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Exhibit 10.1

SECOND AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
RW HOLDINGS NNN OPERATING PARTNERSHIP, LP
 
Rich Uncles NNN Operating Partnership, LP, was formed 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 January 28, 2016. This Second Amended and Restated Limited
Partnership Agreement (“Agreement”) is entered into effective as of December 31,
2019, among RW Holdings NNN REIT, Inc., a Maryland corporation (the “General
Partner”) and the Limited Partners party hereto from time to time. Capitalized
terms used herein but not otherwise defined shall have the meanings given them
in Article 1.
 
WHEREAS, the General Partner and Rich Uncles NNN LP, LLC (the “Original Limited
Partner”) entered into that certain Agreement of Limited Partnership of Rich
Uncles NNN Operating Partnership, LP, dated as of May 24, 2016, pursuant to
which the Partnership was formed (the “Original Agreement”);
 
WHEREAS, the General Partner and the Original Limited Partner entered into an
Amended and Restated Limited Partnership Agreement of the Partnership, dated as
of August 11, 2017 (the “First Amended and Restated Agreement”), to amend and
restate the Original Agreement;
 
WHEREAS, pursuant to that certain Agreement and Plan of Merger by and among the
General Partner, Rich Uncles Real Estate Investment Trust I (“REIT I”), and
Katana Merger Sub, LP, a subsidiary of the General Partner (“Merger Sub”), and
the Partnership, on December 31, 2019, REIT I merged with and into Merger Sub
(the “REIT Merger”), with Merger Sub continuing as the surviving entity;
 
WHEREAS, pursuant to that certain Contribution Agreement by and among the
Partnership, the General Partner, BrixInvest, LLC (“BrixInvest”), and Daisho OP
Holdings, LLC (“Daisho”), BrixInvest and Daisho contributed certain assets to
the Partnership (the “Contribution Transaction”), including all of Daisho’s
right, title, and interest in all of the membership interests in modiv LLC;
 
WHEREAS, on December 31, 2019, a certificate of amendment was filed with the
Delaware Secretary of State, changing the name of the Partnership from “Rich
Uncles NNN REIT Operating Partnership” to “RW Holdings NNN REIT Operating
Partnership;” and
 
WHEREAS, the General Partner and the Limited Partners now desire to amend and
restate the First Amended and Restated Agreement in order to, among other
things, reflect the name change of the Partnership to “RW Holdings NNN REIT
Operating Partnership,” reclassify the existing Partnership Interests into
“Partnership Units” of corresponding Classes, to set forth the terms of the
Class M Units (as defined herein) issued to Daisho in the Contribution
Transaction and the Class P Units (as defined herein) issued to the Key
Employees (as defined herein), (or their Affiliates, as applicable), to admit
Daisho as a Limited Partner, to admit the Key Employees (or their Affiliates, as
applicable) as holders of “profits interests” in the Partnership, to make other
updates to reflect the effects of the Merger and the Contribution Transaction,
and make other conforming changes.
 
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 to
amend and restate the First Amended and Restated Agreement in its entirety and
continue the Partnership as a limited partnership under the Delaware Revised
Uniform Limited Partnership Act, as amended from time to time, as follows: 
 
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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. 
 
Additional Securities means any additional REIT Shares (other than REIT Shares
issued in connection with an exchange pursuant to Section 8.4 hereof) 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). 
 
Adjusted Capital Account means the Capital Account maintained for each Partner
as of the end of each Partnership Year (i) increased by any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the
items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.701-4(b)(2)(ii)(d)(6). The foregoing definition
of Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith. 
 
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, and (iii) to the
extent not included in clause (ii) above, REIT Expenses; 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 (other than this Partnership)
that are owned by the General Partner directly.
 
Affiliate or Affiliated means, as to any other Person, any of the following: 
 
(a) any Person directly or indirectly owning, controlling or holding, with power
to vote, ten percent (10%) or more of the outstanding voting securities of such
other Person;
 
(b) any Person ten percent (10%) or more of whose outstanding voting securities
are directly or indirectly owned, controlled or held, with power to vote, by
such other Person;
 
(c) any Person directly or indirectly controlling, controlled by or under common
control with such other Person;
 
(d) any executive officer, director, trustee or general partner of such other
Person; and
 
(e) any legal entity for which such Person acts as an executive officer,
director, trustee or general partner.
 
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 General Partner and Limited
Partners, number of Partnership Units issued to each of them, and their
respective Capital Contributions as of the date of contribution is set forth on
Exhibit A. 
 
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Agreement means this Second Amended and Restated Limited Partnership Agreement,
as amended, modified supplemented or restated from time to time, as the context
requires. 
 
Articles of Incorporation means the General Partner’s Articles of Incorporation
filed with the Maryland State Department of Assessments and Taxation, as amended
or restated from time to time. 
 
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. 
 
Cash Amount means an amount of cash equal to the product of the Value of one
REIT Share and the REIT Shares Amount on the date of receipt by the General
Partner of a Notice of Exchange. 
 
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.
 
Class C REIT Shares means the REIT Shares classified as Class C common stock in
the Articles of Incorporation.
 
Class C Unit means a Partnership Unit entitling the holder thereof to the rights
of a holder of a Class C Unit as provided in this Agreement.
 
Class M Unit means a Partnership Unit representing a Limited Partnership
Interest issued to Daisho OP Holdings, LLC pursuant to the Contribution
Agreement and having the rights, privileges, limitations, and restrictions
described on Exhibit C.
 
Class P Unit means a Partnership Unit representing a Limited Partnership
Interest issued to Key Employees (or an Affiliate of a Key Employee) pursuant to
the terms of each Key Employee’s (or such Affiliate’s, as the case may be)
restricted unit award agreement and having the rights, privileges, limitations,
and restrictions described on Exhibit D.
 
Class S Offering Expenses means any commissions and fees payable to brokers or
other persons that are related, directly or indirectly, to a Class S Unit.
 
Class S REIT Shares means the REIT Shares classified as Class S common stock in
the Articles of Incorporation.
 
Class S Unit means a Partnership Unit entitling the holder thereof to the rights
of a holder of a Class S Unit as provided in this Agreement.
 
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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. 
 
Common Stockholders means holders of REIT Shares. 
 
Common Unit means a Partnership Unit that is a Class C Unit, Class M Unit, Class
S Unit, or such additional class of units as may be created and designated as
“common units” pursuant to the terms hereof.
 
Contribution Agreement means that certain Contribution Agreement by and among
the Partnership, Daisho OP Holdings, LLC, and various other parties dated
September 19, 2019.
 
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 Exchange 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 Exchange immediately prior to the record date for
such dividend, distribution, subdivision or combination. A separate Conversion
Factor shall be determined for each class of Partnership Units by taking into
account only the outstanding REIT Shares having the same class designation as
the applicable class of Partnership Units.
 
Designated Individual has the meaning set forth in Section 10.5(a) hereof.
 
Distributions means any dividends or other distributions of money or other
property paid by the General Partner to the holders of its REIT Shares,
including dividends that may constitute a return of capital for federal income
tax purposes. 
 
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.
 
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Exchanged REIT Shares has the meaning set forth in Section 7.1(e) hereof.
 
Exchange Right has the meaning provided in Section 8.4(a) hereof. 
 
Exchanging Partner has the meaning provided in Section 8.4(a) hereof. 
 
GAAP means generally accepted accounting principles consistently applied as used
in the United States. 
 
General Partner means RW Holdings NNN REIT, Inc., a Maryland corporation, and
any Person who becomes a substitute or additional General Partner as provided
herein, and any of their successors as General Partner. 
 
General Partnership Interest means a Partnership Interest held by the General
Partner that is a general partnership interest. The number of Common Units held
by the General Partner equal to one percent (1%) of all outstanding Common Units
from time to time is hereby designated as the General Partnership Interest. 
 
Indemnitee means (i) the General Partner or a director, officer or employee of
the General Partner or Partnership, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion. 
 
Independent Director means a director of the General Partner who is not an
officer or employee of the General Partner and meets the requirements for
independence as defined by the General Partner’s Articles of Incorporation. 
 
IRS means the Internal Revenue Service. 
 
Joint Venture or Joint Ventures means those joint venture or general partnership
arrangements in which the General Partner or the Partnership is a co-venturer or
general partner which are established to acquire Properties. 
 
Key Employee means each of Aaron S. Halfacre and Raymond J. Pacini,
collectively, the “Key Employees”.
 
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.  A Limited Partnership Interest may be (but is not required to be)
expressed as a number of Partnership Units. 
 
Listing means the approval of the REIT Shares, issued by the General Partner
pursuant to an effective registration statement, on a National Securities
Exchange. Upon Listing, the shares shall be deemed Listed. 
 
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Loss has the meaning provided in Section 5.1(f) hereof. 
 
National Securities Exchange means any securities exchange registered with the
SEC pursuant to Section 6 of the Securities Exchange Act of 1934, as amended. 
 
Net Sale Proceeds means in the case of a transaction described in clause (a) of
the definition of Sale, the net proceeds of any such transaction less the amount
of all real estate commissions and closing costs paid by the Partnership. In the
case of a transaction described in clause (b) of such definition, Net Sale
Proceeds means the net proceeds of any such transaction less the amount of any
legal and other selling expenses incurred by the Partnership in connection with
such transaction. In the case of a transaction described in clause (c) of such
definition, Net Sale Proceeds means the net proceeds of any such transaction
actually distributed to the Partnership from the Joint Venture less any expenses
incurred by the Partnership in connection with such transaction. In the case of
a transaction or series of transactions described in clause (d) of the
definition of Sale, Net Sale Proceeds means the net proceeds of any such
transaction less the amount of all commissions and closing costs paid by the
Partnership. In the case of a transaction described in clause (e) of such
definition, Net Sale Proceeds means the net proceeds of any such transaction
less the amount of all selling costs and other expenses incurred by the
Partnership in connection with such transaction. Net Sale Proceeds shall also
include, in the case of any lease of a Property consisting of a building only,
any amounts from tenants, borrowers or lessees that the General Partner, in its
capacity as general partner of the Partnership determines, in its discretion, to
be economically equivalent to the proceeds of a Sale. Net Sale Proceeds shall be
calculated after repayment of any outstanding indebtedness secured by the asset
disposed of in the sale.
 
Notice of Conversion means the Notice of Exercise of conversion right
substantially in the form attached as Exhibit E hereto.
 
Notice of Exchange means the Notice of Exercise of Exchange Right substantially
in the form attached as Exhibit B hereto. 
 
Offer has the meaning set forth in Section 7.1(b)(ii) hereof. 
 
Offering means an offering of Stock that is either (a) registered with the SEC,
or (b) exempt from such registration, excluding Stock offered under any employee
benefit plan. 
 
Opt-out Election has the meaning set forth in Section 10.5(c) hereof.
 
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 RW Holdings NNN 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.
 
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 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 the Stockholders of some or all of its portion of such
distribution.
 
Partnership Representative has the meaning set forth in Section 10.5(a) hereof.
 
Partnership Unit means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder, including Class C Units, Class M
Units, Class P Units and Class S Units. Without limitation on the authority of
the General Partner as set forth in Section 4.2 hereof, the General Partner may,
without notification to or consent of the Limited Partners, designate any
Partnership Units, when issued, as Common Units, may establish any other class
of Partnership Units, and may designate one or more series of any class of
Partnership Units. 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.
 
Partnership Year means the fiscal year of the Partnership, which shall be the
calendar year.
 
Percentage Interest means as to a Partner, with respect to any class or series
of Partnership Units held by such Partner, its interest in such class or series
of Partnership Units as determined by dividing the number of Partnership Units
in such class or series owned by such Partner by the total number of Partnership
Units in such class or series then outstanding.  
 
Person means any individual, partnership, limited liability company,
corporation, joint venture, trust or other entity. 
 
Profit has the meaning provided in Section 5.1(f) hereof. 
 
Property or Properties means the real properties or real estate investments
which are acquired by the General Partner either directly or through the
Partnership, Joint Ventures, partnerships or other entities. 
 
Push-out Election has the meaning set forth in Section 10.5(c) hereof.
 
Received REIT Shares has the meaning set forth in Section 7.1(e) 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 real estate investment trust under Sections 856 through 860 of the
Code. 
 
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REIT Expenses means (i) 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, any and all costs, expenses or fees payable to any
director, officer, or employee of the General Partner, (ii) costs and expenses
relating to any Offering and registration of securities or exemption from
registration by the General Partner and all statements, reports, fees and
expenses incidental thereto, including, without limitation, underwriting
discounts and sales commissions applicable to any such Offering of securities,
and any costs and expenses associated with any claims made by any holders of
such securities or any underwriters or placement agents thereof, (iii) costs and
expenses associated with any repurchase of any securities by the General
Partner, (iv) 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 SEC, (v)
costs and expenses associated with compliance by the General Partner with laws,
rules and regulations promulgated by any regulatory body, including the SEC and
any National Securities Exchange, (vi) 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, (vii) costs and expenses incurred by
the General Partner relating to any issuance or redemption of Partnership
Interests, and (viii) 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. 
 
REIT Share means a share of common stock, par value $0.001 per share, in the
General Partner (or successor entity, as the case may be), including Class C
REIT Shares and Class S REIT Shares, the terms and conditions of which are set
forth in the Articles of Incorporation.
 
REIT Shares Amount means a number of REIT Shares equal to the product of the
number of Partnership Units offered for exchange by an Exchanging Partner,
multiplied by the Conversion Factor as adjusted to and including the Specified
Exchange 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 stockholders to subscribe for or purchase REIT Shares,
or any other securities or property (collectively, the “rights”), and the rights
have not expired at the Specified Exchange Date, then the REIT Shares Amount
shall also include the rights issuable to a holder of the REIT Shares Amount of
REIT Shares on the record date fixed for purposes of determining the holders of
REIT Shares entitled to rights. 
 
Sale or Sales means any transaction or series of transactions whereby: (a) the
Partnership sells, grants, transfers, conveys or relinquishes its ownership of
any Property or portion thereof, including the lease of any Property consisting
of the 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 Partnership sells, grants, transfers, conveys or relinquishes its
ownership of all or substantially all of the interest of the Partnership in any
Joint Venture in which it is a co-venturer or partner; (c) any Joint Venture in
which the Partnership is 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 Partnership sells, grants, conveys, or
relinquishes its interest in any asset, or portion thereof, including any event
with respect to any asset which gives rise to a significant amount of insurance
proceeds or similar awards; or (e) the Partnership sells or otherwise disposes
of or distributes all of its assets in liquidation of the Partnership.
 
SEC means the Securities and Exchange Commission. 
 
Securities Act means the Securities Act of 1933, as amended. 
 
Specified Exchange Date means the first business day of the month that is at
least 60 business days after the receipt by the General Partner of a Notice of
Exchange or a Notice of Conversion. 
 
Stock means shares of stock of the General Partner of any class or series,
including REIT Shares, preferred stock or shares-in-trust. 
 
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Stockholders means the registered holders of the General Partner’s Stock. 
 
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. 
 
Surviving General Partner has the meaning set forth in Section 7.1(c) hereof. 
 
Transaction has the meaning set forth in Section 7.1(b) hereof. 
 
Transfer has the meaning set forth in Section 9.2(a) hereof. 
 
Value means, with respect to REIT Shares, the average of the daily market price
of such REIT Share for the ten (10) consecutive trading days immediately
preceding the date of such valuation. The market price for each such trading day
shall be: (i) if the REIT Shares are Listed, the sale price, regular way, on
such day, or if no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, on such day; (ii) if the REIT Shares are not
Listed, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner; or
(iii) if the REIT Shares are not Listed and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than ten (10) days prior to the date in
question) for which prices have been so reported; provided that if there are no
bid and asked prices reported during the ten (10) days prior to the date in
question, the value of the REIT Shares shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount includes rights that a holder of REIT Shares would
be entitled to receive, then the value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
 
ARTICLE 2
PARTNERSHIP FORMATION AND IDENTIFICATION
 
2.1.        Formation. The Partnership was formed as a limited partnership
pursuant to the Act 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 RW
Holdings NNN Operating Partnership, LP. The specified office and place of
business of the Partnership shall be 3080 Bristol Avenue, Suite 550, Costa Mesa,
California 92626. 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
Corp2000, 838 Walker Road, Suite 21-2, Dover, Kent County, Delaware 19904. 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.
 
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2.3.        Partners 
 
(a)          The General Partner of the Partnership is RW Holdings NNN REIT,
Inc., a Maryland corporation. 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 Partnership shall have perpetual duration, 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;
provided that if a General Partner is on the date of such occurrence a
partnership, the dissolution of such General Partner as a result of the
dissolution, death, withdrawal, removal or Event of Bankruptcy of a partner in
such partnership shall not be an event of dissolution of the Partnership if the
business of such General Partner is continued by the remaining partner or
partners, either alone or with additional partners, and such General Partner and
such partners comply with any other applicable requirements of this Agreement;
 
(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);
 
(iii)        The exchange of all Limited Partnership Interests (other than any
of such interests held by the General Partner or Affiliates of the General
Partner) for REIT Shares or the securities of any other entity; or
 
(iv)         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 the Certificate 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.
 
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, the Certificate any and all amendments thereto 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.
 
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2.6.        Certificates Describing Partnership Units. At the request of a
Limited Partner, the General Partner, at its option, may issue a certificate
summarizing the terms of such Limited Partner’s interest in the Partnership,
including the number of Partnership Units owned and the Percentage Interest
represented by such 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 represented by this
certificate are governed by and transferable only in accordance with the
provisions of the Second Amended and Restated Limited Partnership Agreement of
RW Holdings NNN Operating Partnership, LP, as amended from time to time.
 
2.7.       REIT Compliance.  The Partners acknowledge that the General Partner
intends to continue to qualify at all times as a REIT, and that the ability of
the General Partner to qualify as a REIT will depend upon the nature of the
Partnership’s operations. Accordingly, and notwithstanding anything to the
contrary otherwise contained in this Agreement, the business and activities of
the Partnership (including the business and activities of any subsidiary) are
intended to be conducted as if the Partnership were itself a REIT, and in a
manner that will permit the General Partner to maintain its qualification as a
REIT. To this end, the Partnership and its subsidiaries will operate in such a
manner such that the Partnership, assuming it were a REIT, (i) would satisfy the
requirements for an entity to be qualified and taxed as a REIT pursuant to
Sections 856 through 860 of the Code and applicable Regulations related thereto,
and (ii) avoid incurring any taxes under Section 857 or Section 4981.
 
2.8.       REIT Merger.  Notwithstanding any other provision to the contrary in
this Agreement, in no event shall the Partnership take any action that could in
the opinion of the legal counsel of the Partnership cause the REIT Merger to not
qualify as a “reorganization” within the meaning of Section 368(a) of the Code.
 
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, (ii) to enter into any partnership, joint venture 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 cease qualifying as a REIT, the Partners acknowledge that the General
Partner’s current status as a REIT and 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 Articles of Incorporation.
The General Partner 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.
 
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ARTICLE 4
CAPITAL CONTRIBUTIONS AND ACCOUNTS
 
4.1.        Capital Contributions. The General Partner and Limited Partners have
made Capital Contributions to the Partnership in exchange for the Partnership
Interests set forth opposite their names on Exhibit A, as amended from time to
time.
 
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.
 
(a)          Issuances of Additional Partnership Interests.
 
(i)           General. The General Partner is hereby authorized to cause the
Partnership to authorize, create, designate and issue such additional
Partnership Interests in the form of Partnership Units for any Partnership
purpose at any time or from time to time, 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 notification to or the approval of any Limited
Partner. Any additional Partnership Interests issued thereby may be issued in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to any
Common Units, all as shall be determined by the General Partner in its sole and
absolute discretion and without notification to or 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 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, 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 C Units to the General Partner in connection with the issuance of Class C
REIT Shares and shall issue Partnership Interests consisting of Class S Units to
the General Partner in connection with the issuance of Class S 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.
 
(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)          additional Partnership Interests are issued to all Partners holding
Partnership Units in proportion to their respective Percentage Interests.
 
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In addition, the General Partner may acquire Partnership Interests from other
Partners pursuant to this Agreement. In the event that the Partnership issues
Partnership Interests pursuant to this Section 4.2(a), the General Partner shall
make such revisions to this Agreement (without any requirement of receiving
approval of the Limited Partners) as it deems necessary to reflect the issuance
of such additional Partnership Interests and any special rights, powers, and
duties associated therewith.
 
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 net proceeds from the
issuance of such Additional Securities and from any exercise of rights contained
in such Additional Securities, directly through the General Partner, to the
Partnership (without limiting the foregoing, for example, the Partnership shall
issue Limited Partnership Interests consisting of Class C Units to the General
Partner in connection with the issuance of Class C REIT Shares and shall issue
Limited Partnership Interests consisting of Class S Units to the General Partner
in connection with the issuance of Class S 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 by a majority of the Independent Directors (as defined in
the General Partner’s Articles of Incorporation). 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.
For example, in the event the General Partner issues REIT Shares of any class
for a cash purchase price and contributes all of the proceeds of such issuance
to the Partnership, the General Partner shall be issued a number of additional
Partnership Units having the same class designation as the issued REIT Shares
equal to the product of (A) the number of such REIT Shares of that class issued
by the General Partner, the proceeds of which were so contributed, multiplied by
(B) a fraction, the numerator of which is 100%, and the denominator of which is
the Conversion Factor for that class of Partnership Units in effect on the date
of such contribution.
 
(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.
 
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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.
 
4.4.        Capital Accounts. A separate capital account (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 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) a Partnership Interest (other than a de
minimis interest) is granted as consideration for the provision of services to
or for the benefit of the Partnership by an existing Partner acting in a partner
capacity, or by a new Partner acting in a partner capacity in anticipation of
being a Partner, 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 Sections
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 to a percentage equal to the number of
Partnership Units held by such Partner divided by the aggregate number of
Partnership Units outstanding after giving effect to such increase or decrease.
If the Partners’ Percentage Interests are adjusted pursuant to this Section 4.5,
the Profits and Losses 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 Profits and Losses for the taxable year in
which the adjustment occurs. The allocation of Profits and Losses for the
earlier part of the year shall be based on the Percentage Interests before
adjustment, and the allocation of Profits and Losses for the later part of the
year shall be based on the adjusted Percentage Interests.
 
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.
 
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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 and upon a liquidation within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), if any Partner has a deficit Capital Account
(after giving effect to all contributions, distributions, allocations and other
Capital Account adjustments for all taxable years, including the year during
which such liquidation occurs), such Partner shall have no obligation to make
any Capital Contribution to reduce or eliminate the negative balance of such
Partner’s Capital Account.
 
ARTICLE 5
PROFITS AND LOSSES; DISTRIBUTIONS
 
5.1.        Allocation of Profit and Loss.
 
(a)          General. After giving effect to the special allocations set forth
in Sections 5.1(b) and 5.1(c), the Partnership’s Profits and Losses shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided below.
 
(i)           Profits. Profits shall be allocated:
 
(A)         First, to the General Partner to the extent that Losses previously
allocated to the General Partner pursuant to Section 5.1(a)(ii)(C) below exceed
Profits previously allocated to the General Partner pursuant to this Section
5.1(a)(i)(B);
 
(B)         second, to those Partners, including the General Partner, holding
Common Units who have been allocated Losses pursuant to Section 5.1(a)(ii)(A)
below in excess of Profits previously allocated to such Partners pursuant to
this Section 5.1(a)(i)(C) (and as among such Partners, in proportion to their
respective excess amounts); and
 
(C)         third, to the Partners in accordance with their respective
Percentage Interests.
 
(ii)          Losses. Losses shall be allocated:
 
(A)         First, to the Partners, including the General Partner, in accordance
with their respective Percentage Interests, until the Adjusted Capital Account
(ignoring for this purpose any amounts a Partner is obligated to contribute to
the capital of the Partnership or is deemed obligated to contribute pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)(2)) of each Partner is reduced to zero;
and
 
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(B)          second, to the General Partner.
 
(b)          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 that
bears the “economic risk of loss” with respect to the “partner nonrecourse debt”
within the meaning of Regulations Section 1.704-2(b)(4) to which such partner
nonrecourse deduction is 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 nonrecourse liabilities of the
Partnership within the meaning of Regulations Section 1.752-3(a)(3) shall be
such Partner’s Percentage Interest.
 
(c)          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) and 1.704-2(i), 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); provided, that an allocation pursuant to this Section
5.1(c) shall be made only if and to the extent that such Partner would have a
deficit Capital Account balance after all other allocations provided for in
Article 5 have been tentatively made as if this Section 5.1(c) were not in this
Agreement. This Section 5.1(c) is intended to constitute a “qualified income
offset” under Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
 
(d)          Reserved.
 
(e)          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 Loss between the
transferor and the transferee Partner.
 
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(f)          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 specially allocated pursuant
to Sections 5.1(b), 5.1(c) or 5.1(d). All allocations of income, Profit, gain,
Loss and expense (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, in its sole and absolute
discretion, 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.
 
(g)         Curative Allocations. The allocations set forth in Section 5.1(b)
and (c) 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(g). 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) and 5.1(e).
 
(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 General Partner’s
prospectus, 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.  To the extent the Partnership pays any Class S Offering
expenses on behalf of or with respect to any Partner, the amount of such
payments shall constitute an advance by the Partnership to such Partner and
shall be repaid to the Partnership by reducing the amount of the current or next
succeeding distribution or distributions which would otherwise have been made to
such Partner. Alternatively, the General Partner may, in its sole discretion,
treat such advance as a return of capital.
 
(i)          Allocation of Excess Nonrecourse Liabilities. All excess
nonrecourse liabilities of the Partnership shall be allocated in accordance with
such Partner’s “interests in Partnership profits” as defined in Regulations
Section 1.752-3(a)(3).
 
(j)          Allocations to Ensure Intended Results.  Recognizing the complexity
of the allocations pursuant to this Article V, the General Partner is authorized
to modify these allocations (including by making allocations of gross items of
income, gain, loss or deduction rather than allocations of net items) to ensure
that they achieve the intended results, to the extent permitted by Section
704(b) of the Code and the Regulations thereunder.
 
5.2.        Distributions.
 
(a)          Cash Available for Distribution. The Partnership shall distribute
cash (other than Net Sale Proceeds) on a quarterly (or, at the election of the
General Partner, more frequent) basis, in an amount determined by the General
Partner in its sole and absolute discretion, to the holders of the Common Units
(other than the Class M Units and the Class P Units) who are Partners on the
Partnership Record Date with respect to such quarter (or other distribution
period), including the General Partner, in proportion to their respective
Percentage Interests (such calculation to exclude any Percentage Interest held
by the Class M Units and the Class P Units) in the Common Units on the
Partnership Record Date; provided, however, that if a new or existing Partner
acquires an additional Partnership Interest in exchange for a Capital
Contribution on any date other than the next day after a Partnership Record
Date, the cash distribution attributable to such additional Partnership Interest
relating to the Partnership Record Date next following the issuance of such
additional Partnership Interest (or relating to the Partnership Record Date if
such Partnership Interest was acquired on a Partnership Record Date) shall be
reduced in the proportion to (i) the number of days that such additional
Partnership Interest is held by such Partner bears to (ii) the number of days
between such Partnership Record Date (including such Partnership Record Date)
and the immediately preceding Partnership Record Date.
 
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(b)          Net Sale Proceeds. Net Sale Proceeds shall be distributed 100% to
the Partners who are Partners on the Partnership Record Date in accordance with
their respective Percentage Interests on the Partnership Record Date.
 
(c)          Tax Distributions. At the election of the General Partner, the
General Partner may, in its sole and absolute discretion, cause the Partnership
to distribute to the Partners with respect to each fiscal period of the
Partnership an amount of cash (a “Tax Distribution”) which in the good faith
judgment of the General Partner equals (i) the amount of taxable income, if any,
allocable to the Partners in respect of such fiscal period, multiplied by (ii)
the combined maximum federal, state and local income tax rate (such rates being
calculated at the highest rates without regard to such Partner being an
individual or corporate Partner) to be applied with respect to such taxable
income for any Partner (or, if any Partner is a pass-through entity for federal
income tax purposes, any Person owning an equity interest in such Partner)
(“Applicable Tax Rate”), with such distribution to be made to the Partners in
the same proportions that taxable income shall be allocable to the Partners
during such fiscal period. Tax Distributions, if any, shall be made prior to the
Company making any Distributions pursuant to Section 5.2(a).
 
(d)         Withholding; Partnership Loans. 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 excess of the amount required to
be withheld over the actual amount to be distributed 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.
 
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Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to
this Section 5.2(b) 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.
 
(e)          Limitation on Distributions. 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.
 
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 pay stockholder dividends 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 of 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 with positive Capital Accounts
in accordance with their respective positive Capital Account balances. For
purposes of the preceding sentence, the Capital Account of each Partner shall be
determined after all adjustments have been made in accordance with Sections 4.4,
5.1 and 5.2 resulting from Partnership operations and from all sales and
dispositions of all or any part of the Partnership’s assets. 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.
 
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 or any Subsidiary:
 
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(i)           to acquire, purchase, own, operate, lease and dispose of (other
than in a “prohibited transaction” within the meaning of Section
857(b)(6)(B)(iii) of the Code) any real property and any other property or
assets including, but not limited to notes and mortgages, that the General
Partner determines are necessary or appropriate or in the best interests of the
business of the Partnership;
 
(ii)          to develop land, 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 Administrative
Expenses 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 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;
 
(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 available elections for federal, state, or
local income tax purposes, including an election pursuant to Section 754 of the
Code relating to certain adjustments to the basis of the Partnership’s assets;
 
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(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 reasonable
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, limited liability companies, 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;
 
(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.
 
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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.
 
Notwithstanding the foregoing, the Partnership shall not provide for
indemnification for an Indemnitee for any liability or loss suffered by any of
them in contravention of Delaware law and unless all of the following conditions
are met:
 
(i)          The Indemnitee 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)        Such liability or loss was not the result of:
 
(A)         In the case of an Indemnitee who is not an Independent Director,
negligence or misconduct by the Indemnitee; or
 
(B)         In the case of an Independent Director, the gross negligence or
willful misconduct by the Independent Director.
 
Any indemnification pursuant to this Section 6.3 shall be made only out of the
assets of the Partnership.
 
(b)          Notwithstanding the foregoing, the Partnership shall not indemnify
an Indemnitee or any Person acting as a broker-dealer 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 particular
Indemnitee; (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular Indemnitee; or (iii) a
court of competent jurisdiction approves a settlement of the claims against a
particular 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 Securities and Exchange
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.
 
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(c)          The Partnership shall pay or reimburse reasonable legal expenses
and other costs incurred by the Indemnitee in advance of the final disposition
of a proceeding only if (in addition to the procedures required by the Act) all
of the following are satisfied: (a) the proceeding relates to acts or omissions
with respect to the performance of duties or services on behalf of the
Partnership, (b) the legal proceeding was initiated by a third party who is not
a Limited Partner or, if by a Limited Partner acting in his or her capacity as
such, a court of competent jurisdiction approves such advancement, and (c) the
Indemnitee undertakes to repay the amount paid or reimbursed by the Partnership,
together with the applicable legal rate of interest thereon, if it is ultimately
determined that the Indemnitee is not entitled to indemnification.
 
(d)          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.
 
(e)          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.
 
(f)          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.
 
(g)          In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
 
(h)          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.
 
(i)          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.
 
(j)          Neither the amendment nor repeal of this Section 6.3, nor the
adoption or amendment of any other provision of the Agreement inconsistent with
Section 6.3, shall apply to or affect in any respect the applicability with
respect to any act or failure to act which occurred prior to such amendment,
repeal or adoption.
 
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.
 
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(b)          The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership, itself and its stockholders
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 stockholders 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 stockholders 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 stockholders or the Limited Partner shall be resolved in
favor of the stockholders. 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.
 
(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, provided, however, that any such
reimbursement shall not exceed five percent (5%) of the gross income of the
General Partner to the extent that all or any portion of the reimbursement is
treated as a gross income to the REIT.
 
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6.6.        Outside Activities. Subject to the Articles of Incorporation and any
agreements entered into by the General Partner or its Affiliates with the
Partnership or a Subsidiary, any officer, director, employee, agent, trustee,
Affiliate or stockholder of 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, interest 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.
 
(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 and applicable law.
 
(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 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 properties, 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 in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use 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.
 
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6.10.       Miscellaneous. 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 exchanged such REIT Shares (without limiting
the foregoing, for example, the Partnership shall purchase from the General
Partner Partnership Interests consisting of Class C Units in connection with the
exchange of Class C REIT Shares and shall purchase from the General Partner
Partnership Interests consisting of Class S Units in connection with the
exchange of Class S 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. In
the event any REIT Shares are exchanged by the General Partner pursuant to such
offer, the Partnership shall redeem an equivalent number of the General
Partner’s Partnership Units for an equivalent purchase price based on the
application of the Conversion Factor (without limiting the foregoing, for
example, the Partnership shall redeem from the General Partner Partnership
Interests consisting of Class C Units in connection with the exchange of Class C
REIT Shares and shall redeem from the General Partner Partnership Interests
consisting of Class S Units in connection with the exchange of Class S REIT
Shares).
 
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(b), (c) or
(d).
 
(b)          Except as otherwise provided in Section 7.1(c) or (d) hereof or
with respect to the REIT Merger, 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 approval of the holders of a majority of the Common Units
(excluding the Class M Units and the Class P Units) is obtained;
 
(ii)          as a result of such Transaction all Limited Partners will receive
for each Common Unit 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 in
consideration of one 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 fifty percent (50%) of the
outstanding REIT Shares, each holder of Common Units shall be given the option
to exchange its Common Units for the greatest amount of cash, securities, or
other property which a Limited Partner would have received had it (A) exercised
its Exchange Right and (B) sold, tendered or exchanged pursuant to the Offer the
REIT Shares received upon exercise of the Exchange Right immediately prior to
the expiration of the Offer; or
 
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(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) receive 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.
 
(c)          Notwithstanding Section 7.1(b), 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 “Surviving General Partner”), 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
Surviving General Partner in good faith and (ii) the Surviving General Partner
expressly agrees to assume all obligations of the General Partner, as
appropriate, hereunder. Upon such contribution and assumption, the Surviving
General Partner shall have the right and duty to amend this Agreement as set
forth in this Section 7.1(c). The Surviving General Partner 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 or
options, warrants or other rights relating thereto, and to which a holder of
Partnership Units 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 Surviving General Partner also
shall in good faith modify the definition of REIT Shares and make such
amendments to Section 8.4 hereof so as to approximate the existing rights and
obligations set forth in Section 8.4 as closely as reasonably possible. The
above provisions of this Section 7.1(c) shall similarly apply to successive
mergers or consolidations permitted hereunder.
 
In respect of any transaction described in the preceding paragraph, the General
Partner shall use commercially reasonable efforts to structure such transaction
to avoid causing the Limited Partners to recognize gain for federal income tax
purposes by virtue of the occurrence of or their participation in such
transaction, provided such efforts are consistent with the exercise of
the General Partner’s board of directors’ fiduciary duties to the stockholders
of the General Partner under applicable law. Notwithstanding anything herein to
the contrary, if after using such commercially reasonable efforts to avoid
causing the Limited Partners to recognize gain for federal income tax purposes
the General Partner determines, in its sole and absolute discretion, that it (i)
is not possible to structure such transaction to avoid causing the Limited
Partners to recognize gain for federal income tax purposes or (ii) that the
structure required to avoid causing the Limited Partners to recognize gain for
federal income tax purposes would be unduly burdensome to the General Partner,
nothing in this provision shall be construed so as to preclude the General
Partner from proceeding with and consummating such transaction.
 
(d)         Notwithstanding Section 7.1(b),
 
(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
 
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(ii)          the General Partner may engage in Transactions not required by law
or by the rules of any National Securities Exchange on which the REIT Shares are
listed to be submitted to the vote of the holders of the REIT Shares.
 
(e)          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 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.
 
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 the admission of the person to be admitted as a
substitute or additional General Partner is in conformity with the Act, that
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 income tax purposes, or (ii)
the loss of any Limited Partner’s limited liability.
 
7.3.        Effect of Bankruptcy, Withdrawal, Death or Dissolution of a General
Partner.
 
(a)          Upon the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.4(a) hereof) or the death,
withdrawal, removal or dissolution of a General Partner (except that, if a
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.
 
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(b)          Following the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.4(a) hereof) or the death,
withdrawal, removal or dissolution of a General Partner (except that, if a
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 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, dissolution, 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 twenty percent (20%) of the amount of the lower appraisal, the two (2)
appraisers, no later than forty (40) days after the removal of the General
Partner, shall select a third (3rd) 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.
 
(c)          The General Partnership Interest of a removed General Partner,
during the time after default 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).
 
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(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 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.
 
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.        Exchange Right.
 
(a)          Subject to Sections 8.4(b), 8.4(c), 8.4(d), and 8.4(e) and the
provisions of any agreements between the Partnership and one or more holders of
Common Units with respect to Common Units held by them (including, without
limitation, Exhibit C and Exhibit D), each holder of Common Units shall have the
right (the “Exchange Right”) to require the Partnership to redeem on a Specified
Exchange Date all or a portion of the Common Units held by such Limited Partner
at an exchange price equal to and in the form of the Cash Amount to be paid by
the Partnership, provided that such Common Units shall have been outstanding for
at least one year (inclusive of any Partner’s holding period for any Class M
Units or Class P Units converted into Class C Units). The Exchange Right shall
be exercised pursuant to a Notice of Exchange delivered to the Partnership (with
a copy to the General Partner) by the Limited Partner who is exercising the
Exchange Right (the “Exchanging Partner”); provided, however, that the
Partnership shall not be obligated to satisfy such Exchange Right if the General
Partner elects to purchase the Common Units subject to the Notice of Exchange
pursuant to Section 8.4(b); and provided, further, that no holder of Common
Units may deliver more than two (2) Notices of Exchange during each calendar
year. A Limited Partner may not exercise the Exchange Right for less than 1,000
Common Units or, if such Limited Partner holds less than 1,000 Common Units, all
of the Common Units held by such Partner. The Exchanging Partner shall have no
right, with respect to any Common Units so exchanged, to receive any
distribution paid with respect to Common Units if the record date for such
distribution is on or after the Specified Exchange Date. For the avoidance of
doubt, the Exchange Right shall not apply to Class M Units or Class P Units, it
being understood that the Class M Units and the Class P Units must convert to
Class C Units in accordance with the terms of Exhibit C and Exhibit D (as
applicable) prior to exercising the Exchange Right.
 
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(b)          Notwithstanding the provisions of Section 8.4(a), a Limited Partner
that exercises the Exchange Right shall be deemed to have offered to sell the
Common Units described in the Notice of Exchange to the General Partner, and the
General Partner may, in its sole and absolute discretion, elect to purchase
directly and acquire such Common Units by paying to the Exchanging Partner
either the Cash Amount or the REIT Shares Amount, as elected by the General
Partner (in its sole and absolute discretion), on the Specified Exchange Date,
whereupon the General Partner shall acquire the Common Units offered for
exchange by the Exchanging Partner and shall be treated for all purposes of this
Agreement as the owner of such Common Units. Without limiting the foregoing, if
the General Partner elects to purchase such Common Units by paying the REIT
Shares Amount to the Exchanging Partner, the General Partner shall purchase
either (i) Limited Partnership Interests consisting of Class C Units, Class M
Units or Class P Units (in each case, if eligible) which shall be exchanged for
Class C REIT Shares and/or (ii) Limited Partnership Interests consisting of
Class S Units which shall be exchanged for Class S REIT Shares, as applicable. 
The class of the shares purchased by the General Partner and exchanged by the
Exchanging Partner shall be designated on the Notice of Exchange.  If the
General Partner shall elect to exercise its right to purchase Common Units under
this Section 8.4(b) with respect to a Notice of Exchange, it shall so notify the
Exchanging Partner within five (5) Business Days after the receipt by the
General Partner of such Notice of Exchange. Unless the General Partner (in its
sole and absolute discretion) shall exercise its right to purchase Common Units
from the Exchanging Partner pursuant to this Section 8.4(b), the General Partner
shall have no obligation to the Exchanging Partner or the Partnership with
respect to the Exchanging Partner’s exercise of the Exchange Right. In the event
the General Partner shall exercise its right to purchase Common Units with
respect to the exercise of an Exchange Right in the manner described in the
first sentence of this Section 8.4(b), the Partnership shall have no obligation
to pay any amount to the Exchanging Partner with respect to such Exchanging
Partner’s exercise of such Exchange Right, and each of the Exchanging Partner,
the Partnership, and the General Partner, as the case may be, shall treat the
transaction between the General Partner, as the case may be, and the Exchanging
Partner for federal income tax purposes as a sale of the Exchanging Partner’s
Common Units to the General Partner, as the case may be. Each Exchanging Partner
agrees to execute such documents as the General Partner may reasonably require
in connection with the issuance of REIT Shares upon exercise of the Exchange
Right.
 
(c)          Notwithstanding the provisions of Section 8.4(a) and 8.4(b), a
Limited Partner shall not be entitled to exercise the Exchange Right if the
delivery of REIT Shares to such Partner on the Specified Exchange Date by the
General Partner pursuant to Section 8.4(b) (regardless of whether or not the
General Partner would in fact exercise its rights under Section 8.4(b)) would
(i) result in such Partner or any other person owning, directly or indirectly,
REIT Shares in excess of the Ownership Limit (as defined in the Articles of
Incorporation and calculated in accordance therewith), except as provided in the
Articles of Incorporation, (ii) result in REIT Shares being owned by fewer than
100 persons (determined without reference to any rules of attribution), except
as provided in the Articles of Incorporation, (iii) result in the General
Partner being “closely held” within the meaning of Section 856(h) of the Code,
(iv) cause the General Partner to own, directly or constructively, nine and
nine-tenths percent (9.9%) or more of the ownership interests in a tenant within
the meaning of Section 856(d)(2)(B) of the Code (v) cause the General Partner to
be treated as a “successor corporation” to Rich Uncles Real Estate Investment
Trust I, an unincorporated California association, within the meaning of Section
856(g)(3) of the Code, or (vi) 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. The General
Partner, in its sole and absolute discretion, may waive the restriction on
exchange set forth in this Section 8.4(c).
 
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(d)          Any Cash Amount to be paid to an Exchanging Partner pursuant to
this Section 8.4 shall be paid on the Specified Exchange Date; provided,
however, that the General Partner may elect to cause the Specified Exchange Date
to be delayed for up to an additional one hundred eighty (180) days to the
extent required for the General Partner to cause additional REIT Shares to be
issued to provide financing to be used to make such payment of the Cash Amount.
Notwithstanding the foregoing, the General Partner agrees to use commercially
reasonable efforts to cause the closing of the acquisition of exchanged Common
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 Exchange Rights 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, 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 the Partnership being treated as a “publicly traded partnership” under
section 7704 of the Code.
 
(f)          Each Limited Partner covenants and agrees with the General Partner
that all Common Units delivered for exchange shall be delivered to the
Partnership or the General Partner, as the case may be, free and clear of all
liens; and, notwithstanding anything contained herein to the contrary, neither
the General Partner nor the Partnership shall be under any obligation to acquire
Common Units which are or may be subject to any liens. Each Limited Partner
further agrees that, if any state or local property transfer tax is payable as a
result of the transfer of its Common Units to the Partnership or the General
Partner, such Limited Partner shall assume and pay such transfer tax.
 
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 its Partnership Interests
is made as a principal for its 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 it will not sell, assign or
otherwise transfer its 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.
 
9.2.        Restrictions on Transfer of Limited Partnership Interests.
 
(a)          Subject to the provisions of 9.2(b), (c) and (d), no Limited
Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all
or any portion of its 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.
 
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(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 Units pursuant to this Article 9 or pursuant to
an exchange of all of its Common Units pursuant to Section 8.4. 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)          Subject to 9.2(d), (e) and (f) below, a Limited Partner may
Transfer, with the consent of the General Partner, all or a portion of its
Partnership Units 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 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 Units, 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, (iii) in
the opinion of legal counsel for the Partnership, the transfer would cause the
General Partner to be treated as a “successor corporation” to Rich Uncles Real
Estate Investment Trust I, an unincorporated California association, within the
meaning of Section 856(g)(3) of the Code or (iv) 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.
 
(f)          No transfer of any Partnership Units 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
and upon the satisfactory completion of the following:
 
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(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.
 
(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.
 
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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.
 
9.7.         Redemption of Partnership Units. The General Partner will cause the
Partnership to redeem Partnership Units, to the extent it shall have legally
available funds therefor, at any time the General Partner redeems shares of
capital stock in itself. The number and class or series of Partnership Units
redeemed and the redemption price shall equal the number (multiplied by the
Conversion Factor) of shares of capital stock the General Partner redeems and
the redemption price at which the General Partner redeems such shares,
respectively.
 
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.
 
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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. 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.
 
10.5.      Partnership Representative; Tax Elections; Special Basis Adjustments.
 
(a)          The General Partner is hereby designated as the “partnership
representative” of the Partnership within the meaning of Section 6223(a) of the
Code.  If any state or local tax law provides for a partnership representative
or person having similar rights, powers, authority or obligations, the person
designated above shall also serve in such capacity (in any such federal, state
or local capacity, the “Partnership Representative”).  The General Partner may
name a replacement Partnership Representative at any time; provided, however,
that the designated Partnership Representative shall serve as the Partnership
Representative until resignation, death, incapacity, or removal.  In such
capacity, the Partnership Representative shall have all of the rights, authority
and power, and shall be subject to all of the obligations, of a partnership
representative to the extent provided in the Code and the Regulations, and the
Partners hereby agree to be bound by any actions taken by the Partnership
Representative in such capacity.  The Partnership Representative shall represent
the Partnership in all tax matters to the extent allowed by law.  Without
limiting the foregoing, the Partnership Representative is authorized and
required to represent the Partnership (at the Partnership’s expense) in
connection with all examinations of the Partnership’s affairs by tax
authorities, including administrative and judicial proceedings, and to expend
Partnership funds for professional services and costs associated therewith.  Any
decisions made by the Partnership Representative, including, without limitation,
whether or not to settle or contest any tax matter, and the choice of forum for
any such contest, and whether or not to extend the period of limitations for the
assessment or collection of any tax, shall be made in the Partnership
Representative’s sole discretion.  The Partnership Representative (i) shall have
the sole authority to make any elections on behalf of the Partnership permitted
to be made pursuant to the Code or the Regulations promulgated thereunder and
(ii) may, in its sole discretion, make an election on behalf of the Partnership
under Sections 6221(b) or 6226 of the Code as in effect for the first fiscal
year beginning on or after January 1, 2019 and thereafter, (iii) may request a
modification to any assessment of an imputed underpayment, including a
modification for any Partner who is a real estate investment trust or regulated
investment company as defined in Sections 586 and 851, respectively, based on
such Partner making a deficiency dividend pursuant to Section 860 and a
modification based on the tax-exempt status of a reviewed year Partner, and (iv)
may take all actions the Partnership Representative deems necessary or
appropriate in connection with the foregoing.  The Partnership Representative
and any individual who has been appointed as a designated individual with
respect to the Partnership Representative in accordance with Treasury
Regulations Section 301.6223-1(b)(3)(ii) (“Designated Individual”) shall be
reimbursed and indemnified by the Partnership for all claims, liabilities,
losses, costs, damages and expenses, and for reasonable legal and accounting
fees, incurred in connection with the performance of its duties as Partnership
Representative or Designated Individual, as applicable, in accordance with the
terms hereof, unless the actions of the Partnership Representative or the
Designated Individual, as applicable constitute gross negligence or intentional
misconduct.
 
36

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(b)          Each Partner hereby covenants to cooperate with the Partnership
Representative and to do or refrain from doing any or all things reasonably
requested by the Partnership Representative with respect to examinations of the
Partnership’s affairs by tax authorities (including, without limitation,
promptly filing amended tax returns and promptly paying any related taxes,
including penalties and interest) and shall provide promptly and update as
necessary at any times requested by the Partnership Representative, all
information, documents, self-certifications, tax identification numbers, tax
forms, and verifications thereof, that the Partnership Representative deems
necessary in connection with (1) any information required for the Partnership to
determine the application of Sections 6221-6235 of the Code to the Partnership;
(2) an election by the Partnership under Section 6221(b) or 6226 of the Code,
and (3) an audit or a final adjustment of the Partnership by a tax authority. 
The Partnership and the Partners hereby agree and acknowledge that (i) the
actions of the Partnership Representative in connection with examinations of the
Partnership’s affairs by tax authorities shall be binding on the Partnership and
the Partners; and (ii) neither the Partnership nor the Partners have any right
to contact the IRS with respect to an examination of the Partnership or
participate in an audit of the Partnership or proceedings under Sections
6221-6235 of the Code.
 
(c)          The Partners acknowledge that the Partnership intends to elect the
application of Section 6221(b) of the Code (the “Opt-out Election”) for its
first taxable year beginning on or after January 1, 2019 and for each Fiscal
Year thereafter.  If the Partnership is not eligible to make such election, the
Partners acknowledge that the Partnership intends to elect the application of
Section 6226 of the Code (the “Push-out Election”) for its first taxable year
beginning on or after January 1, 2019 and for each Fiscal Year thereafter.  This
acknowledgement applies to each Partner whether or not the Partner owns a
Partnership Interest in both the reviewed year and the year of the tax
adjustment.  If the Partnership elects the application of Section 6226 of the
Code, the Partners shall take into account and report to the IRS (or any other
applicable tax authority) any adjustment to their tax items for the reviewed
year of which they are notified by the Partnership in a written statement, in
the manner provided in Section 6226(b), whether or not the Partner owns a
Partnership Interest at such time.  Any Partner that fails to report its share
of such adjustments on its tax return, shall indemnify and hold harmless the
Partnership, the General Partner, the Partnership Representative, and each of
their Affiliates from and against any and all liabilities related to taxes
(including penalties and interest) imposed on the Partnership as a result of the
Partner’s failure.  In addition, each Partner shall indemnify and hold the
Partnership, the General Partner, the Partnership Representative, and each of
their Affiliates harmless from and against any and all liabilities related to
taxes (including penalties and interest) imposed on the Partnership (i) pursuant
to Section 6221 of the Code, which liabilities relate to adjustments that would
have been made to the tax items allocated to such Partner had such adjustments
been made for a tax year beginning prior to January 1, 2019 (and assuming that
the Partnership had not made an election to have Section 6221 of the Code apply
for such earlier tax years) and (ii) resulting from or attributable to such
Partner’s failure to comply with the preceding subsection (b) or this subsection
(c).  Each Partner acknowledges and agrees that no Partner shall have any claim
against the Partnership, the General Partner, the Partnership Representative, or
any of their Affiliates for any tax, penalties or interest resulting from the
Partnership’s election under Section 6226 of the Code.
 
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(d)          If the Partnership does not make an election under Section 6226 of
the Code, the amount of any imputed underpayment assessed upon the Partnership,
pursuant to Code Section 6232, attributable to a Partner (or former Partner), as
reasonably determined by the Partnership Representative, shall be treated as a
withholding tax with respect to such Partner.  To the extent any portion of such
imputed underpayment cannot be withheld from a current distribution, any such
Partner (or former Partner) shall be liable to the Partnership for the amount
that cannot be withheld and agrees to pay such amount to the Partnership. Any
such amount withheld, or any such payment shall not be treated as a Capital
Contribution for purposes of any provision herein that affects distributions to
the Partners and any amount not paid by any such Partner (or former Partner) at
the time reasonably requested by the Partnership Representative shall accrue
interest at the rate set by the IRS for the underpayment of federal taxes,
compounded quarterly, until paid.
 
(e)          The provisions of this Section 10 shall survive the termination of
the Partnership, the termination of this Agreement and, with respect to any
Partner, the transfer or assignment of any portion of such Partner’s Partnership
Interest.
 
(f)          The Partnership Representative shall use commercially reasonable
efforts to keep the Partners reasonably informed as to the status of any tax
investigations, audits, lawsuits or other judicial or administrative tax
proceedings and shall promptly copy all other Partners on any correspondence to
or from the IRS or applicable state, local or foreign tax authority relating to
such proceedings.  The Partnership Representative shall inform the IRS, as
promptly as possible upon the commencement of any examination or proceeding, of
the tax-exempt status of any Partners and shall take any actions or refrain from
taking any action to the extent necessary to preserve the tax-exempt status of
such Partners and shall afford such Partners tax-free treatment, to the extent
permissible under the Code. The Partnership Representative has an obligation to
perform its duties as the Partnership Representative in good faith and in such
manner as will serve the best interests of the Partnership and all of the
Partners.
 
(g)          The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership as provided in Section 709 of the Code.
 
10.6.      Reports Made Available to Limited Partners.
 
(a)          As soon as practicable after the close of each fiscal quarter
(other than the last quarter of the fiscal year), upon written request by a
Limited Partner to the General Partner, the General Partner will make available,
without cost, 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, upon
written request by a Limited Partner to the General Partner, the General Partner
will make available, without cost, 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.
 
(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 and Forfeiture Allocations.
 
(a) The Partners agree that the General Partner is authorized to make an
election, on behalf of itself and of all Partners, to have the “Safe Harbor” of
Section 3.03 of IRS Notice 2005-43 (or the corresponding provision in any
Revenue Procedure or regulation issued pursuant to such Notice) (the “Safe
Harbor”) apply irrevocably with respect to all Partnership Units transferred in
connection with the performance of services by a Partner in a partner capacity
or in anticipation of becoming a Partner (such election, the “Safe Harbor
Election”).  The Safe Harbor Election shall be effective as of the date hereof. 
The Partnership and each Partner agree 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 by a Partner in a partner capacity
or in anticipation of becoming a Partner, whether such Partner was admitted as a
Partner or as a transferee of a previous Partner.  The General Partner shall
cause the Partnership to comply with all record keeping requirements and other
administrative requirements with respect to the Safe Harbor as shall be required
by proposed or final regulations relating thereto, to the extent the General
Partner so determines in its sole and absolute discretion.
 
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(b) In connection with the Safe Harbor Election, the Partners agree that (i) the
Class P Units are a “Safe Harbor Partnership Interest” within the meaning of
section 3.02 of IRS Notice 2005-43 (or the corresponding provision in any
Revenue Procedure or Treasury Regulation issued pursuant to such Notice)
representing a profits interest received for services rendered or to be rendered
to or for the benefit of the Partnership by the Key Employees (in their (or
their Affiliate’s, as applicable) capacity as Partners for federal income tax
purposes or in anticipation of becoming Partners for federal income tax
purposes), and (ii) the fair market value of the Safe Harbor Partnership
Interest upon receipt by the Key Employees (or their Affiliates, as applicable)
as of the date of issuance is zero, representing the liquidation value of such
interest upon receipt (with such valuation being consented to and approved by
all Partners).
 
(c) Each Partner, by signing this Agreement (or an admission amendment with
respect hereto) or by accepting a Transfer of a Partnership Unit, hereby agrees
(i) to comply with all requirements of the Safe Harbor Election with respect to
any Safe Harbor Partnership Interest while the Safe Harbor Election remains
effective, and (ii) that to the extent that such profits interest is forfeited
after the date hereof and to the extent that allocations of income have been
made to the Key Employees (or their Affiliates, as applicable) with respect
thereto and have not been matched with corresponding allocations of loss or
deduction with respect thereto, or distributions with respect thereto that may
be retained by the Key Employees (or their Affiliates, as applicable), the
Partnership shall make special forfeiture allocations of gross items of
deduction or loss (including, as may be permitted by or under Treasury
Regulations to be adopted, notional items of deduction or loss) in accordance
with IRS Notice 2005-43 and the Treasury Regulations adopted under Sections
704(b) and 83 of the Code.
 
(d) The General Partner shall file or cause the Partnership to file all returns,
reports and other documentation as may be required, as determined by the General
Partner, to perfect and maintain the Safe Harbor Election with respect to
Transfers of any Safe Harbor Partnership Interest without further vote or action
of any other Person.
 
(e) The General Partner hereby is authorized, directed and empowered, without
further vote or action of the Partners or any other Person, to amend the
Agreement as necessary to comply with the Safe Harbor requirements, to the
extent the Safe Harbor Election is utilized, in order to provide for a Safe
Harbor Election and the ability to maintain the same, and shall have the
authority to execute any such amendment by and on behalf of each Partner
pursuant to the power of attorney granted by this Agreement.  Any undertaking by
the Partners necessary to enable or preserve a Safe Harbor Election may be
reflected in such amendments and, to the extent so reflected, shall be binding
on each Partner.
 
(f) Each Partner agrees to cooperate with the General Partner to perfect and
maintain any Safe Harbor Election, and to timely execute and deliver any
documentation with respect thereto reasonably requested by the General Partner
at the expense of the Partnership.
 
(g) No Transfer of any Partnership Units by a Partner shall be effective unless
prior to such Transfer, the assignee or intended recipient of such Partnership
Units shall have agreed in writing to be bound by the provisions of this Section
10.7, in a form satisfactory to the General Partner.
 
39

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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 (including, without limitation, in
connection with the adoption of one more equity compensation arrangements or
plans and the authorization, creation, designation and issuance of one or more
classes or series of equity securities in connection therewith or otherwise) 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(b), (c) or (d) hereof; provided, however, that the
following amendments and any other merger or consolidation of the Partnership
shall require the consent of the General Partner and holders of a majority of
the Common Units (other than the Class M Units and the Class P Units, except as
otherwise provided in Exhibit C or Exhibit D, as applicable):
 
(a)          any amendment affecting the operation of the Conversion Factor or
the Exchange Right or the terms of Exhibit C (except as provided in Section
8.4(d) or 7.1(c) or Exhibit C 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 Interests 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 Interests 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.
 
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.
 
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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
causes of action for violations of federal or state securities laws shall not be
governed by this Section 12.9.
 
[Signatures appear on next page.] 
 
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IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures
to this Second Amended and Restated Limited Partnership Agreement, all as of the
31st day of December, 2019.
 

 
GENERAL PARTNER:
     
RW HOLDINGS NNN REIT, INC.
         
By:
/s/ Aaron S. Halfacre
 

 
Name:
Aaron S. Halfacre
 
Title:
Chief Executive Officer

 
CLASS M LIMITED PARTNER:
     
DAISHO OP HOLDINGS, LLC
     
By:
BrixInvest, LLC
   
Its:
Manager
           
By:
/s/ Aaron S. Halfacre
 

 
Name:
Aaron S. Halfacre
 
Title:
Chief Executive Officer

 
OTHER LIMITED PARTNERS:
     
RICH UNCLES NNN LP, LLC
     
By:
RW Holdings NNN REIT, Inc.
 
Its:
Sole Member
         
By:
/s/ Aaron S. Halfacre
 

 
Name:
Aaron S. Halfacre
 
Title:
Chief Executive Officer

 
/s/ Aaron S. Halfacre
   
Aaron S. Halfacre, in his individual capacity
     
/s/ Raymond J. Pacini
   
The Raymond J. Pacini Trust u/a/d 5/3/01,
Raymond J. Pacini, Trustee

Signature Page to Second Amended and Restated Limited Partnership Agreement of
RW Holdings NNN Operating Partnership, LP
 

--------------------------------------------------------------------------------

EXHIBIT A
 
GENERAL PARTNER AND LIMITED PARTNER,
CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
AS OF DECEMBER 31, 2019
 
Percentage Partner Interest
 
Agreed Value of
Capital
Contribution
   
Number of
Partnership
Units(1)
   
Class of
Partnership Units
 
GENERAL PARTNER:
                 
RW Holdings NNN REIT, Inc.
 
$
242,263,280
     
23,844,811
   

Class C units
 
LIMITED PARTNERS:
                       
Rich Uncles NNN LP, LLC
 
$
0
     
0
     
N/A
 
Daisho OP Holdings, LLC
 
$
33,423,835
     
3,289,748
   

Class M units
 
KEY EMPLOYEES:
                       
Aaron S. Halfacre
 
$
     

200,000
   

Class P units
 
The Raymond J. Pacini Trust u/a/d 5/3/01
 
$
     

80,145
   

Class P units
 
Totals
 
$
275,687,115
     
27,414,704
         

(1)
Assumes units are fully converted at the initial conversion ratio, pursuant to
the terms of the Agreement.

 

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EXHIBIT B
 
NOTICE OF EXERCISE OF EXCHANGE RIGHT
 
In accordance with Section 8.4 of the Second Amended and Restated Limited
Partnership Agreement (the “Agreement”) of RW Holdings NNN Operating
Partnership, LP, the undersigned hereby irrevocably (i) presents for exchange
_____Class _____ Common Units in RW Holdings NNN Operating Partnership, LP, in
accordance with the terms of the Agreement and the Exchange Right referred to in
Section 8.4 thereof, (ii) surrenders such Common Units and all right, title and
interest therein, and (iii) directs that the Cash Amount or REIT Shares Amount
(each as defined in the Agreement) as determined by the General Partner,
deliverable upon exercise of the Exchange 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:
 
 

 

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EXHIBIT C

DESCRIPTION OF CLASS M UNITS

In accordance with Section 4.2(a)(i) of the Agreement, the Partnership has
issued the Class M Units as consideration for the Contributed Assets (as defined
in the Contribution Agreement), contributed by Daisho OP Holdings, LLC
(“Daisho”) to the Partnership.  The initial number of Class M Units shall be
657,949.5.
 
The Class M Units shall have the following terms, rights and restrictions:
 
1.           Limits on Transfer and Exchange.  Notwithstanding anything to the
contrary contained in this Agreement (including but not limited to Section 6 of
this Exhibit C), neither Daisho, the Partnership nor the General Partner shall
be permitted to transfer, convert or exchange the Class M Units until December
31, 2020 (the “Lock Up Period”) or later.
 
2.           No Distribution Rights and No Profit or Loss Allocations.  The
Class M Units are Partnership Units having all of the rights, title and
interests granted to Partnership Units in the Agreement (as modified by this
Exhibit C), provided, however, that the Class M Units are not entitled to (i)
the distributions set forth in Article 5 of the Agreement (excluding any tax
distributions made pursuant to Article 5); (ii) the allocation of any Profit or
Loss of the Partnership (iii) any Exchange Right set forth in Section 8.4 of the
Agreement or (iv) voting rights other than as expressly provided for in this
Exhibit C.  The Class C Units issued in connection with any voluntary or
mandatory conversion of the Class M Units into Class C Units will have all of
the rights, title and interests granted to the Class C Units as set forth in the
Agreement, including the right to cash distributions, the allocation of Profit
or Loss, an Exchange Right and voting rights as set forth in the Agreement. 
Prior to the expiration of the Lock Up Period and at all times thereafter, all
of the General Partner’s real estate assets will be owned, directly or
indirectly, by the Partnership such that cash distributions will be based on the
entire portfolio.
 
3.           No Voting Rights.  The Class M Units shall have no voting or
consent rights.  Notwithstanding the foregoing, the approval of the holders of
Class M Units shall be required for any amendment that adversely impacts the
terms, rights and obligations of the Class M Units as set forth herein.
 
4.           Voluntary Conversion of Class M Units.  Subject to the provisions
of this Exhibit C, each Class M Unit shall be convertible, at the option of the
holder thereof, at any time following the Lock Up Period, and without the
payment of additional consideration by the holder thereof, into Class C Units of
the Partnership initially on a 1:5 basis (the “Class M Conversion Ratio”) on the
Specified Exchange Date; provided, however, that the Class M Conversion Ratio
shall be subject to adjustment as provided in Section 6 and Section 7 of this
Exhibit C.   The conversion right shall be exercised pursuant to a Notice of
Conversion delivered to the Partnership (with a copy to the General Partner) by
the Limited Partner who is exercising the conversion right (the “Converting
Partner”); provided, further, that no holder of Class M Units may deliver more
than two (2) Notices of Conversion during each calendar year. A Limited Partner
may not exercise the conversion right for less than 1,000 Class M Units or, if
such Limited Partner holds less than 1,000 Class M Units, all of the Class M
Units held by such Partner. The Converting Partner shall have no right, with
respect to any Class M Units so exchanged, to receive any distribution paid with
respect to the Class C Units into which such Class M Units convert if the record
date for such distribution is prior to the Specified Exchange Date.
 
Upon any such conversion, the Class M Units surrendered for conversion shall no
longer be entitled to any adjustment to the Class M Conversion Ratio as provided
in Section 7 of this Exhibit C.
 

--------------------------------------------------------------------------------

If at any time or from time to time after the date of this Agreement, the Class
C Units issuable upon the conversion of the Class M Units are changed into the
same or a different number of units of any class or classes of units, whether by
recapitalization, reclassification, merger, consolidation or otherwise, then
following such recapitalization, reclassification, merger, consolidation or
other change, each Class M Unit shall thereafter be convertible in lieu of the
Class C Units into which it was convertible prior to such event into the kind
and amount of securities, cash or other property which a holder of the units of
that number of Class C Units issuable upon conversion of such Class M Units
immediately prior to such recapitalization, reclassification, merger,
consolidation or other change would have been entitled to receive pursuant to
such event, subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.  In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 4 and Section 6 and 7, below, with respect to the rights of the
holders of Class M Units after the capital reorganization to the end that the
provisions of this Section 4 (including the number of Class C Units issuable
upon conversion of the Class M Units) shall be applicable after that event and
be as nearly equivalent as practicable.
 
5.           Mandatory Conversion of Class M Units.  The Class M Units shall be
automatically and mandatorily converted into Class C Units on March 31, 2024
(the “Mandatory Conversion Date”) at the then-applicable Class M Conversion
Ratio.
 
6.           Conversion Prior to Mandatory Conversion Date.  In the event of a
conversion of Class M Units for Class C Units prior to the Mandatory Conversion
Date, such Class M Units shall be exchanged at the rate indicated below,
depending upon the amount of time elapsed:
 
Date of Exchange
Early Conversion Ratio
   
Between December 31, 2020 and
 
December 30, 2021
50% of the Class M Conversion Ratio
   
Between December 31, 2021 and
 
December 30, 2022
60% of the Class M Conversion Ratio
   
Between December 31, 2022 and
 
December 30, 2023
70% of the Class M Conversion Ratio

Further, and for the avoidance of doubt, Class M Units exchanged prior to the
Mandatory Conversion Date will not be entitled to future adjustments in the
Class M Conversion Ratio as provided in Section 7 of this Exhibit C.
 
7.           Adjustments Based on Achievement of Earn-Out Hurdles.  The Class M
Conversion Ratio may be adjusted as follows upon the achievement of the AUM and
AFFO Per Share hurdles set forth below:
 

     
Hurdles
         
AUM
($ in billions)
   
AFFO Per Share
($)
 
Class M
Conversion
Ratio
 
Initial Conversion Ratio
           
1:5.00
 
Fiscal Year 2021
 
$
0.860
   
$
0.59
 
1:5.75
 
Fiscal Year 2022
 
$
1.175
   
$
0.65
 
1:7.50
 
Fiscal Year 2023
 
$
1.551
   
$
0.70
 
1:9.00

The Class M Conversion Ratio will be adjusted as set forth above only if both
the AUM and AFFO Per Share hurdles are met in a given year, which shall be
determined by the General Partner in good faith within the first quarter
following each fiscal year end, and will only be adjusted once in a given year. 
The total amount of Class C Units issued in connection herewith shall not exceed
the initial number of Class M Units issued multiplied by 9.
 

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8.   Additional Definitions.
 
“AFFO Per Share” means Adjusted Funds From Operations which shall be computed
based on the Company’s Consolidated Statements of Cash Flows, contained in its
Annual Report on Form 10-K filed with the SEC, as follows:
 
Net income (loss) from continuing operations, as adjusted for:
 
Plus: Depreciation and amortization
 
Plus: Provision for doubtful accounts
 
Plus: Stock compensation expense
 
Plus (less): Amortization of deferred rents
 
Plus: Amortization of deferred lease incentives
 
Plus: Amortization of deferred financing costs
 
Plus: Amortization of above-market lease intangibles
 
Less: Amortization of below-market lease intangibles
 
Plus: Unrealized loss (gain) on interest rate swap valuation
 
Plus: Amortization of premium (discount) on debt valuation
 
Less: Actual losses from uncollectible accounts, previously reserved
 
Less: (Gains) losses from sales of real estate or other investments
 
Plus: Acquisition fees and due diligence expenses, including abandoned pursuit
costs
 
Plus: Merger and acquisition expenses
 
Plus: Non-recurring impairments of real estate investments
 
Plus: Non-recurring impairments of platform investments
 
Plus: Non-recurring (gains) losses from extinguishment or sale of debt or hedges
 
Plus: Other non-cash charges
 
Plus: Tax expense (benefits) related to excluded gains (losses)
 
Plus: AFFO for platform/investment management business calculated in the same
manner as set forth above

Plus: Adjustments for investments in unconsolidated entities and joint ventures1

“AUM” shall include real estate AUM and AUM of sponsored and managed products.
Real estate AUM shall equal the asset value of all real estate properties
included in the Company’s annual determination of Net Asset Value (“NAV”).
 

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1 It is agreed that the adjustments for investments in unconsolidated entities
are similar to the various adjustments to net income that are set forth above.

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 “Liquidating Gain” means any capital gain realized in connection with the
actual or hypothetical sale of all or substantially all of the assets of the
Partnership, including but not limited to capital gain realized in connection
with an adjustment of Section 704(b) basis of Partnership assets.
 
9.   Capital Account.  Each Partner holding Class M Units shall have an initial
Capital Account.
 
10. Special Allocation. Notwithstanding the provisions of Article 5 of the
Agreement, Liquidating Gain first shall be allocated to the Partners holding
Class M Units and Class P Units with respect to their converted Class M Units or
Class P Units to the extent attributable to the appreciation in the value of the
Partnership assets after the date of issuance of such units.  As a result of the
special allocation, it is intended that the Section 704(b) capital account
attributable to the converted Class M Units shall be equal to the Section 704(b)
capital account for each Class C Unit issued and outstanding as of the date of
the conversion on a pro rata basis.
 
11. Conduct of Business.  Subject to the terms of this Agreement, subsequent to
the Closing of the Transaction, the Partnership and its Affiliates shall have
sole discretion with regard to all matters relating to the operation of the
Partnership and its Affiliates.  Notwithstanding the foregoing, neither the
Partnership nor any of its Affiliates shall intentionally take any action, or
refrain from taking any action, in bad faith for the specific intent to
circumvent the potential adjustments to the Class M Conversion Ratio as set
forth in Section 7 of this Exhibit C.
 
12. Survival and Waiver of Conversion Discount.  Notwithstanding any provision
to the contrary contained in this Agreement, the rights and privileges of each
Partner holding Class M Units shall survive any “Change of Control” of the
Partnership or the General Partner.  For purposes of this Agreement, a “Change
of Control” of the Partnership or the General Partner, as the case may be (the
“Relevant Entity”), shall mean and include any of the following:
 
(i)  a merger or consolidation of the Relevant Entity with or into any other
business entity (except one in which the holders of capital stock or other
equity interests of the Relevant Entity immediately prior to such merger or
consolidation continue to hold at least a majority of the outstanding securities
having the right to vote of the surviving entity); or
 
(ii) the acquisition by any person or any group of persons (other than the
Relevant Entity or any of its direct or indirect subsidiaries) acting together
in any transaction or related series of transactions, of such number of
shares/units of the Relevant Entity’s equity interests as causes such person, or
group of persons, to own beneficially, directly or indirectly, as of the time
immediately after such transaction or series of transactions, 50% or more of the
combined voting power of the shares/units of the Relevant Entity.
 
Upon (i) Change of Control, or a sale, lease, exchange or other transfer of all
or substantially all of the Partnership’s assets, or (ii) any liquidation,
dissolution or winding up of the Partnership (whether voluntary or involuntary)
after the Lock-Up Period and before the Mandatory Conversion Date, the mandatory
conversion of the Class M Units pursuant to Section 5 of this Exhibit C at the
then-applicable Class M Conversion Ratio but without taking into account the
Early Conversion Ratio, shall be accelerated and the Mandatory Conversion Date
shall be treated as the date that is one business day prior to the closing (or
the effectuation) of the relevant transaction.
 
Notwithstanding any provision to the contrary contained in this Agreement, upon
the occurrence of any transaction contemplated by this Section 11, the General
Partner hereby agrees to use its commercially reasonable efforts to consult with
the Partners holding Class M Units (with the Chief Executive Officer of Daisho
as a representative thereof) regarding any change in the conversion ratio
applicable to the relevant transaction, subject to preservation of
attorney-client privilege held by the Partnership and compliance with all third
party confidentiality obligations, in each case as determined by the General
Partner in the exercise of sound business judgment.
 

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13. Amendment.  Notwithstanding the provisions in Article 11 of this Agreement
or any other provision of this Agreement to the contrary, no change,
modification, extension, termination, notice of termination, discharge,
abandonment or waiver of this Exhibit C or any of its provisions, nor any
representation, promise or condition herein, in each case that adversely impacts
the rights, privileges and preferences of the Class M Units, will be binding
upon any party unless made in writing and signed by a majority of the Partners
holding Class M Units.
 
14. Applicability of the Agreement. To the extent not inconsistent with the
terms set forth in this Exhibit C, the Class M Units are subject to the terms of
this Agreement which apply to Limited Partnership Interests and Partnership
Units generally.  All defined terms not otherwise defined herein shall have the
definitions set forth in this Agreement.
 

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EXHIBIT D

DESCRIPTION OF CLASS P UNITS

In accordance with Section 4.2(a)(i) of the Agreement, the Partnership has
issued the Class P Units as consideration for services provided by the Key
Employees to the Partnership.  The initial number of Class P Units shall be
56,029.
 
The Class P Units shall have the following terms, rights and restrictions:
 
1.           Limits on Transfer and Exchange.  Notwithstanding anything to the
contrary contained in this Agreement, no Key Employee, Limited Partner, the
General Partner nor the Partnership shall be permitted to transfer, convert or
exchange the Class P Units until (i) March 31, 2024 or (ii) the date of such
employee’s involuntary termination “without cause” (as such term is defined in
the relevant Key Employee’s (or his or her Affiliate’s, as applicable)
restricted unit award agreement) (clauses (i) and (ii) collectively, the “Class
P Lock Up Period”), or later.
 
2.           No Distribution Rights and No Profit or Loss Allocations.  The
Class P Units are Partnership Units having all of the rights, title and
interests granted to Partnership Units in the Agreement (as modified by this
Exhibit D), provided, however, that the Class P Units are not entitled to (i)
the distributions set forth in Article 5 of the Agreement (excluding any tax
distributions made pursuant to Article 5); (ii) the allocation of any Profit or
Loss of the Partnership, (iii) any Exchange Right set forth in Section 8.4 of
the Agreement or (iv) voting rights other than as expressly provided for in this
Exhibit D.  The Class C Units issued in connection with any voluntary,
involuntary or mandatory conversion of the Class P Units into Class C Units will
have all of the rights, title and interests granted to the Class C Units as set
forth in the Agreement, including the right to cash distributions, the
allocation of Profit or Loss, an Exchange Right and voting rights as set forth
in the Agreement.
 
3.           No Voting Rights.  The Class P Units shall have no voting or
consent rights.  Notwithstanding anything to the contrary contained in this
Agreement, the approval of the holders of Class P Units shall be required for
any amendment to the Agreement that adversely impacts the terms, rights and
obligations of the Class P Units as set forth herein.
 
4.           Voluntary Conversion of Class P Units.  Subject to the provisions
of this Exhibit D, each Class P Unit shall be convertible, at the option of the
holder thereof, at any time following the Class P Lock Up Period, and without
the payment of additional consideration by the holder thereof, into Class C
Units of the Partnership initially on a 1:5 basis (the “Class P Conversion
Ratio”) on the Specified Exchange Date; provided, however, that the Class P
Conversion Ratio shall be subject to adjustment on the same terms and conditions
as set forth in Section 6 and Section 7 of Exhibit C with respect to the Class M
Units.  The conversion right shall be exercised pursuant to a Notice of
Conversion delivered to the Partnership (with a copy to the General Partner) by
the Limited Partner who is exercising the conversion right (the “Converting
Partner”); provided, further, that no holder of Class P Units may deliver more
than two (2) Notices of Conversion during each calendar year. A Limited Partner
may not exercise the conversion right for less than 1,000 Class P Units or, if
such Limited Partner holds less than 1,000 Class P Units, all of the Class P
Units held by such Partner. The Converting Partner shall have no right, with
respect to any Class P Units so exchanged, to receive any distribution paid with
respect to the Class C Units into which such Class P Units convert if the record
date for such distribution is prior to the Specified Exchange Date.
 
Upon any such conversion, the Class P Units surrendered for conversion shall no
longer be entitled to any adjustment to the Class P Conversion Ratio as
referenced in Section 7 of Exhibit C.
 

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If at any time or from time to time after the date of this Agreement, the Class
C Units issuable upon the conversion of the Class P Units are changed into the
same or a different number of units of any class or classes of units, whether by
recapitalization, reclassification, merger, consolidation or otherwise, then
following such recapitalization, reclassification, merger, consolidation or
other change, each Class P Unit shall thereafter be convertible in lieu of the
Class C Units into which it was convertible prior to such event into the kind
and amount of securities, cash or other property which a holder of the units of
that number of Class C Units issuable upon conversion of such Class P Units
immediately prior to such recapitalization, reclassification, merger,
consolidation or other change would have been entitled to receive pursuant to
such event, subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.  In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 4 and Sections 6 and 7 of Exhibit C, with respect to the rights of
the holders of Class P Units after the capital reorganization to the end that
the provisions of this Section 4 (including the number of Class C Units issuable
upon conversion of the Class P Units) shall be applicable after that event and
be as nearly equivalent as practicable.
 
5.           Mandatory Conversion of Class P Units.  The Class P Units shall be
automatically and mandatorily converted into Class C Units on March 31, 2024
(the “Mandatory Conversion Date”) at the then-applicable Class P Conversion
Ratio.
 
6.           Capital Account.  Each Partner holding Class P Units shall have an
initial Capital Account.
 
7.           Profits Interest.  Absent a contrary determination (i) by a court
or other final tax authority or (ii) by the General Partner following the date
hereof based on a change in law governing the taxation of any interest in the
Partnership issued in connection with the performance of services for or for the
benefit of the Partnership, (A) the Partnership and each Partner shall treat
each Class P Unit as a ‘‘profits interest’’ within the meaning of Rev. Proc.
93-27, 1993-2 C.B. 343, as clarified by Rev. Proc. 2001-43, 2001-34 IRB 191; (B)
the Partnership and each Partner shall treat each Partner holding Class P Units
as the owner of such Units from the date such Class P Units are granted until
such Class P Units are forfeited or otherwise disposed of; (iii) the Partnership
and each Partner agree not to claim a deduction (as wages, compensation or
otherwise) for any value attributable to any Class P Units either upon grant or
vesting of the Class P Units; and (iv) the holder of Class P Units agrees not to
transfer or otherwise dispose of such Units within two (2) years of the date
such Units are granted (for avoidance of doubt, a conversion of the Class P
Units into Class C Units shall not be considered a transfer or disposition for
purposes of this Section 7).
 
8.           Special Allocation. Notwithstanding the provisions of Article 5 of
the Agreement, Liquidating Gain first shall be allocated to the Partners holding
Class M Units and Class P Units with respect to their converted Class M Units or
Class P Units to the extent attributable to the appreciation in the value of the
Partnership assets after the date of issuance of such units.  As a result of the
special allocation, it is intended that the Section 704(b) capital account
attributable to the converted Class P Units shall be equal to the Section 704(b)
capital account for each Class C Unit issued and outstanding as of the date of
the conversion on a pro rata basis.
 
9.          Rights upon Liquidation.  Notwithstanding any provision of this
Agreement to the contrary, if, after the conversion of any Class P Unit into a
Class C Unit, the Liquidating Gain from a sale, exchange, merger, liquidation or
other transaction (each a “Capital Event”) is insufficient to cause the
converted Class P Unit to receive an amount of cash or property (at minimum)
equal to the liquidation right for Class C Unit on a unit by unit basis, the
parties hereby acknowledge and agree that each such unit shall nevertheless
receive an amount equal to the liquidation right for Class C Unit on a unit by
unit basis, for each converted Class P Unit (the “Class P Unit Liquidation
Amount”).  Upon the actual liquidation of the Partnership, the cash payment of
the Class P Unit Liquidation Amount shall be treated as (1) a liquidation
distribution from the Partnership to the extent of the section 704(b) capital
account attributable to the converted Class P Units and (2) a guaranteed payment
for U.S. federal income tax purposes for the excess of the Class P Unit
Liquidation Amount in cash over the Section 704(b) capital account balance for
each Partner holding such converted Class P Unit.  For avoidance of doubt, the
Class P Units are subject to all of the terms and conditions set forth in this
Exhibit D prior to conversion and are not entitled to any liquidation right
until conversion.
 

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10.         Survival and Waiver of Conversion Discount.  Notwithstanding any
provision to the contrary contained in this Agreement, the rights and privileges
of each Partner holding Class P Units shall survive on the same terms and
conditions as the rights and privileges of each Partner holding Class M Units in
accordance with Section 12 of Exhibit C of this Agreement.
 
11.         Amendment.  Notwithstanding the provisions in Article 11 of this
Agreement or any other provision of this Agreement to the contrary, no change,
modification, extension, termination, notice of termination, discharge,
abandonment or waiver of this Exhibit D or any of its provisions, nor any
representation, promise or condition herein, in each case that adversely impacts
the rights, privileges and preferences of the Class P Units, will be binding
upon any party unless made in writing and signed by a majority of the Partners
holding Class P Units.
 
12.        Applicability of the Agreement. To the extent not inconsistent with
the terms set forth in this Exhibit D, the Class P Units are subject to the
terms of this Agreement which apply to Limited Partnership Interests and
Partnership Units generally.  All defined terms not otherwise defined herein
shall have the definitions set forth in this Agreement.

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EXHIBIT E
 
NOTICE OF EXERCISE OF CONVERSION RIGHT
 
In accordance with ___Exhibit C or ____ Exhibit D of the Second Amended and
Restated Limited Partnership Agreement (the “Agreement”) of RW Holdings NNN
Operating Partnership, LP, the undersigned hereby irrevocably (i) presents for
conversion _____ Class ____ Units in RW Holdings NNN Operating Partnership, LP,
in accordance with the terms of the Agreement and the conversion right referred
to in Exhibit C/Exhibit D thereof, (ii) surrenders such Common Units and all
right, title and interest therein, and (iii) directs that the number of Class C
Units as calculated pursuant to such Exhibit C/Exhibit D be delivered to the
address specified below, and 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:
     
 
     
Class C Units are to be issued to:
     
Name:
 
 
     
Social Security or Tax I.D. Number:
 
 

 

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