Exhibit 10.1

 

 

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

SERITAGE GROWTH PROPERTIES, L.P.

 

 

Dated as of December 14, 2017

THE PARTNERSHIP INTERESTS ISSUED PURSUANT TO THIS AGREEMENT OF LIMITED
PARTNERSHIP HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES OR “BLUE SKY” LAWS OF ANY STATE OR OTHER
JURISDICTION, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THEY ARE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY OTHER APPLICABLE
SECURITIES OR “BLUE SKY” LAWS, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH PARTNERSHIP INTERESTS ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN THIS AGREEMENT.

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TABLE OF CONTENTS

 

     Page  

ARTICLE I. DEFINED TERMS

     1  

Section 1.1 Definitions

     1  

ARTICLE II. ORGANIZATIONAL MATTERS

     15  

Section 2.1 Organization

     15  

Section 2.2 Name

     15  

Section 2.3 Resident Agent; Principal Office

     16  

Section 2.4 Power of Attorney

     16  

Section 2.5 Term

     17  

Section 2.6 Number of Partners

     17  

Section 2.7 Partnership Interests are Securities

     17  

ARTICLE III. PURPOSE

     18  

Section 3.1 Purpose and Business

     18  

Section 3.2 Powers

     18  

Section 3.3 Partnership Only for Purposes Specified

     18  

Section 3.4 Representations and Warranties by the Parties

     19  

Section 3.5 ERISA

     20  

ARTICLE IV. CAPITAL CONTRIBUTIONS

     20  

Section 4.1 Capital Contributions of the Partners

     20  

Section 4.2 Loans by Third Parties

     20  

Section 4.3 Additional Funding and Capital Contributions

     21  

Section 4.4 Stock Plan

     23  

Section 4.5 Other Contribution Provisions

     23  

Section 4.6 Capital Accounts

     23  

ARTICLE V. DISTRIBUTIONS

     24  

Section 5.1 Requirement and Characterization of Distributions

     24  

Section 5.2 Distributions in Kind

     25  

Section 5.3 Distributions upon Liquidation

     25  

ARTICLE VI. ALLOCATIONS

     25  

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

     25  

Section 6.2 General Allocations

     25  

Section 6.3 Regulatory Allocations

     26  

Section 6.4 Tax Allocations

     27  

ARTICLE VII. MANAGEMENT AND OPERATIONS OF BUSINESS

     28  

Section 7.1 Management

     28  

Section 7.2 Certificate of Limited Partnership

     31  

Section 7.3 Restrictions on General Partner’s Authority

     31  

 

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Section 7.4 Reimbursement of the General Partner

     35  

Section 7.5 Outside Activities of the General Partner

     35  

Section 7.6 Contracts with Affiliates

     36  

Section 7.7 Indemnification

     37  

Section 7.8 Liability of the General Partner

     38  

Section 7.9 Other Matters Concerning the General Partner

     39  

Section 7.10 Title to Partnership Assets

     39  

Section 7.11 Reliance by Third Parties

     40  

ARTICLE VIII. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

     40  

Section 8.1 Limitation of Liability

     40  

Section 8.2 Management of Business

     40  

Section 8.3 Outside Activities of Limited Partners

     41  

Section 8.4 Return of Capital

     41  

Section 8.5 Rights of Limited Partners Relating to the Partnership

     42  

Section 8.6 Redemption Rights

     42  

ARTICLE IX. BOOKS, RECORDS, ACCOUNTING AND REPORTS

     45  

Section 9.1 Records and Accounting

     45  

Section 9.2 Fiscal Year

     45  

Section 9.3 Reports

     45  

ARTICLE X. TAX MATTERS

     46  

Section 10.1 Preparation of Tax Returns

     46  

Section 10.2 Tax Matters Partner

     46  

Section 10.3 Withholding

     47  

Section 10.4 Puerto Rico Tax Matters

     47  

ARTICLE XI. TRANSFERS AND WITHDRAWALS

     48  

Section 11.1 Transfer

     48  

Section 11.2 Transfer of General Partner’s Partnership Interest

     48  

Section 11.3 Limited Partners’ Rights to Transfer

     50  

Section 11.4 Substituted Limited Partners

     51  

Section 11.5 Assignees

     52  

Section 11.6 General Provisions

     52  

ARTICLE XII. ADMISSION OF PARTNERS

     53  

Section 12.1 Admission of Successor General Partner

     53  

Section 12.2 Admission of Additional Limited Partners

     54  

Section 12.3 Amendment of Agreement and Certificate of Limited Partnership

     54  

ARTICLE XIII. DISSOLUTION AND LIQUIDATION

     54  

Section 13.1 Dissolution

     54  

Section 13.2 Winding Up

     55  

Section 13.3 Rights of Limited Partners

     56  

Section 13.4 Notice of Dissolution

     57  

Section 13.5 Cancellation of Certificate of Limited Partnership

     57  

 

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Section 13.6 Reasonable Time for Winding Up

     57  

Section 13.7 Waiver of Partition

     57  

Section 13.8 Liability of Liquidator

     57  

ARTICLE XIV. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

     57  

Section 14.1 Amendments

     57  

Section 14.2 Action by the Partners

     58  

ARTICLE XV. GENERAL PROVISIONS

     59  

Section 15.1 Addresses and Notice

     59  

Section 15.2 Titles and Captions

     59  

ARTICLE XVI. SERIES A PREFERRED UNITS

     61  

Section 16.1 Designation and Number

     61  

Section 16.2 Rank

     61  

Section 16.3 Distributions

     61  

Section 16.4 Liquidation Preference

     63  

Section 16.5 Redemption

     64  

Section 16.6 Voting Rights

     65  

Section 16.7 Conversion

     65  

Section 16.8 Priority Allocations with Respect to the Series A Preferred Units

     66  

 

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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

SERITAGE GROWTH PROPERTIES, L.P.

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
December 14, 2017, is entered into by and among Seritage Growth Properties, a
Maryland real estate investment trust (the “Company”), as the General Partner
and the Persons whose names are set forth in Exhibit A attached hereto (the
“Contributors”), as the Limited Partners, together with any other Persons who
become Partners in the Partnership as provided herein.

WHEREAS, the Partnership (as defined below) was formed as a limited partnership
under the laws of the State of Delaware pursuant to a Certificate of Limited
Partnership filed on April 22, 2015.

WHEREAS, the initial general partner and limited partners of the Partnership
entered into an original agreement of limited partnership of the Partnership
effective as of July 7, 2015 (the “Original Partnership Agreement”);

WHEREAS, pursuant to Section 7.3C(1), the Original Partnership Agreement may be
amended by the General Partner to reflect the issuance of additional Partnership
Interests pursuant to Sections 4.3C and 14.1 and to set forth the designations,
rights, powers, duties and preferences of the holders of any additional
Partnership Interests issued pursuant to Section 4.3C; and

WHEREAS, the General Partner and the Partnership believe it is desirable and in
the best interest of the Partnership to amend and restate the Original
Partnership Agreement as set forth herein.

NOW, THEREFORE, BE IT RESOLVED, that the General Partner and the Limited
Partners, hereby amend and restate the Original Partnership Agreement as
follows:

ARTICLE I.

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, as it may be
amended, supplemented or restated from time to time, and any successor to such
statute.

“Additional Funds” shall have the meaning set forth in Section 4.3A.

 

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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.

“Adjustment Date” means, with respect to any Capital Contribution, the close of
business on the Business Day last preceding the date of the Capital
Contribution, provided that if such Capital Contribution is being made by the
General Partner in respect of the proceeds from the issuance of REIT Shares (or
the issuance of the General Partner’s securities exercisable for, convertible
into or exchangeable for REIT Shares), then the Adjustment Date shall be as of
the close of business on the Business Day last preceding the date of the
issuance of such securities.

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

“Agreed Value” means the fair market value of a Partner’s non-cash Capital
Contribution as of the date of contribution as determined by the General
Partner. The names and addresses of the Partners, number of Partnership Units
issued to each Partner, and the Agreed Value of non-cash Capital Contributions
as of the date of contribution are set forth in Exhibit A, as it may be amended
or restated from time to time.

“Agreement” means this Agreement of Limited Partnership, as it may be amended 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, provided that 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 Partnership 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 any period for which such calculation is
being made,

 

  (i) the sum of:

a. the Partnership’s Net Income or Net Loss (as the case may be) for such
period,

b. Depreciation and all other noncash charges deducted in determining Net Income
or Net Loss for such period,

 

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c. the amount of any reduction in reserves of the Partnership referred to in
clause (ii)(f) below (including, without limitation, reductions resulting
because the General Partner determines such amounts are no longer necessary),

d. the excess of the net proceeds from the sale, exchange, disposition, or
refinancing of Partnership property for such period over the gain (or loss, as
the case may be) recognized from any such sale, exchange, disposition, or
refinancing during such period (excluding Terminating Capital Transactions), and

e. all other cash received by the Partnership for such period that was not
included in determining Net Income or Net Loss for such period;

 

  (ii) less the sum of:

a. all principal debt payments made during such period by the Partnership,

b. capital expenditures made by the Partnership during such period,

c. investments in any entity (including loans made thereto) to the extent that
such investments are not otherwise described in clauses (ii)(a) or (b) above,

d. all other expenditures and payments not deducted in determining Net Income or
Net Loss for such period,

e. any amount included in determining Net Income or Net Loss for such period
that was not received by the Partnership during such period,

f. the amount of any increase in reserves established during such period which
the General Partner determines is necessary or appropriate in its sole and
absolute discretion, and

g. the amount of any working capital accounts and other cash or similar balances
which the General Partner determines to be 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.

“Board” means the Board of Trustees of the Company.

“Business Day” means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to be
closed.

“Capital Account” shall have the meaning set forth in Section 4.6.

 

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“Capital Contribution” means, with respect to any Partner, the amount of money
and the initial Gross Asset Value of any property (other than money) contributed
to the Partnership with respect to the Partnership Units held by such Partner
(net of liabilities secured by such property which the Partnership assumes or
takes subject to).

“Cash Amount” means, with respect to any Common Units subject to a Redemption,
an amount of cash equal to the Deemed Partnership Interest Value attributable to
such Common Units.

“Certificate” means the Certificate of Limited Partnership of the Partnership
filed with the office of the Secretary of State of the State of Delaware on
April 22, 2015, as amended from time to time in accordance with the terms hereof
and the Act.

“Change of Control” means any occurrence resulting in (i) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) becoming the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities entitled to vote in the election of members of the
Board having 30% or more of the then-outstanding voting power of the Company;
(ii) the Company becoming a party to a merger, consolidation, share exchange,
reorganization, sale of assets or other similar extraordinary transaction, or a
proxy contest, in each case as a consequence of which members of the Board in
office immediately prior to such transaction or event constitute less than a
majority of the Board thereafter; or (iii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board
(including for this purpose any new trustee whose election or nomination for
election by the Company’s shareholders was approved by a vote of at least
two-thirds of the trustees then still in office who were trustees at the
beginning of such period, other than those trustees appointed, or nominated for
election, in connection with an actual or threatened proxy contest or other
non-consensual attempt to influence or modify the Board) ceasing for any reason
to constitute at least a majority of the Board.

“Charter” means the Declaration of Trust of the Company filed with the Maryland
State Department of Assessments and Taxation on June 3, 2015, as amended and
restated on July 6, 2015 and as further amended or restated from time to time.

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

“Common Unit” means a Partnership Unit representing a Partnership Interest that
is without preference as to distributions and allocations or rights upon
voluntary or involuntary liquidation, dissolution or winding up.

“Company” shall have the meaning set forth in the preamble.

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

“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.

 

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“Consolidated Economic Ownership Interest” means, as of any specified time, for
any specified Person, the collective percentage of economic ownership of the
Company held by such Person, assuming for such purposes that all Common Units
held by Partners other than the General Partner have been converted into REIT
Class A Common Shares.

“Contributed Property” means each property or other asset, in such form as may
be permitted by the Act, but excluding cash, contributed or deemed contributed
to the Partnership (or deemed contributed to the Partnership on termination and
reconstitution thereof pursuant to Code Section 708).

“Contributors” shall have the meaning set forth in the preamble.

“Conversion Factor” means 1.0; provided that in the event that:

(i) the Company (a) declares or pays a dividend on any class of its outstanding
REIT Economic Shares wholly or partly in REIT Economic Shares or makes a
distribution to all holders of any class of its outstanding REIT Economic Shares
wholly or partly in REIT Economic Shares; (b) splits or subdivides any class of
its outstanding REIT Economic Shares or (c) effects a reverse stock split or
otherwise combines or reclassifies any class of its outstanding REIT Economic
Shares into a smaller number of REIT Economic Shares, then the Conversion Factor
shall be adjusted by multiplying the Conversion Factor by a fraction, (I) the
numerator of which shall be the number of such class of REIT Economic Shares
issued and outstanding on the record date for such dividend, distribution,
split, subdivision, reverse split or combination (assuming for such purpose that
such dividend, distribution, split, subdivision, reverse split or combination
has occurred as of such time), and (II) the denominator of which shall be the
actual number of such class of REIT Economic Shares (determined without the
above assumption) issued and outstanding on the record date for such dividend,
distribution, split, subdivision, reverse split or combination;

(ii) the Company distributes any rights, options or warrants to all holders of
any class of its REIT Economic Shares to subscribe for or to purchase or to
otherwise acquire REIT Economic Shares (or other securities or rights
convertible into, exchangeable for or exercisable for REIT Economic Shares) at a
price per share less than the Fair Market Value of a REIT Economic Share on the
record date for such distribution (each a “Distributed Right”), then, as of the
distribution date of such Distributed Rights or, if later, the time such
Distributed Rights become exercisable, the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction (a) the numerator of which
shall be the number of such class of REIT Economic Shares issued and outstanding
on the record date (or, if later, the date such Distributed Rights become
exercisable) plus the maximum number of such class of REIT Economic Shares
purchasable under such Distributed Rights and (b) the denominator of which shall
be the number of such class of REIT Economic Shares issued and outstanding on
the record date (or, if later, the date such Distributed Rights become
exercisable) plus a fraction (I) the numerator of which is the minimum aggregate
purchase price under such Distributed Rights of the maximum number of such class
of REIT Economic Shares purchasable under such Distributed Rights and (II) the

 

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denominator of which is the Fair Market Value of a REIT Economic Share of such
class as of the record date (or, if later, the date such Distributed Rights
become exercisable); provided, however, that, if any such Distributed Rights
expire or become no longer exercisable, then the Conversion Factor shall be
adjusted, effective retroactive to the date of distribution (or, if later, the
date such Distributed Rights become exercisable) of the Distributed Rights, to
reflect a reduced maximum number of such class of REIT Economic Shares or any
change in the minimum aggregate purchase price for the purposes of the above
fraction; and

(iii) the Company shall, by dividend or otherwise, distribute to all holders of
a class of its REIT Economic Shares evidences of its indebtedness or assets
(including securities, but excluding any dividend or distribution referred to in
subsection (i) or (ii) above), which evidences of indebtedness or assets relate
to assets not received by the Company or its Subsidiaries pursuant to a pro rata
distribution by the Partnership, then the Conversion Factor shall be adjusted to
equal the amount determined by multiplying the Conversion Factor in effect
immediately prior to the close of business on the date fixed for determination
of shareholders entitled to receive such distribution by a fraction the
numerator of which shall be such Fair Market Value of a REIT Economic Share of
such class on the date fixed for such determination and the denominator of which
shall be the Fair Market Value of a REIT Economic Share of such class on the
date fixed for such determination less the then fair market value (as reasonably
determined by the General Partner) of the portion of the evidences of
indebtedness or assets so distributed applicable to one REIT Economic Share.

Any adjustment to the Conversion Factor shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event (or, if later, the date such Distributed Rights become exercisable).
If, however, the General Partner received a Notice of Redemption after the
record date, if any, but prior to the effective date of such event, the
Conversion Factor shall be determined as if the General Partner had received the
Notice of Redemption immediately prior to the record date for such event.

Notwithstanding the foregoing, the Conversion Factor shall not be adjusted in
connection with an event described in clauses (i) or (ii) above if, in
connection with such event, the Partnership makes a distribution of cash,
Partnership Units, REIT Economic Shares and/or rights, options or warrants to
acquire Partnership Units and/or REIT Economic Shares with respect to all
applicable Common Units or effects a reverse split of, or otherwise combines,
the Common Units, as applicable, that is comparable as a whole in all material
respects with such event.

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

 

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“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 applicable Partner’s Percentage Interest of such
class.

“Deemed Value of the Partnership Interests” means, as of any date with respect
to any class or series of Partnership Interests, (i) the total number of shares
of beneficial interest of the General Partner corresponding to such class or
series of Partnership Interests (as provided for in Section 4.1 and Section 4.3)
issued and outstanding as of the close of business on such date (excluding any
treasury shares) multiplied by the Fair Market Value of a share of such
beneficial interest on such date; (ii) divided by the Percentage Interest of the
General Partner in such class of Partnership Interests on such date.

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

“Distributed Right” has the meaning set forth in the definition of “Conversion
Factor.”

“Distribution Payment Date” shall have the meaning set forth in Section 16.3.

“Distribution Record Date” shall have the meaning set forth in Section 16.3.

“ESL Holders” means Mr. Edward S. Lampert, ESL Partners, L.P. and their
respective Affiliates.

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

“Fair Market Value” means, with respect to any share of beneficial interest of
the General Partner, 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; provided, that it is
agreed that the Fair Market Value of the REIT Class C Common Shares shall be
deemed to be the same as the REIT Class A Common Shares. The market price for
each such Trading Day shall be: (i) if such shares are listed or admitted to
trading on any securities exchange, 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, (ii) if such shares are not listed or admitted to
trading on any securities exchange, the last reported sale price on such day or,
if no sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated by the
General Partner, or (iii) if such shares

 

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are not listed or admitted to trading on any securities exchange and no such
last reported sale price or closing bid and asked prices are available, the
average of the reported high bid and low asked prices on such day, as reported
by a reliable quotation source designated by the General Partner, or if there
shall be no bid and asked prices on such day, the average of the high bid and
low asked prices, as so reported, on the most recent day (not more than ten
(10) days prior to the date in question) for which prices have been so reported;
provided that, if there are no bid and asked prices reported during the ten
(10) days prior to the date in question, the Fair Market Value of such shares
shall be determined by the General Partner acting reasonably and 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 Partnership Units issuable upon a Capital
Contribution funded by an underwritten public offering of shares of beneficial
interest of the General Partner, the Fair Market Value of such shares shall be
the public offering price per share of such class of beneficial interest sold.

“Flow Through Entity” shall have the meaning set forth in Section 2.6.

“Funding Notice” shall have the meaning set forth in Section 4.3B.

“General Partner” means the Company or its successor in accordance with the
terms of this Agreement as general partner of the Partnership.

“General Partner Interest” means the Partnership Interest held by the General
Partner in its capacity as General Partner, which Partnership Interest is an
interest as a general partner under the Act. A General Partner Interest may be
expressed as a number of any type of Partnership Units.

“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:

(i) 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, as determined by
the contributing Partner and the General Partner; provided that if the
contributing Partner and the General Partner cannot agree on such determination,
such determination shall be made by Appraisal; provided, further, that if the
contributing Partner is the General Partner then, except with respect to the
General Partner’s capital contributions of cash, REIT Shares or other shares of
beneficial interest of the General Partner, the determination of the fair market
value of the contributed asset shall be determined by (a) the price paid by the
General Partner if the asset is acquired by the General Partner
contemporaneously with its contribution to the Partnership or (b) Appraisal, if
otherwise acquired by the General Partner.

(ii) The Gross Asset Values of all Partnership assets shall be adjusted to equal
their respective gross fair market values, as determined by the General Partner
using such reasonable method of valuation as it may adopt, immediately prior to
the following events:

 

  (a) a Capital Contribution (other than a de minimis Capital Contribution,
within the meaning of Regulations Section 1.704-1(b)(2)(iv)(f)(5)(i)) to the
Partnership by a new or existing Partner as consideration for Partnership Units,
if the General Partner reasonably determines that such adjustment is necessary
or appropriate to reflect the relative economic interests of the Partners in the
Partnership;

 

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  (b) the distribution by the Partnership to a Partner of more than a de minimis
amount (within the meaning of Regulations Section 1.704-1(b)(2)(iv)(f)(5)(i)) of
Partnership property as consideration for the redemption of Partnership Units,
if the General Partner reasonably determines that such adjustment is necessary
or appropriate to reflect the relative economic interests of the Partners in the
Partnership;

 

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

 

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

(iii) The Gross Asset Value of Partnership assets distributed to any Partner
shall be the gross fair market value of such asset on the date of distribution
as determined by the distributee and the General Partner, or if the distributee
and the General Partner cannot agree on such a determination, by Appraisal.

(iv) If the Gross Asset Value of a Partnership asset has been determined or
adjusted pursuant to subparagraph (i) or (ii), such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Net Income and Net Losses.

“Holder” means either the Partner or an Assignee owning a Partnership Unit.

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

“Incapacity” or “Incapacitated” means, (i) as to any natural person that is a
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 that 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 that is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate that 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 that 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 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

 

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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 one
hundred twenty (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 ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) is not vacated
within ninety (90) days after the expiration of any such stay.

“Indemnitee” means (i) any Person made a party, or threatened to be made a
party, to a proceeding by reason of his, her or its status as (a) the Company,
(b) the General Partner or (c) a director, trustee, officer, or employee of the
Company, the General Partner or the Partnership, and (ii) such other Persons
(including, without limitation, Affiliates, officers, employees and agents of
the Company, the General Partner or the Partnership or any of their respective
Subsidiaries) 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.

“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 Partnership 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 Partnership Interest may be expressed as a number of
Partnership Units.

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

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

“Majority in Interest of the Limited Partners” means Limited Partners, excluding
the General Partner and its controlled Affiliates in their respective capacities
as holders of Limited Partnership Interests, holding in the aggregate Percentage
Interests of Limited Partnership Interests that are greater than fifty percent
(50%) of the aggregate Percentage Interests of Limited Partnership Interests
held by all Limited Partners, excluding any and all Limited Partnership
Interests held by the General Partner and its controlled Affiliates.

“Minimum Gain” means an amount determined in accordance with Regulations
Section 1.704-2(d) by computing, with respect to each Nonrecourse Liability of
the Partnership, the amount of gain, if any, that the Partnership would realize
if it disposed of the property subject to such liability for no consideration
other than full satisfaction thereof, and by then aggregating the amounts so
computed.

 

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“Minimum Gain Chargeback” shall have the meaning set forth in Section 6.3A.

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

(i) Any income of the Partnership that is exempt from federal income tax and not
otherwise taken into account in computing Net Income or Net Loss pursuant to
this definition of Net Income or Net Loss shall be added to such taxable income
or loss;

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

(iii) Any items that are specially allocated pursuant to Section 6.3 and
Section 6.4 shall not be taken into account in computing Net Income or Net Loss;
and

(iv) Any expenditures of the Partnership described in Code Section 705(a)(2)(B)
(or treated as such under Regulations Section 1.704-1(b)(2)(iv)(i)) and not
otherwise taken into account in computing Net Income or Net Loss pursuant to
this definition of Net Income or Net Loss shall be deducted in calculating such
taxable income or loss.

“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 beneficial interest of the General Partner, excluding
grants under any Stock Plan, or (ii) any Debt issued by the General Partner that
provides any of the rights described in clause (i).

“Non-Economic Unit” means a Partnership Unit representing a Partnership Interest
that is not entitled to distributions or allocations, including upon voluntary
or involuntary liquidation, dissolution or winding up.

“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 B to this Agreement.

“Original Partnership Agreement” shall have the meaning set forth in the
Recitals.

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

 

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

“Partner Nonrecourse Debt Minimum Gain” has the meaning set forth in Regulations
Section 1.704-2(i). A Partner’s share of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Regulations Section 1.704-2(i)(5).

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

“Partnership” means the limited partnership formed under the Act and pursuant to
this Agreement, and any successor thereto.

“Partnership Interest” means an ownership interest in the Partnership of either
a Limited Partner or the General 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. There may be one or more classes or
series of Partnership Interests as provided in Section 4.3. A Partnership
Interest may be expressed as a number of Partnership Units. Unless otherwise
expressly provided for by the General Partner at the time of the original
issuance of any Partnership Interests, all Partnership Interests (whether of a
Limited Partner or a General Partner) shall be of the same class or series.

“Partnership Minimum Gain” shall have the meaning set forth in Regulations
Section 1.704-2(b)(2).

“Partnership Record Date” means the record date established by the General
Partner for the distribution of Available Cash with respect to Partnership
Interests (other than Non-Economic Units) that are not entitled to any
preference in distribution 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 shareholders of some or all of its portion of such
distribution.

“Partnership Unit” means, with respect to any class of Partnership Interest, a
fractional, undivided share of such class of Partnership Interest issued
pursuant to Section 4.1 and Section 4.3. The ownership of Partnership Units may
be (but is not required to be) evidenced by a certificate for units
substantially in the form of Exhibit C hereto or as the General Partner may
otherwise determine with respect to any class of Partnership Units issued from
time to time under Section 4.1 and Section 4.3.

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

“Percentage Interest” means, as to a Partner holding a class or series of
Partnership Interests, its interest in such class or series as determined by
dividing the Partnership Units of such class or series owned by such Partner by
the total number of Partnership Units of such class then outstanding as
specified in Exhibit A attached hereto, as such Exhibit may be

 

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amended from time to time. If the Partnership issues more than one class or
series of Partnership Interests, the interest in the Partnership among the
classes or series of Partnership Interests shall be determined as set forth in
the amendment to the Partnership Agreement setting forth the rights and
privileges of such additional classes or series of Partnership Interest, if any,
as contemplated by Section 4.3D.

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

“Preemptive Rights Notice” shall have the meaning set forth in Section 4.3C(2).

“Properties” means such interests in real property and personal property,
including without limitation, fee interests, interests in ground leases,
interests in joint ventures, interests in mortgages and Debt instruments, as the
Partnership may hold from time to time.

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

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

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

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

“Regulatory Allocations” shall have the meaning set forth in Section 6.3F.

“REIT” means a real estate investment trust within the meaning of Code Sections
856 through 859.

“REIT Class A Common Share” means a Class A common share of beneficial interest,
$0.01 par value per share, of the General Partner.

“REIT Class B Common Share” means a Class B common share of beneficial interest,
$0.01 par value per share, of the General Partner.

“REIT Class C Common Share” means a Class C common share of beneficial interest,
$0.01 par value per share, of the General Partner.

“REIT Economic Share” means a REIT Class A Common Share or a REIT Class C Common
Share.

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

“REIT Share” means a common share of beneficial interest of the General Partner,
which may be, without limitation, a REIT Class A Common Share, REIT Class B
Common Share or REIT Class C Common Share.

 

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“REIT Shares Amount” means, as of any date, an aggregate number of REIT Economic
Shares equal to the number of Tendered Units or Repurchased REIT Shares or, for
purposes of Section 11.2B, one Partnership Unit, as applicable (provided, that
in the case of Tendered Units, such REIT Economic Shares shall be REIT Class A
Common Shares), multiplied by the Conversion Factor.

“REIT Shares Election” shall have the meaning set forth in Section 8.6B.

“Repurchased REIT Shares” shall have the meaning set forth in Section 7.5C.

“Sears Holdings” means Sears Holdings Corporation, a Delaware corporation.

“SEC” means the U.S. Securities and Exchange Commission.

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

“Series A Articles Supplementary” means the Articles Supplementary of the
General Partner in connection with its Series A Preferred Shares, as filed with
the Maryland State Department of Assessments and Taxation on December 13, 2017
and as such Articles Supplementary of the General Partner may be amended from
time to time in accordance with its terms and the terms of the Charter.

“Series A Preferred Return” shall have the meaning set forth in Section 16.3A.

“Series A Preferred Shares” shall have the meaning set forth in Section 16.5D.

“Series A Preferred Units” shall have the meaning set forth in Section 16.1.

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

“Stock Plan” means any share incentive, share option, share ownership or
employee benefits plan of the General Partner.

“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company, joint venture or other entity of which 50% or more of
(i) the voting power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such Person.

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

“Successor General Partner” mean a Person who is admitted as a General Partner
of the Partnership pursuant to Section 11.2.

“Tax Matters Representative” shall have the meaning set forth in Section 10.2A.

 

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

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

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

“Terminating Capital Transaction” means 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.

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

“Trading Day” means, (i) if shares of beneficial interest of the General Partner
are listed or admitted to trading on any securities exchange, any day on which
such shares are traded on such securities exchange (or, if there are more than
one such exchange, the principal such exchange) or (ii) if such shares are not
listed or admitted to trading on any securities exchange, any date for which
sales prices or closing bid and asked prices (or, if they are not available,
high bid and low asked prices) are reported by a reliable quotation source
designated by the General Partner.

ARTICLE II.

ORGANIZATIONAL MATTERS

Section 2.1 Organization

The Partnership is a limited partnership formed and continued pursuant to the
provisions of the Act and upon the terms and subject to the conditions set forth
in this Agreement. Except as expressly provided herein to the contrary, 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 Seritage Growth Properties, 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.

 

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Section 2.3 Resident Agent; Principal Office

The registered agent of the Partnership for service of process in the State of
Delaware and the registered office of the Partnership in the State of Delaware
is c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The General Partner may
from time to time designate in its sole and absolute discretion another
registered agent or another location for the registered office or principal
place of business, and shall provide the Limited Partners with notice of such
change in the next regular communication to the Limited Partners. The principal
office of the Partnership shall be located at 54 West 40th Street, 10th Floor,
New York, NY 10018 or at such other place as the General Partner may from time
to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside 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 the authorized officers and attorneys-in-fact of
each of the foregoing, 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, seal, 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 any Liquidator
deems appropriate or necessary to form, 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 duly adopted 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, Article XI, XII or XIII
hereof 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, seal, 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 that 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.

 

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

B. The foregoing power of attorney is hereby declared to be irrevocable and a
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 or the
transfer of all or any portion of such Limited Partner’s or Assignee’s
Partnership 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 fifteen (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 any
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 shall be perpetual unless the Partnership is
dissolved sooner pursuant to the provisions of Article XIII or as otherwise
provided by law.

Section 2.6 Number of Partners

Without the consent of the General Partner, which may be given or withheld in
its sole discretion, the Partnership shall not at any time have more than 100
partners (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).

Section 2.7 Partnership Interests are Securities

All Partnership Interests shall be securities within the meaning of, and
governed by, (i) Article VIII of the Delaware Uniform Commercial Code as in
effect from time to time in the State of Delaware and (ii) Article VIII of the
Uniform Commercial Code of any other applicable jurisdiction.

 

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ARTICLE III.

PURPOSE

Section 3.1 Purpose and Business

The purpose and nature of the business to be conducted by the Partnership is
(i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act, 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 federal income tax purposes,
unless the General Partner ceases to qualify as a REIT for reasons other than
the conduct of the business of the Partnership, (ii) to enter into any
partnership, joint venture, limited liability company 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) to do anything necessary or incidental to the foregoing. In
connection with the foregoing, and without limiting the General Partner’s right
in its sole discretion to cease qualifying as a REIT, the Partners acknowledge
that the General Partner has elected REIT status and the General Partner’s
continued qualification as a REIT and the avoidance of income and excise taxes
on the General Partner inure to the benefit of all the Partners and not solely
to the General Partner. The General Partner shall be empowered to do any and all
acts and things necessary or prudent to ensure that the Partnership will not be
classified as a “publicly traded partnership” taxable as a corporation for
purposes of Section 7704 of the Code.

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, acquire, own, manage, improve and develop
real property, and lease, sell, transfer and dispose of real property; provided,
however, that 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, could (i) adversely affect the ability of the General Partner to
continue to qualify as a REIT, (ii) subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code or (iii) violate
any law or regulation of any governmental body or agency having jurisdiction
over the General Partner or its securities or the Partnership or any of its
Subsidiaries, unless any such action (or inaction) under clause (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 company, venture
or 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 or
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.

 

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Section 3.4 Representations and Warranties by the Parties

A. Each Partner that is a natural person 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 bound,
or any statute, regulation, order or other law to which such Partner is subject,
and (iii) this Agreement is binding upon, and enforceable against, such Partner
in accordance with its terms.

B. Each Partner that is not a natural person 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), member(s), beneficiaries,
directors and/or shareholder(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, members, directors or shareholders, as the case may be, is or are
bound, or any statute, regulation, order or other law to which such Partner or
any of its partners, trustees, beneficiaries, members, directors or
shareholders, as the case may be, is or are subject, and (iii) this Agreement is
binding upon, and enforceable against, such Partner in accordance with its
terms.

C. Each Partner represents, warrants and agrees that (i) it is an “accredited
investor” as defined in Rule 501 promulgated under the Securities Act, (ii) it
has acquired and continues to hold its interest in the Partnership for its own
account for investment purposes only and not for the purpose of, or with a view
toward, the resale or distribution of all or any part thereof in violation of
applicable laws, nor with a view toward selling or otherwise distributing such
interest or any part thereof at any particular time or under any predetermined
circumstances in violation of applicable laws. 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 that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.

D. The representations and warranties contained in Section 3.4A, Section 3.4B
and Section 3.4C and this Section 3.4D shall survive the execution and delivery
of this Agreement by each Partner and the dissolution, liquidation, termination
and winding up of the Partnership.

 

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E. 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, and no representation or warranty of any kind or
nature has been made by any Partner or any employee or representative or
Affiliate of any Partner with respect thereto.

F. Notwithstanding the foregoing, the General Partner may, in its sole and
absolute discretion, permit the modification of any of the representations and
warranties contained in Section 3.4A, Section 3.4B and Section 3.4C above as
applicable to any Partner, provided that such representations and warranties, as
modified, shall be set forth in a separate writing addressed to the Partnership
and the General Partner.

Section 3.5 ERISA

It is expected that the Partnership’s assets will not constitute plan assets
under the Employee Retirement Income Security Act of 1974, as amended and to the
extent, the Partnership qualifies as a “real estate operating company” under the
Department of Labor Regulation 2531.3-101(e), its annual valuation period (and
the annual valuation of the General Partner, if any) shall be commence on the
January 1st of each year.

ARTICLE IV.

CAPITAL CONTRIBUTIONS

Section 4.1 Capital Contributions of the Partners

At or prior to the time of their respective execution of this Agreement, the
Partners have made Capital Contributions as set forth in Exhibit A to this
Agreement. The Partners shall own Partnership Units of the class or series and
in the amounts and Percentage Interests set forth in Exhibit A, which Exhibit A
shall be adjusted from time to time by the General Partner to the extent
necessary to reflect accurately exchanges, redemptions, Capital Contributions,
the issuance of additional Partnership Units or similar events. Except as
required by law or as otherwise provided in Section 4.3 and Section 4.4, no
Partner shall be required or permitted to make any additional Capital
Contributions or loans to the Partnership. Unless otherwise specified by the
General Partner at the time of the creation of any class of Partnership
Interests, such Partnership Interests shall be Common Units and the class or
series of beneficial interest of the Company corresponding thereto shall be REIT
Class A Common Shares.

Section 4.2 Loans by Third Parties

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 acquisition of Properties) upon such terms as
the General Partner determines appropriate; provided that, the Partnership shall
not incur any Debt that is recourse to any Partner, except to the extent
otherwise agreed to by the applicable Partner in its sole discretion.

 

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Section 4.3 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 Properties, redemption of Partnership Units or such
other purposes as the General Partner may determine. Additional Funds may be
raised by the Partnership, at the election of the General Partner, from
(i) outside borrowings (subject to Section 4.2), (ii) the General Partner or any
of its Affiliates or (iii) additional Capital Contributions (subject to this
Section 4.3).

B. Funding Notice. The General Partner shall give written notice (the “Funding
Notice”) to the Limited Partners of the need for Additional Funds and the
anticipated source(s) thereof.

C. Issuance of Additional Partnership Interests.

(1) Upon delivery of a Funding Notice, the General Partner may raise all or any
portion of the Additional Funds by accepting additional Capital Contributions.
In connection with any such additional Capital Contributions (of cash or
property) the General Partner is hereby authorized, subject to Section 4.3C(2),
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 Common 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 Partnership Interests,
all as shall be determined by the General Partner, subject to Delaware law,
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 and (iii) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided, that this Agreement shall be amended to the extent
necessary to reflect the terms of any such Partnership Interests in one or more
classes, or one or more series of any of such classes, including such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, at the time of the issuance of additional Partnership
Interests; provided, further, that no such amendment may be made to reflect the
terms of additional Partnership Interests to be issued to the General Partner
(other than additional Common Units) without Consent of the Limited Partners.

(2) Notwithstanding anything to the contrary set forth in Section 4.3C(1), at
least 10 Business Days prior to the issuance to the General Partner of any
additional Common Units pursuant to Section 4.3C(1), the General Partner shall
give notice to each other Partner holding Common Units (a “Preemptive Rights
Notice”). The Preemptive Rights Notice shall set forth all material terms of the
proposed issuance, including the number of Common Units to be issued, the
purchase price per Common Unit and the anticipated closing date of the issuance;
provided, that in the event of any change to such material terms, the General
Partner

 

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shall be required to give each Partner a new Preemptive Rights Notice. Each
Partner receiving a Preemptive Rights Notice shall have the right, upon written
notice to the General Partner and at a price per Common Unit equal to the price
specified in the Preemptive Rights Notice, to purchase up to an amount of
additional Common Units necessary to maintain such Partner’s Consolidated
Economic Ownership Interest immediately prior to the issuance, during the period
commencing on its receipt of the Preemptive Rights Notice and until one hundred
eighty (180) days following the closing of the issuance; provided that to the
extent Partners elect to exercise such rights at different times during the one
hundred eighty (180)-day period, each Partner shall have a continuing right to
make purchases during such period to maintain its Consolidated Economic
Ownership Interest. Such purchase shall occur (a) on the closing of the issuance
to the General Partner, if the Partner gives notice pursuant to the preceding
sentence within five (5) Business Days of receipt of the Preemptive Rights
Notice, or (b) on such later date as may be specified in the notice given
pursuant to the preceding sentence (such date to be no earlier than five
(5) Business Days after such notice is given and no later than one hundred
eighty (180) days following the anticipated closing of the issuance specified in
the Preemptive Rights Notice).

D. Issuance of REIT Shares or Other Securities by the General Partner. The
General Partner shall not issue any additional REIT Shares (other than (x) REIT
Shares issued pursuant to Section 8.6 or pursuant to a dividend or distribution
(including any share split) of REIT Shares to all of its shareholders or
(y) REIT Class A Common Shares issuable upon the conversion of REIT Class C
Common Shares pursuant to the terms of such REIT Class C Common Shares), other
shares of beneficial interest of the General Partner or New Securities unless
(i) the General Partner shall make a Capital Contribution of the net proceeds
from the issuance of such additional REIT Shares, other shares of beneficial
interest 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, and
(ii) except with respect to securities to be issued pursuant to any Stock Plan
or dividend reinvestment plan, the General Partner shall have delivered to the
Limited Partners a Funding Notice regarding the securities to be issued.

E. Percentage Interest Adjustments in the Case of Capital Contributions for
Partnership Units. Upon the acceptance of additional Capital Contributions in
exchange for any class or series of Partnership Units, the Percentage Interest
related thereto shall be equal to a fraction, the numerator of which is equal to
the amount of cash and the Agreed Value of the Property contributed as of the
Adjustment Date and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of such class or series (computed as
of the Business Day immediately preceding the Adjustment Date) and (ii) the
aggregate amount of additional Capital Contributions contributed to the
Partnership on such Adjustment Date in respect of such class or series of
Partnership Interests. The Percentage Interest of each other Partner holding
Partnership Interests of such class or series not making a full pro rata Capital
Contribution shall be adjusted to equal a fraction, the numerator of which is
equal to the sum of (i) the Deemed Partnership Interest Value of such Limited
Partner in respect of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) and (ii) the amount of additional
Capital Contributions made by such Partner to the Partnership in respect of such
class or series of Partnership Interests as of such Adjustment Date, and the
denominator of which is equal to the sum of (x) the Deemed Value of the
Partnership Interests of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) and (y) the aggregate amount of
additional Capital Contributions contributed by all Partners and/or third

 

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parties to the Partnership on such Adjustment Date in respect of such class or
series; provided, however, that solely for purposes of calculating a Partner’s
Percentage Interest pursuant to this Section 4.3E, cash Capital Contributions by
the General Partner will be deemed to equal the cash contributed by the General
Partner plus, in the case of cash contributions funded by an offering of any
shares of beneficial interest of the General Partner, the offering costs
attributable to the cash contributed to the Partnership. The General Partner
shall promptly give each Partner written notice of its Percentage Interest, as
adjusted.

Section 4.4 Stock Plan

If at any time or from time to time the General Partner sells REIT Class A
Common Shares pursuant to any Stock Plan, the General Partner shall contribute
the proceeds therefrom to the Partnership as an additional Capital Contribution
pursuant to Section 4.3 in exchange for an amount of additional Common Units
equal to the number of REIT Class A Common Shares so sold. The General Partner’s
Capital Account shall be increased by the amount of cash so contributed.

Section 4.5 Other Contribution Provisions

In the event that any Partner is admitted to the Partnership (or any existing
Partner is issued additional Partnership Interests) and is given a Capital
Account in exchange for services rendered to the Partnership, such transaction
shall be treated by the Partnership and the affected Partner as if the
Partnership had compensated such Partner in cash and the Partner had contributed
such cash to the capital of the Partnership. In addition, with the consent of
the General Partner, one or more Limited Partners may enter into contribution
agreements with the Partnership which have the effect of providing a guarantee
of certain obligations of the Partnership.

Section 4.6 Capital Accounts

The Partnership shall establish and maintain a separate capital account
(“Capital Account”) for each Partner, including a Partner who shall pursuant to
the provisions hereof acquire a Partnership Interest (other than Non-Economic
Units), which Capital Account shall be:

(1) Credited with the amount of cash contributed by such Partner to the capital
of the Partnership; the initial Gross Asset Value (net of liabilities secured by
such contributed property that the Partnership assumes or takes subject to) of
any other property contributed by such Partner to the capital of the
Partnership; such Partner’s distributive share of Net Income; and any other
items in the nature of income or gain that are allocated to such Partner
pursuant to Article VI hereof, but excluding tax items described in Regulations
Section 1.704-1(b)(4)(i); and

(2) Debited with the amount of cash distributed to such Partner pursuant to the
provisions of this Agreement; the Gross Asset Value (net of liabilities secured
by such distributed property that such Partner assumes or takes subject to) of
any Partnership property distributed to such Partner pursuant to any provision
of this Agreement; the amount of unsecured liabilities of such Partner assumed
by the Partnership; such Partner’s distributive share of Net Loss; and any other
items in the nature of expenses or losses that are allocated to such Partner
pursuant to Article VI hereof, but excluding tax items described in Regulations
Section 1.704-1(b)(4)(i).

 

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(3) In the event that any or all of a Partner’s Partnership Units are
transferred within the meaning of Regulations Section 1.704-1(b)(2)(iv)(l), the
transferee shall succeed to the Capital Account of the transferor to the extent
that it relates to the Partnership Units so transferred.

In the event that the Gross Asset Values of Partnership assets are adjusted
pursuant to the definition of “Gross Asset Value,” the Capital Accounts of the
Partners shall be adjusted to reflect the aggregate net adjustments as if the
Partnership sold all of its properties for their fair market values and
recognized gain or loss for federal income tax purposes equal to the amount of
such aggregate net adjustment.

Except as required by law, no Limited Partner shall be liable for any deficit in
its Capital Account or be obligated to return any distributions of any kind
received from the Partnership.

The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied as provided in the
Regulations.

ARTICLE V.

DISTRIBUTIONS

Section 5.1 Requirement and Characterization of Distributions

Subject to Article XIII, the other provisions of this Article V and the rights
and preferences of any additional class or series of Partnership Units
established pursuant to this Agreement, the General Partner shall cause the
Partnership to distribute quarterly all, or such portion as the General Partner
may in its discretion determine, of the Available Cash generated by the
Partnership to the Partners who are Partners on the applicable record date with
respect to such distribution in accordance with their respective Percentage
Interests of Limited Partnership Interests on the applicable record date.
Notwithstanding the foregoing, no such distribution shall be made in respect of
the Non-Economic Units.

Except for the Series A Preferred Units, or as is otherwise expressly provided
for herein or in an agreement at the time a new class of Partnership Interests
is created in accordance with Article IV, no Partnership Interest shall be
entitled to a distribution in preference to any other Partnership Interest. The
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with its qualification as a REIT, to
cause the Partnership to distribute sufficient amounts, in accordance with this
Section 5.1, to enable the General Partner to pay shareholder dividends that
will (a) satisfy all actions or omissions as may be necessary (including making
appropriate distributions from time to time) to permit the General Partner and,
where applicable, each of its respective Subsidiaries to qualify or continue to
qualify as a REIT within the meaning of Code Section 856 et seq., as such
provisions may be amended from time to time, or the corresponding provisions of
succeeding law (“REIT Requirements”) and (b) avoid any federal income or excise
tax liability of the General Partner.

 

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Section 5.2 Distributions in Kind

No right is given to any Partner to demand and receive property of the
Partnership, except as set forth in Section 8.6. No distribution of any property
of the Partnership other than cash shall be made except following the occurrence
of a Liquidating Event and in accordance with Article XIII.

Section 5.3 Distributions upon Liquidation

Proceeds from a Terminating Capital Transaction shall be distributed to the
Partners in accordance with Section 13.2.

ARTICLE VI.

ALLOCATIONS

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

Net Income and Net Loss of the Partnership shall be determined and allocated
with respect to each Partnership Year as of the end of each such year. Subject
to the other provisions of this Article VI, an allocation to a Partner of a
share of Net Income or Net Loss shall be treated as an allocation of the same
share of each item of income, gain, loss or deduction that is taken into account
in computing Net Income or Net Loss.

Section 6.2 General Allocations

A. Except as otherwise provided in this Article VI, Net Income and Net Loss of
the Partnership (and each item thereof) for each Partnership Year shall be
allocated (i) to each of the Partners holding the same class or series of Common
Units in accordance with their respective Percentage Interest of such class or
series, and (ii) to each of the Partners holding the same class or series of
Partnership Units (other than Common Units) in accordance with the terms of
those Partnership Units; provided, however, that notwithstanding the foregoing,
no Net Income or Net Loss of the Partnership (and no item thereof) shall be
allocated to any Partner in respect of a Non-Economic Unit. The General Partner
is authorized to modify the allocations in this Section 6.2 and amend such
provisions (including the defined terms used therein) in such manner as the
General Partner determines is necessary or appropriate to reflect the issuance
of additional series or classes of Partnership Interests pursuant to Section 4.3
or Section 4.4. Any such modification may be made pursuant to the certificate of
designations or similar instrument establishing such new class or series.

 

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Section 6.3 Regulatory Allocations

Notwithstanding the foregoing provisions of this Article VI, the following
provisions shall apply:

A. Minimum Gain Chargeback. A Partner shall not receive an allocation of any
Partnership deduction that would result in total loss allocations attributable
to Nonrecourse Liabilities in excess of such Partner’s share of Minimum Gain (as
determined under Regulations Section 1.704-2(g)). If the Partnership makes a
distribution allocable to the proceeds of a Nonrecourse Liability, in accordance
with Regulations Section 1.704-2(h), the distribution will be treated as
allocable to an increase in Partnership Minimum Gain to the extent the increase
results from encumbering Partnership property with aggregate Nonrecourse
Liabilities that exceed the property’s adjusted tax basis. If there is a net
decrease in Partnership Minimum Gain for a Partnership Year, in accordance with
Regulations Section 1.704-2(f) and the exceptions contained therein, the
Partners shall be allocated items of Partnership income and gain for such
Partnership Year (and, if necessary, for subsequent Partnership Years) equal to
the Partners’ respective shares of the net decrease in Minimum Gain within the
meaning of Regulations Section 1.704-2(g)(2) (the “Minimum Gain Chargeback”).
The items to be allocated pursuant to this Section 6.3A shall be determined in
accordance with Regulations Section 1.704-2(f) and (j).

B. Partner Nonrecourse Deductions; Partner Minimum Gain Chargeback. Any item of
Partner Nonrecourse Deduction with respect to a Partner Nonrecourse Debt shall
be allocated to the Partner or Partners who bear the economic risk of loss for
such Partner Nonrecourse Debt in accordance with Regulations
Section 1.704-2(i)(1). If the Partnership makes a distribution allocable to the
proceeds of a Partner Nonrecourse Debt, in accordance with Regulations
Section 1.704-2(i)(6) the distribution will be treated as allocable to an
increase in Partner Minimum Gain to the extent the increase results from
encumbering Partnership property with aggregate Partner Nonrecourse Debt that
exceeds the property’s adjusted tax basis. Subject to Section 6.2A hereof, but
not withstanding any other provision of this Agreement, in the event that there
is a net decrease in Partner Nonrecourse Debt Minimum Gain for a Partnership
Year, then after taking into account allocations pursuant to Section 6.2A, but
before any other allocations are made for such taxable year, and subject to the
exceptions set forth in Regulations Section 1.704-2(i)(4), each Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of such
Partnership Year shall be allocated items of income and gain for such
Partnership Year (and, if necessary, for subsequent Partnership Years) equal to
such Partner’s share of the net decrease in Partner Nonrecourse Debt Minimum
Gain as determined in a manner consistent with the provisions of Regulations
Section 1.704-2(g)(2). The items to be so allocated pursuant to this
Section 6.3B shall be determined in accordance with Regulations
Section 1.704-2(i)(4) and (j).

C. Excess Nonrecourse Liabilities. Pursuant to Regulations
Section 1.752-3(a)(3), for the purpose of determining each Partner’s share of
excess nonrecourse liabilities of the Partnership, and solely for such purpose,
each Partner’s interest in Partnership profits shall be determined by any
reasonable method chosen by the General Partner including, without limitation,
the principles set forth in Rev. Rul. 95-41, 1995-1 C.B. 132.

D. Limitation on Allocation of Net Loss; Qualified Income Offset. No Limited
Partner shall be allocated any item of deduction or loss of the Partnership if
such allocation would cause such Limited Partner’s Capital Account to become
negative by more than the sum of (i) any amount such Limited Partner is
obligated to restore upon liquidation of the Partnership, plus (ii) such Limited
Partner’s share of the Partnership’s Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. An item of deduction or loss that cannot be allocated

 

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to a Limited Partner pursuant to this Section 6.3D shall be allocated to the
General Partner. For this purpose, in determining the Capital Account balance of
such Limited Partner, the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) shall be taken into account. In the
event that (a) any Limited Partner unexpectedly receives any adjustment,
allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and (b) such adjustment,
allocation, or distribution causes or increases a deficit balance (net of
amounts which such Limited Partner is obligated to restore or deemed obligated
to restore under Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5) and
determined after taking into account any adjustments, allocations, or
distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or
(6) that, as of the end of the Partnership Year, reasonably are expected to be
made to such Limited Partner) in such Limited Partner’s Capital Account as of
the end of the Partnership Year to which such adjustment, allocation, or
distribution relates, then items of Partnership income and gain (consisting of a
pro rata portion of each item of income or gain) for such Partnership Year and
each subsequent Partnership Year shall be allocated to such Limited Partner
until such deficit balance or increase in such deficit balance, as the case may
be, has been eliminated. In the event that this Section 6.3D and Section 6.3A
and/or Section 6.3B apply, Section 6.3A and/or Section 6.3B hereof shall be
applied prior to this Section 6.3D.

E. Capital Account Deficits. In the event any Partner has a deficit Capital
Account at the end of any Partnership Year which is in excess of the amount such
Partner is obligated to restore to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5), such Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section 6.3E
shall be made only if and to the extent that such Partner would have a deficit
Capital Account in excess of such amount after all other allocations provided
for under this Agreement have been made as if this Section 6.3E and Section 6.3D
were not in this Agreement.

F. Curative Allocation. The Regulatory Allocations shall be taken into account
in allocating other items of income, gain, loss and deduction among the Partners
so that, to the extent possible, the cumulative net amount of allocations of
Partnership items under this Section 6.3 shall be equal to the net amount that
would have been allocated to each Partner if the Regulatory Allocations had not
been made. This Section 6.3F is intended to minimize to the extent possible and
to the extent necessary any economic distortions which may result from
application of the Regulatory Allocations and shall be interpreted in a manner
consistent therewith. For purposes hereof, “Regulatory Allocations” shall mean
the allocations provided under this Section 6.3 (other than this Section 6.3F).

Section 6.4 Tax Allocations

A. Allocations Respecting Section 704(c) Revaluations. In accordance with Code
Section 704(b) and 704(c) and the Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Partnership shall, solely for federal income tax purposes, be allocated among
the Partners on a property by property basis so as to take account of any
variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and the initial Gross Asset Value of such property.
If the Gross Asset Value of any Partnership property is adjusted as described in
the definition of Gross Asset Value, subsequent allocations of income, gains or
losses from taxable sales or other

 

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dispositions and deductions with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and the Gross Asset Value of such asset in the manner prescribed under
Code Sections 704(b) and 704(c) of the Code and the Regulations thereunder. Any
elections or other decisions relating to allocations under Code Section 704(c)
(including under Regulations Section 1.704-3, whether to use the “traditional
method,” the “traditional method with curative allocations” or the “remedial
method) shall be made by the General Partner.

B. The Net Income, Net Loss, gains, deductions and credits of the Partnership
(and all items thereof) for each Partnership Year shall be determined in
accordance with the accounting method followed by the Partnership for federal
income tax purposes.

C. Except as provided in Section 6.3A, for income tax purposes, each item of
income, gain, loss or deduction shall be allocated among the Partners in the
same manner as its correlative item of “book” income, gain, loss or deduction
has been allocated pursuant to this Article VI.

ARTICLE VII.

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 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 of this Agreement, including without limitation
Section 7.3, shall have full power and authority to do all things deemed
necessary or desirable by it to conduct the business of the Partnership, 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 incurrence 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 shareholders 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 the Partnership’s assets) and the
incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership;

 

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(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;

(3) 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 mortgage, pledge, encumbrance or hypothecation of 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 (if necessary to permit the financing or
capitalization of a Subsidiary of the Partnership) 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;

(5) 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 implementation
of the General Partner’s powers under this Agreement;

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

(7) 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;

(8) the maintenance of such insurance (including, without limitation, directors
and officers insurance) for the benefit of the Partnership and the Partners as
it deems necessary or appropriate;

(9) the formation of, or acquisition of an interest in, and the contribution of
property to, any further limited or general partnerships, joint ventures or
other relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the 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 would cause the General Partner to fail to
qualify as a REIT;

(10) the control of any matters affecting the rights and obligations of the
Partnership, including the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation, and the indemnification of
any Person against liabilities and contingencies to the extent permitted by law;

 

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(11) 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);

(12) 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;

(13) 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;

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

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

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

(17) 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;

(18) 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;

(19) the maintenance of the Partnership’s books and records; and

(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.

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

 

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other provisions of this Agreement (except as provided in Section 7.3), the Act
or any 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 July 7, 2015, the General Partner may cause the
Partnership to obtain and maintain (i) casualty, liability and other insurance
on the properties of the Partnership and (ii) liability insurance for the
Indemnitees hereunder.

D. At all times from and after July 7, 2015, the General Partner may cause the
Partnership to establish and maintain working capital reserves in such amounts
as the General Partner, in its sole and absolute discretion, deems appropriate
and reasonable from time to time.

E. Except as provided in this Agreement with respect to the qualification of the
General Partner as a REIT and as may be provided in a separate written agreement
between the Partnership and a Limited Partner, 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 by the General Partner. Except as provided in this
Agreement with respect to the qualification of the General Partner as a REIT and
as may be provided in a separate written agreement between the Partnership and a
Limited Partner, the General Partner and the Partnership shall not have
liability to a Partner under any circumstances as a result of an income tax
liability incurred by such Limited Partner as a result of an action (or
inaction) by the General Partner pursuant to its authority under this Agreement.

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 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 8.5A(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, including, without limitation:

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

 

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(2) possessing Partnership property, or assigning any rights in specific
Partnership property, for other than a Partnership purpose except as otherwise
provided in this Agreement;

(3) admitting a Person as a Partner, except as otherwise provided in this
Agreement;

(4) performing 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

(5) entering into any contract, mortgage, loan or other agreement that expressly
prohibits or restricts the Company or the Partnership from performing their
respective obligations under this Agreement in connection with a Redemption or
prohibits or restricts the ability of a Limited Partner to exercise its rights
to a Redemption in full, except with the written consent of such Limited
Partner.

B. Without the prior Consent of the Limited Partners, neither the General
Partner nor the Partnership may engage in, cause or permit:

 

  (1) at any time:

 

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

 

  (ii) any action that would subject a Limited Partner to liability not
contemplated in this Agreement or under the Act;

 

  (iii) entering into any contract, mortgage loan or other agreement that
expressly prohibits or restricts the Company or the Partnership from performing
their respective specific obligations in connection with a Redemption as
provided in Section 8.6 or restricts the ability of a Limited Partner to
exercise its rights of Redemption in full without the written consent of such
Limited Partner;

 

  (iv) except as explicitly permitted under Section 7.3C, any amendment,
modification or termination of this Agreement;

 

  (v) any other direct or indirect transfer of all or any portion of the General
Partner’s Partnership Interest, other than pursuant to and in accordance with
Section 11.2;

 

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  (vi) any voluntary withdrawal of the General Partner as general partner except
pursuant to and in accordance with Section 11.2;

 

  (vii) any general assignment for the benefit of creditors, or appointment or
acquiescence in the appointment of a custodian, receiver or trustee for all or
any part of the assets of the General Partner or the Partnership;

 

  (viii) the commencement of any proceeding for bankruptcy by or on behalf of
the General Partner or the Partnership

 

  (ix) the confession of a judgment against the General Partner or the
Partnership;

 

  (x) the adoption of any plan of liquidation or dissolution of the General
Partner or the Partnership;

 

  (xi) any change in any election relating to the tax status of the Partnership
or the Company, including, without limitation, the status of the General Partner
as a REIT;

 

  (xii) any admission into the Partnership of a Successor General Partner,
except pursuant to and in accordance with Article XI or Article XII;

(2) until such time as the Consolidated Economic Ownership Interest of the ESL
Holders has been less than forty percent (40%) for one hundred eighty
(180) consecutive days:

 

  (i) the sale, lease, exchange or other transfer of all or substantially all of
the assets of the General Partner or the Partnership, whether in a single
transaction or a series of related transactions;

 

  (ii) any waiver of any restrictions in the Charter relating to the ownership
and transfer of shares of beneficial interest of the General Partner, including,
without limitation, any restriction preventing a person or entity from owning,
or being deemed to own, beneficially or by virtue of the applicable constructive
ownership provisions of the Code, more than a percentage specified in the
Charter, in value or in number of shares, whichever is more restrictive, of the
outstanding shares of any class or series of shares of beneficial interest of
the General Partner, including, without limitation, the REIT Shares; or

 

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  (iii) a Change of Control of the Partnership or any direct or indirect
transfer of all or any portion of the General Partner’s Partnership Interest in
connection with, or any other occurrence of, a merger, consolidation, conversion
or other combination or extraordinary transaction involving the Partnership.

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

(1) to reflect the issuance of additional Partnership Interests pursuant to
Section 4.3C, including without limitation by revising Article V and Article VI
as the General Partner determines is necessary or desirable to reflect the
issuance of the additional Partnership Interests, or the admission,
substitution, termination or withdrawal of Partners in accordance with Articles
XI and XII;

(2) 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 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;

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

(4) to reflect such changes necessary for the General Partner to satisfy the
REIT Requirements, 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

(5) to modify, as set forth in the definition of “Capital Account,” the manner
in which Capital Accounts are computed.

The General Partner will provide notice to the Limited Partners prior to taking
any action under this Section 7.3C.

D. Notwithstanding Section 7.3B and Section 7.3C, 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 V or Section 13.2A(4) or the allocations
specified in Article VI (except as permitted pursuant to Section 4.3 and
Section 7.3C(3)), (iv) materially alter or modify the rights of Redemption or
the REIT Shares Amount as set forth in Section 8.6, and related definitions
thereof or (v) amend this Section 7.3D; provided, that if all holders of
Partnership Units of the same class or series are adversely affected on a
uniform or pro rata basis, this Agreement may be

 

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amended with respect to such Partners by the consent of Partners holding in the
aggregate Percentage Interests of such class or series that are greater than
fifty percent (50%) of the aggregate Percentage Interests of such class or
series held by all Partners. Further, no amendment may alter the restrictions on
the General Partner’s authority set forth elsewhere in this Section 7.3 without
the Consent specified in such section. This Section 7.3D 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 V and VI regarding distributions, payments
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.

B. The General Partner shall be reimbursed on a monthly basis for all expenses
it incurs relating to the operation of, or for the benefit of, the Partnership.
The Limited Partners acknowledge that the General Partner’s sole business is the
ownership of interests in and operation of the Partnership and that such
expenses are incurred for the benefit of the Partnership. Such reimbursements
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.

C. 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 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. The General Partner, the Company and any Affiliates of the General Partner or
the Company may acquire Limited Partnership Interests and shall be entitled to
exercise all rights of a Limited Partner relating to such Limited Partnership
Interests.

B. Except in connection with a transaction pursuant to 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
(i) any interest in any real or personal property or (ii) any equity securities
or other interests (or securities convertible into or exercisable for such
equity securities or other interests) of any Person other than the Partnership,
except in each case its General Partner Interest, its Limited Partnership
Interests, 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.

 

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C. In the event the General Partner exercises its rights under the Charter to
purchase REIT Shares (such REIT Shares, the “Repurchased REIT Shares”), then the
purchase price paid by the General Partner for such Repurchased 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
extent that the Repurchased REIT Shares are REIT Economic Shares, to the
condition that the General Partner shall cause the Partnership to redeem a
number of Common Units held by the General Partner equal to the REIT Shares
Amount.

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 borrow funds from the Partnership, on terms and
conditions established on the Partnership’s behalf in the sole and absolute
discretion of the General Partner. Any Person that has an equity investment in
the Partnership may lend or contribute to the Partnership, and the Partnership
may borrow funds from such Person, on terms and conditions established on the
Partnership’s behalf 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 7.5B and subject to Section 7.3B, 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.

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. The General Partner also is expressly
authorized to cause the Partnership to issue to it Common Units corresponding to
REIT Class A Common Shares issued by the General Partner pursuant to any Stock
Plan or any similar or successor plan and to repurchase such Common Units from
the General Partner to the extent necessary to permit the General Partner to
repurchase such REIT Class A Common Shares in accordance with such plan.

D. 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.

 

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Section 7.7 Indemnification

A. 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
(i) it is established that the act or omission of the Indemnitee constituted
fraud, intentional harm or gross negligence on the part of the Indemnitee;
(ii) the claim is brought by the Indemnitee (other than to enforce the
Indemnitee’s rights to indemnification or advance of expenses); or (iii) the
Indemnitee is found to be liable to the Partnership, and then only with respect
to each such claim. 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 that 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 or settlement does not create a presumption that the Indemnitee
did not meet the requisite standard of conduct set forth in this Section 7.7A.
The termination of any proceeding by conviction or upon a plea of nolo
contendere or its equivalent, or any entry of an order of probation prior to
judgment, creates a rebuttable presumption that the Indemnitee acted in a manner
contrary to that specified in this Section 7.7A. Any indemnification pursuant to
this Section 7.7 shall be made only out of the assets of the Partnership.

B. Reasonable expenses incurred by an Indemnitee who is a party to a proceeding
may be paid or reimbursed by 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
Section 7.7A has been met and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.

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

D. The Partnership may 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 this Section 7.7; and actions taken or omitted by the
Indemnitee with

 

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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.

Section 7.8 Liability of the General Partner

A. Notwithstanding anything to the contrary set forth in this Agreement, the
General Partner shall not be liable or accountable in damages or otherwise to
the Partnership, any Partners or any Assignees for losses sustained, liabilities
incurred or benefits derived as a result of errors in judgment or mistakes of
fact or law or any act or omission except in the event of the General Partner’s
willful misconduct or recklessness.

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 shareholders collectively, that the General Partner is under no
obligation to give priority to the separate interests of the Limited Partners or
the General Partner’s shareholders (including, without limitation, the tax
consequences to Limited Partners or Assignees or to shareholders) in deciding
whether to cause the Partnership to take (or decline to take) any actions and
that the General Partner shall not be liable 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,
except in the event of the General Partner’s willful misconduct or recklessness.

 

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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, except in the event of the General Partner’s willful misconduct
or recklessness.

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 General Partner’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

A. 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.

B. 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
advice or opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person’s professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such advice or opinion.

C. 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.

D. Notwithstanding any other provisions of this Agreement or any nonmandatory
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 (i) to protect the ability of the
General Partner to continue to qualify as a REIT or (ii) to 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

 

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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 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 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 that 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.

ARTICLE VIII.

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1 Limitation of Liability

The Limited Partners shall have no liability under this Agreement (other than
for breach thereof) 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

 

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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 of the Partnership, any
Limited Partner (including, subject to Section 7.5, the Company) and any
officer, director, employee, agent, trustee, Affiliate or shareholder 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 benefitting 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. Notwithstanding the foregoing, without the prior consent
of the General Partner, no Limited Partner shall knowingly take any action,
including acquiring, directly or indirectly, an interest in any Tenant of a
Property which would have, through the actual or constructive ownership of any
Tenant of any Property, the effect of causing the percentage of the gross income
of the General Partner that fails to be treated as “rents from real property”
within the meaning of Section 856(d) of the Code to exceed such percentage as of
July 7, 2015. Each Limited Partner shall have a duty to notify the General
Partner on a timely basis of any potential acquisition or change in ownership
that could reasonably be expected to have such effect.

Section 8.4 Return of Capital

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 and
with respect to the rights of Redemption set forth in Section 8.6. 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 to profits,
losses, distributions or credits, except as otherwise expressly provided in this
Agreement.

 

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Section 8.5 Rights of Limited Partners Relating to the Partnership

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 the Partnership’s expense:

(1) to obtain a copy of the most recent annual and quarterly reports filed with
the SEC by the General Partner pursuant to the Exchange Act, and each
communication sent to the shareholders 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 Conversion Factor or the calculation of the REIT Shares
Amount within ten (10) Business Days of 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 reasonably determines, any information that (i) the General
Partner reasonably 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.

D. Representatives of the General Partner shall meet with representatives of the
Limited Partners quarterly, or more frequently upon the request of any holder of
Partnership Units whose Percentage Interest exceeds ten percent (10%), in order
to discuss matters that Limited Partners may reasonably request, including,
without limitation, the management, operations and strategy of the Partnership.

Section 8.6 Redemption Rights

A. A Limited Partner shall have the right (subject to the terms and conditions
set forth herein) to require the Partnership to redeem all or a portion of the
Common Units which have been held by such Limited Partner for at least 12 months
(such Common Units being hereafter referred to as “Tendered Units”) in exchange
for the Cash Amount (a “Redemption”); provided that no Partnership Units other
than Common Units are entitled to a right of Redemption under this Agreement
unless the terms of such Partnership Units so provide. Any

 

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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 delivered as a certified check
payable to the Tendering Partner within ten (10) days of the Specified
Redemption Date.

B. Notwithstanding Section 8.6A, 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 Section 8.6D), elect to acquire some or
all of the Tendered Units from the Tendering Partner in exchange for the REIT
Shares Amount (calculated 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 for cash. The Company shall give such Tendering Partner
written notice of its election (the “REIT Shares Election”) on or before the
close of business on the fifth (5th) Business Day after its receipt of the
Notice of Redemption, and the Tendering Partner may elect to withdraw its
redemption request at any time before the close of business on the fifth (5th)
Business Day after the Tendering Partner receives the REIT Shares Election.

C. The REIT Shares Amount, if applicable, shall be delivered as duly authorized,
validly issued, fully paid and nonassessable REIT Class A Common Shares, 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 Class A Common Shares entered into by the Tendering
Partner. Subject to Section 8.6G, notwithstanding any delay in such delivery
(but subject to Section 8.6G), the Tendering Partner shall be deemed the owner
of such REIT Class A Common Shares for all purposes, including without
limitation, rights to vote or consent, and receive dividends, as of the
Specified Redemption Date, unless the Tendering Partner elects to withdraw its
redemption request in accordance with Section 8.6B.

D. Subject to Section 8.6G but notwithstanding anything to the contrary in 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 Class A Common Shares to
the extent the ownership or right to acquire REIT Class A Common Shares pursuant
to such exchange by such Partner on the Specified Redemption Date would 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 other exchange for
REIT Shares would be in violation of this Section 8.6D, it shall be null and
void ab initio and such Limited 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.

E. Notwithstanding anything to the contrary in this Agreement (but subject to
Section 8.6D), with respect to any Redemption or other exchange for REIT Class A
Common Shares pursuant to this Section 8.6:

(1) All Partnership Units acquired by the General Partner pursuant thereto shall
automatically, and without further action required, be converted into and deemed
to be Limited Partnership Interests and held by the Company in its capacity as a
Limited Partner in the Partnership.

 

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(2) Without the consent of the General Partner, each Limited Partner may not
effect a Redemption during the period after the Partnership Record Date with
respect to a distribution by the Partnership and before the record date
established by the General Partner for a distribution to its shareholders of
some or all of its portion of such distribution by the Partnership, provided
that the distribution by the General Partner occurs within 30 Business Days of
the distribution by the Partnership.

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

(4) Each Tendering Partner shall continue to own all Common Units subject to any
Redemption or other exchange for REIT Class A Common Shares, and be treated as a
Limited Partner with respect to such Common Units for all purposes of this
Agreement, until such Tendering Partner is deemed the owner of such REIT Class A
Common Shares for all purposes, including without limitation, rights to vote or
consent, and receive dividends, under the terms of this Agreement.

F. The General Partner shall take all actions necessary to effect any
registration of REIT Class A Common Shares under the Securities Act, the
Exchange Act and the securities or “blue sky” laws of any state or other
jurisdiction, and appropriate actions ancillary thereto, as may be required in
connection with any Redemption or other exchange for REIT Class A Common Shares
as promptly as practicable.

G. Notwithstanding anything in this Section 8.6 to the contrary, the ESL Holders
(to the extent they are Limited Partners) shall have the right to sell any or
all Common Units which shall have been held by it or them for at least 12 months
to one or more investment banks or other underwriters (collectively, the
“Redemption Underwriter”), which shall then have the right, by delivery of a
Notice of Redemption indicating an “Underwriter Redemption” as set forth
therein, to require the Partnership to redeem such Common Units (which shall be
deemed to be Tendered Units for purposes of this Agreement) for REIT Class A
Common Shares in accordance with this Section 8.6 and in connection with a
public offering; provided that:

(1) The Redemption Underwriter shall be required to redeem no fewer than all
Tendered Units and such Tendered Units shall be exchanged only for the REIT
Shares Amount (calculated as of the Specified Redemption Date) and not for cash
and without discretion of, election by, or notice to or from the General Partner
or any other Person;

(2) The General Partner shall deliver or cause to be delivered to the transfer
agent for the REIT Class A Common Shares upon the written order of the Tendering
Partner or the Redemption Underwriter, on the date set forth in such order, a
confirmation of book-entry transfer of shares representing such REIT Class A
Common Shares, issued in such name or names as the Tendering Partner or the
Redemption Underwriter shall direct. The

 

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Redemption Underwriter may provide a Notice of Redemption prior to becoming the
legal owner of the Tendered Units with the delivery of the REIT Class A Common
Shares to the Redemption Underwriter being conditioned upon the delivery of the
Tendered Units. The General Partner shall deliver or cause to be delivered the
REIT Class A Common Shares no later than three Business Days following being
provided with the Notice of Redemption and, on or before such third Business
Day, immediately following the surrender of the Tendered Units;

(3) The Redemption Underwriter shall not be treated as a Limited Partner with
respect to such Common Units for purposes of this Agreement, except to the
extent necessary to effectuate the transaction contemplated by this Section 8.6G
and matters ancillary thereto and as required by applicable law;

(4) The Partnership and the General Partner shall take all steps reasonably
requested by the Redemption Underwriter in order to facilitate settlement in the
proposed underwritten offering; and

(5) The issuance of such REIT Class A Common Shares upon such exchange shall be
made without charge for any stamp or other similar tax in respect of such
issuance; provided, that the Tendering Partner shall pay to the General Partner
the amount of any tax which may be payable in respect of any transfer involved
in such issuance or establish to the reasonable satisfaction of the General
Partner that such tax has been paid.

ARTICLE IX.

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 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. No later than the date on which the Company mails its annual report to its
shareholders, the General Partner shall cause to be mailed to each Limited
Partner, as of the close of the Partnership Year, an annual report containing
financial statements of the Partnership, or of the Company if such statements
are prepared solely on a consolidated basis with the Company, 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.

 

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B. As soon as practicable, but in no event later than forty-five (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 SEC, the General Partner
shall cause to be mailed to 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

C. The Partnership shall further cause to be prepared and transmitted to the
General Partner such other reports and/or information as are necessary for the
General Partner to determine and maintain its qualification as a REIT under the
REIT Requirements, its earnings and profits derived from the Partnership, its
liability for a tax as a consequence of its Partnership Interest and
distributive share of taxable income or loss and items thereof, in each case in
a manner that will permit the General Partner to comply with its respective
obligations to file federal, state and local tax returns and information returns
and to provide its stockholders with tax information.

ARTICLE X.

TAX MATTERS

Section 10.1 Preparation of Tax Returns

A. Consistent with all other provisions of this Agreement, the General Partner
shall determine the methods to be used in the preparation of federal, state, and
local income and other tax returns for the Partnership in connection with all
items of income and expense, including, but not limited to, valuation of assets,
the methods of Depreciation and cost recovery, credits and tax accounting
methods and procedures, and all tax elections.

B. The Partnership shall timely cause to be prepared and transmitted to the
Partners, federal and appropriate state and local Partnership Income Tax
Schedules “K-1” or any substitute therefor, with respect to each Partnership
Year on appropriate forms prescribed. The Partnership shall make reasonable
efforts to prepare and submit such forms before the due date for filing federal
income tax returns for the fiscal year in question (determined without
extensions), and shall in any event prepare and submit such forms on or before
July 15 of the year following the fiscal year in question.

Section 10.2 Tax Matters Partner

A. The General Partner is designated as the “tax matters partner” of the
Partnership for purposes of Section 6231(a)(7) of the Code for so long as such
designation is applicable, and the General Partner or such other person as the
General Partner appoints will thereafter be the “partnership representative”
(together with the tax matters partner, the “Tax Matters Representative”) within
the meaning of Section 6223 of the Code, as amended by

 

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Section 1101 of the Bipartisan Budget Act of 2015. The Tax Matters
Representative shall have the right and obligation to take all actions
authorized and required, respectively, by the Code for the Tax Matters
Representative. The Tax Matters Representative shall have the right to retain
professional assistance in respect of any audit of the Partnership by the IRS
and all out-of-pocket expenses and fees incurred by the Tax Matters
Representative on behalf of the Partnership as Tax Matters Representative shall
constitute Partnership expenses. In the event the General Partner receives a
notice of a final Partnership adjustment, the General Partner shall either
(i) file a court petition for judicial review of such final adjustment within
the period provided under Code Section 6226(a) or 6234(a), as applicable, a copy
of which petition shall be mailed to all Limited Partners on the date such
petition is filed, or (ii) mail a written notice to all Limited Partners, within
such period, that describes the General Partner’s reasons for determining not to
file such a petition.

B. All elections and determinations required or permitted to be made by the
Partnership under the Code or any applicable state or local tax law shall be
made by the General Partner in its sole and absolute discretion.

C. In the event that the General Partner shall be removed or replaced pursuant
to any provision of this Agreement, the Successor General Partner shall assume
the obligations of this Section 10.2.

Section 10.3 Withholding

Each Partner hereby authorizes the Partnership and the Tax Matters
Representative 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 or the Tax Matters Representative determines 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 Section 1441,
1442, 1445 or 1446 of the Code. Any amount paid on behalf of or with respect to
a Partner shall constitute a loan by the Partnership to such Partner, which loan
shall be due within fifteen (15) days after repayment is demanded of the Partner
in question, and shall be repaid through withholding of subsequent distributions
to such Partner. Nothing in this Section 10.3 shall create any obligation on the
General Partner to advance funds to the Partnership or to borrow funds from
third parties in order to make payments on account of any liability of the
Partnership under a withholding tax act. 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 (2) percentage points (but not higher
than the maximum lawful rate), such interest to accrue from the date such amount
is due (i.e., fifteen (15) days after demand) until such amount is paid in full.
To the extent the payment or accrual of withholding tax results in a federal,
state or local tax credit to the Partnership, such credit shall be allocated to
the Partner to whose distribution the tax is attributable.

Section 10.4 Puerto Rico Tax Matters

A. For purposes of Section 10.3, the Partnership may assume that any Partner
who, upon request, fails to provide the General Partner with satisfactory
evidence of its tax status for Puerto Rico income tax purposes shall be
considered, for purposes of the Puerto Rico Internal Revenue Code of 2011, as
amended, or any successor statute (collectively, the “PR Code”), both a foreign
person and a foreign partner.

 

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B. Unless otherwise incompatible with the PR Code or the regulations thereunder,
any reference to the Code or the Regulations shall also be deemed a reference to
the corresponding provision of the PR Code or its regulations for purposes of,
among other things, (1) the determination of Net Income or Net Loss for Puerto
Rico income tax purposes, (2) the allocation of such Net Income or Net Loss
among the Partners and (3) this Article X.

C. A Partner who is eligible to participate in the filing of a combined tax
return and desires to participate in the filing of such a return must submit to
the Partnership such information as may be required by the PR Code, its
regulations or any administrative pronouncement, such as a Puerto Rico Treasury
Department Administrative Determination or Circular Letter, in order to elect
and participate in the filing of a combined tax return.

ARTICLE XI.

TRANSFERS AND WITHDRAWALS

Section 11.1 Transfer

A. The term “transfer,” when used in this Article XI with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner purports to assign its General Partner Interest to another
Person or by which a Limited Partner purports to assign its Limited 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 operation of law or otherwise. Except as otherwise expressly
provided in Section 11.6E and Section 11.6F, the term “transfer” when used in
this Article XI does not include any Redemption or other exchange for REIT
Class A Common Shares pursuant to Section 8.6. No part of the interest of a
Limited Partner shall be subject to the claims of any creditor or any spouse for
alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement.

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

Section 11.2 Transfer of General Partner’s Partnership Interest

A. Except in connection with a transaction described in Section 11.2B, the
General Partner shall not withdraw from the Partnership and shall not transfer
all or any portion of its interest in the Partnership (whether by sale,
statutory merger or consolidation, liquidation or otherwise) without the prior
written consent of all of the Limited Partners, which may be given or withheld
by each Limited Partner in its sole and absolute discretion, and only upon the
admission of a Successor General Partner pursuant to Section 12.2B. Upon any
transfer of a

 

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Partnership Interest in accordance with the provisions of this Section 11.2, the
transferee shall become a Successor General Partner for all purposes herein, and
shall be vested with the powers and rights of the transferor General Partner,
and shall be liable for all obligations and responsible for all duties of the
General Partner, once such transferee has executed such instruments as may be
necessary to effectuate such admission and to confirm the agreement of such
transferee to be bound by all the terms and provisions of this Agreement with
respect to the Partnership Interest so acquired. It is a condition to any
transfer otherwise permitted hereunder that the transferee assumes, by operation
of law or express agreement, all of the obligations of the transferor General
Partner under this Agreement with respect to such transferred Partnership
Interest, and no such transfer (other than pursuant to a statutory merger or
consolidation approved by the Consent of the Limited Partners in accordance with
Section 11.2B wherein all obligations and liabilities of the transferor General
Partner are assumed by a successor corporation by operation of law) shall
relieve the transferor General Partner of its obligations under this Agreement
without the consent of all of the Limited Partners, which may be given or
withheld by each Limited Partner in its sole and absolute discretion. In the
event the General Partner withdraws from the Partnership, in violation of this
Agreement or otherwise, or otherwise dissolves or terminates, or upon the
Incapacity of the General Partner, a Majority in Interest of the Limited
Partners may elect to continue the Partnership business by selecting a Successor
General Partner in accordance with the Act.

B. The General Partner shall not engage in, or cause or permit, any direct or
indirect transfer of all or any portion of the General Partner’s Partnership
Interest in connection with, or any other occurrence of, (i) a merger,
consolidation, conversion or other combination or extraordinary transaction
involving the General Partner, (ii) a reclassification, recapitalization or
change of the outstanding REIT Shares (other than a change in par value, or from
par value to no par value, or as a result of a share split, share dividend or
similar subdivision), or (iii) a Change of Control of the Company, or any
reclassification, recapitalization or change of its outstanding equity interests
(“Termination Transaction”), unless (A) the Termination Transaction has been
approved by the Consent of the Limited Partners and (B) in connection with such
Termination Transaction all Limited Partners either will receive, or will have
the right to elect to receive, for each Partnership Unit other than a
Non-Economic Unit an amount of cash, securities or other property equal to the
product of the REIT Shares Amount and the greatest amount of cash, securities or
other property paid to a holder of one REIT Economic Share in consideration of
one REIT Economic Share at any time during the period from and after the date on
which the Termination Transaction is consummated, subject to any escrow,
contingent value or other deferred consideration arrangement applicable to such
consideration for such REIT Economic Share; provided that, if, in connection
with the Termination Transaction, a purchase, tender or exchange offer shall
have been made to and accepted by the holders of more than fifty percent (50%)
of the outstanding voting power of the Company, each holder of Partnership Units
shall have the right to elect to receive the greatest amount of cash,
securities, or other property which such holder would have received had it
exercised its rights of Redemption pursuant to Section 8.6 and received REIT
Class A Common Shares in exchange for its Partnership Units (for the avoidance
of doubt, excluding Non-Economic Units) immediately prior to the expiration of
such purchase, tender or exchange offer and had thereupon accepted or tendered
such REIT Class A Common Shares into such purchase, tender or exchange offer
(subject to any escrow, contingent value or other deferred consideration
arrangement that would have been applicable to such consideration for such REIT
Class A Common Shares).

 

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C. In connection with any transaction permitted by Section 11.2B, the General
Partner shall use its commercially reasonable efforts to structure such
Termination Transaction to avoid causing the Limited Partners to recognize gain
for federal income tax purposes by virtue of the occurrence of or their
participation in such Termination Transaction. In the event of any actual or
threatened breach by the General Partner of this Section 11.2C, the Limited
Partners shall be entitled to injunctive relief, in addition to any other remedy
available at law or in equity.

Section 11.3 Limited Partners’ Rights to Transfer

A. Each Limited Partner 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:

(1) Waiting Period. Prior to the first anniversary of a Limited Partner’s
acquisition of a Partnership Interest, 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 its sole and absolute
discretion; provided, however, that any Limited Partner may, at any time
(whether prior to or after such first anniversary), without the consent of the
General Partner, (i) transfer all or any portion of its Partnership Interest to
an Affiliate (other than Sears Holdings), another original Limited Partner or
any of its Affiliates, or an Immediate Family member, subject to the provisions
of Section 11.6, (ii) 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 (iii) subject to the
provisions of Section 11.6, 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.

(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 or other
event wherein all obligations and liabilities of the transferor Limited Partner
are assumed by a successor by operation of law) shall relieve the transferor
Limited 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 and the
representations in Section 3.4D. 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 rights hereunder, other than the rights of an Assignee as provided in
Section 11.5.

 

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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 Partnership 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.

D. In no event may any transfer or assignment of a Partnership Unit (including
any Redemption or other exchange for REIT Class A Common Shares pursuant to
Section 8.6) be made, nor any new Partnership Unit be issued by the Partnership,
(i) if such transfer would immediately or with the passage of time cause the
General Partner to fail to comply with the REIT Requirements, such determination
to be made assuming that the General Partner does comply with the REIT
Requirements immediately prior to the proposed transfer; (ii) if such transfer
would result in a deemed distribution to any Partner attributable to a failure
to meet the requirements of Regulations Section 1.752-2(d)(1), unless such
Partner consents thereto; (iii) if such transfer would cause any lender to the
Partnership to hold in excess of ten (10%) percent of the Partnership Interest
that would, pursuant to the regulations under Code Section 752 or any successor
provision, cause a loan by such lender to constitute Partner Nonrecourse Debt;
(iv) if such transfer would, in the opinion of counsel to the Partnership, cause
the Partnership to cease to be classified as a Partnership for federal income
tax purposes; or (v) if such transfer is effectuated through an “established
securities market” or a “secondary market (or the substantial equivalent
thereof)” within the meaning of Section 7704 of the Code.

Section 11.4 Substituted Limited Partners

A. No Limited Partner shall have the right to substitute a transferee as a
Limited Partner in his, her or its 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 against the Partnership or any Partner.

B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article XI 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 conditioned upon the transferee executing and delivering to the
Partnership 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 or advisable to effect the
admission, in the sole and absolute discretion of the General Partner).

 

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C. Upon the admission of a Substituted Limited Partner, the General Partner
shall amend Exhibit A to reflect the name, address, number of Partnership Units,
and Percentage Interest of such Substituted Limited Partner and to eliminate or
adjust, 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 Losses, gain and loss attributable to the
Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article XI, and the rights of Redemption
provided in Section 8.6, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled to
effect a Consent with respect to such Partnership Units on any matter presented
to the Limited Partners for approval (such Consent right 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 XI to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of Partnership
Units.

Section 11.6 General Provisions

A. No Limited Partner may withdraw from the Partnership other than (i) as a
result of a permitted transfer of all of such Limited Partner’s Partnership
Units in accordance with this Article XI 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 rights of Redemption of all of
its Common Units under Section 8.6.

B. Any Limited Partner who shall transfer all of such Limited Partner’s
Partnership Units in a transfer permitted pursuant to this Article XI 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
Partnership Units under Section 8.6 shall cease to be a Limited Partner.

C. Transfers pursuant to this Article XI 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 fiscal year in compliance with the
provisions of this Article XI or exchanged or redeemed pursuant to Section 8.6
on any day other than the first day of a Partnership Year, then 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.

 

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E. In addition to any other restrictions on transfer herein contained, including
without limitation the provisions of this Article XI and Section 2.6, in no
event may any transfer or assignment of a Partnership Interest by any Partner
(including by way of a Redemption) 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) 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 such transfer
would 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); (v) if such transfer would, 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 2510.3-101; (vi) if such transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; or (vii) 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.

F. Notwithstanding any other provision of this Agreement, the General Partner
shall place appropriate restrictions on the ability of the Limited Partners to
transfer interests in the Partnership (including by exercising redemption
rights) as and if deemed necessary to ensure that the Partnership does not
constitute a “publicly traded partnership” taxable as an association under Code
Section 7704. If and when the General Partner determines that imposing such
restrictions is necessary, the General Partner shall give prompt written notice
thereof to each of the Limited Partners, which notice shall be accompanied by a
copy of an opinion of counsel to the Partnership that states that, in the
opinion of such counsel, restrictions are desirable in order to avoid the
Partnership being treated as a “publicly traded partnership” under Code
Section 7704. 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 discretion to ensure that the Partnership will not be classified as a
“publicly traded partnership” taxable as a corporation under Code Section 7704.

ARTICLE XII.

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 XI.

 

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Section 12.2 Admission of Additional Limited Partners

A. After the admission to the Partnership of the initial Limited Partners on
July 7, 2015, 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 sole and absolute
discretion of the General Partner. 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. 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 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 XIII.

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) 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 (“Liquidating Events”):

 

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A. an event of withdrawal of the General Partner, as defined in the Act, unless,
within ninety (90) days after the withdrawal, a Majority in Interest of the
Limited 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;

B. subject to compliance with Section 7.3B, an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion,

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

D. the sale, in accordance with this Agreement (including without limitation
Section 7.3B) of all or substantially all of the assets and properties of the
Partnership for cash or marketable securities;

E. the Incapacity of the General Partner, unless a Majority in Interest of the
Limited 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; or

F. the Redemption or other exchange for REIT Class A Common Shares of all
Partnership Units (other than those of the General Partner) pursuant to this
Agreement, unless waived by the 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,
and 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 beneficial interest 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 General Partner;

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

 

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(3) Third, to the holders of Series A Preferred Units or other classes or series
of Partnership Units ranking senior to the Common Units in accordance with their
relative rights upon a liquidation, dissolution or winding-up of the affairs of
the Partnership; and

(4) The balance, if any, to the General Partner and Limited Partners in
accordance with their positive Capital Account balances, determined after taking
into account all Capital Account adjustments for 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)); provided, that
notwithstanding the foregoing, no such application or distribution shall be made
in respect of the Non-Economic Units.

If upon dissolution and termination of the Partnership the Capital Account of
any Partner (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs) is less than zero, then such Partner shall have no
obligation to restore the negative balance in its Capital Account, and such
deficit shall not be considered a debt owed to the Partnership or to any other
Person for any purpose whatsoever.

The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII other than reimbursement of its
expenses as provided in Section 7.4.

B. 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 (including by establishing
reserves and/or distributing into escrow) 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 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. No Limited Partner shall have any rights or powers upon liquidation
or dissolution in respect of his or her Non-Economic Units, except as required
by law.

 

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Section 13.4 Notice of Dissolution

In the event a Liquidating Event occurs or an event occurs that would, but for
the provisions of Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (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).

Section 13.5 Cancellation of Certificate of Limited Partnership

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

Section 13.6 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 13.7 Waiver of Partition

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

Section 13.8 Liability of Liquidator

Any Liquidator shall be indemnified and held harmless by the Partnership in the
same manner and to the same degree as an Indemnitee may be indemnified pursuant
to Section 7.7.

ARTICLE XIV.

AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

Section 14.1 Amendments

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

 

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B. Amendments to this Agreement require the consent of the General Partner and,
unless otherwise provided herein, Consent of the Limited Partners and may be
proposed by the General Partner or by any Limited Partner. Following such
proposal, with respect to any proposal to which the General Partner has or will
consent, the General Partner shall submit any proposed amendment to the Limited
Partners. 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 fifteen (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 (for the avoidance of doubt, excluding Partnership
Interests held by the General Partner). The call 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 (7) days nor more than thirty (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.

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. A proxy may be granted in writing, by means of electronic
transmission or as otherwise permitted by applicable law. No proxy shall be
valid after the expiration of eleven (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, such revocation to be effective upon the
Partnership’s receipt of written notice of such revocation from the Limited
Partner executing such proxy.

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.

 

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ARTICLE XV.

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, nationally recognized overnight delivery service, or electronic
mail 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 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 in its capacity as such or other
third party having dealings with the Partnership.

 

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Section 15.7 Waiver

No failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon 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; Waiver of Jury Trial

A. 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.

B. Each Partner hereby (i) stipulates that any dispute or disagreement between
or among any of the parties hereto as to the interpretation of any provision of,
or the performance of obligations under, this Agreement shall be commenced and
prosecuted in its entirety in, and consents to the exclusive jurisdiction and
proper venue of, the Delaware Court of Chancery (and if the Delaware Court of
Chancery shall be unavailable, any federal court located within the State of
Delaware), and each party hereto consents to personal and subject matter
jurisdiction and venue in such courts and waives and relinquishes all right to
attack the suitability or convenience of such venue or forum by reason of its
present or future domiciles, or by any other reason, for any such dispute or
disagreement. The parties hereto acknowledge that all directions issued by the
forum court, including all injunctions and other decrees, will be binding and
enforceable in all jurisdictions and countries; and (ii) TO THE FULLEST EXTENT
PERMITTED BY LAW, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

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.

 

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Section 15.12 No Rights as Shareholders

Nothing contained in this Agreement shall be construed as conferring upon the
holders of Partnership Units any rights whatsoever as holders of REIT Shares or
otherwise as shareholders of the General Partner, including without limitation
any right to receive dividends or other distributions made to shareholders of
the General Partner or to vote or to consent or to receive notice as
shareholders in respect of any meeting of shareholders for the election of
trustees of the General Partner or any other matter.

ARTICLE XVI.

SERIES A PREFERRED UNITS

Section 16.1 Designation and Number. A series of preferred partnership units,
designated the “Series A Preferred Units” (the “Series A Preferred Units”), is
hereby established. The number of Series A Preferred Units hereby authorized
shall be 3,220,000.

Section 16.2 Rank. The Series A Preferred Units shall, with respect to the
payment of distributions and the distribution of assets in the event of any
liquidation, dissolution or winding up of the affairs of the Partnership, rank
(a) senior to all classes or series of Common Units and all classes or series of
equity securities the terms of which provide that such units rank junior to the
Series A Preferred Units; (b) on a parity with all classes or series of all
other equity securities issued by the Partnership the terms of which
specifically provide that such classes or series rank on a parity with the
Series A Preferred Units; and (c) junior to (i) all existing and future
indebtedness of the Partnership and (ii) all equity securities issued by the
Partnership the terms of which specifically provide that such equity securities
rank senior to the Series A Preferred Units. The term “equity securities” shall
not include convertible debt securities.

Section 16.3 Distributions.

A. Holders of the then outstanding Series A Preferred Units shall be entitled to
receive, when and as authorized by the General Partner and declared by the
Partnership, out of funds legally available for the payment of distributions,
cumulative cash distributions at the rate of 7.00% per year of the $25.00
liquidation preference per unit (equivalent to a fixed annual amount of $1.75
per unit) (the “Series A Preferred Return”). Distributions on the Series A
Preferred Units are payable quarterly in arrears on January 15th, April 15th,
July 15th and October 15th of each year and, if such day is not a Business Day,
the next succeeding Business Day, beginning on April 15, 2018 (each, a
“Distribution Payment Date”). The quarterly period beginning on, and including,
each Distribution Payment Date and ending on, but excluding, the next succeeding
Distribution Payment Date is referred to herein as a “distribution period” and
the distribution which shall accrue in respect of any full distribution period
shall be $0.4375 regardless of the actual number of days in such full
distribution period. No holder of any Series A Preferred Units shall be entitled
to receive any distributions paid or payable on the Series A Preferred Units
with a Distribution Payment Date before the date such Series A Preferred Units
are issued. The first distribution will be for more than a full quarter and will
cover the period from, and including, December 14, 2017 to, but excluding,
April 15, 2018. Such distribution and any distribution payable on the Series A
Preferred Units for any partial distribution period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Distributions will

 

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be payable in arrears to holders of record as they appear in the books and
records of the Partnership at the close of business on the applicable record
date, which shall be the first day of the calendar month in which the applicable
Distribution Payment Date falls, or on such other date designated by the General
Partner as the record date for the payment of distributions on the Series A
Preferred Units that is not more than 30 nor less than 10 days prior to such
Distribution Payment Date (each, a “Distribution Record Date”).

B. No distributions on Series A Preferred Units shall be authorized by the
General Partner or declared by the Partnership or paid or set apart for payment
by the Partnership at such time as the terms and provisions of any agreement of
the Partnership, including any agreement relating to its indebtedness,
(i) prohibit such authorization, declaration, payment or setting apart for
payment of distributions or (ii) provide that such authorization, declaration,
payment or setting apart for payment of distributions would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.

C. Notwithstanding the foregoing, distributions on the Series A Preferred Units
shall accrue whether or not the terms and provisions set forth in Section 16.3B
at any time prohibit the current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally available for
the payment of such distributions and whether or not such distributions are
authorized by the General Partner and declared by the Partnership.

D. Accrued but unpaid distributions on the Series A Preferred Units will
accumulate as of the Distribution Payment Date on which they first become
payable. Except as provided in Section 16.3E below, no distributions will be
declared or paid or set apart for payment, and no distribution will be made on
any Common Units or any other class or series of Partnership Interests ranking,
as to distributions, on a parity with or junior to the Series A Preferred Units
(other than a distribution that consists of the Common Units or units of any
other class or series of Partnership Interests ranking junior to the Series A
Preferred Units as to distributions and upon liquidation), for any period unless
full cumulative distributions on the Series A Preferred Units have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof is set apart for such payment on the Series A Preferred
Units for all past distribution periods.

E. When distributions are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series A Preferred Units and the units of
any other class or series of Partnership Units ranking on a parity as to
distributions with the Series A Preferred Units, all distributions declared upon
the Series A Preferred Units and any other class or series of Partnership Units
ranking on a parity as to distributions with the Series A Preferred Units shall
be declared pro rata so that the amount of distributions declared per unit of
Series A Preferred Units and such other class or series of Partnership Units
shall in all cases bear to each other the same ratio that accrued distributions
per unit on the Series A Preferred Units and such other class or series of
Partnership Units (which shall not include any accrual in respect of unpaid
distributions for prior distribution periods if such Partnership Units do not
have a cumulative distribution) bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any distribution payment or
payments on Series A Preferred Units which may be in arrears.

 

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F. Except as provided in the immediately preceding paragraph, unless full
cumulative distributions on the Series A Preferred Units have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for all past distribution periods, no
distributions (other than distributions paid in Common Units or any other class
or series of Partnership Units ranking junior to the Series A Preferred Units as
to distributions and upon liquidation) shall be declared or paid or set aside
for payment, nor shall any other distribution be declared or made upon the
Common Units or other class or series of Partnership Interests ranking junior to
or on a parity with the Series A Preferred Units as to distributions or upon
liquidation, nor shall any Common Units, or any other class or series of
Partnership Interests ranking junior to or on a parity with the Series A
Preferred Units as to distributions or upon liquidation be redeemed, purchased
or otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such units) by the
Partnership (except by conversion into or exchange for any other class or series
of Partnership Interests ranking junior to the Series A Preferred Units as to
distributions and upon liquidation) and except in connection with the redemption
of Partnership Units in connection with a redemption, purchase or acquisition of
shares of beneficial interest in the General Partner under Stock Plans for
officers, trustees or employees or others performing or providing similar
services and pursuant to Article VII of the Charter.

G. Holders of the Series A Preferred Units shall not be entitled to any
distribution, whether payable in cash, property or Partnership Interests in
excess of full cumulative distributions on the Series A Preferred Units as
provided above. Any distribution payment made on Series A Preferred Units shall
first be credited against the earliest accrued but unpaid distribution due with
respect to such units which remains payable.

Section 16.4 Liquidation Preference.

A. Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Partnership, the holders of Series A Preferred Units then
outstanding are entitled to be paid out of the assets of the Partnership legally
available for distribution to its partners a liquidation preference of $25.00
per unit, plus an amount equal to all accrued and unpaid distributions (whether
or not earned or declared) to, but excluding, the date of payment, before any
distribution of assets is made to holders of Common Units or any other class or
series of Partnership Interests that ranks junior to the Series A Preferred
Units as to liquidation rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series A
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.

B. In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the available
assets of the Partnership are insufficient to pay in full the amount of the
liquidating distributions on all outstanding Series A Preferred Units and the
corresponding amounts payable on all Partnership Interests of other classes or
series of Partnership Interests ranking on a parity with the Series A Preferred
Units in the distribution of assets upon liquidation, then the holders of the
Series A Preferred Units and all other such classes or series of Partnership
Interests shall share ratably in any such distribution of assets in proportion
to the full liquidating distributions to which they would otherwise be
respectively entitled.

 

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C. Written notice of any such liquidation, dissolution or winding up of the
affairs of the Partnership, stating the payment date or dates when, and the
place or places where, the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage pre-paid, not less than 30
nor more than 60 days prior to the payment date stated therein, to each record
holder of the Series A Preferred Units at the respective addresses of such
holders as the same shall appear on the books and records of the Partnership.

D. The consolidation, conversion, combination or merger of the Partnership with
or into any other corporation, partnership or entity or consolidation,
conversion or merger of any other corporation with or into the Partnership, or
the sale, lease or conveyance of all or substantially all of the Partnership’s
assets, property or business or any statutory share exchange, shall not be
deemed to constitute a liquidation, dissolution or winding up of the affairs of
the Partnership.

Section 16.5 Redemption.

A. Right of Optional Redemption. The Series A Preferred Units are not redeemable
prior to December 14, 2022, except as expressly provided in Section 16.5D below.
On and after December 14, 2022, the Partnership, at its option and upon not less
than 30 nor more than 60 days’ written notice, may redeem the Series A Preferred
Units, in whole or in part, at any time or from time to time, for cash at a
redemption price of $25.00 per unit, plus an amount equal to all accrued and
unpaid distributions thereon to, but excluding, the date fixed for redemption
(except as provided in Section 16.5C below), without interest. If less than all
of the outstanding Series A Preferred Units are to be redeemed, the Series A
Preferred Units to be redeemed shall be selected pro rata (as nearly as may be
practicable without creating fractional units) in compliance with applicable
procedures of The Depository Trust Company.

B. Limitations on Redemption. Unless full cumulative distributions on all
Series A Preferred Units shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past distribution periods, no Series A Preferred Units shall be
redeemed unless all outstanding Series A Preferred Units are simultaneously
redeemed, and the Partnership shall not purchase or otherwise acquire directly
or indirectly any Series A Preferred Units (except by exchange for Partnership
Interests ranking junior to the Series A Preferred Units as to distributions and
upon liquidation); provided, however, that the foregoing shall not prevent the
redemption or purchase of Series A Preferred Units by the Partnership to fund
the purchase by the General Partner of Series A Preferred Shares corresponding
to the repurchased Series A Preferred Units in order to ensure that the General
Partner remains qualified as a REIT for federal income tax purposes or
acquisition of Series A Preferred Units pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding Series A Preferred Units.

C. Payment of Distributions in Connection with Redemption. Immediately prior to
any redemption of Series A Preferred Units, the Partnership shall pay, in cash,
any accrued and unpaid distributions to, but excluding, the redemption date,
unless a redemption date falls after a Distribution Record Date and prior to the
corresponding Distribution Payment Date, in which case each holder of Series A
Preferred Units at the close of business on such Distribution Record Date shall
be entitled to the distribution payable on such units on the

 

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corresponding Distribution Payment Date notwithstanding the redemption of such
units before such Distribution Payment Date. Except as provided above, the
Partnership will make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series A Preferred Units which are redeemed.

D. Other Redemptions. Notwithstanding anything to the contrary contained herein,
at any time that the General Partner redeems all or any of the Series A
preferred shares of the General Partner issued pursuant to the Series A Articles
Supplementary (the “Series A Preferred Shares”), the General Partner shall cause
the Partnership to concurrently redeem an equal number of Series A Preferred
Units, at a redemption price per Series A Preferred Unit payable in cash and
equal to the same price per share paid by the General Partner to redeem the
Series A Preferred Shares (i.e., a redemption price of $25.00 per Series A
Preferred Share, plus any accrued and unpaid dividends thereon). No interest
shall accrue for the benefit of the Series A Preferred Units to be redeemed on
any cash set aside by the Partnership.

E. Notwithstanding anything to the contrary contained herein, the Partnership
may redeem one Series A Preferred Unit for each Series A Preferred Share
purchased in the open market, through tender or by private agreement with the
General Partner.

F. Status of Redeemed Units. Any Series A Preferred Units that shall at any time
have been redeemed shall, after such redemption, have the status of authorized
but unissued Partnership Units, without designation as to class or series until
such Partnership Units are thereafter classified or designated as part of a
particular series by the General Partner.

Section 16.6 Voting Rights. Except as provided by law, the General Partner, in
its capacity as the holder of the Series A Preferred Units, shall not be
entitled to vote for any purpose or otherwise participate in any action taken by
the Partnership or the Partners.

Section 16.7 Conversion.

A. Except as otherwise set forth herein, the Series A Preferred Units are not
convertible into or exchangeable for any other property or units of the
Partnership.

B. In the event that a holder of Series A Preferred Shares of the General
Partner exercises its right to convert the Series A Preferred Shares into REIT
Class A Common Shares in accordance with the terms of the Series A Articles
Supplementary, then, concurrently therewith, an equivalent number of Series A
Preferred Units held by the General Partner shall automatically be converted
into a number of Common Units of the Partnership equal to the number of REIT
Class A Common Shares issued upon conversion of such Series A Preferred Shares;
provided, however, that if a holder of Series A Preferred Shares receives cash
or other consideration in addition to or in lieu of REIT Class A Common Shares
in connection with such conversion, then the General Partner, as the holder of
Series A Preferred Units, shall be entitled to receive cash or such other
consideration. With respect to any automatic conversion of Series A Preferred
Units to Common Units of the Partnership pursuant to this Section 16.7, all
Common Units acquired by the General Partner pursuant hereto shall
automatically, and without further action required, be converted into and deemed
to be Limited Partnership Interests and held by the Company in its capacity as a
Limited Partner in the Partnership.

 

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Section 16.8 Priority Allocations with Respect to the Series A Preferred Units.

After giving effect to the allocations set forth in Section 6.3, but before
giving effect to the allocations to the Common Units set forth in Section 6.2,
Net Income shall be allocated to the General Partner until the aggregate amount
of Net Income allocated to the General Partner under this Section 16.8 for the
current year and all prior years equals the aggregate amount of the Series A
Preferred Return paid to the General Partner for the current year and all prior
years.

[Signature Page Follows]

 

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

 

GENERAL PARTNER: SERITAGE GROWTH PROPERTIES   By:  

/s/ Benjamin Schall

  Name: Benjamin Schall   Title:   Chief Executive Officer & President

[Signature Page to Partnership Agreement]

 

67

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LIMITED PARTNER: ESL PARTNERS, L.P.   By: RBS Partners, L.P., as its general
partner  

          By: ESL Investments, Inc., as its

          general partner

By:  

/s/ Edward S. Lampert

  Name: Edward S. Lampert   Title:   Chief Executive Officer LIMITED PARTNER:
EDWARD S. LAMPERT

/s/ Edward S. Lampert

Edward S. Lampert

[Signature Page to Partnership Agreement]

 

68

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EXHIBIT A

PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS

As of December 14, 2017

Common Units

 

Name and Address

of Partner

   Cash
Contributions1      Agreed
Value of
Contributed
Property2      Total
Contributions1      Economic
Units      Economic
Percentage
Interest     Non-
Economic
Units      Non-
Economic
Percentage
Interest  

GENERAL PARTNER

                   

Seritage Growth Properties

   $ 928,048,599.36        —        $ 928,048,599.36        31,374,192       
56.47867 %      1,434,922        100 % 

LIMITED PARTNERS

                   

ESL Partners, L.P.

c/o ESL Investments, Inc.

1170 Kane Concourse, Suite 200

Bay Harbor Islands, Florida 33154

   $ 325,609,185.84        —        $ 325,609,185.84        8,663,159       
15.59510 %      —          —    

Edward S. Lampert

c/o ESL Investments, Inc.

1170 Kane Concourse, Suite 200

Bay Harbor Islands, Florida 33154

   $ 389,526,566.82        —        $ 389,526,566.82        13,168,579       
23.70559 %      —          —    

Seritage Growth Properties3

     NA        —          NA        2,344,589        4.22064 %      —         
—    

Series A Preferred Units

 

Name and Address

of Partner

   Cash
Contributions      Agreed
Value of
Contributed
Property (*)      Total
Contributions      Economic
Units      Economic
Percentage
Interest     Non-
Economic
Units      Non-
Economic
Percentage
Interest  

LIMITED PARTNER

                   

Seritage Growth Properties

   $ 70,000,000        —        $ 70,000,000        2,800,000        100 %     
—          —    

 

 

1  Contribution amounts are not adjusted in the event of exchange or other
disposition of Units.

2  Net of Debt (if any).

3  Units acquired upon exchange in lieu of redemption.

 

A-1

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EXHIBIT B

NOTICE OF REDEMPTION

The undersigned hereby (i) transfers                              Common Units
of Seritage Growth Properties, L.P. in accordance with the terms of the Limited
Partnership Agreement of Seritage Growth Properties, L.P. and the rights of
Redemption and/or exchange referred to therein, (ii) surrenders such Common
Units and all right, title and interest therein and (iii) directs that the cash
or REIT Class A Common Shares deliverable upon Redemption or exchange be
delivered to the address specified below, and if applicable, that such REIT
Class A Common Shares be registered or placed in the name(s) and address(es)
specified below.

Underwriter Redemption:          Yes          No

Dated:                                                                   
                                         
                                         
                                                         

Name                                             
of                                                             
Limited                                        
                                Partner

or Underwriter:

 

 

(Signature of Limited Partner or Underwriter)

 

(Street Address)

 

(City) (State) (Zip Code) Signature Guaranteed by:

 

Issue REIT Class A Common Shares to:

Please insert social security or identifying number:

Name:

 

B-1

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EXHIBIT C

FORM OF PARTNERSHIP UNIT CERTIFICATE

CERTIFICATE FOR PARTNERSHIP UNITS OF

SERITAGE GROWTH PROPERTIES, L.P.

 

No.           [COMMON / NON-ECONOMIC]    UNITS   

Seritage Growth Properties, as the General Partner of Seritage Growth
Properties, L.P., a Delaware limited partnership (the “Partnership”), hereby
certifies that                                  is a Limited Partner of the
Partnership whose Partnership Interests therein, as set forth in the Agreement
of Limited Partnership of Seritage Growth Properties, L.P. (the “Partnership
Agreement”), under which the Partnership is existing and as filed in the office
of the Secretary of State of the State of Delaware (copies of which are on file
at the Partnership’s principal office at
                                             ), represent
                                 [Common / Non-Economic] Units of limited
partnership interest in the Partnership.

THE PARTNERSHIP 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 OF
                                , 2015, AS IT MAY BE AMENDED FROM TIME TO TIME
(A COPY OF WHICH IS ON FILE WITH THE PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED
IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), OR (B) IF THE PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER.

DATED:                             ,         .

 

Seritage Growth Properties, General Partner of Seritage Growth Properties, L.P.

ATTEST:

 

By:  

 

      By:   

 

 

C-1