Document:

Exit 10.31

 

 HARTMAN XX LIMITED PARTNERSHIP

a Texas limited partnership 
 
AGREEMENT OF LIMITED PARTNERSHIP
 Dated as of April 11, 2014
 THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
 

    
 

 
 AGREEMENT OF LIMITED PARTNERSHIP OF
 HARTMAN XX LIMITED PARTNERSHIP
  
 THIS AGREEMENT OF LIMITED PARTNERSHIP OF HARTMAN XX LIMITED PARTNERSHIP, dated as of April 11, 2014, is made and entered into by and among HARTMAN XX REIT GP, LLC, a Texas limited liability company, HARTMAN SHORT TERM INCOME PROPERTIES XX, INC., a Maryland corporation, and any additional limited partner that is admitted from time to time to the Partnership and listed on Exhibit A attached hereto. 
 

 WHEREAS, a Certificate of Formation of Limited Partnership was filed in the office of the Secretary of State of the State of Texas on April 11, 2014 (the "Formation Date"); and 
 

 WHEREAS, the Partners (as hereinafter defined) desire to enter into this Agreement (as hereinafter defined);
  
 NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
  
 ARTICLE 1
 DEFINED TERMS
  
 The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement: 
   
 "Act" means the Texas Business Organizations Code, Title 4. Partnerships, Chapter 153. Limited Partnerships, as it may be amended from time to time, and any successor to such statute. 
 

 "Actions" has the meaning set forth in Section 7.7 hereof. 
 

 "Additional Funds" has the meaning set forth in Section 4.3.A hereof. 
 

 "Additional General Partner" means a Person who is admitted to the Partnership as a General Partner pursuant to Section 4.2 and Section 12.1 hereof and who is shown as such on the books and records of the Partnership. 
 

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

 "Adjusted Available Cash" means, as of any date of determination, the sum of Available Cash and REIT Available Cash. 
 

 "Adjusted Capital Account Deficit" means, with respect to any Partner, the deficit balance, if any, in such Person's Capital Account as of the end of the relevant Partnership Year, after giving effect to the following adjustments: 
 

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 (i)
 decrease such deficit by any amounts that such Person is obligated to restore pursuant to this Agreement or by operation of law upon liquidation of such Partner's Partnership Interest or that such Person is deemed to be obligated to restore pursuant to the penultimate sentence of each of 
 Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and 
 

 (ii)
 increase such deficit by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). 
 

 The foregoing definition of "Adjusted Capital Account Deficit" is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. 
  
 "Adjustment Factor" means 1.0; provided, however, that in the event that: 
 

 (i)    the Special Limited Partner (a) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares in REIT Shares, (b) splits or subdivides its outstanding REIT Shares or (c) effects a reverse stock split or otherwise combines its outstanding REIT Shares into a smaller number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (i) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time) and (ii) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination; 
 

 (ii)   the Special Limited Partner distributes any rights, options or warrants to all holders of its REIT Shares to subscribe for or to purchase or to otherwise acquire REIT Shares, or other securities or rights convertible into, exchangeable for or exercisable for REIT Shares (other than REIT Shares issuable pursuant to a Qualified DRIP), at a price per share less than the Value of a REIT Share on the record date for such distribution (each a "Distributed Right"), then the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction (a) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date plus the maximum number of REIT Shares purchasable under such Distributed Rights and (b) the denominator of which shall be the number of REIT Shares issued and outstanding on the record date plus a fraction (1) the numerator of which is the maximum number of REIT Shares purchasable under such Distributed Rights times the minimum purchase price per REIT Share under such Distributed Rights and (2) the denominator of which is the Value of a REIT Share as of the record date; provided, however, that, if any such Distributed Rights expire or become no longer exercisable, then the Adjustment Factor shall be adjusted, effective retroactive to the date of distribution of the Distributed Rights, to reflect a reduced maximum number of 
 

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 REIT Shares or any change in the minimum purchase price for the purposes of the above fraction; and 
 

 (iii)  the Special Limited Partner shall, by dividend or otherwise, distribute to all holders of its REIT Shares evidences of its indebtedness or assets (including securities, but excluding any dividend or distribution referred to in subsection (i) above), which evidences of indebtedness or assets relate to assets not received by the General Partner and/or any Special Limited Partner pursuant to a pro rata distribution by the Partnership, then the Adjustment Factor shall be adjusted to equal the amount determined by multiplying the Adjustment Factor in effect immediately prior to the close of business as of the record date by a fraction (a) the numerator of which shall be such Value of a REIT Share as of the record date and (b) the denominator of which shall be the Value of a REIT Share as of the record date less the then fair market value (as determined by the Managing General Partner, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share. 
 

 Any adjustments to the Adjustment Factor shall become effective immediately after such event, retroactive to the record date, if any, for such event. For illustrative purposes, examples of adjustments to the Adjustment Factor are set forth on Exhibit B attached hereto. 
 

 "Affiliate" means, with respect to any Person, any Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, "control" when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 
 

 "Affiliated REIT" means the Special Limited Partner and any Affiliate of the Special Limited Partner that has elected to be taxed as a REIT under the Code. 
 

 "Agreement" means this Limited Partnership Agreement of Hartman XX Limited Partnership, as now or hereafter amended, restated, modified, supplemented or replaced. 
 

 "Applicable Percentage" has the meaning set forth in Section 15.1.B hereof. 
 

 "Appraisal" means, with respect to any assets, the written opinion of an independent third party experienced in the valuation of similar assets, selected by the Managing General Partner in good faith. Such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the Managing General Partner is fair, from a financial point of view, to the Partnership. 
         
 "Assignee" means a Person to whom one or more Partnership Common 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 hereof. 
 

 

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 "Available Cash" means, with respect to any period for which such calculation is being made, 
 

 (i)    the sum, without duplication, of: 
           
 (1)   
 the Partnership's Net Income or Net Loss (as the case may be) for such period,
 

 (2)  Depreciation and all other noncash charges to the extent deducted in determining Net Income or Net Loss for such period,
  
 (3)   the amount of any reduction in reserves of the Partnership referred to in clause (ii)(6) below (including, without limitation, reductions resulting because the Managing General Partner determines such amounts are no longer necessary), 
 

 (4)   the excess, if any, of the net cash proceeds from the sale, exchange, disposition, financing or refinancing of Partnership property for such period over the gain (or loss, as the case may be) recognized from such sale, exchange, disposition, financing or refinancing during such period (excluding Terminating Capital Transactions), and 
 

 (5)   all other cash received (including amounts previously accrued as Net Income and amounts of deferred income) or any net amounts borrowed by the Partnership for such period that was not included in determining Net Income or Net Loss for such period; 
 

 (ii)   less the sum, without duplication, of:
  
 (1)   all principal debt payments made during such period by the Partnership, 
 

 (2)   capital expenditures made by the Partnership during such period,
 

 (3)   investments in any entity (including loans made thereto) to the extent that such investments are not otherwise described in clause (ii)(1) or clause (ii)(2) above, 
 

 (4)   all other expenditures and payments not deducted in determining Net Income or Net Loss for such period (including amounts paid in respect of   expenses previously accrued), 
 

 (5)   any amount included in determining Net Income or Net Loss for such period that was not received by the Partnership during such period, 
 

 (6)   the amount of any increase in reserves (including, without limitation, working capital reserves) established during such period that the Managing General Partner determines are necessary or appropriate in its sole and absolute discretion,
 

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 (7)   any amount distributed or paid in redemption of any Limited Partner Interest or Partnership Units, including, without limitation, any Cash Amount paid, and 
 

 (8)   the amount of any working capital accounts and other cash or similar balances which the Managing General Partner determines to be necessary or appropriate in its sole and absolute discretion. 
 

 Notwithstanding the foregoing, Available Cash shall not include (a) any cash received or reductions in reserves, or take into account any disbursements made, or reserves established, after dissolution and the commencement of the liquidation and winding up of the Partnership or (b) any Capital Contributions, whenever received or any payments, expenditures or investments made with such Capital Contributions.
 

 "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in Houston, Texas are authorized by law to close. 
  
 "Capital Account" means, with respect to any Partner, the Capital Account maintained by the Managing General Partner for such Partner on the Partnership's books and records in accordance with the following provisions: 
 

 (i)
 To each Partner's Capital Account, there shall be added such Partner's Capital Contributions, such Partner's distributive share of Net Income and any items in the nature of income or gain that are specially allocated pursuant to Section 6.3 hereof, and the principal amount of any Partnership liabilities assumed by such Partner or that are secured by any property distributed to such Partner.
 

 (ii)
 From each Partner's Capital Account, there shall be subtracted the amount of cash and the Gross Asset Value of any property distributed to such Partner pursuant to any provision of this Agreement, such Partner's distributive share of Net Losses and any items in the nature of expenses or losses that are specially allocated pursuant to Section 6.3 hereof, and the principal amount of any liabilities of such Partner assumed by the Partnership or that are secured by any property contributed by such Partner to the Partnership.  
 

 (iii)
 In the event any interest in the Partnership is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Partner's Capital Account of the transferor to the extent that it relates to the Transferred interest.
 

 (iv)
 In determining the principal amount of any liability for purposes of subsections (i) and (ii) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations. 
 

 (v)
 The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations promulgated under Section 704 of the 
 

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 Code, and shall be interpreted and applied in a manner consistent with such Regulations. If the Managing General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts are maintained in order to comply with such Regulations, the Managing General Partner may make such modification provided that such modification will not have any effect on the amounts distributable to any Partner or the timing of any distribution to such Partner without such Person's consent. The Managing General Partner also shall (a) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership's balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (b) make any appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2; provided, however, that such changes shall not reduce amounts otherwise distributable to the Partner as current cash distributions or as distributions on termination of the Partnership or affect the timing of any distribution to the Partner. 
 

 "Capital Contribution" means, with respect to any Partner, the amount of money and the initial Gross Asset Value of any Contributed Property, adjusted to the extent provided in the definition of "Capital Account" above, that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2, or 4.3 hereof or is deemed to contribute pursuant to Section 4.4 or 4.5 hereof; 
 

 "Capital Share" means a share of any capital stock of the Special Limited Partner now or hereafter authorized or reclassified other than REIT Share.
 

 "Cash Amount" means an amount of cash equal to the product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount determined as of the applicable Valuation Date. 
 

 "Certificate" means the Certificate of Limited Partnership of the Partnership filed in the office of the Secretary of State of the State of Texas, as amended from time to time in accordance with the terms hereof and the Act. 
 

 "Charity" means an entity described in Section 501(c)(3) of the Code or any trust all the beneficiaries of which are such entities. 
 

 “Charter" means the Certificate of Incorporation of the Special Limited Partner filed with the Secretary of State of the State of Maryland on February 5, 2009, as amended, supplemented or restated from time to time. 
 

 "Closing Price" has the meaning set forth in the definition of "Value." 
 

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

 

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

 "Consent of the Partners" means the Consent of the General Partner and Consent of a Majority in Interest of the Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by the General Partner or the Limited Partners in their sole and absolute discretion; provided, however, that if any such action affects only certain classes or series of Partnership Units, "Consent of the Partners" means the Consent of a Majority in Interest of the affected classes or series of Partnership Units. 
 

 "Consent of the Limited Partners" means the Consent of a Majority in Interest of the Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld each Limited Partner in its sole and absolute discretion. 
         
 "Contributed Property" means each Property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership (or deemed contributed by the Partnership to a "new" partnership pursuant to Code Section 708). 
 

 "Controlled Entity" means, as to any Partner, (a) any corporation more than fifty percent (50%) of the outstanding voting stock of which is owned by such Partner or such Partner's Family Members or Affiliates, other Partners or other Partners' Family Members or Affiliates, (b) any trust, whether or not revocable, of which such Partner or such Partner's Family Members or Affiliates are the sole beneficiaries, (c) any partnership of which such Partner or other Partners or their respective Affiliates are the managing partners and in which such Partner, such Partner's Family Members or Affiliates, other Partners or other Partners' Family Members or Affiliates hold partnership interests 
 representing at least twenty-five percent (25%) of such partnership's capital and profits and (d) any limited liability company of which such Partner, other Partners or their respective Affiliates are the managers and in which such Partner, such Partner's Family Members or Affiliates, other Partners or such other Partners' Family Members or Affiliates hold membership interests representing at least twenty-five percent (25%) of such limited liability company's capital and profits.
 

 "Cut-Off Date" means the fifth (5th) Business Day after the Managing General Partner's receipt of a Notice of Redemption. 
 

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

 

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 "Depreciation" means, for each Partnership Year or other applicable period, an amount equal to the Federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such year or period, Depreciation shall be in an amount that bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the Federal income tax depreciation, amortization or other cost recovery deduction for such year or 
 period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing General Partner. 
 

 "Distributed Right" has the meaning set forth in the definition of "Adjustment Factor."
 

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

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

 "Excluded Property" means those assets listed on Exhibit C attached hereto, as Exhibit C may, from time to time, be amended by the Managing General Partner, together with any other asset now or hereafter held directly by the Special Limited Partner or any wholly-owned Subsidiary of the Special Limited Partner (other than the stock of any wholly-owned Subsidiary and interests in the Partnership), in each case to the extent such asset has not theretofore been contributed to the Partnership. 
 

 "Family Members" means, as to a Person that is an individual, such Person's spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters, nieces and nephews and inter vivos or testamentary trusts of which only such Person and his or her spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters and nieces and nephews are beneficiaries. 
 

 "Formation Date" has the meaning set forth in the Recitals hereof. 
 

 “Fourteen-Month Period" means (a) as to an Original Limited Partner or any successor-in-interest that is a Qualifying Party, a fourteen-month period ending on the day before the first fourteen-month anniversary of the date of this Agreement or on the day before a subsequent anniversary thereof and (b) as to any other Qualifying Party, a fourteen-month period ending on the day before the first fourteen-month anniversary of such Qualifying Party's first becoming a Holder of Partnership Common Units, or on the day before a subsequent anniversary thereof; provided, however, that the Managing General Partner may, in its sole and absolute discretion, by written agreement with a Qualifying Party, shorten or lengthen the first Fourteen-Month Period to a period of shorter or longer than fourteen (14) months with respect to a Qualifying Party other than an Original Limited Partner or successor-in-interest.
 

 "Funding Debt" means any Debt incurred by or on behalf of the General Partner or the Special Limited Partner for the purpose of providing funds to the Partnership.
 

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 "General Partner" means the Managing General Partner, and its successors and assigns, in its capacity as a general partner of the Partnership and any Additional General Partner. 
 

 "General Partner Interest" means the Partnership Interest held by a General Partner hereof, which Partnership Interest is an interest as a general partner under the Act. A General Partner Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or any other Partnership Units. 
 

 "General Partner Loan" has the meaning set forth in Section 4.3.D hereof.
 

 "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for 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 as determined by the Managing General Partner and agreed to by the contributing Person.
 

 (b)   The Gross Asset Values of all Partnership assets immediately prior to the occurrence of any event described in clause (i), clause (ii), clause (iii), clause (iv) or clause (v) hereof shall be adjusted to equal their respective gross fair market values, as determined by the Managing General Partner using such reasonable method of valuation as it may adopt, as   of the following times:
  
 (i)
 the acquisition of an additional interest in the Partnership (other than in connection with the execution of this Agreement but including, without limitation, acquisitions pursuant to Section 4.2 hereof or contributions or deemed contributions by the General Partner pursuant to Section 4.2 hereof) by a new or existing Partner in exchange for more than a de minimis Capital Contribution, if the Managing General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; 
 

 (ii)
 the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership if the Managing General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;
 

 (iii)
 the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); 
 

 (iv)
 upon the admission of a successor Managing General Partner pursuant to Section 12.1 hereof; and 
 

 

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 (v)
 at such other times as the Managing General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2. 
 

 (c)   The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution as determined by the distributee and the Managing General Partner; provided, however, that if the distributee is the Managing General Partner or if the distributee and the Managing General Partner cannot agree on such a determination, such gross fair market value shall be determined by   Appraisal. 
 

 (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 Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection 
 

 (d) to the extent that the Managing General Partner reasonably determines that an adjustment pursuant to subsection (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d).
 

 (e)   If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subsection (a), subsection (b) or subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses. 
 

 "Holder" means either (a) a Partner or (b) an Assignee owning a Partnership Unit. 
 

 “Incapacity" or "Incapacitated" means: (i) as to any Partner who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Partner incompetent to manage his or her person or his or her estate; (ii) as to any Partner that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Partner that is a partnership, the dissolution and commencement of winding up of the partnership; (iv) as to any Partner that is an estate, the distribution by the fiduciary of the estate's entire interest in the Partnership; (v) as to any trustee of a trust that is a Partner, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and delivers a general assignment for the benefit of the Partner's creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, 
 

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 receiver or liquidator for the Partner or for all or any substantial part of the Partner's properties, (f) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof, (g) the appointment without the Partner's consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment, or (h) an appointment referred to in clause (g) above is not vacated within ninety (90) days after the expiration of any such stay.
 

 "Indemnitee" means (i) any Person made a party to a proceeding by reason of its status as (a) the General Partner or the Special Limited Partner or (b) a director or member of the General Partner or the Special Limited Partner or an officer or employee of the Partnership, the Special Limited Partner or the General Partner and (ii) such other Persons (including Affiliates of the General Partner, the Special Limited Partner or the Partnership) as the Managing 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. 
 

 "IRS" means the United States Internal Revenue Service. 
 

 "Legal Requirements" has the meaning set forth in Section 7.3.C hereof. 
 

 "Limited Partner" means the Special Limited Partner and any Additional Limited partner that is admitted from time to time to the Partnership and is listed on Exhibit A attached hereto, as such Exhibit A may be amended from time to time, and any Substituted Limited Partner or Additional Limited Partner, each shown as such in the books and records of the Partnership, 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 Limited 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 Common Units, Partnership Preferred Units or other Partnership Units. 
 

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

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

 "Majority in Interest of the Partners" means Partners holding in the aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all Partners entitled to Consent to or withhold Consent from a proposed action. 
 

 "Majority in Interest of the Limited Partners" means Limited Partners (other than the Special Limited Partner and any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by the Managing General Partner or Special Limited Partner) holding in the aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate 
 

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 Percentage Interests of all such Limited Partners entitled to Consent to or withhold Consent from a proposed action. 
 

 "Managing General Partner" means Hartman XX REIT GP, LLC, a Texas limited liability company, and its successors and assigns, as the managing general partner of the Partnership in their capacities as managing general partner of the Partnership. 
 

 "Market Price" has the meaning set forth in the definition of "Value." 
 

 "Net Income" or "Net Loss" means, for each Partnership Year of the Partnership, an amount equal to the Partnership's taxable income or loss for such year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: 
 

 (a)   Any income of the Partnership that is exempt from Federal income tax and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of "Net Income" or "Net Loss" shall be added to (or subtracted from, as the case may be) such taxable income (or loss); 
 

 (b)   Any expenditure of the Partnership described in Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of "Net Income" or "Net Loss," shall be subtracted from (or added to, as the case may be) such taxable income (or loss);
 

 (c)   In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) or subsection (c) of the definition of "Gross Asset Value," the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss; 
 

 (d)   Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;  
 

 (e)   In lieu of the depreciation, amortization and other cost recovery deductions that would otherwise be taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Partnership Year; 
 

 (f)    To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner's interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) 
 

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 from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and
 

 (g)   Notwithstanding any other provision of this definition of "Net Income" or "Net Loss," any item that is specially allocated pursuant to Section 6.3 hereof shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Section 6.3 hereof shall be determined by applying rules analogous to those set forth in this definition of "Net Income" or "Net Loss." 
 

 "New Securities" means (i) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or Preferred Shares, excluding grants under the Stock Option Plans, or (ii) any Debt issued by the Special Limited Partner that provides any of the rights described in clause (i).
  
 "Nonrecourse Deductions" has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).
 

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

 "Notice of Redemption" means the Notice of Redemption substantially in the form of Exhibit B attached to this Agreement. 
 

 “Optionee" means a Person to whom a stock option is granted under any Stock Option Plan.
 

 "Original Limited Partners" means the Persons listed as the Limited Partners on Exhibit A originally attached to this Agreement, without regard to any amendment thereto, and does not include any Assignee or other transferee, including, without limitation, any Substituted Limited Partner succeeding to all or any part of the Partnership Interest of any such Person. 
 

 "Ownership Limit" means the applicable restriction or restrictions on ownership of shares of the Special Limited Partner imposed under the Charter. 
 

 "Partner" means the General Partner or a Limited Partner, and "Partners" means the General Partner and the Limited Partners. 
 

 Partner 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 Regulations Section 1.704-2(i)(3). 
 

 “Partner Nonrecourse Debt" has the meaning set forth in Regulations Section 1.704-2(b)(4). 
         "Partner Nonrecourse Deductions" has the meaning set forth in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of Regulations Section 
 

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 1.704-2(i)(2). 
 

 "Partnership" means the limited partnership formed and continued under the Act and pursuant to this Agreement and any successor thereto. 
 

 "Partnership Common Unit" means a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but does not include any Partnership Preferred Unit or any other Partnership Unit specified in a Partnership Unit Designation as being other than a Partnership Common Unit; provided, however, that the General Partner Interest and the Limited Partner Interests shall have the differences in rights and privileges as specified in this Agreement. 
 

 "Partnership Employee" means an employee of the Partnership or an employee of a Subsidiary of the Partnership, if any, acting in such capacity. 
 

 "Partnership Interest" means an ownership interest in the Partnership held by either a Limited Partner or a General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Partnership Interest may be expressed as a number of Partnership Common Units, Partnership Preferred Units or other Partnership Units. 
 

 "Partnership Minimum Gain" has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).
 

 "Partnership Preferred Unit" means a fractional, undivided share of the Partnership Interests that the Managing General Partner has authorized pursuant to Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the Partnership Common Units.
 

 "Partnership Record Date" means the record date established by the Managing General Partner for the distribution of Available Cash pursuant to Section 5.1 hereof, which record date shall generally be the same as the record date established by the Special Limited Partner for a distribution to its shareholders of some or all of its portion of such distribution. 
 

 "Partnership Unit" means a Partnership Common Unit, a Partnership Preferred Unit, a Performance Unit or any other partnership unit or fractional, undivided share of the Partnership Interests that the Managing General Partner has authorized pursuant to Section 4.1, Section 4.2 or Section 4.3 hereof. 
 

 "Partnership Unit Designation" shall have the meaning set forth in Section 4.2.A hereof.
 

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

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 "Percentage Interest" means, as to each Partner, its interest in the Partnership Units, as determined by dividing the Partnership Units owned by such Partner by the aggregate number of Partnership Units then outstanding. 
 

 "Performance Unit" has the meaning set forth in Section 4.2.B hereof. 
 

 "Permitted Transfer" has the meaning set forth in Section 11.3.A hereof. 
 

 "Person" means an individual or a corporation, partnership, trust, unincorporated organization, association, limited liability company or other entity.
 

 "Pledge" has the meaning set forth in Section 11.3.A hereof.
 

 "Preferred Share" means a share of capital stock of the Special Limited Partner now or hereafter authorized or reclassified that has dividend rights, or rights upon liquidation, winding up and dissolution, that are superior or prior to the REIT Shares.
 

 “Properties" means any assets and property of the Partnership such as, but not limited to, interests in real property and personal property, including, without limitation, fee interests, interests in ground leases, easements and rights of way, interests in limited liability companies, joint ventures or partnerships, interests in mortgages, and Debt instruments as the Partnership may hold from time to time and "Property" means any one such asset or property. 
 

 "Publicly Traded" means having common equity securities listed or admitted to trading on any U.S. national securities exchange or the NASDAQ Stock Market's National Market System. 
  
 "Qualified DRIP" means a dividend reinvestment plan of the Special Limited Partner that permits participants to acquire REIT Shares using the proceeds of dividends paid by the Special Limited Partner; provided, however, that if such shares are offered at a discount, such discount must (i) be designed to pass along to the shareholders of the Special Limited Partner the savings enjoyed by the Special Limited Partner in connection with the avoidance of stock issuance costs, and (ii) not exceed 5% of the value of a REIT Share as computed under the terms of such dividend reinvestment plan. 
 

 "Qualified Transferee" means an "accredited investor" as defined in Rule 501 promulgated under the Securities Act. 
 

 "Qualifying Party" means (a) a Limited Partner, (b) an Additional Limited Partner, (c) an Assignee, or (d) a Person, including a lending institution as the pledgee of a Pledge, who is the transferee of a Limited Partner Interest in a Permitted Transfer; provided, however, that a Qualifying Party shall not include the Special Limited Partner. 
 

 "Redemption" has the meaning set forth in Section 15.1.A hereof. 
 

 

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 "Regulations" means the income tax regulations under the Code, whether such regulations are in proposed, temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
 

 "Regulatory Allocations" has the meaning set forth in Section 6.3.B(viii) hereof.
 

 "REIT" means a real estate investment trust qualifying under Code Section 856.
 

 "REIT Available Cash" means, as of any date of determination, all amounts which would be available for distribution to the holders of REIT Shares (calculated in a manner substantially similar to the manner in which the Partnership calculates Available Cash and without regard to any distributions from or allocations by the Partnership to be made, or which have been made, to the Managing General Partner and the Special Limited Partner hereunder and without regard to any restriction on distribution imposed on the Managing General Partner by any third party).
 

 "REIT Partner" means (a) the Special Limited Partner or any Affiliate of the Special Limited Partner to the extent such person has in place an election to qualify as a REIT and, (b) any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)) of any such person. 
 

 "REIT Payment" has the meaning set forth in Section 15.12 hereof. 
 

 "REIT Requirements" has the meaning set forth in Section 5.1 hereof. 
 

 "REIT Share" means a share of common stock of the Special Limited Partner, par value $.01 per share (but shall not include any additional series or class of the Special Limited Partner's common stock created after the date of this Agreement). 
 

 "REIT Shares Amount" means a number of REIT Shares equal to the product of (a) the number of Tendered Units and (b) the Adjustment Factor; provided, however, that, in the event that the Special Limited Partner issues to all holders of REIT Shares as of a certain record date rights, options, warrants or convertible or exchangeable securities entitling the Special Limited Partner's shareholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the "Rights"), with the record date for such Rights issuance falling within the period starting on the date of the Notice of Redemption and ending on the day immediately preceding the Specified Redemption Date, which Rights will not be distributed before the relevant Specified Redemption Date, then the REIT Shares Amount shall also include such Rights that a holder of that number of REIT Shares would be entitled to receive, expressed, where relevant hereunder, in a number of REIT Shares determined by the Special Limited Partner in good faith. 
 

 "Related Party" means, with respect to any Person, any other Person whose ownership of shares of the Special Limited Partner's capital stock would be attributed to the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)). 
        
 "Rights" has the meaning set forth in the definition of "REIT Shares Amount." 
 

 "SEC" means the Securities and Exchange Commission. 
 

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 "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. 
 

 “Special Limited Partner" means Hartman Short Term Income Properties XX, Inc., a Maryland corporation.
 

 "Special Limited Partner Affiliate" means any other Limited Partners, from time to time, that are Affiliates of Hartman Short Term Income Properties XX, Inc., each of which shall be designated as a "Special Limited Partner Affiliate" on Exhibit A attached hereto, as amended from time to time, and shown as such in the books and records of the Partnership. 
 

 "Special Redemption" has the meaning set forth in Section 15.1.A hereof. 
 

 "Specified Partnership Units" means, (i) with respect to each Excluded Property that is listed on Exhibit C as of the date hereof, the number of Partnership Common Units and/or Partnership Preferred Units (as the case may be) set forth opposite such Excluded Property on Exhibit C, and (ii) with respect to each Excluded Property that is added to Exhibit C from and after the date hereof, the amount of Partnership Common Units and/or Partnership Preferred Units (as the case may be) which would have been issued to the Special Limited Partner, pursuant to Section 4.3.B and 4.2 hereof, if the Special Limited Partner had contributed such Excluded Property on the later to occur of (a) the date of issuance of any Partnership Unit to any Person that is not an Affiliate of the Special Limited Partner and (b) the date that such asset was acquired by the Special Limited Partner or a wholly-owned Subsidiary of the Special Limited Partner, in exchange for Partnership Units equal in value to the fair market value of such Excluded Property as of such date. 
 

 “Specified Redemption Date" means the tenth (10th) Business Day after the receipt by the Managing General Partner of a Notice of Redemption; provided, however, that no Specified Redemption Date shall occur during the first Fourteen-Month Period (except pursuant to a Special Redemption). 
 

 "Stock Option Plans" means any stock option plan now or hereafter adopted by the Partnership or the Special Limited Partner. 
 

 "Subsidiary" means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person; provided, however, that, with respect to the Partnership, "Subsidiary" means solely a partnership or limited liability company (taxed, for Federal income tax purposes, as a partnership and not as an association or publicly traded partnership taxable as a corporation, including without limitation single member limited liability companies) of which the Partnership is a member or any "taxable REIT subsidiary" in which the Partnership owns shares of stock, unless the Managing General Partner has received an unqualified opinion from independent counsel of recognized standing, or a ruling from the IRS, that the ownership of shares of stock of a corporation or other entity (other than a "taxable REIT subsidiary") will not jeopardize the Special Limited Partner's status as a REIT or any Special Limited Partner Affiliate's status as a "qualified REIT subsidiary" (within the meaning of Code 
 

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 Section 856(i)(2)), in which event the term "Subsidiary" shall include the corporation or other entity which is the subject of such opinion or ruling. 
 

 "Substituted Limited Partner" means a Person who is admitted as a Limited Partner to the Partnership pursuant to (i) Section 11.4 hereof or (ii) pursuant to any designation or similar document or instrument providing for the creation of a new class or series of Limited Partner Interests. 
   
 "Tax Items" has the meaning set forth in Section 6.4.A hereof. 
 

 "Tendered Units" has the meaning set forth in Section 15.1.A hereof. 
 

 "Tendering Party" has the meaning set forth in Section 15.1.A hereof. 
 

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

 "Transfer" means any sale, assignment, bequest, conveyance, devise, gift (outright or in trust), Pledge, encumbrance, hypothecation, mortgage, exchange, transfer or other disposition or act of alienation, whether voluntary, involuntary or by operation of law; provided, however, that when the term is used in Article 11 hereof, "Transfer" does not include (a) any Redemption of Partnership Common Units by the Partnership, or acquisition of Tendered Units by the Special Limited Partner, pursuant to Section 15.1 hereof or (b) any redemption of Partnership Units pursuant to any Partnership Unit Designation. The terms "Transferred" and "Transferring" have correlative meanings. 
 

 "Valuation Date" means the date of receipt by the Managing General Partner of a Notice of Redemption pursuant to Section 15.1 herein, or such other date as specified herein, or, if such date is not a Business Day, the immediately preceding Business Day. 
 

 "Value" means, on any Valuation Date with respect to a REIT Share, the average of the daily Market Prices for ten (10) consecutive trading days immediately preceding the Valuation Date (except that, as provided in Section 4.4.C. hereof, the Market Price for the trading day immediately preceding the date of exercise of a stock option under any Stock Option Plans shall be substituted for such average of daily market prices for purposes of Section 4.4 hereof). The term "Market Price" on any date means, with respect to any class or series of outstanding REIT Shares, the Closing Price for such REIT Shares on such date. The "Closing Price" on any date means the last sale price for such REIT Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such REIT Shares, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if such REIT Shares are not listed or admitted to trading on the New York Stock Exchange, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such REIT Shares are listed or admitted to trading or, if such REIT Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not 
 

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 so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such REIT Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such REIT Shares selected by the Board of Directors of the Special Limited Partner or, in the event that no trading price is available for such REIT Shares, the fair market value of the REIT Shares, as determined in good faith by the Board of Directors of the Special Limited Partner. In the event that the REIT Shares Amount includes Rights that a holder of REIT Shares would be entitled to receive, then the Value of such Rights shall be determined by the Special Limited Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. 
 

 ARTICLE 2
 ORGANIZATIONAL MATTERS
 

 Section 2.1   Formation.    The Partnership is a limited partnership heretofore formed and continued pursuant to the provisions of the Act and upon the terms and subject to the 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.
 

 Section 2.2   Name.    The name of the Partnership is "Hartman XX Limited Partnership." The Partnership's business may be conducted under any other name or names deemed advisable by the Managing General Partner, including the name of the Managing General Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be included in the Partnership's name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The Managing General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Partners of such change in the next regular communication to the Partners.
  
 Section 2.3   Registered Office and Agent; Principal Office.    The address of the registered office of the Partnership in the State of Texas is located at 2909 Hillcroft, Suite 420, Houston, Texas 77057, and the registered agent for service of process on the Partnership in the State of Texas at such registered office is Hartman Short Term Income Properties XX, Inc. The principal office of the Partnership is located at 2909 Hillcroft, Suite 420, Houston, Texas 77057, or such other place as the Managing 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 Texas as the Managing General Partner deems advisable. 
 

 Section 2.4    Power of Attorney.    
 

 A.    Each Limited Partner and Assignee hereby irrevocably constitutes and appoints the Managing 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: 
 

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 (1)   execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices: (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments, supplements or restatements thereof) that the Managing 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 to the extent provided by applicable law) in the State of Texas and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the Managing 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 Managing General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all conveyances and other instruments or documents that the Managing General Partner or the Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; (e) all instruments relating to the admission, acceptance, withdrawal, removal or substitution of any Partner pursuant to the terms of this Agreement or the Capital Contribution of any Partner; and (f) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges relating to Partnership Interests; and 
 

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

 Nothing contained herein shall be construed as authorizing the Managing General Partner or any Liquidator to amend this Agreement except in accordance with Section 14.2 hereof or as may be otherwise expressly provided for in this Agreement. 
         
 B.    The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of the fact that each of the Limited Partners and Assignees will be relying upon the power of the Managing General Partner or the 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 Person's Partnership Units or Partnership Interest (as the case may be) and shall extend to such Person's heirs, successors, assigns and personal representatives. Each such Limited Partner and Assignee hereby agrees to be bound by any representation made by the Managing General Partner or the Liquidator, acting in good faith pursuant to such power of attorney; and each such Limited Partner and Assignee hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the Managing General Partner or the Liquidator, taken in good faith under such power of attorney. Each Limited Partner and Assignee shall execute and deliver to the Managing General Partner or the Liquidator, 
 

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 within fifteen (15) days after receipt of the Managing General Partner's or the Liquidator's request therefor, such further designation, powers of attorney and other instruments as the Managing General Partner or the Liquidator (as the case may be) deems necessary to effectuate this Agreement and the purposes of the Partnership. Notwithstanding anything else set forth in this Section 2.4.B, no Limited Partner shall incur any personal liability for any action of the Managing General Partner or the Liquidator taken under such power of attorney. 
 

 Section 2.5    Term.    The term of the Partnership commenced on April 11, 2014, the date that the original Certificate was filed in the office of the Secretary of State of Texas in accordance with the Act, and shall continue indefinitely unless the Partnership is dissolved sooner pursuant to the provisions of Article 13 hereof or as otherwise provided by law. 
 

 ARTICLE 3
 PURPOSE
 

 Section 3.1    Purpose and Business.    The purpose and nature of the Partnership is to conduct any business, enterprise or activity permitted by or under the Act, including, without limitation, (i) to conduct the business of ownership, construction, reconstruction, development, redevelopment, alteration, improvement, maintenance, operation, sale, leasing, transfer, encumbrance, conveyance and exchange of the Properties, (ii) to acquire and invest in any securities and/or loans relating to the Properties, (iii) to enter into any partnership, joint venture, business trust arrangement, limited liability company or other similar arrangement to engage in any business permitted by or under the Act, or to own interests in any entity engaged in any business permitted by or under the Act, (iv) to conduct the business of providing property and asset management and brokerage services, whether directly or through one or more partnerships, joint ventures, Subsidiaries, business trusts, limited liability companies or similar arrangements, and (v) to do anything necessary or incidental to the foregoing; provided, however, that such business and arrangements and interests shall be limited to and conducted in such a manner (a) as to permit the Special Limited Partner, in the sole and absolute discretion of the Special Limited Partner, at all times to be classified as a REIT and to avoid paying taxes under Code Sections 857 or 4981 and (b) as will comply in all material respects with the covenants, conditions and restrictions now or hereafter placed upon or adopted by the Special Limited Partner pursuant to any agreement of the Special Limited Partner or applicable laws and regulations. The Partnership shall have all powers necessary or desirable to accomplish the purposes set forth above. In connection with the foregoing, the Partnership shall have full power and authority to enter into, perform and carry out contracts of any kind, to borrow and lend money and to issue evidence of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien and, directly or indirectly, to acquire and construct additional Properties necessary, useful or desirable in connection with its business. 
         
 Section 3.2    Powers.    
 

 A.    The Partnership shall be 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. 
 

 

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 B.    Notwithstanding any other provision in this Agreement, the General Partner shall cause the Partnership not to take, or to refrain from taking, any action that, in the judgment of the Managing General Partner, in its sole and absolute discretion, (i) could adversely affect the ability of the Special Limited Partner to continue to qualify as a REIT, (ii) could subject the Special Limited Partner to any taxes under Code Section 857 or Code Section 4981 or any other related or successor provision under the Code, (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the Special Limited Partner, its securities or the Partnership or (iv) could violate in any material respect any of the covenants, conditions or restrictions now or hereafter placed upon or adopted by the Special Limited Partner pursuant to any 
 agreement of the Special Limited Partner or applicable laws and regulations, unless, in any such case, such action (or inaction) under clause (i), clause (ii), clause (iii) or clause (iv) above shall have been specifically consented to by the Special Limited Partner. 
 

 Section 3.3    Partnership Only for Purposes Specified.    The Partnership shall be a limited partnership only for the purposes specified in Section 3.1 hereof, and this Agreement shall not be deemed to create a company, venture or partnership between or among the Partners or any other Persons with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act. 
 

 Section 3.4    Representations and Warranties by the Partners.    
 

 A.    Each Partner that is an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any material agreement by which such Partner or any of such Partner's property is bound, or any statute, regulation, order or other law to which such Partner is subject, (ii) such Partner does not, and for so long as it is Partner will not, own, directly or indirectly, (a) five percent (5%) or more of the total combined voting power of all classes of stock entitled to vote, or five percent (5%) or more of the total number of shares of all classes of stock, of any corporation that is a tenant of either (I) the Special Limited Partner or any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), (II) the Partnership or (III) any partnership, venture or limited liability company of which the Special Limited Partner, any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member or (b) an interest of five percent (5%) or more in the assets or net profits of any tenant of either (I) the Special Limited Partner or any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), (II) the Partnership or (III) any partnership, venture, or limited liability company of which the Special Limited Partner, any "qualified REIT subsidiary" (within the meaning of Code 
 

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 Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member, (iii) such Partner has the legal capacity to enter into this Agreement and perform such Partner's obligations hereunder, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms. Notwithstanding the foregoing, each Partner that is an individual may exceed any of the five percent (5%) limits set forth in clause (ii) of the immediately preceding sentence; provided, however, that the Partner obtains the written consent of the Managing General Partner prior to exceeding any such limits, which consent the Managing General Partner may give or withhold in its sole and absolute discretion; and provided, further, that in no event shall the Partner own, directly or indirectly, more than ten percent (10%) of the stock described in clause (ii) (a) of the immediately preceding sentence or more than ten percent (10%) of the assets or net profits described in clause (ii) (b) of the immediately preceding sentence. Each Partner that is an individual shall also represent and warrant to the Partnership whether such Partner is a "foreign person" within the meaning of Code Section 1445(f) or a foreign partner within the meaning of Section 1446(e). 
 

 B.    Each Partner that is not an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or shareholder(s) (as the case may be) as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be) any material agreement by which such Partner or any of such Partner's properties or any of its partners, members, beneficiaries, trustees or shareholders (as the case may be) is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, members, trustees, beneficiaries or shareholders (as the case may be) is or are subject, (iii) such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (a) five percent (5%) or more of the total combined voting power of all classes of stock entitled to vote, or five percent (5%) or more of the total number of shares of all classes of stock, of any corporation that is a tenant of either (I) the Special Limited Partner or any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, (II) the Partnership or (III) any partnership, venture or limited liability company of which the Special Limited Partner, any Special Limited Partner, any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member or (b) an interest of five percent (5%) or more in the assets or net profits of any tenant of either (I) the Special Limited Partner, or any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with respect to the Special Limited Partner, (II) the Partnership or (III) any partnership, venture or limited liability company for which the Special Limited Partner, any Special Limited Partner, any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), with respect to the Special Limited Partner, or the Partnership is a member, and (iv) this Agreement 
 is binding upon, and enforceable against, such Partner in accordance with its terms. Notwithstanding the foregoing, each Partner that is not an individual may exceed any of the five percent (5%) limits set forth in clause (iii) of the immediately preceding sentence; provided, however, that the Partner obtains the written consent of the Managing General Partner prior to exceeding any such limits, which consent the Managing General Partner may give or withhold in its 
 

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 sole and absolute discretion; and provided, further, that in no event shall the Partner own, directly or indirectly, more than ten percent (10%) of the stock described in clause (iii) (a) of the immediately preceding sentence or more than ten percent (10%) of the assets or net profits described in clause (iii) (b) of the immediately preceding sentence. Each Partner that is not an individual shall also represent and warrant to the Partnership whether such Partner is a "foreign person" within the meaning of Code Section 1445(f) or a foreign partner within the meaning of Section 1446(e). 
 

 C.    Each Partner (including, without limitation, each Substituted Limited Partner as a condition to becoming a Substituted Limited Partner) represents, warrants and agrees that it has acquired and continues to hold its interest in the Partnership for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof in violation of applicable laws, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances in violation of applicable laws. Each Partner further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment.
 

 D.    The representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C hereof shall survive the execution and delivery of this Agreement by each Partner (and, in the case of an Additional Limited Partner or a Substituted Limited Partner, the admission of such Additional Limited Partner or Substituted Limited Partner as a Limited Partner in the Partnership) and the dissolution, liquidation and termination of the Partnership. 
 

 E.    Each Partner (including, without limitation, each Substituted Limited Partner as a condition to becoming a Substituted Limited Partner) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied. 
 

 F.     Notwithstanding the foregoing, the Managing General Partner may, in its sole and absolute discretion, permit the modification of any of the representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C above as applicable to any Partner (including, without limitation any Additional Limited Partner or Substituted Limited Partner or any transferee of either), provided that such representations and warranties, as modified, shall be set forth in either (i) a Partnership Unit Designation applicable to the Partnership Units held by such Partner or (ii) a separate writing addressed to the Partnership and the Managing General Partner. 
 

 ARTICLE 4
 CAPITAL CONTRIBUTIONS
  
 

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 Section 4.1    Capital Contributions of the Partners.    The Partners have heretofore made Capital Contributions to the Partnership. Each Partner owns Partnership Units in the amount set forth for such Partner on Exhibit A, as the same may be amended from time to time by the Managing General Partner to the extent necessary to reflect accurately sales, exchanges or other Transfers, redemptions, Capital Contributions, the issuance of additional Partnership Units, or similar events having an effect on a Partner's ownership of Partnership Units. Except as provided by law or in Section 4.2, 4.3, or 10.4 hereof, the Partners shall have no obligation or, except with the prior written consent of the Managing General Partner, right to make any additional Capital Contributions or loans to the Partnership. 
 

 Section 4.2    Issuances of Additional Partnership Interests.
    
 A.    General.    The Managing General Partner is hereby authorized to cause the Partnership to issue additional Partnership Interests, in the form of Partnership Units, for any Partnership purpose, at any time or from time to time, to the Partners (including the General Partner and the Special Limited Partner) or to other Persons, and to admit such Persons as Additional Limited Partners or as General Partners, for such consideration and on such terms and conditions as shall be established by the Managing General Partner in its sole and absolute discretion, all without the approval of any Limited Partner or any other Person. The Managing General Partner may issue Partnership Units in connection with an acquisition of property to be held directly by the Managing General Partner or its parent, if and only if, such direct acquisition and issuance of Partnership Units has been approved and determined to be in the best interest of the Managing General Partner and its parent and the Partnership by a majority of the Independent Directors.  Without limiting the foregoing, the Managing General Partner is expressly authorized to cause the Partnership to issue Partnership Units (i) upon the conversion, redemption or exchange of any Debt, Partnership Units, or other securities issued by the Partnership, (ii) for less than fair market value, so long as the Managing General Partner concludes in good faith that such issuance is in the best interests of the Managing General Partner and the Partnership, and (iii) in connection with any merger of any other Person into the Partnership if the applicable merger agreement provides that Persons are to receive Partnership Units in exchange for their interests in the Person merging into the Partnership. Any additional Partnership Interests may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties (including, without limitation, rights, powers and duties that may be senior or otherwise entitled to preference over existing Partnership Units) as shall be determined by the Managing General Partner, in its sole and absolute discretion without the approval of any Limited Partner or any other Person, and set forth in a written document thereafter attached to and made an exhibit to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated herein by this reference (each, a "Partnership Unit Designation"), including, in the event of the admission of an Additional General Partner, such rights, duties and obligations for such General Partner hereunder as the Managing General Partner shall assign, delegate or permit such Additional General Partner to exercise hereunder, in the sole and absolute discretion of the Managing General Partner, without the approval of any Limited Partner or any other Person. Without limiting the generality of the foregoing, the Managing General Partner shall have authority to specify:   (a) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Interests; (b) the right of each such class or series of Partnership Interests to share (on a pari passu, junior or preferred basis) in Partnership distributions; 
 

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 (c) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership; (d) the voting rights, if any, of each such class or series of Partnership Interests; and (e) the conversion, redemption or exchange rights applicable to each such class or series of Partnership Interests. Upon the issuance of any additional Partnership Interest, the Managing General Partner shall amend Exhibit A and the books and records of the Partnership as appropriate to reflect such issuance. 
 

 B.    Issuances of Performance Units.    Without limiting the generality of the foregoing, the Managing General Partner is hereby authorized to create one or more classes or series of additional Partnership Interests, in the form of Partnership Units (each such class or series of Partnership Interests is referred to as "Performance Units"), for issuance at any time or from time to time to directors, officers or employees of the Special Limited Partner or any Affiliate of the foregoing, and to admit such Persons as Additional Limited Partners or General Partners, for such consideration and on such terms and conditions as shall be established by the Managing General Partner, all without approval of any Limited Partner or any other Person. The Managing General Partner shall determine, in its sole and absolute discretion without the approval of any Limited Partner or any other Person, and set forth in a Partnership Unit Designation, the designations, preferences and relative, participating, option or other special rights, powers and duties with respect to any class or series of Performance Units(including, without limitation, the extent to which the value or number of each such class or series of Performance Units is subject to adjustment based on the financial performance of the Special Limited Partner). Upon the issuance of any class or series of   Performance Units, the Managing General Partner shall amend the Partnership Agreement, including Exhibit A and the books and records of the Partnership as appropriate to reflect such issuance. 
 

 C.    Issuances to the General Partner or Special Limited Partner.    No additional Partnership Units shall be issued to the General Partner or the Special Limited Partner unless (i) the additional Partnership Units are issued to all Partners in proportion to their respective Percentage Interests, (ii)  (a) the additional Partnership Units are (x) Partnership Common Units issued in connection with an issuance of REIT Shares, or (y) Partnership Units (other than Partnership Common Units) issued in connection with an issuance of Preferred Shares, New Securities or other interests in the Special Limited Partner (other than REIT Shares), which Preferred Shares, New Securities or other interests have designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of the additional Partnership Units issued to the General Partner, and (b) the General Partner or the Special Limited Partner (as the case may be) contributes to the Partnership the cash  proceeds or other consideration received in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or other interests in the Special Limited Partner, (iii) the additional Partnership Units are issued upon the conversion, redemption or exchange of Debt, Partnership Units or other securities issued by the Partnership, or (iv) the additional Partnership Units are issued pursuant to Section 4.3.B, Section 4.3.E, Section 4.4, Section 4.5 or Section 4.9. 
 

 D.    No Preemptive Rights.    No Person, including, without limitation, any Partner or Assignee, shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Partnership Interest.
 

 

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 Section 4.3    Additional Funds and Capital Contributions.    
 

 A.    General.    The Managing General Partner may, at any time and from time to time, determine that the Partnership requires additional funds ("Additional Funds") for the acquisition or development of additional Properties, for the redemption of Partnership Units or for such other purposes as the Managing General Partner may determine, in its sole and absolute discretion. Additional Funds may be obtained by the Partnership, at the election of the Managing General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.3 without the approval of any Limited Partner or any other Person.
 

 B.    Additional Capital Contributions.    The Managing General Partner, on behalf of the Partnership, may obtain any Additional Funds by accepting Capital Contributions from any Partners or other Persons. In connection with any such Capital Contribution (of cash or property), the Managing General Partner is hereby authorized to cause the Partnership from time to time to issue additional Partnership Units (as set forth in Section 4.2 above) in consideration therefor and the Percentage Interests of the General Partner, the Limited Partners shall be adjusted to reflect the issuance of such additional Partnership Units. 
 

 C.    Loans by Third Parties.    The Managing General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to any Person (other than the Managing General Partner or the Special Limited Partner) upon such terms as the Managing General Partner determines appropriate, including making such Debt convertible, redeemable or exchangeable for Partnership Units; provided, however, that the Partnership shall not incur any such Debt if any Partner would be personally liable for the repayment of such Debt (unless such Partner otherwise agrees). 
 

 D.    General Partner and Special Limited Partner Loans.    The Managing General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to the General  Partner and/or the Special Limited Partner (each, a "General Partner Loan") if (i) such Debt is, to the extent permitted by law, on substantially the same terms and conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights) as Funding Debt incurred by the General Partner or the Special Limited Partner, as applicable, the net proceeds of which are loaned to the Partnership to provide such Additional Funds, or (ii) such Debt is on terms and conditions no less favorable to the Partnership than would be available to the Partnership from any third party; provided, however, that the Partnership shall not incur any such Debt if any Partner would be personally liable for the repayment of such Debt (unless such Partner otherwise agrees) and that a majority of the directors of the Managing General Partner (including a majority of the Independent Directors) not otherwise interested in the transaction approve the transaction as being fair, competitive, and commercially reasonable on terms no less favorable to the Partnership than loans between unaffiliated parties under the same circumstances. 
 

 E.    Issuance of Securities by the Special Limited Partner.    The Special Limited Partner shall not issue any additional REIT Shares, Capital Shares or New Securities unless the Special Limited Partner contributes the cash proceeds or other consideration received from the issuance of such additional REIT Shares, Capital Shares or New Securities (as the case may be) and from the 
 

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 exercise of the rights contained in any such additional New Securities to the Partnership in exchange for (x) in the case of an issuance of REIT Shares, Partnership Common Units, or (y) in the case of an issuance of Capital Shares or New Securities, Partnership Units with designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of such Capital Shares or New Securities; provided, however, that notwithstanding the foregoing, the Special Limited Partner may issue REIT Shares, Capital Shares or New Securities (a) pursuant to Section 4.4 or Section 15.1.B hereof, (b) pursuant to a dividend or distribution (including any stock split) of REIT Shares, Capital Shares or New Securities to all of the holders of REIT Shares, Capital Shares or New Securities (as the case may be), (c) upon a conversion, redemption or exchange of Capital Shares, (d) upon a conversion, redemption, exchange or exercise of New Securities, or (e) in connection with an acquisition of a property or other asset to be owned, directly or indirectly, by the Special Limited Partner if the Managing General Partner determines that such acquisition is in the best interests of the Partnership. In the event of any issuance of additional REIT Shares, Capital Shares or New Securities by the Special Limited Partner, and the contribution to the Partnership, by the Special Limited Partner, of the cash proceeds or other consideration received from such issuance, if the cash proceeds actually received by the Special Limited Partner are less than the gross proceeds of such issuance as a result of any underwriter's discount or other expenses paid or incurred in connection with such issuance, then the Special Limited Partner shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the cash proceeds of such issuance plus the amount of such underwriter's discount and other expenses paid by the Special Limited Partner (which discount and expense shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4) 
 

 Section 4.4    Stock Option Plans.    
 

 A.    Options Granted to Persons other than Partnership Employees.   If at any time or from time to time, in connection with any Stock Option Plan, a stock option granted for stock in the Special Limited Partner to a Person other than a Partnership Employee is duly exercised: 
 

 (1)   The Special Limited Partner, shall, as soon as practicable after such exercise, make a Capital Contribution to the Partnership in an amount equal to the exercise price paid to the Special Limited Partner by such exercising party in connection with the exercise of such stock option. 
 

 (2)   Notwithstanding the amount of the Capital Contribution actually made pursuant to Section 4.4.A(1) hereof, the Special Limited Partner shall be deemed to have contributed to the Partnership as a Capital Contribution, in lieu of the Capital Contribution actually made and in consideration of an additional Limited Partner Interest (expressed in and as   additional Partnership Common Units), an amount equal to the Value of a REIT Share as of the date of exercise multiplied by the number of REIT Shares then being issued in connection with the exercise of such stock option.
 

 (3)   An equitable Percentage Interest adjustment shall be made in which the Special Limited Partner shall be treated as having made a cash contribution equal to the amount described in Section 4.4.A(2) hereof. 
 

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 B.    Options Granted to Partnership Employees.    If at any time or from time to time, in connection with any Stock Option Plan, a stock option granted for stock in the Special Limited Partner to a Partnership Employee is duly exercised: 
 

 (1)   The Special Limited Partner shall sell to the Partnership, and the Partnership shall purchase from the Special Limited Partner, the number of REIT Shares as to which such stock option is being exercised. The purchase price per REIT Share for such sale of REIT Shares to the Partnership shall be the Value of a REIT Share as of the date of exercise of such stock option. 
 

 (2)   The Partnership shall sell to the Optionee (or if the Optionee is an employee of a Partnership Subsidiary, the Partnership shall sell to such Partnership Subsidiary, which in turn shall sell to the Optionee), for a cash price per share equal to the Value of a REIT Share at the time of the exercise, the number of REIT Shares equal to (a) the exercise price paid to     the Special Limited Partner by the exercising party in connection with the exercise of such stock option divided by (b) the Value of a REIT Share at the time of such exercise. 
 

 (3)   The Partnership shall transfer to the Optionee (or if the Optionee is an employee of a Partnership Subsidiary, the Partnership shall transfer to such Partnership Subsidiary, which in turn shall transfer to the Optionee) at no additional cost, as additional compensation, the number of REIT Shares equal to the number of REIT Shares described in Section 4.4.B(1) hereof less the number of REIT Shares described in Section 4.4.B(2) hereof. 
 

 (4)   The Special Limited Partner shall, as soon as practicable after such exercise, make a Capital Contribution to the Partnership of an amount equal to all proceeds received (from whatever source, but excluding any payment in respect of payroll taxes or other withholdings) by the  Special Limited Partner in connection with the exercise of such stock option. An equitable Percentage Interest adjustment shall be made in which the Special Limited Partner shall be treated as having made a cash contribution equal to the amount described in Section 4.4.B(1) hereof. 
 

 
 C.    Future Stock Incentive Plans.    Nothing in this Agreement shall be construed or applied to preclude or restrain the Managing General Partner or the Special Limited Partner from adopting, modifying or terminating stock incentive plans for the benefit of employees, directors or other business associates of the Managing General Partner, the Special Limited Partner, the Partnership or any of their Affiliates. The Partners acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by the Managing General Partner or the Special Limited Partner, amendments to this Section 4.4 may become necessary or advisable and that any approval or Consent to any such amendments requested by the Managing General Partner or the Special Limited Partner shall be deemed granted by the Limited Partners. 
 

 Section 4.5    Dividend Reinvestment Plan, Stock Incentive Plan or Other Plan.    Except as may otherwise be provided in this Article 4, all amounts received by the Special Limited Partner in respect of any dividend reinvestment plan, stock incentive or other stock or subscription plan or 
 

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 agreement, either (a) shall be utilized by the Special Limited Partner to effect open market purchases of REIT Shares, or (b) if the Special Limited Partner elects instead to issue new REIT Shares with respect to such amounts, shall be contributed by the Special Limited Partner to the Partnership in exchange for additional Partnership Common Units. Upon such contribution, the Partnership will issue to the Special Limited Partner a number of Partnership Common Units equal in value to the product of (i) the Value as of the date of issuance of each REIT Share so issued by the Special Limited Partner multiplied by (ii) the number of REIT Shares so issued. 
 

 Section 4.6    No Interest; No Return.    No Partner shall be entitled to interest on its Capital Contribution or on such Partner's Capital Account. 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. 
 

 Section 4.7    Conversion or Redemption of Capital Shares.    
 

 A.    Conversion of Capital Shares.    If, at any time, any of the Capital Shares are converted into REIT Shares, in whole or in part, then a number of Partnership Units with designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of such Capital Shares ("Partnership Equivalent Units") equal to the number of Capital Shares so converted shall automatically be converted into a number of Partnership Common Units equal to (i) the number of REIT Shares issued upon such conversion divided by (ii) the Adjustment Factor then in effect, and the Percentage Interests of the General Partner and the Limited Partners (including the Special Limited Partner) shall be adjusted to reflect such conversion. 
 

 B.    Redemption of Capital Shares.    If, at any time, any Capital Shares are redeemed (whether by exercise of a put or call, automatically or by means of another arrangement) by the Special Limited Partner for cash, the Partnership shall, immediately prior to such redemption of Capital Shares, redeem an equal number of Partnership Equivalent Units held by the Special Limited Partner upon the same terms and for the same price per Partnership Equivalent Unit as such Preferred Shares are redeemed. 
 

 Section 4.8    Other Contribution Provisions.    In the event that any Partner is admitted to the Partnership and is given a Capital Account in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had 
 compensated such partner in cash and such Partner had contributed the cash that the Partner would have received to the capital of the Partnership. In addition, with the consent of the Managing General Partner, one or more Partners (including the Special Limited Partner) may enter into contribution agreements with the Partnership which have the effect of providing a guarantee of certain obligations of the Partnership. 
         
 Section 4.9    Excluded Properties.    The Special Limited Partner shall contribute each Excluded Property (or, if applicable, the net proceeds (after payment of all transfer taxes and other transaction costs) received by the Special Limited Partner from the sale, transfer or other disposition of an Excluded Property to a Person who is not a wholly-owned Subsidiary of the Special Limited Partner) to the Partnership upon the earlier of (i) such time as it is commercially 
 

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 practicable to contribute such property to the Partnership without adverse tax or other economic consequence to the Special Limited Partner and (ii) any sale, transfer or other disposition of an Excluded Property to a Person who is not a wholly-owned Subsidiary of the Special Limited Partner. Upon any such contribution of an Excluded Property or the proceeds therefrom, the Special Limited Partner shall receive in exchange for such contribution, notwithstanding the actual value of such Excluded Property or the amount of such proceeds (as the case may be), the Specified Partnership Units applicable to such Excluded Property. 
 

 ARTICLE 5
 DISTRIBUTIONS
 

 Section 5.1    Requirement and Characterization of Distributions.   Subject to the terms of any Partnership Unit Designation, the Managing General Partner shall cause the Partnership to distribute quarterly all, or such portion as the Managing General Partner may in its sole and absolute discretion determine, of Available Cash generated by the Partnership during such quarter to the Holders on the Partnership Record Date with respect to such quarter: (i) first, with respect to any Partnership Units that are entitled to any preference in distribution, in accordance with the rights of such class(es) of Partnership Units (and, within such class(es), among the Holders pro rata in proportion to their respective Percentage Interests on such Partnership Record Date); and (ii) second, with respect to any Partnership Units that are not entitled to any preference in distribution, in accordance with the rights of such class of Partnership Units, as applicable (and, within such class, among the Holders pro rata in proportion to their respective Percentage Interests on such Partnership Record Date). Distributions payable with respect to any Partnership Units that were not outstanding during the entire quarterly period in respect of which any distribution is made shall be prorated based on the portion of the period that such Partnership Units were outstanding. Notwithstanding the foregoing, the Managing General Partner, in its sole and absolute discretion, may distribute Available Cash to the Holders on a more or less frequent basis than quarterly and provide for an appropriate record date. The Managing General Partner shall make such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with the Special Limited Partner's qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the Special Limited Partner, for so long as the Special Limited Partner has determined to qualify as a REIT, to pay shareholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations (the "REIT Requirements") and (b) except to the extent otherwise determined by the Special Limited Partner, eliminate any Federal income or excise tax liability of the Special Limited Partner. 
 

 Notwithstanding the foregoing, in the event any Excluded Property (or the proceeds therefrom) has not been contributed to the Partnership pursuant to Section 4.9, the distributions provided for above shall be calculated, to the extent possible, based on Adjusted Available Cash as if each Excluded Property had been contributed to the Partnership in exchange for Partnership Common Units pursuant to Section 4.9; provided, however, that in the event any Excluded Property (or the proceeds therefrom) has not been contributed to the Partnership pursuant to Section 4.9, any distributions to be made with respect to the Special Limited Partner's Partnership Units shall in the aggregate be reduced to the extent of any REIT Available Cash. 
 

 

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 Subject to the applicable Partner Unit Designation, each Limited Partner shall receive a pro rata share of Distributions under this Article 5 in an amount equal to the distributions such Limited Partner would have received if such Limited Partner held one REIT Share (bearing the same designations as the actual Partnership Unit held by such Limited Partner) for each of such Limited 
 Partner's Partnership Unit. 
    
 Section 5.2    Distributions in Kind.    No right is given to any Holder to demand and receive property other than cash as provided in this Agreement. The Managing General Partner may determine, in its sole and absolute discretion, to make a distribution in kind of Partnership assets to the Holders, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5, 6 and 10 hereof; provided, however, that the Managing General Partner shall not make a distribution in kind to any Holder unless the Holder has been given 90 days prior written notice of such distribution. 
 

 Section 5.3    Amounts Withheld.    All amounts withheld pursuant to the Code or any provisions of any state or local tax law and Section 10.4 hereof with respect to any allocation, payment or distribution to any Holder shall be treated as amounts paid or distributed to such Holder pursuant to Section 5.1 hereof for all purposes under this Agreement. 
 

 Section 5.4    Distributions Upon Liquidation.    Notwithstanding the other provisions of this Article 5, net proceeds from a Terminating Capital Transaction, and any other cash received or reductions in reserves made after commencement of the liquidation of the Partnership, shall be distributed to the Holders in accordance with Section 13.2 hereof. 
  
 Section 5.5    Distributions to Reflect Additional Partnership Units.    In the event that the Partnership issues additional Partnership Units pursuant to the provisions of Article 4 hereof, the Managing General Partner is hereby authorized to make such revisions to this Article 5 as it determines are necessary or desirable to reflect the issuance of such additional Partnership Units, including, without limitation, making preferential distributions to certain classes of Partnership Units. 
 

 Section 5.6    Restricted Distributions.    Notwithstanding any provision to the contrary contained in this Agreement, neither the Partnership nor the General Partner, on behalf of the Partnership, shall make a distribution to any Holder if such distribution would violate Section 17-607 of the Act or other applicable law. 
 

 ARTICLE 6
 ALLOCATIONS
 

 Section 6.1    Timing and Amount of Allocations of Net Income and Net Loss.    Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Partnership Year of the Partnership as of the end of each such year, provided that the Managing General Partner may in its discretion allocate Net Income and Net Loss for a shorter period as of the end of such period. Except as otherwise provided in this Article 6, and subject to Section 11.6.C hereof, an allocation to a Holder of a share of Net Income or Net Loss shall be treated as an 
 

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 allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss. 
 

 Section 6.2    General Allocations.    Subject to Section 11.6.C hereof and with any modifications pursuant to the definition of Capital Account Net Income and Net Loss shall be allocated to each of the Holders as follows: 
 

 (i)    Net Income will be allocated to Holders of Partnership Preferred Units in accordance with and subject to the terms of the Partnership Unit Designation applicable to such Partnership Preferred Units; 
 

 (ii)   subject to the terms of any Partnership Unit Designation, remaining Net Income will be allocated to the Holders of Partnership Common Units in accordance with their respective Percentage Interests at the end of each Partnership Year; 
 

 (iii)  subject to the terms of any Partnership Unit Designation, Net Loss will be allocated to the Holders of Partnership Common Units in accordance with their respective Percentage Interests at the end of each Partnership Year; and 
 

 (iv)  for purposes of this Section 6.2, the Percentage Interests of the Holders of Partnership Common Units shall be calculated based on a denominator equal to the aggregate Partnership Common Units outstanding as of the date of determination. 
 

 It is intended that the provisions of this Article 6 satisfy the requirements of Section 704(b) of the Code and the Regulations thereunder, and the General Partner is authorized to make adjustments to the allocation provisions set forth above to the extent the General Partner determines such adjustments to be necessary or appropriate to comply with Section 704(b) of the Code and the Regulations thereunder (including to cause Capital Accounts attributable to Partnership Common Units to be in proportion to their respective Percentage Interests); provided, however, that in no event shall this sentence permit the General Partner to adjust the timing or amount of any distributions to the Partners. 
 

 Section 6.3    Additional Allocation Provisions.    Notwithstanding the foregoing provisions of this Article 6: 
 

 A.    Special Allocations Regarding Partnership Preferred Units.    If any Partnership Preferred Units are redeemed pursuant to Section 4.7.B hereof (treating a full liquidation of the Managing General Partner's General Partner Interest or of such Special Limited Partner's Limited Partner Interest for purposes of this Section 6.3.A as including a redemption of any then outstanding Partnership Preferred Units pursuant to Section 4.7.B hereof), for the Partnership Year that includes such redemption (and, if necessary, for subsequent Partnership Years) (a) gross income and gain (in such relative proportions as the Managing General Partner in its discretion shall determine) shall be allocated to the holder(s) of such Partnership Preferred Units to the extent that the Redemption Amounts paid or payable with respect to the Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the aggregate Capital Account Balances (net of liabilities assumed or taken subject to by the Partnership) per Partnership Preferred Unit allocable 
 

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 to the Partnership Preferred Units so redeemed (or treated as redeemed) and (b) deductions and losses (in such relative proportions as the Managing General Partner in its discretion shall determine) shall be allocated to the holder(s) of such Partnership Preferred Units to the extent that the aggregate Capital Account Balances (net of liabilities assumed or taken subject to by the Partnership) per Partnership Preferred Unit allocable to the Partnership Preferred Units so redeemed (or treated as redeemed) exceeds the Redemption Amount paid or payable with respect to the Partnership Preferred Units so redeemed (or treated as redeemed). 
 

 B.    Regulatory Allocations.  
 

 (i)    Minimum Gain Chargeback.    Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 hereof, or any other provision of this Article 6, if there is a net decrease in Partnership Minimum Gain during any Partnership Year, each Holder shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder's share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.B(i) is intended to qualify as a "minimum gain chargeback" within the meaning of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith. 
 

 (ii)    Partner Minimum Gain Chargeback.    Except as otherwise provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.B(i) hereof, if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each Holder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder's respective share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.B(ii) is intended to qualify as a "chargeback of partner nonrecourse debt minimum gain" within the meaning of Regulations Section 1.704-2(i) and shall be interpreted consistently therewith. 
 

 (iii)    Nonrecourse Deductions and Partner Nonrecourse Deductions.  Any Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holders in accordance with their respective Percentage Interests. Any Partner Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holder(s) who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Section 1.704-2(i). 
 

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 (iv)    Qualified Income Offset.    If any Holder unexpectedly receives an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to  eliminate, to the extent required by such Regulations, the Adjusted Capital Account Deficit of such Holder as quickly as possible, provided that an allocation pursuant to this Section 6.3.B(iv) shall be made if and only to the extent that such Holder would have an Adjusted Capital Account Deficit after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.B(iv) were not in the Agreement. It is intended that this Section 6.3.B(iv) qualify and be construed as a "qualified income offset" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.  
 

 (v)    Gross Income Allocation.    In the event that any Holder has a deficit Capital Account at the end of any Partnership Year that is in excess of the sum of (1) the amount (if any) that such Holder is obligated to restore to the Partnership upon complete liquidation of such Holder's Partnership Interest (including, the Holder's interest in outstanding Partnership Preferred Units and other Partnership Units) and (2) the amount that such Holder is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be specially allocated items of Partnership income and gain in the amount of such excess to eliminate such deficit as quickly as possible, provided that an allocation pursuant to this Section 6.3.B(v) shall be made if and only to the extent that such Holder would have a deficit Capital Account in excess of such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.B(v) and Section 6.3.B(iv) hereof were not in the Agreement.   
 

 (vi)    Limitation on Allocation of Net Loss.    To the extent that any allocation of Net Loss would cause or increase an Adjusted Capital Account Deficit as to any Holder, such allocation of Net Loss shall be  reallocated among the other Holders in accordance with their respective Percentage Interests, subject to the limitations of this Section 6.3.B(vi).
 

 (vii)    Section 754 Adjustment.    To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2) (iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Holder of Partnership Common Units in complete liquidation of its interest in the Partnership, 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 to the Holders in accordance with their respective Percentage Interests in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holder(s) to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies. 
 

 

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 (viii)    Curative Allocations.    The allocations set forth in Sections 6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the "Regulatory Allocations") are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section 6.1 hereof, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Holders of Partnership Common Units so that to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each Holder of a Partnership Common Unit shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred. 
 

 C.    Special Allocations Upon Liquidation.    Notwithstanding any provision in this Article 6 to the contrary, in the event that the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Partnership pursuant to Article 13 hereof, then any Net Income or Net Loss realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such Partnership Year (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding Partnership Year) among the Holders as required so as to cause liquidating distributions pursuant to Section 13.2.A(4) hereof to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article 5 hereof. 
 

 D.    Allocation of Excess Nonrecourse Liabilities.    For purposes of determining a Holder's proportional share of the "excess nonrecourse liabilities" of the Partnership within the meaning of Regulations Section 1.752-3(a)(3), each Holder's respective interest in Partnership profits shall be equal to such Holder's Percentage Interest with respect to Partnership Common Units. 
 

 Section 6.4    Tax Allocations. 
 

 A.    In General.    Except as otherwise provided in this Section 6.4, for income tax purposes under the Code and the Regulations each Partnership item of income, gain, loss and deduction (collectively, "Tax Items") shall be allocated among the Holders in the same manner as its correlative item of "book" income, gain, loss or deduction is allocated pursuant to Sections 6.2 and 6.3 hereof. 
 

 B.    Section 704(c) Allocations.    Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is contributed to the Partnership with a Gross Asset Value that varies from its basis in the hands of the contributing Partner immediately preceding the date of contribution shall be allocated among the Holders for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. The Partnership shall account for such variation under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the Managing General Partner. In the event that the Gross Asset Value of any partnership asset is adjusted pursuant to subsection (b) of the definition of "Gross Asset Value" (provided in Article 1 hereof), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable Regulations and using the method chosen by the Managing General Partner. 
 

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 ARTICLE 7
 MANAGEMENT AND OPERATIONS OF BUSINESS
 

 Section 7.1    Management.    
 

 A.    Except as otherwise expressly provided in this Agreement or as delegated or provided to an Additional General Partner by the Managing General Partner pursuant to Section 4.2.A and Section 11.2 hereof, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the Managing General Partner, and no Limited Partner (other than the Special Limited Partner in its capacity as the sole member of the Managing General Partner) shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. No General Partner may be removed by the Partners, with or without cause, except with the consent of the Managing General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the Managing General Partner, subject to the other provisions hereof including, without limitation, Section 3.1, Section 3.2, and Section 7.3, 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, without limitation:
 

 (1)   the making of any expenditures, the lending or borrowing of money or selling of assets (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to the Holders in such amounts as will permit the Special Limited Partner (so long as the Special Limited Partner qualifies as a REIT) to prevent the imposition of any Federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its shareholders sufficient to permit the Special Limited Partner to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by deed to secure debt, mortgage, deed of trust or other lien or encumbrance on the Partnership's assets) and the incurring of any obligations that the  Managing General Partner deems necessary for the conduct of the activities of the Partnership;
  
 (2)   the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; 
 

 (3)   subject to Section 11.2 hereof, the acquisition, sale, transfer, exchange or other disposition of any, all or substantially all of the assets (including the goodwill) of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger, consolidation, reorganization or other combination of the Partnership with or into another entity; 
 

 

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 (4)   the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the assignment of any assets of the Partnership in trust for creditors or on the promise of the assignee to pay the debts of the Partnership, the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms that the Managing General Partner sees fit, including, without limitation, the financing of the operations and activities of the Managing General Partner, the Partnership or any of the Partnership's Subsidiaries, the lending of funds to other Persons (including, without limitation, the Managing General Partner and/or the Partnership's Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership's Subsidiaries; 
 

 (5)   the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property; 
 

 (6)   the negotiation, execution and performance of any contracts, including leases (including ground leases), easements, management agreements, rights of way and other property-related agreements, conveyances or other instruments that the Managing General Partner considers useful or necessary to the conduct of the Partnership's operations or the implementation of the Managing General Partner's powers under this Agreement, including contracting with contractors, developers, consultants, governmental authorities, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation, as applicable, out of the Partnership's assets; 
 

 (7)   the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, and the collection and receipt of revenues, rents and income of the Partnership; 
 

 (8)   the selection and dismissal of employees of the Partnership (if any) or the Managing General Partner (including, without limitation, employees having titles or offices such as "president," "vice president," "secretary" and "treasurer"), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the Managing General Partner and the determination of their compensation and other terms of employment or hiring; 
 

 (9)   the maintenance of such insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership and the Partners (including, without limitation, the Special Limited Partner) as the Managing General Partner deems necessary or appropriate; 
 

 (10) the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, limited liability companies, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, any Subsidiary and any other 
 

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 Person in which the Managing General Partner has an equity investment from time to time); provided, however, that, as long as the Special Limited Partner has determined to continue to qualify as a REIT, the Managing General Partner will not engage in any such formation, acquisition or contribution that would cause the Special Limited Partner to fail to qualify as a REIT; 
 

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

 (12) the undertaking of any action in connection with the Partnership's direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons);  
 

 (13) the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the Managing General Partner may adopt; provided, however, that such methods are otherwise consistent with the requirements of this Agreement; 
 

 (14) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner's contribution of property or assets to the Partnership; 
 

 (15) 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; 
 

 (16) the exercise of any of the powers of the Managing 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; 
 

 (17) the exercise of any of the powers of the Managing 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; 
 

 (18) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases, confessions of judgment or any other legal instruments or agreements in writing necessary or appropriate in the judgment of the 
 

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 Managing General Partner for the accomplishment of any of the powers of the Managing General Partner enumerated in this Agreement;
 

 (19) 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; 
 

 (20) an election to dissolve the Partnership pursuant to Section 13.1.B hereof; and
 

 (21) the distribution of cash to acquire Partnership Common Units held by a Limited Partner in connection with a Redemption under Section 15.1  hereof. 
 

 B.    Each of the Limited Partners agrees that, except as provided in Section 7.3 hereof, the Managing 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 or any other Persons, notwithstanding any other provision of the Act or any applicable law, rule or regulation. 
   
 C.    At all times from and after the date hereof, the Managing General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties of the Partnership and (ii) liability insurance for the Indemnitees hereunder.
 

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

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

 Section 7.2    Certificate of Limited Partnership.    To the extent that such action is determined by the Managing General Partner to be reasonable and necessary or appropriate, the Managing General Partner shall file amendments to and restatements of the Certificate and do all 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 Texas and each other state, the District of Columbia or any other jurisdiction, in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5.A hereof, the Managing 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. The Managing 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 
 

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 a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Texas and any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property. 
  
 Section 7.3    Restrictions on Managing General Partner's Authority.  
 

 A.    The Managing General Partner may not take any action in contravention of this Agreement, including, without limitation: 
 

 (1)   take any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement; 
 

 (2)   possess Partnership property, or assign any rights in specific Partnership property, for other than a Partnership purpose except as otherwise provided in this Agreement, including, without limitation, Section 7.10; 
 

 (3)   admit a Person as a Partner, except as otherwise provided in this Agreement;
 

 (4)   perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as provided herein or under the Act; or 
 

 (5)   enter into any contract, mortgage, loan or other agreement that expressly prohibits or restricts (a) the Managing General Partner or the Partnership from performing its specific obligations under Section 15.1 hereof in full or (b) a Limited Partner from exercising its rights under Section 15.1 hereof to effect a Redemption in full, except, in either case, with the written consent of such Limited Partner affected by the prohibition or restriction. 
 

 B.    Except as provided in Section 7.3C hereof, the Managing General Partner shall not, without the prior Consent of the Partners, amend, modify or terminate this Agreement. 
 

 C.    Notwithstanding Section 7.3.B and 14.2 hereof, the Managing General Partner shall have the power, without the Consent of the Partners, to amend this Agreement as may be required to facilitate or implement any of the following purposes:
 

 (1)   to add to the obligations of the Managing General Partner or surrender any right or power granted to the Managing General Partner or any Affiliate of the Managing General Partner (including the delegation or surrender of any power to any Additional General Partner admitted to the Partnership pursuant to the terms hereof) for the benefit of the Limited Partners; 
 

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

 (3)   to reflect a change that is of an inconsequential nature or does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or 
 

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 supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;  
 

 (4)   to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a Federal or state agency or contained in Federal or state law (collectively, "Legal Requirements"); 
 

 (5)   (a) to reflect such changes as are reasonably necessary for the Special Limited Partner to maintain its status as a REIT or to satisfy the REIT Requirements, or (b) to reflect the Transfer of all or any part of a Partnership Interest among the Special Limited Partner and any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)) with respect to the Special Limited Partner; 
 

 (6)   to modify either or both of the manner in which items of Net Income or Net Loss are allocated pursuant to Article VI or the manner in which Capital Accounts are adjusted, computed, or maintained (but in each case only to the extent set forth in the definition of "Capital Account" or the flush language of Section 6.2); 
 

 (7)   the issuance of additional Partnership Interests in accordance with Section 4.2; and 
 

 (8)   to reflect any other modification to this Agreement as is reasonably necessary for the business or operations of the Partnership or the Special Limited Partner and which does not violate Section 7.3.D. 
 

 D.    Notwithstanding Sections 7.3.B, 7.3.C and 14.2 hereof, this Agreement shall not be amended, and no action may be taken by the Managing General Partner, without the consent of each Partner adversely affected thereby, if such amendment or action would (i) convert a Limited Partner Interest in the Partnership into a General Partner Interest (except as a result of the Managing General Partner acquiring such Partnership Interest), (ii) modify the limited liability of a Limited Partner, (iii) alter the rights of any Partner to receive the distributions to which such Partner is entitled, pursuant to Article 5 or Section 13.2.A(4) hereof, or alter the allocations specified in Article 6 hereof (except, in any case, as permitted pursuant to Sections 4.2, 7.3.C and Article 6 hereof), (iv) alter or modify the Redemption rights, Cash Amount or REIT Shares Amount as set forth in Section 15.1 hereof, or amend or modify any related definitions, (v) alter or modify Section 11.2 hereof, (vi) remove, alter or amend the powers and restrictions related to REIT requirements or to permit the Special Limited Partner to avoid paying tax under Sections 857 or 4981 contained in Sections 3.1, 3.2, 7.1 and 7.3, or (vii) amend this Section 7.3.D. Further, no amendment may alter the restrictions on the Managing General Partner's authority set forth elsewhere in this Section 7.3 without the consent specified therein. Any such amendment or action consented to by any Partner shall be effective as to that Partner, notwithstanding the absence of such consent by any other Partner. 
 

 Section 7.4    Reimbursement of the Managing General Partner and the Special Limited Partner.    
 

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 A.    Neither the Managing General Partner nor the Special Limited Partner shall be compensated for its services as managing general partner or limited partner of the Partnership except as provided in this Agreement (including the provisions of Articles 5 and 6 hereof regarding distributions, payments and allocations to which they may be entitled in their respective capacities as the Managing General Partner and the Special Limited Partner). 
 

 B.    Subject to Sections 7.4.C and 15.12 hereof, the Partnership shall be liable for, and shall reimburse the Managing General Partner and the Special Limited Partner, as applicable, on a monthly basis, or such other basis as the Managing General Partner may determine in its sole and absolute discretion, for all sums expended in connection with the Partnership's business, including, 
 without limitation, (i) expenses relating to the ownership of interests in and management and operation of, or for the benefit of, the Partnership, (ii) compensation of officers and employees, including, without limitation, payments under future compensation plans, of the Special Limited Partner, the Managing General Partner, or the Partnership that may provide for stock units, or phantom stock, pursuant to which employees of the Special Limited Partner, the Managing General Partner, or the Partnership will receive payments based upon dividends on or the value of REIT Shares, (iii) director or manager fees and expenses of the Special Limited Partner or its Affiliates, and (iv) all costs and expenses of the Special Limited Partner being a public company, including costs of filings with the SEC, reports and other distributions to its shareholders; provided, however, that the amount of any reimbursement shall be reduced by any interest earned by the Managing General Partner or the Special Limited Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership as permitted pursuant to Section 7.5 hereof. Such 
 reimbursements shall be in addition to any reimbursement of the Managing General Partner and the Special Limited Partner as a result of indemnification pursuant to Section 7.7 hereof.
 

 C.    To the extent practicable, Partnership expenses shall be billed directly to and paid by the Partnership and, subject to Section 15.12 hereof, reimbursements to the Managing General Partner, the Special Limited Partner or any of their respective Affiliates by the Partnership pursuant to this Section 7.4 shall be treated as "guaranteed payments" within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Partners' Capital Accounts. 
 

 Section 7.5    Outside Activities of the Managing General Partner and the Special Limited Partner.    Neither the Managing General Partner nor the Special Limited Partner shall directly or indirectly enter into or conduct any business, other than in connection with, (a) with respect to the Managing General Partner, the ownership, acquisition and disposition of Partnership Interests as the Managing General Partner, (b) with respect to the Managing General Partner, the management of the business of the Partnership, (c) with respect to the Special Limited Partner, the operation of the Special Limited Partner as a reporting company with a class (or classes) of securities registered under the Exchange Act, (d) with respect to the Special Limited Partner, its operations as a REIT, (e) with respect to the Special Limited Partner, the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests, (f) financing or refinancing of any type related to the Partnership or its assets or activities, and (g) such activities as are incidental thereto; 
 provided, however, that each of the Managing General Partner and the Special Limited Partner may, in its sole and absolute discretion, from time to time hold or acquire assets in its own name or 
 

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 otherwise other than through the Partnership so long as each of the Managing General Partner and the Special Limited Partner takes commercially reasonable measures to insure that the economic benefits and burdens of such Property are otherwise vested in the Partnership, whether by electing to treat such asset as an "Excluded Property" hereunder, through assignment, mortgage loan or otherwise or, if it is not commercially reasonable to vest such economic interests in the Partnership, the Partners shall negotiate in good faith to amend this Agreement, including, without limitation, the definition of "Adjustment Factor," to reflect such activities and the direct ownership of assets by the Managing General Partner or the Special Limited Partner, as applicable. Nothing contained herein shall be deemed to prohibit the Managing General Partner from executing guarantees of Partnership debt for which it would otherwise be liable in its capacity as Managing General Partner. The Managing General Partner, the Special Limited Partner and all "qualified REIT subsidiaries" (within the meaning of Code Section 856(i)(2)), taken as a group, shall not own any assets or take title to assets (other than temporarily in connection with an acquisition prior to contributing such assets to the Partnership) other than (i) Excluded Properties, (ii) interests in "qualified REIT subsidiaries" (within the meaning of Code Section 856(i)(2)), (iii) Partnership Interests as the Managing General Partner or Special Limited Partner and (iv) such cash and cash equivalents, bank 
 accounts or similar instruments or accounts as such group deems reasonably necessary, taking into account Section 7.1.D hereof and the requirements necessary for the Special Limited Partner to qualify as a REIT and for the Managing General Partner and the Special Limited Partner to carry out their respective responsibilities contemplated under this Agreement and the Charter. The Managing General Partner and any Affiliates of the Managing 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. Nothing in this Agreement shall limit, or be deemed to limit, (A) the ability of the Managing General Partner, the Special Limited Partner or any of their respective Subsidiaries to form (or acquire an interest in) a partnership or limited liability company with any other Person into which such Person shall contribute or otherwise assign or transfer (or has contributed or otherwise assigned or transferred) certain assets or properties of such Person for partnership or membership interests in such partnership or limited liability company, as the case may be, or (B) the ability of the Special Limited Partner to own any interest in any financing vehicle that is otherwise not a Subsidiary of the Partnership, which will be deemed to be an Excluded Property. 
 

 Section 7.6    Transactions with Affiliates.    
 

 A.    The Partnership may lend or contribute funds or other assets to the Special Limited Partner and its Subsidiaries or other Persons in which the Special Limited Partner has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions no less favorable to the Partnership in the aggregate than would be available from unaffiliated third parties as determined by the Managing General Partner in good faith (provided, however, that the foregoing limitation shall not apply to any transaction between the Partnership and its Subsidiaries in which the Special Limited Partner does not own an equity interest other than through the Partnership). The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person. It is expressly acknowledged and agreed by each Partner that the Special Limited Partner may, in the sole and absolute discretion of the Managing General Partner, (i) borrow funds from the Partnership in order to redeem, at any time or from time to time, options or warrants previously or hereafter issued by the Special Limited Partner, (ii) put to the Partnership, 
 

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 for cash, any rights, options, warrants or convertible or exchangeable securities that the Special Limited Partner may desire or be required to purchase or redeem or (iii) borrow funds from the Partnership to acquire assets that become Excluded Properties or will be contributed to the Partnership for Partnership Units. If the Special Limited Partner acquires a corporation in which the Partnership does not hold an interest, in whole or in part, with the proceeds (whether comprised of cash or other assets) of a loan from the Partnership to the Special Limited Partner, the Partnership shall issue to such corporation an interest in the Partnership that (1) entitles the holder thereof to receive distributions in amounts and at the same times as interest payments on such loan (with appropriate reductions in such distributions if any portion of the loan is repaid), (2) entitles the holder thereof to receive, if and to the extent that any portion of such loan is repaid, a number of Partnership Units equal to the quotient obtained by dividing the principal amount of the loan repaid by the Value of REIT Shares at the date of repayment (it being understood and agreed that if the loan is repaid with funds contributed to such corporation by the Special Limited Partner from the proceeds of a sale of REIT Shares, the market price Value of REIT Shares at the date of repayment shall be deemed to be the net price per share at which such shares were sold), and (3) is automatically redeemed for no consideration upon the repayment in full of such loan. 
 

 B.    Except as provided in Section 7.5 hereof and subject to Section 3.1 hereof, the Partnership may transfer assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law as the Managing General Partner, believes, in good faith, to be advisable. 
 

 C.    The Managing General Partner, the Special Limited Partner and their respective Affiliates may sell, transfer or convey any property to the Partnership, directly or indirectly, on terms and conditions no less favorable to the Partnership in the aggregate than would be available from unaffiliated third parties as determined by the Managing General Partner in good faith; provided, however, that the foregoing limitation shall not apply to any transaction between the Partnership and its Subsidiaries in which the Special Limited Partner does not own an equity interest other than through the Partnership.
 

 D.    The Managing General Partner or the Special Limited Partner, in their respective sole and absolute discretion and without the approval of the Partners or any of them or any other Persons, may propose and adopt (on behalf of the Partnership) employee benefit plans funded by the Partnership for the benefit of employees of the Managing General Partner, the Partnership, the 
 Special Limited Partner, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Managing General Partner, the Special Limited Partner, the Partnership or any of the Partnership's Subsidiaries. 
 

 Section 7.7    Indemnification.  
 

 A.    To the fullest extent permitted by applicable law, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, attorney's fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, 
 

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 suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership ("Actions") as set forth in this Agreement in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise; provided, however, that the Partnership shall not indemnify an Indemnitee (i) if the act or omission of the Indemnitee was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful; or (iii) for any transaction for which such Indemnitee received an improper personal benefit in violation or breach of any provision of this Agreement; and provided, further, that (x) no payments pursuant to this Agreement shall be made by the Partnership to indemnify or advance funds to any Indemnitee with respect to any Action initiated or brought voluntarily by such Indemnitee (and not by way of defense) unless (I) approved or authorized by the Managing General Partner or (II) incurred to establish or enforce such Indemnitee's right to indemnification under this Agreement, and (y) the Partnership shall not be liable for any expenses incurred by an Indemnitee in connection with one or more Actions or claims brought by the Partnership or involving such Indemnitee if such Indemnitee is found liable to the Partnership on any portion of any claim in any such Action. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the Managing General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. It is the intention of this Section 7.7.A that the Partnership indemnify each Indemnitee to the fullest extent permitted by law.  The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A. The termination of any proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, creates a rebuttable presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7.A with respect to the subject matter of such proceeding. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and neither the Managing General Partner nor any other Holder shall have any obligation to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7. 
 

 B.    To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or otherwise subject to or the focus of or is involved in any Action shall be paid or reimbursed by the Partnership as incurred by the Indemnitee in advance of the final disposition of the Action 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 Section 7.7A has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met. 
 

 C.    The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any 
 

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 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 and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written agreement with such Indemnitee or in the writing pursuant to which such Indemnitee is indemnified. 
 

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

 E.    Any liabilities which an Indemnitee incurs as a result of acting on behalf of the Partnership, the Managing General Partner or the Special Limited Partner (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the IRS, penalties assessed by the Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities or judgments or fines under this Section 7.7, unless such liabilities arise as a result of (i) an act or omission of such Indemnitee that was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, an act or omission that such Indemnitee had reasonable cause to believe was unlawful, or (iii) any transaction in which such Indemnitee received a personal benefit in violation or breach of any provision of this Agreement or applicable law. 
 

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

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

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

 

 I.     It is the intent of the parties that any amounts paid by the Partnership to the Managing General Partner pursuant to this Section 7.7 shall be treated as "guaranteed payments" within the meaning of Code Section 707(c). 
 

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 Section 7.8    Liability of the Managing General Partner and the Special Limited Partner.   
 

 A.    Notwithstanding anything to the contrary set forth in this Agreement, neither the Managing General Partner (nor the Special Limited Partner as the managing member for the Managing General Partner) nor any of their respective directors or officers shall be liable or accountable in damages or otherwise to the Partnership, any Partners, or any Assignees for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or of any act or omission if the Managing General Partner, the Special Limited Partner or such director or officer acted in good faith. 
 

 B.    The Limited Partners expressly acknowledge that (i) the Managing General Partner (and the Special Limited Partner, as the managing Member of the Managing General Partner) is acting for the benefit of the Partnership, the Limited Partners and the Special Limited Partner's shareholders collectively, (ii) the Special Limited Partner is under no obligation to give priority to the separate interests of the Limited Partners (including, without limitation, the tax consequences to Limited Partners or Assignees) in deciding whether to cause the Partnership to take (or decline to take) any actions, and (iii) the Managing General Partner shall not be liable to the Partnership or to any Partner for monetary damages for losses sustained, liabilities incurred or benefits not derived by the Limited Partners in connection with such decisions, provided that the Managing General Partner has acted in good faith. 
 

 C.    Subject to its obligations and duties as Managing General Partner set forth in Section 7.1.A hereof, the Managing 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 employees or agents or through the Special Limited Partner (subject to the supervision and control of the Managing General Partner and the Special Limited Partner).  The Managing General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith. 
 

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

 E.    Notwithstanding anything herein to the contrary, except for fraud, willful misconduct or gross negligence, or pursuant to any express indemnities given to the Partnership by any Partner pursuant to any other written instrument, no Partner shall have any personal liability whatsoever, to the Partnership or to the other Partners, for the debts or liabilities of the Partnership or the Partnership's obligations hereunder, and the full recourse of the other Partner(s) shall be limited to the interest of that Partner in the Partnership. To the fullest extent permitted by law, no officer, director, member or shareholder of the Managing General Partner or the Special Limited Partner shall be liable to the Partnership for money damages except for (i) active and deliberate dishonesty 
 

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 established by a non-appealable final judgment or (ii) actual receipt of an improper benefit or profit in money, property or services. Without limitation of the foregoing, and except for fraud, willful misconduct or gross negligence, or pursuant to any such express indemnity, no property or assets of any Partner, other than its interest in the Partnership, shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) in favor of any other Partner(s) and arising out of, or in connection with, this Agreement. This Agreement is executed by the officers of the Managing General Partner or of the Special Limited Partner as managing member of the Managing General Partner, solely as officers of the same and not in their own individual capacities. 
 

 F.     To the extent that, at law or in equity, the Managing General Partner or the Special Limited Partner as the managing member of the Managing General Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Limited Partners, neither the Managing General Partner nor the Special Limited Partner shall be liable to the Partnership or to any other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of the Managing General Partner and the Special Limited Partner otherwise existing at law or in equity, are agreed by the Partners to replace such other duties and liabilities of such Managing General Partner. 
 

 G.    Whenever in this Agreement the Managing General Partner is permitted or required to make a decision (i) in its "sole discretion" or "discretion" or under a grant of similar authority or latitude, the Managing General Partner shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest or factors affecting the Partnership or the Partners or any of them, or (ii) in its "good faith" or under another expressed standard, the Managing General partner shall act under such express standard and shall not be subject to any other or different standards imposed by 
 this Agreement or any other agreement contemplated herein or by relevant provisions of law or in equity or otherwise. If any question should arise with respect to the operation of the Partnership, which is not otherwise specifically provided for in this Agreement or the Act, or with respect to the interpretation of this Agreement, the Managing General Partner is hereby authorized to make a final determination with respect to any such question and to interpret this Agreement in such a manner as it shall deem, in its sole discretion, to be fair and equitable, and its determination and interpretations so made shall be final and binding on all parties. The Managing General Partner's "sole discretion" and "discretion" under this Agreement shall be exercised in good faith. 
 

 

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 Section 7.9    Other Matters Concerning the Managing General Partner and the Special Limited Partner.    
 

 A.    The Managing General Partner and the Special Limited 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 Managing General Partner and the Special Limited 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 that the Managing General Partner and the Special Limited 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.
 

 C.    The Managing 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 a duly appointed attorney or attorneys-in-fact (including, without limitation, officers and directors of the Special Limited Partner). Each such attorney shall, to the extent provided by the Managing General Partner in the power of attorney, have full power and authority to do and perform all and every act and duty that is permitted or required to be done by the Managing General Partner hereunder. 
 

 D.    Notwithstanding any other provision of this Agreement or the Act, any action of the Managing General Partner or the Special Limited Partner on behalf of the Partnership or any decision of the Managing General Partner or the Special Limited 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 Special Limited Partner to continue to qualify as a REIT, (ii) for the Special Limited Partner otherwise to satisfy the REIT Requirements, (iii) to avoid the Special Limited Partner incurring any taxes under Code Section 857 or Code Section 4981, or (iv) for any Special Limited Partner Affiliate to continue to qualify as a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)), is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners. 
 

 E.    To the extent the Special Limited Partner, or its officers or directors, take any action by or on behalf of the Managing General Partner or the Partnership, the Special Limited Partner and its officers and directors shall be entitled to the same protection as the Managing General Partner and its officers and directors. 
      
 Section 7.10    Title to Partnership Assets.    Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively with other Partners or Persons, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the Managing General Partner, the Special Limited Partner or one or more nominees, as the Managing General Partner or 
 

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 the Special Limited Partner may determine, including Affiliates of the Managing General Partner or the Special Limited Partner. The Managing General Partner and the Special Limited Partner hereby declare and warrant that any Partnership assets for which legal title is held in the name of the Managing General Partner or the Special Limited Partner, as applicable, or any nominee or Affiliate of the Managing General Partner or the Special Limited Partner shall be held by the Managing General Partner or the Special Limited Partner, as applicable, for the use and benefit of the Partnership in accordance with the provisions of this Agreement. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held. 
 

 Section 7.11    Reliance by Third Parties.    Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the Managing General Partner has full power and authority, without the consent or approval of any other Partner, or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall be entitled to deal with the Managing General Partner as if it were the Partnership's sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Managing General Partner in connection with any such dealing. In no event shall any Person dealing with the Managing 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 Managing General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the Managing 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. 
 

 

 ARTICLE 8
 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
  
 Section 8.1    Limitation of Liability.    No Limited Partner shall have any liability under this Agreement except as expressly provided in this Agreement (including, without limitation, Section 10.4 hereof) or under the Act. 
 

 Section 8.2    Management of Business.    Subject to the rights and powers of the Special Limited Partner hereunder, no Limited Partner or Assignee (other than the Managing General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent or trustee of the Managing General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership's business, transact any business in the Partnership's name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the 
 

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 Managing General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent, representative, or trustee of the Managing General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement. 
 

 Section 8.3    Outside Activities of Limited Partners.    Subject to any agreements entered into pursuant to Section 7.6 hereof and any other agreements entered into by a Limited Partner or any of its Affiliates with the Managing General Partner, the Partnership or a Subsidiary (including, without limitation, any employment agreement), any Limited Partner (including, subject to Section 
 7.5 hereof, the Special Limited Partner) and any Assignee, officer, director, employee, agent, trustee, Affiliate, member or shareholder of any 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 or indirect competition with the Partnership or that are enhanced by the activities of the Partnership.  Neither the Partnership nor any Partner shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person (other than the Managing General Partner or the Special Limited Partner, to the extent expressly provided herein), and such Person shall have no obligation pursuant to this Agreement, subject to Section 7.6 hereof and any other agreements entered into by a Limited Partner or its Affiliates with the Managing General Partner, the Partnership or a Subsidiary, 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 that, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person. 
 

 Notwithstanding any other provision of this Agreement, including without limitation Section 7.1.A and Section 7.5, one or more Affiliates of the Special Limited Partner may own membership interests or similar equity interests in one or more Subsidiaries, provided that the aggregate amount of such interests owned by the Affiliates of the Special Limited Partner in any one Subsidiary shall not exceed 5% of such Subsidiary's outstanding membership or similar equity 
 interests and provided further that, at or promptly following the acquisition by such Affiliates of the Special Limited Partner of such interests, such interest(s) are listed as Excluded Properties on Exhibit C hereto.
 

 Section 8.4    Return of Capital.    Except pursuant to the rights of Redemption set forth in Section 15.1 hereof, 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. Except to the extent provided in Article 6 hereof or otherwise expressly provided in this Agreement, 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.
 

 

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 Section 8.5    Rights of Limited Partners Relating to the Partnership.   
  
 A.    In addition to other rights provided by this Agreement or by the Act, and except as limited by Section 8.5.C hereof, the Managing General Partner shall deliver to each Limited Partner a copy of any information mailed to all of the common shareholders of the Special Limited Partner as soon as practicable after such mailing. 
 

 B.    The Partnership shall notify any Limited Partner that is a Qualifying Party, on request, of the then current Adjustment Factor and any change made to the Adjustment Factor shall be set forth in the quarterly report required by Section 9.3.B hereof immediately following the date such change becomes effective.
 

 C.    Notwithstanding any other provision of this Section 8.5, the Managing General Partner may keep confidential from the Limited Partners (or any of them), for such period of time as the Managing General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the Managing General Partner believes to be in the nature of trade secrets or other information the disclosure of which the Managing General Partner in good faith believes is not in the best interests of the Partnership or the Managing General Partner or (ii) the Partnership or the Managing General Partner is required by law or by agreement to keep confidential. 
 

 Section 8.6    Partnership Right to Call Limited Partner Interests.
 

 Notwithstanding any other provision of this Agreement, on and after the date on which the aggregate Percentage Interests of the Limited Partners (other than the Special Limited Partner) are less than one percent (1%), the Partnership shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Limited Partner Interests (other than the Special Limited Partner's Limited Partner Interests) by treating any Limited Partner as a Tendering Party who has delivered a Notice of Redemption pursuant to Section 15.1 hereof for the amount of Partnership Common Units to be specified by the Managing General Partner, in its sole and absolute discretion, by notice to such Limited Partner that the Partnership has elected to exercise its rights under this Section 8.6. Such notice given by the Managing General Partner to a Limited Partner pursuant to this Section 8.6 shall be treated as if it were a Notice of Redemption delivered to the Managing General Partner by such Limited Partner. For purposes of this Section 8.6, (a) any Limited Partner (whether or not otherwise a Qualifying Party) may, in the Managing General Partner's sole and absolute discretion, be treated as a Qualifying Party that is a Tendering Party and (b) the provisions of Sections 15.1.F(2) and 15.1.F(3) hereof shall not apply, but the remainder of Section 15.1 hereof shall apply, mutatis mutandis. 
 

 ARTICLE 9
 BOOKS, RECORDS, ACCOUNTING AND REPORTS
 

 Section 9.1    Records and Accounting.    
 

 A.    The Managing 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 Managing General Partner to be appropriate with respect to the 
 

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 Partnership's business, including, without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 8.5.A, Section 9.3 or Article 13 hereof. Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on any information storage device, provided that the records so maintained are convertible into clearly legible written form within a reasonable period of time. 
 

 B.    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 on such other basis as the Managing General Partner determines to be necessary or appropriate. To the extent permitted by sound accounting practices and principles, the Partnership and the Managing General Partner may operate with integrated or consolidated accounting records, operations and principles. 
 

 Section 9.2   Partnership Year.    The Partnership Year of the Partnership shall be the calendar year. 
 

         Section 9.3    Reports.
 

 A.    As soon as practicable, but in no event later than one hundred five (105) days after the close of each Partnership Year, the Managing General Partner shall cause to be mailed to each Limited Partner of record as of the close of the Partnership Year, financial statements of the Partnership, or of the Special Limited Partner if such statements are prepared solely on a consolidated basis with the Special Limited Partner, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the Managing General Partner. 
 

 B.    As soon as practicable, but in no event later than sixty (60) days after the close of each calendar quarter (except the last calendar quarter of each year), the Managing General Partner shall cause to be mailed to each Limited Partner of record as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership for such calendar quarter, or of the Special Limited Partner if such statements are prepared solely on a consolidated basis with the Special Limited Partner, and such other information as may be required by applicable law or regulation or as the Managing General Partner determines to be appropriate. 
 

 C.    The Managing General Partner shall have satisfied its obligations under Section 9.3A and Section 9.3B by posting or making available the reports required by this Section 9.3 on the website maintained from time to time by the Partnership or the Special Limited Partner, provided that such reports are able to be printed or downloaded from such website.
 

 D.    At the request of any Limited Partner, the Managing General Partner shall provide access to the books, records and workpapers upon which the reports required by this Section 9.3 are based, to the extent required by the Act. 
 

 

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 ARTICLE 10
 TAX MATTERS
 

 

 Section 10.1    Preparation of Tax Returns.    The Managing General Partner shall arrange for the preparation and timely filing of all returns with respect to 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 Limited Partners and for Federal and state income tax and any other tax reporting purposes. The Limited Partners shall promptly provide the Managing General Partner with such information relating to the Contributed Properties as is readily available to the Limited Partners, including tax basis and other relevant information, as may be reasonably requested by the Managing General Partner from time to time. 
 

         Section 10.2    Tax Elections.    Except as otherwise provided herein, the Managing General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Code Section 754 and the election to use the "recurring item" method of accounting provided under Code Section 461(h) with respect to property taxes imposed on the Partnership's Properties; provided, however, that, if the "recurring item" method of accounting is elected with respect to such property taxes, the Partnership shall pay the applicable property taxes prior to the date provided in Code Section 461(h) for purposes of determining economic performance. The Managing General Partner shall have the right to seek to revoke any such election (including, without limitation, any election under Code Sections 461(h) and 754) upon the Managing General Partner's determination in its sole and absolute discretion that such revocation is in the best interests of the Partners. 
   
 Section 10.3    Tax Matters Partner.    
 

 A.    The Managing General Partner shall be the "tax matters partner" of the Partnership for Federal income tax purposes. The tax matters partner shall receive no compensation for its services. All third-party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership in addition to any reimbursement pursuant to Section 7.4 hereof. 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. At the request of any Limited Partner, the Managing General Partner agrees to inform such Limited Partner regarding the preparation and filing of any returns and with respect to any subsequent audit or litigation relating to such returns. 
 

 B.    The tax matters partner is authorized, but not required: 
   
  (1)   to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a "tax audit" and such judicial proceedings being referred to as "judicial review"), and in the settlement agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind 
 

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 any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner (as the case may be) or (ii) who is a "notice partner" (as defined in Code Section 6231) or a member of a "notice group" (as defined in Code Section 6223(b)(2)); 
 

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

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

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

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

 (6)   to take any other action on behalf of the Partners or any of them 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 Managing General Partner set forth in Section 7.7 hereof shall be fully applicable to the tax matters partner in its capacity as such. 
 

 Section 10.4    Withholding.    Each Limited Partner hereby authorizes the Partnership to withhold from or pay on behalf of or with respect to such Limited Partner any amount of Federal, state, local or foreign taxes that the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Code Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446. Any amount paid on behalf of or with respect to a Limited Partner shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner within thirty (30) days after the affected Limited Partner receives written notice from the Managing General Partner that such payment must be made, provided that the Limited Partner shall not be required to repay such deemed loan if either (i) the Partnership withholds such payment from a distribution that would 
 

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 otherwise be made to the Limited Partner or (ii) the Managing General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of the Available Cash of the Partnership that would, but for such payment, be distributed to the Limited Partner. Any amounts payable by a Limited Partner hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate) from the date such amount is due (i.e., thirty (30) days after the Limited Partner receives written notice of such amount) until such amount is paid in full. 
 

 Section 10.5    Organizational Expenses.    The Managing General Partner may cause the Partnership to elect to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a 180-month period as provided in Section 709 of the Code. 
 

 ARTICLE 11
 PARTNER TRANSFERS AND WITHDRAWALS
 

 Section 11.1    Transfer.    
 

 A.    No part of the interest of a Partner shall be subject to the claims of any creditor, to any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement. 
 

 B.    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. Any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio. 
 

 C.    Notwithstanding the other provisions of this Article 11 (other than Section 11.6.D hereof), the respective Partnership Interests of the Managing General Partner and the Special Limited Partner may be Transferred, in whole or in part, at any time or from time to time, to or among the Managing General Partner, the Special Limited Partner, and any other Person that is, at the time of such Transfer, an Affiliate of the Special Limited Partner, including any "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)). Any transferee of the entire General Partner Interest pursuant to this Section 11.1.C shall, upon compliance with Section 12.1.A hereof, become, without further action or consent of any Partners or other Persons, the sole Managing General Partner of the Partnership, subject to all the rights, privileges, duties and obligations under this Agreement and the Act relating to a Managing General Partner. Any transferee of a Special Limited Partner Interest pursuant to this Section 11.1.C shall, upon its execution of a counterpart of this Agreement, become, without further action or consent of any Partner or any other Person, a Substituted Limited Partner (as a Special Limited Partner). Upon any Transfer of the Managing General Partner's entire General Partner Interest (other than a pledge, hypothecation, encumbrance or mortgage) permitted by this Section 11.1.C, the transferor Partner shall be relieved of all its obligations under this Agreement from and after the date of such Transfer. The provisions of Section 11.2.B, 11.3, 11.4.A and 11.5 hereof shall not apply to any Transfer permitted by this Section 11.1.C. 
 

 

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 D.    No Transfer of any Partnership Interest 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, without the consent of the Managing General Partner 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 Managing General Partner to redeem or exchange for the REIT Shares Amount any Partnership Units in which a security interest is held by such lender 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 (provided that for purpose of calculating the REIT Shares Amount in this Section 11.1.D, "Tendered Units" shall mean all such Partnership Units in which a security interest is held by such lender). 
 

 Section 11.2    Transfer of General Partner's Partnership Interest.    
 

 A.    The Managing General Partner may not Transfer any of its General Partner Interest or withdraw from the Partnership except as provided in Sections 11.1.C, 11.2.B and 11.2.C hereof. The term "Transfer", when used in this Section 11.2 with respect to the General Partner Interest, shall be deemed to include a Transfer of the General Partner Interest resulting from any merger, consolidation or other combination by the Special Limited Partner with or into another Person (other than a Subsidiary of the Special Limited Partner), the sale of all or substantially all of the assets of the Special Limited Partner and its Subsidiaries, taken as a whole, or any reclassification, recapitalization or change of the outstanding equity interests of the Special Limited Partner, but shall exclude the transactions described in Section 11.3.B hereof. 
 

 B.    Except as provided in Section 11.1.C, this Section 11.2.B and Section 11.2.C hereof, the Managing General Partner shall not withdraw from the Partnership and shall not Transfer all of its interest in the Partnership (whether by sale, disposition, statutory merger or consolidation, liquidation or otherwise) without the Consent of the Limited Partners. Upon any Transfer of such a Partnership Interest pursuant to the Consent of the Limited Partners and otherwise in accordance with the provisions of this Section 11.2.B, the transferee shall become a successor Managing General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor Managing General Partner, and shall be liable for all obligations and responsible for all duties of the Managing General Partner, once such transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired. It is a condition to any Transfer otherwise permitted hereunder that the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor Managing General Partner under this Agreement with respect to such Transferred Partnership Interest, and such Transfer shall relieve the transferor Managing General Partner of its obligations under this Agreement without the Consent of the Limited Partners. In the event that the Managing General Partner withdraws from the Partnership in violation of this Agreement or otherwise, or otherwise dissolves or terminates, or upon the bankruptcy of the Managing General Partner, a Majority in Interest of the Limited Partners may elect to continue the Partnership business by selecting a successor Managing General Partner in accordance with Section 13.1.A hereof. 
 

 

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 C.    The Managing General Partner may, with the Consent of the Limited Partners, merge with another entity if immediately after such merger substantially all the assets of the surviving entity, other than the General Partner Interest held by the Managing General Partner, are contributed to the Partnership as a Capital Contribution in exchange for Partnership Units. 
  
 D.    No Additional General Partner shall Transfer any of its General Partner Interest or withdraw from the Partnership except with the consent of the Managing General Partner.
 

 Section 11.3    Limited Partners' Rights to Transfer.    
 

 A.    General.    Prior to the end of the first Fourteen-Month Period and except as provided in Section 11.1.C hereof, no Limited Partner shall Transfer all or any portion of its Partnership Interest to any transferee without the consent of the Managing General Partner, which consent may be withheld in its sole and absolute discretion; provided, however, that any Limited Partner may, at any time, without the consent of the Managing General Partner, (i) Transfer all or part of its Partnership Interest to any Family Member, any Charity, any Controlled Entity or any Affiliate, or (ii) pledge (a "Pledge") all or any portion of its Partnership Interest to a lending institution as collateral or security for a bona fide loan or other extension of credit, and Transfer such pledged Partnership Interest to such lending institution in connection with the exercise of remedies under such loan or extension of credit (any Transfer or Pledge permitted by this proviso is hereinafter referred to as a "Permitted Transfer"). After such first Fourteen-Month Period, each Limited Partner, and each transferee of Partnership Units or Assignee pursuant to a Permitted Transfer, shall have the right to Transfer all or any portion of its Partnership Interest to any Person, subject to the provisions of Section 11.4 hereof and to satisfaction of each of the following conditions: 
 

 (1)    Special Limited Partner Right of First Refusal.    The transferring Partner (or the Partner's estate in the event of the Partner's death) shall give written notice of the proposed Transfer to the Managing General Partner and the Special Limited Partner, which notice shall state (i) the identity and address of the proposed transferee and (ii) the amount and type of consideration proposed to be received for the Transferred Partnership Units. The Special Limited Partner shall have ten (10) Business Days upon which to give the Transferring Partner notice of its election to acquire the Partnership Units on the terms set forth in such notice. If it so elects, it shall purchase the Partnership Units on such terms within ten (10) Business Days after giving notice of such election; provided, however, that in the event that the proposed terms involve a purchase for cash, the Special Limited Partner may at its election deliver in lieu of all or any portion of such cash a note from the Special Limited Partner payable to the Transferring Partner at a date as soon as reasonably practicable, but in no event later than one hundred eighty (180) days after such purchase, and bearing interest at an annual rate equal to the total dividends declared with respect to one (1) REIT Share for the four (4) preceding fiscal quarters of the Managing General Partner, divided by the Value as of the closing of such purchase; and provided, further, that such closing may be deferred to the extent necessary to effect compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if applicable, and any other applicable requirements of law. If it does not so elect, the Transferring Partner may Transfer such Partnership Units to a third party, on terms no more favorable to the transferee than the proposed terms, subject to the other conditions of this Section 11.3. 
 

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 (2)    Qualified Transferee.    Any Transfer of a Partnership Interest shall be made only to a single Qualified Transferee; provided, however, that, for such purposes, all Qualified Transferees that are Affiliates, or that comprise investment accounts or funds managed by a single Qualified Transferee and its Affiliates, shall be considered together     to be a single Qualified Transferee; and provided, further, that each Transfer meeting the minimum Transfer restriction of Section 11.3.A(4) hereof may be to a separate Qualified Transferee. 
 

 (3)    Opinion of Counsel.    The Transferor shall deliver or cause to be delivered to the Managing General Partner an opinion of counsel reasonably satisfactory to it to the effect that the proposed Transfer may be effected without registration under the Securities Act and will not otherwise violate the registration provisions of the Securities Act and the    regulations promulgated thereunder or violate any state securities laws or regulations applicable to the Partnership or the Partnership Interests Transferred; provided, however, that the Managing General Partner may, in its sole discretion, waive this condition upon the request of the Transferor. If, in the opinion of such counsel, such Transfer would require the filing of a registration statement under the Securities Act or would otherwise violate any Federal or state securities laws or regulations applicable to the Partnership or the Partnership Units, the Managing General Partner may prohibit any Transfer otherwise permitted under this Section 11.3 by a Limited Partner of Partnership Interests. 
 

 (4)    Minimum Transfer Restriction.    Any Transferring Partner must Transfer not less than the lesser of (i) five hundred (500) Partnership Units or (ii) all of the remaining Partnership Units owned by such Transferring Partner, unless, in each case, otherwise agreed to by the Managing General Partner in its sole and absolute discretion; provided, however, that, for purposes of determining compliance with the foregoing restriction, all Partnership Units owned by Affiliates of a Limited Partner shall be considered to be owned by such Limited Partner. 
 

 (5)    No Further Transfers.    The transferee shall not be permitted to effect any further Transfer of the Partnership Units, other than to the Special Limited Partner.
 

 (6)    Exception for Permitted Transfers.    The conditions of Sections 11.3.A(1) through 11.3.A(5) hereof shall not apply in the case of a Permitted Transfer.  It is a condition to any Transfer otherwise permitted hereunder (whether or not such Transfer is effected during or after the first Fourteen-Month Period) that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such Transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the Managing General Partner, in its sole and absolute discretion. Notwithstanding the foregoing, any transferee of any Transferred Partnership Interest shall be subject to any and all ownership limitations (including, without limitation, the Ownership Limit) contained in the Charter that may limit or restrict such transferee's 
 

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 ability to exercise its Redemption rights, including, without limitation, the Ownership Limit. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5 hereof. 
 

 B.    Certain Transactions of the Special Limited Partner.    Notwithstanding anything to the contrary in this Agreement, the Special Limited Partner may merge, consolidate or otherwise combine its assets with another entity, sell all or substantially all of its assets or reclassify, recapitalize or change its outstanding equity interests if: 
 

  (i)    in connection with such merger, consolidation, combination, sale, reclassification, recapitalization or change, all of the Limited Partners (other than the Special Limited Partner) will 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 Adjustment Factor    and the greatest amount of cash, securities or other property paid to a holder of one REIT Share in consideration of one REIT Share pursuant to the terms of such merger, consolidation or combination; provided, that if, in connection with such merger, consolidation, combination, sale, reclassification, recapitalization or change, a purchase, tender or exchange offer shall have been made to and accepted by the holders of the outstanding REIT Shares, each holder of Partnership Units (other than the Special Limited Partner) shall receive, or shall have the right to elect to receive, the greatest amount of cash, securities or other property which such holder of Partnership Units would have received had it exercised its right to Redemption pursuant to Article 15 hereof and received REIT Shares in exchange for its Partnership Units immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such merger, consolidation or combination shall have been consummated; or             (ii)   the following conditions are met: (w) substantially all of the assets directly or indirectly owned by the surviving entity, other than the Partnership Units held by the Special Limited Partner, are owned directly or indirectly by the Partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the Partnership (in each case, the "Surviving Partnership"); (x) the holders of Partnership Units own a percentage interest of the Surviving Partnership based on the relative fair market value of the net assets of the Partnership and the other net assets of the Surviving Partnership immediately prior to the consummation of such transaction; (y) the rights, preferences and privileges of such holders in the Surviving Partnership are at least as favorable as those in effect immediately prior to the consummation of such transaction and as those applicable to any other limited partners or non-managing members of the Surviving Partnership; and (z) the rights of the Limited Partners include at least one of the following: (a) the right to redeem their interests in the Surviving Partnership for the consideration available to such persons pursuant to Section 11.3.B(i) or (b) the right to redeem their Partnership Units for cash on terms equivalent to those in effect with respect to their Partnership Units immediately prior to the consummation of such transaction, or, if the ultimate controlling person of the Surviving Partnership has publicly traded common equity securities, such common equity securities, 
 

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 with an exchange ratio based on the determination of relative fair market value of such securities and the REIT Shares. 
 

 C.    Incapacity.    If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner's estate shall have all 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 its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership. 
 

 D.    Adverse Tax Consequences.    No Transfer by a Limited Partner of its Partnership Interests (including any Redemption, any other acquisition of Partnership Units by the Managing General Partner or any acquisition of Partnership Units by the Partnership) may be made to or by any Person if (i) in the opinion of legal counsel for the Partnership, it would result in the Partnership being treated as an association taxable as a corporation or would result in a termination of the Partnership under Code Section 708 or (ii) such Transfer would be effectuated through an "established securities market" or a "secondary market (or the substantial equivalent thereof)" within the meaning of Code Section 7704. 
 

 Section 11.4    Substituted Limited Partners.   
  
 A.    No Limited Partner shall have the right to substitute a transferee (including any transferees pursuant to Transfers permitted by Section 11.3 hereof) as a Limited Partner in its place. A transferee of the interest of a Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the Managing General Partner, which consent may be given or withheld 
 by the Managing General Partner in its sole and absolute discretion. The failure or refusal by the Managing General Partner to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or the Managing General Partner. Subject to the foregoing, an Assignee shall not be admitted as a Substituted Limited Partner until and unless it furnishes to the Managing General Partner (i) evidence of acceptance, in form and substance satisfactory to the Managing General Partner, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such Assignee and (iii) such other documents and instruments as may be required or advisable, in the sole and absolute discretion of the Managing General Partner, to effect such Assignee's admission as a Substituted Limited Partner. 
 

 B.    Concurrently with, and as evidence of, the admission of a Substituted Limited Partner, the Managing General Partner shall amend Exhibit A and the books and records of the Partnership to reflect the name, address and number of Partnership Units of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and number of Partnership Units of the predecessor of such Substituted Limited Partner. 
 

 C.    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. 
 

 

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 Section 11.5    Assignees.    If the Managing General Partner, in its sole and absolute discretion, does not consent to the admission of any permitted transferee under Section 11.3 hereof as a Substituted Limited Partner, as described in Section 11.4 hereof, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Net Income, Net Losses and other items of income, gain, loss, deduction and credit of the Partnership attributable to the Partnership Units assigned to such transferee and the rights to Transfer the Partnership Units provided in this Article 11, but shall not be deemed to be a holder of Partnership Units for any other purpose under this Agreement (other than as expressly provided in Section 15.1 hereof with respect to a Qualifying Party that becomes a Tendering Party), and shall not be entitled to effect a Consent or vote with respect to such Partnership Units on any matter presented to the Limited Partners for approval (such right to Consent or vote, to the extent provided in this Agreement or under the Act, fully remaining with the transferor Limited Partner). In the event that any such transferee desires to make a further assignment of any such Partnership Units, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of Partnership Units.
 

 Section 11.6    General Provisions.  
 

 A.    No Limited Partner may withdraw from the Partnership other than as a result of a permitted Transfer of all of such Limited Partner's Partnership Units in accordance with this Article 11, with respect to which the transferee becomes a Substituted Limited Partner, or pursuant to a redemption (or acquisition by the Special Limited Partner) of all of its Partnership Units pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any Partnership Unit Designation. 
 

         B.    Any Limited Partner who shall Transfer all of its Partnership Units in a Transfer (i) permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner, (ii) pursuant to the exercise of its rights to effect a redemption of all of its Partnership Units pursuant to a Redemption under Section 15.1 hereof and/or pursuant to any Partnership Unit Designation or (iii) to the Special Limited Partner, whether or not pursuant to Section 15.1.B hereof, shall cease to be a Limited Partner. 
 

 C.    If any Partnership Unit is Transferred in compliance with the provisions of this Article 11, or is redeemed by the Partnership, or acquired by the Special Limited Partner pursuant to Section 15.1 hereof, on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit attributable to such Partnership Unit for such Partnership Year shall be allocated to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer other than a Redemption, to the transferee Partner, by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the "interim closing of the books" method or another permissible method selected by the Managing General Partner. Solely for purposes of making such allocations, each of such items for the calendar month in which a Transfer occurs shall be allocated to the transferee Partner and none of such items for the calendar month in which a Transfer or a Redemption occurs shall be allocated to the transferor Partner, or the Tendering Party (as the case may be) if such Transfer occurs on or before the fifteenth (15th) day of the month, otherwise such 
 

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 items shall be allocated to the transferor. All distributions of Available Cash attributable to such Partnership Unit with respect to which the Partnership Record Date is before the date of such Transfer, assignment or Redemption shall be made to the transferor Partner or the Tendering Party (as the case may be) and, in the case of a Transfer other than a Redemption, all distributions of Available Cash thereafter attributable to such Partnership Unit shall be made to the transferee Partner. 
 

 D.    In addition to any other restrictions on Transfer herein contained, in no event may any Transfer of a Partnership Interest by any Partner (including any Redemption, any acquisition of Partnership Units by the Special Limited Partner or any other acquisition of Partnership Units by the Partnership) be made: (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) in the event that such Transfer would cause either the Special Limited Partner or any Special Limited Partner Affiliate to cease to comply with the REIT Requirements or to cease to qualify as a "qualified REIT subsidiary" (within the meaning of Code Section 856(i)(2)); (v) if such Transfer would, in the opinion of counsel to the Partnership or the Managing General Partner, cause a termination of the Partnership for Federal or state income tax purposes (except as a result of the Redemption (or acquisition by the Special Limited Partner) of all Partnership Common Units held by all Limited Partners); (vi) if such Transfer would, in the opinion of legal counsel to the Partnership, cause the Partnership to cease to be classified as a partnership for Federal income tax purposes (except as a result of the Redemption (or acquisition by the Special Limited Partner) of all Partnership Common Units held by all Limited Partners (other than the Special Limited Partner)); (vii) if 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 ERISA Section 3(14)) or a "disqualified person" (as defined in Code Section 4975(c)); (viii) if such Transfer would, in the opinion of legal counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to 
 Department of Labor Regulations Section 2510.3-101; (ix) if such Transfer requires the registration of such Partnership Interest pursuant to any applicable Federal or state securities laws; (x) if such Transfer causes the Partnership to become a "publicly traded partnership," as such term is defined 
 in Code Section 469(k)(2) or Code 7704(b); (xi) if such Transfer causes the Partnership (as opposed to the Managing General Partner) to become a reporting company under the Exchange Act; or (xii) if such Transfer subjects the Partnership to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended. The General Partner shall take all action necessary to avoid the Partnership from being classified as a "publicly traded partnership" under Code Section 7704. 
 

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

 ARTICLE 12
 ADMISSION OF PARTNERS
 

 Section 12.1    Admission of Successor Managing General Partner and Additional General Partners.    
 

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 A.    A successor to all of the Managing General Partner's General Partner Interest pursuant to Section 11.1.C or Section 11.2 hereof who is proposed to be admitted as a successor Managing General Partner shall be admitted to the Partnership as the Managing General Partner, effective immediately prior to such Transfer. Any such successor shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor Managing General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. 
 

 B.    A successor to a portion of the Managing General Partner's General Partner Interest pursuant to Section 11.2.B hereof or any Person to be admitted as an Additional General Partner pursuant to Section 4.2.A hereof who is proposed to be admitted as an Additional General Partner shall be admitted to the Partnership as a General Partner, effective immediately prior to such Transfer. Any such Additional General Partner shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the Additional General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. Concurrently with, and as evidence of, the admission of an Additional General Partner, the Managing General Partner shall amend Exhibit A and the books and records of the Partnership to reflect the name, address and number of Partnership Units of such Additional General Partner. 
 

 Section 12.2    Admission of Additional Limited Partners.    
 

 A.    After the admission to the Partnership of an Original Limited Partner on the date hereof, a Person (other than an existing Partner) who makes a Capital Contribution to the Partnership in exchange for Partnership Units and in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the Managing General Partner (i) evidence of acceptance, in form and substance satisfactory to the Managing General Partner, of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a counterpart signature page to this Agreement executed by such Person and (iii) such other documents or instruments as may be required in the sole and absolute discretion of the Managing General Partner in order to effect such Person's admission as an Additional Limited Partner. Concurrently with, and as evidence of, the admission of an Additional Limited Partner, the Managing General Partner shall amend Exhibit A and the books and records of the Partnership to reflect the name, address and number of Partnership Units of such Additional Limited Partner. 
 

 B.    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 Managing General Partner, which consent may be given or withheld in the Managing General Partner's sole and absolute discretion. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the consent of the Managing General Partner to such admission and the satisfaction of all the conditions set forth in Section 12.2.A. 
 

 

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 C.    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, each item thereof and all other items of income, gain, loss, deduction and credit allocable among Holders for such Partnership Year shall be allocated among such Additional Limited Partner and all other Holders by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the "interim closing of the books" method or another permissible method selected by the Managing General Partner. 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 the Holders including such Additional Limited Partner, in accordance with the principles described in Section 11.6.C hereof. All distributions of Available Cash 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 of Available Cash thereafter shall be made to all the Partners and Assignees including such Additional Limited Partner. 
 

 D.    Any Additional Limited Partner admitted to the Partnership that is an Affiliate of the Managing General Partner shall be deemed to be a "Special Limited Partner Affiliate" hereunder and shall be reflected as such on Exhibit A and the books and records of the Partnership. 
 

 Section 12.3    Amendment of Agreement and Certificate of Limited Partnership.    For the admission to the Partnership of any Partner, the Managing 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. 
 

 Section 12.4    Limit on Number of Partners.    Unless otherwise permitted by the Managing General Partner in its sole and absolute discretion, no Person shall be admitted to the Partnership as an Additional Limited Partner if the effect of such admission would be to cause the Partnership to have a number of Partners that would cause the Partnership to become a reporting company under the Exchange Act. 
 

 Section 12.5    Admission.    A Person shall be admitted to the Partnership as a limited partner of the Partnership or a general partner of the Partnership only upon strict compliance, and not upon substantial compliance, with the requirements set forth in this Agreement for admission to the Partnership as a Limited Partner or a General Partner. 
 

 ARTICLE 13
 DISSOLUTION, LIQUIDATION AND TERMINATION
 

 Section 13.1    Dissolution.    The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners, by the admission of a successor Managing General Partner or an Additional General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the Managing General Partner, any successor Managing General Partner shall continue the business of the Partnership without dissolution. However, the 
 

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 Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a "Liquidating Event"): 
 

 A.    an event of withdrawal, as defined in the Act (including, without limitation, bankruptcy), of the sole Managing General Partner unless, within ninety (90) days after the withdrawal, a Majority in Interest of the Partners remaining agree in writing, in their sole and absolute discretion, to continue the business of the Partnership and to the appointment, effective as of the date of withdrawal, of a successor Managing General Partner; 
 

 B.    an election to dissolve the Partnership made by the Managing General Partner in its sole and absolute discretion, with or without the Consent of the Partners; 
 

 C.    entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act; 
 

 D.    any sale or other disposition of all or substantially all of the assets of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership;
 

 E.    the Redemption (or acquisition by the Special Limited Partner) of all Partnership Common Units other than Partnership Common Units held by the Managing General Partner or the Special Limited Partner; or 
 

 F.   the Redemption (or acquisition by the Special Limited Partner) of all Partnership Units other than Partnership Units held by the Managing General Partner or the Special Limited Partner.
  
 Section 13.2    Winding Up.
     
 
 A.    Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership's business and affairs. The Managing General Partner (or, in the event that there is no remaining Managing General Partner or the Managing General Partner has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any Person elected by a Majority in Interest of the Partners (the Managing 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 Managing General Partner, include shares of stock in the Special Limited Partner) shall be applied and distributed in the following order: 
 

 (1)   First, to the satisfaction of all of the Partnership's debts and liabilities to creditors other than the Holders (whether by payment or the making of reasonable provision for payment thereof); 
 

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 (2)   Second, to the satisfaction of all of the Partnership's debts and liabilities to the Managing General Partner and the Special Limited Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4 hereof; 
 

 (3)   Third, to the satisfaction of all of the Partnership's debts and liabilities to the other Holders (whether by payment or the making of reasonable provision for payment thereof); 
 

 (4)   Subject to the terms of any Partnership Unit Designation, the balance, if any, to the Holders in accordance with and in proportion to their positive Capital Account balances, after giving effect to all contributions, distributions and allocations for all periods; provided, however, that it is he intent of the Partners that liquidating distributions shall be made in the same manner as distributions would be made under Section 5.1, and accordingly, to the extent that distributions under Section 13.2(A)(4) would result in different distributions than had all liquidating distributions been made under Section 5.1, the Capital Accounts of the partners shall be adjusted (including through allocations, or if necessary, credits or debits to Capital Accounts) prior to the liquidating distributions being made to the extent necessary to cause distributions made to each partner under Section 13.2(A)(4) to be the same as the distributions that would have been made to such partner had liquidating distributions been made in accordance with Section 5.1.
 

 The Managing General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13. 
 

 B.    Notwithstanding the provisions of Section 13.2.A hereof that 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 Holders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Holders as creditors) and/or distribute to the Holders, 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. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the 
 Holders, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt. 
 

 C.    In the event that the Partnership is "liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article 13 to the Holders (a) first in accordance with Section 5.1 and (b) then to the Holders that have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive Capital Account balances, but distributions under this clause (b) shall be 
 

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 subject to the proviso set forth above in Section 13.2(A)(4). If any Holder has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Holder 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. In the sole and absolute discretion of the Managing General Partner or the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Holders pursuant to this Article 13 may be: 
 

 (1)   distributed to a trust established for the benefit of the Managing General Partner and the Holders for the purpose of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the Managing General Partner arising out of or in connection with the Partnership and/or Partnership activities. The assets of any such trust shall be distributed to the Holders, from time to time, in the reasonable discretion of the Managing General Partner, in the same proportions and amounts as would otherwise have been distributed to the Holders pursuant to this Agreement; or 
 

 (2)   withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be distributed to the Holders in the manner and order of priority set forth in Section 13.2.A hereof as soon as practicable.
  
 Section 13.3    Deemed Contribution and Distribution.    Notwithstanding any other provision of this Article 13, in the event that the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership's Property shall not be liquidated, the Partnership's liabilities shall not be paid or discharged and the Partnership's affairs shall not be wound up. Instead, for Federal income tax purposes the Partnership shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and immediately thereafter, distributed Partnership Units to the Partners in the new partnership in accordance with their respective Capital Accounts in liquidation of the Partnership, and the new partnership is deemed to continue the business of the Partnership. Nothing in this Section 13.3 shall be deemed to have constituted any Assignee as a Substituted Limited Partner without compliance with the provisions of Section 11.4 or Section 13.3 hereof. 
 

 Section 13.4    Rights of Holders.    Except as otherwise provided in this Agreement, (a) each Holder shall look solely to the assets of the Partnership for the return of its Capital Contribution, (b) no Holder shall have the right or power to demand or receive property other than cash from the Partnership and (c) no Holder shall have priority over any other Holder as to the return of its Capital Contributions, distributions or allocations. 
 

 Section 13.5    Notice of Dissolution.    In the event that a Liquidating Event occurs or an event occurs that would, but for an election or objection by one or more Partners pursuant to Section 13.1 hereof, result in a dissolution of the Partnership, the Managing General Partner shall, 
 

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 within thirty (30) days thereafter, provide written notice thereof to each Holder and, in the Managing General Partner's sole and absolute discretion or as required by the Act, to all other parties with whom the Partnership regularly conducts business (as determined in the sole and absolute discretion of the Managing General Partner), and the Managing General Partner may, or, if required by the Act, shall, publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the sole and absolute discretion of the Managing General Partner). 
 

 Section 13.6    Cancellation of Certificate of Limited Partnership.    Upon the completion of the liquidation of the Partnership cash and property as provided in Section 13.2 hereof, the Partnership shall be terminated, a certificate of cancellation shall be filed with the State of Texas, all qualifications of the Partnership as a foreign limited partnership or association in jurisdictions other than the State of Texas shall be cancelled, and such other actions as may be necessary to terminate the Partnership shall be taken. 
 

 Section 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 between and among the Partners during the period of liquidation. 
 

 ARTICLE 14
 PROCEDURES FOR ACTIONS AND CONSENTS
 OF PARTNERS; AMENDMENTS; MEETINGS
 

 
 Section 14.1    Procedures for Actions and Consents of Partners.    The actions requiring consent or approval of Partners pursuant to this Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14.
  
 Section 14.2    Amendments.    Amendments to this Agreement may be proposed by the Managing General Partner or by Limited Partners holding twenty-five percent (25%) or more of the Partnership Interests held by Limited Partners (excluding the Partnership Interests held by the Special Limited Partner) and, except as set forth in Section 7.3.C and subject to Section 7.3.D, shall be approved by the Consent of the Partners. Following such proposal, the Managing General Partner shall submit to the Partners any proposed amendment that, pursuant to the terms of this Agreement, requires the consent, approval or vote of the Partners holding Partnership Interests entitled to vote thereon. The Managing General Partner shall seek the written consent, approval or vote of the Partners on any such proposed amendment or shall call a meeting to vote thereon and to transact any other business that the Managing General Partner may deem appropriate. For purposes of obtaining a written Consent, the Managing General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent that is consistent with the Managing General Partner's recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.
 

 

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 Section 14.3    Meetings of the Partners.    
 

 A.    Meetings of the Partners may be called only by the Managing General Partner. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote, consent or approval of Partners is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Partners or may be given in accordance with the procedure prescribed in Section 14.3.B hereof. 
 

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

 C.    Each Partner entitled to act at the meeting may authorize any Person or Persons to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Partner executing it, such revocation to be effective upon the Partnership's receipt of written notice of such revocation from the Partner executing such proxy. 
 

 D.    Each meeting of Partners shall be conducted by the Managing General Partner or such other Person as the Managing General Partner may appoint pursuant to such rules for the conduct of the meeting as the Managing General Partner or such other Person deems appropriate in its sole and absolute discretion. Without limitation, meetings of Partners may be conducted in the same manner as meetings of the Special Limited Partner's shareholders and may be held at the same time as, and as part of, the meetings of the Special Limited Partner's shareholders. 
 

 ARTICLE 15
 GENERAL PROVISIONS
 

 Section 15.1    Redemption Rights of Qualifying Parties.    
 

 A.    After the applicable Fourteen-Month Period, a Qualifying Party shall have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem all or a portion of the Partnership Common Units held by such Tendering Party (Partnership Common Units that have in fact been tendered for redemption being hereafter referred to as "Tendered Units") in exchange (a "Redemption") for the Cash Amount payable on the Specified Redemption 
 

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 Date. The Partnership may, in the Managing General Partner's sole and absolute discretion, redeem Tendered Units at the request of the Holder prior to the end of the applicable Fourteen-Month Period (subject to the terms and conditions set forth herein) (a "Special Redemption"); provided, however, that the Managing General Partner first receives a legal opinion to the same effect as the legal opinion described in Section 15.1.G(4) of this Agreement. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the Managing General Partner and the Special Limited Partner by the Qualifying Party when exercising the Redemption right (the "Tendering Party"). The Partnership's obligation to effect a Redemption, however, shall not arise or be binding against the Partnership until the earlier of (i) the date the Managing General Partner, on behalf of the Partnership, notifies the Tendering Party that the Partnership declines to cause the Special Limited to Partner to acquire some or all of the Tendered Units under Section 15.1.B hereof following receipt of a Notice of Redemption and (ii) the Business Day following the Cut-Off Date. In the event of a Redemption, the Cash Amount shall be delivered as a certified or bank check payable to the Tendering Party or, in the Managing General Partner's sole and absolute discretion, in immediately available funds, in each case, on or before the tenth (10th) Business Day following the date on which the Managing General Partner receives a Notice of Redemption from the Tendering Party. 
 

 B.    Notwithstanding the provisions of Section 15.1.A hereof, on or before the close of business on the Cut-Off Date, the Partnership may, in the Managing General Partner's sole and absolute discretion but subject to the Ownership Limit and the transfer restrictions and other limitations of the Charter, elect to cause the Special Limited Partner to acquire some or all (such percentage being referred to as the "Applicable Percentage") of the Tendered Units from the Tendering Party in exchange for REIT Shares. If the Partnership chooses to cause the Special Limited Partner to acquire some or all of the Tendered Units pursuant to this Section 15.1.B, the Managing General Partner, on behalf of the Partnership, shall give written notice thereof to the Special Limited Partner and the Tendering Party on or before the close of business on the Cut-Off Date. If the Partnership elects to cause the Special Limited Partner to acquire any of the Tendered Units for REIT Shares, the Managing General Partner, on behalf of the Partnership, shall direct the Special Limited Partner to issue and deliver such REIT Shares to the Tendering Party pursuant to the terms of this Section 15.1.B, in which case (1) the Special Limited Partner shall assume directly the obligation with respect thereto and shall satisfy the Tendering Party's exercise of its Redemption right with respect to such Tendered Units, and (2) such transaction shall be treated, for 
 Federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the Special Limited Partner in exchange for the REIT Shares Amount. If the Partnership so elects, on the Specified Redemption Date, the Tendering Party shall sell such number of the Tendered Units to the Special Limited Partner in exchange for a number of REIT Shares equal to the product of the REIT Shares Amount and the Applicable Percentage. The Tendering Party shall submit (i) such information, certification or affidavit as the Special Limited Partner may reasonably require in connection with the application of the Ownership Limit and other restrictions and limitations of the Charter to any such acquisition and (ii) such written representations, investment letters, legal opinions or other instruments necessary, in the Special Limited Partner's view, to effect compliance with the Securities Act. In the event of a purchase of the Tendered Units by the Special Limited Partner pursuant to this Section 15.1.B, the Tendering Party shall no longer have the right to cause the Partnership to effect a Redemption of such Tendered Units, and, upon notice to the Tendering Party by the Managing General Partner, given on or before the close of business on the Cut-Off 
 

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 Date, that the Partnership has elected to cause the Special Limited Partner to acquire some or all of the Tendered Units pursuant to this Section 15.1.B, the obligation of the Partnership to effect a Redemption of the Tendered Units as to which the Managing General Partner's notice relates shall not accrue or arise. The product of the Applicable Percentage and the REIT Shares Amount, if applicable, shall be delivered by the Special Limited Partner as duly authorized, validly issued, fully paid and non-assessable REIT Shares and, if applicable, Rights, free of any pledge, lien, encumbrance or restriction, other than the Ownership Limit and other restrictions provided in the Charter, the Securities Act and relevant state securities or "blue sky" laws. Neither any Tendering Party whose Tendered Units are acquired by the Special Limited Partner pursuant to this Section 15.1.B, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the Special Limited Partner to register, qualify or list any REIT Shares owned or held by such Person, whether or not such REIT Shares are issued pursuant to this Section 15.1.B, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; provided, however, that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the Special Limited Partner and any such Person. Notwithstanding any delay in such delivery, the Tendering Party shall be deemed the owner of such REIT Shares and Rights for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares issued upon an acquisition of the Tendered Units by the Special Limited Partner pursuant to this Section 15.1.B may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the Special Limited Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws.
 

 C.    Notwithstanding the provisions of Section 15.1.A and 15.1.B hereof, the Tendering Parties shall have no rights under this Agreement that would otherwise be prohibited under the Charter with respect to the Ownership Limit. To the extent that any attempted Redemption or acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof 
 would be in violation of this Section 15.1.C, it shall be null and void ab initio, and the Tendering Party shall not acquire any rights or economic interests in REIT Shares otherwise issuable by the Special Limited Partner under Section 15.1.B hereof or cash otherwise payable under Section 15.1.A hereof. 
 

 D.    If the Partnership does not exercise its right to cause the Special Limited Partner to acquire the Tendered Units pursuant to Section 15.1.B hereof: 
 

 (1)   The Partnership may elect to raise funds for the payment of the Cash Amount either (a) by requiring that the Special Limited Partner contribute to the Partnership funds from the proceeds of a registered public offering by the Special Limited Partner of REIT Shares sufficient to purchase the Tendered Units or (b) from any other sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership. Any proceeds from a public offering that are in excess of the Cash Amount shall be for the sole benefit of the Special Limited Partner. The Special Limited Partner shall make a Capital Contribution of any such amounts to the Partnership for an additional Limited Partner Interest. Any such contribution shall entitle the Special Limited Partner to an equitable Percentage Interest adjustment. 
 

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 (2)   If the Cash Amount is not paid on or before the Specified Redemption Date, interest shall accrue with respect to the Cash Amount from the day after the Specified Redemption Date to and including the date on which the Cash Amount is paid at a rate equal to the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate). 
 

 E.    Notwithstanding the provisions of Section 15.1.B hereof, the Partnership shall not, under any circumstances, elect to cause the Special Limited Partner to acquire any Tendered Units in exchange for REIT Shares if such exchange would be prohibited under the Charter. 
 

 F.     Notwithstanding anything herein to the contrary (but subject to Section 15.1.C hereof), with respect to any Redemption (or any tender of Partnership Common Units for Redemption if the Tendered Units are acquired by the Special Limited Partner pursuant to Section 15.1.B hereof) pursuant to this Section 15.1: 
 

 (1)   All Partnership Common Units acquired by the Special Limited Partner pursuant to Section 15.1.B hereof shall automatically, and without further action required, be converted into and deemed to be a Special Limited Partner's Partner Interest comprised of the same number of Partnership Common Units. 
 

 (2)   Subject to the Ownership Limit, no Tendering Party may effect a Redemption for less than one thousand (1,000) Partnership Common Units or, if such Tendering Party holds (as a Limited Partner or, economically, as an Assignee) less than one thousand (1,000) Partnership Common Units, all of the Partnership Common Units held by such Tendering Party, unless, in each case, otherwise agreed to by the Managing General Partner in its sole and absolute discretion. 
 

 (3)   If (i) a Tendering Party surrenders its Tendered Units during the period after the Partnership Record Date with respect to a distribution and before the record date established by the Special Limited Partner for a distribution to its shareholders of some or all of its portion of such Partnership distribution, and (ii) the Partnership elects to cause the Special Limited Partner to acquire any of such Tendered Units in exchange for REIT Shares pursuant to Section 15.1.B, such Tendering Party shall pay to the Managing General Partner on the Specified Redemption Date an amount in cash equal to the portion of the Partnership distribution in respect of the Tendered Units exchanged for REIT Shares, insofar as such distribution relates to the same period for which such Tendering Party would receive a distribution in respect of such REIT Shares. 
 

 (4)   The consummation of such Redemption (or an acquisition of Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, as the case may be) shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 
 

 

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 (5)   The Tendering Party shall continue to own (subject, in the case of an Assignee, to the provisions of Section 11.5 hereof) all Partnership Common Units subject to any Redemption, and be treated as a Limited Partner or an Assignee, as applicable, with respect to such Partnership Common Units for all purposes of this Agreement, until such Partnership Common Units are either paid for by the Partnership pursuant to Section 15.1.A hereof or transferred to the Special Limited Partner and paid for, by the issuance of the REIT Shares, pursuant to Section 15.1.B hereof on the Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, the Tendering Party shall have no rights as a shareholder of the Special Limited Partner with respect to the REIT Shares issuable in connection with such acquisition. 
 

 G.    In connection with an exercise of Redemption rights pursuant to this Section 15.1, the Tendering Party shall submit the following to the Managing General Partner, in addition to the Notice of Redemption: 
 

  (1)   A written affidavit, dated the same date as the Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and (ii) to the best of their knowledge any Related Party and (b) representing that, after giving effect to the Redemption or an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, neither the Tendering Party nor to the best of their knowledge any Related Party will own REIT Shares in excess of the Ownership Limit;
 

 (2)   A written representation that neither the Tendering Party nor to the best of their knowledge any Related Party has any intention to acquire any additional REIT Shares prior to the closing of the Redemption or an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof on the Specified Redemption Date; and 
 

 (3)   An undertaking to certify, at and as a condition to the closing of (i) the Redemption or (ii) the acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares by the Tendering Party and to the best of their knowledge any Related Party remain unchanged from that disclosed in the affidavit required by Section 15.1.G(1) or (b) after giving effect to the Redemption or an acquisition of the Tendered Units by the Special Limited Partner pursuant to Section 15.1.B hereof, neither the Tendering Party nor to the best of their knowledge any Related Party shall own REIT Shares in violation of the Ownership Limit. 
 

 (4)   In connection with any Special Redemption, the Special Limited Partner shall have the right to receive an opinion of counsel reasonably satisfactory to it to the effect that the proposed Special Redemption will not cause the Partnership, the Managing General Partner or the Special Limited Partner to violate any Federal or state securities laws or regulations applicable to the Special Redemption, the issuance and sale of the Tendered Units to the Tendering Party or the issuance and sale of REIT Shares to the Tendering Party pursuant to Section 15.1.B of this Agreement. 
 

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 Section 15.2    Addresses and Notice.    Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written communication (including by telecopy, facsimile, or commercial 
 courier service) to the Partner, or Assignee at the address set forth in Exhibit A or Exhibit B (as applicable) or such other address of which the Partner shall notify the Managing General Partner in writing. 
 

 Section 15.3    Titles and Captions.    All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to "Articles" or "Sections" are to Articles and Sections of this Agreement. 
 

 Section 15.4    Pronouns and Plurals.    Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. 
 

 Section 15.5    Further Action.    The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement. 
 

 Section 15.6    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. 
 

 Section 15.7    Waiver.
 

 A.    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. 
 

 B.    The restrictions, conditions and other limitations on the rights and benefits of the Limited Partners contained in this Agreement, and the duties, covenants and other requirements of performance or notice by the Limited Partners, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the Managing General Partner, in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time; provided, however, that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Limited Partner, (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners (other than any such reduction that affects all of the Limited Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Partners holding such class or series of Partnership Units), (iv) resulting in the classification of the Partnership as an 
 

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 association or publicly traded partnership taxable as a corporation or (v) violating the Securities Act, the Exchange Act or any state "blue sky" or other securities laws; and provided, further, that any waiver relating to compliance with the Ownership Limit or other restrictions in the Charter shall be made and shall be effective only as provided in the Charter. 
 

 Section 15.8    Counterparts.    This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto. 
 

 Section 15.9    Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial.    
 

 A.    This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Texas, without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence. 
 

 B.    Each Partner hereby (i) submits to the non-exclusive jurisdiction of any state or federal court sitting in the State of Texas (collectively, the "Texas Courts"), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute, (ii) irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of any of the Texas Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper, (iii) agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered to such Partner at such Partner's last known address as set forth in the Partnership's books and records, and (iv) irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby. 
       
 Section 15.10    Entire Agreement.    This Agreement contains all of the understandings and agreements between and among the Partners with respect to the subject matter of this Agreement and the rights, interests and obligations of the Partners with respect to the Partnership. Notwithstanding the immediately preceding sentence, the Partners hereby acknowledge and agree that the Managing General Partner, without the approval of any Limited Partner, may enter into side letters or similar written agreements with Limited Partners that are not Affiliates of the Managing General Partner or the Special Limited Partner, executed contemporaneously with the admission of such Limited Partner to the Partnership, affecting the terms hereof, as negotiated with such Limited Partner and which the Managing General Partner in its sole discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms, conditions or provisions contained in such side letters or similar written agreements with a Limited Partner shall govern with respect to such Limited Partner notwithstanding the provisions of this Agreement. 
 

 

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 Section 15.11    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. 
 

 Section 15.12    Limitation to Preserve REIT Status.    Notwithstanding anything else in this Agreement, to the extent that the amount paid, credited, distributed or reimbursed by the Partnership to any REIT Partner or its officers, directors, employees or agents, whether as a reimbursement, fee, expense or indemnity (a "REIT Payment"), would constitute gross income to the REIT Partner for purposes of Code Section 856(c)(2) or Code Section 856(c)(3), then, notwithstanding any other provision of this Agreement, the amount of such REIT Payments, as selected by the Managing General Partner in its discretion from among items of potential distribution, reimbursement, fees, expenses and indemnities, shall be reduced for any Partnership Year so that the REIT Payments, as so reduced, for or with respect to such REIT Partner shall not exceed the lesser of: 
 

 (i)    an amount equal to the excess, if any, of (a) four and nine-tenths percent (4.9%) of the REIT Partner's total gross income (but excluding the amount of any REIT Payments) for the Partnership Year that is described in subsections (A) through (H) of Code Section 856(c)(2) over (b) the amount of gross income (within the meaning of Code Section 856(c)(2)) derived by the REIT Partner from sources other than those described in subsections (A) through (H) of Code Section 856(c)(2) (but not including the amount of any REIT Payments); or 
 

 (ii)   an amount equal to the excess, if any, of (a) twenty-four percent (24%) of the REIT Partner's total gross income (but excluding the amount of any REIT Payments) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(3) over (b) the amount of gross income (within the meaning of Code Section 856(c)(3)) derived by the REIT Partner from sources other than those described in subsections (A)   through (I) of Code Section 856(c)(3) (but not including the amount of any REIT Payments);
 

 provided, however, that REIT Payments in excess of the amounts set forth in clauses (i) and (ii) above may be made if the Managing General Partner, as a condition precedent, obtains an opinion of tax counsel that the receipt of such excess amounts shall not adversely affect the REIT Partner's ability to qualify as a REIT. To the extent that REIT Payments may not be made in a Partnership Year as a consequence of the limitations set forth in this Section 15.12, such REIT Payments shall carry over and shall be treated as arising in the following Partnership Year if such carry over does not adversely affect the REIT Partner's ability to qualify as a REIT. The purpose of the limitations contained in this Section 15.12 is to prevent any REIT Partner from failing to qualify as a REIT under the Code by reason of such REIT Partner's share of items, including distributions, reimbursements, fees, expenses or indemnities, receivable directly or indirectly from the Partnership, and this Section 15.12 shall be interpreted and applied to effectuate such purpose.
 

 Section 15.13    REIT Restrictions.    Each Affiliated REIT is a REIT and is subject to the provisions of Sections 856 through and including 860 of the Code. So long as an Affiliated REIT 
 

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 owns, directly or indirectly, any interest in the Partnership, then notwithstanding any other provision of this Agreement: 
 

 (i)    any services that would otherwise cause any rents from a lease to be excluded from treatment as rents from real property pursuant to Section 856(d)(2)(C) of the Code shall be provided by either (1) an independent contractor (as described in Section 856(d)(3) of the Code) with respect to such Affiliated REIT and from whom neither the Partnership nor such Affiliated REIT derives or receives any income or (2) a taxable REIT subsidiary of such Affiliated REIT as described in Section 856(l) of the Code; 
 

 (ii)   except for a taxable REIT subsidiary of an Affiliated REIT, the Partnership shall not own, directly or indirectly or by attribution (in accordance with attribution rules referred to in Section 856(d)(5) of the Code), in the aggregate more than 10% of the total value of all classes of stock or more than 10% of the total voting power (or, with respect to any such person which is not a corporation, an interest of 10% or more in the assets or net profits of such person) of a lessee or sublessee of all or any part of the Property or of any other assets of the Partnership except in each case with the specific written approval of each Affiliated REIT; 
 

 (iii)  except for securities of a taxable REIT subsidiary of an Affiliated REIT, the Partnership shall not own or acquire, directly or indirectly or by attribution, more than 10% of the total value or the total voting power of the outstanding securities of any issuer or own any other asset (including a security) which would cause the Affiliated REIT to fail the asset test of Section 856(c)(4)(B) of the Code; and 
 

 (iv)  leases entered into by the Partnership or any of its Subsidiary partnerships, limited partnerships, and limited liability companies shall provide for rents that qualify as "rents from real property" within the meaning of Section 856(d) of the Code with respect to each Affiliated REIT. 
 

 Section 15.14    No Partition.    No Partner nor any successor-in-interest to a Partner shall have the right while this Agreement remains in effect to have any property of the Partnership partitioned, or to file a complaint or institute any proceeding at law or in equity to have such property of the Partnership partitioned, and each Partner, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Partners that the rights of the parties hereto and their successors-in-interest to Partnership property, as among themselves, shall be governed by the terms of this Agreement, and that the rights of the Partners and their respective successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement. 
 

 Section 15.15    No Third-Party Rights Created Hereby.    The provisions of this Agreement are solely for the purpose of defining the interests of the Holders, inter se; and no other person, firm or entity (i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. No creditor or other third party having dealings with the Partnership (other than as expressly set forth herein with respect to Indemnitees) 
 

 80
 

 

 
 shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans to the Partnership or to pursue any other right or remedy hereunder or at law or in equity. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may any such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or any of the Partners. 
 

         Section 15.16    No Rights as Shareholders.    Nothing contained in this Agreement shall be construed as conferring upon the Holders of Partnership Units any rights whatsoever as shareholders of the Special Limited Partner, including without limitation any right to receive dividends or other distributions made to shareholders of the Special Limited Partner or to vote or to consent or receive notice as shareholders in respect of any meeting of shareholders for the election of directors of the Special Limited Partner or any other matter. 
 

 

 

 

 [Remainder of Page Left Blank Intentionally]
 

 

 

 

 

 81
 

 

 
 

 IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
 

 

 MANAGING GENERAL PARTNER:
 

    HARTMAN XX REIT GP, LLC
    a Texas limited liability company
 

        
        
       By: _________________________      
       Name: Allen R. Hartman
       Its: Manager
 

        
        
 SPECIAL LIMITED PARTNER:
 

  HARTMAN SHORT TERM INCOME PROPERTIES XX, INC.,
       a Maryland corporation,
       
        
 

           By: _______________________
           Name: Allen R. Hartman
           Its: President
 

 

 LIMITED PARTNER:
 

        
        
 ________________________________,
 A __________________________________.
 

        
        
       By: _____________________________     
       Name: ___________________________
       Its: ______________________________
 

 

 82
 

 

 
 Exhibit A
 

 PARTNERS AND PARTNERSHIP UNITS 
       Name and Address of Partners
 Partnership Units (Type and Amount)
 

 

       Managing General Partner:  
             
       Hartman XX REIT GP, LLC
 Partnership Common Units
        2909 Hillcroft, Suite 420  
 66,582
        Houston, Texas 77057
    
   
 

 

       Special Limited Partner:  
             
       Hartman Short Term Income Properties XX, Inc.
 Partnership Common Units
        2909 Hillcroft, Suite 420  
 6,591,585
        Houston, Texas 77057
 

 

 

       Limited Partners:  
 

 

                         
       TOTAL: 6,658,167 Partnership Common Units as of the Formation Date
 

 

  
 

 83
 

 

 
 Exhibit B
 

 EXAMPLES REGARDING ADJUSTMENT FACTOR
 

 For purposes of the following examples, it is assumed that (a) the Adjustment Factor in effect on December 30, 2007 is 1.0 and (b) on January 1, 2006 (the "Partnership Record Date" for purposes of these examples), prior to the events described in the examples, there are 100 REIT Shares issued and outstanding. 
 Example 1
 

 On the Partnership Record Date, the Special Limited Partner declares a dividend on its outstanding REIT Shares in REIT Shares. The amount of the dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to Paragraph (i) of the definition of "Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after 
 the stock dividend is declared, as follows: 
 

 1.0 * 200/100 = 2.0
 

 Accordingly, the Adjustment Factor after the stock dividend is declared is 2.0. 
 

 Example 2
 

 On the Partnership Record Date, the Special Limited Partner distributes options to purchase REIT Shares to all holders of its REIT Shares. The amount of the distribution is one option to acquire one REIT Share in respect of each REIT Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the definition of "Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the options are distributed, as follows: 
 

 1.0 * (100 + 100)/(100 + [100 * $4.00/$5.00]) = 1.1111 
 

 Accordingly, the Adjustment Factor after the options are distributed is 1.1111.  If the options expire or become no longer exercisable, then the retroactive adjustment specified in Paragraph (ii) of the definition of "Adjustment Factor" shall apply.
  
 Example 3
 

 On the Partnership Record Date, the Special Limited Partner distributes assets to all holders of its REIT Shares. The amount of the distribution is one asset with a fair market value (as determined by the Managing General Partner) of $1.00 in respect of each REIT Share owned. It is also assumed that the assets do not relate to assets received by the Managing General Partner pursuant to a pro 
 rata distribution by the Partnership. The Value of a REIT Share on the Partnership Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of "Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the assets are 
 distributed, as follows: 
 

 1.0 * $5.00/($5.00 - $1.00) = 1.25 
 

 Accordingly, the Adjustment Factor after the assets are distributed is 1.25. 
 

 

 

 84
 

 

 
 Exhibit C
 

 LIST OF EXCLUDED PROPERTIES
 

 

 None. 
 

 

 85
 

 

 
 Exhibit C
 

 LIST OF EXCLUDED PROPERTIES
 

 

 86stlt_ex103.htm

EXHIBIT 10.3

SHARE EXCHANGE AGREEMENT

by and among

Celtic Biotech Iowa, Inc. (“Purchaser“)

An Iowa Corporation,

and

Celtic Biotech Limited (“Acquiree”),

An Irish Limited Company,

Together (the “Parties”) or Individually (a “Party”)

 

June 4, 2014

 

  

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SHARE EXCHANGE AGREEMENT

This Share Exchange Agreement, dated as of June 4, 2014 (this “Agreement”), is made and entered into by and among Celtic Biotech Iowa, Inc., incorporated in the State of Iowa (“Purchaser”), and Celtic Biotech Limited, an Irish Limited Company (“Acquiree”) (together (the “Parties”) and individually (a “Party”)).

R E C I T A L S

WHEREAS, the Acquiree is seeking a partner for its continued development and the eventual marketing of its Intellectual Properties (the “IP”) and those products developed from that IP.

WHEREAS, Purchaser has agreed to provide partner with Acquiree to continue development of Acquiree’s IP and products developed from that IP.

WHEREAS, upon Close of this Agreement, the Board of Directors of both the Purchaser and the Acquiree will have adopted resolutions approving the acquisition, by Purchaser of Acquiree, through the exchange of shares between Purchaser and Acquiree (the “Acquisition”), upon the terms and conditions hereinafter set forth in this Agreement.

WHEREAS, the Acquiree must obtain the permission of its Stockholders to enact the terms of the Acquisition by attaining a vote of those Acquiree issued shares eligible to vote, and such vote must be of at least 95% for approval of the terms of this Agreement in order for the terms and conditions of this Agreement to be enacted (the “Approval”).

WHEREAS, upon Approval, and following consummation of the terms and conditions of this Agreement, Acquiree will become a subsidiary of Purchaser.

WHEREAS, it is intended that the terms and conditions of this Agreement comply in all respects with Section 368(a)(1)(B) of the US Code and the regulations corresponding thereto, so that the Acquisition shall qualify as a tax free reorganization under the Code, and that this share exchange transaction shall qualify as a transaction in securities exempt from registration or qualification under the Securities Act of 1933, as amended and in effect on the date of this Agreement.

 

  

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A G R E E M E N T

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

 

ARTICLE 1

THE TRANSACTION

1.1 Certain Definitions. The following capitalized terms as used in this Agreement shall have the respective definitions:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Approval” This Agreement will be: (i.) enacted should the Acquiree receive a shareholder vote which is at least 95% of the voting shares of Acquiree voting for the adoption of this Agreement, or (ii.) annulled, should the Acquiree receive a shareholder vote which is less than 95% of the voting shares of Acquiree for the adoption of this Agreement.

 

“Close” means the state where all the terms and conditions necessary to affect the Acquisition of Acquiree by Purchaser have been completed and the Acquiree has become a subsidiary of Purchaser.

 

“Contract” means any contract, lease, license, indenture, note, bond, agreement, permit, concession, franchise or other instrument.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 or any successor law and the regulations and rules issued pursuant to that act or any successor law.

“FINRA” means Financial Industry Regulatory Authority.

 

“Knowledge” means the notice, acknowledgement, receipt or presence of any data by or to the officers, directors or advisors of the referenced Party.

 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” means an adverse effect on either referenced Party or the combined entity resulting from the consummation of the transaction contemplated by this Agreement, or on the financial condition, results of operations or business, before or after the consummation of the transaction contemplated in this Agreement, which as a whole is or would be considered material to an investor in the securities of Acquiree.

“Person” means any individual, corporation, partnership, joint venture, trust, business association, organization, governmental authority or other entity.

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

“Section 368(a)(1)(B)” refers to Title 26 › Subtitle A › Chapter 1 › Subchapter C › Part III › Subpart D › subsection 368 of the US Code.

  

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“Tax Returns” means all federal, state, local and foreign returns, estimates, information statements and reports relating to Taxes.

“Tax” or “Taxes” means any and all applicable central, federal, provincial, state, local, municipal and foreign taxes, including, without limitation, gross receipts, income, profits, sales, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes, assessments, governmental charges and duties together with all interest, penalties and additions imposed with respect to any such amounts and any obligations under any agreements or arrangements with any other person with respect to any such amounts and including any liability of a predecessor entity for any such amounts.

“Transaction” means the transactions, transfer of ownership and change of control contemplated by this Agreement.

“US” means and includes the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

“US Code” means the official code of laws of the federal government of the United States of America.

 

1.2. Pre-Closing. Upon the terms and subject to the conditions hereof, at the Closing (as hereinafter defined) the parties shall do the following:

(a) Acquiree will obtain Approval of the terms and conditions of this Agreement, no later than 90 days following the execution of this Agreement. Upon receipt of Approval, Acquiree will notify Purchaser of such Approval; then

 

(b) The Parties will mutually deliver those items called for in Article 7; then

 

(c) The Purchaser will issue to Acquiree certificates representing 474,419 shares of the Purchaser’s Series B Preferred Stock (the “Exchange Shares”) having those material attributes as detailed in Exhibit A, and a stated value of $2,229,924.00 (the “Purchase Price”); then

 

(d) Acquiree will issue to Purchaser shares of its common stock to Purchaser equal to 95% of its securities on a fully diluted basi (the “Acquiree Shares”); then

 

(e) The License Agreement, signed on March 10, 2014, between the Purchaser and the Acquiree, (the “License Agreement”), shall be annulled. The License rights, as detailed in the Disclosure Schedule 1.2(e), shall revert back to Acquiree (the LICENSOR in the License Agreement). The 115,839 shares of Series B Preferred stock paid by Purchaser to Acquiree for the License Agreement purchase, will be returned to Purchaser to be cancelled; then

 

(f) Acquiree will exchange with its shareholders, the Exchange Shares, for those common shares of the Acquiree held by the shareholders (Reference is made to the Exchange Share Chart listed in Exhibit B) which shall be cancelled upon such exchange.

1.3 The Close. Following the completion of Section 1.2 above, the Acquisition will be considered Closed.

  

4

  

 

1.4 Post Close. Immediately following the Close:

 

(a) The Acquiree will be placed as a subsidiary of Purchaser in the Purchasers Corporate Organization Chart and will report its financials to the Purchaser according to the requirements of the Purchaser.

 

(b) Eoghan Reid shall accept the position and be appointed as Resident Director of Acquiree and shall be retained in that position for a minimum of 5 years, in exchange for having 300,000 shares of Acquiree common shares issued in his name. Such position will require that Eoghan Reid be available and as the registered agent for the Acquiree in Ireland, responsible for inquiries to/from/of or related to the Acquiree’s status as an Ireland registered company.

 

(c) The Acquiree will call a meeting of its directors and address the following items: and

 

i. The Board of Directors will elect and seat Eoghan Reid as a Director and place him as the Resident Director; and

ii. The Board will elect and seat Cristopher Grunewald and (John Krone) to the board; and

iii. All remaining board members of Acquiree will resign; and

iv. The board will then amend the Bylaws of Acquiree as follows:

a. The Board of Directors shall consist of 3 Members.

b. Director appointment will be made by Shareholder vote.

c. Directors shall hold their seats for 5 years unless removed by the Board; and

v. Paul Reid will operate as President until removed by the Board; and

vi. Operational Financials will be reported to the Purchaser and included in Purchasers financials; and

(d) Purchaser will deliver to its parent company Spotlight Innovation, Inc. (“Spotlight”) this Agreement, the Notice of Approval, a statement of Closing and sufficient information so that Spotlight may make the appropriate securities disclosures and issue the appropriate press releases.

 

1.5. Further Transactional Items. Upon completion of the Acquisition, the Purchaser shall:

 

(a) appoint Paul Reid to the board of the Purchaser. The Board will recommend to its shareholders, that Paul Reid occupy this for a period of five years.

 

1.6 Closing Date. The closing of the Acquisition (the “Closing”) shall take place on such date as Section 1.2 is completed. Such date is referred to herein as the “Closing Date.”

 

1.7 Taking of Necessary Action; Further Action. If, at any time following the Close, any further action is or becomes necessary or desirable to carry out the purposes of this Agreement, the Purchaser and the Acquiree will take all such lawful and necessary action.

 

1.8 Tax Consequences. It is intended that the terms and conditions of this Agreement comply in all respects with Section 368(a)(1)(B) of the US Code and the regulations corresponding thereto, so that the Acquisition shall qualify as a tax-free reorganization under the US Code.

 

  

5

  

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Except as otherwise disclosed herein or in a disclosure schedule attached hereto, Purchaser hereby represents and warrants to Acquiree and the Acquiree Stockholders as of the date hereof and as of the Closing Date (unless otherwise indicated) as follows:

2.1 Organization. Purchaser has been duly incorporated, validly exists as a corporation, and is in good standing under the laws of the state of Iowa, and has the requisite power to carry on its business as now conducted.

 

2.2 Capitalization. The authorized capital stock of Purchaser consists of 100,000,000 share of common stock, 500,000 Series A Preferred Stock, 500,000 shares of Series B Preferred Shares 4,000,000 shares of unissued Preferred Stock. The capitalization of Purchaser is set forth on Schedule 2.2, and as of Closing the capitalization shall not have changed. All of the issued and outstanding shares of Purchaser, as of the date of this Agreement are and as of Closing will be, duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. There are no voting trusts or any other agreements or understandings with respect to the voting of shareholder interests. Except as set forth in the preceding sentence, no other class of shares or other security of Purchaser is authorized, issued, reserved for issuance or outstanding. Except as set forth on Schedule 2.2 there are no authorized or outstanding options, warrants, equity securities, calls, rights, commitments or agreements of any character by which Purchaser or any of the Purchaser is obligated to issue, deliver or sell, or cause to be issued, delivered or sold, any membership interests or other securities of Purchaser.

 

2.3 Subsidiaries. As of the Closing, Purchaser has no direct or indirect subsidiaries.

 

2.4 Certain Corporate Matters. Purchaser is duly qualified to do business as a corporation and is in good standing under the laws of the State of Iowa. Purchaser has full corporate power and authority and all authorizations, licenses and permits necessary to carry on the business in which it is engaged and to own and use the properties owned and used by it.

 

2.5 Authority Relative to this Agreement. Purchaser has the requisite power and authority to enter into this Agreement and to carry out its respective obligations hereunder. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by Purchaser will have been duly authorized by the Board of Directors of the Purchaser and no other actions on the part of Purchaser is necessary to authorize this Agreement or the transactions contemplated hereby. When delivered, this Agreement will have been duly and validly executed and delivered by Purchaser and will constitute a valid and binding agreement, enforceable against Purchaser in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

 

2.6 Consents and Approvals; No Violations. Except for applicable requirements of federal securities laws and state securities or blue-sky laws, no filing with, and no permit, authorization, consent or approval of, any third Party, public body or authority is necessary for the consummation by Purchaser of the transactions contemplated by this Agreement. Neither the execution and delivery of this Agreement by Purchaser nor the consummation by Purchaser of the transactions contemplated hereby, nor compliance by them with any of the provisions hereof, will (a) conflict with or result in any breach of any provisions of the charter or bylaws (or operating agreement) of Purchaser, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or obligation to which Purchaser is a Party or by which any of their respective properties or assets may be bound, or (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Purchaser, or any of its properties or assets, except in the case of clauses (b) and (c) for violations, breaches or defaults which are not in the aggregate material to Purchaser taken as a whole.

 

  

6

  

 

2.7 Books and Records. The books and records of Purchaser will have been maintained in accordance with applicable generally accepted accounting principles.

 

2.8 Intellectual Property. Purchaser has no Knowledge of any claim that, or inquiry as to whether, any product, activity or operation of Purchaser infringes upon or involves, or has resulted in the infringement of, any trademarks, trade-names, service marks, patents, copyrights or other proprietary rights of any other person, corporation or other entity; and no proceedings have been instituted, are pending or are threatened.

 

2.9 Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the Knowledge of Purchaser, threatened against or affecting Purchaser or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Exchange Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a material adverse effect.

 

2.10 Legal Compliance. To the best Knowledge of Purchaser, no claim has been filed against Purchaser alleging a violation of any applicable laws and regulations of foreign, federal, state and local governments and all agencies thereof.

 

2.11 Contracts. Purchaser is not in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which they are a Party or by which they or any of their properties or assets are bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

2.12 Labor Relations. No labor dispute exists or is imminent with respect to any of the employees of Purchaser which could reasonably be expected to result in a Material Adverse Effect. Purchaser is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.13 Title to Assets. Purchaser has good and marketable title to all real property owned by it and good and marketable title in all personal property owned by it that is material to the business of Purchaser. Any real property and facilities held under lease by Purchaser is held by it under valid, subsisting and enforceable leases with which Purchaser is in compliance.

 

2.14 Intentionally Omitted

 

2.15 Foreign Corrupt Practices. Neither Purchaser nor any Purchaser Subsidiary, nor to the Knowledge of Purchaser, any agent or other person acting on behalf of Purchaser, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by Purchaser (or made by any person acting on its behalf of which Purchaser is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

  

7

  

 

2.16 Obligations of Management. Each officer and key employee of Purchaser is currently devoting substantially all of his or her business time to the conduct of business of Purchaser.

 

2.17 Minute Books. The minute books of Purchaser made available to Acquiree contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.

 

2.18 Employee Benefits. Purchaser and Purchaser Subsidiary has (including the two years preceding the date hereof has had) no plans which are subject to ERISA.

 

2.19 Money Laundering Laws. The operations of Purchaser are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental body (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Purchaser with respect to the Money Laundering Laws is pending or, to the Knowledge of Purchaser, threatened.

 

2.20 Disclosure. The representations and warranties and statements of fact made by Purchaser and the Purchaser Subsidiaries in this Agreement are, to the best Knowledge of the Purchaser, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

 

ARTICLE 3

(Article 3 Intentionally Omitted)

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF ACQUIREE

Acquiree hereby represents and warrants to Purchaser as of the date hereof and as of the Closing Date (unless otherwise indicated), as follows:

4.1 Organization. Acquiree has been duly incorporated, validly exists as a limited liability corporation, and is in good standing under the laws of the Republic of Ireland, and has the requisite power to carry on its business as now conducted.

 

4.2 Capitalization. The authorized capital stock of Acquiree consists of 10,000,000 share of common stock and 0 shares of Preferred stock. The capitalization of Acquiree is set forth on Schedule 4.2, and as of Closing the capitalization shall not have changed. All of the issued and outstanding shares of Acquiree, as of the date of this Agreement are and as of Closing will be, duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. There are no voting trusts or any other agreements or understandings with respect to the voting of shareholder interests. Except as set forth in the preceding sentence, no other class of shares or other security of Acquiree is authorized, issued, reserved for issuance or outstanding. Except as set forth on Schedule 4.2 there are no authorized or outstanding options, warrants, equity securities, calls, rights, commitments or agreements of any character by which Acquiree or any of the Acquiree is obligated to issue, deliver or sell, or cause to be issued, delivered or sold, any membership interests or other securities of Acquiree.

 

  

8

  

 

4.3 Subsidiaries. As of the Closing, Acquiree has no direct or indirect subsidiaries.

 

4.4 Certain Corporate Matters. Acquiree is duly qualified to do business as a corporation and is in good standing under the laws of the Republic of Ireland. Acquiree has full corporate power and authority and all authorizations, licenses and permits necessary to carry on the business in which it is engaged and to own and use the properties owned and used by it.

 

4.5 Authority Relative to this Agreement. Acquiree has the requisite power and authority to enter into this Agreement and to carry out its respective obligations hereunder. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by Acquiree will have been duly authorized by the Acquiree shareholders and the Board of Directors of the Acquiree and no other actions on the part of Acquiree is necessary to authorize this Agreement or the transactions contemplated hereby. When delivered, this Agreement will have been duly and validly executed and delivered by Acquiree and will constitute a valid and binding agreement, enforceable against Acquiree in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally or by general principles of equity.

 

4.6 Consents and Approvals; No Violations. Except for applicable requirements of federal securities laws and state securities or blue-sky laws, no filing with, and no permit, authorization, consent or approval of, any third Party, public body or authority is necessary for the consummation by Acquiree of the transactions contemplated by this Agreement. Neither the execution and delivery of this Agreement by Acquiree nor the consummation by Acquiree of the transactions contemplated hereby, nor compliance by them with any of the provisions hereof, will (a) conflict with or result in any breach of any provisions of the charter or bylaws (or operating agreement) of Acquiree, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or obligation to which Acquiree is a Party or by which any of their respective properties or assets may be bound, or (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Acquiree, or any of its properties or assets, except in the case of clauses (b) and (c) for violations, breaches or defaults which are not in the aggregate material to Acquiree taken as a whole.

 

4.7 Books and Records. The books and records of Acquiree will have been maintained in accordance with applicable generally accepted accounting principles. Set forth on Schedule 4.7 are the assets and liabilities of the Acquiree.

 

4.8 Intellectual Property. Acquiree has no Knowledge of any claim that, or inquiry as to whether, any product, activity or operation of Acquiree infringes upon or involves, or has resulted in the infringement of, any trademarks, trade-names, service marks, patents, copyrights or other proprietary rights of any other person, corporation or other entity; and no proceedings have been instituted, are pending or are threatened.

 

4.9 Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the Knowledge of Acquiree, threatened against or affecting Acquiree or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Exchange Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a material adverse effect.

 

  

9

  

 

4.10 Legal Compliance. To the best Knowledge of Acquiree, no claim has been filed against Acquiree alleging a violation of any applicable laws and regulations of foreign, federal, state and local governments and all agencies thereof.

 

4.11 Contracts. Acquiree is not in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice would cause such a violation of or default under) any Contract to which they are a Party or by which they or any of their properties or assets are bound, except for violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

4.12 Labor Relations. No labor dispute exists or is imminent with respect to any of the employees of Acquiree which could reasonably be expected to result in a Material Adverse Effect. Acquiree is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

4.13 Title to Assets. Acquiree has good and marketable title to all real property owned by it and good and marketable title in all personal property owned by it that is material to the business of Acquiree. Any real property and facilities held under lease by Acquiree is held by it under valid, subsisting and enforceable leases with which Acquiree is in compliance. Schedule 4.13 contains a list of all assets of Acquiree.

 

4.14 Intentionally Omitted

 

4.15 Foreign Corrupt Practices. Neither Acquiree nor any Acquiree Subsidiary, nor to the Knowledge of Acquiree, any agent or other person acting on behalf of Acquiree, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by Acquiree (or made by any person acting on its behalf of which Acquiree is aware) which is in violation of law.

 

4.16 Obligations of Management. Each officer and key employee of Acquiree is currently devoting substantially all of his or her business time to the conduct of business of Acquiree.

 

4.17 Minute Books. The minute books of Acquiree made available to Purchaser contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.

 

4.18 Employee Benefits. Acquiree and Acquiree Subsidiary has (including the two years preceding the date hereof has had) no plans which are subject to Irish law.

 

4.19 Money Laundering Laws. The operations of Acquiree are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of international money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental body (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Acquiree with respect to the money laundering laws is pending or, to the Knowledge of Acquiree, threatened.

 

4.20 Disclosure. The representations and warranties and statements of fact made by Acquiree and the Acquiree Subsidiaries in this Agreement are, to the best Knowledge of the Acquiree, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

 

  

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ARTICLE 5

INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS

5.1 Indemnification. Subject to the provisions of this Article 5, the Acquiree agree to, indemnify fully in respect of, hold harmless and defend Purchaser, the Purchaser and each of the officers, agents and directors of Purchaser against any damages, liabilities, costs, claims, proceedings, investigations, penalties, judgments, deficiencies, including taxes, expenses (including, but not limited to, any and all interest, penalties and expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever) and losses (each, a “Claim” and collectively “Claims”) to which it or they may become subject arising out of or based on (i) any claim, action, litigation or charge brought by the shareholders of Acquiree pertaining to this Agreement and Acquiree’s authority to Close this Agreement.

 

5.2 Survival of Representations and Warranties. Notwithstanding provision in this Agreement to the contrary, the representations and warranties given or made by Acquiree and Purchaser under this Agreement shall survive the date hereof for a period of twelve (12) months from and after the Closing Date (the last day of such period is herein referred to as the “Expiration Date”), except that any written claim for breach thereof made and delivered prior to the Expiration Date to the Party against whom such indemnification is sought shall survive thereafter and, as to any such claim, such applicable expiration will not affect the rights to indemnification of the Party making such claim; provided, however, that any representations and warranties that were fraudulently made shall not expire on the Expiration Date and shall survive indefinitely, and claims with respect to fraud by Acquiree, the Acquiree Stockholders or Purchaser may be made at any time.

ARTICLE 6

COVENANTS OF THE PARTIES

6.1 Corporate Examinations and Investigations. Prior to the Closing, each Party shall be entitled, through its employees and representatives, to make such investigations and examinations of the books, records and financial condition of Purchaser and Acquiree as each Party may request. In order that each Party may have the full opportunity to do so, Purchaser and Acquiree, shall furnish each Party and its representatives during such period with all such information concerning the affairs of the other respective Party as may reasonably be requested and cause Purchaser or Acquiree and their respective officers, employees, consultants, agents, accountants and attorneys to cooperate fully with each Party’s representatives in connection with such review and examination and to make full disclosure of all information and documents requested by each Party and/or its representatives. Any such investigations and examinations shall be conducted at reasonable times and under reasonable circumstances, it being agreed that any examination of original documents will be at each Party’s premises, with copies thereof to be provided to each Party and/or its representatives upon request.

 

6.2 Cooperation; Consents. Prior to the Closing, each Party shall cooperate with the other Party to the end that the parties shall (i) in a timely manner make all necessary filings with, and conduct negotiations with, all authorities and other persons the consent or approval of which, or the license or permit from which is required for the consummation of the Acquisition and (ii) provide to each other Party such information as the other Party may reasonably request in order to enable it to prepare such filings and to conduct such negotiations.

 

  

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6.3 Conduct of Business. Subject to the provisions hereof, from the date hereof through the Closing, each Party hereto shall (i) conduct its business in the ordinary course and in such a manner so that the representations and warranties contained herein shall continue to be true and correct in all material respects as of the Closing as if made at and as of the Closing, and (ii) not enter into any material transactions or incur any liability not required or specifically contemplated hereby, without first obtaining the written consent of Purchaser and the Purchaser on the one hand and Acquiree and the holders of a majority of voting stock of Acquiree common stock on the other hand. Without the prior written consent of Purchaser, the Purchaser, Acquiree or the Acquiree Stockholders, except as required or specifically contemplated hereby, each Party shall not undertake or fail to undertake any action if such action or failure would render any of said warranties and representations untrue in any material respect as of the Closing.

 

6.4 Litigation. From the date hereof through the Closing, each Party hereto shall promptly notify the representative of the other parties of any lawsuits, claims, proceedings or investigations which after the date hereof are threatened or commenced against such Party or any of its affiliates or any officer, director, employee, consultant, agent or shareholder thereof, in their capacities as such.

 

6.5 Notice of Default. From the date hereof through the Closing, each Party hereto shall give to the representative of the other parties prompt written notice of the occurrence or existence of any event, condition or circumstance occurring which would constitute a violation or breach of this Agreement by such Party or which would render inaccurate in any material respect any of such Party’s representations or warranties herein.

 

6.6 Confidentiality; Access to Information.

 

(a) Confidentiality. Any confidentiality agreement or letter of intent previously executed by the parties shall be superseded in its entirety by the provisions of this Agreement. Each Party agrees to maintain in confidence any non-public information, including the existence of this Agreement, received from the other Party, and to use such non-public information only for purposes of consummating the transactions contemplated by this Agreement. Such confidentiality obligations will not apply to (i) information which was known to the one Party or their respective agents prior to receipt from the other Party; (ii) information which is or becomes generally known; (iii) information acquired by a Party or their respective agents from a third Party who was not bound to an obligation of confidentiality; and (iv) disclosure required by law. In the event this Agreement is terminated as provided in Article 8 hereof, each Party will return or cause to be returned to the other all documents and other material obtained from the other in connection with the Transaction contemplated hereby.

 

(b) Access to Information.

 

(i) Purchaser will afford Acquiree and its financial advisors, accountants, counsel and other representatives reasonable access during normal business hours, upon reasonable notice, to the properties, books, records and personnel of Purchaser during the period prior to the Closing to obtain all information concerning the business, including the status of product development efforts, properties, results of operations and personnel of Purchaser, as Acquiree may reasonably request. No information or Knowledge obtained by Acquiree in any investigation pursuant to this Section 6.6 will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Transaction.

 

  

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(ii) Acquiree will afford Purchaser and its financial advisors, underwriters, accountants, counsel and other representatives reasonable access during normal business hours, upon reasonable notice, to the properties, books, records and personnel of Acquiree during the period prior to the Closing to obtain all information concerning the business, including the status of product development efforts, properties, results of operations and personnel of Acquiree, as Purchaser may reasonably request. No information or Knowledge obtained by Purchaser in any investigation pursuant to this Section 6.6 will affect or be deemed to modify any representation or warranty contained herein or the conditions to the obligations of the parties to consummate the Transaction.

 

6.7 Public Disclosure. Except to the extent previously disclosed or to the extent the parties believe that they are required by applicable law or regulation to make disclosure, prior to Closing, no Party shall issue any statement or communication to the public regarding the transaction contemplated herein without the consent of the other Party, which consent shall not be unreasonably withheld. To the extent a Party hereto believes it is required by law or regulation to make disclosure regarding the Transaction, it shall, if possible, immediately notify the other Party prior to such disclosure.

 

6.8 Assistance with Post-Closing Reports and Inquiries. Upon the reasonable request of Purchaser, after the Closing Date, each Acquiree Stockholder shall use its, his or her reasonable best efforts to provide such information available to it, including information, filings, reports, financial statements or other circumstances of Acquiree occurring, reported or filed prior to the Closing, as may be necessary or required by Acquiree for the preparation of the post-Closing Date reports that Acquiree is required to file.

ARTICLE 7

CONDITIONS TO CLOSING

7.1 Conditions to Obligations of Purchaser. The obligations of Acquiree and the Purchaser under this Agreement shall be subject to each of the following conditions:

 

(a) Closing Deliveries. At the Closing, Acquiree and/or the Acquiree stockholders shall have delivered or caused to be delivered to Purchaser the following:

 

(i) this Agreement duly executed by Acquiree; and

 

(ii) resignations signed for all existing officers and Directors of the Acquiree; and

 

(iii) legal opinion as detailed in Exhibit C; and

 

(iv) resolutions duly adopted by the Board of Directors of Acquiree, and if necessary according to the Memorandum and Articles of Association of Acquiree, by a majority of the shares of Common Stock of Acquiree, approving the following events or actions, as applicable:

 

	
a.  

	
the execution, delivery and performance of this Agreement; and

	
b.  

	
the Acquisition and the terms thereof; and

	
c.  

	
fixing the number of authorized directors on the board of directors at 3 (Three); and

	
d.  

	
the appointment of Cristopher Grunewald, (TBD) and Eoghan Reid to serve on the board of directors, immediately following the Closing; and

  

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(v) a certificate of good standing for Acquiree from its jurisdiction of incorporation or other mutually agreeable party, dated not earlier than five (5) days prior to the Closing Date; and

 

(vi) a certification signed by the Managing Director of Acquiree , in a form reasonably acceptable to Purchaser and consistent with the terms of this Agreement, authorizing the issuanceof the certificates representing the Acquiree Shares, to be delivered pursuant to this Agreement registered in the name of the Purchaser; and

 

(vii) a copy of the Certificate of Incorporation, and Memorandum and Articles of Association of the Acquiree, as in effect on and as of the Closing Date, and a copy of the resolutions of the Board of Directors of the Acquiree authorizing and approving the Acquiree’ execution, delivery and performance of the Transaction Documents, all matters in connection with the Transaction Documents, and the transactions contemplated thereby; and

 

(viii) all corporate records, board minutes and resolutions, tax and financial records, agreements, seals and any other information or documents reasonably requested by Purchaser’ representatives with respect to Acquiree; and

 

(b) Representations and Warranties to be True. The representations and warranties of Acquiree herein contained shall be true in all material respects at the Closing with the same effect as though made at such time. Acquiree and the Acquiree Stockholders shall have performed in all material respects all obligations and complied in all material respects with all covenants and conditions required by this Agreement to be performed or complied with by them at or prior to the Closing.

 

(c) Liabilities. At the Closing, other than those liabilities as set forth on Schedule 7.1, Acquiree shall have no liabilities, debts or payables (contingent or otherwise), no tax obligations, and except as contemplated in this Agreement, no material changes to its business or financial condition shall have occurred since the date of this Agreement. All of the liabilities stated on Schedule 7.1 shall have accompanying pay off letters signed by each of the creditors therein;

 

(e) No Adverse Effect. The business and operations of Acquiree will not have suffered any Material Adverse Effect.

 

(f) Due Diligence. Purchaser shall have completed, and be satisfied with its due diligence review of Acquiree.

 

7.2 Conditions to Obligations of Acquiree. The obligations of Acquiree and the Acquiree Stockholders under this Agreement shall be subject to each of the following conditions:

 

(a) Closing Deliveries. On the Closing Date, Purchaser and/or the Purchaser shall have delivered to Acquiree the following:

 

(i) this Agreement duly executed by Purchaser and the Purchaser;

 

(ii) resolutions duly adopted by the Board of Directors of Purchaser authorizing and approving the execution, delivery and performance of this Agreement;

 

(iii) certificates representing the Exchange Shares of Purchaser in the names of the Acquiree shareholders, as shown in the Exhibit B Signature Block of Acquiree shareholders to this Agreement, to be delivered pursuant to this Agreement duly endorsed or accompanied by duly executed stock powers or instruments of like tenor; and

 

  

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(b) Representations and Warranties True and Correct. The representations and warranties of Purchaser and the Purchaser herein contained shall be true in all material respects at the Closing with the same effect as though made at such time. Purchaser and the Purchaser shall have performed in all material respects all obligations and complied in all material respects with all covenants and conditions required by this Agreement to be performed or complied with by them at or prior to the Closing.

 

(c) No Adverse Effect. The business and operations of Purchaser will not have suffered any Material Adverse Effect.

 

ARTICLE 8

TERMINATION

8.1 This Agreement may be terminated at any time prior to the Closing:

 

(a) by mutual written agreement of Acquiree and the Purchaser;

 

(b) by either Acquiree or the Purchaser if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the Transaction, which order, decree, ruling or other action is final and non-appealable;

 

(c) by the Purchaser, upon a material breach of any representation, warranty, covenant or agreement on the part of Acquiree or the Acquiree Stockholders set forth in this Agreement, or if any representation or warranty of Acquiree shall have become materially untrue, in either case such that the conditions set forth in Section 7.1 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if such inaccuracy in Acquiree’ representations and warranties or breach by Acquiree or the Acquiree Stockholders is curable by Acquiree or the Acquiree Stockholders prior to the Closing Date, then the Purchaser may not terminate this Agreement under this Section 8.1 for thirty (30) days after delivery of written notice from the Purchaser to Acquiree and the Acquiree Stockholders of such breach, provided Acquiree and the Acquiree Stockholders continue to exercise commercially reasonable efforts to cure such breach (it being understood that the Purchaser may not terminate this Agreement pursuant to this Section 8.1 if they shall have materially breached this Agreement or if such breach by Acquiree or the Acquiree Stockholders is cured during such thirty (30) day period); or

 

(d) by Acquiree, upon a material breach of any representation, warranty, covenant or agreement on the part of Purchaser or the Purchaser set forth in this Agreement, or if any representation or warranty of Purchaser or the Purchaser shall have become materially untrue, in either case such that the conditions set forth in Section 7.2 would not be satisfied as of the time of such breach or as of the time such representation or warranty shall have become untrue, provided, that if such inaccuracy in Purchaser’ or the Purchaser’ representations and warranties or breach by Purchaser or the Purchaser is curable by Purchaser or the Purchaser prior to the Closing Date, then Acquiree may not terminate this Agreement under this Section 8.1 for thirty (30) days after delivery of written notice from Acquiree to Purchaser and the Purchaser of such breach, provided Purchaser and the Purchaser continue to exercise commercially reasonable efforts to cure such breach (it being understood that Acquiree may not terminate this Agreement pursuant to this Section 8.1 if it shall have materially breached this Agreement or if such breach by Purchaser or the Purchaser is cured during such thirty (30) day period).

 

  

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8.2 Notice of Termination; Effect of Termination. Any termination of this Agreement under Section 8.1 above will be effective immediately upon (or, if the termination is pursuant to Section 8.1(d), Section 8.1(e) or Section 8.1(f) and the proviso therein is applicable, thirty (30) days after) the delivery of written notice of the terminating Party to the other parties hereto. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement shall be of no further force or effect and the Transaction shall be abandoned, except as set forth in Section 8.1, Section 8.2 and Article 9 (General Provisions), each of which shall survive the termination of this Agreement.

 

ARTICLE 9

GENERAL PROVISIONS

9.1 Notices. Any and all notices and other communications hereunder shall be in writing and shall be deemed duly given to the Party to whom the same is so delivered, sent or mailed at addresses and contact information set forth on the signature pages hereof (or at such other address for a Party as shall be specified by like notice). Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) on the date of transmission, if such notice or communication is delivered via email at the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (local time of the recipient) on a business day, (b) on the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a business day or later than 5:30 p.m. (local time of the recipient) on any business day, (c) on the second business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the Party to whom such notice is required to be given.

9.1.1. Notice Addresses:

The Purchaser:

6750 Westown Pkwy Ste-200-226

West Des Moines, IA 50266

The Acquiree:

Celtic Biotech Ltd.

9610 NW 24 Court

Sunrise, Florida 33322

With a Copy to:

Celtic Biotech Ltd.

Unit 11, Burnell Court, Northern Cross, Malahide Road

Dublin 17, Ireland

  

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9.2 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. References to Sections and Articles refer to sections and articles of this Agreement unless otherwise stated.

 

9.3 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated and the parties shall negotiate in good faith to modify this Agreement to preserve each Party’s anticipated benefits under this Agreement.

 

9.4 Miscellaneous. This Agreement (together with all other documents and instruments referred to herein): (a) constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof; (b) except as expressly set forth herein, is not intended to confer upon any other person any rights or remedies hereunder and (c) shall not be assigned by operation of law or otherwise, except as may be mutually agreed upon by the parties hereto.

 

9.5 Separate Counsel. Each Party hereby expressly acknowledges that it has been advised to seek its own, and has obtained its own, separate legal counsel for advice with respect to this Agreement, and that no counsel to any Party hereto has acted or is acting as counsel to any other Party hereto in connection with this Agreement.

 

9.6 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Iowa. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Iowa, without regard to the principles of conflicts of law thereof. Each Party, and Mr. Eoghan Reid (a beneficiary hereof), agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a Party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the County of Polk. Each Party, and Mr. Eoghan Reid (a beneficiary hereof), hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the County of Polk, Iowa, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each Party, and Mr. Eoghan Reid (a beneficiary hereof), hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either Party, and Mr. Eoghan Reid (a beneficiary hereof), shall commence an action or proceeding to enforce any provisions of the Agreement, then the prevailing Party in such action or proceeding shall be reimbursed by the other Party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

  

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9.7 Counterparts and Facsimile Signatures. This Agreement may be executed in two or more counterparts, which together shall constitute a single agreement. This Agreement and any documents relating to it may be executed and transmitted to any other Party by facsimile, which facsimile shall be deemed to be, and utilized in all respects as, an original, wet-inked manually executed document.

 

9.8 Amendment. This Agreement may be amended, modified or supplemented only by an instrument in writing executed by Purchaser, Acquiree, and holders of a majority of the outstanding voting stock of Acquiree; provided that, the consent of any Purchaser or Acquiree shareholder that is a Party to this Agreement shall be required if the amendment or modification would disproportionately affect such shareholder (other than by virtue of their ownership of Purchaser or Acquiree shares, as applicable).

 

9.9 Parties In Interest. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties hereto.

 

9.10 Waiver. No waiver by any Party of any default or breach by another Party of any representation, warranty, covenant or condition contained in this Agreement shall be deemed to be a waiver of any subsequent default or breach by such Party of the same or any other representation, warranty, covenant or condition. No act, delay, omission or course of dealing on the part of any Party in exercising any right, power or remedy under this Agreement or at law or in equity shall operate as a waiver thereof or otherwise prejudice any of such Party’s rights, powers and remedies. All remedies, whether at law or in equity, shall be cumulative and the election of any one or more shall not constitute a waiver of the right to pursue other available remedies.

 

9.11 Expenses. At or prior to the Closing, the parties hereto shall pay all of their own expenses relating to the transactions contemplated by this Agreement, including, without limitation, the fees and expenses of their respective counsel and financial advisers.

 

9.12 Recitals. The Recitals set forth in the preamble to this Agreement are hereby incorporated in and made a part of this Agreement by this reference.

 

REMAINDER OF PAGE INTENTIONALLY BLANK

SIGNATURE PAGE FOLLOWS

  

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IN WITNESS WHEREOF, the parties hereto execute this Share Exchange Agreement as of the date first written in the preamble to this Agreement.

 

	
PURCHASER: 

 

Celtic Biotech Iowa, Inc.

An Iowa Corporation

	 
	 	 	 
	
By: 

	/s/ Cristopher Grunewald	 
	 	
Cristopher Grunewald, CEO

	 

 

	
ACQUIREE: 

	 
	 	 
	CELTIC BIOTECH LIMITED, 

An Irish corporation

	 
	 	 	 
	
By: 

	/s/ Paul Reid	 
	 	
Paul Reid, CEO

	 

 

	

Mr. Eohan Reid,

for purposes of Section 9.6

	 
	 	 	 
	
By: 

	/s/ Eoghan Reid	 
	 	
Eoghan Reid

	 

 

  

19

  

Exhibit A

Material Share Attributes of Celtic Biotech Iowa, Inc. Series B Preferred Shares

                                                                         

	Par Value:  	$5.00

	Conversion Rate to Common: 	1-1

	
Conversion Rights:

	
Convertible into common on a 1-1 basis

	Votes:	1 vote per share upon conversion

	Dividends:	Payable on par with the Common Share Distributions

	
Preference:

	
Series B shall be preferred above all following series Preferred Shares and the common stock, but after Series A Preferred Shares

	
Redemption:

	
Redeemable after 5 years from the date of issue

	
Redemption Value:

	
That value which the board determines above the Par value which is the total company valuation X 50% Divided by the total common shares outstanding on a fully diluted basis.

	
Automatic Conversion:

	
No Automatic Conversion

	
CALL Rights:

	
No CALL rights by the Issuer

	
PUT Rights:

	
No PUT rights to the Issuer

  

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Exhibit B

Exchange Share Chart

  

21

  

Exhibit C

Acquiree Legal Opinion

 

7.1(a)(iii) legal opinion letter addressed to Purchaser provided by a law firm accepted by Purchaser to address those items listed in 1.2(a) and the following:

	 	
a.  

	
Acquiree (a) is a Limited Company duly organized, validly existing, and in good standing under the laws of Ireland, and (b) has the power and authority and the legal right to own and operate its property and to conduct its business.

	 	
b.  

	
Acquiree has the power and authority to execute, deliver and perform the Share Exchange Agreement to which it is a party and has taken all necessary organizational action to authorize the execution, delivery and performance of the Share Exchange Agreement to which it is a party.

	 	
c.  

	
No consent, approval, authorization, order, filing, registration or qualification of or with any person or entity (including, without limitation, any governmental authority) is required in connection with the execution, delivery or performance by Acquiree of the Share Exchange Agreement.

	 	
d.  

	
Acquiree has duly executed and delivered the Share Exchange Agreement to which it is a party.

	 	
e.  

	
The execution, delivery and performance by Acquiree of the Share Exchange Agreement to which it is a party will not (a) violate the Memorandum and Articles of Associationof Acquiree, (b) violate any law applicable to Acquiree, or (c) to our knowledge, violate any determination of an arbitrator or a court or other governmental authority applicable to Acquiree.

	 	
f.  

	
To our knowledge, no litigation, investigation or proceeding of or before any governmental authority are pending or threatened by or against Acquiree, or against any of its properties or revenues, existing or future (a) with respect to the Share Exchange Agreement or any of the transactions contemplated thereby, or (b) which, if adversely determined, would reasonably be expected to have a material adverse effect upon Acquiree.

	 	
g.  

	
The Acquiree has corporate authority to issue the shares of the Acquiree's common stock to Purchaser.

	 	
h.  

	
The officers of the Acquiree were duly authorized by resolutions of the Acquiree's Board of Directors to issue the shares of the Acquiree's common stock to Purchaser.

	 	
i.  

	
The Acquiree is properly authorized to issue its common stock to Purchaser pursuant to the corporation laws of the nation of Ireland.

	 	
j.  

	
To our actual knowledge, no litigation or other proceeding is now threatened or pending in writing against the Acquiree in which an unfavorable decision, finding or result would materially and adversely affect the Acquiree 's financial condition or legal ability to perform its obligations as described in the Share Exchange Agreement.

	 	
k.  

	
Upon executing the Share Exchange Agreement, the obligations described thereunder will be obligations of the Acquiree, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

 

  

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