Document:

Exhibit 10.1

 

REGISTRATION
RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS
AGREEMENT is entered into as of August 4, 2009 by and among PennyMac
Mortgage Investment Trust, a Maryland real estate investment trust (the “Trust”),
Stanford L. Kurland, David A. Spector, BlackRock Holdco 2, Inc., a
Delaware corporation (“BlackRock”), Highfields Capital Investments LLC,
a Delaware limited liability company (“Highfields”), and Private
National Mortgage Acceptance Company, LLC, a Delaware limited liability company
(“PNMAC”).  For purposes of this
Agreement, each of Stanford L. Kurland, David A. Spector, BlackRock, Highfields
and PNMAC shall be referred to individually as a “Purchaser” and
collectively as the “Purchasers”).

 

WHEREAS, the Trust and each
Purchaser are parties to a Share Purchase Agreement, dated as of July 29,
2009 (the “Share Purchase Agreement”), pursuant to which concurrently
with the Trust’s proposed initial public offering (the “IPO”), the Trust
agreed to issue in a private placement to each Purchaser and each Purchaser
agreed, severally and not jointly, to purchase a number of common shares of
beneficial interest, par value $0.01 per share (the “Common Shares”),
equal to the product of (x) the number of Common Shares sold to the public
in the IPO, excluding any Common Shares that may be sold pursuant to the
exercise of the overallotment option applicable to the IPO, multiplied by (y) the
percentage set forth opposite such Purchaser’s name on Schedule A
thereto (the “Private Placement Common Shares”); and

 

WHEREAS, the Trust and each
Purchaser desire to enter into this Agreement to provide each Purchaser and its
permitted transferees with certain registration rights described herein.

 

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

 

1.                         Definitions.  The following capitalized terms used herein
have the following meanings:

 

“Affiliate” means (i) any
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such other Person, (2) any
executive officer or general partner of such other Person and (3) any legal
entity for which such Person acts as executive officer or general partner, and “control”
for these purposes means the direct or indirect power to direct or cause the
direction of the management and policies of another Person, whether by
operation of law or regulation, through ownership of securities, as trustee or
executor or in any other manner.

 

“Agreement” means
this Registration Rights Agreement, as amended, restated, supplemented, or
otherwise modified from time to time.

 

“BlackRock” is
defined in the preamble to this Agreement.

 

“Board” means the
board of trustees of the Trust.

 

“Business Day” means
any day, other than a Saturday or Sunday or a day on which commercial banks in
New York, New York are authorized or required by law to close.

 

 

“Commission” means
the Securities and Exchange Commission, or any other federal agency then
administering the Securities Act or the Exchange Act.

 

“Common Shares” is
defined in the recitals to this Agreement.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall be
in effect at the time.

 

“Highfields” is
defined in the preamble to this Agreement.

 

“Holder” means (i) each
Purchaser in his, her or its capacity as a holder of record of Registrable
Securities, as reflected on Schedule 1 hereto, and (ii) any direct
or indirect transferee of such Registrable Securities from such Purchaser.  For purposes of this Agreement, the Trust may
deem and treat the registered holder of Registrable Securities as the Holder
and absolute owner thereof, unless notified to the
contrary in writing by the registered Holder thereof.

 

“Indemnified Party”
is defined in Section 5.3.

 

“Indemnifying Party”
is defined in Section 5.3.

 

“Inspectors” is
defined in Section 4.1.8.

 

“IPO” is defined in
the recitals to this Agreement.

 

“Losses” is defined
in Section 5.1.

 

“Majority-in-Interest”
means holders of more than 50% of the Registrable Securities.

 

“Maximum Threshold”
is defined in Section 2.1.2.

 

“Person” means an
individual or a real estate investment trust, corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization,
association (including any group, organization, co-tenancy, plan, board, council
or committee), government (including a country, state, county, or any other
governmental or political subdivision, agency or instrumentality thereof) or
other entity (or series thereof).

 

“Piggy-Back Registration”
is defined in Section 2.3.1.

 

“PNMAC” is defined in
the preamble to this Agreement.

 

“Private Placement Common
Shares” is defined in the recitals to this Agreement.

 

“Pro
Rata Adjusted” is defined in Section 2.1.2.

 

“Prospectus” means
the prospectus or prospectuses included in any Registration Statement
(including without limitation, any “free writing prospectus” (as defined in Rule 405
under the Securities Act) and any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration 

 

2

 

statement
in reliance upon Rule 430A promulgated under the Securities Act and any
term sheet filed pursuant to Rule 434 under the Securities Act), as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by reference or deemed to be incorporated by reference in such prospectus or
prospectuses.

 

“Purchaser” and “Purchasers”
are defined in the preamble to this Agreement.

 

“Records” is defined
in Section 4.1.8.

 

“Registration” mean a
registration effected by preparing and filing a registration statement or
similar document in compliance with the requirements of the Securities Act, and
such registration statement becoming effective.

 

“Registrable Securities”
means at any time the Private Placement Common Shares (with the initial amount
of Private Placement Common Shares held by each Holder set forth opposite such
Holder’s name on Schedule 1 hereto), together with any class of shares
of beneficial interest of the Trust or a successor to the entire business of
the Trust which may be issued in exchange for such Private Placement Common
Shares or with respect to any dividend on such Private Placement Common
Shares.  As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities on the
earliest to occur of:  (a) the date
on which a Registration Statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been sold, transferred, disposed of or exchanged in accordance with such
Registration Statement; (b) the date on which such securities shall have
ceased to be outstanding; and (c) the date on which the Registrable
Securities have been sold and all transfer restrictions and restrictive legends
with respect to such Registrable Securities are removed upon the consummation
of such sale and the seller and purchaser of such Registrable Securities
receive an opinion of counsel for the Trust, which shall be in form and content
reasonably satisfactory to the seller and purchaser and their respective
counsel, to the effect that such Registrable Securities in the hands of the
purchaser are freely transferable without restriction or registration under the
Securities Act in any public or private transaction.

 

“Registration Statement”
means any registration statement filed by the Trust with the Commission in
compliance with the Securities Act (including the Resale Shelf Registration
Statement or any Registration Statement filed in connection with a Piggy-Back
Registration) for a public offering and sale of Common Shares or other
securities of the Trust, including the Prospectus, amendments and supplements
to such Registration Statement, including post-effective amendments, all
exhibits and all materials incorporated by reference or deemed to be
incorporated by reference in such Registration Statement (other than a
registration statement (a) on Form S-4 or Form S-8, or their
successors, (b) covering only securities proposed to be issued in exchange
for securities or assets of another entity, (c) for an exchange offer or
offering of securities solely to the Trust’s existing shareholders, (d) for
an offering of debt that is convertible into equity securities of the Trust or (e) for
a dividend reinvestment plan).

 

“Resale Shelf
Registration” is defined in Section 2.1.1.

 

3

 

“Resale Shelf
Registration Statement” is defined in Section 2.1.1.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder, all as the same shall be
in effect at the time.

 

“Share Purchase Agreement”
is defined in the recitals to this Agreement.

 

“Trust” is defined in
the preamble to this Agreement.

 

“underwritten offering”
means a Registration in which securities of the Trust are sold to one or more
underwriters for reoffering to the public.

 

2.                         Registration
Rights.

 

2.1.                             Shelf
Registration.

 

2.1.1                            Shelf Registration Requirement.  The Trust
shall prepare and file, at its own expense, not later than the 30th day prior to
the expiration of the lockup period described in the Share Purchase Agreement,
a “shelf” registration statement with respect to the resale of all Registrable
Securities (“Resale Shelf Registration”) by the Holders on an
appropriate form for an offering to be made on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act or any successor thereof
(the “Resale Shelf Registration Statement”) and permitting registration
of such Registrable Securities for resale by such Holders in accordance with
the methods of distribution elected by the Holders pursuant to the
questionnaire referred to in Section 2.1.3 below and set forth
in the Resale Shelf Registration Statement. The Trust may include in
such registration additional securities of the class of Registrable Securities
to be registered thereunder, including securities to be sold for the Trust’s
own account or the account of Persons who are not Holders of Registrable
Securities.  The Trust shall use its reasonable best efforts to cause the Resale
Shelf Registration Statement to be declared effective by the Commission within
150 days after the filing thereof (if it is not an automatic
shelf registration statement),
and, subject to Section 2.2, to keep such Resale Shelf Registration
Statement continuously effective for a period ending when all Private Placement
Common Shares covered by the Resale Shelf Registration Statement are no longer
Registrable Securities, including, if necessary, by filing with the SEC a
post-effective amendment or a supplement to the Resale Registration Statement
or the related Prospectus or any document incorporated therein by reference or
by filing any other required document or otherwise supplementing or amending
the Resale Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Trust for such
Resale Registration Statement or by the Securities Act, the Exchange Act, any
state securities or blue sky laws or any rules and regulations thereunder.

 

2.1.2                            Underwritten
Offering; Reduction of Offering.  Each Holder of the Registrable Securities shall have the right to request that an
underwritten offering be effected off the Resale Shelf Registration at any
time, subject to Section 2.2. 
All Holders proposing to participate in such underwriting shall (i) enter
into an underwriting agreement in customary form with the underwriter(s) selected
for such underwriting by a Majority-in-Interest of the Registrable Securities
included in such offering, which underwriter(s) shall be reasonably 

 

4

 

acceptable to the Trust and (ii) complete
and execute all questionnaires, powers-of-attorney, indemnities, opinions and
other documents required under the terms of such underwriting agreement.  Notwithstanding the foregoing, in no event
shall the Trust be obligated to effect more than two (2) underwritten
offerings hereunder in any single six-month period.  If the managing underwriter(s) for an
underwritten offering advises the Trust and the Holders in writing that the
dollar amount or number of Registrable Securities which the Holders desire to
sell, taken together with all other Common Shares or other securities which the
Trust desires to sell and the Common Shares or other securities, if any, as to
which registration has been requested pursuant to written contractual
piggy-back registration rights held by other shareholders of the Trust who
desire to sell or otherwise, exceeds the maximum dollar amount or maximum
number of securities that can be sold in such offering without adversely
affecting the proposed offering price, the timing, the distribution method, or
the probability of success of such offering (such maximum dollar amount or
maximum number of securities, as applicable, the “Maximum Threshold”),
then the Trust shall include in such registration:  (a) first, the Registrable
Securities (pro rata in accordance with the
number of Registrable Securities which such Holders have requested be included
in such underwritten offering, regardless of the number of Registrable
Securities or other securities held by each such Person (such proportion is
referred to herein as “Pro Rata Adjusted”)) that can be sold without exceeding
the Maximum Threshold; (b) second, to the extent that the Maximum
Threshold has not been reached under the foregoing clause (a), the Common
Shares or other securities that the Trust desires to sell that can be sold
without exceeding the Maximum Threshold; (c) third, to the extent
that the Maximum Threshold has not been reached under the foregoing clauses (a) and
(b), the Common Shares or other securities for the account of other Persons
that the Trust is obligated to register pursuant to written contractual
arrangements with such Persons and that can be sold without exceeding the
Maximum Threshold; and (d) fourth, to the extent that the Maximum
Threshold has not been reached under the foregoing clauses (a), (b) and
(c), the Common Shares that other shareholders desire to sell that can be sold
without exceeding the Maximum Threshold to the extent that the Trust, in its
sole discretion, wishes to permit such sales pursuant to this clause (d).

 

A
request for an underwritten offering may be withdrawn by a Majority-in-Interest
of the Registrable Shares included in such offering prior to the consummation
thereof, and, in such event, such withdrawal shall not be treated as a request
for an underwritten offering which shall have been effected pursuant to the immediately
preceding paragraph.

 

2.1.3                            Inclusion in Resale Shelf Registration.  The Trust shall give written
notice to all Holders at least 20 Business Days prior to the anticipated filing
date of the Resale Shelf Registration Statement, which notice shall include a
questionnaire seeking information from the Holders deemed necessary or
advisable by the Trust or its counsel in order to file the Resale Shelf
Registration Statement. At the time the Resale Shelf Registration Statement is
declared effective (or becomes effective, if the Registration Statement is an automatic
shelf registration statement),
each Holder that has delivered to the Trust a duly completed and executed
questionnaire on or prior to the date which is ten Business Days prior to such
time of effectiveness shall be named as a selling shareholder in the Resale
Shelf Registration Statement and the related Prospectus in such a manner as to
permit such Holder to deliver such Prospectus to purchasers of Registrable
Securities in accordance with applicable law. Subject to the terms and
conditions hereof, after effectiveness of the Resale Shelf Registration
Statement, the Trust shall file a supplement to such Prospectus or amendment to
the Resale Shelf Registration 

 

5

 

Statement
upon request of any Holder as necessary to name as selling shareholders therein
any Holders that provide to the Trust duly completed and executed
questionnaires and shall use commercially reasonable efforts to cause any
post-effective amendment to such Resale Shelf Registration Statement filed for
such purpose to be declared effective (if it is not an automatic
shelf registration statement) by
the Commission as promptly as reasonably practicable after the filing thereof.

 

2.1.4                            Continued Effectiveness.  The Trust shall prepare and
file such additional Registration Statements as necessary every three years (or
such other period of time as may be required to maintain continuously effective
shelf registration statements) and use its reasonable best efforts to cause
such Registration Statements to be declared effective by the Commission (if it is not
an automatic shelf registration statement) so that a shelf registration statement remains continuously effective,
subject to Section 2.2, with respect to resales of Registrable
Securities as and for the periods required under Section 2.1.1,
each such subsequent Registration Statement to constitute a Resale Shelf
Registration Statement hereunder.

 

2.2.                             Suspension of Use of Registration Statement.

 

2.2.1                            Upon prior written notice to the Holders, the Trust may suspend the use
of a Resale Shelf Registration Statement pursuant to Section 2.1 on
up to two occasions during any period of twelve consecutive months for a
reasonable time specified in the notice but not exceeding 90 days in the
aggregate during any such twelve month period (which period may not be extended
or renewed), if (i) the Board determines in good faith that permitting
sales under the Registration Statement would materially and adversely affect an
offering of securities of the Trust; (ii) a Piggy-Back Registration
(defined below) in which Holders were able to participate was completed within
the prior 90 days; or (iii) the Trust is in possession of material
non-public information and the Board determines in good faith that the
disclosure of such information during the period specified in such notice would
not be in the best interests of the Trust.

 

2.2.2                            If all reports required to be filed by the Trust pursuant to the
Exchange Act have not been filed by the required date taking into account any
permissible extension, upon written notice thereof by the Trust to the Holders,
the rights of the Holders to offer, sell or distribute any Registrable
Securities pursuant to any Registration Statement or to require the Trust to
take action with respect to the registration or sale of any Registrable
Securities pursuant to any Registration Statement shall be suspended until the
date on which the Trust has filed such reports, and the Trust shall notify the
Holders in writing as promptly as practicable when such suspension is no longer
required.

 

2.3.                             Piggy-Back
Registration.

 

2.3.1                            Piggy-Back
Rights.  At any time after August 4,
2012 (the third anniversary of the closing of the transactions under the Share
Purchase Agreement), if the Trust proposes to file a Registration Statement
under the Securities Act with respect to an offering of equity securities by
the Trust for its own account or for shareholders of the Trust for their
account and the registration form to be used may be used for any registration
of Registrable Securities or if the Trust proposes to conduct an offering at
any time after August 4, 2012 using any such Registration Statement filed
prior to August 4, 2012 for its own account or for shareholders of 

 

6

 

the Trust, then the Trust shall (a) give
written notice of such proposed filing and/or offering to the Holders of
Registrable Securities as soon as practicable but in no event less than ten
Business Days before the anticipated filing date, which notice shall describe
the amount and type of securities to be included in such offering, the intended
method(s) of distribution, and the name of the proposed managing
underwriter(s), if any, of the offering, and (b) offer to the Holders of
Registrable Securities in such notice the opportunity to register the sale of
such number of Registrable Securities as such Holders may request in writing
within five Business Days following receipt of such notice (a “Piggy-Back
Registration”).  If at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the Registration Statement filed in connection with such
registration, the Trust shall determine for any reason not to register or to
delay registration of such securities, the Trust may, at its election, give
written notice of such determination to each Holder of Registrable Securities
and, (x) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with
such registration, and (y) in the case of a determination to delay
registering, shall be permitted to delay registering any Registrable Securities
for the same period as the delay in registering such other securities.  The Trust shall cause such Registrable
Securities to be included in such registration and shall use its reasonable
best efforts to cause the managing underwriter(s) of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration on the same terms and conditions as any
similar securities of the Trust and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method(s) of
distribution thereof.  All Holders of
Registrable Securities proposing to distribute their securities through a
Piggy-Back Registration that involves an underwriter(s) shall enter into
an underwriting agreement in reasonable and customary form with the underwriter(s) selected
for such Piggy-Back Registration and (ii) complete and execute all
questionnaires, powers-of-attorney, indemnities, opinions and other documents
reasonably required under the terms of such underwriting agreement.  No registration effected under this Section 2.3
shall relieve the Trust of its obligations to effect a Resale Shelf
Registration required by Section 2.1.

 

2.3.2                            Reduction of
Offering.  If the
managing underwriter(s) for a Piggy-Back Registration that is to be an
underwritten offering advises the Trust and the Holders of Registrable
Securities that in their opinion the dollar amount or number of Common Shares
or other securities which the Trust desires to sell, taken together with Common
Shares or other securities, if any, as to which registration has been demanded
pursuant to written contractual arrangements with third parties, the
Registrable Securities as to which registration has been requested under this Section 2.3,
and the Common Shares or other securities, if any, as to which registration has
been requested pursuant to the written contractual piggy-back registration
rights of other shareholders of the Trust, exceeds the Maximum Threshold, then
the Trust shall include in any such registration:

 

(a)                                             If the
registration is undertaken for the Trust’s account:  (i) first, the Common Shares or
other securities that the Trust desires to sell that can be sold without
exceeding the Maximum Threshold; (ii) second, to the extent that
the Maximum Threshold has not been reached under the foregoing clause (i),
the Common Shares or other securities, if any, comprised of Registrable
Securities as to which registration has been requested pursuant to the terms
hereof, Pro Rata Adjusted, that can be sold without exceeding the Maximum
Threshold; and (iii) third, to the extent that the Maximum
Threshold has not been reached under the 

 

7

 

foregoing clauses (i) and (ii), the
Common Shares or other securities for the account of other Persons that the
Trust is obligated to register pursuant to written contractual piggy-back
registration rights with such Persons and that can be sold without exceeding
the Maximum Threshold; and

 

(b)                                            If the
registration is a “demand” registration undertaken at the demand of one
or more parties other than the Trust, (i) first, the Common Shares
or other securities for the account of such demanding parties that can be sold
without exceeding the Maximum Threshold; (ii) second, to the extent
that the Maximum Threshold has not been reached under the foregoing
clause (i), the Common Shares or other securities that the Trust desires
to sell that can be sold without exceeding the Maximum Threshold; (iii) third,
to the extent that the Maximum Threshold has not been reached under the
foregoing clauses (i) and (ii), the Common Shares or other securities, if
any, comprised of Registrable Securities as to which registration has been
requested pursuant to the terms hereof, Pro Rata Adjusted, that can be sold
without exceeding the Maximum Threshold; and (iv) fourth, to the
extent that the Maximum Threshold has not been reached under the foregoing
clauses (i), (ii) and (iii), the Common Shares or other securities,
if any, for the account of other Persons that the Trust is obligated to
register pursuant to written contractual piggy-back registration rights with
such Persons that can be sold without exceeding the Maximum Threshold.

 

2.3.3                            Withdrawal.  Any Holder of Registrable Securities may
elect to withdraw such Holder’s request for inclusion of Registrable Securities
in any Piggy-Back Registration by giving written notice to the Trust of such
request to withdraw prior to the effectiveness of the Registration Statement or
filing of a Prospectus naming such Holder as a selling shareholder, as
applicable.  The Trust (whether on its
own determination or as the result of a withdrawal by Persons making a demand
pursuant to written contractual obligations) may withdraw a Registration
Statement at any time prior to the effectiveness of the Registration Statement
without thereby incurring any liability to the Holders of Registrable
Securities.  Notwithstanding any such
withdrawal, the Trust shall pay all expenses incurred by the Holders of Registrable
Securities in connection with such Piggy-Back Registration as provided in Section 4.3.

 

3.                         Restrictions on
Public Sale by the Trust.

 

If requested by the lead underwriter(s) in
any underwritten offering, the Trust agrees not to effect any public sale or
distribution (other than, in the case of the Trust, in connection with (a) any
merger, acquisition or similar transaction that involves the public offering of
securities, (b) public sales or distributions solely by and for the
account of the Trust of securities issued pursuant to any employee benefit or
similar plan, including employee stock and stock option plans or, (c) any
dividend reinvestment plan), of any securities during the period commencing on
the date the Trust receives a request for an underwritten offering from any
Holder and continuing until 90 days after the commencement of an underwritten
offering (or for such shorter period as the lead underwriter(s) shall
request) unless earlier terminated by the lead underwriter(s) in such
underwritten offering.

 

4.                         Registration
Procedures.

 

4.1.                             Filings.  In connection with the filing of any
Registration Statement as provided in 

 

8

 

this
Agreement, the paragraphs below shall be applicable:

 

4.1.1                            Filing
Registration Statement.  The
Trust shall (a) as expeditiously as reasonably possible prepare and file
with the Commission a Registration Statement on any form for which the Trust
then qualifies or which counsel for the Trust shall deem appropriate and which
form shall be available for the sale of all Registrable Securities to be
registered thereunder in accordance with the intended method(s) of
distribution thereof, which shall comply as to form with the requirements of
the applicable form and include all financial statements required by the SEC to
be filed therewith, (b) use its reasonable best efforts to cause such
Registration Statement to be declared (if it is not an automatic shelf
registration statement) and remain effective for the period required by Section 4.1.3,
(c) not take any action that would cause a Registration Statement to
contain a material misstatement or omission or to be not effective and usable
for resale of Registrable Securities during the period that such Registration
Statement is required to be effective and usable, (d) use its reasonable
best efforts to cause each Registration Statement and the related Prospectus
and any amendment or supplement thereto, as of the effective date of such
Registration Statement, amendment or supplement to comply in all material
respects with any requirements of the Securities Act and the rules and
regulations of the SEC and (e) cause such Registration Statement and the
related Prospectus and any amendment or supplement thereto not to contain any
untrue statement of a material fact required to be stated therein or necessary
to make the statements therein not misleading during the period that such
Registration Statement is required to be effective and usable.

 

4.1.2                            Copies.  The Trust shall, upon request, prior to
filing a Registration Statement or Prospectus in respect of Registrable
Securities, or any amendment or supplement thereto, furnish without charge to
the Holders of Registrable Securities included in such registration, any
underwriter and such Holders’ or underwriter’s legal counsel, copies of such
Registration Statement as proposed to be filed, each amendment and supplement
to such Registration Statement (in each case including all exhibits thereto and
documents incorporated by reference therein), the Prospectus included in such
Registration Statement (including each preliminary Prospectus) and such other
documents as the Holders of Registrable Securities included in such
Registration, underwriter or legal counsel for any such Holders or underwriter
may reasonably request.  Following the filing of such Registration Statement, the Trust shall
furnish to the Holders of Registrable Securities included in such registration
(in each case in an electronic format, unless otherwise required by applicable
law), without charge, such number of copies of such Registration Statement,
each amendment and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein), the Prospectus
included in such Registration Statement (including each preliminary Prospectus)
and such other documents as the Holders of Registrable Securities
included in such Registration, underwriter or legal counsel for any such
Holders or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Holders.  Each Holder of Registrable
Securities included in the Registration Statement shall have the right to
request in writing that the Trust modify any information contained in such
Registration Statement, amendment and supplement thereto pertaining solely to
such Holder or which such counsel to Holder may reasonably request in order to
ensure that the Registration Statement complies with the Securities Act and the
rules and regulations promulgated thereunder and the Trust shall use its
reasonable best efforts to comply with such request; provided, however, that the Trust shall not have any
obligation to so modify any information if the Trust reasonably expects that so
doing would 

 

9

 

cause the Prospectus to
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading.

 

4.1.3                            Amendments and
Supplements.  The Trust
shall prepare and file with the Commission such amendments, including
post-effective amendments, and supplements to such Registration Statement and
the Prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and in compliance with the provisions of the
Securities Act until all Registrable Securities and other securities covered by
such Registration Statement have been disposed of in accordance with the
intended method(s) of distribution set forth in such Registration Statement
or such securities have been withdrawn.

 

4.1.4                            Notification.  After the filing of a Registration Statement,
the Trust shall promptly, and in no event more than three Business Days after
such filing, notify the Holders of Registrable Securities included in such
Registration Statement of such filing, and shall further promptly notify such
Holders of the occurrence, and in no event more than three Business Days after
such occurrence of any of the following and, if requested by any Holder,
confirm such advice in writing:  (a) when
such Registration Statement becomes effective; (b) when any post-effective
amendment to such Registration Statement becomes effective; (c) the
issuance by the Commission of any stop order (and the Trust shall take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered); and (d) any request by the Commission for any
amendment or supplement to such Registration Statement or any Prospectus
relating thereto or for additional information or of the occurrence of an event
requiring the preparation of a supplement or amendment to such Prospectus so
that, as thereafter delivered to the purchasers of the securities covered by
such Registration Statement, such Prospectus will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
promptly make available to the Holders of Registrable Securities included in
such Registration Statement any such supplement or amendment; except that
before filing with the Commission a Registration Statement or Prospectus or any
amendment or supplement thereto, including documents incorporated by reference,
the Trust shall furnish to the Holders of Registrable Securities included in
such Registration Statement and to the legal counsel for any such Holders,
copies of all such documents proposed to be filed sufficiently in advance of
filing to provide such Holders and legal counsel with a reasonable opportunity
to review such documents and comment thereon, and the Trust shall not file any
Registration Statement or Prospectus or amendment or supplement thereto,
including documents incorporated by reference, to which such Holders or their
legal counsel shall reasonably object. 
The Trust shall use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness or qualification of a Registration
Statement or suspending or preventing the use of any related Prospectus at the
earliest possible time.

 

4.1.5                            State
Securities Laws Compliance.  The Trust shall use its reasonable best
efforts to (a) register or qualify the Registrable Securities covered by
the Registration Statement under such securities or “blue sky” laws of such
jurisdictions in the United States as the Holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may reasonably request and (b) take such action as
reasonably necessary to cause such Registrable Securities covered by the
Registration Statement to be registered with or

 

10

 

approved by such other governmental
authorities as may be necessary by virtue of the business and operations of the
Trust and do any and all other acts and things that may be necessary or
advisable to enable the Holders of Registrable Securities included in such
Registration Statement to consummate the disposition of such Registrable
Securities in such jurisdictions; provided, however,
that the Trust shall not be required to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph, consent to general service of process in any such jurisdiction or
subject itself to taxation in any such jurisdiction.

 

4.1.6                            Agreements for
Disposition.  The Trust
shall enter into customary agreements (including, if applicable, an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities.  Such Holders of
Registrable Securities shall agree to such representations, warranties,
covenants and indemnification and contribution obligations for selling
shareholders as are customarily contained in agreements of that type used by
the underwriters.

 

4.1.7                            Cooperation.  (a) The chief executive officer of the
Trust, the chief financial officer of the Trust and all other officers and
members of the management of the Trust, including applicable officers and
employees of PNMAC Capital Management, LLC, the external manager of the Trust,
shall cooperate fully in any offering of Registrable Securities hereunder,
which cooperation shall include, without limitation, the preparation of the
Registration Statement with respect to such offering and all other offering
materials and related documents, and participation in meetings with
underwriters, attorneys, accountants and potential purchasers, including
without limitation, participation in any roadshow for an underwritten offering.

 

(b)                                            The Trust
shall, upon request, furnish to the lead underwriter of an underwritten
offering of Registrable Securities, if any, without charge, at least one signed
copy of each Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated
therein by reference and all exhibits; and furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested) and shall cooperate with the selling Holders of Registrable
Securities and the lead underwriter of an underwritten offering of Registrable
Securities, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the governing documents
thereof) and registered in such names as the selling Holders or the lead
underwriter of an underwritten offering of Registrable Securities, if any, may
reasonably request at least three business days prior to any sale of
Registrable Securities.

 

4.1.8                            Records.  The Trust shall make available for inspection
by the Holders of Registrable Securities included in such Registration
Statement, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other professional
retained by any Holder of Registrable Securities included in such Registration
Statement or any underwriter (collectively, the “Inspectors”), all
financial and other records, pertinent corporate documents and properties of
the Trust (collectively, the “Records”) as shall 

 

11

 

be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Trust’s officers,
trustees and employees to supply all information reasonably requested by any of
them in connection with such Registration Statement.  Records which the Trust determines, in good
faith, to be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement or (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction.  Each Holder of Registrable
Securities included in such Registration Statement agrees that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of the Trust unless and until such is made generally available to
the public.  Each Holder of Registrable
Securities included in such Registration Statement further agrees that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Trust and allow the Trust, at its expense, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential.

 

4.1.9                            Opinions and
Comfort Letters.  If an
underwritten offering is effected off the Resale Shelf Registration Statement,
or if a Registration Statement in respect of Registrable Securities includes an
underwritten offering, the Trust shall furnish (a) any opinion of counsel
to the Trust delivered to any underwriter and (b) any comfort letter from
the Trust’s independent public accountants delivered to any underwriter, each
in the form reasonably requested by counsel to such underwriter and shall
furnish to each Holder of Registrable Securities included in such Registration
Statement a signed counterpart, addressed to such Holder, of any such opinion
of counsel or comfort letter.

 

4.1.10                      Earnings
Statement.  The Trust
shall make available to its shareholders, as soon as practicable but not more
than 12 months after the effective date of the Registration Statement, an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.

 

4.1.11                      Listing.  To the extent any Registrable Securities are
not then listed on an exchange, the Trust shall use its commercially reasonable
efforts to cause all Registrable Securities included in any Registration
Statement to be listed on such exchanges or otherwise designated for trading in
the same manner as similar securities issued by the Trust are then listed or
designated.

 

4.2.                             Obligation to
Suspend Distribution.  Upon
receipt of any notice from the Trust of the happening of any event of the kind
described in Section 4.1.4(d), each Holder of Registrable
Securities included in any registration shall immediately discontinue
disposition of such Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities until such Holder receives the
supplemented or amended Prospectus contemplated by Section 4.1.4(d) and,
if so directed by the Trust, each such Holder will destroy all copies, other
than permanent file copies then in such Holder’s possession, of the most recent
Prospectus covering such Registrable Securities at the time of receipt of such
notice.

 

4.3.                             Registration
Expenses.  The Trust
shall pay the following costs and expenses incurred in connection with (a) any
Resale Shelf Registration pursuant to Section 2.1 and (b) any 

 

12

 

Piggy-Back
Registration pursuant to Section 2.3, and all expenses incurred in
performing or complying with its other obligations under this Agreement,
whether or not the Registration Statement becomes effective, including, without
limitation:  (i) all registration
and filing fees; (ii) fees and expenses of compliance with securities or “blue
sky” laws (including fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities); (iii) printing
expenses; (iv) the fees and expenses incurred in connection with the
listing of the Registrable Securities as required by Section 4.1.11;
(v) Financial Industry Regulatory Authority, Inc. fees; (vi) fees
and disbursements of counsel for the Trust and fees and expenses for
independent public accountants retained by the Trust (including the expenses or
costs associated with the delivery of any opinions or comfort letters requested
pursuant to Section 4.1.9); (vii) the fees and expenses of any
special experts retained by the Trust in connection with such Registration; and
(viii) the reasonable fees and expenses of one legal counsel selected by
the holders of a Majority-in-Interest of the Registrable Securities included in
such Registration.  The Trust shall have
no obligation to pay any other costs or expenses in the course of the transaction
contemplated hereby, including underwriting discounts or selling commissions
attributable to the Registrable Securities being sold by the Holders thereof,
which underwriting discounts or selling commissions shall be borne by such
Holders.

 

The Trust shall have the
right to exclude any Holder that does not comply with the preceding sentence
from the applicable Registration.

 

The obligation of the Trust
to bear the expenses described in this Section 4.3 shall apply
irrespective of whether a registration becomes effective, is withdrawn or suspended,
is converted to another form of registration and irrespective of when any of
the foregoing shall occur.

 

4.4.                             Information.  In connection with the filing of any
Registration Statement covering Registrable Securities, the Holders of
Registrable Securities shall provide such information as may reasonably be
requested by the Trust in connection with the preparation of any Registration
Statement in order to effect the registration of any Registrable Securities
under the Securities Act pursuant to Section 2 and in connection
with the Trust’s obligation to comply with federal and applicable state
securities laws.  If a Holder fails to
provide such information after reasonably requested, the Trust may omit such
Holder’s Registrable Securities from such Registration Statement.

 

5.                         Indemnification
and Contribution.

 

5.1.                             Indemnification
by the Trust.  The Trust
agrees to indemnify and hold harmless to the fullest extent permitted by law
each Holder of Registrable Securities, and each of their respective officers,
employees, Affiliates, trustees, directors, partners, members, attorneys and
agents, and each Person, if any, who controls (within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act) such
Holder of Registrable Securities from and against any expenses, losses,
judgments, claims, damages or liabilities (“Losses”) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which the sale of such
Registrable Securities was registered under the Securities Act, Prospectus
(including any preliminary Prospectus), or any amendment thereof or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein, 

 

13

 

in
the case of the Prospectus in the light of the circumstances under which they
were made, not misleading; provided, however, that the Trust will not be liable in any such case
to any Holder to the extent that any such Loss arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, Prospectus, or any such amendment
thereof or supplement thereto, in reliance upon and in conformity with
information furnished to the Trust, in writing, by such Holder expressly for
use therein.

 

5.2.                             Indemnification
by Holders of Registrable Securities.  In connection with any Registration Statement
in which a Holder is participating and as a condition to such participation,
each Holder of Registrable Securities agrees, severally and not jointly, to
indemnify and hold harmless to the fullest extent permitted by law the Trust,
and each of its officers, employees, Affiliates, trustees and agents, and each
Person who controls the Trust within the meaning of the Securities Act and each
underwriter (if any), and each Person, if any, who controls such underwriter
within the meaning of the Securities Act, against any Losses, insofar as such
Losses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement under which the sale of such Registrable Securities
was registered under the Securities Act, Prospectus (including any preliminary
Prospectus), or any amendment thereof or supplement thereto, or arise out of or
are based upon any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statement therein, in
the case of the Prospectus in the light of the circumstances under which they
were made, not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Trust by such
Holder expressly for use therein.  Each
Holder’s indemnification obligations hereunder shall be several and not joint
and shall be limited to the amount of gross proceeds actually received by such
Holder from sales of Registrable Securities giving rise to such obligations.

 

Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of the Trust or any Indemnified Party and shall survive
the transfer of such securities by any Holder.

 

5.3.                             Conduct of
Indemnification Proceedings.  Promptly after receipt by any Person of any
notice of any Loss or any action in respect of which indemnity may be sought
pursuant to Section 5.1 or 5.2, such Person (the “Indemnified
Party”) shall, if a claim in respect thereof is to be made against any
other Person for indemnification hereunder, notify such other Person (the “Indemnifying
Party”) in writing of the Loss or action; provided,
however, that the failure by the
Indemnified Party to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability which the Indemnifying Party may have to
such Indemnified Party hereunder, except and solely to the extent the
Indemnifying Party is actually and materially prejudiced by such failure.  If the Indemnified Party is seeking
indemnification with respect to any claim or action brought against the
Indemnified Party, then the Indemnifying Party shall be entitled to participate
in such claim or action, and, to the extent that it wishes, jointly with all
other Indemnifying Parties, to assume control of the defense thereof with
counsel reasonably satisfactory to the Indemnified Party.  After notice from the Indemnifying Party to
the Indemnified Party of its election to assume control of the defense of such
claim or action, the Indemnifying Party shall not be liable to the Indemnified
Party for any legal or other expenses subsequently incurred by the Indemnified
Party in connection with the defense thereof other than 

 

14

 

reasonable
costs of investigation; provided, however, that in any action in which both the Indemnified
Party and the Indemnifying Party are named as defendants or if such Indemnified
Party or parties determines in good faith that a conflict of interest exists
and that therefore it is advisable for such Indemnified Party or parties to be
represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to it or them which are different from or in addition
to those available to the Indemnifying Party, then the Indemnifying Party or
parties shall not be entitled to assume such defense and the Indemnified Party
or parties shall be entitled to separate counsel at the Indemnifying Party’s or
parties’ expense.  If an Indemnifying
Party or parties is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this paragraph, the Indemnifying Party or parties will
pay the reasonable fees and expenses of counsel for the Indemnified Party or
parties (limited in each jurisdiction to one counsel for all underwriters and
another counsel for all other Indemnified Parties under this Agreement).  The Indemnified Party shall have the right to
employ separate counsel (but no more than one such separate counsel, which firm
shall be designated in writing by those Indemnified Parties who sold a majority
of the Registrable Shares sold by all such Indemnified Parties) to represent
the Indemnified Party or parties and their respective controlling Persons who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Indemnified Party or parties against the
Indemnifying Party or parties, with the fees and expenses of such counsel to be
paid by such Indemnifying Party.  No
Indemnifying Party shall, without the prior written consent of any Indemnified
Party or parties, consent to entry of judgment or effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party or parties are or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such judgment or settlement
includes an unconditional release of such Indemnified Party from all liability
arising out of such claim or proceeding and does not include any statement of
admission of fault, culpability or failure to act by or on behalf of such Indemnified
Party.

 

5.4.                             Contribution.

 

5.4.1                            If the
indemnification provided for in this Section 5 is unavailable to any
Indemnified Party or insufficient to hold it harmless in respect of any Loss
referred to herein, then each such Indemnifying Party, in lieu of indemnifying
such Indemnified Party or parties, shall contribute to the amount paid or
payable by such Indemnified Party or parties as a result of such Loss in such
proportion as is appropriate to reflect the relative fault of the Indemnified
Parties and the Indemnifying Parties in connection with the actions or
omissions which resulted in such Loss, as well as any other relevant equitable
considerations.  The relative fault of
any Indemnified Party and any Indemnifying Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by such Indemnified Party or such Indemnifying
Party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

 

5.4.2                            The parties
agree that it would not be just and equitable if contribution pursuant to this Section 5.4
were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding Section 5.4.1.

 

15

 

5.4.3                            The amount paid
or payable by an Indemnifying Party as a result of any Loss shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. 
Notwithstanding the provisions of this Section 5.4, no
Holder of Registrable Securities shall be required to contribute any amount in
excess of the dollar amount by which the gross proceeds actually received by
such Holder from the sale of Registrable Securities exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

 

5.4.4                            The indemnity
and contribution agreements contained in this Section 5 are in
addition to any liability which the Indemnifying Parties may otherwise have to
the Indemnified Parties hereunder, under applicable law or at equity.

 

6.                         Underwriting
and Distribution.

 

6.1.                             Rule 144.  At such times as the Trust is obligated to
file reports in compliance with either Section 13 or 15(d) of the
Exchange Act, the Trust covenants that it shall file any reports required to be
filed by it under the Securities Act or the Exchange Act and shall take such
further action as the Holders of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such Holders to sell
Registrable Securities (subject to any contractual obligation of such Holders
to the contrary) without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 under the Securities
Act, as such Rules may be amended from time to time, or any similar Rule or
regulation hereafter adopted by the Commission. 
Upon the request of any Holder, the Trust will deliver to such Holder a
written statement as to whether it has complied with such requirements.

 

7.                         Miscellaneous.

 

7.1.                             Assignment; No
Third Party Beneficiaries.  This
Agreement and the rights, duties and obligations of the Trust hereunder may not
be assigned or delegated by the Trust in whole or in part.  This Agreement and the rights, duties and
obligations of the Holders of Registrable Securities hereunder may be freely
assigned or delegated by such Holder of Registrable Securities in conjunction
with and to the extent of any transfer of Registrable Securities held by any
such Holder (subject to any contractual obligation of such Holders to the
contrary).  This Agreement and the
provisions hereof shall be binding upon and shall inure to the benefit of each
of the parties hereto and their respective permitted successors and assigns; provided, however, that
no such transfer or assignment shall be binding upon or obligate the Trust to
any such assignee unless and until the Trust shall have received written notice
of such transfer or assignment as herein provided and a written agreement of
the assignee to be bound by the provisions of this Agreement.  This Agreement is not intended to confer any
rights or benefits on any Persons that are not party hereto other than as
expressly set forth in Article 5 and this Section 7.1.

 

16

 

7.2.                             Notices. All notices,
demands, requests, consents, approvals or other communications required or
permitted to be given hereunder or which are given with respect to this Agreement
shall be in writing and shall be personally served, delivered by reputable
overnight courier service with charges prepaid, or transmitted by hand
delivery, telex or facsimile, addressed as set forth below, or to such other
address as such party shall have specified most recently by written
notice.  Notice shall be deemed given on
the date of service or transmission if personally served or transmitted by
telex or facsimile; provided, however, that if such service or transmission is not on a
Business Day or is after normal business hours, then such notice shall be
deemed given on the next Business Day. 
Notice otherwise sent as provided herein shall be deemed given on the
next Business Day following timely delivery of such notice to a reputable
overnight courier service with an order for next-day delivery.

 

	
  To the Trust:

  
	
   

  
	
  PennyMac Mortgage Investment Trust

  
	
  27001 Agoura Road, Third Floor

  
	
  Calabasas, California 91301

  
	
  Facsimile:

  	
  (818) 337-2138

  
	
  Attention:

  	
  Chief Legal Officer

  
	
   

  
	
  with a copy (which shall not constitute notice)
  to:

  
	
   

  
	
  Sidley Austin LLP

  
	
  787 Seventh Avenue

  
	
  New York, New York 10019

  
	
  Facsimile:

  	
  (212) 839-5599

  
	
  Attention:

  	
  Edward J. Fine

  
	
   

  	
  J. Gerard Cummins

  
	
   

  	
   

  
	
  To
  a Holder, at the address set forth under such Holder’s name on Schedule 1
  hereto.

  

 

7.3.                             Severability.  This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof.  Furthermore, in lieu
of any such invalid or unenforceable term or provision, the parties hereto
intend that there shall be added as a part of this Agreement a provision as
similar in terms to such invalid or unenforceable provision as may be possible
that is valid and enforceable.

 

7.4.                             Counterparts.  This Agreement may be executed by facsimile
and in multiple counterparts, and all of which taken together shall constitute
one and the same instrument.

 

7.5.                             Entire
Agreement.  This
Agreement (including all agreements entered into pursuant hereto and all
certificates and instruments delivered pursuant hereto and thereto) constitutes
the entire agreement of the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions among the parties, whether oral or
written.

 

17

 

7.6.                             Modifications
and Amendments.  The
provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Trust has obtained the
written consent of a Majority-In-Interest of Registrable Securities outstanding
at such time.

 

7.7.                             Titles and
Headings.  Titles and
headings of sections of this Agreement are for convenience only and shall not
affect the construction of any provision of this Agreement.

 

7.8.                             Waivers and
Extensions.  Any party
to this Agreement may waive any right, breach or default which such party has
the right to waive, provided, that
such waiver will not be effective against the waiving party unless it is in
writing, is signed by such party, and specifically refers to this
Agreement.  Waivers may be made in
advance or after the right waived has arisen or the breach or default waived
has occurred.  Any waiver may be
conditional.  No waiver of any breach of
any agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained.  No waiver or extension
of time for performance of any obligations or acts shall be deemed a waiver or
extension of the time for performance of any other obligations or acts.

 

7.9.                             Remedies
Cumulative.  In the
event that the Trust fails to observe or perform any covenant or agreement to
be observed or performed under this Agreement, each Holder of Registrable
Securities may proceed to protect and enforce its rights by suit in equity or
action at law, whether for specific performance of any term contained in this
Agreement or for an injunction against the breach of any such term or in aid of
the exercise of any power granted in this Agreement or to enforce any other
legal or equitable right, or to take any one or more of such actions, without
being required to post a bond.  None of
the rights, powers or remedies conferred under this Agreement shall be mutually
exclusive, and each such right, power or remedy shall be cumulative and in
addition to any other right, power or remedy, whether conferred by this
Agreement or now or hereafter available at law, in equity, by statute or
otherwise.

 

7.10.                       Waiver of Trial
by Jury.  EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION, SUIT, COUNTERCLAIM OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF, CONNECTED WITH OR RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF ANY HOLDER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

7.11.                       Governing Law;
Jurisdiction.  This
Agreement shall for all purposes be deemed to be made under and shall be
construed in accordance with the laws of the State of New York.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in any federal or state court located in the State of New York, and each
of the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding 

 

18

 

which is brought in any such
court has been brought in an inconvenient forum.  Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. 
Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 7.2 shall be deemed
effective service of process on such party.

 

7.12.                       Other
Registration Rights.  Should the
Trust grant any new registration rights to any other Person, or amend or modify
the registration rights of any Person in such a way to make such registration
rights more favorable to one Person than to another Person, the registration
rights granted under this Agreement shall be automatically amended so as to be
not less favorable to any Holder than those granted to such other Person;
provided, however, that this provision shall under no circumstances require the
registration of any Registrable Securities prior to the time contemplated by
this Agreement.

 

7.13.                       Specific
Performance.  The parties
hereto acknowledge that there would be no adequate remedy at law if any party
fails to perform in any material respect any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under this Agreement in
accordance with the terms and conditions of this Agreement in any court of the
United States or any State thereof having jurisdiction.

 

7.14.                       Expenses.  Except as otherwise provided for herein or
otherwise agreed to in writing by the parties, all costs and expenses incurred
in connection with the preparation of this Agreement shall be paid by the
Trust.

 

7.15.                       Holdback
Agreement.  In
connection with an underwritten primary or secondary offering to the public,
each Holder of Registrable Securities agrees, subject to any exceptions that
may be agreed upon at the time of such offering, not to sell or otherwise
transfer or dispose of any Registrable Securities (or other securities) of the
Trust held by them (other than Registrable Securities included in such offering
in accordance with the terms hereof) for a period equal to the lesser of
45 days following the effective date of a Registration Statement of the
Trust filed under the Securities Act or such shorter period as the managing
underwriter(s) shall agree to; provided, that
such Holder owns more than 10% of the outstanding Common Shares of the Trust
and all other shareholders who own more than 10% of the outstanding Common
Shares of the Trust and all officers and trustees of the Trust enter into
similar agreements.  Such agreement shall
be in writing in form reasonably satisfactory to the Trust and the managing underwriter.  The Trust may impose stop-transfer
instructions with respect to the Registrable Securities (or other securities of
the Trust) subject to the foregoing restriction until the end of said period.

 

[Remainder of page intentionally left blank]

 

19

 

IN WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be executed and
delivered as of the date first written above.

 

	
   

  	
  PENNYMAC MORTGAGE INVESTMENT TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff Grogin

  
	
   

  	
   

  	
  Name: Jeff Grogin

  
	
   

  	
   

  	
  Title: Chief Legal Officer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Stanford L. Kurland

  
	
   

  	
  Stanford L. Kurland

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David A. Spector

  
	
   

  	
  David A. Spector

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BLACKROCK HOLDCO 2, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Wiedman

  
	
   

  	
   

  	
  Name: Mark Wiedman

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HIGHFIELDS CAPITAL INVESTMENTS LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph Mazzella

  
	
   

  	
   

  	
  Name: Joseph Mazzella

  
	
   

  	
   

  	
  Title: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PRIVATE NATIONAL MORTGAGE ACCEPTANCE COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeff Grogin

  
	
   

  	
   

  	
  Name:
  Jeff Grogin

  
	
   

  	
   

  	
  Title:
  Secretary

  

 

 

[Agreement Signature Page]Exhibit 10.2

 

AMENDED AND RESTATED

 

LIMITED PARTNERSHIP AGREEMENT

 

OF

 

PENNYMAC OPERATING PARTNERSHIP, L.P.

 

a Delaware limited partnership

 

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 THE
TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT THAT 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.

 

AMENDED AND RESTATED AS OF AUGUST 4, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1. DEFINED
  TERMS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE 2.
  ORGANIZATIONAL MATTERS

  	
  14

  
	
   

  	
   

  
	
  Section 2.1.

  	
  Continuation

  	
  14

  
	
  Section 2.2.

  	
  Name

  	
  14

  
	
  Section 2.3.

  	
  Registered Office and
  Agent; Principal Office

  	
  14

  
	
  Section 2.4.

  	
  Power of Attorney

  	
  14

  
	
  Section 2.5.

  	
  Term

  	
  16

  
	
  Section 2.6.

  	
  Admission of Limited
  Partners

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3. PURPOSE

  	
  16

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Purpose and Business

  	
  16

  
	
  Section 3.2.

  	
  Powers

  	
  16

  
	
  Section 3.3.

  	
  Representations and
  Warranties by the Parties

  	
  17

  
	
  Section 3.4.

  	
  Not Publicly Traded

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4. CAPITAL
  CONTRIBUTIONS

  	
  19

  
	
   

  	
   

  
	
  Section 4.1.

  	
  Capital Contributions
  of the Partners

  	
  19

  
	
  Section 4.2.

  	
  Issuances of Additional
  Partnership Interests

  	
  19

  
	
  Section 4.3.

  	
  Contribution of
  Proceeds of Issuance of Securities by the Company

  	
  22

  
	
  Section 4.4.

  	
  Additional Funds

  	
  23

  
	
  Section 4.5.

  	
  Preemptive Rights

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5.
  DISTRIBUTIONS

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Requirement and
  Characterization of Distributions

  	
  24

  
	
  Section 5.2.

  	
  Amounts Withheld

  	
  24

  
	
  Section 5.3.

  	
  Distributions Upon
  Liquidation

  	
  25

  
	
  Section 5.4.

  	
  Restricted
  Distributions

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6. ALLOCATIONS

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Allocations For Capital
  Account Purposes

  	
  25

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7. MANAGEMENT
  AND OPERATIONS OF BUSINESS

  	
  26

  
	
   

  	
   

  
	
  Section 7.1.

  	
  Management

  	
  26

  

 

 

	
  Section 7.2.

  	
  Certificate of Limited
  Partnership

  	
  30

  
	
  Section 7.3.

  	
  Restrictions on General
  Partner Authority

  	
  30

  
	
  Section 7.4.

  	
  Reimbursement of the
  General Partner and the Company

  	
  30

  
	
  Section 7.5.

  	
  Outside Activities of
  the General Partner

  	
  31

  
	
  Section 7.6.

  	
  Contracts with
  Affiliates

  	
  31

  
	
  Section 7.7.

  	
  Indemnification

  	
  32

  
	
  Section 7.8.

  	
  Liability of the
  General Partner

  	
  33

  
	
  Section 7.9.

  	
  Other Matters
  Concerning the General Partner

  	
  34

  
	
  Section 7.10.

  	
  Title to Partnership
  Assets

  	
  35

  
	
  Section 7.11.

  	
  Reliance by Third
  Parties

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8. RIGHTS AND
  OBLIGATIONS OF LIMITED PARTNERS

  	
  36

  
	
   

  	
   

  
	
  Section 8.1.

  	
  Limitation of Liability

  	
  36

  
	
  Section 8.2.

  	
  Management of Business

  	
  36

  
	
  Section 8.3.

  	
  Outside Activities of
  Limited Partners

  	
  36

  
	
  Section 8.4.

  	
  Return of Capital

  	
  37

  
	
  Section 8.5.

  	
  Rights of Limited
  Partners Relating to the Partnership

  	
  37

  
	
  Section 8.6.

  	
  Redemption Right

  	
  38

  
	
  Section 8.7.

  	
  Conversion of LTIP
  Units

  	
  39

  
	
  Section 8.8.

  	
  Voting Rights of LTIP
  Units

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9. BOOKS,
  RECORDS, ACCOUNTING AND REPORTS

  	
  43

  
	
   

  	
   

  
	
  Section 9.1.

  	
  Records and Accounting

  	
  43

  
	
  Section 9.2.

  	
  Fiscal Year

  	
  43

  
	
  Section 9.3.

  	
  Reports

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10. TAX MATTERS

  	
  44

  
	
   

  	
   

  
	
  Section 10.1.

  	
  Preparation of Tax
  Returns

  	
  44

  
	
  Section 10.2.

  	
  Tax Elections

  	
  44

  
	
  Section 10.3.

  	
  Tax Matters Partner

  	
  44

  
	
  Section 10.4.

  	
  Organizational Expenses

  	
  46

  
	
  Section 10.5.

  	
  Withholding

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11. TRANSFERS
  AND WITHDRAWALS

  	
  47

  
	
   

  	
   

  
	
  Section 11.1.

  	
  Transfer

  	
  47

  
	
  Section 11.2.

  	
  Transfer of General
  Partner Interest and Limited Partner Interest

  	
  47

  
	
  Section 11.3.

  	
  Limited Partners’
  Rights to Transfer

  	
  48

  
	
  Section 11.4.

  	
  Substituted Limited
  Partners

  	
  49

  
	
  Section 11.5.

  	
  Assignees

  	
  50

  
	
  Section 11.6.

  	
  General Provisions

  	
  50

  

 

 

	
  ARTICLE 12. ADMISSION
  OF PARTNERS

  	
  51

  
	
   

  	
   

  	
   

  
	
  Section 12.1.

  	
  Admission of Successor
  General Partner

  	
  51

  
	
  Section 12.2.

  	
  Admission of Additional
  Limited Partners

  	
  51

  
	
  Section 12.3.

  	
  Amendment of Agreement
  and Certificate of Limited Partnership

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13.
  DISSOLUTION, LIQUIDATION AND TERMINATION

  	
  52

  
	
   

  	
   

  	
   

  
	
  Section 13.1.

  	
  Dissolution

  	
  52

  
	
  Section 13.2.

  	
  Winding Up

  	
  53

  
	
  Section 13.3.

  	
  Compliance with Timing
  Requirements of Regulations

  	
  54

  
	
  Section 13.4.

  	
  Deemed Contribution and
  Distribution

  	
  55

  
	
  Section 13.5.

  	
  Rights of Limited
  Partners

  	
  55

  
	
  Section 13.6.

  	
  Notice of Dissolution

  	
  55

  
	
  Section 13.7.

  	
  Termination of
  Partnership and Cancellation of Certificate of Limited Partnership

  	
  55

  
	
  Section 13.8.

  	
  Reasonable Time for
  Winding Up

  	
  55

  
	
  Section 13.9.

  	
  Waiver of Partition

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14. AMENDMENT
  OF PARTNERSHIP AGREEMENT; MEETINGS

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 14.1.

  	
  Amendment of
  Partnership Agreement

  	
  56

  
	
  Section 14.2.

  	
  Meetings of the
  Partners

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15. GENERAL PROVISIONS

  	
  58

  
	
   

  	
   

  
	
  Section 15.1.

  	
  Addresses and Notice

  	
  58

  
	
  Section 15.2.

  	
  Titles and Captions

  	
  58

  
	
  Section 15.3.

  	
  Pronouns and Plurals

  	
  58

  
	
  Section 15.4.

  	
  Further Action

  	
  59

  
	
  Section 15.5.

  	
  Binding Effect

  	
  59

  
	
  Section 15.6.

  	
  Creditors

  	
  59

  
	
  Section 15.7.

  	
  Waiver

  	
  59

  
	
  Section 15.8.

  	
  Counterparts

  	
  59

  
	
  Section 15.9.

  	
  Applicable Law

  	
  59

  
	
  Section 15.10.

  	
  Invalidity of
  Provisions

  	
  59

  
	
  Section 15.11.

  	
  Entire Agreement

  	
  59

  

 

 

	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A —
  Partners’ Contributions and Partnership Interests

  	
   

  
	
  Exhibit B -
  Capital Account Maintenance

  	
   

  
	
  Exhibit C -
  Special Allocation Rules

  	
   

  
	
  Exhibit D - Notice
  of Redemption

  	
   

  
	
  Exhibit E —
  Constructive Ownership Definition

  	
   

  
	
  Exhibit F —
  Conversion Notice

  	
   

  
	
  Exhibit G — Forced
  Conversion Notice

  	
   

  
	
  Exhibit H —
  Schedule of Partner’s Ownership with Respect to Tenants

  	
   

  

 

 

AMENDED AND RESTATED

LIMITED
PARTNERSHIP AGREEMENT

OF

PENNYMAC OPERATING
PARTNERSHIP, L.P.

 

THIS AMENDED AND RESTATED LIMITED PARTNERSHIP
AGREEMENT OF PENNYMAC OPERATING PARTNERSHIP, L.P. (this “Agreement”),
dated as of August 4, 2009, is entered into by and among PennyMac GP OP, Inc.,
a Delaware corporation (the “General Partner”), and the Persons (as
defined below) that are party hereto from time to time and whose names are set
forth on Exhibit A as attached hereto (as it may be amended from time to
time).

 

WHEREAS, the limited partnership was formed on May 20,
2009 and an original limited partnership agreement, dated as of May 20,
2009 (the “Prior Agreement”), was entered into between the General
Partner, as general partner, and PennyMac Mortgage Investment Trust, a Maryland
real estate investment trust (the “Company”), as the initial limited
partner;

 

WHEREAS, the General Partner and the Company desire to
enter into this Amended and Restated Limited Partnership Agreement of PennyMac
Operating Partnership, L.P. (the “Partnership”); and

 

WHEREAS, the General Partner and the Company have
made, and the Company will make certain additional, capital contributions to
the Partnership as set forth on Exhibit A attached hereto;

 

NOW THEREFORE, in consideration of the mutual
covenants herein contained, and other valuable consideration, the receipt and
sufficiency of which is 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.

 

“704(c) Value” of any Contributed Property means
the fair market value of such property or other consideration at the time of
contribution, as determined by the General Partner using such reasonable method
of valuation as it may adopt. Subject to Exhibit B hereof, the General
Partner shall, in its sole and absolute discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate of the 704(c) Values
of Contributed Properties in a single or integrated transaction among the
separate properties on a basis proportional to their respective fair market
values.

 

“Act” means the Delaware Revised Uniform
Limited Partnership Act, 6 Del. C. §17-101, et  seq., as it
may be amended from time to time, and any successor to such statute.

 

 

“Additional Funds” has the meaning set forth in
Section 4.4.A hereof.

 

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

 

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

 

“Adjusted Capital Account Deficit” means, with
respect to any Partner, the deficit balance, if any, in such Partner’s Adjusted
Capital Account as of the end of the relevant Partnership taxable year.

 

“Adjusted Property” means any property, the
Carrying Value of which has been adjusted pursuant to Exhibit B hereof.

 

“Adjustment Event” means any of the following
events: (A) the Partnership makes a distribution on all outstanding
Partnership Units in Partnership Units, (B) the Partnership subdivides the
outstanding Partnership Units into a greater number of Partnership Units or
combines the outstanding Partnership Units into a smaller number of Partnership
Units, or (C) the Partnership issues any Partnership Units in exchange for
its outstanding Partnership Units by way of a reclassification or
recapitalization of its Partnership Units. 
If more than one Adjustment Event occurs, the adjustment to the LTIP
Units under Section 4.2.C need be made only once using a single formula
that takes into account each and every Adjustment Event as if all Adjustment
Events occurred simultaneously.  For the
avoidance of doubt, the following shall not be Adjustment Events:  (x) the issuance of Partnership Units in
a financing, reorganization, acquisition or other similar business transaction,
(y) the issuance of Partnership Units pursuant to the Plan, or any other
long-term incentive plan, any employee benefit or compensation plan or
distribution reinvestment plan, or (z) the issuance of any Partnership
Units to the Company in respect of a capital contribution to the Partnership of
proceeds from the sale of securities by the Company.

 

“Affiliate” means, with respect to any Person, (i) any
Person directly or indirectly controlling, controlled by or under common
control with such Person; (ii) any Person owning or controlling ten
percent (10%) or more of the outstanding voting interests of such Person; (iii) any
Person of which such Person owns or controls ten percent (10%) or more of the
voting interests; or (iv) any officer, director, general partner or
trustee of such Person or of any Person referred to in clauses (i), (ii), or (iii) above.

 

“Agreed Value” means (i) in the case of
any Contributed Property as of the time of its contribution to the Partnership,
the 704(c) Value of such property, reduced by any liabilities 

 

2

 

either
assumed by the Partnership upon such contribution or to which such property is
subject when contributed, and (ii) in the case of any property distributed
to a Partner by the Partnership, the Partnership’s Carrying Value of such
property at the time such property is distributed, reduced by any indebtedness
either assumed by such Partner upon such distribution or to which such property
is subject at the time of distribution as determined under Section 752 of
the Code and the Regulations thereunder.

 

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

 

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

 

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

 

(i)            the
sum of:

 

(a)           the Partnership’s
Net Income or Net Loss (as the case may be) for such period (without regard to
adjustments resulting from allocations described in Sections 1.A through 1.E of
Exhibit C);

 

(b)           Depreciation and all
other noncash charges deducted in determining Net Income or Net Loss for such
period;

 

(c)           the amount of any
reduction in the reserves of the Partnership referred to in clause (ii)(f) below
(including, without limitation, reductions resulting because the General
Partner determines such amounts are no longer necessary);

 

(d)           the excess of
proceeds from the sale, exchange, disposition, or refinancing of Partnership
property for such period over the gain recognized from such sale, exchange,
disposition, or refinancing during such period (excluding Terminating Capital
Transactions); and

 

(e)           all other cash
received by the Partnership for such period that was not included in
determining Net Income or Net Loss for such period;

 

(ii)           less
the sum of:

 

(a)           all principal debt
payments made by the Partnership during such period;

 

(b)           capital expenditures
made by the Partnership during such period;

 

(c)           investments made by
the Partnership during such period in any entity (including loans made thereto)
to the extent that such investments are not otherwise described in clause (ii)(a) or
(ii)(b);

 

3

 

(d)           all other expenditures
and payments not deducted in determining Net Income or Net Loss for such
period;

 

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

 

(f)            the amount of any increase
in reserves during such period which the General Partner determines to be
necessary or appropriate in its sole and absolute discretion; and

 

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

 

Notwithstanding the foregoing, Available Cash shall
not include any cash received or reductions in reserves, or take into account
any disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.

 

“Board of Trustees” means the Board of Trustees
of the Company.

 

“Book-Tax Disparities” means, with respect to
any item of Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such Contributed
Property or Adjusted Property and the adjusted basis thereof for federal income
tax purposes as of such date. A Partner’s share of the Partnership’s Book-Tax
Disparities in all of its Contributed Property and Adjusted Property will be
reflected by the difference between such Partner’s Capital Account balance as
maintained pursuant to Exhibit B and the hypothetical balance of such
Partner’s Capital Account computed as if it had been maintained strictly in
accordance with federal income tax accounting principles.

 

“Business Day” means any day except a Saturday,
Sunday or other day on which commercial banks in New York, New York are
authorized or required by law to close.

 

“Capital Account” means the Capital Account
maintained for a Partner pursuant to Exhibit B hereof.

 

“Capital Account Limitation” has the meaning
set forth in Section 8.7.B.

 

“Capital Contribution” means, with respect to
any Partner, any cash, cash equivalents or the Agreed Value of Contributed
Property which such Partner contributes or is deemed to contribute to the
Partnership pursuant to Section 4.1, 4.2, or 4.3 hereof.

 

“Carrying Value” means (i) with respect to
a Contributed Property or Adjusted Property, the 704(c) Value of such
property, reduced (but not below zero) by all Depreciation with respect to such
property charged to the Partners’ Capital Accounts following the contribution
of or adjustment with respect to such property; and (ii) with respect to
any other Partnership property, the adjusted basis of such property for federal
income tax purposes, all as of the time of determination. The Carrying Value of
any property shall be adjusted from time to time in accordance with Exhibit B
hereof, and to reflect changes, additions or other adjustments to the 

 

4

 

Carrying
Value for dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.

 

“Cash Amount” means an amount of cash per
Partnership Unit equal to the Value on the Valuation Date of the REIT Shares
Amount.

 

“Certificate” means the Certificate of Limited
Partnership of the Partnership as filed in the office of the Delaware Secretary
of State on May 20, 2009, as amended and/or restated from time to time in
accordance with the terms hereof and the Act.

 

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

 

“Common Units”
means the Partnership Units other than any series of units of limited
partnership interest issued in the future and designated as preferred or
otherwise different from the Common Units, including, but not limited to, with
respect to the payment of distributions, including distributions upon
liquidation.

 

“Company” means PennyMac Mortgage Investment
Trust, a Maryland real estate investment trust.

 

“Compensation Committee” means the Compensation
Committee of the Company, or if no such committee exists, the Board of
Trustees.

 

“Concurrent Offering” means the private
placement of REIT Shares pursuant to that certain Share Purchase Agreement
among the Company and the other parties named therein.

 

“Consent” means the consent or approval of a
proposed action by a Partner given in accordance with Section 14.2 hereof.

 

“Constituent Person” has the meaning set forth in
Section 8.7.G.

 

“Constructively Own” means ownership under the
constructive ownership rules described in Exhibit E.

 

“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. Once the Carrying Value
of a Contributed Property is adjusted pursuant to Exhibit B hereof, such
property shall no longer constitute a Contributed Property for purposes of Exhibit B
hereof, but shall be deemed an Adjusted Property for such purposes.

 

“Conversion Date” has the meaning set forth in Section 8.7.B.

 

“Conversion Factor” means 1.0, subject to
adjustment as follows: (i) in case the Company shall (A) make a
distribution on the outstanding REIT Shares in REIT Shares, (B) subdivide
or reclassify the outstanding REIT Shares into a greater number of REIT Shares,
or 

 

5

 

(C) combine
or reclassify the outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion Factor in effect at the opening of business on the day following
the date fixed for the determination of shareholders entitled to receive such
distribution or subject to such subdivision, combination or reclassification
shall be proportionately adjusted so that a holder of Partnership Units shall
be entitled to receive, upon exchange thereof, the number of REIT Shares which
the holder would have owned at the opening of business on the day following the
date fixed for such determination had such Partnership Units been exchanged
immediately prior to such determination; (ii) in case the Partnership
shall subdivide or reclassify the outstanding Partnership Units into a greater
number of Partnership Units, the Conversion Factor in effect at the opening of
business on the day following the date fixed for the determination of
Partnership Unit holders subject to such subdivision or reclassification shall
be proportionately adjusted so that a holder of Partnership Units shall be
entitled to receive, upon exchange thereof, the number of REIT Shares which the
holder would have owned at the opening of business on the day following the
date fixed for such determination had such Partnership Units been exchanged
immediately prior to such determination; (iii) in case the Company (A) shall
issue rights or warrants to all holders of REIT Shares entitling them to
subscribe for or purchase REIT Shares at a price per share less than the daily
market price per REIT Share on the date fixed for the determination of shareholders
entitled to receive such rights or warrants, (B) shall not issue similar
rights or warrants to all holders of Partnership Units entitling them to
subscribe for or purchase REIT Shares or Partnership Units at a comparable
price (determined, in the case of Partnership Units, by reference to the
Conversion Factor), and (C) cannot issue such rights or warrants to a
Redeeming Partner as otherwise required by the definition of “REIT Shares
Amount” set forth in this Article 1, then the Conversion Factor in effect
at the opening of business on the day following the date fixed for such
determination shall be increased by multiplying such Conversion Factor by a
fraction of which the numerator shall be the number of REIT Shares outstanding
at the close of business on the date fixed for such determination plus the
number of REIT Shares so offered for subscription or purchase, and of which the
denominator shall be the number of REIT Shares outstanding at the close of
business on the date fixed for such determination plus the number of REIT
Shares which the aggregate offering price of the total number of REIT Shares so
offered for subscription would purchase at such daily market price per share,
such increase of the Conversion Factor to become effective immediately after
the opening of business on the day following the date fixed for such
determination; and (iv) in case the Company shall, by distribution or
otherwise, distribute to all holders of its REIT Shares, (A) capital
shares of any class other than its REIT Shares, (B) evidence of its
indebtedness or (C) assets (excluding any rights or warrants referred to
in clause (iii) above, any cash distribution lawfully paid under the laws
of the state of organization of the Company, and any distribution referred to
in clause (i) above) and shall not cause a corresponding distribution to
be made to all holders of Partnership Units, the Conversion Factor shall be
adjusted so that the same shall equal the ratio determined by multiplying the
Conversion Factor in effect immediately prior to the close of business on the
date fixed for the determination of shareholders entitled to receive such
distribution by a fraction of which the numerator shall be the daily market
price per REIT Share on the date fixed for such determination, and of which the
denominator shall be such daily market price per REIT Share less the fair
market value (as determined by the Board of Trustees, whose determination shall
be conclusive and described in a Board resolution certified by the Secretary of
the Company and delivered to the holders of the Partnership Units) of the
portion of the capital shares or evidences of indebtedness or assets so 

 

6

 

distributed
applicable to one REIT Share, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such distribution.

 

“Conversion Notice” has the meaning set forth
in Section 8.7.B.

 

“Conversion Right” has the meaning set forth in
Section 8.7.B.

 

“Covered Person” has the meaning set forth in Section 7.8.A.

 

“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) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
GAAP, should be capitalized.

 

“Declaration of Trust” means the Declaration of
Trust of the Company filed with the State Department of Assessments and
Taxation of the State of Maryland on May 18, 2009, as amended and/or
restated from time to time.

 

“Depreciation” means, for each taxable year, an
amount equal to the federal income tax depreciation, amortization, or other
cost recovery deduction allowable with respect to an asset for such year,
except that if the Carrying Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning
Carrying Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such year 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 is zero,
Depreciation shall be determined with reference to such beginning Carrying
Value using any reasonable method selected by the General Partner.

 

“Direct Offering” means the offering of REIT
Shares under the Securities Act directly by the Company pursuant to those
certain subscription agreements between the Company and each of the purchasers
named therein.

 

“Distribution Payment Date” means the dates
upon which the General Partner makes distributions in accordance with Section 5.1
of this Agreement.

 

“Economic Capital Account Balances” has the
meaning set forth in Section 6.1.C.

 

“ERISA” means the Employee Retirement Income Security
Act of 1974, as amended and in effect from time to time, as interpreted by the
applicable regulations thereunder. Any reference 

 

7

 

herein
to a specific section or Title of ERISA shall be deemed to include a reference
to any corresponding provision of future law.

 

“Event of Bankruptcy” has the meaning set forth
in Section 13.1.G.

 

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

 

“final adjustment” has the meaning set forth in
Section 10.3.B.

 

“Forced Conversion” has the meaning set forth
in Section 8.7.C.

 

“Forced Conversion Notice” has the meaning set
forth in Section 8.7.D.

 

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

 

“GAAP” means U.S. generally accepted accounting
principles.

 

“General Partner” means PennyMac GP OP, Inc.,
a wholly-owned subsidiary of the Company, or any Person who becomes an
additional or a successor general partner of the Partnership.

 

“General Partner Interest” means a Partnership
Interest held by the General Partner, in its capacity as general partner of the
Partnership. A General Partner Interest may be (but is not required to be)
expressed as a number of Partnership Units.

 

“IRS” means the Internal Revenue Service, which
administers the internal revenue laws of the United States.

 

“Incapacity” or “Incapacitated” means, (i) as
to any individual Partner, death, total physical disability or entry by a court
of competent jurisdiction adjudicating him incompetent to manage his Person or
his estate; (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership or limited
liability company which is a Partner, the dissolution and commencement of
winding up of the partnership; (iv) as to any estate which is a Partner,
the distribution by the fiduciary of the estate’s entire interest in the
Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the
Partner commences a voluntary proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect; (b) the Partner is adjudged as bankrupt or insolvent,
or a final and 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, receiver or liquidator for the Partner or for all or any substantial
part of the Partner’s properties; (f) any 

 

8

 

proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect has not been dismissed within one hundred twenty (120) days after the
commencement thereof; (g) the appointment without the Partner’s consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or
stayed within ninety (90) days of such appointment; or (h) an appointment
referred to in clause (g) which has been stayed 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 (A) his or its status as the General
Partner, or as a trustee, director, officer, shareholder, partner, member,
employee, representative or agent of the General Partner or as an officer,
employee, representative or agent of the Partnership, or (B) his or its
liabilities, pursuant to a loan guarantee 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 assets subject to); and (ii) such other
Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.

 

“Initial Public Offering” means the initial
public offering of REIT Shares under the Securities Act pursuant to that
certain underwriting agreement, dated July 29, 2009 among the Company, the
Partnership, PNMAC Capital Management, LLC and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Credit Suisse Securities (USA) LLC, and Deutsche Bank
Securities Inc., as representatives of the underwriters named therein.

 

“Limited Partner” means the Company and any
other Person named as a limited partner of the Partnership in Exhibit A
attached hereto, as such Exhibit may be amended from time to time, or any
Substituted Limited Partner or Additional Limited Partner, in such Person’s
capacity as a limited partner of the Partnership.  For purposes of this Agreement and the Act,
the Limited Partners shall constitute a single class or group of limited
partners.

 

“Limited Partner Interest” means a Partnership
Interest of a Limited Partner in the Partnership representing a fractional part
of the Partnership Interests of all Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled, as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partner Interest may be
(but is not required to be) expressed as a number of Partnership Units.

 

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

 

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

 

“LTIP Unit” means a Partnership Unit which is
designated as an LTIP Unit and which has the rights, preferences and other
privileges designated in Section 4.2.C hereof and in the Plan in respect
of LTIP Unitholders.  The allocation of
LTIP Units among the Partners shall be set forth on Exhibit A, as may be
amended from time to time.

 

9

 

“LTIP Unit Agreement” means each or any, as the
context implies, LTIP Unit Agreement entered into by an LTIP Unitholder upon
acceptance of an award of LTIP Units under the Plan (as such agreement may be
amended, modified or supplemented from time to time).

 

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

 

“Net Income” means, for any taxable period, the
excess, if any, of the Partnership’s items of income and gain for such taxable
period over the Partnership’s items of loss and deduction for such taxable
period. The items included in the calculation of Net Income shall be determined
in accordance with federal income tax accounting principles, subject to the
specific adjustments provided for in Section 1.B of Exhibit B.

 

“Net Loss” means, for any taxable period, the
excess, if any, of the Partnership’s items of loss and deduction for such
taxable period over the Partnership’s items of income and gain for such taxable
period. The items included in the calculation of Net Loss shall be determined
in accordance with federal income tax accounting principles, subject to the
specific adjustments provided for in Section 1.B of Exhibit B.

 

“New Securities” has the meaning set forth in Section 4.2.B
hereof.

 

“Nonrecourse Deductions” has the meaning set
forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse
Deductions for a Partnership taxable 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 D to this Agreement.

 

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

 

“Partner Minimum 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 taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(i)(2).

 

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

 

10

 

“Partnership Interest” means an ownership
interest in the Partnership held by either a Limited Partner or the General
Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be (but is not required to be)
expressed as a number of 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 a Partnership Minimum
Gain, for a Partnership taxable year shall be determined in accordance with the
rules of Regulations Section 1.704-2(d).

 

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

 

“Partnership Unit” means a fractional,
undivided share of the Partnership Interests of all Partners issued pursuant to
Sections 4.1, 4.2 and 4.3. The number of Partnership Units outstanding and the
Percentage Interest in the Partnership represented by such Units are set forth
in Exhibit A attached hereto, as such Exhibit may be amended from
time to time. The ownership of Partnership Units shall be evidenced by such form
of certificate for units as the General Partner adopts from time to time unless
the General Partner determines that the Partnership Units shall be
uncertificated securities.

 

“Partnership Unit Economic Balance” has the
meaning set forth in Section 6.1.C.

 

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

 

“Percentage Interest” means, as to a Partner,
its interest in the Partnership as determined by dividing the Partnership Units
owned by such Partner by the total number of Partnership Units then outstanding
and as specified in Exhibit A attached hereto, as such Exhibit may be
amended from time to time.

 

“Person” means an individual or a real estate
investment trust, corporation, partnership, limited liability company, trust,
unincorporated organization, association or other entity.

 

“Plan” means the PennyMac Mortgage Investment
Trust 2009 Equity Incentive Plan, as such plan may be amended from time to
time.

 

“Prior Agreement” has the meaning set forth in
the recitals hereto.

 

“Qualified REIT Subsidiary” means a qualified
REIT subsidiary of the Company within the meaning of Code Section 856(i)(2).

 

“Recapture Income” means any gain recognized by
the Partnership upon the disposition of any property or asset of the
Partnership, which gain is characterized as ordinary income 

 

11

 

because
it represents the recapture of deductions previously taken with respect to such
property or asset.

 

“Redeeming Partner” has the meaning set forth
in Section 8.6.A hereof.

 

“Redemption Right” shall have the meaning set
forth in Section 8.6.A hereof.

 

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

 

“REIT” means a real estate investment trust
under Section 856 of the Code.

 

“REIT Share” means a common share of beneficial
interest, par value $0.01 per share, of the Company.

 

“REIT Shares Amount” means a number of REIT
Shares equal to the product of the number of Partnership Units offered for
redemption by a Redeeming Partner, multiplied by the Conversion Factor; provided,
that in the event the Company issues to all holders of REIT Shares rights, options,
warrants or convertible or exchangeable securities entitling the shareholders
to subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the “rights”), and the Company can issue such rights to
the Redeeming Partner, then the REIT Shares Amount shall also include such
rights that a holder of that number of REIT Shares would be entitled to
receive.

 

“REIT Share Offering” means a primary offering
by the Company of its REIT Shares, including, without limitation, the Initial
Public Offering, the Concurrent Offering, the Direct Offering and any other
offerings.

 

“Residual Gain” or “Residual Loss” means
any item of gain or loss, as the case may be, of the Partnership recognized for
federal income tax purposes resulting from a sale, exchange or other
disposition of Contributed Property or Adjusted Property, to the extent such
item of gain or loss is not allocated pursuant to Section 2.B.(1)(a) or
2.B.(2)(a) of Exhibit C to eliminate Book-Tax Disparities.

 

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

 

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

 

“Subsidiary” means, with respect to any Person,
any real estate investment trust, corporation, partnership, limited liability
company 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.

 

12

 

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

 

“Tenant” means any tenant from which the
Company derives rent either directly or indirectly through partnerships or
limited liability companies, including the Partnership.

 

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

 

“Transaction” has the meaning set forth in Section 8.7.G.

 

“Trading Days” means days on which the primary
trading market for REIT Shares, if any, is open for trading.

 

“Unrealized Gain” attributable to any item of
Partnership property means, as of any date of determination, the excess, if
any, of (i) the fair market value of such property (as determined under Exhibit B
hereof) as of such date; over (ii) the Carrying Value of such property
(prior to any adjustment to be made pursuant to Exhibit B hereof) as of
such date.

 

“Unrealized Loss” attributable to any item of
Partnership property means, as of any date of determination, the excess, if
any, of (i) the Carrying Value of such property (prior to any adjustment
to be made pursuant to Exhibit B hereof) as of such date; over (ii) the
fair market value of such property (as determined under Exhibit B hereof)
as of such date.

 

“Unvested LTIP Units” has the meaning set forth
in Section 4.2.C.

 

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

 

“Value” means, with respect to a REIT Share,
the average of the daily market price for the ten (10) consecutive Trading
Days immediately preceding the Valuation Date. 
The daily market price for each such Trading Day shall be: (i) if
the REIT Shares are listed or admitted to trading on any national securities
exchange or the NASDAQ National Market, the closing price on such day, or if no
such sale takes place on such day, the average of the closing bid and asked
prices on such day; (ii) if the REIT Shares are not listed or admitted to
trading on any national securities exchange or the NASDAQ National Market, the
last reported sale price on such day or, if no sale takes place on such day,
the average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner; or (iii) if
the REIT Shares are not listed or admitted to trading on any national
securities exchange or the NASDAQ National Market and no such last reported
sale price or closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a reliable
quotation source designated by the General Partner, or if there shall be no bid
and asked prices on such day, the average of the high bid and low asked prices,
as so reported, on the most recent day (not more than ten (10) days prior
to the date in question) for which prices have been so reported; provided,
that if there are no bid and asked prices reported during the ten (10) days
prior to the date in question, the Value of the REIT Shares shall be determined
by the General 

 

13

 

Partner
acting in good faith on the basis of such quotations and other information as
it considers, in its reasonable judgment, appropriate.  In the event 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 General Partner acting in good
faith on the basis of such quotations and other information as it considers, in
its reasonable judgment, appropriate.

 

“Vested LTIP Units” has the meaning set forth
in Section 4.2.C.

 

ARTICLE
2.

 

ORGANIZATIONAL MATTERS

 

Section 2.1.            Continuation

 

The Partners hereby continue the Partnership as a
limited partnership under and pursuant to the Act. 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 heretofore formed and
continued hereby shall be PennyMac Operating Partnership, L.P.  The Partnership’s business may be conducted
under any other name or names deemed advisable by the General Partner,
including the name of the General Partner or any Affiliate thereof. The words “Limited
Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in
the Partnership’s name where necessary for the purposes of complying with the
laws of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and from
time to time and shall notify the Limited Partners of such change in the next
regular communication to the Limited Partners.

 

Section 2.3.            Registered Office and Agent;
Principal Office

 

The address of the registered office of the
Partnership in the State of Delaware and the name and address of the registered
agent for service of process on the Partnership in the State of Delaware is
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801.  The
principal office of the Partnership shall be c/o PennyMac Mortgage Investment
Trust, 27001 Agoura Road, Third Floor, Calabasas, California 91301, or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place
or places within or outside the State of Delaware as the General Partner deems
advisable.

 

Section 2.4.            Power of Attorney

 

A.            Each
Limited Partner and each Assignee hereby constitutes and appoints the General
Partner, any Liquidator, and authorized officers and attorneys-in-fact of each,
and each 

 

14

 

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:

 

(1)           execute, swear to, 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 or restatements thereof)
that the General Partner or the Liquidator deems appropriate or necessary to
form, qualify or continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the Limited Partners have
limited liability) in the State of Delaware and in all other jurisdictions in which
the Partnership may or plans to conduct business or own property; (b) all
instruments that the General Partner deems appropriate or necessary to reflect
any amendment, change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments or
documents that the General Partner or 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 instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article 11, 12 or 13 hereof or the Capital
Contribution of any Partner; and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership Interest; and

 

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

 

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

 

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

 

15

 

and other
instruments as the General Partner or the Liquidator, as the case may be, deems
necessary to effectuate this Agreement and the purposes of the Partnership.

 

Section 2.5.            Term

 

The term of the Partnership commenced on the date that
the Certificate was filed with the Secretary of State of the State of Delaware
and shall continue until December 31, 2109, unless the Partnership is
dissolved sooner pursuant to the provisions of Article 13 or as otherwise
provided by law.

 

Section 2.6.            Admission of Limited Partners

 

On the date hereof, and upon the execution of this
Agreement or a counterpart of this Agreement, each of the Persons identified as
a limited partner of the Partnership on Exhibit A to this Agreement (other
than the Company which has already been admitted as a limited partner of the
Partnership) is hereby admitted to the Partnership as a limited partner of the
Partnership.

 

ARTICLE
3.

 

PURPOSE

 

Section 3.1.            Purpose and Business

 

The purpose and nature of the business to be conducted
by the Partnership is (i) to conduct any business that may be lawfully
conducted by a limited partnership formed pursuant to the Act; provided,
however, that such business shall be limited to and conducted in such a
manner as to permit the Company at all times to qualify as a REIT, unless the
Company ceases to qualify as a REIT for reasons other than the conduct of the
business of the Partnership or voluntarily revokes its election to be a REIT; (ii) to
enter into any partnership, joint venture or other similar arrangement to
engage in any of the foregoing or to own interests in any entity engaged in any
of the foregoing; and (iii) to do anything necessary, convenient or
incidental to the foregoing. In connection with the foregoing, and without
limiting the Company’s right, in its sole discretion, to cease qualifying as a
REIT, the Partners acknowledge that the Company’s current status as a REIT
inures to the benefit of all of the Partners and not solely to the General
Partner, the Company or their Affiliates.

 

Section 3.2.            Powers

 

The Partnership is empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership, and
shall have, without limitation, any and all of the powers that may be exercised
on behalf of the Partnership by the General Partner pursuant to this Agreement;
provided, however, that the Partnership shall not take, or
refrain from taking, any action which, in the judgment of the General Partner,
in its sole and absolute discretion, (i) could adversely affect the
ability of the Company to qualify and to continue to qualify as a REIT; (ii) could
subject the Company to any additional taxes under Code Section 857 or Code
Section 4981 or any other related or successor 

 

16

 

provision
of the Code; or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the Company, its
securities or the Partnership, unless such action (or inaction) under clause
(i), clause (ii) or clause (iii) above shall have been specifically
consented to by the Company in writing.

 

Section 3.3.            Representations and Warranties by
the Parties

 

A.            Each Partner that is an individual represents and
warrants to each other Partner that (i) such Partner has the legal
capacity to enter into this Agreement and perform such Partner’s obligations
hereunder, (ii) 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 agreement by which such Partner or any of
such Partner’s property is or are bound, or any statute, regulation, order or
other law to which such Partner is subject, (iii) such Partner is a “United
States person” within the meaning of Section 7701(a)(30) of the Code, and (iv) this
Agreement is binding upon, and enforceable against, such Partner in accordance
with its terms.

 

B.            Each Partner that is not an individual represents and
warrants to each other Partner that (i) its execution and delivery of this
Agreement and 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, director(s) 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 certificate of limited
partnership, partnership agreement, trust agreement, limited liability company
operating agreement, declaration of trust, charter or bylaws, as the case may
be, any agreement by which such Partner or any of such Partner’s properties or
any of its partners, 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, trustees, beneficiaries or shareholders, as the
case may be, is or are subject, (iii) such Partner is a “United States
person” within the meaning of Section 7701(a)(30) of the Code and (iv) this
Agreement is binding upon, and enforceable against, such Partner in accordance
with its terms.

 

C.            Each Partner further represents, warrants, covenants and
agrees as follows:

 

(1)           Except as provided in Exhibit H
hereto, at any time such Partner actually or Constructively Owns a 25% or
greater capital interest or profits interest in the Partnership, it does not
and will not, without the prior written consent of the General Partner,
actually own or Constructively Own (a) with respect to any Tenant that is
a corporation, any stock of such Tenant, and (b) with respect to any
Tenant that is not a corporation, any interest in either the assets or net
profits of such Tenant.

 

(2)           Upon request of the General Partner,
it will promptly disclose to the General Partner the amount of REIT Shares or
other capital shares of the Company that it actually owns or Constructively
Owns.

 

Each Partner understands
that if, for any reason, (a) the representations, warranties or agreements
set forth above are violated, or (b) the Partnership’s actual or Constructive

 

17

 

Ownership of REIT Shares or other capital shares of
the Company violates the limitations set forth in the Declaration of Trust,
then (x) some or all of the Redemption Rights of the Partners may become
non-exercisable, and (y) some or all of the REIT Shares owned by the
Partners may be automatically transferred to a trust for the benefit of a
charitable beneficiary, as provided in the Declaration of Trust.

 

(3)           Without the consent of the General
Partner, which may be given or withheld in its sole discretion, no Partner
shall take any action that would cause the Partnership at any time to have more
than 100 partners (including as partners those Persons indirectly owning an
interest in the Partnership through a partnership, limited liability company, S
corporation or grantor trust (such entity, a “flow through entity”), but
only if substantially all of the value of such person’s interest in the flow
through entity is attributable to the flow through entity’s interest (direct or
indirect) in the Partnership).

 

D.            The representations and warranties contained in this Section 3.3
shall survive the execution and delivery of this Agreement by each Partner and
the dissolution and winding up of the Partnership.

 

E.             Each 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 Company 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, which 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.

 

Section 3.4.            Not Publicly Traded

 

The General Partner, on behalf of the Partnership,
shall use its best efforts not to take any action which would result in the
Partnership being a publicly traded partnership within the meaning of either
Code Section 469(k)(2) or 7704(b). 
Subject to this Section 3.4, it is expressly acknowledged and
agreed by the Partners that the General Partner may, in its sole and absolute
discretion, waive or otherwise modify the application with respect to any
Partner(s) or Assignee(s) of any provision herein restricting,
prohibiting or otherwise relating to (i) the transfer of a Limited Partner
Interest or the Partnership Units evidencing the same, (ii) the admission
of any Limited Partners and (iii) the Redemption Rights of such Partners,
and that such waivers or modifications may be made by the General Partner at
any time or from time to time, including, without limitation, concurrently with
the issuance of any Partnership Units pursuant to the terms of this Agreement.

 

18

 

ARTICLE
4.

 

CAPITAL CONTRIBUTIONS

 

Section 4.1.            Capital Contributions of the
Partners

 

At the time of their respective execution of this
Agreement, the Partners shall make or shall have made Capital Contributions as
set forth in Exhibit A to this Agreement. 
The Partners shall own Partnership Units of the class or series and in
the amounts set forth in Exhibit A and shall have a Percentage Interest in
the Partnership as set forth in Exhibit A, which Percentage Interest shall
be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately exchanges, redemptions, additional
Capital Contributions, the issuance of additional Partnership Units (pursuant
to any merger or otherwise), or similar events having an effect on any Partner’s
Percentage Interest.  Except as provided
in Sections 4.2, 4.3 and 10.5, the Partners shall have no obligation to make
any additional Capital Contributions or loans to the Partnership.

 

Section 4.2.            Issuances of Additional
Partnership Interests

 

A.            The General Partner is hereby
authorized, without the need for any vote or approval of any Partner or any
other Person who may hold Partnership Units or Partnership Interests, to cause
the Partnership from time to time to issue to any existing Partner (including
the General Partner and the Company) or to any other Person, and to admit such
Person as a limited partner in the Partnership, Partnership Units (including,
without limitation, Common Units and preferred Partnership Units) or other
Partnership Interests, in each case in exchange for the contribution by such
Person of property or other assets, in one or more classes, or one or more
series of any of such classes, or otherwise with such designations,
preferences, redemption and conversion rights and relative, participating,
optional or other special rights, powers and duties, including rights, powers
and duties senior to Limited Partner Interests, all as shall be determined by
the General Partner in its sole and absolute discretion subject to Delaware
law, including, without limitation, (i) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such class or
series of Partnership Interests; (ii) the right of each such class or
series of Partnership Interests to share in Partnership distributions; and (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership; provided, that no such additional
Partnership Units or other Partnership Interests shall be issued to the Company
unless either (a)(1) the additional Partnership Interests are issued in
connection with an issuance of REIT Shares or other securities by the Company,
which securities have designations, preferences and other rights such that the
economic interests attributable to such securities are substantially similar to
the designations, preferences and other rights of the additional Partnership
Interests issued to the Company in accordance with this Section 4.2.A, and
(2) the Company shall make a Capital Contribution to the Partnership in an
amount equal to the proceeds, if any, raised in connection with such issuance, (b) the
additional Partnership Interests are issued to all Partners in proportion to
their respective Percentage Interests, or (c) the additional Partnership
Interests are issued in connection with a contribution of property to the
Partnership by the Company.  In addition,
the Company may acquire Units from other Partners pursuant to this Agreement.

 

19

 

B.            In accordance with, and subject to
the terms of Section 4.3 hereof, the Company shall not issue any REIT
Shares (other than REIT Shares issued pursuant to Section 8.6) or other
securities, or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase REIT Shares or
other securities of the Company (or any Debt issued by the
Company that provides any of the foregoing rights) (collectively, “New Securities”) other than to
all holders of REIT Shares unless (i) the General Partner shall cause the
Partnership to issue to the Company Partnership Interests or rights, options,
warrants or convertible or exchangeable securities of the Partnership having
designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the REIT Shares or other
securities or New Securities; and (ii) the Company contributes to the
Partnership the proceeds, if any, from the issuance of such REIT Shares, other
securities or New Securities and, if applicable, from the exercise of rights
contained in such New Securities.  Without
limiting the foregoing, the Company is expressly authorized to issue REIT
Shares, other securities or New Securities for less than fair market value, and
the General Partner is expressly authorized to cause the Partnership to issue
to the Company corresponding Partnership Interests, so long as (x) the
General Partner concludes in good faith that such issuance is in the interests
of the Company and the Partnership (for example, and not by way of limitation,
the issuance of REIT Shares and corresponding Partnership Units in connection
with an issuance of REIT Shares under the Plan or another long-term incentive
plan of the Company or pursuant to an employee share purchase plan providing
for employee purchases of REIT Shares at a discount from fair market value or
employee share options that have an exercise price that is less than the fair
market value of the REIT Shares, either at the time of issuance or at the time
of exercise, or in order to comply with the REIT share ownership requirements
set forth in Section 856(a)(5) of the Code); and (y) the Company
contributes all proceeds from such issuance and exercise to the Partnership.

 

C.            The General Partner may from time to
time issue LTIP Units to Persons who provide services to the Partnership, for
such consideration as the General Partner may determine to be appropriate, and
admit such Persons as Limited Partners. 
Subject to the following provisions of this Section 4.2.C and the
special provisions of Sections 6.1.C, 8.7 and 8.8, LTIP Units shall be treated
as Partnership Units, with all of the rights, privileges and obligations
attendant thereto.  For purposes of
computing the Partners’ Percentage Interests, holders of LTIP Units shall be
treated as Partnership Unitholders and LTIP Units shall be treated as
Partnership Units.  In particular, except
as otherwise specifically provided in this Agreement, the Partnership shall
maintain at all times a one-to-one correspondence between LTIP Units and
Partnership Units for conversion, distribution and other purposes, including
without limitation complying with the following procedures:

 

(i)            If an Adjustment
Event occurs, the General Partner shall make a corresponding adjustment to the
LTIP Units to maintain a one-for-one conversion and economic equivalence ratio
between Partnership Units and LTIP Units. 
If the Partnership takes an action affecting the Partnership Units other
than actions specifically defined herein as “Adjustment Events” and in the
opinion of the General Partner such action would require an adjustment to the
LTIP Units to maintain the one-to-one correspondence described above, the
General Partner shall have the right to make such adjustment to the LTIP Units,
to the extent permitted by law and by the Plan, in such manner and at such time
as the General Partner, in its sole discretion, may determine to be appropriate
under the circumstances.  If an
adjustment is made to the LTIP Units as herein provided, the Partnership shall
promptly file in the books and records of the

 

20

 

Partnership an officer’s
certificate setting forth such adjustment and a brief statement of the facts
requiring such adjustment, which certificate shall be conclusive evidence of
the correctness of such adjustment absent manifest error.  Promptly after filing of such certificate, (i) the
Partnership shall mail a notice to each LTIP Unitholder setting forth the
adjustment to his or her LTIP Units and the effective date of such adjustment;
and

 

(ii)           The LTIP
Unitholders shall, in respect of each Distribution Payment Date, when, as and
if authorized and declared by the General Partner out of assets legally
available for that purpose, be entitled to receive distributions in an amount
per LTIP Unit equal to the distributions per Partnership Unit paid to holders
of record on the same record date established by the General Partner with
respect to such Distribution Payment Date; provided, however, that no
distributions shall be made in respect of any LTIP Unit that would cause the
Economic Capital Account of the holder of such LTIP Unit to have a negative
balance that is greater than the negative balance of the Economic Capital
Account of each Partnership Unit generally. 
During any distribution period, so long as any LTIP Units are
outstanding, no distributions (whether in cash or in kind) shall be authorized,
declared or paid on Partnership Units, unless equal distributions have been or
contemporaneously are authorized, declared and paid on the LTIP Units for such
distribution period, except in the circumstances described in the proviso to
the preceding sentence.  Except to the
extent required by the aforementioned proviso, the LTIP Units shall rank pari passu with the Partnership Units as to the payment of
regular and special periodic or other distributions and distribution of assets upon
liquidation, dissolution or winding up. 
As to the payment of distributions and as to distribution of assets upon
liquidation, dissolution or winding up, any class or series of Partnership
Units or Partnership Interests which by its terms specifies that it shall rank
junior to, on a parity with, or senior to the Partnership Units shall also rank
junior to, or pari passu with, or senior to, as
the case may be, the entitlement of the LTIP Units to such distribution.  Subject to the terms of any LTIP Unit
Agreement, an LTIP Unitholder shall be entitled to transfer his or her LTIP
Units to the same extent, and subject to the same restrictions as holders of
Partnership Units are entitled to transfer their Partnership Units pursuant to Article 11.

 

LTIP Units shall be subject to the following special
provisions:

 

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

 

(ii)           Forfeiture.  Unless otherwise specified in the applicable
LTIP Unit Agreement, upon the occurrence of any event specified in an LTIP Unit
Agreement as resulting in either the right of the Partnership or the General
Partner to repurchase LTIP Units at a specified purchase price or some other
forfeiture of any LTIP Units, if the Partnership or the General Partner
exercises such right to repurchase or forfeiture in accordance with the applicable
LTIP Unit 

 

21

 

Agreement, then
the relevant LTIP Units shall immediately, and without any further action, be
treated as cancelled and no longer outstanding for any purpose.  Unless otherwise specified in the applicable
LTIP Unit Agreement, no consideration or other payment shall be due with
respect to any LTIP Units that have been forfeited, other than any
distributions declared with respect to a Partnership Record Date prior to the
effective date of the forfeiture.  In
connection with any repurchase or forfeiture of LTIP Units, the balance of the
portion of the Capital Account of the LTIP Unitholder that is attributable to
all of his or her LTIP Units shall be reduced by the amount, if any, by which
it exceeds the target balance contemplated by Section 6.1.C, calculated
with respect to the LTIP Unitholder’s remaining LTIP Units, if any.

 

(iii)          Allocations.  LTIP Unitholders shall receive certain
special allocations of gain under Section 6.1.C.

 

(iv)          Redemption.  The Redemption Right provided to Limited
Partners under Section 8.6 shall not apply with respect to LTIP Units
unless and until they are converted to Partnership Units as provided in clause (vi) below
and Section 8.7.

 

(v)           Legend.  Any certificate evidencing an LTIP Unit shall
bear an appropriate legend indicating that additional terms, conditions and
restrictions on transfer, including without limitation any LTIP Unit Agreement,
apply to the LTIP Unit.

 

(vi)          Conversion to Partnership Units.  Vested LTIP Units are eligible to be
converted into Partnership Units under Section 8.7.

 

(vii)         Voting. 
LTIP Units shall have the voting rights provided in Section 8.8.

 

Section 4.3.            Contribution of Proceeds of
Issuance of Securities by the Company

 

On the date of the completion of the Initial Public
Offering, the Concurrent Offering and the Direct Offering, the Company shall
contribute to the Partnership the proceeds of the Initial Public Offering, the
Concurrent Offering and the Direct Offering in exchange for Partnership Units;
and in connection with any other REIT Share Offering and any other issuance of
REIT Shares, other securities or New Securities pursuant to Section 4.2,
the Company shall contribute to the Partnership any proceeds (or a portion
thereof) raised in connection with such issuance in exchange for Partnership
Interests or rights, options, warrants or convertible or exchangeable
securities of the Partnership having designations, preferences and other
rights, all such that the economic interests are substantially similar to those
of the REIT Shares or other securities or New Securities contributed to the
Partnership; provided, that, in each case, if the proceeds actually
received by the Company 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 Company shall be deemed to have made a
Capital Contribution to the Partnership in the amount equal to the sum of the
net proceeds of such issuance plus the amount of such underwriter’s discount
and other expenses paid by the Company (which discount and expense shall be
treated as an expense for the benefit of the Partnership in accordance with Section 7.4).  In the case of employee purchases of New
Securities at a discount from fair market value, the amount of such discount
representing compensation to the employee, as determined by the General
Partner, shall be treated as an expense of the issuance of such New Securities.

 

22

 

Section 4.4.            Additional
Funds

 

A.            The General Partner may, at any time
and from time to time, determine that the Partnership requires additional funds
(“Additional Funds”) for the acquisition of additional assets, for the
redemption of Partnership Units or for such other purposes as the General
Partner may determine in its sole and absolute discretion.  Additional Funds may be obtained by the
Partnership, at the election of the General Partner, in any manner provided in,
and in accordance with, the terms of this Section 4.4 without the approval
of any Limited Partners.

 

B.            The 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, the 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 Partners
shall be adjusted to reflect the issuance of such additional Partnership Units.

 

C.            The General Partner, on behalf of
the Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt to any Person upon such terms as the 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 (i) a breach, violation or default of
such indebtedness would be deemed to occur by virtue of the transfer of any
Partnership Interest, or (ii) such Debt is recourse to any Partner (unless
the Partner otherwise agrees).

 

D.            The General Partner, on behalf of
the Partnership, may obtain any Additional Funds by causing the Partnership to
incur Debt with the Company 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, the net proceeds of
which are loaned to the Partnership to provide such Additional Funds, or (ii) such
Debt is on terms and conditions no less favorable to the Partnership than would
be available to the Partnership from any third party; provided, however,
that the Partnership shall not incur any such Debt if (a) a breach,
violation or default of such Debt would be deemed to occur by virtue of the
transfer of any Partnership Interest, or (b) such Debt is recourse to any
Partner (unless the Partner otherwise agrees).

 

Section 4.5.            Preemptive
Rights

 

No Person shall have any preemptive, preferential or
other similar right with respect to (i) additional Capital Contributions
or loans to the Partnership; or (ii) the issuance or sale of any
Partnership Units or other Partnership Interests.

 

23

 

ARTICLE
5.

 

DISTRIBUTIONS

 

Section 5.1.            Requirement
and Characterization of Distributions

 

The General Partner shall distribute at least
quarterly all or such portion as the General Partner may in its sole discretion
determine of Available Cash generated by the Partnership during such quarter or
shorter period to the Partners that are Partners on the Partnership Record Date
with respect to such quarter or shorter period in the following priority:

 

A.            First, to the Partners in accordance with their
Percentage Interests in arrears with respect to the immediately preceding
calendar quarter in an amount equal to (1) the sum of (a) the General
Partner’s reasonable estimate of the Net Income allocable to the Partners in
accordance with their Percentage Interests under Section 6.1.A.(ii) with
respect to such immediately preceding calendar quarter and (b) the General
Partner’s determination of the Net Income so allocated in prior calendar
quarters in the same calendar year, reduced by (2) the sum of (a) all
distributions previously made under this subsection or under subsection B. with
respect to all calendar quarters during the same calendar year and (b) any
Net Loss allocable to the Partners in accordance with their Percentage
Interests in such calendar quarter or any preceding calendar quarter of the
same calendar year under Section 6.1.B.

 

B.            Second, to the Partners in accordance with their Percentage
Interests; provided, that in no event may a Partner receive a
distribution of Available Cash with respect to a Partnership Unit if such
Partner is entitled to receive a distribution out of such Available Cash with
respect to a REIT Share for which such Partnership Unit has been exchanged, and
any such distribution shall be made to the Company; and provided, further, that
no LTIP Unitholder shall receive any distribution of Available Cash if and to
the extent the balance of such LTIP Unitholder’s Adjusted Capital Account would
be equal to or less than zero after such distribution is made unless the
balances of the Adjusted Capital Accounts of all Partners in the Partnership
would also be equal to or less than zero after such distribution is made.

 

The General Partner shall take such reasonable
efforts, as determined by it in its sole and absolute discretion and consistent
with the Company’s qualification as a REIT, to distribute Available Cash to the
Limited Partners so as to preclude any such distribution or portion thereof
from being treated as part of a sale of property to the Partnership by a
Limited Partner under Section 707 of the Code or the Regulations
thereunder; provided, that the General Partner and the Partnership shall
not have liability to a Limited Partner under any circumstances as a result of
any distribution to a Limited Partner being so treated.

 

Section 5.2.            Amounts
Withheld

 

All amounts withheld pursuant to the Code or any
provisions of any state or local tax law and Section 10.5 hereof with
respect to any allocation, payment or distribution to the Partners or 

 

24

 

Assignees
shall be treated as amounts distributed to the Partners or Assignees pursuant
to Section 5.1 for all purposes under this Agreement.

 

Section 5.3.            Distributions
Upon Liquidation

 

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 Partners in
accordance with Section 13.2.

 

Section 5.4.            Restricted
Distributions

 

Notwithstanding any provision to the contrary
contained in this Agreement, the Partnership, and the General Partner on behalf
of the Partnership, shall not make a distribution to any Partner on account of
its interest in the Partnership if such distribution would violate Section 17-607
of the Act or other applicable law.

 

ARTICLE
6.

 

ALLOCATIONS

 

Section 6.1.            Allocations
For Capital Account Purposes

 

For purposes of maintaining the Capital Accounts and
in determining the rights of the Partners among themselves, the Partnership’s
items of income, gain, loss and deduction (computed in accordance with Exhibit B
hereof) shall be allocated among the Partners in each taxable year (or portion
thereof) as provided herein below.

 

A.            After giving effect to the special
allocations set forth in Section 1 of Exhibit C attached hereto, Net
Income shall be allocated to the Partners in accordance with their respective
Percentage Interests.

 

B.            After giving effect to the special
allocations set forth in Section 1 of Exhibit C attached hereto, Net
Losses shall be allocated to the Partners in accordance with their respective
Percentage Interests.  In no event shall
Net Losses be allocated to a Limited Partner to the extent such allocation
would result in such partner having an Adjusted Capital Account Deficit (per
Unit) at the end of any taxable year in excess of the Adjusted Capital Account
Deficit (per Unit) of any other Limited Partner.  All such Net Losses shall be allocated to the
other Partners; provided, however, that appropriate adjustments
shall be made to the allocation of future Net Income in order to offset such
specially allocated Net Losses hereunder.

 

C.            Notwithstanding the provisions of Section 6.1.A
above, any net capital gains realized in connection with the actual or
hypothetical sale of all or substantially all of the assets of the Partnership,
including but not limited to net capital gain realized in connection with an
adjustment to the Carrying Value of Partnership assets under Section 704(b) of
the Code, shall first be allocated to the LTIP Unitholders until the aggregate
Economic Capital Account Balances of such LTIP Unitholders, to the extent
attributable to their ownership of LTIP Units, 

 

25

 

are equal to the
product of (i) the Partnership Unit Economic Balance, multiplied by (ii) the
number of such LTIP Unitholders’ LTIP Units.

 

For this purpose, the “Economic Capital Account Balances”
of the LTIP Unitholders will be equal to their Capital Account balances, plus
the amount of their shares of any Partner Minimum Gain or Partnership Minimum
Gain, in either case to the extent attributable to their ownership of LTIP
Units.  Similarly, the “Partnership Unit
Economic Balance” shall mean (i) the Capital Account balance of the
Company, plus the amount of the Company’s share of any Partner Minimum Gain or
Partnership Minimum Gain, in either case to the extent attributable to the
Company’s ownership of Partnership Units and computed on a hypothetical basis
after taking into account all allocations through the date on which any
allocation is made under this Section 6.1.C, divided by (ii) the
number of the Company’s Partnership Units. 
Any such allocations shall be made among the LTIP Unitholders in
proportion to the amounts required to be allocated to each under this Section 6.1.C.  The parties agree that the intent of this Section 6.1.C
is to make the Capital Account balances of the LTIP Unitholders with respect to
each of their LTIP Units economically equivalent to the Capital Account balance
of the Company with respect to each of its Partnership Units if the Carrying
Value of the Partnership’s property has been adjusted in accordance with Exhibit B
in a corresponding amount.

 

ARTICLE
7.

 

MANAGEMENT AND OPERATIONS
OF BUSINESS

 

Section 7.1.            Management

 

A.            Except
as otherwise expressly provided in this Agreement, all management powers over
the business and affairs of the Partnership are and shall be exclusively vested
in the General Partner, and no Limited Partner shall have any right to
participate in or exercise control or management power over the business and
affairs of the Partnership. The General Partner may not be removed by the
Limited Partners with or without cause. 
In addition to the powers now or hereafter granted to a general partner
of a limited partnership under applicable law or which are granted to the
General Partner under any other provision of this Agreement, the General
Partner, subject to Section 7.3 hereof, shall have full power and
authority to do all things deemed necessary, desirable or convenient 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 (including, without limitation, making
prepayments on loans and borrowing money to permit the Partnership to make distributions
to its Partners in such amounts as will permit the Company (so long as the
Company desires to maintain its qualification as a REIT) to avoid the payment
of any federal income tax (including, for this purpose, any excise tax pursuant
to Section 4981 of the Code) and to make distributions to its shareholders
in amounts sufficient to permit the Company to maintain its REIT status), the
assumption or 

 

26

 

guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidence
of indebtedness (including the securing of the same by deed, mortgage, deed of
trust or other lien or encumbrance on the Partnership’s assets) and the
incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership;

 

(2)           the making of tax, regulatory and
other filings or elections, or rendering of periodic or other reports to
governmental or other agencies having jurisdiction over the business or assets
of the Partnership;

 

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

 

(4)           the mortgage, pledge, encumbrance or
hypothecation of any assets 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 it sees fit,
including, without limitation, the financing of the conduct of the operations
of the Partnership, the Company or any of the Partnership’s or the Company’s
Subsidiaries, the lending of funds to other Persons (including, without
limitation, the Subsidiaries of the Partnership and/or the Company) and the
repayment of obligations of the Partnership and its Subsidiaries and any other
Person in which it has an equity investment, and the making of capital
contributions to its Subsidiaries;

 

(5)           the management, operation, leasing,
landscaping, repair, alteration, demolition, disposition or improvement of any
real property or improvements owned by the Partnership or any Subsidiary of the
Partnership;

 

(6)           the negotiation, execution, delivery
and performance of any contracts, conveyances or other instruments that the
General Partner considers useful or necessary or convenient to the conduct of
the Partnership’s operations or the implementation of the General Partner’s
powers under this Agreement, including, without limitation, contracting with
consultants, accountants, legal counsel, other professional advisors and other
agents and the payment of their expenses and compensation out of the
Partnership’s assets;

 

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

 

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

 

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

 

(10)         the establishment of one or more
divisions of the Partnership, the selection and dismissal of employees of the
Partnership (including, without limitation, employees 

 

27

 

who may be designated as
officers with titles such as “president,” “vice president,” “secretary” and “treasurer”
of the Partnership), and agents, outside attorneys, accountants, consultants
and contractors of the Partnership, and the determination of their compensation
and other terms of employment or hiring;

 

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

 

(12)         the formation of, or acquisition of an
interest in, and the contribution of property to, any further limited or
general partnerships, limited liability companies, real estate investment
trusts, corporations, entities that are treated as REITs, “taxable REIT
subsidiaries” or as foreign corporations for federal income tax purposes, joint
ventures or other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of property
or the making of loans to, its or the Company’s Subsidiaries and any other
Person in which it has an equity investment from time to time or the incurrence
of indebtedness on behalf of such Persons or the guarantee of obligations of
such Persons and the making of any tax, regulatory or other filing or election
with respect to any of the foregoing Persons); provided, that as long as the Company has determined to continue to qualify as a
REIT, the Partnership may not engage in any such formation, acquisition or
contribution that would cause the Company to fail to qualify as a REIT;

 

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

 

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

 

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

 

(16)         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;

 

(17)         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;

 

28

 

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

 

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

 

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

 

(21)         the issuance of additional Partnership
Units and other partnership interests, as appropriate, in connection with
Capital Contributions by Additional Limited Partners and additional Capital
Contributions by Partners pursuant to Article 4 hereof; and

 

(22)         the taking of any action necessary or
appropriate to enable the Company to qualify as a REIT.

 

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

 

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

 

D.            In exercising its authority under
this Agreement, the General Partner may, but shall be under no obligation to,
take into account the tax consequences to any Partner of any action taken by
it. The General Partner and the Partnership shall not be liable to a Limited Partner
under any circumstances as a result of an income tax liability incurred by such
Limited Partner as a result of an action (or inaction) by the General Partner
taken pursuant to its authority under this Agreement and in accordance with the
terms of Section 7.3.

 

29

 

Section 7.2.            Certificate
of Limited Partnership

 

The General Partner has filed the Certificate with the
Secretary of State of the State of Delaware as required by the Act. The General
Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, or the District of
Columbia, in which the Partnership may elect to do business or own property. To
the extent that such action is determined by the General Partner to be
reasonable and necessary or appropriate or convenient, the General Partner
shall file amendments to and restatements of the Certificate and do all of the
things to maintain the Partnership as a limited partnership (or a partnership
in which the limited partners have limited liability) under the laws of the
State of Delaware and each other state, or the District of Columbia, in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4) hereof, the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto or restatement thereof to any Limited Partner.

 

Section 7.3.            Restrictions
on General Partner Authority

 

The
General Partner may not take any action in contravention of an express
prohibition or limitation of this Agreement without the written Consent of
Limited Partners holding a majority of the Percentage Interests of the Limited
Partners, or such other percentage of the Limited Partners as may be
specifically provided for under a provision of this Agreement.

 

Section 7.4.            Reimbursement
of the General Partner and the Company

 

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

 

B.            The General Partner and its
Affiliates shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenditures that each incurs relating to the ownership and operation of, or
for the benefit of, the Partnership; provided, that the amount of any
such reimbursement shall be reduced by any interest earned by the General
Partner with respect to bank accounts or other instruments or accounts held by
it on behalf of the Partnership; and provided, further, that the
General Partner and its Affiliates shall not be reimbursed for any (i) trustees’/directors’
fees, (ii) income tax liabilities or (iii) filing or similar fees in
connection with maintaining the General Partner’s or any such Affiliate’s
continued existence that are incurred by the General Partner or an Affiliate,
but the Partners acknowledge that all other expenses of the General Partner and
its Affiliates are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of indemnification
pursuant to Section 7.7 hereof. 
Included among the expenditures for which the General Partner shall be
entitled to reimbursement hereunder shall be any payments of debt service made
by the General Partner, in its capacity as General Partner, as guarantor or
otherwise, with respect to indebtedness encumbering any property held by the
Partnership.

 

30

 

C.            As set forth in Section 4.3,
the Company shall be treated as having made a Capital Contribution in the
amount of all expenses that it incurs and pays relating to the Initial Public
Offering, the Concurrent Offering, the Direct Offering, any other REIT Share
Offering and any other issuance of REIT Shares, other securities or New
Securities pursuant to Section 4.2, the proceeds from the issuance of
which are contributed to the Partnership.

 

D.            In the event that the Company shall
elect to purchase from its shareholders REIT Shares for the purpose of
delivering such REIT Shares to satisfy an obligation under any distribution
reinvestment program adopted by the Company, any employee share purchase plan
adopted by the Company, or any similar obligation or arrangement undertaken by
the Company in the future, the purchase price paid by the Company for such REIT
Shares and any other expenses incurred by the Company in connection with such
purchase shall be considered expenses of the Partnership and shall be
reimbursed to the Company, subject to the condition that: (i) if such REIT
Shares subsequently are sold by the Company, the Company shall pay to the
Partnership any proceeds received by the Company for such REIT Shares (which
sales proceeds shall include the amount of distributions reinvested under any
distribution reinvestment or similar program; provided, that a transfer
of REIT Shares for Partnership Units pursuant to Section 8.6 would not be
considered a sale for such purposes); and (ii) if such REIT Shares are not
retransferred by the Company within 30 days after the purchase thereof, the
General Partner shall cause the Partnership to cancel a number of Partnership
Units held by the Company equal to the product obtained by multiplying the
Conversion Factor by the number of such REIT Shares (in which case such
reimbursement shall be treated as a distribution in redemption of Partnership
Units held by the Company).

 

Section 7.5.            Outside
Activities of the General Partner

 

The General Partner shall not directly or indirectly
enter into or conduct any business other than in connection with the ownership,
acquisition and disposition of Partnership Interests and the management of the
business of the Partnership, and such activities as are incidental
thereto.  The General Partner and any
Affiliates of the General Partner may acquire Limited Partner Interests and shall
be entitled to exercise all rights of a Limited Partner relating to such
Limited Partner Interests.

 

Section 7.6.            Contracts
with Affiliates

 

A.            The Partnership may lend or
contribute funds or other assets to its or the Company’s Subsidiaries or other Persons
in which it or the Company has an equity investment and such Persons may borrow
funds from the Partnership, on terms and conditions established in the sole and
absolute discretion of the General Partner. The foregoing authority shall not
create any right or benefit in favor of any Subsidiary or any other Person.

 

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

 

31

 

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

 

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

 

E.             The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, and
without the approval of the Limited Partners, a right of first opportunity
arrangement and other conflict avoidance agreements with various Affiliates of
the Partnership, the Company and the General Partner, on such terms as the
General Partner, in its sole and absolute discretion, believes are advisable.

 

Section 7.7.            Indemnification

 

A.            To the fullest extent permitted by
Delaware law, the Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, attorneys’ fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership or the Company as set forth in this Agreement, in which such
Indemnitee may be involved, or is threatened to be involved, as a party or otherwise,
except to the extent such Indemnitee acted in bad faith, or with gross
negligence or willful misconduct. 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 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. Any indemnification pursuant
to this Section 7.7 shall be made only out of the assets of the
Partnership, and neither the General Partner nor any Limited Partner shall have
any obligation to contribute to the capital of the Partnership, or otherwise
provide funds, to enable the Partnership to fund its obligations under this Section 7.7.

 

B.            Reasonable expenses incurred by an
Indemnitee who is a party to a proceeding shall be paid or reimbursed by the
Partnership in advance of the final disposition of the proceeding, upon receipt
by the Partnership of an undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in Section 7.7.A.

 

32

 

C.            The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an
Indemnitee or any other Person may be entitled under any agreement, pursuant to
any vote of the Partners, as a matter of law or otherwise, and shall continue
as to an Indemnitee who has ceased to serve in such capacity unless otherwise
provided in a written agreement pursuant to which such Indemnities are
indemnified.

 

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

 

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

 

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

 

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

 

H.            The provisions of this Section 7.7
are for the benefit of the Indemnities, 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 Partnership’s liability to any Indemnitee under this Section 7.7,
as in effect immediately prior to such amendment, modification, or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.

 

Section 7.8.            Liability
of the General Partner

 

A.            Notwithstanding anything to the
contrary set forth in this Agreement, none of the General Partner, its
Affiliates, or any of their respective officers, trustees, directors,
shareholders, partners, members, employees, representatives or agents or any
officer, employee, representative or agent of the Partnership and its
Affiliates (individually, a “Covered Person” and collectively, the “Covered
Persons”) shall be liable for monetary damages to the Partnership, any
Partners or 

 

33

 

any Assignees for
losses sustained or liabilities incurred as a result of errors in judgment or
of any act or omission if the Covered Person’s conduct did not constitute bad
faith, gross negligence or willful misconduct.

 

B.            The Limited Partners expressly
acknowledge that the General Partner is acting on behalf of the Partnership and
the shareholders of the Company collectively, that the General Partner is under
no obligation to consider the separate interests of the Limited Partners
(except as otherwise provided herein) in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General Partner
shall not be liable for monetary damages for losses sustained, liabilities
incurred, or benefits not derived by Limited Partners in connection with such
decisions; provided, that the General Partner has acted in good faith.

 

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

 

D.            Any amendment, modification or
repeal of this Section 7.8 or any provision hereof shall be prospective
only and shall not in any way affect the limitations on the Covered Person’s
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.             To the extent that, at law or in
equity, a Covered Person has duties (including fiduciary duties) and
liabilities relating thereto to the Partnership or to the Partners, any Covered
Person acting under this Agreement or otherwise shall not be liable to the
Partnership or to any 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 a
Covered Person otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such Covered Person.

 

F.             Whenever in this Agreement the
General Partner is permitted or required to make a decision (i) in its “sole
discretion” or “discretion,” or under a similar grant of authority or latitude,
the General Partner shall be entitled to consider such interests and factors as
it desires and may consider its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors affecting
the Partnership or the Limited Partners, or (ii) in its “good faith” or
under another express standard, the General Partner shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Agreement or by law or any other agreement contemplated herein.

 

Section 7.9.            Other
Matters Concerning the General Partner

 

A.            The General Partner may rely and
shall be protected in acting, or refraining from acting, upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, 

 

34

 

consent, order,
bond, debenture, or other paper or document believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties.

 

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

 

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

 

D.            Notwithstanding any other provisions
of this Agreement or the Act, any action of the General Partner on behalf of
the Partnership or any decision of the General Partner to refrain from acting
on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order (i) to protect the
ability of the Company to continue to qualify as a REIT; or (ii) to avoid
the Company incurring any taxes under Section 337(d), 857, 1374 or 4981 of
the Code, is expressly authorized under this Agreement and is deemed approved
by all of the Limited Partners.

 

Section 7.10.          Title
to Partnership Assets

 

Title to Partnership assets, whether real, personal or
mixed and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine in its sole and absolute discretion, including Affiliates
of the General Partner. The General Partner hereby declares and warrants that
any Partnership assets for which legal title is held in the name of the General
Partner or any nominee or Affiliate of the General Partner shall be held by the
General Partner for the use and benefit of the Partnership in accordance with
the provisions of this Agreement; provided, however, that the
General Partner shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.

 

Section 7.11.          Reliance
by Third Parties

 

Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Partnership shall be entitled to assume
that the General Partner has full power and authority, without 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 

 

35

 

Partnership,
and take any and all actions on behalf of the Partnership and such Person shall
be entitled to deal with the General Partner as if the General Partner were the
Partnership’s sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies which may
be available against such Person to contest, negate or disaffirm any action of
the General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to
inquire into the necessity or expedience of any act or action of the General
Partner or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
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

 

The Limited Partners shall have no liability under
this Agreement except as expressly provided in this Agreement, including Section 10.5
hereof, or under the Act.

 

Section 8.2.            Management
of Business

 

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

 

Section 8.3.            Outside
Activities of Limited Partners

 

Subject to any agreements entered into pursuant to Section 7.6.E
hereof and any other agreements entered into by a Limited Partner or its
Affiliates with the Partnership or any of its Subsidiaries, any Limited Partner
(other than the Company) and any officer, trustee, director, member, employee,
agent, trustee, Affiliate or shareholder of any Limited Partner (other than the
Company) shall be entitled to and may have business interests and engage in
business activities in addition to those relating to the Partnership, including
business interests and activities that are in direct competition with the
Partnership or that are enhanced by the activities of the 

 

36

 

Partnership.
Neither the Partnership nor any Partners shall have any rights by virtue of
this Agreement in any business ventures of any Limited Partner or Assignee.
None of the Limited Partners (other than the Company) nor any other Person
shall have any rights by virtue of this Agreement or the Partnership
relationship established hereby in any business ventures of any other Person
and such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could
be taken by such Person.

 

Section 8.4.            Return
of Capital

 

Except pursuant to the right of redemption set forth
in Section 8.6, 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 by Exhibit C hereof or as 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.

 

Section 8.5.            Rights
of Limited Partners Relating to the Partnership

 

A.            In
addition to the other rights provided by this Agreement or by the Act, and
except as limited by Section 8.5.C hereof, each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner’s interest
as a limited partner in the Partnership, upon written demand with a statement
of the purpose of such demand and at such Limited Partner’s own expense
(including such copying and administrative charges as the General Partner may
establish from time to time):

 

(1)           to obtain a copy of the most recent
annual and quarterly reports prepared by the Company and distributed to its
shareholders, including, annual and quarterly reports filed with the Securities
and Exchange Commission by the Company pursuant to the Exchange Act;

 

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

 

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

 

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

 

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

 

37

 

B.            The Partnership shall notify each
Limited Partner, upon request, of the then current Conversion Factor.

 

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

 

Section 8.6.            Redemption
Right

 

A.            Subject to Sections 8.6.B and 8.6.C
hereof and on or after such date, if any, as expressly provided for in any
agreement entered into between the Partnership and any Limited Partner, each
Limited Partner (other than the Company) shall have the right (the “Redemption
Right”) to require the Partnership to redeem on a Specified Redemption Date
all or a portion of the Partnership Units (provided that such Partnership Units
constitute Common Units) held by such Limited Partner at a redemption price per
Unit equal to and in the form of the Cash Amount to be paid by the Partnership.
The Redemption Right shall be exercised pursuant to a Notice of Redemption
delivered to the Partnership (with a copy to the Company) by the Limited
Partner who is exercising the redemption right (the “Redeeming Partner”);
provided, however, that the Partnership shall not be obligated to
satisfy such Redemption Right if the Company elects to purchase the Partnership
Units subject to the Notice of Redemption pursuant to Section 8.6.B. A
Limited Partner may not exercise the Redemption Right for less than one
thousand (1,000) Partnership Units at any one time or, if such Limited Partner
holds less than one thousand (1,000) Partnership Units, all of the Partnership
Units held by such Partner. The Redeeming Partner shall have no right, with
respect to any Partnership Units so redeemed, to receive any distributions paid
on or after the Specified Redemption Date. The Assignee of any Limited Partner
may exercise the rights of such Limited Partner pursuant to this Section 8.6,
and such Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Assignee. In
connection with any exercise of such rights by an Assignee on behalf of a
Limited Partner, the Cash Amount shall be paid by the Partnership directly to
such Assignee and not to such Limited Partner. 
Any Partnership Units redeemed by the Partnership pursuant to this Section 8.6.A
shall be cancelled upon such redemption.

 

B.            Notwithstanding the provisions of Section 8.6.A,
a Limited Partner that exercises the Redemption Right shall be deemed to have
offered to sell the Partnership Units described in the Notice of Redemption to
the Company, and the Company may, in its sole and absolute discretion, elect to
purchase directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
Company (in its sole and absolute discretion), on the Specified Redemption
Date, whereupon the Company shall acquire the Partnership Units offered for
redemption by the Redeeming Partner and shall be treated for all purposes of
this Agreement as the owner of such Partnership Units. If the Company shall
elect to exercise its right to purchase Partnership Units under this Section 8.6.B
with respect to a Notice of Redemption, it shall so notify the Redeeming
Partner within 

 

38

 

five (5) Business
Days after the receipt by it of such Notice of Redemption. Unless the Company
(in its sole and absolute discretion) shall exercise its right to purchase
Partnership Units from the Redeeming Partner pursuant to this Section 8.6.B,
the Company shall not have any obligation to the Redeeming Partner or the
Partnership with respect to the Redeeming Partner’s exercise of the Redemption
Right. In the event the Company shall exercise its right to purchase
Partnership Units with respect to the exercise of a Redemption Right in the
manner described in the first sentence of this Section 8.6.B, the
Partnership shall have no obligation to pay any amount to the Redeeming Partner
with respect to such Redeeming Partner’s exercise of such Redemption Right, and
each of the Redeeming Partner, the Partnership and the Company shall treat the
transaction between the Company and the Redeeming Partner, for federal income
tax purposes, as a sale of the Redeeming Partner’s Partnership Units to the
Company. Each Redeeming Partner agrees to execute such documents as the Company
may reasonably require in connection with the issuance of REIT Shares upon
exercise of the Redemption Right.  In
case of any reclassification of the REIT Shares (including, but not limited to,
any reclassification upon a consolidation or merger in which the Company is the
continuing corporation) into securities other than REIT Shares, for purposes of
this Section 8.6.B, the Company (or its Successor) may thereafter exercise
its right to purchase Partnership Units for the kind and amount of shares of
such securities receivable upon such reclassification by a holder of the number
of REIT Shares for which such Units could be purchased pursuant to this Section immediately
prior to such reclassification.

 

C.            Notwithstanding the provisions of Section 8.6.A
and Section 8.6.B, a Partner shall not be entitled to exercise the
Redemption Right pursuant to Section 8.6.A to the extent that the delivery
of REIT Shares to such Partner on the Specified Redemption Date by the Company
pursuant to Section 8.6.B (regardless of whether or not the Company would
in fact exercise its rights under Section 8.6.B) would (i) be
prohibited, as determined in the sole discretion of the Company, under the
Declaration of Trust or (ii) cause the acquisition of REIT Shares by such
Partner to be “integrated” with any other distribution of REIT Shares for
purposes of complying with the Securities Act.

 

Section 8.7.            Conversion
of LTIP Units

 

A.            An LTIP Unitholder shall have the
right (the “Conversion Right”), at his or her option, at any time to convert
all or a portion of his or her Vested LTIP Units into Partnership Units;
provided, however, that a holder may not exercise the Conversion Right for less
than 100 Vested LTIP Units or, if such holder holds less than 100 Vested LTIP
Units, all of the Vested LTIP Units held by such holder.  Notwithstanding the foregoing, in no event
may a holder of Vested LTIP Units convert a number of Vested LTIP Units that
exceeds (x) the Economic Capital Account Balance of such Limited Partner,
to the extent attributable to its ownership of LTIP Units, divided by (y) the
Partnership Unit Economic Balance, in each case as determined as of the
effective date of conversion (the “Capital Account Limitation”).  LTIP Unitholders shall not have the right to
convert Unvested LTIP Units into Partnership Units until they become Vested
LTIP Units; provided, however, that when an LTIP Unitholder is notified of the
expected occurrence of an event that will cause his or her Unvested LTIP Units
to become Vested LTIP Units, such LTIP Unitholder may give the Partnership a
Conversion Notice conditioned upon and effective as of the time of vesting and
such Conversion Notice, unless subsequently revoked by the LTIP Unitholder,
shall be accepted by the Partnership subject to such condition.  The 

 

39

 

General Partner
shall have the right at any time to cause a conversion of Vested LTIP Units
into Partnership Units.  In all cases,
the conversion of any LTIP Units into Partnership Units shall be subject to the
conditions and procedures set forth in this Section 8.7.

 

B.            Subject to the Capital Account
Limitation, a holder of Vested LTIP Units may convert such Units into an equal
number of fully paid and non-assessable Partnership Units, giving effect to all
adjustments (if any) made pursuant to Section 4.2.C.  In order to exercise his or her Conversion
Right, an LTIP Unitholder shall deliver a notice (a “Conversion Notice”) in the
form attached as Exhibit F to the Partnership (with a copy to the General
Partner) not less than 10 nor more than 60 days prior to a date (the “Conversion
Date”) specified in such Conversion Notice; provided, however, that if the
General Partner has not given to the LTIP Unitholders notice of a proposed or
upcoming Transaction at least 30 days prior to the effective date of such
Transaction, then LTIP Unitholders shall have the right to deliver a Conversion
Notice until the earlier of (x) the 10th day after such notice from the
General Partner of a Transaction or (y) the third Business Day immediately
preceding the effective date of such Transaction.  A Conversion Notice shall be provided in the
manner provided in Section 15.1. 
Each LTIP Unitholder covenants and agrees with the Partnership that all
Vested LTIP Units to be converted pursuant to this Section 8.7.B shall be
free and clear of all liens. 
Notwithstanding anything herein to the contrary, a holder of LTIP Units
may deliver a Redemption Notice pursuant to Section 8.6.A hereof relating
to those Partnership Units that will be issued to such holder upon conversion
of such LTIP Units into Partnership Units in advance of the Conversion Date;
provided, however, that the redemption of such Partnership Units by the
Partnership shall in no event take place until after the Conversion Date.  For clarity, it is noted that the objective
of this paragraph is to put an LTIP Unitholder in a position where, if he or
she so wishes, the Partnership Units into which his or her Vested LTIP Units
will be converted can be redeemed by the Partnership simultaneously with such
conversion, with the further consequence that, if the Company elects to assume
the Partnership’s redemption obligation with respect to such Partnership Units
under Section 8.6.B hereof by delivering to such holder REIT Shares rather
than cash, then such holder can have such REIT Shares issued to him or her
simultaneously with the conversion of his or her Vested LTIP Units into
Partnership Units.  The General Partner
shall cooperate with an LTIP Unitholder to coordinate the timing of the
different events described in the foregoing sentence.

 

C.            The Partnership, at any time at the
election of the General Partner, may cause any number of Vested LTIP Units held
by an LTIP Unitholder to be converted (a “Forced Conversion”) into an equal
number of Partnership Units, giving effect to all adjustments (if any) made
pursuant to Section 4.2.C; provided, however, that the Partnership may not
cause a Forced Conversion of any LTIP Units that would not at the time be
eligible for conversion at the option of such LTIP Unitholder pursuant to Section 8.7.

 

D.            In order to exercise its right of
Forced Conversion, the Partnership shall deliver a notice (a “Forced Conversion
Notice”) in the form attached as Exhibit G to the applicable LTIP
Unitholder not less than 10 nor more than 60 days prior to the Conversion Date
specified in such Forced Conversion Notice. 
A Forced Conversion Notice shall be provided in the manner provided in Section 15.1.

 

40

 

E.             A conversion of Vested LTIP Units
for which the holder thereof has given a Conversion Notice or the Partnership
has given a Forced Conversion Notice shall occur automatically after the close
of business on the applicable Conversion Date without any action on the part of
such LTIP Unitholder, as of which time such LTIP Unitholder shall be credited
on the books and records of the Partnership with the issuance as of the opening
of business on the next day of the number of Partnership Units issuable upon
such conversion.  After the conversion of
LTIP Units as aforesaid, the Partnership shall deliver to such LTIP Unitholder,
upon his or her written request, a certificate of the General Partner
certifying the number of Partnership Units and remaining LTIP Units, if any,
held by such Person immediately after such conversion.  The Assignee of any Limited Partner pursuant
to Article 11 hereof may exercise the rights of such Limited Partner
pursuant to this Section 8.7 and such Limited Partner shall be bound by
the exercise of such rights by the Assignee.

 

F.             For purposes of making future
allocations under Section 6.1.C and applying the Capital Account
Limitation, the portion of the Economic Capital Account Balance of the
applicable LTIP Unitholder that is treated as attributable to his or her LTIP
Units shall be reduced, as of the date of conversion, by the product of the
number of LTIP Units converted and the Partnership Unit Economic Balance.

 

G.            If the Partnership or the General
Partner shall be a party to any transaction (including without limitation a
merger, consolidation, unit exchange, self tender offer for all or
substantially all Partnership Units or other business combination or
reorganization, or sale of all or substantially all of the Partnership’s
assets, but excluding any transaction which constitutes an Adjustment Event) in
each case as a result of which Partnership Units shall be exchanged for or
converted into the right, or the holders of such Partnership Units shall
otherwise be entitled, to receive cash, securities or other property or any
combination thereof (each of the foregoing being referred to herein as a “Transaction”),
then the General Partner shall, immediately prior to the Transaction, exercise
its right to cause a Forced Conversion with respect to the maximum number of LTIP
Units then eligible for conversion, taking into account any allocations that
occur in connection with the Transaction or that would occur in connection with
the Transaction if the assets of the Partnership were sold at the Transaction
price or, if applicable, at a value determined by the General Partner in good
faith using the value attributed to the Partnership Units in the context of the
Transaction (in which case the Conversion Date shall be the effective date of
the Transaction).  In anticipation of
such Forced Conversion and the consummation of the Transaction, the Partnership
shall use commercially reasonable efforts to cause each LTIP Unitholder to be
afforded the right to receive in connection with such Transaction in
consideration for the Partnership Units into which his or her LTIP Units will
be converted the same kind and amount of cash, securities and other property
(or any combination thereof) receivable upon the consummation of such
Transaction by a holder of the same number of Partnership Units, assuming such
holder of Partnership Units is not a Person with which the Partnership
consolidated or into which the Partnership merged or which merged into the
Partnership or to which such sale or transfer was made, as the case may be (a “Constituent
Person”), or an Affiliate of a Constituent Person.  In the event that holders of Partnership
Units have the opportunity to elect the form or type of consideration to be
received upon consummation of a Transaction, prior to such Transaction the
General Partner shall give prompt written notice to each LTIP Unitholder of
such election, and shall use commercially reasonable efforts to afford the LTIP
Unitholders the right to elect, by written notice to the General Partner, 

 

41

 

the form or type
of consideration to be received upon conversion of each LTIP Unit held by such
holder into Partnership Units in connection with such Transaction.  If an LTIP Unitholder fails to make such an
election, such holder (and any of its transferees) shall receive upon
conversion of each LTIP Unit held by him or her (or by any of his or her
transferees) the same kind and amount of consideration that a holder of a
Partnership Unit would receive if such Partnership Unit holder failed to make
such an election.  Subject to the rights
of the Partnership and the Company under any LTIP Unit Agreement and the Plan,
the Partnership shall use commercially reasonable effort to cause the terms of
any Transaction to be consistent with the provisions of this Section 8.7.G
and to enter into an agreement with the successor or purchasing entity, as the
case may be, for the benefit of any LTIP Unitholders whose LTIP Units will not
be converted into Partnership Units in connection with the Transaction that
will (i) contain provisions enabling the holders of LTIP Units that remain
outstanding after such Transaction to convert their LTIP Units into securities
as comparable as reasonably possible under the circumstances to the Partnership
Units and (ii) preserve as far as reasonably possible under the
circumstances the distribution, special allocation, conversion, and other
rights set forth in this Agreement for the benefit of the LTIP Unitholders.

 

Section 8.8.            Voting
Rights of LTIP Units

 

LTIP Unitholders shall have (a) those voting
rights required from time to time by applicable law, if any, (b) the same
voting rights as a holder of Partnership Units, with the LTIP Units voting as a
single class with the Partnership Units and having one vote per LTIP Unit, and (c) the
additional voting rights that are expressly set forth below.  So long as any LTIP Units remain outstanding,
the Partnership shall not, without the affirmative vote of the holders of at
least a majority of the LTIP Units outstanding at the time, given in person or
by proxy, either in writing or at a meeting (voting separately as a class),
amend, alter or repeal, whether by merger, consolidation or otherwise, the
provisions of this Agreement applicable to LTIP Units so as to materially and
adversely affect any right, privilege or voting power of the LTIP Units or the
LTIP Unitholders as such, unless such amendment, alteration, or repeal affects
equally, ratably and proportionately the rights, privileges and voting powers
of the holders of Partnership Units; but subject, in any event, to the
following provisions:  (i) with
respect to any Transaction, so long as the LTIP Units are treated in accordance
with Section 8.7.G hereof, the consummation of such Transaction shall not
be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers of the LTIP Units or the LTIP Unitholders as such;
and (ii) any creation or issuance of any Partnership Units or of any class
or series of Partnership Interest including without limitation additional
Partnership Units, LTIP Units or Preferred Units, whether ranking senior to,
junior to, or on a parity with the LTIP Units with respect to distributions and
the distribution of assets upon liquidation, dissolution or winding up, shall not
be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers of the LTIP Units or the LTIP Unitholders as
such.  The foregoing voting provisions
will not apply if, at or prior to the time when the act with respect to which
such vote would otherwise be required will be effected, all outstanding LTIP
Units shall have been converted into Partnership Units.

 

42

 

ARTICLE 9.

 

BOOKS, RECORDS,
ACCOUNTING AND REPORTS

 

Section 9.1.            Records
and Accounting

 

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

 

Section 9.2.            Fiscal
Year

 

The fiscal 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 General Partner shall cause to be mailed to each Limited
Partner as of the close of the Partnership Year, an annual report containing
financial statements of the Partnership, or of the Company if such statements
are prepared solely on a consolidated basis with the Company, for such
Partnership Year, presented in accordance with GAAP, such statements to be
audited by a nationally recognized firm of independent public accountants
selected by the General Partner.

 

B.            As soon as practicable, but in no
event later than one hundred five (105) days after the close of each calendar
quarter (except the last calendar quarter of each year), the General Partner
shall cause to be mailed to each Limited Partner as of the last day of the
calendar quarter, a report containing unaudited financial statements of the
Partnership, or of the Company, if such statements are prepared solely on a
consolidated basis with the Company, and such other information as may be
required by applicable law or regulation, or as the General Partner determines
to be appropriate.

 

C.            The
Partnership shall also cause to be prepared such reports and/or information as
are necessary for the Company to determine its qualification as a REIT and its
compliance with the requirements for REITs pursuant to the Code and
Regulations.

 

43

 

ARTICLE 10.

 

TAX MATTERS

 

Section 10.1.          Preparation
of Tax Returns

 

The General Partner shall arrange for the preparation
and timely filing of all returns of Partnership income, gains, deductions,
losses and other items required of the Partnership for federal and state income
tax purposes and shall use all reasonable efforts to furnish, within ninety
(90) days of the close of each taxable year, the tax information reasonably
required by Limited Partners for federal and state income tax reporting
purposes.

 

Section 10.2.          Tax
Elections

 

Except as otherwise provided herein, the General
Partner shall, in its sole and absolute discretion, determine whether to make
any available election pursuant to the Code. Notwithstanding the above, in
making any such tax election the General Partner may, but shall be under no
obligation to, take into account the tax consequences to the Limited Partners
resulting from any such election.

 

The General Partner shall make such tax elections on
behalf of the Partnership as the Limited Partners holding a majority of the
Percentage Interests of the Limited Partners request; provided, that the
General Partner believes that such election is not adverse to the interests of
the Company, including its interest in preserving its qualification as a REIT
under the Code. The General Partner can elect to use any method permitted by
Code Section 704(c) and the Regulations thereunder to take into
account any variation between the adjusted basis of any property contributed to
the Partnership by any Partner after the date hereof and such property’s
initial Carrying Value.  The General
Partner shall have the right to seek to revoke any tax election it makes
(including, without limitation, an election under Section 754 of the Code)
upon the General Partner’s determination, in its sole and absolute discretion,
that such revocation is in the best interests of the Partners.

 

Section 10.3.          Tax
Matters Partner

 

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

 

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

 

(1)           to enter into any settlement with the
IRS with respect to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being referred to as a
“tax audit” and such judicial proceedings being referred to as “judicial 

 

44

 

review”), and in the
settlement agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement agreement shall
not bind any Partner (i) who (within the time prescribed pursuant to the
Code and Regulations) files a statement with the IRS providing that the tax
matters partner shall not have the authority to enter into a settlement
agreement on behalf of such Partner; or (ii) who is a “notice partner” (as
defined in Section 6231(a)(8) of the Code) or a member of a “notice
group” (as defined in Section 6223(b)(2) of the Code);

 

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

 

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

 

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

 

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

 

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

 

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

 

45

 

Section 10.4.          Organizational
Expenses

 

The Partnership shall elect to deduct expenses, if
any, incurred by it in forming the Partnership ratably over a one-hundred
eighty (180) month period as provided in Section 709 of the Code.

 

Section 10.5.          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 General Partner
determines 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 Section 1441, 1442, 1445, or 1446 of
the Code. Any amount paid on behalf of or with respect to a Limited Partner
shall constitute a loan by the Partnership to such Limited Partner, which loan
shall be repaid by such Limited Partner within fifteen (15) days after notice
from the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution which would otherwise be
made to the Limited Partner, or (ii) the General Partner determines, in
its sole and absolute discretion, that such payment may be satisfied out of the
available funds of the Partnership which would, but for such payment, be
distributed to the Limited Partner. Any amounts withheld pursuant to the
foregoing clause (i) or (ii) shall be treated as having been
distributed to such Limited Partner. In the event that a Limited Partner fails
to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect
to make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. Without limitation, in
such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and
immediately paid by the defaulting Limited Partner to the General Partner in
repayment of such loan. Any amounts payable by a Limited Partner hereunder
shall bear interest at the lesser of (A) the base rate on corporate loans
at large United States money center commercial banks, as published from time to
time in The Wall Street Journal, plus four (4) percentage points,
or (B) the maximum lawful rate of interest on such obligation, such
interest to accrue from the date such amount is due (i.e., fifteen (15) days
after demand) until such amount is paid in full. Each Limited Partner shall
take such actions as the Partnership or the General Partner shall request in
order to perfect or enforce the security interest created hereunder.  Upon a Limited Partner’s complete withdrawal
from the Partnership, such Limited Partner shall be required to restore funds
to the Partnership to the extent that the cumulative amount of taxes withheld
from or paid on behalf of, or with respect to, such Limited Partner exceeds the
sum of such amounts (i) repaid to the Partnership by such Limited Partner,
(ii) withheld from distributions to such Limited Partner and (iii) paid
by the General Partner on behalf of such Limited Partner.

 

46

 

ARTICLE 11.

 

TRANSFERS AND WITHDRAWALS

 

Section 11.1.          Transfer

 

A.            The term “transfer,” when used in
this Article 11 with respect to a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partner Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partner
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term “transfer” when used in this Article 11 does not
include (i) any redemption of Partnership Interests by the Partnership
from a Limited Partner, (ii) any acquisition of Partnership Units from a
Limited Partner by the Company pursuant to Section 8.6, or (iii) any
distribution of Partnership Units by a Limited Partner to its beneficial
owners.

 

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.

 

C.            Notwithstanding the other provisions
of this Article 11, the Partnership Interests of the General Partner or
the Company may be transferred, in whole or in part, at any time or from time
to time, to any Person that is, at the time of such transfer, a Qualified REIT
Subsidiary.  Any transferee of the entire
General Partner Interest pursuant to this Section 11.1.C shall
automatically become, without further action or Consent of any Limited
Partners, the sole general partner of the Partnership, subject to all the
rights, privileges, duties and obligations under this Agreement and the Act
relating to a general partner.  Upon any
transfer permitted by this Section 11.1.C, the transferor Partner shall be
relieved of all its obligations under this Agreement.  The provisions of Sections 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.

 

Section 11.2.          Transfer
of General Partner Interest and Limited Partner Interest

 

A.            The General Partner may not transfer
any of its General Partner Interest or withdraw as General Partner, or transfer
any of its Limited Partner Interest, except as provided in
Sections 11.1.C, 11.2.B and 11.2.C hereof.

 

B.            Except as set forth in Section 11.1.C
or 11.2.C, the General Partner shall not withdraw from the Partnership and
shall not transfer all or any portion of its Limited Partner Interest in the
Partnership (whether by sale, disposition, statutory merger or consolidation,
liquidation or otherwise) unless Limited Partners holding a majority of the
Percentage Interests of the Limited Partners Consent to such transfer or
withdrawal.  Upon any transfer of the
General Partner’s 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 General Partner for all purposes
herein, and shall be vested with the powers and rights of the transferor
General Partner, and shall be liable for all obligations and responsible for
all duties of 

 

47

 

the 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 by the General Partner otherwise permitted
hereunder that the transferee assumes, by operation of law or express
agreement, all of the obligations of the transferor General Partner under this
Agreement with respect to such transferred Partnership Interest, and such
transfer shall relieve the transferor General Partner of its obligations under
this Agreement without the Consent of the Limited Partners.  In the event that the General Partner
withdraws from the Partnership, in violation of this Agreement or otherwise, or
otherwise dissolves or terminates, or upon an Event of Bankruptcy of the
General Partner, as described in Section 13.2 hereof, the remaining
Partners may agree in writing to continue the business of the Partnership by
selecting a successor General Partner in accordance with the Act.

 

C.            The General Partner may merge with
another entity if immediately after such merger substantially all of the assets
of the surviving entity, other than the General Partner Interest held by the
General Partner, are contributed to the Partnership as a Capital Contribution
in exchange for Partnership Units.

 

Section 11.3.          Limited
Partners’ Rights to Transfer

 

A.            Except as provided in Section 11.3.B,
no Limited Partner shall Transfer all or any portion of its Partnership
Interest to any transferee without the written consent of the General Partner,
which consent may be withheld in its sole and absolute discretion; provided,
however, that the Company may not transfer any portion of its Limited
Partnership Interest without the Consent of Partners holding a majority of the
Percentage Interests of the Limited Partners; and provided, further, that if a Limited
Partner is subject to Incapacity, such Incapacitated Limited Partner may
transfer all or any portion of its Partnership Interest;.

 

B.            Notwithstanding any other provision
of this Article 11, a Limited Partner may Transfer all or any portion of
its Partnership Interest to any of its Affiliates and such transferee shall be
admitted as a Substituted Limited Partner, all without obtaining the consent of
the General Partner.

 

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

 

D.            Without limiting the generality of Section 11.3.A
hereof, the General Partner may prohibit any transfer by a Limited Partner of
its Partnership Interest if, in the opinion of legal counsel to the
Partnership, such transfer would require 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.

 

48

 

E.             No transfer by a Limited Partner of
its Partnership Units may be made to 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 a publicly traded
partnership within the meaning of either Code Section 469(k)(2) or
7704(b); (ii) such transfer is effectuated through an “established
securities market” or a “secondary market (or the substantial equivalent
thereof)” within the meaning of Section 7704 of the Code; (iii) such
transfer would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of ERISA or to Section 4975 of the Code, a
“party-in-interest” (as defined in Section 3(14) of ERISA) or a “disqualified
person” (as defined in Section 4975(c) of the Code); (iv) such
transfer would, in the opinion of legal counsel for the Partnership, cause any
portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.3-101;
(v) such transfer would subject the Partnership to be regulated under the
Investment Company Act of 1940, as amended, the Investment Advisers Act of
1940, as amended, or the fiduciary responsibility provisions of ERISA; or (vi) such
transfer would cause the Partnership to be terminated for federal income tax
purposes pursuant to Code Section 708.

 

F.             No transfer of any Partnership
Units may be made to a lender to the Partnership or any Person who is related
(within the meaning of Section 1.752-4(b) of the Regulations) to any
lender to the Partnership whose loan constitutes a Nonrecourse Liability,
without the consent of the General Partner, in its sole and absolute
discretion.

 

G.            The General Partner shall keep a
register for the Partnership on which the transfer, pledge or release of
Partnership Units shall be shown and pursuant to which entries shall be made to
effect all transfers, pledges or releases as required by the applicable
sections of Article 8 of the Uniform Commercial Code, as amended, in
effect in the States of California and Delaware; provided, however,
that if there is any conflict between such requirements, the provisions of the
Delaware Uniform Commercial Code shall govern. 
The General Partner shall (i) place proper entries in such register
clearly showing each transfer and each pledge and grant of security interest
and the transfer and assignment pursuant thereto, such entries to be endorsed
by the General Partner, and (ii) maintain the register and make the
register available for inspection by all of the Partners and their pledgees at
all times during the term of this Agreement. 
Nothing herein shall be deemed a consent to any pledge or transfer
otherwise prohibited under this Agreement.

 

Section 11.4.          Substituted
Limited Partners

 

A.            No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in his or its place. The
General Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4
as a Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion. The General Partner’s
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner.  A Person
shall be admitted to the Partnership as a Substituted Limited Partner only upon
the aforementioned consent of the General Partner and the furnishing to the General
Partner of (i) evidence of acceptance in form satisfactory to the General
Partner of all of the terms and conditions of this Agreement, including,
without limitation, the power of attorney granted in Section 2.4 hereof
and (ii) such other documents of the General 

 

49

 

Partner in order
to effect such Person’s admission as a Substituted Limited Partner.  The admission of any Person as a Substituted
Limited Partner shall become effective on the date upon which the name of such
Person is recorded on the books and records of the Partnership, following the
consent of the General Partner to such admission.

 

B.            A transferee who has been admitted
as a Substituted Limited Partner in accordance with this Article 11 shall
have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement.

 

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

 

Section 11.5.          Assignees

 

If the General Partner, in its sole and absolute
discretion, does not consent to the admission of any permitted transferee as a
Substituted Limited Partner, as described in Section 11.4, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of Net Income, Net Losses,
Recapture Income, and any other items, gain, loss, deduction and credit of the
Partnership attributable to the Partnership Interest assigned to such
transferee, but shall not be deemed to be a holder of a Partnership Interest
for any other purpose under this Agreement, and shall not be entitled to vote
such Partnership Interest in any matter presented to the Limited Partners for a
vote (such Partnership Interest being deemed to have been voted on such matter
in the same proportion as all other Partnership Interest held by Limited
Partners are voted). In the event any such transferee desires to make a further
assignment of any such Partnership Interest, such transferee shall be subject
to all of the provisions of this Article 11 to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of his or its
Partnership Interest.

 

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 Interest in accordance with this Article 11
or pursuant to redemption of all of its Partnership Units, or the acquisition
thereof by the Company, under Section 8.6.

 

B.            Any Limited Partner who shall
transfer all of its Partnership Interest in a transfer permitted pursuant to
this Article 11 shall cease to be a Limited Partner upon the admission of
all Assignees of such Partnership Interest as Substituted Limited Partners.
Similarly, any Limited Partner who shall transfer all of its Partnership Units
pursuant to a redemption of all of its Partnership Units, or the acquisition
thereof by the Company, under Section 8.6 shall cease to be a Limited
Partner.

 

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

 

50

 

D.            If any Partnership Interest is
transferred or assigned during any quarterly segment of the Partnership’s
fiscal year in compliance with the provisions of this Article 11 or
redeemed or transferred pursuant to Section 8.6 on any day other than the
first day of a Partnership Year, then Net Income, Net Losses, each item thereof
and all other items attributable to such interest for such Partnership Year
shall be divided and allocated between the transferor Partner and the
transferee Partner by taking into account their varying interests during the
Partnership Year in accordance with Section 706(d) of the Code, using
the interim closing of the books method. All distributions of Available Cash
attributable to such Partnership Interest 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 Redeeming Partner, as the case
may be, and in the case of a transfer or assignment other than a redemption,
all distributions of Available Cash thereafter attributable to such Partnership
Interest shall be made to the transferee Partner.

 

ARTICLE 12.

 

ADMISSION OF PARTNERS

 

Section 12.1.          Admission
of Successor General Partner

 

A successor to all of the General Partner Interest
pursuant to Section 11.1.C or 11.2 hereof who is proposed to be admitted
as a successor General Partner shall be admitted to the Partnership as the
General Partner, effective immediately prior to such transfer. Any such
transferee shall carry on the business of the Partnership without dissolution.
In each case, the admission shall be subject to the successor General Partner
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission. In the case of such admission on any day
other than the first day of a Partnership Year, all items attributable to the
General Partner Interest for such Partnership Year shall be allocated between
the transferring General Partner and such successor as provided in Section 11.6.D
hereof.

 

Section 12.2.          Admission
of Additional Limited Partners

 

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

 

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

 

51

 

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 allocable among Partners and Assignees for such Partnership Year shall be
allocated among such Additional Limited Partner and all other Partners and
Assignees by taking into account their varying interests during the Partnership
Year in accordance with Section 706(d) of the Code, using the interim
closing of the books method.  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 such Additional Limited Partner, and all distributions of
Available Cash thereafter shall be made to all of the Partners and Assignees,
including such Additional Limited Partner.

 

Section 12.3.          Amendment
of Agreement and Certificate of Limited Partnership

 

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

 

ARTICLE 13.

 

DISSOLUTION, LIQUIDATION
AND TERMINATION

 

Section 13.1.          Dissolution

 

The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement.  Upon the withdrawal of
the General Partner, any successor General Partner shall continue the business
of the Partnership without dissolution. 
The Partnership shall dissolve, and its affairs shall be wound up, only
upon the first to occur of any of the following (“Liquidating Events”):

 

A.            the expiration of its term as
provided in Section 2.5 hereof;

 

B.            an event of withdrawal of the
General Partner, as defined in the Act, other than an event of bankruptcy as
defined in the Act, unless, (i) at the time of the occurrence of such
event there is at least one remaining general partner of the Partnership who is
hereby authorized to and does carry on the business of the Partnership, or (ii) within
ninety (90) days after such event of withdrawal not less than a majority of the
Percentage Interests of the remaining Partners (or such greater Percentage
Interest as may be required by the Act and determined in accordance with the
Act), determined, in case the withdrawing General Partner continues as a
Limited Partner, by both excluding and including Limited Partner Interests
continuing to be held by the withdrawing General Partner, agrees in writing to
continue the business of the Partnership and to the appointment, effective as
of the date of withdrawal, of a successor General Partner;

 

52

 

C.            from and after the date of this
Agreement through December 31, 2069, an election to dissolve the
Partnership made by the General Partner with the Consent of Partners holding a
majority of the Percentage Interests of the Limited Partners;

 

D.            on or after January 1, 2070, an
election to dissolve the Partnership made by the General Partner, in its sole
and absolute discretion;

 

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

 

F.             the sale of all or substantially
all of the assets and properties of the Partnership; or

 

G.            a final and non-appealable judgment
is entered by a court of competent jurisdiction ruling that the General Partner
is bankrupt or insolvent, or a final and non-appealable order for relief is
entered by a court with appropriate jurisdiction against the General Partner,
in each case under any federal or state bankruptcy or insolvency laws as now or
hereafter in effect (hereinafter referred to as an “Event of Bankruptcy,”
and such term as used herein is intended and shall be deemed to supersede and
replace the events of withdrawal described in Section 17-402(a)(4) and
(5) of the Act), unless prior to the entry of such order or judgment all
of the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of a date prior to the date of
such order or judgment, of a substitute General Partner.

 

Section 13.2.          Winding
Up

 

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

 

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

 

(2)           Second, to the payment and discharge
of all of the Partnership’s debts and liabilities to the General Partner;

 

(3)           Third, to the payment and discharge
of all of the Partnership’s debts and liabilities to the other Partners; and

 

53

 

(4)           The balance, if any, to the General
Partner and Limited Partners in accordance with their Capital Accounts, after
giving effect to all contributions, distributions, and allocations for all
periods.

 

The
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 which require liquidation of the assets of the Partnership, but subject
to the order of priorities set forth therein, if prior to or upon dissolution
of the Partnership the Liquidator determines that an immediate sale of part or
all of the Partnership’s assets would be impractical or would cause undue loss
to the Partners, the Liquidator may, in its sole and absolute discretion, defer
for a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Partnership (including to those Partners as
creditors) and/or distribute to the Partners, in lieu of cash, as tenants in
common and in accordance with the provisions of Section 13.2.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
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time.  The Liquidator shall
determine the fair market value of any property distributed in kind using such
reasonable method of valuation as it may adopt.

 

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

 

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

 

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

 

Section 13.3.          Compliance
with Timing Requirements of Regulations

 

In the event 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 General Partner 

 

54

 

and
Limited Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-l(b)(2)(ii)(b)(2).  If any Partner has a deficit balance in his
or 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 Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit,
and such deficit shall not be considered a debt owed to the Partnership or to
any other Person for any purpose whatsoever.

 

Section 13.4.          Deemed
Contribution and Distribution

 

Notwithstanding any other provision of this Article 13,
in the event the Partnership is “liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
but no Liquidating Event has occurred, the Partnership’s property shall not be
liquidated, the Partnership’s liabilities shall not be paid or discharged, and
the Partnership’s affairs shall not be wound up.  Instead, for federal income tax purposes and
for purposes of maintaining Capital Accounts pursuant to Exhibit B hereto,
the Partnership shall be deemed to have contributed all Partnership property
and liabilities to a new limited partnership in exchange for an interest in
such new limited partnership and, immediately thereafter, the Partnership will
be deemed to liquidate by distributing interests in the new limited partnership
to the Partners.

 

Section 13.5.          Rights
of Limited Partners

 

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

 

Section 13.6.          Notice
of Dissolution

 

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

 

Section 13.7.          Termination
of Partnership and Cancellation of Certificate of Limited Partnership

 

Upon the completion of the winding up of the
Partnership and liquidation of its assets, as provided in Section 13.2
hereof, the Partnership shall be terminated by filing a certificate of
cancellation with the Secretary of State of the State of Delaware, canceling
all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware and taking such other actions as
may be necessary to terminate the Partnership.

 

Section 13.8.          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 

 

55

 

minimize
any losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect among the Partners during the period of
liquidation.

 

Section 13.9.          Waiver
of Partition

 

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

 

ARTICLE 14.

 

AMENDMENT
OF PARTNERSHIP AGREEMENT; MEETINGS

 

Section 14.1.          Amendment
of Partnership Agreement

 

A.            Amendments to this Agreement may be
proposed by the General Partner or by Limited Partners holding twenty percent
(20%) or more of the Partnership Interests. 
Following such proposal, the General Partner shall submit any proposed
amendment to the Limited Partners.  The
General Partner shall seek the written vote of the Partners on the proposed
amendment or shall call a meeting to vote thereon and to transact any other
business that it may deem appropriate. 
For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall constitute
a vote which is consistent with the General Partner’s recommendation with
respect to the proposal.  Except as
otherwise provided in this Agreement, a proposed amendment shall be adopted and
be effective as an amendment hereto if it is approved by the General Partner
and it receives the Consent of Partners holding a majority of the Percentage
Interests of the Limited Partners.

 

B.            Notwithstanding Section 14.1.A,
the General Partner shall have the power, without the consent of the Limited
Partners, to amend this Agreement as may be required to facilitate or implement
any of the following purposes:

 

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

 

(2)           to reflect the admission,
substitution, termination, or withdrawal of Partners in accordance with this
Agreement;

 

(3)           to set forth the designations, rights
(including redemption rights that differ from those specified in Section 8.6),
powers, duties, and preferences of Partnership Units or other Partnership
Interests issued pursuant to Section 4.2.A hereof;

 

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

 

56

 

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

 

The
General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.

 

C.            Notwithstanding Section 14.1.A
and 14.1.B hereof, this Agreement shall not be amended without the Consent of
each Partner adversely affected if such amendment would (i) convert a
Limited Partner’s interest in the Partnership into a General Partner Interest; (ii) modify
the limited liability of a Limited Partner in a manner adverse to such Limited
Partner; (iii) alter rights of such Partner to receive distributions
pursuant to Article 5 or Article 13, or the allocations specified in Article 6
(except as permitted pursuant to Section 4.2 and Section 14.1.B(3) hereof)
in a manner adverse to such Partner; (iv) alter or modify the Redemption
Right and REIT Shares Amount as set forth in Section 8.6, and the related
definitions, in a manner adverse to such Partner; (v) cause the
termination of the Partnership prior to the time set forth in Section 2.5
or 13.1; or (vi) amend this Section 14.1.C; provided, however,
that the Consent of each Partner adversely affected shall not be required for
any amendment or action that affects all Partners holding the same class or
series of Partnership Units on a uniform or pro rata
basis.  Any amendment consented to by any
Partner shall be effective as to that Partner, notwithstanding the absence of
such Consent by any other Partner.

 

D.            Notwithstanding Section 14.1.A
or Section 14.1.B hereof, the General Partner shall not amend Sections
4.2.A, 7.5, 7.6, 11.2 or 14.2 without the Consent of Limited Partners holding a
majority of the Percentage Interests of the Limited Partners.

 

Section 14.2.          Meetings
of the Partners

 

A.            Meetings of the Partners may be
called by the General Partner and shall be called upon the receipt by the
General Partner of a written request by Limited Partners (other than the
Company) holding twenty percent (20%) or more of the Partnership
Interests.  The request shall state the
nature of the business to be transacted. 
Notice of any such meeting shall be given to all Partners not less than
seven (7) days nor more than thirty (30) days prior to the date of such
meeting.  Partners may vote in person or
by proxy at such meeting.  Whenever the
vote or Consent of the Partners is permitted or required under this Agreement,
such vote or Consent may be given at a meeting of the Partners or may be given
in accordance with the procedure prescribed in Section 14.1.A hereof.  Except as otherwise expressly provided in
this Agreement, the Consent of holders of a majority of the Percentage Interests
held by Limited Partners shall control.

 

B.            Any action required or permitted to
be taken at a meeting of the Partners may be taken without a meeting if a
written consent setting forth the action so taken is signed by a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). 
Such consent may be in one instrument or in several instruments, and
shall have the same force and effect as a vote of a majority of the Percentage
Interests of the Partners (or such other percentage as is expressly required by
this Agreement).  Such consent 

 

57

 

shall be filed
with the General Partner.  An action so
taken shall be deemed to have been taken at a meeting held on the effective
date so certified.

 

C.            Each Limited Partner may authorize
any Person or Persons to act for him by proxy on all matters in which a Limited
Partner is entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. 
Every proxy must be signed by the Limited Partner or his 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.  Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
such revocation to be effective upon the Partnership’s receipt of written
notice of such revocation from the Limited Partner executing such proxy.

 

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

 

ARTICLE 15.

 

GENERAL
PROVISIONS

 

Section 15.1.          Addresses
and Notice

 

Any notice, demand, request or report required or
permitted to be given or made to a Partner or Assignee under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by first class United States mail or by other means of written
communication to such Partner or Assignee at the address set forth in Exhibit A
or such other address of which such Partner shall notify the General Partner in
writing.

 

Section 15.2.          Titles
and Captions

 

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

 

Section 15.3.          Pronouns
and Plurals

 

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

 

58

 

Section 15.4.          Further
Action

 

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

 

Section 15.5.          Binding
Effect

 

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 15.6.          Creditors

 

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

 

Section 15.7.          Waiver

 

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

 

Section 15.8.          Counterparts

 

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

 

Section 15.9.          Applicable
Law

 

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

 

Section 15.10.        Invalidity
of Provisions

 

If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.

 

Section 15.11.        Entire
Agreement

 

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

 

59

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.

 

	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  
	
   

  	
  PennyMac GP
  OP, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff Grogin

  
	
   

  	
   

  	
  Name: Jeff
  Grogin

  
	
   

  	
   

  	
  Title: Executive
  Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LIMITED PARTNER:

  
	
   

  	
   

  
	
   

  	
  PennyMac Mortgage
  Investment Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff Grogin

  
	
   

  	
   

  	
  Name: Jeff
  Grogin

  
	
   

  	
   

  	
  Title: Chief
  Legal Officer and Secretary

  

 

[SIGNATURE PAGE TO AMENDED AND RESTATED LIMITED 

PARTNERSHIP AGREEMENT OF PENNYMAC OPERATING
PARTNERSHIP, L.P.]

 

 

EXHIBIT A

 

PARTNERS’
CONTRIBUTIONS AND PARTNERSHIP INTERESTS

 

	
  Name and Address

  of Partner

  	
   

  	
  Cash

  Contribution

  	
   

  	
  Agreed
  Value of

  Contributed Property

  	
   

  	
  Total

  Contribution

  	
   

  	
  Partnership

  Units

  	
   

  	
  Percentage

  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General
  Partner:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PennyMac GP
  OP, Inc. 

  27001 Agoura Road, Third Floor 

  Calabasas, California 91301

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1% general
  partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Limited
  Partners:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PennyMac Mortgage
  Investment Trust 

  27001 Agoura Road, Third Floor 

  Calabasas, California 91301

  	
   

  	
  $

  	
  334,706,340

  	
  *

  	
  N/A

  	
   

  	
  $

  	
  334,706,340

  	
  *

  	
  16,735,317

  	
  +

  	
  99% limited
  partner

  	
   

  
														

 

* Constitutes gross
proceeds from REIT Share Offerings in accordance with Section 4.3 hereof.

 

+ Subject to change as a
result of subsequent contributions by the Company. 

 

61

 

EXHIBIT B

 

CAPITAL ACCOUNT
MAINTENANCE

 

1.                                       Capital Accounts of the Partners

 

A.                                   The Partnership shall maintain for each
Partner a separate Capital Account in accordance with the rules of
Regulations Section 1.704-l(b)(2)(iv). 
Such Capital Account shall be increased by (i) the amount of all
Capital Contributions and any other deemed contributions made by such Partner
to the Partnership pursuant to the Agreement; and (ii) all items of
Partnership income and gain (including income and gain exempt from tax) computed
in accordance with Section 1.B hereof and allocated to such Partner
pursuant to Section 6.1.A of the Agreement and Exhibit C
hereof, and decreased by (x) the amount of cash or Agreed Value of all
actual and deemed distributions of cash or property made to such Partner
pursuant to the Agreement, and (y) all items of Partnership deduction and
loss computed in accordance with Section 1.B hereof and allocated to such
Partner pursuant to Section 6.1.B of the Agreement and Exhibit C
hereof.

 

B.                                     For purposes of computing the amount of
any item of income, gain, deduction or loss (“Net Income” or “Net
Loss”) to be reflected in the Partners’ Capital Accounts, unless otherwise
specified in the Agreement, the determination, recognition and classification
of any such item shall be the same as its determination, recognition and
classification for federal income tax purposes determined in accordance with Section 703(a) of
the Code (for this purpose all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss), with the following
adjustments:

 

(1)                                  Except as otherwise provided in
Regulations Section 1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership; provided,
that the amounts of any adjustments to the adjusted bases of the assets of the
Partnership made pursuant to Section 734 of the Code as a result of the
distribution of property by the Partnership to a Partner (to the extent that
such adjustments have not previously been reflected in the Partners’ Capital
Accounts) shall be reflected in the Capital Accounts of the Partners in the
manner and subject to the limitations prescribed in Regulations Section 1.704-1(b)(2)(iv)(m)(4).

 

(2)                                  The computation of all items of income,
gain, and deduction shall be made without regard to the fact that items
described in Sections 705(a)(1)(B) or 705(a)(2)(B) of the Code are
not includable in gross income or are neither currently deductible nor
capitalized for federal income tax purposes.

 

(3)                                  Any income, gain or loss attributable to
the taxable disposition of any Partnership property shall be determined as if
the adjusted basis of such property as of such date of disposition were equal
in amount to the Partnership’s Carrying Value with respect to such property as
of such date.

 

62

 

(4)                                  In lieu of the depreciation,
amortization, and other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken into account
Depreciation for such fiscal year.

 

(5)                                  In the event the Carrying Value of any
Partnership Asset is adjusted pursuant to Section 1.D hereof, the amount
of any such adjustment shall be taken into account as gain or loss from the
disposition of such asset.

 

(6)                                  Notwithstanding any other provision of
this Section 1.B, any items that are specially allocated pursuant to Exhibit C
or Section 6.1.C. of the Agreement shall not be taken into account for
purposes of 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 Exhibit C
or Section 6.1.C. of the Agreement shall be determined by applying rules analogous
to those set forth in Sections 1.B(1) through 1.B(5) above.

 

C.                                     Generally, a transferee (including an
Assignee) of a Partnership Unit shall succeed to a pro rata portion of the
Capital Account of the transferor.

 

D.                                    (1)                                  Consistent with the provisions of
Regulations Section 1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2),
the Carrying Value of all Partnership assets shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as of the times of the adjustments provided in Section 1.D(2) hereof,
as if such Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property and allocated pursuant to Section 6.1 of the
Agreement.

 

(2)                                  Such adjustments shall be made as of the
following times: (a) immediately prior to the acquisition of an additional
interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (b) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis amount
of property as consideration for an interest in the Partnership; (c) in
connection with the grant of an interest (including LTIP Units) in the
Partnership (other than a de minimis interest), as consideration for the
provision of services to or for the benefit of the Partnership by an existing
Partner acting in a partner capacity or by a new partner acting in a partner
capacity or in anticipation of being a partner; and (d) immediately prior
to the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that adjustments pursuant to clauses (a), (b) and
(c) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.

 

(3)                                  In accordance with Regulations Section 1.704-1(b)(2)(iv)(e),
the Carrying Value of Partnership assets distributed in kind shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time any such asset is
distributed.

 

63

 

(4)                                  The Carrying Value 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) and
Section 1.B(1) hereof or Section 1.F. of Exhibit C; provided,
however, that Carrying Values shall not be adjusted pursuant to this Section 1.D(4) to
the extent that an adjustment pursuant to Section 1.D(2) is required
in connection with a transaction that would otherwise result in an adjustment
pursuant to this Section 1.D(4).

 

(5)                                  In determining Unrealized Gain or
Unrealized Loss for purposes of this Exhibit B, the aggregate cash
amount and fair market value of all Partnership assets (including cash or cash
equivalents) shall be determined by the General Partner using such reasonable
method of valuation as it may adopt, or in the case of a liquidating
distribution pursuant to Article 13 of the Agreement, shall be determined
and allocated by the Liquidator using such reasonable method of valuation as it
may adopt.  The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its sole and
absolute discretion to arrive at a fair market value for individual
properties).

 

If the Carrying Value of an asset has been determined
or adjusted pursuant to Section 1.B(2) or Section 1.B(4), such
Carrying Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset, for purposes of computing Net Income and
Net Loss.

 

E.                                      The provisions of the Agreement
(including this Exhibit B and other Exhibits to the Agreement)
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-l(b), and shall be interpreted and applied in a
manner consistent with such Regulations. 
In the event the General Partner shall determine that it is prudent to
modify (i) the manner in which the Capital Accounts, or any debits or
credits thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Partnership, the General Partner, or the Limited Partners)
are computed; or (ii) the manner in which items are allocated among the
Partners for federal income tax purposes, in order to comply with such
Regulations or to comply with Section 704(c) of the Code, the General
Partner may make such modification without regard to Article 14 of the
Agreement; provided, that it is not likely to have a material effect on
the amounts distributable to any Person pursuant to Article 13 of the
Agreement upon the dissolution of the Partnership.  The General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership’s balance
sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q);
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause the Agreement not to comply with Regulations Section 1.704-1(b).  In addition, the General Partner may adopt
and employ such methods and procedures for (i) the maintenance of book and
tax capital accounts; (ii) the determination and allocation of adjustments
under Sections 704(c), 734 and 743 of the Code; (iii) the determination of
Net Income, Net Loss, taxable income, taxable loss and items thereof under the
Agreement and pursuant to the Code; (iv) the adoption of reasonable conventions
and methods for the valuation of assets and the determination of tax basis; (v) the
allocation of asset value and tax 

 

64

 

basis; and (vi) conventions
for the determination of cost recovery, depreciation and amortization
deductions, as it determines in its sole discretion are necessary or
appropriate to execute the provisions of the Agreement, to comply with federal
and state tax laws, and are in the best interest of the Partners.

 

2.                                       No Interest

 

No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners’ Capital Accounts.

 

3.                                       No Withdrawal

 

No Partner shall be entitled to withdraw any part of
his or its Capital Contribution or his or its Capital Account or to receive any
distribution from the Partnership, except as provided in Articles 4, 5, 7 and
13 of the Agreement.

 

65

 

EXHIBIT C

 

SPECIAL ALLOCATION
RULES

 

1.                                       Special Allocation Rules

 

Notwithstanding any other provision of the Agreement
or this Exhibit C, the following special allocations shall be made
in the following order:

 

A.                                   Minimum Gain Chargeback. 
Notwithstanding the provisions of Section 6.1 of the Agreement or
any other provisions of this Exhibit C, if there is a net decrease
in Partnership Minimum Gain during any Partnership taxable year, then, subject
to the exceptions set forth in Regulations Sections 1.704-2(f)(2)-(5), each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner’s share of the net decrease in Partnership Minimum Gain, 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 Partner
pursuant thereto.  The items to be so
allocated shall be determined in accordance with Regulations Section 1.704-2(f)(6).  This Section 1.A is intended to comply
with the minimum gain chargeback requirements in Regulations Section 1.704-2(f) and
shall be interpreted consistently therewith. 
Solely for purposes of this Section 1.A, each Partner’s Adjusted
Capital Account Deficit shall be determined prior to any other allocations pursuant
to Section 6.1 of the Agreement of Partner Minimum Gain during such
Partnership taxable year.

 

B.                                     Partner Minimum Gain Chargeback. 
Notwithstanding any other provision of Section 6.1 of the Agreement
or any other provisions of this Exhibit C (except Section 1.A
hereof), if there is a net decrease in Partner Minimum Gain attributable to a
Partner Nonrecourse Debt during any Partnership taxable year, then, subject to
the exceptions referred to in Regulations Section 1.704-2(i)(4), each
Partner 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 Partner’s
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)(5).  Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto.  The
items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(i)(4).  This Section 1.B is intended to comply
with the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith.  Solely for purposes of this Section 1.B,
each Partner’s Adjusted Capital Account Deficit shall be determined prior to
any other allocations pursuant to Section 6.1 of the Agreement or this Exhibit with
respect to such Partnership taxable year, other than allocations pursuant to Section 1.A
hereof.

 

C.                                     Qualified Income Offset. 
In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
and after giving effect to the allocations required under Sections 1.A and 1.B
hereof such Partner has an Adjusted Capital Account Deficit, 

 

66

 

items of
Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain for the Partnership taxable
year) shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. 
This Section 1.C is intended to constitute a qualified income
offset under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.

 

D.                                    Nonrecourse Deductions. 
Nonrecourse Deductions for any Partnership taxable year shall be
allocated to the Partners in accordance with their respective Percentage
Interests.  If the General Partner
determines in its good faith discretion that the Partnership’s Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe harbor
requirements of the Regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio to the numerically closest ratio for
such Partnership taxable year which would satisfy such requirements.

 

E.                                      Partner Nonrecourse Deductions. 
Any Partner Nonrecourse Deductions for any Partnership taxable year
shall be specially allocated to the Partner 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).

 

F.                                      Code Section 754 Adjustments. 
To the extent an adjustment to the adjusted tax basis of any Partnership
asset pursuant to Section 734(b) or 743(b) of the Code is
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be
taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of
the Regulations.

 

G.                                     Curative Allocations. 
The allocations set forth in Section 1.A through 1.F of this Exhibit C
(the “Regulatory Allocations”) are intended to comply with certain
requirements of the Regulations under Section 704(b) of the
Code.  The Regulatory Allocations may not
be consistent with the manner in which the Partners intend to divide
Partnership distributions.  Accordingly,
the General Partner is hereby authorized to divide other allocations of income,
gain, deduction and loss among the Partners so as to prevent the Regulatory
Allocations from distorting the manner in which Partnership distributions will
be divided among the Partners.  In
general, the Partners anticipate that, if necessary, this will be accomplished
by specially allocating other items of income, gain, loss and deduction among
the Partners so that the net amount of the Regulatory Allocations and such
special allocations to each person is zero. 
However, the General Partner will have discretion to accomplish this
result in any reasonable manner; provided, however, that no
allocation pursuant to this Section 1.G shall cause the Partnership to
fail to comply with the requirements of Regulations Sections
1.704-1(b)(2)(ii)(d), -2(e) or -2(i).

 

67

 

2.                                       Allocations for Tax Purposes

 

A.                                   Except as otherwise provided in this Section 2,
for federal income tax purposes, each item of income, gain, loss and deduction
shall be allocated among the Partners in the same manner as its correlative
item of “book” income, gain, loss or deduction is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.

 

B.                                     In an attempt to eliminate Book-Tax
Disparities attributable to a Contributed Property or Adjusted Property, items
of income, gain, loss, and deduction shall be allocated for federal income tax
purposes among the Partners as follows:

 

	
   

  	
  (1)

  	
  (a)

  	
  In the case of a
  Contributed Property, such items attributable thereto shall be allocated
  among the Partners, consistent with the principles of
  Section 704(c) of the Code and the Regulations thereunder, and with
  the procedures and methods described in Section 10.2 of the Agreement,
  to take into account the variation between the 704(c) Value of such
  property and its adjusted basis at the time of contribution; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  any item of Residual
  Gain or Residual Loss attributable to a Contributed Property shall be
  allocated among the Partners in the same manner as its correlative item of “book”
  gain or loss is allocated pursuant to Section 6.1 of the Agreement and
  Section 1 of this Exhibit C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)

  	
  (a)

  	
  In the case of an
  Adjusted Property, such items shall

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (1)         first,
  be allocated among the Partners in a manner consistent with the principles of
  Section 704(c) of the Code and the Regulations thereunder to take
  into account the Unrealized Gain or Unrealized Loss attributable to such
  property and the allocations thereof pursuant to Exhibit B; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (2)         second,
  in the event such property was originally a Contributed Property, be
  allocated among the Partners in a manner consistent with
  Section 2.B(1) of this Exhibit C; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
  any item of Residual
  Gain or Residual Loss attributable to an Adjusted Property shall be allocated
  among the Partners in the same manner as its correlative item of “book” gain
  or loss is allocated pursuant to Section 6.1 of the Agreement and
  Section 1 of this Exhibit C.

  

 

C.                                     To the extent that the Treasury
Regulations promulgated pursuant to Section 704(c) of the Code permit
the Partnership to utilize alternative methods to eliminate the disparities
between the Carrying Value of property and its adjusted basis, the General
Partner 

 

68

 

shall have the
authority to elect the method to be used by the Partnership and such election
shall be binding on all Partners.

 

3.                                       No Withdrawal

 

No Partner shall be entitled to withdraw any part of
its Capital Contribution or its Capital Account or to receive any distribution
from the Partnership, except as provided in Articles 4, 5, 8 and 13 of the
Agreement.

 

69

 

EXHIBIT D

 

NOTICE OF
REDEMPTION

 

The undersigned Limited Partner hereby irrevocably
requests PennyMac Operating Partnership, L.P., a Delaware limited partnership
(the “Partnership”), to redeem
                            
Partnership Units in the Partnership in accordance with the terms of the
Amended and Restated Limited Partnership Agreement of the Partnership and the
Redemption Right referred to therein; and the undersigned Limited Partner
irrevocably (i) surrenders such Partnership Units and all right, title and
interest therein; and (ii) directs that the Cash Amount or REIT Shares
Amount (as determined by the Company) deliverable upon exercise of the
Redemption Right be delivered to the address specified below, and if REIT
Shares are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below.  The undersigned hereby represents, warrants,
and certifies that the undersigned (a) has marketable and unencumbered
title to such Limited Partnership Units, free and clear of the rights or
interests of any other person or entity; (b) has the full right, power,
and authority to request such redemption and surrender such Partnership Units
as provided herein; and (c) has obtained the consent or approval of all
persons or entities, if any, having the right to consent or approve such
redemption and surrender of Units.  The
undersigned Limited Partner further agrees that, in the event that any state or
local property tax is payable as a result of the transfer of its Partnership
Units to the Partnership or the Company, the undersigned Limited Partner shall
assume and pay such transfer tax.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Limited
  Partner:

  	
   

  	
   

  
	
   

  	
   

  	
  Please Print

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Limited
  Partner)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Street Address)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (City) (State) (Zip
  Code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guaranteed
  by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  If REIT Shares are to
  be issued, issue to:

  	
   

  	
   

  

 

	
  Name:

  	
   

  	
   

  	
   

  

 

	
  Please insert social
  security or identifying number:

  	
   

  

 

70

 

EXHIBIT E

 

CONSTRUCTIVE OWNERSHIP DEFINITION

 

The
term “Constructively Owns” means ownership determined through the application
of the constructive ownership rules of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. Generally, as of the date
first set forth above, these rules provide the following:

 

a.  an individual
is considered as owning the Ownership Interest that is owned, actually or
constructively, by or for his spouse, his children, his grandchildren, and his
parents;

 

b.  an Ownership
Interest that is owned, actually or constructively, by or for a partnership,
limited liability company or estate is considered as owned proportionately by
its partners or beneficiaries;

 

c.  an Ownership
Interest that is owned, actually or constructively, by or for a trust is
considered as owned by its beneficiaries in proportion to the actuarial
interest of such beneficiaries (provided, however, that in the
case of a “grantor trust” the Ownership Interest will be considered as owned by
the grantors);

 

d.  if ten (10) percent
or more in value of the stock in a corporation is owned, actually or
constructively, by or for any person, such person shall be considered as owning
the Ownership Interest that is owned, actually or constructively, by or for such
corporation in that proportion which the value of the stock which such person
so owns bears to the value of all the stock in such corporation;

 

e.  an Ownership
Interest that is owned, actually or constructively, by or for a partner or
member which actually or constructively owns a 25% or greater capital interest
or profits interest in a partnership or limited liability company, or by or to
or for a beneficiary of an estate or trust shall be considered as owned by the
partnership, limited liability company, estate, or trust (or, in the case of a
grantor trust, the grantors);

 

f.  if ten (10) percent
or more in value of the stock in a corporation is owned, actually or
constructively, by or for any person, such corporation shall be considered as
owning the Ownership Interest that is owned, actually or constructively, by or
for such person;

 

g.  if any person
has an option to acquire an Ownership Interest (including an option to acquire
an option or any one of a series of such options), such Ownership Interest
shall be considered as owned by such person;

 

h.  an Ownership
Interest that is constructively owned by a person by reason of the application
of the rules described in paragraphs (a) through (g) above
shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person; provided, however, that (i) an
Ownership Interest constructively owned by an individual by reason of paragraph
(a) shall not be considered as owned by him for purposes of again applying
paragraph (a) in order to make another person the constructive owner of
such Ownership Interest, (ii) an Ownership Interest constructively owned
by a partnership, estate, trust, or corporation by reason of the application of
paragraphs (e) or (f) shall not be considered as owned by it for
purposes of 

 

71

 

applying
paragraphs (b), (c), or (d) in order to make another person the
constructive owner of such Ownership Interest, (iii) if an Ownership
Interest may be considered as owned by an individual under paragraph (a) or
(g), it shall be considered as owned by him under paragraph (g), and (iv) for
purposes of the above described rules, an S corporation shall be treated as a
partnership and any shareholder of the S corporation shall be treated as a
partner of such partnership except that this rule shall not apply for
purposes of determining whether stock in the S corporation is constructively
owned by any person.

 

i.  For purposes
of the above summary of the constructive ownership rules, the term “Ownership
Interest” means the ownership of stock with respect to a corporation and,
with respect to any other type of entity, the ownership of an interest in
either its assets or net profits.

 

72

 

EXHIBIT F

 

NOTICE OF CONVERSION

 

The undersigned LTIP Unitholder hereby irrevocably (i) elects
to convert the number of LTIP Units in PennyMac Operating Partnership, L.P.
(the “Partnership”) set forth below into Partnership Units in accordance with
the terms of the Amended and Restated Limited Partnership Agreement of the
Partnership, as it may be amended, supplemented or restated from time to time;
and (ii) directs that any cash in lieu of Partnership Units that may be
deliverable upon such conversion be delivered to the address specified
below.  The undersigned hereby
represents, warrants, and certifies that the undersigned (a) has title to
such LTIP Units, free and clear of the rights or interests of any other person
or entity other than the Partnership; (b) has the full right, power, and
authority to cause the conversion of such LTIP Units as provided herein; and (c) has
obtained the consent or approval of all persons or entities, if any, having the
right to consent or approve such conversion.

 

 

	
  Name of LTIP
  Unitholder:

  	
   

  	
   

  
	
   

  	
  (Please Print: Exact
  Name as Registered with Partnership)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of LTIP Units to
  be Converted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of this Notice:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Signature of Limited
  Partner: Sign Exact Name as Registered with Partnership)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (Street Address)
  ---------------------------- (City) (State) (Zip Code)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed
  by:

  	
   

  	
   

  
						

 

73

 

EXHIBIT G

 

NOTICE OF FORCED CONVERSION

 

PennyMac Operating Partnership, L.P. (the “Partnership”)
hereby irrevocably elects to cause the number of LTIP Units held by the LTIP
Unitholder set forth below to be converted into Partnership Units in accordance
with the terms of the Amended and Restated Limited Partnership Agreement of the
Partnership, as it may be amended, supplemented and restated from time to time.

 

 

	
  Name of LTIP
  Unitholder:

  	
   

  	
   

  
	
   

  	
  (Please Print: Exact
  Name as Registered with Partnership)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of LTIP Units to
  be Converted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of this Notice:

  	
   

  	
   

  
					

 

74

 

EXHIBIT H

 

SCHEDULE OF PARTNERS’ OWNERSHIP

WITH RESPECT TO TENANTS

 

NONE

 

75

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00164-of-00352.parquet"}]]