Document:

EX 4.3 ARC HCT III 6.30.2015 10-Q SS

Exhibit 4.3

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP  
 
OF  
 
AMERICAN REALTY CAPITAL HEALTHCARE TRUST III OPERATING PARTNERSHIP, L.P.  
 
Dated as of August 10, 2015

TABLE OF CONTENTS
	
				
	 
	 
	 
	Page

	Article
	1.
	DEFINED TERMS
	1

	 
	 
	 
	 

	Article
	2.
	ORGANIZATIONAL MATTERS
	20

	 
	2.1
	Formation
	20

	 
	2.2
	Name
	20

	 
	2.3
	Registered Office and Agent; Principal Office
	20

	 
	2.4
	Power of Attorney
	20

	 
	2.5
	Term
	20

	 
	 
	 
	 

	Article
	3.
	PURPOSE
	22

	 
	3.1
	Purpose and Business
	22

	 
	3.2
	Powers
	23

	 
	 
	 
	 

	Article
	4.
	CAPITAL CONTRIBUTIONS
	23

	 
	4.1
	Capital Contributions of the Partners
	23

	 
	4.2
	Additional Funds; Restrictions on the General Partner
	24

	 
	4.3
	Issuance of Additional Partnership Interests; Admission of Additional Limited Partners
	26

	 
	4.4
	Contribution of Proceeds of Issuance of Common Stock
	26

	 
	4.5
	Repurchase of Common Stock; Shares-In-Trust
	27

	 
	4.6
	No Third-Party Beneficiary
	27

	 
	4.7
	No Interest; No Return
	28

	 
	4.8
	No Preemptive Rights
	28

	 
	 
	 
	 

	Article 
	5.
	DISTRIBUTIONS
	28

	 
	5.1
	Distributions
	28

	 
	5.2
	Qualifications as a REIT
	33

	 
	5.3
	Withholdings
	33

	 
	5.4
	Additional Partnership Intersts
	33

	 
	 
	 
	 

	Article
	6.
	Allocations
	33

	 
	6.1
	Allocations
	33

	 
	6.2
	Revisions to Allocations to Reflect Issuance of Partnership Interests
	34

	 
	 
	 
	 

	Article
	7.
	MANAGEMENT AND OPERATIONS OF BUSINESS
	34

	 
	7.1
	Management
	34

	 
	7.2
	Certificate of Limited Partnership
	39

	 
	7.3
	Reimbursement of the General Partner
	39

	 
	7.4
	Outside Activities of the General Partner
	40

	 
	7.5
	Contracts with Affiliates
	40

	 
	7.6
	Indemnification
	41

	 
	7.7
	Liability of the General Partner
	43

	 
	7.8
	Other Matters Concerning the General Partner
	44

	 
	7.9
	Title to Partnership Assets
	45

i

	
				
	 
	7.10
	Reliance by Third Parties
	45

	 
	7.11
	Loans by Third Parties
	46

	 
	 
	 
	 

	Article
	8.
	RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
	46

	 
	8.1
	Limitation of Liability
	46

	 
	8.2
	Management of Business
	46

	 
	8.3
	Outside Activities of Limited Partners
	47

	 
	8.4
	Return of Capital
	47

	 
	8.5
	Rights of Limited Partners Related to the Partnership
	47

	 
	8.6
	Exchange of OP Units
	48

	 
	8.7
	Conversion and Exchange of Special Limited Partner Interest
	50

	 
	 
	 
	 

	Article
	9.
	BOOKS, RECORDS, ACCOUNTING AND REPORTS
	51

	 
	9.1
	Records and Accounting
	51

	 
	9.2
	Fiscal Year
	51

	 
	9.3
	Reports
	51

	 
	 
	 
	 

	Article
	10.
	TAX MATTERS
	52

	 
	10.1
	Preparation of Tax Returns
	52

	 
	10.2
	Tax Elections
	52

	 
	10.3
	Tax Matters Partner
	35

	 
	10.4
	Organizational Expenses
	55

	 
	10.5
	Withholdings
	55

	 
	 
	 
	 

	Article
	11.
	TRANSFERS AND WITHDRAWALS
	56

	 
	11.1
	Transfer
	56

	 
	11.2
	Transfer of the General Partner's General Partnership Interest
	57

	 
	11.3
	Limited Partners' Right to Transfer
	58

	 
	11.4
	Substituted Limited Partners
	60

	 
	11.5
	Assignees
	61

	 
	11.6
	General Provisions
	61

	 
	 
	 
	 

	Article
	12.
	ADMISSION OF PARTNERS
	63

	 
	12.1
	Admission of Successor General Partner
	63

	 
	12.2
	Admission of Additional Limited Partners
	64

	 
	12.3
	Amendment of Agreement and Certificate of Limited Partnership
	65

	 
	 
	 
	 

	Article
	13.
	DISSOLUTION, LIQUIDATION AND TERMINATION
	65

	 
	13.1
	Dissolution
	65

	 
	13.2
	Winding Up
	66

	 
	13.3
	Obligation to Contribute Deficit
	68

	 
	13.4
	Rights of Limited Partners
	68

	 
	13.5
	Notice of Dissolution
	69

	 
	13.6
	Termination of Partnership and Cancellation of Certificate of Limited Partnership
	69

	 
	13.7
	Reasonable Time for Winding-Up
	69

	 
	13.8
	Waiver of Partition
	69

ii

	
				
	 
	 
	 
	 

	Article
	14.
	AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
	69

	 
	14.1
	Amendments
	69

	 
	14.2
	Meetings of the Partners
	70

	 
	 
	 
	 

	Article
	15.
	GENERAL PROVISIONS
	71

	 
	15.1
	Addresses and Notice
	71

	 
	15.2
	Titles and Captions
	72

	 
	15.3
	Pronouns and Plurals
	72

	 
	15.4
	Further Action
	72

	 
	15.5
	Binding Effect
	72

	 
	15.6
	Creditors
	72

	 
	15.7
	Waivers
	72

	 
	15.8
	Counterparts
	72

	 
	15.9
	Applicable Law
	73

	 
	15.10
	Invalidity of Provisions
	73

	 
	15.11
	Entire Agreement
	73

	 
	15.12
	Merger
	73

	 
	15.13
	No Rights as Stockholders
	73

	 
	 
	 
	 

	Article
	16.
	CLASS B UNITS
	73

	 
	16.1
	Designation and Number
	73

	 
	16.2
	Special Provisions
	75

	 
	16.3
	Voting
	76

	 
	16.4
	Conversion of Class B Units
	77

	 
	16.5
	Profits Interest
	79

	 
	 
	 
	 

	EXHIBITS
	 
	 

	 
	 
	 
	 

	Exhibit
	A - 
	Partners' Contributions and Partnership Interest
	 

	 
	B - 
	Allocations
	 

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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF  
AMERICAN REALTY CAPITAL HEALTHCARE TRUST III OPERATING PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AMERICAN REALTY CAPITAL HEALTHCARE TRUST III OPERATING PARTNERSHIP, L.P. (this “Agreement”) dated as of August 10, 2015, is entered into among AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC., a Maryland corporation, as general partner (the “General Partner”), AMERICAN REALTY CAPITAL HEALTHCARE III ADVISORS, LLC, a Delaware limited liability company, as initial limited partner (the “Initial Limited Partner”), AMERICAN REALTY CAPITAL HEALTHCARE III SPECIAL LIMITED PARTNERSHIP, LLC, a Delaware limited liability company, as Special Limited Partner (the “Special Limited Partner”), and the Limited Partners party hereto from time to time.
WHEREAS, the General Partner formed American Realty Capital Healthcare Trust III Operating Partnership, L.P. as a limited partnership on April 24, 2014 pursuant to the Revised Uniform Limited Partnership Act of the State of Delaware and a certificate of limited partnership was filed with the Secretary of State of the State of Delaware on April 24, 2014 (the “Certificate”).
WHEREAS, the parties entered into the Agreement of Limited Partnership on August 20, 2014 (the “Original Agreement”), as amended by the First Amendment to Agreement of Limited Partnership, dated as of May 13, 2015.
WHEREAS, the General Partner desires to amend and restate the Amended and Restated Agreement in its entirety with this Agreement.
NOW THEREFORE, in consideration of the mutual covenants herein contained, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do 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.
“Acquisition Expenses” means any and all expenses, exclusive of Acquisition Fees, incurred by the General Partner, the Partnership, the Advisor or any of their Affiliates (as such term is defined in the Advisory Agreement) in connection with the selection, evaluation, acquisition, origination, making or development of any Real Estate Assets, whether or not acquired, including legal fees and expenses, travel and communications expenses, brokerage fees, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums and the costs of performing due diligence.

“Acquisition Fee” means the fee payable to the Advisor or its assignees pursuant to Section 11(a) of the Advisory Agreement. 
 “Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from time to time, and any successor to such statute.
“Additional Limited Partner” means a Person that has executed and delivered an additional limited partner signature page in the form attached hereto, has been admitted to the Partnership as a Limited Partner pursuant to Section 4.3 hereof and that is shown as such on the books and records of the Partnership.
“Adjusted Capital Account Deficit” means with respect to any Partner, the negative balance, if any, in such Partner’s Capital Account as of the end of any relevant fiscal year, determined after giving effect to the following adjustments:
(a)credit to such Capital Account any portion of such negative balance which such Partner (i) is treated as obligated to restore to the Partnership pursuant to the provisions of Section 1.704-1(b)(2)(ii)(c) of the Regulations, or (ii) is deemed to be obligated to restore to the Partnership pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(b)    debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
“Adjustment Event” has the meaning set forth in Section 16.1(b).
“Advisor” means the Initial Limited Partner, its successors and assignees.
“Advisory Agreement” means the Advisory Agreement dated as of August 20, 2014 by and among the Partnership and the General Partner, as advisees, and the Advisor, as advisor, as the same may be amended, supplemented or restated from time to time.
 “Affected Gain” has the meaning set forth in subparagraph 4(b) of Exhibit B.
“Affiliate” means,
(a)    with respect to any individual Person, any member of the Immediate Family of such Person or a trust established for the benefit of such member, or
(b)    with respect to any Entity, any Person which, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, any such Entity.  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.

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“Agreement” means this Amended and Restated Agreement of Limited Partnership, as originally executed and as amended, supplemented or restated from time to time, as the context requires.
“Articles of Incorporation” means the General Partner’s Articles of Incorporation, filed with the Maryland State Department of Assessments and Taxation, or other organizational document governing the General Partner, as amended, supplemented or restated from time to time.
“Asset Sale” means any transaction or series of transactions resulting in a liquidation or sale of all or substantially all the investments owned directly or indirectly by the General Partner and the distribution of the Net Sales Proceeds therefrom to the Partners whereby: (a) the Partnership directly or indirectly sells, grants, transfers, conveys or relinquishes its direct or indirect ownership of or interest in (i) any Real Estate Asset, including through any event with respect to any Real Estate Asset that gives rise to a significant amount of insurance proceeds or condemnation awards, (ii) any joint venture in which the Partnership is a co-venturer, member or partner, (iii) any real estate-related loan or portion thereof (including all payments thereunder or in satisfaction thereof other than regularly scheduled interest payments), including through any event with respect to any real estate-related loan or portion thereof that gives rise to a significant amount of insurance proceeds or similar awards, or (iv) any other investment not previously described in this definition, or any portion thereof; or (b) any joint venture in which the Partnership is a co-venturer, member or partner directly or indirectly sells, grants, transfers, conveys or relinquishes its direct or indirect ownership of or interest in any investment described in this definition, or any portion thereof.
“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.
“Available Cash” means, with respect to the applicable period of measurement (i.e., any period (other than the first period in which this calculation of Available Cash is being made) beginning on the first day of the fiscal year, quarter or other period commencing immediately after the last day of the fiscal year, quarter or other applicable period for purposes of the prior calculation of Available Cash for or with respect to which a distribution has been made, and ending on the last day of the fiscal year, quarter or other applicable period immediately preceding the date of the calculation), the excess, if any, as of such date, of
(a)    the gross cash receipts of the Partnership for such period from all sources whatsoever, including the following:
(i)all rents, revenues, income and proceeds derived by the Partnership from its operations, including distributions received by the Partnership from any Entity in which the Partnership has an interest;
(ii)    all proceeds and revenues received by the Partnership on account of any sales of any Partnership property or as a refinancing of or payment of 

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principal, interest, costs, fees, penalties or otherwise on account of any borrowings or loans made by the Partnership or financings or refinancings of any property of the Partnership;
(iii)    the amount of any insurance proceeds and condemnation awards received by the Partnership; and
(iv)    all capital contributions and loans received by the Partnership from its Partners;
(v)    all cash amounts previously reserved by the Partnership, to the extent such amounts are no longer needed for the specific purposes for which such amounts were reserved; and
(vi)    the proceeds of liquidation of the Partnership’s property in accordance with this Agreement;
over
(b)    the sum of the following:
(i)    all operating costs and expenses paid, including taxes and other expenses of the properties directly and indirectly held by the Partnership and capital expenditures made during such period (without deduction, however, for any capital expenditures, charges for Depreciation or other expenses not paid in cash or expenditures from reserves described in clause (viii) below);
(ii)    all costs and expenses paid during such period in connection with the sale or other disposition, or financing or refinancing, of the property directly or indirectly held by the Partnership or the recovery of insurance or condemnation proceeds;
(iii)    all fees provided for under this Agreement;
(iv)    all debt service, including principal and interest, paid during such period on all indebtedness (including under any line of credit) of the Partnership;
(v)    all capital contributions, advances, reimbursements, loans or similar payments made to any Person in which the Partnership has an interest;
(vi)    all loans made by the Partnership in accordance with the terms of this Agreement;
(vii)    all reimbursements paid to the General Partner or its Affiliates during such period; and

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(viii)    the amount of any new reserve or increase in reserves established during such period which the General Partner determines is necessary or appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash received or reductions in reserves, or take into account any disbursements made or reserves established, after commencement of the dissolution and liquidation of the Partnership.
“Average Class B Economic Capital Account Balances” means with respect to a Limited Partner owning Class B Units, an amount equal to the quotient of (a) the Class B Economic Capital Account Balance of such Limited Partner divided by (b) the number of Class B Units owned by such Limited Partner.
 “Business Combination” has the meaning set forth in Section 7.1(a)(iii)(D).
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.
“Capital Account” means with respect to any Partner, the Capital Account maintained for such Partner in accordance with the following provisions:
(a)    to each Partner’s Capital Account there shall be credited
(i)    such Partner’s Capital Contributions;
(ii)    such Partner’s distributive share of Net Income, Net Property Gain and any items in the nature of income or gain which are specially allocated to such Partner pursuant to paragraphs 1 and 2 of Exhibit B; and
(iii)    the amount of any Partnership liabilities assumed by such Partner or which are secured by any asset distributed to such Partner;
(b)    to each Partner’s Capital Account there shall be debited
(i)    the amount of cash and the Gross Asset Value of any property distributed to such Partner pursuant to any provision of this Agreement,
(ii)    such Partner’s distributive share of Net Losses, Net Property Loss and any items in the nature of expenses or losses which are specially allocated to such Partner pursuant to paragraphs 1 and 2 of Exhibit B; and
(iii)    the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any asset contributed by such Partner to the Partnership;

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(c)    if all or a portion of a Partnership Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Partnership Interest.
The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Sections 1.704-1(b) and 1.704-2 of the Regulations, and shall be interpreted and applied in a manner consistent with such Regulations.  If the General Partner shall reasonably determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including debits or credits relating to liabilities which are secured by contributed or distributed assets or which are assumed by the Partnership, the General Partner or any Limited Partner) are computed in order to comply with such Regulations, the General Partner may make such modification; provided, that, all allocations of Partnership income, gain, loss and deduction continue to have “substantial economic effect” within the meaning of Section 704(b) of the Code and that no Limited Partner is materially adversely affected by any such modification.
“Capital Contribution” means, with respect to any Partner, any cash, cash equivalents or the Gross Asset Value of property (net of any liabilities secured by contributed property that the Partnership is considered to assume or take subject to under Section 752 of the Code) which such Partner contributes or is deemed to contribute to the Partnership pursuant to Article 4 hereof.
“Capital Transaction” means any sale, or other disposition (other than a deemed disposition pursuant to Section 708(b)(1)(B) of the Code and the Regulations thereunder) of all or substantially all the assets and properties of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all the assets and properties of the Partnership.
“Cash Amount” means an amount of cash per Partnership Unit equal to the value of one share of Common Stock as determined under the applicable Exchange Rights Agreement on the Valuation Date of the Common Stock Amount.
“Cash Available for Distribution” means the Available Cash other than Net Sales Proceeds.
“Certificate” has the meaning set forth in the Recitals.
“Claims” has the meaning set forth in Section 7.6(a)(i).
“Class B Unit” means a Partnership Unit which is designated as a Class B Unit of the Partnership.
“Class B Economic Capital Account Balances” means the Capital Account balances of the Class B Unit holders to the extent attributable to their ownership of Class B Units reduced by any forfeiture allocations in accordance with Section 16.5(d) due to the forfeiture of any Class B Units.

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“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, 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 future law.
“Common Stock” means the common stock of the General Partner, $.01 par value per share.  Common Stock may be issued in one or more classes or series in accordance with the terms of the Articles of Incorporation.  If, at any time, there is more than one class or series of Common Stock, the term “Common Stock” shall, as the context requires, be deemed to refer to the class or series of Common Stock that correspond to the class or series of Partnership Interests for which the reference to Common Stock is made.
“Common Stock Amount” means that number of shares of Common Stock equal to the product of (a) the number of OP Units offered for exchange by an exchanging Partner, multiplied by (b) the Exchange Factor as of the Valuation Date, provided, however, that if the General Partner or the Partnership issues to all holders of Common Stock rights, options, warrants or convertible, exercisable or exchangeable securities entitling the stockholders to subscribe for or purchase Common Stock, or any other securities or property (collectively, the “rights”), then the Common Stock Amount shall also include such rights that a holder of that number of shares of Common Stock would be entitled to receive.
“Consent” means the consent or approval of a proposed action by a Partner given in accordance with Section 14.2 hereof.
“Consent of the Limited Partners” means the Consent of Limited Partners (excluding for this purpose any Partnership Interests held by the General Partner, any other Person of which the General Partner owns or controls more than fifty percent (50%) of the voting interests and any Person directly or indirectly owning or controlling more than fifty percent (50%) of the outstanding voting interests of the General Partner) holding Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all Limited Partners who are not excluded for the purposes hereof.
“Constituent Person” has the meaning set forth in Section 16.4(d) hereof.
“Contributed Property” means each property, partnership interest, contract right or other asset, in such form as may be permitted by the Act, contributed or deemed contributed to the Partnership by any Partner, including any interest in any successor partnership occurring as a result of a termination of the Partnership pursuant to Section 708 of Code.
“Conversion Date” has the meaning set forth in Section 16.4(a) hereof.
“Cost of Assets” means, with respect to a Real Estate Asset, the purchase price, Acquisition Expenses, capital expenditures and other customarily capitalized costs, but shall exclude Acquisition Fees associated with such Real Estate Asset.

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 “Debt” means, as to any Person, as of any date of determination and without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (b) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; (c) 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 (d) obligations of such Person incurred in connection with entering into a lease which, in accordance with generally accepted accounting principles, should be capitalized.
“Depreciation” means, with respect to any asset of the Partnership for any fiscal year, quarter or other applicable period, the depreciation, depletion, amortization or other cost recovery deduction, as the case may be, allowed or allowable for federal income tax purposes in respect of such asset for such fiscal year, quarter or other applicable period; provided, however, that except as otherwise provided in Section 1.704-2 of the Regulations, if there is a difference between the Gross Asset Value (including the Gross Asset Value, as increased pursuant to paragraph (d) of the definition of Gross Asset Value) and the adjusted tax basis of such asset at the beginning of such fiscal year, quarter or other applicable period, Depreciation for such asset shall be an amount that bears the same ratio to the beginning Gross Asset Value of such asset as the federal income tax depreciation, depletion, amortization or other cost recovery deduction for such fiscal year, quarter or other applicable period bears to the beginning adjusted tax basis of such asset; provided further, however, that if the federal income tax depreciation, depletion, amortization or other cost recovery deduction for such asset for such fiscal year, quarter or other applicable period is zero, Depreciation of such asset shall be determined with reference to the beginning Gross Asset Value of such asset using any reasonable method selected by the General Partner.
“Distribution Date” has the meaning set forth in Section 5.1(a).
“Economic Hurdle” has the meaning set forth in Section 16.2(a)(ii)(A).
 “Effective Date” means the date upon which the Registration Statement relating to the General Partner’s public offering of Common Stock has been declared effective by the Securities and Exchange Commission.
“Entity” means any general partnership, limited partnership, corporation, joint venture, trust, business trust, real estate investment trust, limited liability company, limited liability partnership, cooperative or association.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time (or any corresponding provisions of succeeding laws).
“Excess Oversight Fee” has the meaning set forth in Section 16.1(a)(i).

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“Exchange Factor” means 1.0, provided, however, that if the General Partner (a) declares or pays a dividend on its outstanding Common Stock in Common Stock or makes a distribution to all holders of its outstanding Common Stock in Common Stock; (b) subdivides its outstanding Common Stock; or (c) combines its outstanding Common Stock into a smaller number of shares of Common Stock, the Exchange Factor shall be adjusted by multiplying the Exchange Factor by a fraction, the numerator of which shall be the number of shares of Common Stock issued and outstanding on the record date for such dividend, distribution, subdivision or combination (assuming for such purpose that such dividend, distribution, subdivision or combination has occurred as of such time), and the denominator of which shall be the actual number of shares of Common Stock (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, subdivision or combination.  Any adjustment to the Exchange Factor shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.
“Exchange Right” means the exchange right of a Limited Partner described in Section 8.6 and to be set forth in one or more Exchange Rights Agreements.
“Exchange Rights Agreements” has the meaning set forth in Section 8.6(h).
 “General Partner” has the meaning set forth in the Preamble, and any successor as 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 GP Units.
“GP Unit” means a Partnership Unit which is designated as a GP Unit of the Partnership.
“Gross Asset Value” means, with respect to any asset of the Partnership, such asset’s adjusted basis for U.S. federal income tax purposes, except as follows:
(a)    the initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, without reduction for liabilities, as determined by the contributing Partner and the Partnership on the date of contribution thereof;
(b)    if the General Partner determines that an adjustment is necessary or appropriate to reflect the relative economic interests of the Partners, the Gross Asset Values of all Partnership assets shall be adjusted in accordance with Sections 1.704-1(b)(2)(iv)(f) and (g) of the Regulations to equal their respective gross fair market values, without reduction for liabilities, as reasonably determined by the General Partner, as of the following times:
(i)    a Capital Contribution (other than a de minimis Capital Contribution) to the Partnership by a new or existing Partner as consideration for a Partnership Interest;

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(ii)    the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership assets as consideration for the repurchase or redemption of a Partnership Interest; 
(iii)    the liquidation of the Partnership within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations; and
(iv)    the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner;
(c)    the Gross Asset Values of Partnership assets distributed to any Partner shall be the gross fair market values of such assets (taking Section 7701(g) of the Code into account) without reduction for liabilities, as determined by the General Partner as of the date of distribution; and
(d)    the Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations (as set forth in Exhibit B); provided, however, that Gross Asset Values shall not be adjusted pursuant to this paragraph (d) to the extent that the General Partner determines that an adjustment pursuant to paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken into account with respect to the Partnership’s assets for purposes of computing Net Income and Net Loss.
“Gross Proceeds” means the aggregate purchase price of all shares of Common Stock sold for the account of the General Partner through an Offering, without deduction for Organization and Offering Expenses.  For the purpose of computing Gross Proceeds, the purchase price of any share of Common Stock for which reduced selling commissions are paid to (i) Realty Capital Securities, LLC or any successor dealer manager to the General Partner or (ii) a broker-dealer (where net proceeds to the General Partner are not reduced) shall be deemed to be the full amount of the offering price per share of Common Stock pursuant to the Registration Statement for such Offering without reduction.
“Immediate Family” means a person’s spouse; child residing in the person’s household (including step and adoptive children); and any dependent of the person, as defined in Section 152 of the Code.
“Incapacity” or “Incapacitated” means,

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(a)    as to any individual who is a Partner, death, total physical disability or entry by a court of competent jurisdiction adjudicating him incompetent to manage his person or his estate;
(b)    as to any corporation which is a Partner, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter;
(c)    as to any partnership which is a Partner, the dissolution and commencement of winding up of the partnership;
(d)    as to any limited liability company which is a Partner, the dissolution and commencement of winding up of the limited liability company;
(e)    as to any estate which is a Partner, the distribution by the fiduciary of the estate’s entire interest in the Partnership;
(f)    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
(g)    as to any Partner, the bankruptcy of such Partner, which shall be deemed to have occurred when
(i)    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;
(ii)    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;
(iii)    the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors;
(iv)    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 (ii) above;
(v)    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;
(vi)    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;

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(vii)    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
(viii)    an appointment referred to in clause (vii) which has been stayed is not vacated within ninety (90) days after the expiration of any such stay.
“Include”, “includes” and “including” shall be construed as if followed by the phrase “without limitation”.
“Included Assets” means the Investments owned as of the Termination Date.
“Indemnitee” means
(a)    any Person made a party to a proceeding by reason of: 
(i)    its status as the General Partner,
(ii)    its status as a Limited Partner,
(iii)    its status as an investment advisor to the General Partner,
(iv)    its status as a trustee, director or officer of the Partnership, the General Partner, or the investment advisor to the General Partner, 
(v)    its status as a director, trustee, member or officer of any other Entity, each Person serving in such capacity at the request of the Partnership or the General Partner, or
(vi)    his or its liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken assets subject to); and
(b)    such other Persons (including Affiliates of the General Partner, a Limited Partner, the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.
“Initial Limited Partner” has the meaning set forth in the Preamble.
“Investment” or “Investments” means any investment or investments by the Partnership, directly or indirectly, in Properties, Loans or other Permitted Investments.
“Investment Liquidity Promote” has the meaning set forth in Section 5.1(e).

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“Investment Liquidity Date” means the date on which an Investment Liquidity Event is consummated.
 “Investment Liquidity Event” means (a) an Asset Sale or (b) a Merger.
“IRS” means the Internal Revenue Service of the United States (or any successor organization).
“Liability Shortfall” has the meaning set forth in subparagraph 4(d) of Exhibit B.
“Lien” means any lien, security interest, mortgage, deed of trust, charge, claim, encumbrance, pledge, option, right of first offer or first refusal and any other right or interest of others of any kind or nature, actual or contingent, or other similar encumbrance of any nature whatsoever.
“Limited Partner” means, prior to the admission of the first Additional Limited Partner to the Partnership, the Initial Limited Partner, and thereafter any Person named as a Limited Partner in Exhibit A, as such Exhibit may be amended from time to time, upon the execution and delivery by such Person of an additional limited partner signature page, 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 (other than GP Units).
“Liquidating Event” has the meaning set forth in Section 13.1(b) hereof.
“Liquidator” has the meaning set forth in Section 13.2(a)(iii) hereof.
“Liquidity Event” means the first to occur of the following: (i) an OP Unit Transaction, (ii) a Listing, or (iii) a Termination Without Cause.
 “Listing” means the listing of the shares of Common Stock on a national securities exchange.
“Listing Note” has the meaning set forth in Section 5.1(c).
“Loans” means mortgage loans and other types of debt financing investments made by the Partnership, either directly or indirectly, including through ownership interests in a joint venture or other entity and including mezzanine loans, B-notes, bridge loans, convertible mortgages, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests, and participations in such loans.

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“Management Agreement” means the Property Management and Leasing Agreement between the General Partner, the Partnership and American Realty Capital Healthcare III Properties, LLC, a Delaware limited liability company, as the manager. 
“Market Value” means: (a) in the case of a Listing, the weighted average closing price per share of Common Stock over the Measurement Period multiplied by the number of shares of Common Stock outstanding on the day trading first commences or commenced upon a Listing; (b) in the case of a Merger, the value accorded to one share of Common Stock in the applicable transaction documents governing the Merger multiplied by the number of shares of Common Stock outstanding immediately prior to the effective time of the Merger; and (c) in the case of an Asset Sale, the Net Sales Proceeds distributed to the holders of Common Stock.  Notwithstanding (a) above, if a definitive agreement relating to a Merger or an Asset Sale shall be entered into after a Listing, but before the Measurement Period shall be completed, then Market Value shall be determined according to (b) or (c) above, as applicable.
“Measurement Period” means the period beginning one hundred eighty (180) calendar days after a Listing, and continuing for a period of thirty (30) consecutive trading days.
“Merger” means any merger, reorganization, business combination, share exchange or acquisition by any Person or related group of Persons of beneficial ownership of all or substantially all the shares of Common Stock in one or more related transactions, or another similar transaction involving the General Partner, pursuant to which the holders of Common Stock receive cash or the securities of another issuer that are listed on a national securities exchange, as full or partial consideration for their shares of Common Stock.
“NAV” means the General Partner’s net asset value, calculated pursuant to the valuation guidelines adopted by the General Partner’s board of directors.
“NAV Pricing Start Date” means the date the General Partner first publishes an estimated per share NAV, which will be on or prior to July 11, 2017.
“Net Income” or “Net Loss” means, for each fiscal year or other applicable period, an amount equal to the Partnership’s taxable income or loss for such year or period as determined for federal income tax purposes by the General Partner, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a) of the Code shall be included in taxable income or loss), adjusted as follows:
(a)    by including as an item of gross income any tax-exempt income received by the Partnership and not otherwise taken into account in computing Net Income or Net Loss;
(b)    by treating as a deductible expense any expenditure of the Partnership described in Section 705(a)(2)(B) of the Code (or which is treated as a Section 705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the Regulations) and not otherwise taken into account in computing Net Income or Net Loss, including amounts 

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paid or incurred to organize the Partnership (unless an election is made pursuant to Section 709(b) of the Code) or to promote the sale of interests in the Partnership and by treating deductions for any losses incurred in connection with the sale or exchange of Partnership property disallowed pursuant to Section 267(a)(1) or 707(b) of the Code as expenditures described in Section 705(a)(2)(B) of the Code;
(c)    by taking into account Depreciation in lieu of depreciation, depletion, amortization and other cost recovery deductions taken into account in computing taxable income or loss;
(d)    by computing gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal income tax purposes by reference to the Gross Asset Value of such property rather than its adjusted tax basis;
(e)    if an adjustment of the Gross Asset Value of any Partnership asset which requires that the Capital Accounts of the Partners be adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and (g) of the Regulations, by taking into account the amount of such adjustment as if such adjustment represented additional Net Income or Net Loss pursuant to Exhibit B; 
(f)    by excluding Net Property Gain and Net Property Loss; and
(g)    by not taking into account in computing Net Income or Net Loss items separately allocated to the Partners pursuant to paragraphs 2 and 3 of Exhibit B.
“Net Investment” means (i) as it relates to the Stockholders, the total amount of Gross Proceeds raised in all Offerings; and (ii) as it relates to the Limited Partners (other than the General Partner in its capacity as a Limited Partner) the total amount of Capital Contributions.
“Net Investment Balance” means the excess, if any, of: (a) the Net Investment, over (b) in each case, without duplication, (i) as it relates to the Stockholders, all prior distributions to Stockholders of Net Sales Proceeds and any amounts paid by the General Partner to repurchase shares of Common Stock pursuant to the General Partner’s plan for redemption of Common Stock or otherwise; and (ii) as it relates to the Limited Partners, all distributions pursuant to Section 5.1(b)(i) (other than distributions to the General Partner), and all proceeds or property used to redeem Limited Partner Interests (except those held directly or indirectly by the General Partner). 
“Net Property Gain” or “Net Property Loss” means, for each fiscal year or other applicable period, an amount equal to the Partnership’s taxable gain or loss for such year or period from Sales, including the amount of any adjustment of the Gross Asset Value of any Real Estate Asset which requires that the Capital Accounts of the Partners be adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and (g) of the Regulations.  For these purposes, the Gross Asset Value of the Real Estate Assets may reflect the market capitalization of the General Partner (increased by the amount of any Partnership liabilities).

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 “Net Sales Proceeds” has the meaning set forth in the Articles of Incorporation.
“Nonrecourse Deductions” has the meaning set forth in Sections 1.704-2(b)(1) and 1.704-2(c) of the Regulations.
“Nonrecourse Liabilities” has the meaning set forth in Section 1.704-2(b)(3) of the Regulations.
“Note” means a non-interest-bearing promissory note which shall be evidence of a distribution obligation of the Partnership to the Special Limited Partner pursuant to the terms of Section 5.1. The Partnership shall be the sole obligor with respect to any Note.
“Notice of Redemption” has the meaning provided in Section 8.6(a) hereof. 
“Offer” has the meaning set forth in Section 11.2(c)(i).
 “Offering” means the public offering of shares of Common Stock pursuant to the Registration Statement on Form S-11 or any other applicable form prescribed by the Securities and Exchange Commission.
“OP Unit” means a Partnership Unit which is designated as an OP Unit of the Partnership.
“OP Unit Economic Balance” means the quotient of (a) the aggregate Capital Account balance attributable to the OP Units outstanding, plus the amount of any Partner Minimum Gain or Partnership Minimum Gain, in either case to the extent attributable to the ownership of OP Units and computed on a hypothetical basis after taking into account all allocations through the date on which any allocation is made under subparagraph 1(c)(ii) of Exhibit B, divided by (b) the number of OP Units outstanding.
“OP Unit Redemption Amount” means either the Cash Amount or the Common Stock Amount, as selected by the Partnership pursuant to Section 8.6 (a) or the General Partner pursuant to Section 8.6(b) hereof.
“OP Unit Redemption Right” has the meaning provided in Section 8.6(a) hereof.
“OP Unit Transaction” means, in connection with a Class B Unit, a transaction to which the Partnership or the General Partner shall be a party, including a merger, consolidation, unit exchange, self-tender offer for all or substantially all OP Units or other business combination or reorganization, or sale of all or substantially all the Partnership’s assets (but excluding any transaction which constitutes an Adjustment Event and any merger in which the General Partner is the surviving entity) in each case as a result of which OP Units shall be exchanged for or converted into the right, or the holders of such OP Units shall otherwise be entitled, to receive cash, securities or other property or any combination thereof.
 “Organization and Offering Expenses” means all expenses incurred by or on behalf of the General Partner in connection with or in preparing the General Partner for registration of and 

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subsequently offering and distributing its shares of Common Stock to the public, whether incurred before, on or after the date of the Advisory Agreement, which may include total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys); any expense allowance granted by the General Partner to the underwriter or any reimbursement of expenses of the underwriter by the General Partner; expenses for printing, engraving and mailing; compensation of employees while engaged in sales activity; charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts; and expenses of qualification of the sale of the securities under federal and state laws, including taxes and fees, accountants’ and attorneys’ fees.
“Partner” means the General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners collectively.  Solely for purposes of Exhibit B, “Partner” shall include the Special Limited Partner.
“Partner Nonrecourse Debt” has the meaning set forth in Section 1.704-2(b)(4) of the Regulations.
“Partner Nonrecourse Debt Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of the Regulations.
“Partner Nonrecourse Deductions” has the meaning set forth in Sections 1.704-2(i)(1) and (2) of the Regulations, and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership taxable year shall be determined in accordance with the rules of Section 1.704-2(i)(2) of the Regulations.
“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 representing a Capital Contribution by either a Limited Partner or the General Partner or the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner, and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement.  A Partnership Interest may be expressed as a number of Partnership Units.
“Partnership Minimum Gain” has the meaning set forth in Section 1.704-2(b)(2) of the Regulations, and the amount of Partnership Minimum Gain, as well as any net increase or decrease in a Partnership Minimum Gain, for a Partnership taxable year shall be determined in accordance with the rules of Section 1.704-2(d) of the Regulations.
“Partnership Record Date” means the record date established by the General Partner for a distribution pursuant to Section 5.1(a) hereof, which record date shall be the same as the record 

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date established by the General Partner for a distribution to its stockholders of some of or all its portion of such distribution.
“Partnership Unit” means a fractional, undivided share of the Partnership Interests of all Partners issued hereunder.  Partnership Units consist of GP Units, OP Units, Class B Units and any classes or series of Partnership Units established after the date hereof. The number of Partnership Units outstanding and the Percentage Interests in the Partnership represented by such Partnership Units are set forth in Exhibit A, as such Exhibit may be amended from time to time. The ownership of Partnership Units shall be evidenced by such form of certificate for Partnership Units as the General Partner adopts from time to time unless the General Partner determines that the Partnership Units shall be uncertificated securities.
“Partnership Year” means the fiscal year of the Partnership, as set forth in Section 9.2.
“Percentage Interest” means, as to a Partner, the fractional part of the Partnership Interests owned by such Partner and expressed as a percentage as specified in Exhibit A, as such Exhibit may be amended from time to time.
“Permitted Investments” means all investments (other than Properties and Loans) in which the Partnership acquires an interest, either directly or indirectly, including through ownership interests in a joint venture or other entity, pursuant to the Certificate, this Agreement and the investment objectives and policies adopted by the General Partner from time to time, other than short-term investments acquired for purposes of cash management, and that allow the General Partner to meet the REIT Requirements.
“Permitted Transferee” means any person to whom Partnership Units are Transferred in accordance with Section 11.3.
“Person” means an individual or Entity.
“Precontribution Gain” has the meaning set forth in subparagraph 4(c) of Exhibit B.
“Priority Return” means a 6% cumulative, non-compounded, pre-tax annual return (based on a 365-day year). 
“Priority Return Balance” means, as of any date, the excess, if any, of (a) a Priority Return from the Effective Date until such Distribution Date on the Net Investment Balance (calculated like simple interest on a daily basis based on a 365-day year), over (b) distributions made under Sections 5.1(a), (b)(ii) and (b)(iv), as the case may be; provided, however, that for purposes of calculating the Priority Return Balance, the Net Investment Balance shall be determined on a daily basis. 
“PTP Safe Harbors” has the meaning set forth in Section 11.6(f).
 “Quarter” means each of the three-month periods ending on March 31, June 30, September 30 and December 31.

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“Real Estate Assets” means any investment by the Partnership in unimproved and improved Real Property (including fee or leasehold interests, options and leases) or any investment by the Partnership in Loans, directly, through one or more subsidiaries or through a joint venture (net of any interest held in such investment by a partner or member of a joint venture unaffiliated with the Partnership).
“Real Property” means (i) land, (ii) rights in land (including leasehold interests), and (iii) any buildings, structures, improvements, furnishings, fixtures and equipment located on or used in connection with land and rights or interests in land.
“Redeeming Limited Partner” has the meaning provided in Section 8.6(a) hereof.
 “Registration Statement” means the Registration Statement filed on the applicable form prescribed by the Securities and Exchange Commission filed by the General Partner with the Securities and Exchange Commission, and any amendments thereof at any time made, relating to the Common Stock.
“Regulations” means the final, temporary or proposed income tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Regulatory Allocations” means the allocations set forth in paragraph 2 of Exhibit B.
“REIT” means a real estate investment trust as defined in Section 856 of the Code.
“REIT Requirements” has the meaning set forth in Section 5.2.
“Restricted Class B Units” has the meaning set forth in Section 16.2(a)(i).
“Safe Harbor” has the meaning set forth in Section 10.2(d).
“Safe Harbor Election” has the meaning set forth in Section 10.2(d).
“Safe Harbor Interests” has the meaning set forth in Section 10.2(d).
“Sales” has the meaning set forth in the Articles of Incorporation.
“Securities” has the meaning set forth in Section 4.2(b).
“Special Limited Partner” has the meaning set forth in the Preamble, which shall be a limited partner of the Partnership and recognized as such under applicable Delaware law, but not a “Limited Partner” within the meaning of this Agreement.
“Special Limited Partner Interest” means the interest of the Special Limited Partner in the Partnership representing its right as the holder of an interest in distributions described in Sections 5.1(b)(iii)(A), (c), (d) and (e)  (and any corresponding allocations of income, gain, loss and deduction under this Agreement).

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“Specified Redemption Date” shall mean with respect to each written notice of redemption, the first Business Day of a month occurring on or after 60 calendar days from receipt by the General Partner of such written notice of redemption.
 “Stockholder” means a holder of Common Stock.
“Stockholder Distributions” means any distributions of money or other property by the General Partner to Stockholders, including distributions that may constitute a return of capital for U.S. federal income tax purposes, with the exception of distributions paid on shares of Common Stock repurchased or redeemed by the General Partner.
“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company or other entity of which a majority of (a) the voting power of the voting equity securities; or (b) the outstanding equity interests (whether or not voting), 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.
“Surviving General Partner” has the meaning set forth in Section 11.2(d)(i)(A).
 “Tax Allocations” means the allocations set forth in paragraph 4 of Exhibit B.
“Tax Items” has the meaning set forth in subparagraph 4(a) of Exhibit B.
“Termination” means the termination of the Advisory Agreement.
“Termination Amount” means the Termination Liquidity Promote or the amounts distributable as evidenced by a Termination Base Note or a Termination Listing Note.
“Termination Base Note” has the meaning set forth in Section 5.1(d)(i).
“Termination Date” means the date of Termination.
“Termination Liquidity Promote” has the meaning set forth in Section 5.1(d)(ii)(B).
“Termination Listing Note” has the meaning set forth in Section 5.1(d)(ii)(A).
“Termination Without Cause” means the termination of the Advisory Agreement as provided in the Advisory Agreement by the Independent Directors (as defined in the Advisory Agreement) of the General Partner without Cause (as defined in the Advisory Agreement).
“Transaction” has the meaning set forth in Section 11.2(c).

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 “Transfer” as a noun, means any sale, assignment, conveyance, pledge, hypothecation, gift, encumbrance or other transfer, and as a verb, means to sell, assign, convey, pledge, hypothecate, give, encumber or otherwise transfer.
“Unrestricted Class B Units” has the meaning set forth in Section 16.2(a)(ii).  
 “Valuation Date” means the date of receipt by the Partnership and the General Partner of notice from an exchanging Partner that such Partner is exercising its Exchange Rights or, if such date is not a Business Day, the first Business Day thereafter.
“Value” means the most recent Offering price for a share of Common Stock (other than shares of Common Stock offered pursuant to the General Partner’s distribution reinvestment plan) less any selling commissions and dealer manager fee that would be payable with respect to the sale of a share of Common Stock.
“Withheld Amount” means any amount required to be withheld by the Partnership with respect to a Limited Partner and paid over to any taxing authority as a result of any allocation or distribution of income to a Limited Partner or any other transaction.
Certain additional terms and phrases have the meanings set forth in Exhibit B.
Article 2.     
ORGANIZATIONAL MATTERS
2.1    Formation
The General Partner has formed the Partnership by filing the Certificate on April 24, 2014 in the office of the Delaware Secretary of State.  The Partnership is a limited partnership organized pursuant to the provision of the Act and upon the terms and conditions set forth in this Agreement.  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.
2.2    Name
The name of the Partnership is American Realty Capital Healthcare Trust III Operating Partnership, L.P.  The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof.  The words “Limited Partnership,” “LP,” “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 and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners.

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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 Service Company, 2711 Centerville Road Suite 400, Wilmington, Delaware 19808.  The principal office of the Partnership shall be 405 Park Avenue, New York, New York 10022, or such other place as the General Partner may from time to time designate by notice to the Limited Partners.  The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.
2.4    Power of Attorney
(a)    Each Limited Partner and each Assignee who accepts Partnership Units (or any rights, benefits or privileges associated therewith) is deemed to irrevocably constitute and appoint 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:
(i)    execute, swear to, acknowledge, deliver, file and record in the appropriate public offices
(A)    all certificates, documents and other instruments (including this Agreement and the Certificate and all amendments or restatements thereof) that the General Partner or the 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, including any documents necessary or advisable to convey any Contributed Property to the Partnership;
(B)    all instruments that the General Partner or any Liquidator 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 a certificate of cancellation;
(D)    all instruments relating to the admission, withdrawal, removal or substitution of any Partner pursuant to, or other events described in, Article 11, 12 or 13 hereof or the Capital Contribution of any Partner;
(E)    all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of Partnership Interest; and

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(F)    amendments to this Agreement as provided in Article 14 hereof; and
(ii)    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)    (i)    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 Limited 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 and 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.
(ii)    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.
(iii)    Each Limited Partner or Assignee shall execute and deliver to the General Partner or the Liquidator, within fifteen (15) days after receipt of the General Partner’s or Liquidator’s request therefore, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator, as the case may be, deems necessary to effectuate this Agreement and the purposes of the Partnership.
(c)    For the purposes of this Section 2.4, the term “Limited Partner” shall be deemed to include the Special Limited Partner, unless the context otherwise requires.

2.5    Term

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The term of the Partnership shall commence on the date hereof and shall continue until the Partnership is dissolved pursuant to the provisions of Article 13 or as otherwise provided by law.
Article 3.     
PURPOSE
3.1    Purpose and Business
(a)    The purpose and nature of the business to be conducted by the Partnership is to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act including to engage in the following activities:
(i)    to acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange, and otherwise dispose of or deal with the properties or other real estate assets acquired by the Partnership as described in the prospectus (as supplemented or amended from time to time) contained in the Registration Statement;
(ii)    to acquire, hold, own, develop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange, and otherwise dispose of or deal with real and personal property of all kinds;
(iii)    to enter into any partnership, joint venture, corporation, limited liability company, trust or other similar arrangement to engage in any of the foregoing;
(iv)    to undertake such other activities as may be necessary, advisable, desirable or convenient to the business of the Partnership; and
(v)    to engage in such other ancillary activities as shall be necessary or desirable to effectuate the foregoing purposes;
provided, however, that such business shall be limited to and conducted in such a manner as to permit the General Partner at all times to be classified as a REIT, unless the General Partner determines not to qualify as a REIT or ceases to qualify as a REIT for any reason not related to the business conducted by the Partnership.
(b)    The Partnership shall have all powers necessary or desirable to accomplish the purposes enumerated.
3.2    Powers
(a)    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 full power and authority to enter into, perform, and carry out contracts of any kind, to borrow money and to issue evidences of indebtedness, whether or not 

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secured by mortgage, trust deed, pledge or other Lien, and, directly or indirectly, to acquire, own, improve, develop and construct real property, and lease, sell, transfer and dispose of real property; provided, however, that the Partnership shall not take, or refrain from taking, any action which, in the judgment of the General Partner, in its sole and absolute discretion,
(i)    could adversely affect the ability of the General Partner to continue to qualify as a REIT, unless the General Partner otherwise ceases to qualify as a REIT;
(ii)    could subject the General Partner 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 General Partner or its securities, unless such action (or inaction) shall have been specifically consented to by the General Partner in writing.
(b)    The General Partner also is empowered to do any and all acts and things necessary, appropriate or advisable to ensure that the Partnership will not be classified as a “publicly traded partnership” for the purposes of Section 7704 of the Code, including but not limited to imposing restrictions on exchanges of Partnership Units.
Article 4.     
CAPITAL CONTRIBUTIONS
4.1    Capital Contributions of the Partners
(a)    The Partners have made the Capital Contributions as set forth in Exhibit A.
(b)    To the extent the Partnership acquires any property by the merger of any other Person into the Partnership or the contribution of assets by any other Person, Persons who receive Partnership Interests in exchange for their interests in the Person merging into or contributing assets to the Partnership shall become Limited Partners and shall be deemed to have made Capital Contributions as provided in the applicable merger agreement or contribution agreement and as set forth in Exhibit A, as amended to reflect such deemed Capital Contributions.
(c)    As of the effective date of this Agreement, the Partnership shall have three classes of Partnership Units, entitled “GP Units”, “OP Units” and “Class B Units”, respectively.  The Class B Units shall have the same rights, privileges and preferences as the OP Units, except as set forth in Article 16.  Each Partner shall own Partnership Units in the amounts set forth for such Partner in Exhibit A and shall have a Percentage Interest in the Partnership as set forth in Exhibit A, which Percentage Interest shall be adjusted in Exhibit A from time to time by the General Partner to the extent necessary to reflect accurately exchanges, additional Capital Contributions, the issuance of additional Partnership Units, transfers of Partnership Units or similar events having an effect on any Partner’s Percentage Interest.

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(d)    The number of Partnership Units held by the General Partner, in its capacity as general partner, as evidenced by GP Units, shall be deemed to be the General Partner Interest.
(e)    Except as otherwise may be expressly provided herein, the Partners shall have no obligation to make any additional Capital Contributions or provide any additional funding to the Partnership (whether in the form of loans, repayments of loans or otherwise) and, except as set forth in Section 13.3, no Partner shall have any obligation to restore any deficit that may exist in its Capital Account, either upon a liquidation of the Partnership or otherwise.
4.2    Additional Funds; Restrictions on the General Partner
(a)    (i)    The sums of money required to finance the business and affairs of the Partnership shall be derived from the Capital Contributions made to the Partnership by the Partners as set forth in Section 4.1 and from funds generated from the operation and business of the Partnership, including rents and distributions directly or indirectly received by the Partnership from any Subsidiary.
(ii)    If additional financing is needed from sources other than as set forth in Section 4.2(a)(i) for any reason, the General Partner may, in its sole and absolute discretion, in such amounts and at such times as it solely shall determine to be necessary or appropriate,
(A)    cause the Partnership to issue additional Partnership Interests and admit additional Limited Partners to the Partnership in accordance with Section 4.3;
(B)    make additional Capital Contributions to the Partnership (subject to the provisions of Section 4.2(b));
(C)    cause the Partnership to borrow money, enter into loan arrangements, issue debt securities, obtain letters of credit or otherwise borrow money on a secured or unsecured basis;
(D)    make a loan or loans to the Partnership (subject to Section 4.2(b)); or
(E)    sell any assets or properties directly or indirectly owned by the Partnership.
(iii)    In no event shall any Limited Partners be required to make any additional Capital Contributions or any loan to, or otherwise provide any financial accommodation for the benefit of, the Partnership.
(b)    The General Partner shall not issue any debt securities, any preferred stock or any common stock (including additional Common Stock (other than (i) as payment of the Common Stock Amount or (ii) in connection with the conversion or exchange of securities of the General Partner solely in conversion or exchange for other securities of the General Partner)) or rights, 

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options, warrants or convertible, exercisable or exchangeable securities containing the right to subscribe for or purchase any of the foregoing (collectively, “Securities”), other than to all holders of Common Stock, unless the General Partner shall,
(i)    in the case of debt securities, lend to the Partnership the proceeds of or consideration received for such Securities on the same terms and conditions, including interest rate and repayment schedule, as shall be applicable with respect to or incurred in connection with the issuance of such Securities and the proceeds of, or consideration received from, any subsequent exercise, exchange or conversion thereof (if applicable);
(ii)    in the case of equity Securities senior or junior to the Common Stock as to dividends and distributions on liquidation, contribute to the Partnership the proceeds of or consideration (including any property or other non-cash assets) received for such Securities and the proceeds of, or consideration received from, any subsequent exercise, exchange or conversion thereof (if applicable), and receive from the Partnership, interests in the Partnership in consideration therefor with the same terms and conditions, including dividend, dividend priority and liquidation preference, as are applicable to such Securities; and
(iii)    in the case of Common Stock or other equity Securities on a parity with the Common Stock as to dividends and distributions on liquidation, (including Common Stock or other Securities granted as a stock award to directors and officers of the General Partner or directors, officers or employees of its Affiliates or related parties in consideration for services or future services, and Common Stock issued pursuant to a dividend reinvestment plan or issued to enable the General Partner to make distributions to satisfy the REIT Requirements), contribute to the Partnership the proceeds of or consideration (including any property or other non-cash assets, including services) received for such Securities and the proceeds of, or consideration received from, any subsequent exercise, exchange or conversion thereof (if applicable), and receive from the Partnership a number of additional Partnership Units in consideration therefor equal to the product of
(A)    the number of shares of Common Stock or other equity Securities issued by the General Partner, multiplied by
(B)    a fraction the numerator of which is one and the denominator of which is the Exchange Factor in effect on the date of such contribution.
4.3    Issuance of Additional Partnership Interests; Admission of Additional Limited Partners
(a)    In addition to any Partnership Interests issuable by the Partnership pursuant to Section 4.2, the General Partner is authorized to cause the Partnership to issue additional Partnership Interests (or options therefore) in the form of Partnership Units or other Partnership Interests in one or more series or classes, or in one or more series of any such class senior, on a parity with, or junior to the Partnership Units to any Persons at any time or from time to time, on such terms and conditions, as the General Partner shall establish in each case in its sole and 

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absolute discretion subject to Delaware law, including (i) the allocations of items of Partnership income, gain, loss, deduction and credit to each class or series of Partnership Interests, (ii) the right of each class or series of Partnership Interests to share in Partnership distributions, and (iii) the rights of each class or series of Partnership Interest upon dissolution and liquidation of the Partnership; provided, however, that no such Partnership Interests shall be issued to the General Partner unless either (A) the Partnership Interests are issued in connection with the grant, award, or issuance of Common Stock or other equity interests in the General Partner having designations, preferences and other rights such that the economic interests attributable to such Common Stock or other equity interests are substantially similar to the designations, preferences and other rights (except voting rights) of the Partnership Interests issued to the General Partner in accordance with this Section 4.3(a) or (B) the additional Partnership Interests are issued to all Partners holding Partnership Interests in the same class in proportion to their respective Percentage Interests in such class, without any approval being required from any Limited Partner or any other Person; provided further, however, that:
(i)    such issuance does not cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA or Section 4975 of the Code, 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); and
(ii)    such issuance would not cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Section 2510.3-101 of the regulations of the United States Department of Labor.
(b)    Subject to the limitations set forth in Section 4.3(a), the General Partner may take such steps as it, in its sole and absolute discretion, deems necessary or appropriate to admit any Person as a Limited Partner of the Partnership or to issue any Partnership Interests, including amending the Certificate, Exhibit A or any other provision of this Agreement.
4.4    Contribution of Proceeds of Issuance of Common Stock
In connection with any offering, grant, award, or issuance of Common Stock or securities, rights, options, warrants or convertible or exchangeable securities pursuant to Section 4.2, the General Partner shall make aggregate Capital Contributions to the Partnership of the proceeds raised in connection with such offering, grant, award, or issuance, including any property issued to the General Partner pursuant to a merger or contribution agreement in exchange for Common Stock; provided, however, that if the proceeds actually received by the General Partner are less than the gross proceeds of such offering, grant, award, or issuance as a result of any underwriter’s discount, commission, or fee or other expenses paid or incurred in connection with such offering, grant, award, or issuance, then the General Partner shall make a Capital Contribution to the Partnership in the amount equal to the sum of (i) the net proceeds of such issuance plus (ii) an intangible asset in an amount equal to the capitalized costs of the General Partner relating to such issuance of Common Stock.  Upon any such Capital Contribution by the General Partner, the Capital Account of the General Partner shall be increased by the amount of its Capital Contribution as described in the previous sentence.

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4.5    Repurchase of Common Stock; Shares-In-Trust
(a)    If the General Partner shall elect to purchase from its stockholders Common Stock for the purpose of delivering such Common Stock to satisfy an obligation under any distribution reinvestment plan adopted by the General Partner, any employee stock purchase plan adopted by the General Partner, or for any other purpose, the purchase price paid by the General Partner for such Common Stock and any other expenses incurred by the General Partner in connection with such purchase shall be considered expenses of the Partnership and shall be reimbursed to the General Partner, subject to the condition that:
(i)    if such Common Stock subsequently is to be sold by the General Partner, the General Partner shall pay to the Partnership any proceeds received by the General Partner from the sale of such Common Stock (provided that an exchange of Common Stock for Partnership Units pursuant to the applicable Exchange Rights Agreement would not be considered a sale for such purposes); and
(ii)    if such Common Stock is not re-transferred by the General Partner within 30 days after the purchase thereof, the General Partner shall cause the Partnership to cancel a number of Partnership Units held by the General Partner (as applicable) equal to the product of
(A)    the number of shares of such Common Stock, multiplied by
(B)    a fraction, the numerator of which is one and the denominator of which is the Exchange Factor in effect on the date of such cancellation.
(b)    If the General Partner purchases shares of Common Stock from the Trust (as from time to time defined in the Articles of Incorporation), the Partnership will purchase from the General Partner a number of Partnership Units, at a price per Partnership Unit equal to the price per share of Common Stock paid by the General Partner, equal to the product of
(i)    the number of shares of Common Stock purchased by the General Partner from the Trust, multiplied by
(ii)    a fraction, the numerator of which is one and the denominator of which is the Exchange Factor in effect on the date of such purchase.
4.6    No Third-Party Beneficiary
No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligations of any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns.
4.7    No Interest; No Return

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(a)    No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account.
(b)    Except as provided herein or by law, no Partner shall have any right to demand or receive the return of its Capital Contribution from the Partnership.
4.8    No Preemptive Rights.
Subject to any preemptive rights that may be granted pursuant to Section 4.3 hereof, no Person shall have any preemptive or other similar right with respect to
(a)    additional Capital Contributions or loans to the Partnership; or
(b)    issuance or sale of any Partnership Units or other Partnership Interests.
Article 5.     
DISTRIBUTIONS
5.1    Distributions
(a)    Cash Available for Distribution.  Subject to the provisions of Sections 5.3, 5.4, 12.2(c) and 13.2, the General Partner shall cause the Partnership to distribute, at such times as the General Partner shall determine (each a “Distribution Date”), an amount of Cash Available for Distribution, determined by the General Partner in its sole discretion to the Partners holding GP Units, OP Units, and/or Class B Units who are Partners on applicable Partnership Record Date, in accordance with each such Partner’s respective Percentage Interest.  
(b)    Net Sales Proceeds.  Subject to the provisions of Sections 5.1(f), 5.3, 5.4, 12.2(c) and 13.2, Net Sales Proceeds shall be distributed as follows:
(i)    First, 100% to the Partners holding GP Units and/or OP Units in proportion to each such Partner’s respective Percentage Interest with respect to such GP Units and/or OP Units until the Net Investment Balance is zero;
(ii)    Second, 100% to the Partners holding GP Units and/or OP Units in proportion to each such Partner’s respective Percentage Interest with respect to such GP Units and/or OP Units until such Partners have received in the aggregate, pursuant to this Section 5.1(b)(ii) and Section 5.1(a), an amount such that the Priority Return Balance is zero; and
(iii)    Thereafter, (A) 15% to the Special Limited Partner and its assigns, and (B) 85% to be distributed to the Partners holding GP Units, OP Units and/or Class B Units in proportion to their respective Percentage Interests with respect to such GP Units, OP Units and/or Class B Units; provided, that no distributions shall be made pursuant to this Section 5.1(b)(iii) with respect to a Class B Unit unless such Class B Unit is an Unrestricted Class B Unit; provided further, that to the extent the Average Class B Economic Capital Account Balance of a holder of Class B Units is less than the OP Unit 

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Economic Balance of the corresponding OP Units, the Percentage Interest of such Partner holding such Class B Units with respect to such Class B Units shall be reduced for purposes of determining its proportionate share of distributions pursuant to this Section 5.1(b)(iii) to equal such Partner’s Percentage Interest with respect to such Class B Units multiplied by a fraction, the numerator of which is such Partner’s Average Class B Economic Capital Account Balance for such Class B Units, and the denominator of which is the OP Unit Economic Balance of the corresponding OP Units.
(c)    Listing Amounts.  Upon a Listing and subject to Section 5.1(f), the General Partner shall cause the Partnership to distribute an amount to the Special Limited Partner and its assigns, in one or more distributions solely out of Net Sales Proceeds in redemption of the Special Limited Partner Interest and as evidenced by a Note (the “Listing Note”), equal to 15% of the amount, if any, by which (i) the sum of (A) the Market Value plus (B) the sum of all Stockholder Distributions paid by the General Partner prior to the date of Listing, exceeds (ii) the sum of (Y) the Gross Proceeds raised in all Offerings through the date of Listing (less amounts paid on or prior to the date of Listing to purchase or redeem any shares of Common Stock purchased in an Offering pursuant to the General Partner’s share repurchase program) plus (Z) the minimum amount of cash that, if distributed to those Stockholders who purchased shares of Common Stock in an Offering, would have provided such Stockholders a Priority Return on the Gross Proceeds raised in all such Offerings.  The Listing Note will only be issued to the Special Limited Partner if the Advisory Agreement has not been terminated by the General Partner or the Advisor prior to the Listing.
(d)    Termination Amounts.
(i)    Upon a Termination and subject to Sections 5.1(d)(ii) and (f), the General Partner shall cause the Partnership to distribute an amount to the Special Limited Partner and its assigns, in one or more distributions solely out of Net Sales Proceeds in redemption of the Special Limited Partner Interest and as evidenced by a Note (the “Termination Base Note”), equal to 15% of the amount, if any, by which (A) the sum of (I) the estimated value of the Included Assets (as determined by General Partner in accordance with its valuation policy), minus (II) any debt secured by such Investments as well as any unsecured debt of the General Partner, plus or minus (III) any working capital surplus or deficit of the General Partner, as applicable, plus (IV) the sum of all Stockholder Distributions paid by the General Partner through the Termination Date on shares of Common Stock issued in all Offerings through the Termination Date, minus (V) any amounts distributable as of the Termination Date to the Limited Partners who received Partnership Units in connection with the contribution of any Included Assets (including cash used to acquire Included Assets) to the Partnership, upon the liquidation or sale of such Included Assets (assuming the liquidation or sale of such Included Assets on the Termination Date), exceeds (B) the sum of (1) the Gross Proceeds raised in all Offerings through the Termination Date (less amounts paid on or prior to the Termination Date to purchase or redeem any shares of Common Stock purchased in an Offering pursuant to the General Partner’s share repurchase program) plus (2) the minimum amount of cash that, if distributed to those Stockholders who purchased shares of 

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Common Stock in an Offering on or prior to the Termination Date, would have provided such Stockholders a Priority Return on the Gross Proceeds raised in all Offerings through the Termination Date, measured for the period from inception through the Termination Date.  
(ii)    Subject to Section 5.1(f), if upon a Termination the Special Limited Partner would be entitled to the Termination Base Note the Special Limited Partner may retain its Special Limited Partner Interest and elect to receive, in lieu of its right to receive the Termination Base Note, either:
(A)    If there is a Listing subsequent to the Termination Date, then the General Partner shall cause the Partnership to distribute an amount to the Special Limited Partner and its assigns, in one or more distributions solely out of Net Sales Proceeds in redemption of the Special Limited Partner Interest and as evidenced by a Note (the “Termination Listing Note”), equal to 15% of the amount, if any, by which (I) the sum of (a) the Market Value, plus (b) the sum of all Stockholder Distributions paid by the General Partner through the date of Listing on shares of Common Stock issued in Offerings through the Termination Date exceeds (II) the sum of (a) the Gross Proceeds raised in all Offerings through the Termination Date (less amounts paid on or prior to the date of Listing to purchase or redeem any shares of Common Stock purchased in an Offering on or prior to the Termination Date pursuant to the General Partner’s share repurchase program), plus (b) the minimum amount of cash that, if distributed to those Stockholders who purchased shares of Common Stock in an Offering on or prior to the Termination Date, would have provided such Stockholders a Priority Return on the Gross Proceeds raised in all Offerings through the Termination Date, measured for the period from inception of the General Partner through the date of Listing.
(B)    If there is an Investment Liquidity Event subsequent to the Termination Date, then the General Partner shall cause the Partnership to distribute an amount to the Special Limited Partner and its assigns in redemption of the Special Limited Partner Interest, payable in one or more distributions (the “Termination Liquidity Promote”), equal to 15% of the amount, if any, by which (I) the sum of (a) the Market Value, plus (b) the sum of all Stockholder Distributions paid by the General Partner through the Investment Liquidity Date on shares of Common Stock issued in Offerings through the Termination Date exceeds (II) the sum of (a) the Gross Proceeds raised in all Offerings through the Termination Date (less amounts paid on or prior to the Investment Liquidity Date to purchase or redeem any shares of Common Stock purchased in an Offering on or prior to the Termination Date pursuant to the General Partner’s share repurchase program), plus (b) the minimum amount of cash that, if distributed to those Stockholders who purchased shares of Common Stock in an Offering on or prior to the Termination Date, would have provided such Stockholders a Priority Return on the Gross Proceeds raised in all Offerings through the Termination 

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Date, measured for the period from inception of the General Partner through the Investment Liquidity Date.
(e)    Investment Liquidity Amounts.  Upon an Investment Liquidity Event and subject to Section 5.1(f), the General Partner shall cause the Partnership to distribute an amount to the Special Limited Partner and its assigns in one or more distributions solely out of Net Sales Proceeds in redemption of the Special Limited Partner Interest(the “Investment Liquidity Promote”), equal to 15% of the amount, if any, by which (i) the sum of (A) the Market Value, plus (B) the sum of all Stockholder Distributions paid by the General Partner through the Investment Liquidity Date, exceeds (ii) the sum of (A) the Gross Proceeds raised in all Offerings through the Investment Liquidity Date (less amounts paid on or prior to the Investment Liquidity Date to purchase or redeem any shares of Common Stock purchased in an Offering pursuant to the General Partner’s share repurchase program) plus (B) the total amount of cash that, if distributed to those Stockholders who purchased shares of Common Stock in an Offering on or prior to the Investment Liquidity Date, would have provided such Stockholders a Priority Return on the Gross Proceeds raised in all Offerings through the Investment Liquidity Date, measured for the period from inception of the General Partner through the Investment Liquidity Date. The Investment Liquidity Promote will only be paid to the Special Limited Partner if the Advisory Agreement has not been terminated by the General Partner or the Advisor prior to the Investment Liquidity Event.
(f)    Coordination.
(i)    Any Net Sales Proceeds paid to the Special Limited Partner and its assigns pursuant to Section 5.1(b)(iii)(A) prior to a Listing shall reduce dollar for dollar the amount of a Listing Note distributable pursuant to Section 5.1(c).  If the Special Limited Partner receives, or is entitled to receive, a Listing Note pursuant to Section 5.1(c), (A) the Special Limited Partner shall no longer be entitled to receive distributions of Net Sales Proceeds pursuant to Section 5.1(b)(iii)(A), a Termination Amount pursuant to Section 5.1(d) or the Investment Liquidity Promote pursuant to Section 5.1(e) and (B) any Net Sales Proceeds received by the Partnership after the Listing shall be applied first to satisfy the Partnership’s obligation to make distributions pursuant to Section 5.1(c).
(ii)    Any Net Sales Proceeds paid to the Special Limited Partner and its assigns pursuant to Section 5.1(b)(iii)(A) prior to the Termination Date shall reduce dollar for dollar the amount of the Termination Amount distributable pursuant to Section 5.1(d).  If the Special Limited Partner receives, or is entitled to receive, a Termination Amount pursuant to Section 5.1(d), (A) the Special Limited Partner shall no longer be entitled to receive distributions of Net Sales Proceeds pursuant to Section 5.1(b)(iii)(A), a Listing Note pursuant to Section 5.1(c) or the Investment Liquidity Promote pursuant to Section 5.1(e) and (B) any Net Sales Proceeds received by the Partnership after the Termination Date, in connection with a Termination Base Note, the date of the subsequent Listing, in connection with the Termination Listing Note, and the subsequent Investment Liquidity Date, in connection with the Termination Liquidity Promote, shall be applied first to satisfy the Partnership’s obligation to make distributions pursuant to Section 5.1(d).

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(iii)    Any Net Sales Proceeds paid to the Special Limited Partner and its assigns pursuant to Section 5.1(b)(iii)(A) prior to an Investment Liquidity Date shall reduce dollar for dollar the Investment Liquidity Promote distributable pursuant to Section 5.1(e).  If the Special Limited Partner receives, or is entitled to receive, an Investment Liquidity Promote pursuant to Section 5.1(e), (A) the Special Limited Partner shall no longer be entitled to receive distributions of Net Sales Proceeds pursuant to Section 5.1(b)(iii)(A), a Listing Note pursuant to Section 5.1(c) or a Termination Amount pursuant to Section 5.1(d) and (B) any Net Sales Proceeds received by the Partnership as a result of or after the Investment Liquidity Event shall be applied first to satisfy the Partnership’s obligation to make distributions pursuant to Section 5.1(e).
(iv)    If the Special Limited Partner contributes its Special Limited Partner Interest to the Partnership in exchange for OP Units pursuant to Section 8.7, the Special Limited Partner shall no longer be entitled to a Listing Note, the Termination Amount or the Investment Liquidity Promote or distributions of Net Sales Proceeds in respect of such Listing Note, Termination Amount or Investment Liquidity Promote pursuant to Sections 5.1(f)(i), (ii) or (iii), respectively.
(v)    If the priority distribution of Net Sales Proceeds to the Special Limited Partner and its assigns pursuant to this Section 5.1(f) prevents the Partnership from being able to distribute sufficient amounts to the General Partner pursuant to Section 5.1(b) to enable the General Partner to satisfy the REIT Requirements, the General Partner may in its sole discretion cause the Partnership to distribute some of or all the Net Sales Proceeds subject to a priority distribution pursuant to this Section 5.1(f) to the General Partner in an amount sufficient to enable the General Partner to pay dividends to the Stockholders in order to satisfy the REIT Requirements.
(g)    Notwithstanding anything herein to the contrary, in accordance with Section 736 of the Code, so long as the Special Limited Partner is entitled to distributions pursuant to a Listing Note, the Termination Amount or the Investment Liquidity Promote and has not contributed its Special Limited Partner Interest in accordance with Section 8.7, the Special Limited Partner shall continue to be treated as a partner of the Partnership in respect of its Special Limited Partner Interest until the Partnership has satisfied its obligations with respect to the Listing Note, Termination Amount and Investment Liquidity Promote.
(h)    In no event may any Partner receive a distribution pursuant to Sections 5.1(a) or (b) with respect to a Partnership Unit if such Partner is entitled to receive a distribution with respect to Common Stock for which such a Partnership Unit has been exchanged.
5.2    Qualification as a REIT
The General Partner shall use its best efforts to cause the Partnership to distribute sufficient amounts under this Article 5 to enable the General Partner to pay dividends to the Stockholders that will enable the General Partner to

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(a)    satisfy the requirements for qualification as a REIT under the Code and Regulations (“REIT Requirements”), and
(b)    avoid any U.S. federal income or excise tax liability;
provided, however, that the General Partner shall not be bound to comply with this covenant to the extent such distributions would
(i)    violate applicable Delaware law or
(ii)    contravene the terms of any notes, mortgages or other types of debt obligations to which the Partnership may be subject in conjunction with borrowed funds.
5.3    Withholding
With respect to any withholding tax or other similar tax liability or obligation to which the Partnership may be subject as a result of any act or status of any Partner or the Special Limited Partner or to which the Partnership becomes subject with respect to any Partnership Unit or the Special Limited Partner Interest, the Partnership shall have the right to withhold amounts distributable pursuant to this Article V to such Partner or the Special Limited Partner or with respect to such Partnership Units or the Special Limited Partner Interest, to the extent of the amount of such withholding tax or other similar tax liability or obligation pursuant to the provisions contained in Section 10.5, and the amount of any withholding shall reduce the right of such Partner or the Special Limited Partner to future distribution to the extent provided in Section 10.5.
5.4    Additional Partnership Interests
If the Partnership issues Partnership Interests in accordance with Section 4.2 or 4.3, the distribution priorities set forth in Section 5.1 shall be amended, as necessary, to reflect the distribution priority of such Partnership Interests and corresponding amendments shall be made to the provisions of Exhibit B.
Article 6.     
ALLOCATIONS
6.1    Allocations
The Net Income, Net Loss, Net Property Gain, Net Property Loss and other Partnership items shall be allocated pursuant to the provisions of Exhibit B.
6.2    Revisions to Allocations to Reflect Issuance of Partnership Interests
If the Partnership issues Partnership Interests to the General Partner or any additional Limited Partner pursuant to Article IV, the General Partner shall make such revisions to this Article 6 and Exhibit B as it deems necessary to reflect the terms of the issuance of such Partnership Interests, including making preferential allocations to classes of Partnership Interests 

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that are entitled thereto.  Notwithstanding anything to the contrary in this Agreement, such revisions shall not require the consent or approval of any other Partner.
Article 7.     
MANAGEMENT AND OPERATIONS OF BUSINESS
7.1    Management
(a)    (i)    Except as otherwise expressly provided in this Agreement, full, complete and exclusive discretion to manage and control the business and affairs of the Partnership are and shall be 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.
(ii)    The General Partner may not be removed by the Limited Partners with or without cause.
(iii)    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 Section 7.11, 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 hereof and to effectuate the purposes set forth in Section 3.1 hereof, including:
(A)    (1)    the making of any expenditures, the lending or borrowing of money, including making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner qualifies as a REIT) to avoid the payment of any U.S. federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its Stockholders in amounts sufficient to permit the General Partner to maintain REIT status,
(2)    the assumption or guarantee of, or other contracting for, indebtedness and other liabilities,
(3)    the issuance of evidence of indebtedness (including the securing of the same by deed, mortgage, deed of trust or other lien or encumbrance on the Partnership’s assets), and
(4)    the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership, including the payment of all expenses associated with the General Partner;
(B)    the acquisition, purchase, ownership, operating, leasing and disposition of any real property and any other property or assets, including mortgages and real estate-related securities, whether directly or indirectly;

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(C)    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 or the General Partner;
(D)    the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of all or substantially all 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, consolidation or other combination (each a “Business Combination”) of the Partnership with or into another Entity on such terms as the General Partner deems proper, provided, however, that the General Partner shall be required to send to each Limited Partner a notice of such proposed Business Combination no less than 15 days prior to the record date for the vote of the General Partner’s Stockholders on such Business Combination, if any;
(E)    the use of the assets of the Partnership (including cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including,
(1)    the financing of the conduct of the operations of the General Partner, the Partnership or any of the Partnership’s Subsidiaries,
(2)    the lending of funds to other Persons (including the Subsidiaries of the Partnership and/or the General Partner) and the repayment of obligations of the Partnership and its Subsidiaries and any other Person in which it has an equity investment, and
(3)    the making of capital contributions to its Subsidiaries;
(F)    the expansion, development, redevelopment, construction, leasing, repair, rehabilitation, repositioning, alteration, demolition or improvement of any property in which the Partnership or any Subsidiary of the Partnership owns an interest;
(G)    the negotiation, execution, and performance of any contracts, 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;
(H)    the distribution of Partnership cash or other Partnership assets in accordance with this Agreement;

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(I)    holding, managing, investing and reinvesting cash and other assets of the Partnership;
(J)    the collection and receipt of revenues and income of the Partnership;
(K)    the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including employees having titles such as “president,” “vice president,” “secretary” and “treasurer” of the Partnership), and agents, attorneys, accountants, consultants and contractors of the Partnership, and the determination of their compensation and other terms of employment or engagement;
(L)    the maintenance of such insurance for the benefit of the Partnership and the Partners and the directors, officers, agents, employees or affiliates thereof as it deems necessary or appropriate;
(M)    the formation of, or acquisition of an interest (including non-voting interests in entities controlled by Affiliates of the Partnership or third parties) in, and the contribution of property to, any further Entities or other relationships that it deems desirable, including the acquisition of interests in, and the contributions of funds or property to, or making of loans to, its Subsidiaries and any other Person from time to time, or the incurrence of indebtedness on behalf of such Persons or the guarantee of the obligations of such Persons; provided, however, that as long as the General Partner has determined to elect to qualify as a REIT or to continue to qualify as a REIT, the Partnership may not engage in any such formation, acquisition or contribution that would cause the General Partner to fail to qualify as a REIT;
(N)    the control of any matters affecting the rights and obligations of the Partnership, including:
(1)    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,
(2)    the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and
(3)    the representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expenses, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

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(O)    the undertaking of any action in connection with the Partnership’s direct or indirect investment in its Subsidiaries or any other Person (including the contribution or loan of funds by the Partnership to such Persons);
(P)    the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner, in its sole discretion, may adopt;
(Q)    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;
(R)    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;
(S)    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;
(T)    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 foregoing;
(U)    the issuance of additional Partnership Units in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof;
(V)    the authorization, issuance, sale, redemption or purchase of any Partnership Units or any securities of the Partnership;
(W)    the opening of bank accounts on behalf of, and in the name of, the Partnership and its Subsidiaries; and
(X)    the amendment and restatement of Exhibit A to reflect accurately 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 any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment of this Agreement, as long as the 

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matter or event being reflected in Exhibit A otherwise is authorized by this Agreement.
(b)    (i)    Each of the Limited Partners agree 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 to the fullest extent permitted under the Act or other applicable law, rule or regulation.
(ii)    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 at the expense of the Partnership, may or may not, cause the Partnership to obtain and maintain
(i)    casualty, liability and other insurance on the properties of the Partnership or its Subsidiaries;
(ii)    liability insurance for the Indemnitees hereunder; and
(iii)    such other insurance as the General Partner, in its sole and absolute discretion, determines to be appropriate and reasonable.
(d)    At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain at any and all times working capital accounts and other cash or similar balances in such amount as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.
(e)    (i)    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 any Limited Partner for monetary damages or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with such decisions; provided, that the General Partner has acted in good faith pursuant to its authority under this Agreement.  The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, the General Partner, and the General Partner’s Stockholders, collectively.
(ii)    The General Partner and the Partnership shall not have liability to any Limited Partner or the Special Limited Partner under any circumstances as a result of an income tax liability incurred by such Limited Partner or the Special Limited Partner as a result of an action (or inaction) by the General Partner taken pursuant to its authority under and in accordance with this Agreement.

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(iii)    With respect to any indebtedness of the Partnership which any Limited Partner or the Special Limited Partner may have guaranteed, the General Partner (and its investment advisor) shall have no duty to keep such indebtedness outstanding.
7.2    Certificate of Limited Partnership
(a)    The General Partner has previously filed the Certificate with the Secretary of State of Delaware as required by the Act.
(b)    (i)    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 State of Delaware and any other state, or the District of Columbia, in which the Partnership may elect to do business or own property.
(ii)    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 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, in which the Partnership may elect to do business or own property.
(iii)    The General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner.
7.3    Reimbursement of the General Partner
(a)    Except as provided in this Section 7.3 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments, and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.
(b)    (i)    The Partnership shall be responsible for and shall pay all expenses relating to the Partnership’s organization, the ownership of its assets and its operations.  The General Partner shall be reimbursed on a monthly basis, or such other basis as it may determine in its sole and absolute discretion, for all expenses that it incurs on behalf of the Partnership relating to the ownership and operation of the Partnership’s assets, or for the benefit of the Partnership, including all expenses associated with compliance by the General Partner with laws, rules and regulations promulgated by any regulatory body, expenses related to the operations of the General Partner and to the management and administration of any Subsidiaries of the General Partner or the Partnership or Affiliates of the Partnership, such as auditing expenses and filing fees and any and all salaries, compensation and expenses of officers and employees of the General Partner, but excluding any portion of expenses reasonably attributable to assets not owned by or for the benefit of, or to operations not for the benefit of, the Partnership or Affiliates of the Partnership; provided, however, that the amount of any such reimbursement shall be r

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educed by any interest earned by the General Partner with respect to bank accounts or other instruments or accounts held by it in its name.
(ii)    Such reimbursement shall be in addition to any reimbursement made as a result of indemnification pursuant to Section 7.6 hereof.
(iii)    The General Partner shall determine in good faith the amount of expenses incurred by it related to the ownership and operation of, or for the benefit of, the Partnership.  If certain expenses are incurred for the benefit of the Partnership and other entities (including the General Partner), such expenses will be allocated to the Partnership and such other entities in such a manner as the General Partner in its reasonable discretion deems fair and reasonable.  All payments and reimbursements hereunder shall be characterized for federal income tax purposes as expenses of the Partnership incurred on its behalf, and not as expenses of the General Partner.
(c)    (i)    Expenses incurred by the General Partner relating to the organization or reorganization of the Partnership and the General Partner the issuance of Common Stock in connection with an Offering and any issuance of additional Partnership Interests, Common Stock or rights, options, warrants, or convertible or exchangeable securities pursuant to Section 4.2 hereof and all costs and expenses associated with the preparation and filing of any periodic reports by the General Partner under federal, state or local laws or regulations (including all costs, expenses, damages, and other payments resulting from or arising in connection with litigation related to any of the foregoing) are primarily obligations of the Partnership.
(ii)    To the extent the General Partner pays or incurs such expenses, the General Partner shall be reimbursed for such expenses.
7.4    Outside Activities of the General Partner
(a)    Without the Consent of the 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 its business and the business of the Partnership, and such activities as are incidental thereto.
(b)    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.
7.5    Contracts with Affiliates
(a)    (i)    The Partnership may lend or contribute funds or other assets to its Subsidiaries or other Persons in which it has an equity investment and such Subsidiaries and Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner.

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(ii)    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 7.4, the Partnership may Transfer assets to 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, may determine.
(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 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 Partnership, the General Partner, any Subsidiaries 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, any Subsidiaries of the Partnership or any Affiliate of any of them.
(e)    The General Partner is expressly authorized to enter into, in the name and on behalf of the Partnership, a “right of first opportunity” or “right of first offer” arrangement, non‐competition agreements and other conflict avoidance agreements with various Affiliates of the Partnership and the General Partner, on such terms as the General Partner, in its sole and absolute discretion, believes are advisable.
7.6    Indemnification
(a)    (i)    To the fullest extent permitted by Delaware law or as provided herein, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including reasonable attorneys’ fees and other legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative (collectively, “Claims”), that relate to the operations of the Partnership or the General Partner as set forth in this Agreement, in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, so long as (A) the course of conduct which gave rise to the Claim was taken, in the reasonable determination of the Indemnitee made in good faith, in the best interests of the Partnership or the General Partner, (B) such Claim was not the result of negligence or misconduct by the Indemnitee, (C) the Indemnitee (if other than the General Partner) was acting on behalf of or performing services for the Partnership and (D) such indemnification is not satisfied or recoverable from the assets of the Stockholders of the General Partner.  Notwithstanding the foregoing, no Indemnitee (other than the General Partner) shall be indemnified for any Claim arising from or out of an alleged violation of federal or state securities laws unless (1) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to such Indemnitee, (2) such allegations have been dismissed w

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ith prejudice on the merits by a court of competent jurisdiction as to such Indemnitee, or (3) a court of competent jurisdiction approves a settlement of such allegations against such Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which the Common Stock was offered or sold as to indemnification for violations of securities law.
(ii)    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), contractual obligation for any indebtedness or other obligation or otherwise for any indebtedness of the Partnership or any Subsidiary of the Partnership (including 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 7.6 in favor of any Indemnitee having or potentially having liability for any such indebtedness.
(iii)    Any indemnification pursuant to this Section 7.6 shall be made only out of the assets of the Partnership, 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 7.6.
(b)    Reasonable expenses incurred by an Indemnitee who is a party to a proceeding shall be paid or reimbursed by the Partnership in advance of the final disposition of any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative made or threatened against an Indemnitee 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 7.6 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 7.6 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity unless otherwise provided in a written agreement pursuant to which such Indemnities are 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.

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(e)    For purposes of this Section 7.6, the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by such Indemnitee of its duties to the Partnership also imposes duties on, or otherwise involves services by, such Indemnitee to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section 7.6.  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 (other than the General Partner) 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 7.6 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)    (i)    The provisions of this Section 7.6 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.
(ii)    Any amendment, modification or repeal of this Section 7.6 or any provision hereof shall be prospective only and shall not in any way affect the Partnership’s liability to any Indemnitee under this Section 7.6, 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.
(i)    If and to the extent any payments to the General Partner pursuant to this Section 7.6 constitute gross income to the General Partner (as opposed to the repayment of advances made on behalf of the Partnership), such amounts shall constitute guaranteed payments 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 distributions for purposes of computing the Partners’ Capital Accounts.
(j)    Notwithstanding anything to the contrary in this Agreement, the General Partner shall not be entitled to indemnification hereunder for any loss, claim, damage, liability or expense for which the General Partner is obligated to indemnify the Partnership under any other agreement between the General Partner and the Partnership.
7.7    Liability of the General Partner

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(a)    Notwithstanding anything to the contrary set forth in this Agreement, neither the General Partner nor the investment advisor of the General Partner, nor any of their respective officers and directors, shall be liable for monetary damages to the Partnership, any Partners or any Assignees for losses sustained or liabilities incurred as a result of errors in judgment or mistakes of fact or law or of any act or omission unless the General Partner or its investment advisor, as the case may be, acted in bad faith and the act or omission was material to the matter giving rise to the loss, liability or benefit not derived.
(b)    (i)    Subject to its obligations and duties as General Partner set forth in Section 7.1(a) hereof, 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 agent, including its investment advisor.
(ii)    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.
(c)    The Limited Partners expressly acknowledge that if any conflict in the fiduciary duties owed by the General Partner to its Stockholders and by the General Partner, in its capacity as a general partner of the Partnership, to the Limited Partners or the Special Limited Partner, the General Partner may act in the best interests of the General Partner’s Stockholders without violating its fiduciary duties to the Limited Partners or the Special Limited Partner, and, notwithstanding anything to the contrary herein, the General Partner shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits not derived by the Limited Partners or the Special Limited Partner in connection with any such violation.
(d)    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 General Partner’s and its officers’ and directors’ liability to the Partnership, the Special Limited Partner and the Limited Partners 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.
7.8    Other Matters Concerning the General Partner
(a)    The General Partner 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 in good faith to be genuine and to have been signed or presented by the proper party or parties.
(b)    The General Partner 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 reasonably believes 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.

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(c)    (i)    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 attorneys-in-fact.
(ii)    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 each 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 on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order
(i)    to protect the ability of the General Partner to continue to qualify as a REIT; or
(ii)    to avoid the General Partner 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 and the Special Limited Partner.
7.9    Title to Partnership Assets
(a)    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.
(b)    (i)    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.
(ii)    The General Partner hereby declares and warrants that any Partnership asset for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable.
(iii)    All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.

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7.10    Reliance by Third Parties
(a)    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 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.
(b)    Each Limited Partner and the Special Limited Partner hereby waive 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.
(c)    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 expediency of any act or action of the General Partner or its representatives.
(d)    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 relying 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.
7.11    Loans By Third Parties
The Partnership may incur Debt, or enter into similar credit, guarantee, financing or refinancing arrangements for any purpose (including in connection with any acquisition of property) with any Person upon such terms as the General Partner determines appropriate.
Article 8.     
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1    Limitation of Liability
No Limited Partner shall have any liability under this Agreement except as expressly provided in this Agreement, including Section 10.5 hereof, or under the Act.

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8.2    Management of Business
(a)    No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or related parties or any officer, director, employee, agent or trustee of the General Partner, the Partnership or any of their Affiliates or related parties, in their capacity as such) shall take part in the operation, 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.
(b)    The transaction of any such business by the General Partner, any of its Affiliates or related parties or any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates or related parties, 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.
8.3    Outside Activities of Limited Partners
(a)    Subject to any agreements entered into pursuant to Section 7.5 hereof and any other agreements entered into by a Limited Partner, the Special Limited Partner or any of their Affiliates with the Partnership or any of its Subsidiaries, any Limited Partner, the Special Limited Partner and any officer, director, employee, agent, trustee, Affiliate or shareholder of any Limited Partner or the Special Limited 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.
(b)    Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner, the Special Limited Partner, any Assignee or any of their Affiliates.
(c)    No Limited Partner 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 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 or any such other Person, even if such opportunity is of a character which, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person.
8.4    Return of Capital
(a)    Except pursuant to the Exchange Rights Agreements, no Limited Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein.

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(b)    Except as provided in Articles 5, 6 and 13 hereof, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee, either as to the return of Capital Contributions or as to profits, losses or distributions.
8.5    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 8.5(b) hereof, each Limited Partner and the Special Limited Partner shall have the right, for a purpose reasonably related to such Person’s interest as a limited partner in the Partnership, upon written demand with a statement of the purpose of such demand and at such Person’s own expense (including such reasonable copying and administrative charges as the General Partner may establish from time to time):
(i)    to obtain a copy of the most recent annual and quarterly reports filed with the Securities and Exchange Commission by the General Partner pursuant to the Securities Exchange Act of 1934; and
(ii)    to obtain a copy of the Partnership’s federal, state and local income tax returns for each Partnership Year.
(b)    Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners and the Special Limited Partner, 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 reasonably 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 is required by law or by agreements with an unaffiliated third party to keep confidential.
8.6    Exchange of OP Units
(a)    Subject to Sections 8.6(b), (c), (d), (e), (f) and (g) hereof, the penultimate sentence of this Section 8.6(a), and the provisions of any agreements between the Partnership and one or more Limited Partners with respect to OP Units held by them, each Limited Partner holding OP Units shall have the right (the “OP Unit Redemption Right”) to require the Partnership to redeem on a Specified Redemption Date all or a portion of the OP Units held by such Limited Partner at a redemption price equal to and in the form of the OP Unit Redemption Amount to be paid by the Partnership; provided, that such OP Units (including, for the avoidance of doubt, any OP Units issued to such Limited Partner as a result of any merger, consolidation or other business combination or reorganization to which the Partnership and/or the General Partner is a party) shall have been outstanding for at least one year (or such lesser time as determined by the General Partner in its sole and absolute discretion), which period shall include the period that 

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Partnership Units or the Special Limited Partner Interest that were converted into such OP Units were held, and subject to any restriction agreed to in writing between the Redeeming Limited Partner and the General Partner.  The OP Unit Redemption Right shall be exercised pursuant to a written notice (the “Notice of Redemption”) delivered to the Partnership (with a copy to the General Partner) by the Limited Partner who is exercising the OP Unit Redemption Right (the “Redeeming Limited Partner”); provided, however, that the Partnership shall, in its sole and absolute discretion, have the option to deliver either the Cash Amount or the Common Stock Amount; provided, further, that the Partnership shall not be obligated to satisfy such OP Unit Redemption Right if the General Partner elects to purchase the OP Units subject to the Notice of Redemption; and provided, further, that no Limited Partner may deliver more than two Notices of Redemption during each calendar year.  A Limited Partner may not exercise the OP Unit Redemption Right for less than one thousand (1,000) OP Units or, if such Limited Partner holds less than one thousand (1,000) OP Units, all of the OP Units held by such Limited Partner.  The Redeeming Limited Partner shall have no right, with respect to any OP Units so redeemed, to receive any distribution paid with respect to OP Units if the record date for such distribution is on or after the Specified Redemption Date.
(b)    Notwithstanding the provisions of Section 8.6(a) hereof, a Limited Partner that exercises the OP Unit Redemption Right shall be deemed to have offered to sell the OP Units described in the Notice of Redemption to the General Partner, and the General Partner may, in its sole and absolute discretion, elect to purchase directly and acquire such OP Units by paying to the Redeeming Limited Partner either the Cash Amount or the Common Stock Amount, as elected by the General Partner (in its sole and absolute discretion), on the Specified Redemption Date, whereupon the General Partner shall acquire the OP Units offered for redemption by the Redeeming Limited Partner and shall be treated for all purposes of this Agreement as the owner of such OP Units.  If the General Partner shall elect to exercise its right to purchase OP Units under this Section 8.6(b) with respect to a Notice of Redemption, it shall so notify the Redeeming Limited Partner within five business days after the receipt by the General Partner of such Notice of Redemption.
(c)    In the event the General Partner shall exercise its right to purchase OP Units with respect to the exercise of a OP Unit Redemption Right, the Partnership shall have no obligation to pay any amount to the Redeeming Limited Partner with respect to such Redeeming Limited Partner’s exercise of such OP Unit Redemption Right, and each of the Redeeming Limited Partner, the Partnership and the General Partner shall treat the transaction between the General Partner and the Redeeming Limited Partner for U.S. federal income tax purposes as a sale of the Redeeming Limited Partner’s OP Units to the General Partner.  Each Redeeming Limited Partner agrees to execute such documents as the General Partner may reasonably require in connection with the issuance of Common Stock upon exercise of the OP Unit Redemption Right.
(d)    Notwithstanding the provisions of Sections 8.6(a) and 8.6(b) hereof, a Limited Partner shall not be entitled to exercise the OP Unit Redemption Right if the delivery of Common Stock to such Limited Partner on the Specified Redemption Date by the General Partner pursuant to Section 8.6(b) hereof (regardless of whether or not the General Partner would in fact exercise its rights under Section 8.6(b) hereof) would cause the acquisition of Common 

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Stock by such Limited Partner to be “integrated” with any other distribution of Common Stock or OP Units for purposes of complying with the registration provisions of the Securities Act.  The General Partner, in its sole and absolute discretion and without the consent of any other Limited Partner or Person, may waive the restriction on redemption set forth in this Section 8.6(d).
(e)    Any Cash Amount to be paid to a Redeeming Limited Partner pursuant to this Section 8.6 shall be paid on the Specified Redemption Date; provided, however, that the General Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional 90 days to the extent required for the General Partner to cause additional Common Stock to be issued to provide financing to be used to make such payment of the Cash Amount.  Any Common Stock Amount to be paid to a Redeeming Limited Partner pursuant to this Section 8.6 shall be paid on the Specified Redemption Date; provided, however, that the General Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional 60 days to the extent required for the General Partner to cause additional Common Stock to be issued.  Notwithstanding the foregoing, the General Partner agrees to use its reasonable best efforts to cause the closing of the acquisition of redeemed OP Units hereunder to occur as quickly as reasonably possible.
(f)    Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the Partnership to comply with any withholding requirements established under the Code or any other federal, state or local law that apply upon a Redeeming Limited Partner’s exercise of the OP Unit Redemption Right.  If a Redeeming Limited Partner believes that it is exempt from such withholding upon the exercise of the OP Unit Redemption Right, such Partner must furnish the General Partner with such supporting documentation reasonably requested by the General Partner.  If the Partnership or the General Partner is required to withhold and pay over to any taxing authority any amount upon a Redeeming Limited Partner’s exercise of the OP Unit Redemption Right and if the OP Unit Redemption Amount equals or exceeds the Withheld Amount, the Withheld Amount shall be treated as an amount received by such Limited Partner in redemption of its OP Units.  If, however, the OP Unit Redemption Amount is less than the Withheld Amount, the Redeeming Limited Partner shall not receive any portion of the OP Unit Redemption Amount, the OP Unit Redemption Amount shall be treated as an amount received by such Limited Partner in redemption of its OP Units, and the Limited Partner shall contribute the excess of the Withheld Amount over the OP Unit Redemption Amount to the Partnership before the Partnership is required to pay over such excess to a taxing authority.
(g)    Notwithstanding any other provision of this Agreement, the General Partner shall place appropriate restrictions on the ability of the Limited Partners to exercise their OP Unit Redemption Rights as and if deemed necessary to ensure that the Partnership does not constitute a “publicly traded partnership” under Section 7704 of the Code.  If and when the General Partner determines that imposing such restrictions is necessary, the General Partner shall give prompt written notice thereof to each of the Limited Partners.
(h)    Any other terms, conditions and restrictions with respect to such a redemption will be contained in an exchange rights agreement among the General Partner, the Partnership 

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and one or more Limited Partners (as amended from time to time, the “Exchange Rights Agreement”).  The form of the Exchange Rights Agreement governing the redemption of OP Units hereafter shall be determined by the General Partner. 
(i)    The Limited Partners and all successors, assignees and transferees (whether by operation of law, including by merger or consolidation, dissolution or liquidation of an entity that is a Limited Partner, or otherwise) shall be bound by the provisions of the Exchange Rights Agreement to which they are parties. 
8.7    Conversion and Exchange of Special Limited Partner Interest.
(a)    Conversion of Listing Note, Termination Base Note or Termination Listing Note.
(i)    If the Special Limited Partner is entitled to receive distributions pursuant to the Partnership’s obligation under a Listing Note, Termination Base Note or Termination Listing Note, at such time as the Capital Account balance of the Special Limited Partner attributable to the Special Limited Partner Interest is equal to the remaining amount distributable to the Special Limited Partner pursuant to the Listing Note, Termination Base Note or Termination Listing Note, respectively, the Special Limited Partner shall have the right, but not the obligation, to convert all or a portion of the Special Limited Partner Interest into OP Units. The Special Limited Partner shall provide written notice to the General Partner of its intention to convert all or a portion of its Special Limited Partner Interest at least ten days prior to the date on which the conversion is to occur, and such notice shall indicate the amount of the Special Limited Partner Interest that the Special Limited Partner intends to convert. The maximum number of OP Units issuable upon a conversion of the Special Limited Partner Interest pursuant to this Section 8.7(a)(i) shall be equal to the quotient of (i) the net amount of the Partnership’s remaining obligation pursuant to the Listing Note, Termination Base Note or Termination Listing Note on the date of conversion divided by (ii) the product of (A) in the case of the Listing Note and the Termination Listing Note, the Market Value per share of Common Stock on the date of conversion, and in the case of the Termination Base Note, the amount described in Section 5.1(d)(i)(A) (but not including the amount described in subsection (4) thereof) per share of Common Stock on the date of conversion multiplied by (B) the Exchange Factor. Only a whole number of OP Units may be issuable upon a conversion of the Special Limited Partner Interest. The Special Limited Partner covenants and agrees with the Partnership that the Special Limited Partner Interest shall be free and clear of all liens. The conversion of all or a portion of the Special Limited Partner Interest shall occur automatically after the close of business on the applicable date of conversion, as of which time the Special Limited Partner shall be credited on the books and records of the Partnership with the issuance as of the opening of business on the next day of the number of OP Units issuable upon such conversion.
(ii)    Exchange. OP Units issuable upon a conversion of the Special Limited Partner Interest as set forth in this Section 8.7(a) shall be exchangeable for cash or, at the option of the Partnership, for shares of Common Stock pursuant to Section 8.6.

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(iii)    Impact of Conversion for Purposes of Subparagraph 1(c)(iii) of Exhibit B. For purposes of making future allocations under subparagraph 1(c)(iii) of Exhibit B, the Special Limited Partner’s Capital Account balance shall be reduced, as of the date of conversion, by an amount equal to the product of (i) the number of OP Units issued in the conversion multiplied by (ii) the product of (A) the amount described in clause (ii)(A) of the third sentence in Section 8.7(a)(i) multiplied by (B) the Exchange Factor.
(b)    Conversion of Termination Liquidity Promote or Investment Liquidity Promote.  At such time as the Special Limited Partner is entitled to the Termination Liquidity Promote or Investment Liquidity Promote, the Special Limited Partner shall have the right, but not the obligation, to contribute the entire Special Limited Partner Interest to the Partnership in exchange for OP Units in a transaction intended to qualify as a contribution of property pursuant to Section 721 of the Code. The Special Limited Partner shall notify the General Partner of its intention to exchange its Special Limited Partner Interest as soon as reasonably practicable after learning of the event that will give rise to its right to receive the Termination Liquidity Promote or Investment Liquidity Promote. The number of OP Units issuable upon a conversion of the Special Limited Partner Interest pursuant to this Section 8.7(b) shall be equal to the quotient of (i) the Termination Liquidity Promote or Investment Liquidity Promote, as the case may be, divided by (ii) the product of (A) the Market Value per share of Common Stock, as applicable, multiplied by (B) the Exchange Factor. The Special Limited Partner covenants and agrees with the Partnership that the Special Limited Partner Interest shall be free and clear of all liens. The conversion of all or a portion of the Special Limited Partner Interest shall occur automatically after the close of business on the applicable date of conversion, as of which time the Special Limited Partner shall be credited on the books and records of the Partnership with the issuance as of the opening of business on the next day of the number of OP Units issuable upon such conversion.
Article 9.     
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1    Records and Accounting
(a)    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 all books and records necessary for the General Partner to comply with applicable REIT Requirements and to provide to the Limited Partners and the Special Limited Partner any information, lists and copies of documents required to be provided pursuant to Sections 8.5(a) and 9.3 hereof.
(b)    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, punch cards, 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.

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(c)    The books of 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.
9.2    Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
9.3    Reports
(a)    As soon as practicable, but in no event later than the date on which the General Partner mails its annual report to its Stockholders, the General Partner shall cause to be mailed to each Limited Partner and the Special Limited Partner as of the close of the Partnership Year, an annual report containing financial statements of the Partnership, or of the General Partner, if such statements are prepared on a consolidated basis with the Partnership, for such Partnership Year, presented in accordance with the standards of the Public Accounting Oversight Board (United States), such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner in its sole discretion.
(b)    If and to the extent that the General Partner mails quarterly reports to its Stockholders, then as soon as practicable, but in no event later than the date such reports are mailed, the General Partner shall cause to be mailed to each Limited Partner and the Special Limited Partner a report containing unaudited financial statements as of the last day of the calendar quarter of the Partnership, or of the General Partner, if such statements are prepared on a consolidated basis with the Partnership, and such other information as may be required by applicable law or regulation, or as the General Partner determines to be appropriate.
(c)    Notwithstanding the foregoing, the General Partner may deliver to the Limited Partners and the Special Limited Partner each of the reports described above, as well as any other communications that it may provide hereunder, by e-mail or by any other electronic means.
Article 10.     
TAX MATTERS
10.1    Preparation of Tax Returns
(a)    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 all reasonable efforts to furnish, within ninety (90) days of the close of each taxable year, the tax information reasonably required by the Limited Partners and the Special Limited Partner for U.S. federal and state income tax reporting purposes.  The federal income tax return of the Partnership shall be filed annually on IRS Form 1065 (or such other successor form) or on any other IRS form as may be required.

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(b)    If required under the Code or applicable state or local income tax law, the General Partner shall also arrange for the preparation and timely filing of all returns of income, gains, deductions, losses and other items required of the Subsidiaries of the Partnership for federal and state income tax purposes and shall use all reasonable efforts to furnish, within ninety (90) days of the close of each taxable year, the tax information reasonably required by the Limited Partners and the Special Limited Partner for U.S. federal and state income tax reporting purposes.
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.
(b)    The General Partner shall elect a permissible method (which need not be the same method for each item or property) of eliminating the disparity between the Gross Asset Value and the tax basis for each item of property contributed to the Partnership or to a Subsidiary of the Partnership pursuant to the Regulations promulgated under the provisions of Section 704(c) of the Code.
(c)    The General Partner shall have the right to seek to revoke any tax election it makes, including the election under Section 754 of the Code, upon the General Partner’s determination, in its sole and absolute discretion, that such revocation is in the best interests of the Partners.
(d)    The Partners, intending to be legally bound, hereby authorize the Partnership to make an election (the “Safe Harbor Election”) to have the “liquidation value” safe harbor provided in Proposed Treasury Regulation Section 1.83-3(1) and the Proposed Revenue Procedure set forth in IRS Notice 2005-43, as such safe harbor may be modified when such proposed guidance is issued in final form or as amended by subsequently issued guidance (the “Safe Harbor”), apply to any interest in the Partnership transferred to a service provider while the Safe Harbor Election remains effective, to the extent such interest meets the Safe Harbor requirements (collectively, such interests are referred to as “Safe Harbor Interests”).  The tax matters partner is authorized and directed to execute and file the Safe Harbor Election on behalf of the Partnership and the Partners if and when the Safe Harbor Election becomes available.  The Partnership and the Partners (including any person to whom an interest in the Partnership is transferred in connection with the performance of services) hereby agree to comply with all requirements of the Safe Harbor (including forfeiture allocations) with respect to all Safe Harbor Interests and to prepare and file all U.S. federal income tax returns reporting the tax consequences of the issuance and vesting of Safe Harbor Interests consistent with such final Safe Harbor guidance.  The General Partner is authorized to take such actions as are necessary to achieve, under the Safe Harbor, the effect that the election and compliance with all requirements of the Safe Harbor referred to above would be intended to achieve under Proposed Treasury Regulation Section 1.83-3, including amending this Agreement.

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10.3    Tax Matters Partner
(a)    (i)    The General Partner shall be the “tax matters partner” of the Partnership for U.S. federal income tax purposes.
(ii)    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 profit interest of each of the Limited Partners, the Special Limited Partner and the Assignees; provided however, that such information is provided to the Partnership by the Limited Partners, the Special Limited Partner and the Assignees.
(iii)    The tax matters partner is authorized, but not required:
(A)    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 (including the Special Limited 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 (including the Special Limited Partner), except that such settlement agreement shall not bind any Partner or the Special Limited Partner
(1)    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 the Special Limited Partner; or
(2)    who is a “notice partner” (as defined in Section 6231(a)(8) of the Code) or a member of a “notice group” (as defined in Section 6223(b)(2) of the Code);
(B)    if a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner or the Special Limited 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 filing of a complaint for refund with the United States Claims Court or the District Court of the United States for the district in which the Partnership’s principal place of business is located;
(C)    to intervene in any action brought by any other Partner or the Special Limited Partner for judicial review of a final adjustment;

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(D)    to file a request for an administrative adjustment with the IRS 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;
(E)    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 account of by a Partner or the Special Limited Partner for tax purposes, or an item affected by such item; and
(F)    to take any other action on behalf of the Partners, the Special Limited Partner 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 7.6 of this Agreement shall be fully applicable to the tax matters partner in its capacity as such.
(b)    (i)    The tax matters partner shall receive no compensation for its services.
(ii)    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.
(iii)    Nothing herein shall be construed to restrict the Partnership from engaging an accounting 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.
10.4    Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a one hundred eighty (180) month period as provided in Section 709 of the Code.
10.5    Withholding
(a)    Each Limited Partner and the Special Limited Partner hereby authorizes the Partnership to withhold from, or pay on behalf of or with respect to, such Limited Partner or the Special Limited Partner any amount of U.S. federal, state, local, or foreign taxes that the General Partner determines that the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner or the Special Limited Partner pursuant to this Agreement, including any taxes required to be withheld or paid by the Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code.
(b)    (i)    Any amount paid on behalf of or with respect to a Limited Partner or the Special Limited Partner shall constitute a loan by the Partnership to such Limited Partner or the S

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pecial Limited Partner, which loan shall be repaid by such Limited Partner or the Special Limited Partner as the case may be within fifteen (15) days after notice from the General Partner that such payment must be made unless
(A)    the Partnership withholds such payment from a distribution which would otherwise be made to the Limited Partner or the Special Limited Partner; or
(B)    the 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 the Special Limited Partner.
(ii)    Any amounts withheld pursuant to the foregoing clauses (i)(A) or (B) shall be treated as having been distributed to the Limited Partner or the Special Limited Partner.
(c)    (i)    Each Limited Partner and the Special Limited Partner hereby unconditionally and irrevocably grant to the Partnership a security interest in such Limited Partner’s Partnership Interest and such Special Limited Partner’s Special Limited Partner Interest, as the case may be, to secure such Limited Partner’s or Special Limited Partner’s obligation to pay to the Partnership any amounts required to be paid pursuant to this Section 10.5.
(ii)    (A)    If a Limited Partner or the Special Limited Partner fails to pay when due any amounts owed to the Partnership pursuant to this Section 10.5, 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 or the Special Limited Partner, and in such event shall be deemed to have loaned such amount to such defaulting Limited Partner or the Special Limited Partner and shall succeed to all rights and remedies of the Partnership as against such defaulting Limited Partner or the Special Limited Partner.
(B)    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 or the Special 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 or the Special Limited Partner and immediately paid by the defaulting Limited Partner or the Special Limited Partner to the General Partner in repayment of such loan.
(iii)    Any amount payable by a Limited Partner or the Special Limited Partner hereunder shall bear interest at the highest base or prime rate of interest published from time to time by The Wall Street Journal, plus four (4) percentage points, but in no event higher than 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.

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(iv)    Each Limited Partner and the Special Limited Partner shall take such actions as the Partnership or the General Partner shall request in order to perfect or enforce the security interest created hereunder.
Article 11.     
TRANSFERS AND WITHDRAWALS
11.1    Transfer
(a)    (i)    The term “Transfer,” when used in this Article 11 with respect to a Partnership Interest or 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 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 law or otherwise.
(ii)    The term “Transfer” when used in this Article 11 does not include any exchange of Partnership Units for cash or Common Stock pursuant to the Exchange Rights Agreement.
(b)    (i)    No Partnership Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11.
(ii)    Any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void.
11.2    Transfer of the General Partner’s General Partner Interest
(a)    The General Partner may not Transfer any of its General Partner Interest or withdraw as General Partner, or Transfer any of its Limited Partner Interest, except
(i)    if holders of at least two-thirds of the Limited Partner Interests consent to such Transfer or withdrawal;
(ii)    if such Transfer is to an entity which is wholly owned by the General Partner and is a Qualified REIT Subsidiary as defined in Section 856(i) of the Code; or
(iii)    in connection with a transaction described in Section 11.2(c) or 11.2(d) (as applicable).
(b)    If the General Partner withdraws as general partner of the Partnership in accordance with Section 11.2(a), the General Partner’s General Partner Interest shall immediately be converted into a Limited Partner Interest.
(c)    Except as otherwise provided in Section 11.2(d), the General Partner shall not engage in any merger, consolidation or other combination of the General Partner with or into another Person (other than a merger in which the General Partner is the surviving entity) or sale 

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of all or substantially all its assets, or any reclassification, or any recapitalization of outstanding Common Stock (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination of Common Stock) (a “Transaction”), unless
(i)    in connection with the Transaction all Limited Partners will either receive, or will have the right to elect to receive, for each Partnership Unit an amount of cash, securities, or other property equal to the product of the Exchange Factor and the amount of cash, securities or other property or value paid in the Transaction to or received by a holder of one share of Common Stock corresponding to such Partnership Unit in consideration of one share of Common Stock at any time during the period from and after the date on which the Transaction is consummated; provided, however, that if, in connection with the Transaction, a purchase, tender or exchange offer (“Offer”) shall have been made to and accepted by the holders of more than 50% of the outstanding Common Stock, each holder of Partnership Units shall be given the option to exchange its Partnership Units for the amount of cash, securities, or other property which a Limited Partner would have received had it
(A)    exercised its Exchange Right and
(B)    sold, tendered or exchanged pursuant to the Offer the Common Stock received upon exercise of the Exchange Right immediately prior to the expiration of the Offer.
The foregoing is not intended to, and does not, affect the ability of (i) a Stockholder of the General Partner to sell its stock in the General Partner or (ii) the General Partner to perform its obligations (under agreement or otherwise) to such Stockholders (including the fulfillment of any obligations with respect to registering the sale of stock under applicable securities laws).
(d)    (i)    Notwithstanding Section 11.2(c), the General Partner may merge into or consolidate with another entity if immediately after such merger or consolidation
(A)    substantially all of the assets of the successor or surviving entity (the “Surviving General Partner”), other than Partnership Units held by the General Partner, are contributed to the Partnership as a Capital Contribution in exchange for Partnership Units with a fair market value equal to the value of the assets so contributed as determined by the Surviving General Partner in good faith and
(B)    the Surviving General Partner expressly agrees to assume all obligations of the General Partner hereunder.
(ii)    (A)    Upon such contribution and assumption, the Surviving General Partner shall have the right and duty to amend this Agreement and the Exchange Rights Agreement as set forth in this Section 11.2(d).

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(B)    (1)    The Surviving General Partner shall in good faith arrive at a new method for the calculation of the Exchange Factor for a Partnership Unit after any such merger or consolidation so as to approximate the existing method for such calculation as closely as reasonably possible.
(2)    Such calculation shall take into account, among other things, the kind and amount of securities, cash and other property that was receivable upon such merger or consolidation by a holder of Common Stock or options, warrants or other rights relating thereto, and which a holder of Partnership Units could have acquired had such Partnership Units been redeemed for Common Stock immediately prior to such merger or consolidation.
(C)    Such amendment to this Agreement shall provide for adjustment to such method of calculation, which shall be as nearly equivalent as may be practicable to the adjustments provided for with respect to the Exchange Factor.
(iii)    The above provisions of this Section 11.2(d) shall similarly apply to successive mergers or consolidations permitted hereunder.
11.3    Limited Partners’ Rights to Transfer
(a)    Subject to the provisions of Sections 11.3(c), 11.3(d), 11.3(e), 11.4 and 11.6, a Limited Partner may, without the consent of the General Partner, Transfer all or any portion of its Limited Partner Interest, or any of such Limited Partner’s economic right as a Limited Partner.  In order to effect such Transfer, the Limited Partner must deliver to the General Partner a duly executed copy of the instrument making such Transfer and such instrument must evidence the written acceptance by the assignee of all of the terms and conditions of this Agreement and represent that such assignment was made in accordance with all applicable laws and regulations.
(b)    (i)    If a Limited Partner is Incapacitated, 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 interest in the Partnership.
(ii)    The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.
(c)    The General Partner may prohibit any Transfer by a Limited Partner of its Partnership Units if it reasonably believes (based on the advice of counsel) such Transfer would require filing of a registration statement under the Securities Act of 1933, as amended, or would otherwise violate any federal or state securities laws or regulations applicable to the Partnership or the Partnership Units.

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(d)    No Transfer by a Limited Partner of its Partnership Units may be made to any Person if
(i)    it would adversely affect the ability of the General Partner to continue to qualify as a REIT or would subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code;
(ii)    it would result in the Partnership being treated as an association taxable as a corporation for U.S. federal income tax purposes;
(iii)    such Transfer would 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(c) of the Code);
(iv)    such Transfer would, in the opinion of legal counsel for 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;
(v)    such Transfer would subject the Partnership to regulation 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;
(vi)    such Transfer is a sale or exchange, and such sale or exchange would, when aggregated with all other sales and exchanges during the 12-month period ending on the date of the proposed Transfer, result in 50% or more of the interests in Partnership capital and profits being sold or exchanged during such 12‐month period without the consent of the General Partner, which consent may be withheld in its sole and absolute discretion; or
(vii)    such Transfer is effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code.
(e)    No Transfer of any Partnership Units may be made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a nonrecourse liability (within the meaning of Section 1.752-1(a)(2) of the Regulations), without the consent of the General Partner, which may be withheld in its sole and absolute discretion, provided, however, that as a condition to such consent the lender will be required to enter into an arrangement with the Partnership and the General Partner to exchange for the Cash Amount any Partnership Units in which a security interest is held simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code.

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(f)    Any Transfer in contravention of any of the provisions of this Section 11.3 shall be void and ineffectual and shall not be binding upon, or recognized by, the Partnership.
11.4    Substituted Limited Partners
(a)    (i)    No Limited Partner shall have the right to substitute a Permitted Transferee for a Limited Partner in its place.
(ii)    The General Partner shall, however, have the right to consent to the admission of a Permitted Transferee of the Partnership 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.
(iii)    The General Partner’s failure or refusal to permit such transferee 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.
(c)    (i)    No Permitted Transferee will be admitted as a Substituted Limited Partner, unless such transferee has furnished to the General Partner evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement and, as it relates to the Substituted Limited Partners, the Exchange Rights Agreement, including the power of attorney granted in Section 2.4 hereof.
(ii)    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.
11.5    Assignees
(a)    If the General Partner, in its sole and absolute discretion, does not consent to the admission of any transferee as a Substituted Limited Partner, as described in Section 11.4(a), such transferee shall be considered an Assignee for purposes of this Agreement.
(b)    An Assignee shall be deemed to have had assigned to it, and shall be entitled to receive distributions from the Partnership and the share of Net Income, Net Losses, Net Property Gain, Net Property Loss and any other items of gain, loss, deduction or credit of the Partnership attributable to the Partnership Units assigned to such transferee, 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 vote such Partnership Units in any matter presented to the Limited Partners, for a vote (such 

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Partnership Units being deemed to have been voted on such matter in the same proportion as all other Partnership Units held by Limited Partners are voted).
(c)    If 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.
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 or, as it relates to the Limited Partners, pursuant to exchange of all of its Partnership Units pursuant to the applicable Exchange Rights Agreement.
(b)    (i)    Any Limited Partner which shall Transfer all of its Partnership Units in a Transfer permitted pursuant to this Article 11 shall cease to be a Limited Partner upon the admission of all Assignees of such Partnership Units as Substituted Limited Partners.
(ii)    Similarly, any Limited Partner which shall Transfer all of its Partnership Units pursuant to an exchange of all of its Partnership Units pursuant to an Exchange Rights Agreement shall cease to be a Limited Partner.
(c)    Other than pursuant to the Exchange Rights Agreement or with the consent of the General Partner, transfers pursuant to this Article 11 may only be made as of the first day of a fiscal quarter of the Partnership.
(d)    (i)    If any Partnership Interest is transferred or assigned during the Partnership’s fiscal year in compliance with the provisions of this Article 11 or exchanged pursuant to the applicable Exchange Rights Agreement on any day other than the first day of a Partnership Year, then Net Income, Net Losses, Net Property Gain, Net Property Loss, each item thereof and all other items attributable to such 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 permitted by the Code as the General Partner may select.
(ii)    Solely for purposes of making such allocations, 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 an exchange occurs shall be allocated to the exchanging Partner, provided, however, that the General Partner may adopt such other conventions relating to allocations in connection with transfers, assignments, or exchanges as it determines are necessary or appropriate.
(iii)    All distributions pursuant to Section 5.1(a)  and Section 5.1(b) attributable to Partnership Units, with respect to which the Partnership Record Date is before the date

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 of such Transfer, assignment, or exchange of such Partnership Units, shall be made to the transferor Partner or the exchanging Partner, as the case may be, and in the case of a Transfer or assignment other than an exchange, all distributions pursuant to Section 5.1(a)  and Section 5.1(b) thereafter attributable to such Partnership Units shall be made to the transferee Partner.
(e)    In addition to any other restrictions on transfer herein contained, including the provisions of this Article 11, in no event may any Transfer or assignment of a Partnership Interest by any Partner (including pursuant to Section 8.6) be made without the express consent of the General Partner, in its sole and absolute discretion, (i) to any person or entity who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) 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) if in the opinion of legal counsel to the Partnership such Transfer or assignment would cause a termination of the Partnership for U.S. federal or state income tax purposes (except as a result of the exchange for Common Stock of all Partnership 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, there would be a significant risk that such Transfer or assignment would cause the Partnership to cease to be classified as a partnership for U.S. federal income tax purposes (except as a result of the exchange for Common Stock of all Partnership Units held by all Limited Partners or pursuant to a transaction expressly permitted under Section 11.2); (vi) if such Transfer requires the registration of such Partnership Interest pursuant to any applicable federal or state securities laws; (vii) if such Transfer or assignment is effectuated through an “established securities market” or a “secondary market” (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code or such Transfer or assignment causes the Partnership to become a “publicly traded partnership,” as such term is defined in Section 469(k)(2) or Section 7704(b) of the Code (provided, however, that this clause (vii) shall not be the basis for limiting or restricting in any manner the exercise of the Exchange Right under Section 8.6 unless, and only to the extent that, outside tax counsel provides to the General Partner an opinion to the effect that, in the absence of such limitation or restriction, there is a significant risk that the Partnership will be treated as a “publicly traded partnership” and, by reason thereof, taxable as a corporation); (viii) such Transfer or assignment could adversely affect the ability of the General Partner to remain qualified as a REIT; or (ix) if in the opinion of legal counsel of the transferring Partner (which opinion and counsel are reasonably satisfactory to the Partnership), or legal counsel of the Partnership, such Transfer or assignment would adversely affect the ability of the General Partner to continue to qualify as a REIT or subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code, if the General Partner has elected to be qualified as a REIT.
(f)    The General Partner shall monitor the transfers of interests in the Partnership to determine (i) if such interests are 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 additional transfers of interests would result in the Partnership being unable to qualify for at least one of the “safe harbors” set forth in Section 1.7704-1 of the Regulations (or such other guidance subsequently published by the IRS setting forth safe harbors 

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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 “PTP Safe Harbors”).  The General Partner shall take all steps reasonably necessary or appropriate to prevent any trading of interests or any recognition by the Partnership of transfers made on such markets and, except as otherwise provided herein, to insure that at least one of the PTP Safe Harbors is met; provided, however, that the foregoing shall not authorize the General Partner to limit or restrict in any manner the right of any holder of a Partnership Unit to exercise the Exchange Right in accordance with the terms of the applicable Exchange Rights Agreement unless, and only to the extent that, outside tax counsel provides to the General Partner an opinion to the effect that, in the absence of such limitation or restriction, there is a significant risk that the Partnership will be treated as a “publicly traded partnership” and, by reason thereof, taxable as a corporation for U.S. federal income tax purposes.
Article 12.     
ADMISSION OF PARTNERS
12.1    Admission of Successor General Partner
(a)    (i)    A successor to all of the General Partner Interest pursuant to Article 11 hereof who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately following such Transfer and the admission of such successor General Partner as a general partner of the Partnership upon the satisfaction of the terms and conditions set forth in Section 12.1(b).
(ii)    Any such transferee shall carry on the business of the Partnership without dissolution.
(b)    A Person shall be admitted as a substitute or successor General Partner of the Partnership only if the following terms and conditions are satisfied:
(i)    the Person to be admitted as a substitute or additional General Partner shall have accepted and agreed to be bound by all the terms and provisions of this Agreement by executing a counterpart thereof and such other documents or instruments as may be required or appropriate in order to effect the admission of such Person as a General Partner;
(ii)    if the Person to be admitted as a substitute or additional General Partner is a corporation or a partnership it shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of such Person’s authority to become a General Partner and to be bound by the terms and provisions of this Agreement; and
(iii)    counsel for the Partnership shall have rendered an opinion (relying on such opinions from other counsel as may be necessary) that the admission of the person to be admitted as a substitute or additional General Partner is in conformity with the Act, that none of the actions taken in connection with the admission of such Person as a substitute or additional General Partner will cause

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(A)    the Partnership to be classified other than as a partnership for federal income tax purposes, or
(B)    the loss of any Limited Partner’s limited liability.
(c)    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 Section 11.6(d) hereof.
12.2    Admission of Additional Limited Partners
(a)    A Person who makes a Capital Contribution to the Partnership or provides (or is to provide) services to or for the benefit of the Partnership in anticipation of becoming a Partner 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 and the applicable Exchange Rights Agreement, including the power of attorney granted in Section 2.4 hereof, 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.
(b)    (i)    Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the consent of the General Partner, which consent may be given or withheld in the General Partner’s sole and absolute discretion.
(ii)    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 consent of the General Partner to such admission.
(c)    (i)    If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Net Income, Net Losses, Net Property Gain, Net Property 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 the interim closing of the books method or such other method permitted by the Code as the General Partner may select.
(ii)    (A)    Solely for purposes of making such allocations, each of such items for the calendar month in which an admission of any Additional Limited Partner occurs shall be allocated among all of the Partners and Assignees, including such Additional Limited Partner.

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(B)    distributions pursuant to Section 5.1(a) and Section 5.1(b) 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 pursuant to Section 5.1(a) and Section 5.1(b) thereafter shall be made to all of the Partners and Assignees, including such Additional Limited Partner.
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 (including an amendment of Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof.
Article 13.     
DISSOLUTION, LIQUIDATION AND TERMINATION
13.1    Dissolution
(a)    The Partnership shall not be dissolved by the admission of Substituted Limited Partners, 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.
(b)    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”):
(i)    the expiration of its term as provided in Section 2.5 hereof;
(ii)    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” (as defined below) of the remaining Partners Consent 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;
(iii)    an election to dissolve the Partnership made by the General Partner, with the Consent of the Limited Partners holding at least a majority of the Percentage Interest of the Limited Partners (including Limited Partner Interests held by the General Partner);
(iv)    entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;
(v)    a Capital Transaction;

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(vi)    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 a “majority in interest” (as defined below) of the remaining Partners Consent 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 substitute General Partner.
As used herein, a “majority in interest” shall refer to Partners (excluding the General Partner) who hold more than fifty percent (50%) of the outstanding Percentage Interests not held by the General Partner.
13.2    Winding Up
(a)    (i)    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.
(ii)    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.
(iii)    The General Partner, or, if there is no remaining General Partner, any Person elected by the Limited Partners holding at least a “majority in interest” (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 common stock or other securities of the General Partner) shall be applied and distributed in the following order:
(A)    First, to the payment and discharge of all of the Partnership’s debts and liabilities to creditors other than the Partners;
(B)    Second, to the payment and discharge of all of the Partnership’s debts and liabilities to the General Partner;
(C)    Third, to the payment and discharge of all of the Partnership’s debts and liabilities to the other Partners; and
(D)    the balance, if any, shall be distributed to all Partners (including the Special Limited Partner) with positive Capital Accounts in accordance with their respective positive Capital Account balances after giving effect to all allocations in Exhibit B and all prior distributions under Section 5.1.

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(iv)    The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13.
(v)    Any distributions pursuant to this Section 13.2(a) shall be made by the end of the Partnership’s taxable year in which the liquidation occurs (or, if later, within 90 days after the date of the liquidation).
(b)    (i)    Notwithstanding the provisions of Section 13.2(a) hereof 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 (including the Special Limited Partner), the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any asset except those necessary to satisfy liabilities of the Partnership (including to those Partners, including the Special Limited Partner, as creditors) or distribute to the Partners (including the Special Limited Partner), in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2(a) hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation.
(ii)    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 interests of the Partners (including the Special Limited Partner), 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.
(iii)    The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.
(c)    In the discretion of the Liquidator, a pro rata portion of the distributions that would otherwise be made to the General Partner, the Limited Partners and the Special Limited Partner pursuant to this Article 13 may be:
(A)    distributed to a trust established for the benefit of the General Partner, the Limited Partners and the Special Limited Partner 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 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, the Limited Partners and the Special Limited Partner from time to time, in the reasonable discretion of the Liquidator, in the same proportions as the amount distributed to such trust by the Partnership would otherwise have been distributed to the General Partner, the Limited Partners and the Special Limited Partner pursuant to this Agreement; or
(B)    withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized 

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portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be distributed to the General Partner, the Limited Partners and the Special Limited Partner in the manner and order of priority set forth in Section 13.2(a), as soon as practicable.
13.3    Obligation to Contribute Deficit
If any Partner or Special Limited Partner (other than a holder of Restricted Class B Units) has a deficit balance in his Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Partner and the Special Limited Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever.  If a holder of Restricted Class B Units has a deficit balance in its Capital Account attributable to such Restricted Class B Units (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during with such liquidation occurs), such holder of Restricted Class B Units shall restore and contribute to the capital of the Partnership the amount necessary to restore such deficit balance to zero, but not to exceed an amount equal to the excess of the cash distributions of Net Sales Proceeds made (if any) to such holder of Restricted Class B Units over the amount of Net Property Gain (including, to the extent necessary, individual items of income and gain comprising Net Property Gain) and Liquidating Gain allocated to such holder of Restricted Class B Units in accordance with subparagraph 1(c)(ii) of Exhibit B, in compliance with Section 1.704-1(b)(2)(ii)(b)(3) of the Regulations, which restoration and contribution shall be before the later to occur of (x) the end of the taxable year in which the Partnership is liquidated, or (y) ninety (90) days after the date of the liquidation of the Partnership, which amount shall be paid to creditors of the Partnership or, if the amount contributed exceeds the amount due to creditors, shall be distributed to the Partners with positive Capital Account balances.
13.4    Rights of Limited Partners
(a)    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.
(b)    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.
13.5    Notice of Dissolution
If a Liquidating Event occurs or an event occurs that would, but for the provisions of 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 (including the Special Limited Partner).

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13.6    Termination of Partnership and 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.
13.7    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 hereof in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect among the Partners (including the Special Limited Partner) during the period of liquidation.
13.8    Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership property.
Article 14.     
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
14.1    Amendments
(a)    The General Partner shall have the power, without the consent of the Limited Partners or the Special Limited Partner, to amend this Agreement except as set forth in Section 14.1(b) hereof.  The General Partner shall provide notice to the Limited Partners and the Special Limited Partner when any action under this Section 14.1(a) is taken in the next regular communication to the Limited Partners.
(b)    Notwithstanding Section 14.1(a) hereof, this Agreement shall not be amended with respect to:
(i)    any Partner, including the Special Limited Partner, adversely affected without the Consent of such Partner adversely affected if such amendment would:
(A)    convert a Limited Partner’s or the Special Limited Partner’s interest in the Partnership into a General Partner Interest;
(B)    modify the limited liability of a Limited Partner or the Special Limited Partner in a manner adverse to such Limited Partner or the Special Limited Partner; or
(C)    amend this Section 14.1(b)(i);

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(ii)    any Limited Partner adversely affected without the Consent of Limited Partners holding more than fifty percent (50%) of the outstanding Percentage Interests of the Limited Partners adversely affected if such amendment would:
(A)    alter or change Exchange Rights;
(B)    create an obligation to make Capital Contributions not contemplated in this Agreement;
(C)    alter or change the terms of this Agreement or the Exchange Rights Agreement regarding the rights of the limited partners with respect to Business Combinations;
(D)    alter or change the distribution and liquidation rights provided in Section 5 and 13 hereto, except as otherwise permitted under this Agreement; or
(E)    amend this Section 14.1(b)(ii).
Section 14.1(b)(i) does not require unanimous consent of all Partners adversely affected unless the amendment is to be effective against all Partners adversely affected.
(c)    Notwithstanding Section 14.1(a) hereof, no provision of this Agreement shall be amended or modified without the Special Limited Partner’s prior written consent if such amendment or modification (i) relates to the distributions, allocations or other rights and privileges of the Special Limited Partner or (ii) would amend this Section 14.1(c).
14.2    Meetings of the Partners
(a)    (i)    Meetings of the Partners may be called by the General Partner and shall be called upon the receipt by the General Partner of a written request by Limited Partners holding 25 percent or more of the Partnership Interests.
(ii)    The request shall state the nature of the business to be transacted.
(iii)    Notice of any such meeting shall be given to all Partners not less than seven (7) days nor more than thirty (30) days prior to the date of such meeting.
(iv)    Partners may vote in person or by proxy at such meeting.
(v)    Whenever the vote or Consent of the Limited 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(a).
(vi)    Except as otherwise expressly provided in this Agreement, the Consent of holders of a majority of the Percentage Interests held by Partners (including the General Partner) shall control.

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(b)    (i)    Subject to Section 14.2(a)(vi), 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 Percentage Interests of the Partners (or such other percentage as is expressly required by this Agreement).
(ii)    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 Percentage Interests of the Partners (or such other percentage as is expressly required by this Agreement).
(iii)    Such Consent shall be filed with the General Partner.
(iv)    An action so taken shall be deemed to have been taken at a meeting held on the effective date of the Consent as certified by the General Partner.
(c)    (i)    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.
(ii)    Every proxy must be signed by the Partner or an attorney-in-fact and a copy thereof delivered to the Partnership.
(iii)    No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy.
(iv)    Every proxy shall be revocable at the pleasure of the Partner executing it, such revocation to be effective upon the General Partner’s receipt of written notice of such revocation from the Partner executing such proxy.
(d)    (i)    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.
(ii)    Meetings of Partners may be conducted in the same manner as meetings of the Stockholders of the General Partner and may be held at the same time, and as part of, meetings of the Stockholders of the General Partner.
Article 15.     
GENERAL PROVISIONS
15.1    Addresses and Notice
Any notice, demand, request or report required or permitted to be given or made to a Partner, the Special Limited Partner, Indemnitee or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or five days after being sent by first class United States mail or by overnight delivery or via facsimile to the Partner or Assignee at the address set forth in Exhibit A or such other address of which the Partner shall notify the General Partner in writing.  Notwithstanding the foregoing, the General Partner may 

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elect to deliver any such notice, demand, request or report by E-mail or by any other electronic means, in which case such communication shall be deemed given or made one day after being sent.
15.2    Titles and Captions
All article or section titles or captions in this Agreement are for convenience of reference only, shall not be deemed part of this Agreement and shall 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.
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.
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.
15.5    Binding Effect
This 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.
15.6    Creditors
Other than as expressly set forth herein with respect to the Indemnitees, none of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.
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.
15.8    Counterparts
This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or 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 

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or the same counterpart.  Each party shall become bound by this Agreement immediately upon affixing its signature hereto.
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 laws thereof.
15.10    Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
15.11    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.
15.12    Merger
Notwithstanding any provision of this Agreement, the General Partner, without the consent of the Limited Partners or any other Person, may (i) merge or consolidate the Partnership with or into any other domestic or foreign partnership, limited partnership, limited liability company, corporation or other Person or (ii) sell all or substantially all the assets of the Partnership and may amend this Agreement in any manner or adopt a new limited partnership agreement for the Partnership in connection with any such transaction consistent with the provisions of this Section 15.12.
15.13    No Rights as Stockholders
Nothing contained in this Agreement shall be construed as conferring upon the holders of the Partnership Units any rights whatsoever as Stockholders of the General Partner, including any right to receive dividends or other distributions made to Stockholders or to vote or to consent or receive notice as Stockholders in respect to any meeting of Stockholders for the election of directors of the General Partner or any other matter.
Article 16.     
CLASS B UNITS
		
	16.1
	Designation and Number

(a)    A series of Partnership Units in the Partnership, designated as the “Class B Units,” is hereby established.  Except as set forth in this Article 16, Class B Units shall have the same rights, privileges and preferences as the OP Units.  Subject to the provisions of this Article 

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16 and the special provisions of subparagraph 1(c)(ii) of Exhibit B, Class B Units shall be treated as Partnership Units, with all of the rights, privileges and obligations attendant thereto. In connection with services provided by the Advisor under the Advisory Agreement, the General Partner shall cause the Partnership to issue to the Advisor or any of its assignees within thirty (30) days after the end of each Quarter a number of Class B Units equal to the quotient of:
(i)    Prior to the NAV Pricing Start Date, (i) the excess of (A) the product of (y) the Cost of Assets multiplied by (z) 0.1875% over (B) any amounts payable as an Oversight Fee (as defined in the Management Agreement) for such Quarter divided by (ii) the Value of one share of Common Stock as of the last day of such Quarter; provided, that if the amounts payable as an Oversight Fee for such Quarter exceed the amount determined under clause (A) for such Quarter (an “Excess Oversight Fee”), no Class B Units shall be issued for such Quarter and the Excess Oversight Fee shall be carried forward to the next succeeding Quarter and included with and treated as amounts payable as an Oversight Fee for such Quarter for purposes of determining the amount of Class B Units issuable for such Quarter; provided further, that the sum of (I) the amounts determined under clause (i) for a calendar year plus (II) the amounts payable as an Oversight Fee for such calendar year, shall not be less than 0.75% of the Cost of Assets for such calendar year; provided further, that each quarterly issuance of Class B Units shall be subject to the approval of the General Partner’s board of directors.    
(ii)    After the NAV Pricing Start Date. (i) the excess of (A) the product of (y) the lower of the Cost of Assets and the fair value of the Partnership’s assets multiplied by (z) 0.1875% over (B) any amounts payable as an Oversight Fee (as defined in the Management Agreement) for such Quarter divided by (ii) the NAV per share of Common Stock as of the last day of such Quarter; provided, that if there is an Excess Oversight Fee, no Class B Units shall be issued for such Quarter and the Excess Oversight Fee shall be carried forward to the next succeeding Quarter and included with and treated as amounts payable as an Oversight Fee for such Quarter for purposes of determining the amount of Class B Units issuable for such Quarter; provided further, that the sum of (I) the amounts determined under clause (i) for a calendar year plus (II) the amounts payable as an Oversight Fee for such calendar year, shall not be less than 0.75% of the lower of the Cost of Assets and the fair value of the Partnership’s assets for such calendar year; provided further, that each quarterly issuance of Class B Units shall be subject to the approval of the General Partner’s board of directors.
(b)    The Partnership shall maintain at all times a one-to-one correspondence between Class B Units and OP Units for conversion and other purposes.  If an Adjustment Event (as defined below) occurs, then the General Partner shall make a corresponding adjustment to the Class B Units to maintain a one-for-one conversion and economic equivalence ratio between OP Units and Class B Units. The following shall be “Adjustment Events:” (A) the Partnership makes a distribution on all outstanding OP Units in Partnership Units, (B) the Partnership subdivides the outstanding OP Units into a greater number of units or combines the outstanding OP Units into a smaller number of units, or (C) the Partnership issues any Partnership Units in exchange for its outstanding OP Units by way of a reclassification or recapitalization of its OP Units. If more than 

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one Adjustment Event occurs, the adjustment to the Class B Units need be made only once using a single formula that takes into account each and every Adjustment Event as if all Adjustment Events occurred simultaneously. For the avoidance of doubt, the following events shall not be Adjustment Events: (x) the issuance of Partnership Units in a financing, reorganization, acquisition or other similar business transaction, (y) the issuance of Partnership Units pursuant to any employee benefit or compensation plan or distribution reinvestment plan, or (z) the issuance of any Partnership Units in respect of a capital contribution to the Partnership, including a contribution by the General Partner of proceeds from the sale of securities by the General Partner. If the Partnership takes an action affecting the OP Units other than actions specifically described above as Adjustment Events and, in the opinion of the General Partner such action would require an adjustment to the Class B Units to maintain the one-to-one correspondence described above, the General Partner shall have the right to make such adjustment to the Class B Units, to the extent permitted by law, in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances. If an adjustment is made to the Class B Units as herein provided, the Partnership shall promptly file in the books and records of the Partnership an officer’s certificate setting forth such adjustment and a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment absent manifest error. Promptly after the filing of such certificate, the Partnership shall mail a notice to each holder of Class B Units setting forth the adjustment to his, her or its Class B Units and the effective date of such adjustment.
		
	16.2
	Special Provisions. Class B Units shall be subject to the following special provisions: 

(a)    Restrictions and Forfeiture. 
(i)    All Class B Units when issued shall be subject to forfeiture and shall constitute “Restricted Class B Units” and shall remain subject to forfeiture as provided in this Section 16.2(a) until the requirements of this Section 16.2(a) have been satisfied.
(ii)    One hundred percent (100%) of the outstanding Restricted Class B Units shall no longer be subject to forfeiture and shall constitute “Unrestricted Class B Units” at such time as a Liquidity Event occurs; provided, that the Advisor pursuant to the Advisory Agreement is providing services to the Partnership immediately prior to the occurrence of an event of the type described therein, unless the failure to provide such services is attributable to a Termination Without Cause.
(iii)    If the Advisory Agreement is terminated for any reason other than pursuant to a Termination Without Cause, any outstanding Restricted Class B Units shall be forfeited immediately.  Upon such forfeiture, such Restricted Class B Units shall immediately, and without any further action, be treated as cancelled and no longer outstanding for any purpose. No consideration or other payment shall be due with respect to any Class B Units that have been forfeited. In connection with any forfeiture of Class B Units, the balance of the Capital Account of a holder of Class B Units, if any, shall be reduced by the amount of the Capital Account attributable to the forfeited Class B Units, and such reduction shall be reallocated to all holders of OP Units, pro rata in accordance with their respective Percentage Interests with respect to OP Units.

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(iv)    The General Partner may in its sole discretion provide for the acceleration, waiver or change of the forfeiture provisions contained in this Section 16.2(a), in whole or in part, based on such factors or criteria as the General Partner may determine.
(b)    Distributions.  The holders of Class B Units shall be entitled to (i) current distributions of Cash Available for Distribution pursuant to Section 5.1(a); (ii) distributions, if any, of Net Sales Proceeds pursuant to Section 5.1(b)(iii); and (iii) distributions in liquidation of the Partnership pursuant to Section 13.2.
(c)    Allocations. Holders of Class B Units shall be entitled to certain special allocations of gain under subparagraph 1(c)(ii) of Exhibit B. 
(d)    Exchange Right. The right to exchange all or a portion of Partnership Units for cash or, at the option of the Partnership, for shares of Common Stock provided to Limited Partners under Section 8.6 hereof shall not apply with respect to Class B Units unless and until the Class B Units are converted to OP Units as provided in clause (e) below and Section 16.4 hereof. 
(e)    Conversion to OP Units. Unrestricted Class B Units are eligible to be converted into OP Units in accordance with Section 16.4 hereof.
		
	16.3
	Voting

(a)    Holders of Class B Units shall (a) have the same voting rights as the Limited Partners, with the Class B Units voting as a single class with the OP Units and having one vote per Class B Unit; and (b) have the additional voting rights that are expressly set forth below. So long as any Class B Units remain outstanding, the Partnership shall not, without the affirmative vote of the holders of at least a majority of the Class B Units outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class), amend, alter or repeal, whether by merger, consolidation or otherwise, the provisions of this Agreement applicable to Class B Units so as to materially and adversely affect any right, privilege or voting power of the Class B Units or the holders of Class B Units as such, unless such amendment, alteration, or repeal affects equally, ratably and proportionately the rights, privileges and voting powers of the Limited Partners; but subject, in any event, to the following provisions: 
(i)    With respect to any OP Unit Transaction, so long as the Class B Units are treated in accordance with Section 16.4(c) hereof, the consummation of such OP Unit Transaction shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers of the Class B Units or the holders of Class B Units as such; and 
(ii)    Any creation or issuance of any Partnership Units or of any class or series of Partnership Interest including additional OP Units or Class B Units whether ranking senior to, junior to, or on a parity with the Class B Units with respect to distributions and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed 

80

to materially and adversely affect such rights, preferences, privileges or voting powers of the Class B Units or the holders of Class B Units as such. 
(b)    The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required, all outstanding Class B Units shall have been converted into OP Units.
		
	16.4
	Conversion of Class B Units

(a)    Conversion.  Restricted Class B Units shall not be convertible into OP Units until they become Unrestricted Class B Units.  At such time as the Economic Capital Account Balance attributable to an Unrestricted Class B Unit is equal to the OP Unit Economic Balance, each such balance determined on a per unit basis as of the effective date of conversion (the “Conversion Date”), such Unrestricted Class B Unit shall automatically convert into one fully paid and non-assessable OP Unit, giving effect to all adjustments (if any) made pursuant to Section 16.1 hereof; provided, that an Unrestricted Class B Unit shall not be convertible into OP Units if the Economic Capital Account Balance attributable to such Unrestricted Class B Unit is negative.  Each holder of Class B Units covenants and agrees with the Partnership that all Unrestricted Class B Units to be converted pursuant to this Section 16.4 shall be free and clear of all liens. The conversion of Unrestricted Class B Units shall occur automatically after the close of business on the applicable Conversion Date without any action on the part of such holder of Unrestricted Class B Units, as of which time such holder of Unrestricted Class B Units shall be credited on the books and records of the Partnership with the issuance as of the opening of business on the next day of the number of OP Units issuable upon such conversion.  For purposes of determining the Economic Capital Account Balance attributable to an Unrestricted Class B Unit, allocations pursuant to subparagraph 1(c)(ii) of Exhibit B shall be made in such a manner so as to allow the greatest number of Class B Units to convert pursuant to this Section 16.4 at any time.
(b)    Adjustment to Gross Asset Value.  
(i)    The General Partner shall provide the holders of Class B Units the opportunity but not the obligation to make Capital Contributions to the Partnership in exchange for OP Units in order to cause an adjustment to the Gross Asset Value of the Partnership’s assets within the meaning of paragraph (b)(i) of the definition of Gross Asset Value up to two (2) times each fiscal year including:
(A)    if the Partnership or the General Partner shall be a party to any OP Unit Transaction; provided, that the General Partner shall give each holder of Class B Units written notice of such OP Unit Transaction at least thirty (30) days prior to entering into any definitive agreement pursuant to which the OP Unit Transaction would be consummated;
(B)    upon a Listing; provided, that the General Partner shall give each holder of Class B Units written notice of such Listing at least thirty (30) days prior to such Listing; or

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(C)    upon a Termination Without Cause; provided, that the General Partner shall give each holder of Class B Units written notice of such Termination Without Cause at least thirty (30) days prior to such Termination Without Cause.
(ii)    For purposes of clause (i) of this Section 16.4(b), the value of each OP Unit issued in order to cause an adjustment to the Gross Asset Value of the Partnership’s assets shall be an amount equal to the product of (y) the Value of a share of Common Stock as of the date the holder of Class B Units makes a Capital Contribution to the Partnership multiplied by (z) the Exchange Factor.
(iii)    For the avoidance of doubt, the issuance of Class B Units shall be treated as an event allowing for an adjustment to the Gross Asset Value of the Partnership’s assets within the meaning of paragraph (b)(iv) of the definition of Gross Asset Value.
(c)    Impact of Conversion for Purposes of Subparagraph 1(c)(ii) of Exhibit B. For purposes of making future allocations under subparagraph 1(c)(ii) of Exhibit B, the portion of the Economic Capital Account Balance of the applicable holder of Unrestricted Class B Units that is treated as attributable to his, her or its Class B Units shall be reduced, as of the date of conversion, by the product of the number of Unrestricted Class B Units converted and the OP Unit Economic Balance.
(d)    OP Unit Transactions. Immediately prior to or concurrent with an OP Unit Transaction the maximum number of Class B Units then eligible for conversion (in accordance with the provisions of Section 16.4(a)) shall automatically be converted into an equal number of OP Units, giving effect to all adjustments (if any) made pursuant to Section 16.1 hereof, taking into account any allocations that occur in connection with the OP Unit Transaction or that would occur in connection with the OP Unit Transaction if the assets of the Partnership were sold at the OP Unit Transaction price or, if applicable, at a value determined by the General Partner in good faith using the value attributed to the Partnership Units in the context of the OP Unit Transaction (in which case the Conversion Date shall be the effective date of the OP Unit Transaction). In anticipation of such OP Unit Transaction, the Partnership shall use commercially reasonable efforts to cause each holder of Class B Units to be afforded the right to receive in connection with such OP Unit Transaction in consideration for the OP Units into which his, her or its Class B Units will be converted the same kind and amount of cash, securities and other property (or any combination thereof) receivable upon the consummation of such OP Unit Transaction by a holder of the same number of OP Units, assuming such holder of OP Units is not a Person with which the Partnership consolidated or into which the Partnership merged or which merged into the Partnership or to which such sale or transfer was made, as the case may be (a “Constituent Person”), or an affiliate of a Constituent Person. In the event that holders of OP Units have the opportunity to elect the form or type of consideration to be received upon consummation of the OP Unit Transaction, prior to such OP Unit Transaction the General Partner shall give prompt written notice to each holder of Class B Units of such election, and shall use commercially reasonable efforts to afford the holders of Class B Units the right to elect, by written notice to the General Partner, the form or type of consideration to be received upon conversion of each Class B Unit held by such holder into OP Units in connection with such OP Unit Transaction. If a 

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holder of Class B Units fails to make such an election, such holder (and any of its transferees) shall receive upon conversion of each Class B Unit held by him, her or it (or by any of his, her or its transferees) the same kind and amount of consideration that a holder of an OP Unit would receive if such OP Unit holder failed to make such an election. The Partnership shall use commercially reasonable effort to cause the terms of any OP Unit Transaction to be consistent with the provisions of this Section 16.4(d) and to enter into an agreement with the successor or purchasing entity, as the case may be, for the benefit of any holders of Class B Units whose Class B Units will not be converted into OP Units in connection with the OP Unit Transaction that will (i) contain provisions enabling the holders of Class B Units that remain outstanding after such OP Unit Transaction to convert their Class B Units into securities as comparable as reasonably possible under the circumstances to the OP Units and (ii) preserve as far as reasonably possible under the circumstances the distribution, special allocation, conversion, and other rights set forth in this Agreement for the benefit of the holders of Class B Units.
		
	16.5
	Profits Interests

(a)    Class B Units are intended to qualify as a “profits interest” in the Partnership issued to a new or existing Partner in a partner capacity for services performed or to be performed to or for the benefit of the Partnership within the meaning of Rev. Proc. 93-27, 1993-2 C.B. 343, and Rev. Proc. 2001-43, 2001-2 C.B. 191, the Code, the Regulations, and other future guidance provided by the IRS with respect thereto, and the allocations under subparagraph 1(c)(ii) of Exhibit B shall be interpreted in a manner that is consistent therewith. 
(b)    The Partners agree that the General Partner may make a Safe Harbor Election (if and when the Safe Harbor Election becomes available), on behalf of itself and of all Partners, to have the Safe Harbor apply irrevocably with respect to Class B Units transferred in connection with the performance of services by a Partner in a partner capacity. The Safe Harbor Election (if and when the Safe Harbor Election becomes available) shall be effective as of the date of issuance of such Class B Units. If such election is made, (i) the Partnership and each Partner agree to comply with all requirements of the Safe Harbor with respect to all interests in the Partnership transferred in connection with the performance of services by a Partner in a partner capacity, whether such Partner was admitted as a Partner or as the transferee of a previous Partner, and (ii) the General Partner shall cause the Partnership to comply with all record-keeping requirements and other administrative requirements with respect to the Safe Harbor as shall be required by proposed or final regulations relating thereto. 
(c)    The Partners agree that (A) if a Safe Harbor Election is made by the General Partner, each Class B Unit issued hereunder with respect to which the Safe Harbor Election is available is a Safe Harbor Interest, (B) each Class B Unit represents a profits interest received for services rendered or to be rendered to or for the benefit of the Partnership by such holder of Class B Units in his, her or its capacity as a Partner or in anticipation of becoming a Partner, and (C) the fair market value of each Class B Unit issued by the Partnership upon receipt by such holder of Class B Units as of the date of issuance is zero (plus the amount, if any, of any Capital Contributions made to the Partnership by such holder of Class B Units in connection with the 

83

issuance of such Class B Unit), representing the liquidation value of such interest upon receipt (with such valuation being consented to and hereby approved by all Partners). 
(d)    Each Partner, by signing this Agreement or by accepting such transfer, hereby agrees (A) to comply with all requirements of any Safe Harbor Election made by the General Partner with respect to each holder of Class B Units’ Safe Harbor Interest, (B) that each holder of Class B Units shall take into account all items of income, gain, loss, deduction and credit associated with its Class B Units as if they were fully vested in computing its federal income tax liability for the entire period during which it holds the Class B Units, (C) that neither the Partnership nor any Partner shall claim a deduction (as wages, compensation or otherwise) for the fair market value of such Class B Units issued to a holder of such Class B Units, either at the time of grant of the Class B Units or at the time the Class B Units becomes substantially vested, and (D) that to the extent that such profits interest is forfeited after the date hereof, the Partnership shall make special forfeiture allocations of gross items of income, deduction or loss (including, as may be permitted by or under Regulations (or other rules promulgated) to be adopted, notional items of income, deduction or loss) in accordance with the Regulations to be adopted under Sections 704(b) and 83 of the Code. 
(e)    The General Partner shall file or cause the Partnership to file all returns, reports and other documentation as may be required, as reasonably determined by the General Partner, to perfect and maintain any Safe Harbor Election made by the General Partner with respect to granting of each holder of Class B Units’ Safe Harbor Interest.
(f)    The General Partner is hereby authorized and empowered, without further vote or action of the Partners, to amend this Agreement to the extent necessary or helpful in accordance with the advice of Partnership tax counsel or accountants to sustain the Partnership’s position that (A) it has complied with the Safe Harbor requirements in order to provide for a Safe Harbor Election and it has ability to maintain the same, or (B) the issuance of the Class B Units is not a taxable event with respect to the holders of Class B Units, and the General Partner shall have the authority to execute any such amendment by and on behalf of each Partner pursuant to the power of attorney granted by this Agreement. Any undertaking by any Partner necessary or desirable to (A) enable or preserve a Safe Harbor Election or (B) otherwise to prevent the issuance of Class B Units from being a taxable event with respect to the holders of Class B Units may be reflected in such amendments and, to the extent so reflected, shall be binding on each Partner.
(g)    Each Partner agrees to cooperate with the General Partner to perfect and maintain any Safe Harbor Election, and to timely execute and deliver any documentation with respect thereto reasonably requested by the General Partner, at the expense of the Partnership. 
(h)    No Transfer of any interest in the Partnership by a Partner shall be effective unless prior to such Transfer, the assignee or intended recipient of such interest shall have agreed in writing to be bound by the provisions of Section 10.2(d) and this Section 16.5, in a form reasonably satisfactory to the General Partner.
(i)    The provisions of this Section 16.5 shall apply regardless of whether or not a holder of Class B Units files an election pursuant to Section 83(b) of the Code.

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(j)    The General Partner may amend this Section 16.5 as it deems necessary or appropriate to maximize the tax benefit of the issuance of Class B Units to any holder of Class B Units if there are changes in the law or Regulations concerning the issuance of partnership interests for services.
[SIGNATURE PAGE FOLLOWS]

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Signature Page to Agreement of Limited Partnership of American Realty Capital Healthcare Trust III Operating Partnership, L.P., among the undersigned and the other parties thereto.
GENERAL PARTNER:
AMERICAN REALTY CAPITAL HEALTHCARE TRUST III, INC.
         
		
	By:
	/s/ Thomas D’Arcy    

Thomas D’Arcy 
Chief Executive Officer
INITIAL LIMITED PARTNER:
AMERICAN REALTY CAPITAL HEALTHCARE III ADVISORS, LLC
By: American Realty Capital Healthcare III Special Limited Partnership, LLC, its Member 
		
	By:
	American Realty Capital VII, LLC, its Managing Member

By:  /s/ William M. Kahane    
William M. Kahane
Manager
SPECIAL LIMITED PARTNER:
AMERICAN REALTY CAPITAL HEALTHCARE III SPECIAL LIMITED PARTNERSHIP, LLC
		
	By:
	American Realty Capital VII, LLC, its Managing Member

By:  /s/ William M. Kahane    
William M. Kahane
Manager

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Exhibit A     
 
Partners’ Contributions and Partnership Interests

1

Exhibit B     
 
Allocations
For purposes of this Exhibit B, the term “Partner” shall include the Special Limited Partner.
1.Allocations.
(a)    Allocations of Net Income and Net Loss.  Except as otherwise provided in this Agreement, after giving effect to the special allocations in subparagraph 1(c) and paragraph 2, Net Income, Net Loss and, to the extent necessary, individual items of income, gain, loss or deduction, of the Partnership for each fiscal year or other applicable period of the Partnership shall be allocated among the General Partner and Limited Partners in accordance with their respective Percentage Interests.
(b)    Allocations of Net Property Gain and Net Property Loss.  Except as otherwise provided in this Agreement, after giving effect to the special allocations in subparagraphs 1(c) and paragraph 2, Net Property Gain, Net Property Loss and, to the extent necessary, individual items of income, gain, credit, loss and deduction comprising Net Property Gain and Net Property Loss of the Partnership for each fiscal year or other applicable period shall be allocated among the Partners in a manner determined in the reasonable discretion of the General Partner that will, as nearly as possible cause the Capital Account balance of each Partner at the end of such fiscal year, quarter or other applicable period to equal (i) the amount of the distributions that would be made to such Partner pursuant to Section 5.1(b) of the Agreement if the Partnership were dissolved, its affairs wound up and its assets were sold for cash equal to their Gross Asset Value, taking into account any adjustments thereto for such period, all Partnership liabilities were satisfied in full in cash according to their terms (limited with respect to each nonrecourse liability to the Gross Asset Value of the assets securing such liability), and Net Sales Proceeds (after satisfaction of such liabilities) were distributed in full in accordance with Section 5.1(b) to the Partners immediately after making such allocations, minus (ii) the sum of such Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain and the amount, if any and without duplication, that the Partner would be obligated to contribute to the capital of the Partnership, all computed immediately prior to the hypothetical sale of assets.
(c)    Special Allocations. 
(i)    General Partner Gross Income Allocation. After giving effect to the special allocations in paragraph 2 but prior to any allocations under subparagraphs 1(a) or 1(b), there shall be specially allocated to the General Partner an amount of (i) first, items of Partnership income and (ii) second, items of Partnership gain during each fiscal year, quarter or other applicable period in an amount equal to the excess, if any, of (A) the cumulative distributions made to the General Partner under Section 7.3(b) of the Agreement, other than distributions which would properly be treated as “guaranteed payments” or which are attributable to the reimbursement of expenses which would properly be either deductible by the Partnership or added to the tax basis of any 

1

Partnership asset, over (B) the cumulative allocations of Partnership income and gain to the General Partner under this subparagraph 1(c)(i).
(ii)    Special Allocations Regarding Class B Units. After giving effect to the special allocations in subparagraph 1(c)(i) and paragraph 2 but prior to any allocations under subparagraphs 1(a) or 1(b), Net Property Gain and, to the extent necessary, individual items of income and gain comprising Net Property Gain of the Partnership shall be allocated to the Partners holding Class B Units until their Class B Economic Capital Account Balances are equal to (A) the OP Unit Economic Balance, multiplied by (B) the number of their Class B Units; provided, that no such Net Property Gain or individual items of income and gain comprising Net Property Gain will be allocated with respect to any particular Class B Unit unless and to the extent that the OP Unit Economic Balance exceeds the OP Unit Economic Balance in existence at the time such Class B Unit was issued. Any allocations made pursuant to the first sentence of this subparagraph 1(c)(ii) shall be made among the holders of Class B Units in proportion to the amounts required to be allocated to each under this subparagraph 1(c)(ii). The parties agree that the intent of this subparagraph 1(c)(ii) is to make the Capital Account balance associated with each Class B Unit to be economically equivalent to the Capital Account balance associated with the OP Units outstanding (on a per-Unit basis), but only if and to the extent that the Capital Account balance associated with the OP Units outstanding, without regard to the allocations under this subparagraph 1(c)(ii), has increased on a per-Unit basis since the issuance of the relevant Class B Unit. To the extent Net Property Loss is allocated to Partners Holding Class B Units pursuant to subparagraph 1(b), such Net Property Loss shall be allocated amount the Partners holding Class B Units in a manner that reverses the allocation of Net Property Gain to such Partner pursuant to this subparagraph 1(c)(ii).
(iii)    Special Allocations Regarding the Special Limited Partner Interest.  After giving effect to the special allocations in subparagraphs 1(c)(i) and 1(c)(ii) and paragraph 2 but prior to any allocations under subparagraph 1(a) and 1(b), Net Property Gain and, to the extent necessary, individual items of income and gain comprising Net Property Gain of the Partnership shall be allocated to the Special Limited Partner until the Special Limited Partner has received aggregate allocations of income for all fiscal years equal to the aggregate amount of distributions the Special Limited Partner is entitled to receive or has received with respect to the Special Limited Partner Interest for such fiscal year and all prior fiscal years.  Notwithstanding the foregoing, if the Special Limited Partner is entitled to receive distributions of Net Sales Proceeds pursuant to the Partnership’s obligation under a Listing Note, Termination Amount or Investment Liquidity Promote, Liquidating Gain shall be allocated to the Special Limited Partner until the Special Limited Partner has received aggregate allocations equal to the aggregate amount of distributions the Special Limited Partner is entitled to receive pursuant to such Listing Note, Termination Amount or Investment Liquidity Promote.
2.    Regulatory Allocations. Notwithstanding any provisions of paragraph 1 of this Exhibit B, the following special allocations shall be made.

2

(a)    Minimum Gain Chargeback (Nonrecourse Liabilities). Except as otherwise provided in Section 1.704-2(f) of the Regulations, if there is a net decrease in Partnership Minimum Gain for any Partnership fiscal year, each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner’s share of the net decrease in Partnership Minimum Gain to the extent required by Section 1.704-2(f) of the Regulations. The items to be so allocated shall be determined in accordance with Sections 1.704-2(f) and (i) of the Regulations. This subparagraph 2(a) is intended to comply with the minimum gain chargeback requirement in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this subparagraph 2(a) shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto.
(b)    Partner Minimum Gain Chargeback. Except as otherwise provided in Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain during any fiscal year, each Partner who has a share of the Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to that Partner’s share of the net decrease in the Partner Nonrecourse Debt Minimum Gain to the extent and in the manner required by Section 1.704-2(i) of the Regulations. The items to be so allocated shall be determined in accordance with Sections 1.704-2(i)(4) and (j)(2) of the Regulations. This subparagraph 2(b) is intended to comply with the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt contained in said section of the Regulations and shall be interpreted consistently therewith. Allocations pursuant to this subparagraph 2(b) shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant hereto.
(c)    Qualified Income Offset. If a Partner unexpectedly receives any adjustments, allocations or distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such Partner has an Adjusted Capital Account Deficit, items of Partnership income (including gross income) and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly as possible as required by the Regulations. This subparagraph 2(c) is intended to constitute a “qualified income offset” under Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.
(d)    Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year, quarter or other applicable period shall be allocated to the Partners in accordance with their respective Percentage Interests.
(e)    Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any fiscal year, quarter or other applicable period with respect to a Partner Nonrecourse Debt shall be specially allocated to the Partner that bears the economic risk of loss for such Partner Nonrecourse Debt (as determined under Sections 1.704-2(b)(4) and 1.704-2(i)(1) of the Regulations).

3

(f)    Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis of any asset of the Partnership pursuant to Section 734(b) of the Code or Section 743(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations, to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated among the Partners in a manner consistent with the manner in which each of their respective Capital Accounts are required to be adjusted pursuant to such section of the Regulations.
(g)    Gross Income Allocation.  If any Partner has an Adjusted Capital Account Deficit at the end of any fiscal year or other applicable period which is in excess of the amount such Partner is obligated to restore pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations, such Partner shall be specially allocated items of Partnership income (including gross income) and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this subparagraph 2(g) shall be made if and only to the extent that such Partner would have an Adjusted Capital Account Deficit in excess of such amount after all other allocations provided for under this Agreement have been tentatively made as if subparagraph 2(c) and this subparagraph 2(g) were not in this Agreement.
3.    Curative Allocations. The General Partner is authorized to offset all Regulatory Allocations either with other Regulatory Allocations or with special allocations of other items of Partnership income, gain, loss, or deduction pursuant to this paragraph 3.  Therefore, notwithstanding any other provision of this Exhibit B (other than the Regulatory Allocations and Tax Allocations), the General Partner shall make such offsetting allocations of Partnership income, gain, loss or deduction in whatever manner the General Partner determines appropriate so that, after such offsetting allocations are made, each Partner’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Partner would have had if the Regulatory Allocations were not part of this Agreement.
4.    Tax Allocations.
(a)    Items of Income or Loss. Except as is otherwise provided in this Exhibit B, an allocation of Partnership Net Income, Net Loss, Net Property Gain or Net Property Loss to a Partner shall be treated as an allocation to such Partner of the same share of each item of income, gain, loss, deduction and item of tax-exempt income or Section 705(a)(2)(B) expenditure (or item treated as such expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the Regulations) (“Tax Items”) that is taken into account in computing Net Income, Net Loss, Net Property Gain or Net Property Loss.  
(b)    Section 1245/1250 Recapture. Subject to subparagraph 4(c) below, if any portion of gain from the sale of Partnership assets is treated as gain which is ordinary income by virtue of the application of Sections 1245 or 1250 of the Code or is gain described in Section 1(h)(1)(D) of the Code (“Affected Gain”), then such Affected Gain shall be allocated among the Partners in the same proportion that the depreciation and amortization deductions giving rise to the Affected Gain were allocated. This subparagraph 4(b) shall not alter the amount of Net Income or Net Property Gain (or items thereof) allocated among the Partners, but merely the 

4

character of such Net Income or Net Property Gain (or items thereof). For purposes hereof, in order to determine the proportionate allocations of depreciation and amortization deductions for each fiscal year or other applicable period, such deductions shall be deemed allocated on the same basis as Net Income, Net Loss, Net Property Gain and Net Property Loss for such respective period.
(c)    Precontribution Gain, Revaluations. With respect to any Contributed Property, the Partnership shall use any permissible method contained in the Regulations promulgated under Section 704(c) of the Code selected by the General Partner, in its sole discretion, to take into account any variation between the adjusted basis of such asset and the fair market value of such asset as of the time of the contribution (“Precontribution Gain”). Each Partner hereby agrees to report income, gain, loss and deduction on such Partner’s federal income tax return in a manner consistent with the method used by the Partnership. If any asset has a Gross Asset Value which is different from the Partnership’s adjusted basis for such asset for federal income tax purposes because the Partnership has revalued such asset pursuant to Section 1.704-1(b)(2)(iv)(f) of the Regulations, the allocations of Tax Items shall be made in accordance with the principles of Section 704(c) of the Code and the Regulations and the methods of allocation promulgated thereunder. The intent of this subparagraph 4(c) is that each Partner who contributed to the capital of the Partnership a Contributed Property will bear, through reduced allocations of depreciation, increased allocations of gain or other items, the tax detriments associated with any Precontribution Gain. This subparagraph 4(c) is to be interpreted consistently with such intent.
(d)    Excess Nonrecourse Liability Safe Harbor. Pursuant to Section 1.752-3(a)(3) of the Regulations, solely for purposes of determining each Partner’s proportionate share of the “excess nonrecourse liabilities” of the Partnership (as defined in Section 1.752-3(a)(3) of the Regulations), the Partners’ respective interests in Partnership profits shall be determined under any permissible method reasonably determined by the General Partner; provided, however, that each Partner who has contributed an asset to the Partnership shall be allocated, to the extent possible, a share of “excess nonrecourse liabilities” of the Partnership which results in such Partner being allocated nonrecourse liabilities in an amount which is at least equal to the amount of income pursuant to Section 704(c) of the Code and the Regulations promulgated thereunder (the “Liability Shortfall”). If there is an insufficient amount of nonrecourse liabilities to allocate to each Partner an amount of nonrecourse liabilities equal to the Liability Shortfall, then an amount of nonrecourse liabilities in proportion to, and to the extent of, the Liability Shortfall shall be allocated to each Partner.
(e)    References to Regulations. Any reference in this Exhibit B or the Agreement to a provision of proposed and/or temporary Regulations shall, if such provision is modified or renumbered, be deemed to refer to the successor provision as so modified or renumbered, but only to the extent such successor provision applies to the Partnership under the effective date rules applicable to such successor provision.

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(f)    Successor Partners. For purposes of this Exhibit B, a transferee of a Partnership Interest shall be deemed to have been allocated the Net Income, Net Loss, Net Property Gain, Net Property Loss and other items of Partnership income, gain, loss, deduction and credit allocable to the transferred Partnership Interest that previously have been allocated to the transferor Partner pursuant to this Agreement.

6EX 10.12 ARC HCT III 6.30.2015 10-Q SS

Exhibit 10.12

AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
ROCKWALL MEDICAL PLAZA
890 ROCKWALL PARKWAY, ROCKWALL, TEXAS 
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this “Agreement”) is made and entered into as of the Effective Date by and between AMERICAN REALTY CAPITAL VII, LLC, a Delaware limited liability company (“Buyer”), and Rockwall Medical Properties, L.P., an Ohio limited partnership (“Seller”).
In consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1.Terms and Definitions.  The terms listed below shall have the respective meaning given them as set forth adjacent to each term.
(a)    “Broker” shall mean Holliday Fenoglio Fowler, L.P., a Texas limited partnership.
(b)    “Closing” shall mean the consummation of the transaction contemplated herein, which shall occur, subject to any applicable extension periods set forth in this Agreement, on the date that is five (5) business days after the last day of the Due Diligence Period (as defined herein) unless the Buyer waives the full Due Diligence Period and elects to close earlier by providing written notice thereof to Seller.  The date of Closing is sometimes hereinafter referred to as the “Closing Date.”  Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent prior to the date of Closing.
(c)     “Due Diligence Period” shall mean the period beginning upon the Effective Date and extending until 11:59 PM EST on the date that is thirty (30) days thereafter or the date on which Seller receives written notice of Buyer’s waiver of the Due Diligence Period.  Seller shall deliver to Buyer all of the Due Diligence Materials within five (5) business days after the Effective Date, and for each day that passes thereafter until all of the Due Diligence Materials are delivered to Buyer, the Due Diligence Period and the Closing Date shall be extended by one (1) business day.  
(d)    “Earnest Money” shall mean Three Hundred Thirty Five Thousand and 00/100 Dollars ($335,000.00).  The Earnest Money shall be delivered to Escrow Agent within three (3) business days after the Effective Date.  The Earnest Money shall be deposited by Buyer in escrow with Escrow Agent, to be applied as part payment of the Purchase Price at the time of Closing, or disbursed as agreed upon in accordance with the terms of this Agreement.  Seller and Buyer each shall pay one-half of all reasonable escrow fees charged by Escrow Agent. 

(e)      “Effective Date” This Agreement shall be signed by both Seller and Buyer.  The date that is one (1) business day after the date of execution and delivery of this Agreement by both Seller and Buyer shall be the “Effective Date” of this Agreement.
(f)    “Escrow Agent” shall mean Stewart Title Guaranty Company, whose address is One Washington Mall - Suite 1400, Boston, MA 02108, Attention: Annette Comer, Telephone: 617-933-2441, Telecopy: 617-727-8372; E-Mail: acomer@stewart.com.   The parties agree that the Escrow Agent and Buyer’s title agent, if any, shall be responsible for (x) organizing the issuance of the Title Commitment (hereinafter defined) and Title Policy (hereinafter defined), (y) preparation of the closing statement, and (z) collections and disbursement of the funds.
(g)    “Guarantor” shall mean each guarantor, if any, of the Leases.
(h)    “Guaranty” shall mean each Lease guaranty executed by a Guarantor.
(i)    “Leases” shall mean those certain leases described on Exhibit A-2 attached hereto and made a part hereof and referred to in Section 6(b)(i) of this Agreement between Seller, as landlord, and the tenants described on Exhibit A-2 attached hereto, as tenant (each tenant, individually, a “Tenant”, and collectively, the “Tenants”), as amended.  Each of the Leases may be referred to herein individually as a “Lease” or the “Lease”.
(j)    “Property” shall mean (A) that certain real property located at 890 Rockwall Parkway, Rockwall, Texas 75032, being more particularly described on Exhibit A-1, attached hereto and incorporated herein (the “Real Property”) together with all buildings, facilities and other improvements located thereon (collectively, the “Improvements”); (A) all right, title and interest of Seller under the Leases and all security deposits (if any) that Seller is holding pursuant to the Leases; (A) all right, title and interest of Seller in all machinery, furniture, lighting, electrical, mechanical, plumbing and heating, ventilation and air conditioning systems and other equipment used in connection with operation of the Real Property and the Improvements, and all carpeting, draperies, appliances and other fixtures and equipment attached or appurtenant to the Real Property and Improvements, and items of personal property of Seller attached or appurtenant to, located on or used in the ownership, use, operation or maintenance of the Property or the Improvements (collectively, the “Personalty”); (A) all right, title and interest of Seller, if any, to any unpaid award for (A) any taking or condemnation of the Property or any portion thereof, or (A) any damage to the Property or the Improvements by reason of a change of grade of any street or highway; (e) all easements, licenses, rights-of-way, air and subsurface rights and appurtenances relating to any of the foregoing, including, without limitation, any reciprocal easement agreements and parking lot agreements; (f) all right, title and interest of Seller in and to any warranties and guaranties respecting the Improvements and Personalty; (g) all right, title and interest of Seller in and to all licenses, permits, authorizations and approvals issued by any governmental agency or authority which pertain to the Real Property and the Improvements, to the extent they exist and are transferable and assignable; (h) to the extent the same are assignable, all site plans, surveys, and plans which relate to the Real Property;  and (i) all right, title and interest of Seller in and to any tradenames, logos (including any federal or state trademark or tradename registrations), or other identifying name or mark now used in connection with the Real Property and/or the Improvements, but expressly excluding any such property to the extent owned by any Tenant.

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(k)    “Purchase Price” shall mean Six Million Six Hundred Thirty-nine Thousand and 00/100 Dollars ($6,639,000.00).  The Purchase Price is based upon information made available to Buyer by Seller and its representatives and is subject to change if such information is inaccurate or additional information is discovered during the Due Diligence Period.  
(l)    “Real Estate Taxes” shall mean all real estate taxes, rollback taxes, personal property taxes, water and sewer use charges, or payments in lieu of taxes, and any other charges and assessments constituting a lien on the Property.
(m)    Seller and Buyer’s Notice address 
(i)    “Seller’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:  
Rockwall Medical Properties, L.P.
18100 Jefferson Park Road
Suite 103
Middleburg Heights, Ohio 44130
Tel. No.: (216) 570-6714
Email: ted@cc-realty.com
And to:
Sonkin and Koberna, LLC
3401 Enterprise Parkway
Suite 400
Attn: Shawn Krahe, Esq. and Craig Hairston, Esq.
Tel. No.: (216) 514-8300
Email: skrahe@sonkinkoberna.com  
           chairston@sonkinkoberna.com 
(ii)    “Buyer’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:
Thomas P. D’Arcy
c/o American Realty Capital VII, LLC 
405 Park Avenue, 14th Floor
New York, NY 10022
Tel. No.: (212) 415-6500
Fax No.:  (646) 861-7805
Email: tdarcy@arlcap.com
And to:
Jesse Galloway, Esq.
c/o American Realty Capital VII, LLC 
405 Park Avenue, 14th Floor
New York, NY 10022
Tel. No.: (212) 415-6516

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Fax No.: (646) 861-7751
Email: jgalloway@arlcap.com

And Due Diligence Materials (if provided by email) to:

        duediligence@arlcap.com
        
With hard copies and/or cds to:

James A. (Jim) Mezzanotte
c/o American Realty Capital VII, LLC  
7621 Little Avenue, Suite 200
Charlotte, North Carolina 28226
Tel. No.: (704) 626-4400
Fax No.: (212) 415-6507
Email: jmezzanotte@arlcap.com
2.    Purchase and Sale of the Property.  Subject to the terms of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property for the Purchase Price.  
3.    Payment of Purchase Price.  
(a)    The Purchase Price to be paid by Buyer to Seller shall be paid by wire transfer of immediately available funds in the amount of the Purchase Price plus or minus prorations, credits and adjustments as provided in Section 4 and elsewhere in this Agreement to Escrow Agent, at the time of Closing, or as otherwise agreed to between Buyer and Seller.  
(b)    The parties agree that the value of the Personalty is de minimis, and no part of the Purchase Price is allocated to it.  

4.    Proration of Expenses and Payment of Costs and Recording Fees.  
(a)    Prorations.  The following items will be prorated as of 12:01 A.M. on the Closing Date, with all items of income and expense for the Property being borne by Buyer from and after (and including) the Closing Date:  Tenant Receivables (hereinafter defined) and other income and rents that have been collected by Seller as of Closing; fees and assessments; prepaid expenses and obligations under service contracts which are assigned, if any; accrued operating expenses; Real Estate Taxes; and any assessments by private covenant for the then-current calendar year of Closing.  
(b)    Taxes
(i)    If Real Estate Taxes for the year of Closing are not known or cannot be reasonably estimated, Real Estate Taxes will be prorated based on Real Estate Taxes for the year prior to Closing.  Any additional Real Estate Taxes in the nature of “roll back” taxes arising out of a change in the use of the Land or Improvements prior to Closing or a change in ownership prior to and including the Closing shall, to the extent such Real Estate Taxes are not fully reimbursable 

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to Buyer by the tenants of the Property, be paid by Seller when due and payable, and Seller will, to the extent such Real Estate Taxes are payable by Seller pursuant to this sentence, indemnify Buyer from and against any and all such  Real Estate Taxes arising out of the transfer of the Property, which indemnification obligation will survive the Closing.  In the event the foregoing Real Estate Taxes are the obligation of tenants of the Property, Buyer shall use all commercially reasonable efforts to collect such amounts from the tenant(s).  Notwithstanding the foregoing, in the event Buyer fails to collect such Real Estate Tax reimbursements due from a tenant, Seller, at Seller’s option may attempt to collect such amounts directly from the tenant(s) and Buyer will cooperate with Seller’s collection efforts.
(ii)    If Seller has engaged or will engage prior to the expiration of the Due Diligence Period, consultants for the purpose of protesting the amount of taxes or the assessed valuation for certain tax periods for the Property (“Protest Proceedings”), any cash refunds or proceeds actually distributed (collectively, “Cash Refunds”) will be apportioned as described below.  Any Cash Refunds (including interest thereon) on account of a favorable determination, after deduction of costs and expenses incurred for such Protest Proceedings, shall be: (A) the property of Seller to the extent such Cash Refunds were for Real Estate Taxes paid by Seller applicable to a period prior to the Closing Date; (B) prorated between Buyer and Seller for taxes paid for a period during which the Closing Date occurred; and (C) the property of Buyer for Real Estate Taxes for a period after the Closing Date.  Seller and Buyer agree to notify the other in writing of any receipt of a Cash Refund within fifteen (15) business days of receipt of such Cash Refund.  To the extent either party obtains a Cash Refund, a portion of which is owed to the other party, the receiving party shall deliver the Cash Refund to the other party within fifteen (15) Business Days of its receipt.  Buyer agrees and acknowledges that Seller has the right to initiate proceedings to protest the valuation of any of the Property prior to the expiration of the Due Diligence Period.  Seller agrees to give Buyer notice of Seller’s intent to initiate such proceedings prior to initiation of such proceedings and at any time subsequent to the end of the Due Diligence Period shall obtain Buyer’s consent to initiation of such proceedings, which consent may be unreasonably withheld.     
(c)    Utilities.  Buyer will take all steps necessary to effectuate the transfer of all utilities to its name as of the Closing Date, and where necessary, post deposits with the utility companies.  The Seller shall use its best efforts to ensure that all utility meters are read as of the Closing Date.  Seller will be entitled to recover any and all deposits held by any utility company as of the Closing Date.
(d)    Tenant Receivables.  Rents due from Tenants under the Leases (including operating expense and real estate tax contributions or reimbursements and similar charges (collectively, “Pass-Through Expenses”)), set-offs due or required to be paid under or by reason of the Leases (collectively called “Tenant Receivables”) shall be adjusted by appropriate credit to the Seller or Buyer (as the case may be) on the Closing Date.  If, at the Closing Date, any Tenant is in arrears in the payment of rents (“Uncollected Delinquent Tenant Receivables”), Seller will disclose the same to Buyer in writing or on the rent roll to be delivered to Buyer pursuant to Section 10 hereof and such amounts shall not be adjusted on the Closing Date.  Prior to the Closing Date, Seller shall use Seller’s current business practices to collect Uncollected Delinquent Tenant Receivables.  If Buyer shall collect Uncollected Delinquent Tenant Receivables within ninety (90) days after the 

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Closing Date, then Buyer shall turn over to Seller the arrearages so collected, less the reasonable cost of collection thereof, if any; provided, however, Seller may continue to seek to collect the Uncollected Delinquent Tenant Receivables by legal action following the Closing Date.  All rents collected by Buyer after the Closing Date (except for amounts specifically billed and paid as end of year reconciliation payments for Pass-Through Expenses, which shall be separately accounted for and allocated, pro rata, between Seller and Buyer as their interest may appear) shall be first applied to rents due and payable after the Closing Date and only the excess thereof shall be paid over to Seller on account of the Uncollected Delinquent Tenant Receivables.  Seller shall prepare the reconciliation for Pass-Through Expenses for the Property and provide such reconciliation to Buyer and Buyer’s property manager.  Buyer agrees to cause its property manager to cooperate with Seller in preparing such reconciliation.  To the extent that items to be apportioned hereunder may be required to be paid directly by a Tenant under its Lease, the same shall not be apportioned, provided, however, that such items shall have been paid by such Tenant currently through the month including the Closing Date.  The provisions of this subparagraph 4(d) shall survive Closing and the delivery of the Deed (hereinafter defined), and shall survive the expiration or earlier termination of this Agreement.  Seller expressly agrees that if Seller receives any amounts after the Closing Date which are attributable, in whole or in part, to any period after the Closing Date, Seller will notify Buyer of such fact and will remit to Buyer that portion of the monies so received by Seller to which Buyer is entitled within ten (10) business days after receipt thereof.  With respect to unbilled Tenant Receivables, Buyer covenants and agrees to cause its property manager to (A) bill the same in the ordinary course of its business and (B) cooperate with Seller to determine the correct amount of operating expenses and/or taxes due.
A reconciliation or determination of Pass-Through Expenses, Uncollected Delinquent Tenant Receivables and unbilled Tenant Receivables due under the Leases shall be made at Closing to the extent possible.  To the extent such information is not available at Closing, the foregoing shall be subject to adjustment following the Closing in accordance with the terms of Section 4(e), below.  The provisions of this Section 4(d) will survive the Closing.
(e)    If final bills are not available or cannot be issued prior to Closing for any item being prorated under Section 4(a) through (d), then, for each separate item for which an adjustment is to be made, the matter subject to allocation at Closing (including without limitation the Pass-Through Expenses) shall be re-prorated within one hundred twenty (120) days following the Closing.
(f)    All security deposits under the Leases collected and not properly applied by Seller as of the Closing (and interest thereon if required by law or contract) must be transferred or credited to Buyer at Closing.  As of the Closing, Buyer will assume each Seller’s obligations related to the security deposits, but only to the extent they are credited or transferred to Buyer.
(g)    Seller shall pay or be charged with the following costs and expenses in connection with this transaction:
(i)100% of all Title Policy premiums, including search costs, but excluding any endorsements issued in connection with such policies other than endorsements that Seller elects to purchase to cover title issues, if any;

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(ii)Any transfer taxes and conveyance fees on the sale and transfer of the Property;

(iii)One-half of Broker’s commission payments, in accordance with Section 24 of this Agreement; 

(iv)All fees relating to the granting, executing and recording of the Deed for the Property and for any costs incurred in connection with the release of existing debt, including, but not limited to, prepayment penalty fees and recording fees for documents providing for the release of the applicable Property from the existing debt; and

(v)Any unpaid leasing commissions or tenant improvement allowances or outstanding rent concessions related to the Leases, whether or not due and payable.

(h)    Buyer shall pay or be charged with the following costs and expenses in connection with this transaction:
(i)Title Policy premiums for any endorsements issued in connection with such policies other than a endorsements that Seller elects to purchase to cover title issues, if any;

(ii)One-half of Broker’s commission payments, in accordance with Section 24 of this Agreement;

(iii)all costs and expenses in connection with Buyer’s financing, including appraisal, points, commitment fees and the like and costs for the filing of all documents necessary to complete such financing and related documentary stamp tax and intangibles tax; and

(iv)Buyer shall pay for the cost of its own survey, Phase I environmental study and due diligence investigations.

(i)    Each party shall pay its own legal fees incidental to the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.
5.    Title.  At Closing, Seller agrees to convey to Buyer fee simple marketable title to the Property by special warranty deed, free and clear of all liens, defects of title, conditions, easements, assessments, restrictions, and encumbrances except for Permitted Exceptions (as hereinafter defined).  
6.    Examination of Property.  Seller and Buyer hereby agree as follows:
(a)    Buyer shall order a title commitment (the “Title Commitment”) from Escrow Agent, a survey and a zoning report for the Property promptly after the date hereof.  All matters shown in the Title Commitment, survey or zoning report (“Title Matters”) with respect to which Buyer fails to object prior to the expiration of the Due Diligence Period shall be deemed “Permitted Exceptions”.  However, Permitted Exceptions shall not include, and Seller shall be 

     7

obligated to remove of record prior to or at Closing, any mechanic’s lien or any monetary lien, fine or penalty, or any deeds of trust, mortgage, or other loan documents secured by the Property or any judgments and federal and state tax liens (collectively, “Liens”).  Seller shall be required to cure or remove all Liens (by payment, bond deposit or indemnity acceptable to Escrow Agent).  Seller agrees to remove or cure any objections of Buyer which are of a nature that are capable of being cured with reasonable efforts prior to Closing, including the payment of a sum of money in connection therewith.  Seller shall have no obligation to cure any Title Matter objected to, except the Liens as aforesaid, provided Seller notifies Buyer of any objections which Seller elects not to remove or cure within five (5) business days following receipt of Buyer’s objections.  In the event that Seller refuses to remove or cure any objections, Buyer shall have the right to terminate this Agreement upon written notice to Seller given within five (5) business days after receipt of Seller’s notice, upon which termination the Earnest Money, and all interest earned thereon, shall be returned to Buyer and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.  If any matter not revealed in the Title Commitment is discovered by Buyer or by the Escrow Agent and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Buyer shall have until the earlier of (i) five (5) business days after the Buyer’s receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the Closing Date, to provide Seller with written notice of its objection to any such new title exception (an “Objection”).  If Seller does not remove or cure such Objection prior to the Closing Date, Buyer may terminate this Agreement, in which case the Earnest Money, together with all interest earned thereon, shall be returned to Buyer, Seller shall reimburse Buyer for all out of pocket costs and expenses incurred hereunder and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein. 
(b)     The parties acknowledge and agree that to the extent within Seller’s possession or reasonably obtainable by Seller or Seller’s counsel, Seller has provided the following documents and materials pertaining to the Property to Buyer: (i) a complete copy of all leases and lease guaranties affecting the Property and all amendments thereto and of all material correspondence relating thereto; (ii) a copy of all surveys and site plans of the Property, including without limitation any as-built survey obtained or delivered to tenants of the Property in connection with its construction; (iii) a copy of all architectural plans and specifications and construction drawings and contracts for improvements located on the Property; (iv) a copy of Seller’s title insurance commitments and policies relating to the Property; (v) a copy of the certificate of occupancy (or local equivalent) and zoning reports for the Property; and of all governmental permits/approvals; (vi) a copy of all environmental, engineering and physical condition reports for the Property; (vii) copies of the Property’s real estate tax bills for the current and prior two (2) tax years or, if the Property has been owned by Seller for less than two (2) tax years, for the period of ownership; (viii) the operating budget and any common area maintenance (CAM) reconciliations of the Property for the current year and following year, if available; (ix) the operating statements and delinquency reports of the Property for the twenty four (24) calendar months immediately preceding the Effective Date or if a Tenant has been operating for less than twenty-four (24) months, for the period of operation; (x) all service contracts and insurance policies which affect the Property, if any; (xi) a copy of all warranties relating to the improvements constructed on the Property, including without limitation any structural slab or roof warranties; (xii) a written inventory of all items of personal property to be conveyed to Buyer, if any; (xiii) Tenant financials for each Tenant, to the extent 

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reasonably available to Seller and consistent with such Tenant’s reporting requirements; (xiv) Guarantor financials for each Guarantor, to the extent reasonably available to Seller and consistent with each such Guarantor’s reporting requirements; (xv) a complete copy of any feasibility study completed by the developer of the Property; (xvi) a copy of all primary and secondary state licenses or regulatory permits for the Property, if any; and (xvii) a copy of any documents relating to a waiver of life safety code or physical plant requirements, if any (collectively, the “Due Diligence Materials”).  Seller shall deliver any other documents relating to the Property reasonably requested by Buyer, to the extent within Seller’s or its affiliates’ or agents’ possession or reasonably obtainable by Seller, within three (3) business days following such request.  Additionally, during the term of this Agreement, Buyer, its agents and designees, shall have the right to enter the Property for the purposes of inspecting the Property, conducting soil tests, and making surveys, mechanical and structural engineering studies, inspecting construction, and conducting any other investigations and inspections as Buyer may reasonably require to assess the condition and suitability of the Property; provided, however, that such activities by or on behalf of Buyer on the Property shall not damage the Property nor materially interfere with construction on the Property or the conduct of business by Tenants under the Leases; and provided further, however, that Buyer shall indemnify and hold Seller harmless from and against any and all claims or damages to the extent resulting from the activities of Buyer on the Property, and Buyer shall repair any and all damage caused, in whole or in part, by Buyer and return the Property to substantially its condition prior to such damage, which obligation shall survive Closing or any termination of this Agreement.  Seller shall reasonably cooperate with the efforts of Buyer and the Buyer’s representatives to inspect the Property.  After the Effective Date, upon not less than seventy-two (72) hours prior written notice to Seller, and subject to the consent of the applicable tenant(s), Buyer shall be permitted to speak and meet with the Tenants in connection with Buyer’s due diligence.  Seller, at Seller’s option, may elect to have a representative present during any tenant interviews conducted by Buyer.  Upon signing this Agreement, Seller shall provide Buyer with the name of a contact person(s) for the purpose of arranging site visits.  Buyer shall give Seller reasonable written notice (which in any event shall not be less than two (2) business days) before entering the Property, and Seller may have a representative present during any and all examinations, inspections and/or studies on the Property.  Buyer shall have the unconditional right, for any reason or no reason, to terminate this Agreement by giving written notice thereof to Seller and the Escrow Agent prior to the expiration of the Due Diligence Period, in which event this Agreement shall become null and void, Buyer shall receive a refund of the Earnest Money, together with all interest earned thereon, and all rights, liabilities and obligations of the parties under this Agreement shall expire, except as otherwise expressly set forth herein. 
(c)    It shall be a condition of Closing that Seller shall have obtained estoppel certificates from each Tenant and Guarantor, certified to Buyer, its lender and their successors and assigns, in substantially the form attached hereto as Exhibit F (the “Estoppel Certificate”).  Within five (5) business days following the Effective Date, Seller shall deliver to Buyer, for Buyer’s review and approval, draft Estoppel Certificates for the Leases.  Seller shall promptly deliver to Buyer a photocopy or pdf file of the executed Estoppel Certificate when Seller receives the same.  Within two (2) business days following the Effective Date, Seller shall request a waiver of any right of first refusal, right of first offer or other purchase option, if any, that any party may have to purchase the Property (and simultaneously provide Buyer with copies of such requests).  

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(d)    Seller shall use good faith efforts to obtain a subordination, non-disturbance and attornment agreement from each Tenant in form and substance reasonably acceptable to Buyer and Buyer’s Lender, if applicable (each such agreement, an “SNDA”).
(e)    Seller shall use good faith efforts to obtain estoppel certificates with respect to reciprocal easement agreements affecting the Property, as may be reasonably requested by Buyer.
(f)    On or before the expiration of the Due Diligence Period, Buyer shall notify Seller in writing if Buyer elects not to assume at Closing any of the Contracts (defined below).  If Buyer does not notify Seller prior to the expiration of the Due Diligence Period that it elects not to assume any of the Contracts, Buyer shall be deemed to have accepted and agreed to assume all of the Contracts.  If Buyer exercises its right not to assume one or more Contracts at Closing, Seller shall give notice of termination of such disapproved Contract(s); provided, if by the terms of the disapproved Contract Seller has no right to terminate same on or prior to Closing, Buyer shall be required at Closing to assume all obligations thereunder until the effective date of the termination; provided, further, if any fee or other compensation is due under any disapproved Contract as a result of such termination, whether payable before or after the Closing Date, Seller shall remain obligated to pay the contractor or to reimburse Buyer for the payment of the termination charge.  Notwithstanding the foregoing, Seller shall, without notice from Buyer, terminate any and all property management and listing agreements prior to Closing at Seller’s sole cost and expense.
(g)    Seller shall cause its property manager to complete the Property Manager Questionnaire in the form attached hereto as Exhibit L and return the same to Buyer within ten (10) days following the Effective Date.
7.    Risk of Loss/Condemnation.  Upon an occurrence of a casualty, condemnation or taking, Seller shall notify Buyer in writing of same.  Until Closing, the risk of loss or damage to the Property, except as otherwise expressly provided herein, shall be borne by Seller.  In the event all or any portion of the Property is damaged in any casualty or condemned or taken (or notice of any condemnation or taking is issued) so that:  (a) any Tenant has a right of termination or abatement of rent under its Leases, whether or not the restoration work shall be timely completed or (b) with respect to any casualty, if the cost to repair such casualty would exceed $50,000, or (c) with respect to any condemnation, any Improvements or access to the Property or more than five percent (5%) of the Property is (or will be) condemned or taken, then, Buyer may elect to terminate this Agreement by providing written notice of such termination to Seller within ten (10) business days after Buyer’s receipt of written notice of such condemnation, taking or damage, upon which termination, the Earnest Money, together with all interest earned thereon, shall be returned to the Buyer and neither party hereto shall have any further rights, obligations or liabilities under this Agreement, except as otherwise expressly set forth herein.  With respect to any condemnation or taking (of any notice thereof), if Buyer does not elect to cancel this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the awards, if any, for the condemnation or taking, and Buyer shall be entitled to receive and keep all such awards.  With respect to a casualty, if Buyer does not elect to terminate this Agreement or does not have the right to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing, the rights of Seller to the proceeds 

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under Seller’s insurance policies covering such Property with respect to such damage or destruction (or pay to Buyer any such proceeds received prior to Closing) and pay to Buyer the amount of  any deductible with respect thereto, and Buyer shall be entitled to receive and keep any monies received from such insurance policies.
8.    Earnest Money Disbursement.  The Earnest Money shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions:
(a)    If the Closing occurs, Escrow Agent shall deliver the Earnest Money to Seller and apply the Earnest Money as part payment of the Purchase Price.  If for any reason the Closing does not occur, Escrow Agent shall deliver the Earnest Money to Seller or Buyer only upon receipt of a written demand therefor from such party, subject to the following provisions of this clause (a).  Subject to the last sentence of this clause (a), if for any reason the Closing does not occur and either party makes a written demand (the “Demand”) upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of the Demand within one (1) business day after receipt of the Demand.  If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice by Escrow Agent, Escrow Agent is hereby authorized to make the payment set forth in the Demand.  If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court.  Notwithstanding the foregoing provisions of this clause (a), if Buyer delivers a notice to Escrow Agent and Seller stating that Buyer has terminated this Agreement on or prior to the expiration of the Due Diligence Period, then Escrow Agent shall immediately return the Earnest Money, together with all interest earned thereon, to Buyer without the necessity of delivering any notice to, or receiving any notice from Seller.
(b)    The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of law respecting the scope or nature of Escrow Agent’s duties.  Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence or willful misconduct on the part of Escrow Agent.  Escrow Agent has executed this Agreement in the place indicated on the signature page hereof in order to confirm that Escrow Agent shall hold the Earnest Money in escrow and shall disburse the Earnest Money pursuant to the provisions of this Section 8.
9.    Default
(a)    In the event that Seller is ready, willing and able to close in accordance with the terms and provisions hereof, and Buyer defaults in any of its obligations undertaken in this 

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Agreement, Seller shall be entitled, as its sole and exclusive remedy, to either:  (i) if Buyer is willing to proceed to Closing, waive such default and proceed to Closing in accordance with the terms and provisions hereof; or (ii) declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Earnest Money as liquidated damages as and for Seller’s sole remedy.  Upon such termination, neither Buyer nor Seller shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly provided herein.  Seller and Buyer agree that (a) actual damages due to Buyer’s default hereunder would be difficult and inconvenient to ascertain and that such amount is not a penalty and is fair and reasonable in light of all relevant circumstances, (b) the amount specified as liquidated damages is not disproportionate to the damages that would be suffered and the costs that would be incurred by Seller as a result of having withdrawn the Property from the market, and (c) Buyer desires to limit its liability under this Agreement to the amount of the Earnest Money paid in the event Buyer fails to complete Closing, and such amount shall be paid to Seller as liquidated damages and as Seller’s sole remedy hereunder.  Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer.  In no event under this Section or otherwise shall Buyer be liable to Seller for any punitive, speculative or consequential damages.
(b)    In the event of a default in the obligations herein taken by Seller, or in the event of the failure of a condition precedent set forth in Section 13 of this Agreement, with respect to the Property, Buyer may, as its sole and exclusive remedy, either:  (i) waive any unsatisfied conditions and proceed to Closing in accordance with the terms and provisions hereof; (ii) terminate this Agreement by delivering written notice thereof to Seller no later than Closing, upon which termination the Earnest Money, together with all interest earned therein, shall be refunded to Buyer, Seller shall pay to Buyer the actual out-of-pocket costs and expenses incurred by Buyer in connection with this Agreement up to a maximum of $25,000.00, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof; (iii) enforce specific performance of Seller’s obligations hereunder; or (iv) by notice to Seller given on or before the Closing Date, extend the Closing Date for a period of up to thirty (30) days (the “Closing Extension Period”) to permit Seller to remedy any such default, and the “Closing Date” shall be moved to the last day of the Closing Extension Period.  If Buyer so extends the Closing Date, then Seller may, but shall not be obligated to, cause said conditions to be satisfied during the Closing Extension Period.  If Seller does not cause said conditions to be satisfied during the Closing Extension Period, then Buyer shall have the remedies set forth in Section 9(b) (i) through (iii) above, except that the term “Closing” shall read “Extended Closing.”
10.    Closing.  The Closing shall consist of the execution and delivery of documents by Seller and Buyer, as set forth below, and delivery by Buyer to Seller of the Purchase Price in accordance with the terms of this Agreement.  Seller shall deliver to Escrow Agent for the benefit of Buyer at Closing the following executed documents:
(a)    A Special Warranty Deed in substantially the form attached hereto as Exhibit B (the “Deed”);

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(b)    An Assignment and Assumption of Leases, Guaranties and Security Deposits, in substantially the form attached hereto as Exhibit C; 
(c)    A Bill of Sale for the Personalty, if any, in substantially the form attached hereto as Exhibit D;
(d)    An Assignment of Contracts, Permits, Licenses and Warranties in substantially the form of Exhibit E;
(e)    An original of each Estoppel Certificate from each Tenant and, as applicable, Guarantor, dated no earlier than thirty (30) days prior to the date of Closing.  Each Estoppel Certificate must (i) reflect the business terms of the Lease, (ii) not reflect any monetary defaults or non-monetary material defaults, (iii) be fully completed, dated and executed, and (iv) be certified to Buyer and its lender.  As to any Lease, if the Lease and any amendments, bearing the original signatures of the landlord and tenant thereunder have not been delivered to Buyer previously, a copy thereof confirming that the copy is true, correct and complete shall be attached to the Estoppel Certificate; 
(f)    To the extent obtained by Seller, estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer;
(g)    A settlement statement setting forth the Purchase Price, all prorations and other adjustments to be made pursuant to the terms hereof, and the funds required for Closing as contemplated hereunder;
(h)    All transfer tax statements, declarations and filings as may be necessary or appropriate for purposes of recordation of the deed; 
(i)    Good standing certificates and corporate resolutions or member or partner consents, as applicable, and such other documents as reasonably requested by Escrow Agent;
(j)    Originals of the Warranties (as hereinafter defined) re-issued at Seller’s expense to Buyer, as requested by Buyer;
(k)    A certificate pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, or the regulations issued pursuant thereto, certifying the non-foreign status of Seller in the form attached hereto as Exhibit M;
(l)    An owner’s title affidavit as to mechanics’ liens and possession and other matters in customary form reasonably acceptable to Buyer and Escrow Agent;
(m)    An original SNDA from each Tenant fully executed and notarized by such Tenant, if requested by Buyer; 
(n)    With respect to each Tenant, a Letter to Tenant in form of Exhibit H attached hereto, with such changes as Buyer might reasonably require; 

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(o)    An updated Rent Roll (defined below), arrears report and schedule of security deposits and letters of credit, certified by Seller to be true and correct;
(p)    A bring down certificate with respect to Seller’s representations and warranties provided herein in the form attached hereto as Exhibit N;
(q)    Certificates of insurance or other evidence reasonably satisfactory to Buyer memorializing and confirming that the Tenants are then maintaining policies of insurance of the types and in the amounts required by the Leases; 
(r)    All records (including originals) within Seller’s or Seller’s managing agent’s possession or reasonably obtainable by such parties reasonably required for the continued operation of the Property, including but not limited to, service contracts, plans, surveys, the Leases, Guaranties, lease files, licenses, permits, warranties, guaranties, and records of current expenditures for repairs and maintenance; and
(s)    Such other instruments as are reasonably required by Escrow Agent to close the escrow and consummate the purchase of the Property in accordance with the terms hereof.
At Closing, Buyer shall instruct Escrow Agent to deliver the Earnest Money, together with all interest earned thereon, to Seller, which shall be applied to the Purchase Price, shall deliver the balance of the Purchase Price to Seller and shall execute and deliver execution counterparts of the closing documents referenced in clauses (b), (g), (h) and (m).  Buyer shall have the right to advance the Closing upon five (5) business days’ prior written notice to Seller; provided that all conditions precedent to both Buyer’s and Seller’s respective obligations to proceed with Closing under this Agreement have been satisfied (or, if there are conditions to a party’s obligation to proceed with Closing that remain unsatisfied, such conditions have been waived by such party).  Buyer shall have a one-time right to extend the Closing for up to thirty (30) business days upon written notice to Seller to be received by Seller four (4) business days prior to the date scheduled for the Closing.  If Buyer timely exercises this right to extend, any document that Seller is obligated to provide that is “time sensitive” does not need to be provided again by Seller.  The Closing shall be held through the mail, by delivery in escrow of the closing documents to the Escrow Agent, on or prior to the Closing or such other place or manner as the parties hereto may mutually agree.  
11.    Representations by Seller.  For the purpose of inducing Buyer to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Seller makes the following representations and warranties to Buyer as of the date hereof and as of the Closing Date:
(a)    Seller is duly organized (or formed), validly existing and in good standing under the laws of its state of organization, and to the extent required by law, the State in which the Property is located.  Seller has the power and authority to execute and deliver this Agreement and all closing documents to be executed by Seller, and to perform all of Seller’s obligations hereunder and thereunder.  Neither the execution and delivery of this Agreement and all closing documents to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Seller or 

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will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller is bound.  The execution, delivery and performance of this Agreement does not require the consent or approval of any court, administrative or governmental authority and does not result in the creation or imposition of any lien or equity of any kind whatsoever upon, or give to any other person any interest or right (including any right of termination or cancellation) in or with respect to, any material agreement to which Seller is a party or the business or operations of Seller or any of its properties or assets;
(b)    Seller has not received any written notice of any current or pending litigation, condemnation proceeding or tax appeals affecting Seller or the Property and Seller does not have any knowledge of any pending litigation or tax appeals against Seller or the Property; Seller has not initiated, nor is Seller participating in, any action for a change or modification in the current subdivision, site plan, zoning or other land use permits for the Property; 
(c)    Attached hereto as Exhibit J is a true, correct and complete list of all contracts and agreements relating to the operation or maintenance of the Property (the “Contracts”).  Other than the Leases and Contracts, Seller has not entered into any agreements affecting the Property which will be binding upon Buyer after the Closing;
(d)    Except for violations which have been cured or remedied on or before the date hereof, Seller has not received any written notice from (or delivered any notice to) any governmental authority regarding any violation of any law applicable to the Property and Seller does not have knowledge of any such violations, and the Property shall be delivered free from all known violations at Closing; 
(e)    Seller has fee simple title to the Property free and clear of all liens and encumbrances except for Permitted Exceptions and encumbrances which will be released on or before the Closing Date and Seller is the sole owner of the entire lessor’s interest in each Lease.  The Property constitutes one or more separate tax parcels for purposes of ad valorem taxation;
(f)    Attached hereto as Exhibit A-2 is a true, correct and complete list of all leases and subleases affecting the Property, including all amendments to such leases and subleases.
(g)    With respect to each Lease:  (i) the Lease forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Lease; (ii) the Lease is in full force and effect and there is no known material default thereunder; (iii) no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Lease or any extension or renewal thereof; (iv) Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; (v) intentionally deleted; (vi) Tenant is not entitled to rental concessions or abatements for any period subsequent to the scheduled date of Closing; (vii) Tenant has not prepaid any rents as of the date hereof nor has Tenant delivered a security deposit, letter of credit or other security in connection with the Lease, except as set forth on Exhibit K attached hereto; (viii) Tenant has not made any request for any assignment, transfer, or subletting in connection with all or a portion of the premises demised to Tenant which is presently pending or under consideration by Seller; (ix) all specified work required to be performed by the landlord 

     15

under the Lease up to the date of Closing has been completed or will be completed, at Seller’s expense, prior to the Closing; (x) Seller has not received and has no knowledge of any pending notices from Tenant electing to vacate the premises leased to Tenant or exercising any right of Tenant to terminate the Lease; and (xi) Seller has heretofore billed Tenant for all fixed rent and additional rent due under the Lease as of the date hereof; 
(h)    Attached hereto as Exhibit A-3 and made a part hereof is a true, correct and complete copy of the rent roll for the Property (the “Rent Roll”);  
(i)    To the best of Seller’s knowledge, there are no occupancy rights, leases or tenancies affecting the Property other than the Leases.  Neither this Agreement nor the consummation of the transactions contemplated hereby is subject to any right of first refusal or other purchase right in favor of any other person or entity; and apart from this Agreement, Seller has not entered into any written agreements for the purchase or sale of the Property, or any interest therein which has not been terminated;
(j)    The transactions contemplated hereby either (i) will not constitute a sale of all or substantially all the assets of Seller, or (ii) if such transaction does constitute a sale of all or substantially all the assets of any Seller, Seller shall provide to Buyer at Closing an excise tax lien waiver or such other reasonably obtainable instruments evidencing compliance with laws or payment of taxes to the extent required by the law of the relevant state, or an indemnification from a party reasonably acceptable to Buyer for any resulting liability with respect to the period prior to the Closing;  
(k)    To Seller’s knowledge, except as set forth in the environmental reports previously delivered by Seller to Buyer, no hazardous substances have been generated, stored, released, or disposed of on or about the Property in violation of any law, rule or regulation applicable to the Property which regulates or controls matters relating to the environment or public health or safety (collectively, “Environmental Laws”) and no adverse environmental condition exists at the Property.  Seller has not received any written notice from (nor delivered any notice to) any federal, state, county, municipal or other governmental department, agency or authority (1) concerning any petroleum product or other hazardous substance discharge or seepage at, on, around or under the Property, or migrating from the Property, in violation of any Environmental Laws or; (2) of any pending actions, suits, claims and/or proceedings claiming that Seller, any Tenant or the Property is in violation of any Environmental Laws.  For purposes of this Subsection, “hazardous substances” shall mean any substance or material which is defined or deemed to be hazardous or toxic pursuant to any Environmental Laws.  To Seller’s knowledge, there are no underground storage tanks located on the Property; 
(l)    Exhibit I attached hereto is a true, correct and complete listing of all warranties in effect for the Property (the “Warranties”);
(m)    Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal Revenue Code;

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(n)    To the best of Seller’s knowledge, there presently exists no unrestored casualty or condemnation affecting the Property;
(o)    With respect to each Guaranty: (a) the Guaranty forwarded to Buyer under Section 6(b) is a true, correct and complete copy of the Guaranty; and (b) the Guaranty is in full force and effect and there is no default thereunder; and
(p)    To Seller’s actual knowledge and except for Seller’s confidential materials, Seller has provided Buyer with access to all certificates, licenses, permits, Leases, Contracts, books, records, documents and information relating to the Property and the ownership and operation thereof which are in the possession of Seller.  Seller represents and warrants that such Due Diligence Materials are true and correct copies of the same materials in Seller’s files.
The representations and warranties of Seller shall survive Closing for a period of one (1) year.
12.    Representations by Buyer.  Buyer represents and warrants to, and covenants with, Seller as follows:
(a)    Buyer is duly formed, validly existing and in good standing under the laws of Delaware, is authorized to consummate the transaction set forth herein and fulfill all of its obligations hereunder and under all closing documents to be executed by Buyer, and has all necessary power to execute and deliver this Agreement and all closing documents to be executed by Buyer, and to perform all of Buyer’s obligations hereunder and thereunder.  This Agreement and all closing documents to be executed by Buyer have been duly authorized by all requisite corporate or other required action on the part of Buyer and are the valid and legally binding obligation of Buyer, enforceable in accordance with their respective terms.  Neither the execution and delivery of this Agreement and all closing documents to be executed by Buyer, nor the performance of the obligations of Buyer hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Buyer or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Buyer is bound.
The representations and warranties of Buyer shall survive Closing for a period of one (1) year.
13.    Conditions Precedent to Buyer’s Obligations.    Buyer’s obligation to pay the Purchase Price, and to accept title to the Property, shall be subject to compliance by Seller with the following conditions precedent on and as of the date of Closing:
(a)    Seller shall deliver to Buyer on or before the Closing the items set forth in Section 10 above;
(b)    Buyer shall receive from Escrow Agent or any other title insurer approved by Buyer in its reasonable judgment and discretion, a current ALTA owner’s form of title insurance policy, or irrevocable and unconditional binder to issue the same, with extended coverage for the Real Property and the Improvements (including any beneficial easements) in the amount of the 

     17

Purchase Price, dated, or updated to, the date of the Closing, insuring, or committing to insure, at its ordinary premium rates Buyer’s good and marketable title in fee simple to the Real Property and the Improvements and otherwise in such form and with such endorsements as provided in the title commitment approved by Buyer pursuant to Section 6 hereof and subject only to the Permitted Exceptions (the “Title Policy”);
(c)    Buyer shall have received a valid and permanent final certificate of occupancy (or the equivalent thereof) for the Property which shall not contain any contingencies or require any additional work to be completed;
(d)    Each Tenant shall be in possession of the premises demised under its respective Lease, open for business to the public and paying full and unabated rent under such Lease and no Tenant shall have assigned its Lease or sublet the Property;
(e)    The representations and warranties of Seller contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Seller shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing; 
(f)    Seller shall have delivered to Buyer a written waiver from any party of any right of first refusal, right of first offer or other purchase option that such party may have, pursuant to the Leases or otherwise, to purchase the Property from Seller; and  
(g)    Seller shall have made all contributions, payments and/or reimbursements and completed any and all work required by any governmental authority in connection with the construction and development of the Property, including, without limitation, as required by any variance or site plan approval.
In the event that the foregoing conditions precedent have not been satisfied as of Closing, Buyer shall have the rights and remedies set forth in Section 9(b) of this Agreement.
14.    Conditions Precedent to Seller’s Obligations.  Seller’s obligation to deliver title to the Property shall be subject to compliance by Buyer with the following conditions precedent on and as of the date of Closing:
(a)    Buyer shall deliver to Escrow Agent on the Closing Date the remainder of the Purchase Price, subject to adjustment of such amount pursuant to Section 4 hereof; and
(b)    The representations and warranties of Buyer contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing.

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15.    Notices.  Unless otherwise provided herein, all notices and other communications which may be or are required to be given or made by any party to the other in connection herewith shall be in writing and shall be deemed to have been properly given and received on the date: (i) delivered by electronic mail (e.g. email), (ii) delivered in person, (iii) deposited in the United States mail, registered or certified, return receipt requested, or (iv) deposited with a nationally recognized overnight courier, to the addresses set out in Section 1, or at such other addresses as specified by written notice delivered in accordance herewith.  Notwithstanding the foregoing, Seller and Buyer agree that notice may be given on behalf of each party by the counsel for each party and notice by such counsel in accordance with this Section 15 shall constitute notice under this Agreement. 
16.    Seller Covenants.  Seller agrees that it:  (a) shall continue to operate and manage the Property in substantially the same manner in which Seller has previously operated and managed the Property; (b) shall, subject to Section 7 hereof and subject to reasonable wear and tear, maintain the Property in substantially the same (or better) condition as exists on the date hereof; and (c) shall not, without Buyer’s prior written consent, which, after the expiration of the Due Diligence Period may be withheld in Buyer’s sole discretion:  (i) amend the Leases in any manner or enter into any new lease, license agreement or other occupancy agreement with respect to the Property; (ii) consent to an assignment of any Lease or a sublease of the premises demised thereunder or a termination or surrender thereof; (iii) terminate any Lease or release any guarantor of or security for any Lease unless required by the express terms of such Lease; (iv) enter into any contracts  unless terminable by Seller without penalty upon not more than thirty (30) days’ prior notice; and/or (v) cause, permit or consent to an alteration of the premises demised under the Leases (unless such consent is non-discretionary).  Seller shall promptly inform Buyer in writing of any material event adversely affecting the ownership, use, occupancy or maintenance of the Property, whether insured or not.
17.    314 Audit.  Upon Buyer’s request, for a period of one (1) year after Closing, Seller shall make the financial statements, including balance sheets, income statements, stockholders’ equity statements and cash flow statements and related notes prepared in accordance with United States generally accepted accounting standards, and any and all books, records, correspondence, financial data, leases, delinquency reports and all other documents and matters (other than confidential and privileged information) maintained by Seller or their agents and relating to receipts, expenditures, contributions and distributions reasonably necessary to complete an audit pertaining to the Property for the three (3) most recent full calendar years and the interim period of the current calendar year (collectively, the “Records”) available to Buyer and/or its auditors for inspection, copying and audit by Buyer’s designated accountants, and at Buyer’s expense.  Seller shall provide Buyer and/or its auditors, but without expense to Seller, with copies of, or access to, such factual and financial information as may be reasonably requested by Buyer or its designated accountants, and in the possession or control of Seller, to enable Buyer to file any filings required by the Securities and Exchange Commission (the “SEC”) in connection with the purchase of the Property.  Seller understands and acknowledges that Buyer is required to file audited financial statements related to the Property with the SEC within seventy-one (71) days of the Closing Date and agrees to provide any Records and requested reasonable representations and/or certifications to the Buyer’s auditors, on a timely basis to facilitate Buyer’s timely submission of such audited financial statements.  

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18.    Performance on Business Days.  A "business day" is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government.  Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day.  When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded.  If the last day of such period is a non-business day, the period in question shall end on the next succeeding business day.
19.    Entire Agreement.  This Agreement constitutes the sole and entire agreement among the parties hereto and no modification of this Agreement shall be binding unless in writing and signed by all parties hereto.   No prior agreement or understanding pertaining to the subject matter hereof (including, without limitation, any letter of intent executed prior to this Agreement) shall be valid or of any force or effect from and after the date hereof.
20.    Severability.  If any provision of this Agreement, or the application thereof to any person or circumstance, shall be invalid or unenforceable, at any time or to any extent, then the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby.  Each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.
21.    No Representations or Warranties.  Buyer hereby acknowledges, understands and agrees that it has an opportunity to inspect the Property as set forth in Section 6 herein, and except as set forth in this Agreement, the Property shall be conveyed at Closing to Buyer in “as-is” condition with no representation or warranties whatsoever.
22.    Applicable Law.  This Agreement shall be construed under the laws of the State or Commonwealth in which the Property is located, without giving effect to any state's conflict of laws principles.
23.    Tax-Deferred Exchange.  Seller hereby acknowledges that Seller does not contemplate an Exchange (hereinafter defined) relating to the Property.  Buyer and Seller respectively acknowledge that the purchase of the Property contemplated hereby may be part of a separate exchange (an “Exchange”) being made by Buyer pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated with respect thereto.  In the event that Buyer (the “Exchanging Party”) desires to effectuate such an exchange, then the Seller (the “Non-Exchanging Party”) agrees to cooperate fully with the Exchanging Party in order that the Exchanging Party may effectuate such an exchange; provided, however, that with respect to such Exchange (a) all additional costs, fees and expenses related thereto shall be the sole responsibility of, and borne by, the Exchanging Party; (b) the Non-Exchanging Party shall incur no additional liability as a result of such exchange; (c) the contemplated exchange shall not delay any of the time periods or other obligations of the Exchanging Party hereby, and without limiting the foregoing, the scheduled date for Closing shall not be delayed or adversely affected by reason of the Exchange; (d) the accomplishment of the Exchange shall not be a condition precedent or condition subsequent to the Exchanging Party's obligations under the Agreement; and (e) the Non-Exchanging Party shall not be required to hold title to any land other than the Property for purposes 

     20

of the Exchange.  The Exchanging Party agrees to defend, indemnify and hold the Non-Exchanging Party harmless from any and all liability, damage or cost, including, without limitation, reasonable attorney's fees that may result from Non-Exchanging Party's cooperation with the Exchange. The Non-Exchanging Party shall not, by reason of the Exchange, (i) have its rights under this Agreement, including, without limitation, any representations, warranties and covenants made by the Exchanging Party in this Agreement (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller), or in any of the closing documents (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller) contemplated hereby, adversely affected or diminished in any manner, or (ii) be responsible for compliance with or deemed to have warranted to the Exchanging Party that the Exchange complies with Section 1031 of the Code.
24.    Broker’s Commissions.  Buyer and Seller each hereby represent that, except for the Broker listed herein, there are no other brokers involved or that have a right to proceeds in this transaction.  Buyer and Seller shall each be responsible for payment of one-half of any commissions to the Broker pursuant to one or more separate written agreement executed by Buyer, Seller and Broker.  Seller and Buyer each hereby agree to indemnify and hold the other harmless from all loss, cost, damage or expense (including reasonable attorneys' fees at both trial and appellate levels) incurred by the other as a result of any claim arising out of the acts of the indemnifying party (or others on its behalf) for a commission, finder's fee or similar compensation made by any broker, finder or any party who claims to have dealt with such party.  The representations, warranties and indemnity obligations contained in this section shall survive the Closing or the earlier termination of this Agreement.
25.    Assignment.  Buyer may assign its rights under this Agreement, provided, however, that no such assignment shall relieve Buyer of any of its obligations hereunder until Closing is complete.  Buyer is entering into this Agreement for and on behalf of a related special purpose entity titled ARHC RMRWLTX01, LLC (“Approved Assignee”) and intends to assign Approved Assignee its rights hereunder prior to Closing.  
26.    Attorneys’ Fees.  In any action between Buyer and Seller as a result of failure to perform or a default under this Agreement, the prevailing party shall be entitled to recover from the other party, and the other party shall pay to the prevailing party, the prevailing party’s reasonable attorneys’ fees and disbursements and court costs incurred in such action.
27.    Time of the Essence.  Time is of the essence with respect to each of Buyer’s and Seller’s obligations hereunder.
28.    Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party.  Signatures on this Agreement which are transmitted electronically shall be valid for all purposes, however any party shall deliver an original signature on this Agreement to the other party upon request.

     21

29.    Anti-Terrorism.  Neither Buyer or Seller, nor any of their affiliates, are in violation of any Anti-Terrorism Law (as hereinafter defined) or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. “Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including: Executive Order No. 13224; the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or may hereafter be, renewed, extended, amended or replaced; the applicable laws comprising or implementing the Bank Secrecy Act; and the applicable laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing may from time to time be amended, renewed, extended, or replaced).       
[SIGNATURES APPEAR ON THE FOLLOWING PAGES]

     22

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.  
	
		
	BUYER:
	SELLER:

	 
	 

	AMERICAN REALTY CAPITAL VII, LLC, 
a Delaware limited liability company
	ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership

	By:   AR Capital, LLC,  
   a Delaware limited liability company, 
   its sole member
	By:    CH Rockwall, LLC, an Ohio limited liability company, its general partner

	 
	 

	   By:   /s/ William M. Kahane   
      Name: William M. Kahane  
Title:   Manager
	By: CH Rockwall, LLC, 
an Ohio limited liability company 
its general partner

	 
	 

	   
	By:    /s/ Ted Barr   

	      

	Name: Ted Barr
Title:   

	Date: April 28, 2015
	Date: April 28, 2015

	 
	 

THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO ESCROW AGENT AND THE EARNEST MONEY.
ESCROW AGENT:
STEWART TITLE GUARANTY COMPANY
By:     /s/ Elizabeth Harrington        
Name:        Elizabeth Harrington        
Title:     Underwriter                
Date:      April 29, 2015                 

 

EXHIBITS
Exhibit A-1    -    Real Property
Exhibit A-2    -    List of Leases
Exhibit A-3    -    Rent Roll
Exhibit B    -    Form of Special Warranty Deed
Exhibit C    -    Form of Assignment and Assumption of Leases, Guaranties and                     Security Deposits 
Exhibit D    -    Form of Bill of Sale
Exhibit E    -    Form of Assignment of Contracts, Permits, Licenses and Warranties
Exhibit F    -    Form of Estoppel Certificate
Exhibit G    -    Intentionally Omitted
Exhibit H    -    Form of Tenant Notice Letter
Exhibit I    -    Warranties    
Exhibit J    -    Contracts
Exhibit K    -    Prepaid Rents, Security Deposits and Letters of Credit
Exhibit L    -    Property Manager Questionnaire
Exhibit M    -    Non-Foreign Person Affidavit
Exhibit N    -    Seller’s Bring Down Certificate

EXHIBIT A-1
LEGAL DESCRIPTION OF PROPERTY
	
		
	Property:
	890 Rockwall Parkway, (Rockwall Medical Plaza), Rockwall, TX

 
TRACT 1:
 
 
BEING A TRACT OF LAND OUT OF THE EDWARD TEAL SURVEY, ABSTRACT NO. 207, CITY OF ROCKWALL, ROCKWALL COUNTY, TEXAS AND BEING ALL OF LOT 19, BLOCK A OF PRESBYTERIAN HOSPITAL OF ROCKWALL ADDITION, AN ADDITION TO THE CITY OF ROCKWALL, ROCKWALL COUNTY, TEXAS AS RECORDED IN CABINET G, SLIDE 315 OF THE PLAT RECORDS OF ROCKWALL COUNTY, TEXAS AND BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS:  
 
BEGINNING AT A 5/8" IRON ROD WITH RED CAP STAMPED "RPLS 4868" FOUND AT THE WESTERLY CORNER OF SAID LOT 19 AND BEING THE NORTHERLY CORNER OF LOT 18, BLOCK A OF SAID PRESBYTERIAN HOSPITAL OF ROCKWALL ADDITION AND BEING ON THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF ROCKWALL PARKWAY (60' RIGHT-OF-WAY); 
 
THENCE NORTH 22 DEG. 09' 01" EAST, ALONG THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF SAID ROCKWALL PARKWAY AND THE NORTHWESTERLY LINE OF SAID LOT 19, A DISTANCE OF 204.03' TO A 5/8" IRON ROD WITH YELLOW CAP STAMPED "RPLS 5539" SET AT THE BEGINNING OF A CURVE TO THE RIGHT HAVING A CENTRAL ANGLE OF 05 DEG. 08' 26", A RADIUS OF 795.00', AND A CHORD BEARING AND DISTANCE OF NORTH 24 DEG. 43' 14" EAST, 71.30';  
 
THENCE, CONTINUING ALONG THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF SAID ROCKWALL PARKWAY AND THE NORTHWESTERLY LINE OF SAID LOT 19 AND ALONG SAID CURVE TO THE RIGHT IN A NORTHEASTERLY DIRECTION, AN ARC DISTANCE OF 71.33' TO A CUT "X'; FOUND AT THE NORTHERLY CORNER OF SAID LOT 19 AND BEING THE WESTERLY CORNER OF THAT CERTAIN TRACT OF LAND DESCRIBED IN DEED TO MURPHY ROAD, LTD. AS RECORDED IN VOLUME 1605, PAGE 182 OF THE DEED RECORDS OF ROCKWALL COUNTY; TEXAS; 
 
THENCE SOUTH 45 DEG. 46' 04" EAST, DEPARTING THE SOUTHEASTERLY RIGHT-OF-WAY LINE OF SAID ROCKWALL PARKWAY AND ALONG THE NORTHEASTERLY LINE OF SAID LOT 19 AND THE SOUTHWESTERLY LINE OF SAID MURPHY ROAD, LTD. TRACT, A DISTANCE OF 236.01', TO A CUT "X" SET AT THE SOUTHERLY CORNER OF SAID MURPHY ROAD, LTD. TRACT AND BEING THE WESTERLY CORNER OF LOT 1, BLOCK A OF SAID PRESBYTERIAN HOSPITAL OF ROCKWALL ADDITION AS RECORDED IN CABINET G, SLIDE 43 OF THE PLAT RECORDS OF ROCKWALL COUNTY, TEXAS AND ALSO BEING ON THE NORTHEASTERLY LINE OF SAID LOT 14; 
 
THENCE SOUTH 46 DEG. 43' 38" EAST, ALONG THE SOUTHWESTERLY LINE OF SAID LOT 1 AND LOT 2, BLOCK A OF SAID PRESBYTERIAN OF ROCKWALL ADDITION AND THE NORTHEASTERLY LINE OF SAID LOT 19, A DISTANCE OF 114.92', TO A CUT "X" FOUND AT THE EASTERLY CORNER OF SAID LOT 19;  
 

 
 

THENCE SOUTH 43 DEG. 16' 22" WEST, ALONG THE SOUTHEASTERLY LINE OF SAID LOT 19, A DISTANCE OF 253.97', TO A 5/8" IRON ROD WITH RED CAP STAMPED "RPLS 4868" FOUND FOR CORNER AT THE SOUTHERLY CORNER OF SAID LOT 19; 
 
THENCE NORTH 46 DEG. 43' 37" WEST, ALONG THE SOUTHWESTERLY LINE OF SAID LOT 19, A DISTANCE OF 254.68', TO THE POINT OF BEGINNING AND CONTAINING 1.780 ACRES OF LAND, MORE OR LESS. 
 
TRACT 2: 
 
NON-EXCLUSIVE EASEMENT RIGHTS AS SET OUT IN DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS EXECUTED BY ROCKWALL REGIONAL HOSPITAL, LLC DATED SEPTEMBER 21, 2007, FILED FOR RECORD SEPTEMBER 21, 2007 AND RECORDED IN VOLUME 5224, PAGE 1, REAL PROPERTY RECORDS, ROCKWALL COUNTY, TEXAS. TOGETHER WITH INSTRUMENT FILED 04/15/2008, RECORDED IN VOLUME 5428, PAGE 247, REAL PROPERTY RECORDS, ROCKWALL COUNTY, TEXAS.

A-1-1

EXHIBIT A-2
LIST OF LEASES
Tenant 1
Main Lease:
Suite: #100
Lease date: 4/22/2009
Landlord: TRIO Partners, LLC (As assigned to Rockwall Medical Properties, LP by Assignment and Assumption of Lease dated December 16, 2010).
Tenant: PedMed Rockwall, LLC
Demised Premises: Approximately 6,000 sf
Lease term: Ten (10) years
Commencement date: August 1, 2009
Rent:     years 1-7 $13,000 / month - $26.00 / sf
years 8-10 $13,390 / month - $26.78 / sf
Security deposit: None
Lease type: NNN
Renewal Option: 2 terms of 5 years each.
Lease Guaranty: Yes

Sub-lease:
Date signed: 3/31/2014
Sublessor: PedMed Rockwall, LLC
Sublessee: Texas Health Resources
Landlord: Rockwall Medical Properties, LP
Commencement date: December 1, 2013
Rent:     Effective December 1, 2013 monthly rent $13,000 - $26.00 / sf. 
Effective August 1, 2016 monthly rent $13,390 - $26.78 / sf.

 Lease amendments: None

Tenant 2
Suite: #102
Lease date: January 10, 2014
Tenant:  Texas Health Resources
Landlord: Rockwall Medical Properties, LP
Demised Premises: Approximately 3,098 sf
Lease term:  60 months
Commencement date:  February 1, 2014.
Rent:     year 1 $24.00 / sf $6,196.00 / month $74,352.00 / year (Begins 2/1/2014)
year 2 $24.60 / sf $6,350.90 / month $76,210.80 / year
year 3 $25.22 / sf $6,509.67 / month $78,116.07 / year
year 4 $25.85 / sf $6,672.41 / month $80,068.97 / year
year 5 $26.49 / sf $6,839.22 / month $82,070.70 / year

A-2-1

Security deposit: None
Lease type: NNN
Lease Guaranty: None
Lease amendments: None

Tenant 3
Suite: #105
Lease date: December 6, 2011
Tenant:  Texas Health Resources
Landlord: Rockwall Medical Properties, LP
Demised Premises: Approximately 1,496 sf
Lease term:  85 months
Commencement date:  April 10, 2012.
Rent:     year 1 $24.00 / sf $2,992.00 / month $35,904.00 / year
year 2 $24.72 / sf $3,081.76 / month $36,981.12 / year
year 3 $25.46 / sf $3,174.01 / month $38,088.16 / year
year 4 $26.22 / sf $3,268.76/ month $39,225.12 / year
year 5 $27.01 / sf $3,367.25 / month $40,406.96 / year
year 6 $27.82 / sf $3,468.23 / month $41,618.72 / year
year 7 $28.65 / sf $3,571.70 / month $42,860.40 / year
Security deposit: None
Lease type: NNN
Lease Guaranty: None

Commencement Letter
Dated: April 16, 2012
Commencement date: April 10, 2012
Lease expiration: May 31, 2019

Revised Commencement letter
Dated: March 13, 2015
Commencement date: April 10, 2012
Lease expiration: April 30, 2019

Additional Lease amendments: None

Tenant 4
Suite: #110
Lease date: December 6, 2011
Tenant:  Ridge Road Urologic Holdings, LLC.
Landlord: TRIO Partners, LLC(As assigned to Rockwall Medical Properties, LP by Assignment and Assumption of Lease dated December 16, 2010).

A-2-2
 

Demised Premises: Approximately 4,500 sf
Lease term:  10 years
Commencement date:  November 1, 2010
Rent:      Month 1- 12  $21.50 / sf  $8,062.50 / month
 Month 13- 24  $21.93 / sf  $8,223.75 / month
 Month 25- 36  $22.37 / sf  $8,388.75 / month
 Month 37- 48  $22.82 / sf  $8,557.50 / month
 Month 49- 60  $23.28 / sf  $8,730.00 / month
 Month 61- 72  $23.67 / sf  $8,876.25 / month
 Month 73- 84 $24.14 / sf  $9,052.50 / month
 Month 85- 96 $24.62 / sf  $9,232.50 / month
 Month 97- 108  $25.11 / sf  $9,416.25 / month
Month 109- 120  $25.61 / sf  $9,603.75 / month
Security deposit: None
Lease type: NNN
Renewals: 2 options of 5 years each
Lease Guaranty: None
Lease amendments: None

Tenant 5
Suite: #115
Lease date: November 11, 2014
Tenant:  Texas Heath Resources
Landlord: Rockwall Medical Properties, LP
Demised Premises: Approximately 3,082 sf
Lease term:  84 months
Commencement date:  when tenant occupies the premises
Rent:     year 1 $24.00 / sf $6,164.00 / month $73,968.00 / year 
year 2 $24.72 / sf $6,348.92 / month $76,187.04 / year
year 3 $25.46 / sf $6,538.98 / month $78,467.72 / year
year 4 $26.23 / sf $6,736.74/ month $80,840.86 / year
year 5 $27.01 / sf $6,937.07 / month $83,244.82 / year
year 6 $27.82 / sf $7,145.10 / month $85,741.24 / year
year 7 $28.66 / sf $7,360.84 / month $88,330.12 / year
Security deposit: None
Lease type: NNN
Renewals: one 5 year option
Lease Guaranty: None
Lease amendments: None

A-2-3
 

EXHIBIT A-3
RENT ROLL
(attached) 

A-3-1

EXHIBIT B
FORM OF SPECIAL WARRANTY DEED 
[Subject to Local Counsel Review]
This document prepared by: 
(and return to :)
___________________________ 
___________________________ 
___________________________ 
___________________________

Tax Parcel No. ______________________________
SPECIAL WARRANTY DEED
THIS INDENTURE, made on the _____ day of ______________, 2015, by and between ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership ("Grantor"), and ARHC RMRWLTX01, LLC, a Delaware limited liability company, whose address is 106 York Road, Jenkintown, Pennsylvania 19046 ("Grantee")
W I T N E S S E T H:
THAT Grantor, in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, does by these presents, sell and convey unto the said Grantee, its successors and assigns, the lots, tracts or parcels of land lying, being and situated in the County of Rockwall, State of Texas, and more fully described on Exhibit "A" attached hereto and incorporated herein by reference, together with all buildings, facilities and other improvements, located thereon and (a) all right, title and interest, if any, of Grantor in and to any streets and roads abutting the above described premises to the center lines thereof and (b) the appurtenances and all the estate and rights of Grantor in and to said premises.
This Special Warranty Deed is executed by Grantor and accepted by Grantee subject to the items set out and listed in Exhibit “B” attached hereto and incorporated by reference (herein collectively called the “Permitted Encumbrances”).
TO HAVE AND TO HOLD the premises aforesaid, subject to the Permitted Encumbrances, with all and singular, the rights, easements, privileges, appurtenances and immunities thereto belonging or in any wise appertaining unto the said Grantee and unto Grantee's successors and assigns forever, the said Grantor hereby covenanting that Grantor will warrant and defend the title to said premises unto the said Grantee and unto Grantee's successors and assigns, 

B-1

against the lawful claims and demands of all persons claiming by, under or through Grantor, but not otherwise.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

B-2

IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed the day and year first above written.
GRANTOR:
ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership

By:    CH Rockwall, LLC, 
    an Ohio limited liability company, 
    its general partner

By:                          
Name:
Title:

[ACKNOWLEDGMENT]

B-3

Exhibit A

B-4

Exhibit B

B-5
 

EXHIBIT C
FORM OF 
ASSIGNMENT AND ASSUMPTION OF LEASES, GUARANTIES AND SECURITY DEPOSITS
ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership ("Assignor"), in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby assigns, transfers, sets over and conveys to ARHC RMRWLTX01, LLC, a Delaware limited liability company ("Assignee"), all of Assignor's right, title and interest in and to those leases described in Exhibit A attached hereto and made a part hereof (as amended from time to time, the “Leases”), including any and all security deposits under the Leases, together with all of Assignor’s right, title and interest in and to those lease guaranties described in Exhibit B attached hereto and made a part hereof. 
Subject to the limitations set forth below, Assignor does hereby agree to defend, indemnify and hold harmless Assignee from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignee by reason of the failure of Assignor to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the lessor, or landlord under and by virtue of the Leases arising or accruing prior to the date of this Assignment.  Subject to the limitations set forth below, Assignee does hereby agree to defend, indemnify and hold harmless Assignor from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignor by reason of the failure of Assignee to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the landlord under and by virtue of the Leases arising or accruing on and after the date of this Assignment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

C-1

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment this ______ day of ______________, 2015, which Assignment is effective this date.  This Assignment may be executed in counterparts, which when taken together shall be deemed one agreement.
ASSIGNOR:
ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership

By:    CH Rockwall, LLC, 
    an Ohio limited liability company, 
    its general partner

By:                          
Name:                    
Title:                    

ASSIGNEE:

ARHC RMRWLTX01, LLC, a Delaware limited liability company

By:                          
Name:                    
Title:                    

C-2

Exhibit A

List of Leases

[to be prepared by Seller]

C-3

Exhibit B

List of Guaranties

[to be prepared by Seller]

C-4

EXHIBIT D
FORM OF BILL OF SALE
For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership (“Seller”), hereby bargains, sells, conveys and transfers to ARHC RMRWLTX01, LLC, a Delaware limited liability company (“Buyer”), all of Seller’s right, title and interest in and to those certain items of personal and intangible property (including any warranty made by third parties in connection with the same and the right to sue on any claim for relief under such warranties) (the “Personal Property”) located at or held in connection with that certain real property located in the State of Texas, as more particularly described on Schedule A attached hereto and made a part hereof.
Seller has not made and does not make any express or implied warranty or representation of any kind whatsoever with respect to the Personal Property, including, without limitation, with respect to title, merchantability of the Personal Property or its fitness for any particular purpose, the design or condition of the Personal Property; the quality or capacity of the Personal Property; workmanship or compliance of the Personal Property with the requirements of any law, rule, specification or contract pertaining thereto; patent infringement or latent defects.  Buyer accepts the Personal Property on an “as is, where is” basis.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

D-1

IN WITNESS WHEREOF, Seller has caused this instrument to be executed and delivered as of this ___ day of _______, 2015.
SELLER:
ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership

By:    CH Rockwall, LLC, 
    an Ohio limited liability company, 
    its general partner

By:                          
Name:
Title:

D-2

SCHEDULE A 
TO BILL OF SALE
[Add legal description of Real Property]

D-3

EXHIBIT E
FORM OF ASSIGNMENT OF CONTRACTS, 
PERMITS, LICENSES AND WARRANTIES
THIS ASSIGNMENT, made as of the ___ day of ________, 2015, by ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership (“Assignor”), to ARHC RMRWLTX01, LLC, a Delaware limited liability company (“Assignee”).
W I T N E S S E T H:
WHEREAS, by Agreement for Purchase and Sale of Real Property (the “Purchase Agreement”) having an effective date of ________, 2015, between Assignor and American Realty Capital VII, LLC, a Delaware limited liability company, predecessor-in-interest to Assignee, Assignee has agreed to purchase from Assignor as of the date hereof, and Assignor has agreed to sell to Assignee, that certain property located at 890 Rockwall Parkway, Rockwall, Texas 75032 (the “Property”); and
WHEREAS, Assignor desires to assign to Assignee as of the date hereof all of Assignor’s right, title and interest in those contracts set forth on Exhibit A attached hereto, and the permits, trademarks, licenses and warranties held by Assignor in connection with the Property (collectively, the “Contracts”).
NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Assignor hereby assigns, sets over and transfers unto Assignee to have and to hold from and after the date hereof all of the right, title and interest of Assignor in, to and under the Contracts.  Assignor agrees without additional consideration to execute and deliver to Assignee any and all additional forms of assignment and other instruments and documents that may be reasonably necessary or desirable to transfer or evidence the transfer to Assignee of any of Assignor's right, title and interest to any of the Contracts.
This Assignment shall be governed by the laws of the State of Texas, applicable to agreements made and to be performed entirely within said State.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

E-1

IN WITNESS WHEREOF, Assignor has duly executed this Assignment as of the date first above written.
ASSIGNOR:

ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership

By:    CH Rockwall, LLC, 
    an Ohio limited liability company, 
    its general partner

By:                          
Name:
Title:

E-2

Exhibit “A”

Assigned Contracts

E-3

EXHIBIT F
FORM OF ESTOPPEL CERTIFICATE
The undersigned hereby certifies to ARHC RMRWLTX01, LLC, a Delaware limited liability company (“Buyer”), KeyBank National Association (“Lender”), and their respective successors and assigns as follows:
1.    The undersigned is the tenant under that certain [insert title of lease document] [(the “Lease”)], dated as of _________ __, ____, by and between _________________________ (“Landlord”) and _________________________ (“Tenant”) [, as amended by that certain [insert title of lease amendment document], dated as of _________ __, ____,  by and between _________________________ and _________________________ (collectively, the “Lease”)], pursuant to which Tenant leases certain premises [known as Suite ____], consisting of _______ rentable square feet (the “Premises”), at that real property and improvements located at _________________________________________ (the “Property”).
2.    Except as set forth above, the Lease has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived.
3.    The Lease is valid and in full force and effect on the date hereof. The Lease represents the entire agreement between Landlord and Tenant with respect to the Premises and the land on which the Premises are situated.
4.    Tenant is not entitled to, and has made no agreement with Landlord or its agents or employees concerning, free rent, partial rent, rebate of rent payments, credit or offset or reduction in rent, or any other type of rental concession including, without limitation, lease support payments, lease buy-outs, or assumption of any leasing or occupancy agreements of Tenant. 
5.    The initial term of the Lease began on __________ __, _____ and expires on ________ __, 20__.  The Rent Commencement Date was __________ __, ____.  Tenant has accepted possession of the Premises and is open for business.  Tenant has not sublet all or a portion of the Premises to any sublessee and has not assigned, transferred or encumbered any of its rights or interests under the Lease.
6.    Tenant has no outstanding options or rights to renew or extend the term of the Lease, except as follows: ________________ (if none, please state “none”). Tenant has no outstanding expansion options, other options, rights of first refusal or rights of first offer to purchase the Property or any part thereof, or rights of first offer to lease with respect to all or any part of the Property.   
7.    The [Base Annual Rent] payable under the Lease is $____________ ($_________ monthly).  Such [Base Annual Rent] payable under the Lease shall be adjusted during the initial term of the Lease as follows: (a) from ___________, 20__ to and including ______________, 20__, the Base Annual Rent shall be $_______ ($_______ monthly); (b) from ___________, 20___ to and including ____________, 20___ the Base Annual Rent shall be $________ ($________ monthly); [and from __________, 20__ to and including __________, 20___ the Base Annual Rent 

F-1

shall be $_________ ($__________ monthly)]. Such rent has been paid through and including the month of ____________, 2015. Additional rent under the Lease in the amount of $__________ has been paid through and including the month of __________, 2015.   No such rent (excluding security deposits) has been paid more than one (1) month in advance of its due date.
8.    Tenant's security deposit, if any, is $_________________ (if none, please state “none”).
9.    No event has occurred and no condition exists that constitutes, or that with the giving of notice or the lapse of time or both, would constitute, a default by Tenant or, to the best knowledge of Tenant, Landlord under the Lease. Tenant has no existing defenses or offsets against the enforcement of the Lease by Landlord.
10.    (a)    All required contributions by Landlord to Tenant on account of Tenant's improvements have been received by Tenant and all of Tenant's tenant improvements have been completed in accordance with the terms of the Lease.
(b)    Landlord has satisfied all its obligations to Tenant arising out of or incurred in connection with the construction of the tenant improvements on the Premises and no off-set exists with respect to any rents or other sums payable or to become payable by the Tenant under the Lease.
11.    All licenses necessary for using and operating the Premises as a [insert permitted use] are held by Tenant and are in full force and effect.
12.    No voluntary actions or, to Tenant’s best knowledge, involuntary actions are pending against Tenant under the bankruptcy laws of the United States or any state thereof.
13.    This Certificate is delivered to induce Buyer to acquire the Property and Lender to provide certain financing, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate.
[SIGNATURE PAGE FOLLOWS]

F-2

The undersigned is duly authorized to execute this Certificate on behalf of Tenant.
Dated: ____________, 2015
TENANT:    
____________________, a ________________
By:______________________ 
      Name:
Title:

[DELETE THE FOLLOWING SECTION IF THE LEASE IS NOT GUARANTEED]
[_________________________, a _________________________] (“Guarantor”) certifies to and for the benefit of Buyer, Lender and their respective successors and assigns as follows:
With respect to that certain [Guaranty], dated as of ________ __, ____,  by Guarantor to and for the benefit of Landlord (the “Guaranty”): (a) Guarantor is the guarantor of the Lease pursuant to the Guaranty; (b) the Guaranty has not been modified, changed, altered, supplemented or amended in any respect, nor have any provisions thereof been waived; (c) the Guaranty is valid and in full force and effect on the date hereof; and (d) no voluntary actions or, to Guarantor’s best knowledge, involuntary actions are pending against Guarantor under the bankruptcy laws of the United States or any state thereof.  This Certificate is delivered to induce Buyer to acquire the Property and Lender to provide certain financing, with the understanding that Buyer and Lender shall rely upon the truth of the matters set forth in this Certificate.  The undersigned is duly authorized to execute this Certificate.  
Dated: ____________, 2015

[USE FOLLOWING SIGNATURE BLOCK FOR ENTITY GUARANTOR]
GUARANTOR:    
____________________, 
a ________________
                            
By:______________________ 
    Name:
Title:

[USE FOLLOWING SIGNATURE BLOCK FOR PERSONAL GUARANTOR]

F-3

GUARANTOR:    
______________________
Name:

F-4

EXHIBIT G
INTENTIONALLY OMITTED

G-1

EXHIBIT H
FORM OF NOTICE TO TENANT
________________ ___, 2015
TO:    [INSERT TENANT’S NOTICE ADDRESS FROM LEASE]
Re:    Notice of Change of Ownership of 890 Rockwall Parkway, Rockwall, Texas 75032

Ladies and Gentlemen:
YOU ARE HEREBY NOTIFIED AS FOLLOWS:
That as of the date hereof, the undersigned has transferred, sold, assigned, and conveyed all of its right, title and interest in and to the above-described property, (the “Property”) to ARHC RMRWLTX01, LLC, a Delaware limited liability company (the “New Owner”), and assigned to New Owner, all of the undersigned’s right, title and interest under that certain Lease, dated _________, between ________as tenant and ____________as landlord (the “Lease”), together with any security deposits or letters of credit held thereunder. 
Accordingly, New Owner is the landlord under the Lease and future notices and correspondence with respect to your leased premises at the Property should be made to the New Owner at the following address:
ARHC RMRWLTX01, LLC
c/o American Realty Capital Healthcare Trust III, Inc.
7621 Little Avenue, Suite 200
Charlotte, North Carolina 28226
Attention: Regional Asset Manager

With a copy to:
ARHC RMRWLTX01, LLC
c/o American Realty Capital Healthcare Trust III, Inc. 
405 Park Avenue, 14th Floor
New York, NY 10022
Attention: General Counsel
You will receive a separate notification from New Owner regarding the new address for the payment of rent.  In addition, to the extent required by the Lease, please amend all insurance policies you are required to maintain pursuant to the Lease to name New Owner as an additional insured thereunder and promptly provide New Owner with evidence thereof.

H-1

[SIGNATURE PAGE FOLLOWS]

D-2

Very truly yours,

ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership

By:    CH Rockwall, LLC, 
    an Ohio limited liability company, 
    its general partner

By:                         
Name:
Title:

H-3

EXHIBIT I
WARRANTIES
Roof Warranty

I-1

EXHIBIT J
CONTRACTS
Fire Panel Monitoring
HVAC Maintenance
Landscaping
Building Maintenance

J-1

EXHIBIT K
PREPAID RENTS, SECURITY DEPOSITS AND LETTERS OF CREDIT
None.

K-1

EXHIBIT L
PROPERTY MANAGER QUESTIONNAIRE
(attached)

L-1

EXHIBIT M
NON-FOREIGN PERSON AFFIDAVIT

THIS AFFIDAVIT is made this _____ day of ________________, 20__ by ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership (the “Transferor”), for the benefit of ARHC RMRWLTX01, LLC, a Delaware limited liability company (“Transferee”).
Section 1445(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the “Code”), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.  To inform the Transferee that withholding of tax is not required upon the disposition by Transferor of an interest in the Property described on Exhibit “A” hereto, the undersigned hereby certifies the following on behalf of Transferor:
(i)Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate or other foreign person (as those terms are defined in the Code and Income Tax Regulations);
(ii)    Transferor’s U.S. Employer Identification Number or Social Security Number, as applicable, is ____________; and
(iii)    Transferor’s address is [SELLER’S ADDRESS].
Transferor understands that this certification may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

M-1

Under penalties of perjury, the undersigned declares that he has examined this certification and, to the best of his knowledge and belief, it is true, correct and complete, and the undersigned further declares that he has authority to sign this document on behalf of Transferor.
TRANSFEROR:

ROCKWALL MEDICAL PROPERTIES, L.P., 
an Ohio limited partnership
By:    CH Rockwall, LLC, 
    an Ohio limited liability company 
    its general partner

By:         
Name:
Title:

M-2

Exhibit A

M-3

EXHIBIT N
SELLER’S BRING DOWN CERTIFICATE

Reference is made to that certain Agreement for Purchase and Sale of Real Property having an effective date of April ____, 2015 (the “Agreement”) by and between American Realty Capital VII, LLC, a Delaware limited liability company, predecessor-in-interest to ARHC RMRWLTX01, LLC, a Delaware limited liability company (“Buyer”), and ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership (“Seller”).  Pursuant to Section 10(p) of the Agreement, Seller hereby certifies to Buyer that all of Seller’s representations and warranties contained in the Agreement are true and correct as of the date hereof. 
Dated: May ___, 2015.
ROCKWALL MEDICAL PROPERTIES, L.P., an Ohio limited partnership

By:    CH Rockwall, LLC, 
    an Ohio limited liability company 
    its general partner

By:                         
Name:
Title:

N-1

[INSERT PROPERTY NAME]
Property Manager Questionnaire

Calendar Year: 2015
Property Name/Address:
Property Manager Name:
Survey Completed by: Phone Number:
Email Address:

Questionnaire Background
This Property is currently being evaluated for ownership either directly or indirectly in a structure including a real estate investment trust (“REIT”).
In general, a REIT has certain restrictions placed upon it with respect to the source and type of income that it may derive from its properties and the nature and extent of services that it may provide to its tenants. This questionnaire is being used to ascertain all sources of income from the Property, the exact nature and extent of the services provided or to be provided to tenants of the Property, and who performs such services. Unless otherwise noted, any reference herein to Owner refers, also, to any one or more of the employees of Owner or a Related Entity. When asked, please clarify who is performing such services (e.g., are the services performed by (a) employees of Owner, (b) a third party independent contractor ("Third Party") or (c) a Taxable REIT Subsidiary (“TRS”). A TRS is a corporation 100% owned by a REIT.
Please answer all questions, unless specifically instructed to skip a question or an entire section.
1. Building Information
1(a) Type of Property (check all that apply)
£Retail-Regional Mall
£Retail-Strip Center
£Retail-Other
£Warehouse
£Residential
£Office (may include ancillary retail)
£Parking
£Other____

1

1 (b)How many different tenants currently lease space at the Property? 
£0-5
£6-10
£More than 10
1(c)Is any tenant at the Property related to Owner?
£No 
£Yes
1(c)(1) If Yes, please explain the nature and extent of that relationship.
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
Please go to question 2 on the next page.

2

	
									
	2. Repairs and Maintenance
	 
	 
	 
	 
	 
	 
	 
	 

	Please answer for each column:
	Premium Light Bulb Replacement (not building standard)
	Locksmith Services
	Painting Tenant Space During Lease Term
	Carpeting Tenant Space
	Picture Hanging
	Construction Rubbish Removal
	Interior Glass Replacement
	Assist Tenant Moves

	 
	 
	 
	 
	 
	 
	 
	 
	 

	2(a) Please indicate whether such service is performed by (A) a TRS, (B) building employees, or (C) a Third Party. Please list A, B, or C in each box on the right.
	 
	 
	 
	 
	 
	 
	 
	 

	If you listed A in the 2(a) box above, please skip the rest of column and go to the next column.
	 
	 
	 
	 
	 
	 
	 
	 

	If you listed B in the 2(a) box above, what is Owner's annual aggregate cost for this service?
	 
	 
	 
	 
	 
	 
	 
	 

	If you listed C in the 2(a) box above, please continue below:
	 
	 
	 
	 
	 
	 
	 
	 

	How are tenants charged for such services? (X) no separate charge; (Y) separately charged directly by the Third Party; or (Z) separately charged by Owner. Please list X, Y, or Z in each box on the right.
	 
	 
	 
	 
	 
	 
	 
	 

	If you listed X in the box immediately above, what is Owner's aggregate annual cost for this service?
	 
	 
	 
	 
	 
	 
	 
	 

	If you listed Z in the box above, does Owner charge the tenants the exact amount Owner pays to the Third Party for the service? Please answer Yes or No.
	 
	 
	 
	 
	 
	 
	 
	 

	If you listed "No" in the box immediately above, what is Owner's annual aggregate cost for this service?
	 
	 
	 
	 
	 
	 
	 
	 

3

3. Concierge Services
3(a)  Are any concierge services which include services beyond a basic security function ("special concierge services") provided at the Property? This would include arranging for tickets and any services beyond basic security.
£No (Skip the rest of this section) 
£Yes

3(b) Are all special concierge services performed by a TRS? (A Taxable REIT Subsidiary is a corporation 100% owned by a REIT.) 
£Yes (Skip the rest of this section) 
£No
3(c)  Are special concierge services performed by a Third Party? 
£No (Skip to 3(d)) 
£Yes
3(c)(1) Does the Third Party charge tenants directly for special concierge services? 
£No
£Yes
3(c)(2) Does Owner receive any income from the Third Party's provision of special concierge services? 
£No
£Yes
3(d)Are special concierge services performed by Owner employees? 
£Yes
£No
3(e) What is the annual cost to Owner of providing concierge services?
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
4. Construction Services
4(a) Do Owner employees perform actual construction in tenant spaces for tenant improvements (rather than hiring a Third Party)? 
£No 
£Yes
4(b) Does Owner perform supervision and coordination services for tenants with respect to tenant repairs, construction or alteration? 
£No 
£Yes
4(b)(1) Are all such supervision and coordination services performed by a TRS? 
£Yes (Skip the rest of this section)
£No
4(b)(1)(A) Please name the Third Parties who perform the actual construction.
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________

4

5. Cleaning Services
5(a) Are specialty cleaning services (e.g., carpet cleaning, party clean-up, cafeteria cleaning, etc.) provided within the tenant's space?
£No (Skip the rest of this section) 
£Yes
5(b) Are specialty cleaning services that are provided within the tenant's space, performed by a TRS? 
£Yes (Skip the rest of this section)
£No
5(b)(1) Are any specialty cleaning services being provided by a Third Party? 
£No (Skip to 5(b)(2))
£Yes
5(b)(1)(A) Does the Third Party charge the tenants directly for the specialty cleaning services? 
£No (Skip to 5(b)(1)(B))
£Yes
5(b)(1)(A)(1) Does Owner receive any payments from the Third Party? 
£No
£Yes
5(b)(1)(B) Does Owner separately charge the tenants for such services? 
£No (Skip to 5(b)(2))
£Yes
5(b)(1)(B)(1) If Yes, does Owner charge the tenants the exact amount Owner pays to the Third Party for the service? Please answer Yes or No. _____
5(b)(2) Are any specialty cleaning services provided by a Owner employee? 
£No (Skip the rest of this section) 
£Yes
5(b)(2)(A) If Yes, what is Owner's aggregate annual cost for such services? _____

6. Health Club Facilities and Other Facilities  
6(a) Are any of the following facilities available at the Property? If Yes, please indicate on the lines below whether (1) there are attendants at such facilities, (2) whether these facilities are open to non-tenants, (3) whether any services are provided at these facilities, and (4) if so, who provides the services.
Library        £No    £Yes_____

Cafeteria        £No    £Yes_____

Day Care        £No    £Yes_____

Swimming Pool    £No    £Yes_____

Tennis Court    £No    £Yes_____

Playground    £No    £Yes_____

Other        £No    £Yes_____

6(b) Is a health club or other exercise or wellness facility provided at the Property? 
£No (Skip the rest of this section)
£Yes

5

6(b)(1) Is the health club leased by a health club tenant? 
£No (Skip to 6(c))
£Yes
     6(b)(1)(A) Please provide the name of the health club tenant.______

6(b)(2) Was the lease to the health club tenant a "below market" lease at the time it was executed? 
£No
£Yes
6(b)(3) Do tenants get discounts on the health club? 
£No
£Yes
6(c) Are any services provided by a Third Party (e.g., as towel service, personal training, aerobics, etc.)? 
£No (Skip to 6(d))
£Yes
6(c)(1) Please list services provided:
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
6(c)(2) Does the Third Party charge the tenants directly for such services? 
£No (Skip to 6(d))
£Yes
6(c)(2)(A) Does Owner receive any payments from the Third Party? 
£No
£Yes
6(c)(3) Does Owner separately charge the tenants for such services? 
£No (Skip to 6(c)(4))
£Yes
6(c)(3)(A) If Yes, does Owner charge the tenants the exact amount Owner pays to the Third Party for the service? Please answer Yes or No. ______

6(c)(4) How much does Owner pay the Third Party annually for such services? ______
6(d) Are any of such services provided by a Owner employee?
£ No (Skip the rest of this section) 
£Yes
6(d)(1) If Yes, what is Owner's aggregate annual cost for such services?______
7. Parking Facilities
7(a)  Are there parking facilities available at the Property? 
£No (Skip the rest of this section) 
£Yes

7(b)  Are any services provided at the parking facilities other than lighting, cleaning, striping, and security? 
£No (Skip the rest of this section) 
£Yes

6

7(b)(1) Has a third party manager been hired to manage the parking facilities? 
£No (Skip to 7(b)(2))
£Yes
7(b)(1)(A) If Yes, please provide the name of the third party manager.    ______
7(b)(2) Are the parking facilities leased to a third party? 
£No (Skip to 7(b)(3))
£Yes
7(b)(2)(A) If Yes, please provide the name of the third party lessee.    _______
7(b)(3) Are ancillary services provided to parkers (e.g., car wash, auto care and maintenance, car detailing, battery starts, oil changes, etc)?
£No (Skip the rest of this section) 
£Yes
7(b)(3)(A) Does a Owner employee provide the ancillary services? 
£No
£Yes
8. Shuttle Services
8(a) Are shuttle services provided at the Property? 
£No (Skip the rest of this section) 
£Yes
8(a)(1) Are shuttle services provided by a TRS? 
£Yes (Skip the rest of this section) 
£No

8(a)(2) Are shuttle services available for both tenants and non-tenants? 
£No
£Yes
8(a)(3) Please indicate who provides the shuttle services: 
£Owner employee
£Third Party
8(a)(4) What is the annual aggregate cost to Owner of providing such services?
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
9. Discounts
9(a) Does Owner procure discounts on goods or services for tenants?
£No (Skip the rest of this section) 
£Yes
9(a)(1) Please describe the arrangement and the parties involved.
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________

7

10. Promotions and Marketing
10(a) Does Owner perform any unusual marketing or promotional services for tenants? 
£No (Skip the rest of this section)
£Yes
10(a)(1) If the Property is an office building, what is Owner's annual aggregate cost of such services?

11. Conference Facilities
11(a)  Are conference facilities available for use by the tenants of the Property, that are not leased to a Third Party or a TRS? 
£No (Skip the rest of this section) 
£Yes

11(b)Are any services provided in connection with the conference room facilities (e.g., food, beverage, audio/video, special cleaning, receptionist, copying, or other ancillary services)?
£No (Skip the rest of this section) 
£Yes
11(b)(1) What type of services are provided?
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
12. Executive Office Suites
12 (a)Does the Property have executive office suites, or similar short-term or temporary office space available for use by the tenants? 
£No (Skip the rest of this section)
£Yes
12(a)(1) Are such office suites leased to a third party? 
£Yes (Skip the rest of this section) 
£No
12(a)(2) Are such office suites leased to a TRS, or are services in the office suites provided by a TRS? 
£Yes (Skip the rest of this section)
£No

12(b) Please describe any services provided. Examples include providing furnished space, secretarial services, etc.
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
13. Common Eating Facilities
13(a) Is Owner subsidizing the provision of food at the Property? 
£No
£Yes
13(a)(1) If Yes, please describe:
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________

8

14. Mail Distribution or Courier Service
14(a) Is messenger, courier, or mail distribution service provided to or for the tenants of the Property? 
£No (Skip the rest of this section)
£Yes
14(a)(1) Are such services provided by a TRS? 
£Yes (Skip the rest of this section) 
£No
14(b) What type of services are provided?
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
15. Security Services
15(a) Are security services provided within any tenant space?
£No (Skip the rest of this section)
£Yes
15(a)(1)   Are such services provided by a TRS?
£Yes (Skip the rest of this section) 
£No
15(a)(2)   What type of services are provided?
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
16. Other Services
16(a)  Does Owner provide any of the following telecommunications services customized to a particular tenant?

Cable                    £No    £Yes_____
Telephone                    £No    £Yes_____
Internet Access                £No    £Yes_____
Email                    £No    £Yes_____
Safety and security systems            £No    £Yes_____
Environmental control systems            £No    £Yes_____
Security alarms                £No    £Yes_____
Rooftop space for telecommunications equipment    £No    £Yes_____
Other _____

16(a)(1)   If Yes, does Owner receive compensation for these services and from whom?

____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
 16(b) Is abt Billboard space rented at the Property?
£No
£Yes

16(c) Are any other services not covered in any of the previous sections provided to tenants at the Property? Examples include shoe shine, massage therapist, dry cleaning, or any special services provided to particular tenants or within the tenant's space.
£No (Skip the rest of this section) 
£Yes

9

16(c)(1) Please describe the services:
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
17. Miscellaneous
17(a) Do any tenants sublease any portion of the Property to subtenants? 
£No (Skip to 17(b))
£Yes
17(a)(1) Is any portion of the Property being subleased by a subtenant who is a party related to Owner?
£No
£Yes
17(a)(2) Do any tenants sublease any portion of the Property where the sublease rent is based on net profits of the subtenant?
£No
£Yes
17(a)(3) Is any portion of the Property being subleased by a tenant where Owner is getting a percentage of the excess rent collected
by the tenant?
£No
£Yes
17(a)(4) Is Owner in the process of taking back existing space from a tenant under a sublease from the tenant? Has the lease been
structured yet?
_____________________________________________________________________________________________________________________________
17(b) Is any material amount (an amount with an annual rental value in excess of $1MM) of personal property (e.g., furniture, equipment, appliances, etc. owned by the landlord) leased to a tenant under, or in connection with, a lease of space or other real property to such tenant?
£No (Skip to 17(c)) 
£Yes
17(b)(1) If Yes, what is the total annual rent payable by such tenant and what is the fair market value of such personal property?
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
17(c) Is any Third Party which performs cleaning, painting, or construction services for tenants at the Property, or to your knowledge, at any other Owner property, a tenant at the Property (other than a tenant renting space solely to perform its work at the Property)?
£No 
£Yes
17(c)(1) If Yes, please describe the terms of the lease:
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________

10

18. Other Comments
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________

11

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