Document:

Form of Advisory Agreement

 EXHIBIT 10.2 
 Form of Advisory Agreement 

 ADVISORY AGREEMENT 
 THIS ADVISORY AGREEMENT, dated as of April     , 2008, is between CNL INCOME PROPERTIES, INC., a corporation organized under the laws of the State of Maryland (the “Company”) and
CNL INCOME Company, LLC (formerly CNL Income Corp.), a limited liability Compay organized under the laws of the State of Florida (the “Advisor”). 
 W I T N E S S E T H 
 WHEREAS, the Company has filed with the Securities and Exchange Commission a
Registration Statement (No. 333-              ) on Form S-11 covering 200,000,000 of its common shares, par value $0.01 per share (the “Shares”), to be offered to the
public, and the Company may subsequently issue securities other than such Shares (the “Securities”) or otherwise raise additional capital; 
 WHEREAS, the Company intends to qualify as a REIT (as defined below), and to invest its funds in investments permitted by the terms of the Registration Statement and Sections 856 through 860 of the Code (as later
defined); 
 WHEREAS, the Company desires to avail itself of the experience, sources of information, advice, assistance and certain
facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision, of the Board of Directors (as later defined) of the Company all as provided
herein; and 
 WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board of Directors, on
the terms and conditions hereinafter set forth; 
 NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements contained herein, the parties hereto agree as follows: 
 (1) Definitions. As used in this Advisory Agreement (the
“Agreement”), the following terms have the definitions hereinafter indicated: 
 Acquisition Expenses. Any and all expenses
incurred by the Company, the Advisor, or any Affiliate of either in connection with the selection, acquisition or making of any investment, including any Property, Loan or other Permitted Investments, whether or not acquired or made, including,
without limitation, legal fees and expenses, travel and communication expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, and title insurance. 
 Acquisition Fees. Any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person or entity to any other Person or entity
(including any fees or commissions paid by or to any Affiliate of the Company or the Advisor) in connection with making an investment, including making or investing in Loans or other Permitted Investments or the purchase, development or construction
of a Property, including, without limitation, real estate commissions, acquisition fees, finder’s fees, selection fees, development fees, construction fees, nonrecurring management fees, consulting fees, loan fees, points, or any other fees or
commissions of a similar nature. Excluded shall be development fees and construction fees paid to any Person or entity not Affiliated with the Advisor in connection with the actual development and construction of any Property. Further, Acquisition
Fees will not be paid in connection with temporary short-term investments acquired for purposes of cash management. 
 Advisor. The
Person or Persons, if any, appointed, employed or contracted with by the Company pursuant to Section 4.1 of the Company’s Articles of Incorporation and responsible for directing or performing the day-to-day business affairs of the Company,
including any Person to whom the Advisor subcontracts substantially all of such functions. 

 Affiliate or Affiliated (or any derivation thereof). An affiliate of another Person, which is
defined as: (i) any Person directly or indirectly owning, controlling, or holding, with power to vote 10% or more of the outstanding voting securities of such other Person; (ii) any Person 10% or more of whose outstanding voting securities
are directly or indirectly owned, controlled or held, with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (iv) any executive officer,
director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner. 
 Articles of Incorporation. The Articles of Incorporation of the Company, as amended from time to time. 
 Asset Management Fee. The fee payable to the Advisor for day-to-day professional management services in connection with the Company and its
investments in Properties, Loans and other Permitted Investments pursuant to this Agreement. 
 Assets. Properties, Loans and other
Permitted Investments, collectively. 
 Average Invested Assets. For a specified period, the average of the aggregate book value of
the assets of the Company invested, directly or indirectly, in equity interests in, and Loans secured by, Real Estate, or in other Permitted Investments, before reserves for depreciation or bad debts or other similar non-cash reserves, computed by
taking the average of such values at the end of each month during such period. 
 Board of Directors or Board. The Directors of the
Company. 
 Bylaws. The bylaws of the Company, as the same are in effect and may be amended from time to time. 
 Cause. With respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct or willful or negligent breach of fiduciary
duty by the Advisor, breach of this Agreement, a default by the Sponsor under the guarantee by the Sponsor to the Company or the bankruptcy of the Sponsor. 
 Change of Control. A change of control of the Company of such a nature that would be required to be reported in response to the disclosure requirements of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended, as enacted and in force on the date hereof (the “Exchange Act”), whether or not the Company is then subject to such reporting requirements; provided, however, that, without limitation, a change
of control shall be deemed to have occurred if: (i) any “person” (within the meaning of Section 13(d) of the Exchange Act) is or becomes the “beneficial owner” (as that term is defined in Rule 13d-3, as enacted and in
force on the date hereof, under the Exchange Act) of securities of the Company representing 8.5% or more of the combined voting power of the Company’s securities then outstanding; (ii) there occurs a merger, consolidation or other
reorganization of the Company which is not approved by the Board of Directors of the Company; (iii) there occurs a sale, exchange, transfer or other disposition of substantially all of the assets of the Company to another entity, which
disposition is not approved by the Board of Directors of the Company; or (iv) there occurs a contested proxy solicitation of the Stockholders of the Company that results in the contesting party electing candidates to a majority of the Board of
Directors’ positions next up for election. 
 Competitive Real Estate Commission. A real estate or brokerage commission for the
purchase or sale of property which is reasonable, customary, and competitive in light of the size, type, and location of the property. The total of all real estate commissions paid by the Company to all Persons (including the subordinated
disposition fee payable to the Advisor) in connection with any Sale of one or more of the Company’s Properties shall not exceed the lesser of (i) a Competitive Real Estate Commission or (ii) 6% of the gross sales price of the Property
or Properties. 
  

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 Directors. (collectively) The individuals named in Section 2.4 of the Articles of Incorporation so
long as they continue in office and all other individuals who have been duly elected and qualify as Directors of the Company hereunder. 
 Distributions. Any distribution of money or other property, pursuant to Section 7.2(iv) of the Articles of Incorporation, by the Company to owners of Equity Shares, including distributions that may constitute a return of capital
for federal income tax purposes. 
 Equity Shares. Shares of capital stock of the Company of any class or series (other than Excess
Shares). The use of the term “Equity Shares” or any term defined by reference to the term “Equity Shares” shall refer to the particular class or series of capital stock of the Company which is appropriate under the context.

 Gross Proceeds. The aggregate purchase price of all Equity Shares sold for the account of the Company, without deduction for
Selling Commissions, volume discounts, the marketing support fee, due diligence expense reimbursements or Organizational and Offering Expenses. For the purpose of computing Gross Proceeds, the purchase price of any Equity Share for which reduced or
no Selling Commissions or marketing support fees are paid to the Managing Dealer or a Soliciting Dealer (where net proceeds to the Company are not reduced) shall be deemed to be the full offering price of the Equity Shares, with the exception of
Equity Shares purchased pursuant to the reinvestment plan, which will be factored into the calculation using their actual purchase price. 
 Independent Director. A Director who is not, and within the last two years has not been, directly or indirectly associated with the Advisor by virtue of (i) ownership of an interest in the Advisor or its Affiliates,
(ii) employment by the Advisor or its Affiliates, (iii) service as an officer or director of the Advisor or its Affiliates, (iv) performance of services, other than as a Director, for the Company, (v) service as a director or
trustee of more than three real estate investment trusts advised by the Advisor, or (vi) maintenance of a material business or professional relationship with the Advisor or any of its Affiliates. An indirect relationship shall include
circumstances in which a Director’s spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-law is or has been associated with the Advisor, any of its Affiliates or the Company. A
business or professional relationship is considered material if the gross revenue derived by the Director from the Advisor and Affiliates exceeds five percent of either the Director’s annual gross revenue during either of the last two years or
the Director’s net worth on a fair market value basis. 
 Independent Expert. A Person or entity with no material current or
prior business or personal relationship with the Advisor or the Directors and who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company. 
 Invested Capital. The amount calculated by multiplying the total number of Equity Shares issued and outstanding by the offering price per share,
without deduction for Selling Commissions, volume discounts, the marketing support fee, due diligence expense reimbursements or Organizational and Offering Expenses (which price per Equity Share, in the case of Equity Shares purchased pursuant to
the reinvestment plan, shall be deemed to be the actual purchase price), reduced by the portion of any Distribution that is attributable to Net Sales Proceeds. 
 Joint Ventures. Those joint venture or general partnership arrangements in which the Company is a co-venturer or general partner which are established to acquire Properties and/or make Loans or other Permitted
Investments. 
 Line of Credit. One or more lines of credit initially in an aggregate amount up to $100 million (or such greater
amount as shall be approved by the Board of Directors), the proceeds of which will be used to acquire Properties and make Loans and other Permitted Investments and for any other authorized purpose. The Line of Credit may be in addition to any
Permanent Financing. 
  

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 Listing. The listing of the Common Shares of the Company on a national securities exchange or
quoted on the National Market System of the Nasdaq Stock Market. 
 Loans. Mortgage Loans and other types of debt financing provided
by the Company. 
 Managing Dealer. CNL Securities Corp., an Affiliate of the Advisor, or such other Person or entity selected by the
Board of Directors to act as the managing dealer for the offering. CNL Securities Corp. is a member of the Financial Industry Regulatory Authority, Inc. (formerly known as the National Association of Securities Dealers, Inc. and the NASD)
(“FINRA”). 
 Net Income. For any period, the total revenues applicable to such period, less the total expenses applicable
to such period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, Net Income for purposes of calculating total allowable Operating Expenses (as defined herein) shall exclude the gain
from the sale of the Company’s assets. 
 Net Sales Proceeds. In the case of a transaction described in clause (i) of the
definition of Sale, the proceeds of any such transaction less the amount of all real estate commissions and closing costs paid by the Company. In the case of a transaction described in clause (ii) of such definition, Net Sales Proceeds means
the proceeds of any such transaction less the amount of any legal and other selling expenses incurred in connection with such transaction. In the case of a transaction described in clause (iii) of such definition, Net Sales Proceeds means the
proceeds of any such transaction actually distributed to the Company from the Joint Venture. In the case of a transaction or series of transactions described in clause (iv) of the definition of Sale, Net Sales Proceeds means the proceeds of any
such transaction less the amount of all commissions and closing costs paid by the Company. In the case of a transaction described in clause (ii) of the definition of Sale, Net Sales Proceeds means the proceeds of such transaction or series of
transactions less all amounts generated thereby and reinvested in one or more Properties within 180 days thereafter and less the amount of any real estate commissions, closing costs, and legal and other selling expenses incurred by or allocated to
the Company in connection with such transaction or series of transactions. Net Sales Proceeds shall also include, in the case of any lease of a Property consisting of a building only or any Loan or other Permitted Investments, any amounts from
tenants, borrowers or lessees that the Company determines, in its discretion, to be economically equivalent to the proceeds of a Sale. Net Sales Proceeds shall not include, as determined by the Company in its sole discretion, any amounts reinvested
in one or more Properties, Loans or other Permitted Investments, to repay outstanding indebtedness, or to establish reserves. 
 Operating
Expenses. All costs and expenses incurred by the Company, as determined under generally accepted accounting principles, which in any way are related to the operation of the Company or to Company business, including (i) advisory fees,
(ii) the Asset Management Fee, (iii) the Performance Fee, and (iv) the Subordinated Incentive Fee, but excluding (a) the expenses of raising capital such as Organizational and Offering Expenses, legal, audit, accounting,
underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing; (b) interest payments; (c) taxes;
(d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) the Advisor’s subordinated ten percent share of Net Sales Proceeds; and (f) Acquisition Fees and Acquisition Expenses, real estate or other
commissions on the Sale of Assets, and other expenses connected with the acquisition and ownership of Real Estate interests, Loans, or other Permitted Investments (such as the costs of foreclosure, insurance premiums, legal services, maintenance,
repair, and improvement of Property). 
 Organizational and Offering Expenses. Any and all costs and expenses, other than Selling
Commissions, the marketing support fee and due diligence expense reimbursements incurred by the Company, the Advisor or any Affiliate of either in connection with the formation, qualification and registration of the Company and the marketing and
distribution of Equity Shares, including, without limitation, the following: legal, accounting and escrow fees; printing, amending, supplementing, mailing and distributing costs; filing, registration and qualification fees and taxes; telegraph and
telephone costs; and all advertising and marketing expenses, including the costs related to investor and broker-dealer sales meetings. The Organizational and Offering Expenses paid by the Company in connection with each public offering of Equity
Shares of the Company, together with all Selling Commissions, the marketing support fee and due diligence reimbursements incurred by the Company, will not exceed 13% of the proceeds raised in connection with such offering 
  

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 Performance Fee. The fee payable to the Advisor under certain circumstances if certain performance
standards have been met and the Subordinated Incentive Fee has not been paid. 
 Permanent Financing. The financing to
(i) acquire Properties and to make Loans or other Permitted Investments; (ii) pay off any Acquisition Fees arising from any Permanent Financing; and (iii) refinance outstanding amounts on the Line of Credit. Permanent financing may be
in addition to any borrowing under the Line of Credit. 
 Permitted Investments. All investments that the Company may acquire pursuant
to its Articles of Incorporation and bylaws, other than the short-term investments acquired for purposes of cash management. 
 Person. An individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government or any agency or political subdivision thereof, and
also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, but does not include (i) an underwriter that participates in a public offering of Equity Shares for a period of
sixty days following the initial purchase by such underwriter of such Equity Shares in such public offering, or (ii) CNL Income Corp., during the period ending December 31, 2004, provided that the foregoing exclusions shall apply only if
the ownership of such Equity Shares by an underwriter or CNL Income Corp. would not cause the Company to fail to qualify as a REIT by reason of being “closely held” within the meaning of Section 856(a) of the Code or otherwise cause
the Company to fail to qualify as a REIT. 
 Property or Properties. Interests in (i) the real properties, including the
buildings and equipment located thereon, (ii) the real properties only, or (iii) the buildings only, including equipment located therein; where, in each such enumerated instance, such interest is acquired by the Company, either directly or
indirectly through joint ventures, partnerships, or other legal entities. 
 Prospectus. As defined in Section 2(10) of the
Securities Act of 1933, including a preliminary prospectus, an offering circular as described in Rule 253 of the General Rules and Regulations under the Securities Act of 1933, as amended, or, in the case of an intrastate offering, any document by
whatever name known, utilized for the purpose of offering and selling securities to the public. 
 Real Estate Asset Value or
Contract Purchase Price means the amount actually paid or allocated to the purchase, development, construction or improvement of a Property, exclusive of Acquisition Fees and Acquisition Expenses. 
 REIT. A “real estate investment trust” as defined pursuant to Sections 856 through 860 of the Code. 
 Sale or Sales. (i) Any transaction or series of transactions whereby: (A) the Company sells, grants, transfers, conveys or relinquishes
its ownership of any Property or portion thereof, including the lease of any Property, Loan or other Permitted Investment consisting of the building only, and including any event with respect to any Property which gives rise to a significant amount
of insurance proceeds or condemnation awards; (B) the Company sells, grants, transfers, conveys or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture in which it is a co-venturer or
partner; (C) any Joint Venture in which the Company as a co-venturer or partner sells, grants, transfers, conveys or relinquishes its ownership of any Property, Loan or other Permitted Investment or portion thereof, including any event with
respect to any Property, Loan or other Permitted Investment which gives rise to insurance claims or condemnation awards; or (D) the Company sells, grants, conveys or relinquishes its interest in any Loan or other Permitted Investment, or
portion thereof, including any event with respect to any Loan or other Permitted 
  

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 Investment, which gives rise to a significant amount of insurance proceeds or similar awards, but (ii) shall not
include any transaction or series of transactions specified in clause (i)(A), (i)(B), or (i)(C) above in which the proceeds of such transaction or series of transactions are reinvested in one or more Properties, Loans or other Permitted Investments
within 180 days thereafter. 
 Securities. Any Equity Shares, Excess Shares, as such terms are defined in the Company’s Articles
of Incorporation, any other stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to
subscribe to, purchase or acquire, any of the foregoing. 
 Soliciting Dealers. Broker-dealers that are members of the National
Association of Securities Dealers, Inc., or that are exempt from broker-dealer registration, and that, in either case, enter into participating broker or other agreements with the Managing Dealer to sell Equity Shares. 
 Sponsor. Any Person directly or indirectly instrumental in organizing, wholly or in part, the Company or any Person who will control, manage or
participate in the management of the Company, and any Affiliate of such Person. Not included is any Person whose only relationship with the Company is that of an independent property manager of the Company’s Properties, Loans or other Permitted
Investments, and whose only compensation is as such. Sponsor does not include independent third parties such as attorneys, accountants, and underwriters whose only compensation is for professional services. A Person may also be deemed a Sponsor of
the Company by: 
  

	 	a.	taking the initiative, directly or indirectly, in founding or organizing the business or enterprise of the Company, either alone or in conjunction with one or more other Persons;

  

	 	b.	receiving a material participation in the Company in connection with the founding or organizing of the business of the Company, in consideration of services or property, or both
services and property; 

  

	 	c.	having a substantial number of relationships and contacts with the Company; 

  

	 	d.	possessing significant rights to control the Company’s Properties; 

  

	 	e.	receiving fees for providing services to the Company which are paid on a basis that is not customary in the industry; or 

  

	 	f.	providing goods or services to the Company on a basis which was not negotiated at arms length with the Company. 

 Stockholders. The registered holders of the Company’s Equity Shares. 
 Stockholders’ 8% Return. As of each date, an aggregate amount equal to an 8% cumulative, noncompounded, annual return on Invested Capital.

 Subordinated Disposition Fee. The Subordinated Disposition Fee as defined in Paragraph 9(c). 
 Subordinated Incentive Fee. The fee payable to the Advisor under certain circumstances if the Common Shares are Listed. 
 Termination Date. The date of termination of this Agreement. 
  

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 Total Proceeds. The Gross Proceeds plus Loan proceeds from Permanent Financings and the Line of
Credit that are used to make or acquire Properties, Loans and other Permitted Investments. 
 Total Property Cost. With regard to any
Company Property, an amount equal to the sum of the Real Estate Asset Value of such Property plus the Acquisition Fees paid in connection with such Property. 
 2%/25% Guidelines. The requirement pursuant to the guidelines of the North American Securities Administrators Association, Inc. that, in any 12 month period, total Operating Expenses may not exceed the greater
of 2% of the Company’s Average Invested Assets during such 12 month period or 25% of the Company’s Net Income over the same 12 month period. 
 Valuation. An estimate of value of the Assets of the Company as determined by an Independent Expert. 
 (2) Appointment. The Company hereby appoints the Advisor to serve as its advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment. 
 (3) Duties of the Advisor. The Advisor undertakes to use its best efforts to present to the Company potential investment opportunities and to
provide a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Directors. In performance of this undertaking, subject to the supervision
of the Directors and consistent with the provisions of the registration statement, Articles of Incorporation and Bylaws of the Company, the Advisor shall, either directly or by engaging an Affiliate: 
  

	 	(a)	serve as the Company’s investment and financial advisor and provide research and economic and statistical data in connection with the Company’s assets and investment
policies; 

  

	 	(b)	provide the daily management of the Company and perform and supervise the various administrative functions reasonably necessary for the management of the Company;

  

	 	(c)	investigate, select, and, on behalf of the Company, engage and conduct business with such Persons as the Advisor deems necessary to the proper performance of its obligations
hereunder, including but not limited to consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers,
insurance agents, banks, builders, developers, property owners, mortgagors, and any and all agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable
for the performance of any of the services herein, including but not limited to entering into contracts in the name of the Company with any of the foregoing; 

  

	 	(d)	consult with the officers and Directors of the Company and assist the Directors in the formulation and implementation of the Company’s financial policies, and, as necessary,
furnish the Directors with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the Company;

  

	 	(e)	subject to the provisions of Paragraphs 3(g) and 4 hereof, (i) locate, analyze and select potential investments in Properties and Loans and other Permitted Investments,
(ii) structure and negotiate the terms and conditions of transactions pursuant to which investment in Properties and Loans and other Permitted Investments; (iii) make investments in Properties and Loans and other Permitted Investments in
compliance with the investment objectives 

  

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 and policies of the Company; (iv) arrange for financing and refinancing and make other changes in
the asset or capital structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with the investments in, Properties, Loans and other Permitted Investments; and (v) enter into leases and service contracts for Company
Property and, to the extent necessary, perform all other operational functions for the maintenance and administration of such Company Property; 
  

	 	(f)	provide the Directors with periodic reports regarding prospective investments in Properties, Loans and other Permitted Investments; 

  

	 	(g)	obtain the prior approval of the Directors (including a majority of all Independent Directors) for any and all investments in Properties, Loans and other Permitted Investments;

  

	 	(h)	negotiate on behalf of the Company with banks or lenders for loans to be made to the Company and negotiate on behalf of the Company with investment banking firms and broker-dealers
or negotiate private sales of Shares and Securities or obtain loans for the Company, but in no event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and provided, further, that any fees and costs payable to third
parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company; 

  

	 	(i)	obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of investments or contemplated investments of the Company;

  

	 	(j)	from time to time, or at any time reasonably requested by the Directors, make reports to the Directors of its performance of services to the Company under this Agreement;

  

	 	(k)	provide the Company with all necessary cash management services; 

  

	 	(l)	do all things necessary to assure its ability to render the services described in this Agreement; 

  

	 	(m)	deliver to or maintain on behalf of the Company copies of all appraisals obtained in connection with the investments in Properties, Loans and other Permitted Investments; and

  

	 	(n)	notify the Board of all proposed material transactions before they are completed. 

 (4) Authority of Advisor. 
 (a) Pursuant to the terms of this Agreement (including the restrictions
included in this Paragraph 4 and in Paragraph 7), and subject to the continuing and exclusive authority of the Directors over the management of the Company, the Directors hereby delegate to the Advisor the authority to (1) locate, analyze and
select investment opportunities, (2) structure the terms and conditions of transactions pursuant to which investments will be made or acquired for the Company, (3) acquire Properties, make Loans and other Permitted Investments in
compliance with the investment objectives and policies of the Company, (4) arrange for financing or refinancing with respect to Properties, Loans and other Permitted Investments, (5) enter into leases and service contracts for the
Company’s Property, and perform other property management services, (6) oversee non-affiliated property managers and other non-affiliated Persons who perform services for the Company; and (7) undertake accounting and other
record-keeping functions at the Property level. 
 (b) Notwithstanding the foregoing, any investment in Properties or Loans or other
Permitted Investments, including any acquisition of Property by the Company (as well as any financing acquired by the Company in connection with such acquisition), will require the prior approval of the Directors (including a majority of the
Independent Directors). 
  

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 (c) If a transaction requires approval by the Independent Directors, the Advisor will deliver to the
Independent Directors all documents required by them to properly evaluate the proposed investment in the Property, Loan or other Permitted Investments. 
 The prior approval of a majority of the Independent Directors and a majority of the Directors not otherwise interested in the transaction will be required for each transaction with the Advisor or its Affiliates.

 The Directors may, at any time upon the giving of notice to the Advisor, modify or revoke the authority set forth in this Paragraph 4. If
and to the extent the Directors so modify or revoke the authority contained herein, the Advisor shall henceforth submit to the Directors for prior approval such proposed transactions involving investments thereafter require prior approval, provided,
however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the date of receipt by the Advisor of such
notification. 
 (5) Bank Accounts. The Advisor may establish and maintain one or more bank accounts in its own name for the account
of the Company or in the name of the Company and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company, under such terms and conditions as the Directors may
approve, provided that no funds shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Directors and to the auditors of the Company.

 (6) Records; Access. The Advisor shall maintain appropriate records of all its activities hereunder and make such records available
for inspection by the Directors and by counsel, auditors and authorized agents of the Company, at any time or from time to time during normal business hours. The Advisor shall at all reasonable times have access to the books and records of the
Company. 
 (7) Limitations on Activities. Anything else in this Agreement to the contrary notwithstanding, the Advisor shall refrain
from taking any action which, in its sole judgment made in good faith, would (a) adversely affect the status of the Company as a REIT, (b) subject the Company to regulation under the Investment Company Act of 1940, or (c) violate any
law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, its Equity Shares or its Securities, or otherwise not be permitted by the Articles of Incorporation or Bylaws of the Company,
except if such action shall be ordered by the Directors, in which case the Advisor shall notify promptly the Directors of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives
further clarification or instructions from the Directors. In such event the Advisor shall have no liability for acting in accordance with the specific instructions of the Directors so given. Notwithstanding the foregoing, the Advisor, its directors,
officers, employees and stockholders, and stockholders, directors and officers of the Advisor’s Affiliates shall not be liable to the Company or to the Directors or Stockholders for any act or omission by the Advisor, its directors, officers or
employees, or stockholders, directors or officers of the Advisor’s Affiliates except as provided in Paragraphs 19 and 20 of this Agreement. 
 (8) Relationship with Directors. Directors, officers and employees of the Advisor or an Affiliate of the Advisor or any corporate parents of an Affiliate, or directors, officers or stockholders of any director, officer or corporate
parent of an Affiliate may serve as a Director and as officers of the Company, except that no director, officer or employee of the Advisor or its Affiliates who also is a Director or officer of the Company shall receive any compensation from the
Company for serving as a Director or officer of the Company other than reasonable reimbursement for travel and related expenses incurred in attending meetings of the Directors of the Company. 
  

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 (9) Fees. 
 (a) Asset Management Fee. The Company shall pay to the Advisor as compensation for the advisory services rendered to the Company under Paragraph 3 above a monthly fee in an amount equal to 0.08334% of the
Company’s Real Estate Asset Value and the outstanding principal amount of the Loans and other Permitted Investments (the “Asset Management Fee”), as of the end of the preceding month. Specifically, Real Estate Asset Value equals the
amount invested in the Properties wholly owned by the Company, determined on the basis of cost, plus, in the case of Properties owned by any Joint Venture or partnership in which the Company is a co-venturer or partner, the portion of the cost of
such Properties paid by the Company, exclusive of Acquisition Fees and Acquisition Expenses. The Asset Management Fee shall be payable monthly on the last day of such month, or the first business day following the last day of such month. The Asset
Management Fee, which will not exceed fees which are competitive for similar services in the same geographic area, may or may not be taken, in whole or in part as to any year, in the sole discretion of the Advisor. All or any portion of the Asset
Management Fee not taken as to any fiscal year shall be deferred without interest and may be taken in such other fiscal year as the Advisor shall determine. 
 (b) Acquisition Fees. 
 (i) The Company shall pay the Advisor a fee in the amount of 3.0% of Total
Proceeds as Acquisition Fees. Acquisition Fees shall be reduced to the extent that, and, if necessary to limit, the total compensation paid to all persons involved in the acquisition of any Property to the amount customarily charged in
arm’s-length transactions by other persons or entities rendering similar services as an ongoing public activity in the same geographic location and for comparable types of Properties and to the extent that other acquisition fees, finder’s
fees, real estate commissions, or other similar fees or commissions are paid by any person in connection with the transaction. In addition, Acquisition Fees shall be reduced to 1.0% of Gross Proceeds in connection with sales in excess of 500,000
shares to a “purchaser” (as such term is defined in the section of the Prospectus titled “The Offering — Plan of Distribution”), provided all such shares are purchased through the same registered investment adviser,
Soliciting Dealer, or the Managing Dealer. The total of all Acquisition Fees and any Acquisition Expenses shall be limited in accordance with the Articles of Incorporation. 
 (ii) Advisory Fee. To the extent the Acquisition Fee is reduced in the manner described in subparagraph (9)(b)(i) above, for investments by
a stockholder in excess of 500,000 Shares, such stockholder and any person it transfers shares to will be required to pay an annual 0.40% Advisory Fee on its Shares to the Advisor or its Affiliates. Payment of this fee will be withheld from
Distributions otherwise payable to such stockholder. Upon Listing, the Advisory Fee will no longer be payable to the Advisor or its Affiliates. Other than the Company’s obligation to withhold Distributions if and when such Distributions are
declared and made, and its obligation to forward such withheld amounts to the Advisor, the Company shall have no further obligations with respect to this fee. Further, nothing contained herein shall be construed to imply that the Company is liable
for any portion of the Advisory Fee. 
 (c) Subordinated Disposition Fee. If the Advisor or an Affiliate provides a substantial amount
of the services (as determined by a majority of the Independent Directors) in connection with the Sale of one or more Assets, the Advisor or an Affiliate shall receive a Subordinated Disposition Fee equal to the lesser of (i) one-half of a
Competitive Real Estate Commission or (ii) 3% of the sales price of such Property or Properties (or comparable competitive Fee in the case of a Loan or other Permitted Investment). The Subordinated Disposition Fee will be paid only if
Stockholders have received total Distributions in an amount equal to or greater than the sum of their aggregate Invested Capital and their aggregate Stockholders’ 8% Return. To the extent that Subordinated Disposition Fees are not paid by the
Company on a current basis due to the foregoing limitation, the unpaid fees will be accrued and paid at such time as the subordination conditions have been satisfied. The Subordinated Disposition Fee may be paid in addition to real estate
commissions paid to non-Affiliates, provided that the total real estate commissions paid to all Persons by the Company (including the Subordinated Disposition fee) shall not exceed an amount equal to the lesser of (i) 6% of the Contract Sales
Price of a Property or (ii) the Competitive Real Estate Commission. In the event this Agreement is terminated prior to such time as the Stockholders have received total Distributions in an amount equal to 100% of 
  

 -10- 

 Invested Capital plus an amount sufficient to pay the Stockholders’ 8% Return through the Termination Date, an
appraisal of the Properties then owned by the Company shall be made and the Subordinated Disposition Fee on Properties previously sold will be deemed earned if the appraised value of the Properties then owned by the Company plus total Distributions
received prior to the Termination Date equals or is greater than 100% of Invested Capital plus an amount sufficient to pay the Stockholders’ 8% Return through the Termination Date. Upon Listing, if the Advisor has accrued but not been paid such
Subordinated Disposition Fee, then for purposes of determining whether the subordination conditions have been satisfied, Stockholders will be deemed to have received a Distribution in the amount equal to the product of the total number of Shares
outstanding and the average closing price of the Shares over a period, beginning 180 days after Listing, of 30 days during which the Shares are traded. 
 (d) Subordinated Share of Net Sales Proceeds. The Subordinated Share of Net Sales Proceeds shall be payable to the Advisor in an amount equal to 10% of Net Sales Proceeds from Sales of Assets of the Company
payable after the Stockholders have received Distributions equal to or greater than the sum of the Stockholders’ 8% Return and 100% of Invested Capital. Following Listing, no Subordinated Share of Net Sales Proceeds will be paid to the Advisor.

 (e) Subordinated Incentive Fee. Upon Listing, the Advisor shall be paid the Subordinated Incentive Fee in an amount equal to 10% of
the amount by which (ii) the market value of the Company, measured by taking the average closing price or average of bid and asked price, as the case may be, over a period of 30 days during which the Shares are traded, with such period
beginning 180 days after Listing (the “Market Value”), plus the total Distributions paid to Stockholders from the Company’s inception until the date of Listing, exceeds (ii) the sum of (A) 100% of Invested Capital and
(B) the total Distributions required to be paid to the Stockholders in order to pay the Stockholders’ 8% Return from inception through the date the Market Value is determined. The Company shall have the option to pay such fee in the form
of cash, Securities, a promissory note or any combination of the foregoing. The Subordinated Incentive Fee will be reduced by the amount of any prior payment to the Advisor of a deferred, subordinated share of Net Sales Proceeds from Sales of Assets
of the Company. 
 (f) Loans from Affiliates. If any loans are made to the Company by an Affiliate of the Advisor, the maximum amount
of interest that may be charged by such Affiliate shall be the lesser of (i) 1% above the prime rate of interest charged from time to time by The Bank of New York and (ii) the rate that would be charged to the Company by unrelated lending
institutions on comparable loans for the same purpose. The terms of any such loans shall be no less favorable than the terms available between non-Affiliated Persons for similar commercial loans. 
 (g) Changes to Fee Structure. In the event of Listing, the Company and the Advisor shall negotiate in good faith to establish a fee structure
appropriate for a perpetual-life entity. A majority of the Independent Directors must approve the new fee structure negotiated with the Advisor. In negotiating a new fee structure, the Independent Directors shall consider all of the factors they
deem relevant, including, but not limited to: (i) the amount of the advisory fee in relation to the asset value, composition and profitability of the Company’s portfolio; (ii) the success of the Advisor in generating opportunities
that meet the investment objectives of the Company; (iii) the rates charged to other REITs and to investors other than REITs by advisors performing the same or similar services; (iv) additional revenues realized by the Advisor and its
Affiliates through their relationship with the Company, including loan administration, underwriting or broker commissions, servicing, engineering, inspection and other fees, whether paid by the Company or by others with whom the Company does
business; (v) the quality and extent of service and advice furnished by the Advisor; (vi) the performance of the investment portfolio of the Company, including income, conversion or appreciation of capital, and number and frequency of
problem investments; and (vii) the quality of the Property, Loan and other Permitted Investment portfolio of the Company in relationship to the investments generated by the Advisor for its own account. The new fee structure can be no more
favorable to the Advisor than the current fee structure. 
  

 -11- 

 (10) Expenses. 
 (a) In addition to the compensation paid to the Advisor pursuant to Paragraph 9 hereof, the Company shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor in connection
with the services it provides to the Company pursuant to this Agreement, including, but not limited to: 
 (i) the Company’s
Organizational and Offering Expenses; 
 (ii) Acquisition Expenses incurred in connection with the selection and acquisition of Properties
or the making of Loans or other Permitted Investments for goods and services provided by the Advisor at the lesser of the actual cost or 90% of the competitive rate charged by unaffiliated persons providing similar goods and services in the same
geographic location; 
 (iii) the actual cost of goods and materials used by the Company and obtained from entities not affiliated with the
Advisor, other than Acquisition Expenses, including brokerage fees paid in connection with the purchase and sale of securities; 
 (iv)
interest and other costs for borrowed money, including discounts, points and other similar fees; 
 (v) taxes and assessments on income or
Property and taxes as an expense of doing business; 
 (vi) costs associated with insurance required in connection with the business of the
Company or by the Directors; 
 (vii) expenses of managing and operating Properties owned by the Company, whether payable to an Affiliate of
the Company or a non-affiliated Person; 
 (viii) all expenses in connection with payments to the Directors and meetings of the Directors
and Stockholders; 
 (ix) expenses associated with Listing or with the issuance and distribution of Shares and Securities, such as selling
commissions and fees, advertising expenses, taxes, legal and accounting fees, and Listing and registration fees; 
 (x) expenses connected
with payments of Distributions in cash or otherwise made or caused to be made by the Directors to the Stockholders; 
 (xi) expenses of
organizing, revising, amending, converting, modifying, or terminating the Company or the Articles of Incorporation; 
 (xii) expenses of
maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities; 
 (xiii) expenses related to negotiating and servicing Loans and other Permitted Investments; 
 (xiv) administrative service expenses (including personnel costs; provided, however, that no reimbursement shall be made for costs of personnel to the
extent that such personnel perform services in transactions for which the Advisor receives a separate fee at the lesser of actual cost or 90% of the competitive rate charged by unaffiliated persons providing similar goods and services in the same
geographic location); and 
  

 -12- 

 (xv) audit, accounting and legal fees. 
 (b) Expenses incurred by the Advisor on behalf of the Company and payable pursuant to this Paragraph 10 shall be reimbursed no less than monthly to the
Advisor. The Advisor shall prepare a statement documenting the expenses of the Company during each quarter, and shall deliver such statement to the Company within 45 days after the end of each quarter. 
 (11) Other Services. Should the Directors request that the Advisor or any director, officer or employee thereof render services for the Company
other than set forth in Paragraph 3, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Independent Directors of the Company, subject to the limitations contained in the Articles of
Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement. 
 (12) Reimbursement to the Advisor.
The Company shall not reimburse the Advisor at the end of any fiscal quarter for Operating Expenses that, in the four consecutive fiscal quarters then ended (the “Expense Year”) exceed the greater of 2% of Average Invested Assets or 25% of
Net Income (the “2%/25% Guidelines”) for such year. Within 60 days after the end of any fiscal quarter of the Company for which total Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor shall reimburse the
Company the amount by which the total Operating Expenses paid or incurred by the Company exceed the 2%/25% Guidelines. The Company will not reimburse the Advisor or its Affiliates for services for which the Advisor or its Affiliates are entitled to
compensation in the form of a separate fee. All figures used in the foregoing computation shall be determined in accordance with generally accepted accounting principles applied on a consistent basis. 
 (13) Other Activities of the Advisor. Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without
limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of any director,
officer, employee, or stockholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association. The Advisor may, with respect to any
investment in which the Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall report to the Directors the existence of any condition or circumstance, existing or anticipated, of which
it has knowledge, which creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other partnership, corporation, firm, individual, trust or association. The
Advisor or its Affiliates shall promptly disclose to the Directors knowledge of such condition or circumstance. If the Sponsor, Advisor, a Director or Affiliates thereof have sponsored other investment programs with similar investment objectives
which have investment funds available at the same time as the Company, it shall be the duty of the Directors (including the Independent Directors) to adopt the method set forth in the Registration Statement or another reasonable method by which
properties are to be allocated to the competing investment entities and to use their best efforts to apply such method fairly to the Company. 
 The Advisor shall be required to use its best efforts to present a continuing and suitable investment program to the Company which is consistent with the investment policies and objectives of the Company, but neither the Advisor nor any
Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Company even if the opportunity is of character which, if presented to the Company, could be taken by the Company. 
 In the event that the Advisor or its Affiliates is presented with a potential investment which might be made by the Company and by another investment
entity which the Advisor or its Affiliates advises or manages, the Advisor and its Affiliates shall consider the investment portfolio of each entity, cash flow of each entity, the effect of the acquisition on the diversification of each
entity’s portfolio, rental payments during any renewal period, the estimated income tax effects of the purchase on each entity, the policies of each entity relating to leverage, the funds of each entity available for investment and the length
of time such funds have been available for investment. In the event that an investment 
  

 -13- 

 opportunity becomes available which is suitable for both the Company and a public or private entity which the Advisor or
its Affiliates are Affiliated, then the entity which has had the longest period of time elapse since it was offered an investment opportunity will first be offered the investment opportunity. For purposes of this conflict resolution procedure, an
investment opportunity will be considered “offered” to the Company when an opportunity is presented to the Board of Directors for its consideration. 
 (14) Relationship of Advisor and Company. The Company and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint
venturers or impose any liability as such on either of them. 
 (15) Term; Termination of Agreement. This Agreement shall continue in
force until             , 2009, subject to an unlimited number of successive one-year renewals upon mutual consent of the parties. It is the duty of the Directors to evaluate the
performance of the Advisor annually before renewing the Agreement, and each such agreement shall have a term of no more than one year. 
 (16) Termination by Either Party. This Agreement may be terminated upon 60 days written notice without Cause or penalty, by either party, or by the mutual consent of the parties (by a majority of the Independent Directors of the
Company or a majority of the Board of Directors of the Advisor, as the case may be). 
 (17) Assignment to an Affiliate. This
Agreement may be assigned by the Advisor to an Affiliate with the approval of a majority of the Directors (including a majority of the Independent Directors). The Advisor may assign any rights to receive fees or other payments under this Agreement
without obtaining the approval of the Directors. This Agreement shall not be assigned by the Company without the consent of the Advisor, except in the case of an assignment by the Company to a corporation or other organization which is a successor
to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company is bound by this Agreement. 
 (18) Subcontracts with Affiliates. The Advisor may subcontract with an Affiliate for a portion of the services and duties to be performed
under this Agreement without obtaining the approval of the Directors to the extent such services or duties are primarily administrative in nature. The Advisor may further subcontract any rights to receive fees or other payments for such services or
duties under this Agreement without obtaining the approval of the Directors. 
 (19) Payments to and Duties of Advisor Upon
Termination. Payments to the Advisor pursuant to this Paragraph (19) shall be subject to the 2%/25% Guidelines to the extent applicable. 
 (a) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company within 30 days after the effective date of such termination all unpaid
reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement, exclusive of disputed items arising out of possible unauthorized transactions. 
 (b) Upon termination, the Advisor shall be entitled to payment of the Performance Fee if performance standards satisfactory to a majority of the Board of
Directors, including a majority of the Independent Directors, when compared to (a) the performance of the Advisor in comparison with its performance for other entities, and (b) the performance of other advisors for similar entities, have
been met. If Listing has not occurred, the Performance Fee, if any, shall equal 10% of the amount, if any, by which (i) the appraised value of the assets of the Company on the Termination Date, less the amount of all indebtedness secured by
such assets, plus the total Distributions paid to stockholders from the Company’s inception through the Termination Date, exceeds (ii) Invested Capital plus an amount equal to the Stockholders’ 8% Return from inception through the
Termination Date. The Advisor shall be entitled to receive all accrued but unpaid compensation and expense reimbursements in cash within 30 days of the Termination Date. All other amounts payable to the Advisor in the event of a termination shall be
evidenced by a promissory note and shall be payable from time to time. 
  

 -14- 

 (c) The Performance Fee shall be paid in 12 equal quarterly installments without interest on the unpaid
balance, provided, however, that no payment will be made in any quarter in which such payment would jeopardize the Company’s REIT status, in which case any such payment or payments will be delayed until the next quarter in which payment would
not jeopardize REIT status. Notwithstanding the preceding sentence, any amounts which may be deemed payable at the date the obligation to pay the Performance Fee is incurred which relate to the appreciation of the Company’s assets shall be an
amount which provides compensation to the terminated Advisor only for that portion of the holding period for the respective assets during which the Advisor provided services to the Company. 
 (d) If Listing occurs, the Performance Fee, if any, payable thereafter will be as negotiated between the Company and the Advisor. The Advisor shall not
be entitled to payment of the Performance Fee in the event this Agreement is terminated because of failure of the Company and the Advisor to establish, pursuant to Paragraph 9(g) hereof, a fee structure appropriate for a perpetual-life entity at
such time, if any, as Listing occurs. The Performance Fee, to the extent payable at the time of Listing, will not be payable in the event the Subordinated Incentive Fee is paid. 
 (e) The Advisor shall promptly upon termination: 
 (i) pay over to the Company all money collected and held for the account of the Company pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled; 
 (ii) deliver to the Directors a full accounting, including a statement showing all payments collected by it and a statement of all money held by it,
covering the period following the date of the last accounting furnished to the Directors; 
 (iii) deliver to the Directors all assets,
including Properties, Loans, and other Permitted Investments, and documents of the Company then in the custody of the Advisor; and 
 (iv)
cooperate with the Company to provide an orderly management transition. 
 (20) Indemnification by the Company. The Company shall
indemnify and hold harmless the Advisor and its Affiliates, including their respective officers, directors, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related
expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, subject to any limitations imposed by the laws of the State of Maryland or the
Articles of Incorporation of the Company. Notwithstanding the foregoing, the Advisor shall not be entitled to indemnification or be held harmless pursuant to this Paragraph 20 for any activity for which the Advisor shall be required to indemnify or
hold harmless the Company pursuant to Paragraph 21. Any indemnification of the Advisor may be made only out of the net assets of the Company and not from Stockholders. 
 (21) Indemnification by Advisor. The Advisor shall indemnify and hold harmless the Company from contract or other liability, claims, damages, taxes or losses and related expenses including attorneys’ fees,
to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s bad faith, fraud, misconduct, or negligence, but the Advisor shall not be
held responsible for any action of the Board of Directors in following or declining to follow any advice or recommendation given by the Advisor. 
 (22) Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Articles

  

 -15- 

 of Incorporation, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand
or by overnight mail or other overnight delivery service to the addresses set forth herein: 
  

			
	To the Directors and to the Company:	  	 CNL Income Properties, Inc.
 CNL Center at City
Commons
 450 South Orange Avenue
 Orlando, Florida
32801
 Tammie Quinlan, Chief Financial Officer and Executive Vice President and Amy Sinelli, Senior Vice President, Corporate Counsel &
Secretary

		
	To the Advisor:	  	 CNL Income Company, LLC
 CNL Center at City
Commons
 450 South Orange Avenue
 Orlando, Florida
32801
 Tammie Quinlan, Chief Financial Officer and Executive Vice President and Amy Sinelli, Senior Vice President, Corporate Counsel &
Secretary

 Either party may at any time give notice in writing to the other party of a change in its address for the purposes
of this Paragraph 22. 
 (23) Modification. This Agreement shall not be changed, modified, terminated, or discharged, in whole or in
part, except by an instrument in writing signed by both parties hereto, or their respective successors or assignees. 
 (24)
Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may
be invalid or unenforceable in whole or in part. 
 (25) Construction. The provisions of this Agreement shall be interpreted,
construed and enforced in all respects in accordance with the laws of the State of Florida applicable to contracts to be made and performed entirely in said state. 
 (26) Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. 
 (27)
Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver. 
 (28) Gender. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. 
  

 -16- 

 (29) Titles Not to Affect Interpretation. The titles of paragraphs and subparagraphs contained in
this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof. 
 (30) Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the
signatories. 
 (31) Name. CNL Income Company, LLC. has a proprietary interest in the name “CNL.” Accordingly, and in
recognition of this right, if at any time the Company ceases to retain CNL Income Company, LLC or an Affiliate thereof to perform the services of Advisor, the Directors of the Company will, promptly after receipt of written request from CNL Income
Company, LLC cease to conduct business under or use the name “CNL” or any diminutive thereof and the Company shall use its best efforts to change the name of the Company to a name that does not contain the name “CNL” or any other
word or words that might, in the sole discretion of the Advisor, be susceptible of indication of some form of relationship between the Company and the Advisor or any Affiliate thereof. Consistent with the foregoing, it is specifically recognized
that the Advisor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate) and financial and service
organizations having “CNL” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company or its Directors. 
 (32) Initial Investment. The Advisor has contributed to the Company $200,000 in exchange for 20,000 Equity Shares (the “Initial
Investment”). The Advisor may not sell these Equity Shares while the Advisory Agreement is in effect, although the Advisor may transfer such Equity Shares to Affiliates. The restrictions included above shall not apply to any Equity Shares,
other than the Equity Shares acquired through the Initial Investment, acquired by the Advisor or its Affiliates. The Advisor shall not vote any Equity Shares it now owns, or hereafter acquires, in any vote for the removal of Directors or any vote
regarding the approval or termination of any contract with the Advisor or any of its Affiliates. 
 IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date and year first above written. 
  

			
	CNL INCOME PROPERTIES, INC.
		
	By:	 	  

	Name:	 	R. Byron Carlock, Jr.
	Its:	 	Chief Executive Officer
	
	CNL INCOME COMPANY, LLC.
		
	By:	 	  

	Name:	 	Tammie A. Quinlan
	Its:	 	Chief Financial Officer

  

 -17-Operating Agreement of KC Pheasant Associates, LLC

 Exhibit 10.1 
 OPERATING AGREEMENT 
 OF 
 KC PHEASANT ASSOCIATES, LLC 
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “FEDERAL ACT”), IN RELIANCE UPON ONE (1) OR MORE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE FEDERAL ACT. IN ADDITION, THE ISSUANCE OF THIS SECURITY
HAS NOT BEEN QUALIFIED UNDER THE DELAWARE SECURITIES ACT OR ANY OTHER STATE SECURITIES LAWS (COLLECTIVELY, THE “STATE ACTS”), IN RELIANCE UPON ONE (1) OR MORE EXEMPTIONS FROM THE REGISTRATION PROVISIONS OF THE STATE ACTS. IT IS
UNLAWFUL TO CONSUMMATE A SALE OR OTHER TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN TO, OR TO RECEIVE ANY CONSIDERATION THEREFOR FROM, ANY PERSON OR ENTITY WITHOUT THE OPINION OF COUNSEL FOR THE COMPANY THAT THE PROPOSED SALE OR OTHER TRANSFER
OF THIS SECURITY DOES NOT AFFECT THE AVAILABILITY TO THE COMPANY OF SUCH EXEMPTIONS FROM REGISTRATION AND QUALIFICATION, AND THAT SUCH PROPOSED SALE OR OTHER TRANSFER IS IN COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL SECURITIES LAWS. THE
TRANSFER OF THIS SECURITY IS FURTHER RESTRICTED UNDER THE TERMS OF THE OPERATING AGREEMENT GOVERNING THE COMPANY, A COPY OF WHICH IS ON FILE WITH THE OPERATING MEMBER OF THE COMPANY. 

 OPERATING AGREEMENT 
 OF 
 KC PHEASANT ASSOCIATES, LLC 
 TABLE OF CONTENTS 
  

							
	 	 	 	  	 	  	Page
	ARTICLE 1 FORMATION	  	1
				
		 	1.01	  	Formation	  	1
		 	1.02	  	Names and Addresses	  	1
		 	1.03	  	Nature of Business	  	2
		 	1.04	  	Term of the Company	  	2
		
	ARTICLE 2 MANAGEMENT OF THE COMPANY	  	2
				
		 	2.01	  	Management Committee	  	2
		 	2.02	  	Authority of the Management Committee	  	5
		 	2.03	  	Operating Member	  	9
		 	2.04	  	Annual Business Plan	  	10
		 	2.05	  	Operating Budget	  	10
		 	2.06	  	Removal of the Operating Member	  	11
		 	2.07	  	Liability and Indemnity	  	13
		 	2.08	  	Limited Liability	  	14
		 	2.09	  	Other Activities	  	14
		 	2.10	  	Brokers Indemnity	  	14
		 	2.11	  	Reimbursement; Compensation	  	15
		 	2.12	  	Property Management	  	15
		
	ARTICLE 3 MEMBERS’ CAPITAL CONTRIBUTIONS	  	16
				
		 	3.01	  	Initial Contributions of the Members	  	16
		 	3.02	  	Additional Contributions	  	16
		 	3.03	  	Remedy For Failure to Contribute Capital	  	17
		 	3.04	  	Debt Financing	  	20
		 	3.05	  	Loans from Members	  	21
		 	3.06	  	Capital Contributions in General	  	21
		
	ARTICLE 4 ALLOCATION OF PROFITS AND LOSSES	  	21
				
		 	4.01	  	Allocation of Net Profits and Net Losses	  	21
		 	4.02	  	Regulatory Allocations	  	23
		 	4.03	  	Special Allocation	  	24
		 	4.04	  	Other Allocation Rules	  	24
		
	ARTICLE 5 DISTRIBUTIONS	  	25
				
		 	5.01	  	Distribution of Ordinary Cash Flow	  	25
		 	5.02	  	Distribution of Extraordinary Cash Flow	  	25
		 	5.03	  	Limitations on Distributions	  	26

							
		 	5.04	  	In-Kind Distribution	  	26
		 	5.05	  	Right to Withhold	  	26
		
	ARTICLE 6 RESTRICTIONS ON TRANSFERS OF COMPANY INTERESTS	  	27
				
		 	6.01	  	Limitations on Transfer	  	27
		 	6.02	  	Permitted Transfers	  	27
		 	6.03	  	Admission of Substitute Members	  	28
		 	6.04	  	Additional Restrictions on Transfer	  	29
		 	6.05	  	Paladin Purchase Option	  	29
		 	6.06	  	Election; Allocations Between Transferor and Transferee	  	30
		 	6.07	  	Partition	  	30
		 	6.08	  	Waiver of Withdrawal	  	31
		
	ARTICLE 7 DEFAULT BUY-SELL AGREEMENT	  	31
				
		 	7.01	  	Default Buy-Sell Events	  	31
		 	7.02	  	Rights Arising From a Default Buy-Sell Event	  	33
		 	7.03	  	Determination of Purchase Price	  	33
		 	7.04	  	Member’s Option	  	35
		 	7.05	  	Closing of Purchase and Sale	  	36
		 	7.06	  	Payment of Purchase Price	  	36
		 	7.07	  	Release and Indemnity	  	36
		 	7.08	  	Repayment of Member Loans	  	37
		 	7.09	  	Voting Rights Following Default Buy-Sell Event	  	37
		 	7.10	  	Withdrawal of the Selling Member	  	38
		
	ARTICLE 8 DISSOLUTION AND WINDING UP OF THE COMPANY	  	38
				
		 	8.01	  	Events Causing Dissolution of the Company	  	38
		 	8.02	  	Winding Up of the Company	  	38
		 	8.03	  	No Negative Capital Account Restoration	  	39
		
	ARTICLE 9 BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS	  	39
				
		 	9.01	  	Company Books	  	39
		 	9.02	  	Delivery of Records; Inspection	  	39
		 	9.03	  	Reports and Tax Information	  	40
		 	9.04	  	Company Tax Elections; Tax Controversies	  	41
		 	9.05	  	Accounting and Fiscal Year	  	42
		 	9.06	  	Confidentiality of Information	  	42
		
	ARTICLE 10 MISCELLANEOUS	  	42
				
		 	10.01	  	Subscription Agreement	  	42
		 	10.02	  	Investment Interest; Nature of Investment	  	43
		 	10.03	  	Appointment of Attorney-in-Fact	  	43
		 	10.04	  	Waiver of Conflict of Interest	  	44
		 	10.05	  	Amendment	  	44
		 	10.06	  	No Assignments; Binding Effect	  	44
		 	10.07	  	Further Assurances	  	45

							
		 	10.08	  	Notices	  	45
		 	10.09	  	Waivers	  	46
		 	10.10	  	Preservation of Intent	  	46
		 	10.11	  	Entire Agreement	  	47
		 	10.12	  	Certain Rules of Construction	  	47
		 	10.13	  	Counterparts	  	47
		 	10.14	  	Governing Law	  	47
		 	10.15	  	Assurances	  	47
		 	10.16	  	Time is of the Essence	  	48
		 	10.17	  	Other Matters	  	48
		 	10.18	  	Ownership of the Lippert Members and Property Manager	  	48
		
	ARTICLE 11 DEFINITIONS	  	49
				
		 	11.01	  	12% IRR Amount	  	49
		 	11.02	  	Additional Contribution	  	49
		 	11.03	  	Additional Member	  	49
		 	11.04	  	Adjusted Capital Account	  	49
		 	11.05	  	Affiliate	  	49
		 	11.06	  	Agreement	  	49
		 	11.07	  	Annual Business Plan	  	49
		 	11.08	  	Appraised Value	  	50
		 	11.09	  	Business Day	  	50
		 	11.10	  	Buyout Purchase Price	  	50
		 	11.11	  	Buy-Sell Notice	  	50
		 	11.12	  	Capital Account	  	50
		 	11.13	  	Capital Contribution	  	50
		 	11.14	  	Capital Event	  	51
		 	11.15	  	Cash Flow	  	51
		 	11.16	  	Cash Flow Bonus Forfeiture Event	  	51
		 	11.17	  	Code	  	51
		 	11.18	  	Company	  	51
		 	11.19	  	Company Minimum Gain	  	51
		 	11.20	  	Contributing Member	  	52
		 	11.21	  	Contribution Date	  	52
		 	11.22	  	Contribution Notice	  	52
		 	11.23	  	Contribution Percentage	  	52
		 	11.24	  	Default Buy-Sell Event	  	52
		 	11.25	  	Default Notice	  	52
		 	11.26	  	Defaulting Member	  	52
		 	11.27	  	Default Purchase Price	  	52
		 	11.28	  	Deferred Management Fees	  	52
		 	11.29	  	Deferred Management Fee Account	  	52
		 	11.30	  	Delaware Act	  	53
		 	11.31	  	Delinquent Contribution	  	53
		 	11.32	  	Dilution Percentage	  	53
		 	11.33	  	Effective Date	  	53

							
		 	11.34	  	Extraordinary Cash Flow	  	53
		 	11.35	  	Fiscal Year	  	54
		 	11.36	  	Gross Asset Value	  	54
		 	11.37	  	Immediate Family	  	55
		 	11.38	  	Indemnified Party	  	55
		 	11.39	  	Interest	  	55
		 	11.40	  	IRR	  	55
		 	11.41	  	Lippert Holdings	  	55
		 	11.42	  	Lippert Management	  	56
		 	11.43	  	Lippert Member(s)	  	56
		 	11.44	  	Liquidation	  	56
		 	11.45	  	Majority of Representatives	  	56
		 	11.46	  	Management Committee	  	56
		 	11.47	  	Material Breach	  	56
		 	11.48	  	Member Loan	  	57
		 	11.49	  	Member Minimum Gain	  	57
		 	11.50	  	Member Nonrecourse Debt	  	57
		 	11.51	  	Member Nonrecourse Deductions	  	57
		 	11.52	  	Member(s)	  	57
		 	11.53	  	Net Profits and Net Losses	  	57
		 	11.54	  	Non-Contributing Member	  	58
		 	11.55	  	Nonrecourse Deductions	  	58
		 	11.56	  	Operating Account	  	58
		 	11.57	  	Operating Budget	  	59
		 	11.58	  	Operating Member	  	59
		 	11.59	  	Option Notice	  	59
		 	11.60	  	Option Price	  	59
		 	11.61	  	Ordinary Cash Flow	  	59
		 	11.62	  	Paladin	  	59
		 	11.64	  	Paladin REIT	  	59
		 	11.65	  	Percentage Interest	  	60
		 	11.66	  	Permitted Transferees	  	60
		 	11.67	  	Person	  	60
		 	11.68	  	Price Determination Notice	  	60
		 	11.69	  	Preferred Return	  	60
		 	11.70	  	Project	  	60
		 	11.71	  	Project Shortfall	  	60
		 	11.72	  	Property Management Agreement	  	61
		 	11.73	  	Property Manager	  	61
		 	11.74	  	Purchase Option	  	61
		 	11.75	  	Purchasing Member	  	61
		 	11.77	  	Qualified Appraiser	  	61
		 	11.76	  	Regulatory Allocations	  	61
		 	11.77	  	REIT	  	61
		 	11.78	  	Removal Event	  	61

							
		 	11.79	  	Removal Notice	  	62
		 	11.80	  	Securities Act	  	62
		 	11.81	  	Seller Loan	  	62
		 	11.82	  	Selling Member	  	62
		 	11.83	  	Tax Matters Partner	  	62
		 	11.84	  	Threshold Return	  	62
		 	11.85	  	Third-Party Purchase Price	  	62
		 	11.86	  	Transfer	  	62
		 	11.87	  	Treasury Regulation	  	62
		 	11.88	  	Unanimous Written Consent	  	62
		 	11.89	  	Unpaid Preferred Return	  	63
		 	11.90	  	Unrecovered Contribution Account	  	63

 Exhibit List 
  

			
	Exhibit “A”	 	Initial Capital Contributions
		
	Exhibit “B”	 	Property Description for Project
		
	Exhibit “C”	 	Annual Operating Budget for 2007
		
	Exhibit “D”	 	Information Regarding Lippert Members and Property Manager
		
	Exhibit “E”	 	xIRR Calculation

 EXECUTION COPY 
 OPERATING AGREEMENT 
 OF 
 KC PHEASANT ASSOCIATES, LLC 
 THIS OPERATING AGREEMENT OF KC PHEASANT
ASSOCIATES, LLC (the “Company”), is entered into effective as of September 25, 2007, by and between PRIP 1102, LLC, a Delaware limited liability company (“Paladin”), and JTL HOLDINGS, LLC, a
Missouri limited liability company (“Lippert Holdings”), and JTL ASSET MANAGEMENT, INC., a Missouri limited liability company (“Lippert Management”). The capitalized terms used herein and not otherwise
defined shall have the respective meanings assigned to such terms in Article 11. 
 ARTICLE 1 
 FORMATION 
 1.01
Formation 
 The Company has been formed as a Delaware limited liability company pursuant to the provisions of the Delaware Act.
The Company shall be operated in accordance with, and the Members shall be governed by, the terms and conditions of this Agreement. If any terms of this Agreement are inconsistent with any terms of the Act that are not mandatory, then the terms of
this Agreement shall control. In connection with the formation of the Company, a duly authorized representative of the Company has caused to be filed with the office of the Delaware Secretary of State a duly executed Certificate of Formation for the
Company in accordance with the Delaware Act. A duly authorized representative also shall execute, acknowledge and verify such other documents or instruments as may be necessary or appropriate in order to form the Company under the Delaware Act or to
continue its existence in accordance with the provisions of the Delaware Act or to register, qualify to do business or operate its business as a foreign limited liability company in any other state in which the Company conducts business. 

1.02 Names and Addresses 
 The name of the Company is KC Pheasant Associates, LLC. The registered office of the Company in the State of Delaware shall be at c/o The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 and the name of the
registered agent for the Company at such registered office is The Corporation Trust Company. For so long as Lippert Management is the Operating Member, the principal office for the Company shall be maintained at Two Pershing Square, 2300 Main
Street, 

  

 1 

 
Suite 910, Kansas City, Missouri 64108, or such other location at which Lippert Management maintains an office and thereafter at such other place as the
Management Committee may designate from time to time. Copies of any material notices or other matters received by the Company shall be promptly delivered by the Operating Member to the Members. 
 1.03 Nature of Business 
 The
purpose for which the Company is to exist is (i) to acquire, own, manage, operate, maintain, finance, hold for investment, and sell that certain real property more particularly described on Exhibit B attached hereto, together with
existing improvements consisting of an approximately 160 unit apartment complex and related amenities and improvements located thereto located at 1102 NE Independence Avenue in Lee’s Summit, Missouri (the “Project”);
(ii) to conduct such other activities with respect to, and otherwise realize and optimize the economic internal rates of return from, the Project and any and all other related assets the Company may hereinafter acquire as are appropriate to
carrying out the foregoing purposes; and (iii) to do all things incidental to or in furtherance of the above enumerated purposes. 
 1.04 Term of the Company 
 The term of the Company commenced on the date the Certificate of Formation for the Company
was filed with the Delaware Secretary of State and shall continue until December 31, 2047, unless otherwise dissolved pursuant to Article 8 or unless extended by the unanimous agreement of the Members. The existence of the Company as a
separate legal entity shall continue until the cancellation of the Certificate of Formation of the Company in accordance with the provisions of the Delaware Act. 
 ARTICLE 2 
 MANAGEMENT OF THE COMPANY 
 2.01 Management Committee 
 (a) Management by Management Committee. Except as otherwise provided in this Agreement, all aspects of the business and affairs of the Company shall be managed, and all decisions affecting the business and affairs of the Company
(including, without limitation, investment and Project related decisions) shall be made, by the Members acting through a management committee (the “Management Committee”) composed of five (5) representatives in accordance with
the provisions contained below. The Members, exclusively through the Management Committee, shall have the right, power and authority to take any and all actions consistent with the purpose of the Company that is permitted hereunder and under
applicable law. No Member shall have any right, power or authority to act (as agent or otherwise) for, or to bind, the Company in any manner (other than as expressly provided herein) except through the Management Committee. 
  

 2 

 (b) Representatives. Paladin shall be entitled to select three (3) representatives of the
Management Committee, and Lippert Management shall be entitled to select two (2) representatives of the Management Committee. Lippert Holdings shall not be entitled to appoint any representatives to the Management Committee. Paladin hereby
designates James R. Worms, William K. Dunbar, and Whitney A. Greaves as its initial representatives on the Management Committee, and Lippert Management hereby designates James E. Lippert and Teresa Lippert as its initial representatives of the
Management Committee. Paladin may appoint a replacement representative at any time and from time to time for any one or more of the representatives it designated by giving written notice of such replacement to the Lippert Members, which replacement
shall be effective upon the giving of such notice. Any change in the designation of Lippert Management’s representatives shall be subject to Paladin’s approval, which approval shall not be unreasonably withheld. The Members acting through
the Management Committee shall have the authority to make all decisions affecting the business and affairs of the Company as fully and completely as if the Members were themselves making such decisions. Each Member recognizes and agrees, however,
that the representatives on the Management Committee are acting exclusively on behalf of the Member they represent, respectively, and that such representatives shall not, therefore, have any personal liability by reason of serving as a
representative of such Member. 
 (c) Decisions. Except as otherwise set forth in this Agreement, any actions required or permitted to
be taken by the Management Committee shall be so taken only either (i) with the approval of a Majority of Representatives at a meeting of the Management Committee or (ii) by Unanimous Written Consent without a meeting pursuant to
Section 2.01(i). The Management Committee may, but shall not be required to, memorialize its actions in the form of minutes, which minutes, when signed by at least one representative on the Management Committee appointed by each of
Paladin and Lippert Management, shall be conclusive evidence of such action and shall be incorporated into the books and records of the Company. Notwithstanding anything contained herein to the contrary, each Member hereby agrees and covenants that
it shall direct its representatives on the Management Committee to execute any minutes relating to actions that were taken in accordance with this Section 2.01(c) regardless of whether such Member voted in favor of the action.

 (d) Meetings. Regular meetings of the Management Committee shall be held at the principal office of the Company (or at such other
place(s) as are designated by the Management Committee) at such times as shall be designated from time to time by the Management Committee. 
 (e) Special Meetings. Special meetings of the Management Committee may be called by or at the request of any representative and shall be held at the principal office of the Company (or at such other place(s) as may be designated by
the Management Committee). The representative calling any special meeting of the Management Committee may designate any reasonable time for the holding of the special meeting. 
  

 3 

 (f) Telephonic Participation. Representatives of the Management Committee may participate in any
regularly scheduled or special meetings of the Management Committee telephonically or through other similar communications equipment, as long as all of the representatives participating in the meeting can hear one another. Participation in a meeting
pursuant to the preceding sentence shall constitute presence in person at such meeting for all purposes of this Agreement. 
 (g) Notice
and Attendance. Notice of any meeting of, or of any action taken without a meeting pursuant to Section 2.01(i) by, the Management Committee shall be given as far in advance of the meeting as is reasonably practicable.
Representatives, absent exigent circumstances, shall use their best efforts to give any such notice at least forty-eight (48) hours prior to such meeting, unless otherwise agreed by the representatives, and to attend all meetings of the
Management Committee. 
 (h) Quorum. A quorum shall be required to conduct any business at any meeting of the Management Committee,
and shall be deemed present at any such meeting so long as at least one representative of each Member is in attendance (whether in person or otherwise); provided, however, that if written notice of any such meeting has been given at least five
(5) days prior to such meeting, then a quorum shall be deemed present at any such meeting so long as a Majority of Representatives of the Management Committee are present at such meeting. 
 (i) Actions Without Meetings. Any action required or permitted to be taken at a meeting of the Management Committee may be taken without a meeting
with Unanimous Written Consent, which consent shall set forth the actions to be so taken. Any such Unanimous Written Consent shall have the same effect as an act of a Majority of Representatives at a properly called and constituted meeting of the
Management Committee. Copies of any such written consent shall be delivered promptly to all representatives. 
 (j) Execution of
Documents. Except as provided in Section 2.03 below, all contracts, agreements and other documents or instruments affecting or relating to the business and affairs of the Company may be executed on the Company’s behalf only by the
Members, or such other person(s) as may be designated by the Management Committee and without execution by any other Member. 
 (k)
Unauthorized Actions. None of the Members or officers of the Company, without the prior consent of the Management Committee, shall take any action on behalf of or in the name of the Company, or enter into any commitment or obligation binding
upon the Company, except for (i) actions expressly authorized by this Agreement, (ii) actions by any Member (or officer) within the scope of such Member’s (or officer’s) authority expressly granted hereunder, and
(iii) actions authorized by the Management Committee in the manner set forth herein. Each Member hereby indemnifies, defends, protects and holds wholly harmless the other Members and each such other Member’s Affiliates, shareholders,
officers, directors, constituent members, 

  

 4 

 
Members, employees, agents, and representatives (including the representative(s) to the Management Committee appointed by such Member) from and against any
and all losses, liability, damages, costs and expenses (including attorneys’ fees) arising out of the breach of any of the foregoing provisions by such indemnifying Member, any representative of the Management Committee selected by such Member
or such Member’s Affiliates, shareholders, officers, directors, constituent members, Members, employees, agents, or representatives. 
 2.02 Authority of the Management Committee 
 Without limiting the generality of Section 2.01, and except
as otherwise provided by this Agreement, the consent of the Management Committee shall be required for the Company to undertake, and the Management Committee shall have the right, power and authority to approve and cause the Company to undertake,
all of the following actions (which actions shall be approved by a Majority of Representatives unless otherwise expressly provided below): 
 (a) Issuance of Additional Interests. The issuance of any additional Interests in the Company or the admission of any Additional Member into the Company; provided, however, that such a decision shall
require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; 
 (b) Sale or Other Transfer. Except as provided in accordance with the provisions of Article 7, the sale, lease, exchange,
transfer or other disposition of all or any portion of the Project or any other assets of the Company; 
 (c) Financing or
Refinancing. Any and all financing or refinancing for the Company or the Project, the terms and conditions thereof, or any modifications or amendments thereto; provided, however, that such a decision shall require the approval of all of
the representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; 
 (d) Material Company Transactions. The entry into by the Company and the taking by the Company of any and all actions permitted or required by the Company in connection with any acquisition, disposition, merger, “roll-up”
consolidation, reorganization, recapitalization, restructuring, joint venture, partnership, limited liability company, or any other material business transaction involving the Company or its assets, including, without limitation, any and all actions
required or permitted in connection with any initial public offering of ownership interests in the Company (or in connection with the merger or the transfer of the assets of the Company to any corporation or other entity that is the successor to the
Company that intends to conduct an initial public offering) or any transfer of all or any portion of the assets of the Company to a public or private 

  

 5 

 
market vehicle that intends to qualify as a real estate investment trust (“REIT”) under Section 856 et. seq. of the Code or to a
partnership, limited liability company or other entity whose general partner, managing member or other owner, intends to qualify as a REIT or to a comparable public or private REIT vehicle; provided, however, that such a decision shall
require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent; 
 (e) Plans and Budgets. The approval of each Annual Business Plan and Operating Budget for the Company prepared by the Operating
Member, and any modifications or amendments thereof; 
 (f) Expenditures Outside of Plans or Budgets. The making of any
expenditure by the Company that is not specifically included or contemplated under any applicable Annual Business Plan and Operating Budget, other than as permitted within any parameters agreed to by the Management Committee and specified in any
such plan or budget (e.g., application of line item cost savings, contingency line amounts, budget variances, etc.); 
 (g) Additional Capital Contributions. The making of any Additional Contributions to the capital of the Company pursuant to Section 3.02; 
 (h) Unrelated Businesses. The entry into by the Company of any business that is not related to the purpose of the Company set forth
in Section 1.03; provided, however, that such a decision shall require the approval of all of the representatives present at a meeting of the Management Committee at which a quorum is present or Unanimous Written Consent;

 (i) Liquidation of the Company. Except to the extent dissolution of the Company is permitted or required by this
Agreement or any nonwaivable provision of applicable law, the dissolution and winding up of the Company; 
 (j) Contracts
with Affiliates. Except as otherwise expressly permitted under this Agreement, the entry by the Company into any contract with, or the making of any payment to, any Member or any Affiliate of any Member and with respect to any such contract, the
making of any amendment, modification, waiver, termination, extension or rescission thereof; the declaration of any default thereunder or the exercise of any remedy thereunder; the institution, settlement or compromise of any claim with respect
thereto; the waiver of any rights of the Company against the other party(ies) thereto; or the consent to the assignment of any rights or the delegation of any duties by the other party(ies) thereto. The Members further acknowledge and agree that,
except as otherwise expressly permitted under this Agreement or as otherwise approved by the Management Committee, the fees paid in connection with any such contracts, payments, etc., made with or to any Member or any Affiliate thereof shall in all
events be commensurate with fees negotiated at arm’s length and paid to independent third parties for providing similar services to projects similar in size, nature and location to the Project; 
  

 6 

 (k) Cash Flow and Reserves. Subject to the provisions of
Section 5.03, the determination of any policies or procedures for making Cash Flow distributions by the Company including, without limitation, the establishment of any reserves with respect thereto; 
 (l) Material Agreements. The execution by the Company of any material agreement in order to acquire, develop, redevelop, renovate,
operate, manage, maintain, market, lease, sell, transfer, convey, pledge or otherwise dispose of all or any portion of the Project or any other asset of the Company and any undertaking by the Company to implement the terms of any such agreement,
including the granting or withholding of approvals and consents thereunder, and any amendment or termination of any such material agreement (including, without limitation, the Property Management Agreement); 
 (m) Consultants. The employment and engagement of any agents, brokers, appraisers, architects, contractors, subcontractors,
attorneys, accountants, bookkeepers, engineers, environmental consultants, real property and mortgage brokers and analysts, underwriters, escrow agents, depositories, agents for collection, banks, builders, building managers and operators, marketing
agents, property managers and any other service providers other than as permitted by the applicable Annual Business Plan or Operating Budget; 
 (n) Legal Proceedings. The institution or defense of any legal proceedings (including arbitration) in the name of the Company, the settlement of any such legal proceedings against the Company and the confession
of any judgment against the Company, or any property thereof; 
 (o) Bankruptcy. Any of the following: (i) the
filing of any voluntary petition in bankruptcy on behalf of the Company; (ii) the consenting to the filing of any involuntary petition and bankruptcy against the Company; (iii) the filing on behalf of the Company of any petition seeking,
or consenting to, the reorganization or relief under any applicable federal or state law relating to bankruptcy or insolvency; (iv) the consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or a substantial part of its property; (v) the making on behalf of the Company of any assignment for the benefit of creditors; (vi) the admission in writing of the Company’s inability to pay its debts
generally as they become due; or (vii) the taking of any action by the Company in furtherance of any such action; provided, however, that such a decision shall require the approval of all of the representatives present at a meeting of
the Management Committee at which a quorum is present or Unanimous Written Consent; provided, further, however, 

  

 7 

 
that if Lippert Management is removed as Operating Member of the Company pursuant to Section 2.06 (and as a result no longer has a representative
on the Management Committee) and the then current mortgage lender for the Project fails or refuses to release any guaranty of James E. Lippert for which he would have liability upon the occurrence of one or more of the events specified in clauses
(i) - (vii) immediately above, then for so long as Lippert Management remains a Member of the Company the approval of Lippert Management shall continue to be required for the Company to take any such action specified in clauses (i) - (vii)
immediately above until such guaranty is released or such mortgage loan is paid in full; 
 (p) Insurance. The entry
into by the Company of any and all contracts of insurance for the Company that the Management Committee deems necessary or proper for the protection of the Company or the Project, either for the conservation of the Company’s assets or for any
purpose convenient or beneficial to the Company; 
 (q) Tax and Accounting Elections. Any and all tax or accounting
elections permitted or required to be made by the Company; 
 (r) Actions pertaining to Paladin REIT Status. The
undertaking of any action that deemed necessary, in the sole and but reasonable discretion of the Tax Matters Partner, to maintain the status of Paladin REIT as a REIT under the Code. 
 (s) Transfers from Operating Account. The drawing of any single check on, or the making of any single transfer or expenditure of
funds from, the Operating Account in excess of $25,000, or drawing of any multiple number of checks on, or the making of any multiple number of transfers or expenditures of funds from, any Operating Account which collectively total more than $25,000
to any one Person, unless such single check or transfer, or multiple checks or transfers, are drawn or made, as the case maybe, pursuant to the directive of the Management Committee as contained in the Operating Budget, and the Operating Member has
confirmed, for the benefit of the Company, that any such check or transfer is in proper order for payment; and 
 (t) Other
Actions. Any and all other actions required or permitted to be taken by the Management Committee under this Agreement and any and all other actions relating to the business and affairs of the Company or necessary to carry out the intentions and
purposes of the Company. 
 The provisions of this Section 2.02 shall not be construed as exclusive or so as to bar the
Management Committee from delegating responsibility for any of the Management Committee’s management decisions to any Member, officer, or other representative or agent of the Company. The Members also acknowledge that signatory authority for
any of the foregoing items may be delegated by the Management Committee to any Member, officer, or other representative or agent of the Company. 
  

 8 

 2.03 Operating Member 
 (a) Designation of Operating Member. Lippert Management is hereby designated as the “Operating Member” of the Company (the
“Operating Member”). Lippert Management shall serve in such capacity unless and until Lippert Management is removed by the Management Committee in accordance with the provisions of Section 2.06. Following any removal of
Lippert Management as the Operating Member, the Person (who may be, but need not be, a Member of the Company) selected by the Management Committee in accordance with the provisions of Section 2.06 shall serve as the replacement Operating
Member or manager of the Company. 
 (b) Responsibilities of Operating Member. The Operating Member shall be responsible for
implementing the decisions of the Management Committee and for regularly reporting to the Management Committee as to the status of the business and affairs of the Company. The Operating Member also shall be responsible for (i) procuring any and
all financing required for the Project as approved by the Management Committee, (ii) supervising the management, leasing and operation of the Project in accordance with a Property Management Agreement approved by the Management Committee and
entered into, by and between the Company, as owner, and either the Property Manager or such other manager as may be designated by the Management Committee, as manager, (iii) undertaking such other matters as are determined by the Management
Committee, (iv) coordinating, supervising and otherwise overseeing any sale of the Project, (v) preparing and, as and when reasonably requested by the Management Committee, updating any applicable Annual Business Plan or Operating Budget
for the Company and the Project (provided, that, for the avoidance of any doubt, the foregoing provisions are not intended to permit the Operating Member to amend, modify or deviate from any of the foregoing documents, plans or budgets
without the prior consent of the Management Committee (except as otherwise expressly provided therein), (vi) advising the Management Committee on day-to-day matters affecting the business and affairs of the Company, (vii) diligently
conducting the day-to-day operations of the Company in accordance with the Annual Business Plan and Operating Budget, (viii) performing the duties assigned to such Member under this Agreement or by the Management Committee, and
(ix) diligently endeavoring to carry out all decisions and resolutions of the Management Committee. 
 (c) Authority of Operating
Member. The Operating Member shall at all times be subject to the direction and control of the Management Committee, and shall conform to the policies and procedures established and approved by the Management Committee in conformity with this
Agreement, and the scope of the Operating Member’s authority shall be limited solely to the matters set forth above in this Section 2.03. The Operating Member shall keep the Management Committee and the Members informed as to all
matters of concern to the Management Committee, the Company and the Members. 

  

 9 

 
The Operating Member shall not be authorized to bind the Company without the prior written approval of the Management Committee, except for matters delegated
in writing to the Operating Member by the Management Committee or any nonmaterial agreements, contracts or other documents or instruments affecting or relating to the day-to-day business and affairs of the Company provided that any such
agreement, contract or other document is within the parameters established in the applicable Annual Business Plan or Operating Budget. 
 (d)
Expenditures. The Operating Member shall have the authority to incur costs and expenditures and only the costs and expenditures set forth in an approved Operating Budget (subject to the ability to apply line item cost savings; contingency
line item amounts; budget variances, etc., if any, contained in such Operating Budget) without any further approval of the Management Committee (or the Members). 
 (e) Indemnification. The Operating Member shall indemnify and hold harmless the Company and the other Member(s), their Affiliates, subsidiaries, officers, directors, employees, partners, members, shareholders,
agents and representatives to the full extent permitted by law from and against any and all losses, claims, costs, damages and expenses (including attorneys’ fees) arising from or in connection with any act or failure to act of the Operating
Member which was not in good faith, within the scope of its authority, or in accordance with the directives of the Management Committee, and (ii) or constituted fraud, willful misconduct, gross negligence, or a Material Breach. 
 2.04 Annual Business Plan 
 On
or before October 31 of each Fiscal Year of the Company, commencing on October 31, 2007, the Operating Member shall submit a new annual business plan for the ensuing Fiscal Year for the review and approval of the Management Committee (the
initial and each new business plan, as approved, being the “Annual Business Plan”). Each Annual Business Plan shall include, without limitation: (i) a narrative description of the proposed objectives and goals for the Company,
which shall include for such Fiscal Year (without limitation), any proposed sale or refinancing of the Project; (ii) the status of the Project; (iii) a property management and leasing plan for the Project for such Fiscal Year; and
(iv) such other items as are requested by any representative of the Management Committee or as otherwise reasonably necessary to keep the Management Committee informed as to the business and affairs of the Company and the Project. 

2.05 Operating Budget 
 Attached hereto as Exhibit C is the annual operating budget for the Company for the remainder of the 2007 Fiscal Year. On October 31 of each Fiscal Year of the Company commencing on October 31, 2007, the Operating Member
shall submit a new annual operating budget for the Company for the ensuing Fiscal Year for the review and approval of the Management Committee (the initial and each new annual operating budget, as approved, being the “Operating
Budget”). Each Operating Budget shall set 

  

 10 

 
forth on a detailed itemized basis: (i) all receipts projected for the period of such Operating Budget and all expenses, by category, for the Company
(including, without limitation, all repairs and capital expenditures projected to be incurred during such period), (ii) the anticipated operating reserves and working capital projected to be required for such period, (iii) a schedule
setting forth the timing and amount of any Additional Contributions projected to be required by the Members for such Fiscal Year (or other period); and (iv) a five (5)-year projection setting forth the estimated revenues, expenses and net
operating income (or loss) expected to be incurred for the next five (5) years for the Company which shall be updated to compare the actual results to the projected results set forth in the prior Operating Budget. The Operating Budget shall
also include a detailed description of such other information, contracts, agreements and other matters reasonably necessary to inform the Management Committee of all matters relevant to the ownership, operation, management, maintenance, leasing and
sale of the Project (or any portion thereof) or as may be reasonably requested by any representative of the Management Committee. Except as otherwise expressly set forth herein, the Operating Member shall only have the authority to incur the costs
and expenditures set forth in an approved Operating Budget (subject to the ability to apply line item cost savings, contingency line item amounts, budget variances, etc., if any, contained in such Operating Budget, as and if so permitted by the
parameters of such Operating Budget), without any further approval of the Management Committee (or the Members). Except as otherwise provided within any Operating Budget, the Operating Budget may not be increased without the prior approval of the
Management Committee. 
 2.06 Removal of the Operating Member 
 (a) Upon Removal Event. Upon the occurrence of a Removal Event, the Management Committee shall have the right to remove Lippert Management as the
Operating Member of the Company by delivering written notice (“Removal Notice”) thereof at any time following the occurrence of a Removal Event in accordance with the provisions of this Section 2.06. As used herein, the
term “Removal Event” means the occurrence of any of the Buy-Sell Events set forth in Section 7.01 with respect to which the Operating Member is the Defaulting Member (regardless of whether Paladin, as the Non-Defaulting
Member, exercises any of its rights under Article 7 in connection therewith). Any removal of Lippert Management as the Operating Member shall be effective upon the Effective Date of the Removal Notice relating to any Removal Event (or such
later time as may be provided in the Removal Notice). 
 (b) Effect of Removal Upon Removal Event. If Lippert Management is removed as
the Operating Member of the Company pursuant to Section 2.06(a), then (i) a Cash Flow Bonus Forfeiture Event shall exist for purposes of Sections 5.01(d) and 5.02(h), (ii) the Lippert Members shall retain the remaining
portions of their respective Interests in the Company (unless Paladin purchases such Interests as a result of the exercise of the Buy-Sell provisions set forth in Article 7), (iii) neither the Lippert Members nor their respective
Affiliates shall be entitled to receive any further fees to which they would otherwise be entitled pursuant to Section 2.12; and (iv) the 

  

 11 

 
Management Committee may, in its sole and absolute discretion, designate any person or entity as a replacement Operating Member or as a manager who shall
fulfill the duties and obligations of the Operating Member, that may be (but need not be) a Member of the Company (including, without limitation, Paladin (or any Affiliate thereof). From and after any such removal: (1) the replacement Operating
Member (and not Lippert Management or its Affiliates) shall be entitled to exercise all the rights, duties and obligations, and to receive any and all fees of the Operating Member under this Agreement, (2) Lippert Management shall have no
further obligations under Sections 2.03, 2.04 or 2.05, and (3) Lippert Management shall no longer have any right to appoint any representative to the Management Committee and any previously appointed representatives of Lippert Management
shall be replaced by one (1) or more representatives to be appointed by the Management Committee. In the event there is a dispute as to whether a Removal Event occurred, then Lippert Management shall cease to be the Operating Member and shall
no longer have any right to appoint any representative to the Management Committee, and, if it shall be later determined by a court of competent jurisdiction that a Removal Event did not occur, then Lippert Management shall be deemed to have been
terminated pursuant to Section 2.06(c). 
 (c) Other Removal. For any reason, the Management Committee may elect (in its
sole and absolute discretion) at any time, without cause and for any or no reason, to remove Lippert Management as the Operating Member and to designate any Person as a replacement Operating Member or as a manager who shall fulfill the duties and
obligations of the Operating Member, which election may be made by written notice to Lippert Management not less than fifteen (15) days prior to the effective date of such removal, provided that, the Management Committee agrees to meet
and confer with Lippert Management during such fifteen (15) day period, at the request of Lippert Management, in connection with such removal. In such event, Lippert Management (or its Affiliates, as applicable) shall: (i) have no further
obligations under Sections 2.03, 2.04 or 2.05, and (ii) otherwise retain its Interest in the Company, including its interests in the Net Income and Net Losses or similar items of, and to receive distributions from, the Company as
provided in Articles 4 and 5 of this Agreement. If Lippert Management is removed as Operating Member pursuant to this Section 2.06(c), then (A) any such replacement Operating Member shall not receive any additional fees or
“carried interest” or other profits interest in the Company unless such interest is paid from Paladin’s Interest in the Company and (B) Lippert Management may elect, by written notice to Paladin within thirty (30) days after
the effective date of such removal, to require Paladin to purchase 100% of the Lippert Members’ Interests in accordance with the procedures set forth in the last two sentences of Section 7.02, and in Section 7.03(a),
(b) and (d) and Section 7.05, Section 7.06, Section 7.07, Section 7.08 and Section 7.10 as if a Lippert Member were a Defaulting Member as a result of one of the Buy-Sell Events
referenced in Section 7.01(e)-(g) and the Lippert Members were the Selling Member and Paladin the Purchasing Member under such provisions of this Agreement (but in such case the provisions of clause (iv) of Section 7.03(a)
shall not apply). If Lippert Management fails to make such election by written notice to Paladin at or before the end of such thirty (30) day period, then Lippert Management shall be deemed to have waived its rights under 

  

 12 

 
clause (B) immediately above. In addition, if Lippert Management is removed as Operating Member pursuant to this Section 2.06(c), then
Paladin shall use its reasonable efforts to obtain written releases of the Lippert Members (and their respective Affiliates) from all guarantees of liabilities of the Company previously executed by the Lippert Members (and its Affiliates). To the
extent such releases cannot be obtained by Paladin, Paladin shall indemnify, defend, protect and hold the Lippert Members (and such Affiliates) wholly free and harmless from and against any and all claims, liabilities, causes of action, liens,
charges, and all other matters arising from such liabilities or guarantees, arising subsequent to the Effective Date of such removal. 
 (d)
Contracts. If Lippert Management is removed as the Operating Member (whether pursuant to either Section 2.06(a) or Section 2.06(c)), then Paladin (acting alone and outside of the Management Committee), on behalf of the Company, shall also
have the right to terminate Lippert Management’s right to provide the services provided for in Section 2.12 and to terminate any other agreement between the Company and Lippert Management or any Affiliate of either the Lippert
Members (including, without limitation, the Property Management Agreement described in Section 2.12), without penalty. If Lippert Management is removed as the Operating Member pursuant to Section 2.06(c) and Paladin elects to
terminate Lippert Management’s (or its Affiliate’s) right to provide the services provided for in Section 2.12 or to terminate any contract between the Company and Lippert or an Affiliate of either of the Lippert Members, then
the Company shall be obligated to engage a third party other than an Affiliate of Paladin to undertake the services previously provided by Lippert Management or the Affiliate of Lippert Members and which were terminated. If Lippert Management is
removed as the Operating Member pursuant to Section 2.06(a) as a result of the occurrence of a Removal Event, then the Company may engage either an Affiliate of Paladin or a third party to complete the services that were being provided
under the terminated contract or other arrangement. 
 2.07 Liability and Indemnity 
 (a) Indemnification. Except as otherwise expressly provided in this Agreement, no Member, officer of the Company, representative on the Management
Committee or other authorized representative of the Company (each, an “Indemnified Party”) shall be liable or accountable in damages or otherwise to the Company or to the other Members for any error of judgment or any mistake of
fact or law or for anything that such Indemnified Party may do or refrain from doing hereafter, except in the case of fraud, willful misconduct or gross negligence in performing or failing to perform such Indemnified Party’s duties for the
Company. To the maximum extent permitted by law, the Company hereby indemnifies, defends, protects and agrees to hold each Indemnified Party wholly harmless from and against any and all loss, expense or damage suffered by such Indemnified Party by
reason of anything which such Indemnified Party may do or refrain from doing hereafter for and on behalf of the Company and in furtherance of its interest; provided, however, (i) no Indemnified Party shall be indemnified, defended,
protected or held harmless from any loss, cost, expense or damage which such 

  

 13 

 
Indemnified Party may suffer as a result of such Indemnified Party’s fraud, willful misconduct or gross negligence in performing or in failing to
perform such Indemnified Party’s duties for the Company, and (ii) any such indemnity shall be recoverable only from the assets of the Company. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of
a Member (or representative thereof) otherwise existing at law or in equity, are agreed by the Members to replace such duties and liabilities of such Member (or such representative). 
 (b) No Third Party Beneficiaries. The provisions of this Section 2.07 are for the benefit of the Indemnified Parties and shall not be
deemed to create any rights for the benefit of any other Person. 
 (c) Survival. The provisions of this Section 2.07
shall survive the termination of this Agreement. 
 2.08 Limited Liability 
 Except as otherwise required hereunder or pursuant to any non-waivable provision of the Delaware Act, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the Members shall not be obligated personally for any such debt, obligation or liability of the Company solely by
reason of being a Member of the Company. 
 2.09 Other Activities 
 Lippert Management, as the Operating Member, agrees to carry out the business and affairs of the Company in accordance with the terms and conditions of
this Agreement and shall devote all such time to the Company as is necessary for the efficient operation of the business and affairs of the Company. Except as otherwise provided in Section 2.11 of this Agreement or any Operating Budget,
or as otherwise approved by the Management Committee, the Operating Member shall not be paid any compensation by the Company for providing such services to the Company. No Member shall have any obligations (fiduciary or otherwise) with respect to
the Company or to the other Member insofar as making other investment opportunities available to the Company or to the other Members. Each Member may engage in whatever activity such Member may choose without having or incurring any obligation to
offer any interest in such activity to the Company or to the other Members. 
 2.10 Brokers Indemnity 
 Each Member represents and warrants that it has not dealt with any broker or agent in connection with this Agreement or the relationship contemplated
hereby, and each Member hereby agrees to indemnify, defend, protect and hold the other Member and the Company wholly harmless from and against any and all liability, loss, cost, damage 

  

 14 

 
and expense (including without limitation, attorneys’ fees and costs) which the other Member or the Company may suffer or incur by reason of any claim
by any broker or agent for any compensation with respect to such indemnifying Member’s dealings in connection with this Agreement or the transactions described herein. 
 2.11 Reimbursement; Compensation 
 (a) Compensation. Except as otherwise expressly provided in this Agreement or as provided in any applicable Operating Budget, no Member or any constituent partner, member, shareholder, officer, director, employee, agent,
representative or Affiliate thereof shall receive any remuneration for services rendered to or in connection with the Company or be reimbursed for general administrative and overhead expenses. 
 (b) Reimbursement of Expenses. Notwithstanding the foregoing: (i) each Member shall be reimbursed from the initial contributions made by the
Members pursuant to Section 3.01 for any and all costs (including legal fees) reasonably and actually incurred by such Member in connection with the transactions contemplated herein (including the formation of the Company, and the
negotiation and documentation of this Agreement), and (ii) each Member and its representatives shall be reimbursed for any out-of-pocket travel and other costs and expenses reasonably and actually incurred in connection with the business and
affairs of the Company, but such reimbursement shall not include any costs or charges for time expended by any Member’s employees or other representatives or overhead costs of any Member. 
 2.12 Property Management 
 C.R.E.S. Management, L.L.C., a Missouri limited liability company, which is an Affiliate of Lippert Management, initially shall be the Property Manager of the Project and shall manage and operate the Project in accordance with a Property
Management Agreement between the Company and such Property Manager in the form approved by the Management Committee (the “Property Management Agreement”). The Property Management Agreement shall provide for (i) an initial one
year term with automatic one year renewals, (ii) termination by either the Company or the Property Manager upon not less than thirty (30) days prior written notice or upon a sale of the Project, and (iii) a management fee payable
monthly, in arrears, to the Property Manager with respect to the Project equal to five percent (5%) of the monthly gross revenues from the Project; provided, however, that if during any month for which such management fee is due and
payable, there is insufficient Cash Flow to fund payment to Paladin of its Unpaid Preferred Return accrued and owing through the end of such month, then a portion of the management fees payable to the Property Manager for such month up to, but not
exceeding, two and one half percent (2.5%) of the monthly gross revenues of the Project for such month shall be deferred by the Property Manager and paid to Paladin to the extent (but only to the extent) of its Unpaid Preferred Return
(collectively, the “Deferred Management Fees”) and shall be paid to the Property Manager only from 

  

 15 

 
available Cash Flow pursuant to Section 5.01(b) and Section 5.02(a). All amounts paid to the Property Manager as management fees
(including Deferred Management Fees) shall be treated as amounts paid to a person other than a Member as described in Section 707(a) of the Code. In addition to the fees payable as provided above in this Section 2.12, upon
the execution of this Agreement, the Company shall pay to Lippert Management or its Affiliate a one-time due diligence fee in the amount of $20,000. 
 ARTICLE 3 
 MEMBERS’ CAPITAL CONTRIBUTIONS 
 3.01 Initial Contributions of the Members 
 (a) Initial Capital Contributions. Simultaneously with the execution of this Agreement, the Members have contributed to the Company in cash their respective Initial Capital Contributions in the amounts shown on
Exhibit A hereto. 
 (b) Credit to Capital Accounts. Any and all Capital Contributions made by each Member pursuant to
this Section 3.01 and Sections 3.02 and 3.03 shall be credited to the Capital Account and Unrecovered Contribution Account of each such Member as of the date any such Capital Contribution is made. 
 3.02 Additional Contributions 
 (a) Need for Contributions. Except as otherwise required by law or pursuant to this Section 3.02 or Section 3.03, no Member shall be required or permitted to make any additional capital contributions to the
Company. 
 (b) Required Additional Contributions. From time to time, the Management Committee may require the Members to make
Additional Contributions to the capital of the Company pursuant to this Section 3.02(b) in connection with the Project to fund Project Shortfalls by delivering written notice (“Contribution Notice”) of such Additional
Contribution to the Members, which Contribution Notice shall include a contribution date (“Contribution Date”) (which date shall not be less than fifteen (15) Business Days following the Effective Date of such notice), upon
which Contribution Date each Member shall be obligated to contribute to the capital of the Company its pro rata share of such Additional Contribution (measured by such Member’s Contribution Percentage). 
  

 16 

 3.03 Remedy For Failure to Contribute Capital 
 (a) Failure to Contribute. If any Member (the “Non-Contributing Member”) fails timely to make all or any portion of any
Additional Contribution such Member is required to contribute pursuant to Section 3.02 (the “Delinquent Contribution”) and such failure continues for five (5) days following the Effective Date of notice thereof from
the other Member, such other Member (the “Contributing Member”), in addition to any and all other remedies available to the Contributing Member under this Agreement or otherwise at law or in equity (including, without limitation,
instituting a legal proceeding to collect the Delinquent Contribution), shall have the right, but not the obligation, to proceed in accordance with the terms and conditions set forth below in this Section 3.03 and, in addition, if either
of the Lippert Members is the Non-Contributing Member, a Cash Flow Bonus Forfeiture Event shall exist for purposes of Sections 5.01(d) and 5.02(h). For purposes of this Section 3.03, the Lippert Members shall be treated
collectively as one party and shall act as one Member (and shall be either the Contributing Member or the Non-Contributing Member, as the case may be) and any increases or decreases in their Percentage Interests shall be allocated between them pro
rata, in proportion to their Percentage Interests at such time. 
 (b) Default Loan. The Contributing Member may advance to the
Company, in cash, within thirty (30) days following the Contribution Date, an amount equal to the Delinquent Contribution, and such advance by the Contributing Member shall be treated as a non-recourse loan by the Contributing Member to the
Non-Contributing Member (a “Member Loan”), bearing interest at a rate equal to the lesser of the then current prime rate as most recently reported by the Western Edition of the Wall Street Journal, plus five percentage
points, adjusted and compounded concurrently with any adjustments to such prime rate, or the maximum, nonusurious rate then permitted by applicable law for such loans. Each Member Loan shall be due and payable upon the earlier of six
(6) months from the date such Member Loan is advanced or the dissolution of the Company. If Paladin is the Contributing Member, then both Members shall take all actions and execute all documents (including a written promissory note evidencing
the obligation of the Non-Contributing Member) necessary to ensure that the obligation meets the “straight debt safe harbor” described in Section 856(m) of the Code. 
 As of the Effective Date of any advance of a Member Loan, the Non-Contributing Member shall be deemed to have contributed an amount equal to the
principal amount of such Member Loan to the capital of the Company, and the Capital Account and Unrecovered Contribution Account of the Non-Contributing Member shall be credited with a like amount. Notwithstanding the provisions of Articles 5
and 8, until any and all Member Loans are repaid in full, the Non-Contributing Member shall draw no further distributions from the Company, and all cash or property otherwise distributable with respect to the Non-Contributing Member’s Interest
(or fees payable to the Non-Contributing Member or any of its Affiliates, excluding, however, any fees payable under Section 2.12) shall be distributed to the Contributing Member in repayment of the outstanding balance of the Member
Loan, with such funds being applied 

  

 17 

 
first to reduce any and all interest accrued on such Member Loan and then to reduce the principal amount thereof. Any amounts so applied shall be treated,
for all purposes under this Agreement, as having actually been distributed to the Non-Contributing Member and applied by the Non-Contributing Member to repay the outstanding Member Loan. 
 If, upon the maturity of a Member Loan (taking into account any agreed upon extensions thereof), any principal thereof or accrued interest thereon
remains outstanding, the Contributing Member shall elect one of the following options: (i) to renew such Member Loan (or portion thereof) pursuant to the terms and provisions of this Section 3.03(b) for an additional term of six
(6) months; (ii) to contribute all or any portion of such outstanding principal of and accrued, unpaid interest on such Member Loan (or portion thereof) to the capital of the Company and dilute the Percentage Interest of the
Non-Contributing Member in accordance with the provisions of Section 3.03(c); or (iii) elect to exercise the buy-sell provisions contained in Article 7 in accordance with the provisions of Sections 3.03(c) and (d), in
which event the Member Loan shall remain in effect until the closing of the buy-sell transaction contemplated under Article 7. The Contributing Member may elect any of the options set forth in the immediately preceding sentence by giving
written notice of such election to the Non-Contributing Member within thirty (30) days prior to such maturity date of the Member Loan. Failure of the Contributing Member to timely give such written notice to the Non-Contributing Member shall be
deemed to constitute an election to renew such Member Loan for an additional term of six (6) months on the terms set forth herein. 
 (c) Dilution. The Contributing Member may contribute to the capital of the Company, in cash, within thirty (30) days following the Contribution Date, an amount equal to the Delinquent Contribution, and the Capital Account and
Unrecovered Contribution Account of the Contributing Member shall be credited with the amount so contributed. In the alternative, if the Contributing Member elected to make a Member Loan, then upon the maturity of a Member Loan that is not fully
repaid on or before the maturity date thereof, the Contributing Member also may contribute to the capital of the Company, in accordance with the provisions of Section 3.03(b) above, all or any portion of the outstanding principal of and
accrued, unpaid interest on such Member Loan (or portion thereof) and (i) the amount of such outstanding principal and interest so contributed shall be deemed repaid and satisfied, (ii) the amount of such outstanding principal and interest
shall be deemed to have been distributed to the Non-Contributing Member, and debited from the Capital Account and Unrecovered Contribution Account of the Non-Contributing Member, and (iii) the Capital Account and Unrecovered Contribution
Account of the Contributing Member shall be increased by the amount of such outstanding principal and interest so contributed. 
 Upon the
contribution of any Delinquent Contribution (or the contribution of the principal and interest of any Member Loan by the Contributing Member pursuant to this Section 3.03(c)), the Percentage Interest (but not the Contribution Percentage)
of the Non-Contributing Member shall be decreased by the Dilution Percentage. The “Dilution Percentage” shall equal the amount expressed in percentage points (rounded to 

  

 18 

 
the nearest one-hundredth of a percentage point) calculated based upon the following formula: 
  

			
		 	Delinquent Contribution (or the outstanding balance of any Member Loan (including interest)) contributed by the Contributing Member
	Dilution Percentage = 200% x	 	 
		 	
		 	Aggregate amount of the balances standing in all of the Members’ respective Unrecovered Contribution Accounts (including the Additional Contribution contributed by the Contributing
Member(s) and the Delinquent Contribution or the outstanding balance of any Member Loan (including interest) contributed by the Contributing Member)

 The Percentage Interest, but not the Contribution Percentage, of the Contributing Member shall be
increased by the amount of the reduction in the Percentage Interest of the Non-Contributing Member. 
 The application of the provisions of
this Section 3.03(c) is illustrated by the following example: Assume that (i) the Unrecovered Contribution Amount of the Members was equal to $4,000,000, (ii) an Additional Contribution of $200,000 was required to be
contributed by the Members to the capital of the Company, (iii) the Non-Contributing Member whose aggregate Percentage Interest is 2.5% failed to contribute its share of such contribution of $5,000 (i.e., 2.5% x $200,000), and
(iv) pursuant to this Section 3.03(c), the Contributing Member whose Percentage Interest is 97.5% made the Delinquent Contribution of $5,000 to the capital of the Company on behalf of such Non-Contributing Member pursuant to this
Section 3.03(c). 
 The Dilution Percentage applicable to the Non-Contributing Member would be equal to 0.24 percentage points as
calculated in accordance with the following formula: 
  

					
		  		  	$       5,000
	0.24% = 200%	  	x	  	 $4,200,000

 The Percentage Interest of the Non-Contributing Member therefore would be reduced by 0.24 percentage points from
2.5% to 2.26%, and the Percentage Interest of the Contributing Member would be increased by a like amount of percentage points from 97.5% to 97.74%. 
 The Contribution Percentages of the Members would not be adjusted as a result of the foregoing dilution. 
  

 19 

 (d) Implementation of Buy-Sell. In addition to the options set forth in
Sections 3.03(b) and 3.03(c) above, the Contributing Member may elect to implement the buy-sell provisions contained in Article 7 for a Default Buy-Sell Event by delivery of written notice of such election to the Non-Contributing
Member in accordance with the provisions thereof (and in which case the Non-Contributing Member shall be deemed to be the Defaulting Member and the Contributing Member shall be deemed to be the Non-Defaulting Member for purposes of Article
7); provided, however, that if the Contributing Member so elects to implement the buy-sell provisions contained in Article 7 and the Contributing Member also exercises its rights under Section 3.03(c), then in computing the
Dilution Percentage in Section 3.03(c) in connection with the contribution of the Delinquent Contribution or any portion of the outstanding principal of and/or accrued, unpaid interest on any Member Loan that is the subject of the
Default Buy-Sell Event, the 200% number used in the dilution formula in Section 3.03(c) above shall be 100%. 
 (e)
Application of Provisions. Any and all adjustments to the Non-Contributing Member’s Percentage Interest shall be rounded to the nearest .01% and (except as provided otherwise in the first paragraph of Section 3.03(b)) the
Contributing Member shall not succeed to all or any portion of the Capital Account or Unrecovered Contribution Account of the Non-Contributing Member as the result of any such adjustment. In addition, notwithstanding any provision contained in this
Article 3, the Non-Contributing Member’s Percentage Interests shall in no event be reduced below .01% by operation of Section 3.03(d). As a result of any contribution to the capital of the Company pursuant to this
Section 3.03, the Contributing Member shall have the right, but not the obligation, to cause the Capital Accounts of the Members to be booked-up or booked-down in accordance with the provisions of Treasury Regulation Section
l.704-l(b)(2)(iv)(f) to reflect the fair market value of the Company’s assets (as reasonably determined by the Contributing Member) at the time of such contribution. 
 3.04 Debt Financing 
 The Members acknowledge that the Management Committee may cause the
Company to obtain debt financing from one or more third-party lenders in order to fund all or any portion of any actual or projected financial requirements of the Company or in connection with other costs that may be incurred by the Company. Any
such financing shall be obtained on the best available market rates and terms, all as determined in the sole and absolute discretion of the Management Committee. In connection with obtaining any financing, it is expected that the Lippert Members and
their respective Affiliates shall provide such repayment and “carve-out” guarantees that are customarily requested, and on such terms and conditions as are customarily requested, by lenders with respect to similar projects of similar size,
type and location. Paladin shall not be required to personally guarantee any financing obtained by the Company. 
  

 20 

 3.05 Loans from Members 
 The Management Committee may elect, in its discretion, to cause the Members to fund Project Shortfalls and other financial requirements of the Company as
loans to the Company in lieu of making Additional Contributions to the Company, on such terms and conditions as it shall determine from time to time. 
 3.06 Capital Contributions in General 
 Except as otherwise expressly provided in this
Agreement, (i) no part of the contributions of any Member to the capital of the Company may be withdrawn by such Member, (ii) no Member shall be entitled to receive interest on such Member’s contributions to the capital of the
Company, (iii) no Member shall have the right to demand or receive property other than cash in return for such Member’s contributions to the Company, and (iv) no Member shall be required or be entitled to contribute additional capital
to the Company other than as permitted or required by this Article 3. 
 ARTICLE 4 
 ALLOCATION OF PROFITS AND LOSSES 
 4.01 Allocation of Net Profits and Net Losses 
 (a) Net Profits. After application of Sections 4.02 and
4.03, Net Profits for each Fiscal Year shall be allocated among the Members in the following order and priority: 
 (i) first,
to the Members, in proportion to and to the extent of the amounts necessary to cause the cumulative allocations of Net Profits to each Member under this Section 4.01(a)(i) for the current and all prior Fiscal Years to equal the
cumulative allocations of Net Losses to such Member pursuant to Section 4.01(b)(iv) hereof; 
 (ii) second, to
Paladin, until the balance of Paladin’s Capital Account (as of the last day of such Fiscal Year, but adjusted to reflect any Net Profits for such Fiscal Year allocated to Paladin pursuant to Section 4.01(a)(i) and
Section 4.02 and 4.03 hereof) equals Paladin’s 12% IRR Amount (as of the last day of such Fiscal Year); 
 (iii) third, to the Lippert Members, in proportion to and to the extent of the amounts that would cause the balances of each of the Lippert Members’ Capital Accounts (as of the last day of such Fiscal Year, but adjusted to reflect any
Net Profits for such Fiscal Year allocated to such Lippert Member pursuant to Section 4.01(a)(i) and Section 4.02 and 4.03 hereof) to equal such Lippert Member’s 12% IRR Amount (as of the last day of such Fiscal Year);

  

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 (iv) fourth, subject to Section 4.03(b), 50% to Paladin, and 50% to the
Lippert Members, pro rata, in proportion to their respective Percentage Interests. 
 For purposes of determining the amount of Net Profits to be
allocated pursuant to Section 4.01(a)(ii) and (iii) for any Fiscal Year, the Capital Account of each Member shall be increased by such Member’s share of “partnership minimum gain” as of the last day of such Fiscal
Year, determined pursuant to Section 1.704-2(g)(1) of the Regulations, and by such Member’s share of “partner nonrecourse debt minimum gain” as of the last day of such Fiscal Year, determined pursuant to
Section 1.704-2(i)(5) of the Regulations.  
 (b) Net Losses. After application of Sections 4.02 and 4.03, Net
Losses for each Fiscal Year shall be allocated among the Members in the following order and priority: 
 (i) first, 50% to
Paladin, and 50% to the Lippert Members, pro rata, in proportion to their respective Percentage Interests, until the cumulative Net Losses allocated to each Member under this Section 4.01(b)(i) for the current and all prior Fiscal Years
equal the excess, if any, of (A) the cumulative Net Profits allocated to such Member pursuant to Section 4.01(a)(iii) for all prior Fiscal Years, over (B) the cumulative distributions to such Member pursuant to
Section 5.02(h); 
 (ii) second, to the Lippert Members, in proportion to and to the extent of the amounts that
would cause the Capital Accounts of each Lippert Member to equal zero; 
 (iii) third, to Paladin, until Paladin’s
Capital Account equals zero; 
 (iv) fourth, to the Members, in proportion to their Percentage Interests. 
 For purposes of determining the amount of Net Losses to be allocated pursuant to Section 4.01(b)(ii) and (iii) for any Fiscal Year, the Capital Account
of each Member shall be increased by such Member’s share of “partnership minimum gain” as of the last day of such Fiscal Year, determined pursuant to Section 1.704-2(g)(1) of the Regulations, and by such Member’s share of
“partner nonrecourse debt minimum gain” as of the last day of such Fiscal Year, determined pursuant to Section 1.704-2(i)(5) of the Regulations. 
 (c) Net Loss Limitation. Notwithstanding anything in this Agreement to the contrary, no Member shall be allocated Net Losses under Section 4.01(b) to the extent such allocation would cause or
increase an Adjusted Capital Account deficit for such Member as of the last day of the Fiscal Year to which such allocation relates. Any amounts not allocated to a Member pursuant to the limitation set forth in the preceding 

  

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sentence shall be allocated to the other Members in proportion to and to the extent that such allocations would not cause them to have, or increase their,
Adjusted Capital Account deficits. Any remaining Net Losses shall be allocated among the Members in proportion to their then-current respective Percentage Interests. This provision is intended to ensure that allocations of Net Losses have economic
effect pursuant to Treas. Reg. §1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. 
 4.02 Regulatory
Allocations 
 Prior to making any allocations pursuant to Sections 4.01 or 4.03 hereof, the following special allocations
shall be made each Fiscal Year, to the extent required, in the following order: 
 (a) Minimum Gain Chargebacks. Items
of Company income and gain shall be allocated for any Fiscal Year to the extent, and in an amount sufficient to satisfy the “minimum gain chargeback” requirements of Treasury Regulation Sections 1.704-2(f) and (i)(4). 
 (b) Qualified Income Offset. Items of Company income and gain shall be allocated any Fiscal Year to the extent, and in an amount
sufficient to satisfy the “qualified income offset” requirements of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3). 
 (c) Member Nonrecourse Deductions. Member Nonrecourse Deductions shall be allocated to the Member who bears the economic risk of loss associated with such deductions, in accordance with Treasury Regulations
Section 1.704-2(i). 
 (d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be allocated
among the Members in accordance with their Percentage Interests. 
 (e) Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Company asset pursuant to Sections 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the
Members in accordance with the requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(m). 
 (f)
Curative Allocations. The allocations set forth in Section 4.01(c) and 4.02(a) through (e) (the “Regulatory Allocations”) are intended to comply with certain requirements of Treasury Regulation Sections 1.704-1(b)
and 1.704- 

  

 23 

 
2. The Regulatory Allocations may affect results which would be inconsistent with the manner in which the Members intend to divide Company distributions.
Accordingly, Paladin authorized to specially allocate items of income, gain, loss or deduction which otherwise would be included in the computation of Net Profits and Net Losses and other items among the Members, to the extent that they exist, so
that, to the extent possible, the cumulative net amount of allocations of Company items under Sections 4.01, 4.02, and 4.03 hereof shall be equal to the net amount that would have been allocated to each Member if the Regulatory Allocations
had not occurred. Paladin will have discretion to accomplish this result in any reasonable manner that is consistent with Section 704 of the Code and the related Regulations. 
 4.03 Special Allocation 
 (a)
After giving effect to the allocations provided for in Section 4.02 hereof, items of gross income or gain shall be specially allocated for each Fiscal Year to the Members in proportion to and to the extent of the excess of (A) the
cumulative amounts distributed to each Member pursuant to Sections 5.01(a), (c), and (d) for the current and all prior Fiscal Years, over (B) the cumulative amounts allocated to each Members pursuant to this
Section 4.03(a) for all prior Fiscal Years; and 
 (b) Appropriate adjustments shall be made to the allocations provided for in
Section 4.01 hereof if a Cash Flow Bonus Forfeiture Event has existed at any time during the life of the Company, or if the Percentage Interests of the Members change pursuant to Section 3.03(c). 
 4.04 Other Allocation Rules 
 (a) Tax/Book Differences. In the event that any Company property has a book value which differs from the adjusted tax basis of such property, then allocations with respect to such property for income tax purposes shall be made in a
manner which takes into consideration differences between such book value and such adjusted tax basis in accordance with Section 704(c) of the Code, the Treasury Regulations promulgated thereunder and Treasury Regulation
Section 1.704-1(b)(2)(iv)(f)(4). Such allocations for income tax purposes shall be made using the traditional method or such other method as may be agreed to by the Members. Such tax allocations shall neither affect, nor in any way be taken
into account in computing, any Member’s Capital Account or share of Net Profits, Net Losses, other items, or distributions pursuant to any provision of this Agreement. 
 (b) Variations in Interests During any Fiscal Year. For purposes of determining the Net Profits, Net Losses, or any other items allocable to any
period, Net Profits, Net Losses, and any such other items shall be determined on a daily, monthly, interim closing of the books or other basis, as determined by the Management Committee using any permissible method under Section 706 of the Code
and the regulations promulgated thereunder. 
  

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 (c) Allocations of Items. Any allocation to a Member of Net Profit or Net Loss shall be treated as
an allocation to such Member of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Profit or Net Loss. Unless otherwise specified herein to the contrary, any allocation to a Member of items of
Company income, gain, loss, deduction or credit (or item thereof) shall be treated as an allocation of a pro rata portion of each item of Company income, gain, loss, deduction or credit (or item thereof). 
 ARTICLE 5 
 DISTRIBUTIONS 

 5.01 Distribution of Ordinary Cash Flow 
 Subject to the provisions of Sections 5.03, 7.04 and 8.02, Ordinary Cash Flow realized by the Company shall be distributed to the Members as soon as practicable following the Company’s receipt thereof in
the following order of priority: 
 (a) First, to Paladin until Paladin’s Unpaid Preferred Return has been reduced to
zero; 
 (b) Second, unless a Cash Flow Bonus Forfeiture Event exists, to the Property Manager until the Deferred Management
Fee Account has been reduced to zero; 
 (c) Third, to the Lippert Members, in proportion to and to the extent of the amounts
necessary to cause each of the Lippert Member’s Unpaid Preferred Return to be reduced to zero; and 
 (d) Thereafter,
seventy-five percent (75%) to Paladin and twenty-five percent (25%) to the Lippert Members, or if a Cash Flow Bonus Forfeiture Event exists, to the Members pro rata in accordance with their respective Percentage Interests. 
 5.02 Distribution of Extraordinary Cash Flow 
 Subject to the provisions of Sections 5.03, 7.04 and 8.02, Extraordinary Cash Flow realized by the Company shall be distributed to the Members as soon as practicable following the Company’s receipt thereof
in the following order of priority: 
 (a) First, unless a Cash Flow Bonus Forfeiture Event exists, to the Property Manager
until the Deferred Management Fee Account has been reduced to zero; 
  

 25 

 (b) Second, to Paladin until Paladin’s Unpaid Preferred Return is reduced to zero;

 (c) Third, to Paladin until Paladin’s Unrecovered Contribution Account is reduced to zero; 
 (d) Fourth, to Paladin until Paladin has received distributions under Section 5.01 and this Section 5.02 in an
amount equal to Paladin’s Threshold Return; 
 (e) Fifth, to the Lippert Members, in proportion to and to the extent of
the amounts necessary to cause each of the Lippert Member’s Unpaid Preferred Return to be reduced to zero; 
 (f) Sixth,
to the Lippert Members, in proportion to and to the extent of the amounts necessary to cause each of the Lippert Member’s Unrecovered Contribution Account to be reduced to zero; 
 (g) Seventh, to the Lippert Members, in proportion to and to the extent of the amounts necessary to cause each of the Lippert Members to
have received distributions under Section 5.01 and this Section 5.02 in an amount equal to such Lippert’s Member’s Threshold Return; and 
 (h) Thereafter, fifty percent (50%) to Paladin and fifty percent (50%) to the Lippert Members, pro rata in accordance with their
respective Percentage Interests, or if a Cash Flow Bonus Forfeiture Event exists, to the Members pro rata in accordance with their respective Percentage Interests. 
 5.03 Limitations on Distributions 
 Notwithstanding any other provision contained in this
Agreement, the Company shall not make a distribution of Cash Flow (or other proceeds) to any Member if such distribution would violate any applicable provision of the Delaware Act or other applicable law. 
 5.04 In-Kind Distribution 
 Assets of the Company (other than cash) shall not be distributed in kind to the Members without the prior written approval of the Members. 
 5.05 Right to Withhold 
 The Management Committee, on behalf of the Company, shall withhold from any distribution
such amounts as are required to be withheld by the laws of any taxing jurisdiction (as determined in the sole and absolute discretion of the Management Committee). In addition, the Management Committee, on behalf of the Company shall 

  

 26 

 
withhold from any distribution to any Member any amounts for which such Member (or any Affiliate thereof) may be liable or responsible to the Company, and
shall apply such withheld amount to such liability or responsibility. All amounts so withheld shall be treated as amounts distributed to the respective Member(s) on whose account the withholding was imposed. 
 ARTICLE 6 
 RESTRICTIONS ON
TRANSFERS OF COMPANY INTERESTS 
 6.01 Limitations on Transfer 
 Except as permitted pursuant to Section 6.02 below, no Member or assignee of a Member shall be entitled to sell, exchange, assign, transfer,
convey or otherwise dispose of, pledge, hypothecate, encumber or otherwise grant a security interest in, directly or indirectly, for value or no value, whether voluntary or involuntary (including by operation of law or other legal or equitable
proceedings) (collectively, “Transfer”), all or any part of such Member’s or assignee’s Interest, including, without limitation, Transfers of any economic interest, without the prior written consent of the other Members,
which consent may be granted or withheld in each such other Member’s sole discretion. Any attempted Transfer, or withdrawal by a Member in violation of the restrictions set forth in this Article 6 shall, unless this provision is waived
by the other Members (each acting in its sole and absolute discretion), be null and void ab initio and of no force or effect and, in addition to the other rights and remedies at law and in equity, any of the other Members shall be entitled to
injunctive relief enjoining the prohibited action. The Members expressly agree that damages at law would be an inadequate remedy for a breach or threatened breach of the Transfer restrictions set forth in this Agreement. 
 6.02 Permitted Transfers 
 Notwithstanding the foregoing, any Member may Transfer all or any portion of such Member’s Interest to any of the following (collectively, “Permitted Transferees”) without complying with the provisions of
Section 6.01: 
 (a) In the case of Transfers by Paladin, (i) any Transfer of any direct or indirect Interest
in Paladin to any Affiliate of Paladin and (ii) any Transfer of a direct or indirect interest in Paladin Realty Income Properties, L.P. or the Paladin REIT to any Person; and 
 (b) In the case of Transfers by any Lippert Member, any Transfer of an interest in Lippert Management or Lippert Holdings to any Immediate
Family Member of James Lippert or Teresa Lippert upon the death or disability of James Lippert or Theresa Lippert. 
  

 27 

 Upon receipt by the Management Committee of notice of such Transfer (along with a copy of the
instrument(s) of transfer), any such Permitted Transferees shall receive and hold such Interest or portion thereof, subject to the terms of this Agreement (including Article 4) and to the obligations hereunder of the transferor, and there
shall be no further Transfer of such Interest (or economic interest) or portion thereof except to a Person to whom such Permitted Transferee could have transferred such Interest (or economic interest) or portion thereof in accordance with this
Section 6.02 had such Permitted Transferee originally been a Member or otherwise in accordance with the terms of this Agreement. Notwithstanding any other provision contained herein, any Transfer described in this
Section 6.02 shall be null and void ab initio and of no force or effect if such Transfer would otherwise violate the provisions of Section 6.04. 
 6.03 Admission of Substitute Members 
 If any Member Transfers such Member’s Interest to a transferee in accordance with Sections 6.01 or 6.02, then such transferee shall only be entitled to be admitted into the Company as a substitute Member if (i) the
books and records of the Company are amended to reflect such admission; (ii) the Management Committee approves the admission of such transferee (but only in the event of a transfer in accordance with Section 6.01) and approves the
form and content of the instrument of transfer; (iii) the transferor and transferee named therein execute and acknowledge such other instruments as the Management Committee may deem reasonably necessary to effectuate such admission;
(iv) the transferee in writing accepts and adopts all of the terms and conditions of this Agreement, as the same may have been amended; and (v) the transferor pays, as the Management Committee may reasonably determine, all reasonable
expenses incurred in connection with such admission, including, without limitation, legal fees and costs. In the event of a Transfer in part of a Member’s Interest under Section 6.02 and the admission of the transferee into the
Company as a member, such transferee member shall be required to act together as one Person with the Person(s) holding the remainder of the entire Interest as of the date of this Agreement from whence such transferee member’s interest
originally derived. To the fullest extent permitted by law, any transferee of an Interest who does not become a substituted Member shall have no right to require any information or account of the Company’s transactions, to inspect the Company
books, or to vote on any of the matters as to which a Member would be entitled to vote under this Agreement. Any such transferee shall only be entitled to share, as an assignee, in such Net Profits and Net Losses, to receive such distributions, and
to receive such allocations of income, gain, loss, deduction or credit or similar items to which the transferor was entitled, to the extent assigned. A Member that Transfers its Interest shall not cease to be a member of the Company until the
admission of the transferee as a substituted member of the Company and, except as provided in the preceding sentence, shall continue to be entitled to exercise, and shall continue to be subject to, all of the rights, duties and obligations of such
Member under this Agreement. 
  

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 6.04 Additional Restrictions on Transfer 
 Notwithstanding any other provision contained herein, unless the Management Committee waives any applicable restriction set forth in this
Section 6.04, any Transfer described in this Article 6 shall be null and void ab initio and of no force or effect if: (i) such Transfer requires the registration of such Interest pursuant to, or otherwise directly or
indirectly violates, any applicable federal or state securities laws; (ii) such transfer causes or will cause the Company to become a “Publicly Traded Partnership” as such term is defined in Section 7704(b) of the Code;
(iii) such Transfer results in a violation of applicable laws; (iv) such Transfer would, in the opinion of the Company’s counsel, cause the Company to cease to be classified as a partnership for state and federal income tax purposes;
(v) such Transfer is made to any Person lacking the legal power or capacity to own any Interest; or (vi) such Transfer causes an acceleration of any loan or debt instrument to which the Company is a party. 
 6.05 Paladin Purchase Option 
 (a) Grant of Option. The Lippert Members hereby grant to Paladin the right and option to purchase all of the Interests of the Lippert Members (the “Purchase Option”) for the purchase price determined in accordance
with Section 6.05(b) (the “Option Price”) and otherwise upon and subject to the following terms and conditions of this Section 6.05. The Purchase Option may be exercised at any time and from time to time after the
first anniversary of the date of this Agreement by written notice from Paladin to the Lippert Members (the “Option Notice”). 
 (b) Option Price. For a period of thirty (30) days following the Effective Date of the Option Notice, the Members shall attempt to agree upon the Option Price. If the Members are unable to agree on the Option Price within such
thirty (30) day period, then the Option Purchase Price shall be determined in accordance with the provisions of the following provisions of this Section 6.05. Within fifteen (15) days after the expiration of such thirty
(30) day period, Paladin shall select one (1) Qualified Appraiser and shall notify the Lippert Members in writing of such selection. Within fifteen (15) days following the Effective Date of such notice from Paladin, the Lippert
Members (acting together as one Person) shall either agree to the Qualified Appraiser selected by Paladin or select a second (2nd) Qualified Appraiser and give written notice to Paladin of the Person so selected. If either Paladin or the
Lippert Members fail to appoint a Qualified Appraiser within the time period specified above and after the expiration of five (5) days following the Effective Date of written demand that a Qualified Appraiser be appointed, the Qualified
Appraiser duly appointed by the Member making such demand to appoint such Qualified Appraiser shall proceed to make the appraisal as herein set forth, and the determination thereof shall be conclusive on all the Members. Thereafter the Qualified
Appraiser or two (2) Qualified Appraisers shall determine the Appraised Value in accordance with the provisions of Section 7.03(b)(1)-(3). Within thirty (30) days after such determination of the Appraised Value of the Company,
the accountants regularly employed by the Company shall determine the Option Price, which shall be an amount equal to the amount of cash which would be distributed to the Lippert Members pursuant to Section 5.02 if (i) the Company
(including all of its assets) were sold (as applicable) 

  

 29 

 
for the Appraised Value thereof as of the Effective Date of the Option Notice (after deducting therefrom an amount equal to reasonable and customary closing
costs); (ii) the remaining liabilities of the Company were liquidated pursuant to Section 8.02(a); (iii) reasonable reserves were established for any contingent, conditional or unmatured liabilities or obligations of the
Company pursuant to Section 8.02(b); and (iv) the Company distributed any remaining amounts to the Lippert Members in accordance with the provisions of Section 5.02. Upon such determination, the accountants regularly
employed by the Company shall give each Member a notice thereof. 
 (c) Closing. The closing of the purchase by Paladin of the
Interests of the Lippert Members shall occur on or before the date that is thirty (30) days after the determination of the Option Price. Paladin shall pay the Option Price to the Lippert Members, in cash, on the closing date, and at the
closing, the Lippert Members shall execute such instruments of conveyance and make such representations and warranties as Paladin shall reasonably request to deliver good title to all of the Interests of the Lippert Members, free and clear of all
liens, pledges, encumbrances, security interests or restrictions of any kind whatsoever (other than restrictions on transfer arising under federal and state securities laws). 
 6.06 Election; Allocations Between Transferor and Transferee 
 Upon the Transfer of the Interest of any Member or the distribution of any property of the Company to a Member, the Company may file, with the approval of the Management Committee, in its sole and absolute discretion,
an election in accordance with applicable Treasury Regulations, to cause the basis of the Company property to be adjusted for federal income tax purposes as provided by Sections 734 and 743 of the Code. 
 6.07 Partition 
 No Member
shall have the right to partition any assets of the Company or any interest therein, nor shall a Member make an application or proceeding for a partition thereto and, upon any breach of the provisions of this Section 6.07 by any Member,
the other Member (in addition to all rights and remedies afforded by law or equity) shall be entitled to a decree or order restraining or enjoining such application, action or proceeding. Upon the Transfer of all or any part of the Interest of a
Member as hereinabove provided, Net Profits and Net Losses shall be allocated between the transferor and transferee on the basis of the computation method which with the approval of the Management Committee, in its sole and absolute discretion, is
in the best interests of the Company, provided such method is in conformity with the methods prescribed by Section 706 of the Code and Treasury Regulation Section 1.706-1(c)(2)(ii). 
  

 30 

 6.08 Waiver of Withdrawal 
 No Member may voluntarily withdraw, resign or retire from the Company without the prior written consent of the Members, which consent may be granted or
withheld in each such Member’s sole and absolute discretion. Each Member hereby waives any and all rights such Member may have to withdraw or resign from the Company pursuant to the Delaware Act or otherwise and hereby waives any and all rights
such Member may have to receive the fair value of such Member’s Interest in the Company upon such withdrawal, resignation or retirement pursuant to the Delaware Act. No admission or withdrawal of a Member, whether in accordance with this
Agreement or otherwise, shall cause the dissolution of the Company except as otherwise provided in Section 8.01. Any purported admission, withdrawal or removal which is not in accordance with this Agreement shall be null and void and, in
addition to other rights and remedies at law and in equity, the other Member(s) shall be entitled to injunctive relief enjoining the prohibited action. The Members expressly acknowledge that damages at law would be an inadequate remedy for a breach
or threatened breach of the foregoing restrictions. 
 ARTICLE 7 
 DEFAULT BUY-SELL AGREEMENT 
 7.01 Default Buy-Sell Events 

 For purposes of this Article 7, the following shall constitute “Default Buy-Sell Events”: 
 (a) Prohibited Withdrawal or Retirement. The withdrawal, retirement, or other cessation to serve as a Member of the Company by any
Member in violation of the terms of this Agreement; 
 (b) Default by the Operating Member. The fraud, willful
misconduct, gross negligence or Material Breach (which shall include the notice and cure provisions to the extent provided in the definition of Material Breach) by the Operating Member (or its representatives) in performing or failing to perform the
Operating Member’s duties and obligations under this Agreement; 
 (c) Prohibited Transfer or Encumbrance. Any
Transfer or encumbrance or attempted Transfer or encumbrance by any Member of such Member’s Interest contrary to the provisions of Article 6; 
 (d) Breach of Agreement. Any Material Breach (which shall include the notice and cure provisions to the extent provided in the
definition of Material Breach) by any Member (except for the failure of any Member to make an Additional Contribution required hereunder); 
  

 31 

 (e) Bankruptcy or Insolvency. The rendering, by a court with appropriate
jurisdiction, of a decree or order (i) adjudging a Member bankrupt or insolvent; or (ii) approving as properly filed a petition seeking reorganization, readjustment, arrangement, composition, or similar relief for a Member under the
federal bankruptcy laws or any other similar applicable law or practice, and if such decree or order referred to in this Section 7.01(e) shall have continued undischarged and unstayed for a period of sixty (60) days; 
 (f) Appointment of Receiver. The rendering, by a court with appropriate jurisdiction, of a decree or order (i) for the
appointment of a receiver, a liquidator, or a trustee or assignee in bankruptcy or insolvency of a Member, or for the winding up and liquidation of a Member’s affairs, provided that such decree or order shall have remained in force undischarged
and unstayed for a period of ninety (90) days, or (ii) for the sequestration or attachment of any property of a Member without its return to the possession of such Member or its release from such sequestration or attachment within ninety
(90) days thereafter; and 
 (g) Bankruptcy Proceedings. A Member (i) institutes proceedings to be
adjudicated a voluntary bankrupt or an insolvent, (ii) consents to the filing of a bankruptcy proceeding against such Member, (iii) is unable to or admits in writing such Member’s inability to pay such Member’s debts generally as
they become due, or (iv) files a petition or answer or consent seeking reorganization, readjustment, arrangement, composition, or similar relief for such Member under the federal bankruptcy laws or any other similar applicable law or practice,
(iv) consents to the filing of any such petition, or to the appointment of a receiver, a liquidator, or a trustee or assignee in bankruptcy or insolvency for such Member or a substantial part of such Member’s property, (v) makes an
assignment for the benefit of such Member’s creditors, or (vi) takes any action in furtherance of any of the aforesaid purposes. 
 For the purposes of implementing the provisions contained in this Article 7 and otherwise for purposes of this Agreement, (A) each of the events set forth in Sections 7.01(a)-(g) shall constitute a “Default
Buy-Sell Event”; (B) the “Defaulting Member” shall be (i) in the case of the occurrence of the event referenced in Section 7.01(a), the Member that has withdrawn, retired or ceased to serve as a Member
of the Company in violation of the terms of this Agreement; (ii) in the case of the occurrence of the event referenced in Section 7.01(b), the Operating Member; (iii) in the case of the occurrence of the event referenced in
Section 7.01(c), the Member that purports to undertake a Transfer of such Member’s rights or interests contrary to the provisions of Article 6; (iv) in the case of the occurrence of the event referenced in
Section 7.01(d), the Member that has breached any material covenant, duty or obligation under this Agreement; and (v) in the case of any of the events referenced in Section 7.01(e), (f), or (g), the Member who is the
subject of such court decree or order or has instituted such proceedings or filed such petitions or who is insolvent, etc; and (C) the “Non-Defaulting  

  

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Member” is the Member that is not the Defaulting Member. In addition, for purposes of implementing the provisions of this Article VII, a
Default Buy/Sell Event with respect one of the Lippert Members shall constitute a Default Buy/Sell Event with respect to all of the Lippert Members, and with respect to any Default Buy/Sell Event, the Lippert Members shall be treated and act
collectively as one Member (and shall be either the Defaulting Member or the Non-Defaulting Member, as the case may be). 
 7.02 Rights
Arising From a Default Buy-Sell Event 
 At any time following the occurrence of a Default Buy-Sell Event, the Non-Defaulting Member
shall have the right (but shall not be obligated to) either to (i) cause the sale of the Company or its assets to any unaffiliated third party for a purchase price based upon the sole and absolute judgment of the Non-Defaulting Member
(“Third-Party Purchase Price,” as further set forth in Section 7.03(c)), and such other terms and conditions as are determined in the sole discretion of the Non-Defaulting Member or (ii) purchase the Interest of the
Defaulting Member in accordance with the terms and conditions set forth in this Article 7, in either case, by delivering written notice (“Default Notice”) thereof to the Defaulting Member, or (iii) exercise any other
rights or remedies available to the Non-Defaulting Member under this Agreement or at law or in equity as a result of such Default Buy-Sell Event; provided, however, that the failure of the Non-Defaulting Member to exercise any of the
foregoing rights shall not be deemed to constitute a waiver of any Default Buy-Sell Event or any rights and remedies (and the provisions of Section 7.09 shall apply to the Defaulting Member). For a period of fifteen (15) days
following the Effective Date of any Default Notice, the Members shall attempt to agree upon a purchase price for the Defaulting Member’s Interest (the “Buyout Purchase Price”) in the event the Non-Defaulting Member desires to
purchase the Interest of the Defaulting Member. If the Members are unable to agree on a Buyout Purchase Price, then the Default Purchase Price shall be determined in accordance with the provisions of Section 7.03(a) based on the
Appraised Value as determined pursuant to Section 7.03(b). 
 7.03 Determination of Purchase Price 
 (a) Member Buyout. Within thirty (30) days after the determination of the Buyout Purchase Price or, in the absence thereof, the determination
of the Appraised Value of the Company pursuant to Section 7.03(b), the accountants regularly employed by the Company shall determine the amount of cash which would be distributed to each Member pursuant to Section 5.02 if
(i) the Company (including all of its assets) were sold (as applicable) for the Buyout Purchase Price or Appraised Value thereof (as applicable) as of the Effective Date of the Default Notice (after deducting therefrom an amount equal to
reasonable and customary closing costs); (ii) the remaining liabilities of the Company were liquidated pursuant to Section 8.02(a); (iii) reasonable reserves were established for any contingent, conditional or unmatured
liabilities or obligations of the Company pursuant to Section 8.02(b); (iv) if (and only if) the Defaulting Member is a Lippert Member, a Cash Flow Bonus Forfeiture Event existed for purposes of Sections 5.01(d) 

  

 33 

 
and 5.02(h); and (v) the Company distributed any remaining amounts to the Members in accordance with the provisions of Section 5.02. Upon
such determination, the accountants regularly employed by the Company shall give each Member a notice thereof (the “Price Determination Notice”). The determination by the accountants of such amounts, including all components
thereof, shall be deemed conclusive absent any material computational error. If the Non-Defaulting Member purchases the Interest of the Defaulting Member, ninety percent (90%) of the amount that would be distributed to the Defaulting Member
pursuant to clause (v) above shall be deemed to be the “Default Purchase Price” for purposes of this Article 7; provided, however, that if the Buy-Sell Event applicable to the Defaulting Member is not one of the
Buy-Sell Events referenced in Sections 7.01(a), (b), (c) or (d), then one hundred percent (100%) of the amount that would be distributed to the Defaulting Member pursuant to clause (v) above shall be deemed to be the
“Default Purchase Price” for purposes of this Article 7. 
 (b) Determination of Appraised Value. For purposes
of this Article 7 and Section 6.05, the appraised value (“Appraised Value”) of the assets of the Company shall be determined by one (1) or more independent Qualified Appraisers. The Non-Defaulting Member
shall select one (1) Qualified Appraiser and shall include such selection in the Default Notice. Within fifteen (15) days following the Effective Date of the Default Notice, the Defaulting Member shall either agree to the Qualified
Appraiser selected by the Non-Defaulting Member or select a second (2nd) Qualified Appraiser and give written notice to the Non-Defaulting Member of the person so selected. If either the Non-Defaulting Member or the Defaulting Member fails to
appoint a Qualified Appraiser within the time period specified and after the expiration of five (5) days following the Effective Date of written demand that a Qualified Appraiser be appointed, the Qualified Appraiser duly appointed by the
Member making such demand to appoint such Qualified Appraiser shall proceed to make the appraisal as herein set forth, and the determination thereof shall be conclusive on all the Members. 
 (1) The Qualified Appraiser or two (2) Qualified Appraisers, as the case may be, shall promptly fix a time for the completion of the
appraisal, which shall not be later than thirty (30) days from the Effective Date of the appointment of the last Qualified Appraiser. 
 (2) The Qualified Appraiser(s) shall determine the Appraised Value by determining the fair market value of the assets of the Company, such being the fairest price estimated in the terms of money which the Company
could obtain if the assets of the Company were sold, for all cash, in the open market allowing a reasonable time to find a purchaser. 
 (3) Upon submission of the appraisals setting forth the opinions as to the Appraised Value of the assets of the Company, the average of the two (2) appraisals shall constitute the Appraised Value of the assets of
the Company for purposes of this Article 7. 
  

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 (c) Sale to Third Party. Within ten (10) days after the closing of any sale of the Company or
its assets to any third party pursuant to clause (i) of Section 7.02, the accountants regularly employed by the Company shall determine the amount of cash which would be distributed to each Member pursuant to
Section 5.02 after (i) the sale of the Company (including all of its assets) to the third party for the Third-Party Purchase Price as of the closing of the sale of the Company or its assets (after deducting therefrom an amount equal
to reasonable and customary closing costs and any prepayment fees on any indebtedness that would be payable in connection with any such sale); (ii) the liquidation of the remaining liabilities of the Company pursuant to
Section 8.02(a); (iii) the establishment of reserves in an amount reasonably determined by the Non-Defaulting Member for any contingent, conditional or unmatured liabilities or obligations of the Company pursuant to
Section 8.02(b); (iv) if a Lippert Member is the Defaulting Member, the existence of a Cash Flow Bonus Forfeiture Event for purposes of Sections 5.01(d) and 5.02(h); and (v) the distribution by the Company of any
remaining amounts to the Members in accordance with the provisions of Section 5.02. Upon such determination, the accountants regularly employed by the Company shall give each Member a Price Determination Notice thereof. The determination
by the accountants of such amounts, including all components thereof, shall be deemed conclusive absent any material computational error. In the event of any such third party sale, ninety percent (90%) of the amount that would be distributed to
the Defaulting Member pursuant to clause (v) above shall be deemed to be the “Default Purchase Price” for purposes of this Article 7. 
 (d) Payment of Costs. The Non-Defaulting Member shall pay for the services of the Qualified
Appraiser appointed by such Member, and the Defaulting Member shall pay for the services of the Qualified Appraiser appointed by such Member. The cost of the services of the third (3rd) Qualified Appraiser, if any, shall be paid
one-half ( 1/2) by the Non-Defaulting Member and one-half ( 1/2) by the Defaulting Member. The costs of the services of the accountants and, in the event only one (1) Qualified Appraiser is required, the cost of
the services of such Qualified Appraiser, shall be paid one-half ( 1/2) by the Non-Defaulting Member and one-half
( 1/2) by the Defaulting Member. 
 7.04 Member’s Option 
 For a period of ninety (90) days following the determination of the Default Purchase Price pursuant to Section 7.03(a), the Non-Defaulting Member shall have the right, but not the obligation, to (i) purchase the entire
Defaulting Member’s Interest for the Default Purchase Price thereof (as determined pursuant to Section 7.03(a)), and on the terms and conditions set forth in this Article 7, (ii) elect to sell the Company or cause the
Company to sell its assets to a third party in accordance with the provisions set forth above in this Article 7 or (iii) waive the right to purchase the Defaulting Member’s Interest or cause such third party sale with respect to the
particular Default Buy-Sell Event, in each case by delivering written notice thereof to the Defaulting Member within such thirty (30)-day period. The failure of the Non-Defaulting Member to timely give 

  

 35 

 
any such written notice pursuant to this Section 7.04 shall be deemed an election by such Member to waive such rights with respect to the
particular Buy-Sell Event that resulted in the implementation of the provisions of this Article 7. If the Non-Defaulting Member elects to sell the Company or cause the Company to sell its assets to a third party in accordance with the
provisions set forth above in this Article 7, then, in lieu of electing to purchase the Defaulting Member’s Interest, at the Non-Defaulting Member’s option, the Non-Defaulting Member may cause the sale to such third party to occur.
If the Non-Defaulting Member causes the sale to such third party to occur, then, notwithstanding the provisions of Articles 5 and 8 (and any other provision contained in this Agreement), the aggregate amount of Cash Flow to be
distributed to the Defaulting Member from such sale shall be equal to the Default Purchase Price for the Defaulting Member’s Interest determined in accordance with the provisions of Section 7.03(c) and the balance of such proceeds
shall be distributed to the Non-Defaulting Member. 
 7.05 Closing of Purchase and Sale 
 The closing of any purchase and sale of the Interest of any Member selling its Interest (the “Selling Member”) pursuant to this
Article 7 shall be held at the principal office of the Member that is purchasing the Interest of the Selling Member (the “Purchasing Member”) Member (or its counsel) on or before the forty-fifth (45th) day after the
expiration of the applicable thirty (30)-day period set forth in Section 7.04 (if applicable), or, if earlier, the forty-fifth (45th) day after the Effective Date of the Default Notice or Buy-Sell Notice, as applicable). The Selling
Member shall transfer to the Purchasing Member (or such Member’s nominee(s)) the entire Interest of the Selling Member free and clear of all liens, security interests, and competing claims and shall deliver to the Purchasing Member (or such
Member’s nominee(s)) such instruments of transfer and such evidence of due authorization, execution, and delivery, and of the absence of any such liens, security interests, or competing claims as such Purchasing Member (or such Member’s
nominee(s)) shall reasonably request. 
 7.06 Payment of Purchase Price 
 The Purchase Price for the purchase of the Selling Member’s Interest shall be paid by the Purchasing Member (or such Member’s nominee(s)) at
the closing, in cash or one (1) or more certified or bank cashier’s checks drawn and made payable to the order of the Selling Member. If the Company or its assets are sold to a third party pursuant to this Article 7, then the entire
Third Party Purchase Price shall be paid concurrently with such closing. 
 7.07 Release and Indemnity 
 On or before the closing of a purchase held pursuant to this Article 7, the Purchasing Member shall use such Member’s reasonable efforts to
obtain written releases of the Selling Member (and such Member’s Affiliates) from all liabilities of the Company 

  

 36 

 
and from all guarantees of such liabilities of the Company previously executed by the Selling Member (and its Affiliates). To the extent such releases cannot
be obtained by the Purchasing Member, the Purchasing Member shall indemnify, defend, protect and hold the Selling Member (and such Affiliates) wholly free and harmless from and against any and all claims, liabilities, causes of action, liens,
charges, and all other matters arising from such liabilities or guarantees, arising subsequent to the Effective Date of such closing. 
 7.08 Repayment of Member Loans 
 The Purchase Price to be paid by the Purchasing Member for the Interest of the
Selling Member shall be offset at the closing of such purchase by the then outstanding principal balance (together with all accrued, unpaid interest thereon) of any and all (i) Member Loans made by the Purchasing Member to the Selling Member
and (ii) loans or advances of funds made by the Company to the Selling Member (each a “Seller Loan”). Such Member Loans and Seller Loans (together with all accrued, unpaid interest thereon) shall be deemed paid to the extent of
such offset, with such deemed payment to be applied first to the accrued interest thereon and thereafter to the payment of the outstanding principal amount thereof. If the Purchase Price for the Defaulting Member’s Interest is insufficient to
fully offset the then unpaid principal balance of any and all Member Loans and Seller Loans (together with all accrued, unpaid interest thereon), then the portion of any such Member Loans and Seller Loans (and accrued, unpaid interest thereon) that
remains outstanding following such offset shall be due and payable in full at the closing of the purchase of the Selling Member’s Interest pursuant to this Article 7. Also, notwithstanding any other provision contained in this Agreement,
the unpaid principal balance of any and all Member Loans and Seller Loans (together with all accrued, unpaid interest thereon) shall be due and payable in full at the closing of the purchase of the Selling Member’s Interest pursuant to this
Article 7. 
 7.09 Voting Rights Following Default Buy-Sell Event 
 From and after the occurrence of a Default Buy-Sell Event (unless and until the Non-Defaulting Member waives in writing any Default Buy-Sell Event or
fails to timely consummate the closing of any applicable transaction described in this Article 7 pursuant to Section 7.05), (i) the Defaulting Member shall not be entitled to participate in the management of, or otherwise
vote upon, any matter affecting the business and affairs of, the Company or any matter that such Member is entitled to vote upon under this Agreement, (ii) the Defaulting Member shall no longer have any right to appoint any representative to
the Management Committee and any previously appointed representatives of the Defaulting Member shall be replaced by one (1) or more representatives to be appointed by the Non-Defaulting Member, and (iii) the rights of the Defaulting Member
shall be limited solely to those of an assignee. 
  

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 7.10 Withdrawal of the Selling Member 
 If the Interest of the Selling Member is purchased by the Purchasing Member pursuant to this Article 7, then, effective as of the closing for such
purchase, (i) the Selling Member shall withdraw as a Member of the Company, and (ii) if the Selling Member is the Lippert Members, then Lippert Management shall be automatically removed as the Operating Member of the Company. In connection
with any such withdrawal of the Selling Member, the Purchasing Member may cause any nominee designated in the sole and absolute discretion of the Purchasing Member to be admitted as a substitute partner of the Company. 
 ARTICLE 8 
 DISSOLUTION AND
WINDING UP OF THE COMPANY 
 8.01 Events Causing Dissolution of the Company 
 Upon any Member’s bankruptcy, retirement, resignation, expulsion or other cessation to serve, or the admission or substitution of a new Member, the
Company shall not be dissolved but its business shall continue without interruption or break in continuity. Upon the bankruptcy, retirement, resignation, expulsion or other cessation to serve of any Member, the other Member shall continue to serve
as a Member of the Company in accordance with the provisions of this Agreement. The Company shall be dissolved upon the first to occur of: (a) the expiration of the term of the Company, unless such term has been extended by the unanimous
agreement of the Members; (b) the sale, transfer or other disposition by the Company of all or substantially all of its assets and the collection by the Company of its distributive share of any and all cash proceeds delivered therefrom; or
(c) the affirmative election of the Management Committee to dissolve the Company. Except as may be permitted in accordance with this Section 8.01 or other terms of this Agreement, no Member shall have the right to, and each Member
hereby agrees that it shall not, seek to dissolve or cause the dissolution of the Company or seek to cause a partial or whole distribution or sale of Company assets whether by court action or otherwise, it being agreed that any actual or attempted
dissolution, distribution or sale would cause a substantial hardship to the Company and the remaining Members. 
 8.02 Winding Up of
the Company 
 Upon the Liquidation of the Company caused by other than the termination of the Company under
Section 708(b)(1)(B) of the Code (in which latter case the Company shall remain in existence in accordance with the provisions of such Section of the Code), the Members shall proceed to the winding up of the affairs of the Company. During such
winding up process, the Net Profits, Net Losses and Cash Flow distributions shall continue to be shared by the Members in accordance with this Agreement. The assets shall be liquidated as promptly as consistent with obtaining a fair value therefor,
and the proceeds therefrom, to the extent available, shall be applied and distributed by the Company on or before the end of the taxable year of such Liquidation or, if later, within ninety (90) days after such Liquidation, in the following
order: (a) first, to creditors of the Company (including Members who are creditors), in the order of priority as provided 

  

 38 

 
by law, (b) second, to the setting up of any reasonable reserves which the Management Committee deems reasonably necessary for any contingent,
conditional or unmatured liabilities or obligations of the Company (which shall be distributed as soon as reasonably practicable to the Members in proportion to their respective positive Capital Account balances), and (c) thereafter, to the
Members in accordance with Section 5.02 hereof. 
 8.03 No Negative Capital Account Restoration 
 No Member shall have any obligation whatsoever upon the Liquidation of such Member’s Interest, the Liquidation of the Company or in any other event,
to contribute all or any portion of any negative balance standing in such Member’s Capital Account to the Company, to any other Member or to any other Person. 
 ARTICLE 9 
 BOOKS AND RECORDS;  
 ACCOUNTING; TAX ELECTIONS 
 9.01 Company Books 

The Operating Member shall cause to be kept, at the principal office of the Company, or at such other location as the Management Committee shall
reasonably deem appropriate, full and proper ledgers, other books of account, and records of all receipts and disbursements, other financial activities, and the internal affairs of the Company for at least the current and past four (4) Fiscal
Years. 
 9.02 Delivery of Records; Inspection 
 The Operating Member, subject to such reasonable standards as may be established from time to time by the Management Committee, shall deliver to any Member (or, to the extent so directed, to its agent or attorney) a
copy of the following information at any time if requested in writing: 
 (a) Financial Reports. True and full
information regarding the status of the business and financial condition of the Company (including, without limitation, the annual financial reports and all supporting calculations and information for such reports), including (without limitation,)
the information required by Section 9.03(c); 
 (b) Tax Returns. Promptly after becoming available, copies
of the Company’s federal, state and local income or information tax returns for the year; 
 (c) Names and
Addresses. A current list of the name and last known-business, residence or mailing address of each Member and the date on which each became a Member; 
  

 39 

 (d) Formation Documents. A copy of this Agreement, as amended, and any other
formation documents for the Company, together with executed copies of any written powers of attorney pursuant to which this Agreement, as amended, and any other formation documents have been executed; and 
 (e) Contribution Information. True and full information regarding the amount of cash and a description and statement of the agreed
value of any other property or services contributed by each Member and which each Member has agreed to contribute in the future. 
 Any
Member (personally or through an authorized representative) may, for any purpose reasonably related to such Member’s Interest, inspect and copy (at its own cost and expense) the books and records of the Company at all reasonable business hours.

 9.03 Reports and Tax Information 
 (a) General. The Operating Member shall cause to be prepared, at the cost and expense of the Company, and delivered to each Member at such times as are determined by the Management Committee (or otherwise in
accordance with the terms of this Agreement), the Annual Business Plans, the Operating Budgets, any and all periodic operating reports, and any and all other financial statements or reports requested from time to time by any representative of the
Management Committee. In addition, the Operating Member shall cause to be prepared, at the cost and expense of the Company, and delivered to each Member, within ninety (90) days after the end of each tax year, the information necessary for such
Member to complete its federal, state and local income tax or information returns. 
 (b) Tax Returns. The Operating Member shall
cause to be prepared by a reputable accounting firm approved by the Management Committee and delivered to each Member, within ninety (90) days from and after the final day of each tax year, the Company’s federal, state and local income or
information tax returns for the year, as well as any additional information necessary for such Member to complete its federal, state and local income tax or information returns. In addition, upon the request of any Member, the Operating Member shall
prepare estimates of the projected federal, state and local taxable income of the Company, and the portion thereof allocable to each Member, within a reasonable time period specified by the Member prior to the end of each tax year. 
 (c) Periodic Financial Statements. The Operating Member shall furnish quarterly financial statements, including a balance sheet, income statement,
statement of Members’ capital, statement of cash flows and notes thereon, that are prepared on a historical cost basis in accordance with generally accepted accounting principles within fifteen (15) calendar days following the close of a
given quarter. 
  

 40 

 (d) Audited Financial Statements. The Operating Member shall prepare, at the expense of the
Company, and furnish the following information to each Member within sixty (60) calendar days after the end of each Fiscal Year (with a final reviewable draft thereof to be furnished to each Member within forty-five (45) days after the end
of each Fiscal Year): (i) an audited balance sheet of the Company dated as of the end of such Fiscal Year, (ii) an audited related income statement of the Company for such Fiscal Year, (iii) an audited statement of cash flows for such
Fiscal Year, (iv) an audited statement of each Member’s Capital Account for such Fiscal Year, and (v) notes thereon, prepared on a historical cost basis in accordance with generally accepted accounting principles, all of which shall
be certified by the Operating Member as being, to the best of its knowledge, true and correct and all of which shall be certified in the customary manner by a reputable accounting firm approved by the Management Committee (which firm shall provide
such balance sheet, income statement and statement of Capital Account in draft form within forty (40) calendar days after the end of each Fiscal Year, to the Members for review prior to finalization and certification thereof). 
 (e) Securities Exchange Act. The Operating Member acknowledges that the financial statements of the Company will be consolidated with
those of the Paladin REIT and that the Paladin REIT is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. The Operating Member shall permit the officers, agents and representatives of the Paladin REIT
(including its attorneys and accountants) to have unfettered access to such financial and other information for the Company at such times as such officer, agent or representatives may reasonably request to enable the Paladin REIT to obtain the
information required in order to timely comply with such reporting requirements. The Operating Member, at its expense, shall employ, or contract with, such individuals and implement such accounting practices and procedures as are necessary for
the provision of a reasonably professional level of accounting, reporting and internal controls for the Company, including (without limitation) the provision of the following: (i) documentation of property level and corporate accounting and
financial reporting policies and procedures; (ii) documentation of Information Technology (IT) policies and procedures, and disaster recovery plan; (iii) “sign off” by Lippert Management’s property, accounting and
supervisory/review personnel after their preparation, review and/or approval of accounting transactions and workpapers, and (iv) preparation of written variance analysis of significant accounts quarterly and year-to-date, as compared to the
prior year period. In addition, the Operating Member shall institute such additional reasonable internal accounting controls as may be requested by the Paladin REIT, including, without limitation, those which are necessitated for compliance
with the Sarbanes-Oxley Act of 2002, as amended. 
 9.04 Company Tax Elections; Tax Controversies 
 The Management Committee shall have the right in its sole and absolute discretion to make elections for the Company provided for in the Code including,
without limitation, the elections provided for in Section 754 of the Code. Additionally, the Management Committee shall have the right to seek to revoke any such election 

  

 41 

 
(including without limitation, any election under Section 754 of the Code) upon the Management Committee’s determination that such revocation is in
the best interests of the Company or its Members. Paladin is hereby designated as the “Tax Matters Partner” pursuant to the requirements of Section 6231(a)(7) of the Code, and in such capacity shall represent the Company in any
disputes, controversies or proceedings with the Internal Revenue Service. 
 9.05 Accounting and Fiscal Year 
 Subject to Section 448 of the Code, the books of the Company shall be kept on such method of accounting for tax and financial reporting purposes as
may be determined by the Management Committee. The Fiscal Year of the Company shall be the calendar year. 
 9.06 Confidentiality of
Information 
 Each party hereto agrees that the provisions of this Agreement, all understandings, agreements and other arrangements
between and among the parties, and all other non-public information received from or otherwise relating to the Company, shall be confidential and shall not be disclosed or otherwise released to any other person or entity (other than another party
hereto) without the written consent of the Management Committee. Notwithstanding the foregoing, confidential information may be disclosed by a party if such party is required to do so: (i) by operation of law, rule or regulation;
(ii) pursuant to applicable legal process; (iii) by the commercial lenders to the Company; (iv) by the title insurer to the Company or Project lender; (v) to any proposed transferee of an Interest; or (vi) to prosecute any
claim or defend any action between the Members relating to the Company, without the written consent of the Management Committee. Accordingly, each party hereto shall, and shall cause its agents and attorneys to, hold in confidence all such
information. 
 ARTICLE 10 
 MISCELLANEOUS 
 10.01 Subscription Agreement 
 As a condition to its admission to the Company, each Member may be required by the Management Committee to execute a subscription agreement in a form
satisfactory to the Management Committee, which subscription agreement shall contain certain representations made by each such Member. 
  

 42 

 10.02 Investment Interest; Nature of Investment 
 Each Member hereby represents and warrants to the Company and to each other Member that such Member is acquiring its Interest in the Company for its own
account and not with a view to, or for resale in connection with, any distribution thereof in violation of the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state securities laws. Such Member possesses
experience and sophistication as an investor adequate for the evaluation of the merits and risks of such Member’s investment in the Company, has investigated the Company and its business, and the Company has made available to such Member all
information necessary for such Member to make an informed decision to acquire an Interest in the Company. Such Member also understands that its Company Interest may not be transferred absent compliance with the registration requirements of the
Securities Act and applicable state securities laws or pursuant to an exemption therefrom and otherwise in compliance with the terms of this Agreement. Each Member understands the meaning and consequences of the representations, warranties and
covenants made by such Member set forth herein and that the Company has relied upon such representations, warranties and covenants. Each Member hereby indemnifies, defends, protects and holds wholly free and harmless the Company from and against any
and all losses, damages, expenses or liabilities arising out of the breach or inaccuracy of any such representation, warranty or covenant. All representations, warranties and covenants contained herein shall survive the execution of this Agreement,
the formation of the Company, and the liquidation of the Company. 
 10.03 Appointment of Attorney-in-Fact 
 Each of the Members by its execution of this Agreement, irrevocably constitutes and appoints any Member(s), agent or other representative as is
designated by the Management Committee as such Member’s true and lawful attorney-in-fact with full power and authority in its name, place and stead to execute, acknowledge, deliver, swear to, file and record at the appropriate public offices
such documents as may be necessary or appropriate to carry out the provisions of this Agreement including, without limitation: 
 (a) Formation Documents. All formation documents and other instruments (including counterparts of this Agreement), and all amendments thereto, which the Management Committee deems appropriate to form, qualify, continue or otherwise
operate the Company as a limited liability company, in the jurisdictions in which the Company may conduct business. 
 (b)
Amendments. All amendments to this Agreement adopted in accordance with the terms of this Agreement, and all instruments which the Management Committee deems appropriate to reflect a change or modification of the Company in accordance with
the terms of this Agreement. 
 (c) Conveyance Documents. All conveyances of Company assets in accordance with the
terms of this Agreement, and other instruments which the Management Committee reasonably deems necessary in order to complete a dissolution and liquidation of the Company in accordance with the terms of this Agreement. 
  

 43 

 The foregoing appointment shall be deemed to be a power coupled with an interest, in recognition that
each of the Members under this Agreement will be relying upon the power of the Management Committee to act as contemplated by this Agreement in any filing and other action by it on behalf of the Company, shall survive the bankruptcy or other
incapacity of any Member hereby giving such power, and the transfer or assignment of all or any portion of the Interest of such Member in the Company, and shall not be affected by the subsequent bankruptcy or other incapacity of such Member. If any
Member assigns all or any portion of its Interest in the Company, then the foregoing power of attorney shall survive such assignment. 
 10.04 Waiver of Conflict of Interest 
 The Company and each Member are not represented by separate counsel;
provided, however, in connection with the formation of the Company and the drafting and negotiation of this Agreement, (i) Paladin (and not the Company or any Lippert Member) has been represented separately by King & Spalding
LLP and (ii) the Lippert Members (and not the Company or Paladin) has been represented separately by White Goss Bowers March Schulte & Weisenfels, a Professional Corporation. The attorneys, accountants and other experts who perform
services for any Member may also perform services for the Company. To the extent that the foregoing representation constitutes a conflict of interest, the Company and each Member hereby expressly waive any such conflict of interest. 
 10.05 Amendment 
 The written
consent of each Member shall be required to amend any provision of this Agreement, which consent may be given, withheld or made subject to such conditions as are determined by each such Member in such Member’s sole and absolute discretion. No
provision of this Agreement may be amended except in a writing signed by all Members and expressly stating (i) that it is an amendment of this Agreement and (ii) the provisions of this Agreement being amended and how it is being amended.
Notwithstanding the foregoing provisions of this Section 10.05 to the contrary, this Agreement may be amended by Paladin, by executing an instrument of amendment and giving each Member notice thereof, without the consent of any of the
other Members, to effect or implement actions approved by the Management Committee if the Operating Member fails to take action to effect or implement such actions. 
 10.06 No Assignments; Binding Effect 
 This Agreement shall not be assigned or otherwise
transferred (by operation of law or otherwise) by any Member except as is otherwise permitted hereby. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and assigns permitted in accordance with this Agreement and the Delaware Act. 
  

 44 

 10.07 Further Assurances 
 Each of the parties hereto hereby covenants and agrees on behalf of itself, its successors, and its assigns, without further consideration, to prepare,
execute, acknowledge, verify, file, record, publish and deliver such other instruments, documents and statements, and to take such other action as may be required by law or reasonably necessary to effectively carry out the purposes of this
Agreement. 
 10.08 Notices 
 Any notice, approval, consent, payment, demand or communication required or permitted to be given to any Member under this Agreement shall be in writing and shall be deemed to have been duly given or made as of the
date (the “Effective Date”) set forth below: (i) if delivered personally by courier or otherwise, then as of the date delivered or if delivery is refused, then as of the date presented; (ii) if sent or mailed by Federal
Express, Express Mail, or other nationally recognized overnight mail service which maintains evidence of delivery and receipt, to the Company at its principal office and to each Member at its address appearing in the current records of the Company,
then as of the date received; (iii) if sent or mailed by certified U.S. Mail, return receipt requested, to the Company at its principal office and to each Member at its address appearing in the current records of the Company, then as of the
third Business Day after the date so mailed; or (iv) if sent by facsimile to the Company at its facsimile telephone number or to any Member at its facsimile telephone appearing in the current records of the Company, then either (A) as of
the date on which the appropriate electronic confirmation of receipt is received by the sending party at or before 5:00 p.m. (receiver’s time) on any Business Day, or (B) as of the next Business Day if the time of the appropriate
electronic confirmation of receipt is received by the sending party after 5:00 p.m. (receiver’s time). Notices to each Member shall be addressed as follows (which address(es) may be changed by the Member from time to time by written notice
to the Members). 
  

			
	To Paladin:	  	c/o Paladin Realty Partners, LLC
		  	10880 Wilshire Boulevard, Suite 1400
		  	Los Angeles, California 90024
		  	Attention: William K. Dunbar
		  	Fax: (310) 996-8708
		  	Telephone: (310) 996-8754

  

 45 

			
		  	King & Spalding LLP
		  	1180 Peachtree Street, N.E.
		  	Atlanta, Georgia 30309
		  	Attention: Scott J. Arnold, Esq.
		  	Fax: (404) 572-5131
		  	Telephone: (404) 572-4600
		
	To either of the     	  	
	Lippert Members:	  	c/o CRES Management Co.
		  	Two Pershing Square
		  	2300 Main Street, Suite 910
		  	Kansas City, Missouri 64108
		  	Attention: James Lippert
		  	Fax: (816) 756-1881
		  	Telephone: (816) 268-1498
		
	With a copy to:     	  	White Goss Bowers March Schulte &
Weisenfels, a Professional Corporation
		  	4510 Belleview, Suite 300
		  	Kansas City, Missouri 64111
		  	Attention: John R. Weisenfels, Esq.
		  	Fax: (816) 753-9200
		  	Telephone: (816) 753-9201

 10.09 Waivers 
 No waiver by any Member of any default with respect to any provision, condition or requirement hereof shall be deemed to be a waiver of any other
provision, condition or requirement hereof; nor shall any delay or omission of any Member to exercise any right hereunder in any manner impair the exercise of any such right accruing to it hereafter. 
 10.10 Preservation of Intent 
 If any provision of this Agreement is determined by an arbitrator or any court having jurisdiction to be illegal or in conflict with any laws of any state or jurisdiction, then the Members agree that such provision shall be modified to the
extent legally possible so that the intent of this Agreement may be legally carried out. If any one (1) or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in
any respect or for any reason, then the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that all of the
Members’ rights and privileges shall be enforceable to the fullest extent permitted by law. 
  

 46 

 10.11 Entire Agreement 
 This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereto and fully supersedes any and all prior
or contemporaneous agreements or understandings between the parties thereto pertaining to the subject matter hereof. 
 10.12 Certain
Rules of Construction 
 Any ambiguities shall be resolved without reference to which party may have drafted this Agreement. All
Article or Section titles or other captions in this Agreement are for convenience only, and they shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Unless the
context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles; (iii) “or” is
not exclusive; (iv) words in the singular include the plural, and words in the plural include the singular; (v) provisions apply to successive events and transactions; (vi) “herein,” “hereof” and other words of
similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; (vii) all references to “clauses,” “Sections” or “Articles” refer to clauses, Sections or Articles
of this Agreement; and (viii) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms. 
 10.13 Counterparts 
 This Agreement may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which, taken together, shall constitute one (1) and the same instrument. 
 10.14 Governing Law

 This Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the Members hereto,
shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any otherwise governing principles of conflicts of law. 
 10.15 Assurances 
 Each of the Members shall hereafter execute and deliver such further
instruments and do such further acts and things as may be reasonably required or useful to carry out the intent and purpose of this Agreement and as are not inconsistent with the terms hereof. 
  

 47 

 10.16 Time is of the Essence 
 Time is of the essence hereof in connection with all obligations of the parties hereunder. 
 10.17 Other Matters 
 If any
proceeding is brought by any Member or the Company against any other Member or the Company that arises out of, or is connected with, this Agreement, then the prevailing party in such proceeding shall be entitled to recover reasonable attorneys’
fees and costs. Any agreement to pay any amount and any assumption of liability herein contained, express or implied, shall be only for the benefit of the Members and their respective successors and assigns, and such agreements and assumptions shall
not inure to the benefit of the obligees of any indebtedness or any other party, whomsoever, deemed to be a third-party beneficiary of this Agreement. 
 10.18 Ownership of the Lippert Members and Property Manager 
 The Lippert Members represent
and warrant that Lippert Holdings is a limited liability company duly organized under the laws of the State of Missouri, that Lippert Management is a corporation duly organized under the laws of the State of Missouri, and that the Property Manager
is a limited liability company duly organized under the laws of the State of Missouri, and that Exhibit D sets forth the following information with respect to the ownership and structure of the Lippert Members and the Property Manager and
each Person that owns any direct or indirect interest therein: 
 (a) The name, type and percentage ownership interest of each
such Person; and 
 (b) The name of each officer, if any, and the title thereof, in any corporate entity, the name of each
partner in any partnership entity, and the name of each member and the name of each manager in any limited liability company. 
 The Lippert
Members represent that there are no commitments, options, warrants or rights of any kind which evidence a right to acquire or receive any ownership interest in the Lippert Members or the Property Manager. 
  

 48 

 ARTICLE 
 11 DEFINITIONS 
 11.01 12% IRR Amount 
 The term “12% IRR Amount” means, as of any date, the amount which would have to be received by a Member on such date in order for such
Member to receive an IRR of twelve percent (12%). 
 11.02 Additional Contribution 
 The term “Additional Contribution” means any and all additional contributions approved in writing by the Management Committee and made
by any Member to the capital of the Company pursuant to Section 3.02. 
 11.03 Additional Member 
 The term “Additional Member” means any Person that has been admitted to the Company as a Member pursuant to this Agreement by virtue of
such Person receiving its Interest in the Company from the Company and not from another Member or an assignee. 
 11.04 Adjusted
Capital Account 
 The term “Adjusted Capital Account” means, with respect to any Member, the deficit balance, if
any, in such Member’s Capital Account (a) increased for any amount which the Member is deemed to be obligated to restore with respect to any negative balance in the Member’s Capital Account pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(c) or pursuant to the penultimate sentence of Treasury Regulation Section 1.704-2(g)(1) or 1.704-2(i)(5); and (b) decreased by any items described in Treasury Regulation Sections 1.704-1(b)(2)(d)(4),
(5) or (6). 
 11.05 Affiliate 
 The term “Affiliate” means, with reference to a specified Person, any other Person that, directly or indirectly through one or more intermediaries or otherwise, controls, is controlled by or is under
common control with the specified Person. As used in this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person (whether through
ownership of securities of that Person, by contract, relationship or otherwise) and includes, in any event, the ownership of twenty-five percent (25%) or more of the outstanding voting interests of such Person. 
 11.06 Agreement 
 The term
“Agreement” means this Operating Agreement of KC Pheasant Associates, LLC, as it may be further amended. 
 11.07
Annual Business Plan 
 The term “Annual Business Plan” is defined in Section 2.04. 
  

 49 

 11.08 Appraised Value 
 The term “Appraised Value” is defined in Section 7.03(b). 
 11.09 Business Day 
 The term
“Business Day” means any weekday excluding any legal holiday observed pursuant to United States federal law or California state law or regulation. 
 11.10 Buyout Purchase Price 
 The term “Buyout Purchase Price” is defined in
Section 7.02. 
 11.11 Buy-Sell Notice 
 The term “Buy-Sell Notice” is defined in Section 7.02. 
 11.12 Capital Account 
 The
term “Capital Account” means with respect to each Member the amount of money contributed by such Member to the capital of the Company, increased by the aggregate Gross Asset Value at the time of contribution (as determined by
the Members) of all property contributed by such Member to the capital of the Company (net of liabilities secured by such contributed property that the Company is considered to assume or take subject to under Section 752 of the Code), the
aggregate amount of all Net Profits allocated to such Member, and any and all items of gross income or gain specially allocated to such Member pursuant to Sections 4.02 and 4.03, and decreased by the amount of money distributed to such
Member by the Company (exclusive of any guaranteed payment within the meaning of Section 707(c) of the Code paid to such Member), the aggregate fair market value at the time of distribution (as determined by the Members) of all property
distributed to such Member by the Company (net of liabilities secured by such distributed property that such Member is considered to assume or take subject to under Section 752 of the Code), the amount of any Net Losses charged to such Member,
and any items of loss or deduction specially allocated to such Member pursuant to Sections 4.02 and 4.03. The provisions hereof governing the maintenance of Capital Accounts are intended to satisfy the requirements of Treasury Regulation
Section 1.704-1(b)(2)(iv) and shall be interpreted and applied in a manner consistent therewith. 
 11.13 Capital Contribution

 The term “Capital Contribution” means with respect to each Member, the aggregate amount of any and all amounts
credited to such Member’s Unrecovered Contribution Account in accordance with the terms of this Agreement. Any Capital Contributions made at any time during throughout the term hereof shall be deemed made on the date contributed. 
  

 50 

 11.14 Capital Event 
 The term “Capital Event” means and includes: (i) any transaction involving the sale, exchange or other disposition of the Project
or the Company (but excluding any incidental sales or exchanges of tangible personal property and fixtures), (ii) any financing, refinancing or borrowing secured by the Project or the Company, and (iii) any condemnation or recovery of
damage awards and property insurance proceeds (excluding proceeds from any rent or business interruption insurance). 
 11.15 Cash
Flow 
 The term “Cash Flow” means the sum of any and all Ordinary Cash Flow and Extraordinary Cash Flow.

 11.16 Cash Flow Bonus Forfeiture Event 
 The term “Cash Flow Bonus Forfeiture Event” shall mean any of the following: (i) the failure of any Lippert Member to make all or any portion of any Additional Contribution such Lippert Member is
required to contribute pursuant to Section 3.02, (ii) the removal of Lippert Management as Operating Member pursuant to Section 2.06(a) or (iii) the existence of Default Buy-Sell Event and a Lippert Member is the
Defaulting Member. 
 11.17 Code 
 The term “Code” means the Internal Revenue Code of 1986, as heretofore and hereafter amended from time to time (or any corresponding provision of any superseding revenue law). 
 11.18 Company 
 The term
“Company” means the limited liability company governed by this Agreement and created upon the filing of the Certificate of Formation with the Delaware Secretary of State in accordance with the provisions of the Delaware Act, which
limited liability company is referenced in the first paragraph of this Agreement. 
 11.19 Company Minimum Gain 
 The term “Company Minimum Gain” has the meaning set forth in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase
“partnership minimum gain.” 
  

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 11.20 Contributing Member 
 The term “Contributing Member” is defined in Section 3.03(a). 
 11.21 Contribution Date 
 The
term “Contribution Date” is defined in Section 3.02(b). 
 11.22 Contribution Notice 

The term “Contribution Notice” is defined in Section 3.02(b). 
 11.23 Contribution Percentage 
 The term “Contribution Percentage” means, with respect to each Member, the percentage set forth opposite such Member’s name on Exhibit A attached hereto under the column labeled “Contribution
Percentage.” 
 11.24 Default Buy-Sell Event 
 The term “Default Buy-Sell Event” is defined in Section 7.01. 
 11.25 Default Notice 
 The
term “Default Notice” is defined in Section 7.02. 
 11.26 Defaulting Member 
 The term “Defaulting Member” is defined in Section 7.01. 
 11.27 Default Purchase Price 
 The term “Default Purchase Price” is defined in Section 7.03(a). 
 11.28 Deferred Management
Fees 
 The term “Deferred Management Fees” is defined in Section 2.12. 
 11.29 Deferred Management Fee Account  
 The term “Deferred Management Fee Account” means, as to the Property Manager and as of any relevant date, the excess, if any, of the aggregate amount of the Deferred Management Fees, over the
aggregate amount of payments made to the Property Manager prior to such relevant date pursuant to Section 5.01(b) and Section 5.02(a). 
  

 52 

 11.30 Delaware Act 
 The term “Delaware Act” means the Delaware Limited Liability Company Act (6 Del.C. § 17-101, et seq.), as
hereafter amended from time to time. 
 11.31 Delinquent Contribution 
 The term “Delinquent Contribution” is defined in Section 3.03(a). 
 11.32 Dilution Percentage 
 The term “Dilution Percentage” is defined in Section 3.03(c). 
 11.33 Effective Date 

 The term “Effective Date” is defined in Section 10.08. 
 11.34 Extraordinary Cash Flow 
 The term “Extraordinary Cash Flow” means the cash proceeds (including, without limitation, any insurance proceeds, recoveries, damages and awards, but excluding the proceeds of any rent insurance or business interruption
insurance) realized by the Company, directly or indirectly, as a result of the occurrence of a Capital Event, plus cash interest payments received with respect to such proceeds, decreased by the sum of (i) the amount of such proceeds
applied by the Company to pay debts and liabilities of the Company which are then due and payable (inclusive of any guaranteed payment within the meaning of Section 707(c) of the Code paid to any Member); (ii) the amount of such proceeds
used, set aside or committed by the Company or required to be used by any secured lender for the Project for restoration and repair of any property in the event of damage or destruction to the Project; (iii) any incidental or ancillary
expenses, costs or liabilities incurred by the Company in effecting or obtaining any such Capital Event, or the proceeds thereof (including, without limitation, attorneys’ fees, expert witness’ fees, accountants’ fees, court costs,
recording fees, transfer taxes and fees, appraisal costs and the like) all of which expenses, costs and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof; (iv) the payment of such other Company debts
and liabilities as are determined in the reasonable discretion of the Management Committee; and (v) a reserve, established in the reasonable discretion of the Management Committee, for anticipated cash disbursements that will have to be made
before additional cash receipts from third parties will provide funds therefore. 
  

 53 

 11.35 Fiscal Year 
 The term “Fiscal Year” means, except as otherwise provided in this definition, the twelve (12) month period commencing on
January 1 of each calendar year and ending on December 31 of each calendar year, with the first Fiscal Year commencing on the date hereof and ending on December 31, 2007 and the last Fiscal Year being the period beginning on
January 1 of the year in which the final liquidation and termination of the Company is completed and ending on the date such final liquidation and termination is completed. To the extent any computation or other provision hereof provides for an
action to be taken on the basis of a Fiscal Year, an appropriate proration or other adjustment shall be made in respect of the initial and final Fiscal Years to reflect that such periods are less than 12 month periods. 
 11.36 Gross Asset Value 
 The
term “Gross Asset Value” shall mean, except as set forth below, such asset’s adjusted basis for federal income tax purposes: 
 (i) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the contributing Member and the Company. 
 (ii) The Gross Asset Value of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by
the Members as of the following times: (A) the acquisition of an additional interest in the Company by any new or existing Members in exchange for more than a de minimis Capital Contribution if the Members reasonably determine that
such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; (B) the distribution by the Company to a Member of more than a de minimis amount of Company property as
consideration for an interest in the Company if the Members reasonably determine that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company; and (C) the liquidation of the Company
within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g). 
 (iii) The Gross Asset Value of any Company
asset distributed to any Member shall be the gross fair market value of such asset on the date of distribution; and 
 (iv)
The Gross Asset Values of Company assets shall be increased or decreased to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments
are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the
extent the Members determine that an adjustment pursuant to subparagraph (ii) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (iv). 

 

 54 

 If the Gross Asset Value of an asset has been determined or adjusted pursuant to subparagraphs (i),
(ii) or (iv) of this provision, such Gross Asset Value shall thereafter be computed in accordance with Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations. 
 11.37 Immediate Family 
 The
term “Immediate Family” means an individual Person’s current spouse, parents, grandparents, siblings, children, children’s spouses, grandchildren or grandchildren’s spouses or any trusts or estates (or other
estate-planning vehicles) for the exclusive benefit of any one or more of the foregoing that is controlled by such individual Person. 
 11.38 Indemnified Party 
 The term “Indemnified Party” is defined in Section 2.07(a).

 11.39 Interest 
 The term “Interest” means in respect to any Member, all of such Member’s right, title and interest in and to the Net Profits, Net Losses, Cash Flow, distributions and capital of the Company, and any and all other
interests therein in accordance with the provisions of this Agreement and the Delaware Act. 
 11.40 IRR 
 The term “IRR” means, with respect to any Member, the annual discount rate, determined by iterative process, which results in a net
present value approximating zero (0) when such discount rate is applied to the Capital Contributions made by such Member from time to time and distributions made to such Member from time to time (except for Section 707(c) payments), and
calculated using Microsoft Office Excel, xIRR function in accordance with the formula attached hereto as Exhibit E. 
 11.41
Lippert Holdings 
 The term “Lippert Holdings” means JLT Holdings, LLC, a Missouri limited liability company.

  

 55 

 11.42 Lippert Management 
 The term “Lippert Management” means JLT Management, Inc., a Missouri corporation. 
 11.43 Lippert Member(s) 
 The
term “Lippert Members” means Lippert Management and Lippert Holdings, collectively; the term “Lippert Member” means any one of the Lippert Members. 
 11.44 Liquidation 
 The term
“Liquidation” means, (i) in respect to the Company, the earlier of the date upon which the Company is terminated under Section 708(b)(1) (except for any deemed liquidation under Section 708(b)(1)(B) of the Code) or
the date upon which the Company ceases to be a going concern (even though it may continue in existence for the purpose of winding up its affairs, paying its debts and distributing any remaining balance to its Members), and (ii) in respect to a
Member wherein the Company is not in Liquidation, the liquidation of a Member’s interest in the Company under Treasury Regulation Section 1.761-1(d). 
 11.45 Majority of Representatives 
 The term “Majority of Representatives”
means a majority (in number) of the representatives on the Management Committee, provided that, at any meeting of the Management Committee, all of the representatives collectively shall have a number of votes equal to the representatives that
Paladin or Lippert Management, as the case may be, is entitled to elect, and such votes shall be cast (whether by one or more of such representatives) as a block, with a majority of such votes constituting a “Majority of
Representatives.” 
 11.46 Management Committee 
 The term “Management Committee” is defined in Section 2.01(a). 
 11.47 Material Breach 
 The
term “Material Breach” means any material breach or default by a Member of any material covenant, duty or obligation under this Agreement or any Exhibits hereto (including, without limitation, the failure of any Member to contribute
any Additional Contribution to the extent required to be made pursuant to Section 3.02 and Section 3.03), provided that in any such instance: (i) such Member shall have received written notice from the other
Member of such breach or default, and (ii) if curable, such Member shall have failed to cure or remedy such breach or default within ten (10) days following the Effective Date of such notice (except that no such notice shall 

  

 56 

 
be required in the case of the failure of any Member to contribute any Additional Contribution pursuant to Section 3.02 and
Section 3.03) or, if such breach or default is not curable within such 10-day period, such Member shall have failed to diligently and continuously pursue such a cure or remedy and in any event fully cure or remedy such breach or default
within thirty (30) days of the Effective Date of such notice. 
 11.48 Member Loan 
 The term “Member Loan” is defined in Section. 3.03(b). 
 11.49 Member Minimum Gain 
 The term “Member Minimum Gain” means minimum gain attributable to a Member Nonrecourse Debt determined in accordance with Treasury Regulation Section 1.704-2(i) for the phrase “partner minimum gain.”

 11.50 Member Nonrecourse Debt 
 The term “Member Nonrecourse Debt” has the meaning set forth in Treasury Regulation Section 1.704-2(b)(4) for the phrase “partner nonrecourse debt.” 
 11.51 Member Nonrecourse Deductions 
 “Member Nonrecourse Deductions” has the meaning set forth in Treasury Regulation Section 1.704-2(i) for the phrase “partner nonrecourse deductions.” 
 11.52 Member(s) 
 The term
“Members” means Paladin, Lippert Management and Lippert Holdings, collectively; the term “Member” means any one of the Members. 
 11.53 Net Profits and Net Losses 
 The term “Net Profits” or “Net
Losses” shall mean, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: 
 (i) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Profits and Net
Losses pursuant to this subparagraph (i) shall be added to such taxable income or loss; 
  

 57 

 (ii) Any expenditures of the Company described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(1), and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this provision shall be subtracted from
such taxable income or loss; 
 (iii) In the event of the Gross Asset Value of any Company property is adjusted pursuant to
subparagraphs (ii) or (iii) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses;

 (iv) Gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; 
 (v) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account depreciation computed in accordance with Section 1.704-1(b)(2)(iv)(2) of the Treasury Regulations for such Fiscal Year or other period; and 
 (vi) Notwithstanding anything contained herein to the contrary, any items which are specially allocated pursuant to Article 4
hereof shall not be taken into account in computing Net Profits or Net Losses. 
 11.54 Non-Contributing Member 
 The term “Non-Contributing Member” is defined in Section 3.03(a). 
 11.55 Nonrecourse Deductions 
 The term “Nonrecourse Deductions” means deductions as described in Treasury Regulation Section 1.704-2(b)(l). 
 11.56 Operating Account 
 The term “Operating Account” means an account of the Company at a
financial institution approved by the Management Committee and into which all Capital Contributions and other funds for and from the ownership and operation of the Project by the Company shall be deposited and held until properly disbursed and on
which at least one of the representatives of Paladin on the Management Committee shall be a signatory. 
  

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 11.57 Operating Budget 
 The term “Operating Budget” is defined in Section 2.05. 
 11.58 Operating Member 
 The
term “Operating Member” is defined in Section 2.03(a). 
 11.59 Option Notice 
 The term “Option Notice” is defined in Section 6.05(a). 
 11.60 Option Price 
 The term
“Option Price” is defined in Section 6.05(a). 
 11.61 Ordinary Cash Flow 
 The term “Ordinary Cash Flow” means the amount, if any, of all cash receipts of the Company as of any applicable determination date
(including, without limitation, any cash receipts realized from operations of the Company but excluding any cash receipts or proceeds from a Capital Event), in excess of the sum of (i) all cash disbursements (inclusive of any reimbursements and
guaranteed payments made to any Member, but exclusive of disbursements made from the proceeds of a Capital Event and distributions to the Members in their capacities as such) of the Company prior to that date, plus (ii) any reserve, determined
in the sole and absolute discretion of the Management Committee, for anticipated cash disbursements that will have to be made before additional cash receipts from third parties will provide the funds therefor. Ordinary Cash Flow shall be determined
and distributed no more frequently than monthly and no less frequently than on a quarterly basis or at such other times as the Management Committee determines that funds are available therefor, taking into account the reasonable business needs of
the Company. 
 11.62 Paladin 
 The term “Paladin” means PRIP 1102, LCC, a Delaware limited liability company. 
 11.63
Paladin REIT 
 The term “Paladin REIT” means Paladin Realty Income Properties, Inc. a Maryland corporation, or
any successor thereto. 
  

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 11.64 Percentage Interest 
 The term “Percentage Interest” means, with respect to each Member, the percentage set forth opposite such Member’s name on
Exhibit A attached hereto under the column labeled “Percentage Interest,” as such percentage shall be modified from time to time in accordance with this Agreement. The initial Percentage Interests of the Members shall be as follows:

  

				
	 Paladin:
	  	97.5	%
	 Lippert Holdings:
	  	1.5	%
	 Lippert Management:
	  	1.0	%

 11.65 Permitted Transferees 
 The term “Permitted Transferees” is defined in Section 6.02. 
 11.66 Person 
 The term
“Person” means and includes an individual, a corporation, a partnership, a limited liability company, a joint venture, a trust, an unincorporated organization and a government or any department or agency thereof, or any entity
similar to any of the foregoing. 
 11.67 Price Determination Notice 
 The term “Price Determination Notice” is defined in Section 7.03(a). 
 11.68 Preferred Return 
 The
term “Preferred Return” means, with respect to each Member, an amount calculated like interest and accrued on the balance standing from time to time in such Member’s Unrecovered Contribution Account at a simple interest rate
equal to nine percent (9%) per annum, non-compounded, and determined on a cumulative basis. For financial and income tax reporting purposes, neither accrual nor payment of the Preferred Return shall be an expense of the Company nor be treated
as a guaranteed payment under Section 707(c) of the Code. 
 11.69 Project 
 The term “Project” is defined in Section 1.03. 
 11.70 Project Shortfall 
 The
term “Project Shortfall” means any means any and all cash required to satisfy any actual or projected financial requirements of the Company (not including, however, payment of Unpaid Preferred Return or any other obligations of the
Company to the Members), as determined by the Management Committee. 
  

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 11.71 Property Management Agreement 
 The term “Property Management Agreement” is defined in Section 2.12. 
 11.72 Property Manager 
 The
term “Property Manager” means the Person engaged or designated by the Company from time to time to manage and operate the Project. 
 11.73 Purchase Option 
 The term “Purchase Option” is defined in Section 6.05(a).

 11.74 Purchasing Member 
 The term “Purchasing Member” is defined in Section 7.05. 
 11.75
Qualified Appraiser 
 The term “Qualified Appraiser” means an appraiser who is not an Affiliate or Related Party
of any Member and has not been an employee of any Member or any Affiliate or Related Party of the Member at any time, who is qualified to appraise assets of the same type owned by the Company and is a member of the Appraisal Institute (or any
successor association or body of comparable standing if such Institute is not then in existence), and who has held his or her certificate as an M.A.I. or its equivalent for a period of not fewer than ten (10) years, and has been actively
engaged in the appraisal of such projects immediately preceding his or her appointment under this Agreement. 
 11.76 Regulatory
Allocations 
 The term “Regulatory Allocations” is defined in Section 4.02(f). 
 11.77 REIT 
 The term
“REIT” is defined in Section 2.02(d). 
 11.78 Removal Event 
 The term “Removal Event” is defined in Section 2.06(a). 
  

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 11.79 Removal Notice 
 The term “Removal Notice” is defined in Section 2.06(a). 
 11.80 Securities Act 
 The
term “Securities Act” is defined in Section 10.02. 
 11.81 Seller Loan 
 The term “Seller Loan” is defined in Section 7.08. 
 11.82 Selling Member 
 The
term “Selling Member” is defined in Section 7.05 
 11.83 Tax Matters Partner 
 The term “Tax Matters Partner” is defined in Section 9.04. 
 11.84 Threshold Return 
 The
term “Threshold Return” means, with respect to each Member, aggregate cash distributions pursuant to Sections 5.01 and 5.02 which would produce a 12% IRR to such Member on all Capital Contributions made by such Member.

 11.85 Third-Party Purchase Price 
 The term “Third-Party Purchase Price” is defined in Section 7.02. 
 11.86
Transfer 
 The term “Transfer” is defined in Section 6.01. 
 11.87 Treasury Regulation 
 The term “Treasury Regulation” means any proposed, temporary, or final federal income tax regulation promulgated by the United States Department of the Treasury as heretofore and hereafter amended from time to time (or any
corresponding provisions of any superseding revenue law or regulation). 
 11.88 Unanimous Written Consent 
 The term “Unanimous Written Consent” means a written consent executed by at least one representative of each Member. 
  

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 11.89 Unpaid Preferred Return 
 The term “Unpaid Preferred Return” means, (i) with respect to Paladin and as of any specified date, the Preferred Return accrued
through such date, decreased by the amount of money and the agreed upon net fair market value of any property distributed by the Company to Paladin pursuant to Sections 5.01(a) and 5.02(a) and (ii) with respect to each of the Lippert
Members and as of any specified date, the Preferred Return accrued through such date, decreased by the amount of money and the agreed upon net fair market value of any property distributed by the Company to such Lippert Member pursuant to
Sections 5.01(c) and 5.02(e). 
 11.90 Unrecovered Contribution Account 
 The term “Unrecovered Contribution Account” means, (i) with respect to Paladin, the amount of money or the agreed upon fair market
value of any property contributed (or deemed contributed) by Paladin to the capital of the Company pursuant to Section 3.01, Section 3.02 and Section 3.03, as the case may be (net of liabilities secured by such
contributed property that the Company is considered to assume or take subject to pursuant to Section 752 of the Code), and decreased by the amount of money and the agreed upon fair market value of any property (net of liabilities secured
by such distributed property that Paladin is considered to assume or take subject to under Section 752 of the Code) distributed by the Company to Paladin pursuant to Section 5.02(c) and (ii) with respect to each Lippert Member,
the amount of money or the agreed upon fair market value of any property contributed (or deemed contributed) by such Lippert Member to the capital of the Company pursuant to Section 3.01, Section 3.02 and
Section 3.03, as the case may be (net of liabilities secured by such contributed property that the Company is considered to assume or take subject to pursuant to Section 752 of the Code), and decreased by the amount of money
and the agreed upon fair market value of any property (net of liabilities secured by such distributed property that such Lippert Member is considered to assume or take subject to under Section 752 of the Code) distributed (or deemed
distributed) by the Company to such Lippert Member pursuant to Section 5.02(f). 
 [Signatures Commence on Next Page] 

 

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

							
	“Paladin”
	
	PRIP 1102, LLC, a Delaware limited liability company
		
	By:	 	Paladin Realty Income Properties, L.P., a Delaware limited partnership
			
		 	By:	 	Paladin Realty Income Properties, Inc., a Maryland corporation, its general partner
				
		 		 	By:	 	/s/ William K. Dunbar
		 		 	Name:	 	William K. Dunbar
		 		 	Title:	 	Chief Investment Officer

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	“Lippert Holdings”
	
	JLT HOLDINGS, LLC, 
	a Missouri limited liability company
		
	By:	 	/s/ James E. Lippert
	Name:	 	James E. Lippert
	Title:	 	Manager
	
	“Lippert Management”
	
	JLT ASSET MANAGEMENT, INC., 
	a Missouri corporation
		
	By:	 	/s/ James E. Lippert
	Name:	 	James E. Lippert
	Title:	 	President

  

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