EX-4.34



 





Exhibit 4.34



Execution Copy




FOURTH AMENDED AND RESTATED

OPERATING AGREEMENT OF

DDR DownREIT LLC

(An Ohio Limited Liability Company)




     THIS FOURTH AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”), dated as
of February 26, 2007, of DDR DownREIT LLC (the “Company”) is entered into by and among
Developers Diversified Realty Corporation, an Ohio corporation (“DDR” or the “Managing
Member”), as the Managing Member, DD Development Company II, Inc., an Ohio corporation, (“DevCo
II” or the “Nonmanaging Member”), as a Nonmanaging Member, and Wachovia Bank, National
Association, a national banking association (“Wachovia” or the “Preferred Member”),
as a Preferred Member, together with any other Persons who become Members in the Company as
provided herein.



RECITALS




     A. The Company was formed on August 17, 1999, as a limited liability company under the Ohio
Limited Liability Company Act.



     B. The original Operating Agreement of the Company was amended and restated on September 1,
1999, to admit DD Development Company, Inc., an Ohio corporation (“DevCo I”), as the
original nonmanaging member of the Company (the “Amended and Restated Agreement”).



     C. Subsequent to the date of the Amended and Restated Agreement, DevCo I merged with and into
DevCo II, with DevCo II being the surviving entity and succeeding to the interest of DevCo I under
this Agreement.



     D. The Amended and Restated Agreement was subsequently amended and restated on September 3,
io1999, to admit Goldman Sachs 1999 Exchange Place Fund, L.P. (“Goldman 1999”) as a Member
(the “Second Amended and Restated Agreement”) and to set forth the members’ respective
rights and duties relating to the Company.



     E. The Second Amended and Restated Agreement was subsequently amended and restated on May 25,
2000 to admit Goldman Sachs 2000 Exchange Place Fund, L.P. (“Goldman 2000”) as a Member
(the “Third Amended and Restated Agreement”) and to set forth the Members’ respective
rights and duties relating to the Company.



     F. The Third Amended and Restated Agreement was amended by a First Amendment to Third Amended
and Restated Operating Agreement on April 1, 2003 to admit Hendon Investments, Inc. and
Hendon/Johns Creek, LLC (together, “Hendon”) as Additional Nonmanaging Members.



     G. Prior to the date hereof, DDR acquired all of the Units of Goldman 1999, Goldman 2000, and
Hendon.



     H. As a result of such acquisitions, immediately prior to execution of this Agreement, DDR and
DevCo II were the only Members and owned all of the issued and outstanding equity interests in the
Company.



 









 





     I. The Members desire to admit Wachovia as a Preferred Member owning Preferred Units and to
amend and restate the Third Amended and Restated Agreement, as amended, on the terms and conditions
set forth herein for the purpose of setting forth the Members’ respective rights and duties with
respect to each other and the Company.



     NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and
intending to be legally bound, the parties 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.



     “Accumulated Preferred Unit Distributions” has the meaning set forth in Section
15.2(c).



     “Act” shall mean the Ohio Limited Liability Company Act, as set forth in Chapter 1705
of the Ohio Revised Code, inclusive, as in effect from time to time in the State of Ohio.



     “Additional Nonmanaging Member” means a Person admitted to the Company as a Member
pursuant to Section 12.2 hereof and who is shown as such on the books and records of the Company.



     “Adjusted Capital Account” means the Capital Account maintained for each Member as of
the end of each Company Year (a) increased by any amounts which such Member is obligated to restore
pursuant to any provision of this Agreement (including Section 13.9 hereof) or is deemed to be
obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(5) and (b) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.



     “Adjusted Capital Account Deficit” means, with respect to any Member, the deficit
balance, if any, in such Member’s Adjusted Capital Account as of the end of the relevant Company
Year.



     “Adjusted Property” means any property the Book Value of which has been adjusted
pursuant to Section 4.4(d) hereof.



     “Affiliate” means, with respect to any Person, (a) any Person directly or indirectly
controlling, controlled by or under common control with such Person, (b) any Person owning or
controlling ten percent (10%) or more of the outstanding voting interest of such Person, (c) any
Person of which such Person owns or controls ten percent (10%) or more of the voting interests, or
(d) any officer, director, general partner or trustee of such Person or any Person referred to in
clause (a), (b) or (c) above.



     “Agreed Value” means (a) in the case of any Contributed Property (whether contributed
as of the date of this Agreement or thereafter) as of the time of its contribution to the Company,
the Agreed Value of such property as set forth in Exhibit B (which Agreed Value shall be reduced by
any indebtedness either assumed by the Company upon such contribution or to which such property is
subject at the time of contribution), as that exhibit may be amended from time to time by the
Managing Member to reflect the contribution of additional properties, and (b) in the case of any
property distributed to a



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Member by the Company, the Company’s Book Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Member upon such distribution or to
which such property is subject at the time of distribution as determined under Section 752 of the
Code and the Regulations thereunder.



     “Agreement” means this Fourth Amended and Restated Operating Agreement, as it may be
further amended, supplemented or restated from time to time.



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



     “Available Cash” means, with respect to any period for which such calculation is being
made, (a) all cash revenues and funds received by the Company from whatever source (including
Capital Transaction Proceeds, but excluding the proceeds of any Capital Contribution to the Company
pursuant to Section 4.1 hereof and excluding any proceeds from a Liquidating Transaction) plus the
amount of any reduction (including, without limitation, a reduction resulting because the Managing
Member determines such amounts are no longer necessary) in reserves of the Company, which reserves
are referred to in clause (b)(iv) below; (b) less the sum of the following (except to the extent
made with the proceeds of any Capital Contribution and except to the extent taken into account in
determining Capital Transaction Proceeds):




     (i) all interest, principal and other debt payments made during such period by
the Company,




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




     (iii) investments in any entity (including loans made thereto) to the extent
that such investments are not otherwise described in clauses (b)(i) or (ii), and




     (iv) the amount of any increase in reserves established during such period that
the Managing Member determines is necessary or appropriate in its sole and absolute
discretion.



Notwithstanding the foregoing, Available Cash shall not include any cash received or reductions in
reserves or take into account any disbursements made or reserves established, after commencement of
the dissolution and liquidation of the Company.



     “Book-Tax Disparities” means, with respect to any item of Contributed Property or
Adjusted Property as of the date of any determination, the difference between the Book Value of
such Contributed Property or Adjusted Property and the adjusted basis thereof for federal income
tax purposes as of such date. A Member’s share of the aggregate of the Company’s net Book-Tax
Disparities in all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Member’s Capital Account balance as maintained pursuant to Section 4.4 and
the hypothetical balance of such Member’s Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.



     “Book Value” means (a) with respect to a Contributed Property or Adjusted Property,
the 704(c) Value of such property reduced (but not below zero) by all Depreciation with respect to
such property charged to the Members’ Capital Accounts and (b) with respect to any other Company
property,



Page 3









 







the adjusted basis of such property for federal income tax purposes, all as of the time of
determination. The Book Value of any property shall be adjusted from time to time in accordance
with Section 4.4 hereof and to reflect changes, additions or other adjustments to the Book Value
for dispositions and acquisitions of Company properties, as deemed appropriate by the Managing
Member.



     “Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in Cleveland, Ohio, are authorized or required by law to close.



     “Call Date” has the meaning set forth in Section 15.4(b)(1).



     “Capital Account” means the Capital Account maintained for a Member pursuant to
Section 4.4 hereof.



     “Capital Contribution” means, with respect to any Member, any cash, cash equivalents
or the Agreed Value of Contributed Property which such Member contributes or is deemed to
contribute to the Company pursuant to Sections 4.1 hereof.



     “Capital Transaction” means a sale, exchange or other disposition (other than in
liquidation of the Company) or a financing or refinancing by the Company (which shall not include
any loan or financing to or by the Managing Member as permitted by Sections 4.1(b), 7.1(a)(1),
7.1(a)(3) and 7.1(a)(4)) of any Company property or any portion thereof.



     “Capital Transaction Proceeds” means the net cash proceeds of a Capital Transaction,
after deducting all expenses incurred in connection therewith and after application of any
proceeds, at the sole discretion of the Managing Member, toward the payment of any indebtedness of
the Company, the purchase or financing of any improvements or an expansion of Company property or
the establishment of any reserves deemed reasonably necessary by the Managing Member.



     “Capital Transaction Record Date” means, with respect to a Capital Transaction, the
date of such Capital Transaction.



     “Change of Control” has the meaning set forth in Section 15.2(b)(1).



     “Closing Date” has the meaning set forth in Section 15.2(b)(2).



     “Code” means the Internal Revenue Code of 1986, as amended. 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” means DDR DownREIT LLC, and any successor thereto.



     “Company 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 its shareholders.



     “Company Unit” or “Unit” means a fractional, undivided share of the Membership
Interests of all Members issued pursuant to Sections 4.1, 4.2 and 15.1, in such number as set forth
on Exhibit A attached hereto, as such exhibit may be amended from time to time.



     “Company Year” means the calendar year.



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     “Consent” means the consent or approval of a proposed action by a Member given in
accordance with Section 7.3, 13.2(b), 14.1 or 15.7(b) hereof.



     “Consolidated Group” has the meaning set forth in Section 15.12(i).



     “Consolidated Group Pro Rata Share” has the meaning set forth in Section 15.12(i).



     “Consolidated Interest Expense” has the meaning set forth in Section 15.12(i).



     “Consolidated Outstanding Indebtedness” has the meaning set forth in Section 15.12(i).



     “Consolidated Tangible Net Worth” has the meaning set forth in Section 15.12(i).



     “Contributed Property” means each property or other asset (but excluding cash), in
such form as may be permitted by the Act, contributed or deemed contributed to the Company. Once
the Book Value of a Contributed Property is adjusted pursuant to Section 4.4(d) hereof, such
property shall no longer constitute a Contributed Property for purposes of Section 4.4 hereof, but
shall be deemed an Adjusted Property for such purposes.



     “Current Rating” has the meaning set forth in Section 15.2(b)(3).



     “DD Borrowing Rate” means the highest per annum rate of interest incurred by the
Managing Member for borrowed money under its principal line of credit, as the same may be in effect
from time to time, plus two percent (2%).



     “DDR” means Developers Diversified Realty Corporation, an Ohio corporation.



     “Debt” means, as to any Person, as of any date of determination, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property or services, which
purchase price is due more than six (6) months after the date of placing such property in service
or taking delivery and title thereto or the completion of such services; (b) 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; (c) 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 (d) lease obligations of such Person which,
in accordance with generally accepted accounting principles, should be capitalized.



     “Depreciation” means for each fiscal year, an amount equal to the federal income tax
depreciation, amortization or other cost recovery deduction allowable with respect to an asset for
such year, except that if the Book Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation shall be an amount
which bears the same ratio to such beginning Book Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year 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 is zero, Depreciation shall be determined with
reference to such beginning Book Value using any reasonable method selected by the Managing Member.



     “DevCo II” means DD Development Company II, Inc., an Ohio corporation.



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     “Distribution Period” has the meaning set forth in Section 15.2(b)(4).



     “Distribution Rate” has the meaning set forth in Section 15.2(b)(5).



     “Event of Dissolution” has the meaning set forth in Section 13.1.



     “Excess Gain” has the meaning set forth in Section 6.1(c)(1).



     “Fixed Charges” has the meaning set forth in Section 15.12(i).



     “GAAP” has the meaning set forth in Section 15.12(i).



     “Immediate Family” means, with respect to any natural Person, such natural Person’s
spouse, parents, descendants, nephews, nieces, brothers and sisters, and one or more trusts
established for the sole benefit of one or more of such Persons.



     “Indebtedness” has the meaning set forth in Section 15.12(i).



     “Indemnitee” means (a) any Person made a party to a proceeding by reason of his status
as (i) the Managing Member or (ii) a director or officer of the Company or the Managing Member or
an advisor of the Company or the Managing Member, and (b) such other Persons (including Affiliates
of the Managing Member of the Company) acting in good faith on behalf of the Company as determined
by the Managing Member in its sole discretion.



     “Inland Limited Partnership” means Inland Retail Real Estate Limited Partnership, an
Illinois limited partnership.



     “Inland Limited Partnership Agreement” means the Agreement of Limited Partnership of
Inland Limited Partnership, dated February 11, 1999, as amended, modified, restated or revised from
time to time.



     “Investment Affiliate” has the meaning set forth in Section 15.12(i).



     “IRS” means the Internal Revenue Service.



     “Junior Units” has the meaning set forth in Section 15.2(d)(1).



     “LIBOR Reset Date” has the meaning set forth in Section 15.2(b)(6).



     “Lien” has the meaning set forth in Section 15.12(i).



     “Liquidating 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, results
in the sale or other disposition of all or substantially all of the assets of the Company.



     “Liquidation Preference” has the meaning set forth in Section 15.2(b)(7).



     “Liquidator” has the meaning set forth in Section 13.2.



     “Managing Member” means DDR or its successors as a Member of the Company. Further,
notwithstanding any provision of this Agreement to the contrary: (i) DDR Nassau Pavilion, Inc., an
Ohio corporation, is hereby admitted as a Managing Member of the Company with no economic or



Page 6









 







other interest in the Company other than a one percent (1%) management right solely with
respect to any property located in Illinois, and (ii) DDR shall have the authority, in its sole
discretion and without the consent of any other Member, to appoint a Managing Member with a de
minimis interest in the Company or to hire a manager with de minimis management rights to the
extent necessary to minimize Company costs of complying with state or other government filings,
registrations, or taxes.



     “Managing Member Membership Interest” means a Membership Interest held by the Managing
Member. A Managing Member Membership Interest may be expressed as a number of Company Units.



     “Member” means a Managing Member, a Nonmanaging Member, and a Preferred Member, and
“Members” means the Managing Member, the Nonmanaging Members and the Preferred Member.



     “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 a
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 Company Units.



     “Net Income” means for any taxable period, the excess, if any, of the Company’s items
on an accrual basis of income and gain for such taxable period over the Company’s items of loss and
deduction (including Nonrecourse Deductions) for such taxable period. The items included in the
calculation of Net Income shall be determined in accordance with Section 4.4. Once an item of
income, gain, loss or deduction that has been included in the initial computation of Net Income is
subjected to the special allocation rules in Sections 6.2 and 6.3, Net Income or the resulting Net
Loss, whichever the case may be, shall be recomputed without regard to such item.



     “Net Loss” means for any taxable period, the excess, if any, of the Company’s items on
an accrual basis of loss and deduction (including Nonrecourse Reductions) for such taxable period
over the Company’s items of income and gain for such taxable period. The items included in the
calculation of Net Loss shall be determined in accordance with Section 4.4. Once an item of
income, gain, loss or deduction that has been included in the initial computation of Net Loss is
subjected to the special allocation rules in Sections 6.2 and 6.3, Net Loss or the resulting Net
Income, whichever the case may be, shall be recomputed without regard to such item.



     “Net Operating Income” has the meaning set forth in Section 15.12(i).



     “Nonmanaging Member” means any Person named as a Nonmanaging Member in Exhibit A
attached hereto, as such Exhibit may be amended from time to time, or any Substituted Nonmanaging
Member or Additional Nonmanaging Member, in such Person’s capacity as a Nonmanaging Member of the
Company.



     “Nonmanaging Member Membership Interest” means a Membership Interest of a Nonmanaging
Member in the Company and includes any and all benefits to which the holder of such a Nonmanaging
Member 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
Nonmanaging Member Membership Interest may be expressed as a number of Company Units or Nonmanaging
Units.



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     “Nonmanaging Member Representative” means, until a replacement or successor acceptable
to the Managing Member in its sole discretion is chosen by holders of a majority of Nonmanaging
Member Membership Interests, William H. Schafer, not individually, but solely as representative of
each of the Nonmanaging Members.



     “Nonmanaging Members’ Preferred Return” has the meaning set forth in Section 5.1.



     “Nonmanaging Units” means a fractional, undivided share of the Nonmanaging Member
Membership Interests of all Nonmanaging Members issued pursuant to Sections 4.1 and 4.2, in such
number as set forth on Exhibit A attached hereto, as such Exhibit may be amended from time to time.



     “Nonrecourse Built-In Gain” means, with respect to any Contributed Properties or
Adjusted Properties that are subject to a mortgage or negative pledge securing a Nonrecourse
Liability, the amount of any taxable gain that would be allocated to the Members pursuant to
Section 6.3(b) if such properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.



     “Nonrecourse Deductions” has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Company 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 the Notice of Redemption substantially in the form of
Exhibit C to this Agreement.



     “One-Month LIBOR” has the meaning set forth in Section 15.2(b)(8).



     “Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt,
equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were
treated as a Nonrecourse Liability, determined in accordance with Regulations Section
1.704-2(i)(3).



     “Partner Nonrecourse Debt” has the meaning set forth in Regulations Section
1.704-2(b)(4).



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



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



     “Percentage Interest” means, as to a Member, the percentage interest set forth on
Exhibit A from time to time determined by the relative Capital Contributions of the Members. If
Capital Accounts are adjusted in accordance with Section 4.4(d), those adjustments shall be
considered to be additions to or subtractions from the Capital Contributions of those Members.



Page 8









 





     “Permitted Transferee” shall mean (a) a partnership in which the Nonmanaging Member is
the sole or controlling general partner and other partners are members of the Immediate Family of
such Nonmanaging Member, (ii) a limited liability company (“LLC”) in which the Nonmanaging Member
is the sole or controlling member and other members of the LLC are members of the Immediate Family
of such Nonmanaging Member, (iii) a corporation of which all of the issued and outstanding capital
stock of all classes is owned and controlled by the Nonmanaging Member (or members of the Immediate
Family of such Nonmanaging Member), (iv) another Member, or (v) a successor trustee or trustees of
any Nonmanaging Member which is a trust upon the death, resignation, removal or failure to act of
any individual trustee thereof.



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



     “Preferred Member” means Wachovia Bank, National Association, a national banking
association.



     “Preferred Member Initial Contribution” has the meaning set forth in Section 4.1(a)
hereof.



     “Preferred Member Suspension Period” has the meaning set forth in Section 15.5(c)(2).



     “Preferred Redemption Notice” has the meaning set forth in Section 15.4(b)(1).



     “Preferred Redemption Price” has the meaning set forth in Section 15.4(a).



     “Preferred Shares” has the meaning set forth in Section 15.2(b)(9).



     “Preferred Shares Election” has the meaning set forth in Section 15.5(c).



     “Preferred Stock” has the meaning set forth in Section 15.12(i).



     “Preferred Unit” means a Preferred Unit in the Company as described in Article XV of
this Agreement.



     “Preferred Unit Distribution” has the meaning set forth in Section 15.2(a).



     “Preferred Unit Distribution Date” has the meaning set forth in Section 15.2(a).



     “Purchase Agreement” means that certain Purchase Agreement dated as of February 23,
2007 by and among the Preferred Member, the Company and the Managing Member relating to the
purchase and sale of Preferred Units.



     “Put Notice” has the meaning set forth in Section 15.5(a).



     “Put Procedure Notice” has the meaning set forth in Section 15.5(b).



     “Rating Agencies” has the meaning set forth in Section 15.2(b)(10).



     “Recapture Income” means any gain recognized by the Company (computed without regard
to any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Company, which gain is characterized as ordinary income for federal income
tax



Page 9









 







purposes because it represents the recapture of depreciation deductions previously taken with
respect to such property or asset.



     “Redeeming Member” has the meaning set forth in Section 4.2(a)(1) hereof.



     “Redemption Amount” means an amount of cash per Company Unit equal to the deemed Value
on the Valuation Date of the Shares that the Member being redeemed would have been entitled to
receive under Section 4.2(a) if DDR were to assume the Company obligation to redeem Company Units
by issuing Shares. The Unit Adjustment Factor shall be that in effect on the Valuation Date.



     “Redemption Right” has the meaning set forth in Section 4.2(a)(1) hereof.



     “Registration Rights Agreement” has the meaning set forth in Section 15.5(b)(2)
hereof.



     “Regulations” means the Income Tax Regulations promulgated under the Code, as such
Regulations may be amended from time to time (including corresponding provisions of succeeding
Regulations).



     “REIT” means a real estate investment trust under Section 856 of the Code.



     “REIT Preferred Shares” means depositary shares, each of which represents a 1/40
fractional interest in a share of a class of Preferred Shares of DDR that have terms consistent
with prevailing market terms as reasonably determined by the Preferred Member, which shall be
supported by evidence of recent securities offerings with similar terms by issuers with similar
ratings at the request of the Managing Member. Each reference to certificates evidencing REIT
Preferred Shares set forth in Article XV shall mean depositary receipts evidencing REIT Preferred
Shares.



     “Reports” has the meaning set forth in Section 15.12(h).



     “Residual Gain” or “Residual Loss” means any item of gain or loss, as the case
may be, of the Company recognized for federal income tax purposes resulting from a sale, exchange
or other disposition of Contributed Property or Adjusted Property, to the extent such item of gain
or loss is not allocated pursuant to Section 6.3(b)(1)(i) or 6.3(b)(2)(i) to eliminate Book-Tax
Disparities.



     “704(c) Value” of any Contributed Property means the fair market value of such
property as set forth in Exhibit B.



     “Scheduled Redemption Date” means (i) the date of redemption of Preferred Units as set
forth in a Preferred Redemption Notice or a Put Procedure Notice or (ii) the day after the last day
of a Suspension Period, as the case may be.



     “Securities Act” has the meaning set forth in Section 15.5(b)(2).



     “Senior Unsecured Notes” has the meaning set forth in Section 15.2(b)(11).



     “Shares” means the common shares of DDR, which Shares may not be registered and may be
restricted as described in Section 4.2 of this Agreement.



     “Subsidiary” means, with respect to any Person, any corporation or other entity of
which a majority of (a) the voting power of the voting equity securities or (b) the outstanding
equity interests is owned, directly or indirectly, by such Person.



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     “Substituted Nonmanaging Member” means a Person who is admitted as a Nonmanaging
Member to the Company pursuant to Section 11.4.



     “Suspension Notice” has the meaning set forth in Section 15.5(c)(1).



     “Suspension Period” has the meaning set forth in Section 15.5(c)(1).



     “Three-Month LIBOR” has the meaning set forth in Section 15.2(b)(12).



     “Transaction” has the meaning set forth in Section 11.2(b).



     “Unit Adjustment Factor” means, as of the date of this Agreement, one (1.0);
provided that in the event that the Managing Member (i) declares or pays a dividend on its
outstanding Shares in Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares, or (iii) combines its outstanding Shares into a
smaller number of Shares, the Unit Adjustment Factor shall be adjusted by multiplying the Unit
Adjustment Factor by a fraction, the numerator of which shall be the number of Shares issued and
outstanding on the record date (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the denominator of which shall be the
actual number of Shares (determined without the above assumption) issued and outstanding on the
record date for such dividend, distribution, subdivision or combination. Any adjustment to the
Unit Adjustment Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event. For example, if the Managing Member pays a
stock dividend of one (1) share on each of its outstanding Shares, the Unit Adjustment Factor would
be adjusted from one (1) to two (2) by applying the formula set forth above. Notwithstanding the
foregoing, in the event the Company makes a distribution of Capital Transaction Proceeds to the
Members, the Unit Adjustment Factor shall not be adjusted but any distribution of Capital
Transaction Proceeds to any Nonmanaging Member in excess of such Nonmanaging Member’s allocation of
Excess Gain or any return of Capital Contributions to the Nonmanaging Members shall be treated as a
redemption of Units from the Nonmanaging Members, with the number of Units being redeemed
determined by applying the Redemption Amount concepts set forth in Section 5.1 of this Agreement.



     “Unrealized Gain” attributable to any item of Company property means, as of any date
of determination, the excess, if any, of (a) the fair market value of such property (as determined
under Section 4.4 hereof) as of such date over (b) the Book Value of such property (prior to any
adjustment to be made pursuant to Section 4.4 hereof) as of such date.



     “Unrealized Loss” attributable to any item of Company property means, as of any date
of determination, the excess, if any, of (a) the Book Value of such property (prior to any
adjustment to be made pursuant to Section 4.4 hereof) as of such date over (b) the fair market
value of such property (as determined under Section 4.4 hereof) as of such date.



     “Valuation Date” means the date of receipt by the Managing Member of a Notice of
Redemption or, if such date is not a Business Day, the first (1st) Business Day thereafter.



     “Value” means, with respect to a Share, the average of the daily market price for the
thirty (30) consecutive trading days immediately preceding the Valuation Date. The market price
for each such trading day shall be the closing price, regular way, on such day, or if no sale takes
place on such day, the average of the closing bid and asked prices on such day; provided,
that if there are no bid and asked prices reported during the thirty (30) days prior to the date in
question, the Value of the Shares shall be determined (i) first by taking the average of the
closing prices on the thirty (30) days preceding the Valuation Date on which trading did occur,
provided the look-back period does not exceed six (6)



Page 11









 







months, and (ii) then, to the extent a value has not been determined, by the Managing Member
acting in good faith on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate.



ARTICLE II

ORGANIZATIONAL MATTERS




     Section 2.1 Organization; Application of Act.




     (a) Organization of Company. The Managing Member has previously formed the
Company as a limited liability company in accordance with the Act. The Managing Member is
the sole Managing Member.




     (b) Application of Act. The Company is a limited liability company pursuant to
the provisions of the Act and upon the terms and subject to the conditions set forth in this
Agreement. Except as expressly provided herein to the contrary, the rights and obligations
of the Members and the administration and termination of the Company shall be governed by
the Act. No Member has any interest in any Company property, and the Membership Interest of
each Member shall be personal property for all purposes.



     Section 2.2 Name. The name of the Company is DDR DownREIT LLC. The words “Limited
Liability Company,” “LLC,” or similar words or letters shall be included in the Company’s name
where necessary for the purposes of complying with the laws of any jurisdiction that so requires.



     Section 2.3 Principal Office. The principal office of the Company is 3300 Enterprise
Parkway, Beachwood, Ohio 44122, or such other place as the Managing Member may from time to time
designate by notice to the Nonmanaging Members. The Company may maintain offices at such other
place or places within or outside the State of Ohio as the Managing Member deems advisable.



     Section 2.4 Term. The term of the Company shall commence on the date hereof and
shall continue perpetually, unless it is dissolved sooner pursuant to the provisions of Article
XIII or as otherwise provided by law.



ARTICLE III

PURPOSE




     Section 3.1 Purpose and Business. The purpose and nature of the business to be
conducted by the Company is (a) to acquire, own, lease, manage, finance, refinance, and sell the
Contributed Property described on Exhibit B and any additional property purchased by or contributed
to the Company, and (b) to do anything necessary or incidental to the foregoing; provided,
however, that each of the foregoing clauses (a) and (b) shall be limited and conducted in
such a manner as to permit the Managing Member at all times to be classified as a REIT, unless the
Managing Member provides notice to the Company that it intends to cease (and, in such case,
provides thirty (30) days’ written notice) or has ceased to qualify as a REIT.



     Section 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; provided, that the Company shall not take any action which, in the judgment of
the Managing Member, in its sole and



Page 12









 







absolute discretion, (a) could adversely affect the ability of the Managing Member to continue
to qualify as a REIT, (b) could subject the Managing Member to any additional taxes under Section
857 or Section 4981 of the Code or (c) could violate any law or regulation of any governmental body
or agency having jurisdiction over the Managing Member or its securities, unless such action (or
inaction) shall have been specifically consented to by the Managing Member in writing.
Notwithstanding the foregoing or any other provision of this Agreement, any provision of this
Agreement that in the opinion of counsel to the Company would be reasonably likely to jeopardize
the REIT status of the Managing Member (or any of its Affiliates) shall be void and of no effect,
or reformed, to the extent necessary to avoid any loss of REIT status.



ARTICLE IV

CAPITAL CONTRIBUTIONS; ISSUANCE OF UNITS;

CAPITAL ACCOUNTS




     Section 4.1 Capital Contributions of the Members.




     (a) Capital Contributions. On the date hereof, the Preferred Member has
contributed Five Hundred Million Dollars ($500,000,000) (the “Preferred Member Initial
Contribution”) to the Company for the Preferred Units. Immediately after such transactions,
the Members will have made, in the aggregate, the Capital Contributions set forth in Exhibit
A to this Agreement. The Members shall own Company Units in the amounts set forth in
Exhibit A and the Members shall have the Units and Percentage Interests in the Company as
set forth in Exhibit A, which Units and Percentage Interest shall be adjusted in Exhibit A
from time to time by the Managing Member to the extent necessary to reflect accurately
redemptions, conversions, Capital Contributions or the return of Capital Contributions, the
issuance of additional Company Units or similar events having an effect on the number of any
Member’s Units or the amount of its Percentage Interest. Company Units held by the
Managing Member shall be deemed to be the Managing Member Membership Interest. Simultaneous
with the closing of the transactions contemplated by that certain Agreement and Plan of
Merger, dated as of October 20, 2006, by and among Inland Retail Real Estate Trust, Inc.,
the Managing Member and DDR IRR Acquisition LLC, the Preferred Member Initial Contribution
shall be paid to Inland Limited Partnership in exchange for LP Common Units constituting a
28.0% Percentage Interest (as those terms are defined in the Inland Limited Partnership
Agreement) in Inland Limited Partnership.




     (b) Additional Capital Contributions or Assessments. No Member shall be
assessed or required to pay, except for any such amounts which a Member may be obligated to
repay under Section 10.5 or except for any such amounts which the Managing Member may be
obligated to repay under Section 13.9, additional funds or other property to the Company.
Any additional funds or other property required by the Company (including, but not limited
to, maintenance, repair, replacement, operation or other capital requirements), as
determined by the Managing Member in its sole discretion, may, at the option of the Managing
Member and without an obligation to do so, be loaned by the Managing Member to the Company
at the DD Borrowing Rate. Notwithstanding the foregoing, the Managing Member shall be
entitled to make additional Capital Contributions to the Company or allow other Persons to
make additional Capital Contributions to the Company pursuant to terms determined by the
Managing Member in its sole discretion. If and as any Member or Person makes additional
Capital Contributions to the Company as provided in this Section 4.1(b), each such Member
shall receive additional Company Units based upon the Agreed Value of the property
contributed.



Page 13









 






     (c) Return of Capital Contributions. Except as otherwise expressly provided
herein, the Capital Contribution of each Nonmanaging Member will be returned to that Member
only in the manner and to the extent provided in Article V and Article XIII hereof, and no
Member may withdraw from the Company or otherwise have any right to demand or receive the
return of its Capital Contribution to the Company (as such), except as specifically provided
herein. Under circumstances requiring a return of any Capital Contribution, no Member shall
have the right to receive property other than cash, except as specifically provided herein.
No Member shall be entitled to interest on any Capital Contribution or Capital Account,
notwithstanding any disproportion therein as between the Members. Except as specifically
provided herein, the Managing Member shall not be liable for the return of any portion of
the Capital Contribution of any Nonmanaging Member, and the return of such Capital
Contribution shall be made solely from Company assets.




     (d) Liability of Nonmanaging Members and Preferred Member. Neither the
Preferred Member nor the Nonmanaging Member shall have any further personal liability to
contribute money to, or in respect of, the liabilities or the obligations of the Company,
nor shall the Preferred Member or the Nonmanaging Member be personally liable for any
obligations of the Company, except as otherwise provided in this Article IV or in the Act.
Neither the Preferred Member nor the Nonmanaging Member shall be required to make any
contribution to the capital of the Company other than its Capital Contribution.



     Section 4.2 Redemption or Purchase of Nonmanaging Member Units.




     (a) Redemption of Nonmanaging Member Units.




     (1) Subject to the further provisions of this Section 4.2, beginning on
the date one (1) year after the date of this Agreement, a Nonmanaging Member
shall have the right (the “Redemption Right”) to redeem any or all
of the Nonmanaging Units held by such Nonmanaging Member for cash equal to
the Redemption Amount, subject to the Managing Member’s rights as set forth
below. For purposes of this Agreement, the Redemption Amount shall be the
cash value of Nonmanaging Units if such Nonmanaging Units were converted
into Shares at the Value of such Shares. The Unit Adjustment Factor shall
be that in effect at such time. The Redemption Right may be exercised by a
Nonmanaging Member (a “Redeeming Member”) at any time and from time
to time by delivering a Notice of Redemption to the Company. In the event
the Managing Member does not exercise its right to substitute cash or Shares
as set forth in Section 4.2(b), the Company shall pay the Redemption Amount
no later than forty-five (45) days of receipt of the Notice of Redemption.
The rights of a Nonmanaging Member as a holder of such Nonmanaging Units
shall cease on the date the Redemption Amount is tendered by the Company.




     (2) In the event of any change in the Unit Adjustment Factor, the
number of Nonmanaging Units held by each Nonmanaging Member shall be
proportionately adjusted by multiplying the number of Nonmanaging Units held
by such Nonmanaging Member immediately prior to the change in the Unit
Adjustment Factor by the new Unit Adjustment Factor and dividing that
product by the Unit Adjustment Factor applicable immediately prior to the
event requiring such adjustment; the intent of this provision is that one
Nonmanaging Unit remains exchangeable for one (1) Share.



Page 14









 






     (b) Managing Member’s Right to Substitute Cash or Shares. Notwithstanding any
provision of this Agreement to the contrary, the Managing Member shall have the right (after
application of the Unit Adjustment Factor) to purchase a Redeeming Member’s Nonmanaging
Units by paying one (1) Share of stock for each Unit or by paying the Redemption Amount to
any Redeeming Member. The Managing Member shall have forty-five (45) days to pay cash to
the Redeeming Member, and the Managing Member shall be treated as the owner of such
Nonmanaging Units upon tendering the Shares or the Redemption Amount to the Nonmanaging
Member. The Shares issued may be unregistered and shall be subject to a transfer
restriction prohibiting the public sale of such Shares absent registration. A Nonmanaging
Member’s unregistered Shares shall be registered pursuant to a registration rights agreement
in substantially the form attached hereto as Exhibit D. In the event the Managing Member
shall exercise its right to satisfy the Redemption Right in the manner described in this
Section 4.2(b), each of the Redeeming Member, the Company and the Managing Member shall
treat the transaction between the Managing Member and the Redeeming Member as a sale of the
Redeeming Member’s Company Units to the Managing Member for federal income tax purposes;
each Redeeming Member that the Managing Member has elected to pay the Shares or the
Redemption Amount agrees to execute such documents as the Managing Member may reasonably
require in connection with the payment of the Redemption Amount. Notwithstanding the
foregoing provisions of this Section 4.2, Shares shall not be issued if (i) in the opinion
of Baker & Hostetler LLP or other counsel for the Managing Member, the Managing
Member would, as a result thereof, no longer qualify (or in the opinion of counsel for the
Managing Member, there is a material risk that the Managing Member no longer would qualify)
as a REIT under the Code; or (ii) such exchange would in the written opinion of Baker &
Hostetler LLP or other national law firm with experience in securities
transactions, constitute or be more likely than not to constitute a violation of applicable
securities laws.




     (c) Managing Member’s Right to Purchase Nonmanaging Member Units. The Managing
Member shall have the right at any time to purchase all or any part of any Nonmanaging
Member’s Nonmanaging Units by paying (after applying the Unit Adjustment Factor) one (1)
Share for each Unit purchased or the Redemption Amount to such Nonmanaging Member. The
Managing Member shall be treated for all purposes as the owner of such Nonmanaging Units
upon tendering the Shares or the Redemption Amount.



     Section 4.3 No Preemptive Rights. Except as specifically provided in this Agreement,
no Person shall have any preemptive, preferential or other similar right with respect to (a)
additional Capital Contributions or loans to the Company or (b) issuance or sale of any Company
Units.



     Section 4.4 Capital Accounts of the Members.




     (a) General. The Company shall maintain for each Member a separate Capital
Account in accordance with the rules of Regulations Section 1.704-1(b)(2)(iv). Such Capital
Account shall be increased by (i) the amount of all Capital Contributions made by such
Member to the Company pursuant to this Agreement and (ii) all items of Company income and
gain (including income and gain exempt from tax) computed in accordance with Section 4.4(b)
hereof and allocated to such Member pursuant to Sections 6.1(a) and 6.2 of this Agreement,
and decreased by (x) the amount of cash or Agreed Value of all actual and deemed
distributions of cash or property made to such Member pursuant to this Agreement and (y) all
items of Company deduction and loss computed in accordance with Section 4.4(b) hereof and
allocated to such Member pursuant to Sections 6.1(b) and 6.2 of this Agreement.



Page 15









 






     (b) Income, Gains, Deductions and Losses. For purposes of computing the amount
of any item of income, gain, loss or deduction to be reflected in the Members’ Capital
Accounts, unless otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination, recognition and
classification for federal income tax purposes determined in accordance with Section 703(a)
of the Code (for this purpose all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable
income or loss), with the following adjustments:




     (1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of
the Code which may be made by the Company; provided, that the
amounts of any adjustments to the adjusted bases of the assets of the
Company made pursuant to Section 734 of the Code as a result of the
distribution of property by the Company to a Member (to the extent that such
adjustments have not previously been reflected in the Members’ Capital
Accounts) shall be reflected in the Capital Accounts of the Members in the
manner and subject to the limitations prescribed in Regulations Section
1.704-1(b)(2)(iv)(m).




     (2) The computation of all items of income, gain, loss and deduction
shall be made without regard to the fact that items described in Sections
705(a)(1)(B) or 705(a)(2)(B) of the Code are not includable in gross income
or are neither currently deductible nor capitalized for federal income tax
purposes.




     (3) Any income, gain or loss attributable to the taxable disposition of
any Company property shall be determined as if the adjusted basis of such
property as of such date of disposition were equal in amount to the
Company’s Book Value with respect to such property as of such date.




     (4) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year.




     (5) In the event the Book Value of any Company asset is adjusted
pursuant to Section 4.4(d) hereof, the amount of any such adjustment shall
be taken into account as gain or loss from the disposition of such asset.




     (6) Any items specially allocated under Sections 6.2 or 6.3 hereof
shall not be taken into account.




     (c) Transfers of Company Units. A transferee of a Company Unit shall succeed
to a pro rata portion of the Capital Account of the transferor.




     (d) Unrealized Gains and Losses.




     (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 4.4(d)(2), the Book Values
of all Company assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Company property, as
of the times of the adjustments provided in Section 4.4(d)(2) hereof, as if
such Unrealized



Page 16









 







Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of this Agreement.




     (2) Such adjustments shall be made as of the following times: (i)
immediately prior to the acquisition of an additional interest in the
Company by any new or existing Member in exchange for more than a de minimis
Capital Contribution; (ii) immediately prior to the distribution by the
Company to a Member of more than a de minimis amount of Property as
consideration for an interest in the Company; and (iii) immediately prior to
the liquidation of the Company or the Managing Member’s interest in the
Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g).




     (3) In accordance with Regulations Section 1.704-1(b)(2)(iv)(e) the
Book Value of Company assets distributed in kind shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to
such Company property, as of the time any such asset is distributed.




     (4) In determining such Unrealized Gain or Unrealized Loss, the
aggregate cash amount and fair market value of all Company assets (including
cash or cash equivalents) shall be determined by the Managing Member using
such reasonable method of valuation as it may adopt, or in the case of a
liquidating distribution pursuant to Article XIII of this Agreement, be
determined and allocated by the Liquidator using such reasonable methods of
valuation as it may adopt. The Managing Member, or the Liquidator, as the
case may be, shall allocate such aggregate fair market value among the
assets of the Company (in such manner as it determines in its reasonable
discretion to arrive at a fair market value for individual properties).




     (e) Modification by Managing Member. The provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Regulations Section
1.704-1(b) and shall be interpreted and applied in a manner consistent with such
Regulations. In the event the Managing Member shall determine that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits thereto (including,
without limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Company, the Managing
Member, or any Nonmanaging Members) are computed in order to comply with such Regulations,
the Managing Member shall make any necessary or appropriate adjustments so long as such
adjustments would not materially adversely affect the Preferred Member.



ARTICLE V

DISTRIBUTIONS




     Section 5.1 Requirement and Characterization of Distributions. Subject to the
provisions of Article XV, the Managing Member shall distribute quarterly an amount equal to one
hundred percent (100%) of Available Cash generated by the Company during such quarter to the
Members who are Members on the Company Record Date with respect to such quarter as follows: (i) to
the extent that there is sufficient Available Cash after payment of the Preferred Unit
Distributions and any Accumulated Preferred Unit Distributions, both as defined in Section 15.2,
each Nonmanaging Member shall be entitled to a distribution per Nonmanaging Unit in an amount equal
to (a) the dividend per Share paid by the Managing Member for the same calendar quarter (the
“Nonmanaging Members’ Preferred Return”)



Page 17









 







plus (b) any Excess Gain allocated to the Nonmanaging Member, and (ii) to the extent there is
excess Available Cash after payment of the Preferred Unit Distributions, Accumulated Preferred Unit
Distributions and the application of clause (i), such excess shall be distributed to the Managing
Member in respect of its Company Units. In the event the Company shall distribute any Capital
Transaction Proceeds to a Nonmanaging Member in excess of such Nonmanaging Member’s share of the
Excess Gain, the number of Nonmanaging Units owned by such Nonmanaging Members shall be reduced to
an amount equal to the quotient of (i) (A) the product of the market price of a Share on the date
of the distribution times the number of Nonmanaging Units owned by such Nonmanaging Member
immediately prior to such distribution, minus (B) the amount of Capital Transaction Proceeds
distributed to such Nonmanaging Member in excess of the Nonmanaging Member’s share of the Excess
Gain, divided by (ii) the market price of a Share on the date of the distribution. Notwithstanding
anything to the contrary contained herein, in no event may a Nonmanaging Member receive a
distribution of Available Cash with respect to a Nonmanaging Unit if such Member is entitled to
receive a distribution out of such Available Cash with respect to a Share for which such
Nonmanaging Unit has been redeemed or exchanged. Further, if the Managing Member, pursuant to
Section 11.6, or otherwise in its sole discretion with respect to items not covered in Section
11.6, determines that it would be equitable to (i) pay a Nonmanaging Member only a portion of the
dividend per Share with respect to Nonmanaging Units not outstanding for an entire quarterly
period, or (ii) split the dividend per Share amount between or among Members (or former Members)
based on changes in ownership of Nonmanaging Units by such Nonmanaging Members (or former
Nonmanaging Members) during a quarterly period, the Managing Member is hereby authorized to take
such action.



     Section 5.2 Amounts Withheld. All amounts withheld pursuant to the Code or any
provisions of any state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the Managing Member, or any Nonmanaging Members or Assignees shall be
treated as amounts distributed to the Managing Member or such Nonmanaging Members, or Assignees
pursuant to Section 5.1 for all purposes under this Agreement.



     Section 5.3 Distributions Upon Liquidation. Proceeds from a Liquidating Transaction
shall be distributed to the Members in accordance with Section 13.2.



ARTICLE VI

ALLOCATIONS




     Section 6.1 Allocations For Capital Account Purposes. For purposes of maintaining the
Capital Accounts and in determining the rights of the Members among themselves, the Company’s items
of income, gain, loss and deduction (computed in accordance with Sections 4.4 hereof) shall be
allocated among the Members for each taxable year (or portion thereof) as provided herein below.




     (a) Net Income. After giving effect to the special allocations set forth in
Section 6.2 below, Net Income (excluding gains from any Capital Transaction or Liquidating
Transaction) shall be allocated (i) first, to the Preferred Member to the extent that, on a
cumulative basis, Net Losses previously allocated to such Preferred Member pursuant to
Section 6.1(b) exceed Net Income or gain previously allocated to the Member pursuant to this
clause (i) of this Section 6.1(a) or Section 6.1(c)(1)(ii), (ii) second, to the extent
available and, to the extent not previously allocated pursuant to this clause (ii) or
Section 6.1(c)(1)(i), to the Preferred Member until the Preferred Member has been allocated,
on an annual basis, Net Income equal to (A) the Preferred Unit Distribution accrued for that
period plus (B) the Preferred Unit Distributions for all prior periods, (iii) third, to each
Nonmanaging Member to the extent that, on a cumulative basis, Net Losses previously
allocated to the Nonmanaging Member pursuant to



Page 18









 







Section 6.1(b) exceed Net Income previously allocated to the Member pursuant to this
clause (iii) of this Section 6.1(a), (iv) fourth, to each Nonmanaging Member until each
Nonmanaging Member has been allocated, on a cumulative basis, Net Income equal to the sum of
the distributions actually paid to such Nonmanaging Member, pro rata as among the
Nonmanaging Members in the ratio of such distributions, and (v) thereafter, Net Income shall
be allocated to the Managing Member.




     (b) Net Losses. After giving effect to the special allocations set forth in
Section 6.2 below, Net Losses shall be allocated (i) first, one hundred percent (100%) to
the Managing Member until the Managing Member’s Adjusted Capital Account Balance is equal to
zero, (ii) second, one hundred percent (100%) to the Nonmanaging Members until all of the
Nonmanaging Members’ Adjusted Capital Account Balances are equal to zero, (iii) third, one
hundred percent (100%) to the Preferred Member until the Preferred Member’s Adjusted Capital
Account Balance is equal to zero and (iv) then one hundred percent (100%) to the Managing
Member.




     (c) Gain from Capital Transactions.




     (1) Capital Transaction. Gains from Capital Transactions shall
be allocated as follows: (i) first, to the extent available, to the
Preferred Member until such time as the amount allocated to the Preferred
Member pursuant to this clause (i) or Section 6.1(a)(i) equals (A) the
Preferred Unit Distribution accrued for that period plus (B) to the extent
not previously allocated pursuant to this clause (i) or Section 6.1(a)(i),
the Preferred Unit Distributions for all prior periods, (ii) second, to the
Preferred Member to the extent that, on a cumulative basis, Net Losses
previously allocated to the Preferred Member pursuant to Section 6.1(b)
exceed Net Income or gain previously allocated to the Member pursuant to
this clause (ii) of this Section 6.1(c) or 6.1(a)(2), (iii) third to the
extent that the gain from such Capital Transaction is attributable to
appreciation of the asset or assets sold that is in excess of such assets’
Agreed Value (“Excess Gain”), one percent (1%) of such Excess Gain
to the Nonmanaging Members, pro rata in accordance with their respective
ownership of the Nonmanaging Units and (iv) then, the remainder of all of
the Gain from the Capital Transaction to the Managing Member.




     (2) Liquidating Transactions. Gains from a Liquidating
Transaction shall be allocated as follows: (i) first, to the extent
available, one hundred percent (100%) to the Preferred Member until such
time as the Capital Account of the Preferred Member equals the Preferred
Member Initial Contribution plus any Accumulated Preferred Unit
Distribution, (ii) second one percent (1%) of the Excess Gain to the
Nonmanaging Members, pro rata in accordance with their respective ownership
of Nonmanaging Units, and (iii) thereafter, one hundred percent (100%) to
the Managing Member.




     (d) Nonrecourse Liabilities. For purposes of Regulations Section 1.752-3(a)
and except as otherwise agreed to by the Managing Member and one or more Nonmanaging Members
pursuant to side letter agreements as set forth in Section 16.17 hereof, the Members agree
that Nonrecourse Liabilities of the Company in excess of the sum of (i) the amount of
Partnership Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be
allocated among the Members in proportion to the sum of (a) the amount of Net Income
allocated



Page 19









 







to each Member for such taxable year plus (b) the amount of the Net Income that would
be allocated to each Member if the Property were sold for an amount equal to the 704(c)
Value.




     (e) Gain Characterization for Federal Income Tax Purposes. Any gain allocated
to the Members upon the sale or other taxable disposition of any Company asset shall, to the
extent possible, after taking into account other required allocations of gain pursuant to
Section 6.2 below, be characterized for federal income tax purposes as Recapture Income in
the same proportions and to the same extent as such Members have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as Recapture
Income.



     Section 6.2 Special Allocation Rules. Notwithstanding any other provision of this
Agreement, the following special allocations shall be made in the following order:




     (a) Minimum Gain Chargeback. Notwithstanding any other provisions of Article
VI, if there is a net decrease in Partnership Minimum Gain during any Company 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 Partnership 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 so
allocated shall be determined in accordance with Regulations Section 1.704-2(f)(6). This
Section 6.2(a) is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this Section 6.2(a) only, each Member’s
Adjusted Capital Account Deficit shall be determined prior to any other allocations pursuant
to Section 6.1 of this Agreement with respect to such fiscal year and without regard to any
decrease in Partnership Minimum Gain during such fiscal year.




     (b) Partner Minimum Gain Chargeback. Notwithstanding any other provision of
Article VI (except Section 6.2(a) hereof), if there is a net decrease in Partner Minimum
Gain attributable to a Partner Nonrecourse Debt during any Company fiscal year, each Member
who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with 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 Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5). 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
Section 1.704-2(i)(4). This Section 6.2(b) is intended to comply with the minimum gain
chargeback requirement in such Section of the Regulations and shall be interpreted
consistently therewith. Solely for purposes of this Section 6.2(b), each Member’s Adjusted
Capital Account Deficit shall be determined prior to any other allocations pursuant to
Article VI of this Agreement with respect to such fiscal year, other than allocations
pursuant to Section 6.2(a) hereof.




     (c) Qualified Income Offset. In the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1-704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), and after
giving effect to the allocations required under Sections 6.2(a) and 6.2(b) hereof, such
Member has an Adjusted Capital Account Deficit, items of Company income and gain shall be
specially allocated to such Member in an amount and manner sufficient to eliminate, to the
extent required by the



Page 20









 







Regulations, its Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible.




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




     (e) Code Section 754 Adjustments. To the extent an adjustment to the adjusted
tax basis of any company asset pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the Regulations.



     Section 6.3 Allocations for Tax Purposes.




     (a) General. Except as otherwise provided in this Section 6.3, for federal
income tax purposes, each item of income, gain, loss and deduction 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 6.1 and 6.2 of this Agreement.




     (b) To Eliminate Book-Tax Disparities. In an attempt to eliminate Book-Tax
Disparities attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss and deduction shall be allocated for federal income tax purposes among the
Members as follows:




     (1) (i) In the case of a Contributed Property, income, gain, loss and
deductions (including depreciation) attributable thereto shall be allocated
among the Members consistent with the principles of Section 704(c) of the
Code that take into account the variation between the 704(c) Value of such
property and its adjusted basis at the time of contribution; and (ii) any
item of Residual Gain or Residual Loss attributable to a Contributed
Property shall be allocated among the Members in the same manner as its
correlative item of “book” gain or loss is allocated pursuant to Sections
6.1 and 6.2 of this Agreement.




     (2) (i) In the case of an Adjusted Property, income, gain, loss and
deductions (including depreciation) shall (A) first, be allocated among the
Members in a manner consistent with the principles of Section 704(c) of the
Code to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof pursuant to
Section 4.4 and (B) second, in the event such property was originally a
Contributed Property, be allocated among the Members in a manner consistent
with Section 6.3(b)(1)(i); and (ii) any item of Residual Gain or Residual
Loss attributable to an Adjusted Property shall be allocated among the
Members in the same manner as its correlative item of “book” gain or loss is
allocated pursuant to Sections 6.1 and 6.2 of this Agreement.



Page 21









 






     (3) Election of Method. To the extent Treasury Regulations
promulgated pursuant to Section 704(c) of the Code permit a partnership (and
thus the Company) to utilize alternative methods to eliminate the
disparities between the agreed value of property and its adjusted basis, the
Managing Member may, in its sole discretion from time to time, elect any
such method.



ARTICLE VII

MANAGEMENT AND OPERATIONS OF BUSINESS




     Section 7.1 Management.




     (a) Powers of Managing Member. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the Company are
exclusively vested in the Managing Member, and neither the Nonmanaging Member nor the
Preferred Member shall have any right to participate in or exercise control or management
power over the business and affairs of the Company. Notwithstanding anything to the
contrary in this Agreement, the Managing Member may not be removed by the Nonmanaging
Members nor by the Preferred Member with or without cause. In addition to the powers now or
hereafter granted to a general partner of a limited partnership under applicable law or
which are granted to the Managing Member under any other provision of this Agreement, the
Managing Member, subject to Section 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) the making of any expenditures, the lending or borrowing of money
from the Managing Member, Affiliates of the Managing Member, any Nonmanaging
Member, the Preferred Member, or any third-party lender (including, without
limitation, making prepayments on loans and borrowing money to permit the
Company to make distributions to its Members in such amounts as will permit
the Managing Member (so long as the Managing Member desires to qualify as a
REIT) to avoid the payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Section 4981 of the Code) and to make
distributions to its shareholders sufficient to permit the Managing Member
to maintain REIT status), the assumption or guarantee of, or other
contacting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by mortgage, deed
of trust or other lien or encumbrance on the Company’s assets) and the
incurring of any obligations 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) the acquisition, sale, disposition, conveyance, mortgage, pledge,
encumbrance, hypothecation or exchange (subject to Section 7.3(d)) of any
assets of the Company or the merger or other combination of the Company with
or into another entity on such terms as the Managing Member deems necessary
or desirable, which powers shall include, without limitation, the power to
guarantee, and pledge any or all of the assets of the Company or the
Managing Member’s



Page 22









 







interest in the Company to secure a loan, loans to, or other financing
to or financial obligations of the Managing Member or its Affiliates (the
proceeds of which are not required to be contributed or loaned to this
Company);




     (4) the use of the assets of the Company (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any term it sees fit, including, without limitation, the
financing of the conduct of the operations of the Managing Member, the
Company or any of the Company’s Subsidiaries, the lending of funds to other
Persons (including the Company’s Subsidiaries) and the repayment of
obligations of the Company and its Subsidiaries and any other Person in
which it has an equity investment and the making of capital contributions to
its Subsidiaries, the holding of any real, personal and mixed property of
the Company in the name of the Company or in the name of a nominee or
trustee (subject to Section 7.10), the creation, by grant or otherwise, of
easements or servitudes, and the performance of any and all acts necessary
or appropriate to the operation of the Company assets including, but not
limited to, applications for rezoning, objections to rezoning, constructing,
altering, improving, repairing, renovating, rehabilitating, razing,
demolishing or condemning any improvements or property of the Company;




     (5) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including with Affiliates of the Company
to the extent provided in Section 7.6) that the Managing Member considers
necessary or desirable to the conduct of the Company’s operations or the
implementation of the Managing Member’s powers under this Agreement,
including, without limitation, the execution and delivery of leases on
behalf of or in the name of the Company (including the lease of Company
property for any purpose and without limit as to the term thereof, whether
or not such term (including renewal terms) shall extend beyond the date of
termination of the partnership and whether or not the portion so leased is
to be occupied by the lessee or, in turn, subleased in whole or in part to
others);




     (6) the opening and closing of bank accounts, the investment of Company
funds in securities, certificates of deposit and other instruments and the
distribution of Company cash or other Company assets in accordance with this
Agreement;




     (7) the maintenance of such insurance for the benefit of the Company
and the Members as it deems necessary or appropriate;




     (8) the control of any matters affecting the rights and obligations of
the Company, including the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation, and the indemnification
of any Person against liabilities and contingencies to the extent permitted
by law;




     (9) the determination of the fair market value of any Company property
distributed in kind using such reasonable method of valuation as it may
adopt; and



Page 23









 






     (10) the execution, acknowledgment and delivery of any and all
documents and instruments to effectuate any or all of the foregoing.




     (b) No Approval Required for Above Powers. Each of the Nonmanaging Members and
the Preferred Member agree that the Managing Member is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of the Company without any
further act, approval or vote of the Members, notwithstanding any other provision of this
Agreement (except as provided in Section 7.3), 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, the
Nonmanaging Members, the Preferred Member or any other Persons under this Agreement or of
any duty stated or implied by law or equity.




     (c) Insurance. At all times on and from the date hereof, the Managing Member
may cause the Company to obtain and maintain casualty, liability and other insurance on the
properties of the Company and liability insurance for the Indemnitees hereunder.




     (d) Working Capital Reserves. At all times on and from 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 reasonable discretion, deems appropriate and
reasonable from time to time.




     (e) No Liability for Tax Consequences to Members. The Managing Member and the
Company shall not have liability to any other Member under any circumstances as a result of
an income tax liability incurred by such Member or its owners as a result of entering into
the transactions contemplated by this Agreement, or any action (or inaction) by the Managing
Member pursuant to its authority under this Agreement unless the Managing Member
deliberately took such action (or failed to take such action) in bad faith or with willful
misconduct.



     Section 7.2 Articles of Organization. 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 Articles of Organization and do all the things to maintain
the Company as a limited liability company under the laws of the State of Ohio and each other
jurisdiction in which the Company may elect to do business or own property. Subject to the terms
of Section 8.5(a)(4) hereof, the Managing Members shall not be required, before or after filing, to
deliver or mail a copy of the Articles of Organization, as it may be amended or restated from time
to time, to any Nonmanaging Member or the Preferred Member. The Managing Member shall use all
reasonable efforts to cause to be filed such other certificates or documents as may be reasonable
and necessary or appropriate for the formation, qualification and operation of a limited liability
company in the State of Ohio and any other jurisdiction in which the Company may elect to do
business or own property.



     Section 7.3 Restrictions on Managing Member’s Authority. The Managing Member may not,
without the written Consent of a majority of the Nonmanaging Members, take any action in
contravention of this Agreement, including, without limitation:




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



Page 24









 






     (b) performing any act that would subject a Nonmanaging Member to liability as a member
in any jurisdiction or any other liability except as provided herein or under the Act.



     Section 7.4 Responsibility for Expenses.




     (a) No Compensation. Except as provided in this Section 7.4 and elsewhere in
this Agreement (including the provisions of Articles V and VI regarding distributions,
payments, and allocations to which it may be entitled), the Managing Member shall not be
compensated for its services as Managing Member of the Company.




     (b) Responsibility for Ownership and Operation Expenses. The Company shall be
responsible for and shall pay all expenses relating to the Company’s ownership of its assets
and the operation of, or for the benefit of, the Company, and the Managing Member shall be
reimbursed for all expenses it incurs relating to the Company’s ownership of its assets and
the operation of, or for the benefit of, the Company. Such requirements shall be in
addition to any reimbursement to the Managing Member as a result of indemnification pursuant
to Section 7.7 hereof.




     (c) Responsibility for Organization Expenses. The Company shall be responsible
for and shall pay all expenses incurred relating to the organization of the Company.



     Section 7.5 Outside Activities of the Managing Member. Nothing herein contained shall
prevent or prohibit the Managing Member or any employee or other Affiliate of the Managing Member
from entering into, engaging in or conducting any other activity or performing for a fee any
service including (without limiting the generality of the foregoing) engaging in any business
dealing with real property of any type or location; acting as a director, officer or employee of
any corporation, as a trustee of any trust, as a general partner of any partnership, or as an
administrative official of any other business entity; or receiving compensation for services to, or
participating in profits derived from the investments of, any such corporation, trust, partnership
or other entity, regardless of whether such activities are competitive with the Company, and
nothing herein shall require the Managing Member or any employee or Affiliate thereof to offer any
interest in such activities to the Company or any Member.



     Section 7.6 Contracts with Affiliates. Except as contemplated pursuant to Section
7.1, neither the Managing Member nor any of its Affiliates shall (i) sell, transfer or convey any
property to, or purchase any property from, the Company, directly or indirectly, or (ii) enter into
any agreement for the provision of services to the Company, except, in both such cases, pursuant to
transactions or agreements that are on terms that are reasonable to the Company.



     Section 7.7 Indemnification.




     (a) General. The Company shall indemnify each Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses (including 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 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 the act or omission of the Indemnitee was material
to the matter giving rise to the proceeding and was the result of active and deliberate
dishonesty or willful misconduct; or in the case of any criminal proceeding, the Indemnitee
believed that the act or omission was unlawful. The termination of any proceeding by
judgment, order or settlement does not create a presumption



Page 25









 







that the Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.7(a). The termination of any proceeding by conviction (but not upon a plea of
nolo contendere or its equivalent) creates a rebuttable presumption that the Indemnitee
acted in a manner contrary to that specified in this Section 7.7(a). Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the Company.




     (b) In Advance of Final Disposition. Reasonable expenses incurred by each
Indemnitee who is a party to a proceeding may be paid or reimbursed by the Company in
advance of the final disposition of the proceeding upon receipt by the Company of (i) a
written affirmation by such Indemnitee of the Indemnitee’s good faith belief that the
standard of conduct necessary for indemnification by the Company as authorized in this
Section 7.7 has been met and (ii) a written undertaking by or on behalf of such Indemnitee
to repay the amount if it shall ultimately be determined that the standard of conduct has
not been met.




     (c) Other Than by This Section. The indemnification provided by this Section
7.7 shall be in addition to any other rights to which any Indemnitee or any other Person may
be entitled under any agreement, as a matter of law or otherwise, and shall continue as to
an Indemnitee who has ceased to serve in such capacity.




     (d) Insurance. The Company may purchase and maintain insurance, on behalf 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 Indemnitees
or Persons in connection with the Company’s activities, regardless of whether the Company
would have the power to indemnify such Indemnitees or Persons against such liability under
the provisions of this Agreement.




     (e) No Personal Liability for Nonmanaging Members or Preferred Member. In no
event may an Indemnitee or the Company subject the Nonmanaging Members or the Preferred
Member to personal liability by reason of the indemnification provisions set forth in this
Agreement.




     (f) Interested Transactions. 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) Binding Effect. 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.



     Section 7.8 Liability of the Managing Member.




     (a) General. Notwithstanding anything to the contrary set forth in this
Agreement, the Managing Member shall not be liable for monetary damages to the Company, any
Members or any Assignees for losses sustained or liabilities incurred as a result of errors
in judgment or of any act or omission if the Managing Member was not guilty of willful
misconduct or fraud.




     (b) No Obligation to Consider Interests of Other Members. The Members
expressly acknowledge that the Managing Member is acting on behalf of the Company and the
Managing Member collectively, that the Managing Member is under no obligation to



Page 26









 







consider the separate interests of the other Members or their owners (including without
limitation, the tax consequences to other Members or Assignees) in deciding whether to cause
the Company to take (or decline to take) any actions which the Managing Member has
undertaken on behalf of the Company, and that the Managing Member shall not be liable for
monetary damages for losses sustained, liabilities incurred, or benefits not derived by
other Members or their owners in connection with such decisions, provided that the Managing
Member is not guilty of willful misconduct or fraud.




     (c) Acts of Agents. 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 agents. The Managing Member shall not be responsible
for any misconduct or negligence on the part of any such agent.




     (d) Effect of Amendment. 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 liability to the Company, the Nonmanaging Members and
the Preferred Member 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.



     Section 7.9 Other Matters Concerning the Managing Member.




     (a) Reliance on Documents. 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, after reasonable inquiry, to be genuine and to have been signed or presented
by the proper party or parties.




     (b) Reliance on Consultants and Advisers. The Managing Member may consult with
legal counsel, accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any action taken or omitted to be taken in
reliance upon the opinion of any of such Persons as to matters which such Managing Member
reasonably believes to be within such Person’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) Action Through Officers and Attorneys. 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 which is permitted or
required to be done by the Managing Member hereunder.




     (d) Actions to Maintain REIT Status or Avoid Taxation of the Managing Member.
Notwithstanding any provision of the Act and except as specifically limited by this
Agreement, 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 the Managing Member to continue to qualify as a REIT or (ii) to avoid the
Managing Member



Page 27









 







incurring any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by the Nonmanaging Members and the
Preferred Member; provided, however, that prior to taking any such action
(or refraining from taking any such action) that would, in the good faith judgment of the
Managing Member, have a material adverse effect on the Nonmanaging Members taken as a whole
or the Preferred Member, the Managing Member shall first (i) obtain a written opinion of
Baker & Hostetler LLP or another national law firm with experience in tax matters
that such action or omission is necessary or advisable in order (A) to protect the ability
of the Managing Member to continue to qualify as a REIT or (B) to avoid the Managing Member
incurring any taxes under Section 857 or Section 4981 of the Code and (ii) in the case of an
affected Preferred Member, (A) deliver a copy of such opinion to the Preferred Member, (B)
notify such Preferred Member(s), in writing, of the proposed action (or inaction), and (C)
refrain from acting or ceasing to act until at least ten (10) days after delivery to the
Preferred Member(s) of such notice.



     Section 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, shall have any ownership interest in such
Company assets or any portion thereof.



     Section 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 to encumber, sell or otherwise use in any manner any and all
assets of the Company (including, without limitation, in connection with any pledge of Company
assets to secure a loan or other financing to the Managing Member as provided by Section 7.1(a)(3))
and to enter into any contracts 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 Member hereby waives any and all defenses or other remedies which may be
available against such Member to contest, engage 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 the Managing Member or its representatives shall be conclusive evidence in favor
of any and every Person relying thereon or claiming thereunder that (a) at the time of the
execution and delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) 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 (c) 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




     Section 8.1 Limitation on Liability. Neither the Nonmanaging Members nor the
Preferred Member shall have any liability under this Agreement except as expressly provided in this
Agreement or under the Act.



     Section 8.2 Management of Business. No Nonmanaging Member, Preferred 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 operation, management or control (within the meaning of
the Act)



Page 28









 







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 Nonmanaging Members,
the Preferred Member or Assignees under this Agreement.



     Section 8.3 Outside Activities of Nonmanaging Members and the Preferred Member.
Subject to any written agreements entered into by a Nonmanaging Member, Preferred Member or their
Affiliates with the Managing Member, the Company or a Subsidiary, the following rights shall govern
outside activities of Nonmanaging Members or the Preferred Member: (a) any Nonmanaging Member or
Preferred Member (other than the Managing Member) and any officer, director, employee, agent,
trustee, Affiliate or shareholder of any Nonmanaging Member or Preferred 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 in direct competition with the Company,
(b) neither the Company nor any Members shall have any rights by virtue of this Agreement in any
business ventures of any Nonmanaging Member, Preferred Member or Assignee; (c) none of any
Nonmanaging Member, Preferred Member 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, and such Person shall have no obligation pursuant to this Agreement
to offer any interest in any such business ventures to the Company, any Nonmanaging Member,
Preferred Member or any such other Person, even if such opportunity is of a character which, if
presented to the Company, any Nonmanaging Member, Preferred Member or such other Person, could be
taken by such Person; (d) the fact that a Nonmanaging Member or Preferred Member may encounter
opportunities to purchase, otherwise acquire, lease, sell or otherwise dispose of real or personal
property and may take advantage of such opportunities himself or introduce such opportunities to
entities in which it has or has not any interest, shall not subject such Member to liability to the
Company or any of the other Members on account of the lost opportunity; and (e) except as otherwise
specifically provided herein, nothing contained in this Agreement shall be deemed to prohibit a
Nonmanaging Member, Preferred Member or any Affiliate of either from dealing, or otherwise
engaging in business, with Persons transacting business with the Company or from providing services
relating to the purchase, sale, rental, management or operation of real or personal property
(including real estate brokerage services) and receiving compensation therefor, from any Persons
who have transacted business with the Company or other third parties.



     Section 8.4 Priority Among Members. No Member or Assignee shall have priority over
any other Member or Assignee except to the extent specifically provided in this Agreement,
including, without limitation, Article XV hereof.



     Section 8.5 Rights of Nonmanaging Members and the Preferred Member Relating to the
Company.




     (a) Copies of Business Records. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5(c) hereof, each Nonmanaging
Member and Preferred Member shall have the right, for a purpose reasonably related to such
Nonmanaging Member’s or Preferred Member’s interest as a member in the Company, upon written
demand with a statement of the purpose of such demand and at such Nonmanaging Member’s or
Preferred Member’s own expense:




     (1) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by the Managing Member
pursuant to the Securities Exchange Act of 1934, if any;



Page 29









 






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




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




     (4) 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 which each Member has agreed to contribute in
the future, and the date on which each became a Member; and




     (5) to obtain copies of (or be provided reasonable access to) the books
and records of the Company referred to in Section 9.1.




The Managing Member shall furnish a copy to each Nonmanaging Member and Preferred Member of
the Company’s federal income tax return within sixty (60) days of the date such return is
filed.




     (b) Notification of Changes in Unit Adjustment Factor. The Company shall
notify each Nonmanaging Member in writing of any change made to the Unit Adjustment Factor
within ten (10) Business Days of the date such change becomes effective.




     (c) Confidential Information. Notwithstanding any other provision of this
Section 8.5, the Managing Member may keep confidential from the other Members, for such
period of time as the Managing Member determines in its sole and absolute discretion to be
reasonable, any information relating to the Managing Member or the conduct of its business
that the Managing Member believes, in its good faith judgment, the disclosure of which
information would adversely affect a financing, acquisition, disposition of assets or
securities or other comparable transaction to which the Managing Member is subject.



ARTICLE IX

BOOKS, RECORDS, ACCOUNTING AND REPORTS




     Section 9.1 Records and Accounting. The Managing Member shall keep or cause to be
kept at the principal office of the Company appropriate books and records with respect to the
Company’s business, operations and financial condition, including, without limitation, all books
and records necessary to provide to the other 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 eligible written form
within a reasonable period of time. The books of the Company shall be maintained for financial
purposes on an accrual basis in accordance with generally accepted accounting principles and for
tax reporting purposes on the accrual basis.



     Section 9.2 Fiscal Year. The fiscal year of the Company shall be the Company Year.



Page 30









 





     Section 9.3 Annual Reports. As soon as practicable, but in no event later than one
hundred eighty (180) days after the close of each Company Year, the Managing Member shall cause to
be mailed to each other Member as of the close of the Company Year, an annual report containing
financial statements of the Company for such Company Year, compiled in accordance with generally
accepted accounting principles and certified by the Managing Member.



ARTICLE X

TAX MATTERS




     Section 10.1 Preparation of Tax Returns. The Managing Member shall arrange for the
preparation and timely filing of all returns of Company income, gains, deductions, losses and other
items required of the Company for federal and state income tax purposes and shall use all
reasonable efforts to furnish, within one hundred eighty (180) days of the close of each taxable
year, the tax information reasonably required by Nonmanaging Members and the Preferred Member for
federal and state income tax reporting purposes. Not less than ten (10) days before the federal
income tax returns for the Company are filed, the Preferred Member shall receive a copy thereof and
have the opportunity to offer comments thereon.



     Section 10.2 Tax Elections. Except as otherwise provided herein, the Managing Member
shall, upon the Managing Member’s reasonable determination that such election is in the best
interests of the Company and the Members, make any available election pursuant to the Code;
provided, however, that the Managing Member shall, upon the request of any Member,
make the election under Section 754 of the Code in accordance with applicable Regulations
thereunder. The Managing Member shall have the right to seek to revoke any such election
(including, without limitation, the election under Section 754 of the Code) upon the Managing
Member’s determination that such revocation is in the best interests of the Company and the
Preferred Member.



     Section 10.3 Tax Matters.




     (a) General. The Managing Member shall be the “tax matters partner” of the
Company for federal income tax purposes. Pursuant to Section 6223(c) of the Code, upon
receipt of notice from the IRS of the beginning of an administrative proceeding with respect
to the Company, the tax matters partner shall furnish the IRS with the name, address and
Percentage Interest of each of the other Members; provided, however, that
such information is provided to the Company by the other Members.




     (b) Powers. Subject to Article XV, the tax matters partner is authorized, but
not required:




     (1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of Company items
required to be taken into account by a Member for income tax purposes (such
administrative proceedings being referred to as a “tax audit” and such
judicial proceedings being referred to as “judicial review”), and in the
settlement agreement the tax matters partner may expressly state that such
agreement shall bind all Members, except that such settlement agreement
shall not bind any Member (i) who (within the time prescribed pursuant to
the Code and Regulations) files a statement with the IRS providing that the
tax matters partner shall not have the authority to enter into a settlement
agreement on behalf of such



Page 31









 







Member or (ii) who is a “notice partner” (as defined in Section 6231 of
the Code) or a member of a “notice group” (as defined in Section 6223(b)(2)
of the Code);




     (2) in the event that a notice of a final administrative adjustment at
the Company level of any item required to be taken into account by a Member
for tax purposes (a “final adjustment”) is mailed or otherwise given to the
tax matters partner, to seek judicial review of such final adjustment,
including the filing of a petition for a readjustment with the Tax Court or
the United States Claims Court, or the filing of a compliant for refund with
the District Court of the United States for the district in which the
Company’s principal place of business is located;




     (3) to intervene in any action brought by any other Member for judicial
review of a final adjustment;




     (4) to file a request for an administrative adjustment with the IRS at
any time and, if any part of such request is not allowed by the IRS, to file
an appropriate pleading (petition, complaint or other document) for judicial
review with respect to such request;




     (5) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any time required to be taken
into account by a Member for tax purposes, or an item affected by such
items; and




     (6) to take any other action on behalf of the Members or the Company in
connection with any tax audit or judicial review proceeding to the extent
permitted by applicable law or regulations.



The taking of any action and the incurring of any expense by the tax matters partner in
connection with any such proceeding, except to the extent required by law, is a matter in
the sole and absolute discretion of the tax matters partner, and the provisions relating to
indemnification of the Managing Member set forth in Section 7.7 of this Agreement shall be
fully applicable to the tax matters partner in its capacity as such. The Nonmanaging
Members shall not be entitled to cause the tax matters partner to take any of the actions
described in clauses (1) through (6) above unless the Nonmanaging Member requesting that the
tax matters partner take any such action furnishes the tax matters partner an opinion of a
national law firm with experience in tax matters to the effect that it would be more likely
than not that the taking of such action would result in a determination in favor of the
Nonmanaging Member. All expenses with respect to obtaining the opinions described in the
preceding sentence shall be borne by the Nonmanaging Member or Nonmanaging Members
requesting the tax matters partner to take such action. The tax matters partner shall
provide to the Members a timely summary of each oral and written communication from or to
the IRS or any other taxing authority relating to any material tax matter. In addition,
nothing in this Section 10.3(b) shall limit the ability of any Member to take any action in
his, her or its individual capacity relating to tax audit matters relating to the Company
that is left to the determination of an individual partner under Sections 6222 through 6232
of the Code or any similar state or local provision.




     (c) Reimbursement. The tax matters partner shall receive no compensation for
its services. All third-party costs and expenses incurred by the tax matters partner in
performing its duties as such (including legal and accounting fees) shall be borne by the
Company. Nothing herein shall be construed to restrict the Company from engaging an



Page 32









 







accounting firm and a law firm to assist the tax matters partner in discharging its
duties hereunder, so long as the compensation paid by the Company for such services is
reasonable.



     Section 10.4 Organizational Expenses. The Company shall elect to deduct expenses, if
any, incurred by it in organizing the Company ratably over a sixty (60) month period as provided in
Section 709 of the Code.



     Section 10.5 Withholding. 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 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
Sections 1441, 1442, 1445 or 1446 of the Code. 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 fifteen (15) days after notice from the Managing Member that such payment must be
made unless (a) the Company withholds such payment from a distribution which would otherwise be
made to the Member or (b) the Managing Member determines, in its sole and absolute discretion, that
such payment may be satisfied out of the available funds of the Company which would, but for such
payment, be distributed to the Member. Any amounts withheld pursuant to the foregoing clauses (a)
or (b) shall be treated as having been distributed to such Member. Each Member hereby
unconditionally and irrevocably grants to the Company a security interest in such Member’s
Membership Interest to secure such Member’s obligation to pay to the Company any amounts required
to be paid pursuant to this Section 10.5. In the event that a Member fails to pay any amounts owed
to the Company pursuant to this Section 10.5 when due, the Managing Member may, in its sole and
absolute discretion, elect to make the payment to the Company 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., fifteen (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.



     Section 10.6 Cooperation. The Managing Member shall use commercially reasonable best
efforts (provided that the Managing Member shall not be obligated to incur any incremental
out-of-pocket expenses that are not reimbursed by the Preferred Member) to the extent such efforts
are in compliance with all applicable laws, (a) to notify the Preferred Member promptly if the
Managing Member determines that the Company is required to withhold any tax with respect to
distributions or allocations to be made to the Preferred Member, and (b) to provide the Preferred
Member with any reasonably requested information or assistance in connection with the Preferred
Member’s efforts to (1) obtain any available exemption from, or refund of, any withholding or
similar taxes, or (2) comply with or seek exemption from any tax filing obligations in
jurisdictions in which the Company now or hereafter, directly or indirectly, holds investments.
Notwithstanding the foregoing, nothing set forth in this Section 10.6 shall be construed as
requiring the Managing Member to take any action which it determines to be adverse or detrimental
to its interest, including, but not limited to, joining in the filing of a composite or similar
joint tax return in any jurisdiction to the extent the Managing Member determines such filing is
detrimental or adverse to its interest.



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ARTICLE XI

TRANSFERS AND WITHDRAWALS




     Section 11.1 Transfer.




     (a) Definition. The term “transfer,” when used in this Article XI with respect
to a Company Unit, shall be deemed to refer to a transaction by which the Managing Member
purports to assign its Membership Interest to another Person or by which a Nonmanaging
Member purports to assign its Nonmanaging Member Membership Interest to another Person, and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or
any other disposition by law or otherwise. The term “transfer” when used in this Article XI
does not include any redemption of Company Units by a Nonmanaging Member or acquisition of
Company Units from a Nonmanaging Member by the Managing Member or the Company pursuant to
Section 4.2.




     (b) Requirements. Except as set forth in Article XV, no Nonmanaging Member
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
Nonmanaging Member Membership Interest not made in accordance with this Article XI shall be
null and void.



     Section 11.2 Transfer of Managing Member Membership Interest.




     (a) General. Without the consent of the holders of a majority of Company
Units, except as specifically provided in this Agreement, the Managing Member may not
transfer any of its Managing Member Membership Interest (other than any transfer to an
Affiliate of the Managing Member or a Permitted Transferee) or withdraw as Managing Member
(other than pursuant to a permitted transfer), other than in connection with a transaction
described in Section 11.2(b). Notwithstanding any permitted transfer of its Managing Member
Membership Interest or withdrawal as Managing Member hereunder (other than in connection
with a transaction described in Section 11.2(b)), the Managing Member shall remain subject
to Section 7.7 of this Agreement unless such transferee Managing Member provides
substantially similar rights to the Nonmanaging Members and the Nonmanaging Members
expressly approve such rights in writing. If the Managing Member transfers all of its
Managing Member Membership Interest (other than any transfer to an Affiliate of the Managing
Member), the Preferred Member’s right to cause the Company to redeem its Preferred Units as
contemplated by Section 15.5 shall be accelerated and become effective as of the date of
such transfer. Thereafter, the Preferred Member may exercise such right by delivery of a
Put Notice and otherwise in accordance with Section 15.5.




     (b) Transfer in Connection With Reclassification, Recapitalization or Business
Combination Involving Managing Member. The Managing Member shall not engage in any
merger, consolidation or other combination with or into another Person (unless the Managing
Member survives) or sale of all or substantially all of its assets, or any reclassification,
or recapitalization or change of outstanding Shares (other than a change in par value, or
from par value to no par value, or as a result of a subdivision or combination as described
in the definition of Unit Adjustment Factor) (“Transaction”), unless as a result of
the Transaction each Nonmanaging Member thereafter remains entitled to exchange each Company
Unit owned by such Nonmanaging Member (after application of the Unit Adjustment Factor) for
an amount of cash, securities or other property equal to the greatest amount of cash,
securities or other property paid to a holder of one (1) Share in consideration of one (1)
Share at any time during the period on and from the date on which the Transaction is
consummated which a Nonmanaging Member



Page 34









 







would have received after such Transaction, as if the Nonmanaging Member had exercised
its Redemption Right immediately prior to the Transaction, provided that if, in connection
with the 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 Shares, the
holders of Nonmanaging Units shall receive the greatest amount of cash, securities or other
property which a Nonmanaging Member would have received had it exercised the Redemption
Right and received Shares in exchange for its Nonmanaging Units immediately prior to the
expiration of such purchase, tender or exchange offer.



     Section 11.3 Nonmanaging Members’ Rights to Transfer.




     (a) General. Subject to Section 11.3(b) below or as provided in Article XV, no
transfer, assignment, pledge or encumbrance of a Nonmanaging Member Membership Interest by a
Nonmanaging Member is permitted (other than a transfer to a Permitted Transferee) without
the prior written consent of the Managing Member, which may not unreasonably be withheld.
In order to effect any transfer under this Section 11.3 which has been consented to by the
Managing Member, the Nonmanaging Member must deliver to the Managing Member a duly executed
copy of the instrument making such transfer and such instrument must evidence the written
acceptance by the Transferee of all of the terms and conditions of this Agreement and
represent that such assignment was made in accordance with all applicable laws and
regulations.




     (b) Transfers Resulting in Corporation Status; Transfers Through Established
Securities or Secondary Markets. Regardless of whether the Managing Member has provided
its consent under Section 11.3(a), no transfer by a Nonmanaging Member of its Company Units
(or any economic or other interest therein or right thereto) may be made to any person if
(i) in the opinion of legal counsel for the Company, it would result in the Company being
treated as an association taxable as a corporation, or (ii) such transfer is effectuated
through an “established securities market” or a “secondary market (or the substantial
equivalent thereof)” within the meaning of Section 7704 of the Code.




     (c) Transfers to Holders of Nonrecourse Liabilities. Regardless of whether the
Managing Member has provided its consent under Section 11.3(a), with the exception of the
Preferred Member, no transfer (other than a transfer pursuant to the laws of inheritance or
by will or a transfer to an Affiliate or a member of the Immediate Family of the Nonmanaging
Member) of any Company 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 exchange or redeem for the Redemption Amount any Company 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
Section 752 of the Code.



     Section 11.4 Substituted Nonmanaging Members.




     (a) Consent of Managing Member Required. Subject to Section 11.3, each
Nonmanaging Member shall have the right to substitute a transferee as a Nonmanaging Member
in his place but only if such transferee is a Permitted Transferee of the Nonmanaging
Member, in which event such substitution shall occur if the Nonmanaging Member so provides.
With respect to any other transfers, the Managing Member shall, however, have the right to



Page 35









 







consent to the admission of a transferee of the interest of a Nonmanaging Member
pursuant to this Section 11.4 as a Substituted Nonmanaging 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 Nonmanaging Member shall not give rise to any cause of action against the
Company or any Member.




     (b) Rights and Duties of Substituted Nonmanaging Members. A transferee who has
been admitted as a Substituted Nonmanaging 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
Nonmanaging Member under this Agreement.




     (c) Amendment of Exhibit A. Upon the admission of a Substituted Nonmanaging
Member, or any Additional Member, the Managing Member shall amend Exhibit A to reflect the
name, address, number of Company Units and Percentage Interest of such Substituted
Nonmanaging Member or Additional Member and to eliminate or adjust, if necessary, the name,
address and interest of the predecessor of any Substituted Nonmanaging Member.



     Section 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 11.4(a) as a
Substituted Nonmanaging Member, such transferee shall be considered an Assignee for purposes of
this Agreement unless there is a risk that recognition of such Assignee might cause the Company to
be treated as a publicly traded partnership under the Code, in which case the Managing Member may
refuse to recognize any rights of such Assignee. An Assignee shall be entitled to all the rights
of an assignee of a limited partnership interest under the Act, including the right to receive
distributions from the Company and the share of Net Income, Net Losses, gain, loss and Recapture
Income attributable to the Company Units assigned to such transferee, but shall not be deemed to be
a holder of Company Units for any other purpose under this Agreement, and shall not be entitled to
vote such Company Units in any matter presented to the Nonmanaging Members for a vote (such Company
Units being deemed to have been voted on such matter in the same proportion as all Company Units
held by Nonmanaging Members are voted). In the event any such transferee desires to make a further
assignment of any such Company 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 Nonmanaging Member desiring to
make an assignment of Company Units.



     Section 11.6 General Provisions.




     (a) Withdrawal of Nonmanaging Member. No Nonmanaging Member may withdraw from
the Company other than as a result of a permitted transfer of such Nonmanaging Member’s
Company Units in accordance with this Article XI or pursuant to redemption of its
Nonmanaging Units under Section 4.2.




     (b) Transfer of All Company Units by Nonmanaging Member. Any Nonmanaging
Member who shall transfer all of his Company Units in a transfer permitted pursuant to this
Article XI or pursuant to the Redemption Rights of all of its Nonmanaging Units under
Section 4.2 shall be deemed to withdraw from the Company.




     (c) Timing of Transfers. Transfers pursuant to this Article XI may only be
made on the first (1st) day of a fiscal quarter of the Company, unless the Managing Member
otherwise agrees.



Page 36









 






     (d) Allocation When Transfer Occurs. If any Membership Interest is transferred
during any quarterly segment of the Company Year in compliance with the provisions of this
Article XI or converted pursuant to Section 4.2, Net Income, Net Losses, each item thereof
and all other items attributable to such Membership Interest for such Company Year shall be
divided and allocated between the transferor Member and the transferee Member by taking into
account their varying interests during the fiscal year in accordance with Section 706(d) of
the Code, using the method agreed upon between the transferor and the transferee. Solely
for purposes of making such allocations, each of such items for the calendar month in which
the transfer or redemption occurs shall be allocated to the Person who is a Member as of
midnight on the last day of said month. All distributions of Available Cash with respect to
which the Company Record Date is before the date of such transfer or redemption shall be
made to the transferor Member, and all distributions of Available Cash thereafter shall be
made to the transferee Member; all distributions of Capital Transaction Proceeds with
respect to which the Capital Transaction Record Date is before the date of such transfer or
redemption shall be made to the transferor Member, and all distributions of Capital
Transaction Proceeds thereafter shall be made to the transferee Member.



ARTICLE XII

ADMISSION OF MEMBERS




     Section 12.1 Admission of Successor Managing Member. A successor to all or part of
the Managing Member 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 a Managing Member,
effective upon such transfer. Any such transferee 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 and conditions of this
Agreement and such other documents or instruments as may be required by the predecessor Managing
Member to effect the admission.



     Section 12.2 Admission of Additional Nonmanaging Members.




     (a) General. Any Person who makes a Capital Contribution to the Company with
the permission of the Managing Member shall be admitted to the Company as an Additional
Nonmanaging Member only upon furnishing to the Managing Member (i) evidence of acceptance in
form satisfactory to the Managing Member of all of the terms and conditions of this
Agreement, including, without limitation, the power of attorney granted in Article XVII
hereto, and (ii) such other documents or instruments as may be required in the discretion of
the Managing Member in order to effect such Person’s admission as an Additional Nonmanaging
Member.




     (b) Admission of Nonmanaging Member. The admission of any Person as an
Additional Nonmanaging 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 to such admission.



     Section 12.3 Amendment of Agreement and Articles of Organization. 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 the amendment of Exhibit A) and, if required by
law, shall prepare and file an amendment to the Articles of Organization and may for this purpose
exercise the power of attorney granted pursuant to Article XVII hereof.



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ARTICLE XIII

DISSOLUTION AND LIQUIDATION




     Section 13.1 Dissolution. The Company shall not be dissolved by the admission of
Substituted Nonmanaging Members or Additional Nonmanaging Members or by the admission of a
successor Managing Member in accordance with the terms of this Agreement. The Company shall
dissolve, and its affairs shall be wound up, upon the first to occur of any of the following
(“Events of Dissolution”):




     (a) Judicial Dissolution Decree. Entry of a decree of judicial dissolution of
the Company pursuant to the provisions of the Act;




     (b) Sale of Company’s Assets. The sale of all or substantially all of the
assets and properties of the Company; or




     (c) Bankruptcy or Insolvency of Managing Member. The Managing Member (1) makes
an assignment for the benefit of creditors; (2) files a voluntary petition in bankruptcy;
(3) is adjudged a bankrupt or insolvent, or has entered against it an order of relief in any
bankruptcy or insolvency proceeding; (4) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation; (5) files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against it in any
proceeding of this nature; or (6) seeks, consent to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Managing Member or of all or any substantial part of
its properties, unless within ninety (90) days after the withdrawal, the Managing Member or
its assignee and Nonmanaging Members holding more than fifty percent (50%) of the
Nonmanaging Units 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.



     Section 13.2 Winding Up.




     (a) General. Upon the occurrence of an Event of Dissolution, 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. 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 there is no
remaining Managing Member, any Person elected by a majority in interest of the Members (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 shall be applied and distributed in the following
order:




     (1) First, to the payment and discharge of all of the Company’s debts
and liabilities to creditors other than the Members;




     (2) Second, to the payment and discharge of all of the Company’s debts
and liabilities to the Members, pro rata in accordance with amounts owed to
each such Member;



Page 38









 






     (3) Third, to the Preferred Member in proportion to and to the extent
of its Capital Account, after giving effect to all contributions,
distributions and allocations for all periods; and




     (4) The balance, if any, to the Managing Member and Nonmanaging Members
in proportion to and to the extent of their respective Capital Accounts,
after giving effect to all contributions, distributions and allocations for
all periods, with any excess to the Managing Member.



Notwithstanding anything to the contrary set forth herein, the Company may not be dissolved
or wound up prior to the redemption of the Preferred Units and payment of the aggregate
Liquidation Preference and all Accumulated Preferred Unit Distributions to the holders of
the Preferred Units. The Managing Member shall not receive any additional compensation for
any services performed pursuant to this Article XIII.




     (b) Where Immediate Sale of Company’s Assets Impractical. Notwithstanding the
provisions of Section 13.2(a) hereof which 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, in
its sole and absolute discretion, 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) or, with the Consent of the Nonmanaging Members holding a majority of the
Nonmanaging Units, distribute to the Members, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2(a) hereof, undivided interests in such
Company assets as the Liquidator deems not suitable for liquidation. 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 the Liquidator
deems reasonable and equitable 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.



     Section 13.3 Compliance with Timing Requirements of Regulations; Allowance for Contingent
or Unforeseen Liabilities or Obligations. Notwithstanding anything to the contrary in this
Agreement, in the event 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 Managing
Member, Nonmanaging Members and the Preferred Member provided such Member has a positive Capital
Account in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2) (including any timing
requirements therein). In the discretion of the Managing Member, a pro rata portion of the
distributions that would otherwise be made to the Managing Member, Nonmanaging Members and the
Preferred Member pursuant to this Article XIII may be: (i) distributed to a liquidating trust
established for the benefit of the Managing Member and Nonmanaging Members for the purposes of
liquidating Company assets, collecting amounts owed to the Company, and paying any contingent or
unforeseen liabilities or obligations of the Company or of the Managing Member arising out of or in
connection with the Company (the assets of any such trust shall be distributed to the Managing
Member and Nonmanaging Members from time to time, in the reasonable discretion of the Managing
Member, in the same proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Managing Member and Nonmanaging Members pursuant to this
Agreement), or (ii) withheld to provide a reasonable reserve for Company liabilities (contingent or
otherwise) and to reflect



Page 39









 







the unrealized portion of any installment obligations owed to the Company; provided,
that such withheld amounts shall be distributed to the Managing Member and Nonmanaging Members as
soon as practicable.



     Section 13.4 Continuation of Company. Notwithstanding any other provision of this
Article XIII, in the event the Company is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Event of Dissolution 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.



     Section 13.5 Rights of Nonmanaging Members and The Preferred Member. Except as
specifically provided in this Agreement, each Nonmanaging Member and the Preferred Member shall
look solely to the assets of the Company for the return of his, her or its Capital Contribution and
shall have no right or power to demand or receive property other than cash from the Company.
Except as specifically provided in this Agreement, no Nonmanaging Member shall have priority over
any other Nonmanaging Member as to the return of his Capital Contributions, distributions or
allocations.



     Section 13.6 Notice of Dissolution. In the event an Event of Dissolution or an event
occurs that would, pursuant to the provisions of Section 13.1, result in a dissolution of the
Company, the Managing Member shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Members and to all other parties with whom the Company regularly conducts
business (as determined in the discretion of the Managing Member) and shall publish notice thereof
in a newspaper of general circulation in each place in which the Company regularly conducts
business (as determined in the discretion of the Managing Member).



     Section 13.7 Cancellation of Articles of Organization. Upon the completion of the
liquidation of the Company as provided in Section 13.2 hereof, the Company shall be terminated and
the Articles of Organization and all qualifications of the Company as a foreign limited liability
company in jurisdictions other than the State of Ohio shall be cancelled and such other actions as
may be necessary to terminate the Company shall be taken.



     Section 13.8 Reasonable Time for Winding-Up. A reasonable time shall be allowed for
the orderly winding-up of the business and affairs of the Company and the liquidation of its assets
pursuant to Section 13.2 hereof, in order 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.



ARTICLE XIV

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS




     Section 14.1 Amendments.




     (a) General. Amendments to this Agreement may be proposed by the Managing
Member or by any Nonmanaging Members holding fifty percent (50%) or more of the Percentage
Interests. Following such proposal, the Managing Member shall submit any proposed amendment
to the Nonmanaging Members. The Managing Member shall seek the written vote of the Members
on the proposed amendment or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate. For purposes of obtaining a written vote, the
Managing Member may require a response within a reasonable specified time, but not less than
ten (10) days, and failure to respond in such time period shall constitute a vote which is
consistent with the Managing Member’s recommendation with respect to the proposal. Except
as provided in Section 14.1(b) or 14.1(c) and except as provided in Article XV, a proposed
amendment shall



Page 40









 





be adopted and be effective as an amendment hereto if it is approved by the Managing
Member and it receives the Consent of Nonmanaging Members holding a majority of the
Percentage Interests of the Nonmanaging Members. Without limiting the foregoing, this
Agreement may not be amended without the consent of the Preferred Member if such consent is
required pursuant to Section 15.7(b).




     (b) Managing Member’s Power to Amend. Notwithstanding Section 14.1(a), the
Managing Member shall have the power, without the consent of the Nonmanaging Members, to
amend this Agreement as may be required to facilitate or implement any of the following
purposes:




     (1) 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 Nonmanaging Members;




     (2) to reflect the admission, substitution, termination or withdrawal
of Members in accordance with this Agreement;




     (3) to reflect a change that is of an inconsequential nature and does
not adversely affect the Nonmanaging Members or the Preferred Member in any
material respect, or to cure any ambiguity, to correct or supplement any
provision in this Agreement not inconsistent with law or with other
provisions, or to make other changes with respect to matters arising under
this Agreement that will not be inconsistent with law or with the provisions
of this Agreement; and




     (4) 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.




     (c) Consent of Adversely Affected Member Required. Notwithstanding Section
14.1(a) hereof, this Agreement shall not be amended without the Consent of each Member
adversely affected if such amendment would (i) modify the limited liability of a Nonmanaging
Member or Preferred Member, (ii) alter or modify the Redemption Right or the Redemption
Amount except as provided in this Agreement, (iii) change any of the allocation or
distribution provisions, (iv) have an adverse effect on the Preferred Member or (v) amend
this Section 14.1(c). Notwithstanding any other provision of this Agreement, Article XV may
not be amended nor any of the terms thereof waived without the prior written consent of the
Preferred Member. Further, no amendment may alter the restrictions on the Managing Member’s
authority set forth in Section 7.3 without the Consent specified in that section.



ARTICLE XV

PREFERRED UNITS




     Section 15.1 Designation and Number; Certificate. The number of Preferred Units
issued to the Preferred Member shall be Twenty Million (20,000,000) which number was determined by
dividing the Preferred Member Initial Contribution by the Liquidation Preference (as defined in
clause (b) below). The provisions of this Article XV shall be applicable to the Preferred Units
and to the extent any other provisions of this Agreement conflict with the provisions of this
Article XV, the provisions of this Article XV shall govern. The Preferred Units shall be evidenced
by a Certificate of Preferred Units issued by the



Page 41









 







Company to Hare & Co., the Preferred Member’s nominee, or such other Person designated in
writing by the Preferred Member.



     Section 15.2 Distributions.




     (a) Payment of Distributions. The Preferred Member will be entitled to
receive, when, as and if declared by the Company acting through the Managing Member, out of
Available Cash, cumulative preferential cash distributions in an amount equal to (1) the
product of (i) the Distribution Rate in effect for each day elapsed during a Distribution
Period, multiplied by (ii) the Liquidation Preference, multiplied by (iii) the number of
days actually elapsed in a Distribution Period, divided by (2) 360 (the
“Preferred Unit Distribution”). Preferred Unit Distributions shall be cumulative
from the Closing Date, shall accrue with respect to the Preferred Member from the Closing
Date and shall be payable when, as and if declared by the Company acting through the
Managing Member as follows: (A) quarterly in arrears, on the last day of each March, June,
September and December until March 31, 2008, beginning June 30, 2007, and thereafter monthly
in arrears on the last calendar day of each month, and, (B) in the event of a redemption of
Preferred Units, on the redemption date (each a “Preferred Unit Distribution Payment
Date”), commencing on the first of such payment dates to occur following their original
date of issuance. If any Preferred Unit Distribution Payment Date is not a Business Day (as
defined herein), then payment of the Preferred Unit Distribution to be made on such date
will be made on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately preceding Business
Day (without any deduction), in each case with the same force and effect as if made on such
date. Preferred Unit Distributions will be made to the Preferred Member of record on the
relevant record dates, which will be fifteen (15) days prior to the relevant Preferred Unit
Distribution Payment Date.




     (b) For purposes hereof, the following terms shall have the meanings ascribed to them
below:




     (1) “Change of Control” means (i) the acquisition by any Person, or two
or more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act) of a
majority of the outstanding voting capital stock of the Managing Member or (ii) the
acquisition by any Person, or two or more Persons acting in concert, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act) of a majority of the outstanding Membership
Interests or other voting securities of the Company.




     (2) “Closing Date” means February 26, 2007.




     (3) “Current Rating” means, (i) with respect to the Senior Unsecured
Notes, (A) Baa2 stable, by Moody’s, (B) BBB negative watch, by S&P, and (C) BBB
stable by Fitch and (ii) with respect to the Preferred Shares, (A) Baa3 stable, by
Moody’s, (B) BBB- negative, by S&P, and (C) BB+ stable, by Fitch.




     (4) “Distribution Period” means (i) initially, from the Closing Date to
and including the initial Preferred Unit Distribution Payment Date, and (ii)
thereafter, a period from the day after any Preferred Unit Distribution Payment Date
to and including the next Preferred Unit Distribution Payment Date.



Page 42









 






     (5) “Distribution Rate” means a floating rate determined as follows:




     (i) from the Closing Date to and including the 120th day after the
Closing Date, a rate equal to (A) Three-Month LIBOR (as in effect on the
applicable LIBOR Reset Date), plus (B) 0.75%;




     (ii) from the 121st day after the Closing Date to and
including the 180th day after the Closing Date, a rate equal to (A)
Three-Month LIBOR (as in effect on the applicable LIBOR Reset Date), plus
(B) 1.50%; and




     (iii) from the 181st day after the Closing Date and for each
30-day period thereafter, a rate equal to (A) One-Month LIBOR (as in effect
on the applicable LIBOR Reset Date), plus (B) the product of (x) 0.70% and
(y) the number of whole thirty-day periods elapsed between the Closing Date
and the first day of such 30-day period;




     (iv) if either the Senior Unsecured Notes or the Preferred Shares are
downgraded to below the applicable Current Rating at any time by 2 or more
of the Rating Agencies, the Distribution Rate shall be increased by 100
basis points, effective as of the date of the second such downgrade by a
Rating Agency. Thereafter, the Distribution Rate shall be increased by an
additional 50 basis points for each additional downgrade of either the
Senior Unsecured Notes or Preferred Shares by any of the Rating Agencies
below the Current Rating, after giving effect to any previous downgrade that
resulted in an increase in the Distribution Rate, effective as of the date
of such additional downgrade; and




     (v) if a Change of Control occurs, the Distribution Rate in effect from
the date of such Change of Control shall be increased by 1.0% per annum.



The maximum Distribution Rate shall not exceed 20% at any time, except to
the extent resulting from an increase in the Distribution Rate following a
Change of Control, as contemplated by Section 15.2(b)(5)(v).




     (6) “LIBOR Reset Date” means, with respect to any Distribution Period,
two Business Days prior the first day of such Distribution Period.




     (7) “Liquidation Preference” means Twenty Five Dollars ($25) per
Preferred Unit.




     (8) “One-Month LIBOR” means the British Bankers’ Association LIBOR rate
for deposits in U.S. dollars for a one month period as reported by any generally
recognized financial information service as of 11:00 a.m. (London time) on a
specified date.




     (9) “Preferred Shares” means the shares of capital stock of the
Managing Member which are entitled to preference or priority over any other capital
stock of, or other equity interest in, the Managing Member in respect of the payment
of dividends or distribution of assets upon liquidation or both.



Page 43









 






     (10) “Rating Agencies” means, collectively, (A) Moody’s Investors
Service, Inc. (“Moody’s), (B) Standard & Poor’s Ratings Services (“S&P”), and (C)
Fitch Ratings Ltd. (“Fitch”).




     (11) “Senior Unsecured Notes” means the long term, senior unsecured
notes of the Managing Member.




     (12) “Three-Month LIBOR” means the British Bankers’ Association LIBOR
rate for deposits in U.S. dollars for a three month period as reported by any
generally recognized financial information service as of 11:00 a.m. (London time) on
a specified date.




     (c) Accrual of Distributions. Preferred Unit Distributions shall accrue
whether or not such distributions shall be authorized, whether or not there shall be assets
of the Company legally available for the payment of such distributions, whether or not the
terms and provisions of any agreement of the Company, including any agreement relating to
its indebtedness, prohibits such authorization or payment or provides that such
authorization or payment would constitute a breach thereof or a default thereunder, and
whether or not such authorization or payment shall be restricted or prohibited by law.
Accrued but unpaid Preferred Unit Distributions (“Accumulated Preferred Unit
Distributions”) will accumulate as of the Preferred Unit Distribution Payment Date on
which they first become payable. Accumulated Preferred Unit Distributions will not bear
interest.




     (d) Priority as to Distributions.




     (1) So long as any Preferred Units are outstanding, no distribution of
cash or other property shall be authorized, declared, paid or set apart for
payment on or with respect to any class or series of Membership Interests
ranking junior to or on parity with the Preferred Units as to the payment of
Preferred Unit Distributions (collectively, “Junior Units”), nor
shall any cash or other property (other than Shares of the Managing Member
which corresponds in ranking to the Membership Interests being acquired) be
set aside for or applied to the purchase, redemption or other acquisition
for consideration of any Preferred Units, Membership Interests ranking on
parity with the Preferred Units, or any Junior Units, unless, in each case,
all Accumulated Preferred Unit Distributions (including, without limitation,
any such distributions in respect of the then-current Distribution Period)
have been paid in full or an amount for the payment thereof has been set
apart for payment.




     (2) Notwithstanding anything to the contrary set forth herein,
distributions on Membership Interests held by the Managing Member ranking
junior to or on parity with the Preferred Units may be made, without
preserving the priority of distributions described in Sections 15.2(c)(1)
and (2), but only to the extent such distributions are required to preserve
the REIT status of the Managing Member.




     (e) No Further Rights. The Preferred Member shall not be entitled to any
distributions, whether payable in cash, other property or otherwise, in excess of the
Preferred Unit Distributions (and any Accumulated Preferred Unit Distributions) described
herein.



Page 44









 





     Section 15.3 Liquidation Proceeds.




     (a) Liquidation. Upon voluntary or involuntary liquidation, dissolution or
winding-up of the Company, distributions on the Preferred Units shall be made in accordance
with Article XIII of this Agreement.




     (b) Notice. Written notice of any such voluntary or involuntary liquidation,
dissolution or winding-up of the Company, stating the payment date or dates when, and the
place or places where, the amounts distributable in such circumstances shall be payable,
shall be given by (i) fax and (ii) first class mail, postage pre-paid, not less than thirty
(30) and not more than sixty (60) days prior to the payment date stated therein, to the
Preferred Member at the address of the Preferred Member as the same shall appear on the
transfer records of the Company.




     (c) No Further Rights. After payment of the full amount of the liquidating
distributions to which it is entitled, the Preferred Member will have no right or claim to
any of the remaining assets of the Company.




     (d) Consolidation, Merger or Certain Other Transactions. The consolidation or
merger or other business combination of the Company with or into any corporation, trust or
other entity (or of any corporation, trust or other entity with or into the Company) shall
not be deemed to constitute a liquidation, dissolution or winding-up of the Company.



     Section 15.4 Company’s Right to Redeem.




     (a) Right of Optional Redemption. The Company shall have the right, at any
time, to redeem all but not less than all of the then outstanding Preferred Units at a
redemption price equal to the aggregate Liquidation Preference plus the aggregate
Accumulated Preferred Unit Distributions (including, without limitation, any such
distributions in respect of the then-current Distribution Period for the number of days
actually elapsed in such Distribution Period), whether or not declared, multiplied by:




     (1) if the Call Date (as defined in Section 15.4(b)) is 120 or fewer days following the
Closing Date, 97.0%;




     (2) if the Call Date is more than 120 days, but 180 or fewer days, following the
Closing Date, 97.2%;




     (3) if the Call Date is more than 180 days, but 270 or fewer days, following the
Closing Date, 98.0%;




     (4) if the Call Date is more than 270 days, but 365 or fewer days, following the
Closing Date, 99.0%; and




     (5) if the Call Date is more than 365 days from the Closing Date, 100.0%.



The amount payable upon redemption of Preferred Units pursuant to this Section 15.4 is
referred to herein as the “Preferred Redemption Price”.




     (b) Procedures for Redemption.



Page 45









 






     (1) If the Company desires to exercise its redemption rights described
in Section 15.4(a), the Company shall deliver a notice of redemption
(“Preferred Redemption Notice”) to the holder of Preferred Units not
less than five (5) days prior to the redemption date or, if the Preferred
Units have been transferred by Wachovia in accordance with Section 15.8
hereof, to the then-current holder of the Preferred Units not less than
thirty (30) days prior to the redemption date (the “Call Date”),
addressed to the Preferred Member in accordance with the terms hereof at the
Preferred Member’s address as it appears on the records of the Company. In
addition to any information required by Law, each Preferred Redemption
Notice shall state: (i) the redemption date, (ii) the Preferred Redemption
Price, (iii) if the Preferred Units are certificated, the place or places
where such Preferred Units are to be surrendered for payment of the
Preferred Redemption Price, (iv) that distributions on the Preferred Units
to be redeemed will cease to accumulate on such redemption date and (v) that
payment of the Preferred Redemption Price will be made upon transfer or
presentation and surrender of such Preferred Units to the Company, as the
case may be.




     (2) If the Company delivers a Preferred Redemption Notice in respect of
Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New
York City time, on the redemption date, the Company will deposit irrevocably
in trust for the benefit of the holder of the Preferred Units funds
sufficient to pay the Preferred Redemption Price. The Company will give
irrevocable instructions and authority to pay and deliver such Preferred
Redemption Price to the Preferred Member upon surrender or transfer of the
Preferred Units in accordance with the Preferred Redemption Notice.



     Section 15.5 Preferred Member’s Put Right.




     (a) Put Right. If any Preferred Units remain outstanding at any time after
September 25, 2007 or as otherwise contemplated by Section 11.2(a) or Section 15.12(c),
then, so long as any Preferred Units remain outstanding, the Preferred Member shall have the
right by delivering 30 days advance written notice (a “Put Notice”), which notice
shall be irrevocable, to the Managing Member to cause the Company to redeem all, but not
less than all, of the Preferred Units for the Preferred Redemption Price, payable in
immediately available funds. Notwithstanding any provision of this Agreement to the
contrary, the Managing Member shall have the right to purchase the Preferred Units that are
the subject of a Put Notice by paying the Preferred Redemption Price, at the option of the
Managing Member, in immediately available funds, REIT Preferred Shares or a combination
thereof. In the event the Managing Member shall exercise its right to satisfy the
Preferred Redemption Price in the manner described in this Section 15.5(a), (i) each of the
Preferred Member, the Company and the Managing Member shall treat the transaction between
the Managing Member and the Preferred Member as a sale of the Preferred Member’s Preferred
Units to the Managing Member for federal income tax purposes, (ii) the number of REIT
Preferred Shares to be issued to the Preferred Member in respect of the Preferred Units
shall be equal to the quotient obtained by dividing the portion of the Preferred Redemption
Price being paid in REIT Preferred Shares divided by the liquidation preference of the REIT
Preferred Shares, and (iii) the Managing Member shall be treated for all purposes as the
owner of such Preferred Units upon tendering the Preferred Redemption Price.




     (b) Procedures for Put.



Page 46









 






     (1) Following receipt of a Put Notice, the Company or the Managing
Member, as the case may be, shall deliver a notice (“Put Procedure
Notice”) to the holder of Preferred Units not less than ten (10) days
prior to the redemption date, addressed to the Preferred Member in
accordance with the terms hereof at the Preferred Member’s address as it
appears on the records of the Company. In addition to any information
required by Law, the Put Procedure Notice shall state: (i) the redemption
date, (ii) the Preferred Redemption Price, (iii) if the Preferred Units are
certificated, the place or places where such Preferred Units are to be
surrendered for payment of the Preferred Redemption Price, (iv) that
distributions on the Preferred Units to be redeemed will cease to accumulate
on such redemption date, (v) that payment of the Preferred Redemption Price
will be made upon transfer or presentation and surrender of such Preferred
Units to the Company, as the case may be and (vi) what portion of the
Preferred Redemption Price will be paid in immediately available funds and
what portion will be paid in REIT Preferred Shares.




     (2) Following delivery of a Put Procedure Notice, then, by 12:00 noon,
New York City time, on the redemption date, the Managing Member or the
Company, as the case may be, will deposit irrevocably in trust for the
benefit of the holder of the Preferred Units (i) if all or a portion of the
Preferred Redemption Price is being paid in immediately available funds,
funds sufficient to pay that portion of the Preferred Redemption Price being
paid in immediately available funds, and (ii) subject to the last sentence
of this Section 15.5(b)(2), if all or a portion of the Preferred Redemption
Price is being satisfied pursuant to the issuance of REIT Preferred Shares,
certificates evidencing a number of REIT Preferred Shares equal to the
quotient obtained by dividing the portion of the Preferred Redemption Price
being paid in REIT Preferred Shares divided by the liquidation preference of
the REIT Preferred Shares. If the Managing Member elects to cause only a
portion of the Preferred Redemption Price to be paid pursuant to the
issuance of REIT Preferred Shares, the remainder of the Preferred Redemption
Price shall be paid in immediately available funds. If the Managing Member
elects to cause all or a portion of the Preferred Redemption Price to be
paid pursuant to the issuance of REIT Preferred Shares, the Preferred Member
shall be entitled to certain rights with respect to the registration of such shares for sale under the Securities Act of 1933, as amended (the
“Securities Act”), pursuant to the registration rights agreement
signed as of the date of this Agreement between the Managing Member and the
Preferred Member in the form attached hereto as Exhibit D (the
“Registration Rights Agreement”). The Company will give irrevocable
instructions and authority to pay and deliver such Preferred Redemption
Price to the Preferred Member upon surrender or transfer of the Preferred
Units in accordance with the Put Procedure Notice.




     (3) As a condition to the redemption of Preferred Units, the Managing
Member may require the Preferred Member to make such representations as may
be reasonably necessary for the Managing Member to establish that the
issuance of REIT Preferred Shares in redemption of the Preferred Units shall
not be required to be registered under the Securities Act, or any state
securities laws. Any REIT Preferred Shares issued pursuant to this Section
shall be duly authorized, validly issued, fully paid and nonassessable, free
of any pledge, lien, encumbrance or restriction other than those provided in
the articles of incorporation or the by-laws of the Managing Member, the



Page 47









 







Securities Act and relevant state securities or blue sky laws. The
certificates representing the REIT Preferred Shares issued upon exchange of
the Preferred Units shall, in addition to any legend required by the
Managing Member’s articles of incorporation, contain the following legend:




     THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”) OR (B) IF THE COMPANY HAS BEEN FURNISHED
WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE
UNITS REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO
THE COMPANY, THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND
REGULATIONS THEREUNDER.




     (4) In the event of an exchange of Preferred Units for REIT Preferred
Shares, an amount equal to the Accumulated Preferred Unit Distributions to
the date of exchange on any Preferred Units tendered for exchange shall
continue to accrue on such Preferred Units, which shall remain outstanding
following such exchange, with the Managing Member as the holder of such
Preferred Units. Fractional REIT Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the Managing Member will pay a cash
adjustment based upon the liquidation preference of the REIT Preferred
Shares on the day prior to the exchange date as determined in good faith by
the Managing Member.




     (c) Registration of Preferred Shares; Underwriting Agreement




     (1) If the Managing Member elects to deliver REIT Preferred Shares in
satisfaction of all or a portion of the Preferred Redemption Price (the
“Preferred Shares Election”), the Managing Member will use its
reasonable best efforts (i) to file a Registration Statement with the
Securities and Exchange Commission and to cause such Registration Statement
to be effective upon issuance of such REIT Preferred Shares and (ii) to keep
the Registration Statement effective until the earlier of (A) the date on
which the Preferred Member consummates the sale of all of the REIT Preferred
Shares registered under such registration statement, or (B) the date on
which all of the REIT Preferred Shares are eligible for sale pursuant to
Rule 144(k) (or any successor provision) or in a single transaction pursuant
to Rule 144(e) (or any successor provision) under the Securities Act.
Notwithstanding the foregoing, if the Managing Member makes the Preferred
Shares Election, prior to issuance of such REIT Preferred Shares, the
Managing Member shall be permitted to delay issuance of such REIT Preferred
Shares for a period not to exceed forty five (45) days after the specified
redemption date (the “Suspension Period”) upon delivery of a written
notice by the Managing Member to the Preferred Member (a “Suspension
Notice”) that a negotiation or consummation of a transaction by the



Page 48









 







Managing Member or any of its subsidiaries is pending or an event has
occurred, which negotiation, consummation or event would require disclosure
by the Managing Member in a Registration Statement of material information
which the Managing Member has a bona fide business purpose for keeping
confidential or the nondisclosure of which in the Registration Statement
might cause the Registration Statement to fail to comply with applicable
disclosure requirements.




     (2) If the Managing Member makes a Preferred Shares Election and the
Managing Member will be unable to deliver REIT Preferred Shares subject to
an effective Registration Statement on the Scheduled Redemption Date (taking
into account any Suspension Period), (i) the Managing Member shall deliver
written notice thereof to the Preferred Member at least two (2) Business
Days prior to such Scheduled Redemption Date and, upon receipt of such
written notice, (ii) the Preferred Member shall have the right to delay
issuance of such REIT Preferred Shares for a period of up to 730 days (the
“Preferred Member Suspension Period”). At all times during the
Preferred Member Suspension Period, the Managing Member shall use its
reasonable best efforts (A) to file a Registration Statement with the
Securities and Exchange Commission and to cause such Registration Statement
to be effective upon issuance of such REIT Preferred Shares and (B) to keep
the Registration Statement effective until the earlier of (x) the date on
which the Preferred Member consummates the sale of all of the REIT Preferred
Shares registered under such registration statement, or (y) the date on
which all of the REIT Preferred Shares are eligible for sale pursuant to
Rule 144(k) (or any successor provision) or in a single transaction pursuant
to Rule 144(e) (or any successor provision) under the Securities Act.
Notwithstanding anything to the contrary contained in this Agreement, if
upon expiration of the Preferred Member Suspension Period the Managing
Member, despite using its reasonable best efforts to cause a Registration
Statement to become effective is unsuccessful, shall issue REIT Preferred
Shares to the Preferred Member and shall continue to use its reasonable best
efforts to satisfy clause (A) and clause (B) of the preceding sentence. If
at any time REIT Preferred Shares are issued to the Preferred Member in
redemption of Preferred Units that are not subject to an effective
Registration Statement, the Preferred Member shall be entitled to liquidated
damages as contemplated by Section 7(d) of the Purchase Agreement.




     (3) If the Managing Member issues REIT Preferred Shares in satisfaction
of all or a portion of the Preferred Redemption Price, the Preferred Member
or its designee agrees to use its reasonable best efforts to distribute such
REIT Preferred Shares in an underwritten offering no later than 35 days
following the date of delivery of such REIT Preferred Shares and further
agrees that as a result of any such distribution no single purchaser of REIT
Preferred Shares in such underwritten offering will own more than 9.75% of
such class of REIT Preferred Shares without the prior written consent of the
Managing Member. In connection with any such underwritten offering, the
Preferred Member or its designee shall serve as the underwriter (the
“Underwriter”) pursuant to an underwriting agreement on prevailing market
terms, which shall provide that the Underwriter shall be paid an
underwriting fee equal to 3.15% of the aggregate liquidation preference of
the REIT Preferred Shares subject to such offering upon the consummation
thereof and that the parties will pay certain costs



Page 49









 







and expenses as contemplated by Section 4 of the Registration Rights
Agreement.



     Section 15.6 Additional Redemption Provisions. On and after the date of any
redemption of Preferred Units pursuant to Section 15.4 or Section 15.5, distributions will cease to
accumulate on the Preferred Units, unless the Company defaults in the payment thereof. If any date
fixed for redemption of Preferred Units is not a Business Day, then payment of the Preferred
Redemption Price payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Preferred Redemption Price is improperly withheld or refused and
not paid by the Company, distributions on such Preferred Units will continue to accumulate from the
original redemption date to the date of payment.



     Section 15.7 Voting Rights.




     (a) General. The Preferred Member will not have any voting rights or right to
consent to any matter requiring the consent or approval of the Managing Member or
Nonmanaging Members, except as set forth below.




     (b) Certain Voting Rights. So long as any Preferred Units remain outstanding,
the Company shall not, without the affirmative vote or consent of the Preferred Member (i)
authorize or create, or increase the authorized or issued amount of, any Units or Membership
Interests ranking senior to or on parity with the Preferred Units with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution, or winding up or
reclassify any Units or Membership Interests into, or create, authorize, or issue any
obligation or security convertible into, exchangeable for or evidencing the right to
purchase, any such Units or Membership Interests; or (ii) amend, alter, or repeal the
provisions of this Agreement, whether by merger, consolidation or otherwise (an
“event”), so as to adversely affect any right, preference, privilege, or voting
power of the Preferred Units or the Preferred Member; however, as long as the Preferred
Units remain outstanding with their terms materially unchanged, taking into account that
upon the occurrence of an event, the Company may not be the surviving entity, the occurrence
of an event described in clause (ii) above of this paragraph shall not be deemed to
materially and adversely affect such rights, preferences, privileges, or voting power of the
holders of Preferred Units, and any increase in the amount of the authorized Preferred Units
or the creation or issuance of any other series of Preferred Units or Membership Interests
ranking on a parity with or junior to the Preferred Units with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution, or winding up,
shall not be deemed to materially and adversely affect such rights, preferences, privileges,
or voting powers. Notwithstanding the foregoing, the Preferred Units shall not be entitled
to vote, and the foregoing voting provisions shall not apply, if at or prior to the time
when the act with respect to which such vote would otherwise be required is effected, all
outstanding Preferred Units have been redeemed or called for redemption, and sufficient
funds have been deposited in trust for the benefit of the holders of the Preferred Units to
effect such redemption.



     Section 15.8 Restrictions on Transfer of Preferred Units.




     (a) Transfer Restrictions. Except as contemplated by Sections 15.8(b) and
15.8(c), the Preferred Member may not sell, assign, gift, pledge, encumber, hypothecate,
mortgage, exchange, or otherwise dispose of any Preferred Units without the prior written
consent of the Managing Member.



Page 50









 






     (b) Permitted Transfers. If (1) the Preferred Member delivers a Put Notice to
the Managing Member in accordance with Section 15.5(a), and (2) the Managing Member delivers
a Suspension Notice as contemplated by Section 15.5 or otherwise defaults in its redemption
obligation, then the Preferred Member shall have the right to transfer all or a portion of
its Preferred Units to one or more Persons selected by the Preferred Member in its
discretion, provided that the Preferred Member delivers evidence reasonably satisfactory to
the Managing Member including, if requested by the Managing Member, an opinion of counsel
reasonably satisfactory to the Managing Member that the proposed transfer may be effected
without registration under the Securities Act and any applicable state securities laws.
Notwithstanding the foregoing, the Preferred Member shall have no right to transfer the
Preferred Units if (i) in the opinion of legal counsel for the Managing Member, it would
result in the Company being treated as an association taxable as a corporation, or (ii) such
transfer is effectuated through an “established securities market” or a “secondary market
(or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code.




     (c) Transfer Requirements. In order to effect any transfer made in accordance
with this Section 15.8, the Preferred Member must deliver to the Managing Member a duly
executed copy of the instrument making such transfer and such instrument must evidence the
written acceptance by the transferee(s) of all of the terms and conditions of this Agreement
and represent that such transfer was made in accordance with all applicable laws and
regulations.



     Section 15.9 No Other Conversion Rights. The Preferred Member shall not
have any rights to convert its Preferred Units into any other securities of, or interest in, the
Company.



     Section 15.10 No Sinking Fund. No sinking fund shall be established for the retirement
or redemption of Preferred Units.



     Section 15.11 Rights as Taxpayer. Notwithstanding anything in Section 10.3 to the
contrary, the Preferred Member has not surrendered any of its rights that an individual partner
would have in any matter in which the Company is dealing with the IRS.



     Section 15.12 Preferred Member Rights. As long as any of the Preferred Units are
outstanding, the Company shall comply with the following:




     (a) Dividends. No distributions (other than distributions paid in Units of, or options, warrants
or rights to subscribe for or purchase, Junior Units) shall be authorized or paid or set
apart for payment by the Company or other distribution of cash or other property authorized
or made directly or indirectly by the Company with respect to any Junior Units, nor shall
any Junior Units be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any units)
directly or indirectly by the Company (except by conversion into or exchange for Junior
Units), nor shall any other cash or other property otherwise be paid or distributed to or
for the benefit of any holder of Junior Units in respect thereof, directly or indirectly, by
the Company, unless in each case all Accumulated Preferred Unit Distributions have been or
contemporaneously are declared and paid or declared and a sum sufficient for the payment
thereof is set apart for payment thereof for all past Distribution Periods and the
then-current Distribution Period.




     (b) Affiliate Transactions. Except as expressly provided elsewhere in this
Agreement, the Company shall not, nor will it permit any of its Subsidiaries to, enter into
any transaction (including, without limitation, the purchase or sale of any property or
service) with, or make any payment or transfer to, any Affiliate of the Company except in
the ordinary course of



Page 51









 







business and pursuant to the reasonable requirements of the Company’s or such
Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or
such Subsidiary than the Company or such Subsidiary would obtain in a comparable arms-length
transaction.




     (c) Consolidated Tangible Net Worth. The Company shall provide the Preferred
Member prompt written notice in the event Consolidated Tangible Net Worth is or is
reasonably likely to be less than Seven Hundred Fifty Million Dollars ($750,000,000) (the
“Minimum Net Worth”). Upon the earlier of (1) delivery by the Company to the
Preferred Member of a written notice that the Consolidated Tangible Net Worth is or is
reasonably likely to be less than the Minimum Net Worth, or (2) the Managing Member’s breach
of its obligation to deliver such a notice in accordance with the previous sentence, the
Preferred Member’s right to cause the Company to redeem its Preferred Units as contemplated
by Section 15.5 shall be accelerated and immediately become effective. Thereafter, the
Preferred Member may exercise such right by delivery of a Put Notice and otherwise in
accordance with Section 15.5.




     (d) Net Operating Income. The Company shall provide the Preferred Member
prompt written notice in the event aggregate Net Operating Income for any two consecutive
calendar quarters from all properties owned in fee simple or ground leased by the Company, a
Subsidiary, or an Investment Affiliate is, or is reasonably likely to be, less than two (2)
times the portion of the Consolidated Interest Expense for such two fiscal quarters
attributable to debt, as of the last day of any fiscal quarter.




     (e) Fixed Charge Coverage. The Company shall provide the Preferred Member
prompt written notice in the event the ratio of (i) Net Operating Income determined on a
consolidated basis for any two consecutive calendar quarters, to (ii) Fixed Charges
determined on a consolidated basis for such two calendar-quarter period, is or is reasonably
likely to be, less than 1.5 to 1 at the end of such two calendar-quarter period.




     (f) Other Actions. The Company shall not, and shall not permit any Subsidiary
to, take any action that causes, or would be reasonably likely to cause, (i) any unpaid
Accumulated Preferred Unit Distribution for any quarterly period or (ii) any reduction in
the Preferred Member’s Capital Accounts due to the payment of any Accumulated Preferred Unit
Distribution.




     (g) Information Rights. During any period in which the Managing Member is not
subject to Section 13 or 15(d) of the Exchange Act and any of the Preferred Units are
outstanding, the Company will (i) transmit by mail to the Preferred Member copies of the
annual reports and quarterly reports (“Reports”) that the Managing Member would have
been required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act if
the Managing Member were subject to such Sections and (ii) promptly upon written request,
supply copies of such Reports to any prospective holder of the Preferred Units. The Company
will mail the Reports to the Preferred Member within 15 days after the respective dates by
which the Managing Member would have been required to file such Reports with the SEC if the
Managing Member were subject to Section 13 or 15(d) of the Exchange Act.




     (h) Breach. In the event of any material breach of any of the covenants set
forth in this Section 15.12, the Preferred Member shall have all rights at law, and as long
as such breach remains uncured (following the earlier of receipt of notice of material
breach from the Preferred Member or knowledge of material breach by the Company), the
Company shall not make any distributions or dividends to or in respect of any Company Units
other than the Preferred Units, or purchase or redeem any Company Units other than the
Preferred Units.



Page 52









 






     (i) Definitions. Any capitalized terms used in this Section 15.12 that are not
otherwise defined in this Agreement shall have the meanings ascribed to them below:



     “Consolidated Group” means the Company and all Subsidiaries that are
consolidated with it for financial reporting purposes under GAAP.



     “Consolidated Group Pro Rata Share” means with respect to any Investment
Affiliate, the percentage of the total equity ownership interests held by the Consolidated
Group in the aggregate, in such Investment Affiliate, determined by calculating the greater
of (i) the percentage of the issued and outstanding stock, partnership interests or
membership interests in such Investment Affiliate held by the Consolidated Group in the
aggregate and (ii) the percentage of the total book value of such Investment Affiliate that
would be received by the Consolidated Group in the aggregate, upon liquidation of such
Investment Affiliate after repayment in full of all Indebtedness of such Investment
Affiliate.



     “Consolidated Interest Expense” means, for any period without duplication, the
sum of (a) the amount of interest expense, determined in accordance with GAAP, of the
Consolidated Group for such period related to Consolidated Outstanding Indebtedness during
such period plus (b) the Consolidated Group Pro Rata Share of any interest expense,
determined in accordance with GAAP, of any Investment Affiliate, for such period, whether
recourse or non-recourse less (c) with respect to each consolidated Subsidiary of
the Company in which the Company does not directly or indirectly hold a 100% ownership
interest, a percentage of the interest expense attributable to such consolidated Subsidiary
which is included under clause (a) of this definition and which is not related to
Indebtedness which is not guaranteed by the Company equal to the percentage ownership in
such consolidated Subsidiary which is not held with (i) directly or indirectly by the
Company, or (ii) by holders of operating partnership units in such consolidated Subsidiary
which are convertible into interests in the Company.



     “Consolidated Outstanding Indebtedness” means, as of any date of determination,
without duplication, the sum of (a) all Indebtedness of the Consolidated Group outstanding
at such date, determined on a consolidated basis in accordance with GAAP, plus (b)
the applicable Consolidated Pro Rata Share of any Indebtedness of each Investment Affiliate
other than Indebtedness of such Investment Affiliate to a member of the Consolidated Group,
less (c) with respect to each consolidated Subsidiary of the Company in which the
Company does not directly or indirectly hold a 100% ownership interest, a percentage of any
Indebtedness of such consolidated Subsidiary which is not guaranteed by the Company equal to
the percentage ownership interest in such consolidated Subsidiary which is not held directly
or indirectly by the Company.



     “Consolidated Tangible Net Worth” means, the excess of the total fair market
value (using a 9.5% capitalization rate) of the assets over total liabilities of the Company
and its Subsidiaries; provided, that for purposes of this definition, the determination of
total assets shall exclude (a) all assets which should be classified as intangible assets
(such as goodwill, patents, trademarks, copyrights, franchises, unamortized debt discount,
capitalized research and development costs, capitalized software costs and organization
costs), (b) cash held in a sinking or other similar fund established for the purpose of
redemption or other retirement of capital stock and (c) to the extent not already deducted
from total assets, reserves for depreciation, depletion, obsolescence or amortization of
properties and other reserves or appropriations of retained earnings which have been or
should be established in connection with the business of operating and maintaining the
Properties.



Page 53









 





     “Fixed Charges” means the sum of (a) Consolidated Interest Expense for such
period plus (b) the aggregate of all scheduled principal payments on Indebtedness
during such period (excluding balloon, bullet or similar payments of principal due upon the
stated maturity of Indebtedness) of the Consolidated Group and the Consolidated Group Pro
Rata Share of such amounts plus (c) the aggregate of all dividends paid or accrued
on any Preferred Stock during such period by the Consolidated Group and the Consolidated
Group Pro Rata Share of such amounts.



     “GAAP” means generally accepted account principles in the United States of
America as in effect from time to time.



     “Indebtedness” of any Person at any date without duplication, (a) all
indebtedness of such Person for borrowed money including without limitation any repurchase
obligation or liability of such Person with respect to securities, accounts or notes
receivable sold by such Person, (b) all obligations of such Person for the deferred purchase
price of property or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), to the extent such
obligations constitute indebtedness for purposes of GAAP, (c) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar instrument, (d) all
capitalized lease obligations of such Person, (e) all obligations of such Person in respect
of acceptances issued or created for the account of such Person, (f) all guarantee
obligations of such Person (excluding in any calculation of consolidated Indebtedness of the
Consolidated Group, guarantee obligations of one member of the Consolidated Group in respect
of primary reimbursement obligations of any other member of the Consolidated Group, (g) all
reimbursement obligations of such Person for letters of credit and other contingent
liabilities, and (h) all liabilities secured by any lien (other than liens for taxes not yet
due and payable) on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof. Notwithstanding the foregoing,
any indebtedness between or among the Company and any of its Subsidiaries or among the
Subsidiaries shall not be treated as Indebtedness.



     “Investment Affiliate” means any Person in which the Consolidated Group,
directly or indirectly, has an ownership interest, whose financial results are not
consolidated under GAAP with the financial results of the Consolidated Group.



     “Lien” means any lien (statutory or other), mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional sale, capitalized lease
or other title retention agreement).



     “Net Operating Income” means, with respect to any property of the Company, any
Subsidiary and any Investment Affiliate (to the extent, directly or indirectly, owned by the
Company) for any period, the sum of (a) “property rental and other income” of the
Consolidated Group (as determined by GAAP) attributable to such property accruing for such
period less the amount of all expenses other than depreciation, interest expense, and
amortization (as determined in accordance with GAAP) incurred in connection with and
directly attributable to the ownership and operation of such property for such period plus
(b) the Consolidated Group Pro Rata Share of “property rental and other income” of property
of an Investment Affiliate, calculated in the same manner as in clause (a).



Page 54









 





     “Preferred Stock” means, with respect to any Person, shares of capital stock
of, or other equity interests in, such Person which are entitled to preference or priority
over any other capital stock of, or other equity interest in, such Person in respect of the
payment of dividends or distribution of assets upon liquidation or both.



ARTICLE XVI

GENERAL PROVISIONS




     Section 16.1 Addresses and Notices. All notices and demands under this Agreement
shall be in writing and may be either delivered personally (which shall include deliveries by
courier), by telefax or other wire transmission (with request for assurance of receipt in a manner
appropriate with respect to communications of that type; provided, that a confirmation copy is
concurrently sent by a nationally recognized express courier for overnight delivery) or mailed,
postage prepaid, by certified or registered mail, return receipt requested, directed to the parties
at their respective addresses set forth on Exhibit A attached hereto, as it may be amended from
time to time, and, if to the Company, such notices and demands sent in the aforesaid manner must be
delivered at its principal place of business as set forth in Section 2.3. Unless delivered
personally or by telefax, telex or other wire transmission as above (which shall be effective on
the date of such delivery or transmission), any notice shall be deemed to have been made three (3)
days following the date so mailed. Any party hereto may designate a different address to which
notices and demands shall thereafter be directed by written notice given in the same manner and
directed to the Company at its office as set forth on Exhibit A attached hereto. Copies of any
notices to the Company or the Managing Member shall also be delivered to:



Baker
& Hostetler LLP

3200 National City Center

1900 East 9th Street

Cleveland, Ohio 44114-3485

Attention: Albert T. Adams

Telephone: (216) 621-0200

Facsimile: (216) 696-0740




Copies of any notices to the Preferred Member shall also be delivered to:



Hunton & Williams LLP

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, Virginia 23219-4074

Attention: James S. Seevers, Jr.

Telephone: (804) 788-8573

Facsimile: (804) 788-8218




     Section 16.2 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” and “Sections” are to Articles and
Sections of this Agreement.



     Section 16.3 Pronouns and Plurals. Whenever the context may require, any pronoun 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.



Page 55









 





     Section 16.4 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.



     Section 16.5 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors, administrators, successors,
legal representatives and permitted assigns.



     Section 16.6 Waiver of Partition. The Members hereby agree that the Company
properties are not and will not be suitable for partition. Accordingly, each of the Members hereby
irrevocably waives any and all rights (if any) that he, she or it may have to maintain any action
for partition of any of the Company properties.



     Section 16.7 Entire Agreement. This Agreement and any side letters permitted under
the terms of this Agreement signed on or after the date of this Agreement by the Managing Member
and any Nonmanaging Member that is a party to such side letter(s) constitute the entire agreement
among the parties. This Agreement and any related side letters supersede any prior agreements or
understandings among the parties, including the Prior Agreement, and modifications may not be made
except pursuant to (i) Article XIV, or (ii) a side letter permitted under the terms of this
Agreement signed by the Managing Member and any Nonmanaging Member that is a party to such side
letter. Notwithstanding the foregoing, (i) no side letter with respect to any Nonmanaging Member
shall be binding if it is signed by the parties before the date the Nonmanaging Member signing the
side letter is admitted to the Company and (ii) no side letter with respect to any Nonmanaging
Member shall be entered into by the Company or given effect in this Agreement if it has or would be
reasonably likely to have an adverse affect on the Preferred Member.



     Section 16.8 Securities Law Provisions. The Company Units have not been registered
under the federal or state securities laws of any state and, therefore, may not be resold unless
appropriate federal and state securities laws, as well as the provisions of Article XI hereof, have
been complied with.



     Section 16.9 Remedies Not Exclusive. Any remedies herein contained for breaches of
obligations hereunder shall not be deemed to be exclusive and shall not impair the right of any
party to exercise any other right or remedy, whether for damages, injunction or otherwise.



     Section 16.10 Time. Time is of the essence of this Agreement.



     Section 16.11 Creditors. None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Company.



     Section 16.12 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.



     Section 16.13 Execution 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.
Each party shall become bound by this Agreement immediately upon affixing its signature hereto.



     Section 16.14 Applicable Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Ohio, without regard to the principles or conflicts of
law.



Page 56









 





     Section 16.15 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.



     Section 16.16 Limitation of Liability. Any obligation or liability whatsoever of the
Managing Member which may arise at any time under this Agreement or any obligation or liability
which may be incurred by it pursuant to any other instrument, transaction or undertaking
contemplated hereby shall be satisfied, if at all, out of the Managing Member’s assets in the
Company only. No such obligation or liability shall be personally binding upon, nor shall resort
for the enforcement thereof be had to, the property of any of its shareholders, directors,
officers, employees or agents, regardless of whether such obligation or liability is in the manner
of contract, tort or otherwise.



     Section 16.17 Partner Nonrecourse Debt. The Managing Member may from time to time, in
order to help provide one or more Nonmanaging Members with tax basis, enter into side letter
agreements with one or more Nonmanaging Members pursuant to which the Managing Member agrees to
cause the Company to borrow funds from unrelated parties or from the Managing Member or an
Affiliate of the Managing Member. Such loans may be guaranteed by one or more Nonmanaging Members
in accordance with a guaranty in form and content reasonably acceptable to the Managing Member.



ARTICLE XVII

POWER OF ATTORNEY




     Section 17.1 Power of Attorney.




     (a) Scope. Each Nonmanaging Member and each Assignee of a Nonmanaging Member
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 (i) all certificates, documents and other
instruments (including, without limitation, this Agreement and all
amendments or restatements thereof) that the Managing Member or the
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 Ohio and in all other jurisdictions in which the Company may
conduct business or own property; (ii) all instruments that the Managing
Member deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its terms;
(iii) all conveyances and other instruments or documents that the Managing
Member 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; (iv) all
instruments or documents and all certificates and acknowledgments relating
to any mortgage, pledge or other form of encumbrance in connection with any
loan or other financing to the Managing Member as provided by Section
7.1(a)(1), (3) and (4); (v) all instruments relating to the admission,
withdrawal, removal or substitution of any Member pursuant to, or other
events described in, Article XI, XII or XIII hereof or the Capital



Page 57









 







Contributions of any Member; (vi) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Membership Interests, and (vii) all instruments or documents
and all certificates and acknowledgments, including those to be executed by
Nonmanaging Members, relating to DDR’s right to purchase Nonmanaging Units
pursuant to Section 4.2(b) above; and




     (2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the Managing Member, 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
is consistent with the terms of this Agreement or appropriate or necessary,
in the sole discretion of the Managing Member, to effectuate the terms or
intent of this Agreement.



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




     (b) Irrevocability. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact that each of
the Members will be relying upon the power of the Managing Member to act as contemplated by
this Agreement in any filing or other action by it on behalf of the Company, and it shall
survive and not be affected by the subsequent incapacity of any Member or Assignee other
than the Managing Member and the transfer of all or any portion of such Member’s or
Assignee’s Company Units and shall extend to such Member’s or Assignee’s heirs, successors,
assigns and personal representatives. Each such Member or Assignee hereby agrees to be
bound by any representation made by the Managing Member, acting in good faith pursuant to
such power of attorney; and each such Member or Assignee hereby waives any and all defenses
which may be available to contest, negate or disaffirm the action of the Managing Member,
taken in good faith under such power of attorney. Each Member or Assignee shall execute and
deliver to the Managing Member or other Liquidator, within fifteen (15) days after receipt
of the Managing Member’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
necessary to effectuate this Agreement and the purposes of the Company.




Page 58









 





MANAGING MEMBER SIGNATURE PAGE




     IN WITNESS WHEREOF, the parties have hereunto set their hands as of the day and year first
above written.



	 	 	 	 	 
	 	 	MANAGING MEMBER:
	 
	 	 	 	 
	 	 	DEVELOPERS DIVERSIFIED REALTY

CORPORATION, an Ohio corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Page 59









 





NONMANAGING MEMBER SIGNATURE PAGE




     The undersigned, desiring to become a Nonmanaging Member of DDR DownREIT LLC, hereby agrees to
all of the terms of the Fourth Amended and Restated Operating Agreement of DDR DownREIT LLC, and
agrees to be bound by the terms and provisions thereof.



     Executed by the undersigned as a member of DDR DownREIT LLC.



	 	 	 	 	 
	 	 	NONMANAGING MEMBER:
	 
	 	 	 	 
	 	 	DD DEVELOPMENT COMPANY II, INC.,

an Ohio corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Page 60









 





PREFERRED MEMBER SIGNATURE PAGE




     The undersigned, desiring to become a Preferred Member of DDR DownREIT LLC, hereby agrees to
all of the terms of the Fourth Amended and Restated Operating Agreement of DDR DownREIT LLC, and
agrees to be bound by the terms and provisions thereof.



     Executed by the undersigned as a member of DDR DownREIT LLC.



	 	 	 	 	 
	 	 	PREFERRED MEMBER:
	 
	 	 	 	 
	 	 	WACHOVIA BANK, NATIONAL ASSOCIATION,

a national banking association
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 





Page 61