Document:

Winter Sports, Inc.

	

LIMITED LIABILITY
COMPANY AGREEMENT 

OF 

GLADES DEVELOPMENT LLC 

	EXHIBIT  	10-13  

	

	

LIMITED LIABILITY COMPANY
AGREEMENT 

OF 

GLADES DEVELOPMENT LLC 

TABLE OF CONTENTS 

			Page

	 	 	 	 	 	 
	ARTICLE I	 	DEFINITIONS	 	1	 
	       1.1	 	Accumulated Preference Return	 	1	 
	       1.2	 	Act	 	1	 
	       1.3	 	Adjusted Capital Account Deficit	 	1	 
	       1.4	 	Adjustment Percentage	 	2	 
	       1.5	 	Affiliate	 	2	 
	       1.6	 	Agreement	 	2	 
	       1.7	 	Amenities	 	2	 
	       1.8	 	Annual Plan	 	2	 
	       1.9	 	Approved Annual Plan	 	2	 
	       1.10	 	Bankruptcy	 	2	 
	       1.11	 	BMDC Affiliate	 	2	 
	       1.12	 	Buy-Sell Period	 	2	 
	       1.13	 	Buy-Sell Right	 	2	 
	       1.14	 	Capital Account	 	3	 
	       1.15	 	Capital Contribution	 	3	 
	       1.16	 	Capital Return Percentages	 	3	 
	       1.17	 	Closing Date	 	3	 
	       1.18	 	Closing Sum	 	3	 
	       1.19	 	Code	 	3	 
	       1.20	 	Commencement of Construction	 	3	 
	       1.21	 	Company	 	3	 
	       1.22	 	Company Assets	 	3	 
	       1.23	 	Company Available Cash Flow	 	3	 
	       1.24	 	Completion Date	 	4	 
	       1.25	 	Conference Center Fee	 	4	 
	       1.26	 	Construction Contract	 	4	 
	       1.27	 	Construction Contractor	 	4	 
	       1.28	 	Construction Financing	 	4	 
	       1.29	 	Contribution Percentage	 	4	 
	       1.30	 	Cumulative Net Income	 	4	 
	       1.31	 	Cumulative Net Loss	 	4	 
	       1.32	 	Default Fraction	 	4	 
	       1.33	 	Defaulted Portion	 	5	 

	

i 

	 	 	 	 	 	 
	       1.34	 	Defaulting Event	 	5	 
	       1.35	 	Defaulting Member	 	5	 
	       1.36	 	Defaulting Member Loan	 	5	 
	       1.37	 	Defaulting Member Approval Rights	 	5	 
	       1.38	 	Designated Representative(s)	 	5	 
	       1.39	 	Development Budget	 	5	 
	       1.40	 	Development Management Agreement	 	5	 
	       1.41	 	Development Manager	 	5	 
	       1.42	 	Development Plan	 	5	 
	       1.43	 	Disbursement Request	 	5	 
	       1.44	 	Electing Member	 	6	 
	       1.45	 	Election	 	6	 
	       1.46	 	Election Date	 	6	 
	       1.47	 	Failure Notice	 	6	 
	       1.48	 	FMV	 	6	 
	       1.49	 	Forced Sale	 	6	 
	       1.50	 	Forced Sale Notice	 	6	 
	       1.51	 	Forced Sale Price	 	6	 
	       1.52	 	Forced Sale Right	 	6	 
	       1.53	 	Forced Sale Value	 	6	 
	       1.54	 	Gross Negligence	 	6	 
	       1.55	 	HILP	 	6	 
	       1.56	 	Hines Member	 	6	 
	       1.57	 	Hines Affiliate	 	6	 
	       1.58	 	Horizontal Development	 	7	 
	       1.59	 	Horizontal Ownership Percentage	 	7	 
	       1.60	 	Infrastructure Costs	 	7	 
	       1.61	 	Initiating Member	 	7	 
	       1.62	 	Interest	 	7	 
	       1.63	 	Land Agreement	 	7	 
	       1.64	 	Land Note	 	7	 
	       1.65	 	Liquidating Member	 	8	 
	       1.66	 	Major Decision	 	8	 
	       1.67	 	Manager	 	8	 
	       1.68	 	Master Development Agreement	 	8	 
	       1.69	 	Member Loan	 	8	 
	       1.70	 	Member Nonrecourse Debt	 	8	 
	       1.71	 	Member Nonrecourse Debt Minimum Gain	 	8	 
	       1.72	 	Member Nonrecourse Deductions	 	8	 
	       1.73	 	Members	 	8	 
	       1.74	 	Members’ Total Outstanding Capital Amount	 	8	 
	       1.75	 	Minimum Gain	 	8	 
	       1.76	 	Monetary Default	 	9	 
	       1.77	 	Net Income	 	9	 
	       1.78	 	Net Loss	 	9	 
	       1.79	 	Non-Core Real Estate	 	9	 

	

ii 

	 	 	 	 	 	 
	       1.80	 	Non-Defaulting Member	 	9	 
	       1.81	 	Non-Electing Member	 	9	 
	       1.82	 	Nonrecourse Deductions	 	9	 
	       1.83	 	Operating Shortfall	 	9	 
	       1.84	 	Outstanding Capital Contribution	 	9	 
	       1.85	 	Person	 	9	 
	       1.86	 	Plans	 	10	 
	       1.87	 	Pledge	 	10	 
	       1.88	 	Preference Return	 	10	 
	       1.89	 	Price	 	10	 
	       1.90	 	Prime Rate	 	10	 
	       1.91	 	Project	 	10	 
	       1.92	 	Project Capital Commitment	 	10	 
	       1.93	 	Project Costs	 	11	 
	       1.94	 	Project Land	 	11	 
	       1.95	 	Project Partnership	 	11	 
	       1.96	 	Project Partnership Agreement	 	12	 
	       1.97	 	Receiving Member	 	12	 
	       1.98	 	Regulations	 	12	 
	       1.99	 	Regulatory Allocations	 	12	 
	       1.100	 	Special Party	 	12	 
	       1.101	 	Transfer	 	12	 
	       1.102	 	Village Core	 	12	 
	       1.103	 	WSI	 	12	 
	 	 	 	 	 	 
	ARTICLE II	 	THE COMPANY	 	12	 
	       2.1	 	Purpose of the Company	 	12	 
	       2.2	 	Company Name and Office	 	12	 
	       2.3	 	Manager	 	13	 
	       2.4	 	BMDC	 	13	 
	       2.5	 	Term of the Company	 	13	 
	       2.6	 	Fictitious Name Certificates	 	13	 
	       2.7	 	Title to Property	 	13	 
	       2.8	 	Registered Office and Agent	 	13	 
	       2.9	 	Qualification	 	13	 
	 	 	 	 	 	 
	ARTICLE III	 	CAPITALIZATION AND FINANCING	 	13	 
	       3.1	 	Contribution of Certain Property; Assumption of Land Note	 	13	 
	       3.2	 	Capital Contributions Incident to a Project	 	14	 
	       3.3	 	Capital Contributions Incident to Operations	 	15	 
	       3.4	 	Wire Transfer	 	15	 
	       3.5	 	Failure of a Member to Satisfy Monetary Obligations	 	16	 
	       3.6	 	Member Loans	 	18	 
	 	 	 	 	 	 
	ARTICLE IV	 	RIGHTS AND OBLIGATIONS OF MANAGER; MANAGEMENT OF THE COMPANY	 	18	 
	       4.1	 	Management	 	18	 

	

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	       4.2	 	Manager	 	18	 
	       4.3	 	Preparation and Filing of Tax Returns and Required Tax Elections	 	20	 
	       4.4	 	Specific Limitations on Manager	 	20	 
	       4.5	 	Safekeeping of Company Assets	 	21	 
	       4.6	 	Contracts with the Hines Member and Affiliates of the Hines Member	 	21	 
	       4.7	 	Permissible Activities of the Members	 	22	 
	       4.8	 	Exculpation of Manager	 	22	 
	       4.9	 	Approval of Members	 	23	 
	 	 	 	 	 	 
	ARTICLE V	 	RIGHTS AND OBLIGATIONS OF THE MEMBERS	 	23	 
	       5.1	 	Limited Liability	 	23	 
	       5.2	 	Examination of the Company Records	 	23	 
	       5.3	 	Reliance on Authority of Person Signing Agreement; Designated Representatives	 	23	 
	 	 	 	 	 	 
	ARTICLE VI	 	MAINTENANCE OF CAPITAL ACCOUNTS; ALLOCATION OF COMPANY NET  	 	 	 
	 	 	INCOME, NET GAIN AND NET LOSS; DISTRIBUTION OF NET CASH FLOW 	 	25	 
	       6.1	 	Capital Accounts	 	25	 
	       6.2	 	Allocation of Net Income and Net Loss	 	26	 
	       6.3	 	Limitations and Qualifications Regarding Special Allocations	 	27	 
	       6.4	 	Contributed Property	 	29	 
	       6.5	 	Allocation of Items with Respect to Interests Transferred	 	29	 
	       6.6	 	Distribution of Company Available Cash Flow	 	29	 
	 	 	 	 	 	 
	ARTICLE VII	 	ASSIGNABILITY	 	30	 
	       7.1	 	Transfers and Pledges	 	30	 
	 	 	7.1.1     Hines Member Permitted Transfers	 	30	 
	 	 	7.1.2     BMDC Permitted Transfers	 	30	 
	 	 	7.1.3     Limitation on Transfers	 	30	 
	       7.2	 	Additional Covenants Concerning Transfers	 	31	 
	       7.3	 	Admission as Substituted Member	 	31	 
	 	 	 	 	 	 
	ARTICLE VIII	 	ACCOUNTING PROCEDURE	 	31	 
	       8.1	 	Fiscal Year	 	31	 
	       8.2	 	Books of Account	 	31	 
	       8.3	 	Annual Reports	 	32	 
	       8.4	 	The Development Budget, the Development Plan and the Annual Plan	 	32	 
	       8.5	 	Multiple Projects	 	33	 
	 	 	 	 	 	 
	ARTICLE IX	 	DURATION AND DISSOLUTION	 	33	 
	       9.1	 	Dissolution	 	33	 
	       9.2	 	Liquidation	 	33	 
	       9.3	 	Liquidation of a Member’s Interest	 	34	 
	 	 	 	 	 	 
	ARTICLE X	 	COMPENSATION AND FEES	 	35	 
	       10.1	 	Management Fee	 	35	 
	       10.2	 	Reimbursement of Expenses	 	35	 

	

iv 

	 	 	 	 	 	 
	ARTICLE XI	 	BUY-SELL PROCEDURES/FORCED SALE	 	35	 
	       11.1	 	Buy-Sell Right	 	35	 
	       11.2	 	Forced Sale	 	36	 
	       11.3	 	Closing	 	38	 
	       11.4	 	Default by Purchasing Member	 	39	 
	       11.5	 	Default by Non-purchasing Member	 	39	 
	       11.6	 	Liability After Closing	 	39	 
	       11.7	 	Limitation on Exercise	 	40	 
	       11.8	 	No Assignment	 	40	 
	       11.9	 	Release of Liability	 	40	 
	 	 	 	 	 	 
	ARTICLE XII	 	DEFAULTING EVENT REMEDIES	 	40	 
	       12.1	 	Election to Purchase Defaulting Member’s Interest	 	40	 
	       12.2	 	Purchase Price of Defaulting Member’s Interest	 	41	 
	       12.3	 	Suspension of Rights	 	41	 
	       12.4	 	Grant of Security Interest	 	41	 
	       12.5	 	Remedies Exclusive	 	42	 
	 	 	 	 	 	 
	ARTICLE XIII	 	MISCELLANEOUS PROVISIONS	 	42	 
	       13.1	 	Entire Contract	 	42	 
	       13.2	 	Notices	 	42	 
	       13.3	 	Nature of Interest	 	44	 
	       13.4	 	Execution in Counterparts	 	44	 
	       13.5	 	Severability	 	44	 
	       13.6	 	Modification, Termination and Waiver	 	44	 
	       13.7	 	Waivers	 	44	 
	       13.8	 	Headings	 	44	 
	       13.9	 	Rights and Remedies Cumulative	 	44	 
	       13.10	 	Waiver of Right to Partition	 	44	 
	       13.11	 	Heirs, Successors, and Assigns	 	44	 
	       13.12	 	Governing Law	 	44	 
	       13.13	 	Estoppel Certificates	 	45	 
	       13.14	 	Further Assurances	 	45	 
	       13.15	 	Attorneys’ Fees	 	45	 
	       13.16	 	Captions	 	45	 
	       13.17	 	Pronouns	 	45	 
	       13.18	 	Recalculation of Interest	 	45	 
	       13.19	 	Confidentiality; Publicity	 	45	 
	       13.20	 	Waiver of Jury Trial	 	46	 
	       13.21	 	General Exculpation	 	46	 
	       13.22	 	No Third-Party Beneficiaries	 	46	 
	       13.23	 	No Consequential Damages	 	46	 
	       13.24	 	Exhibits	 	46	 
	       13.25	 	Days	 	46	 
	       13.26	 	Dispute Resolution	 	46	 

	

v 

	EXHIBITS
	
		 	 	 
	Initial Project Land Description	 	Exhibit A	 
	Fair Market Value Procedure	 	Exhibit B	 

	

vi 

	

LIMITED LIABILITY
COMPANY AGREEMENT 

FOR 

GLADES DEVELOPMENT LLC 

	

        THIS
LIMITED LIABILITY COMPANY AGREEMENT OF GLADES DEVELOPMENT LLC (the “Company”) entered
into as of the 4th day of April, 2003, by and between Hines Montana Development Limited
Partnership, a Texas limited partnership (the “Hines Member”), and Big Mountain
Development Corporation, a Montana corporation (“BMDC”).  

W I T N E S S E T H: 

	 	        WHEREAS,
 the Hines Member and BMDC hereby agree to form the Company as a limited  liability
 company  pursuant to and subject to the Act; 

	 	        WHEREAS,
 a  Certificate  of Formation  of the Company has been filed with the  Secretary of State
of the State of Delaware; and 

	 	        WHEREAS,
the parties desire to provide for the orderly management of the Company; 

	 	        NOW,
THEREFORE,  in consideration of the foregoing and the covenants and agreements herein
contained,  the parties hereto agree as follows: 

	

ARTICLE I 

DEFINITIONS 

      
              1.1
        Accumulated Preference Return. “Accumulated Preference
        Return” shall have the meaning set forth in the definition of
        Preference Return.  

        1.2
Act. “Act” shall mean the Delaware Limited Liability Company Act, Del. Code
Ann. tit. 6, ss. 18-101, et seq., as from time to time amended.  

        1.3
Adjusted Capital Account Deficit. “Adjusted Capital Account Deficit” shall mean,
with respect to any Member, the deficit balance, if any, in such Member’s Capital
Account as of the end of the relevant fiscal year, after giving effect to the following
adjustments: (i) crediting to such Capital Account any amounts that such Member
is obligated to restore or is deemed to be obligated to restore pursuant to
Regulations sections 
1.704-1(b)(2)(ii)(b)(3), 1.704-1(b)(2)(ii)(c),
1.704-2(g)(1), and 1.704-2(i)(5), and (ii) debiting to such Capital Account the items
described in Regulations section 1.704-1(b)(2)(ii)(d)(4), (5), and (6). The foregoing
definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of Regulations section 
1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.  

1 

	

        1.4
Adjustment Percentage. “Adjustment Percentage” shall mean, in the case of the
reduction in the Defaulting Member’s interest in the Company pursuant to Section
3.5(a)(ii) of this Agreement, a fraction, expressed as a percentage, the numerator of
which is the Defaulted Portion of the Defaulting Member’s Interest in the Company and
the denominator of which is the Defaulting Member’s Horizontal Ownership Percentage
(determined immediately prior to the Non-Defaulting Member’s purchase).  

        1.5
Affiliate. “Affiliate” shall mean a BMDC Affiliate or a Hines Affiliate, as
applicable.  

        1.6
Agreement. “Agreement” shall mean this Limited Liability Company Agreement, as
amended from time to time.  

        1.7
Amenities. “Amenities” means the open areas, plazas, landscaped areas and other
portions of the Village Core available for the common use and enjoyment of all owners
and users of improvements that an Affiliate of the Hines Member or BMDC develops
within the Village Core.  

        1.8
Annual Plan. “Annual Plan” shall mean the annual plan for the Company proposed to
the Members for approval pursuant to Section 8.4(b) of this Agreement.  

        1.9
Approved Annual Plan. “Approved Annual Plan” shall mean the annual plan of the
Company approved (or deemed to have been approved) by the Members pursuant to Section
8.4(b) of this Agreement, as the same may be amended from time to time as herein
provided.  

        1.10
Bankruptcy. “Bankruptcy” of a person shall be deemed to have occurred upon the
happening of any of the following: (i) the filing by such person of an application
for, or a consent to, the appointment of a trustee for such person’s assets; (ii)
the filing by such person of a voluntary petition in bankruptcy or the filing of a
pleading in any court of record admitting in writing its inability to pay its debts as
they come due; (iii) the making by the person of a general assignment for the benefit
of creditors; (iv) the filing by the person of an answer admitting the material
allegations of, or its consenting to or defaulting in answering, a bankruptcy petition
filed against it in any bankruptcy proceeding; (v) the entry of an order, judgment, or
decree by any court of competent jurisdiction adjudicating the person a bankrupt or
appointing a trustee of its assets, and such order, judgment, or decree continues
unstayed and in effect for a period of 90 days; or (vi) if any petition for same
shall be filed against a person and such petition is not dismissed within 120 days.  

        1.11
BMDC Affiliate. “BMDC Affiliate” means WSI or any other entity owned or
controlled, directly or indirectly, by WSI or BMDC.  

        1.12
Buy-Sell Period. “Buy-Sell Period” shall mean the period commencing five (5)
years after the date of this Agreement and ending two (2) years after such commencement
date.  

        1.13
Buy-Sell Right. “Buy-Sell Right” shall have the meaning set forth in Section 11.1 of
this Agreement.  

2 

	

        1.14
Capital Account. “Capital Account” shall mean a financial account to be
established and maintained by the Company for each Member as computed from time to
time in accordance with Section 6.1 hereof. A transferee of a Member’s Interest
shall succeed to the transferor’s Capital Account with respect to the transferred
Interest.  

        1.15
Capital Contribution. “Capital Contribution” shall mean, with respect to any
Member, any cash or property contribution (other than Project Land) made by the Member
pursuant to this Agreement.  

        1.16
Capital Return Percentages. “Capital Return Percentages” shall mean, at any point in
time:  

		         (1) 	in
the case of the Hines Member, one hundred percent (100.0%) multiplied by a fraction,  the
numerator of which is                   the sum of (a) the Hines Member’s  Outstanding
 Capital  Contributions,  (b) the Hines Member’s accrued and unpaid
                  Preference  Return  and (c)  the  Hines  Member’s  accrued  and  unpaid
 Accumulated  Preference  Return,  and the                   denominator of which is the
Members’ Total Outstanding Capital Amount, and

		         (2) 	in
the case of BMDC, one hundred  percent  (100.0%)  multiplied by a fraction the numerator
of which is the sum of                   (a) BMDC’s  Outstanding  Capital  Contributions,
 (b) BMDC’s accrued and unpaid  Preference  Return and (c) BMDC’s
                  accrued and unpaid  Accumulated  Preference  Return and the denominator
of which is the Members’ Total Outstanding                   Capital Amount.

	

        1.17
Closing Date. “Closing Date” shall have the meaning set forth in Section 11.3 of
this Agreement.  

        1.18
Closing Sum. “Closing Sum” shall have the meaning set forth in Section 11.1 of this
Agreement.  

        1.19
Code. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.  

        1.20
Commencement of Construction. “Commencement of Construction” shall mean the date
the notice (or other authorization) is given by the Company to the general contractor
to commence construction of a Project.  

        1.21
Company. “Company” is defined in the Preamble.  

        1.22
Company Assets. “Company Assets” shall mean all interests, properties and rights of
any kind owned by the Company.  

        1.23
Company Available Cash Flow. “Company Available Cash Flow” shall mean, with
respect to the Company, the excess of (i) all revenues and receipts of the Company
from all sources for the period in question, determined in accordance with the cash
receipts and disbursements method of accounting, including any amounts expended from
the working capital reserve and replacement reserve accounts of the Company (whether
utilized to pay costs and expenditures of the Company or distributed to the Members
thereof), but excluding any Capital Contributions, over (ii) all expenditures for the
period in question, determined in accordance with the cash receipts and disbursements
method of accounting (including all cash operating expenses and capital
expenditures) other than debt service payments and deposits to the Company’s reserve
accounts (including reserves for taxes and insurance).  

3 

	

        1.24
Completion Date. “Completion Date” shall mean the date (i) a Project
architect certifies that the Construction Contractor has substantially completed
all the construction work, including but not limited to satisfactory operation of
all equipment, other than correction of all punch list items to the satisfaction
of Owner, and (ii) to the extent required by applicable laws, occupancy or use of
a Project is permitted pursuant to temporary certificates of occupancy or
comparable approvals from the city and county governments, or other authority having
jurisdiction for which the Construction Contractor is responsible.  

        1.25
Conference Center Fee. “Conference Center Fee” shall mean an amount, for each
Horizontal Development, equal to six percent (6.0%) of the following: the gross
sales price actually received by the Company for each lot or townhome site actually
sold by the Company, minus real estate commissions, title insurance premiums, transfer
fees, recording costs, transaction legal fees, and other closing costs incurred by the
Company in closing the sale of a lot or townhome site.  

        1.26
Construction Contract. “Construction Contract” means the general construction
contract entered into by the Company with a general contractor for construction of a
Project.  

        1.27
Construction Contractor. “Construction Contractor” means the general contractor
under the Construction Contract.  

        1.28
Construction Financing. “Construction Financing” means any loan or other
borrowings by the Company, in accordance with the Development Plan, for the
predevelopment and/or development of a Project, which is secured, in whole or in
part, by Company Assets.  

        1.29
Contribution Percentage. “Contribution Percentage” shall mean fifty percent
(50.0%) as to BMDC and fifty percent (50.0%) as to the Hines Member.  

        1.30
Cumulative Net Income. “Cumulative Net Income” shall mean the excess of (i) the
Net Income (other than Net Income of the Company allocated pursuant to Section
6.2.1(a)(i) and (ii)) previously allocated to the Members, over (ii) the Net Loss
previously allocated to the Members.  

        1.31
Cumulative Net Loss. “Cumulative Net Loss” shall mean the excess of (i) the
Net Loss previously allocated to the Members, over (ii) the Net Income previously
allocated to the Members (other than Net Income of the Company allocated pursuant to
Section 6.2.1(a)(i) and (ii)).  

        1.32
Default Fraction. “Default Fraction” shall mean, in the case of the reduction in
the Defaulting Member’s Interest in the Company pursuant to Section 3.5(a)(ii) of this
Agreement, the lesser of (i) 1.0 or (ii) a fraction, the numerator of which is the
product of 1.0 multiplied by the amount of the Monetary Default in question and
the denominator of which is the sum of the Monetary Default in question and the
Defaulting Member’s Capital Contributions which have theretofore been made to the Company.  

4 

	

        1.33
Defaulted Portion. “Defaulted Portion” shall have the meaning set forth in Section
3.5(a)(ii) of this Agreement.  

        1.34
Defaulting Event. “Defaulting Event” means (i) a Member’s withdrawal as a
Member from the Company in willful and intentional breach of Section 9.1(b), (ii)
the fraud, Gross Negligence or intentional or willful misconduct of either Member,
(iii) the Transfer by a Member of all or any part of its Interest in willful and
intentional breach of Sections 7.1 and 7.2, or (iv) a Member’s Bankruptcy.  

        1.35
Defaulting Member. “Defaulting Member” shall mean a Member with respect to which
a Defaulting Event occurs or which commits a Monetary Default.  

        1.36
Defaulting Member Loan. “Defaulting Member Loan” shall have the meaning set
forth in Section 3.5(a)(iv) of this Agreement.  

        1.37
Defaulting Member Approval Rights. “Defaulting Member Approval Rights” shall
have the meaning set forth in Section 3.5(a)(iii).  

        1.38
Designated Representative(s). “Designated Representative(s)” shall have the
meaning set forth in Section 5.3(b) of this Agreement.  

        1.39
Development Budget. “Development Budget” means the Development Budget with
respect to a Project included as part of the Development Plan approved as provided in
Section 8.4, as such budget may, from time to time, be amended in accordance with
this Agreement and the Development Management Agreement.  

        1.40
Development Management Agreement. “Development Management Agreement” shall mean
the Development Management Agreement entered into by Company and Development Manager
pursuant to Section 10.1, as amended or supplemented from time to time.  

        1.41
Development Manager. “Development Manager” shall mean HILP under the
Development Management Agreement or any other Person retained in accordance with the
terms of this Agreement to manage the development of a Project.  

        1.42
Development Plan. “Development Plan” means the Development Plan for a Project
approved in accordance with the Master Development Plan, as such plan is amended from
time to time, in accordance with this Agreement.  

        1.43
Disbursement Request. “Disbursement Request” means a requisition submitted
from time to time to the Members by the Development Manager to fund costs incurred in
connection with predevelopment, development, construction and marketing activities of
a Project pursuant to the Development Plan and the Development Management Agreement and
which shall state the date on which the funds requested are to be contributed (or loan
proceeds drawn), which date shall not be less than five (5) business days following the
receipt of such Disbursement Request by the Members.  

5 

	

        1.44
Electing Member. “Electing Member” shall have the meaning set forth in Section 11.1
of this Agreement.   

         1.45
Election. “Election” shall have the meaning set forth in
Section 11.2(c) of this Agreement.  

        1.46
Election Date. “Election Date” shall have the meaning set forth in Section 11.2(c)
of this Agreement.  

        1.47
Failure Notice. “Failure Notice” shall have the meaning set forth in Section 11.1(c)
of this Agreement.  

        1.48
FMV. “FMV” shall mean fair market value determined in accordance with the
appraisal or arbitration procedure described in Exhibit B hereto.  

        1.49
Forced Sale. “Forced Sale” shall have the meaning set forth in Section 11.2(a) of
this Agreement.  

        1.50
Forced Sale Notice. “Forced Sale Notice” shall have the meaning set forth in Section
11.2(a) of this Agreement.  

        1.51
Forced Sale Price. “Forced Sale Price” shall have the meaning set forth in Section
11.2(b) of this Agreement.  

        1.52
Forced Sale Right. “Forced Sale Right” shall have the meaning set forth in Section
11.2(a) of this Agreement.  

        1.53
Forced Sale Value. “Forced Sale Value” shall have the meaning set forth in Section
11.2(e) of this Agreement.  

        1.54
Gross Negligence. “Gross Negligence” shall mean a Member’s failure, through act or
omission, to perform a material duty specifically set forth herein in reckless disregard
of the consequences thereof.  

        1.55
HILP. “HILP” shall mean Hines Interests Limited Partnership, a Delaware limited
partnership, or any successor to all or substantially all of the assets of such entity.  

        1.56
Hines Member. “Hines Member” means Hines Montana Development Limited
Partnership, or any other person or entity that succeeds such partnership in such
capacity as a Member.  

        1.57
Hines Affiliate. “Hines Affiliate” means any one or more of (i) Jeffrey C.
Hines, his spouse and his children (including, without limitation, children by
adoption); (ii) Gerald D. Hines, his spouse and his children (including, without
limitation, children by adoption); (iii) a trust, all the vested beneficiaries of
which are persons described in (i) and (ii) of this definition; (iv) a general or
limited partnership, in which the only general partners are Gerald D. Hines, Jeffrey C.
Hines, a trust described in (iii) or an entity or party described in one of the other
items of this definition; (v) a limited liability company in which the only managing
members are one or more of Gerald D. Hines, Jeffrey C. Hines, a trust described in
(iii), or an entity described in one of the other items of this definition; (vi) a
corporation all the stock of which is owned, directly or indirectly, by persons,
entities or parties referred to in this definition; (vii) HILP; (viii) in the case of
the deaths of both Gerald D. Hines and Jeffrey C. Hines, the estate of either of them
or the issue (including, without limitation, children by adoption and
grandchildren), brothers, sisters and spouses of issue of Jeffrey C. Hines; and
(ix) any other entity owned or controlled, directly or indirectly, by an entity or
person described in one of the other items of this definition.  

6 

	

        1.58
Horizontal Development. “Horizontal Development” means the development of lots
for homesites and townhomes or other residential development within the Non-Core Real
Estate.  

        1.59
Horizontal Ownership Percentage. “Horizontal Ownership Percentage” shall mean
(i) in the case of BMDC, sixty-three percent (63.0%), and (ii) in the case of the
Hines Member, thirty-seven percent (37.0%); provided, however, that the Members’
respective Horizontal Ownership Percentages may be adjusted as provided in Section
3.5(a)(ii) of this Agreement.  

        1.60
Infrastructure Costs. “Infrastructure Costs” means the costs of installing
streets, roads, utilities and other service facilities (e.g., parking, common garbage
collection facilities) and common recreational facilities available for all users of the
Village Core to provide utilities and services for improvements or users of improvements
developed (or planned to be developed).  

        1.61
Initiating Member. “Initiating Member” shall have the meaning set forth in Section
11.2(a) of this Agreement.  

        1.62
Interest. “Interest” means, as to any Member, all of the Member’s interest in
the Company, including any and all benefits to which the holder of an interest in the
Company may be entitled as provided in this Agreement and under the Act, together
with all obligations of the Member to comply with the terms and provisions of this
Agreement (including the Member’s Project Capital Commitment).  

        1.63
Land Agreement. “Land Agreement” shall mean, as to the initial land to be
developed by the Company, that certain Agreement for Sale and Purchase of Land
dated as of April 4, 2003, between HILP and WSI, as amended by mutual agreement of
HILP and WSI from time to time. If the Company elects to develop additional land,
the term “Land Agreement” shall in turn refer to such subsequent Agreement(s) for Sale
and Purchase of Land as may be in effect for development of such additional land.  

        1.64
Land Note. “Land Note” shall mean, as to the initial land to be developed by the
Company, the Horizontal Land Note, in the original principal amount of $2,520,000.00,
which is payable to WSI and given as consideration for the purchase of the initial
Project Land. If the Company elects to develop additional land, the term “Land
Note” shall in turn refer to such subsequent Horizontal Land Note(s) given as
consideration for the purchase of the additional land to be developed.  

7 

	

        1.65
Liquidating Member. “Liquidating Member” shall have the meaning set forth in Section
9.3 of this Agreement.  

        1.66
Major Decision. “Major Decision” shall have the meaning set forth in Section 4.4 of
this Agreement.  

        1.67
Manager. “Manager” shall mean the Hines Member or any other Member that
succeeds the Hines Member in such capacity pursuant to the terms hereof.  

        1.68
Master Development Agreement. “Master Development Agreement” shall mean that
certain Master Development Agreement dated as of March 12, 2001, by and among HILP, BMDC
and WSI, as amended from time to time.  

        1.69
Member Loan. “Member Loan” shall mean a loan made by a Member to the Company
pursuant to the provisions of Section 3.6 hereof.  

        1.70
Member Nonrecourse Debt. “Member Nonrecourse Debt” shall have the meaning
ascribed to the term “partner nonrecourse debt” in Regulations section 1.704-2(b)(4).  

        1.71
Member Nonrecourse Debt Minimum Gain. “Member Nonrecourse Debt Minimum Gain” shall
have the meaning ascribed to the term “partner nonrecourse debt minimum gain” in
Regulations section 1.704-2(i)(2).  

        1.72
Member Nonrecourse Deductions. “Member Nonrecourse Deductions” shall mean any
item of partnership loss, deduction, or expenditure under section 705(a)(2)(B) of the
Code that is attributable to a Member Nonrecourse Debt, as determined pursuant to
Regulations section 1.704-2(i)(2).  

        1.73
Members. “Members” shall mean the Hines Member, BMDC, and their successors and
assigns, any one of which may be referred to individually as a “Member.”  

        1.74
Members’ Total Outstanding Capital Amount. “Members’ Total Outstanding
Capital Amount” shall mean the sum of the Outstanding Capital Contributions,
accrued unpaid Preference Returns and accrued unpaid Accumulated Preference Return of
all the Members.  

        1.75
Minimum Gain. “Minimum Gain” shall have the meaning set forth in Regulations
section 1.704-2(d)(1) and shall mean the amount determined by (i) computing for each
nonrecourse liability of the Company any gain the Company would realize if it disposed
of the property subject to that liability for no consideration other than full
satisfaction of the liability and (ii) aggregating the separately computed gains.
If, pursuant to Regulations sections 1.704-1(b)(2)(iv)(d) or 1.704-1(b)(2)(iv)(f),
Company property is properly reflected on the books of the Company at a book value
that differs from the adjusted tax basis of such property, the calculation of
Minimum Gain pursuant to the preceding sentence shall be made by reference to such book
value. For purposes hereof, a liability of the Company is a nonrecourse liability to
the extent that no Member or related person bears the economic risk of loss for that
liability within the meaning of Regulations section 1.752-2.  

8 

	

        1.76
Monetary Default. “Monetary Default” shall mean, with respect to the Company,
the failure by any Member to make any Capital Contribution that such Member is
required to make pursuant to Sections 3.2 or 3.3 of this Agreement, which failure is not
cured within 10 business days of the actual receipt or refusal of service of written
notice of demand from the Non-Defaulting Member for payment of such defaulted amount.  

        1.77
Net Income. “Net Income” shall mean for a taxable year of the Company or other
period the excess of (i) the income and gain of the Company for such year or period
determined in accordance with the accounting principles described in Section 8.2, over
(ii) the deductions and losses of the Company for such year or period determined in
accordance with the accounting principles described in Section 8.2.  

        1.78
Net Loss. “Net Loss” shall mean for a taxable year of the Company or other period
the excess of (i) the deductions and losses of the Company for such year or period
determined in accordance with the accounting principles described in Section 8.2,
over (ii) the income and gain of the Company for such year or period determined in
accordance with the accounting principles described in Section 8.2.  

        1.79
Non-Core Real Estate. “Non-Core Real Estate” shall mean the developable portion of
Big Mountain Resort located outside the Village Core, currently contemplated for
development as single-family lots, townhome sites, apartments, condominiums or other
residential uses.  

        1.80
Non-Defaulting Member. “Non-Defaulting Member” shall mean a Member other than a
Defaulting Member.  

        1.81
Non-Electing Member. “Non-Electing Member” shall have the meaning set forth in
Section 11.1 of this Agreement.  

        1.82
Nonrecourse Deductions. “Nonrecourse Deductions” shall have the meaning ascribed
to such term in Regulations section 1.704-2(b)(1).  

        1.83
Operating Shortfall. “Operating Shortfall” shall have the meaning set forth in
Section 3.3(a) of this Agreement.  

        1.84
Outstanding Capital Contribution. “Outstanding Capital Contribution” shall mean
the excess of (i) the aggregate amount of a Member’s Capital Contributions pursuant to
Article III, over (ii) the aggregate amount previously distributed to such Member
pursuant to Section 6.6(e).  

        1.85
Person. “Person” shall mean an individual, a trust, an estate, a governmental
entity or subdivision, a partnership, a corporation, a joint venture, a company, a
firm or any other entity whatsoever.  

9 

	

        1.86
Plans. “Plans” shall mean the plans, specifications, drawings and other materials
which describe, in appropriate detail at the time, the improvements planned for a
Project consistent with the Development Plan approved by the Members and any changes
thereto approved by the Members to the extent such approval is required in this
Agreement, including plans for any Infrastructure or Amenities associated with a
Project.  

        1.87
Pledge. “Pledge” shall mean any voluntary pledge, mortgage, deed of trust,
security interest or other consensual lien or hypothecation of, in or on any Member’s
Interest or right to receive distributions from the Company.  

        1.88
Preference Return. “Preference Return” shall mean a return at a rate equal to
eight percent (8.0%) per annum on the amount of each Member’s Outstanding Capital
Contribution existing from time to time. To the extent that the Company has Company
Available Cash Flow, the Preference Return shall be paid quarterly in cash. To the
extent that the Company does not have Company Available Cash Flow sufficient to pay the
Preference Return when due, the Preference Return shall compound annually at eight
percent (8.0%) per annum and shall accumulate (the “Accumulated Preference Return”).  

        1.89
Price. “Price” shall have the meaning set forth in Section 11.1(c) of this Agreement.  

        1.90
Prime Rate. “Prime Rate” shall mean the prime lending rate in effect from time to
time at J. P. Morgan Chase & Company in New York City, New York, or any successor
thereto; provided, however, that in the event that no prime lending rate shall be in
effect at J. P. Morgan Chase & Company in New York City, New York, or its successor,
“Prime Rate” shall mean the highest domestic prime lending rate published from time to
time in the Wall Street Journal.  

        1.91
Project. “Project” shall mean the initial Project Land and the improvements to
be constructed thereon, in accordance with the Development Plan approved as provided
herein, including all buildings, structures and improvements (including the
footings and foundations, columns, piles, improvements, fixtures, equipment and
other installations of such buildings and structures) now or hereafter erected
on, in, under or above the initial Project Land. If the Company elects to
undertake development of additional land, the term “Project” shall in turn
refer to such additional land to be developed and the improvements to be
constructed thereon, in accordance with the Development Plan approved for such
development, including all buildings, structures and improvements (including the
footings and foundations, columns, piles, improvements, fixtures, equipment and other
installations of such buildings and structures) now or hereafter erected on, in,
under or above the additional land to be developed. The Project that will be developed
on the initial Project Land is sometimes referred to as the initial Project.  

        1.92
Project Capital Commitment. “Project Capital Commitment” shall mean the aggregate
amount that each Member has agreed to contribute to the capital of the Company with
respect to a Project pursuant to Section 3.2.  

10 

	

        1.93
Project Costs. “Project Costs” means all costs and expenses incurred after the
date of this Agreement in developing, constructing and repairing a Project,
including: all costs and expenses of every kind incurred in connection with
the construction, ownership, maintenance, repair and restoration of a Project at any
time (including before the formation of the Company) except land acquisition costs,
including, but not limited to, the following: demolition costs, construction costs of
all improvements; costs of temporary facilities required for interim use pending
final completion of improvements of a Project; operating costs of temporary
facilities; governmentally imposed costs and burdens; a proportionate share (based on
an allocation formula mutually approved by the Members) for professional fees and
expenses of architectural and engineering firms employed in connection with land use
approvals for the Village; professional fees and expenses of architectural and
engineering firms for the design and construction of a Project; utility costs during
construction of a Project; an allocation of off-site Infrastructure Costs and costs of
Amenities properly attributable to the construction of a Project (based on an
allocation formula mutually approved by the Members or otherwise as provided in a
Project Budget) and the Conference Center Fee for Horizontal Developments; ad valorem
taxes and other impositions and all amounts paid to governmental authorities to
permit construction of a Project following contribution of Project Land to the
Company; insurance during construction of a Project including owner’s and
mortgagee’s title insurance, builders risk insurance and liability insurance; the
cost of all bonds obtained in connection with the construction of a Project (including
payment and performance bonds and bonds with respect to lien claims); interest
charges, fees and costs, if any, incurred for borrowings of the Company; amounts paid
all consultants retained in connection with the construction of a Project; costs of
Project evaluation reports; marketing costs and sales costs and expenses; title
insurance, transfer taxes and other transaction costs; leasing costs and expenses; all
legal fees and expenses associated with acquisition of a Project (or interests therein)
and zoning, development and land use approval activities with respect to a Project
excluding legal costs of acquiring Project Land (other than additional property
acquired after the date of this Agreement); all salaries, bonuses and benefits of
Project development and clerical personnel and all reimbursable expenses paid
under the Development Management Agreement with respect to a Project; accounting
fees incurred in connection with a Project, including without limitation fees
and expenses paid to Ernst & Young, LLP or such other accounting firm as the
Company may employ to review and audit expenditures for Project Costs (including “soft”
costs) which are properly allocable to a Project; an allocation of central accounting
and general and administrative costs of the Hines Member or BMDC attributable to the
development of a Project which are reimbursable pursuant to the Development Management
Agreement in the amount budgeted for such reimbursement(s) in the Development Budget;
and travel costs incurred in development, marketing and sale of a Project.  

        1.94
Project Land. “Project Land” shall mean, as to the initial development to be
undertaken by the Company, the parcel or parcels of land situated in the County of
Flathead, State of Montana, as more particularly described on Exhibit A hereto. If
the Company elects to develop additional land, the term “Project Land” shall in turn
refer to such additional land to be developed. The land described on Exhibit A is
sometimes referred to as the initial Project Land.  

        1.95
Project Partnership. “Project Partnership” means a partnership, limited liability
company, corporation or other entity, if any, formed for the ownership and
development of a Project and in which the Company is a partner, member or owner,
as applicable to the particular type of entity.  

11 

	

        1.96
Project Partnership Agreement. “Project Partnership Agreement” means the
partnership, limited liability company or other entity formation documents for a Project
Partnership.  

        1.97
Receiving Member. “Receiving Member” shall have the meaning set forth in Section
12.2(a) of this Agreement.  

        1.98
Regulations. “Regulations” shall mean the Treasury Regulations promulgated pursuant
to the Code.  

        1.99
Regulatory Allocations. “Regulatory Allocations” shall mean the allocations set
forth in Section 6.3 of this Agreement, which allocations are intended to comply with
certain requirements of Regulations sections 1.704-1(b) and 1.704-2.  

        1.100
Special Party. “Special Party” shall have the meaning set forth in Section 13.21 of
this Agreement.  

        1.101
Transfer. “Transfer” shall mean any sale, assignment, transfer, gift, conveyance or
other disposition, whether voluntary or involuntary (by operation of law or otherwise),
of any Interest of a Member in the Company.  

        1.102
Village Core. “Village Core” shall mean means the portion of the Big Mountain
Resort containing approximately fifteen (15) acres, more or less, located within the
Village, as more fully shown on the Approved Master Plan.  

        1.103
WSI. “WSI” shall mean Winter Sports, Inc., a Montana corporation.  

ARTICLE II 

THE COMPANY 

        2.1
Purpose of the Company. The purpose of the Company is, as to the initial Project
Land and any additional land that the Company elects to develop, to (i) exercise
predevelopment activities with respect to each Project and (ii) directly (or
indirectly through ownership of an interest in a Project Partnership) acquire,
obtain, own, manage, develop, operate, finance, sell and otherwise deal with
each Project and in all respects act as owner (or as owner of ownership of an
interest in a Project Partnership that is the owner) thereof, upon and subject
to the terms and conditions of this Agreement and any Project Partnership
Agreement.  

        2.2
Company Name and Office. The name of the Company shall be “Glades Development
LLC,” and the business of the Company shall be conducted under that name. The
principal place of business of the Company shall be located at P. O. Box 4154,
Whitefish, Montana 59937. The Company may maintain other offices as may be
designated from time to time by Manager for the purpose of carrying out the
business of the Company. Manager shall give BMDC written notice of any change in
the principal place of business of the Company.  

12 

	

        2.3
Manager. The initial Manager is the Hines Member, and its principal office
address is 426 East Main Street, Aspen, Colorado 81611.  

        2.4
BMDC. The name and address of BMDC are Big Mountain Development Corporation,
The Big Mountain, P. O. Box 1400, Whitefish, Montana 59937.  

        2.5
Term of the Company. The term of the Company shall commence on the date of the
filing of the Certificate of Formation creating the Company with the Secretary
of State of the State of Delaware and shall continue until terminated as
provided in Article IX; provided, however, that this Agreement shall not be
effective until it is executed and delivered.  

        2.6
Fictitious Name Certificates. Manager shall promptly execute and file with the
proper offices in each county, or other appropriate subdivision in each
jurisdiction in which the Company conducts business, one or more certificates as
are required by any fictitious name act or assumed name act statute in effect as
to each such jurisdiction.  

        2.7
Title to Property. Legal title to all Company Assets shall be taken and at all
times held in the name of the Company.  

        2.8
Registered Office and Agent. The Company shall maintain a registered office and
agent in Delaware, as may be designated from time to time by Manager. The
address of the initial registered office of the Company in Delaware shall be
1209 Orange Street, Wilmington, Delaware 19801. The name and address of the
initial registered agent of the Company for service of process are The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801.
Manager shall provide prompt written notice to BMDC of any change in the
registered office or registered agent.  

        2.9
Qualification. Manager is authorized to do any and all acts necessary to
authorize or qualify the Company to do business in the State of Montana and in each
jurisdiction in which the Company conducts business.  

ARTICLE III 

CAPITALIZATION AND
FINANCING 

        3.1
Contribution of Certain Property; Assumption of Land Note.  

	 	        (a)
Concurrently with the formation of the Company, the Hines Member, to the extent
that the Hines Member owns any of the following items, shall contribute to the
Company the initial Project Land (subject to the Land Note applicable to the
initial Project Land as contemplated in Section 3.1(b) below) and all other
rights, interests and assets appurtenant to the Project Land included in the
Project and acquired pursuant to the Land Agreement with the initial Project
Land. If the Company elects to develop additional Project Land, the Hines
Member, to the extent that the Hines Member owns any of the following items,
shall contribute to the Company the additional Project Land (subject to the Land
Note applicable to the additional Project Land as contemplated in Section 3.1(b)
below) and all other rights, interests and assets appurtenant to the additional
Project Land included in the Project and acquired pursuant to the Land Agreement
with the additional Project Land. 

	

13 

	 	        (b)
 The Company shall assume all obligations of the Hines Member under each Land Note. 

	 	        (c)
The Hines Member shall contribute to the Company all deposits and reservation
fees and reservation agreements or contracts then in existence with respect to
the improvements to be constructed as part of each Project or lots to be
included within each Project. 

	 	        (d)
 The Members agree that the initial Outstanding Capital  Contributions of each Member
shall be as follows: 

		Hines Member
BMDC	$_________
$_________

	

        3.2
Capital Contributions Incident to a Project.  

	 	        (a)
(i) To the extent provided for in the approved Development Plan with respect to
a Project, as it may be amended from time to time, and only after the
contributions in Section 3.1(a) are made by the Members or their Affiliates to
the Company, each Member agrees to contribute capital to the Company from time
to time in accordance with the terms of this Agreement, not to exceed the
Member’s Project Capital Commitment for each Project, for (A) predevelopment
activities prior to Commencement of Construction (including, without limitation,
the costs set forth in Section 3.1), (B) following satisfaction or waiver by the
Members of the Construction Commencement Conditions, the construction of the
Project, and (C) other costs and expenses as provided in the approved
Development Plan with respect to the Project. 

	 	        (ii)
Capital Contributions pursuant to this Section 3.2(a) shall be made with respect
to Disbursement Requests in proportion to the Members’ respective Contribution
Percentages for application to costs detailed in each such Disbursement Request
and in accordance with the Development Budget and the Development Plan. Such
contributions pursuant to this Section 3.2(a) shall be made on the date provided
in the applicable Disbursement Request therefor submitted by Development Manager
in accordance with the Development Management Agreement, which date shall not be
less than ten (10) business days following the date of the applicable
Disbursement Request. 

	 	        (iii)
Each Member acknowledges that it intends for the Company to obtain Construction
Financing to pay Project Costs in order to minimize the Capital Contributions of
the Members. In connection with such financing, each Member shall provide the
applicable lender with such customary financial and other information regarding
the business of each Member and its Affiliates and the Company as such lender
may reasonably request. If the Company obtains such financing, then the Hines
Member and BMDC shall execute and deliver to the lender in connection therewith
such documentation as the applicable lender may reasonably request including,
but not limited to, a legal opinion as to such matters as the lender may
reasonably request, and a consent to, or acknowledgment of, the granting of a
security interest in the Company’s Assets. 

	

14 

	 	        (iv)
The Construction Financing shall not require either Member to guarantee or
otherwise be personally liable for the repayment thereof. Notwithstanding the
foregoing to the extent provided for in the Development Plan or otherwise
approved by the Members, in the event that a Member or its Affiliate agrees to
enter into any guaranty, indemnity or other agreement for the benefit of any
such lender (including, without limitation, a completion guaranty, a recourse
indemnity agreement, and/or an environmental indemnification agreement), then
any and all amounts payable under such agreement shall be treated as incurred by
the Company and shall be payable by the Company (directly or as a reimbursement
for any amounts paid by the Member or its affiliate under the agreement) as
provided herein, and the Members shall be obligated to make Capital
Contributions pursuant to this Section 3.2 and Section 3.3 to discharge the
same. 

	 	        (b)
If, at any time or from time to time after all of the contributions pursuant to
Section 3.2(a) have been contributed for a Project, additional funds are
required in connection with the Project, Manager shall request the Members to
make further capital contributions in such amount; provided, however, no Member
shall be obligated to contribute more than its Project Capital Commitment. If so
requested by Manager, each Member shall make Capital Contributions to pay its
Contribution Percentage of the amount so requested, within ten (10) business
days after such request. 

        3.3
Capital Contributions Incident to Operations.  

	 	        (a)
If at any time or from time to time additional funds are required (or are
expected to be required) to meet the obligations or needs of the Company (an
“Operating Shortfall”), Manager shall provide written notice to all Members of
the existence (or expected existence) of such Operating Shortfall, which notice
shall include factual information and reports evidencing the basis for the
Operating Shortfall and Manager’s recommendation as to meeting such Operating
Shortfall, which recommendation may include seeking nonrecourse third-party
financing for the portion of the Operating Shortfall in excess of that funded or
to be so funded from Project Capital Commitments. Any financing requested by
Manager on behalf of the Company and approved by the Members pursuant to this
Section 3.3(a) may be secured by a mortgage encumbering all or a portion of the
Projects provided that in no event shall the Company be permitted to obtain any
third-party financing on a basis that requires any Member or its Affiliates to
guarantee or otherwise be personally liable for the repayment of any financing
obtained by the Company pursuant to this Section 3.3(a) without the consent of
the Members. 

	 	        (b)
In the event that (i) the Company has experienced an Operating Shortfall (or is
expected to experience an Operating Shortfall) and (ii) all or a portion of such
Operating Shortfall is not defrayed pursuant to any of the methods described in
Section 3.3(a), Manager shall request the Members to make further Capital
Contributions in the amount of the Operating Shortfall, and each Member shall
contribute Capital Contributions to pay its pro rata share (in proportion to
Contribution Percentages) of the amount of such Operating Shortfall, within ten
(10) business days after such request. 

	

        3.4
Wire Transfer. The capital contributions required by Sections 3.2 and 3.3 above
shall be made by wire transfer of funds to a Company account designated by Manager.  

15 

	

        3.5
Failure of a Member to Satisfy Monetary Obligations.  

	 	        (a)
If any Member shall commit a Monetary Default, the Non-Defaulting Member shall
at any time thereafter, during such time as such Monetary Default remains
uncured, have the right to enforce the Company’s rights and remedies against the
Defaulting Member and, in connection therewith, to exercise any of the remedies
set forth in this Section 3.5 (subject to the limitation set forth below).

	 	        (i)
In the case of any Monetary Default occasioned by the Defaulting Member’s
failure to fulfill its obligations under Section 3.2 and Section 3.3 of this
Agreement, the Company shall have the right to institute suit for collection of
such Monetary Default, together with (y) interest thereon from the date on which
such payment thereof was due until it is paid, computed at a rate equal to the
lesser of (A) Prime Rate, plus 5 percentage points or (B) the highest rate
allowed by law and (z) all reasonable fees and expenses of counsel and court
costs that may have been incurred by reason of or in connection with such
Monetary Default. 

	 	        (ii)
In the case of any Monetary Default which continues for a period of 5 business
days following written notice thereof (in addition to the initial notice of such
request for funds), the Non-Defaulting Member shall have the right to make the
Capital Contribution which the Defaulting Member declined to make. In such
event, the Interest of the Defaulting Member in the Company shall be reduced
automatically by that portion (the “Defaulted Portion”) equal to the product
determined by multiplying (i) the Defaulting Member’s Horizontal Ownership
Percentage by (ii) the Default Fraction, and the Non-Defaulting Member’s
Interest shall be increased by the same amount. For purposes of adjusting and
maintaining the balances of the Capital Accounts of the Defaulting Member and
the Non-Defaulting Member, (A) the amount contributed to the Company by the
Non-Defaulting Member to replace the Capital Contribution which the Defaulting
Member declined to make shall be deemed to have been contributed to the Company
by the Defaulting Member and shall increase the balances of the Defaulting
Member’s Capital Account, (B) the balance of the Defaulting Member’s Capital
Account (determined with regard to the adjustments required by clause (A) above)
shall be debited (reduced), but not below zero, by an amount equal to the
product determined by multiplying the balance of the Defaulting Member’s Capital
Account (determined with regard to the adjustments required by clause (A) above)
by the Adjustment Percentage, (C) the balance of the Non-Defaulting Member’s
Capital Account shall be credited (increased) by an amount equal to the product
determined by multiplying the balance of the Defaulting Member’s Capital Account
(determined with regard to the adjustments required by clause (A) above, but
without regard to any adjustments required by clause (B) above) by the
Adjustment Percentage (provided, however, that the balance of the Non-Defaulting
Member’s Capital Account shall not be credited by an amount greater than the
amount by which the Defaulting Member’s Capital Account was debited pursuant to
clause (B) above). Following the contribution by the Non-Defaulting Member of
the Capital Contribution that the Defaulting Member declined to make, (D) the
Non-Defaulting Member’s Horizontal Ownership Percentage shall equal the lesser
of one hundred percent (100.0%) or the sum of (y) the Non-Defaulting Member’s
Horizontal Ownership Percentage (determined immediately prior to the
Non-Defaulting Member’s contribution of the Capital Contribution that the
Defaulting Member declined to make) and (z) the Defaulted Portion of the
Defaulting Member’s Interest in the Company, and (E) the Defaulting Member’s
Horizontal Ownership Percentage shall equal the excess, if any, of (y) one
hundred percent (100.0%), over (z) the Non-Defaulting Member’s Horizontal
Ownership Percentage (determined immediately following the Non-Defaulting
Member’s purchase pursuant to clause (D) above). 

	

16 

	 	        (iii)
In the case of a Monetary Default by either Member, the Non-Defaulting Member
shall have the right to undertake any action described in Section 4.4 without
the prior written consent of the Defaulting Member during such time as the
Monetary Default in question remains uncured; provided, however, that the
consent of the Defaulting Member shall still be required with respect to the
following (the “Defaulting Member Approval Rights”): any amendment to this
Agreement. Without limitation upon the foregoing, the Non-Defaulting Member
shall, during such time as such Monetary Default remains uncured, have the power
and authority to borrow from third parties (upon the approval of only the
Non-Defaulting Members) all or a portion of the amounts of the Monetary Default
necessary to develop and/or operate the Projects, to secure such borrowings by a
mortgage encumbering all or a portion of the Projects, and to apply all or a
portion of the proceeds of such borrowings to reimburse Manager for any amounts
advanced by it to the Company to defray Company or Project expenses, to the
extent that such advances were reasonable in amount and were necessitated by the
Monetary Default in question. 

	 	        (iv)
In the case of any Monetary Default by either Member, the Non-Defaulting Member
shall have the right to advance to the Company an amount of money equal to the
Monetary Default of the Defaulting Member, which advance shall be considered to
be a loan from the Non-Defaulting Member to the Defaulting Member (a “Defaulting
Member Loan”). Such loan shall bear interest at an annual rate equal to the
Prime Rate, plus five percentage points (unless such rate exceeds the highest
lawful rate, in which event the rate charged hereunder shall be the highest
lawful rate), and shall be repayable from that portion of each distribution or
payment made to the Members pursuant to Sections 6.6, 9.2, 11.3 and 12.2 hereof
that would have been distributed or paid to the Defaulting Member had the
Defaulting Member made the contribution to the Company that was required of (but
not made by) it. For purposes of adjusting and maintaining the balance of the
Defaulting Member’s Capital Account, (A) the amount of any Member Loan made by
the Non-Defaulting Member to the Defaulting Member pursuant to this Section
3.5(a)(iv) by reason of the Defaulting Member’s failure to fulfill its
obligations under Sections 3.2 and 3.3 of this Agreement shall be deemed to have
been contributed to the Company by the Defaulting Member and shall increase the
balance of the Defaulting Member’s Capital Account, and (B) the amount of any
distribution or payment otherwise payable to the Defaulting Member that is paid
to the Non-Defaulting Member in repayment of a Member Loan made by the
Non-Defaulting Member to the Defaulting Partner pursuant to this subparagraph
(iv) shall be treated as if such amount had actually been distributed or paid to
the Defaulting Member pursuant to Article VI, Article IX, Article XI, or Article
XII, as the case may be. 

	

17 

	 	        (v)
In the case of any Monetary Default by either Member under Section 3.2 or
Section 3.3, the Non-Defaulting Member may exercise the Defaulting Event
Remedies permitted under Article XII. 

	 	        (b)
     The remedies provided by this Section 3.5 and Article XII for Monetary Defaults by
the Members shall be exclusive. 

	 	        (c)
     Notwithstanding  any other  provision in this  Agreement to the contrary,  neither
the Hines Member nor BMDC shall have any personal  liability for the  obligations of such
Member under this Article III to the other except each Member’s  obligation to fund
Capital Contributions under Section 3.2(a). 

	

        3.6
Member Loans. Either Member, with the consent of the other Member, may elect
under this Section 3.6 to loan funds to the Company or to cause such a loan to be made by
an Affiliate of either Member. Any such loan by a Member or an Affiliate is herein
called a “Member Loan”. Each Member Loan shall accrue interest on unpaid principal at
a rate per annum equal to the lesser of (i) three percent (3.0%) above the Prime Rate
and (ii) the maximum non-usurious rate allowed by applicable law. Member Loans shall
not be considered Capital Contributions.  

ARTICLE IV 

RIGHTS AND OBLIGATIONS
OF MANAGER; 
MANAGEMENT OF THE COMPANY 

        4.1
Management. Subject to the provisions and delegations herein set forth, the
management and control of the Company shall be exclusively vested in Manager. 

        4.2
Manager. The Members have designated and do hereby designate the Hines Member as
the Manager of the Company, subject to the rights of the Members as provided
herein. Except as otherwise provided in Section 4.4 with respect to Major
Decisions, the management of the Company shall be the obligation and
responsibility of and rest exclusively with Manager, who shall have all the
rights and powers as are necessary or advisable to the management of the
business and affairs of the Company. In this regard, Manager shall devote such
time and talents to such management as shall be reasonably necessary from time
to time to conduct the business of the Company in an efficient manner. In order
to satisfy the duties and obligations imposed by the preceding two sentences,
and subject to the limitations set forth in this Agreement and the Act, Manager
shall carry out the objectives and purposes of the Company set forth in Section
2.1 and otherwise manage the business and affairs of the Company, in its own
capacity, or in the Company’s capacity as the managing member or general partner
of any Project Partnership, and perform all acts and enter into such contracts
and other undertakings authorized hereunder, including, without limitation, the
power:  

	 	        (a)
                  To manage the Company’s and any Project  Partnership’s  assets,  and,
in accordance with the Development  Plan and any Approved Annual Plan, to make capital
calls as provided herein and in the Project Partnership Agreement,  if applicable,  to
cause the  Company or any Project  Partnership  to arrange  for the  development,
 construction,  repair,  management,  maintenance, operation  and leasing of the
 Projects or any portion  thereof and any other  properties  and  projects in which the
Company or the Project  Partnership  has any interest,  to cause the Company or the
Project  Partnership to establish  reserves to pay  anticipated costs and expenses,  and
to handle  collections  and  disbursements  of the Company’s  funds and to cause the
Company or any Project Partnership to take actions with respect to any matters  necessary
or desirable in connection  with all applicable  laws,  rules and regulations of
governmental agencies having jurisdiction over the Projects; 

	

18 

	 	        (b)
                  To cause all  indebtedness  owing by the  Company or any  Project
 Partnership  or owing  with  respect to and secured by the Company’s or any Project
 Partnership’s  assets,  or any part thereof,  to be paid prior to delinquency and make
such other  payments and perform  such other acts as may be necessary to preserve the
interest of the Company or the Project  Partnership therein; and 

	 	        (c)
                  Subject to, as limited by, and in accordance  with the  provisions of
this  Agreement,  to have,  exercise and perform,  to the full extent  granted to and
 permitted to be exercised by members  under the Act,  such other rights and powers and
such other business  functions as may be necessary for the operation of the Company’s
 business,  affairs and assets in the ordinary course. 

	

        Without
limiting the foregoing, the Manager shall have the following powers: 

	 	        (a)
                  to control and manage the Company’s  assets and to arrange for
 collections,  disbursements  and other matters necessary or desirable in connection
 with the  management  of the  Company’s  assets (such rights shall include the right to
borrow money in furtherance of the Company purposes (including financings in which net
proceeds are procured)); 

	 	        (b)
                  to the extent  that the  Company’s  financial  resources  will  permit
 the  Manager to do so, to see that all indebtedness  owing with  respect to and  secured
 by the  Company’s  assets,  or any part  thereof,  is paid and to make such other
payments and perform such other acts as Manager may deem necessary to preserve the
interest of the Company therein; 

	 	        (c)
                  to cause the  Partnership  to enter into the Project  Partnership
 Agreement and to exercise all of the rights and  privileges  of the Company as a partner
in the Project  Partnership,  and to cause the Company to discharge  all of its duties,
responsibilities and obligations as a partner of the Project Partnership; 

	 	        (d)
                  to pay and discharge all taxes and assessments  levied and assessed
 against the Company’s  assets or any part thereof for the account of the Company; 

	 	        (e)
                  to carry such insurance as it may deem necessary or appropriate; 

	 	        (f)
                  to have such other  authority  and power as may be  reasonably
 necessary or  appropriate  for the  operation, maintenance and preservation of the
Company’s assets; and 

	 	        (g)
                  to make all  decisions  on behalf of the  Company as a partner,  member
or owner in the  Project  Partnership. Without  limiting the other  provisions of this
 Agreement,  it is understood and agreed that the Manager shall have full authority,
without the further consent of any other Member, to finance,  sell,  assign,  pledge,
 hypothecate,  encumber or otherwise  transfer Company assets in accordance with an
approved Annual Plan. 

	

19 

	

The Manager  shall be  reimbursed
 by the Company  for all actual,  reasonable  and  necessary  out-of-pocket  expenses
 incurred in connection with the discharge of its duties hereunder as Manager. 

        4.3
Preparation and Filing of Tax Returns and Required Tax Elections. Manager shall
cause the preparation of all Company tax returns so as to permit the timely filing
thereof, shall make on behalf of the Company all tax elections and determinations,
and shall timely file all other writings required by any governmental authority
having jurisdiction to require such filing. Manager is hereby designated as the “tax
matters partner” of the Company as defined in section 6231(a)(7) of the Code. The tax
matters partner shall furnish written reports to all Members on a timely basis that
detail the status of any administrative or judicial proceeding relating to the federal
income tax treatment of “partnership items” (as defined in section 6231(a)(3) of the
Code or Regulations promulgated thereunder). The tax matters partner shall also
furnish written notice (including a copy of any written communication) to the Members
of any written communication sent to or received from the Internal Revenue Service
within 10 days of the date such communications are sent or received. The Members
intend that the Company be treated as a partnership for federal income tax purposes,
rather than an association taxable as a corporation.  

        4.4
Specific Limitations on Manager. Notwithstanding anything to the contrary
contained in this Agreement or the Act, other than as set forth in Section 3.5(a)(iii)
hereof, without the prior written approval of the Members in their sole
discretion, Manager shall have no right, power, or authority to do any of the
following acts (each of which is herein called a “Major Decision”), except to the
extent the matter or action is included or authorized by an Approved Annual Plan:  

	 	        (a)
 proceed with  development of land other than the initial Project Land, or acquire,  by
purchase or lease,  any direct or indirect  interest in real  property in addition to
Project  Land (other than  utility and access  easements  on customary terms serving a
Project over property owned by third  parties),  or construct any significant  capital
 improvements on Project Land or replace an existing capital improvement following
completion of construction thereof; 

	 	        (b)
                  give or grant any options, rights of first refusal, deeds of trust,
 mortgages,  pledges or security interests or otherwise encumber a Project or any portion
thereof, other than the granting of customary easements; 

	 	        (c)
                  modify the Development Plan; 

	 	        (d)
                  sell or convey a Project or any portion thereof or any interest
 therein other than sales of residential  land or units in accordance with an Approved
Annual Plan or the Development Plan; 

	 	        (e)
                  cause or permit the Company to extend credit to or to make any loans or
become a surety,  guarantor,  endorser or accommodation endorser for any person, firm or
corporation; 

	

20 

	 	        (f)
                  confess a judgment  against the Company,  submit a Company claim to
litigation or  arbitration,  or settle any litigation or arbitration; 

	 	        (g)
                  distribute any cash or property of the Company to a Member,  or
establish any reserve,  other than as provided in an Approved Annual Plan or the
Development Plan; 

	 	        (h)
                  enter into any lease or other occupancy  arrangement  not in accordance
 with leasing  guidelines set forth in an Approved Annual Plan or the Development Plan; 

	 	        (i)
                  admit a new Member to the Company; 

	 	        (j)
                  enter into,  modify,  terminate or waive any breach of or default under
the Development  Management  Agreement or any other agreement with any Affiliate of any
Member; 

	 	        (k)
                  select the Company’s legal counsel, or change the Company’s counsel; 

	 	        (l)
                  except as provided in an Annual Business Plan or the  Development  Plan
and with respect to trade payables and other borrowings in the ordinary course of the
Company’s  business,  enter into any third party loan or other borrowing,  or modify,
prepay or extend the term of any third party loan or other borrowing; 

	 	        (m)
                  enter into any collective bargaining agreement; 

	 	        (n)
                  except as  authorized  by an Approved  Annual Plan or the  Development
 Plan,  implement  any  advertising  or marketing of a Project; 

	 	        (o)
                  acquire an interest in or transfer property to any Project Partnership. 

	

        4.5
Safekeeping of Company Assets. Manager shall not employ Company funds or
Company Assets in any manner except for the exclusive benefit of the Company. Manager
shall at all times use commercially reasonable efforts at the Company’s expense to
maintain the minimum insurance coverage on each Project approved by the Members from
time to time in connection with the approval of the Development Plan or the Annual Plan
with respect to the Project.  

        4.6
Contracts with the Hines Member and Affiliates of the Hines Member.  

	 	        (a)
     The  Company  may enter  into  agreements  directly  with a Hines  Affiliate,  and
the  validity  of any such  transaction, agreement,  or payment shall not be affected by
reason of any relationship  between the Company and such Hines Affiliates,  provided that
such agreements are provided for in the Development  Plan or an Approved  Annual Plan or
otherwise  (i) such  agreements do not result in  expenditures  or  concessions  by the
 Company  in excess of the  amount or terms  that would be paid or agreed to by the
Company in arm’s length  agreements  with  unrelated  parties  with  comparable
 experience,  capability  and  expertise in the same business as the  contracting  Hines
 Affiliate in the same  geographic  area as the Company and (ii) the  Company  first
obtains the prior written approval of BMDC of such agreement and any amendment thereto. 

	

21 

	 	        (b)
     The parties hereby  acknowledge  that the Development  Management  Agreement
 between the Company and the Hines Member or a Hines Affiliate,  and the fees, payments,
 expenditures and reimbursements described therein, satisfy the provisions of this
Section 4.6. The  Development  Management  Agreement  requires the  Development  Manager
to provide  certain  reports and information to the Company.  The Hines  Member or Hines
 Affiliate  that is the  Development  Manager  will provide BMDC with copies of any or
all such reports and information as BMDC may request. 

	

        4.7
Permissible Activities of the Members. (a) Except as set forth in Section 4.7(b),
the Members and their Affiliates may individually and/or with others (i.e., other
than in their capacity as Members) engage in other activities for profit, whether in the
real estate business or otherwise, including, without limitation, the ownership,
operation, development (subject to the following provisions), leasing and
management of other properties similar to a Project, and may in the future
participate in partnerships or other ventures for such purposes. Neither the
Company nor the Members shall have any right by virtue of this Agreement in or to such
independent ventures or to the income or profits derived therefrom.  

	 	        (b)
Except as set forth in Section 2.3 of the Master Development Agreement or approved by
the parties to the Master Development Agreement, neither the Hines Member nor BMDC
(nor any affiliate of either of them) shall acquire any property other than the “Project
Land” (as defined in the Master Development Agreement) or participate in any
development of said Project Land or other properties in Flathead County, Montana. 

	

        4.8
Exculpation of Manager.  

	 	        (a)
     Neither  Manager nor its partners shall be liable or accountable,  in damages or
otherwise,  to the Company or to any other Member for any act  performed or failure to
act by it (or them) that arises out of, or in  connection  with,  this  Agreement or the
Company’s  business  and  affairs,  unless such act or failure to act is  attributable
 to fraud,  bad faith,  Gross  Negligence  or intentional  or willful  misconduct  by
 Manager,  during  the period of time such  Member is  serving  as  Manager.  Manager
 shall indemnify,  defend and hold harmless the Company,  its Members and the partners,
 officers,  directors,  members,  shareholders  and employees of each of them for any
loss,  damage,  liability,  cost or expense  (including  reasonable  attorneys’ fees)
claimed by a third party and incurred by the Company to the extent  caused by any act
 performed or failure to act by Manager,  or its  employees or agents,  which constitutes
fraud, bad faith,  Gross Negligence or intentional or willful misconduct by Manager,  or
its employees or agents, during the period of time such Member is serving as Manager. 

	 	        (b)
     The Company (but not any Member) shall indemnify,  defend and hold harmless Manager
and its partners,  agents and employees for any loss, damage,  liability,  cost, or
expense (including  reasonable attorneys’ fees) claimed by a third party and incurred by
virtue of  Manager’s  activities  as Manager  hereunder  and arising out of any act
 performed  or failure to act that is within the scope of Manager’s  authority
 hereunder,  as reasonably  determined  by Manager,  and arises out of, or in  connection
 with,  this Agreement or the  Company’s  business and affairs,  except to the extent the
act or omission  constitutes  fraud,  bad faith,  Gross Negligence or intentional or
willful misconduct by Manager, or its employees or agents. 

	

22 

	 	        (c)
     In no event shall the foregoing be deemed to confer any personal  liability upon any
limited partner,  agent or employee of Manager or of any Member of the  Company.  The
 Company’s  obligations  under this  Section 4.8 shall be  satisfied  only out of the
assets of the  Company  and the rents,  issues and  profits  therefrom,  and in no event
 shall any Member be  required  to make any Capital Contribution to discharge the
Company’s obligations under this Section 4.8. 

	

        4.9
Approval of Members. Manager shall submit to the Members in writing for their
approval each act, item or decision with respect to which Manager is required to
obtain the approval of the Members pursuant to the terms of this Agreement, including
each act, item or decision described in Section 4.4. Except where a different time
period is established elsewhere in this Agreement, each Member shall then have a
period of ten (10) business days from the date upon which it receives (or is
deemed to have received) such written notice in which to approve or disapprove the act,
item or decision in question. In the event that a Member fails to notify Manager of its
approval or disapproval of the act, item or decision in question within the time
period set forth in the preceding sentence, and such notice is not received for two (2)
business days following receipt (or refusal of service) by such Member of an additional
notice, such Member shall be deemed to have approved such act, item or decision.
Notwithstanding the foregoing, however, in the event of any emergency posing an
imminent threat to persons or property, Manager shall be required to provide only such
notice as is practical under the circumstances before taking such action as Manager
reasonably believes to be necessary in order to remove such imminent threat.
Furthermore, all matters approved or provided for in the Development Plan or an
Approved Annual Plan shall be deemed to have been approved by the Members.  

ARTICLE V 

RIGHTS AND OBLIGATIONS
OF THE MEMBERS 

        5.1
Limited Liability. The Members shall not be personally liable for any of the
debts of the Company or any Project Partnership or any of the losses thereof.  

        5.2
Examination of the Company Records. The Members or their representatives may,
during regular business hours, examine the records (at a Project, at the regional
office of HILP or at such other location approved by the Members where such records
are maintained) or property of the Company or otherwise inquire as to Company affairs.  

        5.3
Reliance on Authority of Person Signing Agreement; Designated Representatives.  

	 	        (a)
     In the event  that a Member is any entity  other than a natural  person,  the
 Members  and the  Company  (i) shall  not be required to determine the authority of the
person  signing this  Agreement to make any  commitment or  undertaking on behalf of such
entity or to determine  any fact or  circumstance  bearing upon the  existence of the
 authority of such person;  (ii) shall  not be required to see to the  application or
 distribution  of proceeds paid or credited to persons signing this Agreement or any
document executed in  connection  herewith on behalf of such  entity;  and  (iii) shall
 be entitled to rely on the  authority  of the person signing this  Agreement or any
document in  connection  herewith  with respect to the voting of the interest of such
entity and with respect to the giving of consent on behalf of such entity in  connection
 with any matter for which consent is permitted or required under this Agreement or any
document in connection herewith. 

	

23 

	 	        (b)
Each Member shall designate in writing to the Company one or more representatives
who shall be authorized to act under this Agreement for and on behalf of such Member.
Any act, approval, consent or vote of any representative of a Member that is so
designated shall be deemed to be the act, approval, consent or vote of said Member, and
no Person, including, without limitation, the Company and the other Members, shall
be required to inquire into the authority of such representative as to such act,
approval, consent or vote on behalf of the Member who has designated said
representative. Any representative may be replaced by a successor representative by
written notice to the Company and designation of a substitute for such representative.
Until written notice of any change is given pursuant to Section 13.2, the designated
representatives (“Designated Representative(s)”) of the Members shall be as follows: 

	 	For BMDC:	Michael Collins

Big Mountain Development Corporation

The Big Mountain

P. O. Box 1400

Whitefish, Montana 59937

Fax No.: (406) 862-2955

            and

Jami Phillips

Big Mountain Development Corporation

The Big Mountain

P. O. Box 1400

Whitefish, Montana 59937

Fax No.: (406) 862-2955
	 	 	 
	 	For the Hines Member:	Robert E. Daniel, Jr.

Hines Interests Limited Partnership

426 East Main Street

Aspen, Colorado 81611

Fax No.: (970) 920-3829

            and

Clayton T. Stone

Hines Interests Limited Partnership

2800 Post Oak Boulevard, Suite 5000

Houston, Texas 77056-6118

Fax No.: (512) 360-3385

	

24 

	 	        (c)
     In dealing with  Manager,  no Person shall be required to inquire as to its
 authority to bind the Company.  Manager  shall have the full right and authority to
execute and deliver any and all agreements,  contracts,  documents and instruments
 relating to the business and affairs of the Company,  without the joinder of the other
Members or any other Person,  and any Person dealing with the Company may rely upon
Manager’s  execution and delivery of any agreement,  contract,  document or instrument as
the act and deed of the Company, without the necessity for further inquiry and
notwithstanding any other provision of this Agreement. 

	

ARTICLE VI 

MAINTENANCE OF CAPITAL
ACCOUNTS; 
ALLOCATION OF COMPANY NET INCOME, 
NET GAIN AND NET LOSS; 
DISTRIBUTION
OF NET CASH FLOW 

        6.1
Capital Accounts.  

	 	        (a)
     A Capital  Account shall be maintained  for each Member,  which account shall be
increased  (credited) by (i) the amount of money and the fair market value of property
 contributed  and deemed  contributed  by such Member to the Company (net of liabilities
secured by such property  that the Company is  considered to assume or take subject to
under section 752 of the Code),  and (ii) the amount of income and gain (or items
 thereof) of the Company  allocated  to such Member,  including  income and gain exempt
from tax and gain described in  Regulations  section  1.704-1(b)(2)(iv)(g),  but
excluding  income and gain described in Regulations  section 1.704-1(b)(4)(i);  and
decreased  (debited) by (iii) the amount of money and the fair market value of property
 distributed  to such Member (net of  liabilities  secured by such  property that such
Member is considered to assume or take subject to under section 752 of the Code), (iv)
such Member’s  distributive  share of expenditures of the Company described in section
 705(a)(2)(B) of the Code, and (v) the amount of loss and deduction (or items  thereof)
of the Company  allocated to such Member,  including loss and deduction described in
Regulations  section  1.704-1(b)(2)(iv)(g),  but excluding  items described in clause
(iv) above and loss and deduction described in Regulations sections  1.704-1(b)(4)(i) or
1.704-1(b)(4)(iii),  and otherwise adjusted in accordance with the additional rules set
forth in Regulations  section  1.704-1(b)(2)(iv).  In addition,  a Member’s Capital
Account may be adjusted as provided in Sections 9.2  and 9.3 hereof.  The  Capital
 Accounts of all Members  shall be  adjusted  as  required  under  Regulations  sections
1.704-1(b)(2)(iv)(f)  or  1.704-1(b)(2)(iv)(m),  as  applicable,  to reflect any
aggregate  net  adjustment to the values of Company assets as permitted by the Code or
the relevant Regulations. 

	

25 

	 	        (b)
     A single  Capital  Account  shall be maintained  for each Member,  which  Capital
 Account  shall reflect all  allocations, distributions,  or other adjustments required
by this Article VI with respect to Company interests owned by such Member,  regardless of
whether such Member owns more than one class of Company interest. 

	 	        (c)
     If, pursuant to Regulations sections  1.704-1(b)(2)(iv)(d)  or
 1.704-1(b)(2)(iv)(f),  Company property is reflected on the books of the Company at a
book value that  differs  from the adjusted tax basis of such  property,  the  Members’
 Capital  Accounts shall be  adjusted in  accordance  with  Regulations  section
 1.704-1(b)(2)(iv)(g)  for  allocations  of  depreciation,  depletion, amortization, and
gain or loss, as computed for book purposes, with respect to such property. 

	 	        (d)
     Upon any transfer of all or part of a Company  interest,  as permitted by this
 Agreement,  the Capital Account (or portion thereof)  of the  transferor  that is
 attributable  to the  transferred  interest  (or  portion  thereof)  shall  carry over
to the transferee, as prescribed by Regulations section 1.704-1(b)(2)(iv)(l). 

	

        6.2
Allocation of Net Income and Net Loss  

	 	        (a)
     Net Income shall be allocated as follows: 

	 	        (i)
     First, to the Members to the extent of the excess of the  Accumulated  Preference
 Return,  over          the aggregate Net Income theretofore allocated to such Member
pursuant to this clause (i). 

	 	        (ii)
    Second,  to the  Members in the amount by which (a) the  aggregate  amount of the
 distributions          theretofore  received  by the  Members  pursuant  to  Sections
 6.6(c)  and 6.6(d)  exceeds  (b) the  aggregate  Net Income          theretofore
allocated to such Member pursuant to clause (i) and this clause (ii) of this Section
6.2(a). 

	 	        (iii)
   Third,  to the Members in accordance  with their Capital  Return  Percentages to the
extent that          when  allocated the Net Income would reduce a Cumulative  Net Loss
but only to the extent of the excess of (A) the Net Loss          allocated pursuant to
Section  6.2(b)(iii),  over (B) the Net Income previously  allocated pursuant to this
clause (iii) of          this Section 6.2(a). 

	 	        (iv)
    Fourth,  sixty  percent  (60.0%) to BMDC and forty  percent  (40.0%) to the Hines
 Member to the          extent of the excess of (A) $319,915.00,  over (B) the sum of (I)
the aggregate Net Income  previously  allocated  pursuant          to this clause (iv) of
this Section 6.2(a), and (II) the aggregate Net Loss allocated pursuant to Section
6.2(b)(ii). 

	 	        (v)
     Fifth, to the Members in accordance with their respective Horizontal Ownership
Percentages. 

	 	        (b)
     Net Loss shall be allocated as follows: 

	 	        (i)
     First,  to the Members in proportion  to, and to the extent of, an amount equal to
the excess of          (A) the Cumulative Net Income  allocated to the Members  pursuant
to clause (v) of Section  6.2(a),  over (B) the aggregate          Net Loss previously
allocated to the Members pursuant to this clause (i) of Section 6.2(b). 

	

26 

	 	        (ii)
    Second,  to the Members in proportion to, and to the extent of, an amount equal to
the excess of          (A) the Cumulative Net Income  allocated to the Members  pursuant
to clause (iv) of Section 6.2(a),  over (B) the aggregate          Net Loss previously
allocated to the Members pursuant to this clause (ii) of Section 6.2(b). 

	 	        (iii)
   Third,  to the Members in accordance  with their Capital  Return  Percentages to the
extent that          when allocated the Net Loss would add to a Cumulative Net Loss. 

	

        6.3
Limitations and Qualifications Regarding Special Allocations. Notwithstanding
the provisions of Section 6.2, Net Income and Net Loss of the Company (or items of
income, gain, loss, deduction or credit, as the case may be) shall be allocated in
accordance with the following provisions of this Section 6.3 to the extent such
provisions shall be applicable.  

	 	        (a)
     Notwithstanding  any other provision of Section 6.2 hereof, but subject to the
exceptions set forth in Regulations  section 1.704-2(f)(2),  (3), (4) or (5), if there is
a net decrease in the Minimum Gain of the Company during any Company fiscal year,  each
Member  shall be  specially  allocated  items of Company  income and gain for such year
(and,  if  necessary,  subsequent  years) in proportion  to, and to the  extent of, an
amount  equal to that  Member’s  share of the net  decrease  in Minimum  Gain,  within
the meaning  of  Regulations  section  1.704-2(g)(2).  The  Minimum  Gain  chargeback
 shall  consist  first of income and gain from the disposition  of Company  Assets
 subject  to  nonrecourse  liabilities  of the  Company,  with the  remainder  of the
 Minimum  Gain chargeback,  if any,  made up of a pro rata  portion of the  Company’s
 other  items of income and gain for such year,  and shall be determined  in  accordance
 with  Regulations  sections  1.704-2(f)(6),   1.704-2(g)(2)  and  1.704-2(j)(2)(i),   or
 any  successor provisions.  If such income and gain from the  disposition of Company
Assets  exceeds the amount of the Minimum Gain  chargeback,  a proportionate  share of
each item of such income and gain shall  constitute a part of the Minimum Gain
 chargeback.  The  provisions of this Section 6.3(a) are intended to comply with the
minimum gain  chargeback  requirement of Regulations  section  1.704-2(f) and shall be
interpreted in accordance therewith for all purposes under this Agreement. 

	 	        (a)
     Notwithstanding  any other  provision of Section 6.2 hereof or this Section 6.3
other than Section  6.3(a),  but subject to the exceptions referenced in Regulations
section  1.704-2(i)(4),  if there is a net decrease in Member Nonrecourse Debt Minimum
Gain during any fiscal year,  each Member that has a share of such Member  Nonrecourse
 Debt Minimum Gain,  determined in accordance with Regulations  section  1.704-2(i)(5),
 as of the beginning of such year shall be specially allocated items of Company income
and gain for such year (and, if necessary,  for  succeeding  years) equal to such  Member’s
 share of the net decrease in Member  Nonrecourse Debt Minimum Gain. The items to be so
allocated  shall be determined in accordance with  Regulations  section  1.704-2(i)(4)
 or any successor  provision.  The  provisions of this Section 6.3(b) are intended to
comply with the Member  Nonrecourse  Debt Minimum Gain chargeback  requirement  of
Regulations  section  1.704-2(i)(4)  and shall be  interpreted in accordance  therewith
for all purposes under this Agreement.  

	 	        (c)
     If  any  Member   receives  any   adjustments,   allocations,   or   distributions
  described  in   Regulations   sections 1.704-1(b)(2)(ii)(d)(4),  (5) or (6),  items of
Company  income and gain  (consisting  of a pro rata portion of each item of Company
income,  including  gross  income,  and gain for such year)  shall be  specially
 allocated  to such  Member in an amount and manner sufficient to eliminate as quickly as
possible the Adjusted  Capital Account Deficit of such Member,  if any, to the extent
required by the  Regulations.  The provisions of this Section 6.3(c) are intended to
comply with the  “qualified  income offset”  requirement of  Regulations  section
 1.704-1(b)(2)(ii)(d)(3)  and shall be  interpreted  in accordance  therewith  for all
purposes  under this Agreement. 

	

27 

	 	        (d)
     Nonrecourse  Deductions of the Company for any fiscal year shall be specially
 allocated to the Members in accordance  with the  allocation  of Net Income or Net Loss
for such  fiscal  year  pursuant to Section  6.2 of this  Agreement.  Member  Nonrecourse
Deductions  of the Company for any fiscal year shall be specially  allocated  to the
Member who bears the economic  risk of loss for the liability in question.  The
provisions of this Section 6.3(d) are intended to satisfy the  requirements of
Regulations  sections 1.704-2(e)(2) and 1.704-2(i)(1) and shall be interpreted in
accordance therewith for all purposes under this Agreement. 

	 	        (e)
     No net loss shall be  allocated  to a Member  pursuant  to Section 6.2 hereof to the
extent that such loss would cause such Member to have an Adjusted  Capital  Account
 Deficit at the end of any fiscal  year.  Instead,  any such loss shall be allocated to
each other Member to the extent that such allocation would not cause such other Member to
have an Adjusted Capital Account Deficit. 

	 	        (f)
     Net Income and Net Loss of the Company  shall not be allocated in  accordance  with
Section 6.2 hereof or any  paragraph of this Section 6.3 other than this paragraph (f) if
and to the extent that any such allocation  would cause the Company’s  allocations not to
have  substantial  economic effect for purposes of section  704(b)(2) of the Code under
the economic effect  equivalence test set forth in  Regulations  section
 1.704-1(b)(2)(ii)(i),  and any such Net Income and Net Loss shall  instead be  allocated
 to and among the  Members in the  amounts and in the manner  necessary  to cause the
 Company’s  allocations  to comply with such  economic effect  equivalence  test.  For
purposes of this Section  6.3(f) only, it shall be assumed that no Member is obligated to
contribute to the Company any cash or property to eliminate the deficit  balance
 existing in its Capital  Account upon the  liquidation of the Company except to the
extent that such Member is personally liable under law or by contract to satisfy a
Company liability. 

	 	        (g)
The allocations set forth in this Section 6.3 (the “Regulatory Allocations”)
are intended to comply with certain requirements of Regulations sections
1.704-1(b) and 1.704-2. Notwithstanding any other provision of this Article VI (other
than the Regulatory Allocations), the Regulatory Allocations shall be taken into
account in making allocations among the Members of Net Income and Net Loss (and items
thereof) of the Company other than the Regulatory Allocations such that, to the
extent possible, the net amount of such allocations of Net Income and Net Loss (and
items thereof) other than the Regulatory Allocations, together with the Regulatory
Allocations, shall equal the net amount that would have been allocated to and among
the Members had the Regulatory Allocations not occurred. 

	 	        (h)
     It is intended  that the  allocations  set forth in Section 6.2 satisfy the
 substantial  economic  effect  requirement  of section 704(b) of the Code.  However,  in
the event that counsel to the Company or any Member  determines that such requirements
are not satisfied, the Manager shall modify such allocations in order to comply with such
requirements. 

	

28 

	

        6.4
Contributed Property. In accordance with Section 704(c) of the Code and applicable
Treasury Regulations, income, gain, loss and deduction with respect to any property
contributed to the Company (or any predecessor thereto) shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation between
the adjusted basis of such property to the Company (or any predecessor thereto) for
federal income tax purposes and the fair market value of such property for federal income
tax purposes at the time of contribution. In addition, in the event that any asset
of the Company is revalued pursuant to the provisions of Section 704(b) of the Code and
the Treasury Regulations thereunder, subsequent allocations of income, gain, loss and
deduction for tax purposes with respect to such asset shall take account of any
variation between the adjusted basis of such assets for federal income tax purposes
and its adjusted value, in the same manner as under Section 704(c) of the Code and
the applicable Treasury Regulations. In making the adjustments required by Section
704(c) of the Code and this Section 6.4, the Company shall elect to use the
traditional method with curative allocations within the meaning of Treasury
Regulations Section 1.704-3(c).  

        6.5
Allocation of Items with Respect to Interests Transferred. If any Interest is
transferred during any fiscal year, the Net Income and Net Loss attributable to such
interest for such fiscal year will be divided and allocated proportionately between the
transferor and the transferee by taking account of their varying interests in the
Company during such fiscal year on a daily, monthly, or other basis, as determined by
Manager, using any method permitted by section 706 of the Code and the Regulations
promulgated thereunder.  

        6.6
Distribution of Company Available Cash Flow. The Company Available Cash Flow
shall be distributed (subject to any amounts reserved by the Manager) no less
frequently than quarterly as follows:  

	 	        (a)
First, to repay all indebtedness of the Company including any Member Loans but excluding
any Land Note; 

	 	        (b)
Second, to establish reserves authorized pursuant to the Development Plan or an Approved
Annual Plan; 

	 	        (c)
Third, to the Members in accordance with their Capital Return  Percentages until each
Member has received its accrued and unpaid Preference Return; 

	 	        (d)
Fourth,  to the  Members in  accordance  with their  Capital  Return  Percentages  until
each  Member has received its accrued and unpaid Accumulated Preference Return; 

	 	        (e)
Fifth, to the Members in accordance with their Capital Return  Percentages until each
Member has received its Outstanding Capital Contribution balance; 

	 	        (f)
Sixth, to repay the Land Note in full (including accrued interest thereon); 

	

29 

	 	        (g)
Seventh,  sixty  percent  (60.0%) to BMDC and forty  percent  (40.0%) to the Hines Member
until the Hines Member has received an aggregate amount of $127,966.00 pursuant to this
Section 6.6(g); and 

	 	        (h)
Eighth, to the Members in accordance with their Horizontal Ownership Percentages. 

	

ARTICLE VII 

ASSIGNABILITY 

        7.1
Transfers and Pledges. Except as contemplated in this Section 7.1 or Article XI,
no Member shall Transfer or Pledge all or any part of its Interest without the prior
written consent of the other Member which approval may be given or withheld in the
sole and absolute discretion of the other Member. Nothing herein shall prohibit the
Transfer or Pledge of any limited partner interest in any Member of the Company.  

	 	        7.1.1
Hines Member Permitted Transfers. Subject to Section 7.2, the Hines Member at any
time without the consent of BMDC may Transfer all or any portion of its Interest
to any Hines Affiliate, provided that (i) the Hines Member notifies BMDC in
writing of such Transfer at least ten (10) business days prior to the date of the
Transfer, (ii) such Transfer shall not violate any of the terms of any
financing documents or other obligations of the Company approved by the Hines
Member, and any guaranty given to such lender for the benefit of the Company
remains in full force and effect and (iii) the transferee must assume all of
the obligations of the Hines Member thereafter accruing with respect to such
interest Transferred arising hereunder and under all agreements given by the Hines
Member to third parties, to the extent of the interest Transferred. 

	 	        7.1.2
BMDC Permitted Transfers. Subject to Section 7.2, BMDC at any time without the
consent of Manager may Transfer all or any portion of its Interest to a BMDC
Affiliate, provided that (i) BMDC notifies the Hines Member in writing of
such Transfer within ten (10) business days of the Transfer, (ii) such Transfer
shall not violate any of the terms of any financing documents or other
obligations of the Company approved by BMDC, (iii) the transferee must
assume all of the obligations of BMDC thereafter accruing with respect to such
interest Transferred arising hereunder and under all agreements given by
BMDC to third parties, to the extent of the interest Transferred, and (iv)
such Affiliate shall have sufficient net worth, as reasonably determined by
the Hines Member, to fulfill the obligations of BMDC under this Agreement to
the extent of the interest so Transferred. 

	 	        7.1.3
Limitation on Transfers. Except for transfers permitted under Sections 7.1.1 and
7.1.2, no Member shall be permitted to Transfer all or any portion of its
Interest during the pendency of a Buy-Sell procedure pursuant to Section
11.1, or during the period following the issuance of a Forced Sale Notice and prior to
the earlier of (x) an Election by the Receiving Member to permit the sale to
a third party pursuant to Section 11.2(c)(i) or (y) the Closing of the
acquisition by the Receiving Member pursuant to Section 11.2(c)(ii) except in any
event pursuant to a Buy-Sell or a Forced Sale procedure, as applicable. 

	

30 

	

        7.2
Additional Covenants Concerning Transfers. In the event of any Transfer of an
Interest in accordance with the provisions of this Article VII, the Members agree to
cooperate fully in order to facilitate such Transfer, such cooperation to include
without limitation the execution of all appropriate instruments or documents
evidencing such Transfer or such Member’s consent thereto, provided that any
reasonable expenses incurred by the non-transferring Member shall be reimbursed by the
other Member and the non-transferring Member shall not be required to incur any
additional risk, liability or obligation in connection therewith. In no event shall
any Member be permitted to Transfer an Interest if such Transfer violates
applicable laws, or any rule or regulation promulgated thereunder, or causes a
termination of the Company for purposes of Section 708 of the Code, and, if
required by the non-transferring Member, the transferring Member shall obtain and
deliver to the non-transferring Member an opinion, in form and substance reasonably
satisfactory to the non-transferring Member, of counsel reasonably acceptable to the
non-transferring Member, to the effect that any such Transfer will not be in violation
of such laws, rules or regulations and will not cause such a termination of the Company.  

        7.3
Admission as Substituted Member. Any person acquiring an Interest in the Company
shall have no right to participate in the management of the business and affairs of
the Company except upon the approval of the other Members in their reasonable
discretion; provided, however, that in the event the Hines Member Transfers its
Interest to an entity controlled, directly or indirectly, by a Hines Affiliate for
purposes of providing an Investor (as defined in the Master Development Agreement)
with an economic interest in the Company, such transferee shall be admitted as a
Member and as Manager of the Company. It is the intent of the parties that at all times
there shall be a single decision making entity for each of the Hines Member and BMDC
and in the event of a partial Transfer by either, the original Member shall be
designated as such single decision making entity for all purposes hereof and such
original Member’s successors shall be bound by such decision of its transferor
for all purposes, including, without limitation, any course of action taken by such
original Member pursuant to Article XI. Any Member Interest transferred pursuant to
any provision of this Article VII shall thereafter remain subject to all the
provisions of this Article VII and this Agreement.  

ARTICLE VIII 

ACCOUNTING PROCEDURE 

        8.1
Fiscal Year. The fiscal year of the Company shall begin on January 1 and shall end
on December 31 of each year.  

        8.2
Books of Account. There shall be kept books of account at the offices of the
Company in which shall be entered fully and accurately each and every transaction of
the Company. The books shall be kept using the accrual method of accounting. Each
Member shall have unrestricted access to and the right to inspect the books and
records of the Company and the right to consult with and advise those persons carrying
out the business of the Company upon reasonable notice during business hours.  

31 

	

        8.3
Annual Reports.  

	 	        (a)
     At the end of each fiscal  year,  Manager  shall,  at the expense of the  Company,
 have an  independent  certified  public accountant  (which shall be chosen by Manager
with the consent of the Members) prepare audited  financial  statements of the Company as
of the close of such fiscal year,  including a balance  sheet,  a statement  of income or
loss, a statement of cash flows,  and a statement of changes in Members’  capital.  A
copy of such audited  financial  statements for each fiscal year shall be furnished by
Manager to each of the  Members  not later  than 90 days after the end of the fiscal
 year of the  Company.  The  audited  financial statements shall be prepared in
accordance with generally accepted accounting principles. 

	 	        (b)
     Not later  than 120 days after the end of the  fiscal  year of the  Company,
 Manager  shall  furnish to BMDC a copy of the Company’s U.S.  Partnership Return of
Income (presently Form 1065) and BMDC’s Schedule K-1 of the Company’s U.S.  Partnership
Return of Income.  The tax reporting  information  shall also be accompanied by a
 reconciliation  between the information set forth on the annual audited  financial
 statements  pursuant to  Section 8.3(a)  above and the  information  furnished to the
Members for federal income tax purposes pursuant to this Section 8.3(b). 

	

        8.4
The Development Budget, the Development Plan and the Annual Plan.  

	 	        (a)
     The Hines Member and BMDC have approved the  Development  Plan for the initial
 Project,  including a proposed  Development Budget describing,  among other matters,
 the maximum Project Capital Commitments of the Members.  The Company will not proceed
with developing  any  additional  Projects  until  such time as the  Hines  Member  and
BMDC have  approved  a  Development  Plan for the additional  Project.  Each  Development
 Plan and the Development  Budget for each Project may be amended from time to time (i)
with the mutual approval of the Members,  (ii) to reflect  amendments  consistent with
the Plans,  the  Construction  Contract and/or the Construction Financing, (iii) to be
consistent with any subsequently Approved Annual Plan or (iv) as otherwise provided
therein. 

	 	        (b)
For each Project, within ninety (90) calendar days prior to the date on which
the first sale of property by the Company in the ordinary course of business is
scheduled to occur, Manager shall prepare and submit to the Members for their
approval a budget and strategic operating plan (the “Annual Plan” or, as approved,
the “Approved Annual Plan”) for the Company through the then current calendar year,
which shall set forth all anticipated income, operating expenses and capital and
other costs and expenses of the Company together with guidelines for sales for the
coming year and include all backup information reasonably requested by the Members.
Thereafter, the Annual Plan for each subsequent fiscal year shall be prepared and
be sent to the Members for review by the Members in draft form by October 1 of the
preceding year and shall be submitted in final form to the Members for approval no
later than 30 calendar days prior to the end of each fiscal year with respect to the
following fiscal year. Each Member shall have thirty (30) days from the date upon
which it receives the Annual Plan to approve or disapprove such Annual Plan. If a
Member has not notified Manager of its approval or disapproval of the Annual Plan by
the end of such 30-day period, such Member shall be deemed to have approved the Annual
Plan. Manager shall exercise good faith efforts to operate each Project in accordance
with the Approved Annual Plan. Prior to the approval of an Annual Plan, Manager shall
operate the Company in accordance with the prior year’s Approved Annual Plan.
Notwithstanding the foregoing, the Approved Annual Plan for the calendar year
immediately preceding the calendar year for which the Annual Plan has not yet been
approved shall automatically be adjusted for increases, if any, in debt service,
taxes, insurance and other costs payable to third parties beyond the reasonable control
of Manager. 

	

32 

	 	        In
conjunction  with the formulation of, and as part of, the Annual Plan for each year,
 Manager will also develop sales and other  operating  guidelines for each Project for
the upcoming  fiscal year,  which sales and other  operating  guidelines shall include
(i) a standard form or forms of sale contract to be offered to prospective  buyers,  (ii)
a schedule of proposed sales prices of lots and units,  for the upcoming  fiscal year,
 (iii) a  description  of any  anticipated  inducements,  concessions,  or allowances  to
be offered,  (iv) a budget for the costs to be  incurred  for the balance of the
 projected  sales  period and (vi) a summary of the general content and method of
presentation  of the advertising and marketing  program to be implemented  with respect
to each Project. 

	

        8.5
Multiple Projects. If the Company undertakes more than one Project, the budgeting
and reporting for each Project shall be maintained separately for each Project.  

ARTICLE IX 

DURATION AND DISSOLUTION 

        9.1
Dissolution.  

	 	        (a)
     The Company  shall  continue in  existence  until the earliest to occur of (i) a
 written  election by the Hines Member and BMDC to dissolve  the Company or a written
 election by one Member to dissolve  the Company  pursuant to the express  right to do so
granted in this  Agreement;  (ii) the sale,  forfeiture,  or  abandonment  of
 substantially  all of the Company  Assets;  (iii) the December 31 following the 20th
 anniversary  of this  Agreement;  or (iv) any other event causing the  dissolution of
the Company by operation of law. 

	 	        (b)
     Except as expressly  provided  herein to the  contrary,  each Member  agrees not to
withdraw  from the Company  without the prior written consent of the other Member. 

	

        9.2
Liquidation.  

	 	        (a)
     Except as otherwise  provided  herein,  upon the dissolution of the Company no
further  business shall be conducted  except for the taking of such action as shall be
 necessary  for the winding up of the affairs of the Company and the  distribution  of
its assets to the Members  pursuant to the  provisions  of this  section.  In such event,
 a  liquidating  trustee shall be appointed as follows:  Each Member shall select an
advisor and the advisors  shall  select a third person to serve as  liquidating  trustee.
 The liquidating  trustee  shall have full  authority  to wind up the affairs of the
Company and to make final  distribution  as provided herein. 

	

33 

	 	        (b)
     Upon the  dissolution of the Company,  the liquidating  trustee shall sell the
Company Assets at the best price  available, or, with the consent of all Members,  the
 liquidating  trustee may distribute  those assets in kind;  provided,  however,  that
the liquidating  trustee  shall  ascertain  the fair market  value by appraisal or other
 reasonable  means of the Company  Assets to be distributed in kind, and each Member’s
 Capital Account shall be charged or credited,  as the case may be, as if such asset had
been sold for cash at such  fair  market  value  and the net gain or net loss  recognized
 thereby  had been  allocated  to and among the Members in  accordance  with Article VI
above.  All of the Company  Assets shall be so applied and  distributed  by the
 liquidating trustee on or before the later to occur of (x) the end of the taxable year
in which the dissolution of the Company  occurs,  (y) the date that is 90 days  following
the date upon which  substantially  all of the Company  Assets are sold or otherwise
 disposed of by the Company, or (z) the date that is 90 days following the date any other
event of dissolution occurs, and in the following order: 

	 	        (i)
     First, to the creditors of the Company; 

	 	        (ii)
    Second,  to  setting up the  reserves  that the  liquidating  trustee  may deem
 reasonably  necessary  for  contingent  or          unforeseen liabilities or
obligations of the Company; and 

	 	        (iii)
   Finally, in the manner provided in Section 6.6, as applicable. 

	 	        (c)
     The liquidating  trustee shall comply with any  requirements of the Act or other
applicable law, except as modified by this Agreement  in the manner  permitted  by the
Act,  pertaining  to the winding up of a limited  liability  company,  at which time the
Company shall stand liquidated. 

	

        9.3
Liquidation of a Member’s Interest. Notwithstanding anything herein to the
contrary, in the event of the liquidation of an Interest other than in connection
with the liquidation of the Company, the Company shall distribute to such Member
(the “Liquidating Member”) in liquidation of its interest cash or other assets with an
aggregate value equal to the positive balance in the Liquidating Member’s Capital
Account, as adjusted to reflect all allocations to the Liquidating Member as provided
in this Section 9.3 and in Article VI hereof. Immediately prior to the distribution
described in the preceding sentence, a liquidating trustee, appointed as provided in
Section 9.2, shall determine the fair market value of the Company Assets by such
reasonable methods of valuation as it may adopt, and all Members’ Capital Accounts
shall be charged or credited, as the case may be, as if such assets had been sold at
such fair market value and the net gain or net loss recognized thereby had been
allocated to and among the Members in accordance with Section 6.2 above. The
adjustment described in this Section 9.3 shall take place on or before the later of
(i) the end of the taxable year of the Company in which the liquidation occurs or (ii)
90 days after the date of such liquidation.  

34 

	

ARTICLE X 

COMPENSATION AND FEES 

        10.1
Management Fee. The Company shall retain the Development Manager to perform the
services of development manager under the Development Management Agreement and shall
pay to Development Manager the fees provided therein.  

        10.2
Reimbursement of Expenses. The Company shall pay to the Manager, as and when
requested, the amounts necessary to reimburse the Manager for the direct
third-party out-of-pocket expenses actually incurred by it in administering the
Company hereunder as set forth in the Development Plan or Approved Annual Plan.  

ARTICLE XI 

BUY-SELL
PROCEDURES/FORCED SALE 

        11.1
Buy-Sell Right. (a) At any time during the Buy-Sell Period, either the Hines
Member, on the one hand, or BMDC, on the other hand (the actual Member giving such
notice being herein called the “Electing Member”), shall have the option (“Buy-Sell
Right”) to cause to occur the buy-sell rights under this Article XI by giving
written notice thereof to the other Member (the Member receiving such notice being
herein called the “Non-Electing Member”).  

	 	        (b)
     No notice may be given by any Member at any time that the exercise  thereof would
 constitute a default with respect to any indebtedness of the Company  secured by a lien
on any Project (unless the holder thereof has theretofore  waived such default or the
Electing Member in its notice states such  indebtedness  will be paid in full and
 demonstrates it has the financial means to do so) or under any lease or other  agreement
 to which the  Company is a party or by which it or its  assets are bound and which
 lease or other document was approved by the Members. 

	 	        (c)
If the Buy-Sell Right is exercised, then the Electing Member, in its notice of
exercise, shall set forth an all-cash price for all Projects and other assets
(except cash) of the Company (“Price”), taking into account (but not reduced by) all
liens, debts and other then-existing liabilities as reflected on the most recent
financial statements for the Company and taking into account Section 11.3(iii) below.
The Non-Electing Member shall then decide whether (i) the Electing Member will buy
the Interest of the Non-Electing Member, or (ii) the Non-Electing Member will buy the
Interest of the Electing Member in the Company. If the Non-Electing Member does not
give to the Electing Member written notice selecting (i) or (ii) within ninety (90) days
after the Electing Member gives notice of exercising the Buy-Sell Right, then the
Electing Member may either withdraw its exercise of the Buy-Sell Right or at any time
thereafter give written notice of such failure (“Failure Notice”) to the
Non-Electing Member and, if the Non-Electing Member has not elected (i) or (ii)
within ten (10) days after delivery of such Failure Notice, then the Non-Electing
Member will be deemed to have selected (i). Within ninety (90) days (or eighty
(80) days in the event a Failure Notice is delivered) after the determination of
whether the Electing Member or the Non-Electing Member will buy under (i) or (ii), the
Members shall complete such purchase and sale. The price (the “Closing Sum”)
the Electing Member under (i) or the Non-Electing Member under (ii) shall pay such
non-purchasing Member is the sum the non-purchasing Member would have received under
this Agreement if all Projects and other assets of the Company (except cash) had been
sold for the Price; provided, however, that the expenses of sale shall be
disregarded in computing the amount distributable pursuant to Article VI hereof.
Subject to the preceding provisions of this Section 11.1, the Buy-Sell Right may be
exercised at any time. During the pendency of proceedings under this Article XI, no
Member shall make any Transfer of its Interest other than pursuant to the Buy-Sell Right
that instituted such proceedings. 

	

35 

	

        11.2
Forced Sale.  

	 	        (a)
In addition to the rights of the parties with respect to the Buy-Sell
provisions of Section 11.1 above, at any time after the Buy-Sell Period, either
Member (the actual Member initiating a Forced Sale being herein called the “Initiating
Member”) shall have the right (the “Forced Sale Right”) to require a sale of all
Projects by the Company pursuant to the provisions of this Section 11.2 (herein called
a “Forced Sale”). The Initiating Member may initiate the Forced Sale by giving a
written notice (a “Forced Sale Notice”) signed by the Initiating Member to the other
Member (the “Receiving Member”). 

	 	        (b)
The Forced Sale Notice shall specify (i) the Initiating Member’s determination of
the all-cash price for all Projects and other assets of the Company (except cash),
taking into account, but not reduced by, all liens, debts and other then-existing
liabilities as reflected on the most recent financial statements for the Company (the
“Forced Sale Price”), (ii) allocation of closing costs, and (iii) such other material
economic terms of such sale as the Initiating Member may propose to the Receiving
Member; provided, however, that the terms of such sale must (A) provide for an “as is”
sale as of the time the Forced Sale Notice is given, (B) provide for expiration of any
representations or warranties (other than a special warranty of title) not more than
one (1) year following the closing, (C) provide for closing within 100 days of the date
a contract is signed and (D) be subject to no contingencies other than customary due
diligence contingencies, such as review of title, survey and environmental matters;
provided, however, that acceptable contingencies shall not include those based on
further completion of the Projects, occupancy, sale or rental achievement. 

	 	        (c)
The Receiving Member shall have the right, exercisable by delivery of notice
in writing (referred to herein as an “Election”) to the Initiating Member within
ninety (90) calendar days from the date of receipt by the Receiving Member of the
Forced Sale Notice (referred to herein as the “Election Date”), to notify the Initiating
Member either: 

	 	        (i)
     That the  Receiving  Member is  agreeable  to the sale of the  Projects  by the
 Company  for a price not less than  ninety          percent  (90.0%) of the Forced Sale
Price set forth in the Forced Sale Notice and on other terms no less  favorable  to the
         Company  than  those set forth in the  Forced  Sale  Notice;  provided,
 however,  that  neither  the Member nor any of its          Affiliates  shall qualify as
a purchaser under this clause (i) without the written consent of the Initiating  Member
in its          sole discretion; or 

	

36 

	 	        (ii)
    That the  Receiving  Member  elects to buy the Interest of the  Initiating  Member
for a cash  purchase  price equal to the          Initiating Member’s Forced Sale Value
(as defined in subparagraph (e) below). 

	

In the event the Receiving  Member
fails to give the  Initiating  Member  written  notice of the Receiving  Member’s
 Election on or before the Election  Date,  the Initiating  Member may either  withdraw
its Forced Sale Notice or shall give the Receiving  Member a final written  notice
 stating that the Election Date has occurred.  In the event the Receiving  Member fails
to give the Initiating Member written notice of the Receiving  Member’s  Election  within
ten (10) days  following the Receiving  Member’s  receipt of such final notice, the
Receiving Member shall be deemed to have made an Election to agree to sell under Section
11.2(c)(i) above. 

	 	        (d)
     In the event of an Election  pursuant to Section  11.2(c)(i) above, the agreement to
such sale between the Members shall be binding for six months  following the date of such
 election (or deemed  election) by the Receiving  Member.  During such  six-month period
the Company (and the  Members)  shall  cooperate  in good faith to effect such sale by a
contract to be executed  within such period with  closing to occur not later than one
hundred  (100) days  following  the date of the  execution of the contract of sale. In
the event the Initiating Member is not the Manager and is dissatisfied  with the
marketing  efforts  undertaken by the Manager to complete the sale of the Projects,  the
 Initiating  Member may give the Manager  written notice of such  dissatisfaction,
 together with a description  in reasonable  detail of the  deficiencies  observed and
 suggestions  for resolving the same. In the event such deficiencies  have not been
rectified  within 30 days following the date of such notice,  then the Initiating  Member
shall have the right to act on behalf of the  Company in the place of Manager  in
 connection  with such sale for the  duration  of such  six-month period and,  if
 applicable,  100-day  period  prior to  closing.  In the event that such sale is not
 consummated  as  contemplated thereby,  the Company shall,  at the direction of both
Members,  exercise any remedies or rights,  or satisfy any  liabilities,  the Company may
have with respect  thereto,  and the Members shall be restored to the status quo ante
under this Agreement.  The failure of either  Member to close or the  failure of either
 Member to  cooperate  with the effort to sell or to cause the closing to occur once the
 Projects  are subject to a contract of sale as required by this  Section  11.2(d)  shall
 constitute  a  Defaulting  Event hereunder. 

	 	        (e)
As used herein, a Member’s “Forced Sale Value” shall be equal to the sum the
Member would have been entitled to receive had the sale of the Projects been closed
and consummated on the terms of the Forced Sale Notice and the Company thereafter
liquidated in the manner provided in Article IX hereof, assuming the prior allocation
of any Net Income or Net Loss in accordance with the terms of this Agreement which
would have been recognized by the Company in connection with any sale of the Projects
for an amount equal to the purchase price provided for in the Forced Sale Notice. 

	 	        (f)
     If the  Receiving  Member  agrees or is deemed to have agreed to the sale to a third
party  pursuant to Section  11.2(c)(i) above, and no such third-party sale is consummated
 within 180 days following the date of the Receiving  Member’s Election or deemed
Election,  the  requirement  to sell the Projects  shall lapse and be of no further force
and effect,  until and unless a new Forced Sale Notice is given as herein provided. 

	

37 

	 	        (g)
     Closing  pursuant  to an exercise  under  Section  11.2(c)(ii)  shall be held on or
before the date set forth in the Forced Sale Notice. 

	 	        (h)
     Subject to the provisions of this Section 11.2 and Section 11.8, a Forced Sale may
be instituted at any time. 

	

        11.3
Closing. The closing of the purchasing Member’s purchase of the other Member’s
Interest pursuant to Section 11.1 or Section 11.2(c)(ii), as applicable, shall be
held at the principal office of the Company, at 10 a.m., local time, on such business day
within the applicable period for completing the purchase and sale referred to in
Section 11.1 or 11.2 hereof as the purchasing Member may select (provided that the
purchasing Member shall give to the Company and to the non-purchasing Member notice of
such selected date at least ten (10) days prior thereto), or if the purchasing Member
shall not select a date for such closing, then on the last day for closing under
Section 11.1 or 11.2 (or if such last day shall not be a regular business day, then
on the next business day following such last day) (the “Closing Date”). Notwithstanding
the foregoing, the purchasing Member may at any time upon not less than ten (10) days’
written notice set a revised Closing Date so long as it is earlier than the original
Closing Date. Pending the closing, Manager shall cause the business of the Company
to be conducted in the ordinary course and shall not pay or incur any costs, expenses
or obligations or accelerate or defer the receipt of any revenues in such a way as to
cause the Company Available Cash Flow that is to be distributed on the Closing Date
as provided in clause (iii) below or the operating expenses or Company liabilities
as of the Closing Date to be materially different from what such would have been as of
such date in the absence of the purchase and sale pursuant to this Article XI. At the
closing,  

	 	        (i)
the purchasing Member shall pay to the selling Member the difference between (A)
the sum of the selling Member’s share of the Company’s income prorated
to the Closing Date and (1) the Closing Sum in the event of a Buy-Sell or (2)
the Initiating Member’s Forced Sale Value in the event of an election
pursuant to Section 11.2(c)(ii), as applicable, and (B) the selling
Member’s share of the Company’s expenses prorated to the Closing Date,
in cash or by wire transfer of immediately available U.S. funds completed prior
to 2 p.m. local time on the Closing Date. All costs and expenses incurred in
connection with any closing pursuant to Section 11.1 shall be paid by the Member
incurring such costs, and no deductions shall be made from the Closing Sum for
deemed closing costs. All out-of-pocket costs and expenses incurred by the Hines
Member or BMDC in connection with any closing pursuant to Section 11.2(c)(ii)
shall be paid as set forth in the Forced Sale Notice, and the amount payable by
the purchasing Member shall be adjusted accordingly. 

	 	        (ii)
the non-purchasing Member shall assign to the purchasing Member or its or their
nominees or assignees, with title covenants of general warranty, the entire
Company Interest of the non-purchasing Member, free and clear of all liens,
claims and encumbrances (or, in lieu thereof, the purchasing Member may elect to
have the Company convey to it all assets of the Company through appropriate
deeds, assignments of leases and the like). Additionally, at the request of the
purchasing Member, in order to confirm record title to the assets of the
Company, the non-purchasing Member shall convey and transfer to the purchasing
Member or its nominee or assignee, by quit claim deed and bill of sale, the
entire right, title and interest of the non-purchasing Member in and to all
assets of the Company; 

	

38 

	 	        (iii)
there shall be a distribution to the Members of all Company Available Cash Flow
in accordance with Section 6.6 hereof, as applicable determined as of the
Closing Date; and 

	 	        (iv)
the non-purchasing Member and the purchasing Member shall execute and deliver
such other documents as may be reasonably necessary to carry out such
transaction. 

	

        11.4
Default by Purchasing Member. In the event that the purchasing Member shall
default in its obligation to consummate the purchase contemplated by Section 11.1 or
Section 12.2(c)(ii) and such failure continues for more than five business days
following written notice thereof, then the non-purchasing Member shall, at its option,
have the right to (i) (x) in the case of a Buy-Sell pursuant to Section 11.1, become
the purchasing Member on the same terms and provisions as were applicable to the
purchase that the Defaulting Member failed to close with a ten percent (10.0%)
discount on the amount payable or (y) in the case of an election pursuant to Section
11.2(c)(ii), elect to acquire the Defaulting Member’s Interest for an amount equal to
ninety percent (90.0%) of the Defaulting Member’s Forced Sale Value (taking into
account the adjustments set forth in the first partial sentence of Section 11.3(i));
or (ii) abandon the purchase and sale contemplated by this Article XI and carry forward
as if the Buy-Sell Right or Forced Sale Right had not been exercised; or (iii) if it
had not been the Electing Member with respect to the Buy-Sell Right or Forced Sale Right
that the purchasing Member failed to consummate, then institute the Buy-Sell Right or
Forced Sale Right itself; or (iv) pursue any other right or remedy at law or in equity
(it being agreed the non-purchasing Member shall have the right to compel specific
performance) against the purchasing Member. If the non-purchasing Member shall not
have used one or more of the options described in the preceding clauses (i) through
(iv) of this Section 11.4 within six (6) months after the default by the purchasing
Member, then the non-purchasing Member shall be deemed to have elected option (ii);
provided, however, that either Member shall thereafter be entitled to exercise a new
Buy-Sell Right or Forced Sale Right, subject to the provisions of Section 11.1 or
11.2, as applicable. Except as provided in the preceding two sentences, the rights
and remedies provided herein are cumulative, and the use of any one right or remedy
by a Member shall not preclude or waive its right to use any or all of the other
rights or remedies available to it.  

        11.5
Default by Non-purchasing Member. In the event the non-purchasing Member shall
default in its or their obligations to consummate the purchase contemplated by this
Article XI, then the purchasing Member may (i) abandon the purchase and sale
contemplated by this Article XI and proceed as if the Buy-Sell Right or Forced Sale
Right or Put Right had not been exercised, (ii) enforce specific performance of the
sale contemplated by this Article XI or (iii) exercise any remedy to which it may be
entitled at law or in equity.  

        11.6
Liability After Closing. From and after the consummation of any purchase and
sale pursuant to this Article XI, (i) the non-purchasing Member or its Affiliates
shall have no obligation or liability (except for title warranties) with respect
to matters pertaining to the Company arising on and after the Closing Date, and the
purchasing Member shall assume and be responsible for any such liabilities or
obligations arising on and after the Closing Date as well as any obligations of the
non-purchasing Member’s Affiliate under any indemnity or guaranty relating to the
Projects as to which the purchasing Member had written notice at the time of its
decision to purchase, and (ii) the purchasing Member shall have no obligation or
liability with respect to matters pertaining to the Interest so purchased arising
prior to the Closing Date. The non-purchasing Member shall indemnify the purchasing
Member from and against all of the non-purchasing Member’s obligations under this
Agreement arising prior to the Closing with respect to the Interests being conveyed.
The purchasing Member shall indemnify the non-purchasing Member from and against all
such obligations arising on and after the Closing with respect to the Interests being
conveyed.  

39 

	

        11.7
Limitation on Exercise. Notwithstanding anything herein to the contrary, no Forced
Sale Right may be exercised until all periods for making elections and performing
obligations under any previous Buy-Sell Right pursuant to Section 11.1 have elapsed
(except for remedies described in Sections 11.4 and 11.5 above in the event of a
default). In addition, no Buy-Sell Right may be exercised for a period of 90 days
after the date a Forced Sale Notice is given pursuant to Section 11.2. Following the
expiration of such 90-day period, either Member may exercise a Buy-Sell Right,
provided, however, that no such exercise shall be permitted (i) if prior to such
exercise of a Buy-Sell Right, a bona fide offer to purchase the Projects on terms at
least as favorable as contained in the Forced Sale Notice has been delivered to the
Members and thereafter a contract is produced within 60 days from the date of such
bona fide offer or (ii) following the Election by a Receiving Member under
Section 11.2(c)(ii) (except as provided in Section 11.4).  

        11.8
No Assignment. Neither Member may assign its rights and obligations under
Section 11.1 or Section 11.2 to any third party (other than a successor to such
Member’s interest), provided, however, that a Member may freely assign its right to
receive a conveyance of all or part of an Interest by delivering notice of such
assignment to the other Member.  

        11.9
Release of Liability. Subject to Section 7.1 of this Agreement, in the event any
Member shall sell its entire Interest (other than in a sale of the Projects or the
entire Interests of all Members), in compliance with the provisions of this Agreement
without retaining any interest therein, directly or indirectly (unless such sale was
made pursuant to Article VII), then the Selling Member shall be relieved of any
further liability arising hereunder for events occurring from and after the date of
such Transfer, and such Member and its Affiliates, as applicable, shall be released
from any written indemnity or guaranty obligations relating to the Projects as to which
the purchasing Member had notice at the time of its decision to purchase.  

ARTICLE XII 

DEFAULTING EVENT
REMEDIES 

        12.1
Election to Purchase Defaulting Member’s Interest. In the event that a Member
becomes a Defaulting Member (or purposes of this Article XII only, the term “Defaulting
Member” shall refer only to a Member who committed a Defaulting Event or a Monetary
Default under Article III) the non-defaulting Member shall have the option to purchase
the Interest of the Defaulting Member in the Company, with any such election to be
made by the non-defaulting Member giving notice of such election to the Defaulting
Member within 30 days after the non-defaulting Member first discovers that the other
Member has become a Defaulting Member (and so notifies the Defaulting Member in writing).  

40 

	

        12.2
Purchase Price of Defaulting Member’s Interest. If either Member becomes a
Defaulting Member, in the event that the non-defaulting Member elects under Section
12.1 to purchase the Defaulting Member’s Interest, the purchase price of such Interest
shall be ninety percent (90.0%) of the amount that the Defaulting Member would have
received under Section 11.1 if the Price equaled the fair market value of the
Projects (taking into account the adjustments set forth in the first partial
sentence of Section 11.3(i)); provided, however, that the non-defaulting Member
shall receive a credit against such purchase price in the amount of any delinquent
Capital Contributions due from the Defaulting Member and any expenses of closing such
purchase. In the event that the non-defaulting Member elects under Section 12.1 to
purchase the Defaulting Member’s Interest, then the Company shall not make any
distributions on or before the closing of the purchase of such Interest, and any such
distributions which would have been made to the Defaulting Member shall be distributed
to the non-defaulting Member on or after the closing. In the event the Members are
unable to agree upon the fair market value of the Projects within thirty (30) days
following the notice given by the non-defaulting Member pursuant to Section 12.1,
then FMV of the Projects shall be determined. The closing shall be held on a date
selected by the non-defaulting Member within 10 business days after the purchase price
of the Defaulting Member’s Interest has been determined.  

        12.3
Suspension of Rights. In addition to all other remedies provided hereunder, except
as expressly provided in the Act and except for the Defaulting Member Approval Rights,
whenever the vote, consent or decision of the taking of any action of a Member or of
the Members is required or permitted pursuant to this Agreement, any Defaulting
Member (and its successors) shall not be entitled to participate in such vote or
consent, or to make such decision or take such action, and such vote, consent or
decision shall be tabulated or made as if such Defaulting Member (and its successors)
were not a Member.  

        12.4
Grant of Security Interest.  

	 	        (a)
     The Hines Member hereby grants to the Company,  as the secured  party, a security
 interest in the Hines Member’s  Interest in the Company to secure its  obligation  to
make Capital  Contributions  pursuant to Article  III,  and the Company  shall have all
rights  available to a secured party under the Montana  Uniform  Commercial  Code and the
laws of the state of  organization  of the Hines  Member.  A failure by the Hines  Member
to make a Capital  Contribution  pursuant  to Article  III,  which  continues  for 15
calendar days after written notice thereof,  will be a default,  and the Company, or the
other Member on behalf of the Company,  may exercise any remedies permitted by applicable
law to enforce the Company’s security interests. 

	 	        (b)
     BMDC hereby grants to the Company,  as the secured party under the Montana Uniform
 Commercial Code, a security interest in BMDC’s  Interest in the Company to secure its
 obligation  to make  Capital  Contributions  pursuant to Article III, and the Company
shall have all rights  available to a secured party under the laws of the state of
 organization  of BMDC. A failure by BMDC to make Capital  Contributions  pursuant to
Article III,  which  continues  for 15 calendar  days after written  notice  thereof,
 will be a default,  and the Company,  or the other Member on behalf of the Company,  may
exercise any remedies  permitted by applicable law to enforce the Company’s security
interests. 

	

41 

	 	        (c)
     Each Member hereby irrevocably  appoints each other Member,  the Company and the
agents,  officers or employees of any such party,  as its attorneys in fact,  coupled
with an interest,  with full power to prepare and execute any documents,  instruments and
agreements,  and such  financing,  continuation  statements,  and other  instruments and
documents as may be appropriate to perfect, continue and enforce such security interests
provided for in this Section 12.4. 

	

        12.5
Remedies Exclusive. The option of the non-defaulting Member to purchase the
Interest of the Defaulting Member under Section 12.1 and any rights or remedies which
the non-defaulting Member or the Company may have under Section 3.5, Section 12.3 and
Section 12.4 hereof against or with respect to such Defaulting Member shall be the
exclusive remedy of the non-defaulting Member under this Article XII.  

ARTICLE XIII 

MISCELLANEOUS PROVISIONS 

        13.1
Entire Contract. This Agreement and its exhibits shall constitute the entire
contract between the parties and shall supersede all prior agreements and
understandings, and there are no other or further agreements outstanding not
specifically mentioned herein; provided, however, that the parties may by agreement
amend and supplement this Agreement in writing from time to time pursuant to Section 13.6
hereof.  

        13.2
Notices. Any notice or demand provided for in or permitted under this Agreement
shall be made in writing, and may be given or served by (i) delivering the same in
person or by facsimile transmission to the party to be notified, or (ii) by
depositing same with a reputable overnight courier service. Notice given in any
manner shall be effective only if and when received by the party to be notified (or
service is refused), but if notice is not received by 5:00 p.m. local time on a
business day, such notice will be effective the next business day. For the purpose of
notice, the address of the Members shall be, until changed as hereinafter provided, as
follows:  

42 

		If to Manager:	Robert E. Daniel, Jr.

Hines Interests Limited Partnership

426 East Main Street

Aspen, Colorado 81611

Fax No.: (970) 920-3829
	 
		With a copy to:	Clayton T. Stone

Hines Interests Limited Partnership

2800 Post Oak Boulevard, Suite 5000

Houston, Texas 77056-6118

Fax No.: (512) 360-3385
	 
		With a copy to:	Baker Botts L.L.P.

One Shell Plaza

910 Louisiana Street

Houston, Texas 77002

Attention: Fred H. Dunlop

Fax No.: (713) 229-2873
	 
		If to BMDC:	Michael Collins

Big Mountain Development Corporation

The Big Mountain

P. O. Box 1400

Whitefish, Montana 59937

Fax No.: (406) 862-2955

          and

Jami Phillips

Big Mountain Development Corporation

The Big Mountain

P. O. Box 1400

Whitefish, Montana 59937

Fax No.: (406) 862-2955
	 
		With a copy to:	Christensen, Moore, Cockrell, Cummings

& Axelberg, P.C.

Two Medicine Building

160 Heritage Way

P. O. Box 7370

Kalispell, Montana 59904-0370

Attention: Steven E. Cummings

Fax No.: (406) 756-6522

	

or to such other address as each
Member may specify in a written notice to the other Member in accordance with this
Section 13.2. 

        Each
 Member  shall have the right from time to time and at any time to change its  respective
 address and each shall have the right to specify as its address any other  address by at
least  fifteen  (15) days’  written  notice to the other  Member.  Each Member shall have
the right from time to time to specify an additional  party to whom notice  hereunder
 must be given by delivering to the other party  fifteen  (15) days’  written  notice
 thereof  setting  forth the address of such  additional  party;  provided, however,
 that no  Member  shall  have the right to  designate  more  than one (1) such
 additional  party.  Notice  required  to be delivered  hereunder to either Member shall
not be deemed to be effective until the additional  parties,  if any, designated by such
Member have been given notice in a manner deemed effective pursuant to the terms of this
Section 13.2. 

43 

	

        13.3
Nature of Interest. The Interest of the Members in the Company is personal property.  

        13.4
Execution in Counterparts. This Agreement may be executed in multiple counterparts,
each to constitute an original, but all in the aggregate to constitute one agreement as
executed.  

        13.5
Severability. In case any one or more of the provisions contained in this
Agreement shall be invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby.  

        13.6
Modification, Termination and Waiver. This Agreement may be modified, terminated
or waived only by a writing signed by all of the Members.  

        13.7
Waivers. The failure of any party to seek redress for violation of or to insist
upon the strict performance of any covenant or condition of this Agreement shall not
prevent a subsequent act, which would have originally constituted a violation, from
having the effect of an original violation.  

        13.8
Headings. The headings in this Agreement are inserted for convenience only
and are in no way intended to describe, interpret, define or limit the scope, extent, or
intent of this Agreement or any provision hereof.  

        13.9
Rights and Remedies Cumulative. The rights and remedies provided by this
Agreement are cumulative and, except as otherwise provided herein, the use of any
one right or remedy by any party shall not preclude or waive its right to use any or all
other remedies. Except as otherwise provided herein, said rights and remedies are
given in addition to any other rights the parties may have by law, statute, ordinance,
or otherwise.  

        13.10
Waiver of Right to Partition. Each of the parties hereto irrevocably waives
during the term of the Company any right that it may have to maintain any action for
partition with respect to Company property.  

        13.11
Heirs, Successors, and Assigns. Each and all of the covenants, terms, provisions,
and agreements herein contained shall be binding upon and inure to the benefit of the
parties hereto and, to the extent permitted by this Agreement, their respective
heirs, legal representatives, successors, and assigns.  

        13.12
Governing Law. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.  

44 

	

        13.13
Estoppel Certificates. Within fifteen (15) days following the request of any
Member, each of the other Members shall execute estoppel certificates addressed to
such parties as the requesting Member may specify, certifying to such Member’s actual
knowledge without inquiry as to such facts, if true, with respect to this Agreement
and the Company as the requesting Member may reasonably request.  

        13.14
Further Assurances. Each Member agrees to execute, acknowledge, deliver, file,
record and publish such further instruments and documents, and do all such other
acts and things as may be required by law or as may be required to carry out the intent
and purposes of this Agreement.  

        13.15
Attorneys’ Fees. If the Company or any Member commences an action against any
Member by reason of the breach of this Agreement or the failure to comply with the
terms hereof, the prevailing party shall be entitled to reimbursement for its
reasonable attorneys’ fees and costs as fixed by the court.  

        13.16
Captions. All titles or captions contained in this Agreement are inserted only
as a matter of convenience and for reference and in no way define, limit, extend,
or describe the scope of this Agreement or the intent of any provision in this
Agreement.  

        13.17
Pronouns. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, and neuter, singular and plural, as the identity of the party
or parties may require.  

        13.18
Recalculation of Interest. If any applicable law is ever judicially
interpreted so as to deem any distribution, contribution, payment or other amount
received by a Member or the Company under this Agreement as interest and so as to render
any such amount in excess of the maximum rate or amount of interest permitted by
applicable law, then it is the express intent of the Members and the Company that all
amounts in excess of the highest lawful rate or amount theretofore collected be
credited against any other distributions, contributions, payments or other amounts to
be paid by the recipient of the excess amount or refunded to the appropriate Person,
and the provisions of this Agreement immediately be deemed reformed, without the
necessity of the execution of any new document, so as to comply with the applicable
law, but so as to permit the payment of the fullest amount otherwise required
hereunder. All sums paid or agreed to be paid that are judicially determined to be
interest shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the term of such obligation so that the rate or amount
of interest on account of such obligation does not exceed the maximum rate or amount
of interest permitted under applicable law.  

        13.19
Confidentiality; Publicity. The Members agree that no Member shall issue any press
release concerning formation of the Company or otherwise publicize the terms of this
Agreement or the proposed terms of the acquisition by the Company of any assets,
without the approval of the Members except as such publicity may be made in the course
of normal reporting practices by a Member to its partners, shareholders or members
or as otherwise required by law. Furthermore, the Members acknowledge their mutual
desire to limit disclosure of the terms of this Agreement, any other agreements
entered into in connection with the transactions contemplated hereby, and the parties
shall use their good faith efforts to prevent disclosure thereof absent a reasonable
business purpose for doing so (such as, by way of example and not by limitation, to
demonstrate the financial strength of the Members to potential tenants); provided,
however, that any Member may make disclosures if required to do so by applicable law or
court order and to such parties attorneys, accountants and other professionals and to
potential purchasers and lenders, who have a reasonable need to know such information.
Neither Member shall at any time, either during or after the term of this Agreement,
use for its own benefit and account (except as provided herein) or for the benefit and
account of any other person or entity any tenant lists or financial information relating
to the Projects.  

45 

	

        13.20
Waiver of Jury Trial. EACH OF THE MEMBERS HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION ARISING OUT OF MATTERS RELATED TO THIS AGREEMENT, WHICH WAIVER IS INFORMED AND
VOLUNTARY.  

        13.21
General Exculpation. Notwithstanding any provision hereof to the contrary, in
no circumstances shall a member, shareholder, limited partner, director, officer,
employee or agent (“Special Party”) of a Member or of a Special Party of a Member hereto
be personally liable for any of the obligations of Member under this Agreement except
to the extent, if any, provided in any separate agreement now or hereafter executed
and delivered by such Special Party nor shall any Special Party of a Member be liable
to any other Member (the other Members herein agreeing to indemnify such Special Party
from and against any such liability) for any act or omission, negligent, tortious or
otherwise, of such Special Party unless, in each case, the same results from fraud,
Gross Negligence or willful or intentional misconduct by such Special Party.  

        13.22
No Third-Party Beneficiaries. The provisions of this Agreement are for the
exclusive benefit of the Members and their respective successors and permitted
assigns and are not for the benefit of any other person or entity (including,
without limitation, any tenants or purchasers of interests in the Projects).  

        13.23
No Consequential Damages. Notwithstanding anything herein to the contrary, in no
event shall any Member be liable to any other Member for any special, consequential or
punitive damages, other than those damages payable or paid to third parties.  

        13.24
Exhibits. All Exhibits attached hereto are made a part hereof by this reference.  

        13.25
Days. Unless otherwise stated, a day shall be deemed to mean a calendar day and a
“business day” shall mean a day which is not a Saturday, Sunday or a holiday on which
national banks in Montana, are closed for business. In the event the date for
performance of any obligation hereunder falls on a day which is not a business day, then
the date for performance hereunder shall be extended until the next business day.  

        13.26
Dispute Resolution. The Members agree to follow the dispute resolution procedures
set forth in Schedule 13.26 attached hereto when applicable.  

46 

	

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

			MANAGER:

HINES MONTANA DEVELOPMENT LIMITED PARTNERSHIP,

a Texas limited partnership

		By:	Glacier Village Land Company LLC,

a Delaware limited liability company,

its General Partner

		By:	Hines Interests Limited Partnership,

a Delaware limited partnership,

its sole member

		By:	Hines Holdings, Inc.,

general partner

		By:

 

Name:

Title:	
 
———————————————

Robert E. Daniel, Jr.

Vice President

			BMDC:

BIG MOUNTAIN DEVELOPMENT CORPORATION,

a Montana corporation

By:

        
——————————————

Name:   Michael Collins

Title:     Chief Executive Officer

	

47 

	

EXHIBIT A 

INITIAL PROJECT LAND
DESCRIPTION - 20.372 Acre Parcel  

A TRACT OF LAND,  SITUATED,  LYING,
 AND BEING IN THE SOUTH HALF OF THE  NORTHWEST  QUARTER  AND IN THE NORTH HALF OF THE
 SOUTHWEST QUARTER OF SECTION 1, TOWNSHIP 31 NORTH,  RANGE 22 WEST,  P.M.,M.,  FLATHEAD
COUNTY,  MONTANA,  AND MORE  PARTICULARLY  DESCRIBED AS FOLLOWS TO WIT: 

      
      Commencing at the
        northeast corner of the Northwest Quarter of the Southwest Quarter of
        Section 1, Township 31 North, Range 22 West, P.M.,M., Flathead County,
        Montana; Thence along the east boundary of said NW1/4SW1/4 S00°41’04”W
        751.59 feet to a found iron pin and THE TRUE POINT OF BEGINNING OF
        THE TRACT OF LAND HEREIN DESCRIBED: Thence N56°54’13”W
        188.45 feet to a set iron pin; Thence N21°24’36”W 63.70
        feet to a set iron pin; Thence N05°35’57”W 441.07 feet to
        a set iron pin; Thence N14°50’11”E 175.14 feet to a set
        iron pin; Thence N09°42’30”W 224.62 feet to a found iron
        pin; Thence N36°34’23”E 60.00 feet to a found iron pin on
        a 210.00 foot radius curve, concave southwesterly (radial bearing S36°34’23”W);
        Thence southeasterly along said curve through a central angle of 22°41’32”
        an arc length of 83.17 feet to a set iron pin and the P.R.C. of a 100.00
        foot radius curve, concave northwesterly (radial bearing N59°15’55”E);
        Thence southeasterly and northeasterly along said curve through a central
        angle of 138°45’55” an arc length of 242.19 feet to a set
        iron pin; Thence N10°30’00”E 39.47 feet to a set iron pin
        and the P.C. of a 330.00 foot radius curve, concave southeasterly, having
        a central angle of 29°50’00”; Thence along an arc length
        of 171.83 feet to a set iron pin; Thence N40°20’00”E 73.57
        feet to a set iron pin and the P.C. of a 470.00 foot radius curve, concave
        northwesterly, having a central angle of 30°50’00”; Thence
        along an arc length of 252.93 feet to a set iron pin; Thence N09°30’00”E
        89.75 feet to a set iron pin; Thence N87°24’47”E 347.58
        feet to a set iron pin on a 190.00 foot radius curve, concave southeasterly
        (radial bearing S49°47’49”E); Thence southwesterly along
        said curve through a central angle of 34°40’57” an arc length
        of 115.01 feet to a set iron pin and the P.R.C. of a 135.00 foot radius
        reverse curve, concave northwesterly (radial bearing N84°28’46”W);
        Thence southwesterly along said curve through a central angle of 55°20’14”
        an arc length of 130.39 feet to a set iron pin and the P.R.C. of a 240.00
        foot radius reverse curve, concave southeasterly (radial bearing S29°08’32”E);
        Thence southwesterly along said curve through a central angle of 56°16’02”
        an arc length of 235.69 feet to a set iron pin and the P.R.C. of a 260.00
        foot radius reverse curve, concave northwesterly (radial bearing N85°24’35”W);
        Thence southwesterly along said curve through a central angle of 29°24’35”
        an arc length of 133.46 feet to a set iron pin; Thence S34°00’00”W
        178.77 feet to a set iron pin and the P.C. of a 130.00 foot radius curve,
        concave southeasterly, having a central angle of 35°48’52”;
        Thence along an arc length of 81.26 feet to a set iron pin; Thence S74°49’15”E
        369.78 feet to a found iron pin; Thence S00°42’50”W 752.01
        feet to a found iron pin; Thence N89°18’14”W 600.07 feet
        to the point of beginning and containing approximately 20.372 ACRES. 
      

Tract 1, Certificate of Survey No.
_____________, records of Flathead County, Montana. 

A-1 

	

EXHIBIT B 

FAIR MARKET VALUE
PROCEDURE  

        ”Fair
Market Value” or FMV shall mean the fair market value of the Projects determined
pursuant to the following appraisal or arbitration procedure:  

	 	        (a)
“Fair Market Value” shall mean the price a willing buyer would pay and
a willing seller would accept for the Projects taking into consideration the
location, quality and age of the Projects and any other relevant term or condition
in making such evaluation. 

	 	        (b)
If the parties are unable to agree in writing upon the Fair Market
value within thirty (30) days after a Member requests such determination, the Hines
Member and BMDC shall each, within twenty (20) days of the expiration of such thirty (30)
day period, appoint a licensed commercial real estate appraiser (a “Party
Appraiser”) with at least ten (10) years experience, who is a member of M.A.I.,
experienced in commercial and residential real estate appraisals in Montana, and
shall notify the other Party in writing in accordance with the notice provisions of
this Agreement of the name of such real estate appraiser. Each Party Appraiser
shall as soon as reasonably possible and in all events, within sixty (60) days
of their appointment, independently appraise the value of the Projects for the Fair
Market Value, considering the items set forth in the definition of Fair Market Value
in subsection (a) above (a “Party Appraisal”). 

	 	        (c)
If the two (2) Party Appraisals are equal, then such value shall be considered
the Fair Market Value for purposes of this Agreement. By written communication
delivered within five (5) days after the Party Appraisers’ completion of
the Party Appraisals, the Party Appraisers shall notify both the Hines Member
and BMDC of their findings. 

	 	        (d)
If the two (2) Party Appraisals are not equal, then the Party
Appraisers shall by agreement between them within ten (10) days of the delivery of the
last of the Party Appraisals, appoint a third real estate appraiser (the “Independent
Appraiser”), who shall also meet the qualifications as set forth in this subsection
(b) for the Party Appraisers. If the Party Appraisers fail to agree on the an
Independent Appraiser within twenty (20) days of the delivery of the last of the
Party Appraisals, either the Hines Member or BMDC may petition (within ten (10) days
of the expiration of the foregoing twenty (20) day period the American Arbitration
Association to designate an independent appraiser so qualified (also, the
“Independent Appraiser”). Once selected or appointed, the Independent Appraiser
shall then appraise the value of the Projects for the Fair Market Value (considering
the items set forth in the definition of Fair Market Value set forth in subsection
(a) above) within thirty (30) days of his or her selection/appointment (the
“Independent Appraisal”). The Independent Appraiser shall choose the Party Appraisal
that is most near in value to the Independent Appraisal. The Party Appraisal so
selected by the Independent Appraiser shall be the Fair Market Value for purposes of
this Agreement. By written communication delivered within five (5) days after the
Independent Appraiser’s completion of his or her selection, the Independent Appraiser
shall notify both the Hines Member and BMDC of his or her findings. 

	

B-1 

	 	        (e)
                  The  costs and  expenses  associated  with the  determination  of the
Fair  Market  Value by said  Independent Appraiser  (if  applicable)  shall be borne
 equally by the Hines Member and BMDC and otherwise the Hines Member and BMDC shall each
be responsible for the costs and expenses of the Party Appraiser which the Hines Member
or BMDC (respectively) selected. 

	

B-2 

	

Schedule 13.26  

Limited Liability
Company Agreement 
(Big Mountain) 
Dispute Resolution Procedures  

        1.
Conference. Any party may from time to time call a special meeting (which may be
conducted by telephone) for the resolution of disputes pursuant to the foregoing
Agreement. Such meeting shall be held at the offices of BMDC in Flathead County,
Montana within fifteen (15) business days of a written request therefor, which
request shall specify in reasonable detail the nature of the dispute to be resolved at
such meeting. The meeting shall be attended by representatives of the parties and may
be attended by any other person that may be affected in any material respect by the
resolution of such disputes.  

        2.
Mediation. If the dispute has not been resolved within five (5) Business Days
after the special meeting has been held, a mediator, mutually acceptable to the
parties and experienced in development and project operations matters shall be
appointed. The cost of the mediator shall be shared by the parties. The mediator
shall be given any written statements of the parties and may review the site and any
relevant documents. The mediator shall call a meeting in Flathead County, Montana of
the parties affected by such dispute within ten (10) Business Days after his/her
appointment, which meeting shall be attended (in person or by telephone) by
representatives of such parties to settle such dispute. During such ten (10) Business
Days period, the mediator may meet with the representatives of the affected parties
separately.  

        3.
Mediation Process. No minutes shall be kept and the comments and/or findings of the
mediator, together with any written statements prepared, shall be non-binding,
confidential and without prejudice to the rights of and remedies of any party. The
entire mediation process shall be completed within twenty (20) Business Days of
the date upon which the special meeting referred to in paragraph 2 is held, unless all
of the parties involved in the dispute agree otherwise in writing. If the dispute is
settled through the mediation process, the decision will be implemented by written
agreement signed by all the parties involved.  

        4.
Arbitration. Any controversy or dispute not resolved through non-binding
mediation shall be settled by binding arbitration. Either party may initiate
arbitration by giving written notice to the other party after exhausting the
mediation procedures referred to above, or if the parties in general do not mutually
agree on a mediator as provided in paragraph 2 above. The notice shall state the nature
of the claim or dispute, the amount involved, if any, and the remedy sought.  

B-3 

	

        5.
Arbitrators.  

	 	        a.
The arbitration shall be conducted before a board of three neutral arbitrators
(“Board”), all of whom shall have at least five years experience in real estate
construction, development, operation or law (the “Qualifications”). 

	 	        b.
 The arbitrators shall be selected in accordance with the following procedure: 

	 	        (i)
Within ten (10) days following receipt by one party of the other party’s
notice of arbitration, HILP and BMDC shall each designate one person with the
Qualifications to serve on the Board. In the event one party fails to designate
a representative within said ten (10)-day period, then the representative
designated by the other party shall select a representative for such party
within ten days thereafter. 

	 	        (ii)
Within ten (10) days following the selection of the two members of the Board by
the parties as provided in (i) above, such two arbitrators shall select the
third member of the Board who shall possess the Qualifications. In the event
such persons cannot agree on the third member of the Board, such member shall be
selected by the two Board members from a list of at least five persons with the
Qualifications submitted by the American Arbitration Association or its
successor (“AAA”). If the two members of the Board fail to accept the
third arbitrator from such list, the AAA shall have the power to appoint the
third arbitrator with the Qualifications. 

	 	        (iii)
If an arbitrator should die, withdraw or otherwise become incapable of serving,
a replacement shall be selected and appointed in a manner comparable to the
manner of original selection of such deceased, withdrawn or incapacitated
arbitrator. 

	 	        c.
The arbitrator selected by the two arbitrators or by the AAA shall be the
Chairman. Upon consultation with the other arbitrators and the parties, the
Chairman shall, at the earliest possible date, set dates for a hearing and
establish any pre-hearing conferences or procedural schedules that the Board
deems to be necessary and appropriate. If none of the arbitrators is a licensed
attorney, the Chairman shall be entitled to retain an attorney for the limited
purpose of advising the Board with respect to legal matters, as reasonably
necessary, including the issuance of protective orders and the admission of
evidence. 

	 	        d.
The Chairman shall preside at all hearings and executive sessions of the Board.
The Chairman may authorize depositions and issue subpoenas and make other
decisions provided for below. All other decisions of the Board shall be by a
majority of the arbitrators, unless the parties agree otherwise. 

	

B-4 

	

        6.
Discovery.  

	 	        a.
It is the mutual intention of the parties that discovery, if any, shall be
conducted expeditiously; shall have as its sole purpose the obtaining of
information that is directly relevant and necessary to the presentation of the
requesting party’s case; shall be conducted in a fair, cooperative and
courteous manner; and shall be accomplished primarily if not exclusively by the
voluntary exchange of documents and information. 

	 	        b.
To the extent possible, discovery shall be handled informally and by agreement.
Requests for inspections, requests for production of documents or other
information and requests for depositions may be made in writing. 

	 	        c.
Any dispute regarding discovery shall be submitted promptly to the Board and
shall be resolved by the Board. The parties shall promptly comply with any
decision by the Board, including but not limited to protective orders such as
those provided for in Rule 26(c) of the Federal Rules of Civil Procedure. If
necessary, any decision of the Board respecting discovery may be enforced by any
court of competent jurisdiction in the same manner as a final award under this
Exhibit, including an order for specific performance. 

	

        7.
The Proceedings.  

	 	        a.
The arbitration  proceedings  shall be held in Flathead  County,  Montana at a place to
be agreed upon by the parties. 

	 	        b.
A stenographic record of the proceedings shall be made and supplied to the Board and
parties. 

	 	        c.
Unless  the  parties  agree  otherwise,  the Board  shall  require  witnesses  to
 testify  under oath or affirmation. 

	 	        d.
The parties may offer such  evidence as is relevant  and  material to the dispute and
shall  produce such additional  evidence as the Board may deem  necessary to the
 determination  of the dispute,  subject to the  limitations in Section 6(a) above. 

	 	        e.
All  evidence to be  considered  by the Board shall be offered at the  hearing.  Prior to
the hearing the parties shall exchange  lists of names and addresses of all witnesses,
 together with the substance of the testimony of each and the report,  vita and
 publication  list of any expert  witness.  Exhibits  shall be admitted  into  evidence
by the Board only upon the establishment of a proper foundation concerning authenticity,
unless the parties agree otherwise. 

	

B-5 

	 	        f.
Unless the parties agree otherwise,  the parties shall simultaneously file initial briefs
within fourteen (14) days  following the close of the hearing and reply briefs seven (7)
days  thereafter.  The hearing shall be deemed closed as of the final date set for the
receipt of briefs. 

	

        8.
The Award.  

	 	        a.
The Board shall render an award in writing  within thirty (30) days  following the
closing of the hearing and shall base its  decision  solely upon the  evidence  before
it,  applicable  law and this  Agreement.  Unless the parties  agree otherwise, the award
shall briefly state the reasoning on which it rests. 

	 	        b.
Duplicate  copies  of the award  shall be  signed by each  member of the Board and shall
be served on the parties by certified mail. 

	 	        c.
Fourteen (14) days following the mailing of the award to the parties, it shall become
final,  binding and enforceable in any court of competent jurisdiction. 

	

        9.
Communication with Arbitrators; Service.  

	 	        a.
All  communications  from the  parties to the Board shall be in writing  except in
unusual  circumstances requiring oral  communication  regarding  procedural or scheduling
 matters.  Any oral  communication to the Board shall be promptly confirmed in writing.
 Copies of all communications with the Board shall be served by overnight delivery to the
other party. 

	 	        b.
Any papers,  notices,  or process  necessary or proper for the  initiation or  completion
of  arbitration under the  Agreement  and this  Exhibit,  or for the entry or
 enforcement  of judgment  on an award,  may be served upon a party by personal service
or by mail addressed to it at the address designated in the Agreement. 

	

        10.
Fees and Expenses.  

        The
 parties  shall  share  equally  the cost of the  arbitration  proceedings,  including
 the fees  and  expenses  of the arbitrators including, without limitation, any
attorneys’ fees incurred by the Board and the cost of the stenographic record. 

        11.
Confidentiality, Protective Orders.  

        To
the  extent  reasonably  possible  under  the  applicable  circumstances,  all  aspects
 of  the  arbitration  shall  be confidential,  and the parties and arbitrators  shall
not disclose to others,  or permit  disclosure of, any information  related to the
proceedings, including but not limited to discovery, testimony and other evidence, briefs
and the award. 

B-6EXHIBIT 10.9
NOTICE OF TERMINATION OF CONSULTING AGREEMENT WITH FRANK PINIZZOTTO

FROM: Bill Forhan [mailto:bforhan@invictatravelgroup.com]
SENT: Saturday, March 08, 2003 5:48 PM
TO: Frank Pinizzotto (hittpr@aol.com)
CC: david Scott (dscott@invictatravelgroup.com); Jackson Morris
(jmorris8@tampabay.rr.com)
SUBJECT: Termination of Agreement

March 8, 2003

Regarding:  FRANK PINIZZOTTO MANAGEMENT CONSULTING AGREEMENT
            ------------------------------------------------

Dear Frank:

Invicta Group Inc. is canceling the Management Consulting Agreement entered into
January 8, 2003.

We regret this action, but the lack of communication and lack of performance has
resulted in termination.

Best of Luck,

William Forhan

Bill Forhan
CEO
Invicta Group Inc.
9553 Harding Ave. Suite 301
Miami Beach, Fl.33154
fax: 954 785 1508
cell: 954 684 8288

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