===================================================================== STACK METHOD — DRAFT TEMPLATE — NOT LEGAL ADVICE — ATTORNEY REVIEW REQUIRED Provided "as is," for education only. No liability accepted. [BRACKETS] = fill in. Admitting a seller as a Member in exchange for value, and any pooling of investor money, can implicate SECURITIES law — engage securities counsel. ===================================================================== OPERATING AGREEMENT OF [PROPERTY LLC NAME], LLC (Capital-Contribution / "Stack" Structure) This Operating Agreement ("Agreement") of [PROPERTY LLC NAME], LLC, a [STATE] limited liability company (the "Company"), is effective [DATE] among the Members. 1. FORMATION & PURPOSE. The Company is formed under [STATE] LLC Act to acquire, hold, operate, and ultimately refinance the real property at [ADDRESS] (the "Property"). Manager-managed. 2. MEMBERS & INTERESTS (at formation): • [SPONSOR/BUYER ENTITY] — Managing Member — [95]% Membership Interest. • [SELLER NAME] — Non-Managing (Passive) Member — [5]% Membership Interest. 3. CAPITAL CONTRIBUTIONS. • Sponsor: services, deal sourcing, and/or $[__]. • Seller: the Seller Carry of $[CARRY], contributed as described in the Security Agreement (Doc 04), in exchange for the [5]% Interest and the Preferred Return / Redemption right in Sections 4 and 8. 4. SELLER'S ECONOMIC RIGHT (the carried balance). Notwithstanding the [5]% Interest, the Seller holds a [Preferred Capital Account / Redemption Right] equal to the unpaid Seller Carry of $[CARRY] [plus any agreed return], which the Company shall redeem/pay in full at the Balloon (Section 8). The [5]% is a protective interest, not the measure of what Seller is owed. 5. MANAGEMENT. The Managing Member controls day-to-day operations, the Senior Loan, leasing, and the Property. The Passive Member has no management authority but has the consent rights and protections below. 6. DISTRIBUTIONS (operating cash flow). After debt service, taxes, insurance, HOA, management, maintenance, and reserves, net cash flow is distributed [to the Managing Member / per Interests], except that Seller's agreed payments, if any (Doc 04, §3), are paid first. (Choose with counsel; default: operating cash flow to the operator; Seller's return is the Balloon redemption.) 7. PROTECTIVE COVENANTS & CONSENT RIGHTS (for the Passive Member). Until the Seller Carry is redeemed in full, the Company/Managing Member shall NOT, without the Seller's written consent: (a) place any lien or financing on the Property other than the Senior Loan and Seller's interest; (b) sell or transfer the Property except a refinance/sale that pays Seller in full; (c) make distributions that leave taxes, insurance, HOA, or the Senior Loan unfunded; (d) amend this Agreement in a way that impairs Seller's economic right or protections. 8. BALLOON / MANDATORY REDEMPTION. On or before [60-84] months from formation (the "Balloon Date"), the Company shall refinance the Property and pay the Seller's unpaid Carry in full. If the Property cannot refinance cleanly due to a Qualifying Event (vacancy/cash-flow shortfall, major casualty/repair, or a market/appraisal decline), the Balloon Date extends [24-36] months per the Balloon-Extension Addendum (Doc 12), during which the Company shall use commercially reasonable efforts to refinance and pay Seller. 9. DEFAULT — 60-DAY CURE → 100% TO SELLER. If the Company fails to pay any Obligated Payment (taxes, insurance, HOA, the Senior Loan, or an amount due to Seller) and does not cure within 60 days after written notice, then the Seller's Membership Interest automatically increases to 100% and the Managing Member's Interest is reduced to 0%, transferring full control and ownership of the Company to the Seller. Upon such transfer, the Seller takes the Company SUBJECT TO the then-outstanding Senior Loan and any permitted liens; the Seller's own Carry merges (it is no longer owed by the Company to the Seller). 10. TRANSFER RESTRICTIONS. No Member may transfer its Interest without [consent / right of first refusal], except the Managing Member may admit an assignee/end buyer who assumes all obligations to Seller (see Assignment, Doc 10). 11. PASSIVITY / LIABILITY. The Passive Member is not liable for Company debts beyond its interest and takes no part in management; the Managing Member owes the Passive Member the duties stated here. 12. TAX. The Company is taxed as a [partnership]. Each Member responsible for its own taxes; consult CPAs. Distributions intended to be tax-efficient are not guaranteed; no tax advice is given here. 13. DISSOLUTION. On sale/refinance paying all obligations, or by [unanimous] consent; assets distributed after liabilities (Senior Loan first, then Seller's Carry, then Members per Interests). 14. BUYER / SPONSOR (MANAGING MEMBER) PROTECTIONS (Doc 14 incorporated). Key items: (a) FULL CONTROL: Managing Member has sole, exclusive authority over operations, leasing, capital decisions, financing/refinancing, sale, distributions, and bank accounts (§5). No Seller consent for ordinary-course actions; Seller consent limited to the Protective Covenants in §7. (b) FEES: Managing Member/affiliates may earn a market asset-management fee of [__]% plus expense reimbursement, paid ahead of member distributions. (c) REFINANCE TIMING: Managing Member's sole discretion within the balloon and extension windows. (d) PROTECTIVE-ADVANCE PRIORITY: amounts advanced to cure the senior loan, taxes, insurance, or emergencies accrue [__]% and are repaid to the Managing Member with priority, ahead of the Seller's recovery. (e) DRAG-ALONG: on a sale/refinance paying the Seller's agreed amount in full, the Managing Member may require the Seller to consent/cooperate. (f) NO PARTITION / NO FORCED DISSOLUTION by the Passive Member. (g) TRANSFER: Managing Member may admit assignees/new members and transfer its interest; the Passive Member's transfer is restricted ([ROFR/consent]). (h) NON-RECOURSE to principals except standard carve-outs; limited member liability. (i) DISPUTES: mediation then binding arbitration in [VENUE]; prevailing-party fees; confidentiality and non-circumvention by the Passive Member. 15. INDEPENDENT ADVICE. Each Member acknowledges the right to, and is encouraged to, obtain independent legal and tax counsel before signing. 16. GENERAL. [STATE] law; entire agreement; amendments per Section 7(d); counterparts. Managing Member: ____________________ Date: ______ Passive Member (Seller): ____________________ Date: ______