Contract

EXHIBIT 10.1 OPERATING AGREEMENT OF NNN 2002 VALUE FUND, LLCTHE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACTOF 1933, AS AMENDED, NOR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIESAND EXCHANGE COMMISSION NOR BY THE SECURITIES REGULATORY AUTHORITY OF ANY STATE,NOR HAS ANY COMMISSION OR AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THISOFFERING OR THE ACCURACY OR ADEQUACY OF ANY DISCLOSURE MADE IN CONNECTIONTHEREWITH. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESECURITIES OFFERED HEREBY MAY NOT BE RESOLD WITHOUT REGISTRATION UNDER THESECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OREXEMPTION THEREFROM. TABLE OF CONTENTS

Page —- 1. Organization ……………………………………………. 1 1.1 Formation …………………………………………….. 1 1.2 Name and Place of Business ……………………………… 1 1.3 Business and Purpose of the Company ……………………… 1 1.4 Term …………………………………………………. 1 1.5 Required Filings ………………………………………. 1 1.6 Registered Office and Registered Agent …………………… 1 1.7 Certain Transactions …………………………………… 12. Definitions …………………………………………….. 13. Capitalization and Financing ……………………………… 2 3.1 Members’ Capital Contributions ………………………….. 2 3.1.1 Initial Member …………………………………… 2 3.1.2 Investor Units …………………………………… 2 3.1.3 Payment of Purchase Price …………………………. 2 3.1.4 Subscription Agreement ……………………………. 2 3.1.5 Depository Account ……………………………….. 2 3.1.6 Cancellation of Offering ………………………….. 2 3.1.7 Interest from Depository Account …………………… 3 3.1.8 Manager as Member ………………………………… 3 3.1.9 Admission of a Member …………………………….. 3 3.1.10 Liabilities of Members ……………………………. 3 3.2 Cunningham Loan ……………………………………….. 3 3.3 Company Loans …………………………………………. 3 3.4 Third Party Beneficiaries ………………………………. 34. Allocation of Tax Items ………………………………….. 3 4.1 Generally …………………………………………….. 3 4.2 Special Allocations ……………………………………. 4 4.3 Curative Allocations …………………………………… 5 4.4 Contributed Property …………………………………… 5 4.5 Recapture Income ………………………………………. 5 4.6 Allocation Among Investor Units …………………………. 5 4.7 Allocation of Company Items …………………………….. 5 4.8 Assignment ……………………………………………. 6 4.9 Power of Manager to Vary Allocations …………………….. 6 4.10 Consent of Members ………………………………….. 6 4.11 Withholding Obligations ……………………………… 65. Distributions …………………………………………… 7 5.1 Cash from Operations …………………………………… 7 5.2 Cash from Capital Transactions ………………………….. 7 5.3 Restrictions ………………………………………….. 76. Compensation to the Manager and Affiliates …………………. 7 6.1 Manager’s and Affiliates’ Compensation …………………… 7 6.1.1 Acquisition Fee ………………………………….. 7 6.1.2 Property Management Fee …………………………… 7 6.1.3 Leasing Commission ……………………………….. 7 6.1.4 Construction Management Fee ……………………….. 8 6.1.5 Selling Commission ……………………………….. 8 6.1.6 Loan Fee …………………………………………… 8 6.1.7 Termination Fee ………………………………….. 8

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6.1.8 Commissions and Due Diligence Reimbursement…………….. 8 6.2 Company Expenses……………………………………….. 8 6.2.1 Operating Expenses…………………………………… 8 6.2.2 Manager Overhead…………………………………….. 9 6.2.3 Acquisition Expenses…………………………………. 97. Authority, and Responsibilities of the Manager………………. 9 7.1 Management…………………………………………….. 9 7.2 Number, Tenure and Qualifications………………………… 9 7.3 Manager Authority………………………………………. 10 7.4 Restrictions on Manager’s Authority………………………. 12 7.5 Responsibilities of the Manager………………………….. 13 7.6 Administration of Company……………………………….. 13 7.7 Tax Matters Partner…………………………………….. 14 7.8 Indemnification of Manager………………………………. 14 7.9 No Personal Liability for Return of Capital……………….. 14 7.10 Authority as to Third Persons…………………………. 148. Rights, Authority and Voting of the………………………… 15 8.1 Members Are Not Agents………………………………….. 15 8.2 Voting by a Member……………………………………… 15 8.3 Member Vote; Consent of Manager………………………….. 15 8.4 Meetings of the Members…………………………………. 16 8.4.1 Notice ………………………………………….. 16 8.4.2 Adjourned Meeting and Notice Thereof………………… 16 8.4.3 Quorum ………………………………………….. 16 8.4.4 Consent of Absentees………………………………. 16 8.4.5 Action Without Meeting…………………………….. 16 8.4.6 Record Dates……………………………………… 17 8.4.7 Proxies …………………………………………. 17 8.4.8 Chairman of Meeting……………………………….. 17 8.4.9 Inspectors of Election…………………………….. 18 8.4.10 Record Date and Closing Company Books……………….. 18 8.5 Rights of Members………………………………………. 18 8.6 Restrictions on the Member………………………………. 18 8.7 Return of Capital of Member……………………………… 189. Resignation, Withdrawal or Insolvency of the Manager…………. 19 9.1 Resignation or Withdrawal of Manager……………………… 19 9.2 Removal for Cause………………………………………. 19 9.3 Purchase of Manager’s Interest…………………………… 1910. Assignment of the Manager’s Interest……………………….. 19 10.1 Permitted Assignments………………………………… 19 10.2 Substitute Manager…………………………………… 20 10.3 Transfer in Violation Not Recognized…………………… 2011. Assignment of Investor Units………………………………. 20 11.1 Permitted Assignments………………………………… 20 11.2 Substituted Member…………………………………… 21 11.2.1 Conditions to be Satisfied…………………………. 21 11.2.2 Consent of Manager………………………………… 21 11.2.3 Consent of Member…………………………………. 21 11.3 Rights of Economic Interest Owner……………………… 21 11.4 Right to Inspect Books……………………………….. 21 11.5 Assignment of 50% or More of Investor Units…………….. 22 11.6 Transfer Subject to Law………………………………. 22

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11.7 Termination of Membership Interest……………………….. 2212. Books, Records, Accounting and Reports……………………… 22 12.1 Records, Audits and Reports……………………………… 22 12.2 Delivery to Members and Inspection……………………….. 22 12.3 Annual Report………………………………………….. 23 12.4 Tax Information………………………………………… 2313. Termination and Dissolution of the Company………………….. 23 13.1 Termination of Company………………………………….. 23 13.2 Certificate of Cancellation……………………………… 24 13.3 Liquidation of Assets…………………………………… 24 13.4 Distributions Upon Dissolution…………………………… 24 13.5 Liquidation of Member’s Interest…………………………. 2414. Special and Limited Power of Attorney………………………. 24 14.1 Power of Attorney………………………………………. 24 14.2 Provision of Power of Attorney…………………………… 25 14.3 Notice to Members………………………………………. 2515. Relationship of This Agreement to the Act…………………… 2516. Amendment of Agreement……………………………………. 25 16.1 Admission of Member…………………………………….. 25 16.2 Amendments with Consent of Member………………………… 26 16.3 Amendments Without Consent of the Members…………………. 26 16.4 Execution and Recording of Amendments…………………….. 2617. Miscellaneous……………………………………………. 26 17.1 Counterparts…………………………………………… 26 17.2 Successors and Assigns………………………………….. 26 17.3 Severability…………………………………………… 26 17.4 Notices……………………………………………….. 26 17.5 Manager’s Address………………………………………. 26 17.6 Governing Law………………………………………….. 26 17.7 Captions………………………………………………. 27 17.8 Gender………………………………………………… 27 17.9 Time………………………………………………….. 27 17.10 Additional Documents……………………………………. 27 17.11 Descriptions…………………………………………… 27 17.12 Binding Arbitration…………………………………….. 27 17.13 Venue…………………………………………………. 27 17.14 Partition……………………………………………… 27 17.15 Integrated and Binding Agreement…………………………. 27 17.16 Legal Counsel………………………………………….. 2718. Lender Covenants…………………………………………. 28EXHIBIT A……………………………………………………… 1EXHIBIT B……………………………………………………… 1

(iii) OPERATING AGREEMENT OF NNN 2002 VALUE FUND, LLC This Operating Agreement, effective as of May 15, 2002, is entered into byand between Triple Net Properties, LLC, a Virginia limited liability company, asthe Manager, and Anthony W. Thompson, as the Initial Member, pursuant to the Acton the following terms and conditions.1. Organization. 1.1 Formation. Articles of Organization have been filed in the Clerk’sOffice of the State Corporation Commission of the Commonwealth of Virginia inaccordance with and pursuant to the Act. 1.2 Name and Place of Business. The name of the Company shall be NNN 2002Value Fund, LLC, and its principal place of business shall be 1551 N. TustinAvenue, Suite 650, Santa Ana, California 92705. The Manager may change suchname, change such place of business or establish additional places of businessof the Company as the Manager may determine to be necessary or desirable. 1.3 Business and Purpose of the Company. The sole purpose of the Companyis to (a) acquire, own and operate the Properties and to that end hold, improve,mortgage, maintain, refinance, manage, lease and dispose of the Properties, oran undivided interest therein, and (b) engage in such other activities relatingto or incidental as are necessary to accomplish such purposes. 1.4 Term. This Agreement shall not terminate until the Company isdissolved in accordance with this Agreement. 1.5 Required Filings. The Manager shall execute, acknowledge, file, recordand/or publish such certificates and documents, as may be required by thisAgreement or by law in connection with the formation and operation of theCompany. 1.6 Registered Office and Registered Agent. The Company’s initialregistered office and initial registered agent shall be as provided in theArticles of Organization. The registered office and registered agent may bechanged from time to time by the Manager by filing the address of the newregistered office and/or the name of the new registered agent pursuant to theAct. 1.7 Certain Transactions. Any Manager, Member, Economic Interest Owner, orany Affiliate, or any shareholder, officer, director, employee, partner, member,manager or any person owning an interest therein, may engage in or possess aninterest in any other business or venture of any nature or description, whetheror not competitive with the Company, including, but not limited to, theacquisition, syndication, ownership, financing, leasing, operation, maintenance,management, brokerage, construction and development of property similar to theProperties and no Manager, Member or other person or entity shall have anyinterest in such other business or venture by reason of their interest in theCompany.2. Definitions. Definitions for this Agreement are set forth on Exhibit A andare incorporated herein.3. Capitalization and Financing. 3.1 Members’ Capital Contributions. 3.1.1 Initial Member. Anthony W. Thompson, as the Initial Member,shall contribute the sum of $100 in cash to the Company, but shall not receiveany Investor Units therefor. On the first business day following the admissionof additional Members, the Initial Member’s $100 Capital Contribution shall bereturned, and he shall cease to be a Member. The Members hereby consent to theInitial Member’s withdrawal of his Capital Contribution and waive any right,claim or action they may have against him by reason of his having been a Member. 3.1.2 Investor Units. The Company is hereby authorized to sell andissue not less than 200 and not more than 6,000 Investor Units pursuant to theMemorandum at a purchase price of $5,000 per Investor Unit, which number ofUnits may be adjusted by the Manager in its sole and absolute discretion, and toadmit the persons who acquire such Investor Units as Members, provided that theManager has at least accepted at least $1,000,000 of aggregate subscriptions forInvestor Units. The Offering shall terminate on the Offering Termination Date. 3.1.3 Payment of Purchase Price. The purchase price of each InvestorUnit shall be paid in full, in cash, at the time of execution of theSubscription Agreement. Payment of the purchase price for an Investor Unit shallconstitute the Member’s initial Capital Contribution. 3.1.4 Subscription Agreement. Each person desiring to acquireInvestor Units and become a Member shall tender to the Company a SubscriptionAgreement for the number of Investor Units desired, together with the correctfull Subscription Payment of the Investor Units so subscribed. The Company shallaccept or reject each Subscription Agreement within 30 days after the Companyreceives the same (and the failure by the Company to accept a SubscriptionAgreement within said 30 days shall constitute a rejection thereof). Acceptanceof a Subscription Agreement shall be evidenced by the execution by the Manager.Subject to Section 3.1.9, upon the acceptance of a Subscription Agreement, theaccompanying Subscription Payment shall become a Capital Contribution by suchsubscriber. The Company may accept subscriptions from “benefit plans” (asdefined by ERISA); provided, however, that at all times benefit plans must own,in the aggregate, less than twenty-five (25%) of the total value of the InvestorUnits then outstanding. 3.1.5 Depository Account. After acceptance of any tenderedSubscription Agreement by the Company, the accompanying Subscription Paymentshall, prior to the Impound Release Date, be placed in an interest-bearingescrow account (“Depository Account”) at a bank or financial institutionselected by the Manager in California for Investor Units and held there untilsuch time (“Impound Release Date”) as $1,000,000 in the aggregate of good orcollected Subscription Payments for Investor Units have been deposited. Uponreceipt of at least $1,000,000 of collected funds from acceptable subscriptionsof Investor Units, funds in the Depository Account shall be released to theCompany. After the Impound Release Date, any additional Subscription Paymentsreceived (a) for Investor Units shall be sent directly to and retained by theCompany. Investors in the Company shall be admitted into the Company on thefirst day of the calendar month following the month in which the Company acceptssuch subscriber’s subscription unless admitted earlier by the Manager, in itssole discretion. All subscriptions shall be accepted or rejected by the Companywithin 30 days of their actual receipt by the Company. If rejected, allSubscription Payments shall be returned to the subscriber. 3.1.6 Cancellation of Offering. If the Company has not acceptedSubscription Payments for a sufficient number of Investor Units on or beforeApril 30, 2003, the Offering shall be 2canceled and all Subscription Payments received shall be promptly refunded tothe subscribers; provided, however, that such date may be extended until April30, 2004 in the sole and absolute discretion of the Manager. 3.1.7 Interest from Depository Account. Within 45 days after anySubscription Payment for Investor Units is released from the Depository Accountor upon cancellation of the Offering as provided in Section 3.1.6, an allocableshare of the interest earned by the Depository Account while the SubscriptionPayment was deposited therein shall be paid to the subscriber, based on theactual number of days such Subscription Payment was deposited in the DepositoryAccount and the actual amount of interest earned during such period on funds inthe Depository Account. 3.1.8 Manager as Member. The Manager and/or Affiliates may purchaseInvestor Units for the same price and upon the same terms and conditions, as allother purchasers thereof. As a result, the Manager or Affiliates shall beadmitted to the Company as Members with respect to such Investor Units and shallbe entitled to all rights as Members appurtenant thereto, including but notlimited to the right to vote on certain Company matters as provided for in thisAgreement and to receive Distributions and allocations attributable to theInvestor Units so purchased. 3.1.9 Admission of a Member. To the extent required by law, theManager shall amend this Agreement and take such other action as the Managerdeems necessary or appropriate promptly after receipt of the Members’ CapitalContributions to the Company to reflect the admission of those persons to theCompany as Members. 3.1.10 Liabilities of Members. Except as specifically provided inthis Agreement, neither the Manager nor any Member shall be required to make anyadditional contributions to the Company and no Manager or Member shall be liablefor the debts, liabilities, contracts, or any other obligations of the Company,nor shall the Manager or the Members be required to lend any funds to theCompany or to repay to the Company, any Member, any creditor of the Company orany other person, any portion or all of any deficit balance in a Member’sCapital Account. 3.2 Cunningham Loan. Cunningham Lending Group, LLC, an Affiliate ofThompson, may, but will have no obligation to, make loans to the Company toacquire the Properties, pay operating expenses or for any other businesspurpose. Any such loan shall bear interest at Cunningham Lending Group, LLC’scost of funds not to exceed 12% per annum (or, if less, the maximum rate allowedby law). 3.3 Company Loans. The Company shall have no authority to borrow money orincur indebtedness on behalf of the Company (other than normal trade accountspayable, lease obligations in the ordinary course of business, or loans fromCunningham Lending Group, LLC) or grant consensual liens on the Company’sproperty; provided, however, that the Manager is hereby authorized to execute apromissory note, the Mortgage and all other documents associated with the Loans(collectively, the “Loan Documents”) but may not incur any other indebtednessexcept as expressly permitted by this item. 3.4 Third Party Beneficiaries. The parties to this Agreement shall beentitled to all of the privileges, benefits and rights contained herein; noother party shall be a third party beneficiary or have any rights hereunder orbe able to enforce any provision contained herein.4. Allocation of Tax Items. 4.1 Generally. After giving effect to the special allocations contained inSection 4.2, Net income and Net Loss shall be allocated to the Members’ CapitalAccounts in such manner as to cause each 3Member’s Capital Account to equal the amount that such Member would receive fromthe Company pursuant to Section 5.2 hereof if on the last day of such year (a)all of the Company’s assets that are then secured by nonrecourse debt were soldfor an amount equal to such debt, (b) all of the Company’s other assets weresold for an amount equal to their Book Value, (c) all of the Company’sliabilities were satisfied and (d) all remaining sale proceeds were distributedto the Members in accordance with Section 5.2 hereof. To the extent necessary toproduce the target Capital Account balances provided above, items of grossincome and gain or deduction shall consist of a proportionate amount of eachitem of Company gross income and gain or deduction, as the case may be, for suchyear. 4.2 Special Allocations. (a) Qualified Income Offset. Except as provided in Section4.3(c), in the event any Member unexpectedly receives any adjustments,allocations, or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items ofCompany income and gain shall be specially allocated to such Member in an amountand manner sufficient to eliminate, to the extent required by the TreasuryRegulations, the Adjusted Capital Account Deficit created by such adjustment,allocation or distribution as quickly as possible. (b) Gross Income Allocation. Net Loss shall not be allocatedto any Member to the extent such allocation would cause any Member to have anAdjusted Capital Account Deficit at the end of a fiscal year. In the event anyMember has an Adjusted Capital Account Deficit at the end of any fiscal year,each such Member shall be specially allocated items of Company gross income andgain in the amount of such Adjusted Capital Account Deficit as quickly aspossible. (c) Company Minimum Gain Chargeback. Notwithstanding any otherprovision of this Section 4, if there is a net decrease in Company Minimum Gainduring any Company fiscal year, each Member shall be specially allocated itemsof 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 MinimumGain, determined in accordance with Treasury Regulations Section 1.704-2(g)(2).This Section 4.2(c) is intended to comply with the partnership minimum gainchargeback requirement in the Treasury Regulations and shall be interpretedconsistently therewith. This provisions shall not apply to the extent theMember’s share of net decrease in Company Minimum Gain is caused by a guaranty,refinancing, or other change in the debt instrument causing it to becomepartially or wholly recourse debt or Member Nonrecourse Debt, and such Memberbears the economic risk of loss (within the meaning of Treasury RegulationsSection 1.752-2 for the newly guaranteed, refinanced or otherwise changed debtor to the extent the Member contributes cash to the capital of the Company thatis used to repay the Nonrecourse Debt, and the Member’s share of the netdecrease in Company Minimum Gain results from the repayment. (d) Member Minimum Gain Chargeback. Notwithstanding any otherprovision of this Section 4, except Section 4.2(c), if there is a net decreasein Member Minimum Gain, any Member with a share of that Member Minimum Gain (asdetermined under Treasury Regulations Section 704-2(i)(5)) as of the beginningof the year shall be allocated items of Company income and gain for such year(and, if necessary, subsequent years) in an amount equal to such Member’s shareof the net decrease in Member Minimum Gain, determined in accordance withTreasury Regulations Section 1.704-2(g)(2). This Section shall not apply to theextent the net decrease in Member Minimum Gain arises because the liabilityceases to be Member Nonrecourse Debt due to conversion, refinancing or otherchange in a debt instrument that causes it to become partially or wholly aNonrecourse Debt. This Section is intended to comply with the partner minimumgain chargeback requirements in the Treasury Regulations and shall beinterpreted consistently therewith and applied with the restrictionsattributable thereto. 4 (e) Nonrecourse Deductions. Nonrecourse Deductions for anyfiscal year or other period shall be allocated 100% to the Investor Units. (f) Member Nonrecourse Deductions. Member NonrecourseDeductions for any fiscal year shall be allocated to the Member who bears theeconomic risk of loss as set forth in Treasury Regulations Section 1.752-2 withrespect to the Member Nonrecourse Debt. If more than one Member bears theeconomic risk of loss for a Member Nonrecourse Debt, any Member NonrecourseDeductions attributable to that Member Nonrecourse Debt shall be allocated amongthe Members according to the ratio in which they bear the economic risk of loss. (g) Code Section 754 Adjustments. To the extent an adjustmentto the adjusted tax basis of any Company asset pursuant to Code Section 734(b)or Code Section 743(b) is required, pursuant to Treasury Regulations Section1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,the amount of such adjustment to the Capital Accounts shall be treated as anitem of gain (if the adjustment increases the basis of the asset) or loss (ifthe adjustment decreases such basis), and such gain or loss shall be speciallyallocated to the Members in a manner consistent with the manner in which theirCapital Accounts are required to be adjusted pursuant to such section of theTreasury Regulations. 4.3 Curative Allocations. Notwithstanding any other provision of thisAgreement, the Regulatory Allocations shall be taken into account in allocatingitems of income, gain, loss and deduction among the Members so that, to theextent possible, the net amount of such allocations of other items and theRegulatory Allocations to each Member shall be equal to the net amount thatwould have been allocated to each such Member if the Regulatory Allocations hadnot occurred. 4.4 Contributed Property. Notwithstanding any other provision of thisAgreement, the Members shall cause depreciation and or cost recovery deductionsand gain or loss attributable to property contributed by a Member or revalued bythe Company to be allocated among the Members for income tax purposes inaccordance with Section 704(c) of the Code and the Treasury Regulationspromulgated thereunder. 4.5 Recapture Income. The portion of each Member’s distributive share ofCompany Net Income that is characterized as ordinary income pursuant to Section1245 or 1250 of the Code shall be proportionate to the amount of Net Income orNet Loss which included the corresponding depreciation deductions that wereallocated to such Member as compared with the amount of depreciation deductionsallocated to all Members. 4.6 Allocation Among Investor Units. Except as otherwise provided in thisAgreement, all Distributions and allocations made to the Investor Units shall bein the ratio of the number of Investor Units held by each such Member on thedate of such allocation (which allocation date shall be deemed to be the lastday of each month) to the total outstanding Investor Units as of such date, and,except as otherwise provided in this Agreement without regard to the number ofdays during such month that the Investor Units were held by each Member. Forpurposes of this Section 4, an Economic Interest Owner shall be treated as aMember. Members who purchase Investor Units at different times during theCompany tax year shall be allocated Net Income and Net Loss using the monthlyconvention set forth in Section 4.7. 4.7 Allocation of Company Items. Except as otherwise provided herein,whenever a proportionate part of Net Income or Net Loss is allocated to aMember, every item of income, gain, loss or deduction entering into thecomputation of such Net Income or Net Loss, and every item of credit or tax 5preference related to such allocation and applicable to the period during whichsuch Net Income or Net Loss was realized shall be allocated to the Owner in thesame proportion. 4.8 Assignment. 4.8.1 In the event of the assignment of an Investor Unit, the NetIncome and Net Loss shall be apportioned as between the Member and his assigneebased upon the number of months of their respective ownership during the year inwhich the assignment occurs, without regard to the results of the Company’soperations during the period before or after such assignment. Distributionsshall be made to the holder of record of the Investor Units as of the date ofthe Distribution. An assignee who receives Investor Units during the first 15days of a month will receive any allocations relative to such month. An assigneewho acquires Investor Units on or after the sixteenth day of a month will betreated as acquiring his Investor Units on the first day of the following month. 4.8.2 In the event of the assignment of the Manager’s Interest, theallocations of Net Income or Net Loss shall be as agreed between the Manager andits assignee. In the absence of an agreement, the Net Income, Net Loss andDistributions shall be allocated in a manner similar to that provided in Section4.7. 4.9 Power of Manager to Vary Allocations. It is the intent of the Membersthat each Member’s share of Net Income and Net Loss be determined and allocatedin accordance with Section 704(b) and Section 514(c)(9) of the Code, and theprovisions of this Agreement shall be so interpreted. Therefore, if the Companyis advised by the Company’s legal counsel that the allocations provided in thisSection 4 are unlikely to be respected for federal income tax purposes, theManager is hereby granted the power to amend the allocation provisions of thisAgreement to the minimum extent necessary to comply with Section 704(b) andSection 514(c)(9) of the Code and effect the plan of allocations anddistributions provided for in this Agreement. 4.10 Consent of Members. The allocation methods of Net Income and Net Lossare hereby expressly consented to by each Member as a condition of becoming aMember. 4.11 Withholding Obligations. 4.11.1 If the Company is required (as determined in good faith bythe Manager) to make a payment (“Tax Payment”) with respect to any Member todischarge any legal obligation of the Company or the Manager to make payments toany governmental authority with respect to any federal, foreign, state or localtax liability of such Member arising as a result of such Member’s interest inthe Company, then, notwithstanding any other provision of this Agreement to thecontrary, the amount of any such Tax Payment shall be deemed to be a loan by theCompany to such Member, which loan shall bear interest at the Prime Rate and bepayable upon demand or by offset to any Distribution which otherwise would bemade to such Member. 4.11.2 If and to the extent the Company is required to make any TaxPayment with respect to any Member, or elects to make payment on any loandescribed in Section 4.11.1 by offset to a Distribution to a Member, either (a)such Member’s proportionate share of such Distribution shall be reduced by theamount of such Tax Payment, or (b) such Member shall pay to the Company prior tosuch Distribution an amount of cash equal to such Tax Payment. In the event aportion of a Distribution in kind is retained by the Company pursuant to clause(a) above, such retained property may, in the discretion of the Manager, either(i) be distributed to the other Members, or (ii) be sold by the Company togenerate the cash necessary to satisfy such Tax Payment. If the property issold, then for purposes of income tax 6allocations only under the Agreement, any gain or loss from such sale orexchange shall be allocated to the Member to whom the Tax Payment relates. Ifthe property is sold at a gain, and the Company is required to make any TaxPayment on such gain, the Member to whom the gain is allocated shall pay theCompany prior to the due date of Tax Payment an amount of cash equal to such TaxPayment. 4.11.3 The Manager shall be entitled to hold back any Distributionto any Member to the extent the Manager believes in good faith that a TaxPayment will be required with respect to such Member in the future and theManager believes that there will not be sufficient subsequent Distributions tomake such Tax Payment.5. Distributions. 5.1 Cash from Operations. Cash from Operations will be distributed asfollows: (i) 100% to the Members until the Members have received their PriorityReturn; and (ii) the balance, to be shared by the Members and the Manager inproportion to the Residuary Sharing Ratio. 5.2 Cash from Capital Transactions. Cash from Capital Transactions will bedistributed as follows: (i) first, to the Members, an amount equal to theirUnrecovered Equity; (ii) second, to the Members, an amount equal to theirPriority Return; and (iii) the balance, to be shared by the Members and theManager in proportion to the Residuary Sharing Ratio. 5.3 Restrictions. The Company intends to make periodic distributions ofsubstantially all cash determined by the Manager to be distributable, subject tothe following: (a) Distributions may be restricted or suspended for periods whenthe Manager determines in its reasonable discretion that it is in the bestinterest of the Company; and (b) all Distributions are subject to the payment,and the maintenance of reasonable reserves for payment, of Company obligations.6. Compensation to the Manager and Affiliates. 6.1 Manager’s and Affiliates’ Compensation. The Manager and its Affiliatesshall receive compensation from the Company for services rendered or to berendered only as specified in this Agreement and the Management Agreement, atrue copy of which is attached as Exhibit B. If any provision of the ManagementAgreement is inconsistent with any provision contained in this Agreement, thenthe provision contained in the Management Agreement shall control and theinconsistent provision herein shall be of no force or effect. 6.1.1 Acquisition Fee. For services rendered in connection with thedue diligence investigation and acquisition of the Properties, the Manager shallbe entitled to receive from the Company out of Offering proceeds an acquisitionfee of 4% of the funds raised in the Offering (the “Acquisition Fee”). 6.1.2 Property Management Fee. The Management Agreement providesthat the Property Manager or an Affiliate will receive a monthly propertymanagement fee for managing the Properties (“Property Management Fee”) equal to5% of Gross Revenues (as defined in the Management Agreement). 6.1.3 Leasing Commission. The Management Agreement provides that theProperty Manager or an Affiliate will receive a leasing commission (“LeasingCommission”) equal to six percent (6%) of the value of any lease centered intoduring the term of the Management Agreement and three percent (3%) with respectto any renewals. Any leasing fees due outside leasing agents or brokers will be 7paid by the Manager from these commissions. The value of the lease shall becalculated by totaling the minimum monthly rent (or similar rent) for the termof the lease. The term of the lease shall not exceed five (5) years for purposesof the foregoing computation and shall be exclusive of option periods. Ifanother broker represents the tenant, then Property Manager may cooperate withthat broker on terms and conditions acceptable to Property Manager withcommissions to the other broker to be paid by the Tenants in Common. The Managermay use outside leasing agents. In the event outside leasing agents are used,the Manager shall pay any commissions that may be due. 6.1.4 Construction Management Fee. The Management Agreement providesthat the Property Manager or an Affiliate will receive a construction managementfee (“Construction Management Fee”) equal to 5% of any amount (includingprofessional services) up to $25,000, 4% of any amount over $25,000 but lessthan $50,000 and 3% of any amount in excess of $50,000 which is expended in anycalendar year for construction or tenant improvements or repair of theProperties; provided, however, that this fee shall only be applicable in theevent outside contracts are used. 6.1.5 Selling Commission. The Management Agreement provides that theProperty Manager or an Affiliate will be entitled to a selling commission (the”Selling Commission”) of up to 5% of the gross sales price of the Properties ina sale to a third party and a sale to the Manager or its Affiliates pursuant tothe Purchase Option set forth in Section 11 of the Tenants in Common Agreement.The Property Manager or an Affiliate will pay any real estate agents and brokerswho assist in the sale any amount of the Commission over 4% up to a maximum of5%. However, the Commission will not be paid if the Property Manager isterminated for cause pursuant to Section 9.2 of this Agreement. 6.1.6 Loan Fee. The Management Agreement provides that the PropertyManager or an Affiliate will receive from the Company a fee (“Loan Fee”) equalto 1% of the principal amount of any loan obtained for the Company; provided,however, that the fee paid to the Property Manager or an Affiliate and any loanfee paid to any other person (other than a lender) as a result of each loanshall not exceed 1%. 6.1.7 Termination Fee. The Management Agreement provides that if theProperty Manager is terminated other than “for cause” (as defined in Section10.1 of the Management Agreement), then the Company shall pay the Manager thetermination fee described therein. 6.1.8 Commissions and Due Diligence Reimbursement. The Memorandumprovides that certain broker-dealers (“Broker-Dealers,” collectively the”Selling Group”) who are members of the National Association of SecuritiesDealers, Inc. (“NASD”) will receive commissions of up to 8% of the grossproceeds (“Gross Proceeds”) of the Offering (“Selling Commissions”). NNN CapitalCorp., an Affiliate of Thompson, will receive a nonaccountable marketing and duediligence allowance in the amount of 1.5% of the Gross Proceeds, which it mayreallow to other members of the Selling Group. In addition, NNN Capital Corp.will receive a nonaccountable marketing due diligence expense allowance in theamount of 1% of the Gross Proceeds, which it will not reallow to other membersof the Selling Group. The total aggregate amount of commissions, marketing anddue diligence expense reimbursements (collectively, “Selling Commissions andExpenses”) will not exceed 10.5% of the Gross Proceeds. 6.2 Company Expenses. 6.2.1 Operating Expenses. Subject to the limitations set forth inSection 6.2.2, the Company shall pay directly, or reimburse the Manager as thecase may be, for all of the costs and expenses of the Company’s operations,including, without limitation, the following costs and expenses: (a) allOrganization and Offering Expenses advanced or otherwise paid by the Manager;(b) all costs of personnel 8employed by the Company and directly involved in the Company’s business; (c) allcompensation due to the Manager or its Affiliates; (d) all costs of personnelemployed by the Manager or its Affiliates and directly involved in the businessof the Company; (e) all costs of borrowed money, taxes and assessments on theProperties and other taxes applicable to the Company; (f) legal, accounting,audit, brokerage, and other fees; (g) fees and expenses paid to independentcontractors, mortgage bankers, real estate brokers, and other agents; (h) costsof acquiring, owning, developing, improving, operating, and disposing of theProperties; (i) expenses incurred in connection with the alteration,maintenance, repair, remodeling, refurbishment, leasing and operation of theProperties; (j) all expenses incurred in connection with the maintenance ofCompany books and records, the preparation and dissemination of reports, taxreturns or other information to Members and the making of Distributions to theMembers; (k) expenses incurred in preparation and filing reports or otherinformation with appropriate regulatory agencies; (l) expenses of insurance asrequired in connection with the business of the Company, other than anyinsurance insuring the Manager against losses for which it is not entitled to beindemnified under Section 7.8; (m) costs incurred in connection with anylitigation in which the Company may become involved, or any examination,investigation, or other proceedings conducted by any regulatory agency,including legal and accounting fees; (n) the actual costs of goods and materialsused by or for the Company; (o) the costs of services that could be performeddirectly for the Company by independent parties such as legal, accounting,secretarial or clerical, reporting, transfer agent, data processing andduplicating services but which are in fact performed by the Manager or itsAffiliates, but not in excess of the lesser of: (i) the actual costs to theManager or its Affiliates of providing such services; or (ii) the amounts whichthe Company would otherwise be required to pay to independent parties forcomparable services in the same geographic locale; (p) expenses of Companyadministration, accounting, documentation and reporting, (q) expenses ofrevising, amending, modifying, or terminating this Agreement; (r) all travelexpenses incurred in connection with the Company’s business, including travel toand from the Properties; and (s) all other costs and expenses incurred inconnection with the business of the Company exclusive of those set forth inSection 6.2.2. 6.2.2 Manager Overhead. The Manager and its Affiliates shall not bereimbursed for overhead expenses incurred in connection with the Company,including but not limited to rent, depreciation, utilities, capital equipment,other administrative items, and the following items paid to any officer of theManager or any Affiliate: salaries, fringe benefits, travel expenses and otheradministrative items. 6.2.3 Acquisition Expenses. Notwithstanding Section 6.2.2, theManager will be reimbursed for all costs expended in the due diligence of theProperties and acquisition of the Properties, including down payments, closingcosts, travel, legal, environmental and other studies, surveys, escrow depositsand costs, plus interest at the Manager’s cost of funds to borrow funds for theabove purposes.7. Authority, and Responsibilities of the Manager. 7.1 Management. The business and affairs of the Company shall be managedby its Manager. Except as otherwise set forth in this Agreement, the Managershall have full and complete authority, power and discretion to manage andcontrol the business, affairs and all property of the Company, to make alldecisions regarding those matters and to perform any and all other acts oractivities customary or incident to the management of the Company’s business. 7.2 Number, Tenure and Qualifications. The Company shall have one Manager,which shall be Triple Net Properties, LLC. The Manager shall hold office untilit is removed, withdraws or resigns. 9 7.3 Manager Authority. The Manager shall have all authority, rights andpowers conferred by law (subject only to Section 7.4) and those required orappropriate to the management of the Company’s business, which, by way ofillustration but not by way of limitation, shall include the right, authorityand power to cause the Company to: 7.3.1 Acquire, hold, develop, lease, rent, operate, sell, exchange,subdivide and otherwise dispose of all property, including the Properties; 7.3.2 Borrow money, and, if security is required therefor, to pledgeor mortgage or subject the Properties to any security device, to obtainreplacements of any mortgage or other security device and to prepay, in whole orin part, refinance, increase, modify, consolidate, or extend any mortgage orother security device. All of the foregoing shall be on such terms and in suchamounts as the Manager, in its sole discretion, deems to be in the best interestof the Company; 7.3.3 Place record title to, or the right to use, the Properties inthe name or names of a nominee or nominees for any purpose convenient orbeneficial to the Company; 7.3.4 Enter into such contracts and agreements as the Managerdetermines to be reasonably necessary or appropriate in connection with theCompany’s business and purpose (including contracts with Affiliates of theManager), and any contract of insurance that the Manager deems necessary orappropriate for the protection of the Company and the Manager, including errorsand omissions insurance, for the conservation of Company assets, or for anypurpose convenient or beneficial to the Company; 7.3.5 Employ persons, who may be Affiliates of the Manager, in theoperation and management of the business of the Company; 7.3.6 Prepare or cause to be prepared reports, statements, and otherrelevant information for distribution to the Members. 7.3.7 Open accounts and deposits and maintain funds in the name ofthe Company in banks, savings and loan associations, “money market” mutual fundsand other instruments as the Manager may deem in its discretion to be necessaryor desirable; 7.3.8 Cause the Company to make or revoke any of the electionsreferred to in the Code (the Manager shall have no obligation to make any suchelections); 7.3.9 Select as its accounting year a calendar or fiscal year as maybe approved by the Internal Revenue Service (the Company initially intends toadopt the calendar year); 7.3.10 Determine the appropriate accounting method or methods to beused by the Company; 7.3.11 In addition to any amendments otherwise authorized herein,amend this Agreement without any action on the part of the Members by special orgeneral power of attorney or otherwise: (a) To add to the representations, duties, services or obligations of the Manager or its Affiliates, for the benefit of the Members; 10 (b) To cure any ambiguity or mistake, to correct or supplement any provision herein that may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Agreement that will not be inconsistent with the provisions of this Agreement; (c) To delete or add any provision of this Agreement required to be so deleted or added for the benefit of the Members by the staff of the Securities and Exchange Commission or by a state “Blue Sky” Commissioner or similar official; (d) To amend this Agreement to reflect the addition or substitution of Members or the reduction of the Capital Accounts upon the return of capital to the Members; (e) To minimize the adverse impact of, or comply with, any final regulation of the United States Department of Labor, or other federal agency having jurisdiction, defining “plan assets” for ERISA purposes; (f) To reconstitute the Company under the laws of another state if beneficial; (g) As required by a lender who has made a loan to the Company secured by the Properties or as required by a lender in connection with a refinancing that has been properly approved by the Company; and (h) To execute, acknowledge and deliver any and all instruments to effectuate the foregoing, including the execution, acknowledgment and delivery of any such instrument by the artorney-in-fact for the Manager under a special or limited power of attorney, and to take all such actions in connection therewith as the Manager shall deem necessary or appropriate with the signature of the Manager acting alone. 7.3.12 Require in any Company contract that the Manager shall nothave any personal liability, but that the person or entity contracting with theCompany is to look solely to the Company and its assets for satisfaction; 7.3.13 Lease personal property for use by the Company; 7.3.14 Establish reserves from income in such amounts as the Managermay deem appropriate; 7.3.15 Temporarily invest the proceeds from sale of Investor Unitsin short-term, highly liquid investments; 7.3.16 Make secured or unsecured loans to the Company and receiveinterest at the rates set forth herein; 7.3.17 Represent the Company and the Members as “tax matterspartner” within the meaning of the Code in discussions with the Internal RevenueService regarding the tax treatment of items of Company income, loss, deductionor credit, or any other matter reflected in the Company’s returns, and, ifdeemed in the best interest of the Members, to agree to final Companyadministrative adjustments or file a petition for a readjustment of the Companyitems in question with the applicable court; 7.3.18 Redeem or repurchase Investor Units on behalf of the Company; 11 7.3.19 Hold an election for a successor Manager before theresignation, expulsion or dissolution of the Manager; 7.3.20 Initiate legal actions, settle legal actions and defend legalactions on behalf of the Company; 7.3.21 Admit itself as a Member; 7.3.22 Take all actions and make any decision under the ManagementAgreement; 7.3.23 Execute and amend the Management Agreement; 7.3.24 Enter into any transaction with any partnership or venture; 7.3.25 Place all or a portion of the Properties in a single purposeor bankruptcy remote entity, or otherwise structure or restructure the Companyto accommodate any financing for the Properties; 7.3.26 Perform any and all other acts which the Manager is obligatedto perform hereunder; 7.3.27 Subcontract with Affiliates and third parties, in theManager’s sole discretion, to perform some or all management functions set forthherein; and 7.3.28 Execute, acknowledge and deliver any and all instruments toeffectuate the foregoing and take all such actions in connection therewith asthe Manager may deem necessary or appropriate. Any and all documents orinstruments may be executed on behalf and in the name of the Company by theManager. 7.4 Restrictions on Manager’s Authority. Neither the Manager nor anyAffiliates shall have authority to: 7.4.1 Enter into contracts with the Company that would bind theCompany after the expulsion, Event of Insolvency, or other cessation to exist ofthe Manager, or to continue the business of the Company after the occurrence ofsuch event; 7.4.2 Use or permit any other person to use Company funds or assetsin any manner except for the exclusive benefit of the Company; 7.4.3 Alter the primary purpose of the Company; 7.4.4 Receive from the Company a rebate or give-up or participate inany reciprocal business arrangements which would enable it or any Affiliate todo so (excluding the fees and other items set forth in the ManagementAgreement); 7.4.5 Except for the Properties, sell or lease to the Company anyreal property in which the Manager or any Affiliate has any interest without aMajority Vote of the Members; 7.4.6 Admit another person or entity as the Manager, except with theconsent of the Members as provided in this Agreement; 12 7.4.7 Reinvest Cash from Operations in any additional propertiesother than the Properties; 7.4.8 Confess a judgment against the Company in connection with anythreatened or pending legal action; 7.4.9 Commingle the Company funds with those of any other person orentity, except for (i) the temporary deposit of funds in a bank checking accountfor the sole purpose of making Distributions immediately thereafter to theMembers and the Manager or (ii) funds attributable to the Properties and heldfor use in the management of the operations of the Properties; 7.4.10 Directly or indirectly pay or award any finder’s fees,commissions or other compensation to any person engaged by a potential investorfor investment advice as an inducement to such advisor to advise the purchaserregarding the purchase of Investor Units; 7.4.11 Merge, combine or “roll-up” the Company into a partnership,limited liability company or other entity or participate in an UPREIT, DOWNREITor similar transaction with a real estate investment trust or other entity; or 7.4.12 Vote, or permit to be voted, any Membership Interest owned bythe Manager to remove the Manager in accordance with Section 9.2. 7.5 Responsibilities of the Manager. The Manager shall: 7.5.1 Have a fiduciary responsibility for the safekeeping and use ofall the funds and assets of the Company; 7.5.2 Devote such of its time and efforts to the business of theCompany as the Manager shall in its discretion, exercised in good faith,determine to be necessary to conduct the business of the Company; 7.5.3 File and publish all certificates, statements, or otherinstruments required by law for formation, qualification and operation of theCompany and for the conduct of its business in all appropriate jurisdictions; 7.5.4 Cause the Company to be protected by public liability,property damage and other insurance determined by the Manager in its discretionto be appropriate to the business of the Company; 7.5.5 At all times use its best efforts to meet applicablerequirements for the Company to be taxed as a partnership and not as anassociation taxable as a corporation; and 7.5.6 Amend this Agreement to reflect the admission of Members notlater than 90 days after the date of admission or substitution. 7.6 Administration of Company. So long as it is the Manager and theprovisions of this Agreement for compensation and reimbursement of expenses ofthe Manager are observed, the Manager shall have the responsibility of providingcontinuing administrative and executive support, advice, consultation, analysisand supervision with respect to the functions of the Company, includingdecisions regarding the sale or refinancing or other disposition of Properties,and compliance with federal, state and 13local regulatory requirements and procedures. In this regard, the Manager mayretain the services of such Affiliates or unaffiliated parties as the Managermay deem appropriate to provide management and financial consultation andadvice, and may enter into agreements for the management and operation ofCompany assets. 7.7 Tax Matters Partner. The Members hereby appoint the Manager to act asthe “tax matters partner.” 7.8 Indemnification of Manager. 7.8.1 The Manager, its members, managers, affiliates, officers,directors, partners, employees, agents and assigns, shall not be liable for, andshall be indemnified and held harmless (to the full extent of the Company’sassets and to the maximum extent permitted by applicable law) from, any loss ordamage incurred by them, the Company or the Members in connection with thebusiness of the Company, including by way of illustration, but not limitation,costs and reasonable attorneys’ fees and any amounts expended in the settlementof any claims of loss or damage resulting from any act or omission performed oromitted in good faith, which shall not constitute negligence or malfeasance,pursuant to the authority granted, to promote the interests of the Company.Moreover, the Manager shall not be liable to the Company or the Members becauseany taxing authorities disallow or adjust any deductions or credits in theCompany income tax returns. 7.8.2 Notwithstanding Section 7.8.1, the Company shall not indemnifyany Manager, or shareholder, director, officer or other employee thereof, forliability imposed or expenses incurred in connection with any claim arising outof a violation of the Securities Act of 1933, as amended, or any other federalor state securities law, with respect to the offer and sale of the InvestorUnits. Indemnification will be allowed for settlements and related expenses inlawsuits alleging securities law violations, and for expenses incurred insuccessfully defending such lawsuits, provided that (i) the Manager issuccessful in defending the action; (ii) the indemnification is specificallyapproved by the court of law which shall have been advised as to the currentposition of the Securities and Exchange Commission (as to any claim involvingallegations that the Securities Act of 1933, as amended, was violated) or theapplicable state authority (as to any claim involving allegations that theapplicable state’s securities laws were violated); or (iii) in the opinion ofcounsel for the Company, the right to indemnification has been settled bycontrolling precedent. 7.8.3 The provisions of this Section 7.8 shall be in addition to,and not in lieu of, or limit, the provisions of the Company’s Articles ofOrganization authorizing the limitation of liability, and indemnification of,the Manager and certain other persons and entities. 7.9 No Personal Liability for Return of Capital. The Manager shall not bepersonally liable or responsible for the return or repayment of all or anyportion of the Capital Contribution of any Member or any loan made by any Memberto the Company, it being expressly understood that any such return of capital orrepayment of any loan shall be made solely from the assets (which shall notinclude any right of contribution from any Member) of the Company. 7.10 Authority as to Third Persons. 7.10.1 No third party dealing with the Company shall be required toinvestigate the authority of the Manager or secure the approval or confirmationby any Member of any act of the Manager in connection with the Company business.No purchaser of any property or interest owned by the Company shall be requiredto determine the right to sell or the authority of the Manager to sign anddeliver 14any instrument of transfer on behalf of the Company, or to see to theapplication or distribution of revenues or proceeds paid or credited inconnection therewith. 7.10.2 The Manager shall have full authority to execute on behalf ofthe Company any and all agreements, contracts, conveyances, deeds, mortgages andother instruments, and the execution thereof by one or more officers of theManager, executing on behalf of the Company shall be the only executionnecessary to bind the Company thereto. No signature of any Member shall berequired. 7.10.3 The Manager shall have the right by separate instrument ordocument to authorize one or more individuals or entities to execute leases andlease-related documents on behalf of the Company and any leases and documentsexecuted by such agent shall be binding upon the Company as if executed by theManager.8. Rights, Authority and Voting of the Member. 8.1 Members Are Not Agents. Pursuant to Section 7 and the Articles ofOrganization, the management of the Company is vested exclusively in theManager. No Member, acting solely in the capacity of a Member, is an agent ofthe Company nor can any Member in such capacity bind or execute any instrumenton behalf of the Company. 8.2 Voting by a Member. Members who own Investor Units shall be entitledto cast one vote for each Investor Unit they own. Except as otherwisespecifically provided in this Agreement, Members who own Investor Units (but notEconomic Interest Owners) shall have the right to vote only upon the followingmatters: 8.2.1 Removal of the Manager as provided in this Agreement; 8.2.2 Admission of the Manager or election to continue the businessof the Company after the Manager ceases to be the Manager when there is noremaining Manager; 8.2.3 Amendment of this Agreement; 8.2.4 Any merger, combination or “roll-up” of the Company or anyUPREIT, DOWNREIT or other similar transaction with a real estate investmenttrust; 8.2.5 Dissolution and winding up of the Company as set forth inSection 13.1; 8.2.6 The sale of all or substantially all of the assets of theCompany; 8.2.7 Election to continue the business of the Company as set forthin Section 13.1.4 when there is a Dissolution Event; and 8.2.8 Election to obtain audited financial statements as set forthin Section 12.3.2. 8.3 Member Vote; Consent of Manager. Except as expressly provided in thisAgreement, matters upon which the Members may vote shall require a Majority Voteof the Members to pass and become effective. The following matters shall requirethe consent of the Manager to pass and become effective: 8.3.1 Any amendment to this Agreement; and 15 8.3.2 The admission of an additional or successor Manager when theManager will continue as such. 8.4 Meetings of the Members. The Manager may at any time call for ameeting of the Members, or for a vote without a meeting, on matters on which theMembers are entitled to vote. In addition, the Manager shall call for such ameeting following receipt of a written request therefor of Members holding morethan 10% of the Investor Units entitled to vote as of the record date. Within 20days after receipt of such request, the Manager shall notify all Members ofrecord on the record date of the Company meeting. The Manager shall give noticeof all such meetings by sending the Members written notice by certified U.S.Mail, with return receipt, by Federal Express or other guaranteed overnightdelivery service. 8.4.1 Notice. Written notice of each meeting shall be given to eachMember entitled to vote, either personally or by mail or other means of writtencommunication, charges prepaid, addressed to such Member at his addressappearing on the books of the Company or given by him to the Company for thepurpose of notice or, if no such address appears or is given, at the principalexecutive office of the Company, or by publication of notice at least once in anewspaper of general circulation in the city or county in which such office islocated. All such notices shall be sent not less than 10, nor more than 60, daysbefore such meeting. The notice shall specify the place, date and hour of themeeting and the general nature of business to be transacted, and no otherbusiness shall be transacted at the meeting. 8.4.2 Adjourned Meeting and Notice Thereof. When a Members’ meetingis adjourned to another time or place, notice need not be given of the adjournedmeeting if the time and place thereof are announced at the meeting at which theadjournment is taken. At the adjourned meeting, the Company may transact anybusiness which might have been transacted at the original meeting. If theadjournment is for more than 45 days or if after the adjournment a new recorddate is fixed for the adjourned meeting, a notice of the adjourned meeting shallbe given to each Member of record entitled to vote at the meeting. 8.4.3 Quorum. The presence in person or by proxy of the personsentitled to vote a majority of the Investor Units shall constitute a quorum forthe transaction of business. The Members present at a duly called or heldmeeting at which a quorum is present may continue to transact business untiladjournment notwithstanding the withdrawal of enough Members to leave less thana quorum, if any action taken (other than adjournment) is approved by at least aMajority Vote or such greater vote as may be required by this Agreement or bylaw. In the absence of a quorum, any meeting of Members may be adjourned fromtime to time by the vote of a majority of the Investor Units represented eitherin person or by proxy, but no other business may be transacted, except asprovided above. 8.4.4 Consent of Absentees. The transactions of any meeting ofMembers, however called and noticed and wherever held, are as valid as thoughthey occurred at a meeting duly held after regular call and notice, if a quorumis present either in person or by proxy, and if, either before or after themeeting, each of the persons entitled to vote, not present in person or byproxy, signs a written waiver of notice, or a consent to the holding of themeeting or an approval of the minutes thereof. All waivers, consents andapprovals shall be filed with the Company records or made a part of the minutesof the meeting. 8.4.5 Action Without Meeting. Except as otherwise provided in thisAgreement, any action which may be taken at any meeting of the Members may betaken without a meeting if a consent in writing, setting forth the action sotaken, shall be signed by Members having not less than the minimum number ofvotes that would be necessary to authorize or take that action at a meeting atwhich all entitled 16to vote thereon were present and voted. In the event the Members are requestedto consent on a matter without a meeting, each Member shall be given not lessthan 10, nor more than 60, days notice. In the event the Manager or Membersrepresenting more than 10% of the Investor Units, request a meeting for thepurpose of discussing or voting on the matter, the notice of a meeting shall begiven in the same manner as required by Section 8.4.1 and no action shall betaken until the meeting is held. Unless delayed as a result of the precedingsentence, any action taken without a meeting will be effective 5 days after therequired minimum number of voters have signed the consent; however, the actionwill be effective immediately if the Manager and Members representing at least90% of the Investor Units have signed the consent. 8.4.6 Record Dates. For purposes of determining the Members entitledto notice of any meeting or to vote or entitled to receive any Distributions orto exercise any rights in respect of any other lawful matter, the Manager (orMembers representing more than 10% of the Investor Units if the meeting is beingcalled at their request) may fix in advance a record date, which is not morethan 60 nor less than 10 days prior to the date of the meeting nor more than 60days prior to any other action. If no record date is fixed: (a) The record date for determining Members entitled to notice of, or to vote at, a meeting of Members shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; (b) The record date for determining Members entitled to give consent to Company action in writing without a meeting shall be the day on which the first written consent is given; (c) The record date for determining Members for any other purpose shall be at the close of business on the day on which the Manager adopts it, or the 60th day prior to the date of the other action, whichever is later; and (d) A determination of Members of record entitled to notice of, or to vote at, a meeting of Members shall apply to any adjournment of the meeting unless the Manager, or the Members who requested the meeting fix a new record date for the adjourned meeting, but the Manager, or such Members, shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting. 8.4.7 Proxies. Every person entitled to vote or execute consentsshall have the right to do so either in person or by one or more agentsauthorized by a written proxy executed by such person or his duly authorizedagent and filed with the Manager. No proxy shall be valid after the expirationof 11 months from the date thereof unless otherwise provided in the proxy. Everyproxy continues in full force and effect until revoked or unless it states thatit is irrevocable. A proxy which states that it is irrevocable is irrevocablefor the period specified therein. 8.4.8 Chairman of Meeting. The Manager may select any person topreside as Chairman of any meeting of the Members, and if such person shall beabsent from the meeting, or fail or be unable to preside, the Manager may nameany other person in substitution therefor as Chairman, In the absence of anexpress selection by the Manager of a Chairman or substitute therefor, thePresident, Vice President, Secretary, or Chief Financial Officer of the Managershall preside as Chairman, in that order. The Chairman of the meeting shalldesignate a secretary for such meeting, who shall take and keep or cause to betaken and kept minutes of the proceedings thereof. The conduct of all Members’meetings 17shall at all times be within the discretion of the Chairman of the meeting andshall be conducted under such rules as he may prescribe. The Chairman shall havethe right and power to adjourn any meeting at any time, without a vote of theInvestor Units present in person or represented by proxy, if the Chairman shalldetermine such action to be in the best interests of the Company. 8.4.9 Inspectors of Election. In advance of any meeting of Members,the Manager may appoint any persons other than nominees for Manager or otheroffice as the inspector of election to act at the meeting and any adjournmentthereof. If an inspector of election is not so appointed, or if any such personfails to appear or refuses to act, the Chairman of any such meeting may, and onthe request of any Member or his proxy shall, make such appointment at themeeting. The inspector of election shall determine the number of Investor Unitsoutstanding and the voting power of each, the Investor Units represented at themeeting, the existence of a quorum, the authenticity, validity and effect ofproxies, receive votes, ballots or consents, hear and determine all challengesand questions in any way arising in connection with the right to vote, count andtabulate all votes or consents, determine when the polls shall close, determinethe result and do such acts as may be proper to conduct the election or votewith fairness to all Members. 8.4.10 Record Date and Closing Company Books. When a record date isfixed, only Members of record on that date are entitled to notice of and to voteat the meeting or to receive a Distribution, or allotment of rights, or toexercise the rights, as the case may be, notwithstanding any transfer of anyInvestor Units on the books of the Company after the record date. 8.5 Rights of Members. No Member or Owner shall have the right or powerto: (i) withdraw or reduce his contribution to the capital of the Company,except as a result of the dissolution and termination of the Company or asotherwise provided in this Agreement or by law; (ii) bring an action forpartition against the Company; or (iii) demand or receive property other thancash in return for his Capital Contribution. Except as provided in thisAgreement, no Member or Owner shall have priority over any other Member or Ownereither as to the return of Capital Contributions or as to allocations of the NetIncome, Net Loss or Distributions of the Company. Other than upon thetermination and dissolution of the Company as provided by this Agreement, therehas been no time agreed upon when the contribution of each Member (other thanthe Initial Member) or Owner is to be returned. 8.6 Restrictions on the Member. No Member shall: 8.6.1 Disclose to any non-Member other than their lawyers,accountants or consultants and/or commercially exploit any of the Company’sbusiness practices, trade secrets or any other information not generally knownto the business community, including the identity of suppliers utilized by theCompany; 8.6.2 Do any other act or deed with the intention of harming thebusiness operations of the Company; or 8.6.3 Do any act contrary to the Agreement. 8.7 Return of Capital of Member. In accordance with the Act, an Owner may,under certain circumstances, be required to return to the Company, for thebenefit of the Company’s creditors, amounts previously distributed to the Owner.If any court of competent jurisdiction holds that any Owner is obligated to makeany such payment, such obligation shall be the obligation of such Owner and notof the Company, the Manager or any other Owner. 189. Resignation and Termination. 9.1 Resignation or Withdrawal of Manager. Subject to Section 10, theManager shall not resign or withdraw as the Manager or do any act that wouldrequire its resignation or withdrawal. 9.2 Removal for Cause. The Members by Majority Vote shall have the rightto remove the Manager at any time solely “for cause.” For purposes of thisAgreement, removal of the Manager “for cause” shall mean removal due to the (a)gross negligence or fraud of the Manager, (b) willful misconduct or willfulbreach of this Agreement by the Manager, (c) bankruptcy, insolvency or inabilityof the Manager to meet its obligation as the same come due, or (d) a convictionof a felony by Anthony W. Thompson, President of the Manager. If the Manager oran Affiliate owns an Interest, the Manager or the Affiliate, as the case may be,shall not participate in any vote to remove the Manager. 9.3 Purchase of Manager’s Interest. Upon the removal of the Managerpursuant to Section 9.2 or resignation of the Manager pursuant to Section 10,the Manager shall be paid by the Company all fees that have been earned and allother compensation remaining to be paid under this Agreement.10. Assignment of the Manager’s Interest. 10.1 Permitted Assignments. Except as otherwise provided in thisAgreement, the Manager may not sell, assign, hypothecate, encumber or otherwisetransfer any part or all of its interest in the Company except with the consentof a Majority Vote of the Members, which consent may be withheld by such Membersin their sole and absolute discretion and without reason or for any reasonwhatsoever. If the Members consent to the transfer, the interest may only besold to the proposed transferee within the time period approved by the Members,or within 90 days of such consent on the proposed terms and price, if later. Allcosts of the transfer, including reasonable attorneys’ fees (if any), shall beborne by the transferring Manager. 10.1.1 Any assignment or transfer of the Manager’s interest providedfor by this Agreement can be an assignment or transfer of all of its interest orany portion or part of its interest. 10.1.2 Any transfer of all or a part of any Manager’s interest maybe made only pursuant to the terms and conditions contained in this Section 10. 10.1.3 Any such assignment shall be by a written instrument ofassignment, the terms of which are not in contravention of any of the provisionsof this Agreement, and which has been duly executed by the assignor of suchManager’s interest and accepted by the Members pursuant to a Majority Vote. 10.1.4 The assignor and assignee shall have executed, acknowledged,and delivered such other instruments as the Members pursuant to a Majority Vote,may deem necessary or desirable to effect such substitution, which may includean opinion of counsel regarding the effect and legality of any such proposedtransfer, and which shall include the written acceptance and adoption by theassignee of the provisions of this Agreement. 10.1.5 Notwithstanding the foregoing Sections 10.1.1 – 10.1.4, andanything to the contrary in this Agreement, the Manager or its Affiliates maysell, assign, hypothecate, encumber or otherwise transfer any part or all of itsinterest in the Company received in consideration for funds advanced to theCompany in accordance with Section 3.3, provided that: (a) the Manager, itsAffiliates and/or the transferee are responsible for all transfer costsincluding the Company’s legal fees and costs; (b) 19such transferee agrees to be bound by this Agreement; (c) such transfer complieswith all requirements pursuant to the Act, and all applicable federal and statesecurities laws; and (d) such transferee is an Affiliate of the Manager. 10.2 Substitute Manager. Upon acceptance by the Members of an assignmentby the Manager, any assignee of such Manager’s interest in compliance with thisSection 10 shall be substituted as the Manager. 10.3 Transfer in Violation Not Recognized. Any assignment, sale, exchangeor other transfer in contravention of the provisions of this Section 10 shall bevoid and ineffectual and shall not bind or be recognized by the Company.11. Assignment of Investor Units. 11.1 Permitted Assignments. A Member may only sell, assign, hypothecate,encumber or otherwise transfer all of his or her interest in the Company if thefollowing requirements are satisfied: 11.1.1 The Manager consents in writing to the transfer; 11.1.2 No Member shall transfer, assign or convey or offer totransfer, assign or convey all or any portion of an Investor Unit to any personwho does not possess the financial qualifications required of all persons whobecome Members; 11.1.3 No Member shall have the right to transfer any Investor Unitto any minor or to any person who, for any reason, lacks the capacity tocontract for himself under applicable law. Such limitations shall not, however,restrict the right of any Member to transfer any one or more Investor Units to acustodian or a trustee for a minor or other person who lacks such contractualcapacity; 11.1.4 The Manager, with advice of counsel, must determine that suchtransfer will not jeopardize the applicability of the exemptions from theregistration requirements under the Securities Act of 1933, as amended, andregistration or qualification under state securities laws relied upon by theCompany and Manager in offering and selling the Investor Units or otherwiseviolate any federal or state securities laws; 11.1.5 The Manager, with advice of counsel, must determine that,despite such transfer, Investor Units will not be deemed traded on anestablished securities market or readily tradable on a secondary market (or thesubstantial equivalent thereof) under the provisions applicable to publiclytraded partnership status; provided, however, in no event may any Membertransfer any Investor Units if such transfer would cause the Company to havemore than 100 Owners without the express prior written consent of the Manager,which consent may be withheld in the Manager’s sole and absolute discretion; 11.1.6 Any such transfer shall be by a written instrument ofassignment, the terms of which are not in contravention of any of the provisionsof this Agreement, and which has been duly executed by the assignor of suchInvestor Units and accepted by the Manager in writing. Upon such acceptance bythe Manager, such an assignee shall take subject to all terms of this Agreementand shall become an Economic Interest Owner; and 11.1.7 A transfer fee shall be paid by the transferring Member insuch amount as may be required by the Manager to cover all reasonable expenses,including attorneys’ fees, connected with such assignment. 20 11.1.8 The transfer would not cause a default or otherwiseaccelerate any payment date on any loan obtained by the Company. 11.1.9 The minimum Interest that may be transferred is the lesser ofone Investor Unit or the Member’s entire interest in the Company. 11.2 Substituted Member. 11.2.1 Conditions to be Satisfied. No Economic Interest Owner shallhave the right to become a Substituted Member unless the Manager shall consentthereto in accordance with Section 11.2.2 and all of the following conditionsare satisfied: (a) A duly executed and acknowledged written instrument of assignment shall have been filed with the Company, which instrument shall specify the number of Investor Units being assigned and set forth the intention of the assignor that the assignee succeed to the assignor’s interest as a Substituted Member in his place; (b) The assignor and assignee shall have executed, acknowledged and delivered such other instruments as the Manager may deem necessary or desirable to effect such substitution, which may include an opinion of counsel regarding the effect and legality of any such proposed transfer, and which shall include: (i) the written acceptance and adoption by the Economic Interest Owner of the provisions of this Agreement; and (ii)the execution, acknowledgment and delivery to the Manager of a special power of attorney, the form and content of which are more fully described herein; and (c) A transfer fee sufficient to cover all reasonable expenses connected with such substitution shall have been paid to the Company. 11.2.2 Consent of Manager. The consent of the Manager shall berequired to admit an Economic Interest Owner as a Substituted Member. Thegranting or withholding of such consent shall be within the sole and absolutediscretion of the Manager. 11.2.3 Consent of Member. By executing or adopting this Agreement,each Member hereby consents to the admission of additional or SubstitutedMembers, and to any Economic Interest Owner becoming a Substituted Member uponconsent of the Manager and in compliance with this Agreement. 11.3 Rights of Economic Interest Owner. An Economic Interest Owner shallbe entitled to receive Distributions from the Company attributable to theinterest acquired by reason of such assignment from and after the effective dateof the assignment; provided, however, that notwithstanding anything herein tothe contrary, the Company shall be entitled to treat the assignor of suchinterest as the absolute owner thereof in all respects, and shall incur noliability for allocations of Net Income and Net Loss or Distributions, or forthe transmittal of reports or accounting until the written instrument ofassignment has been received by the Company and recorded on its books. Theeffective date of such assignment shall be the date on which all of therequirements of this Section have been complied with, subject to Section 4.8. 11.4 Right to Inspect Books. Economic Interest Owners shall have no rightto inspect the Company’s books or records, to vote on Company matters, or toexercise any other right or privilege as Members, until they are admitted to theCompany as Substituted Members, except as provided in the Act. 21 11.5 Assignment of 50% or More of Investor Units. No assignment of anyInvestor Units may be made if the Investor Units to be assigned, when added tothe total of all other Investor Units and Manager interests assigned within the13 immediately preceding months, would, in the opinion of counsel for theCompany, result in the termination of the Company under the Code. 11.6 Transfer Subject to Law. No assignment, sale, transfer, exchange orother disposition of any Investor Units may be made except in compliance withthe applicable governmental laws and regulations, including state and federalsecurities laws. 11.7 Termination of Membership Interest. Upon the transfer of an InvestorUnit in violation of this Agreement or the occurrence of a Dissolution Event asto such Member which does not result in the dissolution of the Company, theMembership Interest of a Member shall be converted into an Economic Interest orpurchased by the Company as provided herein.12. Books, Records, Accounting and Reports. 12.1 Records, Audits and Reports. The Company shall maintain at itsprincipal office the Company’s records and accounts of all operations andexpenditures of the Company including the following: 12.1.1 A current list in alphabetical order of the full name andlast known business or resident address of each Owner and Manager, together withthe Capital Contribution and the share in profits and losses of each Owner; 12.1.2 A copy of the Articles of Organization and all amendmentsthereto, together with any powers of attorney pursuant to which the Articles ofOrganization or any amendments thereto were executed; 12.1.3 Copies of the Company’s Federal, state, and local income taxor information returns and reports, if any, for the six most recent taxableyears; 12.1.4 Copies of this Agreement and any amendments thereto togetherwith any powers of attorney pursuant to which any written accounting or anyamendments thereto were executed; 12.1.5 Copies of any financial statements of the Company, if any,for the six most recent years; and 12.1.6 The Company’s books and records as they relate to theinternal affairs of the Company for at least the current and past four fiscalyears. 12.2 Delivery to Members and Inspection. Each Member has the right, uponreasonable written request for purposes related to the interest of that personas a Member, to receive from the Company: (a) True and full information regarding the status of the business and financial condition of the Company; (b) Promptly after becoming available, a copy of the Company’s federal, state and local income tax returns for each year; 22 (c) A current list of the name and last known business, residence or mailing address of each Member and Manager; (d) A copy of this Agreement and the Articles of Organization and all amendments thereto, together with executed copies of any written powers of attorney pursuant to which this Agreement and any certificate and all amendments thereto have been executed; and (e) True and full information regarding the amount of cash and description and statement of the agreed value of any property or services contributed by each Member and which each Member has agreed to contribute in the future, and the date on which each became a Member. (f) Any information required to be made available to a Member pursuant to Section 13.1-1028 of the Code of Virginia (1950), or amended, or any other applicable law. 12.3 Annual Report. 12.3.1 The Manager will cause the Company, at the Company’s expense,to prepare an unaudited annual report containing a year end balance sheet,income statement and a statement of changes in financial position. Copies ofsuch statements shall be distributed to each Member within 75 days after theclose of each fiscal year of the Company. 12.3.2 Upon the vote of Members who own thirty percent (30%) or moreof the Investor Units (including Investor Units owned or controlled by theManger or its Affiliates), the Manager will use its best efforts to obtain inthe future audited financial statements for the Properties’ operations. Suchaudited financial statements shall be at the Company’s sole cost and expense. 12.4 Tax Information. The Manager shall cause the Company, at theCompany’s expense, to prepare and timely file income tax returns for the Companywith the appropriate authorities, and shall cause all Company informationnecessary in the preparation of the Owners’ individual income tax returns to bedistributed to the Owners not later than 75 days after the end of the Company’sfiscal year.13. Termination and Dissolution of the Company. 13.1 Termination of Company. The Company shall terminate, be dissolved,and its assets shall be disposed of, and its affairs wound up upon the earliestto occur of the following: 13.1.1 Upon the happening of any event of dissolution specified inthe Articles of Organization; 13.1.2 A determination by the Manager, with a Majority Vote, toterminate the Company; 13.1.3 The sale of the Properties or the receipt of the finalpayment on any seller financing provided by the Company on the sale of theProperties, if later, unless the Company holds securities of another companywhich cannot be distributed, in which case the Company will be dissolved as soonas possible upon such distribution; or 23 13.1.4 The occurrence of a Dissolution Event unless the business ofthe Company is continued by the consent of the remaining Members within 90 daysfollowing the occurrence of the event and there are at least two remainingMembers. 13.2 Certificate of Cancellation. As soon as possible following theoccurrence of any of the events specified in Section 13.1, the Manager who hasnot wrongfully dissolved the Company or, if none, the Members, shall execute aCertificate of Cancellation in such form as shall be required by the Act. 13.3 Liquidation of Assets. Upon a dissolution and termination of theCompany, the Manager (or in case there is no Manager, the Members or persondesignated by a Majority Vote) shall take full account of the Company assets andliabilities, shall liquidate the assets as promptly as is consistent withobtaining the fair market value thereof, and shall apply and distribute theproceeds therefrom in the following order: 13.3.1 To the payment of creditors of the Company, including Memberswho are creditors to the extent permitted by law, but excluding securedcreditors whose obligations will be assumed or otherwise transferred on theliquidation of Company assets; 13.3.2 To the setting up of any reserves as required by law for anycontingent liabilities or obligations of the Company; provided, however, thatsaid reserves shall be deposited with a bank or trust company in escrow atinterest for the purpose of disbursing such reserves for the payment of any ofthe aforementioned contingencies and, at the expiration of a reasonable period,for the purpose of distributing the balance remaining in accordance withremaining provisions of this Section 13.3; and 13.3.3 To the Members in accordance with Section 5.2 hereof. 13.4 Distributions Upon Dissolution. Each Member shall look solely to theassets of the Company for all Distributions and its Capital Contributions, andshall have no recourse therefor (upon dissolution or otherwise) against anyManager or any Member. 13.5 Liquidation of Member’s Interest. If there is a Liquidation of aMember’s interest in the Company, any liquidating Distribution pursuant to suchLiquidation shall be made only to the extent of the positive Capital Accountbalance, if any, of such Member for the taxable year during which suchLiquidation occurs after proper adjustments for allocations and Distributionsfor such taxable year up to the time of Liquidation. Such Distributions shall bemade by the end of the taxable year of the Company during which such Liquidationoccurs, or if later, within 90 days after such Liquidation.14. Special and Limited Power of Attorney. 14.1 Power of Attorney. Triple Net Properties, LLC shall at all timesduring the term of the Company have a special and limited power of attorney asthe attorney-in-fact for each Member, with power and authority to act in thename and on behalf of each such Member to execute, acknowledge, and swear to inthe execution, acknowledgment and filing of documents which are not inconsistentwith the provisions of this Agreement and which may include, by way ofillustration but not by limitation, the following: 14.1.1 This Agreement, as well as any amendments to the foregoingwhich, under the laws of the Commonwealth of Virginia or the laws of any otherstate, are required to be filed or which the Manager shall deem it advisable tofile; 24 14.1.2 Any other instrument or document that may be required to befiled by the Company under the laws of any state or by any governmental agencyor which the Manager shall deem it advisable to file; 14.1.3 Any instrument or document that may be required to effect thecontinuation of the Company, the admission of Substituted Members, or thedissolution and termination of the Company (provided such continuation,admission or dissolution and termination are in accordance with the terms ofthis Agreement); 14.1.4 Any contract for purchase or sale of real estate, and anydeed, deed of trust, mortgage, or other instrument of conveyance or encumbrance,with respect to the Properties; and 14.1.5 Any and all other instruments as the Manager may deemnecessary or desirable to effect the purposes of this Agreement and carry outfully its provisions. 14.2 Provision of Power of Attorney. The special and limited power ofattorney granted to Triple Net Properties, LLC: 14.2.1 Is a special power of attorney coupled with an interest, isirrevocable, shall survive the death, incapacity, termination or dissolution ofthe granting Member, and is limited to those matters herein set forth; 14.2.2 May be exercised by Triple Net Properties, LLC by and throughone or more of the officers of Triple Net Properties, LLC, for each of theMembers by the signature of Triple Net Properties, LLC acting asattorney-in-fact for all of the Members, together with a list of all Membersexecuting such instrument by their attorney-in-fact or by such other method asmay be required or requested in connection with the recording or filing of anyinstrument or other document so executed; and 14.2.3 Shall survive an assignment by a Member of all or any portionof his Investor Units except that, where the assignee of the Investor Unitsowned by the Member has been approved by the Manager for admission to theCompany as a Substituted Member, the special power of attorney shall survivesuch assignment for the sole purpose of enabling Triple Net Properties, LLC toexecute, acknowledge and file any instrument or document necessary to effectsuch substitution. 14.3 Notice to Members. The Manager shall promptly furnish to a Member acopy of any amendment to the Agreement executed by Triple Net Properties, LLCpursuant to a power of attorney from the Member.15. Relationship of This Agreement to the Act. Many of the terms of thisAgreement are intended to alter or extend provisions of the Act as they mayapply to the Company or the Members. Any failure of this Agreement to mention orspecify the relationship of such terms to provisions of the Act that may affectthe scope or application of such terms shall not be construed to mean that anyof such terms is not intended to be an operating agreement provision authorizedor permitted by the Act or which in whole or in part alters, extends orsupplants provisions of the Act as may be allowed thereby.16. Amendment of Agreement. 16.1 Admission of Member. Amendments to this Agreement for the admissionof any Member or Substitute Member shall not, if in accordance with the terms ofthis Agreement, require the consent of any Member. 25 16.2 Amendments with Consent of Member. In addition to any amendmentsotherwise authorized herein, this Agreement may be amended by the Manager with aMajority Vote of the Member. 16.3 Amendments Without Consent of the Members. In addition to theAmendments authorized pursuant to Section 4.9 and Section 7.3.11 or otherwiseauthorized herein, the Manager may amend this Agreement, without the consent ofany of the Members, to (i) change the name and/or principal place of business ofthe Company, or (ii) decrease the rights and powers of the Manager (so long assuch decrease does not impair the ability of the Manager to manage the Companyand conduct its business and affairs); provided, however, that no amendmentshall be adopted pursuant to this Section 16.3 unless the adoption thereof (A)is for the benefit of or not adverse to the interests of the Members, (B) is notinconsistent with Section 7, and (C) does not affect the limited liability ofthe Members or the status of the Company as a partnership for federal income taxpurposes. 16.4 Execution and Recording of Amendments. Any amendment to thisAgreement shall be executed by the Manager and by Triple Net Properties, LLC, asattorney-in-fact for the Members, pursuant to the power of attorney contained inSection 14. After the execution of such amendment, the Manager shall alsoprepare and record or file any certificate or other document which may berequired to be recorded or filed with respect to such amendment, either underthe Act or under the laws of any other jurisdiction in which the Company holdsany Property or otherwise does business.17. Miscellaneous. 17.1 Counterparts. This Agreement may be executed in several counterparts,and all so executed shall constitute one Agreement, binding on all of theparties hereto, notwithstanding that all of the parties are not signatory to theoriginal or the same counterpart. 17.2 Successors and Assigns. The terms and provisions of this Agreementshall be binding upon and shall inure to the benefit of the successors andassigns of the respective Members. 17.3 Severability. In the event any sentence or Section of this Agreementis declared by a court of competent jurisdiction to be void, such sentence orSection shall be deemed severed from the remainder of this Agreement and thebalance of this Agreement shall remain in full force and effect. 17.4 Notices. All notices under this Agreement shall be in writing andshall be given to the Member or Economic Interest Owner entitled thereto, bypersonal service or by mail, posted to the address maintained by the Company forsuch person or at such other address as he may specify in writing. 17.5 Manager’s Address. The name and address of the Manager is as follows: Triple Net Properties, LLC 1551 N. Tustin Avenue, Suite 650 Santa Ana, California 92705 Attn: Anthony W. Thompson, President 17.6 Governing Law. This Agreement shall be governed by and construed inaccordance with the laws of the Commonwealth of Virginia, where this Agreementis made and entered into. 26 17.7 Captions. Section titles or captions contained in this Agreement areinserted only as a matter of convenience and reference. Such titles and captionsin no way define, limit, extend or describe the scope of this Agreement nor theintent of any provisions hereof. 17.8 Gender. Whenever required by the context hereof, the singular shallinclude the plural, and vice versa, the masculine gender shall include thefeminine and neuter genders, and vice versa. 17.9 Time. Time is of the essence with respect to this Agreement. 17.10 Additional Documents. Each Member, upon the request of the Manager,shall perform any further acts and execute and deliver any documents which maybe reasonably necessary to carry out the provisions of this Agreement,including, but not limited to, providing acknowledgment before a Notary Publicof any signature made by a Member. 17.11 Descriptions. All descriptions referred to in this Agreement areexpressly incorporated herein by reference as if set forth in full, whether ornot attached hereto. 17.12 Binding Arbitration. Any controversy arising out of or related tothis Agreement or the breach thereof or an investment in the Investor Unitsshall be settled by arbitration in Orange County, California, in accordance withthe rules of The American Arbitration Association, and judgment entered upon theaward rendered may be enforced by appropriate judicial action. The arbitrationpanel shall consist of one member, which shall be the mediator if mediation hasoccurred or shall be a person agreed to by each party to the dispute within 30days following notice by one party that he desires that a matter be arbitrated.If there was no mediation and the parties are unable within such 30 day periodto agree upon an arbitrator, then the panel shall be one arbitrator selected bythe Orange County office of The American Arbitration Association, whicharbitrator shall be experienced in the area of real estate and limited liabilitycompanies and who shall be knowledgeable with respect to the subject matter areaof the dispute. The losing party shall bear any fees and expenses of thearbitrator, other tribunal fees and expenses, reasonable attorney’s fees of bothparties, any costs of producing witnesses and any other reasonable costs orexpenses incurred by him or the prevailing party or such costs shall beallocated by the arbitrator. The arbitration panel shall render a decisionwithin 30 days following the close of presentation by the parties of their casesand any rebuttal. The parties shall agree within 30 days following selection ofthe arbitrator to any prehearing procedures or further procedures necessary forthe arbitration to proceed, including interrogatories or other discovery;provided, in any event each Member shall be entitled to discovery. 17.13 Venue. Any Action relating to or arising out of this Agreement shallbe brought only in a court of competent jurisdiction located in Orange County,California. 17.14 Partition. The Members agree that the assets of the Company are notand will not be suitable for partition. Accordingly, each of the Members herebyirrevocably waives any and all rights that he may have, or may obtain, tomaintain any action for partition of any of the assets of the Company. 17.15 Integrated and Binding Agreement. This Agreement contains the entireunderstanding and agreement among the Members with respect to the subject matterhereof, and there are no other agreements, understandings, representations orwarranties among the Members other than those set forth herein except theSubscription Documents. This Agreement may be amended only as provided in thisAgreement. 17.16 Legal Counsel. Each Member acknowledges and agrees that counselrepresenting the Company, the Manager and its Affiliates does not represent andshall not be deemed under the applicable 27codes of professional responsibility to have represented or to be representingany or all of the Members, other than the Manager, in any respect. In addition,each Member consents to the Manager hiring counsel for the Company which is alsocounsel to one or more of the Manager.18. Lender Covenants. The Company has not and will not: (a) engage in any business or activity other than the ownership, operation and maintenance of the Properties, and activities incidental thereto; (b) acquire or own any assets other than (i) the Properties, and (ii) such incidental personal property as may be necessary for the operation of the Properties; (c) merge into or consolidate with any Person, or dissolve, terminate, liquidate in whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change its legal structure; (d) fail to observe all organizational formalities, or fail to preserve its existence as an entity duly organized, validly existing and in good standing (if applicable) under the applicable legal requirements of the jurisdiction of its organization or formation, or amend, modify, terminate or fail to comply with the provisions of its organizational documents; (e) own any subsidiary, or make any investment in, any Person; (f) commingle its assets with the assets of any other Person; (g) incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (i) the Loans, (ii) trade and operational indebtedness incurred in the ordinary course of business with trade creditors, provided such indebtedness is (A) unsecured, (B) not evidenced by a note, (C) on commercially reasonable terms and conditions, and (D) due not more than sixty (60) days past the date incurred, and/or (iii) financing leases and purchase money indebtedness incurred in the ordinary course of business relating to personal property on commercially reasonable terms and conditions; provided however, the aggregate amount of the indebtedness described in (ii) and (iii) shall not exceed at any time three percent (3%) of the outstanding principal amount of the Notse; (h) fail to maintain its records, books of account, bank accounts, financial statements, accounting records and other entity documents separate and apart from those of any other Person; (i) enter into any contract or agreement with any general partner, member, shareholder, principal or affiliate, except upon terms and conditions that are intrinsically fair and substantially similar to those that would be available on an arm’s-length basis with unaffiliated third parties; (j) maintain its assets in such a manner that it will be costly or difficult to segregate, ascertain or identify its individual assets from those of any other Person; (k) assume or guaranty the debts of any other Person, hold itself out to be responsible for the debts of any other Person, or otherwise pledge its assets for the benefit of any other Person or hold out its credit as being available to satisfy the obligations of any other Person; 28 (l) make any loans or advances to any Person; (m) fail to file its own tax returns (unless prohibited by applicable Legal Requirements from doing so); (n) fail either to hold itself out to the public as a legal entity separate and distinct from any other Person or to conduct its business solely in its own name or fail to correct any known misunderstanding regarding its separate identity; (o) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; (p) if it is a partnership or limited liability company, without the unanimous written consent of all of its partners or members, as applicable, and the written consent of 100% of the directors of the SPE Component Entity, (i) file or consent to the filing of any petition, either voluntary or involuntary, to take advantage of any Creditors Rights Laws, (ii) seek or consent to the appointment of a receiver, liquidator or any similar official, (iii) take any action that might cause such entity to become insolvent, or (iv) make an assignment for the benefit of creditors; (q) fail to allocate shared expenses (including, without limitation, shared office space) among the Persons sharing such expenses and to use separate stationery, invoices and checks; (r) fail to pay its own liabilities (including, without limitation, salaries of its own employees) from its own funds; (s) acquire obligations or securities of its partners, members, shareholders or other affiliates, as applicable; or (t) violate or cause to be violated the assumptions made with respect to the Company and its principals in any opinion letter pertaining to substantive consolidation delivered to a lender in connection with the Loan. [BALANCE OF PAGE LEFT INTENTIONALLY BLANK] 29 IN WITNESS WHEREOF, the undersigned have set their hands to this Agreementas of the date first set forth in the preamble. MANAGER: TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company BY: /s/ Anthony W. Thompson ———————————– Anthony W. Thompson, President INITIAL MEMBER: /s/ Anthony W. Thompson ———————————– Anthony W. Thompson, Individually 30 EXHIBIT A DEFINITIONS “Act” shall mean the Virginia Limited Liability Company Act, as the samemay be amended from time to time. “Adjusted Capital Account Deficit” shall mean, with respect to any Member,the deficit balance, if any, in such Member’s Capital Account as of the end ofthe relevant fiscal year, after giving effect to the following adjustments: (i) Credit to such Capital Account any amounts which the Member is obligated to restore and the Member’s share of Member Minimum Gain and Company Minimum Gain and; (ii) Debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),and 1.704-1 (b)(2)(ii)(d)(6). “Affiliate” shall mean (i) any person directly or indirectly controlling,controlled by or under common control with another person; (ii) a person owningor controlling 10% or more of the outstanding voting securities of such otherperson; (iii) any officer, director or partner of such other person; and (iv) ifsuch other person is an officer, director or partner, any company for which suchperson acts in any capacity. The term “person” shall include any natural person,corporation, partnership, trust, unincorporated association or other legalentity. “Agreement” shall mean this Operating Agreement, as amended from time totime. “Articles of Organization” shall mean the Articles of Organization of theCompany as filed with the State Corporation Commission of the Commonwealth ofVirginia as the same may be amended or restated from time to time. “Book Gain” shall mean the excess, if any, of the fair market value of theProperties over its adjusted basis for federal income tax purposes at the time avaluation of the Properties is required under this Agreement or TreasuryRegulations Section 1.704-1(b) for purposes of making adjustments to the CapitalAccounts. “Book Loss” shall mean the excess, if any, of the adjusted basis ofProperties for federal income tax purposes over its fair market value at thetime a valuation of the Properties is required under this Agreement or TreasuryRegulations Section 1.704-1(b) for purposes of making adjustments to the CapitalAccounts. “Book Value” shall mean the adjusted basis of Properties for federalincome tax purposes increased or decreased by Book Gain, Book Loss, Built-InGain and Built-In Loss as reduced by depreciation, amortization or other costrecovery deductions, or otherwise, based on such Book Value. “Built-In Gain (or Loss)” shall mean the amount, if any, by which theagreed value of contributed property exceeds (or is lesser than) the adjustedbasis of property contributed to the Company by a Member immediately after itscontribution by the Member to the capital of the Company. “Capital Account” with respect to any Member (or such Member’s assignee)shall mean such Member’s initial Capital Contribution adjusted as follows: A-1 (i) A Member’s Capital Account shall be increased by: (a) such Member’s share of Net Income; (b) any income or gain specially allocated to a Member and not included in Net Income or Net Loss; (c) any additional cash Capital Contribution made by such Member to the Company; and (d) the fair market value of any additional Capital Contribution consisting of property contributed by such Member to the capital of the Company reduced by any liabilities assumed by the Company in connection with such contribution or to which the property is subject. (ii) A Member’s Capital Account shall be reduced by: (a) such Member’s share of Net Loss; (b) any deduction specially allocated to a Member and not included in Net Income or Net Loss; (c) any cash Distribution made to such Member; and (d) the fair market value, as agreed to by the Manager and the Members pursuant to a Majority Vote, of any property (reduced by any liabilities assumed by the Member in connection with the Distribution or to which the distributed property is subject) distributed to such Member; provided that, upon liquidation and winding up of the Company, unsold property will be valued for Distribution at its fair market value and the Capital Account of each Member before such Distribution shall be adjusted to reflect the allocation of gain or loss that would have been realized had the Company then sold the Properties for their fair market values. Such fair market values shall not be less than the amount of any nonrecourse indebtedness that is secured by the Properties. Property other than money may not be contributed to the Company except asspecifically provided in this Agreement. Property of the Company may not berevalued for purposes of calculating Capital Accounts unless the Manager and theMembers pursuant to a Majority Vote agree on the fair market value of theProperties and Company complies with the requirements of Treasury RegulationsSection 1.704-1(b)(2)(iv)(i) and (g); provided, however, for purposes ofcalculating Book Gain or Book Loss (but not for purposes of adjusting CapitalAccounts to reflect the contribution and distribution of such Properties), thefair market value of Properties shall be deemed to be no less than theoutstanding balance of any nonrecourse indebtedness secured by such Properties. The Capital Account of a Substituted Member shall include the CapitalAccount of his transferor. Notwithstanding anything to the contrary in thisAgreement, the Capital Accounts shall be maintained in accordance with TreasuryRegulations Section 1.704-1(b). References in this Agreement to the TreasuryRegulations shall include corresponding subsequent provisions. “Capital Contribution” shall mean the gross amount invested in the Companyby a Member and shall be equal in amount to the cash purchase price paid by suchMember for the Investor Units sold to him A-2by the Company. In the plural, “Capital Contributions” shall mean the aggregateamount invested by all of the Members in the Company and shall equal, in total,the sum of the amount attributable to the purchase of Investor Units and thecontributions of the Manager. “Capital Transaction” shall mean any financing, refinancing, sale,exchange, or other disposition or condemnation of, or casualty to, theProperties. “Cash from Capital Transactions” shall mean the net cash realized by theCompany from any Capital Transaction after payment of all cash expenditures ofthe Company, including, but not limited to, all fees payable to the Manager orAffiliates, all payments of principal and interest on indebtedness, and suchreserves and retentions as the Manager reasonably determines to be necessary anddesirable in connection therewith. “Cash from Operations” shall mean the net cash realized by the Companyfrom any source other than a Capital Transaction, after payment of all cashexpenditures of the Company, including, but not limited to, all operatingexpenses including all fees payable to the Manager or Affiliates, all paymentsof principal and interest on indebtedness, expenses for repairs and maintenance,capital improvements and replacements, and such reserves and retentions as theManager reasonably determines to be necessary and desirable in connection withCompany operations with its then existing assets and any anticipatedacquisitions. “Class A Investor Unit” shall mean an Investor Unit that is subscribed toin the first $10,000,000 raised in the Offering. “Class B Investor Unit” shall mean an Investor Unit that is subscribed toin the second $10,000,000 raised in the Offering. “Class C Investor Unit” shall mean an Investor Unit that is subscribed toin the last $10,000,000 raised in the Offering. “Code” shall mean the Internal Revenue Code of 1986, as amended, orcorresponding provisions of subsequently enacted federal revenue laws. “Company” shall refer to NNN 2002 Value Fund, LLC. “Company Minimum Gain” shall meaning “partnership minimum gain” as setforth in Treasury Regulations Sections 1.704-2(d). “Depository Account” shall have the meaning set forth in Section 3.1.5. “Dissolution Event” shall mean with respect to any Manager one or more ofthe following: the death, insanity, withdrawal, retirement, resignation,expulsion, Event of Insolvency, dissolution or occurrence of any other eventwhich terminates the continued membership of any Manager unless the Membersconsent to continue the business of the Company pursuant to Section 8.2.7. “Distributable Cash” shall mean Cash from Operations, and CapitalContributions determined by the Manager to be available for Distribution to theMembers. A-3 “Distribution” shall refer to any money or other property transferredwithout consideration (other than repurchased Investor Units) to Members orOwners with respect to their Investor Units in the Company, but shall notinclude any payments to the Manager pursuant to Section 6. “Economic Interest” shall mean an interest in the Net Income, Net Loss andDistributions of the Company but shall not include any right to vote or toparticipate in the management of the Company. “Economic Interest Owner” shall mean the owner of an Economic Interest whois not a Member. “Event of Insolvency” shall occur when an order for relief against theManager is entered under Chapter 7 of the federal bankruptcy law, or (i) theManager: (a) makes a general assignment for the benefit of creditors, (b) filesa voluntary petition under the federal bankruptcy law, (c) files a petition oranswer seeking for that Manager a reorganization, arrangement, composition,readjustment, liquidation, dissolution or similar relief under any statute, lawor regulation, (d) files an answer or other pleading admitting or failing tocontest the material allegations of a petition filed against the Manager in anyproceeding of this nature, or (e) seeks, consents to, or acquiesces in theappointment of a trustee, receiver, or liquidator of that Manager or of all or asubstantial part of that Manager’s properties, or (f) the expiration of 90 daysafter either (i) the commencement of any proceeding against the Manager seekingreorganization, arrangement, composition, readjustment, liquidation, dissolutionor similar relief under any statute, law, or regulation, if the proceeding hasnot been dismissed, or (ii) the appointment without the Manager’s consent oracquiescence of a trustee, receiver, or liquidator of the Manager or of all orany substantial part of the Manager’s properties, if the appointment has notbeen vacated or stayed (or if within 90 days after the expiration of any suchstay, the appointment is not vacated). “Impound Release Date” shall have the meaning set forth in Section 3.1.5. “Initial Member” shall refer to Anthony W. Thompson. “Interest” or “Interests” shall mean a Membership Interest or an EconomicInterest. “Investor Unit” shall represent an interest in the Company entitling theowner of the Investor Unit if admitted as a Member to the respective voting andother rights afforded to a Member holding an Investor Unit, and affording tosuch Member a share in Net Income, Net Loss and Distributions as provided for inthis Agreement. “Liquidation” means in respect to the Company the earlier of the date uponwhich the Company is terminated under Section 708(b)(1) of the Code or the dateupon which the Company ceases to be a going concern (even though it may existfor purposes of winding up its affairs, paying its debts and distributing anyremaining balance to its Members), and in respect to a Member where the Companyis not in Liquidation means the date upon which occurs the termination of theMember’s entire interest in the Company by means of a distribution or the makingof the last of a series of Distributions (whether or not made in more than oneyear) to the Member by the Company. “Loan” or “Loans” mean the acquisition loans used to acquire theProperties by the Company and the tenant in common owners of the Properties. “Majority Vote” shall mean the vote of more than 50% of the Investor Unitsentitled to vote. Members shall be entitled to cast one vote for each InvestorUnit they own, and a fractional for each fractional Unit they own. A-4 “Management Agreement” shall refer to the Management Agreement betweenProperty Manager, as property manager, and the Company, with respect to themanagement and operation of the Properties, a true copy of which is attached asExhibit B. “Manager” shall refer to Triple Net Properties, LLC, a Virginia limitedliability company. The term “Manager” shall also refer to any successor oradditional Manager who is admitted to the Company as the Manager. “Member” shall mean any holder of an Investor Unit who is admitted to theCompany as a Member or the Manager. “Member Minimum Gain” shall mean “partner nonrecourse debt minimum gain”as determined under Treasury Regulations Section 1.704-2(i)(3). “Member Nonrecourse Debt” shall mean “partner nonrecourse debt” as setforth in Treasury Regulations Section 1.704-2(b)(4). “Member Nonrecourse Deductions” shall mean of “partner nonrecoursedeductions,” and the amount thereof shall be, as set forth in TreasuryRegulations Section 1.704-2(i). “Membership Interest” shall mean a Member’s entire interest in the Companyincluding such Member’s Economic Interest and such voting and other rights andprivileges that the Member may enjoy by being a Member. “Memorandum” shall mean the Company’s Confidential Private PlacementMemorandum dated May 15, 2002, for the sale of the Investor Units. “Net Capital Contribution” of any Member shall be equal to the excess, ifany, of (i) the aggregate Capital Contributions of such Member based on $5,000per Unit over (ii) the aggregate Distributions to such Member. “Net Income” or “Net Loss” shall mean, respectively, for each taxable yearof the Company the taxable income and taxable loss (exclusive of Built-in Gainor Loss) of the Company as determined for federal income tax purposes inaccordance with Section 703(a) or the Code (including all items of income,gain, loss, or deduction required to be separately stated pursuant to Section703(a)(1) of the Code) (other than any specific item of income, gain (exclusiveof Built-in Gain), loss (exclusive of Built-in Loss), deduction or creditsubject to special allocation under this Agreement), with the followingmodifications: (i) The amount determined above shall be increased by any income exempt from federal income tax; (ii) The amount determined above shall be reduced by any expenditures described in Section 705(a)(2)(B) of the Code or expenditures treated as such pursuant to Treasury Regulations Section 1.704-1 (b)(2)(iv)(i); (iii) Depreciation, amortization and other cost recovery deductions shall be computed based on Book Value instead of on the amount determined in computing taxable income or loss. Any item of deduction, amortization or cost recovery specially allocated to a Member and not included in Net Income or Net Loss shall be determined for Capital Account purposes in a similar manner; and A-5 (iv) For purposes of this Agreement, Book Gain and Book Loss attributable to a revaluation of Property attributable to unrealized gain or loss in such Property shall be treated as Net Income and Net Loss. “Nonrecourse Debt” shall have the meaning set forth in TreasuryRegulations Section 1.704-2(b)(3). “Nonrecourse Deductions” shall have the meaning, and the amount thereofshall be, as set forth in Treasury Regulations Section 1.704-2(c). “Note” or “Notes” mean the certain promissory notes in the originalprincipal amount of the Loans. “Offering” shall mean the offering and sale of the Investor Units made inaccordance with the provisions of Section 3.1.2. “Offering Termination Date” shall mean the date the Offering of InvestorUnits will terminate pursuant to the Memorandum, which is the earliest of (i)the date all Investor Units are sold or (ii) April 30, 2003, which date can beextended to April 30, 2004 in the sole and absolute discretion of the Manager. “Organization and Offering Expenses” shall mean all expenses incurred inconnection with the organization and formation of the Company, the preparationof the offering materials, and the marketing and sale of the Investor Units,including but not limited to legal, accounting, tax planning fees, promotionalfees or expenses, filing and recording fees, market research and surveys,property inspections and research, engineering services, printing costs,securities sales commissions, travel expenses and other costs or expensesincurred in connection therewith. “Owner” shall mean a Member or the holder of an Economic Interest. “Person” shall mean any natural person or entity, and the heirs,executors, administrators, legal representatives, successors, and assigns ofsuch Person where the context so admits. “Prime Rate” shall mean the reference rate announced from time-to-time bythe Wall Street Journal, and changes in the Prime Rate shall be deemed to occuron the date that changes in such rate are announced. “Priority Return” shall mean: (a) for the holders of Class A InvestorUnits, a 10% per annum cumulative (but not compounded) return on theirUnrecovered Equity, on an annualized basis, properly adjusted for any partialyears and/or fractional interests; (b) for the holders of Class B InvestorUnits, a 9% per annum cumulative (but not compounded) return on theirUnrecovered Equity, on an annualized basis, properly adjusted for any partialyears and/or fractional interests; and (c) for the holders of Class C InvestorUnits, an 8% per annum cumulative (but not compounded) return on theirUnrecovered Equity, on an annualized basis, properly adjusted for any partialyears and/or fractional interests. “Property” or “Properties” shall refer to the properties acquired by NNN2002 Value Fund, LLC, or by special purpose entity of which it is a member, asdescribed in the Memorandum. “Property Manager” shall mean Triple Net Properties Realty, Inc., aCalifornia corporation. A-6 “Regulatory Allocations” shall mean the allocations set forth in Sections4.2(a) through (g). “Residuary Sharing Ratio” shall mean the sharing ratio with respect to anyamount available as a tier (ii) distribution of Cash from Operations or as atier (iii) distribution of Cash from Capital Transactions (the “Residue”). Suchsharing ratio shall be determined by first tentatively dividing the Residueequally among all of the Investor Units so as to establish a per Investor Unitallocation (the “Per Investor Unit Allocation”); second the Members shallreceive: 85% of the Per Investor Unit Allocation for each Class A Investor Unitowned; 80% of the Per Investor Unit Allocation for each Class B Investor Unitowned; 75% of the Per Investor Unit Allocation for each Class B Investor Unitowned; and the Manager shall receive the balance, that is, 15% of the PerInvestor Unit Allocation for each Class A Investor Unit, 20% of the Per InvestorUnit Allocation for each Class B Investor Unit, and 25% of the Per Investor UnitAllocation for each Class C Investor Unit. “Subscription Agreement” means the agreement, in the form as may beattached to the Memorandum, by which each person desiring to become a Membershall evidence (i) the number of Investor Units which such person wishes toacquire and (ii) such person’s agreement to become a party to, and be bound bythe provisions of, this Agreement and (iii) certain representations regardingthe person’s finances and investment intent. “Subscription Payment” shall mean the cash payment that must accompanyeach subscription for Investor Units sold through the Offering. “Substituted Member” shall mean any person admitted as a substitutedMember pursuant to this Agreement. “Tax Payment” shall have the meaning set forth in Section 4.11.1. “Tenants in Common” shall mean the Company and the purchasers of tenant incommon interests in the Properties. “Thompson” shall mean Anthony W. Thompson. “Unrecovered Equity” of a Member as of any date means the amount of aMember’s Capital Contributions to the Company, reduced, but not below zero, bythe cumulative Cash from Capital Transactions amounts distributed to such Memberunder Section 5.2 hereof. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK] A-7