Exhibit 10.1

 

THIRD amended and restated LIMITED PARTNERSHIP AGREEMENT

 

OF

 

INDUSTRIAL property OPERATING PARTNERSHIP LP

 

A DELAWARE LIMITED PARTNERSHIP

 

3rd day of February, 2020

 

  

 

 

TABLE OF CONTENTS

 

RECITALS 1     Article 1 DEFINED TERMS 4     Article 2 PARTNERSHIP FORMATION AND
IDENTIFICATION 15 2.1     Formation 15 2.2     Name, Office and Registered Agent
15 2.3     Partners 15 2.4     Term and Dissolution 15 2.5     Filing of
Certificate and Perfection of Limited Partnership 16 2.6     Certificates
Describing Partnership Units and Special Partnership Units 16     Article 3
BUSINESS OF THE PARTNERSHIP 16     Article 4 CAPITAL CONTRIBUTIONS AND ACCOUNTS
17 4.1     Capital Contributions 17 4.2     Additional Capital Contributions and
Issuances of Additional Partnership Interests 17 4.3     Additional Funding 19
4.4     Capital Accounts 19 4.5     Percentage Interests 19 4.6     No Interest
On Contributions 20 4.7     Return Of Capital Contributions 20 4.8     No Third
Party Beneficiary 20     Article 5 PROFITS AND LOSSES; DISTRIBUTIONS 20
5.1     Allocation of Profit and Loss 20 5.2     Distribution of Cash 23
5.3     REIT Distribution Requirements 25 5.4     No Right to Distributions in
Kind 25 5.5     Limitations on Return of Capital Contributions 25
5.6     Distributions Upon Liquidation 25 5.7     Substantial Economic Effect 25
    Article 6 RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER 26
6.1     Management of the Partnership 26 6.2     Delegation of Authority 28
6.3     Indemnification and Exculpation of Indemnitees 28 6.4     Liability of
the General Partner 30 6.5     Reimbursement of General Partner 31
6.6     Outside Activities 31 6.7     Employment or Retention of Affiliates 31
6.8     General Partner Participation 32 6.9     Title to Partnership Assets 32
6.10   Redemptions and Exchanges of REIT Shares 32 6.11   No Duplication of Fees
or Expenses 33

 

  

 

 

Article 7 CHANGES IN GENERAL PARTNER 33 7.1     Transfer of the General
Partner’s Partnership Interest 33 7.2     Admission of a Substitute or
Additional General Partner 35 7.3     Effect of Bankruptcy, Withdrawal, Death or
Dissolution  of a General Partner 36 7.4     Removal of a General Partner 36    
Article 8 RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS 37 8.1     Management
of the Partnership 37 8.2     Power of Attorney 37 8.3     Limitation on
Liability of Limited Partners 38 8.4     Ownership by Limited Partner of
Corporate General Partner or Affiliate 38 8.5     Redemption Right 38
8.6     Registration 40 8.7     Redemption or Conversion of Special Partnership
Units 40 8.8     Distribution Reinvestment Plan 42     Article 9 TRANSFERS OF
LIMITED PARTNERSHIP INTERESTS 42 9.1     Purchase for Investment 42
9.2     Restrictions on Transfer of Limited Partnership Interests 43
9.3     Admission of Substitute Limited Partner 44 9.4     Rights of Assignees
of Partnership Interests 45 9.5     Effect of Bankruptcy, Death, Incompetence or
Termination of a Limited Partner 45 9.6     Joint Ownership of Interests 45    
Article 10 BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS 46 10.1   Books and
Records 46 10.2   Custody of Partnership Funds; Bank Accounts 46 10.3   Fiscal
and Taxable Year 46 10.4   Annual Tax Information and Report 46
10.5   Partnership Representative; Tax Elections; Special Basis Adjustments 47
10.6   Reports to Limited Partners 48     Article 11 AMENDMENT OF AGREEMENT;
MERGER 49     Article 12 GENERAL PROVISIONS 50 12.1   Notices 50 12.2   Survival
of Rights 50 12.3   Additional Documents 50 12.4   Severability 50 12.5   Entire
Agreement 50 12.6   Pronouns and Plurals 50 12.7   Headings 50
12.8   Counterparts 50 12.9   Governing Law 50

 

  

 

 

EXHIBITS

 

EXHIBIT A - Partners, Capital Contributions and Percentage Interests or Special
Percentage Interests

 

EXHIBIT B -Notice of Exercise of Redemption Right

 

  

 

 

THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
INDUSTRIAL PROPERTY OPERATING PARTNERSHIP LP

 

RECITALS

 

This Third Amended and Restated Limited Partnership Agreement (this “Agreement”)
is entered into this 3rd day of February, 2020 between Industrial Property
Trust, a Maryland real estate investment trust (the “General Partner”) and the
Limited Partners set forth on Exhibit A attached hereto. Capitalized terms used
herein but not otherwise defined shall have the meanings given them in Article
1.

 

AGREEMENT

 

WHEREAS, the General Partner has elected to be treated as a real estate
investment trust under the Internal Revenue Code of 1986, as amended commencing
with the taxable year ended December 31, 2013;

 

WHEREAS, Industrial Property Operating Partnership LP (the “Partnership”), was
formed on August 28, 2012 as a limited partnership under the laws of the State
of Delaware, pursuant to a Certificate of Limited Partnership filed with the
Office of the Secretary of State of the State of Delaware on August 28, 2012;

 

WHEREAS, the General Partner and the Limited Partners orally entered into a
Limited Partnership Agreement of the Partnership on August 28, 2012;

 

WHEREAS, the General Partner contributed its general partner interest in the
Partnership to IPT-GP Inc. (formerly known as LIT-GP Inc.), a wholly-owned
subsidiary of the General Partner (“IPT-GP”), on September 7, 2012;

 

WHEREAS, IPT-GP contributed $2,000 to the Partnership in exchange for 200
Operating Partnership Units, and the General Partner contributed $198,000 to the
Partnership in exchange for 19,800 Operating Partnership Units on September 18,
2012;

 

WHEREAS, IPT-GP was subsequently dissolved and its 200 Operating Partnership
Units were distributed to the General Partner on March 31, 2013, resulting in
the General Partner becoming the sole general partner of the Partnership;

 

WHEREAS, Industrial Property Advisors Group LLC contributed $1,000 to the
Partnership and received 100 Special Partnership Units;

 

WHEREAS, the General Partner and Limited Partners entered into a Limited
Partnership Agreement dated as of July 16, 2013 and effective as of March 31,
2013 (the “Original Partnership Agreement”);

 

WHEREAS, the General Partner and the Limited Partners amended and restated the
Original Partnership Agreement and entered into an Amended and Restated Limited
Partnership Agreement dated August 8, 2013 (the “Amended and Restated Limited
Partnership Agreement”);

 

 1 

 

 

WHEREAS, the General Partner and Limited Partners entered into Amendment No. 1
to the Amended and Restated Limited Partnership Agreement as of March 5, 2014;

 

WHEREAS, the General Partner desires to conduct its current and future business
through the Partnership;

 

WHEREAS, in furtherance of the foregoing, the General Partner has contributed
and desires to continue to contribute certain assets to the Partnership from
time to time;

 

WHEREAS, in exchange for the General Partner’s contribution of assets, the
Partnership has issued and will continue to issue Partnership Units to the
General Partner in accordance with the terms of this Agreement;

 

WHEREAS, the Limited Partners have contributed and they and future Limited
Partners may contribute certain of their property to the Partnership in exchange
for Partnership Units or Special Partnership Units in accordance with the terms
of this Agreement;

 

WHEREAS, in furtherance of the Partnership’s business, the Partnership may
acquire Properties and other assets from time to time by means of the
contribution of such Properties or other assets to the Partnership by the owners
thereof in exchange for Partnership Units;

 

WHEREAS, the parties hereto wish to establish herein their respective rights and
obligations in connection with all of the foregoing and certain other matters;

 

WHEREAS, the parties hereto entered into a Second Amended and Restated Limited
Partnership Agreement dated August 14, 2015 (the “Second Amended and Restated
Limited Partnership Agreement”), to effect certain changes in share
classification and other changes;

 

WHEREAS, on August 20, 2019, the General Partner, Prologis, L.P., a Delaware
limited partnership (“PLD”), and Rockies Acquisition LLC, a Delaware limited
liability company and a wholly-owned subsidiary of PLD, entered into an Amended
and Restated Agreement and Plan of Merger ("Merger Agreement") pursuant to which
General Partner elected to engage in an asset sale with PLD and its affiliates,
rather than a merger of Rockies Acquisition LLC with and into General Partner,
and the board of directors of General Partner unanimously approved the Asset
Sale (as defined below), the Merger Agreement and the other transactions
contemplated by the Merger Agreement;

 

WHEREAS, the Merger Agreement provided for the sale of substantially all of
General Partner’s assets to PLD through (i) two mergers (each, a "Merger" and
collectively the "Mergers") of Rockies Acquisition LLC or newly formed Delaware
limited liability companies that are wholly owned subsidiaries of PLD or an
affiliate of PLD with and into newly formed, wholly owned subsidiaries of IPT
Real Estate Holdco LLC, a Delaware limited liability company and indirect
subsidiary of General Partner, with each such applicable newly formed, wholly
owned subsidiary of IPT Real Estate Holdco LLC surviving each Merger as a wholly
owned subsidiary of PLD or an affiliate of PLD upon the terms and subject to the
conditions set forth in the Merger Agreement, and (ii) the sale (each such asset
transfer, together with the Mergers, the "Asset Sale") by IPT Real Estate Holdco
LLC of up to ten to-be-formed Delaware limited liability companies that are
wholly owned subsidiaries of IPT Real Estate Holdco LLC to PLD or an affiliate
of PLD;

 

 2 

 

 

WHEREAS, in connection with the Asset Sale, the General Partner agreed to sell
all of its subsidiaries in which it has an ownership interest (excluding the
Partnership, IPT Real Estate Holdco LLC and its subsidiaries that hold General
Partner’s collective interests in Build-to-Core Industrial Partnership I LP, a
Delaware limited partnership, and Build-to-Core Industrial Partnership II LP, a
Delaware limited partnership (together, the “BTC Portfolio”); and potentially
excluding IPT Acquisition, IPT Property Management, and IPT Services) to
affiliates of PLD by way of the Asset Sale, causing the General Partner to
continue to exist and for its remaining assets to primarily consist of its
interests in the BTC Portfolio, and resulting in all holders of the General
Partner’s common stock to continue to hold their respective shares of common
stock in the General Partner;

 

WHEREAS, the Parties previously agreed to generate a reduction in total,
combined fees payable to Industrial Property Advisors LLC, a Delaware limited
liability company (the “Advisor”) under the Advisory Agreement, in connection
with the Asset Sale or (if the Asset Sale is not consummated) similar
transactions with other parties with respect to the assets subject to the Asset
Sale;

 

WHEREAS, the Parties previously agreed that the Advisor will receive an
increased promote interest in the Partnership to the Special OP Unitholder, such
increase to be effective after the closing of the Asset Sale, which transactions
the independent directors of the General Partner unanimously approved and the
board of directors of General Partner unanimously approved;

 

WHEREAS, in furtherance of the foregoing, on or about October 7, 2019, (a) the
General Partner and Limited Partners entered into an Amendment to the Second
Amended and Restated Limited Partnership Agreement, and (b) the Advisor, the
General Partner and the Partnership entered into an Amendment to the Advisory
Agreement, which amendments the independent directors of the General Partner
unanimously approved and the board of directors of General Partner unanimously
approved;

 

WHEREAS, Industrial Property Advisors Group LLC, the sole Special OP Unitholder
of the Partnership under the Second Amended and Restated Limited Partnership
Agreement, duly transferred and assigned all of its Special Partnership Units in
the Partnership to IPT Advisor LLC, a Delaware limited liability company, by way
of an assignment and assumption agreement including a joinder agreement to the
Partnership dated December 18, 2019;

 

WHEREAS, the Asset Sale closed on January 8, 2020 and, pursuant to the closing
of the Asset Sale, all holders of the General Partner’s common stock were
entitled to receive a special distribution from the General Partner in cash
equal to such stockholder's pro rata share of the net total consideration for
the Asset Sale, as a result of which the General Partner received cumulative
distributions from the Partnership equal to the General Partner's aggregate
capital contributions plus the required return thereon required by the Second
A&R Partnership Agreement; and

 

 3 

 

 

WHEREAS, following the closing of the Asset Sale, the parties now desire to
issue to the Special OP Unitholder a preferred equity capital interest (the
“Preferred Equity Interest”) in the Partnership in exchange for an in-kind
Capital Contribution by the Special OP Unitholder of all the rights, title and
interests in certain trademarks and/or service marks and related registrations
(the “Assigned IP”), the Agreed Value of which is $10,000,000, which amount was
calculated by reference to the current, total fair market value of the Assigned
IP based on arm’s length appraisal of the Assigned IP conducted by an
independent third party as selected by the independent directors of the
Partnership, and all of which transactions the independent directors of the
General Partner previously unanimously approved and the board of directors of
General Partner previously unanimously approved.

 

NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between
the parties hereto, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree that
the Third Amended and Restated Limited Partnership Agreement is hereby entered
into and adopted in its entirety as follows:

 

Article 1
DEFINED TERMS

 

The following defined terms used in this Agreement shall have the meanings
specified below:

 

“ACT” means the Delaware Revised Uniform Limited Partnership Act, as it may be
amended from time to time.

 

“ADDITIONAL FUNDS” has the meaning set forth in Section 4.3 hereof.

 

“ADDITIONAL SECURITIES” means any additional REIT Shares (other than REIT Shares
issued in connection with a redemption pursuant to Section 8.5 hereof or REIT
Shares issued pursuant to a distribution reinvestment plan of the General
Partner) or rights, options, warrants or convertible or exchangeable securities
containing the right to subscribe for or purchase REIT Shares, as set forth in
Section 4.2(a)(ii).

 

“ADMINISTRATIVE EXPENSES” means (i) all administrative and operating costs and
expenses incurred by the Partnership, (ii) those administrative costs and
expenses of the General Partner, including any salaries or other payments to
directors, officers or employees of the General Partner, and any accounting and
legal expenses of the General Partner, which expenses, the Partners have agreed,
are expenses of the Partnership and not the General Partner, (iii) costs and
expenses relating to the formation and continuity of existence and operation of
the General Partner and any Subsidiaries thereof (which Subsidiaries shall, for
purposes hereof, be included within the definition of General Partner),
including taxes, fees and assessments associated therewith, (iv) costs and
expenses relating to any Offering and registration of securities by the General
Partner and all statements, reports, fees and expenses incidental thereto,
including, without limitation, underwriting discounts and selling commissions
applicable to any such Offering, and any costs and expenses associated with any
claims made by any holders of such securities or any underwriters or placement
agents thereof, (v) costs and expenses associated with any repurchase of any
securities by the General Partner, (vi) costs and expenses associated with the
preparation and filing of any periodic or other reports and communications by
the General Partner under federal, state or local laws or regulations, including
filings with the Commission, (vii) costs and expenses associated with compliance
by the General Partner with laws, rules and regulations promulgated by any
regulatory body, including the Commission and any securities exchange, (viii)
costs and expenses associated with any 401(k) plan, incentive plan, bonus plan
or other plan providing for compensation for the employees of the General
Partner, (ix) costs and expenses incurred by the General Partner relating to any
issuing or redemption of Partnership Interests and (x) all other operating or
administrative costs of the General Partner incurred in the ordinary course of
its business on behalf of or in connection with the Partnership; provided,
however, that Administrative Expenses shall not include any administrative costs
and expenses incurred by the General Partner that are attributable to Properties
or partnership interests in a Subsidiary Partnership that are owned by the
General Partner directly.

 

 4 

 

 

“ADVISOR” or “ADVISORS” means the Person or Persons, if any, appointed, employed
or contracted with by the General Partner and responsible for directing or
performing the day-to-day business affairs of the General Partner, including any
Person to whom the Advisor subcontracts all or substantially all of such
functions.

 

“ADVISORY AGREEMENT” means the agreement between the General Partner, the
Partnership and the Advisor pursuant to which the Advisor will direct or perform
the day-to-day business affairs of the General Partner.

 

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

 

“AGGREGATE SHARE OWNERSHIP LIMIT” shall have the meaning set forth in the
Charter.

 

“AGREED VALUE” means the fair market value of a Partner’s non-cash Capital
Contribution as of the date of contribution as agreed to by such Partner and the
General Partner. The names and addresses of the Partners, number of Partnership
Units or Special Partnership Units issued to each Partner, and the Agreed Value
of non-cash Capital Contributions as of the date of contribution are set forth
on Exhibit A.

 

“AGREEMENT” means this Third Amended and Restated Limited Partnership Agreement,
as amended, modified supplemented or restated from time to time, as the context
requires.

 

“APPLICABLE PERCENTAGE” has the meaning provided in Section 8.5(b) hereof.

 

 5 

 

 

“ASSET” means any Property, Mortgage, other debt or other investment (other than
investments in bank accounts, money market funds or other current assets) owned
by the General Partner, directly or indirectly through one or more of its
Affiliates.

 

“CAPITAL ACCOUNT” has the meaning provided in Section 4.4 hereof.

 

“CAPITAL CONTRIBUTION” means the total amount of cash, cash equivalents, and the
Agreed Value of any Property or other asset (other than cash) contributed or
agreed to be contributed, as the context requires, to the Partnership by each
Partner pursuant to the terms of this Agreement. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.

 

“CARRYING VALUE” means, with respect to any asset of the Partnership, the
asset’s adjusted net basis for federal income tax purposes or, in the case of
any asset contributed to the Partnership, the fair market value of such asset at
the time of contribution, reduced by any amounts attributable to the inclusion
of liabilities in basis pursuant to Section 752 of the Code, except that the
Carrying Values of all assets may, at the discretion of the General Partner, be
adjusted to equal their respective fair market values (as determined by the
General Partner), in accordance with the rules set forth in Regulations Section
1.704-1(b)(2)(iv)(f), as provided for in Section 4.4. In the case of any asset
of the Partnership that has a Carrying Value that differs from its adjusted tax
basis, the Carrying Value shall be adjusted by the amount of depreciation,
depletion and amortization calculated for purposes of the allocations of net
profit and net loss pursuant to Article 5 hereof rather than the amount of
depreciation, depletion and amortization determined for federal income tax
purposes.

 

“CASH AMOUNT” means an amount of cash per Partnership Unit equal to the lesser
of (i) the Value of the REIT Shares Amount on the date of receipt by the General
Partner of a Notice of Redemption or (ii) the applicable Redemption Price
determined by the General Partner.

 

“CERTIFICATE” means any instrument or document that is required under the laws
of the State of Delaware, or any other jurisdiction in which the Partnership
conducts business, to be signed and sworn to by the Partners of the Partnership
(either by themselves or pursuant to the power-of-attorney granted to the
General Partner in Section 8.2 hereof) and filed for recording in the
appropriate public offices within the State of Delaware or such other
jurisdiction to perfect or maintain the Partnership as a limited partnership, to
effect the admission, withdrawal, or substitution of any Partner of the
Partnership, or to protect the limited liability of the Limited Partners as
limited partners under the laws of the State of Delaware or such other
jurisdiction.

 

“CHARTER” means the Amended and Restated Articles of Incorporation of the
General Partner filed with the Maryland State Department of Assessments and
Taxation, as amended, restated or supplemented from time to time.

 

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

 

“CLASS A REIT SHARES” means the REIT Shares classified as Class A common shares
in the Charter.

 

 6 

 

 

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

 

“CODE” means the Internal Revenue Code of 1986, as amended, and as hereafter
amended from time to time. Reference to any particular provision of the Code
shall mean that provision in the Code at the date hereof and any successor
provision of the Code.

 

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

 

“COMMON SHARE OWNERSHIP LIMIT” shall have the meaning set forth in the Charter.

 

“CONTROL” means the possession, directly or indirectly, of the power to direct
or cause the direction of management, policies or activities of a Person,
whether through ownership of voting securities or other beneficial interests, by
contract or otherwise. “Controlled” and “Controlling” shall have correlative
meanings.

 

“CONVERSION FACTOR” means 1.0, provided that in the event that the General
Partner (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares, (ii) subdivides its outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on such date and, provided further, that in the event
that an entity other than an Affiliate of the General Partner shall become
General Partner pursuant to any merger, consolidation or combination of the
General Partner with or into another entity (the “Successor Entity”), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by the
number of shares of the Successor Entity into which one REIT Share is converted
pursuant to such merger, consolidation or combination, determined as of the date
of such merger, consolidation or combination. 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; provided, however, that
if the General Partner receives a Notice of Redemption after the record date,
but prior to the effective date of such dividend, distribution, subdivision or
combination, 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 dividend, distribution, subdivision or combination.

 

“DEFAULTING LIMITED PARTNER” has the meaning provided in Section 5.2(c) hereof.

 

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

 

“DISTRIBUTION FEE” shall have the meaning set forth in the Company’s Prospectus.

 

 7 

 

 

“EVENT OF BANKRUPTCY” as to any Person means the filing of a petition for relief
as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or
similar provision of law of any jurisdiction (except if such petition is
contested by such Person and has been dismissed within 90 days); insolvency or
bankruptcy of such Person as finally determined by a court proceeding; filing by
such Person of a petition or application to accomplish the same or for the
appointment of a receiver or a trustee for such Person or a substantial part of
his assets; commencement of any proceedings relating to such Person as a debtor
under any other reorganization, arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or hereinafter in
effect, either by such Person or by another, provided that if such proceeding is
commenced by another, such Person indicates his approval of such proceeding,
consents thereto or acquiesces therein, or such proceeding is contested by such
Person and has not been finally dismissed within 90 days.

 

“EXCEPTED HOLDER LIMIT” shall have the meaning set forth in the Charter.

 

“EXCHANGED REIT SHARES” has the meaning set forth in Section 6.10(b) hereof.

 

“GENERAL PARTNER” means Industrial Property Trust, a Maryland real estate
investment trust, and any Person who becomes a substitute or additional General
Partner as provided herein, and any of their successors as General Partner.

 

“GENERAL PARTNER LOAN” has the meaning provided in Section 5.2(c) hereof.

 

“GENERAL PARTNERSHIP INTEREST” means a Partnership Interest held by the General
Partner that is a general partnership interest.

 

“INDEMNITEE” means (i) any Person made a party to a proceeding by reason of its
status as the General Partner, the Advisor or a director, officer or employee of
the General Partner, the Advisor or the Partnership, and (ii) such other Persons
(including Affiliates of the General Partner, the Advisor or the Partnership) as
the General Partner may designate from time to time, in its sole and absolute
discretion.

 

“INDEPENDENT DIRECTORS” shall have the meaning set forth in the Charter.

 

“JOINT VENTURE” means those joint venture, co-investment, co-ownership or
partnership arrangements in which the General Partner or any of its subsidiaries
is a co-venturer or general partner established to acquire or hold Assets.

 

“LIMITED PARTNER” means any Person named as a Limited Partner on Exhibit A
attached hereto, and any Person who becomes a Substitute Limited Partner, in
such Person’s capacity as a Limited Partner in the Partnership.

 

“LIMITED PARTNERSHIP INTEREST” means the ownership interest of a Limited Partner
in the Partnership at any particular time, including the right of such Limited
Partner to any and all benefits to which such Limited Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of such
Limited Partner to comply with all the provisions of this Agreement and of such
Act.

 

 8 

 

 

“LIQUIDITY EVENT” shall include, but shall not be limited to, (i) a Listing,
(ii) a sale, merger or other transaction in which the Stockholders either
receive, or have the option to receive, cash, securities redeemable for cash,
and/or securities of a publicly traded company, and (iii) the sale of all or
substantially all of the Corporation’s Assets where Stockholders either receive,
or have the option to receive, cash or other consideration.

 

“LISTING” means the listing of the REIT Shares on a national securities exchange
or the receipt by the holders of the REIT Shares of securities that are listed
on a national securities exchange. Upon such Listing, the REIT Shares shall be
deemed “Listed.”

 

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

 

“NET SALES PROCEEDS” means, in the case of a transaction described in clause
(i)(A) of the definition of Sale, the proceeds of any such transaction less the
amount of selling expenses incurred by or on behalf of the General Partner or
the Partnership, including all real estate commissions, closing costs and legal
fees and expenses. In the case of a transaction described in clause (i)(B) of
such definition, Net Sales Proceeds means the proceeds of any such transaction
less the amount of selling expenses incurred by or on behalf of the General
Partner or the Partnership, including any legal fees and expenses and other
selling expenses incurred in connection with such transaction. In the case of a
transaction described in clause (i)(C) of such definition, Net Sales Proceeds
means the proceeds of any such transaction actually distributed to the General
Partner or the Partnership from the Joint Venture less the amount of any selling
expenses, including legal fees and expenses incurred by or on behalf of the
General Partner (other than those paid by the Joint Venture). In the case of a
transaction or series of transactions described in clause (i)(D) of the
definition of Sale, Net Sales Proceeds means the proceeds of any such
transaction (including the aggregate of all payments under a Mortgage or in
satisfaction thereof other than regularly scheduled interest payments) less the
amount of selling expenses incurred by or on behalf of the General Partner or
the Partnership, including all commissions, closing costs and legal fees and
expenses. In the case of a transaction described in clause (i)(E) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of selling expenses incurred by or on behalf of the General Partner
or the Partnership, including any legal fees and expenses and other selling
expenses incurred in connection with such transaction. In the case of a
transaction described in clause (ii) of the definition of Sale, Net Sales
Proceeds means the proceeds of such transaction or series of transactions less
all amounts generated thereby which are reinvested in one or more Assets within
180 days thereafter and less the amount of any real estate commissions, closing
costs, and legal fees and expenses and other selling expenses incurred by or
allocated to the General Partner or the Partnership in connection with such
transaction or series of transactions. Net Sales Proceeds shall also include any
amounts that the General Partner determines, in its discretion, to be
economically equivalent to proceeds of a Sale. Net Sales Proceeds shall not
include any reserves established by the General Partner in its sole discretion.

 

 9 

 

 

“NOTICE OF REDEMPTION” means the Notice of Exercise of Redemption Right
substantially in the form attached as Exhibit B hereto.

 

“OFFER” has the meaning set forth in Section 7.1(c) hereof.

 

“OFFERING” means the offer and sale of REIT Shares to the public.

 

“OP UNITHOLDERS” means all holders of Partnership Interests other than the
Special OP Unitholders.

 

“ORIGINAL LIMITED PARTNER” means the Limited Partners designated as “Original
Limited Partners” on Exhibit A hereto.

 

“PARTNER” means any General Partner or Limited Partner.

 

“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).

 

“PARTNERSHIP” means Industrial Property Operating Partnership LP, a Delaware
limited partnership.

 

“PARTNERSHIP INTEREST” means an ownership interest in the Partnership held by
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.

 

“PARTNERSHIP LOAN” has the meaning provided in Section 5.2(c) hereof.

 

“PARTNERSHIP MINIMUM GAIN” has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if it
disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately
computed gains. A Partner’s share of Partnership Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(g)(1).

 

“PARTNERSHIP RECORD DATE” means the record date established by the General
Partner for the distribution of cash pursuant to Section 5.2 hereof, 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 a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder, including Class A Units but
excluding the Partnership Interests represented by Special Partnership Units and
the Preferred Equity Interest. The allocation of Partnership Units of each Class
among the Partners shall be as set forth on Exhibit A, as such Exhibit may be
amended from time to time.

 

 10 

 

 

“PERCENTAGE INTEREST” means the percentage ownership interest in the Partnership
of each Partner, as determined by dividing the Partnership Units owned by a
Partner by the total number of Partnership Units then outstanding. The
Percentage Interest of each Partner shall be as set forth on Exhibit A, as such
Exhibit may be amended from time to time.

 

“PERSON” means any individual, partnership, limited liability company,
corporation, joint venture, trust or other entity.

 

“PREFERRED EQUITY INTEREST” shall have the meaning set forth in the Recitals.

 

“PROPERTY” means, as the context requires, all or a portion of each Real
Property acquired by the General Partner, directly or indirectly through joint
venture or co-ownership arrangements or other partnership or investment
entities.

 

“PROSPECTUS” means the same as that term is defined in Section 2(10) of the
Securities Act, including a preliminary prospectus, an offering circular as
described in Rule 256 of the general rules and regulations under the Securities
Act, or, in the case of an intrastate offering, any document by whatever name
known, utilized for the purpose of offering and selling REIT Shares to the
public.

 

“REAL PROPERTY” means land, rights in land (including leasehold interests), and
any buildings, structures, improvements, furnishings, fixtures and equipment
located on or used in connection with land and rights or interests in land.

 

“RECEIVED REIT SHARES” has the meaning set forth in Section 6.10(b) hereof.

 

“REDEMPTION” has the meaning provided in Section 8.5(a) hereof.

 

“REDEMPTION PRICE” means the Value of the REIT Shares Amount on the date of
receipt by the General Partner of a Notice of Redemption multiplied by any
discount determined by the General Partner, including but not limited to, any
discount based upon the combined number of years that the applicable Partner has
held the Partnership Units offered for redemption.

 

“REDEMPTION RIGHT” has the meaning provided in Section 8.5(a) hereof.

 

“REDEMPTION SHARES” has the meaning provided in Section 8.6(a) hereof.

 

“REGULATIONS” means the Federal income tax regulations promulgated under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.

 

“REGULATORY ALLOCATIONS” has the meaning set forth in Section 5.1(i) hereof.

 

“REIT” means a corporation, trust, association or other legal entity (other than
a real estate syndication) that qualifies as a real estate investment trust
under Sections 856 through 860 of the Code, and any successor or other
provisions of the Code relating to real estate investment trusts (including
provisions as to the attribution of ownership of beneficial interests therein)
and the regulations promulgated thereunder.

 

 11 

 

 

“REIT SHARE” means a common share of beneficial interest in the General Partner
(or successor entity, as the case may be), including Class A REIT Shares.

 

“REIT SHARES AMOUNT” means, with respect to Tendered Units of a Class, a number
of REIT Shares of the corresponding REIT Share Class equal to the product of the
number of Partnership Units of such Class offered for exchange by a Tendering
Party, multiplied by the Conversion Factor, as adjusted to and including the
Specified Redemption Date; provided that in the event the General Partner issues
to all holders of REIT Shares rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for or purchase
REIT Shares of such Class, or any other securities or property (collectively,
the “rights”), and the rights have not expired at the Specified Redemption Date,
then the REIT Shares Amount shall also include the rights issuable to a holder
of the REIT Shares.

 

“RELATED PARTY” means, with respect to any Person, any other Person whose
ownership of shares of the General Partner’s capital stock would be attributed
to the first such Person under Code Section 544 (as modified by Code Section
856(h)(1)(B)).

 

“SAFE HARBOR” means, the election described in the Safe Harbor Regulation,
pursuant to which a partnership and all of its partners may elect to treat the
fair market value of a partnership interest that is transferred in connection
with the performance of services as being equal to the liquidation value of that
interest.

 

“SAFE HARBOR ELECTION” means the election by a partnership and its partners to
apply the Safe Harbor, as described in the Safe Harbor Regulation and Internal
Revenue Service Notice 2005-43 , issued on May 19, 2005.

 

“SAFE HARBOR REGULATION” means Proposed Treasury Regulations Section 1.83-3(l)
issued on May 19, 2005.

 

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

 

 12 

 

 

“SECOND A&R PARTNERSHIP AGREEMENT” means the Second Amended and Restated Limited
Partnership Agreement of the Partnership dated August 14, 2015, as amended by
that certain Side Agreement Concerning Second Amended and Restated Limited
Partnership Agreement, dated as of August 20, 2019, by and between Industrial
Property Trust Inc. and Industrial Property Advisors Group LLC and the Amendment
thereto dated October 7, 2019.

 

“SECURITIES ACT” means the Securities Act of 1933, as amended from time to time,
or any successor statute thereto. Reference to any provision of the Securities
Act shall mean such provision as in effect from time to time, as the same may be
amended, and any successor provision thereto, and the rules and regulations
promulgated thereunder.

 

“SERVICE” means the United States Internal Revenue Service.

 

“SPECIAL DISTRIBUTION” means the distribution of substantially of all the net
proceeds of the Asset Sale by the Partnership to the Partners in accordance with
the Second A&R Partnership Agreement.

 

“SPECIAL OP UNITHOLDERS” means the holders of Special Partnership Units.

 

“SPECIAL PARTNERSHIP UNIT” means a unit of a series of Partnership Interests,
designated as Special Partnership Units, issued pursuant to Section 4.1. The
number of Special Partnership Units outstanding and the Special Percentage
Interests in the Partnership represented by such Special Partnership Units are
set forth on Exhibit A, as such Exhibit may be amended from time to time. A
holder of a Special Partnership Unit shall have the same rights and preferences
as a holder of a Partnership Unit under this Agreement that is a Limited Partner
except as set forth in Sections 5.1(a), 5.2(b), 7.1(c), 8.5, 8.6 and 8.7.

 

“SPECIAL PERCENTAGE INTEREST” shall mean the percentage ownership interest in
the Partnership of each Special OP Unitholder, as determined by dividing the
Special Partnership Units owned by each Special OP Unitholder by the total
number of Special Partnership Units then outstanding. The Special Percentage
Interest of each Partner shall be as set forth on Exhibit A, as such Exhibit may
be amended from time to time.

 

“SPECIFIED REDEMPTION DATE” means the last business day of the month that
includes the day that is forty-five (45) days after the receipt by the General
Partner of the Notice of Redemption.

 

 13 

 

 

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

 

“SUBSIDIARY PARTNERSHIP” means any partnership of which the partnership
interests therein are owned by the General Partner or a direct or indirect
subsidiary of the General Partner.

 

“SUBSTITUTE LIMITED PARTNER” means any Person admitted to the Partnership as a
Limited Partner pursuant to Section 9.3 hereof.

 

“SUCCESSOR ENTITY” has the meaning provided in the definition of “Conversion
Factor” contained herein.

 

“SURVIVOR” has the meaning set forth in Section 7.1(d) hereof.

 

“TAX MATTERS PARTNER” has the meaning described in Section 10.5(a) hereof.

 

“TERMINATION EVENT” means the termination or nonrenewal of the Advisory
Agreement (i) in connection with a merger, sale of Assets or other transaction
involving the General Partner pursuant to which a majority of the Directors then
in office are replaced or removed, (ii) by the Advisor for “good reason” (as
defined in the Advisory Agreement), or (iii) by the General Partner and/or the
Partnership other than for “cause” (as defined in the Advisory Agreement).

 

“TENDERED UNITS” has the meaning provided in Section 8.5(a) hereof.

 

“TENDERING PARTY” has the meaning provided in Section 8.5(a) hereof.

 

“TRANSACTION” has the meaning set forth in Section 7.1(c) hereof.

 

“TRANSFER” has the meaning set forth in Section 9.2(a) hereof.

 

“VALUATION DATE” has the meaning set forth in Section 8.7(b) hereof.

 

“VALUE” means for each Class of REIT Shares, the fair market value of that Class
of REIT Shares which will equal: (i) if REIT Shares of that Class are Listed,
the average closing price per share for the previous thirty business days, (ii)
if REIT Shares of that Class are not Listed, (a) the most recent offering price
per share or share equivalent of REIT Shares of that Class, until December 31st
of the year following the year in which the most recently completed offering of
REIT Shares of that Class has expired, and (b) thereafter, such price per REIT
Share of that Class as the management of the General Partner determines in good
faith.

 

14

 

 

Article 2
PARTNERSHIP FORMATION AND IDENTIFICATION

 

2.1          Formation. The Partnership was formed as a limited partnership
pursuant to the Act and all other pertinent laws of the State of Delaware, for
the purposes and upon the terms and conditions set forth in this Agreement.

 

2.2          Name, Office and Registered Agent. The name of the Partnership is
Industrial Property Operating Partnership LP. The specified office and place of
business of the Partnership shall be 518 17th Street, 17th Floor, Denver,
Colorado 80202. The General Partner may at any time change the location of such
office, provided the General Partner gives notice to the Partners of any such
change. The name and address of the Partnership’s registered agent is
Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington,
Delaware 19808. The sole duty of the registered agent as such is to forward to
the Partnership any notice that is served on him as registered agent.

 

2.3          Partners.

 

(a)          The General Partner of the Partnership is Industrial Property
Trust, a Maryland real estate investment trust. Its principal place of business
is the same as that of the Partnership.

 

(b)          The Limited Partners are those Persons identified as Limited
Partners on Exhibit A hereto, as amended from time to time.

 

2.4          Term and Dissolution.

 

(a)          The term of the Partnership shall continue in full force and effect
until December 31, 2039, except that the Partnership shall be dissolved upon the
first to occur of any of the following events:

 

(i)            The occurrence of an Event of Bankruptcy as to a General Partner
or the dissolution, death, removal or withdrawal of a General Partner unless the
business of the Partnership is continued pursuant to Section 7.3(b) hereof;

 

(ii)           The passage of ninety (90) days after the sale or other
disposition of all or substantially all of the assets of the Partnership
(provided that if the Partnership receives an installment obligation as
consideration for such sale or other disposition, the Partnership shall
continue, unless sooner dissolved under the provisions of this Agreement, until
such time as such note or notes are paid in full); or

 

(iii)          The election by the General Partner that the Partnership should
be dissolved.

 

(b)          Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.3(b) hereof), the General Partner
(or its trustee, receiver, successor or legal representative) shall amend or
cancel any Certificate(s) and liquidate the Partnership’s assets and apply and
distribute the proceeds thereof in accordance with Section 5.6 hereof.
Notwithstanding the foregoing, the liquidating General Partner may either (i)
defer liquidation of, or withhold from distribution for a reasonable time, any
assets of the Partnership (including those necessary to satisfy the
Partnership’s debts and obligations), or (ii) distribute the assets to the
Partners in kind.

 

15

 

 

2.5          Filing of Certificate and Perfection of Limited Partnership. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, any and all amendments to the Certificate(s) and all requisite
fictitious name statements and notices in such places and jurisdictions as may
be necessary to cause the Partnership to be treated as a limited partnership
under, and otherwise to comply with, the laws of each state or other
jurisdiction in which the Partnership conducts business.

 

2.6          Certificates Describing Partnership Units and Special Partnership
Units. At the request of a Limited Partner, the General Partner, at its option,
may issue (but in no way is obligated to issue) a certificate summarizing the
terms of such Limited Partner’s interest in the Partnership, including the
number of Partnership Units and Special Partnership Units owned and the
Percentage Interest and Special Percentage Interest represented by such
Partnership Units and Special Partnership Units as of the date of such
certificate. Any such certificate (i) shall be in form and substance as approved
by the General Partner, (ii) shall not be negotiable and (iii) shall bear a
legend to the following effect:

 

This certificate is not negotiable. The Partnership Units and Special
Partnership Units represented by this certificate are governed by and
transferable only in accordance with the provisions of the Third Amended and
Restated Limited Partnership Agreement of Industrial Property Operating
Partnership LP, as amended from time to time.

 

Article 3
BUSINESS OF THE PARTNERSHIP

 

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 qualify as a REIT, unless the General Partner otherwise ceases to
qualify as a REIT, and in a manner such that the General Partner will not be
subject to any taxes under Section 857 or 4981 of the Code, (ii) to enter into
any partnership, joint venture, co-ownership or other similar arrangement to
engage in any of the foregoing or the ownership of interests in any entity
engaged in any of the foregoing and (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 and absolute discretion to qualify or cease
qualifying as a REIT, the Partners acknowledge that the General Partner intends
to qualify as a REIT for federal income tax purposes and upon such qualification
the avoidance of income and excise taxes on the General Partner inures to the
benefit of all the Partners and not solely to the General Partner.
Notwithstanding the foregoing, the Limited Partners agree that the General
Partner may terminate its status as a REIT under the Code at any time to the
full extent permitted under the Charter. The General Partner on behalf of the
Partnership shall also 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” for purposes of Section 7704 of the Code.

 

16

 

 

Article 4
CAPITAL CONTRIBUTIONS AND ACCOUNTS

 

4.1          Capital Contributions. The General Partner and the initial Limited
Partners have made capital contributions to the Partnership in exchange for the
Partnership Interests set forth opposite their names on Exhibit A, as such
exhibit may be amended from time to time. The Partners shall own Partnership
Units of the Class or series and in the amounts set forth in Exhibit A and shall
have a Percentage Interest in the Partnership as set forth in Exhibit A.
Notwithstanding the foregoing, the General Partner may keep Exhibit A current
through separate revisions to the books and records of the Partnership that
reflect periodic changes to the capital contributions made by the Partners and
redemptions and other purchases of Partnership Units by the Partnership, and
corresponding changes to the Partnership Interests of the Partners, without
preparing a formal amendment to this Agreement, provided that such amendment
shall be prepared upon the written request of any Limited Partner.

 

4.2          Additional Capital Contributions and Issuances of Additional
Partnership Interests. Except as provided in this Section 4.2 or in Section 4.3,
the Partners shall have no right or obligation to make any additional Capital
Contributions or loans to the Partnership. The General Partner may contribute
additional capital to the Partnership, from time to time, and receive additional
Partnership Interests in respect thereof, in the manner contemplated in this
Section 4.2. Limited Partnership Interests will be issued to the General Partner
in exchange for contributions by the General Partner to the capital of the
Partnership of the proceeds received by the General Partners from the issuance
of REIT Shares.

 

(a)           Issuances of Additional Partnership Interests.

 

(i)            General. The General Partner is hereby authorized to cause the
Partnership to issue such additional Partnership Interests in the form of
Partnership Units for any Partnership purpose at any time or from time to time,
including but not limited to Partnership Units issued in connection with
acquisitions of properties, to the Partners (including the General Partner) or
to other Persons for such consideration and on such terms and conditions as
shall be established by the General Partner in its sole and absolute discretion,
all without the approval of any Limited Partners. Any additional Partnership
Interests issued thereby may be issued in one or more Classes (including the
Classes specified in this Agreement or any other 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 Limited Partnership Interests, all as shall
be determined by the General Partner in its sole and absolute discretion and
without the approval of any Limited Partner, subject to Delaware law, including,
without limitation, (i) the allocations of items of Partnership income, gain,
loss, deduction and credit to each 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, however, that no additional Partnership Interests shall
be issued to the General Partner unless:

 

(1)             (A) the additional Partnership Interests are issued in
connection with an issuance of REIT Shares of or other interests in the General
Partner, which shares or interests have designations, preferences and other
rights, all such that the economic interests are substantially similar to the
designations, preferences and other rights of the additional Partnership
Interests issued to the General Partner by the Partnership in accordance with
this Section 4.2 (without limiting the foregoing, for example, the Partnership
shall issue Partnership Interests consisting of Class A Units to the General
Partner in connection with the issuance of Class A REIT Shares) and (B) the
General Partner shall make a Capital Contribution to the Partnership in an
amount equal to the proceeds raised in connection with the issuance of such
shares of stock of or other interests in the General Partner;

 

17

 

 

(2)             the additional Partnership Interests are issued in exchange for
property owned by the General Partner with a fair market value, as determined by
the General Partner, in good faith, equal to the value of the Partnership
Interests; or

 

(3)             the additional Partnership Interests are issued to all Partners
holding Partnership Units in proportion to their respective Percentage
Interests.

 

Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership.

 

(ii)          Upon Issuance of Additional Securities. The General Partner shall
not issue any Additional Securities other than to all holders of REIT Shares,
unless (A) the General Partner shall cause the Partnership to issue to the
General Partner, as the General Partner may designate, Partnership Interests or
rights, options, warrants or convertible or exchangeable securities of the
Partnership having designations, preferences and other rights, all such that the
economic interests are substantially similar to those of the Additional
Securities, and (B) the General Partner contributes the proceeds from the
issuance of such Additional Securities and from any exercise of rights contained
in such Additional Securities, directly and through the General Partner, to the
Partnership (without limiting the foregoing, for example, the Partnership shall
issue Partnership Interests consisting of Class A Units to the General Partner
in connection with the issuance of Class A REIT Shares); provided, however, that
the General Partner is allowed to issue Additional Securities in connection with
an acquisition of a property to be held directly by the General Partner, but if
and only if, such direct acquisition and issuance of Additional Securities have
been approved and determined to be in the best interests of the General Partner
and the Partnership. Without limiting the foregoing, the General Partner is
expressly authorized to issue Additional Securities for less than fair market
value, and to cause the Partnership to issue to the General Partner
corresponding Partnership Interests, so long as (x) the General Partner
concludes in good faith that such issuance is in the best interests of the
General Partner and the Partnership, including without limitation, the issuance
of REIT Shares and corresponding Partnership Units pursuant to an employee share
purchase plan providing for employee purchases of REIT Shares at a discount from
fair market value or employee stock options that have an exercise price that is
less than the fair market value of the REIT Shares, either at the time of
issuance or at the time of exercise, and (y) the General Partner contributes all
proceeds from such issuance to the Partnership.

 

18

 

 

(b)           Certain Deemed Contributions of Proceeds of Issuance of REIT
Shares. In connection with any and all issuances of REIT Shares, the General
Partner shall make Capital Contributions to the Partnership of the proceeds
therefrom, provided that if the proceeds actually received and contributed by
the General Partner are less than the gross proceeds of such issuance as a
result of any underwriter’s discount or other expenses paid or incurred in
connection with such issuance, then the General Partner shall be deemed to have
made Capital Contributions to the Partnership in the aggregate amount of the
gross proceeds of such issuance and the Partnership shall be deemed
simultaneously to have paid such offering expenses in accordance with
Section 6.5 hereof and in connection with the required issuance of additional
Partnership Units to the General Partner for such Capital Contributions pursuant
to Section 4.2(a) hereof, and any such expenses shall be allocable solely to the
Class of Partnership Units issued to the General Partner at such time.

 

4.3          Additional Funding. If the General Partner determines that it is in
the best interests of the Partnership to provide for additional Partnership
funds (“Additional Funds”) for any Partnership purpose, the General Partner may
(i) cause the Partnership to obtain such funds from outside borrowings, or (ii)
elect to have the General Partner or any of its Affiliates provide such
Additional Funds to the Partnership through loans or otherwise, provided,
however, that the Partnership may not borrow money from its Affiliates, unless a
majority of the Directors of the General Partner (including a majority of
Independent Directors) not otherwise interested in such transaction approve the
transaction as being fair, competitive, and commercially reasonable and no less
favorable to the Partnership than comparable loans between unaffiliated parties.

 

4.4          Capital Accounts. A separate capital account (each a “Capital
Account”) shall be established and maintained for each Partner in accordance
with Regulations Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner
acquires an additional Partnership Interest in exchange for more than a de
minimis Capital Contribution, (ii) the Partnership distributes to a Partner more
than a de minimis amount of Partnership property, or money as consideration for
a Partnership Interest, (iii) the Partnership is liquidated within the meaning
of Regulation Section 1.704-1(b)(2)(ii)(g), or (iv) the Partnership grants a
Partnership Interest (other than a de minimis interest) as consideration for the
provision of services to or for the benefit of the Partnership, the General
Partner shall revalue the property of the Partnership to its fair market value
(as determined by the General Partner, in its sole and absolute discretion, and
taking into account Section 7701(g) of the Code) in accordance with Regulations
Section 1.704-1(b)(2)(iv)(f). When the Partnership’s property is revalued by the
General Partner, the Capital Accounts of the Partners shall be adjusted in
accordance with Regulations Section 1.704-1(b)(2)(iv)(f) and (g), which
generally require such Capital Accounts to be adjusted to reflect the manner in
which the unrealized gain or loss inherent in such property (that has not been
reflected in the Capital Accounts previously) would be allocated among the
Partners pursuant to Section 5.1 if there were a taxable disposition of such
property for its fair market value (as determined by the General Partner in its
sole and absolute discretion, and taking into account Section 7701(g) of the
Code, on the date of the revaluation).

 

4.5          Percentage Interests. If the number of outstanding Partnership
Units increases or decreases during a taxable year, each Partner’s Percentage
Interest shall be adjusted by the General Partner effective as of the effective
date of each such increase or decrease. If the Partners’ Percentage Interests
are adjusted pursuant to this Section 4.5, the net profits and net losses (and
items thereof) for the taxable year in which the adjustment occurs shall be
allocated between the part of the year ending on the day when the Partnership’s
property is revalued by the General Partner and the part of the year beginning
on the following day either (i) as if the taxable year had ended on the date of
the adjustment or (ii) based on the number of days in each part. The General
Partner, in its sole and absolute discretion, shall determine which method shall
be used to allocate net profits and net losses (or items thereof) for the
taxable year in which the adjustment occurs. The allocation of net profits and
net losses (or items thereof) for the earlier part of the year shall be based on
the Percentage Interests before adjustment, and the allocation of net profits
and net losses (or items thereof) for the later part shall be based on the
adjusted Percentage Interests.

 

19

 

 

4.6         No Interest On Contributions. No Partner shall be entitled to
interest on its Capital Contribution.

 

4.7         Return Of Capital Contributions. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically provided
in this Agreement. Except as otherwise provided herein, there shall be no
obligation to return to any Partner or withdrawn Partner any part of such
Partner’s Capital Contribution for so long as the Partnership continues in
existence.

 

4.8         No Third Party Beneficiary. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners. In
addition, it is the intent of the parties hereto that no distribution to any
Limited Partner shall be deemed a return of money or other property in violation
of the Act. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General Partner. Without
limiting the generality of the foregoing, a deficit Capital Account of a Partner
shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership.

 

Article 5
PROFITS AND LOSSES; DISTRIBUTIONS

 

5.1          Allocation of Profit and Loss.

 

(a)          General Partner Gross Income Allocation. There shall be specially
allocated to the General Partner an amount of (i) first, items of Partnership
income and (ii) second, items of Partnership gain during each fiscal year or
other applicable period, before any other allocations are made hereunder, in an
amount equal to the excess, if any, of the cumulative distributions made to the
General Partner under Section 6.5(b) hereof, over the cumulative allocations of
Partnership income and gain to the General Partner under this Section 5.1(a).

 

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(b)          General Allocations. The items of Profit and Loss and deduction of
the Partnership for each fiscal year or other applicable period, other than any
items allocated under Section 5.1(a), shall be allocated among the Partners in a
manner that will, as nearly as possible (after giving effect to the allocations
under Section 5.1(a), 5.1(c), 5.1(d), 5.1(e), 5.1(h) and 5.1(i)) cause the
Capital Account balance of each Partner at the end of such fiscal year or other
applicable period to equal (i) the amount of the hypothetical distribution that
such Partner would receive if the Partnership were liquidated on the last day of
such period and all assets of the Partnership, including cash, were sold for
cash equal to their Carrying Values, taking into account any adjustments thereto
for such period, all liabilities of the Partnership were satisfied in full in
cash according to their terms (limited with respect to each nonrecourse
liability to the Carrying Value of the assets securing such liability) and the
remaining cash proceeds (after satisfaction of such liabilities) were
distributed in full pursuant to Section 5.2(b); minus (ii) the sum of such
Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain and the amount, if any and without duplication, that the Partner would be
obligated to contribute to the capital of the Partnership, all computed as of
the date of the hypothetical sale of assets.

 

(c)          Nonrecourse Deductions; Minimum Gain Chargeback. Notwithstanding
any provision to the contrary, (i) any expense of the Partnership that is a
“nonrecourse deduction” within the meaning of Regulations Section 1.704-2(b)(1)
shall be allocated in accordance with the Partners’ respective Percentage
Interests, (ii) any expense of the Partnership that is a “partner nonrecourse
deduction” within the meaning of Regulations Section 1.704-2(i)(2) shall be
allocated to the Partner or Partners that bear the “economic risk of loss” with
respect to the liability to which such deductions are attributable in accordance
with Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease in
Partnership Minimum Gain within the meaning of Regulations Section 1.704-2(f)(1)
for any Partnership taxable year, then, subject to the exceptions set forth in
Regulations Section 1.704-2(f)(2),(3), (4) and (5), items of gain and income
shall be allocated among the Partners in accordance with Regulations Section
1.704-2(f) and the ordering rules contained in Regulations Section 1.704-2(j),
and (iv) if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
within the meaning of Regulations Section 1.704-2(i)(4) for any Partnership
taxable year, then, subject to the exceptions set forth in Regulations
Section 1.704-(2)(g), items of gain and income shall be allocated among the
Partners in accordance with Regulations Section 1.704-2(i)(4) and the ordering
rules contained in Regulations Section 1.704-2(j). A Partner’s “interest in
partnership profits” for purposes of determining its share of the excess
nonrecourse liabilities of the Partnership within the meaning of Regulations
Section 1.752-3(a)(3) shall be such Partner’s Percentage Interest.

 

(d)          Qualified Income Offset. If a Partner unexpectedly receives in any
taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations Section 1.704-1(b)(2)(ii)(d) that
causes or increases a deficit balance in such Partner’s Capital Account that
exceeds the sum of such Partner’s shares of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5), such Partner shall be allocated
specially for such taxable year (and, if necessary, later taxable years) items
of income and gain in an amount and manner sufficient to eliminate such deficit
Capital Account balance as quickly as possible as provided in Regulations
Section 1.704-1(b)(2)(ii)(d). This Section 5.1(d) is intended to constitute a
“qualified income offset” under Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith. After the occurrence of an
allocation of income or gain to a Partner in accordance with this Section
5.1(d), to the extent permitted by Regulations Section 1.704-1(b), items of
expense or loss shall be allocated to such Partner in an amount necessary to
offset the income or gain previously allocated to such Partner under this
Section 5.1(d).

 

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(e)          Capital Account Deficits. Loss (or items of expense or loss) shall
not be allocated to a Limited Partner to the extent that such allocation would
cause or increase a deficit in such Partner’s Capital Account at the end of any
fiscal year (after reduction to reflect the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such
Partner’s shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain, as determined in accordance with Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5). Any Loss or item of expense or loss in excess
of that limitation shall be allocated to the General Partner. After an
allocation to the General Partner under the immediately preceding sentence, to
the extent permitted by Regulations Section 1.704-1(b), Profit or items of
income or gain shall be allocated to the General Partner in an amount necessary
to offset the items allocated to the General Partner under the immediately
preceding sentence.

 

(f)           Allocations Between Transferor and Transferee. If a Partner
transfers any part or all of its Partnership Interest, the distributive shares
of the various items of Profit and Loss allocable among the Partners during such
fiscal year of the Partnership shall be allocated between the transferor and the
transferee Partner either (i) as if the Partnership’s fiscal year had ended on
the date of the transfer, or (ii) based on the number of days of such fiscal
year that each was a Partner without regard to the results of Partnership
activities in the respective portions of such fiscal year in which the
transferor and the transferee were Partners. The General Partner, in its sole
and absolute discretion, shall determine which method shall be used to allocate
the distributive shares of the various items of Profit and profit and loss
between the transferor and the transferee Partner.

 

(g)          Definition of Profit and Loss. “Profit” and “Loss” and any items of
income, gain, expense, or loss referred to in this Agreement shall be determined
in accordance with federal income tax accounting principles, as modified by
Regulations Section 1.704-1(b)(2)(iv), except that Profit and Loss shall not
include items of income, gain and expense that are specifically allocated
pursuant to Section 5.1(a), 5.1(c), 5.1(d), 5.1(e) or 5.1(h). All allocations of
Profit and Loss (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set forth in this
Section 5.1, except as otherwise required by Section 704(c) of the Code and
Regulations Section 1.704-1(b)(4). The General Partner shall have the authority
to elect the method to be used by the Partnership for allocating items of
income, gain, and expense as required by Section 704(c) of the Code including a
method that may result in a Partner receiving a disproportionately larger share
of the Partnership tax depreciation deductions, and such election shall be
binding on all Partners.

 

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(h)          Special Allocations of Class-Specific Items. To the extent that any
items of income, gain, loss or deduction of the General Partner are allocable to
a specific Class or Classes of REIT Shares as provided in the Prospectus,
including, without limitation, Distribution Fees, such items, or an amount equal
thereto, shall be specially allocated to the Class or Classes of Partnership
Units corresponding to such Class or Classes of REIT Shares.

 

(i)           Curative Allocations. The allocations set forth in Section 5.1(c)
(d) and (e) of this Agreement (the “Regulatory Allocations”) are intended to
comply with certain requirements of the Regulations. The General Partner is
authorized to offset all Regulatory Allocations either with other Regulatory
Allocations or with special allocations of other items of Partnership income,
gain, loss or deduction pursuant to this Section 5.1(i). Therefore,
notwithstanding any other provision of this Section 5.1 (other than the
Regulatory Allocations), the General Partner shall make such offsetting special
allocations of Partnership income, gain, loss or deduction in whatever manner it
deems appropriate so that, after such offsetting allocations are made, each
Partner’s Capital Account is, to the extent possible, equal to the Capital
Account balance such Partner would have had if the Regulatory Allocations were
not part of this Agreement and all Partnership items were allocated pursuant to
Section 5.1(a), (b), (f) and (h).

 

5.2          Distribution of Cash.

 

(a)          For the avoidance of doubt, notwithstanding anything to the
contrary contained herein, the Special Distribution shall be paid in accordance
with Section 5.2(b) of the Second A&R Partnership Agreement. After payment of
the Special Distribution, the Partnership may distribute cash on a quarterly
(or, at the election of the General Partner, more or less frequent) basis, in an
amount determined by the General Partner in its sole and absolute discretion, to
the Partners who are Partners on the Partnership Record Date with respect to
such quarter (or other distribution period) in accordance with Section 5.2(b).

 

(b)          Except for distributions pursuant to Section 5.6 of this Agreement
in connection with the dissolution and liquidation of the Partnership and
subject to the provisions of Sections 5.2(c), 5.2(d), 5.3, 5.5 and 8.7 of this
Agreement, distributions shall be made in accordance with the following
provisions:

 

(i)            first, one hundred percent (100%) of distributions will be made
to the Special OP Unitholders until each Special OP Unitholder obtains a full
return of the amount of its Preferred Equity Interest; then

 

(ii)           sixty-five percent (65%) to the General Partner and thirty-five
percent (35%) to the Special OP Unitholders.

 

In applying this Section 5.2(b), the amount distributed per Partnership Unit of
any Class may differ from the amount per Partnership Unit of another Class on
account of differences in Class-specific expense allocations with respect to
REIT Shares as described in the Prospectus (and of corresponding special
allocations among Classes of Partnership Units in accordance with Section 5.1(h)
hereof) or for other reasons as determined by the board of directors of the
General Partner. Any such differences shall correspond to differences in the
amount of distributions per REIT Share for REIT Shares of different Classes,
with the same adjustments being made to the amount of distributions per
Partnership Unit for Partnership Units of a particular Class as are made to the
distributions per REIT Share by the General Partner with respect to REIT Shares
having the same Class designation.

 

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(c)          Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines to be necessary or
appropriate to cause the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law including,
without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
To the extent that the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of
income to any Partner or assignee (including by reason of Section 1446 of the
Code), either (i) if the actual amount to be distributed to the Partner equals
or exceeds the amount required to be withheld by the Partnership, the amount
withheld shall be treated as a distribution of cash in the amount of such
withholding to such Partner, or (ii) if the actual amount to be distributed to
the Partner is less than the amount required to be withheld by the Partnership,
the actual amount shall be treated as a distribution of cash in the amount of
such withholding and the additional amount required to be withheld shall be
treated as a loan (a “Partnership Loan”) from the Partnership to the Partner on
the day the Partnership pays over such amount to a taxing authority. A
Partnership Loan shall be repaid through withholding by the Partnership with
respect to subsequent distributions to the applicable Partner or assignee. In
the event that a Limited Partner (a “Defaulting Limited Partner”) fails to pay
any amount owed to the Partnership with respect to the Partnership Loan within
fifteen (15) days after demand for payment thereof is made by the Partnership on
the Limited Partner, the General Partner, in its sole and absolute discretion,
may elect to make the payment to the Partnership on behalf of such Defaulting
Limited Partner. In such event, on the date of payment, the General Partner
shall be deemed to have extended a loan (a “General Partner Loan”) to the
Defaulting Limited Partner in the amount of the payment made by the General
Partner and shall succeed to all rights and remedies of the Partnership against
the Defaulting Limited Partner as to that amount. Without limitation, the
General Partner shall have the right to receive any distributions that otherwise
would be made by the Partnership to the Defaulting Limited Partner until such
time as the General Partner Loan has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
received by the Defaulting Limited Partner and immediately paid to the General
Partner.

 

Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to
this Section 5.2(c) shall bear interest at the lesser of (i) 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, or (ii) the maximum
lawful rate of interest on such obligation, such interest to accrue from the
date the Partnership or the General Partner, as applicable, is deemed to extend
the loan until such loan is repaid in full.

 

(d)          In no event may a Partner receive a distribution of cash with
respect to a Partnership Unit if such Partner is entitled to receive a cash
distribution as the holder of record of a REIT Share for which all or part of
such Partnership Unit has been or will be exchanged.

 

24

 

 

5.3         REIT Distribution Requirements. The General Partner shall use its
commercially reasonable efforts to cause the Partnership to distribute amounts
sufficient to enable the General Partner to make shareholder distributions that
will allow the General Partner to (i) meet its distribution requirement for
qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid
any federal income or excise tax liability imposed by the Code.

 

5.4         No Right to Distributions in Kind. No Partner shall be entitled to
demand property other than cash in connection with any distributions by the
Partnership.

 

5.5         Limitations on Return of Capital Contributions. Notwithstanding any
of the provisions of this Article 5, no Partner shall have the right to receive
and the General Partner shall not have the right to make, a distribution that
includes a return of all or part of a Partner’s Capital Contributions, unless
after giving effect to the return of a Capital Contribution, the sum of all
Partnership liabilities, other than the liabilities to a Partner for the return
of his Capital Contribution, does not exceed the fair market value of the
Partnership’s assets.

 

5.6         Distributions Upon Liquidation. Upon liquidation of the Partnership,
after payment of, or adequate provision for, debts and obligations of the
Partnership, including any Partner loans, any remaining assets of the
Partnership shall be distributed to all Partners in proportion to their
respective positive Capital Account balances, determined after taking into
account all allocations required to be made pursuant to Section 5.1 hereof and
all prior distributions made pursuant to this Article 5, in compliance with
Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2). Notwithstanding any other
provision of this Agreement, the amount by which the value, as determined in
good faith by the General Partner, of any property other than cash to be
distributed in kind to the Partners exceeds or is less than the Carrying Value
of such property shall, to the extent not otherwise recognized by the
Partnership, be taken into account in computing Profit and Loss of the
Partnership for purposes of crediting or charging the Capital Accounts of, and
distributing proceeds to, the Partners, pursuant to this Agreement. To the
extent deemed advisable by the General Partner, appropriate arrangements
(including the use of a liquidating trust) may be made to assure that adequate
funds are available to pay any contingent debts or obligations.

 

5.7         Substantial Economic Effect. It is the intent of the Partners that
the allocations of Profit and Loss, under this Agreement have substantial
economic effect (or be consistent with the Partners’ interests in the
Partnership in the case of the allocation of losses attributable to nonrecourse
debt) within the meaning of Section 704(b) of the Code as interpreted by the
Regulations promulgated pursuant thereto. Article 5 and other relevant
provisions of this Agreement shall be interpreted in a manner consistent with
such intent.

 

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Article 6
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER

 

6.1          Management of the Partnership.

 

(a)          Except as otherwise expressly provided in this Agreement, the
General Partner shall have full, complete and exclusive discretion to manage and
control the business of the Partnership for the purposes herein stated, and
shall make all decisions affecting the business and assets of the Partnership.
Subject to the restrictions specifically contained in this Agreement, the powers
of the General Partner shall include, without limitation, the authority to take
the following actions on behalf of the Partnership:

 

(i)           to acquire, purchase, own, operate, lease, dispose and exchange of
any Assets, that the General Partner determines are necessary or appropriate or
in the best interests of the business of the Partnership;

 

(ii)          to construct buildings and make other improvements on the
properties owned or leased by the Partnership;

 

(iii)         to authorize, issue, sell, redeem or otherwise purchase any
Partnership Interests or any securities (including secured and unsecured debt
obligations of the Partnership, debt obligations of the Partnership convertible
into any Class or series of Partnership Interests, or options, rights, warrants
or appreciation rights relating to any Partnership Interests) of the
Partnership;

 

(iv)         to borrow or lend money for the Partnership, issue or receive
evidences of indebtedness in connection therewith, refinance, increase the
amount of, modify, amend or change the terms of, or extend the time for the
payment of, any such indebtedness, and secure such indebtedness by mortgage,
deed of trust, pledge or other lien on the Partnership’s assets;

 

(v)          to pay, either directly or by reimbursement, for all operating
costs and general administrative expenses of the Partnership to third parties or
to the General Partner or its Affiliates as set forth in this Agreement;

 

(vi)         to guarantee or become a co-maker of indebtedness of the General
Partner or any Subsidiary thereof, refinance, increase the amount of, modify,
amend or change the terms of, or extend the time for the payment of, any such
guarantee or indebtedness, and secure such guarantee or indebtedness by
mortgage, deed of trust, pledge or other lien on the Partnership’s assets;

 

(vii)        to use assets of the Partnership (including, without limitation,
cash on hand) for any purpose consistent with this Agreement, including, without
limitation, payment, either directly or by reimbursement, of all operating costs
and general administrative expenses of the General Partner, the Partnership or
any Subsidiary of either, to third parties or to the General Partner as set
forth in this Agreement;

 

(viii)       to lease all or any portion of any of the Partnership’s assets,
whether or not the terms of such leases extend beyond the termination date of
the Partnership and whether or not any portion of the Partnership’s assets so
leased are to be occupied by the lessee, or, in turn, subleased in whole or in
part to others, for such consideration and on such terms as the General Partner
may determine;

 

(ix)         to prosecute, defend, arbitrate, or compromise any and all claims
or liabilities in favor of or against the Partnership, on such terms and in such
manner as the General Partner may reasonably determine, and similarly to
prosecute, settle or defend litigation with respect to the Partners, the
Partnership, or the Partnership’s assets;

 

26

 

 

(x)         to file applications, communicate, and otherwise deal with any and
all governmental agencies having jurisdiction over, or in any way affecting, the
Partnership’s assets or any other aspect of the Partnership business;

 

(xi)        to make or revoke any election permitted or required of the
Partnership by any taxing authority;

 

(xii)       to maintain such insurance coverage for public liability, fire and
casualty, and any and all other insurance for the protection of the Partnership,
for the conservation of Partnership assets, or for any other purpose convenient
or beneficial to the Partnership, in such amounts and such types, as it shall
determine from time to time;

 

(xiii)      to determine whether or not to apply any insurance proceeds for any
property to the restoration of such property or to distribute the same;

 

(xiv)      to establish one or more divisions of the Partnership, to hire and
dismiss employees of the Partnership or any division of the Partnership, and to
retain legal counsel, accountants, consultants, real estate brokers, and such
other persons, as the General Partner may deem necessary or appropriate in
connection with the Partnership business and to pay therefor such remuneration
as the General Partner may deem reasonable and proper;

 

(xv)       to retain other services of any kind or nature in connection with the
Partnership business, and to pay therefor such remuneration as the General
Partner may deem reasonable and proper;

 

(xvi)      to negotiate and conclude agreements on behalf of the Partnership
with respect to any of the rights, powers and authority conferred upon the
General Partner;

 

(xvii)     to maintain accurate accounting records and to file promptly all
federal, state and local income tax returns on behalf of the Partnership;

 

(xviii)    to distribute Partnership cash or other Partnership assets in
accordance with this Agreement;

 

(xix)      to form or acquire an interest in, and contribute 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, its Subsidiaries and any
other Person in which it has an equity interest from time to time);

 

(xx)        to establish Partnership reserves for working capital, capital
expenditures, contingent liabilities, or any other valid Partnership purpose;

 

27

 

 

(xxi)       to merge, consolidate or combine the Partnership with or into
another Person;

 

(xxii)      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”
for purposes of Section 7704 of the Code; and

 

(xxiii)     to take such other action, execute, acknowledge, swear to or deliver
such other documents and instruments, and perform any and all other acts that
the General Partner deems necessary or appropriate for the formation,
continuation and conduct of the business and affairs of the Partnership
(including, without limitation, all actions consistent with allowing the General
Partner at all times to qualify as a REIT unless the General Partner voluntarily
terminates its REIT status) and to possess and enjoy all of the rights and
powers of a general partner as provided by the Act.

 

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

 

6.2          Delegation of Authority. The General Partner may delegate any or
all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the business
of the Partnership, which Person may, under supervision of the General Partner,
perform any acts or services for the Partnership as the General Partner may
approve.

 

6.3          Indemnification and Exculpation of Indemnitees.

 

(a)          The Partnership shall indemnify an Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including reasonable 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 it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Any indemnification pursuant to this Section 6.3 shall be made only
out of the assets of the Partnership.

 

(b)          The Partnership shall reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee’s good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.3 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.

 

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(c)        The indemnification provided by this Section 6.3 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 6.3, 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 6.3; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.

 

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

 

(g)        An Indemnitee shall not be denied indemnification in whole or in part
under this Section 6.3 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 6.3 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.

 

(i)         Notwithstanding the foregoing, the Partnership may not indemnify or
hold harmless an Indemnitee for any liability or loss unless all of the
following conditions are met: (i) the Indemnitee has determined, in good faith,
that the course of conduct that caused the loss or liability was in the best
interests of the Partnership; (ii) the Indemnitee was acting on behalf of or
performing services for the Partnership; (iii) the liability or loss was not the
result of (A) negligence or misconduct, in the case that the Indemnitee is a
director of the General Partner (other than an Independent Director), the
Advisor or an Affiliate of the Advisor or (B) gross negligence or willful
misconduct, in the case that the Indemnitee is an Independent Director; and (iv)
the indemnification or agreement to hold harmless is recoverable only out of net
assets of the Partnership. In addition, the Partnership shall not provide
indemnification for any loss, liability or expense arising from or out of an
alleged violation of federal or state securities laws by such party unless one
or more of the following conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged material securities
law violations as to the Indemnitee; (ii) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as to the
Indemnitee; or (iii) a court of competent jurisdiction approves a settlement of
the claims against the Indemnitee and finds that indemnification of the
settlement and the related costs should be made, and the court considering the
request for indemnification has been advised of the position of the Commission
and of the published position of any state securities regulatory authority in
which Securities were offered or sold as to indemnification for violations of
securities laws.

 

29

 

 

6.4         Liability of the General Partner.

 

(a)          Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary damages to the
Partnership or any Partners for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General Partner
acted in good faith. The General Partner shall not be in breach of any duty that
the General Partner may owe to the Limited Partners or the Partnership or any
other Persons under this Agreement or of any duty stated or implied by law or
equity provided the General Partner, acting in good faith, abides by the terms
of this Agreement.

 

(b)          The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership, itself and its shareholders
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or the tax consequences of some, but not
all, of the Limited Partners) in deciding whether to cause the Partnership to
take (or decline to take) any actions. In the event of a conflict between the
interests of its shareholders on one hand and the Limited Partners on the other,
the General Partner shall endeavor in good faith to resolve the conflict in a
manner not adverse to either its shareholders or the Limited Partners; provided,
however, that for so long as the General Partner directly owns a controlling
interest in the Partnership, any such conflict that the General Partner, in its
sole and absolute discretion, determines cannot be resolved in a manner not
adverse to either its shareholders or the Limited Partner shall be resolved in
favor of the shareholders. The General Partner shall not be liable for monetary
damages for losses sustained, liabilities incurred, or benefits not derived by
Limited Partners in connection with such decisions, provided that the General
Partner has acted in good faith.

 

(c)          Subject to its obligations and duties as General Partner set forth
in Section 6.1 hereof, the General Partner may exercise any of the powers
granted to it under this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.

 

(d)          Notwithstanding any other provisions of this Agreement or 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 prevent the General Partner from incurring any
taxes under Section 857, Section 4981, or any other provision of the Code, is
expressly authorized under this Agreement and is deemed approved by all of the
Limited Partners.

 

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(e)          Any amendment, modification or repeal of this Section 6.4 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 6.4 as in effect immediately prior to such
amendment, modification or repeal with respect to matters occurring, in whole or
in part, prior to such amendment, modification or repeal, regardless of when
claims relating to such matters may arise or be asserted.

 

6.5         Reimbursement of General Partner.

 

(a)          Except as provided in this Section 6.5 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments, and allocations to which it may be entitled), the General Partner
shall not be compensated for its services as general partner of the Partnership.

 

(b)          The General Partner shall be reimbursed on a monthly basis, or such
other basis as the General Partner may determine in its sole and absolute
discretion, for all Administrative Expenses incurred by the General Partner.

 

6.6         Outside Activities. Subject to (a) Section 6.8 hereof, (b) the
Charter and (c) any agreements entered into by the General Partner or its
Affiliates with the Partnership, a Subsidiary or any officer, director,
employee, agent, trustee, Affiliate or shareholder of the General Partner, the
General 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 substantially similar or identical
to those of the Partnership. Neither the Partnership nor any of the Limited
Partners shall have any rights by virtue of this Agreement in any such business
ventures, interests or activities. 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 such business ventures, interests or
activities, and the General Partner shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures, interests and
activities to the Partnership or any Limited Partner, even if such opportunity
is of a character which, if presented to the Partnership or any Limited Partner,
could be taken by such Person.

 

6.7         Employment or Retention of Affiliates.

 

(a)          Any Affiliate of the General Partner may be employed or retained by
the Partnership and may otherwise deal with the Partnership (whether as a buyer,
lessor, lessee, manager, furnisher of goods or services, broker, agent, lender
or otherwise) and may receive from the Partnership any compensation, price, or
other payment therefor which the General Partner determines to be fair and
reasonable.

 

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(b)         The Partnership may lend or contribute to its Subsidiaries or other
Persons in which it has an equity investment, and such Persons may borrow funds
from the Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.

 

(c)         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 as the
General Partner deems are consistent with this Agreement, applicable law and the
REIT status of the General Partner.

 

(d)         Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are, in the General Partner’s sole
discretion, on terms that are fair and reasonable to the Partnership.

 

6.8         General Partner Participation. The General Partner agrees that all
business activities of the General Partner, including activities pertaining to
the acquisition, development or ownership of any Asset shall be conducted
through the Partnership or one or more Subsidiary Partnerships; provided,
however, that the General Partner is allowed to make a direct acquisition, but
if and only if, such acquisition is made in connection with the issuance of
Additional Securities, which direct acquisition and issuance have been approved
and determined to be in the best interests of the General Partner and the
Partnership by a majority of the Independent Directors.

 

6.9         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 Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more 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 or one or more Subsidiary Partnerships in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its commercially reasonable 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.

 

6.10       Redemptions and Exchanges of REIT Shares.

 

(a)          Redemptions. In the event the General Partner redeems any REIT
Shares (other than REIT Shares redeemed in accordance with the share redemption
program of the General Partner through proceeds received from the General
Partner’s distribution reinvestment plan), then the General Partner shall cause
the Partnership to purchase from the General Partner a number of Partnership
Units as determined based on the application of the Conversion Factor on the
same terms that the General Partner redeemed such REIT Shares. Moreover, if the
General Partner makes a cash tender offer or other offer to acquire REIT Shares,
then the General Partner shall cause the Partnership to make a corresponding
offer to the General Partner to acquire an equal number of Partnership Units
held by the General Partner that have the same Class designation as the REIT
Shares that are subject to the offer. In the event any REIT Shares are redeemed
by the General Partner pursuant to such offer, the Partnership shall redeem an
equivalent number of the General Partner’s Partnership Units having the same
Class designation as the redeemed REIT Shares for an equivalent purchase price
based on the application of the Conversion Factor.

 

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(b)          Exchanges. If the General Partner exchanges any REIT Shares of any
Class (“Exchanged REIT Shares”) for REIT Shares of a different Class (“Received
REIT Shares”), then the General Partner shall, and shall cause the Partnership
to, exchange a number of Partnership Units having the same Class designation as
the Exchanged REIT Shares, as determined based on the application of the
Conversion Factor, for Partnership Units having the same Class designation as
the Received REIT Shares on the same terms that the General Partner exchanged
the Exchanged REIT Shares. The exchange of Units shall occur automatically after
the close of business on the applicable date of the exchange of REIT Shares, as
of which time the holder of a Class of Units having the same designation as the
Exchanged REIT Shares shall be credited on the books and records of the
Partnership with the issuance, as of the opening of business on the next day, of
the applicable number of Units having the same designation as the Received REIT
Shares.

 

6.11       No Duplication of Fees or Expenses. The Partnership may not incur or
be responsible for any fee or expense (in connection with the Offering or
otherwise) that would be duplicative of fees and expenses paid by the General
Partner.

 

Article 7
CHANGES IN GENERAL PARTNER

 

7.1         Transfer of the General Partner’s Partnership Interest.

 

(a)          The General Partner shall not transfer all or any portion of its
General Partnership Interest or withdraw as General Partner except as provided
in, or in connection with a transaction contemplated by, Section 7.1(c), (d) or
(e).

 

(b)          The General Partner agrees that its Percentage Interest will at all
times be in the aggregate, at least 0.1%.

 

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(c)          Except as otherwise provided in Section 6.4(b) or Section 7.1(d) or
(e) hereof, the General Partner shall not engage in any merger, consolidation or
other combination with or into another Person or sale of all or substantially
all of its assets (other than in connection with a change in the General
Partner’s state of incorporation or organizational form) in each case which
results in a change of Control of the General Partner (a “Transaction”), unless:

 

(i)           the consent of Limited Partners holding more than 50% of the
Percentage Interests and more than 50% of the Special Percentage Interests of
the Limited Partners is obtained;

 

(ii)          as a result of such Transaction all Limited Partners will receive
or have the right to receive (A) for each Partnership Unit of each Class (other
than the Special Units) an amount of cash, securities, or other property equal
to the product of the Conversion Factor and the greatest amount of cash,
securities or other property paid in the Transaction to a holder of one REIT
Share having the same Class designation as the Partnership Unit in consideration
of such REIT Share, provided that if, in connection with the Transaction, a
purchase, tender or exchange offer (“Offer”) shall have been made to and
accepted by the holders of more than 50% of the outstanding REIT Shares, each
holder of Partnership Units shall be given the option to exchange its
Partnership Units for the greatest amount of cash, securities, or other property
which a Limited Partner holding Partnership Units would have received had it (1)
exercised its Redemption Right and (2) sold, tendered or exchanged pursuant to
the Offer the REIT Shares received upon exercise of the Redemption Right
immediately prior to the expiration of the Offer and (B) for each Special
Partnership Unit an amount of cash, securities or other property (as applicable
based upon the type of consideration and the proportions thereof paid to holders
of REIT Shares in the Transaction) determined as set forth pursuant to Section
5.2(b)(i) or Section 8.7(b) hereof, as applicable; or

 

(iii)         the General Partner is the surviving entity in the Transaction and
either (A) the holders of REIT Shares do not receive cash, securities, or other
property in the Transaction or (B) all Limited Partners (other than the General
Partner or any Subsidiary) have the right to receive (1) in exchange for their
Partnership Units of each Class (other than the Special Units), an amount of
cash, securities, or other property (expressed as an amount per REIT Share) that
is no less than the product of the Conversion Factor and the greatest amount of
cash, securities, or other property (expressed as an amount per REIT Share)
received in the Transaction by any holder of REIT Shares having the same Class
designation as the Partnership Units being exchanged, and (2) in exchange for
their Special Partnership Units, an amount of cash, securities or other property
(as applicable based upon the type of consideration and the proportions thereof
paid to holders of REIT Shares in the Transaction) determined as set forth
pursuant to Section 8.7 hereof.

 

(d)          Notwithstanding Section 7.1(c), the General Partner may merge with
or into or consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity (the “Survivor”), other than Partnership Units held by the General
Partner, are contributed, directly or indirectly, to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value
equal to the value of the assets so contributed as determined by the Survivor in
good faith and (ii) the Survivor expressly agrees to assume all obligations of
the General Partner, as appropriate, hereunder. Upon such contribution and
assumption, the Survivor shall have the right and duty to amend this Agreement
as set forth in this Section 7.1(d). The Survivor shall in good faith arrive at
a new method for the calculation of the Cash Amount, the REIT Shares Amount and
Conversion Factor for a Partnership Unit after any such merger or consolidation
so as to approximate the existing method for such calculation as closely as
reasonably possible. Such calculation shall take into account, among other
things, the kind and amount of securities, cash and other property that was
receivable upon such merger or consolidation by a holder of REIT Shares of each
Class or options, warrants or other rights relating thereto, and which a holder
of Partnership Units of any Class could have acquired had such Partnership Units
been exchanged immediately prior to such merger or consolidation. Such amendment
to this Agreement shall provide for adjustment to such method of calculation,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for with respect to the Conversion Factor. The Survivor also shall in
good faith modify the definition of REIT Shares and make such amendments to
Sections 8.5 and 8.7 hereof so as to approximate the existing rights and
obligations set forth in Sections 8.5 and 8.7 as closely as reasonably possible.
The above provisions of this Section 7.1(d) shall similarly apply to successive
mergers or consolidations permitted hereunder.

 

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(e)          Notwithstanding Section 7.1(c),

 

(i)            a General Partner may transfer all or any portion of its General
Partnership Interest to (A) a wholly-owned Subsidiary of such General Partner or
(B) the owner of all of the ownership interests of such General Partner, and
following a transfer of all of its General Partnership Interest, may withdraw as
General Partner; and

 

(ii)           the General Partner may engage in any transaction that is not
required to be submitted to the vote of the holders of the REIT Shares by (A)
law or (B) the rules of any national securities exchange on which one or more
Classes of REIT Shares are Listed.

 

7.2         Admission of a Substitute or Additional General Partner. A Person
shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are satisfied:

 

(a)          the Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms and
provisions of this Agreement by executing a counterpart thereof and such other
documents or instruments as may be required or appropriate in order to effect
the admission of such Person as a General Partner, and a certificate evidencing
the admission of such Person as a General Partner shall have been filed for
recordation and all other actions required by Section 2.5 hereof in connection
with such admission shall have been performed;

 

(b)          if the Person to be admitted as a substitute or additional General
Partner is a corporation or a partnership it shall have provided the Partnership
with evidence satisfactory to counsel for the Partnership of such Person’s
authority to become a General Partner and to be bound by the terms and
provisions of this Agreement; and

 

(c)          counsel for the Partnership shall have rendered an opinion (relying
on such opinions from other counsel and the state or any other jurisdiction as
may be necessary) that (x) the admission of the person to be admitted as a
substitute or additional General Partner is in conformity with the Act and (y)
none of the actions taken in connection with the admission of such Person as a
substitute or additional General Partner will cause (i) the Partnership to be
classified other than as a partnership for federal tax purposes, or (ii) the
loss of any Limited Partner’s limited liability.

 

35

 

 

7.3          Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General
Partner.

 

(a)         Upon the occurrence of an Event of Bankruptcy as to the sole
remaining General Partner (and its removal pursuant to Section 7.4(a) hereof) or
the death, withdrawal, deemed removal or dissolution of the sole remaining
General Partner (except that, if the sole remaining General Partner is on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners), the
Partnership shall be dissolved and terminated unless the Partnership is
continued pursuant to Section 7.3(b) hereof. The merger of the General Partner
with or into any entity that is admitted as a substitute or successor General
Partner pursuant to Section 7.2 hereof shall not be deemed to be the withdrawal,
dissolution or removal of the General Partner.

 

(b)         Following the occurrence of an Event of Bankruptcy as to the sole
remaining General Partner (and its removal pursuant to Section 7.4(a) hereof) or
the death, withdrawal, removal or dissolution of the sole remaining General
Partner (except that, if a General Partner is, on the date of such occurrence, a
partnership, the withdrawal of, death, dissolution, Event of Bankruptcy as to,
or removal of a partner in, such partnership shall be deemed not to be a
dissolution of such General Partner if the business of such General Partner is
continued by the remaining partner or partners), the Limited Partners, within
ninety (90) days after such occurrence, may elect to continue the business of
the Partnership for the balance of the term specified in Section 2.4 hereof by
selecting, subject to Section 7.2 hereof and any other provisions of this
Agreement, a substitute General Partner by consent of a majority in interest of
the Limited Partners. If the Limited Partners elect to continue the business of
the Partnership and admit a substitute General Partner, the relationship with
the Partners and of any Person who has acquired an interest of a Partner in the
Partnership shall be governed by this Agreement.

 

7.4          Removal of a General Partner.

 

(a)         Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be deemed to be
removed automatically; provided, however, that if a General Partner is on the
date of such occurrence a partnership, the withdrawal, death or dissolution of,
Event of Bankruptcy as to, or removal of, a partner in, such partnership shall
be deemed not to be a dissolution of the General Partner if the business of such
General Partner is continued by the remaining partner or partners. The Limited
Partners may not remove the General Partner, with or without cause.

 

(b)         If a General Partner has been removed pursuant to this Section 7.4
and the Partnership is continued pursuant to Section 7.3 hereof, such General
Partner shall promptly transfer and assign its General Partnership Interest in
the Partnership to the substitute General Partner approved by a majority in
interest of the Limited Partners in accordance with Section 7.3(b) hereof and
otherwise admitted to the Partnership in accordance with Section 7.2 hereof. At
the time of assignment, the removed General Partner shall be entitled to receive
from the substitute General Partner the fair market value of the General
Partnership Interest of such removed General Partner as reduced by any damages
caused to the Partnership by such General Partner. Such fair market value shall
be determined by an appraiser mutually agreed upon by the General Partner and a
majority in interest of the Limited Partners within ten (10) days following the
removal of the General Partner. In the event that the parties are unable to
agree upon an appraiser, the removed General Partner and a majority in interest
of the Limited Partners each shall select an appraiser. Each such appraiser
shall complete an appraisal of the fair market value of the removed General
Partner’s General Partnership Interest within thirty (30) days of the General
Partner’s removal, and the fair market value of the removed General Partner’s
General Partnership Interest shall be the average of the two appraisals;
provided, however, that if the higher appraisal exceeds the lower appraisal by
more than 20% of the amount of the lower appraisal, the two appraisers, no later
than forty (40) days after the removal of the General Partner, shall select a
third appraiser who shall complete an appraisal of the fair market value of the
removed General Partner’s General Partnership Interest no later than sixty (60)
days after the removal of the General Partner. In such case, the fair market
value of the removed General Partner’s General Partnership Interest shall be the
average of the two appraisals closest in value.

 

36

 

 

(c)          The General Partnership Interest of a removed General Partner,
until transfer under Section 7.4(b), shall be converted to that of a special
Limited Partner; provided, however, such removed General Partner shall not have
any rights to participate in the management and affairs of the Partnership, and
shall not be entitled to any portion of the income, expense, profit, gain or
loss allocations or cash distributions allocable or payable, as the case may be,
to the Limited Partners. Instead, such removed General Partner shall receive and
be entitled only to retain distributions or allocations of such items that it
would have been entitled to receive in its capacity as General Partner, until
the transfer is effective pursuant to Section 7.4(b).

 

(d)          All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary, desirable and sufficient to effect all the foregoing provisions of
this Section.

 

Article 8
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS

 

8.1          Management of the Partnership. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.

 

8.2          Power of Attorney. Each Limited Partner hereby irrevocably appoints
the General Partner its true and lawful attorney-in-fact, who may act for each
Limited Partner and in its name, place and stead, and for its use and benefit,
to sign, acknowledge, swear to, deliver, file or record, at the appropriate
public offices, any and all documents, certificates, and instruments as may be
deemed necessary or desirable by the General Partner to carry out fully the
provisions of this Agreement and the Act in accordance with their terms, which
power of attorney is coupled with an interest and shall survive the death,
dissolution or legal incapacity of the Limited Partner, or the transfer by the
Limited Partner of any part or all of its Partnership Interest.

 

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8.3         Limitation on Liability of Limited Partners. No Limited Partner
shall be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of its Capital Contribution, if any, as and when due hereunder. After
its Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.

 

8.4         Ownership by Limited Partner of Corporate General Partner or
Affiliate. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof, if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal tax purposes. The General Partner shall be entitled to
make such reasonable inquiry of the Limited Partners as is required to establish
compliance by the Limited Partners with the provisions of this Section.

 

8.5         Redemption Right.

 

(a)          Subject to Sections 8.5(b), 8.5(c), 8.5(d), 8.5(e) and 8.5(f) and
the provisions of any agreements between the Partnership and one or more Limited
Partners with respect to Partnership Units held by them, each Limited Partner,
other than the General Partner, shall, after holding their Partnership Units for
at least one year, have the right (subject to the terms and conditions set forth
herein) to require the Partnership to redeem (a “Redemption”) all or a portion
of the Partnership Units (other than Special Units), held by such Limited
Partner in exchange (a “Redemption Right”) for REIT shares having the same Class
designation as the Partnership Units subject to the Redemption Right, issuable
on, or the Cash Amount payable on, the Specified Redemption Date, as determined
by the General Partner in its sole discretion, provided that such Partnership
Units (the “Tendered Units”) shall have been outstanding for at least one year.
Any Redemption Right shall be exercised pursuant to a Notice of Redemption
delivered to the Partnership (with a copy to the General Partner) by the Limited
Partner exercising the Redemption Right (the “Tendering Party”). No Limited
Partner may deliver more than two Notices of Redemption during each calendar
year. A Limited Partner may not exercise the Redemption Right for less than
1,000 Partnership Units or, if such Limited Partner holds less than 1,000
Partnership Units, all of the Partnership Units held by such Partner. The
Tendering Party shall have no right, with respect to any Partnership Units so
redeemed, to receive any distribution paid with respect to Partnership Units if
the record date for such distribution is on or after the Specified Redemption
Date.

 

(b)          If the General Partner elects to redeem Tendered Units for REIT
Shares having the same Class designation as the Tendered Units rather than cash,
then the Partnership shall direct the General Partner to issue and deliver such
REIT Shares to the Tendering Party pursuant to the terms set forth in this
Section 8.5(b), in which case, (i) the General Partner, acting as a distinct
legal entity, shall assume directly the obligation with respect thereto and
shall satisfy the Tendering Party’s exercise of its Redemption Right, and (ii)
such transaction shall be treated, for federal income tax purposes, as a
transfer by the Tendering Party of such Tendered Units to the General Partner in
exchange for REIT shares. The percentage of the Tendered Units tendered for
Redemption by the Tendering Party for which the General Partner elects to issue
REIT Shares (rather than cash) is referred to as the “Applicable Percentage.” In
making such election to acquire Tendered Units, the Partnership shall act in a
fair, equitable and reasonable manner that neither prefers one group or class of
Limited Partners over another nor discriminates against a group or class of
Limited Partners. If the Partnership elects to redeem any number of Tendered
Units for REIT Shares, rather than cash, on the Specified Redemption Date, the
Tendering Party shall sell such number of the Tendered Units to the General
Partner in exchange for a number of REIT Shares having the same Class
designation as the Tendered Units equal to the product of the REIT Shares Amount
and the Applicable Percentage. The product of the Applicable Percentage and the
REIT Shares Amount, if applicable, shall be delivered by the General Partner as
duly authorized, validly issued, fully paid and accessible REIT Shares having
the same Class designation as the Tendered Units, free of any pledge, lien,
encumbrance or restriction, other than the Ownership Limit (as calculated in
accordance with the Charter) and other restrictions provided in the Article of
Incorporation, the bylaws of the General Partner, the Securities Act and
relevant state securities or “blue sky” laws. Notwithstanding the provisions of
Section 8.5(a) and this Section 8.5(b), the Tendering Parties shall have no
rights under this Agreement that would otherwise be prohibited under the
Charter.

 

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(c)          In connection with an exercise of Redemption Rights pursuant to
this Section 8.5, the Tendering Party shall submit the following to the General
Partner, in addition to the Notice of Redemption:

 

(1)          A written affidavit, dated the same date as the Notice of
Redemption, (a) disclosing the actual and constructive ownership, as determined
for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such
Tendering Party and (ii) any Related Party and (b) representing that, after
giving effect to the Redemption, neither the Tendering Party nor any Related
Party will own REIT Shares in excess of the Ownership Limit (or, if applicable
the Excepted Holder Limit);

 

(2)          A written representation that neither the Tendering Party nor any
Related Party has any intention to acquire any additional REIT Shares prior to
the closing of the Redemption on the Specified Redemption Date;

 

(3)          An undertaking to certify, at and as a condition to the closing of
the Redemption on the Specified Redemption Date, that either (a) the actual and
constructive ownership of REIT Shares by the Tendering Party and any Related
Party remain unchanged from that disclosed in the affidavit required by Section
8.5(c)(1) or (b) after giving effect to the Redemption, neither the Tendering
Party nor any Related Party shall own REIT Shares in violation of the Ownership
Limit (or, if applicable, the Excepted Holder Limit);

 

(4)          With respect to any Cash Amount to be received by a Tendering
Party, a waiver and release in a form acceptable to the General Partner; and

 

(5)          Any other documents as the General Partner may reasonably require.

 

39

 

 

(d)          Any Cash Amount to be paid to a Tendering Party pursuant to this
Section 8.5 shall be paid on the Specified Redemption Date; provided, however,
that the General Partner may elect to cause the Specified Redemption Date to be
delayed for up to an additional 180 days to the extent required for the General
Partner to provide financing to be used to make such payment of the Cash Amount,
by causing the issuance of additional REIT Shares or otherwise. Notwithstanding
the foregoing, the General Partner agrees to use its commercially reasonable
efforts to cause the closing of the acquisition of Tendered Units hereunder to
occur as quickly as reasonably possible.

 

(e)          Notwithstanding any other provision of this Agreement, the General
Partner shall place appropriate restrictions on the ability of the Limited
Partners to exercise their Redemption Rights to prevent, among other things, (a)
any person from owning shares in excess of the Common Share Ownership Limit, the
Aggregate Share Ownership Limit and the Excepted Holder Limit, (b) the General
Partner’s common stock from being owned by less than 100 persons, the General
Partner from being “closely held” within the meaning of section 856(h) of the
Code, and as and if deemed necessary to ensure that the Partnership does not
constitute a “publicly traded partnership” under section 7704 of the Code. 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 holding Partnership Units, which notice shall be
accompanied by a copy of an opinion of counsel to the Partnership which states
that, in the opinion of such counsel, restrictions are necessary in order to
avoid having the Partnership be treated as a “publicly traded partnership” under
section 7704 of the Code.

 

(f)           A redemption fee may be charged in connection with an exercise of
Redemption Rights pursuant to this Section 8.5.

 

8.6         Registration. Subject to the terms of any agreement between the
General Partner and one or more Limited Partners with respect to Partnership
Units held by them:

 

(a)          Listing on Securities Exchange. If the General Partner shall list
or maintain the listing of any REIT Shares on any securities exchange or
national market system, it will at its expense and as necessary to permit the
registration and sale of the REIT Shares that may be issued upon redemption of
Partnership Units pursuant to Section 8.5 hereof (the “Redemption Shares”)
hereunder, list thereon, maintain and, when necessary, increase such listing to
include such Redemption Shares.

 

(b)          Registration Not Required. Notwithstanding the foregoing, the
General Partner shall not be required to file or maintain the effectiveness of a
registration statement covering the resale of Redemption Shares if, in the
opinion of counsel to the General Partner, such Redemption Shares could be sold
by the holders thereof pursuant to Rule 144 under the Securities Act, or any
successor rule thereto.

 

8.7         Redemption or Conversion of Special Partnership Units. Upon the
earliest to occur of (a) the termination or nonrenewal of the Advisory Agreement
for “cause” (as defined in the Advisory Agreement), (b) a Termination Event, or
(c) a Liquidity Event which does not qualify as a Termination Event, the Special
Partnership Units will be exchanged for Partnership Units with a value as
described below and immediately thereafter such Partnership Units received upon
exchange of the Special Partnership Units will be redeemed, subject to the
option of the Special OP Unitholders to retain such Partnership Units received
upon exchange of the Special Partnership Units in such circumstances; provided,
however, that in the event of any Termination Event or a Liquidity Event which
does not qualify as a Termination Event, the Special OP Unitholders may choose
to receive distributions of the Net Sales Proceeds from such Termination Event
or Liquidity Event in accordance with the distribution provisions set forth in
Section 5.2(b) rather than having its Partnership Units exchanged and redeemed
in accordance with this Section 8.7.

 

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(a)          Redemption of Special Partnership Units Upon Termination or
Nonrenewal of the Advisory Agreement for Cause. If the Advisory Agreement is
terminated or not renewed by the General Partner for “cause” (as defined in the
Advisory Agreement), all of the Special Partnership Units shall be redeemed by
the Partnership for $1 within thirty (30) days after the termination or
nonrenewal of the Advisory Agreement.

 

(b)          Redemption of Special Partnership Units upon a Termination Event or
Liquidity Event. Upon the occurrence of a Termination Event or a Liquidity
Event, unless a Special OP Unitholder has chosen to receive distributions of the
Net Sales Proceeds from such Termination Event or Liquidity Event in accordance
with the proviso in Section 8.7 above, the Special Partnership Units shall be
exchanged for Class A Units with a value equal to the Net Sales Proceeds that
would have been distributed to the Special OP Unitholders under Section 5.2(b)
if all assets of the Partnership had been sold for their fair market value, as
determined in good faith by the General Partner, all liabilities of the
Partnership were satisfied in full in cash according to their terms, and Net
Sales Proceeds (after satisfaction of such liabilities) were distributed in full
pursuant to Section 5.2(b), provided however, (i) in any case of a Liquidity
Event of the type described in Section 7.1(c) (including a Termination Event
that is a Liquidity Event), the General Partner shall determine such fair market
value by reference to the value paid to the holders of Class A REIT Shares, if
applicable, and the implied value of the Partnership’s assets as a result of
such Liquidity Event, (ii) in any case of a Termination Event which is not a
Liquidity Event of the type described in Section 7.1(c), the General Partner
shall determine such fair market value by reference to a valuation provided by
an independent appraiser selected by the General Partner and approved by the
Special OP Unitholders, and (iii) in connection with a Listing, the General
Partner shall make such determination taking into account the market value of
the General Partner’s Class A Listed Shares based upon the average closing
price, or average of bid and asked prices, as the case may be, during a period
of thirty (30) days during which such shares are traded beginning 150 days after
the Listing (the date on which such valuation is determined to be referred to as
the “Valuation Date”). In the case of a Termination Event or Liquidity Event
which is not a Listing, unless a Special OP Unitholder has chosen to receive
distributions of the Net Sales Proceeds from such Termination Event or Liquidity
Event in accordance with the proviso in Section 8.7 above, such OP Units shall
be redeemed in connection with such Termination Event or Liquidity Event or as
soon as is reasonably practicable thereafter, and in the case of a Listing
described above, the redemption of such Class A Units shall occur within 210
days thereof. The payment to the Special OP Unitholders upon the redemption of
their Partnership Units resulting from a Termination Event or a Liquidity Event,
to the extent applicable, shall be paid in cash; provided, however that if the
Board of Directors of the General Partner determines that such payment will
impair the capital of the General Partner, such payment shall consist of a
promissory note bearing interest at a competitive market rate (determined by
taking into account, among other things, the size of the Partnership, its
capital structure and financial strength, its credit rating or the credit rating
of its General Partner (if applicable), the terms of the promissory note,
including its maturity date, principal balance, whether it is secured or
unsecured, whether it pays interest currently or allows it to accrue, and the
liquidation preference of the promissory note in relation to other liabilities
and obligations of the Partnership). The promissory note will be repaid pursuant
to the terms thereof, including using the entire net proceeds of each Sale of an
Asset or Assets of the Partnership in connection with or following the
occurrence of the Termination Event or a Liquidity Event. Notwithstanding
anything to the contrary in this Section 8.7, in the case of any termination or
non-renewal of the Advisory Agreement that is not in connection with a Liquidity
Event or for “cause” (as defined in the Advisory Agreement), the Special OP
Unitholders shall receive payment in the form of a promissory note, which shall
be payable in 12 equal quarterly installments and will bear interest on the
unpaid balance at a rate determined by the Board of Directors of the General
Partner to be fair and reasonable; provided, however, that no payment shall be
made in any quarter in which such payment would impair the General Partner’s
capital or jeopardize its REIT status (and such deferred payments shall be
delayed until the next quarter in which payment would not impair the General
Partner’s capital or jeopardize REIT status); further provided that the payment
of the outstanding balance on any promissory note and all interest due on such
note shall be accelerated upon the occurrence of a Liquidity Event.

 

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8.8         Distribution Reinvestment Plan. OP Unitholders may have the
opportunity to join the General Partner’s distribution reinvestment plan by
completing an enrollment form which is available upon request. A copy of the
General Partner’s distribution reinvestment plan is also available upon request.
The shares of the General Partner’s common stock which may be issued under the
General Partner’s distribution reinvestment plan are offered only by a
prospectus.

 

Article 9
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS

 

9.1         Purchase for Investment.

 

(a)          Each Limited Partner hereby represents and warrants to the General
Partner and to the Partnership that the acquisition of his Partnership Interest
is made as a principal for his account for investment purposes only and not with
a view to the resale or distribution of such Partnership Interest.

 

(b)          Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction thereof, whether
voluntarily or by operation of law or at judicial sale or otherwise, to any
Person who does not make the representations and warranties to the General
Partner set forth in Section 9.1(a) above and similarly agree not to sell,
assign or transfer such Partnership Interest or fraction thereof to any Person
who does not similarly represent, warrant and agree.

 

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9.2          Restrictions on Transfer of Limited Partnership Interests.

 

(a)           Subject to the provisions of 9.2(b) and (c), no Limited Partner
may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any
portion of his Limited Partnership Interest, or any of such Limited Partner’s
economic rights as a Limited Partner, whether voluntarily or by operation of law
or at judicial sale or otherwise (collectively, a “Transfer”) without the
consent of the General Partner, which consent may be granted or withheld in its
sole and absolute discretion. Any such purported transfer undertaken without
such consent shall be considered to be null and void ab initio and shall not be
given effect. The General Partner may require, as a condition of any Transfer to
which it consents, that the transferor assume all costs incurred by the
Partnership in connection therewith.

 

(b)           No Limited Partner may withdraw from the Partnership other than as
a result of a permitted Transfer (i.e., a Transfer consented to as contemplated
by clause (a) above or clause (c) below or a Transfer pursuant to Section 9.5
below) of all of its Partnership Interest pursuant to this Article 9 or pursuant
to a redemption of all of its Partnership Units pursuant to Section 8.5 or
pursuant to the redemption of the Limited Partner’s Special Partnership Units
pursuant to Section 8.7. Upon the permitted Transfer or redemption of all of a
Limited Partner’s Partnership Interest, such Limited Partner shall cease to be a
Limited Partner.

 

(c)           Notwithstanding Section 9.2(a) and subject to Sections 9.2(d), (e)
and (f) below, a Limited Partner may Transfer, without the consent of the
General Partner, all or a portion of its Partnership Interest to (i) a parent or
parent’s spouse, natural or adopted descendant or descendants, spouse of such
descendant, or brother or sister, or a trust created by such Limited Partner for
the benefit of such Limited Partner and/or any such person(s), of which trust
such Limited Partner or any such person(s) is a trustee, (ii) a corporation
controlled by a Person or Persons named in (i) above, or (iii) if the Limited
Partner is an entity, its beneficial owners.

 

(d)           No Limited Partner may effect a Transfer of its Limited
Partnership Interest, in whole or in part, if, in the opinion of legal counsel
for the Partnership, such proposed Transfer would require the registration of
the Limited Partnership Interest under the Securities Act or would otherwise
violate any applicable federal or state securities or blue sky law (including
investment suitability standards).

 

(e)           No Transfer by a Limited Partner of its Partnership Interest, in
whole or in part, may be made to any Person if (i) in the opinion of legal
counsel for the Partnership, the transfer would result in the Partnership’s
being treated as an association taxable as a corporation (other than a qualified
REIT subsidiary within the meaning of Section 856(i) of the Code), (ii) in the
opinion of legal counsel for the Partnership, it would adversely affect the
ability of the General Partner to continue to qualify as a REIT or subject the
General Partner to any additional taxes under Section 857 or Section 4981 of the
Code, or (iii) 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.

 

 43 

 

 

(f)            No transfer by a Limited Partner of any Partnership Interest may
be made to a lender to the Partnership or any Person who is related (within the
meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership
whose loan constitutes a nonrecourse liability (within the meaning of
Regulations Section 1.752-1(a)(2)), without the consent of the General Partner,
which may be withheld in its sole and absolute discretion, provided that as a
condition to such consent the lender will be required to enter into an
arrangement with the Partnership and the General Partner to exchange or redeem
for the Cash Amount any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
Partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.

 

(g)           Any Transfer in contravention of any of the provisions of this
Article 9 shall be void and ineffectual and shall not be binding upon, or
recognized by, the Partnership.

 

(h)           Prior to the consummation of any Transfer under this Article 9,
the transferor and/or the transferee shall deliver to the General Partner such
opinions, certificates and other documents as the General Partner shall request
in connection with such Transfer.

 

9.3          Admission of Substitute Limited Partner.

 

(a)           Subject to the other provisions of this Article 9, an assignee of
the Limited Partnership Interest of a Limited Partner (which shall be understood
to include any purchaser, transferee, donee, or other recipient of any
disposition of such Limited Partnership Interest) shall be deemed admitted as a
Limited Partner of the Partnership only with the consent of the General Partner,
which consent may be granted or withheld in its sole and absolute discretion,
and upon the satisfactory completion of the following:

 

(i)              The assignee shall have accepted and agreed to be bound by the
terms and provisions of this Agreement by executing a counterpart or an
amendment thereof, including a revised Exhibit A, and such other documents or
instruments as the General Partner may require in order to effect the admission
of such Person as a Limited Partner.

 

(ii)             To the extent required, an amended Certificate evidencing the
admission of such Person as a Limited Partner shall have been signed,
acknowledged and filed for record in accordance with the Act.

 

(iii)            The assignee shall have delivered a letter containing the
representation set forth in Section 9.1(a) hereof and the agreement set forth in
Section 9.1(b) hereof.

 

(iv)            If the assignee is a corporation, partnership or trust, the
assignee shall have provided the General Partner with evidence satisfactory to
counsel for the Partnership of the assignee’s authority to become a Limited
Partner under the terms and provisions of this Agreement.

 

(v)             The assignee shall have executed a power of attorney containing
the terms and provisions set forth in Section 8.2 hereof.

 

(vi)            The assignee shall have paid all legal fees and other expenses
of the Partnership and the General Partner and filing and publication costs in
connection with its substitution as a Limited Partner.

 

(vii)           The assignee has obtained the prior written consent of the
General Partner to its admission as a Substitute Limited Partner, which consent
may be given or denied in the exercise of the General Partner’s sole and
absolute discretion.

 

 44 

 

 

(b)            For the purpose of allocating profits and losses and distributing
cash received by the Partnership, a Substitute Limited Partner shall be treated
as having become, and appearing in the records of the Partnership as, a Partner
upon the filing of the Certificate described in Section 9.3(a)(ii) hereof or, if
no such filing is required, the later of the date specified in the transfer
documents or the date on which the General Partner has received all necessary
instruments of transfer and substitution.

 

(c)            The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation required by
this Section and making all official filings and publications. The Partnership
shall take all such action as promptly as practicable after the satisfaction of
the conditions in this Article 9 to the admission of such Person as a Limited
Partner of the Partnership.

 

9.4          Rights of Assignees of Partnership Interests.

 

(a)            Subject to the provisions of Sections 9.1 and 9.2 hereof, except
as required by operation of law, the Partnership shall not be obligated for any
purposes whatsoever to recognize the assignment by any Limited Partner of its
Partnership Interest until the Partnership has received notice thereof.

 

(b)           Any Person who is the assignee of all or any portion of a Limited
Partner’s Limited Partnership Interest, but does not become a Substitute Limited
Partner and desires to make a further assignment of such Limited Partnership
Interest, shall be subject to all the provisions of this Article 9 to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of its Limited Partnership Interest.

 

9.5          Effect of Bankruptcy, Death, Incompetence or Termination of a
Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited
Partner, the death of a Limited Partner or a final adjudication that a Limited
Partner is incompetent (which term shall include, but not be limited to,
insanity) shall not cause the termination or dissolution of the Partnership, and
the business of the Partnership shall continue if an order for relief in a
bankruptcy proceeding is entered against a Limited Partner, the trustee or
receiver of his estate or, if he dies, his executor, administrator or trustee,
or, if he is finally adjudicated incompetent, his committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing his estate property and such power as the bankrupt,
deceased or incompetent Limited Partner possessed to assign all or any part of
his Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.

 

9.6          Joint Ownership of Interests. A Partnership Interest may be
acquired by two individuals as joint tenants with right of survivorship,
provided that such individuals either are married or are related and share the
same home as tenants in common. The written consent or vote of both owners of
any such jointly held Partnership Interest shall be required to constitute the
action of the owners of such Partnership Interest; provided, however, that the
written consent of only one joint owner will be required if the Partnership has
been provided with evidence satisfactory to the counsel for the Partnership that
the actions of a single joint owner can bind both owners under the applicable
laws of the state of residence of such joint owners. Upon the death of one owner
of a Partnership Interest held in a joint tenancy with a right of survivorship,
the Partnership Interest shall become owned solely by the survivor as a Limited
Partner and not as an assignee. The Partnership need not recognize the death of
one of the owners of a jointly-held Partnership Interest until it shall have
received notice of such death. Upon notice to the General Partner from either
owner, the General Partner shall cause the Partnership Interest to be divided
into two equal Partnership Interests, which shall thereafter be owned separately
by each of the former owners.

 

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Article 10

BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS

 

10.1        Books and Records. At all times during the continuance of the
Partnership, the Partners shall keep or cause to be kept at the Partnership’s
specified office true and complete books of account in accordance with generally
accepted accounting principles, including: (a) a current list of the full name
and last known business address of each Partner, (b) a copy of the Certificate
of Limited Partnership and all Certificates of amendment thereto, (c) copies of
the Partnership’s federal, state and local income tax returns and reports, (d)
copies of this Agreement and amendments thereto and any financial statements of
the Partnership for the three most recent years and (e) all documents and
information required under the Act. Any Partner or its duly authorized
representative, upon paying the costs of collection, duplication and mailing,
shall be entitled to inspect or copy such records during ordinary business
hours.

 

10.2        Custody of Partnership Funds; Bank Accounts.

 

(a)          All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or brokerage
institutions as the General Partner shall determine, and withdrawals shall be
made only on such signature or signatures as the General Partner may, from time
to time, determine.

 

(b)          All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner in investment
grade instruments (or investment companies whose portfolio consists primarily
thereof), government obligations, certificates of deposit, bankers’ acceptances
and municipal notes and bonds. The funds of the Partnership shall not be
commingled with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.2(b).

 

10.3        Fiscal and Taxable Year. The fiscal and taxable year of the
Partnership shall be the calendar year.

 

10.4        Annual Tax Information and Report. Within seventy-five (75) days
after the end of each fiscal year of the Partnership, the General Partner shall
furnish to each person who was a Limited Partner at any time during such year
the tax information necessary to file such Limited Partner’s individual tax
returns as shall be reasonably required by law.

 

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10.5        Partnership Representative; Tax Elections; Special Basis
Adjustments.

 

(a)            BBA Audit Rules.

 

(i)            Partnership Representative. The General Partner shall designate
the "Partnership Representative" of the Partnership for purposes of Sections
6221-6241 of the Code as amended by the Bipartisan Budget Act of 2015 and
subsequent legislation, as well as similar state and local legislation
(collectively, the "BBA Audit Rules"). The Partnership Representative shall be
the sole person authorized to represent and act on behalf of the Partnership and
the Partners in connection with an examination or proceeding under the BBA Audit
Rules. If the Partnership Representative is not an individual, the Partnership
Representative shall designate an individual to act as the “designated
individual” for purposes of the BBA Audit Rules. The General Partner shall
require the Partnership Representative to act solely as directed by the General
Partner, and the General Partner shall exercise reasonable business judgment in
determining how the Partnership Representative will act or not act. With respect
to this Section 10.5(a), the General Partner must obtain the written consent of
Special OP Unitholders before acting or not acting in a manner that would
disproportionately and adversely affect Special OP Unitholders. In addition, the
General Partner shall not make a Section 6226 election without previously having
given Special OP Unitholders a reasonable opportunity to avail itself of the
modification procedures under Section 6225(c)(2) of the Code. The General
Partner shall ensure that the Partnership Representative provides timely notice
to the Partners of all communications with the Internal Revenue Service or other
tax agency that are pursuant to the BBA Audit Rules.

 

(ii)           Cooperation. The Partners hereby agree to cooperate and provide
information and documentation that is reasonably requested by the Partnership
Representative with respect to the conduct of an examination or proceeding under
the BBA Audit Rules, including cooperation that will enable the Partnership to
take advantage of the modification procedures provided by Section 6225(c) with
respect to a contemplated adjustment in a proceeding relating to the
Partnership. Such cooperation may include the filing of amended tax returns and
the payment of additional tax.

 

(iii)          Partnership Payments. In the event that the Partnership pays an
imputed underpayment under BBA Audit Rules or an associated amount such as
penalties or interest (collectively, a "Partnership Tax Payment"), the
Partnership Representative shall allocate the Partnership Tax Payment to the
Partners as required under the Code and associated guidance. If no particular
allocation is required, the Partnership Representative shall exercise reasonable
business judgment in making this allocation. Each Partner hereby agrees to
indemnify the Partnership for its allocated share of a Partnership Tax Payment,
plus interest thereon at a rate equal to the long-term applicable Federal rate
under Code Section 1274(d), computed annually, as of the date the Partnership
Tax Payment was made. At the option of the General Partner, the Partnership may
collect the indemnity owed by a Partner under this Section 10.5(a)(iii) by
withholding amounts that otherwise would have been distributed to such Partner
under Section 5. In addition, the General Partner may waive a Partner's
obligation to indemnify the Partnership for its share of a Partnership Tax
Payment so long as this does not reduce the amount that the Partnership will
distribute to the other Partners. If the General Partner waives a Partner's
obligation to indemnify the Partnership for its share of a Partnership Tax
Payment, such share of the Partnership Tax Payment shall be treated as an
expense of the Partnership under Section 704 of the Code.

 

 47 

 

 

(iv)            Adjustments That Do Not Result in an Imputed Underpayment. The
General Partner may use reasonable discretion to make allocations relating to
adjustments under Section 6225(a)(2) of the Code that do not result in an
imputed underpayment.

 

(v)             Lower-Tier Partnerships. If the Partnership invests in an entity
that is treated as a partnership for U.S. federal income tax purposes, and such
entity makes a Partnership Tax Payment or has an adjustment under Section
6225(a)(2) that does not result in an imputed underpayment, the General Partner
is authorized to apply the principles of Sections 10.5(a)(iii) and (iv) with
respect the Partnership's share of that Partnership Tax Payment and any
associated indemnification that the Partnership may pay.

 

(b)           All elections 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 of a transfer of all or any part of the Partnership
Interest of any Partner, the Partnership, at the option of the General Partner,
may elect pursuant to Section 754 of the Code to adjust the basis of the
Partnership’s assets. Notwithstanding anything contained in Article 5 of this
Agreement, any adjustments made pursuant to Section 754 of the Code shall affect
only the successor in interest to the transferring Partner and in no event shall
be taken into account in establishing, maintaining or computing Capital Accounts
for the other Partners for any purpose under this Agreement. Each Partner will
furnish the Partnership with all information necessary to give effect to such
election.

 

10.6        Reports to Limited Partners.

 

(a)            As soon as practicable after the close of each fiscal quarter
(other than the last quarter of the fiscal year), the General Partner shall
cause to be mailed to each Limited Partner a quarterly report containing
financial statements of the Partnership, or of the General Partner if such
statements are prepared solely on a consolidated basis with the General Partner,
for such fiscal quarter, presented in accordance with generally accepted
accounting principles. As soon as practicable after the close of each fiscal
year, the General Partner shall cause to be mailed to each Limited Partner an
annual report containing financial statements of the Partnership, or of the
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, for such fiscal year, presented in accordance with
generally accepted accounting principles. The annual financial statements shall
be audited by accountants selected by the General Partner.

 

 48 

 

 

(b)            Any Partner shall further have the right to a private audit of
the books and records of the Partnership at the expense of such Partner,
provided such audit is made for Partnership purposes and is made during normal
business hours.

 

10.7        Safe Harbor Election. The Partners agree that, in the event the Safe
Harbor Regulation is finalized, the Partnership shall be authorized and directed
to make the Safe Harbor Election and the Partnership and each Partner (including
any person to whom an interest in the Partnership is transferred in connection
with the performance of services) agrees to comply with all requirements of the
Safe Harbor with respect to all interests in the Partnership transferred in
connection with the performance of services while the Safe Harbor Election
remains effective. The Tax Matters Partner shall be authorized to (and shall)
prepare, execute, and file the Safe Harbor Election.

 

Article 11

AMENDMENT OF AGREEMENT; MERGER

 

The General Partner’s consent shall be required for any amendment to this
Agreement. The General Partner, without the consent of the Limited Partners, may
amend this Agreement in any respect or merge or consolidate the Partnership with
or into any other partnership or business entity (as defined in Section 17-211
of the Act) in a transaction pursuant to Section 7.1(c), (d) or (e) hereof;
provided, however, that the following amendments and any other merger,
conversion or consolidation of the Partnership shall require (i) the consent of
Limited Partners holding more than 50% of the Percentage Interests of the
Limited Partners and (ii) in the case of any of the following (b), (c) or (d),
the consent of Limited Partners holding more than 50% of the Special Percentage
Interests of the Limited Partners:

 

(a)            any amendment affecting the operation of the Conversion Factor or
the Redemption Right (except as provided in Section 8.5(d) or 7.1(d) hereof) in
a manner adverse to the Limited Partners;

 

(b)            any amendment that would adversely affect the rights of the
Limited Partners to receive the distributions payable to them hereunder, other
than with respect to the issuance of additional Partnership Units pursuant to
Section 4.2 hereof;

 

(c)            any amendment that would alter the Partnership’s allocations of
profit and loss to the Limited Partners, other than with respect to the issuance
of additional Partnership Units pursuant to Section 4.2 hereof; or

 

(d)            any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the Partnership.

 

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Article 12

GENERAL PROVISIONS

 

12.1        Notices. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.

 

12.2        Survival of Rights. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.

 

12.3        Additional Documents. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents which
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.

 

12.4        Severability. If any provision of this Agreement shall be declared
illegal, invalid, or unenforceable in any jurisdiction, then such provision
shall be deemed to be severable from this Agreement (to the extent permitted by
law) and in any event such illegality, invalidity or unenforceability shall not
affect the remainder hereof.

 

12.5        Entire Agreement. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.

 

12.6        Pronouns and Plurals. When the context in which words are used in
the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.

 

12.7        Headings. The Article headings or sections in this Agreement are for
convenience only and shall not be used in construing the scope of this Agreement
or any particular Article.

 

12.8        Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.

 

12.9        Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware; provided, however, that any
cause of action for violation of federal or state securities laws shall not be
governed by this Section 12.9.

 

 50 

 

  

IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures
to this Third Amended and Restated Limited Partnership Agreement, all as of
February 3, 2020.

 

 GENERAL PARTNER:       INDUSTRIAL PROPERTY TRUST, a  Maryland real estate
investment trust           By: /s/ Thomas G. McGonagle    Name: Thomas G.
McGonagle    Title: Chief Financial Officer

 

 

 

 

  LIMITED PARTNER:               INDUSTRIAL PROPERTY TRUST               By: /s/
Thomas G. McGonagle     Name: Thomas G. McGonagle     Title: Chief Financial
Officer               SPECIAL LIMITED PARTNER:           IPT ADVISOR LLC        
      By: /s/ Evan H. Zucker     Name: Evan H. Zucker     Title: Manager

 

 

 

 

EXHIBIT A

 

As of February 3, 2020

 

 

 

Partner

 

 

Cash Contribution

Agreed Value of
Non-Cash Capital
Contribution

Agreed Value of
Capital
Contribution

Class A
Partnership
Units Special
Partnership
Units Percentage
Interest Special
Percentage
Interest Preferred
Equity
Interest

GENERAL PARTNER:

 

       

 

 

     

Industrial Property Trust

518 17th Street, 17th Floor

Denver, CO 80202

 

$2,000   $2,000

200

 

__ 0.0001% 0% 0%

ORIGINAL LIMITED 

PARTNER:

 

               

Industrial Property Trust

518 17th Street, 17th Floor

Denver, CO 80202

 

$1,860,014,919   $1,860,014,919 177,335,375 __ 99.9999% 0% 0%

SPECIAL LIMITED

PARTNER

               

IPT Advisor LLC

518 17th Street, 17th Floor

Denver, CO 80202

 

$1,000 $10,000,000 $10,001,000 1,000,100 100 0.0000% 100% 100% Totals
$1,860,017,919 $10,000,000 $1,870,017,919 178,335,675 100 100% 100% 100%

 

 

 

 

EXHIBIT B

 

NOTICE OF EXERCISE OF REDEMPTION RIGHT

 

In accordance with Section 8.5 of the Limited Partnership Agreement (the
“Agreement”) of Industrial Property Operating Partnership LP, the undersigned
hereby irrevocably (i) presents for redemption ________ Partnership Units in
Industrial Property Operating Partnership LP in accordance with the terms of the
Agreement and the Redemption Right referred to in Section 8.5 thereof,
(ii) surrenders such Partnership Units and all right, title and interest
therein, and (iii) directs that the Cash Amount or REIT Shares Amount (as
defined in the Agreement) as determined by the General Partner deliverable upon
exercise of the Redemption Right be delivered to the address specified below,
and if REIT Shares (as defined in the Agreement) are to be delivered, such REIT
Shares be registered or placed in the name(s) and at the address(es) specified
below.

 

Dated:________ __, _____       (Name of Limited Partner)              
(Signature of Limited Partner)               (Mailing Address)              
(City) (State) (Zip Code)               Signature Guaranteed by:             If
REIT Shares are to be issued, issue to:    

 

Name:    

 

Social Security     or Tax I.D. Number:    

 

 B-1