Exhibit 10.1

 

 

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

OF

 

HCP DR MCD, LLC,

 

a Delaware limited liability company

 

Dated as of February 9, 2007

 

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE I. DEFINED TERMS

 

1

 

 

 

ARTICLE II. ORGANIZATIONAL MATTERS

 

21

 

 

 

 

 

2.1

Formation

 

21

 

2.2

Name

 

21

 

2.3

Registered Office and Agent; Principal Place of Business; Other Places of
Business

 

21

 

2.4

Power of Attorney

 

22

 

2.5

Term

 

23

 

 

 

 

ARTICLE III. PURPOSE

 

23

 

 

 

 

 

3.1

Purpose and Business

 

23

 

3.2

Powers

 

23

 

3.3

Specified Purposes

 

24

 

3.4

Representations and Warranties by the Members; Disclaimer of Certain
Representations

 

24

 

 

 

 

ARTICLE IV. CAPITAL CONTRIBUTIONS

 

27

 

 

 

 

4.1

Capital Contributions of the Initial Members

 

27

 

4.2

Additional Members

 

27

 

4.3

Loans and Incurrence and Payment of Debt

 

27

 

4.4

Additional Funding and Capital Contributions

 

28

 

4.5

No Interest; No Return

 

29

 

 

 

 

ARTICLE V. DISTRIBUTIONS

 

29

 

 

 

 

 

5.1

Requirement and Characterization of Distributions

 

29

 

5.2

Distributions in Kind

 

30

 

5.3

Amounts Withheld

 

30

 

5.4

Distributions Upon Liquidation

 

31

 

5.5

Restricted Distributions

 

31

 

5.6

Distributions of Proceeds from Sale of Properties and Refinancing Debt

 

31

 

5.7

Distributions Following Redemption

 

33

 

 

 

 

ARTICLE VI. ALLOCATIONS

 

33

 

 

 

 

6.1

Timing and Amount of Allocations of Net Income and Net Loss

 

33

 

6.2

General Allocations

 

33

 

6.3

Additional Allocation Provisions

 

35

 

6.4

Tax Allocations

 

37

 

6.5

Other Provisions

 

37

 

6.6

Amendments to Allocation Reflect Issuance of Additional Membership Interests

 

38

 

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ARTICLE VII. MANAGEMENT AND OPERATION OF BUSINESS

 

38

 

 

 

 

 

7.1

Management

 

38

 

7.2

Certificate of Formation

 

42

 

7.3

Restrictions on Managing Member’s Authority

 

42

 

7.4

Compensation of the Managing Member

 

48

 

7.5

Other Business of Managing Member

 

49

 

7.6

Contracts with Affiliates

 

49

 

7.7

Indemnification

 

50

 

7.8

Liability of the Managing Member

 

52

 

7.9

Other Matters Concerning the Managing Member

 

52

 

7.10

Title to Company Assets

 

53

 

7.11

Reliance by Third Parties

 

53

 

 

 

 

ARTICLE VIII. RIGHTS AND OBLIGATIONS OF MEMBERS

 

54

 

 

 

 

 

8.1

Limitation of Liability

 

54

 

8.2

Managing of Business

 

54

 

8.3

Outside Activities of Members

 

54

 

8.4.

Return of Capital

 

55

 

8.5

Rights of Non-Managing Members Relating to the Company

 

55

 

8.6

Redemption Rights

 

56

 

 

 

 

ARTICLE IX. BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

58

 

 

 

 

 

9.1

Records and Accounting

 

58

 

9.2

Fiscal Year

 

59

 

9.3

Reports

 

59

 

9.4

Cooperation Regarding Tax Matters Relating to Contributed Property

 

59

 

 

 

 

ARTICLE X. TAX MATTERS

 

60

 

 

 

 

 

10.1

Preparation of Tax Returns

 

60

 

10.2

Tax Elections

 

60

 

10.3

Tax Matters Partner

 

60

 

10.4

Organizational Expenses

 

61

 

 

 

 

ARTICLE XI. TRANSFERS AND WITHDRAWALS

 

61

 

 

 

 

 

11.1

Transfer

 

61

 

11.2

Transfer of Managing Member’s Membership Interest

 

61

 

11.3

Non-Managing Members’ Rights to Transfer

 

62

 

11.4

Substituted Members

 

64

 

11.5

Assignees

 

64

 

11.6

General Provisions

 

65

 

 

 

 

 

ARTICLE XII. ADMISSION OF MEMBERS

 

66

 

 

 

 

12.1

Admission of Initial Non-Managing Members

 

66

 

12.2

Admission of Successor Managing Member

 

67

 

12.3

Admission of Additional Members

 

67

 

12.4

Amendment of Agreement and Certificate

 

68

 

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12.5

Limitation on Admission of Members

 

68

 

 

 

 

ARTICLE XIII. DISSOLUTION, LIQUIDATION AND TERMINATION

 

68

 

 

 

 

 

13.1

Dissolution

 

68

 

13.2

Redemption of Non-Managing Member Units

 

69

 

13.3

Winding Up

 

69

 

13.4

Deemed Contribution and Distribution

 

71

 

13.5

Rights of Members

 

71

 

13.6

Notice of Dissolution

 

71

 

13.7

Cancellation of Certificate

 

71

 

13.8

Reasonable Time for Winding-Up

 

71

 

13.9

Liability of Liquidator

 

72

 

 

 

 

ARTICLE XIV. PROCEDURES FOR ACTIONS AND CONSENTS OF MEMBERS; AMENDMENTS;
MEETINGS

 

72

 

 

 

 

 

14.1

Procedures for Actions and Consents of Members

 

72

 

14.2

Amendments

 

72

 

14.3

Meetings of the Members; Written Consent Without a Meeting

 

72

 

 

 

 

ARTICLE XV. GENERAL PROVISIONS

 

73

 

 

 

 

 

15.1

Addresses and Notice

 

73

 

15.2

Titles and Captions

 

74

 

15.3

Pronouns and Plurals

 

74

 

15.4

Further Action

 

74

 

15.5

Binding Effect

 

74

 

15.6

Creditors

 

74

 

15.7

Waiver

 

74

 

15.8

Counterparts

 

74

 

15.9

Applicable Law

 

75

 

15.10

Entire Agreement

 

75

 

15.11

Invalidity of Provisions

 

75

 

15.12

No Partition

 

75

 

15.13

Uniform Commercial Code Article 8 (Opt-In)

 

75

 

 

 

 

 

Exhibit A

Member Information

 

A-1

Exhibit B

Notice of Redemption

 

B-1

Exhibit C

Form of Joinder Agreement

 

C-1

Exhibit D

Example of Certain Calculations Pursuant to Section 5.6.C

 

D-1

Exhibit E

Form of Bottom Dollar Guarantee

 

E-1

Exhibit F-1

Form of Managing Member Note

 

F-1-1

Exhibit F-2

Form of Managing Member Note (Subordinate Note)

 

F-2-1

 

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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
HCP DR MCD, LLC

 

THIS LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) is made and entered
into as of February 9, 2007, by and among Health Care Property Investors, Inc.,
a Maryland corporation (the “Managing Member”), and the Persons whose names are
set forth on Exhibit A attached hereto as “Non-Managing Members” (collectively,
the “Non-Managing Members,” and together with the Managing Member, the
“Members”), for the purpose of forming HCP DR MCD, LLC, a Delaware limited
liability company (the “Company”).

 

RECITALS

 

A.                                   The Managing Member, the Company and
Medical City Dallas Limited Partnership, a Texas limited partnership
(“Contributor”) entered into that certain Contribution Agreement and Joint
Escrow Instructions dated as of February 6, 2007 (the “Contribution Agreement”),
providing, among other things, for the contribution of certain assets to, and
the acquisition of certain interests in, the Company.

 

B.                                     The Contributor has, in accordance with
the limited partnership agreement of Contributor and subject to the terms of the
Contribution Agreement, concurrent with the Effective Date (as hereinafter
defined) distributed and assigned to its constituent partners all or a portion
of Contributor’s rights to receive Non-Managing Member Units pursuant to and in
accordance with Sections 4.1 and 12.1 hereof.

 

C.                                     It is a condition to the closing of the
transactions contemplated by the Contribution Agreement that the Members enter
into this Agreement, and the Members desire to adopt this Agreement in
accordance with the Act.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto hereby
agree as follows:

 

ARTICLE I.
DEFINED TERMS

 

The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.

 

“Accounting Firm” has the meaning set forth in Section 7.3H hereof.

 

“Act” means the Delaware Limited Liability Company Act, as it may be amended
from time to time, and any successor to such statute.

 

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“Actions” has the meaning set forth in Section 7.7 hereof.

 

“Additional Funds” has the meaning set forth in Section 4.4A hereof.

 

“Additional Member” means a Person admitted to the Company as a Member pursuant
to Section 4.2 hereof.

 

“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:

 

(a)                                  decrease such deficit by any amounts that
such Member is obligated to restore pursuant to this Agreement or by operation
of law upon liquidation of such Member’s Membership Interest or is deemed to be
obligated to restore pursuant to Regulation Section 1.704-1(b)(2)(ii)(c) or the
penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and

 

(b)                                 increase such deficit by the items described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

 

The foregoing definition of “Adjusted Capital Account Deficit” is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.

 

“Adjustment Factor” means 1.0; provided, however, that: (a) in the event that
the Managing Member (i) declares or pays a dividend on its outstanding REIT
Shares in REIT Shares or makes a distribution to all holders of its outstanding
REIT Shares in REIT Shares, (ii) splits or subdivides its outstanding REIT
Shares or (iii) effects a reverse stock split or otherwise combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Adjustment
Factor shall be adjusted by multiplying the Adjustment Factor in effect
immediately prior to such adjustment by a fraction, (1) the numerator of which
shall be the number of REIT Shares issued and outstanding on the record date for
such dividend, distribution, split, subdivision, reverse split or combination
(assuming for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has occurred as of such time) and
(2) the denominator of which shall be the actual number of REIT Shares issued
and outstanding on the record date for such dividend, distribution, split,
subdivision, reverse split or combination (assuming for such purposes that such
dividend, distribution, split, subdivision, reverse split or combination has not
occurred as of such time) ; (b) the Managing Member distributes any rights,
options or warrants to all holders of its REIT Shares to subscribe for or to
purchase or to otherwise acquire REIT Shares (or other securities or rights
convertible into, exchangeable for or exercisable for REIT Shares) at a price
per share less than the Value of a REIT Share on the record date for such
distribution (each a “Distributed Right”), then the Adjustment Factor shall be
adjusted by multiplying the Adjustment Factor previously in effect by a
fraction, (i) the numerator of which shall be the number of REIT Shares issued
and outstanding on the record date plus the maximum number of REIT Shares
purchasable under such Distributed Rights and (ii) the denominator of which
shall be the number of REIT Shares issued and outstanding on the record date
plus a fraction, (1) the numerator of which is the maximum number of REIT Shares

 

2

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purchasable under such Distributed Rights times the minimum purchase price per
REIT Share under such Distributed Rights and (2) the denominator of which is the
Value of a REIT Share as of the record date; provided, however, that, if any
such Distributed Rights expire or become no longer exercisable, then the
Adjustment Factor shall be adjusted, effective retroactive to the date of
distribution of the Distributed Rights, to reflect a reduced maximum number of
REIT Shares or any change in the minimum purchase price for the purposes of the
above fractions; and (c) the Managing Member shall, by dividend or otherwise,
distribute to all holders of its REIT Shares evidences of its indebtedness or
assets (including securities, but excluding any dividend or distribution
referred to in subsection (a) above), which evidences of indebtedness or assets
relate to assets not received by the Managing Member pursuant to a pro rata
distribution by the Company, then the Adjustment Factor shall be adjusted to
equal the amount determined by multiplying the Adjustment Factor in effect
immediately prior to the close of business on the date fixed for determination
of shareholders entitled to receive such distribution by a fraction, (i) the
numerator shall be such Value of a REIT Share on the date fixed for such
determination and (ii) the denominator shall be the Value of a REIT Share on the
dated fixed for such determination less the then fair market value (as
reasonably determined by the Managing Member) of the portion of the evidences of
indebtedness or assets so distributed applicable to one REIT Share. Any
adjustments to the Adjustment Factor shall become effective immediately after
the effective date of such event, retroactive to the record date, if any, for
such event.

 

“Affirmative Consent of the Non-Managing Members” means the Consent of the
Non-Managing Members other than pursuant to a Deemed Consent of any Non-Managing
Member.

 

“Affirmative Consent of a Supermajority of the Non-Managing Members” means the
Consent of a Supermajority of the Non-Managing Members other than pursuant to a
Deemed Consent of any Non-Managing Member.

 

“Affiliate” means, with respect to any Person, any Person directly or indirectly
Controlling or Controlled by or under common Control with such Person.

 

“Aggregate Sharing Amount” means, with respect to any taxable disposition of all
or any portion of the Contributed Property or any Successor Property, an amount
equal to the excess, if any, of (i) the Property Appreciation with respect to
all or such portion of the Contributed Property or any Successor Properties
being sold or previously sold by the Company, over (ii) the Unit Appreciation
with respect to all or such portion of the Contributed Property or any Successor
Properties being sold or previously sold by the Company.

 

“Agreement” means this Amended and Restated Limited Liability Company Agreement
of HCP DR MCD, LLC, as it may be amended, supplemented or restated from time to
time.

 

“Appraisal” means, with respect to any assets, the written opinion of an
independent third party experienced in the valuation of similar assets in the
general location of the property being appraised, selected by the Managing
Member in good faith. Such opinion may be in the form of an opinion by such
independent third party that the value for such property or asset as set by the
Managing Member is fair, from a financial point of view, to the Company.

 

3

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“Assignee” means a Person to whom one or more LIC Units have been Transferred in
a manner permitted under this Agreement, but who has not become a Substituted
Member, and who has the rights set forth in Section 11.5 hereof.

 

“Available Cash” means, with respect to any period for which such calculation is
being made:

 

(a)                                  the sum, without duplication, of:

 

(i)                                     the Company’s net income or net loss (as
the case may be) for such period determined in accordance with GAAP,

 

(ii)                                  depreciation and all other non-cash
charges to the extent deducted in determining net income or net loss for such
period pursuant to the foregoing clause (a)(i),

 

(iii)                               the amount of any reduction in reserves of
the Company (including, without limitation, reductions resulting because the
Managing Member determines such amounts are no longer necessary and
straight-line rent adjustments), and

 

(iv)                              all other cash received (including, but not
limited to amounts previously accrued as net income and amounts of deferred
income but excluding any net amounts borrowed by the Company for such period)
that was not included in determining net income or net loss for such period
pursuant to the foregoing clause (a)(i),

 

(b)                                 less the sum, without duplication, of:

 

(i)                                     all regularly scheduled (including at
maturity) principal debt payments made during such period by the Company,

 

(ii)                                  capital expenditures made by the Company
during such period,

 

(iii)                               all other expenditures and payments
(including any loans made by the Company pursuant to the terms of this
Agreement) not deducted in determining net income or net loss for such period
pursuant to the foregoing clause,

 

(iv)                              straight-line rental revenue to the extent
added in determining net income or net loss for such period pursuant to the
foregoing clause (a)(i),

 

(v)                                 the amount of any increase in reserves
(including, without limitation, working capital reserves) established during
such period that the Managing Member determines are necessary or appropriate in
its sole and absolute discretion, and

 

4

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(vi)                              amounts included in determining net income or
net loss for such period where cash was not received during such period for such
amounts.

 

Notwithstanding the foregoing, Available Cash shall not include (1) any cash
received or reductions in reserves, or take into account any disbursements made,
or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Company, (2) any Capital Contributions,
whenever received, (3) any Disposition Proceeds or (4) any Refinancing Debt
Proceeds.

 

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law
for the relief of debtors.

 

“Beneficial Ownership” means ownership of REIT Shares by a Person who is or
would be treated as an owner of such REIT Shares either actually or
constructively through the application of Section 544 of the Code, as modified
by Section 856(h)(1)(B) of the Code. The terms “Beneficially Own,” “Beneficially
Owned,” “Beneficially Owns” and “Beneficial Owner” shall have the correlative
meanings.

 

“Bottom Guarantee” has the meaning set forth in Section 7.3E.(4) hereof.

 

“Built-in Gain” means the excess of (a) the gross fair market value of the
Contributed Property or any Successor Properties (or any applicable
portion(s) thereof) over (b) the adjusted tax basis of the Contributed Property
or Successor Properties (or any applicable portion(s) thereof) (as the case may
be) for federal income tax purposes, as determined as of the Effective Date and
as reduced from time to time in accordance with applicable provisions of the
Code and Regulations.

 

“Business Day” means any day except a Saturday, Sunday or other day on which the
Federal Reserve Bank of San Francisco is closed.

 

“Calendar Quarter” means each of the following periods of each year: January 1
through and including March 31; April 1 through and including June 30; July 1
through and including September 30; and October 1 through and including
December 31.

 

“Call Notice” means a written notice to the Non-Managing Members informing them
of the Managing Member’s election to call their Non-Managing Member Units
pursuant to Section 13.2 hereof.

 

“Capital Account” means, with respect to any Member, the Capital Account
maintained for such Member on the Company’s books and records in accordance with
the following provisions:

 

(a)                                  To each Member’s Capital Account, there
shall be added such Member’s Capital Contributions, such Member’s allocable
share of Net Income and any items of income or gain specially allocated pursuant
to Section 6.3 hereof, and the amount of any Company liabilities assumed by such
Member or that are secured by any property distributed to such Member.

 

5

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(b)                                 From each Member’s Capital Account, there
shall be subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Member pursuant to any provision of this Agreement, such
Member’s allocable share of Net Loss and any items of loss or deductions
specially allocated pursuant to Section 6.3 hereof, and the amount of any
liabilities of such Member assumed by the Company or that are secured by any
property contributed by such Member to the Company.

 

(c)                                  In the event any interest in the Company is
Transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent that it relates
to the Transferred interest.

 

(d)                                 In determining the principal amount of any
liability for purposes of subsections (a) and (b) above there shall be taken
into account Code Section 752(c) and any other applicable provisions of the Code
and Regulations.

 

(e)                                  The provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Regulations
Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a
manner consistent with such Regulations. If the Managing Member shall determine
that it is prudent to modify the manner in which the Capital Accounts are
maintained in order to comply with such Regulations, the Managing Member may
make such modification provided that such modification will not have a material
effect on the amounts distributable to any Member without such Member’s Consent.
The Managing Member also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Members and
the amount of Company capital reflected on the Company’s balance sheet, as
computed for book purposes, in accordance with Regulations
Section 1.704-1(b)(2)(iv)(q) and (ii) make any appropriate modifications in the
event that unanticipated events might otherwise cause this Agreement not to
comply with Regulations Sections 1.704-1(b) or 1.704-2 provided that such
modification will not have a material effect on the amounts distributable to any
Member without such Member’s Consent.

 

“Capital Contribution” means, with respect to any Member, the amount of money
and the initial Gross Asset Value of any property or other assets (including,
without limitation, the Contributed Property) that such Member contributes to
the Company pursuant to Sections 4.1, 4.2 or 4.4 hereof and, with respect to the
Initial Non-Managing Members, the Contribution Agreement.

 

“Cash Amount” means an amount of cash per LLC Unit equal to the product of
(a) the Value of a REIT Share and (b) the REIT Shares Amount determined as of
the applicable Valuation Date.

 

“Certificate” means the Certificate of Formation of the Company filed in the
office of the Secretary of State of the State of Delaware, as amended from time
to time in accordance with the terms hereof and the Act.

 

“Charter” means the Articles of Incorporation of the Managing Member, as
amended, supplemented or restated from time to time.

 

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“Closing Price” means the closing price of a REIT Share on the New York Stock
Exchange.

 

“Code” means the Internal Revenue Code of 1986, as amended and in effect from
time to time or any successor statute thereto, as interpreted by the applicable
Regulations thereunder. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.

 

“Company” has the meaning set forth in the Preface hereof, and any successor
thereto.

 

“Company Minimum Gain” has the meaning set forth in Regulations
Section 1.704-2(b)(2) for the phrase “partnership minimum gain,” and the amount
of Company Minimum Gain, as well as any net increase or decrease in Company
Minimum Gain, for a Fiscal Year shall be determined in accordance with the
rules of Regulations Section 1.704-2(d).

 

“Consent” means the consent to, approval of, or vote on a proposed action by a
Member given in accordance with Article XIV hereof or any other written consent
to, approval of, or vote on a proposed action or matter by a Member as otherwise
provided herein.

 

“Consent of the Non-Managing Members” means the Consent of a Majority in
Interest of the Non-Managing Members, which Consent shall be obtained prior to
the taking of any action for which it is required by this Agreement and, except
as otherwise provided in this Agreement, may be given or withheld by a Majority
in Interest of the Non-Managing Members, in their reasonable discretion.

 

“Consent of Supermajority of the Non-Managing Members” means the Consent of a
Supermajority in Interest of the Non-Managing Members, which Consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and, except as otherwise provided in this Agreement, may be given or
withheld by a Supermajority in Interest of the Non-Managing Members in their
reasonable discretion.

 

“Constructive Ownership” means ownership of REIT Shares, or any other interest
in an entity, by a Person who is or would be treated as an owner thereof either
actually or constructively through the application of Section 318 of the Code,
as modified by Section 856(d)(5) of the Code. The terms “Constructively Own,”
“Constructively Owned,” “Constructively Owns” and “Constructive Owner” shall
have the correlative meanings.

 

“Contributed Property” means the “Property” as that term is defined in the
Contribution Agreement. It is acknowledged that, pursuant to the Contribution
Agreement, certain identified non-real estate assets of the “Property” (as
defined in the Contribution Agreement) shall be contributed through or at the
direction of the Company upon the closing of the transactions contemplated
thereby.

 

“Contribution Agreement” shall have the meaning given to such term in Recital A
above, as the same may be amended or modified in accordance with the terms
thereof.

 

“Contributor” shall have the meaning given to such term Recital A above.

 

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“Contributor’s Partners” means the constituent partners of Contributor to whom
Contributor has distributed or otherwise assigned, in accordance with the
limited partnership agreement of Contributor and subject to the terms of the
Contribution Agreement, the right of such Contributor to receive Non-Managing
Member Units pursuant to and in accordance with Sections 4.1 and 12.1 hereof.

 

“Control” means, when used with respect to any Person, the possession directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities,
by contract or otherwise, and the terms “controlling” and “controlled” have
correlative meanings.

 

“Custodian” means any receiver, trustee, assignee, liquidator or other similar
official under any Bankruptcy Law.

 

“Debt” means, as to any Person, as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person’s interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
that, in accordance with GAAP, should be capitalized.

 

“Deemed Consent” has the meaning set forth in Section 14.3B. hereof.

 

“Depreciation” means, for each Fiscal Year or other applicable period, an amount
equal to the federal income tax depreciation, amortization or other cost
recovery deduction allowable with respect to an asset for such year or other
period, except that, if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
period, Depreciation shall be in an amount that bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction for such year or other period bears to such
beginning adjusted tax basis; provided, however, that, if the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
period is zero (-0-), Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Managing
Member.

 

“Disposition Proceeds” means the net proceeds (i.e., after the repayment of any
Debt and the payment of all costs related to the disposition) received by the
Company upon the taxable disposition of all or any portion of the Properties.

 

“Effective Date” means the date on which the transactions contemplated by the
Contribution Agreement are consummated, at which time the contributions set
forth in Section 4.1 hereof and Exhibit A hereto that are to be effective shall
become effective.

 

“Effective Price” as defined in the Contribution Agreement.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Excess LLC Units” means any LLC Units held by a Non-Managing Member to the
extent that, if such LLC Units were exchanged for the REIT Shares Amount
pursuant to Section 8.6 hereof, such Non-Managing Member would Beneficially Own
or Constructively Own REIT Shares in excess of the Ownership Limit or otherwise
in violation of the Charter.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.

 

“Fiscal Year” means the fiscal year of the Company, which shall be the calendar
year.

 

“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the United States accounting profession, which are applicable to the facts
and circumstances on the date of determination.

 

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:

 

(a)                                 The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be its fair market value, as agreed
to by such Member and the Managing Member, and set forth on Exhibit A with
respect to that Member or as otherwise set forth in the books and records of the
Company; provided, however, that the initial Gross Asset Value of any asset
contributed by the Managing Member or an Affiliate of the Managing Member to the
Company shall be its fair market value as reasonably and in good faith
determined by the Managing Member.

 

(b)                                 The Gross Asset Values of all Company assets
immediately prior to the occurrence of any event described in clause (i), clause
(ii), clause (iii), (iv) or clause (v) hereof shall be adjusted to equal their
respective gross fair market values, as determined by the Managing Member using
such reasonable and good faith method of valuation as it may adopt, as of the
following times:

 

(i)                                     the acquisition of an additional
interest in the Company (other than in connection with the execution of this
Agreement but including, without limitation, acquisitions pursuant to
Section 4.2 hereof or contributions or deemed contributions by the Managing
Member pursuant to Section 4.4 hereof) by a new or existing Member in exchange
for more than a de minimis Capital Contribution, if the Managing Member
reasonably determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Members in the Company;

 

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(ii)                                  the distribution by the Company to a
Member of more than a de minimis amount of Company property as consideration for
an interest in the Company, if the Managing Member reasonably determines that
such adjustment is necessary or appropriate to reflect the relative economic
interests of the Members in the Company;

 

(iii)                               in connection with the grant of an interest
in the Company (other than a de minimis interest) as consideration for the
performance of services to or for the benefit of the Company by an existing
Member acting in a capacity as a Member of the Company or by a new Member acting
in a capacity as a member of the Company or in anticipation of being a Member of
the Company if the Managing Member reasonably determines that such adjustment is
necessary or appropriate to reflect the relative economic interests of the
Members in the Company;

 

(iv)                              the liquidation of the Company within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and

 

(v)                                 at such other times as the Managing Member
shall reasonably determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.

 

(c)                                  The Gross Asset Value of any Company asset
distributed to a Member shall be the gross fair market value of such asset on
the date of distribution as determined by the distributee and the Managing
Member, provided that, if the distributee is the Managing Member or if the
distributee and the Managing Member cannot agree on such a determination, such
gross fair market value shall be determined by Appraisal.

 

(d)                                 At the election of the Managing Member, the
Gross Asset Values of Company assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subsection (d) to the extent that
the Managing Member reasonably determines that an adjustment pursuant to
subsection (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subsection (d).

 

(e)                                  If the Gross Asset Value of a Company asset
has been determined or adjusted pursuant to subsection (a), subsection (b) or
subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Loss.

 

“HCP” means Health Care Property Investors, Inc., a Maryland corporation, its
successors and assigns.

 

“Incapacity” or “Incapacitated” means, (a) as to any Member who is an
individual, death, total physical disability or entry by a court of competent
jurisdiction

 

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adjudicating such Member incompetent to manage his or her person or his or her
estate; (b) as to any Member that is a corporation or limited liability company,
the filing of a certificate of dissolution, or its equivalent, for the
corporation or limited liability company or the revocation of its charter;
(c) as to any Member that is a partnership, the dissolution and commencement of
winding up of the partnership; (d) as to any Member that is an estate, the
distribution by the fiduciary of the estate’s entire interest in the Company;
(e) as to any trustee of a trust that is a Member, the termination of the trust
(but not the substitution of a new trustee); or (f) as to any Member, the
bankruptcy of such Member. For purposes of this definition, bankruptcy of a
Member shall be deemed to have occurred when (i) the Member commences a
voluntary proceeding seeking liquidation, reorganization or other relief of or
against such Member under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (ii) the Member is adjudged as bankrupt or insolvent, or a
final and non-appealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Member,
(iii) the Member executes and delivers a general assignment for the benefit of
the Member’s creditors, (iv) the Member files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Member in any proceeding of the nature described in clause
(ii) above, (v) the Member seeks, consents to or acquiesces in the appointment
of a trustee, receiver or liquidator for the Member or for all or any
substantial part of the Member’s properties, (vi) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within 120
days after the commencement thereof, (vii) the appointment without the Member’s
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within 90 days of such appointment, or (viii) an appointment
referred to in clause (vii) above is not vacated within 90 days after the
expiration of any such stay.

 

“Indemnitee” means (a) any Person made a party to a proceeding by reason of its
status as (i) a Non-Managing Member, (ii) the Managing Member or (iii) a
director of the Managing Member or an officer or employee of the Company or the
Managing Member and (b) such other Persons (including Affiliates of the Managing
Member or the Company) as the Managing Member may designate from time to time
(whether before or after the event giving rise to potential liability), in its
sole and absolute discretion.

 

“Initial Managing Member Loan Amount” means, with respect to each initial
Managing Member Loan pursuant to Section 4.3B, the applicable amount set forth
in such Section 4.3B.

 

“Initial Non-Managing Members” means the Non-Managing Members who acquired their
Non-Managing Member Units in exchange for the Contributed Property on the
Effective Date pursuant to the Contribution Agreement.

 

“IRS” means the Internal Revenue Service, which administers the internal revenue
laws of the United States.

 

“Joinder Agreement” means a Joinder Agreement in substantially the form attached
hereto as Exhibit C.

 

“Liquidating Event” has the meaning set forth in Section 13.1 hereof.

 

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“Liquidator” has the meaning set forth in Section 13.3A hereof.

 

“LLC Distribution Date” means the date established by the Managing Member for
the payment of actual distributions declared by the Managing Member pursuant to
Sections 5.1 and 5.2, which date shall be the same as the date established by
the Managing Member for the payment of dividends to holders of REIT Shares.

 

“LLC Record Date” means the record date established by the Managing Member for
the distribution of Available Cash pursuant to Section 5.1  hereof, which record
date shall be the same as the record date established by the Managing Member for
a dividend to holders of REIT Shares.

 

“LLC Units” means the Managing Member Units and the Non-Managing Member Units,
collectively.

 

“Loan-to-Value Ratio” shall mean the ratio, as of the date of incurrence of any
Debt by the Company, in which the numerator is equal to the outstanding
principal balance of all Debt of the Company and the denominator is equal to the
fair market value of the Properties, as reasonably and in good faith determined
by the Managing Member.

 

“Majority in Interest of the Non-Managing Members” means at any time those
Non-Managing Members (other than the Managing Member or its Affiliate in its
capacity as a holder of Non-Managing Member Units) holding in the aggregate more
than 50% of the then aggregate outstanding Non-Managing Member Units (other than
those held by the Managing Member or its Affiliate).

 

“Majority of Remaining Members” means Non-Managing Members owning a majority of
the Non-Managing Member Units held by Non-Managing Members.

 

“Make-Whole Payment” has the meaning set forth in Section 7.3G hereof.

 

“Managing Member” means HCP, in its capacity as the Managing Member, or any
successor Managing Member designated pursuant to the terms of this Agreement.

 

“Managing Member Guarantee” has the meaning set forth in Section 11.2A.

 

“Managing Member Loan” has the meanings set forth in Section 4.3B hereof.

 

“Managing Member Loan Amount” means, with respect to any Managing Member Loan
(or any permitted Replacement Indebtedness pursuant to Section 7.3E.(3)), the
applicable Initial Managing Member Loan Amount; provided, however, that such
amount may be decreased by the Managing Member in its sole discretion on the
date of any termination or withdrawal of a Bottom Guarantee with respect thereto
by any Initial Non-Managing Member by the amount of such Managing Member Loan
(or any permitted Replacement Indebtedness pursuant to Section 7.3E.(3))
previously guaranteed by such Initial Non-Managing Member under such Bottom
Guarantee.

 

“Managing Member Note” has the meanings set forth in Section 4.3B hereof.

 

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“Managing Member Second Tier Distribution” has the meaning set forth in
Section 5.1A.(4).

 

“Managing Member Shortfall” has the meaning set forth in Section 5.1A.(2).

 

“Managing Member Unit” means a single unit of Membership Interest of the
Managing Member issued pursuant to Article IV hereof, as the same may be
modified from time to time as provided in this Agreement. The ownership of the
Managing Member Units may (but need not in the sole and absolute discretion of
the Managing Member) be evidenced in the form of a certificate for the Managing
Member Units.

 

“Member Minimum Gain” means an amount, with respect to each Member Nonrecourse
Debt, equal to the Company Minimum Gain that would result if such Member
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i) with respect to “partner
nonrecourse debt minimum gain.”

 

“Member Nonrecourse Debt” has the meaning set forth in Regulations
Section 1.704-2(b)(4) for the phrase “partner nonrecourse debt.”

 

“Member Nonrecourse Deductions” has the meaning set forth in Regulations
Section 1.704-2(i)(2) for the phrase “partner nonrecourse deductions,” and the
amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse
Debt for a Fiscal Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(i)(2).

 

“Members” means the Persons owning Membership Interests, including the Managing
Member, Non-Managing Members and any Additional and Substituted Members, named
as Members in Exhibit A attached hereto, which Exhibit A may be amended from
time to time in accordance with the provisions of this Agreement.

 

“Membership Interest” means an ownership interest in the Company representing a
Capital Contribution by a Member and includes any and all benefits to which the
holder of such Membership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement. A Membership Interest may be expressed as a
number of the Managing Member Units or Non-Managing Member Units, as applicable.

 

“Net Income” or “Net Loss” means, for each Fiscal Year of the Company, an amount
equal to the Company’s taxable income or loss for such year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:

 

(a)                                 Any income of the Company that is exempt
from federal income tax and not otherwise taken into account in computing Net
Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss”
shall be added to (or subtracted from, as the case may be) such taxable income
(or loss);

 

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(b)                                 Any expenditure of the Company described in
Code Section 705(a)(2)(b) or treated as a Code Section 705(a)(2)(b) expenditure
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income (or Net Loss) pursuant to this definition
of “Net Income” or “Net Loss,” shall be subtracted from (or added to, as the
case may be) such taxable income (or loss);

 

(c)                                  In the event that the Gross Asset Value of
any Company asset is adjusted pursuant to subsection (b) or subsection (c) of
the definition of “Gross Asset Value,” the amount of such adjustment shall be
taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;

 

(d)                                 In lieu of the depreciation, amortization
and other cost recovery deductions that would otherwise be taken into account in
computing such taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year;

 

(e)                                  To the extent that an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Member’s interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Net Income or Net Loss; and

 

(f)                                   Notwithstanding any other provision of
this definition of “Net Income” or “Net Loss,” any item allocated pursuant to
Section 6.3A hereof shall not be taken into account in computing Net Income or
Net Loss. The amounts of the items of Company income, gain, loss or deduction
available to be allocated pursuant to Section 6.3A hereof shall be determined by
applying rules analogous to those set forth in this definition of “Net Income”
or “Net Loss.”

 

“NMM Sharing Amount” means, with respect to any taxable disposition of all or
any portion of the Contributed Property or any Successor Properties, the product
equal to (a) the Sharing Amount multiplied by (b) the NMM Sharing Percentage.

 

“NMM Sharing Percentage” means a percentage equal to one percent (1%) multiplied
by a fraction with the numerator equal to the number of Non-Managing Member
Units then outstanding and the denominator equal to the number of Non-Managing
Member Units issued by the Company to all Non-Managing Members; provided,
however, any NMM Units reduced pursuant to Section 5.6C hereof shall be
subtracted from the denominator of such fraction.

 

“Non-Managing Member” means any Member other than the Managing Member (except to
the extent the Managing Member holds Non-Managing Member Units).

 

“Non-Managing Member Unit” means a single unit of Membership Interest issued to
a Non-Managing Member pursuant to Section 4.1 hereof, as the same may be
modified from time to time as provided in this Agreement. The ownership of
Non-Managing Member Units shall be evidenced in the form of a certificate for
Non-Managing Member Units.

 

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“Nonrecourse Deductions” has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Fiscal
Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).

 

“Nonrecourse Liability” has the meaning set forth in Regulations
Section 1.752-1(a)(2).

 

“Notice of Redemption” means a Notice of Redemption substantially in the form of
Exhibit B attached to this Agreement.

 

“One Hundred Member Limit” has the meaning set forth in Section 11.6E hereof.

 

“Ownership Limit” means 9.8% of the number or value (whichever is more
restrictive) of outstanding REIT Shares. The number and value of REIT Shares
shall be determined by the Board of Directors of the Managing Member, in good
faith, which determination shall be conclusive for all purposes hereof.

 

“Payment Quarter” has the meaning set forth in Section 5.1A hereof.

 

“Percentage Interest” means, as to a Member holding a Membership Interest, its
interest in the Company as determined by dividing the LLC Units owned by such
Member by the total number of LLC Units then outstanding as specified in
Exhibit A attached hereto, as it may be modified or supplemented from time to
time, or otherwise in the books and records of the Company.

 

“Permitted Non-Managing Member Assignment” has the meaning set forth in
Section 11.3A hereof.

 

“Person” means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.

 

“Preferred Return Per Unit” means with respect to each Non-Managing Member Unit
outstanding on a LLC Record Date an amount initially equal to zero, and
increased cumulatively on each LLC Record Date by an amount equal to the product
of (i) the cash dividend per REIT Share declared by the Managing Member for
holders of REIT Shares on that LLC Record Date, multiplied by (ii) the
Adjustment Factor in effect on that LLC Record Date; provided, however, that the
increase that shall occur in accordance with the foregoing on the first LLC
Record Date subsequent to the Effective Date shall be the foregoing product of
(i) and (ii) above multiplied by a fraction, the numerator of which shall be the
number of days in the period commencing on the Effective Date and ending on the
first LLC Record Date following the Effective Date, and the denominator of which
shall be the number of days in the period commencing on February 5, 2007 and
ending on the first LLC Record Date following the Effective Date.

 

“Preferred Return Shortfall” means, for any holder of Non-Managing Member Units,
the amount (if any) by which (i) the Preferred Return Per Unit with respect to
all Non-Managing Member Units held by such holder exceeds (ii) the aggregate
amount previously

 

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distributed with respect to such Non-Managing Member Units pursuant to
Section 5.1 A.(1)  Section 5.6A.(1) or Section 5.6B.(1) hereof, together with
cumulative simple interest accruing on such excess at the Prime Rate from the
applicable LLC Distribution Date to the date of distribution.

 

“Preferred Return Shortfall Per Unit” means, for any holder of Non-Managing
Member Units, the amount equal to the quotient of (a) such Non-Managing Member’s
Preferred Return Shortfall divided by (b) the number of Non-Managing Member
Units held by such Non-Managing Member immediately prior to the day on which a
Specified Redemption Date occurs with respect to any Non-Managing Member Units
held by such Non-Managing Member.

 

“Prime Rate” means on any date, a rate equal to the annual rate on such date
announced by the Bank of America, N.A. to be its prime, base or reference rate
for 90-day unsecured loans to its corporate borrowers of the highest credit
standing. If the Bank of America, N.A. discontinues its use of such prime, base
or reference rate or ceases to exist, the Managing Member shall designate the
prime, base or reference rate of another state or federally chartered bank based
in Los Angeles, California to be used for the purpose of calculating the Prime
Rate hereunder.

 

“Profit Participation Amount” means with respect to any Member the sum of
(a) cumulative distributions to such Member (including its predecessors, if any)
pursuant to Section 5.6A.(2) to the extent such distributions did not result in
a reduction in LLC Units pursuant to Section 5.6C; and (b) the remaining amount
of the cumulative distributions to such Member (including its predecessors, if
any) pursuant to Section 5.6A.(2) multiplied by a fraction, the numerator of
which is the excess (if any) of (i) the weighted average of the Values on each
of the Reduction Dates over (ii) the Effective Price, and the denominator of
which is the weighted average of the Values on each of the Reduction Dates.
Exhibit D sets forth an example of the calculation of Profit Participation
Amount.

 

“Properties” means any assets and property of the Company such as, but not
limited to, interests in real property (including the Contributed Property and
any Successor Properties) and personal property, including, without limitation,
fee interests, interests in ground leases, interests in limited liability
companies, joint ventures or partnerships, interests in mortgages, and Debt
instruments as the Company may hold from time to time.

 

“Property Appreciation” means, with respect to a taxable disposition of all or
any portion of the Contributed Property or any Successor Properties, the excess
of the sales price paid in such disposition (including amounts paid through the
assumption of debt) over the initial Gross Asset Value of the Contributed
Property (or if the disposition was of a Successor Property, the initial Gross
Asset Value of the related Contributed Property to the extent it relates to the
Successor Property) (or applicable portion thereof).

 

“Redemption” has the meaning set forth in Section 8.6A hereof.

 

“Redemption Right” has the meaning set forth in Section 8.6A hereof.

 

“Reduction” has the meaning set forth in Section 5.6C hereof.

 

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“Reduction Date” has the meaning set forth in Section 5.6C hereof.

 

“Reduction Units” has the meaning set forth in Section 5.6C hereof.

 

“Refinancing Debt” means any Debt (including indebtedness to the Managing Member
or any Affiliate of the Managing Member), the repayment of which is secured by
all or any portion of the Properties or which is incurred to repay a Managing
Member Loan, subject to the provisions of Section 7.3E.(3) and 7.3E.(4) hereof.

 

“Refinancing Debt Proceeds” means the net proceeds from any Refinancing Debt
incurred by the Company which remain after the repayment of any Debt with
proceeds of the Refinancing Debt and the payment of all costs related to the
Refinancing Debt.

 

“Regulations” means the applicable income tax regulations under the Code,
whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).

 

“Regulatory Allocations” has the meaning set forth in Section 6.3A.(7) hereof.

 

“REIT” means a real estate investment trust qualifying under Code Section 856,
et seq.

 

“REIT Member” means a Member or Assignee that is, or has made an election to
qualify as, a REIT or who is Controlled by a Person that is, or has made an
election to qualify as, a REIT. As of the Effective Date, it is acknowledged and
agreed that the Managing Member is a REIT Member.

 

“REIT Requirements” has the meaning set forth in Section 5.1B hereof.

 

“REIT Share” means a share of the Common Stock of the Managing Member, par value
$1.00 per share.

 

“REIT Shares Amount” means a number of REIT Shares equal to the sum of (a) the
product of (i) the number of Tendered Units and (ii) the Adjustment Factor plus
(b) the quotient of (i) the product of (x) the number of Tendered Units and
(y) Preferred Return Shortfall Per Unit divided by (ii) the Value of a REIT
Share as of the applicable Valuation Date.

 

“Related Party” means, with respect to any Person, any other Person whose actual
ownership, Beneficial Ownership or Constructive Ownership of shares of the
Managing Member’s capital stock would be attributed to the first such Person
under either (i) Code Section 544 (as modified by Code Section 856(h)(1)(b) ) or
(ii) Code Section 318 (as modified by Code Section 856(d)(5)).

 

“Replacement Indebtedness” has the meaning set forth in Section 7.3E.(3) hereof.

 

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“Rights” means rights, options, warrants or convertible or exchangeable
securities entitling the Managing Member’s shareholders to subscribe for or
purchase REIT Shares, or any other securities or property.

 

“SEC” means the Securities and Exchange Commission.

 

“Second Tier Distribution Per Unit” means with respect to each Non-Managing
Member Unit outstanding on a LLC Record Date and to the extent of Available
Cash, a non-cumulative amount equal to $0.085; provided, however, that such
Second Tier Distribution Per Unit on the first LLC Record Date subsequent to the
Effective Date shall be the foregoing amount, if any, multiplied by a fraction,
the numerator of which shall be the number of days in the period commencing on
the Effective Date and ending on the first LLC Record Date following the
Effective Date, and the denominator of which shall be the number of days in the
period commencing on November 3, 2006 and ending on the first LLC Record Date
following the Effective Date.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

 

“Sharing Amount” means, with respect to any taxable disposition of all or any
portion of the Contributed Property or any Successor Properties, the excess, if
any, of the Aggregate Sharing Amount over the Sharing Amounts, if any,
previously used for purposes of calculating Reduction Units pursuant to
Section 5.6C.

 

“Sharing Percentage” means, with respect to a Non-Managing Member (including the
Managing Member with respect to any Non-Managing Member Units held by the
Managing Member) or Assignee, its share of the NMM Sharing Percentage based on
its share of the Non-Managing Member Units and, with respect to the Managing
Member (in its capacity as the Managing Member), one hundred percent (100%)
minus the NMM Sharing Percentage.

 

“Specified Redemption Date” means (A) in the case of a Redemption pursuant to
Section 8.6 hereof and subject to the terms thereof, the thirtieth (30th)
calendar day (or, if such day is not a Business Day, the next following Business
Day) after the receipt by the Managing Member of a Notice of Redemption (or such
earlier date as the Managing Member may agree, in its sole and absolute
discretion, after receipt by the Managing Member of any such Notice of
Redemption); provided, however, that notwithstanding any provisions set forth
herein to the contrary, in no event shall the Specified Redemption Date with
respect to any LLC Unit occur prior to the first (1st) anniversary of the
Effective Date; provided, further, that the Specified Redemption Date, as well
as the closing of a Redemption on any Specified Redemption Date, may be
deferred, in the Managing Member’s sole and absolute discretion, for such time
(but in any event not more than 90 days in the aggregate) as may reasonably be
required to effect, as applicable, (i) necessary funding arrangements,
(ii) compliance with the Securities Act or other law (including, but not limited
to, (a) state “blue sky” or other securities laws and (b) the expiration or
termination of the applicable waiting period, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended), and
(iii) satisfaction or waiver of other commercially reasonable and customary
closing conditions and requirements for a transaction of such nature, and (B) in
the case of the delivery of a Call Notice pursuant to Section 13.2, the

 

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tenth (10th) calendar day (or, if such day is not a Business Day, the next
following Business Day) after the mailing to the applicable Non-Managing Members
of a Call Notice.

 

“Subsequent Threshold Date” means the date that the Subsequent Threshold Test
has been satisfied.

 

“Subsequent Threshold Test” means a test which will be satisfied on the date on
which seventy percent (70%) of the LLC Units issued by the Company to the
Initial Non-Managing Members have been disposed of pursuant to a Taxable
Disposition or Series of Taxable Dispositions.

 

“Subsidiary” means, (a) with respect to any Person other than the Company, any
corporation or other entity of which a majority of (i) the voting power of the
voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person and (b) with respect to the Company,
(i) any TRS Subsidiary or (ii) any partnership or limited liability company
(taxed, for federal income tax purposes, as a partnership or disregarded entity
and not as an association or publicly traded partnership taxable as a
corporation) of which the Company is a partner or member unless the Managing
Member has received an unqualified opinion from independent counsel of
recognized standing, or a ruling from the IRS, that the ownership of shares of
stock of a corporation or other entity will not jeopardize a REIT Member’s
status or the status of its Affiliate as a REIT, in which event the term
“Subsidiary” shall include the corporation or other entity which is the subject
of such opinion or ruling.

 

“Substituted Member” means an Assignee who is admitted as a Member to the
Company pursuant to Section 11.4 hereof. The term “Substituted Member” shall not
include any Additional Member.

 

“Successor Properties” means real properties acquired by the Company in
connection with a Tax-Free Disposition of all of any portion of the Contributed
Property or any Successor Property (each, a “Successor Property”) (or, where
applicable, the ownership interests in a Subsidiary(ies) holding title to such
real properties).

 

“Supermajority in Interest of the Non-Managing Members” means at any time those
Non-Managing Members (other than the Managing Members or its Affiliate in its
capacity as a holder of Non-Managing Member Units), holding in the aggregate
more than 75% of the then aggregate outstanding Non-Managing Member Units (other
than those held by the Managing Members or its Affiliate).

 

“Taxable Dispositions” means a transaction in which an LLC Unit has either
(a) been disposed of to the extent such disposition is a taxable transaction
(including, without limitation, a Redemption or exchange pursuant to
Section 8.6A hereof) or (b) otherwise received a “step-up” in tax basis to its
fair market value at the time of such “step-up” (e.g., as a result of the death
of a holder of LLC Units who is an individual).

 

“Tax-Free Disposition” means the disposition of property in a transaction that
is not subject to tax under the Code, including, without limitation, by virtue
of the provisions of Section 1031 of the Code.

 

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“Tax Items” has the meaning set forth in Section 6.1 hereof.

 

“Tax Protection Period” means the period of time beginning on the Effective Date
and ending on the first to occur of (i) the twelfth (12th) anniversary of the
Effective Date or (ii) the Subsequent Threshold Date.

 

“Tendered Units” has the meaning set forth in Section 8.6A hereof.

 

“Tendering Party” has the meaning set forth in Section 8.6A hereof.

 

“Termination Transaction” has the meaning set forth in Section 11.2B hereof.

 

“Terminating Capital Transaction” means any sale or other disposition of all or
substantially all of the assets of the Company or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Company.

 

“Transfer,” when used with respect to an LLC Unit or all or any portion of a
Membership Interest, means any sale, assignment, bequest, conveyance, devise,
gift (outright or in trust), pledge, encumbrance, hypothecation, mortgage,
exchange, transfer or other disposition or act of alienation, whether voluntary
or involuntary or by operation of law. The terms “Transferred” and
“Transferring” have correlative meanings.

 

“Triggering Event” has the meaning set forth in Section 7.3G hereof.

 

“TRS Subsidiary” means a corporation, limited liability company, partnership or
other legal entity taxable as a corporation and that has elected with HCP to be
treated as a “taxable REIT subsidiary” as defined in Section 856(1) of the Code.

 

“Unit Amount” means, with respect to a taxable disposition of the Contributed
Property or any Successor Property, a number of LLC Units equal to the product
of (i) the number of LLC Units outstanding at the time of such disposition, and
(ii) the Unit Portion.

 

“Unit Appreciation” means, with respect to any taxable disposition of all or any
portion of the Contributed Property or any Successor Properties, the product of
the (i) Unit Amount and (ii) excess of the Value at the time of such disposition
over the Effective Price.

 

“Unit Portion” means, with respect to a taxable disposition of all or any
portion of the Contributed Property or any Successor Properties, a number
determined by dividing (i) the net cash flow (ignoring payments made by the
Company under any Debt related to such Property) produced by the Contributed
Property or any Successor Properties (or such applicable portion(s) thereof) for
the twelve month period immediately prior to such disposition, by (ii) the net
cash flow (ignoring payments made by the Company under any Debt related to the
Contributed Property or Successor Properties) produced by the Contributed
Property or Successor Properties held by the Company for the twelve month period
immediately prior to such disposition.

 

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“Valuation Date” means (a) in the case of a Redemption pursuant to Section  8.6A
hereof or a tender of Non-Managing Member Units pursuant to Section 13.2 hereof
following a Call Notice, the Specified Redemption Date, (b) for purposes of
Section 5.6C hereof, the Reduction Date or, if the Reduction Date is not the
date the Call Notice is delivered or, if such day is not a Business Day, the
immediately preceding Business Day, or (c) in any other case, the date specified
in this Agreement or, if such date is not a Business Day, the immediately
preceding Business Day.

 

“Value” means, on any Valuation Date, the average of the Closing Prices for the
twenty (20) consecutive trading days ending on the second trading day
immediately prior to the Valuation Date.

 

ARTICLE II.

ORGANIZATIONAL MATTERS

 

2.1 Formation

 

The Company is a limited liability company formed pursuant to the provisions of
the Act for the purposes stated in Section 3.1  and upon the terms and subject
to the conditions set forth in this Agreement. Except as expressly provided
herein, the rights and obligations of the Members and the administration and
termination of the Company shall be governed by the Act.

 

2.2 Name

 

The name of the Company is HCP DR MCD, LLC. The Company’s business shall
initially be conducted under the fictitious name “Medical City Dallas, LLC”;
provided, however, that the Company’s business may be conducted under any other
name or names deemed advisable by the Managing Member, in its reasonable
discretion, including the name of the Managing Member or any Affiliate thereof.
The Managing Member in its sole and absolute discretion may change the name of
the Company at any time and from time to time in accordance with applicable law
and shall notify the Members of such change in the next regular communication to
the Members.

 

2.3 Registered Office and Agent; Principal Place of Business; Other Places of
Business

 

The address of the registered office of the Company in the State of Delaware is
located at c/o Corporation Service Company, 2711 Centerville, Suite 400,
Newcastle County, Wilmington, Delaware 19808, and the registered agent for
service of process on the Company in the State of Delaware at such registered
office is Corporation Service Company, 2711 Centerville, Suite 400, Newcastle
County, Wilmington, Delaware 19808. The principal office of the Company is
located at 3760 Kilroy Airport Way, Suite 300, Long Beach, California 90806, or
such other place as the Managing Member may from time to time designate by
notice to the Members. The Company may maintain offices at such other place or
places within or outside the State of Delaware as the Managing Member deems
advisable.

 

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2.4 Power of Attorney

 

A.            Each Member (other than the Managing Member) and each Assignee
hereby irrevocably constitutes and appoints the Managing Member, any Liquidator,
and authorized officers and attorneys in fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place and
stead to:

 

(1)           execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate and all
amendments or restatements thereof) that the Managing Member or any Liquidator
deems appropriate or necessary to form, qualify or continue the existence or
qualification of the Company as a limited liability company in the State of
Delaware and in all other jurisdictions in which the Company may conduct
business or own property; (b) all instruments that the Managing Member or any
Liquidator deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its terms;
(c) all conveyances and other instruments or documents that the Managing Member
or any Liquidator deems appropriate or necessary to reflect the dissolution and
liquidation of the Company pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation; (d) all instruments relating
to the admission, withdrawal, removal or substitution of any Member pursuant to,
or other events described in, Articles XI, XII or XIII hereof or the Capital
Contribution of any Member; and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Membership Interests, so long as such instruments pursuant to this
clause (e) do not affect the rights or obligations of the Members under this
Agreement; and

 

(2)           execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments as the Managing Member or
any Liquidator deems appropriate or necessary to make, evidence, give, confirm
or ratify any vote, consent, approval, agreement or other action which is made
or given by the Members hereunder or to facilitate or effectuate the terms or
intent of this Agreement, so long as such instruments do not affect the rights
or obligations of the Members under this Agreement.

 

Nothing contained in this Section 2.4 shall be construed as authorizing the
Managing Member or any Liquidator to amend this Agreement except in accordance
with Article XIV hereof or as may be otherwise expressly provided for in this
Agreement.

 

B.            The foregoing power of attorney is hereby declared to be
irrevocable and a special power coupled with an interest, in recognition of the
fact that each of the Members and Assignees will be relying upon the power of
the Managing Member to act as contemplated by this Agreement, and it shall
survive and not be affected by the subsequent Incapacity of any Member or
Assignee and the Transfer of all or any portion of such Member’s or Assignee’s
LLC Units or Membership Interest and shall extend to such Member’s or Assignee’s
heirs, successors, assigns and personal representatives. Each Member or Assignee
shall execute and deliver to the

 

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Managing Member or any Liquidator, within 15 days after receipt of the Managing
Member’s or Liquidator’s request therefor, such further designation, powers of
attorney and other instruments as the Managing Member or the Liquidator, as the
case may be, deems reasonably necessary to effectuate this Agreement and the
purposes of the Company.

 

2.5 Term

 

The term of the Company commenced on January 17, 2007, the date that the
original Certificate was filed in the office of the Secretary of State of
Delaware in accordance with the Act, and shall continue until terminated
pursuant the provisions of Article XIII hereof or as otherwise provided by law.

 

ARTICLE III.
PURPOSE

 

3.1 Purpose and Business

 

The sole purposes of the Company are (i) to acquire, own, manage, operate,
repair, renovate, maintain, improve, expand, redevelop, encumber, sell, lease,
hold for appreciation, or otherwise dispose of, in accordance with the terms of
this Agreement, the Properties and any other Properties acquired by the Company
(or ownership in Subsidiaries engaged in the foregoing), and to invest and
ultimately distribute funds, including, without limitation, funds obtained from
owning or otherwise operating the Properties and any other Properties acquired
by the Company (or ownership in Subsidiaries engaged in the foregoing) and the
proceeds from the sale or other disposition of the Properties and any other
Properties acquired by the Company (or ownership in Subsidiaries engaged in the
foregoing), all in the manner permitted by this Agreement, and (ii) subject to
and in accordance with the terms of this Agreement, to do anything necessary or
incidental to the foregoing.

 

3.2 Powers

 

The Company is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Company including, without limitation, full power
and authority, directly or through its ownership interest in other entities, to
enter into, perform and carry out contracts of any kind, borrow money and issue
evidences of indebtedness, whether or not secured by mortgage, deed of trust,
pledge or other lien, acquire, own, manage, improve and develop real property,
and lease, sell, transfer and dispose of real property; provided, however, that
notwithstanding any other provision in this Agreement, but subject to Sections
7.3E., 7.3F. and 7.3G., the Managing Member may cause the Company to take any
action to avoid a result that, or refrain from taking any action that, in the
reasonable and good faith judgment of the Managing Member, (i) could adversely
affect the ability of a REIT Member or its Affiliate to continue to qualify as a
REIT, (ii) could subject a REIT Member or its Affiliate to any additional taxes
under Code Section 857 or Code Section 4981, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over a REIT
Member or its Affiliate, their securities or the Company,

 

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unless such action (or inaction) under clause (i), clause (ii) or clause
(iii) above shall have been specifically consented to by such REIT Member in
writing.

 

3.3 Specified Purposes

 

The Company shall be a limited liability company only for the purposes specified
in Section 3.1 hereof, and this Agreement shall not be deemed to create a
company, venture or partnership between or among the Members with respect to any
activities whatsoever other than the activities within the purposes of the
Company as specified in Section 3.1 hereof. Except as otherwise provided in this
Agreement, no Member shall have any authority to act for, bind, commit or assume
any obligation or responsibility on behalf of the Company, its properties or any
other Member. No Member, in its capacity as a Member under this Agreement, shall
be responsible or liable for any indebtedness or obligation of another Member,
nor shall the Company be responsible or liable for any indebtedness or
obligation of any Member, incurred either before or after the execution and
delivery of this Agreement by such Member, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.

 

3.4 Representations and Warranties by the Members; Disclaimer of Certain
Representations

 

A.            Each Member that is an individual (including, without limitation,
each Additional Member or Substituted Member as a condition to becoming an
Additional Member or a Substituted Member) represents and warrants to the
Company, the Managing Member and each other Member that (i) such Member has the
legal capacity to enter into this Agreement and perform such Member’s
obligations hereunder, (ii) the consummation of the transactions contemplated by
this Agreement to be performed by such Member will not result in a breach or
violation of, or a default under, any material agreement by which such Member or
any of such Member’s property is bound, or any statute, regulation, order or
other law to which such Member is subject, (iii) such Member is neither a
“foreign person” within the meaning of Code Section 1445(f) nor a “foreign
partner” within the meaning of Code Section 1446(e), and (iv) this Agreement is
binding upon, and enforceable against, such Member in accordance with its terms.

 

B.            Each Member that is not an individual (including, without
limitation, each Additional Member or Substituted Member as a condition to
becoming an Additional Member or a Substituted Member) represents and warrants
to the Company, the Managing Member and each other Member that (i) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including, without limitation, that of its
managing member(s) (or, if there is no managing member, a majority in interest
of all members), committee(s), trustee(s), general partner(s), beneficiaries,
directors and shareholder(s), as the case may be, as required, (ii) the
consummation of such transactions will not result in a breach or violation of,
or a default under, its partnership or operating agreement, trust agreement,
charter or bylaws, as the case may be, any material agreement by which such
Member or any of such Member’s properties or any of its partners, members,
beneficiaries, trustees or shareholders, as the case may be, is or are bound, or
any statute, regulation, order or other law to which such Member or any of its
partners, members, trustees, beneficiaries or shareholders, as the case may

 

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be, is or are subject, (iii) such Member is neither a “foreign person” within
the meaning of Code Section 1445(f) nor a “foreign partner” within the meaning
of Code Section 1446(e), and (iv) this Agreement is binding upon, and
enforceable against, such Member in accordance with its terms.

 

C.            Each Member (including, without limitation, each Additional Member
or Substituted Member as a condition to becoming an Additional Member or a
Substituted Member) represents and warrants that it is an “accredited investor”
within the meaning of Rule 501 of Regulation D under the Securities Act, and
that it has a sufficiently high net worth that it does not anticipate a need for
the funds that it has invested in the Company in what it understands to be a
highly speculative and illiquid investment.

 

D.            Each Member (including, without limitation, each Additional Member
or Substituted Member as a condition to becoming an Additional Member or a
Substituted Member) hereby represents that it has consulted and been advised by
its legal counsel and tax advisor in connection with, and acknowledges that no
representations as to potential profit, tax consequences of any sort (including,
without limitation, the tax consequences resulting from forming or operating the
Company, conducting the business of the Company, executing this Agreement,
consummating the transaction provided for in or contemplated by the Contribution
Agreement, making a Capital Contribution, being admitted to the Company,
receiving or not receiving distributions from the Company, redeeming
Non-Managing Member Units or being allocated Tax Items), cash flows, funds from
operations or yield, if any, in respect of the Company or the Managing Member
have been made by the Company, any Member or any employee or representative or
Affiliate of the Company or any Member, and that projections and any other
information, including, without limitation, financial and descriptive
information and documentation, that may have been in any manner submitted to
such Member shall not constitute any representation or warranty of any kind or
nature, express or implied.

 

E.            Each Member (including, without limitation, each Additional Member
or Substituted Member as a condition to becoming an Additional Member or a
Substituted Member) further represents that it has had access to and reviewed
the Managing Member’s most current Form S-3, Form 10-Q, Form 10-K, proxy
statement and other filings with the SEC under the Securities Act available on
the Managing Member’s website at www.hcpi.com and this Agreement, and has been
afforded the opportunity to ask questions of representatives of the Managing
Member and the Company, and to receive answers to those questions, as it deemed
necessary in connection with the acquisition of the Non-Managing Member Units
being issued pursuant to the Contribution Agreement. Each Member represents and
warrants that it has carefully considered potential risks relating to the
Managing Member and the acquisition of LLC Units and fully understands that the
LLC Units are speculative investments that involve a high degree of risk of loss
of the Member’s entire investment.

 

F.             Each Member (including, without limitation, each Additional
Member or Substituted Member as a condition to becoming an Additional Member or
a Substituted Member), acknowledges that it will acquire the LLC Units issued to
it in a transaction not involving any public offering within the meaning of the
Securities Act and that the LLC Units have not been registered under the
Securities Act. Each Member acknowledges that the LLC

 

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Units will be in the form of physical certificates and that the certificates
will bear a legend to the following effect:

 

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION
MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS.

 

G.            Each Member (including, without limitation, each Additional Member
or Substituted Member as a condition to becoming an Additional Member or a
Substituted Member) represents that it will acquire its LLC Units solely for its
own account for the purpose of investment only and not as a nominee or agent for
any other Person and not with a view to, or for offer or sale in connection
with, any distribution or resale thereof, in whole or in part, in violation of
the Securities Act or state securities or “blue sky” laws, without prejudice,
however, to its right to sell or otherwise dispose of all or any part of the LLC
Units pursuant to an effective registration statement under the Securities Act
or under an exemption from registration available under the Securities Act.

 

H.            Each Member (including, without limitation, each Additional Member
or Substituted Member as a condition to becoming an Additional Member or a
Substituted Member) represents and warrants to the Company, the Managing Member
and each other Member that (i) it is, and in the case of the Managing Member, to
its knowledge it is, in compliance with the requirements of the Executive Order
No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the “Order”) and other similar
requirements contained in the rules and regulations of the Office of Foreign
Assets Control, Department of the Treasury (“OFAC”) and in any enabling
legislation or other Executive Orders or regulations in respect thereof (the
Order and such other rules, regulations, legislation or orders are collectively
called the (“Orders”); and (ii) neither such Member nor any of its Affiliates
(A) is listed on the Specially Designated Nationals and Blocked Person List
maintained by OFAC pursuant to the Order and/or on any other list of terrorists
or terrorist organizations maintained pursuant to any of the rules and
regulations of OFAC or pursuant to any other applicable Orders (such lists are
collectively referred to as the “Lists”), (B) is a Person (as defined in the
Order) who has been determined by competent authority to be subject to the
prohibitions contained in the Orders; or (C) is owned or controlled by
(including without limitation by virtue of such Person being a director or
owning voting shares or interests), or acts for or on behalf of, any person on
the Lists or any other Person who has been determined by competent authority to
be subject to the prohibitions contained in the Orders.

 

I.             The representations and warranties contained in Sections 3.4A
through 3,4H, inclusive, hereof shall survive the execution and delivery of this
Agreement by each Member

 

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(and, in the case of an Additional Member or a Substituted Member, the admission
of such Additional Member or Substituted Member as a Member in the Company) and
the dissolution, liquidation and termination of the Company.

 

ARTICLE IV.
CAPITAL CONTRIBUTIONS

 

4.1 Capital Contributions of the Initial Members

 

At the time of their respective execution of this Agreement, the Members (or, in
the event an Initial Non-Managing Member shall be one of Contributor’s Partners,
Contributor) shall make the initial Capital Contributions as set forth in
Exhibit A to this Agreement and as further provided in the Contribution
Agreement. The Members shall own the Managing Member Units and Non-Managing
Member Units, as applicable, in the amounts set forth in the books and records
of the Company. Except as required by law or as otherwise provided in Sections
4.1, 4.2, 4.3 and 4.4, no Member shall be required or permitted to make any
Capital Contributions or loans to the Company.

 

4.2 Additional Members

 

The Managing Member is authorized to admit one or more Additional Members to the
Company from time to time, in accordance with the provisions of Section 12.3
hereof, on terms and conditions and for such Capital Contributions as may be
established by the Managing Member in its reasonable discretion, subject to the
provisions of Section 12.3 hereof. The provisions of Sections 7.3 and 12.3
hereof shall govern the acquisition by the Company in the future of additional
Properties (i.e., in addition to the Contributed Property and any Successor
Properties) by means of Capital Contributions by other Persons, which Capital
Contributions shall be set forth in the books and records of the Company. As a
condition to being admitted to the Company, each Additional Member shall execute
a Joinder Agreement.

 

4.3 Loans and Incurrence and Payment of Debt

 

A.                 Subject to the provisions of Sections 4.3B., 7.3E.(3) and
7.3E.(4) hereof, the Company may incur or assume Debt, or enter into other
similar credit, guarantee, financing (including, without limitation, the
encumbrance of the Properties for the debt of Affiliates of the Managing Member
pursuant to so-called cross-collateralized loans, or otherwise) or refinancing
arrangements, repay or prepay Debt, for any purpose (including, without
limitation, in connection with any further acquisition of Properties from any
Person), upon such terms as the Managing Member determines appropriate;
provided, however, that any Debt shall be nonrecourse to the Managing Member
unless the Managing Member otherwise agrees; provided, further, that except as
otherwise required for the Managing Member in order to avoid an obligation to
make a Make-Whole Payment pursuant to Sections 7.3E.(3)  or 7.3E.(4), at the
time of incurrence of any such Debt by the Company, (i) the Loan-to-Value Ratio
shall not exceed Seventy Percent (70%) and (ii) the Managing Member shall have
made a good faith determination that the Debt service payments required in
connection therewith will not adversely affect the Non-Managing Members’ rights
to receive distributions pursuant to Sections 5.1A.(1) and 5.1A.(3) hereof.

 

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B.                  In connection with the consummation of the transactions
contemplated by the Contribution Agreement and, in addition to the initial
Capital Contribution of the Managing Member as set forth on Exhibit A hereto,
the Managing Member has made two loans (each, a “Managing Member Loan”) to the
Company in the respective original principal amounts of Fifty Million and 00/100
Dollars ($50,000,000.00) and Fifty-Five Million Nine Hundred Sixty-Eight
Thousand Eight Hundred Forty-Eight and 00/100 Dollars ($55,968,848.00) (each, an
“Initial Managing Member Loan Amount”), and each of which loans is evidenced by
a promissory note in the original principal amount of the respective Initial
Managing Member Loan Amount by the Company in favor of the Managing Member and
is payable with interest thereon and at the time and manner as provided therein
(each, as the same may be amended, modified, extended, recast, restated or
otherwise supplemented from time to time, a “Managing Member Note”).
Notwithstanding anything to the contrary contained herein, the Members hereby
approve each of the Managing Member Loans and the terms of the respective
Managing Member Notes therefor in substantially the form attached hereto as
Exhibit F-1 and Exhibit F-2, respectively.

 

C.                  Without limiting the foregoing, subject to Sections
7.3E.(3) and 7.3E.(4) hereof, the Managing Member is authorized, in its sole and
absolute discretion, to cause the Company to repay or prepay any Debt (including
any Managing Member Loan and any other Debt owing to the Managing Member or any
Affiliate thereof).

 

4.4 Additional Funding and Capital Contributions

 

A.                General. The Managing Member may, at any time and from time to
time, determine that the Company requires additional funds (“Additional Funds”)
for the operation of the Company. Additional Funds may be raised by the Company
in accordance with the terms of Sections 4.2 or 4.3 hereof or pursuant to the
terms of this Section 4.4; provided, however, that in no event shall any
Non-Managing Member be required to make additional Capital Contributions. No
Person, including, without limitation, any Member or Assignee, shall have any
preemptive, preferential, participation or similar right or rights to subscribe
for or acquire any Membership Interest, except as set forth in this Agreement.

 

B.                  Additional Contributions. The Managing Member on behalf of
the Company may raise all or any portion of the Additional Funds by making
additional Capital Contributions, subject to the provisions of Section 7.3
hereof. Subject to the definition of “Gross Asset Value,” the Managing Member
shall determine in good faith the amount, terms and conditions of such
additional Capital Contributions. The Managing Member shall receive that number
of additional Managing Member Units in consideration for additional Capital
Contributions made by the Managing Member equal to the amount of such Capital
Contribution divided by the Value as of the date of such Capital Contribution.
In addition to the foregoing, the Managing Member shall also be permitted to
make additional Capital Contributions of cash or other property to the Company
in accordance with the terms and subject to the restrictions set forth herein
for any lawful purpose, including, but not limited to, in order to assist a REIT
Member or any Affiliate thereof in maintaining its qualification as a REIT under
the Code.

 

C.                  Timing of Additional Capital Contributions. if additional
Capital Contributions are made by a Member on any day other than the first (1st)
day of a Fiscal Year,

 

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then Net Income, Net Loss, each item thereof and all other items of income,
gain, loss, deduction and credit allocable among Members for such Fiscal Year,
if necessary, shall be allocated among such Members by taking into account their
varying interests during the Fiscal Year in accordance with Code Section 706(d),
using the “interim closing of the books” or “daily proration” method or another
permissible method selected by the Managing Member.

 

4.5 No Interest; No Return

 

Except as provided herein, no Member shall be entitled to interest on its
Capital Contribution or on such Member’s Capital Account. Except as provided
herein or by law, no Member shall have any right to demand or receive the return
of its Capital Contribution from the Company.

 

ARTICLE V.
DISTRIBUTIONS

 

5.1 Requirement and Characterization of Distributions

 

A.     Subject to the provisions of Section 5.7 hereof, the Managing Member
shall cause the Company to distribute quarterly on the LLC Distribution Date all
Available Cash generated by the Company during the quarter most recently ended
prior to the LLC Distribution Date (the “Payment Quarter”) as follows:

 

(1) First, to the holders of the Non-Managing Member Units, in accordance with
their relative Preferred Return Shortfalls at the end of the Payment Quarter,
until the Preferred Return Shortfall for each holder of Non-Managing Member
Units at the end of the Payment Quarter is zero (-0-), provided, however, that
in the event a Reduction Date occurs during any Payment Quarter, a distribution
shall be made under this Section 5.1A.(1) on the LLC Distribution Date
associated with such Payment Quarter to the holder or holders of the Reduction
Units in an amount determined by multiplying the amount that would have been
distributed on the LLC Distribution Date under this Section 5.1A.(1) in respect
of the Reduction Units had they been outstanding on the last day of such Payment
Quarter by a fraction, the numerator of which shall be the number of days
beginning on the first day of the Payment Quarter relating to the LLC
Distribution Date and ending on the Reduction Date and the denominator of which
shall be the number of days in the Payment Quarter in which the Reduction Date
occurs.

 

(2) Second, to the Managing Member until the Managing Member has received an
amount equal to the excess (the “Managing Member Shortfal”), if any, of (A) the
amount of cash that must be distributed to the Managing Member such that
aggregate distributions of cash pursuant to Sections 5.1A.(1), 5.1A.(2),
5.6A.(1) and 5.6B.(l) shall have been made to all Members pro rata to the
Members’ Percentage Interests, over (B) the sum of all prior distributions to
the Managing Member pursuant to this Section 5.1A.(2) and Sections 5.6A.(1) and
5.6B.(l).

 

(3) Third, to the holders of the Non-Managing Member Units, in an amount equal
to the Second Tier Distribution Per Unit; provided, however, that in the event a
Reduction Date occurs during any Payment Quarter, a distribution shall be made

 

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under this Section 5.1A.(3) on the LLC Distribution Date associated with such
Payment Quarter to the holder or holders of the Reduction Units in an amount
determined by multiplying the amount that would have been distributed on the LLC
Distribution Date under Section 5.1A.(3) in respect of the Reduction Units had
they been outstanding on the last day of such Payment Quarter by a fraction, the
numerator of which shall be the number of days beginning on the first day of the
Payment Quarter relating to the LLC Distribution Date and ending on the
Reduction Date and the denominator of which shall be the number of days in the
Payment Quarter in which the Reduction Date occurs.

 

(4) Fourth, to the Managing Member until the Managing Member has received an
amount equal to the excess (the “Managing Member Second Tier Distribution”), if
any, of (A) the amount of cash that must be distributed to the Managing Member
such that aggregate distributions of cash pursuant to Sections 5.1A.(3) and
5.1A.(4) shall have been made to all Members pro rata to the Members’ Percentage
Interests, over (B) the sum of all prior distributions to the Managing Member
pursuant to this Section 5.1A.(4).

 

(5) Thereafter, the Managing Member may, in its sole discretion, cause the
Company to distribute all Available Cash remaining after the distributions
provided for in Sections 5.1A.(1), 5.1A.(2), 5.1A.(3) and 5.1A.(4) above to the
Members in proportion to their Sharing Percentages.

 

B.      The Managing Member for so long as it is a REIT Member or an Affiliate
of a REIT Member may take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with its qualification or the
qualification of any Affiliate thereof as a REIT, to cause the Company to
distribute sufficient amounts to enable such REIT Member or any Affiliate
thereof to pay stockholder dividends that will (a) satisfy the requirements for
qualifying as a REIT under the Code and Regulations (“REIT Requirements”), and
(b) except to the extent the Managing Member elects, in its sole discretion, not
to make such distributions, avoid any federal income or excise tax liability of
such REIT Member or any Affiliate thereof.

 

5.2 Distributions in Kind

 

No right is given to any Member to demand and receive property other than cash.
The Managing Member may determine, with the Affirmative Consent of the
Non-Managing Members, to make a distribution in kind to the Members of Company
assets, and such assets shall be distributed in such a fashion as to ensure that
the fair market value is distributed and allocated in accordance with Articles V
and VI hereof. The fair market value of any Property distributed in kind shall
be determined (i) prior to the Subsequent Threshold Date, by the Managing Member
with the Affirmative Consent of the Non-Managing Members, and (ii) thereafter,
by the Managing Member in its good faith determination.

 

5.3 Amounts Withheld

 

Each Member hereby authorizes the Company to withhold from or pay on behalf of
or with respect to such Member any amount of federal, state, local or foreign
taxes that the Managing Member determines that the Company is required to
withhold or pay with respect to

 

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any amount distributable or allocable to such Member pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Company pursuant to Code Section 1441, Code Section 1442, Code Section 1445 or
Code Section 1446. Any amount paid on behalf of or with respect to a Member
shall constitute a loan by the Company to such Member, which loan shall be
repaid by such Member within 15 days after notice from the Managing Member that
such payment must be made unless (i) the Company withholds such payment from a
distribution that would otherwise be made to the Member or (ii) the Managing
Member determines that such payment may be satisfied out of the Available Cash
of the Company that would, but for such payment, be distributed to the Member.
Any amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be
treated as having been distributed to such Member. In the event that a Member
fails to pay any amounts owed to the Company pursuant to this Section 5.3 when
due, the Managing Member may, in its sole and absolute discretion, elect to make
the payment to the Company, either directly or through an Affiliate, on behalf
of such defaulting Member, and in such event shall be deemed to have loaned such
amount to such defaulting Member and shall succeed to all rights and remedies of
the Company as against such defaulting Member (including, without limitation,
the right to receive distributions). Any amounts payable by a Member hereunder
shall bear interest at the base rate on corporate loans at large United States
money center commercial banks, as published from time to time in the Wall Street
Journal, plus four (4) percentage points (but not higher than the maximum lawful
rate) from the date such amount is due (i.e., 15 days after demand) until such
amount is paid in full. Each Member shall take such actions as the Company or
the Managing Member shall request in order to perfect or enforce the security
interest created hereunder.

 

5.4 Distributions Upon Liquidation

 

Notwithstanding the other provisions of this Article V, net proceeds from a
Terminating Capital Transaction and any other cash received or reductions in
reserves made after commencement of the liquidation of the Company shall be
distributed to the Members in accordance with Section 13.3 hereof.

 

5.5 Restricted Distributions

 

Notwithstanding any provision to the contrary contained in this Agreement,
neither the Company nor the Managing Member, on behalf of the Company, shall
make a distribution to any Member on account of its Membership Interest or
interest in LLC Units if such distribution would violate Section 18-607 of the
Act or other applicable law.

 

5.6 Distributions of Proceeds from Sale of Properties and Refinancing Debt

 

A.     Subject to the provisions of Section 5.7 hereof, in the event of a
taxable disposition of some, but not all, of the Properties, the Managing Member
shall cause the Company to (i) reinvest (including by making loans pursuant to
the terms of this Agreement) the Disposition Proceeds to the extent the Managing
Member elects to do so and in the amount determined by the Managing Member to be
appropriate (and to hold the Disposition Proceeds in an interest bearing account
pending such reinvestment), in its sole discretion, and (ii) if the Managing
Member elects, in its sole discretion, to distribute all or any portion of the
Disposition Proceeds, distribute such portions of the Disposition Proceeds, to
the extent thereof, as follows:

 

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(1) First, to the holders of Non-Managing Member Units in accordance with their
Preferred Return Shortfalls until the Preferred Return Shortfall for each holder
of Non-Managing Member Units is zero (-0-), and then to the Managing Member to
the extent of its Managing Member Shortfall;

 

(2) Second, to the holders of LLC Units pro rata to their holdings of LLC Units
but only to the extent that such distribution would not cause the number of LLC
Units held by the Non-Managing Members to be reduced below zero (-0-) pursuant
to the provisions of Section 5.6C hereof; and

 

(3) Third, the remaining balance of the Disposition Proceeds, if any, to the
Managing Member.

 

B.      Subject to the provisions of Section 5.7, upon the incurrence of
Refinancing Debt, the Managing Member shall cause the Company to (i) reinvest
(including by making loans pursuant to the terms of this Agreement) the
Refinancing Debt Proceeds to the extent the Managing Member elects to do so and
in the amount determined by the Managing Member to be appropriate (and to hold
the Refinancing Debt Proceeds in an interest bearing account pending such
reinvestment), in its sole discretion, and (ii) if the Managing Member elects,
in its sole discretion, to distribute all or any portion of the Refinancing Debt
Proceeds, distribute such portion of the Refinancing Debt Proceeds, to the
extent thereof, as follows:

 

(1) First, to the holders of the Non-Managing Member Units in accordance with
their Preferred Return Shortfalls until the Preferred Return Shortfall for each
holder of Non-Managing Member Units is zero (-0-) and then to the Managing
Member to the extent of its Managing Member Shortfall; and

 

(2) Second, the remaining balance of the Refinancing Debt Proceeds, if any, to
the Members in proportion to their Sharing Percentages.

 

C.      The number of LLC Units outstanding on the date of a distribution
pursuant to Section 5.6A.(2) hereof will be reduced (each such reduction a
“Reduction”) by a number of LLC Units (rounded down to the nearest whole unit)
(the “Reduction Units”) on the date of the distribution (the “Reduction Date”)
by the aggregate number of LLC Units (the “Total Units”) as follows:

 

(1) The Non-Managing Member Units shall be reduced by a number of LLC Units
(rounded down to the nearest whole unit) (the “Non-Managing Member Reduction
Units”) determined by dividing (i) the excess of (a) the aggregate amount of
distributions made on the Reduction Date to Non-Managing Members and Assignees
pursuant to Sections 5.6A.(2) and 5.6B.(2), over (b) the NMM Sharing Amount by
(ii) the product obtained by multiplying (a) Value on the Reduction Date by
(b) the Adjustment Factor. The Non-Managing Member Reduction Units shall be
allocated (as closely as practicable in whole units) among the holders of
Non-Managing Member Units in accordance with their respective holdings of
Non-Managing Member Units.

 

(2) The Managing Member Units shall be reduced by a number of Managing Member
Units (rounded down to the nearest whole unit) (the “the Managing

 

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Member Reduction Units”) equal to the product of (i) the Reduction Units with
respect to the Non-Managing Members divided by the aggregate Percentage Interest
of the Non-Managing Members immediately prior to the Reduction Date, times
(ii) the Percentage Interest of the Managing Member immediately prior to such
Reduction Date, provided the Managing Member Units shall not be reduced to less
than 1 LLC Unit.

 

To reflect the foregoing reduction, each Member shall return to the Managing
Member the certificate evidencing the Reduction Units allocated to him or it or
the Managing Member Units so reduced which will be canceled and a new
certificate evidencing the reduced number of Managing Member Units or
Non-Managing Member Units shall be immediately issued to such Member by the
Managing Member on behalf of the Company. In the event the number of outstanding
Non-Managing Member Units held by a Non-Managing Member or Assignee is reduced
(pursuant to this Section 5.6C or otherwise) to zero (-0-), such Non-Managing
Member or Assignee shall cease to have an interest in the Company (other than
the right to receive final distributions and allocations resulting from the
liquidation of their interest). Exhibit D sets forth an example of a Reduction
in Non-Managing Member Units and Managing Member Units pursuant to this
Section 5.6C.

 

D.      The Managing Member shall have no obligation to incur Refinancing Debt
for the purpose of making distributions pursuant to this Section 5.6 or for any
other purpose, except as provided in Sections 7.3E.(3) and 7.3E.(4) hereof.

 

5.7 Distributions Following Redemption

 

Notwithstanding anything to the contrary contained herein, a Non-Managing Member
shall not be entitled to any distribution pursuant to this Article V with
respect to any Tendered Units or any Non-Managing Member Units for which a Call
Notice pursuant to Section 13.2 has been delivered, as the case may be, if the
next LLC Record Date is on or after the Specified Redemption Date for such
Tendered Unit(s) or any Non-Managing Member Units for which a Call Notice
pursuant to Section 13.2 has been delivered, as the case may be.

 

ARTICLE VI.
ALLOCATIONS

 

6.1 Timing and Amount of Allocations of Net Income and Net Loss

 

Net Income and Net Loss of the Company shall be determined and allocated with
respect to each Fiscal Year of the Company as of the end of each such year.
Except as otherwise provided in this Article VI, an allocation to a Member of a
share of Net Income or Net Loss shall be treated as an allocation of the same
share of each item of income, gain, loss or deduction (collectively, “Tax
Items”)that is taken into account in computing Net Income or Net Loss.

 

6.2 General Allocations

 

A.     Operating Net Income and Net Loss. Except as otherwise provided in
Sections 6.2.B, 6.2.C or 6.3 hereof:

 

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(1) Net Loss with respect to any Fiscal Year of the Company, other than Net Loss
attributable to a disposition of any or all of the Properties, and other than
Net Loss attributable to a Liquidating Event, shall be allocated to the Members
and Assignees in proportion to their Sharing Percentages.

 

(2) Net Income with respect to any Fiscal Year of the Company, other than Net
Income attributable to a disposition of any or all of the Properties, and other
than Net Income attributable to a Liquidating Event, shall be allocated as
follows:

 

(a)                                  First, to each Member or Assignee in
proportion to, and to the extent of, the amount that cumulative Net Loss
previously allocated to such Member or Assignee pursuant to
Section 6.2A.(1) exceeds the cumulative amount of Net Income previously
allocated to such Member or Assignee pursuant to this Section 6.2A.(2)(a); and

 

(b)                                 Second, to each Member or Assignee in an
amount that will cause such allocation, together with the amount of all previous
allocations of Net Income under this Section 6.2A.(2)(b) and
Section 6.2B.(2)(b) to be in proportion to and to the extent of the cumulative
distributions received by such Member or Assignee pursuant to Sections 5.1A,
5.6A.(1), 5.6A.(2) (but only to the extent of the Profit Participation Amount)
and 5.6B.(1) for the current and all prior Fiscal Years; and

 

(c)                                  Thereafter, to each Member or Assignee pro
rata to such Member’s or Assignee’s Sharing Percentage.

 

B.      Net Income and Net Loss from the Disposition of Properties. Except as
otherwise provided in Sections 6.2C or 6.3:

 

(1) Net Loss attributable to a disposition of any or all of the Properties shall
be allocated to the Members and Assignees in proportion to their Sharing
Percentages.

 

(2) Net Income attributable to a disposition of any or all of the Properties
shall be allocated as follows:

 

(a)                                  First, to each Member or Assignee in
proportion to, and to the extent of, the amount that cumulative Net Loss
previously allocated to such Member or Assignee pursuant to
Section 6.2B.(1) exceeds the cumulative amount of Net Income previously
allocated to such Member or Assignee pursuant to this Section 6.2B.(2)(a);

 

(b)                                 Second, to each Member or Assignee in an
amount that will cause such allocation, together with the amount of all previous
allocations of Net Income under this Section 6.2B.(2)(b) and
Section 6.2A.(2)(b) to be in proportion to and to the extent of the cumulative
distributions received by such Member or Assignee pursuant to Sections 5.1 A,
5.6A.(1), 5.6(A).(2) (but only to the extent of

 

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the Profit Participation Amount) and 5.6B.(1) for the current and all prior
Fiscal Years; and

 

(c)                                  Thereafter, to each Member or Assignee pro
rata to such Member’s or Assignee’s Sharing Percentage.

 

C.      Net Income and Net Loss Upon Liquidation. If a Liquidating Event occurs
in a Fiscal Year, or if the number of LLC Units held by the Non-Managing Members
have been reduced (pursuant to Section 5.6C or otherwise) to zero (-0-), Net
Income or Net Loss (or, if necessary, separate items of income, gain, loss and
deduction) for such Fiscal Year and any Fiscal Years thereafter shall, subject
to Section 6.3, be allocated among the Members, as follows:

 

(1) First, to holders of Non-Managing Member Units, pro rata to their Percentage
Interests, in such amounts as will cause, to the greatest extent possible, each
such holder’s Capital Account per Non-Managing Member Unit (if any) to be equal
to the sum of (a) such holder’s Preferred Return Shortfall per unit, (b) the
product of (i) the Value of a REIT Share (with the date of the liquidating
distribution being the Valuation Date), and (ii) the Adjustment Factor (with the
product set forth in (b) being equal to zero if the number of outstanding
Non-Managing Member Units has been reduced (pursuant to Section 5.6.C, or
otherwise) to zero), and (c) an amount equal to (x) the NMM Sharing Amount,
calculated as if all of the Properties then owned by the Company were sold in a
taxable transaction at their fair market values, divided by (y) the total number
of Non-Managing Member Units then outstanding; and

 

(2) Thereafter, to the Managing Member.

 

6.3 Additional Allocation Provisions

 

A.     Regulatory Allocations.

 

(1) Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(f), notwithstanding the provisions of Section 6.2 hereof, or any
other provision of this Article VI, if there is a net decrease in Company
Minimum Gain during any Fiscal Year, 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, as determined under Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to
be allocated shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3A.(1) is intended to qualify as
a “minimum gain chargeback” within the meaning of Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.

 

(2) Member Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(i)(4) or in Section 6.3A.(1) hereof, if there is a net decrease
in Member Minimum Gain attributable to a Member Nonrecourse Debt during any
Fiscal Year, each Member who has a share of the Member Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with

 

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Regulations Section 1.704-2(i)(5), 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 Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 6.3A.(2) is intended to qualify as a “chargeback of
partner nonrecourse debt minimum gain” within the meaning of Regulations
Section 1.704-2(i) and shall be interpreted consistently therewith.

 

(3) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any
Fiscal Year shall be specially allocated to the Member(s) who bears the economic
risk of loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable, in accordance with Regulations
Section 1.704-2(i).

 

(4) Qualified Income Offset. If any Member unexpectedly receives an adjustment,
allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain
shall be allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d),
to such Member in an amount and manner sufficient to eliminate, to the extent
required by such Regulations, the Adjusted Capital Account Deficit of such
Member as quickly as possible, provided that an allocation pursuant to this
Section 6.3A.(4) shall be made if and only to the extent that such Member would
have an Adjusted Capital Account Deficit after all other allocations provided in
this Article VI have been tentatively made as if this Section 6.3A.(4) were not
in the Agreement. It is intended that this Section 6.3A.(4) qualify and be
construed as a “qualified income offset” within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

(5) Limitation on Allocation of Net Loss. To the extent that any allocation of
Net Loss would cause or increase an Adjusted Capital Account Deficit as to any
Member, such allocation of Net Loss shall be reallocated among the other Members
in accordance with their respective LLC Units, subject to the limitations of
this Section 6.3A.(5).

 

(6) Section 754 Adjustment. 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 Regulations
Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of its interest in the Company,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such gain or loss shall be specially
allocated to the Members in accordance with their LLC Units in the event that
Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom
such distribution was made in the event that Regulations
Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

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(7) Curative Allocations. The allocations set forth in Sections 6.3A.(1) through
(6) hereof (the “Regulatory Allocations”) are intended to comply with certain
regulatory requirements, including the requirements of Regulations Sections
1.704-1(b) and 1.704-2. Notwithstanding the provisions of Sections 6.1 and 6.2
hereof, the Regulatory Allocations shall be taken into account in allocating
other items of income, gain, loss and deduction among the Members so that, to
the extent possible without violating the requirements giving rise to the
Regulatory Allocations, 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.

 

B.    Allocation of Excess Nonrecourse Liabilities. For purposes of determining
a Member’s proportional share of the “excess nonrecourse liabilities” of the
Company within the meaning of Regulations Section 1.752-3(a)(3), each Member’s
interest in Company profits shall be such Member’s Percentage Interest.

 

C.    Special Allocation of Loss or Deduction. Any deductions associated with
the payment of a pre-payment premium or penalty in connection with the
prepayment of any mortgage Debt encumbering the Contribution Property on the
Effective Date shall be allocated to the Non-Managing Members.

 

6.4 Tax Allocations

 

A.    In General. Except as otherwise provided in this Section 6.4, for income
tax purposes under the Code and the Regulations each of the Company’s Tax Items
shall be allocated among the Members in the same manner as its correlative item
of “book” income, gain, loss or deduction is allocated pursuant to Sections 6.2
and 6.3 hereof.

 

B.    Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4A hereof, Tax Items with respect to Property that is contributed to
the Company with a Gross Asset Value that varies from its basis in the hands of
the contributing Member immediately preceding the date of contribution shall be
allocated among the Members for income tax purposes pursuant to the “traditional
method” as described in Regulations Section 1.704-3(b). In the event that the
Gross Asset Value of any Company asset is adjusted pursuant to subsection (b) of
the definition of “Gross Asset Value” (provided in Article I hereof), subsequent
allocations of Tax Items with respect to such asset (other than Tax Items
governed by the previous sentence) shall take account of the variation, if any,
between the adjusted basis of such asset and its Gross Asset Value in the same
manner as under Code Section 704(c) and the applicable Regulations and this
Section 6.4B, pursuant to any method permitted under Regulations Section 1.704-3
as selected by the Managing Member

 

6.5 Other Provisions

 

A.    Other Allocations. In the event that (i) any modifications are made to the
Code or any Regulations, (ii) any changes occur in any case law applying or
interpreting the Code or any Regulations, (iii) the IRS changes or clarifies the
manner in which it applies or interprets the Code or any Regulations or any case
law applying or interpreting the Code or any

 

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Regulations or (iv) the IRS adjusts the reporting of any of the transactions
contemplated by this Agreement which, in each case as reasonably and in good
faith determined by the Managing Member, either (a) requires allocations of
items of income, gain, loss, deduction or credit or (b) requires reporting of
any of the transactions contemplated by this Agreement in a manner different
from that set forth in this Article VI, the Managing Member is hereby authorized
to make new allocations or report any such transactions (as the case may be) in
reliance of the foregoing, and such new allocations and reporting shall be
deemed to be made pursuant to the fiduciary duty of the Managing Member to the
Company and the other Members, and no such new allocation or reporting shall
give rise to any claim or cause of action by any Member.

 

B.      Consistent Tax Reporting. The Members acknowledge and are aware of the
income tax consequences of the allocations made by this Article VI and hereby
agree to be bound by the provisions of this Article VI in reporting their shares
of Net Income, Net Loss and other items of income, gain, loss, deduction and
credit for federal, state and local income tax purposes.

 

6.6 Amendments to Allocation to Reflect Issuance of Additional Membership
Interests

 

In the event that the Company issues additional Membership Interests to the
Managing Member or any Additional Member pursuant to Article IV hereof, the
Managing Member shall make such revisions to this Article VI as it determines
are necessary to reflect the terms of the issuance of such additional Membership
Interests, including making preferential allocations to certain classes of
Membership Interests; provided, however, that any such preferential allocations
shall be subject to the prior Affirmative Consent of a Supermajority of the
Non-Managing Members.

 

ARTICLE VII.
MANAGEMENT AND OPERATION OF BUSINESS

 

7.1 Management

 

A.     Except as otherwise expressly provided in this Agreement, the Managing
Member, in its capacity as a Managing Member of the Company under the Act, shall
have sole and complete charge and management over the business and affairs of
the Company, in all respects and in all matters. The Managing Member shall at
all times act in good faith in exercising its powers hereunder. The Managing
Member shall be an agent of the Company’s business, and the actions of the
Managing Member taken in such capacity and in accordance with this Agreement
shall bind the Company. The Managing Member shall at all times be a Member of
the Company. Except as otherwise expressly provided in this Agreement or
required by any non-waivable provisions of applicable law, the Non-Managing
Members shall not participate in the control of the Company, shall have no
right, power or authority to act for or on behalf of, or otherwise bind, the
Company and shall have no right to vote on or consent to any other matter, act,
decision or document involving the Company or its business. The Managing Member
may not be removed by the Members with or without cause, except with the Consent
of the Managing Member. In addition to the powers now or hereafter granted a
manager of a limited liability company under applicable law or that are granted
to the Managing Member under any provision

 

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of this Agreement, the Managing Member, subject to the other provisions hereof
including the limitations on the authority of the Managing Member set forth in
Sections 4.3A and 7.3  hereof, shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of the
Company, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:

 

(1)   except as restricted in this Agreement, the making of any expenditures,
the lending or borrowing of money (including loans to the Managing Member), the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including the securing
of the same by deed to secure debt, mortgage, deed of trust or other lien or
encumbrance on the Company’s assets) and the incurring of any obligations that
it deems necessary for the conduct of the activities of the Company;

 

(2)   the making of tax, regulatory and other filings, or rendering of periodic
or other reports to governmental or other agencies having jurisdiction over the
business or assets of the Company;

 

(3)   except as restricted in this Agreement, the acquisition, sale, transfer,
exchange or other disposition of any assets of the Company (including, but not
limited to, the exercise or grant of any conversion, option, privilege or
subscription right or any other right available in connection with any assets at
any time held by the Company);

 

(4)   except as restricted in this Agreement, the mortgage, pledge, encumbrance
or hypothecation of any assets of the Company (including, without limitation,
any Property), the use of the assets of the Company (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement which the Managing Member believes will directly benefit the Company
and on any terms that the Managing Member sees fit, including, without
limitation, the financing of the conduct or the operations of the Company, the
lending of funds to other Persons (including, without limitation, the Managing
Member (if necessary to permit the financing or capitalization of a Subsidiary
of the Managing Member or the Company)) and the repayment of obligations of the
Company;

 

(5)   the management, operation, leasing, landscaping, repair, alteration,
demolition, replacement or improvement of any Property, including, without
limitation, any Property, or other asset of the Company or any Subsidiary of the
Company;

 

(6)   the negotiation, execution and performance of any contracts, leases,
conveyances or other instruments that the Managing Member considers useful or
necessary to the conduct of the Company’s operations or the implementation of
the Managing Member’s powers under this Agreement, including, without
limitation, (i) contracting with property managers (including, without
limitation, as to any Property, contracting with the contributing or any other
Member or its Affiliates for property management services), contractors,
developers, consultants, accountants, legal counsel, other professional advisors
and other agents and the payment of their expenses and compensation out of the
Company’s assets, and (ii) the execution, delivery and

 

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performance of the Contribution Agreement and the agreements and instruments
referred to therein or contemplated thereby.

 

(7)   the distribution of Company cash or other Company assets in accordance
with this Agreement, the holding, management, investment and reinvestment of
cash and other assets of the Company consistent with established investment
policies of the Managing Member, and the collection and receipt of revenues,
rents and income of the Company;

 

(8)   the selection and dismissal of employees of the Company or the Managing
Member (including, without limitation, employees having titles or offices such
as “president,” “vice president,” “secretary” and “treasurer”), and agents,
outside attorneys, accountants, consultants and contractors of the Company or
the Managing Member and the determination of their compensation and other terms
of employment or hiring;

 

(9)   the maintenance of such insurance including (i) liability insurance for
the Indemnitees hereunder and (ii) casualty, liability, earthquake and other
insurance on the Properties of the Company for the benefit of the Company and
the Members comparable in coverage to that maintained by the Managing Member
with respect to the properties it owns and otherwise as it deems necessary or
appropriate;

 

(10)  the control of any matters affecting the rights and obligations of the
Company, including the settlement, compromise, submission to arbitration or any
other form of dispute resolution, or abandonment, of any claim, cause of action,
liability, debt or damages, due or owing to or from the Company, the
commencement or defense of suits, legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, and the representation of the
Company in all suits or legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, the incurring of legal
expense, and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;

 

(11)  subject to the provisions of Section 5.2 hereof, the determination of the
fair market value of any Company property distributed in kind using such
reasonable method of valuation as it may adopt; provided that such methods are
otherwise consistent with the requirements of this Agreement;

 

(12)  the enforcement of any rights against any Member pursuant to
representations, warranties, covenants and indemnities relating to such Member’s
contribution of property or assets to the Company;

 

(13)  holding, managing, investing and reinvesting cash and other assets of the
Company;

 

(14)  the collection and receipt of revenues and income of the Company;

 

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(15)  the exercise, directly or indirectly, through any attorney-in-fact acting
under a general or limited power of attorney, of any right, including the right
to vote, appurtenant to any asset or investment held by the Company;

 

(16)  the exercise of any of the powers of the Managing Member enumerated in
this Agreement on behalf of or in connection with any Subsidiary of the Company
or any other Person in which the Company has a direct or indirect interest, or
jointly with any such Subsidiary or other Person;

 

(17)  the exercise of any of the powers of the Managing Member enumerated in
this Agreement on behalf of any Person in which the Company does not have an
interest pursuant to contractual or other arrangements with such Person;

 

(18)  the maintenance of working capital and other reserves in such amounts as
the Managing Member deems appropriate and reasonable from time to time;

 

(19)  the making, execution and delivery of any and all deeds, leases, notes,
deeds to secure debt, mortgages, deeds of trust, security agreements,
conveyances, contracts, guarantees, warranties, indemnities, waivers, releases
or legal instruments or agreements in writing necessary or appropriate in the
judgment of the Managing Member for the accomplishment of any of the powers of
the Managing Member enumerated in this Agreement;

 

(20)  the distribution of cash to acquire LLC Units held by a Member in
connection with a Member’s exercise of its Redemption Right under Section 8.6
hereof;

 

(21)  the amendment and restatement of Exhibit A hereto or the books and records
of the Company to reflect accurately at all times the Capital Accounts, LLC
Units, and Percentage Interests of the Members as the same are adjusted from
time to time to the extent necessary to reflect redemptions, Capital
Contributions, the issuance of or reduction in the number of LLC Units, the
admission of any Additional Member or any Substituted Member or otherwise, as
long as the matter or event being reflected in Exhibit A hereto or in the books
and records of the Company otherwise is authorized by this Agreement;

 

(22)  admit into the Company any Additional or Substituted Managing Member in
accordance with Section 12.2 hereof;

 

(23)  admit into the Company any Additional Member in accordance with
Section 12.3 hereof;

 

(24)  the transfer of any Property to or holding of any Property in any
wholly-owned Subsidiary of Company for financing or other purposes deemed
appropriate by the Managing Member.

 

B.      Each of the Non-Managing Members agrees that, except as otherwise
provided in this Agreement, the Managing Member is authorized to execute,
deliver and perform the above-mentioned agreements and transactions on behalf of
the Company without any further

 

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act, approval or vote of the Non-Managing Members, notwithstanding any other
provision of the Act or any applicable law, rule or regulation. The execution,
delivery or performance by the Managing Member or the Company of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the Managing Member of any duty that the Managing Member may owe the Company or
the Members or any other Persons under this Agreement or of any duty stated or
implied by law or equity.

 

C.      At all times from and after the date hereof, the Managing Member may
cause the Company to establish and maintain working capital reserves in such
amounts as the Managing Member, in its sole and absolute discretion, deems
appropriate and reasonable from time to time.

 

D.      Except as otherwise expressly provided in this Agreement, in exercising
its permitted authority under this Agreement, the Managing Member may, but shall
be under no obligation to, take into account the tax consequences to any Member
(including the Managing Member) of any action taken by it. Except as otherwise
provided in this Agreement, the Managing Member and the Company shall not have
liability to a Member under any circumstances as a result of an income tax
liability incurred by such Member as a result of an action (or inaction) by the
Managing Member pursuant to its authority under this Agreement so long as the
action or inaction is taken in good faith and does not otherwise violate this
Agreement.

 

7.2 Certificate of Formation

 

To the extent that such action is determined by the Managing Member to be
reasonable and necessary or appropriate, the Managing Member shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Company as a limited liability company under the laws of the State
of Delaware and each other state, the District of Columbia or any other
jurisdiction in which the Company may elect to do business or own property.
Subject to the terms of Section 8.5A.(4) hereof, the Managing Member shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate or any amendment thereto to any Member. The Managing Member shall
use all reasonable efforts to cause to be filed such other certificates or
documents as may be commercially reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited liability
company in the State of Delaware and any other state, or the District of
Columbia or other jurisdiction in which the Company may elect to do business or
own property.

 

7.3 Restrictions on Managing Member’s Authority

 

A.     The Managing Member may not take any action in contravention of an
express prohibition or limitation of this Agreement, including, without
limitation:

 

(1)   take any action that would make it impossible to carry on the ordinary
business of the Company, except as otherwise provided in this Agreement;

 

(2)   possess Company property, or assign any rights in specific Company
property, for other than a Company purpose except as otherwise provided in this
Agreement;

 

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(3)   perform any act that would subject a Member to liability as a Managing
Member in any jurisdiction or any other liability except as provided herein or
under the Act; or

 

(4)   enter into any contract, mortgage, loan or other agreement that expressly
prohibits or restricts, or has the effect of prohibiting or restricting, the
ability of (a) the Managing Member or the Company from satisfying its
obligations under Article V and Section 8.6 hereof in full or (b) a Member from
exercising its rights to a Redemption in full, except, in either case, with the
written Consent of such Member affected by the prohibition.

 

B.      Subject to the provisions of Section 11.2 hereof, the Managing Member
shall not, without the prior Consent of the Non-Managing Members undertake or
have the authority to do or undertake, on behalf of the Company, any of the
following actions or enter into any transaction which would have the effect of
such transactions:

 

(1)   except as provided in Section 7.3C and except in connection with a
dissolution or termination of the Company permitted by Section 7.3E, amend,
modify or terminate this Agreement other than to reflect the admission,
substitution, termination or withdrawal of Members pursuant to Article XI or
Article XII hereof;

 

(2)   except as provided in Section 11.2 hereof, approve or acquiesce to the
Transfer of the Membership Interest of the Managing Member to any Person other
than the Company;

 

(3)   make a general assignment for the benefit of creditors or appoint or
acquiesce in the appointment of a Custodian for all or any part of the assets of
the Company;

 

(4)   institute any proceeding for bankruptcy on behalf of the Company;

 

(5)   acquire any real properties other than the Contributed Property and any
Successor Properties and any assets or other Property subsequently acquired that
are directly related to the Contributed Property or any Successor Properties; or

 

(6)   incur any Debt in violation of the provisions of Section 4.3A. hereof.

 

C.      Notwithstanding Section 7.3B, but subject to the provisions of
Section 7.3D, the Managing Member shall have the exclusive power to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:

 

(1)   to reflect the issuance of additional Membership Interests pursuant to
Sections 4.2 and 4.4 and Article XII, to reflect the admission, substitution,
termination, or withdrawal of Members in accordance with this Agreement and to
amend Exhibit A or the books and records of the Company in connection therewith
and to reflect the redemption or other reduction in the number of LLC Units
outstanding pursuant to Section 5.6 hereof and as otherwise permitted by this
Agreement;

 

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(2)   (x) to reflect a change that is of an inconsequential nature (y) to cure
any ambiguity, correct or supplement any provision in this Agreement, or (z) to
make other changes with respect to matters arising under this Agreement, in each
case to the extent that the same does not adversely affect the Non-Managing
Members and is not inconsistent with law or with the provisions of this
Agreement;

 

(3)   to satisfy any requirements, conditions, or guidelines contained in any
order, directive, opinion, ruling or regulation of a federal or state agency or
contained in federal or state law;

 

(4)   to reflect such changes as are reasonably necessary for any REIT Member or
any Affiliate thereof to maintain its status as a REIT or to satisfy the REIT
Requirements;

 

(5)   to modify, as set forth in the definition of “Capital Account,” the manner
in which Capital Accounts are computed, subject to the provisions of such
definition; and

 

(6)   to add to the obligations of the Managing Member or surrender any right or
power granted to the Managing Member or any Affiliate of the Managing Member for
the benefit of the Non-Managing Members.

 

D.    Notwithstanding Section 7.3B and 7.3C hereof, this Agreement shall not be
amended with respect to any Member adversely affected, and no action may be
taken by the Managing Member, without the Consent of such Member adversely
affected if such amendment or action would (i) convert a Non-Managing Member’s
interest in the Company into a Managing Member’s interest, (ii) modify the
limited liability of a Non-Managing Member, (iii) alter rights of the Member to
receive distributions pursuant to Article V or Section I3.3A.(4), or the
allocations specified in Article VI (except as permitted pursuant to Sections
4.2, 4.3 and 4.4 and Section 7.3C.(1) hereof), (iv) alter or modify the rights
to a Redemption as set forth in Section 8.6, or the rights to a Make-Whole
Payment as set forth in Sections 7.3E, 7.3F, 7.3G and 7.3H hereof, and related
definitions hereof, or (v) amend this Section 7.3D. Further, no amendment may
alter the restrictions on the Managing Member’s authority set forth elsewhere in
this Section 7.3 without the Consent specified in such section. Any such
amendment or action consented to by any Member shall be effective as to that
Member, notwithstanding the absence of such Consent by any other Member.

 

E.     The Company shall pay to each Non-Managing Member the Make-Whole Payment,
if any, as provided below if the Company takes any of the following actions
during the Tax Protection Period without the prior Consent of the Non-Managing
Members, which Consent expressly states that the right to the Make-Whole Payment
is being waived:

 

(1)   cause or permit the Company (x) to merge, consolidate or combine with or
into any other partnership, limited partnership, limited liability company,
corporation or other Person (other than with a Subsidiary of the Company),
(y) to engage in any Terminating Capital Transaction or (z) to dissolve or
otherwise terminate its existence; or

 

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(2)   sell, dispose, convey or otherwise transfer all or any portion of the
Contributed Property or any Successor Properties, in a transaction that causes
holders of Non-Managing Member Units to recognize taxable income under the Code
on account of a Built-in Gain, other than (i) a casualty loss, (ii) taking by
eminent domain; (iii) pursuant to the exercise of a put right by the Company (or
any Subsidiary of the Company) pursuant to which the Company (or such
Subsidiary) may require another Person to purchase all or any portion of the
Contributed Property or one or more of the Successor Properties, which put right
was granted pursuant to any document or instrument in effect at the time the
Contributed Property or any Successor Property was acquired by the Company (or
any Subsidiary); or (iv) pursuant to the exercise of a call or purchase right by
any other Person pursuant to which such Person has the right to purchase all or
any portion of the Contributed Property or one or more of the Successor
Properties, which purchase right was granted pursuant to any document or
instrument in effect at the time the Contributed Property or any Successor
Property was contributed to or acquired by the Company (or any Subsidiary of the
Company); provided that the Company has first used commercially reasonable
efforts to structure such disposition as either a tax-free like-kind exchange
under Section 1031 of the Code or as a tax-free investment under Section 1033 of
the Code; or

 

(3)   fails to keep in place a Managing Member Loan for which a Bottom Guarantee
has been executed and delivered by an Initial Non-Managing Member as of the
Effective Date in an amount not less than the applicable Managing Member Loan
Amount, unless such Managing Member Loan is replaced or refinanced with other
Debt satisfying the requirements set for below (“Replacement Indebtedness”). Any
Replacement Indebtedness shall:

 

(a)           not be less than the applicable Managing Member Loan Amount
therefor;

 

(b)           not require principal repayments during such period that would
cause the principal balance of such Replacement Indebtedness to be less than the
applicable Managing Member Loan Amount therefor at any time during the Tax
Protection Period;

 

(c)           be full recourse to the Company; and

 

(d)           provide each Initial Non-Managing Member that executed and
delivered a Bottom Guarantee therefor as of the Effective Date with the
opportunity to execute and deliver to the lender thereunder (including Managing
Member, if applicable) a Bottom Guarantee for such Replacement Indebtedness;

 

The Managing Member shall provide each Initial Non-Managing Member who has
executed and delivered a Bottom Guarantee with respect to a Managing Member Loan
as of the Effective Date or any permitted Replacement Indebtedness thereafter
with not less than thirty (30) days’ prior written notice of its desire to
refinance such Managing

 

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Member Loan or any permitted Replacement Indebtedness with Replacement
Indebtedness; or

 

(4)   fails to continue to provide the opportunity to each Initial Non-Managing
Member who elected as of the Effective Date to execute and deliver a Bottom
Guarantee with respect to a Managing Member Loan, to execute a Bottom Guarantee
therefor or for any Replacement Indebtedness therefor in an amount up to the
applicable Managing Member Loan Amount. If any Initial Non-Managing Member who
elected to execute and deliver a Bottom Guarantee as of the Effective Date with
respect to a Managing Member Loan, elected to deliver the same for less than the
applicable Managing Member Loan Amount, then upon written notice to the Company
and the Managing Member (and, if applicable, the lender under any Replacement
Indebtedness), not more frequently than one time per year during the Tax
Protection Period, such Initial Non-Managing Member may elect to increase such
Non-Managing Member’s Bottom Guarantee in an amount up to the applicable
Managing Member Loan Amount. As used herein, “Bottom Guarantee” means an
agreement in substantially the form attached hereto as Exhibit E or in such
other form as may be reasonably acceptable to the lender and such Initial
Non-Managing Member and providing substantively the same benefits to such
Initial Non-Managing Member as the form attached hereto as Exhibit E. By their
execution and delivery hereof, each Initial Non-Managing Member acknowledges
that it has been provided the opportunity to execute a Bottom Guarantee for a
Managing Member Loan as of the Effective Date, and if such Initial Non-Member
has exercised such opportunity, it has executed and delivered such Bottom
Guarantee to Managing Member as of the Effective Date. Notwithstanding anything
to the contrary contained herein, any Initial Managing Member that fails to
execute and deliver a Bottom Guarantee with respect to a Managing Member Loan as
of the Effective Date, shall be deemed to have elected not to exercise its
opportunity to execute a Bottom Guarantee with respect thereto and the Managing
Member shall have no further obligation to provide such opportunity to execute
and deliver a Bottom Guarantee or to maintain a Managing Member Loan or any
Replacement Indebtedness for the benefit of such Initial Non-Managing Member.

 

In the event that the prior Consent of the Non-Managing Members is not required
for the Managing Member, on behalf of the Company, to take or engage or fail to
take, as the case may be, in any of the actions described in the foregoing
subparagraphs (1), (2) and (3) or fails to provide the rights in the foregoing
subparagraph (4), the Managing Member may take such action only after providing
the Non-Managing Members with not less than fifteen (15) days’ notice of its
intention to do so.

 

F.     The Company shall pay to each applicable Non-Managing Member the Make
Whole Payment as provided in Section 7.3G if the Company takes any action to
dissolve or otherwise terminate the Company during the Tax Protection Period. In
addition, an applicable Non-Managing Member shall be entitled to the Make Whole
Payment in the event of the exercise of such Non-Managing Member’s right to a
Redemption under Section 8.6A after receipt by such Non-Managing Member of a
written notice of a Liquidating Event provided by the Company to the same extent
such Non-Managing Member would have been entitled to such Make Whole Payment had
such Non-Managing Member not have been redeemed pursuant to

 

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such Redemption. In the event the Managing Member intends to dissolve or
otherwise terminate the Company following the Tax Protection Period, it shall
give not less than fifteen (15) calendar days notice of such intent to the
Non-Managing Members prior to taking any action in furtherance of such intent.

 

G.             Any event in Sections 7.3E and 7.3F that triggers the obligation
of the Company to make a Make-Whole Payment (as defined below) is called a
“Triggering Event.” The Company shall pay to each applicable Non-Managing Member
an amount (the “Make-Whole Payment”) equal to the aggregate federal, state and
local income taxes, if any, incurred by such applicable Non-Managing Member as a
result of a Triggering Event. Any such federal, state and local income taxes
shall be deemed to be the amount of Built-in Gain recognized by the Non-Managing
Members multiplied by the then highest rate or rates applicable to such Built-in
Gain for the year in which such Built-in Gain is recognized grossed up to
include any federal, state and local income taxes incurred by the Non-Managing
Member by reason of the receipt of the payment from the Company. No effect shall
be given in determining the amount of the Make-Whole Payment of a Non-Managing
Member’s taxable income, tax deductions, tax credits, tax carry forwards nor to
any other of their tax benefits or tax attributes (except that state and local
taxes paid on account of the Make-Whole Payment shall be deducted in determining
federal income taxes for purposes of determining the Make-Whole Payment). The
Make-Whole Payment shall be made within a reasonable period of time after the
Triggering Event, but in no event later than the date by which the Non-Managing
Member would be required to make the applicable tax payment. In addition to any
other rights available under law or equity, in the event that the Company fails
to pay any amounts owed pursuant to this Section 7.3 when due, the Non- Managing
Member to whom such payment is owed shall be deemed to have loaned such amount
to the Company. Any amounts payable to a Non-Managing Member shall be increased
by an amount equal to the greater of (x) interest accrued on such amount at the
Prime Rate from the date such amount is due until such amount is paid in full
and (y) actual interest and penalties assessed by the relevant taxing
authorities with respect to such amounts plus any penalties actually imposed
thereon by the relevant taxing authorities. In the event that any Member becomes
entitled to a Make Whole Payment and the Company, for any reason, fails to
satisfy such obligation, then the Managing Member shall make the Make Whole
Payment promptly following such failure by the Company to make such Make Whole
Payment. In the event that any Non-Managing Member becomes entitled to a
Make-Whole Payment, then, on or before the date on which such Make-Whole Payment
is payable to the Non-Managing Member, the Managing Member shall make a Capital
Contribution to the Company of cash in an amount equal to said Make-Whole
Payment.

 

H.            The parties agree that the sole and exclusive rights and remedies
to which the Non-Managing Members may be entitled at law or in equity in
connection with any Triggering Event shall be for payment of the Make-Whole
Payment pursuant to Section 7.3G, and no Non-Managing Member shall be entitled
to enjoin or otherwise object to any transaction that would result in a taxable
event or pursue any other claim with respect to a Triggering Event. If any
Non-Managing Member notifies the Company of a claim that the Company owes a
Make-Whole Payment, the Managing Member, on behalf of the Company, and the
Non-Managing Member shall negotiate in good faith to resolve any disagreements
regarding any such Triggering Event. If any such disagreement cannot be resolved
by the parties within thirty (30) calendar days after the receipt by the Company
of the notice in accordance with the preceding sentence, the

 

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Managing Member, on behalf of the Company, and the Non-Managing Member shall
jointly retain a nationally recognized independent public accounting firm (an
“Accounting Firm”) to act as an arbitrator to resolve as expeditiously as
possible all points of any such disagreement (including, without limitation,
whether a Triggering Event has occurred and, if so, the amount of the applicable
Make-Whole Payment that the Non-Managing Member is entitled to as a result
thereof, determined as set forth in Section 7.3G). If the parties cannot agree
on an Accounting Firm, each of the Managing Member, on behalf of the Company,
and the Non-Managing Member shall retain an Accounting Firm, and the Accounting
Firms selected shall jointly retain a third Accounting Firm. If the two
Accounting Firms cannot agree upon a third Accounting Firm within thirty (30)
calendar days, such matter shall be referred to a court of competent
jurisdiction to select the third Accounting Firm. The Accounting Firms shall be
instructed to resolve as expeditiously as possible all points of any such
disagreement (including, without limitation, whether a Triggering Event has
occurred and, if so, the amount of the applicable Make-Whole Payment that the
Non-Managing Member is entitled to as a result thereof, determined as set forth
in Section 7.3.G). All determinations made by the Accounting Firm or the
Accounting Firms, as the case may be, with respect to the resolution of whether
a Triggering Event has occurred shall be final, conclusive and binding on the
Company and the Non-Managing Member. The fees and expenses of any Accounting
Firms incurred in connection with any such determination shall be shared equally
by the Company and the Non-Managing Member.

 

7.4 Compensation of the Managing Member

 

A.           The Managing Member shall not be compensated for its services as
the manager of the Company. Distributions, payments and allocations to which the
Managing Member may be entitled in its capacity as the Managing Member shall not
constitute compensation for services rendered by the Managing Member as provided
in this Agreement (including the provisions of Articles V and VI hereof).

 

B.             Subject to Section 7.4C hereof, the Company shall be liable, and
shall reimburse the Managing Member on a monthly basis (or such other basis as
the Managing Member may determine in its sole and absolute discretion), for all
sums expended in connection with the Company’s business. Any such reimbursements
shall be in addition to any reimbursement of the Managing Member as a result of
indemnification pursuant to Section 7.7 hereof.

 

C.             To the extent practicable, Company expenses shall be billed
directly to and paid by the Company. Reimbursements to the Managing Member or
any of its Affiliates by the Company shall be allowed, however, for the actual
cost to the Managing Member or any of its Affiliates of operating and other
expenses of the Company, including, without limitation, the actual cost of
goods, materials and administrative services related to (i) Company operations,
(ii) company accounting, (iii) communications with Members, (iv) legal services,
(v) tax services, (vi) computer services, (vii) risk management, (viii) mileage
and travel expenses and (ix) such other related operational and administrative
expenses as are necessary for the prudent organization and operation of the
Company. “Actual cost of goods and materials” means the actual cost to the
Managing Member or any of its Affiliates of goods and materials used for or by
the Company obtained from entities not affiliated with the Managing Member, and
“actual cost of administrative services” means the pro rata cost of personnel
(as if such persons were

 

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employees to the Company) providing administrative services to the Company. The
cost for such services to be reimbursed to the Managing Member or any Affiliate
thereof shall be the lesser of the Managing Member’s or Affiliate’s actual cost,
or the amount the Company would be required to pay to independent parties for
comparable administrative services in the same geographic location.

 

D.            In addition to any reimbursements to which the Managing Member is
entitled pursuant to Sections 8.6 and 11.3 hereof or elsewhere in this
Agreement, the Managing Member shall also be reimbursed for all expenses it
incurs relating to any issuance of additional Membership Interests, Debt of the
Company, or rights, options, warrants or convertible or exchangeable securities
of the Company pursuant to Article VIII hereof (including, without limitation,
all costs, expenses, damages and other payments resulting from or arising in
connection with litigation related to any of the foregoing), all of such
expenses are considered by the Members to constitute expenses of, and for the
benefit of, the Company.

 

To the extent that reimbursements to the Managing Member or any of its
Affiliates by the Company pursuant to this Section 7.4 would constitute gross
income to the Managing Member for purposes of Code Section 856(c)(2) or
856(c)(3), then such amounts shall be treated as “guaranteed payments” within
the meaning of Code Section 707(c).

 

7.5 Other Business of Managing Member

 

The Managing Member shall devote to the Company such time as may be necessary
for the performance of its duties as Managing Member, but the Managing Member is
not required, and is not expected, to devote its full time to the performance of
such duties. The Managing Member may engage independently or with others in
other business ventures of every nature and description, including, without
limitation, the ownership of other properties and the making or management of
other investments. Nothing in this Agreement shall be deemed to prohibit the
Managing Member or any Affiliate of the Managing Member from dealing, or
otherwise engaging in business with, Persons transacting business with the
Company, or from providing services related to the purchase, sale, financing,
management, development or operation of real or personal property and receiving
compensation therefor, not involving any rebate or reciprocal arrangement that
would have the effect of circumventing any restriction set forth herein upon
dealings with the Managing Member or any Affiliate of the Managing Member.
Neither the Company nor any Member shall have any right by virtue of this
Agreement or the relationship created hereby in or to such other ventures or
activities or to the income or proceeds derived therefrom, and the pursuit of
such ventures, even if competitive with the business of the Company, shall not
be deemed wrongful or improper.

 

7.6 Contracts with Affiliates

 

A.           Subject to Section 7.6B below, the Company may lend or contribute
to Persons in which it has an equity investment, and such Persons may borrow
funds from the Company, on terms and conditions established in the sole and
absolute discretion of the Managing Member. The foregoing authority shall not
create any right or benefit in favor of any Person.

 

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B.             The Managing Member or any of its Affiliates, directly or
indirectly, shall be permitted to sell, transfer or convey any property to, or
purchase any property from, or borrow funds from, or lend funds to, the Company
or engage in any other transaction with the Company, but only upon terms
determined by the Managing Member in good faith to be fair and reasonable and
comparable to terms that could be obtained from an unaffiliated party in an
arm’s length transaction, except as otherwise expressly permitted by this
Agreement.

 

C.             Notwithstanding any other provision of this Agreement, on and as
of the Effective Date the Members acknowledge that an Affiliate of certain of
the Non-Managing Members shall be engaged by the Company to provide day-to-day
property management and leasing services for the Company pursuant to a written
agreement upon terms and conditions approved by the Managing Member, in its sole
discretion.

 

7.7 Indemnification

 

A.           To the fullest extent permitted by applicable law, the Company
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without limitation,
attorney’s fees and other legal fees and expenses), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative, that
relate to the operations of the Company (“Actions”) as set forth in this
Agreement in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise unless it is established that: (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
proceeding and either was (A) committed in bad faith, (B) was the result of
gross negligence or willful misconduct or (C) in material breach of such
Indemnitee’s express duties, covenants or obligations under this Agreement;
(ii) the Indemnitee actually received an improper personal benefit in money,
property or services; or (iii) in the case of any criminal proceeding, the
Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any
indebtedness of the Company or any Subsidiary of the Company (including, without
limitation, any indebtedness which the Company or any Subsidiary of the Company
has assumed or taken subject to), and the Managing Member is hereby authorized
and empowered, on behalf of the Company, to enter into one or more indemnity
agreements consistent with the provisions of this Section 7.7 in favor of any
Indemnitee having or potentially having liability for any such indebtedness. The
termination of any Action by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7A, unless such judgment or order against an
Indemnitee establishes the same. The termination of any Action upon a plea of
nolo contendre or its equivalent, or an entry of an order of probation prior to
judgment against an Indemnitee, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section 7.7A
with respect to the subject matter of such proceeding. Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the
Company, and any insurance proceeds from the liability policy covering the
Managing Member and any Indemnitees, and neither the Managing Member nor any
Non-Managing Member shall have any obligation to contribute to the capital of
the Company or otherwise provide funds to enable the Company to fund its
obligations under this Section 7.7.

 

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B.             Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding or otherwise subject to or the focus of or is involved in any Action
shall be paid or reimbursed by the Company as incurred by the Indemnitee in
advance of the final disposition of the Action upon receipt by the Company of
(i) a written affirmation by the Indemnitee of the Indemnitee’s good faith
belief that the standard of conduct necessary for indemnification by the Company
as authorized in Section 7.7A has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.

 

C.             The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Members, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement with
such Indemnitee or in the writing pursuant to which such Indemnitee is
indemnified.

 

D.            The Company may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any of the Indemnitees and such other Persons
as the Managing Member shall determine, against any liability that may be
asserted against or expenses that may be incurred by such Person in connection
with the Company’s activities, regardless of whether the Company would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.

 

E.              In no event may an Indemnitee subject any of the Members to
personal liability by reason of the indemnification provisions set forth in this
Agreement.

 

F.              An Indemnitee shall not be denied indemnification in whole or in
part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.

 

G.             The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Company’s liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

 

H.            If and to the extent any reimbursements to the Managing Member
pursuant to this Section 7.7 constitute gross income to the Managing Member (as
opposed to the repayment of advances made by the Managing Member on behalf of
the Company) such amounts shall constitute guaranteed payments within the
meaning of Code Section 707(c), shall be treated consistently therewith by the
Company and all Members, and shall not be treated as distributions for purposes
of computing the Members’ Capital Accounts.

 

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7.8 Liability of the Managing Member

 

A.           Notwithstanding anything to the contrary set forth in this
Agreement, neither the Managing Member nor any of its directors, officers,
agents or employees shall be liable or accountable in damages or otherwise to
the Company, any Members or any Assignees for losses sustained, liabilities
incurred or benefits not derived as a result of errors in judgment or mistakes
of fact or law or of any act or omission if the Managing Member or such
director, officer, agent or employee of the Managing Member, as the case may be,
acted in good faith and has not engaged in gross negligence or breached its
express covenants set forth in this Agreement.

 

B.             The Non-Managing Members expressly acknowledge that the Managing
Member is acting for the benefit of the Company, the Members and the Managing
Member’s shareholders collectively, that the Managing Member is under no
obligation to give priority to the separate interests of the Members or the
Managing Member’s shareholders (including, without limitation, the tax
consequences to Members, Assignees or the Managing Member’s shareholders) in
deciding whether to cause the Company to take (or decline to take) any actions
and that the Managing Member shall not be liable to the Company or to any Member
for monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Non-Managing Members in connection with such decisions, provided that
the Managing Member has acted in good faith and has not engaged in gross
negligence or breached its express covenants set forth in this Agreement.

 

C.             Subject to its obligations and duties as Managing Member set
forth in Section 7.1.A hereof, the Managing Member may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its employees or agents. The
Managing Member shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by it in good faith.

 

D.            Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the Managing Member’s, its officers’, directors’, agents’ or
employees’ liability to the Company and the Non-Managing Members under this
Section 7.8 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.

 

7.9 Other Matters Concerning the Managing Member

 

A.           The Managing Member may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties.

 

B.             The Managing Member may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters that the Managing Member

 

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reasonably believes to be within the Managing Member’s professional or expert
competence shall be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.

 

C.             The Managing Member shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the Managing Member in the power of attorney,
have full power and authority to do and perform all and every act and duty that
is permitted or required to be done by the Managing Member hereunder.

 

D.            Notwithstanding any other provisions of this Agreement or the Act,
any action of the Managing Member on behalf of the Company or any decision of
the Managing Member to refrain from acting on behalf of the Company undertaken
in the good faith belief that such action or omission is necessary or advisable
in order (i) to protect the ability of any REIT Member or any Affiliate thereof
to continue to qualify as a REIT, (ii) for any REIT Member or any Affiliate
thereof otherwise to satisfy the REIT Requirements or (iii) to allow any REIT
Member or any Affiliate thereof to avoid incurring any liability for taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Non-Managing Members. If in the
opinion of the Managing Member any such action or omission shall adversely
affect the rights of a Non-Managing Member hereunder, the Managing Member shall
give such affected Non-Managing Member notice of such intended action or
omission.

 

7.10 Title to Company Assets

 

Title to Company assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Company as an entity, and no
Member, individually or collectively with other Members or Persons, shall have
any ownership interest in such Company assets or any portion thereof. All
Company assets shall be recorded as the property of the Company in its books and
records, irrespective of the name in which legal title to such Company assets is
held.

 

7.11 Reliance by Third Parties

 

Notwithstanding anything to the contrary in this Agreement, any Person dealing
with the Company shall be entitled to assume that the Managing Member has full
power and authority, without the consent or approval of any other Member or
Person, to encumber, sell or otherwise use in any manner any and all assets of
the Company and to enter into any contracts on behalf of the Company, and take
any and all actions on behalf of the Company, and such Person shall be entitled
to deal with the Managing Member as if it were the Company’s sole party in
interest, both legally and beneficially. Each Non-Managing Member hereby waives
any and all defenses or other remedies that may be available against such Person
to contest, negate or disaffirm any action of the Managing Member in connection
with any such dealing. In no event shall any Person dealing with the Managing
Member or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expediency
of any act or action of the Managing Member or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Company by

 

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the Managing Member or its representatives shall be conclusive evidence in favor
of any and every Person relying thereon or claiming thereunder that (i) at the
time of the execution and delivery of such certificate, document or instrument,
this Agreement was in full force and effect, (ii) the Person executing and
delivering such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Company and (iii) such certificate,
document or instrument was duly executed and delivered in accordance with the
terms and provisions of this Agreement and is binding upon the Company.

 

ARTICLE VIII.
RIGHTS AND OBLIGATIONS OF MEMBERS

 

8.1 Limitation of Liability

 

The Non-Managing Members shall have no liability under this Agreement except as
expressly provided in this Agreement or under the Act.

 

8.2 Managing of Business

 

No Non-Managing Member or Assignee (other than the Managing Member, any of its
Affiliates or any officer, director, employee, partner, agent or trustee of the
Managing Member, the Company or any of their Affiliates, in their capacity as
such) shall take part in the operations, management or control (within the
meaning of the Act) of the Company’s business, transact any business in the
Company’s name or have the power to sign documents for or otherwise bind the
Company. The transaction of any such business by the Managing Member, any of its
Affiliates or any officer, director, employee, partner, agent or trustee of the
Managing Member, the Company or any of their Affiliates, in their capacity as
such, shall not affect, impair or eliminate the limitations on the liability of
the Non-Managing Members or Assignees under this Agreement.

 

8.3 Outside Activities of Members

 

Subject to any agreements entered into by a Member or its Affiliates with the
Managing Member, the Company or a Subsidiary (including, without limitation, any
employment agreement), any Member and any Assignee, officer, director, employee,
agent, trustee, Affiliate or shareholder of any Member shall be entitled to and
may have business interests and engage in business activities in addition to
those relating to the Company, including business interests and activities that
are in direct or indirect competition with the Company or that are enhanced by
the activities of the Company. Neither the Company nor any Member shall have any
rights by virtue of this Agreement in any business ventures of any Member or
Assignee. Subject to such agreements, none of the Members nor any other Person
shall have any rights by virtue of this Agreement or the relationship
established hereby in any business ventures of any other Person (other than the
Managing Member, to the extent expressly provided herein), and such Person shall
have no obligation pursuant to this Agreement, subject to any agreements entered
into by a Member or its Affiliates with the Managing Member, the Company or a
Subsidiary, to offer any interest in any such business ventures to the Company,
any Member or any such other Person, even if such opportunity is of a character
that, if presented to the Company, any Member or such other Person, could be
taken by such Person. The Non-

 

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Managing Members shall not, by virtue of their ownership of Non-Managing Member
Units, owe a fiduciary duty to the other Members or the Company.

 

8.4 Return of Capital

 

Except pursuant to the rights of Redemption set forth in Section 8.6 hereof, no
Member shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Company as provided herein. Except to the
extent provided in Article V, Article VI and Article XIII hereof or otherwise
expressly provided in this Agreement, no Member or Assignee shall have priority
over any other Member or Assignee either as to the return of Capital
Contributions or as to profits, losses, distributions or credits.

 

8.5 Rights of Non-Managing Members Relating to the Company

 

A.           In addition to other rights provided by this Agreement or by the
Act, and except as limited by Section 8.5C hereof, each Non-Managing Member
shall have the right, for a purpose reasonably related to such Non-Managing
Member’s Membership Interest in the Company, upon written demand with a
statement of the purpose of such demand and at such Non-Managing Member’s own
expense:

 

(1)   to obtain a copy of (i) the most recent annual and quarterly reports filed
with the SEC by the Managing Member pursuant to the Exchange Act and (ii) each
report or other written communication sent to the shareholders of the Managing
Member;

 

(2)   to obtain a copy of the Company’s federal, state and local income tax
returns for each Fiscal Year;

 

(3)   to obtain a current list of the name and last known business, residence or
mailing address of each Member;

 

(4)   to obtain a copy of this Agreement and the Certificate and all amendments
thereto, together with executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate and all amendments thereto have been
executed; and

 

(5)   to obtain true and full information regarding the amount of cash and a
description and statement of any other property or services contributed by each
Member, and the date on which each became a Member.

 

B.             The Company shall notify any Non-Managing Member of the then
current Adjustment Factor or any change made to the Adjustment Factor or to the
REIT Shares Amount within 30 days following such change or adjustment.

 

C.             Notwithstanding any other provision of this Section 8.5, the
Managing Member may keep confidential from the Non-Managing Members, for such
period of time as the Managing Member determines in its sole and absolute
discretion to be reasonable, any information that (i) the Managing Member
believes to be in the nature of trade secrets or other

 

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information the disclosure of which the Managing Member in good faith believes
is not in the best interests of the Company or could damage the Company or its
business or (ii) the Company or the Managing Member is required by law or by
agreements with unaffiliated third parties to keep confidential.

 

8.6 Redemption Rights

 

A.           On or after the first (1st) anniversary of the Effective Date, each
Non-Managing Member shall have the right (the “Redemption Right”) (subject to
the terms and conditions set forth herein) to require the Company to redeem all
or a portion of the Non-Managing Member Units held by such Non-Managing Member
(all such Non-Managing Member Units being hereafter called “Tendered Units”) for
the Cash Amount payable on the Specified Redemption Date (the “Redemption”);
provided, however, that at the election of and in the sole and absolute
discretion of the Managing Member, the Managing Member may elect to assume the
Company’s obligation with respect to the Redemption (though such assumption
shall not relieve the Company from such obligation in the event the Managing
Member fails to fulfill such obligation) and, at the election of and in the sole
and absolute discretion of the Managing Member, to satisfy the Redemption by
(i) paying either the Cash Amount payable on the Specified Redemption Date or
(ii) delivering a number of REIT Shares equal to the REIT Shares Amount payable
on the Specified Redemption Date.

 

B.             Any Redemption shall be exercised pursuant to a Notice of
Redemption delivered to the Company by a Non-Managing Member or any Substituted
Member of a Non-Managing Member or an Assignee of either exercising the
Redemption Right (the “Tendering Party”). On the Specified Redemption Date, the
Tendering Party shall sell the Tendered Units to the Company or the Managing
Member, as the case may be, in accordance with this Section 8.6. Any Tendered
Units acquired by the Managing Member pursuant to this Section 8.6 shall be held
by the Managing Member as Non-Managing Member Units with all the rights and
preferences relating thereto as provided in this Agreement. The Tendering Party
shall submit (i) such information, certification or affidavit as the Company may
reasonably require in connection with the Ownership Limit and (ii) in the event
that the REIT Shares issued upon such Redemption are not registered for issuance
or resale under the Securities Act as of the date of issuance, such written
representations, investment letters, legal opinions or other instruments
necessary, in the Company’s view, to effect compliance with the Securities Act.
If a Cash Amount is to be delivered upon the Redemption, the Cash Amount shall
be delivered as a certified check payable to the Tendering Party or, in the
Company’s or the Managing Member’s sole discretion, as the case may be, in
immediately available funds via wire transfer to an account or
account(s) specified by the Tendering Party. If REIT Shares are to be delivered
upon the Redemption, the REIT Shares Amount shall be delivered by the Managing
Member as duly authorized, validly issued, fully paid and nonassessable REIT
Shares (and, if applicable, Rights), free of any pledge, lien, encumbrance or
restriction, other than (1) the Ownership Limit and other restrictions provided
in the Charter or the Bylaws of the Managing Member and (2) in the event the
REIT Shares issued upon such Redemption are not registered for issuance or
resale under the Securities Act as of the date of issuance, the Securities Act
and relevant state securities or “blue sky” laws. The Tendering Party shall be
deemed the owner of such REIT Shares and Rights for all purposes, including,
without limitation, rights to vote or consent, receive dividends, and exercise
rights, as of the Specified Redemption Date. REIT Shares issued upon an
acquisition of the

 

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Tendered Units by the Managing Member pursuant to this Section 8.6 may contain
such legends regarding restrictions on Transfer or ownership to protect the
Managing Member’s tax status as a REIT and in the event the REIT Shares issued
upon such Redemption are not registered for resale under the Securities Act as
of the date of issuance, restrictions under the Securities Act and applicable
state securities laws as the Managing Member in good faith determines to be
necessary or advisable in order to ensure compliance with such laws.

 

C.             Notwithstanding the provisions of Sections 8.6A. and 8.6B.
hereof, the following shall apply:

 

(1) no Tendering Party shall have any right to tender for Redemption (whether
for the REIT Shares Amount or the Cash Amount) any Excess LLC Units held by such
Tendering Party. The Managing Member shall have no obligation to acquire Excess
LLC Units, whether for the REIT Shares Amount or the Cash Amount;

 

(2) No Tendering Party may exercise the Redemption Rights pursuant to
Section 8.6.A. and 8.6.B. hereof more than one (1) time during any Calendar
Quarter or more than three (3) times during any calendar year. In determining
whether such limit has been reached during any Calendar Quarter or calendar year
with respect to any Non-Managing Member or Substituted Member of a Non-Managing
Member, it is understood and agree that the exercise of the Redemption Rights by
any Assignee of such Non-Managing Member or Substituted Member shall be counted
for all purposes as the exercise of such Redemption Rights by the Non-Managing
Member or Substituted Member assignor. Notwithstanding the foregoing, each
Tendering Party may exercise the Redemption Rights after the receipt of a notice
of a Liquidating Event;

 

(3)                                  no Tendering Party may exercise the
Redemption Rights pursuant to Sections 8.6.A and B as to fewer than 5,000
Non-Managing Member Units (unless they constitute all of the Non-Managing Member
Units held by such Tendering Party);

 

(4)                                  No Tendering Party may deliver a Notice of
Redemption during the period from November 10th through December 31 of any year;
and

 

(5) each Tendering Party shall pay to the Managing Member the sum of $1,500.00
as the stipulated and agreed upon reimbursement cost for the Managing Member’s
administrative overhead and out-of-pocket costs in connection with any
Redemption pursuant to Sections 8.6A. and 8.6B.; provided, however, that no such
reimbursement shall be due with respect to the first such Redemption by any
Non-Managing Member or Substituted Member in any calendar year; provided,
further, however, that the exercise by any Assignee of a Non-Managing Member or
Substituted Member shall be deemed a Redemption by such Non-Managing Member or
Substituted Member of such Assignee (and vice versa) for purposes of determining
whether such reimbursement is due and owing to the Managing Member.

 

D.            Notwithstanding anything herein to the contrary, with respect to
any Redemption pursuant to this Section 8.6, each Tendering Party shall continue
to own all LLC Units subject to any Redemption, and be treated as a Member with
respect to such LLC Units for

 

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all purposes of this Agreement, until such LLC Units are Transferred to the
Company or the Managing Member, as the case may be, and paid for or exchanged on
the Specified Redemption Date; subject, however, to the provisions of
Section 5.7. Until a Specified Redemption Date and an acquisition of the
Tendered Units by the Managing Member, if it so elects, pursuant to Sections
8.6A and 8.6B hereof, the Tendering Party shall have no rights as a shareholder
of the Managing Member with respect to the REIT Shares issuable in connection
with such Redemption.

 

E.              In connection with an exercise of Redemption Rights pursuant to
this Section 8.6, the Tendering Party shall submit the following to the Managing
Member, in addition to the Notice of Redemption:

 

(1) Any information reasonably required by the Managing Member in order to allow
it to determine (a) the actual and Constructive Ownership, as determined for
purposes of Code Sections 856(a)(6), 856(h), 856(d)(2)(b) and 856(d)(5), of REIT
Shares by (i) such Tendering Party and (ii) any Related Party and (b) that,
after giving. effect to the Redemption, neither the Tendering Party nor any
Related Party will have actual, Beneficial Ownership or Constructive Ownership
of a number of REIT Shares that is in excess of the Ownership Limit;

 

(2) A written representation that neither the Tendering Party nor any Related
Party has any intention to acquire any additional REIT Shares prior to the
closing of the Redemption on the Specified Redemption Date that would cause such
Tendering Party or any Related Party to have Beneficial Ownership or
Constructive Ownership of a number of REIT Shares that is in excess of the
Ownership Limit; and

 

(3) An undertaking to certify, at and as a condition to the closing of the
Redemption that either (a) the actual and Constructive Ownership of REIT Shares
by the Tendering Party and any Related Party remain unchanged from that
disclosed pursuant to Section 8.6D.(1) or (b) after giving effect to the
Redemption, neither the Tendering Party nor any Related Party shall have actual
or Constructive Ownership of a number of REIT Shares that is in violation of the
Ownership Limit.

 

ARTICLE IX.

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

9.1 Records and Accounting

 

A.           The Managing Member shall keep or cause to be kept at the principal
office of the Company those records and documents required to be maintained by
the Act and other books and records deemed by the Managing Member to be
appropriate with respect to the Company’s business, including, without
limitation, all books and records necessary to provide to the Members any
information, lists and copies of documents required to be provided pursuant to
Section 9.3 hereof. Any records maintained by or on behalf of the Company in the
regular course of its business may be kept on, or be in the form of, punch
cards, magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time.

 

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B.             The books of the Company shall be maintained, for financial and
tax reporting purposes, on an accrual basis, and for financial purposes in
accordance with GAAP, or on such other basis as the Managing Member determines
to be necessary or appropriate. To the extent permitted by sound accounting
practices and principles, the Company and the Managing Member may operate with
integrated or consolidated accounting records, operations and principles.

 

9.2 Fiscal Year

 

The Fiscal Year of the Company shall be the calendar year.

 

9.3 Reports

 

Upon written request after any Calendar Quarter, the Managing Member shall as
promptly as practicable deliver to each requesting Member a profit and loss
statement and balance sheet of the Company dated as of the last day of such
Calendar Quarter.

 

9.4 Cooperation Regarding Tax Matters Relating to Contributed Property

 

A.           In connection with the issuance of Non-Managing Member Units to the
Initial Non-Managing Members upon the contribution of the Contributed Property
to the Company pursuant to the Contribution Agreement, the Initial Non-Managing
Members shall deliver, or cause Contributor to deliver, to the Company at or
prior to the effective date of such issuance, at the Initial Non-Managing
Members’ or the Contributor’s sole cost and expense, the following information
prepared as of the date of such anticipated contribution.

 

(1) depreciation and amortization schedules for the assets constituting the
Contributed Property, as kept for both book and tax purposes, showing original
basis and accumulated depreciation or amortization;

 

(2) basis information (computed for both book and tax purposes, if different)
for the Contributed Property and all assets that are components of the
Contributed Property;

 

(3) the adjusted basis of each Initial Non-Managing Member and any constituent
partners or members of each Initial Non-Managing Member in its interest in the
Company; and

 

(4) calculations of the estimated amounts of gain to be realized and recognized
(if any) by each Initial Non-Managing Member, as a result of the transactions
involving the Contributed Property in accordance with this Agreement and showing
the method by which such amounts are calculated.

 

B.             The Company shall be permitted to rely on the information
provided or to be provided to it under this Section 9.4 as to the adjusted tax
basis of the Contributed Property and the relevant depreciation schedules
thereto in determining the amount of Built-in Gain on a going forward basis.

 

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C.             Each Initial Non-Managing Member shall provide reasonable
assistance to the Company to enable the Company and the Managing Member to
determine the Built-in Gain or to prepare their tax returns. Each Initial
Non-Managing Member shall also provide to the Company, promptly upon receipt,
any notice that it receives from any of its direct or indirect constituent
partners or members (including such Contributor’s Partners) that such
partner(s) or member(s) intends to prepare its tax returns in a manner
inconsistent with the returns filed by such Initial Non-Managing Member. Each
Initial Non-Managing Member understands and agrees that he shall cause the tax
returns filed by such Initial Non-Managing Member to be substantially consistent
with the information provided to the Company pursuant to this Section 9.4.

 

ARTICLE X.

TAX MATTERS

 

10.1                        Preparation of Tax Returns

 

The Managing Member shall arrange for the preparation and timely filing,
including extension, of all returns with respect to Company income, gains,
deductions, losses and other items required of the Company for federal and state
income tax purposes and shall use all commercially reasonable efforts to
furnish, within 90 days of the close of each taxable year, such tax information
to enable each Member to reasonably estimate their tax liability.

 

10.2                        Tax Elections

 

Except as otherwise provided herein, the Managing Member shall (a) determine
whether to make any available election pursuant to the Code, including, without
limitation, the election under Section 754 of the Code and (b) also determine
whether to revoke any such election (including, without limitation, any election
under Code Section 754); provided, however, that any such determination by the
Managing Member pursuant to this Section 10.2 made prior to the Subsequent
Threshold Date shall be made in good faith based upon the best interests of the
Members in the aggregate and after the Subsequent Threshold Date in the Managing
Member’s sole and absolute discretion.

 

10.3                        Tax Matters Partner

 

A.           The Managing Member shall be designated and shall operate as “Tax
Matters Partner” (as defined in Code Section 6231), to oversee or handle matters
relating to the taxation of the Company; provided, however, that prior to the
Subsequent Threshold Date, the Consent of the Non-Managing Members (which
approval or disapproval shall not be unreasonably withheld or delayed) shall be
required to settle any administrative proceeding or institute or settle any
litigation with respect to tax issues if such action (i) is reasonably likely to
materially and adversely affect the Non-Managing Members in the aggregate, and
(ii) does not relate to a REIT Member’s or its Affiliate’s tax status as a REIT.

 

B.             Income tax returns of the Company shall be prepared by such
certified public accountant(s) as the Managing Member shall retain at the
expense of the Company.

 

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10.4                        Organizational Expenses

 

The Company shall elect to deduct expenses, if any, incurred by it in organizing
the Company ratably as provided in Code Section 709.

 

ARTICLE XI.

TRANSFERS AND WITHDRAWALS

 

11.1                        Transfer

 

A.           No part of the interest of a Member shall be subject to the claims
of any creditor, to any spouse for alimony or support, or to legal process, and
may not be voluntarily or involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement.

 

B.             No Membership Interest shall be Transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article XI.
Any Transfer or purported Transfer of a Membership Interest not made in
accordance with this Article XI shall be null and void ab initio.

 

11.2                        Transfer of Managing Member’s Membership Interest

 

A.           Except in connection with a transaction described in
Section 11.2B., the Managing Member shall not withdraw from the Company and
shall not Transfer all or any portion of its interest in the Company without the
Consent of the Non-Managing Members, which Consent shall not be unreasonably
withheld, conditioned or delayed; provided, however, that the Managing Member
may Transfer all or any portion of its interest in the Company without Consent
to any Affiliate of the Managing Member, provided that the Managing Member
guarantees the obligations of such Affiliate under this Agreement (the “Managing
Member Guarantee”). Upon any Transfer of the Membership Interest of the Managing
Member in accordance with the provisions of this Section 11.2, the transferee
shall become a Substitute Managing Member for all purposes herein, and shall be
vested with the powers and rights of the transferor Managing Member, and shall
be liable for all obligations and responsible for all duties of the Managing
Member, once such transferee has executed such instruments as may be necessary
to effectuate such admission and to confirm the agreement of such transferee to
be bound by all the terms and provisions of this Agreement with respect to the
Membership Interest so acquired. It is a condition to any Transfer otherwise
permitted hereunder that the transferee assumes, by operation of law or express
agreement, all of the obligations of the transferor Managing Member under this
Agreement with respect to such Transferred Membership Interest, and in such
event such Transfer shall relieve the transferor Managing Member of its
obligations under this Agreement accruing subsequent to the date of such
Transfer except for the Managing Member Guarantee. In the event the Managing
Member withdraws from the Company, in violation of this Agreement or otherwise,
or otherwise dissolves or terminates, or upon the Incapacity of the Managing
Member, all of the remaining Members may elect to continue the Company business
by selecting a Substitute Managing Member in accordance with the Act.

 

B.             The Managing Member may engage in any merger, consolidation or
other combination with or into another Person, sale of all or substantially all
of its assets or any

 

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reclassification, or change of its outstanding equity interests (a “Termination
Transaction”), if either (i) the Termination Transaction has been approved by
the Consent of the Non-Managing Members or (ii) in connection with the
Termination Transaction, all holders of LLC Units (other than the Managing
Member) either will receive for each LLC Unit, or will be entitled to receive,
for each LLC Unit (in lieu of the REIT Shares Amount) upon a Redemption of the
LLC Unit pursuant to Section 8.6 hereof, an amount of cash, securities, or other
property equal to the amount that would have been paid to the holder had the LLC
Unit been redeemed for REIT Shares pursuant to Section 8.6 hereof immediately
prior to the consummation of the Termination Transaction subject, in the event
of a Redemption of the LLC Unit pursuant to Section 8.6 hereof subsequent to the
consummation of the Termination Transaction, to further adjustment to the extent
provided in this Agreement to compensate for the dilutive effect of certain
transactions described herein; provided, however, that, if, in connection with
the Termination Transaction, a purchase, tender or exchange offer shall have
been made to and accepted by the holders of more than fifty percent (50%) of the
outstanding REIT Shares, each Member shall receive, or shall have the right to
elect to receive, the greatest amount of cash, securities, or other property
which such Member would have received had it redeemed its LLC Units for REIT
Shares pursuant to Section 8.6 immediately prior to the expiration of such
purchase, tender or exchange offer and had thereupon accepted such purchase,
tender or exchange offer. No provision of this Agreement, including, without
limitation, the provisions of Section 7.3B hereof, shall prohibit the
consummation of any Termination Transaction permitted by the provisions of this
Section 11.2B.

 

11.3                        Non-Managing Members’ Rights to Transfer

 

A.           General. No Non-Managing Member shall Transfer all or any portion
of its Membership Interest, or any of such Non-Managing Member’s economic rights
as a Non-Managing Member, to any transferee without first offering such
Membership Interest to the Managing Member or otherwise obtaining the Consent of
the Managing Member, which Consent may be withheld in its sole and absolute
discretion; provided, however, that notwithstanding the foregoing, but subject
to the balance of the provisions of this Article XI, any Non-Managing Member
may, without the Consent of the Managing Member, (x) pledge all or any portion
of its Membership Interest to a lender to such Member to secure indebtedness to
such lender and Transfer such Membership Interest to such lender upon
foreclosure of the debt secured by such Membership Interest, so long as any such
pledge or other Transfer would not otherwise violate the provisions of this
Agreement or (y) transfer all or any portion of its Membership Interest or
economic rights as a Non-Managing Member to a partner or member of such
Non-Managing Member as a distribution or in liquidation of such partner’s or
member’s interest in such Non-Managing Member, to a family member of such
Non-Managing Member, a trust, all of the beneficiaries of which are, such
Non-Managing Member and family members of such Non-Managing Member, a
corporation, general or limited partnership or limited liability company all of
the owners of which are such Non-Managing Member and family members of such
Non-Managing Member or to an organization described in Sections
170(b)(1)(A), 170(b)(c)(2) or 501(c)(3) of the Code, so long as any such
Transfer would not otherwise violate the provisions of this Agreement (herein, a
“Permitted Non-Managing Member Assignment”), and in connection with any
Permitted Non-Managing Member Assignment, such Non-Managing shall reimburse to
the Managing Member all actual out-of-pocket costs and expenses in connection
with such Permitted Non-Managing Member Assignment, including, without
limitation, attorneys’ fees and

 

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costs and any other expenses incurred by the Managing Member, including the
costs of filing any amendment or prospectus supplement to any registration
statement or prospectus as necessary to reflect such Transfer. In addition, it
is understood and agreed that the transferee pursuant to any Permitted
Non-Managing Member Assignment shall only become an Assignee and not a
Substituted Member, unless otherwise consented to by the Managing Member in its
sole and absolute discretion.

 

B.             Conditions to Transfer. It is a condition to any Transfer
otherwise permitted hereunder that the transferee assume by operation of law or
express agreement all of the obligations of the transferor Member under this
Agreement with respect to such Transferred Membership Interest, and that the
Managing Member be reimbursed for all actual out-of-pocket costs and expenses
incurred by the Managing Member in connection with such Transfer, including,
without limitation, attorneys’ fees and costs and any other expenses incurred by
the Managing Member, including the costs of filing any amendment or prospectus
supplement to any registration statement or prospectus as necessary to reflect
such Transfer. Notwithstanding the foregoing, any transferee of any Transferred
Membership Interest shall be subject to the Ownership Limits and any and all
ownership limitations contained in the Charter. Any transferee, whether or not
admitted as a Substituted Member, shall take subject to the obligations of the
transferor hereunder. Unless admitted as a Substituted Member, no transferee,
whether by a voluntary Transfer, by operation of law or otherwise, shall have
any rights hereunder, other than the rights of an Assignee as provided in
Section 11.5 hereof.

 

C.             Incapacity. If Non-Managing Member is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator or receiver
of such Non-Managing Member’s estate shall have all the rights of a Non-Managing
Member, but not more rights than those enjoyed by other Non-Managing Members,
for the purpose of settling or managing the estate, and such power as the
Incapacitated Non-Managing Member possessed to Transfer all or any part of its
interest in the Company. The Incapacity of a Non-Managing Member, in and of
itself, shall not dissolve or terminate the Company.

 

D.            Opinion of Counsel. In connection with any Transfer of a
Membership Interest other than in connection with a Redemption, the Managing
Member shall have the right to receive an opinion of counsel reasonably
satisfactory to it to the effect that the proposed Transfer may be effected
without registration under the Securities Act and will not otherwise violate any
federal or state securities laws or regulations applicable to the Company or the
Membership Interests Transferred. If, in the opinion of such counsel, such
Transfer would require the filing of a registration statement under the
Securities Act or would otherwise violate any federal or state securities laws
or regulations applicable to the Company or the LLC Units, the Managing Member
may prohibit any Transfer by a Member of Membership Interests otherwise
permitted under this Section 11.3.

 

E.              Transfers to Lenders. No Transfer of any LLC Units may be made
to a lender to the Company or any Person who is related (within the meaning of
Section 1.752-4(b) of the Regulations) to any lender to the Company whose loan
constitutes a Nonrecourse Liability, without the Consent of the Managing Member,
in its sole and absolute discretion; provided that, as a condition to such
Consent, the lender will be required to enter into an arrangement with the
Company and the Managing Member to redeem or exchange for the REIT Shares Amount
any

 

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LLC Units in which a security interest is held simultaneously with the time at
which such lender would be deemed to be a member in the Company for purposes of
allocating liabilities to such lender under Code Section 752.

 

11.4                        Substituted Members

 

A.           No Member shall have the right to substitute a transferee
(including any transferees pursuant to Transfers permitted by Section 11.3
hereof) as a Member in its place. The Managing Member shall, however, have the
right to Consent to the admission of a transferee of the interest of a Member
pursuant to this Section 11.4 as a Substituted Member, which Consent may be
given or withheld by the Managing Member in its sole and absolute discretion.
The Managing Member’s failure or refusal to permit a transferee of any such
interests to become a Substituted Member shall not give rise to any cause of
action against the Company or any Member.

 

B.             A transferee who has been admitted as a Substituted Member in
accordance with this Article XI shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Member under this
Agreement. The admission of any transferee as a Substituted Member shall be
subject to the transferee executing and delivering to the Company an acceptance
of all of the terms and conditions of this Agreement (including without
limitation, the provisions of Section 2.4 and such other documents or
instruments as may be required to effect the admission) from and after the date
of such Transfer.

 

C.             Upon the admission of a Substituted Member, the Managing Member
shall update the books and records of the Company to reflect the name, address,
Capital Account, number of LLC Units and Percentage Interest of such Substituted
Member and to eliminate or adjust, if necessary, the name, address, Capital
Account, number of LLC Units and Percentage Interest of the predecessor of such
Substituted Member (and any other Member, as necessary).

 

11.5                        Assignees

 

If the Managing Member, in its sole and absolute discretion, does not Consent to
the admission of any permitted transferee under Section 11.3 hereof as a
Substituted Member, as described in Section 11.4 hereof, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited liability company
interest under the Act, including the right to receive distributions from the
Company and the share of Net Income, Net Loss and other items of income, gain,
loss, deduction and credit of the Company attributable to the LLC Units assigned
to such transferee, the rights to Transfer the LLC Units provided in this
Article XI, and the right of Redemption provided in Section 8.6, but shall not
be deemed to be a Member of LLC Units for any other purpose under this
Agreement, and shall not be entitled to effect a Consent or vote with respect to
such LLC Units on any matter presented to the Members for approval (such right
to Consent or vote, to the extent provided in this Agreement or under the Act,
fully remaining with the transferor Member). In the event that any such
transferee desires to make a further assignment of any such LLC Units, such
transferee shall be subject to all the provisions of this Article XI to the same
extent and in the same manner as any Members desiring to make an assignment of
LLC Units. The Managing

 

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Member shall have no liability under any circumstance with respect to any
Assignee as to which it does not have notice.

 

11.6                        General Provisions

 

A.           No Non-Managing Member may withdraw from the Company other than
(i) as a result of a permitted Transfer of all of such Non-Managing Member’s LLC
Units in accordance with this Article XI and the transferee(s) of such LLC Units
being admitting to the Company as a Substituted Member or (ii) pursuant to a
Redemption by the Non-Managing Member of all of its LLC Units under Section 8.6
hereof.

 

B.             Any Non-Managing Member who shall Transfer all of its LLC Units
in a Transfer (i) permitted pursuant to this Article XI where such transferee
was admitted as a Substituted Member; (ii) pursuant to the exercise of its
rights to effect a Redemption of all of its LLC Units under Section 8.6 hereof;
(iii) pursuant to a Reduction; or (iv) pursuant to a combination of Transfers of
the types specified in the foregoing (i) - (iii), shall cease to be a Member.

 

C.             Except in connection with a Redemption, Transfers pursuant to
this Article XI may only be made on the first day of a Calendar Quarter of the
Company, unless the Managing Member otherwise agrees.

 

D.            All distributions of Available Cash attributable to an LLC Unit
with respect to which the LLC Record Date is before the date of a Transfer or a
Redemption of the LLC Unit shall be made to the transferor Member and all
distributions of Available Cash thereafter attributable to such LLC Unit shall
be made to the transferee Member.

 

E.              Notwithstanding anything to the contrary set forth herein, in
addition to any other restrictions on Transfer herein contained, in no event may
any Transfer or assignment of a Membership Interest by any Member (excluding any
Redemption or any other acquisition of LLC Units by the Company) be made:

 

(1) to any person or entity who lacks the legal right, power or capacity to own
a Membership Interest;

 

(2) in violation of applicable law;

 

(3) without the Consent of the Managing Member, if such Transfer would, in the
opinion of counsel to the Company or the Managing Member, cause an increased tax
liability to any other Member or Assignee as a result of the termination of the
Company, in either case for federal or state income or franchise tax purposes
(except in the case of a Terminating Capital Transaction or as a result of the
Redemption of all LLC Units pursuant to Section 8.6);

 

(4) without the Consent of the Managing Member, if such Transfer could, as
reasonably determined by the Managing Member, (i) result in the Company being
treated as an association taxable as a corporation for federal income tax or for
state income or franchise tax purposes, (ii) adversely affect the ability of any
REIT Member or

 

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any Affiliate thereof to continue to qualify as a REIT or subject any REIT
Member or any Affiliate thereof to any additional taxes under Code Section 857
or Code Section 4981 or (iii) be treated as having been effectuated through an
“established securities market” or a “secondary market (or the substantial
equivalent thereof)” within the meaning of Code Section 7704, or such Transfer
fails to satisfy a “safe-harbor” preventing such treatment (as set forth in
Treasury Regulations under Code Section 7704 or any successor provision);

 

(5) if such Transfer could cause the Company to become, with respect to any
employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as
defined in ERISA Section 3(14)) or a “disqualified person” (as defined in Code
Section 4975(c));

 

(6) if such Transfer could, in the opinion of legal counsel to the Company,
cause any portion of the assets of the Company to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101;

 

(7) if such Transfer could cause the Company (as opposed to the Managing Member)
to become a reporting company under the Exchange Act;

 

(8) if such Transfer could subject the Company to regulation under the
Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA,
each as amended; or

 

(9) without the Consent of the Managing Member, which Consent may be granted or
withheld in its sole and absolute discretion, if such Transfer could result in
the Company having more than 100 Members (including as Members those persons
indirectly owning an interest in the Company through a partnership, limited
liability company, S corporation or grantor trust (such entity, a “flow through
entity”), but only if substantially all of the value of such person’s interest
in the flow through entity is attributable to the flow through entity’s interest
(direct or indirect) in the Company) (the “One Hundred Member Limit”).

 

F.              No Non-Managing Member will take or allow any Affiliate to take
any action that would cause a violation of the One Hundred Member Limit.

 

ARTICLE XII.

ADMISSION OF MEMBERS

 

12.1                        Admission of Initial Non-Managing Members

 

Pursuant and subject to the terms of the Contribution Agreement, upon the
contribution of the Contributed Property to the Company, the Contributor has
distributed to each of Contributor’s Partners identified on Exhibit A attached
hereto the number of Non-Managing Member Units otherwise issuable to Contributor
pursuant to the Contribution Agreement, and each of such Persons identified on
Exhibit A attached hereto shall be admitted to the Company as an Initial
Non-Managing Member.

 

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12.2        Admission of Successor Managing Member

 

A successor to all of the Managing Member’s Membership Interest pursuant to
Section 11.2 hereof who is proposed to be admitted as a successor Managing
Member shall be admitted to the Company as the Managing Member, effective
immediately upon such Transfer. Any such successor shall carry on the business
of the Company without dissolution. In each case, the admission shall be subject
to the successor Managing Member executing and delivering to the Company an
acceptance of all of the terms, conditions and applicable obligations of this
Agreement and such other documents or instruments as may be required to effect
the admission, in accordance with and subject to the provisions of Section 11.2
hereof.

 

12.3        Admission of Additional Members

 

A.  A Person (other than an existing Member) who makes a Capital Contribution to
the Company in accordance with this Agreement shall be admitted to the Company
as an Additional Member, only upon furnishing to the Managing Member (i)
evidence of acceptance, in form and substance satisfactory to the Managing
Member, of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof, and (ii) such
other documents or instruments as may be required in the sole and absolute
discretion of the Managing Member in order to effect such Person’s admission as
an Additional Member.

 

B.  Notwithstanding anything to the contrary in this Agreement, no Person shall
be admitted as an Additional Member without the Consent of the Managing Member
and the Affirmative Consent of the Non-Managing Members, which Consent may be
given or withheld by each Member in its sole and absolute discretion; provided,
however, that in no event shall any Person be admitted as an Additional Member
if such Additional Member shall be granted preferential distributions or rights
ahead of the other Non-Managing Members, unless such preferential distributions
and/or rights shall be approved by the Affirmative Consent of a Supermajority of
the Non-Managing Members. The admission of any Person as an Additional Member
shall become effective on the date upon which the name of such Person is
recorded on the books and records of the Company, following the Consent of the
Managing Member and the Affirmative Consent of the Non-Managing Members to such
admission.

 

C.  If any Additional Member is admitted to the Company on any day other than
the first day of a Fiscal Year, then Net Income, Net Loss, each item thereof and
all other items of income, gain, loss, deduction and credit allocable among
Members and Assignees for such Fiscal Year shall be allocated among such
Additional Member and all other Members and Assignees by taking into account
their varying interests during the Fiscal Year in accordance with Code
Section 706(d), using the “interim closing of the books” method or another
permissible method selected by the Managing Member. Solely for purposes of
making such allocations, each of such items for the calendar month in which an
admission of any Additional Member occurs shall be allocated among all the
Members and Assignees including such Additional Member, in accordance with the
principles described in Section 11.6C hereof. All distributions of Available
Cash with respect to which the LLC Record Date is before the date of such
admission shall be made solely to Members and Assignees other than the
Additional Member, and all distributions

 

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of Available Cash thereafter shall be made to all the Members and Assignees
including such Additional Member.

 

12.4        Amendment of Agreement and Certificate

 

For the admission to the Company of any Member, the Managing Member shall take
all steps necessary and appropriate under the Act to amend the records of the
Company and, if necessary, to prepare as soon as practical an amendment of this
Agreement (including if elected by the Managing Member an amendment of
Exhibit A) and, if required by law, shall prepare and file an amendment to the
Certificate and may for this purpose exercise the power of attorney granted
pursuant to Section 2.4 hereof.

 

12.3        Limitation on Admission of Members

 

No Person shall be admitted to the Company as a Substituted Member or an
Additional Member if, in the opinion of legal counsel for the Company, it would
result in the Company being treated as a corporation for federal income tax
purposes or otherwise cause the Company to become a reporting company under the
Exchange Act.

 

ARTICLE XIII.

DISSOLUTION, LIQUIDATION AND TERMINATION

 

13.1        Dissolution

 

The Company shall not be dissolved by the admission of Substituted Members or
Additional Members or by the admission of a successor Managing Member in
accordance with the terms of this Agreement. Upon the withdrawal of the Managing
Member, any successor Managing Member shall continue the business of the Company
without dissolution. However, the Company shall dissolve, and its affairs shall
be wound up, upon the first to occur of any of the following (each a
“Liquidating Event”):

 

A.  an event of withdrawal of the Managing Member, as defined in the Act (other
than an event of bankruptcy), unless, within 90 days after the withdrawal, a
Majority of Remaining Members agree in writing to continue the business of the
Company and to the appointment, effective as of the date of withdrawal, of a
substitute Managing Member;

 

B.  subject to the provisions of Sections 7.3E and 7.3H hereof, an election to
dissolve the Company made by the Managing Member;

 

C.  entry of a decree of judicial dissolution of the Company pursuant to the
provisions of the Act;

 

D.  subject to the provisions of Sections 7.3E and 7.3H hereof, the sale of all
or substantially all of the assets and properties of the Company;

 

E.  subject to the provisions of Sections 7.3E and 7.3H hereof, a final and
non-appealable judgment is entered by a court of competent jurisdiction ruling
that the Managing Member is bankrupt or insolvent, or a final and non-appealable
order for relief is entered by a

 

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court with appropriate jurisdiction against the Managing Member, in each case
under any Bankruptcy Law as now or hereafter in effect, unless prior to or
within 90 days after the entry of such order or judgment a Majority of Remaining
Members’ Consent in writing to continue the business of the Company and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute Managing Member;

 

F.  the Incapacity of the Managing Member, unless prior to or within 90 days
after such Incapacity a Majority of Remaining Members agree in writing to
continue the business of the Company and to the appointment, effective as of a
date prior to the date of such Incapacity, of a substitute Managing Member; or

 

G.  the Redemption of all LLC Units (other than those held by the Managing
Member).

 

13.2        Redemption of Non-Managing Member Units

 

Notwithstanding anything in this Agreement to the contrary, on or after such
time as the Managing Member has the right to dissolve the Company or upon the
occurrence of a Liquidating Event or at any time after the expiration of the Tax
Protection Period, the Managing Member may, in its sole and absolute discretion,
require each Non-Managing Member (by delivering a Call Notice to such
Non-Managing Member) to tender all or a portion of its Non-Managing Member Units
to the Managing Member in exchange for, at the election of and in the sole and
absolute discretion of the Managing Member, either (a) an amount of cash equal
to the sum of (i) the Cash Amount and (ii) the NMM Sharing Amount, calculated as
if all of the Properties then owned by the Company were sold in a taxable
transaction at their fair market values, or (b) a number of REIT Shares equal to
the sum of (i) the REIT Shares Amount payable on the Specified Redemption Date
and otherwise in accordance with the procedures and provisions set forth in
Sections 8.6A. and 8.6B., and (ii) a number of REIT Shares with a value equal to
the amount set forth in Section 13.2(a)(ii).

 

13.3        Winding Up

 

A.  Upon the occurrence of a Liquidating Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets and satisfying the claims of its creditors and Members.
After the occurrence of a Liquidating Event, no Member shall take any action
that is inconsistent with, or not necessary to or appropriate for, the winding
up of the Company’s business and affairs. The Managing Member (or, in the event
that there is no remaining Managing Member, any Person elected by a Majority in
Interest of the Non-Managing Members (the Managing Member or such other Person
being referred to herein as the “Liquidator”)) shall be responsible for
overseeing the winding up and dissolution of the Company and shall take full
account of the Company’s liabilities and property, and the Company property
shall be liquidated as promptly as is consistent with obtaining the fair value
thereof, and the proceeds therefrom (which may, to the extent determined by the
Managing Member, include shares of stock in the Managing Member) shall be
applied and distributed in the following order:

 

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(1)  First, to the satisfaction of all of the Company’s debts and liabilities to
creditors other than the Members and their Assignees (whether by payment or the
making of reasonable provision for payment thereof);

 

(2)  Second, to the satisfaction of all of the Company’s debts and liabilities
to the Members, including, but not limited to, any loan made to the Company by a
Member in accordance with the terms of this Agreement (including the Managing
Member Loan) (whether by payment or the making of reasonable provision for
payment thereof); and

 

(3)  The balance, if any, to the Members and any Assignees in accordance with
and proportion to their positive Capital Account balances, after giving effect
to all contributions, distributions and allocations for all periods.

 

The Managing Member shall not receive any additional compensation for any
services performed pursuant to this Article XIII.

 

B.  Notwithstanding the provisions of Section 13.3A hereof that require
liquidation of the assets of the Company, but subject to the order of priorities
set forth therein, if prior to or upon dissolution of the Company the Liquidator
determines that an immediate sale of part or all of the Company’s assets would
be impractical or would cause undue loss to the Members, the Liquidator may
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Company (including to those Members as creditors)
and/or with the Consent of the Managing Member and the Affirmative Consent of
the Non-Managing Members, distribute to the Members, in lieu of cash, as tenants
in common and in accordance with the provisions of Section 13.3A hereof,
undivided interests in such Company assets as the Liquidator deems not suitable
for liquidation. Notwithstanding the foregoing, any such distributions in kind
shall be made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Members, and shall be
subject to such conditions relating to the disposition and management of such
properties as approved by the Consent of the Managing Member and the Affirmative
Consent of the Non-Managing Members and to any agreements governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.

 

C.  In the event that the Company is “liquidated” within the meaning of
Regulations Section 1.704-1(b) (2)(ii)(g), distributions shall be made pursuant
to this Article XIII to the Members and Assignees that have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b) (2)(ii)(b) (2) to the
extent of, and in proportion to, their positive Capital Account balances. If any
Member has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Member shall have no
obligation to make any contribution to the capital of the Company with respect
to such deficit, and such deficit shall not be considered a debt owed to the
Company or to any other Person for any purpose whatsoever. A pro rata portion of
the distributions that would otherwise be made to the Members pursuant to this
Article XIII may be withheld or escrowed to provide a reasonable reserve for
Company liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment

 

70

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obligations owed to the Company, provided that such withheld or escrowed amounts
shall be distributed to the Members in the manner and order of priority set
forth in Section 13.3A hereof as soon as practicable.

 

13.4        Deemed Contribution and Distribution

 

Notwithstanding any other provision of this Article XIII, in the event that the
Company is liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the
Company’s Property shall not be liquidated, the Company’s liabilities shall not
be paid or discharged and the Company’s affairs shall not be wound up. Instead,
for federal and state income tax purposes, the Company shall be deemed to have
contributed its assets and liabilities to a new limited liability company in
exchange for an interest in such new limited liability company and, immediately
thereafter, the Company will be deemed to liquidate by distributing interests in
the new limited liability company to the Members.

 

13.5        Rights of Members

 

Except as otherwise provided in this Agreement, (a) each Member shall look
solely to the assets of the Company for the return of its Capital Contribution,
(b) no Member shall have the right or power to demand or receive property other
than cash from the Company and (c) except as provided in this Agreement, no
Member shall have priority over any other Member as to the return of its Capital
Contributions, distributions or allocations.

 

13.6        Notice of Dissolution

 

In the event that a Liquidating Event occurs or an event occurs that would, but
for an election or objection by one or more Members pursuant to Section 13.1
hereof, result in a dissolution of the Company, the Managing Member shall,
within 30 days thereafter, provide written notice thereof to each of the Members
and, in the Managing Member’s sole and absolute discretion or as required by the
Act, to all other parties with whom the Company regularly conducts business (as
determined in the sole and absolute discretion of the Managing Member), and the
Managing Member may, or, if required by the Act, shall, publish notice thereof
in a newspaper of general circulation in each place in which the Company
regularly conducts business (as determined in the sole and absolute discretion
of the Managing Member).

 

13.7        Cancellation of Certificate

 

Upon the completion of the liquidation of the Company’s cash and property as
provided in Section 13.3 hereof, the Company shall be terminated and the
Certificate and all qualifications of the Company as a foreign limited liability
company in jurisdictions other than the State of Delaware shall be canceled and
such other actions as may be necessary to terminate the Company shall be taken.

 

13.8        Reasonable Time for Winding-Up

 

A reasonable time shall he allowed for the orderly winding-up of the business
and affairs of the Company and the liquidation of its assets pursuant to
Section 13.3 hereof, in order

 

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to minimize any losses otherwise attendant upon such winding-up, and the
provisions of this Agreement shall remain in effect between the Members during
the period of liquidation.

 

13.9        Liability of Liquidator

 

The Liquidator shall be indemnified and held harmless by the Company from and
against any and all claims, liabilities, costs, damages, and causes of action of
any nature whatsoever arising out of or incidental to the Liquidator’s taking of
any action authorized under or within the scope of this Agreement; provided,
however, that the Liquidator shall not be entitled to indemnification, and shall
not be held harmless, where the claim, demand, liability, cost, damage or cause
of action at issue arises out of (i) a matter entirely unrelated to the
Liquidator’s action or conduct pursuant to the provisions of this Agreement or
(ii) the proven willful misconduct or gross negligence of the Liquidator.

 

ARTICLE XIV.

PROCEDURES FOR ACTIONS AND CONSENTS

OF MEMBERS; AMENDMENTS; MEETINGS

 

14.1        Procedures for Actions and Consents of Members

 

The actions requiring Consent or approval of Non-Managing Members pursuant to
this Agreement, including Section 7.3 hereof, or otherwise pursuant to
applicable law, are subject to the procedures set forth in this Article XIV and
shall require the Consent of the Non-Managing Members unless a different
standard or percentage is expressly required by this Agreement for the action in
question.

 

14.2        Amendments

 

Except for amendments permitted hereby by the Managing Member without any
Consent or approval of any other Members, amendments to this Agreement may be
proposed by the Managing Member or by a Majority in Interest of the Non-Managing
Members. Following such proposal, the Managing Member shall submit any proposed
amendment to the Members. The Managing Member shall seek the written Consent of
the Members on the proposed amendment or shall call a meeting to vote thereon
and to transact any other business that the Managing Member may deem
appropriate. The affirmative vote or Consent, as applicable, of a Majority in
Interest of the Non-Managing Members and the Managing Member is required for the
approval of a proposed amendment.

 

14.3        Meetings of the Members; Written Consent Without a Meeting

 

A.  Meetings of the Members may be called by the Managing Member and shall be
called upon the receipt by the Managing Member of a written request by a
Majority in Interest of the Non-Managing Members. The call shall state the
nature of the business to be transacted. Notice of any such meeting shall be
given to all Members not less than seven days nor more than 30 days prior to the
date of such meeting. The meeting shall be held at the headquarters office of
the Managing Member or at such other location as may be designated by the
Managing Member. Members may vote in person or by proxy at such meeting.
Whenever the vote or Consent of Members is permitted or required under this
Agreement, such vote or Consent may be given at a

 

72

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meeting of Members or may be given in accordance with the procedure prescribed
in Section 14.3.B hereof

 

B.  Any action required or permitted to be taken at a meeting of the Members may
be taken without a meeting if written notice thereof is sent to each Member in
accordance with the provisions of Section 15.1 hereof, and written Consent
setting forth the action so taken is signed by Members holding a majority of the
LLC Units (or such other percentage as is expressly required by this Agreement
for the action in question). Such Consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of Members
holding a majority of the LLC Units (or such other percentage as is expressly
required by this Agreement). Such Consent shall be filed with the Managing
Member. An action so taken shall be deemed to have been taken at a meeting held
on the effective date so certified. For purposes of obtaining a written Consent
(other than the Affirmative Consent of the Non- Managing Members or the
Affirmative Consent of a Supermajority of the Non-Managing Members), the
Managing Member may require a response within a reasonable specified time, but
not less than 30 days, and failure to respond in such time period shall
constitute a Consent that is consistent with the Managing Member’s
recommendation with respect to the proposal (herein, a “Deemed Consent”);
provided, however, that an action shall become effective at such time as
requisite Consents are received even if prior to such specified time.

 

C.  Each Member may authorize any Person or Persons to act for it by proxy on
all matters in which a Member is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Member or its attorney-in-fact. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise provided in
the proxy (or there is receipt of a proxy authorizing a later date). Every proxy
shall be revocable at the pleasure of the Member executing it, such revocation
to be effective upon the Company’s receipt of written notice of such revocation
from the Member executing such proxy.

 

D.  Each meeting of Members shall be conducted by the Managing Member or such
other Person as the Managing Member may appoint pursuant to such rules for the
conduct of the meeting as the Managing Member or such other Person deems
appropriate in its sole and absolute discretion. Without limitation, meetings of
Members may be conducted in the same manner as meetings of the Managing Member’s
shareholders and may be held at the same time as, and as part of, the meetings
of the Managing Member’s shareholders.

 

ARTICLE XV.

GENERAL PROVISIONS

 

15.1        Addresses and Notice

 

Any notice, demand, request or report required or permitted to be given or made
to a Member or Assignee under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class United
States mail or by other means of written communication (including by telecopy,
facsimile, or commercial courier service) (i) in the case of a Member, to that
Member at the address set forth in Exhibit A or such other address

 

73

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of which the Member shall notify the Managing Member in writing and (ii) in the
case of an Assignee, to the address of which such Assignee shall notify the
Managing Member in writing.

 

15.2        Titles and Captions

 

All article or section titles or captions in this Agreement are for convenience
only. They shall not be deemed part of this Agreement and in no way define,
limit, extend or describe the scope or intent of any provisions hereof. Except
as specifically provided otherwise, references to “Articles” or “Sections” are
to Articles and Sections of this Agreement.

 

15.3        Pronouns and Plurals

 

Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.

 

15.4        Further Action

 

The parties shall execute and deliver all documents, provide all information and
take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.

 

15.5        Binding Effect

 

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

 

15.6        Creditors

 

Other than as expressly set forth herein with respect to Indemnitees, none of
the provisions of this Agreement shall be for the benefit of, or shall be
enforceable by, any creditor of the Company.

 

15.7        Waiver

 

No failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute waiver of any such
breach or any other covenant, duty, agreement or condition.

 

15.8        Counterparts

 

This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.

 

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15.9        Applicable Law

 

This Agreement shall be construed and enforced in accordance with and governed
by the laws of the State of Delaware, without regard to the principles of
conflicts of law. In the event of a conflict between any provision of this
Agreement and any non-mandatory provision of the Act, the provisions of this
Agreement shall control and take precedence.

 

15.10      Entire Agreement

 

This Agreement, the Contribution Agreement and the other agreements executed on
the Effective Date as provided in the Contribution Agreement contain all of the
understandings and agreements between and among the Members with respect to the
subject matter of this Agreement and the rights, interests and obligations of
the Members with respect to the Company.

 

15.11      Invalidity of Provisions

 

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.

 

15.12      No Partition

 

No Member nor any successor-in-interest to a Member shall have the right while
this Agreement remains in effect to have any property of the Company
partitioned, or to file a complaint or institute any proceeding at law or in
equity to have such property of the Company partitioned, and each Member, on
behalf of itself and its successors and assigns hereby waives any such right. It
is the intention of the Members that the rights of the parties hereto and their
successors-in-interest to Company property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Members and
their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.

 

15.13      Uniform Commercial Code Article 8 (Opt-In)

 

The Company hereby irrevocably elects that all LLC Units shall be securities
governed by Article 8 of the Uniform Commercial Code as in effect in the State
of Delaware and each other applicable jurisdiction. Each certificate evidencing
LLC Units in the Company shall bear the following legend: “This certificate
evidences an interest in HCP DR MCD, LLC and shall be a security governed by
Article 8 of the Uniform Commercial Code as in effect in the State of Delaware
and, to the extent permitted by applicable law, each other applicable
jurisdiction.” This provision shall not be amended, and any purported amendment
to this provision shall be null and void.

 

[Signatures appear on following page]

 

75

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IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
date first written above.

 

MANAGING MEMBER:

 

HEALTH CARE PROPERTY INVESTORS, INC., a

 

 

Maryland corporation

 

 

 

 

 

 

 

 

By:

/s/ Tim Schoen

 

 

Name:

Tim Schoen

 

 

Title:

Senior Vice President

 

 

NON-MANAGING MEMBERS:

 

[See Additional Signature Pages of

Non-Managing Members Attached hereto]

 

--------------------------------------------------------------------------------

 

[Additional Signatures of Non-Managing Members to

Amended and Restated Limited Liability Company Agreement

of HCP DR MCD, LLC]

 

POWER OF ATTORNEY

 

This Agreement has been signed by each of the following persons as a
Non-Managing Member in the capacities and to be effective on February 9, 2007:

 

Signature

 

Non-Managing Member

 

 

 

*

 

TWG Medical, Ltd.

 

 

 

*

 

Marvin C. Culbertson, Jr.

 

 

 

*

 

Pierce D. Flanders

 

 

 

*

 

G&B Johnson

 

 

Investments, Ltd.

 

 

 

*

 

Clifford J. Osborn

 

 

 

 

 

 

*

 

Sandra R. Cohen, as

 

 

Trustee for the Ivy T.

 

 

Rabinowitz Trust for

 

 

Sandra R. Cohen

 

 

 

*

 

Joe A. Stalcup

 

 

 

*

 

Howard G. Thomas

 

 

 

*

 

Carol E. Touchstone

 

 

 

*

 

Jesse M. Hellums III

 

 

 

*

 

Hunt H. Hellums

 

 

 

*

 

Frank O. Seay

 

 

 

*

 

Robert J. Wright

 

 

 

*

 

Cynthia J. Hellstern

 

 

 

*

 

Mary Ellen Thomas

 

 

 

*

 

Harlan R. Crow

 

 

 

*

 

Wright Williams, Ltd.

 

 

 

*

 

Allen E. Cullum

 

 

 

*

 

Margaret Anne Cullum

 

 

 

*

 

William Bennett Cullom

 

 

 

*

 

James McDonald Williams

 

--------------------------------------------------------------------------------

 

*

 

Thornton Tye Medical,

 

 

L.P.

*

 

Harlan R. Crow, Trustee

 

 

for the Trammell Crow

 

 

1994 Revocable Trust

*

 

Crow Realty investors,

 

 

L.P.

 

 

 

 

 

 

 

 

*By

TWG Medical, Ltd., a Texas limited

 

 

 

partnership, as Attorney-in-Fact

 

 

 

 

 

 

 

By:

TWG, Inc., its general partner

 

 

 

 

 

 

 

 

 

By:

/s/ Robert J. Wright

 

 

 

 

 

Robert J. Wright

 

 

 

 

 

President

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

MEMBER’S CAPITAL CONTRIBUTIONS

 

[See Pages A-2 and A-3 attached hereto]

 

A-1

--------------------------------------------------------------------------------

 

EXHIBIT A-2

CONTRIBUTIONS

 

Part I: Contributor

 

Contributor

 

Gross Asset Value
of Contribution

 

Number of Non-Managing Member
Units

 

Medical City Dallas Limited

 

$

140,051,433.00

 

4,246,857

 

 

--------------------------------------------------------------------------------

(1)                                 See Part II (Exhibit A-3) for a breakout by
individual Non-Managing Members and their respective allocations

 

Part II: Managing Member

 

Managing Member

 

Gross Asset Value
of Contribution

 

Number of Managing Member Units

 

Health Care Property Investors, Inc.

 

$

65,892,373.00

 

1,999,162

 

 

A-2

--------------------------------------------------------------------------------

 

EXHIBIT A-3

LLC UNITS (NON-MANAGING MEMBER AND MANAGING MEMBER)

 

Non-Managing Member Units

 

Name

 

Address

 

Number of Units

 

 

 

 

 

TWG Medical, Ltd.

 

7777 Forest Lane

 

1,419,328

 

 

Suite C-840

 

 

 

 

Dallas, TX 75230

 

 

 

 

 

 

 

Marvin C. Culbertson, Jr.

 

6126 Averell Way

 

30,551

 

 

#109 W

 

 

 

 

Dallas, TX 75225

 

 

 

 

 

 

 

Pierce D. Flanders

 

1317 Palm Valley

 

25,481

 

 

Drive East

 

 

 

 

Harlingen, TX 78552

 

 

 

 

 

 

 

G&B Johnson Investments, Ltd.

 

8523 Thackery

 

12,741

 

 

Apt. 2103

 

 

 

 

Dallas, TX 75225

 

 

 

 

 

 

 

Clifford J. Osborn

 

5581 East Finisterra

 

25,481

 

 

Tucson, AZ 85715

 

 

 

 

 

 

 

Sandra R. Cohen, as Trustee for

 

7030 South Jan Mar

 

10,193

the Ivy T. Rabinowitz Trust for

 

Dallas, TX 75230

 

 

Sandra R. Cohen

 

 

 

 

 

 

 

 

 

Joe A. Stalcup

 

6510 Abrams

 

178,235

 

 

Suite 640

 

 

 

 

Dallas, TX 75231

 

 

 

 

 

 

 

Howard G. Thomas

 

8333 Douglas

 

50,918

 

 

Suite 1414

 

 

 

 

Dallas, TX 75225

 

 

 

 

 

 

 

Carol E. Touchstone

 

3829 Stratford

 

25,481

 

 

Dallas, TX 75205

 

 

 

 

 

 

 

Jesse M. Hellums III

 

16161 College Oak

 

6,325

 

 

Suite 100

 

 

 

 

San Antonio, TX 78249

 

 

 

 

 

 

 

Hunt H. Hellums

 

906 Point Run Dr.

 

6,325

 

 

Pflugerville, TX 78660

 

 

 

 

 

 

 

Frank O. Seay

 

4242 Lomo Alto N48

 

10,121

 

 

Dallas, TX 75219

 

 

 

 

 

 

 

Robert J. Wright

 

7777 Forest Lane

 

22,386

 

 

Suite C-840

 

 

 

 

Dallas, TX 75230

 

 

 

A-3

--------------------------------------------------------------------------------

 

Name

 

Address

 

Number of Units

 

 

 

 

 

Cynthia J. Hellstern

 

10827 Crooked Creek Drive

 

4,710

 

 

Dallas, TX 75229

 

 

 

 

 

 

 

Mary Ellen Thomas

 

3904 Deepwood St.

 

4,710

 

 

Colleyville, TX 76034

 

 

 

 

 

 

 

Harlan R. Crow

 

Crow Holdings

 

1,187,080

 

 

2100 McKinney

 

 

 

 

Suite 700

 

 

 

 

Dallas, TX 75201

 

 

 

 

 

 

 

Wright Williams, Ltd.

 

7777 Forest Lane

 

26,199

 

 

Suite C-840

 

 

 

 

Dallas, TX 75230

 

 

 

 

 

 

 

Allen E. Cullum

 

5952 Royal Ln #216

 

72,146

 

 

Dallas, TX 75230-3831

 

 

 

 

 

 

 

Margaret Anne Cullum

 

11 Turtle Creek Bend

 

84,878

 

 

Dallas, TX 75204

 

 

 

 

 

 

 

William Bennett Cullum

 

4940 Mangold Circle

 

84,833

 

 

Dallas, TX 75229-4343

 

 

 

 

 

 

 

James McDonald Williams

 

c/o Dorothy Hopkins

 

82,994

 

 

Williams Interests

 

 

 

 

2001 Ross, Suite 3350

 

 

 

 

Dallas, TX 75201

 

 

 

 

 

 

 

Thornton Tye Medical, L.P.

 

c/o Ken Travis

 

82,994

 

 

Travis Wolff

 

 

 

 

5580 LBJ Freeway

 

 

 

 

Suite 400

 

 

 

 

Dallas, TX 75240

 

 

 

 

 

 

 

Harlan R. Crow, Trustee for the

 

2100 McKinney, Suite 700

 

631,111

Trammell Crow 1994 Revocable

 

Dallas, TX 75201

 

 

Trust

 

 

 

 

 

 

 

 

 

Crow Realty Investors, L.P.

 

2100 McKinney, Suite 700

 

161,636

 

 

Dallas, TX 75201

 

 

 

 

 

 

 

Cumulative Totals:

 

 

 

4,246,857

 

A-4

--------------------------------------------------------------------------------

 

EXHIBIT A-3 (cont.)
LLC UNITS (NON-MANAGING MEMBER AND MANAGING MEMBER)

 

Managing Member Units

 

Name

 

Address

 

Number of Units

Health Care Property Investors, Inc.

 

3760 Kilroy Airport Way,

 

1,999,162

 

 

Suite 300

 

 

 

 

Long Beach, CA 90806

 

 

 

A-5

--------------------------------------------------------------------------------

 

EXHIBIT B

NOTICE OF REDEMPTION

 

To:

HCP DR MCD, LLC

 

c/o Health Care Property Investors, Inc.

 

3760 Kilroy Airport Way, Suite 300

 

Long Beach, California 90806

 

The undersigned Member or Assignee hereby irrevocably tenders for Redemption
                    LLC Units in HCP DR MCD, LLC (the “Company”) in accordance
with the terms of the Amended and Restated Limited Liability Company Agreement
of HCP DR MCD, LLC, dated as of February     , 2007 (the “Agreement”), and the
Redemption Rights referred to therein. The undersigned Member or Assignee:

 

(a)             undertakes (i) to surrender such LLC Units and any certificate
therefor at the closing of the Redemption and (ii) to furnish to the Managing
Member, prior to the Specified Redemption Date, the documentation, instruments
and information required under Section 8.6.E of the Agreement;

 

(b)             directs that, at the sole discretion of the Managing Member,
either (i) a certified check representing the Cash Amount deliverable upon
closing of the Redemption be delivered to the address specified below, after
deducting therefrom any costs or expenses to which the undersigned Member or
Assignee is responsible pursuant to the Agreement, or (ii) a certificate(s)
representing the REIT Shares deliverable upon the closing of such Redemption be
delivered to the address specified below;

 

(c)             represents, warrants, certifies and agrees that: (1) the
undersigned Member or Assignee has, and at the closing of the Redemption will
have unencumbered title to such LLC Units, free and clear of the rights or
interests of any other person or entity other than any rights of the Managing
Member thereto or the Company in respect thereof, (2) the undersigned Member or
Assignee has, and at the closing of the Redemption will have, the full right,
power and authority to tender and surrender such LLC Units as provided herein,
(3) the undersigned Member or Assignee has obtained the consent or approval of
all persons and entities, if any, having the right to consent to or approve such
tender and surrender, (4) such Redemption is in compliance with the provisions
of Section 8.6 of the Agreement, and (5) except to the extent deducted from the
Cash Amount pursuant to clause (b)(i) above, the undersigned Member or Assignee
shall, as a condition to receipt of the REIT Shares, reimburse to the Managing
Member all costs and expenses for which such undersigned Member or Assignee is
responsible pursuant to the Agreement; and

 

(d)             acknowledges that it will continue to own such LLC Units until
and unless such Redemption transaction closes, subject to the provisions of
Section 5.7 of the Agreement.

 

B-1

--------------------------------------------------------------------------------

 

All capitalized terms used herein and not otherwise defined shall have the same
meaning ascribed to them respectively in the Agreement.

 

Dated:

 

 

Name of Member or Assignee:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Signature of Member or Assignee)

 

 

 

 

 

 

 

 

(Street Address)

 

 

 

 

 

 

 

 

(City) (State) (Zip)

 

 

 

 

 

Signature Guaranteed by:

 

 

 

 

 

 

 

 

 

 

 

Issue REIT Shares in the name of:

 

 

 

 

 

 

Please insert social security or identifying number:

 

 

B-2

--------------------------------------------------------------------------------

 

EXHIBIT C

FORM OF JOINDER AGREEMENT

 

JOINDER TO OPERATING AGREEMENT

 

THIS JOINDER TO OPERATING AGREEMENT (the “Joinder”) is dated as of
                    ,                    effecting a joinder to the Amended and
Restated Limited Liability Company Operating Agreement of HCP DR MCD, LLC dated
as of February       , 2007 (the “Operating Agreement”) by and between HCP DR
MCD, LLC, a Delaware limited liability company (the “Company”), and
                                 , a                                     (the
“New Member”). Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Operating Agreement.

 

1.                                      New Member agrees to be bound by, the
terms and conditions of the Operating Agreement, a copy of which is attached
hereto as Exhibit A.

 

2.                                      New Member represents to the Company and
the Managing Member that the representations and warranties set forth in
Section 3.4 of the Operating Agreement are true and correct as of the date
hereof.

 

3.                                      The Company agrees to admit New Member
as a Non-Managing Member of the Company and, in connection therewith, to update
and amend the books and records of the Company to reflect the information set
forth on Exhibit B attached hereto.

 

4.                                      This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

 

5.                                      This Joinder shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to principles of conflicts of laws or choice of law of the State
of Delaware or any other jurisdiction which would result in the application of
the law of any jurisdiction other than the State of Delaware.

 

6.                                      The descriptive headings of this Joinder
are inserted for convenience only and do not constitute a part of this Joinder.

 

7.                                      If any provision of this Joinder is in
conflict with or inconsistent with any provision of the Operating Agreement, the
provision of the Operating Agreement shall control.

 

C-1

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, this Joinder to Operating Agreement has been duly executed
and delivered by the parties as of the date first above written.

 

COMPANY:

 

NEW MEMBER:

 

 

 

HCP DR MCD, LLC, a Delaware limited liability company

 

 

By:

HEALTH CARE PROPERTY

 

By:

 

 

INVESTORS, INC.,

 

Name:

 

 

a Maryland corporation,

 

Title:

 

 

its Managing Member

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

C-2

--------------------------------------------------------------------------------

 

EXHIBIT D

 

EXAMPLE OF CERTAIN CALCULATIONS PURSUANT TO SECTION 5.6.C

 

Assumptions for example —

 

(1) LLC unit ownership:

 

 

 

Units

 

Effective Price

 

Value of
Interest

 

Percentage
Interest

 

the Managing Member Units (MMUs)

 

2,400,000

 

$

25.

 

60,000,000

 

75

%

Non-Managing Member Units (NMMUs)

 

800,000

 

$

25.

 

20,000,000

 

25

%

Total

 

3,200,000

 

 

 

80,000,000

 

 

 

 

(2)  Sale of property to which distribution pursuant to Sec. 5.6A.(2) relates:

Disposition Proceeds = $30MM

Initial value = $25MM

Property Appreciation = $5MM

Portion of Disposition Proceeds to be distributed = $10MM

 

(3)  Other assumptions:

Value of REIT stock on Reduction Date = $30

There is no Preferred Return Shortfall or the Managing Member Shortfall

Unit Portion (Net Cash Flow of property sold/Net Cash Flow of all the
contributed property) = .20

There have been no previous distributions of Disposition Proceeds or Refinancing
Debt Proceeds Adjustment Factor = 1.0

 

Calculation of Reduction:

 

Sec. 5.6C.(1) – NMMU Reduction = 82,733 Units ($2,482,000 ÷ 30), computed as

(i) excess of

(a)    $2.5MM ($10MM distribution * 25% NMM LLC units), over

(b)    NMM Sharing Amount of $18,000

(U)       (.20 Unit Portion * 3.2MM LLC Units Outstanding) = 640,000 = Unit
Amount

(V)       640,000 * ($30 Value - $25 Effective Price) = $3.2MM Unit Appreciation

(W)    $5MM Property Appreciation - $3.2MM Unit Appreciation = $1.8MM =
Aggregate Sharing Amount

(X)       $1.8MM Aggregate Sharing Amount - $0 Prior Sharing Amounts = $1.8MM
Sharing Amount

(Y)       $1.8MM * 1% NMM Sharing Percentage = $18,000 NMM Sharing Amount

(Z)        $2.5MM – $18,000 = $2,482,000

 

D-1

--------------------------------------------------------------------------------

 

Divided by

(ii) $30 Value on Reduction Date

 

Sec. 5.6C.(2) – MMU Reduction = 248,199 Units, computed as

(i) 82,733 Reduction Units for NMMs divided by 25% Aggregate Percentage
Interests of NMMs before Reduction, times

(ii) 75% Percentage Interest of MM before Reduction

 

Calculation of Profit Participation Amount for NMMs:

 

$431,667, computed as the sum of

(a)    $18,000 (Cumulative distributions pursuant to Sec. 5.6A.(2) that did not
result in a Reduction), and

(b)    $413,667 ($2,482,000 [$2.5MM cumulative distributions pursuant to sec.
5.6A.(2) – $18,000]

* (($30 weighted average Value on each Reduction Date - $25 Effective Price)/$30
weighted average Value on each Reduction Date)

 

D-2

--------------------------------------------------------------------------------

 

EXHIBIT E

 

FORM OF BOTTOM DOLLAR GUARANTEE

 

[See Attached]

 

E-1

--------------------------------------------------------------------------------

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT (“Guarantee”), dated as of February    , 2007, is made
by each of the persons or entities whose names are set forth on the signature
page hereof as a “Guarantor” (each, a “Guarantor,” and collectively, the
“Guarantors”), in favor of Health Care Property Investors, Inc., a Maryland
corporation (“Guaranteed Party”).

 

WHEREAS, HCP DR MCD, LLC (“Borrower”), is indebted to Guaranteed Party pursuant
to that certain Promissory Note in the original principal amount of Fifty
Million and No/100 Dollars ($50,000,000.00) (the “Credit Document”) by Borrower
in favor of Guaranteed Party.

 

WHEREAS, each Guarantor desires to guarantee collection of a portion of the
amount owing under the Credit Document (the “Obligations”) not in excess of the
amount listed next to such Guarantor’s name on Schedule 1 attached hereto (such
amount, as applicable to each individual Guarantor, the “Maximum Guaranteed
Amount” and all such amounts in the aggregate, the “Maximum Guaranteed
Amounts”).

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound hereby,
Guarantors agree as follows:

 

1.                                      Guarantee.

 

A.                                    Guarantors hereby irrevocably and
unconditionally guarantee the collection by Guaranteed Party of, and hereby
agree to pay to Guaranteed Party upon demand (following the exhaustion of the
exercise of any and all remedies available to Guaranteed Party against Borrower,
including, without limitation and to the extent applicable, realizing upon the
assets of Borrower), an amount equal to the excess, if any, of the Maximum
Guaranteed Amounts over the Borrower Proceeds (as hereinafter defined);
provided, however, the obligation of each Guarantor shall be limited severally,
and not jointly, to the Maximum Guaranteed Amount set forth opposite its name on
Schedule 1 attached hereto. Each Guarantor’s obligations as set forth in this
Paragraph 1.A. are hereinafter referred to as the “Guaranteed Obligations.”

 

B.                                    For the purposes of this Guarantee, the
term “Borrower Proceeds” shall mean the aggregate of all amounts collected from
Borrower or realized from the sale or other disposition of assets of Borrower
(whether applied to the Guaranteed Obligations or other obligations).

 

2.                                      Waivers: Other Agreements. Guaranteed
Party is hereby authorized, without notice or demand upon any Guarantor, which
notice or demand is expressly waived hereby, and without discharging or
otherwise affecting the enforceability of the obligations of any Guarantor

 

--------------------------------------------------------------------------------

 

hereunder (which shall remain absolute and unconditional notwithstanding any
such action or omission to act), from time to time to:

 

(i)                                     waive or otherwise consent to
noncompliance with any provision of the Credit Document, or any part thereof, or
any other instrument or agreement in respect of the Guaranteed Obligations now
or hereafter executed by Borrower or any other person and delivered to
Guaranteed Party;

 

(ii)                                  accept partial payments on the Guaranteed
Obligations by Borrower;

 

(iii)                               receive, take and hold additional security
or collateral for the payment of the Guaranteed Obligations or for the payment
of this Guarantee, or for the payment of any other guarantees of the Guaranteed
Obligations, and exchange, enforce, waive, substitute, liquidate, terminate,
abandon, fail to perfect, subordinate, transfer, or otherwise alter or release
any such additional security or collateral;

 

(iv)                              apply any and all such security or collateral
and direct the order or manner of sale thereof as Guaranteed Party may determine
in its sole discretion;

 

(v)                                 settle, release, compromise, collect or
otherwise liquidate the Guaranteed Obligations or accept, substitute, release,
exchange or otherwise alter, affect or impair any mortgage or any other security
or collateral for the Guaranteed Obligations or any other guarantee therefore,
in any manner;

 

(vi)                              add, release or substitute any one or more
other guarantors, borrowers or endorsers of the Guaranteed Obligations and
otherwise deal with Borrower or any other guarantor as Guaranteed Party may
elect in its sole discretion; and

 

(vii)                           apply any and all payments or recoveries from
Borrower, any Guarantor or from any other guarantor of the Guaranteed
Obligations, to such of the Guaranteed Obligations as Guaranteed Party in its
sole discretion may determine, whether such Guaranteed Obligations are secured
or unsecured or guaranteed or not guaranteed by others.

 

3.                                      Independent Obligations. Except as
expressly set forth in Paragraph 1, the obligations of each Guarantor hereunder
are independent of the obligations of Borrower, and a separate action or actions
may be brought by Guaranteed Party against any Guarantor. Each Guarantor
expressly waives any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution or any other claim which such Guarantor may now or
hereafter have against Borrower, or any other person directly or contingently
liable for the payment or performance of the obligations under the Credit
Document arising from the existence or performance of this Guarantee (including,
but not limited to, Guaranteed Party, or any other member of Borrower) (except
and only to the extent that such Guarantor makes a payment to Guaranteed Party
in excess of the amount required to be paid under Paragraph 1 and the
limitations set forth therein).

 

2

--------------------------------------------------------------------------------

 

4.                                      Miscellaneous.

 

A.                                    1.                                     
Subject to the provisions of Section 4.A.2., this Guarantee is irrevocable as to
any and all of the Guaranteed Obligations of each Guarantor until such Guarantor
has disposed of all of its equity interests in Borrower (the “Termination
Date”), provided that the obligations of such Guarantor hereunder shall continue
after the Termination Date to the extent of any claims that are attributable
fully and solely to an event or action that occurred on or before the
Termination Date.

 

2.                                                                                     
In the event that any Guarantor disposes of all or any portion of such
Guarantor’s equity interest in Borrower, the Guaranteed Obligations of such
Guarantor shall be decreased by an amount equal to the portion of the Guaranteed
Obligations of such Guarantor allocable to the disposed of equity interest (a
“Reduction Date”), provided that the obligations of such Guarantor hereunder
shall continue after the Reduction Date with respect to the Guaranteed
Obligations undiminished by such reduction to the extent of any claims that are
attributable fully and solely to an event or action that occurred on or before
said Reduction Date.

 

B.                                    This Guarantee is binding on each
Guarantor and its successors and assigns, and inures to the benefit of
Guaranteed Party.

 

C.                                    No delay on the part of Guaranteed Party
in the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise or waiver by Guaranteed Party of any right or remedy
shall preclude any further exercise thereof, nor shall any modification or
waiver of any of the provisions of this Guarantee be binding upon Guaranteed
Party, except as expressly set forth in a writing duly signed or delivered by
Guaranteed Party or on Guaranteed Party’s behalf by an authorized officer or
agent of Guaranteed Party. Guaranteed Party’s failure at any time or times
hereafter to require strict performance by Borrower, any Guarantor or any other
person of any of the provisions, warranties, terms and conditions contained in
any security agreement, agreements, guarantee, instrument or document now or at
any time or times hereafter executed by Borrower or any Guarantor or delivered
to Guaranteed Party shall not waive, affect or diminish any right of Guaranteed
Party at any time or times hereafter to demand strict performance thereof and
such right shall not be deemed to have been waived by any act or knowledge of
Guaranteed Party, its agents, officers, or employees, unless such waiver is
contained in an instrument in writing signed by an officer or agent of
Guaranteed Party and directed to Borrower or such Guarantor, or any of them (as
the case may be) specifying such waiver. No waiver by Guaranteed Party of any
default shall operate as a waiver of any other

 

3

--------------------------------------------------------------------------------

 

default or the same default on a future occasion, and no action by Guaranteed
Party permitted hereunder shall in any way affect or impair Guaranteed Party’s
rights or the obligations of any Guarantor under this Guarantee.

 

D.                                    This Guarantee shall be interpreted and
the rights and liabilities of the parties hereto determined in accordance with
the laws (other than the conflicts of law provisions) of the State of Texas.

 

E.                                     This Guarantee contains all the terms and
conditions of the agreement between Guaranteed Party and each Guarantor. The
terms and provisions of this Guarantee may not be waived, altered, modified or
amended except in writing duly executed by the party to be charged thereby.

 

F.                                      Any notice shall be directed to the
parties at the following addresses:

 

If to a Guarantor:

[To the address set forth opposite its signature hereto]

 

 

If to Guaranteed Party:

Health Care Property Investors, Inc.

3760 Kilroy Airport Way, Suite 300

Long Beach, California 90806

Attention:  Legal Department

Telephone No.: (562) 733-5100

Facsimile No.: (562) 733-5200

 

 

With a copy to:

Latham & Watkins LLP

650 Town Center Drive

20th Floor

Costa Mesa, California 92626

Attention:  David C. Meckler

Telephone No.: (714) 540-1235

Facsimile No.: (714) 755-8290

 

[Remainder of page intentionally blank.]

 

4

--------------------------------------------------------------------------------

 

GUARANTORS’ SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN GUARANTY AGREEMENT
DATED AS OF FEBRUARY   , 2007

 

POWER OF ATTORNEY

 

IN WITNESS WHEREOF, this Guarantee has been duly executed by each of the
following persons as a “Guarantor” effective as of the date set forth above.

 

Signature

 

Guarantor

 

Address

 

 

 

 

 

*

 

TWG Medical, Ltd.

 

7777 Forest Lane

 

 

 

 

Suite C-840

 

 

 

 

Dallas, TX 75230

 

 

 

 

 

*

 

M.C. Culbertson, Jr.

 

6126 Averell Way
#109 W
Dallas, TX 75225

 

 

 

 

 

 

 

*

 

Pierce D. Flanders

 

1317 Palm Valley
Drive East
Harlingen, TX 78552

 

 

 

 

 

 

 

*

 

G&B Johnson Investments, Ltd.

 

8523 Thackery
Apt. 2103
Dallas, TX 75225

 

 

 

 

 

 

 

*

 

Clifford J. Osborn

 

5581 East Finisterra
Tucson, AZ 85715

 

 

 

 

 

 

 

*

 

Sandra R. Cohen, Trustee for the Ivy T. Rabinowitz Trust for Sandra R.Cohen

 

7030 South Jan Mar
Dallas, TX 75230

 

 

 

 

 

 

 

*

 

Joe A. Stalcup

 

6510 Abrams
Suite 640
Dallas, TX 75231

 

 

 

 

 

 

 

*

 

Howard G. Thomas

 

8333 Douglas
Suite 1414
Dallas, TX 75225

 

 

 

 

 

 

 

*

 

Carol E. Touchstone

 

3829 Stratford
Dallas, TX 75205

 

 

 

Signature Page

 

--------------------------------------------------------------------------------

 

*

 

Jesse M. Hellums III

 

16161 College Oak

 

 

 

 

Suite 100
San Antonio, TX 78249

 

 

 

 

 

*

 

Hunt H. Hellums

 

906 Point Run Dr.

 

 

 

 

Pflugerville, TX 78660

 

 

 

 

 

*

 

Frank O. Seay

 

4242 Lomo Alto N48

 

 

 

 

Dallas, TX 75219

 

 

 

 

 

*

 

Robert J. Wright

 

7777 Forest Lane Suite C-840

 

 

 

 

Dallas, TX 75230

 

 

 

 

 

*

 

Cynthia J. Hellstern

 

10827 Crooked Creek Drive

 

 

 

 

Dallas, TX 75229

 

 

 

 

 

*

 

Mary Ellen Thomas

 

3904 Deepwood St.

 

 

 

 

Colleyville, TX 76034

 

 

 

 

 

*

 

Harlan R. Crow

 

Crow Holdings

 

 

 

 

2100 McKinney Suite 700
Dallas, TX 75201

 

 

 

 

 

*

 

Wright Williams, Ltd.

 

7777 Forest Lane

 

 

 

 

Suite C-840
Dallas, TX 75230

 

 

 

 

 

*

 

Thornton Tye Medical, L.P.

 

c/o Ken Travis

 

 

 

 

Travis Wolff
5580 LBJ Fwy, Suite 400
Dallas, TX 75240

 

 

 

 

 

*

 

James McDonald Williams

 

c/o Dorothy Hopkins

 

 

 

 

Williams Interests
2001 Ross Ave., Suite 3350
Dallas, TX 75201

 

 

 

 

 

*

 

Harlan R. Crow, Trustee for the Trammell Crow 1994 Revocable Trust

 

2100 McKinney Ave.,

 

 

 

Suite 700
Dallas, Texas 75201

 

Signature Page

 

--------------------------------------------------------------------------------

 

*

 

Crow Realty Investors, L.P.

 

2100 McKinney Ave.,

 

 

 

 

Suite 700
Dallas, Texas 75201

 

 

*By

TWG Medical, Ltd., a Texas limited partnership, as Attorney-in-Fact

 

 

 

 

 

By:

TWG, Inc., its general partner

 

 

 

 

 

 

 

By:

 

 

 

 

 

Robert J. Wright

 

 

 

 

President

 

Signature Page

 

--------------------------------------------------------------------------------

 

Schedule 1

 

Guarantor

 

Maximum Guaranteed Amount

 

 

 

 

 

TWG Medical, Ltd.

 

$

8,075,302

 

 

 

 

 

M.C. Culbertson, Jr.

 

$

838,133

 

 

 

 

 

Pierce D. Flanders

 

$

698,308

 

 

 

 

 

G&B Johnson Investments, Ltd.

 

$

349,145

 

 

 

 

 

Clifford J. Osborn

 

$

698,306

 

 

 

 

 

Sandra R. Cohen, Trustee for the Ivy T. Rabinowitz Trust for Sandra R.Cohen

 

$

279,251

 

 

 

 

 

Joe A. Stalcup

 

$

4,888,946

 

 

 

 

 

Howard G. Thomas

 

$

1,397,011

 

 

 

 

 

Carol E. Touchstone

 

$

698,307

 

 

 

 

 

Jesse M. Hellums III

 

$

174,573

 

 

 

 

 

Hunt H. Hellums

 

$

174,573

 

 

 

 

 

Frank O. Seay

 

$

277,046

 

 

 

 

 

Robert J. Wright

 

$

620,559

 

 

 

 

 

Cynthia J. Hellstern

 

$

130,066

 

 

 

 

 

Mary Ellen Thomas

 

$

130,065

 

 

 

 

 

Harlan R. Crow

 

$

7,717,439

 

 

 

 

 

Wright Williams, Ltd.

 

$

717,825

 

 

 

 

 

Thornton Tye Medical, L.P.

 

$

1,520,464

 

 

 

 

 

James McDonald Williams

 

$

1,520,464

 

 

 

 

 

Harlan R. Crow, Trustee for the Trammell Crow 1994 Revocable Trust

 

$

16,128,645

 

 

 

 

 

Crow Realty Investors, L.P.

 

$

2,965,572

 

 

 

 

 

Total Maximum Guaranteed Amounts

 

$

50,000,000.00

 

 

--------------------------------------------------------------------------------

 

GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT (“Guarantee”), dated as of February   , 2007, is made by
each of the persons or entities whose names are set forth on the signature
page hereof as a “Guarantor” (each, a “Guarantor,” and collectively, the
“Guarantors”), in favor of Health Care Property Investors, Inc., a Maryland
corporation (“Guaranteed Party”).

 

WHEREAS, HCP DR MCD, LLC (“Borrower”), is indebted to Guaranteed Party pursuant
to that certain Promissory Note in the original principal amount of Fifty-Five
Million Nine Hundred Sixty-Eight Thousand Eight Hundred Forty-Eight and No/100
Dollars ($55,968,848.00) (the “Credit Document”) by Borrower in favor of
Guaranteed Party.

 

WHEREAS, each Guarantor desires to guarantee collection of a portion of the
amount owing under the Credit Document (the “Obligations”) not in excess of the
amount listed next to such Guarantor’s name on Schedule 1 attached hereto (such
amount, as applicable to each individual Guarantor, the “Maximum Guaranteed
Amount” and all such amounts in the aggregate, the “Maximum Guaranteed
Amounts”).

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound hereby,
Guarantors agree as follows:

 

1.                                      Guarantee.

 

A.            Guarantors hereby irrevocably and unconditionally guarantee the
collection by Guaranteed Party of, and hereby agree to pay to Guaranteed Party
upon demand (following the exhaustion of the exercise of any and all remedies
available to Guaranteed Party against Borrower, including, without limitation
and to the extent applicable, realizing upon the assets of Borrower), an amount
equal to the excess, if any, of the Maximum Guaranteed Amounts over the Borrower
Proceeds (as hereinafter defined); provided, however, the obligation of each
Guarantor shall be limited severally, and not jointly, to the Maximum Guaranteed
Amount set forth opposite its name on Schedule 1 attached hereto. Each
Guarantor’s obligations as set forth in this Paragraph 1.A. are hereinafter
referred to as the “Guaranteed Obligations.”

 

B.            For the purposes of this Guarantee, the term “Borrower Proceeds”
shall mean the aggregate of all amounts collected from Borrower or realized from
the sale or other disposition of assets of Borrower (whether applied to the
Guaranteed Obligations hereunder or other obligations) after reduction of the
Guaranteed Obligations under that certain Guaranty Agreement in favor of
Guaranteed Party from the Guarantors listed on Schedule 2 attached hereto (the
“$50,000,000 Note Guarantors”).

 

--------------------------------------------------------------------------------

 

2.             Waivers: Other Agreements. Guaranteed Party is hereby authorized,
without notice or demand upon any Guarantor, which notice or demand is expressly
waived hereby, and without discharging or otherwise affecting the enforceability
of the obligations of any Guarantor hereunder (which shall remain absolute and
unconditional notwithstanding any such action or omission to act), from time to
time to:

 

(i)            waive or otherwise consent to noncompliance with any provision of
the Credit Document, or any part thereof, or any other instrument or agreement
in respect of the Guaranteed Obligations now or hereafter executed by Borrower
or any other person and delivered to Guaranteed Party;

 

(ii)           accept partial payments on the Guaranteed Obligations by
Borrower;

 

(iii)          receive, take and hold additional security or collateral for the
payment of the Guaranteed Obligations or for the payment of this Guarantee, or
for the payment of any other guarantees of the Guaranteed Obligations, and
exchange, enforce, waive, substitute, liquidate, terminate, abandon, fail to
perfect, subordinate, transfer, or otherwise alter or release any such
additional security or collateral;

 

(iv)          apply any and all such security or collateral and direct the order
or manner of sale thereof as Guaranteed Party may determine in its sole
discretion;

 

(v)           settle, release, compromise, collect or otherwise liquidate the
Guaranteed Obligations or accept, substitute, release, exchange or otherwise
alter, affect or impair any mortgage or any other security or collateral for the
Guaranteed Obligations or any other guarantee therefore, in any manner;

 

(vi)          add, release or substitute any one or more other guarantors,
borrowers or endorsers of the Guaranteed Obligations and otherwise deal with
Borrower or any other guarantor as Guaranteed Party may elect in its sole
discretion; and

 

(vii)         apply any and all payments or recoveries from Borrower, any
Guarantor or from any other guarantor of the Guaranteed Obligations, to such of
the Guaranteed Obligations as Guaranteed Party in its sole discretion may
determine, whether such Guaranteed Obligations are secured or unsecured or
guaranteed or not guaranteed by others.

 

3.             Independent Obligations. Except as expressly set forth in
Paragraph 1, the obligations of each Guarantor hereunder are independent of the
obligations of Borrower, and a separate action or actions may be brought by
Guaranteed Party against any Guarantor. Each Guarantor expressly waives any and
all rights of subrogation, reimbursement, indemnity, exoneration, contribution
or any other claim which such Guarantor may now or hereafter have against
Borrower, or any other person directly or contingently liable for the payment or
performance of the obligations under the Credit Document arising from the
existence or performance of this Guarantee (including, but not Guaranteed Party,
or any other

 

2

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member of Borrower) (except and only to the extent that such Guarantor makes a
payment to Guaranteed Party in excess of the amount required to be paid under
Paragraph 1 and the limitations set forth therein).

 

4.             Miscellaneous.

 

A.            1.             Subject to the provisions of Section 4.A.2., this
Guarantee is irrevocable as to any and all of the Guaranteed Obligations of each
Guarantor until such Guarantor has disposed of all of its equity interests in
Borrower (the “Termination Date”), provided that the obligations of such
Guarantor hereunder shall continue after the Termination Date to the extent of
any claims that are attributable fully and solely to an event or action that
occurred on or before the Termination Date.

 

2.                                                                                     
In the event that any Guarantor disposes of all or any portion of such
Guarantor’s equity interest in Borrower, the Guaranteed Obligations of such
Guarantor shall be decreased by an amount equal to the portion of the Guaranteed
Obligations of such Guarantor allocable to the disposed of equity interest (a
“Reduction Date”), provided that the obligations of such Guarantor hereunder
shall continue after the Reduction Date with respect to the Guaranteed
Obligations undiminished by such reduction to the extent of any claims that are
attributable fully and solely to an event or action that occurred on or before
said Reduction Date.

 

B.            This Guarantee is binding on each Guarantor and its successors and
assigns, and inures to the benefit of Guaranteed Party.

 

C.            No delay on the part of Guaranteed Party in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise or waiver by Guaranteed Party of any right or remedy shall preclude any
further exercise thereof, nor shall any modification or waiver of any of the
provisions of this Guarantee be binding upon Guaranteed Party, except as
expressly set forth in a writing duly signed or delivered by Guaranteed Party or
on Guaranteed Party’s behalf by an authorized officer or agent of Guaranteed
Party. Guaranteed Party’s failure at any time or times hereafter to require
strict performance by Borrower, any Guarantor or any other person of any of the
provisions, warranties, terms and conditions contained in any security
agreement, agreements, guarantee, instrument or document now or at any time or
times hereafter executed by Borrower or any Guarantor or delivered to Guaranteed
Party shall not waive, affect or diminish any right of Guaranteed Party at any
time or times hereafter to demand strict performance thereof and such right
shall not be deemed to have been waived by any act or knowledge of Guaranteed
Party, its agents, officers, or employees, unless such waiver is contained in an
instrument in writing signed by an officer or agent of Guaranteed Party and
directed to Borrower or such

 

3

--------------------------------------------------------------------------------

 

Guarantor, or any of them (as the case may be) specifying such waiver. No waiver
by Guaranteed Party of any default shall operate as a waiver of any other
default or the same default on a future occasion, and no action by Guaranteed
Party permitted hereunder shall in any way affect or impair Guaranteed Party’s
rights or the obligations of any Guarantor under this Guarantee.

 

D.            This Guarantee shall be interpreted and the rights and liabilities
of the parties hereto determined in accordance with the laws (other than the
conflicts of law provisions) of the State of Texas.

 

E.            This Guarantee contains all the terms and conditions of the
agreement between Guaranteed Party and each Guarantor. The terms and provisions
of this Guarantee may not be waived, altered, modified or amended except in
writing duly executed by the party to be charged thereby.

 

F.             Any notice shall be directed to the parties at the following
addresses:

 

If to a Guarantor:

 

[To the address set forth opposite its signature hereto]

 

 

 

If to Guaranteed Party:

 

Health Care Property Investors, Inc.
3760 Kilroy Airport Way, Suite 300
Long Beach, California 90806
Attention: Legal Department
Telephone No.: (562) 733-5100
Facsimile No.: (562) 733-5200

 

 

 

With a copy to:

 

Latham & Watkins LLP
650 Town Center Drive
20th Floor
Costa Mesa, California 92626
Attention: David C. Meckler
Telephone No.: (714) 540-1235
Facsimile No.: (714) 755-8290

 

[Remainder of page intentionally blank.]

 

4

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GUARANTORS’ SIGNATURE PAGE
ATTACHED TO AND MADE A PART OF
THAT CERTAIN GUARANTY AGREEMENT
DATED AS OF FEBRUARY    , 2007

 

IN WITNESS WHEREOF, this Guarantee has been duly executed by each of the
following persons as a “Guarantor” effective as of the date set forth above.

 

Address:

 

Guarantor

 

 

 

7777 Forest Lane

 

TWG Medical, Ltd., a Texas limited

Suite C-840

 

partnership

Dallas, TX 75230

 

 

 

 

 

 

 

By:

TWG, Inc., its general partner

 

 

 

 

 

 

 

By:

 

 

 

 

 

Robert J. Wright

 

 

 

 

President

 

 

 

 

 

 

Crow Holdings

 

 

2100 McKinney

 

Harlan R. Crow

Suite 700

 

 

Dallas, TX 75201

 

 

 

 

 

 

 

 

2100 McKinney

 

Harlan R. Crow, Trustee for the Trammell

Suite 700

 

Crow 1994 Revocable Trust

Dallas, TX 75201

 

 

 

 

 

 

 

Harlan R. Crow, Trustee

 

 

 

 

 

 

2100 McKinney

 

Crow Realty Investors, L.P.

Suite 700

 

 

Dallas, Texas 75201

 

 

 

 

By:

Crow Family, Inc.

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

Signature Page

 

--------------------------------------------------------------------------------

 

c/o Ken Travis

 

Thornton Tye Medical, L.P.

Travis Wolff

 

 

5580 LBJ Freeway, Suite 400

 

 

Dallas, TX 75240

 

 

 

 

By:

Thornton Tye Management I, LLC,

 

 

its general partner

 

 

 

 

 

 

By:

 

 

 

 

 

Judith K. Williams

 

 

 

 

President

 

 

 

 

 

 

c/o Dorothy Hopkins

 

 

Williams Interests

 

 

2001 Ross Avenue, Suite 3350

 

James McDonald Williams

Dallas, TX 75201

 

 

 

 

 

 

 

 

7777 Forest Lane, Suite C-840

 

 

Dallas, TX 75230

 

Robert J. Wright

 

Signature Page

 

--------------------------------------------------------------------------------

 

Schedule 1

 

Guarantor

 

Maximum Guaranteed Amount

 

TWG Medical, Ltd.

 

$

18,764,623

 

Harlan R. Crow

 

$

21,469,339

 

Harlan R. Crow, Trustee for the Trammell Crow 1994 Revocable Trust

 

$

11,412,711

 

Crow Realty Investors, L.P.

 

$

2,077,949

 

Thornton Tye Medical, L.P.

 

$

1,038,995

 

James McDonald Williams

 

$

1,038,995

 

Robert J. Wright

 

166,236

 

Total Maximum Guaranteed Amounts

 

$

55,968,848.00

 

 

Schedule 1

 

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Schedule 2

 

The $50,000,000 Note Guarantors

 

TWG Medical, Ltd.

 

M.C. Culbertson, Jr.

 

Pierce D. Flanders

 

G&B Johnson Investments, Ltd.

 

Clifford J. Osborn

 

Sandra R. Cohen, Trustee for the Ivy T. Rabinowitz Trust for Sandra R.Cohen

 

Joe A. Stalcup

 

Howard G. Thomas

 

Carol E. Touchstone

 

Jesse M. Hellums III

 

Hunt H. Hellums

 

Frank O. Seay

 

Robert J. Wright

 

Cynthia J. Hellstern

 

Mary Ellen Thomas

 

Harlan R. Crow

 

Wright Williams, Ltd.

 

Thornton Tye Medical, L.P.

 

James McDonald Williams

 

Harlan R. Crow, Trustee for the Trammell Crow 1994 Revocable Trust

 

Crow Realty Investors, L.P.

 

Schedule 2

 

--------------------------------------------------------------------------------

 

EXHIBIT F - 1

 

FORM OF MANAGING MEMBER NOTE

 

[See Attached]

 

F-1

--------------------------------------------------------------------------------

 

NEGOTIABLE DEMAND PROMISSORY NOTE

 

Principal Amount: $50,000,000.00

 

Date of this Note: February    , 2007

 

1.             Promise to Pay. For good and valuable consideration, HCP DR MCD,
LLC, a Delaware limited liability company (“Payor”), promises to pay to HEALTH
CARE PROPERTY INVESTORS, INC., a Maryland corporation (“HCP”), on order, Fifty
Million Dollars ($50,000,000.00) (the “Principal Amount”), together with
interest thereon at the Applicable Interest Rate from the date of this Note
until paid, in accordance with the terms contained herein. Interest shall be
computed on the basis of a 360-day year and the actual number of days elapsed.
As used herein, “Applicable Interest Rate” shall mean the ten-year U.S. Treasury
Note rate published in the Wall Street Journal as of the date of each payment by
Payor, plus One Percent (1.00%)

 

2.             Payment Schedule. From the date of this Note to and until the
Demand Date, Payor shall pay quarterly all accrued and unpaid interest under
this Note. Each such quarterly installment of accrued and unpaid interest shall
be paid on or before the Quarterly Installment Date. For purposes of this Note,
the “Quarterly Installment Date” shall be January 1, April 1, July 1, and
October 1 of each year to and until the Demand Date. The first installment of
accrued and unpaid interest under this Note shall be paid on or before April 1,
2007. The entire indebtedness under this Note (including the Principal Amount
and all accrued and unpaid interest) shall be due and payable on the date (the
“Demand Date”) that the holder of this Note delivers to Payor at 3760 Kilroy
Airport Way, Suite 300, Long Beach, California 90806, a writing demanding
immediate payment of the indebtedness hereunder. All payments shall be applied
first to amounts owing under this Note other than interest and principal, next
to accrued interest and then to the principal balance. All payments shall be
made in lawful money of the United States.

 

3.             Purpose of Loan. The Loan evidenced by this Note is being made by
HCP to Payor pursuant to the provisions of Section 4.3B of that certain Amended
and Restated Limited Liability Company Agreement for HCP DR MCD, LLC dated
February    , 2007, as amended (the “LLC Agreement”).

 

4.             Miscellaneous Provisions. If the holder of this Note refers this
Note to an attorney to enforce, construe or defend any provision hereof, with or
without the filing of any legal action or proceeding, Payor shall pay to the
holder of this Note upon demand the amount of all attorneys’ fees, costs and
other expenses incurred in connection therewith, together with interest thereon
from the date of demand at the rate set forth in Section 1 above. No provision
of this Note may be amended, modified, supplemented, changed, waived, discharged
or terminated unless the holder of this Note consents thereto in writing. In
case any one or more of the provisions contained in this Note should be held to
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby. This Note shall be binding upon and inure to
the benefit of Payor, the holder of this Note and their respective successors
and assigns. The parties intend for this Note to he negotiable in accordance
with Section 3-104 of the California Uniform Commercial Code. Time is of the
essence of this Note and the performance of each of

 

--------------------------------------------------------------------------------

 

the covenants and agreements contained herein. This Note shall be governed by
and construed in accordance with the laws of the State of California.

 

[Signature Page Follows]

 

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Payor has executed this Note as of the Date of this Note set
forth above.

 

 

HCP DR MCD, LLC, a Delaware limited liability company

 

 

 

 

By:

HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation, its Sole Member

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Its:

 

 

--------------------------------------------------------------------------------

 

EXHIBIT F - 2

 

FORM OF MANAGING MEMBER NOTE (Subordinate Note)

 

[See Attached]

 

F-2-1

--------------------------------------------------------------------------------

 

SUBORDINATE NEGOTIABLE DEMAND PROMISSORY NOTE

 

Principal Amount: $55,968,848.00

 

Date of this Note: February    ,2007

 

1.             Promise to Pay. For good and valuable consideration, HCP DR MCD,
LLC, a Delaware limited liability company (“Payor”), promises to pay to HEALTH
CARE PROPERTY INVESTORS, INC., a Maryland corporation (“HCP”), on order,
Fifty-Five Million Nine Hundred Sixty-Eight Thousand Eight Hundred Forty-Eight
Dollars ($55,968,848.00) (the “Principal Amount”), together with interest
thereon at the Applicable Interest Rate from the date of this Note until paid,
in accordance with the terms contained herein. Interest shall be computed on the
basis of a 360-day year and the actual number of days elapsed. As used herein,
“Applicable Interest Rate” shall mean the ten-year U.S. Treasury Note rate
published in the Wall Street Journal as of the date of each payment by Payor,
plus One Percent (1.00%)

 

2.             Payment Schedule. From the date of this Note to and until the
Demand Date, Payor shall pay quarterly all accrued and unpaid interest under
this Note. Each such quarterly installment of accrued and unpaid interest shall
be paid on or before the Quarterly Installment Date. For purposes of this Note,
the “Quarterly Installment Date” shall be January 1, April 1, July 1, and
October 1 of each year to and until the Demand Date. The first installment of
accrued and unpaid interest under this Note shall be paid on or before April 1,
2007. The entire indebtedness under this Note (including the Principal Amount
and all accrued and unpaid interest) shall be due and payable on the date (the
“Demand Date”) that the holder of this Note delivers to Payor at 3760 Kilroy
Airport Way, Suite 300, Long Beach, California 90806, a writing demanding
immediate payment of the indebtedness hereunder. All payments shall be applied
first to amounts owing under this Note other than interest and principal, next
to accrued interest and then to the principal balance. All payments shall be
made in lawful money of the United States.

 

3.             Purpose of Loan. The Loan evidenced by this Note is being made by
HCP to Payor pursuant to the provisions of Section 4.3B of that certain Amended
and Restated Limited Liability Company Agreement for HCP DR MCD, LLC dated
February        , 2007, as amended (the “LLC Agreement”).

 

4.             Subordinate Note. Payor and HCP, by its acceptance of this Note,
agree that this Note shall be subordinate in all respects to that certain
Negotiable Demand Promissory Note in the original principal amount of
$50,000,000.00 dated concurrently herewith and made by Payor in favor of HCP.

 

5.             Miscellaneous Provisions. If the holder of this Note refers this
Note to an attorney to enforce, construe or defend any provision hereof, with or
without the filing of any legal action or proceeding, Payor shall pay to the
holder of this Note upon demand the amount of all attorneys’ fees, costs and
other expenses incurred in connection therewith, together with interest thereon
from the date of demand at the rate set forth in Section 1 above. No provision
of this Note may be amended, modified, supplemented, changed, waived, discharged
or terminated unless the holder of this Note consents thereto in writing. In
case any one or more of the provisions contained in this Note should be held to
be invalid, illegal or unenforceable in any

 

--------------------------------------------------------------------------------

 

respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. This Note
shall be binding upon and inure to the benefit of Payor, the holder of this Note
and their respective successors and assigns. The parties intend for this Note to
be negotiable in accordance with Section 3-104 of the California Uniform
Commercial Code. Time is of the essence of this Note and the performance of each
of the covenants and agreements contained herein. This Note shall be governed by
and construed in accordance with the laws of the State of California.

 

[Signature Page Follows]

 

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Payor has executed this Note as of the Date of this Note set
forth above.

 

 

HCP DR MCD, LLC, a Delaware limited liability company

 

 

 

 

By:

HEALTH CARE PROPERTY INVESTORS, INC., a Maryland corporation, its Sole Member

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Its:

 

 

--------------------------------------------------------------------------------