Document:

Exhibit 4.8

 

REGISTRATION RIGHTS AGREEMENT

 

THIS
REGISTRATION RIGHTS AGREEMENT, dated as of February 9, 2007, is entered into
by and between Health Care Property Investors, Inc., a Maryland
corporation (the “Company”), and the parties
identified on the signature page hereof as a “Unitholder” (each, a “Unitholder” and collectively the “Unitholders”).

 

RECITALS

 

WHEREAS,
the Company, HCP DR MCD, LLC, a Delaware limited liability company (the “Operating LLC”) and Medical City Dallas Limited Partnership,
a Texas limited partnership (“Contributor”),
have entered into that certain Contribution Agreement and Escrow Instructions
dated as of February9, 2007 (the “Contribution Agreement”)
providing, among other things, for the contribution of certain properties by Contributor
to the Operating LLC, the contribution of cash by the Company to the Operating
LLC and the issuance by the Operating Company to the Unitholders of LLC Units
(as defined below); and

 

WHEREAS,
it is a condition to the closing of the transactions contemplated by the
Contribution Agreement that the parties hereto enter into this Agreement;

 

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

 

ARTICLE I.

DEFINITIONS

 

Section 1.1  Definitions. 
The following capitalized terms, as used in this Agreement, have the
following meanings:

 

“Agreement” means this Registration Rights Agreement, as it may be amended,
supplemented or restated from time to time.

 

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

 

“Closing Price” means (i) the closing price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any or (ii) if the Common Stock is not publicly traded on an
exchange, the mean between the closing bid and asked prices for the Common Stock.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock, par value $1.00 per share, of
the Company.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

 

“Contribution Agreement” has the meaning set forth in the recitals to this
Agreement.

 

“Demand Registration” has the meaning set forth in Section 3.1(b) hereof.

 

“Demand Registration Statement” has the meaning set forth in Section 3.1(b) hereof.

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“Filing Date” has the meaning set forth in Section 2.1 hereof.

 

“Full Conversion Date” has the meaning set forth in Section 2.1 hereof.

 

“Holder” means any Person (including any
Unitholder) who is the record or beneficial owner of any Registrable Security
or any assignee or transferee of such Registrable Security (including
assignments or transfers of Registrable Securities to such assignees or
transferees as a result of the foreclosure on any loans secured by such
Registrable Securities) unless such Registrable Security is acquired in a sale
pursuant to a registration statement under the Securities Act or pursuant to a
transaction exempt from registration under the Securities Act, in each such
case where the security sold in such transaction may be resold without
subsequent registration under the Securities Act.

 

“Inspectors” has the meaning set forth in Section 3.2(j).

 

“Issuance Registration Statement” has the meaning set forth in Section 2.1.

 

“LLC Agreement” means the Amended and Restated Limited Liability
Company Agreement of HCP DR MCD, LLC, dated as of even date herewith, as the
same may be further amended, modified or restated from time to time.

 

“LLC Units” has the meaning set forth in the LLC Agreement.

 

“Operating LLC” has the meaning set forth in the recitals to this
Agreement.

 

“Person”
means an individual or a corporation, partnership, limited liability company,
association, trust, or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

 

“Records” has the meaning set forth in Section 3.2(j).

 

“Redeemable LLC Units” means LLC Units which may be redeemed for Common
Stock pursuant to the LLC Agreement.

 

“Registration Expenses” has the meaning set forth in Section 3.4.

 

“Registrable Securities” means shares of Common Stock of the Company issued
upon exchange of Redeemable LLC Units pursuant to the terms of the LLC
Agreement at any time owned, either of record or beneficially, by any Holder
unless and until (i) a registration

 

 

statement covering such shares has been declared
effective by the Commission and (A) the shares have been issued by the
Company to a Holder upon exchange of Redeemable LLC Units pursuant to an
effective registration statement or (B) have been sold or transferred by a
Holder to another Person pursuant to an effective registration statement, (ii) such
shares are sold pursuant to the provisions of Rule 144 under the
Securities Act (or any similar provisions then in force) (“Rule 144”),
(iii) such shares are held by a Holder who is not an affiliate of the
Company within the meaning of Rule 144 (a “Rule 144
Affiliate”) and may be eligible for immediate sale pursuant to Rule 144(k) under
the Securities Act, (iv) such shares are held by a Holder who is a Rule 144
Affiliate and all such shares may be sold pursuant to Rule 144 within a
period of three months in accordance with the volume limitations set forth in Rule 144(e)(1),
or (iv) such shares have been otherwise transferred in a transaction that
would constitute a sale under the Securities Act and such shares may be resold
without subsequent registration under the Securities Act.

 

“Resale Prospectus” has the meaning set forth in Section 3.5.

 

“Resale Shelf Registration Statement” has the meaning set forth in Section 3.1(a).

 

“Resale Registration Statement” has the meaning set forth in Section 3.2(c).

 

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

 

“Secondary Offering Security Holders” has the meaning set forth in Section 3.1(b).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Selling Holder” means a Holder who is selling Registrable Securities
pursuant to a Resale Registration Statement.

 

“Supplemental Rights Period” has the meaning set forth in Section 3.1.

 

“Unitholder” has the meaning set forth in the preamble to this Agreement.

 

ARTICLE II.

REGISTRATION

 

Section 2.1            Registration Statement Covering
Issuance of Common Stock.  Subject to the provisions of Article III
hereof, the Company will use best efforts to file with the Commission a
registration statement on Form S-3 (the “Issuance
Registration Statement”) under Rule 415 under the Securities
Act that complies as to form in all material respects with applicable
Commission rules to register the issuance to Holders of the shares of
Common Stock to be issued upon the redemption of the Redeemable LLC Units, such
filing to be made within the four (4) week period following the date (the “Filing Date”) which is the later of (i) a date which is
fourteen (14) days prior to the first date on which the Redeemable LLC Units
issued pursuant to the Contribution Agreement may be redeemed for shares of
Common Stock pursuant

 

 

to the provisions of the LLC Agreement or (ii) such other date as
may be required by the Commission pursuant to its interpretation of applicable
federal securities laws and the rules and regulations promulgated
thereunder.  The Company shall use its commercially
reasonable efforts to cause the Issuance Registration Statement filed with the
Commission to be declared effective by the Commission as soon as practicable
following the filing thereof and within sixty (60) days after the filing.  In the event the Company is unable to cause
the Issuance Registration Statement to be declared effective by the Commission
within sixty (60) days after the filing date, then the rights of the Holders
set forth in Sections 3.1 and 3.2 hereof shall apply to Common Stock received
by Holders upon redemption of the Redeemable LLC Units for shares of Common
Stock.  Notwithstanding the availability
of rights under Section 3.1 hereof, the Company shall continue to use its commercially
reasonable efforts to cause the Issuance Registration Statement to be declared
effective by the Commission and if it shall be declared effective by the
Commission, at any time, the obligations of the Company under Section 3.1
hereof shall cease.  The Company agrees
to use its commercially reasonable efforts to keep the Issuance Registration
Statement continuously effective (a) until the earlier of (i) the S-3
Expiration Date, or (ii) the first date on which no Redeemable LLC Units
(other than those held by the Company) remain outstanding (the “Full Conversion Date”). 
Notwithstanding anything to the contrary herein, to the extent the rules and
regulations of the Commission permit the Company to use a registration
statement that has been declared effective by the Commission and continues to
be effective (an “Existing Shelf Registration Statement”)
to register the issuance to Holders of the shares of Common Stock to be issued
upon the redemption of the Redeemable LLC Units, the Company shall be permitted
to file a prospectus supplement or prepare such supplemental materials as are
then required by the rules and regulations of the Commission in lieu of
filing the Issuance Registration Statement, in which case each reference in
this Agreement to the Issuance Registration Statement shall be deemed to be a
reference to such Existing Shelf Registration Statement.

 

ARTICLE III.

REGISTRATION RIGHTS

 

Section 3.1            Registration Rights.

 

(a)           Resale Shelf Registration Statement.  This Section 3.1(a) shall apply
with respect to any shares of Common Stock issued or issuable upon exchange of
Redeemable LLC Units during the period, if any, beginning on the earlier of (a) the
Company’s failure to file the Issuance Registration Statement within the four (4) week
period specified in Section 2.1 and (b) if the Issuance Registration
Statement has been filed but has not been declared effective by the Commission
within sixty (60) days after the filing, the sixtieth (60th) day
after such filing and ending, in each case, on the date upon which no
Redeemable LLC Units or Registrable Securities remain outstanding(the “Supplemental Rights Period”); provided, however,
that if the Company is unable to keep the Issuance Registration Statement
effective until the Full Conversion Date (except as permitted pursuant to Section 3.3
hereof), the Holders shall be entitled to exercise the rights provided under
this Section 3.1(a); and provided  further, if the S-3
Expiration Date has occurred, the Supplemental Rights Period under this Section 3.1(a) will
be suspended until the S-3 Expiration Date is no longer effective.  During the Supplemental Rights Period, upon
receipt of a written demand from one or more Holders (including any Unitholder),
the Company will use best efforts to file with the Commission a registration

 

 

statement
on Form S-3 (the “Resale Shelf Registration
Statement”) under Rule 415 under the Securities Act that
complies as to form in all material respects with applicable Commission rules to
register the resale by such Holder(s) of shares of Common Stock issued or
issuable upon exchange of their Redeemable LLC Units, such filing to be made
within the thirty (30) day period following the date of such demand.  The Company shall give written notice of the
proposed filing of the Resale Shelf Registration Statement to all Holders of
Registrable Securities and Redeemable LLC Units as soon as practicable (but in
no event less than twenty (20) days before the anticipated filing date), and
such notice shall offer such Holders the opportunity to participate in the
Resale Shelf Registration Statement and to register the resale of shares of Common
Stock issued or issuable upon exchange of their Redeemable LLC Units.  The Company shall use its commercially
reasonable efforts to cause the Resale Shelf Registration Statement filed with
the Commission to be declared effective by the Commission as soon as
practicable following the filing thereof. 
The Company agrees to use its commercially reasonable efforts to keep
the Resale Shelf Registration Statement continuously effective through the end
of the Supplemental Rights Period. 
Notwithstanding anything to the contrary herein, to the extent the rules and
regulations of the Commission permit the Company to use an Existing Shelf
Registration Statement to register the resale by Holders of the shares of
Common Stock to be issued upon the redemption of the Redeemable LLC Units, the
Company shall be permitted to file a prospectus supplement or prepare such
supplemental materials as are then required by the rules and regulations
of the Commission in lieu of filing the Resale Shelf Registration Statement, in
which case each reference in this Agreement to the Resale Shelf Registration
Statement shall be deemed to be a reference to such Existing Shelf Registration
Statement.

 

(b)           Demand Registration Statement.  If any Registrable Securities or Redeemable
LLC Units remain outstanding after the S-3 Expiration Date, Holders may make a
written demand for registration under the Securities Act of all or part of the
Registrable Securities (a “Demand Registration”);
provided, however, that (i) the Company shall not be
obligated to effect more than two Demand Registrations for Holders in any
twelve month period, and (ii) the number of Registrable Securities
proposed to be sold by the Holder(s) making such written demand either (x) shall
be all the Registrable Securities owned by, or that may be issued upon exchange
of Redeemable LLC Units to, such Holders or (y) shall have an estimated
market value at the time of such demand (based upon the then market price of a
share of Common Stock) of at least $500,000 or (z) shall be at least
25,000 shares of Common Stock.  The
Company shall file any registration statement required by this Section 3.1(b),
which registration statement shall comply as to form in all material respects
with the applicable Commission rules providing for the sale by the Holder(s) of
such Registrable Securities (a “Demand Registration
Statement”) with the Commission within thirty (30) days after
receipt of the requisite Holder demand and shall use its commercially
reasonable efforts to cause the Demand Registration Statement to be declared
effective by the Commission as soon as practicable thereafter.  The Company shall give written notice of the
proposed filing of the Demand Registration Statement to all Holders of
Registrable Securities and Redeemable LLC Units as soon as practicable (but in
no event less than twenty (20) days before the anticipated filing date), and
such notice shall offer such Holders the opportunity to participate in such
Demand Registration and to register such number of shares of Registrable
Securities as each such Holder may request. 
The Company shall use its commercially reasonable efforts to keep each
such Demand Registration Statement continuously effective for a period of one
hundred eighty (180) days (such period, in each case, to be extended by the
number of days, if any, during which Holders were not permitted to make

 

 

offers or
sales under the Demand Registration Statement by reason of Section 3.3
hereof); provided that in no event shall the Company be obligated to
maintain the effectiveness of the Demand Registration Statement once all of the
Registrable Securities covered thereby cease to be Registrable Securities.  The Company may elect to include in any
Demand Registration Statement additional shares of Common Stock to be issued by
the Company, if the Company reasonably believes that the inclusion of such
additional shares will not adversely affect the marketability of the offering
and subject, in the case of an underwritten secondary Demand Registration, to
cutback by the managing underwriters.  A
registration shall not constitute a Demand Registration under this Section 3.1(b)(i) until
the Demand Registration Statement has been declared effective or (ii) if
the Demand Registration is suspended for more than ninety (90) days.

 

(c)           Company Repurchase.   Upon receipt by the Company of a registration
demand pursuant to Section 3.1(b), the Company may, but will not be
obligated to, purchase for cash from any Holder so requesting registration all,
but not less than all, of the Registrable Securities which are the subject of
the request at a price per share equal to the average of the Closing Prices of
a share of Common Stock for the ten (10) trading days immediately
preceding the date of receipt by the Company of the registration request.  In the event the Company elects to purchase
the Registrable Securities which are the subject of a registration request, the
Company shall notify the Holder within five (5) Business Days of the date
of receipt of the request by the Company, which notice shall indicate (i) that
the Company will purchase for cash the Registrable Securities held by the
Holder which are the subject of the request, (ii) the price per share,
calculated in accordance with the preceding sentence, which the Company will
pay the Holder and (iii) the date upon which the Company shall purchase
the Registrable Securities, which date shall not be later than the tenth (10th)
Business Day after receipt of the registration request.  If the Company so elects to purchase the
Registrable Securities which are the subject of a registration request, then
upon such purchase the Company shall be relieved of its obligations under this Section 3.1
with respect to such Registrable Securities.

 

Section 3.2            Additional Registration
Procedures.  In connection with any registration statement
covering Registrable Securities filed by the Company pursuant to Section 2.1
or 3.1 hereof:

 

(a)           Each Holder
agrees to provide in a timely manner information requested by the Company
regarding the proposed distribution by that Holder of the Registrable
Securities and all other information reasonably requested by the Company in
connection with the preparation of the registration statement covering the
Registrable Securities.

 

(b)           Subject to Section 3.3 hereof, the
Company will prepare and file with the Commission such amendments and
supplements to the registration statement and the prospectus used in connection
therewith as may be necessary (i) to keep such registration statement
effective and (ii) to comply with the provisions of the Securities Act
with respect to the disposition of the securities covered by such registration
statement, in each case solely for such time as is contemplated in Section 2.1
or 3.1 above, as applicable.

 

 

(c)           The
Company will, if requested by any of the Holders, prior to filing a
registration statement or prospectus, or any amendment or supplement thereto in
connection with any Resale Shelf Registration Statement or Demand Registration
Statement (each, a “Resale Registration
Statement”), furnish to each Selling Holder and each underwriter, if
any, of the Registrable Securities covered by such registration statement or
prospectus copies of such registration statement or prospectus or any amendment
or supplement thereto as proposed to be filed, and thereafter will furnish,
without charge, to each such Selling Holder and underwriter, if any, such
number of conformed copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such
registration statement (including each preliminary prospectus) and such other
documents as such Selling Holder or underwriter may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by such
Selling Holder.  The Company shall also promptly
notify each Selling Holder of Registrable Securities covered by any Resale
Registration Statement when such registration statement, or any post-effective
amendment thereto, has become effective.

 

(d)           After the
filing of the registration statement, the Company will promptly notify each
Selling Holder of Registrable Securities covered by the registration statement
of any stop order issued or threatened by the Commission and take all commercially
reasonable actions required to prevent the entry of such stop order or to
remove it if entered.

 

(e)           In
connection with any Resale Registration Statement, the Company will use
reasonable efforts to register or qualify the Registrable Securities under such
securities or blue sky laws of those jurisdictions in the United States (where
an exemption is not available) as any Selling Holder or managing underwriter or
underwriters, if any, reasonably (in light of the Selling Holder’s intended
plan of distribution) requests and shall use reasonable efforts to keep each
such registration or qualification effective during the period such Resale
Registration Statement is required to be kept effective pursuant to this
Agreement, and to do any and all other similar acts and things which may be
reasonably necessary or advisable to enable the Holders to consummate the
disposition of the Registrable Securities owned by the Holders in each such
jurisdiction; provided, however, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this paragraph (d), (ii) subject
itself to taxation in any such jurisdiction where it is not then already
subject to taxation or (iii) consent to general service of process in any
such jurisdiction where it is not then subject.

 

(f)            In
connection with any Resale Registration Statement, the Company will enter into
customary agreements (including an underwriting agreement, if any, in customary
form) as are reasonably required in order to expedite or facilitate the
disposition of Registrable Securities pursuant to the Resale Registration
Statement.  Each Selling Holder
participating in an underwritten offering shall also enter into and perform its
or his obligations under the underwriting agreement.

 

(g)           The
Company shall cause all such Registrable Securities to be listed on each
securities exchange on which the Common Stock of the Company is then listed.

 

 

(h)           If the
Registrable Securities are of a class of securities that is listed on a
national securities exchange, the Company shall file copies of any prospectus
covering Registrable Securities with such exchange so that the Selling Holders
shall benefit from the prospectus delivery procedures described in Rule 153
under the Securities Act.

 

(i)            The
Company will promptly notify each Selling Holder of such Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the existence of any fact of which the
Company is aware or the occurrence of an event requiring the preparation of a
supplement or amendment to either a registration statement or related
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such registration statement or related prospectus as
then in effect, will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statement therein, in light of the circumstances then existing, not
misleading and promptly make available to each Selling Holder a reasonable
number of copies of any such supplement or amendment.

 

(j)            The
Company will make available for inspection by any Selling Holder of such
Registrable Securities, any underwriter participating in any disposition
pursuant to such Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
underwriter (collectively, the “Inspectors”),
all financial and other records, pertinent corporate documents and properties
of the Company (collectively, the “Records”)
as shall be reasonably necessary to enable them to discharge their due
diligence responsibility under the Securities Act, and cause the Company’s
officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with the discharge of their due
diligence responsibility.  Records which
the Company determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
the release of such Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction. 
Each Selling Holder of such Registrable Securities agrees that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates or otherwise
disclosed by it unless and until such is made generally available to the public
and further agrees, if the Company so requests, to enter into a confidentiality
agreement with the Company that is reasonably acceptable to the Selling Holder
and the Company prior to Selling Holder’s receipt of any confidential
information.  Each Selling Holder of such
Registrable Securities further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.

 

(k)           If
requested by any Holder participating in the offering of Registrable
Securities, the Company shall incorporate in a prospectus supplement or post-effective
amendment such information concerning the Holder or the intended method of
distribution as the Holder reasonably requests to be included therein and is
reasonably necessary to permit the sale of the Registrable Securities pursuant
to the registration statement, including, without limitation, information with
respect to the number of Registrable Securities being sold, the purchase price
being paid therefor and any other material terms of the offering of the

 

 

Registrable
Securities to be sold in such offering; provided, however, that
the Company shall not be obligated to include in any such prospectus supplement
or post-effective amendment any requested information that is not required by
the rules of the Commission and that is unreasonable in scope; provided,
further, that the Company shall not be required to file more than one (1) prospectus
supplement or post-effective amendment pursuant to this Section 3.2(k) in
any six-month period.

 

(l)            In
connection with a disposition of the Registrable Securities in which there is a
participating underwriter or underwriters, the Company will furnish to each
Selling Holder and to each underwriter, a signed counterpart, addressed to such
Selling Holder or underwriter, of (i) an opinion or opinions of counsel to
the Company and (ii) a comfort letter or comfort letters from the Company’s
independent public accountants (to the extent permitted by the standards of the
American Institute of Certified Public Accountants), each in customary form and
covering such matters of the type customarily covered by opinions or comfort
letters, as the case may be, as the Holders of a majority of the Registrable
Securities included in such offering or the managing underwriter or
underwriters therefor reasonably requests.

 

(m)          The Company
will otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering a period of twelve (12) months, beginning within three (3) months
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 of the Commission promulgated thereunder (or
any successor rule or regulation hereafter adopted by the Commission).

 

(n)           The
Company will provide and cause to be maintained a transfer agent for all
Registrable Securities covered by the registration statement from and after a
date not later than the effective date of the registration statement.

 

Section 3.3            Material Developments; Suspension of
Offering.

 

(a)           Notwithstanding
the provisions of Sections 2.1 or 3.1 hereof or any other provisions of this
Agreement to the contrary, the Company shall not be required to file a
registration statement or to keep any registration statement effective if the
negotiation or consummation of a transaction by the Company or any of its
subsidiaries is pending or an event has occurred, which negotiation,
consummation or event would require additional disclosure by the Company in the
registration statement of material information which the Company (in the reasonable
judgment of management of the Company) has a bona fide business purpose
for keeping confidential and the nondisclosure of which in the registration
statement would be expected, in the Company’s reasonable determination, to cause
the registration statement to fail to comply with applicable disclosure
requirements; provided, however, that the Company (i) will
promptly notify the Holders of Registrable Securities otherwise entitled to
registration of a delay, suspension or withdrawal pursuant to this Section 3.3(a) and
(ii) may not delay, suspend or withdraw the registration statement for
such reason under this Section 3.3(a) more than twice in any twelve
(12) month period or three times in any twenty-four (24) month period or for
more than ninety (90) days at any time. 
Upon receipt of any notice from the Company of the happening of any
event during the period the registration statement is effective which is of a
type

 

 

specified
in the preceding sentence or as a result of which the registration statement or
related prospectus contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statement therein, in light of the circumstances under which they were made not
misleading, the Holders agree that they will immediately discontinue offers and
sales of the Registrable Securities under the registration statement (until
they receive copies of a supplemental or amended prospectus that corrects the
misstatements or omissions and receive notice that any post-effective amendment
has become effective or unless notified in writing by the Company that they may
resume such offers and sales).  If so
directed by the Company, Holders will deliver to the Company any copies of the
prospectus covering the Registrable Securities in their possession at the time
of receipt of such notice.  In the event
the Company shall give notice of the happening of an event of the kind
described in this Section 3.3(a), the Company shall extend the period
during which the affected registration statement is required to be maintained
pursuant to this Agreement by the number of days during the period from and
including the date of the giving of notice pursuant to this Section 3.3(a) to
the date when the Company shall make available a prospectus supplemented or
amended to conform with the requirements of the Securities Act.  Each Holder agrees to keep confidential the
fact that the Company has exercised its rights under this Section 3.3 and
all facts and circumstances relating to such exercise until such information is
made public by the Company.

 

(b)           If all
reports required to be filed by the Company pursuant to the Exchange Act have
not been filed by the required date without regard to any extension, or if the
consummation of any business combination by the Company has occurred or is
probable for purposes of Rule 3-05 or Article 11 of Regulation S-X
under the Securities Act, upon written notice thereof by the Company to the
Holders, the rights of the Holders to acquire Registrable Securities pursuant
to the Issuance Registration Statement or to offer, sell or distribute any
Registrable Securities pursuant to any Resale Registration Statement or to
require the Company to take action with respect to the registration of any
Registrable Securities pursuant to this Agreement shall be suspended until the
date on which the Company has filed such reports or obtained and filed the
financial information required by Rule 3-05 or Article 11 of
Regulation S-X to be included or incorporated by reference, as applicable,
in the Issuance Registration Statement or the Resale Registration Statement and
the Company shall notify the Holders as promptly as practicable when such
suspension is no longer required.  The
Company’s rights to suspend its obligations under this Section 3.3(b) shall
be in additional to its rights under Section 3.3(a).

 

Section 3.4            Registration Expenses.  Except
as otherwise provided in the Contribution Agreement, in connection with any
registration statement required to be filed hereunder, the Company shall pay
the following registration expenses incurred in connection with the registration
(the “Registration Expenses”): (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including the fees and expenses of counsel to the
Company), (iii) printing and distribution expenses, (iv) internal
expenses (including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), (v) the fees and
expenses incurred in connection with the listing of the Registrable Securities
on each securities exchange on which similar securities issued by the Company
are then listed, (vi) fees and disbursements of counsel for the Company
and the independent public accountants of the Company, and (vii) the fees
and expenses of any experts

 

 

retained by the Company in connection with such
registration.  The Holders shall be
responsible for the payment of any and all other expenses incurred by them in
connection with the registration and sale of Registrable Securities, including,
without limitation, brokerage and sales commissions, underwriting fees and
placement agent fees, discounts and commissions attributable to the Registrable
Securities, fees and disbursements of counsel engaged by the Holders, and any
transfer taxes relating to the sale or disposition of the Registrable
Securities.

 

Section 3.5            Indemnification by the Company. 
The Company agrees to indemnify and hold harmless each Selling Holder,
its partners, members, officers, directors, employees, representatives, and
agents, and each Person, if any, who controls such Selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, actions, damages,
liabilities, costs and expenses (including, without limitation, but subject to
the provisions of Section 3.7 hereof, reasonable attorneys’ fees and
disbursements) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Resale Registration Statement (or any amendment
thereto), including all documents incorporated therein by reference, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact contained in
any prospectus contained in a Resale Registration Statement (or any amendment
thereto) at the time it became effective (a “Resale Prospectus”),
including all documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading,  except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder’s behalf expressly for inclusion therein; provided, however,
that the Company will not be liable in any case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based upon any
untrue statement or omission contained in a Resale Prospectus which was
corrected in a supplement or amendment thereto if such claim is brought by a
purchaser of Registrable Securities from the Selling Holder and the Selling
Holder failed to deliver to such purchaser the supplement or amendment to the
Resale Prospectus in a timely manner.

 

Section 3.6            Indemnification by Holders of
Registrable Securities.  Each Selling Holder of
Registrable Securities covered by a Resale Registration Statement agrees to
indemnify and hold harmless the Company, its officers, directors and agents and
each Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent
as the indemnity set forth in Section 3.5 from the Company to Selling Holders,
but only with respect to information relating to such Selling Holder furnished
in writing by such Selling Holder or on such Selling Holder’s behalf expressly
for use in any Resale Registration Statement or Resale Prospectus or any
amendment or supplement thereto; provided, that the aggregate liability
of a Selling Holder under this Section 3.6 with respect to any Resale
Registration Statement shall not exceed the proceeds received by the Selling
Holder from the sale of Registrable Securities pursuant that Resale
Registration Statement.  Each Holder also
agrees to indemnify and hold harmless underwriters of the Registrable
Securities, their officers and directors and each Person who controls such
underwriters within the meaning of Section 15 of the Securities Act or Section 20
of the

 

 

Exchange
Act on substantially the same basis as that of the indemnification of the
Company provided in this Section 3.6.

 

Section 3.7            Conduct of Indemnification
Proceedings.  Each indemnified party shall give reasonably prompt
notice to each indemnifying party of any action or proceeding commenced against
it in respect of which indemnity may be sought hereunder, but failure to so
notify the indemnifying party (i) shall not relieve the indemnifying party
from any liability which it may have under the indemnity agreement provided in Section 3.5
or 3.6 above, unless and to the extent it did not otherwise learn of such
action and the lack of notice by the indemnified party results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii) shall
not, in any event, relieve the indemnifying party from any obligations to the
indemnified party other than the indemnification obligation provided under Section 3.5
or 3.6 above.  If the indemnifying party
so elects within a reasonable time after receipt of notice, the indemnifying
party may assume the defense of the action or proceeding at the indemnifying
party’s own expense with counsel chosen by the indemnifying party and approved
by the indemnified party, which approval shall not be unreasonably withheld; provided,
however, that if the defendants in any such action or proceeding include
both the indemnified party and the indemnifying party and the indemnified party
reasonably determines based upon advice of legal counsel experienced in such
matters, that there may be legal defenses available to it which are different
from or in addition to those available to the indemnifying party, then the
indemnified party shall be entitled to separate counsel at the indemnifying
party’s expense, which counsel shall be chosen by the indemnified party and
approved by the indemnifying party, which approval shall not be unreasonably
withheld; provided  further, that it is understood that the
indemnifying party shall not be liable for the fees, charges and disbursements
of more than one separate firm (other than one local counsel, if relevant).  If the indemnifying party does not assume the
defense, after having received the notice referred to in the first sentence of
this Section 3.7, the indemnifying party will pay the reasonable fees and
expenses of counsel for the indemnified party; in that event, however, the
indemnifying party will not be liable for any settlement effected without the
written consent of the indemnifying party. 
If an indemnifying party assumes the defense of an action or proceeding
in accordance with this Section, the indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified party incurred thereafter
in connection with that action or proceeding except as set forth in the proviso
in the second sentence of this Section 3.7.  Unless and until a final judgment is rendered
that an indemnified party is not entitled to the costs of defense under the
provisions of this Section, the indemnifying party shall reimburse, promptly as
they are incurred, the indemnified party’s costs of defense.

 

Section 3.8            Contribution.

 

(a)           If the
indemnification provided for in Section 3.5 or 3.6 hereof is applicable in
accordance with its terms, but if determined by a court of competent
jurisdiction to be legally unenforceable in respect of any losses, claims,
damages or liabilities referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by indemnified party as a result of such losses, claims,
damages or liabilities as between the Company on the one hand and each Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of each Selling Holder on the
other in connection with such statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant

 

 

equitable
considerations.  The relative fault of
the Company on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact has been made by or relates to information supplied by
the Company or such Selling Holder.

 

(b)           The
Company and the Selling Holders agree that it would not be just and equitable
if contribution pursuant to this Section 3.8 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in Section 3.8(a).  The amount paid or payable by an indemnifying
party as a result of the losses, claims, damages or liabilities referred to in
Sections 3.5 and 3.6 hereof shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
the indemnified party in connection with investigating or defending any such
action or claim.  Notwithstanding the
provisions of this Section 3.8, no Selling Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the securities of such Selling Holder were offered to the public exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.

 

Section 3.9            Participation in Underwritten
Registrations.  No Holder may participate in any underwritten
registration hereunder unless the Holder (a) agrees to sell his or its
Registrable Securities on the basis provided in the applicable underwriting
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents in customary
form as reasonably required under the terms of such underwriting arrangements.

 

Section 3.10         Holdback Agreements. 
Each Holder whose securities are included in a Resale Registration
Statement agrees not to effect any sale or distribution of the securities
registered under that Registration statement or any similar security of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, including a sale pursuant to Rule 144 under the
Securities Act, during the fourteen (14) days prior to, and during the ninety
(90)-day period beginning on, the effective date of such registration statement
(except as part of such registration), if and to the extent requested in
writing by the Company in the case of a non-underwritten public offering by the
Company or if and to the extent requested in writing by the managing
underwriter or underwriters in the case of an underwritten public offering.

 

ARTICLE IV.

MISCELLANEOUS

 

Section 4.1            Specific Performance. 
The parties hereto acknowledge that there would be no adequate remedy at
law if any party fails to perform any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to seek specific
performance of the obligations, covenants and agreements of any other party
under this Agreement in accordance

 

 

with the terms and conditions of this Agreement in any
court of the United States or any State thereof having jurisdiction.

 

Section 4.2            Amendments and Waivers. 
The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given without the prior
written consent of the Company and the Holders holding at least a majority of the
then outstanding Registrable Securities and Redeemable LLC Units, taken
together as one class assuming all Redeemable LLC Units were exchanged for
Registrable Securities.  No failure or
delay 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 any breach thereof shall constitute a waiver of any such breach
or any other covenant, duty, agreement or condition.

 

Section 4.3            Notices. 
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given (a) when delivered by
hand or upon transmission by telecopier or similar facsimile transmission
device, (b) on the date delivered by a courier service, or (c) on the
third Business Day after mailing by registered or certified mail, postage
prepaid, return receipt requested, in any case addressed as follows:

 

(a)           if to any
Holder, to such Holder at the address set forth under such Holder’s name on the
signature page hereto, or to such other address and to such other Persons
as the Holders may hereafter notify the Company in writing; and

 

(b)           if to the
Company, to Health Care Property Investors, Inc., 3760 Kilroy Airport Way,
Suite 300, Long Beach, California 90806 (Attention:  Legal Department), or to such other address
as the Company may hereafter specify in writing.

 

Section 4.4            Successors and Assigns.  The
rights and obligations of the Holders under this Agreement shall not be
assignable by any Holder to any Person that is not a Holder; provided, however,
that a Unitholder may assign its rights and obligations hereunder, following
prior written notice to the Company, to a permitted transferee in connection
with a transfer of some or all of such Unitholder’s LLC Units in accordance
with the terms of the LLC Agreement, if such transferee agrees in writing to be
bound by all of the provisions hereof.  This
Agreement shall be binding upon the parties hereto, the Holders and their
respective successors and assigns (including lenders in foreclosure).

 

Section 4.5            Counterparts. 
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate 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 agreement.

 

Section 4.6            Governing Law. 
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York without regard to the conflicts of law
provisions thereof.

 

Section 4.7            Severability. 
In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or

 

 

unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.

 

Section 4.8            Entire Agreement.  This
Agreement is intended by the parties as a final expression of their agreement
and intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein.  This Agreement supersedes all
prior agreements and understandings between the parties with respect to the
subject matter of this Agreement.

 

Section 4.9            Headings. 
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning of any provision of this
Agreement.

 

Section 4.10         Selling Holders Become Party to
this Agreement.  By asserting or participating in the benefits
of registration of Registrable Securities pursuant to this Agreement, each
Holder agrees that it or he will be deemed a party to this Agreement and be
bound by each of its terms.

 

Section 4.11         Rule 144.  The
Company covenants that it will file any reports required to be filed by it
under the Securities Act and the Exchange Act to the extent required from time
to time to enable Holders to sell Registrable Securities without registration
under the Securities Act within the limitations of the exemptions provided by (a) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or
(b) any similar rule or regulation hereafter adopted by the
Commission.  Upon the request of any
Holder, the Company will deliver to such Holder a written statement as to
whether it has filed such reports.  In
connection with any sale, transfer or other disposition by a Holder of any
Registrable Securities pursuant to Rule 144 under the Securities Act, the
Company shall cooperate with the Holder to facilitate the timely preparation
and delivery of certificates representing the Registrable Securities to be
sold, and enable certificates for such Registrable Securities (which
certificates shall not bear Securities Act legends) to be for such number of
shares and registered in such names as a Holder may reasonably request; provided
that any such request shall be made at least five (5) Business Days prior
to any sale of Registrable Securities hereunder.

 

[Signature Page Follows]

 

 

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

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  HEALTH CARE PROPERTY INVESTORS, INC.,

  
	
   

  	
  a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tim Schoen

  	
   

  
	
   

  	
  Name:

  	
  Tim Schoen

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  

 

 

UNITHOLDERS SIGNATURE PAGE

ATTACHED TO AND MADE A PART OF

THAT CERTAIN REGISTRATION RIGHTS AGREEMENT

DATED AS OF FEBRUARY 9, 2007

 

POWER OF ATTORNEY

 

	
  Signature

  	
   

  	
  Unitholder

  	
   

  	
  Date

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  TWG Medical, Ltd.

  	
   

  	
  The date set forth

  	
   

  	
  7777 Forest Lane

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Suite C-840

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75230

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Marvin C.
  Culbertson, Jr.

  	
   

  	
  The date set forth

  	
   

  	
  6126 Averell Way

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  #109 W

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75225

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Pierce D. Flanders

  	
   

  	
  The date set forth

  	
   

  	
  1317 Palm Valley

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Drive East

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Harlingen, TX 78552

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  G&B Johnson

  	
   

  	
  The date set forth

  	
   

  	
  8523 Thackery

  
	
   

  	
   

  	
  Investments, Ltd.

  	
   

  	
  above

  	
   

  	
  Apt. 2103

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75225

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Clifford J. Osborn

  	
   

  	
  The date set forth

  	
   

  	
  5581 East Finisterra

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Tucson, AZ 85715

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Sandra R. Cohen,
  Trustee

  	
   

  	
  The date set forth

  	
   

  	
  7030 South Jan Mar

  
	
   

  	
   

  	
  for the Ivy T.
  Rabinowitz

  	
   

  	
  above

  	
   

  	
  Dallas, TX 75230

  
	
   

  	
   

  	
  Trust for Sandra R.
  Cohen

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Joe A. Stalcup

  	
   

  	
  The date set forth

  	
   

  	
  6510 Abrams

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Suite 640

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75231

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Howard G. Thomas

  	
   

  	
  The date set forth

  	
   

  	
  8333 Douglas

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Suite 1414

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75225

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Carol E. Touchstone

  	
   

  	
  The date set forth

  	
   

  	
  3829 Stratford

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Dallas, TX 75205

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Jesse M. Hellums III

  	
   

  	
  The date set forth

  	
   

  	
  16161 College Oak

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Suite 100

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  San Antonio, TX 78249

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Hunt H. Hellums

  	
   

  	
  The date set forth

  	
   

  	
  906 Point Run Dr.

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Pflugerville, TX 78660

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Frank O. Seay

  	
   

  	
  The date set forth

  	
   

  	
  4242 Lomo Alto N48

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Dallas, TX 75219

  

 

 

	
  Signature

  	
   

  	
  Unitholder

  	
   

  	
  Date

  	
   

  	
  Address

  

 

	
  *

  	
   

  	
  Robert J. Wright

  	
   

  	
  The date set forth

  	
   

  	
  7777 Forest Lane

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Suite C-840

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75230

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Cynthia J. Hellstern

  	
   

  	
  The date set forth

  	
   

  	
  10827 Crooked Creek Drive

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Dallas, TX 75229

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Mary Ellen Thomas

  	
   

  	
  The date set forth

  	
   

  	
  3904 Deepwood St.

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Colleyville, TX 76034

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Harlan R. Crow

  	
   

  	
  The date set forth

  	
   

  	
  Crow Holdings

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  2100 McKinney

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Suite 700

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Wright Williams, Ltd.

  	
   

  	
  The date set forth

  	
   

  	
  7777 Forest Lane

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Suite C-840

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX 75230

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Allen E. Cullum

  	
   

  	
  The date set forth

  	
   

  	
  5952 Royal Ln #216

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Dallas, TX 75230-3831

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Margaret Anne Cullum

  	
   

  	
  The date set forth

  	
   

  	
  11 Turtle Creek Bend

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Dallas, TX 75204

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  William Bennett Cullum

  	
   

  	
  The date set forth

  	
   

  	
  4940 Mangold Circle

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Dallas, TX 75229-4343

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Thornton Tye Medical, L.P.

  	
   

  	
  The date set forth

  	
   

  	
  c/o
  Ken Travis

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Travis
  Wolff

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  5580
  LBJ Fwy

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Suite 400

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas,
  TX 75240

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  James McDonald Williams

  	
   

  	
  The date set forth

  	
   

  	
  c/o
  Dorothy Hopkins

  
	
   

  	
   

  	
   

  	
   

  	
  above

  	
   

  	
  Williams
  Interests

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2001
  Ross, Suite 3350

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas,
  TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Harlan R. Crow, Trustee

  	
   

  	
  The date set forth

  	
   

  	
  2100
  McKinney

  
	
   

  	
   

  	
  for the Trammell Crow

  	
   

  	
  above

  	
   

  	
  Suite 700

  
	
   

  	
   

  	
  1994 Revocable Trust

  	
   

  	
   

  	
   

  	
  Dallas,
  TX 75201

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Crow Realty Investors,

  	
   

  	
  The date set forth

  	
   

  	
  2100
  McKinney

  
	
   

  	
   

  	
  L.P.

  	
   

  	
  above

  	
   

  	
  Suite 700

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas,
  TX 75201

  

 

 

	
   

  	
  *By

  	
  TWG Medical, Ltd., a
  Texas limited

  
	
   

  	
  partnership, as
  Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TWG, Inc., its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert J. Wright

  	
   

  
	
   

  	
   

  	
  Robert J. Wright

  
	
   

  	
   

  	
  PresidentExhibit 10.1

 

 

AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

 

OF

 

 

HCP DR MCD, LLC,

 

 

a Delaware limited liability company

 

 

Dated as of February 9, 2007

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE
  I. DEFINED TERMS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE
  II. ORGANIZATIONAL MATTERS

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Formation

  	
  21

  
	
   

  	
  2.2

  	
  Name

  	
  21

  
	
   

  	
  2.3

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

  	
  21

  
	
   

  	
  2.4

  	
  Power
  of Attorney

  	
  22

  
	
   

  	
  2.5

  	
  Term

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  III. PURPOSE

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Purpose
  and Business

  	
  23

  
	
   

  	
  3.2

  	
  Powers

  	
  23

  
	
   

  	
  3.3

  	
  Specified
  Purposes

  	
  24

  
	
   

  	
  3.4

  	
  Representations
  and Warranties by the Members; Disclaimer of Certain Representations

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV. CAPITAL CONTRIBUTIONS

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Capital
  Contributions of the Initial Members

  	
  27

  
	
   

  	
  4.2

  	
  Additional
  Members

  	
  27

  
	
   

  	
  4.3

  	
  Loans
  and Incurrence and Payment of Debt

  	
  27

  
	
   

  	
  4.4

  	
  Additional
  Funding and Capital Contributions

  	
  28

  
	
   

  	
  4.5

  	
  No
  Interest; No Return

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V. DISTRIBUTIONS

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Requirement
  and Characterization of Distributions

  	
  29

  
	
   

  	
  5.2

  	
  Distributions
  in Kind

  	
  30

  
	
   

  	
  5.3

  	
  Amounts
  Withheld

  	
  30

  
	
   

  	
  5.4

  	
  Distributions
  Upon Liquidation

  	
  31

  
	
   

  	
  5.5

  	
  Restricted
  Distributions

  	
  31

  
	
   

  	
  5.6

  	
  Distributions
  of Proceeds from Sale of Properties and Refinancing Debt

  	
  31

  
	
   

  	
  5.7

  	
  Distributions
  Following Redemption

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI. ALLOCATIONS

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Timing
  and Amount of Allocations of Net Income and Net Loss

  	
  33

  
	
   

  	
  6.2

  	
  General
  Allocations

  	
  33

  
	
   

  	
  6.3

  	
  Additional
  Allocation Provisions

  	
  35

  
	
   

  	
  6.4

  	
  Tax
  Allocations

  	
  37

  
	
   

  	
  6.5

  	
  Other
  Provisions

  	
  37

  
	
   

  	
  6.6

  	
  Amendments
  to Allocation to Reflect Issuance of Additional Membership Interests

  	
  38

  
									

 

 

i

 

	
  ARTICLE
  VII. MANAGEMENT AND OPERATION OF BUSINESS

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Management

  	
  38

  
	
   

  	
  7.2

  	
  Certificate
  of Formation

  	
  42

  
	
   

  	
  7.3

  	
  Restrictions
  on Managing Member’s Authority

  	
  42

  
	
   

  	
  7.4

  	
  Compensation
  of the Managing Member

  	
  48

  
	
   

  	
  7.5

  	
  Other
  Business of Managing Member

  	
  49

  
	
   

  	
  7.6

  	
  Contracts
  with Affiliates

  	
  49

  
	
   

  	
  7.7

  	
  Indemnification

  	
  50

  
	
   

  	
  7.8

  	
  Liability
  of the Managing Member

  	
  52

  
	
   

  	
  7.9

  	
  Other
  Matters Concerning the Managing Member

  	
  52

  
	
   

  	
  7.10

  	
  Title
  to Company Assets

  	
  53

  
	
   

  	
  7.11

  	
  Reliance
  by Third Parties

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII. RIGHTS AND OBLIGATIONS OF MEMBERS

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Limitation
  of Liability

  	
  54

  
	
   

  	
  8.2

  	
  Managing
  of Business

  	
  54

  
	
   

  	
  8.3

  	
  Outside
  Activities of Members

  	
  54

  
	
   

  	
  8.4

  	
  Return
  of Capital

  	
  55

  
	
   

  	
  8.5

  	
  Rights
  of Non-Managing Members Relating to the Company

  	
  55

  
	
   

  	
  8.6

  	
  Redemption
  Rights

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX. BOOKS, RECORDS, ACCOUNTING AND REPORTS

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Records
  and Accounting

  	
  58

  
	
   

  	
  9.2

  	
  Fiscal
  Year

  	
  59

  
	
   

  	
  9.3

  	
  Reports

  	
  59

  
	
   

  	
  9.4

  	
  Cooperation
  Regarding Tax Matters Relating to Contributed Property

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  X. TAX MATTERS

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Preparation
  of Tax Returns

  	
  60

  
	
   

  	
  10.2

  	
  Tax
  Elections

  	
  60

  
	
   

  	
  10.3

  	
  Tax
  Matters Partner

  	
  60

  
	
   

  	
  10.4

  	
  Organizational
  Expenses

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XI. TRANSFERS AND WITHDRAWALS

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Transfer

  	
  61

  
	
   

  	
  11.2

  	
  Transfer
  of Managing Member’s Membership Interest

  	
  61

  
	
   

  	
  11.3

  	
  Non-Managing
  Members’ Rights to Transfer

  	
  62

  
	
   

  	
  11.4

  	
  Substituted
  Members

  	
  64

  
	
   

  	
  11.5

  	
  Assignees

  	
  64

  
	
   

  	
  11.6

  	
  General
  Provisions

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XII. ADMISSION OF MEMBERS

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Admission
  of Initial Non-Managing Members

  	
  66

  
	
   

  	
  12.2

  	
  Admission
  of Successor Managing Member

  	
  67

  
	
   

  	
  12.3

  	
  Admission
  of Additional Members

  	
  67

  
	
   

  	
  12.4

  	
  Amendment
  of Agreement and Certificate

  	
  68

  
										

 

ii

 

	
   

  	
  12.5

  	
  Limitation
  on Admission of Members

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII. DISSOLUTION, LIQUIDATION AND TERMINATION

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Dissolution

  	
  68

  
	
   

  	
  13.2

  	
  Redemption
  of Non-Managing Member Units

  	
  69

  
	
   

  	
  13.3

  	
  Winding
  Up

  	
  69

  
	
   

  	
  13.4

  	
  Deemed
  Contribution and Distribution

  	
  71

  
	
   

  	
  13.5

  	
  Rights
  of Members

  	
  71

  
	
   

  	
  13.6

  	
  Notice
  of Dissolution

  	
  71

  
	
   

  	
  13.7

  	
  Cancellation
  of Certificate

  	
  71

  
	
   

  	
  13.8

  	
  Reasonable
  Time for Winding-Up

  	
  71

  
	
   

  	
  13.9

  	
  Liability
  of Liquidator

  	
  72

  
	
   

  	
   

  	
   

  	
   

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

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Procedures
  for Actions and Consents of Members

  	
  72

  
	
   

  	
  14.2

  	
  Amendments

  	
  72

  
	
   

  	
  14.3

  	
  Meetings
  of the Members; Written Consent Without a Meeting

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XV. GENERAL PROVISIONS

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Addresses
  and Notice

  	
  73

  
	
   

  	
  15.2

  	
  Titles
  and Captions

  	
  74

  
	
   

  	
  15.3

  	
  Pronouns
  and Plurals

  	
  74

  
	
   

  	
  15.4

  	
  Further
  Action

  	
  74

  
	
   

  	
  15.5

  	
  Binding
  Effect

  	
  74

  
	
   

  	
  15.6

  	
  Creditors

  	
  74

  
	
   

  	
  15.7

  	
  Waiver

  	
  74

  
	
   

  	
  15.8

  	
  Counterparts

  	
  74

  
	
   

  	
  15.9

  	
  Applicable
  Law

  	
  75

  
	
   

  	
  15.10

  	
  Entire
  Agreement

  	
  75

  
	
   

  	
  15.11

  	
  Invalidity
  of Provisions

  	
  75

  
	
   

  	
  15.12

  	
  No
  Partition

  	
  75

  
	
   

  	
  15.13

  	
  Uniform
  Commercial Code Article 8 (Opt-In)

  	
  75

  
					

 

	
  Exhibit A

  	
  Member
  Information

  	
  A-1

  
	
  Exhibit B

  	
  Notice
  of Redemption

  	
  B-1

  
	
  Exhibit C

  	
  Form of
  Joinder Agreement

  	
  C-1

  
	
  Exhibit D

  	
  Example
  of Certain Calculations Pursuant to Section 5.6.C

  	
  D-1

  
	
  Exhibit E

  	
  Form of
  Bottom Dollar Guarantee

  	
  E-1

  
	
  Exhibit F-1

  	
  Form of
  Managing Member Note

  	
  F-1-1

  
	
  Exhibit F-2

  	
  Form of
  Managing Member Note (Subordinate Note)

  	
  F-2-1

  

 

iii

 

AMENDED
AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

HCP DR MCD, LLC

 

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

 

RECITALS

 

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

 

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

 

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

 

AGREEMENT

 

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

 

ARTICLE
I.

DEFINED TERMS

 

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

 

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

 

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

 

 

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

 

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

 

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

 

“Adjusted Capital Account Deficit” means, with respect to any Member, the
deficit balance, if any, in such Member’s Capital Account as of the end of the
relevant Fiscal Year, after giving effect to the following adjustments:

 

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

 

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

 

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

 

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

 

2

 

purchasable
under such Distributed Rights and (ii) the denominator of which shall be
the number of REIT Shares issued and outstanding on the record date plus a
fraction, (1) the numerator of which is the maximum number of REIT Shares
purchasable under such Distributed Rights times the minimum purchase price per
REIT Share under such Distributed Rights and (2) the denominator of which
is the Value of a REIT Share as of the record date; provided, however,  that, if any
such Distributed Rights expire or become no longer exercisable, then the
Adjustment Factor shall be adjusted, effective retroactive to the date of
distribution of the Distributed Rights, to reflect a reduced maximum number of
REIT Shares or any change in the minimum purchase price for the purposes of the
above fractions; and (c) the Managing Member shall, by dividend or
otherwise, distribute to all holders of its REIT Shares evidences of its
indebtedness or assets (including securities, but excluding any dividend or
distribution referred to in subsection (a) above), which evidences of
indebtedness or assets relate to assets not received by the Managing Member
pursuant to a pro rata
distribution by the Company, then the Adjustment Factor shall be adjusted to
equal the amount determined by multiplying the Adjustment Factor in effect
immediately prior to the close of business on the date fixed for determination
of shareholders entitled to receive such distribution by a fraction, (i) the
numerator shall be such Value of a REIT Share on the date fixed for such
determination and (ii) the denominator shall be the Value of a REIT Share
on the dated fixed for such determination less the then fair market value (as
reasonably determined by the Managing Member) of the portion of the evidences
of indebtedness or assets so distributed applicable to one REIT Share.  Any adjustments to the Adjustment Factor
shall become effective immediately after the effective date of such event,
retroactive to the record date, if any, for such event.

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

(a)           the sum, without duplication, of:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Effective Price” as defined in the Contribution Agreement.

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

“SEC” means the Securities and Exchange
Commission.

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

ARTICLE II.

ORGANIZATIONAL MATTERS

 

2.1  Formation

 

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

 

2.2  Name

 

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

 

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

 

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

 

21

 

2.4  Power of Attorney

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

2.5  Term

 

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

 

ARTICLE
III.

PURPOSE

 

3.1  Purpose and
Business

 

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

 

3.2  Powers

 

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

 

23

 

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

 

3.3  Specified Purposes

 

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

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

ARTICLE
IV.

CAPITAL CONTRIBUTIONS

 

4.1  Capital
Contributions of the Initial Members

 

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

 

4.2       Additional
Members

 

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

 

4.3  Loans and
Incurrence and Payment of Debt

 

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

 

27

 

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

 

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

 

4.4  Additional Funding and Capital Contributions

 

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

 

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

 

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

 

28

 

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

 

4.5  No Interest; No
Return

 

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

 

ARTICLE
V.

DISTRIBUTIONS

 

5.1  Requirement and
Characterization of Distributions

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

5.2  Distributions in Kind

 

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

 

5.3  Amounts Withheld

 

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

 

30

 

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

 

5.4  Distributions Upon
Liquidation

 

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

 

5.5  Restricted
Distributions

 

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

 

5.6  Distributions of
Proceeds from Sale of Properties and Refinancing Debt

 

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

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

5.7  Distributions Following Redemption

 

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

 

ARTICLE VI.

ALLOCATIONS

 

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

 

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

 

6.2  General Allocations

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

(2)   Thereafter, to the Managing Member.

 

6.3  Additional
Allocation Provisions

 

A.    Regulatory Allocations.

 

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

 

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

 

35

 

Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member’s share of the
net decrease in Member Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(4).  Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Member pursuant thereto.  The
items to be so allocated shall be determined in accordance with Regulations
Sections 1.704-2(i)(4) and 1.704-2(j)(2). 
This Section 6.3A.(2) is intended to qualify as a “chargeback of partner nonrecourse debt minimum
gain” within the meaning of Regulations Section 1.704-2(i) and
shall be interpreted consistently therewith.

 

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

 

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

 

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

 

(6)   Section 754 Adjustment.  To the extent that an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or
Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as the result of a distribution to
a Member in complete liquidation of its interest in the Company, the amount of
such adjustment to the Capital Accounts shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to
the Members in accordance with their LLC Units in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom such
distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

36

 

(7)   Curative Allocations.  The allocations set forth in Sections 6.3A.(1) through
(6) hereof (the “Regulatory Allocations”)
are intended to comply with certain regulatory requirements, including the
requirements of Regulations Sections 1.704-1(b) and 1.704-2.  Notwithstanding the provisions of Sections 6.1
and 6.2 hereof, the Regulatory Allocations shall be taken into account
in allocating other items of income, gain, loss and deduction among the Members
so that, to the extent possible without violating the requirements giving rise
to the Regulatory Allocations, the net amount of such allocations of other
items and the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the Regulatory
Allocations had not occurred.

 

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

 

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

 

6.4  Tax Allocations

 

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

 

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

 

6.5  Other Provisions

 

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

 

37

 

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

 

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

 

6.6  Amendments to Allocation to Reflect Issuance of Additional
Membership Interests

 

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

 

ARTICLE VII.

MANAGEMENT AND OPERATION OF BUSINESS

 

7.1  Management

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

7.2  Certificate of Formation

 

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

 

7.3  Restrictions on Managing Member’s Authority

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

D.    Notwithstanding
Section 7.3B and 7.3C hereof, this Agreement shall not be
amended with respect to any Member adversely affected, and no action may be
taken by the Managing Member, without the Consent of such Member adversely
affected if such amendment or action would (i) convert a Non-Managing
Member’s interest in the Company into a Managing Member’s interest, (ii) modify
the limited liability of a Non-Managing Member, (iii) alter rights of the
Member to receive distributions pursuant to Article V or Section 13.3A.(4),
or the allocations specified in Article VI (except as permitted
pursuant to Sections 4.2, 4.3 and 4.4 and Section 7.3C.(1) hereof),
(iv) alter or modify the rights to a Redemption as set forth in Section 8.6,
or the rights to a Make-Whole Payment as set forth in Sections 7.3E,
7.3F, 7.3G and 7.3H hereof, and related definitions
hereof, or (v) amend this Section 7.3D.  Further, no amendment may alter the
restrictions on the Managing Member’s authority set forth elsewhere in this Section 7.3
without the Consent specified in such section. 
Any such amendment or action consented to by any Member shall be
effective as to that Member, notwithstanding the absence of such Consent by any
other Member.

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

(c)           be full recourse to the Company; and

 

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

 

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

 

45

 

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

 

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

 

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

 

46

 

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

 

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

 

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

 

47

 

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

 

7.4  Compensation of the Managing Member

 

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

 

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

 

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

 

48

 

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

 

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

 

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

 

7.5  Other Business of Managing Member

 

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

 

7.6  Contracts with Affiliates

 

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

 

49

 

 

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

 

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

 

7.7  Indemnification

 

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

 

50

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

51

 

7.8  Liability
of the Managing Member

 

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

 

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

 

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

 

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

 

7.9  Other Matters Concerning the
Managing Member

 

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

 

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

 

52

 

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

 

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

 

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

 

7.10        Title to Company Assets

 

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

 

7.11        Reliance by Third Parties

 

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

 

53

 

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

 

ARTICLE
VIII.

RIGHTS AND OBLIGATIONS OF MEMBERS

 

8.1  Limitation
of Liability

 

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

 

8.2  Managing
of Business

 

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

 

8.3  Outside
Activities of Members

 

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

 

54

 

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

 

8.4  Return of
Capital

 

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

 

8.5  Rights of
Non-Managing Members Relating to the Company

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

55

 

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

 

8.6  Redemption
Rights

 

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

 

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

 

56

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

57

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
IX.

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

9.1  Records
and Accounting

 

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

 

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

 

9.2  Fiscal
Year

 

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

 

9.3  Reports

 

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

 

9.4  Cooperation
Regarding Tax Matters Relating to Contributed Property

 

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

 

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

 

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

 

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

 

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

 

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

 

59

 

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

 

ARTICLE
X.

TAX MATTERS

 

10.1        Preparation
of Tax Returns

 

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

 

10.2        Tax
Elections

 

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

 

10.3        Tax
Matters Partner

 

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

 

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

 

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10.4        Organizational
Expenses

 

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

 

ARTICLE
XI.

TRANSFERS AND WITHDRAWALS

 

11.1        Transfer

 

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

 

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

 

11.2        Transfer
of Managing Member’s Membership Interest

 

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

 

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

 

61

 

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

 

11.3        Non-Managing
Members’ Rights to Transfer

 

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

 

62

 

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

 

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

 

C.    Incapacity.  If 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 its interest in the Company. 
The Incapacity of a Non-Managing Member, in and of itself, shall not
dissolve or terminate the Company.

 

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

 

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

 

63

 

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

 

11.4        Substituted
Members

 

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

 

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

 

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

 

11.5        Assignees

 

If the Managing Member, in its sole and absolute discretion, does not
Consent to the admission of any permitted transferee under Section 11.3
hereof as a Substituted Member, as described in Section 11.4
hereof, such transferee shall be considered an Assignee for purposes of this
Agreement.  An Assignee shall be entitled
to all the rights of an assignee of a limited liability company interest under
the Act, including the right to receive distributions from the Company and the
share of Net Income, Net Loss and other items of income, gain, loss, deduction
and credit of the Company attributable to the LLC Units assigned to such
transferee, the rights to Transfer the LLC Units provided in this Article XI,
and the right of Redemption provided in Section 8.6, but shall not
be deemed to be a Member of LLC Units for any other purpose under this
Agreement, and shall not be entitled to effect a Consent or vote with respect
to such LLC Units on any matter presented to the Members for approval (such
right to Consent or vote, to the extent provided in this Agreement or under the
Act, fully remaining with the transferor Member).  In the event that any such transferee desires
to make a further assignment of any such LLC Units, such transferee shall be
subject to all the provisions of this Article XI to the same extent
and in the same manner as any Members desiring to make an assignment of LLC
Units.  The Managing Member shall have no
liability under any circumstance with respect to any Assignee as to which it
does not have notice.

 

64

 

11.6        General
Provisions

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)   in violation of applicable law;

 

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

 

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

 

65

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
XII.

ADMISSION OF MEMBERS

 

12.1        Admission
of Initial Non-Managing Members

 

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

 

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12.2        Admission
of Successor Managing Member

 

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

 

12.3        Admission
of Additional Members

 

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

 

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

 

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

 

67

 

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

 

12.4        Amendment
of Agreement and Certificate

 

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

 

12.5        Limitation
on Admission of Members

 

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

 

ARTICLE
XIII.

DISSOLUTION, LIQUIDATION AND TERMINATION

 

13.1        Dissolution

 

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

 

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

 

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

 

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

 

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

 

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

 

68

 

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

 

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

 

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

 

13.2        Redemption
of Non-Managing Member Units

 

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

 

13.3        Winding Up

 

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

 

69

 

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

 

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

 

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

 

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

 

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

 

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

 

70

 

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

 

13.4        Deemed
Contribution and Distribution

 

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

 

13.5        Rights of
Members

 

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

 

13.6        Notice of
Dissolution

 

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

 

13.7        Cancellation
of Certificate

 

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

 

13.8        Reasonable
Time for Winding-Up

 

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

 

71

 

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

 

13.9        Liability
of Liquidator

 

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

 

ARTICLE
XIV.

PROCEDURES FOR ACTIONS AND CONSENTS

OF MEMBERS; AMENDMENTS; MEETINGS

 

14.1        Procedures
for Actions and Consents of Members

 

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

 

14.2        Amendments

 

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

 

14.3        Meetings
of the Members; Written Consent Without a Meeting

 

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

 

72

 

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

 

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

 

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

 

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

 

ARTICLE
XV.

GENERAL PROVISIONS

 

15.1        Addresses
and Notice

 

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

 

73

 

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

 

15.2        Titles and
Captions

 

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

 

15.3        Pronouns
and Plurals

 

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

 

15.4        Further
Action

 

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

 

15.5        Binding
Effect

 

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

 

15.6        Creditors

 

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

 

15.7        Waiver

 

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

 

15.8        Counterparts

 

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

 

74

 

15.9        Applicable Law

 

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

 

15.10      Entire Agreement

 

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

 

15.11      Invalidity of Provisions

 

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

 

15.12      No Partition

 

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

 

15.13      Uniform Commercial Code Article 8 (Opt-In)

 

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

 

[Signatures
appear on following page]

 

75

 

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

 

	
  MANAGING MEMBER:

  	
  HEALTH CARE PROPERTY
  INVESTORS, INC., a

  
	
   

  	
  Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Tim Schoen

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Tim Schoen

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Senior Vice President

  	
   

  
	
   

  
	
   

  
	
   

  
	
  NON-MANAGING MEMBERS:

  	
   

  
								

 

 

[See Additional Signature Pages of

Non-Managing Members Attached hereto]

 

 

[Additional Signatures of Non-Managing Members to

Amended and Restated Limited Liability
Company Agreement

of HCP DR MCD, LLC]

 

POWER OF ATTORNEY

 

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

 

	
  Signature

  	
   

  	
  Non-Managing
  Member

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  TWG Medical, Ltd.

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Marvin C.
  Culbertson, Jr.

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Pierce D. Flanders

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  G&B Johnson
  Investments, Ltd.

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Clifford J. Osborn

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Sandra R. Cohen, as

  
	
   

  	
   

  	
  Trustee for the Ivy T.

  
	
   

  	
   

  	
  Rabinowitz Trust for

  
	
   

  	
   

  	
  Sandra R. Cohen

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Joe A. Stalcup

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Howard G. Thomas

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Carol E. Touchstone

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Jesse M. Hellums III

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Hunt H. Hellums

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Frank O. Seay

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Robert J. Wright

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Cynthia J. Hellstern

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Mary Ellen Thomas

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Harlan R. Crow

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Wright Williams, Ltd.

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Allen E. Cullum

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  Margaret Anne Cullum

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  William Bennett Cullum

  
	
   

  	
   

  	
   

  
	
  *

  	
   

  	
  James McDonald Williams

  

 

 

	
  *

  	
   

  	
  Thornton Tye Medical,

  
	
   

  	
   

  	
  L.P.

  
	
  *

  	
   

  	
  Harlan R. Crow, Trustee

  
	
   

  	
   

  	
  for the Trammell Crow

  
	
   

  	
   

  	
  1994 Revocable Trust

  
	
  *

  	
   

  	
  Crow Realty Investors,

  
	
   

  	
   

  	
  L.P.

  

 

	
   

  	
  *By

  	
  TWG Medical, Ltd., a
  Texas limited

  partnership, as Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TWG, Inc., its
  general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert J. Wright 

  
	
   

  	
   

  	
  Robert J. Wright

  
	
   

  	
   

  	
  President

  

 

 

EXHIBIT
A

 

MEMBER’S
CAPITAL CONTRIBUTIONS

 

 

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

 

A-1

 

EXHIBIT
A-2

CONTRIBUTIONS

 

Part I:  Contributor

 

	
  Contributor

  	
   

  	
  Gross Asset Value

  of Contribution

  	
   

  	
  Number of Non-Managing Member

  Units

  
	
  Medical City Dallas Limited

  	
   

  	
  $

  	
  140,051,433.00

  	
   

  	
  4,246,857

  
						

 

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

 

Part II:  Managing Member

 

	
  Managing Member

  	
   

  	
  Gross Asset Value

  of Contribution

  	
   

  	
  Number of Managing Member Units

  
	
  Health Care Property Investors, Inc.

  	
   

  	
  $

  	
  65,892,373.00

  	
   

  	
  1,999,162

  
						

 

A-2

 

EXHIBIT
A-3

LLC UNITS
(NON-MANAGING MEMBER AND MANAGING MEMBER)

 

Non-Managing
Member Units

 

	
  Name

  	
   

  	
  Address

  	
   

  	
  Number
  of Units

  
	
  TWG Medical, Ltd.

  	
   

  	
  7777 Forest Lane

  Suite C-840

  Dallas, TX 75230

  	
   

  	
  1,419,328

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marvin C.
  Culbertson, Jr.

  	
   

  	
  6126 Averell Way

  #109 W

  Dallas, TX 75225

  	
   

  	
  30,551

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pierce D. Flanders

  	
   

  	
  1317 Palm Valley

  Drive East

  Harlingen, TX 78552

  	
   

  	
  25,481

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G&B Johnson
  Investments, Ltd.

  	
   

  	
  8523 Thackery

  Apt. 2103

  Dallas, TX 75225

  	
   

  	
  12,741

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Clifford J. Osborn

  	
   

  	
  5581 East Finisterra

  Tucson, AZ 85715

  	
   

  	
  25,481

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sandra R. Cohen, as
  Trustee for

  the Ivy T. Rabinowitz Trust for

  Sandra R. Cohen

  	
   

  	
  7030 South Jan Mar

  Dallas, TX 75230

  	
   

  	
  10,193

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Joe A. Stalcup

  	
   

  	
  6510 Abrams

  Suite 640

  Dallas, TX 75231

  	
   

  	
  178,235

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Howard G. Thomas

  	
   

  	
  8333 Douglas

  Suite 1414

  Dallas, TX 75225

  	
   

  	
  50,918

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Carol E. Touchstone

  	
   

  	
  3829 Stratford

  Dallas, TX 75205

  	
   

  	
  25,481

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jesse M. Hellums III

  	
   

  	
  16161 College Oak

  Suite 100

  San Antonio, TX 78249

  	
   

  	
  6,325

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hunt H. Hellums

  	
   

  	
  906 Point Run Dr.

  Pflugerville, TX 78660

  	
   

  	
  6,325

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Frank O. Seay

  	
   

  	
  4242 Lomo Alto N48

  Dallas, TX 75219

  	
   

  	
  10,121

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Robert J. Wright

  	
   

  	
  7777 Forest Lane

  Suite C-840

  Dallas, TX 75230

  	
   

  	
  22,386

  

 

A-3

 

	
  Name

  	
   

  	
  Address

  	
   

  	
  Number
  of Units

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cynthia J. Hellstern

  	
   

  	
  10827 Crooked Creek
  Drive

  Dallas, TX 75229

  	
   

  	
  4,710

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mary Ellen Thomas

  	
   

  	
  3904 Deepwood St.

  Colleyville, TX 76034

  	
   

  	
  4,710

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Harlan R. Crow

  	
   

  	
  Crow Holdings

  2100 McKinney

  Suite 700

  Dallas, TX 75201

  	
   

  	
  1,187,080

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wright Williams, Ltd.

  	
   

  	
  7777 Forest Lane

  Suite C-840

  Dallas, TX 75230

  	
   

  	
  26,199

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Allen E. Cullum

  	
   

  	
  5952 Royal Ln #216

  Dallas, TX 75230-3831

  	
   

  	
  72,146

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Margaret Anne Cullum

  	
   

  	
  11 Turtle Creek Bend

  Dallas, TX 75204

  	
   

  	
  84,878

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  William Bennett Cullum

  	
   

  	
  4940 Mangold Circle

  Dallas, TX 75229-4343

  	
   

  	
  84,833

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  James McDonald Williams

  	
   

  	
  c/o Dorothy Hopkins

  Williams Interests

  2001 Ross, Suite 3350

  Dallas, TX 75201

  	
   

  	
  82,994

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thornton Tye Medical,
  L.P.

  	
   

  	
  c/o Ken Travis

  Travis Wolff

  5580 LBJ Freeway

  Suite 400

  Dallas, TX 75240

  	
   

  	
  82,994

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Harlan R. Crow, Trustee
  for the

  Trammell Crow 1994 Revocable

  Trust

  	
   

  	
  2100 McKinney,
  Suite 700

  Dallas, TX 75201

  	
   

  	
  631,111

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crow Realty Investors,
  L.P.

  	
   

  	
  2100 McKinney,
  Suite 700

  Dallas, TX 75201

  	
   

  	
  161,636

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative Totals:

  	
   

  	
   

  	
   

  	
  4,246,857

  

 

A-4

 

	
  Name

  	
   

  	
  Address

  	
   

  	
  Number
  of Units

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Health Care Property
  Investors, Inc.

  	
   

  	
  3760 Kilroy Airport
  Way,

  Suite 300

  Long Beach, CA 90806

  	
   

  	
  1,999,162

  

 

A-5

 

EXHIBIT
B

NOTICE
OF REDEMPTION

 

	
  To:

  	
   

  	
  HCP DR MCD, LLC

  
	
   

  	
   

  	
  c/o Health Care Property
  Investors, Inc.

  
	
   

  	
   

  	
  3760 Kilroy Airport Way,
  Suite 300

  
	
   

  	
   

  	
  Long Beach, California
  90806

  

 

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

 

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

 

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

 

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

 

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

 

B-1

 

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

 

	
  Dated:

  	
   

  	
   

  	
  Name
  of Member or Assignee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature
  of Member or Assignee)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Street
  Address)  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (City)   (State)   (Zip)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   Signature Guaranteed by:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Issue
  REIT Shares in the name of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   Please insert social security or identifying number:

  
						

 

B-2

 

EXHIBIT C

FORM OF JOINDER AGREEMENT

 

JOINDER TO OPERATING AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-1

 

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

 

	
  COMPANY:

  	
  NEW MEMBER:

  
	
   

  	
   

  	
   

  
	
  HCP DR MCD, LLC, a Delaware limited

  liability company

  	
   

  
	
   

  	
  By:

  	
   

  
	
  By:

  	
  HEALTH CARE PROPERTY  

  	
  Name:

  	
   

  
	
   

  	
  INVESTORS, INC.,

  	
  Title:

  	
   

  
	
   

  	
  a Maryland corporation,

  	
   

  
	
   

  	
  its Managing Member

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
							

 

C-2

 

EXHIBIT D

 

EXAMPLE OF CERTAIN
CALCULATIONS PURSUANT TO SECTION 5.6.C

 

Assumptions
for example –

 

(1) 
LLC unit ownership:

 

	
   

  	
   

  	
  Units

  	
   

  	
  Effective
  Price

  	
   

  	
  Value of
  

  Interest

  	
   

  	
  Percentage

  Interest

  	
   

  
	
  the
  Managing Member Units (MMUs)

  	
   

  	
  2,400,000

  	
   

  	
  $

  	
  25.

  	
   

  	
  60,000,000

  	
   

  	
  75

  	
  %

  
	
  Non-Managing
  Member Units (NMMUs)

  	
   

  	
  800,000

  	
   

  	
  $

  	
  25.

  	
   

  	
  20,000,000

  	
   

  	
  25

  	
  %

  
	
  Total

  	
   

  	
  3,200,000

  	
   

  	
   

  	
   

  	
  80,000,000

  	
   

  	
   

  	
   

  

 

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

Disposition
Proceeds = $30MM

Initial
value = $25MM

Property
Appreciation = $5MM

Portion
of Disposition Proceeds to be distributed = $10MM

 

(3) 
Other assumptions:

Value
of REIT stock on Reduction Date = $30

There
is no Preferred Return Shortfall or the Managing Member Shortfall

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

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

 

Calculation
of Reduction:

 

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

 

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

(b) NMM
Sharing Amount of $18,000

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

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

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

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

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

(Z) $2.5MM
– $18,000 = $2,482,000

 

D-1

 

Divided
by

(ii) $30
Value on Reduction Date

 

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

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

(ii) 75%
Percentage Interest of MM before Reduction

 

Calculation
of Profit Participation Amount for NMMs:

 

$431,667,
computed as the sum of

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

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

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

 

D-2

 

EXHIBIT E

 

FORM OF BOTTOM DOLLAR
GUARANTEE

 

 

[See Attached]

 

E-1

 

EXHIBIT F - 1

 

FORM OF MANAGING MEMBER NOTE

 

[See Attached]

 

F-1

 

EXHIBIT F - 2

 

FORM OF MANAGING MEMBER NOTE (Subordinate Note)

 

[See Attached]

 

F-2-1

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