FORM OF AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF LIGHTSTONE VALUE PLUS REIT II LP

 

---

 

TABLE OF CONTENTS

 

				Page
ARTICLE 1 DEFINED TERMS				1
ARTICLE 2 ORGANIZATIONAL MATTERS				10
2.1		Formation		10
2.2		Name		11
2.3		Registered Office and Agent; Principal Office		11
2.4		Power of Attorney		11
2.5		Term		12
ARTICLE 3 PURPOSE				12
3.1		Purpose and Business		12
3.2		Powers		12
ARTICLE 4 CAPITAL CONTRIBUTIONS				13
4.1		Capital Contributions of the Partners		13
4.2		Additional Funds; Restrictions on the General Partner		13
4.3		Issuance of Additional Partnership Interests; Admission of Additional Limited Partners		14
4.4		Contribution of Proceeds of Issuance of REIT Stock		14
4.5		Repurchase of REIT Stock; Shares-In-Trust		15
4.6		No Third-Party Beneficiary		15
4.7		No Interest; No Return		15
4.8		No Preemptive Rights		15
ARTICLE 5 DISTRIBUTIONS				15
5.1		Regular Distributions		15
5.2		Qualification as a REIT		16
5.3		Withholding		16
5.4		Additional Partnership Interests		17
5.5		Distributions Upon Liquidation		17
ARTICLE 6 ALLOCATIONS				17
6.1		Allocations		17
6.2		Revisions to Allocations to Reflect Issuance of Partnership Interests		17
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS				17
7.1		Management		17
7.2		Certificate of Limited Partnership		20
7.3		Reimbursement of the General Partner		20
7.4		Outside Activities of the General Partner		20
7.5		Contracts with Affiliates		21
7.6		Indemnification		21
7.7		Liability of the General Partner		22
7.8		Other Matters Concerning the General Partner		23
7.9		Restrictions on Indemnification and Limitation of Liability		23
7.10		Title to Partnership Assets		24
7.11		Reliance by Third Parties		24
7.12		Loans By Third Parties.		24
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS				25
8.1		Limitation of Liability		25
8.2		Management of Business		25
8.3		Outside Activities of Limited Partners		25
8.4		Return of Capital		25
8.5		Rights of Limited Partners Relating to the Partnership		25
8.6		Exchange Rights Agreements		26
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS				26
9.1		Records and Accounting		26
9.2		Fiscal Year		26
9.3		Reports		26

 

---

 

				Page
ARTICLE 10 TAX MATTERS				27
10.1		Preparation of Tax Returns		27
10.2		Tax Elections		27
10.3		Tax Matters Partner		27
10.4		Organizational Expenses		28
10.5		Withholding		28
ARTICLE 11 TRANSFERS AND WITHDRAWALS				29
11.1		Transfer		29
11.2		Transfer of the General Partner’s General Partner Interest		29
11.3		Limited Partners’ Rights to Transfer		30
11.4		Substituted Limited Partners		31
11.5		Substituted Associate General Partner		31
11.6		Assignees		32
11.7		General Provisions		32
ARTICLE 12 ADMISSION OF PARTNERS				33
12.1		Admission of Successor General Partner		33
12.2		Admission of Additional Limited Partners		34
12.3		Amendment of Agreement and Certificate of Limited Partnership		34
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION				34
13.1		Dissolution		34
13.2		Winding Up		35
13.3		Return of Associate General Partner Capital Contributions		36
13.4		No Obligation to Contribute Deficit		36
13.5		Rights of Limited Partners		36
13.6		Notice of Dissolution		37
13.7		Termination of Partnership and Cancellation of Certificate of Limited Partnership		37
13.8		Reasonable Time for Winding-Up		37
13.9		Waiver of Partition		37
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS				37
14.1		Amendments		37
14.2		Meetings of the Partners		38
ARTICLE 15 GENERAL PROVISIONS				38
15.1		Addresses and Notice		38
15.2		Titles and Captions		39
15.3		Pronouns and Plurals		39
15.4		Further Action		39
15.5		Binding Effect		39
15.6		Creditors		39
15.7		Waiver		39
15.8		Counterparts		39
15.9		Applicable Law		39
15.10		Invalidity of Provisions		39
15.11		Entire Agreement		39
15.12		Merger		39
15.13		No Rights as Stockholders		39
EXHIBITS
Exhibit A -		Partners’ Contributions and Partnership Interests
Exhibit B -		Allocations
Exhibit C -		Exchange Rights Agreement for Partnership Units
Exhibit D -		Certificate of Limited Partnership

 

---

 

FOR ALL INVESTORS:

 

THE PARTNERSHIP UNITS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER THE APPLICABLE STATE SECURITIES LAWS, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION AND QUALIFICATION PROVIDED IN THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

 

IN ADDITION, THE PARTNERSHIP UNITS ISSUED UNDER THIS AGREEMENT MAY BE SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH HEREIN.

 

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE PARTNERSHIP UNITS OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

THE PARTNERSHIP UNITS OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

FOR NEW YORK INVESTORS:

 

THIS AGREEMENT HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

THIS AGREEMENT DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE MADE, NOT MISLEADING. STATEMENTS CONTAINED HEREIN AS TO THE CONTENTS OF DOCUMENTS GOVERNING THIS INVESTMENT ARE SUMMARIES AND ARE NOT COMPLETE COPIES OF THE DOCUMENTS, AND, ACCORDINGLY, REFERENCE SHOULD BE MADE TO THE DOCUMENTS THEMSELVES FOR A MORE COMPLETE UNDERSTANDING OF THE INVESTMENT. HOWEVER, THIS PARTNERSHIP AGREEMENT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN.

 

FOR FLORIDA INVESTORS:

 

THE PARTNERSHIP UNITS OFFERED HEREBY WILL BE SOLD TO, AND ACQUIRED BY, THE PURCHASER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. THAT SECTION PROVIDES THAT WHEN SALES ARE MADE TO FIVE OR MORE PERSONS, ANY SALE MADE PURSUANT TO SUCH SECTION IS VOIDABLE AT THE OPTION OF THE PURCHASER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.

 

---

 

AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP

OF

LIGHTSTONE VALUE PLUS REIT II LP

 

 

“ Affiliate” means,

 

(a) with respect to any individual Person, any member of the Immediate Family of such Person or a trust established for the benefit of such member, or

 

(b) with respect to any Entity, any Person which, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, any such Entity. For purposes of this definition, “control,” when used with respect to a any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

1

---

 

“Agreement” means this Agreement of Limited Partnership, as originally executed and as amended, modified, supplemented or restated from time to time, as the context requires.

 

“Articles of Incorporation” means the General Partner’s Articles of Incorporation, filed with the Maryland State Department of Assessments and Taxation, or other organizational document governing the General Partner, as amended, modified, supplemented or restated from time to time.

“Asset Management Fee” means quarterly fees for the Initial Limited Partner’s management of the General Partner’s Assets; provided, however, that the total of all such asset management fees shall not exceed 0.2375% of the average, at the end of each calendar month during the calendar quarter in respect of which such asset management fee is being calculated, of the aggregate book value of the Company’s Assets invested in equity interests and loans secured by real estate, before reserves for depreciation or bad debt or other similar non-cash reserves.

“Assets” means any Property, Mortgage or other investment (other than investments in bank accounts, money market funds or other current assets) owned by the General Partner, directly or indirectly through one or more of its Affiliates, by the General Partner and any other investment made, directly or indirectly through one or more of its Affiliates.

 

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

 

(ii) the Partner is adjudged as bankrupt or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner;

 

(iii) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors;

 

(iv) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (ii) above;

 

(v) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner’s properties;

 

(vi) any proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof;

 

(vii) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment; or

 

(viii) an appointment referred to in clause (vii) which has been stayed is not vacated within ninety (90) days after the expiration of any such stay.

 

6

---

 

“Indemnitee” means

 

(a) any Person made a party to a proceeding by reason of its status as

 

(i) the General Partner,

 

(ii) the Associate General Partner,

 

(iii) a Limited Partner,

 

(iv) an investment advisor to the General Partner,

 

(v) a trustee, director or officer of the Partnership, the General Partner, the Associate General Partner or the investment advisor to the General Partner, or

 

(vi) a director, trustee, member or officer of any other Entity, each Person serving in such capacity at the request of the Partnership or the General Partner, or

 

(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

 

(c) such other Persons (including Affiliates of the General Partner, the Associate General Partner, a Limited 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 Limited Partner” means the Lightstone Value Plus REIT II LLC.

 

“IRS” shall mean the Internal Revenue Service of the United States.

 

“Lien” means any lien, security interest, mortgage, deed of trust, charge, claim, encumbrance, pledge, option, right of first offer or first refusal and any other right or interest of others of any kind or nature, actual or contingent, or other similar encumbrance of any nature whatsoever.

 

“Limited Partner” means, prior to the admission of the first Additional Limited Partner to the Partnership, the Initial Limited Partner, and thereafter any Person named as a Limited Partner in Exhibit A, as such Exhibit may be amended from time to time, upon the execution and delivery by such Person of an additional limited partner signature page, or any Substituted Limited Partner or Additional Limited Partner, in such Person’s capacity as a Limited Partner of the Partnership.

 

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

 

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

 

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

“Mortgage” means , in connection with mortgage financing provided, invested in, participated in or purchased by the General Partner, all of the notes, deeds of trust, security interests or other evidences of indebtedness or obligations, which are secured or collateralized by Property owed by the borrowers under such notes, deeds of trust, security interests or other evidences of indebtedness or obligations.

 

“Net Income” or “Net Loss” means, for each fiscal year or other applicable period, an amount equal to the Partnership’s taxable income or loss for such year or period as determined for federal income tax purposes by the General Partner, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a) of the Code shall be included in taxable income or loss), adjusted as follows:

 

(a) by including as an item of gross income any tax-exempt income received by the Partnership and not otherwise taken into account in computing Net Income or Net Loss;

 

(b) by treating as a deductible expense any expenditure of the Partnership described in Section 705(a)(2)(B) of the Code (or which is treated as a Section 705(a)(2)(B) expenditure pursuant to Section 1.704-1(b)(2)(iv)(i) of the Regulations) and not otherwise taken into account in computing Net Income or Net Loss, including amounts paid or incurred to organize the Partnership (unless an election is made pursuant to Section 709(b) of the Code) or to promote the sale of interests in the Partnership and by treating deductions for any losses incurred in connection with the sale or exchange of Partnership property disallowed pursuant to Section 267(a)(1) or 707(b) of the Code as expenditures described in Section 705(a)(2)(B) of the Code;

 

7

---

 

(c) by taking into account Depreciation in lieu of depreciation, depletion, amortization and other cost recovery deductions taken into account in computing taxable income or loss;

 

(d) by computing gain or loss resulting from any disposition of Partnership property with respect to which gain or loss is recognized for federal income tax purposes by reference to the Gross Asset Value of such property rather than its adjusted tax basis;

 

(e) in the event of an adjustment of the Gross Asset Value of any Partnership asset which requires that the Capital Accounts of the Partnership be adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and (g) of the Regulations, by taking into account the amount of such adjustment as if such adjustment represented additional Net Income or Net Loss pursuant to Exhibit B; and

 

(f) by not taking into account in computing Net Income or Net Loss items separately allocated to the Partners pursuant to Paragraphs 1 and 2 of Exhibit B.

 

“Net Investment” means (i) as it relates to the Stockholders, the original issue price paid by such stockholders for the purchase of Common Stock; (ii) as it relates to the Limited Partners the total amount of Capital Contributions; and (iii) as it relates to the Associate General Partner the Associate General Partner Capital Contributions; in each case reduced by distributions from the sale or financing of properties.

 

“Nonrecourse Deductions” has the meaning set forth in Sections 1.704-2(b)(1) and 1.704-2(c) of the Regulations. 

 

“Nonrecourse Liabilities” has the meaning set forth in Section 1.704-2(b)(3) of the Regulations.

 

“ Offering Expenses” means all of the costs and expenses of the offering of the Common Stock (including organizational expenses, dealer manager fees and selling commissions relating thereto), paid by the Associate General Partner on behalf of the General Partner.

“Organization and Offering Expenses” means any and all costs and expenses incurred by and to be paid from the assets of the General Partner in connection with the formation, qualification and registration of the General Partner, and the marketing and distribution of Shares, including, without limitation, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys), expenses for printing, engraving, amending, supplementing, mailing and distributing costs, salaries of employees while engaged in sales activity, telephone and other telecommunications costs, all advertising and marketing expenses (including the costs related to investor and broker-dealer sales meetings), charges of transfer agents, registrars, trustees, escrow holders, depositories, experts, fees, expenses and taxes related to the filing, registration and qualification of the sale of its shares under federal and state laws, including taxes and fees, accountants’ and attorneys’ fees.

 

“Partner” means the General Partner, the Associate General Partner or a Limited Partner, and “Partners” means the General Partner, the Associate 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 formed under the Act and pursuant to this Agreement, and any successor thereto.

 

“Partnership Interest” means an ownership interest in the Partnership representing a Capital Contribution by either a Limited Partner, the Associate General 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 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 General Partner for a distribution to its stockholders of some or all of its portion of such distribution.

 

8

---

 

“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 and includes any classes or series of Partnership Units established after the date hereof. The number of Partnership Units outstanding and the Percentage Interests in the Partnership represented by such Partnership Units are set forth in Exhibit A, as such Exhibit may be amended from time to time. The ownership of Partnership Units shall be evidenced by such form of certificate for Partnership Units as the General Partner adopts from time to time unless the General Partner determines that the Partnership Units shall be uncertificated securities.

 

“Partnership Year” means the fiscal year of the Partnership, as set forth in Section 9.2 hereof.

 

“Percentage Interest” means, as to a Partner, the fractional part of the Partnership Interests owned by such Partner and expressed as a percentage as specified in Exhibit A, as such Exhibit may be amended from time to time. The Associate General Partner Interest shall not be considered in the computation of the Partners’ Percentage Interest. 

 

“Permitted Partners” has the meaning set forth in subparagraph 1(b) of Exhibit B.

 

“Permitted Transferee” means any person to whom Partnership Units are Transferred in accordance with Section 11.3 of this Agreement.

 

“Person” means an individual or Entity.

 

“Precontribution Gain” has the meaning set forth in subparagraph 3(c) of Exhibit B.

“Property” means land, rights in land (including leasehold interests), and any buildings, structures, improvements, furnishings, fixtures and equipment located on or used in connection with land and rights or interests in land acquired by the General Partner, directly or indirectly through joint venture arrangements or other partnership or investment interests.

 

“Quarter” means each of the three-month periods ending on March 31, June 30, September 30 and December 31.

 

“Registration Statement” means the Registration Statement on Form S-11 to be filed by the General Partner with the Securities and Exchange Commission, and any amendments at any time made thereto.

 

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

 

“REIT” means a real estate investment trust as defined in Section 856 of the Code.

 

“REIT Requirements” has the meaning set forth in Section 5.2.

 

“REIT Stock” has the meaning set forth in the Exchange Rights Agreement.

 

“REIT Stock Amount” has the meaning set forth in the Exchange Rights Agreement.

 

“Restricted Partner” has the meaning set forth in Section 1(b) of Exhibit B.

“Sale” means (i) any transaction or series of transactions whereby: (A) the General Partner or the Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including the lease of any Property consisting of a building only, and including any event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the General Partner or the Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the General Partner or the Operating Partnership in any Joint Venture in which it is a co-venturer or partner; (C) any joint venture in which the General Partner or the Partnership as a co-venturer or partner directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including any event with respect to any Property which gives rise to insurance claims or condemnation awards; or (D) the General Partner or the Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, conveys or relinquishes its interest in any Mortgage or portion thereof (including with respect to any Mortgage, all payments thereunder or in satisfaction thereof other than regularly scheduled interest payments) of amounts owed pursuant to such Mortgage and any event which gives rise to a significant amount of insurance proceeds or similar awards; or (E) the General Partner or the Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other Asset not previously described in this definition or any portion thereof, but (ii) not including any transaction or series of transactions specified in clause (i) (A) through (E) above in which the proceeds of such transaction or series of transactions are reinvested in one or more Assets within 180 days thereafter.

 

“Second Level Return” has the meaning set forth in Section 5.1(b)(iii).

 

“SLP Distribution” has the meaning set forth in Section 5.1(b)(ii).

 

9

---

 

“Sponsor” means any Person which (i) is directly or indirectly instrumental in organizing, wholly or in part, the General Partner, (ii) will manage or participate in the management of the General Partner, and any Affiliate of any such Person, other than a Person whose only relationship with the General Partner is that of an independent property manager and whose only compensation is as such, (iii) takes the initiative, directly or indirectly, in founding or organizing the General Partner, either alone or in conjunction with one or more other Persons, (iv) receives a material participation in the General Partner in connection with the founding or organizing of the business of the General Partner, in consideration of services or property, or both services and property, (v) has a substantial number of relationships and contacts with the General Partner, (vi) possesses significant rights to control Properties, (vii) receives fees for providing services to the General Partner which are paid on a basis that is not customary in the industry, or (viii) provides goods or services to the General Partner on a basis which was not negotiated at arm’s-length with the General Partner. The term “Sponsor” shall not include third parties wholly independent of the General Partner, such as attorneys, accountants and underwriters whose only compensation is for professional services.

 

“Stockholder” means a holder of Common Stock.

 

 

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

 

(a) the voting power of the voting equity securities; and/or

 

(b) the outstanding equity interests (whether or not voting), is owned, directly or indirectly, by such Person.

 

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

 

“Substituted Associate General Partner” means a Person who is admitted as an Associate General Partner to the Partnership pursuant to Section 11.5 hereof.

 

“Tax Items” has the meaning set forth in Exhibit B.

 

“Terminating Capital Transaction” means any sale or other disposition (other than a deemed disposition pursuant to Section 708(b)(1)(B) and the regulations thereunder) 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.

“Total Operating Expenses” means all costs and expenses paid or incurred by the General Partner, as determined under generally accepted accounting principles, that are in any way related to the operation of the General Partner or its business, including advisory fees, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) incentive fees paid in compliance with the Guidelines; (vi) Acquisition Fees and Acquisition Expenses, (vii) real estate commissions on the Sale of Property, and (viii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property).

“Transfer” as a noun, means any sale, assignment, conveyance, pledge, hypothecation, gift, encumbrance or other transfer, and as a verb, means to sell, assign, convey, pledge, hypothecate, give, encumber or otherwise transfer.

 

Certain additional terms and phrases have the meanings set forth in Exhibit B.

 

 

 

(e) The General Partner shall adjust the amount of the Associate General Partner Contributions in Exhibit A to reflect all Offering Expenses paid by the Associate General Partner from time to time. The Associate General Partner shall provide the General Partner with evidence of payment of Offering Expenses as such expenses are incurred.

 

(f) The number of Partnership Units held by the General Partner, in its capacity as general partner, shall be deemed to be the General Partner Interest.

 

(g) Except as provided in Sections 4.2 and 10.5, the Partners shall have no obligation to make any additional Capital Contributions or provide any additional funding to the Partnership (whether in the form of loans, repayments of loans or otherwise) and no Partner shall have any obligation to restore any deficit that may exist in its Capital Account, either upon a liquidation of the Partnership or otherwise.

 

 

(c) Notwithstanding anything to the contrary in this Section 5, in no event will the Acquisition Fees, Acquisition Expenses and Asset Management Fee paid to the Initial Limited Partner, plus the subordinated payments payable by the Partnership to the Sponsor (“Program Structure”) exceed the sum of (i) an amount equal to 6 percent of the gross Contract Purchase Price of all Properties acquired by the General Partner; (ii) an amount determined annually (“Asset Management Amount”) equal in the aggregate to the greater of 2 percent of the Average Invested Assets or 25 percent of the GP Net Income after reducing such Asset Management Amount by those Total Operating Expenses as defined in the Guidelines that exclude the asset management amount; (iii) an amount equal to the Disposition Fees, if any, but not to exceed 3 percent of the contract sales price of all Properties sold by the General Partner; and (iv) an amount equal to 15 percent of the GP Net Sales Proceeds, if any, remaining after the payment to the shareholders of the General Partner in the aggregate of an amount equal to 100 percent of the original issue price of their shares plus an amount equal to 6 percent of the original issue price of the General Partner’s shares per annum, cumulative (“Guideline Structure”). For purposes of determining compliance with this undertaking, the comparison between the Program Structure and the Guideline Structure shall be determined on an annual basis at the end of each fiscal year of the General Partner (“Comparison Date”). To the extent that at the Comparison Date the Program Structure amount exceeds the Guideline Structure amount, the Sponsor shall return such excess to the shareholders within 30 days after the Comparison Date.

 

 

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.

 

 

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

 

(e) The General Partner is expressly authorized to enter into, in the name and on behalf of the Partnership, a “right of first opportunity” or “right of first offer” arrangement, non-competition agreements and other conflict avoidance agreements with various Affiliates of the Partnership and the General Partner, on such terms as the General Partner and Associate General Partner in their absolute discretion, believe are advisable.

 

 

(b) Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of the Associate General Partner or any Limited Partner or Assignee.

 

(c) Neither the Associate General Partner or the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the Partnership relationship established hereby in any business ventures of any other Person and such Person shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Partnership, the Associate General Partner, any Limited Partner or any such other Person, even if such opportunity is of a character which, if presented to the Partnership, the Associate General Partner, any Limited Partner or such other Person, could be taken by such Person.

 

 

 

(A) convert a Limited Partner’s interest in the Partnership into an Associate General Partner Interest or a General Partner Interest;

 

(B) modify the limited liability of a Limited Partner in a manner adverse to such Limited Partner; or

 

(C) amend this Section 14.1(b)(i).

 

(ii) any General Partner adversely affected without the Consent of General Partners holding more than fifty percent (50%) of the outstanding Percentage Interests of the General Partners adversely affected if such amendment would:

 

(A) alter or change Exchange Rights;

 

(B) create an obligation to make Capital Contributions not contemplated in this Agreement;

 

(C) alter or change the terms of this Agreement or the Exchange Rights Agreement regarding the rights of the limited partners with respect to Business Combinations;

 

(D) alter or change the distribution and liquidation rights provided in Section 5 and 13 hereto, except as otherwise permitted under this Agreement; or

 

(E) amend this Section 14.1(b)(ii).

 

(iii) the Associate General Partner without its Consent if such amendment would alter or change any of its rights under this Agreement.

 

37

---

 

Section 14.1(b)(i) does not require unanimous consent of all Partners adversely affected unless the amendment is to be effective against all Partners adversely affected.

 

 

4.9 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.

 

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

 

4.11 Amendment . This Agreement may be amended from time to time with the consent of the Company by a vote of the Limited Partners in the same manner as the Partnership Agreement (in accordance with Section 14.1(a) thereof) may be amended as provided therein, provided, however , that the Company shall vote its limited partnership interests in proportion to the votes of the other Limited Partners.

 

[Signature page follows.]

 

---

 

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

	THE COMPANY:
	LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST II, INC.
	By:
		Name:
		Title:
	OPERATING PARTNERSHIP:
	LIGHTSTONE VALUE PLUS REIT II LP
	BY:	LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST, II INC., its general partner
		By:
			Name:
			Title:

 

---

 

Exhibit A - Exchange Rights Agreement

 

Name and Address of Limited Partner

 

---

 

Exhibit B – Exchange Rights Agreement

 

Notice of Exchange

 

The undersigned Limited Partner hereby irrevocably (i) exchanges              Partnership Units in Lightstone Value Plus REIT II LP, in accordance with the terms of the Exchange Rights Agreement, dated as of             , 200     (the “ Exchange Rights Agreement”), and the Exchange Right referred to therein; (ii) surrenders such Partnership Units and all right, title and interest therein; and (iii) directs that the Cash Amount or REIT Stock Amount (as determined by the Company) deliverable upon exercise of the Exchange Right be delivered to the address specified below, and if REIT Stock is to be delivered, such REIT Stock will 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 Partnership Units, free and clear, other than any encumbrance arising pursuant to the Partnership Agreement, of the rights or interests of any other person or entity; (b) has the full right, power, and authority to exchange and surrender such Partnership Units as provided herein; and (c) has obtained the consent or approval of all persons or entities, if any, (other than consent or approval that may be required of the Company or the Operating Partnership) having the right to consent or approve such exchange and surrender on the part of the undersigned.

 

The undersigned hereby makes the representations and warranties contained in Section 3.3 of the Exchange Rights Agreement as if such representations and warranties had been set forth in full in this Notice of Exchange.

 

Dated:          ________________________________
		Name of Limited Partner (Please Print)
Signature guaranteed by:
		(Signature of Limited Partner)
		(Street Address)
		(City) (State)                         (Zip Code)
		If REIT Stock is to be issued, issue to:
		Name:                                     _____________________

 

---

 

Exhibit D

 

Certificate of Limited Partnership

 

---