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HomeMy WebLinkAboutOPERATING AGREEMENT - 20-00011 - Providence Square 479251772.5050.101 AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF COMPASS GROUP PROVIDENCE SQUARE, LLC THE SECURITIES OFFERED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), NOR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SECURITIES AND EXCHANGE COMMISSION”) NOR BY THE SECURITIES REGULATORY AUTHORITY OF ANY STATE, NOR HAS ANY COMMISSION OR AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY OR ADEQUACY OF ANY DISCLOSURE MADE IN CONNECTION THEREWITH. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES OFFERED HEREBY HAVE BEEN ISSUED AND SOLD PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT AND MAY NOT BE RESOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR EXEMPTION THEREFROM. -1- 479251772.5050.101 AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF COMPASS GROUP PROVIDENCE SQUARE, LLC This Amended and Restated Limited Liability Company Agreement (this “Agreement”) is effective as of October 27, 2017 by and among SWEETWATER PROPERTIES, LLC, an Idaho limited liability company, as the Successor Initial Member, COMPASS GROUP PROVIDENCE SQUARE MANAGEMENT, LLC, a Delaware limited liability company, as the Manager, and such other Persons who are Members as of the effective date of this Agreement or who have been or may be admitted to the Company from time to time as Members, pursuant to the Act and this Agreement. This Agreement replaces and supersedes in its entirety that certain Amended and Restated Limited Liability Company Agreement of the Company effective as of February 4, 2016, which as of the effective date of this Agreement is no longer in force or effect. Certain capitalized terms used herein have the meanings set forth in Exhibit A (Definitions). 1. Organization. 1.1 Formation; Certificate of Amendment. The Certificate of Formation was filed with the Secretary of State of the State of Delaware on September 4, 2013 in accordance with and pursuant to the Act. The Company has filed the necessary documentation for qualification to do business in the State of Idaho. On May 14, 2015, a Certificate of Amendment was filed with the Secretary of State of the State of Delaware whereby the name of the Company was changed to Compass Group Providence Square, LLC. 1.2 Name and Place of Business. The Company was originally named Compass Group Providence Square Phase I Investor Units, LLC. The current name of the Company is Compass Group Providence Square, LLC, and its principal place of business is 629 N 3570 E, Menan, ID 83434. The Manager may change such name, change such place of business or establish additional places of business of the Company as the Manager may determine to be necessary or desirable. 1.3 Business and Purpose of the Company. 1.3.1 The sole purpose of the Company is to acquire, own, develop, hold, operate, dispose of and manage certain real property consisting of three (3) contiguous parcels, as more particularly described in Exhibit B attached hereto and incorporated herein, generally located at 430 West 2nd South, Rexburg, Idaho 83440, which currently is planned to be developed by constructing thereon a multi-family housing project that will consist of seventeen (17) 16-unit apartment buildings and one (1) 12-unit apartment building totaling 284 units designed with a focus on the needs of married students attending Brigham Young University – Idaho but also available to non-student families living in the local area, generally to be known as “Providence Square” (all of the foregoing, collectively, the “Property”), together with such other activities as may be necessary, incidental or appropriate in connection therewith. 1.3.2 Except as limited in this Agreement, the Company shall have all powers enumerated in the Act for limited liability companies as necessary or convenient to the conduct, promotion or attainment of the business or purposes otherwise set forth herein. 1.4 Term. This Agreement shall not terminate until the Company is terminated in accordance with this Agreement. 1.5 Required Filings. The Manager shall execute, acknowledge, file, record and/or publish such certificates and documents as may be required by this Agreement or by law in connection with the formation and operation of the Company. 1.6 Registered Office and Registered Agent. The Company’s initial registered office and initial registered agent shall be as provided in the Certificate of Formation. The Company’s registered office and registered agent may be changed from time to time by the Manager by filing the address of the Company’s new registered -2- 479251772.5050.101 office and/or the name of the Company’s new registered agent with the Secretary of State of the State of Delaware pursuant to the Act. 1.7 Certain Transactions. Notwithstanding any other duty existing at law or in equity, any Manager, Member, Economic Interest Owner, or any Affiliate, or any shareholder, officer, director, employee, partner, member, manager or any Person owning an interest therein, may engage in or possess an interest in any other business or venture of any nature or description, whether or not competitive with the Company, including, without limitation, the acquisition, syndication, ownership, financing, leasing, operation, maintenance, management, brokerage, construction and development of property similar to the Property. No Manager, Member or other Person shall have any interest in such other business or venture by reason of their interest in the Company. 2. Definitions. Definitions for this Agreement are set forth in Exhibit A hereto and are incorporated herein. 3. Capitalization and Financing. 3.1 Members’ Capital Contributions. 3.1.1 Initial Member’s Capital Contribution. The Initial Member contributed the sum of $100.00 in cash to the Company but did not receive any Units therefor. The Initial Member has been replaced by the Successor Initial Member. The Initial Member’s $100.00 Capital Contribution shall be returned to the Successor Initial Member, and the Successor Initial Member shall cease to be a Member, upon the termination of the offering of Units. The Members hereby consent to the Successor Initial Member’s withdrawal of the Initial Member’s Capital Contribution upon or the termination of the offering of Units and waive any right, claim or action that the Members may have against the Initial Member and/or the Successor Initial Member by reason of its having been a Member. 3.1.2 Units. The Company is hereby authorized to sell and issue Units to Persons who are “accredited investors” (as defined in Rule 501 of Regulation D under the Securities Act) and to admit the Persons who acquire Units as Members. 3.1.3 Payment of Purchase Price. The purchase price of each Unit (each, a “Subscription Payment”) shall be paid in full, in cash, at the time of execution of the Subscription Agreement. Subject to Section 3.1.5, payment of the Subscription Payment shall constitute the Member’s initial Capital Contribution. 3.1.4 Subscription Agreement. Each Person desiring to acquire Units and become a Member shall tender to the Company a Subscription Agreement. The Company may accept subscriptions from “benefit plans” (as defined by ERISA); provided, however, that at all times benefit plans must own, in the aggregate, less than twenty-five percent (25%) of the total value of the Units then outstanding. 3.1.5 Company Acceptance or Rejection of Subscriptions. All subscriptions shall be accepted or rejected by the Company within thirty (30) days of their actual receipt by the Company. If rejected, the Subscription Payment shall be returned to the subscriber without interest. If accepted (in whole or in part), the Subscription Payment (in whole or in part) shall be deposited into the Company’s bank account and thereafter be immediately available for use by the Company (provided, however, that the portion of funds received by the Company as part of the Subscription Payment that is not accepted by the Company shall be returned to the subscriber without interest). In addition, if accepted (in whole or in part), the subscriber shall thereupon and thereafter be deemed to have adopted this Agreement, as the same may be amended or amended and restated from time to time in accordance with its terms, as a Member of the Company and to have agreed to be a party to, and to be bound by, the terms of this Agreement and be deemed a signatory hereto. 3.1.6 Successor Initial Member and Manager as Members. The Successor Initial Member, the Manager and/or Affiliates may purchase Units for the same price and upon the same terms and conditions as all other purchasers thereof. As a result, the Successor Initial Member, the Manager or Affiliates shall be admitted to the Company as Members with respect to such Units and shall be entitled to all rights as Members appurtenant thereto, including, without limitation, the right to vote on certain Company matters as provided for in this Agreement and to receive Distributions and allocations attributable to the Units so purchased. -3- 479251772.5050.101 3.1.7 Admission of a Member. To the extent required by law, the Manager shall amend this Agreement and take such other action, as the Manager deems necessary or appropriate, promptly after receipt of the Members’ Capital Contributions to the Company to reflect the admission of those Persons to the Company as Members. 3.1.8 Liabilities of Members. Except as specifically provided in this Agreement, neither the Manager nor any Member shall be required to make any additional contributions to the Company, and no Manager or Member shall be liable for the debts, liabilities, contracts or any other obligations of the Company solely by reason of being a Member or Manager of the Company, nor shall the Manager or the Members be required to lend any funds to the Company or to repay to the Company, any Member, any creditor of the Company or any other Person any portion or all of any deficit balance in a Member’s Capital Account. 3.2 Additional Capital Contributions. Each Member shall make such additional capital contributions (“Additional Capital Contributions”) to the Company as the Manager may reasonably require from time to time, on a pro rata basis in proportion to the Members’ ownership of the Units. The Manager shall give written notice to the Members concerning any Additional Capital Contribution requirement, which notice shall set forth (a) the total amount required and (b) such Member’s proportionate share thereof. The Members shall have ten (10) business days from the date such notice is given to deliver their Additional Capital Contributions to the Manager. If any Member fails to contribute such Member’s share of an Additional Capital Contribution requested by the Manager, then the remaining Members shall have the option, but not the obligation, to contribute to the Company, within such time period as designated by the Manager in its sole discretion, the total amount of additional capital that the non-contributing Member(s) were to contribute (“Additional Capital Shortfall”). Any such contribution of an Additional Capital Shortfall would be funded pari passu by each contributing Member in proportion to the Unit ownership percentages of the contributing Members or as the contributing Members otherwise agree. Following the contributing Member(s)’ contribution of additional capital required to fund their share of the requested Additional Capital Contribution plus the Additional Capital Shortfall, the Members’ capital accounts shall be adjusted such that the non-contributing Members’ capital accounts shall be reduced by the amount of Additional Capital Shortfall contributed by the contributing Member(s), and the contributing Member(s) shall have their capital accounts increased accordingly. Corresponding Unit totals and voting rights shall be recalculated accordingly. This shall represent the sole remedy available to the Company or any Member against a Member that fails to contribute its share of any requested Additional Capital Contribution. 3.3 Third Party Beneficiaries. The parties to this Agreement shall be entitled to all of the privileges, benefits and rights contained herein; and no other Person shall be a third party beneficiary or have any rights hereunder or be able to enforce any provision contained herein. 4. Allocation of Tax Items. 4.1 Generally. After giving effect to the special allocations contained in Section 4.2, Net Income and Net Loss shall be allocated to the Members’ Capital Accounts in proportion to their Membership Interests. 4.2 Special Allocations. (a) Qualified Income Offset. Except as provided in Section 4.2(c), in the event that any Member unexpectedly receives any adjustment, allocation or distribution described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit created by such adjustment, allocation or distribution as quickly as possible. -4- 479251772.5050.101 (b) Gross Income Allocation. Net Loss shall not be allocated to any Member to the extent that such allocation would cause any Member to have an Adjusted Capital Account Deficit at the end of a fiscal year. In the event that any Member has an Adjusted Capital Account Deficit at the end of any fiscal year, each such Member shall be specially allocated items of Company gross income and gain in the amount of such Adjusted Capital Account Deficit as quickly as possible. (c) Company Minimum Gain Chargeback. Notwithstanding any other provision of this Section 4, if there is a net decrease in Company Minimum Gain during any Company fiscal year, then each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-2(g)(2). This Section 4.2(c) is intended to comply with the partnership minimum gain chargeback requirement in the Treasury Regulations and shall be interpreted consistently therewith. This provision shall not apply to the extent that the Member’s share of net decrease in Company Minimum Gain is caused by a guaranty, refinancing or other change in the debt instrument causing it to become partially or wholly recourse debt or Member Non-recourse Debt, and such Member bears the economic risk of loss (within the meaning of Treasury Regulations Section 1.752-2) for the newly guaranteed, refinanced or otherwise changed debt or to the extent that the Member contributes cash to the capital of the Company that is used to repay the Non-recourse Debt, and the Member’s share of the net decrease in Company Minimum Gain results from the repayment. (d) Member Minimum Gain Chargeback. Notwithstanding any other provision of this Section 4, except Section 4.2(c), if there is a net decrease in Member Minimum Gain, then any Member with a share of that Member Minimum Gain (as determined under Treasury Regulations Section 704-2(i)(5)) as of the beginning of the year shall be allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Member Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-2(g)(2). This Section shall not apply to the extent that the net decrease in Member Minimum Gain arises because the liability ceases to be Member Non- recourse Debt due to conversion, refinancing or other change in a debt instrument that causes it to become partially or wholly a Non-recourse Debt. This Section is intended to comply with the partner minimum gain chargeback requirements in the Treasury Regulations and shall be interpreted consistently therewith and applied with the restrictions attributable thereto. (e) Non-recourse Deductions. Non-recourse Deductions for any fiscal year or other period shall be allocated to the Members in proportion to their Units, and each Member’s share of excess Non- recourse Debt shall be in the same proportion. (f) Member Non-recourse Deductions. Member Non-recourse Deductions for any fiscal year shall be allocated to the Member who bears the economic risk of loss as set forth in Treasury Regulations Section 1.752-2 with respect to the Member Non-recourse Debt. If more than one Member bears the economic risk of loss for a Member Non-recourse Debt, then Member Non-recourse Deductions attributable to that Member Non- recourse Debt shall be allocated among the Members according to the ratio in which they bear the economic risk of loss. (g) Code Section 754 Adjustments. To the extent that an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations. 4.3 Curative Allocations. Notwithstanding any other provision of this Agreement, the Regulatory Allocations shall be taken into account in allocating items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each such Member if the Regulatory Allocations had not occurred. -5- 479251772.5050.101 4.4 Contributed Property. Notwithstanding any other provision of this Agreement, the Members shall cause depreciation and/or cost recovery deductions and gain or loss attributable to property contributed by a Member or revalued by the Company to be allocated among the Members for income tax purposes in accordance with Section 704(c) of the Code and the Treasury Regulations promulgated thereunder. 4.5 Recapture Income. The portion of each Member’s distributive share of Net Income that is characterized as ordinary income pursuant to Section 1245 or 1250 of the Code shall be proportionate to the amount of Net Income or Net Loss that included the corresponding depreciation deductions that were allocated to such Member as compared with the amount of depreciation deductions allocated to all Members. 4.6 Allocation Among Units. Except as otherwise provided in this Agreement, all Distributions and allocations made to the Units shall be in the ratio of the number of Units held by each Member on the date of such allocation (which allocation date shall be deemed to be the last day of each month) to the total outstanding Units as of such date, and, except as otherwise provided in this Agreement, without regard to the number of days during such month that the Units were held by each Member. For purposes of this Section 4, an Economic Interest Owner shall be treated as a Member. Members who purchase Units at different times during the Company tax year shall be allocated Net Income and Net Loss using the monthly convention set forth in Section 4.8. 4.7 Allocation of Company Items. Except as otherwise provided herein, whenever a proportionate part of Net Income or Net Loss is allocated to an Owner, every item of income, gain, loss or deduction entering into the computation of such Net Income or Net Loss, and every item of credit or tax preference related to such allocation and applicable to the period during which such Net Income or Net Loss was realized, shall be allocated to the Owner in the same proportion. 4.8 Assignment. 4.8.1 In the event of the assignment of a Unit, the Net Income and Net Loss shall be apportioned as between the Member and such Member’s assignee based on the number of months of their respective ownership during the year in which the assignment occurs, without regard to the results of the Company’s operations during the period before or after such assignment. Distributions shall be made to the holder of record of the Units as of the date of the Distribution. An assignee who receives Units during the first fifteen (15) days of a month will receive all allocations relative to such month. An assignee who acquires Units on or after the sixteenth (16th) day of a month will be treated as acquiring his Units on the first day of the following month. 4.8.2 In the event of the assignment of the Manager’s Membership Interest, the allocations of Net Income or Net Loss shall be as agreed between the Manager and its assignee. In the absence of an agreement, the Net Income, Net Loss and Distributions shall be allocated in a manner similar to that provided in Section 4.7. 4.9 Power of Manager to Vary Allocations. It is the intent of the Members that each Member’s share of Net Income and Net Loss be determined and allocated in accordance with Section 704(b) and Section 514(c)(9) of the Code, and the provisions of this Agreement shall be so interpreted. Therefore, if the Company is advised by the Company’s legal counsel that the allocations provided in this Section 4 are unlikely to be respected for federal income tax purposes, then the Manager is hereby granted the power to amend the allocation provisions of this Agreement to the minimum extent necessary to comply with Section 704(b) and Section 514(c)(9) of the Code and effect the plan of allocations and distributions provided for in this Agreement. 4.10 Consent of Members. The allocation methods of Net Income and Net Loss are hereby expressly consented to by each Member as a condition of becoming a Member. 4.11 Withholding Obligations. 4.11.1 If the Company is required (as determined in good faith by the Manager) to make a payment (“Tax Payment”) with respect to any Member to discharge any legal obligation of the Company or the Manager to make payments to any governmental authority with respect to any federal, foreign, state or local tax liability of such Member arising as a result of such Member’s interest in the Company, then, notwithstanding any -6- 479251772.5050.101 other provision of this Agreement to the contrary, the amount of any such Tax Payment shall be deemed to be a loan by the Company to such Member, which loan shall bear interest at the Prime Rate and be payable upon demand or by offset to any Distribution that otherwise would be made to such Member. 4.11.2 If and to the extent that the Company is required to make any Tax Payment with respect to any Member, or elects to make payment on any loan described in Section 4.11.1 by offset to a Distribution to a Member, either (a) such Member’s proportionate share of such Distribution shall be reduced by the amount of such Tax Payment, or (b) such Member shall pay to the Company before such Distribution an amount of cash equal to such Tax Payment. In the event that a portion of a Distribution in kind is retained by the Company pursuant to clause (a) above, such retained property may, in the discretion of the Manager, either (i) be distributed to the other Members or (ii) be sold by the Company to generate the cash necessary to satisfy such Tax Payment. 4.11.3 The Manager shall be entitled to hold back any Distribution to any Member to the extent that the Manager believes in good faith that a Tax Payment will be required with respect to such Member in the future, and the Manager believes that there will not be sufficient subsequent Distributions to make such Tax Payment. 5. Distributions. 5.1 Cash from Operations. Distributable Cash with respect to each calendar year shall be distributed one hundred percent (100%) to the Members in proportion to their Units until the amount of each Member’s unreturned Capital Contribution is zero (0) and each Member has, as of the date of the distribution, received cumulative distributions (including distributions made pursuant to Section 5.2) that equal a pre-tax rate of return on such Member’s actual Capital Contributions of fifteen percent (15%) per annum, with no compounding, and thereafter shall be distributed fifty percent (50%) to the Members in proportion to their Units and fifty percent (50%) to the Manager. 5.2 Cash from Capital Transactions. Cash from Capital Transactions with respect to each calendar year shall be distributed one hundred percent (100%) to the Members in proportion to their Units until the amount of each Member’s unreturned Capital Contribution is zero (0) and each Member has, as of the date of the distribution, received cumulative distributions (including distributions made pursuant to Section 5.1) that equal a pre-tax rate of return on such Member’s actual Capital Contributions of fifteen percent (15%) per annum, with no compounding, and thereafter shall be distributed fifty percent (50%) to the Members in proportion to their Units and fifty percent (50%) to the Manager. 5.3 Restrictions. The Company intends to make periodic distributions of substantially all cash determined by the Manager to be distributable, subject to the following: (a) Distributions may be restricted or suspended for periods when the Manager determines in its reasonable discretion that it is in the best interest of the Company; and (b) all Distributions are subject to the payment, and the maintenance of reasonable reserves for payment, of Company obligations. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not be required to make a distribution to any Member on account of such Member’s Membership Interest in the Company if such distribution would violate Section 18-607 of the Act or any other applicable law. 6. Compensation to the Manager, the Property Manager and Affiliates. 6.1 Manager’s, Property Manager’s and Affiliates’ Compensation. The Manager, the Property Manager and their Affiliates shall receive compensation from the Company for services rendered or to be rendered only as specified in this Agreement and in the Amended and Restated Property and Asset Management Agreement. If any provision of the Amended and Restated Property and Asset Management Agreement is inconsistent with any provision contained in this Agreement, then the provision contained in the Amended and Restated Property and Asset Management Agreement shall control, and the inconsistent provision herein shall be of no force or effect. The Manager shall receive, for its services in managing the Company in accordance with the terms of this Agreement, an annual management fee (the “Annual Management Fee”) of $2,500. The Annual Management Fee shall be payable monthly in arrears. Upon termination of this Agreement, the parties will prorate the Annual Management Fee on a daily basis to the effective date of such termination. -7- 479251772.5050.101 6.2 Company Expenses. 6.2.1 Operating Expenses. Subject to the limitations set forth in Section 6.2.2, the Company shall pay directly, or reimburse the Manager and its Affiliates, as the case may be, for all of the costs and expenses of the Company’s operations, including, without limitation, the following costs and expenses: (a) all Organization and Offering Expenses advanced or otherwise paid by the Manager or its Affiliates; (b) all costs of personnel employed by the Company and directly involved in the Company’s business; (c) all compensation due to the Manager or its Affiliates; (d) all costs of personnel employed by the Manager or its Affiliates and directly involved in the business of the Company; (e) all costs of borrowed money, taxes and assessments on the Property and other taxes applicable to the Company; (f) legal, accounting, audit, brokerage and other fees; (g) fees and expenses paid to independent contractors, mortgage bankers, real estate brokers and other agents; (h) costs of acquiring, owning, developing, improving, operating and disposing of the Property; (i) expenses incurred in connection with the alteration, maintenance, repair, remodeling, refurbishment, leasing and operation of the Property; (j) all expenses incurred in connection with the maintenance of Company books and records, the preparation and dissemination of reports, tax returns or other information to Members and the making of Distributions to Members; (k) expenses incurred in connection with the preparation and filing of reports or other information with appropriate regulatory agencies; (l) expenses of insurance as required in connection with the business of the Company, other than any insurance insuring the Manager against losses for which it is not entitled to be indemnified under Section 7.8; (m) to the fullest extent permitted by law, costs incurred in connection with any litigation in which the Company may become involved, or any examination, investigation or other proceeding conducted by any regulatory agency, including legal and accounting fees; (n) the actual costs of goods and materials used by or for the Company; (o) the costs of services that could be performed directly for the Company by independent parties such as legal, accounting, secretarial or clerical, reporting, transfer agent, data processing and duplicating services but that in fact are performed by the Manager or its Affiliates, but not in excess of the lesser of: (i) the actual costs to the Manager or its Affiliates of providing such services or (ii) the amounts that the Company otherwise would be required to pay to independent parties for comparable services in the same geographic locale; (p) expenses of Company administration, accounting, documentation and reporting; (q) expenses of revising, amending, modifying or terminating this Agreement; (r) all travel expenses incurred in connection with the Company’s business, including travel to and from the Property; and (s) all other costs and expenses incurred in connection with the business of the Company exclusive of those set forth in Section 6.2.2. 6.2.2 Manager Overhead. The Manager and its Affiliates shall not be reimbursed for overhead expenses incurred in connection with the Company, including, without limitation, rent, depreciation, utilities, capital equipment, other administrative items and the following items paid to any officer of the Manager or any Affiliate: salaries, fringe benefits, travel expenses and other administrative items. 6.2.3 Acquisition Expenses. Notwithstanding Section 6.2.2, the Manager and its Affiliates will be reimbursed for all costs expended in the due diligence and acquisition of the Property, including down payments, closing costs, carrying costs, travel, legal, environmental and other studies, surveys and escrow deposits and costs. 7. Authority and Responsibilities of the Manager. 7.1 Management. The business and affairs of the Company shall be managed by its Manager. Except as otherwise set forth in this Agreement and the Certificate of Formation, the Manager shall have full and complete authority, power and discretion to manage and control the business, affairs and properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incidental to the management of the Company’s business. 7.2 Number, Tenure and Qualifications. The Company shall have one Manager, which shall be Compass Group Providence Square Management, LLC. The Manager shall hold office until it is removed for cause, withdraws or resigns. 7.3 Manager Authority. Subject to Section 7.4, the Manager shall have all authority, rights and powers conferred by law and those required or appropriate to the management of the Company’s business, which, by way of illustration but not by way of limitation, shall include the right, authority and power to cause the Company to: -8- 479251772.5050.101 7.3.1 Acquire, hold, develop, lease, rent, operate, sell, exchange, subdivide and otherwise dispose of all property, including the Property; 7.3.2 Borrow money and, if security is required therefor, to pledge or mortgage or subject the Property to any security device, to obtain replacements of any mortgage or other security device and to prepay, in whole or in part, refinance, increase, modify, consolidate or extend any mortgage or other security device. All of the foregoing shall be on such terms and in such amounts as the Manager, in its sole discretion, deems to be in the best interest of the Company; 7.3.3 Place record title to, or the right to use, the Property, in the name or names of a nominee or nominees for any purpose convenient or beneficial to the Company; 7.3.4 Enter into such contracts and agreements as the Manager determines to be reasonably necessary or appropriate in connection with the Company’s business and purpose (including contracts with Affiliates of the Manager) and any contract of insurance that the Manager deems necessary or appropriate for the protection of the Company and the Manager, including errors and omissions insurance, for the conservation of Company assets or for any purpose convenient or beneficial to the Company; 7.3.5 Employ Persons, who may be Affiliates of the Manager, in the operation and management of the business of the Company; 7.3.6 Prepare or cause to be prepared reports, statements and other relevant information for distribution to the Members; 7.3.7 Open accounts and deposits and maintain funds in the name of the Company in banks, savings and loan associations, “money market” mutual funds and other instruments as the Manager may deem in its discretion to be necessary or desirable; 7.3.8 Cause the Company to make or revoke any of the elections referred to in the Code (the Manager shall have no obligation to make any of such elections); 7.3.9 Select as its accounting year a calendar or fiscal year as may be approved by the Internal Revenue Service (the Company initially intends to adopt the calendar year); 7.3.10 Determine the appropriate accounting method or methods to be used by the Company; 7.3.11 In addition to amendments otherwise authorized herein, amend this Agreement without any action on the part of the Members by special or general power of attorney or otherwise: (a) To add to the representations, duties, services or obligations of the Manager or its Affiliates for the benefit of the Members; (b) To cure any ambiguity or mistake, to correct or supplement any provision herein that may be inconsistent with any other provision herein or to make any other provision with respect to matters or questions arising under this Agreement that will not be inconsistent with the provisions of this Agreement; (c) To delete or add any provision of this Agreement required to be so deleted or added for the benefit of the Members by the staff of the Securities and Exchange Commission or by a state “Blue Sky” commissioner or similar official; (d) To amend this Agreement to reflect the addition or substitution of Members or the reduction of the Capital Accounts upon the return of capital to the Members; -9- 479251772.5050.101 (e) To minimize the adverse impact of, or comply with, any final regulation of the United States Department of Labor, or other federal agency having jurisdiction, defining “plan assets” for ERISA purposes; (f) To reconstitute the Company under the laws of another state if beneficial; (g) As required by a lender who has made a loan to the Company secured by the Property or as required by a lender in connection with a refinancing of the Property that has been properly approved by the Members pursuant to Section 8.2.7; (h) To execute, acknowledge and deliver any and all instruments to effectuate the foregoing, including the execution, acknowledgment and delivery of any such instrument by the attorney-in-fact for the Manager under a special or limited power of attorney, and to take all such actions in connection therewith as the Manager deems necessary or appropriate with the signature of the Manager acting alone; (i) As necessary in connection with an Approved Reinvestment by the Company pursuant to Section 13.8; (j) To modify the allocations provisions of this Agreement to comply with Section 704(b) of the Code; (k) To change the name and/or principal place of business of the Company; and (l) To decrease the rights and powers of the Manager (so long as such decrease does not impair the ability of the Manager to manage the Company and conduct its business affairs). 7.3.12 Require in any Company contract that the Manager shall not have any personal liability but that the Person contracting with the Company is to look solely to the Company and its assets for satisfaction; 7.3.13 Lease personal property for use by the Company; 7.3.14 Establish reserves from income in such amounts as the Manager may deem appropriate; 7.3.15 Temporarily invest the proceeds from the sale of Units in short-term, highly-liquid investments; 7.3.16 Make secured or unsecured loans to the Company and receive interest at the Prime Rate; 7.3.17 Represent the Company and the Members as “tax matters partner” within the meaning of the Code in discussions with the Internal Revenue Service regarding the tax treatment of items of Company income, loss, deduction or credit, or any other matter reflected in the Company’s returns, and, if deemed in the best interest of the Members, to agree to final Company administrative adjustments or file a petition for a readjustment of the Company items in question with the applicable court; 7.3.18 Redeem or repurchase Units on behalf of the Company; 7.3.19 Hold an election for a successor Manager before the resignation, expulsion or dissolution of the Manager; 7.3.20 Initiate legal actions, settle legal actions and defend legal actions on behalf of the Company; 7.3.21 Admit itself as a Member; -10- 479251772.5050.101 7.3.22 Except as otherwise provided under Section 8.2.7 or Section 8.2.8, take all actions and make any decision on behalf of the Company under the Amended and Restated Property and Asset Management Agreement; 7.3.23 Execute and amend the Amended and Restated Property and Asset Management Agreement; 7.3.24 Enter into any transaction with any partnership or venture; 7.3.25 Perform any and all other acts that the Manager is obligated to perform hereunder; 7.3.26 Subcontract with Affiliates and third parties, in the Manager’s sole discretion, to perform some or all management functions set forth herein; 7.3.27 Merge or combine the Company or “roll up” the Company into a partnership, limited liability company or other entity with a Majority Vote of the Members; and 7.3.28 Execute, acknowledge and deliver any and all instruments to effectuate the foregoing and all transactions and actions described herein, or contemplated hereby, and take all such actions in connection therewith as the Manager may deem necessary or appropriate. Notwithstanding any other provision of this Agreement, any and all documents or instruments may be executed on behalf and in the name of the Company by the Manager. 7.4 Restrictions on Manager’s Authority. Neither the Manager nor any Affiliate shall have authority to: 7.4.1 Enter into contracts with the Company that would bind the Company after the expulsion, Event of Insolvency or other cessation to exist of the Manager or to continue the business of the Company after the occurrence of such event; 7.4.2 Use or permit any other Person to use Company funds or assets in any manner except for the benefit of the Company; 7.4.3 Alter the primary purpose of the Company except as needed in connection with an Approved Reinvestment by the Company pursuant to Section 13.8; 7.4.4 Receive from the Company a rebate, kick-back or give-up or participate in any reciprocal business arrangement that would enable it or any Affiliate to do so (excluding the fees and other items set forth in the Amended and Restated Property and Asset Management Agreement); 7.4.5 Except for the Property, or except as part of an Approved Reinvestment by the Company pursuant to Section 13.8, sell or lease to the Company any real property in which the Manager or any Affiliate has any interest; provided, however, that, by their execution hereof, the Members consent to the purchase of the Property described in the Subscription Agreement; 7.4.6 Admit another Person as the Manager, except with the consent of the Members as provided in this Agreement; 7.4.7 Reinvest Cash from Operations in any additional property other than the Property; 7.4.8 Confess a judgment against the Company in connection with any threatened or pending legal action; 7.4.9 Commingle the Company funds with those of any other Person, except for (i) the temporary deposit of funds in a bank checking account for the sole purpose of making Distributions immediately -11- 479251772.5050.101 thereafter to the Members and the Manager or (ii) funds attributable to the Property and held for use in the management of the operations of the Property; 7.4.10 Directly or indirectly pay or award any finder’s fee, commission or other compensation to any Person engaged by a prospective investor for investment advice as an inducement to such adviser to advise the purchaser regarding the purchase of Units; provided, however, that the Manager shall not be prohibited from paying underwriting or marketing commissions, or finder’s or referral fees, to registered broker-dealers or other properly licensed Persons for their services in marketing Units; 7.4.11 Merge, combine or “roll-up” the Company into a partnership, limited liability company or other entity or participate in an UPREIT, DOWNREIT or similar transaction with a real estate investment trust or other entity; or 7.4.12 Vote, or permit to be voted, any Units owned by the Manager or any Affiliate to remove the Manager in accordance with Section 9.2. 7.5 Responsibilities of the Manager. The Manager shall: 7.5.1 Devote such of its time and efforts to the business of the Company as the Manager shall in its discretion, exercised in good faith, determine to be necessary to conduct the business of the Company; 7.5.2 File and publish all certificates, statements or other instruments required by law for formation, qualification and operation of the Company and for the conduct of its business in all appropriate jurisdictions; 7.5.3 At all times use its best efforts to satisfy applicable requirements for the Company to be taxed as a partnership and not as an association taxable as a corporation; and 7.5.4 Amend this Agreement to reflect the admission or substitution of Members not later than ninety (90) days after the date of admission or substitution. 7.6 Administration of Company. So long as it is the Manager and the provisions of this Agreement for compensation and reimbursement of expenses of the Manager are observed, the Manager shall have the responsibility of providing continuing administrative and executive support, advice, consultation, analysis and supervision with respect to the functions of the Company, including decisions regarding the sale, financing or refinancing or other disposition of the Property, and compliance with federal, state and local regulatory requirements and procedures. In this regard, the Manager may retain the services of such Affiliates or unaffiliated parties as the Manager may deem appropriate to provide management and financial consultation and advice and may enter into agreements for the management and operation of Company assets. 7.7 Tax Matters Partner. The Members hereby appoint the Manager to act as the “tax matters partner.” 7.8 Indemnification of Manager. 7.8.1 The Manager, and its shareholders, members, managers, Affiliates, officers, directors, partners, employees, agents and assigns, shall not be liable for, and shall be indemnified and held harmless (to the full extent of the Company’s assets and to the maximum extent permitted by applicable law) from, any loss or damage incurred by them, the Company or the Members in connection with the business of the Company, including by way of illustration, but not limitation, costs and reasonable attorneys’ fees and all amounts expended in the settlement of any and all claims of loss or damage resulting from any act or omission performed or omitted in good faith, which shall not constitute gross negligence or willful malfeasance, pursuant to the authority granted to promote the interests of the Company. Moreover, the Manager shall not be liable to the Company or the Members because any taxing authority disallows or adjusts any deduction or credit in the Company’s income tax returns. 7.8.2 Notwithstanding Section 7.8.1, the Company shall not indemnify any Manager, or any shareholder, director, officer or other employee thereof, for liability imposed or expenses incurred in connection -12- 479251772.5050.101 with any claim arising out of a violation of the Securities Act or any other federal or state securities law, with respect to the offer and sale of the Units. Indemnification will be allowed for settlements and related expenses in lawsuits alleging securities law violations, and for expenses incurred in successfully defending such lawsuits, provided that (i) the Manager is successful in defending the action; (ii) the indemnification is specifically approved by the court of law that shall have been advised as to the current position of the Securities and Exchange Commission (as to any claim involving allegations that the Securities Act was violated) or the applicable state authority (as to any claim involving allegations that the applicable state’s securities laws were violated); or (iii) in the opinion of counsel for the Company, the right to indemnification has been settled by controlling precedent. 7.9 No Personal Liability for Return of Capital. The Manager shall not be personally liable or responsible for the return or repayment of all or any portion of the Capital Contribution of any Member or of any loan made by any Member to the Company, it being expressly understood that any such return of capital or repayment of any loan shall be made solely from the assets (which shall not include any right of contribution from any Member) of the Company. 7.10 Authority as to Third Persons. 7.10.1 Notwithstanding any other provision of this Agreement, no third party dealing with the Company shall be required to investigate the authority of the Manager or secure the approval or confirmation by any Member of any act of the Manager in connection with the Company’s business. No purchaser of any property or interest owned by the Company (including the Property) shall be required to determine the right to sell or the authority of the Manager to sign and deliver any instrument of transfer on behalf of the Company or to see to the application or distribution of revenues or proceeds paid or credited in connection therewith. 7.10.2 The Manager shall have the right by separate instrument or document to authorize one or more individuals or entities to execute leases and lease-related documents on behalf of the Company, and all leases and documents executed by such agent shall be binding on the Company as if executed by the Manager. 8. Rights, Authority and Voting of the Members. 8.1 Members Are Not Agents. Pursuant to Section 7, the management of the Company is vested exclusively in the Manager. No Member, acting solely in the capacity of a Member, is an agent of the Company, nor can any Member in such capacity bind or execute any instrument on behalf of the Company. 8.2 Voting by a Member. Members who own Units shall be entitled to cast one (1) vote for each Unit that they own. Except as otherwise specifically provided in this Agreement or any mandatory provision of the Act, Members who own Units (but not Economic Interest Owners) shall have the right to vote only on the following matters: 8.2.1 Removal of the Manager as provided in this Agreement; 8.2.2 Amendment of this Agreement; 8.2.3 Any merger, combination or “roll-up” of the Company or any UPREIT, DOWNREIT or other similar transaction with a real estate investment trust; 8.2.4 Dissolution and winding up of the Company as set forth in Section 13.1 and the election to continue the Company; 8.2.5 The sale of all or substantially all of the assets of the Company; 8.2.6 Admission of the Manager or election to continue the business of the Company after the Manager ceases to be the Manager when there is no remaining Manager; 8.2.7 Any decision as to whether to sell, exchange, transfer, finance or refinance the Property; or -13- 479251772.5050.101 8.2.8 Election to participate in a Proposed Tax-Free Exchange as more particularly described in Section 13.8. Notwithstanding any provision hereof to the contrary, the following shall govern: When acting on matters subject to the vote of the Members, notwithstanding that the Company is not then insolvent, all of the Members shall, to the fullest extent permitted by law (including Section 18-1101(c) of the Act), take into account the interests of the Company’s creditors as well as those of the Members. 8.3 Member Vote; Consent of Manager. Except as otherwise expressly provided in this Agreement, matters upon which the Members may vote shall require a Majority Vote of the Members to pass and become effective; provided, however, that any vote pursuant to Section 8.2.8 will require the affirmative vote of the Members holding at least seventy-five percent (75%) of the Units. The following matters also shall require the consent of the Manager to pass and become effective: 8.3.1 Any amendment to this Agreement; 8.3.2 The admission of an additional or successor Manager when the current Manager will continue as such; and 8.4.3 Election to offer the Members the opportunity to participate in a Proposed Tax-Free Exchange, as more particularly described in Section 13.8. 8.4 Meetings of the Members. The Manager may at any time call for a meeting of the Members, or for a vote without a meeting, on matters on which the Members are entitled to vote. In addition, the Manager shall call for such a meeting following receipt of a written request therefor of Members holding more than ten percent (10%) of the Units entitled to vote as of the record date. Within twenty (20) days after receipt of such request, the Manager shall notify all Members of record on the record date of the Company meeting. The Manager shall give notice of all such meetings by sending the Members written notice by certified U.S. Mail, with return receipt, by FedEx or other guaranteed overnight delivery service. 8.4.1 Notice. Written notice of each meeting shall be given to each Member entitled to vote, either personally by certified U.S. mail, with return receipt requested or other comparable means of written communication, charges prepaid, addressed to such Member at such Member’s address appearing on the books of the Company or given by such Member to the Company for the purpose of notice or, if no such address appears or is given, at the principal executive office of the Company, or by publication of notice at least once in a newspaper of general circulation in the city or county in which such office is located. All such notices shall be sent not less than ten (10), nor more than sixty (60), days before such meeting. The notice shall specify the place, date and hour of the meeting and the general nature of business to be transacted, and no other business shall be transacted at the meeting. 8.4.2 Adjourned Meeting and Notice Thereof. When a Members’ meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Company may transact any business that might have been transacted at the original meeting. If the adjournment is for more than forty-five (45) days or if after the adjournment a new record date is fixed for the adjourned meeting, then a notice of the adjourned meeting shall be given to each Member of record entitled to vote at the meeting. 8.4.3 Quorum. The presence in person or by proxy of the Persons entitled to vote a majority of the Units shall constitute a quorum for the transaction of business. The Members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a Majority Vote of the Members or such greater vote of the Members as may be required by this Agreement or by law. In the absence of a quorum, any meeting of Members may be adjourned from time to time by the vote of a majority of the Units represented either in person or by proxy, but no other business may be transacted, except as provided above. -14- 479251772.5050.101 8.4.4 Consent of Absentees. The transactions of any meeting of Members, however called and noticed and wherever held, are as valid as though they occurred at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the Persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All waivers, consents and approvals shall be filed with the Company’s records or made a part of the minutes of the meeting. 8.4.5 Action Without Meeting. Except as otherwise provided in this Agreement, any action that may be taken at any meeting of the Members may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by Members having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all Members entitled to vote thereon were present and voted. In the event that the Members are requested to consent on a matter without a meeting, each Member shall be given not less than ten (10), nor more than sixty (60), days notice. In the event that the Manager or Members representing more than ten percent (10%) of the Units request a meeting for the purpose of discussing or voting on the matter, the notice of a meeting shall be given in the same manner as required by Section 8.5.1, and no action shall be taken until the meeting is held. Unless delayed as a result of the preceding sentence, any action taken without a meeting will be effective five (5) days after the required minimum number of voters have signed the consent; however, the action will be effective immediately if the Manager and Members representing at least ninety percent (90%) of the Units have signed the consent. 8.4.6 Record Dates. For purposes of determining the Members entitled to notice of any meeting or to vote or entitled to receive any Distribution or to exercise any right in respect of any other lawful matter, the Manager (or Members representing more than ten percent (10%) of the Units if the meeting is being called at their request) may fix in advance a record date that is not more than sixty (60) nor less than ten (10) days before the date of the meeting nor more than sixty (60) days before any other action. If no record date is fixed, then: (a) The record date for determining Members entitled to notice of, or to vote at, a meeting of Members shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; (b) The record date for determining Members entitled to give consent to Company action in writing without a meeting shall be the day on which the first written consent is given; (c) The record date for determining Members for any other purpose shall be at the close of business on the day on which the Manager adopts it, or the sixtieth (60th) day before the date of the other action, whichever is later; and (d) A determination of Members of record entitled to notice of, or to vote at, a meeting of Members shall apply to any adjournment of the meeting unless the Manager, or the Members who requested the meeting, fix a new record date for the adjourned meeting, but the Manager, or such Members, shall fix a new record date if the meeting is adjourned for more than forty-five (45) days from the date set for the original meeting. 8.4.7 Proxies. Every Person entitled to vote or execute consents shall have the right to do so either in person or by one or more agents authorized by a written proxy executed by such Person or such Person’s duly authorized agent and filed with the Manager. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked or unless it states that it is irrevocable. A proxy that states that it is irrevocable is irrevocable for the period specified therein to the fullest extent permitted by law. 8.4.8 Chairman of Meeting. The Manager may select any person to preside as Chairman of any meeting of the Members, and if such person is absent from the meeting or fails or is unable to preside at the meeting, then the Manager may name any other person in substitution therefor as Chairman. In the absence of an express selection by the Manager of a Chairman or substitute therefor, any manager or officer of the Manager present at the meeting may preside as Chairman. The Chairman of the meeting shall designate a secretary for such meeting, who -15- 479251772.5050.101 shall take and keep or cause to be taken and kept minutes of the proceedings thereof. The conduct of all Members’ meetings shall at all times be within the discretion of the Chairman of the meeting and shall be conducted under such rules as the Chairman may prescribe. The Chairman shall have the right and power to adjourn any meeting at any time, without a vote of the Units present in person or represented by proxy, if the Chairman determines such action to be in the best interest of the Company. 8.4.9 Inspectors of Election. In advance of any meeting of Members, the Manager may appoint any person other than a nominee for Manager or other office as the inspector of election to act at the meeting and any adjournment thereof. If an inspector of election is not so appointed, or if any such person fails to appear or refuses to act, then the Chairman of any such meeting may, and upon the request of any Member or such Member’s proxy shall, make such appointment at the meeting. The inspector of election shall determine the number of Units outstanding and the voting power of each, the Units represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies; receive votes, ballots or consents; hear and determine all challenges and questions in any way arising in connection with the right to vote; count and tabulate all votes or consents; determine when the polls shall close; determine the results; and do such acts as may be proper to conduct the election or vote with fairness to all Members. 8.4.10 Record Date and Closing Company Books. When a record date is fixed, only Members of record on that date are entitled to notice of and to vote at the meeting or to receive a Distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of Units on the books of the Company after the record date. 8.5 Rights of Members. No Member or Owner shall have the right or power to: (i) withdraw or reduce such Member’s or Owner’s contribution to the capital of the Company, except as a result of the dissolution of the Company or as otherwise provided in this Agreement or by law; (ii) to the fullest extent permitted by law, bring an action for partition against the Company; or (iii) demand or receive property other than cash in return for such Member’s or Owner’s Capital Contribution. Except as provided in this Agreement, no Member or Owner shall have priority over any other Member or Owner either as to the return of Capital Contributions or as to allocations of Net Income, Net Loss or Distributions of the Company. Other than upon the termination and dissolution of the Company as provided by this Agreement, there has been no time agreed upon when the contribution of each Member (other than the Initial Member’s $100.00 Capital Contribution described in Section 3.1.1) or Owner is to be returned. 8.6 Restrictions on the Member. No Member shall: 8.6.1 Except as required by law, disclose to any non-Member other than such Member’s lawyers, accountants or consultants and/or commercially exploit any of the Company’s business practices, trade secrets or any other information not generally known to the business community, including the identity of suppliers used by the Company; 8.6.2 Do any other act or deed with the intention of harming the business operations of the Company; or 8.6.3 Do any act contrary to this Agreement. 8.7 Return of Capital of Member. In accordance with the Act, an Owner may, under certain circumstances, be required to return to the Company, for the benefit of the Company’s creditors, amounts previously distributed to the Owner. If any court of competent jurisdiction holds that any Owner is obligated to make any such payment, then such obligation shall be the obligation of such Owner and not of the Company, the Manager or any other Owner. 9. Resignation, Withdrawal or Removal of the Manager. 9.1 Resignation or Withdrawal of Manager. Subject to Section 10, the Manager shall not resign or withdraw as the Manager or do any act that would require its resignation or withdrawal, without a Majority Vote of the Members. If the Manager is permitted to resign pursuant to this Section 9.1, then an additional Manager of the Company shall be admitted to the Company upon its execution of an instrument signifying its agreement to be -16- 479251772.5050.101 bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. Such admission shall be deemed effective immediately before the resignation, and, immediately following such admission, the resigning Manager shall cease to be a Manager of the Company. 9.2 Removal for Cause. The Members by Majority Vote of the Members shall have the right to remove the Manager at any time solely “for cause.” For purposes of this Agreement, removal of the Manager “for cause” shall mean removal due to the (a) gross negligence or fraud of the Manager, (b) willful misconduct or willful breach of this Agreement by the Manager or (c) bankruptcy, insolvency or inability of the Manager to satisfy its obligations as the same come due (each, an “Event of Insolvency”). If the Manager or an Affiliate owns Units, then the Manager or such Affiliate, as the case may be, shall not participate in any vote to remove the Manager. 9.3 Payment of Manager’s Fees. Upon the removal of the Manager pursuant to Section 9.2 or resignation of the Manager pursuant to Section 9.1, the Manager shall be paid by the Company all fees that have been earned and all other compensation remaining to be paid under this Agreement. The Company shall pay these amounts to the Manager in cash within sixty (60) days of the withdrawal of the Manager. Notwithstanding the foregoing, the amount of the accrued but unpaid fees shall be reduced by any damages caused by the Manager before such removal that occur as a result of the Manager’s gross negligence, willful misconduct or fraud. 10. Assignment of the Manager’s Interest. 10.1 Permitted Assignments. Except as otherwise provided in this Agreement, the Manager may not sell, assign, hypothecate, encumber or otherwise transfer any part or all of its Membership Interest in the Company, if any, except with the consent of a Majority Vote of the Members, which consent may be withheld by such Members in their sole and absolute discretion and without reason or for any reason whatsoever. If the Members consent to the transfer, the Membership Interest may only be sold to the proposed transferee within the time period approved by the Members, or within ninety (90) days of such consent (if later), on the proposed terms and price. All costs of the transfer, including reasonable attorneys’ fees (if any), shall be borne by the transferring Manager. 10.1.1 Any assignment or transfer of the Manager’s Membership Interest provided for by this Agreement can be an assignment or transfer of all of its Membership Interest or any portion or part of its Membership Interest. 10.1.2 Any transfer of all or a part of any Manager’s Membership Interest may be made only pursuant to the terms and conditions contained in this Section 10. 10.1.3 Any such assignment shall be by a written instrument of assignment, the terms of which are not in contravention of any of the provisions of this Agreement, and which has been duly executed by the assignor of such Manager’s Membership Interest and accepted by the Members pursuant to a Majority Vote of the Members. 10.1.4 The assignor and assignee shall have executed, acknowledged and delivered such other instruments as the Members, pursuant to a Majority Vote of the Members, may deem necessary or desirable to effect such assignment, which may include an opinion of counsel regarding the effect and legality of any such proposed transfer, and which shall include the written acceptance and adoption by the assignee of the provisions of this Agreement. 10.2 Substitute Manager. Upon acceptance by the Members of an assignment by the Manager, any assignee of such Manager’s Membership Interest in compliance with this Section 10 shall be substituted as the Manager. 10.3 Transfer in Violation Not Recognized. Any assignment, sale, exchange or other transfer in contravention of the provisions of this Section 10 shall to the fullest extent permitted by law be void and ineffectual and shall not bind or be recognized by the Company. -17- 479251772.5050.101 11. Assignment of Units. 11.1 Permitted Assignments. A Member may only sell, assign, hypothecate, encumber or otherwise transfer any part (but not less than the lesser of (i) one (1) Unit or (ii) the Member’s entire Membership Interest in the Company) or all of such Member’s Units if the following requirements are satisfied: 11.1.1 The Manager consents in writing to the transfer; 11.1.2 No Member shall transfer, assign or convey or offer to transfer, assign or convey all or any portion of a Unit to any Person who does not possess the financial qualifications required of all Persons who become Members; 11.1.3 No Member shall have the right to transfer any Unit to any minor or to any person who, for any reason, lacks the capacity to contract for himself under applicable law. Such limitations shall not, however, restrict the right of any Member to transfer any one or more Units to a custodian or a trustee for a minor or other person who lacks such contractual capacity; 11.1.4 The Manager, with advice of counsel, must determine that such transfer will not jeopardize the applicability of the exemptions from the registration requirements under the Securities Act and registration or qualification under state securities laws relied on by the Company and the Manager in offering and selling the Units or otherwise violate any federal or state securities law; 11.1.5 The Manager, with advice of counsel, must determine that, despite such transfer, Units will not be deemed traded on an established securities market or “readily tradable on a secondary market” (or the substantial equivalent thereof) under the provisions applicable to publicly traded partnership status; provided, however, that in no event may any Member transfer Units if such transfer would cause the Company to have more than one hundred (100) Owners without the express prior written consent of the Manager, which consent may be withheld in the Manager’s sole and absolute discretion; 11.1.6 Any such transfer shall be by a written instrument of assignment, the terms of which are not in contravention of any of the provisions of this Agreement, and which has been duly executed by the assignor of such Units and accepted by the Manager in writing. Upon such acceptance by the Manager, such an assignee shall take subject to all terms of this Agreement and shall become an Economic Interest Owner; 11.1.7 A transfer fee shall be paid by the transferring Member in such amount as may be required by the Manager to cover all reasonable expenses, including attorneys’ fees, connected with such assignment; 11.1.8 The transfer would not cause a default or otherwise accelerate any payment date on any loan obtained by the Company; and 11.1.9 The transfer will not result in benefit plans owning twenty-five percent (25%) or more of the Units, as determined by the Manager in its sole discretion. 11.2 Substituted Member. 11.2.1 Conditions to be Satisfied. No Economic Interest Owner shall have the right to become a Substituted Member unless the Manager consents thereto in accordance with Section 11.2.2 and all of the following conditions are satisfied: (a) A duly executed and acknowledged written instrument of assignment shall have been filed with the Company, which instrument shall specify the number of Units being assigned and set forth the intention of the assignor that the assignee succeed to the assignor’s interest as a Substituted Member in the assignor’s place; -18- 479251772.5050.101 (b) The assignor and assignee shall have executed, acknowledged and delivered such other instruments as the Manager may deem necessary or desirable to effect such substitution, which may include an opinion of counsel regarding the effect and legality of any such proposed transfer, and which shall include: (i) the written acceptance and adoption by the Economic Interest Owner of the provisions of this Agreement and (ii) the execution, acknowledgment and delivery to the Manager of a special power of attorney, the form and content of which are more fully described herein; and (c) A transfer fee sufficient to cover all reasonable expenses connected with such substitution shall have been paid to the Company. 11.2.2 Consent of Manager. The consent of the Manager shall be required to admit an Economic Interest Owner as a Substituted Member. The granting or withholding of such consent shall be within the sole and absolute discretion of the Manager. 11.2.3 Consent of Member. By executing or adopting this Agreement, each Member hereby consents to the admission of additional or Substituted Members and to any Economic Interest Owner becoming a Substituted Member upon consent of the Manager and in compliance with this Agreement. 11.3 Rights of Economic Interest Owner. An Economic Interest Owner shall be entitled to receive Distributions from the Company attributable to the Units acquired by reason of such assignment from and after the effective date of such assignment; provided, however, that, notwithstanding anything herein to the contrary, the Company shall be entitled to treat the assignor of such Units as the absolute owner thereof in all respects and shall incur no liability for allocations of Net Income and Net Loss or Distributions, or for the transmittal of reports or accounting, until the written instrument of assignment has been received by the Company and recorded on its books. The effective date of such assignment shall be the date on which all of the requirements of this Section have been complied with, subject to Section 4.8. 11.4 Right to Inspect Books, Right to Vote and Other Rights and Privileges. Economic Interest Owners shall have no right to inspect the Company’s books or records, to vote on Company matters or to exercise any other right or privilege as Members, until they are admitted to the Company as Substituted Members, except as otherwise provided in the Act. For the avoidance of doubt, Units owned by an Economic Interest Owner that has not become a Substituted Member pursuant to Section 11.2 have no voting power and are not entitled to vote. 11.5 Assignment of 50% or More of Units. No assignment of Units may be made if the Units to be assigned, when added to the total of all other Units and Manager interests assigned within the thirteen (13) immediately-preceding months, would, in the opinion of counsel for the Company, result in the termination of the Company under the Code. 11.6 Transfer Subject to Law. No assignment, sale, transfer, exchange or other disposition of Units may be made except in compliance with the applicable governmental laws and regulations, including state and federal securities laws. Any assignment, sale, exchange or other transfer in contravention of this Agreement or any applicable law shall, to the fullest extent permitted by law, be void and of no force or effect and shall not bind or be recognized by the Company. 11.7 Termination of Membership Interest. Upon the transfer of a Unit in violation of this Agreement or the dissolution of a Member that does not result in the dissolution of the Company, the Membership Interest of such Member shall be converted into an Economic Interest or purchased by the Company as provided herein. 12. Books, Records, Accounting and Reports. 12.1 Records, Audits and Reports. The Company shall maintain at its principal office the Company’s records and accounts of all operations and expenditures of the Company, including the following: 12.1.1 A current list in alphabetical order of the full name and last known business or resident address of each Owner and Manager, together with the Capital Contribution and the share in profits and losses of each Owner; -19- 479251772.5050.101 12.1.2 A copy of the Certificate of Formation and all amendments thereto, together with all powers of attorney issued pursuant to this Agreement; 12.1.3 Copies of this Agreement and all amendments thereto, together with all powers of attorney pursuant to which any written accounting or any amendment thereto was executed; 12.1.4 Copies of the Company’s federal, state and local income tax or information returns and reports, if any, for the six (6) most recent taxable years; 12.1.3 Copies of all financial statements of the Company, if any, for the six (6) most recent years; and 12.1.4 The Company’s books and records as they relate to the internal affairs of the Company for at least the current and past four (4) fiscal years. 12.2 Delivery to Members and Inspection. Each Member has the right, upon reasonable written request for purposes related to the interest of that Person as a Member, to receive from the Company: 12.2.1 True and full information regarding the status of the business and financial condition of the Company; 12.2.2 Promptly after becoming available, a copy of the Company’s federal, state and local income tax returns for each year; 12.2.3 A current list of the name and last known business, residence or mailing address of each Member and Manager; 12.2.4 A copy of this Agreement and the Certificate of Formation and all amendments thereto, together with executed copies of all written powers of attorney pursuant to which this Agreement and any certificate and all amendments thereto have been executed; 12.2.5 True and full information regarding the amount of cash and description and statement of the agreed value of any property or services contributed by each Member and that each Member has agreed to contribute in the future, and the date on which each became a Member; and 12.2.6 Any information required to be made available to a Member pursuant to Section 18-305 of the Act or any other applicable law. 12.3 Annual Report. The Manager will cause the Company, at the Company’s expense, to prepare an unaudited annual report containing a year-end balance sheet, income statement and a statement of changes in financial position. Copies of such statements shall be kept at the Company’s principal place of business, and each Member (or a duly authorized representative) will, during reasonable business hours, have the right to inspect, examine and copy them. 12.4 Tax Information. The Manager shall cause the Company, at the Company’s expense, to prepare and timely file income tax returns for the Company with the appropriate authorities and shall cause all Company information necessary in the preparation of the Owners’ individual income tax returns to be distributed to the Owners not later than seventy-five (75) days after the end of the Company’s fiscal year. -20- 479251772.5050.101 13. Termination and Dissolution of the Company. 13.1 Dissolution of Company. The Company shall be dissolved, shall terminate and its assets shall be disposed of, and its affairs wound up, upon the earliest to occur of the following: 13.1.1 A determination by the Manager, with a Majority Vote of the Members, to terminate the Company; 13.1.2 The sale of the Property or the receipt of the final payment on any seller financing provided by the Company on the sale of the Property, if later, unless (i) the Company holds securities of another company that cannot be distributed, in which case the Company will be dissolved as soon as possible upon such distribution, or (ii) Members holding at least seventy-five percent (75%) of the Units elect to participate in an Approved Reinvestment pursuant to Section 13.8, in which case dissolution of the Company shall be governed by Section 13.8.2(c). 13.1.3 The termination of the legal existence of the last remaining Member of the Company or the occurrence of any other event that terminates the continued membership of the last remaining Member of the Company in the Company, unless the Company is continued without dissolution in a manner permitted by this Agreement or the Act; or 13.1.4 The entry of a decree of judicial dissolution under Section 18-802 of the Act. 13.2 Events of Dissolution. Notwithstanding any provision hereof to the contrary, to the extent permissible under applicable federal and state tax and other applicable law, the majority vote of Units owned by the remaining Members is sufficient to continue the existence of the Company upon the occurrence of the event set forth in Section 13.1.1. 13.3 Restriction on Termination. Notwithstanding any other provision of this Agreement, the Bankruptcy of a Member shall not cause such Member to cease to be a Member of the Company or the dissolution of the Company, and upon the occurrence of such an event the Company shall continue without dissolution. 13.4 Termination. The Company shall terminate when (i) all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Members in the manner provided for in this Agreement, and (ii) the Certificate of Formation shall have been canceled in the manner required by the Act. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate of Formation as provided in the Act. 13.5 Liquidation of Assets. Upon a dissolution and termination of the Company, the Manager (or in case there is no Manager, the Members or Person designated by a Majority Vote of the Members) shall take full account of the Company’s assets and liabilities, shall liquidate the assets as promptly as is consistent with obtaining the fair market value thereof and shall apply and distribute the proceeds therefrom in the following order: 13.5.1 To the payment of creditors of the Company, other than Members who are creditors, but excluding secured creditors whose obligations will be assumed or otherwise transferred upon liquidation of Company’s assets, and then to the payment of Members who are creditors of the Company; 13.5.2 To the setting up of reserves as required by law for liabilities or obligations of the Company; provided, however, that such reserves shall be deposited with a bank or trust company in escrow with interest for the purpose of disbursing such reserves for the payment of any of the aforementioned contingencies and, at the expiration of a reasonable period, for the purpose of distributing the balance remaining in accordance with the remaining provisions of this Section 13.5; and 13.5.3 To the Members in proportion to their Units until the amount of each Member’s unreturned Capital Contribution is zero (0) and each Member has, as of the date of the distribution, received cumulative distributions (including distributions made pursuant to Section 5.1 and Section 5.2) that equal a pre-tax rate of return on such Member’s actual Capital Contributions of fifteen percent (15%) per annum, with no -21- 479251772.5050.101 compounding, and thereafter fifty percent (50%) to the Members in proportion to their Units and fifty percent (50%) to the Manager. 13.6 Distributions Upon Dissolution. Each Member shall look solely to the assets of the Company for all Distributions and its Capital Contributions and shall have no recourse therefor (upon dissolution or otherwise) against any Manager or any Member. 13.7 Liquidation of Member’s Interest. If there is a Liquidation of a Member’s Membership Interest in the Company, then any liquidating Distribution pursuant to such Liquidation shall be made only to the extent of the positive Capital Account balance, if any, of such Member for the taxable year during which such Liquidation occurs after proper adjustments for allocations and Distributions for such taxable year up to the time of Liquidation. Such Distributions shall be made by the end of the taxable year of the Company during which such Liquidation occurs or, if later, within ninety (90) days after such Liquidation. 13.8 Approved Reinvestment. 13.8.1 Upon any sale of the Property, the Manager may, at its discretion, offer the Members the opportunity to have the Company reinvest the net proceeds received by the Company from such sale as part of a Section 1031 tax-deferred exchange (a “Proposed Tax-Free Exchange”). If the Manager elects to offer the Members such opportunity, then the Manager shall notify the Members in writing of the terms governing such Proposed Tax-Free Exchange (and the Manager’s and Members’ respective rights and obligations relating thereto) (the “Tax-Free Exchange Conditions”) as far in advance of the estimated closing date for the sale of the Property as is practical. Such notification may include a description of one or more potential replacement properties that may be acquired as part of such Proposed Tax-Free Exchange, which may include properties owned (in whole or in part) or managed by the Manager or its Affiliates. The Members shall have fifteen (15) days from receipt of such notification to notify the Manager in writing of their decision to participate in such Proposed Tax-Free Exchange, with any failure of a Member to timely respond being deemed such Member’s decision not to participate in such Proposed Tax-Free Exchange. 13.8.2 If Members holding at least seventy-five percent (75%) of the Units affirmatively elect to participate in such Proposed Tax-Free Exchange, then: (a) thereafter, the Proposed Tax-Free Exchange shall be referred to for purposes of this Agreement as an “Approved Reinvestment”; and each property acquired as part of such Approved Reinvestment shall be referred to herein individually as an “Approved Reinvestment Property,” and such acquired properties shall be collectively referred to herein as the “Approved Reinvestment Properties”; and, upon the completion of such Approved Reinvestment transaction, the term “Property” wherever used in this Agreement shall thereafter mean individually and collectively, as the context so indicates, each Approved Reinvestment Property and the Approved Reinvestment Properties; (b) the Company shall be deemed to have approved the Approved Reinvestment, and the Manager and the Members shall cause such Approved Reinvestment transaction to be completed in accordance with, and as outlined in, the Tax-Free Exchange Conditions; (c) the Company shall not dissolve upon the sale of the Property, as contemplated by Section 13.1.2, but instead the Company shall continue in existence until the earlier to occur of (x) the subsequent occurrence of an event under Section 13.1.1 or Section 13.1.3 or Section 13.1.4 that causes the Company to dissolve or (y) the sale of the final Approved Reinvestment Property and either (1) the Members declining to thereafter approve a subsequent Proposed Tax-Free Exchange or (2) the Manager electing not to offer the Members the opportunity to participate in a subsequent Proposed Tax-Free Exchange; and (d) the Manager shall be entitled to make such amendments and modifications to this Agreement, without the prior approval of the Members, as the Manager deems necessary in connection with completing any such Approved Reinvestment transaction. -22- 479251772.5050.101 14. Special and Limited Power of Attorney. 14.1 Power of Attorney. The Manager shall at all times during the term of the Company have a special and limited power of attorney as the attorney-in-fact for each Member, with power and authority to act in the name and on behalf of each such Member to execute, acknowledge and swear to in the execution, acknowledgment and filing of documents that are not inconsistent with the provisions of this Agreement and that may include, by way of illustration but not by limitation, the following: 14.1.1 This Agreement, as well as all amendments to the foregoing, that, under the laws of the State of Delaware or the laws of any other state, are required to be filed or that the Manager deems it advisable to file; 14.1.2 Any other instrument or document that may be required to be filed by the Company under the laws of any state or by any governmental agency or that the Manager deems it advisable to file; 14.1.3 Any instrument or document that may be required to effect the continuation of the Company, the admission of Substituted Members or the dissolution and termination of the Company (provided that such continuation, admission or dissolution and termination are in accordance with the terms of this Agreement); 14.1.4 Upon approval thereof pursuant to Section 8.2.8 or Section 8.2.9, any contract for purchase or sale of real estate, and any deed, deed of trust, mortgage or other instrument of conveyance or encumbrance, with respect to the Property; and 14.1.5 Any and all other instruments as the Manager may deem necessary or desirable to effect the purposes of this Agreement and carry out fully its provisions. 14.2 Provision of Power of Attorney. The special and limited power of attorney granted to the Manager: 14.2.1 Is a special power of attorney coupled with an interest, is irrevocable, shall survive the death, incapacity, termination or dissolution of the granting Member and is limited to those matters herein set forth; 14.2.2 May be exercised by the Manager by and through one or more of the managers or officers of the Manager, for each of the Members by the signature of the Manager acting as attorney-in-fact for all of the Members, together with a list of all Members executing such instrument by their attorney-in-fact or by such other method as may be required or requested in connection with the recording or filing of any instrument or other document so executed; and 14.2.3 Shall survive an assignment by a Member of all or any portion of such Member’s Units, except that, where the assignee of the Units owned by such Member has been approved by the Manager for admission to the Company as a Substituted Member, the special power of attorney shall survive such assignment for the sole purpose of enabling the Manager to execute, acknowledge and file any instrument or document necessary to effect such substitution to the fullest extent permitted by law. 14.3 Notice to Members. The Manager shall promptly furnish to a Member a copy of any amendment to this Agreement executed by the Manager pursuant to a power of attorney from the Member. 15. Relationship of this Agreement to the Act. Many of the terms of this Agreement are intended to alter or extend provisions of the Act as they may apply to the Company or the Members. Any failure of this Agreement to mention or specify the relationship of such terms to provisions of the Act that may affect the scope or application of such terms shall not be construed to mean that any of such terms is not intended to be a limited liability company agreement provision authorized or permitted by the Act or that in whole or in part alters, extends or supplants provisions of the Act as may be allowed thereby. -23- 479251772.5050.101 16. Amendment of Agreement. 16.1 Admission of Member. Amendments to this Agreement for the admission of any Member or Substituted Member shall not, if in accordance with the terms of this Agreement, require the consent of any Member. 16.2 Amendments with Consent of Members. In addition to amendments to this Agreement otherwise authorized herein, this Agreement may be amended by the Manager with a Majority Vote of the Members; provided, however, that any amendment that would treat a specific Member less favorably than another Member (in application but not in effect) shall require the vote of such adversely affected Member. 16.3 Amendments Without Consent of the Members. In addition to the amendments to this Agreement authorized pursuant to Sections 4.9 and Section 7.3.11 or otherwise authorized herein, the Manager may amend this Agreement, without the consent of any of the Members, to (i) change the name and/or principal place of business of the Company or (ii) decrease the rights and powers of the Manager (so long as such decrease does not impair the ability of the Manager to manage the Company and conduct its business and affairs); provided, however, that no amendment to this Agreement shall be adopted pursuant to this Section 16.3 unless the adoption thereof (A) is for the benefit of or not adverse to the interests of the Members, (B) is not inconsistent with Section 7 and (C) does not affect the limited liability of the Members or the status of the Company as a partnership for federal income tax purposes. 16.4 Execution and Recording of Amendments. Any amendment to this Agreement shall be executed by the Manager as such and by the Manager, as attorney-in-fact for the Members, pursuant to the power of attorney contained in Section 14. After the execution of such amendment, the Manager also shall prepare and record or file any certificate or other document that may be required to be recorded or filed with respect to such amendment, either under the Act or under the laws of any other jurisdiction in which the Company holds any property or otherwise does business. 17. Miscellaneous. 17.1 Counterparts. This Agreement may be executed in several counterparts, and all so executed counterparts shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all of the parties hereto are not signatory to the original or the same counterpart. 17.2 Successors and Assigns. The terms and provisions of this Agreement shall be binding on and shall inure to the benefit of the successors and permitted assigns of the respective Members. 17.3 Severability. In the event that any sentence or Section of this Agreement is declared by a court of competent jurisdiction to be void, such sentence or Section shall be deemed severed from the remainder of this Agreement, and the balance of this Agreement shall remain in full force and effect. 17.4 Notices. All notices under this Agreement shall be in writing and shall be given to the Member or Economic Interest Owner entitled thereto, by personal service or by mail, posted to the address maintained by the Company for such Person or at such other address as such person may specify in writing. 17.5 Manager’s Mailing Address. The name and mailing address of the Manager is as follows: Compass Group Providence Square Management, LLC c/o Sweetwater Properties, LLC PO Box 142 Menan, ID 83434 Attn: Manager 17.6 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware (without regard to conflict of laws principles). -24- 479251772.5050.101 17.7 Captions; Section References. Section titles or captions contained in this Agreement are inserted only as a matter of convenience and reference. Such titles and captions in no way define, limit, extend or describe the scope of this Agreement or the intent of any of the provisions hereof. All references in this Agreement to “Section” or “Sections” refer to the corresponding Section or Sections of this Agreement unless otherwise expressly specified. 17.8 Gender. Whenever required by the context hereof, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa. 17.9 Time. Time is of the essence with respect to this Agreement. 17.10 Additional Documents. Each Member, upon the request of the Manager, shall perform all further acts and execute and deliver all documents that may be reasonably necessary to carry out the provisions of this Agreement, including, without limitation, providing acknowledgment before a notary public of any signature made by a Member. 17.11 Descriptions. All descriptions referred to in this Agreement are expressly incorporated herein by reference as if set forth in full, whether or not attached hereto. 17.12 Binding Arbitration. Any controversy arising out of or related to this Agreement or the breach thereof or an investment in the Units shall be settled by binding arbitration in Madison County, Idaho, in accordance with the laws of the State of Delaware for agreements made in and to be performed in that state, and judgment entered upon the award rendered may be enforced by appropriate judicial action in any court of competent jurisdiction. Such arbitration shall be administered by the American Arbitration Association in accordance with its rules then existing and conducted by an arbitration panel consisting of one (1) member, which shall be the mediator if mediation has occurred, which arbitrator or mediator shall be experienced in the area of real estate and limited liability companies and shall be knowledgeable with respect to the subject matter area of the dispute. The losing party shall bear all fees and expenses of the arbitrator or mediator, other tribunal fees and expenses, reasonable attorneys’ fees of both parties, all costs of producing witnesses and all other reasonable costs or expenses incurred by the losing party and the prevailing party, or such costs shall be allocated by the arbitrator or mediator. The arbitration panel shall render a decision within thirty (30) days following the close of presentation by the parties of their cases and any rebuttal. This Section 17.12 shall be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Uniform Arbitration Act (10 Del. C. Sections 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it is determined by a court of competent jurisdiction that any provision or wording of this Section 17.12 is invalid or unenforceable under the Delaware Arbitration Act or other applicable law, then such invalidity shall not invalidate all of this Section 17.12. In that case, this Section 17.12 shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act or other applicable law, and, in the event that such term or provision cannot be so limited, this Section 17.12 shall be construed to omit such invalid or unenforceable provision. 17.13 Venue. Subject to Section 17.12, any action relating to or arising out of this Agreement may be brought in a court of competent jurisdiction located in Madison County, Idaho or in any state or federal court in the State of Idaho. 17.14 Partition. The Members agree that the assets of the Company are not and will not be suitable for partition. Accordingly, each of the Members hereby irrevocably waives (to the fullest extent permitted by law) any and all rights that such Member may have, or may obtain, to maintain any action for partition of any of the assets of the Company. 17.15 Integrated and Binding Agreement. This Agreement contains the entire understanding and agreement among the Members with respect to the subject matter hereof, and there are no other agreements, understandings, representations or warranties among the Members other than those set forth herein, except the Subscription Agreement (and related documents). This Agreement may be amended only as provided in this Agreement. Notwithstanding any other provision of this Agreement, the Members agree that this Agreement constitutes a legal, valid and binding agreement of the Members and is enforceable against the Members by the Manager, in accordance with its terms. In addition, the Manager shall be an intended beneficiary of this Agreement. -25- 479251772.5050.101 17.16 Legal Counsel. Each Member acknowledges and agrees that legal counsel representing the Company, the Manager and its Affiliates does not represent and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing any or all of the Members, other than the Manager, in any respect. In addition, each Member consents to the Manager hiring legal counsel for the Company that also is legal counsel to one or more of the Manager or its Affiliates. 17.17 Title to Company Property. All property owned by the Company shall be owned by the Company as an entity, and, insofar as permitted by applicable law, no Member shall have any ownership interest in any Company property in its individual name or right, and each Member’s Membership Interest shall be personal property for all purposes. 18. Member Representations. Each Member hereby represents and warrants to the Company, the Manager and all other Members that: 18.1 Such Member has the power and authority to execute and comply with the terms and provisions of this Agreement. 18.2 Such Member’s interest in the Company has been or will be acquired solely by and for the account of such Member for investment purposes only and is not being purchased for subdivision, fractionalization, resale or distribution; such Member has no contract, undertaking, agreement or arrangement with any Person to sell, transfer or pledge to such Person or anyone else such Member’s interest in the Company (or any portion thereof); and such Member has no present plans or intentions to enter into any such contract, undertaking or arrangement. 18.3 Such Member’s interest in the Company has not and will not be registered under the Securities Act or the securities laws of any state and cannot be sold or transferred without compliance with the registration provisions of the Securities Act and the applicable state securities laws or compliance with the exemptions, if any, available thereunder. Such Member understands that neither the Company nor the Manager nor any other Member has any obligation or intention to register the Units under any federal or state securities act or law or to file the reports to make public the information required by Rule 144 under the Securities Act. 18.4 Such Member expressly warrants that (i) such Member has knowledge and experience in financial and business matters in general and in investments of the type to be made by the Company in particular; (ii) such Member is capable of evaluating the merits and risks of an investment in the Company; (iii) such Member’s financial condition is such that such Member has no need for liquidity with respect to such Member’s investment in the Company to satisfy any existing or contemplated undertaking or indebtedness; (iv) such Member is able to bear the economic risk of such Member’s investment in the Company for an indefinite period of time, including the risk of losing all of such investment, and the loss of such investment would not materially adversely affect such Member; (v) either such Member has secured independent tax advice with respect to the investment in the Company, upon which such Member is solely relying, or such Member is sufficiently familiar with the income taxation of limited liability companies that such Member has deemed such independent advice unnecessary; and (vi) such Member has made an investigation of the Company and the Company’s business, and the Company has made available to such Member all information with respect thereto that such Member needed to make an informed decision with respect to such Member’s investment in the Company. 18.5 Such Member acknowledges that the Company and/or the Manager have made all documents pertaining to such Member’s investment in the Company available and have allowed such Member an opportunity to ask questions and receive answers thereto and to verify and clarify any information contained in such documents. Such Member is aware of the provisions of this Agreement providing for additional capital contributions and dilution of such Member’s interest in the Company. 18.6 Such Member has relied solely on the documents submitted to such Member and independent investigations made by such Member in making the decision to purchase its interest in the Company. [Signature Page Follows] -26- 479251772.5050.101 IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Limited Liability Company Agreement to be effective as of the date first written above. SUCCESSOR INITIAL MEMBER: SWEETWATER PROPERTIES, LLC, an Idaho limited liability company By: Name: Ryan Nelson Title: Manager MANAGER: COMPASS GROUP PROVIDENCE SQUARE MANAGEMENT, LLC, a Delaware limited liability company By: SWEETWATER PROPERTIES, LLC, an Idaho limited liability company, its Manager By: Name: Ryan Nelson Title: Manager [SIGNATURE PAGE OF AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF COMPASS GROUP PROVIDENCE SQUARE, LLC] -1- 479251772.5050.101 EXHIBIT A TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT DEFINITIONS “Act” means the Delaware Limited Liability Company Act, as the same may be amended from time to time. “Additional Capital Contribution” has the meaning set forth in Section 3.2. “Additional Capital Shortfall” has the meaning set forth in Section 3.2. “Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments: (i) Credit to such Capital Account all amounts that the Member is obligated to restore and the Member’s share of Member Minimum Gain and Company Minimum Gain; and (ii) Debit to such Capital Account of the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). “Affiliate” means (i) any Person directly or indirectly controlling, controlled by or under common control with another Person; (ii) a Person owning or controlling ten percent (10%) or more of the outstanding voting securities of such other Person; (iii) any officer, director or partner of such other Person; and (iv) if such other Person is an officer, director, manager or partner, any company for which such Person acts in any capacity. “Agreement” means this Amended and Restated Limited Liability Company Agreement, as amended from time to time. This Agreement shall constitute a limited liability company agreement within the meaning of Section 18-101(7) of the Act. “Amended and Restated Property and Asset Management Agreement” means the Amended and Restated Property and Asset Management Agreement effective as of the effective date of this Agreement between the Company and the Property Manager. “Annual Management Fee” has the meaning set forth in Section 6.1. “Bankruptcy” means, with respect to any Person, if such Person (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged as bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties, or (vii) if one hundred twenty (120) days after the commencement of any proceeding against the Person seeking reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation, if the proceeding has not been dismissed, or if within ninety (90) days after the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator of such Person or of all or any substantial part of such Person’s properties, the appointment is not vacated or stayed, or within ninety (90) days after the expiration of any such stay, the appointment is not vacated. The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act. “Book Gain” means the excess, if any, of the fair market value of property over its adjusted basis for federal income tax purposes at the time a valuation of the property is required under this Agreement or Treasury Regulations Section 1.704-1(b) for purposes of making adjustments to the Capital Accounts. -2- 479251772.5050.101 “Book Loss” means the excess, if any, of the adjusted basis of property for federal income tax purposes over its fair market value at the time a valuation of property is required under this Agreement or Treasury Regulations Section 1.704-1(b) for purposes of making adjustments to the Capital Accounts. “Book Value” means the adjusted basis of property for federal income tax purposes increased or decreased by Book Gain, Book Loss, Built-In Gain and Built-In Loss as reduced by depreciation, amortization or other cost recovery deductions, or otherwise. “Built-In Gain (or Loss)” means the amount, if any, by which the agreed value of contributed property exceeds (or is lesser than) the adjusted basis of property contributed to the Company by a Member immediately after its contribution by such Member to the capital of the Company. “Capital Account” with respect to any Member (or such Member’s assignee) means such Member’s initial Capital Contribution adjusted as follows: (i) A Member’s Capital Account shall be increased by: (a) such Member’s share of Net Income; (b) any income or gain specially allocated to a Member and not included in Net Income or Net Loss; (c) any additional cash Capital Contribution (including an Additional Capital Contribution, as adjusted for any Additional Capital Shortfall pursuant to Section 3.2) made by such Member to the Company; and (d) the fair market value of any additional Capital Contribution (including an Additional Capital Contribution, as adjusted for any Additional Capital Shortfall pursuant to Section 3.2) consisting of property contributed by such Member to the capital of the Company reduced by liabilities assumed by the Company in connection with such contribution or to which the property is subject. (ii) A Member’s Capital Account shall be reduced by: (a) such Member’s share of Net Loss; (b) any deduction specially allocated to a Member and not included in Net Income or Net Loss; (c) any cash Distribution made to such Member; and (d) the fair market value, as agreed to by the Manager and the Members pursuant to a Majority Vote of the Members, of any property (reduced by liabilities assumed by the Member in connection with the Distribution or to which the distributed property is subject) distributed to such Member; provided that, upon liquidation and winding up of the Company, unsold property will be valued for Distribution at its fair market value, and the Capital Account of each Member before such Distribution shall be adjusted to reflect the allocation of gain or loss that would have been realized had the Company then sold the property for its fair market value. Such fair market value shall not be less than the amount of any non-recourse indebtedness that is secured by the property. Property other than money may not be contributed to the Company except as specifically provided in this Agreement. Property of the Company may not be revalued for purposes of calculating Capital Accounts unless the Manager and the Members pursuant to a Majority Vote of the Members agree on the fair market value of the property, and the Company complies with the requirements of Treasury Regulations Section 1.704-1(b)(2)(iv)(f) and (g); provided, however, that, for purposes of calculating Book Gain or Book Loss (but not for purposes of adjusting Capital Accounts to reflect the contribution and distribution of the property), the fair market value of property shall be deemed to be no less than the outstanding balance of any non-recourse indebtedness secured by such property. -3- 479251772.5050.101 The Capital Account of a Substituted Member shall include the Capital Account of his transferor. Notwithstanding anything to the contrary in this Agreement, the Capital Accounts shall be maintained in accordance with Treasury Regulations Section 1.704-1(b). References in this Agreement to the Treasury Regulations shall include corresponding subsequent provisions. “Capital Contribution” means the gross amount invested in the Company by a Member and shall be equal in amount to the purchase price paid by such Member for the Units sold to such Member by the Company. In the plural, “Capital Contributions” means the aggregate amount invested by all of the Members in the Company and shall equal, in total, the sum of the amounts attributable to the purchase of Units and the contributions of the Manager. “Capital Transaction” means any financing, refinancing, sale, exchange or other disposition or condemnation of, or casualty to, the Property. “Cash from Capital Transactions” means the net cash realized by the Company from any Capital Transaction after payment of all cash expenditures of the Company, including, without limitation, all fees payable to the Manager or Affiliates, all payments of principal and interest on indebtedness (if any) and such reserves and retentions as the Manager reasonably determines to be necessary and desirable in connection therewith. “Cash from Operations” means the net cash realized by the Company from any source other than a Capital Transaction, after payment of all cash expenditures of the Company, including, without limitation, all operating expenses, including all fees payable to the Manager or Affiliates, all payments of principal and interest on indebtedness (if any) and, as applicable, expenses for repairs and maintenance, capital improvements and replacements and such reserves and retentions as the Manager reasonably determines to be necessary and desirable in connection with Company operations with the Company’s then existing assets and anticipated acquisitions (if any). “Certificate of Formation” means the Certificate of Formation of the Company as filed with the Secretary of State of the State of Delaware on September 4, 2013, as amended by the Certificate of Amendment filed with the Secretary of State of the State of Delaware on May 14, 2015, as the same may be further amended or restated from time to time. “Code” means the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequently enacted federal revenue laws. “Company” means Compass Group Providence Square, LLC, a Delaware limited liability company. “Company Minimum Gain” means “partnership minimum gain” as set forth in Treasury Regulations Sections 1.704-2(d). “Distributable Cash” means Cash from Operations and Capital Contributions determined by the Manager to be available for Distribution. “Distribution” (whether or not capitalized, unless the context requires otherwise) means any money or other property transferred without consideration (other than repurchased Units) to Members or Owners with respect to their Units in the Company or to the Manager, including, without limitation, under Section 5.1, Section 5.2 and Section 13.5 (as applicable), but does not include payments to the Manager pursuant to Section 6. “Economic Interest” means an interest in the Net Income, Net Loss and Distributions of the Company but does not include any right to vote or to participate in the management of the Company. “Economic Interest Owner” means the owner of an Economic Interest who is not a Member. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. -4- 479251772.5050.101 “Event of Insolvency” has the meaning set forth in Section 9.2. “Initial Member” has the meaning set forth in the definition of the term “Successor Initial Member” set forth below herein. “Liquidation” means, in respect to the Company, the earlier of the date on which the Company is terminated under Section 708(b)(1) of the Code or the date on which the Company ceases to be a going concern (even though it may exist for purposes of winding up its affairs, paying its debts and distributing any remaining balance to its Members) and means, in respect to a Member, where the Company is not in Liquidation, the date on which occurs the termination of such Member’s entire interest in the Company by means of a Distribution or the making of the last of a series of Distributions (whether or not made in more than one year) to such Member by the Company. “Majority Vote of the Members” means the vote of Members owning more than fifty percent (50%) of the Units entitled to vote. Members shall be entitled to cast one (1) vote for each Unit that they own and a fractional vote for each fractional Unit that they own. “Manager” means Compass Group Providence Square Management, LLC, a Delaware limited liability company, in its capacity as a Manager of the Company. The term “Manager” also means any successor or additional Manager who is admitted to the Company as the Manager within the meaning of Section 18-101(10) of the Act. “Member” means any holder of a Unit who is admitted to the Company as a Member from time to time, in such Person’s capacity as a member of the Company. “Member Minimum Gain” means “partner non-recourse debt minimum gain” as determined under Treasury Regulations Section 1.704-2(i)(3). “Member Non-recourse Debt” means “partner non-recourse debt” as set forth in Treasury Regulations Section 1.704-2(b)(4). “Member Non-recourse Deductions” means “partner non-recourse deductions,” and the amount thereof shall be, as set forth in Treasury Regulations Section 1.704-2(i). “Membership Interest” means a Member’s entire limited liability company interest in the Company, including such Member’s Economic Interest and such voting and other rights and privileges that such Member may enjoy by being a Member. “Net Capital Contribution” of any Member means the excess, if any, of (i) the aggregate Capital Contributions of such Member over (ii) the aggregate Distributions to such Member. “Net Income” or “Net Loss” means, respectively, for each taxable year of the Company the taxable income and taxable loss (exclusive of Built-In Gain or Loss) of the Company as determined for federal income tax purposes in accordance with Section 703(a) of the Code (including all items of income, gain, loss or deduction required to be separately stated pursuant to Section 703(a)(1) of the Code) (other than any specific item of income, gain (exclusive of Built-In Gain), loss (exclusive of Built-In Loss), deduction or credit subject to special allocation under this Agreement), with the following modifications: (i) The amount determined above shall be increased by any income exempt from federal income tax; (ii) The amount determined above shall be reduced by all expenditures described in Section 705(a)(2)(B) of the Code or expenditures treated as such pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i); -5- 479251772.5050.101 (iii) Depreciation, amortization and other cost recovery deductions shall be computed based on Book Value instead of on the amount determined in computing taxable income or loss. Any item of deduction, amortization or cost recovery specially allocated to a Member and not included in Net Income or Net Loss shall be determined for Capital Account purposes in a similar manner; and (iv) For purposes of this Agreement, Book Gain and Book Loss attributable to a revaluation of property attributable to unrealized gain or loss in such property shall be treated as Net Income and Net Loss. “Non-recourse Debt” has the meaning set forth in Treasury Regulations Section 1.704-2(b)(3). “Non-recourse Deductions” has the meaning, and the amount thereof shall be, as set forth in Treasury Regulations Section 1.704-2(c). “Organization and Offering Expenses” means all expenses incurred in connection with the organization and formation of the Company, the preparation of offering materials and the marketing and sale of the Units, including, without limitation, legal, accounting and tax planning fees, promotional fees or expenses, filing and recording fees, market research and surveys, property inspections and research, engineering services, printing costs, securities sales commissions, travel expenses and other costs or expenses incurred in connection therewith. “Owner” means a Member or the holder of an Economic Interest. “Person” means any natural person or entity and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits. “Prime Rate” means the reference rate announced from time to time by The Wall Street Journal, and changes in the Prime Rate shall be deemed to occur on the date that changes in such rate are announced. “Property” means certain real property consisting of three (3) contiguous parcels, as more particularly described in Exhibit B attached hereto and incorporated herein, generally located at 430 West 2nd South, Rexburg, Idaho 83440, which currently is planned to be developed by constructing thereon a multi-family housing project that will consist of seventeen (17) 16-unit apartment buildings and one (1) 12-unit apartment building totaling 284 units designed with a focus on the needs of married students attending Brigham Young University – Idaho but also available to non-student families living in the local area, generally to be known as “Providence Square”. “Property Manager” means Compass Group Property Management, Inc., an Idaho corporation; provided, however, that, under the terms of the Amended and Restated Property and Asset Management Agreement, Compass Group Property Management, Inc. (“CGPM, Inc.”) has the right, in its discretion, at any time while the Amended and Restated Property and Asset Management Agreement is in effect, to assign the Amended and Restated Property and Asset Management Agreement (and all of CGPM, Inc.’s right, title and interest thereto and thereunder) to CGPM, Inc.’s parent entity, Sweetwater Property Management, LLC, an Idaho limited liability company, upon which event (if it occurs) and thereafter, “Property Manager” means and shall mean Sweetwater Property Management, LLC, an Idaho limited liability company. “Regulatory Allocations” means the allocations set forth in Sections 4.2(a) through (g). “Section 1031” means Section 1031 of the Code. “Securities Act” means the Securities Act of 1933, as amended. “Subscription Agreement” means the written agreement by which each Person desiring to become a Member shall evidence (i) the number of Units that such Person desires to acquire and (ii) such Person’s agreement to become a party to, and be bound by the terms of, this Agreement and be deemed a signatory hereto and (iii) certain representations regarding such Person’s finances and investment intent. “Substituted Member” means any Person admitted as a substituted Member pursuant to this Agreement. -6- 479251772.5050.101 “Successor Initial Member” means SWEETWATER PROPERTIES, LLC, an Idaho limited liability company, as successor in interest hereunder to COMPASS GROUP, LLC, an Idaho limited liability company, which was the “Initial Member” under the original Limited Liability Company Agreement of the Company that was effective as of September 18, 2013 and that was amended and restated effective as of February 4, 2016. “Tax Payment” has the meaning set forth in Section 4.11.1. “Treasury Regulations” means those regulations promulgated by the Secretary of the United States Department of the Treasury pursuant to the Code. “Unit” means a unit of Membership Interest (or Economic Interest) in the Company (as applicable). -7- 479251772.5050.101 EXHIBIT B TO AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT LEGAL DESCRIPTION OF THE PROPERTY Parcel 1: The East 259.50 feet of Lot 1 in Block 44 of the Original Rexburg Townsite, Madison County, Idaho, as per the recorded plat thereof; also, the East 259.50 feet of Lot 4 in Block 44 of the Original Rexburg Townsite, Madison County, Idaho, as per the recorded plat thereof; also all of Lot 1 in Block 4 of the Southend addition to the City of Rexburg, Madison County, Idaho, as per the recorded plat thereof. More particularly described as follows: Beginning at the Northeast corner of Lot 1, Block 44 of the Original Rexburg Townsite, Madison County, Idaho as per the recorded plat thereof and running thence South 00o00’00” West 660.00 feet to the Southeast corner of Lot 1 of Block 4 of the Southend Addition to the City of Rexburg, Madison County, Idaho as per the recorded plat thereof; thence North 90o00’00” West 330.00 feet to the Southwest corner, Lot 1, Block 4; thence North 00o00’00” East 165.00 feet to the Northwest corner of said Lot 1; thence North 90o00’00” East 70.50 feet; thence North 00o00’00” East 495.00 feet to the North line of Lot 1, Block 44; thence North 90o00’00” East 259.50 feet to the point of beginning. Contains 4.20 Acres. APN: #RPR00SE0044571 (1.256 acres); #RPRRXB10440015 (2.949 acres) Parcel 2: Lot 2 in Block 44 and the West 70.50 feet of Lot 1 in Block 44 of the Original Rexburg Townsite, Madison County, Idaho as per the recorded plat thereof; also, Lot 3 of Block 44 and the West 70.50 feet of Lot 4 in Block 44 of the Original Rexburg Townsite, Madison County, Idaho as per the recorded plat thereof. More particularly described as follows: Beginning at a point on the North line of Lot 1, Block 44 of the Original Rexburg Townsite, Madison County, Idaho as per the recorded plat thereof, that is North 90o00’00” West 259.50 feet from the Northeast corner of said Lot 1 and running thence South 00o00’00” West 495.00 feet to the South line of Lot 4, Block 44, said point falls on the North line of Lot 1, Block 4 of the Southend Addition to the City of Rexburg, Madison County, Idaho as per the recorded plat thereof; thence North 90o00’00” West 400.50 feet to the Southwest corner of Lot 3, Block 44, also shown as the Northwest corner of Lot 2, Block 4 of the Southend Addition to the City of Rexburg; thence North 00o00’00” East 495.00 feet to the Northwest corner of Lot 2, Block 44; thence North 90o00’00” East 400.50 feet to the point of beginning. Contains 4.142045 Acres. APN: #RPRRXB10440012; #RPRRXB10440021; # RPRRXB10440130. Parcel 3: Lot 2, Block 4 of Southend Addition to the City of Rexburg, Madison County, Idaho, as shown on the recorded plat thereof. More particularly described as follows: Beginning at a point that is S00o16’29”E 1319.99 feet and N89o43’31”E 45.62 feet from the Northwest corner of Section 30, Township 6 North, Range 40 East, Boise-Meridian, Madison County, City of Rexburg, Idaho; and running thence N89o45’08”E 297.81 feet; thence S00o28’04”E 165.02 feet; thence S89o45’06”W 298.36 feet; thence N00o16’29”W 165.02 feet to the point of beginning, containing 1.13 acres. Contains 1.13 Acres. APN: RPR00SE0044641.