Exhibit 10.14

 

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF PROCACCIANTI HOTEL REIT, L.P.

 

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF PROCACCIANTI HOTEL
REIT, L.P., a Delaware limited partnership (the “Partnership”), dated as of
February 27, 2020 (the “Effective Date”), is entered into by and among
Procaccianti Hotel REIT, Inc., a Maryland corporation holding a general
partnership interest in the Partnership (the “General Partner”), Procaccianti
Hotel REIT LP, LLC, a Delaware limited liability company holding a limited
partnership interest in the Partnership (“Procaccianti LP”), together with any
other Persons who become Partners in the Partnership as provided herein.

 

WHEREAS, the Partnership was formed when a Certificate of Limited Partnership
was filed and accepted by the Secretary of State of the State of Delaware;

 

WHEREAS, the General Partner and Procaccianti LP entered into that certain
Agreement of Limited Partnership of the Partnership dated as of August 26, 2016
(the “Initial Agreement”); and

 

WHEREAS, the General Partner and Procaccianti LP desire to amend and restate the
Initial Agreement as set forth herein.

 

NOW, THEREFORE, BE IT RESOLVED, that for good and adequate consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE 1

DEFINED TERMS

  

Section 1.1 Definitions.

 

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

 

“Act” means the Delaware Revised Uniform Limited Partnership Act (6 Del. C.
Section 17-101 et seq.), as it may be amended from time to time, and any
successor to such statute.

 

“Acquisition Expenses” means any and all expenses, exclusive of Acquisition
Fees, incurred by the General Partner, the Partnership, the Advisoror any of
their Affiliates (as such term is defined in the Advisory Agreement) in
connection with the selection, evaluation, acquisition, origination, making or
development of any Real Estate Assets, whether or not acquired, including legal
fees and expenses, travel and communications expenses, brokerage fees, costs of
appraisals, nonrefundable option payments on property not acquired, accounting
fees and expenses, title insurance premiums and the costs of performing due
diligence.

 

“Acquisition Fee” means the fee payable to the Advisor or its assignees pursuant
to Section 9(a) of the Advisory Agreement.

 

“Additional Funds” shall have the meaning set forth in Section 4.4A.

 

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“Additional Limited Partner” means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 12.2 and who is shown as such on the books
and records of the Partnership.

 

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

 

(a) such deficit shall be decreased by any amounts which such Partner is
obligated to restore pursuant to this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentence of each of Regulations Sections
1.704-2(i)(5) and 1.704-2(g)(1); and

 

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

 

The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith. A positive balance in a Partner’s Capital
Account, after giving effect to the adjustments described above in clauses (a)
and (b), is referred to in this Agreement as an “Adjusted Capital Account
Balance.”

 

“Advisor” shall have the meaning set forth in the introduction.

 

“Advisory Agreement” means that certain Amended and Restated Advisory Agreement
by and among the General Partner, Procaccianti LP and the Advisor, dated as of
August 2, 2018, as amended or restated from time to time.

 

“Affected Gain” has the meaning set forth in subparagraph 4(b) of Exhibit B.

 

“Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with such Person. Control of
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.

 

“Agreement” means this Amended and Restated Agreement of Limited Partnership, as
it may be amended, modified, supplemented or restated from time to time.

 

“Appraisal” means with respect to any assets, the opinion of an independent
third party experienced in the valuation of similar assets, selected by the
General Partner in good faith; such opinion may be in the form of an opinion by
such independent third party that the value for such property or asset as set by
the General Partner is fair, from a financial point of view, to the Partnership.

 

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

 

“Available Cash” means, with respect to the applicable period of measurement
(i.e., any period (other than the first period in which this calculation of
Available Cash is being made) beginning on the first day of the fiscal year,
quarter or other period commencing immediately after the last day of the fiscal
year, quarter or other applicable period for purposes of the prior calculation
of Available Cash for or with respect to which a distribution has been made, and
ending on the last day of the fiscal year, quarter or other applicable period
immediately preceding the date of the calculation), the excess, if any, as of
such date, of

 

(a) the gross cash receipts of the Partnership for such period from all sources
whatsoever, including the following:

 

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(i) all rents, revenues, income and proceeds derived by the Partnership from its
operations, including distributions received by the Partnership from any Entity
in which the Partnership has an interest;

 

(ii) all proceeds and revenues received by the Partnership on account of any
sales of any Partnership property or as a refinancing of or payment of
principal, interest, costs, fees, penalties or otherwise on account of any
borrowings or loans made by the Partnership or financings or refinancings of any
property of the Partnership;

 

(iii) the amount of any insurance proceeds and condemnation awards received by
the Partnership;

 

(iv) all capital contributions and loans received by the Partnership from its
Partners;

 

(v) all cash amounts previously reserved by the Partnership, to the extent such
amounts are no longer needed for the specific purposes for which such amounts
were reserved; and

 

(vi) the proceeds of liquidation of the Partnership’s property in accordance
with this Agreement;

 

over

 

(b) the sum of the following:

 

(i) all operating costs and expenses, including taxes and other expenses of the
properties directly and indirectly held by the Partnership and capital
expenditures made during such period (without deduction, however, for any
capital expenditures, charges for Depreciation or other expenses not paid in
cash or expenditures from reserves described in clause (viii) below);

 

(ii) all costs and expenses expended or paid during such period in connection
with the sale or other disposition, or financing or refinancing, of the property
directly or indirectly held by the Partnership or the recovery of insurance or
condemnation proceeds;

 

(iii) all fees provided for under this Agreement;

 

(iv) all debt service, including principal and interest, paid during such period
on all indebtedness (including under any line of credit) of the Partnership;

 

(v) all capital contributions, advances, reimbursements, loans or similar
payments made to any Person in which the Partnership has an interest;

 

(vi) all loans made by the Partnership in accordance with the terms of this
Agreement;

 

(vii) all reimbursements to the General Partner or its Affiliates during such
period; and

 

(viii) the amount of any new reserve or reserves or increase in reserves
established during such period which the General Partner determines is necessary
or appropriate in its sole and absolute discretion.

 

Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.

 

“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York,

 

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New York are authorized or required by law to be closed.

 

“Capital Account” means with respect to any Partner, the Capital Account
maintained for such Partner in accordance with the following provisions:

 

(a) to each Partner’s Capital Account there shall be credited;

 

(i) such Partner’s Capital Contributions;

 

(ii) such Partner’s distributive share of Net Income and any items in the nature
of income or gain which are specially allocated to such Partner pursuant to
paragraphs 1, 2 or 3 of Exhibit B; and

 

(iii) the amount of any Partnership liabilities assumed by such Partner or which
are secured by any asset distributed to such Partner;

 

(b) to each Partner’s Capital Account there shall be debited;

 

(i) the amount of cash and the Gross Asset Value of any property distributed to
such Partner pursuant to any provision of this Agreement;

 

(ii) such Partner’s distributive share of Net Losses and any items in the nature
of expenses or losses which are specially allocated to such Partner pursuant to
paragraphs 1, 2 and 3 of Exhibit B; and

 

(iii) the amount of any liabilities of such Partner assumed by the Partnership
or which are secured by any asset contributed by such Partner to the
Partnership; and

 

(c) if all or a portion of a Partnership Interest is transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred
Partnership Interest.

 

The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Sections
1.704-1(b) and 1.704-2 of the Regulations, and shall be interpreted and applied
in a manner consistent with such Regulations. If the General Partner shall
reasonably determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including debits or credits
relating to liabilities which are secured by contributed or distributed assets
or which are assumed by the Partnership, the General Partner or any Limited
Partner) are computed in order to comply with such Regulations, the General
Partner may make such modification; provided, that, all allocations of
Partnership income, gain, loss and deduction continue to have “substantial
economic effect” within the meaning of Section 704(b) of the Code and that no
Limited Partner is materially adversely affected by any such modification.

 

“Capital Contribution” means, with respect to any Partner, any cash, cash
equivalents or the Gross Asset Value of property (net of any liabilities secured
by contributed property that the Partnership is considered to assume or take
subject to under Section 752 of the Code) which such Partner contributes or is
deemed to contribute to the Partnership pursuant to Article 4 hereof.

 

“Capital Transaction” means any transaction outside the ordinary course of the
Partnership’s business involving the sale, exchange, other disposition, or
refinancing of any Partnership asset.

 

“Cash Amount” means, with respect to any OP Units subject to a Redemption, an
amount of cash equal to the

 

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Deemed Partnership Interest Value attributable to such OP Units.

 

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

 

“Change of Control” means any event (including, without limitation, issue,
transfer or other disposition of REIT Shares or equity interests in the
Partnership, merger, share exchange or consolidation) after which any “person”
(as that term is used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the “beneficial owner” (as defined in Rule 13d-j of the Exchange Act),
directly or indirectly, of securities of the Company or the Partnership
representing greater than 50% or more of the combined voting power of the
Company’s or the Partnership’s then outstanding securities, respectively;
provided, that, a Change of Control shall not be deemed to occur as a result of
any widely distributed public offering of the REIT Shares.

 

“Charter” means the Second Articles of Amendment and Restatement of the General
Partner filed with the State Department of Assessments and Taxation of Maryland
on April 28, 2017, as amended or restated from time to time.

 

“Class” means a class of REIT Shares or OP Units, as the context may require.

 

“Class A OP Unit” means an OP Unit entitling the holder thereof to the rights of
a holder of a Class A OP Unit as provided in this Agreement.

 

“Class A REIT Shares” means the REIT Shares classified as “Class A Common Stock”
in the Charter.

 

“Class B OP Unit” means an OP Unit entitling the holder thereof to the rights of
a holder of a Class B OP Unit as provided in this Agreement.

 

“Class B REIT Shares” means the REIT Shares classified as “Class B Capital
Stock” in the Charter.

 

“Class K OP Unit” means an OP Unit entitling the holder thereof to the rights of
a holder of a Class K OP Unit as provided in this Agreement.

 

“Class K OP Unit Distribution Base” means $10.00 per Class K OP Unit, subject to
reduction as provided in this Agreement.

 

“Class K REIT Shares” means the REIT Shares classified as “Class K Common Stock”
in the Charter.

 

“Class K-I OP Unit” means an OP Unit entitling the holder thereof to the rights
of a holder of a Class K-I OP Unit as provided in this Agreement.

 

“Class K-I OP Unit Distribution Base” means $10.00 per Class K-I OP Unit,
subject to reduction as provided in this Agreement.

 

“Class K-I REIT Shares” means the REIT Shares classified as “Class K-I Common
Stock” in the Charter.

 

“Class K-T OP Unit” means an OP Unit entitling the holder thereof to the rights
of a holder of a Class K-T OP Unit as provided in this Agreement.

 

“Class K-T OP Unit Distribution Base” means $10.00 per Class K-T OP Unit,
subject to reduction as provided in this

 

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Agreement.

 

“Class K-T REIT Shares” means the REIT Shares classified as “Class K-T Common
Stock” in the Charter.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Common Stock” means the capital stock of the General Partner, $0.01 par value
per share. Common Stock may be issued in one or more classes or series in
accordance with the terms of the Charter. The term “Common Stock” shall, as the
context requires, be deemed to refer to the class or series of Common Stock that
correspond to the class or series of Partnership Interests for which the
reference to Common Stock is made.

 

“Consent” means the consent to, approval of, or vote on a proposed action by a
Partner given in accordance with Article 14.

 

“Consent of the Limited Partners” means the Consent of a Majority in Interest of
the Limited Partners, which Consent shall be obtained prior to the taking of any
action for which it is required by this Agreement and may be given or withheld
by a Majority in Interest of the Limited Partners, unless otherwise expressly
provided herein, in their sole and absolute discretion.

 

“Consent of the Partners” means the Consent of Partners holding Percentage
Interests that in the aggregate are equal to or greater than fifty percent (50%)
of the aggregate Percentage Interests of all Partners, which Consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by such Partners, in their sole and
absolute discretion.

 

“Constructively Own” means ownership under the constructive ownership rules
described in the Charter.

 

“Contributed Property” means each property, partnership interest, contract right
or other asset, in such form as may be permitted by the Act, contributed or
deemed contributed to the Partnership by any Partner, including any interest in
any successor partnership occurring as a result of a termination of the
Partnership pursuant to Section 708 of Code.

 

“Cost of Assets” means, with respect to a Real Estate Asset, the purchase price,
Acquisition Expenses, capital expenditures and other customarily capitalized
costs, but shall exclude Acquisition Fees associated with such Real Estate
Asset.

 

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

 

“Deemed Partnership Interest Value” means, as of any date with respect to any
class of Partnership Interests, the Deemed Value of the Partnership Interests of
such class multiplied by the Partner’s relative Percentage Interest of such
class.

 

“Deemed Value of the Partnership Interests” means, as of any date with respect
to any class or series of

 

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Partnership Interests, (i) the total number of OP Units of the General Partner
issued and outstanding as of the close of business on such date multiplied by
the Fair Market Value determined as of such date of a share of common stock of
the General Partner which corresponds to such Partnership Interest, as adjusted
(x) pursuant to Section 7.5 (in the event the General Partner acquires material
assets, other than on behalf of the Partnership) and (y) for stock dividends and
distributions, stock splits and subdivisions, reverse stock splits and
combinations, distribution of warrants or options and distributions of evidences
of indebtedness or assets not received by the General Partner pursuant to a pro
rata distribution by the Partnership; (ii) divided by the Percentage Interest of
the General Partner on such date; provided, that if no outstanding shares of
capital stock of the General Partner correspond to a class or series of
Partnership Interests, the Deemed Value of the Partnership Interests with
respect to such class or series shall be equal to an amount reasonably
determined by the General Partner.

 

“Depreciation” means, with respect to any asset of the Partnership for any
fiscal year or other period, the depreciation, depletion, amortization or other
cost recovery deduction, as the case may be, allowed or allowable for federal
income tax purposes in respect of such asset for such fiscal year or other
period; provided, however, that except as otherwise provided in Section 1.704-2
of the Regulations, if there is a difference between the Gross Asset Value and
the adjusted tax basis of such asset at the beginning of such fiscal year or
other period, Depreciation for such asset shall be an amount that bears the same
ratio to the beginning Gross Asset Value of such asset as the federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
fiscal year or other period bears to the beginning adjusted tax basis of such
asset; provided further, however, that if the federal income tax depreciation,
depletion, amortization or other cost recovery deduction for such asset for such
fiscal year or other period is zero, Depreciation of such asset shall be
determined with reference to the beginning Gross Asset Value of such asset using
any reasonable method selected by the General Partner.

 

“Disposition Fees” means the fee payable to the Advisor for services provided in
connection with the Sale of one or more Properties pursuant to the Advisory
Agreement.

 

“Distributions” means any dividends or other distributions of money or other
property paid by the General Partner to Stockholders, including distributions
that may constitute a return of capital for U.S. federal income tax purposes.

 

“Effective Date” shall have the meaning set forth in the introduction.

 

“Entity” means any general partnership, limited partnership, corporation, joint
venture, trust, business trust, real estate investment trust, limited liability
company, limited liability partnership, cooperative or association.

 

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

 

“Excess Cash” means the amount of cash available for Distribution after the
General Partner establishes any working capital reserves or other reserves it
deems necessary for the Partnership (but excluding Net Sales Proceeds) and after
the full payment of (a) all accumulated, accrued and unpaid Distributions on the
Class K OP Units, Class K-I OP Units and Class K-T OP Units, (b) the full asset
management fees payable to the Advisor pursuant to the Advisory Agreement,
including any deferred amounts and any interest accrued thereon, and (c) all
accumulated, accrued and unpaid distributions with respect to Class A OP Units.
The General Partner shall determine annually, other than upon a liquidation, the
amount, if any, of Excess Cash and shall authorize Distribution payments of any
Excess Cash on an annual basis.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder and any successor statute thereto.

 

“Fair Market Value” means, with respect to any share of capital stock of the
General Partner, (i) if such shares are

 

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listed or admitted to trading on any securities exchange or automated quotation
system, the average of the daily market price for the ten (10) consecutive
trading days immediately preceding the date with respect to which “Fair Market
Value” must be determined hereunder or, if such date is not a Business Day, the
immediately preceding Business Day, using as the market price for each such
trading day the closing price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices on such
day, or (ii) if such shares are not listed or admitted to trading on any
securities exchange or automated quotation system, the price at which such
shares are then being offered to the public pursuant to any public offering of
the General Partner minus the maximum selling commissions and dealer manager fee
allowed in the Offering or pursuant to its distribution reinvestment plan
(before giving effect to any discounts in effect and made available to
participants in such plan); provided that, if there is no ongoing public
offering or if the General Partner is not then offering its shares pursuant to a
distribution reinvestment plan, the Fair Market Value of such shares shall be
determined by the General Partner acting in good faith on the basis of the most
recent, publicly reported net asset value of the General Partner and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount for such shares includes rights that a holder of
such shares would be entitled to receive, then the Fair Market Value of such
rights shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate; and provided, further that, in connection with
determining the Deemed Value of the Partnership Interests for purposes of
determining the number of additional OP Units issuable upon a Capital
Contribution funded by an underwritten public offering of shares of capital
stock of the General Partner, the Fair Market Value of such shares shall be the
public offering price per share of such class of capital stock sold.
Notwithstanding the foregoing, the General Partner in its reasonable discretion
may use a different “Fair Market Value” for purposes of making the
determinations under subparagraph (b) of the definition of “Gross Asset Value”
and in connection with the contribution of Property or cash to the Partnership
by a third party, provided such value shall be based upon the value per REIT
Share (or per OP Unit) agreed upon by the General Partner and such third party
for purposes of such contribution.

 

“General Partner” shall have the meaning set forth in the introduction.

 

“General Partner Interest” means a Partnership Interest held by the General
Partner. A General Partner Interest may be expressed as a number of OP Units.

 

“General Partner’s Prospectus” means any prospectus, supplement, or other
communication satisfying the standards set forth in Section 10 of the Securities
Act, and contained in a currently effective registration statement filed by the
General Partner with, and declared effective by, the U.S. Securities and
Exchange Commission, or if no registration statement is currently effective,
then the prospectus (and any supplement or supplements thereto) contained in the
most recently effective registration statement.

 

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

 

(a) the initial Gross Asset Value of any asset contributed by a Partner to the
Partnership shall be the gross fair market value of such asset, without
reduction for liabilities, as determined by the contributing Partner and the
Partnership on the date of contribution thereof;

 

(b) if the General Partner determines that an adjustment is necessary or
appropriate to reflect the relative economic interests of the Partners, the
Gross Asset Values of all Partnership assets shall be adjusted in accordance
with Sections 1.704-1(b)(2)(iv)(f) and (g) of the Regulations to equal their
respective gross fair market values, without reduction for liabilities, as
reasonably determined by the General Partner, as of the following times:

 

(i) a Capital Contribution (other than a de minimis Capital Contribution) to the
Partnership by a new or

 

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existing Partner as consideration for a Partnership Interest;

 

(ii) the distribution by the Partnership to a Partner of more than a de minimis
amount of Partnership assets as consideration for the repurchase or redemption
of a Partnership Interest;

 

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

 

(iv) the grant of an interest in the Partnership (other than a de minimis
interest) as consideration for the provision of services to or for the benefit
of the Partnership by an existing Partner acting in a partner capacity, or by a
new Partner acting in a partner capacity or in anticipation of becoming a
Partner;

 

(c) the Gross Asset Values of Partnership assets distributed to any Partner
shall be the gross fair market values of such assets without reduction for
liabilities, as determined by the General Partner as of the date of
distribution; and

 

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

 

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

 

“Gross Proceeds” means the aggregate purchase price of all shares of Common
Stock sold for the account of the General Partner through an Offering, without
deduction for Organization and Offering Expenses. For the purpose of computing
Gross Proceeds, the purchase price of any share of Common Stock for which
selling commissions or dealer manager fees are reduced from the standard selling
commission and dealer manager fees, each as provided in the Registration
Statement, and are paid to (i) SC Distributors, LLC or any successor dealer
manager to the General Partner or (ii) a broker-dealer (where net proceeds to
the General Partner are not reduced (for example, as described in the
Registration Statement under “Plan of Distribution - Special Discounts” and
“Plan of Distribution - Volume Discounts”)), shall be deemed to be the full
amount of the offering price per share of Common Stock pursuant to the
Registration Statement for such Offering without reduction.

 

“Immediate Family Member” means, with respect to any natural Person, such
natural Person’s estate or heirs or current spouse or former spouse, parents,
parents-in-law, children (whether natural, adopted or by marriage), siblings and
grandchildren and any trust or estate, all of the beneficiaries of which consist
of such Person or such Person’s spouse or former spouse, parents,
parents-in-law, children, siblings or grandchildren.

 

“Incapacity” or “Incapacitated” means, (i) as to any individual Partner, death,
total physical disability or entry by a court of competent jurisdiction
adjudicating him or her incompetent to manage his or her Person or his or her
estate; (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate’s
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner

 

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shall be deemed to have occurred when (a) the Partner commences a voluntary
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the
Partner is adjudged as bankrupt or insolvent, or a final and nonappealable order
for relief under any bankruptcy, insolvency or similar law now or hereafter in
effect has been entered against the Partner, (c) the Partner executes and
delivers a general assignment for the benefit of the Partner’s creditors, (d)
the Partner files an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against the Partner in any
proceeding of the nature described in clause (b) above, (e) the Partner seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator for the Partner or for all or any substantial part of the Partner’s
properties, (f) any proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect has not been dismissed within 120 days after the commencement thereof,
(g) the appointment without the Partner’s consent or acquiescence of a trustee,
receiver or liquidator has not been vacated or stayed within 90 days of such
appointment, or (h) an appointment referred to in clause (g) is not vacated
within 90 days after the expiration of any such stay.

 

“Included Assets” has the meaning set forth in Section 5.1(D)(2)(a).

 

“Indemnitee” means (i) any Person subject to a claim or demand or made or
threatened to be made a party to, or involved or threatened to be involved in,
an action, suit or proceeding by reason of his or her status as (A) the General
Partner or (B) a director, officer or employee of the Partnership or the General
Partner, and (ii) such other Persons (including Affiliates of the General
Partner or the Partnership) as the General Partner may designate from time to
time (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.

 

“Independent Appraiser” means a person with no material current or prior
business or personal relationship with the General Partner (or its directors)
and who is a qualified appraiser of real property of the type held by the
Partnership or of other assets as determined by the General Partner. Membership
in a nationally recognized appraisal society such as the American Institute of
Real Estate Appraisers or the Society of Real Estate Appraisers shall be
conclusive evidence of such qualification as to real property.

 

“Independent Director” shall have the meaning set forth in the Charter.

 

“Investments” means investments made by the Partnership, directly or indirectly,
in a Property, Loan or Other Permitted Investment Asset.

 

“IRS” means the U.S. Internal Revenue Service.

 

“Limited Partner” means any Person named as a Limited Partner in Exhibit A
attached hereto, as such Exhibit may be amended from time to time, or any
Substituted Limited Partner or Additional Limited Partner, in such Person’s
capacity as a Limited Partner in the Partnership.

 

“Limited Partner Interest” means a Partnership Interest of a Limited Partner
representing a fractional part of the Partnership Interests of all Limited
Partners and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Limited Partner Interest may be expressed as a number of OP
Units.

 

“Liquidating Event” shall have the meaning set forth in Section 13.1.

 

“Liquidating Gain” means net capital gain realized in connection with an actual
or hypothetical Capital Transaction, including the amount of any adjustment of
the Gross Asset Value of any Real Estate Asset which requires that the Capital
Accounts of the Partners be adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e),
(f) and (g) of the Regulations.

 

10 

 

 

“Liquidator” shall have the meaning set forth in Section 13.2A.

 

“Liquidity Event” means the first to occur of the following: (i) an OP Unit
Transaction, (ii) a Listing, or (iii) a Termination Without Cause.

 

“Listing” means the listing of the shares of Common Stock on a national
securities exchange.

 

“Loans” means notes and other evidences of indebtedness or obligations acquired,
originated or entered into, directly or indirectly, by the Partnership as
lender, noteholder, participant, note purchaser or other capacity, including but
not limited to first or subordinate mortgage loans, construction loans,
development loans, loan participations, loans secured by capital stock or any
other assets or form of equity interest and any other type of loan or financial
arrangement, such as providing or arranging for letters of credit, providing
guarantees of obligations to third parties, or providing commitments for loans.
Loans shall not include leases which are not recognized as leases for federal
income tax reporting purposes.

 

“Majority in Interest of the Limited Partners” means Limited Partners holding in
the aggregate Percentage Interests that are greater than fifty percent (50%) of
the aggregate Percentage Interests of all Limited Partners.

 

“Mortgage” means, in connection with mortgage financing provided, invested in or
purchased by the General Partner, all of the notes, deeds of trust, security
interests or other evidences of indebtedness or obligations, which are secured
or collateralized by Real Property owned by the borrowers under such notes,
deeds of trust, security interests or other evidences of indebtedness or
obligations.

 

“Net Income” or “ Net Loss” means, for each fiscal year or other applicable
period, an amount equal to the Partnership’s taxable income or loss for such
year or period as determined for federal income tax purposes by the General
Partner, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), adjusted as follows:

 

(a) by including as an item of gross income any tax-exempt income received by
the Partnership and not otherwise taken into account in computing Net Income or
Net Loss;

 

(b) by treating as a deductible expense any expenditure of the Partnership
described in Section 705(a)(2)(B) of the Code (or which is treated as a Section
705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the
Regulations) and not otherwise taken into account in computing Net Income or Net
Loss;

 

(c) by taking into account Depreciation in lieu of depreciation, depletion,
amortization and other cost recovery deductions taken into account in computing
taxable income or loss;

 

(d) by computing gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal income tax
purposes by reference to the Gross Asset Value of such property rather than its
adjusted tax basis;

 

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

 

(f) to the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) or

 

11 

 

 

Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Partner’s interest,
the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset) from the disposition of the asset and shall be
taken into account for purposes of computing Net Income or Net Loss; and

 

(g) by not taking into account in computing Net Income or Net Loss items
separately allocated to the Partners pursuant to paragraphs 2 and 3 of Exhibit
B.

 

“Net Sales Proceeds” means, in the case of a transaction described in clause (A)
of the definition of Sale, the proceeds of any such transaction less the amount
of selling expenses incurred by or on behalf of the General Partner or the
Partnership, including all Disposition Fees, closing costs and legal fees and
expenses. In the case of a transaction described in clause (B) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of selling expenses incurred by or on behalf of the General Partner
or the Partnership, including any legal fees and expenses and other selling
expenses incurred in connection with such transaction. In the case of a
transaction described in clause (C) of such definition, Net Sales Proceeds means
the proceeds of any such transaction actually distributed to the General Partner
or the Partnership from the joint venture less the amount of any selling
expenses, including legal fees and expenses incurred by or on behalf of the
General Partner or the Partnership (other than those paid by the joint venture).
In the case of a transaction or series of transactions described in clause (D)
of the definition of Sale, Net Sales Proceeds means the proceeds of any such
transaction (including the aggregate of all payments under a Mortgage or in
satisfaction thereof other than regularly scheduled interest payments) less the
amount of selling expenses incurred by or on behalf of the General Partner or
the Partnership, including all commissions, closing costs and legal fees and
expenses. In the case of a transaction described in clause (E) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of selling expenses incurred by or on behalf of the General Partner
or the Partnership, including any legal fees and expenses and other selling
expenses incurred in connection with such transaction. In the case of a
transaction described in the last sentence of the definition of Sale, Net Sales
Proceeds means the proceeds of such transaction or series of transactions less
all amounts generated thereby which are reinvested in one or more Assets within
180 days thereafter and less the amount of any Disposition Fees, closing costs,
and legal fees and expenses and other selling expenses incurred by or allocated
to the General Partner or the Partnership in connection with such transaction or
series of transactions. Net Sales Proceeds shall also include any consideration
(including non-cash consideration such as stock, notes, or other property or
securities) that the General Partner determines, in its discretion, to be
economically equivalent to the proceeds of a Sale, valued in the reasonable
determination of the General Partner. Net Sales Proceeds shall not include any
reserves established by the General Partner in its sole discretion.

 

“New Securities” means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase REIT
Shares or other shares of common stock of the General Partner, or (ii) any Debt
issued by the General Partner that provides any of the rights described in
clause (i).

 

“Non-Cause Advisory Agreement Termination” means the non-renewal of the Advisory
Agreement or the termination of the Advisory Agreement without Cause (as defined
in the Advisory Agreement).

 

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

 

“Nonrecourse Liability” shall have the meaning set forth in Regulations Section
1.704-2(b)(3).

 

“Notice of Redemption” means the Notice of Redemption substantially in the form
of Exhibit C to this Agreement.

 

12 

 

 

“Offering” means the public offering of shares of Common Stock pursuant to the
Registration Statement on Form S-11.

 

“OP Unit” means a Partnership Unit which is designated as an OP Unit of the
Partnership.

 

“Other Permitted Investment Asset” means assets, other than cash, cash
equivalents, short term bonds, auction rate securities and similar short term
investments, acquired by the Partnership for investment purposes that is not a
Loan or a Property and is consistent with the investment objectives and policies
of the Partnership.

 

“Partner” means a General Partner or a Limited Partner, and “Partners” means the
General Partner and the Limited Partners.

 

“Partner Nonrecourse Debt” has the meaning set forth in Section 1.704-2(b)(4) of
the Regulations.

 

“Partner Nonrecourse Debt Minimum Gain” means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Regulations.

 

“Partner Nonrecourse Deductions” has the meaning set forth in Sections
1.704-2(i)(1) and (2) of the Regulations, and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable
year shall be determined in accordance with the rules of Section 1.704-2(i)(2)
of the Regulations.

 

“Partnership” shall have the meaning set forth in the introduction.

 

“Partnership Interest” means an ownership interest in the Partnership of a
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement.

 

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

 

“Partnership Record Date” means the record date established by the General
Partner for the distribution of Available Cash pursuant to Section 5.1 which
record date shall be the same as the record date established by the General
Partner for a distribution to its stockholders of some or all of its portion of
such distribution.

 

“Partnership Unit” means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder. Partnership Units consist of OP
Units and any classes or series of Partnership Units established after the date
hereof. The number of Partnership Units outstanding and the Percentage Interests
in the Partnership represented by such Partnership Units are set forth in
Exhibit A, as such Exhibit may be amended from time to time.

 

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

 

“Percentage Interest” means, as to a Partner, the fractional part of the
Partnership Interests owned by such Partner and expressed as a percentage as
specified in Exhibit A, as such Exhibit may be amended and adjusted from time to
time by the General Partner, or, if used in the context of a particular class or
series of Partnership Units, the fractional part of the Partnership Units owned
by such Partner expressed as a percentage.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, unincorporated

 

13 

 

 

organization, association or other entity.

 

“Plan Asset Regulation” means the regulations promulgated by the United States
Department of Labor in Title 29, Code of Federal Regulations, Part 2510, Section
101.3, and any successor regulations thereto.

 

“Pledge” shall have the meaning set forth in Section 11.3A.

 

“Precontribution Gain” has the meaning set forth in subparagraph 4(c) of Exhibit
B.

 

“Procaccianti LP” shall have the meaning set forth in the introduction.

 

“Property” or “Properties” means a partial or entire interest in real property
(including leasehold interests) and personal or mixed property connected
therewith. An Investment which obligates the Partnership to acquire a Property
will be treated as a Property for purposes of this Agreement.

 

“PTP Safe Harbor” has the meaning provided in Section 11.6F.

 

“Qualifying Party” means (a) an Additional Limited Partner; (b) an Immediate
Family Member, or a lending institution as the pledgee of a Pledge, who is the
transferee in a permitted transfer pursuant to Section 11.3; or (c) a
Substituted Limited Partner succeeding to all or part of the Limited Partner
Interest of (i) an Additional Limited Partner or (ii) an Immediate Family
Member, or a lending institution who is the pledgee of a Pledge, who is the
transferee in a permitted transfer pursuant to Section 11.3.

 

“Qualified REIT Subsidiary” means any Subsidiary of the General Partner that is
a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code.

 

“Qualified Transferee” means an “Accredited Investor” as such term is defined in
Rule 501 promulgated under the Securities Act.

 

“Real Estate Assets” means any investment by the Partnership in unimproved and
improved Real Property (including fee or leasehold interests, options and
leases), directly, through one or more subsidiaries or through a joint venture.

 

“Real Property” means (i) land, (ii) rights in land (including leasehold
interests), and (iii) any buildings, structures, improvements, furnishings,
fixtures and equipment located on or used in connection with land and rights or
interests in land.

 

“Redemption” shall have the meaning set forth in Section 8.6A.

 

“Registration Statement” means the Registration Statement on Form S-11 filed by
the General Partner with the Securities and Exchange Commission, and any
amendments thereof at any time made, relating to the Common Stock.

 

“Regulations” means the Treasury Regulations promulgated under the Code, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).

 

“Regulatory Allocations” means the allocations set forth in paragraph 2 of
Exhibit B

 

“Remaining Liquidation Cash” means all cash remaining for distribution, as
determined by the General Partner in its sole discretion, after (a) payment in
full of, or the setting aside of reserves for, all of the Partnership’s debts
and

 

14 

 

 

liabilities, limited, in the case of Nonrecourse Liabilities secured by Real
Property, to the value of such Real Property, and excluding liabilities for the
payment of deferred Asset Management Fees, Acquisition Fees and disposition fees
payable to the Advisor pursuant to the Advisory Agreement and any interest
accrued thereon; (b) payment in full of the Liquidation Preferences on all
outstanding Class K OP Units, Class K-I OP Units and Class K-T OP Units, (c)
payment of the full asset management fees payable to the Advisor pursuant to the
Advisory Agreement, including any deferred amounts and interest accrued thereon;
(d) payment of the full Acquisition Fees and disposition fees payable to the
Advisor, including any interest accrued thereon; (e) payment of all accrued
distributions on Class A OP Units pursuant to this Agreement; and (f) payment in
full of the stated value of all outstanding Class A OP Units.

 

“REIT” means a “real estate investment trust”, as defined under Sections 856
through 860 of the Code.

 

“REIT Requirements” shall have the meaning set forth in Section 5.1.

 

“REIT Share” means a share of Common Stock, including Class A REIT Shares, Class
B REIT Shares, Class K REIT Shares, Class K-I REIT Shares and Class K-T REIT
Shares.

 

“REIT Shares Amount” means, with respect to Tendered Units of a Class, as of any
date, an aggregate number of the corresponding Class of REIT Shares equal to the
number of Tendered Units of such Class, as adjusted (x) pursuant to Section 7.5
(in the event the General Partner acquires material assets, other than on behalf
of the Partnership) and (y) for stock dividends and distributions, stock splits
and subdivisions, reverse stock splits and combinations, distributions of
rights, warrants or options, and distributions of evidences of indebtedness or
assets relating to assets not received by the General Partner pursuant to a pro
rata distribution by the Partnership.

 

“Safe Harbor” has the meaning set forth in Section 10.2B.

 

“Safe Harbor Election” has the meaning set forth in Section 10.2B.

 

“Safe Harbor Interest” has the meaning set forth in Section 10.2B.

 

“Sale” or “Sales” means any transaction or series of transactions whereby: (A)
the General Partner or the Partnership directly or indirectly (except as
described in other subsections of this definition) sells, grants, transfers,
conveys, or relinquishes its ownership of any Property or portion thereof,
including the lease of any Property consisting of a building only, and including
any event with respect to any Property which gives rise to a significant amount
of insurance proceeds or condemnation awards; (B) the General Partner or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, transfers, conveys, or relinquishes its
ownership of all or substantially all of the interest of the General Partner or
the Partnership in any joint venture in which it is a co-venturer or partner;
(C) any joint venture directly or indirectly (except as described in other
subsections of this definition) in which the General Partner or the Partnership
as a co-venturer or partner sells, grants, transfers, conveys, or relinquishes
its ownership of any Property or portion thereof, including any event with
respect to any Property which gives rise to insurance claims or condemnation
awards; (D) the General Partner or the Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants,
conveys or relinquishes its interest in any Mortgage or portion thereof
(including with respect to any Mortgage, all repayments thereunder or in
satisfaction thereof other than regularly scheduled interest payments) and any
event with respect to a Mortgage which gives rise to a significant amount of
insurance proceeds or similar awards; or (E) the General Partner or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, transfers, conveys, or relinquishes its
ownership of any other Asset not previously described in this definition or any
portion thereof. Notwithstanding the foregoing, “Sale” or “Sales” shall not
include any transaction or series of transactions specified in clause (A)
through (E) above in which the proceeds of such transaction or series of
transactions are reinvested in one or more Assets within 180 days thereafter.

 

15 

 

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder and
any successor statute thereto.

 

“Special Affiliate” means, as to any Person, (i) any Person directly or
indirectly owning, controlling, or holding, with the power to vote, 10% or more
of the outstanding voting securities of such Person; (ii) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with power to vote, by such other Person; (iii) any Person,
directly or indirectly, controlling, controlled by, or under common control with
such Person; (iv) any executive officer, director, trustee or general partner of
such Person; and (v) any legal entity for which such Person acts as an executive
officer, director, trustee or general partner.

 

“Special Fees” means fees or expenses that are required or intended to be borne
entirely or disproportionately by one or more particular Classes of OP Units,
including but not limited to, selling commissions, dealer manager fees and
stockholder servicing fees.

 

“Specified Redemption Date” means the day of receipt by the General Partner of a
Notice of Redemption.

 

“Sponsor” shall have the meaning set forth in the Charter.

 

“Stockholder” means a holder of Common Stock.

 

“Stockholder Servicing Fee” means the stockholder servicing fees referred to in
the General Partner’s Prospectus.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, joint venture or other entity of which a majority of
(i) the voting power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.

 

“Subsidiary Partnership” means any partnership or limited liability company that
is a Subsidiary of the Partnership.

 

“Substituted Limited Partner” means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4.

 

“Tax Allocations” means the allocations set forth in paragraph 4 of Exhibit B.

 

“Tax Items” has the meaning set forth in subparagraph 4(a) of Exhibit B.

 

“Tenant” means any tenant from which the General Partner derives rent either
directly or indirectly through partnerships, including the Partnership, or
Qualified REIT Subsidiaries.

 

“Tendered Units” shall have the meaning set forth in Section 8.6A.

 

“Tendering Partner” shall have the meaning set forth in Section 8.6A.

 

“Termination” means the termination of the Advisory Agreement.

 

“Termination Date” means the date of Termination.

 

“Termination Without Cause” means the termination of the Advisory Agreement as
provided in the Advisory Agreement by the Independent Directors of the General
Partner without Cause (as defined in the Advisory Agreement).

 

16 

 

 

“Transaction” shall have the meaning set forth in Section 11.2C.

 

“Value” means the Offering price for a share of Common Stock of the relevant
class less any selling commissions and dealer manager fee that would be payable
with respect to the sale of a share of such Common Stock until such time as the
General Partner calculates its net asset value, in which case, such amount will
be the per share net asset value of such class.

 

Certain additional terms and phrases have the meanings set forth in Exhibit B.

 

ARTICLE 2

ORGANIZATIONAL MATTERS

 

Section 2.1 Organization.

 

The Partnership is a limited partnership formed pursuant to the provisions of
the Act and upon the terms and conditions set forth in this Agreement. Except as
expressly provided herein, the rights and obligations of the Partners and the
administration and termination of the Partnership shall be governed by the Act.
The Partnership Interest of each Partner shall be personal property for all
purposes.

 

Section 2.2 Name.

 

The name of the Partnership is Procaccianti Hotel REIT, L.P. The Partnership’s
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or
letters shall be included in the Partnership’s name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.

  

Section 2.3 Registered Office and Agent; Principal Office.

 

The name and address of the registered office and registered agent of the
Partnership is [•]. The principal office of the Partnership is located at 1140
Reservoir Avenue, Cranston, Rhode Island 02920-6320, or such other place as the
General Partner may from time to time designate by notice to the other Partners.
The Partnership may maintain offices at such other place or places within or
ou1140 Reservoir Avenue, Cranston, Rhode Island 02920-6320tamtside the State of
Delaware as the General Partner deems advisable.

 

Section 2.4 Power of Attorney.

 

A. Each Limited Partner and each Assignee constitutes and appoints the General
Partner, any Liquidator, and authorized officers and attorneys-in-fact of each,
and each of those acting singly, in each case with full power of substitution,
as its true and lawful agent and attorney-in-fact, with full power and authority
in its name, place and stead to:

 

(1) execute, swear to, acknowledge, deliver, file and record in the appropriate
public offices (a) all certificates, documents and other instruments (including,
without limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the Liquidator deems
appropriate or necessary to form,

 

17 

 

 

qualify or continue the existence or qualification of the Partnership as a
limited partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (b) all instruments that the
General Partner or any Liquidator deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in accordance
with its terms; (c) all conveyances and other instruments or documents that the
General Partner or any Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate of cancellation; (d) all
instruments relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to, or other events described in, Articles 11, 12 or 13 or
the Capital Contribution of any Partner; and (e) all certificates, documents and
other instruments relating to the determination of the rights, preferences and
privileges of Partnership Interests; and

 

(2) execute, swear to, acknowledge and file all ballots, consents, approvals,
waivers, certificates and other instruments appropriate or necessary, in the
sole and absolute discretion of the General Partner or any Liquidator, to make,
evidence, give, confirm or ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners hereunder or is consistent
with the terms of this Agreement or appropriate or necessary, in the sole
discretion of the General Partner or any Liquidator, to effectuate the terms or
intent of this Agreement. Nothing contained herein shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement except
in accordance with Article 14 or as may be otherwise expressly provided for in
this Agreement.

 

B. The foregoing power of attorney is hereby declared to be irrevocable and a
power coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this Agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner’s or Assignee’s OP Units
and shall extend to such Limited Partner’s or Assignee’s heirs, successors,
assigns and personal representatives. Each such Limited Partner or Assignee
hereby agrees to be bound by any representation made by the General Partner or
any Liquidator, acting in good faith pursuant to such power of attorney; and
each such Limited Partner or Assignee hereby waives any and all defenses which
may be available to contest, negate or disaffirm the action of the General
Partner or any Liquidator, taken in good faith under such power of attorney.
Each Limited Partner or Assignee shall execute and deliver to the General
Partner or any Liquidator, within 15 days after receipt of the General Partner’s
or Liquidator’s request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case may
be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.

 

Section 2.5 Term.

 

The term of the Partnership commenced on the date of its formation and the
Partnership shall have a perpetual existence unless it is dissolved pursuant to
the provisions of Article 13 or as otherwise provided by law.

 

ARTICLE 3

PURPOSE

 

Section 3.1 Purpose and Business.

 

The purpose and nature of the business to be conducted by the Partnership is to
(i) conduct any business that may be lawfully conducted by a limited partnership
organized pursuant to the Act, (ii) enter into any partnership, joint venture

 

18 

 

 

or other similar arrangement to engage in any business described in the
foregoing clause (i) or to own interests in any entity engaged, directly or
indirectly, in any such business and (iii) do anything necessary or incidental
to the foregoing, provided, however, that such business shall be limited to and
conducted in such a manner as to permit the General Partner at all times to be
classified as a REIT for U.S. federal income tax purposes unless the General
Partner, in its sole and absolute discretion, has chosen to cease to qualify as
a REIT or has chosen not to attempt to qualify as a REIT for any reason or
reasons whether or not related to the business conducted by the Partnership. In
connection with the foregoing, and without limiting the General Partner’s right
in its sole discretion to cease qualifying as a REIT, the Limited Partners
acknowledge that the General Partner’s current status as a REIT inures to the
benefit of all the Limited Partners and not solely the General Partner.

 

Section 3.2 Powers.

 

The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, including, without limitation, full
power and authority, directly or through its ownership interest in other
entities, to enter into, perform and carry out contracts of any kind, borrow
money and issue evidences of indebtedness, whether or not secured by mortgage,
deed of trust, pledge or other lien, grant guarantees and/or indemnities,
acquire, own, manage, improve and develop real property, and lease, sell,
transfer and dispose of real property; provided, however, notwithstanding
anything to the contrary in this Agreement, the Partnership shall not take, or
refrain from taking, any action which, in the judgment of the General Partner,
in its sole and absolute discretion, (i) could adversely affect the ability of
the General Partner to continue to qualify as a REIT (unless the General Partner
has determined in its sole discretion not to continue to so qualify), (ii)
absent the consent of the General Partner, which may be given or withheld in its
sole and absolute discretion, could subject the General Partner to any taxes
under Section 857 or Section 4981 of the Code, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner or its securities, unless any such action (or inaction) under
the foregoing clauses (i), (ii) or (iii) shall have been specifically consented
to by the General Partner in writing.

 

Section 3.3 Partnership only for Purposes Specified.

 

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

 

Section 3.4 Representations and Warranties by the Parties.

 

A. Each Partner that is an individual represents and warrants to each other
Partner that (i) such Partner has the legal capacity to enter into this
Agreement and perform such Partner’s obligations hereunder, (ii) the
consummation of the transactions contemplated by this Agreement to be performed
by such Partner will not result in a breach or violation of, or a default under,
any agreement by which such Partner or any of such Partner’s property is or are
bound, or any statute,

 

19 

 

 

regulation, order or other law to which such Partner is subject, (iii) such
Partner is a “United States person” within the meaning of Section 7701(a)(30) of
the Code, and (iv) this Agreement is binding upon, and enforceable against, such
Partner in accordance with its terms.

 

B. Each Partner that is not an individual represents and warrants to each other
Partner that (i) its execution and delivery of this Agreement and all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
stockholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its certificate of limited partnership, partnership agreement, trust agreement,
limited liability company operating agreement, charter or bylaws, as the case
may be, any agreement by which such Partner or any of such Partner’s properties
or any of its partners, beneficiaries, trustees or stockholders, as the case may
be, is or are bound, or any statute, regulation, order or other law to which
such Partner or any of such Partner’s properties or any of its partners,
trustees, beneficiaries or stockholders, as the case may be, is or are subject,
(iii) such Partner is a “United States person” within the meaning of Section
7701(a)(30) of the Code and (iv) this Agreement is binding upon, and enforceable
against, such Partner in accordance with its terms.

 

C. Each Partner represents, warrants, and agrees that it has acquired and
continues to hold its interest in the Partnership for its own account for
investment only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment. Each Partner
represents, warrants and agrees that such Partner is an “accredited investor”
(as such term is defined in Rule 501(a) of Regulation D under the Securities
Act).

 

D. Each Partner acknowledges that (i) the OP Units (and any REIT Shares that
might be exchanged therefor) have not been registered under the Securities Act
and may not be transferred unless they are subsequently registered under the
Securities Act or an exemption from such registration is available (it being
understood that the Partnership has no intention of so registering the OP
Units), (ii) a restrictive legend in the form set forth in Exhibit D shall be
placed on the certificates representing the OP Units, and (iii) a notation shall
be made in the appropriate records of the Partnership indicating that the OP
Units are subject to restrictions on transfer.

 

E. Each Limited Partner further represents, warrants, covenants and agrees as
follows:

 

(1) at any time such Partner actually or Constructively Owns a 25% or greater
capital interest or profits interest in the Partnership, it does not and will
not, without the prior written consent of the General Partner, actually own or
Constructively Own (a) with respect to any Tenant that is a corporation, any
stock of such Tenant, and (b) with respect to any Tenant that is not a
corporation, any interests in either the assets or net profits of such Tenant.

 

(2) at any time such Partner actually or Constructively Owns a 25% or greater
capital interest or profits interest in the Partnership, it does not, and agrees
that it will not without the prior written consent of the General Partner,
actually own or Constructively Own, any stock in the General Partner, other than
any REIT Shares or other shares of capital stock of the General Partner such
Partner may acquire as a result of an exchange of Tendered Units pursuant to
Section 8.6, subject to the ownership limitations set forth in the General
Partner’s Charter.

 

(3) Upon request of the General Partner, it will disclose to the General Partner
the amount of REIT Shares or other shares of capital stock of the General
Partner that it actually owns or Constructively Owns.

 

20 

 

 

(4) It understands that if, for any reason, (a) the representations, warranties
or agreements set forth in E(1) or (2) above are violated, or (b) the
Partnership’s actual or Constructive Ownership of REIT Shares or other shares of
capital stock of the General Partner violates the limitations set forth in the
Charter, then (x) some or all of the Redemption rights of the Partners may
become non-exercisable, and (y) some or all of the REIT Shares owned by the
Partners may be automatically transferred to a trust for the benefit of a
charitable beneficiary, as provided in the Charter.

 

(5) Without the consent of the General Partner, which may be given or withheld
in its sole discretion, no Partner shall take any action that would cause the
Partnership at any time to have more than 100 partners, as determined for
purposes of the safe harbor set forth in Regulations Section 1.7704-1(h)
(including as partners those persons indirectly owning an interest in the
Partnership through a partnership, limited liability company, S corporation or
grantor trust (such entity, a “flow through entity”), but only if substantially
all of the value of such person’s interest in the flow through entity is
attributable to the flow through entity’s interest (direct or indirect) in the
Partnership).

 

F. The representations and warranties contained in Section 3.4 shall survive the
execution and delivery of this Agreement by each Partner and the dissolution and
winding-up of the Partnership.

 

G. Each Partner hereby acknowledges that no representations as to potential
profit, cash flows, funds from operations or yield, if any, in respect of the
Partnership or the General Partner have been made by any Partner or any employee
or representative or Affiliate of any Partner, and that projections and any
other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.

 

Section 3.5 Certain ERISA Matters.

 

Each Partner acknowledges that the Partnership is intended to qualify as a “real
estate operating company” (as such term is defined in the Plan Asset
Regulation). The General Partner may structure investments in, relationships
with and conduct with respect to Investments and any other assets of the
Partnership so that the Partnership will be a “real estate operating company”
(as such term is defined in the Plan Asset Regulation).

 

ARTICLE 4

CAPITAL CONTRIBUTIONS

 

Section 4.1 Capital Contributions of the Partners.

 

At the time of their respective execution of this Agreement, the Partners shall
make or shall have made Capital Contributions as set forth in the books and
records of the Partnership. The Partners shall own OP Units of the class or
series and in the amounts set forth in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately exchanges, redemptions, Capital
Contributions, the issuance of additional OP Units or similar events having an
effect on a Partner’s Percentage Interest. Except as required by law, as
otherwise expressly provided herein, or as otherwise agreed to by a Partner and
the Partnership, no Partner shall be required or permitted to make any
additional Capital Contributions or loans to the Partnership.

 

Section 4.2 Classes of Partnership Units.

 

21 

 

 

The General Partner is hereby authorized to cause the Partnership to issue OP
Units designated as Class A OP Units, Class B OP Units, Class K OP Units, Class
K-I OP Units and Class K-T OP Units. Each such Class of OP Units shall have the
rights and obligations attributed to that Class under this Agreement.

 

Section 4.3 Loans by Third Parties.

 

Subject to Section 4.4, the Partnership may incur Debt, or enter into other
similar credit, guarantee, financing or refinancing arrangements for any purpose
(including, without limitation, in connection with any further acquisition of
Investments) with any Person that is not the General Partner upon such terms as
the General Partner determines appropriate; provided that, the Partnership shall
not incur any Debt that is recourse to the General Partner, except to the extent
otherwise agreed to by the General Partner in its sole discretion.

 

Section 4.4 Additional Funding and Capital Contributions.

 

A. General. The General Partner may, at any time and from time to time determine
that the Partnership requires additional funds (“Additional Funds”) for the
acquisition of additional Investments or for such other Partnership purposes as
the General Partner may determine. Additional Funds may be raised by the
Partnership, at the election of the General Partner, in any manner provided in,
and in accordance with, the terms of this Section 4.4. No Person shall have any
preemptive, preferential or similar right or rights to subscribe for or acquire
any Partnership Interest, except as set forth in this Section 4.4.

 

B. Issuance of Additional Partnership Interests. The General Partner, in its
sole and absolute discretion, may raise all or any portion of the Additional
Funds by causing the Partnership to accept additional Capital Contributions of
cash. The General Partner may also cause the Partnership to accept additional
Capital Contributions of real property or any other non-cash assets. In
connection with any such additional Capital Contributions (of cash or property)
or events, the General Partner is hereby authorized to cause the Partnership
from time to time to issue to Partners (including the General Partner) or other
Persons (including, without limitation, in connection with the contribution of
property to the Partnership) additional OP Units or other Partnership Interests
in one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers, and duties, including rights, powers, and duties senior to then
existing Limited Partner Interests, all as shall be determined by the General
Partner in its sole and absolute discretion subject to Delaware law, and as set
forth by amendment to this Agreement, including without limitation: (i) the
allocations of items of Partnership income, gain, loss, deduction, and credit to
such class or series of Partnership Interests; (ii) the right of each such class
or series of Partnership Interests to share in Partnership distributions; (iii)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; and (iv) the right to vote,
including, without limitation, the Limited Partner approval rights set forth
herein; provided, that no such additional OP Units or other Partnership
Interests shall be issued to the General Partner unless either (a)(1) the
additional Partnership Interests are issued in connection with the grant, award,
or issuance of shares of the General Partner pursuant to Section 4.4C below,
which shares have designations, preferences, and other rights (except voting
rights) such that the economic interests attributable to such shares are
substantially similar to the designations, preferences and other rights of the
additional Partnership Interests issued to the General Partner in accordance
with this Section 4.4B, and (2) the General Partner shall make a Capital
Contribution to the Partnership in an amount equal to the net proceeds raised in
connection with such issuance, (b) the General Partner otherwise makes an
additional Capital Contribution, or (c) the additional Partnership Interests are
issued to all Partners holding Partnership Interests in the same class in
proportion to their respective Percentage Interests in such class. The General
Partner’s determination that consideration is adequate shall be conclusive
insofar as the adequacy of consideration relates to whether the Partnership
Interests are validly issued and paid. In the event that the Partnership issues
additional Partnership Interests pursuant to

 

22 

 

 

this Section 4.4B, the General Partner shall make such revisions to this
Agreement as it determines are necessary to reflect the issuance of such
additional Partnership Interests. Without limiting the foregoing, the General
Partner is expressly authorized to cause the Partnership to issue OP Units for
less than fair market value, so long as the General Partner concludes in good
faith that such issuance of Partnership Interests is in the best interests of
the Partnership.

 

C. Issuance of REIT Shares or Other Securities by the General Partner. The
General Partner shall not issue any additional REIT Shares, other shares of
capital stock of the General Partner or New Securities (other than REIT Shares
issued pursuant to Section 8.6 or such shares, stock or securities pursuant to a
dividend or distribution (including any stock split) to all of its stockholders
or all of its stockholders who hold a particular class of stock of the General
Partner) unless (i) the General Partner shall cause the Partnership to issue to
the General Partner (in compliance with the requirements of Section 4.4B),
Partnership Interests or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights, all such that the economic interests thereof are substantially
similar to those of the REIT Shares, other shares of capital stock of the
General Partner or New Securities issued by the General Partner and (ii) the
General Partner shall make a Capital Contribution of the net proceeds from the
issuance of such additional REIT Shares, other shares of capital stock or New
Securities, as the case may be, and from the exercise of the rights contained in
such additional New Securities, as the case may be. Without limiting the
foregoing, the General Partner is expressly authorized to issue REIT Shares of
any Class (or combination of any Class), other shares of capital stock of the
General Partner or New Securities for no tangible value or for less than fair
market value, and the General Partner is expressly authorized to cause the
Partnership to issue to the General Partner Partnership Interests of the
corresponding Class, so long as (x) the General Partner concludes in good faith
that such issuance of Partnership Interests is in the interests of the
Partnership; and (y) the General Partner contributes all proceeds, if any, from
such issuance to the Partnership. In connection with the General Partner’s
initial offering of REIT Shares, any other issuance of REIT Shares, other
capital stock of the General Partner or New Securities, the General Partner
shall contribute to the Partnership any net proceeds raised in connection with
such issuance; provided, that the General Partner may use a portion of the net
proceeds from any offering to acquire OP Units or other assets (provided such
other assets are contributed to the Partnership pursuant to the terms of this
Agreement; and provided further that if the net proceeds actually received by
the General Partner are less than the gross proceeds of such issuance as a
result of any underwriter’s discount or other expenses paid or incurred in
connection with such issuance then, except to the extent such net proceeds are
used to acquire OP Units, the General Partner shall be deemed to have made a
Capital Contribution to the Partnership in the amount equal to the sum of the
net proceeds of such issuance plus the amount of such underwriter’s discount and
other expenses paid by the General Partner (which discount and expense shall be
treated as an expense for the benefit of the Partnership for purposes of Section
7.4)).

  

Section 4.5 Other Contribution Provisions.

 

With the consent of the General Partner, in its sole discretion, one or more
Limited Partners may enter into agreements with the Partnership, in the form of
a guarantee or contribution agreement, which have the effect of providing a
guarantee of certain obligations of the Partnership.

  

Section 4.6 No Preemptive Rights.

 

Except to the extent expressly granted by the Partnership pursuant to another
agreement, no Person shall have any preemptive, preferential or other similar
right with respect to (i) providing funds to the Partnership or (ii) issuance or
sale of any OP Units or other Partnership Interests.

  

Section 4.7 No Interest; No Return.

 

23 

 

 

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

  

Section 4.8 [Intentionally Omitted.]

 

Section 4.9 Special Fees.

 

The Partners acknowledge and agree that the following Special Fees, to the
extent not otherwise borne by the General Partner, shall be borne by the Classes
of OP Units in the manner prescribed under Section 5.1v as follows:

 

(a) 7% selling commission for each Class K OP Unit (other than Class K OP Units
issued in connection with Class K REIT Shares purchased through the General
Partner’s distribution reinvestment plan).

 

(b) 3% selling commission for each Class K-T OP Unit (other than Class K-T OP
Units issued in connection with Class K-T REIT Shares purchased through the
General Partner’s distribution reinvestment plan).

 

(c) 3% dealer manager fee for each Class K OP Unit, Class K-T OP Unit, and Class
K-I OP Unit (other than Class K OP Units, Class K-I OP Units and Class K-T OP
Units issued in connection with Class K REIT Shares, Class K-I REIT Shares and
Class K-T REIT Shares purchased through the General Partner’s distribution
reinvestment plan).

 

(d)  1.00% annualized Stockholder Servicing fee for each Class K-T OP Unit
(other than Class T OP Units issued in connection with Class K-T REIT Shares
purchased through the General Partner’s distribution reinvestment plan) in
accordance with the terms set forth in the Registration Statement.

 

ARTICLE 5

Class K, Class K-I, Class K-T, Class A and Class B OP Units

 

Section 5.1

 

(i) Class K OP Units, Class K-I OP Units and Class K-T OP Units.

 

A. Cash Distributions. Subject to the preferential rights of the holders of any
class or series of Units ranking senior to Class K OP Units, Class K-I OP Units
and Class K-T OP Units as to the payment of distributions and except as
otherwise provided herein, (a) the holder of each Class K OP Unit shall be
entitled to receive cash distributions, when and as authorized by the General
Partner, out of Available Cash, on each Class K OP Unit calculated using the
Class K OP Unit Distribution Base at the same per annum rate as set forth in the
Charter from time to time with respect to Class K REIT Shares, (b) the holder of
each Class K-I OP Unit shall be entitled to receive, when and as authorized by
the General Partner, out of Available Cash, cash distributions on each Class K-I
OP Unit calculated using the Class K-I OP Unit Distribution Base at the same per
annum rate as set forth in the Charter from time to time with respect to Class
K-I REIT Shares, and (c) the holder of each Class K-T OP Unit shall be entitled
to receive, when and as authorized by the General Partner, out of Available
Cash, cash distributions on each Class K-T OP Unit calculated using the Class
K-T OP Unit Distribution Base at the same per annum rate as set forth in the
Charter from time to time with respect to Class K-T REIT Shares. The
distributions pursuant to this Section 5.1(i)A shall accrue on each Class K OP
Unit, Class K-I OP Unit and Class K-T OP Unit automatically without any action
of the General Partner and whether or not there are funds legally available for
the payment thereof. If

 

24 

 

 

at any time the General Partner pays less than the total amount of accumulated,
accrued and unpaid distributions pursuant to this Section 5.1(i)A, such payment
shall be distributed pro rata among the holders of Class K OP Units, Class K-I
OP Units and Class K-T OP Units in accordance with each such Partner’s
respective number of Class K-OP Units, Class K-I OP Units or Class K-T OP Units.

 

Unless and until all accumulated, accrued and unpaid distributions with respect
to Class K OP Units, Class K-I OP Units and Class K-T OP Units have been, or
contemporaneously are, paid on the Class K OP Units, Class K-I OP Units and
Class K-T OP Units, the General Partner shall not pay make any distributions to
holders of Class A OP Units and to the holders of Class B OP Units; provided,
however, that in the event of a Non-Cause Advisory Agreement Termination, the
General Partner shall redeem all Class A OP Units.

 

B. Excess Cash Distributions. If the Partnership has Excess Cash, Partners
holding Class K OP Units, Class K-I OP Units and Class K-T OP Units shall be
entitled to receive, pari passu with the holders of Class A OP Units and Class B
OP Units, a special distribution of 50% of such Excess Cash (pro rata based on
the number of Class K OP Units, Class K-I OP Units and Class K-T OP Units), or,
if the Class A OP Units have been repurchased in connection with a Non-Cause
Advisory Agreement Termination, 87.5% of such Excess Cash (pro rata based on the
number of Class K OP Units, Class K-I OP Units and Class K-T OP Units). In
addition, if the General Partner authorizes a distribution on the Class K OP
Units, Class K-I OP Units and Class K-T OP Units payable out of Net Sales
Proceeds herein from the Sale of Real Property, such distribution shall first be
applied against any accumulated, accrued and unpaid distributions on the Class K
OP Units, Class K-I OP Units and Class K-T OP Units and then to reduce the
remaining portion Class K OP Unit Liquidation Preference, Class K-I OP Unit
Liquidation Preference, and Class K-T OP Unit Liquidation Preference.

 

C. Liquidation Distributions. Except as otherwise provided herein, upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Partnership, before any distribution or payment of the assets of the Partnership
(whether capital or surplus) shall be made to or set apart for the holders of
Class A OP Units and Class B OP Units, (a) the holder of each Class K OP Unit
shall be entitled to be paid out of Available Cash, after payment or provision
for the Partnership’s debts and liabilities, limited, in the case of
non-recourse liabilities secured by properties, to the value of such properties,
a liquidation preference equal to $10.00 per Class K OP Unit, plus an amount
equal to any and all accumulated, accrued and unpaid distributions on such Class
K OP Unit pursuant to Section 5.1(i)A herein (whether or not authorized by the
General Partner) up to and including the date of issuance of such Class K OP
Unit (the “Class K OP Unit Preference”), (b) the holder of each Class K-I OP
Unit shall be entitled to receive a liquidation preference equal to $10.00 per
Class K-I OP Unit, plus an amount equal to any and all accumulated, accrued and
unpaid distributions on such Class K-I OP Unit pursuant to Section 5.1(i)A
herein (whether or not authorized by the General Partner) up to and including
the date of issuance of such Class K-I OP Unit (the “Class K-I OP Unit
Preference”), and (c) the holder of each Class K-T OP Unit shall be entitled to
receive a liquidation preference equal to $10.00 per Class K-T OP Unit, plus an
amount equal to any and all accumulated, accrued and unpaid distributions on
such Class K-T OP Unit pursuant to Section 5.1(i)A herein (whether or not
authorized by the General Partner) up to and including the date of issuance of
such Class K-T OP Unit (the “Class K-T OP Unit Preference”, collectively with
the Class K OP Unit Preference and Class K-I OP Unit Preference, the
“Liquidation Preferences”), The Class K OP Unit Preference, Class K-I OP Unit
Preference and Class K-T OP Unit Preference on all then outstanding Class K OP
Units, Class K-I OP Units and Class K-T OP Units, respectively, shall be reduced
as a result of the payment of distributions pursuant to Section 5.1(i)B. To the
extent not applied against any accumulated, accrued, and unpaid distributions on
the Class K OP Units, Class K-I OP Units and Class K-T OP Units, such reductions
in the Class K OP Unit Preference, Class K-I OP Units Preference and Class K-T
OP Unit Preference on all then outstanding Class K OP Units, Class K-I OP Units
and Class K-T OP Units, respectively, shall result in corresponding reductions
to the Class K OP Unit Distribution Base, Class K-I OP Unit Distribution Base
and Class K-T OP Unit Distribution Base, as the case may be. Upon any voluntary
or involuntary liquidation, dissolution or winding up of the Partnership, 50% of
any Remaining Liquidation Cash available for distribution (or 87.5% of any
Remaining Liquidation Cash available for Distribution if the Class A OP Units
have been redeemed in

 

25 

 

 

connection with a Non-Cause Advisory Agreement Termination) shall be distributed
to the Partners holding Class K OP Units, Class K-I OP Units and Class K-T OP
Units, pro rata based on the number of Class K OP Units, Class K-I OP Units and
Class K-T OP Units.

 

D. Listing. Upon a Listing, each Class K OP Unit, Class K-I OP Unit or Class K-T
OP Unit that does not have an associated class of REIT Shares Listed by the
General Partner shall automatically convert into an OP Unit of the class that
corresponds to the Listed class of REIT Shares (subject to any adjustment deemed
necessary by the General Partner).

 

E. Conversion of Class K-T OP Units. Class K-T OP Units (including the
associated Class K-T OP Units issued in connection with Class K-T REIT Shares
purchased under the General Partner’s distribution reinvestment plan) shall
automatically convert into the number of Class K OP Units calculated in
accordance with, and pursuant to the terms for Class K-T REIT Shares provided
in, Section 5.2.7 of the Charter.

 

(ii) Class B OP Units.

 

A. Excess Cash Distributions. If the Partnership has Excess Cash, the holders of
Class B OP Units shall be entitled to receive, pari passu with the holders of
Class A OP Units, Class K OP Units, Class K-I OP Units and Class K-T OP Units, a
special distribution of 12.5% of Excess Cash (pro rata based on the number of
Class B OP Units).

 

B. Liquidation. Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Partnership,12.5% of any Remaining Liquidation Cash available
for distribution by the General Partner shall be paid to holders of Class B OP
Units, pro rata based on the number of Class B OP Units.

 

C. Listing. If there is an excess amount in accordance with Section 5.3.5 of the
Charter, the General Partner shall cause the outstanding Class B OP Units to be
redeemed for the same amount that the Class B REIT Shares would be redeemed
pursuant to Section 5.3.5 of the Charter. If there is no excess amount in
accordance with Section 5.3.5 of the Charter, the Class B OP Units shall be
redeemed and cancelled for no consideration.

 

(iii) Class A OP Units.

 

A. Cash Distributions. Following the payment in full of all accumulated, accrued
and unpaid distributions on the Class K OP Units, Class K-I OP Units and Class
K-T OP Units, and the payment of any accrued asset management fees payable to
the Advisor by the General Partner (and any interest thereon), the holder of
each Class A OP Unit shall be entitled to receive, when and as authorized by the
General Partner, out of Available Cash, distributions on each Class A OP Unit at
the same per annum rate as set forth in the Charter from time to time for the
Class A REIT Shares. Except in the case of a Liquidation of the Partnership, the
Class A OP Units shall not be entitled to participate or receive any
distributions on account of Net Sales Proceeds.

 

B. Excess Cash Distributions. If the Partnership has Excess Cash, Partners
holding Class A OP Units shall be entitled to receive, pari passu with the
holders of Class K OP Units, Class K-I OP Units, Class K-T OP Units, and Class B
OP Units, a special distribution of 37.5% of such Excess Cash (pro rata based on
the number of Class A OP Units) unless all Class A OP Units have been
repurchased because of a Non-Cause Advisory Agreement Termination, in which case
the Excess Cash otherwise apportioned to the Class A OP Units shall be
distributed to the holders of Class K OP Units, Class K-I OP Units and Class K-T
OP Units.

 

C. Liquidation. Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, after payment of the Partnership’s debts and
liabilities and the Liquidation Preferences, Partners holding Class A OP Units
shall be entitled to be paid an amount equal to each Class A OP Unit’s stated
value of $10.00 per Unit. In addition, upon any

 

26 

 

 

voluntary or involuntary liquidation, dissolution or winding up of the
Partnership, 37.5% of any Remaining Liquidation Cash available for Distribution
shall be paid to the holders of the Class A OP Units, pro rata based on the
number of Class A OP Units, unless all Class A OP Units previously have been
repurchased because of a Non-Cause Advisory Agreement Termination, in which case
the Remaining Liquidation Cash otherwise apportioned to the Class A OP Units
shall be distributed to the holders of the Class K OP Units, Class K-I OP Units
and Class K-T OP Units.

 

D. Listing. Class A OP Units shall redeemed by the General Partner or exchanged
for the class or series of Common Stock that is Listed in accordance the
election of the holder of Class A REIT Shares pursuant to Section 5.4.5 of the
Charter.

 

E. Termination of Advisory Agreement. In the event of a Non-Cause Advisory
Agreement Termination, the General Partner shall repurchase all outstanding
Class A OP Units for an amount per Class A OP Unit equal to the amount per Class
A REIT Share calculated in accordance with Section 5.4.6 of the Charter.

 

(iv) Consolidation, Merger or Certain Other Transactions. If the Partnership
enters into a merger or other acquisition transaction, the merger or acquisition
transaction consideration shall be distributed among the holders of the Class K
OP Units, Class K-I OP Units, Class K-T OP Units, Class B OP Units and Class A
OP Units in the same order of priority as if the Partnership liquidated and
wound up and the proceeds from such liquidation and winding up available for
distribution to the Limited Partners were equal to the aggregate consideration
payable in such merger or acquisition transaction.

 

(v) Additional Distribution Rules.

 

(1) Any distributions and redemptions made pursuant to this Section 5.1 shall be
made without economic duplication taking into account the intent of the
provisions herein.

 

(2) If the priority distributions applicable to Class K OP Units, Class K-I OP
Units and Class K-T OP Units pursuant to this Article 5 prevents the Partnership
from being able to distribute sufficient amounts to the General Partner to
enable the General Partner to satisfy the REIT Requirement, the General Partner
may, in its sole discretion, cause the Partnership to distribute some or all of
the Net Sales Proceeds to the General Partner in an amount sufficient to enable
the General Partner to pay dividends to the Stockholders in order to satisfy the
REIT Requirements; provided, the Partners holding Class K OP Units, Class K-I OP
Units and Class K-T OP Units, as applicable, shall be made whole with future
distributions as soon as possible thereafter.

 

(3) In no event may any Partner receive a distribution pursuant to this Section
5.1 with respect to a Partnership Unit if such Partner is entitled to receive a
distribution with respect to Common Stock for which such a Partnership Unit has
been exchanged.

 

(vi) Special Fees. Consistent with Section 4.9, if the Partnership directly or
indirectly incurs Special Fees: (i) Available Cash or Net Sales Proceeds, as the
case may be, available for distribution under this Section 5.1 shall be deemed
to be increased by the Special Fees to the extent that Available Cash or Net
Sales Proceeds have been previously reduced by such fees; and (ii) the amounts
otherwise distributable among the Classes of OP Units based on such deemed
increase shall then be reduced (without duplication of any prior reductions made
under this Section 5.1v) to reflect their appropriate shares of the Special
Fees.

 

Section 5.2 Qualification as a REIT.

 

The General Partner shall use its best efforts to cause the Partnership to
distribute sufficient amounts to the General Partner under this Article 5 to
enable the General Partner to pay dividends to the Stockholders that will enable
the

 

27 

 

 

General Partner to (a) satisfy the requirements for qualification as a REIT
under the Code and Regulations (“REIT Requirements”), and (b) avoid any federal
income or excise tax liability; provided, however, that the General Partner
shall not be bound to comply with this covenant to the extent (a) the General
Partner has determined not to continue to qualify as a REIT, or (b) such
distributions would (i) violate applicable Delaware law, or (ii) contravene the
terms of any notes, mortgages or other types of debt obligations to which the
Partnership may be subject in conjunction with borrowed funds.

  

Section 5.3 Withholding.

 

With respect to any withholding tax or other similar tax liability or obligation
to which the Partnership may be subject as a result of any act or status of any
Partner or to which the Partnership becomes subject with respect to any
Partnership Unit, the Partnership shall have the right to withhold amounts
distributable pursuant to this Article V to such Partner or with respect to such
Partnership Units, to the extent of the amount of such withholding tax or other
similar tax liability or obligation pursuant to the provisions contained in
Section 10.5, and the amount of any withholding shall reduce the right of such
Partner to future distribution to the extent provided in Section 10.5.

  

Section 5.4 Additional Partnership Interests.

 

If the Partnership issues Partnership Interests in accordance with Section 4.4,
the distribution priorities set forth in Section 5.1 shall be amended, as
necessary, to reflect the distribution priority of such Partnership Interests
and corresponding amendments shall be made to the provisions of Exhibit B.

 

Section 5.5 Distributions in Kind.

 

Except as expressly provided herein, no right is given to any Partner to demand
and receive property other than cash. The General Partner may determine, in its
sole and absolute discretion, to make a distribution in-kind to the Partners of
Partnership assets, and such assets shall be distributed in such a fashion as to
ensure that the fair market value is distributed and allocated in accordance
with Articles 5, 6 and 10.

 

Section 5.6 Distributions upon Liquidation.

 

Notwithstanding Section 5.1, proceeds from a Liquidating Event shall be
distributed to the Partners in accordance with Section 13.2.

  

Section 5.7 Reserved.

 

ARTICLE 6

ALLOCATIONS

 

Section 6.1 Allocations.

 

Net Income, Net Loss and other Partnership items shall be allocated pursuant to
the provisions of Exhibit B.

 

28 

 

 

ARTICLE 7

MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section 7.1 Management.

 

A. Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership are and shall be
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause, except with the consent of the
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under applicable law or which are granted to
the General Partner under any other provision of this Agreement, the General
Partner, subject to the other provisions hereof including Sections 7.3 and 11.2,
shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership (including, without
limitation, all actions consistent with allowing the General Partner at all
times to qualify as a REIT unless the General Partner voluntarily terminates its
REIT status), to exercise all powers set forth in Section 3.2 and to effectuate
the purposes set forth in Section 3.1, including, without limitation:

 

(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and borrowing money
to permit the Partnership to make distributions to its Partners in such amounts
as will permit the General Partner (so long as the General Partner has
determined to qualify as a REIT) to avoid the payment of any federal income tax
(including, for this purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its stockholders sufficient to permit the
General Partner to maintain REIT status), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by mortgage, deed of
trust or other lien or encumbrance on all or any of the Partnership’s assets)
and the incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership;

 

(2) the making of tax, regulatory and other filings, or rendering of periodic or
other reports to governmental or other agencies having jurisdiction over the
business or assets of the Partnership, the registration of any class of
securities of the Partnership under the Exchange Act, and the listing of any
debt securities of the Partnership on any exchange;

 

(3) subject to the provisions of Section 11.2, the acquisition, disposition,
mortgage, pledge, encumbrance, hypothecation or exchange of any assets of the
Partnership or the merger or other combination of the Partnership with or into
another entity;

 

(4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation
of all or any assets of the Partnership, and the use of the assets of the
Partnership (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on any terms it sees fit,
including, without limitation, the financing of the conduct or the operations of
the General Partner or the Partnership, the lending of funds to other Persons
(including, without limitation, the General Partner or any Subsidiaries of the
Partnership) and the repayment of obligations of the Partnership, any of its
Subsidiaries and any other Person in which it has an equity investment, and the
making of capital contributions to its Subsidiaries;

 

(5) the management, operation, leasing, landscaping, repair, alteration,
demolition or improvement of any real property or improvements owned by the
Partnership or any Subsidiary of the Partnership;

 

(6) the negotiation, execution, and performance of any contracts, leases,
conveyances or other instruments that the General Partner considers useful or
necessary to the conduct of the Partnership’s operations or the

 

29 

 

 

implementation of the General Partner’s powers under this Agreement, including
contracting with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership’s assets;

 

(7) the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;

 

(8) the establishment of one or more divisions of the Partnership, the selection
and dismissal of employees of the Partnership (including, without limitation,
employees having titles such as “president,” “vice president,” “secretary” and
“treasurer”), and agents, outside attorneys, accountants, consultants and
contractors of the Partnership, the determination of their compensation and
other terms of employment or hiring, including waivers of conflicts of interest
and the payment of their expenses and compensation out of the Partnership’s
assets;

 

(9) the maintenance of such insurance for the benefit of the Partnership and the
Partners and directors and officers of the Partnership or the General Partner as
it deems necessary or appropriate;

 

(10) the formation of, or acquisition of an interest in, and the contribution of
property to, any further limited or general partnerships, limited liability
companies, joint ventures, corporations or other relationships that it deems
desirable (including, without limitation, the acquisition of interests in, and
the contributions of property to any Subsidiary and any other Person in which it
has an equity investment from time to time); provided, that, as long as the
General Partner has determined to continue to qualify as a REIT, the Partnership
may not engage in any such formation, acquisition or contribution that could
cause the General Partner to fail to qualify as a REIT;

 

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

 

(12) the undertaking of any action in connection with the Partnership’s direct
or indirect investment in any Person (including, without limitation,
contributing or loaning Partnership funds to, incurring indebtedness on behalf
of, or guarantying the obligations of any such Persons);

 

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

 

(14) the management, operation, leasing, landscaping, repair, alteration,
demolition or improvement of any real property or improvements owned by the
Partnership or any Subsidiary of the Partnership or any Person in which the
Partnership has made a direct or indirect equity investment;

 

(15) holding, managing, investing and reinvesting cash and other assets of the
Partnership;

 

(16) the collection and receipt of revenues and income of the Partnership;

 

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

 

30 

 

 

(18) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of or in connection with any Subsidiary of the Partnership
or any other Person in which the Partnership has a direct or indirect interest,
or jointly with any such Subsidiary or other Person;

 

(19) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of any Person in which the Partnership does not have an
interest pursuant to contractual or other arrangements with such Person;

 

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

 

(21) the issuance of additional Partnership Interests, as appropriate, in
connection with the contribution of Additional Funds pursuant to Section 4.4;

 

(22) the distribution of cash to acquire OP Units held by a Limited Partner in
connection with a Limited Partner’s exercise of its Redemption Right under
Section 8.6 hereof;

 

(23) the amendment and restatement of Exhibit A hereto to reflect accurately at
all times the Capital Contributions and Percentage Interests of the Partners as
the same are adjusted from time to time to the extent necessary to reflect
redemptions, Capital Contributions, the issuance of OP Units, the admission of
any Additional Limited Partner or any Substituted Limited Partner or otherwise,
which amendment and restatement, notwithstanding anything in this Agreement to
the contrary, shall not be deemed an amendment to this Agreement, as long as the
matter or event being reflected in Exhibit A hereto otherwise is authorized by
this Agreement;

 

(24) the taking of any and all acts and things necessary or prudent to ensure
that the Partnership will not be classified as a “publicly traded partnership”
under Section 7704 of the Code; and

 

(25) the delegation to another Person of any powers now or hereafter granted to
the General Partner.

 

B. Each of the Limited Partners agrees that the General Partner is authorized to
execute, deliver and perform the above-mentioned agreements and transactions on
behalf of the Partnership without any further act, approval or vote of the
Partners, notwithstanding any other provisions of this Agreement (except as
provided in Section 7.3 or 11.2), the Act or any applicable law, rule or
regulation to the fullest extent permitted under the Act or other applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.

 

C. At all times from and after the date hereof, the General Partner may cause
the Partnership to obtain and maintain (i) casualty, liability and other
insurance on the Investments and (ii) liability insurance for the Indemnities
hereunder.

 

D. At all times from and after the date hereof, the General Partner may cause
the Partnership to establish and maintain working capital and other reserves in
such amounts as the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time.

 

31 

 

 

E. Each of the Limited Partners acknowledges that, in exercising its authority
under this Agreement, the General Partner may, but shall be under no obligation
to, take into account the tax consequences to any Partner (including the General
Partner) of any action taken (or not taken) by the General Partner. The General
Partner and the Partnership shall not have liability to a Partner under this
Agreement as a result of any income tax liability incurred by a Limited Partner
as a result of an action (or inaction) by the General Partner pursuant to its
authority under this Agreement. There may be circumstances in which the
fiduciary duties that the General Partner owes to the Limited Partners conflicts
with any duties that the officers and directors of General Partner owe to its
stockholders. For so long as the General Partner owns a controlling interest in
the Partnership, any such conflict that cannot be resolved in a manner not
adverse to either the stockholders or the Limited Partners shall be resolved in
favor of the General Partner’s stockholders.

 

F. Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to authorize or require the
General Partner, in its capacity as such, to expend its individual funds for
payment to third parties or to undertake any individual liability or obligation
on behalf of the Partnership.

 

Section 7.2 Certificate of Limited Partnership.

 

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

 

Section 7.3 Restrictions on General Partner’s Authority.

 

A. The General Partner may not take any action in contravention of an express
prohibition or limitation of this Agreement without the written Consent of the
Limited Partners, and may not (i) perform any act that would subject a Limited
Partner to liability as a general partner in any jurisdiction or any other
liability except as provided herein or under the Act; or (ii) enter into any
contract, mortgage, loan or other agreement that prohibits or restricts, or has
the effect of prohibiting or restricting, the ability of a Limited Partner to
exercise its rights to a Redemption in full, except in each case with the
written consent of such Limited Partner.

 

B. The General Partner shall not, without the prior Consent of the Partners (in
addition to any Consent of the Limited Partners required by any other provision
hereof), or except as provided in Section 7.3D, amend, modify or terminate this
Agreement.

 

C. The General Partner may not cause the Partnership to take any action which
the General Partner would be prohibited from taking directly under the General
Partner’s bylaws as in effect from time to time.

 

32 

 

 

D. Notwithstanding Section 7.3B, the General Partner shall have the exclusive
power to amend this Agreement as may be required to facilitate or implement any
of the following purposes:

 

(1) to add to the obligations of the General Partner or surrender any right or
power granted to the General Partner or any Affiliate of the General Partner for
the benefit of the Limited Partners;

 

(2) to reflect the issuance of additional Partnership Interests pursuant to
Sections 4.4B and 5.4 or the admission, substitution, termination, or withdrawal
of Partners in accordance with this Agreement (which may be effected through the
replacement of Exhibit A with an amended Exhibit A);

 

(3) to set forth or amend the designations, rights, powers, duties and
preferences of the holders of any additional Partnership Interests issued
pursuant to Article 4;

 

(4) to reflect a change that is of an inconsequential nature and does not
adversely affect the Limited Partners in any material respect, or to cure any
ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes with
respect to matters arising under this Agreement that will not be inconsistent
with law or with the provisions of this Agreement;

 

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

 

(6) to reflect such changes as are reasonably necessary for the General Partner
to maintain its status as a REIT or to mitigate any otherwise payable U.S.
federal income or excises taxes, including changes which may be necessitated due
to a change in applicable law (or an authoritative interpretation thereof) or a
ruling of the IRS; and

 

(7) to modify the manner in which Capital Accounts are computed or allocations
of items thereto are made.

 

The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3D is taken.

 

E. Notwithstanding Sections 7.3B and 7.3D, this Agreement shall not be amended
with respect to any Partner adversely affected, and no action may be taken by
the General Partner, without the Consent of such Partner adversely affected if
such amendment or action would (i) convert a Limited Partner’s interest in the
Partnership into a general partner’s interest (except as the result of the
General Partner acquiring such interest), (ii) modify the limited liability of a
Limited Partner, (iii) alter rights of the Partner to receive distributions
pursuant to Article 5 or Section 13.2A(4), or the allocations specified in
Article 6 (except as permitted pursuant to Sections 4.4, 5.4, and Section
7.3D(2)), (iv) materially alter or modify the rights to a Redemption or the REIT
Shares Amount as set forth in Section 8.6, and related definitions hereof, or
(v) amend this Section 7.3E. Further, no amendment may alter the restrictions on
the General Partner’s authority set forth elsewhere in this Section 7.3 or in
Section 11.2A without the Consent specified in such section. This Section 7.3E
does not require unanimous consent of all Partners adversely affected unless the
amendment is to be effective against all partners adversely affected.

 

Section 7.4 Reimbursement of the General Partner.

 

A. Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments
and allocations to which it may be entitled), the General Partner shall not be

 

33 

 

 

compensated for its services as general partner of the Partnership.

 

B. The Partnership shall be responsible for and shall pay all expenses relating
to the Partnership’s and the General Partner’s organization, the ownership of
its assets and its operations. The General Partner is hereby authorized to pay
compensation for accounting, administrative, legal, technical, management and
other services rendered to the Partnership. Except to the extent provided in
this Agreement, the General Partner and its Affiliates shall be reimbursed on a
monthly basis, or such other basis as the General Partner may determine in its
sole and absolute discretion, for all expenses that the General Partner and its
Affiliates incur relating to the ownership and operation of, or for the benefit
of, the Partnership (including, without limitation, administrative expenses);
provided, that the amount of any such reimbursement shall be reduced by any
interest earned by the General Partner with respect to bank accounts or other
instruments or accounts held by it on behalf of the Partnership. The Partners
acknowledge that all such expenses of the General Partner are deemed to be for
the benefit of the Partnership. Such reimbursement shall be in addition to any
reimbursement made as a result of indemnification pursuant to Section 7.7
hereof. In the event that certain expenses are incurred for the benefit of the
Partnership and other entities (including the General Partner), such expenses
will be allocated to the Partnership and such other entities in such a manner as
the General Partner in its sole and absolute discretion deems fair and
reasonable. All payments and reimbursements hereunder shall be characterized for
federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner, with any Special Fees
allocated to the applicable class or series of Partnership Units or other
securities issued by the Partnership that correspond to the REIT Shares, other
shares of capital stock, or New Securities issued by the General Partner.

 

C. If the General Partner shall elect to purchase from its stockholders REIT
Shares for the purpose of delivering such REIT Shares to satisfy an obligation
under any dividend reinvestment program adopted by the General Partner, any
employee stock purchase plan adopted by the General Partner, or any similar
obligation or arrangement undertaken by the General Partner in the future or for
the purpose of retiring such REIT Shares, the purchase price paid by the General
Partner for such REIT Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be advanced to the General Partner or reimbursed to the
General Partner, subject to the condition that: (i) if such REIT Shares
subsequently are sold by the General Partner, the General Partner shall pay to
the Partnership any proceeds received by the General Partner for such REIT
Shares (which sales proceeds shall include the amount of dividends reinvested
under any dividend reinvestment or similar program; provided, that a transfer of
REIT Shares for OP Units pursuant to Section 8.6 would not be considered a sale
for such purposes); and (ii) if such REIT Shares are not retransferred by the
General Partner within thirty (30) days after the purchase thereof, or the
General Partner otherwise determines not to retransfer such REIT Shares, the
General Partner, shall cause the Partnership to redeem a number of OP Units held
by the General Partner equal to the number of such REIT Shares, as adjusted (x)
pursuant to Section 7.5 (in the event the General Partner acquires material
assets, other than on behalf of the Partnership) and (y) for stock dividends and
distributions, stock splits and subdivisions, reverse stock splits and
combinations, distributions of rights, warrants or options, and distributions of
evidences of indebtedness or assets relating to assets not received by the
General Partner pursuant to a pro rata distribution by the Partnership (in which
case such advancement or reimbursement of expenses shall be treated as having
been made as a distribution in redemption of such number of OP Units held by the
General Partner).

 

D. As set forth in Section 4.4, the General Partner shall be treated as having
made a Capital Contribution in the amount of all expenses that it incurs
relating to the General Partner’s offering of REIT Shares, other shares of
capital stock of the General Partner or New Securities.

 

E. If and to the extent any reimbursements to the General Partner pursuant to
this Section 7.4 constitute gross income of the General Partner (as opposed to
the repayment of advances made by the General Partner on behalf of the
Partnership), such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall

 

34 

 

 

be treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners’ Capital
Accounts.

 

Section 7.5 Outside Activities of the General Partner.

 

A. Except in connection with a transaction authorized in Section 11.2, without
the Consent of the Limited Partners, the General Partner shall not, directly or
indirectly, enter into or conduct any business, other than in connection with
the ownership, acquisition and disposition of Partnership Interests as a General
Partner and the management of the business of the Partnership, its operation as
a public reporting company with a class (or classes) of securities registered
under the Exchange Act, its operation as a REIT and such activities as are
incidental to the same. Without the Consent of the Limited Partners, the General
Partner shall not, directly or indirectly, participate in or otherwise acquire
any interest in any real or personal property, except its General Partner
Interest, its minority interest in any Subsidiary Partnership(s) that the
General Partner holds in order to maintain such Subsidiary Partnership’s status
as a partnership, and such bank accounts, similar instruments or other short
term investments as it deems necessary to carry out its responsibilities
contemplated under this Agreement and the Charter. In the event the General
Partner desires to contribute cash to any Subsidiary Partnership to acquire or
maintain an interest of 1% or less in the capital of such partnership, the
General Partner may acquire or maintain an interest of 1% or less in the capital
of such partnership, and the General Partner may acquire such cash from the
Partnership as a loan or in exchange for a reduction in the General Partner’s OP
Units, in an amount equal to the amount of such cash divided by the Fair Market
Value of a REIT Share on the day such cash is received by the General Partner.
Notwithstanding the foregoing, the General Partner may acquire Investments or
other assets in exchange for REIT Shares or cash, to the extent such Investments
or other assets are immediately contributed by the General Partner to the
Partnership, pursuant to the terms described in Section 4.4. Any Limited Partner
Interests acquired by the General Partner, whether pursuant to exercise by a
Limited Partner of its right of Redemption, or otherwise, shall be automatically
converted into a General Partner Interest comprised of an identical number of OP
Units with the same rights, priorities and preferences as the class or series so
acquired. The General Partner may also own one hundred percent (100%) of the
stock or interests of one or more Qualified REIT Subsidiaries or limited
liability companies, respectively, provided that any such entity shall be
subject to the limitations of this Section 7.5A. If, at any time, the General
Partner acquires material assets (other than Partnership Interests or other
assets on behalf of the Partnership) the definition of “REIT Shares Amount” and
the definition of “Deemed Value of Partnership Interests” shall be adjusted, as
reasonably determined by the General Partner, to reflect the relative Fair
Market Value of a share of capital stock of the General Partner relative to the
Deemed Partnership Interest Value of the related Partnership Unit. The General
Partner’s General Partner Interest in the Partnership, its minority interest in
any Subsidiary Partnership(s) (held directly or indirectly through a Qualified
REIT Subsidiary) that the General Partner holds in order to maintain such
Subsidiary Partnership’s status as a partnership, and interests in such
short-term liquid investments, bank accounts or similar instruments as the
General Partner deems necessary to carry out its responsibilities contemplated
under this Agreement and the Charter are interests which the General Partner is
permitted to acquire and hold for purposes of this Section 7.5A.

 

B. In the event the General Partner exercises its rights under the Charter to
purchase REIT Shares, other common stock of the General Partner or New
Securities, as the case may be, then the General Partner shall cause the
Partnership to purchase from it a number of OP Units equal to the number of REIT
Shares and of the same class, other capital stock of the General Partner or New
Securities, as the case may be, so purchased on the same terms that the General
Partner purchased such REIT Shares, other capital stock of the General Partner
or New Securities, as the case may be.

 

Section 7.6 Contracts with Affiliates.

 

A. The Partnership may lend or contribute to Persons in which it has an equity
investment, and such Persons may

 

35 

 

 

borrow funds from the Partnership, on terms and conditions established in the
sole and absolute discretion of the General Partner. The foregoing authority
shall not create any right or benefit in favor of any Person.

 

B. Except as provided in Section 7.5A, the Partnership may transfer assets to
joint ventures, other partnerships, corporations or other business entities in
which it is or thereby becomes a participant upon such terms and subject to such
conditions consistent with this Agreement and applicable law as the General
Partner in its sole discretion deems advisable.

 

C. The General Partner, in its sole and absolute discretion and without the
approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans funded by the Partnership for the benefit of
employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership’s Subsidiaries.

 

D. Except as expressly permitted by this Agreement, neither the General Partner
nor any of its Affiliates shall sell, transfer or convey any property to, or
purchase any property from, the Partnership, directly or indirectly, except
pursuant to transactions that are determined by the General Partner in good
faith to be fair and reasonable.

 

E. The General Partner is expressly authorized to enter into, in the name and on
behalf of the Partnership, a right of first opportunity arrangement and other
conflict avoidance agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.

 

Section 7.7 Indemnification.

 

A. To the fullest extent permitted by law, the Partnership shall indemnify an
Indemnitee from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including legal fees and expenses), judgments,
fines, settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, unless (1) Section 12.2.2 of the Charter of the General
Partner prohibits the corporation from indemnifying the Indemnitee for a tax
matter, in which case the Partnership shall likewise be prohibited from
indemnifying the Indemnitee for the matter, or (2) it is established that: (i)
the act or omission of the Indemnitee was material to the matter giving rise to
the proceeding and either was committed in bad faith, fraud or was the result of
active and deliberate dishonesty; (ii) the Indemnitee actually received an
improper personal benefit in money, property or services; or (iii) in the case
of any criminal proceeding, the Indemnitee had reasonable cause to believe that
the act or omission was unlawful. Without limitation, the foregoing indemnity
shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or
otherwise, for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the
Partnership or any Subsidiary of the Partnership has assumed or taken subject
to), and the General Partner is hereby authorized and empowered, on behalf of
the Partnership, to enter into one or more indemnity agreements consistent with
the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. The termination of any
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, or any entry of an order of probation prior to
judgment, does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct set forth in this Section 7.7A. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitee, and neither the General Partner
nor any Limited Partner shall have any obligation to contribute to the capital
of the Partnership or otherwise provide funds to enable the Partnership to fund
its obligations under this Section 7.7, except to the extent otherwise expressly
agreed to by such Partner and the Partnership.

 

B. Reasonable expenses incurred by an Indemnitee who is a party to a proceeding
may be paid or reimbursed by

 

36 

 

 

the Partnership in advance of the final disposition of the proceeding upon
receipt by the Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee’ s good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in this Section 7.7 has been
met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay
the amount if it shall ultimately be determined that the standard of conduct has
not been met.

 

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

 

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

 

E. For purposes of this Section 7.7, the Partnership shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.

 

F. In no event may an Indemnitee subject the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

 

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

 

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

 

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

 

J. Any indemnification hereunder is subject to, and limited by, the provisions
of Section 17-108 of the Act and Section 12.2.2 of the Charter.

 

37 

 

 

K. In the event the Partnership is made a party to any litigation or otherwise
incurs any loss or expense as a result of or in connection with any Partner’s
personal obligations or liabilities unrelated to Partnership business, such
Partner shall indemnify and reimburse the Partnership for all such loss and
expense incurred, including legal fees, and the Partnership interest of such
Partner may be charged therefor. The liability of a Partner under this Section
7.7K shall not be limited to such Partner’s Partnership Interest, but shall be
enforceable against such Partner personally.

 

Section 7.8 Liability of the General Partner.

 

A. Notwithstanding anything to the contrary set forth in this Agreement, none of
the General Partner nor any of its officers, directors, agents or employees
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees, or their successors or assigns, for losses sustained,
liabilities incurred or benefits not derived as a result of errors in judgment
or mistakes of fact or law or any act or omission if the General Partner acted
in good faith.

 

B. The Limited Partners expressly acknowledge that the General Partner is acting
for the benefit of the Partnership, the Limited Partners and the General
Partner’s stockholders collectively. The General Partner is under no obligation
to give priority to the separate interests of the Limited Partners or the
General Partner’s stockholders (including, without limitation, the tax
consequences to Limited Partners or Assignees or to stockholders) in deciding
whether to cause the Partnership to take (or decline to take) any actions. If
there is a conflict between the interests of the stockholders of the General
Partner on one hand and the Limited Partners on the other, the General Partner
shall endeavor in good faith to resolve the conflict in a manner not adverse to
either the stockholders of the General Partner or the Limited Partners;
provided, however, that for so long as the General Partner, owns a controlling
interest in the Partnership, any such conflict that cannot be resolved in a
manner not adverse to either the stockholders of the General Partner or the
Limited Partners shall be resolved in favor of the stockholders. The General
Partner shall not be liable under this Agreement to the Partnership or to any
Partner for monetary damages for losses sustained, liabilities incurred, or
benefits not derived by Limited Partners in connection with such decisions;
provided, that the General Partner has acted in good faith.

 

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

 

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

 

Section 7.9 Other Matters Concerning the General Partner.

 

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

 

(2) The General Partner may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other consultants and advisers
selected by it, and any act taken or omitted to be taken in reliance upon the
opinion of such Persons as to matters which such General Partner reasonably
believes to be within

 

38 

 

 

such Person’s professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.

 

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

 

(4) Notwithstanding any other provisions of this Agreement or any non-mandatory
provision of the Act, any action of the General Partner on behalf of the
Partnership or any decision of the General Partner to refrain from acting on
behalf of the Partnership, undertaken in the good faith belief that such action
or omission is necessary or advisable in order to protect the ability of the
General Partner, for so long as the General Partner has determined to qualify as
a REIT, to (i) continue to qualify as a REIT or (ii) avoid the General Partner
incurring any taxes under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.

 

Section 7.10 Title to Partnership Assets.

 

Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partners, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more subsidiaries or nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership, a subsidiary or
a nominee thereof, as soon as reasonably practicable. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.

 

Section 7.11 Reliance by Third Parties.

 

Notwithstanding anything to the contrary in this Agreement, any Person dealing
with the Partnership shall be entitled to assume that the General Partner has
full power and authority to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts on behalf of
the Partnership, and such Person shall be entitled to deal with the General
Partner as if it were the Partnership’s sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.

 

39 

 

 

ARTICLE 8

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.1 Limitation of Liability.

 

The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement or under the Act.

  

Section 8.2 Management of Business.

 

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

 

Section 8.3 Outside Activities of Limited Partners.

 

Subject to any agreements entered into by a Limited Partner or its Affiliates
with the General Partner, Partnership or a Subsidiary, any Limited Partner and
any officer, director, employee, agent, trustee, Affiliate or stockholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities in direct competition with the
Partnership or that are enhanced by the activities of the Partnership. Neither
the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefiting from the business conducted by the General Partner,
and such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.

  

Section 8.4 Return of Capital.

 

Except pursuant to the rights of Redemption set forth in Section 8.6, no Limited
Partner shall be entitled to the withdrawal or return of his or her Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions, or as otherwise
expressly provided in this Agreement, or as to profits, losses, distributions or
credits.

  

Section 8.5 Rights of Limited Partners Relating to the Partnership.

 

40 

 

 

A. In addition to other rights provided by this Agreement or by the Act, and
except as limited by Section 8.5C, each Limited Partner shall have the right,
for a purpose reasonably related to such Limited Partner’s interest as a limited
partner in the Partnership, upon written demand with a statement of the purpose
of such demand and at such Limited Partner’s expense:

 

(1) to obtain a copy of the most recent annual and quarterly reports filed with
the Securities and Exchange Commission by the General Partner pursuant to the
Exchange Act, and each communication sent to the stockholders of the General
Partner;

 

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

 

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

 

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

 

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

 

B. The Partnership shall notify each Limited Partner in writing of any
adjustment made in the calculation of the REIT Shares Amount within a reasonable
time after the date such change becomes effective.

 

C. Notwithstanding any other provision of this Section 8.5, the General Partner
may keep confidential from the Limited Partners, for such period of time as the
General Partner determines in its sole and absolute discretion to be reasonable,
any information that (i) the General Partner believes to be in the nature of
trade secrets or other information the disclosure of which the General Partner
in good faith believes is not in the best interests of the Partnership or (ii)
the Partnership or the General Partner is required by law or by agreements with
unaffiliated third parties to keep confidential.

 

Section 8.6 Redemption Rights.

 

A. At any time after one year following the date of issuance of any OP Units to
a Limited Partner, such Limited Partner shall have the right (subject to the
terms and conditions set forth herein and in any other such agreement, as
applicable) to require the Partnership to redeem all or a portion of the OP
Units held by such Limited Partner (such OP Units being hereafter referred to as
“Tendered Units”) in exchange for the Cash Amount (a “Redemption”); provided
that the terms of such OP Units do not provide that such OP Units are not
entitled to a right of Redemption. Unless otherwise expressly provided in this
Agreement or in a separate agreement entered into between the Partnership and
the holders of such OP Units, all OP Units, including Class A OP Units, Class B
OP Units, Class K OP Units, Class K-I OP Units and Class K-T OP Units, shall be
entitled to a right of Redemption hereunder. The Tendering Partner shall have no
right, with respect to any OP Units so redeemed, to receive any distributions
paid on or after the Specified Redemption Date. Any Redemption shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
the Limited Partner who is exercising the right (the “Tendering Partner”). The
Cash Amount shall be payable to the Tendering Partner within ten (10) days of
the Specified Redemption Date in accordance with the instructions set forth in
the Notice of Redemption.

 

41 

 

 

B. Notwithstanding Section 8.6A above, if a Limited Partner has delivered to the
General Partner a Notice of Redemption then the General Partner may, in its sole
and absolute discretion (subject to the limitations on ownership and transfer of
REIT Shares set forth in the Charter), elect to acquire some or all of the
Tendered Units from the Tendering Partner in exchange for the REIT Shares Amount
(as of the Specified Redemption Date) and, if the General Partner so elects, the
Tendering Partner shall sell the Tendered Units to the General Partner in
exchange for the REIT Shares Amount. In such event, the Tendering Partner shall
have no right to cause the Partnership to redeem such Tendered Units. The
General Partner shall promptly give such Tendering Partner written notice of its
election, and the Tendering Partner may elect to withdraw its redemption request
at any time prior to the acceptance of the cash or REIT Shares Amount by such
Tendering Partner.

 

C. The REIT Shares Amount, if applicable, shall be delivered as duly authorized,
validly issued, fully paid and nonassessable REIT Shares and, if applicable,
free of any pledge, lien, encumbrance or restriction, other than those provided
in the Charter, the Bylaws of the General Partner, the Securities Act, relevant
state securities or blue sky laws and any applicable registration rights
agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section
8.6E), the Tendering Partner shall be deemed the owner of such REIT Shares for
all purposes, including without limitation, rights to vote or consent, and
receive dividends, as of the Specified Redemption Date.

 

D. Each Limited Partner covenants and agrees with the General Partner that all
Tendered Units shall be delivered to the General Partner free and clear of all
liens, claims and encumbrances whatsoever and should any such liens, claims
and/or encumbrances exist or arise with respect to such Tendered Units, the
General Partner shall be under no obligation to acquire the same. Each Limited
Partner further agrees that, in the event any state or local property transfer
tax is payable as a result of the transfer of its Tendered Units to the General
Partner (or its designee), such Partner shall assume and pay such transfer tax.

 

E. Notwithstanding the provisions of Section 8.6A, 8.6B, 8.6C or any other
provision of this Agreement, a Limited Partner (i) shall not be entitled to
effect a Redemption for cash or an exchange for REIT Shares to the extent the
ownership or right to acquire REIT Shares pursuant to such exchange by such
Partner on the Specified Redemption Date could cause such Partner or any other
Person, or, in the opinion of counsel selected by the General Partner, may cause
such Partner or any other Person, to violate the restrictions on ownership and
transfer of REIT Shares set forth in the Charter and (ii) shall have no rights
under this Agreement to acquire REIT Shares which would otherwise be prohibited
under the Charter. To the extent any attempted Redemption or exchange for REIT
Shares would be in violation of this Section 8.6E, it shall be null and void ab
initio and such Partner shall not acquire any rights or economic interest in the
cash otherwise payable upon such Redemption or the REIT Shares otherwise
issuable upon such exchange.

 

F. Notwithstanding anything herein to the contrary (but subject to Section
8.6E), with respect to any Redemption or exchange for REIT Shares pursuant to
this Section 8.6:

 

(1) All OP Units acquired by the General Partner pursuant thereto shall
automatically, and without further action required, be converted into and deemed
to be Limited Partner Interests comprised of the same number and class of OP
Units.

 

(2) A Limited Partner may not effect a Redemption for less than one thousand
(1,000) OP Units or, if such Partner holds less than one thousand (1,000) OP
Units, such Partner may effect a Redemption only with respect to all OP Units
held by such Partner.

 

(3) A Tendering Partner may not effect more than two (2) Redemptions in a single
calendar year.

 

42 

 

 

(4) Without the consent of the General Partner, a Limited Partner may not effect
a Redemption during the period after the Partnership Record Date with respect to
a distribution and before the record date established by the General Partner for
a distribution to its stockholders of some or all of its portion of such
distribution.

 

(5) The consummation of any Redemption or exchange for REIT Shares shall be
subject to the expiration or termination of the applicable waiting period, if
any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

(6) Each Tendering Partner shall continue to own all OP Units subject to any
Redemption or exchange for REIT Shares, and be treated as a Partner with respect
to such OP Units for all purposes of this Agreement, until such OP Units are
transferred to the General Partner and paid for or exchanged on the Specified
Redemption Date. Until a Specified Redemption Date, the Tendering Partner shall
have no rights as a stockholder of the General Partner with respect to such
Tendering Partner’s OP Units.

 

(7) The General Partner shall be entitled to impose restrictions on the amount
of and manner in which OP Units are Redeemed or exchanged pursuant to this
Section 8.6 to the extent the General Partner determines, in its sole and
absolute discretion, such restrictions are necessary or advisable to reduce any
risk of the OP Units being treated as “traded on an established securities
market” or “readily tradable on a secondary market (or the substantial
equivalent thereof)” within the meaning of Section 7704 of the Code.

 

G. In the event that the Partnership issues additional Partnership Interests to
any Additional Limited Partner pursuant to Section 4.4B, the General Partner
shall make such revisions to this Section 8.6 as it determines are necessary to
reflect the issuance of such additional Partnership Interests.

 

H. Notwithstanding any other provision of this Agreement, the General Partner is
authorized to take any action that it determines to be necessary or appropriate
to cause the partnership to comply with any withholding requirements established
under the Code or any other federal, state or local law that apply upon a
Redemption or exchange of Tendered Units. If a Tendering Partner believes that
it is exempt from withholding upon a Redemption or exchange of Tendered Units,
such Partner must furnish the General Partner a FIRPTA certificate or other
documentation requested by the General Partner is a form acceptable to the
General Partner. If the Partnership or the General Partner is required to
withhold and pay over to any taxing authority any amount upon a Redemption or
exchange of Tendered Units and the Cash Amount or the REIT Shares Amount, as the
case may be, equals or exceeds the amount of tax required to be withheld, the
amount withheld shall be treated as an amount received by such Partner in
redemption of its Tendered Units. If the Cash Amount or the REIT Shares Amount,
as the case may be, is less than the amount of tax required to be withheld, the
Tendering Partner shall not receive any Cash Amount or REIT Shares Amount, and
the Tendering Partner shall contribute the excess of the amount of tax required
to be withheld over the Cash Amount or REIT Shares Amount before such excess
taxes are required to be paid to the taxing authority.

 

ARTICLE 9

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1 Records and Accounting.

 

The General Partner shall keep, or cause to be kept, at the principal office of
the Partnership appropriate books and records with respect to the Partnership’s
business, including without limitation, all books and records necessary to
provide to the Limited Partners any information, lists and copies of documents
required to be provided pursuant to Section 9.3. Any records maintained by or on
behalf of the Partnership in the regular course of its business may be kept on,
or be in

 

43 

 

 

the form of any information storage device, provided, that the records so
maintained are convertible into clearly legible written form within a reasonable
period of time. The books of the Partnership shall be maintained, for financial
and tax reporting purposes, on an accrual basis in accordance with generally
accepted accounting principles.

 

Section 9.2 Fiscal Year.

 

The fiscal year of the Partnership shall be the calendar year.

 

Section 9.3 Reports.

 

A. As soon as practicable, but in no event later than 105 days after the close
of each Partnership Year, or such earlier date as they are filed with the
Securities and Exchange Commission, the General Partner shall cause to be
delivered to each Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership, or of the
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner.

 

B. As soon as practicable, but in no event later than 45 days after the close of
each calendar quarter (except the last calendar quarter of each year), or such
earlier date as they are filed with the Securities and Exchange Commission, the
General Partner shall cause to be delivered to the each Limited Partner as of
the last day of the calendar quarter, a report containing unaudited financial
statements of the Partnership, or of the General Partner, if such statements are
prepared solely on a consolidated basis with the applicable law or regulation,
or as the General Partner determines to be appropriate.

 

Section 9.4 Nondisclosure of Certain Information.

 

Notwithstanding the provisions of Sections 9.1 and 9.3, the General Partner may
keep confidential from the Limited Partners any information that the General
Partner believes to be in the nature of trade secrets or other information the
disclosure of which the General Partner in good faith believes is not in the
best interest of the Partnership or which the Partnership is required by law or
by agreements with unaffiliated third parties to keep confidential.

  

ARTICLE 10

TAX MATTERS

 

Section 10.1 Preparation of Tax Returns.

 

The General Partner shall arrange for the preparation and timely filing of all
returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and applicable state income tax purposes
and shall use all reasonable efforts to furnish, within 90 days of the close of
each taxable year, the tax information reasonably required by the Limited
Partners for federal and applicable state income tax reporting purposes. Each
Limited Partner shall promptly provide the General Partner with any information
reasonably requested by the General Partner relating to any Contributed Property
contributed (directly or indirectly) by such Partner to the Partnership.

  

Section 10.2 Tax Elections.

 

A. Except as otherwise provided herein, the General Partner shall, in its sole
and absolute discretion, determine

 

44 

 

 

whether to make any available election pursuant to the Code, including the
election under Section 754 of the Code. The General Partner shall have the right
to seek to revoke any such election (including without limitation, any election
under Section 754 of the Code) upon the General Partner’s determination in its
sole and absolute discretion that such revocation is the best interests of the
Partners.

 

B. The Partners, intending to be legally bound, hereby authorize the Partnership
to make an election (the “Safe Harbor Election”) to have the “liquidation value”
safe harbor provided in Proposed Treasury Regulation Section 1.83-3(l) and the
Proposed Revenue Procedure set forth in Internal Revenue Service Notice 2005-43,
as such safe harbor may be modified when such proposed guidance is issued in
final form or as amended by subsequently issued guidance (the “Safe Harbor”),
apply to any interest in the Partnership transferred to a service provider while
the Safe Harbor Election remains effective, to the extent such interest meets
the Safe Harbor requirements (collectively, such interests are referred to as
“Safe Harbor Interests”). The General Partner is authorized and directed to
execute and file any Safe Harbor Election on behalf of the Partnership and the
Partners. The Partnership and the Partners (including any person to whom an
interest in the Partnership is transferred in connection with the performance of
services) hereby agree to comply with all requirements of the Safe Harbor
(including forfeiture allocations) with respect to all Safe Harbor Interests and
to prepare and file all U.S. federal income tax returns reporting the tax
consequences of the issuance and vesting of Safe Harbor Interests consistent
with such final Safe Harbor guidance. The General Partner is authorized to take
such actions as are necessary to achieve, under the Safe Harbor, the effect that
the election and compliance with all requirements of the Safe Harbor referred to
above would be intended to achieve under Proposed Treasury Regulation Section
1.83-3, including amending this Agreement.

  

Section 10.3 [Intentionally Omitted.]

 

Section 10.4 [Intentionally Omitted.]

 

Section 10.5 Withholding.

 

Each Partner hereby authorizes the Partnership to withhold from or pay on behalf
of or with respect to such Partner any amount of federal, state, local, or
foreign taxes that the General Partner determines that the Partnership is
required to withhold or pay with respect to any amount distributable or
allocable to such Partner pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to Sections 1441, 1442, 1445 or 1446 (including Section 1446(f)) of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a receivable of the Partnership from such Partner, which receivable
shall be paid by such Partner within 15 days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Partner or (ii)
the General Partner determines, in its sole and absolute discretion, that such
payment may be satisfied out of the available funds of the Partnership which
would, but for such payment, be distributed to the Partner. Any amounts withheld
pursuant to the foregoing clauses (i) or (ii) shall be treated as having been
distributed to such Partner. Each Limited Partner hereby unconditionally and
irrevocably grants to the Partnership a security interest in such Partner’s
Partnership Interest to secure such Partner’s obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 10.5. Any
amounts payable by a Limited Partner hereunder shall bear interest at the base
rate on corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus two percentage
points (but not higher than the maximum lawful rate) from the date such amount
is due (i.e., 15 days after demand) until such amount is paid in full. Each
Limited Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security interest
created hereunder.

 

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ARTICLE 11

TRANSFERS AND WITHDRAWALS

 

Section 11.1 Transfer.

 

A. The term “transfer”, when used in this Article 11 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a
Partner purports to assign its Partnership Interest to another Person and
includes a sale, assignment, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term “transfer” when used in this Article 11 does not include any Redemption
or exchange for REIT Shares pursuant to Section 8.6, except as otherwise
provided herein. No part of the interest of a Limited Partner shall be subject
to the claims of any creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement or consented to by
the General Partner.

 

B. No Partnership Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article 11. Any
transfer or purported transfer of a Partnership Interest not made in accordance
with this Article 11 shall be null and void ab initio unless otherwise consented
to by the General Partner in its sole and absolute discretion.

 

Section 11.2 Transfer of the Partnership Interest of the General Partner.A. The
General Partner may not Transfer any of its General Partner Interest or withdraw
as General Partner, or Transfer any of its Limited Partner Interest, except (i)
if holders of at least two-thirds of the Limited Partner Interests consent to
such Transfer or withdrawal; (ii) if such Transfer is to an entity which is
wholly owned by the General Partner and is a Qualified REIT Subsidiary; or (iii)
in connection with a transaction described in Section 11.2C or 11.2D (as
applicable).

 

B. In the event the General Partner withdraws as general partner of the
Partnership in accordance with Section 11.2A, the General Partner’s General
Partner Interest shall immediately be converted into a Limited Partner Interest.

 

C. Except as otherwise provided in Section 11.2D, the General Partner shall not
engage in any merger, consolidation or other combination of the General Partner
with or into another Person (other than a merger in which the General Partner is
the surviving entity) or sale of all or substantially all of its assets, or any
reclassification, or any recapitalization of outstanding REIT Stock (other than
a change in par value, or from par value to no par value, or as a result of a
subdivision or combination of REIT Stock) (a “Transaction”), unless in
connection with the Transaction all Limited Partners will either receive, or
will have the right to elect to receive, for each OP Unit an amount of cash,
securities, or other property equal to the amount of cash, securities or other
property or value paid in the Transaction to or received by a holder of one REIT
Share corresponding to such OP Unit in consideration of one REIT Share (subject
to any adjustments set forth in the definition of the “REIT Shares Amount” as
determined by the General Partner) at any time during the period from and after
the date on which the Transaction is consummated; provided that if, in
connection with the Transaction, a purchase, tender or exchange offer (“Offer”)
shall have been made to and accepted by the holders of more than 50% of the
outstanding REIT Shares, each holder of OP Units shall be given the option to
exchange its OP Units for the amount of cash, securities, or other property
which a Limited Partner would have received had it (i) exercised its right of
Redemption and (ii) sold, tendered or exchanged pursuant to the Offer the REIT
Shares received upon exercise of the right of Redemption immediately prior to
the expiration of the Offer.

 

The foregoing is not intended to, and does not, affect the ability of (i) a
stockholder of the General Partner to sell its stock in the General Partner or
(ii) the General Partner to perform its obligations (under agreement or
otherwise) to such stockholders (including the fulfillment of any obligations
with respect to registering the sale of stock under applicable

 

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securities laws).

 

D. Notwithstanding Section 11.2C, the General Partner may merge into or
consolidate with another entity if immediately after such merger or
consolidation: (i) substantially all of the assets of the successor or surviving
entity (the “Surviving General Partner”), other than OP Units held by the
General Partner, are contributed to the Partnership as a Capital Contribution in
exchange for OP Units with a fair market value equal to the value of the assets
so contributed as determined by the Surviving General Partner in good faith and
(ii) the Surviving General Partner expressly agrees to assume all obligations of
the General Partner hereunder.

 

Upon such contribution and assumption, the Surviving General Partner shall have
the right and duty to amend this Agreement as set forth in this Section 11.2D.
The Surviving General Partner shall in good faith arrive at a new method for the
calculation of the REIT Shares Amount for an OP Unit after any such merger or
consolidation so as to approximate the existing method for such calculation as
closely as reasonably possible. Such calculation shall take into account, among
other things, the kind and amount of securities, cash and other property that
was receivable upon such merger or consolidation by a holder of REIT Shares or
options, warrants or other rights relating thereto, and which a holder of OP
Units could have acquired had such OP Units been redeemed for REIT Shares
immediately prior to such merger or consolidation. Such amendment to this
Agreement shall provide for adjustment to such method of calculation, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in the definition of REIT Shares Amount.

 

The above provisions of this Section 11.2D shall similarly apply to successive
mergers or consolidations permitted hereunder.

 

Section 11.3 Limited Partners’ Rights to Transfer.

 

A. Prior to the first anniversary of the Effective Date, no Limited Partner
shall transfer all or any portion of its Partnership Interest to any transferee
without the consent of the General Partner, which consent may be withheld in
their sole and absolute discretion; provided, however, that any Limited Partner
may, at any time, without the consent of the General Partner, (i) transfer all
or any portion of its Partnership Interest to the General Partner, (ii) transfer
all or any portion of its Partnership Interest to an Affiliate, another original
Limited Partner or to an Immediate Family Member, subject to the provisions of
Section 11.6, (iii) transfer all or any portion of its Partnership Interest to a
trust for the benefit of a charitable beneficiary or to a charitable foundation,
subject to the provisions of Section 11.6, and (iv) subject to the provisions of
Section 11.6, pledge (a “Pledge”) all or any portion of its Partnership Interest
to a lending institution, which is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, and
transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension or credit,
and the transfer of such pledged Partnership Interest by the lender to any
transferee. Each Limited Partner or Assignee (resulting from a transfer made
pursuant to clauses (i)-(iv) of the proviso of the preceding sentence) shall
have the right to transfer all or any portion of its Partnership Interest,
subject to the provisions of Section 11.6 and the satisfaction of each of the
following conditions (in addition to the right of each such Limited Partner or
Assignee to continue to make any such transfer permitted by clauses (i)-(iv) of
such proviso without satisfying either of the following conditions):

 

(1) General Partner Right of First Refusal. The transferring Partner shall give
written notice of the proposed transfer to the General Partner, which notice
shall state (i) the identity of the proposed transferee, and (ii) the amount and
type of consideration proposed to be received for the transferred OP Units. The
General Partner shall have ten (10) business days upon which to give the
transferring Partner notice of its election to acquire the OP Units on the
proposed terms. If it so elects, it shall purchase the OP Units on such terms
within ten (10) business days after giving notice of such election. If it does
not so elect, the transferring Partner may transfer such OP Units to a third
party, on economic terms no

 

47 

 

 

more favorable to the transferee than the proposed terms, subject to the other
conditions of this Section 11.3.

 

(2) Qualified Transferee. Any transfer of a Partnership Interest shall be made
only to Qualified Transferees. It is a condition to any transfer otherwise
permitted hereunder that the transferee assumes by operation of law or express
agreement all of the obligations of the transferor Limited Partner under this
Agreement with respect to such transferred Partnership Interest and no such
transfer (other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Charter, which may limit or restrict such
transferee’s ability to exercise its Redemption rights, and to the
representations in Section 3.4.D. Any transferee, whether or not admitted as a
Substituted Limited Partner, shall take subject to the obligations of the
transferor hereunder. Unless admitted as a Substituted Limited Partner, no
transferee, whether by a voluntary transfer, by operation of law or otherwise,
shall have any rights hereunder, other than the rights of an Assignee as
provided in Section 11.5.

 

B. If a Limited Partner is subject to Incapacity, the executor, administrator,
trustee, committee, guardian, conservator, or receiver of such Limited Partner’s
estate shall have all the rights of a Limited Partner, but not more rights than
those enjoyed by other Limited Partners, for the purpose of settling or managing
the estate, and such power as the Incapacitated Limited Partner possessed to
transfer all or any part of his or its interest in the Partnership. The
Incapacity of a Limited Partner, in and of itself, shall not dissolve or
terminate the Partnership.

 

C. The General Partner may prohibit any transfer otherwise permitted under
Section 11.3 by a Limited Partner of his or her OP Units if, in the opinion of
legal counsel to the Partnership, such transfer would require the filing of a
registration statement under the Securities Act by the Partnership or would
otherwise violate any federal or state securities laws or regulations applicable
to the Partnership or the Partnership Unit.

 

Section 11.4 Substituted Limited Partners.

 

A. No Limited Partner shall have the right to substitute a transferee as a
Limited Partner in his or her place (including any transferee permitted by
Section 11.3). The General Partner shall, however, have the right to consent to
the admission of a transferee of the interest of a Limited Partner pursuant to
this Section 11.4 as a Substituted Limited Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion. The
General Partner’s failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action, whether at law or in equity, against the Partnership or any
Partner.

 

B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement. The admission of any transferee as a Substituted Limited Partner
shall be subject to the transferee executing and delivering to the General
Partner an acceptance of all of the terms and conditions of this Agreement
(including without limitation, the provisions of Section 2.4 and such other
documents or instruments as may be required to effect the admission), each in
form and substance satisfactory to the General Partner) and the acknowledgment
by such transferee that each of the representations and warranties set forth in
Section 3.4 are true and correct with respect to such transferee as of the date
of the transfer of the Partnership Interest to such transferee and will continue
to be true to the extent required by such representations and warranties.

 

C. Upon the admission of a Substituted Limited Partner, the General Partner
shall amend Exhibit A to reflect the name, address, number of OP Units, and
Percentage Interest of such Substituted Limited Partner and to eliminate or
adjust,

 

48 

 

 

if necessary, the name, address and interest of the predecessor of such
Substituted Limited Partner.

 

Section 11.5 Assignees.

 

If the General Partner, in its sole and absolute discretion, does not consent to
the admission of any permitted transferee under Section 11.3 as a Substituted
Limited Partner, as described in Section 11.4, such transferee shall be
considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Loss, gain and loss attributable to the OP
Units assigned to such transferee, the rights to transfer the OP Units provided
in this Article 11, the right of Redemption provided in Section 8.6, but shall
not be deemed to be a holder of OP Units for any other purpose under this
Agreement, and shall not be entitled to effect a Consent with respect to such OP
Units on any matter presented to the Limited Partners for approval (such Consent
remaining with the transferor Limited Partner). In the event any such transferee
desires to make a further assignment of any such Partnership Units, such
transferee shall be subject to all the provisions of this Article 11 to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of OP Units. Notwithstanding anything contained in this Agreement to
the contrary, as a condition to becoming an Assignee, any prospective Assignee
must first execute and deliver to the Partnership an acknowledgment that each of
the representations and warranties set forth in Section 3.4 are true and correct
with respect to such prospective Assignee as of the date of the prospective
assignment of the Partnership Interest to such prospective Assignee and will
continue to be true to the extent required by such representations or
warranties.

 

Section 11.6 General Provisions. 

 

A. No Limited Partner may withdraw from the Partnership other than as a result
of (i) a permitted transfer of all of such Limited Partner’s OP Units in
accordance with this Article 11 and the transferee(s) of such Partnership Units
being admitted to the Partnership as a Substituted Limited Partner or (ii)
pursuant to the exercise of its right of Redemption of all of such Limited
Partner’s OP Units under Section 8.6; provided that after such transfer,
exchange or redemption such Limited Partner owns no Partnership Interest.

 

B. Any Limited Partner who shall transfer all of such Limited Partner’s OP Units
in a transfer permitted pursuant to this Article 11 where such transferee was
admitted as a Substituted Limited Partner or pursuant to the exercise of its
rights of Redemption of all of such Limited Partner’s OP Units under Section 8.6
shall cease to be a Limited Partner; provided that after such transfer, exchange
or redemption such Limited Partner owns no Partnership Interest.

 

C. Transfers pursuant to this Article 11 may only be made on the first day of a
fiscal quarter of the Partnership, unless the General Partner otherwise agrees.

 

D. If any Partnership Interest is transferred, assigned or redeemed during any
quarterly segment of the Partnership’s Partnership Year in compliance with the
provisions of this Article 11 or transferred or redeemed pursuant to Section
8.6, on any day other than the first day of a Partnership Year, then Net Income,
Net Loss, each item thereof and all other items attributable to such Partnership
Interest for such Partnership Year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the Partnership Year using a method selected by the
General Partner that is in accordance with Section 706(d) of the Code. Except as
otherwise agreed by the General Partner, all distributions of Available Cash
with respect to which the Partnership Record Date is before the date of such
transfer, assignment, exchange or redemption shall be made to the transferor
Partner, and all distributions of Available Cash thereafter, in the case of a
transfer or assignment other than a redemption, shall be made to the transferee
Partner.

 

49 

 

 

E. In addition to any other restrictions on transfer herein contained, including
without limitation the provisions of this Article 11, in no event may any
transfer or assignment of a Partnership Interest by any Partner (including
pursuant to a Redemption or exchange for REIT Shares by the Partnership or the
General Partner) be made (i) to any person or entity who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, of any component portion of a
Partnership Interest, such as the Capital Account, or rights to distributions,
separate and apart from all other components of a Partnership Interest;; (iv) if
in the opinion of counsel to the Partnership such transfer could cause the
Partnership to cease to be classified as a partnership for federal income tax
purposes (except as a result of the Redemption or exchange for REIT Shares of
all Partnership Interests held by all Limited Partners); (v) if such transfer
could, in the opinion of counsel to the Partnership, cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA, a
“party-in-interest” (as defined in Section 3(14) of ERISA) or a “disqualified
person” (as defined in Section 4975(c) of the Code); (vi) if such transfer
could, in the opinion of counsel to the Partnership, cause any portion of the
assets of the Partnership to constitute assets of any employee benefit plan
pursuant to Department of Labor Regulations Section 2510.2-101; (vii) if such
transfer requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (viii) except with the consent of
the General Partner, which may be given or withheld in its sole and absolute
discretion, if such transfer (1) could be treated as effectuated through an
“established securities market” or a “secondary market” (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code, (2) could
cause the Partnership to become a “publicly traded partnership,” as such term is
defined in Sections 469(k)(2) or 7704(b) of the Code, (3) could be in violation
of Section 3.4.E(5), or (4) could cause the Partnership to fail one or more of
the PTP Safe Harbors (as defined below); (ix) if such transfer subjects the
Partnership to be regulated under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or the Employee Retirement Income Security Act
of 1974, each as amended; (x) except with the consent of the General Partner,
which may be given or withheld in its sole discretion, if the transferee or
assignee of such Partnership Interest is unable to make the representations set
forth in Section 3.4C; (xi) if such transfer is made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, except with the consent of the General
Partner, which may be given or withheld in its sole and absolute discretion; and
provided, that, as a condition to granting such consent the lender may be
required to enter into an arrangement with the Partnership and the General
Partner to redeem or exchange for the REIT Shares Amount any OP Units in which a
security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code; or (xii) if in the
opinion of legal counsel for the Partnership such transfer could adversely
affect the ability of the General Partner to continue to qualify as a REIT or,
except with the consent of the General Partner, which may be given or withheld
in its sole and absolute discretion, subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code.

 

F. The General Partner shall monitor the transfers of interests in the
Partnership (including any acquisition of OP Units by the Partnership or the
General Partner) to determine (i) if such interests could be treated as being
traded on an “established securities market” or a “secondary market” (or the
substantial equivalent thereof), within the meaning of Section 7704 of the Code
and (ii) whether such transfers of interests could result in the Partnership
being unable to qualify for the “safe harbors” set forth in Regulations Section
1.7704-1 (or such other guidance subsequently published by the IRS setting forth
safe harbors under which interests will not be treated as “readily tradable on a
secondary market” (or the substantial equivalent thereof), within the meaning of
Section 7704 of the Code) (the “PTP Safe Harbors”). The General Partner shall
have the authority (but shall not be required) to take any steps it determines
are necessary or appropriate in its sole and absolute discretion to prevent any
trading of interests which could cause the Partnership to become a “publicly
traded partnership” within the meaning of Code Section 7704, or any recognition
by the Partnership of such transfers, or to ensure that one or more of the PTP
Safe Harbors is met.

 

50 

 

 

Section 11.7 Put Right of General Partner.

 

The General Partner shall have the right at any time (the “GP Put Right”) to
require the Partnership to redeem any portion of the General Partner Interest
for the purpose of providing the General Partner with sufficient funds to enable
it to make repurchases of its stock. The General Partner shall exercise the GP
Put Right at any time by providing the Partnership with written notice of its
desire to exercise the GP Put Right. The purchase price to be paid by the
Partnership for the portion of the General Partner Interest that the General
Partner desires to be redeemed shall equal the fair market value of such portion
as determined by Appraisal, and shall be paid in cash within one hundred twenty
(120) days after the General Partner provides the written notice required under
this Section 11.7. In the event that the General Partner exercises the GP Put
Right, the OP Units held by the General Partner shall be reduced as appropriate.

 

ARTICLE 12

ADMISSION OF PARTNERS

 

Section 12.1 Admission of Successor General Partner.

 

A successor to all of the General Partner’s General Partner Interest pursuant to
Section 11.2 who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Article 11.

 

Section 12.2 Admission of Additional Limited Partners.

 

A. After the admission to the Partnership of the initial Limited Partners on the
date hereof, a Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 and (ii) such other documents or instruments
as may be required in the discretion of the General Partner in order to effect
such Person’s admission as an Additional Limited Partner.

 

B. Notwithstanding anything to the contrary in this Section 12.2, no Person
shall be admitted as an Additional Limited Partner without the consent of the
General Partner, which consent may be given or withheld in the General Partner’s
sole and absolute discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of such
Person is recorded on the books and records of the Partnership, following the
receipt of the Capital Contribution in respect of such Limited Partner and the
consent of the General Partner to such admission. If any Additional Limited
Partner is admitted to the Partnership on any day other than the first day of a
Partnership Year, then Net Income, Net Loss, each item thereof and all other
items allocable among Partners and Assignees for such Partnership Year shall be
allocated among such Limited Partner and all other Partners and Assignees by
taking into account their varying interests during the Partnership Year using a
method selected by the General Partner that is in accordance with Section 706(d)
of the Code. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission shall be made
solely to Partners and Assignees other than the Additional Limited Partner
(other than in its capacity as an Assignee) and, except as otherwise agreed to
by the Additional Limited Partners

 

51 

 

 

and the General Partner, all distributions of Available Cash thereafter shall be
made to all Partners and Assignees including such Additional Limited Partner.

 

Section 12.3 Amendment of Agreement and Certificate of Limited Partnership.

 

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

 

ARTICLE 13

DISSOLUTION AND LIQUIDATION

  

Section 13.1 Dissolution.

 

The Partnership shall not be dissolved by the admission of Substituted Limited
Partners or Additional Limited Partners or by the admission of a successor
General Partner in accordance with the terms of this Agreement. Upon the
withdrawal of the General Partner, any successor General Partner (selected as
described in Section 13.1B below) shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up,
upon the first to occur of any of the following (each a “Liquidating Event”):

 

A. the expiration of its term as provided in Section 2.5;

 

B. an event of withdrawal of the General Partner, as defined in the Act, unless,
within 90 days after the withdrawal, all of the remaining Partners agree in
writing, in their sole and absolute discretion, to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
substitute General Partner;

 

C. subject to compliance with Section 11.2, an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;

 

D. entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Act;

 

E. any sale or other disposition of all or substantially all of the assets of
the Partnership or a related series of transactions that, taken together, result
in the sale or other disposition of all or substantially all of the assets of
the Partnership;

 

F. the Incapacity of the General Partner, unless all of the remaining Partners
in their sole and absolute discretion agree in writing to continue the business
of the Partnership and to the appointment, effective as of a date prior to the
date of such Incapacity, of a substitute General Partner;

 

G. the redemption or exchange for REIT Shares of all Partnership Interests
(other than those of the General Partner) pursuant to this Agreement; or

 

H. a final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to the entry of such order or judgment all of the remaining Partners agree in
writing to

 

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continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such order or judgment, of a substitute General
Partner.

 

Section 13.2 Winding Up.

 

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

 

(1) First, to the payment and discharge of all of the Partnership’s debts and
liabilities to creditors other than the Partners;

 

(2) Second, to the payment and discharge of all of the Partnership’s debts and
liabilities to the General Partner;

 

(3) Third, to the payment and discharge of all of the Partnership’s debts and
liabilities to the other Partners; and

 

(4) The balance, if any, to the General Partner and the Limited Partners in
proportion to their positive Capital Account balances, determined after taking
into account all Capital Account adjustments for all prior periods and the
Partnership taxable year during which the liquidation occurs (other than those
made as a result of the liquidating distribution set forth in this Section
13.2A(4)).

 

(5) Notwithstanding the provisions of Section 13.2A which require liquidation of
the assets of the Partnership, but subject to the order of priorities set forth
therein, if prior to or upon dissolution of the Partnership the Liquidator
determines that an immediate sale of part or all of the Partnership’s assets
would be impractical or would cause undue loss to the Partners, the Liquidator
may, in its sole and absolute discretion, defer for a reasonable time the
liquidation of any assets except those necessary to satisfy liabilities of the
Partnership (including to those Partners as creditors) and/or distribute to the
Partners, in lieu of cash, as tenants in common and in accordance with the
provisions of Section 13.2A, undivided interests in such Partnership assets as
the Liquidator deems not suitable for liquidation. Any such distributions
in-kind shall be made only if, in the good faith judgment of the Liquidator,
such distributions in-kind are in the best interest of the Partners, and shall
be subject to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property distributed in
kind using such reasonable method of valuation as it may adopt.

 

Section 13.3 Capital Contribution Obligation.

 

A. If any Partner has a deficit balance in its Capital Account (after giving
effect to all contributions, distributions and allocations for the taxable
years, including the year during which such liquidation occurs), such Partner
shall have no

 

53 

 

 

obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit at any time shall not be considered a
debt owed to the Partnership or to any other Person for any purpose whatsoever,
except to the extent otherwise expressly agreed to by such Partner and the
Partnership.

 

Section 13.4 Compliance with Timing Requirements of Regulations.

 

In the discretion of the Liquidator or the General Partner, a pro rata portion
of the distributions that would otherwise be made to the General Partner and
Limited Partners pursuant to this Article 13 may be:

 

(1) distributed to a trust established for the benefit of the General Partner
and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the Liquidator or the General
Partner, in the same proportions and the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement; or

 

(2) withheld or escrowed to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided, that such
withheld or escrowed amounts shall be distributed to the General Partner and
Limited Partners in the manner and priority set forth in Section 13.2A as soon
as practicable.

 

Section 13.5 Deemed Distribution and Recontribution.

 

Notwithstanding any other provision of this Article 13, in the event the
Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership’s
property shall not be liquidated, the Partnership’s liabilities shall not be
paid or discharged, and the Partnership’s affairs shall not be wound up.
Instead, the Partnership shall be deemed to have contributed all of its assets
and liabilities to a new partnership in exchange for an interest in the new
partnership. Immediately thereafter, the Partnership shall be deemed to
distribute interests in the new partnership to the General Partner and Limited
Partners in proportion to their respective interests in the Partnership in
liquidation of the Partnership.

 

Section 13.6 Rights of Limited Partners.

 

Except as otherwise provided in this Agreement, each Limited Partner shall look
solely to the assets of the Partnership for the return of his Capital
Contribution and shall have no right or power to demand or receive property from
the General Partner. No Limited Partner shall have priority over any other
Limited Partner as to the return of his Capital Contributions, distributions or
allocations.

 

Section 13.7 Notice of Dissolution.

 

In the event a Liquidating Event occurs or an event occurs that would, but for
provisions of Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within 30 days thereafter, provide written notice thereof
to each of the Partners and to all other parties with whom the Partnership
regularly conducts business (as determined in the discretion of the General
Partner) and shall publish notice thereof in a newspaper of general circulation
in each place in which the Partnership regularly conducts business (as
determined in the discretion of the General Partner).

 

54 

 

 

Section 13.8 Cancellation of Certificate of Limited Partnership.

 

Upon the completion of the liquidation of the Partnership cash and property as
provided in Section 13.2, the Partnership shall be terminated and the
Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions shall be cancelled and such other actions as may be
necessary to terminate the Partnership shall be taken.

 

Section 13.9 Reasonable Time for Winding-Up.

 

A reasonable time shall be allowed for the orderly winding-up of the business
and affairs of the Partnership and the liquidation of its assets pursuant to
Section 13.2, in order to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect between
the Partners during the period of liquidation.

 

Section 13.10 Waiver of Partition.

 

Each Partner hereby waives any right to partition of the Partnership property.

 

ARTICLE 14

AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

 

Section 14.1 Amendments.

 

A. The actions requiring consent or approval of the Partners or of the Limited
Partners pursuant to this Agreement, including Section 7.3, or otherwise
pursuant to applicable law, are subject to the procedures in this Article 14.

 

B. Amendments to this Agreement requiring the consent or approval of Limited
Partners may be proposed by the General Partner or by Limited Partners holding
twenty-five percent (25%) or more of the Partnership Interests held by Limited
Partners. Following such proposal, the General Partner shall submit any proposed
amendment to the Partners or to the Limited Partners, as applicable. The General
Partner shall seek the written consent of the Limited Partners on the proposed
amendment or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate. For purposes of obtaining a written
consent, the General Partner may require a response within a reasonable
specified time, but not less than 15 days, and failure to respond in such time
period shall constitute a consent which is consistent with the General Partner’s
recommendation (if so recommended) with respect to the proposal; provided, that,
an action shall become effective at such time as requisite consents are received
even if prior to such specified time.

  

Section 14.2 Action by the Partners.

 

A. Meetings of the Partners may be called by the General Partner and shall be
called upon the receipt by the General Partner of a written request by Limited
Partners holding twenty-five percent (25%) or more of the Partnership Interests
held by Limited Partners. The notice shall state the nature of the business to
be transacted. Notice of any such meeting shall be given to all Partners not
less than seven days nor more than 30 days prior to the date of such meeting.
Partners may vote in person or by proxy at such meeting. Whenever the vote or
Consent of the Limited Partners or of the Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of Partners
or may be given in accordance with the procedure prescribed in Section 14.1.

 

55 

 

 

B. Any action required or permitted to be taken at a meeting of the Partners may
be taken without a meeting if a written consent setting forth the action so
taken is signed by the percentage as is expressly required by this Agreement for
the action in question. Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of the
Percentage Interests of the Partners (expressly required by this Agreement).
Such consent shall be filed with the General Partner. An action so taken shall
be deemed to have been taken at a meeting held on the effective date so
certified.

 

C. Each Limited Partner may authorize any Person or Persons to act for him by
proxy on all matters in which a Limited Partner is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.

 

D. Each meeting of Partners shall be conducted by the General Partner or such
other Person as the General Partner may appoint pursuant to such rules for the
conduct of the meeting as the General Partner or such other Person deems
appropriate.

 

E. On matters on which Limited Partners are entitled to vote, each Limited
Partner shall have a vote equal to the number of OP Units held.

  

ARTICLE 15

GENERAL PROVISIONS

 

Section 15.1 Addresses and Notice.

 

Any notice, demand, request or report required or permitted to be given or made
to a Partner or Assignee under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class United
States mail or by other means of written communication to the Partner or
Assignee at the address set forth in Exhibit A or such other address as the
Partners shall notify the General Partner in writing.

 

Section 15.2 Titles and Captions.

 

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

 

 

Section 15.3 Pronouns and Plurals.

 

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

 

Section 15.4 Further Action.

 

The parties shall execute and deliver all documents, provide all information and
take or refrain from taking action

 

56 

 

 

as may be necessary or appropriate to achieve the purposes of this Agreement.

 

Section 15.5 Binding Effect.

 

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

 

Section 15.6 Creditors.

 

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

 

Section 15.7 Waiver.

 

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

 

Section 15.8 Counterparts.

 

This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto.

 

Section 15.9 Applicable Law.

 

This Agreement shall be construed in accordance with and governed by the laws of
the State of Delaware, without regard to the principles of conflicts of law.

 

Section 15.10 Invalidity of Provisions.

 

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

 

Section 15.11 Entire Agreement.

 

This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.

  

Section 15.12 No Rights as Stockholders.

 

Nothing contained in this Agreement shall be construed as conferring upon the
holders of OP Units any rights whatsoever as stockholders of the General
Partner, including without limitation any right to receive dividends or other

 

57 

 

 

distributions made to stockholders of the General Partner or to vote or to
consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the General Partner or any other
matter.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

58 

 

 

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

 

    GENERAL PARTNER:       Procaccianti Hotel REIT, Inc.       By: /s/ James A.
Procaccianti   Name: James A. Procaccianti   Title:   President  

 

    LIMITED PARTNERS:       Procaccianti Hotel REIT L.P., LLC       By:
Procaccianti Hotel REIT, Inc., its Sole Member       By: /s/ James A.
Procaccianti   Name: James A. Procaccianti   Title:   President  

 

    LFHI, LLC           By: /s/ Robert Leven   Name: Robert Leven   Title:  
Manager  

 

PEH 1999 Realty Trust Number Two

          By: /s/ James A. Procaccianti   Name: James A. Procaccianti   Title:  
Trustee  

 

59 

 

 

The LHG 1997 Realty Trust             By: /s/ Elizabeth A. Procaccianti   Name:
Elizabeth A. Procaccianti   Title:   Trustee           TH Investment Holdings
II, LLC               By: /s/ James A. Procaccianti   Name: James A.
Procaccianti   Title:   Manager  

 

 

60 

 

 

ETJ GANO HOLDINGS, INC.           By: /s/ James A. Procaccianti   Name: James A.
Procaccianti   Title:   Authorized Signatory  

 

    PRJA GANO HOLDINGS, LLC           By: /s/ James A. Procaccianti   Name:
James A. Procaccianti   Title:   Authorized Signatory  

 

EHI GANO HOLDINGS, INC.

          By: /s/ James A. Procaccianti   Name: James A. Procaccianti   Title:  
Authorized Signatory  

 

[Signature Page to Amended and Restated Agreement of Limited Partnership
of Procaccianti Hotel REIT, L.P.]

 

61 

 

 

Annex A

 

Annex A - Certain Audit Matters

 

(a) Appointment; Resignation. The Partners hereby appoint James A. Procaccianti
as the “partnership representative” as provided in Code Section 6223(a) (the
“Partnership Representative”). The Partnership Representative can be removed at
any time by a vote of the General Partner. The Partnership Representative shall
resign if he is no longer a direct or indirect member of the Partnership. In the
event of the resignation or removal of the Partnership Representative, the
General Partner shall select a replacement Partnership Representative. If the
resignation or removal of the Partnership Representative occurs prior to the
effectiveness of the resignation or removal under applicable Treasury
Regulations or other administrative guidance, the Partnership Representative
that has resigned or been removed shall not take any actions in his capacity as
Partnership Representative except as directed by the General Partner.

 

(b) Tax Examinations and Audits. The Partnership Representative shall promptly
notify the Partners of the commencement of any tax audit of the Partnership,
upon receipt of a tax assessment and upon the receipt of a notice of final
partnership administrative adjustment or final partnership adjustment and shall
keep the Partners reasonably informed of the status of any tax audit or
resulting administrative or judicial proceeding. Without the consent of the
General Partner, the Partnership Representative shall not extend the statute of
limitations, file a request for administrative adjustment, file suit relating to
any Partnership tax refund or deficiency or enter into any settlement agreement
relating to items of income, gain, loss or deduction of the Partnership with any
taxing authority.

 

(c) Elections. With respect to any imputed underpayment, the Partnership
Representative shall take such actions, on a timely basis, as directed by the
General Partner, including whether to (i) file a petition for readjustment in
the Tax Court, federal district court, or the Court of Federal Claims, (ii)
cause the Partnership to pay the imputed underpayment under Code Section 6225,
or (iii) make the election under Code Section 6226. If the General Partner
directs the Partnership Representative to cause the Partnership to pay the
imputed underpayment under Code Section 6225, (A) the Partners shall take such
actions as requested by the Partnership Representative, including filing amended
tax returns and paying any tax due under Code Section 6225(c)(2)(A) or paying
any tax due and providing applicable information to the Internal Revenue Service
under Code Section 6225(c)(2)(B) and (B) the Partnership shall make any
modifications available under Code Section 6225(c)(3), (4), and (5) as directed
by the General Partner. If the Partnership economically bears (or is required to
economically bear) any imputed underpayment and the General Partner determines
that any portion of such liability is attributable to a Partner or former
Partner, then such amount shall be paid by such Person to the Partnership. Any
such payment made by a Partner shall not be treated as a capital contribution,
except to the extent required for purposes of maintaining Capital Account
balances. Any amount not paid by a Partner or former Partner within fifteen (15)
days of a request by the Partnership Representative pursuant to this clause (c)
shall accrue interest at an annual rate equal to the lesser of fifteen (15%) and
the highest rate permitted by applicable law. Any imputed underpayment amount
paid by the Partnership on behalf of a Partner and not reimbursed by that
Partner shall be treated as a distribution to such Partner.

 

(d) Tax Returns and Tax Deficiencies. Each Partner agrees that such Partner
shall not treat any Partnership item inconsistently on such Partner’s federal,
state, foreign, or other income tax return with the treatment of the item on the
Partnership’s return. Any deficiency for taxes imposed on any Partner or former
Partner (including penalties, additions to tax or interest imposed with respect
to such taxes, and any taxes imposed pursuant to Code Section 6226) shall be
paid by such Partner or former Partner and if required to be paid (and actually
paid) by the Partnership, will be recoverable from such Partner or former
Partner.

 

Annex A-1 

 

 

(e) Cooperation by Partners and Former Partners. Each Partner and former Partner
shall provide such cooperation and assistance, including timely executing and
filing forms or other statements and providing information about the Partner, as
is reasonably requested by the Partnership Representative to enable the
Partnership to satisfy any applicable tax reporting or compliance requirements,
to make any tax election or to qualify for an exception from or reduced rate of
tax or other tax benefit or be relieved of liability for any tax regardless of
whether such requirement, tax benefit or tax liability existed on the date such
Partner was admitted to the Partnership. If a Partner fails to provide any such
forms, statements, or other information requested by the Partnership
Representative, such Partner shall indemnify the Partnership for the share of
any tax deficiency paid or payable by the Partnership that is due to such
failure (as reasonably determined by the Partnership Representative).

 

(f) Indemnification of Partnership Representative. The Partnership shall, to the
fullest extent permitted by the Act and other applicable law as it presently
exists or may hereafter be amended, indemnify and hold harmless any Person who
serves as Partnership Representative, or as an officer or director of a
corporate Partnership Representative, with respect to any claim or demand
against such Person and any debt, obligation or other liability incurred by such
Person by reason of such Person’s former or present capacity as the Partnership
Representative (or as an officer or director of a corporate Partnership
Representative). The indemnification provided hereunder shall not be deemed
exclusive of any other rights to which any Person may be entitled under this
Agreement, or under any applicable law, other agreement, vote of the General
Partners, or otherwise. For purposes of this paragraph (g), any provisions of
the Act that restrict or prohibit the Partnership from indemnifying a General
Partner shall be deemed to also restrict or prohibit the Partnership from
indemnifying any Person who serves as Partnership Representative, or as an
officer or director of a corporate Partnership Representative. Any amendment,
modification or repeal of any portion of this paragraph (g) shall not adversely
affect any right or protection of a Partnership Representative in respect of any
act or omission occurring prior to the time of such amendment, modification or
repeal.

 

(g) Tax Counsel. The Partnership Representative may employ tax counsel to
represent the Partnership in connection with any tax audit or investigation of
the Partnership and any administrative or judicial proceedings arising out of
such audit. The fees and expenses of such counsel shall be a Partnership expense
and shall be paid by the Partnership.

 

(h) Survival. The obligations of each Partner or former Partner under this Annex
A shall survive the transfer or redemption by such Partner of its partnership
interest, the termination of this Agreement, or the dissolution of the
Partnership.

 

Annex A-2 

 

 

EXHIBIT A

 

PARTNERS, OP UNITS, PERCENTAGE INTERESTS

 

Names and Addresses:  Class A
OP Units  Class B OP
Units  Class K OP
Units  Class K-I
OP Units  Class K-T
OP Units  Percentage
Interest General Partner  PER THE  BOOKS  AND  RECORDS  OF THE  REIT
Procaccianti Hotel REIT, Inc.
1140 Reservoir Avenue
Cranston, Rhode Island 02920-6320                                        Limited
Partners                   Procaccianti Hotel REIT LP, LLC
1149 Reservoir Avenue
Cranston, Rhode Island
02920-6320  PER THE  BOOKS  AND  RECORDS   OF THE  REIT                    
LFHI, LLC
1149 Reservoir Avenue
Cranston, Rhode Island
02920-6320        22,641.10                              PEH 1999 Realty Trust
#2
1149 Reservoir Avenue
Cranston, Rhode Island
02920-6320        11,321.19                              LHG 1997 Realty Trust
1149 Reservoir Avenue
Cranston, Rhode Island
02920-6320        11,321.19                              TH Investment Holdings
II, LLC
1149 Reservoir Avenue
Cranston, Rhode Island
02920-6320        81,807.72                              ETJ Gano Holdings, Inc.
1149 Reservoir Avenue
Cranston, Rhode Island
02920-6320        666.62         

 

Exhibit A-1 

 

 

PRJA GANO HOLDINGS, LLC
Cranston, Rhode Island
02920-6320         399.97                              EHI GANO HOLDINGS, Inc.
1149 Reservoir Avenue
Cranston, Rhode Island
02920-6320         266.65         

 

Exhibit A-2 

 

 

EXHIBIT B

 

ALLOCATIONS

 

1. Allocations.

 

(a) Allocations of Net Income and Net Loss. After giving effect to the
allocations set forth in paragraphs 2 and 3 of this Exhibit B, items of Net
Income and Net Loss in each fiscal year shall be allocated among the Partners in
a manner such that the Capital Account of each Partner, immediately after giving
effect to such allocation, is, as nearly as possible, equal (proportionately) to
the amount of the distribution that would be made to such Partner if:

 

(i) the Partnership were dissolved and terminated;

 

(ii) the affairs of the Partnership were wound up and each Partnership asset was
sold for cash equal to its Gross Asset Value (except that any Partnership Asset
actually sold during the current year shall be treated as sold for the actual
proceeds of the sale);

 

(iii) all Partnership liabilities were satisfied; and

 

(iv) the net assets of the Partnership were distributed to the Partners in
accordance with Article 5 immediately after giving effect to such allocation.

 

To the extent that any loss or deduction otherwise allocable to a Partner causes
such Partner to have an Adjusted Capital Account Deficit as of the end of the
fiscal year to which such loss or deduction relates, such loss or deduction
shall instead be allocated to the other Partner(s) in proportion to positive
Capital Account balances, until their Capital Accounts are all reduced to zero,
then the remainder shall be allocated by Percentage Interest.

 

(b) For purposes of subparagraph 1(a) Partners holding a class or series of
Partnership Units that are burdened by Special Fees that are not applicable to
all Partnership Units within such class (such as the stockholder servicing fees
described in the General Partner’s Prospectus, which is not applicable to Class
K-T OP Units corresponding to Class K-T REIT Shares purchased through the
General Partner’s dividend reinvestment plan), shall also be deemed to be a
separate Partner with respect to each group of such class or series of
Partnership Units.

 

2. Regulatory Allocations. Prior to making any allocations pursuant to paragraph
1 of this Exhibit B, items of Partnership income and loss shall be allocated in
the following order and priority:

 

(a) Minimum Gain Chargeback (Nonrecourse Liabilities). Except as otherwise
provided in Section 1.704-2(f) of the Regulations, if there is a net decrease in
Partnership Minimum Gain for any Partnership fiscal year, each Partner shall be
specially allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Partner’s share of the
net decrease in Partnership Minimum Gain determined in accordance with Section
1.704-2(g) of the Regulations. The items to be so allocated shall be determined
in accordance with Sections 1.704-2(f) and (j) of the Regulations. This
subparagraph 2(a) is intended to comply with the minimum gain chargeback
requirement in section 1.704-2(f) of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph 2(a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.

 

(b) Partner Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(i)(4) of the Regulations, if

 

Exhibit B-1 

 

 

there is a net decrease in Partner Nonrecourse Debt Minimum Gain during any
fiscal year, each Partner who has a share of the Partner Nonrecourse Debt
Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the
Regulations, shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to that
Partner’s share of the net decrease in the Partner Nonrecourse Debt Minimum Gain
to the extent and in the manner required by Section 1.704-2(i) of the
Regulations. The items to be so allocated shall be determined in accordance with
Sections 1.704-2(i)(4) and (j)(2) of the Regulations. This subparagraph 2(b) is
intended to comply with the minimum gain chargeback requirement contained in
section 1.704-2(i)(4) of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this subparagraph 2(b) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.

 

(c) Qualified Income Offset. If a Partner unexpectedly receives any adjustments,
allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5)
or (6) of the Regulations, and such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain shall be specially allocated to
such Partner in an amount and manner sufficient to eliminate the Adjusted
Capital Account Deficit as quickly as possible as required by the Regulations
without creating or increasing an Adjusted Capital Account Deficit of any other
Partner, provided that an allocation pursuant to this subparagraph 2(c) shall be
made only if and to the extent that such Partner would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Exhibit B have
been tentatively made as if this subparagraph 2(c) were not in the Agreement..
This subparagraph 2(c) is intended to constitute a “qualified income offset”
under Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.

 

(d) Gross Income Allocation. If any Partner has an Adjusted Capital Account
Deficit at the end of any fiscal year or other applicable period which is in
excess of the amount such Partner is obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations, such Partner shall be specially allocated items of Partnership
income (including gross income) and gain in the amount of such excess as quickly
as possible, provided that an allocation pursuant to this subparagraph 2(g)
shall be made if and only to the extent that such Partner would have an Adjusted
Capital Account Deficit in excess of such amount after all other allocations
provided for under this Agreement have been tentatively made as if subparagraph
2(c) and this subparagraph 2(d) were not in this Agreement.

 

(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or other
applicable period shall be allocated to the Partners the same ratio as Net
Income for such fiscal year or other applicable period.

 

(f) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
fiscal year or other applicable period shall be specially allocated to the
Partner that bears the economic risk of loss for which such Partner Nonrecourse
Deductions are attributable(as determined in accordance with Section
1.704-2(i)(1) of the Regulations).

 

(g) Section 754 Adjustment. To the extent an adjustment to the adjusted tax
basis of any asset of the Partnership pursuant to Section 734(b) of the Code or
Section 743(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m)
of the Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated among the Partners in a manner consistent with the manner in which
each of their respective Capital Accounts are required to be adjusted pursuant
to section 1.704-1(b)(2)(iv)(m) of the Regulations.

 

3. Curative Allocations and Similar Rules. The General Partner is authorized to
offset all Regulatory Allocations either with other Regulatory Allocations or
with special allocations of other items of Partnership income, gain, loss, or
deduction pursuant to this paragraph 3. Therefore, notwithstanding any other
provision of this Exhibit B (other than the Regulatory Allocations and Tax
Allocations), the General Partner shall make such offsetting allocations of
Partnership

 

Exhibit B-2 

 

 

income, gain, loss or deduction in whatever manner the General Partner
determines appropriate so that, after such offsetting allocations are made, each
Partner’s Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of this Agreement. In addition, in the event the
General Partner determines the allocation provisions of the Agreement and this
Exhibit B result in allocations or Capital Account balances that do not comport
with the economic intent of the parties, the General Partner shall be entitled,
in its sole discretion, to make such adjustments to such provisions as it deems
necessary or appropriate to correct such provisions.

 

4. Tax Allocations.

 

(a) Items of Income or Loss. Except as is otherwise provided in this Exhibit B,
an allocation of Partnership Net Income or Net Loss to a Partner shall be
treated as an allocation to such Partner of the same share of each item of
income, gain, loss, deduction and item of tax-exempt income or Section
705(a)(2)(B) expenditure (or item treated as such expenditure pursuant to
Section 1.704-1(b)(2)(iv)(i) of the Regulations) (“Tax Items”) that is taken
into account in computing Net Income or Net Loss.

 

(b) Section 1245/1250 Recapture. Subject to subparagraph 4(c) below, if any
portion of gain from the sale of Partnership assets is treated as gain which is
ordinary income by virtue of the application of Sections 1245 or 1250 of the
Code (“Affected Gain”), then such Affected Gain shall be allocated among the
Partners in the same proportion that the depreciation and amortization
deductions giving rise to the Affected Gain were allocated. This subparagraph
4(b) shall not alter the amount of Net Income (or items thereof) allocated among
the Partners, but merely the character of such Net Income (or items thereof).
For purposes hereof, in order to determine the proportionate allocations of
depreciation and amortization deductions for each fiscal year or other
applicable period, such deductions shall be deemed allocated on the same basis
as Net Income and Net Loss for such respective period.

 

(c) Precontribution Gain, Revaluations. With respect to any Contributed
Property, the Partnership shall use any permissible method contained in the
Regulations promulgated under Section 704(c) of the Code selected by the General
Partner, in its sole discretion, to take into account any variation between the
adjusted basis of such asset and the fair market value of such asset as of the
time of the contribution (“Precontribution Gain”). Each Partner hereby agrees to
report income, gain, loss and deduction on such Partner’s federal income tax
return in a manner consistent with the method used by the Partnership. If any
asset has a Gross Asset Value which is different from the Partnership’s adjusted
basis for such asset for federal income tax purposes because the Partnership has
revalued such asset pursuant to Section 1.704-1(b)(2)(iv)(f) of the Regulations,
the allocations of Tax Items shall be made in accordance with the principles of
Section 704(c) of the Code and the Regulations and the methods of allocation
promulgated thereunder. The intent of this subparagraph 4(c) is that each
Partner who contributed to the capital of the Partnership a Contributed Property
will bear, through reduced allocations of depreciation, increased allocations of
gain or other items, the tax detriments associated with any Precontribution
Gain. This subparagraph 4(c) is to be interpreted consistently with such intent.

 

(d) Excess Nonrecourse Liability Safe Harbor. Pursuant to Section 1.752-3(a)(3)
of the Regulations, solely for purposes of determining each Partner’s
proportionate share of the “excess nonrecourse liabilities” of the Partnership
(as defined in Section 1.752-3(a)(3) of the Regulations), the Partners’
respective interests in Partnership profits shall be determined under any
permissible method reasonably determined by the General Partner, provided
however, Excess Nonrecourse Liabilities shall be allocated first to the ETJ Gano
Holdings, Inc., PRJA Gano Holdings, LLC and EHI Gano Holdings, Inc. to the
extent of their allocable share of 704(c) built-in gain.”

 

(e) References to Regulations. Any reference in this Exhibit B or the Agreement
to a provision of proposed and/or temporary Regulations shall, if such provision
is modified or renumbered, be deemed to refer to the successor provision as

 

Exhibit B-3 

 

 

so modified or renumbered, but only to the extent such successor provision
applies to the Partnership under the effective date rules applicable to such
successor provision.)

 

(f) Successor Partners. For purposes of this Exhibit B, a transferee of a
Partnership Interest shall be deemed to have been allocated the Net Income, Net
Loss and other items of Partnership income, gain, loss, deduction and credit
allocable to the transferred Partnership Interest that previously have been
allocated to the transferor Partner pursuant to this Agreement.

 

Exhibit B-4 

 

 

EXHIBIT C

 

NOTICE OF REDEMPTION

 

The undersigned hereby irrevocably (i) transfers [Class A][Class B][Class
K][Class K-I][Class K-T] OP Units in Procaccianti Hotel REIT, L.P. in accordance
with the terms of the Amended and Restated Agreement of Limited Partnership of
Procaccianti Hotel REIT, L.P. and the rights of Redemption referred to therein,
(ii) surrenders such [Class A][Class B][Class K][Class K-I][Class K-T] OP Units
and all right, title and interest therein, and (iii) directs that the cash (or,
if applicable, REIT Shares of the corresponding Class of OP Units being
redeemed) deliverable upon Redemption or exchange be delivered to the address
specified below within ten (10) days of the receipt of this Notice of
Redemption, and if applicable, that such REIT Shares of the corresponding Class
of OP Units being redeemed be registered or placed in the name(s) and at the
address(es) specified below.

 

      Dated:             Name of Partner:

 

    (Signature of Partner)     (Street Address)     (City, State, Zip Code)

 

Issue REIT Shares of the corresponding Class of OP Units being redeemed to:

 

Please insert social security or identifying number:

 

Name:

 

Exhibit C-1 

 

 

EXHIBIT D

 

FORM OF [Class A][Class B][Class K][Class K-I][Class K-T] OP UNIT CERTIFICATE

 

CERTIFICATE FOR OP UNITS OF

Procaccianti Hotel REIT, L.P.

 

No.   UNITS

 

Procaccianti Hotel REIT, Inc., as the General Partner of Procaccianti Hotel
REIT, L.P., a Delaware limited partnership (the “Operating Partnership”), hereby
certifies that is a Limited Partner of the Operating Partnership whose
Partnership Interests therein, as set forth in the Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated [•], 2020,
as amended (the “Partnership Agreement”), under which the Operating Partnership
is existing (copies of which are on file at the Operating Partnership’s
principal office at 1140 Reservoir Avenue, Cranston, Rhode Island 02920-6320),
represent [Class A][Class B][Class K][Class K-I][Class K-T] OP Units in the
Operating Partnership.

 

THE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES
WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT, AS IT MAY BE AMENDED FROM TIME
TO TIME (A COPY OF WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS
OTHERWISE PROVIDED IN THE PARTNERSHIP AGREEMENT, THE UNITS EVIDENCED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS
TO THE GENERAL PARTNER AN OPINION OF COUNSEL SATISFACTORY TO THE GENERAL
PARTNER, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY
BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE
SECURITIES OR “BLUE SKY” LAWS. THIS CERTIFICATE EVIDENCES AN INTEREST IN THE
OPERATING PARTNERSHIP AND SHALL BE A SECURITY GOVERNED BY ARTICLE 8 OF THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF DELAWARE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OTHER APPLICABLE JURISDICTION.

 

Exhibit D-1 

 

 

TABLE OF CONTENTS

 

    PAGE ARTICLE 1 DEFINED TERMS 1 Section 1.1 Definitions. 1 ARTICLE 2
ORGANIZATIONAL MATTERS 17 Section 2.1 Organization. 17 Section 2.2 Name. 17
Section 2.3 Registered Office and Agent; Principal Office. 17 Section 2.4 Power
of Attorney. 17 Section 2.5 Term. 18 ARTICLE 3 PURPOSE 18 Section 3.1 Purpose
and Business. 18 Section 3.2 Powers. 19 Section 3.3 Partnership only for
Purposes Specified. 19 Section 3.4 Representations and Warranties by the
Parties. 19 Section 3.5 Certain ERISA Matters. 21 ARTICLE 4 CAPITAL
CONTRIBUTIONS 21 Section 4.1 Capital Contributions of the Partners. 21 Section
4.2 Classes of Partnership Units. 21 Section 4.3 Loans by Third Parties. 22
Section 4.4 Additional Funding and Capital Contributions. 22 Section 4.5 Other
Contribution Provisions. 23 Section 4.6 No Preemptive Rights. 23 Section 4.7 No
Interest; No Return. 23 Section 4.8 Intentionally Omitted. 24 Section 4.9
Special Fees. 24 ARTICLE 5 DISTRIBUTIONS 24 Section 5.1 Distributions. 24
Section 5.2 Qualification as a REIT. 27 Section 5.3 Withholding. 28 Section 5.4
Additional Partnership Interests. 28 Section 5.5 Distributions in Kind. 28
Section 5.6 Distributions upon Liquidation. 28 Section 5.7 Distribution
Limitation. 28 ARTICLE 6 ALLOCATIONS 28 Section 6.1 Allocations. 28 ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS 29 Section 7.1 Management. 29 Section 7.2
Certificate of Limited Partnership. 32 Section 7.3 Restrictions on General
Partner’s Authority. 32 Section 7.4 Reimbursement of the General Partner. 33
Section 7.5 Outside Activities of the General Partner. 35 Section 7.6 Contracts
with Affiliates. 35 Section 7.7 Indemnification. 36 Section 7.8 Liability of the
General Partner. 38 Section 7.9 Other Matters Concerning the General Partner. 38
Section 7.10 Title to Partnership Assets. 39 Section 7.11 Reliance by Third
Parties. 39 ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 40 Section 8.1
Limitation of Liability. 40

 

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Section 8.2 Management of Business. 40 Section 8.3 Outside Activities of Limited
Partners. 40 Section 8.4 Return of Capital. 40 Section 8.5 Rights of Limited
Partners Relating to the Partnership. 40 Section 8.6 Redemption Rights. 41
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS 43 Section 9.1 Records and
Accounting. 43 Section 9.2 Fiscal Year. 44 Section 9.3 Reports. 44 Section 9.4
Nondisclosure of Certain Information. 44 ARTICLE 10 TAX MATTERS 44 Section 10.1
Preparation of Tax Returns. 44 Section 10.2 Tax Elections. 44 Section 10.3
[Intentionally Omitted.] 45 Section 10.4 [Intentionally Omitted.] 45 Section
10.5 Withholding. 45 ARTICLE 11 TRANSFERS AND WITHDRAWALS 46 Section 11.1
Transfer. 46 Section 11.2 Transfer of the Partnership Interest of the General
Partner.. 46 Section 11.3 Limited Partners’ Rights to Transfer. 47 Section 11.4
Substituted Limited Partners. 48 Section 11.5 Assignees. 49 Section 11.6 General
Provisions. 49 Section 11.7 Put Right of General Partner. 51 ARTICLE 12
ADMISSION OF PARTNERS 51 Section 12.1 Admission of Successor General Partner. 51
Section 12.2 Admission of Additional Limited Partners. 51 Section 12.3 Amendment
of Agreement and Certificate of Limited Partnership. 52 ARTICLE 13 DISSOLUTION
AND LIQUIDATION 52 Section 13.1 Dissolution. 52 Section 13.2 Winding Up. 53
Section 13.3 Capital Contribution Obligation. 53 Section 13.4 Compliance with
Timing Requirements of Regulations. 54 Section 13.5 Deemed Distribution and
Recontribution. 54 Section 13.6 Rights of Limited Partners. 54 Section 13.7
Notice of Dissolution. 54 Section 13.8 Cancellation of Certificate of Limited
Partnership. 55 Section 13.9 Reasonable Time for Winding-Up. 55 Section 13.10
Waiver of Partition. 55 ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
55 Section 14.1 Amendments. 55 Section 14.2 Action by the Partners. 55 ARTICLE
15 GENERAL PROVISIONS 56 Section 15.1 Addresses and Notice. 56 Section 15.2
Titles and Captions. 56 Section 15.3 Pronouns and Plurals. 56 Section 15.4
Further Action. 56 Section 15.5 Binding Effect. 57 Section 15.6 Creditors. 57
Section 15.7 Waiver. 57 Section 15.8 Counterparts. 57 Section 15.9 Applicable
Law. 57 Section 15.10 Invalidity of Provisions. 57 Section 15.11 Entire
Agreement. 57 Section 15.12 No Rights as Stockholders. 57

 

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