SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

BLUEROCK RESIDENTIAL HOLDINGS, L.P.
(a Delaware limited partnership)

 

 

 

 

TABLE OF CONTENTS

 

      Page         ARTICLE I DEFINED TERMS 1 ARTICLE II FORMATION OF PARTNERSHIP
11 2.01   Formation of the Partnership 11 2.02   Name 12 2.03   Registered
Office and Agent; Principal Office 12 2.04   Term and Dissolution 12 2.05  
Filing of Certificate and Perfection of Limited Partnership 13 2.06  
Certificates Describing Partnership Units 13 ARTICLE III BUSINESS OF THE
PARTNERSHIP 13 ARTICLE IV CAPITAL CONTRIBUTIONS AND ACCOUNTS 14 4.01   Capital
Contributions 14 4.02   Additional Capital Contributions and Issuances of
Additional Partnership Units 14 4.03   Additional Funding 17 4.04   LTIP Units
17 4.05   Conversion of LTIP Units 20 4.06   Capital Accounts 23 4.07  
Percentage Interests 23 4.08   No Interest on Contributions 24 4.09   Return of
Capital Contributions 24 4.10   No Third-Party Beneficiary 24 ARTICLE V PROFITS
AND LOSSES; DISTRIBUTIONS 24 5.01   Allocation of Profit and Loss 24 5.02  
Distribution of Cash 27 5.03   REIT Distribution Requirements 28 5.04   No Right
to Distributions in Kind 28 5.05   Limitations on Return of Capital
Contributions 28 5.06   Distributions Upon Liquidation 28 5.07   Substantial
Economic Effect 29 ARTICLE VI RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL
PARTNER 29 6.01   Management of the Partnership 29 6.02   Delegation of
Authority 31 6.03   Indemnification and Exculpation of Indemnitees 32 6.04  
Liability of the General Partner 33 6.05   Partnership Obligations 34 6.06  
Outside Activities 35 6.07   Employment or Retention of Affiliates 35 6.08  
General Partner Activities 35 6.09   Title to Partnership Assets 36 6.10  
Restrictions on General Partner Authority 36 ARTICLE VII CHANGES IN GENERAL
PARTNER 36 7.01   Transfer of the General Partner’s Partnership Interest 36 7.02
  Admission of a Substitute or Additional General Partner 38

  

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7.03   Effect of Bankruptcy, Withdrawal, Death or Dissolution of General Partner
39 7.04   Removal of General Partner 39 ARTICLE VIII RIGHTS AND OBLIGATIONS OF
THE LIMITED PARTNERS 40 8.01   Management of the Partnership 40 8.02   Power of
Attorney 40 8.03   Limitation on Liability of Limited Partners 41 8.04   Common
Unit Redemption Right 41 8.05   Registration 43 ARTICLE IX TRANSFERS OF
PARTNERSHIP INTERESTS 47 9.01   Purchase for Investment 47 9.02   Restrictions
on Transfer of Partnership Units 48 9.03   Admission of Substitute Limited
Partner 49 9.04   Rights of Assignees of Partnership Units 50 9.05   Effect of
Bankruptcy, Death, Incompetence or Termination of a Limited Partner 51 9.06  
Joint Ownership of Partnership Units 51 ARTICLE X BOOKS AND RECORDS; ACCOUNTING;
TAX MATTERS 51 10.01   Books and Records 51 10.02   Custody of Partnership
Funds; Bank Accounts 52 10.03   Fiscal and Taxable Year 52 10.04   Annual Tax
Information and Report 52 10.05   Tax Matters Partner; Tax Elections; Special
Basis Adjustments 52 ARTICLE XI AMENDMENT OF AGREEMENT 53 11.01   Amendment of
Agreement 53 ARTICLE XII GENERAL PROVISIONS 55 12.01   Notices 55 12.02  
Survival of Rights 55 12.03   Additional Documents 55 12.04   Severability 55
12.05   Entire Agreement 55 12.06   Pronouns and Plurals 56 12.07   Headings 56
12.08   Counterparts 56 12.09   Governing Law 56

 

EXHIBITS

 

EXHIBIT A - Partners, Capital Contributions and Percentage Interests

EXHIBIT B - Notice of Exercise of Common Unit Redemption Right

EXHIBIT C-1 - Certification of Non-Foreign Status (For Redeeming Limited
Partners That Are Entities)

EXHIBIT C-2 - Certification of Non-Foreign Status (For Redeeming Limited
Partners That Are Individuals)

EXHIBIT D - Notice of Election by Partner to Convert LTIP Units into Common
Units

EXHIBIT E - Notice of Election by Partnership to Force Conversion of LTIP Units
into Common Units

 

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SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

BLUEROCK RESIDENTIAL HOLDINGS, L.P.

 

THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF BLUEROCK
RESIDENTIAL HOLDINGS, L.P. (the “Partnership”), dated as of April 2, 2014, is
made and entered into by and among Bluerock Residential Growth REIT, Inc., a
Maryland corporation (together with its successors and assigns, the “General
Partner”), and the Limited Partners set forth on the attached Exhibit A.

 

RECITALS

 

WHEREAS, the Partnership was formed as a limited partnership under the laws of
the State of Delaware, pursuant to a Certificate of Limited Partnership filed
with the Secretary of State of the State of Delaware effective as of August 8,
2008 and an Agreement of Limited Partnership, entered into as of August 8, 2008
(the “Original Agreement”), by and between the General Partner and Bluerock
Enhanced Multifamily Advisor, LLC, a Delaware limited liability company as the
initial limited partner (the “Initial Limited Partner”);

 

WHEREAS, Bluerock REIT Holdings, LLC (“REIT Holdings”) was formed to replace the
Initial Limited Partner;

 

WHEREAS, the General Partner and REIT Holdings amended and restated the Original
Agreement by entering into that certain Amended and Restated Limited Partnership
Agreement of the Partnership dated as of June 2009 (the “A & R Partnership
Agreement”);

 

WHEREAS, the Partners desire to amend and restate the A & R Partnership
Agreement as set forth below; and

 

WHEREAS, capitalized terms used herein but not otherwise defined shall have the
meanings given to such terms in Article I.

  

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between
the parties, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I

DEFINED TERMS

 

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

 

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

 

1

 

 

“Additional Funds” has the meaning set forth in Section 4.03.

 

“Additional Securities” has the meaning set forth in Section 4.02(a)(ii).

 

“Adjustment Events” has the meaning set forth in Section 4.04(a)(i).

 

“Administrative Expenses” means (i) all administrative and operating costs and
expenses incurred by the Partnership, (ii) 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 clauses (i) or (ii), 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 interests
in a Subsidiary that are owned by the General Partner other than through its
ownership interest in the Partnership.

 

“Affiliate” means, (i) any Person that, directly or indirectly, controls or is
controlled by or is under common control with such Person, (ii) any other Person
that owns, beneficially, directly or indirectly, 10% or more of the outstanding
capital stock, shares or equity interests of such Person, or (iii) any officer,
director, employee, partner, member, manager or trustee of such Person or any
Person controlling, controlled by or under common control with such Person
(excluding directors and persons serving in similar capacities who are not
otherwise an Affiliate of such Person). For the purposes of this definition,
“control” (including the correlative meanings of the terms “controlled by” and
“under common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities or partnership interests or otherwise.

 

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

 

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

 

“Board of Directors” means the Board of Directors of the General Partner.

 

“Capital Account” has the meaning provided in Section 4.06.

 

“Capital Account Limitation” has the meaning set forth in Section 4.05(b).

 

“Capital Contribution” means the total amount of cash, cash equivalents, and the
Agreed Value of any Property or other asset contributed or agreed to be
contributed, as the context requires, to the Partnership by each Partner
pursuant to the terms of the 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.

 

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“Cash Amount” means an amount of cash per Common Unit equal to the Value of the
REIT Shares Amount on the date of receipt by the Partnership and the General
Partner of a Notice of Redemption.

 

“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 8.02) 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.

 

“Change of Control” means, as to the General Partner, the occurrence of any of
the following: (i) the sale, lease or transfer, in one or a series of related
transactions, of 80% or more of the assets of the General Partner, taken as a
whole, to any Person or group (within the meaning of Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act, or any successor provision), other than an
Affiliate of the General Partner; or (ii) the acquisition by any Person or group
(within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act,
or any successor provision), including any group acting for the purpose of
acquiring, holding or disposing of securities (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), other than an Affiliate of the General
Partner in a single transaction or in a related series of transactions, by way
of merger, share exchange, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision) of more than 50% of the total voting
power of the voting capital securities of the General Partner.

 

“Charter” means the Second Articles of Amendment and Restatement of the General
Partner filed on March 26, 2014 with the State Department of Assessments and
Taxation of the State of Maryland, as amended, supplemented or restated from
time to time.

 

“Class A REIT Share” means one share of the Class A common stock, par value
$0.01 per share, of the General Partner (or Successor Entity, as the case may
be).

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.
Reference to any particular provision of the Code means that provision in the
Code on the date of this Agreement and any successor provision of the Code.

 

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

 

“Common Partnership Unit Distribution” has the meaning set forth in
Section 4.04(a)(ii).

  

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“Common Redemption Amount” means either the Cash Amount or the REIT Shares
Amount, as selected by the General Partner pursuant to Section 8.04(b).

 

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

 

“Common Unit Economic Balance” has the meaning set forth in Section 5.01(g).

 

“Common Unit Redemption Right” has the meaning provided in Section 8.04(a).

 

“Common Unit Transaction” has the meaning set forth in Section 4.05(f).

 

“Constituent Person” has the meaning set forth in Section 4.05(f).

 

“Conversion Date” has the meaning set forth in Section 4.05(b).

 

“Conversion Factor” means 1.0, provided, however, if 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, however, if 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, if the General
Partner receives a Notice of Redemption after the record date, but before the
effective date of such dividend, distribution, subdivision or combination, the
Conversion Factor shall be determined as if the General Partner had received the
Notice of Redemption immediately before the record date for such dividend,
distribution, subdivision or combination. Notwithstanding the foregoing, no
adjustment shall be made to the Conversion Factor if the number of outstanding
Common Units is otherwise adjusted in the same manner and at the same time as
the adjustment to the number of outstanding REIT Shares.

 

“Conversion Notice” has the meaning set forth in Section 4.05(b).

 

“Conversion Right” has the meaning set forth in Section 4.05(a).

 

4

 

 

“Defaulting Limited Partner” means a Limited Partner that has failed to pay any
amount owed to the Partnership under a Partnership Loan within 15 days after
demand for payment thereof is made by the Partnership.

 

“Distributable Amount” has the meaning set forth in Section 5.02(d).

 

“Economic Capital Account Balances” has the meaning set forth in
Section 5.01(g).

 

“Equity Incentive Plan” means any equity incentive or compensation plan
hereafter adopted by the Partnership or the General Partner, including, without
limitation, the General Partner’s 2014 Equity Incentive Plan for Individuals and
2014 Equity Incentive Plan for Entities.

 

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

 

“Excepted Holder Limit” has the meaning set forth in the Charter.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Forced Conversion” has the meaning set forth in Section 4.05(c).

 

“Forced Conversion Notice” has the meaning set forth in Section 4.05(c).

 

“General Partner” has the meaning set forth in the first paragraph of this
Agreement.

 

“General Partner Loan” means a loan extended by the General Partner to a
Defaulting Limited Partner in the form of a payment on a Partnership Loan by the
General Partner to the Partnership on behalf of the Defaulting Limited Partner.

 

“General Partnership Interest” means the Partnership Interest held by the
General Partner in its capacity as the general partner of the Partnership, which
Partnership Interest is an interest as a general partner under the Act. The
General Partnership Interest may be expressed as a number of Partnership Units.
A number of Common Units held by the General Partner equal to one-tenth of one
percent (0.1%) of all outstanding Partnership Units shall be deemed to be the
General Partnership Interest. All other Partnership Units owned by the General
Partner and any Partnership Units owned by any Affiliate or Subsidiary of the
General Partner shall be considered to constitute a Limited Partnership
Interest.

 

5

 

 

“Indemnified Party” has the meaning set forth in Section 8.05(e)

 

“Indemnifying Party” has the meaning set forth in Section 8.05(e).

 

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

 

“Independent Director” means a director of the General Partner who meets the
NYSE requirements for an independent director as set forth from time to time.

 

“Initial Limited Partner” has the meaning set forth in the Recitals hereto.

 

“Initial Redemption Shares” has the meaning set forth in Section 8.05(a).

 

“Initial Registration Statement” has the meaning set forth in Section 8.05(a).

 

“Investment Allocation Agreement” means that certain Investment Allocation
Agreement dated as of April 1, 2014, by and among the General Partner, the
Partnership, the Manager and Bluerock Real Estate, L.L.C.

 

“Limited Partner” means any Person named as a Limited Partner on the attached
Exhibit A, as it may be amended or restated from time to time, and any Person
who becomes a Substitute Limited Partner or any additional Limited Partner, in
such Person’s capacity as a Limited Partner in the Partnership.

 

“Limited Partnership Interest” means a Partnership Interest held by a Limited
Partner at any particular time representing a fractional part of the Partnership
Interest of all Limited Partners, and includes any and all benefits to which the
holder of such a Limited Partnership Interest 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.
Limited Partnership Interests may be expressed as a number of Common Units, LTIP
Units or other Partnership Units.

 

“Liquidating Gains” has the meaning set forth in Section 5.01(g).

 

“LTIP Unit” means a Partnership Unit which is designated as an LTIP Unit and
which has the rights, preferences and other privileges designated in
Section 4.04 and elsewhere in this Agreement in respect of holders of LTIP
Units. The allocation of LTIP Units among the Partners shall be set forth on
Exhibit A, as it may be amended or restated from time to time.

 

6

 

 

“LTIP Unitholder” means a Partner that holds LTIP Units.

 

“Loss” has the meaning provided in Section 5.01(h).

 

“Majority in Interest” means the Limited Partners holding more than fifty
percent (50%) of the Percentage Interests of the Limited Partners.

 

“Management Agreement” means that certain Management Agreement dated as of April
1, 2014 by and among the General Partner, the Partnership and the Manager.

 

“Manager” means BRG Manager, LLC, Delaware limited liability company.

 

“Notice of Redemption” means the Notice of Exercise of Common Unit Redemption
Right substantially in the form attached as Exhibit B.

 

“NYSE” means the New York Stock Exchange.

 

“Offer” has the meaning set forth in Section 7.01(c)(ii).

 

“Offering” means the underwritten initial public offering of Class A REIT Shares
by the General Partner.

 

“Original Agreement” has the meaning set forth in the Recitals hereto.

 

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

 

“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” has the meaning set forth in the first paragraph of this
Agreement.

 

“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. A Partnership Interest
may be expressed as a number of Common Units, LTIP Units or other Partnership
Units.

 

“Partnership Loan” means a loan from the Partnership to the Partner on the day
the Partnership pays over the excess of the Withheld Amount over the
Distributable Amount to a taxing authority.

 

7

 

 

“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 5.02, which record date
shall be the same as the record date established by the General Partner for a
distribution to its shareholders of some or its entire portion of such
distribution.

 

“Partnership Unit” means a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder, and includes Common Units, LTIP
Units and any other class or series of Partnership Units that may be established
after the date of this Agreement. The number of Partnership Units outstanding
and the Percentage Interests represented by such Partnership Units are set forth
on Exhibit A, as it may be amended or restated from time to time. The ownership
of Partnership Units may be evidenced by a certificate in a form approved by the
General Partner.

 

“Percentage Interest” means the percentage determined by dividing the number of
Common Units of a Partner by the aggregate number of Common Units of all
Partners, treating LTIP Units as Common Units for this purpose in accordance
with Section 4.04(a).

 

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

 

“Profit” has the meaning provided in Section 5.01(h).

 

“Property” means any property or other investment in which the Partnership,
directly or indirectly, holds an ownership interest.

 

“Redeeming Limited Partner” has the meaning provided in Section 8.04(a).

 

“Redemption Shares” has the meaning provided in Section 8.05(a).

 

“Registration Statement” has the meaning provided in Section 8.05(a).

 

“Regulations” means the Federal Income Tax Regulations validly issued 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 of this Agreement and any successor provision of the
Regulations.

 

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

 

8

 

 

“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 these purposes, be included
within the definition of the 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 public offering and registration, or private offering,
of securities by the General Partner, and all statements, reports, fees and
expenses incidental thereto, including, without limitation, underwriting
discounts and selling commissions applicable to any such offering 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
Commission, (v) costs and expenses associated with compliance by the General
Partner with laws, rules and regulations promulgated by any regulatory body,
including the Commission and any securities exchange, (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 issuing 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 one share of common stock, par value $0.01 per share, of the
General Partner (or Successor Entity, as the case may be), including without
limitation the General Partner’s Class A REIT Shares and shares of the General
Partner’s Class B common stock.

 

“REIT Shares Amount” means the number of Class A REIT Shares equal to the
product of (X) the number of Common Units offered for redemption by a Redeeming
Limited Partner, multiplied by (Y) the Conversion Factor as adjusted to and
including the Specified Redemption Date; provided that in the event the General
Partner issues to all holders of Class A REIT Shares rights, options, warrants
or convertible or exchangeable securities entitling the holders of Class A REIT
Shares to subscribe for or purchase additional Class A REIT Shares, or any other
securities or property (collectively, the “Rights”), and such Rights have not
expired at the Specified Redemption Date, then the Class A REIT Shares Amount
shall also include such Rights issuable to a holder of the Class A REIT Shares
on the record date fixed for purposes of determining the holders of Class A REIT
Shares entitled to Rights.

 

“Restriction Notice” has the meaning set forth in Section 8.04(f).

 

“Rights” has the meaning set forth in the definition of “REIT Shares Amount”
contained herein.

 

“S-3 Eligible Date” has the meaning provided in Section 8.05(a).

 

“Safe Harbor” has the meaning set forth in Section 10.05(d)

 

9

 

 

“Safe Harbor Election” has the meaning set forth in Section 10.05(d).

 

“Safe Harbor Interests” has the meaning set forth in Section 10.05(d).

 

“Secondary Market Safe Harbors” has the meaning set forth in Section 9.02(f).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Service” means the Internal Revenue Service.

 

“Share Ownership Limit” means the Aggregate Share Ownership Limit and the Common
Share Ownership Limit, each as defined in the Charter.

 

“Specified Redemption Date” means the date that is three business days following
the General Partner’s receipt of a Notice of Redemption.

 

“Subsequent Redemption Shares” has the meaning set forth in Section 8.05(a).

 

“Subsidiary” or “Subsidiaries” 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 or limited liability company in
which the General Partner, the Partnership, or a wholly owned subsidiary of the
General Partner or the Partnership owns a partnership or limited liability
company interest.

 

“Substitute Limited Partner” means any Person admitted to the Partnership as a
Limited Partner pursuant to Section 9.03.

 

“Successor Entity” has the meaning set forth in the definition of “Conversion
Factor” contained herein.

 

“Survivor” has the meaning set forth in Section 7.01(d).

 

“Tax Matters Partner” has the meaning set forth within Section 6231(a)(7) of the
Code.

 

“Trading Day” means a day on which the principal national securities exchange on
which a security is listed or admitted to trading is open for the transaction of
business or, if a security is not listed or admitted to trading on any national
securities exchange, shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.

 

“Transaction” has the meaning set forth in Section 7.01(c).

 

“Transfer” has the meaning set forth in Section 9.02(a).

 

10

 

 

“TRS” means a taxable REIT subsidiary (as defined in Section 856(l) of the Code)
of the General Partner.

 

“Two Thirds Majority” means the Limited Partners holding more than Sixty-Six and
Sixty-Six Hundredths percent (66.66%) of the Percentage Interests of the Limited
Partners.

 

“Unvested LTIP Units” has the meaning set forth in Section 4.04(c).

 

“Value” means, with respect to any security, the average of the daily market
price of such security for the ten consecutive Trading Days immediately
preceding the date of such valuation. The market price for each such Trading Day
shall be: (i) if the security is listed or admitted to trading on the NYSE or
any national securities exchange, the last reported 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 security is not
listed or admitted to trading on the NYSE or any national securities exchange,
the last reported sale price on such day or, if no sale takes place on such day,
the average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or (iii) if the
security is not listed or admitted to trading on the NYSE or any national
securities exchange and no such last reported sale price or closing bid and
asked prices are available, the average of the reported high bid and low asked
prices on such day, as reported by a reliable quotation source designated by the
General Partner, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than ten days before 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 days before the date in question, the value of the security 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. If security includes any Rights, 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.

 

“Vested LTIP Units” has the meaning set forth in Section 4.04(c).

 

“Vesting Agreement” means each or any, as the context implies, agreement or
instrument entered into by an LTIP Unitholder upon acceptance of an award of
LTIP Units under an Equity Incentive Plan.

 

“Withheld Amount” means any amount required to be withheld by the Partnership to
pay over to any taxing authority as a result of any allocation or distribution
of income to a Partner.

 

ARTICLE II

FORMATION OF PARTNERSHIP

 

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

 

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

 

2.03         Registered Office and Agent; Principal Office. The address of the
registered office of the Partnership in the State of Delaware is located at 160
Greentree Drive, Suite 101, Dover, 19904 and the registered agent for service of
process on the Partnership in the State of Delaware at such registered office is
National Registered Agents, Inc., a Delaware corporation. The principal office
of the Partnership is located at 712 Fifth Avenue, 9th Floor, New York, New York
10019, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems necessary or desirable.

 

2.04         Term and Dissolution.

 

(a)            The term of the Partnership shall continue in full force and
effect until 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 7.03(b); 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 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 installment
obligations are paid in full);

 

(iii) the redemption of all Limited Partnership Interests (other than any such
Limited Partnership Interests held by the General Partner or its subsidiaries),
unless the General Partner determines to continue the term of the Partnership by
the admission of one or more additional Limited Partners; or

 

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(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 7.03(b)), the General Partner (or
its director, 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 5.06. 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.

 

2.05         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 and 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.

 

2.06         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 class or series and 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
determined by the General Partner, (ii) shall not be negotiable and (iii) shall
bear a legend substantially similar 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 AGREEMENT OF LIMITED PARTNERSHIP OF BLUEROCK RESIDENTIAL
HOLDINGS, LP AS AMENDED, SUPPLEMENTED OR RESTATED FROM TIME TO TIME.

 

ARTICLE III

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, or the Board of Directors determines, pursuant to Section 7.7 of the
Charter, that the General Partner shall no longer 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 has elected REIT status
and intends to continue to elect REIT status 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 or revoke its
status as a REIT under the Code at any time. 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”
taxable as a corporation for purposes of Section 7704 of the Code.

 

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ARTICLE IV

CAPITAL CONTRIBUTIONS AND ACCOUNTS

 

4.01         Capital Contributions. The General Partner and each Limited Partner
has made a capital contribution to the Partnership in exchange for the
Partnership Units set forth opposite such Partner’s name on Exhibit A, as it may
be amended or restated from time to time by the General Partner to the extent
necessary to reflect accurately sales, exchanges or other Transfers,
redemptions, Capital Contributions, the issuance of additional Partnership Units
or similar events having an effect on a Partner’s ownership of Partnership
Units.

 

4.02         Additional Capital Contributions and Issuances of Additional
Partnership Units. Except as provided in this Section 4.02 or in Section 4.03,
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, which may be deemed Capital Contributions
of REIT Holdings at the discretion of the General Partner, from time to time,
and receive additional Partnership Interests, in the form of Partnership Units,
in respect thereof, in the manner contemplated in this Section 4.02.

 

(a)          Issuances of Additional Partnership Units.

 

(i) General. As of the effective date of this Agreement, the Partnership shall
have two classes of Partnership Units, entitled “Common Units” and “LTIP Units.”
The General Partner is hereby authorized to cause the Partnership to issue
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 the approval of any Limited Partners. The
General Partner’s determination that consideration is adequate shall be
conclusive insofar as the adequacy of consideration relates to whether the
Partnership Units are validly issued and fully paid. Any additional Partnership
Units 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 the then-outstanding Partnership Units held
by the Limited Partners, all as shall be determined by the General Partner in
its sole and absolute discretion and without the approval of any Limited
Partner, subject to Delaware law, including, without limitation, (i) the
allocations of items of Partnership income, gain, loss, deduction and credit to
each such class or series of Partnership Units; (ii) the right of each such
class or series of Partnership Units to share in Partnership distributions; and
(iii) the rights of each such class or series of Partnership Units upon
dissolution and liquidation of the Partnership; provided, however, that no
additional Partnership Units shall be issued to the General Partner (or any
direct or indirect wholly owned Subsidiary of the General Partner, including
without limitation REIT Holdings) unless:

 

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(1) (A) the additional Partnership Units are issued in connection with an
issuance of REIT Shares of or other interests in the General Partner, which
shares or interests have designations, preferences and other rights, all such
that the economic interests are substantially similar to the designations,
preferences and other rights of the additional Partnership Units issued to the
General Partner (or any direct or indirect wholly owned Subsidiary of the
General Partner) by the Partnership in accordance with this Section 4.02 and
(B) the General Partner (or any direct or indirect wholly owned Subsidiary of
the General Partner) shall make a Capital Contribution to the Partnership in an
amount equal to the cash consideration received by the General Partner from the
issuance of such REIT Shares or other interests in the General Partner;

 

(2) (A) the additional Partnership Units are issued in connection with an
issuance of REIT Shares of or other interests in the General Partner pursuant to
a taxable share dividend declared by the General Partner, which shares or
interests have designations, preferences and other rights, all such that the
economic interests are substantially similar to the designations, preferences
and other rights of the additional Partnership Units issued to the General
Partner (or any direct or indirect wholly owned Subsidiary of the General
Partner) by the Partnership in accordance with this Section 4.02, (B) if the
General Partner allows the holders of its REIT Shares to elect whether to
receive such dividend in REIT Shares, other interests of the General Partner or
cash, the Partnership will give the Limited Partners (excluding the General
Partner or any direct or indirect Subsidiary of the General Partner) the same
election to elect to receive (I) Partnership Units or cash or, (II) at the
election of the General Partner, REIT Shares or cash, and (C) if the Partnership
issues additional Partnership Units pursuant to this Section 4.02(a)(i)(2), then
an amount of income equal to the value of the Partnership Units received will be
allocated to those holders of Common Units that elect to receive additional
Partnership Units;

 

(3) the additional Partnership Units are issued in exchange for property owned
by the General Partner (or any direct or indirect wholly owned Subsidiary of the
General Partner) with a fair market value, as determined by the General Partner,
in good faith, equal to the value of the Partnership Units; or

 

(4) Common Units are issued to all Partners owning Common Units or LTIP Units in
proportion to their respective Percentage Interests.

 

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

 

15

 

 

(ii) Upon Issuance of Additional Securities. The General Partner shall not issue
any additional REIT Shares (other than (i) REIT Shares issued in connection with
an exchange pursuant to Section 8.04, (ii) Class A REIT Shares issued upon a
conversion in accordance with Section 5.2.6 of the Charter, (iii) REIT Shares
issued in a taxable share dividend as described in Section 4.02(a)(i)(2)), or
(iv) Rights (collectively, “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 (or any direct or indirect wholly owned Subsidiary of the
General Partner, including without limitation REIT Holdings) Partnership Units
or Rights 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 (or any direct or indirect wholly owned
Subsidiary of the General Partner, including without limitation REIT Holdings)
contributes the proceeds from the issuance of such Additional Securities and
from any exercise of Rights contained in such Additional Securities to the
Partnership; provided, however, that the General Partner is allowed to issue
Additional Securities in connection with an acquisition of 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 by a majority of the
Independent Directors. Without limiting the foregoing, the General Partner is
expressly authorized to issue Additional Securities for less than fair market
value, and the General Partner is authorized to cause the Partnership to issue
to the General Partner (or any direct or indirect wholly owned Subsidiary of the
General Partner) corresponding Partnership Units, 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 and (y) the General Partner (or any
direct or indirect wholly owned Subsidiary of the General Partner, including
without limitation REIT Holdings) contributes all proceeds from such issuance to
the Partnership, including without limitation, the issuance of REIT Shares and
corresponding Partnership Units pursuant to a share purchase plan providing for
purchases of REIT Shares at a discount from fair market value or pursuant to
share awards, including share 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 restricted or other share awards approved by the
Board of Directors. For example, in the event the General Partner issues REIT
Shares for a cash purchase price and the General Partner (or any direct or
indirect wholly owned Subsidiary of the General Partner, including without
limitation REIT Holdings) contributes all of the proceeds of such issuance to
the Partnership as required hereunder, the General Partner (or any direct or
indirect wholly owned Subsidiary of the General Partner, including without
limitation REIT Holdings) shall be issued a number of additional Partnership
Units equal to the product of (A) the number of such REIT Shares 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 in effect on the date of such contribution.

 

(b)          Certain Contributions of Proceeds of Issuance of REIT Shares. In
connection with any and all issuances of REIT Shares, the General Partner (or
any direct or indirect wholly owned Subsidiary of the General Partner, including
without limitation REIT Holdings) shall make Capital Contributions to the
Partnership of the proceeds therefrom, provided that if the proceeds actually
received and contributed by the General Partner (or any direct or indirect
wholly owned Subsidiary of the General Partner, including without limitation
REIT Holdings) are less than the gross proceeds of such issuance as a result of
any underwriter’s discount, commissions, placement fees or other expenses paid
or incurred in connection with such issuance, then the General Partner (or any
direct or indirect wholly owned Subsidiary of the General Partner, including
without limitation REIT Holdings) shall be deemed to have made a Capital
Contribution to the Partnership in the amount equal to the sum of the net
proceeds of such issuance plus the amount of such underwriter’s discount,
commissions, placement fees or other expenses paid by the General Partner and
the Partnership shall be deemed simultaneously to have reimbursed such discount,
commissions, placement fees and expenses as an Administrative Expense for the
benefit of the Partnership for purposes of Section 6.05(b)).

 

16

 

 

(c)          Repurchases of General Partner Securities. If the General Partner
shall repurchase shares of any class of its shares of beneficial interest, all
costs incurred in connection with such repurchase shall be reimbursed to the
General Partner by the Partnership pursuant to Section 6.05 and the General
Partner simultaneously shall cause the Partnership to redeem an equivalent
number of Partnership Units of the appropriate class or series held by the
General Partner, or by the General Partner in its capacity as a Limited Partner,
(which, in the case of REIT Shares, shall be a number equal to the quotient of
the number of such REIT Shares divided by the Conversion Factor).

 

4.03         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.

 

4.04         LTIP Units.

 

(a)            Issuance of LTIP Units. The General Partner may from time to time
cause the Partnership to issue LTIP Units to Persons who provide services to the
Partnership or the General Partner, for such consideration as the General
Partner may determine to be appropriate, and admit such Persons as Limited
Partners. Subject to the following provisions of this Section 4.04 and the
special provisions of Sections 4.05 and 5.01(g), LTIP Units shall be treated as
Common Units, with all of the rights, privileges and obligations attendant
thereto. For purposes of computing the Partners’ Percentage Interests, holders
of LTIP Units shall be treated as Common Unit holders and LTIP Units shall be
treated as Common Units. In particular, the Partnership shall maintain at all
times a one-to-one correspondence between LTIP Units and Common Units for
conversion, distribution and other purposes, including, without limitation,
complying with the following procedures:

 

17

 

 

(i) If an Adjustment Event occurs, then the General Partner shall make a
corresponding adjustment to the LTIP Units to maintain a one-for-one conversion
and economic equivalence ratio between Common Units and LTIP Units. The
following shall be “Adjustment Events”: (A) the Partnership makes a distribution
on all outstanding Common Units in Partnership Units, (B) the Partnership
subdivides the outstanding Common Units into a greater number of units or
combines the outstanding Common Units into a smaller number of units, or (C) the
Partnership issues any Partnership Units in exchange for its outstanding Common
Units by way of a reclassification or recapitalization of its Common Units. If
more than one Adjustment Event occurs, the adjustment to the LTIP Units need be
made only once using a single formula that takes into account each and every
Adjustment Event as if all Adjustment Events occurred simultaneously. For the
avoidance of doubt, the following shall not be Adjustment Events: (x) the
issuance of Partnership Units in a financing, reorganization, acquisition or
other similar business Common Unit Transaction, (y) the issuance of Partnership
Units pursuant to any employee benefit or compensation plan or distribution
reinvestment plan or (z) the issuance of any Partnership Units to the General
Partner in respect of a capital contribution to the Partnership of proceeds from
the sale of Additional Securities by the General Partner. If the Partnership
takes an action affecting the Common Units other than actions specifically
described above as “Adjustment Events” and in the opinion of the General Partner
such action would require an adjustment to the LTIP Units to maintain the
one-to-one correspondence described above, the General Partner shall have the
right to make such adjustment to the LTIP Units, to the extent permitted by law
and by any Equity Incentive Plan, in such manner and at such time as the General
Partner, in its sole discretion, may determine to be appropriate under the
circumstances. If an adjustment is made to the LTIP Units, as herein provided,
the Partnership shall promptly file in the books and records of the Partnership
an officer’s certificate setting forth such adjustment and a brief statement of
the facts requiring such adjustment, which certificate shall be conclusive
evidence of the correctness of such adjustment absent manifest error. Promptly
after filing of such certificate, the Partnership shall mail a notice to each
LTIP Unitholder setting forth the adjustment to his or her LTIP Units and the
effective date of such adjustment; and

 

(ii) The LTIP Unitholders shall, when, as and if authorized and declared by the
General Partner out of assets legally available for that purpose, be entitled to
receive distributions in an amount per LTIP Unit equal to the distributions per
Common Unit (the “Common Partnership Unit Distribution”), paid to holders of
Common Units on such Partnership Record Date established by the General Partner
with respect to such distribution. So long as any LTIP Units are outstanding, no
distributions (whether in cash or in kind) shall be authorized, declared or paid
on Common Units, unless equal distributions have been or contemporaneously are
authorized, declared and paid on the LTIP Units.

 

(b)          Priority. Subject to the provisions of this Section 4.04 and the
special provisions of Sections 4.05 and 5.01(g), the LTIP Units shall rank pari
passu with the Common Units as to the payment of regular and special periodic or
other distributions and distribution of assets upon liquidation, dissolution or
winding up. As to the payment of distributions and as to distribution of assets
upon liquidation, dissolution or winding up, any class or series of Partnership
Units which by its terms specifies that it shall rank junior to, on a parity
with, or senior to the Common Units shall also rank junior to, or pari passu
with, or senior to, as the case may be, the LTIP Units. Subject to the terms of
any Vesting Agreement, an LTIP Unitholder shall be entitled to transfer his or
her LTIP Units to the same extent, and subject to the same restrictions as
holders of Common Units are entitled to transfer their Common Units pursuant to
Article IX.

 

(c)          Special Provisions. LTIP Units shall be subject to the following
special provisions:

 

18

 

 

(i) Vesting Agreements. LTIP Units may, in the sole discretion of the General
Partner, be issued subject to vesting, forfeiture and additional restrictions on
transfer pursuant to the terms of a Vesting Agreement. The terms of any Vesting
Agreement may be modified by the General Partner from time to time in its sole
discretion, subject to any restrictions on amendment imposed by the relevant
Vesting Agreement or by the Equity Incentive Plan, if applicable. LTIP Units
that have vested under the terms of a Vesting Agreement are referred to as
“Vested LTIP Units”; all other LTIP Units shall be treated as “Unvested LTIP
Units.”

 

(ii) Forfeiture. Unless otherwise specified in the Vesting Agreement, upon the
occurrence of any event specified in a Vesting Agreement as resulting in either
the right of the Partnership or the General Partner to repurchase LTIP Units at
a specified purchase price or some other forfeiture of any LTIP Units, then if
the Partnership or the General Partner exercises such right to repurchase or
forfeiture in accordance with the applicable Vesting Agreement, the relevant
LTIP Units shall immediately, and without any further action, be treated as
cancelled and no longer outstanding for any purpose. Unless otherwise specified
in the Vesting Agreement, no consideration or other payment shall be due with
respect to any LTIP Units that have been forfeited, other than any distributions
declared with respect to a Partnership Record Date before the effective date of
the forfeiture. In connection with any repurchase or forfeiture of LTIP Units,
the balance of the portion of the Capital Account of the LTIP Unitholder that is
attributable to all of his or her LTIP Units shall be reduced by the amount, if
any, by which it exceeds the target balance contemplated by Section 5.01(g),
calculated with respect to the LTIP Unitholder’s remaining LTIP Units, if any.

 

(iii) Allocations. LTIP Unitholders shall be entitled to certain special
allocations of gain under Section 5.01(g).

 

(iv) Redemption. The Common Unit Redemption Right provided to Limited Partners
under Section 8.04 shall not apply with respect to LTIP Units unless and until
they are converted to Common Units as provided in Section 4.04(c)(v)  and
Section 4.05.

 

(v) Conversion to Common Units. Vested LTIP Units are eligible to be converted
into Common Units in accordance with Section 4.05.

 

(d)          Voting. LTIP Unitholders shall (a) have the same voting rights as
the Limited Partners, with the LTIP Units voting as a single class with the
Common Units and having one vote per LTIP Unit; and (b) have the additional
voting rights that are expressly set forth below. So long as any LTIP Units
remain outstanding, the Partnership shall not, without the affirmative vote of
the holders of a majority of the LTIP Units outstanding at the time, given in
person or by proxy, either in writing or at a meeting (voting separately as a
class), amend, alter or repeal, whether by merger, consolidation or otherwise,
the provisions of this Agreement applicable to LTIP Units so as to materially
and adversely affect any right, privilege or voting power of the LTIP Units or
the LTIP Unitholders as such, unless such amendment, alteration, or repeal
affects equally, ratably and proportionately the rights, privileges and voting
powers of the Limited Partners; but subject, in any event, to the following
provisions:

 

19

 

 

(i) With respect to any Common Unit Transaction (as defined in Section 4.05(f)),
so long as the LTIP Units are treated in accordance with Section 4.05(f), the
consummation of such Common Unit Transaction shall not be deemed to materially
and adversely affect such rights, preferences, privileges or voting powers of
the LTIP Units or the LTIP Unitholders as such; and

 

(ii) Any creation or issuance of any Partnership Units or of any class or series
of Partnership Interest including without limitation additional Common Units or
LTIP Units, whether ranking senior to, junior to, or on a parity with the LTIP
Units with respect to distributions and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers of the
LTIP Units or the LTIP Unitholders as such.

 

The foregoing voting provisions will not apply if, at or before the time when
the act with respect to which such vote would otherwise be required will be
effected, all outstanding LTIP Units shall have been converted into Common
Units.

 

4.05         Conversion of LTIP Units.

 

(a)             Subject to the provisions of this section, an LTIP Unitholder
shall have the right (the “Conversion Right”), at his or her option, at any time
to convert all or a portion of his or her Vested LTIP Units into Common Units;
provided, however, that a holder may not exercise the Conversion Right for less
than one thousand (1,000) Vested LTIP Units or, if such holder holds less than
one thousand Vested LTIP Units, all of the Vested LTIP Units held by such
holder. LTIP Unitholders shall not have the right to convert Unvested LTIP Units
into Common Units until they become Vested LTIP Units; provided, however, that
when an LTIP Unitholder is notified of the expected occurrence of an event that
will cause his or her Unvested LTIP Units to become Vested LTIP Units, such LTIP
Unitholder may give the Partnership a Conversion Notice conditioned upon and
effective as of the time of vesting and such Conversion Notice, unless
subsequently revoked by the LTIP Unitholder, shall be accepted by the
Partnership subject to such condition. The General Partner shall have the right
at any time to cause a conversion of Vested LTIP Units into Common Units. In all
cases, the conversion of any LTIP Units into Common Units shall be subject to
the conditions and procedures set forth in this Section 4.05. 

 

20

 

 

(b)            A holder of Vested LTIP Units may convert such LTIP Units into an
equal number of fully paid and non-assessable Common Units, giving effect to all
adjustments (if any) made pursuant to Section 4.04. Notwithstanding the
foregoing, in no event may a holder of Vested LTIP Units convert a number of
Vested LTIP Units that exceeds (x) the Economic Capital Account Balance of such
Limited Partner, to the extent attributable to its ownership of LTIP Units,
divided by (y) the Common Unit Economic Balance, in each case as determined as
of the effective date of conversion (the “Capital Account Limitation”). To
exercise such LTIP Unitholder’s Conversion Right, an LTIP Unitholder shall
deliver a notice (a “Conversion Notice”) substantially in the form attached as
Exhibit D to the Partnership (with a copy to the General Partner) not less than
ten nor more than 60 days before a date (the “Conversion Date”) specified in
such Conversion Notice; provided, however, that if the General Partner has not
given to the LTIP Unitholders notice of a proposed or upcoming Common Unit
Transaction (as defined in Section 4.05(f)) at least 30 days before the
effective date of such Common Unit Transaction, then LTIP Unitholders shall have
the right to deliver a Conversion Notice until the earlier of (x) the tenth day
after such notice from the General Partner of a Common Unit Transaction or
(y) the third business day immediately preceding the effective date of such
Common Unit Transaction. A Conversion Notice shall be provided in the manner
provided in Section 12.01. Each LTIP Unitholder covenants and agrees that all
Vested LTIP Units to be converted pursuant to this Section 4.05(b) shall be free
and clear of all liens. Notwithstanding anything herein to the contrary, a
holder of LTIP Units may deliver a Notice of Redemption pursuant to
Section 8.04(a) relating to those Common Units that will be issued to such
holder upon conversion of such LTIP Units into Common Units in advance of the
Conversion Date; provided, however, that the redemption of such Common Units by
the Partnership shall in no event take place until after the Conversion Date.
For clarity, it is noted that the objective of this paragraph is to put an LTIP
Unitholder in a position where, if such LTIP Unitholder so wishes, the Common
Units into which such LTIP Unitholder’s Vested LTIP Units will be converted can
be redeemed by the Partnership simultaneously with such conversion, with the
further consequence that, if the General Partner elects to assume the
Partnership’s redemption obligation with respect to such Common Units under
Section 8.04(b) by delivering to such holder Class A REIT Shares rather than
cash, then such holder can have such Class A REIT Shares issued to him or her
simultaneously with the conversion of his or her Vested LTIP Units into Common
Units. The General Partner and LTIP Unitholder shall reasonably cooperate with
each other to coordinate the timing of the events described in the foregoing
sentence.

 

(c)             The Partnership, at any time at the election of the General
Partner, may cause any number of Vested LTIP Units held by an LTIP Unitholder to
be converted (a “Forced Conversion”) into an equal number of Common Units,
giving effect to all adjustments (if any) made pursuant to Section 4.04;
provided, however, that the Partnership may not cause Forced Conversion of any
LTIP Units that would not at the time be eligible for conversion at the option
of such LTIP Unitholder pursuant to Section 4.05(b). To exercise its right of
Forced Conversion, the Partnership shall deliver a notice (a “Forced Conversion
Notice”) in the form attached as Exhibit E to the applicable LTIP Unitholder not
less than ten nor more than 60 days before the Conversion Date specified in such
Forced Conversion Notice. A Forced Conversion Notice shall be provided in the
manner provided in Section 12.01.

 

(d)            A conversion of Vested LTIP Units for which the LTIP Unitholder
has given a Conversion Notice or the Partnership has given a Forced Conversion
Notice shall occur automatically after the close of business on the applicable
Conversion Date without any action on the part of such LTIP Unitholder, as of
which time such LTIP Unitholder 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 number of Common Units issuable upon such conversion. After the
conversion of LTIP Units as aforesaid, the Partnership shall deliver to such
LTIP Unitholder, upon his or her written request, a certificate of the General
Partner certifying the number of Common Units and remaining LTIP Units, if any,
held by such person immediately after such conversion. The Assignee of any
Limited Partner pursuant to Article IX may exercise the rights of such Limited
Partner pursuant to this Section 4.05 and such Limited Partner shall be bound by
the exercise of such rights by the Assignee.

 

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(e)             For purposes of making future allocations under Section 5.01(g)
and applying the Capital Account Limitation, the portion of the Economic Capital
Account Balance of the applicable LTIP Unitholder that is treated as
attributable to his or her LTIP Units shall be reduced, as of the date of
conversion, by the product of the number of LTIP Units converted and the Common
Unit Economic Balance.

 

(f)             If the Partnership or the General Partner shall be a party to
any Common Unit Transaction (including without limitation a merger,
consolidation, unit exchange, self-tender offer for all or substantially all
Common Units or other business combination or reorganization, or sale of all or
substantially all of the Partnership’s assets, but excluding any Common Unit
Transaction which constitutes an Adjustment Event) in each case as a result of
which Common Units shall be exchanged for or converted into the right, or the
holders of such Units shall otherwise be entitled, to receive cash, securities
or other property or any combination thereof (each of the foregoing being
referred to herein as a “Common Unit Transaction”), then the General Partner
shall, immediately before the Common Unit Transaction, exercise its right to
cause a Forced Conversion with respect to the maximum number of LTIP Units then
eligible for conversion, taking into account any allocations that occur in
connection with the Common Unit Transaction or that would occur in connection
with the Common Unit Transaction if the assets of the Partnership were sold at
the Common Unit Transaction price or, if applicable, at a value determined by
the General Partner in good faith using the value attributed to the Partnership
Units in the context of the Common Unit Transaction (in which case the
Conversion Date shall be the effective date of the Common Unit Transaction).

 

In anticipation of such Forced Conversion and the consummation of the Common
Unit Transaction, the Partnership shall use commercially reasonable efforts to
cause each LTIP Unitholder to be afforded the right to receive in connection
with such Common Unit Transaction in consideration for the Common Units into
which such LTIP Units will be converted the same kind and amount of cash,
securities and other property (or any combination thereof) receivable upon the
consummation of such Common Unit Transaction by a holder of the same number of
Common Units, assuming such holder of Common Units is not a Person with which
the Partnership consolidated or into which the Partnership merged or which
merged into the Partnership or to which such sale or transfer was made, as the
case may be (a “Constituent Person”), or an affiliate of a Constituent Person.
In the event that holders of Common Units have the opportunity to elect the form
or type of consideration to be received upon consummation of the Common Unit
Transaction, before such Common Unit Transaction the General Partner shall give
prompt written notice to each LTIP Unitholder of such election, and shall use
commercially reasonable efforts to afford the LTIP Unitholders the right to
elect, by written notice to the General Partner, the form or type of
consideration to be received upon conversion of each LTIP Unit held by such
holder into Common Units in connection with such Common Unit Transaction. If an
LTIP Unitholder fails to make such an election, such holder (and any of its
transferees) shall receive upon conversion of each LTIP Unit held him or her (or
by any of his or her transferees) the same kind and amount of consideration that
a holder of a Common Unit would receive if such Common Unit holder failed to
make such an election.

 

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Subject to the rights of the Partnership and the General Partner under any
Vesting Agreement and any Equity Incentive Plan, the Partnership shall use
commercially reasonable efforts to cause the terms of any Common Unit
Transaction to be consistent with the provisions of this Section 4.05(f) and to
enter into an agreement with the successor or purchasing entity, as the case may
be, for the benefit of any LTIP Unitholders whose LTIP Units will not be
converted into Common Units in connection with the Common Unit Transaction that
will (i) contain provisions enabling the holders of LTIP Units that remain
outstanding after such Common Unit Transaction to convert their LTIP Units into
securities as comparable as reasonably possible under the circumstances to the
Common Units and (ii) preserve as far as reasonably possible under the
circumstances the distribution, special allocation, conversion, and other rights
set forth in this Agreement for the benefit of the LTIP Unitholders.

 

4.06         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) the Partnership grants a
Partnership Interest (other than a de minimis Partnership Interest) as
consideration for the provision of services to or for the benefit of the
Partnership to an existing Partner acting in a Partner capacity, or to a new
Partner acting in a Partner capacity or 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); provided, that (i) the issuance
of any LTIP Unit shall be deemed to require a revaluation pursuant to this
Section 4.06 and (ii) the General Partner may elect not to revalue the property
of the Partnership in connection with the issuance of additional Partnership
Units pursuant to Section 4.02 to the extent it determines, in its sole and
absolute discretion, that revaluing the property of the Partnership is not
necessary or appropriate to reflect the relative economic interests of the
Partners. 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 5.01 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.

 

4.07         Percentage Interests. If the number of outstanding Common Units or
LTIP 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 Common Units or LTIP Units held by such Partner divided by the
aggregate number of Common Units and LTIP Units, as applicable, outstanding
after giving effect to such increase or decrease. If the Partners’ Percentage
Interests are adjusted pursuant to this Section 4.07, 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 shall be based on the adjusted Percentage Interests.

 

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

 

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

 

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

 

ARTICLE V

PROFITS AND LOSSES; DISTRIBUTIONS

 

5.01         Allocation of Profit and Loss.

 

(a)             Profit. Profit of the Partnership for each fiscal year of the
Partnership shall be allocated to the Partners in accordance with their
respective Percentage Interests.

 

(b)            Loss. Loss of the Partnership for each fiscal year of the
Partnership shall be allocated to the Partners in accordance with their
respective Percentage Interests.

 

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(c)             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” of such deduction 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). The manner in which
it is reasonably expected that the deductions attributable to nonrecourse
liabilities will be allocated for purposes of determining a Partner’s share of
the nonrecourse liabilities of the Partnership within the meaning of Regulations
Section 1.752-3(a)(3) shall be in accordance with a Partner’s Percentage
Interest.

 

(d)            Qualified Income Offset. If a Partner 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).
After the occurrence of an allocation of income or gain to a Partner in
accordance with this Section 5.01(d), to the extent permitted by Regulations
Section 1.704-1(b), items of expense or loss shall be allocated to such Partner
in an amount necessary to offset the income or gain previously allocated to such
Partner under this Section 5.01(d).

 

(e)            Capital Account Deficits. Loss shall not be allocated to a
Limited Partner to the extent that such allocation would cause a deficit in such
Partner’s Capital Account (after reduction to reflect the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of
such Partner’s shares of Partnership Minimum Gain and Partner Nonrecourse Debt
Minimum Gain. Any Loss in excess of that limitation shall be allocated to the
General Partner. After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(e), to the extent permitted by
Regulations Section 1.704-1(b), Profit first shall be allocated to the General
Partner in an amount necessary to offset the Loss previously allocated to the
General Partner under this Section 5.01(e).

 

25

 

 

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

 

(g)            Special Allocations Regarding LTIP Units. Notwithstanding the
provisions of Sections 5.01(a) and (b), Liquidating Gains shall first be
allocated to the LTIP Unitholders until their Economic Capital Account Balances,
to the extent attributable to their ownership of LTIP Units, are equal to
(i) the Common Unit Economic Balance, multiplied by (ii) the number of their
LTIP Units. For this purpose, “Liquidating Gains” means net capital gains
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
net capital gain realized in connection with an adjustment to the value of
Partnership assets under Section 704(b) of the Code. The “Economic Capital
Account Balances” of the LTIP Unitholders will be equal to their Capital Account
balances to the extent attributable to their ownership of LTIP Units. Similarly,
the “Common Unit Economic Balance” shall mean (i) the Capital Account balance of
the General Partner, plus the amount of the General Partner’s share of any
Partner Nonrecourse Debt Minimum Gain or Partnership Minimum Gain, in either
case to the extent attributable to the General Partner’s ownership of Common
Units and computed on a hypothetical basis after taking into account all
allocations through the date on which any allocation is made under this
Section 5.01(g), divided by (ii) the number of the General Partner’s Common
Units. Any such allocations shall be made among the LTIP Unitholders in
proportion to the amounts required to be allocated to each under this
Section 5.01(g). The parties agree that the intent of this Section 5.01(g) is to
make the Capital Account balance associated with each LTIP Unit to be
economically equivalent to the Capital Account balance associated with the
General Partner’s Common Units (on a per-Unit basis).

 

(h)            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 5.01(c), (d) or (e). 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 5.01, except as otherwise required by Section 704(c) of the Code and
Regulations Section 1.704-1(b)(4). With respect to properties acquired by the
Partnership, the General Partner shall have the authority to elect the method to
be used by the Partnership for allocating items of income, gain and expense as
required by Section 704(c) of the Code with respect to such properties, and such
election shall be binding on all Partners.

 

26

 

 

5.02         Distribution of Cash.

 

(a)             Subject to Sections 5.02(c), (d) and (e), the Partnership shall
distribute cash at such times and in such amounts as are determined by the
General Partner in its sole and absolute discretion, to the Partners who are
Partners on the Partnership Record Date with respect to such quarter (or other
distribution period) in proportion with their respective Percentage Interests on
the Partnership Record Date.

 

(b)             In accordance with Section 4.04(a)(ii), the LTIP Unitholders
shall be entitled to receive distributions in an amount per LTIP Unit equal to
the Common Partnership Unit Distribution.

 

(c)             If a new or existing Partner acquires additional Partnership
Units in exchange for a Capital Contribution on any date other than a
Partnership Record Date, the cash distribution attributable to such additional
Partnership Units relating to the Partnership Record Date next following the
issuance of such additional Partnership Units shall be reduced in the proportion
to (i) the number of days that such additional Partnership Units are held by
such Partner bears to (ii) the number of days between such Partnership Record
Date and the immediately preceding Partnership Record Date.

 

(d)            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 a Partner or assignee (including by reason of
Section 1446 of the Code), either (i) if the actual amount to be distributed to
the Partner (the “Distributable Amount”) equals or exceeds the Withheld Amount,
the entire Distributable Amount shall be treated as a distribution of cash to
such Partner, or (ii) if the Distributable Amount is less than the Withheld
Amount, the excess of the Withheld Amount over the Distributable Amount shall be
treated as 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 upon the demand of the Partnership or, alternatively, through
withholding by the Partnership with respect to subsequent distributions to the
applicable Partner or assignee. In the event that a Limited Partner fails to pay
any amount owed to the Partnership with respect to the Partnership Loan within
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 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.

 

27

 

 

Any amounts treated as a Partnership Loan or a General Partner Loan pursuant to
this Section 5.02(d) shall bear interest at the lesser of (i) 300 basis points
above 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,
Eastern Addition, 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)             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
dividend as the holder of record of a Class A REIT Share for which all or part
of such Partnership Unit has been or will be redeemed.

 

5.03         REIT Distribution Requirements. The General Partner shall use
commercially reasonable efforts to cause the Partnership to distribute amounts
sufficient to enable the General Partner to pay distributions to its
shareholders 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,
other than to the extent the General Partner elects to retain and pay income tax
on its net capital gain.

 

5.04         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.

 

5.05         Limitations on Return of Capital Contributions. Notwithstanding any
of the provisions of this Article V, 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.

 

5.06         Distributions Upon Liquidation.

 

(a)            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.

 

(b)            For purposes of Section 5.06(a), the Capital Account of each
Partner shall be determined after all adjustments made in accordance with
Sections 5.01 and 5.02 resulting from Partnership operations and from all sales
and dispositions of all or any part of the Partnership’s assets.

 

(c)            Any distributions pursuant to this Section 5.06 shall be made by
the end of the Partnership’s taxable year in which the liquidation occurs (or,
if later, within 90 days after the date of the liquidation). 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.

 

28

 

 

5.07         Substantial Economic Effect. It is the intent of the Partners that
the allocations of Profit and Loss under the 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 V and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.

 

ARTICLE VI

RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER

 

6.01         Management of the Partnership.

 

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

 

(i) to acquire, purchase, own, operate, lease and dispose of 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 in
the business of the Partnership;

 

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

 

(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership
Units 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 Units, or Rights relating to any class or series of
Partnership Units) 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 indebtedness by mortgage, deed of trust, pledge or
other lien on the Partnership’s assets;

 

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

 

(vi) to guarantee or become a co-maker of indebtedness of any Subsidiary of the
General Partner or the Partnership, 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; 

 

29

 

 

(vii) to use assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with this Agreement, including, without
limitation, payment, either directly or by reimbursement, of all operating costs
and general and 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’s business;

 

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

 

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

 

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

 

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

 

30

 

 

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

 

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

 

(xix) to form or acquire an interest in, and contribute property to, any further
limited or general partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the acquisition of interests in,
and the contributions of property to, its Subsidiaries and any other Person in
which it has an equity interest from time to time);

 

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

 

(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” taxable as
a corporation under Section 7704 of the Code or an "investment company" or a
subsidiary of an investment company under the Investment Company Act of 1940;
and

 

(xxiii) enter into and perform obligations under underwriting or other
agreements in connection with issuances of securities by the Partnership or the
General Partner or any affiliate thereof;

 

(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 or revokes its REIT status) and to possess and enjoy all of the
rights and powers of a general partner as provided by the Act.

 

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

 

6.02         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.

 

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6.03         Indemnification and Exculpation of Indemnitees.

 

(a)           The Partnership shall indemnify an Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including reasonable legal fees and expenses), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation before judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 6.03(a). Any indemnification pursuant to this Section 6.03 shall be
made only out of the assets of the Partnership.

 

(b)          The Partnership shall reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding in advance of
the final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee’s good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.

 

(c)           The indemnification provided by this Section 6.03 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.

 

(d)           The Partnership may purchase and maintain insurance, as an expense
of the Partnership, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership’s activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.

 

(e)           For purposes of this Section 6.03, 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 6.03; 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 that is not opposed to the best interests of the
Partnership.

 

32

 

 

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

 

(g)          An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.03 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.

 

(h)          The provisions of this Section 6.03 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.

 

(i)          Any amendment, modification or repeal of this Section 6.03 or any
provision shall be prospective only and shall not in any way affect the
indemnification of an Indemnitee by the Partnership under this Section 6.03 as
in effect immediately before such amendment, modification or repeal with respect
to matters occurring, in whole or in part, before such amendment, modification
or repeal, regardless of when claims relating to such matters may arise or be
asserted.

 

6.04         Liability of the General Partner.

 

(a)            Notwithstanding anything to the contrary set forth in this
Agreement, neither the General Partner, nor any of its Directors, officers,
agents or employees shall 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 mistakes of fact or law or of any act or omission if any such
party acted in good faith. The General Partner shall not be in breach of any
duty that the General Partner may owe to the Limited Partners or the Partnership
or any other Persons under this Agreement or of any duty stated or implied by
law or equity provided the General Partner, acting in good faith, abides by the
terms of this Agreement.

 

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

 

33

 

 

(c)            Subject to its obligations and duties as General Partner set
forth in Section 6.01, 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 6.04 or any
provision shall be prospective only and shall not in any way affect the
limitations on the General Partner’s or any of its officer’s, director’s,
agent’s or employee’s liability to the Partnership and the Limited Partners
under this Section 6.04 as in effect immediately before such amendment,
modification or repeal with respect to matters occurring, in whole or in part,
before such amendment, modification or repeal, regardless of when claims
relating to such matters may arise or be asserted.

 

6.05         Partnership Obligations.

 

(a)            Except as provided in this Section 6.05 and elsewhere in this
Agreement (including the provisions of Articles V and VI regarding
distributions, payments and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.

 

(b)           All Administrative Expenses shall be obligations of the
Partnership, and the General Partner shall be entitled to reimbursement by the
Partnership for any expenditure (including Administrative Expenses) incurred by
it on behalf of the Partnership that shall be made other than out of the funds
of the Partnership. All reimbursements hereunder shall be characterized for
federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner.

 

34

 

 

6.06         Outside Activities. Subject to Section 6.08, the Charter and any
agreements, including without limitation the Investment Allocation Agreement and
the Management Agreement, entered into by the General Partner or its Affiliates
with the Partnership or a Subsidiary, any officer, director, employee, agent,
trustee, Affiliate or shareholder of the General Partner, the General Partner
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities substantially similar or identical to those of the
Partnership. Neither the Partnership nor any of the Limited Partners shall have
any rights by virtue of this Agreement in any such business ventures, 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
that, if presented to the Partnership or any Limited Partner, could be taken by
such Person.

 

6.07         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 that 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.

 

6.08         General Partner Activities. The General Partner agrees that,
generally, all business activities of the General Partner, including activities
pertaining to the acquisition, development, ownership of or investment in real
properties or other property, shall be conducted through the Partnership or one
or more Subsidiary Partnerships; provided, however, that the General Partner may
make direct acquisitions or undertake business activities if such acquisitions
or activities are made in connection with the issuance of Additional Securities
by the General Partner or the business activity has been approved by a majority
of the Independent Directors. If, at any time, the General Partner acquires
material assets (other than Partnership Units or other assets on behalf of the
Partnership), the definition of “REIT Shares Amount” may be adjusted, as
reasonably determined by the General Partner, to reflect only the fair market
value of a Class A REIT Share attributable to the General Partner’s Partnership
Units and other assets held on behalf of the Partnership.

 

35

 

 

6.09         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 its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.

 

6.10         Restrictions on General Partner Authority. The General Partner may
not take any action in contravention of an express prohibition or limitation of
this Agreement without the written consent of a Two Thirds Majority (other than
the General Partner or any Subsidiary of the General Partner), or such other
percentage of the Limited Partners as may be specifically provided for under a
provision of this Agreement, and may not perform any act that would subject a
Limited Partner to liability as a general partner in any jurisdiction or any
liability not contemplated herein or under the Act except with the written
consent of such Limited Partner.

 

ARTICLE VII

CHANGES IN GENERAL PARTNER

 

7.01         Transfer of the General Partner’s Partnership Interest.

 

(a)            The General Partner shall not transfer all or any portion of its
General Partnership Interests, and the General Partner shall not withdraw as
General Partner, except as provided in or in connection with a transaction
contemplated by Sections 7.01(c), (d) or (e).

 

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

 

(c)            Except as otherwise provided in Section 7.01(d) or (e), 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 at least one
of the following conditions is met:

 

(i) the consent of a Majority in Interest (other than the General Partner or any
Subsidiary of the General Partner) is obtained;

 

36

 

 

(ii) as a result of such Transaction, all Limited Partners (other than the
General Partner and any Subsidiary of the General Partner) will receive, or have
the right to receive, for each Partnership Unit an amount of cash, securities or
other property equal in value 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 Class A REIT Share in consideration of one Class A REIT Share,
provided that if, in connection with such Transaction, a purchase, tender or
exchange offer (“Offer”) shall have been made to and accepted by the holders of
more than 50% of the outstanding REIT Shares, each holder of Partnership Units
(other than the General Partner and any Subsidiary of the General Partner) shall
be given the option to exchange its Partnership Units for the greatest amount of
cash, securities or other property that such Limited Partner would have received
had it (A) exercised its Common Unit Redemption Right pursuant to Section 8.04
and (B) sold, tendered or exchanged pursuant to the Offer the REIT Shares
received upon exercise of the Common Unit Redemption Right immediately before
the expiration of the Offer; or

 

(iii) the General Partner is the surviving entity in the Transaction and either
(A) the holders of REIT Shares do not receive cash, securities or other property
in the Transaction or (B) all Limited Partners (other than the General Partner
or any Subsidiary of the General Partner) receive for each Partnership Unit an
amount of cash, securities or other property (expressed as an amount per Class A
REIT Share) that is no less in value than the product of the Conversion Factor
and the greatest amount of cash, securities or other property (expressed as an
amount per Class A REIT Share) received in the Transaction by any holder of
Class A REIT Shares.

 

(d)          Notwithstanding Section 7.01(c), the General Partner may merge with
or into or consolidate with another entity if immediately after such merger or
consolidation (i) substantially all of the assets of the successor or surviving
entity (the “Survivor”), other than Partnership Units held by the General
Partner, are contributed, directly or indirectly, to the Partnership as a
Capital Contribution in exchange for Partnership Units with a fair market value
equal to the value of the assets so contributed as determined by the Survivor in
good faith and (ii) the Survivor expressly agrees to assume all obligations of
the General Partner hereunder. Upon such contribution and assumption, the
Survivor shall have the right and duty to amend this Agreement as set forth in
this Section 7.01(d). The Survivor shall in good faith arrive at a new method
for the calculation of the Cash Amount, the REIT Shares Amount and Conversion
Factor for a Partnership Unit after any such merger or consolidation so as to
approximate the existing method for such calculation as closely as reasonably
possible. Such calculation shall take into account, among other things, the kind
and amount of securities, cash and other property that was receivable upon such
merger or consolidation by a holder of Class A REIT Shares or options, warrants
or other rights relating thereto, and which a holder of Partnership Units could
have acquired had such Partnership Units been exchanged immediately before such
merger or consolidation. Such amendment to this Agreement shall provide for
adjustment to such method of calculation, which shall be as nearly equivalent as
may be practicable to the adjustments provided for with respect to the
Conversion Factor. The Survivor also shall in good faith modify the definition
of Class A REIT Shares and make such amendments to Section 8.04 so as to
approximate the existing rights and obligations set forth in Section 8.04 as
closely as reasonably possible. The above provisions of this Section 7.01(d)
shall similarly apply to successive mergers or consolidations permitted
hereunder.

 

37

 

 

In respect of any transaction described in the preceding paragraph, the General
Partner is required to use its commercially reasonable efforts to structure such
transaction to avoid causing the Limited Partners (other than the General
Partner or any Subsidiary) to recognize a gain for federal income tax purposes
by virtue of the occurrence of or their participation in such transaction,
provided such efforts are consistent with and subject in all respects to the
exercise of the Board of Directors’ fiduciary duties to the shareholders of the
General Partner under applicable law.

 

(e)           Notwithstanding anything in this Article VII:

 

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

 

(ii) the General Partner may engage in a transaction required by law or by the
rules of any national securities exchange or over-the-counter interdealer
quotation system on which the REIT Shares are listed or traded.

 

7.02         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 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 2.05 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 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.

 

38

 

 

7.03         Effect of Bankruptcy, Withdrawal, Death or Dissolution of General
Partner.

 

(a)           Upon the occurrence of an Event of Bankruptcy as to the General
Partner (and its removal pursuant to Section 7.04(a)) or the death, withdrawal,
removal or dissolution of the General Partner (except that, if the 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 the 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 7.03(b). The merger of the General
Partner with or into any entity that is admitted as a substitute or successor
General Partner pursuant to Section 7.02 shall not be deemed to be the
withdrawal, dissolution or removal of the General Partner.

 

(b)           Following the occurrence of an Event of Bankruptcy as to the
General Partner (and its removal pursuant to Section 7.04(a)) or the death,
withdrawal, removal or dissolution of the General Partner (except that, if the
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, within 90 days after such occurrence, may elect
to continue the business of the Partnership for the balance of the term
specified in Section 2.04 by selecting, subject to Section 7.02 and any other
provisions of this Agreement, a substitute General Partner by consent of a
Majority in Interest. 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.

 

7.04         Removal of General Partner.

 

(a)            Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, the General Partner, the General Partner shall be deemed to be
removed automatically; provided, however, that if the 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 the 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 the General Partner has been removed pursuant to this
Section 7.04 and the Partnership is continued pursuant to Section 7.03, the
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 in accordance with Section 7.03(b) and otherwise be
admitted to the Partnership in accordance with Section 7.02. 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 (excluding the General Partner and any Subsidiary of the General
Partner) within ten 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 (excluding the General Partner and
any Subsidiary of the General Partner) 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 30 days of the General
Partner’s removal, and the fair market value of the removed General Partner’s
General Partnership Interest shall be the average of the two appraisals;
provided, however, that if the higher appraisal exceeds the lower appraisal by
more than 20% of the amount of the lower appraisal, the two appraisers, no later
than 40 days after the removal of the General Partner, shall select a third
appraiser who shall complete an appraisal of the fair market value of the
removed General Partner’s General Partnership Interest no later than 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.

 

39

 

 

(c)           The General Partnership Interest of a removed General Partner,
during the time after default until transfer under Section 7.04(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 7.04(b).

 

(d)           All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall be legally
necessary and sufficient to effect all the foregoing provisions of this
Section 7.04.

 

ARTICLE VIII

RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS

 

8.01         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, which shall act for the benefit of the Partnership, the
Limited Partners and the General Partner’s stockholders, collectively.

 

8.02         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,
including amendments, which power of attorney is coupled with an interest and
shall survive the death, dissolution or legal incapacity of the Limited Partner,
or the transfer by the Limited Partner of any part or all of its Partnership
Interest.

 

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8.03         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.

 

8.04         Common Unit Redemption Right.

 

(a)            Subject to Sections 8.04(b), (c), (d), (e) and (f) and the
provisions of any agreements between the Partnership and one or more Limited
Partners with respect to Common Units (including any LTIP Units that are
converted into Common Units) held by them, each Limited Partner (other than the
General Partner or any Subsidiary of the General Partner, shall have the right
(the “Common Unit Redemption Right”) to require the Partnership to redeem on a
Specified Redemption Date all or a portion of the Common Units held by such
Limited Partner at a redemption price equal to and in the form of the Common
Redemption Amount to be paid by the Partnership, provided that such Common Units
(or the LTIP Units converted into such Common Units) shall have been outstanding
for at least one year (or such lesser time as determined by the General Partner
in its sole and absolute discretion), and subject to any restriction agreed to
in writing between the Redeeming Limited Partner and the Partnership or General
Partner. The Common Unit Redemption Right shall be exercised pursuant to a
Notice of Exercise of Redemption Right in the form attached hereto as Exhibit B
delivered to the Partnership (with a copy to the General Partner) by the Limited
Partner who is exercising the Common Unit Redemption Right (the “Redeeming
Limited Partner”); provided, however, that the Partnership shall, in its sole
and absolute discretion, have the option to deliver either the Cash Amount or
the REIT Shares Amount; provided, further, that the Partnership shall not be
obligated to satisfy such Common Unit Redemption Right if the General Partner
elects to purchase the Common Units subject to the Notice of Redemption; and
provided, further, that, subject to the terms of any agreement between the
General Partner and a Limited Partner with respect to Common Units (or any LTIP
Units converted into such Common Units) held by such Limited Partner, no Limited
Partner may deliver more than two Notices of Redemption during each calendar
year. A Limited Partner may not exercise the Common Unit Redemption Right for
less than one thousand (1,000) Common Units or, if such Limited Partner holds
less than one thousand (1,000) Common Units, all of the Common Units held by
such Limited Partner. The Redeeming Limited Partner shall have no right, with
respect to any Common Units so redeemed, to receive any distribution paid with
respect to Common Units if the record date for such distribution is on or after
the Specified Redemption Date.

 

(b)           Notwithstanding the provisions of Section 8.04(a), a Limited
Partner that exercises the Common Unit Redemption Right shall be deemed to have
offered to sell the Common Units described in the Notice of Redemption 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 Redeeming Limited 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 Redemption Date, whereupon the General Partner shall acquire
the Common Units offered for redemption by the Redeeming Limited Partner and
shall be treated for all purposes of this Agreement as the owner of such Common
Units. If the General Partner shall elect to exercise its right to purchase
Common Units under this Section 8.04(b) with respect to a Notice of Redemption,
it shall so notify the Redeeming Limited Partner within five Business Days after
the receipt by the General Partner of such Notice of Redemption.

 

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If the General Partner shall exercise its right to purchase Common Units with
respect to the exercise of a Common Unit Redemption Right, the Partnership shall
have no obligation to pay any amount to the Redeeming Limited Partner with
respect to such Redeeming Limited Partner’s exercise of such Common Unit
Redemption Right, and each of the Redeeming Limited Partner, the Partnership and
the General Partner shall treat the transaction between the General Partner and
the Redeeming Limited Partner for federal income tax purposes as a sale of the
Redeeming Limited Partner’s Common Units to the General Partner. Each Redeeming
Limited Partner agrees to execute such documents as the General Partner may
reasonably require in connection with the issuance of Class A REIT Shares upon
exercise of the Common Unit Redemption Right.

 

(c)           Notwithstanding the provisions of Section 8.04(a) and 8.04(b), a
Limited Partner shall not be entitled to exercise the Common Unit Redemption
Right if the delivery of Class A REIT Shares to such Limited Partner on the
Specified Redemption Date by the General Partner pursuant to Section 8.04(b)
(regardless of whether or not the General Partner would in fact exercise its
rights under Section 8.04(b)) would (i) result in such Limited Partner or any
other Person (as defined in the Charter) owning, directly or indirectly, REIT
Shares in excess of the Share Ownership Limit or any Excepted Holder Limit and
calculated in accordance therewith, except as provided in the Charter,
(ii) result in REIT Shares being owned by fewer than 100 persons (determined
without reference to any rules of attribution), (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, actually or constructively, 10% or more
of the ownership interests in a tenant (other than a TRS) of the General
Partner’s, the Partnership’s or a Subsidiary Partnership’s real property, within
the meaning of Section 856(d)(2)(B) of the Code, (v) otherwise cause the General
Partner to fail to qualify as a REIT under the Code or (vi) cause the
acquisition of REIT Shares by such Limited Partner to be “integrated” with any
other distribution of REIT Shares or Common Units for purposes of complying with
the registration provisions of the Securities Act. The General Partner, in its
sole and absolute discretion, may waive the restriction on redemption set forth
in this Section 8.04(c).

 

(d)           Any Cash Amount to be paid to a Redeeming Limited Partner pursuant
to this Section 8.04 shall be paid on the Specified Redemption Date. Any REIT
Share Amount to be paid to a Redeeming Limited Partner pursuant to this
Section 8.04 shall be paid on the Specified Redemption Date. 

 

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(e)           Notwithstanding any other provision of this Agreement, the General
Partner is authorized to take any action that it determines to be necessary or
appropriate to cause the Partnership to comply with any withholding requirements
established under the Code or any other federal, state or local law that apply
upon a Redeeming Limited Partner’s exercise of the Common Unit Redemption Right.
If a Redeeming Limited Partner believes that it is exempt from such withholding
upon the exercise of the Common Unit Redemption Right, such Partner must furnish
the General Partner with a FIRPTA Certificate in substantially the form attached
as Exhibit C and any similar forms or certificates required to avoid or reduce
the withholding under state, local or foreign law. If the Partnership or the
General Partner is required to withhold and pay over to any taxing authority any
amount upon a Redeeming Limited Partner’s exercise of the Common Unit Redemption
Right and if the Common Redemption Amount equals or exceeds the Withheld Amount,
the Withheld Amount shall be treated as an amount received by such Partner in
redemption of its Common Units. If, however, the Common Redemption Amount is
less than the Withheld Amount, the Redeeming Limited Partner shall not receive
any portion of the Common Redemption Amount, the Common Redemption Amount shall
be treated as an amount received by such Partner in redemption of its Common
Units, and the Partner shall contribute the excess of the Withheld Amount over
the Common Redemption Amount to the Partnership before the Partnership is
required to pay over such excess to a taxing authority.

 

(f)          Notwithstanding any other provision of this Agreement, the General
Partner shall place appropriate restrictions on the ability of the Limited
Partners to exercise their Common Unit Redemption Rights as and if deemed
necessary or reasonable to ensure that the Partnership does not constitute a
“publicly traded partnership” taxable as a corporation 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 (a
“Restriction Notice”) to each of the Limited Partners, which notice shall be
accompanied by a copy of an opinion of counsel to the Partnership that states
that, in the opinion of such counsel, restrictions are necessary or reasonable
to avoid the Partnership being treated as a “publicly traded partnership” under
Section 7704 of the Code.

 

8.05 Registration. Subject to the terms of any agreement between the General
Partner and a Limited Partner with respect to Common Units or LTIP Units held by
such Limited Partner:

 

(a) Registration of the REIT Shares. One year following the date of this
Agreement, or as soon as is practicable thereafter, the General Partner shall
file with the Commission a continuous offering registration statement under Rule
415 of the Securities Act (a “Registration Statement”), or any similar rule that
may be adopted by the Commission, on appropriate form as determined by the
General Partner, covering the resale of REIT Shares issuable upon redemption of
the Common Units or LTIP Units held by the Limited Partners as of the date of
this Agreement, or their respective transferees and assigns (collectively,
“Qualifying Limited Partners”), other than the REIT Shares covered by a separate
registration statement under the Securities Act, including without limitation a
registration statement on Form S-8 (“Initial Redemption Shares”). In connection
therewith, the General Partner will:

 

(1) use commercially reasonable efforts to have such Registration Statement
declared effective;

 

(2) register or qualify the Redemption Shares covered by a Registration
Statement under the securities or blue sky laws of such jurisdictions within the
United States as required by law, and do such other reasonable acts and things
as may be required of it to enable such holders to consummate the sale or other
disposition in such jurisdictions of the Initial Redemption Shares; provided,
however, that the General Partner shall not be required to (i) qualify as a
foreign corporation or consent to a general or unlimited service or process in
any jurisdictions in which it would not otherwise be required to be qualified or
so consent or (ii) qualify as a dealer in securities; and

 

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(3) otherwise use its commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission in connection with a
Registration Statement.

 

The General Partner agrees to supplement or make amendments to the Registration
Statement, if required by the rules, regulations or instructions applicable to
the registration form utilized by the General Partner or by the Securities Act
or rules and regulations thereunder for a Registration Statement. The General
Partner further agrees that it shall, in its discretion, either (i) amend or
supplement the Registration Statement filed with respect to the Initial
Redemption Shares (the “Initial Registration Statement”) to cover the resale of
any REIT Shares issuable upon redemption of Common Units or LTIP Units issued by
the Partnership to the Qualifying Limited Partners after the Initial
Registration Statement is declared effective, other than those Units covered by
another registration statement under the Securities Act, including without
limitation a registration statement on Form S-8 (“Subsequent Redemption Shares”
and collectively with the Initial Redemption Shares, “Redemption Shares”); or
(ii) file a new Registration Statement covering any Subsequent Redemption
Shares. In connection with and as a condition to the General Partner’s
obligations with respect to the filing of the Registration Statement pursuant to
this Section 8.05, each Limited Partner agrees with the General Partner that:

 

(w) it will provide in a timely manner to the General Partner such information
with respect to the Limited Partner as reasonably required to complete a
Registration Statement, including without limitation the information required by
Item 507 of Regulation S-K promulgated under the Securities Act, and file the
Registration Statement and to have the Registration Statement declared effective
by the Commission and cleared by the Financial Industry Regulatory Authority (if
required), and take such other acts as otherwise required to comply with
applicable securities laws and regulations;

 

(x) it will not offer or sell its Redemption Shares until (A) such Redemption
Shares have been included in a Registration Statement and (B) it has received
notice that the Registration Statement covering such Redemption Shares, or any
post-effective amendment thereto, has been declared effective by the Commission,
such notice to have been satisfied by the posting by the Commission on
www.sec.gov of a notice of effectiveness;

 

(y) if the General Partner determines in its good faith judgment, after
consultation with counsel, that the use of a Registration Statement, including
any pre- or post-effective amendment thereto, or the use of any prospectus
contained in such Registration Statement would require the disclosure of
important information that the General Partner has a bona fide business purpose
for preserving as confidential or the disclosure of which, in the judgment of
the General Partner, would impede the General Partner’s ability to consummate a
significant transaction, upon written notice of such determination by the
General Partner (which notice shall be deemed sufficient if given through the
issuance of a press release or filing with the Commission and, if such notice is
not publicly distributed, the Limited Partner agrees to keep the subject
information confidential and acknowledges that such information may constitute
material non-public information subject to the applicable restrictions under
securities laws), the rights of each Limited Partner to offer, sell or
distribute its Redemption Shares pursuant to such Registration Statement or
prospectus or to require the General Partner to take action with respect to the
registration or sale of any Redemption Shares pursuant to a Registration
Statement (including any action contemplated by this Section 8.05) will be
suspended until the date upon which the General Partner notifies such Limited
Partner in writing (which notice shall be deemed sufficient if given through the
issuance of a press release or filing with the Commission and, if such notice is
not publicly distributed, the Limited Partner agrees to keep the subject
information confidential and acknowledges that such information may constitute
material non-public information subject to the applicable restrictions under
securities laws) that suspension of such rights for the grounds set forth in
this paragraph is no longer necessary; provided, however, that the General
Partner may not suspend such rights for an aggregate period of more than 180
days in any 12-month period; and

  

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(z) in the case of the registration of any underwritten equity offering proposed
by the General Partner (other than any registration by the General Partner on
Form S-8, or a successor or substantially similar form, of an employee share
option, share purchase or compensation plan or of securities issued or issuable
pursuant to any such plan), each Limited Partner will agree, (i) if requested in
writing by the General Partner, managing underwriter or underwriters
administering such offering, not to effect any offer, sale or distribution of
any REIT Shares or Redemption Shares (or any option or right to acquire REIT
Shares or Redemption Shares) during the period commencing on the tenth day prior
to the expected effective date (which date shall be stated in such notice) of
the registration statement covering such underwritten primary equity offering
or, if such offering shall be a “take-down” from an effective shelf registration
statement, the tenth day prior to the expected commencement date (which date
shall be stated in such notice) of such offering and ending on the date
specified by such General Partner, managing underwriter, or underwriters
administering such offering in such written request to the Limited Partners and
(ii) to keep all information regarding any such offering, including without
limitation the existence, timing, pricing and terms of any such offering,
confidential until such time as the General Partner makes such information
public; provided, however, that no Limited Partner shall be required to agree
not to effect any offer, sale or distribution of its Redemption Shares for a
period of time that is longer than the greater of 90 days or the period of time
for which any senior executive of the General Partner is required so to agree in
connection with such offering. Nothing in this paragraph shall be read to limit
the ability of any Limited Partner to redeem its Common Units in accordance with
the terms of this Agreement.

 

(b) Listing on Securities Exchange. If the General Partner lists or maintains
the listing of REIT Shares on any securities exchange or national market system,
it shall, at its expense and as necessary to permit the registration and sale of
the Redemption Shares hereunder, list thereon, maintain and, when necessary,
increase such listing to include such Redemption Shares.

 

(c) Allocation of Expenses. The Partnership shall pay all expenses in connection
with the Registration Statement, including without limitation (i) all expenses
incident to filing with the Financial Industry Regulatory Authority, Inc., (ii)
registration fees, (iii) printing expenses, (iv) accounting and legal fees and
expenses, except to the extent holders of Redemption Shares elect to engage
accountants or attorneys in addition to the accountants and attorneys engaged by
the General Partner or the Partnership, which fees and expenses for such
accountants or attorneys shall be for the account of the holders of the
Redemption Shares, (v) accounting expenses incident to or required by any such
registration or qualification and (vi) expenses of complying with the securities
or blue sky laws of any jurisdictions in connection with such registration or
qualification; provided, however, neither the Partnership nor the General
Partner shall be liable for, or pay (A) any discounts or commissions to any
underwriter or broker attributable to the sale of Redemption Shares, or (B) any
fees or expenses incurred by holders of Redemption Shares in connection with
such registration that, according to the written instructions of any regulatory
authority, the Partnership or the General Partner is not permitted to pay.

 

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(d) Indemnification.

 

(i) In connection with the Registration Statement, the General Partner and the
Partnership agree to indemnify each holder of Redemption Shares and each Person
who controls any such holder of Redemption Shares within the meaning of Section
15 of the Securities Act, against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) caused by any untrue, or
alleged untrue, statement of a material fact contained in a Registration
Statement, preliminary prospectus or prospectus (as amended or supplemented if
the General Partner shall have furnished any amendments or supplements thereto)
or caused by any omission or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses are caused by any untrue statement, alleged untrue statement, omission,
or alleged omission based upon information furnished to the General Partner by
the Limited Partner or the holder for use therein. The General Partner and each
officer, director, stockholder, employee, agent, external advisor, investment
adviser, and controlling Person of the General Partner and the Partnership shall
be indemnified by each Limited Partner or holder of Redemption Shares covered by
a Registration Statement for all such losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) caused by any untrue, or
alleged untrue, statement or any omission, or alleged omission, based upon
information furnished to the General Partner by the Limited Partner or the
holder for use therein.

 

(ii) Promptly upon receipt by a party indemnified under this Section 8.05(d) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 8.05(d), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action, but
the failure to so notify the indemnifying party shall not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 8.05(d) unless such failure shall materially adversely affect the
defense of such action. In case notice of commencement of any such action shall
be given to the indemnifying party as above provided, the indemnifying party
shall be entitled to participate in and, to the extent it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and reasonably satisfactory
to such indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be paid by the indemnified party
unless (i) the indemnifying party agrees to pay the same, (ii) the indemnifying
party fails to assume the defense of such action with counsel reasonably
satisfactory to the indemnified party or (iii) the named parties to any such
action (including any impleaded parties) have been advised by such counsel that
representation of such indemnified party and the indemnifying party by the same
counsel would be inappropriate under applicable standards of professional
conduct (in which case the indemnified party shall have the right to separate
counsel and the indemnifying party shall pay the reasonable fees and expenses of
such separate counsel, provided that, the indemnifying party shall not be liable
for more than one separate counsel). No indemnifying party shall be liable for
any settlement of any proceeding entered into without its consent.

 

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(iii) The indemnification provided for in this Section 8.05(d) shall survive the
termination of this Agreement and shall remain in full force and effect
regardless of any investigation made by or on behalf of any indemnified party.

 

(e) Contribution.

 

(i) If for any reason the indemnification provisions contemplated by Section
8.05(d) hereof are either unavailable or insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages or liabilities
referred to therein, then the party that would otherwise be required to provide
indemnification or the indemnifying party (in either case, for purposes of this
Section 8.05(e), the “Indemnifying Party”) in respect of such losses, claims,
damages or liabilities, shall contribute to the amount paid or payable by the
party that would otherwise be entitled to indemnification or the indemnified
party (in either case, for purposes of this Section 8.05(e), the “Indemnified
Party”) as a result of such losses, claims, damages, liabilities or expense, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and the Indemnified Party, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact related to information supplied by the
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party.

 

(ii) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8.05(e) were determined by pro rata
allocation (even if the holders were treated as one entity for such purpose) or
by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person or
entity determined to have committed a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

 

(iii) The contribution provided for in this Section 8.05(e) shall survive the
termination of this Agreement and shall remain in full force and effect
regardless of any investigation made by or on behalf of any Indemnified Party.

 

ARTICLE IX

TRANSFERS OF PARTNERSHIP INTERESTS

 

9.01        Purchase for Investment.

 

(a)           Each Limited Partner, by its signature below or by its subsequent
admission to the Partnership, hereby represents and warrants to the General
Partner and to the Partnership that the acquisition of such Limited Partner’s
Partnership Units is made for investment purposes only and not with a view to
the resale or distribution of such Partnership Units.

 

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(b)            Subject to the provisions of Section 9.02, each Limited Partner
agrees that such Limited Partner will not sell, assign or otherwise transfer
such Limited Partner’s Partnership Units 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 9.01(a).

 

9.02        Restrictions on Transfer of Partnership Units.

 

(a)            Subject to the provisions of Sections 9.02(b), (c) and (d), no
Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer all or any portion of such Limited Partner’s Partnership Units, 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. The
General Partner may require, as a condition of any Transfer to which it
consents, that the transferor assume all costs incurred by the Partnership in
connection therewith.

 

(b)           No Limited Partner may withdraw from the Partnership other than as
a result of a permitted Transfer (i.e., a Transfer consented to as contemplated
by clause (a) above or clause (c) below or a Transfer pursuant to Section 9.05)
of all of such Limited Partner’s Partnership Units pursuant to this Article IX
or pursuant to a redemption of all of such Limited Partner’s Common Units
pursuant to Section 8.04. Upon the permitted Transfer or redemption of all of a
Limited Partner’s Common Units, such Limited Partner shall cease to be a Limited
Partner.

 

(c)           Subject to Sections 9.02(d), (e) and (g), a Limited Partner may
Transfer, with the written consent of the General Partner, all or a portion of
such Limited Partner’s Partnership Units to such Limited Partner’s (i) parent or
parent’s spouse, (ii) spouse, (iii) natural or adopted descendant or
descendants, (iv) spouse of such Limited Partner’s descendant, (v) brother or
sister, (vi) trust created by such Limited Partner for the primary benefit of
such Limited Partner and/or any such Person(s) described in (i) through
(v) above, of which trust such Limited Partner or any such Person(s) or bank or
other commercial entity in the business of acting as a fiduciary in its ordinary
course of business and having an equity capitalization of at least $100,000,000
is a trustee, (vii) a corporation, partnership or limited liability company
controlled by a Person or Persons named in (i) through (v) above, or (viii) if
the Limited Partner is an entity, its beneficial owners.

 

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

 

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(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, such Transfer would result in the Partnership being
treated as an association taxable as a corporation (other than a qualified REIT
subsidiary within the meaning of Section 856(i) of the Code), (ii) in the
opinion of legal counsel for the Partnership, it would adversely affect the
ability of the General Partner to continue to qualify as a REIT or subject the
General Partner to any additional taxes under Section 857 or Section 4981 of the
Code or (iii) such Transfer is effectuated through an “established securities
market” or a “secondary market (or the substantial equivalent thereof)” within
the meaning of Section 7704 of the Code.

 

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

 

(g)           Any purported Transfer in contravention of any of the provisions
of this Article IX shall be void ab initio and ineffectual and shall not be
binding upon, or recognized by, the General Partner or the Partnership.

 

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

 

9.03        Admission of Substitute Limited Partner.

 

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

 

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

 

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(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
in accordance with the Act;

 

(iii) The assignee shall have delivered a letter containing the representation
set forth in Section 9.01(a) and the representations and warranties set forth in
Section 9.01(b);

 

(iv) If the assignee is a corporation, partnership, limited liability company 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 8.02;

 

(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; and

 

(vii) The assignee shall have 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 9.03(a)(ii) 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 and the Substitute Limited Partner shall
cooperate with each other by preparing the documentation required by this
Section 9.03 and making all required filings and publications. The Partnership
shall take all such action as promptly as practicable after the satisfaction of
the conditions in this Article IX to the admission of such Person as a Limited
Partner of the Partnership.

 

9.04        Rights of Assignees of Partnership Units.

 

(a)            Subject to the provisions of Sections 9.01 and 9.02, 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 Units until the Partnership has received notice.

 

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

 

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9.05         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 such Limited Partner dies, such Limited Partner’s
executor, administrator or trustee, or, if such Limited Partner is finally
adjudicated incompetent, such Limited Partner’s committee, guardian or
conservator, shall have the rights of such Limited Partner for the purpose of
settling or managing such Limited Partner’s estate property and such power as
the bankrupt, deceased or incompetent Limited Partner possessed to assign all or
any part of such Limited Partner’s Partnership Units and to join with the
assignee in satisfying conditions precedent to the admission of the assignee as
a Substitute Limited Partner.

 

9.06         Joint Ownership of Partnership Units. A Partnership Unit 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 Unit shall be required to constitute the
action of the owners of such Partnership Unit; 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 Unit held in a joint tenancy with a right of survivorship, the
Partnership Unit 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 Unit 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 Unit to be divided into two equal
Partnership Units, which shall thereafter be owned separately by each of the
former owners.

 

ARTICLE X

BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS

 

10.01         Books and Records. At all times during the continuance of the
Partnership, the General Partner 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 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 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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10.02      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. 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 10.02(b).

 

10.03      Fiscal and Taxable Year. The fiscal and taxable year of the
Partnership shall be the calendar year unless otherwise required by the Code.

 

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

 

10.05     Tax Matters Partner; Tax Elections; Special Basis Adjustments.

 

(a)           The General Partner shall be the Tax Matters Partner of the
Partnership. As Tax Matters Partner, the General Partner shall have the right
and obligation to take all actions authorized and required, respectively, by the
Code for the Tax Matters Partner. The General Partner shall have the right to
retain professional assistance in respect of any audit of the Partnership by the
Service and all out-of-pocket expenses and fees incurred by the General Partner
on behalf of the Partnership as Tax Matters Partner shall constitute Partnership
expenses. In the event the General Partner receives notice of a final
Partnership adjustment under Section 6223(a)(2) of the Code, the General Partner
shall either (i) file a court petition for judicial review of such final
adjustment within the period provided under Section 6226(a) of the Code, a copy
of which petition shall be mailed to all Limited Partners on the date such
petition is filed, or (ii) mail a written notice to all Limited Partners, within
such period, that describes the General Partner’s reasons for determining not to
file such a petition.

 

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

 

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

 

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(d)          The Partners, intending to be legally bound, hereby authorize the
Partnership to make an election (the “Safe Harbor Election”) to have the
“liquidation value” safe harbor provided in Proposed Treasury Regulation Section
1.83-3(1) and the Proposed Revenue Procedure set forth in Internal Revenue
Service Notice 2005-43, as such safe harbor may be modified when such proposed
guidance is issued in final form or as amended by subsequently issued guidance
(the “Safe Harbor”), apply to any interest in the Partnership transferred to a
service provider while the Safe Harbor Election remains effective, to the extent
such interest meets the Safe Harbor requirements (collectively, such interests
are referred to as “Safe Harbor Interests”). The Tax Matters Partner is
authorized and directed to execute and file the Safe Harbor Election on behalf
of the Partnership and the Partners. The Partnership and the Partners (including
any person to whom an interest in the Partnership is transferred in connection
with the performance of services) hereby agree to comply with all requirements
of the Safe Harbor (including forfeiture allocations) with respect to all Safe
Harbor Interests and to prepare and file all U.S. federal income tax returns
reporting the tax consequences of the issuance and vesting of Safe Harbor
Interests consistent with such final Safe Harbor guidance. The Partnership is
also authorized to take such actions as are necessary to achieve, under the Safe
Harbor, the effect that the election and compliance with all requirements of the
Safe Harbor referred to above would be intended to achieve under Proposed
Treasury Regulation Section 1.83-3, including amending this Agreement.

 

ARTICLE XI

AMENDMENT OF AGREEMENT

 

11.01     Amendment of Agreement.

 

(a)           Amendments to this Agreement may be proposed by the General
Partner or by Limited Partners forming a Two Thirds Majority (other than the
General Partner or any Subsidiary of the General Partner). Following such
proposal, the General Partner shall submit any proposed amendment to the Limited
Partners. The General Partner shall seek the written vote of the Partners on the
proposed amendment or shall call a meeting to vote thereon and to transact any
other business that it may deem appropriate. For purposes of obtaining a written
vote, the General Partner may require a response within a reasonable specified
time, but not less than fifteen (15) days, and failure to respond in such time
period shall constitute a vote which is consistent with the General Partner’s
recommendation with respect to the proposal. Except as otherwise provided in
this Agreement, a proposed amendment shall be adopted and be effective as an
amendment hereto if it is approved by the General Partner and it receives the
consent of a Two Thirds Majority (other than the General Partner or any
Subsidiary of the General Partner).

 

(b)           Notwithstanding Section 11.01(a), the General Partner shall have
the power, without the consent of the Limited Partners, to amend this Agreement
as may be required to facilitate or implement any of the following purposes:

 

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

 

(ii) to reflect the issuance of additional Partnership Units or the admission,
substitution, termination, or withdrawal of Partners in accordance with this
Agreement;

 

(iii) to set forth or amend the designations, rights (including redemption
rights that differ from those specified in Section 8.04), powers, duties, and
preferences of holders of any additional Partnership Units or other Partnership
Interests issued pursuant to Section 4.02;

 

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

 

(v) to reflect such changes as are reasonably necessary for the General Partner
to maintain its qualification as a REIT, including changes which may be
necessitated due to a change in applicable law (or an authoritative
interpretation thereof) or a ruling of the Service;

 

(vi) to modify the manner in which Capital Accounts are computed;

 

(vii) to include provisions in this Agreement that may be referenced in any
rulings, regulations, notices, announcements, or other guidance regarding the
federal income tax treatment of compensatory partnership interests issued and
made effective after the date hereof or in connection with any elections that
the General Partner determines to be necessary or advisable in respect of any
such guidance. Any such amendment may include, without limitation, (a) a
provision authorizing or directing the General Partner to make any election
under the such guidance, (b) a covenant by the Partnership and all of the
Partners to agree to comply with the such guidance, (c) an amendment to the
capital account maintenance provisions and the allocation provisions contained
in this Agreement so that such provisions comply with (I) the provisions of the
Code and the Regulations as they apply to the issuance of compensatory
partnership interests and (II) the requirements of such guidance and any
election made by the General Partner with respect thereto, including, a
provision requiring “forfeiture allocations” as appropriate. Any such amendments
to this Agreement shall be binding upon all Partners; and

 

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

 

The General Partner shall provide notice to the Limited Partners when any action
under this Section 11.01(b) is taken.

 

54

 

 

(c)          Notwithstanding Sections 11.01(a) and (b), this Agreement shall not
be amended without the consent of each Partner adversely affected if such
amendment would (i) convert a Limited Partner’s interest in the Partnership into
a General Partner Interest; (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner; (iii) alter rights of such
Partner to receive distributions pursuant to Article 5, or the allocations
specified in Article 5 (except as permitted pursuant to Section 4.02 and Section
11.01(b)(iii)) in a manner adverse to such Partner; (iv) alter or modify the
Common Unit Redemption Right and REIT Shares Amount as set forth in Section
8.04, and the related definitions, in a manner adverse to such Partner; (v)
cause the termination of the Partnership prior to the time set forth in Section
2.04; or (vi) amend this Section 11.01(c); provided, however, that the consent
of each Partner adversely affected shall not be required for any amendment or
action that affects all Partners holding the same class or series of Partnership
Units on a uniform or pro rata basis. Any amendment consented to by any Partner
shall be effective as to that Partner, notwithstanding the absence of such
consent by any other Partner.

 

(d)          Notwithstanding Sections 11.01(a) or (b), the General Partner shall
not amend Sections 4.02(a), 6.06, 6.07 or 7.01 without the consent of a Two
Thirds Majority (other than the General Partner or any Subsidiary of the General
Partner).

 

ARTICLE XII

GENERAL PROVISIONS

 

12.01     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
the attached Exhibit A, as it may be amended or restated from time to time;
provided, however, that any Partner may specify a different address by notifying
the General Partner in writing of such different address. Notices to the General
Partner and the Partnership shall be delivered at or mailed to its office
address set forth in Section 2.03. The General Partner and the Partnership may
specify a different address by notifying the Limited Partners in writing of such
different address.

 

12.02     Survival of Rights. Subject to the provisions 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.  

 

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

 

12.04     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.

 

12.05     Entire Agreement. This Agreement and its attached Exhibits 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, including without limitation the Original
Agreement.

 

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12.06     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.

 

12.07     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.

 

12.08     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,
notwithstanding that all parties shall not have signed the same counterpart.

 

12.09     Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have hereunder affixed their signatures to this
Second Amended and Restated Agreement of Limited Partnership, all as of the 2nd
day of April, 2014.

 

  GENERAL PARTNER:       BLUEROCK RESIDENTIAL GROWTH REIT, INC.             By:
/s/ Christopher J. Vohs     Name: Christopher J. Vohs     Title: Treasurer and
Chief Accounting Officer           LIMITED PARTNERS:       BLUEROCK REIT
HOLDINGS, LLC,           By: Bluerock Residential Growth REIT, Inc.   Its: Sole
Member             By: /s/ Christopher J. Vohs     Name: Christopher J. Vohs    
Title: Treasurer and Chief Accounting Officer           BRG MANAGER, LLC        
By: Bluerock Real Estate, L.L.C.     Its: Manager             By: /s/ Jordan B.
Ruddy     Name: Jordan B. Ruddy     Title: Authorized Signatory

 

[Signature Page to Second Amended and Restated Agreement of Limited Partnership]

 

57

 

 

  BR-NPT SPRINGING ENTITY, LLC           By: BR–North Park Towers, LLC   Its:
Manager             By: Bluerock Real Estate, L.L.C.     Its: Manager          
  By: /s/ Jordan B. Ruddy     Name: Jordan B. Ruddy     Title: Authorized
Signatory           BLUEROCK MULTIFAMILY ADVISOR, LLC           By:  /s/ Jordan
B. Ruddy   Name: Jordan B. Ruddy   Its: President and Chief Operating Officer

 

[Signature Page to Second Amended and Restated Agreement of Limited Partnership
- Continued]

 

58

 

 

  BLUEROCK PROPERTY MANAGEMENT, LLC           By: Bluerock Real Estate, L.L.C.  
Its: Manager             By: /s/ Jordan B. Ruddy     Name: Jordan B. Ruddy    
Its: Authorized Signatory

 

[Signature Page to Second Amended and Restated Agreement of Limited Partnership
- Continued]

 

59

 

 

EXHIBIT A

(As of April 2, 2014)

 

       Agreed                     Value of                 Cash   Capital  
Common   LTIP   Percentage  Partner  Contribution   Contribution   Units  
Units   Interest  General Partner:                                          
Bluerock Residential Growth REIT, Inc.  $402,856         27,783    0    0.45%   
                        Limited Partners:                                      
              Bluerock REIT Holdings, LLC  $80,168,326         5,528,850    0  
 89.68%                            BRG Manager, LLC  $0   $2,603,652    0  
 179,562    2.91%                            BR-NPT Springing Entity, LLC  $0  
$3,632,000    250,483    0    4.06%                            Bluerock Property
Management, LLC  $0   $468,000    32,276    0    2.53%                       
    Bluerock Multifamily Advisor, LLC  $0   $2,117,237    0    146,016    2.37%
                           TOTALS  $80,571,182   $8,820,889    5,839,392  
 325,579    100.0000%

 

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