LIMITED LIABILITY COMPANY AGREEMENT OF GGT PATTERSON PLACE NC VENTURE, LLC LIMITED LIABILITY COMPANY AGREEMENT OF GGT PATTERSON PLACE NC VENTURE, LLC A DELAWARE LIMITED LIABILITY COMPANY TABLE OF CONTENTS

Bainbridge:

EX-10.3 4 d561583dex103.htm LIMITED LIABILITY AGREEMENT Limited LIability Agreement

Exhibit 10.3

LIMITED LIABILITY COMPANY AGREEMENT

GGT PATTERSON PLACE NC VENTURE, LLC

LIMITED LIABILITY

COMPANY AGREEMENT OF

GGT PATTERSON PLACE NC VENTURE, LLC

A DELAWARE LIMITED LIABILITY COMPANY

TABLE OF CONTENTS


		Page

ARTICLE 1. DEFINITIONS			2
1.1	Definitions		2
1.2	Other Defined Terms		9
1.3	Exhibits		9

ARTICLE 2. THE COMPANY			9
2.1	Organization		9
2.2	Name of Company		10
2.3	Purpose of Company		10
2.4	Principal and Registered Office		10
2.5	Further Assurances		10
2.6	Expenses of Formation and Syndication		10
2.7	No Individual Authority		11
2.8	Business Opportunities.		11
2.9	Neither Responsible for Other’s Commitments		12
2.10	Affiliates		12
2.11	Operations in Accordance With the Act: Ownership		12

ARTICLE 3. TERM			12
3.1	Term		12

ARTICLE 4. CAPITAL CONTRIBUTIONS OF THE MEMBERS			13
4.1	Capital Contributions of the Members		13
4.2	No Other Contributions		13
4.3	No Interest Payable		13
4.4	No Withdrawals		13
4.5	Additional Capital Contributions.		13

ARTICLE 5. MEMBER LOANS			16
5.1	Member Loans		16
5.2	Payment of Member Loans		16

ARTICLE 6. MANAGEMENT OF THE COMPANY			16
6.1	Management.		16
6.2	Major Decisions.		20
6.3	Bank Accounts		24
6.4	Annual Budgets		24
6.5	Insurance		25
6.6	Consultation Regarding the Project		25


6.7	Termination of Delegation of Authority to Bainbridge as Operating Member.	26
6.8	Development	28
6.9	Property Management Agreement	29
6.10	Contracts with Affiliates	29
6.11	Indemnification of Managing Member and Operating Member	29
6.12	Leasing Guidelines	29
6.13	General Contractor	30
6.14	Danziger Property Option	30

ARTICLE 7. BOOKS AND RECORDS, AUDITS, TAXES, ETC.		30
7.1	Books; Statements	30
7.2	Where Maintained	32
7.3	Audits	32
7.4	Objections to Statements	32
7.5	Tax Returns	32
7.6	Tax Matters Partner	32
7.7	Tax Policy	33
7.8	Section 754 Election	33
7.9	Capital Accounts	33

ARTICLE 8. ALLOCATIONS		33
8.1	Allocation of Net Income and Net Loss	33
8.2	Loss Limitation	34
8.3	Minimum Gain Chargebacks and Nonrecourse Deductions	34
8.4	Qualified Income Offset	35
8.5	Curative Allocations	35
8.6	Code Section 704(b) Allocations	35
8.7	Other Allocation Provisions	35
8.8	Distributions of Nonrecourse Liability Proceeds	35
8.9	Information as to Allocation of Debt	36
8.10	Taxable Year; Fiscal Year	36

ARTICLE 9. DISTRIBUTIONS AND ALLOCATIONS		36
9.1	Percentage Interests in Company	36
9.2	Certain Definitions	36
9.3	Operating Cash Flow Distributions	38
9.4	Extraordinary Cash Flow Distributions	38
9.5	Loss of Promoted Interest	38
9.6	Tax Distributions	39

ARTICLE 10. ASSIGNMENT AND OFFER TO PURCHASE		39
10.1	Transfers	39
10.2	Permitted Transfers	39
10.3	Assumption by Assignee	40
10.4	Amendment of Certificate of Formation	40
10.5	Other Assignments Void.	41


10.6	Rights of a Transferee	41
10.7	Buy-Sell.	41
10.8	Provisions Generally Applicable to Sales	43
10.9	[Intentionally Omitted]	46
10.10	Right to Market the Property.	46

ARTICLE 11. DISSOLUTION OR BANKRUPTCY OF A MEMBER		48
11.1	Dissolution or Merger	48
11.2	Bankruptcy, etc	48
11.3	Reconstitution	49

ARTICLE 12. CROSS-DEFAULT		49

ARTICLE 13. DISSOLUTION		49
13.1	Winding Up by Members	49
13.2	Winding Up by Liquidating Member.	49
13.3	Offset for Damages	51
13.4	Distributions of Operating Cash Flow	51
13.5	Distributions of Proceeds of Liquidation	51
13.6	Orderly Liquidation	51
13.7	Financial Statements	52
13.8	Restoration of Deficit Capital Accounts	52

ARTICLE 14. MEMBERS		52
14.1	Liability	52

ARTICLE 15. NOTICES		52
15.1	In Writing; Address	52
15.2	Copies	53

ARTICLE 16. MISCELLANEOUS		53
16.1	Additional Documents and Acts	53
16.2	Interpretation	53
16.3	Entire Agreement	54
16.4	References to this Agreement	54
16.5	Headings	54
16.6	Binding Effect	54
16.7	Counterparts	54
16.8	Confidentiality	54
16.9	Amendments	54
16.10	Exhibits	55
16.11	Severability	55
16.12	Qualification in Other States	55
16.13	Forum	55
16.14	No Brokerage	55
16.15	Dispute Resolution.	55
16.16	Partition	57

iii

Exhibits

Exhibit A

Members’ Percentage Interests

Exhibit B

Description of Land

Exhibit C

Development Agreement

Exhibit D

Insurance Certificates

Exhibit E

[Intentionally Omitted]

Exhibit F

[Intentionally Omitted]

Exhibit G

Project Budget

Exhibit H

Pre-Development Costs

Exhibit I

Property Management Agreement

Exhibit J

Construction Contract

Exhibit K

Danziger Property

LIMITED LIABILITY COMPANY AGREEMENT

GGT PATTERSON PLACE NC VENTURE, LLC

This Limited Liability Company Agreement of GGT PATTERSON PLACE NC VENTURE, LLC (this “Agreement”) is entered into and shall be effective as of the 25^th day of June, 2013, by and between BAINBRIDGE PATTERSON PLACE, LLC, a Florida limited liability company (“Bainbridge”), and GGT PATTERSON PLACE HOLDINGS, LLC, a Delaware limited liability company (“CNL”), pursuant to the provisions of the Delaware Limited Liability Company Act (the “Act”). Bainbridge and CNL are sometimes referred to herein, collectively, as the Members and individually as a Member.

R E C I T A L S

WHEREAS, GGT Patterson Place NC Venture, LLC (the “Company”) was formed on May 31, 2013, pursuant to the Delaware Limited Liability Company Act by filing a Certificate of Formation filed with the Secretary of State of the State of Delaware (the “Certificate of Formation”).

WHEREAS, reference is hereby made to that certain Purchase and Sale Agreement with an effective date of March 5, 2012, by and between Bainbridge Communities Acquisition I, LLC, a Florida limited liability company, as purchaser (“Purchaser”), and Boulevard Forest & Trees LLC, a North Carolina limited liability company, as seller (“Property Seller”) (as the same may have been amended, modified or supplemented, the “Land Contract”), whereby Purchaser has agreed to purchase from Property Seller, and Property Seller has agreed to sell to Purchaser, inter alia, the real property located off of Southwest Durham Drive in Durham, Durham County, North Carolina (together with all personal property, fixtures, rights and intangibles associated therewith, the “Property”), as more particularly described in Exhibit B hereto.

WHEREAS, the Members desire to form the Company for the purposes of acquiring the Property and constructing a Class A rental apartment community on the Property with 322 units, together with all amenities and related improvements (the “Project”), and leasing and managing the Project, but in any case the Property is intended to be held by the Company for investment and/or held for appreciation and subsequent sale.

WHEREAS, contemporaneously with the execution of this Agreement, Purchaser has assigned its interest under the Land Contract with regard to the acquisition of the Property under the Land Contract to the Company.

NOW, THEREFORE, in order to carry out their intent as expressed above and in consideration of the mutual agreements and covenants hereinafter contained, the receipt and sufficiency of which are hereby acknowledged, the Members hereby covenant and agree as follows:

ARTICLE 1. DEFINITIONS

1.1 Definitions. The following terms shall have the following meanings when used herein:

Act. The Delaware Limited Liability Company Act, 6 Delaware Code, Section 18-101 et. seq. (or any corresponding provisions of succeeding law), as in effect at the time of the initial filing of the Certificate, and as thereafter amended from time to time.

Additional Capital. For a Member, except as otherwise provided in this Agreement, the sum of all capital contributions made by such Member under this Agreement other than the Initial Capital Contributions funded under Section 4.1 and the Additional Initial Capital funded under Section 4.5(a), but including any amounts funded under Section 4.5(b). “Additional Capital” shall not include any Member Loan.

Additional Capital Request Date. As described in Section 4.5(b).

Additional Funding Notice. As defined in Section 4.5(b).

Additional Initial Capital. As described in Section 4.5(a).

Additional Initial Capital Funding Notice. As described in Section 4.5(a).

Additional Initial Capital Request Date. As described in Section 4.5(a).

Adjusted Capital Account. As defined in Section 8.2.

Affiliate. An “Affiliate” of a Person is (a) any officer, director, general partner, shareholder, member, manager or trustee of such Person, (b) any Person directly or indirectly controlling, controlled by, or under common control with such Person, and (c) any officer, director, general partner, shareholder, member, manager, trustee or holder of fifty percent (50%) or more of the voting interest of any Person described in clause (a) or (b) of this sentence. For the purpose of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means any of the following: (i) having, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; (ii) holding fifty percent (50%) or more of the outstanding voting securities of such Person, (iii) having the right to receive fifty percent (50%) or more of the profits of such Person; (iv) having the right to receive fifty percent (50%) or more of the assets of such Person upon dissolution; or (v) having the contractual power to designate fifty percent (50%) or more of the directors of such Person or individuals exercising similar functions.

Agreement. This Limited Liability Company Agreement, including all Exhibits and Schedules attached hereto, as it may be amended from time to time.

Allowable Development Costs. As defined in Development Agreement.

Appraisal Notice. As described in Section 13.2(b)(i).

Assumed Tax Liability. As described in Section 9.6.

Bainbridge. As described in the first paragraph above.

Bainbridge Principals. Means, collectively, Richard Schechter and Thomas J. Keady.

Bainbridge’s Initial Capital. As described in Section 4.1.

Bainbridge’s Maximum Initial Capital. As described in Section 4.1.

Budgeted Costs. As described in Section 4.5(a).

Business Day. Any weekday that is not an official holiday in the State of Florida.

Buy-Sell Price. As described in Section 10.8(a).

Capital Account. As described in Section 7.9.

Capital Budget. As described in Section 6.4.

Capital Contribution. For each Member, the aggregate of sums contributed to the Company by such Member pursuant to Article IV hereof.

Cause. As defined in Section 6.7.

Certificate of Formation. As described in the Recitals above.

CFG. As defined in Section 10.1.

CNL. As described in the first paragraph above.

CNL Consent. The written consent of CNL.

CNL Decision. As defined in Section 6.2(b).

CNL Entities. As defined in Section 2.8(b).

CNL’s Initial Capital. As described in Section 4.1.

CNL’s Maximum Initial Capital. As described in Section 4.1.

Code. The Internal Revenue Code of 1986, as amended from time to time, any successor thereto and, to the extent applicable, regulations promulgated thereunder.

Company. GGT Patterson Place NC Venture, LLC, a Delaware limited liability company.

Company Election Date. As defined in Section 6.14.

Company Financing. Financing that is provided to the Company.

Company Minimum Gain. As described in Section 8.3(a).

Competing Property Area. The geographic area which is the straight-line radius of three (3) miles from the center of the Property.

Completion. As defined in the Development Agreement.

Completion Date. As defined in the Development Agreement.

Construction Contract. As defined in the Development Agreement.

Construction Cost Overruns. As defined in the Development Agreement.

Construction Loan. As defined in the Development Agreement, which Construction Loan, and the terms thereof, are hereby approved by the Members.

Danziger Property. As defined in Section 6.14.

Developer. Bainbridge Development Company LLC, a Florida limited liability company, acting in such capacity pursuant to Section 6.8 and the Development Agreement, or any successor thereto selected by Member Consent, or to the extent a Member has the unilateral right to select such successor pursuant to this Agreement, as selected by such Member.

Development Agreement. That certain Development Agreement dated of even date herewith by and between the Company and Developer providing for the development of the Project on the Property, a copy of which is attached hereto as Exhibit C and incorporated herein by reference.

Development Fee. As described in Section 6.8.

Disposition Election. As defined in Section 10.10(a).

Economic Capital Account. With respect to any Member, such Member’s Capital Account as of the date of determination, after crediting to such Capital Account any amounts that the Member is deemed obligated to restore under Treasury Regulations Section 1.704-2.

Effective Date. The date this Agreement shall be signed by all the Members.

Electing Member. As described in Section 13.2(b)(i).

Entire Interest. Means, for each Member, such Member’s entire equity interest in the Company and all unpaid Member Loans made by such Member.

ERISA. The Employee Income Security Act of 1974, as amended.

Excess Allocation. As described in Section 9.6.

Extraordinary Cash Flow. As described in Section 9.2(b).

Failing Member. As described in Section 4.5(d).

Failing Member Loan. As described in Section 4.5(d).

Fair Market Value. As described in Section 13.2(b)(ii).

GAAP. United States generally accepted accounting principles applied on a consistent basis.

GC Fee. As defined in Section 6.13.

General Contractor. Bainbridge Mid-Atlantic Construction, LLC, a Florida limited liability company, acting in such capacity pursuant to the Construction Contract.

Initial Capital Contributions. As defined in Section 4.1.

IRR. With respect to all Capital Contributions of a Member, the internal rate of return or discount factor that, when applied to a cash flow stream consisting of all distributions by the Company to such Member, makes the present value of such distributions equal the present value (determined using the same discount factor) of all Capital Contributions of such Member to the Company. The IRR shall be determined taking into account the exact dates any applicable Capital Contributions are made to the Company by the Member and the exact dates any applicable distributions are made by the Company to such Member. The IRR to a Member shall be computed using the XIRR function in Microsoft Excel or a functional equivalent using actual dates of cash flows and based on annual compounding.

Land Contract. As defined in the Recitals above.

Leasing Guidelines. The leasing guidelines for the Project as set forth in the Property Management Agreement and any amendments thereto made in accordance with Section 6.12 and the Property Management Agreement.

LIBOR. The average rate (rounded upward to the nearest 1/16^th) at which deposits in U.S. dollars of comparable amounts and for a period of one month are offered in the London Interbank Market at approximately 11:00 am (London time) on the day that the capital contribution or loan is made, as reasonably determined by Member Consent, or if London Interbank Market is no longer published, LIBOR shall be a rate as published in a publication of national circulation approved by Member Consent.

Liquidating Member. The Member in sole charge of winding up the Company and having the powers described in Section 13.2.

List. As described in Section 13.2(b)(ii).

Loan Closing. The closing of the Construction Loan.

Major Capital Event. One or more of the following: (i) sale of all or any part of, or any interest in, Company property (including the Project and the Property), exclusive of sales or other dispositions of tangible personal property in the ordinary course of business; (ii) placement and funding of any indebtedness of the Company secured by some or all of its assets with respect to borrowed money, excluding short term borrowing in the ordinary course of business; (iii) condemnation of all or any material part of, or any interest in, the Property through the exercise of the power of eminent domain; or (iv) any unrestored material loss of Company property or any part thereof or interest therein by casualty, failure of title or otherwise.

Major Decision. As defined in Section 6.2(a).

Managing Member. CNL.

Market Sale Notice. As defined in Section 10.10(a).

Market Sale Offering Member. As defined in Section 10.10(a).

Market Sale Recipient Member. As defined in Section 10.10(a).

Market Sale Right. As defined in Section 10.10(a).

Member Consent. The written consent of each of CNL and Bainbridge.

Member Loan. Any loan made by any Member to the Company pursuant to Article V.

Member Nonrecourse Debt. As described in Section 8.3(c).

Member Nonrecourse Debt Minimum Gain. As described in Section 8.3(c).

Members. The parties to this Agreement, any Person to whom the parties to this Agreement may convey an interest in the Company pursuant to Article 10, and any Person subsequently admitted to the Company as a substitute or additional Member in accordance with the terms of this Agreement, and “Member” means any of the Members. The initial Members are CNL and Bainbridge.

Member Sale Election. As defined in Section 10.10(a).

Member Sale Closing Date. As defined in Section 10.10(c).

Member Sale Purchaser. As defined in Section 10.10(c).

Member Sale Seller. As defined in Section 10.10(c).

Membership Interest. The entire ownership interest of a Member in the Company, including the Member’s Capital Account, interest in profits and losses, the right to receive distributions from the Company and the rights, if any, to participate in the management of the Company or consent to any actions by the Company as set forth in this Agreement.

Minor Field Changes. As defined in the Development Agreement.

Necessary Expenses. As described in Section 6.4.

Non-Failing Member. As described in Section 4.5(d).

Nonrecourse Deductions. As described in Section 8.3(b)

Notice Date. As described in Section 10.8(b).

Notice of Intention. As described in Section 4.5(d).

Offering Party. As defined in Section 10.8(a)

Operating Budget. As described in Section 6.4.

Operating Cash Flow. As described in Section 9.2(a).

Operating Member. Bainbridge, subject to CNL’s right to terminate Bainbridge’s authority as Operating Member in accordance with Section 6.7.

Operating Return. As described in Section 9.2(c).

Operating Shortfall. For any given period after Completion of the Project, if the operating expenses of the Company in the normal course of business of the Company (including debt service under any Company Financing) exceed or are expected to exceed the gross receipts of the Company plus cash reserves for such period, and the Company therefore is expected to suffer, or has suffered, a cash flow deficit.

Opportunity. As defined in Section 2.8(b).

Option. As defined in Section 6.14.

Option Agreement. As defined in Section 6.14.

Option Election. As defined in Section 6.14.

Option Payments. As defined in Section 6.14.

Option Purchase Price. As defined in Section 6.14.

Out-of-Pocket Costs. Any unbudgeted reasonable out-of-pocket costs or expenses incurred by the Managing Member, Operating Member or other Member or their Affiliates acting within the scope of their respective authority under this Agreement (including travel costs and FedEx/mail charges), provided that such costs or expenses are necessary or beneficial for the Company’s business as described in Section 2.3.

Outside Purchaser. As defined in Section 10.10(a).

Percentage Interest. As described in Section 9.1.

Permitted Leases. Leases of apartment units within the Project entered into pursuant to the approved Leasing Guidelines in the ordinary course of operations as an apartment community.

Person. The term “person” includes individuals, partnerships, limited liability companies, corporations, trusts, and other associations.

Plans and Specifications. Plans and specifications for the Project prepared by the Developer and approved by Member Consent.

Pre-Development Costs. Those certain costs and expenses incurred by Bainbridge or Developer for the benefit of the Company as set forth on Exhibit H attached hereto and incorporated herein by reference, which shall be reimbursed to Bainbridge or Developer, as applicable, in accordance with Section 4.1.

Project. As described in the third paragraph of the Recitals.

Project Budget. The budget approved by Member Consent for the acquisition, construction, development, marketing and financing of the Project. The initial Project Budget is attached hereto as Exhibit G.

Property. As described in the second paragraph of the Recitals.

Property Closing. The closing of the Company’s acquisition of the Property pursuant to the Land Contract.

Property Management Agreement. As defined in Section 6.9.

Property Manager. Bainbridge Management Group, LLC, a Florida limited liability company, and any successor thereto selected by Member Consent or, to the extent a Member has the unilateral right pursuant to this Agreement to select such successor, as selected by such Member.

Proposer. As described in Section 10.7(a).

Recipient Member’s Market Sale Deposit. As defined in Section 10.10(a).

Requirements. (a) All laws, ordinances, rules, regulations, codes, requirements, permits, licenses and approvals of, in each case, all state, federal and local governmental authorities, (b) the obligations and requirements of the Company under all restrictions, easements and other arrangements of record affecting all or any portion of the Property and (c) all obligations and requirements of the Company under the Construction Loan and other Company Financings.

Responding Member. As described in Section 10.7(a).

REIT. A real estate investment trust as defined pursuant to Sections 856 through 860 of the Code and the Treasury Regulations promulgated thereunder.

Responding Member’s Buy-Sell Deposit. As described in Section 10.7(b)(ii).

Sale Proposal. As defined in Section 10.7(a).

Target Balance. With respect to any Member as of the close of any period for which allocations are made under Article 8, the amount such Member would receive (or be required to contribute) in a hypothetical liquidation of the Company as of the close of such period, assuming for purposes of such hypothetical liquidation: (i) a sale of all of the assets of the Company at prices equal to their then book values (as maintained by the Company for purposes of, and as maintained pursuant to, the capital account maintenance provisions of Treasury Regulations Sections 1.704-1(b)(2)(iv)); and (ii) the distribution of the net proceeds computed under clause (i) above to the Members pursuant to Section 9.4 (after the payment of all actual Company indebtedness, and any other liabilities related to the Company’s assets, limited, in the case of nonrecourse liabilities, to the collateral securing or otherwise available to satisfy such liabilities).

Tax Matters Partner. As described in Section 7.6.

Treasury Regulations. The Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

Unbudgeted Costs. As described in Section 4.5(a).

Unreturned Capital. As described in Section 9.2(d).

Unreturned Operating Return. As described in Section 9.2(e).

Value. As described in Section 10.8(a)(i).

The definitions in this Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “,without limitation,”.

1.2 Other Defined Terms. Capitalized terms not defined in Section 1.1 shall have the meanings set forth in the other sections of this Agreement.

1.3 Exhibits. The exhibits to this Agreement are incorporated herein by reference as if fully set forth herein.

ARTICLE 2. THE COMPANY

2.1 Organization. The Members shall operate the Company pursuant to the provisions of the Act. The terms and provisions hereof will be construed and interpreted in accordance with the Act.

2.2 Name of Company. The name of the Company will be “GGT Patterson Place NC Venture, LLC”, and the Company’s business will be conducted under the name “REALM Patterson Place”. The Managing Member may change the name of the Company at any time, and may change the name under which the Company’s business is conducted with Member Consent, provided, that Bainbridge shall have the right to approve the use of any name that includes the word “Bainbridge” or any variation thereof, and provided any required consents of lenders to the Company have been obtained.

2.3 Purpose of Company. The purpose of the Company is to directly or indirectly carry on the business of acquiring, owning, developing, operating, managing, improving, repairing, renting, mortgaging, refinancing, selling, conveying and otherwise dealing with the Property and all activities reasonably related thereto. In furtherance of such purpose, the Company shall have all such powers as may be exercised by a limited liability company under the laws of the State of Delaware. Except as permitted by this Section 2.3, the Company shall not engage in any other business. In furtherance of the foregoing purposes, but expressly subject to the other provisions of this Agreement, the Company is empowered to enter into contracts containing agreements to arbitrate disputes to the extent such contracts are approved by Member Consent. Subject to the provisions of this Agreement, the Company is authorized to take any legal measures which will assist it in accomplishing its purpose or benefit the Company.

2.4 Principal and Registered Office. The principal office of the Company shall be 450 South Orange Avenue, Orlando, Florida 32801 or such other place as the Managing Member may from time to time determine. Notification of any change in the Company’s principal place of business or principal office shall be given to the other Members. The Company may change its principal office and or may maintain additional offices and places of business in other locations selected by the Managing Member and, to the extent required by law and/or deemed necessary or desirable by the Managing Member, the Company shall qualify as a foreign limited liability company in any other jurisdiction in which it conducts business. The name and address of the registered agent of the Company for service of process in the State of Delaware is National Registered Agents, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904. The Company’s registered agent and the Company’s registered and principal offices may be changed by the Managing Member in compliance with the relevant requirements of the Act.

2.5 Further Assurances. The parties hereto will execute whatever certificates and documents, and will file, record and publish such certificates and documents, which are required to operate a limited liability company under the Act. The parties hereto will also execute and file, record and publish, as required, such certificates and documents as they, upon advice of counsel, may deem necessary or appropriate to comply with other applicable laws governing the operation of a limited liability company.

2.6 Expenses of Formation and Syndication. The expenses incurred by each Member in connection with its consideration of an investment in the Company and its acquisition of a membership interest in the Company, including the fees of any attorney, financial advisor or other consultant, shall be paid and/or reimbursed by the Company as set forth in the Project Budget and approved by Member Consent.

2.7 No Individual Authority. Except as otherwise expressly provided in this Agreement, no Member, acting alone, shall have any authority to act for, undertake or assume any obligations or responsibility on behalf of any other Member or the Company.

2.8 Business Opportunities.

(a) Subject to the provisions of, and except as set forth in, subsection (a) of this Section 2.8, nothing contained in this Agreement shall be construed so as to prohibit any Member or any firm or corporation controlled by or controlling such Member or any other Affiliate of a Member from owning, operating, or investing in any real estate or real estate development not owned or operated by the Company, wherever located. Each Member agrees that any other Member, any Affiliate or any director, officer, employee, partner or other Person related to either thereof may engage in or possess an interest in another business venture or ventures of any nature and description, independently or with others, including the ownership, financing, leasing, operation, management, syndication, brokerage and development of real property, whether or not such activities are in direct competition with the company, and neither the Company nor the Members shall have any rights by virtue of this Agreement in and to such independent ventures or to the income or profits derived therefrom. To the fullest extent permitted by applicable law, the Members hereby waive any obligation or duty which might otherwise be imposed or implied under any so-called “business opportunity doctrine” or similar theory.

(b) Bainbridge covenants and agrees that for so long as it is a Member, in the event it proposes to initiate as principal developer the new construction of any apartment complex located within the Competing Property Area (each, an “Opportunity”) other than developments existing as of the Effective Date, CNL and Affiliates of CNL Financial Group, LLC (collectively, “CNL Entities”) shall have the right of first offer to participate in any such Opportunity pursuant to, and in accordance with, the terms of this Section 2.8(b). If an Opportunity arises, then Bainbridge shall first submit such Opportunity to CNL for investment consideration prior to submitting such Opportunity to a third party for investment consideration (any such submission to be accompanied by such financial and other information regarding such Opportunity reasonably available to Bainbridge and reasonably necessary in order for CNL to consider investing in such Opportunity. Within fifteen (15) Business Days after receipt of any such notice (the “ROFO Investment Response Period”), CNL (on behalf of the CNL Entities) shall deliver a response (the “ROFO Investment Response Notice”) stating either (x) that the CNL Entities elect to waive their right to invest in any such Opportunity (the “Waiver Election”) or (y) that one or more of the CNL Entities desire to co-invest with Bainbridge in such Opportunity upon terms and conditions substantially similar to the terms and conditions contained in this Agreement with respect to the Property, to the extent such terms and conditions may be applicable to the Opportunity (the “Acceptance Election”), and the identity of such one or more CNL Entities which desires to co-invest as aforesaid. If CNL fails to deliver a ROFO Investment Response Notice within such fifteen (15) Business Days period, CNL shall be deemed to have made the Waiver Election. If CNL makes, or is deemed to have made, the Waiver Election, Bainbridge shall thereafter have the right to pursue such Opportunity for its own account without the participation of the CNL Entities and, at Bainbridge’s option, with any other third party participation on such terms as it shall elect. If CNL delivers a ROFO Investment Response Notice exercising the Acceptance Election, Bainbridge and the CNL

Entities identified in such ROFO Investment Response Notice shall use commercially reasonable efforts to promptly execute and deliver a definitive joint venture agreement governing the terms of such investment in such Opportunity, which terms shall be substantially similar to those terms and conditions contained in this Agreement with respect to the Property, to the extent such terms and conditions may be applicable to the Opportunity. If such definitive joint venture agreement is not executed and delivered within thirty (30) days of receipt by Bainbridge of notice of the exercise by CNL of the Acceptance Election, then CNL shall automatically be deemed to have made the Waiver Election and Bainbridge may proceed as if the Waiver Election had initially been made by CNL.

2.9 Neither Responsible for Other’s Commitments. Neither the Members nor the Company shall be responsible or liable for any indebtedness or obligation of a particular Member incurred either before or after the execution of this Agreement, except as to those joint responsibilities, liabilities, debts or obligations incurred pursuant to the terms of this Agreement, and each Member indemnifies and agrees to hold the other Member and the Company harmless from such personal obligations and debts, except as aforesaid.

2.10 Affiliates. Any and all activities to be performed by CNL hereunder may be performed by officers or employees of one or more Affiliates of CNL, provided that all actions taken by such persons on behalf of CNL in connection with this Agreement shall be binding upon CNL. Any and all activities to be performed by Bainbridge hereunder may be performed by officers or employees of one or more Affiliates of Bainbridge, provided that all actions taken by such persons on behalf of Bainbridge in connection with this Agreement shall be binding upon Bainbridge.

2.11 Operations in Accordance With the Act: Ownership. Except as expressly set forth in this Agreement to the contrary, the rights and obligations of the Members and the administration, operation and termination of the Company shall be governed by the Act, as it may be amended. The interest of each Member in the Company shall be personal property for all purposes. All real and other property owned by the Company shall be deemed owned by the Company as a company, and no Member, individually, shall have any ownership interest in such property.

ARTICLE 3. TERM

3.1 Term. Unless extended by Member Consent, the term of the Company shall continue until the first to occur of the following:

(a) December 31, 2061;

(b) The sale or other disposition of all or substantially all of the Property, other than to a nominee or trustee of the Company for financial or other business purposes;

(d) The occurrence of any event or circumstance that would cause the entry of a decree of judicial dissolution of the Company under the Act unless, following a Member Consent to cure such events, the events giving rise to such judicial dissolution are cured within the time, if any, set for such cure, and the Company is reinstated under the Act.

ARTICLE 4. CAPITAL CONTRIBUTIONS OF THE MEMBERS

4.1 Capital Contributions of the Members. Upon the execution of this Agreement, CNL and Bainbridge shall contribute their pro rata shares (based upon their respective Percentage Interests) of all amounts payable by the Company at the Property Closing and the Loan Closing, including amounts necessary to reimburse Bainbridge or Developer for its Pre-Development Costs. Such initial capital contribution by CNL shall constitute a portion of “CNL’s Initial Capital”. Such initial capital contribution by Bainbridge shall constitute a portion of “Bainbridge’s Initial Capital”. Bainbridge’s Initial Capital and CNL’s Initial Capital shall collectively be called the “Initial Capital Contributions.” Such Initial Capital Contributions are reflected on Exhibit A attached hereto and shall be updated from time to time to reflect modifications to the Initial Capital Contributions and any additional contributions, including contributions of Additional Initial Capital as required pursuant to Section 4.5(a). In no event shall the aggregate amount of CNL’s Initial Capital exceed Ten Million Eight Hundred Thirty-Six Thousand Nine Hundred Three Dollars ($10,836,903) without the express written approval of CNL (the “CNL Maximum Initial Capital”), and in no event shall Bainbridge’s Initial Capital exceed One Million Two Hundred Four Thousand One Hundred Dollars ($1,204,100) without the express written approval of Bainbridge (the “Bainbridge Maximum Initial Capital”). Any Construction Cost Overruns funded by Developer shall not be treated as a contribution by Developer or Bainbridge to the Company or in any manner construed so as to increase Bainbridge’s Capital Account or Bainbridge’s Initial Capital under this Agreement, shall not be treated as Additional Capital of Bainbridge under this Agreement, shall not be treated as a Member Loan by Bainbridge to the Company, and, except to the extent set forth in the Development Agreement, shall not entitle Developer or Bainbridge to any interest on or refund of any amounts so advanced or to any other rights or remedies against the Company or any Member.

4.2 No Other Contributions. Except as expressly required by this Article 4, neither Member shall have any obligation to make any capital contribution or loan to the Company nor to otherwise advance any funds thereto.

4.3 No Interest Payable. No Member shall receive any interest on any of its Capital Contributions except for such Member’s Operating Return.

4.4 No Withdrawals. No Capital Contribution shall be withdrawn except as hereinafter expressly stipulated.

4.5 Additional Capital Contributions.

(a) When the Operating Member determines in its good faith business judgment that capital is needed by the Company to pay for (i) costs provided in the Project Budget that have not been previously paid by the Members and that are not being paid for out of Company Financing (“Budgeted Costs”) or (ii) costs of development or construction of the Project in excess of the Project Budget which do not constitute Construction Cost Overruns

(“Unbudgeted Costs” and, together with Budgeted Costs, the “Additional Initial Capital”), then the Operating Member shall cause notice to be delivered to the Members setting forth the purposes and amounts of such Additional Initial Capital. Each such notice delivered to the Members shall constitute an “Additional Initial Capital Funding Notice” pursuant to this Section 4.5(a). All amounts funded by Bainbridge pursuant to this Section 4.5(a) shall constitute a portion of Bainbridge’s Initial Capital. All amounts funded by CNL pursuant to this Section 4.5(a) shall constitute a portion of CNL’s Initial Capital. Within ten (10) Business Days following the date of delivery of an Additional Initial Capital Funding Notice (in each case, the “Additional Initial Capital Request Date”), Bainbridge and CNL shall contribute to the Company, in proportion to their Percentage Interests, as Additional Initial Capital, the amount so required, up to the Bainbridge Maximum Initial Capital, in the case of Bainbridge, and up to the CNL Maximum Initial Capital, in the case of CNL.

(b) If the Operating Member determines in its good faith business judgment that additional funds (other than amounts required to be funded under Section 4.5(a) above) are needed by the Company to fund any Operating Shortfall or to reimburse the Members or their Affiliates for Out-of-Pocket Costs incurred on behalf of the Company (other than Out-of-Pocket Costs related to or arising out of the development and construction of the Project to the extent Bainbridge is responsible for such Out-of-Pocket Costs under the Development Agreement), then Operating Member shall cause notice to be delivered to the Members setting forth the purposes and amounts of such additional funds. Each such notice delivered to the Members shall constitute an “Additional Funding Notice”. All amounts funded by CNL pursuant to this Section 4.5(b) shall constitute a portion of CNL’s Additional Capital, and all amounts funded by Bainbridge pursuant to this Section 4.5(b) shall constitute a portion of Bainbridge’s Additional Capital. Within ten (10) Business Days following the date of delivery of an Additional Funding Notice (in each case, the “Additional Capital Request Date”), CNL and Bainbridge shall contribute to the Company, in proportion to their respective Percentage Interests, as Additional Capital, the amount so required. Any amounts funded pursuant this Section 4.5(b) shall constitute Additional Capital.

(c) Any and all funds contributed by the Members pursuant to Section 4.1 or this Section 4.5 shall be credited to their Capital Accounts in the Company and shall constitute Additional Capital (in the case of the contribution of Additional Capital) or Additional Initial Capital (in the case of the contribution of Additional Initial Capital), as the case may be, for all purposes of this Agreement.

(d) If a Member (the “Failing Member”) fails to contribute an amount equal to the entire amount required to be contributed by it pursuant to Section 4.5(a) or 4.5(b) within the applicable period after the Additional Initial Capital Request Date or the Additional Capital Request Date, as applicable, and if any other Member (the “Non-Failing Member”) makes its required contribution within such applicable time period pursuant to Section 4.5(a) or 4.5(b) and so notifies any Failing Member (the “Notice of Intention”), and such Failing Member fails to fully remedy its failure to contribute such required capital within ten (10) days after the giving of such Notice of Intention, then one or more of the following may occur to the extent applicable, at the option and election of the Non-Failing Member, which election shall be specified prospectively in the Notice of Intention: (i) the Non-Failing Member may require the Company to repay immediately to the Non-Failing Member the amount of the Capital Contribution(s), if

any, made by the Non-Failing Member pursuant to Section 4.5(a) or 4.5(b) in response to the applicable Additional Funding Notice or Additional Initial Capital Funding Notice; (ii) the Non-Failing Member may, but need not, make an Additional Capital Contribution to the Company not in excess of the amount that such Failing Member failed to contribute pursuant to Section 4.5(a) or 4.5(b) in response to the applicable Additional Funding Notice or Additional Initial Capital Funding Notice, in which case (y) the balance of the Non-Failing Member’s Capital Account shall be increased by $1.15 for each $1.00 not funded by such Failing Member that is funded by the Non-Failing Member in accordance with the terms of this Section 4.5 in response to the applicable Additional Funding Notice or Additional Initial Capital Funding Notice (which adjustment shall be treated as Additional Capital contributed by such Non-Failing Member and shall cause a corresponding adjustment in each Member’s Percentage Interest), as applicable and (z) subject to the provisions of Section 6.7(c) in which event this subclause (z) shall not apply, in the event that Bainbridge has been removed as the Operating Member without Cause and elects not to make any additional Capital Contributions as provided in Section 6.7(c), such Failing Member’s distribution percentages under Sections 9.4(d), 9.4(e) and 9.4(f) shall be reduced by one percent (1%) for every $10,000 of Additional Capital or Additional Initial Capital that such Failing Member failed to contribute to the Company pursuant to this Section 4.5 in response to the applicable Additional Funding Notice or Additional Initial Capital Funding Notice to the extent contributed by the Non-Failing Member and in turn, the Non-Failing Member’s distribution percentages under Sections 9.4(d), 9.4(e) and 9.4(f), respectively, shall be increased by the equivalent percentage, and any such adjustments to the Members’ Capital Account balances to give effect to the foregoing shall be treated as liquidated damages for tax purposes; (iii) solely with respect to a failure to contribute under Section 4.5(a) by the Failing Member and not with respect to any failure to contribute under Section 4.5(b), the Non-Failing Member may cause the Company to be dissolved, in which case such Non-Failing Member will be the Liquidating Member and will have the right to cause the Property and other Company assets to be sold or otherwise liquidated in accordance with Section 13.2; or (iv) the Non-Failing Member may elect to loan to such Failing Member (“Failing Member Loan”), which Failing Member Loan shall be disbursed to the Company and treated as an Additional Capital Contribution or Additional Initial Capital, as applicable, to the Company made by such Failing Member, an amount equal to the amount that such Failing Member failed to contribute pursuant to Section 4.5(a) or 4.5(b) in response to the applicable Additional Funding Notice or Additional Initial Capital Funding Notice, which Failing Member Loan made by the Non-Failing Member to the Failing Member shall bear interest at an annual rate (compounded annually) of one thousand basis points (1,000 bps) above one month LIBOR from the date of the advance until such Failing Member Loan is paid to the Non-Failing Member in full, provided, however, in no event shall the rate of interest exceed the highest rate permitted by law for the obligor which, if exceeded, could subject the Non-Failing Member who made such Failing Member Loan to penalties or forfeiture of all or any part of the interest or principal associated with such Failing Member Loan. Payments with respect to such Failing Member Loan shall be made to the Non-Failing Member out of distributions that would otherwise have been payable to such Failing Member under this Agreement until fully repaid (which payments will be applied first to accrued interest on the outstanding principal balance and then to the outstanding principal balance of such Failing Member Loan). Any such Failing Member Loan shall be nonrecourse to such Failing Member, secured by such Failing Member’s entire interest in the Company, and shall be satisfied only out of distributions as provided above in this Section 4.5(d). Such Failing Member Loan may be

prepayable at any time or from time to time and, if not sooner paid in full, shall mature upon the earlier of (A) the liquidation of the Company and (B) the fifth anniversary thereof. Each Non-Failing Member shall have the right, but not the obligation, to make a portion of any Additional Capital Contribution (as contemplated by Section 4.5(d)(ii)) or Failing Member Loan (as contemplated by Section 4.5(d)(iv)) in an amount proportionate to its respective Percentage Interest.

ARTICLE 5. MEMBER LOANS

5.1 Member Loans. No Member shall be obligated to lend any money to the Company. If the Operating Member determines that it is necessary or appropriate for the Company to borrow money from any of the Members, then the Operating Member shall cause notice (a “Loan Request Notice”) to be sent to each of the Members, setting forth the amount proposed to be borrowed from the Members and the purpose of the proposed Member Loan. Each of the Members shall have the right, but not the obligation, to lend to the Company the amount to be borrowed as set forth in such Loan Request Notice, multiplied by its respective Percentage Interest, which shall be exercisable by notice given to the Company and the other Members within 45 days of receipt of the Loan Request Notice from the Operating Member or by such earlier date as shall have been determined to be appropriate by the Operating Member, as set forth in the Loan Request Notice. If a Member does not lend the full amount of its proportionate share of the amount proposed to be borrowed from the Members, as set forth in the Loan Request Notice, the other Members shall have the option to lend the balance. If any Member(s) shall lend any money to the Company, such Member Loan shall not constitute a Capital Contribution by such Member(s) or entitle it to any increase in its share of the distributions of the Company. Each Member Loan shall be an obligation of the Company, provided that no Member shall be personally obligated to repay the Member Loan and the Member Loan shall be payable or collectible only out of the assets of the Company. All such Member Loans shall be on commercially reasonable terms as determined by Member Consent and shall bear interest at a rate of 2% per annum above the prime rate (or the average thereof if published as a range) (in each case as published from time to time in The Wall Street Journal (or if The Wall Street Journal is no longer published, the prime rate as published in a publication of national circulation selected by Member Consent)), compounded annually, adjusted as of the date of each prime rate change published, but in no event shall the rate of interest exceed the highest rate permitted by law for the obligor which, if exceeded, could subject the lending Member to penalties or forfeiture of all or any part of the interest or principal associated with such Member Loan.

5.2 Payment of Member Loans. Member Loans shall be repaid in accordance with the terms as agreed to by Member Consent.

ARTICLE 6. MANAGEMENT OF THE COMPANY

6.1 Management.

(a) The day-to-day ordinary and customary business and affairs of the Company shall be managed by Managing Member in its capacity as manager of the Company, subject to and in accordance with the terms hereof. The Members hereby appoint CNL as the initial Managing Member of the Company.

(b) Subject to (A) approval by Member Consent of Major Decisions under Section 6.2(a) and other matters requiring Member Consent hereunder, (B) approval by CNL Consent of CNL Decisions under Section 6.2(b) and the other restrictions on authority and express approval rights of CNL otherwise provided in this Agreement and (C) the provisions of Section 6.1(c), the Managing Member shall have full and complete authority, power and discretion to manage and control the day-to-day affairs and business of the Company and shall have such power as is necessary, convenient or appropriate to carry out the purposes of the Company and to conduct the day-to-day business of the Company consistent with the terms of this Agreement. Except as otherwise expressly provided in this Agreement, the Members (other than Managing Member acting in its capacity as manager of the Company in accordance with and subject to the terms of this Agreement or Operating Member acting in accordance with the authority delegated by Managing Member to Operating Member subject to the terms of this Agreement) shall have no right, power or authority to act for or on behalf of, or otherwise bind, the Company. Managing Member agrees to devote to the Company’s business such time as reasonably shall be necessary in connection with its duties and responsibilities hereunder. Managing Member shall at all times conduct the business and affairs of the Company (i) in accordance with the then effective Project Budget or Operating Budget and Capital Budget, as the case may be, (ii) following Completion, in a first-class and prudent manner, and (iii) in compliance in all material respects with all material agreements affecting the Property or the Company, all applicable Requirements and any court orders. Subject to Section 6.1(c), Section 6.2 and other provisions of this Agreement requiring Member Consent or CNL Consent, as applicable, the Managing Member shall have the rights and authority to act on behalf of the Company with respect to:

(i) managing the Company’s operations so as to preserve the REIT status of the CNL owner and/or prevent the imposition of a prohibited transaction tax;

(ii) the continuation of the Company’s valid existence as a limited liability company under the laws of State of Delaware;

(iii) the acquisition, development, maintenance, preservation and operation of the Project in accordance with the provisions of the approved Plans and Specifications, this Agreement and applicable Requirements;

(iv) subject to the provisions of Section 6.2(b)(iv), entering into contracts and agreements necessary in order to conduct the business and affairs of the Company and operate the Property as set forth in this Agreement;

(v) procurement of such insurance as may be appropriate or necessary for the prudent development and operation and management of the Property as set forth in this Agreement;

(vi) formation of subsidiaries as may be necessary for the prudent development of the Project and the operation and management of the Company’s business and affairs;

(vii) collection of revenues generated by the Company and payment of all expenses of the Company;

(viii) establishment, maintenance and drawing upon checking, savings and other accounts in the name of the Company;

(ix) oversight and management of litigation filed on behalf of or against the Company as set forth in this Agreement; including providing to the other Members any notices received by the Managing Member or its Affiliates regarding any violations of Requirements and any notices received with respect to the Construction Loan or any other third party loan;

(x) maintenance of all accounting and tax records for the Company as set forth in this Agreement, including maintaining all tax books, tax records and all other financial statements and records in accordance with GAAP and as may be required for REIT purposes;

(xi) preparation or oversight of the Company’s independent accountants in the preparation of all federal, state and local tax returns of the Company;

(xii) the delivery of the Company financial statements as set forth in this Agreement, prepared in accordance with GAAP and performance or causing performance of the Company’s financial reporting requirements as set forth in this Agreement;

(xiii) delivery of, or causing delivery of, to the Company and the members of the Company of all documentation and calculations necessary for the Company’s independent accountants to prepare the Company’s federal tax return and K-1’s;

(xiv) monitoring of compliance with all loan and lender requirements and performing loan covenant testing and loan compliance reporting with respect to the Construction Loan and other loans made to the Company;

(xv) monitoring and oversight of the Property Manager, and delivery to the Members such reports and information as are required of the Property Manager pursuant to the Property Management Agreement;

(xvi) monitoring and management of Company’s debt compliance, cash management functions and annual independent audit, including maintenance of a system of cash management to comply with lender cash management requirements (this obligation shall include payment of vendors, maintenance of bank accounts, performance of bank reconciliations, the making of intercompany rent payments and the making of debt service payments);

(xvii) maintenance of Capital Accounts for the Members of the Company in accordance with the terms of this Agreement;

(xviii) implementation of Major Decisions and CNL Decisions as approved and on the terms set forth by Member Consent with respect to Major Decisions and CNL Consent with respect to CNL Decisions;

(xix) making all distributions of Operating Cash Flow and Extraordinary Cash Flow in accordance with the terms of this Agreement;

(xx) maintaining a system of internal controls necessary for CNL Sarbanes-Oxley certifications, including delivering or causing to be delivered a SAS 70 Type II report for the Property as requested by CNL, or such other documentation and testing of internal controls as is deemed necessary by CNL; and

(xxi) any other action that the Managing Member or the Operating Member is expressly authorized to perform under the other provisions of this Agreement.

(c) The Managing Member shall have the right to delegate any of the above responsibilities and authority to any other Member of the Company as the Operating Member, subject to the acceptance by such Member of such delegation. The Managing Member hereby designates Bainbridge as Operating Member and, subject to the right of the Managing Member to terminate such delegation in accordance with Section 6.7, delegates to Bainbridge the foregoing responsibilities, duties and authority of the Managing Member described in Section 6.1(b), including those described in subparagraphs (ii) through (xx) of Section 6.1(b), but specifically excluding those described in subparagraph (i) of Section 6.1(b), with the intent that until termination of such delegation in accordance with Section 6.7, Bainbridge shall have full and exclusive authority, power, responsibility and discretion to operate the Company in accordance with such delegated responsibilities, duties and authority. Bainbridge hereby accepts such delegation by CNL as Managing Member and agrees that it shall perform as Operating Member the responsibilities and obligations and shall exercise the authority, power and discretion delegated to it as part of such delegation in accordance with the standard of care required under Section 6.1(b) of this Agreement as if it was the Managing Member of the Company and had all duties, responsibilities, authority and rights related to the Company and its Members associated with such office of Managing Member. CNL acknowledges that Bainbridge shall have no responsibilities or obligations to perform the duties of Managing Member of the Company except to the extent set forth in this Section 6.1(c).

Notwithstanding anything to the contrary contained herein, in no event shall any action taken by CNL in connection with the activities described in subparagraph 6.1(b)(i) result in an obligation on the part of Bainbridge to fund Additional Initial Capital or Additional Capital or make a Member Loan or increase the exposure or liability, whether contingent or not, of Bainbridge or any of its Affiliates, under any guaranty given by Bainbridge or any of its Affiliates in connection with the Construction Loan or any other Company Financing. In addition, any expenses incurred by the Company which are attributable to the preservation of the REIT status of CNL or which are otherwise necessary or desirable to CNL due to its REIT status, including, without limitation, in connection with the activities described in subparagraphs 6.1(b)(i) and 6.1(b)(x), shall be paid for entirely by CNL to the extent such expenses exceed the expenses which the Company would have otherwise incurred if CNL was not a REIT.

6.2 Major Decisions.

(a) Notwithstanding anything to the contrary set forth herein, without prior written Member Consent in each instance (each, a “Major Decision”), none of the Company, the Managing Member or the Operating Member shall:

(i) adopt, modify or supplement the Plans and Specifications, except to the extent permitted without the Company’s consent under the Development Agreement including, without limitation, Section 2.15 of the Development Agreement;

(ii) enter into any contract or transaction with, or pay any amount to, a Member or any Affiliate of a Member, except for Out-of-Pocket Costs incurred on behalf of the Company or as expressly provided in this Agreement, the Project Budget, an Operating Budget or a Capital Budget;

(iii) authorize or enter into any agreement, transaction or action on behalf of the Company that is unrelated to its purpose set forth in Section 2.3, including acquiring any additional real property;

(iv) subject to the terms of Article 10, sell, lease, encumber, assign, convey, exchange or otherwise dispose of, in each case directly or indirectly, any interest in any asset of the Company, except in the case of (i) the sale of personal property which is not necessary for the operation of the Property (or if necessary, which is replaced by sufficient substitute property) for a sales price of not more than $25,000, or (ii) Permitted Leases;

(v) modify the Project Budget, provided it shall not be a Major Decision to (i) reallocate amounts to the extent permitted under the Development Agreement and under the loan documents relating to the Construction Loan without having to obtain the lender’s consent. Notwithstanding the foregoing, it shall be a Major Decision to reallocate any savings in the Project Budget line item for CNL’s or Bainbridge’s legal and third party costs and expenses, for marketing and initial leasing expenses or for loan interest;

(vi) voluntarily dissolve or liquidate the Company;

(vii) authorize or effect a merger or consolidation of the Company with or into one or more entities;

(viii) make any call for capital contributions from the Members, except as expressly authorized pursuant to Article IV;

(ix) terminate the Property Management Agreement or replace the Property Manager or amend, modify, supplement, assign or grant any material consents or waivers under the Property Management Agreement or any other property management agreement for the Property; provided, however, that if the Property Manager is Bainbridge or an Affiliate of Bainbridge and is in default beyond any applicable cure period under the terms of the Property Management Agreement, only the consent of CNL shall be required to terminate the Property Management Agreement or replace the Property Manager or otherwise amend, modify, supplement or grant any material consents or waivers under the terms of the Property Management Agreement;

(x) cause the Company to incur any Company Financing except for the Construction Loan or modify, supplement or refinance the Construction Loan or any other Company Financing, provided that when the Construction Loan matures (whether at its stated maturity, upon acceleration or otherwise), the Operating Member with Member Consent shall have the authority to affirmatively cause the Company to obtain or attempt to obtain replacement financing in at least the amount of the outstanding balance of the Construction Loan; provided, however that upon the maturity (whether at its stated maturity, upon acceleration or otherwise) of the Construction Loan or any other then-existing Company Financing that has been guaranteed in whole or in part by Bainbridge or any of the Bainbridge Principals, if new Company Financing, the proceeds of which will be used to repay the Construction Loan or such other guaranteed matured Company Financing in full, has been presented, in good faith, by the Operating Member and is not approved by Member Consent, then, so long as the Operating Member is Bainbridge, the Operating Member shall be authorized, without Member Consent, to obtain from a third-party lender such replacement Company Financing, in an amount equal to the then-outstanding principal of the Construction Loan or other matured Company Financing, on commercially reasonable prevailing market terms favorable to the Company. It is understood that non-recourse financing which would neither adversely affect the Company’s ability to dispose of the Property nor require the Company to pay a prepayment premium shall be deemed most favorable, and financing which would neither adversely affect the Company’s ability to dispose of the Property nor require the Company to pay a prepayment premium and which requires guaranties solely from the Operating Member and/or any of the principals of the Operating Member shall also be deemed favorable, it being agreed by the Members that the foregoing shall not be the only terms which constitute financing that is favorable to the Company;

(xi) confess a judgment against the Company in excess of $50,000, file or fail to contest any bankruptcy, seek or determine not to contest a receivership, make an assignment for the benefit of creditors or take any similar action for the benefit of creditors;

(xii) possess any Company property or assign the rights of the Company in specific Company property for other than a Company purpose;

(xiii) cause the Company to loan funds to any Person or issue any guaranty or indemnity;

(xiv) commingle Company funds with the funds of any other Person;

(xv) terminate the Development Agreement or replace the Developer, modify the Development Fee or otherwise amend, modify, supplement, assign or grant any material consents or waivers under the Development Agreement or any other development agreement for the Property; provided, however, that if the Developer is Bainbridge or an Affiliate of Bainbridge and is in default beyond any applicable cure period under the terms of the Development Agreement, only the consent of CNL shall be required to terminate the Development Agreement, replace or permit the replacement of the Developer or otherwise amend, modify, supplement or grant any material consents or waivers under the terms of the Development Agreement;

(xvi) amend this Agreement or the Certificate of Formation, except that the Certificate of Formation may be amended by the Managing Member to the extent required by law or to effect changes solely of a ministerial nature which do not adversely affect the rights or increase the obligations of a Member;

(xvii) issue any interest in the Company or admit any Person as an additional member in the Company, provided, that the Members may effectuate any direct or indirect sale, assignment, gift, pledge, hypothecation, encumbrance or other transfer of its interest in the Company to the extent permitted in Section 10.1 or Section 10.2;

(xviii) determine whether and to what extent the Property should be repaired or restored following casualty or condemnation, other than as required by Company Financing;

(xix) fail to carry insurance required by this Agreement, the Construction Loan or any other Company Financing, or modify any such insurance in any material and adverse respect;

(xx) threaten in writing, file or settle any claim involving the Company, other than eviction proceedings in the ordinary course of business, insured tort claims and claims involving amounts less than $25,000, individually or in the aggregate for related claims;

(xxi) remove or appoint accountants in connection with any Company business;

(xxii) determine any actions to be taken to cure any material default under, or material violation of, any Requirement or material agreement to which the Company is party, other than a default under this Agreement;

(xxiii) designate a bank other than First-Citizens Bank & Trust Company, a North Carolina banking corporation, for the deposit of funds of the Company;

(xxiv) change the name under which the Company conducts its business; or

(xxv) determine whether the Company shall exercise the Option.

(b) Notwithstanding anything to the contrary contained herein, without prior CNL Consent in each instance (each, a “CNL Decision”), none of the Company, the Managing Member or the Operating Member shall:

(i) adopt an Operating Budget or a Capital Budget or, except for the reimbursement of Out-of-Pocket Costs or as expressly provided below in items (ii) and (iii) immediately below, cause the Company to incur any expense not provided for in an Operating Budget or a Capital Budget;

(ii) modify any Operating Budget, except to allow annual variances in line items that do not exceed in the aggregate in any Fiscal Year the greater of (i) $50,000 in the aggregate, and (ii) ten percent (10%) of the line item and that, when taken together with all other variances in any Operating Budget in such Fiscal Year, do not increase the total amount provided in the applicable Operating Budget by more than one hundred ten percent (110%) in the aggregate, provided that the foregoing limitations shall not be applicable if the same are required to be exceeded in order to pay Necessary Expenses;

(iii) modify any Capital Budget, except to allow an annual aggregate variance not in excess of $50,000 in the aggregate after taking all line item variances into account; and

(iv) enter into any contract or agreement that obligates the Company to pay more than $50,000 or that is not terminable on no more than thirty (30) days’ notice without penalty or charge; provided, however, that subject to the other provisions of Section 6.2(a) and 6.2(b), such restriction shall not restrict the authority of the Managing Member or the Operating Member to enter into such contracts or agreements only with non-Affiliate third parties in the ordinary course of business of operating the Project as an apartment community on such terms as are commercially reasonable in the context of a “Class A” garden apartment community in the Durham, North Carolina market.

CNL will use good faith efforts to consult with Bainbridge on matters constituting CNL Decisions. Notwithstanding anything to the contrary contained herein, in no event shall any CNL Decision, if made without Bainbridge Consent, or other action that is taken without Bainbridge Consent, (A) result in an obligation on the part of Bainbridge to fund Additional Initial Capital or Additional Capital or make a Member Loan or (B) increase the exposure or liability, whether contingent or not, of Bainbridge or any of its Affiliates, under any guaranty given by Bainbridge of any of its Affiliates in connection with the Construction Loan or any other Company Financing.

(c) The Operating Member shall use good faith efforts to provide each other Member with not less than thirty (30) days’ advance notice of any proposed Major Decision or CNL Decision, provided, however, in the event of an emergency or other circumstance that does not reasonably permit such advance notice, the Operating Member may call upon the Members to respond within a shorter, reasonable period of time (but in no event less than two (2) Business Days’ advance notice). Any Member that does not respond within the applicable time period required to respond to a proposed Major Decision or CNL Decision by granting or withholding its consent to such proposed Major Decision, or, with respect to CNL, such proposed CNL Decision, described in such advance notice shall be deemed to not have given its consent to such proposed Major Decision or CNL Decision. Member Consent or CNL Consent, as applicable, shall be made by written consent or may occur pursuant to a meeting by conference call with the results confirmed in writing, and such written consent or written confirmation may be delivered in the form of facsimile, electronic mail, telex, telecopy or telegraph. An agenda for each meeting shall be prepared in advance by the Members in consultation with each other. Approval by Member Consent or CNL Consent, as applicable, of the matter being considered shall be binding on the Company and the Members for all matters. Upon the request of any of the Members, the Operating Member shall cause written minutes to be prepared of all actions taken by such members at meetings and shall deliver a copy thereof to each of the Members within seven (7) days after the date of the meeting.

(d) Notwithstanding anything to the contrary set forth herein, the Operating Member shall have the authority to cause the following Major Decisions to occur and be implemented without the consent of any Member, provided such authority shall be limited as follows:

(i) With respect to Section 6.2(a)(xix), the Operating Member shall have the authority to modify the insurance carried by the Company but shall not have the authority to cause the Company to fail to carry any insurance required by this Agreement, applicable law or any Company Financing, loan document or other agreement to which the Company is a party.

(ii) With respect to Section 6.2, neither the Managing Member nor the Operating Member shall have the authority without the consent of the other Member to threaten in writing, file or settle any claim involving the other Member, but each shall have the authority, subject to the provisions of Section 6.2(a)(xx), to threaten in writing, file or settle any claim involving such Member that does not involve the other Member.

(iii) With respect to Section 6.2(a)(xxiii), the Operating Member’s authority to designate a bank for the deposit of Company funds shall be subject to Section 6.3 below.

6.3 Bank Accounts. For so long as the Construction Loan remains outstanding, the Company will maintain a separate bank account or accounts with the bank making the Construction Loan for the deposit and disbursement of all funds of the Company. Subject to the foregoing, the Company may thereafter maintain separate bank accounts in such banks as the Members by Member Consent may designate (it being understood that First-Citizens Bank & Trust Company is hereby deemed designated and approved by Member Consent) or any lender of the Company may require exclusively for the deposit and disbursement of all funds of the Company. All funds of the Company shall be promptly deposited in such accounts. The Operating Member may designate representatives of Operating Member to be authorized signatories for such accounts from time to time, provided that a representative of Bainbridge shall at all times be an authorized signatory on all Company bank accounts without the requirement of any co-signatory for such accounts and all such signatories shall be insured by fidelity bonds on terms reasonably acceptable to CNL and shall not authorize any expenditures from such accounts with respect to the Project that are not in accordance with the Project Budget or otherwise permitted under this Agreement.

6.4 Annual Budgets. No later than sixty (60) days before Completion, the Operating Member shall prepare or cause to be prepared by the Property Manager for the Property, for CNL’s review and approval, a proposed operating budget and a proposed capital budget, each for the following fiscal year of the Company (or portion thereof if Completion does not occur on January 1) in a form reasonably satisfactory to CNL. The Operating Member shall consult with CNL with respect to such proposed operating budget and proposed capital budget. Once approved by CNL, the applicable final proposed operating budget shall become the “Operating

Budget” hereunder, and, once approved by CNL, the applicable final proposed capital budget shall become the “Capital Budget” hereunder. Thereafter, no later than November 1^st of each year, the Operating Member shall prepare or cause to be prepared by the Property Manager for the Property, for CNL’s review and approval, a proposed operating budget and a proposed capital budget for the upcoming calendar year. The Operating Member shall consult with CNL with respect to such proposed operating budget and proposed capital budget with the goal that CNL agree on each such proposed budget on or before December 1^st of each year. If approved by CNL, the final proposed operating budget for such subsequent year shall become the then operative “Operating Budget” hereunder. If approved by CNL, the final proposed capital budget for such subsequent year shall become the then operative “Capital Budget” hereunder. If, as of the commencement of any Fiscal Year, all or any portion of a proposed Operating Budget has not been approved by CNL, the Operating Member shall be authorized to operate the Company in accordance with the approved portions of such Operating Budget, if any, and those portions of the prior Fiscal Year’s Operating Budget that pertain to the portions of the proposed Operating Budget that have not been so approved. Notwithstanding the foregoing, until a new Operating Budget for a Fiscal Year is approved by CNL, the Operating Member may make expenditures for real estate taxes, scheduled debt service payments, insurance premiums for insurance maintained in accordance with the terms of this Agreement, common area expenses (if any), fulfillment of obligations to tenants under Permitted Leases, amounts required to be paid in accordance with contracts binding on the Company which have been entered into in accordance with this Agreement and utilities (collectively, “Necessary Expenses”), regardless of the amounts permitted therefore in the prior Fiscal Year’s Operating Budget. The Operating Member shall prepare for CNL’s review and approval any proposed modifications to any approved Operating Budget or approved Capital Budget and shall consult with CNL with respect to any such modifications; provided, however, such review and approval rights of CNL shall not otherwise limit the ability of the Operating Member to make expenditures for Necessary Expenses or otherwise in excess of an operative, approved Operating Budget or Capital Budget to the extent otherwise permitted under this Agreement.

6.5 Insurance. Certificates for all insurance maintained by the Company as of the date hereof are attached hereto collectively as Exhibit D. The Operating Member shall cause the Company to obtain and maintain all such insurance as and when described on Exhibit D, and the Operating Member shall attach any additional certificates of insurance to Exhibit D upon issuance. At no time shall insurance maintained by the Company be less than the applicable amount required under applicable law or any loan documents relating to the Construction Loan or other Company Financing.

6.6 Consultation Regarding the Project. CNL, as Managing Member, directly or through its agents or Affiliates, notwithstanding the delegation of authority granted to the Operating Member, shall have the right to consult with and provide comments to the Operating Member on significant issues relating to the management and business of the Company and development of the Project, and, if requested by CNL, each of the Company and the Operating Member will make available its officers and representatives of its accountants to meet with CNL or its agents or Affiliates from time to time during each year at mutually agreeable times for such consultation, to review the management, progress and conditions (financial and otherwise) of the Project and the management of the Company. Notwithstanding anything to the contrary in this Agreement, the rights of CNL to provide such consultation shall include: (a) the right to discuss,

and provide advice with respect to, the Company’s business (including the management of the Project) with the Operating Member and the Company’s officers, employees, managers and agents and the right to consult with and advise the Operating Member on matters materially affecting the Company (including the Project); (b) the right to submit business proposals or suggestions relating to the Company (including the Project) to the Operating Member and the Company’s management from time to time with the requirement that one or more members of the Operating Member’s management discuss such proposals or suggestions with CNL or its agents or Affiliates, as applicable, within a reasonable period after such submission and the right to call a meeting with the Operating Member’s management in order to discuss such proposals or suggestions; and (c) the right (i) to visit the Company’s business premises and the Project during normal business hours and on reasonable notice subject to the rights of any tenants of the Project, (ii) to receive financial statements, operating reports, budgets or other financial reports of the Company (including those relating to the Project) on a regular basis describing the financial performance, significant proposals and other material aspects of the Company (including the Project) to the extent required under this Agreement, (iii) to, at its own cost and expense, examine the books and records of the Company (including those relating to the Project) at reasonable times and upon reasonable advance notice to the Operating Member and (iv) to request such other information relating to the Company (including the Project) at reasonable times and intervals in light of the Company’s normal business operations concerning the general status of the Company’s business, financial condition and operations (including the Project) but only to the extent such information is reasonably available to the Company and in a format consistent with how the Company maintains such information. If, at any time, Bainbridge is not acting as the Operating Member under this Agreement, Bainbridge shall have the same rights of consultation as those given to CNL pursuant to this Section 6.6.

6.7 Termination of Delegation of Authority to Bainbridge as Operating Member.

(a) CNL shall have the right, without the concurrence of Bainbridge, to terminate the delegation of authority of, and remove Bainbridge as, Operating Member at any time with or without Cause, subject to the provisions of this Section 6.7. In the event of the termination of the delegation of authority of, and removal of Bainbridge as, Operating Member with or without Cause, there shall no longer be an Operating Member and CNL as Managing Member shall have full and complete authority, power and discretion to manage and control the day-to-day affairs and business of the Company and shall have such power as is necessary, convenient or appropriate to carry out the purposes of the Company and to conduct the day-to-day business of the Company consistent with the terms of this Agreement, subject to such consent rights of the Members as may be required pursuant to this Agreement. Solely in the event of termination by CNL and removal of Bainbridge as Operating Member for Cause, Bainbridge shall cease to have any rights to approve or consent to any matters under this Agreement. For the avoidance of doubt, any termination by CNL and removal of Bainbridge as Operating Member without Cause shall not affect Bainbridge’s right to approve any Major Decisions or any other matters requiring Member Consent under this Agreement.

(b) For purposes of this Agreement, termination of Bainbridge as Operating Member for “Cause” shall mean termination due to any one or more of the following, subject to the notice and cure periods set forth below:

(i) any material breach or default by Bainbridge in its obligations as Operating Member as delegated by the Managing Member under this Agreement which specific material breach or default has occurred more than two (2) times;

(ii) any act by Bainbridge beyond the scope of its authority under this Agreement;

(iii) in the event of any fraud, gross negligence or willful misconduct by Bainbridge against CNL or the Company; or

(iv) if Developer is terminated as developer for the Project due to an Event of Default under the Development Agreement.

provided (x) with respect to any breach, default, act or event under (i), (ii) or (iii) above, which breach, default, act or event if the same may be cured by the payment of money, has not been cured within ten (10) days after written notice to Bainbridge, or if the same may not be cured by the payment of money, has not been cured within thirty (30) days after written notice to Bainbridge (provided, however, that Bainbridge shall have an additional sixty (60) days to cure such breach, default, act or event if the same is not curable within the initial thirty (30) day period, so long as Bainbridge has commenced cure within such initial thirty (30) day period and continues to prosecute to completion with diligence and continuity the curing thereof within such additional sixty (60) day period, and (y) with respect to any breach, default, act or event under (i), (ii) or (iii) above, if such breach, default, act or event does not have a material adverse effect on the Company, the Project or CNL and if Bainbridge has commenced and continues to prosecute to completion with diligence and continuity the cure thereof within such initial thirty (30) day period, then Bainbridge shall have as much time as is commercially reasonable for curing such breach, default, act or event, provided, however, that in no event shall Bainbridge have greater than one hundred twenty (120) days in the aggregate from such written notice to so cure). Without limiting the notice and cure rights set forth above, it is understood and agreed that if any such Cause events are caused by the fraud, misappropriation or theft by a Bainbridge employee(s) below the level of senior management without complicity or approval of senior management, then such fraud, misappropriation or theft shall be considered cured for purposes of this Section 6.7 and shall not constitute a Cause event under this Section 6.7 if (A) Bainbridge cures such fraud, misappropriation or theft within the cure periods provided above after becoming aware of the same (provided, that, if Bainbridge is diligently pursuing an insurance claim with respect to such fraud, theft or misappropriation of funds, then such cure periods shall be extended until the date which is five (5) Business Days after such claim has been finally rejected) and (B) within the cure periods set forth above, Bainbridge causes, or commences the process of causing, the immediate termination (at the sole expense of Bainbridge) of all Persons engaged in such fraud, theft or misappropriation from all involvement with the Bainbridge and/or Property. Any removal and termination of the delegation of authority of Bainbridge as Operating Member for Cause pursuant to this Section 6.7 shall only be effective if the breach, default, act or event which constitutes Cause has not been cured within the periods provided above and, if notice to Bainbridge is required hereinabove, upon delivery of written notice thereof to Bainbridge. Following removal of Bainbridge as Operating Member for Cause, Bainbridge shall cease to have any rights to approve or consent to any matters under this Agreement.

(c) As a condition to terminating the delegation of authority of, and removing Bainbridge as, Operating Member without Cause, (i) CNL must cause the Construction Loan and any other Company Financing for which Bainbridge or any Affiliate of Bainbridge has given any guaranty or otherwise has any personal liability to be paid in full and satisfied from its own funds or the funds of its Affiliate or the funds from a refinancing of such Company Financing and obtain a full release of Bainbridge and its Affiliates under any guaranty previously given; and (ii) such removal shall in no form or fashion affect Bainbridge’s economic interest as a Member of the Company pursuant to this Agreement except as set forth in this Section 6.7, or the right of Developer to receive the Development Fee to the extent provided in the Development Agreement or the right of the General Contractor to receive the GC Fee to the extent provided in the Construction Contract. Furthermore, in the event of removal of Bainbridge as Operating Member for Cause, such removal shall (A) be conditioned on obtaining a release of Bainbridge or any Affiliate of Bainbridge from any guaranty or other personal liability in connection with the Construction Loan and any other Company Financing and (B) not in any form or fashion affect Bainbridge’s economic interest as a member of the Company pursuant to this Agreement, unless such removal for Cause is a result of one of the matters specified in Section 6.7(b) of this Agreement, and then the economic interest of Bainbridge as a Member of the Company shall be effected by such removal only to the extent provided in Section 9.5 below. If Bainbridge is removed as Operating Member with or without Cause, then Bainbridge may elect under Article 4 or Article 5 not to fund any capital to the Company (including any Additional Initial Capital) or make any loans to the Company, or to fund any additional amounts under this Agreement. If (i) Bainbridge elects not to fund a capital contribution requested under the provisions of Section 4.5 following removal of Bainbridge as Operating Member without Cause, then the adjustments provided in Section 4.5 (d)(ii) to the distribution percentages set forth in Sections 9.4(d), 9.4(e) and 9.4(f), respectively, of Bainbridge and of CNL, as the Failing Member and the Non-Failing Member, respectively shall not apply and the distribution percentages of Bainbridge and CNL under Sections 9.4(d), 9.4(e) and 9.4(f), respectively, shall continue to apply as set forth therein and (ii) if Bainbridge elects not to fund a capital contribution as requested under the provisions of Section 4.5 following removal of Bainbridge as Operating Member for Cause, then the provisions of Section 4.5(d) shall apply. Additionally if Bainbridge is removed as Operating Member with or without Cause, Bainbridge shall be relieved and shall no longer be obligated to deliver any guaranties with respect to any Company Financing.

6.8 Development. The Company shall retain Developer as the developer for the Project, to act as the Company’s sole and exclusive agent to coordinate and supervise the management and administration of the development of the Project and the construction of the improvements comprising the Project. On the date hereof, the Company and Developer shall enter into a Development Agreement in substantially the form set forth as Exhibit C attached hereto. The Developer will cause Completion of the Project for a price set forth in the Development Agreement. The Developer, or a creditworthy entity acceptable to the lender pursuant to the Construction Loan, shall provide any completion guaranty, environmental indemnity and/or non-recourse carve-out guaranty (but no other guaranties or indemnities) required in connection with the Construction Loan by the lender pursuant to the Construction Loan and CNL shall not be obligated to provide any such guaranties; provided, however, that CNL hereby agrees to indemnify, defend and hold harmless Developer or such Affiliate of Bainbridge which provides any of the aforementioned guaranties to the lender on the Construction Loan from and against any and all loss, cost, damage, liability , cause of action

and/or expense (including, without limitation, court costs and reasonable attorneys’ fees and disbursements) suffered or incurred by Developer or such Affiliate under such guaranties to the extent caused by the willful or voluntary acts or omissions of CNL or its Affiliates. As compensation for the Developer’s property development services, Company agrees to pay the Developer a development fee and a development supervision fee (collectively, the “Development Fee”) as set forth in the Development Agreement.

6.9 Property Management Agreement. Upon Completion, the Company will enter into a management agreement with the Property Manager to manage the Property in substantially the form attached hereto as Exhibit I (the “Property Management Agreement”), pursuant to which, as compensation for the services described therein, Property Manager shall be paid a property management fee as set forth in the Property Management Agreement. Should the Property Management Agreement terminate for any reason, the Company will enter into an agreement or agreements for management of the Property subject to, and in accordance with, the terms of Section 6.2.

6.10 Contracts with Affiliates. Notwithstanding anything to the contrary, CNL shall have the sole and exclusive authority to enforce and/or exercise the rights of the Company in the event of a default by Bainbridge or its Affiliate under any contract with an Affiliate of Bainbridge, including the Company’s engagement of the Developer pursuant to Section 6.8. Notwithstanding anything to the contrary, Bainbridge shall have the sole and exclusive authority to enforce and/or exercise the rights of the Company in the event of a default by CNL or its Affiliate, under any contract with CNL or an Affiliate of CNL.

6.11 Indemnification of Managing Member and Operating Member. The Company shall hold harmless, indemnify and defend each of the Managing Member and the Operating Member and their respective Affiliates from and against any and all claims arising out of or relating to any action taken, omitted or suffered by the Managing Member or the Operating Member in the performance of their respective duties as Managing Member or Operating Member hereunder, or otherwise in their capacity as the Managing Member or Operating Member, provided that such claim results from a decision or action which (i) was taken, omitted or suffered by the Managing Member or Operating Member, as applicable, in the reasonable and good faith belief that such decision or action was in the best interest of the Company and within the authority of the Managing Member or Operating Member, as applicable, under this Agreement and (ii) did not involve (A) fraud, bad faith, gross negligence or willful misconduct on the part of the Managing Member or the Operating Member, as applicable, or the breach of the fiduciary duties of the Managing Member or Operating Member or of any covenant, agreement or obligation of the Managing Member or Operating Member contained in this Agreement or (B) the knowing breach of any representation or warranty made by the Managing Member or Operating Member in this Agreement.

6.12 Leasing Guidelines. The Members acknowledge and agree that the initial Leasing Guidelines for the lease up of the Project as an apartment community shall be as set forth in the Property Management Agreement. The Members shall negotiate in good faith to amend the Leasing Guidelines as may be necessary from time to time. All amendments to the Leasing Guidelines shall be approved by Member Consent.

6.13 General Contractor. The Company shall retain General Contractor as the general contractor for the development of the Project. The Company and General Contractor shall enter into the Construction Contract in substantially the form set forth as Exhibit J attached hereto, pursuant to which, as compensation for the services described therein, General Contractor shall be paid a general contractor fee (the “GC Fee”) as set forth in the Construction Contract.

6.14 Danziger Property Option. Pursuant to that certain Option Agreement by and between TWSR, LLC, a North Carolina limited liability company, Whitney Waldroup Hovenic, M.D., Robin C. Waldroup, Sheila Stains-Ramp, Marc David Waldroup, Kristin Maria Ramsden and Boulevard Properties LLLP, a North Carolina limited liability limited partnership, collectively as grantors, and the Company, as grantee, dated of even date herewith (the “Option Agreement”), the Company possesses an option (the “Option”) to purchase certain real property located in Durham, North Carolina and more particularly described in Exhibit K hereto (the “Danziger Property”). In consideration of the Option, the Company is obligated to make periodic option payments (the “Option Payments”) to the grantors as more fully set forth in the Option Agreement. The Company shall determine whether it shall elect to exercise the Option no later than the date that is the earlier of (a) seventeen (17) months from the closing of the Company’s acquisition of the Property or (b) the date which is ten (10) days after certificates of occupancy have been obtained for eighty-five percent (85%) of the rental units of the Project (the “Company Election Date”). In the event that the Company elects not to exercise the Option (or does not make a determination as to whether to exercise the Option) on or prior to the Company Election Date, then either Bainbridge or CNL may, in a written notice (the “Option Election”) to the other, make an election to purchase the Option and receive an assignment of the Option Agreement from the Company in exchange for an amount equal to (i) the total of all such Option Payments paid under the Option Agreement through the date of the Option Election, plus (ii) any due diligence (including, without limitation, filing fees and consultants fees and expenses) and legal expenses incurred by the Company, in respect of the Danziger Property or the exercise of the Option, plus (iii) any amounts which would be due by the Company under the Option Agreement prior to the assignment from the Company to the purchasing Member (the amounts referenced in (i), (ii) and (iii) being hereafter collectively referred to as the “Option Purchase Price”). If more than one Member delivers an Option Election, the earlier delivered notice shall be given effect and the later delivered notice will be void and without effect. Within five (5) Business Days after receiving a copy of the Option Election, the Company shall notify the Member making the election of the Option Purchase Price after which the Member making the timely election shall tender payment of the Option Purchase Price in exchange for the assignment of the Option Agreement, which assignment shall be made without representation or warranty by the Company. Each of Bainbridge and CNL acknowledge that the right to exercise the Option is subject to certain conditions and that the Option may not be available to the Company or either Member.

ARTICLE 7. BOOKS AND RECORDS, AUDITS, TAXES, ETC.

7.1 Books; Statements. In addition to the establishment and maintenance of Capital Accounts pursuant to Section 7.9, the Company shall keep all books and records required under the Act and such other books and records as shall be determined by Member Consent. All financial statements of the Company shall be prepared in accordance with GAAP, consistently applied.

Following the Effective Date:

(a) following the commencement of at least one lease for any portion of the Project, Operating Member shall prepare or cause to be prepared a statement setting forth the calculation of Operating Cash Flow for each period of time, but not less often than monthly, at the end of which period the Company is to make periodic distributions of Operating Cash Flow as provided in Section 9.3, and the Company shall furnish a copy of such cash flow statement to each Member within twenty-one (21) days after the end of such period;

(b) no later than the seventh (7^th) day after each month-end, Operating Member shall prepare and submit or cause to be prepared and submitted to each Member, an unaudited balance sheet of the Company dated as of the end of the preceding month, together with a profit and loss statement and statement of cash flows as of the end of such month and for the portion of the fiscal year then ended and a statement of change in each Member’s capital for the month;

(c) no later than the seventh (7^th) day of each January, April, July and October during the term of this Agreement, Operating Member shall prepare and submit or cause to be prepared and submitted to each Member, an unaudited balance sheet of the Company dated as of the end of the preceding month, together with a profit and loss statement for the three calendar month period next preceding with a cumulative calendar year accrual basis profit and loss statement to date, and a statement of change in each Member’s capital for the quarter and year to date; and

(d) as soon as practicable following the end of each fiscal year of the Company, an annual audit shall be conducted by independent certified public accountants of recognized standing, selected by CNL in accordance with Section 7.6 and retained by the Company, which accounting and/or audit shall cover the assets, properties, liabilities and net worth of the Company, and its dealings, transactions and operations during such fiscal year, and all matters and things customarily included in such accountings and audits, and a full, detailed certified statement shall be furnished to each Member within sixty (60) days after the end of such fiscal year, showing on an accrual basis the assets, liabilities, properties, net worth, profits, losses, net income, Operating Cash Flow, changes in the financial condition of the Company for such fiscal year and each Member’s capital in the Company, and, if applicable, a full and complete report of the audit scope and audit findings in the form of a management audit report with an internal control memorandum.

In its preparation of the financial statements set forth in this Section 7.1, the Operating Member shall maintain a system of internal controls necessary to enable CNL to complete CNL’s Sarbanes-Oxley certifications, and shall either deliver or cause to be delivered a SSAE 16 report for the Property to the extent prepared by the Operating Member in the ordinary course of its business if requested by CNL, or shall provide such other certification and documentation and testing of internal controls as is deemed necessary by CNL; provided, however, that to the extent the preparation of SSAE 16 reports, or such other required certifications and documentation and testing of the Company’s internal controls or the implementation of such additional or alternative internal controls of such testing causes the Company to incur non de minimus expenses, CNL shall bear responsibility for such expenses.

7.2 Where Maintained. The books, accounts and records of the Company shall be at all times maintained at the offices of Bainbridge or as otherwise specified in the Property Management Agreement or any successor management agreement in effect with respect to the Property from time to time, and available to the other Members for review and copying.

7.3 Audits. In addition to the annual audit of the Company as required under Section 7.1(d), any Member may, at its option and at its own expense, conduct internal audits of the books, records and accounts of the Company, provided that any audit with respect to Allowable Development Costs may be conducted within one hundred twenty (120) days following Completion. Audits may be on either a continuous or a periodic basis or both and may be conducted by employees of any Member, or an Affiliate of any Member, or by independent auditors retained by any Member.

7.4 Objections to Statements. Following Completion, any Member shall have the right to object to the statements described in Sections 7.1(a), 7.1(b) and 7.1(c) by giving notice to the other Members within 45 days after such statement is received by each Member indicating in reasonable detail the objections of such Member and the basis for such objections. If any Member shall fail to give such notice within said 45-day period, such statement and the contents thereof shall, in the absence of fraud or willful misconduct by the other Members or the independent certified public accountants preparing the statements, be deemed conclusive and binding upon such party so failing to give such notice subject, in the case of the statements provided for in Sections 7.1(a) and 7.1(b), to the audit provided for in Section 7.1(c). Objections to any statement and any disputes concerning the findings of, and questions raised as the result of, audits of the Company’s books shall be settled by Member Consent.

7.5 Tax Returns. The Company shall be treated and shall file its tax returns as a partnership for Federal, state, municipal and other governmental income tax and other tax purposes and shall not take any action (including filing an election to be classified as a corporation for Federal income tax purposes) inconsistent with such treatment. The Company shall prepare or cause to be prepared, on an accrual basis, all Federal, state and municipal partnership tax returns required to be filed. Unless otherwise determined by Member Consent, such tax returns shall be prepared by independent certified public accountants selected pursuant to Section 7.6, who shall sign such returns as preparers. The Company shall submit (a) draft returns to each Member for review and approval no later than ninety (90) days after the close of the Company’s taxable year; and (b) final returns to each Member for review and approval no later than forty-five (45) days prior to the extended due date of the returns. Each Member shall notify the other Member(s) upon receipt of any notice of tax examination of the Company by Federal, state or local authorities.

7.6 Tax Matters Partner. CNL is hereby appointed the “Tax Matters Partner” of the Company for all purposes pursuant to Sections 6221-6231 of the Code, with respect to operations conducted by the Company during the period that CNL is a Member. The Tax Matters Partner shall comply with the requirements of Section 6221 through 6232 of the Code. The Tax Matters Partner shall have the authority, in its reasonable discretion, to select and appoint, from time to time, independent certified public accountants to prepare tax returns and annual audited financial statements for the Company, which selection shall be approved by Bainbridge, the expense of which shall be borne by the Company.

7.7 Tax Policy. The Company shall make any and all tax accounting and reporting elections and adopt such procedures as shall be approved by Member Consent. A Member shall be deemed to have consented to any tax elections made by the Tax Matters Partner if such Member shall not have objected in writing to such election as reflected in the initial tax return reflecting such election within fifteen (15) days after such return is received by such Member, indicating in reasonable detail the objection of such Member and the basis for such objection. Any disputes over tax elections shall be resolved by Member Consent.

7.8 Section 754 Election. At the request of a Member, the Company shall make and file a timely election under Section 754 of the Code (and a corresponding election under applicable state or local law) in the event of a transfer of an interest in the Company permitted hereunder or the distribution of property to a Member to the extent that such election results in a positive basis adjustment to the Company’s property. Any Member or transferee first requesting an election hereunder shall reimburse to the Company the reasonable out-of-pocket expenses incurred by the Company in connection with such election including any legal or accountants’ fees. Thereafter, each transferee shall reimburse such expenses with respect to adjustments under Section 743 of the Code in the proportion which the interest of each transferee bears to the sum of the interests of all transferees.

7.9 Capital Accounts. A separate capital account (each, a “Capital Account”) shall be maintained for each Member in accordance with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv), and this Section 7.9 shall be interpreted and applied in a manner consistent therewith. Whenever the Company would be permitted to adjust the Capital Accounts of the Members pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of Company property, the Company may so adjust the Capital Accounts of the Members and the Company shall so adjust the Capital Accounts of the Members to the extent necessary to comply with the requirements of Code Section 704(b) and the Treasury Regulations thereunder. In the event that the Capital Accounts of the Members are adjusted pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of Company property, (i) the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain or loss, as computed for book purposes, with respect to such property, (ii) the Members’ distributive shares of depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with respect to such property shall be determined so as to take account of the variation between the adjusted tax basis and book value of such property in the same manner as under Code Section 704(c) and (iii) the amount of upward and/or downward adjustments to the book value of the Company property shall be treated as income, gain, deduction and/or loss for purposes of applying the allocation provisions of Article 8. In the event that Code Section 704(c) applies to Company property, the Capital Accounts of the Members shall be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain and loss, as computed for book purposes, with respect to such property.

ARTICLE 8. ALLOCATIONS

8.1 Allocation of Net Income and Net Loss. After application of Section 8.3 and Section 8.4, and subject to Section 8.2, any remaining net income or net loss (or items thereof)

for the fiscal year or portion thereof shall be allocated among the Members and to their Capital Accounts in such ratio or ratios as may be required to cause the balances of the Members’ Economic Capital Accounts to be as nearly equal to their Target Balances as possible, consistent with the provisions of Section 6.

8.2 Loss Limitation. Net loss allocated pursuant to Section 8.1 shall not exceed the maximum amount of net loss that can be allocated without causing or increasing a deficit balance in a Member’s Adjusted Capital Account. A Member’s “Adjusted Capital Account” balance shall mean such Member’s Capital Account balance increased by such Member’s obligation to restore a deficit balance in its Capital Account, including any deemed obligation pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and decreased by the amounts described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6). In the event that one but not all of the Members would have a deficit balance in its Adjusted Capital Account as a consequence of an allocation of net loss pursuant to Section 8.1 in excess of the amount, if any, permitted under the first sentence of this Section 8.2, the limitation set forth in this Section 8.2 shall be applied by allocating 100% of the remaining net loss to the other Members, in proportion to such positive balances, until the Adjusted Capital Account of such other Member or Members is zero.

8.3 Minimum Gain Chargebacks and Nonrecourse Deductions. Notwithstanding any other provision of this Agreement:

(a) Company Minimum Gain Chargeback. In the event there is a net decrease in Company Minimum Gain during a fiscal year, the Members shall be allocated items of income and gain in accordance with Treasury Regulations Section 1.704-2(f). For purposes of this Agreement, the term “Company Minimum Gain” shall have the meaning for “partnership minimum gain” set forth in Treasury Regulations Section 1.704-2(b)(2), and any Member’s share of Company Minimum Gain shall be determined in accordance with Treasury Regulations Section 1.704-2(g)(1). This Section 8.3(a) is intended to comply with the minimum gain chargeback requirement of Treasury Regulations Section 1.704-2(f) and shall be interpreted and applied in a manner consistent therewith.

(b) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to the Members pro rata in accordance with their Percentage Interest as of the date hereof as set forth on Exhibit A attached hereto. For purposes of this Agreement, the term “Nonrecourse Deductions” shall have the meaning set forth in Treasury Regulations Section 1.704-2(b)(1). This Section 8.3(b) is intended to comply with Treasury Regulations Section 1.704-2(e) and shall be interpreted and applied in a manner consistent therewith.

(c) Member Nonrecourse Debt. To the extent required by Treasury Regulations Section 1.704-2(i), any items of income, gain, loss or deduction of the Company that are attributable to a nonrecourse debt of the Company that constitutes Member Nonrecourse Debt (including chargebacks of Member Nonrecourse Debt Minimum Gain) shall be allocated in accordance with the provisions of Treasury Regulations Section 1.704-2(i). For purposes of this Agreement, the term “Member Nonrecourse Debt” shall have the meaning for partner nonrecourse debt set forth in Treasury Regulations Section 1.704-2(b)(4), and the term “Member Nonrecourse Debt Minimum Gain” shall have the meaning for partner nonrecourse debt

minimum gain set forth in Treasury Regulations Section 1.704-2(i)(2). This Section 8.3(c) is intended to satisfy the requirements of Treasury Regulations Section 1.704-2(i) (including the partner nonrecourse debt minimum gain chargeback requirement) and shall be interpreted and applied in a manner consistent therewith.

8.4 Qualified Income Offset. Any Member who unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes or increases a deficit balance in its Capital Account in excess of any obligation to restore a deficit balance in its Capital Account (including any deemed deficit restoration obligation pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and (i)(5), and adjusted as provided in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)) shall be allocated items of Company income and gain (consisting of a pro rata portion of each item of income and gain of the Company) in an amount and a manner sufficient to eliminate, to the extent required by the Treasury Regulations, such deficit balance as quickly as possible. This Section 8.4 is intended to comply with the alternate test for economic effect set forth in Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in a manner consistent therewith.

8.5 Curative Allocations. The allocations set forth in Sections 8.3 (a), (b) and (c) and 8.4 (the “Regulatory Allocations”) are intended to comply with the requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding any other provisions of this Article 8 (other than the Regulatory Allocations), the Regulatory Allocations shall be taken into account as provided for in the following two sentences. Income, gain, loss and deduction shall be reallocated to the extent that such reallocation causes the net aggregate amount of allocations of income, gain, deduction and loss to each Member to be equal to or more closely approximate the net aggregate amount of such items that would have been allocated to each such Member if the Regulatory Allocations had not occurred. This Section 8.5 shall be interpreted and applied in such a manner and to such extent as is reasonably necessary to eliminate, as quickly as possible, permanent economic distortions that would otherwise occur as a consequence of the Regulatory Allocations in the absence of this Section 8.5.

8.6 Code Section 704(b) Allocations. The allocation provisions contained in this Article 8 are intended to comply with Code Section 704(b) and the Treasury Regulations promulgated thereunder.

8.7 Other Allocation Provisions. Any elections or decisions relating to the allocations of Company items of income, gain, loss, deduction or credit shall be made by the Tax Matters Partner in a manner that, in the Tax Matters Partner’s discretion, reasonably reflects the arrangement between the Members pursuant to this Agreement.

8.8 Distributions of Nonrecourse Liability Proceeds. If the Company makes a distribution to any Member that may be allocable to an increase in Company Minimum Gain pursuant to Treasury Regulations Section 1.704-2(h), then the Company shall, to the extent permitted by Treasury Regulations Section 1.704-2(h), minimize the amount of such distribution that is allocable to an increase in Company Minimum Gain.

8.9 Information as to Allocation of Debt. Bainbridge agrees that indebtedness of the Company shall be allocated among the Members under Code Section 752 and the Tax Matters Partner shall have sole authority, in its discretion, as to all allocations and/or decisions under Code Section 752, it being understood that it is the intention of the Members to allocate as much debt as possible to Members other than CNL to the extent that the Tax Matters Partner is satisfied that there is an adequate basis for such position under applicable authority. Managing Member also agrees to provide the Tax Matters Partner with all other information, including taxable income and loss of the Company, the basis of property of the Company, and the highest amount of acquisition indebtedness in the twelve month period preceding any sale or disposition of property of the Company, which the Tax Matters Partner may require for purposes of this Article 8.

8.10 Taxable Year; Fiscal Year. The taxable year of the Company shall be the calendar year, unless otherwise required by the Code or, subject to obtaining consent of the Internal Revenue Service, the Members determine otherwise by Member Consent. The fiscal year of the Company shall be the same as its taxable year.

ARTICLE 9. DISTRIBUTIONS AND ALLOCATIONS

9.1 Percentage Interests in Company. The initial percentage interest of the respective Members in the Company shall be:

The percentage interest of each Member as may be adjusted pursuant to the terms of Section 4.5(d)(ii)(y) and the preferred and priority rights provided for herein, is herein called such Members’ “Percentage Interest.”

9.2 Certain Definitions. The following terms shall have the following meanings when used herein:

(a) “Operating Cash Flow” shall mean, for any period, the net income or loss of the Company for such period (excluding Extraordinary Cash Flow), as determined in accordance with GAAP, consistently applied and adjusted as follows or as otherwise determined by Member Consent:

(i) Additions. There shall be added to such net income or subtracted from such loss (1) the amount charged for depreciation, amortization or any other deduction not involving a cash expenditure, (2) the amount of Capital Contributions to the Company pursuant to (A) Section 4.5(d)(ii) and (B) Section 4.5(d)(iv), (3) the proceeds of short-term borrowings of the Company in the ordinary course of business (including Member Loans) and interest received on non-cash consideration received by the Company pursuant to a Major Capital Event, (4) any amount by which cash reserves, which were previously established pursuant to the Operating Cash Budget prior to the accounting period in order to retain sufficient working capital in the Company or to properly reserve for actual or contingent obligations of the Company or improvements to the Property, have been reduced (other than through the payment of expenses) and (5) the proceeds of business interruption insurance.

(ii) Deductions. There shall be subtracted from such net income or added to such loss (1) the amount of payments made on account of principal upon mortgage loans secured by Company property and the amount of current interest and principal then due and payable with respect to any other loans made to the Company, including Member Loans, (2) funds disbursed for capital expenditures, leasing commissions, tenant finish or any other similar expenses that are required to be capitalized and (3) any amount to establish or increase cash reserves pursuant to a determination by Member Consent that such reserve and the amount thereof is necessary or appropriate in order to retain sufficient working capital in the Company or to properly reserve for other actual or contingent obligations of the Company or improvements to the Property.

(b) “Extraordinary Cash Flow” shall mean the cash receipts of the Company from a Major Capital Event as reduced by (A) the costs and expenses incurred by the Company in connection with such Major Capital Event, including title, survey, appraisal, recording, escrow, transfer tax and similar costs, brokerage expense and attorneys, and other professional fees, and amounts spent on reconstruction or repair, (B) funds deposited in reserves pursuant to a determination by Member Consent that each such reserve and the amount thereof is required or appropriate to provide for actual or contingent obligations of the Company, amounts expected therefrom for capital improvements to the Property, and (C) funds applied to pay or prepay any indebtedness of the Company (including Member Loans) in connection with such Major Capital Event. To the extent that any amount received pursuant to a Major Capital Event has been set aside as a reserve pursuant to item (B) above in this definition and the Members thereafter determine by Member Consent that all or a portion of such amount is not required for such purposes, such amount shall be included in Extraordinary Cash Flow when the Members determine by Member Consent that it is no longer necessary or appropriate to retain such amount as a reserve. Any principal payments on non-cash consideration received pursuant to a Major Capital Event, including promissory notes or deferred payment obligations, shall be deemed to be included in Extraordinary Cash Flow when received in cash by the Company; provided, however, that, notwithstanding the terms of Section 9.2(a)(i)(3) as determined by Member Consent, such noncash assets may be distributed in accordance with Percentage Interest in kind to the Members, in lieu of cash, treating the total fair market value of such non-cash assets at the date of distribution as Extraordinary Cash Flow.

(c) “Operating Return” shall mean a cumulative return, compounded monthly, equal to ten and one-half percent (10.5%) per annum on each Member’s Unreturned Capital. One-twelfth of the annual Operating Return payable for the current fiscal year of the Company shall accrue at the time of each monthly distribution of Operating Cash Flow (or at the time that such distribution would be made if Operating Cash Flow were available for distribution).

(d) “Unreturned Capital” shall mean, for each Member, its Initial Capital, Additional Initial Capital and Additional Capital, reduced by any distributions of Extraordinary Cash Flow made to such Member pursuant to Section 9.4(b) hereof.

(e) “Unreturned Operating Return” shall mean, for each Member, its Operating Return computed with respect to Unreturned Capital reduced by any distributions of Operating Return made to such Member pursuant to Section 9.4(c) hereof.

9.3 Operating Cash Flow Distributions. Subject to the terms of Section 4.5(d) and Section 9.6 hereof, the Company shall distribute Operating Cash Flow for each month during the term of the Company in which there is Operating Cash Flow (such distribution to be made monthly, within twenty-one (21) days after the end of each such month) to the Members pro rata in accordance with their respective Percentage Interests.

9.4 Extraordinary Cash Flow Distributions. Subject to the terms of Section 4.5(d) and Section 9.6 hereof, the Company shall distribute Extraordinary Cash Flow (within five (5) Business Days following a Major Capital Event generating Extraordinary Cash Flow) to the Members, as follows:

(a) first, to the Members, in amounts necessary to repay (A) compounded and current interest, and thereafter (B) the outstanding principal balance payable, on Member Loans made by a Member to the Company, which distributions shall be made pro rata to the Members if more than one of the Members have outstanding Member Loans in accordance with the total principal and interest amounts of Member Loans then outstanding. Without limiting the foregoing, all Member Loans made by a particular Member shall be repaid in the chronological order in which they were made;

(b) second, to the Members, pari passu, in proportion to their respective Unreturned Capital, until each Member’s Unreturned Capital has been reduced to zero;

(c) third, to the Members, pari passu, in accordance with the outstanding balances of the Members’ respective Unreturned Operating Return on Unreturned Capital until each Member’s Unreturned Operating Return balance on Unreturned Capital has been reduced to zero;

(d) fourth, eighty percent (80%) to the Members in proportion to their respective then Percentage Interests and twenty percent (20%) to Bainbridge, until CNL achieves a 15% IRR on its aggregate Capital Contributions;

(e) fifth, seventy-five percent (75%) to the Members in proportion to their respective then Percentage Interests and twenty-five percent (25%) to Bainbridge, until CNL achieves a 20% IRR on its aggregate Capital Contributions; and

(f) thereafter, fifty percent (50%) to the Members in proportion to their respective then Percentage Interests and fifty percent (50%) to Bainbridge.

9.5 Loss of Promoted Interest. Notwithstanding the provisions of Section 9.4, Bainbridge shall no longer have the right to distributions with respect to its so-called “promoted interest” as such distributions are set forth in Sections 9.4(d), 9.4(e) and 9.4(f) (and Bainbridge shall instead receive distributions of Extraordinary Cash Flow under such Sections based on its then Percentage Interest) upon the removal of Bainbridge for Cause as described in Section 6.7(b).

Upon the loss of Bainbridge’s promoted interests set forth in Sections 9.4(d), 9.4(e) and 9.4(f), such Sections shall be deemed revised to provide that all distributions thereunder shall be made to the Members pro rata in accordance with their then respective Percentage Interests, and Bainbridge shall no longer be entitled to any distributions under Section 9.4(d), 9.4(e) or 9.4(f) in excess of a distribution based on its then Percentage Interest. Without limiting the foregoing, if CNL terminates and removes Bainbridge as the Operating Member without Cause in accordance with Section 6.7, such termination and removal shall not cause Bainbridge to lose the promoted interests set forth in Sections 9.4(d), 9.4(e) and 9.4(f).

9.6 Tax Distributions. Notwithstanding anything to the contrary in this Agreement, to the extent that cash is distributed to any Member pursuant to Article 9, for each fiscal year of the Company in which the amount of net income allocated to Bainbridge pursuant to Article 8 exceeds ten percent (10%) of the total net income allocated pursuant to Article 8 (the “Excess Allocation”), cash shall first be distributed to Bainbridge to pay the Assumed Tax Liability on such Excess Allocation. The Assumed Tax Liability on such Excess Allocation shall be forty-five percent (45%) multiplied by the Excess Allocation. Any distribution made pursuant to this Section 9.6 shall be made quarterly (based upon the estimated amount of tax due as determined under this Section 9.6 with a final payment due on or before March 31 of the year following the close of the fiscal year in question (which payment shall be adjusted to reconcile all of the quarterly estimated payments made previously for such fiscal year pursuant to this Section 9.6) and any distribution pursuant to this Section 9.6 shall be treated as an advance under the relevant provision giving rise to such Excess Allocation.

ARTICLE 10. ASSIGNMENT AND OFFER TO PURCHASE

10.1 Transfers. Except as expressly provided in this Article 10, no Member, or any assignee or successor in interest of a Member, may sell, assign, give, pledge, hypothecate, encumber or otherwise transfer, or permit the transfer of, all or any portion of its interest in the Company, or in any Member Loans made by it, or in all or any part of the assets of the Company, directly or indirectly, whether by operation of law or otherwise. Any purported sale, assignment, gift, pledge, hypothecation, encumbrance or other transfer of all or any portion of a Member’s interest in the Company or any Member Loans made by it not otherwise expressly permitted by this Article 10 shall be null and void and of no force or effect whatsoever. A sale, assignment, gift, pledge, hypothecation, encumbrance or other transfer by CNL of all or a portion of its Entire Interest in the Company to an Affiliate of CNL Financial Group, LLC (“CFG”) from time to time, or in connection with any corporate merger, acquisition or other combination or the sale or transfer of all or substantially all of its assets shall be a transfer permitted under this Article 10, and CNL shall not be required to obtain the consent of, nor offer all or any portion of its Entire Interest to be so sold, assigned, given, pledged, hypothecated, encumbered or transferred to any other Member. No transfers of any direct or indirect interest in CNL, or of CNL’s interest in the Company among funds sponsored or advised by CFG or its Affiliates, shall be restricted in any way. CNL’s right to transfer its Entire Interest as expressly permitted in this Section 10.1 shall include, without limitation, its managing member rights.

10.2 Permitted Transfers. Notwithstanding any other provision of this Agreement, so long as one or more of the Bainbridge Principals, individually or collectively, control the day-to-day decision-making for Bainbridge, then the following shall be permitted under this Article 10

without obtaining the consent of any other Member, and without Bainbridge being required to offer to any Member all or any portion of the interest to be sold, assigned, given, pledged, hypothecated, encumbered or transferred: (a) the direct or indirect sale, assignment, gift, pledge, hypothecation, encumbrance or other transfer by Bainbridge of all or a portion of its Entire Interest in the Company to an Affiliate of Bainbridge, (b) in the event of the death of any individual member of Bainbridge or any Person that has an indirect interest in Bainbridge, such individual’s interest may be transferred to the personal representative of such individual or as otherwise disposed of pursuant to the will of such individual or under the laws of intestate succession, and (c) any Person that has a direct or indirect interest in Bainbridge may freely transfer all or any part of such Person’s direct or indirect interest either (A) to another Person that has a direct or indirect interest in Bainbridge or (B) to a trust, family limited liability company, family partnership or similar estate planning or wealth preservation entity established by the transferring Person for the benefit of such Person, such Person’s spouse, one or more of such Person’s immediate family or any combination thereof.

10.3 Assumption by Assignee. Any assignment of all or any portion of an Entire Interest in the Company permitted under this Article 10 shall be in writing, and shall be an assignment and transfer of all of the assignor’s rights and obligations hereunder with respect to the portion of the Entire Interest transferred, and the assignee shall expressly agree in writing to be bound by all of the terms of this Agreement and assume and agree to perform all of the assignor’s agreements and obligations existing or arising at the time of and subsequent to such assignment. Upon any such permitted assignment of all or any portion of an Entire Interest, and after such assumption, the assignor shall be relieved of its agreements and obligations hereunder arising after such assignment with respect to the interest transferred, and, in the case of a transfer of an Entire Interest, the assignee shall become a Member in place of the assignor. An executed counterpart of each such assignment of all or any portion of an Entire Interest in the Company and assumption of a Member’s obligations shall be delivered to each Member and to the Company. The assignor or assignee shall pay all expenses incurred by the Company in admitting the assignee as a Member. Except as otherwise expressly provided herein, no permitted assignment shall terminate the Company.

As a condition to any assignment of all or any portion of an Entire Interest, the selling Member shall obtain such consents as may be required from third parties, if any, or waivers thereof. The other Members shall use reasonable efforts to cooperate with the selling Member in obtaining such consents or waivers.

10.4 Amendment of Certificate of Formation. If an assignment of an Entire Interest in the Company shall take place pursuant to the provisions of this Article 10, then unless the Company is dissolved by such assignment, the continuing Members promptly thereafter shall cause to be filed, to the extent necessary, an amendment to the Company’s Certificate of Formation with all applicable state authorities, together with any necessary amendments to the fictitious or assumed name(s) of the Company in order to reflect such change or take such similar action as may be required.

10.5 Other Assignments Void.

(a) Without limiting the terms of Section 10.1, but subject to Section 10.2, any Member other than CNL that is an incorporated or unincorporated business entity and any permitted assignee of all or any portion of the Entire Interest of such business entity, shall not permit, without prior CNL Consent, which consent may be withheld in the sole and uncontrolled discretion of CNL, the direct or indirect admission of any new equity or other beneficial interest holder in such entity, or the issuance or assignment to any Person, who is not now an equity or other beneficial interest holder, or an Affiliate of such an equity interest holder, in such entity, of any kind of interest whatsoever in such entity. If a transfer is permitted under this subsection, the assignor or such assignee shall pay all expenses incurred by the Company in connection with the transfer.

(b) Further without limiting the terms of Section 10.1, but subject to Section 10.2, any Member other than CNL that is an incorporated or unincorporated business entity and any permitted assignee of all or any portion of the Entire Interest of such business entity, shall not permit, without prior CNL Consent, which consent may be withheld in the sole and uncontrolled discretion of CNL, respectively, the issuance, sale, assignment, gift, pledge, hypothecation or encumbrance of any interest in such entity or in any equity or other beneficial interest holder in such entity or any such assignee or any instruments convertible into any interest in such entity or in any equity or other beneficial interest holder in such entity or any such assignee or the transfer of any right to vote any equity or other beneficial interest in such entity or any such assignee.

10.6 Rights of a Transferee. Any assignee or transferee of less than the Entire Interest of either Member shall, to the extent of such interest acquired, be entitled only to the assignor or transferor Member’s rights, if any, in the profits, losses, income, gains, deductions and distributions of such assignor or transferor Member pursuant to this Agreement, subject to the liabilities and obligations of such assignor or transferor Member hereunder; but such assignee or transferee of less than the Entire Interest of either Member shall have no right to participate in the management of the business and affairs of the Company and shall have no decision making authority hereunder and shall be disregarded in determining whether the approval, consent or any other action has been given or taken by the Members under this Agreement. In addition, the transferor Member and any such assignee or transferee of such transferor Member shall be considered one Member for purposes of Section 10.7.

10.7 Buy-Sell.

(a) Subject to the terms of this Section 10.7, if (i) the Market Sale Right is exercised pursuant to Section 10.10, (ii) the Disposition Election is made by the Recipient Member and (iii) the Property is not sold to an Outside Purchaser pursuant to the Disposition Election in accordance with Section 10.10, then either Bainbridge or CNL (in either case, the “Proposer”) may, in a written notice (the “Sale Proposal”) to the other (in either case, the “Responding Member”), make an offer to either (x) purchase the Responding Member’s Entire Interest (“Buy Offer”) or (y) sell its Entire Interest to the Responding Member (“Sale Offer”) for such purchase price (which shall be payable in cash at the closing of any such transaction) and on such other terms, in each case as the Proposer may propose in the Sale Proposal, which other

terms shall be consistent with the provisions of this Section 10.7 and of Section 10.8. The Sale Proposal shall include the purchase price for Entire Interest of the Proposer if the Proposer is offering to sell its Entire Interest, or the purchase price for the Entire Interest of the Responding Member if the Proposer is offering to purchase the Entire Interest of the Responding Member, as applicable, together with a statement of the total purchase of all of the Company’s property, including the Property (“Property Price”), that formed the basis for determining such stated purchase price for the applicable Entire Interest. If more than one Member delivers a Sale Proposal, the earlier delivered notice shall be given effect and the later delivered notice will be void and without effect.

(b) Within seventy-five (75) days after receiving a copy of the Sale Proposal, the Responding Member shall notify the Proposer that:

(i) the Responding Member elects to sell its Entire Interest to the Proposer at the purchase price determined in accordance with the provisions of Section 10.8 (“Reply Price”) if such purchase price was not set forth by Proposer in the Sale Proposal and otherwise in accordance with the terms set forth in the Sale Proposal as may be modified by Section 10.8(a), in which case, the Proposer shall, within ten (10) Business Days thereof, deliver to the Responding Member a deposit in an amount (such amount, together with any interest earned thereon, being hereinafter called the “Proposer’s Buy Sell Deposit”) equal to five percent (5%) of the purchase price payable to the Responding Member in connection with the Sale Proposal as such purchase price may be modified as applicable in accordance with the provisions of Section 10.8(a), which amount shall be non-refundable unless the purchase and sale pursuant to this Section 10.7(b)(i) does not close due to the default of the Responding Member; or

(ii) the Responding Member elects to purchase the Entire Interest of the Proposer at the Reply Price if the purchase price was not set forth by Proposer in the Sale Proposal and otherwise in accordance with the terms set forth in the Sale Proposal, in which case, the Responding Member shall, within ten (10) Business Days thereof, deliver to the Proposer a deposit in an amount (such amount, together with any interest earned thereon, being hereinafter called the “Responding Member’s Buy Sell Deposit”) equal to five percent (5%) of the purchase price payable to the Proposer in connection with the Sale Proposal as such purchase price may be modified as applicable in accordance with the provisions of Section 10.8(a), which amount shall be non-refundable unless the purchase and sale pursuant to this Section 10.7(b)(ii) does not close due to the default of the Proposer.

(c) The Responding Member’s notice of election to purchase or sell pursuant to Section 10.7(b) shall be addressed to the Proposer and shall set forth the time and place of closing which, unless otherwise agreed, shall be at the office of the Company, during usual business hours within seventy-five (75) days after the date of the giving of the notice of election under Section 10.7(b) to the Proposer. If the Responding Member elects to purchase pursuant to Section 10.7(b)(ii), the Responding Member’s Buy Sell Deposit shall be credited against the total purchase price payable by the Responding Member for the Entire Interest being purchased pursuant thereto; provided, however, that, if the closing shall fail to occur because of a default by the Responding Member, subject to the provisions of Section 10.7(b)(ii) above concerning refundability of the deposit, the Proposer shall have the right to retain the Responding Member’s Buy Sell Deposit as liquidated damages, it being agreed that in such instance the Proposer’s

actual damages would be difficult, if not impossible, to ascertain. If the Responding Member elects to sell pursuant to Section 10.7(b)(i), the Proposer Buy Sell Deposit shall be credited against the total purchase price payable by the Proposer for the Entire Interest being purchased pursuant thereto; provided, however, that, if the closing shall fail to occur because of a default by the Proposer, subject to the provisions of Section 10.7(b)(i) above concerning refundability of the deposit, the Responding Member shall have the right to retain the Proposer’s Buy Sell Deposit as liquidated damages, it being agreed that in such instance the Proposer’s actual damages would be difficult, if not impossible, to ascertain.

(d) Failure of the Responding Member to respond to the Sale Proposal within the seventy-five (75) day period referenced in Section 10.7(b) shall be deemed an election to sell its Entire Interest under Section 10.7(b)(i).

10.8 Provisions Generally Applicable to Sales. The following provisions shall be applicable to sales of a Member’s Entire Interest under each of Sections 10.7, 10.10 and 13.2(b) except to the extent indicated below:

(a) This subparagraph (a) shall be applicable only to a sale of a Member’s Entire Interest under Section 10.7. If, under the provisions of Section 10.7, (i) the Proposer has offered to sell its Entire Interest to the Responding Member and the Responding Member has elected instead to sell its Entire Interest to the Proposer then the purchase price payable to the Responding Member for its Entire Interest shall be determined as set forth in this Section 10.8(a), or (ii) the Proposer has offered to purchase the Entire Interest of the Responding Member and the Responding Member has elected instead to purchase the Entire Interest of the Proposer, then the purchase price payable to the Proposer for its Entire Interest, shall be determined as set forth in this Section 10.8(a). Each such purchase price is the “Reply Price” and shall be determined as follows:

(i) In the event this Section 10.8(a) is triggered in the context of Section 10.7, there shall be determined the “Value” of the Company, after payment of debts, liabilities and expenses, which “Value” shall equal the total amount which would have been available for distribution and payment by the Company to all of the Members under Section 9.4, after payment of debts, liabilities and expenses under Sections 13.5(a) and 13.5(b), if all of the Company’s property, including the Property, were sold for the Property Price set forth in the Sale Proposal.

(ii) After determining the Value, there shall then be determined the amounts which would have been distributable and payable to (a) the Proposer and (b) the Responding Member, in each case, under Section 9.4, if all of the Company’s property, including the Property, had been sold for an amount equal to the Property Price and the Company paid all debts, liabilities and expenses of the Company referenced above. The amount determined under this clause 10.8(a)(ii) which would have been distributable to the Proposer under Section 9.4 shall be the purchase price payable to the Proposer if the Proposer will sell its Entire Interest to the Responding Member pursuant to the Sale Proposal, and the amount determined under this clause 10.8(a)(ii) which would have been distributable to the Responding Member under Section 9.4 shall be the purchase price payable to the Responding Member if the Responding Member will sell its Entire Interest to the Proposer pursuant to the Sale Proposal.

(b) For purposes of any sale of an Entire Interest of a Member, the purchase price associated with such sale shall be adjusted to reflect assets and liabilities of the Company not reflected in the Company’s financial statements available to the Members at the time of the notice of election (the “Notice Date”). The purchase price, as so adjusted, shall be determined ten (10) Business Days prior to closing and shall be subject to such post-closing adjustments as the circumstances may require. The purchase price, as so adjusted, shall be paid, at the selling Member’s option, in cash, by certified check drawn to the order of the selling Member, or by wire transfer of immediately available funds to the seller’s account. All prorations of real estate taxes, rents and other items to be prorated shall be made as of the date of sale. All transfer taxes, title insurance policies, surveys and recording fees shall be paid for by the party usually charged with such payment under local custom.

(c) On payment of the purchase price for an Entire Interest, the purchasing Member shall, at its option, either (i) deliver a release of the selling Member and its Affiliates from all liability, direct or contingent, by each holder of such liability, from all Company debts, obligations or claims against the Company for which the selling Member or its Affiliate is or may be personally liable, including, without limitation, any guaranties of Company debts or obligations given by a selling Member or its Affiliates, except for any such debts, obligations or claims which are fully insured by public liability insurer(s) acceptable to the selling Members, or (ii) cause all such Company debts, obligations or claims to be paid in full at the closing, or (iii) deliver to the selling Member and its Affiliates an agreement in form and substance satisfactory to the selling Member to defend, indemnify and save the selling Member and its Affiliates harmless from any actions, claims or loss arising from any debt, obligation or claim of the Company arising prior to or after the date of sale, including, without limitation, any guaranties of Company debts or obligations given by a selling Member or its Affiliates. The Company shall provide the Members such tax information and reporting as may be required by the Members in connection with such sale within a reasonable period following such sale.

(d) All Members (including the selling Members) shall be entitled to any distributions of Operating Cash Flow from the Company made prior to the closing.

(e) If the Property is damaged by fire or other casualty, or if any entity possessing the right of eminent domain shall give notice of an intention to take or acquire a substantial part of the Property, and such damage occurs, or such notice is given, between the Notice Date and the closing date of the purchase of an Entire Interest in the Company, the following shall apply:

(i) If the Property is damaged by an insured casualty not to exceed five hundred thousand dollars ($500,000) (or an uninsured casualty not resulting in damage in excess of fifty thousand dollars ($50,000)) or if the taking or acquisition shall not result in a substantial (in excess of a two percent (2%)) reduction in the income producing capacity of the Property, then the purchasing Member shall be required to complete the transaction and accept an assignment of the insurance or condemnation proceeds.

(ii) If the Property is damaged by an uninsured casualty resulting in damage in excess of fifty thousand dollars ($50,000), or if the taking or acquisition shall result in a substantial (in excess of a two percent (2%)) reduction in the income producing capacity of the

Property, or if there is an insured casualty in excess of five hundred thousand dollars ($500,000), then the purchasing Member shall have the option (to be exercised within forty-five (45) days from the date of the occurrence of the casualty or receipt of the notice of condemnation) to either (x) accept the Property in an “as is” condition together with any insurance proceeds, settlements and awards, or (y) cancel the purchase and have its deposit returned.

(iii) In the event that the taking or acquisition shall result in a substantial reduction in the income producing capacity of the Property, notwithstanding the election of the purchasing Member pursuant to subparagraph (ii) above, CNL or Bainbridge, in its capacity as selling Member, as applicable, shall also have the right to cancel the purchase within fifteen (15) days from the date of the receipt of the notice of condemnation. In the event that the purchase is canceled by either Member pursuant to the above provisions, the terms of this Agreement shall remain in effect and continue to be binding on the parties.

(f) At the closing of the sale of the Entire Interest of a Member, the selling Member shall execute an assignment of its interest in the Company, free and clear of all liens, encumbrances and adverse claims, which assignment shall be in form and substance reasonably satisfactory to the purchasing Member, and such other instruments as the purchasing Member shall reasonably require to assign the Entire Interest of the selling Members to such Person as the purchasing Member may designate. For any sale or transfer under Section 10.7 where the Responding Member has made its election pursuant to Section 10.7(b) and either a Proposer’s Buy Sell Deposit or a Responding Member’s Buy Sell Deposit, as applicable, has been made pursuant to Section 10.7(b), then the purchasing Member may designate the assignee of the Entire Interest, which assignee need not be an Affiliate of the purchasing Member.

(g) This subparagraph (g) shall be applicable only to a sale of a Member’s Entire Interest under Section 13.2. In the event of a purchase and sale pursuant to Section 13.2, the Company shall be dissolved and terminated as of the closing date of the sale, and on the closing date the Members shall execute and file a Certificate of Cancellation of the Company’s Certificate of Formation, unless the remaining Member elects to continue the Company. The Members shall cooperate in taking all steps necessary in connection with the dissolution and termination of the Company.

(h) It is the intent of the parties to this Agreement that the requirements or obligations, if any, of one Member to sell its Entire Interest to another Member shall be enforceable by an action for specific performance of a contract relating to the purchase of real property or an interest therein. In the event that the selling Member(s) shall have created or suffered any unauthorized liens, encumbrances or other adverse interests against either the Property or the selling Member’s interest in the Company, the purchasing Member shall be entitled either to an action for specific performance to compel the selling Member(s) to have such defects removed, in which case the closing shall be adjourned for such purpose, or, at the purchasing Member’s option, to an appropriate offset against the purchase price, which offset shall include all reasonable costs associated with enforcement of this Section.

(i) Each Member agrees that it will negotiate in good faith a purchase and sale agreement consistent with the requirements set forth herein in the event of an election by a Member to purchase the other Member’s Entire Interest within ten (10) Business Days following

the Notice Date; provided, however, failure to execute and deliver a purchase and sale agreement shall not limit or otherwise affect the obligations of the Members to consummate such purchase and sale in accordance with the requirements set forth herein.

(j) For purposes of this Section 10.8, all references to a “Member” shall mean Bainbridge or CNL as the context permits and all references to “the Members” shall mean Bainbridge, and CNL as the context permits.

10.9 [Intentionally Omitted]

10.10 Right to Market the Property.

(a) Any time after the date that is twenty-four (24) months after Completion of the Project, each of Bainbridge and CNL (the “Market Sale Offering Member”) shall have the right to cause the Property to be marketed for sale (the “Market Sale Right”), as hereinafter provided, by delivering written notice (the “Market Sale Notice”) to the other Member (the “Market Sale Recipient Member”): (i) invoking the provisions of this Section 10.10, and (ii) designating the sale price (which shall be payable only in cash) (the “Sale Price”), and other material terms and conditions upon which the Market Sale Offering Member desires to sell the Property. If more than one Member delivers a Market Sale Notice, the earlier delivered notice shall be given effect and the later delivered notice will be void and without effect. Upon receipt of an effective Market Sale Notice given pursuant to this Section 10.10, the Market Sale Recipient Member shall then be obligated, at the Market Sale Recipient Member’s option and subject to the provisions of Section 10.10(b) below, either to: (x) elect to authorize the Market Sale Offering Member, on behalf of the Company, to market the Property for sale to a third party (i.e., a Person who is not a Member or an Affiliate of a Member) (an “Outside Purchaser”), for the Sale Price and on the terms and conditions as set forth in the Market Sale Notice (the “Disposition Election”), or (y) elect to purchase the Entire Interest of the Market Sale Offering Member for cash at a price equal to the amount the Market Sale Offering Member would have received if the Property had been sold for the Sale Price and the Company paid all of the debts, liabilities and expenses of the Company under Sections 13.5(a) and 13.5(b) and distributed the balance to the Members in accordance with the provisions of Section 9.4 hereof (the “Member Sale Election”). The Market Sale Recipient Member shall give written notice of such election to the Market Sale Offering Member within forty-five (45) days after receipt of the Market Sale Notice. If the Market Sale Recipient Member does not make either of the foregoing elections within such forty-five (45)-day period, the Market Sale Recipient Member shall be deemed to have elected the Disposition Election. If the Market Sale Recipient Member elects the Member Sale Election, then simultaneously with making such election, the Market Sale Recipient Member shall deliver to the Market Sale Offering Member a deposit in an amount (such amount, together with any interest earned thereon, being hereinafter called the “Recipient Member’s Market Sale Deposit”) equal to five percent (5%) of the purchase price payable to the Market Sale Offering Member as determined in accordance with the provisions of this Section 10.10 in connection with the sale of the Entire Interest of the Market Sale Offering Member to the Market Sale Recipient Member. The Recipient Member’s Market Sale Deposit shall be credited against the total purchase price payable by the Market Sale Recipient Member for the Entire Interest being purchased pursuant to this Section 10.10; provided, however, that, if the closing shall fail to occur because of a default by the Market Sale Recipient Member, so long as the Market Sale

Offering Member is not in default, the Market Sale Offering Member shall have the right to (i) retain the Recipient Member’s Market Sale Deposit as liquidated damages, it being agreed that in such instance the Market Sale Offering Member’s actual damages would be difficult, if not impossible, to ascertain, and (ii) market the Property for sale at such price and on such terms as set forth in the Market Sale Notice and in accordance with the provisions of 10.10(b) as if the Market Sale Recipient Member had elected the Disposition Election, with the closing to occur within one hundred eighty (180) days after the date the right to again market the Property under this subclause (ii) arises.

(b) If the Market Sale Recipient Member elects or is deemed to have elected the Disposition Election, the Market Sale Offering Member shall conduct the marketing of the Property in a commercially reasonable manner (which shall include engaging a third party broker) and may cause the sale of the Property to an Outside Purchaser (whose identity will be disclosed to the other Member) on the terms and conditions as set forth in the Market Sale Notice and for a purchase price which is payable only in cash, provided that (i) such sale shall be for a price equal to at least ninety-five percent (95%) of the Sale Price, (ii) such sale shall close within a period of one hundred eighty (180) days after the last date upon which the Market Sale Recipient Member could have elected the Member Sale Election as provided in Section 10.10(a) above and (iii) the Company (or the Outside Purchaser) shall pay any transfer taxes, conveyance taxes and/or financing breakage costs in connection such sale. Further, in the event the Market Sale Recipient Member elects or is deemed to have elected the Disposition Election, the Market Sale Offering Member shall obtain each Member’s prior consent, which consent shall not be unreasonably withheld (a) to the engagement of any financial advisor, broker, placement agent, finder or agent for the purposes of marketing the Property, and (b) to the selection of an Outside Purchaser to purchase the Property. If the foregoing conditions are not met and either Member again desires to cause a sale of the Property, such Member shall again be required to comply with the provisions of this Section 10.10.

(c) If the Market Sale Recipient Member elects the Member Sale Election (the “Member Sale Purchaser”), (i) it may, at its option, cause the Entire Interest of the Market Sale Offering Member (the “Member Sale Seller”) to be acquired by a nominee, assignee or designee; provided, however, such election shall not relieve the Member Sale Purchaser of any obligation or liability with respect thereto, (ii) the Member Sale Purchaser shall fix a closing date (the “Member Sale Closing Date”) not later than ninety (90) days following the date of the exercise of the Member Sale Election pursuant to Section 10.10(a) above, and (iii) the closing shall take place on the Member Sale Closing Date during normal business hours at the principal office of the Company. At the closing pursuant to a Member Sale Election, any applicable transfer taxes and/or conveyance taxes payable in connection with such conveyance shall be paid in accordance with local custom where the Property is located. Each party shall pay its own costs and expenses, to the extent not otherwise designated herein, in connection with the conveyance of the Entire Interests of the Member Sale Seller to the Member Sale Purchaser.

(d) To the extent not inconsistent with the terms of this Section 10.10, the provisions of Sections 10.8(b)–(j) shall be applicable with respect to a closing pursuant to the Member Sale Election.

ARTICLE 11. DISSOLUTION OR BANKRUPTCY OF A MEMBER

11.1 Dissolution or Merger. If Bainbridge shall be dissolved, or merged with or consolidated into another corporation or other entity, or if all or substantially all of its assets shall be sold, or transferred, then unless such dissolution, merger, consolidation, sale or transfer is expressly permitted under Article 10, such dissolution, merger, consolidation, sale or transfer shall, at CNL’s election, be a dissolution of the Company, and CNL shall be the “Liquidating Member” in the dissolution of the Company. If CNL shall be dissolved, or merged with or consolidated into another corporation or other entity, or if all or substantially all of its assets shall be sold, or transferred, then unless such dissolution, merger, consolidation, sale or transfer is expressly permitted under Article 10, such dissolution, merger, consolidation, sale or transfer shall, at Bainbridge’s election, be a dissolution of the Company, and Bainbridge shall be the “Liquidating Member” in the dissolution of the Company.

11.2 Bankruptcy, etc. In the event:

(a) any Member shall file a voluntary petition in bankruptcy or shall be adjudicated a bankrupt or seek any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief for itself under the present or any future Federal bankruptcy code or any other present or future applicable Federal, state, or other statute or law relative to bankruptcy, insolvency, or other relief for debtors, or shall seek or consent to or acquiesce in the appointment of any trustee, receiver, conservator or liquidator of said Member or its interest in the Company (the term “acquiesce” includes but is not limited to the failure to file a petition or motion to vacate or discharge any order, judgment or decree providing for such appointment within sixty (60) days after the appointment); or

(b) a court of competent jurisdiction shall enter an order, judgment or decree approving a petition filed against any Member seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the present or any future Federal bankruptcy code or any other present or future applicable Federal, state or other statute or law relating to bankruptcy, insolvency, or other relief for debtors, and said Member shall acquiesce in the entry for such order, judgment or decree (the term “acquiesce” includes but is not limited to the failure to file a petition or motion to vacate or discharge such order, judgment or decree within ten (10) days after the entry of the order, judgment or decree) or such order, judgment or decree shall remain unvacated and unstayed for an aggregate of ninety (90) days (whether or not consecutive) from the date of entry thereof, or any trustee, receiver, conservator or liquidator of said Member or of all or any substantial part of said Member’s property or its interest in the Company shall be appointed without the consent or acquiescence of said Member and such appointment shall remain unvacated and unstayed for an aggregate of ninety (90) days (whether or not consecutive); or

(d) any Member shall give notice to any governmental body of insolvency, or pending insolvency, or suspension or pending suspension of operations; or

(e) any Member shall make an assignment for the benefit of creditors or take any other similar action for the protection or benefit of creditors;

then such event shall, at the election of any other Member, cause the dissolution of the Company and such electing Member shall be the Liquidating Member.

11.3 Reconstitution. Notwithstanding the provisions of Section 11.1 and 11.2, the remaining Member may, within ninety (90) days of any event described in this Article 11, elect to (a) continue the Company or (b) transfer the assets of the Company to a newly organized entity and all Members shall accept ownership interests in such entity in exact proportion to its interests in the Company at the time of dissolution. An appropriate amendment to or cancellation of the Certificate of Formation and all other filings required by law shall be made in accordance with any action taken pursuant to this Section 11.3.

ARTICLE 12. CROSS-DEFAULT

Any termination for Cause by the Managing Member of the delegation of authority given to Bainbridge as the Operating Member in accordance with Section 6.7 of this Agreement shall give CNL, in its sole and absolute discretion, the right to terminate the Developer as developer under the Development Agreement, and any termination of Developer as developer pursuant to the terms of the Development Agreement due to an Event of Default under the Development Agreement shall give CNL the right to terminate the delegation of authority given to Bainbridge as Operating Member for Cause in accordance with Section 6.7 of this Agreement.

ARTICLE 13. DISSOLUTION

13.1 Winding Up by Members. Upon dissolution of the Company by expiration of the term hereof, by operation of law, by any provision of this Agreement or by agreement between the Members, the Company’s business shall be wound up and all its assets distributed in liquidation. In such dissolution, except as otherwise expressly provided in Articles 10 or 11, the Members shall be co-liquidating Members and shall continue to act by Member Consent. In such event the Members shall have rights acting by Member Consent to wind up the Company and shall proceed to cause the Company’s property to be sold and to distribute the proceeds of sale as provided in Section 13.5. Except in respect of (i) all assets on which a single, non-severable mortgage or other lien will be in effect after such distribution, and (ii) any assets which the Members shall determine are not readily severable or distributable in kind, the Members, to the extent that liquidation of such assets is not required to fulfill the payments, if any, under subsections (a) and (b) of Section 13.5 and subsection (a) of Section 9.4 shall, if they agree, have the right to distribute, in kind, all or a portion of the assets of the Company to the Members.

13.2 Winding Up by Liquidating Member.

(a) In a dissolution pursuant to Section 4.5(d)(iii), Articles 10 and 11, the Liquidating Member shall be as therein provided and such Liquidating Member shall have the right to:

(i) wind up the Company and cause the Company’s assets to be sold and the proceeds of sale distributed as provided in Section 13.5; or

(ii) notwithstanding anything to the contrary contained in this Agreement, cause the assets of the Company to be appraised in accordance with Section 13.2(b) and at its option, purchase the Entire Interests of the other Members in accordance with Section 13.2(b).

(b) (i) The Liquidating Member, within thirty (30) days after the commencement of the dissolution of the Company or the Non-Failing Member at any time during the period set forth in Section 4.5(d) (such Member giving the notice being referred to herein as the “Electing Member”), may give notice (the “Appraisal Notice”) to the other Members electing to have the “Fair Market Value” of the Company’s assets determined by appraisal pursuant to Section 13.2(b)(ii). The fees and expenses of such appraisers shall be borne by the Company. The Electing Member shall have the option, by notice given to the other Members within sixty (60) days after receipt of the determination of “Fair Market Value” pursuant to Section 13.2(b)(ii), to purchase each other Member’s Entire Interest at a price equal to the amount which would have been distributable and payable to the other Member in accordance with the provisions of Section 9.4 if all of the Company’s assets had been sold for an amount equal to such appraised value and any debts, liabilities and expenses which would have been payable by the Company pursuant to Sections 13.5(a), (b) and Section 9.4 out of the proceeds of such sale were deducted in determining the appraised value. Such option may be exercised by the Electing Member within sixty (60) days after receipt of the determination of “Fair Market Value” pursuant to Section 13.2(b)(ii) by notice to the other Members. If after the receipt of the determination of “Fair Market Value” pursuant to Section 13.2(b)(ii), the Electing Member elects not to exercise the option to purchase the other Members’ Entire Interests pursuant to this Section within such sixty (60) day period (or fails to respond within such sixty (60) day period), then the Electing Member shall have all of its rights under Section 4.5(d) or this Section 13.2, as applicable, as if the Appraisal Notice had not been given. All of the provisions of Section 10.8 shall apply to a purchase under this Section 13.2(b), except that for the purposes of this Section 13.2(b), any adjustments required pursuant to Section 10.8 shall be applicable to any events and/or liabilities or income that were not included in determining the Fair Market Value.

(ii) If the fair market value (the “Fair Market Value”) of the assets of the Company is required for purposes of Section 13.2(b)(i), such Fair Market Value, if not otherwise agreed upon by the Members, shall be determined as set forth in this Section 13.2(b)(ii). All appraisers referred to herein shall be real estate appraisers which are members of the Chapter of the American Institute of Real Estate Appraisers for the state in which the Property is located for at least seven (7) years. As used herein, Fair Market Value is the fair market value of all the assets of the Company. Each of CNL and Bainbridge shall select one (1) appraiser. In the event that either party fails to select an appraiser within thirty (30) days after notice of the exercise of an option or election requiring a valuation, then such party’s appraiser shall be selected by the other party from a list of no fewer than five (5) appraisers compiled and approved by Member Consent (the “List”). After the selection, each appraiser shall independently determine the gross fair market value of the assets of the Company. If the separate appraisals differ, the Members shall have a period of ten (10) days after receipt of the appraisals to agree on the Fair Market Value. In the event the Members cannot agree on the Fair Market Value in accordance with the preceding sentence, the two appraisers referred to therein shall within ten (10) days after the expiration of the ten day period described in the preceding sentence

select a third appraiser. In the absence of such a selection, the third appraiser shall be selected by the Chapter of the American Institute of Real Estate Appraisers for the state in which the Property is located. The third appraiser shall decide which of the two appraisals established by the appraisers in accordance with this Section constitutes the Fair Market Value, and such decision shall be conclusive and binding on all Members.

13.3 Offset for Damages. In the event of dissolution resulting from an event described in Article 11, the Liquidating Member shall be entitled to deduct from the amount payable to the other Member pursuant to Section 13.2(a) or (b), Section 13.4 or Section 13.5, the amount of damages, including reasonable attorneys’ fees and disbursements, incurred by the Liquidating Member directly resulting from any such event, only if and as established by a court order.

13.4 Distributions of Operating Cash Flow. Subject to Section 13.5 hereof as to proceeds of liquidation, upon the dissolution of the Company for any reason during the period of liquidation and until termination of the Company, the Members shall continue to receive the Operating Cash Flow and to share profits and losses for all tax and other purposes as provided elsewhere in this Agreement.

13.5 Distributions of Proceeds of Liquidation. For purposes of this Section 13.5, “proceeds of liquidation” shall equal cash available for distribution, net of the Company’s debts, provided that neither the Company nor the Members shall be personally liable on, or they shall be released from, such debts. The proceeds of liquidation shall be applied in the following order of priority:

(a) First. To the payment of:

(i) debts and liabilities of the Company, except Member Loans, and

(ii) expenses of liquidation.

(b) Second. To the setting up of any reserves which the Liquidating Member or Members, as the case may be, may deem necessary for any contingent or unforeseen liabilities or obligations of the Company or of the Members arising out of or in connection with the Company. Such reserves may be deposited by the Company in a bank or trust company acceptable to the Liquidating Member or Members, as the case may be, to be held by it for the purpose of disbursing such reserves in payment of any of the aforementioned liabilities or obligations, and at the expiration of such period as the Liquidating Member or Members, as the case may be, shall deem advisable, distributing the balance, if any, thereafter remaining, in a manner hereinafter provided.

13.6 Orderly Liquidation. A reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the discharge of liabilities to creditors so as to enable the Members to minimize the losses normally attendant upon a liquidation.

13.7 Financial Statements. During the period of winding up, the Company’s then independent certified public accountants shall prepare and furnish to each of the Members, until complete liquidation is accomplished, all the financial statements provided for in Section 7.1.

13.8 Restoration of Deficit Capital Accounts. At no time during the term of the Company shall a Member with a deficit balance in its Capital Account have any obligation to the Company or to another Member or to any other Person to restore such deficit balance.

ARTICLE 14. MEMBERS

14.1 Liability. A Member shall not be personally liable for the debts, liabilities or obligations of the Company, except to the extent provided in the Act, including for distributions received in violation of the Act or which are otherwise required to be returned pursuant to the terms of the Act.

ARTICLE 15. NOTICES

15.1 In Writing; Address. All notices, elections, offers, acceptances, demands, consents, waivers of condition and reports (collectively “notices”) provided for in, permitted under, required under or to be effective under, this Agreement shall be in writing and shall be given to the Company, CNL or Bainbridge at the address set forth below or at such other address as the Company or any of the parties hereto may hereafter specify in writing.


CNL:		GGT Patterson Place Holdings, LLC CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801 Attention: Rosemary Q. Mills, Chief Financial Officer Facsimile No.: (407) 540-2546 Attention: John McRae Facsimile No.: (407) 540-7750

with a copy to:		GGT Patterson Place Holdings, LLC CNL Center at City Commons 450 South Orange Avenue Orlando, Florida 32801 Attention: Holly J. Greer, General Counsel Facsimile No.: (407) 540-2648

with a copy to:		Lowndes, Drosdick, Doster, Kantor & Reed, P.A. 450 South Orange Avenue, Suite 800 Orlando, Florida 32801 Attention: Joaquin E. Martinez, Esq. Facsimile No.: (407) 843-4444


Bainbridge:		Bainbridge Patterson Place, LLC c/o the Bainbridge Companies, LLC 12765 W. Forest Hill Boulevard, Suite 1307 Wellington, Florida 33414 Attention: Mr. Richard Schechter, Chairman and CEO Facsimile No.: (561) 793-8959

with a copy to:		Broad and Cassel 7777 Glades Road, Suite 300 Boca Raton, Florida 33434 Attention: Jeffrey A. Deutch, Esq. Facsimile No.: (561) 483-7321

All notices hereunder shall be in writing to be deemed effective and shall be deemed sufficiently given or served for all purposes when delivered (i) by personal service or courier service, and shall be deemed given on the date when signed for or, if refused, when refused by the Person designated as an agent for receipt of notices, (ii) by nationally-recognized overnight courier that produces a receipt of delivery and shall be deemed given when placed into the hands of such courier for delivery on the next business day, (iii) mailed by United States registered or certified mail, return receipt requested, postage prepaid, deposited in a United States post office or a depository for the receipt of mail regularly maintained by the post office and if so mailed, then such notice or other communication shall be deemed to have been received by the addressee on the third business day following the date of such mailing or (iv) by facsimile transmission with a hard copy to follow by any of the other methods above, in which case it will be deemed delivered on the day and at the time indicated in the sender’s automatic acknowledgment. For purposes hereof, notices may be given by the parties hereto or by their attorneys identified above.

A copy of any notice or any written communication from the Internal Revenue Service to the Company shall be given to each Member at the addresses provided for above.

15.2 Copies. A copy of any notice, service of process, or other document in the nature thereof, received by either Member from anyone other than the other Member and pertaining to the Company or the Property, shall be delivered by the receiving Member to the other Member as soon as practicable.

ARTICLE 16. MISCELLANEOUS

16.1 Additional Documents and Acts. In connection with this Agreement, as well as all transactions contemplated by this Agreement, each Member agrees to execute and deliver such additional documents and instruments, and to perform such additional acts, as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions. All approvals of either party hereunder shall be in writing.

16.2 Interpretation. This Agreement and the rights and obligations of the Members hereunder shall be interpreted in accordance with the laws of the State of Delaware.

16.3 Entire Agreement. This instrument contains all of the understandings and agreements of whatsoever kind and nature existing between the parties hereto with respect to this Agreement and the rights, interests, understandings, agreements and obligations of the respective parties pertaining to the Company.

16.4 References to this Agreement. Numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of this Agreement unless otherwise expressly stated.

16.5 Headings. All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

16.6 Binding Effect. Except as herein otherwise expressly stipulated to the contrary, this Agreement shall be binding upon and inure to the benefit of the parties signatory hereto, and their respective distributees, successors and assigns.

16.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall for all purposes constitute one agreement which is binding on all of the parties hereto.

16.8 Confidentiality. The terms and provisions of this Agreement shall be kept confidential and shall not, without the other Members’ prior written consent (which shall not be unreasonably withheld), be disclosed in writing by a Member or by a Member’s agents, managers, members, representatives and employees to any Person, except to the extent required by law, and to existing or prospective construction lenders, contractors, tenants, or investors in a Member, accountants of a Member, Bainbridge or CNL therein and other advisors to a Member, in each case to the extent each of such parties is bound by a confidentiality obligation substantially on the terms set forth in this Section, and except to the extent reasonably necessary to accomplish the transaction contemplated hereby. No publicity, media communications, press releases or other public announcements concerning the terms and provisions of this Agreement or the transactions contemplated hereby shall be issued or made by any Member without the prior written consent of the other Members, which consent shall not be unreasonably withheld, conditioned or delayed, except if a Member is required to make a public announcement or disclosure under applicable law, in which case such Member shall provide the other Members with the form and content of such disclosure within a reasonable amount of time prior to its release (to the extent possible under the circumstances) and shall consider in good faith all comments provided by the other Members; provided, however, that CNL shall not be required to provide copies of disclosures to be made or proposed to be made by CNL in periodic reports and other filings required by the applicable federal securities laws.

16.9 Amendments. This Agreement may not be amended, altered or modified except by a written instrument signed by all parties, provided, however, that Bainbridge and CNL shall use reasonable efforts to agree to any amendments of this Agreement reasonably required by CNL in order to comply with any amendments reasonably required by CNL in order to comply with REIT requirements which do not adversely affect the other Members hereunder; provided, that CNL will pay for all reasonable costs and expenses (including reasonable attorneys’ fees) of the other Members related to any such amendments.

16.10 Exhibits. All exhibits and schedules annexed hereto are expressly made a part of this Agreement, as fully as though completely set forth herein, and all references to this Agreement herein or in any of such exhibits or schedules shall be deemed to refer to and include all such exhibits or schedules.

16.11 Severability. Each provision hereof is intended to be severable and the invalidity or illegality of any portion of this Agreement shall not affect the validity or legality of the remainder.

16.12 Qualification in Other States. In the event the business of the Company is carried on or conducted in any locations in addition to the state in which the Property is located, then the Members agree that the Company shall be qualified to do business under the laws of each state or district in which business is actually conducted by the Company, and they severally agree to execute such other and further documents as may be required or requested in order that the Members legally may qualify the Company in such states and districts to the extent possible. A Company office or principal place of business in any state or district may be designated from time to time by Member Consent.

16.13 Forum. Any action by one or more Members against the Company or by the Company against one or more Members which arises under or in any way relates to this Agreement, actions taken or failed to be taken or determinations made or failed to be made by the Members or relating to the Company including transactions permitted hereunder or otherwise related in any way to the Company, may be brought only in the state courts of the State of Florida or the United States District Court for the Middle District of Florida. Each Member hereby consents to the jurisdiction of such courts to decide any and all such actions and to such venue.

16.14 No Brokerage. The Members represent and warrant to each other that they have not dealt with any brokers, investment bankers, consultants or other third parties in the negotiation of this Agreement and the transactions contemplated herein. The Members further agree to indemnify, defend and hold each other harmless from and against any liability, claim, damage, cost or expense (including reasonable attorney’s fees) arising out of or in connection with the claims for commissions or any other fees due in connection with this Agreement and the transactions contemplated herein arising from such Member’s actions.

16.15 Dispute Resolution.

(a) Any dispute with respect to the matters described in Section 6.2(a) under this Agreement shall be determined by binding arbitration proceeding (the “Arbitration Proceeding”) administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration Rules and Expedited Procedures, in effect at the time of the demand for arbitration, provided, however, that to the extent any provision of this Section 16.15 modifies, adds to, or is inconsistent with any provisions of those rules and procedures, the provisions of this Section shall control. Arbitration will be conducted before a single arbitrator in a venue

selected by the party which did not initiate the Arbitration Proceeding, in its sole discretion, which shall be binding on both parties. The choice of law provisions set forth in Section 16.2 shall apply in any such Arbitration Proceeding. Any dispute, disagreement, or controversy arising out of or relating to this Agreement for which arbitration is not expressly provided as the means of resolution may be resolved by litigation as provided in Section 16.13 or by other lawful means.

(b) The party desiring arbitration shall provide written notice in accordance with the requirements of Section 15.1 to the other party (the “Arbitration Notice”) indicating (i) the matter in controversy and (ii) the name, contact information and professional resume of the proposed arbitrator meeting the requirements for a qualified and independent arbitrator set forth in Section 16.15(c) (“Initial Arbitrator”) to arbitrate such matter in controversy. If the party receiving the Arbitration Notice rejects the Initial Arbitrator set forth in the Arbitration Notice it shall object by written notice in accordance with the requirements of Section 15.1 (“Objection Notice”) delivered to the other party within seven (7) Business Days of the receipt of the Arbitration Notice. The Objection Notice shall contain the name, contact information and professional resume of a different arbitrator meeting the requirements for a qualified and independent arbitrator set forth in Section 16.15(c) (“Secondary Arbitrator”) to arbitrate the matter in controversy set forth in the Arbitration Notice. If the party receiving the Objection Notice rejects the Secondary Arbitrator, it shall object in writing (“Secondary Objection Notice”) to the other party within seven (7) Business Days after the receipt of the Objection Notice. If neither the Initial Arbitrator nor the Secondary Arbitrator is accepted by the parties, the party which delivered the Arbitration Notice shall instruct the Initial Arbitrator and the Secondary Arbitrator to agree, within five (5) Business Days after receipt of the Secondary Objection Notice, upon an arbitrator (“Appointed Arbitrator”) meeting the requirements for a qualified and independent arbitrator set forth in Section 16.15(c). If they agree upon an Appointed Arbitrator who is prepared to act as the Appointed Arbitrator, the Initial Arbitrator and Secondary Arbitrator shall deliver written notice of the name, contact information and professional resume of the Appointed Arbitrator to each party simultaneously. The appointment of the Appointed Arbitrator shall be a final decision, which shall not be subject to objection by either party, unless either party to this Agreement within five (5) Business Days after such selection of an Appointed Arbitrator, gives written notice in accordance with the requirements of Section 15.1 of this Agreement to the other party, in writing, that such Appointed Arbitrator fails to meet the requirements for a qualified and independent arbitrator set forth in Section 16.15(c) and provides specific information in such written notice as to the reasons why such failure exists.

(c) In the event the Initial Arbitrator and the Secondary Arbitrator cannot agree on an Appointed Arbitrator or if such appointed Arbitrator is unwilling to act as the Appointed Arbitrator or if either party objects to the Appointed Arbitrator within five (5) Business Days after the selection of such Appointed Arbitrator, as permitted in Section 16.15(b), then either party may petition the AAA (or any successor body of similar function) to appoint an arbitrator within five (5) Business Days of such petition using the following criteria: such arbitrator shall be (i) with respect to physical property matters, a licensed professional engineer or registered architect having at least ten (10) years’ experience in the design or construction of multi-family apartment facilities similar to the Property in the market place where the Property is located, (ii) with respect to financial matters, a partner in a “Big Four Accounting Firm” with at least ten (10) years’ experience with the type of matter in dispute, (iii) with respect to property

management issues, an individual who shall have had at least ten (10) years’ experience managing similar multi-family apartment facilities in the market place where the Property is located and (iv) be neutral and shall have had no prior notice, information or discussions concerning such controversy and shall not be employed by or associated with either party or any Affiliate of either of them, or any of their respective agents or affiliates at such time or for the previous ten (10) years. If the dispute involves more than one type of matter, then the Appointed Arbitrator must be either (i) an individual with expertise in the predominate type of matters in dispute for which such Appointed Arbitrator is being asked to arbitrate or (ii) a retired judge.

(d) The Arbitration Proceedings shall commence fifteen (15) Business Days after the engagement or appointment of the arbitrator entitled to serve pursuant to this Section 16.15. The arbitrator shall make a determination within ten (10) Business Days after conclusion of the Arbitration Proceeding.

(e) The costs and expenses of an Arbitration Proceeding including the administrative fees and costs and the arbitrator’s fees and costs, shall be shared equally by CNL and Bainbridge, and each party shall bear its own counsel, witness, expert, administrative fees and other professional fees and expenses with respect to such Arbitration Proceeding; provided, however, that the Appointed Arbitrator may (but shall not be required to), in the exercise of his/her best judgment, assess one party for a part or all of the costs of the other party, including, without limitation, the costs of the Arbitration Proceeding.

(f) Any arbitrator’s final decision and award shall be in writing, shall be binding on the parties and shall be non-appealable, and counterpart copies thereof shall be delivered to both parties. A judgment or order based upon such award may be entered in any court of competent jurisdiction. All actions necessary to implement the decision of the arbitrator shall be undertaken as soon as possible, but in no event later than three (3) Business Days after the rendering of such decision.

16.16 Partition. The Members hereby agree that no Member nor any successor-in-interest to any Member shall have the right to have the property of the Company partitioned, or to file a complaint or institute any proceeding at law or in equity to have the property of the Company partitioned, and each Member, on behalf of himself, his successors, representatives, heirs and assigns, hereby waives any such right.

(Remainder of page intentionally left blank)

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.


Bainbridge:

	BAINBRIDGE PATTERSON PLACE, LLC, a Florida limited liability company

	By:	Bainbridge Manager, LLC, a Florida limited liability company, its Manager

		By:	/S/ Thomas Keady
			Thomas Keady, Vice President

Signature Page to Limited Liability Company Agreement of

GGT Patterson Place NC Venture, LLC

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.


CNL:

		GGT PATTERSON PLACE HOLDINGS, LLC, a Delaware limited liability company

		By: /S/ Rosemary Mills
		Name: Rosemary Mills
		Title: Executive Vice President

Signature Page to Limited Liability Company Agreement of

GGT Patterson Place NC Venture, LLC

EXHIBIT A

[Omitted as not necessary to an understanding of the Agreement]

A-1

EXHIBIT B

DESCRIPTION OF LAND

[Omitted as not necessary to an understanding of the Agreement]

B-1

EXHIBIT C

DEVELOPMENT AGREEMENT

[See Attached Pages]

[Omitted as not necessary to an understanding of the Agreement.]

C-1

EXHIBIT D

INSURANCE CERTIFICATES

[Omitted as not necessary to an understanding of the Agreement]

E-1

EXHIBIT E

[Intentionally Omitted]

E-1

EXHIBIT F

[Intentionally Omitted]

F-1

EXHIBIT G

PROJECT BUDGET

[Omitted as not necessary to an understanding of the Agreement]

G-1

EXHIBIT H

PRE-DEVELOPMENT COSTS

[Omitted as not necessary to an understanding of the Agreement]

H-1

EXHIBIT I

PROPERTY MANAGEMENT AGREEMENT

[Omitted as not necessary to an understanding of the Agreement]

I-1

EXHIBIT J

CONSTRUCTION CONTRACT

[Omitted as not necessary to an understanding of the Agreement]

J-1

EXHIBIT K

DANZIGER PROPERTY

[Omitted as not necessary to an understanding of the Agreement]

K-1