exv10w4






Exhibit 10.4




AMENDED AND RESTATED




AGREEMENT OF LIMITED PARTNERSHIP



OF



COLE
REAL ESTATE INCOME STRATEGY (DAILY NAV) OPERATING PARTNERSHIP, LP



Dated as of September 28, 2011



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









 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE 1 — DEFINED TERMS	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE 2 — ORGANIZATIONAL MATTERS	 	 	11	 
	Section 2.1
	 	Formation and Continuation	 	 	11	 
	Section 2.2
	 	Name	 	 	11	 
	Section 2.3
	 	Registered Office and Agent; Principal Office	 	 	11	 
	Section 2.4
	 	Power of Attorney	 	 	11	 
	Section 2.5
	 	Term	 	 	13	 
	Section 2.6
	 	UCC Article 8 Election	 	 	13	 
	 
	 	 	 	 	 	 
	ARTICLE 3 — PURPOSE	 	 	13	 
	Section 3.1
	 	Purpose and Business	 	 	13	 
	Section 3.2
	 	Powers	 	 	13	 
	Section 3.3
	 	Partnership Only for Purposes Specified	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE 4 — CAPITAL CONTRIBUTIONS	 	 	14	 
	Section 4.1
	 	Capital Contributions of the Partners	 	 	14	 
	Section 4.2
	 	Issuance of Additional Partnership Interests and Additional Funding	 	 	15	 
	Section 4.3
	 	Other Contribution Provisions	 	 	18	 
	Section 4.4
	 	No Preemptive Rights	 	 	18	 
	Section 4.5
	 	No Interest on Capital	 	 	18	 
	 
	 	 	 	 	 	 
	ARTICLE 5 — DISTRIBUTIONS	 	 	18	 
	Section 5.1
	 	Distribution of Cash	 	 	18	 
	Section 5.2
	 	REIT Distribution Requirements	 	 	19	 
	Section 5.3
	 	No Right to Distributions in Kind	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE 6 — ALLOCATIONS	 	 	20	 
	Section 6.1
	 	Capital Account Allocations of Profit and Loss	 	 	20	 
	Section 6.2
	 	Capital Accounts	 	 	22	 
	Section 6.3
	 	Tax Allocations	 	 	23	 
	Section 6.4
	 	Substantial Economic Effect	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE 7 — MANAGEMENT AND OPERATIONS OF BUSINESS	 	 	24	 
	Section 7.1
	 	Management	 	 	24	 
	Section 7.2
	 	Certificate of Limited Partnership	 	 	28	 
	Section 7.3
	 	Restrictions on General Partner Authority	 	 	29	 
	Section 7.4
	 	Reimbursement of the General Partner and the Company	 	 	29	 
	Section 7.5
	 	Outside Activities of the General Partner	 	 	30	 
	Section 7.6
	 	Contracts with Affiliates	 	 	30	 
	Section 7.7
	 	Indemnification	 	 	31	 
	Section 7.8
	 	Liability of the General Partner	 	 	32	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 7.9
	 	Other Matters Concerning the General Partner and the Company	 	 	33	 
	Section 7.10
	 	Title to Partnership Assets	 	 	34	 
	Section 7.11
	 	Reliance by Third Parties	 	 	34	 
	 
	 	 	 	 	 	 
	ARTICLE 8 — RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS	 	 	35	 
	Section 8.1
	 	Limitation of Liability	 	 	35	 
	Section 8.2
	 	Management of Business	 	 	35	 
	Section 8.3
	 	Outside Activities of Limited Partners	 	 	35	 
	Section 8.4
	 	Rights of Limited Partners Relating to the Partnership	 	 	35	 
	Section 8.5
	 	Redemption Right	 	 	36	 
	 
	 	 	 	 	 	 
	ARTICLE 9 — BOOKS, RECORDS, ACCOUNTING AND REPORTS	 	 	37	 
	Section 9.1
	 	Records and Accounting	 	 	37	 
	Section 9.2
	 	Taxable Year and Fiscal Year	 	 	38	 
	Section 9.3
	 	Reports	 	 	38	 
	 
	 	 	 	 	 	 
	ARTICLE 10 — TAX MATTERS	 	 	38	 
	Section 10.1
	 	Preparation of Tax Returns	 	 	38	 
	Section 10.2
	 	Tax Elections	 	 	38	 
	Section 10.3
	 	Tax Matters Partner	 	 	39	 
	Section 10.4
	 	Organizational Expenses	 	 	40	 
	 
	 	 	 	 	 	 
	ARTICLE 11 — TRANSFERS AND WITHDRAWALS	 	 	40	 
	Section 11.1
	 	Transfer	 	 	40	 
	Section 11.2
	 	Transfer of the Company’s and General Partner’s Partnership Interest and Limited Partner Interest;
Extraordinary Transactions	 	 	41	 
	Section 11.3
	 	Limited Partners’ Rights to Transfer	 	 	42	 
	Section 11.4
	 	Substituted Limited Partners	 	 	43	 
	Section 11.5
	 	Assignees	 	 	43	 
	Section 11.6
	 	General Provisions	 	 	44	 
	 
	 	 	 	 	 	 
	ARTICLE 12 — ADMISSION OF PARTNERS	 	 	46	 
	Section 12.1
	 	Admission of Successor General Partner	 	 	46	 
	Section 12.2
	 	Admission of Additional Limited Partners	 	 	46	 
	Section 12.3
	 	Amendment of Agreement and Certificate of Limited Partnership	 	 	47	 
	 
	 	 	 	 	 	 
	ARTICLE 13 — DISSOLUTION, LIQUIDATION AND TERMINATION	 	 	47	 
	Section 13.1
	 	Dissolution	 	 	47	 
	Section 13.2
	 	Winding Up	 	 	48	 
	Section 13.3
	 	Deficit Capital Account Restoration Obligation	 	 	49	 
	Section 13.4
	 	Compliance with Timing Requirements of Regulations	 	 	49	 
	Section 13.5
	 	Deemed Distribution and Recontribution	 	 	50	 
	Section 13.6
	 	Rights of Limited Partners	 	 	50	 
	Section 13.7
	 	Notice of Dissolution	 	 	50	 
	Section 13.8
	 	Cancellation of Certificate of Limited Partnership	 	 	50	 
	Section 13.9
	 	Reasonable Time for Winding-Up	 	 	51	 
	Section 13.10
	 	Waiver of Partition	 	 	51	 






ii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 13.11
	 	Liability of Liquidator	 	 	51	 
	 
	 	 	 	 	 	 
	ARTICLE 14 — AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS	 	 	51	 
	Section 14.1
	 	Amendments	 	 	51	 
	Section 14.2
	 	Meetings of the Partners	 	 	53	 
	 
	 	 	 	 	 	 
	ARTICLE 15 — GENERAL PROVISIONS	 	 	53	 
	Section 15.1
	 	Addresses and Notice	 	 	53	 
	Section 15.2
	 	Titles and Captions	 	 	54	 
	Section 15.3
	 	Pronouns and Plurals	 	 	54	 
	Section 15.4
	 	Further Action	 	 	54	 
	Section 15.5
	 	Binding Effect	 	 	54	 
	Section 15.6
	 	Creditors	 	 	54	 
	Section 15.7
	 	Waiver	 	 	54	 
	Section 15.8
	 	Counterparts	 	 	54	 
	Section 15.9
	 	Applicable Law	 	 	55	 
	Section 15.10
	 	Invalidity of Provisions	 	 	55	 
	Section 15.11
	 	No Rights as Stockholders	 	 	55	 
	Section 15.12
	 	Entire Agreement	 	 	55	 






iii









 






EXHIBITS




	 	 	 	 	 

	Exhibit A

	 	—
	 	Partners Contributions and Partnership Interests
	Exhibit B

	 	—
	 	Notice of Redemption











 









 








AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

COLE REAL ESTATE INCOME STRATEGY (DAILY NAV) OPERATING PARTNERSHIP, LP




     THIS
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
September 28, 2011, is entered
into by and among Cole Real Estate Income Strategy (Daily NAV), Inc., (f/k/a Cole Office/Industrial
Property Trust, Inc., Cole Advisor Corporate Income REIT, Inc. and Cole Real Estate Income Trust,
Inc.) a Maryland corporation (the “Company”), as the General Partner and the Persons whose
names are set forth on Exhibit A attached hereto, as the Limited Partners, together with
any other Persons who become Partners in the Partnership as provided herein.




     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 on July 27, 2010;



     WHEREAS, an original agreement of limited partnership was entered into by the Company, as
general partner, and the initial limited partner as of July 27, 2010;



     WHEREAS, the Company proposes to effect an initial public offering of its common stock and to
contribute the net proceeds from the public offering to the Partnership, to cause the Partnership
to acquire direct and indirect interests in certain commercial properties and other assets, and to
cause the Partnership to enter into certain financing transactions;



     WHEREAS, the Partnership will issue Partnership Interests to the Company and other persons in
connection with the foregoing transactions;



     WHEREAS, upon the completion of the foregoing transactions, the Partnership shall return the
original capital contributions made by the Company, and any ongoing interest in the Partnership of
the Company shall be based on their respective contributions as contemplated below;



     WHEREAS, by virtue of its execution of this Agreement the Company hereby consents to the
amendment and restatement of the original agreement of limited partnership in its entirety by
entering into this Agreement;



     NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:



ARTICLE 1 — DEFINED TERMS




     The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.



     “Act” means the Delaware Revised Uniform Limited Partnership Act, as it may be
amended, supplemented or restated from time to time, and any successor to such statute.



     “Additional Funds” has the meaning set forth in Section 4.2B hereof.



1









 





     “Additional Limited Partner” means a Person admitted to the Partnership as a Limited
Partner pursuant to Section 4.2 and Section 12.2 hereof and who is shown as such on the books and
records of the Partnership.



     “Adjusted Capital Account” means the Capital Account maintained for each Partner as of
the end of each Partnership taxable year (i) increased by any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5) and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing
definition of Adjusted Capital Account is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.



     “Administrative Expenses” means (i) all administrative and operating costs and
expenses incurred by the Partnership, (ii) those administrative costs and expenses of the General
Partner or the Company, including any salaries or other payments to directors, officers or
employees of the General Partner or the Company, and any accounting and legal expenses of the
General Partner or the Company, which expenses, the Partners have agreed, are expenses of the
Partnership and not the General Partner or the Company, and (iii) to the extent not included in
clauses (i) or (ii) above, REIT Expenses; provided, however, that Administrative
Expenses shall not include any administrative costs and expenses incurred by the General Partner or
the Company that are attributable to Properties or partnership interests in a Subsidiary of the
Partnership that are owned by the General Partner or the Company or other than through its
ownership interest in the Partnership.



     “Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For purposes of this
definition, “control,” when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing. No officer, director or stockholder of the General Partner
shall be considered an Affiliate of the General Partner solely as a result of serving in such
capacity or being a stockholder of the General Partner.



     “Agreed Value” means the fair market value of a Partner’s non-cash Capital
Contribution (net of assumed liabilities) 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.



     “Agreement” means this Amended and Restated Agreement of Limited Partnership, as it
may be amended, supplemented and/or restated from time to time, including by way of adoption of a
Certificate of Designations, including any exhibits attached hereto.



     “Articles of Incorporation” means the Articles of Incorporation of the Company filed
with the Maryland State Department of Assessments and Taxation, as amended or restated from time to
time.



2









 





     “Assignee” means a Person to whom one or more Partnership Units have been transferred
in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner,
and who has the rights set forth in Section 11.5.



     “Business
Day” means any day the New York Stock Exchange is open for
trading.



     “Bylaws” means the Amended and Restated Bylaws of the Company, as may be amended,
supplemented and/or restated from time to time.



     “Capital Account” has the meaning set forth in Section 6.2 hereof.



     “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 this Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.



     “Cash Amount” means, with respect to Tendered Units, the Value of the REIT Shares
Amount as of the Valuation Date with respect to such Tendered Units; provided that
the Cash Amount will be reduced by the amount of any distributions payable with respect to such
REIT Shares Amount that have an ex-dividend date after the Valuation Date and a record date before
the Specified Redemption Date.



     “Certificate of Designations” means an amendment to this Agreement that sets forth the
designations, rights, powers, duties and preferences of Holders of any Partnership Interests issued
pursuant to Section 4.2, which amendment is in the form of a certificate signed by the General
Partner and appended to this Agreement. A Certificate of Designations is not the exclusive manner
in which such an amendment may be effected. The General Partner may adopt a Certificate of
Designations without the Consent of the Limited Partners to the extent permitted pursuant to
Section 14.1 hereof.



     “Certificate of Limited Partnership” means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Secretary of State of the State of Delaware
on July 27, 2010, as amended from time to time in accordance with the terms hereof and the Act.



     “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to
time or any successor statute thereto, as interpreted by the applicable regulations thereunder.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any succeeding law.



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



     “Common Unit” means a Partnership Unit other than a Preferred Unit.



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



     “Company” has the meaning set forth in the introductory paragraph.



3









 





     “Consent” means the consent to, approval of or vote in favor of a proposed action by a
Partner given in accordance with Article 14 hereof.



     “Constituent Person” has the meaning set forth in Section 1.12(b) of Exhibit C
hereto.



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



     (i) the Company (a) declares or pays a dividend on its outstanding REIT Shares wholly or
partly in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares wholly
or partly in REIT Shares; (b) splits or subdivides its outstanding REIT Shares or (c) effects a
reverse stock split or otherwise 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, split, subdivision, reverse split or combination (assuming for
such purpose that such dividend, distribution, split, subdivision, reverse split or combination has
occurred as of such time), and the denominator of which shall be the actual number of REIT Shares
(determined without the above assumption) issued and outstanding on the record date for such
dividend, distribution, split, subdivision, reverse split or combination;



     (ii) the Company distributes any rights, options or warrants to all holders of its REIT Shares
to subscribe for or to purchase or to otherwise acquire REIT Shares (or other securities or rights
convertible into, exchangeable for or exercisable for REIT Shares) at a price per share less than
the Value of a REIT Share on the record date for such distribution (each a “Distributed
Right”), then 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 plus the maximum number of REIT Shares purchasable under such Distributed Rights and
the denominator of which shall be the number of REIT Shares issued and outstanding on the record
date plus a fraction (a) the numerator of which is the minimum aggregate purchase price under such
Distributed Rights of the maximum number of REIT Shares purchasable under such Distributed Rights
and (b) the denominator of which is the Value of a REIT Share as of the record date;
provided, however, that, if any such Distributed Rights expire or become no longer
exercisable, then the Conversion Factor shall be adjusted, effective retroactive to the date of
distribution of the Distributed Rights, to reflect a reduced maximum number of REIT Shares or any
change in the minimum aggregate purchase price for the purposes of the above fraction; and



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



4









 




shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed
applicable to one REIT Share.




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



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



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



     “Economic Capital Account Balance” with respect to a Partner means an amount equal to
its Capital Account balance, plus the amount of its share of any Partner Minimum Gain or
Partnership Minimum Gain.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.



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



     “Extraordinary Transaction” means, with respect to the Company, the occurrence of one
or more of the following events: (i) a merger (including a triangular merger), consolidation or
other combination with or into another Person (other than in connection with a change in the
Company’s state of incorporation or organizational form); (ii) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of its assets in one transaction or a series
of related transactions; (iii) any reclassification, recapitalization or change of its outstanding
equity interests (other than a change in par value, or from par value to no par value, or as a
result of a split, dividend or similar subdivision); or (iv) the adoption of any plan of
liquidation or dissolution of the Company (whether or not in compliance with the provisions of this
Agreement).



     “Funding Debt” mean the incurrence of any Debt for the purpose of providing funds to
the Partnership by or on behalf of the Company or any wholly owned Subsidiary of the Company.
Funding Debt also may include Preferred Units with comparable terms to otherwise



5









 




permitted Funding Debt (for example, to avoid adverse REIT tax consequences to the Company
that could arise in certain circumstances through the use of Funding Debt that is treated as debt
for federal income tax purposes).




     “General Partner” means the Company, in its capacity as the general partner of the
Partnership, or any Person who becomes a successor general partner of the Partnership.



     “General Partner Interest” means a Partnership Interest held by the General Partner,
in its capacity as general partner. A General Partner Interest may be expressed as a number of
Partnership Units.



     “General Partner Loan” has the meaning set forth in Section 4.2D hereof.



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



     “Incapacity” or “Incapacitated” means, (i) as to any Partner who is an
individual, death, total physical disability or entry by a court of competent jurisdiction of an
order adjudicating him or her incompetent to manage his or her Person or estate; (ii) as to any
Partner that is a corporation or limited liability company, the filing of a certificate of
dissolution, or its equivalent, or the revocation of its charter; (iii) as to any partnership or
limited liability company which is a Partner, the dissolution and commencement of winding up of the
partnership or the limited liability company; (iv) as to any Partner that is an estate, the
distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any
trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a
new trustee) or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences
a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (b) the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Partner; (c) the Partner
executes and delivers a general assignment for the benefit of the Partner’s creditors; (d) the
Partner files an answer or other pleading admitting or failing to contest the material allegations
of a petition filed against the Partner in any proceeding of the nature described in clause (b)
above; (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver
or liquidator for the Partner or for all or any substantial part of the Partner’s properties; (f)
any proceeding seeking liquidation, reorganization or other relief of or against such Partner under
any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed
within one hundred twenty (120) days after the commencement thereof; (g) the appointment without
the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or
stayed within ninety (90) days of such appointment; or (h) an appointment referred to in clause (g)
above is not vacated within ninety (90) days after the expiration of any such stay.



     “Indemnitee” means (i) any Person made a party to a proceeding by reason of his, her
or its status as (a) the Company (b) the General Partner or (c) a director or officer of the
Company, the General Partner or the Partnership and (ii) such other Persons (including Affiliates
of the Company, General Partner or the Partnership) as the General Partner may designate from time
to



6









 




time (whether before or after the event giving rise to potential liability), in its sole and
absolute discretion.




     “IRS” means the U.S. Internal Revenue Service.



     “Limited Partner” means any Person named as a Limited Partner on Exhibit A
attached hereto, as such Exhibit may be amended from time to time, or any Substituted Limited
Partner or Additional Limited Partner, in such Person’s capacity as a Limited Partner of the
Partnership.



     “Limited Partner Interest” means a Partnership Interest of a Limited Partner in the
Partnership representing a fractional part of the Partnership Interests of all Partners and
includes any and all benefits to which the Holder of such a Partnership Interest may be entitled,
as provided in this Agreement, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of
Partnership Units.



     “Liquidating Event” has the meaning set forth in Section 13.1 hereof.



     “Liquidator” has the meaning set forth in Section 13.2A hereof.



     “Loss” has the meaning set forth in Section 6.1F hereof.



     “Majority in Interest of the Outside Limited Partners” means Limited Partners
(excluding for this purpose (i) any Limited Partnership Interests held by the Company or its
Subsidiaries, (ii) any Person of which the Company or its Subsidiaries directly or indirectly owns
or controls more than 50% of the voting interests and (iii) any Person directly or indirectly
owning or controlling more than 50% of the outstanding interests of the General Partner) holding
more than 50% of the outstanding Partnership Units held by all Limited Partners who are not
excluded for the purposes hereof.



     “New Securities” means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase REIT Shares or other shares
of capital stock of the Company, or (ii) any Debt issued by the Company that provides any of the
rights described in clause (i).



     “Nonrecourse Liability” has the meaning set forth in Regulations Section
1.752-1(a)(2).



     “Notice of Redemption” means the Notice of Redemption substantially in the form of
Exhibit B to this Agreement.



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



     “Partner Minimum Gains” means “partner nonrecourse debt minimum gain” within the
meaning of Regulations Section 1.704-2(i). A Partner’s share of Partner Minimum Gain shall be
determined in accordance with Regulations Section 1.704-2(i)(5).



7









 





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



     “Partnership Interest” means an ownership interest in the Partnership 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. There may be
one or more classes or series or Partnership Interests as provided in Section 4.2. A Partnership
Interest may be expressed as a number of Partnership Units. Unless otherwise expressly provided
for by the General Partner at the time of the original issuance of any Partnership Interests, all
Partnership Interests (whether of a Limited Partner or a General Partner) shall be of the same
class or series. The Partnership Interests represented by the Common Units are, initially, the
only Partnership Interests and each such type of unit is a separate class of Partnership Interest
for all purposes of this Agreement.



     “Partnership Minimum Gain” has the meaning set forth in Regulations Section
1.704-2(b)(2). 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
a distribution pursuant to Section 5.1 hereof.



     “Partnership Unit” or “Unit” means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Article 4 (and includes any class or
series of Preferred Units established after the date hereof). The number of Partnership Units
outstanding and (in the case of Common Units) the Percentage Interest in the Partnership
represented by such Partnership Units are set forth on Exhibit A attached hereto, as such
Exhibit may be amended from time to time. The Partnership Units shall be uncertificated securities
unless the General Partner determines otherwise.



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



     “Percentage Interest” means, with respect to any Partner, the percentage represented
by a fraction (expressed as a percentage), the numerator of which is the number of Common Units
then owned by such Partner, and the denominator of which is the total number of Common Units then
owned by all of the Partners.



     “Person” means an individual, corporation, partnership (whether general or limited),
limited liability company, trust, estate, unincorporated organization, association, custodian,
nominee or any other individual or entity in its own or any representative capacity.



     “Preferred Unit” means a limited partnership interest (of any series), other than a
Common Unit, represented by a fractional, undivided share of the Partnership Interests of all
Partners issued hereunder and which is designated as a “Preferred Unit” (or as a particular class
or series of Preferred Units) herein and which has the rights, preferences and other privileges
designated herein (including by way of a Certificate of Designations). The allocation of



8









 




Preferred Units among the Partners shall be set forth on Exhibit A, as may be amended
from time to time.




     “Profit” has the meaning set forth in Section 6.1F hereof.



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



     “Qualified REIT Subsidiary” means any Subsidiary of the General Partner that is a
“qualified REIT subsidiary” within the meaning of Section 856(i) of the Code.



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



     “Redemption Right” has the meaning set forth in Section 8.5A hereof.



     “Regulations” means the Federal Income Tax Regulations promulgated under the Code, as
such regulations may be amended from time to time (including any corresponding provisions of
succeeding regulations).



     “Regulatory Allocations” has the meaning set forth in Section 6.1G hereof.



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



     “REIT Expenses” means (i) costs and expenses relating to the formation and continuity
of existence and operation of the Company and any Subsidiaries (other than the Partnership) thereof
(which Subsidiaries shall, for purposes hereof, be included within the definition of Company),
including taxes, fees and assessments associated therewith, any and all costs, expenses or fees
payable to any director, officer or employee of the Company, (ii) costs and expenses relating to
any public offering and registration, or private offering, of securities by the Company 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 Company, (iv) costs and expenses associated with the preparation and
filing of any periodic or other reports and communications by the Company under U.S. federal, state
or local laws or regulations, including filings with the Commission, (v) costs and expenses
associated with compliance by the Company 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 Company, (vii) costs and expenses incurred by the Company
relating to any issuing or redemption of Partnership Interests and (viii) all other operating or
administrative costs of the Company or any Subsidiary, including the General Partner, incurred in
the ordinary course of its business on behalf of or in connection with the Partnership.



     “REIT Share” means a share of common stock of the Company.



9









 





     “REIT Shares Amount” means, with respect to Tendered Units as of a particular date, a
number of REIT Shares equal to the product of (x) the number of Tendered Units multiplied by (y)
the Conversion Factor in effect on such date with respect to such Tendered Units.



     “Safe Harbors” has the meaning set forth in Section 11.6F hereof.



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



     “Specified Redemption Date” means the tenth (10th) Business Day after receipt by the
General Partner of a Notice of Redemption; provided that if the Company combines
its outstanding REIT Shares, no Specified Redemption Date shall occur after the record date of such
combination of REIT Shares and prior to the effective date of such combination.



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



     “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, joint venture or other entity of which 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.



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



     “Surviving Partnership” has the meaning set forth in Section 11.2B(2) hereof.



     “Tendered Units” has the meaning set forth in Section 8.5A hereof.



     “Tendering Partner” has the meaning set forth in Section 8.5A hereof.



     “Terminating Capital Transaction” means any sale or other disposition of all or
substantially all of the assets of the Partnership or a related series of transactions that, taken
together, result in the sale or other disposition of all or substantially all of the assets of the
Partnership.



     “Transaction” has the meaning set forth in Section 1.12(a) of Exhibit C
hereto.



     “Valuation Date” means the date of receipt by the Partnership of a Notice of
Redemption or, if such date is not a Business Day, the first Business Day thereafter.



     “Value” means, with respect to a REIT Share on a particular date, (i) the net asset
value per REIT Share as disclosed by the Company after 4:00 p.m. Eastern Time on each Business Day
in either a pricing supplement filed by the Company with the Commission or on the Company’s
website; or (ii) if none of the conditions set forth in clause (i) are met then, unless the holder
of the REIT Shares or Units and the General Partner otherwise agree, with respect to a REIT Share
per Common Unit offered for redemption, the amount that a Holder of one Common Unit would receive
if each of the assets of the Partnership were sold for its fair market value on the Specified



10









 




Redemption Date, the Partnership were to pay all of its outstanding liabilities, and the
remaining proceeds were to be distributed to the Partners in accordance with the terms of this
Agreement.




     “Vesting Agreement” has the meaning set forth in Section 1.2 of Exhibit C
hereto.



ARTICLE 2 — ORGANIZATIONAL MATTERS




     Section 2.1 Formation and Continuation



     The Partnership was formed as a limited partnership organized pursuant to the provisions of
the Act by the filing of the Certificate of Limited Partnership with the Delaware Secretary of
State on July 27, 2010. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal property for all
purposes.



     Section 2.2 Name



     The name of the Partnership is Cole Real Estate Income Strategy (Daily NAV) Operating
Partnership, LP (f/k/a Cole O/I Operating Partnership, LP, Cole Advisor Corporate Income Operating
Partnership, LP and Cole Real Estate Income Operating Partnership, LP). The Partnership’s business
may be conducted under any other name or names deemed advisable by the General Partner, including
the name of the General Partner or any Affiliate thereof. The words “Limited Partnership,” “L.P.,”
“Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for
the purposes of complying with the laws of any jurisdiction that so requires. The General Partner
in its sole and absolute discretion may change the name of the Partnership at any time and from
time to time and shall notify the Limited Partners of such change in the next regular communication
to the Limited Partners.




     Section 2.3 Registered Office and Agent; Principal Office



     The address of the registered office of the Partnership in the State of Delaware and the name
and address of the registered agent for service of process on the Partnership in the State of
Delaware is The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801. The principal business office of the
Partnership shall be 2555 East Camelback Road, Suite 400, Phoenix,
Arizona 85016. The General Partner may from time to time
designate in its sole and absolute discretion another registered agent or another location for the
registered office or principal place of business, and shall provide the Limited Partners with
notice of such change promptly following its effective date. The Partnership may maintain offices
at such other place or places within or outside the State of Delaware as the General Partner deems
advisable.



     Section 2.4 Power of Attorney



          A. Each Limited Partner and each Assignee hereby constitutes and appoints the General Partner,
any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead to:







11









 









          (1) execute, swear to, seal, acknowledge, deliver, file and record in the appropriate
public offices (a) all certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate of Limited Partnership and all amendments or
restatements thereof) that the General Partner or any Liquidator deems appropriate or
necessary to form, qualify or continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Delaware and in all other jurisdictions in which the Partnership
may or plans to conduct business or own property; (b) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a certificate of cancellation; (d)
all instruments relating to the admission, withdrawal, removal or substitution of any
Partner or other events described in, Article 11 or Article 12 hereof or the capital
contribution of any Partner and (e) all certificates, documents and other instruments
relating to the determination of the rights, preferences and privileges of Partnership
Interests; and




          (2) execute, swear to, seal, acknowledge and file all ballots, consents, approvals,
waivers, certificates and other instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner or any Liquidator, to make, evidence, give,
confirm or ratify any vote, Consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the General Partner or any Liquidator,
to effectuate the terms or intent of this Agreement.


Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to
amend this Agreement except in accordance with Article 14 hereof or as may be otherwise expressly
provided for in this Agreement.




          B. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, in recognition of the fact that each of the Partners will be relying upon the
power of the General Partner and any Liquidator to act as contemplated by this Agreement in any
filing or other action by it on behalf of the Partnership, and it shall survive and not be affected
by the subsequent Incapacity of any Limited Partner or Assignee or the transfer of all or any
portion of such Limited Partner’s or Assignee’s Partnership Units and shall extend to such Limited
Partner’s or Assignee’s heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or
any Liquidator, acting in good faith pursuant to such power of attorney, and each such Limited
Partner or Assignee hereby waives any and all defenses which may be available to contest, negate or
disaffirm the action of the General Partner or any Liquidator, taken in good faith under such power
of attorney. Each Limited Partner or Assignee shall execute and deliver to the General Partner or
any Liquidator, within fifteen (15) days after receipt of the General Partner’s or such
Liquidator’s request therefor, such further designation, powers of attorney and other instruments
as the General Partner or any Liquidator, as the case may be, deems necessary to effectuate this
Agreement and the purposes of the Partnership.







12









 








     Section 2.5 Term



     The term of the Partnership commenced on July 27, 2010 and shall be perpetual, unless the
Partnership is dissolved sooner pursuant to the provisions of Article 13 or as otherwise provided
by law.



     Section 2.6 UCC Article 8 Election



     All Partnership Interests shall be securities within the meaning of, and governed by, (i)
Article 8 of the Delaware Uniform Commercial Code and (ii) Article 8 of the Uniform Commercial Code
of any other applicable jurisdiction.



ARTICLE 3 — PURPOSE




     Section 3.1 Purpose and Business



     The purpose and nature of the business to be conducted by the Partnership is (i) to conduct
any business that may be lawfully conducted by a limited partnership organized pursuant to the Act;
provided, however, that such business shall be limited to and conducted in such a
manner as to permit the Company at all times to be qualified as a REIT, unless the Company is not
qualified or ceases to qualify as a REIT for any reason or reasons other than the conduct of the
business of the Partnership; (ii) to enter into any partnership, joint venture, limited liability
company or other similar arrangement to engage in any of the foregoing or to own interests in any
entity engaged, directly or indirectly, 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
Company’s right, in its sole discretion, to cease qualifying as a REIT, the Partners acknowledge
that the Company’s status as a REIT inures to the benefit of all of the Partners and not solely the
Company or its Affiliates.



     Section 3.2 Powers



     The Partnership is empowered to do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and
business described herein and for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest in other entities,
to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of
indebtedness whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own,
manage, improve and develop real property, and lease, sell, transfer and dispose of real property;
provided, however, that the Partnership shall not take, or omit to take, any action
which, in the judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the Company to achieve or maintain qualification as a REIT; (ii)
could subject the Company to any additional taxes under Section 857 or Section 4981 of the Code or
(iii) could violate any law or regulation of any governmental body or agency having jurisdiction
over the Company or its securities, unless any such action (or inaction) under the foregoing
clauses (i), (ii) or (iii) shall have been specifically consented to by the Company in writing.



13









 





     Section 3.3 Partnership Only for Purposes Specified



     This Agreement shall not be deemed to create a company, venture or partnership between or
among the Partners with respect to any activities whatsoever other than the activities within the
purposes of this Partnership as specified in Section 3.1. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligations
or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner,
in its capacity as a Partner under this Agreement, shall be responsible for any indebtedness or
obligation of another Partner, and the Partnership shall not be responsible or liable for any
indebtedness or obligation of any Partner, incurred either before or after the execution or
delivery of this Agreement by such Partner, except as to those responsibilities, liabilities,
indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and
the Act.



ARTICLE 4 — CAPITAL CONTRIBUTIONS




     Section 4.1 Capital Contributions of the Partners



          A. At the times of their respective execution of this Agreement, each Partner shall make or
shall have made capital contributions as set forth on Exhibit A to this Agreement. The
Partners shall own Partnership Units in the amounts set forth on Exhibit A, and have
Percentage Interests as set forth on Exhibit A, which number of Partnership Units and
Percentage Interests shall be adjusted from time to time on Exhibit A by the General
Partner to the extent necessary to accurately reflect the issuance of additional Partnership Units,
the redemption of Partnership Units, additional capital contributions and similar events having an
effect on a Partner’s Percentage Interest.




          B. A number of Common Units held by the General Partner equal to one percent (1%) of all
outstanding Common Units shall be deemed to be the General Partner Partnership Units and shall be
the General Partner Interest. All other Partnership Units held by the General Partner shall be
deemed to be Limited Partner Interests and shall be held by the General Partner in its capacity as
a Limited Partner in the Partnership.




          C. To the extent the Partnership acquires any property (or an indirect interest therein) by
the merger of any other Person into the Partnership or with or into a Subsidiary of the Partnership
in a triangular merger, Persons who receive Partnership Interests in exchange for their interests
in the Person merging into the Partnership or with or into a Subsidiary of the Partnership shall
become Partners and shall be deemed to have made capital contributions as provided in the
applicable merger agreement (or if not so provided, as determined by the General Partner in its
sole discretion) and as set forth on Exhibit A, as amended to reflect such deemed Capital
Contributions.




          D. Except as provided in Section 4.2, Section 4.3, Section 5.1 and Section 13.3, the Limited
Partners shall have no obligation to make any additional capital contributions or loans to the
Partnership.




          E. In the event the Company redeems any REIT Shares (including, without limitation, any REIT
Shares redeemed in accordance with the Company’s share redemption






14









 







program), then the General Partner shall cause the Partnership to purchase from the Company a
number of Common Units as determined based on the application of the Conversion Factor on the same
terms that the Company redeemed such REIT Shares. Moreover, if the Company makes a cash tender
offer or other offer to acquire REIT Shares, then the General Partner shall cause the Partnership
to make a corresponding offer to the Company to acquire an equal number of Common Units held by the
Company. In the event any REIT Shares are redeemed by the Company pursuant to such offer, the
Partnership shall redeem an equivalent number of the Company’s Partnership Units for an equivalent
purchase price based on the application of the Conversion Factor.




     Section 4.2 Issuance of Additional Partnership Interests and Additional Funding



          A. Issuance of Additional Partnership Interests. The General Partner, in its sole and
absolute discretion, is hereby authorized without the approval of the Limited Partners to cause the
Partnership from time to time to issue to the Partners (including the General Partner and its
Affiliates) or other Persons (including, without limitation, in connection with the contribution of
tangible or intangible property, services or other consideration permitted by the Act to the
Partnership) additional Partnership Units or other Partnership Interests in one or more classes, or
one or more series of any of such classes, with such designations, preferences, and relative,
participating, optional or other special rights, powers and duties all as shall be determined by
the General Partner in its sole and absolute discretion subject to Delaware law, including, without
limitation, (i) rights, powers, and duties senior to one or more classes or series of Partnership
Interests and any other Common Units outstanding or thereafter issued; (ii) the rights to an
allocation of items of Partnership income, gain, loss, deduction, and credit to each such class or
series of Partnership Interests; (iii) the rights of each such class or series of Partnership
Interests to share in Partnership distributions; (iv) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership; and (v) the right to
vote, if any, of each such class or series of Partnership Interests; provided that
no such additional Partnership Units or other Partnership Interests shall be issued to the General
Partner or the Company or any direct or indirect wholly owned Subsidiary of the Company, unless
either (a)(1) the additional Partnership Interests are issued in connection with the grant, award
or issuance of REIT Shares, other shares of capital stock or New Securities of the Company pursuant
to Section 4.2E that have designations, preferences and other rights such that the economic
interests attributable to such REIT Shares, other shares of capital stock or New Securities are
substantially similar to the designations, preferences and other rights of the additional
Partnership Interests issued to the General Partner or the Company or any direct or indirect wholly
owned Subsidiary of the Company (as appropriate) in accordance with this Section 4.2A, and (2) the
Company shall, directly or indirectly, make a capital contribution to the Partnership in an amount
equal to any  proceeds, net of any underwriting compensation or other
expenses paid in connection with such issuance,  raised in connection with such issuance or (b) the additional Partnership
Interests are issued to all Partners in proportion to their respective Percentage Interests. By
way of illustration, to reach its initial pool of potential investors, the Company intends to place
its REIT Shares principally through intermediaries, including registered investment advisers and
broker-dealers, that charge their clients a fee, however, the Company may also seek to make its
REIT Shares available through other placement channels, including through commissioned registered
representatives of broker-dealers; intermediaries that seek payment for distribution services
through ongoing fees; and certain institutional investors and high-net worth individuals willing to
make significant investments. In order to be attractive






15









 







to each category of investors, the Company may need to issue additional classes of REIT
Shares, each with different fee structures suited to these alternative placement channels and the
Partnership Units or Partnership Interests that are issued in connection with the issuance of the
additional classes of REIT Shares, will have designations, preferences and other rights such that
the economic interests attributable to such REIT Shares, are substantially similar to the
designations, preferences and other rights of the additional Partnership Units or Partnership
Interests issued. The General Partner’s determination that the consideration is adequate shall be
conclusive insofar as the adequacy of consideration related to whether the Partnership Interests
are validly issued and paid.




          B. Additional Funds. The General Partner may, at any time and from time to time,
determine that the Partnership requires additional funds (“Additional Funds”) for the
acquisition or development of additional Properties, for the redemption of Partnership Units or for
such other Partnership purposes as the General Partner may determine in its sole and absolute
discretion. Additional Funds may be raised by the Partnership, at the election of the General
Partner, in any manner provided in, and in accordance with, the terms of this Section 4.2 without
the approval of the Limited Partners.




          C. Loans by Third Parties. The General Partner, on behalf of the Partnership, may
obtain any Additional Funds by causing the Partnership to incur Debt, or enter into other similar
credit, guarantee, financing or refinancing arrangements for any purpose (including, without
limitation, in connection with any further acquisition of Properties) upon such terms as the
General Partner determines appropriate; provided, that the Partnership shall not incur any
Debt that is recourse to any Partner, except to the extent otherwise agreed to by the applicable
Partner.




          D. General Partner/Company Loans. The General Partner and/or the Company, as the case
may be, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt with the General Partner and/or the Company, as the case may be (each, a “General
Partner Loan”), if (i) such Debt is, to the extent permitted by law, on substantially the same
terms and conditions (including interest rate, repayment schedule, and conversion, redemption,
repurchase and exchange rights, but not including collateral) as Funding Debt incurred by the
General Partner and/or the Company, as the case may be, the net proceeds of which are loaned to the
Partnership to provide such Additional Funds or (ii) such Debt is on terms and conditions no less
favorable to the Partnership than would be available to the Partnership from any third party;
provided, however, that the Partnership shall not incur any such Debt if (a) a
breach, violation or default of such Debt would be deemed to occur by virtue of the transfer by any
Limited Partner of any Partnership Interest or (b) such Debt is recourse to any Partner and/or the
Company, as the case may be (unless the Partner and/or the Company, as the case may be, otherwise
agrees). This Section 4.2D shall not limit the General Partner’s ability to contribute Funding
Debt proceeds to the Partnership in exchange for Preferred Units rather than loaning such proceeds
to the Partnership.




          E. Issuance of Securities by the Company. The Company shall not issue any additional
REIT Shares, other shares of capital stock or New Securities (other than REIT Shares issued
pursuant to Section 8.5 or such shares, stock or securities pursuant to a dividend or distribution
(including any stock split) to all of its stockholders who hold a particular class of






16









 







stock of the Company) unless (i) the General Partner shall cause the Partnership to issue to
the Company, Partnership Interests or rights, options, warrants or convertible or exchangeable
securities of the Partnership having designations, preferences and other rights, all such that the
economic interests thereof are substantially similar to those of the REIT Shares, other shares of
capital stock or New Securities issued by the Company and (ii) the Company directly or indirectly
contributes to the Partnership the proceeds, if any, received from the issuance of such additional
REIT Shares, other shares of capital stock or New Securities, as the case may be, and from any
exercise of the rights contained in such additional New Securities, as the case may be;
provided, that the Company may use a portion of the proceeds received from such issuance to
acquire other assets (provided such other assets are contributed to the Partnership pursuant to the
terms of this Agreement). Without limiting the foregoing, the Company is expressly authorized to
issue REIT Shares, other shares of capital stock or New Securities for no tangible value or for
less than fair market value, and the General Partner is expressly authorized to cause the
Partnership to issue to the Company corresponding Partnership Interests, so long as (x) the General
Partner concludes in good faith that such issuance of Partnership Interests is in the interests of
the Partnership, and (y) the Company contributes all proceeds, if any, from such issuance and
exercise to the Partnership.




          F. In the event that the actual proceeds received by the Company in connection with any
issuance of additional REIT Shares, other shares of capital stock or New Securities are less than
the gross proceeds of such issuance as a result of any underwriting compensation or other expenses
paid in connection with such issuance, then, except as provided in Section 6.1J, the Company shall
be deemed to have made, through the General Partner, 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
underwriting compensation and other expenses paid by the Company (which discount and expense shall
be treated as an expense for the benefit of the Partnership for purposes of Section 7.4). In the
case of the issuance of REIT Shares by the Company in any offering, whether registered under the
Securities Act or exempt from such registration, underwritten, offered and sold directly to
investors or through agents or other intermediaries, or otherwise distributed, for purposes of
determining the number of additional Common Units issuable upon a capital contribution funded by
the net proceeds thereof consistently with the immediately preceding sentence, any discount from
the then current market price of REIT Shares shall be disregarded such that an equal number of
Common Units can be issued to the Company as the number of REIT Shares sold by the Company in such
offering. In the case of issuances of REIT Shares, other capital stock of the Company or New
Securities pursuant to any Stock Plan at a discount from fair market value or for no value, the
amount of such discount representing compensation to the employee, as determined by the General
Partner, shall be treated as an expense for the benefit of the Partnership for purposes of Section
7.4 and, as a result, the Company shall be deemed to have made a capital contribution to the
Partnership in an amount equal to the sum of any net proceeds of such issuance plus the amount of
such expense.




          G. In the event that the Partnership issues Partnership Interests pursuant to Section 4.2, the
General Partner shall make such revisions to this Agreement (without any requirement of receiving
approval of the Limited Partners) including, but not limited to, the revisions described in Section
6.1K and Section 8.5 hereof, as it deems necessary to reflect the






17









 







issuance of such additional Partnership Interests and the special rights, powers, and duties
associated therewith.




     Section 4.3 Other Contribution Provisions



     In the event that any Partner is admitted to the Partnership and is given (or is treated as
having received) a Capital Account at the time of admission in exchange for services rendered to
the Partnership, such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner had contributed such cash
to the capital of the Partnership. In addition, with the consent of the General Partner, in its
sole discretion, one or more Limited Partners may enter into agreements with the Partnership, in
the form of a guarantee or contribution agreement, or an obligation to restore all or part of a
deficit balance in the Limited Partner’s Capital Account, which have the effect of providing a
guarantee of or bearing the economic risk of low with respect to certain obligations of the
Partnership.



     Section 4.4 No Preemptive Rights



     Except to the extent expressly granted by the Partnership pursuant to another agreement, no
Person shall have any preemptive, preferential or other similar right with respect to (i) capital
contributions or loans to the Partnership or (ii) the issuance or sale of any Partnership Units or
other Partnership Interests.



     Section 4.5 No Interest on Capital



     No Partner shall be entitled to interest on its Capital Contributions or its Capital Account.
Except as provided herein or by law, no Partner shall have any right to withdraw any part of its
Capital Account or to demand or receive the return of its Capital Contributions.



ARTICLE 5 — DISTRIBUTIONS




     Section 5.1 Distribution of Cash



          A. Subject to Article 13, the other provisions of this Article 5 and the rights and
preferences of any Preferred Units or additional class or series of Partnership Units established
pursuant to Section 4.2, 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 in accordance with their respective Percentage Interests on
the Partnership Record Date.




          B. 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 U.S. federal,
state or local law or foreign law including, without limitation, pursuant to Sections 1441, 1442,
1445 and 1446 of the Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such
Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner, (ii) the





18









 







General
Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of
the available funds of the Partnership which would, but for such payment, be distributed to the
Limited Partner or (iii) treatment as a loan would jeopardize the Company’s status as a REIT or
otherwise be prohibited by law, including, without limitation, Section 402 of the Sarbanes-Oxley
Act of 2002 (in which case such Limited Partner shall pay such amount to the Partnership on or
before the date the Partnership pays such amount on behalf of such Limited Partner). Any amounts
withheld pursuant to the foregoing clauses (i), (ii) or (iii) shall be treated as having been
distributed to such Limited Partner (unless, in the case of amounts governed by clause (iii), the
Limited Partner timely pays the amount to be withheld to the Partnership). Each Limited Partner
hereby unconditionally and irrevocably grants to the Partnership a security interest in such
Limited Partner’s Partnership Interest to secure such Limited Partner’s obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 5.1B. In the event that a
Limited Partner fails to pay any amounts owed to the Partnership pursuant to this Section 5.1B when
due, the General Partner may, in its sole and absolute discretion, elect to make the payment to the
Partnership on behalf of such defaulting Limited Partner, and in such event shall be deemed to have
loaned such amount to such defaulting Limited Partner and shall succeed to all rights and remedies
of the Partnership as against such defaulting Limited Partner. Without limitation, in such event
the General Partner shall have the right to receive distributions that would otherwise be
distributable to such defaulting Limited Partner until such time as such loan, together with all
interest thereon, has been paid in full, and any such distributions so received by the General
Partner shall be treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in repayment of such
loan. Any amounts payable by a Limited Partner hereunder shall bear interest at the lesser of (1)
the base rate on corporate loans at large United States money center commercial banks, as published
from time to time in The Wall Street Journal, plus four (4) percentage points, or (2) the
maximum lawful rate of interest on such obligation, such interest to accrue from the date such
amount is due (i.e., fifteen (15) days after demand) until such amount is paid in full.
Each Limited Partner shall take such actions as the Partnership or the General Partner shall
request in order to (i) perfect or enforce the security interest created hereunder and (ii) cause
any loan arising hereunder to be treated as a real estate asset for purposes of Section
856(c)(4)(A) of the Code. In the event that proceeds to the Partnership are reduced on account of
taxes withheld at the source or the Partnership incurs a tax liability and such taxes (or a portion
thereof) are imposed on or with respect to one or more, but not all, of the Partners in the
Partnership or if the rate of tax varies depending on the attributes of specific Partners or to
whom the corresponding income is allocated, the amount of the reduction in the Partnership’s net
proceeds shall be borne by and apportioned among the relevant Partners and treated as if it were
paid by the Partnership as a withholding obligation with respect to such Partners in accordance
with such apportionment.




          C. 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 on the Partnership
Record Date for such distribution of a REIT Share for which all or part of such Partnership Unit
has been or will be exchanged.




     Section 5.2 REIT Distribution Requirements. The General Partner shall use its reasonable efforts to cause the Partnership to make
distributions pursuant to this Article 5 sufficient to enable the Company to pay stockholder
dividends that will allow the Company to



19









 








(i) meet its distribution requirement for qualification
as a REIT as set forth in Section 857 of the Code and (ii) avoid any U.S. federal income or excise
tax liability imposed by the Code, other than to the extent the Company elects to retain and pay
income tax on its net capital gain.



     Section 5.3 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.



ARTICLE 6 — ALLOCATIONS




     Section 6.1 Capital Account Allocations of Profit and Loss




     A. Profit. After giving effect to the special allocations, if any, required under this
Article 6 for the applicable period, and subject to the allocations to be made with respect
to any Preferred Units or additional class or series of Partnership Units established
pursuant to Section 4.2, and further subject to the other provisions of this Section 6.1,
Profits in each taxable year or other allocation period shall be allocated to the Partners s
in accordance with their respective Percentage Interests.




          (2) Losses. After giving effect to the special allocations, if any, required
under this Article 6 for the applicable period, and subject to the allocations to be made
with respect to any Preferred Units or additional class or series of Partnership Units
established pursuant to Section 4.2, and further subject to the other provisions of this
Section 6.1, Loss in each taxable year or other period shall be allocated to the Partners in
accordance with their respective Percentage interests.



          B. Minimum Gain Chargeback. Subject to Section 6.5, 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 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).




          C. 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 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




20









 




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).




          D. Capital Account Deficits. Loss or items thereof shall not be allocated to a
Limited Partner to the extent that such allocation would cause or increase a deficit in such
Partner’s Adjusted Capital Account (in which case the Loss or items(or portions thereof) that
cannot be allocated to such Limited Partner shall be allocated to those Partners who can receive
such allocations without violating this Section 6.1B in accordance with their respective Percentage
Interests (or their respective positive Adjusted Capital Accounts if all such Partners hold only
Preferred Units)).




          E. Definition of Profit and Loss. “Profit” and “Loss” and any items
of income, gain, expense or loss referred to in this Agreement means the net income, net loss or
items thereof for the applicable period as determined for maintaining Capital Accounts, and shall
be determined in accordance with U.S. 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, loss and expense that are specially allocated pursuant to this Article 6 (other than
Section 6.1A or Section 6.1B).




          F. Curative Allocations. The allocations set forth in Section 6.1C, Section 6.1D and
Section 6.1E hereof (the “Regulatory Allocations”) are intended to comply with certain
regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Section 6.1 and Section 6.2 hereof, the Regulatory Allocations
shall be taken into account in allocating other items of income, gain, loss and expense among the
Holders so that to the extent possible without violating the requirements giving rise to the
Regulatory Allocations, the net amount of such allocations of other items and the Regulatory
Allocations to each Holder shall be equal to the net amount that would have been allocated to each
such Holder if the Regulatory Allocations had not occurred.




          G. Forfeitures. Upon a forfeiture of any unvested Partnership Interest by any
Partner, gross items of income, gain, loss or deduction shall be allocated to such Partner if and
to the extent required by final Regulations promulgated after the effective date of this Agreement
to ensure that allocations made with respect to all unvested Partnership Interests are recognized
under Code Section 704(b).




          H. Reimbursements Treated as Guaranteed Payments. Subject to Section 6.1J, if and to
the extent any payment or reimbursement to the General Partner or the Company
made pursuant to Section 7.7 or otherwise is determined for U.S. federal income tax purposes
not to constitute a payment of expenses to the Partnership, the amount so determined shall
constitute a guaranteed payment with respect to capital within the meaning of Section 707(c) of the
Code, shall be treated consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners’ Capital Accounts.




          I. Adjustments to Preserve REIT Status. Notwithstanding any provision in this
Agreement to the contrary, if the Partnership pays or reimburses (directly or indirectly, including
by reason of giving the General Partner or the Company or any direct or indirect






21









 







Subsidiary of the
Company Capital Account credit in excess of actual Capital Contributions made by the General
Partner or the Company or any direct or indirect Subsidiary of the Company) fees, expenses or other
costs pursuant to Section 4.2, Section 7.4 and/or Section 7.7, or otherwise, and if failure to
treat all or part of such payment or reimbursement as a distribution to the General Partner, the
Company or any Subsidiary of the Company (as appropriate), or the receipt of Capital Accounts
credit in excess of actual Capital Contributions, would cause the Company to recognize income that
would cause the Company to fail to qualify as a REIT, then such payment or reimbursement (or
portion thereof) shall be treated as a distribution to the General Partner, the Company or direct
or indirect Subsidiary of the Company (as appropriate) for purposes of this Agreement, or the
Capital Account credit in excess of actual Capital Contributions shall be reduced, in each case to
the extent necessary to preserve the Company’s status as a REIT. The Capital Account of the
General Partner, the Company or any direct or indirect Subsidiary of the Company (as appropriate)
shall be reduced by such direct or indirect payment or reimbursement (or a portion thereof) in the
same manner as an actual distribution to the General Partner, the Company, or any direct or
indirect Subsidiary of the Company (as appropriate). To the extent treated as distributions, such
fees, expenses or other costs shall not be taken into account as Partnership fees, expenses or
costs for the purposes of this Agreement. In the event that amounts are recharacterized as
distributions or Capital Accounts are reduced pursuant to this Section 6.1J, allocations under
Section 6.1A and Section 6.1B for the current and subsequent periods shall be adjusted as
reasonably determined by the General Partner so that to the extent possible the Partners have the
same Capital Account balances they would have if this Section 6.1J had not applied. This Section
6.1J is intended to prevent direct or indirect reimbursements or payments under this Agreement from
giving rise to a violation of the Company’s REIT requirements while at the same time preserving to
the extent possible the parties’ intended economic arrangement and shall be interpreted and applied
consistent with such intent.




          J. Modifications to Reflect New Series or Classes. The General Partner is authorized to modify the allocations in this Section 6.1 and amend such
provisions (including the defined terms used therein) in such manner as the General Partner
determines is necessary or appropriate to reflect the issues of additional series or classes of
Partnership Interests. Any such modification may be made pursuant to the Certificate of
Designations or similar instrument establishing such new class or series.




          K. Agreement to Bear Disproportionate Losses. At the request and with the consent of the Limited Partner, the General Partner may modify
these allocations to provide for disproportionate allocations of Loss (or items of loss or
deduction) and chargebacks thereof to a Limited Partner that agrees to restore all or part of any
deficit in its Capital Account in accordance with Section 13.3 (in all cases subject to Section
6.1E).




     Section 6.2 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). Consistent with the
provisions of Regulations Section 1.704-1(b)(2)(iv)(f), (i) immediately prior to the acquisition of
an additional Partnership Interest by any new or existing Partner in connection with the
contribution of money or other property (other than a de minimis amount) to the Partnership, (ii)
immediately prior to the distribution by the Partnership to a Partner of Partnership property
(other than a de minimis amount) as



22









 







consideration for a Partnership Interest, (iii) upon the
acquisition of a more than de minimis additional interest in the Partnership by any new or existing
Partner as consideration for the provision of services to or for the benefit of the Partnership in
a partner capacity or in anticipation of becoming a Partner, and (iv) immediately prior to the
liquidation of the Partnership as defined in Regulations Section 1.704-1(b)(2)(ii)(g), the book
value of all Partnership Assets shall be revalued upward or downward to reflect the 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) of each such Partnership asset unless the General Partner
shall determine that such revaluation is not necessary to maintain the Partner’s intended economic
arrangements. If the Capital Accounts of the Partners are adjusted pursuant to Regulations
Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of Partnership property, (i) the Capital
Accounts of the Partners shall be adjusted in accordance with Regulations Section
1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain or loss, as
computed for book purposes, with respect to such property, (ii) the Partners’ distributive shares
of depreciation, depletion, amortization and gain or loss, as computed for tax purposes, with
respect to such property shall be determined so as to take account of the variation between the
adjusted tax basis and book value of such property in the same manner as under Code Section 704(c),
and (iii) the amount of upward and/or downward adjustments to the book value of the Partnership
property shall be treated as income, gain, deduction and/or loss for purposes of applying the
allocation provisions of this Article 6. If Code Section 704(c) applies to Partnership property,
the Capital Accounts of the Partners shall be adjusted in accordance with Regulations Section
1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization and gain and loss, as
computed for book purposes, with respect to such property.



     Section 6.3 Tax Allocations. All allocations of income, gain, loss and deduction (and all items contained therein) for
U.S. federal income tax purposes shall be identical to all allocations of such items set forth in
Section 6.1, except as otherwise required by Section 704(c) of the Code, Regulations Section
1.704-1(b)(4) and Section 6.2. The General Partner shall have the authority to elect the methods
to be used by the Partnership for allocating items of income, gain and expense as required by
Section 704(c) of the Code and Regulations Section 1.704-1(b)(4), and such election shall be
binding on all Partners.



     Section 6.4 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 6 and other relevant provisions of this Agreement shall be interpreted in a
manner consistent with such intent. The provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify (i) the manner in which the Capital Accounts,
or any debits, or credits thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed; or (ii) the manner in
which items are allocated among the Partners for U.S. federal income tax purposes in order to
comply with such Regulations or to comply with Section 704(c) of the Code, the General Partner may
make such



23









 







modification without regard to Article 14 of the Agreement, provided
that it is not likely to have a material effect on the amounts distributable to any Person
pursuant to Article 13 of the Agreement upon the dissolution of the Partnership. The General
Partner also shall (i) make any adjustments that are necessary or appropriate to maintain equality
between the aggregate Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q); and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b). In addition, the General Partner may adopt and employ such methods and procedures for
(i) the maintenance of book and tax capital accounts; (ii) the determination and allocation of
adjustments under Sections 704(c), 734, and 743 of the Code; (iii) the determination of Profit,
Loss, taxable income and loss and items thereof under this Agreement and pursuant to the Code;
(iv) the adoption of reasonable conventions and methods for the valuation of assets and the
determination of tax basis; (v) the allocation of asset value and tax basis; and (vi) conventions
for the determination of cost recovery, depreciation and amortization deductions, as it determines
in its sole discretion are necessary or appropriate to execute the provisions of this Agreement,
to comply with federal and state tax laws, and/or are in the best interest of the Partners.



     Section 6.5 Treatment of Partnership As Disregarded Entity For Federal Income Tax
Purposes. The General Partner shall not be required to comply with the provisions of this
Article 6 unless and until such time that the Partnership is treated as a partnership for federal
income tax purposes. The provisions of this Article 6 shall be applied following such conversion,
taking into account the treatment and characterization of such conversion for federal income tax
purposes.



ARTICLE 7 — MANAGEMENT AND OPERATIONS OF BUSINESS




     Section 7.1 Management



          A. Except as otherwise expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership are and shall be exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise control or management
power over the business and affairs of the Partnership. The General Partner may not be removed by
the Limited Partners with or without cause, except with the consent of the General Partner. In
addition to the powers now or hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof including Section 7.3 and
Section 11.2, shall have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth in Section 3.2 and
to effectuate the purposes set forth in Section 3.1 (subject to the proviso in Section 3.2),
including, without limitation:





          (1) the making of any expenditures, the lending or borrowing of money (including,
without limitation, making prepayments on loans and borrowing money to permit the
Partnership to make distributions to its Partners in such amounts as will permit the Company
(so long as the Company has determined to qualify as a REIT)



24









 







to avoid the payment of any
federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of
the Code) and to make distributions to its stockholders sufficient to permit the Company to
maintain REIT status), the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidences of indebtedness (including the
securing of same by deed, mortgage, deed of trust or other lien or encumbrance on the
Partnership’s assets) and the incurring of any obligations it deems necessary for the
conduct of the activities of the Partnership;




          (2) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Partnership, the registration of any class of securities of the Partnership under
Exchange Act and the listing of any debt securities of the Partnership on any exchange;




          (3) subject to Section 11.2, the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the Partnership
(including the exercise or grant of any conversion, option, privilege, or subscription right
or other right available in connection with any assets at any time held by the Partnership)
or the merger or other combination of the Partnership with or into
another entity on such terms as the General Partner deems proper (all of the foregoing
subject to any prior approval only to the extent required by Section 7.3);




          (4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation of
any or all of the assets of the Partnership, and the use of the assets of the Partnership
(including, without limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms the General Partner deems proper, including, without
limitation, the financing of the conduct of the operations of the Company, the Partnership
or any Subsidiary of the Company and/or the Partnership, the lending of funds to other
Persons (including, without limitation, the Company or any Subsidiary of the Company and/or
the Partnership) and the repayment of obligations of the Partnership and its Subsidiaries
and any other Person in which it has an equity investment, and the making of capital
contributions to its Subsidiaries;




          (5) the management, operation, leasing, landscaping, repair, alteration, demolition or
improvement of any real property or improvements owned by the Partnership or any Subsidiary
of the Partnership or any Person in which the Partnership has made a direct or indirect
equity investment;




          (6) the negotiation, execution, and performance of any contracts, leases, conveyances
or other instruments that the General Partner considers useful or necessary to the conduct
of the Partnership’s operations or the implementation of the General Partner’s powers under
this Agreement, including contracting with contractors, developers, consultants,
accountants, legal counsel, other professional advisors and other agents and the payment of
their expenses and compensation out of the Partnership’s assets;



25









 






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




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




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




          (10) the establishment of one or more divisions of the Partnership, the selection and
dismissal of employees of the Partnership (including, without limitation, employees having
titles such as “president,” “vice president,” “secretary” and “treasurer” of the
Partnership), and agents, outside attorneys, accountants, consultants and contractors of the
Partnership, and the determination of their compensation and other terms of employment or
hiring including waivers of conflicts of interest and the payment of their expenses and
compensation out of the Partnership’s assets;




          (11) the maintenance of such insurance for the benefit of the Partnership, the Partners
and directors and officers thereof as it deems necessary or appropriate;




          (12) the formation of, or acquisition of an interest in, and the contribution of
property to, any further limited or general partnerships, joint ventures, corporations or
other relationships that it deems desirable (including, without limitation, the acquisition
of interests in, and the contributions of property to, any Subsidiary and any other Person
in which it has an equity investment from time to time); provided, that, as
long as the Company has determined to continue to qualify as a REIT, the Partnership may not
engage in any such formation, acquisition or contribution that would cause the Company to
fail to qualify as a REIT;




          (13) the control of any matters affecting the rights and obligations of the
Partnership, including the settlement, compromise, submission to arbitration or any other
form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt
or damages, due or owing to or from the Partnership, the commencement or defense of suits,
legal proceedings, administrative proceedings, arbitration or other forms of dispute
resolution, and the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution, the incurring
of legal expense, and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;




          (14) the undertaking of any action in connection with the Partnership’s direct or
indirect investment in any Subsidiary or any other Person (including, without limitation,
the contribution or loan of funds by the Partnership to such Persons, incurring indebtedness
on behalf of, or guarantying the obligations of, any such Persons);




          (15) the determination of the fair market value of any Partnership property distributed
in kind using such reasonable method of valuation as the General Partner may adopt;



26









 






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




          (17) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other
Person in which the Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;




          (18) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of any Person in which the Partnership does not have an interest
pursuant to contractual or other arrangements with such Person;




          (19) the making, execution and delivery of any and all deeds, leases, notes, mortgages,
deeds of trust, security agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or agreements in writing necessary or
appropriate, in the judgment of the General Partner, for the accomplishment of any of the
powers of the General Partner enumerated in this Agreement;




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




          (21) the issuance of additional Partnership Units, as appropriate and in the General
Partner’s sole and absolute discretion, in connection with capital contributions by
Additional Limited Partners and additional capital contributions by Partners pursuant to
Article 4 hereof;




          (22) the distribution of cash to acquire Partnership Units held by a Limited Partner in
connection with a Limited Partner’s exercise of its Redemption Right under Section 8.5
hereof;




          (23) the amendment and restatement of Exhibit A hereto to reflect at all times
the capital contributions and Percentage Interests of the Partners as the same are adjusted
from time to time to the extent necessary to reflect redemptions, Capital Contributions, the
issuance of Partnership Units, the admission of any Additional Limited Partner or
Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding
anything in this Agreement to the contrary, shall not be deemed an amendment to this
Agreement, as long as the matter or event being reflected in Exhibit A hereto
otherwise is authorized by this Agreement;




          (24) the taking of any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a “publicly traded partnership” for purposes of
Section 7704 of the Code, including but not limited to imposing restrictions on transfers
and restrictions on redemptions; and




          (25) 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



27









 







actions consistent with
allowing the Company at all times to qualify as a REIT unless the Company voluntarily
terminates its REIT status) and to possess and enjoy all the rights and powers of a general
partner as provided by the Act.



          B. Each of the Limited Partners agrees that the General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership
without any further act, approval or vote of the Partners, notwithstanding any other provision of
this Agreement (except as provided in Section 7.3), the Act or any applicable law, rule or
regulation, to the fullest extent permitted under the Act or other applicable law, rule or
regulation. The execution, delivery or performance by the General Partner or the Partnership of
any agreement authorized or permitted under this Agreement shall not constitute a breach by the
General Partner of any duty that the General Partner may owe the Partnership or the Limited
Partners or any other Persons under this Agreement or of any duty stated or implied by law or
equity.




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




          D. At all times from and after the date hereof, the General Partner may cause the Partnership
to obtain and maintain (i) casualty, liability and other insurance on the properties of the
Partnership, (ii) liability insurance for the Indemnities hereunder and (iii) such other insurance
as the General Partner, in its sole and absolute discretion, determines to be necessary.




          E. In exercising its authority under this Agreement, the General Partner may, but shall be
under no obligation to, take into account the tax consequences to any Partner (including the
General Partner) of any action taken (or not taken) by it. The General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a result of an income tax
liability incurred by such Limited Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement.




     Section 7.2 Certificate of Limited Partnership



     The General Partner has previously filed the Certificate of Limited Partnership with the
Secretary of State of the State of Delaware as required by the Act. To the extent that such action
is determined by the General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate of Limited Partnership and do
all of the things to maintain the Partnership as a limited partnership (or a partnership in which
the limited partners have limited liability) under the laws of the State of Delaware and each other
state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do
business or own property. Subject to the terms of Section 8.4A(4) hereof, the General Partner
shall not be required, before or after filing, to deliver or mail a copy of the Certificate of
Limited Partnership or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited partners have limited
liability) in the



28









 







State of Delaware and any other state, or the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.



     Section 7.3 Restrictions on General Partner Authority



          A. 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 Majority in Interest of the Outside
Limited Partners or such other percentage of the Limited Partners as may be specifically provided
for under a provision of this Agreement and may not (i) perform any act that would subject a
Limited Partner to liability as a general partner in any jurisdiction or and other liability except
as provided herein or under the Act; or (ii) enter into any contract, mortgage loan or other
agreement that expressly prohibits or restricts (a) the General Partner or the Partnership from
performing its specific obligations under Section 8.5 hereof in full or (b) a Limited Partner from
exercising its rights under Section 8.5 hereof to effect a redemption in full, except, in either
case, with the written consent of such Limited Partner affected by the prohibition or restriction.




     Section 7.4 Reimbursement of the General Partner and the Company



          A. Except as provided in this Section 7.4 and elsewhere in this Agreement (including the
provisions of Article 5 and Article 6 regarding distributions, payments, and allocations to which
it may be entitled), the General Partner shall not be compensated for its services as the General
Partner of the Partnership.




          B. The Partnership shall be responsible for and shall pay all expenses relating to the
Partnership’s, the General Partner’s and the Company’s organization, the ownership of their assets
and their operations, including, without limitation, the Administrative Expenses. Except to the
extent provided in this Agreement, the General Partner, the Company and their Affiliates shall be
reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole
and absolute discretion, for all such expenses. The Partners acknowledge that all such expenses of
the General Partner and/or the Company are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of indemnification
pursuant to Section 7.7.




          C. If the Company shall elect to purchase from its stockholders REIT Shares for the purpose of
the Company’s share redemption program, delivering such REIT Shares to satisfy an obligation under
any dividend reinvestment program adopted by the Company, any employee stock purchase plan adopted
by the Company, or any similar obligation or arrangement undertaken by the Company in the future or
for the purpose of retiring such REIT Shares, the purchase price paid by the Company for such REIT
Shares and any other expenses incurred by the Company in connection with such purchase shall be
considered expenses of the Partnership and shall be advanced to the Company or reimbursed to the
Company, subject to the conditions that: (i) if such REIT Shares subsequently are sold by the
Company, the Company shall pay to the Partnership any proceeds received by the Company for such
REIT Shares (which sales proceeds shall include the amount of dividends reinvested under any
dividend reinvestment or similar program, provided, that a transfer of REIT Shares for
Partnership Units pursuant to Section 8.5 would not be considered a sale for such purposes) and
(ii) if such REIT Shares are





29









 







not retransferred by the Company immediately after the purchase
thereof, the Company shall cause the Partnership to redeem a number of Common Units held by the
Company equal to the number of such REIT Shares divided by the Conversion Factor.




          D. As set forth in Section 4.2, but subject to Section 6.1, the General Partner shall be
treated as having made a capital contribution in the amount of all expenses that the Company incurs
relating to the Company’s offering of REIT Shares, other shares of capital stock of the Company or
New Securities.




     Section 7.5 Outside Activities of the General Partner



     Except in connection with a transaction authorized in Section 11.2, without the Consent of a
Majority in Interest of the Outside Limited Partners, the General Partner shall not, directly or
indirectly, enter into or conduct any business, other than in connection with the ownership,
acquisition and disposition of Partnership Interests and the management of the business of the
Partnership, and such activities as are incidental thereto. The General Partner and any Affiliates
of the General Partner may acquire Limited Partner Interests and shall be entitled to exercise
all rights of a Limited Partner relating to such Limited Partner Interests.



     Section 7.6 Contracts with Affiliates



          A. The Partnership may lend or contribute funds or other assets to any Subsidiary 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.




          B. Except as provided in Section 7.5, the Partnership may transfer assets to joint ventures,
other partnerships, corporations or other business entities in which it is or thereby becomes a
participant upon such terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion, believes are advisable.




          C. Except as expressly permitted by this Agreement, neither the General Partner nor any of its
Affiliates shall sell, transfer or convey any property to, or purchase any property from, the
Partnership, directly or indirectly, except pursuant to transactions that are determined by the
General Partner in good faith to be fair and reasonable.




          D. The General Partner, in its sole and absolute discretion and without the approval of the
Limited Partners, may propose and adopt, on behalf of the Partnership, employee benefit plans,
stock option plans, and similar plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, any Subsidiary of the Partnership or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the benefit of the Partnership, the
General Partner, or any Subsidiary of the Partnership.





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     Section 7.7 Indemnification



          A. To the fullest extent permitted by applicable law, the Partnership shall indemnify each
Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys’ fees and other legal fees and expenses),
judgments, fines, settlements and other amounts arising from any and all claims, demands,
subpoenas, requests for information, formal or informal investigations, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to the operations of the
Partnership or the Company as set forth in this Agreement, in which such 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, constituted fraud 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. Without limitation, the foregoing indemnity
shall extend to any liability of any Indemnitee, pursuant to a loan guaranty (except a guaranty by
a Limited Partner of nonrecourse indebtedness of the Partnership or as otherwise provided in any
such loan guaranty) or otherwise for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity
agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or
potentially having liability for any such indebtedness. The termination of any proceeding by
judgment, order or settlement does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct set forth in this Section 7.7A. The termination of any proceeding by
conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee,
or an entry of an order of probation against an Indemnitee prior to judgment, creates a rebuttable
presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership and any insurance proceeds from the liability policy covering the General Partner and
any Indemnitees, and neither the General Partner nor any Limited Partner shall have any obligation
to contribute to the capital of the Partnership, or otherwise provide funds, to enable the
Partnership to fund its obligations under this Section 7.7.




          B. Reasonable expenses incurred by an Indemnitee who is a party to a proceeding or the
recipient of a subpoena or request for information with respect to a proceeding to which such
Indemnitee is not a party shall be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in this Section 7.7 has been met and (ii) a
written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.




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





31









 







continue as to an Indemnitee who
has ceased to serve in such capacity unless otherwise provided in a written agreement pursuant to
which such Indemnitee is indemnified.




          D. The Partnership may, but shall not be obligated to, purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall determine, against
any liability that may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership’s activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of this Agreement.




          E. For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of
Section 7.7; and actions taken or omitted by the Indemnitee with respect to an employee benefit
plan in the performance of its duties for a purpose reasonably believed by it to be in the interest
of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.




          F. In no event may an Indemnitee subject any of the Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.




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




          H. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their employees,
officers, directors, trustees, heirs, successors, assigns and administrators and shall not be
deemed to create any rights for the benefit of any other Persons. Any amendment, modification or
repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any
way affect the limitations on the Partnership’s liability to any Indemnitee under this Section 7.7,
as in effect immediately prior to such amendment, modification, or repeal with respect to claims
arising from or relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.




     Section 7.8 Liability of the General Partner



          A. Notwithstanding anything to the contrary set forth in this Agreement, none of the General
Partner, the Company, nor any of their directors, officers, agents or employees shall be liable or
accountable in monetary damages or otherwise to the Partnership, any Partners or any Assignees for
losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or
mistakes of fact or law or any act or omission unless the General Partner acted in bad faith and
the act or omission was material to the matter giving rise to the loss, liability or benefit not
derived.





32









 








          B. The Limited Partners expressly acknowledge that the General Partner is acting for the
benefit of the Partnership, the Limited Partners and the Company’s stockholders collectively, and
that the General Partner is under no obligation to consider or give priority to the separate
interests of the Limited Partners or the Company’s stockholders (including, without limitation, the
tax consequences to Limited Partners, Assignees or the Company’s stockholders) in deciding whether
to cause the Partnership to take (or decline to take) any actions. If there is a conflict between
the interests of the stockholders of the Company on one hand and the Limited Partners on the other
hand, the General Partner shall endeavor in good faith to resolve the conflict in a manner not
adverse to either the stockholders of the Company or the Limited Partners; provided,
however, that for so long as the General Partner owns a controlling interest in the
Partnership, any such conflict that cannot be resolved in a manner not adverse to either the
stockholders of the General Partner or the Limited Partners shall be resolved in favor of the
stockholders of the General Partner. The General Partner shall not be liable under this Agreement
to the Partnership or to any Partner for monetary damages for losses sustained, liabilities
incurred, or benefits not derived by Limited Partners in connection with such decisions;
provided, that the General Partner has acted in good faith.




          C. Subject to its obligations and duties as General Partner set forth in Section 7.1A, the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents.
The General Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by the General Partner in good faith.




          D. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the General Partner’s and its
officers’, directors’, agents’ and employees’ liability to the Partnership and the Limited Partners
under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal
with respect to claims arising from or relating to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when such claims may arise or be asserted.




     Section 7.9 Other Matters Concerning the General Partner and the Company



          A. The General Partner and the Company may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties.




          B. The General Partner and the Company may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers, environmental
consultants and other consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which such General Partner and the
Company reasonably believe to be within such Person’s professional or expert competence shall be
conclusively presumed to have been done or omitted in good faith and in accordance with such
opinion.





33









 








          C. The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers and duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.




          D. Notwithstanding any other provisions of this Agreement or the Act, any action of the
General Partner or the Company on behalf of the Partnership or any decision of the General Partner
or the Company 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 Company to continue to qualify as a REIT, or (ii) to avoid the Company from incurring any
taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement
and is deemed approved by all of the Limited Partners.




     Section 7.10 Title to Partnership Assets



     Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no 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 or such
nominee or Affiliate 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 if failure to so vest such title would have a material adverse effect on
the Partnership. All Partnership assets shall be recorded as the property of the Partnership in
its books and records, irrespective of the name in which legal title to such Partnership assets is
held.



     Section 7.11 Reliance by Third Parties



     Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner has full power and authority,
without the consent or approval of any other Partner or Person, to encumber, sell or otherwise use
in any manner any and all assets of the Partnership and to enter into any contracts on behalf of
the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall
be entitled to deal with the General Partner as if the General Partner were the Partnership’s sole
party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing. In no event shall
any Person dealing with the General Partner or its representatives be obligated to ascertain that
the terms of this Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and every certificate,
document or other instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person



34









 







relying in good faith
thereon or claiming thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and effect; (ii) the Person
executing and delivering such certificate, document or instrument was duly authorized and empowered
to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument
was duly executed and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.



ARTICLE 8 — RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS




     Section 8.1 Limitation of Liability



     The Limited Partners shall have no liability under this Agreement except as expressly provided
in this Agreement or under the Act.



     Section 8.2 Management of Business



     No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) shall take part in the operations, management
or control (within the meaning of the Act) of the Partnership’s business, transact any business in
the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership.
The transaction of any such business by the General Partner, any of its Affiliates or
any officer, director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees under this
Agreement.



     Section 8.3 Outside Activities of Limited Partners



     Subject to any other agreements to the contrary, any Limited Partner (other than the Company)
and any officer, director, employee, agent, trustee, Affiliate or stockholder of any Limited
Partner of the General Partner shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including business interests
and activities that are in direct competition with the Partnership or that are enhanced by the
activities of the Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to
such agreements, none of the Limited Partners (other than the Company) nor any other Person shall
have any rights by virtue of this Agreement or the partnership relationship established hereby in
any business ventures of any other Person (other than the Limited Partners benefiting from the
business conducted by the General Partner) and such Person shall have no obligation pursuant to
this Agreement to offer any interest in any such business ventures to the Partnership, any Limited
Partner, the Company or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner, the Company or such other Person, could be taken
by such Person.



     Section 8.4 Rights of Limited Partners Relating to the Partnership



          A. In addition to the other rights provided by this Agreement or by the Act, and except as
limited by Section 8.4C, each Limited Partner shall have the
right, for a business purpose
reasonably  related to such Limited Partner’s interest as a
limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited
Partner’s own expense (including such copying and administrative
charges as the General Partner may establish from time to time)




35









 













          (1) to obtain a copy of the most recent annual and quarterly reports filed with the
Commission by the Company pursuant to the Exchange Act;




          (2) to obtain a copy of the Partnership’s federal, state and local income tax returns
for each Partnership Year;




          (3) to obtain a current list of the name and last known business, residence or mailing
address of each Partner;




          (4) to obtain a copy of this Agreement and the Certificate of Limited Partnership and
all amendments thereto, together with executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate of Limited Partnership and all amendments thereto have
been executed; and




          (5) to obtain true and full information regarding the amount of cash and the Agreed
Value of any other property or services contributed by each Partner and
which each Partner has agreed to contribute in the future, and the date on which each
became a Partner.



          B. The Partnership shall notify each Limited Partner, upon request, of the then current
Conversion Factor and the REIT Shares Amount per Common Unit and, with reasonable detail, how the
same was determined.




          C. Notwithstanding any other provision of this Section 8.4, the General Partner may keep
confidential from the Limited Partners, for such period of time as the General Partner determines
in its sole and absolute discretion to be reasonable, any information that (i) the General Partner
believes to be in the nature of trade secrets or other information, the disclosure of which the
General Partner in good faith believes is not in the best interests of the Partnership or could
damage the Partnership or its business or (ii) the Partnership or the General Partner is required
by law or by agreements with unaffiliated third parties to keep confidential.




     Section 8.5 Redemption Right



          A. Each Limited Partner (other than the Company) shall have the right (the “Redemption
Right”) (subject to the terms and conditions set forth herein and in any other such agreement,
as applicable) to require the Partnership to redeem on a Specified Redemption Date all or a portion
of the Common Units held by such Limited Partner (such Common Units being hereafter referred to as
“Tendered Units”) in exchange for the Cash Amount; provided, that the terms of such
Common Units do not provide that such Common Units are not entitled to the Redemption Right.
Unless otherwise expressly provided in this Agreement or in a separate agreement entered into
between the Partnership and the Holders of such Common Units, all Common Units shall be entitled to
the Redemption Right. The Tendering Partner (as defined below) shall have no right, with respect
to any Common Units so redeemed, to receive any


36









 







distributions with a Partnership Record Date on or
after the Specified Redemption Date. Any Redemption Right shall be exercised pursuant to a Notice
of Redemption delivered to the General Partner by the Limited Partner who is exercising the right
(the “Tendering Partner”). The Cash Amount shall be payable in accordance with
instructions set forth in the Notice of Redemption to the Tendering Partner on the Specified
Redemption Date.




          B. Each Limited Partner covenants and agrees with the General Partner that all Tendered Units
shall be delivered to the General Partner free and clear of all liens, claims and encumbrances
whatsoever and should any such liens, claims and/or encumbrances exist or arise with respect to
such Tendered Units, the General Partner shall be under no obligation to acquire the same. Each
Limited Partner further agrees that, in the event any state or local property transfer tax is
payable as a result of the transfer of its Tendered Units to the General Partner (or its designee),
such Limited Partner shall assume and pay such transfer tax.




          C. Notwithstanding anything herein to the contrary, with respect to the redemption of Common
Units by a Limited Partner, other than the Company, pursuant to this Section 8.5, the terms of the
Common Units will include provisions as to: (i) how frequently the Limited Partner may redeem the
Limited Partner’s Common Units without the consent of the General Partner; (ii) whether the General
Partner may restrict redemptions, due to a lack of liquidity at the Partnership or otherwise; (iii)
how many Common Units may be redeemed; and
(iv) whether there will be any blackout periods where the Common Units may not be redeemed
without the consent of the General Partner. Additionally, the terms of the Common Units will
include provisions that: (a) the consummation of any redemption shall be subject to the expiration
or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended; and (b) each Tendering Partner shall continue to own all
Common Units subject to any redemption, and be treated as a Limited Partner with respect to such
Common Units for all purposes of this Agreement, until such Common Units are transferred to the
General Partner and paid for on the Specified Redemption Date.




          D. In the event that the Partnership issues additional Partnership Interests to any Additional
Limited Partner pursuant to Section 4.2, the General Partner shall make such revisions to this
Section 8.5 as it determines are necessary to reflect the issuance of such additional Partnership
Interests.




ARTICLE 9 — BOOKS, RECORDS, ACCOUNTING AND REPORTS




     Section 9.1 Records and Accounting



     The General Partner shall keep or cause to be kept at the principal office of the Partnership
those records and documents required to be maintained by the Act and other books and records deemed
by the General Partner to be appropriate with respect to the Partnership’s business, including,
without limitation, all books and records necessary to provide to the Limited Partners any
information, lists and copies of documents required to be provided pursuant to Section 9.3 hereof.
Any records maintained by or on behalf of the Partnership in the regular course of its business may
be kept on, or be in the form of magnetic tape, photographs, micrographics or any other information
storage device, provided that the records so maintained are convertible into
clearly legible written form within a reasonable period of time. The books of



37









 







the Partnership
shall be maintained for financial and tax reporting purposes, on an accrual basis in accordance
with generally accepted accounting principles or such other basis as the General Partner determines
to be necessary or appropriate.



     Section 9.2 Taxable Year and Fiscal Year



     The taxable year of the Partnership shall be the shall be the calendar year unless otherwise
required by the Code. Unless the General Partner otherwise elects, the fiscal year of the
Partnership shall be the same as its taxable year.



     Section 9.3 Reports



          A. No later than the date on which the Company mails its annual report to its stockholders,
the General Partner shall cause to be mailed to each Limited Partner, as of the close of the
Partnership Year, an annual report containing financial statements of the Partnership, or of the
Company if such statements are prepared solely on a consolidated basis with the Company, for such
Partnership Year, presented in accordance with generally accepted accounting principles, such
statements to be audited by a nationally recognized firm of independent public accountants selected
by the General Partner.




          B. The General Partner shall cause to be mailed to each Limited Partner such other information
as may be required by applicable law or regulation, or as the General Partner determines to be
appropriate.




          C. The General Partner shall have satisfied its obligations under Section 9.3A and 9.3B by (i)
to the extent the General Partner or the Partnership is subject to periodic reporting requirements
under the Exchange Act, filing the quarterly and annual reports required thereunder within the time
periods provided for the filing of such reports, including any permitted extensions, or (ii)
posting or making available the reports required by this Section 9.3 on the website maintained from
time to time by the Partnership, provided that such reports are able to be printed or downloaded
from such website.




ARTICLE 10 — TAX MATTERS




     Section 10.1 Preparation of Tax Returns



     The General Partner shall arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use commercially reasonable efforts to furnish, within ninety
(90) days of the close of each Partnership Year, the estimated tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes which
may be subject to additional changes as finalized. Each Limited Partner shall promptly
provide the General Partner with any information reasonably requested by the General Partner from
time to time.



     Section 10.2 Tax Elections



          A. Except as otherwise provided herein, the General Partner shall, in its sole and absolute
discretion, determine whether to make any available election pursuant to the Code,




38









 







including, but
not limited to, the election under Section 754 of the Code. The General Partner shall have the
right to seek to revoke any such election it makes (including, without limitation, any election
under Section 754 of the Code) upon the General Partner’s determination, in its sole and absolute
discretion.




          B. A Partner’s “interest in partnership profits” for purposes of determining its share of the
excess nonrecourse liabilities of the Partnership within the meaning of Regulations Section
1.752-3(a)(3) shall be such Partner’s Percentage Interest; provided that the General
Partner may modify this Section 10.2C from time to time to provide for different sharing rates in
its sole discretion.




     Section 10.3 Tax Matters Partner



          A. The General Partner shall be the “tax matters partner” of the Partnership for U.S. federal
income tax purposes. Pursuant to Section 6230(e) of the Code, upon receipt of notice from the IRS
of the beginning of an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification number, and profits
interest of each of the Limited Partners and Assignees; provided, however, that
such information is provided to the Partnership by the Limited Partners and Assignees.




          B. The tax matters partner is authorized, but not required:





          (1) to enter into any settlement with the IRS with respect to any administrative or
judicial proceedings for the adjustment of Partnership items required to be taken into
account by a Partner for income tax purposes (such administrative proceedings being referred
to as a “tax audit” and such judicial proceedings being referred to as “judicial
review”), and in the settlement agreement the tax matters partner may expressly state
that such agreement shall bind all Partners, except that such settlement agreement shall not
bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations)
files a statement with the IRS providing that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf of such Partner; or (ii) who is a
“notice partner” (as defined in Section 6231(a)(8) of the Code) or a member of a “notice
group” (within the meaning of Section 6223(b)(2) of the Code);




          (2) in the event that a notice of a final administrative adjustment at the Partnership
level of any item required to be taken into account by a Partner for tax purposes (a
“final adjustment”) is mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for readjustment with the Tax
Court or the United States Claims Court, or the filing of a complaint for refund with the
District Court of the United States for the district in which the Partnership’s principal
place of business is located;




          (3) to intervene in any action brought by any other Partner for judicial review of a
final adjustment;



39









 






          (4) to file a request for an administrative adjustment with the IRS at any time and, if
any part of such request is not allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with respect to such request;




          (5) to enter into an agreement with the IRS to extend the period for assessing any tax
which is attributable to any item required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and




          (6) to take any other action on behalf of the Partners or the Partnership in connection
with any tax audit or judicial review proceeding to the extent permitted by applicable law
or regulations.



     The taking of any action and the incurring of any expense by the tax matters partner in
connection with any such proceeding, except to the extent required by law, is a matter in the sole
and absolute discretion of the tax matters partner and the provisions relating to indemnification
of the General Partner set forth in Section 7.7 shall be fully applicable to the tax matters
partner in its capacity as such.



          C. The tax matters partner shall receive no compensation for its services. All third-party
costs and expenses incurred by the tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the Partnership. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting or law firm to
assist the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.




     Section 10.4 Organizational Expenses



     The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the
Partnership as provided in Section 709 of the Code.



ARTICLE 11 — TRANSFERS AND WITHDRAWALS




     Section 11.1 Transfer



          A. The term “transfer,” when used in this Article 11 with respect to a Partnership Unit, shall
be deemed to refer to a transaction by which the General Partner purports to assign all or any part
of its General Partner Interest to another Person or by which a Limited Partner purports to assign
all or any part of its Limited Partner Interest to another Person, and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by operation
of law or otherwise. The term “transfer” when used in this Article 11 does not include any
redemption of Partnership Interests by the Partnership from a Limited Partner or any acquisition of
Partnership Units from a Limited Partner by the Company pursuant to Section 8.5 except as otherwise
provided herein. No part of the interest of a Limited Partner shall be subject to the claims of
any creditor, any spouse for alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for in this Agreement
or consented to in writing by the General Partner.




40









 








          B. No Partnership Interest may be transferred, in whole or in part, except in accordance with
the terms and conditions set forth in this Article 11. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio
unless consented to in writing by the General Partner.




     Section 11.2 Transfer of the Company’s and General Partner’s Partnership Interest and
Limited Partner Interest; Extraordinary Transactions.



          A. The General Partner may not transfer any of its General Partner Interest or withdraw as
General Partner, and the Company may not, directly or through its wholly owned Subsidiaries,
transfer any of its Limited Partner Interest or engage in an Extraordinary Transaction, except, in
any such case, (i) if such Extraordinary Transaction, or such withdrawal or transfer, is pursuant
to an Extraordinary Transaction that is permitted under Section 11.2B, (ii) if the Majority in
Interest of the Outside Limited Partners Consent to such withdrawal or transfer or Extraordinary
Transaction or (iii) if such transfer is to an entity that is wholly owned by the Company (directly
or indirectly) and is a Qualified REIT Subsidiary under Section 856(i) of the Code or disregarded
as an entity separate from the Company for U.S. federal income tax purposes.




          B. Notwithstanding any other provision of this Agreement, the General Partner and the Company
are permitted to engage (and cause the Partnership to participate) in the following transactions
without the approval or vote of the Limited Partners:





          (1) an Extraordinary Transaction in connection with which either (a) the General
Partner is the surviving entity and the holders of REIT Shares are not entitled to receive
any cash, securities, or other property in connection with such Extraordinary Transaction or
(b) all Limited Partners (other than those who Consent to the Extraordinary Transaction)
either will receive, or will have the right to elect to receive, for each Common Unit an
amount of cash, securities, or other property at least as equal in value to the product of
(x) the REIT Shares Amount multiplied by (y) the greatest amount of cash, securities or
other property paid to a holder of one REIT Share in consideration of one such REIT Share
pursuant to the terms of the Extraordinary Transaction during the period from and after the
date on which the Extraordinary Transaction is consummated; provided that,
if, in connection with the Extraordinary Transaction, a purchase, tender or exchange offer
shall have been made to and accepted by the holders of more than 50% of the outstanding REIT
Shares, each holder of Common Units shall receive, or shall have the right to elect to
receive, the greatest amount of cash, securities, or other property which such holder would
have received had it exercised its Redemption Right (as set forth in Section 8.5) and
received REIT Shares in exchange for its Common Units immediately prior to the expiration of
such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or
exchange offer and then such Extraordinary Transaction shall have been consummated; and




          (2) an Extraordinary Transaction if: (a) immediately after such Extraordinary
Transaction, substantially all of the assets directly or indirectly owned by the surviving
entity, other than Common Units held by the General Partner, are owned directly or
indirectly by the Partnership or another limited partnership or limited liability



41









 







company
which is the survivor of a merger, consolidation or combination of assets with the
Partnership (in each case, the “Surviving Partnership”); (b) the rights, preferences
and privileges of the Common Unitholders in the Surviving Partnership are at least as
favorable as those in effect immediately prior to the consummation of such transaction and
as those applicable to any other limited partners or non-managing members of the Surviving
Partnership (who have, in either case, the rights of a “common” equity holder); and (c) such
rights of the Common Unitholders include the right to exchange their Common Unit equivalent
interests in the Surviving Partnership for at least one of: (x) the consideration available
to such Common Unitholders pursuant to Section 11.2B(1) or (y) if the ultimate controlling
person of the Surviving Partnership has publicly traded common equity securities, such
common equity securities, with an exchange ratio based on the relative fair market value of
such securities (as determined pursuant to Section 11.2C) and the REIT Shares.



          C. In connection with any transaction permitted by Section 11.2B(2), the relative fair market
values shall be reasonably determined by the General Partner as of the time of such transaction
and, to the extent applicable, shall be no less favorable to the Limited Partners than the relative
values reflected in the terms of such transaction.




     Section 11.3 Limited Partners’ Rights to Transfer



          A. Subject to the provisions of this Section 11.3 and Section 11.4, or in connection with the
exercise of a Redemption Right pursuant to Section 8.5, a Limited Partner
(other than the Company) may not transfer, all or any portion of its Partnership Interest, or
any of such Limited Partner’s economic rights as a Limited Partner without the prior written
consent of the General Partner, which consent may be given or withheld in the General Partner’s
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. Without limiting the generality of Section 11.3A, it is expressly understood and agreed
that the General Partner will not consent to any transfer of all or a portion of any Partnership
Interest pursuant to Section 11.3A unless such transfer meets each of the following conditions:





          (1) Such transfer is made only to Qualified Transferees.




          (2) The transferee assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect to such
transferred Partnership Interest and no such transfer (other than pursuant to a statutory
merger or consolidation wherein all obligations and liabilities of the transferor Limited
Partner are assumed by a successor corporation by operation of law) shall relieve the
transferor Partner of its obligations under this Agreement without the approval of the
General Partner, in its sole and absolute discretion. Notwithstanding the foregoing, any
transferee of any transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Articles of Incorporation, which may limit or restrict such
transferee’s ability to exercise its Redemption Right. Any transferee, whether or not
admitted as a Substituted Limited Partner, shall take subject to the
obligations of the



42









 







transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee,
whether by voluntary transfer, by operation of law or otherwise, shall have any rights
hereunder, other than the rights of an Assignee as provided in Section 11.5.



          C. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee,
committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all of the
rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for
the purpose of settling or managing the estate and such power as the Incapacitated Limited Partner
possessed to transfer all or any part of his or its Partnership Interest. The Incapacity of a
Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.




          D. The General Partner may prohibit any transfer by a Limited Partner of its Partnership Units
if, in the opinion of legal counsel to the Partnership, such transfer would require the filing of a
registration statement under the Securities Act or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership Units.




     Section 11.4 Substituted Limited Partners



          A. No Limited Partner shall have the right to substitute a transferee as a Limited Partner in
his place. The General Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4 as a Substituted
Limited Partner, which consent may be given or withheld by the General Partner in
its sole and absolute discretion. The General Partner’s failure or refusal to permit a
transferee of any such interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or any Partner.




          B. A transferee who has been admitted as a Substituted Limited Partner in accordance with this
Article 11 shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any transferee as a
Substituted Limited Partner shall be conditioned upon the transferee executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this Agreement (and such other
documents or instruments as may be required to effect the admission, each in form and substance
satisfactory to the General Partner).




          C. Upon the admission of a Substituted Limited Partner, the General Partner shall amend
Exhibit A to reflect the name, address, number of Partnership Units and Percentage Interest
of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and
interest of the predecessor of such Substituted Limited Partner.




     Section 11.5 Assignees



          A. If the General Partner consents to a transfer of Partnership Interests, but, in its sole
and absolute discretion, does not consent to the admission of any permitted transferee as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an
assignee of a limited partnership interest under the Act, including the right to receive
distributions from the Partnership and the share of Profit, Loss and any other items of income,





43









 







gain, loss, deduction and credit of the Partnership attributable to the Partnership Units assigned
to such transferee and the rights to transfer the Partnership Units in accordance with the
provisions of this Article 11, but shall not be deemed to be a Holder of Partnership Units for any
other purpose under this Agreement, and shall not be entitled to effect a Consent with respect to
such Partnership Units on any matter presented to the Limited Partners for a vote (such right to
Consent remaining with the transferor Limited Partner). In the event any such transferee desires
to make a further assignment of any such Partnership Units, such transferee shall be subject to all
of the provisions of this Article 11 to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of Partnership Units.




     Section 11.6 General Provisions



          A. No Limited Partner may withdraw from the Partnership other than as a result of a permitted
transfer of all of such Limited Partner’s Partnership Units in accordance with this Article 11 and
the transferee of such Partnership Units being admitted to the Partnership a Substituted Limited
Partner or pursuant to a redemption of all of its Partnership Units under Section 8.5.




          B. Any Limited Partner who shall transfer all of its Partnership Units in a transfer permitted
pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner or
pursuant to the exercise of its Redemption Right for all of its Partnership
Units under Section 8.5 shall cease to be a Limited Partner; provided, that after such
transfer, exchange or redemption such Limited Partner owns no Partnership Interest.




          C. Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter
of the Partnership, unless the General Partner otherwise agrees.




          D. If any Partnership Interest is transferred, assigned or redeemed during any quarterly
segment of the Partnership’s Partnership Year in compliance with the provisions of this Article 11
or redeemed by the Partnership pursuant to Section 8.5 on any day other than the first day of a
Partnership Year, then Profit, Loss, each item thereof and all other items attributable to such
Partnership Interest for such Partnership Year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their varying interests during
the Partnership Year in accordance with Section 706(d) of the Code, using the “interim closing of
the books” method or such other method (or combination of methods) selected by the General Partner.
Solely for purposes of making such allocations, at the discretion of the General Partner, each of
such items for the calendar month in which the transfer or assignment occurs shall be allocated to
the transferee Partner, and none of such items for the calendar month in which a transfer or
redemption occurs shall be allocated to transferor Partner or the Tendering Partner as the case
may; provided, however, that the General Partner may adopt such other conventions
relating to allocations in connection with transfers, assignments or redemptions as it determines
are necessary or appropriate. All distributions attributable to such Partnership Unit with respect
to which the Partnership Record Date is before the date of such transfer, assignment, or redemption
shall be made to the transferor Partner or the Tendering Partner, as the case may be, and in the
case of a transfer or assignment other than a redemption, all distributions thereafter attributable
to such Partnership Unit shall be made to the transferee Partner.





44









 








          E. In addition to any other restrictions on transfer herein contained, including without
limitation the provisions of this Article 11, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including pursuant to a redemption or exchange for REIT Shares
by the Partnership or the General Partner) be made (i) to any Person who lacks the legal right,
power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) except
with the consent of the General Partner, which may be given or withheld in its sole and absolute
discretion, of any component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a Partnership Interest;
(iv) except with the consent of the General Partner, which may be given or withheld in its sole and
absolute discretion, if in the opinion of legal counsel to the Partnership such transfer could
cause a termination of the Partnership for federal or state income tax purposes (except as a result
of the redemption or exchange for REIT Shares of all Common Units held by all Limited Partners or
pursuant to a transaction expressly permitted under Section 11.2); (v) if in the opinion of counsel
to the Partnership such transfer could cause the Partnership to cease to be classified as a
partnership for U.S. federal income tax purposes (except as a result of the redemption or exchange
for REIT Shares of all Common Units held by all Limited Partners); (vi) if such transfer could, in
the opinion of counsel to the Partnership, cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in Section
3(14) of ERISA) or a “disqualified person” (as defined in Section 4975(e) of the Code); (vii) if
such transfer could, in the opinion of counsel to the Partnership, cause any portion of the assets
of the Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; (viii) except with the consent of the
General Partner, which may be given or withheld in its sole and absolute discretion, if such
transfer requires the registration of such Partnership Interest pursuant to any applicable federal
or state securities laws; (ix) except with the consent of the General Partner, which may be given
or withheld in its sole and absolute discretion, if such transfer (1) could be treated as
effectuated through an “established securities market” or a “secondary market” (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code, (2) could cause the Partnership
to become a “Publicly Traded Partnership,” as such term is defined in Sections 469(k)(2) or 7704(b)
of the Code, (3) could cause the Partnership to have more than 100 partners (including as partners
those persons indirectly owning an interest in the Partnership through one or more partnerships,
limited liability companies, subchapter S corporations or grantor trusts), or (4) could cause the
Partnership to fail one or more of the Safe Harbors (as defined below); (x) except with the consent
of the General Partner, which may be given or withheld in its sole and absolute discretion, if such
transfer subjects the Partnership to be regulated under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or the Employee Retirement Income Security Act of 1974, each as
amended; (xi) if such transfer is made to a lender to the Partnership or any Person who is related
(within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership
whose loan constitutes a Nonrecourse Liability, except with
the consent of the General Partner,
which may be given or withheld in its sole and absolute discretion; and provided,
that, as a condition to granting such consent the lender may be required to enter into an
arrangement with the Partnership and the General Partner to redeem or exchange for the REIT Shares
Amount any Partnership Units in which a security interest is held simultaneously with the time at
which such lender would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code; or (xiii) if in the opinion of legal
counsel for the Partnership such transfer could adversely affect the




45









 







ability of the Company to
continue to qualify as a REIT or, except with the consent of the General Partner, which may be
given or withheld in its sole and absolute discretion, subject the Company to any additional taxes
under Section 857 or Section 4981 of the Code.




          F. The General Partner shall monitor the transfers of interests in the Partnership (including
any acquisition of Common Units by the Partnership or the General Partner) to determine (i) if such
interests 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 of interests 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 IRS 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 “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 to prevent any trading of interests which could
cause the Partnership to become a “publicly traded partnership,” within the meaning of Code Section
7704, or any recognition by the Partnership of such transfers, or to insure that one or more of the
Safe Harbors is met. Nothing in this Section 11.6.F shall allow the General Partner to limit a
Limited Partner’s Redemption Rights under Section 8.5.




ARTICLE 12 — ADMISSION OF PARTNERS




     Section 12.1 Admission of Successor General Partner



     A successor to all of the General Partner’s General Partner Interest pursuant to Section 11.2
who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership
as the General Partner, effective upon such transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In each case, the admission shall be subject to
the successor General Partner executing and delivering to the Partnership an acceptance of all of
the terms and conditions of this Agreement and such other documents or instruments as may be
required to effect the admission. In the case of such admission on any day other than the first
day of a Partnership Year, all items attributable to the General Partner Interest for such
Partnership Year shall be allocated between the transferring General Partner and such successor as
provided in Article 11.



     Section 12.2 Admission of Additional Limited Partners



          A. After the date hereof, a Person (other than an existing Partner) who makes a capital
contribution to the Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the power of attorney granted in
Section 2.4 and (ii) such other documents or instruments as may be required in the discretion of
the General Partner in order to effect such Person’s admission as an Additional Limited Partner.





46









 








          B. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted
as an Additional Limited Partner without the written consent of the General Partner, which consent
may be given or withheld in the General Partner’s sole and absolute discretion. The admission of
any Person as an Additional Limited Partner shall become effective on the date upon which the name
of such Person is recorded on the books and records of the Partnership, following the written
consent of the General Partner to such admission.




          C. If any Additional Limited Partner is admitted to the Partnership on any day other than the
first day of a Partnership Year, then Profit, Loss, each item thereof and all other items allocable
among Partners and Assignees for such Partnership Year shall be allocated among such Additional
Limited Partner and all other Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Section 706(d) of the Code, using any method(s)
permitted by law and selected by the General Partner consistent with the provisions of Section
11.6D. All distributions with respect to which the Partnership Record Date is before the date of
such admission shall be made solely to Partners and Assignees, other than the Additional Limited
Partner and all distributions thereafter shall be made to all of the Partners and Assignees
including such Additional Limited Partner.




     Section 12.3 Amendment of Agreement and Certificate of Limited Partnership



     For the admission to the Partnership of any Partner, the General Partner shall take all steps
necessary and appropriate under the Act to amend the records of the Partnership and, if necessary,
to prepare as soon as practical an amendment of this Agreement and amend Exhibit A
and, if required by law, shall prepare and file an amendment to the Certificate of Limited
Partnership and may for this purpose exercise the power of attorney granted pursuant to Section 2.4
hereof.



ARTICLE 13 — DISSOLUTION, LIQUIDATION AND TERMINATION




     Section 13.1 Dissolution



          A. The Partnership shall not be dissolved by the admission of Substituted Limited Partners or
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership. The Partnership shall dissolve, and its
affairs shall be wound up, only upon the first to occur of any of the following (each, a
“Liquidating Event”):





          (1) the expiration of its term as provided in Section 2.5;




          (2) an event of withdrawal of the General Partner, as defined in the Act (other than an
event of bankruptcy), unless, within ninety (90) days after such event of withdrawal a
Majority in Interest of the Outside Limited Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of withdrawal,
of a successor General Partner;




          (3) an election to dissolve the Partnership made by the General Partner, in its sole
and absolute discretion;



47









 






          (4) entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Act;




          (5) a Terminating Capital Transaction;




          (6) the Incapacity of the General Partner, unless all of the remaining Partners in
their sole and absolute discretion agree in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to the date of such
Incapacity, of a successor General Partner; or




          (7) a final and non-appealable judgment is entered by a court of competent jurisdiction
ruling that the General Partner is bankrupt or insolvent, or a final and non-appealable
order for relief is entered by a court with appropriate jurisdiction against the General
Partner, in each case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect, unless prior to the entry of such order or judgment all of the
remaining Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment, of a
successor General Partner.



     Section 13.2 Winding Up



          A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner shall take any action that is inconsistent with,
or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs.
The General Partner, or, in the event there is no remaining General Partner, any Person elected by
a Majority in Interest of the Outside Limited Partners (the General Partner or such other Person
being referred to herein as the “Liquidator”), shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the Partnership’s
liabilities and property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the General Partner, include shares of stock in the Company) shall be applied
and distributed in the following order:





          (1) First, to the payment and discharge of all of the Partnership’s debts and
liabilities;




          (2) The balance, if any, to all Partners with positive Capital Accounts in accordance
with their respective positive Capital Account balances, determined after all adjustments
made in accordance with Article 6 resulting from Partnership operations and from all sales
and dispositions of all or any part of the Partnership’s assets.


The General Partner shall not receive any additional compensation for any services performed
pursuant to this Article 13, other than reimbursement of its expenses as provided in Section 7.4.
Any distributions pursuant to this Section 13.2A shall be made by the end of the Partnership’s
taxable year in which the Liquidating Event occurs (or, if later, within 90 days after the date of
the Liquidating Event). To the extent deemed advisable by the General Partner, appropriate


48









 






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.




          B. Notwithstanding the provisions of Section 13.2A which require liquidation of the assets of
the Partnership, but subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership’s assets would be impractical or would cause undue loss to the Partners, the
Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of
any assets except those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 13.2A, undivided interests in such Partnership assets
as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made
only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best
interest of the Partners, and shall be subject to such conditions relating to the disposition and
management of such properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The Liquidator shall determine
the fair market value of any property distributed in kind using such reasonable method of valuation
as it may adopt.




     Section 13.3 Deficit Capital Account Restoration Obligation



     If the General Partner has a deficit balance in its Capital Account at such time as the
Partnership (or the General Partner’s interest therein, including its interest as a Limited
Partner) is “liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) (after
giving effect to all contributions, distributions and allocations for the taxable years, including
the year during which such liquidation occurs), the General Partner shall contribute to the capital
of the Partnership the amount necessary to restore such deficit balance to zero in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(3). If any Limited Partner has a deficit balance in its
Capital Account (after giving effect to all contributions, distributions and allocations for the
taxable years, including the year during which such liquidation occurs), such Limited Partner shall
have no obligation to make any contribution to the capital of the Partnership with respect to such
deficit, and such deficit at any time shall not be considered a Debt owed to the Partnership or to
any other Person for any purpose whatsoever, except to the extent otherwise expressly agreed to by
such Partner and the Partnership.



     Section 13.4 Compliance with Timing Requirements of Regulations



          A. In the discretion of the Liquidator or the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited Partners pursuant to
this Article 13 may be:





          (1) distributed to a trust established for the benefit of the General Partner and
Limited Partners for the purposes of liquidating Partnership assets, collecting amounts owed
to the Partnership, and paying any contingent or unforeseen liabilities or obligations of
the Partnership or of the General Partner arising out of or in connection with the
Partnership. The assets of any such trust shall be distributed to the General Partner and
Limited Partners from time to time, in the reasonable discretion of the



49









 







Liquidator or the
General Partner, in the same proportions and the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and Limited
Partners pursuant to this Agreement; or




          (2) withheld or escrowed to provide a reasonable reserve for Partnership liabilities
(contingent or otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such withheld or escrowed
amounts shall be distributed to the General Partner and Limited Partners in the manner and
order of priority set forth in Section 13.2A as soon as practicable.



     Section 13.5 Deemed Distribution and Recontribution



     Notwithstanding any other provision of this Article 13, in the event the Partnership is
liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event
has occurred, the Partnership’s property shall not be liquidated, the Partnership’s liabilities
shall not be paid or discharged, and the Partnership’s affairs shall not be wound up. Instead, the
Partnership shall be deemed to have contributed all of its assets and liabilities to a new
partnership in exchange a for an interest in the new partnership. Immediately thereafter, the
Partnership shall be deemed to distribute interests in the new partnership to the General Partner
and Limited Partners in proportion to their respective interests in the Partnership in
liquidation of the Partnership, and the new partnership shall be deemed to continue the business of
the Partnership.



     Section 13.6 Rights of Limited Partners



     Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the
assets of the Partnership for the return of its Capital Contributions and shall have no right or
power to demand or receive property other than cash from the Partnership. Except as otherwise
provided in this Agreement, no Limited Partner shall have priority over any other Partner as to the
return of its Capital Contributions, distributions or allocations.



     Section 13.7 Notice of Dissolution



     In the event a Liquidating Event occurs or an event occurs that would, but for an election or
objection by one or more Partners pursuant to Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners.



     Section 13.8 Cancellation of Certificate of Limited Partnership



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



50









 





     Section 13.9 Reasonable Time for Winding-Up



     A reasonable time shall be allowed for the orderly winding-up of the business and affairs of
the Partnership and the liquidation of its assets pursuant to Section 13.2, in order to minimize
any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.



     Section 13.10 Waiver of Partition



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



     Section 13.11 Liability of Liquidator



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



ARTICLE 14 — AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS




     Section 14.1 Amendments



          A. Amendments to this Agreement requiring the Consent of Limited Partners may only be proposed
by 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 Consent of the
Limited Partners on the proposed amendment or shall call a meeting to vote thereon and to transact
any other business that it may deem appropriate. For purposes of obtaining a written Consent, the
General Partner may require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall constitute a vote or Consent
which is consistent with the General Partner’s recommendation with respect to the proposal. Except
as set forth below in Section 14.1B, Section 14.1C and Section 14.1D or as otherwise expressly
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 Limited Partners
holding a majority of the Common Units held by Limited Partners (including Limited Partner Units
held by the Company or its Affiliates); provided that an action shall become
effective at such time as the requisite consents are received by the General Partner even if prior
to such specified time.




          B. The General Partner shall have the exclusive power to amend this Agreement as may be
required to facilitate or implement any of the following purposes:





          (1) 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;




          (2) to reflect the issuance of additional Partnership Interests pursuant to Section 4.2
or the admission, substitution or withdrawal of Partners or the termination of the
Partnership in accordance with this Agreement, and to amend Exhibit A in connection
with such admission, substitution or withdrawal;



51









 






          (3) to set forth or amend the designations, rights, powers, duties and preferences of
the Holders of any additional Partnership Interests issued pursuant to this Agreement;




          (4) to reflect a change that is of an inconsequential nature or does not adversely
affect the rights of the Limited Partners hereunder 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 or this Agreement;




          (5) 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;




          (6) to reflect such changes as are reasonably necessary for the General Partner to
maintain its status 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 IRS; and




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



     The General Partner will provide notice to the Limited Partners when any action under this
Section 14.1B is taken in the next regular communication to the Limited Partners.



          C. Except as set forth in Section 14.1B above, this Agreement shall not be amended, without
the Consent of a Majority in Interest of the Outside Limited Partners, if such amendment would
amend Section 4.2, Article 5, Article 6, Article 7, Section 8.5, Section 11.2 or this Section 14.1C
(to reduce the items requiring the Consent described herein).




          D. This Agreement shall not be amended, and no action may be taken by the General Partner,
without the Consent of each Partner whose rights under this Agreement are adversely affected
thereby if such amendment or action would (i) convert a Limited Partner Interest in the Partnership
into a General Partner Interest (except as a result of the General Partner acquiring such
Partnership Interest), (ii) modify the limited liability of a Limited Partner or (iii) amend this
Section 14.1D (to reduce the items requiring the Consent described herein). Any such amendment or
action Consented to by a Partner shall be effective as to that Partner, notwithstanding the absence
of such Consent by any other Partners.




          E. Notwithstanding anything in this Article 14 or elsewhere in this Agreement to the contrary,
any amendment and restatement of Exhibit A hereto by the General Partner to reflect events
or changes otherwise authorized or permitted by this Agreement, whether pursuant to Section
7.1A(23) hereof or otherwise, shall not be deemed an amendment of this Agreement and may be done at
any time and from time to time, as necessary by the General Partner without the Consent of the
Limited Partners.





52









 








     Section 14.2 Meetings of the Partners



          A. Meetings of the Partners may only be called by the General Partner. The request shall
state the nature of the business to be transacted. Notice of any such meeting shall be given to
all Partners not less than seven (7) days nor more than sixty (60) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote or Consent of
the Partners is permitted or required under this Agreement, such vote or Consent may be given at a
meeting of the Partners or may be given in accordance with the procedure prescribed in Section
14.1. Except as otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Common Units held by Limited Partners (including Common Units held by the Company)
shall control.




          B. Any action required or permitted to be taken at a meeting of the Partners may be taken
without a meeting if a written Consent setting forth the action so taken is signed by a majority of
the Common Units of the Partners (or such other percentage as is expressly
required by this Agreement). Such Consent may be in one instrument or in several instruments,
and shall have the same force and effect as a vote of a majority of the Common Units of the
Partners (or such other percentage as is expressly required by this Agreement). Such Consent shall
be filed with the General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.




          C. Each Limited Partner may authorize any Person or Persons to act for him by proxy on all
matters in which a Limited Partner is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited
Partner or his attorney-in-fact. A proxy may be granted in writing, by means of electronic
transmission or as otherwise permitted by applicable law. No proxy shall be valid after the
expiration of twelve (12) months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Limited Partner executing it, such revocation
to be effective upon the Partnership’s receipt of written notice of such revocation from the
Limited Partner executing such proxy.




          D. Each meeting of the Partners shall be conducted by the General Partner or such other Person
as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate. Without limitation, meetings of the
Partners may be conducted in the same manner as meetings of the Company’s stockholders and may be
held at the same time, and as part of, meetings of the Company’s stockholders.




          E. On matters on which Limited Partners are entitled to vote, each Limited Partner shall have
a vote equal to the number of Partnership Units held.




ARTICLE 15 — GENERAL PROVISIONS




     Section 15.1 Addresses and Notice



     Any notice, demand, request or report required or permitted to be given or made to a Partner
or Assignee under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by certified first class United States mail, return receipt



53









 







requested, nationally recognized overnight delivery service or facsimile transmission (with receipt
confirmed) to the Partner or Assignee at the address set forth on Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.



     Section 15.2 Titles and Captions



     All article or section titles or captions in this Agreement are for convenience only. They
shall not be deemed part of this Agreement and in no way define, limit, extend or describe the
scope or intent of any provisions hereof. Except as specifically provided otherwise, references to
“Articles” and “Sections” are to Articles and Sections of this Agreement.



     Section 15.3 Pronouns and Plurals



     Whenever the context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.



     Section 15.4 Further Action



     The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.



     Section 15.5 Binding Effect



     Subject to the terms set forth herein, the Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.



     Section 15.6 Creditors



     Other than as expressly set forth herein with respect to Indemnitees, none of the provisions
of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the
Partnership.



     Section 15.7 Waiver



     No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.



     Section 15.8 Counterparts



     This Agreement may be executed in counterparts, all of which together shall constitute one
agreement binding on all of the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto.



54









 





     Section 15.9 Applicable Law



     This Agreement shall be construed and enforced in accordance with and governed by the laws of
the State of Delaware, without regard to the principles of conflicts of law.



     Section 15.10 Invalidity of Provisions



     If any provision of this Agreement shall to any extent be held void or unenforceable (as to
duration, scope, activity, subject or otherwise) by a court of competent jurisdiction, such
provision shall be deemed to be modified so as to constitute a provision conforming as nearly as
possible to the original provision while still remaining valid and enforceable. In such
event, the remainder of this Agreement (or the application of such provision to persons or
circumstances other than those in respect of which it is deemed to be void or unenforceable) shall
not be affected thereby. Each other provision of this Agreement, unless specifically conditioned
upon the voided aspect of such provision, shall remain valid and enforceable to the fullest extent
permitted by law; any other provisions of this Agreement that are specifically conditioned on the
voided aspect of such invalid provision shall also be deemed to be modified so as to constitute a
provision conforming as nearly as possible to the original provision while still remaining valid
and enforceable to the fullest extent permitted by law.



     Section 15.11 No Rights as Stockholders



     Nothing contained in this Agreement shall be construed as conferring upon the Holders of
Partnership Units any rights whatsoever as stockholders of the Company, including without
limitation, any right to receive dividends or other distributions made to stockholders or to vote
or consent or to receive notice as stockholders in respect of any meeting of stockholders for the
election of directors of the Company or any other matter.



     Section 15.12 Entire Agreement



     This Agreement contains the entire understanding and agreement among the Partners with respect
to the subject matter hereof and supersedes any other prior written or oral understandings or
agreements among them with respect thereto.



[Signature Page Follows]




55









 





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



	 	 	 	 	 
	 	GENERAL PARTNER:



COLE REAL ESTATE INCOME STRATEGY (DAILY NAV), INC.

 	 
	 	By:  	/s/
Christopher H. Cole	 
	 	 	Name:  	Christopher H. Cole 	 
	 	 	Title:  	Chief Executive Officer and President 	 
	 
	 	LIMITED PARTNER:



COLE REAL ESTATE INCOME STRATEGY (DAILY NAV) ADVISORS, LLC

	 
	 	By:  	/s/
Marc T. Nemer	 
	 	 	Name:  	Marc T. Nemer	 
	 	 	Title:  	Chief Executive Officer and President 	 
	 





Signature Page to Amended and Restated Agreement of 

Limited Partnership of Cole Real Estate Income Strategy (Daily NAV) Operating Partnership, LP





 









 








FORM OF LIMITED PARTNER SIGNATURE PAGE


FOR PARTNERS ADMITTED AFTER SEPTEMBER 28, 2011





     The undersigned, desiring to become one of the within named Limited Partners of Cole Real
Estate Income Strategy (Daily NAV) Operating Partnership, LP, hereby becomes a party to the Amended and Restated
Agreement of Limited Partnership of Cole Real Estate Income Strategy (Daily NAV) Operating Partnership, LP by and among
Cole Real Estate Income Strategy (Daily NAV), Inc. and such Limited Partners, dated as of September 28, 2011 as
amended. The undersigned agrees that this signature page may be attached to any counterpart of
said Amended and Restated Agreement of Limited Partnership.



	 	 	 	 	 
	Signature Line for Limited Partner: 	[Name]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	Date: 	 	 
	 
	 	 	 
	Address of Limited Partner: 	
 	 
	 	 	 
	 	 	 
	 








57









 








Exhibit A




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Agreed Value	 	Number of	 	 
	 	 	Cash	 	of Capital	 	Partnership	 	Percentage
	Partner	 	Contribution	 	Contribution	 	Units	 	Interest
	GENERAL PARTNER
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cole Real Estate
Income Strategy (Daily NAV), Inc.
	 	$	900	 	 	 	N/A	 	 	 	9,000	 	 	 	99.9	%
	
2555 East Camelback 

Road, Suite 400

Phoenix, Arizona
85016
 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LIMITED PARTNER
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cole Real Estate
Income Strategy (Daily NAV), Advisors,
LLC
(f/k/a Cole O/I Advisors, LLC, Cole Advisors: Corporate Income, LLC and Cole Real Estate Income Advisors, LLC)
	 	$	.90	 	 	 	N/A	 	 	 	9	 	 	 	0.1	%
	
2575 East Camelback 

Road, Suite 500

Phoenix, Arizona
85016
 




    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTALS:
	 	$	900.90	 	 	 	 	 	 	 	9,009	 	 	 	100	%













A-1









 








Exhibit B




Notice of Redemption



     The undersigned Limited Partner hereby irrevocably (i) redeems __________ Common Units in Cole
Real Estate Income Strategy (Daily NAV) Operating Partnership, LP in accordance with the terms of the Amended and
Restated Agreement of Limited Partnership of Cole Real Estate Income Strategy (Daily NAV) Operating Partnership, LP and
the Redemption Right referred to therein; (ii) surrenders such Common Units and all right, title
and interest therein; and (iii) directs that the Cash Amount or REIT Shares Amount (as determined
by the General Partner) deliverable upon exercise of the Redemption Right be delivered to the
address specified below, and if REIT Shares are to be delivered, such REIT Shares be registered or
placed in the name(s) and at the address(es) specified below. The undersigned hereby, represents,
warrants, and certifies that the undersigned (a) has marketable and unencumbered title to such
Common Units, free and clear of the rights or interests of any other Person; (b) has the full
right, power, and authority to redeem and surrender such Common Units as provided herein; and (c)
has obtained the consent or approval of all persons or entities, if any, having the right to
consent or approve such redemption and surrender.


Dated:_________________________



Name of Limited Partner:__________________________




Please Print




	 	 	 	 	 
	 	
 	 
	 	(Signature of Limited Partner) 	 
	 	 	 
	 	 	 
	 	
 	 
	 	(Street Address) 	 
	 	 	 
	 	 	 
	 	
 	 
	 	(City)           
          
(State)           
          
(Zip Code) 	 
	 	 	 
	 
	 	Medallion Guarantee:

 	 
	 	
 	 
	 


If REIT Shares are to be issued, issue to:



Name:_______________________



Please insert social security or identifying number:_________________





B-1