining fair value for such assets and any tax or other legal
considerations.
Section 8.3    Final Distribution. Upon winding up of the Company, the assets of
the Company shall be distributed in the following manner and order:
(a)    to the payment of the expenses of the winding-up, liquidation and
dissolution of the Company;
(b)    to pay all creditors of the Company, other than Members, either by the
payment thereof or the making of reasonable provision therefor;
(c)    to the setting up of any reserves which the Liquidator may deem
reasonably necessary for any contingent or unforeseen liabilities or obligations
of the Company as provided in Section 18-804(b) of the LLC Act and, subject to
such Section 18‑804(b), at the expiration of such period as the aforesaid person
or persons may deem advisable, for distribution in the manner hereinafter
provided; and
(d)    to pay, in accordance with the provisions of this Agreement applicable to
such loans or in accordance with the terms agreed among them and otherwise on a
pro rata basis, all creditors of the Company that are Members, either by the
payment thereof or the making of reasonable provision therefor.
The remaining assets of the Company shall be applied and distributed to the
Members in accordance with Section 6.5 or Section 10.6(d)(i), as applicable.

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Section 8.4    Termination. The Company shall terminate when all of the assets
of the Company have been distributed in the manner provided for in this Article
VIII, and the existence of the Company shall have been terminated in the manner
required by the LLC Act. The Liquidator (or Members if necessary) shall take all
other actions as may be necessary to terminate the Company.
Section 8.5    Claims of the Members. Current Members and former Members shall
look solely to the Company’s assets for the return of their Capital
Contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and former
Members shall have no recourse against the Company or any other Member or former
Member.
ARTICLE IX
Transfer of Members’ Interests
Section 9.1    Restrictions on Transfer of Company Interests. (a) Except for
Permitted Transfers and Transfers pursuant to Section 9.3, no Member may,
directly or indirectly, assign, sell, exchange, transfer, pledge, hypothecate or
otherwise dispose of all or any part of its Interest (or permit any of the
foregoing to occur), including any direct or indirect interest (whether legal or
beneficial) in such Member (any such assignment, sale, exchange, transfer,
pledge, hypothecation or other disposition of an Interest or a direct or
indirect interest in a Member being herein collectively called a “Transfer”) to
any Person without the prior written consent of all the Members. In the event of
a partial Transfer of an Interest that is effectuated in accordance with the
provisions hereof, such Transferee shall, for the purposes of this Article IX,
be treated, together with the Member who transferred such Interest to the
Transferee, as a single entity, with such transferor Member having the authority
to make elections and give notices hereunder on behalf of such transferor Member
and Transferee. Any such partial Transferee will be bound by the elections made
by such transferor Member.
(b)    Upon any Transfer of a Member’s Interest in the Company in compliance
with this Article IX, the Person (the “Transferee”) to whom the Member’s
Interest was Transferred shall be admitted as a Member upon the Transferee’s
written acceptance and adoption of all of the terms and provisions of this
Agreement and delivery to the Manager by the transferring Member and its
Transferee of any other documents and instruments, including any legal opinions,
reasonably requested by the Manager. For all purposes hereof, the term “Common
Member”, or “Preferred Member” shall be deemed to include any Transferee of such
Member.
(c)    Notwithstanding the foregoing, no Transfer or substitution shall be
recognized if the Manager reasonably believes that such Transfer or substitution
would pose a material risk that the Company will be treated as a “publicly
traded partnership” within the meaning of Section 7704 of the Code and the
regulations promulgated thereunder.
Section 9.2    Other Transfer Provisions. (a) Any purported Transfer by a Member
of all or any part of its Interest in violation of this Article IX or the Senior
Loan Documents shall be null and void and of no force or effect.

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(b)    Except as provided in this Article IX, no Member shall have the right to
withdraw from the Company prior to its termination and no additional Member may
be admitted to the Company unless approved by the Members. In the event that a
Member purports to resign as a Member, such Member shall not be entitled to
receive any Distributions or fees and shall not otherwise be entitled to receive
value for or in respect of its Interest except as otherwise expressly provided
herein. Notwithstanding any provision of this Agreement to the contrary, a
Member may not Transfer all or any part of its Interest if such Transfer would
jeopardize the status of the Company as a partnership for federal income tax
purposes, or would violate, or would cause the Company to violate, any
applicable law or regulation, including any applicable federal or state
securities laws or any document or instrument evidencing indebtedness of the
Company secured by the Company Assets.
(c)    Concurrently with the admission of any substitute or additional Member,
the Members shall forthwith cause any necessary papers to be filed and recorded
and notice to be given wherever and to the extent required showing the
substitution of a Transferee as a substitute Member in place of the Member
Transferring its Interest, or the admission of an additional Member, all at the
expense, including payment of any professional and filing fees incurred, of such
substituted or additional Member. The admission of any person as a substitute or
additional Member shall be conditioned upon such person or entity’s written
acceptance and adoption of all the terms and provisions of this Agreement.
(d)    If any Interest of a Member is Transferred during any accounting period
in compliance with the provisions of this Article IX, each item of income, gain,
loss, expense, deduction and credit and all other items attributable to such
Interest for such period shall be divided and allocated between the transferor
and the transferee by taking into account their varying Interests during such
period in accordance with Section 706(d) of the Code, using any conventions
permitted by law and selected by the Manager. All Distributions on or before the
date of such Transfer shall be made to the transferor, and all Distributions
thereafter shall be made to the transferee. Solely for purposes of making such
allocations and Distributions, the Company shall recognize a Transfer on the
date that the Manager receives notice of the Transfer which complies with this
Article IX from the Member Transferring its Interest.
(e)    If a Member Transfers its Interest in accordance with this Agreement,
then, at the election of such Member, the Company will make a Section 754
election under the Code.
Section 9.3    Sale of Interest by Preferred Member. Notwithstanding anything
contained in this Agreement to the contrary, at any time Preferred Member shall
have the unilateral right to cause a sale or other Transfer of its entire
Interest in the Company (a “ROFO Sale”) to any Qualified Transferee, in each
case subject to Common Member’s right of first offer as set forth in this
Section 9.3.
(a)    To cause a ROFO Sale, Preferred Member shall give written notice (a “ROFO
Notice”) to Common Member. Common Member shall have the right, but not the
obligation, to offer to purchase the entire Interest of Preferred Member by
providing written notice (a “ROFO Offer”) to Preferred Member within five (5)
Business Days after receipt of the ROFO Notice (the “ROFO Notice Period”). The
ROFO Offer shall specify a valuation stating

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the aggregate dollar amount that Common Member would be willing to pay if it
were a third party for the Preferred Member’s Interest as of that date free and
clear of all liabilities thereon, which amount shall not be less than the amount
that Common Member would be required to pay to Preferred Member to redeem the
Preferred Member Interest in accordance with Section 10.4(a)(ii) on the date
that the ROFO Offer is sent (such amount, the “ROFO Purchase Price”). Preferred
Member may accept or reject the ROFO Offer by providing Common Member with
written notice of the same (a “ROFO Acceptance” or “ROFO Rejection,” as
applicable). Preferred Member’s failure to deliver a ROFO Acceptance or ROFO
Rejection within thirty (30) days after receipt of a ROFO Offer shall be deemed
to be a ROFO Rejection delivered by Preferred Member as of the expiration of
such period. Common Member’s failure to deliver a ROFO Offer prior to the
expiration of the ROFO Notice Period shall be deemed to be a ROFO Rejection
delivered by Preferred Member as of the date of the expiration of the ROFO
Notice Period with a deemed ROFO Purchase Price of zero.
(b)    In the event of a ROFO Rejection, Preferred Member shall have the right
to complete the ROFO Sale with a Qualified Transferee during a six (6) month
period following the date of such ROFO Rejection (the “ROFO Market Period”);
provided, however, that the gross purchase price paid by the Qualified
Transferee shall be at least ninety-five percent (95%) of the ROFO Purchase
Price and the ROFO Sale shall be on material terms that are substantially the
same as those available to Common Member. In the event that the ROFO Sale is not
consummated prior to the expiration of the ROFO Market Period, Preferred Member
must again comply with all of the requirements of this Section 9.3 and Common
Member shall have all of the rights set forth in this Section 9.3.
(c)    In the event of a ROFO Acceptance, Common Member shall provide Preferred
Member with a non-refundable deposit of ten percent (10%) of the ROFO Purchase
Price within five (5) Business Days after such acceptance (the “ROFO Deposit
Period”), and Common Member and Preferred Member shall proceed toward the
closing of the purchase of Preferred Member’s entire Interest, which closing
shall occur not later than thirty (30) days following the expiration of the ROFO
Deposit Period (the “ROFO Closing Deadline”). At the closing, Common Member
shall pay to Preferred Member the ROFO Purchase Price (less the amount of the
deposit) and Preferred Member shall transfer to Common Member its entire
Interest free and clear of all liens, claims and encumbrances. Each of the
Members hereby acknowledges and agrees to cooperate and act in good faith in
connection with such sale and shall otherwise reasonably assist the other in
connection therewith.
(d)    If Common Member fails to provide a deposit prior to the expiration of
the ROFO Deposit Period or the closing of the sale of Preferred Member’s
Interest fails to occur prior to the ROFO Closing Deadline (through no fault of
Preferred Member), Common Member shall forfeit any rights to make a ROFO Offer
in connection with a future sale or other Transfer to a Qualified Transferee,
Preferred Member shall be entitled to retain Common Member’s deposit (if
applicable) as liquidated damages and Preferred Member shall thereafter be free,
at any time and from time to time, to sell its Interest to any Qualified
Transferee at such price as Preferred Member determines to be satisfactory
without compliance with the provisions of this Section 9.3. The parties
acknowledge that it would be impractical and extremely difficult to estimate the
damages which Preferred Member may suffer in connection with a default by Common
Member under this Section 9.3. Therefore, the parties have agreed that a
reasonable

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estimate of the total net detriment that Preferred Member would suffer in such
event is and shall be the right of Preferred Member to receive Common Member’s
deposit as liquidated damages, as its sole and exclusive remedy under this
Section 9.3. Such liquidated damages are not intended as a forfeiture or penalty
within the meaning of applicable law.
ARTICLE X
Preferred Member Provisions
Section 10.1    Current Return Reserve. (a) Simultaneously with the execution of
this Agreement, the Manager shall establish and maintain with Preferred Member a
preferred return reserve (the “Current Return Reserve”), which shall be funded
by Preferred Member by depositing (or causing to be deposited) into the Current
Return Reserve a portion (in cash) of the Preferred Equity Investment in an
initial amount of up to Six Million Nine Hundred Seventy-Five Thousand Dollars
($6,975,000) as follows: (i) on the date hereof, an amount equal to One Million
Two Hundred Thousand Dollars ($1,200,000), (ii) on the first day of the sixth
(6th) month following the date hereof, an amount equal to One Million Two
Hundred Thousand Dollars ($1,200,000), (iii) on the first day of the twelfth
(12th) month following the date hereof, an amount equal to One Million Two
Hundred Thousand Dollars ($1,200,000), (iv) on the first day of the seventeenth
(17th) month following the date hereof, an amount equal to One Million Two
Hundred Thousand Dollars ($1,200,000), (v) on the first day of the twenty-third
(23rd) month following the date hereof, an amount equal to One Million Two
Hundred Thousand Dollars ($1,200,000), and (vi) on the first day of the
twenty-seventh (27th) month following the date hereof, in such amount as set
forth in Section 10.1(c), subject to the terms thereof. The funds held in the
Current Return Reserve shall be held therein until released therefrom and
applied in accordance with the provisions of Sections 10.1(b), 10.1(e) and/or
10.1(f).
(b)    If Common Member shall fail to cause the Company to make (i) any monthly
payment of Current Return when due (the “Monthly Payment”), or (ii) any portion
of the Monthly Payment, then Preferred Member shall, to the extent the amount is
then available in the Current Return Reserve, automatically, without the need
for prior notice to, or consent given by, any other Member or Manager, withdraw
from the Current Return Reserve and retain for itself the difference (the
“Shortfall”) between the Monthly Payment and the amount actually Distributed by
the Company to Preferred Member in respect of a Monthly Payment in accordance
with this Agreement (if any). The Members hereby acknowledge that the purpose of
the Current Return Reserve is to supplement Net Cash Flow and Net Capital
Proceeds to make Distributions to Preferred Member in accordance with this
Agreement of all Monthly Payments in full when due hereunder.
(c)    Subject to the last sentence of this Section 10.1(c), if at any time
during the period commencing on the first day of the twenty-seventh (27th) month
following the date hereof and ending on the date on which the operations of the
Property achieves a Debt Service Coverage Ratio (as used and defined in the
Senior Loan Agreement) of 1.15 to 1.0 the balance of the Current Return Reserve
is less than an amount in cash sufficient to pay for at least the succeeding
three (3) months of Current Return, then Preferred Member shall have the right
(but not the obligation) to make an additional Capital Contribution (which, for
the avoidance of doubt, shall increase the amount of the Preferred Equity
Investment) in an amount equal to the lesser of (x) Nine Hundred Seventy-Five
Thousand Dollars ($975,000) and (y) the then current

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sum of all accumulated cash generated from the operations of the Property
available for distribution and/or payment by the Company pursuant to the terms
and provisions of the Senior Loan Agreement and this Agreement on the date on
which the operations of the Property achieves a Debt Service Coverage Ratio of
1.15 to 1.0 (such sum referenced in the foregoing clause (y) shall be referred
to herein as “Excess Cash”). The amount of the additional Capital Contribution
actually funded (if any) by Preferred Member pursuant to this Section 10.1(c)
shall be referred to herein as the “Supplemental Capital Contribution”. If
actually funded by Preferred Member, the Supplemental Capital Contribution shall
be directly deposited into the Current Return Reserve and be released therefrom
in accordance with Sections 10.1(a) (to supplement any Shortfall), 10.1(e)
and/or 10.1(f) (to the extent applicable). Notwithstanding anything to the
contrary contained in this Agreement, the decision whether or not to fund the
Supplemental Capital Contribution shall be in the sole and absolute discretion
of Preferred Member.
(d)    Each of the Members hereby acknowledges and agrees that on the date on
which the operations of the Property achieves a Debt Service Coverage Ratio of
1.15 to 1.0, all Excess Cash shall be distributed and applied as follows: (i)
first, one hundred percent (100%) of such monies shall be directly Distributed
to Preferred Member to reduce the Net Preferred Equity Investment by an amount
up to, but not exceeding, the Supplemental Capital Contribution, and (ii)
thereafter, one hundred percent (100%) of such monies shall be deposited
directly into the Current Return Reserve and held therein until released
therefrom in accordance with Sections 10.1(a) (to supplement any Shortfall),
10.1(e) and/or 10.1(f) (to the extent applicable).
(e)    So long as no Senior Loan Default, Manager Default or any other default
under this this Agreement has occurred and is continuing, at such time that the
operations of the Property for two (2) consecutive full calendar months (i)
achieves a Debt Service Coverage Ratio of 1.15 to 1.0, (ii) generate sufficient
cash flow to currently pay all amounts owed to the Senior Lender pursuant to the
Senior Loan Documents and (iii) generate sufficient cash flow to currently pay
all amounts owed to Preferred Member pursuant to this Agreement (including the
Current Return), an amount equal to the positive difference (if any) between
(x) the then current balance of the Current Return Reserve and (y) an amount in
cash sufficient to pay for at least the succeeding three (3) months of Current
Return shall be immediately released from the Current Return Reserve and be
directly Distributed to Preferred Member to reduce the Net Preferred Equity
Investment.
(f)    Notwithstanding anything to the contrary herein, Common Member shall, at
all times immediately following the first day of the twenty-seventh (27th) month
following the date hereof, maintain a minimum balance in the Current Return
Reserve in an amount in cash sufficient to pay for at least the succeeding three
(3) months of Current Return; provided, however, that Common Member shall be
permitted to request that Preferred Member make the Supplemental Capital
Contribution in accordance with Section 10.1(c) in order to satisfy the
foregoing obligation of Common Member. Notwithstanding anything to the contrary
herein, each Guarantor irrevocably and unconditionally guarantees and covenants
and agrees to pay any amount required to fulfill Common Member’s obligations
pursuant to this Section 10.1(f). Upon Common Member’s forfeiture of its entire
Interest (free and clear of all liens, claims and encumbrances) to Preferred
Member, each Guarantor’s obligations pursuant to this Section 10.1(f) shall
terminate.

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Section 10.2    Cash Management. Each of the Members hereby acknowledges and
agrees that for so long as the Senior Loan remains outstanding, all amounts in
respect of the Property payable to the Company in accordance with the Senior
Loan Documents shall be deposited and distributed in compliance with the
applicable provisions of the Senior Loan Documents and this Agreement.
Section 10.3    Mandatory Redemption; Right to Extend. (a) On the applicable
Preferred Equity Redemption Date, Common Member shall be obligated to cause the
Company to redeem the entire Preferred Member Interest by payment to Preferred
Member (by wire transfer of immediately available funds to an account designated
by Preferred Member) of (i) the Preferred Equity Redemption Amount, (ii) all
reasonable actual and verifiable third party costs and expenses incurred by
Preferred Member in connection with the redemption of the Preferred Member
Interest in accordance with this Section 10.3, and (iii) any and all reasonable
fees and expenses and other amounts due and payable to Preferred Member (or its
Affiliates) hereunder or under any of the Guaranties.
(b)    From and after the receipt by Preferred Member of the amounts referenced
in Section 10.3(a), and solely if Common Member has obtained in writing any
necessary consents of the Senior Lender required under the Senior Loan Documents
(including the execution and delivery by Common Member, whether in its capacity
as a Member or Manager hereunder, of all documents reasonably required by
Preferred Member or Senior Lender to redeem the Preferred Member Interest in
accordance with this Section 10.3), Preferred Member shall immediately be deemed
to have resigned from the Company, Preferred Member’s entire Interest in the
Company (including the Preferred Member Interest) shall immediately terminate
and be cancelled and Preferred Member shall have no further rights or
obligations under this Agreement, except for any rights of indemnification or
other claims accruing prior to such date or which by their terms survive such
resignation.
(c)    Common Member shall have the right to extend (the “First Option to
Extend”) the Preferred Equity Redemption Date from the Preferred Equity Original
Redemption Date to the Preferred Equity First Extended Redemption Date, so long
as each of the following conditions shall be satisfied:
(i)    Common Member shall, not later than thirty (30) days prior to the
Preferred Equity Original Redemption Date, provide written notice to Preferred
Member specifying Common Member’s election to exercise the First Option to
Extend (which notice shall be irrevocable);
(ii)    As of the date of Common Member’s delivery of the notice of election to
exercise the First Option to Extend, and as of the Preferred Equity Original
Redemption Date, no Material Non-Compliance Event shall have occurred, and no
event or condition that, with the giving of notice or the passage of time or
both, would constitute a Material Non-Compliance Event shall have occurred, and
Common Member shall so certify in writing;
(iii)    Common Member shall execute, or cause the execution of, all documents
reasonably required by Preferred Member to exercise the First Option to Extend;

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(iv)    Common Member shall comply (and, to the extent applicable, cause the
Manager and the Company to comply) with the requirements of Section 10.1;
(v)    On the Preferred Equity Original Redemption Date, Common Member shall pay
to Preferred Member (by wire transfer of immediately available funds to an
account designated by Preferred Member) an extension fee in the amount of
twenty-five basis points (0.25%) of the Preferred Equity Investment;
(vi)    The Property shall have achieved a physical occupancy of either (x) at
least eighty-five percent (85%) with respect to the total square footage of the
Property (including all retail space) or (y) at least ninety percent (90%) with
respect to the total square footage of the Property (excluding all retail
space); and
(vii)    As of the date of Common Member’s delivery of the notice of its
election to exercise the First Option to Extend, the Preferred Equity Extension
Yield shall not be less than seven percent (7.0%) (provided, however, that in
the event the Preferred Equity Extension Yield is not met, Common Member may, to
the extent possible and permitted by the Senior Loan Documents, pay down the Net
Preferred Equity Investment such that the Preferred Equity Extension Yield is
met).
(d)    If Common Member exercised the First Option to Extend and the Preferred
Equity Original Redemption Date was extended to the Preferred Equity First
Extended Redemption Date in accordance with Section 10.3(c), Common Member shall
have the right to further extend (the “Second Option to Extend”) the Preferred
Equity Redemption Date to the Preferred Equity Second Extended Redemption Date,
so long as each of the following conditions shall be satisfied:
(i)    Common Member shall, not later than thirty (30) days prior to the
Preferred Equity First Extended Redemption Date, provide written notice to
Preferred Member specifying Common Member’s election to exercise the Second
Option to Extend (which notice shall be irrevocable);
(ii)    As of the date of Common Member’s delivery of the notice of election to
exercise the Second Option to Extend, and as of the Preferred Equity First
Extended Redemption Date, no Material Non-Compliance Event shall have occurred,
and no event or condition which, with the giving of notice or the passage of
time or both, would constitute a Material Non-Compliance Event shall have
occurred, and Common Member shall so certify in writing;
(iii)    Common Member shall execute, or cause the execution of, all documents
reasonably required by Preferred Member to exercise the Second Option to Extend;
(iv)    Common Member shall comply (and, to the extent applicable, cause the
Manager and the Company to comply) with the requirements of Section 10.1;
(v)    On the Preferred Equity First Extended Redemption Date, Common Member
shall pay to Preferred Member (by wire transfer of immediately available

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funds to an account designated by Preferred Member) an extension fee in the
amount of twenty-five basis points (0.25%) of the Preferred Equity Investment;
(vi)    The Property shall have achieved a physical occupancy of either (x) at
least eighty-five percent (85%) with respect to the total square footage of the
Property (including all retail space) or (y) at least ninety percent (90%) with
respect to the total square footage of the Property (excluding all retail
space); and
(vii)    As of the date of Common Member’s delivery of the notice of its
election to exercise the Second Option to Extend, the Preferred Equity Extension
Yield shall not be less than eight percent (8.0%) (provided, however, that in
the event the Preferred Equity Extension Yield is not met, Common Member may, to
the extent possible and permitted by the Senior Loan Documents, pay down the Net
Preferred Equity Investment such that the Preferred Equity Extension Yield is
met).
(e)    Notwithstanding anything to the contrary contained in this Agreement, if
Common Member fails to cause the Company to redeem the Preferred Member Interest
in accordance with Sections 10.3(a) and 10.3(b) on or prior to the applicable
Preferred Equity Redemption Date (as may be extended pursuant to Sections
10.3(c) and 10.3(d)) it shall be a Material Non-Compliance Event.
Section 10.4    Elective Redemption. (a) Common Member shall have the right at
any time to cause the Company to redeem the Preferred Member Interest in whole
(but not in part), so long as each of the following conditions shall be
satisfied:
(i)    Common Member shall, not later than thirty (30) days prior to the
applicable Preferred Equity Redemption Date, provide written notice to Preferred
Member specifying Common Member’s election to cause the Company to redeem the
Preferred Member Interest in accordance with this Section 10.4 (which notice
shall be irrevocable);
(ii)    Common Member shall pay to Preferred Member (by wire transfer of
immediately available funds to an account designated by Preferred Member) (w)
the Preferred Equity Redemption Amount, (x) solely if the applicable redemption
date is prior to the Preferred Equity Yield Protection Date, the Preferred
Equity Yield Protection Amount, (y) all actual third party costs and expenses
incurred by Preferred Member in connection with the redemption of the Preferred
Member Interest in accordance with this Section 10.4, and (z) any and all fees
and expenses and other amounts due and payable to Preferred Member hereunder or
under any of the Guaranties; and
(iii)    Common Member shall obtain in writing any necessary consents of the
Senior Lender required thereunder (including the execution and delivery by
Common Member, whether in its capacity as a Member or Manager hereunder, of all
documents reasonably required by Preferred Member or Senior Lender to redeem the
Preferred Member Interest in accordance with this Section 10.4).
(b)    Upon Common Member’s satisfaction of each of the conditions referenced in
Section 10.4(a), Preferred Member shall immediately be deemed to have resigned
from the Company, Preferred Member’s entire Interest in the Company (including
the Preferred Member

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Interest) shall immediately terminate and be cancelled and Preferred Member
shall have no further rights or obligations under this Agreement, except for any
rights of indemnification or other claims accruing prior to such date or which
by their terms survive such resignation.
Section 10.5    Material Non-Compliance Event. A “Material Non-Compliance Event
means any one of the following:
(a)    the Preferred Member Interest has not been redeemed pursuant to Sections
10.3(a), 10.3(b) or 10.4 by the applicable Preferred Equity Redemption Date;
(b)    the failure of the Company or Common Member to pay, or cause to be paid,
(i) any monthly installment of the Current Return within five (5) Business Days
following the applicable Distribution Date or (ii) any other sum required to be
paid by the Company or Common Member to Preferred Member hereunder within five
(5) Business Days following the date same is due and payable;
(c)    the occurrence of any Manager Default;
(d)    the occurrence of any Senior Loan Monetary Default;
(e)    the receipt by the Company of a written notice delivered by Senior Lender
informing the Company of the occurrence and continuation of a Senior Loan
Non-Monetary Default beyond all applicable cure periods under the Senior Loan
Documents;
(f)    any Transfer by Common Member in violation of the terms of this
Agreement;
(g)    if any representation or warranty made by Common Member herein or in any
report, certificate, financial statement or other instrument, agreement or
document furnished to Preferred Member shall have been false or misleading in
any material respect as of the date such representation or warranty was made;
(h)    if any money judgment, writ or warrant of attachment, or similar process
involving an amount in the aggregate at any time in excess of One Million
Dollars ($1,000,000) (in either case not adequately covered by insurance as to
which the insurance company has acknowledged coverage) is entered or filed
against the Company, Common Member or any Guarantor and remains undischarged,
unvacated, unbonded, uninsured or unstayed for a period of sixty (60) days or in
any event later than five (5) days prior to the date of any proposed sale
thereunder;
(i)    if the Company continues to fail in any material respect to comply with
the provisions of Section 2.6 beyond the date that is thirty (30) days after
notice is delivered by Preferred Member to the Manager of any such failure,
other than an unintentional non-material breach and such unintentional
non-material breach is not reasonably expected to result in a subsequent
consolidation of the Company with any other Person or entity;
(j)    (i) any breach by any Guarantor of its obligations set forth in Section
10.1 that remains uncured beyond the date that is three (3) Business Days after
such breach, (ii) any

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breach by any Guarantor of the covenants and obligations set forth in Section
11.3 (provided, however, that solely with respect to the obligations of any
Guarantor pursuant to Section 11.3 relating to Net Worth, each Guarantor shall
have the right to cure any Net Worth deficiency within thirty (30) days after
the date on which Preferred Member notifies Common Member or such Guarantor of
such Net Worth deficiency), or (iii) any default by, or breach of any
obligations of, either of a Guarantor or Common Member under any of the Senior
Loan Documents (after the lapse of any applicable notice and cure period
expressly set forth therein) or any Guaranty;
(k)    the occurrence of any Bankruptcy Event with respect to Common Member, any
Guarantor or the Company;
(l)    (i) any failure of the Manager to comply with (or, to the extent
applicable, cause the Company, Common Member or a Guarantor to comply with)
Section 4.3(a) and (ii) any failure of the Manager to comply with (or, to the
extent applicable, cause the Company, Common Member or a Guarantor to comply
with) Sections 10.1 or 10.2 that continues beyond the date that is three (3)
Business Days after such failure; or
(m)    if Preferred Member has not received at least one of (i) a legal opinion
(in portable document format with original copies to promptly follow) issued by
Waller Lansden Dortch & Davis, LLP as counsel for Common Member and Guarantors,
covering due authorization, execution and delivery and enforceability of this
Agreement and the Guaranties within five (5) Business Days after the date hereof
or (ii) a legal opinion (in portable document format with original copies to
promptly follow) issued by other counsel for Common Member and Guarantors,
covering due authorization, execution and delivery and enforceability of this
Agreement and the Guaranties within fifteen (15) Business Days after the date
hereof.
Section 10.6    Remedies Upon a Material Non-Compliance Event. (a) At any time
that a Material Non-Compliance Event exists, Preferred Member may, in addition
to any other rights or remedies available to it under this Agreement (including
pursuant to Sections 4.1(b), 4.1(c) and 4.3), or at law or in equity, take such
action, without notice or demand, as it reasonably deems advisable to protect
and enforce its rights against the Company, Common Member or Guarantors and in
and to the Property or any one or more of them, including the following actions,
each of which may be pursued singly, concurrently or otherwise, at such time and
in such order as Preferred Member may determine, in its sole discretion, without
impairing or otherwise affecting any other rights and remedies of Preferred
Member hereunder, at law or in equity:
(i)    Subject to Section 10.6(d), following a Material Non-Compliance Event,
Preferred Member shall have the right, exercisable at any time upon twenty (20)
Business Days’ notice to Common Member of such Material Non-Compliance Event (a
“Wipeout Notice”), and solely if such Material Non-Compliance Event is not cured
within such twenty (20) Business Day period, to elect that the total Capital
Contributions made by Common Member as of such date be transferred to Preferred
Member and, at Preferred Member’s option, Common Member shall be deemed to have
resigned from the Company and shall cease to be a Member of the Company and
shall have no further rights with respect to the Company, any distributions made
by the Company or the Property. Common Member agrees to promptly and timely
execute and deliver any such documents, instruments or certificates as Preferred
Member

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or its designee may reasonably request to evidence such transfer. Solely for tax
purposes, the redemption by Preferred Member of Common Member shall be treated
as a purchase by Preferred Member of Common Member’s one hundred percent (100%)
limited liability company interest in the Company, and the parties hereto agree
to report any such transaction consistent therewith. The Members agree that the
remedy provisions set forth in this Section 10.6(a)(i), subject to Section
10.6(d), are fair and equitable given the substantial damage and uncertainty
that will be suffered by Preferred Member as result of a Material Non-Compliance
Event and the difficulty in determining and mitigating such damage. Any and all
transfer taxes or other taxes, third party costs and expenses payable or
incurred by Preferred Member (including enforcement costs and expenses and
reasonable attorney’s fees) in connection with the transactions and enforcement
of the rights of Preferred Member contemplated by this Section 10.6(a)(i) shall
be the sole responsibility of Common Member; or
(ii)    Preferred Member may perform, or cause the performance of, any agreement
the Company, Common Member or Guarantors fail to perform under this Agreement or
the Senior Loan Documents, including a failure to pay real property taxes or
insurance premiums with respect to the Property; or
(iii)    Require the Manager to cause the Company to immediately prepay to
Preferred Member (by wire transfer of immediately available funds to an account
designated by Preferred Member) (x) the Preferred Equity Redemption Amount, and
(y) solely if the applicable redemption date is prior to the Preferred Equity
Yield Protection Date, the Preferred Equity Yield Protection Amount; or
(iv)    Apply all amounts in any reserve account maintained by Preferred Member
or the Company under this Agreement and any amounts from time to time in any
cash management account, if any, maintained by Preferred Member toward
prepayment of the applicable amounts referenced in Section 10.6(a)(iii) and all
other amounts payable to Preferred Member under this Agreement.
(b)    In the event that Common Member is removed by Preferred Member as
“Manager” hereunder pursuant to Section 4.1(b) and replaced by Preferred Member
with a successor Manager pursuant to Section 4.1(c), and/or if Common Member is
removed as a Member pursuant to Section 10.6(a)(i), the former Manager and the
Company shall execute all documentation requested by Preferred Member (including
the removal of Common Member as “Manager” hereunder or its officers from any
bank signature cards and adding Preferred Member and/or its officers to such
accounts) and, if requested by Preferred Member, cooperate in transferring all
bank accounts of the Company to accounts under the control of Preferred Member.
(c)    Notwithstanding anything contained in this Agreement to the contrary,
upon Preferred Member’s exercise of its rights under 10.6(a) and/or Section 4.1
(such date, the “Exercise Date”), the amounts owed and payable to Preferred
Member hereunder and the Guarantors’ obligations under the Guaranties shall in
no way be offset, reduced or mitigated by the value of the Property or any
direct or indirect interest in the Property or any income, profit or gain
realized by Preferred Member from and after the Exercise Date from the
operation, revenue, profit, income, proceeds or sale of the Company or the
Property or any other source, it being

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understood and agreed by the Members that (i) Guarantors’ obligations hereunder
shall remain in full force and effect from and after the Exercise Date and may
only be satisfied, reduced or offset by payments of Common Member and/or
Guarantors and/or from amounts applied on behalf of Common Member under Section
10.6(a)(iv) hereof and (ii) Preferred Member shall not be required to mitigate
damages or take any other action to reduce, collect or enforce the amounts
payable hereunder to Preferred Member.
(d)    Notwithstanding anything contained in this Agreement to the contrary, but
subject to Section 10.6(c), at any time within twenty (20) Business Days after
delivery of a Wipeout Notice, Common Member shall have the right to send an
Appraisal Notice as set forth in this Section 10.6(d). Solely if Common Member
reasonably believes in good faith that the Residual Interest (as calculated in
accordance with the definition thereof) would be greater than zero, then Common
Member may deliver a notice (an “Appraisal Notice”) demanding that the Appraised
Value of the Company Assets as of the Wipeout Date be determined. From the time
an Appraisal Notice is delivered until the amount of the Residual Interest is
determined (unless all Material Non-Compliance Events have been cured prior to
the Wipeout Date), all Net Cash Flow and Net Capital Proceeds shall be held (and
not distributed) by the Company. If the Residual Interest is zero, then (unless
all Material Non-Compliance Events have been cured prior to the Wipeout Date)
Common Member may be removed as a Member of the Company as provided in Section
10.6(a)(i)). If the Residual Interest is greater than zero, then (unless all
Material Non-Compliance Events have been cured prior to the Wipeout Date):
(i)    All distributions of Net Cash Flow and Net Capital Proceeds from and
after the Wipeout Date shall be distributed as follows:
(1)    First, one hundred percent (100%) to Preferred Member and any Additional
Member(s) (divided between or among them as shall be determined by such
Members), until an amount has been distributed in accordance with this Section
10.6(d)(i)(1) equal to a preferred return on any Post-Wipeout Contributions of
nineteen percent (19%) per annum, compounded monthly;
(2)    Second, one hundred percent (100%) to Preferred Member and any Additional
Member(s) (divided between or among them as shall be determined by such
Members), until an amount has been distributed in accordance with this Section
10.6(d)(i)(2) equal to any Post-Wipeout Contributions;
(3)    Third, one hundred percent (100%) to Preferred Member and any Additional
Member(s) (divided between or among them as shall be determined by such
Members), until an amount has been distributed in accordance with this Section
10.6(d)(i)(3) equal to the Wipeout Preferred Amount;
(4)    Fourth, one hundred percent (100%) to Common Member until Common Member
has received an amount equal to the Residual Interest; and
(5)    Thereafter, to Preferred Member and any additional Member that may be
admitted to the Company from time to time after the

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Exercise Date (divided between or among them as shall be determined by such
Members).
(ii)    Common Member shall remain a Member of the Company until Common Member
has received the Residual Interest in full in accordance with Section
10.6(d)(i)(4) (at which time Common Member shall be deemed removed as a Member
of the Company as provided in Section 10.1(a)(i)); provided, however, that from
the Wipeout Date until Common Member’s removal, Common Member shall be entirely
passive and have no rights as a Member to participate in the management or
decision-making of the Company under this Agreement, except as set forth in
Section 4.1(c)(v).
Section 10.7    Preferred Interest Transactions. The Company and Common Member
(in its capacity as a Member and the Manager) shall reasonably cooperate with
Preferred Member, at Preferred Member’s sole cost and expense, in connection
with the sale, participation or other Transfer of Preferred Member’s Interest
(or any part thereof) to a Qualified Transferee or an Eligible Assignee as each
may be permitted hereunder and in accordance with the Senior Loan Documents,
which cooperation shall include (i) obtaining required approvals for any such
transfers from Senior Lender, (ii) providing additional information regarding
the Company or its Affiliates, Common Member or its Affiliates and the Property,
including additional appraisals, environmental reports, engineering reports and
similar due diligence materials, (iii) supplying such documentation, financial
statements and reports, if any, that may be required to comply with U.S. federal
securities laws and the laws of the State of Delaware, (iv) re-executing or
making modifications to this Agreement, the Guaranties or the organizational
documents of the Company or any of its Affiliates or Common Member or any of its
Affiliates, provided that no such modification, revision, additional
documentation or other action in connection with such cooperation shall increase
the obligations or decrease the rights of the Company, Common Member or
Guarantors pursuant to this Agreement or the Guaranties, (v) revising existing
opinions or supplying additional opinions, (vi) delivering tenant estoppel
letters, subordination agreements or similar agreements, and (vii) participating
in meetings and presentations to any prospective purchasers.
ARTICLE XI
Senior Loan; Guaranties; and Covenants of Guarantors
Section 11.1    Senior Loan. Each of the Members hereby acknowledges that, as of
the date hereof, the Property is encumbered by the Senior Loan and, in
connection therewith, each of the Company and Guarantors have entered into the
Senior Loan Documents and the Guaranties to which it is a party. If requested by
Preferred Member, each of the Members and the Manager agrees to provide its
reasonable cooperation to cause the Senior Lender or any lender(s) providing any
refinancing of the Senior Loan as may be permitted under this Agreement to enter
into a recognition agreement or other similar arrangement with Preferred Member
pursuant to customary documentation for such transactions (all such
documentation subject to the approval of Preferred Member in the exercise of its
sole and absolute discretion).
Section 11.2    Recourse Liability. (a) Other than as expressly provided herein
or in any Guaranty executed and delivered by Guarantors and/or Common Member in
connection with this Agreement or any guaranty or indemnity executed and
delivered by Guarantors, Common

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Member and/or the Company in connection with the Senior Loan, the Preferred
Equity Investment by Preferred Member and the obligations of Common Member, the
Manager and Guarantors under this Agreement shall be non-recourse to Common
Member, the Manager and Guarantors.
(b)    Notwithstanding anything to the contrary contained in this Agreement,
none of Preferred Member or any of its Affiliates shall have any obligation to
provide any guaranty or indemnity of any of the Company’s obligations to any
party in connection with the Senior Loan or any other financing of the Property
or otherwise.
Section 11.3    Guarantor Covenants. So long as the Preferred Member Interest
remains outstanding, (a) DJ2 LLC shall, at all times, (i) maintain a Net Worth
of not less than Fifty Million Dollars ($50,000,000) and Liquid Assets of not
less than Five Million Dollars ($5,000,000), and (ii) furnish to Preferred
Member annually, within ninety (90) days after the end of each calendar year, a
certificate certifying that, at all times during such calendar year, DJ2 LLC
maintained a Net Worth of not less than Fifty Million Dollars ($50,000,000) and
Liquid Assets of not less than Five Million Dollars ($5,000,000), and (b) Elcano
II LLC shall, at all times, (x) maintain a Net Worth of not less than Eighteen
Million Dollars ($18,000,000), and (y) furnish to Preferred Member annually,
within ninety (90) days after the end of each calendar year, a certificate
certifying that, at all times during such calendar year, Elcano II LLC
maintained a Net Worth of not less than Eighteen Million Dollars ($18,000,000).
For purposes hereof, “Net Worth” means, as of a given date, (i) the total assets
of a Guarantor as of such date less (ii) a Guarantor’s total liabilities as of
such date, determined in accordance with sound accounting principles,
consistently applied. “Liquid Assets” means assets of a Guarantor in the form of
cash, cash equivalents, readily marketable securities traded on a national
exchange or on the National Association of Securities Dealers Automatic
Quotations (NASDAQ), obligations of the United States of America or any agency
or instrumentality thereof, or guaranteed by the United States of America,
corporate debt securities traded on a national exchange, certificates of deposit
issued by a commercial bank having net assets of not less than Five Hundred
Million Dollars ($500,000,000), other liquid debt instruments that have a
readily ascertainable value and are regularly traded in a recognized financial
market, and such other investments as may be acceptable to Preferred Member in
its sole and absolute discretion.
ARTICLE XII
Miscellaneous
Section 12.1    Representations and Covenants by the Members. Each Member
represents, warrants, covenants, acknowledges and agrees that:
(a)    It is a corporation, limited liability company or partnership, as
applicable, duly organized or formed and validly existing and in good standing
under the laws of the state of its organization or formation; it has all
requisite power and authority to enter into this Agreement, to acquire and hold
its Interest and to perform its obligations hereunder; and the execution,
delivery and performance of this Agreement has been duly authorized.

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(b)    This Agreement and all agreements, instruments and documents herein
provided to be executed or caused to be executed by it are duly authorized,
executed and delivered by and are and will be binding and enforceable against
it.
(c)    Neither (i) the execution and delivery of this Agreement and the
performance of its obligations hereunder nor (ii) the acquisition by the Company
of the Property will conflict with, result in a breach of or constitute a
default (or any event that, with notice or lapse of time, or both, would
constitute a default) or result in the acceleration of any obligation under any
of the terms, conditions or provisions of any other agreement or instrument to
which it (or any of its Affiliates) is a party or by which it (or any of its
Affiliates) is bound or to which any of its (or any of its Affiliate’s) property
or assets are subject, conflict with or violate any of the provisions of its
organizational documents, or violate any statute or any order, rule or
regulation of any Governmental Entity, that would materially and adversely
affect the performance of its duties hereunder; such Member has obtained any
consent, approval, authorization or order of any court or governmental agency or
body required for the execution, delivery and performance by such Member of its
obligations hereunder.
(d)    There is no action, suit or proceeding pending or, to its knowledge,
threatened against it in any court or by or before any other Governmental Entity
that would prohibit its entry into or performance of this Agreement.
(e)    This Agreement is a binding agreement on the part of such Member
enforceable in accordance with its terms against such Member, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally, and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
(f)    It has been advised to engage, and has engaged, its own counsel (whether
in-house or external) and any other advisors it deems necessary and appropriate.
By reason of its business or financial experience, or by reason of the business
or financial experience of its own attorneys, accountants and financial advisors
(which advisors, attorneys and accountants are not Affiliates of the Company or
any other Member), it is capable of evaluating the risks and merits of an
investment in the Interest and of protecting its own interests in connection
with this investment. Nothing in this Agreement should or may be construed to
allow any Member to rely upon the advice of counsel acting for another Member or
to create an attorney-client relationship between a Member and counsel for
another Member.
(g)    It is acquiring the Interest for investment purposes for its own account
only and not with a view to, or for sale in connection with, any distribution of
all or a part of the Interest.
(h)    It is familiar with the definition of “accredited investor” in Rule
501(a) of Regulation D of the Securities Act of 1933, as amended, and it
represents that it is an “accredited investor” within the meaning of that Rule.
(i)    It is not required to register as an “investment company” within the
meaning ascribed to such term by the Investment Company Act of 1940, as amended,
and

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covenants that it shall at no time while it is a Member of the Company conduct
its business in a manner that requires it to register as an “investment
company”.
(j)    Each Member and each Person owning a ten percent (10%) or greater direct
or indirect interest in such Member (A) is not currently identified on the
Specially Designated Nationals and Blocked Persons List maintained by the Office
of Foreign Assets Control, Department of the Treasury (or any other similar list
maintained by the Office of Foreign Assets Control pursuant to any authorizing
statute, executive order or regulation) and (B) is not a Person with whom a
citizen of the United States is prohibited to engage in transactions by any
trade embargo, economic sanction, or other prohibition of U.S. law, regulation,
or executive order of the President of the United States. Such Member has
implemented procedures, and will consistently apply those procedures, to ensure
the foregoing representations and warranties remain true and correct at all
times. This Section 12.1(j) shall not apply to any Person to the extent that
such Person’s interest in the Member is through either (x) a Person (other than
an individual) whose securities are listed on a national securities exchange, or
quoted on an automated quotation system, in the United States, or a wholly-owned
subsidiary of such a Person or (y) an “employee pension benefit plan” or
“pension plan” as defined in Section 3(2) of the U.S. Employee Retirement Income
Security Act of 1974, as amended.
(k)    It acknowledges and agrees that Bryan Cave LLP serves as counsel to
Preferred Member, and that Bryan Cave LLP does not serve as counsel to any other
Member. Every Member other than Preferred Member acknowledges and agrees that it
does not have an attorney-client relationship with Bryan Cave LLP, and that no
such relationship will arise in the course of the Company’s existence or
dissolution by any means.
(l)    It acknowledges and agrees that Joel M. Carlins and Associates, Waller
Lansden Dortch & Davis, LLP, and The Selig Law Firm, P.C. (collectively, “Common
Member’s Counsel”) serves as counsel to Common Member, and that Common Member’s
Counsel does not serve as counsel to any other Member. Every Member other than
Common Member acknowledges and agrees that it does not have an attorney-client
relationship with any of Common Member’s Counsel, and that no such relationship
will arise in the course of the Company’s existence or dissolution by any means.
Every Member other than Common Member also acknowledges that, at the Manager’s
discretion, any of Common Member’s Counsel may represent the Company following
the date of this Agreement. Each Member has been given the opportunity to
evaluate Common Member’s Counsel’s role as described in this Section 12.1(l),
and to consider any conflict of interest which may develop therefrom. Each
Member has been advised to seek independent counsel to advise it as to this
waiver of conflict. After consultation with such independent counsel, each
Member hereby consents to Common Member’s Counsel’s representation of the
Company and Common Member.
(m)    It shall comply and shall cause the Company to comply with all
requirements of law relating to money laundering, anti-terrorism, bribery,
corrupt practices, trade embargos and economic sanctions, now or hereafter in
effect and shall immediately notify the other Members in writing if it becomes
aware that any of the foregoing representations, warranties or covenants are no
longer true or have been breached or if the Member has a reasonable basis to
believe that they may no longer be true or have been breached.

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(n)    Other than the Broker (whose collective fees shall be payable by the
Company on the date hereof and for which none of the Members shall be required
to make any Capital Contributions beyond those described in Section 5.1(a)), it
has not dealt with any broker or finder in connection with its entering into
this Agreement and shall indemnify the other Members for all costs, damages and
expenses (including reasonable attorneys’ fees) which may arise out of a breach
of the aforesaid representation and warranty. Each of the Members agrees to pay
any applicable fees and expenses due any broker or finder that such Member has
engaged.
(o)    It recognizes that the Interests have not been registered under the
Securities Act of 1933, as amended, or applicable state securities laws and are
being sold pursuant to the exemptions from registration offered by Section 4(2)
of such Act and by applicable state law provisions, and as a consequence its
Interest must be held indefinitely, unless it is subsequently registered under
the Securities Act of 1933, as amended, and applicable state securities laws, or
an exemption from such registration is available, so that each Member must bear
the economic risk of investment in its Interest for an indefinite period of
time.
(p)    The Company is not under any obligation to register the Interests under
any securities laws, and it does not have any present intention to do so, and it
understands that there is no established market for the Interests, and it is
extremely unlikely that any public or private market will develop.
Section 12.2    Additional Representations and Covenants of Common Member. In
addition to the representations, warranties and covenants set forth in Section
12.1, Common Member hereby represents, warrants, covenants, acknowledges and
agrees that:
(a)    The true and complete ownership and Control structure of Common Member as
of the date hereof is shown on Schedule 12.2(a) and it shall promptly notify
Preferred Member of any changes in the ownership structure or Control from what
is shown on such schedule.
(b)    As of the date hereof, David J. Carlins serves, and since Common Member’s
legal formation, has served, as the manager appointed by Magellan SoBro to the
board of managers of Common Member with (i) the right to participate in the
management of the business and affairs of Common Member (including with respect
to Major Actions (as such term is defined and used in the Common Member
Operating Agreement)) and (ii) upon the execution (on the date hereof) of the
Completion Guaranty (as such term is defined and used in the Common Member
Operating Agreement), the exclusive right to make all decisions (other than with
respect to Construction Major Actions (as such term is defined and used in the
Common Member Operating Agreement)) on behalf of Common Member in connection
with the construction and development of the Property.
(c)    From and after the date hereof, (i) the Common Member Principals shall
exclusively Control Magellan SoBro (including with respect to the granting or
withholding of all consents, approvals and other decisions required or permitted
to be given or made by Magellan SoBro under the Common Member Operating
Agreement), (ii) no Persons other than the Common Member Principals, the
Giarratana Principal and the Wanxiang Principal shall have any right to directly
or indirectly Control Common Member (including with respect to any Major

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Actions and Construction Major Actions (as such terms are defined and used in
the Common Member Operating Agreement) that Common Member may elect to take (or
not take) pursuant to the Common Member Operating Agreement), and (iii) so long
as Magellan SoBro continues to be a member of Common Member, (x) no less than
9.83% of the Capital Contributions made (or to be made) by Common Member have
been (and shall be) contributed out of the personal funds of the Common Member
Principals, their respective family members and/or trusts or other estate
planning vehicles for the benefit thereof (collectively), and (y) no less than
9.83% of the beneficial ownership interest in Common Member’s Interest has been
(and shall be) vested in the Common Member Principals, their respective family
members and/or trusts or other estate planning vehicles for the benefit thereof
(collectively).
(d)    At all times during the existence of the Company, either:
(i) one or more of the Common Member Principals shall be (x) actively engaged in
the day-to-day business and affairs of the Company (including by conferring on a
regular basis with current employees (if any), agents, contractors and
sub-contractors of the Company), (y) serving as a manager appointed to the board
of managers of Common Member with (A) the right to participate in the management
of the business and affairs of Common Member (including with respect to Major
Actions (as such term is defined and used in the Common Member Operating
Agreement)) and (B) upon the execution (on the date hereof) of the Completion
Guaranty (as such term is defined and used in the Common Member Operating
Agreement), the exclusive right to make all decisions on behalf of Common Member
in connection with the construction and development of the Property (other than
with respect to Construction Major Actions (as such term is defined and used in
the Common Member Operating Agreement)), or
(ii) the Wanxiang Principal may substitute for the Common Member Principals with
respect to paragraph (i) above, so long as (x) if such substitution occurs prior
to the full completion of construction and development of the Property and the
initial Architect and/or the initial Construction Manager are removed from such
capacities, a successor Architect is designated and appointed in accordance with
the definition of “Architect” and/or a successor Construction Manager is
designated and appointed in accordance with the definition of “Construction
Manager,” and (y) if such substitution occurs after the full completion of
construction and development of the Property and the initial Property Manager
and/or the initial Parking Manager are removed from such capacities, a successor
Property Manager is designated and appointed in accordance with the definition
of “Property Manager” and/or a successor Parking Manager is designated and
appointed in accordance with the definition of “Parking Manager”.
(e)    As an inducement to Preferred Member to enter into this Agreement, Common
Member represents and warrants to Preferred Member that the matters set forth in
Schedule 12.2(e) are true and correct in all material respects (except to the
extent such matters are qualified by materiality or similar qualifiers, in which
case such matters are true and correct in all respects as so qualified).
(f)    A true, correct and complete copy of the Common Member Operating
Agreement in effect as of the date hereof has been provided to Preferred Member
on or prior to

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the date hereof, and the terms of such agreement shall not be modified in a
manner that in any way contradicts or alters the substantive effect of the terms
of Sections 12.2(a), 12.2(b), 12.2(c) or 12.2(d) without prior written notice to
Preferred Member.
(g)    The representations, warrantees and covenants of the Company made
pursuant to Sections 3.1.9, 3.1.21, 3.1.23, 3.1.28, 3.1.29, 3.1.35, 3.1.38,
3.1.39, 4.1.2, 4.1.3, 4.1.6, 4.1.15, 4.1.22 and 4.2.2 of the Senior Loan
Agreement are hereby incorporated and restated into this Agreement by reference,
mutatis mutandi, with the same effect as though each such representation,
warranty and covenant had been made or given for the benefit of Preferred Member
on and as of the date hereof.
Section 12.3    Equitable Relief. The Members hereby confirm that damages at law
may be an inadequate remedy for a breach or threatened breach of this Agreement
and agree that, in the event of a breach or threatened breach of any provision
hereof, the respective rights and obligations hereunder shall (in addition to
remedies at law) be enforceable by specific performance, injunction or other
equitable remedy, but, nothing herein contained is intended to, nor shall it,
limit or affect any right or rights at law or by statute or otherwise of a
Member aggrieved as against the other for a breach or threatened breach of any
provision hereof, it being the intention of this Section 12.3 to make clear the
agreement of the Members that the respective rights and obligations of the
Members hereunder shall be enforceable in equity as well as at law or otherwise
and that the mention herein of any particular remedy shall not preclude a Member
from any other remedy it or he might have, either in law or in equity.
Section 12.4    Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware. In particular, the Company
is formed pursuant to the LLC Act, and the rights and liabilities of the Members
shall be as provided therein, except as herein otherwise expressly provided.
Section 12.5    Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto, their respective successors
and permitted assigns.
Section 12.6    Notices. Whenever notice is required or permitted by this
Agreement to be given, such notice shall be in writing and shall be given to any
Member or Manager at its address (including via electronic mail) or facsimile
number shown either in the Company’s books and records or on Schedule 3.1
hereto. Each such notice shall be effective (i) if given by facsimile or
electronic mail, upon transmission, (ii) if given by mail, on the fourth (4th)
day after deposit in the mails (certified or registered return receipt
requested) addressed as aforesaid, (iii) if given by overnight courier service,
when received and (iv) if given by any other means, when delivered to and
receipted for at the address of such Member or Manager specified as aforesaid.
Section 12.7    Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument. In
addition, the parties may execute this Agreement by telecopy or other facsimile
machine or electronic transmission and such facsimile signature or electronic
transmission shall be deemed an original.
Section 12.8    Entire Agreement. This Agreement embodies the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein. There are

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no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter hereof.
Section 12.9    Amendments. Any amendment to this Agreement shall be effective
only if such amendment is evidenced by a written instrument duly executed and
delivered by (a) the Manager, (b) Preferred Member and (c) any Member that is
disproportionately and adversely affected by such amendment.
Section 12.10    Waivers. No waiver of any breach of any term of this Agreement
shall be effective unless made in writing signed by the party against whom
enforcement of the waiver is sought, and no such waiver of any breach of that
term or any other term of the same or different nature shall be construed as a
waiver of any subsequent breach of that term of the same or different nature.
Section 12.11    Severability. It is the express intention of the parties that
the agreements contained herein shall have the widest application possible. If
any agreement contained herein is found by a court having jurisdiction to be
unreasonable in scope or character, the agreement shall not be rendered
unenforceable thereby, but rather the scope or character of such agreement shall
be deemed reduced or modified with retroactive effect to render such agreement
reasonable and such agreement shall be enforced as thus modified. If the court
having jurisdiction will not review the agreement, then the parties shall
mutually agree to revise the unenforceable provision to as close as permitted by
law to the provision declared unenforceable. The parties further agree that in
the event a court having jurisdiction determines, despite the express intent of
the parties, that any portion of any covenant or agreement contained herein is
not enforceable, the remaining provisions of this Agreement shall nonetheless
remain valid and enforceable.
Section 12.12    No Partition. The Members hereby waive any right of partition
they may have with respect to any assets of the Company, now existing or
hereafter acquired.
Section 12.13    Exhibits and Schedules. The Schedules and Exhibits attached
hereto are hereby incorporated herein and made a part of this Agreement.
Section 12.14    Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be reasonably necessary or appropriate to achieve the purposes of this
Agreement; provided, however, that the foregoing shall not be interpreted to
diminish in any manner the ability of a Member to enforce any of the rights or
remedies afforded to it pursuant to this Agreement or at law.
Section 12.15    Cumulative Remedies; Prevailing Party. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive its right to use any or all other
remedies. Said rights and remedies are given in addition to any other rights the
parties may have by law or otherwise. If any Member seeks to enforce such
Member’s rights under this Agreement by legal proceedings or otherwise the
non-prevailing party shall be responsible for all costs and expenses in
connection therewith, including reasonable attorneys’ fees and witness fees.

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Section 12.16    Rules of Construction. Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text hereof. This Agreement is not subject to the principle of
construing its meaning against the party that drafted it, and each Member
acknowledges that it was represented by its own counsel in connection with its
negotiation and drafting.
Section 12.17    No Third Party Beneficiaries. No provision of this Agreement
(including any obligation of any Member to make Capital Contributions) shall be
interpreted as bestowing any rights whatsoever upon any third party.
Section 12.18    Confidentiality. By executing this Agreement, each Member
expressly agrees, at all times during the term of the Company and thereafter and
whether or not at the time a Member of the Company (a) not to issue any press
release or advertisement or take any similar action concerning the Company
without first obtaining consent of each other Member, which shall not be
unreasonably withheld, delayed or conditioned; provided, however, that the
foregoing shall not include any press release, advertisement or marketing
efforts undertaken in compliance with the Budget and Plan and related to the
operations of the Property, which may be issued or undertaken (as applicable) by
the Manager, the Property Manager or the Parking Manager, (b) not to publicize
detailed financial information concerning the Company, and (c) not to disclose
the Company’s affairs generally; provided that the foregoing shall not restrict
any Member from disclosing information concerning such Member’s investment in
the Company to its officers, directors, employees, agents, legal counsel,
accountants, other professional advisors, limited partners, members and
Affiliates, or to prospective or existing investors of such Member or its
Affiliates or to prospective or existing lenders to such Member or its
Affiliates or (if such Member is an Affiliate of a publicly traded company) to
the public as such Member determines is reasonably necessary or appropriate.
Nothing herein shall restrict any Member from disclosing information that:
(i) is in the public domain (except where such information entered the public
domain in violation of this Section 12.18); (ii) was made available or becomes
available to a Member on a non-confidential basis prior to its disclosure by the
Company; (iii) was available or becomes available to a Member on a
non-confidential basis from a Person other than the Company who is not otherwise
bound by a confidentiality agreement with the Company or its representatives, or
is not otherwise prohibited from transmitting the information to the Member;
(iv) is developed independently by the Member; (v) is required to be disclosed
by applicable law (provided that prior to any such required disclosure, the
disclosing party shall, to the extent possible, consult with each Member and use
commercially reasonable efforts to incorporate any reasonable comments of each
Member prior to such disclosure); (vi) is disclosed to any Lender or potential
Lender, (vii) is reasonably required to be disclosed to enforce rights and
remedies under this Agreement or (viii) is expressly approved in writing by each
Member. Notwithstanding anything to the contrary contained in this Agreement
(including this Section 12.18), in no event will any announcement, disclosure,
press release, advertisement or marketing efforts include or reference the names
“NorthStar,” “NRF” or any derivation thereof without the express prior written
consent of Preferred Member (which consent may be granted, withheld, conditioned
or delayed in Preferred Member’s sole and absolute discretion). The provisions
of this Section 12.18 shall survive the termination of the Company.

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Section 12.19    Time of the Essence. Time is of the essence as to the parties’
obligations under this Agreement.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 
WMG REALTY HOLDING COMPANY LLC, a
Delaware limited liability company

 
By:
/s/ David Carlins
 
 
Name: David Carlins
 
 
Title: Manager

Acknowledged and agreed for
purposes of Sections 4.10(c)
10.1, 11.2(a) and 11.3:
DJ2 LLC, an Illinois limited liability
Company

By:
/s/ David Carlins
 
Name: David Carlins
 
Title: Manager

ELCANO II LLC, an Illinois limited liability
company

By:
/s/ David Carlins
 
Name: David Carlins
 
Title:

[Signatures Continue on Following Page]

[Signature Page to LLC Agreement of 205 Demonbreun Realty Holding Company LLC]

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QARTH HOLDINGS NT-II, LLC, a Delaware limited liability company

 
By:
/s/ Ronald J. Lieberman
 
 
Name: Ronald J. Lieberman
 
 
Title: Executive Vice President, General Counsel & Secretary

[Signature Page to LLC Agreement of 205 Demonbreun Realty Holding Company LLC]