Document:

Exhibit 10.4

    
      
        

      

    

    Exhibit
      10.4

    

    

    

    
      

      

    

    

     

    LIMITED
      LIABILITY COMPANY AGREEMENT

    

    of

    

    

    [LEASECO,
      LLC]

    

    a
      Delaware Limited Liability Company

    

    

    

    

    Dated
      as
      of _______, 2005

    

    
 

    
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF
      CONTENTS

     

    
      	
              1.

            	 	
              DEFINED
                TERMS

            	
              1

            
	
              2.

            	 	
              ORGANIZATION

            	
              12

            
	 	 	
              2.1

            	
              Continuation

            	
              12

            
	 	 	
              2.2

            	
              Name
                and Principal Place of Business.

            	
              13

            
	 	 	
              2.3

            	
              Term

            	
              13

            
	 	 	
              2.4

            	
              Registered
                Agent and Registered Office

            	
              13

            
	 	 	
              2.5

            	
              Purpose
                of Company.

            	
              13

            
	 	 	
              2.6

            	
              Members;
                Membership Interests.

            	
              13

            
	 	 	
              2.7

            	
              Limitation
                on Liability

            	
              14

            
	 	 	
              2.8

            	
              Title
                to Company Property

            	
              14

            
	
              3.

            	 	
              CAPITAL

            	
              14

            
	 	 	
              3.1

            	
              Initial
                Capital Contributions

            	
              14

            
	 	 	
              3.2

            	
              Additional
                Capital Contributions.

            	
              14

            
	 	 	
              3.3

            	
              Return
                of Capital; No Interest on Capital

            	
              15

            
	 	 	
              3.4

            	
              No
                Third-Party Beneficiary

            	
              15

            
	 	 	
              3.5

            	
              Capital
                Accounts.

            	
              16

            
	
              4.

            	 	
              MANAGEMENT
                OF THE COMPANY

            	
              17

            
	 	 	
              4.1

            	
              Authority
                of Managing Member.

            	
              17

            
	 	 	
              4.2

            	
              Restriction
                of Managing Member’s Authority.

            	
              19

            
	 	 	
              4.3

            	
              Budgeting

            	
              20

            
	 	 	
              4.4

            	
              Managing
                Member’s Time and Effort; Conflicts

            	
              21

            
	 	 	
              4.5

            	
              Indemnification.

            	
              21

            
	 	 	
              4.6

            	
              Certificates
                and Instruments

            	
              21

            
	 	 	
              4.7

            	
              Management
                Cost Reimbursement

            	
              22

            
	 	 	
              4.8

            	
              Property
                Management.

            	
              22

            
	
              5.

            	 	
              DISTRIBUTIONS

            	
              23

            
	 	 	
              5.1

            	
              Distributions
                Generally

            	
              23

            
	 	 	
              5.2

            	
              Distributions
                of Net Cash Flow.

            	
              23

            
	 	 	
              5.3

            	
              Distributions
                Upon Final Liquidation

            	
              25

            
	 	 	
              5.4

            	
              The
                Right to Withhold

            	
              25

            
	
              6.

            	 	
              ALLOCATIONS

            	
              26

            
	 	 	
              6.1

            	
              In
                General

            	
              26

            
	 	 	
              6.2

            	
              Allocations

            	
              26

            
	 	 	
              6.3

            	
              Limitation
                on Allocation of Losses

            	
              26

            
	 	 	
              6.4

            	
              Additional
                Allocation Provisions

            	
              26

            
	
              7.

            	 	
              BOOKS
                AND RECORDS; ACCOUNTING; TAX ELECTIONS

            	
              28

            
	 	 	
              7.1

            	
              Company
                Books

            	
              28

            
	 	 	
              7.2

            	
              Records

            	
              28

            
	 	 	
              7.3

            	
              Company
                Tax Elections; Tax Controversies

            	
              29

            
	 	 	
              7.4

            	
              Fiscal
                Year

            	
              30

            
	 	 	
              7.5

            	
              Financial
                Reports

            	
              30

            
	
              8.

            	 	
              TRANSFERS
                AND ENCUMBRANCES OF COMPANY INTERESTS

            	
              31

            
	 	 	
              8.1

            	
              Restricted
                Transfers and Encumbrances

            	
              31

            
	 	 	
              8.2

            	
              Substitution
                of Approved Transferee for Member

            	
              31

            
	 	 	
              8.3

            	
              Possible
                Amendment

            	
              32

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	 	
              ADDITIONAL
                MEMBERS

            	
              32

            
	 	 	
              9.1

            	
              Admissions
                and Withdrawals

            	
              32

            
	 	 	
              9.2

            	
              Cessation
                of Managing Member

            	
              32

            
	 	 	
              9.3

            	
              New
                Managing Member

            	
              33

            
	
              10.

            	 	
              DISSOLUTION
                AND WINDING UP

            	
              33

            
	 	 	
              10.1

            	
              Dissolution
                and Distributions of Property

            	
              33

            
	 	 	
              10.2

            	
              Dissolution
                Events

            	
              33

            
	 	 	
              10.3

            	
              Liquidation
                and Final Distribution Proceeds.

            	
              34

            
	 	 	
              10.4

            	
              Cancellation
                of Certificate

            	
              34

            
	 	 	
              10.5

            	
              No
                Capital Contribution Upon Dissolution

            	
              34

            
	
              11.

            	 	
              REPRESENTATIONS,
                WARRANTIES AND COVENANTS OF THE MEMBERS

            	
              34

            
	 	 	
              11.1

            	
              Authority

            	
              35

            
	 	 	
              11.2

            	
              Consents

            	
              35

            
	 	 	
              11.3

            	
              No
                Conflict

            	
              35

            
	 	 	
              11.4

            	
              No
                Broker

            	
              35

            
	 	 	
              11.5

            	
              Foreign
                Partner

            	
              35

            
	
              12.

            	 	
              BUY-SELL
                DISPUTE RESOLUTION.

            	
              35

            
	 	 	
              12.2

            	
              Closing

            	
              36

            
	 	 	
              12.3

            	
              Buy-Sell
                Default

            	
              37

            
	 	 	
              12.4

            	
              Payment
                of Debts

            	
              38

            
	 	 	
              12.5

            	
              Release
                of Capital Contribution Obligations

            	
              38

            
	 	 	
              12.6

            	
              Operations
                in Pre-Closing Period

            	
              38

            
	
              13.

            	 	
              MISCELLANEOUS

            	
              39

            
	 	 	
              13.1

            	
              Waiver
                of Conflict of Interest

            	
              39

            
	 	 	
              13.2

            	
              Amendment
                by Members

            	
              39

            
	 	 	
              13.3

            	
              Amendment
                by Managing Member

            	
              39

            
	 	 	
              13.4

            	
              Waivers

            	
              39

            
	 	 	
              13.5

            	
              No
                Assignments; Binding Effect

            	
              39

            
	 	 	
              13.6

            	
              Notices

            	
              39

            
	 	 	
              13.7

            	
              Certain
                Waivers

            	
              40

            
	 	 	
              13.8

            	
              Preservation
                of Intent

            	
              40

            
	 	 	
              13.9

            	
              Entire
                Agreement

            	
              40

            
	 	 	
              13.10

            	
              Certain
                Rules of Construction

            	
              40

            
	 	 	
              13.11

            	
              Counterparts

            	
              41

            
	 	 	
              13.12

            	
              Governing
                Law; Venue

            	
              41

            

    

     

    Exhibits

    
      
        	
                A

              	
                Members,
                  Capital Contributions and Capital Sharing Ratios

              
	
                1.1

              	
                Membership
                  Interests and Owner Entities

              
	
                1.2

              	
                Description
                  of the Property

              
	
                1.3

              	
                Form
                  of Lease

              
	
                2.5.2

              	
                Owner
                  Entity Operating Agreement

              
	
                3.1.2

              	
                Pre-Closing
                  Costs Reimbursable Amounts

              
	
                4.3

              	
                Initial
                  Operating Budget and Business Plan

              
	
                4.8

              	
                Management
                  Agreement

              

      

    

     

    
      
      

      
        
          

        

      

      
      

    

    Index
      of Defined Terms

     

    
      
        	
                Act

              	
                1

              	 	
                Member
                  Loan Interest Rate

              	
                8

              
	
                Adjusted
                  Capital Account

              	
                1

              	 	
                Member
                  Minimum Gain

              	
                8

              
	
                Adjusted
                  Capital Account Deficit

              	
                2

              	 	
                Member
                  Nonrecourse Debt

              	
                8

              
	
                Affiliate

              	
                2

              	 	
                Member
                  Nonrecourse Deductions

              	
                8

              
	
                Agreement

              	
                1

              	 	
                Members

              	
                1,
                  8

              
	
                Agreement
                  Date

              	
                1

              	 	
                Membership
                  Interest

              	
                8

              
	
                Business
                  Day

              	
                2

              	 	
                Mystic
                  Member

              	
                1,
                  8

              
	
                Buy-Sell
                  Closing Date

              	
                36

              	 	
                Net
                  Cash Flow

              	
                8

              
	
                Buy-Sell
                  Option

              	
                35

              	 	
                Net
                  Operating Income

              	
                8

              
	
                Capital
                  Account

              	
                15

              	 	
                Non-Discretionary
                  Expenses

              	
                9

              
	
                Capital
                  Contribution

              	
                2

              	 	
                Non-Managing
                  Member

              	
                9

              
	
                Capital
                  Contribution Default

              	
                14

              	 	
                Nonrecourse
                  Deductions

              	
                9

              
	
                Capital
                  Proceeds

              	
                2

              	 	
                Offeree

              	
                35

              
	
                Capital
                  Sharing Ratio

              	
                2

              	 	
                Offeror

              	
                35

              
	
                Capital
                  Transaction

              	
                2

              	 	
                Old
                  Plan

              	
                20

              
	
                Cause

              	
                3

              	 	
                Operating
                  Account

              	
                22

              
	
                Certificate
                  of Formation

              	
                1

              	 	
                Operating
                  Budget

              	
                20

              
	
                Change
                  in Control

              	
                3

              	 	
                Operating
                  Expenses

              	
                9

              
	
                Code

              	
                3

              	 	
                Operating
                  Revenues

              	
                9

              
	
                Company

              	
                1

              	 	
                Owner
                  Entity

              	
                9

              
	
                Company
                  Minimum Gain

              	
                3

              	 	
                Patriot
                  Act

              	
                18

              
	
                Conflicting
                  Activity

              	
                20

              	 	
                Permitted
                  Expense

              	
                7

              
	
                Contribution
                  Account

              	
                3

              	 	
                Person

              	
                10

              
	
                Control

              	
                3

              	 	
                Preferred
                  Return

              	
                10

              
	
                Defaulted
                  Acquirer

              	
                37

              	 	
                Preferred
                  Return Account

              	
                10

              
	
                Defaulted
                  Amount

              	
                14

              	 	
                Profits

              	
                10

              
	
                Depreciation

              	
                3

              	 	
                Properties

              	
                1

              
	
                Development
                  Asset

              	
                4

              	 	
                Property

              	
                1

              
	
                Development
                  Assets

              	
                4

              	 	
                Property
                  Manager

              	
                22

              
	
                Dissolution
                  Event

              	
                4

              	 	
                Regulatory
                  Allocations

              	
                27

              
	
                Distributable
                  Funds

              	
                23

              	 	
                Removal
                  Event

              	
                32

              
	
                Effective
                  Date

              	
                39

              	 	
                Replacement
                  Acquirer

              	
                37

              
	
                Encumbrance

              	
                4

              	 	
                Residual
                  Sharing Ratios

              	
                11

              
	
                Entity

              	
                4

              	 	
                Stabilized
                  Asset Property

              	
                11

              
	
                Event
                  of Bankruptcy

              	
                4

              	 	
                Stabilized
                  Assets

              	
                11

              
	
                Gross
                  Asset Value

              	
                5

              	 	
                Tax
                  Contest

              	
                11

              
	
                Gross
                  Revenue

              	
                6

              	 	
                Tax
                  Correspondence

              	
                11

              
	
                Hartford
                  Hilton

              	
                4

              	 	
                Tax
                  Liability Distribution

              	
                25

              
	
                Hartford
                  Marriott

              	
                4

              	 	
                Tax
                  Matters Member

              	
                28

              
	
                Initiating
                  Notice

              	
                35

              	 	
                Tax
                  Matters Partner

              	
                28

              
	
                Lease

              	
                6

              	 	
                Transfer

              	
                11

              
	
                Lessee

              	
                6

              	 	
                Transferred

              	
                11

              
	
                Losses

              	
                10

              	 	
                TRS
                  Class A Member

              	
                12

              
	
                Major
                  Decision

              	
                6

              	 	
                TRS
                  Class A Membership Interest

              	
                12

              
	
                Major
                  Dispute

              	
                8

              	 	
                TRS
                  Class B Member

              	
                12

              
	
                Major
                  Dispute Notice

              	
                19

              	 	
                TRS
                  Class B Membership Interest

              	
                12

              
	
                Management
                  Agreements

              	
                22

              	 	
                TRS
                  Member

              	
                1,
                  12

              
	
                Management
                  Fee

              	
                22

              	 	
                Valuation
                  Amount

              	
                35

              
	
                Managing
                  Member

              	
                8

              	 	
                Working
                  Capital

              	
                23

              
	
                Member

              	
                1

              	 	
                Written
                  Submission

              	
                29

              
	
                Member
                  Loan

              	
                15

              	 	 	 

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    LIMITED
      LIABILITY COMPANY OPERATING AGREEMENT

    of

    LEASECO,
      LLC

    

    

    THIS
      LIMITED LIABILITY COMPANY OPERATING AGREEMENT
      (this
“Agreement”)
      of
      [LEASECO], LLC (the “Company”)
      is
      made and entered into as of ____________, 2005 (the “Agreement
      Date”)
      by and
      among [HERSHA TRS, LLC], a Virginia limited partnership, having an address
      at
      510 Walnut Street, 9th
      fl.,
      Philadelphia PA 19106 (“TRS
      Member”),
      and
      [MYSTIC
      LEASE AFFILIATE], LLC,
      a
      Delaware limited liability company having an address at 914 Hartford Turnpike,
      P.O. Box 715, Waterford, CT 06385 (collectively, “Mystic
      Member”).
      TRS
      Member and Mystic Member are sometimes hereinafter collectively referred to
      as
      the “Members”
      and
      individually as a “Member”.

    

    W I T N E S S E T H:

    

    WHEREAS:

    

    Affiliates
      of the Members own all of the membership interests in Mystic Partners, LLC;
      and

    

    Mystic
      Partners, LLC owns all of the membership interests in each of the Owner
      Entities; and

    

    The
      Owner
      Entities collectively own or have a leasehold interest in the respective land,
      and the hotel and other improvements located thereon (each, individually, a
      “Property”
      and
      collectively, the “Properties”),
      all
      as more particularly described on Exhibit
      1.1;
      and

    

    The
      parties hereto desire to form a limited liability company to own membership
      interests in the Lessee subsidiaries that will lease the respective Properties
      from the Owner Entities and to operate the Properties as hotels in accordance
      with the Lease (as defined below); and

    

    The
      Company was formed pursuant to a Certificate of Formation (the “Certificate
      of Formation”)
      filed
      with the Delaware Secretary of State on ___________, 2005.

    

    NOW,
      THEREFORE, in consideration of the mutual covenants and promises contained
      herein and for other good and valuable consideration, the receipt and adequacy
      of which are hereby acknowledged, the parties hereto agree as
      follows:

     

     

    
      	
              1.

            	
              DEFINED
                TERMS

            

    

    

    In
      addition to the defined terms set forth above and elsewhere in this Agreement,
      the following terms shall have the definitions hereinafter indicated whenever
      used in this Agreement with initial capital letters:

    

    “Act”
      means
      the Delaware Limited Liability Company Act, as previously or hereafter
      amended.

    

    “Adjusted
      Capital Account”
      means,
      with respect to any Member, the balance, if any, in such Member’s Capital
      Account as of the end of the relevant taxable year, after: (i) crediting to
      such
      Capital Account any amounts that such Member is obligated to restore pursuant
      to
      Regulations Section 1.704-1(b)(2)(ii)(c) (or is deemed to be obligated to
      restore pursuant to the penultimate sentences of Regulations Sections
      1.704-2(g)(1) and 1.704-2(i)(5)) and (ii) debiting from such Capital Account
      the
      items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and
      (6).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Adjusted
      Capital Account Deficit”
      means,
      with respect to any Member, the deficit balance, if any, in such Member’s
      Adjusted Capital Account.

    

    The
      foregoing definitions of Adjusted Capital Account and of Adjusted Capital
      Account Deficit are intended to comply with the provisions of Regulation Section
      1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
      therewith.

    

    “Affiliate”
      means a
      Person that directly or indirectly, through one or more intermediaries, has
      Control of or is Controlled by, or is under common Control with, the Person
      specified. “Affiliate” shall also include the spouse, ancestors, descendents and
      siblings of any Person that is an individual, Affiliates of such family members
      and trusts for the benefit of an Affiliate of the relevant Person.

    

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

    

    “Capital
      Contribution”
      means,
      with respect to any Member, the amount of money and the initial Gross Asset
      Value of any property (other than money) contributed to the Company by such
      Member, less the amount of liabilities of such Member assumed by the Company
      or
      that are secured by any property contributed by such Member to the Company.
      The
      initial Capital Contributions of the Members are as set forth on Exhibit
      A.

    

    “Capital
      Proceeds”
      means
      the net proceeds of a Capital Transaction distributed to the Company by a
      Lessee.

    

    “Capital
      Sharing Ratio”
      means
      the percentages in which the Members participate in, and bear, certain Company
      items. The initial Capital Sharing Ratios of the Members are as
      follows:

    

    
      	 	
              TRS
                Class A Member:

            	
              66.7%
                with respect to Stabilized Assets Properties and 0% with respect
                to
                Development Assets Properties

            

    

    

    
      	 	
              TRS
                Class B Member:

            	
              0%
                with respect to Stabilized Assets Properties and 50% with respect
                to
                Development Assets Properties

            

    

    

    
      	 	
              Mystic
                Member:

            	
              33.3%
                with respect to Stabilized Assets Properties and 50% with respect
                to
                Development Assets Properties

            

    

    

    “Capital
      Transaction”
      means
      insurance proceeds or other damages in respect of any Property are recovered
      by
      the Company any other transaction that, in accordance with generally accepted
      accounting principles, is considered capital in nature.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Cause”
      means
      the existence or occurrence of any of the following events or conditions with
      respect to (1) a Member, (2) any Controlling Affiliate of a Member or
      (3) any Affiliate of a Member regardless of whether Controlling, if
      such
      Affiliate or its executive officers and employees have direct involvement in
      the
      Company or any Property, as the case may be: (a) the indictment for a felony
      involving a crime or crimes of moral turpitude or dishonesty or for a Patriot
      Act (hereinafter defined) offense (in each case, whether or not convicted),
      misapplication, conversion or theft of any funds belonging to the Company;
      or
      (b) the commission of fraud, gross negligence or willful misconduct
      with
      respect to the Company or any Property. For the avoidance of doubt, the
      indictment of a Member or any executive officer or employee of them for a felony
      involving a crime or crimes of moral turpitude or dishonesty (whether or not
      convicted), or the misapplication of funds belonging to the Company or the
      commission of fraud, gross negligence or willful misconduct with respect to
      the
      Company or any Property shall not be curable and “Cause” shall be deemed to
      exist upon the occurrence or existence of any such event.

    

    “Change
      in Control”
      means,
      with respect to any Person, the occurrence of any of the following:

    

    (i)    
       the
      sale
      of all or substantially all of that Person’s assets;

    

    (ii)  
        the
      merger, reorganization, share exchange, recapitalization, restructuring or
      consolidation of that Person, if such transaction would result in the voting
      securities of that Person outstanding immediately prior thereto no longer
      representing (either by remaining outstanding or by being converted into voting
      securities of the surviving entity) at least 50% of the combined voting power
      of
      the voting securities of that Person or such surviving entity outstanding
      immediately after such transaction;

    

    (iii) 
        the
      acquisition by any “Person” or “Group” (within the meaning of Sections 13(d) and
      14(d)(2) of the Securities Exchange Act of 1934) of an aggregate of 50% or
      more
      of the beneficial ownership (within the meaning of Rule 13d-3 of the Securities
      Exchange Act of 1934) of the issued and outstanding voting securities of that
      Person.

    

    “Code”
      means
      the Internal Revenue Code of 1986, as previously or hereafter
      amended.

    

    “Company
      Minimum Gain”
      means
“partnership minimum gain” as defined in Treasury Regulation Section
      1.704-2(d).

    

    “Contribution
      Account”
      means,
      with respect to each Member, an account maintained for such Member on the
      Company’s books and records in the amount of that Member’s Capital
      Contributions, but in no event less than zero.

    

    “Control”
      (including the terms “controlling”, “controlled by” or “under common control
      with”) means the possession, directly or indirectly, through one or more
      intermediaries, of the power to direct or cause the direction of the management
      or policies of a Person, whether through the ownership of voting securities,
      by
      contract or otherwise.

    

    “Depreciation”
      means,
      for each fiscal year or other period, an amount equal to the federal income
      tax
      depreciation, amortization or other cost recovery deduction allowable with
      respect to an asset for such year or other period, except that if the Gross
      Asset Value of an asset differs from its adjusted basis for federal income
      tax
      purposes at the beginning of such year or other period, Depreciation shall
      be an
      amount that bears the same ratio to such beginning Gross Asset Value as the
      federal income tax depreciation, amortization or other cost recovery deduction
      for such year or other period bears to such beginning adjusted tax basis;
      provided, however, that if the federal income tax depreciation, amortization
      or
      other cost recovery deduction for such year is zero, Depreciation shall be
      determined with reference to such beginning Gross Asset Value using any
      reasonable method selected by Tax Matters Member.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Development
      Assets”
      means
      the following Properties: Hartford Hilton, Hartford, CT (the “Hartford
      Hilton”);
      and
      the Hartford Marriott, Hartford, CT (the “Hartford
      Marriott”),
      but
      only, in the case of the Hartford Marriott, from and after the date (if ever)
      that a Lessee shall lease the Hartford Marriott Property.

    

    “Dissolution
      Event”
      means
      any event specified in Section
      10.2
      that
      results in the dissolution and winding up of the Company.

    

    “Encumbrance”
      means a
      pledge, alienation, mortgage, hypothecation, encumbrance, lien or collateral
      assignment by any other means, whether for value or no value and whether
      voluntary or involuntary (including by operation of law or by judgment, levy,
      attachment, garnishment, bankruptcy or other legal or equitable
      proceedings).

    

    “Entity”
      means
      any general partnership, limited partnership, limited liability partnership,
      corporation, limited liability company, joint venture, trust, business trust,
      cooperative or association.

    

    “Event
      of Bankruptcy”
      means,
      with respect to any Person, the occurrence of:

    

    
      	 	
              ·

            	
              an
                assignment by the Person for the benefit of
                creditors;

            

    

    

    
      	 	
              ·

            	
              the
                filing by the Person of a voluntary petition in
                bankruptcy;

            

    

    

    
      	 	
              ·

            	
              the
                entry of a judgment by any court that the Person is bankrupt or insolvent,
                or the entry against the Person of an order for relief in any bankruptcy
                or insolvency proceeding;

            

    

    

    
      	 	
              ·

            	
              the
                filing of a petition or answer by the Person seeking for itself any
                reorganization, arrangement, composition, readjustment, liquidation,
                dissolution or similar relief under any statute, law or
                regulation;

            

    

    

    
      	 	
              ·

            	
              the
                filing by the Person of an answer or other pleading admitting or
                failing
                to contest the material allegations of a petition filed against it
                in any
                proceeding for reorganization or of a similar
                nature;

            

    

    

    
      	 	
              ·

            	
              the
                consent or acquiescence of the Person to the appointment of a trustee,
                receiver or liquidator of the Person or of all or any substantial
                part of
                its properties; or

            

    

    

    
      	 	
              ·

            	
              any
                event or occurrence not included in the foregoing list that is referenced
                in Section 18-304 of the Act.

            

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Gross
      Asset Value”
      means,
      with respect to any asset, the asset’s adjusted basis for federal income tax
      purposes, except as follows:

    

    A.          
      The
      initial Gross Asset Value of any asset contributed by a Member to the Company
      shall be the gross fair market value of such asset, as determined by TRS Member
      and Mystic Member (acting together), or pursuant to the Contribution Agreement,
      as applicable.

    

    B.        
         The
      Gross
      Asset Values of all Company assets shall be adjusted to equal their respective
      gross fair market values, as determined by TRS Member and Mystic Member (acting
      together), as of the following times:

    

    i.    
        immediately
      prior to the acquisition of an additional interest in the Company by a new
      or
      existing Member, if Managing Member reasonably determines that such adjustment
      is necessary or appropriate to reflect the relative economic interests of the
      Members in the Company;

    

    ii.    
       immediately
      prior to the distribution by the Company to a Member of more than a de
      minimis amount
      of
      Company property as consideration for an interest in the Company, if Managing
      Member reasonably determines that such adjustment is necessary or appropriate
      to
      reflect the relative economic interests of the Members in the
      Company;

    

    iii.   
       immediately
      prior to the liquidation of the Company within the meaning of Regulations
      Section 1.704-1(b)(2)(ii)(g); and

    

    iv.   
        at
      such
      other times as Managing Member shall reasonably determine necessary or advisable
      in order to comply with Regulations Sections 1.704-1(b) and
      1.704-2.

    

    C.       
         The
      Gross
      Asset Value of any Company asset distributed to a Member shall be the gross
      fair
      market value of such asset on the date of distribution as determined by TRS
      Member and Mystic Member (acting together).

    

    D.       
        The
      Gross
      Asset Values 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);
      provided, however,
      that
      Gross Asset Values shall not be adjusted pursuant to this clause D to the extent
      that Managing Member determines that an adjustment pursuant to clause B is
      necessary or appropriate in connection with a transaction that would otherwise
      result in an adjustment pursuant to this clause D.

    

    E.         
       If
      the
      Gross Asset Value of a Company asset has been determined or adjusted pursuant
      to
      clauses A, B or D of this definition, such Gross Asset Value shall thereafter
      be
      adjusted by the Depreciation taken into account with respect to such Company
      asset for purposes of computing Profits and Losses.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Gross
      Revenue”
      shall
      mean, as to any Year, all revenues and receipts of every kind derived from
      the
      operation of the Property and all departments and parts thereof, including,
      but
      not limited to, receipts (from both cash and credit transactions), before
      commissions and discounts for prompt or cash payments, from the rental of guest
      rooms, meeting rooms, stores, offices, exhibit or sales space of any kind,
      parking charges, license and concession fees and rentals (but not including
      the
      gross receipts of any licensees, lessees and concessionaires), booking fees,
      telephone and television viewing charges, food and beverage sales, wholesale
      and
      retail sales, proceeds, if any, from business interruption or other loss of
      income insurance; provided, however, Gross Revenues shall not included
      gratuities to Property employees or Federal, State and Municipal excise, sales
      and use taxes or similar impositions collected directly from patrons or guests
      or included as part of the sales price of any goods or services.

    

    “Lease”
      means a
      Lease Agreement with respect to the Properties between a Lessee and each
      respective Owner Entity as Lessor, substantially in the form attached hereto
      as
Exhibit
      1.2.

    

    “Lessee”
      means
      an entity in which the Company owns all or part of the outstanding Membership
      Interests and that has entered into a Lease with an Owner Entity.

    

    “Major
      Decision”
      means
      any decision regarding each of the matters described below:

    

    
      	 	
              ·

            	
              The
                financing or refinancing of any Lease or the incurrence of any secured
                or
                unsecured borrowings or other indebtedness by the Company, or any
                Lessee
                including determination of the terms and conditions thereof, and
                any
                amendments to such terms and conditions or the prepayment in whole
                or in
                part of any loan or other type of financing with respect to the Company
                or
                any Lessee;

            

    

    

    
      	 	
              ·

            	
              Any
                sale, transfer, grant of option, exchange, mortgage, financing,
                hypothecation or encumbrance or abandonment of all, or any part of
                or any
                interest in the Company any Lessee or any Lease or other material
                asset of
                the Company), and, in each such case, the material terms and conditions
                thereof;

            

    

    

    
      	 	
              ·

            	
              Any
                acquisition by the Company or any Lessee of any interest in any real
                property or other material asset;

            

    

    

    
      	 	
              ·

            	
              The
                requirement of any additional Capital
                Contributions;

            

    

    

    
      	 	
              ·

            	
              The
                approval or adoption of an annual Operating Budget, and any material
                amendment, modification or other change thereto or deviation
                therefrom;

            

    

    

    
      	 	
              ·

            	
              The
                amendment or replacement of any franchise agreement with respect
                to any
                Property that is a hotel;

            

    

    

    
      	 	
              ·

            	
              The
                entering into, amendment or replacement of a
                Lease;

            

    

    

    
      	 	
              ·

            	
              Other
                than as provided in Section
                4.8,
                the selection of a Property Manager, and any amendment of any Management
                Agreement;

            

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      	 	
              ·

            	
              The
                incurring of any cost or expense or incurring of any obligation or
                liability by or for the Company or a Lessee that is not a Permitted
                Expense; for such purposes, “Permitted
                Expense”
                shall mean (i) Operating Expenses, capital expenditures, replacements
                and
                debt service as set forth in the approved Operating Budget, (ii)
                emergency
                expenses, (iii) with respect to each item in the Operating Budget
                (other
                than Non-Discretionary Expenses), the expenditure contemplated by
                such
                Operating Budget item plus 10% of each such item, (iv) Non-Discretionary
                Expenses and (v) any reasonable costs or expenses incurred in implementing
                a Major Decision approved by all Members and not otherwise already
                included in an Operating Budget;

            

    

    

    
      	 	
              ·

            	
              The
                selection or replacement of the Company’s or any Lessee’s accountants,
                legal counsel, or other material
                advisors;

            

    

    

    
      	 	
              ·

            	
              The
                taking, initiation, prosecution, stipulation or settlement or any
                similar
                action with respect to any legal action or dispute on behalf of the
                Company or any Lessee, with any third party or government or regulatory
                agency, except in the ordinary course of
                business;

            

    

    

    
      	 	
              ·

            	
              The
                commencement of any case, proceeding or other action seeking protection
                for the Company or any Lessee as debtor under any existing or future
                law
                of any jurisdiction or otherwise relating to an Event of Bankruptcy,
                insolvency, reorganization or relief of
                debtors;

            

    

    

    
      	 	
              ·

            	
              Issuance
                of any press release or other written materials regarding the Company,
                any
                Lessee, any Property or any other
                Member;

            

    

    

    
      	 	
              ·

            	
              Changes
                in the depreciation or accounting methods or other methods with respect
                to
                the tax or accounting treatment of Company or Lessee
                transactions;

            

    

    

    
      	 	
              ·

            	
              Extension
                of the existence of the Company beyond the date set forth in Section
                2.3;

            

    

    

    
      	 	
              ·

            	
              Entering
                into, amending, modifying or changing any contract or agreement by
                the
                Company or any Lessee with an Affiliate of any Member, or employing
                or
                paying any compensation to such Affiliate, except as expressly permitted
                by this Agreement or the Lease or the Management
                Agreement;

            

    

    

    
      	 	
              ·

            	
              Establishment
                of and amounts to be held as operating reserves and contingency reserves
                for the Company or any Lessee;

            

    

    

    
      	 	
              ·

            	
              Except
                in accordance with Section
                5.2,
                the making of any distributions of the
                Company;

            

    

    

    
      	 	
              ·

            	
              The
                appointment of replacement or additional officers of the Company,
                it being
                agreed by the Members that the initial officers of the Company shall
                be
                Del Lauria, President, Mark Wolman, Vice President and Glenn Jette,
                Treasurer, and it being further agreed that such officers shall have
                the
                powers and duties as Managing Member shall from time to time determine
                necessary or convenient for the conduct of the Company’s business;
                and

            

    

    

    
      	 	
              ·

            	
              Matters
                set forth in Section
                4.2.1.

            

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Major
      Dispute”
      means
      the failure of the Members to agree upon or approve any Major Decision or other
      action requiring the consent of all Members, in accordance with Section
      4.2.

    

    “Managing
      Member”
      means
      Mystic Member, initially, or any other Person who is hereafter appointed as
      a
      managing member of the Company in accordance with this Agreement and applicable
      law, until the date that such Person resigns or is removed from its role as
      a
      managing member.

    

    “Member
      Loan Interest Rate”
      means a
      simple rate of interest equal to the prime rate of U.S. money center commercial
      banks as published in The
      Wall Street Journal
      (or if
      more than one such rate is published, the average of such rates), plus two
      percent per annum.

    

    “Member
      Minimum Gain”
      means
      minimum gain attributable to “partner non-recourse debt” determined in
      accordance with Treasury Regulation Section 1.704-2(i).

    

    “Member
      Nonrecourse Debt”
      means
“partner nonrecourse debt” as defined in Treasury Regulation Section
      1.704-2(b)(4).

    

    “Member
      Nonrecourse Deductions”
      means
“partner nonrecourse deductions” as defined in Treasury Regulation Section
      1.704-2(i)(2).

    

    “Members”
      mean,
      collectively, TRS Member and Mystic Member and/or any other Person hereafter
      admitted as a member of the Company in accordance with this Agreement and
      applicable law.

    

    “Membership
      Interest”
      means
      the interest, as a Member, of any Person in the Company.

    

    “Minority
      Interests”
      means
      the ownership interest of any Person (other than the Company) in an Owner Entity
      that owns any Part Owned Property.

    

    “Minority
      Interest Holder”
      means
      any Person that owns a Minority Interest.

    

    “Mystic
      Member”
      has the
      meaning set forth in the Preamble hereto.

    

    “Net
      Cash Flow”
      means,
      with respect to any fiscal year or other accounting period, Net Operating Income
      less (a) rents paid to the Owner Entities, less (b) capital expenditures not
      paid from (i) reserves, (ii) capital contributions to the Company by its members
      or (iii) Capital Transactions, less (c) increases or decreases in reserves
      for
      working capital, operating deficits and capital items established by the Members
      or such other amount as may be approved by the Members, less (d) Incentive
      Fees.

    

    “Net
      Operating Income”
      means,
      for any period, Operating Revenues, less (i) Operating Expenses, less (ii)
      real
      property and personal property taxes, income taxes, and other taxes other than
      payroll taxes paid by the Company, less (iii) insurance premiums and
      deductibles, less (iv) leases or purchase money financing of FF&E or of real
      property and improvements, less (v) Base Fees and fees payable to the asset
      manager, less (vi) Company-related expenses, and less (vii) additions to any
      operating and replacement reserves, in the amount of

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    for
      Stabilized Assets: 4% of Gross Revenue, until the second anniversary of the
      date
      hereof, and 5% of Gross Revenue thereafter,

    

    for
      the
      Hartford Hilton: 3% of Gross Revenue, until the second anniversary of the date
      hereof, thereafter 4% of Gross Revenue until the fourth anniversary of the
      date
      hereof, and 5% of Gross Revenue thereafter,

    

    for
      the
      Hartford Marriott (if applicable): $0 until the first anniversary of the date
      hereof, thereafter 3% of Gross Revenue until the fifth anniversary of the date
      hereof, and 4% of Gross Revenue thereafter,

    

    or
      such
      higher amount as may be required pursuant to the franchise agreement or loan
      with respect to the applicable hotel.

    

    [NOTE:
      INCOME AND EXPENSE RELATED DEFINITIONS TO BE CONFORMED WITH THE FINAL STRUCTURE
      OF COMPANY HOLDINGS, AS AGREED BY THE PARTIES IN GOOD FAITH. RESERVE
      REQUIREMENTS MAY BE REFERENCED IN OWNER ENTITY OPERATING
      AGREEMENTS]

    

    “Non-Discretionary
      Expenses”
      shall
      mean third party expenses over which Managing Member and the Property Manager
      have no control (including, for example, and without limitation, items that
      are
      budgeted for and/or approved by the Members, taxes, water and sewer costs and
      assessments, union labor contract costs and property-related expenses reasonably
      required to be incurred as a result of force
      majeure).

    

    “Non-Managing
      Member”
      means
      any Member(s) other than Managing Member.

    

    “Nonrecourse
      Deductions”
      means
      deductions as described in Treasury Regulation Section 1.704-2(c).

    

    “Operating
      Expenses”
      means,
      for any period, the current obligations of the Company for such period,
      determined in accordance with sound accounting principles approved by the
      Company and applicable to commercial real estate, consistently applied, for
      operating expenses of the Property. Operating Expenses shall not include any
      non-cash expenses such as depreciation or amortization.

    

    “Operating
      Revenues”
      means,
      for any period, the gross revenues of the Company arising from the operations
      of
      the Properties during such period, including proceeds of any business
      interruption insurance, but specifically excluding the proceeds of Capital
      Transactions or capital contributions made by members.

    

    “Owner
      Entity”
      means
      an Entity that owns a Property.

    

    “Part
      Owned Property”
      means
      any Property that is not wholly owned by the Company or by a wholly owned
      subsidiary of the Company. On the date hereof, the following Properties are
      a
      Part Owned Property:

    Residence
      Inn, Danbury, CT;

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    [Hartford
      Marriott, Hartford, CT; to be included only if and when the membership interests
      in the company owning the Hartford Marriott are acquired by the
      Company];

    

    

    Hartford
      Hilton, Hartford, CT;

    Dunkin
      Donuts, 790 West St., Southington, CT; and

    Residence
      Inn Southington, Southington, CT.

    

    “Person”
      means
      and includes any individual or Entity.

    

    “Preferred
      Return”
      means,
      for each Member, an amount that accrues on the average daily balance of such
      Member’s Contribution Account at a per annum rate of eight and one-half percent
      (8.5%) from the date such Member’s Capital Contributions are made until the
      Preferred Return is paid to the respective contributing Member as provided
      herein. The Preferred Return of the Members shall not be
      compounded.

    

    “Preferred
      Return Account”
      means
      for each Member an account maintained for such Member to which shall be credited
      the accrued Preferred Return of such Member and from which shall be debited
      the
      amount of any distributions of the Preferred Return to such Member pursuant
      to
Sections
      5.2.2.A
      or
5.2.2.B
      hereof
      as well as any distribution of the “Preferred Return” as defined in the Limited
      Liability Company Agreement of Mystic Partners, LLC.

    

    “Profits”
      and
“Losses”
      means
      for each fiscal year or other period an amount equal to the Company’s taxable
      income or loss with respect to the relevant period, determined in accordance
      with Code Section 703(a) (for this purpose, all items of income, gain, loss
      or
      deduction required to be stated separately pursuant to Code Section 703(a)(1)
      shall be included in taxable income or loss), with the following
      adjustments:

    

    
      	 	
              ·

            	
              Any
                income of the Company that is exempt from federal income tax and
                not
                otherwise taken into account in computing Profits and Losses pursuant
                to
                this clause shall be added to such taxable income or
                loss;

            

    

    

    
      	 	
              ·

            	
              Any
                expenditures of the Company described in Code Section 705(a)(2)(B)
                or
                treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations
                Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
                in
                computing Profits or Losses pursuant to this clause, shall be subtracted
                from such taxable income or loss;

            

    

    

    
      	 	
              ·

            	
              If
                the Gross Asset Value of any Company asset is adjusted pursuant to
                clauses
                B or C of the definition of Gross Asset Value, the amount of such
                adjustment shall be taken into account in the taxable year of adjustment
                as gain or loss from the disposition of such asset for purposes of
                computing Profits or Losses;

            

    

    

    
      	 	
              ·

            	
              Gain
                or loss resulting from any disposition of Company property with respect
                to
                which gain or loss is recognized for federal income tax purposes
                shall be
                computed by reference to the Gross Asset Value of the property disposed
                of, notwithstanding that the adjusted tax basis of such property
                differs
                from its Gross Asset Value;

            

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
      	 	
              ·

            	
              In
                lieu of the depreciation, amortization and other cost recovery deductions
                taken into account in computing such taxable income or loss, there
                shall
                be taken into account Depreciation for such fiscal year or other
                period,
                computed in accordance with the definition of
                Depreciation;

            

    

    

    
      	 	
              ·

            	
              To
                the extent an adjustment to the adjusted tax basis of any asset included
                in 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, 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 the purposes of computing Profits and Losses;
                and

            

    

    

    
      	 	
              ·

            	
              Notwithstanding
                any other provision of this definition any items of income, gain,
                loss or
                deduction that are specially allocated pursuant to Article
                6
                shall not be taken into account in computing Profits or Losses. The
                amount
                of items of income, gain, loss and deduction available to be specially
                allocated pursuant to Article
                6
                shall be determined using rules analogous to those set forth in this
                definition.

            

    

    

    “Residual
      Sharing Ratios”
      means
      the percentages in which Members participate in distributions of Net Cash Flow
      and Capital Proceeds pursuant to Section
      5.2.
      The
      Residual Sharing Ratios of the Members are as follows:

    

    
      
        	 	
                TRS
                  Class A Member:

              	
                56.7%
                  with respect to Stabilized Assets and
                  0%

              

      

      
        	 	 	with respect to Development
                Assets;

      

    

    

    
      
        	 	
                TRS
                  Class B Member:

              	
                0%
                  with respect to Stabilized Assets and 35%

              

      

      
        	 	 	with respect to Development
                Assets;

      

    

    

    
      
        	 	
                Mystic
                  Class Member:

              	
                43.3%
                  with respect to Stabilized Assets and 65%

              

      

      
        	 	 	with respect to Development
                Assets.

      

    

    

    “Stabilized
      Assets”
      means
      the following Properties: (1) Residence Inn by Marriott and Whitehall Mansion,
      Mystic, CT; (2) Courtyard by Marriott, Warwick, RI; (3) Courtyard by Marriott
      and Rosemont Suites, Norwich, CT; (4) SpringHill Suites by Marriott, Waterford,
      CT; (5) Mystic Marriott Hotel and Spa, Groton, CT; (6) Residence Inn by
      Marriott, Southington, CT, and ancillary Dunkin Donuts; (7) Residence Inn by
      Marriott, Danbury, CT.

    

    “Tax
      Contest”
      means
      an audit, review, examination, or any other administrative or judicial
      proceeding with the purpose or effect of redetermining any taxes (including
      any
      administrative or judicial review of any claim for refund).

    

    “Tax
      Correspondence”
      means
      all written and oral communications from the IRS (or other taxing authority)
      relating to any item of income, gain, loss or deduction arising with respect
      to
      any activities or assets of the Company, whether communicated with respect
      to an
      audit or otherwise.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    “Transfer”
      and
“Transferred”
      means a
      sale, transfer, assignment, conveyance, gift, bequest or disposition by any
      other means, whether for value or no value and whether voluntary or involuntary
      (including by realization upon any Encumbrance or by operation of law or by
      judgment, levy, attachment, garnishment, bankruptcy or other legal or equitable
      proceedings).

    

    “TRS
      Class A Member”
      means
      the Member holding the interest so designated on Exhibit
      A
      hereto.
      On the date hereof, Investor Member is the TRS Class A Member.

    

    “TRS
      Class A Membership Interest”
      means
      the class of Membership Interest issued to the TRS Class A Member.

    

    “TRS
      Class B Member”
      means
      the Member holding the interest so designated on Exhibit
      A
      hereto.
      On the date hereof, Investor Member is the TRS Class B Member.

    

    “TRS
      Class B Membership Interest”
      means
      the class of Membership Interest issued to the TRS Class B Member.

    

    “TRS
      Member”
      has the
      meaning set forth in the Preamble hereto.

    

    “Wholly
      Owned Property”
      means
      any Property that is wholly owned by an Owner Entity. On the date hereof, the
      following Properties are Wholly Owned Properties:

    

    Courtyard
      Hotel Warwick, Warwick, RI

    Residence
      Inn, Mystic, CT

    Courtyard,
      Norwich, CT

    Springhill
      Suites, Waterford, CT

    Marriott,
      Mystic, CT

    

    A
      reference to any agreement, budget, document or schedule shall include such
      agreement, budget, document or schedule as revised, amended, modified or
      supplemented from time to time in accordance with its terms and the terms of
      this Agreement. The singular includes the plural and the plural includes the
      singular. The words “include”, “includes” and “including” are not limiting.
      Reference to a particular “Section” or “Articles” refers to that section or
      articles of this Agreement unless otherwise indicated. The words “herein”,
“hereof”, “hereunder” and words of like import shall refer to this Agreement as
      a whole and not to any particular section or subdivision of this
      Agreement.

     

     

    
      	
              2.

            	
              ORGANIZATION

            

    

     

    2.1  
      Continuation.   
      The Company was formed as a limited liability company under the Act by the
      filing of the Certificate of Formation. The Members hereby agree to continue
      the
      Company as a limited liability company under the Act, upon the terms and subject
      to the conditions set forth in this Agreement. If any terms of this Agreement
      are inconsistent with any terms of the Act that are not mandatory, then the
      terms of this Agreement shall control. Managing Member is hereby authorized
      to
      file and record any amendments to the Certificate of Formation and such other
      similar documents approved by the Members as may be required or appropriate
      to
      be filed or recorded under the Act or the laws of any other jurisdiction in
      which the Company may conduct business or own property.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    2.2 
 Name
      and Principal Place of Business.

     

    2.2.1 
        The
      name
      of the Company is set forth on the cover page to this Agreement. The Members
      may
      change the name of the Company or adopt such trade or fictitious names for
      use
      by the Company as the Members may from time to time determine. All business
      of
      the Company shall be conducted under such name, and title to all Company
      property shall be held in such name.

    

    2.2.2  
       The
      principal place of business and office of the Company shall be located at 914
      Hartford Turnpike, Waterford, CT 06385, or at such other place or places as
      TRS
      Member and Mystic Member (acting together) may from time to time
      designate.

     

    2.3 
       Term.  
      The
      term
      of the Company commenced on ____________, 2005, the date of the filing of the
      Certificate of Formation pursuant to the Act, and shall continue until December
      31, 2055, unless sooner terminated or further extended pursuant to the
      provisions of this Agreement.

     

    2.4 
       Registered
      Agent and Registered Office.  
      The
      name
      of the Company’s registered agent for service of process shall be CT Corporation
      Systems, and the address of the Company’s registered agent in the State of
      Connecticut shall be ____________________. Managing Member may, upon notice
      to
      all Members, change such agent and such office from time to time.

     

    
      	
              2.5

            	
              Purpose
                of Company.

            

    

    

    2.5.1 
        The
      purpose of the Company is to engage in the following business activities in
      accordance with the terms of this Agreement: own membership interests in the
      Lessee’s that will lease and operate the Properties under the Leases, together
      with such other activities as may be ancillary or related to, or otherwise
      necessary or advisable in connection with the foregoing. The Company, without
      the written consent of all Members, shall not engage in any business unrelated
      to the Properties and shall not own any assets other than those in furtherance
      of the purposes of the Company.

    

    2.5.2  
       Each
      Lessee shall enter into a Lease, as lessee, with an Owner Entity, as lessor,
      to
      lease, operate and manage the applicable Property.

     

    2.5.3
         Each
      Lessee shall be wholly owned by the Company or owned by the Company and the
      Minority Interest Holders. Each Lessee shall be operated under an agreement
      (each such agreement, a “Lessee
      Operating Agreement”)
      the
      form of which shall be agreed upon by the Parties thereto.

     

    
      	
              2.6

            	
              Members;
                Membership Interests.

            

    

    

    2.6.1
         The
      Company shall have three classes of Membership Interests: TRS Class A, TRS
      Class
      B and Mystic Class, each class having identical rights on all matters other
      than
      as expressly provided herein.

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    2.6.2
         Effective
      as of the Agreement Date, the Members of the Company shall be TRS Member and
      Mystic Member. Except as expressly permitted by this Agreement, no other Person
      shall be admitted as a member of the Company and no additional membership
      interests shall be issued.

    

    2.6.3 
        The
      Company shall have a single class of Membership Interests. Mystic Member shall
      be the initial Managing Member of the Company, and shall bear responsibility
      and
      authority for the affairs and management of the Company to the extent
      contemplated hereby, except to the extent that this Agreement contemplates
      that
      a Non-Managing Member, the Property Manager or the Tax Matters Member shall
      have
      specific responsibility or authority with respect thereto.

     

    2.7 
       Limitation
      on Liability.   
      Except
      as
      otherwise expressly provided in the Act, the debts, obligations and liabilities
      of the Company, whether arising in contract, tort or otherwise, shall be solely
      the debts, obligations and liabilities of the Company, and no Member shall
      be
      obligated personally for any such debt, obligation or liability of the Company
      solely by reason of being a Member of the Company. Except as otherwise expressly
      provided in the Act and in Section 4.6 hereof, the liability of each
      Member shall be limited to the amount of Capital Contributions required to
      be
      made by such Member in accordance with the provisions of this Agreement, but
      only when and to the extent the same shall become due pursuant to the provisions
      of this Agreement.

     

    2.8   Title
      to Company Property.   
      All property owned by the Company, whether real or personal, tangible or
      intangible, shall be deemed to be owned by the Company as an entity, and no
      Member, individually, shall have any ownership of such property.

     

     

    
      	
              3.

            	
              CAPITAL

            

    

     

    3.1
       Initial
      Capital Contributions.
      The
      Members acknowledge that on or prior to the date hereof, Mystic Member and
      TRS
      Member have made Capital Contributions to the Company as shown on Schedule
      A.

     

    
      	
              3.2

            	
              Additional
                Capital Contributions.

            

    

    

    3.2.1  
       Except
      as
      otherwise required by law or pursuant to this Section and Section
      3.1,
      no
      Member shall be required to make any additional Capital Contributions to the
      Company. At any time and from time to time following the making of the initial
      Capital Contributions set forth in Section
      3.1,
      the
      Members may determine that the Company requires additional cash Capital
      Contributions and the amount, terms and conditions thereof (including for
      payment of Operating Expenses but subject, in the case of the Part Owned
      Properties, to the approval rights of the Minority Interest Holders in respect
      of additional Capital Contributions and agreement to bear their ratable share
      of
      any additional Capital Contributions). Any such additional Capital Contributions
      shall be made in accordance with the Capital Sharing Ratios for Capital
      Contributions.

    

    3.2.2  
       Upon
      a
      determination by the Members to require additional Capital Contributions,
      Managing Member shall issue a written notice of such determination and stating
      the amount of each Member’s Capital Contribution. Each Member shall make payment
      of its Capital Contribution within 15 Business Days after written notice of
      the
      call therefor, in the case where the aggregate Capital Contributions demanded
      of
      all Members are less than or equal to $100,000, and within 20 Business Days,
      in
      the case where the aggregate Capital Contributions demanded of all Members
      exceed $100,000. Capital Contributions (other than the initial Capital
      Contribution of Mystic Member as provided in Section
      3.1)
      shall
      be made in cash unless otherwise agreed by each Member. Failure to make a
      Capital Contribution when required hereunder shall be a “Capital
      Contribution Default,”
      following which:

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    A.      
          distributions
      made in accordance with clauses
      5.2.2
      or
5.2.3,
      shall
      be amended to reflect the following deemed changes to the Members’ Capital
      Accounts and Capital Sharing Ratios:

    

    i. 
          the
      non-defaulting Member shall be deemed to have made an additional Capital
      Contribution equal to one-half of the portion of the capital call that the
      defaulting Member failed to make (the “Defaulted
      Amount”),
      and

    

    ii.  
        the
      non-defaulting Member’s Capital Account shall similarly be increased by one-half
      of the Defaulted Amount, and the Capital Sharing Ratio shall be recalculated
      on
      the basis of the revised Capital Account balances.

    

    Notwithstanding
      the foregoing, for the purpose of further Capital Contributions, the defaulting
      Member shall nonetheless be required to make Capital Contributions at the
      initial Capital Sharing Ratio that existed prior to (and without giving effect
      to) any such deemed adjustment, and

    

    B.     
         the
      provisions of Section
      9.2
      shall
      also apply.

    

    3.2.3
       If
      a
      Member or the Managing Member believes that there are insufficient Company
      resources available to meet the emergency expenditures of the Company,
      occasioned on account of imminent threats of property damage or personal injury
      or death, in order to remedy such emergency or casualty, it shall notify the
      other Members and provide details of the amounts required and the reasons
      therefor. The Members may thereafter agree but shall have no obligation to,
      contribute the additional capital as a Capital Contribution pursuant to the
      provisions of Section
      3.2.1.
      If, for
      any reason, any Member is unwilling or unable to contribute its share of such
      additional capital, the other Member may loan to the Company the required amount
      as an advance to the Company (a “Member
      Loan”).
      Each
      such Member Loan shall be evidenced by a note of the Company bearing interest
      at
      the Member Loan Interest Rate. Repayment of a Member Loan shall not be a
      distribution under Article
      5.
      All
      outstanding Member Loans shall be repaid in full, together with all accrued
      interest, prior to any distribution to the Members.

     

    3.3   
       Return
      of Capital; No Interest on Capital.  
       Except as expressly provided in this Agreement, no Member shall be
      entitled to the return of any or all of its Capital Contribution. Neither a
      Member’s Capital Account nor its Capital Contribution shall earn
      interest.

     

    3.4   
       No
      Third-Party Beneficiary.   
      No creditor or other third party having dealings with the Company shall have
      the
      right to enforce the right or obligation of any Member to make Capital
      Contributions or to pursue any other right or remedy hereunder or at law or
      in
      equity, it being understood and agreed that the provisions of this Agreement
      shall be solely for the benefit of, and may be enforced solely by, the parties
      hereto and their respective successors and assigns. None of the rights or
      obligations of the Members herein set forth to make Capital Contributions to
      the
      Company shall be deemed an asset of the Company for any purpose by any creditor
      or other third party, nor may such rights or obligations be sold, transferred
      or
      assigned by the Company or pledged or encumbered by the Company to secure any
      debt or other obligation of the Company or of any of the
      Members.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    
      	
              3.5

            	
              Capital
                Accounts.

            

    

    

    3.5.1    
          There
      shall be established for each Member on the books of the Company, as of the
      date
      hereof, a Capital Account, which shall be increased and decreased in the manner
      set forth herein.

    

    3.5.2      
        “Capital
      Account”
      means,
      with respect to each Member, an account maintained for such Member on the
      Company’s books and records in accordance with the following
      provisions:

    

    A.    
      To
      each
      Member’s Capital Account there shall be added (a) the amount of cash and the
      initial Gross Asset Value of any property contributed by such Member to the
      capital of the company, (b) such Member’s share of (i) Profits and (ii) any
      items in the nature of income or gain that are specially allocated pursuant
      to
Article
      6
      and (c)
      the amount of any Company liabilities assumed by such Member or that are secured
      by any Company property distributed to such Member.

    

    B.   
      From
      each
      Member’s Capital Account there shall be subtracted (a) the amount of (i) cash
      and (ii) the Gross Asset Value of any Company property distributed to such
      Member pursuant to any provision of this Agreement (other than amounts paid
      as
      interest or in repayment of principal on any loan by a Member to the Company),
      (b) such Member’s share of (i) Losses and (ii) any items in the nature of
      expenses or losses that are specially allocated pursuant to Article
      6
      and (c)
      the amount of any liabilities of such Member assumed by the Company or that
      are
      secured by any property contributed by such Member to the Company.

    

    C.    
      In
      determining the amount of any liability for purposes of Sections
      3.5.2.A
      and
3.5.2.B,
      there
      shall be taken into account Code Section 752(c) and any other applicable
      provisions of the Code and the Regulations.

    

    D.    
      A
      Member
      who has more than one interest in the Company shall have a single Capital
      Account that reflects all such interests regardless of the class of interests
      owned by such Member and regardless of the time or manner in which such
      interests were acquired.

    

    3.5.3    
        Adjustments
      to Capital Accounts in respect to Company income, gain, loss, deduction and
      non-deductible expenditures (or item thereof) shall be made with reference
      to
      the federal tax treatment of such items (and, in the case of book items, with
      reference to the federal tax treatment of the corresponding tax items) at the
      Company level, without regard to any requisite or elective tax treatment of
      such
      items at the Member level.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    3.5.4  
        The
      provisions of this Section and the other provisions of this Agreement relating
      to the maintenance of Capital Accounts are intended to comply with Regulations
      Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner
      consistent with such Regulations. In the event that Managing Member shall
      determine that it is prudent to modify the manner in which Capital Accounts,
      or
      any additions or subtractions thereto (including adjustments relating to
      liabilities that are secured by contributed or distributed property or that
      are
      assumed by the Company or the Members), are computed in order to comply with
      such Regulations, Managing Member shall be entitled to make such modification,
      provided that it is not likely to have a material effect on the amounts
      distributable to any Member pursuant to Section
      10.3
      upon
      dissolution of the Company.

    

    3.5.5  
        No
      adjustments shall be made to the Capital Account of any Member by reason of
      payment or receipt of any fees by it or any Affiliate pursuant to Article
      4
      hereof.

     

     

    
      	
              4.

            	
              MANAGEMENT
                OF THE COMPANY

            

    

     

    4.1  
      Authority
      of Managing Member.

    

    4.1.1  
        Managing
      Member shall conduct the day-to-day management of the Company and in order
      to
      implement the purposes of the Company identified in Section
      2.5,
      the
      Operating Budget and all Major Decisions and other decisions of the Members
      that
      have then been made. Without limiting the generality of the foregoing,
except
      to the extent that any of the following would constitute a Major
      Decision
      or
      otherwise require the consent of all Members under the terms hereof, Managing
      Member, acting in its reasonable discretion but without any requirement of
      any
      consent or approval from any other Member, shall have general responsibility
      for
      the following with respect to the Company and the Owner Entities:

    

    A.   
         To
      implement all Major Decisions the Members have made;

    

    B.    
        To
      supervise the Property Manager in its management of the Properties, interests
      therein or parts thereof; to operate the Properties as hotels; to lease the
      Property or any part thereof from time to time;

    

    C.  
          To
      employ, engage or contract with or dismiss from employment or engagement Persons
      to the extent deemed necessary by Managing Member for the operation and
      management of the Company business, including contractors, subcontractors,
      engineers, architects, surveyors, mechanics, consultants, accountants,
      investment bankers, underwriters, insurance brokers and others (it being
      understood that unless the Members shall unanimously agree otherwise,
      PriceWaterhouseCoopers shall provide general auditing services for the Company,
      as an expense of the Company, and KPMG shall provide Sarbanes-Oxley Act
      compliance control testing for the Company, at the request of Investor and
      as an
      expense of Investor); provided that the cost of any control established by
      the
      Company on the advice of KPMG or otherwise in accordance with the Sarbanes-Oxley
      Act shall be an expense of the Company;

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    D.   
         To
      acquire and enter into any contract of insurance contemplated by the
      Lease;

    

    E.    
        To
      conduct banking transactions on behalf of the Company in the ordinary course
      of
      business;

    

    F.      
      To
      demand, sue for, receive, and otherwise take steps to collect or recover all
      debts, rents, proceeds, interests, dividends, goods, chattels, income from
      property, damages and all other property, to which the Company may be entitled
      or that are or may become due to the Company from any Person in the ordinary
      course of business; to commence, prosecute, enforce, defend, answer, oppose,
      contest and abandon all legal proceedings in which the Company is or may
      hereafter be interested; and to submit to arbitration any accounts, debts,
      claims, disputes and matters that may arise between the Company and any other
      Person;

    

    G.   
         To
      take
      all reasonable measures necessary to ensure compliance by the Company with
      applicable agreements, and other contractual obligations and arrangements,
      entered into by the Company from time to time in accordance with the provisions
      of this Agreement, including periodic reports as required to be submitted to
      lenders;

    

    H.  
          To
      maintain the Company’s books and records, which shall include, but not be
      limited to, separately tracking and accounting for the portion of Net Cash
      Flow
      that is attributable to each Property;

    

    I.   
         To
      prepare and deliver, or cause to be prepared and delivered, all financial and
      other reports with respect to the operations of the Company and all federal
      and
      state tax returns and reports;

    

    J.     
       To
      pay or
      reimburse any and all fees, costs and expenses incurred in the formation and
      organization of the Company;

    

    K.  
          To
      do all
      acts that are necessary, customary or appropriate for the protection,
      maintenance, repair, operation and preservation of the Company’s
      assets;

    

    L.  
          To
      establish and maintain any and all reserves, working capital accounts and other
      cash or similar balances in such amounts as the Members have
      determined;

    

    M. 
           To
      enter
      into the Lease; and

    

    N. 
           In
      general, to exercise all of the general rights, privileges and powers permitted
      to be exercised by the provisions of the Act.

    

    4.1.2     
       Managing
      Member shall have the right, power and authority to execute documents on behalf
      of the Company in the ordinary course of business. The signature of Managing
      Member shall be sufficient to bind the Company. Notwithstanding the foregoing,
      if requested in writing by Managing Member, each Member shall execute and
      deliver those documents deemed necessary or desirable by Managing Member in
      order to carry out the provisions of this Agreement. The exercise of any of
      the
      rights or powers of the Member pursuant to the terms of this Agreement shall
      not
      be deemed to be taking part in the affairs of the Company or the exercise of
      control over the affairs of the Company.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    4.1.3       
       Managing
      Member shall provide to the Non-Managing Members, promptly following receipt,
      copies of all material notices from any Person and copies of all notices from
      any government or judicial body.

    

    4.1.4     
         Managing
      Member shall implement and enforce an anti-money laundering policy and a program
      of compliance with the Uniting and Strengthening America by Providing
      Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
      ACT)
      Act of 2001, Public Law 107-56 (October 26, 2001) as the same may be amended
      from time to time, and corresponding provisions of future laws (the
“Patriot
      Act”).

    

    4.1.5     
         Managing
      Member agrees to use good faith, reasonable efforts to operate and cause the
      Company to operate each Property as a quality hotel (with ancillary retail
      components) pursuant to commercially reasonable conditions and standards in
      accordance with the purposes of the Company identified in Section
      2.5
      and the
      Lease.

     

    4.2  
      Restriction
      of Managing Member’s Authority.

    

    4.2.1       
       Notwithstanding
      the foregoing provisions of Section
      4.1,
      except
      as otherwise (i.e.,
      other
      than in Section
      4.1)
      expressly permitted by this Agreement, Managing Member agrees that it will
      not
      take any actions within the scope of a Major Decision, or any other decision
      expressly reserved to the Non-Managing Members hereunder without the prior
      written consent of all Non-Managing Members. In addition to any other matter
      designated herein as a Major Decision, Major Decisions also shall include the
      following:

    

    A.   
        Admit
      any
      new Member to the Company or issue additional Membership Interests (other than
      as provided in Section
      8.1).

    

    B.   
        Cause
      the
      Company to merge with or into any other entity.

    

    C.  
         Engage
      in
      any business unrelated to the Property, or lease any assets other than the
      Property.

    

    D.  
         Amend
      this Agreement, except as otherwise provided in Article
      14.

    

    E.  
         Sell
      or
      sublease any Property or any portion thereof.

    

    F.  
         Dissolve
      or liquidate the Company (except as otherwise provided in Article
      10),
      unless
      required by law.

    

    4.2.2     
        All
      Major
      Decisions and actions on the matters set forth in Section
      4.2.1
      (and all
      other matters requiring the consent of the Members hereunder) shall require
      written notice to all Members issued by the Managing Member or any Member.
      Managing Member shall cause written minutes to be prepared of all actions taken
      by the decision of the Members with respect to Major Decisions or other matters
      requiring the consent of the Members hereunder, whether by formal meeting,
      telephonic meeting or otherwise.

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    4.2.3     
        If,
      within five days of such notice, the Members cannot agree on a Major Decision
      any Member may issue a written notice (the “Major
      Dispute Notice”).
      In
      order to be effective, any Major Dispute Notice must contain a description
      of
      the Major Decision on which the Members have been unable to agree and must
      contain the following language typed in BOLD PRINT on the face of the Major
      Dispute Notice:

    

    THIS
      NOTICE IS GIVEN PURSUANT TO THE LIMITED LIABILITY COMPANY AGREEMENT OF
      [LEASECO], LLC (THE “AGREEMENT”)
      IN
      ORDER TO ADVISE A MEMBER THAT A MAJOR DISPUTE WILL EXIST UNDER THE AGREEMENT
      UNLESS THE MEMBERS ARE ABLE TO AGREE WITHIN 30 DAYS WITH RESPECT TO THE MATTERS
      SET FORTH IN THIS NOTICE.

    

    The
      Members shall in good faith meet to discuss and resolve the Major Decision
      in
      question. If, within 30 days of the delivery of a Major Dispute Notice, the
      Members are still unable to agree on the Major Decision in question, then there
      shall exist a Major Dispute hereunder.

     

    4.3   
       Budgeting.
      On or before November 15 of each year, Managing Member shall prepare and submit
      to the other Member with respect to the upcoming calendar year a draft operating
      budget (the “Operating Budget”) for the Company and for each Property
      (subject to any approval rights of the Minority Interest Holders in respect
      of
      the Part Owned Properties), setting forth by line item the estimated revenues
      and other receipts of the Company, and the operating expenses and capital items
      for the Company and for each Property, including anticipated
      reserves.

    

    Any
      reference in this Agreement to an “approved Operating Budget” means an Operating
      Budget, as unanimously approved by the Members in accordance with this Section,
      as the same may be subsequently amended from time to time by the Members in
      accordance with Section
      4.2.
      In
      preparing and approving each Operating Budget and any revisions or amendments
      thereto, Managing Member will consider, among other things, the previous year’s
      experience, current and projected market conditions and anticipated future
      needs
      in light of such projections. Mystic Member and TRS Member will promptly
      consider any proposed annual Operating Budget or amendment thereto. The failure
      of Mystic Member and TRS Member to approve unanimously an annual Operating
      Budget within 30 days after its presentation to them will constitute a Major
      Dispute under Section
      4.2.3;
      however, the Members shall work in good faith to approve an Operating Budget
      in
      order to avoid a Major Dispute. Upon approval and adoption of an Operating
      Budget and Business Plan, the previously effective annual Operating Budget
      shall
      be completely superseded and no longer effective.

    

    If
      an
      annual Operating Budget has not been approved unanimously in accordance with
      this Section with respect to any fiscal year by the start of the fiscal year,
      then the annual Operating Budget, in effect for the immediately preceding Fiscal
      Year (the “Old
      Plan”)
      will
      (subject to the proviso at the end of this sentence) serve as the interim annual
      Operating Budget until a new annual Operating Budget is so approved (if at
      all);
      provided, however, that the Old Plans will be deemed to include all items that
      have been agreed upon and, with respect to each Operating Budget or line item
      thereof that has not been approved by the Members, a corresponding Operating
      Budget or line item that: (A) is based on the Operating Budget or particular
      line item thereof, for the then current fiscal year (inflation adjusted), and
      (B) reflects increases in amounts payable with respect to Non-Discretionary
      Expenses. Attached hereto as Exhibit
      4.3
      is the
      agreed Operating Budget for the remainder of calendar year
      2005.

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    In
      addition, Managing Manager or any Member may from time to time present proposed
      amendments to the annual Operating Budget to Members for approval.

     

    4.4    Managing
      Member’s Time and Effort; Conflicts.  Managing
      Member and Tax Matters Member shall devote whatever time, effort and skill
      as is
      reasonably required to fulfill their respective obligations under this
      Agreement. Except as provided in Section 4.5, each Member may engage in
      any business or activity, including those that may conflict or compete with
      the
      Company (“Conflicting Activity”), and any such Member shall not be
      required to offer any opportunity in any business or activity to such Persons
      or
      otherwise provide compensation to such Persons therefor.

     

    
      	
              4.5

            	
              Indemnification.

            

    

    

    4.5.1   
       Managing
      Member and Tax Matters Member, and all agents acting on their or the Company’s
      behalf, shall not be liable, responsible, or accountable, in damages or
      otherwise, to the Members or the Company for doing any act or failing to do
      any
      act, the effect of which may cause or result in loss or damage to the Company
      or
      the other Member save and except that which arises from Managing Member’s or Tax
      Matters Member’s fraud, willful misconduct, breach of fiduciary duty or material
      and willful breach of their covenants and obligations under this Agreement.
      The
      Company shall indemnify, protect and hold each Member and any such agent
      harmless against all claims, expenses (including reasonable attorneys’ fees),
      losses, penalties and liability whatsoever by reason of any act performed or
      omitted to be performed by it in connection with the business of the Company,
      including reasonable attorneys’ fees incurred in connection with the defense of
      any action based on any such act or omission (which attorneys’ fees may be paid
      as incurred), except that such indemnification shall not apply with respect
      to a
      claim if and to the extent the claim is attributable to or caused by Managing
      Member’s or Tax Matters Member’s fraud, willful misconduct, breach of fiduciary
      duty or material and willful breach of its covenants and obligations under
      this
      Agreement.

    

    4.5.2   
        In
      the
      event that any existing or future lender requires a nonrecourse carveout
      guaranty, each Member agrees to give such a guaranty, subject to indemnity
      by
      the Company for all losses not caused by the indemnitee, and by the other Member
      for losses caused by it. In the event that any obligations of the Company must
      be undertaken by the Members on a joint and several basis or if, under any
      other
      circumstances, a demand is made of a Member with respect to an obligation or
      liability of the Company (other than obligations and liabilities caused by
      the
      intentional act, willful misconduct or gross negligence of either Member),
      each
      Member shall make a mandatory capital contribution (and the proceeds there
      of
      shall be immediately disbursed to the Member(s) who have made any disbursement
      pursuant to such demand) so that the Members bear such liability according
      to
      the Capital Sharing Ratio.

     

    4.6  
      Certificates
      and Instruments.  
      Each Member covenants and agrees that it will, within 5 days following request
      by the other Member:

    
      
        
        

      

      
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    4.6.1   
      execute,
      swear to, acknowledge and/or deliver (A) all certificates and other instruments
      and all amendments of this Agreement that Managing Member reasonably deems
      appropriate or necessary to form, qualify, or continue the qualification of,
      the
      Company as a limited liability company in all jurisdictions in which the Company
      may conduct business or own the Property in accordance with this Agreement;
      (B)
      all instruments that Managing Member reasonably deems appropriate or necessary
      to reflect any amendment, change, modification or restatement of this Agreement
      properly made in accordance with Sections
      14.3
      and
14.4;
      (C) all
      conveyances and other instruments or documents that Managing Member reasonably
      deems appropriate or necessary to reflect, in accordance with this Agreement,
      the disposition of all or any portion of any property, the admission or
      withdrawal of any Member and the dissolution and liquidation of the Company;
      and
      (D) all instruments relating to the admission or withdrawal of any Member
      pursuant to and in accordance with this Agreement; and

    

    4.6.2   
       swear
      to,
      represent or acknowledge, confirm, or ratify that any vote, consent, approval,
      agreement or other action, which is made or given properly by the Member
      hereunder or is consistent with the terms of this Agreement has been made or
      given (whether or not such specific Member voted in favor thereof or consented
      thereto).

     

    4.7  
      Management
      Cost Reimbursement.  
      The Company shall on demand reimburse the Managing Member for all third party
      expenses incurred by Managing Member directly in connection with the business
      of
      the Company as contemplated hereunder and pursuant to the Operating Budget.
      Furthermore, all expenses incurred with respect to any tax matter that does
      or
      may affect the Company, including expenses incurred by Mystic Member acting
      in
      its capacity as Tax Matters Member in connection with Company-level
      administrative or judicial tax proceedings, shall be paid out of Company assets,
      whether or not included in an annual Business Plan.

     

    4.8  
      Property
      Management.  
      

     

    4.8.1
      The
      Lessees shall enter into a separate management agreement for each Property
      substantially in the form attached hereto as Exhibit 4.8 (the
“Management Agreements”) with a property manager (the “Property
      Manager”). Waterford Hotel Group, Inc., an Affiliate of Mystic Member, shall
      be the initial Property Manager, unless and until such Person ceases to be
      the
      property manager pursuant to the Management Agreement. The Property Manager
      is
      not required to be a Member of the Company; provided, however, that TRS Member
      shall have the right to remove the initial Property Manager as Property Manager
      in the event that Mystic Member shall cease to be a Member, in the event that
      Waterford Hotel Group, Inc. is no longer an Affiliate of Mystic Member, or
      for
      Cause, and thereafter, the TRS Member shall have the right to remove the initial
      Property Manager as Property Manager (a) in the event that Mystic Member shall
      cease to be a Member, (b) in the event that Waterford Hotel Group, Inc. is
      no
      longer an Affiliate of Mystic Member, (c) for Cause or (d) if a Removal Event
      occurs, and in the case of event (c) or (d), TRS Member shall have the sole
      right to designate a replacement Property Manager and to make amendments to
      the
      Management Agreement. Under each Management Agreement, Property Manager shall
      provide property management services for each Property for a management fee
      (the
“Management Fee”) in the amount contemplated by the Management Agreement
      except that, with respect to the Properties known as Dunkin Donuts, Southington
      and Residence Inn, Southington, the nominal base management fee shall be 4%
      of
      Gross Revenue (as defined in the Management Agreements) and the Manager shall
      be
      directed (and shall agree) to remit a portion of such fee (in the amount of
      1%
      of Operating Revenues) to the Owner Entity, to be applied to the Asset
      Management Fee (as defined in the Limited Liability Company Agreement of Mystic
      Partners, LLC). In addition,
      the
      Company shall pay any sales tax due and payable in connection with the
      foregoing
      goods
      and services, as provided in the Management Agreements.

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    4.8.2       
       Subject
      to any present or future requirements of any lender to the Company, the
      Management Agreements shall instruct the Property Manager and delegate to the
      Property Manager the authority to:

    

    A.    
      collect
      Gross Revenue and other revenues of the applicable Property,

    

    B.    
      deposit
      such funds into operating accounts (each such account, an “Operating
      Account”)
      in
      each Lessee’s name and in respect of which the Property Manager and Managing
      Member shall have check-writing authority;

    

    C.    
      withdraw
      from such Operating Account to pay Operating Expenses that are then due and
      payable and that are contemplated by the Operating Budget for the applicable
      Property or approved by all Members;

    

    D.    
      pay
      from
      such Operating Account the applicable Management Fee and the Asset Management
      Fee; and

    

    E.    
      remit
      monthly on the last Business Day of the month from such Operating Account to
      a
      separate account designated by the Managing Member (and in respect of which
      Property Manager shall have no withdrawal authority) all remaining Operating
      Account funds, but only to the extent the foregoing exceed the Working Capital
      (hereinafter defined) for the upcoming calendar month. “Working
      Capital”
      for any
      calendar month means the amount equal to the result (but only if such result
      is
      a positive number) of (i) the projected Operating Expenses contemplated to
      be
      paid, (ii) minus projected Operating Revenues contemplated to be received in
      the
      next succeeding, (iii) plus reserves established or required to be established
      or funded during the relevant time period in accordance with the terms of this
      Agreement, any Lease or the Management Agreement, (iv) minus cash on hand and
      reserves on hand and available for the purpose of the payment of expenses
      enumerated in clause (i), above.

    

    4.8.3     
       The
      Management Agreement shall be expressly subject to this Agreement. The
      Management Agreement shall have an initial term of five years and shall
      thereafter be renewable by Manager for two terms of five years,
      each.

     

     

    
      	
              5.

            	
              DISTRIBUTIONS

            

    

     

    5.1 
       Distributions
      Generally.
      Distributions of Company assets shall be made only in accordance with this
      Article and Article 10.

     

    5.2 
       Distributions
      of Net Cash Flow.

    

    5.2.1       
       From
      time
      to time, but not less often than annually with respect to Net Cash Flow and
      within 30 days after a Capital Transaction with respect to Capital Proceeds,
      Managing Member shall determine the amount, if any, of Distributable Funds
      (hereinafter defined) available for distribution to Members in accordance with
      this Section. Distributable Funds shall then be distributed to the Members
      in
      accordance with the provisions of this Article. “Distributable
      Funds”
      shall
      mean Net Cash Flow on hand (after repayment of any outstanding Member Loans)
      and
      Capital Proceeds actually received.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    5.2.2       
      Distributable
      Funds constituting Net Cash Flow shall be distributed to the Members in the
      following order of priority:

    

    A.   
       first,
      to
      TRS Class A Member and TRS Class B Member (in proportion to the relative Capital
      Sharing Ratios as between the TRS Class A Member and TRS Class B Member) in
      the
      amount of any unpaid balance in that Member’s Preferred Return Account with
      respect to all Property;

    

    B.   
       then,
      to
      Mystic Member in the amount of any unpaid balance in that Member’s Preferred
      Return Account with respect to all Property; and

    

    C.   
       any
      excess, to the Members in accordance with their Residual Sharing Ratios with
      respect to such Property.

    

    Notwithstanding
      the foregoing, distributions pursuant to Sections
      5.2.2.A
      and
5.2.2.B,
      shall
      be made only to the extent such unreturned balance has accrued during the Fiscal
      Year in which such distribution is made, it being understood that for the
      purposes of this Section
      5.2,
      only,
      each Member’s Preferred Return Account balance shall be deemed to be $0 at the
      commencement of each Fiscal Year, regardless of all amounts distributed in,
      or
      Preferred Return Account balances accrued with respect to, prior
      periods.

    

    5.2.3       
      Distributable
      Funds with respect to any Property constituting Capital Proceeds shall be
      distributed to the Members in the following order of priority:

    

    A.   
       first,
      to
      TRS Class A Member or TRS Class B Member, as appropriate, the return of its
      Capital Contributions in respect of such Property;

    

    B.   
       then,
      to
      Mystic Class Member, the return of its Capital Contributions in respect of
      such
      Property;

    

    C.   
       then,
      to
      TRS Class A Member or TRS Class B Member, in the amount of 8.5% multiplied
      by
      the Capital Contributions made by such Member, attributed solely to the Property
      generating the relevant Capital Proceeds and calculated without regard to
      distributions made in accordance with Section
      5.2.2;

    

    D.   
       then,
      to
      Mystic Member, in the amount of 8.5% multiplied by the Capital Contributions
      made by such Member, attributed solely to the Property generating the relevant
      Capital Proceeds and calculated without regard to distributions made in
      accordance with Section
      5.2.2;
      and

    

    E.   
       last,
      to
      the Members in accordance with their Residual Sharing Ratios.

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    

    5.2.4  
       TRS
      Member and Mystic Member (acting together) shall determine using reasonable
      judgment whether, and to what extent, Net Cash Flow and Capital Proceeds shall
      be distributed or shall be set aside and retained in a working capital reserve
      or capital expenditure reserve, or reserves for funds to be used for the payment
      or reduction of any Company indebtedness. At such time as the Net Cash Flow
      is
      finally determined with respect to a Company fiscal year, the Company shall
      distribute to the Members in accordance with Section
      5.2.2,
      the
      Members’ respective undistributed shares, if any, of the Company’s actual Net
      Cash Flow for such fiscal year, and if advance distributions to a Member exceed
      such Member’s distributable share of such actual Net Cash Flow for such fiscal
      year, as finally determined, such Member shall immediately repay to the Company
      the amount of such excess, and any amounts not so repaid by a Member may be
      deducted from the next distributions of Net Cash Flow distributable to such
      Member.

    

    5.2.5 
        Notwithstanding
      the foregoing, the Company shall make cash distributions to the Members out
      of
      Net Cash Flow in amounts intended to enable (and at such times as necessary
      to
      enable) the Members to discharge their United States federal, state and local
      income tax liabilities arising from the allocations made pursuant to
Article
      6
      (a
“Tax
      Liability Distribution”).
      The
      amount of any such Tax Liability Distribution shall be determined by Managing
      Member in its discretion, taking into account (a) the maximum combined
      United States and [Connecticut] tax rate applicable to individuals or
      corporations (whichever is higher) on ordinary income and net short-term capital
      gain or on net long-term capital gain, as applicable, and taking into account
      the deductibility of state and local income taxes for United States federal
      income tax purposes (and the deductibility of local income taxes for state
      income tax purposes, if applicable), and (b) the amounts so allocated
      pursuant to Article
      6
      to each
      Member, and otherwise based on such reasonable assumptions as Managing Member
      determines in good faith to be appropriate. Tax Liability Distributions shall
      be
      made to the Members pro
      rata
      in
      accordance with their respective allocation of the corresponding item(s) of
      gain
      or income, and shall be treated as advances with respect to amounts otherwise
      to
      be received by such Members pursuant to this Section
      5.2.

    

    5.2.6  
       Notwithstanding
      the provisions of Sections
      5.2.2
      to the
      contrary, any Incentive Fees (as defined in the Management Agreement) payable
      to
      the Property Manager in accordance with the terms of the Management Agreement
      shall be paid to Manager immediately prior to distributions under Sections
      5.2.2.C.

     

    5.3   
      Distributions
      Upon Final Liquidation. 
       Upon a final liquidation of the Company in accordance with Article
      10, all of the Company’s assets shall be distributed as set forth in
Section 10.3.

     

    5.4   
      The
      Right to Withhold. 
       The Company shall withhold from any distribution such amounts as are
      required to be withheld by the laws of any taxing jurisdiction (or shall pay
      on
      behalf of or with respect to such Member any taxes that Managing Member or
      Tax
      Matters Member determines that the Company is required to pay with respect
      to
      any amount allocable to such Member pursuant to this Agreement). Such withheld
      amounts shall be treated as amounts distributed to the respective Members on
      whose account the withholding was imposed. Any amount paid on behalf of or
      with
      respect to a Member pursuant to this Section 5.4 shall constitute a loan
      by the Company to such Member, which loan such Member shall repay within 15
      days
      after notice from the Company that such payment must be made unless (i) the
      Company withholds such payment from a distribution that would otherwise be
      made
      to the Member or (ii) all Members jointly determine that such payment may be
      satisfied out of Net Cash Flow that would, but for such payment, be distributed
      to the Member. Each Member hereby unconditionally and irrevocably grants to
      the
      Company a security interest in such Member's obligation to pay to the Company
      any amounts required to be paid pursuant to this Section 5.4. Any amounts
      payable by a Member hereunder shall bear interest at the prime rate as published
      from time to time in The
      Wall Street Journal
      (but not
      higher than the maximum lawful rate from the time such amount is due
      (i.e.,
      15 days
      after demand) until such amount is paid in full. Each Member shall take such
      actions as the Company shall request in order to perfect or enforce the security
      interest created hereunder. A Member's obligation hereunder shall survive the
      dissolution, liquidation or winding up of the Company.

     

    
      
        
        

      

      
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                6.

              	
                ALLOCATIONS

              

      

       
6.1   In
      General.
      Profits
      and Losses of the Company shall be determined and allocated with respect to
      each
      fiscal year of the Company as of the end of such year, and at such times as
      the
      Gross Asset Value of any asset is adjusted pursuant to the definition of Gross
      Asset Value. Subject to the other provisions of this Article, an allocation
      to a
      Member of a share of Profits or Losses shall be treated as an allocation of
      the
      same share of each item of income, gain, loss and deduction that is taken into
      account in computing Profits or Losses.

     

    6.2 
       Allocations.  
      Except as otherwise provided in this Article, Profits and Losses of the Company
      shall be allocated for each fiscal year or other period to the Members such
      that
      the positive balance of the Adjusted Capital Account of each Member immediately
      following such allocation is, as closely as possible, equal (proportionately)
      to
      the amount of the distributions that would be made to such Member pursuant
      to
Section 5.2.3 if the Company were dissolved, its affairs wound up and all
      of its assets sold for an amount equal to their Gross Asset Value, all Company
      liabilities were satisfied (limited with respect to each nonrecourse liability
      to the Gross Asset Value of the assets securing such liability) and the
      remaining cash was distributed in accordance with the priority set forth in
      Section 5.2.3.

     

    6.3 
       Limitation
      on Allocation of Losses.  
      The Losses allocated to any Member pursuant to Section 6.2 shall not
      exceed the maximum amount of Losses that can be so allocated without causing
      such Member to have an Adjusted Capital Account Deficit at the end of any fiscal
      year. All Losses in excess of the limitation set forth in this Section
      6.3 shall be allocated to the other Members, pro rata to the allocation of
      other Losses to such Members, subject to the limitations of this Section
      6.3.

     

    6.4 
       Additional
      Allocation Provisions. 
       Notwithstanding the foregoing provisions of this Article (other than
      Section 6.3), the special allocations required by this Section 6.4
      shall be made in the following order of priority:

    

    
      	 	
              6.4.1
                

            	
              Regulatory
                Allocations.

            

    

    

    A.   
       If
      there
      is a net decrease in Company Minimum Gain or Member Minimum Gain during any
      fiscal year, the Members shall be allocated items of Company income and gain
      for
      such year (and, if necessary, for subsequent years) in accordance with Treasury
      Regulation Section 1.704-2(f) or Section 1.704-2(i)(4), as applicable. It is
      intended that this Section
      6.4.1.A
      qualify
      and be construed as a “minimum gain chargeback” and a “chargeback of member
      nonrecourse debt minimum gain” within the meaning of such Regulations, which
      shall be controlling in the event of a conflict between such Regulations and
      this Section
      6.4.1.A.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    B.   
       Any
      Member Nonrecourse Deductions for any fiscal year shall be specially allocated
      to the Member(s) who bear the economic risk of loss with respect to the Member
      Nonrecourse Debt to which such deductions are attributable.

    

    C.   
       If
      any
      Member unexpectedly receives an adjustment, allocation or distribution described
      in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items
      of
      Company income and gain shall be allocated, in accordance with Treasury
      Regulation Section 1.704-1(b)(2)(ii)(d), to the Member in an amount and manner
      sufficient to eliminate, to the extent required by such Regulation, the Adjusted
      Capital Account Deficit of the Member as quickly as possible. It is intended
      that this Section
      6.4.1.C
      qualify
      and be construed as a “qualified income offset” within the meaning of Treasury
      Regulation 1.704-1(b)(2)(ii)(d), which shall be controlling in the event of
      a
      conflict between such Regulation and this Section
      6.4.1.C.

    

    6.4.2     
       The
      allocations set forth in Section
      6.3,
      Sections
      6.4.1.A,
      B
      and
C
      (the
“Regulatory
      Allocations”)
      are
      intended to comply with certain regulatory requirements, including the
      requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2.
      Notwithstanding the provisions of Section
      6.2,
      the
      Regulatory Allocations shall be taken into account in allocating other items
      of
      income, gain, loss and deduction among the Members so that, to the extent
      possible, the net amount of such allocations of other items and the Regulatory
      Allocations to each Member shall be equal to the net amount that would have
      been
      allocated to each such Member if the Regulatory Allocations had not
      occurred.

    

    6.4.3       For
      purposes of determining a Member’s proportional share of the Company’s “excess
      nonrecourse liabilities” with respect to any Property within the meaning of
      Treasury Regulations Section 1.752-3(a)(3), each Member’s interest in Profits
      shall be such Member’s Capital Sharing Ratio with respect to such
      Property.

    

    6.4.4       In
      the
      event that the Code or any Treasury Regulations promulgated thereunder require
      allocations of items of income, gain, loss, deduction or credit different from
      those set forth in this Agreement, upon the advice of the Company’s counsel or
      accountants, Managing Member is hereby authorized to make new allocations in
      reliance upon the Code, the Treasury Regulations and such advice of the
      Company’s counsel or accountants, such new allocations shall be deemed to be
      made pursuant to the fiduciary obligation of Managing Member to the Company
      and
      the Non-Managing Members, and no such new allocation shall give rise to any
      claim or cause of action by any Non-Managing Member.

    

    6.4.5       Notwithstanding
      the foregoing provisions of this Article
      6,
      income,
      gain, loss and deduction with respect to property contributed to the Company
      by
      a Member shall be allocated among the Members, pursuant to Regulations Section
      1.704-3(b), so as to take account of the variation, if any, between the adjusted
      basis of such property to the Company and its initial Gross Asset Value
      (computed in accordance with the definition of Gross Asset Value). In the event
      the Gross Asset Value of any Company asset is adjusted pursuant to clause B
      of
      the definition thereof, subsequent allocations of income, gain, loss and
      deduction with respect to such asset shall take account of the variation, if
      any, between the adjusted basis of such asset for federal income tax purposes
      and its Gross Asset Value in the same manner as under Code Section 704(c) and
      the applicable Regulations, consistent with the requirements of Section
      1.704-1(b)(2)(iv)(g) of the Regulations. Allocations pursuant to this
Section
      6.4.4
      are
      solely for purposes of federal, state and local income taxes and shall not
      affect, or in any way be taken into account in computing, any Member’s Capital
      Account or share of Profits, Losses, other tax items or distributions pursuant
      to any provision of this Agreement.

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	
              7.

            	
              BOOKS
                AND RECORDS; ACCOUNTING; TAX
                ELECTIONS

            

    

     

    7.1  
       Company
      Books.  
      Managing Member shall maintain the books of the Company, for financial reporting
      purposes, on an accrual basis in accordance with generally accepted accounting
      principles. Managing Member shall make all decisions as to accounting matters
      in
      its reasonable judgment, other than those that would constitute Major Decisions
      or that are contemplated to be made by Tax Matters Member hereunder. Managing
      Member shall establish appropriate procedures (which procedures shall be
      reasonably acceptable to Non-Managing Member) to track Net Cash Flow with
      respect to each Property.

     

    7.2  
       Records. 
       Managing Member shall keep at the Company’s office the following Company
      documents:

    

    7.2.1 
               a
      current
      list of the full name and last known business or residence address of each
      Member, together with the Capital Contribution, Capital Sharing Ratio and
      Membership Interest of each Member;

    

    7.2.2  
              copies
      of
      all certificates evidencing membership interests and executed copies of any
      powers of attorney pursuant to which other filings have been made;

    

    7.2.3       
         copies
      of
      the Company’s federal, state, and local income tax or information returns and
      reports, if any, for the six most recent tax years;

    

    7.2.4       
         copies
      of
      this Agreement and all amendments to this Agreement and all other agreements
      to
      which the Company is party;

    

    7.2.5      
          financial
      statements of the Company for the six most recent tax years; and

    

    7.2.6       
         the
      Company’s books and records as they relate to the internal affairs of the
      Company for the current and past three tax years.

    

    On
      reasonable advance notice to Managing Member, any Member (or an authorized
      representative thereof) shall have the right to inspect, examine and make
      photocopies or extracts from any of the foregoing at the offices of the Company,
      and to meet with the Persons responsible for preparing any of the
      foregoing.

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    

    7.3 
       Company
      Tax Elections; Tax Controversies. 
       Mystic Member (in such capacity, “Tax Matters Member”) is hereby
      designated as the “Tax Matters Partner” pursuant to the requirements of Section
      6231(a)(7) of the Code.

    

    7.3.1 
             The
      Tax
      Matters Member shall promptly deliver to each Member copies of all written
      Tax
      Correspondence and shall promptly advise each Member of the content of any
      substantive verbal Tax Correspondence. The Tax Matters Member shall use all
      reasonable efforts to provide each Member and its attorneys the opportunity
      to
      attend any such conversations, and shall keep each Member advised of all
      developments with respect to any proposed adjustments that come to the Tax
      Matters Member’s attention. In addition, the Tax Matters Member shall (x)
      provide to each Member draft copies of any substantive correspondence or filing
      to be submitted by the Tax Matters Member to the IRS (or other taxing
      authority), including with respect to any Tax Contest (a “Written
      Submission”),
      at
      least 14 business days prior to the date the Written Submission is required
      to
      be submitted, (y) shall consider in good faith changes or comments to the
      Written Submission requested by other Members, and shall consult with such
      other
      Members with respect to such changes and comments, and (z) shall provide to
      each
      Member a final copy of the Written Submission. The Tax Matters Member shall
      provide each Member with notice reasonably in advance of any scheduled meetings
      or conferences (including telephone conferences) with respect to any scheduled
      meetings or conferences. The Tax Matters Member will take such reasonable
      actions, including providing powers of attorney, as may be necessary, for each
      Member and its counsel to attend such meetings and conferences. Each Member
      shall provide the Tax Matters Member with written comments to drafts of Written
      Submissions delivered pursuant to this Section
      7.3.1
      within
      seven business days of receipt of such drafts.

    

    7.3.2      
       The
      Tax
      Matters Member agrees that it will not take the following actions without each
      Member’s consent (such consent not to be unreasonably withheld):

    

    A. 
         Settling
      or proposing a settlement with the IRS regarding a Tax Contest;

    

    B.  
        Terminating
      an extension of the statute of limitations regarding the Company’s tax
      year;

    

    C. 
         Seeking
      technical advice or otherwise involving IRS personnel outside the audit team
      or
      using procedures outside the normal audit procedures with respect to a Tax
      Contest; and

    

    D.
          If
      a Tax
      Contest results in a deficiency, choosing the forum for appeals or litigation,
      and settling or proposing a settlement for such a controversy.

    

    7.3.3      
       At
      the
      Company’s expense, the Managing Member shall cause Price Waterhouse Coopers (or
      such other accounting firm mutually acceptable to the Members) to prepare the
      Federal income tax returns for the Company and all other tax and information
      returns of the Company, including state and local tax returns. The Managing
      Member may extend the time for filing any such tax returns as provided for
      under
      applicable statutes. At least 30 days prior to filing the Federal and state
      income tax returns and information returns of the Company, the Managing Member
      shall deliver to the members for their review a copy of the Company’s Federal
      and state income tax returns and information returns in the form proposed to
      be
      filed for each Taxable Year, and shall incorporate all reasonable changes or
      comments to such proposed tax returns and information returns requested by
      Members at least ten days prior to the filing date for such returns. After
      taking into account any such requests changes as described above, the Managing
      Member shall cause the Company to timely file, taking into account any
      applicable extensions, such tax returns. Within 20 days after filing such
      Federal and state income tax returns and information returns of the Company,
      the
      Managing Member shall cause the Company to deliver to each Member a copy of
      the
      Company’s Federal and state income tax returns and information returns as filed
      for each Taxable Year, together with any additional tax-related information
      in
      the possession of the Company that such Member may reasonably and timely request
      in order to properly prepare its own income tax returns.

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    7.3.4      
       To
      the
      extent that the Company may, or is required to, make elections for Federal,
      state or local income or other tax purposes, such elections shall be made by
      the
      Managing Member with the consent of each Member; provided that if requested
      by
      any Member, the Managing Member shall make a Section 754 election.

     

    7.4  
       Fiscal
      Year.   
      The fiscal year of the Company shall be the calendar year, unless otherwise
      required by the Code or determined by the Members.

     

    7.5  
       Financial
      Reports.  
       Managing Member shall prepare or cause to be prepared and shall furnish
      each Member as specified below or otherwise as soon as practicable the following
      (at the expense of the Company):

    

    7.5.1      
       On
      or
      before March 31 of each calendar year, for the preceding year, the following:
      all information necessary for the preparation by each Member of its federal
      income tax return as to the Company’s income, gains, losses, deductions or
      credits and the allocations thereof to each Member, including a Schedule K-1
      (or
      any other comparable form subsequently required by the Internal Revenue
      Service), and a copy of the federal income tax return of the Company, and any
      state or local income tax return required for the Company;

    

    7.5.2      
       Within
      30
      days after the end of each fiscal quarter, for each Property, quarterly
      unaudited profit and loss statements, balance sheets and related statements
      of
      retained earnings and cash flow (which unaudited statements shall be, to
      Managing Member’s best knowledge, true, correct and complete) and comparing the
      results of operations of each Property for such quarter and for the year to
      date
      to the Operating Budget;

    

    7.5.3     
        Monthly,
      such additional reporting as TRS Member may reasonably request;

    

    7.5.4       
      Within
      30
      days after the end of each fiscal quarter, a summary of each Member’s Capital
      Contributions to date plus each Member’s share of approved but unfunded Capital
      Contributions; and

    

    7.5.5     
        Within
      90
      days after the end of each fiscal year, annual audited financial
      statements.

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

    

    
      	
              8.

            	
              TRANSFERS
                AND ENCUMBRANCES OF COMPANY
                INTERESTS

            

    

     

    8.1   
      Restricted
      Transfers and Encumbrances. 
       Except with the consent of the other Members, and other than as expressly
      provided herein, no Member may directly or indirectly Transfer all or any
      portion of its Membership Interest (or any right to receive distributions),
      nor
      grant or permit an Encumbrance of all or any portion of or any interest in
      its
      Membership Interest. Any purported Transfer or Encumbrance of any Membership
      Interest (except as expressly permitted or consented to by all other Members
      as
      aforesaid) shall be null and void. In addition, any (1) Change in Control of
      Mystic Member or of any Controlling Affiliate of Mystic Member or (2)
      disposition of any interest, direct or indirect, in Mystic Member or any
      Controlling Affiliate of Mystic Member shall be subject to the approval, of
      Investor Member, which approval may be subject to conditions of TRS Member.
      Notwithstanding the foregoing, for the purpose of the restrictions contained
      in
      this Article,

    

    8.1.1     
        Transfers
      of interests in Waterford Member (a) among Persons who hold a direct or indirect
      equity interest in Waterford Member as of the date hereof or who hereafter
      acquire an interest in accordance with the terms hereof (but with respect to
      transfers by or to Persons who acquire an interest after the date hereof, the
      allocation of ownership interests resulting from such transfers shall in no
      event exceed 49% of the voting ownership interest of the Company, as provided
      in
      clause (d), below), (b) by any of the foregoing to a personal trust established
      for estate planning or tax reasons, (c) by any of the foregoing to their
      immediate family members or (d) to other Persons in one or more transactions
      in
      amounts aggregating not more than 49% of the total voting ownership interest
      of
      Waterford Member, shall not be restricted or require any consent
      hereunder;

    

    8.1.2      
       Transfers
      of direct or indirect interests in Investor Member shall not be subject to
      the
      consent of any other Member; provided that in the event of a Change in Control
      of Investor Member, Waterford Member may invoke the provisions of Section
      13;

    

    provided,
      in each case, that the relevant Transfer would not cause a default or otherwise
      restrict the Company’s rights under any financing or franchise agreement to
      which the Company or any Property is then subject. Subject to the foregoing
      exceptions, a Person to whom a Membership Interest is Transferred may be
      admitted to the Company as a Member only with the consent of the other Member,
      which may be given or withheld in the other Member’s sole and absolute
      discretion.

     

    8.2   Substitution
      of Approved Transferee for Member.  
      A transferee of a Membership Interest pursuant to Section 8.1 shall have
      no right to become a substituted Member with respect to the transferred Company
      Interest unless the following conditions are satisfied: the Member making such
      Transfer and the assignee shall furnish the other Member with such documents
      regarding the Transfer as the other Member may reasonably request (in form
      and
      substance reasonably satisfactory to the other Member), including a copy of
      the
      Transfer instrument, an assumption and ratification by the assignee of this
      Agreement (if the assignee is to be admitted as a Member), and a legal opinion
      or other reasonably satisfactory evidence to the non-Transferring Member that
      the Transfer (i) complies with applicable federal and state securities laws,
      (ii) will not cause the Company to be classified as other than a “partnership”
      or as a publicly traded partnership for federal income tax purposes, and (iii)
      will not cause the Company to be in breach of or default under any credit
      agreement, mortgage, deed of trust, security agreement or other agreement
      encumbering any Property or otherwise binding on the Company. Upon any transfer
      of a Membership Interest pursuant to this Section, the transferor and transferee
      shall file with the Company an executed or authenticated copy of the written
      instrument of assignment to it. Any transferee under this Section shall, as
      a
      condition to the effectiveness of the assignment to it of the economic benefits
      of Membership Interest, acknowledge in writing that the rights to the Membership
      Interest acquired by it are subject to the restrictions on Transfers set forth
      in this Article.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    8.3  Possible
      Amendment. 
       The parties hereto agree to amend the transfer provisions of this Article
      if Tax Matters Member reasonably determines that such amendment is necessary
      for
      the Company to be treated as a partnership for federal, Delaware and/or
      Connecticut income tax purposes.

     

     

    
      	
              9.

            	
              ADDITIONAL
                MEMBERS

            

    

     

    9.1   Admissions
      and Withdrawals. 
       No Person shall be admitted to the Company as a Member except in
      accordance with Article 8. No Member shall be entitled to withdraw from
      the Company without the consent of each Member, which consent may be given,
      withheld or made subject to conditions determined by that Member, in its sole
      and absolute discretion. Neither the admission of a Member nor the withdrawal
      of
      a Member, whether in accordance with this Agreement or not, shall cause the
      dissolution of the Company. If any Member voluntarily or involuntarily withdraws
      from the Company, then it shall be and remain liable for all obligations and
      liabilities incurred by it as a Member, and shall be liable to the Company
      and
      the other Member for all indemnifications set forth herein arising prior to
      its
      withdrawal and for any liabilities, losses, claims, damages, costs and expenses
      (including reasonable attorney’s fees) incurred by the Company as a result of
      any withdrawal in breach of this Agreement. Any purported admission, withdrawal
      or removal that is not in accordance with this Agreement shall be null and
      void.

     

    9.2   Cessation
      of Managing Member. 
       Mystic Member shall cease to be Managing Member of the Company at the
      election of TRS Member, and any other or future Managing Member shall cease
      to
      be Managing Member at the election of the Non-Managing Member, upon the earliest
      to occur of one of the following events (in each case, a “Removal
      Event”):

    

    9.2.1     
        the
      filing of a certificate of dissolution, or its equivalent, for Managing Member
      (unless withdrawn, revoked or corrected within 30 days);

    

    9.2.2      
       an
      Event
      of Bankruptcy of Managing Member;

    

    9.2.3     
        A
      Capital
      Contribution Default by Managing Member hereunder or of Mystic Hospitality,
      LLC
      under the Limited Liability Company Agreement of Mystic Partners, LLC, which
      default continues in excess of 60 days;

    

    9.2.4      
       Managing
      Member commits a material breach or material default of this Agreement (or
      under
      the Limited Liability Company Agreement of Mystic Partners, LLC) and such breach
      or default is not cured within 15 days after written notice by the
      non-defaulting Member, or if such breach does not involve the failure to pay
      money and cannot reasonably be cured within such 15-day period, such breach
      is
      not cured within 90 days after such written notice so long as the cure for
      the
      same has commenced within said 15-day period and Manager Member is diligently
      and continuously pursuing the cure of the same;

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    9.2.5      
       If
      Property Manager is then an Affiliate of Managing Member, the Management
      Agreement shall have been terminated on account of a default of Property Manager
      thereunder;

    

    9.2.6      
       Cause
      with respect to the Managing Member; or

    

    9.2.7     
        The
      Managing Member ceases to be a Member.

     

    9.3   New
      Managing Member.   
      Except as set forth in the next sentence, no Person shall become a Managing
      Member of the Company without the written approval of all Members, which
      approvals may be given or withheld, or made subject to such conditions as are
      determined by the applicable Member, in such Member’s sole and absolute
      discretion. In the event of an occurrence of an event described in Section
      9.2 hereof, the remaining Member shall (on notice to all other Members)
      immediately become the new, sole Managing Member and the Company shall continue
      without interruption (but such remaining Member shall not be entitled to receive
      any fees or reimbursements then accrued and originally payable to the former
      Managing Member under this Agreement), and any successor Managing Member may
      be
      appointed by such remaining Member.

     

     

    
      	
              10.

            	
              DISSOLUTION
                AND WINDING UP

            

    

     

    10.1    
         Dissolution
      and Distributions of Property.  
       Except for dissolution expressly permitted by this Agreement, no Member
      shall have the right to, and each Member hereby agrees that it shall not (and
      hereby irrevocably waives any right to), seek to dissolve or cause the
      dissolution of the Company or to seek to cause a partial or whole distribution
      or sale of the Property or a partition of the Company or any of its assets,
      whether by court action or otherwise, it being agreed that any actual or
      attempted partition, dissolution, distribution or sale would cause a substantial
      hardship to the Company and the remaining Member(s).

     

    10.2      
       Dissolution
      Events.  
       The Company shall be dissolved upon the earliest to occur of one of
      the
      following events:

    

    10.2.1     
        the
      first
      occurrence of any event set forth in Sections
      9.2.1
      or
9.2.2;
      provided, however, that within 60 days after such event, the remaining Members
      (A) may elect in their sole and absolute discretion to continue the Company
      and
      (B) may designate a new, successor Managing Member as set forth in Section
      9.3,
      in
      which case the Company shall not be dissolved;

    

    10.2.2      
       the
      sale,
      transfer or disposition of every Property or all interests of the Company
      therein; or

    

    10.2.3     
        the
      happening of any other event causing its dissolution under the
      Act.

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    

    Notwithstanding
      anything contained herein to the contrary, to the extent permitted by applicable
      law, the Company shall not dissolve or merge with or into any other entity,
      or
      convert into another form of business entity, or otherwise terminate, and the
      Company shall continue (and not dissolve) for so long as a single solvent Member
      exists. Notwithstanding anything contained herein to the contrary, to the extent
      permitted by applicable law, an Event of Bankruptcy respecting the Company
      shall
      not cause a dissolution of the Company.

     

    10.3       
      Liquidation
      and Final Distribution Proceeds.

    

    10.3.1   
        Upon
      the
      dissolution of the Company pursuant to Sections
      10.2.1
      through
10.2.4,
      the
      Company shall thereafter engage in no further business other than that which
      is
      necessary to wind up the business. The steps to be accomplished by the
      liquidator are as follows:

    

    A.   
       as
      promptly as possible after dissolution and again after final liquidation, the
      liquidator shall cause a proper accounting to be made by the auditor of the
      Company’s assets, liabilities, and operations through the last day of the
      calendar month in which the dissolution shall occur or the final liquidation
      shall be completed, as applicable;

    

    B.   
       the
      liquidator shall pay all of the debts and liabilities of the Company or
      otherwise make adequate provision therefor (including the establishment of
      a
      cash escrow fund for contingent liabilities in such amount and for such term
      as
      the liquidator may reasonably determine); and

    

    all
      remaining assets of the Company shall be distributed to the Members in
      accordance with Section
      5.2.3.

     

    10.4   Cancellation
      of Certificate.  
      On completion of the distribution of Company assets, the Member (or such other
      person as the Act may require or permit) shall file a Certificate of
      Cancellation with the Secretary of State of Delaware, and take such other
      actions as may be necessary to terminate the existence of the
      Company.

     

    10.5
       
      No
      Capital Contribution Upon Dissolution. 
       Each Member shall look solely to the assets of the Company for all
      distributions with respect to the Company, its Capital Contribution thereto,
      its
      Capital Account and its share of Profits or Losses, and shall have no recourse
      therefor (upon dissolution or otherwise) against Managing Member or any
      Non-Managing Member. If, upon liquidation of the Company or upon liquidation
      of
      a Member’s interest in the Company, a Member has a deficit balance in its
      Capital Account (after giving effect to all contributions, distributions and
      allocations for all taxable years, including the year during which the
      liquidation occurs), such Member shall not be obligated to make any capital
      contribution with respect to such deficit.

     

     

    
      	
              11.

            	
              REPRESENTATIONS,
                WARRANTIES AND COVENANTS OF THE
                MEMBERS

            

    

    

    To
      induce
      the other Member to enter into this Agreement, each Member hereby represents,
      warrants and covenants as follows to the Company and to the other
      Member:

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    11.1     
       Authority.   
      It has been duly formed and is a validly existing in the jurisdiction of its
      formation, is in good standing, and with requisite power to execute this
      Agreement and perform all its obligations hereunder. The persons and entities
      executing this Agreement and all assignments contemplated hereby on its behalf
      have the power and authority to enter into this Agreement. The execution,
      delivery and performance of this Agreement by it has been duly and validly
      authorized by all necessary action of it. This Agreement has been duly executed
      and delivered by it and constitutes a legal, valid and binding obligation of
      such Member, enforceable against it in accordance with the terms
      hereof.

     

    11.2     
       Consents.   
      It has obtained all consents required to enter into and perform this Agreement
      required under any company agreement, shareholder agreement, limited liability
      company agreement, covenant, charter, declaration of trust, or other agreement
      concerning it or to which it is a party or which is binding upon it or by any
      law or regulations or any judgment, order or decree of any governmental body,
      agency or court having jurisdiction over it.

     

    11.3     
       No
      Conflict.  
       Neither the execution and delivery of this Agreement nor the consummation
      of the transactions herein contemplated will conflict with, result in a breach
      of or constitute (with or without the giving of notice or the passing of time,
      or both) a default under, or otherwise adversely affect any contract, agreement,
      instrument, license or undertaking to which such Member or any of its Affiliates
      is a party or by which it or any of them or any of their respective properties
      or assets is or may be bound.

     

    
      11.4     
         No
        Broker.   
        Neither TRS Member nor any of its Affiliates have dealt with any broker or
        finder in connection with the transactions between the parties hereto
        contemplated by this Agreement, except that Mystic Member has dealt with
        Hodges
        Ward Elliott, whom Mystic Member will pay pursuant to a separate agreement.
        Each
        Member agrees to defend, indemnify and hold the other harmless from and against
        any and all loss, liability party may incur arising by reason of the above
        representation being false.

       

      11.5     
         Foreign
        Partner.   
        It is neither a “foreign person” within the meaning of Code Section 1445(f) nor
        a “foreign partner” within the meaning of Code Section 1446(e).

       

    

    Each
      Member hereby agrees to and shall defend, indemnify, and hold the Company and
      the other Member harmless from and against any loss or damage caused by or
      accruing from a breach by such indemnifying Member of any representation,
      warranty or covenant made by it in this Agreement.

     

     

    
      	
              12.

            	
              BUY-SELL
                DISPUTE RESOLUTION.

            

    

    

    12.1.1   
        From
      and
      after the third anniversary of the Contribution Agreement Closing Date, in
      the
      event that:

    

    A.  
       at
      any
      time there exists a Major Dispute under this Agreement or under the Limited
      Liability Company Agreement of Mystic Partners, LLC (other than failure to
      agree
      on an Operating Budget), in which case either Member may be an initiating party;
      or

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    B.  
       an
      Event
      of Bankruptcy shall occur or exist with respect to a Member or a member of
      Mystic Partners LLC affiliated with such Member or its direct or indirect parent
      entity, in which case only the other Member may be the initiating
      party.

    

    12.1.2   
       at
      any
      time, the proviso in Section 8.1.2 applies, in which case only Mystic Member
      may
      be the initiating party,

    

    then
      the
      Member that is permitted to be the initiating party under this Section may
      exercise its right to initiate the provisions of this Article (the “Buy-Sell
      Option”).
      The
      Member desiring to exercise the Buy-Sell Option (“Offeror”)
      shall
      do so by giving notice (the “Initiating
      Notice”)
      to the
      other Member (“Offeree”)
      setting forth a statement of intent to invoke its rights under this Article,
      stating therein the aggregate dollar amount (the “Valuation
      Amount”)
      that
      Offeror would be willing to pay for the assets of the Company as of the Buy-Sell
      Closing Date (hereinafter defined) free and clear of all liabilities (as if
      unencumbered). Notwithstanding anything to the contrary contained in this
      Agreement, in no event will the purchase price paid for a Membership Interest
      pursuant to this Article be less than zero.

    

    After
      receipt of such notice, Offeree shall elect either to (1) sell its entire
      Membership Interest to Offeror for an amount equal to the amount Offeree would
      have been entitled to receive if the Company had sold its assets for the
      Valuation Amount on the Buy-Sell Closing Date and the Company had immediately
      paid all Company liabilities and distributed the resulting Capital Proceeds
      to
      the Members in satisfaction of their interests in the Company pursuant to the
      liquidating provisions of Article
      10
      hereof,
      or (2) purchase the entire Membership Interest of Offeror for an amount equal
      to
      the amount Offeror would have been entitled to receive if the Company had sold
      all of its assets for the Valuation Amount on the Buy-Sell Closing Date and
      the
      Company had immediately paid all Company liabilities and distributed the
      resulting Capital Proceeds of the sale to the Members in satisfaction of their
      interests in the Company pursuant to the liquidating provisions of Article
      10
      hereof.
      If the Buy-Sell Option is exercised, then Offeree shall have 45 days after
      the
      giving of Offeror’s notice in which to exercise either of its options by giving
      written notice to Offeror. If Offeree does not elect to acquire Offeror’s
      Membership Interest within the 45-day period, Offeree shall be deemed to have
      elected to sell its interest to Offeror. Within 3 Business Days after an
      election has been made under this Section (whether deemed or otherwise) the
      acquiring Member shall deposit with an escrow agent selected by the selling
      Member and reasonably acceptable to the acquiring Member an earnest money
      deposit in an amount equal to 10% of the amount the selling Member is entitled
      to receive for its Membership Interest under this Section, which deposit will
      be
      applied to the purchase price at Closing. Only contemporaneously with the
      closing under this Article, the acquiring Member may assign its right to acquire
      the interest of the selling Member to another party designated by the acquiring
      Member so long as the acquiring Member remains liable for such
      purchase.

     

    12.2 
       
      Closing. 
       The closing of an acquisition pursuant to this Article shall be held
      at
      the principal place of business of the Company on a mutually acceptable date
      (the “Buy-Sell Closing Date”) not later than 90 days after the Initiating
      Notice. The acquiring Member may extend the Buy-Sell Closing Date for up to
      sixty days after the foregoing 90-day period, provided that not later than
      75
      days after the Initiating Notice the acquiring Member has given notice of such
      extension and unconditionally made a purchase deposit of [$1,000,000] in escrow
      with an escrow agent mutually acceptable to acquiring Member and selling Member.
      At the Closing of the disposition and acquisition of such interests the
      following shall occur:

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    

    12.2.1  
        The
      selling Member shall assign to the acquiring Member or its designee the selling
      Member’s Membership Interest in accordance with the instructions of the
      acquiring Member, and shall execute and deliver to the acquiring Member or
      its
      designee all documents which may be reasonably required to give effect to the
      disposition and acquisition of such interests, in each case free and clear
      of
      all liens, claims, and encumbrances, with covenants of general
      warranty;

    

    12.2.2    
       if
      any
      assumption fees under any loan are due or owing due to the assignment of a
      Member’s Membership Interest, then the Company shall pay for such fees when due;
      and

    

    12.2.3    
       The
      acquiring Member shall pay to the selling Member the consideration therefor
      in
      cash.

     

    12.3       
       Buy-Sell
      Default

    

    12.3.1   
        If
      the
      acquiring Member (for such purposes the “Defaulted
      Acquirer”)
      defaults in its obligation to buy in accordance with this Article, then the
      selling Member (for such purposes, the “Replacement
      Acquirer”)
      shall
      exercise one of the following alternative remedies within 30 days after the
      Defaulted Acquirer’s default as the Replacement Acquirer’s sole and exclusive
      remedy for such default:

    

    A.   
       The
      Replacement Acquirer shall purchase the Defaulted Acquirer’s Membership Interest
      on the terms set forth above, such closing to occur not later than 180 days
      after the Initiating Notice, except that the purchase price shall be 90% of
      the
      amount that the Defaulted Acquirer would be entitled to receive for its
      Membership Interest under Section
      13.1;
      or

    

    B.   
       The
      Replacement Acquirer shall retain the earnest money deposit as full liquidated
      damages for such default of the Defaulted Acquirer, the Members hereby
      acknowledging and agreeing that it is impossible to more precisely estimate
      the
      damages to be suffered by the Replacement Acquirer upon the Defaulted Acquirer’s
      default and the Members acknowledge and agree that the earnest money deposit
      that may be retained by the Replacement Acquirer is intended not as a penalty,
      but as full liquidated damages for such default of the Defaulted Acquirer.
      In
      the event the Defaulted Acquirer failed to make its earnest money deposit as
      required in Section
      12.1
      and the
      Replacement Acquirer has elected its remedy under this Section
      12.3,
      then
      the Replacement Acquirer shall have the right to recover an award or judgment
      against the Defaulted Acquirer in the amount of such required earnest money
      deposit, together with its reasonable attorneys’ fee and costs incurred in
      obtaining such award or judgment.

    

    12.3.2   
       If
      the
      selling Member defaults in its obligation to sell in accordance with this
      Article, the acquiring Member shall exercise one of the following alternative
      remedies within 30 days after the selling Member’s default as the acquiring
      Member’s sole and exclusive remedy for such default:

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

                   
      A.    The
      acquiring Member shall be entitled to demand and receive a return of its earnest
      money deposit previously deposited with the selling Member; or

    

    B.   
       The
      acquiring Member shall be entitled to seek specific performance of the selling
      Member’s obligations under this Article, the Members expressly agreeing that the
      remedy at law for breach of the obligations of the selling Member set forth
      in
      this Article is inadequate in view of (A) the complexities and uncertainties
      in
      measuring the actual damage to be sustained by the acquiring Member on account
      of the default of the selling Member; and (B) the uniqueness of the Company
      business and the Members’ relationships.

     

    12.4        
      Payment
      of Debts.  
      If, at the Buy-Sell Closing Date, the selling Member has any outstanding debts
      to the Company or the acquiring Member relating to the Company, all proceeds
      of
      the purchase price due the selling Member for its Membership Interest will
      be
      paid to the Company or the acquiring Member (pro-rata in accordance with the
      amounts owed by the selling Member to each) for and on behalf of the selling
      Member until all the debts will have been paid and discharged in full. The
      acquiring Member will be entitled to deduct from the amounts otherwise payable
      to the selling Member any and all amounts owed to the acquiring Member,
      including damages owed by reason of any default, to the extent agreed by the
      parties or to the extent such damages have been reduced to an arbitration award
      or a final nonappealable judgment, as applicable.

     

    12.5       
       Release
      of Capital Contribution Obligations.  
      At the time of closing on the purchase and sale of a Membership Interest
      pursuant to this Article, each selling Member will be released from any further
      obligation to make Capital Contributions to the Company.

     

    12.6       
       Operations
      in Pre-Closing Period.  
      From the date the Initiating Notice is given until the date the closing occurs
      under this Article or, if earlier, the date on which the Members agree not
      to
      proceed with such closing, the Company will continue to be operated in the
      ordinary course as though the closing were not going to occur, the Members
      will
      continue to have all power and authority granted in this Agreement (including
      the power to make distributions), and the Members will exercise their power
      and
      authority in good faith and without regard to the fact that such closing may
      occur (although the selling Member shall not unreasonably withhold any consents
      with respect to the Property during such period); provided, however, that,
      any
      and all distributions received by the selling Member from the Company during
      such period representing distributions of Capital Proceeds shall be credited
      against and reduce the price otherwise payable to the selling Member for its
      Membership Interest and any Capital Contributions made by the selling Member
      during such period shall be added to and increase the price otherwise payable
      to
      the selling Member for its Membership Interest, and the Company shall not agree
      to sell or otherwise dispose of any Property; however, the Company shall be
      authorized to consummate any transactions that were the subject of binding
      contractual obligations entered into prior to the commencement of such
      period.

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    
      	
              13.

            	
              MISCELLANEOUS

            

    

     

    13.1     
       Waiver
      of Conflict of Interest. 
       The Company and the Members may, at their option, be represented by
      the
      same counsel. The attorneys, accountants and other experts who perform services
      for the Company may also perform services for a Member. To the extent that
      the
      foregoing representation constitutes a conflict of interest, the Company,
      Managing Member and each Non-Managing Member hereby expressly waive any such
      conflict of interest.

     

    13.2      
      Amendment
      by Members.  
      Except as otherwise stated in 13.3 the written approval of each Member
      shall be required to amend or waive any provision of this
      Agreement.

     

    13.3     
      Amendment
      by Managing Member. 
       Notwithstanding Section 13.2, any provision of this Agreement may
      be amended or waived from time to time by Managing Member, without the consent
      of any Non-Managing Member, only to the extent that such amendment or waiver
      is
      necessary or advisable in the opinion of Managing Member: (i) to qualify or
      continue the qualification of the Company as a limited liability company in
      which the Members have limited liability under the laws of any state; (ii)
      to
      ensure that the Company will be treated as a partnership for federal income
      tax
      purposes; (iii) to ensure that all allocations of Profits and Losses are
      respected for federal income tax purposes; and (vi) to properly reflect the
      Members and their respective Capital Sharing Ratios, as such Members may change
      due to admissions and withdrawals of Members in accordance with this
      Agreement.

    

    However,
      no amendment or waiver referred to above that would alter a Member’s Capital
      Contribution, Capital Account or Capital Sharing Ratio (except to the extent
      that such are indirectly affected by any amendments or waivers pertaining to
      such admissions or withdrawals of Managing or Non-Managing Members), the
      liability of a Member to third parties, or the removal of any Member shall
      be
      permitted without the prior approval of the Member so affected.

     

    13.4    
       Waivers. 
       No waiver by any Member of any default with respect to any provision,
      condition or requirement hereof shall be deemed to be a waiver of any other
      provision, condition or requirement hereof; nor shall any delay or omission
      of
      any Member to exercise any right hereunder in any manner impair the exercise
      of
      any such right accruing to it hereafter.

     

    13.5      No
      Assignments; Binding Effect. 
       This Agreement shall not be assigned or otherwise transferred (by
      operation of law or otherwise) by any Member (except as may be expressly
      permitted in this Agreement). This Agreement shall be binding upon and inure
      to
      the benefit of the parties hereto and their heirs, executors, administrators,
      successors, legal representatives and assigns permitted in accordance with
      this
      Agreement and the Act.

     

    13.6 
Notices. 
       Any notice, approval, consent or other communication required or permitted
      to any Member under this Agreement shall be in writing and shall be deemed
      to
      have been duly given or made: (i) if delivered personally by courier or
      otherwise, then as of the date delivered (the “Effective Date”) or if
      delivery is refused, then as of the date presented (also an “Effective
      Date”), or (ii) if sent or mailed by Federal Express, Express Mail or other
      overnight mail service to the Company and to each Member, then as of the first
      Business Day after the date so mailed (also an “Effective Date”). Each
      communication shall be addressed as follows:

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    

    
      	 	
              If
                to TRS Member:

            	
              Hersha
                Hospitality Trust

            	 
	 	 	
              510
                Walnut Street, 9th
                fl.

            	 
	 	 	
              Philadelphia,
                PA 19106

            	 
	 	 	
              Attn:
                Jay H. Shah

            	 
	 	 	 	 
	 	
              with
                a copy to:

            	
              Hunton
                & Williams LLP

            	 
	 	 	
              1900
                K Street NW

            	 
	 	 	
              Washington,
                DC 20006

            	 
	 	 	
              Attn:
                John M. Ratino, Esq.

            	 
	 	 	 	 
	 	
              If
                to Mystic Member:

            	
              c/o
                Waterford Group, LLC

            	 
	 	 	
              914
                Hartford Turnpike

            	 
	 	 	
              P.O.
                Box 715

            	 
	 	 	
              Waterford,
                CT 06385

            	 
	 	 	
              Attn:
                Len Wolman

            	 
	 	 	 	 
	 	
              with
                a copy to:

            	
              Latham
                & Watkins LLP

            	 
	 	 	
              885
                Third Ave.

            	 
	 	 	
              New
                York, NY 10022

            	 
	 	 	
              Attn:
                Raymond Lin (024576-0017)

            	 

    

    

    The
      parties may change their addresses for subsequent notice, by a notice sent
      to
      each other party. The parties may also send courtesy notices by facsimile to
      TRS
      Member at ______________, or to Mystic Member at (860) 447-8554, although such
      facsimile notices shall not be considered to have been officially given
      hereunder.

     

    13.7  
       Certain
      Waivers.  
      The Members waive any and all rights they may have to a jury trial, and any
      and
      all rights they may have to punitive, special, exemplary, or consequential
      damages, in respect of any dispute based on this Agreement.

     

    13.8  
       Preservation
      of Intent. 
       If any provision of this Agreement is determined by any court having
      jurisdiction to be illegal or in conflict with any laws of any state or
      jurisdiction, then the Members agree that such provision shall be modified
      to
      the extent legally possible so that the intent of this Agreement may be legally
      carried out. If any one or more of the provisions contained herein, or the
      application thereof in any circumstances, is held invalid, illegal or
      unenforceable in any respect or for any reason, then the validity, legality
      and
      enforceability of any such provision in every other respect and of the remaining
      provisions hereof shall not be in any way impaired or affected, it being
      intended that all of the Members’ rights and privileges shall be enforceable to
      the fullest extent permitted by law.

     

    13.9  
       Entire
      Agreement. 
       This Agreement sets forth the entire and only agreement or understanding
      between the Members relating to the subject matter hereof and supersedes and
      cancels all previous agreements negotiations, commitments and representations
      in
      respect thereof among them, and no Member shall be bound by any conditions,
      definitions, warranties or representations with respect to the subject matter
      of
      this Agreement.

     

    13.10 
       Certain
      Rules of Construction. 
       All Article or Section titles or other captions in this Agreement are
      for
      convenience only, and shall not be deemed part of this Agreement and in no
      way
      define, limit, extend or describe the scope or intent of any provisions hereof.
      Unless the context otherwise requires: (i) an accounting term not otherwise
      defined has the meaning assigned to it in accordance with generally accepted
      accounting principles; (ii) words in the singular include the plural, and words
      in the plural include the singular; (iii) provisions apply to successive events
      and transactions; (iv) “herein”“hereof” and other words of similar import refer
      to this Agreement as a whole and not to any particular Article, Section or
      other
      subdivision; and (v) all references to “clauses,”“Sections” or “Articles” refer
      to clauses, Sections or Articles of this Agreement.

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    13.11 
       Counterparts.  
      This Agreement may be executed in any number of counterparts, each of which
      shall be deemed an original, but all of which shall constitute one and the
      same
      instrument.

     

    13.12 
       Governing
      Law; Venue.  
      This Agreement shall be governed by and construed in accordance with the laws
      of
      the State of Delaware.

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Members have caused this Agreement to be duly executed by their respective
      and
      duly authorized representatives as of the date first above written.

    

    
      	 	
              [TRS
                MEMBER]:

            	 
	 	 	 
	 	
              [HERSHA
                TRS, LLC]

            	 
	 	 	 
	 	
              By: 
                _________________________________

            	 
	 	
              Name:                                                                  
                

            	 
	 	
              Title:

            	 
	 	 	 
	 	 	 
	 	 	 
	 	
              [MYSTIC
                MEMBER]:

            	 
	 	 	 
	 	
              [MYSTIC
                LESSEE, LLC]

            	 
	 	 	 
	 	
              By: 
                _________________________________

            	 
	 	
              Name:                                                                   

            	 
	 	
              Title:Exhibit 10.9

    
      Exhibit
        10.9

      
        

      

      INVESTMENT
        AGREEMENT

      

      

      This
        Investment Agreement (the “Agreement”) is made and entered into as of the
        21st
        day
        of
        April 2005, by and among Casino Development & Management Company, LLC
        (“CD&M”), Thomas C. Wilmot (“Wilmot”), Buena Vista Development Company, LLC
        (“Development Company”) and Nevada Gold BVR, L.L.C. (“Nevada
        Gold”).

      

      Recitals

      

      Development
        Company is a single member New York limited liability company whose sole
        member
        is CD&M. CD&M has adopted an Operating Agreement for Development Company
        dated July 25, 2004 (the “Operating Agreement”).

      

      Development
        Company has entered into a Development Agreement dated as of December 29,
        2004 (the “Development Agreement”) with Buena Vista Rancheria of MeWuk Indians
        (the “Tribe”). Capitalized terms used in this Agreement and not otherwise
        defined herein shall have the meanings given such terms in the Development
        Agreement. The term “Tribe” shall, after the Assumption Date, include the Gaming
        Authority.

      

      Pursuant
        to the Development Agreement, Development Company has advanced $23,013,535
        to or
        for the benefit of the Tribe as of February 28, 2005. The amount so advanced
        has
        consisted of advances on the Interim Tribal Loan, Reimbursable Expenses and
        certain expenses that are not reimbursable by the Tribe. The source of these
        advances has been a $949,000 capital contribution and borrowings from CD&M,
        which has in turn borrowed from Wilmot and various entities in which Wilmot
        has
        a controlling interest (the “Affiliates”).

      

      Development
        Company expects to make significant additional advances on the Interim Tribal
        Loan and to incur additional Reimbursable Expenses before the Permanent
        Financing closes, and will finance such advances and expenses by additional
        borrowings from CD&M.

      

      Nevada
        Gold has been offered the opportunity to make a $14,810,200 loan to Development
        Company (the “Loan”) and to make a $189,800 capital contribution (the “Capital
        Contribution”) to Development Company. Development Company will use the proceeds
        of the Loan and the Capital Contribution to reduce its obligation to CD&M,
        and CD&M is expected to use the amount it receives from Development Company
        to reduce its obligations to Wilmot.

      

      Nevada
        Gold has agreed to make the Loan and Capital Contribution on the terms and
        subject to the conditions hereinafter set forth.

      

      Now,
        therefore, in consideration of the premises and of the mutual undertakings
        hereinafter set forth, the parties agree as follows:

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Agreement

       

      1. The
        Loan.
        On or
        before five (5) days following the date when all of the conditions precedent
        specified in Section 7 hereof have been satisfied (the “Closing Date”),
        Nevada Gold will disburse the proceeds of the Loan to Development Company
        by
        wire transfer or other payment acceptable to Development Company. The terms
        of
        the Loan shall be as follows:

       

      (a) The
        Loan
        will bear interest from and including the Closing Date to, but not including,
        the date of payment in full of the Loan. The rate of interest on the Loan
        shall
        be the same as the rate of interest that applies to the Interim Tribal Loan
        under the Development Agreement. Currently, that rate is a variable rate
        per
        annum equal to the prime rate most recently reported from time to time in
        the
“Money Rates” section of The
        Wall Street Journal,
        plus
        1%. Such rate shall not be reduced without the written concurrence of Nevada
        Gold. Interest shall be calculated on the basis of a 365- or 366-day year,
        as
        applicable, and actual days elapsed.

       

      (b) Principal
        and interest on the Loan shall be repaid by Development Company as
        follows:

       

      (i) On
        the
        day following the day on which the Development Company receives any payments
        from any source (other than from any Member or Affiliate of any Member),
        including without limitation any payment from the Tribe, the Development
        Company
        will pay principal and interest on the Loan in an aggregate amount equal
        to the
        payment received by it, except that if such day is not a business day, such
        payment shall be due on the next-following business day and interest shall
        continue to accrue on the Loan until such day. “Business day” means a day on
        which banks are not required or authorized by law to close in New York.

       

      Any
        payment on the Loan shall be applied first to accrued and outstanding interest,
        second to any other amounts that may be owing by Development Company in respect
        of the Loan and third to principal. Development Company will use such payments
        to repay the Loan in full before it repays any other obligations or makes
        any
        distributions to its members. For the avoidance of misunderstanding, the
        parties
        agree that the first payments received by Development Company from the Tribe,
        whether they consist of Interim Tribal Loan repayments, payments of Reimbursable
        Expenses, payments of Development Fees, any other payment, or a combination
        of
        these, or from any other source, will be used first to repay the Loan, and
        second to repay any other debt obligations of Development Company, including
        its
        obligations to CD&M, before any distributions are made to
        members.

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      (ii) Upon
        the
        occurrence of a Termination Event. “Termination Event” occurs if the Development
        Agreement is terminated by the Tribe and a court or arbitrator makes a final
        and
        non-appealable determination that the termination was appropriate due to
        a
        default by Development Company or a final settlement resulting in such a
        termination is agreed to by Development Company and the Tribe with the consent
        of Nevada Gold. No Termination Event shall be deemed to have occurred if
        such
        Termination Event solely and directly results from the action or inaction
        specifically authorized in writing by Nevada Gold or if the default occurred
        solely as a result of any action by Nevada Gold, or any inaction by it in
        circumstances where it was contractually or legally required to take action,
        including a determination by the Tribe, made in good faith and with due process,
        that Nevada Gold was unsuitable for licensing.

       

      (c) Principal
        and interest on the Loan may be prepaid in whole or in part at any time without
        premium or penalty on one business day’s prior notice by Development Company to
        Nevada Gold, and if such notice is given it shall be irrevocable and such
        principal and interest shall be due and payable on the date specified on
        such
        notice. Accrued and unpaid interest on the principal amount prepaid shall
        be due
        and payable on the date of any prepayment of principal. Development Company
        may
        borrow money from CD&M or any of its Affiliates for the purpose of prepaying
        the Loan. Any amount so borrowed by Development Company shall bear interest
        at
        the same rate that applies to the Interim Tribal Loan under the Development
        Agreement.

       

      (d) Development
        Company’s obligation to repay the Loan shall be evidenced by its promissory note
        in the form of Exhibit B.

       

      2. Capital
        Contribution and Membership Interest.
        Nevada
        Gold will provide the Capital Contribution at the same time that it makes
        the
        Loan.

       

      (a) In
        consideration for its Capital Contribution, Nevada Gold will receive the
        Class B Membership Interest (the “Membership Interest”), entitling it to
        all of the rights of the “Class B Member” under the Amended and Restated
        Operating Agreement of Buena Vista Development Company, LLC, in the form
        of
        Exhibit A hereto dated as of the date hereof (the “Operating Agreement”).
        The Operating Agreement shall not be deemed delivered by the parties and
        shall
        not be effective until Nevada Gold has disbursed the proceeds of the Loan
        and
        provided the Capital Contribution to the Development Company.

       

      (b) The
        Membership Interest shall entitle Nevada Gold to distributions in amounts
        to be
        calculated based on its Percentage Interest of “Net Development Revenue” and
“Construction Management Profits,” as those terms are defined in the Operating
        Agreement. “Percentage Interest” of the Class B Member means:

      

      20%,
        if
        the entire principal of and interest on the Loan is paid no later than six
        months after the Closing Date;

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      25%,
        if
        the entire principal of and interest on the Loan is paid after six months
        following the Closing Date, but no later than twelve months following that
        date;

      

      30%,
        if
        the entire principal of and interest on the Loan is paid after twelve months
        following the Closing Date, but no later than eighteen months following that
        date;

      

      35%,
        if
        the entire principal of and interest on the Loan is paid after eighteen months
        following the Closing Date, but no later than twenty-four months following
        that
        date; and

      

      40%,
        if
        the entire principal of and interest on the Loan is paid after twenty-four
        months following the Closing Date.

      

      “Percentage
        Interest” of the Class A Member means 100% less the Percentage Interest of the
        Class B Member.

       

      3. Security
        Interest.  Development
        Company hereby grants to Nevada Gold, as security for the payment of the
        Loan, a
        security interest in:

       

      (a) all
        accounts receivable that may be owing by the Tribe or any other person to
        Development Company, whether now existing or hereafter arising;

       

      (b) all
        rights (but no obligations) of Development Company under the Development
        Agreement and any other agreement between Development Company and the Tribe,
        including without limitation any and all rights to payments from the Tribe
        under
        the Development Agreement or otherwise;

       

      (c) all
        cash
        from time to time held by Development Company, all investments thereof, all
        deposit accounts (and any amounts credited thereto) for which Development
        Company is the customer, all securities accounts for which Development Company
        is the entitlement holder and all financial assets from time to time credited
        to
        any securities accounts; and

       

      (d) all
        proceeds of any of the foregoing (collectively the “Collateral”).

       

      This
        security interest is granted pursuant to and in accordance with the provisions
        of the Uniform Commercial Code of the State of New York, and the Development
        Company agrees that in the event of any default in the payment or performance
        of
        the Loan which continues for a period of five (5) Business Days after the
        giving
        by Nevada Gold to the Development Company of notice of such default, Nevada
        Gold
        shall have and is hereby granted all the rights, remedies, and recourses
        afforded a secured party under the Uniform Commercial Code of the State of
        New
        York, including without limitation, realizing upon such collateral and selling
        such interest at public or private sale or retaining such interest in accordance
        with the Uniform Commercial Code of the State of New York. To evidence such
        security interest, the Development Company shall execute such documents from
        time to time as may be reasonably necessary or appropriate.

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      This
        security interest shall terminate when all principal and interest on and
        other
        amounts owing in respect of the Loan have been paid in full, and the obligations
        secured shall include only the Loan and shall not extend to any distributions
        to
        which Nevada Gold may be entitled as a member of Development
        Company.

      

      Development
        Company represents and warrants that the above described security interest
        is a
        duly created security interest, and no other security interests in the
        Collateral have been granted to any other party.

       

      4. Permitted
        Expenses; Budgets; Information.

       

      (a) Prior
        to
        the Tribe’s receipt of Permanent Financing, Development Company will finance all
        development activities of the Tribe and incur significant out-of-pocket
        expenses. Prior to the Closing Date, Development Company will provide each
        member a budget showing regular monthly advances that it expects to make
        to the
        Tribe. Development Company will advise its members in advance, to the extent
        feasible, of any significant unbudgeted expenditures. CD&M will discuss any
        unbudgeted expenses in excess of $50,000 for any single item, or $200,000
        in the
        aggregate, with Nevada Gold prior to their incurrence, but as the managing
        member of Development Company, CD&M shall have the final decision-making
        authority with respect to expenditures that CD&M reasonably deems necessary
        or desirable in connection with the development of the Project.

       

      (b) During
        the period commencing with the first draw on the Permanent Financing and
        ending
        on the opening date of the Project, Development Company will provide its
        members
        with copies of any documentation provided by Development Company to the Tribe
        and the Permanent Financing lenders or their delegates in support of draws,
        but
        shall have no obligation to provide monthly budgets. If monthly budgets are
        prepared by Development Company and provided to the Tribe or the Permanent
        Financing lenders, or simply used for internal purposes, Development Company
        will provide copies of such budgets to Nevada Gold.

       

      (c) Following
        the opening of the Project, Development Company will provide Nevada Gold
        periodic budgets as to anticipated Development Company expenses on at least
        a
        quarterly basis. Nevada Gold may approve or disapprove expenses, but approval
        may not be unreasonably withheld.

       

      (d) Development
        Company and CD&M agree to provide to Nevada Gold promptly upon receipt (or
        delivery, as the case may be) copies of all (i) monthly operating
        statements provided by the Tribe or the Gaming Authority under Section 6.5
        of the Development Agreement, (ii) the financial statements provided
        to the
        Development Company under Section 6.6 of the Development Agreement,
        (iii) all other notices delivered by the Tribe to the Development
        Company
        or by the Development Company to the Tribe pursuant to the terms of the
        Development Agreement; (iv) the Project Schedule and amendments thereto,
        and
        status reports provided by Wilmorite, Inc. under the Construction Management
        Agreement, and (v) business plans for the Project.

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (e) Development
        Company will pay its obligations in the manner required by this
        subparagraph.

       

      (i) Payment
        of Development Company’s obligations to CD&M, including obligations owed on
        the date of this Agreement and any additional borrowings from CD&M
        (collectively “Affiliate Debt”) shall be subordinate to payment of the Loan. No
        Affiliate Debt may be paid until the Loan has been paid in full.

       

      (ii) All
        Affiliate Debt shall bear interest at a rate equal to the interest rate born
        by
        the Interim Tribal Loan under the Development Agreement.

       

      (iii) If
        any
        indebtedness of the Tribe to Development Company is not paid out of Permanent
        Financing proceeds, Development Company may make any reasonable arrangement
        with
        the Tribe for the payment of such indebtedness following the opening of the
        Project. Regardless of such arrangement, any payments received by Development
        Company following such opening, regardless of how they may be characterized
        as
        between the Tribe and Development Company, shall be used, when and as received,
        first
        to repay
        the Loan with interest, second,
        after
        the Loan has been paid in full, to pay indebtedness owed to CD&M and any of
        its Affiliates, until all such indebtedness shall have been paid in full,
        and
third,
        after
        all of the indebtedness owed by Development to Nevada Gold, CD&M and any of
        its Affiliates has been paid in full, to pay distributions to Development
        Company’s members in accordance with the Operating Agreement.

       

      5. Modification
        of Development Agreement.
        The
        Development Agreement has been submitted to the Office of General Counsel
        for
        the NIGC, with a request that the Office of General Counsel determine that
        the
        Development Agreement is not a “management contract” and does not grant to
        Development Company a “proprietary interest” within the meaning of IGRA. If
        either of such determinations is not provided, for purposes of this Agreement,
        no default shall be deemed to have occurred under either this Agreement or
        the
        Development Agreement. In that event, CD&M shall in good faith seek to
        negotiate with the Tribe other terms or agreements that preserve as much
        as
        possible the economic return expected by Development Company under the
        Development Agreement, but no changes in the terms of the Development Agreement
        shall be made without the consent of Nevada Gold (which consent shall not
        be
        unreasonably withheld). Nevada Gold acknowledges that none of Development
        Company, CD&M or any Affiliate has made any representations that the Office
        of the General Counsel will make the requested determinations, and Nevada
        Gold,
        having made such investigation as it has deemed appropriate and having consulted
        with its own counsel, expressly assumes the risk that it will
        not.

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      6. Representations
        and Warranties.

       

      (a) By
        CD&M, Wilmot and Development Company.

       

      (i) Necessary
        Authority.
        CD&M and Development Company have full power and authority to execute and
        deliver this Agreement and to consummate the transactions contemplated
        hereby.

       

      (ii) Development
        Company and the Membership Interest.
        CD&M is the sole member of Development Company and no other person or entity
        except Nevada Gold has an option or right to become a member of Development
        Company.

       

      (iii) Binding
        Obligation.
        CD&M, Wilmot and Development Company have duly executed and delivered this
        Agreement, and this Agreement constitutes the legal, valid and binding
        obligation of each of them, enforceable against them and their respective
        heirs,
        legal representatives, successors and assigns in accordance with this
        Agreement’s terms except as the same may be limited by bankruptcy, insolvency,
        reorganization or other laws affecting the enforcement of creditors’ rights
        generally now or hereafter in effect, and subject to the availability of
        equitable remedies.

       

      (iv) No
        Conflicts.
        CD&M’s, Wilmot’s and Development Company’s execution, delivery and
        performance of this Agreement, as well as the consummation of the transactions
        contemplated hereby will not (i) require CD&M, Wilmot or Development Company
        to obtain the consent or approval of, or make any filing with, any person
        or
        public authority (except completion of Tribe’s and California’s licensing
        processes), (ii) constitute or result in a breach or violation of any of
        the
        terms and provisions of any agreement or instrument to which CD&M, Wilmot or
        Development Company is a party, or (iii) violate any law, regulations, judgment
        or order applicable to CD&M, Wilmot or Development Company. 

       

      (v) No
        Judgments.
        To
        their knowledge, there are no judgments outstanding against CD&M, Wilmot or
        Development Company, nor is there now pending or threatened any action, suit
        or
        proceeding before any court or governmental or regulatory authority, by,
        against
        or involving CD&M, Wilmot or Development Company. None of CD&M, Wilmot
        or Development Company (a) is in default with respect to any order, writ,
        injunction, or decree of any court; nor (b) is CD&M, Wilmot or Development
        Company in default in any material respect under any applicable law, order,
        regulation or demand of any governmental agency or instrumentality, a default
        under which would substantially and materially adversely affect the condition,
        financial or otherwise, of CD&M, Wilmot or Development Company, or
        compromise CD&M’s, Wilmot’s or Development Company’s ability to perform its
        obligations hereunder.

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      (vi) No
        Default.
        To the
        knowledge of CD&M, there is no default by CD&M, Wilmot or Development
        Company under any contract, lease agreement, instrument or commitment to
        which
        CD&M, Wilmot or Development Company is a party, a default under which would
        substantially and materially adversely affect the condition, financial or
        otherwise, of CD&M, Wilmot or Development Company, or compromise CD&M’s,
        Wilmot’s or Development Company’s ability to perform their obligations
        hereunder.

       

      (vii) Undisclosed
        Liabilities.
        Development Company does not have any material liabilities (absolute, accrued,
        contingent or otherwise), except liabilities incurred in connection with
        its
        development activities on behalf of the Tribe and reflected in its most recent
        financial statements.

       

      (viii) Suitability
        and Gaming Licenses.
        Development Company holds temporary licenses from the Tribe and has applied
        for
        all licenses necessary for it to perform its obligations under the Development
        Agreement. CD&M, Wilmot and Development Company are suitable to receive and
        hold gaming licenses from all applicable regulatory authorities, commissions,
        or
        agencies that have jurisdiction over the Facilities and none of CD&M,
Wilmot
        or
        Development Company has been found unsuitable for any reason, has been denied
        a
        gaming license, or has had a gaming license revoked or cancelled by any
        regulatory authority, commission or agency.

       

      (ix) $300,000
        Prior Note.
        None of
        the obligations of Greenville LLC, a New York limited liability company,
        as
        maker (“Maker”), contained in a certain $300,000 promissory note dated October
        24, 2003 (the “Note”), from the Maker in favor of Albietz & Samuel are
        obligations of Development Company or Nevada Gold. The principal paid on
        the
        Note by the Development Company in connection with the Development Agreement
        are
        Project Costs. The obligation of the Maker set forth in the Note to pay a
        non-profit corporation 3% of the funds earned with respect to the Tribe is
        not
        an obligation of the Development Company, or if it is, such payments will
        be
        made out of distributions payable to CD&M under the Operating Agreement and
        distributions to Nevada Gold shall not be reduced because of such
        obligation.

       

      (b) By
        Nevada
        Gold and, if applicable, Nevada Gold & Casinos, Inc., a Nevada corporation
        (“NGCI”).

       

      (i) Necessary
        Authority.
        Each of
        NGCI and Nevada Gold has full power and authority to execute and deliver
        this
        Agreement and to consummate the transactions contemplated hereby.

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      (ii) Binding
        Obligation.
        Each of
        NGCI and Nevada Gold has duly executed and delivered this Agreement, and
        this
        Agreement constitutes each such person’s legal, valid and binding obligation,
        enforceable against each such person and its assigns in accordance with its
        terms except as the same may be limited by bankruptcy, insolvency,
        reorganization or other laws affecting the enforcement of creditors’ rights
        generally now or hereafter in effect, and subject to the availability of
        equitable remedies.

       

      (iii) No
        Conflicts.
        Neither
        the execution, delivery and performance of this Agreement by NGCI and Nevada
        Gold nor the consummation of the transactions contemplated hereby will (i)
        require either such person to obtain the consent or approval of, or make
        any
        filing with, any person or public authority (except for any required filings
        with the Tribe and the State of California in connection with Development
        Company’s applications for licenses it needs in order to perform under the
        Development Agreement), (ii) constitute or result in
        a
        breach
        or
        violation of any of the terms and provisions of any agreement or instrument
        to
        which Nevada Gold or NGCI is a party or by which Nevada Gold or NGCI is bound,
        or (iii) violate any law, regulations, judgment or order applicable to Nevada
        Gold or NGCI.

       

      (iv) Suitability
        and Gaming Licenses.
        Nevada
        Gold and NGCI are suitable to receive and hold gaming licenses from all
        applicable regulatory authorities, commissions, or agencies that have
        jurisdiction over the Project and Nevada Gold and NGCI have not been found
        unsuitable for any reason, have not been denied a gaming license, and have
        not
        had a gaming license revoked or conditioned by any regulatory authority,
        commission or agency.

       

      (v) Sophisticated
        Investor.
        NGCI is
        a corporation whose stock has been registered pursuant to the U.S. Securities
        Act and is regularly traded on the American Stock Exchange. NGCI is, and
        has
        been since 1994, engaged primarily in the business of developing gaming
        businesses, and is a knowledgeable and sophisticated participant in several
        Indian gaming ventures. As such, NGCI has been able to evaluate the risks
        inherent in the Loan and Capital Contribution. NGCI is an “accredited investor”
        within the meaning of Rule 501 of Regulation D of the Securities Exchange
        Commission.

       

      (vi) Due
        Diligence.
        Wilmot,
        CD&M and Development Company have given NGCI and Nevada Gold adequate
        opportunity to examine their files and their attorneys’ files related to the
        Tribe and the Project and to make inquiries of Wilmot
        and
        legal counsel for Development Company concerning the Tribe and the Project
        and
        the risks of entering into this Agreement and have introduced NGCI and Nevada
        Gold to the Tribe’s Chairperson and Chief Executive Officer. NGCI and Nevada
        Gold have conducted their own investigation of the facts, circumstances and
        unresolved issues surrounding the Facilities and have concluded that is prudent
        to make the Loan and Capital Contribution on the terms and conditions of
        this
        Agreement.

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      7. Closing
        Conditions.

       

      (a) For
        the
        Benefit of Nevada Gold.

       

      The
        obligations of Nevada Gold shall be subject to the satisfaction, on or prior
        to
        the Closing Date, of each of the following conditions, any of which may be
        waived, in whole or in part, in writing by Nevada Gold:

       

      (i) Representations
        and Warranties True.
        The
        representations and warranties of CD&M, Wilmot and Development Company
        contained in this Agreement shall be true and correct in all material respects
        as of the date hereof and shall be deemed to have been made again at and
        as of
        the Closing Date and shall then be true in all material respects.

       

      (ii) Performance.
        Each of
        the documentary conditions precedent specified in Exhibit C shall
        have been
        satisfied by Development Company or waived by Nevada Gold in its sole
        discretion.

       

      (iii) Nevada
        Gold Approval.
        Nevada
        Gold shall not have reasonably determined that making the Loan and acquisition
        of the Membership Interest would violate the provisions of applicable law,
        or
        adversely affect any license held by Nevada Gold or Nevada Gold’s suitability to
        obtain or hold any gaming license.

       

      (iv) Due
        Diligence.
        Nevada
        Gold shall have completed due diligence on CD&M, Wilmot and Development
        Company and the results thereof shall be satisfactory to Nevada Gold in its
        reasonable discretion.

       

      (v) Licensing. Development
        Company shall have provided information about Nevada Gold and its affiliates
        to
        the Tribe’s Tribal Gaming Commission, and the Gaming Commission shall have
        advised Development Company in writing that after giving consideration to
        such
        information, Development Company’s temporary licenses have been extended for an
        additional period of three months or longer.

       

      (b) For
        the
        Benefit of CD&M, Wilmot and Development Company.

      

      The
        obligations of CD&M, Wilmot and Development Company under this Agreement
        shall be subject to the satisfaction, on or prior to the Closing Date, of
        each
        of the following conditions, any of which may be waived in writing by
        Wilmot:

       

      (i) Representations
        and Warranties True.
        The
        representations and warranties of Nevada Gold contained in this Agreement
        shall
        be true and correct in all material respects as of the date hereof and shall
        be
        deemed to have been made again at and as of the Closing Date and shall then
        be
        true in all material respects.

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      (ii) CD&M
        and Wilmot Approval.
        CD&M and Wilmot shall not have reasonably determined that the borrowing of
        the Loan from Nevada Gold or the issuance of the Membership Interest to Nevada
        Gold would violate the provisions of applicable law, or adversely affect
        any
        license held by CD&M, Wilmot or Development Company or CD&M’s, Wilmot’s
        or Development Company’s suitability to obtain or hold any gaming
        license.

       

      8. Further
        Covenants.

       

      (a) Development
        Company will not (i) violate the Development Agreement in any material respect
        or if the effect is to give Tribe right to terminate, or (ii) amend
        the
        Development Agreement if the effect is to reduce Development Revenue, in
        each
        case without prior written consent of Nevada Gold, which consent shall not
        be
        unreasonably withheld.

       

      (b) Development
        Company will seek to assist the Tribe to negotiate terms of the Permanent
        Financing such that proceeds of the first Permanent Financing advance may
        be
        used by the Tribe to repay in full the Interim Tribal Loan and all Reimbursable
        Expenses.

       

      9. General.

       

      (a) Notices.
        Any
        required notice
        shall be delivered personally or by facsimile transmission, electronic mail
        or
        any other electronic means, United States mail or courier to each Person
        entitled to such notice at its business address. Notice by mail shall be
        deemed
        to be given when deposited in the United States mail properly addressed,
        with
        postage thereon prepaid. Facsimile transmission notice shall be deemed to
        be
        given upon completion of the transmission of the message to the number given
        to
        the Person sending such notice to the Person to which such notice is directed
        and receipt of a completed answer-back indicating receipt. Electronic notice
        shall be deemed to have been given when transmitted. Notice given personally
        or
        by courier shall be deemed to have been given when actually delivered.

       

      (b) Application
        of New York Law.
        This
        Agreement and its interpretation shall be governed exclusively by its terms
        and
        by the laws of the State of New York. The parties acknowledge that this
        Agreement and the Operating Agreement have been partially negotiated in New
        York
        and that the parties have signed this Agreement and the Operating Agreement
        in
        New York. The funding of the Loan shall be made in New York and all payments
        of
        principal and interest on such Loan shall be made to an account in New York
        designated by Nevada Gold.

       

      (c) Number,
        Gender, etc.
        Whenever the singular number is used in this Agreement and when required
        by the
        context, the same shall include the plural and vice versa, and the masculine
        gender shall include the feminine and neuter genders and vice versa.

       

      (d) Headings.
        The
        headings in this Agreement are inserted for convenience only and are in no
        way
        intended to describe, interpret, define, or limit the scope, extent or intent
        of
        this Agreement or any provision hereof.

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      (e) No
        Waiver.
        No
        failure or delay on the part of any Person in exercising any power or right
        under this Agreement shall operate as a waiver thereof, nor shall any single
        or
        partial exercise of any such power or right preclude any other or further
        exercise thereof or the exercise of any other power or right. Any waiver
        hereunder must be express and in writing by the party agreeing to waive any
        right hereunder.

       

      (f) Rights
        and Remedies Cumulative.
        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 the right to
        use
        any other remedy. Said rights and remedies are given in addition to any other
        legal rights the parties may have.

       

      (g) Severability.
        If any
        provision of this Agreement or the application thereof to any person or
        circumstance shall be invalid, illegal or unenforceable to any extent, the
        remainder of this Agreement and the application thereof shall not be affected
        and shall be enforceable to the fullest extent permitted by law.

       

      (h) Heirs,
        Successors and Assigns.
        Each
        and
        all of the covenants, terms, provisions and agreements herein contained shall
        be
        binding upon and inure to the benefit of the parties hereto and, to the extent
        permitted by this Agreement, their respective heirs, legal representatives,
        successors and assigns.

       

      (i) Third
        Parties.
        None of
        the provisions of this Agreement shall be for the benefit of or enforceable
        by
        any creditors of any of the parties hereto or any other third
        parties.

       

      (j) Counterparts.
        This
        Agreement may be executed in counterparts, each of which shall be deemed
        an
        original but all of which shall constitute one and the same
        instrument. 

       

      (k) Dispute
        Resolution.
        Any
        disputes hereunder shall be resolved as follows:

       

      (i) Meet
        and Confer.
        In the
        event that a dispute arises between parties to this Agreement (“Disputing
        Parties”) that is related to this Agreement, the Disputing Parties shall attempt
        in good faith to resolve any dispute promptly by negotiations between
        representatives with authority to settle the dispute. If the matter has not
        been
        resolved within thirty days of the first day of such negotiations, any Disputing
        Party may initiate arbitration as provided in Subsection
        (ii) of this Section 9(k).
        All
        negotiations pursuant to this clause will be confidential and will be treated
        as
        compromise and settlement negotiations under the U.S. Federal Rules of
        Evidence.

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      

       

      (ii) Arbitration.
        Any
        dispute arising out of or relating to this Agreement that is not resolved
        pursuant to Subsection
        (i) of this Section 9(k)
        shall be
        finally settled by arbitration conducted in accordance with the Rules of
        the
        American Arbitration Association. Any such arbitration shall be conducted
        before
        a single arbitrator selected in accordance with such rules. Any such arbitration
        shall take place in Rochester, New York. The arbitrator shall not alter,
        amend
        or modify the terms and conditions of this Agreement, but shall consider
        the
        pertinent facts and circumstances and be guided by the terms and conditions
        of
        this Agreement, which shall be binding upon them in resolving any dispute
        or
        controversy hereunder. The cost of the arbitration hereunder, including the
        cost
        of the record of transcripts (if any), the arbitrator’s fees, administrative
        fees, attorney’s fees, and all other fees involved, shall be paid by the
        Disputing Party determined by the arbitrator to be the non-prevailing Disputing
        Party, or otherwise allocated in an equitable manner as determined by the
        arbitrator.

       

      (iii) Binding
        Decision.
        The
        decision by the arbitrator shall be binding and conclusive on the Disputing
        Parties and their successors and assigns, and the parties shall comply with
        such
        decision in good faith. The decision or award of the arbitrator may be entered
        in any state or federal court having jurisdiction to enforce the judgment.
        The
        Disputing Parties shall be deemed to have consented to venue and personal
        jurisdiction in the jurisdictions provided in this Section.

       

      (l) Integration
        Clause.
        This
        Agreement, including any Exhibits presently or subsequently attached hereto,
        and
        the Operating Agreement constitute, collectively, the entire agreement between
        the parties hereto with respect to the subject matter hereof, and supersede
        all
        prior agreements and amendments, whether written or oral, between the parties
        with respect to the subject matter hereto.

      

      

      [SIGNATURE
        PAGES FOLLOW]

      

      

      
        
          
             

          

          
          

        

        
          13

          
            

          

        

        
          
          

          
          

        

      

      IN
        WITNESS WHEREOF, the undersigned have caused their signatures, or the signatures
        of their duly authorized representatives, to be set forth below on the day
        and
        year first above written in New York.

      

      Casino
        Development & Management Company, LLC

      By:
        CDM
        Management, LLC, its Managing Member

      

      By:
        S/S
        Thomas C. Wilmot, Sr.

      __________________________________

      Thomas
        C.
        Wilmot, Sr.

      Its:
        Manager

      

      

      Thomas
        C. Wilmot

      

      S/S
        Thomas C. Wilmot

      ___________________________________

      

      

      Buena
        Vista Development Company, LLC

      By:
        Casino Development & Management Company, LLC, its Managing
        Member

      By:
        CDM
        Management, LLC, its Managing Member

      

      By:
        S/S
        Thomas C. Wilmot

      ____________________________________

      Thomas
        C.
        Wilmot

      Its:
        Manager

      

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      STATE
        OF
        ___________________ )

      )
        ss

      COUNTY
        OF
        _________________)

      

      The
        foregoing instrument was acknowledged before me this ___ day of April, 2005,
        by
        Thomas C. Wilmot, Sr., individually and as the Manager of CDM Management,
        LLC, a
        New York limited liability company, on behalf of said company.

       

      
        ____________________________________

        Notary
          Public

       

      

      

      

      

      (Signature
        Page 1 of 2 to Investment Agreement)

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      Nevada
        Gold BVR, L.L.C.

      By:
        Nevada Gold & Casinos, Inc., its sole member

      

      By:
        S/S
        Cathryn L. Porter

      ____________________________________

      Cathryn
        L. Porter

      Its:
        General Counsel and Secretary

      

      

      Nevada
        Gold & Casinos, Inc.

      

      By:
        S/S
        Cathryn L. Porter

      ____________________________________

      Cathryn
        L. Porter

      Its:
        General Counsel and Secretary

      (For
        purposes of Section 6(b) only.)

      

      STATE
        OF
        ___________________ )

      )
        ss

      COUNTY
        OF
        _________________)

      

      The
        foregoing instrument was acknowledged before me this ___ day of April, 2005,
        by
        Cathryn L. Porter, as the General Counsel and Secretary of Nevada Gold &
        Casinos, Inc., the sole member of Nevada Gold BVR, L.L.C., on behalf of Nevada
        Gold BVR, L.L.C.

       

      

      ____________________________________

      Notary
        Public

      

      
         

      

      STATE
        OF
        ___________________ )

      )
        ss

      COUNTY
        OF
        _________________)

      

      The
        foregoing instrument was acknowledged before me this ___ day of April, 2005,
        by
        Cathryn L. Porter, as the General Counsel and Secretary of Nevada Gold &
        Casinos, Inc., on behalf of said company.

      

      
        

        ____________________________________

        Notary
          Public

      

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        

      (Signature
        Page 2 of 2 to Investment Agreement)

       

       

      
17

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