Document:

Form of Limited Liability Company Agreement

 Exhibit 10.11 
  
 LIMITED LIABILITY COMPANY AGREEMENT 
 OF 
 SUNSTONE HOTEL PARTNERSHIP, LLC 
  
 THIS LIMITED LIABILITY COMPANY AGREEMENT, dated as of
                , 2004 of Sunstone Hotel Partnership, LLC (the “Company”) is entered into by and among Sunstone Hotel Investors, Inc., as
Managing Member (the “Managing Member”), and the Persons identified on the signature pages hereto (the “Non-Managing Members”), together with any other Persons who become Members (as defined herein) in the Company
as provided herein; 
  
 WHEREAS, the Company was formed by the
filing of a certificate of formation with the Secretary of State of the State of Delaware on June 29, 2004 by an authorized person of the Company; 
  
 WHEREAS, immediately prior to the execution hereof, the Managing Member was the sole member of the Company; 
  
 WHEREAS, as part of the Formation and Structuring Transactions (as defined
below), the Company will issue Non-Managing Membership Interests to each of Sunstone Hotel Investors, L.L.C. (“SHI”), Sunstone/WB Hotel Investors, IV, LLC (“Sunstone/WB IV”), Sunstone/WB Manhattan Beach, LLC
(“Sunstone/WB MB”) and WB Hotel Investors, LLC (“WB Hotel”) as set forth on Exhibit A hereto; 
  
 WHEREAS, the Members desire that the Managing Member be the sole Managing Member of the Company upon the completion of the Managing Member’s initial
public offering of its common stock and the contribution by the Managing Member of the net proceeds from its initial public offering as set forth on Exhibit A hereto; and 
  
 WHEREAS, the Members desire to continue the Company under the Act (as defined below) and to set forth their respective
rights and duties relating to the Company on the terms as provided herein; 
  

 NOW, THEREFORE, in consideration of the mutual promises and agreements herein made, and other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Members hereby agree as follows: 
  
 ARTICLE I 
 DEFINED TERMS 
  
 The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement. 
  
 “Act” means the Delaware Limited Liability Company Act, as it may be amended from time to time, and any successor to such statute. 
  
 “Additional Non-Managing Member” means a Person admitted to the Company as a Non-Managing Member pursuant to Section 4.2 and who
is shown as such on the books and records of the Company. 
  
 “Adjusted Capital Account” means the Capital Account maintained for each Member as of the end of each Membership Year (a) increased by any amounts which such Member is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (b) decreased by the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

  
 “Adjusted Capital Account Deficit” means,
with respect to any Member, the deficit balance, if any, in such Member’s Adjusted Capital Account as of the end of the relevant Membership Year. 
  
 “Adjusted Property” means any property the Carrying Value of which has been adjusted pursuant to Section 4.4. 
  
 “Affiliate” means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.

  
 “Agreed Value” means (a) in the case of any
Contributed Property set forth on Exhibit B and as of the time of its contribution to the Company, the Agreed Value of such property as set forth on Exhibit B; (b) in the case of any Contributed Property not set forth on Exhibit
B and as of the time of its contribution to the Company, the 704(c) Value of such property or other consideration, reduced by any liabilities either assumed by the Company upon such contribution or to which such property is subject when
contributed, and (c) in the case of any property distributed to a Member by the Company, the Company’s Carrying Value of such property at the time such property is distributed, reduced by any indebtedness either assumed by such Member upon such
distribution or to which such property is subject at the time of distribution as determined under Section 752 of the Code and the Regulations thereunder. 
  

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 “Agreement” means this Limited Liability Company Agreement and all Exhibits attached
hereto, as the same may be amended, supplemented or restated from time to time. 
  
 “Assignee” means a Person to whom one or more Membership Units have been transferred but who has not been admitted as a Substituted Non-Managing Member, and who has the rights set forth in Section
11.5. 
  
 “Available Cash” means, with
respect to any period for which such calculation is being made, (a) all cash revenues and funds received by the Company from whatever source (excluding the proceeds of any Capital Contribution to the Company pursuant to Section 4.1) plus the
amount of any reduction (including, without limitation, a reduction resulting because the Managing Member determines such amounts are no longer necessary) in reserves of the Company, which reserves are referred to in clause (b)(iv) below;

  
 (b) less the sum of the following (except to the extent made
with the proceeds of any Capital Contribution): 
  
 (i) all interest, principal and other debt payments made during such period by the Company, 
  
 (ii) all cash expenditures (including capital expenditures) made by the Company during such period, 
  
 (iii) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise described in clauses (b)(i) or (ii), and 
  
 (iv) the amount of any reserve created or increase in reserves established during such period which the Managing Member determines are
necessary or appropriate in its sole and absolute discretion. 
  
 Notwithstanding the foregoing, Available Cash shall not include any cash received or reductions in reserves, or take into account any disbursements made or reserves established, after commencement of the dissolution and liquidation of the
Company. 
  
 “Bankruptcy” as to any Person, shall
be deemed to have occurred when (i) such Person commences a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect, (ii) such Person is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against such Person, (iii) such Person executes and delivers a general assignment for
the benefit of such Person’s creditors, (iv) such Person files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against such Person in any proceeding of the nature described in clause (ii)
above, (v) such Person seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for such Person or for all or any substantial part of such Person’s properties, (vi) any proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within 120 days after the commencement thereof, (vii) the appointment without such Person’s consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or 

  

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stayed within 90 days of such appointment, or (viii) an appointment referred to in clause (vii) is not vacated within 90 days after the expiration of any
such stay. 
  
 “Book-Tax Disparities” means, with
respect to any item of Contributed Property or Adjusted Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Adjusted Property and the adjusted basis thereof for Federal income tax
purposes as of such date. A Member’s share of the Company’s Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the difference between such Member’s Capital Account balance as maintained
pursuant to Section 4.4 and the hypothetical balance of such Member’s Capital Account computed as if it had been maintained strictly in accordance with Federal income tax accounting principles. 
  
 “Business Day” means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required by law to close. 
  
 “Capital Account” means the capital account maintained by the Company for each Member pursuant to Section 4.4. 
  
 “Capital Contribution” means, with respect to each Member,
the total amount of cash, cash equivalents and the Agreed Value of Contributed Property which such Member contributes or is deemed to contribute to the Company pursuant to Section 4.1 or 4.2 and which are intended to be treated as a
contribution to the Company pursuant to Section 721(a) of the Code. 
  
 “Carrying Value” means (a) with respect to a Contributed Property or Adjusted Property, the 704(c) Value of such property (or in the case of an Adjusted Property, the fair market value of such property at the time of its
latest adjustment under Section 4.4(d)) reduced (but not below zero) by all Depreciation with respect to such Contributed Property or Adjusted Property charged to the Members’ Capital Accounts and (b) with respect to any other Company
property, the adjusted basis of such property for Federal income tax purposes, all as of the time of determination. The Carrying Value of any property shall be adjusted from time to time in accordance with Section 4.4(d), and to reflect
changes, additions or other adjustments to the Carrying Value for dispositions and acquisitions of Company Properties, as deemed appropriate by the Managing Member. 
  
 “Cash Amount” means an amount of cash per Unit equal to the number of Units offered for redemption by the
Redeeming Member (multiplied by the Unit Adjustment Factor) multiplied by the Value of a Common Share on the Valuation Date. 
  
 “Certificate” means the Certificate of Formation relating to the Company filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and the Act. 
  
 “Charter” means the Articles of Incorporation of the Managing Member filed in the office of the Maryland State Department of Assessments and Taxation on June 28, 2004, as amended from time to time in
accordance with the terms thereof and the Maryland General Corporation Law, and any successor to such statute. 
  

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 “Code” means the Internal Revenue Code of 1986, as amended. Any reference herein to a
specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law. 
  
 “Common Share Rights” has the meaning set forth in Section 4.2(e). 
  
 “Common Shares” means the shares of common stock, $0.01 par value per share, of the Managing Member.

  
 “Company” means Sunstone Hotel Partnership,
LLC, the limited liability company formed under the Act and any successor thereto. 
  
 “Company Property” means such interests in real property and personal property including without limitation, fee interests, interests in ground leases, interests in joint ventures, interests in
mortgages, and Debt instruments as the Company may hold from time to time. 
  
 “Consent” means the consent or approval of a proposed action by a Member given in accordance with Section 14.1. 
  
 “Contributed Property” means each property or other asset (but excluding cash and cash equivalents), in
such form as may be permitted by the Act contributed or deemed contributed to the Company. Once the Carrying Value of a Contributed Property is adjusted pursuant to Section 4.4, such property shall no longer constitute a Contributed Property,
but shall be deemed an Adjusted Property for purposes of Section 4.4. 
  
 “Debt” means, as to any Person, as of any date of determination, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, which purchase price
is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, (b) all amounts owed by such Person to banks or other Persons in respect of reimbursement
obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person, (c) all indebtedness for borrowed money or for the deferred purchase price of property or
services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof, (d) lease obligations of
such Person which, in accordance with generally accepted accounting principles, should be capitalized and (e) all guarantees and other contingent obligations of such Person with respect to Debt of others. 
  
 “Depreciation” means for each fiscal year or other period,
an amount equal to the Federal income tax depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Carrying Value of an asset differs from its adjusted basis
for Federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Carrying Value as the Federal income tax depreciation, amortization, or other cost recovery
deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the Federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, 

  

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Depreciation shall be determined with reference to such beginning Carrying Value using any reasonable method selected by the Managing Member. 
  
 “Effective Date” means the date of closing of the initial
public offering of the Common Shares upon which date the contributions set forth on Exhibit A shall become effective. 
  
 “Events of Dissolution” has the meaning set forth in Section 13.1. 
  
 “Exchange Act” has the meaning set forth in Section 7.1(a)(2). 
  
 “ERISA” means the Employee Retirement Income Security Act of
1974, as amended. 
  
 “Formation and Structuring
Transactions” means the transactions outlined in Exhibit A to the Structuring and Contribution Agreement. 
  
 “Guaranty” has the meaning set forth in Section 11.2(e). 
  
 “IRS” means the Internal Revenue Service, which is charged with administering the internal revenue laws of
the United States. 
  
 “Immediate Family” means,
with respect to any natural Person, such natural Person’s spouse, parents, grandparents, descendants (including adopted children and step-children), nephews, nieces, brothers, and sisters. 
  
 “Incapacity” or “Incapacitated” means (a)
as to any individual Member, death, total physical disability or entry by a court of competent jurisdiction adjudicating him incompetent to manage his Person or his estate, (b) as to any corporation that is a Member, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its charter, (c) as to any partnership that is a Member, the dissolution and commencement of winding up of the partnership, (d) as to any estate that is a Member, the
distribution by the fiduciary of the estate’s entire interest in the Company, (e) as to any trust that is a Member, the termination of the trust (but not the substitution of a new trustee), or (f) as to any Member, the Bankruptcy of such
Member. 
  
 “Incentive Plans” means Common Share
or Unit incentive plans or other employee benefit plans established by, or for the benefit of the employees of, the Managing Member, the Company or any Subsidiary, including the Sunstone Hotel Investors, Inc. 2004 Long-Term Incentive Plan and the
Sunstone Hotel Investors, Inc. Senior Management Incentive Plan. 
  
 “Indemnitee” means (a) any Person made a party to a proceeding by reason of his status as (i) the Managing Member (including as a guarantor of any Membership Debt) or (ii) an officer of the Company or a director or officer
of the Managing Member, and (b) such other Persons (including Affiliates of the Managing Member or the Company) as the Managing Member may designate from time to time, in its sole and absolute discretion. 
  
 “Investors Agreement” means the Investors Agreement dated as
of                     , 2004 by and among the Managing Member, SHI, Sunstone/WB IV, Sunstone/WB MB and WB Hotel. 
  

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 “Liquidating Transaction” means any sale or other disposition of all or substantially
all of the assets of the Company or a related series of transactions that, taken together, results in the sale or other disposition of all or substantially all of the assets of the Company. 
  
 “Liquidator” has the meaning set forth in Section
13.2. 
  
 “Managing Member” means Sunstone
Hotel Investors, Inc., a Maryland corporation, and its successors as a Managing Member of the Company in accordance with the terms of this Agreement. 
  
 “Managing Membership Interest” means a Membership Interest held by the Managing Member (including any Membership Interest acquired by the
Managing Member pursuant to Section 4.2 hereof) that is a Managing Membership interest and includes any and all benefits to which the Managing Member may be entitled and all obligations of the Managing Member hereunder. A Managing Membership
Interest may be expressed as a number of Membership Units. All Membership Units held by the Managing Member shall be deemed to be the Managing Member Interest. 
  

“Member” means individually, the Managing Member or a Non-Managing Member, and “Members” means collectively, the
Managing Member and the Non-Managing Members. 
  
 “Member
Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with
Regulations Section 1.704-2(i)(3). 
  
 “Member Nonrecourse
Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4). 
  
 “Member Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(i)(2), and the amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a
Membership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2). 
  
 “Membership Interest” means an ownership interest in the Company representing a Capital Contribution by either a Non-Managing Member or
the Managing Member and includes any and all benefits to which the holder of such a Membership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this
Agreement. A Membership Interest may be expressed as a number of Membership Units. 
  
 “Membership Minimum Gain” has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Membership Minimum Gain, as well as any net increase or decrease in Membership Minimum Gain,
for a Membership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d). 
  
 “Membership Record Date” means the record date established by the Managing Member for the distribution of Available Cash pursuant to
Section 5.1 hereof, which record date shall be 

  

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the same as the record date established by the Managing Member for a distribution to its shareholders of some or all of its portion of such distribution, and
also means any record date established by the Managing Member in connection with any vote or consent of the Non-Managing Members pursuant to this Agreement. 
  
 “Membership Unit” or “Unit” means a fractional, undivided share of the Membership Interests of all Members issued
pursuant to Sections 4.1 and 4.2, in such number as set forth on Exhibit A, as such Exhibit may be amended from time to time. Any rights and preferences or other obligations with respect to Units as may be authorized hereunder
shall be set forth in an exhibit hereto. 
  
 “Membership
Year” means the fiscal year of the Company, which shall be the calendar year. 
  
 “Minimum Tax Distribution” means an amount per Membership Unit (other than Preferred Units) for each calendar quarter for each taxable year of the Company equal to the product of (i) the sum of (a)
the greater of the highest marginal Federal income tax rate for such taxable year applicable to (x) individuals or (y) large, widely-held corporations and (b) the highest combined marginal state and local income tax rates for such taxable year for
the state and city with the highest marginal income tax rates and (ii) the taxable income allocable to each Membership Unit for such calendar quarter as reasonably estimated by the Company. 
  
 “Net Income” means for any taxable period, the excess, if
any, of the Company’s items of income and gain for such taxable period over the Company’s items of loss and deduction for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with
Section 4.4. Once an item of income, gain, loss or deduction that has been included in the initial computation of Net Income is subjected to the special allocation rules in Sections 6.3 and 6.4, Net Income or the resulting Net
Loss, whichever the case may be, shall be recomputed without regard to such item. 
  
 “Net Loss” means for any taxable period, the excess, if any, of the Company’s items of loss and deduction for such taxable period over the Company’s items of income and gain for such taxable
period. The items included in the calculation of Net Loss shall be determined in accordance with Section 4.4. Once an item of income, gain, loss or deduction that has been included in the initial computation of Net Loss is subjected to the
special allocation rules in Sections 6.3 and 6.4, Net Loss or the resulting Net Income, whichever the case may be, shall be recomputed without regard to such item. 
  
 “New Securities” has the meaning set forth in Section 4.2(c). 
  
 “Non-Managing Member” means any Person named as a
Non-Managing Member on Exhibit A, as such Exhibit may be amended from time to time, including any Substituted Non-Managing Member or Additional Non-Managing Member, in such Person’s capacity as a Non-Managing Member in the Company.

  
 “Non-Managing Membership Interest” means a
Membership Interest held by a Non-Managing Member representing a fractional part of the Membership Interests of all Non-Managing Members and includes any and all benefits to which such Non-Managing Member 

  

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may be entitled and all obligations of such Non-Managing Member hereunder. A Non-Managing Membership Interest may be expressed as a number of Membership
Units. 
  
 “Nonrecourse Built-in Gain” means,
with respect to any Contributed Properties or Adjusted Properties that are subject to a mortgage or negative pledge securing a Nonrecourse Liability, the amount of any taxable gain that would be allocated to the Members pursuant to Section
6.4(b) if such properties were disposed of in a taxable transaction in full satisfaction of such liabilities and for no other consideration. 
  
 “Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Membership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c). 
  
 “Nonrecourse Liability” has the meaning set forth in Regulations Section 1.752-1(a)(2). 
  
 “Non-Restricted Transfer Date” means the first Business Day
following the completion of the initial public offering of the Managing Member and each anniversary of such date (or the next succeeding Business Day if the anniversary falls on a non-Business Day). 
  
 “Notice of Redemption” means a Notice of Redemption
substantially in the form of Exhibit C. 
  
 “Percentage Interest” means, as to any Member, its interest in the Company as determined by dividing the Membership Units owned by such Member by the total number of Membership Units then outstanding and as specified on
Exhibit A, as such Exhibit may be amended from time to time. 
  
 “Person” means an individual or a corporation, partnership, trust, unincorporated organization, association, limited liability company, estate or other entity. 
  
 “Plan Asset Regulation” means the regulations promulgated by the United States Department of Labor in Title
29, Code of Federal Regulations, Part 2510, Section 101.3, and any successor regulations thereto. 
  
 “Preferred Shares” has the meaning set forth in Section 4.2(c). 
  
 “Qualified REIT Subsidiary” means any Subsidiary of the Managing Member that is a “qualified REIT
subsidiary” within the meaning of Section 856(i) of the Code. Immediately following the Formation and Structuring Transactions and the Effective Date, there will be no Qualified REIT Subsidiaries. 
  
 “Recapture Income” means any gain recognized by the Company
(computed without regard to any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any property or asset of the Company, which gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset. 
  
 “Recourse Liabilities” has the meaning set forth in Regulations Section 1.752-1(a)(1). 
  

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 “Redeeming Member” shall have the meaning as set forth in Section 4.2(e)(1).

  
 “Redemption Right” shall have the meaning as
set forth in Section 4.2(e)(1). 
  
 “REIT”
means a real estate investment trust under Section 856 of the Code. 
  
 “REIT Requirements” shall have the meaning set forth in Section 5.1. 
  
 “Regulations” means the Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations). 
  
 “Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the Company recognized for Federal income tax purposes resulting from a sale, exchange or other disposition of
Contributed Property or Adjusted Property, to the extent such item of gain or loss is not allocated pursuant to Section 6.4(b)(1)(i) or 6.4(b)(2)(i) to eliminate Book-Tax Disparities. 
  
 “Securities Act” shall have the meaning set forth in Section
4.2(e)(4). 
  
 “704(c) Value” of any Contributed
Property means the value of such property as set forth on Exhibit B, or if no value is set forth on Exhibit B, the fair market value of such property or other consideration at the time of contribution as determined by the Managing
Member using such reasonable method of valuation as it may adopt. Subject to Section 4.4, the Managing Member shall use such method as it deems reasonable and appropriate to allocate the aggregate of the 704(c) Value of Contributed Properties
among each separate property on a basis proportional to its fair market value. 
  
 “Shares” means any Common Shares, of any class, and Preferred Shares issued to a Non-Managing Member pursuant to Section 4.2(e). 
  
 “Shares Amount” shall mean a number of Common Shares equal to the number of Units offered for redemption by
a Redeeming Member, multiplied by the Unit Adjustment Factor. 
  
 “Specified Redemption Date” means the tenth Business Day after receipt by the Managing Member of a Notice of Redemption. 
  
 “Structuring and Contribution Agreement” means the Structuring and Contribution Agreement, dated as of July 2, 2004, by and among the
Company, the Managing Member and the other parties thereto. 
  
 “Subsidiary” means, with respect to any Person, any corporation or other entity of which a majority of (a) the voting power of the voting equity securities or (b) the outstanding equity interests is owned, directly or
indirectly, by such Person. 
  
 “Substituted Non-Managing
Member” means a Person who is admitted as a Non-Managing Member to the Company pursuant to Section 11.4. 
  

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 “Tendered Units” shall have the meaning set forth in Section 4.2(e)(1).

  
 “Transaction” has the meaning set forth in
Section 11.2(c). 
  
 “Unit Adjustment
Factor” means initially 1.0, unless provided otherwise in an exhibit hereto setting forth rights, preferences and obligations with respect to any specific class or series of Membership Units issued after the date hereof; provided,
however, that in the event that the Managing Member (a) declares or pays a dividend on its outstanding Common Shares in Common Shares or makes a distribution to all holders of its outstanding Common Shares in Common Shares, (b) subdivides its
outstanding Common Shares, or (c) combines its outstanding Common Shares into a smaller number of Common Shares, the Unit Adjustment Factor, as applicable, shall be adjusted by multiplying the Unit Adjustment Factor by a fraction, the numerator of
which shall be the number of Common Shares issued and outstanding on the record date (assuming for such purposes that such dividend, distribution, subdivision or combination has occurred as of such time), and the denominator of which shall be the
actual number of Common Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, subdivision or combination. Any adjustment to the Unit Adjustment Factor shall become effective
immediately after the effective date of such event retroactive to the record date, if any, for such event. Any adjustment to the Unit Adjustment Factor shall be carried forward to successive adjustments. 
  
 “Unrealized Gain” attributable to any item of Company
Property means, as of any date of determination, the excess, if any, of (a) the fair market value of such property (as determined under Section 4.4) as of such date, over (b) the Carrying Value of such property (prior to any adjustment to be
made pursuant to Section 4.4) as of such date. 
  
 “Unrealized Loss” attributable to any item of Company Property means, as of any date of determination, the excess, if any, of (a) the Carrying Value of such property (prior to any adjustment to be made pursuant to
Section 4.4) as of such date, over (b) the fair market value of such property (as determined under Section 4.4) as of such date. 
  
 “Valuation Date” means the date of receipt by the Managing Member of a Notice of Redemption or, if such date is not a Business Day, the
first Business Day thereafter. 
  
 “Value” means,
with respect to a Common Share, of any class, the average of the daily market price for the twenty (20) consecutive trading days immediately preceding the Valuation Date. The market price for each such trading day shall be: (a) if the Common Shares
are listed or admitted to trading on any securities exchange or the NASDAQ-National Market System, the closing price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices on such day;
(b) if the Common Shares are not listed or admitted to trading on any securities exchange or the NASDAQ-National Market System, the last reported sale price on such day or, if no sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated by the Managing Member; or (c) if the Common Shares are not listed or admitted to trading on any securities exchange or the NASDAQ-National Market System and no such last
reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the Managing 

  

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Member, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day
(not more than 20 days prior to the date in question) for which prices have been so reported; provided, however, that if there are no bid and asked prices reported during the 20 days prior to the date in question, the Value of the
Common Shares shall be determined by the Managing Member acting in good faith on the basis of such quotations and other information as it considers, in its judgment, appropriate. In the event a holder of Common Shares, of any class, would be
entitled to receive Common Share Rights, then the Value of such Common Share Rights shall be determined by the Managing Member acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment,
appropriate. 
  
 ARTICLE II 
 ORGANIZATIONAL MATTERS 
  
 Section 2.1 Organization and Continuation; Application of Act. 
  
 (a) Organization and Continuation of Company. The Managing Member and the Non-Managing Members do
hereby continue the Company as a limited liability company according to all of the terms and provisions of this Agreement and otherwise in accordance with the Act. The Managing Member is the sole Managing Member and the Non-Managing Members are the
sole Non-Managing Members of the Company. 
  
 (b)
Application of Act. The Company is a limited liability company subject to the provisions of the Act and the terms and conditions set forth in this Agreement. Except as expressly provided herein to the contrary, the rights and obligations of
the Members and the administration and termination of the Company shall be governed by the Act. No Member has any interest in any Company Property and the Membership Interests of each Member shall be personal property for all purposes. 

 
 Section 2.2 Name. The name of the Company is Sunstone Hotel
Partnership, LLC. The Company’s business may be conducted under any other name or names deemed advisable by the Managing Member, including the name of the Managing Member or any Affiliate thereof. The words “limited liability
company,” or “LLC” or similar words or letters shall be included in the Company’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The Managing Member in its sole and absolute
discretion may change the name of the Company at any time and from time to time and shall notify the Non-Managing Members of such change in the next regular communication to the Non-Managing Members. 
  
 Section 2.3 Registered Office and Agent; Principal Office. The address
of the registered office of the Company in the State of Delaware is located c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, County of New Castle and the registered agent for service of process on the
Company in the State of Delaware at such registered office is the Corporation Service Company. The principal office of the Company is located at 903 Calle Amanecer, Suite 100, San Clemente, California 92673, or such other place as the Managing
Member may from time to time designate by notice to the Non-Managing 

  

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Members. The Company may maintain offices at such other place or places within or outside the State of Delaware as the Managing Member deems
advisable. 
  
 Section 2.4 Term. The term of the
Company shall continue until dissolved pursuant to the provisions of Article XIII or as otherwise provided by law. 
  
 ARTICLE III 
 PURPOSE 
  
 Section 3.1 Purpose and Business. The purpose and nature of the
business to be conducted by the Company is (a) to conduct any business that may be lawfully conducted by a limited liability company organized pursuant to the Act, provided, however, that as long as the Managing Member has determined to continue to
qualify as a REIT, such business shall be limited to and conducted in such a manner as to permit the Managing Member at all times to be classified as a REIT for federal income tax purposes, unless the Managing Member ceases to qualify as a REIT for
reasons other than the conduct of the business of the Company, (b) to enter into any partnership, joint venture or other similar arrangement to engage in any of the foregoing or the ownership of interests in any entity engaged in any of the
foregoing and (c) to do anything necessary or incidental to the foregoing which, in each case, is not in breach of this Agreement. 
  
 Section 3.2 Powers. The Company is empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Company including, without limitation, full power and authority, directly or through its ownership interest in
other entities, to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and develop real
property, and lease, sell, transfer and dispose of real property; provided, however, that as long as the Managing Member has determined to continue to qualify as a REIT, the Company shall not take, or refrain from taking, any action
which, in the judgment of the Managing Member, in its sole and absolute discretion, (i) could adversely affect the ability of the Managing Member to continue to qualify as a REIT, (ii) could subject Managing Member to any taxes under Section 857 or
Section 4981 of the Code, or (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the Managing Member or its securities, unless any such action (or inaction) under (i), (ii) or (iii) shall have been
specifically consented to by the Managing Member in writing. 
  
 Section 3.3 Certain ERISA Matters. Each Member acknowledges that the Company is intended to qualify as a “real estate operating company” (as such term is defined in the Plan Asset Regulation). The Managing Member may
structure the investments in, relationships with and conduct with respect to Company Properties and any other assets of the Company so that the Company will be a “real estate operating company” (as such term is defined in the Plan Asset
Regulation). 
  

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 ARTICLE IV 
 CAPITAL CONTRIBUTIONS; 
 ISSUANCE OF UNITS; CAPITAL ACCOUNTS 
  
 Section 4.1 Capital Contributions of the Members. 
  
 (a) Initial Capital Contributions. At the time of the
execution of this Agreement, the Members shall make or shall have made the Capital Contributions set forth in Exhibit A to this Agreement. The Members shall own Membership Units in the amounts set forth on Exhibit A and shall have a
Percentage Interest in the Company as set forth on Exhibit A, which Percentage Interest shall be adjusted on Exhibit A from time to time by the Managing Member to the extent necessary to reflect accurately redemptions, conversions,
Capital Contributions, the issuance of additional Membership Units, or similar events having an effect on a Member’s Percentage Interest. The ownership of Membership Units may be evidenced by a form of certificate for units designated by the
Managing Member; provided, however, that the Managing Member may provide that some or all of any or all classes or series of the Membership Units shall be uncertificated. Each certificate for Membership Units shall be consecutively
numbered or otherwise identified. Certificates of Membership Units shall be signed by or in the name of the Company by the Chief Executive Officer, the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary of the Company. Where a certificate is countersigned by a transfer agent, other than the Company or an employee of the Company, or by a registrar, the signatures of one or more officers of the Company may be facsimiles. In
case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be
issued by the Company with the same effect as if such officer, transfer agent or registrar were such officer, transfer agent or registrar at the date of its issue. 
  
 (b) Additional Capital Contributions. 
  
 (1) No Member shall be assessed or, except as provided for in Section 4.1(b)(2) and except for
any such amounts which a Non-Managing Member may be obligated to repay under Section 10.5, be required to contribute additional funds or other property to the Company. Any additional funds or other property required by the Company, as
determined by the Managing Member in its sole discretion, may, at the option of the Managing Member and without an obligation to do so (except as provided for in Section 4.1(b)(2)), be contributed by the Managing Member as additional Capital
Contributions. If and as the Managing Member or any other Member makes additional Capital Contributions to the Company, each such Member shall receive additional Membership Units as provided for in Section 4.2. 
  
 (2) Except to the extent provided in Section 7.5
below relating to interests in Company Properties held directly by the Company or through Subsidiaries, the net proceeds of any and all funds raised by or through the 

  

 -14- 

 
Managing Member through the issuance of additional Shares of the Managing Member shall be contributed to the Company as additional Capital Contributions, and
in such event the Managing Member shall be issued additional Membership Units pursuant to Section 4.2 below. 
  
 (c) Return of Capital Contributions. Except as otherwise expressly provided herein, the Capital Contribution of each Member will be
returned to that Member only in the manner and to the extent provided in Article V and Article XIII hereof, and no Member may withdraw from the Company or otherwise have any right to demand or receive the return of its Capital Contribution to the
Company (as such), except as specifically provided herein. Under circumstances requiring a return of any Capital Contribution, no Member shall have the right to receive property other than cash, except as specifically provided herein. No Member
shall be entitled to interest on any Capital Contribution or Capital Account notwithstanding any disproportion therein as between the Members. Except as specifically provided herein, the Managing Member shall not be liable for the return of any
portion of the Capital Contribution of any Non-Managing Member, and the return of such Capital Contributions shall be made solely from Company assets. 
  
 (d) Liability of Members. No Member shall have any further personal liability to contribute money to, or in respect of, the
liabilities or the obligations of the Company, nor shall any Member be personally liable for any obligations of the Company, except as otherwise provided in this Article IV or in the Act. 
  
 Section 4.2 Issuances of Additional Membership Interests. 
  
 (a) Issuance to Other Than the Managing Member. The
Managing Member is hereby authorized to cause the Company to issue such additional Membership Interests in the form of Membership Units for any Company purpose at any time or from time to time, to the Members (other than issuances to the Managing
Member, which issuances are governed by Section 4.2(b) and Section 4.2(c)) or to other Persons for such consideration and on such terms and conditions as shall be established by the Managing Member in its sole and absolute discretion,
all without the approval of any Non-Managing Members except to the extent provided herein; provided, however, that the Company also may from time to time issue to third parties additional Membership Interests (other than any such
issuance to the Managing Member which is governed by Sections 4.2(b) and 4.2(c)) in one or more classes, or one or more series of any of such classes, with such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including voting powers, designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions senior to Non-Managing Membership Interests, as may be set forth an exhibit hereto from time to time, subject to Delaware law, including, without limitation, with respect to (i) the
allocations of items of income, gain, loss, deduction and credit to each such class or series of Membership Interests, (ii) the right of each such class or series of Membership Interests to share in distributions, and (iii) the rights of each such
class or series of Membership Interests upon dissolution and liquidation of the 

  

 -15- 

 
Company. To the extent more than one class of Membership Units is outstanding, the Membership Units in this Agreement shall be referred to as Class A Units.
To the extent more than one class of Common Shares is outstanding, the Common Shares in this Agreement shall be referred to as Class A Common Shares. 
  
 (b) Issuance to the Managing Member. The Company also may from time to time issue to the Managing Member additional Membership
Units or other Membership Interests in one or more classes, or one or more series of any of such classes, with such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof, including voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions senior
to Non-Managing Membership Interests, as may be set forth in an exhibit hereto from time to time, all as shall be determined by the Managing Member, subject to Delaware law, including, without limitation, with respect to (i) the allocations of items
of income, gain, loss, deduction and credit to each such class or series of Membership Interests, (ii) the right of each such class or series of Interests to share in distributions, and (iii) the rights of each such class or series of Membership
Interests upon dissolution and liquidation of the Company; provided, however, that (x) the additional Membership Interests are issued in connection with an issuance of shares of the Managing Member, which shares have designations,
preferences and other rights, all such that the economic interests are substantially similar to the designations, preferences and other rights of the additional Membership Interests issued to the Managing Member in accordance with this Section
4.2(b), and (y) the Managing Member shall make a Capital Contribution to the Company (1) in an amount equal to the net proceeds raised in connection with the issuance of such shares of the Managing Member in the event such shares are sold for
cash or cash equivalents or (2) in the form of the property received in consideration for such shares, in the event such shares are issued in consideration for other property. 
  
 (c) Issuance of Additional Common Shares or Preferred Shares. The Managing Member is explicitly
authorized to issue additional Common Shares, of any class, or preferred shares of beneficial interest of the Managing Member (“Preferred Shares”), or rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase Common Shares, of any class, or Preferred Shares (“New Securities”) and in connection therewith, as further provided in Section 4.2(b), (i) the Managing Member shall cause the Company to
issue to the Managing Member Membership Interests or rights, options, warrants or convertible or exchangeable securities of the Company having designations, preferences and other rights, as may be set forth on an exhibit hereto from time to time,
all such that the economic interests are substantially similar to those of the New Securities, and (ii) the Managing Member shall contribute the net proceeds from, or the property received in consideration for, the issuance of such New Securities
and from the exercise of rights contained in such New Securities to the Company. In connection with the issuance of Membership Interests which are substantially similar to New Securities, the Managing Member is authorized to modify or amend the
distributions or allocations hereunder solely to the extent necessary to give effect to the designations, preferences and other rights pertaining to such Membership Interests. 
  

 -16- 

 (d) Issuance Pursuant to Option Plans. 
  
 (1) Upon the exercise of an option granted by the Managing
Member for Common Shares, of any class, the Managing Member shall cause the Company to issue to the Managing Member one Membership Unit for each such Common Share acquired upon such exercise pursuant to the Option Plans (or such other number of
Membership Units based on the relationship a different class of Common Shares bears to Common Shares), and the Managing Member shall contribute to the Company the net proceeds received upon such exercise (it being understood that the Managing Member
may issue Common Shares in connection with the Option Plans without receiving a specified amount of proceeds and that the issuance of such Common Shares shall nonetheless entitle the Managing Member to additional Membership Units). 
  
 (2) The Managing Member shall cause the Company to issue
Membership Units to employees of the Company upon the exercise by any such employees of an option to acquire Membership Units granted by the Company pursuant to the Option Plans in accordance with the terms of the Option Plans. Membership Units so
issued shall represent Non-Managing Membership Interests. 
  
 (3) The Managing Member shall cause the Company to issue Membership Units to any Subsidiary upon the exercise by an employee of such Subsidiary of an option to acquire Membership Units granted by such Subsidiary
pursuant to the Option Plans, and such Subsidiary shall transfer to the Company the price per Membership Unit required by the Option Plans to be paid by Subsidiaries. Membership Units issued to any such Subsidiary shall represent Non-Managing
Membership Interests. 
  
 (e) Redemption of
Units. 
  
 (1) Subject to Section 11.3(d) and
the further provisions of this Section 4.2(e), and except as otherwise set forth in an exhibit hereto setting forth rights, preferences and obligations with respect to any particular class or series of Membership Units issued after the date
hereof, each Non-Managing Member shall have the right (i) on or after the date twelve (12) months after the Effective Date, with respect to the Membership Units acquired on or contemporaneously with the Effective Date, or (ii) on or after such other
date as expressly provided in any agreement entered into between the Company and any Non-Managing Member, including the Structuring and Contribution Agreement, to require the Company to redeem (the “Redemption Right”) on a Specified
Redemption Date all or a portion of the Membership Units held by such Non-Managing Member at a redemption price equal to and in the form of the Cash Amount to be paid by the Company. The Redemption Right shall be exercised pursuant to a Notice of
Redemption delivered to the Company (with a copy to the Managing Member) by the Non-Managing Member who is exercising the Redemption Right (the “Redeeming Member”); provided, however, that the Company shall not be
obligated to satisfy such Redemption Right if the Managing Member elects to purchase the 

  

 -17- 

 
Membership Units subject to the Notice of Redemption (the “Tendered Units”); provided, further, that in the event the Managing
Member issues to all holders of Common Shares rights, options, warrants or convertible or exchangeable securities entitling the shareholders to subscribe for or purchase Common Shares, or any other securities or property (collectively, the
“Common Share Rights”) then (except to the extent such rights have already been reflected in an adjustment to the Unit Adjustment Factor as provided in Section 4.2(e)(2) below) the Redeeming Member shall also be entitled to
receive such Common Share Rights that a holder of that number of Common Shares would be entitled to receive. A Non-Managing Member may not exercise the Redemption Right for less than ten thousand (10,000) Membership Units or, if such Non-Managing
Member holds less than ten thousand (10,000) Membership Units, all of the Membership Units held by such Non-Managing Member. 
  
 (2) Notwithstanding the provisions of Section 4.2(e)(1), a Non-Managing Member that exercises the Redemption Right shall be deemed
to have offered to sell the Membership Units described in the Notice of Redemption to the Managing Member, and the Managing Member may, in its sole and absolute discretion, elect to assume directly and satisfy a Redemption Right, and acquire some or
all of such Membership Units by paying to the Redeeming Member either the Cash Amount, or the Shares Amount, as elected by the Managing Member (in its sole and absolute discretion), on the Specified Redemption Date, whereupon the Managing Member
shall acquire the Membership Units offered for redemption by the Redeeming Member. If the Managing Member shall elect to exercise its right to purchase Membership Units under this Section 4.2(e)(2) with respect to a Notice of Redemption, it
shall so notify the Redeeming Member promptly after the receipt by the Company of such Notice of Redemption. In the event the Managing Member shall exercise its right to purchase Membership Units with respect to the exercise of a Redemption Right in
the manner described in the first sentence of this Section 4.2(e)(2), the Company shall have no obligation to pay any amount to the Redeeming Member with respect to Redeeming Member’s exercise of the Redemption Right, and each of the
Redeeming Member, the Company and the Managing Member shall treat the transaction between the Managing Member and the Redeeming Member for federal income tax purposes as a sale of the Redeeming Member’s Membership Units to the Managing Member.

  
 (3) In the event of any change in the Unit
Adjustment Factor, the number of Membership Units held by each Member shall be proportionately adjusted by multiplying the number of Membership Units held by such Member immediately prior to the change in the Unit Adjustment Factor by the new Unit
Adjustment Factor; the intent of this provision is that one Membership Unit remains equivalent in value to one Common Share without dilution (including any securities for which Shares are exchanged in a transaction contemplated by Section
11.2(c)). In the event the Managing Member issues any Common Shares in exchange for Membership Units pursuant to this Section 4.2(e), any such Membership Units so acquired by the Managing Member shall immediately 

  

 -18- 

 
thereafter be canceled by the Company and the Company shall issue to the Managing Member new Membership Units pursuant to Section 4.2(c) hereof. Each
Redeeming Member agrees to execute such documents as the Managing Member may reasonably require in connection with the issuance of Common Shares upon exercise of the Redemption Right. 
  
 (4) The Shares Amount, if applicable, shall be delivered as duly authorized, validly issued, fully paid and
nonassessable Common Shares and, if applicable, free of any pledge, lien, encumbrance or restriction, other than those provided in the Charter, the Bylaws of the Managing Member, the Securities Act of 1933, as amended (the “Securities
Act”), relevant state securities or blue sky laws and any applicable registration rights agreement with respect to such Common Shares entered into by the Redeeming Member. Notwithstanding any delay in such delivery (but subject to
Section 4.2(e)(6)), the Redeeming Member shall be deemed the owner of such Common Shares for all purposes, including without limitation, rights to vote or consent, and receive dividends, as of the Specified Redemption Date. In addition, the
Common Shares for which the Membership Units might be exchanged shall also bear a legend which generally provides the following: 
  
 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE
PURPOSE, AMONG OTHERS, OF THE CORPORATION’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY
PROVIDED IN THE CORPORATION’S CHARTER, (I) NO INDIVIDUAL MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION’S COMMON STOCK IN EXCESS OF 9.8 PERCENT (IN VALUE OR NUMBER OF SHARES) OF THE OUTSTANDING SHARES OF COMMON STOCK OF
THE CORPORATION UNLESS SUCH INDIVIDUAL IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (II) NO INDIVIDUAL MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK OF THE CORPORATION IN EXCESS OF 9.8 PERCENT
OF THE VALUE OF THE TOTAL OUTSTANDING SHARES OF CAPITAL STOCK OF THE CORPORATION, UNLESS SUCH INDIVIDUAL IS AN EXCEPTED HOLDER (IN WHICH CASE THE EXCEPTED HOLDER LIMIT SHALL BE APPLICABLE); (III) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN
CAPITAL STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION 856(H) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (IV) NO PERSON MAY TRANSFER SHARES OF CAPITAL STOCK IF SUCH
TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION 

  

 -19- 

 
BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF
CAPITAL STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF CAPITAL STOCK IN EXCESS OR IN VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON TRANSFER OR
OWNERSHIP ARE VIOLATED, THE SHARES OF CAPITAL STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO A TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS
AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN
EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE CHARTER OF THE CORPORATION, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A
COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF CAPITAL STOCK OF THE CORPORATION ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT
ITS PRINCIPAL OFFICE. 
  
 (5) Each
Non-Managing Member covenants and agrees with the Managing Member that all Tendered Units shall be delivered to the Managing Member free and clear of all liens, claims and encumbrances whatsoever and should any such liens, claims and/or encumbrances
exist or arise with respect to such Tendered Units, the Managing Member shall be under no obligation to acquire the same. Each Non-Managing Member further agrees that, in the event any state or local property transfer tax is payable solely with
respect to its Tendered Units transferred to the Managing Member (or its designee), such Non-Managing Member shall assume and pay such transfer tax. 
  
 (6) Notwithstanding the provisions of Section 4.2(e) or any other provision of this Agreement, a Member (i) shall not be entitled
to effect a Redemption for cash or an exchange for Common Shares to the extent the ownership or right to acquire Common Shares pursuant to such exchange by such Member on the Specified Redemption Date could cause such Member or any other Person to
violate the restrictions on ownership and transfer of Common Shares set forth in the Charter and (ii) shall have no rights under this Agreement to acquire Common Shares which would otherwise be prohibited under the Charter. To the extent any
attempted redemption or exchange for Common Shares would be in violation of this Section 4.2(e)(6), it shall be null and void ab initio and such 

  

 -20- 

 
Member shall not acquire any rights or economic interest in the cash otherwise payable upon such redemption or the Common Shares otherwise issuable upon such
exchange. 
  
 (7) Notwithstanding anything herein
to the contrary (but subject to Section 4.2(e)(6)), with respect to any redemption or exchange for Common Shares pursuant to this Section 4.2(e): 
  

(i) All Membership Units acquired by the Managing Member pursuant thereto shall automatically, and without further action required, be
converted into and deemed to be Managing Member Interests comprised of the same number and class of Membership Units. 
  
 (ii) The consummation of any redemption or exchange for Common Shares shall be subject to the expiration or termination of the applicable
waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 
  
 (iii) Each Redeeming Member shall continue to own all Membership Units subject to any redemption or exchange for Common Shares, and be
treated as a Non-Managing Member with respect to such Membership Units for all purposes of this Agreement, until the Specified Redemption Date. Until a Specified Redemption Date, the Redeeming Member shall have no rights as a stockholder of the
Managing Member with respect to such Redeeming Member’s Membership Units, except as may be provided in the Investors Agreement. 
  
 Section 4.3 No Preemptive Rights. Except as specifically provided in this Agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (a) additional Capital Contributions or loans to the Company, or (b) issuance or sale of any Membership Units. 
  
 Section 4.4 Capital Accounts of the Members. 
  
 (a) General. The Company shall maintain for each Member a separate Capital Account in accordance with the rules of Regulations
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (a) the amount of all Capital Contributions made by such Member to the Company pursuant to this Agreement and (b) all items of income and gain (including income and gain exempt
from tax) computed in accordance with Section 4.4(b) hereof and allocated to such Member pursuant to Sections 6.1 through Section 6.3 of the Agreement, and decreased by (i) the amount of cash or Agreed Value of all actual and
deemed distributions of cash or property made to such Member pursuant to this Agreement and (ii) all items of deduction and loss computed in accordance with Section 4.4(b) hereof and allocated to such Member pursuant to Sections 6.1
through Section 6.3 of the Agreement. 
  
 (b) Income, Gains, Deductions and Losses. For purposes of computing the amount of any item of income, gain, loss or deduction to be reflected in the Members’ Capital Accounts, unless otherwise specified in this Agreement, the
determination, 

  

 -21- 

 
recognition and classification of any such item shall be the same as its determination, recognition and classification for Federal income tax purposes
determined in accordance with Section 703(a) of the Code (for this purpose all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the
following adjustments: 
  
 (1) Except as
otherwise provided in Regulations Section 1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and deduction shall be made without regard to any election under Section 754 of the Code which may be made by the Company. 

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

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

  
 (4) In lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year. 
  
 (5) In the event the Carrying Value of any Company asset is adjusted pursuant to Section 4.4(d)
hereof, the amount of any such adjustment shall be taken into account as gain or loss from the disposition of such asset. 
  
 (6) Any items specially allocated under Section 6.4 hereof shall not be taken into account. 
  
 (c) Transfers of Membership Units. A transferee of a
Membership Unit shall succeed to a pro rata portion of the Capital Account of the transferor. 
  
 (d) Unrealized Gains and Losses. 
  
 (1) Consistent with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f), and as provided in Section 4.4(d)(2), the Carrying
Values of all Company assets shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Company Property, as of the times of the adjustments provided in Section 4.4(d)(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each such property and allocated pursuant to Section 6.1 of the Agreement. 
  

(2) Such adjustments shall be made as of the following times: (i) immediately prior to the acquisition of an additional interest in the
Company by any new or existing Member in exchange for more than a de minimis Capital 

  

 -22- 

 
Contribution; (ii) immediately prior to the distribution by the Company to a Member of more than a de minimis amount of Property as consideration for
an interest in the Company; and (iii) immediately prior to the liquidation of the Company or the Managing Member’s interest in the Company within the meaning of Regulations Section 1.704-l(b)(2)(ii)(g); provided, however, that
adjustments pursuant to clauses (i) and (ii) above shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company.

  
 (3) In accordance with Regulations Section
1.704-1(b)(2)(iv)(e), the Carrying Values of Company assets distributed in kind shall be adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Company Property, as of the time any such asset is
distributed. 
  
 (4) In determining such
Unrealized Gain or Unrealized Loss, the aggregate cash amount and fair market value of all Company assets (including cash or cash equivalents) shall be determined by the Managing Member using such reasonable method of valuation as it may adopt, or
in the case of a liquidating distribution pursuant to Article XIII of this Agreement, be determined and allocated by the Liquidator using such reasonable methods of valuation as it may adopt. The Managing Member, or the Liquidator, as the case may
be, shall allocate such aggregate value among the assets of the Company (in such manner as it determines in its sole and absolute discretion to arrive at a fair market value for individual properties). 
  
 (e) Modification by Managing Member. The provisions
of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations issued under Sections 704(b) and 514(c)(9) of the Code, and shall be interpreted and applied in a manner consistent with such Regulations. In
the event the Managing Member shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Company, the Managing Member, or any Non-Managing Members) are computed in order to comply with such Regulations, the Managing Member may make such modification; provided,
however, that it will not have a material effect on the amounts distributable to any Person pursuant to Article XIII of this Agreement upon the liquidation of the Company. The Managing Member also shall (a) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q), and (b) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b). 
  

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 ARTICLE V 
 DISTRIBUTIONS 
  
 Section 5.1
Requirement and Characterization of Distributions. The Managing Member shall cause the Company to distribute quarterly all, or such portion as the Managing Member may in its discretion determine, of Available Cash among the Members (i) first,
with respect to any class of Membership Interests issued pursuant to Section 4.2(a) or 4.2(b) which are entitled to a preference over Membership Units on the distribution of Available Cash and are specially allocated items under
Section 6.1 prior to allocated items with respect to amounts distributed pursuant to clause (ii) below (and within and among such classes, in order of the preferences designated therein and pro rata among any such classes), and (ii)
thereafter, pro rata in accordance with their respective Percentage Interests from time to time as determined by the Managing Member; provided that Available Cash for each calendar quarter shall be distributed on or about the 15th day of January, April, July and October of each year in an amount with respect to each Membership Unit at least equal to the
Minimum Tax Distribution; provided, however, that in no event may a Member receive a distribution of Available Cash with respect to a Unit if such Member is entitled to receive a dividend from the Managing Member which is derived from
a distribution of Available Cash to the Managing Member with respect to a Common Share for which such Unit has been redeemed or exchanged. In the event the Company is subject to any tax or other obligation that is attributable to the interest of one
or more Members in the Company, but fewer than all the Members, such tax or other obligation shall be specially allocated to, and charged against the Capital Account of, such Member or Members, and the amounts otherwise distributable to such Member
or Members pursuant to this Agreement shall be reduced by such amount. The Managing Member shall take such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with its qualification as a REIT, to cause the
Company to distribute sufficient amounts to enable the Managing Member, for so long as the Managing Member has determined to qualify as a REIT, to pay stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the
Code and Regulations (“REIT Requirements”), and (b) except to the extent otherwise determined by the Managing Member, avoid any federal income or excise tax liability of the Managing Member. 
  
 Section 5.2 Amounts Withheld. All amounts withheld pursuant to the
Code or any provisions of any state or local tax law and Section 10.5 hereof with respect to any allocation, payment or distribution to the Managing Member, or any Non-Managing Members or Assignees shall be treated as amounts distributed to
the Managing Member or such Non-Managing Members, or Assignees pursuant to Section 5.1 for all purposes under this Agreement. 
  
 Section 5.3 Distributions Upon Liquidation. Proceeds from a Liquidating Transaction shall be distributed to the Members in accordance with
Section 13.2. 
  
 ARTICLE VI 
 ALLOCATIONS 
  
 Section 6.1 Allocations For Capital Account Purposes Other than the Taxable Year of Liquidation. Subject to a preferential allocation of gain or
net income to any class of Membership Interests issued pursuant to Section 4.2(a) or 4.2(b) which is entitled to a preference 

  

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over Membership Units on the distribution of Available Cash, for purposes of maintaining the Capital Accounts and in determining the rights of the Members
among themselves, the Company’s items of income, gain, loss and deduction (computed in accordance with Section 4.4 hereof) shall be allocated among the Members for each taxable year (or portion thereof) as provided herein below:

  
 (a) Net Income. After giving effect to
the special allocations set forth in Sections 6.2 and 6.3 below, Net Income shall be allocated to the Members in accordance with their respective Percentage Interests. 
  
 (b) Net Losses. After giving effect to the special allocations set forth in Sections 6.2 and
6.3 below, Net Losses shall be allocated to the Members in accordance with their respective Percentage Interests. 
  
 (c) Nonrecourse Liabilities. For purposes of Regulations Section 1.752-3(a), the Members agree that Nonrecourse Liabilities of the
Company in excess of the sum of (i) the amount of Membership Minimum Gain and (ii) the total amount of Nonrecourse Built-in Gain shall be allocated among the Members in the manner determined by the Managing Member, provided that such
allocation shall be permissible under Regulations Section 1.752-3. 
  
 (d) Gains. Any gain allocated to the Members upon the sale or other taxable disposition of any Company asset shall to the extent possible, after taking into account other required allocations of gain pursuant
to Section 6.3 below, be characterized as Recapture Income in the same proportions and to the same extent as such Members have been allocated any deductions directly or indirectly giving rise to the treatment of such gains as Recapture
Income, all in such a manner consistent with Regulations Section 1.1245-1. 
  
 Section 6.2 Allocations for Capital Account Purposes in the Taxable Year of Liquidation. Subject to Section 6.3, the Net Income and Net Loss of the Company for the taxable year of liquidation of the
Company shall be allocated prior to the final liquidating distributions of the Company and shall be allocated first to eliminate any Member’s Adjusted Capital Account Deficit and then, to the extent permissible under Sections 704(b) and
514(c)(9) of the Code, in a manner such that the Capital Accounts of the Members immediately prior to such final liquidating distributions are equal to the amount which would have been distributable to the Members under Section 5.1 if such
distributions were to be governed by Section 5.1. Notwithstanding the preceding sentence, actual distributions made subsequent to the allocations under this Section 6.2 shall be made pursuant to Section 5.3. 
  
 Section 6.3 Special Allocation Rules. Notwithstanding any other
provision of this Agreement, the following special allocations shall be made in the following order: 
  
 (a) Minimum Gain Chargeback. Notwithstanding any other provisions of Article VI, if there is a net decrease in Membership Minimum
Gain during any Membership 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 

  

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Member’s share of the net decrease in Membership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
6.3(a) is intended to comply with the minimum gain chargeback requirements in Regulations Section 1.704-2(f) and for purposes of this Section 6.3(a) only, each Member’s Adjusted Capital Account Deficit shall be determined prior to
any other allocations pursuant to Section 6.1 of the Agreement with respect to such fiscal year and without regard to any decrease in Member Minimum Gain during such fiscal year. 
  
 (b) Member Minimum Gain Chargeback. Notwithstanding any other provision of Article VI (except
Section 6.3(a) hereof), if there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Membership Year, each Member who has a share of the Member Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net
decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(i)(4). This Section 6.3(b) is intended to comply with the minimum gain chargeback
requirement in such Section of the Regulations and shall be interpreted consistently therewith. Solely for purposes of this Section 6.3(b), each Member’s Adjusted Capital Account Deficit shall be determined prior to any other allocations
pursuant to Article VI of this Agreement with respect to such fiscal year, other than allocations pursuant to Section 6.3(a) hereof. 
  
 (c) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations or distributions described
in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), and after giving effect to the allocations required under Sections 6.3(a) and 6.3(b) hereof, such Member has an Adjusted Capital
Account Deficit, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, its Adjusted Capital Account Deficit created by such
adjustments, allocations or distributions as quickly as possible. It is intended that this Section 6.3(c) qualify and be construed as a “qualified income offset” within the meaning of Regulations 1.704-1(b)(2)(ii)(d), which
shall be controlling in the event of a conflict between such Regulations and this Section 6.3(c). 
  
 (d) Nonrecourse Deductions. Nonrecourse Deductions for any taxable period shall be allocated to the Members in the manner
determined by the Managing Member, provided that such allocation shall be permissible under Section 704(b) of the Code. 
  

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 (e) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any
fiscal year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulations Sections 1.704-2(b)(4)
and 1.704-2(i)(2). 
  
 (f) Code Section 754
Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations. 
  
 Section 6.4 Allocations for Tax Purposes.

  
 (a) General. Except as otherwise
provided in this Section 6.4, for Federal income tax purposes, each item of income, gain, loss and deduction shall be allocated among the Members in the same manner as its correlative item of “book” income, gain, loss or deduction
is allocated pursuant to Sections 6.1 and 6.3 of this Agreement. 
  
 (b) To Eliminate Book-Tax Disparities. In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, and deduction shall be allocated for Federal income tax purposes among the Members as follows: 
  
 (1) (i) In the case of a Contributed Property, such items attributable thereto shall be allocated among the Members consistent with the
principles of Section 704(c) of the Code in a manner that takes into account the variation between the 704(c) Value of such property and its adjusted basis at the time of contribution, and (ii) any item of Residual Gain or Residual Loss attributable
to a Contributed Property shall be allocated among the Members in the same manner as its correlative item of “book” gain or loss is allocated pursuant to Sections 6.1 and 6.3 of this Agreement. 
  
 (2) (i) In the case of an Adjusted Property, such items
shall (A) first, be allocated among the Members in a manner consistent with the principles of Section 704(c) of the Code in a manner to take into account the Unrealized Gain or Unrealized Loss attributable to such property and the allocations
thereof pursuant to Section 4.4 and (B) second, in the event such property was originally a Contributed Property, be allocated among the Members in a manner consistent with Section 6.4(b)(1)(i), and (ii) any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be allocated among the Members in the same manner as its correlative item of “book” gain or loss is allocated pursuant to Sections 6.1 and 6.4 of this Agreement.

  

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 (3) All other items of income, gain, loss and deduction shall be allocated among the
Members in the same manner as their correlative item of “book” gain or loss is allocated pursuant to Sections 6.1 and 6.3 of this Agreement. 
  
 (c) Power of Managing Member to Elect Method. To the extent Treasury Regulations promulgated pursuant
to Section 704(c) of the Code permit a partnership to utilize alternative methods to eliminate the disparities between the agreed value of property and its adjusted basis, and subject to any agreements existing between the Company and any Member or
Members prior to the date hereof, the Managing Member shall have the authority to elect the method to be used by the Company and such election shall be binding on all Members. 
  
 ARTICLE VII 
 MANAGEMENT AND OPERATION OF BUSINESS 
  
 Section 7.1
Management. 
  
 (a) Powers of Managing
Member. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Company are exclusively vested in the Managing Member, and no Non-Managing Member shall have any right to participate in
or exercise control or management power over the business and affairs of the Company. Notwithstanding anything to the contrary in this Agreement, the Managing Member may not be removed by the Non-Managing Members with or without cause. In addition
to the powers now or hereafter granted a Managing Member of a limited liability company under applicable law or which are granted to the Managing Member under any other provision of this Agreement, the Managing Member, subject to Section 7.3
hereof, shall have full power and authority to do all things deemed necessary or desirable by it to conduct the business of the Company, to exercise all powers set forth in Section 3.2 hereof and to effectuate the purposes set forth in
Section 3.1 hereof including, without limitation: 
  
 (1) the making of any expenditures (including, without limitation, making prepayments on loans and borrowing money to permit the Company to make distributions to its Members in such amounts as will permit the Managing
Member (so long as the Managing Member has determined to qualify as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its
stockholders sufficient to permit the Managing Member to maintain REIT status), the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by mortgage, deed of trust or other lien or encumbrance on the Company’s assets) and the incurring of any obligations it deems necessary for the conduct of the activities of the Company; 

 
 (2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to the New York Stock Exchange, governmental or other 

  

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agencies having jurisdiction over the business or assets of the Company, the registration of any class of securities of the Company under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the listing of any debt securities of the Company on any exchange; 
  
 (3) the acquisition, disposition, sale, conveyance, financing, refinancing, mortgage, pledge, encumbrance, hypothecation, contribution or
exchange of any assets of the Company or the merger or other combination of the Company with or into another entity on such terms as the Managing Member deems proper; 
  
 (4) the use of the assets of the Company (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees fit including, without limitation, the financing of the assets and the operations of the Managing Member, the Company or any of the Company’s Subsidiaries, the lending of
funds to other Persons (including the Managing Member or any of the Company’s Subsidiaries) and the repayment of obligations of the Company and its Subsidiaries and any other Person in which it has an equity investment and the making of capital
contributions to its Subsidiaries, the holding of any real, personal and mixed property of the Company in the name of the Company or in the name of a nominee or trustee (subject to Section 7.10), the creation, by grant or otherwise, of
easements or servitudes, and the performance of any and all acts necessary or appropriate to the operation of the Company assets including, but not limited to, applications for rezoning, objections to rezoning, constructing, altering, improving,
repairing, renovating, rehabilitating, razing, demolishing or condemning any improvements or property of the Company or any Subsidiary of the Company; 
  
 (5) the negotiation, execution, and performance of any contracts, conveyances or other instruments (including with Affiliates of the
Company to the extent provided in Section 7.6) that the Managing Member considers useful or necessary to the conduct of the Company’s operations or the implementation of the Managing Member’s powers under this Agreement including,
without limitation, the execution and delivery of leases on behalf of or in the name of the Company (including the lease of Company Property for any purpose and without limit as to the term thereof, whether or not such term (including renewal terms)
shall extend beyond the date of termination of the Company and whether or not the portion so leased is to be occupied by the lessee or, in turn, subleased in whole or in part to others); 
  
 (6) the opening and closing of bank accounts, the investment of Company funds in securities, certificates of
deposit and other instruments, and the distribution of Company cash or other Company assets in accordance with this Agreement; 
  
 (7) the selection and dismissal of employees of the Company or the Managing Member (including, without limitation, employees having titles
such as 

  

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“president”, “vice president”, “secretary” and “treasurer”), and the engagement and dismissal of agents, outside
attorneys, accountants, engineers, appraisers, consultants, contractors and other professionals on behalf of the Managing Member or the Company and the determination of their compensation and other terms of employment or hiring; 
  
 (8) the maintenance of such insurance for the benefit of the
Company and the Members and the directors and officers of the Company as it deems necessary or appropriate; 
  
 (9) the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships,
joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contribution of property to, its Subsidiaries and any other Person in which it has an equity investment from time
to time); provided, that, as long as the Managing Member has determined to continue to qualify as a REIT, the Company may not engage in any such formation, acquisition or contribution that could cause the Managing Member to fail to qualify as
a REIT; 
  
 (10) the control of any matters
affecting the rights and obligations of the Company, including the conduct of litigation and the incurring of legal expense and the settlement of claims and litigation, and the indemnification of any Person against liabilities and contingencies to
the extent permitted by law; 
  
 (11) the
undertaking of any action in connection with the Company’s direct or indirect investment in its Subsidiaries or any other Person (including, without limitation, the contribution or loan of funds to, incurring indebtedness on behalf of, or
guaranteeing the obligations of any such Persons); 
  
 (12) the determination of the fair market value of any Company property distributed in kind using such reasonable method of valuation as it may adopt; 
  

(13) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or
improvements owned by the Company or any Subsidiary of the Company or any Person in which the Company has made a direct or indirect equity investment; 
  
 (14) holding, managing, investing and reinvesting cash and other assets of the Company; 
  
 (15) the collection and receipt of revenues and income of
the Company; 
  
 (16) the exercise, directly or
indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Company; 
  

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 (17) the exercise of any of the powers of the Managing Member enumerated in this
Agreement on behalf of or in connection with any Subsidiary of the Company or any other Person in which the Company has a direct or indirect interest, or jointly with any such Subsidiary or other Person; 
  
 (18) the exercise of any of the powers of the Managing
Member enumerated in this Agreement on behalf of any Person in which the Company does not have an interest pursuant to contractual or other arrangements with such Person; 
  
 (19) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the Managing Member for the
accomplishment of any of the powers of the Managing Member enumerated in this Agreement; 
  
 (20) the issuance of Membership Interests, as appropriate, pursuant to Section 4.2 of this Agreement; and 
  
 (21) the consummation of the Formation and Structuring
Transactions. 
  
 (b) No Approval Required for
Above Powers. Except as expressly provided in this Agreement (including, without limitation, the last sentence of this Section 7.1(b)), each of the Members agrees that the Managing Member is authorized to execute, deliver and perform the
above-mentioned agreements and transactions on behalf of the Company without any further act, approval or vote of the Members, notwithstanding any other provision of this Agreement, the Act or any applicable law, rule or regulation to the fullest
extent permitted under the Act or other applicable law, rule or regulation. The execution, delivery or performance by the Managing Member or the Company of any agreement authorized or permitted under this Agreement shall not constitute a breach by
the Managing Member of any duty that the Managing Member may owe the Company or the Non-Managing Members or any other Persons under this Agreement or of any duty stated or implied by law or equity. 
  
 (c) Insurance. At all times from and after the date
hereof, the Managing Member may cause the Company to obtain and maintain casualty, liability and other insurance on Company Properties and liability insurance for the Indemnitees hereunder. The right to procure such insurance on behalf of the
Indemnitees shall in no way mitigate or otherwise affect the right of any such Indemnitee to indemnification under Section 7.7. 
  
 (d) Working Capital Reserves. At all times from and after the date hereof, the Managing Member may cause the Company to establish
and maintain working capital reserves in such amounts as the Managing Member, in its sole and absolute discretion, deems appropriate and reasonable from time to time. 
  
 (e) No Obligation to Consider Tax Consequences to Non-Managing Members. In exercising its authority
under this Agreement, the Managing Member may, 

  

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but shall be under no obligation to, take into account the tax consequences to any Member of any action taken by it. The Managing Member and the Company
shall not have liability to a Non-Managing Member under any circumstances as a result of an income tax liability incurred by such Non-Managing Member as a result of an action (or inaction) by the Managing Member pursuant to its authority under this
Agreement. 
  
 (f) No Obligation To Expend
Individual Funds, etc. Except as otherwise provided herein, to the extent the duties of the Managing Member require expenditures of funds to be paid to third parties, the Managing Member shall not have any obligations hereunder except to the
extent that Company funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the Managing Member, in its capacity as such, to expend its individual funds for
payment to third parties or to undertake any individual liability or obligation on behalf of the Company. 
  
 Section 7.2 Certificate of Formation. To the extent that such action is determined by the Managing Member to be reasonable and necessary or
appropriate, the Managing Member shall file amendments to and restatements of the Certificate and do all the things to maintain the Company as a limited liability company (or an entity in which the Non-Managing Members have limited liability) under
the laws of the State of Delaware and each other jurisdiction in which the Company may elect to do business or own property. Subject to the terms of Section 8.5(a)(4) hereof, the Managing Member shall not be required, before or after filing,
to deliver or mail a copy of the Certificate, as it may be amended or restated from time to time, to any Non-Managing Member. The Managing Member shall use all reasonable efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited liability company (or an entity in which the Non-Managing Members have limited liability) in the State of Delaware and any other
jurisdiction in which the Company may elect to do business or own property. 
  
 Section 7.3 Restrictions on Managing Member’s Authority. The Managing Member may not, without the written Consent of all of the Non-Managing Members, take any action in contravention of this Agreement
including, without limitation: 
  
 (a) take any
action that would make it impossible to carry on the ordinary business of the Company, except as otherwise provided in this Agreement (provided that this restriction shall not be deemed to restrict the sale, lease, transfer or disposition of all or
substantially all of the Company’s assets as may otherwise be provided herein); 
  
 (b) possess Company property, or assign any rights in specific Company property, for other than a Company purpose except as otherwise
provided in this Agreement (other than this Section 7.3); 
  
 (c) admit a Person as a Member, except as otherwise provided in this Agreement; or 
  

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 (d) perform any act that would subject a Member to personal liability for the debts,
obligations and liabilities of the Company except as provided herein or under the Act. 
  
 Section 7.4 Responsibility for Expenses. 
  
 (a) No Compensation. Except as provided in this Section 7.4 and elsewhere in this Agreement (including the provisions of
Articles V and VI regarding distributions, payments and allocations to which it may be entitled), the Managing Member shall not be compensated for its services as Managing Member of the Company. 
  
 (b) Responsibility for Ownership and Operation
Expenses. The Company shall be responsible for and shall pay all expenses relating to the Company’s ownership of its assets, and the operation of, or for the benefit of, the Company. The Managing Member is hereby authorized to pay
compensation for accounting, administrative, legal, technical, management and other services rendered to the Company. The Managing Member shall be reimbursed on a monthly basis, or such other basis as the Managing Member may determine in its sole
and absolute discretion, for all expenses it incurs relating to the Company’s ownership of its assets and the operation of, or for the benefit of, the Company; provided, however, that the amount of any such reimbursement shall be
reduced by any interest or other amounts earned by the Managing Member with respect to bank accounts or other instruments held by it as permitted in Section 7.5(a). The Non-Managing Members acknowledge that all such expenses of the Managing
Member are deemed to be for the benefit of the Company. Such reimbursements shall be in addition to any reimbursement to the Managing Member as a result of indemnification pursuant to Section 7.7 hereof. In the event that certain expenses are
incurred for the benefit of the Company and other entities (including the Managing Member), such expenses shall be allocated to the Company and such other entities in such a manner as the Managing Member in its sole and absolute discretion deems
fair and reasonable. All payments and reimbursements hereunder shall be characterized for federal income tax purposes as expenses of the Company incurred on its behalf, and not as expenses of the Managing Member. 
  
 (c) Responsibility for Organization Expenses. The
Company shall be responsible for and shall pay all expenses incurred relating to the admission of the Managing Member to the Company. 
  
 (d) Common Share Repurchases. If the Managing Member shall elect to purchase from its stockholders Common Shares for the purpose of
delivering such Common Shares to satisfy an obligation under any dividend reinvestment program adopted by the Managing Member, any employee stock purchase plan adopted by the Managing Member, or any similar obligation or arrangement undertaken by
the Managing Member in the future or for the purpose of retiring such Common Shares, the purchase price paid by the Managing Member for such Common Shares and any other expenses incurred by the Managing Member in connection with such purchase shall
be considered expenses of the Company and shall be advanced to the Managing Member or reimbursed to the Managing Member, subject to the condition that: (i) if such Common 

  

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Shares subsequently are sold by the Managing Member, the Managing Member shall pay to the Company any proceeds received by the Managing Member for such
Common Shares (which sales proceeds shall include the amount of dividends reinvested under any dividend reinvestment or similar program; provided, that a transfer of Common Shares for Membership Units pursuant to Section 4.2(e) would not be
considered a sale for such purposes); and (ii) if such Common Shares are not retransferred by the Managing Member within thirty (30) days after the purchase thereof, or the Managing Member otherwise determines not to retransfer such Common Shares,
the Managing Member shall cause the Company to redeem a number of Membership Units held by the Managing Member equal to the number of such Common Shares, as adjusted (x) pursuant to Section 7.5 (in the event the Managing Member acquires
material assets, other than on behalf of the Company) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options, and distributions of evidences
of indebtedness or assets relating to assets not received by the Managing Member pursuant to a pro rata distribution by the Company (in which case such advancement or reimbursement of expenses shall be treated as having been made as a distribution
in redemption of such number of Membership Units held by the Managing Member). 
  
 (e) If and to the extent any reimbursements to the Managing Member pursuant to this Section 7.4 constitute gross income of the
Managing Member (as opposed to the repayment of advances made by the Managing Member on behalf of the Company), such amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Company and all Members, and shall not be treated as distributions for purposes of computing the Members’ Capital Accounts. 
  
 Section 7.5 Outside Activities of the Managing Member. 
  
 (a) The Managing Member shall not directly or indirectly enter into or conduct any business, other than in connection with the ownership,
acquisition and disposition of Membership Interests as a Managing Member or Non-Managing Member and the management of the business of the Company, its operation as a public reporting company with a class (or classes) of securities registered under
the Exchange Act and listed on the New York Stock Exchange, its operation as a REIT and such activities as are incidental thereto. The Managing Member shall not own any assets other than Membership Interests (except for certain interests in Company
Properties held directly by the Managing Member or which have been caused by the Managing Member to be contributed to or purchased by Subsidiaries, which interests shall not exceed 1% of the aggregate economic interests of any property) and other
than such bank accounts or similar instruments as it deems necessary to carry out its responsibilities contemplated under this Agreement and the Charter. The Managing Member and Affiliates of the Managing Member may acquire Non-Managing Membership
Interests and shall be entitled to exercise all rights of a Non-Managing Member relating to such Non-Managing Membership Interests. 
  

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 (b) Purchases of Shares. In the event the Managing Member purchases Shares, then
the Managing Member shall cause the Company to purchase from it an equal number of Membership Units (after application of the Unit Adjustment Factor) on the same terms that the Managing Member purchased such Shares. 
  
 Section 7.6 Contracts with Affiliates. 
  
 (a) Loans. The Managing Member may cause the Company
to lend or contribute to its Subsidiaries or other Persons in which the Company has an equity investment, and such Persons may borrow funds from the Company, on terms and conditions established in the sole and absolute discretion of the Managing
Member. The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person. 
  
 (b) Transfers of Assets. Except as provided in Section 7.5(a), the Managing Member may cause the Company to transfer assets
to joint ventures, other partnerships, corporations or other business entities in which the Company is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law as the Managing
Member in its sole discretion deems advisable. 
  
 (c) Employee Benefit Plans. The Managing Member, in its sole and absolute discretion and without the approval of the Non-Managing Members, may propose and adopt on behalf of the Managing Member and the Company employee benefit plans
funded by the Company for the benefit of employees of the Managing Member, the Company, Subsidiaries of the Company or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Company, the
Managing Member, or any of the Company’s Subsidiaries, including any such plan which requires the Company, the Managing Member or any of the Company’s Subsidiaries to issue or transfer Membership Units to employees. The Managing Member
also is expressly authorized to cause the Company to issue to it Membership Units corresponding to Common Shares issued by the Managing Member pursuant to any such plan or any similar or successor plan and to repurchase such Membership Units to the
extent necessary to permit the Managing Member to repurchase such Common Shares in accordance with such plan. 
  
 (d) Other Agreements. The Managing Member is expressly authorized to enter into, on its own behalf or in the name and on behalf of
the Company, asset management agreements, cross-indemnity agreements, registration rights agreements with respect to the Common Shares, right of first opportunity arrangements or other conflict avoidance agreements with various Affiliates of the
Company and the Managing Member on such terms as the Managing Member, in its sole and absolute discretion, believes are advisable. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Company, and any
insurance proceeds from any liability policy covering the Managing Member and any Indemnitee, and neither the Managing Member nor any Non-Managing Member shall have any obligation to contribute to the capital of the Company or otherwise provide
funds to enable the Company to fund its 

  

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obligations under this Section 7.7, except to the extent otherwise expressly agreed to by such Member and the Company. 
  
 Section 7.7 Indemnification. 
  
 (a) General. The Company shall indemnify, in
accordance with and to the fullest extent now or hereafter permitted by law, any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the Person is or was a Member, director, officer, employee or agent of the Company or the Managing Member, or is or was serving
at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the Person in connection with such action, suit or proceeding if the Person acted in good faith and in a manner the Person reasonably believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to believe the Person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that the Person did not act in good faith and in a manner which the Person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that the Person’s conduct was unlawful. 
  
 (b) Actions in the Right of the Company. The Company shall indemnify any Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Person is or was a Member, director, officer, employee or agent of the Company or the
Managing Member, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually
and reasonably incurred by the Person in connection with the defense or settlement of such action or suit if the Person acted in good faith and in a manner the Person reasonably believed to be in or not opposed to the best interests of the Company
and except that no indemnification shall be made in respect of any claim, issue or matter as to which such Person shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnity or such expenses which such court shall deem proper.

  
 (c) Authorization. Any indemnification
under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the present or former Member, director, officer, employee or
agent is proper in the circumstances because the Person has met the applicable standard of conduct set forth in subsections (a) and (b) of 

  

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this section. Such determination shall be made in the sole and absolute discretion of the Managing Member. 
  
 (d) In Advance of Final Disposition. Expenses
(including attorneys’ fees) incurred by a Person entitled to indemnification hereunder in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Company in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Person to repay such amount if it shall ultimately be determined that such Person is not entitled to be indemnified by the Company as authorized in this
section. Such expenses (including attorneys’ fees) incurred by such Persons may be so paid upon such terms and conditions, if any, as the Managing Member deems appropriate. 
  
 (e) Non-Exclusive Section. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Agreement shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any agreement, or otherwise, both as to action in such Person’s official
capacity and as to action in another capacity while holding such office. 
  
 (f) Insurance. The Company shall have power to purchase and maintain insurance on behalf of any Person who is or was a Member, director, officer, employee or agent of the Company, or is or was serving at the
request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such Person and incurred by such Person in any such capacity, or
arising out of such Person’s status as such, whether or not the Company would have the power to indemnify such Person against such liability under this section. 
  
 (g) Merger and Consolidation; Other Enterprises. For purposes of this section, references to
“the Company” shall include, in addition to the resulting entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had
power and authority to indemnify its members, directors, officers, and employees or agents, so that any person who is or was a Member, director, officer, employee, or agent of such constituent entity, or is or was serving at the request of such
constituent entity as a director, officer, employee or agent of another corporation, partnership, joint venture trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as
such Person would have with respect to such constituent entity if its separate existence had continued. For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines”
shall include any excise taxes assessed on a Person with respect to any employee benefit plan; and references to “serving at the request of the Company” shall include any service as a Member, director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such Member, director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a Person who acted in good faith and in a manner such
Person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed 

  

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to have acted in a manner “not opposed to the best interests of the Company” as referred to in this section. 
  
 (h) Continuation. The indemnification and advancement
of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a Person who has ceased to be a Member, director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a Person. 
  
 (i) Interested Transactions. A Person entitled to indemnification hereunder shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement. 
  
 (j) Binding Effect. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors,
assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the Company’s liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted. 
  
 (k) Reimbursements to Managing Member Shall Not Be Treated As Distributions. If and to the extent any reimbursements to the
Managing Member pursuant to this Section 7.7 constitute gross income of the Managing Member (as opposed to the repayment of advances made by the Managing Member on behalf of the Company) such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Company and all Members, and shall not be treated as distributions for purposes of computing the Members’ Capital Accounts. 
  
 Section 7.8 Liability of the Managing Member. 
  
 (a) General. Notwithstanding anything to the contrary
set forth in this Agreement, the Managing Member shall not be liable for monetary damages to the Company, any Members or any Assignees for losses sustained or liabilities incurred as a result of errors in judgment or of any act or omission, unless
(i) the Managing Member actually received an improper benefit in money, property or services (in which case, such liability shall be for the amount of the benefit in money, property or services actually received), or (ii) the Managing Member’s
action or failure to act was the result of active and deliberate dishonesty, gross negligence or bad faith and was material to the cause of action being adjudicated; provided, however, that the Managing Member shall owe the same duty
of care to the Non-Managing Members as its directors owe to the Shareholders of the Managing Member. 
  

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 (b) No Obligation to Consider Interests of Non-Managing Members. The Non-Managing
Members expressly acknowledge that the Managing Member is acting on behalf of the Company, the Non-Managing Members and the Managing Member’s shareholders collectively, that, except as otherwise provided in Section 7.8(a), the Managing
Member is under no obligation to give priority to the separate interests of the Managing Member’s shareholders or the Non-Managing Members (including, without limitation, the tax consequences to Non-Managing Members or Assignees) in deciding
whether to cause the Company to take (or decline to take) any actions which the Managing Member has undertaken in good faith on behalf of the Company. If there is a conflict between the interests of the Managing Member’s shareholders on the one
hand and the interests of the Non-Managing Members on the other, the Managing Member will endeavor in good faith to resolve the conflict in a manner not adverse to either the Managing Member’s shareholders or the Non-Managing Members; provided,
however, that for so long as the Managing Member owns a controlling interest in the Company, any conflict that cannot be resolved in a manner not adverse to either the Managing Member’s shareholders or the Non-Managing Members will be resolved
in favor of the Managing Member’s shareholders. The Managing Member shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Non-Managing Members in connection with such decisions with
respect to causing the Company to take (or decline to take) any actions which the Managing Member has undertaken in good faith on behalf of the Company, unless (i) the Managing Member actually received an improper benefit in money, property or
services (in which case, such liability shall be for the amount of the benefit in money, property or services actually received), or (ii) the Managing Member’s action or failure to act was the result of active and deliberate dishonesty, gross
negligence or bad faith and was material to the cause of action being adjudicated. 
  
 (c) Acts of Agents. Subject to its obligations and duties as Managing Member set forth in Section 7.1(a) hereof, the
Managing Member may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The Managing Member shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by it in good faith. 
  
 (d) Effect of Amendment. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Managing
Member’s liability to the Company and the Non-Managing Members under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted. 
  
 Section 7.9 Other Matters Concerning the Managing Member. 
  

(a) Reliance on Documents. The Managing Member may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other 

  

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paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. 
  
 (b) Reliance on Consultants and Advisers. The
Managing Member may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such Managing Member reasonably believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

  
 (c) Action Through Officers and
Attorneys. The Managing Member shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers and a duly appointed attorney or attorneys-in-fact. Each such attorney shall, to
the extent provided by the Managing Member in the power of attorney, have full power and authority to do and perform all and every act and duty which is permitted or required to be done by the Managing Member hereunder. 
  
 (d) Action Related to Maintaining REIT Status.
Notwithstanding any other provisions of this Agreement or any non-mandatory provision of the Act, any action of the Managing Member on behalf of the Company or any decision of the Managing Member to refrain from acting on behalf of the Company,
undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the Managing Member, for so long as the Managing Member has determined to qualify as a REIT, to continue to qualify as
a REIT or (ii) to avoid the Managing Member incurring any taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Members. 
  
 Section 7.10 Title to Company Assets. Company assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually or collectively, shall have any ownership interest in such Company assets or any portion thereof. Title to any
or all of the Company assets may be held in the name of the Company, the Managing Member or one or more nominees, as the Managing Member may determine, including Affiliates of the Managing Member. The Managing Member hereby covenants, declares and
warrants that any Company assets as to which legal title is held in the name of the Managing Member or any nominee or Affiliate of the Managing Member shall be held by the Managing Member or such nominee or Affiliate for the exclusive use and
benefit of the Company in accordance with the provisions of this Agreement; provided, however, that the Managing Member shall use its best efforts to cause beneficial and record title to such assets to be vested in the Company as soon
as reasonably practicable. All Company assets shall be recorded as the property of the Company in its books and records, irrespective of the name in which legal title to such Company assets is held. 
  
 Section 7.11 Reliance by Third Parties. Notwithstanding anything to
the contrary in this Agreement, any Person dealing with the Company shall be entitled to assume that the Managing Member has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Company and to enter
into any contracts on behalf of the 

  

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Company, and such Person shall be entitled to deal with the Managing Member as if it were the Company’s sole party in interest, both legally and
beneficially. Each Non-Managing Member hereby waives any and all defenses or other remedies which may be available against such Person to contest, negate or disaffirm any action of the Managing Member in connection with any such dealing. In no event
shall any Person dealing with the Managing Member or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the Managing Member or
its representatives. Each and every certificate, document or other instrument executed on behalf of the Company by the Managing Member or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming
thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Company and (c) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Company.

  
 ARTICLE VIII 
 RIGHTS AND OBLIGATIONS OF NON-MANAGING MEMBERS 
  
 Section 8.1 Limitation of Liability. The Non-Managing Members shall have no liability under this Agreement except as expressly provided in this
Agreement, including Section 10.5 hereof, or under the Act. 
  
 Section 8.2 Management of Business. No Non-Managing Member or Assignee (other than the Managing Member, any of its Affiliates or any officer, director, employee, member or agent of the Managing Member, the Company or any of their
Affiliates, in their capacity as such) shall take part in the operation, management or control (within the meaning of the Act) of the Company’s business, transact any business in the Company’s name or have the power to sign documents for
or otherwise bind the Company. The transaction of any such business by the Managing Member, any of its Affiliates or any officer, director, employee, member or agent or trustee of the Managing Member, the Company or any of their Affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Non-Managing Members or Assignees under this Agreement. 
  
 Section 8.3 Outside Activities of Non-Managing Members. Subject to any agreements entered into pursuant to Section 7.6 hereof and subject to
any other agreements entered into by a Non-Managing Member or its Affiliates with the Managing Member, the Company or a Subsidiary, the following rights shall govern outside activities of Non-Managing Members: (a) any Non-Managing Member (other than
the Managing Member) and any officer, director, employee, agent, trustee, Affiliate or shareholder of any Non-Managing Member shall be entitled to and may have business interests and engage in business activities in addition to those relating to the
Company, including business interests and activities in direct competition with the Company; (b) neither the Company nor any Members shall have any rights by virtue of this Agreement in any business ventures of any Non-Managing Member or Assignee;
(c) none of the Non-Managing Members (in their capacities as Non-Managing Members) nor any other Person shall have any rights by virtue of this Agreement or the Company relationship established hereby in any business ventures of any other Person,
other than the Managing Member, and such Person 

  

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shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Company, any Non-Managing Member or any such
other Person, even if such opportunity is of a character which, if presented to the Company, any Non-Managing Member or such other Person, could be taken by such Person; (d) the fact that a Non-Managing Member may encounter opportunities to
purchase, otherwise acquire, lease, sell or otherwise dispose of real or personal property and may take advantage of such opportunities himself or introduce such opportunities to entities in which it has or has not any interest, shall not subject
such Member to liability to the Company or any of the other Members on account of the lost opportunity; and (e) except as otherwise specifically provided herein, nothing contained in this Agreement shall be deemed to prohibit a Non-Managing Member
or any Affiliate of a Non-Managing Member from dealing, or otherwise engaging in business, with Persons transacting business with the Company or from providing services relating to the purchase, sale, rental, management or operation of real or
personal property (including real estate brokerage services) and receiving compensation therefor, from any Persons who have transacted business with the Company or other third parties. Nothing in this Section 8.3 is intended to alter any
fiduciary obligations of any Person under applicable Delaware law. 
  
 Section 8.4 Return of Capital and Priority Among Members. Except pursuant to the Redemption Rights set forth in Section 4.2(e) hereof, no Member shall be entitled to the withdrawal or return of his or her Capital Contribution,
except to the extent of distributions made pursuant to this Agreement or upon termination of the Company as provided herein. No Member or Assignee shall have priority over any other Member or Assignee either as to the return of Capital Contributions
or otherwise unless expressly provided in this Agreement, as to profits, losses, distributions or credits. 
  
 Section 8.5 Rights of Non-Managing Members Relating to the Company. 
  
 (a) Copies of Business Records. In addition to other rights provided by this Agreement or by the Act,
and except as limited by Section 8.5(c) hereof, each Non-Managing Member shall have the right, for a purpose reasonably related to such Non-Managing Member’s interest as a Non-Managing Member in the Company, upon written demand with a
statement of the purpose of such demand and at such Non-Managing Member’s own expense: 
  
 (1) to obtain a copy of the most recent annual and quarterly reports filed with the Securities and Exchange Commission by the Managing
Member pursuant to the Exchange Act, and each communication sent to all of the stockholders of the Managing Member; 
  
 (2) to obtain a copy of the Company’s Federal, state and local income tax returns for each Membership Year; 
  
 (3) to obtain a current list of the name and last known
business, residence or mailing address of each Member; 
  
 (4) to obtain a copy of this Agreement and the Certificate and all amendments thereto, together with executed copies of all powers of attorney 

  

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pursuant to which this Agreement, the Certificate and all amendments thereto have been executed; and 
  
 (5) to obtain true and full information regarding the amount
of cash and a description and statement of any other property or services contributed by each Member and which each Member has agreed to contribute in the future, and the date on which each became a Member. 
  
 (b) Notification of Changes in Unit Adjustment
Factor. The Company shall notify each Non-Managing Member in writing of any change made to the Unit Adjustment Factor within 10 Business Days of the date such change becomes effective. 
  
 (c) Confidential Information. Notwithstanding any
other provision of this Section 8.5, the Managing Member may keep confidential from the Non-Managing Members, for such period of time as the Managing Member determines in its sole and absolute discretion to be reasonable, any Company
information that (i) the Managing Member believes to be in the nature of trade secrets or other information the disclosure of which the Managing Member in good faith believes is not in the best interests of the Company or (ii) the Company is
required by law or by agreements with unaffiliated third parties to keep confidential. 
  
 (d) Debt Allocation. The Managing Member may allow (but shall not be required to allow) any Non-Managing Member to guarantee on a
“bottom dollar basis,” an amount of indebtedness of the Company or any successor thereto, as is necessary from time to time to provide an allocation of debt to such Non-Managing Member equal to the amount of debt then required to be
allocated to such Non-Managing Member to enable such Non-Managing Member to avoid recognizing gain pursuant to Section 731(a)(1) of the Code as a result of a deemed distribution of money to such Non-Managing Member pursuant to Section 752(b) of the
Code. The Managing Member may, in its discretion, permit other Non-Managing Members to provide similar guarantees from time to time or as a result of minimum gain chargebacks. 
  
 (e) Notice for Certain Transactions. In the event of (a) a dissolution or liquidation of the Company
or the Managing Member, (b) a merger, consolidation or combination of the Company or the Managing Member with or into another Person (including the events set forth in Sections 11.2(c) and 11.2(d)), (c) the sale of all or substantially
all of the assets of the Company or the Managing Member, or (d) the transfer by the Managing Member of all or any part of its interest in the Company, the Managing Member shall give written notice thereof to each Non-Managing Member at least twenty
(20) Business Days prior to the effective date or, to the extent applicable, record date of such transaction, whichever comes first. 
  
 ARTICLE IX 
 BOOKS, RECORDS, ACCOUNTING AND
REPORTS 
  
 Section 9.1 Records and Accounting. The
Managing Member shall keep or cause to be kept at the principal office of the Company appropriate books and records with respect to the 

  

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Company’s business, including, without limitation, all books and records necessary to provide to the Non-Managing Members any information, lists and
copies of documents required to be provided pursuant to Section 9.3 hereof or required by the Act. Any records maintained by or on behalf of the Company in the regular course of its business may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, micrographics or any other information storage device; provided, however, that the records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the
Company shall be maintained for financial purposes on an accrual basis in accordance with generally accepted accounting principles and for tax reporting purposes on the accrual basis. 
  
 Section 9.2 Fiscal Year. The fiscal year of the Company shall be the calendar year. 
  
 Section 9.3 Reports. 
  
 (a) Annual Reports. As soon as practicable, but in no
event later than 120 days after the close of each Membership Year, or such earlier date that they are filed with the Securities and Exchange Commission, the Managing Member shall cause to be mailed to each Non-Managing Member as of the close of the
Company Year, an annual report containing financial statements of the Company, or of the Managing Member if such statements are prepared solely on a consolidated basis with the Managing Member, for such Membership Year, presented in accordance with
generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the Managing Member. 
  
 (b) Quarterly Reports. As soon as practicable, but in no event later than 60 days after the close of
each calendar quarter (except the last calendar quarter of each year), or such earlier date that they are filed with the Securities and Exchange Commission, the Managing Member shall cause to be mailed to each Non-Managing Member as of the last day
of the calendar quarter, a report containing unaudited financial statements of the Company, or of the Managing Member, if such statements are prepared solely on a consolidated basis with the Managing Member, and such other information as may be
required by applicable law or regulation, or as the Managing Member determines to be appropriate. 
  
 ARTICLE X 
 TAX MATTERS 
  
 Section 10.1 Preparation of Tax Returns. The Managing Member shall arrange for the preparation and timely filing of
all returns of Company income, gains, deductions, losses and other items required of the Company for Federal and state income tax purposes and shall use all reasonable efforts to furnish the tax information reasonably required by the Managing Member
and the Non-Managing Members for Federal and state income tax reporting purposes within 60 days after the close of such taxable year. Each Non-Managing Member shall promptly provide the Managing Member with any information reasonably requested by
the Managing Member relating to any Contributed Property contributed (directly or indirectly) by such Non-Managing Member to the Company. 
  

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 Section 10.2 Tax Elections. Except as otherwise provided herein, the Managing Member shall, in its
sole and absolute discretion, determine whether to make any available election pursuant to the Code, except that the election under Section 754 of the Code in accordance with applicable regulations thereunder shall be made at the request of any
Member. The Managing Member shall have the right to seek to revoke any such election (including without limitation, any election under Section 754 of the Code) upon the Managing Member’s determination in its sole and absolute discretion that
such revocation is the best interests of the Members. 
  
 Section
10.3 Tax Matters Member. 
  
 (a)
General. The Managing Member shall be the “tax matters Member” of the Company for Federal income tax purposes. Pursuant to Section 6223(c) of the Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Company, the tax matters Member shall provide the Members notice of such receipt and shall furnish the IRS with the name, address and profit interest of each of the Non-Managing Members; provided,
however, that such information is provided to the Company by the Non-Managing Members. The Non-Managing Members shall provide such information to the Company as the Managing Member shall reasonably request. 
  
 (b) Powers. The tax matters Member is authorized, but
not required: 
  
 (1) to enter into any
settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Company items required to be taken into account by a Member for income tax purposes (such administrative proceedings being referred to as a
“tax audit” and such judicial proceedings being referred to as “judicial review”), and in the settlement agreement the tax matters Member may expressly state that such agreement shall bind all Members, except that such settlement
agreement shall not bind any Member (a) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters Member shall not have the authority to enter into a settlement agreement on
behalf of such Member or (b) who is a “notice Member” (as defined in Section 6231 of the Code) or a member of a “notice group” (as defined in Section 6223(b)(2) of the Code); 
  
 (2) in the event that a notice of a final administrative
adjustment at the Company level of any item required to be taken into account by a Member for tax purposes (a “final adjustment”) is mailed or otherwise given to the tax matters Member, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Company’s principal
place of business is located; 
  
 (3) to
intervene in any action brought by any other Member for judicial review of a final adjustment; 
  

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 (4) to file a request for an administrative adjustment with the IRS at any time and, if
any part of such request is not allowed by the IRS, to file an appropriate pleading (petition, complaint or other document) for judicial review with respect to such request; 
  
 (5) to enter into an agreement with the IRS to extend the period for assessing any tax which is attributable
to any item required to be taken into account by a Member for tax purposes, or an item affected by such item; and 
  
 (6) to take any other action on behalf of the Members of the Company in connection with any tax audit or judicial review proceeding to the
extent permitted by applicable law or regulations. 
  
 The taking of any action and the incurring of any expense by the tax matters Member in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters Member, and
the provisions relating to indemnification of the Managing Member set forth in Section 7.7 of this Agreement shall be fully applicable to the tax matters Member in its capacity as such. 
  
 (c) The tax matters Member shall, upon the request of any
Member, provide such Member with copies of any tax returns, elections or any returns or documents to be filed with the IRS at least ten Business Days prior to the date such filing is required. 
  
 (d) Reimbursement. The tax matters Member shall
receive no compensation for its services. All third-party costs and expenses incurred by the tax matters Member in performing its duties as such (including legal and accounting fees) shall be borne by the Company. Nothing herein shall be construed
to restrict the Company from engaging an accounting firm and a law firm to assist the tax matters Member in discharging its duties hereunder, so long as the compensation paid by the Company for such services is reasonable. 
  
 Section 10.4 Organizational Expenses. The Company shall elect to
deduct expenses, if any, incurred by it in organizing the Company ratably over a 60-month period as provided in Section 709 of the Code. 
  
 Section 10.5 Withholding. Each Non-Managing Member hereby authorizes the Company to withhold from or pay on behalf of or with respect to such
Non-Managing Member any amount of Federal, state, local, or foreign taxes that the Managing Member determines that the Company is required to withhold or pay with respect to any amount distributable or allocable to such Non-Managing Member pursuant
to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Company pursuant to Section 1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf of or with respect to a Non-Managing Member shall
constitute a loan by the Company to such Non-Managing Member, which loan shall be repaid by such Non-Managing Member within 15 days after notice from the Managing Member that such payment must be made unless (a) the Company withholds such payment
from a distribution which would otherwise be made to the Non-Managing Member or (b) the Managing Member determines, in its sole and absolute discretion, that such payment may be satisfied out of 

  

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the available funds of the Company which would, but for such payment, be distributed to the Non-Managing Member. Any amounts withheld pursuant to the
foregoing clauses (a) or (b) shall be treated as having been distributed to such Non-Managing Member. Each Non-Managing Member hereby unconditionally and irrevocably grants to the Company a security interest in such Non-Managing Member’s
Membership Interest to secure such Non-Managing Member’s obligation to pay to the Company any amounts required to be paid pursuant to this Section 10.5. In the event that a Non-Managing Member fails to pay any amounts owed to the Company
pursuant to this Section 10.5 when due, the Managing Member may, in its sole and absolute discretion, elect to make the payment to the Company on behalf of such defaulting Non-Managing Member, and in such event shall be deemed to have loaned
such amount to such defaulting Non-Managing Member and shall succeed to all rights and remedies of the Company as against such defaulting Non-Managing Member (including, without limitation, the right to receive distributions). Any amounts payable by
a Non-Managing Member hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal, plus four percentage points (but not
higher than the maximum lawful rate) from the date such amount is due (i.e., 15 days after demand) until such amount is paid in full. Each Non-Managing Member shall take such actions as the Company or the Managing Member shall request in
order to perfect or enforce the security interest created hereunder. 
  

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 ARTICLE XI 
 TRANSFERS AND WITHDRAWALS 
  
 Section 11.1 Transfer. 
  
 (a)
Definition. The term “transfer,” when used in this Article XI with respect to a Membership Unit, shall be deemed to refer to a transaction by which the Managing Member purports to assign its Managing Membership Interest to another
Person or by which a Non-Managing Member purports to assign its Non-Managing Membership Interest to another Person, and includes a sale, assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or
otherwise. 
  
 (b) Requirements. No
Membership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article XI. Any transfer or purported transfer of a Membership Interest not made in accordance with this Article XI
shall be null and void. 
  
 Section 11.2 Transfer of Managing
Member’s Membership Interest. 
  
 (a)
General. The Managing Member may not transfer any of its Managing Membership Interest or withdraw as Managing Member except as provided in Section 11.2(b) or in connection with a transaction described in either Section 11.2(c)
or Section 11.2(e). 
  
 (b) Transfer to
Company. The Managing Member may transfer Membership Interests held by it to the Company in accordance with Section 7.5(b) hereof. 
  
 (c) Transfer in Connection With Reclassification, Recapitalization, or Business Combination Involving Managing Member. Except as
otherwise provided in Section 11.2(d), the Managing Member shall not engage in any merger, consolidation or other business combination with or into another Person or sale of all or substantially all of its assets, or any reclassification, or
recapitalization or change of outstanding Common Shares (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination as described in the definition of “Unit Adjustment Factor”)
(“Transaction”), unless as a result of the Transaction each Non-Managing Member thereafter remains entitled to redeem each Membership Unit owned by such Non-Managing Member (after application of the Unit Adjustment Factor) for an amount of
cash, securities, or other property equal to the greatest amount of cash, securities or other property which such Non-Managing Member would have received from such Transaction, if such Non-Managing Member had exercised its Redemption Right
immediately prior to the Transaction, provided that if, in connection with the Transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50 percent of the outstanding Common Shares, the
holders of Membership Units shall receive the greatest amount of cash, securities, or other property which a Non-Managing Member would have received had it exercised the Redemption Right and received Common Shares in exchange for its Membership
Units immediately prior to the expiration of such purchase, tender or exchange offer. In connection with any merger, 

  

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consolidation or business combination described in this Section 11.2(c) in which Common Shares were exchanged for securities of the acquiring Person, the
Non-Managing Members shall (unless Non-Managing Members Consent is obtained) remain entitled to exercise their Redemption Right with respect to such Person and the Unit Adjustment Factor shall continue to apply. 
  
 (d) Merger Involving Managing Member Where Surviving
Entity’s Assets Contributed to Company. Notwithstanding Section 11.2(c), the Managing Member may merge with another entity if, under the terms of the transaction, Non-Managing Members will not engage in a sale or exchange for Federal
income tax purposes and immediately after such merger substantially all of the assets of the surviving entity, other than Membership Units held by the Managing Member, are contributed to the Company as a Capital Contribution in exchange for
Membership Units with a fair market value equal to the 704(c) Value of the assets so contributed. 
  
 (e) Pledge of Membership Units by Managing Member. The Managing Member may (i) pledge its Managing Membership Interest as security
for any obligations of the Company or the Managing Member under any credit facility that the Company may enter into from time to time, and (ii) transfer such Managing Membership Interest in the event of any foreclosure (or in lieu of any
foreclosure) on such pledge. 
  
 Section 11.3 Non-Managing
Members’ Rights to Transfer. 
  
 (a)
General. Prior to twelve (12) months after the closing of the initial public offering of Common Shares, no Non-Managing Member shall transfer all or any portion of its Membership Interests to any transferee without the consent of the Managing
Member, which consent may be withheld in its sole and absolute discretion. After such twelve (12) month anniversary and subject to the remaining provisions of this Section 11.3 as well as Section 11.4, a Non-Managing Member may
transfer all or any portion of his Membership Interest, or any of such Non-Managing Member’s rights as a Non-Managing Member, without the prior written consent of the Managing Member. In order to effect such transfer, the Non-Managing Member
must deliver to the Managing Member a duly executed copy of the instrument making such transfer and such instrument must evidence the written acceptance by the assignee of all of the terms and conditions of this Agreement and represent that such
assignment was made in accordance with all applicable laws and regulations. Notwithstanding the foregoing, any transferee of any transferred Membership Interest shall be subject to any and all ownership limitations contained in the Charter. Unless
admitted as a Non-Managing Member, no transferee, whether by a voluntary transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5. 
  
 (b) Incapacitated Non-Managing Members. If a
Non-Managing Member is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Non-Managing Member’s estate shall have all the rights of a Non-Managing Member, but not more rights than
those enjoyed by other Non-Managing Members for the purpose of settling or managing the estate and such power as the Incapacitated Non-Managing Member possessed to transfer all or any part of his or its 

  

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interest in the Company. The Incapacity of a Non-Managing Member, in and of itself, shall not dissolve or terminate the Company. 
  
 (c) Transfers Contrary to Securities Laws. The
Managing Member may prohibit any transfer otherwise permitted under this Section 11.3 by a Non-Managing Member of its Membership Units if, in the opinion of legal counsel to the Company, such transfer would require filing of a registration
statement under the Securities Act or would otherwise violate any Federal or state securities laws or regulations applicable to the Company or the Company Units. 
  
 (d) Publicly Traded Partnership Restrictions. No Member may assign or transfer any Membership Unit
(or any portion thereof or interest therein) if such assignment or transfer would result in the sum of the percentage interests in Membership Units transferred during the Company’s taxable year exceeding two percent (2%) of the total Membership
Units of the Company. Notwithstanding the foregoing, the following transfers shall be disregarded in determining whether Membership Units in excess of two percent (2%) of the Membership Units have been transferred during the Company’s taxable
year: 
  
 (1) transfers in which the tax basis of
the Membership Unit in the hands of the transferee is determined, in whole or in part, by reference to the basis of the Membership Unit in the hands of the transferor or is determined under Section 732 of the Code; 
  
 (2) transfers at death, including transfers from an estate
or testamentary trust; 
  
 (3) transfers between
members of a family (for this purpose, including only brothers and sisters (whether by the whole or half blood), spouses, ancestors and lineal descendants); 
  
 (4) transfers involving the issuance of interests by (or on behalf of) the Company in exchange for cash, property or services; 

 
 (5) transfers involving distributions from a retirement
plan qualified under Section 401(a) of the Code or an individual retirement account; 
  
 (6) transfers by a Member and any related persons (within the meaning of Section 267(b) or 707(b)(1) of the Code) in one or more
transactions during any 30 calendar day period of Membership Units representing in the aggregate more than two percent (2%) of the total Membership Units; 
  
 (7) transfers by one or more Members of Membership Units representing in the aggregate 50 percent or more of the total Membership Units in
one transaction or a series of related transactions; and 
  
 (8) transfers made pursuant to Section 4.2(e) that are made on a Non-Restricted Transfer Date. 
  

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 Any Member seeking to transfer or assign Membership Units pursuant to any of the foregoing disregarded transfers shall,
prior to such transfer or assignment, deliver to the Company a certificate of a duly authorized officer of such Member setting forth the facts relating to such transfer or assignment and the basis for disregarding such transfer for these purposes.
The Company shall, in the sole and absolute discretion of the Managing Member, determine whether to permit such transfer or assignment; provided, that any transfer that complies with any exception in Section 11.3(d)(1) through
(d)(8) shall be permitted. Any attempted transfer or assignment in contravention of the provisions of this Section 11.3(d) or that is not permitted by the Managing Member pursuant to the preceding sentence shall be null and void ab
initio, the purported transferor shall continue to be the Member for all purposes and the purported transferee shall not become a Member as a result of such purported transfer, and the Company shall in no event admit such purported transferee as a
Member or otherwise recognize any rights of such purported transferee (including, without limitation, any right to receive distributions (directly or indirectly) or to acquire any interest in the capital or profits of the Company). Any Member
seeking to transfer or assign Membership Units may request confirmation from the Company that such transfer or assignment is permissible under Section 11.3(a) or the first sentence of this Section 11.3(d). 
  
 Section 11.4 Substituted Non-Managing Members. 
  
 (a) Consent of Managing Member Required. A
Non-Managing Member shall have the right in its discretion to substitute a transferee as a Non-Managing Member in his place, in which event such substitution shall occur if the Non-Managing Member so provides; provided, however, that any transferee
desiring to become a Substituted Non-Managing Member must furnish to the Managing Member (i) evidence of acceptance in form satisfactory to the Managing Member of all of the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Article XVI and (ii) such other documents or instruments as may be required in the reasonable discretion of the Managing Member in order to effect such Person’s admission as a Substituted Non-Managing Member.

  
 (b) Rights and Duties of Substituted
Non-Managing Members. A transferee who has been admitted as a Substituted Non-Managing Member in accordance with this Article XI shall have all the rights and powers and be subject to all the restrictions and liabilities of a Non-Managing Member
under this Agreement. 
  
 (c) Amendment of
Exhibit A. Upon the admission of a Substituted Non-Managing Member, the Managing Member shall amend Exhibit A to reflect the name, address, number of Membership Units, and Percentage Interest of such Substituted Non-Managing Member and to
eliminate or adjust, if necessary, the name, address and interest of the predecessor of such Substituted Non-Managing Member. 
  
 Section 11.5 Assignees. If a Non-Managing Member, in its sole and absolute discretion, does not provide for the admission of any permitted
transferee under Section 11.4(a) as a Substituted Non-Managing Member, as described in Section 11.4, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an
assignee of a Non-Managing Membership Interest under the Act, including the right 

  

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to receive distributions from the Company and the share of Net Income, Net Losses, gain, loss and Recapture Income attributable to the Company Units assigned
to such transferee, but shall not be deemed to be a holder of Membership Units for any other purpose under this Agreement, and shall not be entitled to vote such Membership Units in any matter presented to the Non-Managing Members for a vote (such
Membership Units being deemed to have been voted on such matter in the same proportion as all Membership Units held by Non-Managing Members are voted). In the event any such transferee desires to make a further assignment of any such Membership
Units, such transferee shall be subject to all the provisions of this Article XI to the same extent and in the same manner as any Non-Managing Member desiring to make an assignment of Membership Units. 
  
 Section 11.6 General Provisions. 
  
 (a) Withdrawal of Non-Managing Member. No
Non-Managing Member may withdraw from the Company other than as a result of (i) a permitted transfer of all of such Non-Managing Member’s Membership Units in accordance with this Article XI and the transferee of such Membership Units being
admitted to the Company as a Substituted Non-Managing Member or (ii) pursuant to redemption or exchange of all of its Membership Units under Section 4.2(e). 
  
 (b) Transfer of All Membership Units by Non-Managing Member. Any Non-Managing Member who shall
transfer all of his Membership Units in a transfer permitted pursuant to this Article XI where the transferee was admitted as a Substituted Non-Managing Member or pursuant to the redemption or exchange of all of its Membership Units under Section
4.2(e) shall cease to be a Non-Managing Member. 
  
 (c) Timing of Transfers. Transfers pursuant to this Article XI may only be made on the first day of a calendar month of the Company or on a Non-Restricted Transfer Date, unless the Managing Member otherwise agrees. 
  
 (d) Allocation When Transfer Occurs. If any
Membership Interest is transferred during any quarterly segment of the Company’s fiscal year in compliance with the provisions of this Article XI or redeemed or converted pursuant to Section 4.2(e), Net Income, Net Losses, each item
thereof and all other items attributable to such interest for such fiscal year shall be divided and allocated between the transferor Member and the transferee Member in accordance with the method determined by the Managing Member, provided that such
method shall be permissible under Section 706(d) of the Code and the regulations issued thereunder. Solely for purposes of making such allocations, each of such items for the calendar month in which the transfer or redemption occurs shall be
allocated to the Person who is a Member as of midnight on the last day of said month. All distributions of Available Cash with respect to which the Membership Record Date is before the date of such transfer or redemption shall be made to the
transferor Member, and all distributions of Available Cash with Membership Record Dates thereafter shall be made to the transferee Member. 
  

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 ARTICLE XII 
 ADMISSION OF MEMBERS 
  
 Section
12.1 Admission of Successor Managing Member. A successor to all of the Managing Member’s Managing Membership Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a successor Managing Member shall be admitted
to the Company as the Managing Member, effective upon such transfer. Any such transferee shall carry on the business of the Company without dissolution. In each case, the admission shall be subject to the successor Managing Member executing and
delivering to the Company an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. 
  
 Section 12.2 Admission of Additional Non-Managing Members. 
  
 (a) General. A Person who makes a Capital
Contribution to the Company in accordance with this Agreement or who exercises an option to receive Membership Units shall be admitted to the Company as an Additional Non-Managing Member only upon furnishing to the Managing Member (i) evidence of
acceptance in form reasonably satisfactory to the Managing Member of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Article XVI hereof and (ii) such other documents or instruments
as may be required in the reasonable discretion of the Managing Member in order to effect such Person’s admission as an Additional Non-Managing Member. 
  
 (b) Consent of Managing Member Required. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be
admitted as an Additional Non-Managing Member without the consent of the Managing Member, which consent may be given or withheld in the Managing Member’s sole and absolute discretion. The admission of any Person as an Additional Non-Managing
Member shall become effective on the date upon which the name of such Person is recorded on the books and records of the Company, following the consent of the Managing Member to such admission. 
  
 Section 12.3 Amendment of Agreement and Certificate. For the admission
to the Company of any Member, the Managing Member shall take all steps necessary and appropriate under the Act to amend the records of the Company and, if necessary, to prepare as soon as practical an amendment of this Agreement (including an
amendment of Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Article XVI hereof. 
  
 ARTICLE XIII 
 DISSOLUTION AND LIQUIDATION 
  
 Section 13.1 Dissolution. The Company shall not be dissolved by the admission of Substituted Non-Managing Members or Additional Non-Managing Members or by the admission of a successor Managing Member in
accordance with the terms of this Agreement. The Company shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (“Events of Dissolution”): 
  
 (a) Withdrawal of Managing Member—an event of
withdrawal of the Managing Member, as defined in the Act, unless, within 90 days after the withdrawal all the remaining Members agree in writing to continue the business of the Company and to the appointment, effective as of the date of withdrawal,
of a substitute Managing Member; 
  

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 (b) Voluntary Dissolution—from and after the date of this Agreement, with the
Consent of a majority of the Percentage Interests of the Non-Managing Members, an election to dissolve the Company made by the Managing Member, in its sole and absolute discretion; 
  
 (c) Judicial Dissolution Decree—entry of a decree of judicial dissolution of the Company
pursuant to the provisions of the Act; 
  
 (d)
Sale of Company’s Assets—the sale or disposition of all or substantially all of the assets and properties of the Company or a related series of transactions that, taken together, result in the sale or other disposition of all or
substantially all of the assets of the Company; 
  
 (e) Bankruptcy or Insolvency of Managing Member—the Managing Member 
  
 (1) makes an assignment for the benefit of creditors; 
  
 (2) files a voluntary petition in bankruptcy; 
  
 (3) is adjudged a bankrupt or insolvent, or has entered against it an order for relief in any bankruptcy or
insolvency proceeding; 
  
 (4) files a petition
or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; 
  
 (5) files an answer or other pleading admitting or failing to contest the material allegations of a petition
filed against it in any proceeding of this nature; or 
  
 (6) seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator of the Managing Member or of all or any substantial part of its properties; or 
  
 (f) Readjustment, etc. One hundred and twenty (120) days after the commencement of any proceeding
against the Managing Member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation, the proceeding has not been dismissed, or if within 90 days after the
appointment without the Managing Member’s consent or acquiescence of a trustee, receiver or liquidator of the Managing Member or of all or any substantial part of its properties, the appointment is not vacated or stayed, or within 90 days after
the expiration of any such stay, the appointment is not vacated. 
  

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 Section 13.2 Winding Up. 
  
 (a) General. Upon the occurrence of an Event of Dissolution, the Company shall continue solely for
the purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Members. No Member shall take any action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Company’s business and affairs. The Managing Member (or, in the event there is no remaining Managing Member, any Person elected by a majority in interest of the Non-Managing Members (the “Liquidator”)) shall
be responsible for overseeing the winding up and dissolution of the Company and shall take full account of the Company’s liabilities and property and the Company property shall be liquidated as promptly as is consistent with obtaining the fair
value thereof, and the proceeds therefrom (which may, to the extent determined by the Managing Member, include shares of stock in the Managing Member) shall be applied and distributed in the following order: 
  
 (1) First, to the payment and discharge of all of the
Company’s debts and liabilities to creditors other than the Members; 
  
 (2) Second, to the payment and discharge of all of the Company’s debts and liabilities to the Members, pro rata in accordance with amounts owed to each such Member; and 
  
 (3) The balance, if any, to the Managing Member and
Non-Managing Members in accordance with their Capital Accounts, after giving effect to all contributions, distributions, and allocations for all periods. 
  
 The Managing Member shall not receive any additional compensation for any services performed pursuant to this Article XIII other than reimbursement of its
expenses as provided for in Section 7.4. 
  
 (b) Where Immediate Sale of Company’s Assets Impractical. Notwithstanding the provisions of Section 13.2(a) hereof which require liquidation of the assets of the Company, but subject to the order of priorities set forth
therein, if prior to or upon dissolution of the Company the Liquidator determines that an immediate sale of part or all of the Company’s assets would be impractical or would cause undue loss to the Members, the Liquidator may, in its sole and
absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Company (including to those Members as creditors) or, with the Consent of the Non-Managing Members holding a majority
of the Non-Managing Membership Units, distribute to the Members, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2(a) hereof, undivided interests in such Company assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Members, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. 
  

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 The Liquidator shall determine the fair market value of any property distributed in kind using such
reasonable method of valuation as it may adopt. 
  
 Section 13.3
Capital Contribution Obligation. If any Member has a deficit balance in his or her Capital Account (after giving effect to all contributions, distributions and allocations for the taxable years, including the year during which such
liquidation occurs), such Member shall have no obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit at any time shall not be considered a debt owed to the Company or to any other Person for
any purpose whatsoever, except to the extent otherwise expressly agreed to by such Member and the Company. 
  
 Section 13.4 Compliance with Timing Requirements of Regulations; Allowance for Contingent or Unforeseen Liabilities or Obligations. Notwithstanding
anything to the contrary in this Agreement, in the event the Company is “liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article XIII to the Managing Member and
Non-Managing Members who have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2) (including any timing requirements therein). In the discretion of the Managing Member, a pro rata portion of the distributions
that would otherwise be made to the Managing Member and Non-Managing Members pursuant to this Article XIII may be: (i) distributed to a liquidating trust established for the benefit of the Managing Member and Non-Managing Members for the purposes of
liquidating Company assets, collecting amounts owed to the Company, and paying any contingent or unforeseen liabilities or obligations of the Company or of the Managing Member arising out of or in connection with the Company (the assets of any such
trust shall be distributed to the Managing Member and Non-Managing Members from time to time, in the reasonable discretion of the Managing Member, in the same proportions as the amount distributed to such trust by the Company would otherwise have
been distributed to the Managing Member and Non-Managing Members pursuant to this Agreement); or (ii) withheld or escrowed to provide a reasonable reserve for Company liabilities (contingent or otherwise) and to reflect the unrealized portion of any
installment obligations owed to the Company, provided that such withheld or escrowed amounts shall be distributed to the Managing Member and Non-Managing Members in the manner and priority set forth in Section 13.2(a) as soon as practicable.

  
 Section 13.5 Other Events. Notwithstanding any other
provision of this Article XIII, in the event the Company is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Event of Dissolution has occurred, the Company’s property shall not be liquidated, the Company’s
liabilities shall not be paid or discharged, and the Company’s affairs shall not be wound up. Instead, for federal income tax purposes the Company shall be deemed to have contributed all of its assets and liabilities to a new limited liability
company in exchange for an interest in the new limited liability company and, immediately thereafter, the terminated Company shall be deemed to distribute interests in the new Company to the Managing Member and Non-Managing Members in proportion to
their respective Membership Interests in liquidation of the terminated Company. 
  
 Section 13.6 Rights of Non-Managing Members. Except as specifically provided in this Agreement, each Non-Managing Member shall look solely to the assets of the Company for the return of his Capital Contribution
and shall have no right or power to demand or receive 

  

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property other than cash from the Company. Except as specifically provided in this Agreement, no Non-Managing Member shall have priority over any other
Non-Managing Member as to the return of his Capital Contributions, distributions, or allocations. 
  
 Section 13.7 Notice of Dissolution. In the event an Event of Dissolution or an event occurs that would, but for provisions of Section 13.1,
result in a dissolution of the Company, the Managing Member shall, within 30 days thereafter, provide written notice thereof to each of the Members and to all other parties with whom the Company regularly conducts business (as determined in the
discretion of the Managing Member) and shall publish notice thereof in a newspaper of general circulation in each place in which the Company regularly conducts business (as determined in the discretion of the Managing Member). 
  
 Section 13.8 Cancellation of Certificate. Upon the completion of the
liquidation of the Company as provided in Section 13.2 hereof, the Company shall be terminated and the Certificate and all qualifications of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware
shall be canceled and such other actions as may be necessary to terminate the Company shall be taken. 
  
 Section 13.9 Reasonable Time for Winding-Up. A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the
Company and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between the Members during the
period of liquidation. 
  
 ARTICLE XIV 
 AMENDMENT OF AGREEMENT; MEETINGS 
  
 Section 14.1 Amendments. 
  
 (a) General. Amendments to this Agreement may be proposed by the Managing Member or by any Non-Managing Members holding 25 percent
or more in the aggregate of the Membership Interests held by all Non-Managing Members. Following such proposal, the Managing Member shall submit any proposed amendment to the Non-Managing Members. The Managing Member shall seek the written vote of
the Members on the proposed amendment or shall call a meeting to vote thereon and to transact any other business that it may deem appropriate. For purposes of obtaining a written consent, the Managing Member may require a response within a
reasonable specified time, but not less than 15 days, and failure to respond in such time period shall constitute a consent which is consistent with the Managing Member’s recommendation (if so recommended) with respect to the proposal;
provided, that, an action shall become effective at such time as requisite consents are received even if prior to such specified time. Except as provided in Section 14.1(b), 14.1(c) or 14.1(d), a proposed amendment shall be
adopted and be effective as an amendment hereto if it is approved by the Managing Member and it receives the Consent of Non-Managing Members holding a majority of the Percentage Interests of the Non-Managing Members. 
  

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 (b) Managing Member’s Power to Amend. Notwithstanding Section 14.1(a),
the Managing Member shall have the power, without the consent of the Non-Managing Members, to amend this Agreement as may be required to facilitate or implement any of the following purposes: 
  
 (1) to add to the obligations of the Managing Member or
surrender for the benefit of the Non-Managing Members any right or power granted to the Managing Member or any Affiliate of the Managing Member; 
  
 (2) to reflect the issuance of additional Membership Interests or the admission, substitution, termination, or withdrawal of Members in
accordance with this Agreement; 
  
 (3) to set
forth the rights, powers, duties, and preferences of the holders of any additional Membership Interests issued pursuant to Section 4.2(b) hereof; 
  
 (4) to reflect a change that is of an inconsequential nature and does not adversely affect the Non-Managing Members in any material
respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions; 
  
 (5) to satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a Federal
or state agency or contained in Federal or state law; 
  
 (6) to reflect such changes as are reasonably necessary for the Managing Member to maintain its status as a REIT, including changes which may be necessitated due to a change in applicable law (or an authoritative interpretation thereof) or
a ruling of the IRS; and 
  
 (7) to modify the
manner in which Capital Accounts are computed as set forth in Section 4.4(e). 
  
 The Managing Member will provide notice to the Non-Managing Members when any action under this Section 14.1(b) is taken. 
  

(c) Consent of Adversely Affected Member Required. Notwithstanding Section 14.1(a) and Section 14.1(b) hereof,
this Agreement shall not be amended without the Consent of each Member adversely affected if such amendment would (i) convert a Non-Managing Member’s interest in the Company into a Managing Member’s interest (except as a result of the
Managing Member acquiring such interest), (ii) modify the limited liability of a Non-Managing Member, (iii) alter rights of the Member to receive distributions pursuant to Article V, or the allocations specified in Article VI (except as permitted
pursuant to Section 4.2 and Section 14.1(b)(3) hereof), (iv) alter or modify the Redemption Right as set forth in Sections 4.2(e) and 11.2(b), and related definitions hereof, (v) cause the termination of the Company prior
to the time set forth in Sections 2.5 or 13.1 or (vi) amend this Section 14.1(c). Further, no amendment may alter the 

  

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restrictions on the Managing Member’s authority set forth in Section 7.3 without the Consent specified in that section. This Section
14.1(c) does not require unanimous consent of all Members adversely affected unless the amendment is to be effective against all Members adversely affected. 
  
 (d) When Consent of Majority of Non-Managing Membership Interests Required. Notwithstanding Section 14.1(a)
hereof, the Managing Member shall not amend Section 4.2(b), the second sentence of Section 7.1(a), Sections 7.5, 7.6, 7.8, 11.2, and 14.1(c), this Section 14.1(d) or Section 14.2 without the Consent of two-thirds of the Percentage Interests of the
Non-Managing Members. 
  
 Meetings of the
Members. 
  
 (a) General. Meetings of the
Members may be called by the Managing Member and shall be called upon the receipt by the Managing Member of a written request by Non-Managing Members holding 25 percent or more of the Membership Interests. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all Members not less than seven days nor more than 30 days prior to the date of such meeting. Members may vote in person or by proxy at such meeting. Whenever the vote or
Consent of Members is permitted or required under this Agreement, such vote or Consent may be given at a meeting of Members or may be given in accordance with the procedure prescribed in Section 14.1 hereof. Except as otherwise expressly
provided in this Agreement, the Consent of holders of a majority of the Percentage Interests shall control. 
  
 (b) Informal Action. Any action required or permitted to be taken at a meeting of the Members may be taken without a meeting if a
written Consent setting forth the action so taken is signed by a majority of the Percentage Interests of the Members (or such other percentage as is expressly required by this Agreement). Such Consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of the Percentage Interests of the Members (or such other percentage as is expressly required by this Agreement). Such Consent shall be filed with the Managing Member. An
action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. 
  
 (c) Proxies. Each Non-Managing Member may authorize any Person or Persons to act for him by proxy on all matters in which a
Non-Managing Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Non-Managing Member or his attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Non-Managing Member executing it. 
  
 (d) Conduct of Meeting. Each meeting of Members shall be conducted by the Managing Member or such
other Person as the Managing Member may appoint pursuant to such rules for the conduct of the meeting as the Managing Member or such other Person deems appropriate. 
  

 -59- 

 ARTICLE XV 
 GENERAL PROVISIONS 
  
 Section
15.1 Addresses and Notice. All notices and demands under this Agreement shall be in writing, and may be either delivered personally (which shall include deliveries by courier), by telefax, telex or other wire transmission (with request for
assurance of receipt in a manner appropriate with respect to communications of that type, provided that a confirmation copy is concurrently sent by a nationally recognized express courier for overnight delivery) or mailed, postage prepaid, by
certified or registered mail, return receipt requested, directed to the parties at their respective addresses set forth on Exhibit A, as it may be amended from time to time, and, if to the Company, such notices and demands sent in the
aforesaid manner must be delivered at its principal place of business set forth above. Unless delivered personally or by telefax, telex or other wire transmission as above (which shall be effective on the date of such delivery or transmission), any
notice shall be deemed to have been made three (3) days following the date so mailed. Any party hereto may designate a different address to which notices and demands shall thereafter be directed by written notice given in the same manner and
directed to the Company at its office hereinabove set forth. 
  
 Section 15.2 Titles and Captions. All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” and “Sections” are to Articles and Sections of this Agreement. 
  
 Section 15.3 Pronouns and Plurals. Whenever the context may require, any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. 
  
 Section 15.4 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as
may be necessary or appropriate to achieve the purposes of this Agreement. 
  
 Section 15.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted
assigns. 
  
 Section 15.6 Waiver of Partition. The Members
hereby agree that the Company Properties are not and will not be suitable for partition. Accordingly, each of the Members hereby irrevocably waives any and all rights (if any) that it may have to maintain any action for partition of any of the
Company Properties. 
  
 Section 15.7 Entire Agreement. This
Agreement constitutes the entire agreement among the parties with respect to the matters contained herein; it supersedes any prior agreements or understandings among them and it may not be modified or amended in any manner other than pursuant to
Article XIV. 
  
 Section 15.8 Securities Law Provisions.
The Membership Units have not been registered under the Federal or state securities laws of any state and, therefore, may not be resold 

  

 -60- 

 
unless appropriate Federal and state securities laws, as well as the provisions of Article XI hereof, have been complied with. 
  
 Section 15.9 Remedies Not Exclusive. Any remedies herein contained for
breaches of obligations hereunder shall not be deemed to be exclusive and shall not impair the right of any party to exercise any other right or remedy, whether for damages, injunction or otherwise. 
  
 Section 15.10 Time. Time is of the essence of this Agreement.

  
 Section 15.11 Creditors. None of the provisions of this
Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Company. 
  
 Section 15.12 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement
or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition. 
  
 Section 15.13 Execution Counterparts. This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature
hereto. 
  
 Section 15.14 Applicable Law. This Agreement
shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law. 
  
 Section 15.15 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. 
  
 Section 15.16 No Rights as Stockholders. Nothing contained in this Agreement shall be construed as conferring upon the holders of Membership Units
any rights whatsoever as stockholders of the Managing Member, including without limitation any right to receive dividends or other distributions made to stockholders of the Managing Member or to vote or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the election of directors of the Managing Member or any other matter, except as may be provided in the Investors Agreement. 
  
 ARTICLE XVI 
 POWER OF ATTORNEY 
  
 Section 16.1 Power of
Attorney. 
  
 (a) Scope. Each
Non-Managing Member and each Assignee constitutes and appoints the Managing Member, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of 

  

 -61- 

 
substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to: 
  
 (1) execute, swear to, acknowledge, deliver, publish, file
and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments or restatements thereof) that the Managing Member or the
Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Company as a limited liability company (or an entity in which the Non-Managing Members have limited liability) in the State of Delaware and
in all other jurisdictions in which the Company may conduct business or own property; (b) all instruments that the Managing Member or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this
Agreement in accordance with its terms; (c) all conveyances and other instruments or documents that the Managing Member or any Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Company pursuant to the terms
of this Agreement, including, without limitation, a certificate of cancellation; (d) all instruments relating to the admission, withdrawal, removal or substitution of any Member pursuant to, or other events described in, Article XI, XII or XIII
hereof or the Capital Contribution of any Member; and (e) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of Membership Interests; and 
  
 (2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the Managing Member, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action
which is made or given by the Members hereunder or is consistent with the terms of this Agreement or appropriate or necessary, in the sole discretion of the Managing Member, to effectuate the terms or intent of this Agreement. 
  
 Nothing contained herein shall be construed as authorizing the Managing
Member to amend this Agreement except in accordance with Article XIV hereof or as may be otherwise expressly provided for in this Agreement. 
  
 (b) Irrevocability. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Members will be relying upon the power of the Managing Member to act as contemplated by this Agreement in any filing or other action by it on behalf of the Company, and it shall survive and not be affected by
the subsequent Incapacity of any Non-Managing Member or Assignee and the transfer of all or any portion of such Non-Managing Member’s or Assignee’s Membership Units and shall extend to such Non-Managing Member’s or Assignee’s
heirs, successors, assigns and personal representatives. Each such Non-Managing Member or Assignee hereby agrees to be bound by any representation made by the Managing Member, acting in good faith pursuant to such power of attorney; and each such
Non-Managing Member or Assignee hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the Managing Member, taken in good faith under such power of attorney. Each Non-Managing Member or Assignee shall
execute and deliver to the Managing Member or the Liquidator, within 15 days after receipt of the Managing Member’s request therefor, such further designation, powers of attorney and other instruments as the Managing Member or the Liquidator,
as the case may be, deems necessary to effectuate this Agreement and the purposes of the Company. 
  

 -62- 

 IN WITNESS WHEREOF, the parties hereto have executed this Limited Liability Company Agreement of Sunstone
Hotel Partnership, LLC as of the date first written above. 
  

			
	 Managing Member:

	
	Sunstone Hotel Investors, Inc.
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

	
	 Non-Managing Members:

	
	Sunstone Hotel Investors, L.L.C.
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

	
	Sunstone/WB Hotel Investors, IV, LLC
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

	
	Sunstone/WB Manhattan Beach, LLC
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

  

 -63- 

			
	WB Hotel Investors, LLC
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

  

 -64- 

 EXHIBIT A 
 MEMBERS, CONTRIBUTIONS AND 
 MEMBERSHIP INTERESTS 
  

												
	 Name and Address of Member

	  	Cash
Contribution

	  	Agreed Value of
Contributed
Property

	  	Membership
Units

	  	Percentage
Interest

	 
	 Managing Member:
	  	 	 	  	 	 	  	 	  	 	 
	 Sunstone Hotel Investors, Inc.
 903 Calle Amanecer, Suite 100,
 San Clemente, California 92673
	  	$	 	  	$	0	  	 	  	%	 
	 Non-Managing Members:
	  	 	 	  	 	 	  	 	  	 	 
	 Sunstone Hotel Investors, L.L.C.
 903 Calle Amanecer, Suite 100,
 San Clemente, California 92673
	  	 	0	  	 	 	  	 	  	 	 
	 Sunstone/WB Hotel Investors, IV, LLC
 903 Calle Amanecer, Suite 100,
 San Clemente, California 92673
	  	 	0	  	 	 	  	 	  	 	 
	 Sunstone/WB Manhattan Beach, LLC
 903 Calle Amanecer, Suite 100,
 San Clemente, California 92673
	  	 	0	  	 	 	  	 	  	 	 
	 WB Hotel Investors, LLC
 903 Calle Amanecer, Suite 100,
 San Clemente, California 92673
	  	 	0	  	 	 	  	 	  	 	 
	 	  	
	
	  	
	
	  	
	  	
	

	 Total
	  	$	 	  	$	 	  	 	  	100	%
	 	  	
	
	  	
	
	  	
	  	
	

  

 EXHIBIT B 
 VALUE OF CONTRIBUTED PROPERTY 
  

					
	 Contributed Property

	  	Basis

	  	704(c) Value

  

 EXHIBIT C 
 NOTICE OF REDEMPTION 
  
 The
undersigned hereby irrevocably (a) elects to exercise its Redemption Right set forth in the Limited Liability Company Agreement of Sunstone Hotel Partnership, LLC (the “Agreement”; capitalized terms used and not otherwise defined herein
shall have the meanings assigned to such terms in the Agreement), with respect to an aggregate of              Membership Units, (b) surrenders such Membership Units and all right,
title and interest therein, and (c) directs that the Cash Amount or Shares Amount (as determined by the Managing Member) deliverable upon exercise of the Redemption Right be delivered to the address specified below, and if Common Shares are to be
delivered, such Common Shares be registered or placed in the name(s) and at the address(es) specified below. 
  
 Dated:                      
  
 Name of Non-Managing Member: 
  

	
	
	 
	 (Signature of Non-Managing Member)

	
	 (Street Address)

	
	 (City) (State) (Zip Code)

	
	 Signature Guaranteed by:

  
 If Common Shares are to be
issued, issue to: 
  
 Please insert social security or identifying number:

  
 Name:Committment Letter

 Exhibit 10.12 
  

					
	 CITIGROUP GLOBAL MARKETS INC.
 CITICORP NORTH AMERICA, INC.
 390 Greenwich Street
 New York, New York 10013
	 	 MERRILL LYNCH, PIERCE,
 FENNER & SMITH
 INCORPORATED
 4 World Financial Center North Tower New York, New York 10080
	 	 MORGAN STANLEY SENIOR
 FUNDING, INC.
 1585 Broadway
 New York, New York 10036

  
 September 14, 2004

  
 SUNSTONE HOTEL INVESTORS, L.L.C.

 903 Calle Amanecer, Suite 100 
 San Clemente, California 92673

 Attention: Jon D. Kline 
  Executive Vice President 
  and Chief Financial Officer 
  
 $150,000,000 Senior Secured Revolving Credit Facility 
 and $75,000,000 Subordinate Term Loan Facility 
 COMMITMENT LETTER 
  
 Ladies and Gentlemen: 
  
 Citicorp North America, Inc. (“CNAI”), Merrill Lynch
Capital Corporation (“MLCC”) and Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”; collectively with CNAI and MLCC, the “Initial Lenders”) are each pleased to inform
Sunstone Hotel Investors, L.L.C. (“Sunstone”) of its several commitment to provide Sunstone Hotel Partnership, LLC (the “Borrower”) with 33 2/3% of the full principal amount of (i) a $150,000,000 senior secured revolving credit facility (the “Revolving Credit Facility”) and
(ii) a $75,000,000 subordinate term loan facility (the “Term Loan Facility”; collectively with the Revolving Credit Facility, the “Facilities”), subject to the terms and conditions of this letter and
the attached Annexes I and II (collectively, and together with the Fee Letter referred to below, this “Commitment Letter”). Further, Citigroup Global Markets Inc. (“CGMI”), Merrill Lynch, Pierce,
Fenner & Smith Incorporated (“Merrill Lynch”; collectively with CGMI and Morgan Stanley, the “Co-Lead Arrangers”) and Morgan Stanley are each pleased to inform Sunstone of its several commitment to
act as joint lead arrangers and joint book running managers for the Facilities, subject to the terms and conditions of this Commitment Letter. Furthermore, CNAI is pleased to inform Sunstone of its commitment to act as administrative agent and
collateral agent for the Facilities, subject to the terms and conditions of this Commitment Letter. The proceeds of the Facilities will be used for general corporate purposes of the Borrower, acquisitions, refinancing of certain existing mortgage
indebtedness and payment of fees and expenses related to the Facility and the other transactions contemplated by the loan documents. 
  
 Section 1. Conditions Precedent. The commitments of the Initial Lenders and Co-Lead Arrangers (collectively, the “Lender
Parties”) hereunder are subject to: (i) the preparation, execution and delivery of mutually acceptable loan documentation incorporating substantially the terms and conditions outlined in this Commitment Letter (the “Operative
Documents”); (ii) the absence of (A) any material adverse change in the business, condition (financial or otherwise), operations or prospects, of the Borrower or the Borrower and its subsidiaries, taken as a whole since December 31,
2003, and (B) any circumstance, change or condition in the loan syndication, financial or capital markets generally that, in the judgment of the Co-Lead Arrangers, could reasonably be expected to materially impair syndication of the Facility; (iii)
the accuracy and completeness of all representations that the Borrower makes to the Lender Parties and all information 

  

 
that the Borrower or any of its affiliates furnishes to the Lender Parties; and (iv) compliance by Sunstone and the Borrower with the terms of this
Commitment Letter, including, without limitation, the payment in full of all fees, expenses and other amounts payable under this Commitment Letter. 
  
 Section 2. Commitment Termination. The commitments of the Lender Parties hereunder will terminate on the earlier of (a) the date the Operative
Documents become effective, and (b) December 31, 2004. Before such date, any Lender Party may terminate its commitment hereunder if any event occurs or information becomes available that, in the judgment of such Lender Party, results or is likely to
result in the failure to satisfy any condition set forth in Section 1. 
  
 Section 3. Syndication. The Initial Lenders reserve the right, before or after the execution of the Operative Documents and any Advances thereunder, to syndicate all or a portion of their commitments to one or more other financial
institutions, reasonably acceptable to the Borrower, that will become parties to the Operative Documents pursuant to a syndication to be managed by the Co-Lead Arrangers (the financial institutions becoming parties to the Operative Documents being
collectively referred to herein as the “Lenders”), and the commitments of the Initial Lenders hereunder shall be reduced in a manner agreed to by the Co-Lead Arrangers as and when commitments are received from the Lenders.
The Co-Lead Arrangers will manage all aspects of the syndication in consultation with Sunstone (or, if after the Closing, the Borrower), including the timing of all offers to potential Lenders, the determination of the amounts offered to potential
Lenders, the acceptance of commitments of the Lenders and the compensation to be provided to the Lenders. Notwithstanding anything to the contrary, the Lender Parties will not launch a formal syndication of the Facilities prior to completion of an
initial public offering of Sunstone Hotel Investors, Inc. 
  
 Sunstone shall take, and shall cause the Borrower to take, all action as the Co-Lead Arrangers may reasonably request to assist the Co-Lead Arrangers in forming a syndicate acceptable to the Co-Lead Arrangers. The assistance of Sunstone and
the Borrower in forming such a syndicate shall include but not be limited to (i) making senior management and representatives of Sunstone and the Borrower available to participate in information meetings with potential Lenders at such times and
places as the Co-Lead Arrangers may reasonably request; (ii) using the reasonable efforts of Sunstone and the Borrower to ensure that the syndication efforts benefit from the lending relationships of Sunstone and the Borrower; and (iii) providing
the Co-Lead Arrangers with all information reasonably deemed necessary by it to successfully complete the syndication. 
  
 To ensure an effective syndication of the Facility, Sunstone agrees that until the earlier of (i) termination of the syndication (as determined by the
Co-Lead Arrangers in consultation with Sunstone), and (ii) the 120th day after the Closing, Sunstone will not, and
will not permit the Borrower or any of its affiliates to, syndicate or issue, attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in discussions concerning the syndication or issuance
of, any debt facility or debt security (including any renewals thereof), without the prior written consent of the Co-Lead Arrangers; provided, however, that the foregoing shall not limit the ability of Sunstone Hotel Investors, Inc. or the
Borrower to issue commercial paper, equity or public debt securities or incur mortgage debt on properties other than the seven properties comprising collateral for the Revolving Credit Facility. 
  
 CNAI will act as the sole administrative agent and sole collateral agent for
the Facilities and the Co-Lead Arrangers will act as the sole co-lead arrangers. No additional agents, co-agents or arrangers will be appointed, or other titles conferred, without the consent of the Lender Parties. 
  

 2 

 Section 4. Fees. In addition to the fees described in Annexes I and II, Sunstone shall pay, or
cause the Borrower to pay, the non-refundable fees set forth in the letter agreement dated the date hereof (the “Fee Letter”) between Sunstone and the Lender Parties. The terms of the Fee Letter are an integral part of each
Lender Party’s commitment hereunder and constitute part of this Commitment Letter for all purposes hereof. 
  
 Section 5. Indemnification. Sunstone shall indemnify and hold harmless, and shall cause the Borrower to indemnify and hold harmless, the Lender
Parties, each Lender and each of their respective affiliates and each of their respective officers, directors, employees, agents, advisors and representatives (each, an “Indemnified Party”) from and against any and all
claims, damages, losses, liabilities and expenses (including, without limitation, fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party (including, without limitation, in
connection with any investigation, litigation or proceeding or the preparation of a defense in connection therewith), in each case arising out of or in connection with or by reason of this Commitment Letter or the Operative Documents or the
transactions contemplated hereby or thereby or any actual or proposed use of the proceeds of the Facilities, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought by Sunstone, the Borrower, any of their respective directors, security holders or creditors, an Indemnified Party or any other person or an Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. 
  
 No Indemnified Party shall have any liability (whether in contract, tort or otherwise) to Sunstone or the Borrower or any of their respective security
holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct. In no event, however, shall any Indemnified Party be liable on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of
profits, business or anticipated savings). 
  
 Section 6. Costs
and Expenses. Sunstone shall pay, or cause the Borrower to pay, or reimburse the Lender Parties on demand for, all out-of-pocket costs and expenses incurred by the Lender Parties (whether incurred before or after the date hereof) in connection
with the Facility and the preparation, negotiation, execution and delivery of this Commitment Letter, including, without limitation, the reasonable fees and expenses of counsel (subject to the terms of the Fee Letter), regardless of whether any of
the transactions contemplated hereby are consummated. Sunstone shall also pay, or shall cause the Borrower to pay, all costs and expenses of the Lender Parties (including, without limitation, the reasonable fees and disbursements of counsel)
incurred in connection with the enforcement of any of its rights and remedies hereunder. 
  
 Section 7. Confidentiality. By accepting delivery of this Commitment Letter, Sunstone agrees that this Commitment Letter is for the confidential use of Sunstone and the Borrower only and that neither its
existence nor the terms hereof will be disclosed by Sunstone, or permitted by Sunstone to be disclosed by the Borrower, to any person other than their respective officers, directors, employees, accountants, attorneys and other advisors, agents and
representatives and then only on a confidential and “need to know” basis in connection with the transactions contemplated hereby; provided, however, that Sunstone may make, and may permit the Borrower to make, (i) such other public
disclosures of the terms and conditions hereof as 

  

 3 

 
Sunstone or the Borrower is required by law, in the opinion of its counsel, to make, (ii) such disclosure of the terms and conditions set forth in Annexes I
and II to potential lenders that may participate in either one or both of the Facilities (which disclosure shall, as and to the extent requested by the Co-Lead Arrangers, be made in writing pursuant to summaries of terms approved for such purpose by
the Co-Lead Arrangers), and (iii) such disclosure of the terms and conditions hereof (exclusive of the Fee Letter) as may be required by applicable rules or regulations of the Securities Exchange Commission (“SEC”) or as may
otherwise be reasonably necessary or desirable and consistent with customary market practice in the Form S-11 filed by Sunstone Hotel Investors, Inc. with the SEC. 
  
 Section 8. Representations and Warranties of Sunstone. Sunstone represents and warrants that (i) all information
(other than financial projections) that has been or will hereafter be made available to the Lender Parties, any Lender or any potential Lender by Sunstone or the Borrower or any of their respective representatives in connection with the transactions
contemplated hereby is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein
not misleading in light of the circumstances under which such statements were or are made and (ii) all financial projections that have been or will be prepared by Sunstone or the Borrower and made available to the Lender Parties, any Lender or any
potential Lender have been or will be prepared in good faith based upon reasonable assumptions (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of Sunstone or
the Borrower, and that no assurance can be given that the projections will be realized). Sunstone agrees to supplement, or cause the Borrower to supplement, the information and projections from time to time until the Operative Documents become
effective so that the representations and warranties contained in this paragraph remain correct. 
  
 In providing this Commitment Letter, the Lender Parties are relying on the accuracy of the information furnished to them by or on behalf of Sunstone and
its affiliates without independent verification thereof. 
  
 Section 9. No Third Party Reliance, Etc. The agreements of the Lender Parties hereunder and of any Lender that issues a commitment to provide financing under either of the Facilities are made solely for the benefit of Sunstone and
the Borrower and may not be relied upon or enforced by any other person. Please note that those matters that are not covered or made clear herein are subject to mutual agreement of the parties. Sunstone may not, and may not permit the Borrower to,
assign or delegate any of its rights or obligations hereunder without the Initial Lender Parties’ prior written consent. This Commitment Letter may not be amended or modified, or any provision hereof waived, except by a written agreement signed
by all parties hereto. This Commitment Letter is not intended to create a fiduciary relationship among the parties hereto. 
  
 Sunstone acknowledges, for itself and on behalf of the Borrower, that the Lender Parties and/or one or more of their affiliates may provide financing,
equity capital, financial advisory and/or other services to parties whose interests may conflict with the interests of Sunstone or the Borrower. Consistent with the Lenders Parties’ policies to hold in confidence the affairs of its customers,
neither any Lender Party nor its respective affiliates will furnish confidential information obtained from Sunstone or the Borrower to any of such Lender Party’s other customers. Furthermore, neither any Lender Party nor any of its respective
affiliates will make available to Sunstone or the Borrower confidential information that such Lender Party obtained or may obtain from any other person. 
  
 Section 10. Governing Law, Etc. This Commitment Letter shall be governed by, and construed in accordance with, the law of the State of New York.
This Commitment Letter sets forth the entire agreement 

  

 4 

 
among the parties with respect to the matters addressed herein and supersedes all prior communications, written or oral, with respect hereto. This Commitment
Letter may be executed in any number of counterparts, each of which, when so executed, shall be deemed to be an original and all of which, taken together, shall constitute one and the same Commitment Letter. Delivery of an executed counterpart of a
signature page to this Commitment Letter by telecopier shall be as effective as delivery of an original executed counterpart of this Commitment Letter. Sections 3 through 8, 10 and 11 hereof shall survive the termination of the Lender Parties’
commitments hereunder. Sunstone acknowledges, for itself and the Borrower, that information and documents relating to the Facility may be transmitted through Intralinks, the internet or similar electronic transmission systems. 
  
 Section 11. Waiver of Jury Trial. Each party hereto irrevocably waives
all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter or the transactions contemplated hereby or the actions of the parties hereto in
the negotiation, performance or enforcement hereof. 
  
 [Balance
of Page Intentionally Left Blank.] 
  

 5 

 Please indicate Sunstone’s acceptance of the provisions hereof by signing the enclosed copy of this
Commitment Letter and the Fee Letter and returning them to David Bouton, Director, Citigroup Global Markets Inc., 390 Greenwich Street, New York, New York 10013 (fax: 212-723-8540) at or before 5:00 p.m. (New York City time) on September 21, 2004
the time at which the commitments of the Lender Parties hereunder (if not so accepted prior thereto) will terminate. If Sunstone elects to deliver this Commitment Letter by telecopier, please arrange for the executed original to follow by next-day
courier. 
  

			
	 Very truly yours,

	
	 CITIGROUP GLOBAL MARKETS INC.

		
	By	 	/S/    DAVID
BOUTON        
	 Name:
	 	David Bouton
	 Title:
	 	Director
	
	 CITICORP NORTH AMERICA, INC.

		
	By	 	/S/    DAVID
BOUTON        
	 Name:
	 	David Bouton
	 Title:
	 	Vice President
	
	 MERRILL LYNCH, PIERCE, FENNER & SMITH
 INCORPORATED

		
	By	 	/S/    STEPHEN B.
PARAS        
	 Name:
	 	Stephen B. Paras
	 Title:
	 	Managing Director
	
	 MERRILL LYNCH CAPITAL CORPORATION

		
	By	 	/S/    STEPHEN B.
PARAS        
	 Name:
	 	Stephen B. Paras
	 Title:
	 	Vice President
	
	 MORGAN STANLEY SENIOR FUNDING, INC.

		
	By	 	/S/    TODD
VANNUCCI        
	 Name:
	 	Todd Vannucci
	 Title:
	 	Executive Director

  
 [Signatures
continued on next page] 
  

 6 

			
	 ACCEPTED AND AGREED
 on September 15, 2004:

	
	 SUNSTONE HOTEL INVESTORS, L.L.C.

		
	By	 	/S/    JON D.
KLINE        
	 Name:
	 	Jon D. Kline
	 Title:
	 	Executive Vice President and Chief Financial Officer

  

 7 

 Annex I 
  
 SUNSTONE HOTEL PARTNERSHIP, LLC 
  
 Summary of Terms and Conditions 
 $150 Million Senior Secured Credit Facility 
  

			
		
	Borrower:	  	Sunstone Hotel Partnership, LLC (the “Borrower”).
		
	Guarantors:	  	All obligations of the Borrower under the Facility and under any interest protection or other hedging arrangements entered into with a Lender (or any affiliate thereof) will be unconditionally
guaranteed by each existing and subsequently acquired subsidiary of the Borrower (subject to certain exceptions to be agreed, including an exception for any entity contractually prevented from providing such a guaranty), including those holding
Borrowing Base Assets.
		
	Senior Facility Amount:	  	$150,000,000 or such other amount as provide for under the Commitment Increase and Commitment Reduction sections of this Indicative Summary of Terms and Conditions, but in any event not more
than $225,000,000.
		
	Type of Facility:	  	Senior Secured Revolving Credit Facility (the “Facility”). The Facility will include a Letter of Credit subfacility (subject to a $75,000,000 sublimit) and a Swingline subfacility
(subject to a sublimit to be agreed).
		
	Purpose:	  	General corporate purposes, acquisitions, refinancing of certain existing mortgage indebtedness and payment of fees and expenses related to the Facility and the other transactions contemplated
by the loan documents.
		
	Availability:	  	The Borrower may borrow, repay and reborrow.
		
	Collateral:	  	First priority perfected mortgage liens on all Borrowing Base Assets, and a first priority perfected assignment of and security interest in all related (i) equipment, fixtures and personal
property, (ii) leases and rents, management agreements, licenses and other significant agreements and (iii) permits (to the extent permitted by law), approvals, contracts and other agreements applicable to construction, use or operation of the
property. The Borrower will obtain title insurance insuring the mortgages in amounts acceptable to the Agent, ALTA land surveys certified to the Agent and opinions of local counsel with respect to the enforceability and perfection of the
mortgages.
		
	Administrative Agent and Senior Collateral Agent:	  	Citicorp North America, Inc. (the “Agent”).
		
	Co-Lead Arrangers:	  	Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley Senior Funding, Inc.
		
	Lenders:	  	Citicorp North America, Inc. (“CNAI”), Merrill Lynch Capital Corporation (“Merrill Lynch”), Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”) and other
financial institutions acceptable to the Borrower and the Agent.

			
		
	Closing Date:	  	[            ], 2004, or such other date as may be agreed upon by the Borrower and the Agent.
		
	Commitment Termination Date:	  	Three years from the Closing Date, subject to the Facility Extension section.
		
	Extension of Commitments:	  	The Borrower will have the right to extend the Lenders’ commitments for an additional one-year period, provided that on the extension date, the Agent shall have received a certificate
signed by a duly authorized officer of the Borrower stating that: (i) the representations and warranties contained in the loan documents are true and correct on and as of the extension date, and (ii) no default has occurred and is continuing or
would result from such extension. The Borrower will pay the extending Lenders a Facility Extension Fee as set forth in Exhibit 1 hereto.
		
	Commitment Increase:	  	The Borrower will have the right, no more than once a year, to increase the Facility Amount, in minimum increments of $5,000,000, up to a maximum Facility Amount of $225,000,000, provided that
no Default (as defined in the Conditions Precedent to Closing) or Event of Default has occurred and is continuing. The Borrower may offer the increase to (x) its existing Lenders, and each existing Lender will have the right, but no obligation, to
commit to all or a portion of the proposed increase (the “Proposed Increased Commitment”) (allocations will be based on the ratio of each existing Lender’s Proposed Increased Commitment, if any, to the aggregate of all Proposed
Increased Commitments) and, if the aggregate of all Proposed Increased Commitments of the existing Lenders is less than the requested increase, (y) third party financial institutions acceptable to the Agent, provided that the minimum commitment of
each such institution equals or exceeds $5,000,000.
		
	Commitment Reduction:	  	The Borrower will have the right, upon at least 3 business days’ notice, to terminate or cancel, in whole or in part, the unused portion of the Facility Amount in excess of the aggregate
outstanding Advances, provided that each partial reduction shall be in a minimum amount of $1,000,000 or any whole multiple of $250,000 in excess thereof. Once terminated, a commitment may not be reinstated.
		
	Unused Fee:	  	As set forth in Exhibit 1 hereto.
		
	Upfront Fee:	  	As set forth in a separate Fee Letter.
		
	Letter of Credit Fee:	  	As set forth in Exhibit 1 hereto.
		
	Annual Agency Fee:	  	As set forth in a separate Fee Letter.
		
	Interest Rates and Interest Periods:	  	At the Borrower’s option, any Advance that is made to it will be available at the rates and for the Interest Periods stated below:
		
	 	  	 1)      Base Rate: a fluctuating rate equal to Citibank, N.A.’s Base Rate plus the Applicable
Margin.

		
	 	  	 2)      Eurodollar Rate: a periodic fixed rate equal to LIBOR plus the Applicable
Margin.

  

 2 

			
		
	 	  	The Eurodollar Rate will be fixed for Interest Periods of 1, 2, 3 or 6 months.
		
	 	  	Upon the occurrence and during the continuance of any Event of Default, each Eurodollar Rate Advance will convert to a Base Rate Advance at the end of the Interest Period then in effect for such
Eurodollar Rate Advance.
		
	Applicable Margin:	  	As set forth in Exhibit 1 hereto.
		
	Reference Banks:	  	Citibank, N.A. and certain other banks to be determined.
		
	Interest Payments:	  	At the end of each Interest Period for each Advance, but no less frequently than quarterly. Interest will be computed on a 365/366-day basis for Base Rate Advances and a 360-day basis for
Eurodollar Rate Advances.
		
	Advances:	  	Advances will be in minimum principal amounts of $1,000,000 and integral multiples of $250,000 in excess thereof. All Advances will be made by the Lenders ratably in proportion to their
respective commitments. Advances will be available on same day notice for Base Rate Advances and 3 business days’ notice for Eurodollar Rate Advances. Advances and Letters of Credit issuances will be subject to the Borrowing
Base.
		
	Repayment:	  	The Borrower will repay each Advance no later than on the Commitment Termination Date.
		
	Amortization:	  	None.
		
	Optional Prepayment:	  	Advances may be prepaid without penalty, on same day notice for Base Rate Advances and 2 business days’ notice for Eurodollar Rate Advances, in minimum amounts of $1,000,000 and increments
of $250,000 in excess thereof. The Borrower will bear all breakage costs related to the prepayment of a Eurodollar Rate Advance prior to the last day of the Interest Period thereof.
		
	Loan Documentation:	  	The commitments will be subject to the preparation, execution and delivery of mutually acceptable loan documentation, which will contain conditions precedent, representations and warranties,
covenants, events of default and other provisions customary for facilities of this nature, including, but not limited to, those noted below.
		
	Conditions Precedent to Closing:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)      Completion of the Formation and Structuring Transactions described in the Form S-11 (the
“Registration Statement”) filed by Sunstone Hotel Investors, Inc. (the “REIT”) with the Securities and Exchange Commission (the “SEC”), and closing of the initial public offering of the REIT contemplated therein
generating primary equity issuance gross proceeds of at least $250,000,000.

		
	 	  	 2)      Board resolutions.

		
	 	  	 3)      Incumbency/specimen signature certificate.

  

 3 

			
	 	  	 4)      Accuracy of representations and warranties.

		
	 	  	 5)      No Event of Default, or event which with the giving of notice or lapse of time or both would be an Event
of Default (a “Default”), has occurred and is continuing.

		
	 	  	 6)      Favorable legal opinion from counsel for the Borrower.

		
	 	  	 7)      Favorable legal opinion from counsel for the Agent.

		
	 	  	 8)      The Borrower shall enter into interest rate protection agreements, pursuant to documentation reasonably
satisfactory to the Agent, such that not less than 66 2/3% of consolidated debt for borrowed money is hedged or
bears interest at a fixed rate.

		
	 	  	 9)      Receipt of appraisals, engineering and environmental reports satisfactory to the
Agent.

		
	 	  	 10)   The repayment of certain existing mortgage indebtedness in the amounts and to the lenders described in the “Use of
Proceeds” Section of the Registration Statement.

		
	Conditions Precedent to all Advances and Issuance/Extensions of Letters of Credit:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)      All representations and warranties are true and correct on and as of the date of the Advance or
issuance/extension of a Letter of Credit, before and after giving effect to such Advance or issuance/extension of a Letter of Credit, as the case may be, and to the application of the proceeds therefrom, as though made on and as of such
date.

		
	 	  	 2)      No Default or Event of Default has occurred and is continuing, or would result from such Advance or
issuance/extension of a Letter of Credit, as the case may be.

		
	 	  	 3)      Advances and Letters of Credit not to exceed the Borrowing Base Availability.

		
	Representations and Warranties:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)      Confirmation of corporate status and authority.

		
	 	  	 2)      Due authorization of the loan documents.

		
	 	  	 3)      Execution, delivery, and performance of loan documents do not violate law or existing
agreements.

		
	 	  	 4)      No governmental or regulatory approvals required.

  

 4 

			
	 	  	 5)      No litigation, proceeding or investigation which could reasonably be expected to have a material adverse
effect on the business, condition (financial or otherwise), operations or prospects, or which could reasonably be expected to affect the legality, validity and enforceability of the loan documents.

		
	 	  	 6)      No material adverse change in the business, condition (financial or otherwise), operations or prospects
of the Borrower and its subsidiaries, taken as a whole, since December 31, 2003.

		
	 	  	 7)      Accuracy of information, financial statements.

		
	 	  	 8)      Legality, validity, binding effect and enforceability of the loan documents.

		
	 	  	 9)      Material compliance with all laws and regulations, including ERISA and all applicable environmental laws
and regulations.

		
	 	  	 10)   Margin regulations.

		
	 	  	 11)   Not an investment company.

		
	 	  	 12)   Solvency.

		
	 	  	 13)   The REIT qualifies as a real estate investment trust under the Internal Revenue Code.

		
	Corporate Financial Covenants:	  	Customary for facilities of this nature, applicable to the Borrower and the Guarantors, including but not limited to:
		
	 	  	 1)      Minimum Tangible Net Worth: 85% of Tangible Net Worth per GAAP as of the end of the fiscal quarter most
recently ended prior to the Closing Date plus 75% of the net proceeds of primary equity issuances.

		
	 	  	 2)      Minimum Adjusted EBITDA to Fixed Charges: 1.5:1.0

		
	 	  	 3)      Maximum REIT Dividend Payout Ratio: 95% of FFO or an amount necessary to maintain REIT
status.

		
	 	  	 4)      Maximum Total Debt to EBITDA: 7.0:1.0 through 12/30/06 and 6.5:1.0 thereafter.

		
	 	  	 5)      Maximum Senior Debt to EBITDA: 6.5:1.0 through 12/30/06 and 6.0:1.0 thereafter.

		
	Notes Regarding Corporate Financial Covenants:	  	 1)      Adjusted EBITDA will equal EBITDA less the FF&E Reserve.

		
	 	  	 2)      FF&E Reserve will equal 4% of revenues.

		
	 	  	 3)      Fixed Charges will equal the sum of interest expense on Total Debt plus scheduled amortization (not
including final maturities) plus preferred dividends.

  

 5 

			
	Covenants:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)      Preservation and maintenance of corporate existence.

		
	 	  	 2)      Material compliance with laws and regulations (including ERISA and applicable environmental laws and
regulations).

		
	 	  	 3)      Payment of taxes.

		
	 	  	 4)      Payment of material obligations.

		
	 	  	 5)      Visitation and inspection rights.

		
	 	  	 6)      Maintenance of books and records.

		
	 	  	 7)      Maintenance of properties.

		
	 	  	 8)      Maintenance of insurance.

		
	 	  	 9)      Maintenance of first priority perfected liens on the Collateral.

		
	 	  	 10)   Certain restrictions to be agreed on change of business, transactions with affiliates, acquisitions, permitted
investments, asset dispositions, consolidations, mergers, sales of assets and sale/leaseback transactions.

		
	 	  	 11)   Delivery of audited annual consolidated financial statements and unaudited quarterly consolidated financial statements
(it being acknowledged that the annual and quarterly public reporting filed by the REIT with the SEC will satisfy the foregoing requirements), together with other financial information as the Agent may request.

		
	 	  	 12)   Other reporting requirements and notices of default, material litigation, material claims affecting Borrowing Base Assets
and material environmental events.

		
	 	  	 13)   Use of proceeds.

		
	 	  	 14)   The REIT shall at all times (i) remain a publicly traded company listed on the NYSE or other national stock exchange and
(ii) maintain its status as a real estate investment trust under IRS rules and regulations.

		
	 	  	 15)   Appraisals of the Borrowing Base Assets to be performed at the request of the Agent, but not more frequently than
annually.

  

 6 

			
	Borrowing Base Assets:	  	 The initial Borrowing Base Assets will consist of:
  
 1.      Holiday Inn - Boise, ID
  
 2.      Holiday Inn - Hollywood, CA
  
 3.      Hilton Garden
Inn - Lake Oswego, OR
  
 4.      Marriott - Portland, OR
  
 5.      Marriott - Riverside, CA
  
 6.      Hyatt Regency - Atlanta, GA
  
 7.      Marriott -
Napa, CA

		
	Borrowing Base Covenants:	  	 1)      Maximum Revolver Outstanding to Borrowing Base Value: 65%.

		
	 	  	 2)      Minimum Borrowing Base Debt Service Coverage Ratio: 2.0:1.0, calculated with reference to (i) Adjusted
NOI of the Borrowing Base Assets and (i) annual interest payments under the Facility applying an interest rate equal to the Applicable Margin for Eurodollar Rate Advances under the Facility plus the greater of 3.0% and the 3-year swap
rate.

		
	 	  	 3)      The Borrowing Base shall at all times have a minimum of six Borrowing Base Assets and no single
Borrowing Base Asset (other than the Marriott – Napa, CA asset) may account for more than 25% of the pool on an Adjusted NOI basis unless approved by the Required Lenders (defined below).

		
	 	  	 4)      Additions to the Borrowing Base limited to hotels with at least one
year of operating history that are rated “upscale”, upper upscale” or better by Smith Travel Research. On the date of any acquisition, the Adjusted NOI of the Borrowing Base Assets (adjusted on a pro forma basis to account for the
acquisition) must produce an Implied Debt Service Coverage Ratio of not less than 1.4:1.0.
  
 5)      Proposed additions to the Borrowing Base that fail to meet the criteria described above
will become Borrowing Base Assets only with the approval of the Required Lenders.
  
 6)      Removal of Borrowing Base Assets will be permitted, subject to the aforementioned criteria
plus an average RevPAR for all Borrowing Base Assets (measured on a proforma basis as of the date immediately following the removal) of not less than 95% of the RevPAR that existed as of the date immediately preceding such
removal.

		
	Notes Regarding Borrowing Base Covenants:	  	 1)      An appraisal will be required for each Borrowing Base Asset and all subsequent additions to the
Borrowing Base. The Borrowing Base Value will be the appraised value.

		
	 	  	 2)      Adjusted NOI will equal net operating income, less a management fee (equal to the greater of 3.5% of
revenues or actual), less an FF&E reserve (equal to 4% of revenues).

  

 7 

			
	 	  	 3)      Implied Debt Service will equal annual interest payments on the outstanding Senior Facility Amount
(adjusted on a pro forma basis to include any Advances made in connection with the acquisition) based on a debt constant of 8.5%.

		
	Events of Default:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)      Failure to pay principal when due and failure to pay interest, fees and other amounts within 3 business
days of when due.

		
	 	  	 2)      Representations or warranties materially incorrect.

		
	 	  	 3)      Failure to comply with covenants (with notice and cure periods as applicable).

		
	 	  	 4)      Cross-default to (i) payment defaults on principal aggregating (a) $10,000,000 or more for indebtedness
that is recourse to the Borrower or (b) $100,000,000 or more for any other indebtedness of the Borrower or any of its subsidiaries, or (ii) other events if the effect is to accelerate or permit acceleration of such debt (subject to certain cure
rights to be agreed).

		
	 	  	 5)      Failure to pay a judgment or court order if not stayed within an appropriate period in excess of
$10,000,000 individually or in the aggregate.

		
	 	  	 6)      Bankruptcy, liquidation, or the appointment of a receiver or similar official or institution of any such
proceeding against the Borrower or a Guarantor if not dismissed within an appropriate period.

		
	 	  	 7)      ERISA.

		
	 	  	 8)      Change of control or ownership.

		
	 	  	 9)      Failure to maintain first priority perfected liens on the Collateral.

		
	Other:	  	Loan documentation will include:
		
	 	  	 1)      Indemnification of the Agent and Lenders and their respective affiliates, officers, directors,
employees, agents and advisors for any liabilities and expenses arising out of the Facility or the use or proposed use of proceeds including environmental liabilities.

		
	 	  	 2)      Waiver of consequential damages.

		
	 	  	 3)      Normal agency, set-off and sharing language.

  

 8 

			
	 	  	 4)      “Required Lenders” defined as those holding greater than 50% of the sum of all outstanding
Advances plus all unused commitments. The consent of all or affected Lenders will be required to increase the size of the Facility (other than as provided for in the Commitment Increase section), extend the Commitment Termination Date (other than as
provided in the Extension of Commitments section), decrease interest rates, principal or fees, postpone scheduled payment dates or for those provisions requiring 100% Lender approval, reduce the percentage of Lenders required to take action or
release any Guarantor or Collateral.

		
	Assignments and Participations:	  	Each Lender will have the right to assign to one or more eligible assignees all or a portion of its rights and obligations under the loan documents, with the consent, not to be unreasonably
withheld, of the Agent and, so long as no default has occurred, the Borrower. Minimum aggregate assignment levels will be $5,000,000 and increments of $1,000,000 in excess thereof. The parties to the assignment (other than the Borrower) will pay to
the Agent an administrative fee of $3,500.
		
	 	  	Each Lender will also have the right, without the consent of the Borrower or the Agent, to assign (i) as security, all or part of its rights under the loan documents to any Federal Reserve Bank
and (ii) with notice to the Borrower and the Agent, all or part of its rights and obligations under the loan documents to any of its affiliates.
		
	 	  	Each Lender will have the right to sell participations in its rights and obligations under the loan documents, subject to customary restrictions on the participants’ voting
rights.
		
	Yield Protection, Taxes, and Other Deductions:	  	 1)      The loan documents will contain yield protection provisions, customary for facilities of this nature,
protecting the Lenders in the event of unavailability of funding, funding losses, and reserve and capital adequacy requirements.

		
	 	  	 2)      All payments to be free and clear of any present or future U.S. taxes, withholdings or other deductions
whatsoever (other than franchise and income taxes in the jurisdiction of the Lender’s applicable lending office). The Lenders will use reasonable efforts to minimize to the extent possible any applicable taxes and the Borrower will indemnify
the Lenders and the Agent for such taxes paid by the Lenders or the Agent. Foreign lenders will furnish appropriate evidence of exemption from U.S. withholding taxes.

		
	Governing Law:	  	State of New York.
		
	Counsel to the Agent:	  	Shearman & Sterling LLP.
		
	Expenses:	  	The Borrower will reimburse the Arranger and the Agent for all out-of-pocket expenses (including fees and expenses of counsel to the Agent) incurred by them in the negotiation, syndication and
execution of the Facility. Such expenses will be reimbursed by the Borrower upon presentation of a statement of account, regardless of whether the transaction contemplated is actually completed or the loan documents are signed.
		
	Submission to Jurisdiction:	  	The Borrower will agree to submit to the non-exclusive jurisdiction of the courts of the State of New York in connection with disputes that may arise in connection with the
Facility.

  

 9 

 Exhibit 1 
  

			
	Applicable Margin:	  	The Applicable Margin for Eurodollar Rate Advances and Base Rate Advances means an amount which will vary, as per the Pricing Grid below, based on the Total Debt to Adjusted EBITDA,
provided that (i) the Applicable Margin will initially be 200 bps for Eurodollar Rate Advances and 100 bps for Base Rate Advances, and (ii) upon the occurrence and during the continuance of any Event of Default, the Applicable Margin will
increase by 200 basis points per annum.

  

							
				
	 	 	 Total Debt to
 Adjusted EBITDA

	 	 Applicable Margin for
Eurodollar Rate Advances
(bps)

	 	 Applicable Margin for Base
Rate Advances
 (bps)

	 	 	>6.0	 	200	 	100
	 	 	>5.0 £ 6.0	 	175	 	75
	 	 	< 5.0	 	150	 	50

  

			
	Unused Fee:	  	50 bps, payable on the average unused commitment. The Unused Fee will be payable on each Lender’s commitment, quarterly in arrears on the last day of each March, June, September and
December, and on the Commitment Termination Date. The Unused Fee will be calculated on a 360-day basis.
		
	Facility Extension Fee:	  	The Borrower will pay the extending Lenders a Facility Extension Fee of 25 bps based on their respective commitments.
		
	Letter of Credit Fee:	  	12.5 bps fronting fee payable to the Issuing Bank upon the issuance of each Letter of Credit. Usage fees on the average aggregate available amount of all Letters of Credit will be payable to all
Lenders in an amount equal to the Applicable Margin for Eurodollar Rate Advances.

  

 10 

 Annex II 
  
 SUNSTONE HOTEL PARTNERSHIP, LLC 
  
 Summary of Terms and Conditions 
 $75 Million Subordinate Term Loan Facility 
  

			
	 Borrower:
	  	Sunstone Hotel Partnership, LLC (the “Borrower”).
		
	Guarantors:	  	All obligations of the Borrower under the Facility and under any interest protection or other hedging arrangements entered into with a Lender (or any affiliate thereof) will be unconditionally
guaranteed by Sunstone Hotel Investors, Inc. (the “REIT”) and each existing and subsequently acquired subsidiary of the Borrower (subject to certain exceptions to be agreed, including an exception for any entity contractually prevented
from providing such a guaranty).
		
	Subordinate Term Facility Amount:	  	$75,000,000.
		
	Type of Facility:	  	Subordinate Lien Term Loan Facility (the “Facility”).
		
	Purpose:	  	General corporate purposes, acquisitions, refinancing of certain existing mortgage indebtedness and payment of fees and expenses related to the Facility and the other transactions contemplated
by the loan documents.
		
	Availability:	  	Single advance at Closing (the “Term Advance”).
		
	Collateral:	  	First priority pledge of 100% of the ownership interests in all of the Borrower’s subsidiaries (subject to certain exceptions to be agreed, including an exception for any entity
contractually prevented from doing so), but including either (i) 100% of the membership interests in the Borrower, or (ii) 100% of the ownership interests in a holding company subsidiary through which the Borrower owns its other
subsidiaries.
		
	Administrative Agent and Junior Collateral Agent:	  	Citicorp North America, Inc. (the “Agent”).
		
	Co-Lead Arrangers:	  	Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley Senior Funding, Inc.
		
	Lenders:	  	Citicorp North America, Inc. (“CNAI”), Merrill Lynch Capital Corporation (“Merrill Lynch”), Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”) and other
financial institutions acceptable to the Borrower and the Agent.
		
	Closing Date:	  	[                ], 2004, or such other date as may be agreed upon by the Borrower and the Agent.
		
	Commitment Termination Date:	  	Four years from the Closing Date.
		
	Commitment Reduction:	  	Any prepayment will automatically reduce the Commitments of the Lenders in a like amount. Amounts prepaid may not be reborrowed.

  

			
	 Upfront Fee:
	  	As set forth in a separate Fee Letter.
		
	Annual Agency Fee:	  	As set forth in a separate Fee Letter.
		
	Interest Rates and Interest Periods:	  	At the Borrower’s option, any Advance that is made to it will be available at the rates and for the Interest Periods stated below:
		
	 	  	 1)       Base Rate: a fluctuating rate equal to Citibank, N.A.’s Base Rate plus the
Applicable Margin.

		
	 	  	 2)       Eurodollar Rate: a periodic fixed rate equal to LIBOR plus the Applicable
Margin.

		
	 	  	The Eurodollar Rate will be fixed for Interest Periods of 1, 2, 3 or 6 months.
		
	 	  	Upon the occurrence and during the continuance of any Event of Default, each Eurodollar Rate Advance will convert to a Base Rate Advance at the end of the Interest Period then in effect for
such Eurodollar Rate Advance.
		
	Applicable Margin:	  	The Applicable Margin will be 400 bps for Eurodollar Rate Advances and 300 bps for Base Rate Advances. Upon the occurrence and during the continuance of any Event of Default, the Applicable
Margin will increase by 200 bps per annum.
		
	Reference Banks:	  	Citibank, N.A. and certain other banks to be determined.
		
	Interest Payments:	  	At the end of each Interest Period for each Advance, but no less frequently than quarterly. Interest will be computed on a 365/366-day basis for Base Rate Advances and a 360-day basis for
Eurodollar Rate Advances.
		
	Advances:	  	Single Term Advance by each Lender at Closing aggregating the full Facility Amount. All Advances will be made by the Lenders ratably in proportion to their respective
commitments.
		
	Repayment:	  	The Borrower will repay each Advance no later than on the Commitment Termination Date.
		
	 Amortization:
	  	None.
		
	 Optional Prepayment:
	  	Advances may prepaid, in whole or in part (i) during the first 6 months after the Closing Date only upon payment of yield maintenance in an amount equal to 150 bps of the principal amount of
the Advances being prepaid, (ii) during months 7 through 12 after the Closing Date only upon payment of yield maintenance in an amount equal to 100 bps of the principal amount of the Advances being prepaid, (iii) during months 13 through 18 after
the Closing Date only upon payment of yield maintenance in an amount equal to 50 bps of the principal amount of the Advances being prepaid, and (iv) thereafter without penalty. Prepayments may be made on same day notice for Base Rate Advances and
require 2 business days’ notice for Eurodollar Rate Advances. All prepayments must be in minimum amounts of $1,000,000 and increments of $250,000 in excess thereof. The Borrower will bear all breakage costs

  

 2 

			
	 	  	related to the prepayment of a Eurodollar Rate Advance prior to the last day of the Interest Period thereof.
		
	Mandatory Prepayment:	  	The Borrower shall offer to the Agent (who shall respond on behalf of the Lenders within ten business days) to prepay Advances in an aggregate amount equal to the net proceeds of any issuance of
debt for borrowed money by the Borrower or its subsidiaries (exclusive of (i) revolving credit borrowings under the Borrower’s Senior Secured Credit Facility, and (ii) asset level or mezzanine secured indebtedness that is not recourse to the
Borrower other than to the extent of customary non-recourse carve-outs).
		
	Loan Documentation:	  	The commitments will be subject to the preparation, execution and delivery of mutually acceptable loan documentation which will contain conditions precedent, representations and warranties,
covenants, events of default and other provisions customary for facilities of this nature, including, but not limited to, those noted below.
		
	Intercreditor Agreement:	  	The Lenders and the Junior Collateral Agent will enter into an Intercreditor Agreement with the Senior Lenders and the Senior Collateral Agent under the Borrower’s Senior Secured Credit
Facility (the “Senior Lenders”) on customary terms and conditions.
		
	Conditions Precedent to Closing:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)       Completion of the Formation and Structuring Transactions described in the Form S-11 (the
“Registration Statement”) filed by the REIT with the Securities and Exchange Commission (the “SEC”), and closing of the initial public offering of the REIT contemplated therein generating primary equity issuance gross proceeds of
at least $250,000,000.

		
	 	  	 2)       Board resolutions.

		
	 	  	 3)       Incumbency/specimen signature certificate.

		
	 	  	 4)       Accuracy of representations and warranties.

		
	 	  	 5)       No Event of Default, or event which with the giving of notice or lapse of time or both would be an
Event of Default (a “Default”), has occurred and is continuing.

		
	 	  	 6)       Favorable legal opinion from counsel for the Borrower.

		
	 	  	 7)       Favorable legal opinion from counsel for the Agent.

		
	 	  	 8)       The Borrower shall enter into interest rate protection agreements, pursuant to documentation
reasonably satisfactory to the Agent, such that not less than 66 2/3% of consolidated debt for borrowed money is
hedged or bears interest at a fixed rate.

		
	 	  	 9)       Receipt of appraisals, engineering and environmental reports satisfactory to the
Agent.

  

 3 

			
	 	  	 10)    The repayment of certain existing mortgage indebtedness in the amounts and to the lenders described in the
“Use of Proceeds” Section of the Registration Statement.

		
	Conditions Precedent to the Term Advance:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)       All representations and warranties are true and correct on and as of the date of the Advance,
before and after giving effect to such Advance, and to the application of the proceeds therefrom, as though made on and as of such date.

		
	 	  	 2)       No Default or Event of Default has occurred and is continuing, or would result from such
Advance.

		
	Representations and Warranties:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)       Confirmation of corporate status and authority.

		
	 	  	 2)       Due authorization of the loan documents.

		
	 	  	 3)       Execution, delivery, and performance of loan documents do not violate law or existing
agreements.

		
	 	  	 4)       No governmental or regulatory approvals required.

		
	 	  	 5)       No litigation, proceeding or investigation which could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations or prospects, or which could reasonably be expected to affect the legality, validity and enforceability of the loan documents.

		
	 	  	 6)       No material adverse change in the business, condition (financial or otherwise), operations or
prospects of the Borrower and its subsidiaries, taken as a whole, since December 31, 2003.

		
	 	  	 7)       Accuracy of information, financial statements.

		
	 	  	 8)       Legality, validity, binding effect and enforceability of the loan documents.

		
	 	  	 9)       Material compliance with all laws and regulations, including ERISA and all applicable
environmental laws and regulations.

		
	 	  	 10)     Margin regulations.

		
	 	  	 11)     Not an investment company.

		
	 	  	 12)     Solvency.

  

 4 

			
	 	  	 13)   The REIT qualifies as a real estate investment trust under the Internal Revenue Code.

		
	Corporate Financial Covenants:	  	Customary for facilities of this nature, applicable to the Borrower and the Guarantors, including but not limited to:
		
	 	  	 1)       Minimum Tangible Net Worth: 85% of Tangible Net Worth per GAAP as of the end of the fiscal quarter
most recently ended prior to the Closing Date plus 75% of the net proceeds of primary equity issuances.

		
	 	  	 2)       Minimum Adjusted EBITDA to Fixed Charges: 1.5:1.0

		
	 	  	 3)       Maximum REIT Dividend Payout Ratio: 95% of FFO or an amount necessary to maintain REIT
status.

		
	 	  	 4)       Maximum Total Debt to EBITDA: 7.0:1.0 through 12/30/06 and 6.5:1.0
thereafter.

		
	 	  	 5)       Maximum Senior Debt to EBITDA: 6.5:1.0 through 12/30/06 and 6.0:1.0
thereafter.

		
	Notes Regarding Corporate Financial Covenants:	  	 1)       Adjusted EBITDA will equal EBITDA less the FF&E Reserve.

		
	 	  	 2)       FF&E Reserve will equal 4% of revenues.

		
	 	  	 3)       Fixed Charges will equal the sum of interest expense on Total Debt plus scheduled amortization
(not including final maturities) plus preferred dividends.

		
	Covenants:	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)       Preservation and maintenance of corporate existence.

		
	 	  	 2)       Material compliance with laws and regulations (including ERISA and applicable environmental laws
and regulations).

		
	 	  	 3)       Payment of taxes.

		
	 	  	 4)       Payment of material obligations.

		
	 	  	 5)       Visitation and inspection rights.

		
	 	  	 6)       Maintenance of books and records.

		
	 	  	 7)       Maintenance of properties.

		
	 	  	 8)       Maintenance of insurance.

		
	 	  	 9)       Maintenance of first priority perfected liens on the Collateral.

		
	 	  	 10)     Prohibition on (i) Recourse Debt that is senior to the Facility, other than revolving credit borrowings under
the Borrower’s Senior

  

 5 

			
	 	  	 Secured Credit Facility, and (ii) Recourse Debt that is pari passu to the Facility, unless and to the extent that the Borrower complies with the Mandatory
Prepayment section above (subject to certain customary exceptions to be agreed). “Recourse Debt” defined as indebtedness that is recourse to the Borrower, except to the extent of liabilities in respect of non-recourse carve-out guarantees
issued in connection with asset level or mezzanine secured financings that are not otherwise recourse to the Borrower.

		
	 	  	 11)     Certain restrictions to be agreed on change of business, transactions with affiliates, acquisitions,
permitted investments, asset dispositions, consolidations, mergers, sales of assets and sale/leaseback transactions.

		
	 	  	 12)     Delivery of audited annual consolidated financial statements and unaudited quarterly consolidated financial
statements (it being acknowledged that the annual and quarterly public reporting filed by the REIT with the SEC will satisfy the foregoing requirements), together with other financial information as the Agent may request.

		
	 	  	 13)     Other reporting requirements and notices of default, material litigation and material environmental
events.

		
	 	  	 14)     Use of proceeds.

		
	 	  	 15)     The REIT shall at all times (i) remain a publicly traded company listed on the NYSE or other national stock
exchange and (ii) maintain its status as a real estate investment trust under IRS rules and regulations.

		
	 Events of Default:
	  	Customary for facilities of this nature, including, but not limited to:
		
	 	  	 1)       Failure to pay principal when due and failure to pay interest, fees and other amounts within 3
business days of when due.

		
	 	  	 2)       Representations or warranties materially incorrect.

		
	 	  	 3)       Failure to comply with covenants (with notice and cure periods as
applicable).

		
	 	  	 4)       Cross-default to (i) payment defaults on principal aggregating (a) $10,000,000 or more for
indebtedness that is recourse to the Borrower or (b) $50,000,000 or more for any other indebtedness of the Borrower or any of its subsidiaries, or (ii) other events if the effect is to accelerate or permit acceleration of such debt (subject to
certain cure rights to be agreed).

		
	 	  	 5)       Failure to pay a judgment or court order if not stayed within an appropriate period in excess of
$10,000,000 individually or in the aggregate.

		
	 	  	 6)       Bankruptcy, liquidation, or the appointment of a receiver or similar official or institution of
any such proceeding against the Borrower or a Guarantor if not dismissed within an appropriate period.

  

 6 

			
	 	  	 7)       ERISA.

		
	 	  	 8)       Change of control or ownership.

		
	 	  	 9)       Failure to maintain first priority perfected liens on the Collateral.

		
	Other:	  	Loan documentation will include:
		
	 	  	 1)       Indemnification of the Agent and Lenders and their respective affiliates, officers, directors,
employees, agents and advisors for any liabilities and expenses arising out of the Facility or the use or proposed use of proceeds including environmental liabilities.

		
	 	  	 2)       Waiver of consequential damages.

		
	 	  	 3)       Normal agency, set-off and sharing language.

		
	 	  	 4)       “Required Lenders” defined as those holding greater than 50% of outstanding Advances.
The consent of all or affected Lenders will be required to increase the size of the Facility, extend the Commitment Termination Date (other than as provided in the Extension of Commitments section), decrease interest rates, principal or fees,
postpone scheduled payment dates or for those provisions requiring 100% Lender approval, reduce the percentage of Lenders required to take action or release any Guarantor or Collateral.

		
	Assignments and Participations:	  	Each Lender will have the right to assign to one or more eligible assignees all or a portion of its rights and obligations under the loan documents, with the consent, not to be unreasonably
withheld, of the Agent and, so long as no default has occurred, the Borrower. Minimum aggregate assignment levels will be $1,000,000 and increments of $500,000 in excess thereof. The parties to the assignment (other than the Borrower) will pay to
the Agent an administrative fee of $3,500 on secondary assignments and participations.
		
	 	  	Each Lender will also have the right, without the consent of the Borrower or the Agent, to assign (i) as security, all or part of its rights under the loan documents to any Federal Reserve Bank
and (ii) with notice to the Borrower and the Agent, all or part of its rights and obligations under the loan documents to any of its affiliates.
		
	 	  	Each Lender will have the right to sell participations in its rights and obligations under the loan documents, subject to customary restrictions on the participants’ voting
rights.
		
	Yield Protection, Taxes, and Other Deductions:	  	 1)       The loan documents will contain yield protection provisions,
customary for facilities of this nature, protecting the Lenders in the event of unavailability of funding, funding losses, and reserve and capital adequacy requirements.
  
 2)       All payments to be free and clear of any present or
future U.S. taxes, withholdings or other deductions whatsoever (other than franchise and income taxes in the jurisdiction of the Lender’s applicable

  

 7 

			
	 	  	 lending office). The Lenders will use reasonable efforts to minimize to the extent possible any applicable taxes and the Borrower will indemnify the Lenders and
the Agent for such taxes paid by the Lenders or the Agent. Foreign lenders will furnish appropriate evidence of exemption from U.S. withholding tax.

		
	 Governing Law:
	  	State of New York.
		
	 Counsel to the Agent:
	  	Shearman & Sterling LLP.
		
	 Expenses:
	  	The Borrower will reimburse the Arranger and the Agent for all out-of-pocket expenses (including fees and expenses of counsel to the Agent) incurred by them in the negotiation, syndication and
execution of the Facility. Such expenses will be reimbursed by the Borrower upon presentation of a statement of account, regardless of whether the transaction contemplated is actually completed or the loan documents are signed.
		
	 Submission to Jurisdiction:
	  	The Borrower will agree to submit to the non-exclusive jurisdiction of the courts of the State of New York in connection with disputes that may arise in connection with the
Facility.

  

 8

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