<PAGE>

                                                                    EXHIBIT 10.2

================================================================================

                               OPERATING AGREEMENT
                                       OF
                        NNN PACIFIC CORPORATE PARK 1, LLC

     THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, NOR APPROVED OR DISAPPROVED BY THE
     UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR BY THE SECURITIES
     REGULATORY AUTHORITY OF ANY STATE, NOR HAS ANY COMMISSION OR AUTHORITY
     PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR
     ADEQUACY OF ANY DISCLOSURE MADE IN CONNECTION THEREWITH. ANY
     REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES
     OFFERED HEREBY MAY NOT BE RESOLD WITHOUT REGISTRATION UNDER THE
     SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES
     LAWS OR EXEMPTION THEREFROM.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>                                                                                                            <C>
1.    Organization..............................................................................................1
      ------------
  1.1     Formation.............................................................................................1
          ---------
  1.2     Name and Place of Business............................................................................1
          --------------------------
  1.3     Business and Purpose of the Company...................................................................1
          -----------------------------------
  1.4     Term..................................................................................................1
          ----
  1.5     Required Filings......................................................................................1
          ----------------
  1.6     Registered Office and Registered Agent................................................................1
          --------------------------------------
  1.7     Certain Transactions..................................................................................1
          --------------------
2.    Definitions...............................................................................................1
      -----------
3.    Capitalization and Financing..............................................................................1
      ----------------------------
  3.1     Members' Capital Contributions........................................................................1
          ------------------------------
    3.1.1    Initial Member.....................................................................................2
             --------------
    3.1.2    Investor Units.....................................................................................2
             --------------
    3.1.3    Payment of Purchase Price..........................................................................2
             -------------------------
    3.1.4    Subscription Agreement.............................................................................2
             ----------------------
    3.1.5    Depository Account.................................................................................2
             ------------------
    3.1.6    Cancellation of Offering...........................................................................2
             ------------------------
    3.1.7    Interest from Depository Account...................................................................3
             --------------------------------
    3.1.8    Manager as Member..................................................................................3
             -----------------
    3.1.9    Admission of a Member..............................................................................3
             ---------------------
    3.1.10   Liabilities of Members.............................................................................3
             ----------------------
  3.2     Cunningham Loan.......................................................................................3
          ---------------
  3.3     Company Loans.........................................................................................3
          -------------
  3.4     Lender Covenants......................................................................................3
          ----------------
  3.5     Third Party Beneficiaries.............................................................................5
          -------------------------
4.      Allocation of Tax Items.................................................................................5
        -----------------------
  4.1     Generally.............................................................................................5
          ---------
    4.1.1    Net Income.........................................................................................5
             ----------
    4.1.2    Net Loss...........................................................................................5
             --------
  4.2     Gross Income..........................................................................................6
          ---------------
  4.3     Special Allocations...................................................................................6
          -------------------
  4.4     Curative Allocations..................................................................................7
          --------------------
  4.5     Contributed Property..................................................................................7
          --------------------
  4.6     Recapture Income......................................................................................7
          ----------------
  4.7     Allocation Among Investor Units.......................................................................7
          -------------------------------
  4.8     Allocation of Company Items...........................................................................7
          ---------------------------
  4.9     Assignment............................................................................................8
          ----------
  4.10    Power of Manager to Vary Allocations..................................................................8
          ------------------------------------
  4.11    Consent of Members....................................................................................8
          ------------------
  4.12    Withholding Obligations...............................................................................8
          -----------------------
  4.13    Power of Manager to Assign its Interest in Cash from Operations and Cash from Capital Transactions....9
          --------------------------------------------------------------------------------------------------
5.    Distributions.............................................................................................9
      -------------
  5.1     Cash from Operations..................................................................................9
          --------------------
  5.2     Cash from Capital Transactions........................................................................9
          ------------------------------
  5.3     Restrictions..........................................................................................9
          ------------
6.    Compensation to the Manager and Affiliates................................................................9
      ------------------------------------------
  6.1     Manager's and Affiliates' Compensation................................................................9
          --------------------------------------
    6.1.1    Property Management Fee...........................................................................10
             -----------------------
</TABLE>

                                      (i)

<PAGE>

<TABLE>
<S>                                                                                                            <C>
    6.1.2    Leasing Commission................................................................................10
             ------------------
    6.1.3    Construction Management Fee.......................................................................10
             ---------------------------
    6.1.4    Selling Commission................................................................................10
             ------------------
    6.1.5    Loan Fee..........................................................................................10
             --------
    6.1.6    Termination Fee...................................................................................10
             ---------------
    6.1.7    Marketing and Due Diligence Reimbursement.........................................................10
             -----------------------------------------
  6.2     Company Expenses.....................................................................................10
          ----------------
    6.2.1    Operating Expenses................................................................................11
             ------------------
    6.2.2    Manager Overhead..................................................................................11
             ----------------
    6.2.3    Acquisition Expenses..............................................................................11
             --------------------
7.    Authority, and Responsibilities of the Manager...........................................................11
      ----------------------------------------------
  7.1     Management...........................................................................................11
          ----------
  7.2     Number, Tenure and Qualifications....................................................................12
          ---------------------------------
  7.3     Manager Authority....................................................................................12
          -----------------
  7.4     Restrictions on Manager's Authority..................................................................14
          -----------------------------------
  7.5     Responsibilities of the Manager......................................................................15
          -------------------------------
  7.6     Administration of Company............................................................................15
          -------------------------
  7.7     Tax Matters Partner..................................................................................16
          -------------------
  7.8     Indemnification of Manager...........................................................................16
          --------------------------
  7.9     No Personal Liability for Return of Capital..........................................................16
          -------------------------------------------
  7.10    Authority as to Third Persons........................................................................16
          -----------------------------
8.    Rights, Authority and Voting of the......................................................................17
      -----------------------------------
  8.1     Members Are Not Agents...............................................................................17
          ----------------------
  8.2     Voting by a Member...................................................................................17
          ------------------
  8.3     Member Vote; Consent of Manager......................................................................17
          -------------------------------
  8.4     Meetings of the Members..............................................................................18
          -----------------------
    8.4.1    Notice............................................................................................18
             ------
    8.4.2    Adjourned Meeting and Notice Thereof..............................................................18
             ------------------------------------
    8.4.3    Quorum............................................................................................18
             ------
    8.4.4    Consent of Absentees..............................................................................18
             --------------------
    8.4.5    Action Without Meeting............................................................................18
             ----------------------
    8.4.6    Record Dates......................................................................................19
             ------------
    8.4.7    Proxies...........................................................................................19
             -------
    8.4.8    Chairman of Meeting...............................................................................19
             -------------------
    8.4.9    Inspectors of Election............................................................................20
             ----------------------
    8.4.10   Record Date and Closing Company Books.............................................................20
             -------------------------------------
  8.5     Rights of Members....................................................................................20
          -----------------
  8.6     Restrictions on the Member...........................................................................20
          --------------------------
  8.7     Return of Capital of Member..........................................................................20
          ---------------------------
9.    Resignation, Withdrawal or Insolvency of the Manager.....................................................21
      ----------------------------------------------------
  9.1     Resignation or Withdrawal of Manager.................................................................21
          ------------------------------------
  9.2     Removal for Cause....................................................................................21
          -----------------
  9.3     Purchase of Manager's Interest.......................................................................21
          ------------------------------
10.   Assignment of the Manager's Interest.....................................................................21
      ------------------------------------
  10.1    Permitted Assignments................................................................................21
          ---------------------
  10.2    Substitute Manager...................................................................................22
          ------------------
  10.3    Transfer in Violation Not Recognized.................................................................22
          ------------------------------------
11.   Assignment of Investor Units.............................................................................22
      ----------------------------
  11.1    Permitted Assignments................................................................................22
          ---------------------
  11.2    Substituted Member...................................................................................23
          ------------------
    11.2.1   Conditions to be Satisfied........................................................................23
             --------------------------
    11.2.2   Consent of Manager................................................................................23
             ------------------
</TABLE>

                                      (ii)

<PAGE>

<TABLE>
<S>                                                                                                            <C>
    11.2.3   Consent of Member.................................................................................23
             -----------------
  11.3    Rights of Economic Interest Owner....................................................................23
          ---------------------------------
  11.4    Right to Inspect Books...............................................................................24
          ----------------------
  11.5    Assignment of 50% or More of Investor Units..........................................................24
          -------------------------------------------
  11.6    Transfer Subject to Law..............................................................................24
          -----------------------
  11.7    Termination of Membership Interest...................................................................24
          ----------------------------------
12.   Books, Records, Accounting and Reports...................................................................24
      --------------------------------------
  12.1    Records, Audits and Reports..........................................................................24
          ---------------------------
  12.2    Delivery to Members and Inspection...................................................................24
          ----------------------------------
  12.3    Annual Report........................................................................................25
          -------------
  12.4    Tax Information......................................................................................25
          ---------------
13.   Termination and Dissolution of the Company...............................................................25
      ------------------------------------------
  13.1    Termination of Company...............................................................................25
          ----------------------
  13.2    Certificate of Cancellation..........................................................................26
          ---------------------------
  13.3    Liquidation of Assets................................................................................26
          ---------------------
  13.4    Distributions Upon Dissolution.......................................................................26
          ------------------------------
  13.5    Liquidation of Member's Interest.....................................................................26
          --------------------------------
14.   Special and Limited Power of Attorney....................................................................26
      -------------------------------------
  14.1    Power of Attorney....................................................................................26
          -----------------
  14.2    Provision of Power of Attorney.......................................................................27
          ------------------------------
  14.3    Notice to Members....................................................................................27
          -----------------
15.   Relationship of This Agreement to the Act................................................................27
      -----------------------------------------
16.   Amendment of Agreement...................................................................................27
      ----------------------
  16.1    Admission of Member..................................................................................27
          -------------------
  16.2    Amendments with Consent of Member....................................................................28
          ---------------------------------
  16.3    Amendments Without Consent of the Members............................................................28
          -----------------------------------------
  16.4    Execution and Recording of Amendments................................................................28
          -------------------------------------
17.   Miscellaneous............................................................................................28
      -------------
  17.1    Counterparts.........................................................................................28
          ------------
  17.2    Successors and Assigns...............................................................................28
          ----------------------
  17.3    Severability.........................................................................................28
          ------------
  17.4    Notices..............................................................................................28
          -------
  17.5    Manager's Address....................................................................................28
          -----------------
  17.6    Governing Law........................................................................................28
          -------------
  17.7    Captions.............................................................................................29
          --------
  17.8    Gender...............................................................................................29
          ------
  17.9    Time.................................................................................................29
          ----
  17.10   Additional Documents.................................................................................29
          --------------------
  17.11   Descriptions.........................................................................................29
          ------------
  17.12   Binding Arbitration..................................................................................29
          -------------------
  17.13   Venue................................................................................................29
          -----
  17.14   Partition............................................................................................29
          ---------
  17.15   Integrated and Binding Agreement.....................................................................29
          --------------------------------
  17.16   Legal Counsel........................................................................................29
          -------------
EXHIBIT A.......................................................................................................1
EXHIBIT B.......................................................................................................1
</TABLE>

                                      (iii)

<PAGE>

                               OPERATING AGREEMENT
                                       OF
                        NNN PACIFIC CORPORATE PARK 1, LLC

     This Operating Agreement, effective as of March 11, 2002, is entered into
by and between Triple Net Properties, LLC, a Virginia limited liability company,
as the Manager, and Anthony W. Thompson, as the Initial Member, pursuant to the
Act on the following terms and conditions.

1.   Organization.
     ------------

     1.1 Formation. Articles of Organization have been filed in the Clerk's
         ---------
Office of the State Corporation Commission of the Commonwealth of Virginia in
accordance with and pursuant to the Act.

     1.2 Name and Place of Business. The name of the Company shall be NNN
         --------------------------
Pacific Corporate Park 1, LLC, and its principal place of business shall be 1551
N. Tustin Avenue, Suite 650, Santa Ana, California 92705. The Manager may change
such name, change such place of business or establish additional places of
business of the Company as the Manager may determine to be necessary or
desirable.

     1.3 Business and Purpose of the Company. The sole purpose of the Company is
         -----------------------------------
to (a) acquire, own and operate the Property and to that end hold, improve,
mortgage, maintain, refinance, manage, lease and dispose of the Property, or an
undivided interest therein, and (b) engage in such other activities relating to
or incidental as are necessary to accomplish such purposes.

     1.4 Term. This Agreement shall not terminate until the Company is dissolved
         ----
in accordance with this Agreement.

     1.5 Required Filings. The Manager shall execute, acknowledge, file, record
         ----------------
and/or publish such certificates and documents, as may be required by this
Agreement or by law in connection with the formation and operation of the
Company.

     1.6 Registered Office and Registered Agent. The Company's initial
         --------------------------------------
registered office and initial registered agent shall be as provided in the
Articles of Organization. The registered office and registered agent may be
changed from time to time by the Manager by filing the address of the new
registered office and/or the name of the new registered agent pursuant to the
Act.

     1.7 Certain Transactions. Any Manager, Member, Economic Interest Owner, or
         --------------------
any Affiliate, or any shareholder, officer, director, employee, partner, member,
manager or any person owning an interest therein, may engage in or possess an
interest in any other business or venture of any nature or description, whether
or not competitive with the Company, including, but not limited to, the
acquisition, syndication, ownership, financing, leasing, operation, maintenance,
management, brokerage, construction and development of property similar to the
Property and no Manager, Member or other person or entity shall have any
interest in such other business or venture by reason of their interest in the
Company.

2.   Definitions. Definitions for this Agreement are set forth on Exhibit A and
     -----------
     are incorporated herein.

3.   Capitalization and Financing.
     ----------------------------

     3.1 Members' Capital Contributions.
         ------------------------------

<PAGE>

          3.1.1 Initial Member. Anthony W. Thompson, as the Initial Member,
                --------------
shall contribute the sum of $100 in cash to the Company, but shall not receive
any Investor Units therefor. On the first business day following the admission
of additional Members, the Initial Member's $100 Capital Contribution shall be
returned, and he shall cease to be a Member. The Members hereby consent to the
Initial Member's withdrawal of his Capital Contribution and waive any right,
claim or action they may have against him by reason of his having been a Member.

          3.1.2 Investor Units. The Company is hereby authorized to sell and
                --------------
issue not less than 100 and not more than 1,160 Investor Units pursuant to the
Memorandum at a purchase price of $5,000 per Investor Unit, which number of
Units may be adjusted by the Manager in its sole and absolute discretion, and to
admit the persons who acquire such Investor Units as Members, provided that the
Manager has at least accepted at least $500,000 of aggregate subscriptions for
Investor Units. The Offering shall terminate on the Offering Termination Date.

          3.1.3 Payment of Purchase Price. The purchase price of each Investor
                -------------------------
Unit shall be paid in full, in cash, at the time of execution of the
Subscription Agreement. Payment of the purchase price for an Investor Unit shall
constitute the Member's initial Capital Contribution.

          3.1.4 Subscription Agreement. Each person desiring to acquire Investor
                ----------------------
Units and become a Member shall tender to the Company a Subscription Agreement
for the number of Investor Units desired, together with the correct full
Subscription Payment of the Investor Units so subscribed. The Company shall
accept or reject each Subscription Agreement within 30 days after the Company
receives the same (and the failure by the Company to accept a Subscription
Agreement within said 30 days shall constitute a rejection thereof). Acceptance
of a Subscription Agreement shall be evidenced by the execution by the Manager.
Subject to Section 3.1.9, upon the acceptance of a Subscription Agreement, the
accompanying Subscription Payment shall become a Capital Contribution by such
subscriber. The Company may accept subscriptions from "benefit plans" (as
defined by ERISA); provided, however, that at all times benefit plans must own,
in the aggregate, less than twenty-five (25%) of the total value of the Investor
Units then outstanding.

          3.1.5 Depository Account. After acceptance of any tendered
                ------------------
Subscription Agreement by the Company, the accompanying Subscription Payment
shall, prior to the Impound Release Date, be placed in an interest-bearing
escrow account ("Depository Account") at a bank or financial institution
selected by the Manager in California for Investor Units and held there until
such time ("Impound Release Date") as $500,000 in the aggregate of good or
collected Subscription Payments for Investor Units have been deposited. Upon
receipt of at least $500,000 of collected funds from acceptable subscriptions of
Investor Units, funds in the Depository Account shall be released to the
Company. After the Impound Release Date, any additional Subscription Payments
received (a) for Investor Units shall be sent directly to and retained by the
Company. Investors in the Company shall be admitted into the Company on the
first day of the calendar month following the month in which the Company accepts
such subscriber's subscription unless admitted earlier by the Manager, in its
sole discretion. All subscriptions shall be accepted or rejected by the Company
within 30 days of their actual receipt by the Company. If rejected, all
Subscription Payments shall be returned to the subscriber.

          3.1.6 Cancellation of Offering. If the Company has not accepted
                ------------------------
Subscription Payments for a sufficient number of Investor Units on or before
November 30, 2002, the Offering shall be canceled and all Subscription Payments
received shall be promptly refunded to the subscribers; provided, however, that
such date may be extended until February 28, 2003 in the sole and absolute
discretion of the Manager.

                                       2

<PAGE>

          3.1.7 Interest from Depository Account. Within 45 days after any
                --------------------------------
Subscription Payment for Investor Units is released from the Depository Account
or upon cancellation of the Offering as provided in Section 3.1.6, an allocable
share of the interest earned by the Depository Account while the Subscription
Payment was deposited therein shall be paid to the subscriber, based on the
actual number of days such Subscription Payment was deposited in the Depository
Account and the actual amount of interest earned during such period on funds in
the Depository Account.

          3.1.8 Manager as Member. The Manager and/or Affiliates may purchase
                -----------------
Investor Units for the same price and upon the same terms and conditions, as all
other purchasers thereof. As a result, the Manager or Affiliates shall be
admitted to the Company as Members with respect to such Investor Units and shall
be entitled to all rights as Members appurtenant thereto, including but not
limited to the right to vote on certain Company matters as provided for in this
Agreement and to receive Distributions and allocations attributable to the
Investor Units so purchased.

          3.1.9 Admission of a Member. To the extent required by law, the
                ---------------------
Manager shall amend this Agreement and take such other action as the Manager
deems necessary or appropriate promptly after receipt of the Members' Capital
Contributions to the Company to reflect the admission of those persons to the
Company as a Member.

          3.1.10 Liabilities of Members. Except as specifically provided in this
                 ----------------------
Agreement, neither the Manager nor any Member shall be required to make any
additional contributions to the Company and no Manager or Member shall be liable
for the debts, liabilities, contracts, or any other obligations of the Company,
nor shall the Manager or the Members be required to lend any funds to the
Company or to repay to the Company, any Member, any creditor of the Company or
any other person, any portion or all of any deficit balance in a Member's
Capital Account.

     3.2 Cunningham Loan. Cunningham Lending Group, LLC, an Affiliate of
         ---------------
Thompson, may, but will have no obligation to, make loans to the Company to
acquire the Property, pay Company operating expenses or for any other business
purpose. Any such loan shall bear interest at Cunningham Lending Group, LLC's
cost of funds not to exceed 12% per annum (or, if less, the maximum rate allowed
by law).

     3.3 Company Loans. The Company shall have no authority to borrow money or
         -------------
incur indebtedness on behalf of the Company (other than normal trade accounts
payable, lease obligations in the ordinary course of business, or loans from
Cunningham Lending Group, LLC) or grant consensual liens on the Company's
property; provided, however, that the Manager is hereby authorized to execute a
promissory note, the Mortgage and all other documents associated with the Loan
(collectively, the "Loan Documents") but may not incur any other indebtedness
except as expressly permitted by this item.

     3.4 Lender Covenants. The Company has not and will not:
         ----------------

          (a) Engage in any business or activity other than the ownership,
operation, development and maintenance of the Property in each case, and
activities incidental thereto;

          (b) Acquire or own any material assets other than the Property as
described in these Articles;

          (c) Merge into or consolidate with any person or entity or dissolve,
terminate or liquidate, in whole or in part, transfer or otherwise dispose of
all or substantially all of its assets or change its legal structure, without,
in each case, the Lender's prior written consent;

                                       3

<PAGE>

          (d) Fail to observe its organizational formalities or preserve its
existence as an entity duly organized, validly existing and in good standing (if
applicable) under the laws of the jurisdiction of its organization or formation,
and qualification to do business in the state where the Property is located, if
applicable, or without the prior written consent of the Lender, amend, modify,
terminate or fail to comply with the provisions of its organizational documents;

          (e) Own any subsidiary or make any investment in any person or entity
without the prior written consent of the Lender;

          (f) Commingle its assets with the assets of any of its members,
general partners, affiliates, principals or any other person or entity, or fail
to use its own separate stationary, invoices and checks;

          (g) Incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligations), other than, as to the Company, trade
payables in the ordinary course of owning the Property and loans from the
Manager, provided that such debt is not evidenced by a note, is unsecured and is
paid when due;

          (h) Other than the inability to make payments required under the Loan,
become insolvent or fail to pay its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) from its assets as the same
shall become due;

          (i) Fail to maintain its records, books of account and bank accounts
separate and apart from those of its members, partners, principals and
affiliates of its members, partners or principals, and any other person or
entity;

          (j) Enter into any contract or agreement with any member, partners,
principal or affiliate of the Company, or any member, partner, principal or
affiliate thereof, except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on an arm's length
basis with third parties other than any member, general partner, principal or
affiliate of the Company, or any member, partner, principal or affiliate
thereof;

          (k) Seek the dissolution or winding up in whole or in part of it;

          (l) Fail to correct any know misunderstandings regarding its separate
identity;

          (m) Guarantee or become obligated for the debts of any other entity or
person or hold itself out to be responsible for the debts of another person;

          (n) Make any loans or advances to any third party, including any
member, partner, principal of affiliate of the Company, or any member, partner,
principal or affiliate thereof, or acquire obligations or securities of any
member, partner, principal of affiliate of the Company, or any member, general
partner, or affiliate thereof;

          (o) Fail to file its own tax returns;

          (p) Fail either to hold itself out to the public as a legal entity
separate and distinct from any other entity person or to conduct its business
solely in its own name in order not (i) to mislead others as to the identity
with which such other party is transacting business, or (ii) to suggest that the

                                       4

<PAGE>

Company is responsible for the debts of any third party (including any member,
partner, principal or affiliate of the Company, or any member, partner,
principal or affiliate thereof);

          (q) Fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;

          (r) File or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment for the benefit of
creditors;

          (s) Share any common logo with or hold itself out as or be considered
as a department or division of (i) any partner, member or affiliate of the
Company, (ii) any affiliate of a partner, principal or member of the Company, or
(iii) any other person or entity;

          (t) Fail to allocate fairly and reasonably any overhead expenses that
are shared with an affiliate, including paying for office space and services
performed by any employee of the Company;

          (u) Pledge its assets for the benefit of any other person or entity,
other than, as to the Company, with respect to the Loan; or

          (v) Fail to maintain a sufficient number of employees in light of its
contemplated business operations.

          (w) Modify this Section 3.4.

     3.5 Third Party Beneficiaries. The parties to this Agreement shall be
         -------------------------
entitled to all of the privileges, benefits and rights contained herein; no
other party shall be a third party beneficiary or have any rights hereunder or
be able to enforce any provision contained herein.

4.   Allocation of Tax Items.
     -----------------------

     4.1 Generally. After giving effect to the special allocations contained in
         ---------
Sections 4.2 and 4.3, Net Income and Net Loss shall be allocated to the Members'
Capital Accounts as follows.

          4.1.1 Net Income. Net Income shall be allocated in the following
                ----------
manner and order of priorities:

               (a) in proportion to and in the reverse order that Net Loss has
     been allocated under clauses (b) and (c) of Section 4.1.2 until the
     cumulative Net Income allocated to each Member hereunder equals the
     cumulative Net Loss allocated under such clauses; and

               (b) the balance, 50% to the Investor Units and 50% to the
     Manager.

          4.1.2 Net Loss. Net Loss shall be allocated in the following manner
                --------
and order of priorities:

               (a) 50% to the Investor Units and 50% to the Manager, until the
     cumulative Net Loss allocated under this clause (a) equals the cumulative
     Net Profit allocated under clause (b) of Section 4.1.1;

                                       5

<PAGE>

               (b) to all Members in proportion to their Capital Contributions,
     until the cumulative Net Income allocated to each Member equals such
     Member's Capital Contribution; and

               (c) the balance, 50% to the Investor Units and 50% to the
     Manager.

     4.2 Gross Income. Gross income shall be allocated to the Members'
         ------------
Capital Accounts each year until the cumulative amount of gross income
allocated under this provision equals the cumulative distributions received
by the Members under Section 5.1 and Section 5.2.

     4.3 Special Allocations.
         -------------------

               (a) Qualified Income Offset. Except as provided in Section
                   -----------------------
4.3(c), in the event any Member unexpectedly receives any adjustments,
allocations, or distributions described in Treasury 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),
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
Treasury Regulations, the Adjusted Capital Account Deficit created by such
adjustment, allocation or distribution as quickly as possible.

               (b) Gross Income Allocation. Net Loss shall not be allocated to
                   -----------------------
any Member to the extent such allocation would cause any Member to have an
Adjusted Capital Account Deficit at the end of a fiscal year. In the event any
Member has an Adjusted Capital Account Deficit at the end of any fiscal year,
each such Member shall be specially allocated items of Company gross income and
gain in the amount of such Adjusted Capital Account Deficit as quickly as
possible.

               (c) Company Minimum Gain Chargeback. Notwithstanding any other
                   -------------------------------
provision of this Section 4, if there is a net decrease in Company Minimum Gain
during any Company fiscal year, each Member shall be specially allocated items
of Company income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Member's share of the net decrease in Company Minimum
Gain, determined in accordance with Treasury Regulations Section 1.704-2(g)(2).
This Section 4.3(c) is intended to comply with the partnership minimum gain
chargeback requirement in the Treasury Regulations and shall be interpreted
consistently therewith. This provisions shall not apply to the extent the
Member's share of net decrease in Company Minimum Gain is caused by a guaranty,
refinancing, or other change in the debt instrument causing it to become
partially or wholly recourse debt or Member Nonrecourse Debt, and such Member
bears the economic risk of loss (within the meaning of Treasury Regulations
Section 1.752-2 for the newly guaranteed, refinanced or otherwise changed debt
or to the extent the Member contributes cash to the capital of the Company that
is used to repay the Nonrecourse Debt, and the Member's share of the net
decrease in Company Minimum Gain results from the repayment.

               (d) Member Minimum Gain Chargeback. Notwithstanding any other
                   ---------------------------------
provision of this Section 4, except Section 4.3(c), if there is a net decrease
in Member Minimum Gain, any Member with a share of that Member Minimum Gain (as
determined under Treasury Regulations Section 704-2(i)(5)) as of the beginning
of the year shall be allocated items of Company income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Member's share
of the net decrease in Member Minimum Gain, determined in accordance with
Treasury Regulations Section 1.704-2(g)(2). This Section shall not apply to the
extent the net decrease in Member Minimum Gain arises because the liability
ceases to be Member Nonrecourse Debt due to conversion, refinancing or other
change in a debt instrument that causes it to become partially or wholly a
Nonrecourse Debt. This Section is intended to comply with the partner minimum
gain chargeback requirements in the Treasury Regulations and shall be
interpreted consistently therewith and applied with the restrictions
attributable thereto.

                                       6

<PAGE>

               (e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
                   ----------------------
year or other period shall be allocated 100% to the Investor Units.

               (f) Member Nonrecourse Deductions. Member Nonrecourse Deductions
                   -----------------------------
for any fiscal year shall be allocated to the Member who bears the economic risk
of loss as set forth in Treasury Regulations Section 1.752-2 with respect to the
Member Nonrecourse Debt. If more than one Member bears the economic risk of loss
for a Member Nonrecourse Debt, any Member Nonrecourse Deductions attributable to
that Member Nonrecourse Debt shall be allocated among the Members according to
the ratio in which they bear the economic risk of loss.

               (g) Code Section 754 Adjustments. To the extent an adjustment to
                   ----------------------------
the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Treasury 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 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
Treasury Regulations.

     4.4 Curative Allocations. Notwithstanding any other provision of this
         --------------------
Agreement, the Regulatory Allocations shall be taken into account in allocating
items of income, gain, loss and deduction among the Members so that, to the
extent possible, the net amount of such allocations of other items and the
Regulatory Allocations to each Member shall be equal to the net amount that
would have been allocated to each such Member if the Regulatory Allocations had
not occurred.

     4.5 Contributed Property. Notwithstanding any other provision of this
         --------------------
Agreement, the Members shall cause depreciation and or cost recovery deductions
and gain or loss attributable to Property contributed by a Member or revalued by
the Company to be allocated among the Members for income tax purposes in
accordance with Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder.

     4.6 Recapture Income. The portion of each Member's distributive share of
         ----------------
Company Net Income that is characterized as ordinary income pursuant to Section
1245 or 1250 of the Code shall be proportionate to the amount of Net Income or
Net Loss which included the corresponding depreciation deductions that were
allocated to such Member as compared with the amount of depreciation deductions
allocated to all Members.

     4.7 Allocation Among Investor Units. Except as otherwise provided in this
         -------------------------------
Agreement, all Distributions and allocations made to the Investor Units shall be
in the ratio of the number of Investor Units held by each such Member on the
date of such allocation (which allocation date shall be deemed to be the last
day of each month) to the total outstanding Investor Units as of such date, and,
except as otherwise provided in this Agreement without regard to the number of
days during such month that the Investor Units were held by each Member. For
purposes of this Section 4, an Economic Interest Owner shall be treated as a
Member. Members who purchase Investor Units at different times during the
Company tax year shall be allocated Net Income and Net Loss using the monthly
convention set forth in Section 4.8.

     4.8 Allocation of Company Items. Except as otherwise provided herein,
         ---------------------------
whenever a proportionate part of Net Income or Net Loss is allocated to a
Member, every item of income, gain, loss or

                                       7

<PAGE>

deduction entering into the computation of such Net Income or Net Loss, and
every item of credit or tax preference related to such allocation and applicable
to the period during which such Net Income or Net Loss was realized shall be
allocated to the Owner in the same proportion.

     4.9 Assignment.
         ----------

          4.9.1 In the event of the assignment of an Investor Unit, the Net
Income and Net Loss shall be apportioned as between the Member and his assignee
based upon the number of months of their respective ownership during the year in
which the assignment occurs, without regard to the results of the Company's
operations during the period before or after such assignment. Distributions
shall be made to the holder of record of the Investor Units as of the date of
the Distribution. An assignee who receives Investor Units during the first 15
days of a month will receive any allocations relative to such month. An assignee
who acquires Investor Units on or after the sixteenth day of a month will be
treated as acquiring his Investor Units on the first day of the following month.

          4.9.2 In the event of the assignment of the Manager's Interest, the
allocations of Net Income or Net Loss shall be as agreed between the Manager and
its assignee. In the absence of an agreement, the Net Income, Net Loss and
Distributions shall be allocated in a manner similar to that provided in Section
4.8.

     4.10 Power of Manager to Vary Allocations. It is the intent of the Members
          ------------------------------------
that each Member's share of Net Income and Net Loss be determined and allocated
in accordance with Section 704(b) and Section 514(c)(9) of the Code, and the
provisions of this Agreement shall be so interpreted. Therefore, if the Company
is advised by the Company's legal counsel that the allocations provided in this
Section 4 are unlikely to be respected for federal income tax purposes, the
Manager is hereby granted the power to amend the allocation provisions of this
Agreement to the minimum extent necessary to comply with Section 704(b) and
Section 514(c)(9) of the Code and effect the plan of allocations and
distributions provided for in this Agreement.

     4.11 Consent of Members. The allocation methods of Net Income and Net Loss
          ------------------
are hereby expressly consented to by each Member as a condition of becoming a
Member.

     4.12 Withholding Obligations.
          -----------------------

          4.12.1 If the Company is required (as determined in good faith by the
Manager) to make a payment ("Tax Payment") with respect to any Member to
discharge any legal obligation of the Company or the Manager to make payments to
any governmental authority with respect to any federal, foreign, state or local
tax liability of such Member arising as a result of such Member's interest in
the Company, then, notwithstanding any other provision of this Agreement to the
contrary, the amount of any such Tax Payment shall be deemed to be a loan by the
Company to such Member, which loan shall bear interest at the Prime Rate and be
payable upon demand or by offset to any Distribution which otherwise would be
made to such Member.

          4.12.2 If and to the extent the Company is required to make any Tax
Payment with respect to any Member, or elects to make payment on any loan
described in Section 4.12.1 by offset to a Distribution to a Member, either (a)
such Member's proportionate share of such Distribution shall be reduced by the
amount of such Tax Payment, or (b) such Member shall pay to the Company prior to
such Distribution an amount of cash equal to such Tax Payment. In the event a
portion of a Distribution in kind is retained by the Company pursuant to clause
(a) above, such retained property may, in the discretion of the Manager, either
(i) be distributed to the other Members, or (ii) be sold by the Company to
generate the

                                       8

<PAGE>

cash necessary to satisfy such Tax Payment. If the property is sold, then for
purposes of income tax allocations only under the Agreement, any gain or loss
from such sale or exchange shall be allocated to the Member to whom the Tax
Payment relates. If the property is sold at a gain, and the Company is required
to make any Tax Payment on such gain, the Member to whom the gain is allocated
shall pay the Company prior to the due date of Tax Payment an amount of cash
equal to such Tax Payment.

          4.12.3 The Manager shall be entitled to hold back any Distribution to
any Member to the extent the Manager believes in good faith that a Tax Payment
will be required with respect to such Member in the future and the Manager
believes that there will not be sufficient subsequent Distributions to make such
Tax Payment.

     4.13 Power of Manager to Assign its Interest in Cash from Operations and
          -------------------------------------------------------------------
Cash from Capital Transactions. The Manager reserves the right, in its sole
------------------------------
discretion, to assign to the Managing Broker-Dealer and/or any Soliciting
Broker-Dealer that participates in the Offering all or any portion of the
Manager's interest in Cash from Operations and Cash from Capital Transactions.
If the Manager elects to make such an assignment, the Members hereby consent to,
and authorize, such assignment, and each assignee may be admitted as a special
non-voting Member of the Company. In addition, a proportionate share of Net
Income otherwise allocable to the Manager would be allocated to each special
Member.

5.   Distributions.
     -------------

     5.1 Cash from Operations. Distributable Cash from Operations with respect
         --------------------
to each calendar year shall be distributed in the following manner and order of
priorities:

               (a) to the Investor Units, in the amount of the Priority Return;

               (b) then to the Investor Units, an amount equal to the Unpaid
     Priority Distribution with regard to the Investor Units; and

               (c) finally, the balance, 50% to the Investor Units and 50% to
     the Manager.

     5.2 Cash from Capital Transactions. Cash from Capital Transactions with
         ------------------------------
respect to each calendar year shall be distributed in the following manner and
order of priorities:

               (a) to pay any unpaid portion of the Member's Capital
     Contribution;

               (b) then to the Investor Units, an amount equal to the Unpaid
     Priority Distribution with regard to the Investor Units; and

               (c) finally, the balance, 50% to the Investor Units and 50% to
     the Manager.

     5.3 Restrictions. The Company intends to make periodic distributions of
         ------------
substantially all cash determined by the Manager to be distributable, subject to
the following: (a) Distributions may be restricted or suspended for periods when
the Manager determines in its reasonable discretion that it is in the best
interest of the Company; and (b) all Distributions are subject to the payment,
and the maintenance of reasonable reserves for payment, of Company obligations.

6.   Compensation to the Manager and Affiliates.
     ------------------------------------------

     6.1 Manager's and Affiliates' Compensation. The Manager and its Affiliates
         --------------------------------------
shall receive compensation from the Company for services rendered or to be
rendered only as specified in this Agreement and the Management Agreement, a
true copy of which is attached as Exhibit B. If any provision of the Management
Agreement is inconsistent with any provision contained in this Agreement, then
the provision contained in the Management Agreement shall control and the
inconsistent provision herein shall be of no force or effect.

                                       9

<PAGE>

          6.1.1 Property Management Fee. The Management Agreement provides that
                -----------------------
the Property Manager or an Affiliate will receive a monthly property management
fee for managing the Property ("Property Management Fee") equal to 5% of Gross
Revenues (as defined in the Management Agreement).

          6.1.2 Leasing Commission. The Management Agreement provides that the
                ------------------
Property Manager or an Affiliate will receive a leasing commission ("Leasing
Commission") equal to six percent (6%) of the value of any lease centered into
during the term of this Agreement and three percent (3%) with respect to any
renewals. Any leasing fees due outside leasing agents or brokers will be paid by
the Manager from these commissions. The value of the lease shall be calculated
by totaling the minimum monthly rent (or similar rent) for the term of the
lease. The term of the lease shall not exceed five (5) years for purposes of the
foregoing computation and shall be exclusive of option periods. If another
broker represents the tenant, then Property Manager may cooperate with that
broker on terms and conditions acceptable to Property Manager with commissions
to the other broker to be paid by the Tenants in Common. The Manager may use
outside leasing agents. In the event outside leasing agents are used, the
Manager shall pay any commissions that may be due.

          6.1.3 Construction Management Fee. The Management Agreement provides
                ---------------------------
that the Property Manager or an Affiliate will receive a construction management
fee ("Construction Management Fee") equal to 5% of any amount (including
professional services) up to $25,000, 4% of any amount over $25,000 but less
than $50,000 and 3% of any amount in excess of $50,000 which is expended in any
calendar year for construction or tenant improvements or repair of the Property;
provided, however, that this fee shall only be applicable in the event outside
contracts are used.

          6.1.4 Selling Commission. The Management Agreement provides that the
                ------------------
Property Manager or an Affiliate will receive, in connection with any sale,
exchange or other disposition of the Property, a selling commission (the
"Selling Commission") in the amount of up to 6% maximum of the gross sales price
of the Property. The Property Manager or an Affiliate will be entitled to a
maximum of 4% of the Commission, and will pay any third party real estate agents
and brokers who assist in the sale any amount of the Commission over 4%.
Notwithstanding anything to the contrary contained herein or in the Management
Agreement, if the Manager is terminated "for causes" pursuant to Section 9.2 of
this Agreement, the Manager shall not be entitled to receive the Selling
Commission.

          6.1.5 Loan Fee. The Management Agreement provides that the Property
                --------
Manager or an Affiliate will receive from the Company, a fee ("Loan Fee") equal
to 1% of any loan obtained in the future (not including the Loan); provided,
however, that the fee paid to the manager or an Affiliate and any loan fee paid
to any other person (other than the lender) as a result of each loan shall not
exceed 1%.

          6.1.6 Termination Fee. The Management Agreement provides that the
                ---------------
Property Manager will receive a termination fee computed as if the Property was
sold based on a value equal to the greater of (i) the appraised value or (ii)
the acquisition capitalization rate for the Property, times the net operating
income of the Property for the 12 month period prior to the termination.

          6.1.7 Marketing and Due Diligence Reimbursement. The Memorandum
                -----------------------------------------
provides that NNN Capital Corp. will receive a nonaccountable marketing and due
diligence allowance in the amount of 1% of the Gross Proceeds, which it may
reallow to other members of the Selling Group.

     6.2 Company Expenses.
         ----------------

                                       10

<PAGE>

          6.2.1 Operating Expenses. Subject to the limitations set forth in
                ------------------
Section 6.2.2, the Company shall pay directly, or reimburse the Manager as the
case may be, for all of the costs and expenses of the Company's operations,
including, without limitation, the following costs and expenses: (a) all
Organization and Offering Expenses advanced or otherwise paid by the Manager;
(b) all costs of personnel employed by the Company and directly involved in the
Company's business; (c) all compensation due to the Manager or its Affiliates;
(d) all costs of personnel employed by the Manager or its Affiliates and
directly involved in the business of the Company; (e) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
Company; (f) legal, accounting, audit, brokerage, and other fees; (g) fees and
expenses paid to independent contractors, mortgage bankers, real estate brokers,
and other agents; (h) costs of acquiring, owning, developing, improving,
operating, and disposing of the Property; (i) expenses incurred in connection
with the alteration, maintenance, repair, remodeling, refurbishment, leasing and
operation of the Property; (j) all expenses incurred in connection with the
maintenance of Company books and records, the preparation and dissemination of
reports, tax returns or other information to Members and the making of
Distributions to the Members; (k) expenses incurred in preparation and filing
reports or other information with appropriate regulatory agencies; (l) expenses
of insurance as required in connection with the business of the Company, other
than any insurance insuring the Manager against losses for which it is not
entitled to be indemnified under Section 7.8; (m) costs incurred in connection
with any litigation in which the Company may become involved, or any
examination, investigation, or other proceedings conducted by any regulatory
agency, including legal and accounting fees; (n) the actual costs of goods and
materials used by or for the Company; (o) the costs of services that could be
performed directly for the Company by independent parties such as legal,
accounting, secretarial or clerical, reporting, transfer agent, data processing
and duplicating services but which are in fact performed by the Manager or its
Affiliates, but not in excess of the lesser of: (i) the actual costs to the
Manager or its Affiliates of providing such services; or (ii) the amounts which
the Company would otherwise be required to pay to independent parties for
comparable services in the same geographic locale; (p) expenses of Company
administration, accounting, documentation and reporting, (q) expenses of
revising, amending, modifying, or terminating this Agreement; (r) all travel
expenses incurred in connection with the Company's business, including travel to
and from the Property; and (s) all other costs and expenses incurred in
connection with the business of the Company exclusive of those set forth in
Section 6.2.2.

          6.2.2 Manager Overhead. The Manager and its Affiliates shall not be
                ----------------
reimbursed for overhead expenses incurred in connection with the Company,
including but not limited to rent, depreciation, utilities, capital equipment,
other administrative items, and the following items paid to any officer of the
Manager or any Affiliate: salaries, fringe benefits, travel expenses and other
administrative items.

          6.2.3 Acquisition Expenses. Notwithstanding Section 6.2.2, the Manager
                --------------------
will be reimbursed for all costs expended in the due diligence of the Property
and acquisition of the Property, including down payments, closing costs, travel,
legal, environmental and other studies, surveys, escrow deposits and costs, plus
interest at the Manager's cost of funds to borrow funds for the above purposes.

7.   Authority, and Responsibilities of the Manager.
     ----------------------------------------------

     7.1 Management. The business and affairs of the Company shall be managed by
         ----------
its Manager. Except as otherwise set forth in this Agreement, the Manager shall
have full and complete authority, power and discretion to manage and control the
business, affairs and all property of the Company, to make all decisions
regarding those matters and to perform any and all other acts or activities
customary or incident to the management of the Company's business.

                                       11

<PAGE>

     7.2 Number, Tenure and Qualifications. The Company shall have one Manager,
         ----------------------------------
which shall be Triple Net Properties, LLC. The Manager shall hold office until
it is removed, withdraws or resigns.

     7.3 Manager Authority. The Manager shall have all authority, rights and
         -----------------
powers conferred by law (subject only to Section 7.4) and those required or
appropriate to the management of the Company's business, which, by way of
illustration but not by way of limitation, shall include the right, authority
and power to cause the Company to:

          7.3.1 Acquire, hold, develop, lease, rent, operate, sell, exchange,
subdivide and otherwise dispose of all property, including the Property;

          7.3.2 Borrow money, and, if security is required therefor, to pledge
or mortgage or subject the Property to any security device, to obtain
replacements of any mortgage or other security device and to prepay, in whole or
in part, refinance, increase, modify, consolidate, or extend any mortgage or
other security device. All of the foregoing shall be on such terms and in such
amounts as the Manager, in its sole discretion, deems to be in the best interest
of the Company;

          7.3.3 Place record title to, or the right to use, the Property in the
name or names of a nominee or nominees for any purpose convenient or beneficial
to the Company;

          7.3.4 Enter into such contracts and agreements as the Manager
determines to be reasonably necessary or appropriate in connection with the
Company's business and purpose (including contracts with Affiliates of the
Manager), and any contract of insurance that the Manager deems necessary or
appropriate for the protection of the Company and the Manager, including errors
and omissions insurance, for the conservation of Company assets, or for any
purpose convenient or beneficial to the Company;

          7.3.5 Employ persons, who may be Affiliates of the Manager, in the
operation and management of the business of the Company;

          7.3.6 Prepare or cause to be prepared reports, statements, and other
relevant information for distribution to the Members.

          7.3.7 Open accounts and deposits and maintain funds in the name of the
Company in banks, savings and loan associations, "money market" mutual funds and
other instruments as the Manager may deem in its discretion to be necessary or
desirable;

          7.3.8 Cause the Company to make or revoke any of the elections
referred to in the Code (the Manager shall have no obligation to make any such
elections);

          7.3.9 Select as its accounting year a calendar or fiscal year as may
be approved by the Internal Revenue Service (the Company initially intends to
adopt the calendar year);

          7.3.10 Determine the appropriate accounting method or methods to be
used by the Company;

          7.3.11 In addition to any amendments otherwise authorized herein,
amend this Agreement without any action on the part of the Members by special or
general power of attorney or otherwise:

                                       12

<PAGE>

               (a) To add to the representations, duties, services or
     obligations of the Manager or its Affiliates, for the benefit of the
     Members;

               (b) To cure any ambiguity or mistake, to correct or supplement
     any provision herein that may be inconsistent with any other provision
     herein, or to make any other provision with respect to matters or questions
     arising under this Agreement that will not be inconsistent with the
     provisions of this Agreement;

               (c) To delete or add any provision of this Agreement required to
     be so deleted or added for the benefit of the Members by the staff of the
     Securities and Exchange Commission or by a state "Blue Sky" Commissioner or
     similar official;

               (d) To amend this Agreement to reflect the addition or
     substitution of Members or the reduction of the Capital Accounts upon the
     return of capital to the Members;

               (e) To minimize the adverse impact of, or comply with, any final
     regulation of the United States Department of Labor, or other federal
     agency having jurisdiction, defining "plan assets" for ERISA purposes;

               (f) To reconstitute the Company under the laws of another state
     if beneficial; and

               (g) To execute, acknowledge and deliver any and all instruments
     to effectuate the foregoing, including the execution, acknowledgment and
     delivery of any such instrument by the attorney-in-fact for the Manager
     under a special or limited power of attorney, and to take all such actions
     in connection therewith as the Manager shall deem necessary or appropriate
     with the signature of the Manager acting alone;

          7.3.12 Require in any Company contract that the Manager shall not have
any personal liability, but that the person or entity contracting with the
Company is to look solely to the Company and its assets for satisfaction;

          7.3.13 Lease personal property for use by the Company;

          7.3.14 Establish reserves from income in such amounts as the Manager
may deem appropriate;

          7.3.15 Temporarily invest the proceeds from sale of Investor Units in
short-term, highly-liquid investments;

          7.3.16 Make secured or unsecured loans to the Company and receive
interest at the rates set forth herein;

          7.3.17 Represent the Company and the Members as "tax matters partner"
within the meaning of the Code in discussions with the Internal Revenue Service
regarding the tax treatment of items of Company income, loss, deduction or
credit, or any other matter reflected in the Company's returns, and, if deemed
in the best interest of the Members, to agree to final Company administrative
adjustments or file a petition for a readjustment of the Company items in
question with the applicable court;

          7.3.18 Redeem or repurchase Investor Units on behalf of the Company;

                                       13

<PAGE>

          7.3.19 Hold an election for a successor Manager before the
resignation, expulsion or dissolution of the Manager;

          7.3.20 Initiate legal actions, settle legal actions and defend legal
actions on behalf of the Company;

          7.3.21 Admit itself as a Member;

          7.3.22 Take all actions and make any decision under the Property
Management Agreement;

          7.3.23 Execute and amend the Management Agreement;

          7.3.24 Enter into any transaction with any partnership or venture;

          7.3.25 Place all or a portion of the Property in a single purpose or
bankruptcy remote entity, or otherwise structure or restructure the Company to
accommodate any financing for the Property;

          7.3.26 Perform any and all other acts which the Manager is obligated
to perform hereunder;

          7.3.27 Subcontract with Affiliates and third parties, in the Manager's
sole discretion, to perform some or all management functions set forth herein;
and

          7.3.28 Execute, acknowledge and deliver any and all instruments to
effectuate the foregoing and take all such actions in connection therewith as
the Manager may deem necessary or appropriate. Any and all documents or
instruments may be executed on behalf and in the name of the Company by the
Manager.

     7.4 Restrictions on Manager's Authority. Neither the Manager nor any
         -----------------------------------
Affiliates shall have authority to:

          7.4.1 Enter into contracts with the Company that would bind the
Company after the expulsion, Event of Insolvency, or other cessation to exist of
the Manager, or to continue the business of the Company after the occurrence of
such event;

          7.4.2 Use or permit any other person to use Company funds or assets in
any manner except for the exclusive benefit of the Company;

          7.4.3 Alter the primary purpose of the Company;

          7.4.4 Receive from the Company a rebate or give-up or participate in
any reciprocal business arrangements which would enable it or any Affiliate to
do so (excluding the fees and other items set forth in the Management
Agreement);

          7.4.5 Except for the Property, sell or lease to the Company any real
property in which the Manager or any Affiliate has any interest without a
Majority Vote of the Members;

                                       14

<PAGE>

          7.4.6 Admit another person or entity as the Manager, except with the
consent of the Members as provided in this Agreement;

          7.4.7 Reinvest Cash from Operations in any additional properties other
than the Property;

          7.4.8 Confess a judgment against the Company in connection with any
threatened or pending legal action;

          7.4.9 Commingle the Company funds with those of any other person or
entity, except for (i) the temporary deposit of funds in a bank checking account
for the sole purpose of making Distributions immediately thereafter to the
Members and the Manager or (ii) funds attributable to the Property and held for
use in the management of the operations of the Property;

          7.4.10 Directly or indirectly pay or award any finder's fees,
commissions or other compensation to any person engaged by a potential investor
for investment advice as an inducement to such advisor to advise the purchaser
regarding the purchase of Investor Units;

          7.4.11 Merge, combine or "roll-up" the Company into a partnership,
limited liability company or other entity or participate in an UPREIT, DOWNREIT
or similar transaction with a real estate investment trust or other entity; or

          7.4.12 Vote, or permit to be voted, any Membership Interest owned by
the Manager to remove the Manager in accordance with Section 9.2.

     7.5 Responsibilities of the Manager. The Manager shall:
         -------------------------------

          7.5.1 Have a fiduciary responsibility for the safekeeping and use of
all the funds and assets of the Company;

          7.5.2 Devote such of its time and efforts to the business of the
Company as the Manager shall in its discretion, exercised in good faith,
determine to be necessary to conduct the business of the Company;

          7.5.3 File and publish all certificates, statements, or other
instruments required by law for formation, qualification and operation of the
Company and for the conduct of its business in all appropriate jurisdictions;

          7.5.4 Cause the Company to be protected by public liability, property
damage and other insurance determined by the Manager in its discretion to be
appropriate to the business of the Company;

          7.5.5 At all times use its best efforts to meet applicable
requirements for the Company to be taxed as a partnership and not as an
association taxable as a corporation; and

          7.5.6 Amend this Agreement to reflect the admission of Members not
later than 90 days after the date of admission or substitution.

     7.6 Administration of Company. So long as it is the Manager and the
         -------------------------
provisions of this Agreement for compensation and reimbursement of expenses of
the Manager are observed, the Manager shall have the responsibility of providing
continuing administrative and executive support, advice,

                                       15

<PAGE>

consultation, analysis and supervision with respect to the functions of the
Company, including decisions regarding the sale or refinancing or other
disposition of Property, and compliance with federal, state and local regulatory
requirements and procedures. In this regard, the Manager may retain the services
of such Affiliates or unaffiliated parties as the Manager may deem appropriate
to provide management and financial consultation and advice, and may enter into
agreements for the management and operation of Company assets.

     7.7 Tax Matters Partner. The Members hereby appoint the Manager to act as
         -------------------
the "tax matters partner."

     7.8 Indemnification of Manager.
         --------------------------

          7.8.1 The Manager, its members, managers, affiliates, officers,
directors, partners, employees, agents and assigns, shall not be liable for, and
shall be indemnified and held harmless (to the full extent of the Company's
assets and to the maximum extent permitted by applicable law) from, any loss or
damage incurred by them, the Company or the Members in connection with the
business of the Company, including by way of illustration, but not limitation,
costs and reasonable attorneys' fees and any amounts expended in the settlement
of any claims of loss or damage resulting from any act or omission performed or
omitted in good faith, which shall not constitute negligence or malfeasance,
pursuant to the authority granted, to promote the interests of the Company.
Moreover, the Manager shall not be liable to the Company or the Members because
any taxing authorities disallow or adjust any deductions or credits in the
Company income tax returns.

          7.8.2 Notwithstanding Section 7.8.1, the Company shall not indemnify
any Manager, or shareholder, director, officer or other employee thereof, for
liability imposed or expenses incurred in connection with any claim arising out
of a violation of the Securities Act of 1933, as amended, or any other federal
or state securities law, with respect to the offer and sale of the Investor
Units. Indemnification will be allowed for settlements and related expenses in
lawsuits alleging securities law violations, and for expenses incurred in
successfully defending such lawsuits, provided that (i) the Manager is
successful in defending the action; (ii) the indemnification is specifically
approved by the court of law which shall have been advised as to the current
position of the Securities and Exchange Commission (as to any claim involving
allegations that the Securities Act of 1933, as amended, was violated) or the
applicable state authority (as to any claim involving allegations that the
applicable state's securities laws were violated); or (iii) in the opinion of
counsel for the Company, the right to indemnification has been settled by
controlling precedent.

          7.8.3 The provisions of this Section 7.8 shall be in addition to, and
not in lieu of, or limit, the provisions of the Company's Articles of
Organization authorizing the limitation of liability, and indemnification of,
the Manager and certain other persons and entities.

     7.9 No Personal Liability for Return of Capital. The Manager shall not be
         -------------------------------------------
personally liable or responsible for the return or repayment of all or any
portion of the Capital Contribution of any Member or any loan made by any Member
to the Company, it being expressly understood that any such return of capital or
repayment of any loan shall be made solely from the assets (which shall not
include any right of contribution from any Member) of the Company.

     7.10 Authority as to Third Persons.
          -----------------------------

          7.10.1 No third party dealing with the Company shall be required to
investigate the authority of the Manager or secure the approval or confirmation
by any Member of any act of the Manager

                                       16

<PAGE>

in connection with the Company business. No purchaser of any property or
interest owned by the Company shall be required to determine the right to sell
or the authority of the Manager to sign and deliver any instrument of transfer
on behalf of the Company, or to see to the application or distribution of
revenues or proceeds paid or credited in connection therewith.

          7.10.2 The Manager shall have full authority to execute on behalf of
the Company any and all agreements, contracts, conveyances, deeds, mortgages and
other instruments, and the execution thereof by one or more officers of the
Manager, executing on behalf of the Company shall be the only execution
necessary to bind the Company thereto. No signature of any Member shall be
required.

          7.10.3 The Manager shall have the right by separate instrument or
document to authorize one or more individuals or entities to execute leases and
lease-related documents on behalf of the Company and any leases and documents
executed by such agent shall be binding upon the Company as if executed by the
Manager.

8.   Rights, Authority and Voting of the Member.
     ------------------------------------------

     8.1 Members Are Not Agents. Pursuant to Section 7 and the Articles of
         ----------------------
Organization, the management of the Company is vested exclusively in the
Manager. No Member, acting solely in the capacity of a Member, is an agent of
the Company nor can any Member in such capacity bind or execute any instrument
on behalf of the Company.

     8.2 Voting by a Member. Members who own Investor Units shall be entitled to
         ------------------
cast one vote for each Investor Unit they own. Except as otherwise specifically
provided in this Agreement, Members who own Investor Units (but not Economic
Interest Owners) shall have the right to vote only upon the following matters:

          8.2.1 Removal of the Manager as provided in this Agreement;

          8.2.2 Admission of the Manager or election to continue the business of
the Company after the Manager ceases to be the Manager when there is no
remaining Manager;

          8.2.3 Amendment of this Agreement;

          8.2.4 Any merger, combination or "roll-up" of the Company or any
UPREIT, DOWNREIT or other similar transaction with a real estate investment
trust;

          8.2.5 Dissolution and winding up of the Company as set forth in
Section 13.1;

          8.2.6 The sale of all or substantially all of the assets of the
Company;

          8.2.7 Election to continue the business of the Company as set forth in
Section 13.1.4 when there is a Dissolution Event; and

          8.2.8 Election to obtain audited financial statements as set forth in
Section 12.3.2.

     8.3 Member Vote; Consent of Manager. Except as expressly provided in this
         -------------------------------
Agreement, matters upon which the Members may vote shall require a Majority Vote
of the Members to pass and become effective. The following matters shall require
the consent of the Manager to pass and become effective:

                                       17

<PAGE>

          8.3.1 Any amendment to this Agreement; and

          8.3.2 The admission of an additional or successor Manager when the
Manager will continue as such.

     8.4 Meetings of the Members. The Manager may at any time call for a meeting
         -----------------------
of the Members, or for a vote without a meeting, on matters on which the Members
are entitled to vote. In addition, the Manager shall call for such a meeting
following receipt of a written request therefor of Members holding more than 10%
of the Investor Units entitled to vote as of the record date. Within 20 days
after receipt of such request, the Manager shall notify all Members of record on
the record date of the Company meeting. The Manager shall give notice of all
such meetings by sending the Members written notice by certified U.S. Mail, with
return receipt, by Federal Express or other guaranteed overnight delivery
service.

          8.4.1 Notice. Written notice of each meeting shall be given to each
                ------
Member entitled to vote, either personally or by mail or other means of written
communication, charges prepaid, addressed to such Member at his address
appearing on the books of the Company or given by him to the Company for the
purpose of notice or, if no such address appears or is given, at the principal
executive office of the Company, or by publication of notice at least once in a
newspaper of general circulation in the city or county in which such office is
located. All such notices shall be sent not less than 10, nor more than 60, days
before such meeting. The notice shall specify the place, date and hour of the
meeting and the general nature of business to be transacted, and no other
business shall be transacted at the meeting.

          8.4.2 Adjourned Meeting and Notice Thereof. When a Members' meeting is
                ------------------------------------
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Company may transact any
business which might have been transacted at the original meeting. If the
adjournment is for more than 45 days or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each Member of record entitled to vote at the meeting.

          8.4.3 Quorum. The presence in person or by proxy of the persons
                ------
entitled to vote a majority of the Investor Units shall constitute a quorum for
the transaction of business. The Members present at a duly called or held
meeting at which a quorum is present may continue to transact business until
adjournment notwithstanding the withdrawal of enough Members to leave less than
a quorum, if any action taken (other than adjournment) is approved by at least a
Majority Vote or such greater vote as may be required by this Agreement or by
law. In the absence of a quorum, any meeting of Members may be adjourned from
time to time by the vote of a majority of the Investor Units represented either
in person or by proxy, but no other business may be transacted, except as
provided above.

          8.4.4 Consent of Absentees. The transactions of any meeting of
                --------------------
Members, however called and noticed and wherever held, are as valid as though
they occurred at a meeting duly held after regular call and notice, if a quorum
is present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice, or a consent to the holding of the
meeting or an approval of the minutes thereof. All waivers, consents and
approvals shall be filed with the Company records or made a part of the minutes
of the meeting.

          8.4.5 Action Without Meeting. Except as otherwise provided in this
                ----------------------
Agreement, any action which may be taken at any meeting of the Members may be
taken without a meeting if a consent in

                                       18

<PAGE>

writing, setting forth the action so taken, shall be signed by Members having
not less than the minimum number of votes that would be necessary to authorize
or take that action at a meeting at which all entitled to vote thereon were
present and voted. In the event the Members are requested to consent on a matter
without a meeting, each Member shall be given not less than 10, nor more than
60, days notice. In the event the Manager or Members representing more than 10%
of the Investor Units, request a meeting for the purpose of discussing or voting
on the matter, the notice of a meeting shall be given in the same manner as
required by Section 8.4.1 and no action shall be taken until the meeting is
held. Unless delayed as a result of the preceding sentence, any action taken
without a meeting will be effective 5 days after the required minimum number of
voters have signed the consent; however, the action will be effective
immediately if the Manager and Members representing at least 90% of the Investor
Units have signed the consent.

          8.4.6 Record Dates. For purposes of determining the Members entitled
                ------------
to notice of any meeting or to vote or entitled to receive any Distributions or
to exercise any rights in respect of any other lawful matter, the Manager (or
Members representing more than 10% of the Investor Units if the meeting is being
called at their request) may fix in advance a record date, which is not more
than 60 nor less than 10 days prior to the date of the meeting nor more than 60
days prior to any other action. If no record date is fixed:

               (a) The record date for determining Members entitled to notice
     of, or to vote at, a meeting of Members shall be at the close of business
     on the business day next preceding the day on which notice is given or, if
     notice is waived, at the close of business on the business day next
     preceding the day on which the meeting is held;

               (b) The record date for determining Members entitled to give
     consent to Company action in writing without a meeting shall be the day on
     which the first written consent is given;

               (c) The record date for determining Members for any other purpose
     shall be at the close of business on the day on which the Manager adopts
     it, or the 60th day prior to the date of the other action, whichever is
     later; and

               (d) A determination of Members of record entitled to notice of,
     or to vote at, a meeting of Members shall apply to any adjournment of the
     meeting unless the Manager, or the Members who requested the meeting fix a
     new record date for the adjourned meeting, but the Manager, or such
     Members, shall fix a new record date if the meeting is adjourned for more
     than 45 days from the date set for the original meeting.

          8.4.7 Proxies. Every person entitled to vote or execute consents shall
                -------
have the right to do so either in person or by one or more agents authorized by
a written proxy executed by such person or his duly authorized agent and filed
with the Manager. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy continues
in full force and effect until revoked or unless it states that it is
irrevocable. A proxy which states that it is irrevocable is irrevocable for the
period specified therein.

          8.4.8 Chairman of Meeting. The Manager may select any person to
                -------------------
preside as Chairman of any meeting of the Members, and if such person shall be
absent from the meeting, or fail or be unable to preside, the Manager may name
any other person in substitution therefor as Chairman. In the absence of an
express selection by the Manager of a Chairman or substitute therefor, the
President, Vice President, Secretary, or Chief Financial Officer of the Manager
shall preside as Chairman, in that order.

                                       19

<PAGE>

The Chairman of the meeting shall designate a secretary for such meeting, who
shall take and keep or cause to be taken and kept minutes of the proceedings
thereof. The conduct of all Members' meetings shall at all times be within the
discretion of the Chairman of the meeting and shall be conducted under such
rules as he may prescribe. The Chairman shall have the right and power to
adjourn any meeting at any time, without a vote of the Investor Units present in
person or represented by proxy, if the Chairman shall determine such action to
be in the best interests of the Company.

          8.4.9 Inspectors of Election. In advance of any meeting of Members,
                ----------------------
the Manager may appoint any persons other than nominees for Manager or other
office as the inspector of election to act at the meeting and any adjournment
thereof. If an inspector of election is not so appointed, or if any such person
fails to appear or refuses to act, the Chairman of any such meeting may, and on
the request of any Member or his proxy shall, make such appointment at the
meeting. The inspector of election shall determine the number of Investor Units
outstanding and the voting power of each, the Investor Units represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, receive votes, ballots or consents, hear and determine all challenges
and questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine when the polls shall close, determine
the result and do such acts as may be proper to conduct the election or vote
with fairness to all Members.

          8.4.10 Record Date and Closing Company Books. When a record date is
                 -------------------------------------
fixed, only Members of record on that date are entitled to notice of and to vote
at the meeting or to receive a Distribution, or allotment of rights, or to
exercise the rights, as the case may be, notwithstanding any transfer of any
Investor Units on the books of the Company after the record date.

     8.5 Rights of Members. No Member or Owner shall have the right or power to:
         -----------------
(i) withdraw or reduce his contribution to the capital of the Company, except as
a result of the dissolution and termination of the Company or as otherwise
provided in this Agreement or by law; (ii) bring an action for partition against
the Company; or (iii) demand or receive property other than cash in return for
his Capital Contribution. Except as provided in this Agreement, no Member or
Owner shall have priority over any other Member or Owner either as to the return
of Capital Contributions or as to allocations of the Net Income, Net Loss or
Distributions of the Company. Other than upon the termination and dissolution of
the Company as provided by this Agreement, there has been no time agreed upon
when the contribution of each Member (other than the Initial Member) or Owner is
to be returned.

     8.6 Restrictions on the Member. No Member shall:
         --------------------------

          8.6.1 Disclose to any non-Member other than their lawyers, accountants
or consultants and/or commercially exploit any of the Company's business
practices, trade secrets or any other information not generally known to the
business community, including the identity of suppliers utilized by the Company;

          8.6.2 Do any other act or deed with the intention of harming the
business operations of the Company; or

          8.6.3 Do any act contrary to the Agreement.

     8.7 Return of Capital of Member. In accordance with the Act, an Owner may,
         ---------------------------
under certain circumstances, be required to return to the Company, for the
benefit of the Company's creditors, amounts previously distributed to the Owner.
If any court of competent jurisdiction holds that any Owner is

                                       20

<PAGE>

obligated to make any such payment, such obligation shall be the obligation of
such Owner and not of the Company, the Manager or any other Owner.

9.   Resignation and Termination.
     ---------------------------

     9.1 Resignation or Withdrawal of Manager. Subject to Section 10, the
         ------------------------------------
Manager shall not resign or withdraw as the Manager or do any act that would
require its resignation or withdrawal.

     9.2 Removal for Cause. The Members by Majority Vote shall have the right to
         -----------------
remove the Manager at any time solely "for cause." For purposes of this
Agreement, removal of the Manager "for cause" shall mean removal due to the (a)
gross negligence or fraud of the Manager, (b) willful misconduct or willful
breach of this Agreement by the Manager, (c) bankruptcy, insolvency or inability
of the Manager to meet its obligation as the same come due, or (d) a conviction
of a felony by Anthony W. Thompson, President of the Manager. If the Manager or
an Affiliate owns an Interest, the Manager or the Affiliate, as the case may be,
shall not participate in any vote to remove the Manager.

     9.3 Purchase of Manager's Interest. Upon the removal of the Manager
         ------------------------------
pursuant to Section 9.2 or resignation of the Manager pursuant to Section 10,
the Manager shall be paid by the Company all fees that have been earned and all
other compensation remaining to be paid under this Agreement.

10.  Assignment of the Manager's Interest.
     ------------------------------------

     10.1 Permitted Assignments. Except as otherwise provided in this Agreement,
          ---------------------
the Manager may not sell, assign, hypothecate, encumber or otherwise transfer
any part or all of its interest in the Company except with the consent of a
Majority Vote of the Members, which consent may be withheld by such Members in
their sole and absolute discretion and without reason or for any reason
whatsoever. If the Members consent to the transfer, the interest may only be
sold to the proposed transferee within the time period approved by the Members,
or within 90 days of such consent on the proposed terms and price, if later. All
costs of the transfer, including reasonable attorneys' fees (if any), shall be
borne by the transferring Manager.

          10.1.1 Any assignment or transfer of the Manager's interest provided
for by this Agreement can be an assignment or transfer of all of its interest or
any portion or part of its interest.

          10.1.2 Any transfer of all or a part of any Manager's interest may be
made only pursuant to the terms and conditions contained in this Section 10.

          10.1.3 Any such assignment shall be by a written instrument of
assignment, the terms of which are not in contravention of any of the provisions
of this Agreement, and which has been duly executed by the assignor of such
Manager's interest and accepted by the Members pursuant to a Majority Vote.

          10.1.4 The assignor and assignee shall have executed, acknowledged,
and delivered such other instruments as the Members pursuant to a Majority Vote,
may deem necessary or desirable to effect such substitution, which may include
an opinion of counsel regarding the effect and legality of any such proposed
transfer, and which shall include the written acceptance and adoption by the
assignee of the provisions of this Agreement.

          10.1.5 Notwithstanding the foregoing Sections 10.1.1 - 10.1.4, and
anything to the contrary in this Agreement, the Manager or its Affiliates may
sell, assign, hypothecate, encumber or

                                       21

<PAGE>

otherwise transfer any part or all of its interest in the Company received in
consideration for funds advanced to the Company in accordance with Section 3.3,
provided that: (a) the Manager, its Affiliates and/or the transferee are
responsible for all transfer costs including the Company's legal fees and costs;
(b) such transferee agrees to be bound by this Agreement; (c) such transfer
complies with all requirements pursuant to the Act, and all applicable federal
and state securities laws; and (d) such transferee is an Affiliate of the
Manager.

     10.2 Substitute Manager. Upon acceptance by the Members of an assignment by
          -------------------
the Manager, any assignee of such Manager's interest in compliance with this
Section 10 shall be substituted as the Manager.

     10.3 Transfer in Violation Not Recognized. Any assignment, sale, exchange
          ------------------------------------
or other transfer in contravention of the provisions of this Section 10 shall be
void and ineffectual and shall not bind or be recognized by the Company.

11.  Assignment of Investor Units.
     ----------------------------

     11.1 Permitted Assignments. A Member may only sell, assign, hypothecate,
          ----------------------
encumber or otherwise transfer all of his or her interest in the Company if the
following requirements are satisfied:

          11.1.1 The Manager consents in writing to the transfer;

          11.1.2 No Member shall transfer, assign or convey or offer to
transfer, assign or convey all or any portion of an Investor Unit to any person
who does not possess the financial qualifications required of all persons who
become Members;

          11.1.3 No Member shall have the right to transfer any Investor Unit to
any minor or to any person who, for any reason, lacks the capacity to contract
for himself under applicable law. Such limitations shall not, however, restrict
the right of any Member to transfer any one or more Investor Units to a
custodian or a trustee for a minor or other person who lacks such contractual
capacity;

          11.1.4 The Manager, with advice of counsel, must determine that such
transfer will not jeopardize the applicability of the exemptions from the
registration requirements under the Securities Act of 1933, as amended, and
registration or qualification under state securities laws relied upon by the
Company and Manager in offering and selling the Investor Units or otherwise
violate any federal or state securities laws;

          11.1.5 The Manager, with advice of counsel, must determine that,
despite such transfer, Investor Units will not be deemed traded on an
established securities market or readily tradable on a secondary market (or the
substantial equivalent thereof) under the provisions applicable to publicly
traded partnership status; provided, however, in no event may any Member
transfer any Investor Units if such transfer would cause the Company to have
more than 100 Owners without the express prior written consent of the Manager,
which consent may be withheld in the Manager's sole and absolute discretion;

          11.1.6 Any such transfer shall be by a written instrument of
assignment, the terms of which are not in contravention of any of the provisions
of this Agreement, and which has been duly executed by the assignor of such
Investor Units and accepted by the Manager in writing. Upon such acceptance by
the Manager, such an assignee shall take subject to all terms of this Agreement
and shall become an Economic Interest Owner; and

                                       22

<PAGE>

          11.1.7 A transfer fee shall be paid by the transferring Member in such
amount as may be required by the Manager to cover all reasonable expenses,
including attorneys' fees, connected with such assignment.

          11.1.8 The transfer would not cause a default or otherwise accelerate
any payment date on any loan obtained by the Company.

          11.1.9 The minimum Interest that may be transferred is the lesser of
one Investor Unit or the Member's entire interest in the Company.

     11.2 Substituted Member.
          ------------------

          11.2.1 Conditions to be Satisfied. No Economic Interest Owner shall
                 --------------------------
have the right to become a Substituted Member unless the Manager shall consent
thereto in accordance with Section 11.2.2 and all of the following conditions
are satisfied:

               (a) A duly executed and acknowledged written instrument of
     assignment shall have been filed with the Company, which instrument shall
     specify the number of Investor Units being assigned and set forth the
     intention of the assignor that the assignee succeed to the assignor's
     interest as a Substituted Member in his place;

               (b) The assignor and assignee shall have executed, acknowledged
     and delivered such other instruments as the Manager may deem necessary or
     desirable to effect such substitution, which may include an opinion of
     counsel regarding the effect and legality of any such proposed transfer,
     and which shall include: (i) the written acceptance and adoption by the
     Economic Interest Owner of the provisions of this Agreement; and (ii) the
     execution, acknowledgment and delivery to the Manager of a special power of
     attorney, the form and content of which are more fully described herein;
     and

               (c) A transfer fee sufficient to cover all reasonable expenses
     connected with such substitution shall have been paid to the Company.

          11.2.2 Consent of Manager. The consent of the Manager shall be
                 ------------------
required to admit an Economic Interest Owner as a Substituted Member. The
granting or withholding of such consent shall be within the sole and absolute
discretion of the Manager.

          11.2.3 Consent of Member. By executing or adopting this Agreement,
                 -----------------
each Member hereby consents to the admission of additional or Substituted
Members, and to any Economic Interest Owner becoming a Substituted Member upon
consent of the Manager and in compliance with this Agreement.

     11.3 Rights of Economic Interest Owner. An Economic Interest Owner shall be
          ---------------------------------
entitled to receive Distributions from the Company attributable to the interest
acquired by reason of such assignment from and after the effective date of the
assignment; provided, however, that notwithstanding anything herein to the
contrary, the Company shall be entitled to treat the assignor of such interest
as the absolute owner thereof in all respects, and shall incur no liability for
allocations of Net Income and Net Loss or Distributions, or for the transmittal
of reports or accounting until the written instrument of assignment has been
received by the Company and recorded on its books. The effective date of such
assignment shall be the date on which all of the requirements of this Section
have been complied with, subject to Section 4.9.

                                       23

<PAGE>

     11.4 Right to Inspect Books. Economic Interest Owners shall have no right
          ----------------------
to inspect the Company's books or records, to vote on Company matters, or to
exercise any other right or privilege as Members, until they are admitted to the
Company as Substituted Members, except as provided in the Act.

     11.5 Assignment of 50% or More of Investor Units. No assignment of any
          -------------------------------------------
Investor Units may be made if the Investor Units to be assigned, when added to
the total of all other Investor Units and Manager interests assigned within the
13 immediately preceding months, would, in the opinion of counsel for the
Company, result in the termination of the Company under the Code.

     11.6 Transfer Subject to Law. No assignment, sale, transfer, exchange or
          ----------------------
other disposition of any Investor Units may be made except in compliance with
the applicable governmental laws and regulations, including state and federal
securities laws.

     11.7 Termination of Membership Interest. Upon the transfer of an Investor
          ----------------------------------
Unit in violation of this Agreement or the occurrence of a Dissolution Event as
to such Member which does not result in the dissolution of the Company, the
Membership Interest of a Member shall be converted into an Economic Interest or
purchased by the Company as provided herein.

12.  Books, Records, Accounting and Reports.
     --------------------------------------

     12.1 Records, Audits and Reports. The Company shall maintain at its
          ----------------------------
principal office the Company's records and accounts of all operations and
expenditures of the Company including the following:

          12.1.1 A current list in alphabetical order of the full name and last
known business or resident address of each Owner and Manager, together with the
Capital Contribution and the share in profits and losses of each Owner;

          12.1.2 A copy of the Articles of Organization and all amendments
thereto, together with any powers of attorney pursuant to which the Articles of
Organization or any amendments thereto were executed;

          12.1.3 Copies of the Company's Federal, state, and local income tax or
information returns and reports, if any, for the six most recent taxable years;

          12.1.4 Copies of this Agreement and any amendments thereto together
with any powers of attorney pursuant to which any written accounting or any
amendments thereto were executed;

          12.1.5 Copies of any financial statements of the Company, if any, for
the six most recent years; and

          12.1.6 The Company's books and records as they relate to the internal
affairs of the Company for at least the current and past four fiscal years.

     12.2 Delivery to Members and Inspection. Each Member has the right, upon
          ----------------------------------
reasonable written request for purposes related to the interest of that person
as a Member, to receive from the Company:

               (a) True and full information regarding the status of the
     business and financial condition of the Company;

                                       24

<PAGE>

               (b) Promptly after becoming available, a copy of the Company's
     federal, state and local income tax returns for each year;

               (c) A current list of the name and last known business, residence
     or mailing address of each Member and Manager;

               (d) A copy of this Agreement and the Articles of Organization and
     all amendments thereto, together with executed copies of any written powers
     of attorney pursuant to which this Agreement and any certificate and all
     amendments thereto have been executed; and

               (e) True and full information regarding the amount of cash and
     description and statement of the agreed value of any 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.

               (f) Any information required to be made available to a Member
     pursuant to Section 13.1-1028 of the Code of Virginia (1950), or amended,
     or any other applicable law.

     12.3 Annual Report.
          -------------

          12.3.1 The Manager will cause the Company, at the Company's expense,
to prepare an unaudited annual report containing a year end balance sheet,
income statement and a statement of changes in financial position. Copies of
such statements shall be distributed to each Member within 75 days after the
close of each fiscal year of the Company.

          12.3.2 Upon the vote of Members who own thirty percent (30%) or more
of the Investor Units (including Investor Units owned or controlled by the
Manger or its Affiliates), the Manager will use its best efforts to obtain in
the future audited financial statements for the Property's operation. Such
audited financial statements shall be at the Company's sole cost and expense.

     12.4 Tax Information. The Manager shall cause the Company, at the Company's
          ---------------
expense, to prepare and timely file income tax returns for the Company with the
appropriate authorities, and shall cause all Company information necessary in
the preparation of the Owners' individual income tax returns to be distributed
to the Owners not later than 75 days after the end of the Company's fiscal year.

13.  Termination and Dissolution of the Company.
     ------------------------------------------

     13.1 Termination of Company. The Company shall terminate, be dissolved, and
          ----------------------
its assets shall be disposed of, and its affairs wound up upon the earliest to
occur of the following:

          13.1.1 Upon the happening of any event of dissolution specified in the
Articles of Organization;

          13.1.2 A determination by the Manager, with a Majority Vote, to
terminate the Company;

          13.1.3 The sale of the Property or the receipt of the final payment on
any seller financing provided by the Company on the sale of the Property, if
later, unless the Company holds securities of another company which cannot be
distributed, in which case the Company will be dissolved as soon as possible
upon such distribution; or

                                       25

<PAGE>

          13.1.4 The occurrence of a Dissolution Event unless the business of
the Company is continued by the consent of the remaining Members within 90 days
following the occurrence of the event and there are at least two remaining
Members.

     13.2 Certificate of Cancellation. As soon as possible following the
          ---------------------------
occurrence of any of the events specified in Section 13.1, the Manager who has
not wrongfully dissolved the Company or, if none, the Members, shall execute a
Certificate of Cancellation in such form as shall be required by the Act.

     13.3 Liquidation of Assets. Upon a dissolution and termination of the
          ---------------------
Company, the Manager (or in case there is no Manager, the Members or person
designated by a Majority Vote) shall take full account of the Company assets and
liabilities, shall liquidate the assets as promptly as is consistent with
obtaining the fair market value thereof, and shall apply and distribute the
proceeds therefrom in the following order:

          13.3.1 To the payment of creditors of the Company, including Members
who are creditors to the extent permitted by law, but excluding secured
creditors whose obligations will be assumed or otherwise transferred on the
liquidation of Company assets;

          13.3.2 To the setting up of any reserves as required by law for any
contingent liabilities or obligations of the Company; provided, however, that
said reserves shall be deposited with a bank or trust company in escrow at
interest for the purpose of disbursing such reserves for the payment of any of
the aforementioned contingencies and, at the expiration of a reasonable period,
for the purpose of distributing the balance remaining in accordance with
remaining provisions of this Section 13.3; and

          13.3.3 To the Members in accordance with Section 5.2 hereof.

     13.4 Distributions Upon Dissolution. Each Member shall look solely to the
          --------------------------------
assets of the Company for all Distributions and its Capital Contributions, and
shall have no recourse therefor (upon dissolution or otherwise) against any
Manager or any Member.

     13.5 Liquidation of Member's Interest. If there is a Liquidation of a
          --------------------------------
Member's interest in the Company, any liquidating Distribution pursuant to such
Liquidation shall be made only to the extent of the positive Capital Account
balance, if any, of such Member for the taxable year during which such
Liquidation occurs after proper adjustments for allocations and Distributions
for such taxable year up to the time of Liquidation. Such Distributions shall be
made by the end of the taxable year of the Company during which such Liquidation
occurs, or if later, within 90 days after such Liquidation.

14.  Special and Limited Power of Attorney.
     -------------------------------------

     14.1 Power of Attorney. Triple Net Properties, LLC shall at all times
          -----------------
during the term of the Company have a special and limited power of attorney as
the attorney-in-fact for each Member, with power and authority to act in the
name and on behalf of each such Member to execute, acknowledge, and swear to in
the execution, acknowledgment and filing of documents which are not inconsistent
with the provisions of this Agreement and which may include, by way of
illustration but not by limitation, the following:

          14.1.1 This Agreement, as well as any amendments to the foregoing
which, under the laws of the Commonwealth of Virginia or the laws of any other
state, are required to be filed or which the Manager shall deem it advisable to
file;

                                       26

<PAGE>

          14.1.2 Any other instrument or document that may be required to be
filed by the Company under the laws of any state or by any governmental agency
or which the Manager shall deem it advisable to file;

          14.1.3 Any instrument or document that may be required to effect the
continuation of the Company, the admission of Substituted Members, or the
dissolution and termination of the Company (provided such continuation,
admission or dissolution and termination are in accordance with the terms of
this Agreement);

          14.1.4 Any contract for purchase or sale of real estate, and any deed,
deed of trust, mortgage, or other instrument of conveyance or encumbrance, with
respect to Property; and

          14.1.5 Any and all other instruments as the Manager may deem necessary
or desirable to effect the purposes of this Agreement and carry out fully its
provisions.

     14.2 Provision of Power of Attorney. The special and limited power of
          ------------------------------
attorney granted to Triple Net Properties, LLC:

          14.2.1 Is a special power of attorney coupled with an interest, is
irrevocable, shall survive the death, incapacity, termination or dissolution of
the granting Member, and is limited to those matters herein set forth;

          14.2.2 May be exercised by Triple Net Properties, LLC by and through
one or more of the officers of Triple Net Properties, LLC, for each of the
Members by the signature of Triple Net Properties, LLC acting as
attorney-in-fact for all of the Members, together with a list of all Members
executing such instrument by their attorney-in-fact or by such other method as
may be required or requested in connection with the recording or filing of any
instrument or other document so executed; and

          14.2.3 Shall survive an assignment by a Member of all or any portion
of his Investor Units except that, where the assignee of the Investor Units
owned by the Member has been approved by the Manager for admission to the
Company as a Substituted Member, the special power of attorney shall survive
such assignment for the sole purpose of enabling Triple Net Properties, LLC to
execute, acknowledge and file any instrument or document necessary to effect
such substitution.

     14.3 Notice to Members. The Manager shall promptly furnish to a Member a
          -----------------
copy of any amendment to the Agreement executed by Triple Net Properties, LLC
pursuant to a power of attorney from the Member.

15.  Relationship of This Agreement to the Act. Many of the terms of this
     -----------------------------------------
     Agreement are intended to alter or extend provisions of the Act as they may
     apply to the Company or the Members. Any failure of this Agreement to
     mention or specify the relationship of such terms to provisions of the Act
     that may affect the scope or application of such terms shall not be
     construed to mean that any of such terms is not intended to be an operating
     agreement provision authorized or permitted by the Act or which in whole or
     in part alters, extends or supplants provisions of the Act as may be
     allowed thereby.

16.  Amendment of Agreement.
     ----------------------

     16.1 Admission of Member. Amendments to this Agreement for the admission of
          -------------------
any Member or Substitute Member shall not, if in accordance with the terms of
this Agreement, require the consent of any Member.

                                       27

<PAGE>

     16.2 Amendments with Consent of Member. In addition to any amendments
          ---------------------------------
otherwise authorized herein, this Agreement may be amended by the Manager with a
Majority Vote of the Member.

     16.3 Amendments Without Consent of the Members. In addition to the
          -----------------------------------------
Amendments authorized pursuant to Section 4.10 and Section 7.3.11 or otherwise
authorized herein, the Manager may amend this Agreement, without the consent of
any of the Members, to (i) change the name and/or principal place of business of
the Company, or (ii) decrease the rights and powers of the Manager (so long as
such decrease does not impair the ability of the Manager to manage the Company
and conduct its business and affairs); provided, however, that no amendment
shall be adopted pursuant to this Section 16.3 unless the adoption thereof (A)
is for the benefit of or not adverse to the interests of the Members, (B) is not
inconsistent with Section 7, and (C) does not affect the limited liability of
the Members or the status of the Company as a partnership for federal income tax
purposes.

     16.4 Execution and Recording of Amendments. Any amendment to this Agreement
          -------------------------------------
shall be executed by the Manager and by Triple Net Properties, LLC, as
attorney-in-fact for the Members, pursuant to the power of attorney contained in
Section 14. After the execution of such amendment, the Manager shall also
prepare and record or file any certificate or other document which may be
required to be recorded or filed with respect to such amendment, either under
the Act or under the laws of any other jurisdiction in which the Company holds
any Property or otherwise does business.

17.  Miscellaneous.
     -------------

     17.1 Counterparts. This Agreement may be executed in several counterparts,
          ------------
and all so executed shall constitute one Agreement, binding on all of the
parties hereto, notwithstanding that all of the parties are not signatory to the
original or the same counterpart.

     17.2 Successors and Assigns. The terms and provisions of this Agreement
          ----------------------
shall be binding upon and shall inure to the benefit of the successors and
assigns of the respective Members.

     17.3 Severability. In the event any sentence or Section of this Agreement
          ------------
is declared by a court of competent jurisdiction to be void, such sentence or
Section shall be deemed severed from the remainder of this Agreement and the
balance of this Agreement shall remain in full force and effect.

     17.4 Notices. All notices under this Agreement shall be in writing and
          -------
shall be given to the Member or Economic Interest Owner entitled thereto, by
personal service or by mail, posted to the address maintained by the Company for
such person or at such other address as he may specify in writing.

     17.5 Manager's Address. The name and address of the Manager is as follows:
          -----------------

          Triple Net Properties, LLC
          1551 N. Tustin Avenue, Suite 650
          Santa Ana, California  92705
          Attn:  Anthony W. Thompson, President

     17.6 Governing Law. This Agreement shall be governed by and construed in
          -------------
accordance with the laws of the Commonwealth of Virginia, where this Agreement
is made and entered into.

                                       28

<PAGE>

     17.7 Captions. Section titles or captions contained in this Agreement are
          --------
inserted only as a matter of convenience and reference. Such titles and captions
in no way define, limit, extend or describe the scope of this Agreement nor the
intent of any provisions hereof.

     17.8 Gender. Whenever required by the context hereof, the singular shall
          ------
include the plural, and vice versa, the masculine gender shall include the
feminine and neuter genders, and vice versa.

     17.9 Time. Time is of the essence with respect to this Agreement.
          ----

     17.10 Additional Documents. Each Member, upon the request of the Manager,
           --------------------
shall perform any further acts and execute and deliver any documents which may
be reasonably necessary to carry out the provisions of this Agreement,
including, but not limited to, providing acknowledgment before a Notary Public
of any signature made by a Member.

     17.11 Descriptions. All descriptions referred to in this Agreement are
           ------------
expressly incorporated herein by reference as if set forth in full, whether or
not attached hereto.

     17.12 Binding Arbitration. Any controversy arising out of or related to
           -------------------
this Agreement or the breach thereof or an investment in the Investor Units
shall be settled by arbitration in Orange County, California, in accordance with
the rules of The American Arbitration Association, and judgment entered upon the
award rendered may be enforced by appropriate judicial action. The arbitration
panel shall consist of one member, which shall be the mediator if mediation has
occurred or shall be a person agreed to by each party to the dispute within 30
days following notice by one party that he desires that a matter be arbitrated.
If there was no mediation and the parties are unable within such 30 day period
to agree upon an arbitrator, then the panel shall be one arbitrator selected by
the Orange County office of The American Arbitration Association, which
arbitrator shall be experienced in the area of real estate and limited liability
companies and who shall be knowledgeable with respect to the subject matter area
of the dispute. The losing party shall bear any fees and expenses of the
arbitrator, other tribunal fees and expenses, reasonable attorney's fees of both
parties, any costs of producing witnesses and any other reasonable costs or
expenses incurred by him or the prevailing party or such costs shall be
allocated by the arbitrator. The arbitration panel shall render a decision
within 30 days following the close of presentation by the parties of their cases
and any rebuttal. The parties shall agree within 30 days following selection of
the arbitrator to any prehearing procedures or further procedures necessary for
the arbitration to proceed, including interrogatories or other discovery;
provided, in any event each Member shall be entitled to discovery.

     17.13 Venue. Any Action relating to or arising out of this Agreement shall
           -----
be brought only in a court of competent jurisdiction located in Orange County,
California.

     17.14 Partition. The Members agree that the assets of the Company are not
           ---------
and will not be suitable for partition. Accordingly, each of the Members hereby
irrevocably waives any and all rights that he may have, or may obtain, to
maintain any action for partition of any of the assets of the Company.

     17.15 Integrated and Binding Agreement. This Agreement contains the entire
           --------------------------------
understanding and agreement among the Members with respect to the subject matter
hereof, and there are no other agreements, understandings, representations or
warranties among the Members other than those set forth herein except the
Subscription Documents. This Agreement may be amended only as provided in this
Agreement.

     17.16 Legal Counsel. Each Member acknowledges and agrees that counsel
           -------------
representing the Company, the Manager and its Affiliates does not represent and
shall not be deemed under the applicable
                                       29

<PAGE>

codes of professional responsibility to have represented or to be representing
any or all of the Members, other than the Manager, in any respect. In addition,
each Member consents to the Manager hiring counsel for the Company which is also
counsel to one or more of the Manager.

     IN WITNESS WHEREOF, the undersigned have set their hands to this Agreement
as of the date first set forth in the preamble.

                                    MANAGER:

                                    TRIPLE NET PROPERTIES, LLC,
                                    a Virginia limited liability company


                                    By:
                                       -----------------------------------------
                                         Anthony W. Thompson, President


                                    INITIAL MEMBER:


                                    --------------------------------------------
                                    Anthony W. Thompson, Individually

                                       30

<PAGE>

                                    EXHIBIT A
                                   DEFINITIONS

     "Act" shall mean the Virginia Limited Liability Company Act, as the same
may be amended from time to time.

     "Adjusted Capital Account Deficit" shall mean, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:

          (i) Credit to such Capital Account any amounts which the Member is
     obligated to restore and the Member's share of Member Minimum Gain and
     Company Minimum Gain and;

          (ii) Debit to such Capital Account the items described in Treasury
     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).

     "Affiliate" shall mean (i) any person directly or indirectly controlling,
controlled by or under common control with another person; (ii) a person owning
or controlling 10% or more of the outstanding voting securities of such other
person; (iii) any officer, director or partner of such other person; and (iv) if
such other person is an officer, director or partner, any company for which such
person acts in any capacity. The term "person" shall include any natural person,
corporation, partnership, trust, unincorporated association or other legal
entity.

     "Agreement" shall mean this Operating Agreement, as amended from time to
time.

     "Articles of Organization" shall mean the Articles of Organization of the
Company as filed with the State Corporation Commission of the Commonwealth of
Virginia as the same may be amended or restated from time to time.

     "Book Gain" shall mean the excess, if any, of the fair market value of the
Property over its adjusted basis for federal income tax purposes at the time a
valuation of the Property is required under this Agreement or Treasury
Regulations Section 1.704-1(b) for purposes of making adjustments to the Capital
Accounts.

     "Book Loss" shall mean the excess, if any, of the adjusted basis of
Property for federal income tax purposes over its fair market value at the time
a valuation of the Property is required under this Agreement or Treasury
Regulations Section 1.704-1(b) for purposes of making adjustments to the Capital
Accounts.

     "Book Value" shall mean the adjusted basis of Property for federal income
tax purposes increased or decreased by Book Gain, Book Loss, Built-In Gain and
Built-In Loss as reduced by depreciation, amortization or other cost recovery
deductions, or otherwise, based on such Book Value.

     "Built-In Gain (or Loss)" shall mean the amount, if any, by which the
agreed value of contributed Property exceeds (or is lesser than) the adjusted
basis of Property contributed to the Company by a Member immediately after its
contribution by the Member to the capital of the Company.

     "Capital Account" with respect to any Member (or such Member's assignee)
shall mean such Member's initial Capital Contribution adjusted as follows:

                                      A-1

<PAGE>

          (i) A Member's Capital Account shall be increased by:

               (a) such Member's share of Net Income;

               (b) any income or gain specially allocated to a Member and not
     included in Net Income or Net Loss;

               (c) any additional cash Capital Contribution made by such Member
     to the Company; and

               (d) the fair market value of any additional Capital Contribution
     consisting of property contributed by such Member to the capital of the
     Company reduced by any liabilities assumed by the Company in connection
     with such contribution or to which the property is subject.

          (ii) A Member's Capital Account shall be reduced by:

               (a) such Member's share of Net Loss;

               (b) any deduction specially allocated to a Member and not
     included in Net Income or Net Loss;

               (c) any cash Distribution made to such Member; and

               (d) the fair market value, as agreed to by the Manager and the
     Members pursuant to a Majority Vote, of any property (reduced by any
     liabilities assumed by the Member in connection with the Distribution or to
     which the distributed property is subject) distributed to such Member;
     provided that, upon liquidation and winding up of the Company, unsold
     property will be valued for Distribution at its fair market value and the
     Capital Account of each Member before such Distribution shall be adjusted
     to reflect the allocation of gain or loss that would have been realized had
     the Company then sold the Property for its fair market value. Such fair
     market value shall not be less than the amount of any nonrecourse
     indebtedness that is secured by the property.

     Property other than money may not be contributed to the Company except as
specifically provided in this Agreement. Property of the Company may not be
revalued for purposes of calculating Capital Accounts unless the Manager and the
Members pursuant to a Majority Vote agree on the fair market value of the
Property and Company complies with the requirements of Treasury Regulations
Section 1.704-1(b)(2)(iv)(f) and (g); provided, however, for purposes of
calculating Book Gain or Book Loss (but not for purposes of adjusting Capital
Accounts to reflect the contribution and distribution of such Property), the
fair market value of Property shall be deemed to be no less than the outstanding
balance of any nonrecourse indebtedness secured by such Property.

     The Capital Account of a Substituted Member shall include the Capital
Account of his transferor. Notwithstanding anything to the contrary in this
Agreement, the Capital Accounts shall be maintained in accordance with Treasury
Regulations Section 1.704-1(b). References in this Agreement to the Treasury
Regulations shall include corresponding subsequent provisions.

     "Capital Contribution" shall mean the gross amount invested in the Company
by a Member and shall be equal in amount to the cash purchase price paid by such
Member for the Investor Units sold to him by the Company. In the plural,
"Capital Contributions" shall mean the aggregate amount invested by all of

                                      A-2

<PAGE>

the Members in the Company and shall equal, in total, the sum of the amount
attributable to the purchase of Investor Units and the contributions of the
Manager.

     "Capital Transaction" shall mean any financing, refinancing, sale,
exchange, or other disposition or condemnation of, or casualty to, the Property.

     "Cash from Capital Transactions" shall mean the net cash realized by the
Company from any Capital Transaction after payment of all cash expenditures of
the Company, including, but not limited to, all fees payable to the Manager or
Affiliates, all payments of principal and interest on indebtedness, and such
reserves and retentions as the Manager reasonably determines to be necessary and
desirable in connection therewith.

     "Cash from Operations" shall mean the net cash realized by the Company from
any source other than a Capital Transaction, after payment of all cash
expenditures of the Company, including, but not limited to, all operating
expenses including all fees payable to the Manager or Affiliates, all payments
of principal and interest on indebtedness, expenses for repairs and maintenance,
capital improvements and replacements, and such reserves and retentions as the
Manager reasonably determines to be necessary and desirable in connection with
Company operations with its then existing assets and any anticipated
acquisitions.

     "Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequently enacted federal revenue laws.

     "Company" shall refer to NNN Pacific Corporate Park 1, LLC.

     "Company Minimum Gain" shall meaning "partnership minimum gain" as set
forth in Treasury Regulations Sections 1.704-2(d).

     "Depository Account" shall have the meaning set forth in Section 3.1.5.

     "Dissolution Event" shall mean with respect to any Manager one or more of
the following: the death, insanity, withdrawal, retirement, resignation,
expulsion, Event of Insolvency, dissolution or occurrence of any other event
which terminates the continued membership of any Manager unless the Members
consent to continue the business of the Company pursuant to Section 8.2.7.

     "Distributable Cash" shall mean Cash from Operations, and Capital
Contributions determined by the Manager to be available for Distribution to the
Members.

     "Distribution" shall refer to any money or other property transferred
without consideration (other than repurchased Investor Units) to Members or
Owners with respect to their Investor Units in the Company, but shall not
include any payments to the Manager pursuant to Section 6.

     "Economic Interest" shall mean an interest in the Net Income, Net Loss and
Distributions of the Company but shall not include any right to vote or to
participate in the management of the Company.

     "Economic Interest Owner" shall mean the owner of an Economic Interest who
is not a Member.

     "Event of Insolvency" shall occur when an order for relief against the
Manager is entered under Chapter 7 of the federal bankruptcy law, or (i) the
Manager: (a) makes a general assignment for the benefit of creditors, (b) files
a voluntary petition under the federal bankruptcy law, (c) files a petition or
answer

                                      A-3

<PAGE>

seeking for that Manager a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, (d) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the Manager in any
proceeding of this nature, or (e) seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator of that Manager or of all or a
substantial part of that Manager's properties, or (f) the expiration of 90 days
after either (i) the commencement of any proceeding against the Manager seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law, or regulation, if the proceeding has
not been dismissed, or (ii) the appointment without the Manager's consent or
acquiescence of a trustee, receiver, or liquidator of the Manager or of all or
any substantial part of the Manager's properties, if the appointment has not
been vacated or stayed (or if within 90 days after the expiration of any such
stay, the appointment is not vacated).

     "Impound Release Date" shall have the meaning set forth in Section 3.1.5.

     "Initial Member" shall refer to Anthony W. Thompson.

     "Interest" or "Interests" shall mean a Membership Interest or an Economic
Interest.

     "Investor Unit" shall represent an interest in the Company entitling the
owner of the Investor Unit if admitted as a Member to the respective voting and
other rights afforded to a Member holding an Investor Unit, and affording to
such Member a share in Net Income, Net Loss and Distributions as provided for in
this Agreement.

     "Lender" means CIBC.

     "Liquidation" means in respect to the Company the earlier of the date upon
which the Company is terminated under Section 708(b)(1) of the Code or the date
upon which the Company ceases to be a going concern (even though it may exist
for purposes of winding up its affairs, paying its debts and distributing any
remaining balance to its Members), and in respect to a Member where the Company
is not in Liquidation means the date upon which occurs the termination of the
Member's entire interest in the Company by means of a distribution or the making
of the last of a series of Distributions (whether or not made in more than one
year) to the Member by the Company.

     "Loan" means the acquisition loan used to acquire the Property by the
Company and the tenant in common owners of the Property.

     "Majority Vote" shall mean the vote of more than 50% of the Investor Units
entitled to vote. Members shall be entitled to cast one vote for each Investor
Unit they own, and a fractional for each fractional Unit they own.

     "Management Agreement" shall refer to the Management Agreement between
Property Manager, as property manager, and the Company, with respect to the
management and operation of the Property, a true copy of which is attached as
Exhibit B.

     "Manager" shall refer to Triple Net Properties, LLC, a Virginia limited
liability company. The term "Manager" shall also refer to (i) any successor or
additional Manager who is admitted to the Company as the Manager and (ii) any
special non-voting Member who receives an assignment of a portion of the
Manager's share of Cash from Operations and Cash from Capital Transactions in
accordance with Section 4.13 of this Agreement, solely as to its interest in
such Cash from Capital Transactions.

                                      A-4

<PAGE>

     "Member" shall mean any holder of an Investor Unit who is admitted to the
Company as a Member or the Manager.

     "Member Minimum Gain" shall mean "partner nonrecourse debt minimum gain" as
determined under Treasury Regulations Section 1.704-2(i)(3).

     "Member Nonrecourse Debt" shall mean "partner nonrecourse debt" as set
forth in Treasury Regulations Section 1.704-2(b)(4).

     "Member Nonrecourse Deductions" shall mean of "partner nonrecourse
deductions," and the amount thereof shall be, as set forth in Treasury
Regulations Section 1.704-2(i).

     "Membership Interest" shall mean a Member's entire interest in the Company
including such Member's Economic Interest and such voting and other rights and
privileges that the Member may enjoy by being a Member.

     "Memorandum" shall mean the Company's Confidential Private Placement
Memorandum dated March 11, 2002, for the sale of the Investor Units.

     "Net Capital Contribution" of any Member shall be equal to the excess, if
any, of (i) the aggregate Capital Contributions of such Member based on $5,000
per Unit over (ii) the aggregate Distributions to such Member.

     "Net Income" or "Net Loss" shall mean, respectively, for each taxable year
of the Company the taxable income and taxable loss (exclusive of Built-In Gain
or Loss) of the Company as determined for federal income tax purposes in
accordance with Section 703(a) or the Code (including all items of income, gain,
loss, or deduction required to be separately stated pursuant to Section
703(a)(1) of the Code) (other than any specific item of income, gain (exclusive
of Built-In Gain), loss (exclusive of Built-In Loss), deduction or credit
subject to special allocation under this Agreement), with the following
modifications:

          (i) The amount determined above shall be increased by any income
     exempt from federal income tax;

          (ii) The amount determined above shall be reduced by any expenditures
     described in Section 705(a)(2)(B) of the Code or expenditures treated as
     such pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i);

          (iii) Depreciation, amortization and other cost recovery deductions
     shall be computed based on Book Value instead of on the amount determined
     in computing taxable income or loss. Any item of deduction, amortization or
     cost recovery specially allocated to a Member and not included in Net
     Income or Net Loss shall be determined for Capital Account purposes in a
     similar manner; and

          (iv) For purposes of this Agreement, Book Gain and Book Loss
     attributable to a revaluation of Property attributable to unrealized gain
     or loss in such Property shall be treated as Net Income and Net Loss.

     "Nonrecourse Debt" shall have the meaning set forth in Treasury Regulations
Section 1.704-2(b)(3).

                                      A-5

<PAGE>

     "Nonrecourse Deductions" shall have the meaning, and the amount thereof
shall be, as set forth in Treasury Regulations Section 1.704-2(c).

     "Note" means that certain promissory note in the original principal amount
of the Loan.

     "Offering" shall mean the offering and sale of the Investor Units made in
accordance with the provisions of Section 3.1.2.

     "Offering Termination Date" shall mean the date the Offering of Investor
Units will terminate pursuant to the Memorandum, which is the earliest of (i)
the date all Investor Units are sold or (ii) November 30, 2002, which date can
be extended to February 28, 2003 in the sole and absolute discretion of the
Manager.

     "Organization and Offering Expenses" shall mean all expenses incurred in
connection with the organization and formation of the Company, the preparation
of the offering materials, and the marketing and sale of the Investor Units,
including but not limited to legal, accounting, tax planning fees, promotional
fees or expenses, filing and recording fees, market research and surveys,
property inspections and research, engineering services, printing costs,
securities sales commissions, travel expenses and other costs or expenses
incurred in connection therewith.

     "Owner" shall mean a Member or the holder of an Economic Interest.

     "Person" shall mean any natural person or entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such Person
where the context so admits.

     "Prime Rate" shall mean the reference rate announced from time-to-time by
the Wall Street Journal, and changes in the Prime Rate shall be deemed to occur
on the date that changes in such rate are announced.

     "Property" shall mean the 60% undivided tenant in common interest in
Pacific Corporate Park located in Orange County, California, being acquired by
the Company.

     "Property Manager" shall mean Triple Net Properties Realty, Inc., a
California corporation.

     "Regulatory Allocations" shall mean the allocations set forth in Sections
4.3(a) through (g).

     "Subscription Agreement" means the agreement, in the form as may be
attached to the Memorandum, by which each person desiring to become a Member
shall evidence (i) the number of Investor Units which such person wishes to
acquire and (ii) such person's agreement to become a party to, and be bound by
the provisions of, this Agreement and (iii) certain representations regarding
the person's finances and investment intent.

     "Subscription Payment" shall mean the cash payment that must accompany each
subscription for Investor Units sold through the Offering.

     "Substituted Member" shall mean any person admitted as a substituted Member
pursuant to this Agreement.

     "Tax Payment" shall have the meaning set forth in Section 4.12.1.

                                      A-6

<PAGE>

     "Thompson" shall mean Anthony W. Thompson.

     "Unpaid Priority Distribution" of a Member as of any date ("determination
date") means the amount that would have to be distributed to such Member to
cause the cumulative amounts distributed to him under Section 5.1 and Section
5.2(a) to equal an eight percent (8%) per annum cumulative (but not compounded)
return on the Member's Unrecovered Equity outstanding from time to time from the
date of such Member's admission to the Company until the determination date.

     "Unrecovered Equity" of a Member as of any date means the amount of a
Member's Capital Contributions to the Company, reduced, but not below zero, by
the cumulative Cash from Capital Transactions amounts distributed to such Member
under Section 5.2 hereof.

                      [BALANCE OF PAGE INTENTIONALLY BLANK]

                                      A-7

<PAGE>

                                    EXHIBIT B
                              MANAGEMENT AGREEMENT

                                      B-1