Document:

Exhibit 10.1

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

OPERATING AGREEMENT

OF

DORAN CANTERBURY I, LLC 

 

THIS OPERATING AGREEMENT
(this “Agreement”), is made and entered into to be effective as of March 1, 2018 (the “Effective Date”)
by and among Doran Shakopee, LLC, a Minnesota limited liability company (“Doran”), Canterbury Development LLC,
a Minnesota limited liability company (“Canterbury”), and Doran Canterbury I, LLC, a Minnesota limited liability
company (the “Company”). Doran and Canterbury are each hereinafter referred to as a “Member”
and together as the “Members.”

 

BACKGROUND

 

A.           The
Members formed the Company by filing the Articles with the Minnesota Secretary of State on May 16, 2017.

 

B.           Each
Member (i) is familiar with the business plan of the Company, (ii) has reviewed this Agreement and has had the opportunity to consult
with such Member’s legal, tax and financial accounting advisors regarding this Agreement, and (iii) desires to enter into
this Agreement effective as of the Effective Date with the intention that this Agreement be the Company’s sole operating
agreement for purposes of the Revised Act.

 

NOW, THEREFORE, in
consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound, the Members hereby agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1           Definitions
of Certain Terms. As used herein, the following terms have the following meanings:

 

“Additional
Land” means the land owned by Canterbury or an Affiliate adjoining the Phase II Land and pictorially represented on Exhibit
A to this Agreement.

 

“Adjusted
Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital
Account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (i) increased for any amounts
such Member is unconditionally obligated to restore and the amount of such Member’s share of Company Minimum Gain and Member
Minimum Gain after taking into account any changes during such year, including such sums that are deemed obligated to restore pursuant
to Treasury Regulation § 1.704-2(g) and (i) or related regulations; and (ii) reduced by the items described in Treasury Regulation
§ 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

 

     

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Affiliate”
means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control
with such Person. For purposes of this definition, “control” when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings. A Person
is an Affiliate of an entity if such Person is a governor, director, manager, officer or legal representative of such entity, or
if such Person has a material financial interest in such entity. An individual Person’s Affiliates include such individual’s
spouse, lineal descendants and ascendants and any trust for any such individual Person’s benefit.

 

“Architect
Contract” means the written contract for architectural services for the Project to be entered into between the Company
and Doran Architects, as provided in Section 3.4 below.

 

“Articles”
means the Articles of Organization of the Company, prepared pursuant to Section 322C.0201 of the Revised Act and filed with the
Minnesota Secretary of State.

 

“Bankruptcy”
with respect to any Person, means the entry of an order for relief with respect to such Person under the federal bankruptcy code
(as set forth in Title 11 of the United States Code) or the insolvency of such Person under any state insolvency act.

 

“Book Value”
of an asset or a Member’s Interest means the net value reflected at any point in time on the books and records of the Company
in accordance with generally accepted accounting principles consistently applied.

 

“Breakeven
Occupancy” means that the Project, following its Substantial Completion, has attained a debt service coverage ratio of
at least 1.00 based on all sources of Project income and revenue, including ancillary income.

 

“Canterbury
Park” means Canterbury Park Holding Corporation, an Affiliate of Canterbury.

 

“Capital Account”
means the separate account established and maintained by the Company for each Member and each Transferee pursuant to Section
3.1 below.

 

“Capital Contribution”
means with respect to a Member the total amount of cash and the net Fair Value of property (or expense payments, where an interest
in Company Capital is issued for such payments with the agreement of the other Member, which shall not unreasonably be withheld),
contributed by such Member (or such Member’s Predecessor in Interest) to the Company for such Member’s Interest.

 

“City Project
Approval Process” means the process of the Company obtaining all approvals from the City required for the Project, including
specifically the approval of the City Development Agreements, but specifically excluding the approval of the Canterbury Park TIF
District.

 

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

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Common Area
Improvements” means one or more clubhouses to be constructed on the Project Land (including all furniture, fixtures,
equipment and amenities located therein, and including leasing and management offices for the Project); the security gatehouse
(including all furniture, fixtures and equipment located therein); a maintenance facility; outdoor amenity areas available for
use by Project tenants (including a swimming pool, spa, courtyards, pool equipment room, grilling stations, patio areas and similar
improvements); private roadways, driveways and parking areas; fencing; signs and markers; lighting; utility lines; landscaping
(including irrigation systems, retaining walls, fountains and water fixtures); breezeways; sidewalks, tunnel and trails; artwork;
and any decorative ponding improvements.

 

“Common Area
REOA” has the meaning set forth in Section 2.8 of this Agreement.

 

“Company Capital”
means at any measuring date the aggregate Capital Accounts of all Members.

 

“Company Minimum
Gain” has the meaning given to the term “partnership minimum gain” in Treasury Regulation §§1.704-2(b)(2)
and 1.704-2(d).

 

“Construction
Cost Overrun” means an amount equal to the aggregate actual costs and expenses incurred in attaining Substantial Completion
of the Project that are in excess of the amounts reflected on the Final Development Budget (after full application of any contingency
line items), as such amounts may be modified from time to time as set forth in Section 5.5 of this Agreement, including
on account of changes in scope, materials or substitutions for the Project.

 

“Construction
Services Agreement” means a written contract for construction of the Project, in the form of fixed bid, cost-plus with
guaranteed maximum price, or such other form as may be required or allowed by HUD, to be entered into between the Company and the
General Contractor, as provided in Section 3.5 of this Agreement.

 

“Covered Person”
means a Person entitled to indemnification under Section 322C.0408 of the Revised Act.

 

“Deferred
Construction Costs” means any costs identified as such in the Preliminary Development Budget.

 

“Distributions”
means any distributions by the Company to the Members of net cash available for such purpose under Section 4.1 of this Agreement.

 

“Ditch Property”
means the land owned by Canterbury adjoining the Project Land and pictorially depicted on Exhibit A to this Agreement.

 

“Ditch Property
Owner” means Canterbury Park Entertainment, LLC and Canterbury Exchange, LLC.

 

“Doran Architects”
means Doran Architects, LLC, an Affiliate of Doran.

 

“Doran Development”
means Doran Development, LLC, an Affiliate of Doran.

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Doran Management”
means Doran Management, LLC, an Affiliate of Doran.

 

“Drainage
and Ponding Easement” has the meaning set forth in Section 2.8 of this Agreement.

 

“EAW Property”
means the Subdivision Property and the parcel adjoining the Additional Land, pictorially depicted on Exhibit A to this Agreement.

 

“Existing
Pre-Development Costs” means costs incurred by the Members, or either of them, in connection with the development of
the Project between the date of the Term Sheet and the earlier to occur of February 28, 2018 or the Effective Date.

 

“Fair Value”
of an asset means its fair market value as reasonably determined by the Managing Member or as otherwise required by law or by this
Agreement, and taking Code §7701(g) into account where required by Treasury Regulations.

 

“Final Development
Budget” means the Preliminary Development Budget together with any and all final amendments made prior to closing on
Project Financing, as adopted in its final form by the Members under Section 5.5 or Section 5.6 of this Agreement,
as applicable.

 

“Future Pre-Development
Costs” means costs incurred by Doran in connection with the development of the Project on and after March 1, 2018.

 

“General Contractor”
means Doran Construction Company, LLC, an Affiliate of Doran.

 

“HUD”
means the U.S. Department of Housing and Urban Development.

 

“HUD Loan”
means the Project Financing, as hereinafter defined.

 

“HUD Operating
Deficit Escrow” means the operating deficit escrow required by HUD on the Project Financing to provide funding for operating
expenses and debt service when net income is not available and which shall be released by HUD upon the later of (i) Stabilization
or (ii) twelve months after final endorsement of the Project by HUD.

 

“HUD Required
Provisions” means certain provisions included in this Agreement as required by HUD as set forth in ARTICLE XII
hereof, which shall be effective and shall supersede any provision herein to the contrary or otherwise inconsistent with the application
of the HUD Required Provisions for as long as there is an outstanding HUD Loan. The HUD Required Provisions may be modified if
required by HUD.

 

“HUD Working
Capital Escrow” means the working capital escrow required by HUD on the Project Financing to cover accruals of taxes,
insurance, and interest in the case of construction delay, construction contingencies for cost overruns and change orders, and
other miscellaneous expenses which are not included in the Project Financing.

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Income”
and “Loss” mean, respectively, for each fiscal year or other period, an amount equal to the Company’s
taxable income or loss for such year or period, determined in accordance with Code § 703(a), except that for this purpose:
(i) all items of income, gain, deduction or loss required to be separately stated by Code § 703(a)(1) will be included in
taxable income or loss; (ii) tax exempt income will be added to taxable income or loss; (iii) any expenditures described in Code
§ 705(a)(2)(B) (or treated as Code § 705(a)(2)(B) expenditures pursuant to Treasury Regulation § 1.704-1(b)(2)(iv)(i))
and not otherwise taken into account in computing taxable income or loss will be subtracted; and (iv) taxable income or loss will
be adjusted to reflect any item of income or loss specially allocated in ARTICLE IV.

 

“Interest”
refers to all of a Member’s rights and interests in the Company in such Member’s capacity as a Member, all as provided
in the Articles, this Agreement and the Revised Act, including the Member’s interest in the capital, income, gain, deductions,
losses, and credits of the Company. Unless otherwise expressly separated, a Member’s Interest includes that Member’s
transferable interest under the Revised Act.

 

“Interest
Reserve” means the reserve described in Section 3.3(e) of this Agreement to fund payment of interest on Project
Financing during construction and initial lease-up of the Project.

 

“Letter of
Credit” means any letter of credit required by HUD pursuant to the Project Financing as collateral for the HUD Operating
Deficit Escrow and/or the HUD Working Capital Escrow.

 

“Liquidation
Proceeds” means all Property at the time of liquidation of the Company and all proceeds thereof, including net sale proceeds
upon a sale or other disposition of the Project by the Company.

 

“Loan Note”
means a promissory note in the form attached as Exhibit C to this Agreement.

 

“Majority
in Interest” means any Member or group of Members holding an aggregate of more than fifty percent (50%) of the Percentage
Interests held by all Members.

 

“Managing
Member” means Doran. The Managing Member is a “manager” as that term is defined in the Revised Act.

 

“Member Minimum
Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result
if such Member Nonrecourse Debt were treated as a Nonrecourse Debt, determined in accordance with Treasury Regulation §1.704-2(i)(3).

 

“Member Nonrecourse
Debt” means any indebtedness of the Company that would be a Nonrecourse Debt if such debt were not attributed to a loan
made or guaranteed by a Member within the meaning of Treasury Regulation §1.704-2(b)(4), or by a Person related to a Member,
within the meaning of Treasury Regulation §1.752-4(b).

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Member Nonrecourse
Deductions” has the same meaning as partner nonrecourse deductions set forth in Treasury Regulation § 1.704-2(i)(2).
Generally, the amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a fiscal year equals the net
increase during the year in the amount of the Member Minimum Gain (determined in accordance with Treasury Regulation § 1.704-2(i))
reduced (but not below zero) by the aggregate Distributions made during the year of proceeds of Member Nonrecourse Debt and allocable
to the increase in Member Minimum Gain determined according to the provisions of Treasury Regulation § 1.704-2(i).

 

“Member”
has the meaning set forth in the Preamble to this Agreement and each Person who is subsequently admitted to the Company as a Member
pursuant to Section 8.3 or Section 8.5, other than a Person who ceases to be a Member of the Company pursuant to
Section 8.7. The name, address, Capital Contributions and Percentage Interest of each Member are set forth on Schedule
1, as the same may be adjusted from time to time as required or permitted by the provisions of this Agreement.

 

“NOI”
means the monthly or annual income, as applicable, of the Company after taking into account all revenues collected from operations
of the Project and other income, and deducting all operating expenses and Property marketing fees, but before any deduction for
payments of principal, interest on indebtedness, depreciation or allocations to the Reserve for Replacement; provided, however,
that for so long as the Property Management Agreement is in effect, the wages, compensation and fees paid to Doran Management and
for its operating and service employees performing services at the Project under the Property Management Agreement shall be included
in operating expenses for the Project.

 

“Nonrecourse
Debt” means a Company liability with respect to which no Member or a related Person bears the economic risk of loss beyond
its Interest as determined under Treasury Regulation §§ 1.752-1(a)(2) and 1.752-2.

 

“Nonrecourse
Deductions” has the same meaning as nonrecourse deductions set forth in Treasury Regulation § 1.704-2(c). Generally,
the amount of Nonrecourse Deductions for a fiscal year equals the net increase in the amount of Company Minimum Gain (determined
in accordance with Treasury Regulation § 1.704.2(d)) during such year reduced (but not below zero) by the aggregate Distributions
made during the year of proceeds of a Nonrecourse Debt that are allocable to the increase in Company Minimum Gain, determined according
to the provisions of Treasury Regulation § 1.704-2(c) and (h).

 

“Officer”
means an individual designated as such by the Managing Member, with the responsibilities and duties specified or delegated by the
Managing Member, including the offices set forth in Section 5.10.

 

“Operating
Deficit” means NOI (excluding depreciation) less (i) accrued and due interest on the Project Financing, (ii) accrued
and due principal on the Project Financing, (iii) escrow for real estate taxes on the Project, (iv) escrow for insurance and (v)
the Reserve for Replacement, if the resulting sum is negative.

 

    6

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Percentage
Interest” means with respect to any Member, the portion of all of the Company’s outstanding Interests owned by
such Member, expressed as a percentage. The Percentage Interests of each Member are as set forth on Schedule 1, as may be
adjusted from time to time as required or permitted by the provisions of this Agreement.

 

“Permitted
Encumbrances” means any or all of the following: (a) liens for real property taxes (i) not yet due and payable or (ii)
the amount or validity of which is being contested in good faith by appropriate proceedings; (b) mechanics’ liens, materialmens’
liens, and similar encumbrances incurred in the ordinary course of business consistent with past practice securing amounts not
yet due and payable or being contested in good faith by appropriate proceedings; (c) zoning, entitlement, building and other land
use regulations that are not violated by the current use and operation of such real property; (d) covenants, conditions, restrictions,
easements and other exceptions that do not, individually or in the aggregate, materially impair the ownership, occupancy, intended
use, or insurability of the real property for ownership, use and operation by the Company or its Affiliates; (e) the Drainage and
Ponding Easement and the Common Area REOA described in Section 2.8 below; (f) those exceptions to title shown on that certain
Commitment for Title Insurance issued by Commercial Partners Title, LLC, as agent for Old Republic National Title Insurance Company,
as its File No. 54071 and having an effective date of February 5, 2018 which affect the Project Land and which are reasonably acceptable
to the Managing Member, on behalf of the Company; and (g) any other matters reasonably acceptable to the Managing Member, on behalf
of the Company, based on any future survey of the Project Land obtained by the Company in connection with, and prior to, closing
on the Project Financing.

 

“Permitted
Transferee” means an Affiliate of the Transferor.

 

“Person”
means any individual, partnership, limited liability company, corporation, cooperative, trust or other entity.

 

“Phase II
Land” means the land owned by Canterbury adjoining the Project Land and pictorially depicted on Exhibit A to this
Agreement.

 

“Phase II
Operating Agreement” means the separate operating agreement to be entered into by Doran and Canterbury for development
of the Phase II Land by the Phase II Owner, as described in Section 3.3(g) of this Agreement.

 

“Phase II
Owner” means Doran Canterbury II, LLC, a Minnesota limited liability company.

 

“Phase II
Project” means the potential development of a second multi-family market-rate apartment building and related improvements
on the Phase II Land by the Phase II Owner pursuant to the Phase II Operating Agreement.

 

“Predecessor
in Interest” means, (i) with respect to Canterbury, Canterbury Park, and (ii) with respect to Doran, Doran Development.

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Preliminary
Development Budget” means the preliminary budget for development tasks and activities required for predevelopment, development,
financing, construction, operation and ownership of the Project during the period through Substantial Completion of the Project
described in Section 2.8 of this Agreement and the estimated costs to complete such activities, as the categories for such
costs are set forth on Exhibit B to this Agreement. The Preliminary Development Budget for the Project shall include line
items for Existing Pre-Development Costs and Future Pre-Development Costs incurred subsequent to execution of the Term Sheet and
prior to the Effective Date.

 

“Prime Rate”
means the Prime Rate published in the Wall Street Journal Money Rates column on the last business day of each month, which rate
shall be deemed to be in effect for the entirety of such month.

 

“Project”
means the development and construction on the Project Land of a residential apartment building of approximately 300 units in
three stories, with four levels of apartments and an enclosed, three-level parking garage, together with surface parking, landscaping,
and the Common Area Improvements, together with all fixtures, equipment and related assets to be used in its operation. “Project”
shall also refer in this Agreement to the Project Land, improvements and related assets as an operating property.

 

“Project Financing”
means mortgage financing for development and construction of the Project pursuant to the HUD Section 221(d)(4) program.

 

“Project Land”
means the site of approximately 13.33 acres of land owned by Canterbury or one or more of its Affiliates on the Effective Date
and located in Shakopee, Minnesota (pictorially represented on Exhibit A to this Agreement).

 

“Project Manager”
means the individual appointed by Doran under Section 3.4 of this Agreement for daily implementation of development of the
Project.

 

“Property”
means all assets that the Company may own or otherwise have an interest in from time to time, including the Project.

 

“Property
Management Agreement” means the written property management contract to be entered into between the Company and Doran
Management.

 

“Related Party
Agreement” means the Architect Contract, the Construction Services Agreement, the Property Management Agreement and any
other contract or agreement between the Company (or any of its Affiliates) and one or more of the Members (or their respective
Affiliates).

 

“Reserve for
Replacement” means, for so long as the Property Management Agreement is in effect, the reserve as defined in the Property
Management Agreement. If at any time the Property Management Agreement shall not be in effect, Reserve for Replacement means the
reserve for future maintenance, repair, replacement and improvement of the Project, for future investments, and for such other
purposes as the Managing Member may reasonably deem necessary or advisable and in accordance with the Annual Budget. In all events,
the Reserve for Replacement shall satisfy the requirements of the Project Financing.

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

“Retention
Pond Area” means the land owned by Canterbury adjoining the Project Land and pictorially depicted on Exhibit A
to this Agreement, upon which the drainage water retention pond that will service the Subdivision Property will be created and
maintained.

 

“Retention
Pond Owner” means Canterbury.

 

“Revaluation”
means the occurrence of any event described in clauses (i), (ii), (iii), (iv) or (v) of Section 3.1(c) as a result of which
the book basis of Property is adjusted by the Company to its Fair Value.

 

“Revised Act”
means the Minnesota Revised Uniform Limited Liability Company Act (Minn. Stat. §§ 322C.0101 et. seq.).

 

“Stabilization”
means six (6) consecutive months of Breakeven Occupancy.

 

“Subdivision
Property” means, in the aggregate, the Project Land, the Phase II Land, the Additional Land, the Retention Pond Area
and the Ditch Property.

 

“Substantial
Completion” means, with respect to the Project, when construction is substantially complete in accordance with the terms
of the Construction Services Agreement, as such terms are approved by HUD in connection with the Project Financing.

 

“Super-Majority
in Interest” means a Member or group of Members holding an aggregate of more than sixty-seven percent (67%) of the Percentage
Interests held by all Members. A Transferee who has not become a Substitute Member shall not be allowed to vote on any matter requiring
Super-Majority in Interest, and any such Super-Majority in Interest vote shall exclude Transferees who have not become Substitute
Members in computing the threshold required by this definition.

 

“Tax Matters
Member” means the Person designated pursuant to Section 7.4 to represent the Company in matters before the Internal
Revenue Service.

 

“Term Sheet”
means that certain term sheet dated April 5, 2016 entered into by Canterbury Park and Doran Development.

 

“Transfer”
means (i) when used as a verb, to give, sell, exchange, assign, transfer, pledge, hypothecate, bequeath, devise or otherwise dispose
of or encumber, and (ii) when used as a noun, the nouns corresponding to such verbs, in either case voluntarily or involuntarily,
by operation of law or otherwise.

 

“Treasury
Regulations” means the regulations promulgated by the Treasury Department with respect to the Code.

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

Article
II

BUSINESS PURPOSES, OFFICES, AND RELATED MATTERS

 

2.1           Name;
Business Purpose. The name of the Company is stated in the Articles. The business purpose of the Company is to design, develop,
finance and construct the Project on the Project Land, to operate, maintain and financially manage the Project following its design,
development, financing and construction, and to do any and all things necessary, appropriate or incidental thereto. The Company
is formed only for the foregoing business purpose and will not be deemed to create any agreement between the Members with respect
to any other activities whatsoever other than the activities within such business purpose.

 

2.2           Powers.
In addition to the powers and privileges conferred upon the Company by law and those incidental thereto, the Company has the same
powers as a person to do all things necessary or convenient to carry out its business and affairs.

 

2.3           Term.
The term of the Company shall continue until terminated as provided in this Agreement, but in no case shall the term of the Company
be less than at least ten years longer than the term of the HUD Loan.

 

2.4           Principal
Office. The principal office of the Company will be located at 7803 Glenroy Road, Suite 200, Bloomington, MN 55439-3126 or
at such other place as the Managing Member may determine from time to time.

 

2.5           Registered
Office. The Company shall continuously maintain a registered office for service of process in the State of Minnesota. The location
of the initial registered office of the Company shall be 7803 Glenroy Road, Suite 200, Bloomington, MN 55439-3126. The registered
office may be changed, from time to time, by the Managing Member.

 

2.6           Operating
Agreement. Subject only to Section 322C.0110 Subd. 2 and Subd. 3 of the Revised Act, the Members intend that this Agreement
govern all aspects of the Company’s business and affairs, including: (a) the formation, operation, ownership, governance,
management, and dissolution of the Company; (b) the allocation of Income and Loss, and Distributions; (c) the receipt of additional
capital, admission of new Members and all valuation issues associated with the receipt of such additional capital and admission
of Members; (d) the Transfer or encumbrance of Interests, and limitations on the transferability of Interests; (e) the specific
types of activities that do not violate the duty of care, duty of loyalty or the duty of fair dealing and good faith, (f) any limitation
of any fiduciary duty or any broadening of the scope of any indemnification or exculpation; and (g) any other matter related to
the Company’s business and affairs. Notwithstanding Section 322C.0102, Subd. 17 of the Revised Act, the Members acknowledge
and agree that this Agreement shall be the Company’s sole operating agreement for purposes of the Revised Act, in each case
as hereafter amended from time to time pursuant to Section 10.9, including any exhibits to this Agreement, and at no time
shall any operating agreement be created by oral or implied means. It is expressly intended that, during the entire term of this
Agreement, the provisions of this Agreement shall supersede any provisions of the Revised Act, as they now exist or as may be subsequently
amended or restated, that are inconsistent or conflict with the provisions of this Agreement to the maximum extent permitted by
law.

 

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Certain information in
this exhibit has been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information
is marked in this exhibit with brackets and five asterisks, as follows: [*****].

 

2.7          Ratification
of Certain Acts. The Company and each Member hereby adopt, approve and ratify all actions taken by the Company’s organizer
or organizers.

 

2.8          General
Plan for Development. The Members agree to the general plan of development for the Project set forth below in this Section
2.8.

 

(a)          The
development of the Project will begin with the preparation of the Preliminary Development Budget. The Company will then enter into
the Architect Contract, the Construction Services Agreement and the Property Management Agreement, as approved by a Super-Majority
in Interest of the Members. Prior to closing on Project Financing, the Final Development Budget shall be approved by the Members
under Section 5.5 or Section 5.6 of this Agreement, as applicable.

 

(b)          The
Project Land shall be conveyed to the Company by Canterbury pursuant to Section 3.3(b) below.

 

(c)          The
Company shall negotiate and enter into any required developer agreement and other agreements with the City of Shakopee, Minnesota
(the “City”) that are necessary or appropriate in connection with development of the Project (the “City
Development Agreements”).

 

(d)          The
Company, Canterbury and any applicable Canterbury Affiliates shall enter into a drainage and ponding easement and operating agreement
with the Retention Pond Owner and the Ditch Property Owner to grant easements and create covenants for the installation, use, operation,
maintenance, repair and replacement of a storm water retention pond on the Retention Pond Area that will serve the Project Land,
the Phase II Land and the Additional Land, for drainage of water onto the Retention Pond Area, and to satisfy all requirements
of any of the City Development Agreements relating thereto (the “Drainage and Ponding Easement”). Canterbury
agrees to cause the storm water retention pond to be constructed on the Retention Pond Area, together with all related installation,
replacement and re-routing of the drainage pipe currently running across the Project Land to the Retention Pond Area, as set forth
in the Drainage and Ponding Easement, at the sole cost of Canterbury or its Affiliates. If required by HUD or otherwise in connection
with the Project Financing, Canterbury further agrees to provide and establish a cash escrow deposit, letter of credit or other
surety arrangement in an amount equal to 125% of the estimated cost of such construction, or in such greater amount as may be required
to secure the Project Financing, the terms of which escrow agreement, letter of credit or other surety agreement shall give the
Managing Member the right to draw upon such funds if necessary to exercise the Company’s self-help remedies in the event
of any failure by Canterbury or its Affiliates to complete the construction of the storm water retention pond in accordance with
the Drainage and Ponding Easement.

 

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Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(e)        The
Company and Phase II Owner shall enter into a reciprocal easement and operating agreement to grant easements and create covenants
for the construction, installation, use, operation, maintenance, repair and replacement of the Common Area Improvements and any
common area improvements to be constructed on the Phase II Land as a part of the Phase II Project (the “Common Area REOA”).

 

(f)          The
Company and Canterbury shall enter into a fire lane easement agreement to grant easements and create covenants for the installation,
use, operation, maintenance, repair and replacement of a fire lane across the North twenty-five (25) feet of the Phase II Land
(adjoining the South boundary of the Project Land) to provide vehicular and pedestrian ingress and egress for fire trucks, emergency
vehicles and emergency personnel only, to and from the Project Land, and to satisfy all requirements of any of the City Development
Agreements relating thereto (the “Fire Lane Easement”).

 

(g)          The
Company and Canterbury shall enter into an ingress and egress easement agreement to grant easements and create covenants for the
installation, use, operation, maintenance, repair and replacement of an access roadway across the West sixty (60) feet of the Phase
II Land to provide vehicular and pedestrian ingress and egress to and from the Project Land (the “Access Easement”).

 

(h)          The
Drainage and Ponding Easement and the Common Area REOA shall be recorded against the Project Land and Phase II Land, and the easements
and covenants of the Drainage and Ponding Easement and the Common Area REOA shall run with the land and be binding on any future
owners of the Project Land and the Phase II Land. The Fire Lane Easement shall be recorded against the Phase II Land and shall
run with the land and be binding on any future owners of the Phase II Land. The Access Easement shall be recorded against the Phase
II Land and shall run with the land and be binding on any future owners of the Phase II Land.

 

(i)          Canterbury
or Canterbury Park will make application for the establishment of a Tax Increment Financing District (the “Canterbury
Park TIF District”) that is intended (i) to facilitate an overall infrastructure construction and upgrade project throughout
the property owned by Canterbury Park or by Canterbury (such as road construction, road upgrades, contributions to Scott County
road upgrade projects, extension and upgrade of utilities, installation of pathways, re-building of horse barns, creation of storm
water ponding and other related costs) and (ii) to fund (A) the Roadway Extension (hereinafter defined) and (B) the construction
of the required retention pond on the Retention Pond Area, and (C) road work planned by Canterbury on proposed Hauer Drive.

 

    12

     

    

 

Certain information in this exhibit has
been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked
in this exhibit with brackets and five asterisks, as follows: [*****].

 

2.9          Road
Vacation and Construction. As a part of its contribution of the Project Land under ARTICLE III of this Agreement, Canterbury
shall convey and dedicate to the City all land necessary for, and cause to be constructed, an extension of Shenandoah Drive, from
Vierling Drive East to Barensheer Road and associated improvements (including but not limited to road construction (including curbs
and gutters), road upgrades, extension and upgrade of utilities, installation of pathways, landscaping, traffic circles, ponding
and other related work), as generally depicted on Exhibit A to this Agreement (the “Roadway Extension”).
The Company and the Members shall take all actions necessary to obtain the vacation or partial vacation by the City of a portion
of Shenandoah Drive, the publicly dedicated (but unbuilt) roadway currently running through the Project Land, lying outside of
the area of the Roadway Extension. All costs of development and construction of the Roadway Extension, including any assessments
by the City relating to the Roadway Extension, and the vacation of Shenandoah Drive (the “Roadway Extension Costs”)
shall be Canterbury’s costs. The Roadway Extension shall be completed by July 1, 2019 unless otherwise agreed to by the Managing
Member, provided that such date shall be extended to the extent of any delay in such completion occasioned by the act or omission
of the Company. Notwithstanding anything contained in this Agreement to the contrary, the following shall be conditions precedent
to the obligation of Canterbury to commence development and construction of the Roadway Extension: (i) completion of the City Project
Approval Process, (ii) closing of the Project Financing, and (iii) commencement of construction of the Project under the Construction
Services Agreement; provided, however, that Canterbury, in its sole discretion, may waive any or all of such conditions precedent.

 

2.10        City
Project Approval Process; Termination of Agreement by Canterbury. In the event that within [*****] months after the successful
completion of the City Project Approval Process, Canterbury is unable (i) to obtain approval of the Canterbury Park TIF District,
or (ii) to obtain from the City alternative financing reasonably satisfactory to Canterbury for the Roadway Extension Costs, then
Canterbury shall have the right to terminate this Agreement by written notice to Doran, provided that Canterbury reimburses Doran
for the total of (i) [*****] percent ([*****]%) of the Existing Pre-Development Costs (hereinafter defined), plus (ii) [*****]
percent ([*****]%) of the Future Pre-Development Costs advanced by Doran through the date of such termination, plus (iii) Canterbury’s
share of the cost of the EAW (as provided for in Section 3.3(f).

 

Article
III

CAPITAL CONTRIBUTIONS, LOANS AND PROJECT DEVELOPMENT

 

3.1          Capital
Accounts.

 

(a)          The
Managing Member shall cause a separate Capital Account to be maintained for each Member and each Transferee. Each Member’s
Capital Account will be (i) increased by (A) the amount of money contributed by such Member, (B) the Fair Value of property contributed
by such Member (net of liabilities secured by such contributed property that the Company is considered to assume or take subject
to under Code § 752), (C) allocations to such Member, pursuant to ARTICLE IV, of Company Income (or items thereof),
and (D) to the extent not already netted out under clause (ii)(B) below, the amount of any Company liabilities assumed by the Member
or which are secured by any Property distributed to such Member; and (ii) decreased by (A) the amount of money distributed to such
Member, (B) the Fair Value of Property distributed to such Member (net of liabilities secured by such distributed Property that
such Member is considered to assume or take subject to under Code § 752), (C) allocations to such Member, pursuant to ARTICLE
IV, of Company Loss (or items thereof), and (D) to the extent not already netted out under clause (i)(B) above, the amount
of any liabilities of the Member assumed by the Company or which are secured by any Property contributed by such Member to the
Company.

 

    13

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(b)          If
any Interest is transferred in accordance with the terms of this Agreement, the Transferee will succeed to the Capital Account
of the Transferor to the extent it relates to the transferred Interest and the Capital Account of each Transferee will be increased
and decreased in the manner set forth above.

 

(c)          In
the event of (i) an additional contribution by an existing or an additional Member of more than a de minimis amount that
results in a shift in Percentage Interests, (ii) the distribution by the Company to a Member of more than a de minimis amount
of Property as consideration for an Interest, (iii) the grant of more than a de minimis Interest in the Company as consideration
for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity or by a new
Member acting in a Member capacity or in anticipation of being a Member, (iv) in connection with the issuance by the Company of
a non-compensatory option (other than an option for a de minimis Interest), or (v) the liquidation of the Company within
the meaning of Treasury Regulation § 1.704-1(b)(2)(ii)(g), the book basis of the Property will be adjusted to Fair Value and
the Capital Accounts of all the Members will be adjusted simultaneously to reflect the aggregate net adjustment to book basis as
if the Company recognized Income or Loss equal to the amount of such aggregate net adjustment (a “Revaluation”);
provided, however, that any Revaluation resulting from clauses (i), (ii), (iii) or (iv) above will be made only if the Members
determine that such Revaluation is necessary or appropriate to reflect the relative economic interests of the Members.

 

(d)          If
any Property is subject to Code § 704(c) or is revalued on the books of the Company in accordance with the preceding paragraph
pursuant to § 1.704-1(b)(2)(iv)(f) of the Treasury Regulations, the Members’ Capital Accounts will be adjusted in accordance
with § 1.704-1(b)(2)(iv)(g) of the Treasury Regulations for allocations to the Members of depreciation, amortization and Income
or Loss, as computed for book purposes (and not tax purposes) with respect to such Property.

 

(e)          The
foregoing provisions of this Section 3.1 and the other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulation § 1.704-1(b) and 1.704-2, and will be interpreted and applied in
a manner consistent with such Treasury Regulations. If it is determined by the Managing Member that it is prudent or advisable
to modify the manner in which the Capital Accounts, or any increases or decreases thereto, are computed in order to comply with
such Treasury Regulations, the Managing Member may cause such modification to be made provided that it is not likely to have a
material effect on the amounts distributable to any Member upon the dissolution of the Company, and upon any such determination
by the Managing Member, the Managing Member is empowered to amend or modify this Agreement, notwithstanding any other provision
of this Agreement.

 

    14

     

    

 

 

Certain information in this exhibit has
been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked
in this exhibit with brackets and five asterisks, as follows: [*****].

 

3.2          Rights
and Obligations Regarding Capital Accounts and Distributions. Except as expressly provided in this Agreement, no Member is
entitled to withdraw or reduce such Member’s Capital Account or to receive any Distributions. No Member is entitled to demand
or receive any Distribution in any form other than in cash. No Member is entitled to receive or be credited with any interest on
the balance in such Member’s Capital Account at any time. Except as expressly provided herein, no Member has any priority
over any other Member as to the return of any balance in such Member’s Capital Account. Increases or decreases in the Capital
Accounts of Members shall not affect their respective Percentage Interests. No Member shall be liable to the Company or to any
other Member, either before or upon liquidation of the Company or before or upon liquidation of such Member’s Membership
Interest, to restore or repay any Adjusted Capital Account Deficit, except to the extent that any such deficit shall have arisen
as a result of such Member’s receipt of a Distribution in excess of the amount rightfully due such Member pursuant to this
Agreement.

 

3.3          Capital
Contributions. The respective Interests of the Members are reflected on Schedule 1. Capital Contributions to be made
by the Members shall be as follows:

 

(a)          Intentionally
Deleted.

 

(b)          Conveyance
of Project Land. As a part of the City Project Approval Process, Canterbury shall take all necessary actions, with Doran’s
assistance, to have the Subdivision Property subdivided, with the Project Land platted as one lot, and the Phase II Land, the Additional
Land, Retention Pond Area and Ditch Property platted as outlots. Costs required in connection with having the Subdivision Property
so subdivided (“Subdivision Costs”) shall be paid in accordance with Section 3.3(f) below. Canterbury
shall convey fee simple title to the Project Land to the Company by limited warranty deed, free and clear from all liens and encumbrances
other than Permitted Encumbrances, on the date of closing of Project Financing. In exchange for such conveyance to the Company
(including the subdivision related costs described above in this Section 3.3(b) paid by Canterbury and together with the
provision by Canterbury of any Letter of Credit required by Section 3.9 below), Canterbury shall be credited with a Capital
Contribution equal to 27.4% of all Capital Contributions to the Company and shall have a Percentage Interest of 27.4% as a Member.

 

(c)          Intentionally
Deleted.

 

(d)          Additional
Contributions Required for Closing on Project Financing. At or before closing on Project Financing of the Project, Doran shall
contribute to the Company (i) cash, (ii) property, (iii) unreimbursed expense payments, or (iv) other contributions allowed by
HUD, in such amounts as are necessary to satisfy any minimum equity requirements of HUD and to complete development of the Project.
In exchange for such contributions to the Company (together with the provision by Doran of any Letter of Credit required by Section
3.9 below and the other commitments and obligations of Doran set forth in this Agreement), Doran shall be credited with a Capital
Contribution equal to 72.6% of all Capital Contributions to the Company and shall have a Percentage Interest of 72.6% as a Member.

 

(e)          Interest
Reserve. At or prior to closing on Project Financing for the Project, the Managing Member shall determine the total amount
of the Interest Reserve required, if any, in order to close on Project Financing. The Members anticipate that the Interest Reserve
for the Project will be fully funded with proceeds of Project Financing. If for any reason the Interest Reserve cannot reasonably
be so funded, however, the Members shall contribute to the Company, proportionate to the Percentage Interests of the Members, such
additional cash as is needed to fully fund the Interest Reserve.

 

    15

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(f)          Advances
for Pre-Development Costs. From March 1, 2018 until closing on Project Financing for the Project, it is contemplated that Doran
shall make all necessary advances to the Company for Future Pre-Development Costs, as identified by estimated calendar month and
approximate amount on Schedule 3 attached hereto, except as provided below in this Section 3.3(f) with respect to
Subdivision Costs and EAW Costs (as defined below). An environmental assessment worksheet (the “EAW”) will be
required to be completed that covers the EAW Property, including environmental work as well as plat and traffic work. All Subdivision
Costs and all costs of the EAW (“EAW Costs”) will be allocated between the Project Land and the remainder of
the EAW Property as follows: [*****]% to the Project Land and [*****]% to the other land owned by Canterbury or its Affiliates.
The portion of Subdivision Costs and EAW Costs allocated to the Project Land shall be advanced by Doran as Future Pre-Development
Costs, with the remainder to be paid by Canterbury or its Affiliates outside of this Agreement. Upon closing on Project Financing
for the Project, all advances for Existing Pre-Development Costs shall be reimbursed to the Members from proceeds of Project Financing
and all advances for Future Pre-Development Costs shall be reimbursed to Doran from proceeds of the Project Financing; provided,
however, that Doran, in its sole discretion, may contribute all or a portion of its unreimbursed Existing Pre-Development Costs
or Future Pre-Development Costs as a part of its Capital Contribution required under Section 3.3(d) above.

 

(g)          Development
of Phase II Land. Any development of the Phase II Land shall be undertaken by the Phase II Owner, pursuant to the terms of
its own operating agreement (the “Phase II Operating Agreement”), which shall be executed and delivered by Doran
and Canterbury following the Effective Date.

 

3.4           Project
Design and Development. Pursuant to the Architect Contract, Doran Architects shall be responsible for the overall design of
the Project, including the planning, architectural and engineering services, entitlement, and supervision of the pre-construction
and construction phases of the Project. Doran shall act as lead developer and in good faith shall coordinate such development activities
in the best interests of both Members. Canterbury shall provide such assistance in development activities as may be reasonably
requested by Doran and shall be responsible for such review and study as Canterbury shall deem necessary in connection with the
approvals required in this Agreement. Doran shall appoint and supervise a project manager, who shall be responsible for the daily
implementation of Project development (the “Project Manager”). The Project Manager shall prepare and deliver
to the Company a written program of activities for development of the Project, which shall set forth the activities to be carried
out during the development process, and the date by which, or the period of time during which, each such activity is to be carried
out. A development team shall be assembled by Doran and supervised by the Project Manager. The development team shall consist of
professionals needed to complete the Project development, including architects, structural engineers, civil engineers, landscape
architects, surveyors, environmental consultants, and the General Contractor, among others. Doran Architects shall perform the
architectural work for the Project under the Architect Contract for a fee currently estimated to be $[*****]. The Members understand
and acknowledge that HUD will require a third party architect to be retained by the Company to perform certain construction administration
services at a cost to the Project separate from, and in addition to, the cost of the Architect Contract.

 

    16

     

    

 

Certain information in this
exhibit has been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information
is marked in this exhibit with brackets and five asterisks, as follows: [*****].

 

3.5          Construction
Services Agreement. The General Contractor shall be the general contractor responsible for construction of the Project, pursuant
to the Construction Services Agreement. The Company shall pay a construction management fee to the General Contractor equal to
[*****] percent ([*****]%) of the Construction Costs, excluding general conditions and the General Contractor’s rates for
insurance premiums, bond premiums and overhead, or such other form of compensation as may be required by HUD. Day-to-day decisions
regarding construction of the Project shall be made by the Project Manager. The Project Manager shall keep the Members apprised
of the status of construction and any material changes. During construction of the Project, monthly construction meetings shall
be held and Canterbury shall have the right to have its chief executive officer or another representative attend such monthly meetings
and participate in discussions, but such representative shall not have the right to direct changes in construction on behalf of
the Company.

 

3.6          Property
Management. Doran Management shall provide property management and leasing services for the Project, pursuant to the Property
Management Agreement with the Company. Day-to-day decisions regarding the operations of the Project shall be made by Doran Management,
in its reasonable discretion. The Company shall pay a fee to Doran Management for its services under each Property Management Agreement
(the “Property Management Fee”). The initial Property Management Fee for the Project shall be $[*****] per calendar
month until such time as [*****] percent ([*****]%) of the Company’s gross revenue exceeds $[*****] per month. Beginning
in the first calendar month after [*****] percent ([*****]%) of the Company’s gross revenue exceeds $[*****] per month, the
monthly Property Management Fee shall be equal to the greater of: (i) [*****] percent ([*****]%) of the Company’s gross revenue
from the Project or (ii) $[*****]. The Property Management Fee shall also be subject to adjustment in future periods (but not more
often than once every two [2] years) based on the prevailing market rate for similar services.

 

3.7          Mandatory
Member Loans to Cover Cost Overruns, Deferred Construction Costs and Operating Deficits.

 

(a)          Construction
Cost Overruns and Deferred Construction Costs. During the period of development and construction of the Project, the Managing
Member shall process monthly draw requests for costs incurred in the previous month. Except as provided below in this Section
3.7(a), in the event that any cost exceeds the budgeted line item amount in the Final Development Budget, the Managing Member
shall notify the Members of the excess cost, reallocate contingency funds within the Final Development Budget to cover such excess
cost, if available, and provide an accounting of such changes to the Members, and, if no contingency funds are available, reallocate
line items of the Final Development Budget that have a reasonable likelihood to be excessive. After making the foregoing reallocations,
the Managing Member shall determine the net amount of any Construction Cost Overrun. In the event that the Managing Member shall
reasonably determine that funds to cover the Construction Cost Overrun are not available under any Project Financing or other third
party financing for the Project, the Managing Member shall then issue a written cash call to each Member for such Member’s
pro-rata share of the Construction Cost Overrun based on each Member’s Percentage Interest. The Managing Member shall also
issue a written cash call to each Member for such Member’s pro-rata share of any Deferred Construction Costs as such costs
are incurred during the period of development and construction of the Project. Following any cash call to each Member for a Construction
Cost Overrun or any Deferred Construction Costs, the Members shall make loans to the Company (“Member Construction Loans”)
in an aggregate amount sufficient to cover the Construction Cost Overrun or Deferred Construction Costs. The Member Construction
Loans shall be evidenced by promissory notes from the Company in the form attached as Exhibit C to this Agreement (“Loan
Notes”).

 

    17

     

    

 

Certain information in this exhibit has
been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked
in this exhibit with brackets and five asterisks, as follows: [*****].

 

(b)          Operating
Deficits. Each month after Stabilization of the Project, the Managing Member shall calculate the NOI of the Company. If the
NOI of the Company is not sufficient to fully satisfy subsections (i) through (iv) of the Financial Waterfall under Section
4.1(a), the shortfall shall constitute an Operating Deficit. The Managing Member shall then reconcile the Operating Deficit
to any available funds of the Company. If an Operating Deficit still exists, the Managing Member shall then issue a written cash
call to each Member for such Member’s pro-rata share of the Operating Deficit based on Percentage Interest. The Members shall
then make loans to the Company (“Operating Deficit Loans”) in an aggregate amount sufficient to cover the Operating
Deficit. The Operating Deficit Loans shall be evidenced by Loan Notes.

 

(c)           Member
Default. If any Member (hereinafter a “Defaulting Member”) shall fail to make all or any portion of the
mandatory Member loans required by this Section 3.7 or by Section 3.9 (“Mandatory Member Loans”)
within fourteen (14) days of the call therefor or date otherwise due under the terms of this Agreement, then the non-Defaulting
Member shall be entitled, but not required, to loan to the Company the amount that the Defaulting Member failed to loan (a “Default
Member Loan”) by giving the Defaulting Member at least five (5) days advance written notice that such a loan will be
made. If the non-Defaulting Member elects to make a Default Member Loan to the Company on behalf of the Defaulting Member, such
Default Member Loan shall be evidenced by a Loan Note and shall bear interest at a rate equal to the Prime Rate plus five percent
per annum (the “Default Loan Interest Return”). Interest shall accrue on the unpaid principal balance of each
Default Member Loan from the date the funds are actually received by the Company until the date that such Default Member Loan is
repaid in full. Default Member Loans, and the Default Loan Interest Return thereon, shall be repaid in accordance with Sections
4.1(c) and 4.2. Default Member Loans made most recently in time shall have priority over older Default Member Loans.

 

(d)          Dilution
of Defaulting Member Interest. In the event that a Defaulting Member fails to make one or more Mandatory Member Loans and the
other Member elects to make one or more Default Member Loans to the Company on behalf of such Defaulting Member, the Percentage
Interest of the Defaulting Member shall be reduced and the Percentage Interest of the non-Defaulting Member shall be increased
by a percentage equal to the product of: (A) 1.25 and (B) the result of dividing the amount of the Default Member Loan by the total
amount of Capital Contributions of all Members.

 

    18

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

3.8          Restrictions
on Use. Canterbury and Doran agree to the following restriction on the development of any land owned or hereafter acquired
by either Canterbury or Doran, or Affiliates of either, in the City (the “Restricted Land”): Except as otherwise
provided for herein, neither Canterbury nor Doran, nor Affiliates of either, shall develop, use or allow to be used any of the
Restricted Land in any manner that would: (i) compete with the Project, or (ii) be detrimental to the marketing of the Project
by the Company (regardless of use) during the Restriction Term (the “Development Restriction”). The Development
Restriction shall remain in effect from the Effective Date until the earlier to occur of (1) stabilization of the Phase II Project
(as the term “stabilization” is defined in the Phase II Operating Agreement); or (2) the date that is sixty (60) months
after a certificate of occupancy is issued for the Project (the “Restriction Term”). Examples of developments
or uses that are not subject to the Development Restriction include rental properties occupying a different niche than the Project
(such as work-force housing or rental townhomes), for-sale housing, and senior housing. Any development or use that includes multifamily
market-rate rental apartment housing at rental rates within [*****] percent ([*****]%) of the Project’s projected average
monthly rent per square foot shall constitute a development or use that competes with the Project. Notwithstanding the foregoing,
nothing in this Section 3.8 shall prohibit the General Contractor, Doran Architects or an Affiliate of either providing
construction or architectural services from serving as general contractor, architect or design-builder, or providing similar services,
for a third party project that may: (i) compete with the Project, or (ii) be detrimental to the marketing of the Project, provided
that such third party shall not include Doran or any of its Affiliates as members or partners unless the equity ownership of Doran
or any of its Affiliates in such third party totals [*****] percent ([*****]%) or less. In the event of a sale, transfer or other
disposition of any Restricted Land during the Restriction Term, Canterbury and Doran each agree to make such transfer (or to cause
their Affiliate, as the case may be, to make such transfer) subject to the Development Restriction, in the deed or other recorded
instrument of conveyance or transfer, in a manner binding on subsequent owners of such land. In addition to any remedies available
at law, Canterbury and Doran each shall be entitled to the equitable remedies described in Section 10.19 below in connection
with any breach by the other of the covenants in this Section 3.8.

 

3.9          Letter(s)
of Credit. Doran and Canterbury shall provide all Letters of Credit as required by HUD to fund the HUD Operating Deficit Escrow
and the HUD Working Capital Escrow for the Project Financing in proportion to each Member’s Percentage Interest. In lieu
of a draw upon any Letter of Credit, the Managing Member shall issue a written cash call to each Member for such Member’s
pro-rata share of the amount that would otherwise be drawn under a Letter of Credit based on such Member’s Percentage Interest.
The Members shall then make Member Construction Loans and/or Operating Deficit Loans (as the case may be) to the Company in the
aggregate amount called, which shall be evidenced by Loan Notes.

 

Article
IV

DISTRIBUTIONS AND ALLOCATIONS

 

4.1          Distributions
from Operations.

 

(a)          Financial
Waterfall. The Managing Member, prior to making any Distributions under Section 4.1(b) or Section 4.1(c) below,
and subject to Section 322C.0405 of the Revised Act, shall apply net cash realized by the Company from gross rents and other operating
revenues after deducting all operating expenses (other than depreciation, amortization and other non-cash charges), in accordance
with the following order of priority:

 

    19

     

    

 

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(i)          First,
to pay accrued interest due on any Project Financing;

 

(ii)         Next,
to pay principal payments due on any Project Financing;

 

(iii)        Next,
to fully fund an escrow for real estate taxes;

 

(iv)        Next,
to fully fund an escrow for insurance; and

 

(v)         Finally,
to fully fund the Reserve for Replacements.

 

(b)          Tax
Distributions. On or before each February 28 following the close of each calendar year, the Company shall distribute to the
Members in accordance with their Percentage Interests cash to pay a portion of the federal, state and local tax liability of the
Members in respect of the allocation to them of Income in excess of Loss pursuant to this Agreement, determined using a marginal
income tax rate determined by the Tax Matters Member (such Distributions being referred to herein as “Tax Distributions”);
subject, in all events to the Company having sufficient funds available for Tax Distributions after applying net cash in accordance
with Section 4.1(a) above.

 

(c)          Periodic
Distributions. Except for Distributions under Section 4.1(b), any Distributions of available funds, whether from construction
cost savings, net operating income of the Project after applying net cash in accordance with Section 4.1(a) above, net proceeds
from refinancing, or from other sources, shall be made by the Company on an annual basis, unless otherwise agreed by a Super-Majority
in Interest of the Members, to the Members in the following order of priority:

 

(i)          First,
to pay accrued interest due on Default Member Loans, if any, with Default Member Loans made most recently in time having priority
over older Default Member Loans;

 

(ii)         Next,
to pay principal payments due on Default Member Loans, if any, with Default Member Loans made most recently in time having priority
over older Default Member Loans;

 

(iii)        Next,
to pay accrued interest due on Operating Deficit Loans;

 

(iv)        Next,
to pay principal payments due on Operating Deficit Loans;

 

(v)         Next,
to pay accrued interest due on Member Construction Loans;

 

(vi)        Next,
to pay principal payments due on Member Construction Loans;

 

    20

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(vii)       Finally,
the remainder to the Members in accordance with their Percentage Interests.

 

4.2          Liquidation
Distributions. Notwithstanding Section 322C.0707 Subd. 2 of the Revised Act, Liquidation Proceeds will be distributed in the
following order of priority:

 

(a)          First,
to discharge the Company’s obligations to creditors and other third parties, including all indebtedness for Project Financing,
in accordance with the terms of such obligations, as set forth in Section 322C.0707 Subd. 1 of the Revised Act.

 

(b)          Next,
to discharge the Company’s obligations to creditors who are Members, including to Members for Default Member Loans, Operating
Deficit Loans and Member Construction Loans, as set forth in Section 322C.0707 Subd.1 of the Revised Act, consistent with the priority
set forth in Section 4.1(c) above. In the event that any Default Member Loan is not fully paid to a non-Defaulting Member
under this Section 4.2(b), the non-Defaulting Member shall be entitled to collect the unpaid balance directly from the Defaulting
Member.

 

(c)          Finally,
the remainder to the Members in accordance with their respective Percentage Interests.

 

4.3          Income,
Losses and Distributive Shares of Tax Items. The Company’s Income or Loss, as the case may be, for each fiscal year of
the Company, as determined in accordance with such method of accounting as may be adopted for the Company pursuant to ARTICLE
VI, will be allocated to the Members for both financial accounting and income tax purposes as set forth in this ARTICLE
IV, except as otherwise provided for herein or unless all Members agree otherwise.

 

4.4          Allocation
of Income and Loss. Income or Loss for each fiscal year will be allocated among the Members in accordance with their Percentage
Interests. To the extent there is any change in the respective Percentage Interests of the Members during the year, Income and
Loss will be allocated among the pre-adjustment and post-adjustment periods as provided in Section 4.5(k).

 

4.5          Special
Rules. Notwithstanding the foregoing allocation provisions of ARTICLE IV, the following special rules apply:

 

(a)          Tax
Allocations; § 704(c) and Revaluation Allocations. Other than as provided in this Section 4.5(a), items of Income
and Loss determined for income tax purposes shall be allocated, to the extent possible and except as otherwise provided herein,
in the same proportions as corresponding items that enter into the calculation of Income and Loss. In accordance with Code §
704(c) and the Treasury Regulations thereunder, Income and Loss with respect to any property contributed to the capital of the
Company will, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted
basis of such Property to the Company for federal income tax purposes and its Fair Value at the time of contribution. Similarly,
in the event of a Revaluation, subsequent allocations of Income and Loss with respect to such Property will take account of any
variation between the adjusted basis of such Property to the Company for federal income tax purposes and its Fair Value immediately
after the adjustment in the same manner as under Code § 704(c) and the Treasury Regulations thereunder. Allocations pursuant
to this Section 4.5(a) are solely for income tax purposes and will not affect, or in any way be taken into account in computing,
for book purposes, any Member’s Capital Account or share of Income or Loss, pursuant to any provision of this Agreement.
Notwithstanding the foregoing, all tax allocations required by this Section 4.5(a) will be made using the “traditional
method” per Code § 704(c) unless otherwise approved by Canterbury and Doran.

 

    21

     

    

 

Certain information in this
exhibit has been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information
is marked in this exhibit with brackets and five asterisks, as follows: [*****].

 

(b)          Minimum
Gain Chargeback. Notwithstanding any other provision of this ARTICLE IV, if there is a net decrease in Company Minimum
Gain during a Company taxable year, each Member will be allocated items of income and gain for such year (and, if necessary, for
subsequent years) in an amount equal to that Member’s share of the net decrease in Company Minimum Gain during such year
(hereinafter referred to as the “Minimum Gain Chargeback Requirement”). A Member’s share of the net decrease
in Company Minimum Gain is the amount of the total decrease multiplied by the Member’s percentage share of the Company Minimum
Gain at the end of the immediately preceding taxable year. A Member is not subject to the Minimum Gain Chargeback Requirement to
the extent: (i) the Member’s share of the net decrease in Company Minimum Gain is caused by a guarantee, refinancing or other
change in the debt instrument causing it to become partially or wholly recourse debt or a Member Nonrecourse Debt, and the Member
bears the economic risk of loss for the newly guaranteed, refinanced or otherwise changed liability; (ii) the Member contributes
capital to the Company that is used to repay the Nonrecourse Debt and the Member’s share of the net decrease in Company Minimum
Gain results from the repayment; or (iii) the Minimum Gain Chargeback Requirement would cause a distortion and the Commissioner
of the Internal Revenue Service waives such requirement. A Member’s share of Company Minimum Gain will be computed in accordance
with Treasury Regulation § 1.704-2(g) and as of the end of any Company taxable year will equal: (1) the sum of the Nonrecourse
Deductions allocated to that Member up to that time and the Distributions made to that Member up to that time of proceeds of a
Nonrecourse Debt allocable to an increase of Company Minimum Gain, minus (2) the sum of that Member’s aggregate share of
net decrease in Company Minimum Gain plus that Member’s aggregate share of decreases resulting from Revaluation of any Property
subject to Nonrecourse Debts. In addition, a Member’s share of Company Minimum Gain will be adjusted for the conversion of
recourse and Member Nonrecourse Debts into Nonrecourse Debts in accordance with Treasury Regulation § 1.704-2(g)(3). In computing
the above, amounts allocated or distributed to the Member’s predecessor in interest will be taken into account. Allocations
shall be determined in accordance with Treasury Regulation § 1.704-2(j).

 

(c)          Member
Minimum Gain Chargeback. Notwithstanding any other provision of this Article IV other than Section 4.5(b) if there is
a net decrease in Member Minimum Gain during a Company taxable year, each Member who has a share of the Member Minimum Gain (determined
under Treasury Regulation § 1.704-2(i)(5) as of the beginning of the year) will be allocated items of income and gain for
such year (and, if necessary, for subsequent years) equal to that Member’s share of the net decrease in Member Minimum Gain.
In accordance with Treasury Regulation § 1.704-2(i)(4), a Member is not subject to this Member Minimum Gain Chargeback requirement
to the extent the net decrease in Member Minimum Gain arises because the liability ceases to be Member Nonrecourse Debt due to
a conversion, refinancing or other change in the debt instrument that causes it to be partially or wholly a Nonrecourse Debt. The
amount that would otherwise be subject to the Member Minimum Gain Chargeback requirement is added to the Member’s share of
Company Minimum Gain.

 

    22

     

    

 

Certain information in this
exhibit has been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information
is marked in this exhibit with brackets and five asterisks, as follows: [*****].

 

(d)          Qualified
Income Offset. If any Member unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulation
§ 1.704-1(b)(2)(ii)(d)(4), (5) or (6), that causes or increases such Member’s Adjusted Capital Account Deficit, items
of Company income and gain will be specially allocated to such Member in an amount and manner sufficient to eliminate such Adjusted
Capital Account Deficit as quickly as possible, provided that an allocation under this Section 4.5(d) may be made if and
only to the extent such Member would have an Adjusted Capital Account Deficit after all other allocations under this ARTICLE
IV have been made.

 

(e)          Nonrecourse
Deductions. Nonrecourse Deductions for any fiscal year or other period will be allocated to the Members in proportion to their
Percentage Interests.

 

(f)          Member
Nonrecourse Deductions. Any Member Nonrecourse Deductions will be allocated to the Member who bears the risk of loss with respect
to the loan to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulation § 1.704-2(i).

 

(g)          Curative
Allocations. Any special allocations of items of Income or Loss pursuant to Sections 4.5(b), (c), (d), (e) and (f) will
be taken into account in computing subsequent allocations of income and gain pursuant to this ARTICLE IV, so that the net
amount of any items so allocated and all other items allocated to each Member pursuant to this ARTICLE IV are, to the extent possible,
equal to the net amount that would have been allocated to each such Member pursuant to the provisions of this ARTICLE IV
if such adjustments, allocations or Distributions had not occurred. In addition, allocations pursuant to this Section 4.5(g)
with respect to Nonrecourse Deductions in Section 4.5(e) and Member Nonrecourse Deductions in Section 4.5(f) will
be deferred to the extent the Managing Member reasonably determines that such allocations are likely to be offset by subsequent
allocations of Company Minimum Gain or Member Minimum Gain, respectively.

 

(h)          Loss
Allocation Limitation. Notwithstanding the other provisions of this ARTICLE IV, unless otherwise agreed to by all of
the Members, no Member may be allocated Loss in any taxable year that would cause or increase an Adjusted Capital Account Deficit
as of the end of such taxable year.

 

(i)          Share
of Nonrecourse Liabilities. Solely for purposes of determining a Member’s proportionate share of the “excess nonrecourse
liabilities” of the Company within the meaning of Treasury Regulation § 1.752-3(a)(3), each Member’s interest
in Company profits is equal to such Member’s respective Percentage Interest.

 

(j)          Compliance
with Treasury Regulations. The foregoing provisions of this Section 4.5 are intended to comply with Treasury Regulation
§ 1.704-1(b), 1.704-2 and 1.752-1 through 1.752-5, and must be interpreted and applied in a manner consistent with such Treasury
Regulations. If it is determined by the Managing Member that it is prudent or advisable to amend this Agreement in order comply
with such Treasury Regulations, the Managing Member is empowered to amend or modify this Agreement, notwithstanding any other provision
of this Agreement.

 

    23

     

    

 

Certain information in this
exhibit has been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information
is marked in this exhibit with brackets and five asterisks, as follows: [*****].

 

(k)          General
Allocation Provisions. Except as otherwise provided in this Agreement, all items that are components of Income or Loss will
be divided among the Members in the same proportions as they share such Income or Loss, as the case may be, for the year. For purposes
of determining the Income, Loss or any other items for any period, Income, Loss or any such other items will be determined on a
daily, monthly or other basis, as determined by the Managing Member using any permissible method under Code § 706 and the
Treasury Regulations thereunder.

 

4.6          No
Priority. Except as may be otherwise expressly provided herein, no Member has priority over any other Member as to Company
Capital, items of Income and Loss, or Distributions.

 

4.7          Tax
Withholding. Notwithstanding any other provision of this Agreement, the Tax Matters Member is authorized to take any action
that it determines to be necessary or appropriate to cause the Company to comply with any withholding requirements established
under any federal, state or local tax law, including withholding on any Distribution to any Member. For all purposes of this ARTICLE
IV, any amount withheld on any Distribution and paid over to the appropriate governmental body will be treated as if such amount
had in fact been distributed to the Member.

 

4.8          Reserve
for Replacements. The Managing Member shall establish, maintain and expend funds from a Reserve for Replacements. The Reserve
for Replacements shall be funded from net cash of the Company, in accordance with the priority set forth in Section 4.1(a) above.
Unless otherwise determined by the Managing Member in its reasonable discretion or as may be required by HUD, the Reserve for Replacements
shall be deemed fully funded at an amount equal to $[*****] per residential unit of the Project.

 

Article
V

MANAGEMENT; WAIVER OF FIDUCIARY DUTIES; INDEMNIFICATION

 

5.1          Management
by the Managing Member. The day-to-day business and affairs of the Company shall be managed by the Managing Member and, except
as expressly set forth in this Agreement, all matters relating to the activities of the Company shall be decided exclusively by
the Managing Member. The Managing Member shall be a “manager” as that term is defined in Section 322C.0102 Subd. 13
of the Revised Act, and the Company shall be a “manager-managed limited liability company” as that term is defined
in Section 322C.0102 Subd. 14 of the Revised Act. During the period prior to Substantial Completion of the Project, the Managing
Member shall keep all Members apprised as needed or upon request on all material aspects of development and construction of the
Project.

 

    24

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

5.2          Managing
Member Authority. Except as otherwise expressly provided in this Agreement, the Managing Member or Persons designated by the
Managing Member for such purpose, including Officers and agents authorized by the Managing Member for such purpose, shall be the
only Persons authorized to execute documents which shall be binding on the Company. To the fullest extent permitted by the Revised
Act, and notwithstanding Section 322C.0407 Subd. 3(4) of the Revised Act, the Managing Member shall have the exclusive power to
do any and all acts, statutory or otherwise, with respect to the Company or this Agreement, which would otherwise be possessed
by the Members under the laws of the State of Minnesota, and the Members, in that capacity, shall have no power whatsoever with
respect to the management of the business activities and affairs of the Company. The Members shall have no authority to bind the
Company and will have no other right to approve any action or vote on any matter except as set forth in this Agreement. Except
as provided in Sections 5.5 and 5.6 below, the power and authority granted to the Managing Member hereunder shall include
all those necessary or convenient for the furtherance of the purposes of the Company and shall include the power to make all decisions
with regard to the management, operations, assets, financing and capitalization of the Company, including the power and authority
to undertake and make decisions concerning:

 

(a)          the
sale, development, lease, or other disposition of the Company’s assets in the ordinary course of business and the purchase,
lease, or other acquisition of assets by the Company in the ordinary course of business;

 

(b)          the
management of the Company’s assets and operations in accordance with the Annual Budget;

 

(c)          opening
of bank and other deposit accounts and operations thereunder;

 

(d)          purchasing
of insurance, goods, supplies, equipment, materials and other personal property on market terms;

 

(e)          executing
and delivering all checks, drafts and other orders for the payment of the Company’s funds and all promissory notes, loans,
security agreements, and other similar documents in accordance with the Annual Budget (and subject to any approval by the Members
as set forth in Section 5.5 below);

 

(f)          the
application of funds in the Reserve for Replacements for the payment of anticipated Company obligations and desired replacements
and repairs to the Property in accordance with the Annual Budget;

 

(g)          entering
into or modifying contracts (excluding Related Party Agreements, which shall be approved as set forth in Section 5.5) for the design,
construction, and development of the Project and for the operation, management, maintenance, repair and rehabilitation of the Project;

 

(h)          acting
as the tax matters partner of the Company for all purposes;

 

    25

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(i)          causing
the Company to employ, engage, hire or otherwise secure the services of such Persons as may be necessary or advisable for the proper
operation of the business of the Company, including property managers, construction contractors, development managers, engineers,
appraisers, attorneys, accountants, and real estate and loan brokers, all upon market terms and consistent with the Construction
Services Agreement, the Property Management Agreement and the Annual Budget, as applicable;

 

(j)          preparing,
executing, acknowledging and filing, recording, publishing and delivering all instruments or documents necessary or convenient
to effectuate any actions of the Company; and

 

(k)          controlling
any matters affecting the rights and obligations of the Company including the settlement, compromise, submission to arbitration
or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing
to or from the Company, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other
forms of dispute resolution, and the representation of the Company in all suits or legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law.

 

5.3          Certain
Required Actions to be Taken by the Managing Member. As Managing Member of the Company, the Managing Member agrees to cause
the Company or its Affiliates to undertake the following to the extent that the Company has sufficient funds therefor:

 

(a)          causing
the Company to enter into the Architect Contract, the Construction Services Agreement and the Property Management Agreement, following
approval as set forth in Section 5.5;

 

(b)          causing
the Company or its Affiliates to engage such architects, engineers and consultants as necessary or required for the design, development,
financing, construction and operation of the Project, any of which may be Affiliates or employees of the Managing Member or its
Affiliates, if so provided in any Architect Contract, Construction Services Agreement or Property Management Agreement;

 

(c)          causing
the Company to enter into Project Financing, and any other borrowing and related documents, upon approval as set forth in Section
5.5;

 

(d)          protecting
and preserving the titles and interests of the Company with respect to the Property;

 

(e)          keeping
all books of account and other records of the Company in accordance with the terms of this Agreement;

 

(f)          exercising
any and all rights of the “Owner” under the Architect Contract, the Construction Services Agreement and the Property
Management Agreement and ensuring the overall performance of the other parties under such agreements to the benefit of the Company
and its Affiliates, carrying out the responsibilities of the Company or its Affiliates under such agreements;

 

    26

     

    

 

Certain information in this
exhibit has been redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information
is marked in this exhibit with brackets and five asterisks, as follows: [*****].

 

(g)          complying
in all material respects with all laws, ordinances, orders, rules, regulations and other requirements of all federal, state, local,
provincial, territorial and foreign governments, courts, departments, commissions, boards and officers applicable to the Company,
its Affiliates or the Project;

 

(h)          receiving,
managing, reserving, paying and distributing operating income of the Company, in each case as provided in this Agreement;

 

(i)          paying
operating expenses, debt service on all indebtedness of the Company, including required escrows, if any, and all other current
debts and obligations of the Company;

 

(j)          maintaining
proper funding of the Reserve for Replacements consistent with Section 4.8 above; and

 

(k)         obtaining
and maintaining, in the name of the Company as may be required by applicable law, such licenses, permits and other governmental
authorizations as are necessary for the lawful conduct of the business of the Company.

 

5.4          Actions
not Delegable by Managing Member. Notwithstanding the foregoing, the Managing Member is authorized to delegate any of its powers
in its sole judgment to Officers or other agents of the Company, except that the following duties may not be delegated
to any agent or Officer of the Company:

 

(a)          the
sale or acquisition of any real property; and

 

(b)          the
compromising, arbitrating, adjusting or litigating of claims in favor of or against the Company or its Affiliates.

 

5.5          Certain
Actions Requiring Super-Majority Consent. Notwithstanding the provisions of Sections 5.2 and 5.3 above, the Managing
Member shall not, without the affirmative consent of Members with voting rights who, together with the Managing Member, hold a
Super-Majority in Interest of the Members, take, or cause the Company or its Affiliates to take, any of the following actions:

 

(a)          approval
of or amendment to any Project Financing or refinancing;

 

(b)          any
material amendment to the Preliminary Development Budget for the Project prior to adoption of the Final Development Budget and,
unless the affirmative unanimous consent of all Members with voting rights is required by Section 5.6 below, adoption of
the Final Development Budget;

 

(c)          approval
of or material amendment to the Company’s Annual Budget;

 

    27

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(d)          negotiation
and execution of any agreement with the City for development of the Project, including entitlements and any applicable tax increment
financing, including any amendments and any request to the City for a change in the approved use of the Project Land;

 

(e)          approval
of the Architect Contract, including any amendments;

 

(f)          approval
of the Construction Services Agreement, including any amendments;

 

(g)          approval
of the Property Management Agreement, including any amendments;

 

(h)          approval
of any Related Party Agreement other than the Architect Contract, the Construction Services Agreement or the Property Management
Agreement discussed in Sections 5.5(e)-(g) above, including any amendments thereto;

 

(i)          change
orders for (X) any scope of work on the Project in excess of $[*****] individually or $[*****] in the aggregate, or (Y) any material
change in the Contract Time required by the Construction Services Agreement;

 

(j)          sale,
lease, exchange or other disposition of the Project or any portion of the Project;

 

(k)         capital
improvements to any Company Property in excess of $[*****];

 

(l)          admission
of any Person to the Company as a Member except in accordance with the provisions of ARTICLE VIII;

 

(m)        any
election by the Company under the BBA, as described in Section 7.4 below; or

 

(n)          approval
of the Drainage and Ponding Easement and the Common Area REOA as well as any amendments to either.

 

5.6           Certain
Actions Requiring Unanimous Consent. Notwithstanding the provisions of Sections 5.2 and 5.3 above, the Managing
Member shall not, without the unanimous affirmative consent of all Members with voting rights, take, or cause the Company or its
Affiliates to take, any of the following actions:

 

(a)          adoption
of the Final Development Budget (subject to the special provision below in this Section 5.6);

 

(b)          acquisition
or investment by the Company in any other business or entity, including formation of joint ventures;

 

(c)          amendment
of this Agreement;

 

    28

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(d)          dissolution
of the Company;

 

(e)          approval
of a merger, conversion, or domestication under Sections 322C.1001 to 322C.1015 of the Revised Act;

 

(f)          causing
the Company to not perform its obligations under any contract or other agreement entered into by the Company with a Person that
is not a Member or an Affiliate of a Member, including to not pay debt or other obligations of the Company to any such third party,
based on a good faith determination that such nonperformance is in the best interest of the Company; provided, however, that the
Managing Member may take action unilaterally with respect to the foregoing if the matter in controversy is less than $[*****];
or

 

(g)          taking
of any action otherwise expressly prohibited by this Agreement.

 

Notwithstanding Section
5.6(a) above, if grand total in the Final Development Budget does not vary by more than [*****] percent ([*****]%) from the
grand total in the Preliminary Development Budget attached as Exhibit B to this Agreement, then the Final Development Budget
shall be adopted pursuant to Section 5.5(b) above and shall not require the unanimous affirmative consent of all Members
with voting rights.

 

5.7          Certain
Canterbury Rights. Any Change Order that would increase the Cost of the Work (as both terms will be defined in the Construction
Services Agreement) by more than [*****] percent ([*****]%) shall require the affirmative written approval of Canterbury, which
approval shall be granted or denied within three (3) business days of the receipt by Canterbury from Doran of a copy of the Change
Order, and shall not be unreasonably denied. Failure by Canterbury to grant or deny approval within said three (3) business day
period shall be deemed an approval of such Change Order. Notwithstanding anything to the contrary in this Agreement, Canterbury
shall have the right to claim, on behalf of the Company or its Affiliates, that an event of default has occurred with respect to
any Architect Contract, Construction Services Agreement or Property Management Agreement, and any other contract between the Company
and Doran or any Affiliate of Doran. Doran and its applicable Affiliates reserve all rights, claims and defenses in connection
with any such claim of default.

 

5.8          Annual
Budget. For so long as the Property Management Agreement is in effect, an annual budget reflecting estimated profit and loss
of the Company for the ensuing operating year shall be prepared by the Doran Management in accordance with the terms of the Property
Management Agreement (the “Annual Budget”). If at any time the Property Management Agreement is not in effect,
the Managing Member shall submit to the Company, at least thirty (30) days before the first day of each fiscal year, an Annual
Budget that includes an estimated profit and loss statement for the ensuing operating year, a schedule of rents, budget estimates
in detail for repairs, maintenance, replacements, and capital expenditures for such ensuing year, and a projection
of anticipated net cash available for Distributions.

 

    29

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

5.9          Replacement
of Managing Member. Notwithstanding Section 322C.0407 Subd. 3(5) of the Revised Act, the Managing Member shall serve until
such time as it voluntarily resigns or is removed for Cause by the other Member or Members. As used in this Agreement, “Cause”
means any material breach by the Managing Member of this Agreement, or fraud, gross misconduct, neglect of duties or commission
of illegal activities that would subject the Managing Member to statutory disqualification if such events were adjudicated by a
court of law and finally found against the Managing Member.

 

5.10        Delegation
of Authority; Officers. Subject to Section 5.4 of this Agreement, the Managing Member shall have the authority to delegate
to any Person all or any of its powers pursuant to this Agreement. Any delegation may be revoked at any time by the Managing Member.
The Company may have the Officers set forth in this Section 5.10, which will include one or more persons appointed by the
Managing Member exercising the functions of the offices set forth herein. Any number of Officer positions may be held by the same
person. Officers shall not be “managers” of the Company as that term is used in the Revised Act, and will only have
the powers expressly delegated to them by the Managing Member. The following Officers shall have the following powers:

 

(a)          President.
Unless provided otherwise by a resolution adopted by the Managing Member, the President will: (i) have general active management
of the day-to-day business of the Company; (ii) preside at meetings of the Members; (iii) see that all orders and resolutions of
the Managing Member are carried into effect; (iv) have authority to sign and deliver in the name of the Company any deeds, mortgages,
bonds, contracts, or other instruments pertaining to the business of the Company, except in cases in which the authority to sign
and deliver is required by law to be exercised by another person or is expressly delegated by this Agreement or the Managing Member
to some other Officer or agent of the Company; (v) maintain records of and certify proceedings of the Members; and (vi) perform
such other duties as may from time to time be prescribed by the Managing Member.

 

(b)          Treasurer.
Unless provided otherwise by a resolution adopted by the Managing Member, the Treasurer will: (i) keep accurate financial records
for the Company; (ii) deposit all monies, drafts, and checks in the name of and to the credit of the Company in such banks and
depositories as the Managing Member may designate from time to time; (iii) endorse for deposit all notes, checks, and drafts received
by the Company as ordered by the Managing Member, making proper vouchers therefore; (iv) disburse Company funds and issue checks
and drafts in the name of the Company as ordered by the Managing Member; (v) render to the President and the Managing Member, whenever
requested, an account of all such Officer’s transactions as Treasurer and of the financial condition of the Company; and
(vi) perform such other duties as may be prescribed by the Managing Member or the President from time to time.

 

(c)          Vice
Presidents. The Vice President, if any, or Vice Presidents in case there be more than one, will have such powers and perform
such duties as the President or the Managing Member may prescribe from time to time. In the absence of the President or in the
event of the President’s death, inability, or refusal to act, the Vice President, or in the event there be more than one
Vice President, the Vice Presidents in the order designated by the Managing Member, or, in the absence of any designation, in the
order of their seniority, will perform the duties of the President, and, when so acting, will have all the powers of and be subject
to all of the restrictions upon the President.

 

    30

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(d)          Secretary.
The Secretary will attend all meetings of the Members and will maintain records of, and whenever necessary, certify all proceedings
of the Members. The Secretary will: (i) keep the required records of the Company, when so directed by the Managing Member or other
person or persons authorized to call such meetings; (ii) give or cause to be given notice of meetings of the Members; and (iii)
perform such other duties and have such other powers as the President or the Managing Member may prescribe from time to time.

 

(e)          Delegation.
Unless prohibited by a resolution adopted by the Managing Member or Section 5.4 hereinabove, an Officer elected or appointed
by the Managing Member may delegate in writing some or all of the duties and powers of such person’s office to other persons.

 

(f)          Term
of Office. Each Officer will hold office until a successor has been appointed by the Managing Member, or until such Officer’s
prior death, resignation, or removal from office.

 

(g)          Removal
and Vacancies. Any Officer or agent elected or appointed by the Managing Member may hold office at the pleasure of the Managing
Member and may be removed, with or without cause, at any time by the Managing Member, subject to the terms of this Agreement. Any
vacancy in an office of the Company will be filled by action of the Managing Member.

 

(h)          No
Compensation. Officers, if any, will not be compensated for their services as such unless otherwise unanimously agreed to by
the Members.

 

5.11        No
Employment Rights. This Agreement does not, and is not intended to, confer upon any Officer any rights with respect to employment
by the Company, and nothing herein should be construed to have created any employment agreement between the Company and any Officer.

 

5.12        Duty
of Care of the Managing Member and Officers. Subject to the business judgment rule, the duty of care of the Managing Member
or an Officer in the conduct of the Company’s activities is to act with the care that a person in a like position would reasonably
exercise under similar circumstances and in a manner the Managing Member or Officer reasonably believes to be in the best interests
of the Company. In discharging this duty, the Managing Member or Officer may rely in good faith on opinions, reports, statements,
or other information provided by another Person that the Managing Member or Officer reasonably believes is a competent and reliable
source for the information. With respect to the duty of care set forth in this Section 5.12, in accordance with Section
322C.0110 Subd. 7 of the Revised Act, no Managing Member or Officer of the Company shall be liable for any money damages to the
Company or to any Member, unless the Managing Member or Officer has engaged in intentional misconduct or a knowing violation of
the law. THE MEMBERS AGREE THAT THIS SECTION 5.12 IS NOT MANIFESTLY UNREASONABLE.

 

    31

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

5.13        Duty
of Loyalty. The Members have formed the Company and entered into this Agreement and become Members with the full knowledge
and awareness that the Managing Member controls, and has a significant financial interest in, its Affiliates. Knowing this, and
notwithstanding anything to the contrary in Section 322C.0409 Subd. 2 or 7 of the Revised Act, the Members acknowledge and agree
as follows:

 

(a)          Other
Business Ventures. Except as set forth in Section 3.8 of this Agreement, each of the Members and their Affiliates, including
the Managing Member, may at any time and from time to time engage in and possess interests in other business ventures of any and
every type and description, including the development, construction, ownership, operation, financing, and management of residential
apartment projects (including projects that might compete with the Project), independently or with others, and neither the Company
nor any Member shall by virtue of this Agreement have any right, title or interest in or to such independent ventures.

 

(b)          Dealings
with the Company; Company Opportunities. Except as set forth in Section 3.8 of this Agreement, the Members have no expectation
that (i) the Managing Member or any other Member will be prohibited, by virtue of the Member’s status as a member of the
Company, from pursuing or engaging in any activities and (ii) the Managing Member or any other Member will be obligated to inform
the Company or any Member of any such opportunity, relationship or investment (a “Company Opportunity”) or to
present to the Company any Company Opportunity. Further, the Company hereby renounces any interest in any Company Opportunity and
any expectancy that any Company Opportunity will be offered to it.

 

THE MEMBERS AGREE
THAT THIS SECTION 5.13 IS NOT MANIFESTLY UNREASONABLE.

 

5.14        Prescribing
Standards of Good Faith and Fair Dealing. The Managing Member and the other Members shall exercise their rights and discharge
their duties under this Agreement and the Revised Act in a manner consistent with the contractual obligation of good faith and
fair dealing, including by acting in a manner, in light of this Agreement, that is honest, fair and reasonable. Any right exercised
or duty discharged by the Managing Member or any other Member pursuant to the written advice of the Company’s attorneys,
accountants, investment bankers, appraisers or other professional advisors shall be deemed to satisfy such contractual obligation.
No Member owes a fiduciary duty to the Company or other Members by reason of being a Member.

 

5.15        No
Personal Liability – Managing Member and Officers. Except as otherwise provided by applicable law or as expressly set
forth in this Agreement, the debts, obligations, or other liabilities of the Company, whether arising in contract, tort or otherwise
(a) are solely the debts, obligations or other liabilities of the Company, and (b) do not become the debts, obligations or other
liabilities of a Managing Member or an Officer solely by reason of such Managing Member acting as a manager or of such Officer
acting as an officer; provided that any repeal of this provision as a matter of law or any modification of this subpart by the
Members shall be prospective only, and shall not adversely affect any limitation on the personal liability of the Managing Member
or any Officer existing at the time of such repeal or modification.

 

    32

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

5.16        Execution
of Documents Filed with Minnesota. The Managing Member and any Officer authorized by the Managing Member is authorized to execute
and file with the Minnesota Secretary of State any document permitted or required by the Revised Act. Such documents may be executed
and filed only after the Members (to the extent required by this Agreement or the Revised Act) have approved or consented to such
action in the manner provided herein.

 

5.17        Indemnification;
Covered Persons; Limitation of Liability.

 

(a)          Conduct
of Covered Persons. A Covered Person shall be deemed to have acted in “good faith” within the meaning of the Revised
Act if such Person acted in reliance upon the records of the Company and upon such information, opinions, reports or statements
(including financial statements and information, opinions, reports or statements as to the value or amount of the assets, liabilities,
Income or Losses of the Company or any facts pertinent to the existence and amount of assets from which Distributions might properly
be paid) of the following Persons or groups: (i) another Member; (ii) one or more Officers or employees of the Company; (iii) any
attorney, independent accountant, appraiser or other expert or professional employed or engaged by or on behalf of the Company;
or (iv) any other Person selected in good faith by or on behalf of the Company, in each case as to matters that such relying Person
reasonably believes to be within such other Person’s professional or expert competence.

 

(b)          Limitation.
In accordance with Section 322C.0110 Subd. 7 of the Revised Act, no Person will be liable to the Company or its Members for any
loss, damage, liability, or expense on account of any action taken or omitted to be taken by such Person as a Managing Member or
Member, other than for: (i) breach of the duty of loyalty in contravention of this Agreement; (ii) a financial benefit received
by the Member or Managing Member to which the Member or Managing Member is not entitled; (iii) a breach of a duty under Section
322C.0406 of the Revised Act; (iv) intentional infliction of harm on the Company or a Member; or (v) an intentional violation of
criminal law. If the Revised Act is hereafter amended to authorize the further elimination or limitation of the liability of the
Managing Member then, without requiring any action by the Members, the liability of the Managing Member shall be further limited
to the fullest extent permitted by the amended Revised Act. Any repeal of this provision as a matter of law or any modification
of this subpart by the Members shall be prospective only, and shall not adversely affect any limitation on the personal liability
of the Managing Member existing at the time of such repeal or modification.

 

(c)          Additional
Limitation on Indemnification. Except as otherwise determined by the Managing Member, the Company shall not be required to
indemnify a Person or advance expenses in connection with a proceeding (or part thereof) covered by Section 322C.0408 of the Revised
Act if such proceeding (or part thereof) was commenced by such Person.

 

    33

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(d)          Right
to Indemnification and Advancement. The Company shall indemnify and advance expenses to the Managing Member, the Officers and
other Persons acting in their “official capacity” (as defined in Section 322C.0408 of the Revised Act) with respect
to “proceedings” (as defined in Section 322C.0408 of the Revised Act) to the fullest extent required by Section 322C.0408
of the Revised Act for actions thereafter.

 

(e)          Indemnity
from Former Members. To the extent that a portion of the tax liabilities imposed under Code Section 6225 as amended by the
BBA relates to a former Member, the Managing Member may require a former Member to indemnify the Company for such former Member’s
allocable portion of such tax adjustment.  Each Member acknowledges that, notwithstanding the Transfer of all or any portion
of its Interest, it may remain liable for tax liabilities with respect to its allocable share of income and gain of the Company
for the Company’s taxable years (or portions thereof) prior to such Transfer or redemption, as applicable.

 

Article
VI

MEMBERS AND meetings of the members

 

6.1          Meetings
of Members; Place of Meetings. Except as provided in Section 6.4, all decisions of the Members will be made at a meeting
duly held in accordance with this ARTICLE VI. Meetings of the Members may be held for any purpose or purposes, unless otherwise
prohibited by law or by the Articles, and may be called by the Managing Member or Members holding not less than twenty percent
(20%) of the Percentage Interests. Meetings of the Members may be held either in person or by means of telephone or video conference
or other communications device that permits all Members participating in the meeting to hear each other, at the principal office
of the Company or, if called by the Managing Member, at such other place, within or outside the State of Minnesota, as is designated
from time to time by the Members and stated in the notice of the meeting or in a duly executed waiver of the notice thereof. During
the period of construction of the Project, meetings of the Members may be scheduled and held monthly (in addition to, and not in
lieu of, any construction meetings), or on such other schedule as the Members may mutually agree upon.

 

6.2          Quorum.
The presence, in person or by proxy, of a Majority in Interest constitutes a quorum for the transaction of business by the Members.
If less than a Majority in Interest is represented at a meeting, a majority of the Interests so represented may adjourn the meeting
to a specified date not longer than ninety (90) days after such adjournment, without further notice. At such adjourned meeting
at which a quorum is present or represented by proxy, any business may be transacted that might have been transacted at the meeting
as originally noticed. The Members present at a duly convened meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of Members such that the remaining Members constitute less than a quorum. At any time, if there is no Person with
the right to vote or to participate in the management of the business and affairs of the Company with respect to a particular Interest,
then the Percentage Interest represented by such Interest will be disregarded for the purposes of determining whether a quorum
is present at a meeting of Members and the requisite Percentage Interest necessary for a valid decision of the Members has been
obtained.

 

    34

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

6.3          Proxies.
At any meeting of the Members, every Member having the right to vote at the meeting will be entitled to vote in person or by proxy
appointed by an instrument in writing signed by such Member and bearing a date not more than three years prior to such meeting.

 

6.4          Action
Without Meeting. Any action required or permitted to be taken at any meeting of the Members of the Company may be taken without
a meeting if the action is evidenced by one or more written consents setting forth the action to be taken and signed by all Members.

 

6.5          Notice
of Meetings. Notice stating the place, day, hour and the purpose for which a meeting of the Members is called must be given,
not less than five (5) business days nor more than sixty (60) days before the date of the meeting, by or at the direction of the
Managing Member or Members calling the meeting, to each Member entitled to vote at such meeting. A Member’s attendance at
a meeting:

 

(a)          waives
objection to lack of notice or defective notice of the meeting, unless such Member, at the beginning of the meeting, objects to
holding the meeting or transacting business at the meeting; and

 

(b)          waives
objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the notice
of meeting, unless such Member objects to considering the matter when it is presented.

 

6.6          Waiver
of Notice. When any notice is required to be given to any Member of the Company hereunder, a waiver thereof in writing signed
by the Member entitled to such notice, whether before, at, or after the time stated therein, is equivalent to the giving of such
notice.

 

6.7          Voting
by Entity Members. In the case of a Member that is a corporation, its Interest may be voted by such officer, agent or proxy
as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation
may determine. In the case of a Member that is a general or limited partnership, its Interest may be voted, in person or by proxy,
by such Person as is designated by such Member. In the case of a Member that is another limited liability company, its Interest
may be voted, in person or by proxy, by such Person as is designated by the operating agreement, bylaws or limited liability company
agreement of such other limited liability company, or, in the absence of such designation, by such Person as is designated by the
limited liability company.

 

    35

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

6.8          Voting
Requirement.

 

(a)          Notwithstanding
anything to the contrary in the Revised Act, and solely to the extent authorized in this Agreement, each Member whose voting rights
have not been suspended under Section 3.7(c) above has the right to vote in proportion to such Member’s Percentage
Interest. Except as otherwise expressly provided in this Agreement, the affirmative vote of a Majority in Interest is required
for a valid decision of the Members. Except as expressly set forth herein (including the items set forth in Section 5.5),
this standard represents the voting power required to take action at a duly called meeting pursuant to Section 322C.0407 Subd.
5 of the Revised Act.

 

(b)          The
affirmative vote of all Members is required to change of the status of the Company from a manager-managed limited liability company
to a board-managed limited liability company or a member-managed limited liability company (in each case, as those terms are defined
in Section 322C.0102 of the Revised Act).

 

(c)          At
any time that a Member does not have the right to vote or to participate in the management of the business and affairs of the Company
with respect to the Interest held by such Member, then the Percentage Interest represented by such Interest will be disregarded
in determining whether the requisite percentage necessary for a valid decision of the Members has been obtained, with the effect
that such Interest will be treated as if such Interest had not been issued and the requisite percentage necessary for a valid decision
will be applied against the remaining Percentage Interests.

 

6.9          Minutes
of Meetings and Record of Other Actions. The Company will keep at its principal office minutes of all meetings of the Members
and a record of all actions taken by the Members without a meeting.

 

6.10        No
Personal Liability – Members. Except as otherwise provided by applicable law or as expressly set forth in this Agreement,
the debts, obligations, or other liabilities of the Company, whether arising in contract, tort or otherwise (a) are solely the
debts, obligations or other liabilities of the Company, and (b) do not become the debts, obligations or other liabilities of a
Member solely by reason of such Member acting as a member; provided that any repeal of this provision as a matter of law or any
modification of this subpart shall be prospective only, and shall not adversely affect any limitation on the personal liability
of any Member existing at the time of such repeal or modification.

 

6.11        Change
of Control of Members.

 

(a)              
Doran represents and warrants that [*****], directly or indirectly (including as the grantor, trustee, or primary income
beneficiary of any trust), currently owns greater than [*****] percent ([*****]%) of the issued and outstanding voting equity interests
of Doran and agrees that, except as provided below, [*****]’s direct or indirect ownership of the issued and outstanding
voting equity interests of Doran shall not equal [*****] percent ([*****]%) or less without the prior written consent of all Members.
The foregoing restriction shall not apply to transfers of ownership of the issued and outstanding voting equity interests of Doran
(i) under any will or applicable law of descent, (ii) among any of the holders of ownership interests in Doran that were holders
of ownership interests in Doran on the Effective Date, (iii) to any child, spouse (or former spouse in connection with a marital
dissolution proceeding), sibling, or grandchild of the holders of ownership interests in Doran as of the Effective Date (collectively,
the “Permitted Family Members”), or (iv) to trusts, limited liability companies or partnerships in which Permitted
Family Members are the sole beneficial owners and, in the case of a limited liability company or partnership, such Permitted Family
Members are in control of the applicable entity. [*****] shall control [*****] the day-to-day responsibilities of the Managing
Member under this Agreement unless he is unable to do so as a result of death or incapacity (in which event [*****] is hereby approved
to control Doran and the day-to-day responsibilities of the Managing Member under this Agreement).

 

    36

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(b)          Canterbury
represents and warrants that Canterbury Park Holding Corporation owns greater than fifty percent (50%) of the issued and outstanding
voting equity interests of Canterbury, and agrees that Canterbury Park Holding Corporation’s ownership of the issued and
outstanding voting equity interests of Canterbury shall not equal [*****] percent ([*****]%) or less without the prior written
consent of all Members.

 

6.12        Financial
Guarantees. If required pursuant to any so-called “carve out” events as defined under the Project Financing, the
Members agree to, or to cause their respective Affiliates to, enter into guarantees of the Project Financing for such “carve-out”
events only. Each Member shall reimburse the Company for any costs, losses, and expenses, including reasonable attorneys’
fees incurred by the Company as a result of such Member’s breach of any representation, warranty or obligation of such Member,
including relating to any so-called “carve out” provisions, arising under or related to the Project Financing (“Reimbursable
Losses”). For purposes of clarification, it is intended that the breaching Member reimburse the Company related to a
default by the Company under the Project Financing as a result of the Member’s breach, such as the cost of putting any new
financing in place and any incremental interest expense under such new financing. In addition, each Member shall defend, indemnify
and hold harmless the other Member, its Affiliates and their officers, directors, employees, agents, successors and permitted assigns
from and against all Reimbursable Losses incurred directly by a non-breaching Member. Unless otherwise agreed to by the Parties,
any guarantees provided by a Member or its respective Affiliates under this Agreement shall not be joint and several but shall
be proportionate to the Percentage Interest in the Company held by the Member. The Members understand that their officers may be
required to provide a personal guaranty of the Project Financing for certain “carve-out” events. Each Member and any
other required guarantor shall provide any HUD-required personal or financial statements or tax returns, within the timeframe requested
by any loan documents entered into by or on behalf of the Company. For the avoidance of doubt, completion guarantees are not subject
to this Section 6.12 because completion guarantees are the sole responsibility of the General Contractor.

 

6.13        Deadlock.

 

(a)          In
the event that the requisite vote, approval, consent or decision of the Members under this Agreement cannot be obtained (a “Deadlock”),
no action shall be taken and the status quo shall continue in effect if the vote, approval, consent or decision relates to any
proposed: (i) amendment of this Agreement; (ii) admission of any Person to the Company as a Member except in accordance with the
provisions of ARTICLE VIII; (iii) sale, lease, exchange or other disposition of the Project; (iv) acquisition or investment
in any other business or entity, including formation of subsidiaries or joint ventures; (v) dissolution of the Company; (vi) merger,
conversion or domestication under Sections 322C.1001 to 322C.1015 of the Revised Act; (vii) change of the management status of
the Company under Section 6.8(b); or (viii) change of control of a Member under Section 6.11.

 

    37

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(b)          Except
as provided above in Section 6.12(a) above, any Deadlock shall be resolved by the process described in this Section 6.13(b).
The Members agree to devote their best efforts, in good faith, to resolving the Deadlock. If the Members cannot resolve the Deadlock
within five (5) business days, each Member shall designate a top executive to participate in a meeting to be called by the Managing
Member to further attempt to resolve the Deadlock. If no resolution is reached following such a meeting, then subject to the terms
of Section 5.12 hereof, the Managing Member’s position on the matter shall control.

 

Article
VII

ACCOUNTING AND BANK ACCOUNTS

 

7.1          Fiscal
Year. The fiscal year and taxable year of the Company will end on December 31 of each year, unless a different year-end is
required by the Code.

 

7.2          Books
and Records. At all times during the existence of the Company, the Company will cause to be maintained full and accurate books
of account, which will reflect all Company transactions and be appropriate and adequate for the Company’s business. The books
and records of the Company will be maintained at the principal office of the Company. The books and records of the Company shall
be maintained using generally accepted accounting principles.

 

7.3          Financial
Reports. Within forty-five (45) days after the end of each fiscal year, there will be prepared and delivered to each Member
by the Company:

 

(a)          A
balance sheet as of the end of such year and related financial statements for the year then ended; and

 

(b)          All
information with respect to the Company necessary for the preparation of the Members’ federal and state income tax returns.

 

7.4          Tax
Returns and Elections; Tax Matters Member. The Company will cause to be prepared and timely filed all federal, state and local
income tax returns or other returns or statements required by applicable law. The Company will claim all deductions and make such
elections for federal or state income tax purposes that the Managing Member reasonably believes will produce the most favorable
tax results for the Members. Doran is hereby designated as the Company’s Tax Matters Member, to serve with respect to the
Company in the same capacity as a “tax matters partner” as defined in the Code, and in such capacity is hereby authorized
and empowered to act for and represent the Company and each of the Members before the Internal Revenue Service in any audit or
examination of any Company tax return and before any court selected by the Managing Member for judicial review of any adjustment
assessed by the Internal Revenue Service. Doran hereby accepts such designation. The Members specifically acknowledge, without
limiting the general applicability of this Section 7.4, that the Tax Matters Member will not be liable, responsible or accountable
in damages or otherwise to the Company or any Member with respect to any action taken by it in its capacity as a “Tax Matters
Member.” All out-of-pocket expenses incurred by the Tax Matters Member in the capacity of Tax Matters Member will be considered
expenses of the Company for which the Tax Matters Member is entitled to full reimbursement. The Members hereby appoint Doran as
the “partnership representative” of the Company pursuant to Section 6223(a) of the Code, as amended by the Bipartisan
Budget Act of 2015 (the “BBA”), and all references in this Agreement to the Tax Matters Member shall refer to
Doran in its capacity as partnership representative under the BBA. For any year in which the Company is eligible to make the election
in Section 6221(b), as amended by the BBA, to have Subchapter C of Chapter 63 of the Code not apply to the Company, the Members
will have the discretion to cause the Company to timely make such election.  For tax years after December 31, 2017, if the
Company receives a notice of final partnership adjustment, the Managing Member, after consultation with and upon the advice of
the other Member(s), may elect the application of Code Section 6226, as amended by the BBA, to such adjustment and if such election
is made, the Managing Member will furnish each Member with the statement required by Code Section 6226(a), as amended by the BBA.

 

    38

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

7.5          Section
754 Election. If a distribution of Company assets occurs that satisfies the provisions of Code § 734 or if a Transfer
of an Interest occurs that satisfies the provisions of Code § 743, upon the determination of the Member transferring its Interest
to a third party, the Company will elect, pursuant to Code § 754, to adjust the basis of the Property to the extent allowed
by Code § 734 or Code § 743 and will cause such adjustments to be made and maintained.

 

7.6          Bank
Accounts. All funds of the Company will be deposited in a separate bank, money market or similar account or accounts approved
by the Managing Member and in the Company’s name. Withdrawals therefrom may be made only by individuals authorized to do
so by the Managing Member.

 

7.7          Company
Information. The Company will provide to the Members, at least quarterly within thirty (30) days after the end of each quarter,
and upon any other request, all information concerning the Company’s activities, financial condition, and other circumstances
of the Company and the Project.

 

Article
VIII

TRANSFERS OF INTERESTS; EVENTS OF WITHDRAWAL; ADDITIONAL MEMBERS

 

8.1          General
Restrictions. Except as expressly provided in this Agreement, no Member may Transfer all or any part of such Member’s
Interest to any other Person. Any purported Transfer of an Interest in violation of the terms of this Agreement will be null and
void and of no effect. A permitted Transfer will be effective as of the date specified in the instruments relating thereto. Any
Transferee desiring to make a further Transfer will become subject to all of the provisions of this ARTICLE VIII to the
same extent and in the same manner as any Member desiring to make any Transfer.

 

    39

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

8.2          Permitted
Transfers. Each Member (a “Transferor”) may Transfer (but not substitute the assignee as a Substitute Member
in such Member’s place, except in accordance with Section 8.3), by a written instrument, all or any part of such Member’s
Interest to a Permitted Transferee, provided that the Transfer would not result in the “termination” of the Company
pursuant to Code § 708. Any assignee of an Interest as allowed by this Section 8.2 who does not become a Substitute
Member as provided in Section 8.3 (a “Transferee”) (i) will not be a Member and will not have any right
to vote as a Member or to participate in the management of the business and affairs of the Company, such right to vote such Interest
and to participate in the management of the business and affairs of the Company continuing with the Transferor, and (ii) shall
have only those rights accorded to the transferee of a transferable Interest as set forth in Section 322C.0502 of the Revised Act.
The Transferee will, however, be entitled to Distributions and allocations of the Company, as provided in ARTICLE IV, attributable
to the Interest that is the subject of the Transfer to such Transferee.

 

8.3          Substitute
Members.

 

(a)          No
assignee of all or part of a Member’s Interest will become a Member in place of the Transferor (a “Substitute Member”)
unless and until:

 

(i)          the
Transferor has stated such intention in the instrument of assignment;

 

(ii)         the
Transferee has executed a joinder or other instrument accepting and adopting the terms and provisions of this Agreement;

 

(iii)        the
Transferor or Transferee has paid all reasonable expenses of the Company in connection with the admission of the Transferee as
a Substitute Member; and

 

(iv)        the
Transferee is (A) a Permitted Transferee or (B) the Transferee has acquired the Interest properly pursuant to Section 8.7.

 

(b)          Upon
satisfaction of all of the foregoing conditions with respect to a Transferee, the Managing Member will cause this Agreement to
be duly amended to reflect the admission of the Transferee as a Substitute Member.

 

8.4          Effect
of Admission as a Substitute Member. Unless and until admitted as a Substitute Member pursuant to Section 8.3, a Transferee
is not entitled to exercise any rights of a Member in the Company, including the right to vote, grant approvals or give consents
with respect to such Interest, the right to require any information or accounting of the Company’s business or the right
to inspect the Company’s books and records, but a Transferee will only be entitled to receive, to the extent of the Interest
transferred to such Transferee, the Distributions to which the Transferor would be entitled. A Transferee who has become a Substitute
Member has, to the extent of the Interest transferred to such Transferee, all the rights and powers of the Member for whom such
Transferee is substituted and is subject to the restrictions and liabilities of a Member under this Agreement. Upon admission of
a Transferee as a Substitute Member, the Transferor will cease to be a Member of the Company to the extent of such Interest.

 

    40

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

8.5          Additional
Members and Interests. Additional Members may be admitted to the Company and additional Interests may be issued with the approval
of the Managing Member and the consent of a Super-Majority in Interest of the Members in accordance with Section 5.5.
Whenever any additional Member is so admitted to the Company, or any additional Interest is issued, the Percentage Interest of
each Member outstanding immediately prior to such admission or issuance will be decreased proportionately, as appropriate, to maintain
the aggregate Percentage Interests of the Members at exactly one hundred percent (100%). The Managing Member will cause Schedule
1 to be revised to reflect any adjustment in the Percentage Interests of the Members in accordance with this Section 8.5,
but such revision shall not, by itself constitute an amendment of this Agreement for purposes of Section 10.9.

 

8.6          Dissociation.
A Member shall not cease to be a Member as a result of the Bankruptcy of such Member or as a result of any other events specified
in Section 322C.0602 of the Revised Act except for the events set forth in clauses (11) [merger], (12) [conversion] and (13) [domestication]
of Section 322C.0602 of the Revised Act. So long as a Member continues to hold any Interest, such Member shall not have the ability
to withdraw or resign as a Member and any such withdrawal or resignation or attempted withdrawal or resignation by a Member prior
to the dissolution or winding up of the Company shall be null and void. As soon as any Person who is a Member ceases to hold any
Interest (other than (i) a Permitted Transfer; or (ii) a charging order in effect under Section 322C.0503 of the Revised Act which
has not been foreclosed) such Person shall no longer be a Member and shall be dissociated.

 

    41

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

8.7          Purchase
of Interest Upon Involuntary Transfer.

 

(a)          Involuntarily
Transferred Interests. For purposes of this Section 8.7, an “Involuntary Transfer” shall mean any
Transfer of all or any part of any Interest, or any Transfer of title or beneficial ownership in and to a Member’s Interests
by a Member upon: (i) default, foreclosure, forfeiture, court order, operation of law or otherwise than by a voluntary decision
on the part of the Member; or (ii) any voluntary or involuntary liquidation, Bankruptcy, dissolution, merger, consolidation, or
reorganization, or sale of substantially all of the assets of a Member, but not including any Permitted Transfer or other Transfer
of Interests by a Member required under the provisions of this Agreement; or (iii) any “change of control” with respect
to a Member, with “change of control” deemed to have occurred in the event of a Transfer, whether voluntary or involuntary,
if (i) any Person or group of affiliated persons becomes the beneficial owner, directly or indirectly, of fifty percent (50%) or
more of the outstanding equity interests of such Member, or (ii) individuals who currently comprise a majority of the governing
body of such member cease for any reason to constitute at least a majority of such Member. In the case of an Involuntary Transfer,
the other Member or Members shall have the right to purchase the Interest (or other financial rights and/or governance rights in
and to Company) as set forth in this this Section 8.7 (collectively, “Involuntarily Transferred Interest”).

 

(b)          Right
to Purchase Involuntarily Transferred Interests. Immediately upon the acquisition of an Involuntarily Transferred Interest
by a Transferee pursuant to an Involuntary Transfer, or immediately upon approval by a Member’s governing board or equity
owners of any liquidation, dissolution or sale of substantially all of the assets of a Member, the Member whose Involuntarily Transferred
Interest has been acquired and the Transferee, or a duly authorized officer of a Member, as applicable, shall each give written
notice to the other Member indicating that the Involuntary Transfer has occurred. The notice shall specify the price and the payment
terms and be accompanied by satisfactory evidence of the acquisition of the Involuntarily Transferred Interest. Upon receipt by
the non-selling Member of the written notice from either the Member whose Involuntarily Transferred Interest has been acquired
or the Transferee, the non-selling Member shall have the right to purchase the Involuntarily Transferred Interest within 30 days.
The purchase price shall be the Book Value of the Involuntarily Transferred Interest; provided, however, if the Transferee
paid an identified consideration for the Involuntarily Transferred Interest that is less than the Book Value of such Interest,
the purchase price shall be the purchase price paid by the Transferee. The non-selling Member may assign its right to purchase
the Interest to the Company. If the non-selling Member does not acquire the Involuntarily Transferred Interest, then any Interest
acquired by a Transferee under the provisions of this Section 8.7 shall remain fully subject to the provisions of this Agreement;
provided, however, that such Transferee (if not already a Member) shall not become a Member unless such Transferee otherwise
becomes a Substitute Member in accordance with Section 8.3.

 

8.8           Mandatory
Buy-Sell Obligations. So long as Doran and Canterbury are the only two Members, either Member (the “Electing Member”)
may at any time deliver written notice to the other Member (the “Non-Electing Member”) of the Electing Member’s
intent to sell its Interest and the price at which the Electing Member is willing to sell its Interest. Following such notice,
for a period of up to thirty (30) days, the Members agree to devote their best efforts, in good faith, to negotiation of a mutually
acceptable purchase by one Member of the other Member’s Interest in the Company or such other transaction that accomplishes
the objectives of both Members. If such negotiations do not result in a mutually acceptable purchase or other transaction, then
within the period of ninety (90) days following expiration of the 30-day negotiation period, the Non-Electing Member shall either:
(i) accept the offer to purchase the Electing Member’s Interest at the stated price, or (ii) sell the Interest of the Non-Electing
Member to the Electing Member at a price that is equivalent to the stated price of the Electing Member’s Interest but as
adjusted to the Percentage Interest of the Non-Electing Member. Failure by the Non-Electing Member to make either election within
the 90-day period shall be deemed an election by the Non-Electing Member to sell its Interest. Unless otherwise agreed by the Members,
any purchase and sale transaction under this Section 8.8 shall be closed within 150 days following delivery of the notice
by the Electing Member.

 

    42

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

Article
IX

DISSOLUTION AND TERMINATION

 

9.1          Events
Causing Dissolution.

 

(a)          Notwithstanding
Section 322C.0701, the Company will be dissolved upon the first to occur of the following events:

 

(i)          upon
termination of this Agreement by Doran following a failure of Canterbury to approve the Final Development Budget, as provided in
Section 5.6 above;

 

(ii)         upon
the sale of the Project;

 

(iii)        upon
the approval of all Members with voting rights; or

 

(iv)        upon
the entry of a decree of judicial dissolution permitted under Section 322C.0701 of the Revised Act.

 

(b)          To
the full extent permitted by applicable law, the forgoing events which cause dissolution of the Company shall be the exclusive
events which cause the dissolution of the Company.

 

9.2           Effect
of Dissolution. Except as otherwise provided in this Agreement, upon the dissolution of the Company, the Managing Member will
take such actions as may be required to wind up, liquidate and terminate the business and affairs of the Company in accordance
with this Agreement and applicable laws. In connection with such winding up, the Managing Member may liquidate and reduce to cash
(to the extent necessary or appropriate) the assets of the Company as promptly as is consistent with obtaining fair market value
therefor, apply and distribute the proceeds of such liquidation and any remaining assets in accordance with the provisions of Section
9.3, and do any and all acts and things authorized by, and in accordance with, applicable laws for the purpose of winding up
and liquidation.

 

    43

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

9.3           Application
of Proceeds. Upon dissolution and liquidation of the Company, the assets of the Company will be applied and distributed in
the order of priority set forth in Section 4.2.

 

Article
X

MISCELLANEOUS

 

10.1         Title
to the Property. Title to the Property will be held in the name of the Company. No Member has any ownership interest or rights
in the Property, except indirectly by virtue of such Member’s ownership of an Interest. No Member has any right to seek or
obtain a partition of the Property, nor does any Member have the right to any specific assets of the Company upon the liquidation
of or any distribution from the Company.

 

10.2         Nature
of Interest in the Company. An Interest is personal property for all purposes.

 

10.3         Organizational
Expenses. Each Member will pay such Member’s own expenses incurred in connection with the review and negotiation of this
Agreement.

 

10.4         Notices.
Any notice, demand, request or other communication (a “Notice”) required or permitted to be given by this Agreement,
the Revised Act (or Act if prior to the Revised Act Date) to the Company, any Member, or any other Person will be sufficient if
in writing and if hand delivered or mailed by registered mail, certified mail or express courier to the Company at its principal
office or to a Member or any other Person at the address of such Member or such other Person as it appears on Schedule 1
next to such Member’s name or, if updated by the Member by written notice to the Company, in the records of the Company or
sent via email to the email address, if any, of the recipient as it as it appears on Schedule 1 next to such Member’s
name or, if updated by the Member by written notice to the Company, in the records of the Company. All Notices that are mailed
will be deemed to be given when deposited in the United States mail, postage prepaid. All Notices that are hand delivered will
be deemed to be given upon delivery. All Notices that are given by e-mail (with confirmation of transmission) will be deemed given
when sent if sent during normal business hours of the recipient and on the next business day if sent after normal business hours
of the recipient.

 

10.5         Waiver
of Default. No consent or waiver, express or implied, by the Company or a Member with respect to any breach or default by another
Member hereunder will be deemed or construed to be a consent or waiver with respect to any other breach or default by such Member
of the same provision or any other provision of this Agreement. Failure on the part of the Company or a Member to complain of any
act or failure to act of another Member or to declare such other Member in default will not be deemed or constitute a waiver by
the Company or the Member of any rights hereunder.

 

10.6         No
Third Party Rights. None of the provisions in this Agreement are for the benefit of or enforceable by any third-party, including
creditors of the Company; provided, however, that the Company may enforce any rights granted to the Company under this Agreement,
its Articles or under the Revised Act.

 

    44

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

10.7        Entire
Agreement. This Agreement, together with the Articles, constitutes the entire agreement among the Members and supersedes all
other written, oral, or implied agreements, arrangements, and understandings among the Members or their Affiliates regarding the
formation, operation and continuation of the Company and the relations among and between the Members and the Company, including
without limitation the Term Sheet.

 

10.8        Complete
Statement of Expectations. Each Member represents and warrants that:

 

(a)          This
Agreement forms a complete statement of the reasonable expectations of such Member with respect to the formation, operation, and
continuation of the Company and the relations among and between the Members and the Company, and such Member does not have any
such expectations not set forth in this Agreement.

 

(b)          This
Agreement contains a complete statement of all expectations that were material to such Member’s decision to become a Member
of the Company.

 

(c)          This
Agreement may not be amended or altered by any oral representation or implied or implicit conduct or actions.

 

10.9        Amendments
to this Agreement. Except as otherwise provided herein, and notwithstanding Section 322C.0407 Subd. 3(4)(iv) of the Revised
Act, this Agreement and the Articles may be modified or amended only in accordance with Section 5.6(b) above.

 

10.10        Interpretation.
The descriptive headings of the paragraphs of this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any provisions of this Agreement. Words such as “herein,” “hereinafter,”
“hereof” and “hereunder” when used in reference to this Agreement, refer to this Agreement as a whole and
not merely to a subdivision in which such words appear, unless the context otherwise requires. The singular shall include the plural
and the masculine gender shall include the feminine and neuter, and vice versa, unless the context otherwise requires. The word
“including” shall not be restrictive and shall be interpreted as if followed by the words “without limitation.”
In the event the time for performance of any obligation hereunder expires on a day that is not a business day, the time for performance
shall be extended to the next business day.

 

10.11        Construction
of Agreement. This Agreement shall not be construed more strictly against one party than against the other merely by virtue
of the fact that it may have been prepared primarily by counsel for one of the parties, it being recognized that both Doran and
Canterbury contributed substantially and materially to the preparation of this Agreement.

 

10.12        Severability.
If any provision of this Agreement is held to be illegal, invalid or unenforceable to any extent, the legality, validity and enforceability
of the remainder of this Agreement will not be affected thereby and will remain in full force and effect and may be enforced to
the greatest extent permitted by law.

 

    45

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

10.13      Binding
Agreement. Subject to the restrictions on the disposition of Interests herein contained, the provisions of this Agreement are
binding upon, and will inure to the benefit of, the parties hereto and their respective successors and permitted assigns.

 

10.14      Counterparts.
This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which constitutes
one agreement that is binding upon all of the parties hereto, notwithstanding that all parties are not signatories to the same
counterpart.

 

10.15      Governing
Law. This Agreement is governed by, and is to be construed in accordance with, the laws of the State of Minnesota without reference
to its conflicts of laws principles.

 

10.16      Remedies.
In the event of a default by any party in the performance of any obligation undertaken in this Agreement, in addition to any other
remedy available to the non-defaulting parties, the defaulting party must pay to each of the non-defaulting parties all costs,
damages, and expenses, including reasonable attorneys’ fees, incurred by the non-defaulting parties as a result of such default.
If any dispute arises with respect to the enforcement, interpretation, or application of this Agreement and court proceedings are
instituted to resolve such dispute, the prevailing party in such court proceedings may recover from the non-prevailing party all
costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in such court proceedings.

 

10.17      Further
Assurances. The Members shall execute and deliver such further instruments and do such further acts and things as may be required
to carry out the intent and purposes of this Agreement.

 

10.18      Waiver
of Jury Trial. Each of the parties hereto waives trial by jury in any litigation, suit or proceeding between them in any court
with respect to, in connection with or arising out of this Agreement, or the validity, interpretation or enforcement thereof.

 

10.19      Equitable
Remedies. Each Member acknowledges and agrees that the Company and the other Member or Members would be irreparably harmed
if any of the provisions of this Agreement (including specifically, without limitation, Section 8.8) are not performed in
accordance with their specific terms, and that monetary damages would not provide an adequate remedy in such event. Accordingly,
it is agreed that, in addition to any other remedy to which the Company and the non-breaching Member or Members may be entitled
hereunder, at law or in equity, the Company and the non-breaching Member or Members shall be entitled to injunctive relief to prevent
breaches of the provisions of this Agreement and specific performance to enforce the terms and provisions of this Agreement.

 

10.20      Consent
to Jurisdiction. The Members consent to the exclusive personal jurisdiction of the federal and state courts of the State of
Minnesota and agree that service of process may be made upon any Member by certified mail, return-receipt requested, or in any
other manner permitted by law. All Members agree not to assert in any action brought in any such court that such action is brought
in an inconvenient forum, or otherwise make any objection to venue or jurisdiction.

 

    46

     

    

 

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

Article
XI

REQUIRED PROVISIONS

 

11.1        Controlling
Provisions. Notwithstanding any other provision of this Agreement, any other organizational documents (including the Articles
of Organization), or any provisions of law that empowers the Company, the following provisions shall be operative and controlling
so long as the HUD Loan to the Company is outstanding:

 

1.          The
sole purpose of the Company is to acquire, own, hold, maintain, operate, develop, manage, and dispose of the real property and
improvements comprising the Property together with such other activities as may be necessary or advisable in connection with the
ownership of the Property. The Company shall not engage, either directly or indirectly, in any business, other than the ownership,
management and operation of the Property, and it shall have no purpose, unrelated to the Property and shall not acquire any real
property or own assets other than those related to the Property and/or otherwise in furtherance of the limited purposes of the
Company.

 

2.          Except
as otherwise provided in this Section 2, the Company shall not own any asset other than (i) the Property, and (ii) incidental personal
property necessary for the operation of the Property.

 

3.          The
Company shall not, and no person or entity on behalf of the Company shall, without the prior written affirmative vote of one hundred
percent (100%) of the Members: (a) institute proceedings to be adjudicated bankrupt or insolvent; (b) consent to the institution
of bankruptcy or insolvency proceedings against it; (c) file a petition seeking, or consenting to, reorganization or relief under
any applicable federal or state law relating to bankruptcy; (d) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or a substantial part of its property; (e) make any assignment
for the benefit of creditors; (f) admit in writing its inability to pay debts generally as they become due or declare or effect
a moratorium on its debts; or (g) take any Company action in furtherance of any such action.

 

4.          The
Company shall at all times observe the applicable legal requirements for the recognition of the Company as a legal entity separate
from any affiliates of same, including, without limitation, as follows:

 

(a)          The
Company shall maintain correct and complete financial statements, accounts, books and records and other entity documents separate
from those of any affiliate or any other person or entity. The Company shall prepare unaudited quarterly and annual financial statements,
and the Company's financial statements shall substantially comply with sound accounting practices for a cash basis company.

 

    47

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(b)          The
Company shall maintain its own separate bank accounts, payroll and correct, complete and separate books of account.

 

(c)          The
Company shall hold itself out to the public (including any of its affiliates' creditors) under the Company's own name and as a
separate and distinct company entity and not as a department, division or otherwise of any affiliate of same.

 

(d)          The
Company shall observe all customary formalities regarding the company existence of the Company, including holding meetings and
maintaining current and accurate minute books separate from those of any affiliate of same.

 

(e)          The
Company shall hold title to its assets in its own name and act solely in its own name and through its own duly authorized officers
and agents. No affiliate of same shall be appointed or act as agent of the Company, other than, as applicable, a property manager
with respect to the Property.

 

(f)          The
Company shall separately identify, maintain and segregate its assets. The Company's assets shall at all times be held by or on
behalf of the Company and if held on behalf of the Company by another entity, shall at all times be kept identifiable (in accordance
with customary usages) as assets owned by the Company. This restriction requires, among other things, that (i) the Company funds
shall be deposited or invested in the Company's name, (ii) the Company funds or assets shall not be commingled with the funds or
assets of any affiliate of same or other person or entity, (iii) the Company shall maintain all accounts in its own name and with
its own tax identification number, separate from those of any affiliate of same or other person or entity, and (iv) the Company
funds shall be used only for the business of the Company.

 

(g)          The
Company shall pay or cause to be paid its own liabilities and expenses of any kind only out of its own separate funds and assets.

 

(h)          The
Company shall at all times be adequately capitalized to engage in the transactions contemplated at its formation.

 

(i)          The
Company shall maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual
assets from those of any affiliate of same or other person or entity.

 

(j)          The
Company shall not do any act which would make it impossible to carry on the ordinary business of the Company.

 

(k)          All
data and records (including computer records) used by the Company or any affiliate of same in the collection and administration
of any loan shall reflect the Company's ownership interest therein.

 

    48

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

(l)          The
Company shall maintain an arm's length relationship with each of its affiliates and enter into contracts or transact business with
its affiliates only on commercially reasonable terms that are not materially less favorable to the Company than is obtainable in
the market from a person or entity that is not an affiliate of same.

 

Any indemnification obligation
of the Company (specifically including the indemnification provisions in Article 5 of this Agreement) shall (a) be fully subordinated
to the HUD Loan and (b) not constitute a claim against the Company or its assets (other than as permitted under Subsection 12.1.11
below) until such time as the HUD Loan has been indefeasibly paid in accordance with its terms and otherwise has been fully discharged.

 

Article
XII

HUD-REQUIRED PROVISIONS

 

12.1        HUD-Controlling
Provisions. Notwithstanding any other provision of this Agreement, any other organizational documents (including the Articles
of Organization), or any provisions of law that empower the Company, the following provisions shall be operative and controlling
so long as the HUD Loan to the Company is outstanding:

 

1.          If
any of the provisions of the Articles of Organization, this Agreement or any other organizational documents of the Company (the
“Organizational Documents”) conflict with the terms of the promissory note executed by the Company and delivered
to HUD (the “Note”) and the Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement with
Minnesota Rider entered into by the Company with HUD (the “Security Agreement”), each evidencing and securing
the HUD Loan made to the Company and insured by HUD or the Regulatory Agreement entered into by the Company with HUD (the “Regulatory
Agreement”) or any other document executed in connection with the HUD Loan (collectively the “HUD Loan Documents”),
the provisions of the HUD Loan Documents shall control.

 

2.          So
long as HUD is the insurer or holder of the Note, no provision required by HUD to be inserted into the Organizational Documents
may be amended without HUD’s prior written approval. Additionally, if there is
a conflict between any HUD-required provisions inserted into this Agreement and any other provision of this Agreement, the terms
of the HUD-required provisions will govern; and if there is a conflict between any of the provisions in the Articles of Organization
or any other Organizational Documents and any HUD-required provisions of this Agreement, the HUD-required provisions will govern.

 

3.          Unless
otherwise approved in writing by HUD, the Company’s business and purpose shall consist solely of the acquisition, ownership,
operation and maintenance of FHA Project No. 092-35836 (the “HUD Project”) located in Shakopee, Minnesota, and
activities incidental thereto. The Company shall not engage in any other business or activity. The HUD Project shall be the sole
asset of the Company, which shall not own any other real estate other than the HUD Project.

 

    49

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

4.          None
of the following will have any force or effect without the prior written consent of HUD:

 

(a)          Any
amendment that modifies the term of the Company’s existence;

 

(b)          Any
amendment that triggers application of the HUD previous participation certification requirements (as set forth in Form HUD-2530,
Previous Participation Certification, or 24 C.F.R. § 200.210, et seq.);

 

(c)          Any
amendment that in any way affects the HUD Loan Documents;

 

(d)          Any
amendment that would authorize any member, partner, owner, officer or director, other than the one previously authorized by HUD,
to bind the Company for all matters concerning the HUD Project which require HUD's consent or approval;

 

(e)          A
change that is subject to the HUD Transfer of Physical Assets requirements contained in Chapter 13 of HUD Handbook 4350.1 REV-1;
or

 

(f)          Any
change in a guarantor of any obligation to HUD (including those obligations arising from violations of the Regulatory Agreement).

 

5.          The
Company is authorized to execute the Note and the Security Instrument in order to secure the HUD Loan and to execute the Regulatory
Agreement and other documents required by the Secretary in connection with the HUD Loan.

 

6.          Any
incoming member of the Company must as a condition of receiving an interest in the Company agree to be bound by the HUD Loan Documents
and all other documents required in connection with the HUD Loan to the same extent and on the same terms as the other members.

 

7.          Notwithstanding
any other provisions, upon any dissolution, no title or right to possession and control of the HUD Project, and no right to collect
the rents from the HUD Project, shall pass to any person or entity that is not bound by the HUD Loan Documents in a manner satisfactory
to HUD.

 

8.          The
key principals of the Company identified in the Regulatory Agreement are liable in their individual capacities to HUD to the extent
set forth in the Regulatory Agreement.

 

9.          The
Company shall not voluntarily be dissolved or converted to another form of entity without the prior written approval of HUD.

 

    50

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

10.         The
Company has designated Kelly J. Doran as its official representative for all matters concerning the HUD Project that require HUD
consent or approval. The signature of this representative will bind the Company in all such matters. The Company may from time
to time appoint a new representative to perform this function, but within three business days of doing so, will provide HUD with
written notification of the name, address, and telephone number of its new representative. When a person other than the person
identified above has full or partial authority with respect to management of the Project, the Company will promptly provide HUD
with the name of that person and the nature of that person’s management authority.

 

11.         Notwithstanding
any provision in the Organizational Documents to the contrary, for so long as the HUD Project is subject to a loan insured or held
by HUD, any obligation of the Company to provide indemnification under the Organizational Documents shall be limited to (i) amounts
mandated by state law, if any, (ii) coverage afforded under any liability insurance carried by the Company and (iii) available
“Surplus Cash” of the Company as defined in the Regulatory Agreement. Until funds from a permitted source for payment
of indemnification costs are available for payment, the Company shall not (a) pay funds to any members, partners, officers and
directors, or (b) pay the deductible on an indemnification policy for any members, partners, officers and directors.

 

[SIGNATURE PAGE FOLLOWS]

 

    51

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

DORAN CANTERBURY I, LLC - OPERATING AGREEMENT

 

SIGNATURE PAGE

 

IN WITNESS WHEREOF,
the Company and the Members have executed this Agreement by their authorized representatives as of the Effective Date.

 

	 	COMPANY
	 	 
	 	DORAN CANTERBURY I, LLC
	 	 
	 	By: DORAN SHAKOPEE, LLC
	 	Its: Managing Member
	 	 	 
	 	 	 
	 	By: 	Kelly J. Doran
	 		Chief Managing Member
	 	 	 
	 	MEMBERS
	 	 
	 	DORAN SHAKOPEE, LLC
	 	 	 
	 	 	 
	 	By:	Kelly J. Doran
	 	 	Chief Managing Member
	 	 	 
	 	CANTERBURY DEVELOPMENT LLC
	 	 	 
	 	 	 
	 	By:	Randy Sampson
	 	 	President and Chief Executive
	 	 	Officer

 

    52

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

DORAN CANTERBURY I, LLC – OPERATING
AGREEMENT

 

SCHEDULE 1

 

Schedule of Members and Percentage Interests

 

	Member’s Name and Address	Capital Contribution	Percentage Interest
	
        Doran Shakopee, LLC

        Attn: Kelly J. Doran

        7803 Glenroy Road

        Suite 200

        Bloomington, MN 55439-3126

        Email: kelly@dorancompanies.com 
	
        As described in Operating Agreement

         

         
	72.6%
	 	 	 
	
        Canterbury Development, LLC 

        Attn: Randy Sampson

        1100 Canterbury Road

        Shakopee, MN 55379

        Email: rsampson@canterburypark.com

         
	As described in Operating Agreement	27.4%
	 	 	 
	Total	 	100.00%

 

    53

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

SCHEDULE 2

 

Intentionally Deleted

 

    54

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

SCHEDULE 3

 

Future Pre-Development Costs

 

[*****]

 

    55

     

    

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

EXHIBIT A

 

Pictorial Depiction of the Project Land,
the Phase II Land, the Additional Land, Retention Pond Area, Ditch Property and Roadway Extension

 

    56

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

EXHIBIT B

 

Preliminary Development Budget

 

[on following pages]

 

[*****]

 

    57

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

EXHIBIT C

 

Form of Loan Note

 

PROMISSORY NOTE

 

	$______________	 	Shakopee, Minnesota
	 	 	____________, 20___

 

FOR VALUE RECEIVED,
DORAN CANTERBURY I, LLC, a Minnesota limited liability company (“Maker”), hereby promises to pay to the
order of _______________, a Minnesota limited liability company (“Holder”), at such place as Holder may from
time to time designate, the principal sum of ___________________ and __/100ths Dollars ($___________), together with interest from
the date of this instrument on the unpaid principal balance outstanding, at the rate equal to the Prime Rate (as defined below)
plus two percent (2.00%) per annum [five percent (5.00% per annum if Default Member Loan], subject to the limitations and
other provisions of this Note. For purposes of this Note, “Prime Rate” means the Prime Rate published in the
Wall Street Journal Money Rates column on the last business day of each calendar month, which rate shall be deemed to be in effect
for the entirety of such calendar month.

 

The loan evidenced
by this Note is made by Holder pursuant to the provisions of the Operating Agreement of Maker dated as of March 1, 2018, as such
agreement may be amended from time to time (the “Operating Agreement”), and capitalized terms used in this Note
but not separately defined herein shall have the meanings set forth in the Operating Agreement.

 

Interest shall accrue
on the unpaid balance of this Note from the date hereof, without compounding, until the entire principal balance is paid in full.
Principal and accrued interest on this Note shall be paid in accordance with the provisions of Section 4.1(c) and Section 4.2 of
the Operating Agreement, consistent with the priorities set forth therein, and no payments shall be required under this Note except
as permitted by the Operating Agreement.

 

This Note may be prepaid,
in whole or in part, without penalty, at any time. All payments shall be applied first to accrued interest and then to principal.

 

This Note is unsecured.

 

Upon default by Maker,
Holder shall be entitled to recover from Maker all expenses and costs of collection, including, but not limited to, reasonable
attorney's fees and costs, whether or not suit or other formal action has been commenced. Holder’s failure to exercise or
delay in exercising any remedy shall not be construed as a waiver or release thereof.

 

    58

     

    

 

Certain information in this exhibit has been
redacted and separately filed with the SEC subject to a confidential treatment request. The redacted information is marked in this
exhibit with brackets and five asterisks, as follows: [*****].

 

Maker hereby waives
demand of payment, presentment, notice of dishonor, protest, and notice of protest, and all other notices and demands in connection
with delivery, acceptance, performance or default, endorsement of this instrument.

 

This Note may not be
modified or discharged orally, but only in writing duly executed by Maker and Holder.

 

This instrument, and
all obligations with respect to the underlying indebtedness, are made and delivered in the State of Minnesota and shall be construed
in accordance with Minnesota law, without giving effect to choice of law principles thereof. Any proceedings with respect to this
instrument shall be conducted in the District Court of Scott County, Minnesota.

 

Notwithstanding any
other provisions of this Note, all payments of accrued interest and principal under this Note which are otherwise due and payable
are expressly subordinated and junior in right of payment to any payments owing by Maker from time to time on Project Financing.
Moreover, no payment of interest or principal shall be made by Maker to Holder under this Note (whether due to Holder hereunder
or by voluntary prepayment by Maker) if such payment would cause Maker to violate any covenants or requirements of any promissory
note, loan agreement, mortgage, or other agreement or obligation entered into by Maker in connection with Project Financing.

 

IN WITNESS WHEREOF,
Maker has executed this Note by its duly authorized representative, effective as of the day and year first above written.

 

	 	DORAN CANTERBURY I, LLC
	 	 
	 	By: DORAN SHAKOPEE, LLC,
	 	Its Managing Member
	 	 	 
	 	By:	 
	 	 	Kelly J. Doran
	 	 	Chief Managing Member

 

    59nine-ex101_15.htm

Exhibit 10.1

RESTRICTED STOCK AGREEMENT

This Restricted Stock Agreement (this “Agreement”) is made as of                              ,              (the “Date of Grant”), between Nine Energy Service, Inc., a Delaware corporation (the “Company”), and ____________________ (the “Employee”).

1.Award.  Pursuant to the Amended and Restated Nine Energy Service, Inc. 2011 Stock Incentive Plan (the “Plan”), effective as of the Date of Grant, ____________ shares (the “Restricted Shares”) of Common Stock shall be issued as hereinafter provided in the Employee’s name subject to certain restrictions thereon and the terms and conditions set forth herein and in the Plan.  The Employee acknowledges receipt of a copy of the Plan, and agrees that this award of the Restricted Shares shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof.  In the event of any conflict between the terms of this Agreement and the Plan, this Agreement shall control.

2.Definitions.  Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings assigned to such terms in the Plan.  In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:

(a)“Earned Shares” means the Restricted Shares following the lapse of the Forfeiture Restrictions with respect to such Restricted Shares pursuant to the terms and conditions of this Agreement and without the prior forfeiture of such Restricted Shares.

(b)“Securities Act” means the Securities Act of 1933, as amended.

3.Restricted Shares.  The Employee hereby accepts the Restricted Shares when issued on the terms and conditions set forth herein and in the Plan and agrees with respect thereto as follows:

(a)Forfeiture Restrictions.  The Restricted Shares may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered, alienated or disposed of except as provided herein or in the Plan, and, in the event of the termination of the Employee’s employment with the Company for any reason whatsoever, the Employee shall, for no consideration, forfeit and surrender to the Company all of the Restricted Shares with respect to which the Forfeiture Restrictions (as defined below) have not lapsed in accordance with Section 3(b) as of the date of such termination.  The prohibition against transfer and the obligation to forfeit and surrender the Restricted Shares to the Company upon termination of employment as provided in the immediately preceding sentence are herein referred to as the “Forfeiture Restrictions.”  The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of the Restricted Shares.

(b)Lapse of Forfeiture Restrictions.  Provided that the Employee remains continuously employed by the Company from the Date of Grant through the applicable vesting date(s) set forth in the following schedule, the Forfeiture Restrictions shall lapse with respect to a percentage of the Restricted Shares determined in accordance with the following schedule: 

 

		
		
	
Vesting Date
	
Percentage of Total Number of Restricted Shares as to which the Forfeiture Restrictions Lapse

	
 
	
 

	
 
	
 

	
 
	
 

	
 
	
 

If the Employee’s employment with the Company terminates, then, regardless of the reason for such termination, the Restricted Shares with respect to which the Forfeiture Restrictions have not lapsed as of the date of termination in accordance with the preceding provisions of this Section 3(b) shall be forfeited and surrendered to the Company for no consideration as of the date of the termination of the Employee’s employment with the Company.

(c)Certificates.  A certificate evidencing the Restricted Shares shall be issued by the Company in the Employee’s name, pursuant to which the Employee shall have all of the rights of a stockholder of the Company with respect to the Restricted Shares, including voting rights and the right to receive dividends and other distributions; provided, however, that dividends and other distributions shall be subject to the Forfeiture Restrictions as described in Section 3(e) below.  Notwithstanding the foregoing, the Company may, in its discretion, elect to complete the delivery of the Restricted Shares by means of electronic, book-entry statement, rather than physical share certificates.  The Employee may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Restricted Shares until the Forfeiture Restrictions have lapsed, and the Employee’s breach of the terms of this Agreement shall result in a forfeiture of the Restricted Shares without consideration.  The certificate, if any, evidencing the Restricted Shares shall be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Committee as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse and the Restricted Shares become Earned Shares pursuant to the terms of the Plan and this Agreement.  At the Company’s request, the Employee shall deliver to the Company a stock power, endorsed in blank, relating to the Restricted Shares.  Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall cause a new certificate or certificates to be issued without legend (except for any legend required pursuant to applicable securities laws or any other agreement to which the Employee is a party) in the name of the Employee in exchange for the certificate evidencing the Restricted Shares or, as may be the case, the Company shall issue appropriate instructions to the transfer agent in the case of the Company’s use of the electronic, book-entry method.

(d)Corporate Acts.  The existence of the Restricted Shares shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger, consolidation or other business combination of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.  The prohibitions of 

2

 

Section 3(a) hereof shall not apply to the transfer of the Restricted Shares pursuant to a plan of reorganization of the Company, but the stock, securities or other property received in exchange therefor shall also become subject to the Forfeiture Restrictions and provisions governing the lapse of such Forfeiture Restrictions applicable to the original Restricted Shares for all purposes of this Agreement, and the certificates, if any, representing such stock, securities or other property shall be legended to reflect such restrictions.

(e)Dividends and Other Distributions.  Dividends and other distributions that are paid or distributed with respect to a Restricted Share (whether in the form of shares of Common Stock or other property (including cash)) (referred to herein as “Distributions”) shall be subject to the transfer restrictions and the risk of forfeiture applicable to the related Restricted Share and shall be held by the Company or other depository as may be designated by the Committee as a depository for safekeeping.  If the Restricted Share to which such Distributions relate is forfeited to the Company, then such Distributions shall be forfeited to the Company at the same time such Restricted Share is so forfeited.  If the Restricted Share to which such Distributions relate becomes vested, then such Distributions shall be paid and distributed to the Employee as soon as administratively feasible after such Restricted Share becomes vested (but in no event later than March 15 of the calendar year following the calendar year in which such vesting occurs).  Distributions paid or distributed in the form of securities with respect to Restricted Shares shall bear such legends, if any, as may be determined by the Committee to reflect the terms and conditions of this Agreement and to comply with applicable securities laws.

4.Withholding of Tax.  To the extent that the receipt of the Restricted Shares or Distributions or the lapse of any Forfeiture Restrictions results in compensation income or wages to the Employee for federal, state, local and/or foreign tax purposes, the Employee shall deliver to the Company or to any Affiliate nominated by the Company at the time of such receipt or lapse, as the case may be, such amount of money or, if permitted by the Committee in its sole discretion, such number of shares of Common Stock as the Company or any Affiliate nominated by the Company may require to meet its obligation under applicable tax or social security laws or regulations, and if the Employee fails to do so, the Company and its Affiliates are authorized to withhold, or cause to be withheld, from any cash or stock remuneration (including withholding any of the Restricted Shares or Earned Shares distributable to the Employee under this Agreement) then or thereafter payable to the Employee an amount equal to any tax or social security required to be withheld by reason of such resulting compensation income or wages, and to take such other action as may be necessary in the opinion of the Company to satisfy such withholding obligation.  If Common Stock is used to pay all or part of such withholding tax obligation, the Fair Market Value of the Common Shares surrendered, withheld or reduced shall be determined as of the date of surrender, withholding or reduction and the maximum number of shares of Common Stock which may be withheld, surrendered or reduced shall be the number of shares of Common Stock which have a Fair Market Value on the date of surrender, withholding, or reduction equal to the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, foreign and/or local tax purposes, including payroll taxes, that may be utilized (and which may be limited to flat rate withholding) without creating adverse accounting, tax or other consequences to the Company or any of its Affiliates, as 

3

 

determined by the Committee in its sole discretion.  The Employee acknowledges and agrees that none of the Board, the Committee, the Company or any of its Affiliates have made any representation or warranty as to the tax consequences to the Employee as a result of the receipt of the Restricted Shares or Distributions, the lapse of any Forfeiture Restrictions or the forfeiture of any of the Restricted Shares pursuant to this Agreement.  The Employee represents that the Employee is in no manner relying on the Board, the Committee, the Company or any of its Affiliates or any of their respective managers, directors, officers, employees or authorized representatives (including, attorneys, accountants, consultants, bankers, lenders, prospective lenders and financial representatives) for tax advice or an assessment of such tax consequences.  The Employee represents that the Employee has consulted with any tax consultants that the Employee deems advisable in connection with the issuance of the Restricted Shares.

5.Compliance with Applicable Law.  Notwithstanding any provision of this Agreement to the contrary, the issuance of shares of Common Stock (including Restricted Shares) will be subject to compliance with all requirements of applicable law with respect to such securities and with the requirements of any stock exchange or market system upon which the Common Stock may then be listed.  No shares of Common Stock will be issued hereunder if such issuance would constitute a violation of any applicable law or regulation or the requirements of any stock exchange or market system upon which the Common Stock may then be listed.  In addition, shares of Common Stock will not be issued hereunder unless (a) a registration statement under the Securities Act is in effect at the time of such issuance with respect to the shares to be issued or (b) in the opinion of legal counsel to the Company, the shares to be issued are permitted to be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary for the lawful issuance and sale of any shares of Common Stock (including Restricted Shares) hereunder will relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority has not been obtained.  As a condition to any issuance hereunder, the Company may require the Employee to satisfy any requirements that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company.  The Employee agrees to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable law.

In addition, the Employee agrees that (i) the certificates, if any, representing the Restricted Shares and Earned Shares may bear such legend or legends as the Committee deems appropriate in order to reflect the Forfeiture Restrictions and to assure compliance with the terms and provisions of this Agreement, the Plan and applicable law, (ii) the Company may refuse to register the transfer of the Restricted Shares or Earned Shares on the stock transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or of applicable law, and (iii) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Shares.  

6.Employment Relationship.  For purposes of this Agreement, the Employee shall be considered to be in the employment of the Company as long as the Employee remains an employee of any of the Company, an Affiliate, or a corporation or other entity, or a parent or 

4

 

subsidiary of such corporation or other entity assuming or substituting a new restricted stock award for the Restricted Shares.  Without limiting the scope of the preceding sentence, it is specifically provided that the Employee shall be considered to have terminated employment with the Company at the time such entity or other organization that employs the Employee ceases to be considered an Affiliate within the meaning of that term as provided in the Plan such that, immediately following the termination of such “Affiliate” status, the Employee is no longer employed by the Company or any of its Affiliates.  Nothing in the adoption of the Plan, nor the award of the Restricted Shares thereunder pursuant to this Agreement, shall confer upon the Employee the right to continued employment by the Company or any such Affiliate, or any other entity, or affect in any way the right of the Employee or the Company or any such Affiliate, or any other entity to terminate the Employee’s employment at any time.  Unless otherwise provided in a written employment agreement or by applicable law, the Employee’s employment by the Company or any such Affiliate or other entity shall be on an at-will basis, and the employment relationship may be terminated at any time by either the Employee or the Company or any such Affiliate or other entity for any reason whatsoever, with or without cause or notice.  Any question as to whether and when there has been a termination of the Employee’s employment with the Company or any such Affiliate or other entity, and the cause of such termination, shall be determined by the Committee, and its determination shall be final and binding on all parties.

7.Confidentiality, Competition and Non-Solicitation.  The Employee expressly acknowledges and agrees that the Restricted Shares granted hereunder link the Employee’s interests to the Company’s long-term business interests and, in accepting the Restricted Shares granted herein, the Employee expressly agrees to be bound by the confidentiality, non-competition and non-solicitation covenants set forth in Exhibit A attached hereto, and the Employee expressly acknowledges and affirms that the Restricted Shares would not be granted to the Employee if the Employee had not agreed to be bound by such covenants.

8.Headings; References; Interpretation.  All Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof.  The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including Exhibit A attached hereto, and not to any particular provision of this Agreement.  All references herein to Sections and Exhibit A shall, unless the context requires a different construction, be deemed to be references to the Sections of this Agreement and Exhibit A attached hereto.  The word “or” as used herein is not exclusive and is deemed to have the meaning “and/or.”  Any and all Exhibits referred to in this Agreement are, by such reference, incorporated herein and made a part hereof for all purposes.  All references to “including” shall be construed as meaning “including without limitation.”  Unless the context requires otherwise, all references herein to a law, agreement, instrument or other document shall be deemed to refer to such law, agreement, instrument or other document as amended, supplemented, modified and restated from time to time to the extent permitted by the provisions thereof.  All references to “dollars” or “$” in this Agreement refer to United States dollars.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any party hereto, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been 

5

 

reviewed by each of the parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the parties hereto.

9.Notices.  Any notices or other communications provided for in this Agreement shall be in writing.  In the case of the Employee, such notices or communications shall be effectively delivered if hand delivered to the Employee at the Employee’s principal place of employment or if sent by certified mail, return receipt requested, to the Employee at the Employee’s last known address on file with the Company.  In the case of the Company, such notices or communications shall be effectively delivered if sent by certified mail, return receipt requested, to the Company at its principal executive offices.

10.Binding Effect; Survival.  This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Employee.  The provisions of Section  5 shall survive the lapse of the Forfeiture Restrictions.

11.Entire Agreement; Amendment.  This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to the Restricted Shares granted hereby; provided ̧ however, that: (i) the terms of this Agreement shall not modify (and shall be subject to the terms and conditions of) any employment or severance agreement between the Company (or an Affiliate or other entity) and the Employee in effect as of the date a determination is to be made under this Agreement; (ii) the terms of Exhibit A are in addition to and complement (and do not replace or supersede) all other agreements and obligations between the Company (or an Affiliate) and the Employee with respect to confidentiality, non-disclosure, non-competition or non-solicitation; and (iii) if the Employee has entered into any written agreement with the Company, Nine Energy Service, LLC or any other Affiliate regarding the arbitration of disputes (such agreement, an “Arbitration Agreement”), then this Agreement shall be subject to the dispute resolution procedures set forth in the Arbitration Agreement.  Without limiting the scope of the preceding sentence, except as provided therein, all prior understandings and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect.  The Committee may, in its sole discretion, amend this Agreement from time to time in any manner that is not inconsistent with the Plan; provided, however, that except as otherwise provided in the Plan or this Agreement, any such amendment that materially reduces the rights of the Employee shall be effective only if it is in writing and signed by both the Employee and an authorized officer of the Company.

12.Clawback.  Notwithstanding any provision in this Agreement or the Plan to the contrary, to the extent required by (i) applicable law, including, without limitation, the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any Securities and Exchange Commission rule or any applicable securities exchange listing standards and/or (ii) any policy that may be adopted or amended by the Board or the Committee from time to time, all shares of Common Stock issued hereunder shall be subject to forfeiture, repurchase, recoupment and/or cancellation to the extent necessary to comply with such law(s) and/or policy.

6

 

13.Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to conflicts of law principles thereof.

[Signatures on the following page.]

7

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has executed this Agreement, all as of the date first above written.

 

	
NINE ENERGY SERVICE, INC.

	
 
	
 
	
 

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
Ann G. Fox

	
 
	
 
	
President and Chief Executive Officer

	
 
	
 
	
 

	
 
	
 
	
 

	
EMPLOYEE
	
 
	
 

 

SPOUSAL CONSENT

The Employee’s spouse, if any, is fully aware of, understands and fully consents and agrees to the provisions of this Agreement and its binding effect upon any marital or community property interests he/she may now or hereafter own, and agrees that the termination of his/her and the Employee’s marital relationship for any reason shall not have the effect of removing any of the Restricted Shares or Earned Shares otherwise subject to this Agreement from coverage hereunder and that his/her awareness, understanding, consent and agreement are evidenced by his/her signature below.

 

	
Signature of Spouse

	
 

	
 

	
 

	
Printed Name of Spouse

 

 

 

8

 

Exhibit A

Confidentiality, Non-Solicitation and Non-Competition covenants

1.Definitions.  As used in this Exhibit A, the following terms shall have the meanings set forth in this Section 1.  Capitalized terms used herein and not defined in this Section 1 shall have the meanings set forth in the Restricted Stock Agreement to which this Exhibit A is attached (the “Restricted Stock Agreement”).

(a)“Business” means: (i) for the period of time in which the Employee is employed by any member of the Company Group, the provision and sale of the products and services provided by the Company Group during such period and other products and services that are functionally equivalent to the foregoing; and (ii) for the period of time within the Prohibited Period in which the Employee is not employed by any member of the Company Group, the provision and sale of the products and services that were provided by  the Company Group during the 12-month period prior to the date on which the Employee ceased to be employed by any member of the Company Group and other products and services that are functionally equivalent to the foregoing.  The Business includes for purposes of both clauses (i) and (ii): (A) the provision of equipment and services used in the completion of wells for the production of oil and natural gas (including cementing, wireline and coiled tubing services), and (B) the provision of production enhancement and well workover services and the sale or rental of equipment relating thereto in connection with the production of oil and natural gas.

(b)“Company Group” means, collectively, the Company and each of its direct and indirect subsidiaries and other Affiliates: (i) that employs or engages the Employee; or (ii) about which the Employee obtains Confidential Information.

(c)“Competing Business” means any business, individual, partnership, firm, corporation or other entity (other than any member of the Company Group) that engages in, or is preparing to engage in, the Business in the Restricted Area. 

(d)“Confidential Information” means any and all confidential or proprietary information and materials, as well as all trade secrets, belonging to the Company or any other member of the Company Group. Confidential Information includes, regardless of whether such information or materials are expressly identified or marked as confidential or proprietary, and whether or not patentable: (i) technical information and materials of the Company or another member of the Company Group; (ii) business information and materials of any member of the Company Group (including all such information relating to corporate opportunities, strategies, business plans, product specifications, compositions, manufacturing and distribution methods and processes, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within the customer’s organizations or within the organization of acquisition prospects, or production, marketing and merchandising techniques, prospective names and marks); (iii) any information or material that gives any member of the Company Group an advantage with respect to its competitors by virtue of not being known by those competitors; and (iv) other valuable, confidential information and materials or trade secrets of the Company or 

 

Exhibit A-1

 

any other member of the Company Group.  Notwithstanding the foregoing, Confidential Information shall not include information that (A) is already properly in the public domain or enters the public domain with the express consent of the Company or another member of the Company Group, or (B) is intentionally made available by the Company or another member of the Company Group to third parties without any expectation of confidentiality.

(e)“Governmental Authorities” means any governmental or regulatory agency, entity, or official(s).

(f)“Prohibited Period” means the definition of “Prohibited Period” (or a similar term) used in the Employee’s employment agreement, or, if the Employee does not have an employment agreement that defines “Prohibited Period” (or a similar term), then Prohibited Period means the period during which the Employee is employed by any member of the Company Group and a period of 12 months following the date that the Employee is no longer employed by any member of the Company Group.

(g)“Restricted Area” means the geographic areas set forth on Appendix A hereto and any other geographic area within a 100-mile radius of any other location where any member of the Company Group conducts or has material plans to conduct the Business and the Employee has direct or indirect responsibilities for, or Confidential Information about, such Business.

2.Protection of Confidential Information.  

(a)In the course of the Employee’s employment or engagement with the Company or the other members of the Company Group, the Employee will be provided with, and will have access to, Confidential Information.  The Employee acknowledges that Confidential Information has been and will be developed or acquired by the Company or other members of the Company Group through the expenditure of substantial time, effort and money and provides the Company or other members of the Company Group with an advantage over competitors who do not know or use such Confidential Information.  

(b)The Employee agrees to preserve and protect the confidentiality of all Confidential Information.  The Employee promises that the Employee will not, at any time during or after the period that the Employee is employed or engaged by any member of the Company Group, make any unauthorized disclosure of, Confidential Information, or make any use thereof, except, in each case, in the carrying out of the Employee’s responsibilities to a member of the Company Group.  

(c)Notwithstanding the foregoing, the Employee shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure thereof is specifically required by law. Further, nothing in this Exhibit A shall prohibit or restrict the Employee from lawfully (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by any Governmental Authorities regarding a possible violation of any law; (ii) responding to any inquiry or legal process directed to the Employee individually from any such Governmental Authorities; (iii) testifying, participating or otherwise assisting in an action or proceeding by any such Governmental Authorities relating to a possible violation of law; or 

 

Exhibit A-2

 

(iv) making any other disclosures that are protected under the whistleblower provisions of any applicable law.  Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, the Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (A) is made (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (y) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made to the Employee’s attorney in relation to a lawsuit for retaliation against the Employee for reporting a suspected violation of law; or (iii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  Nothing in this Agreement require the Employee to obtain prior authorization from any member of the Company Group before engaging in any conduct described in this Section 2, or to notify any member of the Company Group that the Employee has engaged in any such conduct.   

3.Non-Competition And Non-Solicitation.  The Employee and the Company agree to the provisions of this Section 3 as a condition of, and as an express incentive for the Company to enter into, the Restricted Stock Agreement and to issue the Restricted Shares thereunder.  The Employee expressly acknowledges and agrees that the issuance of the Restricted Shares creates an additional incentive for the Employee to increase the value of the Company’s interests that are worthy of protection through the non-competition and non-solicitation provisions of this Section 3.  The Employee further acknowledges that the issuance of the Restricted Shares further aligns the Employee’s interests with the Company’s and the other Company Group members’ long-term business interests, and that the restrictions set forth in this Section 3 are reasonably related to the Company’s and the other Company Group members’ interest in protecting its goodwill.  In addition, the Employee acknowledges that the restrictions that the Employee agrees to herein are necessary to protect the Company’s and the other Company Group members’ additional legitimate business interests, including the protection of the Confidential Information.  The Employee and the Company agree that the non-competition and non-solicitation provisions of this Section 3 are a material inducement for the Company to issue the Restricted Shares and for the Employee to receive, and to be provided access to, Confidential Information in the course of the Employee’s employment.  

(a)The Employee expressly covenants and agrees that, during the Prohibited Period, the Employee will not, directly or indirectly:

(i)Carry on or engage in any business that is competitive with, or similar to, that of any member of the Company Group in the Restricted Area.  Accordingly, the Employee covenants and agrees that the Employee will not, directly or indirectly, own, manage, operate, join, become an employee of, partner in, owner or member of (or an independent contractor to), control or participate in, be connected with or otherwise be affiliated with any business, individual, partnership, firm, corporation or other entity which constitutes a Competing Business in the Restricted Area, as the Employee expressly agrees that each of the foregoing activities would represent carrying on or engaging in a business similar to (or the same as) a member of the Company Group, as prohibited by this Section 3(a)(i); provided, however, that this Section 3(a)(i) will not prevent the Employee from being affiliated with a diversified entity that is a Competing Business, so long as: (A) the Employee’s responsibilities for and with respect to such entity do not directly or indirectly involve the Business; and (B) the Employee does not violate any of the terms of Section 2 above in the course of such affiliation;  

 

Exhibit A-3

 

(ii)Solicit, canvass, approach, encourage, entice or induce: (A) any employee of, or individual acting as a consultant to, any member of the Company Group to terminate his or her employment or engagement with any member of the Company Group; or (B) any customer or supplier of any member of the Company Group to cease or lessen such customer’s or supplier’s business with the Company Group.

(iii)Notwithstanding the foregoing, during the portion of the Prohibited Period that follows the date on which the Employee is no longer employed by any member of the Company Group, the above-referenced limitations in Sections 3(a)(i) and 3(a)(ii)(B) shall not apply in those portions of the Restricted Area located within the State of Oklahoma.  Instead, the Employee agrees that, during such period, the restrictions on the Employee’s activities within those portions of the Restricted Area located within the State of Oklahoma (in addition to those restrictions set forth in Section 3(a)(ii)(A) and Section 2 above) shall be as follows: during the Prohibited Period, the Employee will not directly or indirectly solicit the sale of goods, services, or a combination of goods and services from the established customers of the Company or any other member of the Company Group.

(b)Notwithstanding the restrictions contained in Section 3(a)(i), the Employee may own an aggregate of not more than 5% of the outstanding stock or other equity security of any class of any publicly traded entity that is a Competing Business, if such stock or other equity security is listed on a national securities exchange or regularly traded in the over-the-counter market by a member of a national securities exchange, without violating the provisions of Section 3(a)(i), provided that neither the Employee nor any of the Employee’s affiliates have the power, directly or indirectly, to control or direct the management or affairs of any such publicly traded entity and they are not otherwise involved in the management of such publicly traded entity.

(c)The Employee and the Company agree and acknowledge that the limitations as to time, geographical area and scope of activity to be restrained as set forth above are reasonable in all respects and do not impose any greater restraint than is necessary to protect the legitimate business interests of the Company Group.  The Employee represents that the Employee has read and understands, and agrees to be bound by, the terms of this Exhibit A.  The Employee understands that the foregoing restrictions may limit the Employee’s ability to engage in certain businesses anywhere in the Restricted Area during the Prohibited Period, but acknowledges that the Employee will receive sufficient consideration to justify such restriction and that the Employee’s skills are such that the Employee can be gainfully employed in non-competitive employment, and that the agreement not to compete will not prevent the Employee from earning a living.  Nevertheless, if any of the aforesaid restrictions are found by a court or arbitrator of competent jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise unenforceable, the parties intend for the restrictions herein set forth to be modified by the court or arbitrator making such determination so as to be reasonable and enforceable and, as so modified, to be fully enforced.  By agreeing to this contractual modification prospectively at this time, the Company and the Employee intend to make this Exhibit A enforceable under the law or laws of all applicable jurisdictions so that the entire agreement not to compete and this Exhibit A as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal.  

 

Exhibit A-4

 

4.Right to Injunction.  The Employee acknowledges that the Employee’s violation or threatened or attempted violation of the covenants contained in this Exhibit A will cause irreparable harm to the Company Group and that money damages would not be a sufficient remedy for any breach of these covenants.  The Employee agrees that the Company and the other members of the Company Group shall be entitled as a matter of right to seek specific performance of the covenants in this Exhibit A, including entry of an ex parte temporary restraining order in state or federal court, preliminary and permanent injunctive relief against activities in violation of this Exhibit A, or both, or other appropriate judicial remedy, writ or order, in any court of competent jurisdiction, restraining any violation or further violation of such agreements by the Employee or others acting on the Employee’s behalf, without any showing of irreparable harm and without any showing that the Company does not have an adequate remedy at law.  Such remedies shall be in addition to all other remedies available to the Company and the other members of the Company Group, at law and equity.

5.Miscellaneous.

(a)Severability.  If any term, provision, covenant or condition of this Exhibit A (or any part thereof) is held by a court of competent jurisdiction to be illegal, invalid, unenforceable or void, the validity and enforceability of the remainder of this Exhibit A (and parts thereof) shall not in any way be affected, impaired or invalidated. 

(b)Survival.  The Employee’s obligations under this Exhibit A shall survive the date that the Employee is no longer employed or engaged by any member of the Company Group, regardless of the reason that such relationship ends.  

(c)Restricted Stock Agreement.  This Exhibit A shall be subject to the provisions of Sections 6, 8, 9, 10, 11 and 13 of the Restricted Stock Agreement, which provisions are hereby incorporated by reference as a part of this Exhibit A.  

(d)Third Party Beneficiaries.  Each member of the Company Group that is not a signatory hereto shall be a third party beneficiary of the Employee’s representations, commitments, covenants, and obligations under this Exhibit A and shall have the right to enforce this Exhibit A as if a party hereto.  

 

[Remainder of Page Intentionally Blank]

 

Exhibit A-5

 

APPENDIX A

 

RESTRICTED AREA

The following States: Colorado, Montana, New Mexico, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, West Virginia and Wyoming 

Appendix A

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