LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF SECURED REAL ESTATE INCOME FUND II, LLC

LIMITED LIABILITY COMPANY

OF

SECURED REAL ESTATE INCOME FUND II, LLC

(a Delaware limited liability company)

 

THE LIMITED LIABILITY COMPANY INTERESTS ("INTERESTS") ISSUED PURSUANT TO THIS LIMITED LIABILITY COMPANY AGREEMENT ("AGREEMENT") HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. INTERESTS MAY NOT BE TRANSFERRED UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. IN ADDITION, TRANSFERS OF INTERESTS ARE SUBJECT TO THE RESTRICTIONS SET FORTH IN SECTION 5.4 OF THIS AGREEMENT.

TABLE OF CONTENTS

 

 

		Page
ARTICLE I.	DEFINITIONS	1
ARTICLE II.	FORMATION; BUSINESS; RIGHTS, POWERS AND AUTHORITY; STATUS ANDDURATION; PRINCIPAL OFFICE	1
ARTICLE III.	THE MANAGING MEMBER	2
ARTICLE IV.	MEMBERS	6
ARTICLE V.	INTERESTS	8
ARTICLE VI.	DISTRIBUTIONS TO AND WITHDRAWALS BY MEMBERS	14
ARTICLE VII.	CAPITAL ACCOUNTS; ALLOCATIONS	18
ARTICLE VIII.	RECORDS AND ACCOUNTING; REPORTS; CONFIDENTIALITY	21
ARTICLE IX.	EXCULPATION AND INDEMNIFICATION OF MANAGING MEMBER ASSOCIATES	25
ARTICLE X.	AMENDMENT; CONSENTS FOR OTHER PURPOSES	28
ARTICLE XI.	DISSOLUTION AND WINDING UP	30
ARTICLE XII.	MISCELLANEOUS	32

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

This Limited Liability Company Operating Agreement (this "Agreement") is entered into by and among SREIF MANAGER II, LLC, a Nevada limited liability company (the "Managing Member"), as the Managing Member of Secured Real Estate Income Fund II, LLC, a Delaware limited liability company (the "Company"), those members of the Company owning Membership Interests (as defined below) (each an "Investor" and collectively the "Investors"), and such other Persons who are admitted as Members of the Company or become Assignees of Interests in the Company, in each case pursuant to this Agreement.  This Agreement is effective commencing June 15, 2016.

ARTICLE I.

DEFINITIONS

Capitalized terms used in this Agreement have the meanings given them in ANNEX A.

ARTICLE II.

FORMATION; BUSINESS; RIGHTS, POWERS AND AUTHORITY; STATUS AND DURATION; PRINCIPAL OFFICE

(a) The Company is a separate legal entity whose existence commenced upon the filing of the Certificate and shall continue until the Certificate is canceled. The Liquidating Trustee shall cause the Certificate to be canceled at the time and in the manner prescribed by Section 18-203 of the Act.

(b) The existence shall commence upon the filing of the Certificate and continue until the completion of the winding up of the business and affairs in accordance with the provisions of Article XI.

ARTICLE III. THE MANAGING MEMBER

not of limitation, cause the Company to:

contractual claim by or against the Company;

(viii)   otherwise engage in any and all lawful transactions and activities; and

may not cause the Company to compensate any Managing Member Associate except upon terms and conditions comparable to those that would be negotiated on an "arm's length" basis between unaffiliated parties for the type of service or transaction in question (it being understood and agreed that all payments or allocations to the Managing Member or any of its Affiliates described or referred to in this Agreement shall conclusively be presumed to meet that standard).

Member's right to dissolve the Company pursuant to the provisions of Section 11.1.

Except to the extent otherwise required by law, no Managing Member Associate shall be personally liable for: (a) the repayment, satisfaction or discharge of any debt, liability, obligation or commitment of the Company whether arising in tort, contract or otherwise; (b) the repayment, to any Class A Member or Assignee of the Company, of any Capital Contribution of such Class A Member or Assignee; or (c) any decrease in the value of any Capital Account of any Class A Member or Assignee of the Company.

Managers.

In connection with the investment activities of the Company, the Managing Member shall employ the services of Good ▇▇▇▇▇▇▇ Capital Management, Inc (the "Investment Manager") to assist in the identification, due diligence, acquisition, investment management and disposition of Company Assets.  Pursuant to the terms of the Investment Management Agreement, the Investment Manager will be entitled to receive certain fees and expenses, which shall be payable from the Managing Member's share of Net Income and directed to the Investment Manager.  Each Member and Assignee shall be deemed to have: (a) given full and informed consent to each action and practice involving an actual or potential conflict between the interests of the Managing Member and the Investment Manager, on the one hand, and any one or more of the Company, the Class A Members and the Assignees, on the other hand; and (b) agreed not to object to any such action or practice, and not to bring or participate in bringing any Proceeding against any the Managing Member, any Managing Member Associate, the Investment Manager or the Company, on the grounds that such action or practice involves or involved a breach of the fiduciary duty of loyalty on the part of the Managing Member or any other Managing Member Associate, if: (i) such action or practice is described in this Agreement; (ii) such action or practice was described in the Offering Circular (if any) relating in effect at the time such Class A Member was admitted as a Class A Member or at the time such Assignee became an Assignee; or (iii) the Managing Member has given Notification to the Class A Members, at least thirty (30) calendar days prior to taking such action or implementing such practice, setting forth, in reasonable detail, all material facts relating to such action or practice.

Member described herein, any Person dealing with the Company shall be entitled to assume that the Managing Member has full right, power and authority to cause the Company to exercise or invoke any right, power, authority or privilege that a limited liability company formed under the Act may lawfully exercise or invoke, and no Person dealing with the Managing Member or any other Managing Member Associate shall be obligated to ascertain that the provisions of this Agreement have been complied with or to inquire into the necessity or expedience of any action of the Managing Member or any other Managing Member Associate.

ARTICLE IV. MEMBERS

discretion, may cause the Company to enter into an agreement with any Class A Member or Assignee whereby such Class A Member or Assignee agrees to waive any or all of such Class A Member's rights, powers and authority to authorize, approve, agree or consent to, or vote on, any matter or matters affecting the Company.

(a)

the Managing Member's continued breach of any material provision of the operating agreement following a period of 30 days after written notice thereof (or 45 days after written notice of such breach if the Managing Member, under certain circumstances, has taken steps to cure such breach within 30 days of the written notice);

(b)	the commencement of any proceeding relating to the bankruptcy or insolvency of the Managing Member, including an order for relief in an involuntary bankruptcy case or the Managing Member authorizing or filing a voluntary bankruptcy petition;

(c)

the Managing Member commits fraud against the Company, misappropriating or embezzling the Company's funds, or acting, or failing to act, in a manner constituting bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under the operating agreement; provided, however, that if any of these actions is caused by an employee, personnel and/or officer of the Managing Member or one of its affiliates and the Managing Member (or such affiliate) takes all necessary and appropriate action against such person and cures the damage caused by such actions within 30 days of the Managing Member's actual knowledge of its commission or omission, then the Managing Member may not be removed; or

(d)	the dissolution of the Managing Member.

Unsatisfactory financial performance of the Company does not constitute "Cause" under this Agreement.

4.5

Capital Contributions.

(b)

Closings.

(c)	Admissions of Additional Members.

 

ARTICLE V. INTERESTS

of Interests in the Company. The Interests shall be divided into two (2) classes, the Class B Interests, which shall be held exclusively by the Managing Member and the Class A Interests which shall be held by the Class A Members. Interests shall be deemed to be personal property giving only the rights, powers, authority, privileges and preferences provided in this Agreement, notwithstanding the nature of the property held by the Company.

Class A Member unless such admission is effected in accordance with Section 5.2(b) or Section 5.4(b)(ii)(A).

to be recorded on separate and distinct books and records of the Company. The Company shall not issue certificates certifying the ownership of Interests therein.

(i)	Duties and Liabilities of Transferors.

sole and absolute discretion, no Transfer of an Interest (or any interest therein) shall relieve the transferor

of its duties, liabilities and obligations under this Agreement.

(ii)	Rights, Duties and Liabilities of Transferees.

to whom an Interest (or an interest therein) is Transferred, whether or not such Assignee is admitted as a Member, shall, to the extent of such Interest (or interest therein), succeed to the duties, obligations and liabilities of the transferor under this Agreement.

Interest (or interest therein): (A) with respect to which the distribution record date determined by the Managing Member is before the date such Transfer is deemed to occur, shall be made to the transferor, and (B) with respect to which the distribution record date determined by the Managing Member is on or after the date such Transfer (other than a pledge, encumbrance, hypothecation or mortgage) is deemed to occur, shall be made to the transferee.

ARTICLE VI.  DISTRIBUTIONS TO AND WITHDRAWALS BY MEMBERS

pursuant to this Section 6.1(a)(i) equals the amount of their unpaid Class A Preferred Return;

ARTICLE VII. CAPITAL ACCOUNTS; ALLOCATIONS

All matters concerning the computation of Capital Accounts, the allocation of items of Company income, gain, loss, deduction and expense for all purposes of this Agreement and the adoption of any accounting procedures not expressly provided for by the terms of this Agreement shall be determined by the Managing Member in its discretion. Such determinations shall be final and conclusive as to all the Members. Without in any way limiting the scope of the foregoing, if and to the extent that, for income tax purposes, any item of income, gain, loss, deduction or expense of any Member or the Company is constructively attributed to, respectively, the Company or any Member, or any contribution to or distribution by the Company or any payment by any Member or the Company is recharacterized, the Managing Member may, in its discretion and without limitation, specially allocate items of Company income, gain, loss, deduction and expense and/or make correlative adjustments to the Capital Accounts of the Members in a manner so that the net amount of income, gain, loss, deduction and expense realized by each relevant party (after taking into account such special allocations) and the net Capital Account balances of the Members (after taking into account such special allocations and adjustments) shall, as nearly as possible, be equal, respectively, to the amount of income, gain, loss, deduction and expense that would have been realized by each relevant party and the Capital Account balances of the Members that would have existed if such attribution and/or recharacterization and the application of this sentence of this Section 7.4 had not occurred. Notwithstanding anything expressed or implied to the contrary in this Agreement, in the event the Managing Member shall determine, in its discretion, that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to effectuate the intended economic sharing arrangement of the Members, the Managing Member may make such modification.

ARTICLE VIII. RECORDS AND ACCOUNTING; REPORTS; CONFIDENTIALITY

information tax returns ("Tax Returns") to be prepared and timely filed (subject to the Managing Member's discretion to obtain extensions) with the appropriate authorities.

under the tax laws of the United States, the several states and other relevant jurisdictions ("Tax Laws") as to the treatment of Tax Items or any other method or procedure relating to the preparation of the Tax Returns.

(b) Exceptions to General Rule of Confidentiality. Notwithstanding the provisions of Section 8.6(a):

(i) A Member or Assignee may provide or disclose Confidential Information to its members, partners, shareholders, directors, officers and employees, to its financial, legal, tax and other advisors, and to such other Persons as the Managing Member may approve in its sole and absolute discretion (each of the foregoing, an "Authorized Person"), for any purpose reasonably related to its interest in the Company; provided, however, that such Member or Assignee notifies each such Authorized Person in writing of the restrictions set forth in this Section 8.6 and states in such writing, in a prominent fashion, that such Authorized Person, by receiving such Confidential Information, shall be deemed to have agreed to comply with such restrictions for the benefit of the Company and the Managing Member.

(d)	Rights of Managing Member.

provide service to the Company such information relating or its investments as the Managing Member determines to be necessary, appropriate, advisable, incidental or convenient to effect the formation or manage and conduct its business and affairs.

(e)	Proprietary Information of Managing Member.

ARTICLE IX. EXCULPATION AND INDEMNIFICATION OF MANAGING MEMBER ASSOCIATES

(a)	Notwithstanding any other provision of this Agreement:

Indemnitee is not entitled to be exculpated in respect of the related act or omission pursuant to the provisions of Section 9.1), the Company shall, to the fullest extent permitted by law, contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as is appropriate to reflect not only the relative benefits received by the Company, on the one hand, and such Indemnitee, on the other hand, but also the relative fault of the Company and such Indemnitee, as well as any other equitable considerations.

ARTICLE X. AMENDMENT; CONSENTS FOR OTHER PURPOSES

of any Class A Member or Assignee : (A) to add to the obligations of the Managing Member hereunder, or surrender any right, power or authority granted to the Managing Member hereunder, for the benefit of the Class A Members or Assignees thereof; (B) to provide, pursuant to Section 3.4 that any one or more Additional Managers may possess and exercise any one or more of the rights, powers and authority possessed by the Managing Member under this Agreement; (C) to change the name of the Company ; (D) to reflect the admission, substitution, and withdrawal of Class A Members and Assignees effected after the date hereof in accordance with this Agreement; (E) to reflect Capital Contributions and Capital Withdrawals effected after the date hereof in accordance with this Agreement; and (F) for such other purpose or purposes as the Managing Member may determine to be necessary, appropriate, advisable, incidental or convenient to the management and conduct of the business and affairs of the Company, provided that, in the Managing Member's judgment, no such amendment pursuant to this clause (G) has or could reasonably be expected to have a material adverse effect on the Company  or the Class A Members and Assignees thereof generally;

of any Class A Member or Assignee of the Company, to cause the Company to enter into an agreement with any Class A Member or Assignee thereof to waive or modify the application of any provision of this Agreement with respect to such Class A Member or Assignee, provided that, in the Managing Member's judgment, no such waiver or modification pursuant to this subparagraph (iii) has or could reasonably be expected to have a material adverse effect on the Company or the Class A Members and Assignees thereof generally;

of any Class A Member or Assignee of the Company, to: (A) cause the provisions of Article VII to comply with the provisions of Section 704 of the Code and applicable Treasury Regulations, (B) otherwise cause the Company  to comply with any requirement, condition or guideline contained in any federal, state, local or foreign law or in any order, directive, opinion, ruling or regulation of any Governmental Entity or self-regulatory organization, (C) qualify the Company  as (or to do business as) a limited liability company or a company in which Class A Members and Assignees have limited liability, under the laws of any State or other jurisdiction in which the Managing Member determines such qualification to be necessary or advisable, (D) prevent an Adverse Regulatory Effect, provided that the Managing Member takes such measures as are reasonably necessary to prevent any amendment pursuant to this Section 10.1(a)(iv) from having a material adverse effect on the Class A Members and Assignees thereof generally; or

at such time or times, to such extent and in such manner as may be required by the Act.

 

(b) The Managing Member, in its sole and absolute discretion, may cause theCertificate to be amended and/or restated in accordance with the principles set forth in Section 10.1, and any such amendment and/or restatement shall be effective immediately upon the filing of a certificate of amendment in the office of the Secretary of State of the State of Delaware or upon such future date as may be stated therein.

ARTICLE XI. DISSOLUTION AND WINDING UP

dissolved and gives Notification of such declaration to all Class A Members and Assignees;

Section 18-802 of the Act.

 

ARTICLE XII. MISCELLANEOUS

(b) To the extent not preempted by ERISA or the Securities and Commodities Laws, all provisions of this Agreement, the Certificate, the Subscription Agreements shall be governed by and construed, administered and enforced in accordance with the internal substantive laws of the State of Delaware without regard to "choice of law," "conflict of laws" or similar principals of the State of Delaware or any other jurisdiction. In applying the provisions of this Agreement, it is understood and agreed that, regardless of where this Agreement may be executed by a party hereto, this Agreement is executed and delivered by the parties pursuant to the Act, and that the parties intend that the provisions of this Agreement be given full force and effect pursuant to the principles set forth in Sections 18-1101 (b), (c) and (d) of the Act. Without limiting the scope of the preceding sentence, to the extent this Agreement modifies or nullifies any provision of the Act that would apply in the absence of such modification or nullification, as permitted by the Act (any such provision of the Act being referred to herein as a "default" provision), such modification or nullification shall apply in preference to such "default" provision.

(d) Wherever possible, each provision in this Agreement shall be construed in such a manner as to be valid, legal and enforceable under applicable law. It is the intention of the Parties that, in case any one or more of the provisions contained in this Agreement shall, for any reason, be found or held invalid, illegal or unenforceable to any extent in any jurisdiction, such provision shall be reformed in such jurisdiction to reflect the intent thereof to the greatest extent permitted by law and, to the extent not so reformed, shall be ineffective only in such jurisdiction and only to the extent of such invalidity, illegality or unenforceability without invalidating (i) the effect of such provision in any other jurisdiction or (ii) the effect of any other provision in that or any other jurisdiction, unless such a construction would be unreasonable. If the Managing Member shall determine, with the advice of reputable counsel, that any provision of this Agreement is in conflict with (A) the Securities and Commodities Laws or (B) other applicable laws, rules, regulations or orders, whether generally or in a particular application, the conflicting provision or such particular application thereof, as the case may be, shall not be deemed to constitute a part of this Agreement for so long as such conflict exists (provided, however, that such determination shall not affect any of the remaining provisions of this Agreement or any lawful application of any provision, or render invalid or improper any action taken or omitted prior to such determination). In construing the meaning or application of the Securities and Commodities Laws, the Managing Member may consider the effect of any applicable order or interpretive release issued by the Securities and Exchange Commission or the Commodity Futures Trading Commission, as the case may be, or any applicable "no action" or interpretive position issued by the staff of either such Commission, that modifies or interprets the Securities and Commodities Laws.

to be given to such provision.

(i) Except as otherwise stated in this Agreement, references in this Agreement to Articles, Sections and Annexes are to Articles, Sections and Annexes of this Agreement. The headings to Articles and Sections are for convenience of reference only and shall not be considered in construing this Agreement.

(j) Where appropriate, each definition and pronoun in this Agreement includes the singular and the plural, and reference to a particular gender includes each other gender. As used in this Agreement, the word "including" shall mean "including without limitation," and the word "or" is not exclusive.

(k) The express provisions of this Agreement control and supersede any course of performance or usage of the trade inconsistent with any of the provisions hereof.

EACH MEMBER AND ASSIGNEE AGREES NOT TO RAISE ANY OBJECTION TO VENUE IN THE COURTS OF THE STATE OF CALIFORNIA AND THE FEDERAL COURTS OF THE UNITED STATES, IN EACH CASE SITTING IN ORANGE COUNTY, CALIFORNIA, IN ANY PROCEEDING.

EACH MEMBER AND ASSIGNEE CONSENTS TO SERVICE OF PROCESS, SUMMONS OR NOTICE IN ANY PROCEEDING BY WAY OF NOTIFICATION THEREOF TO SUCH MEMBER OR ASSIGNEE BY REGISTERED OR CERTIFIED U.S. MAIL (FIRST CLASS POSTAGE PREPAID, RETURN RECEIPT REQUESTED).

12.3 Binding Effect. The provisions of this Agreement shall be binding upon the Members (including former Members), Assignees (including former Assignees) and their respective Personal Representatives and shall inure to the benefit of the Members (including former Members), Assignees (including former Assignees), Managing Member Associates (including former Managing Member Associates), Liquidating Trustee Associates (including former Liquidating Trustee Associates), and their respective Personal Representatives (the "Parties"); provided, however, that this Section 12.3 shall not be construed to limit the requirements or effect of any other provision of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Limited Liability Company Agreement as of the date first written above.

MANAGING MEMBER:

SREIF MANAGER II, LLC, a Nevada limited liability company

By:

MEMBERS:

Each Person hereafter admitted as a Member pursuant to the Managing Member's acceptance of such Person's Subscription Agreement or another document that has been duly executed by such Person in which such Person has agreed to be bound hereby as a Member.

ANNEX A

DEFINITIONS

"Account" or "Capital Account" of a Member is defined in Section 7.1.

"Accounting Period" – an Accounting Period as set forth in Section 8.2.

"Act" – the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101 et seq.

"Additional Manager" is defined in Section 3.4(b).

"Adverse Regulatory Effect" – means any of the following: (i) a violation by the Company or the Managing Member of any requirement, condition or guideline contained in any federal, state, local or foreign law or in any order, directive, opinion, ruling or regulation of any Governmental Entity or self-regulatory organization, (ii) the imposition of a requirement that the Company, the Company or the Managing Member comply with any requirement, condition or guideline contained in any federal, state, local or foreign law or in any order, directive, opinion, ruling or regulation of any Governmental Entity or self-regulatory organization, to which it is not subject as of the date of this Agreement; (iii) the termination ' classification as a partnership for federal income tax purposes, (iv) the Company being treated as a "publicly traded partnership" within the meaning of Section 7704 of the Code and applicable Treasury Regulations, (v) any of the assets of the Company being treated as Plan Assets, (vi) the imposition of a requirement on the Company  to register as an investment company under the 1940 Act; (vii) the imposition of a requirement on the Company  to comply with any provision of the 1940 Act (other than provisions applicable to a company that relies on Section 3(c)(1) of the 1940 Act, if the Company relies on that section, or Section 3(c)(7) of the 1940 Act, if the Company relies on that section), or (viii) the occurrence of any "prohibited transaction" (within the meaning of Section 406 of ERISA or Section 4975(c) of the Code).

"Advisers Act" – the Investment Advisers Act of 1940, as amended.

"Affiliate" of a specified Person – any Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.

"Agreed Value" of a Capital Contribution in a form other than cash – the value of such Capital Contribution as mutually agreed by the Managing Member and the Person that makes such Capital Contribution.

"Agreement" – this Second Amended and Restated Limited Liability Company Agreement (including the documents incorporated herein by reference pursuant to Section 12.1(a)), as amended and/or restated from time in accordance with Section 10.1.

"Assets" – all of the assets associated of the Company, including Investments and any accrued interest and dividends receivable in respect of such Investments; provided, however, that no value shall be placed on the name or goodwill of the Company, which shall be considered the exclusive property of the Managing Member.

"Assets Under Management" – All Company assets, including, but not limited to, Loans, Loan Interests and other Company investments, un-invested Capital Contributions, Company income, interest payments, Loan Payments and cash.

"Assignee" is defined in Section 5.4(b)(ii)(A).

"Authorized Person" is defined in Section 8.6(b)(i).

"Bankruptcy" of a Person – (i) such Person (A) makes an assignment for the benefit of creditors; (B) files a voluntary petition in bankruptcy; (C) is adjudged a bankrupt or insolvent, or has entered against it an order for relief, in any bankruptcy or insolvency proceeding; (D) files a petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (E) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding of such nature; or (F) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of such Person or of all or any substantial part of its properties; or (ii) one hundred and twenty (120) calendar days after the commencement of any proceeding against such Person seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, the proceeding has not been dismissed, or if within ninety (90) calendar 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 its properties, the appointment is not vacated or stayed, or within ninety (90) calendar days after the expiration of any such stay, the appointment is not vacated. Without limiting the scope of the foregoing, if a Person is a partnership, Bankruptcy of such Person shall also include the Bankruptcy of any general partner of such Person.

"Benefit Plan Investor" means, as defined in the Pension Protection Act of 2006 ("PPA 2006"),

(i) any employee benefit plan subject to Part 4 of Title I of ERISA (regarding fiduciary responsibility), (ii) any plan to which Section 4975 of the Code applies (including Individual Retirement Accounts, i.e. IRAs) and (iii) any entity whose underlying assets include plan assets by reason of a plan's investment in such entity. For purposes of (iii) above, an entity's underlying assets will include plan assets if immediately after the most recent acquisition or disposition of any equity interest in such entity, 25% or more of a class of such entity's "equity interests" are owned by Benefit Plan Investors and such "equity interests" are not "publicly-offered securities" (as the terms "equity interests" and "publicly-offered securities" are used in Department of Labor ("DOL") Regulation 29 CFR §2510.3-101 and as subsequently modified by PPA 2006); provided that an entity which is primarily engaged, directly or through a majority owned subsidiary or subsidiaries, in the production or sale of a product or service other than the investment of capital shall not be considered a Benefit Plan Investor. Benefit Plan Investors include, by way of example and not of limitation, corporate pension and profit sharing plans, "simplified employee pension plans," ▇▇▇▇▇ plans for self-employed individuals (including partners), individual retirement accounts, and certain bank commingled trust funds, or insurance company separate accounts, for such plans and accounts. Notwithstanding anything herein to the contrary, whether an entity is a Benefit Plan Investor shall be determined under the rules set forth in DOL Regulation 29 CFR §2510.3- 101, but only to the extent such regulations are not inconsistent with PPA 2006 and only until such time as the DOL issues new regulations consistent with PPA 2006, at which time, such superseding regulations shall control the determination of Benefit Plan Investor.

"Book/Tax Disparity" of a Member or Assignee – the difference between the (aggregate) balance of such Member's or Assignee's Capital Account and the balance of such Member's or Assignee's Tax Basis Capital Account.

"Book Value" - with respect to any Investment, the asset's adjusted basis for federal income tax purposes, except that the Book Values of all Investments shall be adjusted to equal their respective Fair Market Values, in accordance with the rules set forth in Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations, except as otherwise provided herein, immediately prior to: (a) the date of the acquisition of any additional Interest by any new or existing Partner in exchange for more than a de minimis Capital Contribution; (b) the date of the actual distribution of more than a de minimis amount of Company property (other than a pro rata distribution) to a Member; or (c) the date of the actual liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; provided that adjustments pursuant to clauses (a) and (b) above shall be made only if the Managing Member determines in its sole discretion that such adjustments are necessary or appropriate to reflect the relative economic interests of the Partners. The Book Value of any Company Investment distributed to any Member shall be adjusted immediately prior to such distribution to equal its Fair Market Value. The Book Value of any Investment shall be adjusted to reflect any write-down which constitutes a Disposition.

"Business Day" – for purposes of this Agreement (excluding, for this purpose, any Authorizing Resolution or other document incorporated by reference herein), means any day that is not a Saturday or Sunday and is not a legal holiday or day on which banking institutions generally are authorized or obligated by law or regulations to remain closed in New York, California or Nevada.

"Capital Contribution" the amount of money (or, if the Managing Member determines in its sole and absolute discretion in any particular case that a contribution of capital may be made in whole or in part in the form of property other than cash, the Agreed Value of such other property, net of any liability secured by such property) contributed by a Person to the capital of the Company (including any reinvested amounts of allocated Net Income), less the amount of any sales charge deducted from such contribution and paid to another Person.

"Capital Withdrawal" from a Capital Account – any distribution of cash or other property from such Capital Account to the Member or Assignee who holds such Account and any withdrawal of cash or other property from such Capital Account (if allowed by the Managing Member), pursuant to this Agreement (including distributions pursuant to the provisions of Article 11). Each Capital Withdrawal from a Capital Account shall be deemed to be effected as of the end of the Accounting Period, notwithstanding that a distribution in connection with such Capital Withdrawal is made after the end of such Accounting Period. For the avoidance of doubt, a distribution shall not include any amount constituting reasonable compensation for present or past services. The amount of a Capital Withdrawal from a Capital Account shall be the amount of cash distributed in connection with such withdrawal (to the extent cash is distributed in connection with such withdrawal) plus the net value of any assets associated that are distributed in connection with such withdrawal (to the extent assets associated are distributed in connection with such withdrawal).

"CE Act" – the Commodity Exchange Act, as amended.

"Certificate" – the Certificate of Formation of the Company as originally filed in the office of the

Secretary of State of the State of Delaware and as subsequently amended and/or restated from time to

time in accordance with this Agreement and the Act.

"Class A Interest" means an Interest that has been designated as Class A.

"Class B Interest" means an Interest that has been designated as Class B.

"Class A Member" means a Member holding a Class A Interest.

"Class B Member" means the Managing Member as the sole holder of the Class B Interests.

"Class A Preferred Return" is an amount equal to eight percent (8%) per annum of the total amount of unreturned Capital Contributions (including reinvested Net Income) from the inception date of a Member's initial Capital Contribution.

"Class Percentage" means, for any Member of a Class, a fraction, expressed as a percentage, the numerator of which fraction shall be the Capital Account balance of such Member and the denominator of which fraction shall be the total Capital Account balance of all Members of the Class, as may be amended from time to time upon the transfer, issuance or redemption of Interests in the Company accordance with this Agreement.

"Code" – the Internal Revenue Code of 1986, as amended.

"Confidential Information" is defined in Section 8.6(a).

"Company" – Secured Real Estate Income Fund II, LLC, the Delaware limited liability company whose formation was completed upon the filing of the Certificate and whose business and affairs shall be governed by this Agreement.

"Control" – when used with respect to a particular Person, means the possession, directly or

indirectly, of the power to direct or cause the direction of the management and policies of such Person,

whether through the ownership of voting securities, by contract or otherwise.

"Disposition" – the sale, exchange, redemption, assignment, transfer, repayment, repurchase or other disposition by the Company of all or any portion of a Company Investment. A Disposition shall be deemed to include a Company Investment becoming worthless within the meaning of section 165(g) of the Code or written down in accordance with GAAP to reflect an impairment in value that in the good faith judgment of the Managing Member is permanent (to the extent of any such write-down only).

"Entity" – any domestic or foreign corporation, partnership (whether general or limited), joint

venture, limited liability company, business trust, trust, estate, custodian, Governmental Entity,

cooperative or other entity, or any unincorporated association or organization or account, whether acting

in an individual or representative capacity.

"ERISA" – the Employee Retirement Income Security Act of 1974, as amended.

"Fair Market Value" – (a) as to any Loan or Loan Interest, the outstanding amount of unpaid principal plus any accrued by unpaid interest and fees on such date of valuation, and (b) as to any other property on any date, the fair market value of such property on such date as determined by an independent appraisal firm selected by the Managing Member or as otherwise determined in good faith by the Managing Member.

"Fiscal Quarter" – a fiscal quarter of a fiscal year.

"Fiscal Year" – the fiscal year is the calendar year ending on December 31^st.

"Governmental Entity" – any federal, state, local or foreign government (or political subdivision, department, instrumentality, body or agency thereof).

"Indemnification Obligation" – an obligation of the Company to indemnify an Indemnitee, advance expenses of an Indemnitee or provide contribution with respect to an Indemnitee, as the case may be, pursuant to Article 9.

"Indemnitee" is defined in Section 9.2(a).

"Initial Closing" the first day on which the Company admits a Person (other than the Managing Member) as a Member thereof pursuant to this Agreement.

"Interest" means a "limited liability company interest" (as such term is defined in Section 18‑101(8) of the Act) in the Company, including any and all rights and benefits to which the holder of such an interest may be entitled as provided in this Agreement and any applicable supplement and/or addendum hereto (e.g., right to receive distributions of Company assets and allocations of income, gain, loss, deduction, credit and similar items from the Company), together with all obligations of such holder to comply with the terms and provisions of this Agreement and any applicable supplement and/or addendum hereto.  The Interests shall include both "Class A Interests" and "Class B Interests".

"Investment" means, as appropriate, any investment made by the Company in a Loan or Loan Interest.

"Investment Company Act" means the U.S. Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.

"Investment Manager" means Good ▇▇▇▇▇▇▇ Capital Management, Inc.

 "Investment Management Agreement" means that certain agreement between the Company, the Managing Member and the Investment Manager relating to the investment management of the Company.

"Investment Period" –the period commencing upon the Initial Closing date in which the Company receives the Minimum Investment Amount and ending upon winding up of the Company.

"Judicially Determined" – determined in a judgment or order, not subject to further appeal or discretionary review, by a court, governmental body or agency or self-regulatory organization having jurisdiction to render or issue such judgment or order.

"Liabilities" (i) all of the Company's bills and accounts payable; (ii) all of the Company's accrued or payable expenses described in Section 5.5; and (iii) all of the Company's other liabilities, present or future, including any Reserves.

"Liquidating Trustee" is defined in Section 11.2(a).

"Liquidating Trustee Associate" – the Liquidating Trustee, any Affiliate of the Liquidating Trustee, and any member, partner, shareholder, other beneficial owner, manager, director, officer, employee or agent of the Liquidating Trustee or any such Affiliate and their Personal Representatives.

"Losses" is defined in Section 9.2(a).

"Loan" means a loan extended, originated or purchased by the Company, which loan consists of the Note, the security instrument (deed of trust, mortgage, security deed or security agreement), personal and corporate guarantees and such other documentation evidencing the extension of money to a borrower and the securing of the collateral.

"Loan Interests" means a whole, fractional or participation interest in a Loan.

"Majority in Interest" of the Members as of the beginning of an Accounting Period (other than Members who are also Managing Member Associates) the Opening Balances of whose Capital Accounts at such time exceed fifty percent (50%) of the Opening Balances of the Capital Accounts at such time of all Members (other than Members who are also Managing Member Associates).

"Manager" means a "manager" within the meaning of Section 18-101(10) of the Act.

"Managing Member" – SREIF MANAGER II, LLC and any Additional Manager that acts as the Manager of the Company, to the extent that the Managing Member, pursuant to Section 3.4(c), provides that such Additional Manager shall possess any one or more of the rights, powers and authority of SREIF MANAGER II, LLC in its capacity as a Manager of the Company under this Agreement.

"Managing Member Associate" – the Managing Member, each Affiliate of the Managing Member, each member, partner, shareholder, other beneficial owner, manager, director, officer, employee

or agent of the Managing Member or any such Affiliate, and the Personal Representatives of each of the foregoing.

"Member"  as of a particular time – a Person who has been admitted as a Class A Member in accordance with this Agreement and who has not, pursuant to this Agreement, (i) withdrawn all amounts from its Capital Account, (ii) resigned or withdrawn as a Class A Member, (iii) been required to withdraw as a Class A Member or (iv) assigned its entire Interest to a substitute Class A Member pursuant to Section 5.4(b)(ii)(A).

"Offering Circular" the Offering Circular filed as Part II of Form 1A filed with the Securities and Exchange Commission as in effect at the time of the Initial Closing (if any), together with (i) any amendment(s) thereto and (ii) any supplement(s) thereto, prepared by or under the direction of the Managing Member describing the Company, the Managing Member and the offer and sale of Interests.

"Minimum Investment Amount" $5,000.

"Minimum Capital Amount" $500,000.

"Net Asset Value" at a particular time – the value of the Investments and other assets at such time minus the amount of the Company' liabilities at such time (in each case determined in accordance with generally accepted accounting principles consistently applied (except as provided in this Agreement or the Offering Circular (if any) and Section 8.3). For purposes of determining Net Asset Value, the value of a Loan Interest will at all times be equal to the amount of principal, plus any accrued but unpaid interests and fees due and owing on a performing Loan Interest on the date of valuation.  Loan Interests that are in default for periods of more than three (3) months, shall be considered non-performing and shall be valued in connection with the Company's annual audit or as otherwise valued by the Managing Member.  In the event that the Company acquires Non-Performing Loan Interests, then the value of such Loan Interests shall be the cost basis plus accrued but unpaid interest thereon.  Real estate owned as a result of a foreclosure and all other Company Investments other than Loan Interests shall be assessed a value by the Managing Member or Investment Manager using acceptable valuation methods no less than annually and shall maintain such valuation until adjusted by virtue of a subsequent appraisal, valuation event or the liquidation of the asset. The value of each Company Investment and the Company's Net Asset Value as determined above will be conclusive and binding on all of the Partners and all parties claiming through or under them.

"Net Income" with respect to the Company, the income generated with respect to the Company's Investments, less any Company Liabilities associated with such Investments.

"1940 Act" – the Investment Company Act of 1940, as amended.

"1934 Act" – the Securities Exchange Act of 1934, as amended.

"1933 Act" – the Securities Act of 1933, as amended.

"Non-Performing Loan Interest" – a Loan Interest which has been in default pursuant to the terms thereof for a period of more than three (3) months.

"Notification" to a Person – a written notice that is deemed to be duly given to such Person on: (i) the date of delivery, if delivered by hand to such Person or sent to such Person by facsimile transmission (provided confirmation of receipt thereof is obtained) or reputable overnight courier; or (ii) the date indicated as the date of receipt on the return receipt, if mailed to such Person by U.S. registered or certified mail (first class postage prepaid), return receipt requested. Any Notification required or permitted to be given to the Managing Member or the Company shall be sent to the principal office of the Company, or to such other address or facsimile number as the Managing Member may specify in a Notification given to all other Members and Assignees. Any Notification required or permitted to be given to any other Member or Assignee shall be sent to such Member or Assignee at such address or to such facsimile number as such Member or Assignee may notify the Company by way of a Notification (it being understood and agreed that a Subscription Agreement, duly executed by a Person who subscribes for a Company Interest pursuant thereto, shall constitute a Notification by such Person of its address and facsimile number).

"Party" is defined in Section 12.3.

"Person" – any natural person, whether acting in an individual or representative capacity, or any Entity.

"Personal Representative" is defined in Section 18-101(13) of the Act.

"Plan Assets" – money or other property in which a Benefit Plan Investor is deemed to have an ownership interest for purposes of ERISA or Section 4975 of the Code.

"Proceeding" – any claim, demand, action, suit or proceeding (including any action by or in the right of the Company), civil, criminal, administrative or investigative, brought by or before (or threatened to be brought by or before) any court, arbitrator, mediator, governmental body or agency or self-regulatory organization, that directly or indirectly arises from or relates to this Agreement, the business or affairs of the Company or a Member's or Assignee's investment.

"Proprietary Information" is defined in Section 8.6(e)(i).

"Regular Income Distribution" is defined in Section 6.1(b).

"Required Records" is defined in Section 8.1(a).

"Reserves" is defined in Section 8.3(d).

"Securities and Commodities Laws" – any one or more of the Advisers Act, the 1933 Act, the 1934 Act, the 1940 Act and the CE Act, to the extent each is applicable to the Managing Member or the Company.

"Subscription Agreement" of a Person – the Subscription Agreement and Power of Attorney (and related documents) in such form or forms as the Managing Member may from time to time determine, as completed and executed by such Person and delivered by such Person to the Company, pursuant to which such Person (i) subscribes for an Interest by agreeing to contribute capital in such amount or amounts, at such time or times and otherwise in such manner as may be set forth therein; and (ii) agrees to be bound by this Agreement as a Member.

"State" is defined in Section 18-101(14) of the Act.

"Subsequent Closing" any closing that takes place after the Initial Closing.

"Target Investment Amount" $50,000,000 or such other amount set forth in the Offering Circular.

"Tax Item" – any item of income, gain, expense, deduction, loss or credit allocable to Members and Assignees for federal income tax purposes.

"Tax Laws" is defined in Section 8.5(b).

"Tax Returns" is defined in Section 8.5(a).

"Transfer" of an Interest or an interest therein – (i) any transaction in which a Person assigns or purports to assign an Interest, or an interest therein, to another Person, and includes: (A) any transfer, sale, assignment, gift, exchange, pledge, mortgage or hypothecation of an Interest, or any interest therein; (B) the creation or granting of a security interest, lien or encumbrance in, on or against an Interest, or any interest therein; or (C) any other conveyance or disposition of an Interest, or an interest therein, whether voluntary, involuntary or by operation of law; and (ii) any agreement, including a structured note or swap transaction, under which a Member or Assignee agrees to: (A) grant any other Person an economic interest in such Member's or Assignee's Capital Account or (B) pay any person an amount determined in whole or in substantial part by reference to the change in value of a Capital Account or to the performance of the Company.

"Treasury Regulations" – the income tax regulations promulgated under the Code, whether in proposed, temporary or final form.

"Withdrawal Date" in respect of a Capital Account – the date as of which a Capital Withdrawal is effected from such Account.

EXHIBIT A

REDEMPTION NOTICE

This Redemption Notice ("Redemption Notice") is made this ___ day of _____________, 20___, by ________________________ (the "Redeemed Investor"), and directed to SREIF Manager II, LLC, a Nevada limited liability company ("Company").

This Redemption Notice is executed with reference to the following:

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Redeemed Investor acknowledges and agrees as follows.

IN WITNESS WHEREOF, the Redeemed Investor has caused this Redemption Notice to be executed and delivered by their duly authorized representative.

Dated:  _____________, 20___

Redeemed Investor:

Signed: _________________________

Printed: _________________________