EX-10.2






FIRST AMENDMENT TO

AGREEMENT OF LIMITED PARTNERSHIP




OF




GRUBB & ELLIS APARTMENT REIT HOLDINGS, L.P.




This First Amendment to Agreement of Limited Partnership (the “Amendment”) of GRUBB & ELLIS
APARTMENT REIT HOLDINGS, L.P. (f/k/a NNN APARTMENT REIT HOLDINGS, L.P.) (the “Partnership”),
entered into as of June 3, 2010, by and among GRUBB & ELLIS APARTMENT REIT, INC. (f/k/a NNN
APARTMENT REIT, INC.), a Maryland corporation (the “Company” or the “General Partner”), GRUBB &
ELLIS APARTMENT REIT ADVISOR, LLC (f/k/a NNN APARTMENT REIT ADVISOR, LLC), a Virginia limited
liability company (the “Special Limited Partner”) and GRUBB & ELLIS APARTMENT REIT ADVISOR, LLC, as
the initial limited partner (the “Initial Limited Partner”) and those parties whom from time to
time become Limited Partners as provided in that certain Agreement of Limited Partnership dated as
of December 27, 2005 (the “Partnership Agreement”) by virtue of their interest in the Partnership
(capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in
the Partnership Agreement).



WHEREAS, pursuant to the authority granted to the General Partner in Article XI of the
Partnership Agreement, the General Partner wishes to amend the Partnership Agreement as described
below;



NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:



1. Redemption of Incentive Limited Partnership Interest. Sections 8.04(b) and 8.04(c)
of the Partnership Agreement are hereby deleted and replaced in their entirety with the following:



“(b) No distribution or payment will be paid to the Advisor in connection with an
internalization of the Advisor pursuant to the Company’s conversion to a
self-administered REIT and the Incentive Limited Partnership Interest of the Special
Limited Partner will not be redeemed. The provisions of this section 8.04(b) are
not intended to limit any other compensation or distribution the Company or the
Partnership may pay the Advisor pursuant to this Agreement or any other agreement.



(c) Upon a termination of the advisory agreement between the Advisor and the Company
in connection with any other event except the listing described in Section 8.04(a),
the Incentive Limited Partnership Interest of the Special Limited Partner will be
redeemed by the General Partner for a redemption price equal to the amount of the
distribution that the Special Limited Partner would receive pursuant to Section
5.02(b)(ii) hereof if the Partnership were immediately to sell all of its Properties
for their fair market value; provided, however, that upon such termination, the
Special Limited Partner, in its sole discretion, may elect, within five (5) business
days after the date of such termination, to defer the redemption of the Incentive
Limited Partnership Interest of the Special Limited Partner and instead elect
(“Deferred Payment Election”) to receive a deferred termination distribution
(“Deferred Termination Amount”), which, notwithstanding any other provisions herein
to the contrary, shall include any Properties acquired and/or owned by the General
Partner (either directly or through third parties) at the time of such termination
and any Properties acquired and/or owned by the General Partner (either directly or
through third parties) after the date of such termination for which the Special
Limited Partner was entitled to receive an acquisition fee pursuant to the advisory
agreement for services rendered (the “Included Assets”), but shall exclude any new
Properties acquired and/or owned by the General Partner (either directly or through
third parties) after such termination, other than the Included Assets (the “Separate
Asset Value”). The Incentive Limited Partnership Interest shall be redeemed for the
Deferred Termination Amount, if any, within five (5) business days after the first
to occur of (x) a listing described in Section 8.04(a) herein or (y) a liquidation
or Transaction (an “Other Liquidity Event”), in an amount equal to:



(i) if in connection with a listing described in Section 8.04(a) herein,
15.0% of the amount, if any, by which (A) the appraised fair market value as of
the listing date of the Included Assets, less any indebtedness secured by such
assets as of the listing date, plus the cumulative distributions made to the
General Partner and to any Limited Partners (other than the Special Limited
Partner) with respect to Partnership Units issued in connection with the
acquisition of the Included Assets from the inception of the Partnership through
the listing date, exceeds (B) the sum of (I) the Invested Capital as of the
listing date (excluding Invested Capital relating to the Separate Asset Value),
(II) the capital value of any Partnership Units issued in connection with the
acquisition of the Included Assets to the Limited Partners (other than the
Special Limited Partner) as valued by the General Partner as of the date of such
issuance, and (III) the Return that has accrued with respect to such Invested
Capital of the General Partner and that has accrued to any Limited Partners
(other than the Special Limited Partner) with respect to Partnership Units
issued in connection with the acquisition of the Included Assets for the period
from the inception of the Partnership through the listing date; or



(ii) if in connection with an Other Liquidity Event, 15.0% of the amount,
if any, by which (A) the appraised fair market value as of the Other Liquidity
Event of the Included Assets, less any indebtedness secured by such assets as of
the Other Liquidity Event, plus the cumulative distributions made to the General
Partner and to any Limited Partners (other than the Special Limited Partner)
with respect to Partnership Units issued in connection with the acquisition of
the Included Assets from the inception of the Partnership through the Other
Liquidity Event, exceeds (B) the sum of (I) the Invested Capital as of the Other
Liquidity Event (excluding Invested Capital relating to the Separate Asset
Value), (II) the capital value of any Partnership Units issued in connection
with the acquisition of the Included Assets to the Limited Partners (other than
the Special Limited Partner) as valued by the General Partner as of the date of
such issuance, and (III) the Return that has accrued with respect to such
Invested Capital of the General Partner and that has accrued to any Limited
Partners (other than the Special Limited Partner) with respect to Partnership
Units issued in connection with the acquisition of the Included Assets for the
period from the inception of the Partnership through the Other Liquidity Event;



provided, further, that if the Special Limited Partner makes a Deferred Payment
Election, the Special Limited Partner shall not be entitled to receive any other
amounts under Section 5.02(b) or Section 8.04(a) hereof following the date of such
election.



The redemption price of the Incentive Limited Partnership Interest or the Deferred
Termination Amount shall be payable in cash or in REIT Shares or Limited Partnership
Interests, if agreed to by the Special Limited Partner and the General Partner,
except that the Special Limited Partner shall not be permitted to elect to receive
REIT Shares to the extent that doing so would cause the Company to fail to qualify
as a REIT.



Notwithstanding any other provisions herein to the contrary, the Special Limited
Partner acknowledges and agrees that: (i) the Special Limited Partner has not
received and the General Partner has not provided any assurance or representation of
any kind relating to the Deferred Termination Amount; (ii) the Special Limited
Partner does not have any expectation of any minimum level of the Deferred
Termination Amount; (iii) the Special Limited Partner shall not have any rights or
interests of any kind with respect to the Separate Asset Value; (iv) neither the
General Partner nor any director, officer, stockholder, partner, member, employee,
trustee, representative or agent of the General Partner shall have any liability or
responsibility to the Special Limited Partner for any act or omission performed or
failed to be performed by it, or for any losses, claims, costs, damages, or
liabilities arising from any such act or omission relating to the acquisition,
management, operation, or disposition of the Properties; (v) the General Partner
shall have full power, authority, discretion and control with respect to the
Properties; (vi) the Deferred Termination Amount, if any, is and shall be deemed to
be a contingent interest; (vii) nothing herein shall in any way limit or restrict
the General Partner’s rights to pursue follow-on offerings; and (viii) any rights of
the Special Limited Partner to the Deferred Termination Amount, if any, are personal
to the Special Limited Partner and, notwithstanding any other provisions herein to
the contrary, may not be assigned by the Special Limited Partner except to an
Affiliate or successor entity. Nothing herein shall limit the Special Limited
Partner’s (or its Affiliates’) rights to pursue and engage in other offerings in the
same or other asset class(es).”



2. Effect. Except as set forth above, the Partnership Agreement shall remain in full
force and effect.



3. Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall be deemed part of the same document.



IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this First
Amendment to Agreement of Limited Partnership, all as of the date first above written.



GENERAL PARTNER:



GRUBB & ELLIS APARTMENT REIT, INC.,


a Maryland corporation

 


By: /s/ Shannon K S Johnson

Name: Shannon K S Johnson

Title: Chief Financial Officer

SPECIAL LIMITED PARTNER:

GRUBB & ELLIS APARTMENT REIT ADVISOR, LLC,

a Virginia limited liability company





By: /s/ Stanley J. Olander, Jr.

Name: Stanley J. Olander, Jr.

Title: Chief Executive Officer and President



INITIAL LIMITED PARTNER:



GRUBB & ELLIS APARTMENT REIT ADVISOR, LLC,



a Virginia limited liability company



By: /s/ Stanley J. Olander, Jr.

Name: Stanley J. Olander, Jr.

Title: Chief Executive Officer and President