Exhibit 4.1


 


ACKNOWLEDGMENT AND CONSENT


 


THIS ACKNOWLEDGMENT AND CONSENT (this “Agreement”)
dated as of February 5, 2010 is by and among ML Private Finance, LLC
(“Lender”), A. Daniel Weyland, an individual (“Borrower”), HCPI/Tennessee, LLC,
a Delaware limited liability company (the “Down REIT Sub”), and HCP, Inc.,
a Maryland corporation (formerly known as Health Care Property
Investors, Inc.) (“HCP”).


 


RECITALS:


 


1.             Borrower is a Non-Managing Member of the
Down REIT Sub pursuant to that certain Amended and Restated Limited Liability
Company Agreement of HCPI/Tennessee, LLC, effective as of September 24,
2003 (the “Original LLC Agreement”), as amended by that certain Amendment
No. 1 to Amended and Restated Limited Liability Company Agreement of HCPI/Tennessee,
LLC dated as of September 29, 2004 and effective as of October 2,
2003 (the “First Amendment”), that certain Amendment No. 2 to Amended and
Restated Limited Liability Company Agreement of HCPI/Tennessee, LLC dated as of
October 27, 2004 (the “Second Amendment”), that certain Amendment
No. 3 to Amended and Restated Limited Liability Company Agreement of
HCPI/Tennessee, LLC and New Member Joinder Agreement effective as of
October 19, 2005 (the “Third Amendment,” and that certain that certain Amendment
No. 4 to Amended and Restated Limited Liability Company Agreement of
HCPI/Tennessee, LLC effective as of January 1, 2007 (the “Fourth
Amendment,” and together with the Original LLC Agreement, the First Amendment,
the Second Amendment, the Third Amendment and the Fourth Amendment and as the
same may be further amended, modified or supplemented from time to time in
accordance with the terms thereof, the “LLC Agreement”).  Further, Borrower is the record owner of the
number of Non-Managing Member Units, as set forth opposite Borrower’s name on
Exhibit A attached hereto (collectively, the “Pledged Units”).  As of the date of this Agreement, the Pledged
Units are evidenced by the LLC Unit Certificates referred to on Exhibit A
(collectively, the “Certificates”).  All
references herein to the Pledged Units shall include all additional or
substituted Non-Managing Member Units, from time to time pledged to Lender
pursuant to the Loan Agreement, as defined below, and all references herein to
the Certificates shall include the Certificates related to such additional or
substituted Non-Managing Member Units.


 


2.             Lender is a party to that certain Loan
and Security Agreement, dated as of the date hereof, by and among Borrower,
Lender and Merrill Lynch, Pierce, Fenner & Smith Incorporated (as such
agreement has been or may hereafter be amended, supplemented or otherwise
modified from time to time, the “Loan Agreement”), whereby Lender has agreed to
lend to Borrower from time to time, on a revolving basis, an amount not to
exceed Five Million Dollars ($5,000,000.00) as presently established.


 


3.             Pursuant to the Loan Agreement, the loan
contemplated therein is secured by, inter alia, (i) all of Borrower’s
right, title and interest in the Pledged Units, and (ii) all of Borrower’s
right, title and interest in the Registration Rights Agreement dated as of
October 19, 2005, between Borrower and HCP, with respect to the Pledged
Units (the “Registration Rights Agreement”).


 


4.             The parties hereto desire to enter into
this Agreement for the purpose of setting forth certain agreements among
Lender, Borrower, HCP and the Down REIT Sub with respect to the Collateral.


 


5.             Capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to them in the LLC
Agreement.


 


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


 

















 


1.             Definitions.  As used in this Agreement, the following
terms shall have the meanings hereinafter set forth unless the context shall
otherwise require.


 


a.             “Collateral” shall mean, collectively, the Pledged
Units, the Pledged Shares and any and all securities issued or issuable on the
conversion or redemption of the Pledged Units or Pledged Shares, or cash or
other distributions of every kind in respect of any of the foregoing.


 


b.             “Commission” shall mean the Securities and Exchange
Commission.


 


c.             “Default” shall mean an “Event of Default” as defined
in the Loan Agreement.


 


d.             “Material Adverse Effect” shall mean (i) an
adverse condition or event material to, (ii) a material adverse effect on,
or (iii) a material adverse change in, as the case may be, any one or more
of the following: (A) the business, assets, results of operations,
financial condition or prospects of HCP or the Down REIT Sub, as the case may
be, or (B) the ability of HCP or the Down REIT Sub, as the case may be, to
perform its obligations under any material contract to which it is a party.


 


e.             “Pledged Shares” shall mean REIT Shares which are
exchanged by HCP for any Pledged Units which are tendered to HCP, as the
Managing Member of the Down REIT Sub, pursuant to the exchange provisions set
forth in Section 8.6 of the Original LLC Agreement, as amended with
respect to the Pledged Shares pursuant to Section 2(e) of the Third
Amendment, and as the same are amended with respect to the Pledged Shares as
provided in Section 7.b.i below.


 


f.              “Registration Rights” shall mean Borrower’s rights
under the Registration Rights Agreement, as supplemented and modified in
Section 7.b below.


 


g.             “S-3 Expiration Date” means the date on which
Form S-3 (or a similar successor form of registration statement) is not available
to HCP for the registration of REIT Shares pursuant to the Securities Act.


 


h.             “Securities Act” shall mean the Securities Act of
1933, as amended.


 


2.             Acknowledgment of Pledge, etc.


 


a.             HCP and the Down REIT Sub hereby agree, acknowledge
and approve, as being subject to, but complying with Section 11.3 of the
Original LLC Agreement, (i) the grant by Borrower to Lender of a security
interest in the Collateral pursuant to the Loan Agreement, and
(ii) subject to Section 7.a below, the Transfer, to Lender or other
purchaser at foreclosure, of the Pledged Units upon foreclosure (or transfer in
lieu of foreclosure, with each reference herein to foreclosure to include such
a transfer) thereon by Lender under or pursuant to the Loan Agreement;
provided, however, that such acknowledgement and approval of the Down REIT Sub
is not, and shall not be construed to be, the consent to or approval of any
other Transfer in the event Lender or other purchaser at foreclosure becomes
the owner of any of the Pledged Units. 
HCP agrees to note in its and the Down REIT Sub’s books and records that
the Borrower has granted to Lender a security interest in the Collateral and
agrees that upon delivery to HCP by Lender of the Certificates evidencing
ownership of the Pledged Units, together with original unit powers duly
executed by Borrower in blank in the form attached hereto as Exhibit B, if
requested by Lender, HCP will register in its books and records, or the books
and records of the Down REIT Sub, ownership of such Pledged Units in the name
of Lender or its nominee.  HCP agrees
that it will not register the Pledged Units (or any entitlement to any
dividend, distribution or other proceeds thereof) into the name of any 


 


2

















 


person other than the Borrower as the owner thereof on
Exhibit A attached hereto, or recognize any person other than Borrower as
the owner of such Pledged Units, without the prior written consent of Lender.


 


b.             HCP and the Down REIT Sub agree that notwithstanding
Section 11.3.D of the Original LLC Agreement, they will not require an
opinion of counsel in order for the Down REIT Sub and HCP to recognize the
Borrower’s pledge of the Pledged Units and the grant of a security interest to
Lender in the Collateral.


 


c.             HCP and the Down REIT Sub hereby acknowledge receipt
of copies of the Instructions to Register Security Interest attached hereto as
Exhibit C (the “Instructions”) and the notice of Lender’s security
interest contained therein and agree to comply with the terms of the
Instructions.


 


d.             HCP and the Down REIT Sub hereby agree that by virtue
of Lender holding a security interest in the Pledged Units (i) Lender does
not and shall not become a Substituted Member under Section 11.4 of the
Original LLC Agreement unless and until Lender forecloses on the Pledged Units
and (ii) Lender does not and shall not undertake any obligations or
liabilities of Borrower of any nature whatsoever pertaining to the Pledged
Units or under the LLC Agreement, both before or after any foreclosure by
Lender on the Pledged Units.


 


e.             HCP and the Down REIT Sub acknowledge and agree that
upon the execution and delivery to Lender by the Borrower of this Agreement,
the Loan Agreement and all schedules hereto and thereto to which the Borrower
is a party, and the Certificates, the Borrower will not be required to sign any
other documents or take any other action with respect to the Transfer of the
Pledged Units to Lender in connection with the exercise of Lender’s rights
under this Agreement.


 


3.             Notices.  Unless and
until HCP has received written notice from Lender to the effect that Lender no
longer claims any interest in the Collateral, (a) HCP shall send to Lender
a copy of each notice sent to holders of LLC Units by HCP under the LLC Agreement
as and when it delivers such notice to Borrower, including any notice of
Reduction pursuant to Section 8.6.D of the Original LLC Agreement,
(b) at the written request of Lender, HCP shall send to Lender a copy of
each other communication, report or other information from time to time sent to
Borrower as holder of the Pledged Units or Pledged Shares, and (c) HCP
shall use commercially reasonable efforts to notify the Lender promptly upon
the Shelf Registration Statement ceasing to be effective and/or ceasing to name
the Lender as a “Selling Shareholder” thereunder for any reason.


 


4.             Amendments to Registration Rights
Agreement and the LLC Agreement.  Unless and
until HCP has received written notice from Lender to the effect that Lender no
longer claims any interest in the Collateral, (a) no amendment of,
termination of, or supplement to, the Registration Rights Agreement shall be
effective without the prior written consent of Lender, and (b) no
amendment of, termination of or supplement to the LLC Agreement for which the
consent of Borrower is required shall be effective without the prior written
consent of Lender, which consent shall not be unreasonably withheld; provided
that if written disapproval is not received from Lender within 10 Business Days
following receipt by Lender of a written request to approve such amendment
(which request shall specifically reference the time limitation imposed by this
Section 4), then Lender’s approval of such amendment shall be deemed to
have been given.


 


5.             Distributions, etc.


 


a.             Following receipt by the Down REIT Sub of written
notice (which notice shall specifically reference this Section 5 of this
Agreement) from Lender that a Default has occurred and is continuing (a
“Default Notice”): (i) upon the written instruction of Lender and until
instructions to the contrary are received from Lender, the Down REIT Sub shall
remit to 


 


3

















 


Lender all cash distributions otherwise payable to
Borrower in respect of the Pledged Units, and HCP shall remit to Lender all
cash dividends otherwise payable to Borrower in respect of the Pledged Shares,
of any nature, and (ii) upon the written instruction of Lender and until
instructions to the contrary are received from Lender, all rights of Borrower
to exercise the voting or other consensual rights that Borrower would otherwise
be entitled to exercise in respect of the Collateral shall cease, and all such
rights (and any other rights Borrower may have in respect of the Collateral)
shall thereupon become vested in Lender, which shall have the sole right to
exercise such rights, until further notice from Lender. With respect to cash
distributions payable during such time as no event of Default is occurring,
Borrower hereby directs the Down REIT Sub and/or HCP, as the case may be, and
the Down REIT Sub and/or HCP, as the case may be, agrees to deposit any and all
such dividends and distributions in the following account at Merrill Lynch,
Pierce, Fenner & Smith Incorporated: 207-15137.  Any amounts paid to the Lender or its
designee as contemplated by the terms of the foregoing shall be treated as
amounts paid or distributed to Borrower for all purposes of the LLC Agreement,
or other agreement pursuant to which the payment or distribution is made or is
required to be made and shall be deemed to satisfy the obligations of the Down
REIT Sub or HCP to make such payment thereunder.  Each Borrower hereby agrees that neither the
Down REIT Sub nor HCP shall be deemed to be in breach of its obligations under,
or in violation of the provisions of, any such agreement by virtue of having
made such payments in the foregoing manner.


 


b.             From and after the date of this Agreement, and whether
or not a Default has occurred and is continuing, if Borrower shall become
entitled to receive, in connection with any of the Collateral, any:


 


i.              LLC Units or stock certificates
(including, without limitation, stock certificates relating to the Pledged
Shares), including, without limitation, any certificates (1) issued in
respect of additional properties contributed by Borrower to the Down REIT Sub,
or (2) representing a dividend or distribution or issued in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares or partnership units,
stock or partnership units split, spin-off, or split-off;


 


ii.             Options, warrants, rights or other
securities or instruments, whether as an addition to, or in substitution or in
exchange for, any of the Collateral, or otherwise;


 


iii.            Dividends or distributions payable in
property other than cash, including securities issued by other than the issuer
of any of the Collateral; or


 


iv.            Any sums paid in redemption of any of the
Collateral,


 


then
HCP shall deliver the same to Lender, to be held by Lender as part of the
Collateral.  Any amounts paid to the
Lender or its designee as contemplated by the terms of the foregoing shall be
treated as amounts paid or distributed to Borrower for all purposes of the LLC
Agreement, or other agreement pursuant to which the payment or distribution is
made or is required to be made and shall be deemed to satisfy the obligations
of the Down REIT Sub or HCP to make such payment thereunder.  Borrower hereby agrees that neither the Down
REIT Sub nor HCP shall be deemed to be in breach of its obligations under, or
in violation of the provisions of, any such agreement by virtue of having made
such payments in the foregoing manner.


 


4

















 


6.             Registration Rights and Registration
Statements.


 


a.             Shelf Registration Statement. 
HCP hereby represents and warrants to Lender that it has filed pursuant
to the Securities Act, and has kept continuously effective, a registration
statement on Form S-3, dated September 4, 2009, File
No. 333-161721 (such registration statements, including all amendments
(including post-effective amendments) and all exhibits thereto and materials
incorporated by reference therein, collectively, the “Shelf Registration
Statement”) that relates to the offer and sale of the REIT Shares issued or to
be issued by the Down REIT Sub upon exchange of the Pledged Units.  HCP hereby agrees, if not so amended prior to
the date of this Agreement, to amend and supplement the Shelf Registration
Statement within 10 Business Days after the date of this Agreement and file to
include one or more such amendments and supplements with the Commission as
required by Rule 424 or similar rule that may be adopted under the
Securities Act to include Lender as a “Selling Shareholder” thereunder.


 


b.             Registration Rights.  In addition
to the specific registration rights set forth in this Agreement, in the name of
and on behalf of Borrower, Lender shall have the right to exercise Borrower’s
Registration Rights with respect to any Pledged Units then owned by Borrower
and held by Lender.  Borrower hereby
irrevocably appoints Lender as his attorney-in-fact to exercise any such
Registration Rights, and irrevocably instructs HCP to honor any such exercise
by Lender of Borrower’s Registration Rights.


 


7.             Rights upon Events of Default.


 


a.             Restrictions on Transfer. 
Upon foreclosure of any Pledged Units, the Lender shall be entitled to
Transfer such Pledged Units, in whole or in part, subject to applicable
restrictions set forth in Section 11.3 through 11.6 of the Original LLC
Agreement; provided, however, that HCP and the Down REIT Sub acknowledge and
agree that (i) the provisions of Section 11.6.C of the Original LLC
Agreement shall not apply to any foreclosure by Lender on any Pledged Units,
(ii) to the extent any such restrictions require the consent of HCP or the
Down REIT Sub, HCP and the Down REIT Sub hereby provide their consent to such
foreclosure, (iii) if Lender or a purchaser of Pledged Units at
foreclosure is prohibited from becoming a Substituted Member of HCP, Lender or
such purchaser may become an Assignee in accordance with such restrictions,
(iv) the Down REIT Sub shall conduct its business in the ordinary course
in accordance with past practices, and (v) neither Lender nor any
purchaser of Pledged Units or Pledged Shares at foreclosure shall be obligated
to assume, or otherwise be responsible for, any obligation Borrower may have
under the LLC Agreement or any other obligation of Borrower accrued prior to
foreclosure under the LLC Agreement; provided that nothing in this subclause
7.a.(v) shall release or reduce any prior obligations of Borrower to HCP
or the Down REIT Sub, it being acknowledged and agreed by the Down REIT Sub or
HCP that the Down REIT Sub and HCP have recourse against Borrower only and not
against Lender.  HCP further acknowledges
and agrees that the aforesaid restrictions do not apply to Pledged Shares.  Lender acknowledges and agrees that the
Pledged Shares are subject to certain restrictions on ownership and transfer as
set forth in the Charter of the HCP, as amended from time to time.


 


b.             Redemption of Pledged Shares; Foreclosure. 
In addition to (i) Lender’s rights under Section 5 and
Section 6 of this Agreement, (ii) Lender’s rights as a pledgee, transferee
or Assignee at foreclosure of LLC Units or a Membership Interest as provided in
the LLC Agreement, and (iii) any and all other rights Lender may have in
respect of a Default under any other agreement, document or instrument, or
under applicable law, upon the occurrence of any one or more Defaults
(including, without limitation, the right of Lender to exercise its rights
under the Loan Agreement to foreclose on or acquire the entire interest of
Borrower in all or any portion of any Collateral), Lender shall thereupon and
thereafter during the continuance thereof have the right, in its sole and
absolute discretion, to do or cause to be done any one or more of the
following:


 


5

















 


i.              Redemption of Pledged Units.


 


Lender shall have
the right, upon written notice to the Down REIT Sub and in the name of and on
behalf of Borrower, to exercise Borrower’s redemption rights and require HCP to
redeem all or any portion (as selected and in such order as Lender may elect in
its sole discretion) of the Pledged Units in accordance with Section 8.6.A
of the Original LLC Agreement, as amended with respect to the Pledged Units
pursuant to Section 2(e) of the Third Amendment (the “Redemption
Rights”).  Any request for such exchange
shall be made on the form of Notice of Redemption attached hereto as
Exhibit D.  Borrower hereby
irrevocably appoints Lender as its attorney-in-fact to exercise such Redemption
Rights, and irrevocably instructs the Down REIT Sub and HCP to honor any such
exercise by Lender of the Redemption Rights. 
HCP hereby agrees that upon any such exercise of the Redemption Rights,
HCP shall deliver the entire Cash Amount or REIT Shares to Lender, in each case
without deduction in respect of any claim which HCP or the Down REIT Sub may
from time to time have of any nature or kind against Borrower (other than with
respect to any withholding tax obligation imposed by law on the Down REIT Sub
with respect to any amount distributable or allocable to Borrower in respect of
Pledged Units, as contemplated in Section 5.3 of the Original LLC
Agreement).


 


In addition to the
foregoing, the second sentence of Section 8.6.A of the Original LLC
Agreement is hereby amended with respect to Lender to provide that
notwithstanding the first sentence of Section 8.6.A of the Original LLC
Agreement, as amended with respect to the Pledged Units pursuant to
Section 2(e) of the Third Amendment, after, or concurrently with,
receipt by HCP of any Default Notice, the Lender shall have the right at any
time, to tender Pledged Units for Redemption (subject to the terms and
conditions of Section 8.6. of the Original LLC Agreement, as amended with
respect to the Pledged Units pursuant to Section 2(e) of the Third
Amendment) and require the Down REIT Sub to acquire up to the number of Pledged
Units specified in the Notice of Redemption as referred to in the definition of
“Redemption Date” set forth in subparagraph (c) immediately following;
provided, however that, notwithstanding the provisions of Sections
8.6.B.(4) or 8.6.B.(5) of the Original LLC Agreement, Lender may
tender Pledged Units for Redemption hereunder once, irrespective of the
aggregate market value of such Pledged Units, and an unlimited number of times,
provided the aggregate market value of such Pledged Units is at least
$1,000,000 on the date of any such Notice of Redemption.


 


In connection with
the foregoing, the definition of the term “Redemption Date” in the LLC
Agreement shall, with respect to Lender and only with respect to Lender, be
amended to read as follows:


 


“Redemption Date” means
in the case of a Redemption pursuant to Section 8.6.A hereof, that date
specified by Lender in a Notice of Redemption to the Company; provided, however, that such date shall in no event be less
than fourteen (14) days (or if such day is not a Business Day, the next
following Business Day) after HCP’s receipt of such Notice of Redemption and
provided further that the Redemption Date, as well as the closing of an
Redemption on the Redemption Date, may be deferred in the Managing Member’s
sole and absolute discretion, for such time as may be reasonably required to
effect, as 


 


6

















 


applicable, (i) necessary
funding arrangements, (ii) compliance with the Securities Act or other
applicable laws (including, but not limited to, (a) state “blue sky” or
other securities laws and (b) the expiration or termination of the
applicable waiting period, if any, under the Hart Scott Rodino Antitrust
Improvements Act of 1976, as amended, and (iii) satisfaction or waiver of
other commercially reasonable and customary closing conditions and requirements
for a transaction of such nature (provided that in no event shall such
Redemption be delayed more than 30 days in the aggregate with respect to
(i) and (iii) above, or more than 90 days in the aggregate with
respect to (ii) above).


 


ii.             Concurrent Exercise. 
The rights exercisable by Lender under this Section 7.b may be
invoked before or after foreclosure under the Loan Agreement in Lender’s sole
discretion, and all without further notice to or any requirement of consent by
Borrower, which hereby irrevocably and unconditionally waives any right to give
any contrary instructions to HCP.  All
parties acknowledge that Lender desires to consummate any necessary foreclosure
under the Loan Agreement on a basis that such foreclosure occurs concurrent
with the closing of an Redemption; all parties agree to cooperate reasonably
with Lender to that end.  HCP agrees that
it will not act on any separate instructions or communications from Borrower
pertaining to the Pledged Units or Pledged Shares or Registration Rights
Agreement  without the express written consent of
Lender.  Nothing in this subparagraph
(v) shall in any way obligate Lender to consummate any necessary
foreclosure under the Loan Agreement in the manner referred to above; Lender
may, in its sole discretion, determine that another method of realization upon
the Collateral is preferable or required, and such determination by Lender
shall in no manner limit or restrict the obligations of Borrower or any other
person or entity with respect to the loans contemplated herein.


 


iii.            Foreclosure. 
Subject to the terms and conditions of the Loan Agreement, Lender shall
have the right to foreclose on or acquire the entire interest of Borrower in
all or any portion of any Pledged Shares (including all of Borrower’s right,
title and interest in the Registration Rights Agreement to the extent
applicable to such Pledged Shares)  owned by
Borrower, by foreclosure or in any other manner.  In the event that Lender elects to exercise
its rights under this Section 7.b.iii, Lender shall deliver to HCP a
notice of its intent to do so no later than ten (10) Business Days prior
to the date of any sale, public or private, or of any transfer in lieu of
foreclosure, and HCP (without limitation on its own right, under applicable
law, to participate in any sale or other disposition of any of the Collateral)
shall reasonably cooperate, at no expense to itself, with Lender in completing
its foreclosure on the affected Pledged Shares in compliance with applicable
laws, including, if applicable, all actions reasonably necessary to comply with
the filing requirements described in Rule 144 of the Securities Act, so as
to enable the Lender to sell such Pledged Shares without registration under the
Securities Act.


 


8.             Representations and Warranties by the
Down REIT Sub and HCP.  The Down REIT Sub and HCP
hereby represent and warrant to Lender as follows as of the date hereof:


 


a.             LLC Agreement.  A true and
correct copy of the LLC Agreement as in effect as of the date hereof is
attached as Exhibit E hereto.


 


b.             Organization And Authority of the Down REIT Sub. 
The Down REIT Sub has been duly formed, is validly existing as a limited
liability company in good standing under the laws of the State of Delaware, and
is duly qualified to transact business and is in good standing 


 


7

















 


in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification except
where the absence of such qualification would not have a Material Adverse
Effect.  The Down REIT Sub has all
requisite power and authority to own or hold under lease the property it
purports to own or hold under lease, to carry on its business as now conducted
and as proposed to be conducted except as would not have a Material Adverse
Effect, and to execute and deliver this Agreement and to perform its
obligations hereunder.


 


c.             Authorization by the Down REIT Sub; Binding Effect. 
The Down REIT Sub has by all necessary action duly authorized
(i) the execution and delivery of this Agreement and (ii) the
performance of its obligations hereunder. 
This Agreement constitutes the legal, valid and binding obligation of
the Down REIT Sub, enforceable against it in accordance with its terms, except
as enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors’
rights generally.


 


d.             Pledged Units; Managing Member of the Down REIT Sub. 
All of the Pledged Units are validly issued and non-assessable.  The identity of the registered owners, the
total number of Pledged Units and the corresponding Certificates evidencing
ownership thereof as reflected on the records of the Down REIT Sub are set
forth on Exhibit A attached hereto. 
No security interest in the Pledged Units has been registered on the
records of the Down REIT Sub (or its transfer agent).  HCP is the sole Managing Member of the Down
REIT Sub and owns the only Managing Member Units thereof.


 


e.             Organization and Authority of HCP. 
HCP is a corporation duly organized, validly existing and in good
standing under the laws of Maryland, and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such qualification
except where the absence of such qualification would not have a Material Adverse
Effect.  HCP has all requisite power and
authority to own or hold under lease the property it purports to own or hold
under lease, to carry on its business as now conducted and as proposed to be
conducted except as would not have a Material Adverse Effect, and to execute
and deliver this Agreement and to perform its obligations hereunder.


 


f.              No Claims.  To their
knowledge, neither HCP nor the Down REIT Sub has any existing claim, defense,
setoff or right of recoupment under the LLC Agreement, any other agreement, or
any law, rule or regulation, against or with respect to (i) any of
the Pledged Units, (ii) any of REIT Shares that may be issuable or any
amount that may be payable in connection with the exchange of any Pledged Units
or (iii) any obligation of Borrower under the LLC Agreement or any other
agreement with respect to any of the Pledged Units, any of the REIT Shares that
may be issued or any amount that may be payable in connection with the
redemption of any Pledged Units.


 


g.             Authorization by HCP; Binding Effect. 
HCP has by all necessary action duly authorized the execution and
delivery of this Agreement and the performance of its obligations
hereunder.  This Agreement constitutes
the legal, valid and binding obligation of HCP, enforceable against it in
accordance with its terms, except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors’ rights generally.


 


h.             HCP Status.  HCP is
organized in conformity with the requirements for qualification as a real
estate investment trust under the Code and its ownership and method of
operation enables it to meet the requirements for taxation as a real estate
investment trust under the Code.


 


8

















 


i.              No Conflict.  The
execution, delivery and performance by HCP of this Agreement, and the
consummation of the transactions contemplated hereby, do not and will not
violate any provision of the charter or bylaws of HCP, or the LLC Agreement, or
any contractual or other undertaking by which HCP or any of its assets are
bound.  As of the date of this Agreement,
the Pledged Units are not evidenced by writing or certificate except by the
Certificates reflected in the records of the Down REIT Sub and set forth on
Exhibit A hereto.


 


j.              Registration Rights Agreement. 
A true and complete copy of the Registration Rights Agreement, including
any amendments and supplements thereto, is attached to this Agreement as
Exhibit F.  The Registration Rights
Agreement remains in full force and effect as of the date of this Agreement,
and is the legal, valid and binding obligation of HCP enforceable against it in
accordance with its terms, except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors’ rights generally.


 


k.             Governmental or Other Approvals. 
No governmental or other approval is or will be required in connection
with the execution, delivery and performance by the Down REIT Sub or HCP of
this Agreement or the transactions contemplated hereby or to ensure the
legality, validity or enforceability hereof.


 


l.              Adjustment Factor.  The
Adjustment Factor under and pursuant to the LLC Agreement is currently two (2).


 


9.             Representations and Warranties by
Borrower.  To its knowledge, Borrower does not have any
existing claims, defenses, setoff rights or rights of recoupment under the LLC
Agreement, under any other agreement, or any law, rule or regulation, against
or with respect to any obligation of either HCP or the Down REIT Sub under the
LLC Agreement or any other agreement. 
Borrower has not executed any Bottom Guarantees in connection with any
Replacement Indebtedness of the Down REIT Sub other than pursuant to the terms
of that certain Guarantee Agreement dated as of April 19, 2006 in favor of
Goldman Sachs Commercial Mortgage Capital, L.P.


 


10.           Compliance with Securities Laws. 
Lender and Borrower hereby acknowledge that if all or any portion of the
Collateral ceases to be registered for sale under the Securities Act, that
Lender may be unable to effect a public sale (under applicable provisions of
the Uniform Commercial Code) of all or any part of the Collateral, and subject
to the restrictions on transfer described above, may be compelled to resort to
one or more private sales to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof.  Lender and Borrower hereby
further acknowledge that any such private sales may be at prices and on terms
less favorable than those of public sales.


 


11.           Liability to Borrower. 
Borrower assumes all risks of the acts or omissions of Lender with
respect to its exercise of its rights hereunder.  Neither the Down REIT Sub, HCP, nor any of
their officers, directors, partners, employees or agents shall be liable or
responsible for any acts or omissions of the Lender, including without
limitation the validity of any determination by Lender that a Default has
occurred or is continuing, nor shall any of such persons have any
responsibility for investigation into the facts and circumstances giving rise
to any such determination by Lender, nor shall any such person be liable or
responsible for following the instructions of Lender in accordance with this
Agreement regardless of any notice, information or instructions to the contrary
received by HCP from Borrower or any other person, including without limitation
following instruction of Lender (a) to remit distributions by the Down
REIT Sub made in respect of the Pledged Units, and distributions of HCP made in
respect of Pledged Shares, to Lender, pursuant to Section 5 above, (b) to
terminate the voting and/or other consensual rights of Borrower (and consider
such right to have vested in Lender) pursuant to Section 5 above,
(c) to exercise Borrower’s Redemption Rights in the name of and on behalf
of Borrower pursuant to Section 7 above, or (d) to exercise
Borrower’s Registration Rights in the name of and on behalf of Borrower,
pursuant to Section 6 above.


 


9

















 


12.           Separate Actions; Waiver of Statute of
Limitations.  The obligations of HCP and Borrower hereunder
shall be in addition to any obligations of Borrower under the Loan
Agreement.  Without limiting the
provisions of the Loan Agreement, a separate action or actions may be brought
and prosecuted against any one or more of the parties hereto whether or not
action is brought against any other person or whether any other person is
joined in any such action or actions. 
HCP and Borrower acknowledge that there are no conditions precedent to
the effectiveness of this Agreement and that this Agreement is in full force
and effect and is binding on such person as of the date hereof.  To the extent permitted under applicable law,
Borrower waives the benefit of any statute of limitations affecting such
person’s liability hereunder or the enforcement thereof.  Lender hereby agrees that neither the Down
REIT Sub nor HCP shall have any obligation or liability under the Loan
Agreement or any other agreement related to the loan contemplated by the Loan
Agreement except as expressly set forth herein and in the Instructions.  Borrower agrees that nothing set forth herein
shall alter, diminish or otherwise affect its obligations under the LLC
Agreement or any other agreement between Borrower and HCP or the Down REIT Sub
relating to the Pledged Units or Pledged Shares.


 


13.           Continuing Obligations. 
Borrower shall indemnify and hold harmless Lender from and against any
and all obligations, claims, losses, liabilities, damages, expenses or costs
(including reasonable attorneys’ fees and expenses and fees and expenses of
expert witnesses) arising from or in any way connected with:  (a) the obligations or liabilities of
either such person with respect to agreements, documents or other instruments,
whether now existing or hereafter incurred, or the conditions and obligations
to be observed and performed by Borrower under any agreement, document or other
instrument relating to the Collateral, except for those arising from Lender’s
gross negligence or willful misconduct; and (b) the exercise by Lender of
any rights or remedies under the Loan Agreement or this Agreement with respect
to the Collateral, including, without limitation, all costs and expenses
associated with the exercise of any foreclosure rights and/or redemption rights
pursuant to Section 6.b above or otherwise.


 


14.           Appointment as Attorney-in-Fact. 
Borrower hereby appoints Lender as its true and lawful attorney-in-fact,
with full power of substitution, for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments either in
the name of Borrower or in the name of Lender, which such attorney-in-fact may
deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest;
provided, that nothing in this section shall require the Lender to take any
action or execute any instruments.


 


15.           Notices.  Any notice,
demand, request or report required or permitted to be given or made to a party
to this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other
means of written communication (including by telecopy, facsimile, or commercial
courier service) to each party, at its address set forth below or at such other
address as such party may give notice of in accordance with the provisions of
this Section:


 


	
  Borrower:

  	
  A. Daniel
  Weyland

  
	
   

  	
  4675 Yosemite
  Street #224

  
	
   

  	
  Denver, CO 80237

  
	
   

  	
  Telephone No.:
  303-721-0033

  
	
   

  	
  Telecopier:
  720-489-6128

  
	
   

  	
   

  
	
  Lender:

  	
  ML Private Finance,
  LLC

  
	
   

  	
  1600 Merrill
  Lynch Drive, 1st Floor

  
	
   

  	
  Pennington, NJ
  08534

  
	
   

  	
  Attention:
  Elizabeth Egan

  
	
   

  	
  Telephone No.:
  609-274-6303

  
	
   

  	
  Telecopier:
  917-778-0791

  



 


10

















 


	
  HCP and/or Down
  REIT Sub:

  	
  HCP, Inc.

  
	
   

  	
  3760 Kilroy
  Airport Way, Suite 300

  
	
   

  	
  Long Beach,
  California 90806

  
	
   

  	
  Attention: Legal
  Department

  
	
   

  	
  Telephone No.:
  562 -733-5100

  
	
   

  	
  Telecopier: 562-733-5206

  



 


16.           Assignments. 
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.  Nothing contained herein,
express or implied, is intended to confer on any person other than the parties
hereto or their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.


 


17.           Governing Law. 
This Agreement and the legal relations between the parties hereto shall
be governed by and construed in accordance with the internal laws of the State
of New York applicable to contracts made and to be performed in that State,
without regard to conflict of laws principles.


 


18.           Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute but one agreement.  This
Agreement may be executed and delivered by facsimile.


 


19.           Entire Agreement; Amendments. 
This Agreement (including the instruments between the parties referred
to herein) constitutes the entire agreement among the parties and supersedes
all other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.  All references to sections, subsections, clauses,
exhibits and schedules shall be deemed references to such part of this
Agreement, unless the context shall otherwise require.  No provisions of this Agreement may be
effectively waived, changed or amended, or the termination or discharge thereof
agreed to or acknowledged, orally, but only by an agreement in writing signed
by the party against whom the enforcement of any waiver, change, amendment,
termination or discharge is sought.


 


20.           Headings.  The headings
contained in this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.


 


21.           Invalidity.  If any
provision of this Agreement is held invalid or unenforceable, the remainder of
this Agreement shall nevertheless remain in full force and effect.


 


22.           Attorneys’ Fees. 
In the event of any controversy, claim or dispute between the parties
hereto arising out of or relating to this Agreement or any of the documents
provided for herein, or the breach thereof, the prevailing party shall be
entitled to recover from the losing party reasonable attorneys’ fees, expenses
and costs.


 


23.           Reimbursement of Costs. 
Concurrently with HCP’s execution and delivery hereof, Borrower shall
pay to HCP the sum of Four Thousand Five Hundred Dollars ($4,500.00), as the
agreed upon reimbursement to HCP for its out-of-pocket costs and expenses
incurred in connection with the review, negotiation and documentation of this
Amendment and the other documents and instruments being executed and delivered
herewith, and to amend and supplement the Shelf Registration Statement as
provided in Section 6.a. hereof.


 


[Remainder of page intentionally left blank.]


 


11

















 


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


 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  ML PRIVATE
  FINANCE, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jay Sanders

  
	
   

  	
  Date:

  	
   

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  /s/ A. Daniel
  Weyland

  
	
   

  	
  A. Daniel
  Weyland

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE DOWN REIT
  SUB:

  
	
   

  	
   

  
	
   

  	
  HCPI/TENNESSEE,
  LLC,

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  HCP, INC., its
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Brian J.
  Maas

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Brian J. Maas

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HCP:

  
	
   

  	
   

  
	
   

  	
  HCP, INC.,

  
	
   

  	
  a Maryland
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian J.
  Maas

  
	
   

  	
  Name:

  	
  Brian J. Maas

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
							



 


12
















 


EXHIBIT A


 


PLEDGED UNITS


 


	
  Member Name

  	
   

  	
  Certificate No(s).

  	
   

  	
  Number of Non-Managing

  Member Units Pledged

  	
   

  
	
  A. Daniel Weyland

  	
   

  	
  8

  	
   

  	
  200,572.13

  	
   

  
	
  A. Daniel Weyland

  	
   

  	
  9

  	
   

  	
  14,300.00

  	
   

  
	
   

  	
   

  	
  TOTAL:

  	
   

  	
  214,872.13