Blueprint





 







EXHIBIT 10.7

 



AMENDED AND RESTATED

 



LIMITED LIABILITY COMPANY AGREEMENT

 



OF

 



SeD MARYLAND DEVELOPMENT, LLC

 


This
Amended and Restated Limited Liability Company
Agreement (together with the schedules attached hereto, this
“Agreement”) of SeD
MARYLAND DEVELOPMENT, LLC, a Delaware limited liability company
(the “Company”), is entered
into on September 16, 2015, by the parties identified on
Schedule B attached
hereto (the “Members” and each a
“Member”). Capitalized
terms used and not otherwise defined herein have the meanings set
forth on Schedule A attached hereto.

 



RECITALS

 


WHEREAS, the
Company was formed as a limited liability company pursuant to and
in accordance with the Delaware Limited Liability Company Act (6
Del. C.
§ 18-101 et seq.), as amended from time to
time (the “Act”), pursuant to that
certain Certificate of Formation of the Company filed with the
Delaware Secretary of State on October 16, 2014 (the
“Certificate of
Formation”).

 


WHEREAS, SeD
Ballenger, LLC (“SeD
Ballenger”) was the original member of the
Company.

 


WHEREAS, SeD Ballenger entered into
that certain Limited Liability Company Agreement dated January 8,
2015 (the “Original
LLC Agreement”).

 


WHEREAS, as of
September 25, 2015, SeD Ballenger shall have contributed
$12,697,568 to the capital of the Company.

 


WHEREAS, pursuant
to the terms and conditions of that certain Membership Interest
Purchase Agreement, dated as of the date hereof (the
“Purchase
Agreement”), by and among the Company, SeD Ballenger
and CNQC Maryland Development LLC, a Delaware limited liability
company (“CNQC”), CNQC has
purchased from the Company a newly issued Interest in the Company
(the “Purchased
Interest”) representing 16.45% of the outstanding
Interests in the Company, in exchange for the payment by CNQC to
the Company of US$2,500,000 in cash on September 25,
2015.

 


WHEREAS, the
Members wish to enter into this Agreement to amend and restate the
Original LLC Agreement in its entirety and to set forth the terms
and conditions that will govern their relationship with respect to
the Company and operation of the Company’s
business.

 




 








 






 


NOW,
THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the Company and
undersigned Members hereby agree that the Original LLC Agreement is
amended and restated in its entirety as follows:

 



AGREEMENT

 

1. Name.
The name of the limited liability company is
“SeD Maryland
Development, LLC.”

 

2. Principal Business
Office. The principal office of
the Company in the United States shall be at such place as the
Company may designate, which need not be in the State of Delaware,
and the Company shall maintain records there as required by the
Delaware Act and shall keep the street address of such principal
office at the registered office of the Company in the State of
Delaware. The Company may have such other offices as the Board of
Managers may designate from time to time, upon approval of at least
a majority of the Managers.

 

3. Registered
Office. The address of the
registered office of the Company in the State of Delaware is 16182
Coastal Highway, Lewes, DE 19958.

 

4. Registered
Agent. The name and address of
the registered agent of the Company for service of process on the
Company in the State of Delaware is Harvard Business Service, 16182
Coastal Highway, Lewes, DE 19958.

 

5. Members.

 

(a) The
mailing address of each Member is set forth on Schedule B
attached hereto.

 

(b) The
Members may act by unanimous written consent in lieu of a
meeting.

 

6. Certificates.
The Certificate of Formation of the Company, and each other
certificate of or relating to the Company, filed on or prior the
date hereof with the Secretary of State of the State of Delaware,
have been executed, delivered and filed by an “authorized
person” of the Company within the meaning of the Act. The
execution, delivery and filing of the Certificate of Formation of
the Company and each other certificate of or relating to the
Company filed on or prior the date hereof with the Secretary of
State of the State of Delaware are hereby expressly approved,
ratified and confirmed in all respects. Upon the execution of this
Agreement, each of Charles Mackenzie, Tung Moe Chan and Jeffrey
Busch shall be designated as an “authorized person” and
shall continue as a designated “authorized person”
within the meaning of the Act, unless the Board of Managers
authorize, upon approval of at least a majority of the Managers, a
change in the authorized persons. An “authorized
person” shall execute, deliver and file any other
certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in any other
jurisdiction in which the Company may wish to conduct
business.

 




 








 






 


The
existence of the Company as a separate legal entity shall continue
until cancellation of the Certificate of Formation as provided in
the Act.

 

7. Purposes.

 

(a) The
business of the Company shall be to acquire, own, develop, hold,
operate, maintain, manage, sell, mortgage, finance, pledge, convey,
lease and otherwise encumber and in any manner deal with that
certain land consisting of approximately 197 acres known as Parcels
53, 54 and 243 on Tax Map 86 in Frederick County, Maryland,
together with the buildings, structures, and improvements thereon
erected and/or to be erected thereon and all appurtenances thereof
and interests therein, and any personal property located thereon or
used in connection therewith, known as Ballenger Run, and being
more particularly described in Exhibit A attached hereto and made a
part hereof (collectively, the “Property”),
and to carry on all such other business incidental to and not
inconsistent with the general purposes herein set
forth.

 

(b) Subject to the approval rights of the SeD
Ballenger set forth herein and the Board of Managers set forth
in Section 10(f)
below, the Management Company or any
authorized person designated or appointed pursuant to a resolution
adopted by the Board of Managers, upon approval of at least a
majority of the Managers, (individually an “Authorized
Signatory”), may enter into, execute and perform (i) the
Basic Documents and all documents, agreements, certificates, or
financing statements contemplated thereby or related thereto and
any resolution relating to the Basic Documents, and (ii) any and
all agreements, documents, instruments and any additions to,
deletions from, changes in, or amendments thereto and do or cause
to be done any and all acts and things, as such Authorized
Signatory shall deem necessary, appropriate or desirable, in the
best interests of the Company. Any Authorized Signatory executing
documents on behalf of the Company may execute such documents using
such person’s title, or in lieu of any title, the designation
“Authorized
Signatory.” The foregoing
shall not be deemed a restriction on the power and authority of the
Board of Managers to execute documents or take other actions on
behalf of the Company so long as duly approved by at least a
majority of the Managers.

 

8. Development
of Project.

 

(a) Development of the
Project. The Board of Managers
shall take such actions as shall be required to cause either the
Company or the Management Company (as defined in
Section
9(b)
below) to perform and complete the
construction and other development work as contemplated and/or
required under the NVR Purchase and Sale Agreements, or any other
construction company selected by the Board of Managers (the
“Development
Work”), substantially in
accordance with the Project Plan, at a cost to the Company not
exceeding the total cost set forth in the Budget, in a manner
consistent with this Agreement and all applicable laws, ordinances,
rules, regulations or requirements (including, without limitation,
those with respect to discrimination) of governmental authorities,
and in compliance with any covenants, conditions or restrictions
affecting all or any portion of the Property.

 




 








 






 

(b) Project Plan and
Budget. The Board of Managers
shall take such actions as shall be required to cause either the
Company or the Management Company to prepare (i) a project plan for
the acquisition and development of the Property and the timely
performance and completion of the Development Work in accordance
with the Budget (the “Project
Plan”), and (ii) a budget
of the hard and soft costs of the Development Work and the other
costs to complete the development of the Property (the
“Budget”),
which Budget shall be prepared not later than thirty (30) days prior to the
commencement of each Fiscal Year. The Board of
Managers shall use commercially
reasonable efforts to operate in all material respects in
accordance with the Budget,
and shall review the Budget
periodically and make any
recommendations with respect to the Project Plan and the Budget.
The Project Plan and Budget, and any amendments, revisions or
modifications thereto, shall be approved by the Board of Managers
pursuant to Section 10(f)
below.

 

(c) Project
Financing. It is anticipated by
the Members that funding for Development Work and other capital
needs of the Company (“Project
Financing”) will be
provided by a third party institutional lender
(“Institutional
Lender”). Subject to the
terms hereof, the Board of Managers shall oversee and make all
final determinations with respect to obtaining all Project
Financing for the Project and the Company’s business,
including, without limitation (i) the final selection of the
Institutional Lender or other final financing source that will
provide the Project Financing; (ii) the final approval of all terms
and conditions of the Project Financing; and (iii) the negotiation
of all final terms and conditions contained in the loan documents
evidencing and securing all Project Financing. As soon as
reasonably practicable, the Board of Managers shall: (A) arrange
for Project Financing which is sufficient to permit the Company to
develop, construct, complete, market and sell the Development Work
on terms acceptable to the Board of Managers; (B) cause such
Project Financing to close and be available to the Company for the
purposes described herein; and (C) provide the Institutional Lender
or other lending source providing the Project Financing (the
“Project Financing
Lender”) with, or causing
the Project Financing Lender to be provided with, such guaranties
of payment and performance with respect to the Project Financing as
may be reasonably required by the Project Financing Lender.
Notwithstanding anything to the contrary in this Agreement, none of
the Members, nor any of the principals or equity holders of any of
the Members, shall have any obligation or duty of any kind to
provide any guaranty or other credit support with respect to any
Project Financing.

 

9. Management.

 

(a) Board of Managers.
Subject to any limitations
specifically imposed by the Act or this Agreement,
the Board of Managers shall have the
sole right to make all
decisions relating to the business, affairs and properties of the
Company, and any and all other acts or activities customary or
incident to the management of the Company’s business and
objectives. The Board of Managers may delegate any of its rights or
responsibilities to (i) an Authorized Signatory pursuant to
Section
7(b)
above, (ii) the Management Company,
pursuant to Section
9(b)
below, or (iii) any officer of the
Company pursuant to Section
10
below. Any delegation pursuant to
this Section
9(a)
may be revoked at any time by the
Board of Managers in its sole discretion.


 




 








 






 

(b) Management
Company. Pursuant
and subject to the terms and
conditions of that certain Management Agreement, dated as of July
15, 2015, by and between the Company and SeD Development
Management, LLC, a Delaware limited liability company (the
“Management
Company”) attached hereto
as Exhibit B (the
“Management
Agreement”), and subject
to the approval rights of the Board of Managers set forth in
Section
10(f)
below, the daily business and affairs
of the Company shall be managed by the Management Company. The
Management Company shall be entitled to be paid the fees and shall
have the other rights, benefits and obligations as are set forth in
the Management Agreement. The Management Company shall be a
“manager” within the meaning of and for purposes of the
Act. The Board of Managers
shall act on behalf of the Company with respect to the Management
Company, the terms and provisions of the Management Agreement,
including, without limitation, the right to remove the Management
Company. Subject to the
foregoing, the Management Company has the authority to bind the
Company.

 

10. Board of Managers;
Officers. A Board of Managers of the Company shall be
established pursuant to this Section
10. Notwithstanding the last sentence of Section
18-402 of the Act, no Manager, acting individually in its capacity
as such, nor each of the Members, acting individually in its
capacity as such, shall have any right or authority to act for,
bind or otherwise assume any obligation or responsibility on behalf
of, the Company, except as specifically authorized in accordance
with this Agreement. Except as otherwise specifically provided
herein, the Company may only act and bind itself through (i) the
collective action of the Managers in accordance with this Agreement
or (ii) the action of the Officers of the Company, if and to the extent
authorized by this Agreement or by the Board of Managers in
accordance with this Agreement. The Board of Managers may, from
time to time as it deems advisable, appoint officers of the Company
(the “Officers”)
and assign in writing titles (including, without limitation,
President, Vice President, Secretary, Treasurer or
attorney-in-fact) to any such individual. The Board of Managers may
remove any Officer at any time with or without cause. No Officer
shall be paid any compensation or other remuneration solely for
serving as an Officer of the Company. Unless the Board of Managers
decides otherwise, if the title is one commonly used for officers
of a business corporation formed under the Delaware General
Corporation Law, the assignment of such title shall constitute the
delegation to such person of the authorities and duties that are
normally associated with that office.

 

(a) Number and Initial
Managers. The number of
Managers constituting the Board of Managers shall be as determined
by the Members in accordance with this Agreement, but in no
instance shall there be less than one Manager. The initial number
of Managers constituting the Board of Managers shall be three. The
Members, by unanimous
vote, may from time to time change the number of
Managers constituting the Board of Managers by adopting resolutions
to that effect. The Board of Managers shall be comprised as
follows:

 

(i) Two
individuals designated by SeD Ballenger, who shall initially be
Chan Heng Fai and Chan Tung Moe, one of which will be the Chairman
of the Board of Managers; and


 




 








 






 

(ii) one
individual designated by CNQC, who shall initially be Li Gen
Zhong.

 

(b) Duties
of the Manager. Each Manager
shall be obliged to devote only as much of their time to the
Company’s business as shall be reasonably required in light
of the Company’s business and objectives. Each Manager shall
perform his or her duties as a Manager in good faith, in a manner
he or she reasonably believes to be in the best interests of the
Company, and with such care as an ordinarily prudent Person in a
like position would use under similar
circumstances.

 

(c) Election
of Managers; Vacancies; Term. Managers shall be appointed from time to time by
the Members. In the event of a vacancy in the Board of Managers,
including vacancies created by an increase in the number of
Managers pursuant to Section 10(a),
the Member(s) who are entitled to appoint the initial managers
pursuant to Section 10(a)
above shall have the right to fill
such vacancy (by way of example only, if there is a vacancy by one
of the Managers appointed by SeD Ballenger, then SeD Ballenger
shall have the right to appoint the successor manager). Each member
of the Board of Managers, including each Manager appointed to fill
a vacancy on the Board of Managers, shall hold office until the
earlier of his or her resignation, removal, retirement or death or
the appointment and qualification of his or her
successor.

 


(d) Resignation and Removal of
Managers. A Manager
may resign upon delivery of written notice thereof to the Chairman
of the Board of Managers or, in case of the Chairman’s
resignation, to an Authorized Signatory, provided that any Manager
who receives written notice of the resignation from the Chairman
shall promptly forward such written notice to the other members of
the Board of Managers. A Manager may be removed from office with or
without cause by unanimous consent of the
Members.

 


(e) Meetings of the Board of
Managers.

 

(i) Location.
The Board of Managers may hold meetings, both regular and special,
either within or without the State of Delaware.

 

(ii) Regular
Meetings. Regular meetings of
the Board of Managers may be held without notice at such time and
at such place as shall, from time to time, be determined by the
Board of Managers.

 

(iii) Special
Meetings. Special meetings of
the Board of Managers may be called by any
Manager.

 




 








 






 

(iv) Notice
of Meetings. Regular meetings
of the Board of Managers may be held without notice. The person(s)
calling a special meeting of the Board of Managers shall, at least
two days (or, in the case of notice given by mail, not less than
three days) before such meeting, give or cause to be given notice
thereof to each Manager by any usual means of communication. Such
notice need not specify the purpose for which the meeting is
called. Any duly convened regular or special meeting may be
adjourned by the Board of Managers to a later time without further
notice. Any Manager may waive notice of any meeting either before
or after such meeting. The waiver must be signed in writing by the
Manager entitled to notice and delivered to the Company for
inclusion in the Company’s records. A Manager’s
attendance at or participation in a meeting shall constitute a
waiver of notice of such meeting, except when such Manager attends
a meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting
of the Board of Managers need be specified in any written waiver of
notice.

 

(v) Quorum,
Adjournments and
Acts of the Board of Managers.
At all meetings of the Board of Managers, the presence of at least
one member nominated by SeD Ballenger and one member nominated by
CNQC, if applicable, shall constitute a quorum for the transaction
of business. Each member of the Board of Managers may appoint an
Officer or any other Person to act on his behalf in case such
Manager is unavailable to attend the meeting. Each member of the
Board of Managers, or its representative, as applicable, shall be
entitled to one vote, and the affirmative vote of a majority of the
members of the Board of Managers present at any meeting at which
there is a quorum shall be the act of the Board of Managers, except
as may be otherwise specifically provided by the Act. If a quorum
is not present at a meeting of the Board of Managers, the Managers
present at such meeting may adjourn the meeting from time to time,
without notice other than announcement at the meeting. After two
adjourned meetings at which a quorum was not present or
represented, the presence of any members of the Board of Managers,
or their representatives, at the third adjourned meeting shall be
sufficient to constitute a quorum for the transaction of business.
At any adjourned meetings, any business may be transacted which
might have been transacted at the meeting as originally
notified.

 

(vi) Action
Without Meeting. Unless
otherwise restricted by the Act, any action required or permitted
to be taken at any meeting of the Board of Managers may be taken
without a meeting, if a written consent thereto is signed by all
members of the Board of Managers before or after such action,
describing the action to be taken or previously taken, and included
in the minutes of the Board of Managers or filed with the
Company’s records.

 




 








 






 

(vii) Organization.
There may be a Chairman of the Board of Managers elected by the
Managers from their number at any meeting of the Board of Managers.
The Chairman shall preside at all meetings of the Board of Managers
and perform such other duties as may be directed by the Board of
Managers, and shall serve as Chairman at the pleasure of the Board
of Managers. Until a Chairman of the Board of Managers is elected,
the President of the Company shall preside at the meetings of the
Board of Managers. The Secretary or an Assistant Secretary of the
Company, if any, shall act as Secretary of any meeting of the Board
of Managers, but if neither has been appointed or in their absence,
the Chairman may appoint any person to act as Secretary of the
meeting.

 

(viii) Meeting
by Conference Telephone. Any
member of the Board of Managers may participate in any meeting of
the Board of Managers by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear, and be heard by, each other,
and such participation shall constitute presence in person at such
meeting.

 


(f) Greater Than Fifty Percent
Majority Approval. Certain
major decisions involving the Company shall require approval of a
majority of the Managers. Without limiting the generality of the
preceding sentence, the following actions shall require approval of
at least a majority percent of the Managers:

 


(i) to
borrow money (other than trade payables) in excess of $500,000 (in
one or a related series of transactions) and/or grant security
interests in Company property to secure such loans;

 

(ii) to make all
decisions and determinations with respect to the Project Financing
in accordance with the terms of Section 8(c) above;

 

(iii) to guarantee the
debts of any Person, or to provide any credit or to grant any loan
or advance to (A) any employee or similar person of the Company, or
(B) any third party in an amount in excess of $50,000;

 

(iv) to enter into any
new line of business;

 

(v) to amend, modify,
waive or terminate the Management Agreement;

 

(vi) to approve the
Project Plan and Budget, and any revisions or changes
thereto;

 

(vii) to require the
Members to make any Member Loans;

 

(viii) to exercise the
right of first refusal pursuant to Section 22(c) below or to make the
rights under Section 22(g) below;

 




 








 






 

(ix) to designate a Tax
Matters Partner (as defined herein);

 

(x) to delegate any of
the powers, authority rights or obligations of the Board of
Managers to (i) an Authorized Signatory pursuant to Section 7(b), (ii) the Management
Company, pursuant to Section 9(b), or (3) any officer of
the Company pursuant to Section 10;

 

(xi) to appoint or
remove any Officer;

 

(xii) removal and
replacement of a Manager from office;

 

(xiii) to appoint a new
Management Company, in accordance with the terms of the Management
Agreement;

 

(xiv) to amend, modify
or terminate the NVR Purchase Agreements (or any of
them);

 

(xv) to sell, transfer,
assign or otherwise dispose of, or encumber, any major asset of the
Company;

 

(xvi) to organize or
acquire any subsidiary or to subscribe for or acquire shares in, or
other securities of, or interest in, any other corporate body or
Person;

 

(xvii) to register or
qualify any securities of the Company under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended,
or any other applicable laws;

 

(xviii) to determine the
maximum and minimum working capital requirements of the
Company;

 

(xix) any merger of the
Company with or into another Person;

 

(xx) any acquisition of
another Person, whether by merger, consolidation, purchase of stock
or assets, or otherwise;

 

(xxi) to
borrow money from a Member or Members;

 

(xxii) to
implement any plan or arrangement for the issuance of, or to issue,
membership interests or other security convertible into membership
interests;

 

(xxiii) to
issue or sell any new membership interests to any Person or admit
any new Member;

 

(xxiv) to
register or qualify any securities of the Company under the
Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, or any other applicable laws;


 




 








 






 

(xxv) to
pay any distributions to the Members, whether in cash or in kind;
and

 

(xxvi) to
acquire any major asset or make any major expenditure with any
Company funds, except in accordance with the Budget.

 


Subject
to the power and authority provided above in Section 10 (f)(x),
unless authorized by at more than fifty percent of the Managers, no
attorney-in-fact, employee, or other agent of the Company shall
have any power or authority to bind the Company in any way, to
pledge its credit, or to render it liable pecuniarily for any
purpose.

 

(g) Unanimous Approval. Certain major
decisions involving the Company shall require unanimous approval of
the Managers. Without limiting the generality of the preceding
sentence, the following actions shall require unanimous approval of
the Managers:

 

(i) amending the
Certificate of Formation of the Company;

 

(iii) amending the terms
of this Agreement;

 

(iii) increasing of the
number of Managers beyond three (3);

 

(iv) instituting any
proceedings under bankruptcy laws or other law of general
application to debtors seeking relief from claims of creditors, or
having a receiver or trustee appointed for the benefit of the
Company, the undertaking of any action that would render the
Company insolvent or unable to pay its debts as they become due,
making a general assignment for the benefit of creditors, or
causing a dissolution, liquidation or winding-up of the
Company.

 

(h) No Exclusive Duty to Company;
Compensation. Members of the Board of Managers shall not be
required to manage the Company as their sole and exclusive
function, and they may have other business interests and may engage
in other activities in addition to those relating to the Company.
Neither the Company nor the Members shall have any right, by virtue
of this Agreement, to share or participate in such other
investments or activities of members of the Board of Managers
acting in a capacity other than as a member of the Board of
Managers or to the income or proceeds derived therefrom. No member
of the Board of Managers shall be compensated for serving as a
Manager, unless compensation shall be duly authorized by SeD
Ballenger. Notwithstanding the foregoing, the Board of Managers
shall provide for the payment or reimbursement of any or all
reasonable expenses incurred by any Manager in connection with the
authorized services performed by such Manager on behalf of the
Company.

 


 




 








 






 

(i) Conflicts
of Interest. No contract or transaction between the
Company and one or more of its Managers, or between the Company and
an Affiliate of any Manager, shall be void or voidable: (a) solely
for that reason; (b) solely because such Manager is present at or
participates in the meeting of the Board of Managers or committee
thereof which authorizes, approves or ratifies the contract or
transaction; (c) solely because the votes of such Manager are
counted for such purpose; or (d) if the transaction is fair as to
the Company as of the time it is authorized, approved or ratified
by the Board of Managers or the Members. Common or interested
Managers may be counted in determining the presence of a quorum at
a meeting of the Board of Managers.

 

11. Deadlock.

 

(a) Subject to the terms and provisions hereof, if the
Members or the Managers are unable to agree on any of the matters
described in this Agreement, including, but not limited to
Section
10(f) and Section 10(g) hereof and such disagreement
continues for [thirty (30)] days despite good faith deliberations
by the Members or the Managers, as applicable
(“Deadlock”),
then either Member shall be entitled to exercise the buy-sell
rights set forth in this Section 11(a)
by delivering a Buy-Sell Offer Notice
(as defined herein). The
provisions of this Section 11(a) shall
not apply with respect to any disagreement regarding the CNQC
Option.

 

(b) If a
Member wishes to exercise the buy-sell right provided in this
Agreement, such Member (the “Initiating
Member”) shall deliver to
the other Member (the “Responding
Member”) written notice
(the “Buy-Sell Offer
Notice”) of such
election, which notice shall include (i) a description of the
circumstances that triggered the buy-sell right, and (ii) the
purchase price (which shall be payable exclusively in cash (unless
otherwise agreed)) at which the Initiating Member shall purchase
all of the Interests owned by the Responding Member (the
“Buy-out
Price”) or sell all of
its Interests to the Responding Member (the
“Sell-out
Price”), with any
difference between the Buy-out Price and the Sell-out Price based
solely on each Member’s Interest in the Company, without
regard to any market discount or premium from differences in such
proportionate interests. The Member who first delivers the Buy-Sell
Offer Notice to the other Member shall be the Initiating
Member.

 

(c) Within [thirty (30)] days after the Buy-Sell Offer
Notice is received (the “Buy-Sell Election
Date”), the Responding
Member shall deliver to the Initiating Member a written notice (the
“Response
Notice”) stating whether
it elects to sell all of its Interests to the Initiating Member for
the Buy-out Price or buy all of the Interests owned by the
Initiating Member for the Sell-out Price. The failure of the
Responding Member to deliver the Response Notice by the Buy-Sell
Election Date shall be deemed to be an election to sell all of its
Interests to the Initiating Member at the Buy-out
Price.

 




 








 






 

(d) The
closing of any purchase and sale of Interests pursuant to
this Section 11
shall take place [fifteen (15)] days
after the Response Notice is delivered or deemed to have been
delivered or some other date mutually agreed upon by the parties.
The Buy-out Price or the Sell-out Price, as the case may be, shall
be paid at closing by wire transfer of immediately available funds
to an account designated in writing by the selling Member (the
“Selling
Member”). At the closing,
the Selling Member shall deliver to the purchasing Member (the
“Purchasing
Member”) good and
marketable title to its Interests, free and clear of all liens and
encumbrances. Each Member agrees to cooperate and take all actions
and execute all documents reasonably necessary or appropriate to
reflect the purchase of the Selling Member’s Interest by the
Purchasing Member.

 

(e) If
the Purchasing Member defaults in any of its material closing
obligations, then the Selling Member shall have the option to
purchase the Purchasing Member’s entire Interest at a price
that is equal to [85]% of the purchase price of the Purchasing Member’s Interest
determined in accordance with Section
11(b)
above.

 

12. Limited
Liability. Except as otherwise
expressly provided by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or
otherwise, shall be the debts, obligations and liabilities solely
of the Company, and no Member, Manager, authorized person or
Authorized Signatory shall be obligated personally for any such
debt, obligation or liability of the Company solely by reason of
being a Member, Management Company, Manager, authorized person or
Authorized Signatory of the Company.

 

13. Initial Capital
Contributions. Each Member has
contributed to the capital of the Company cash in the amount set
forth next to such Member’s name on Schedule B
hereto (an “Initial Capital
Contribution”). Each
Member’s Interest in the Company is expressed as a percentage
and is set forth next to such Member’s name on
Schedule
B hereto. Each Member acknowledges that its
percentage Interest in the Company may change over the life of the
Company and, in the event of any such change in its percentage
Interest in the Company, the Management Company shall revise
Schedule
B hereto to reflect any such change. A separate
capital account (“Capital
Account”) has been or
will be established and maintained for each member in accordance
with Section 1.704-1(b)(2)(iv) of the Treasury
Regulations.

 

14. Capital Contributions;
Member Loans.

 


(a) Voluntary Capital
Contributions. Except
for the Members’ obligation to
make its respective Initial
Capital Contribution, the
Members shall not be required
to make any additional capital contribution to the Company.
To the extent that any
operating revenue and the proceeds of any loans to the Company are
insufficient to fully fund the development costs set forth in the
Budget, any additional capital
requirements shall be fulfilled by one or more member loans
(“Member
Loans”)
in accordance with this Section
14.

 




 








 






 


(b) Member
Loans. Subject to the terms
hereof, Member Loans shall be made by the Members
in an amount equal to their pro rata
portion of the Member Loan
amount based on their
respective percentage Interests in the Company at that time.
In the event the Board of Managers
determines to require Member Loans, the Board of Managers
shall provide written notice to the
Members of such election at least fifteen (15) Business Days prior to the date such
loans will be made to the Company,
together with the amount of the Member Loans required and terms of
repayment of such Member Loans (“Member Loan
Notice”). Each Member
shall have ten (10) Business Days after receipt of the Member Loan
Notice to either agree or decline to make its respective Member
Loan; provided that if a Member fails or otherwise elects to
decline to make the Member Loan, then the other Member shall have
the option to make 100% of the Member Loan amount on the terms set
forth in the Member Loan Notice. Such Member Loans shall have a
two-year term and will be made in exchange for a 15% interest rate
per annum to be paid annually, or any other terms approved by at
least a majority of the Board of Managers.

 


(c) Member Loan
Cap. If a any time the Board of
Managers determined to require additional capital contribution to
the Company in an aggregate amount greater than $5.0 million (USD),
CNQC shall have the option to sell its entire Interest to SeD
Ballenger (the “CNQC
Option”), at a purchase
price equal to the lesser of (i) the fair market value of the CNQC Interest
as determined pursuant to Section
22(d)(ii),
and (ii) CNQC’s Initial Capital Contribution minus any
distributions made to CNQC; which shall be paid in up to 90
Business Days from the receipt of the Election Notice (as defined
below) by SeD Ballenger. CNQC shall have ten (10) Business Days
from receipt of the Member Loan Notice to elect in writing to
exercise the CNQC Option (the “Election
Notice”); provided that
if a CNQC fails or otherwise elects to decline to make such option,
then it shall be understood that CNQC waives its right to exercise
the CNQC Option and the terms of Section
14(b)
above shall apply.

 

(d) Revaluing
Capital Accounts. If (i) a new
or existing Member acquires additional Interests in the Company in
exchange for more than a de minimis contribution of property or services, (ii) the
Company distributes to a Member more than a de minimis amount of Company property as consideration for
such Interests, or (iii) the Company is liquidated within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury
Regulations, the Board of
Managers shall revalue the property of the Company to its fair
market value (as determined by the Board of Managers, in its sole and absolute
discretion, and taking into account Section 7701(g) of the Code) in
accordance with Section 1.704-1(b)(2)(iv)(f) of the Treasury
Regulations; provided, however, that the adjustments pursuant to
clauses (i) and (ii) above shall be made only if the Manager
determines, it is reasonable discretion, that such adjustments are
necessary or appropriate to reflect the relative economic interests
of the Members of the Company. When the Company’s property is
revalued by the Manager, the Capital Accounts of the Company shall
be adjusted in accordance with Sections 1.704-1(b)(2)(iv)(f) and
(g), which generally require such Capital Accounts to be adjusted
to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the Capital
Accounts previously) would be allocated among the Members pursuant
to Sections 15
and 16 if there were a taxable disposition of such
property for its fair market value (as determined by the Managers,
in their sole and absolute discretion, and taking into account
Section 7701(g) of the Code) on the date of the
revaluation.

 




 








 






 

15. Allocation of Profits
and Losses; Tax
Characterization.

 

(a) Profit
and loss of the Company for each 12-month period ending December 31
of each year or such other taxable year as may be required by
Section 706(b) of the Code (“Fiscal
Year” or
“Taxable
Year”) shall be allocated
to the Members in accordance with their respective
Interests.

 

(b)  Notwithstanding any provision to the contrary, (i)
any expense of the Company that is a “nonrecourse
deduction” within the meaning of Treasury Regulations Section
1.704-2(b)(1) shall be allocated in accordance with the
Members’ respective Interests, (ii) any expense of the
Company that is a “partner nonrecourse deduction”
within the meaning of Treasury Regulations Section 1.704-2(i)(2)
shall be allocated in accordance with Treasury Regulations Section
1.704-2(i)(1), (iii) if there is a net decrease in Partnership
Minimum Gain within the meaning of Treasury Regulations Section
1.704-2(f)(1) for any Taxable Year, items of gain and income shall
be allocated among the Members in accordance with Treasury
Regulations Section 1.704-2(f) and the ordering rules contained in
Treasury Regulations Section 1.704-2(j), and (iv) if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain within the
meaning of Treasury Regulations Section 1.704-2(i)(4) for any
Taxable Year, items of gain and income shall be allocated among the
Members in accordance with Treasury Regulations Section
1.704-2(i)(4) and the ordering rules contained in Treasury
Regulations Section 1.704-2(j). A Member’s “interest in
partnership profits” for purposes of determining its share of
the nonrecourse liabilities of the Company within the meaning of
Treasury Regulations Section 1.752-3(a)(3) shall be the percentage
of all outstanding Membership Units held by such
Member.

 

(c) If
a Member receives in any Taxable Year an adjustment, allocation, or
distribution described in subparagraphs (4), (5), or (6) of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d) that causes or
increases a negative balance in such Member’s Capital Account
that exceeds the sum of such Member’s shares of Partnership
Minimum Gain and Partner Nonrecourse Debt Minimum Gain, as
determined in accordance with Treasury Regulations Sections
1.704-2(g) and 1.704-2(i), such Member shall be allocated specially
for such Taxable Year (and, if necessary, later Taxable Years)
items of income and gain in an amount and manner sufficient to
eliminate such negative Capital Account balance as quickly as
possible as provided in Treasury Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of
income or gain to a Member in accordance with this
Section 15(c),
to the extent permitted by Regulations Section 1.704-1(b)
and Section 15(c)
hereof, items of expense or loss shall
be allocated to such Member in an amount necessary to offset the
income or gain previously allocated to such Member under
this Section 15(c).

 




 








 






 

(d) Loss
shall not be allocated to a Member to the extent that such
allocation would cause a deficit in such Member’s Capital
Account (after reduction to reflect the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed
the sum of such Member’s shares of Partnership Minimum Gain
and Partner Nonrecourse Debt Minimum Gain. Any loss in excess of
that limitation shall be allocated to all the other Members in
accordance with their respective Interests. After the occurrence of
an allocation of loss to a Member in accordance with this
Section 15(c),
to the extent permitted by Treasury Regulations Section 1.704-1(b),
profit shall be allocated to such Member in an amount necessary to
offset the loss previously allocated to such Member under
this Section 15(c).

 

(e) If
a Member transfers any part or all of its Interests and the
transferee is admitted as provided herein (a
“New
Member”), the
distributive shares of the various items of profit and loss
allocable among the Members during such Fiscal Year shall be
allocated between the transferor and the New Member (at the
election of the Board) either (i) as if the Fiscal Year had ended
on the date of the transfer or (ii) based on the number of days of
such Fiscal Year that each was a Member without regard to the
results of Company activities in the respective portions of such
Fiscal Year in which the transferor and New Member were
Members.

 

(f)  “Profit”
and “loss” and any items of income, gain, expense or
loss referred to in this Section
15
shall be determined in accordance with
federal income tax accounting principles as modified by Treasury
Regulations Section 1.704-1(b)(2)(iv), except that profits and
losses shall not include items of income, gain, and expense that
are specially allocated pursuant to Section 15(b),
15(c) or 15(d) hereof.
All allocations of income, profits, gains, expenses, and losses
(and all items contained therein) for federal income tax purposes
shall be identical to all allocations of such items set forth in
this Section 15,
except as otherwise required by Section 704(c) of the Code and
Section 1.704-1(b)(4) of the Treasury
Regulations.

 

(g) The
parties hereby agree to treat the purchase by CNQC of the Purchased
Interest as a contribution of cash to the Company in exchange for
the Purchased Interest on a basis consistent with Revenue Ruling
99-5, 1999-1 C.B. 434 (Situation 2). Each of the Members shall file
all tax returns and tax informational statements on a basis
consistent with such characterization.

 

16. Distributions.

 

(a) Distributions
shall be made to the Members at the times and in the aggregate
amounts approved by the Board of Managers, but always (i) after any
Member Loan is repaid in its totality and there are no Member Loans
outstanding, and (ii) in amounts proportional to their then-current
respective Interests in the Company.

 


Notwithstanding
any provision to the contrary contained in this Agreement, the
Company shall not make a distribution to the Members on account of
their Interests in the Company if such distribution would violate
Section 18-607 of the Act or any other applicable law or any Basic
Document. Distributions shall be calculated and paid subject to the
rights of the Management Company under the Management
Agreement.

 


 




 








 






 

(b) Notwithstanding
anything to the contrary herein, the Company shall withhold all
amounts required to be withheld pursuant to Section 1446 of the
Code or any other provision of federal, state, or local tax law,
and any such withholdings shall be treated as amounts actually
distributed to the affected Members for all purposes under this
Agreement.

 

17. Books
and Records. The
Board of Managers shall keep or cause
to be kept complete and accurate books of account and records with
respect to the Company’s business. The books of the Company
shall at all times be maintained by the Board of Managers. The Company, and the
Board of Managers on behalf of the
Company, shall not have the right to keep confidential from the
Members any information that the Board of Managers would otherwise be permitted to
keep confidential from the Members pursuant to Section 18-305(c) of
the Act. The Company’s independent auditor, if any, shall be
an independent public accounting firm selected by the
Board of Managers.

 

18. Reports.
At the Company’s expense, the Board of Managers shall prepare and deliver, or
cause to be prepared and delivered, to the Company, and the Company
shall approve and deliver to the Members no later than 75 days
after the close of each Fiscal Year, a Schedule K-1, a copy of the
Company’s informational tax return (IRS Form 1065), and such
other reports (collectively, the “Annual Tax
Reports”) setting forth
in sufficient detail all such information and data with respect to
the transactions effected by or involving the Company during such
Fiscal Year as shall enable the Company, each Member to prepare its
federal, state, and local income tax returns in accordance with the
laws, rules, and regulations then prevailing. No later than 90 days
after the end of a Fiscal Year or 45 days after the end of each
quarter in a Fiscal Year, the Board of Managers shall prepare or cause the
preparation of, and shall deliver or cause to be delivered to the
Members, statements of the Company’s (i) assets, liabilities
and capital as of the end of the year or quarter, as applicable,
and (ii) revenues and expenses for the year or the quarter and
year-to-date, as applicable.

 

19. Other Business.
Notwithstanding any duty otherwise existing at law or in equity,
any Member and any Affiliate of any Member may engage in or possess
an interest in other business ventures (unconnected with the
Company) of every kind and description, independently or with
others. The Company shall not have any rights in or to such
independent ventures or the income or profits therefrom by virtue
of this Agreement.

 

20. Option to Purchase Lots. SeD
Ballenger, or any of its Affiliates (including, but not limited to,
Mr. Heng Fai Chan and any companies controlled by, or affiliated
with, Mr. Heng Fai Chan), shall, at any time during the duration of
the Development Work, have the sole and absolute option to purchase
(i) the CCRC Multifamily Parcel at the appraised price of $2.8
million and/or (ii) the MF Multifamily Parcel at the appraised
price of $5.25 million; as described in the development plan
attached as Exhibit
C.

 




 








 






 

21. Exculpation and
Indemnification.

 

(a) The Managers,
any Member, any employee, representative, authorized person,
Authorized Signatory, or agent of the Company, the Manager or any
Member, any officer, manager, employee, representative, agent or
Affiliate of the Manager or any Member (or any officer, employee,
representative or agent of any such Affiliate) (collectively, the
“Covered
Persons”), to the fullest
extent permitted by law, shall not be liable to the Company or any
other Person that is a party to or is otherwise bound by this
Agreement for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Covered Person in good
faith on behalf of the Company and in a manner reasonably believed
to be within the scope of the authority conferred on such Covered
Person by this Agreement, except that a Covered Person shall be
liable for any such loss, damage or claim incurred by reason of
such Covered Person’s gross negligence or willful
misconduct.

 

(b) To
the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the Company for any loss,
damage or claim incurred by such Covered Person by reason of any
act or omission performed or omitted by such Covered Person in good
faith on behalf of the Company and in a manner reasonably believed
to be within the scope of the authority conferred on such Covered
Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim
incurred by such Covered Person by reason of such Covered
Person’s gross negligence or willful misconduct with respect
to such acts or omissions; provided,
however,
that any indemnity under this Section 21
by the Company shall be provided out
of and to the extent of Company assets only, and the Members shall
not have personal liability on account thereof.

 

(c) To
the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by a Covered Person defending any claim,
demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt by the
Company of an undertaking by or on behalf of the Covered Person to
repay such amount if it shall be determined that the Covered Person
is not entitled to be indemnified as authorized in this
Section 21.

 

(d) A
Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information,
opinions, advice, reports or statements presented to the Company by
any Person as to matters the Covered Person reasonably believes are
within such other Person’s professional or expert competence
and who has been selected with reasonable care by or on behalf of
the Company, including, without limitation, information, opinions,
advice and reports of legal counsel, accountants and other
professional advisors, and statements as to the value and amount of
the assets, liabilities, or any other facts pertinent to the
existence and amount of assets from which distributions to the
Members might properly be paid.

 




 








 






 

(e) To
the extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto to
the Company or to any other Covered Person, a Covered Person acting
under this Agreement shall not be liable to the Company or to any
other Covered Person for its good faith reliance on the provisions
of this Agreement or any approval or authorization granted by the
Company or any other Covered Person. The provisions of this
Agreement, to the extent that they restrict the duties and
liabilities of a Covered Person otherwise existing at law or in
equity, are agreed by the Members to replace such other duties and
liabilities of such Covered Person.

 

(f) The
foregoing provisions of this Section 21
shall survive any termination of this
Agreement.

 

22. Assignments.

 

(a) Restrictions
on Assignment of Interests. No
Member shall make or effect an Assignment of all, or any part of,
such Member’s Interest, except as provided in this
Section 22.
Notwithstanding anything contained in
this Section 22 to the contrary, but subject to compliance with the
provisions of Section 22(g) below, the Right of First Refusal
contained in Section 22(c) below
shall not apply to an assignment of CNQC Member Interest (i) to an
Affiliate of CNQC, or (ii) pursuant to the exercise of the CNQC
Option under Section  14(c).

 

(b) Assignment in a Permitted
Transfer. Subject to
Section 22(c),
a Member may at any time Assign any part of such Member’s
Interest in a Permitted Transfer and the assignee of such
Member’s Interest shall be deemed to be admitted as a Member
of the Company without any further action or consent by the Members
if such Permitted Transferee has sufficient knowledge and
experience in financial and business matters so as to be capable of
evaluating the merits and risks of its investment in the assigned
Interest.

 

(c) Right of First
Refusal. A Member who wishes to
make an Assignment of such Member’s Interest to any Person,
may make such an Assignment only after complying with the
provisions of this Section 22(c).

 

(i) Any
such Member shall promptly send a notice (the
“Offer
Notice”) to the Company
and each other Member and be deemed to have offered to sell his or
her Interest (the “Offered
Interest”) otherwise
subject to the proposed Assignment to the Company and to the other
Members at the price and on the terms determined in accordance with
this Section 22.
The Offer Notice shall include a statement of the type of proposed
Assignment, the name, address (both home and business address in
the case of a natural person), and business or occupation of the
person to whom such Interest would be transferred, the
consideration for the proposed Assignment, the payment terms and
any other facts that are or would reasonably be deemed material to
the proposed Assignment.

 




 








 






 

(ii) Upon
notice of a proposed Assignment, the Company shall have the first
right and the other Members shall have the second right to purchase
all, but not less than all, of the Offered Interest for the
purchase price determined pursuant to Section 22(d)
and upon the payment terms set forth
in Section 22(e).
The Company shall exercise its right to purchase, if at all, by
irrevocable notice to the Members and the selling Member within
thirty (30) days of the date of the Offer Notice, and the remaining
Members shall exercise their right to purchase, if at all, by
irrevocable notice to the Company and the selling Member within
forty five (45) days of the date of the Offer Notice. The Members
may purchase in such proportion as they may agree or, absent
agreement, in accordance with their respective percentage Interests
(where the percentage Interests of all Members other than the
proposed assignee equals 100%). The Company shall promptly give the
remaining Members notice of the exercise by any other Members of
their right to purchase.

 

(iii) If
the Company and the other Members do not agree to buy in the
aggregate all of the Offered Interest within the applicable
exercise periods, such Assignment may be completed on terms no more
favorable to the transferee than those set forth in the Offer
Notice. If an Assignment is not consummated within sixty
(60) days after the expiration of the
applicable exercise periods, the provisions of this Agreement will
again apply to such Offered Interest as if no such Assignment had
been contemplated and no notice had been given. An Assignment is
consummated when the Company has been given notice by the parties
involved that they have transferred the Interest subject to the
Assignment to their satisfaction, subject to recordation by the
Company on its books.

 


(d) Determination of Purchase
Price.

 

(i) The
price to be paid for the Interest of a selling Member shall be the
price set forth in the Offer Notice. If the proposed Assignment is
a pledge or gift then the price to be paid for the Interest shall
be the fair market value as determined pursuant to
Section
22(d)(ii).

 

(ii) If
the non-assigning Member and the Member cannot agree on the price
to be paid for an Interest within thirty (30) days of the date of
the Offer Notice, then the independent certified public accountants
then employed by the Company (the “Accountants”)
shall determine the fair market value of the assigning
Member’s Interest, taking into account minority or
controlling interests discounts. If the Accountants are unable or
unwilling to perform such an appraisal, the Accountants shall
appoint an independent third party with not less than five (5)
years’ experience appraising similar businesses to conduct
the appraisal. The appraiser shall have thirty (30) days from the
date of appointment to report the fair market value of the
assigning Member’s Interest, and such appraisal shall be
binding. The costs of appraisal shall be evenly divided between the
Company and the assigning Member.

 




 








 






 

(e) Payment
Terms. The purchase price to be
paid upon the purchase of all or a part a Member’s Interest
under the provisions of Section 22(c)
shall be paid in cash or by wire
transfer of immediately available funds upon closing, together with
any instruments of transfer and Assignment reasonably requested by
the purchaser.

 

(f) Closing;
Payment of Purchase Price.
Whenever a right of first refusal under Section 22(c)
of this Agreement is exercised, the
purchase of the Offered Interest will take place at a closing, to
be held at 10 a.m. thirty (30) days after the date on which the
last option to buy is exercised or lapses, or after the date on
which the last buyer becomes obligated to buy, at the
Company’s office or at any other time, date and place to
which the parties agree. At the closing, the selling Member or his
or her legal representative shall execute such documents of
Assignment and transfer as the purchasers may reasonably request.
Each Member appoints the Company as such Member’s agent and
attorney-in-fact to execute and deliver all documents needed to
convey such Member’s Interest, if the selling Member is not
present at the closing. This power of attorney does not terminate
on the Member’s disability, and continues for so long as this
Agreement is in effect except as otherwise required by
law.

 

(g) Manner of
Assignment.

 

(i) No
Assignment shall be effective unless all of the following
conditions shall have been satisfied or waived by the
Company:

 

(1) the
assignee shall have furnished to the Board of Managers an executed and delivered
Assignment of the assignor’s Interest in form and substance
satisfactory to the Board of
Managers;

 

(2) the
assignee shall have executed and delivered to the
Board of Managers an undertaking of
the assignee to be bound by all the terms and provisions of this
Agreement, in form and substance satisfactory to the
Board of Managers, and such other
instruments as may be required by law;

 

(3) the
Assignment shall not result in the termination of the Company for
federal income tax purposes;

 

(4) the
Assignment shall comply with applicable federal and state
securities laws;

 

(5) the
assignee shall have paid to the Company the amount determined by
the Board of Managers to be
equal to the costs and expenses incurred in connection with such
Assignment;

 




 








 






 

(6) the
assignee shall acknowledge that the Interest has not been
registered under the Securities Act of 1933, or any applicable
state securities laws, in reliance upon exemptions therefrom, and
shall covenant, represent, and warrant that the assignee is
acquiring the Interest for investment only and not with a view to
the resale or distribution thereof; and

 

(7) the
assignee shall furnish the Board of Managers with such other similar
information or documentation as the Board of Managers may reasonably
request.

 

(ii) No
purported Assignment or other act of a Member in contravention of
the provisions of this Section 22(g)
shall be or constitute an effective
Assignment of an Interest, or otherwise be binding upon or
recognized by the Company unless the assignor and the assignee
shall have complied with the requirements of this
Section 22(g).

 

(iii) Each
Member hereby agrees to indemnify and hold harmless the Company,
and the other Members, from and against all loss, damage or
expense, including, without limitation, tax liabilities or loss of
tax benefits, arising directly or indirectly as a result of any
Assignment or purported Assignment in contravention of the
provisions of this Section 22(g).

 

(iv) Involuntary
Assignment by a Member. In the
event a Member’s Interest, or any portion thereof, is taken
by levy, foreclosure, charging order, execution or other similar
involuntary proceeding, the Company shall not dissolve, but the
statutory or other involuntary assignee of said Interest, or any
portion thereof, shall be entitled only to the right to participate
in allocations of profits and losses of the Company and the right
to receive distributions from the Company.

 

(v) Admission
of New Members. Except as
provided in Section 22(b),
no Person shall be admitted as a Member of the Company after the
date of this Agreement without approval of at least a majority of
the Managers.

 

(vi) Members’
Representative and Successors.
If a Member who is a natural person dies or a court of competent
jurisdiction adjudges the Member to be incompetent to manage his or
her person or property, the Member’s executor, administrator,
guardian, conservator or other legal representative may exercise
all the Member’s rights for the purpose of settling the
Member’s estate or administering the Member’s
property.

 

(vii) Withdrawal
of Members. No Member shall
have the right to withdraw from the Company without the consent of
a Majority in Interest (excluding the withdrawing
Member).

 




 








 






 

23. Resignation.
A Member may not resign from the Company except with the prior
written consent of the other Members. If a Member is permitted to
resign pursuant to this Section 23,
and an additional member of the Company is to be admitted as a
substitute member of the Company, such admission shall be subject
to Section 22
hereof. Such admission shall be deemed
effective immediately prior to the resignation and, immediately
following such admission, the resigning Member shall cease to be a
member of the Company.

 

24. Forfeiture of
Interests. Any Member who
commits an act of fraud against the Company or materially breaches
its fiduciary duties to the Company, as determined by a court of
competent jurisdiction, shall forfeit its Interest in the Company,
and such Interest shall immediately become null and void and shall
no longer be outstanding without any further action on the part of
the Company or any other Member.

 

25. Dissolution.

 

(a) The
Company shall be dissolved, and its affairs shall be wound up upon
the first to occur of the following: (i) the termination of
the legal existence of the last remaining member of the Company or
the occurrence of any other event which terminates the continued
membership of the last remaining member of the Company in the
Company unless the Company is continued without dissolution in a
manner permitted by this Agreement or the Act, (ii) the entry
of a decree of judicial dissolution under Section 18-802 of the Act
or (iii) the approval by at least a majority of the Managers.
Upon the occurrence of any event that causes the last remaining
member of the Company to cease to be a member of the Company (other
than (a) upon an assignment by the Member of all of its
limited liability company interest in the Company and the admission
of the transferee pursuant to Sections 22
and 24, or (b) the resignation of the current
Members and the admission of one or more additional members of the
Company pursuant to Sections
23
and 24) to the fullest extent permitted by law, the
personal representative of such member is hereby authorized to, and
shall, within 90 days after the occurrence of the event that
terminated the continued membership of such member in the Company,
agree in writing (A) to continue the Company and (B) to
the admission of the personal representative or its nominee or
designee, as the case may be, as a substitute member of the
Company, effective as of the occurrence of the event that
terminated the continued membership of the last remaining member of
the Company.

 

(b) Notwithstanding
any other provision of this Agreement to the contrary, the
Bankruptcy of a Member shall not cause such Member to cease to be a
member of the Company and upon the occurrence of such an event, the
business of the Company shall continue without
dissolution.

 




 








 






 

(c) Notwithstanding
any other provision of this Agreement, each Member waives any right
it might have to agree in writing to dissolve the Company upon its
Bankruptcy, or the occurrence of an event that causes such Member
to cease to be a member of the Company.

 

(d) In
the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the
sale of the assets of the Company in an orderly manner), and the
assets of the Company shall be applied in the manner, and in the
order of priority, set forth in Section 18-804 of the
Act.

 

(e) The
Company shall terminate when (i) all of the assets of the
Company, after payment of or due provision for all debts,
liabilities and obligations of the Company shall have been
distributed to the Members in the manner provided for in this
Agreement, and (ii) the Certificate of Formation shall have
been canceled in the manner required by the Act.

 

26. Tax Matters
Partner. SeD Ballenger, LLC, or
such other Member as the Board
of Managers may designate from time to time, shall be the Tax
Matters Partner for the Company within the meaning of Section
6231(a)(7) of the Code (the “Tax Matters
Partner”). The Tax
Matters Partner shall have the right and obligation to take all
actions authorized and required, respectively, by the Code for the
Tax Matters Partner. The Tax Matters Partner shall have the right
to retain professional assistance in respect of any audit or
controversy proceeding initiated with respect to the Company by the
IRS or any state or local taxing authority, and all expenses and
fees incurred by the Tax Matters Partner on behalf of the Company
shall constitute expenses of the Company. In the event the Tax
Matters Partner receives notice of a final partnership adjustment
under Section 6223(a)(2) of the Code, the Tax Matters Partner shall
either (i) file a court petition for judicial review of such
adjustment within the period provided under Section 6226(a) of the
Code, a copy of which petition shall be mailed to all other Members
on the date such petition is filed, or (ii) mail a written notice
to all other Members, within such period, that describes the Tax
Matters Partner’s reasons for determining not to file such a
petition.

 

27. Tax
Elections.

 

(a) Except
as otherwise provided in this Section 27,
the Board of Managers shall, in
its sole discretion, decide whether to make any available elections
under the Code or any applicable state or local tax law on behalf
of the Company.

 

(b) The
Tax Matters Partner may, upon receiving the written consent of each
other Member, make or revoke, on behalf of the Company, an election
in accordance with Section 754 of the Code, so as to adjust
the basis of Company property in the case of a distribution of
property within the meaning of Section 734 of the Code, and in
the case of a transfer of an Interest within the meaning of
Section 743 of the Code. Each Member shall, upon request of
the Tax Matters Partner, supply the information necessary to give
effect to such an election.

 




 








 






 

(c)  No
election shall be made by the Company or any Member for the Company
to be treated as a corporation, or an association taxable as a
corporation, under the Code or any provisions of any state or local
tax laws. The Company shall be treated as a partnership for U.S.
federal income tax purposes.

 

28. Waiver
of Partition; Nature of Interest. Except as otherwise expressly provided in this
Agreement, to the fullest extent permitted by law, each Member
hereby irrevocably waives any right or power that such Person might
have to cause the Company or any of its assets to be partitioned,
to cause the appointment of a receiver for all or any portion of
the assets of the Company, to compel any sale of all or any portion
of the assets of the Company pursuant to any applicable law or to
file a complaint or to institute any proceeding at law or in equity
to cause the dissolution, liquidation, winding up or termination of
the Company. No Member shall have any interest in any specific
assets of the Company, and no Member shall have the status of a
creditor with respect to any distribution pursuant to
Section 16
hereof. The interest of each Member in
the Company is personal property.

 

29. Benefits
of Agreement; No Third-Party Rights. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any creditor of the Company
or by any creditor of any Member. Nothing in this Agreement shall
be deemed to create any right in any Person (other than as a
Covered Person) not a party hereto, and this Agreement shall not be
construed in any respect to be a contract in whole or in part for
the benefit of any third Person.

 

30. Severability
of Provisions. Each provision
of this Agreement shall be considered severable and if for any
reason any provision or provisions herein are determined to be
invalid, unenforceable or illegal under any existing or future law,
such invalidity, unenforceability or illegality shall not impair
the operation of or affect those portions of this Agreement which
are valid, enforceable and legal.

 

31. Entire
Agreement. This Agreement
constitutes the entire agreement of the parties with respect to the
subject matter hereof.

 

32. Binding
Agreement. Notwithstanding any
other provision of this Agreement, each Member agrees that this
Agreement constitutes a legal, valid and binding agreement of the
Members and is enforceable against the Members in accordance with
its terms.

 

33. Governing
Law. This Agreement shall be
governed by and construed under the laws of the State of Delaware
(without regard to conflict of laws principles), all rights and
remedies being governed by said laws.

 

34. Amendments.
This Agreement may be modified, altered, supplemented or amended
pursuant to a written document executed and delivered by the
Members.

 




 








 






 

35. Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original of this Agreement and all of
which together shall constitute one and the same instrument
notwithstanding the fact that not all signatures appear on the same
page.

 

36. Notices.
Any notices required to be delivered hereunder shall be in writing
and personally delivered, mailed or sent by telecopy, electronic
mail or other similar form of rapid transmission, and shall be
deemed to have been duly given upon receipt (a) in the case of
the Company, to the Company at its address in Section 2,
(b) in the case of the Members, to each Member at its address
as listed on Schedule B
attached hereto and (c) in the
case of either of the foregoing, at such other address as may be
designated by written notice to the other
party.

 

37. Effectiveness.
Pursuant to Section 18-201(d) of the Act, this Agreement shall be
effective as of the date hereof. Other than this Agreement, any
other limited liability company agreement, operating agreement, or
any other form of ownership agreement of the Company, of any nature
whatsoever, shall be null and void with no force and
effect.

 

38. Definitions
and Rules of Construction.
Capitalized terms used and not otherwise defined herein have the
meanings set forth on Schedule A
hereto, the terms and provisions of
which are incorporated herein. The rules of construction to be
applied herein are as set forth on Schedule A
hereto.

 

39. No
Recourse. Notwithstanding
anything to the contrary contained in this Agreement, to the
fullest extent permitted by law, none of the direct or indirect
partners, shareholders, members, Managers, officers, managers,
trustees, agents or employees in or of any Member shall be
personally liable in any manner or to any extent under or in
connection with this Agreement and the Company shall not have any
recourse to any assets of any such parties.

 




 








 






IN WITNESS WHEREOF, the undersigned,
intending to be legally bound hereby, has duly executed this
Agreement as of the date first written above.

 


	
 

	


MEMBERS:


 

 


SeD
Ballenger, LLC


 

 


 

 


By: /s/
Charles
Mackenzie                                                                    


Name:


Title: 
Chief Development Officer, SeD Development Management, LLC,
Manager


 

 


 

 


 

 


CNQC
Maryland Development LLC


 

 


 

 


By: 
/s/ Genzhong
Li                                                                    


Name:


Title: 
Vice President


 

 







 

 




[Signature
Page to Limited Liability Company Agreement]

 








 










 



SCHEDULE A

 

 




DEFINITIONS AND RULES
OF CONSTRUCTION

 



A.            

Definitions.





 


When
used in this Agreement, the following terms not otherwise defined
herein have the following meanings:

 


“Act”
has the meaning set forth in the second paragraph of this
Agreement.

 


“Additional
Required Capital” has the meaning set forth in Section 14(a) hereof.

 


“Affiliate”
means, with respect to any Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect
common Control with such Person (including, without limitation, any
Person holding a direct or indirect equity interest in such
Person).

 


“Agreement”
means this Limited Liability Company Agreement of the Company,
together with all schedules attached hereto, as amended, restated,
supplemented or otherwise modified from time to time.

 


“Annual Tax
Reports” has the meaning set forth in Section 18 hereof.

 


“Applicable
Law” means all existing and future federal, state and local
laws, orders, ordinances, governmental rules and regulations and
court orders and is expressly deemed to include all zoning laws and
environmental laws.

 


“Assign”
means to effect an Assignment, by whatever means.

 


“Assignment”
means any sale, inter vivos transfer or gift, assignment, pledge,
grant of security interest, or transfer by will or trust, by
operation of law or otherwise, in or of all or any part of an
Interest.

 


“Authorized
Signatory” shall have the meaning set forth in Section 7(b) hereof.

 


“Bankruptcy”
means, with respect to any Person, if such Person (i) makes an
assignment for the benefit of creditors, (ii) files a
voluntary petition in bankruptcy, (iii) is adjudged bankrupt
or insolvent, or has entered against it an order for relief, in any
bankruptcy or insolvency proceedings, (iv) files a petition or
answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any
statute, law or regulation, (v) files an answer or other
pleading admitting or failing to contest the material allegations
of a petition filed against it in any proceeding of this nature,
(vi) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Person or of all or any
substantial part of its properties, or (vii) 120 days after
the commencement of any proceeding against the Person seeking
reorganization, arrangement, composition, readjustment, liquidation
or similar relief under any statute, law or regulation, if the
proceeding has not been dismissed, or if within 90 days after the
appointment without such Person’s consent or acquiescence of
a trustee, receiver or liquidator of such Person or of all or any
substantial part of its properties, the appointment is not vacated
or stayed, or within 90 days after the expiration of any such stay,
the appointment is not vacated. The foregoing definition of
“Bankruptcy” is intended to replace and shall supersede
and replace the definition of “Bankruptcy” set forth in
Sections 18-101(1) and 18-304 of the Act.

 



 








 






 


“Basic
Documents” means this Agreement, the Certificate of
Formation, and all documents and certificates contemplated thereby
or delivered in connection therewith.

 


“Board of
Managers” shall mean a board consisting of the Managers of
the Company appointed by the Members, which Board of Managers shall
manage the business and affairs of the Company in accordance with
the provisions of this Agreement.

 


“Budget”
has the meaning set forth in Section 8(b) hereof.

 


“Business
Day” means a day other than a Saturday, Sunday or other day
on which commercial banks in the City of New York are authorized or
required to close.

 


“Buy-out
Price” has the meaning set forth in Section 11(b) hereof.

 


“Buy-Sell
Election Date” has the meaning set forth in Section 11(c) hereof.

 


“Buy-Sell
Offer Notice” has the meaning set forth in Section 11(b) hereof.

 


“Capital
Account” has the meaning set forth in Section 13 hereof.

 


“CCRC
Multifamily Parcel” shall mean the “Land Bay D,”
described in the development plan attached as Exhibit C, consisting of
approximately six acres of land for 200 multifamily senior units
and associated parking, located in Ballenger Run, Frederick County,
MD.

 


“Certificate
of Formation” means the Certificate of Formation of the
Company filed with the Secretary of State of Delaware on October
16, 2014 as amended or amended and restated from time to
time.

 


“CNQC
Option” has the meaning set forth in Section 14(c) hereof.

 


“Code”
means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provisions of succeeding
law).

 


“Company”
shall mean SeD Maryland Development, LLC, a Delaware limited
liability company.

 


“Control”
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person (although the same may be subject to the approval of other
partners, members or other Persons), whether through the ownership
of voting securities or general partnership or managing member
interests, by contract or otherwise. “Controlling” and
“Controlled” shall have correlative meanings. Without
limiting the generality of the foregoing, a Person shall be deemed
to Control any other Person in which it owns, directly or
indirectly, a majority of the ownership interests.

 



 


 

 








 






 


“Covered
Persons” has the meaning set forth in Section 21(a) hereof.

 


“Deadlock”
has the meaning set forth in Section 11(a) hereof.

 


“Development
Work” has the meaning set forth in Section 8(a) hereof.

 


“Election
Notice” has the meaning set forth in Section 14(c) hereof.

 


“Fiscal
Year” has the meaning set forth in Section 15 hereof.

 


“Initiating
Member” has the meaning set forth in Section 11(b) hereof.

 


“Institutional
Lender” has the meaning set forth in Section 8(c) hereof.

 


“Interest”
means the entire ownership interest of a Member in the
Company.

 


“IRS”
means the Internal Revenue Service.

 


“Majority in
Interests” means Members holding fifty-one percent (51%) or
more of the Interests.

 


“Management
Agreement” has the meaning set forth in Section 9(a) hereof.

 


“Management
Company” has the meaning set forth in Section 9(a) hereof.

 


“Manager”
shall mean a Person or Persons selected from time to time to manage
the affairs of the Company under Section 10 hereof as a member of the
Board of Managers. Each Manager is hereby designated as a
“manager” within the meaning of the Act. References to
the Manager in the singular or as him, her, it, itself or other
like references, shall also be deemed, where the context so
requires, to include the plural or the masculine or feminine
reference, as the case may be.

 


“Member
Loan” has the meaning set forth in Section 14(a) hereof.

 


“Member Loan
Notice” has the meaning set forth in Section 14(b) hereof.

 


“MF
Multifamily Parcel” shall mean the “Land Bay B,”
described in the development plan attached as Exhibit C, consisting of
approximately 15 acres of land for 210 all-age multifamily units
and associated parking, located in Ballenger Run, Frederick County,
MD.

 


“New
Member” has the meaning set forth in Section 15(e) hereof.

 


“NVR Purchase
and Sale Agreements” means collectively:

 



 


 

 








 






 

(i) That
certain Assignment and Assumption Agreement –
Ballenger
Run between NVR, Inc., as
assignor (“NVR”), and the Company, dated December 10,
2014, and amended by that certain Restatement and Reinstatement of
and First Amendment to Assignment and Assumption Agreement, dated
January 9, 2015;

 

(ii) That
certain Lot Purchase Agreement – Ballenger Run – Single
Family Attached Villa between
the Company, as seller, and NVR, as purchaser, dated December 10,
2014, as amended by that certain Restatement and Reinstatement of
and First Amendment to Lot Purchase Agreement –
Ballenger Run
– Single Family Attached Villa, dated January 9, 2015;

 

(iii) That
certain Lot Purchase Agreement – Ballenger Run
–Townhouse between the
Company, as seller, and NVR, as purchaser, dated December 10, 2014,
as amended by that certain Restatement and Reinstatement of and
First Amendment to Lot Purchase Agreement –
Ballenger Run
– Townhouse, dated
January 9, 2015;

 

(iv) That
certain Lot Purchase Agreement – Ballenger Run – Large
Single Family Dwelling between
the Company, as seller, and NVR, as purchaser, dated December 10,
2014, as amended by that certain Restatement and Reinstatement of
and First Amendment to Lot Purchase Agreement –
Ballenger Run
– Large Single Family Dwelling, dated January 9, 2015;

 

(v) That
certain Lot Purchase Agreement – Ballenger Run
–Neo-Traditional Single Family Dwelling between the Company, as seller, and NVR, as
purchaser, dated December 10, 2014, as amended by that certain
Restatement and Reinstatement of and First Amendment to Lot
Purchase Agreement – Ballenger Run –
Neo-Traditional Single Family Dwelling, dated January 9, 2015; and

 

(vi) That
certain Lot Purchase Agreement – Ballenger Run
–Small Single Family Dwelling between the Company, as seller, and NVR, as
purchaser, dated December 10, 2014, as amended by that certain
Restatement and Reinstatement of and First Amendment to Lot
Purchase Agreement – Ballenger Run – Small
Single Family Dwelling, dated
January 9, 2015.

 


“Officer”
has the meaning set forth in Section 10 hereof.

 


“Partnership
Minimum Gain” shall have the meaning set forth in Treasury
Regulations Section 1.704-2(d) and any corresponding provision or
provisions of succeeding Regulations. In accordance with Treasury
Regulations Section 1.704-2(d), the amount of Partnership Minimum
Gain is determined by first computing, for each nonrecourse
liability of the Company, any gain the Company would realize if it
disposed of the property subject to that liability for no
consideration other than full satisfaction of the liability, and
then aggregating the separately computed gains. A Member’s
share of Partnership Minimum Gain shall be determined in accordance
with Treasury Regulations Section 1.704-2(g)(1).

 



 


 

 








 






 


“Partner
Nonrecourse Debt Minimum Gain” shall have the meaning set
forth in Treasury Regulations Section 1.704-2(i). A Member’s
share of Partner Nonrecourse Debt Minimum Gain shall be determined
in accordance with Treasury Regulations Section
1.704-2(i)(5).

 


“Permitted
Transfer” means (1) a gift, bequest, sale or other transfer
of an Interest or a part thereof to a member of the immediate
family of a Member (defined for purposes of this Agreement as a
Member’s spouse, descendants (either by birth or adoption
prior to age twelve (12) and ancestors) or to an express trust for
the benefit of one or more members of the immediate family of a
Member or to the beneficiaries of any trust that is a Member; or
(2) a gift, sale, or transfer of an Interest (or a part thereof) to
an Affiliate.

 


“Permitted
Transferee” means any Person who acquires an Interest in the
Company in a Permitted Transfer as set forth in Section 22 hereof.

 


“Person”
means any individual, corporation, partnership, joint venture,
limited liability company, partnership, limited partnership,
limited liability partnership, association, joint stock company,
trust, unincorporated organization, or other organization, whether
or not a legal entity, and any governmental authority.

 


“Project
Financing” has the meaning set forth in Section 8(c) hereof.

 


“Project
Financing Lender” has the meaning set forth in Section 8(c) hereof.

 


“Project
Plan” has the meaning set forth in Section 8(a) hereof.

 


“Property”
has the meaning set forth in Section 7(a) hereof.

 


“Purchase
Agreement” has the meaning set forth in the Recitals
hereof.

 


“Purchasing
Member” has the meaning set forth in Section 11(d) hereof.

 


“Responding
Member” has the meaning set forth in Section 11(b) hereof.

 


“Response
Notice” has the meaning set forth in Section 11(c) hereof.

 


“Selling
Member” has the meaning set forth in Section 11(d) hereof.

 


“Sell-out
Price” has the meaning set forth in Section 11(b) hereof.

 


“Tax Matters
Partner” has the meaning set forth in Section 26 hereof.

 


“Taxable
Year” has the meaning set forth in Section 15 hereof.

 



 


 

 








 






 


“Treasury
Regulations” means the Treasury regulations issued under the
Code, as amended and as hereafter amended from time to time.
Reference to any particular provision of the Treasury Regulations
shall mean that provision of the Treasury regulations on the date
hereof and any successor provision of the Treasury
Regulations.

 



B.            

Rules of
Construction.





 


Definitions in this
Agreement apply equally to both the singular and plural forms of
the defined terms. The words “include” and
“including” shall be deemed to be followed by the
phrase “without limitation.” The terms
“herein,” “hereof” and
“hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Section,
paragraph or subdivision. The Section titles appear as a
matter of convenience only and shall not affect the interpretation
of this Agreement. All Section, paragraph, clause, Exhibit or
Schedule references not attributed to a particular document
shall be references to such parts of this Agreement

 


.

 



 


 

 








 










 



SCHEDULE B

 


 

 


MEMBERS

 


	

Name


 

	

Mailing
Address


 

	


Amount of Cash or Agreed Value of Property Contributed


 

	


Percentage



Interest


 


	
 

	
 

	
 

	
 


	

SeD
Ballenger, LLC


 

	

4800
Montgomery Lane, Suite 210, Bethesda MD, 20814


 

	

$12,697,568


 

	

83.55%


 

 


 


	

CNQC
Maryland Development LLC


 

	

4800
Montgomery Lane Suite 210, Bethesda, MD 20814


 

	

$2,500,000


 

	

16.45%


 







 

 



 








 






 

 EXHIBIT
A




PROPERTY DESCRIPTION

 


 

 


 

 


 

 



 








 





 

 EXHIBIT
B




MANAGEMENT AGREEMENT

 

 

 

 

 

 

 

 



 








 





 


EXHIBIT
C

 



DEVELOPMENT PLAN