Exhibit 10.2

 

THIRD AMENDED AND RESTATED

 

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

ARBOR REALTY LIMITED PARTNERSHIP

 

a Delaware limited partnership

 

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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 SATISFACTORY TO THE PARTNERSHIP, 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.

 

dated as of July 14, 2016

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

Article I

 

 

 

 

 

DEFINED TERMS

 

 

 

 

 

Article II

 

 

 

 

 

ORGANIZATIONAL MATTERS

 

 

 

 

Section 2.1

Organization

15

Section 2.2

Name

15

Section 2.3

Registered Office and Agent; Principal Office

15

Section 2.4

Power of Attorney

16

Section 2.5

Term

16

 

 

 

 

Article III

 

 

 

 

 

PURPOSE

 

 

 

 

Section 3.1

Purpose and Business

17

Section 3.2

Powers

17

Section 3.3

Partnership Only for Partnership Purposes

17

Section 3.4

Representations and Warranties by the Parties

17

 

 

 

 

Article IV

 

 

 

 

 

CAPITAL CONTRIBUTIONS

 

 

 

 

Section 4.1

Capital Contributions of the Partners

19

Section 4.2

Issuances of Additional Partnership Interests

19

Section 4.3

Additional Funds and Capital Contributions

20

Section 4.4

Stock Option Plan

21

Section 4.5

No Interest; No Return

21

Section 4.6

Conversion or Redemption of Preferred Shares

21

Section 4.7

Conversion or Redemption of Junior Shares

22

Section 4.8

Other Contribution Provisions

22

Section 4.9

Not Publicly Traded

22

Section 4.10

Special Preferred Units

22

Section 4.11

Restricted Units

22

 

 

 

 

Article V

 

 

 

 

 

DISTRIBUTIONS

 

 

 

 

Section 5.1

Requirement and Characterization of Distributions

23

Section 5.2

Distributions in Kind

23

Section 5.3

Amounts Withheld

23

Section 5.4

Distributions Upon Liquidation

23

Section 5.5

Distributions to Reflect Issuance of Additional Partnership Units

23

Section 5.6

Restricted Distributions

23

 

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Article VI

 

 

 

 

 

ALLOCATIONS

 

 

 

 

Section 6.1

Timing and Amount of Allocations of Net Income and Net Loss

23

Section 6.2

General Allocations

24

Section 6.3

Additional Allocation Provisions

24

Section 6.4

Tax Allocations

26

 

Article VII

 

 

 

 

 

MANAGEMENT AND OPERATIONS OF BUSINESS

 

 

 

 

Section 7.1

Management

26

Section 7.2

Certificate of Limited Partnership

29

Section 7.3

Restrictions on General Partner’s Authority

29

Section 7.4

Reimbursement of the General Partner

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

34

Section 7.11

Reliance by Third Parties

35

 

 

 

 

Article VIII

 

 

 

 

 

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

 

 

 

Section 8.1

Limitation of Liability

35

Section 8.2

Management of Business

35

Section 8.3

Outside Activities of Limited Partners

35

Section 8.4

Return of Capital

35

Section 8.5

Adjustment Factor

36

Section 8.6

Redemption Rights of Qualifying Parties

36

Section 8.7

Partnership Right to Call Limited Partner Interests

39

Section 8.8

Mergers

39

 

 

 

 

Article IX

 

 

 

 

 

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

 

 

 

Section 9.1

Records and Accounting

40

Section 9.2

Partnership Year

40

Section 9.3

Reports

40

 

 

 

 

Article X

 

 

 

 

 

TAX MATTERS

 

 

 

 

Section 10.1

Preparation of Tax Returns

40

Section 10.2

Tax Elections

41

Section 10.3

Tax Matters Partner

41

Section 10.4

Withholding

42

Section 10.5

Organizational Expenses

42

 

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Article XI

 

 

 

 

 

TRANSFERS AND WITHDRAWALS

 

 

 

 

Section 11.1

Transfer

42

Section 11.2

Transfer of General Partner’s Partnership Interest

43

Section 11.3

Transfer of Limited Partners’ Partnership Interests

44

Section 11.4

Substituted Limited Partners

45

Section 11.5

Assignees

45

Section 11.6

General Provisions

46

 

 

 

 

Article XII

 

 

 

 

 

ADMISSION OF PARTNERS

 

 

 

 

Section 12.1

Admission of Successor General Partner

47

Section 12.2

Admission of Additional Limited Partners

47

Section 12.3

Amendment of Agreement and Certificate of Limited Partnership

47

Section 12.4

Limit on Number of Partners

48

 

 

 

 

Article XIII

 

 

 

 

 

DISSOLUTION, LIQUIDATION AND TERMINATION

 

 

 

 

Section 13.1

Dissolution

48

Section 13.2

Winding Up

48

Section 13.3

Deemed Distribution and Recontribution

49

Section 13.4

Rights of Limited Partners

50

Section 13.5

Notice of Dissolution

50

Section 13.6

Cancellation of Certificate of Limited Partnership

50

Section 13.7

Reasonable Time for Winding-Up

50

 

 

 

 

Article XIV

 

 

 

 

 

PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

 

 

 

 

Section 14.1

Procedures for Actions and Consents of Partners

50

Section 14.2

Amendments

50

Section 14.3

Meetings of the Partners

50

 

 

 

 

Article XV

 

 

 

 

 

GENERAL PROVISIONS

 

 

 

 

Section 15.1

Addresses and Notice

51

Section 15.2

Titles and Captions

51

Section 15.3

Pronouns and Plurals

51

Section 15.4

Further Action

51

Section 15.5

Binding Effect

51

Section 15.6

Waiver

52

Section 15.7

Counterparts

52

Section 15.8

Applicable Law

52

Section 15.9

Entire Agreement

52

Section 15.10

Invalidity of Provisions

52

Section 15.11

Limitation to Preserve REIT Status

52

 

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Section 15.12

No Partition

53

Section 15.13

No Third-Party Rights Created Hereby

53

Section 15.14

No Rights as Stockholders

53

 

EXHIBITS

 

 

Exhibit A

PARTNERS AND PARTNERSHIP UNITS

A-1

Exhibit B

EXAMPLES REGARDING FACTOR

B-1

Exhibit C

NOTICE OF REDEMPTION

C-1

Exhibit D

FORM OF UNIT CERTIFICATE

D-1

Exhibit E

PARTNERSHIP UNIT DESIGNATION OF THE SERIES A PREFERRED UNITS

E-1

Exhibit F

PARTNERSHIP UNIT DESIGNATION OF THE SERIES B PREFERRED UNITS

F-1

Exhibit G

PARTNERSHIP UNIT DESIGNATION OF THE SERIES C PREFERRED UNITS

G-1

 

iv

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THIRD AMENDED AND RESTATED AGREEMENT

OF

LIMITED PARTNERSHIP

OF

ARBOR REALTY LIMITED PARTNERSHIP

 

THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARBOR REALTY
LIMITED PARTNERSHIP (the “Partnership”), dated as of July 14, 2016, is entered
into by and among ARBOR REALTY GPOP, INC., a Delaware corporation (the “General
Partner”), ARBOR REALTY LPOP, INC., a Delaware corporation (the “Initial Limited
Partner”), ARBOR COMMERCIAL MORTGAGE, LLC, a New York limited liability company
(“ACM”), and ARBOR REALTY TRUST, INC., a Maryland corporation (the “Parent
REIT”).

 

WHEREAS, the Partnership was formed by the General Partner and the Initial
Limited Partner as a limited partnership under the laws of the State of Delaware
on June 24, 2003;

 

WHEREAS, the General Partner and the Initial Limited Partner entered that into
certain Agreement of Limited Partnership of Arbor Realty Limited Partnership on
June 24, 2003;

 

WHEREAS,  the General Partner, the Initial Limited Partner, the Parent REIT and
ACM entered into that certain Amended and Restated Agreement of Limited
Partnership of Arbor Realty Limited Partnership, dated as of July 1, 2003 (the
“First Amended Partnership Agreement”), in order to admit ACM to the Partnership
as a limited partner;

 

WHEREAS, the General Partner, the Initial Limited Partner, the Parent REIT and
ACM entered into that certain Second Amended and Restated Agreement of Limited
Partnership of Arbor Realty Limited Partnership, dated as of January 18, 2005
(the “Second Amended Partnership Agreement”), in order to allow for the transfer
of assets from the Partnership to Arbor Realty SR, Inc., a Maryland corporation;

 

WHEREAS, in June 2008, all of ACM’s interests in the Partnership were redeemed
and ACM ceased to be a Limited Partner; and

 

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of
February 25, 2016, by and among the Partnership, ARSR Acquisition Company, LLC,
a Delaware limited liability company, the Parent REIT,  Arbor Commercial
Funding, LLC, a New York limited liability company, and ACM, the parties hereto
desire to amend and restate the Second Amended Partnership Agreement and to
admit ACM as a Limited Partner.

 

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

 

ARTICLE I

 

DEFINED TERMS

 

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

 

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

 

“Actions” has the meaning set forth in Section 7.7 hereof.

 

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

 

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“Additional Limited Partner” means a Person who is admitted to the Partnership
as a Limited Partner pursuant to Section 4.2 and Section 12.2 hereof and who is
shown as such on the books and records of the Partnership, and who has not
ceased to be a Limited Partner pursuant to the Act or this Agreement.

 

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

 

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

 

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

 

The foregoing definition of “Adjusted Capital Account Deficit” is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.

 

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

 

(a)                                 the Parent REIT (i) declares or pays a
dividend on its outstanding REIT Shares in REIT Shares or makes a distribution
to all holders of its outstanding REIT Shares in REIT Shares, (ii) splits or
subdivides its outstanding REIT Shares or (iii) effects a reverse stock split or
otherwise combines its outstanding REIT Shares into a smaller number of REIT
Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment
Factor previously in effect by a fraction, (1) the numerator of which shall be
the number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, split, subdivision, reverse split or combination
(assuming for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has occurred as of such time) and
(2) the denominator of which shall be the actual number of REIT Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, split, subdivision, reverse split or
combination;

 

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

 

(c)                                  the Parent REIT shall, by dividend or
otherwise, distribute to all holders of its REIT Shares evidences of its
indebtedness or assets (including securities, but excluding any dividend or

 

2

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distribution referred to in subsection (a) above), which evidences of
indebtedness or assets relate to assets not received by the Parent REIT pursuant
to a pro rata distribution by the Partnership, then the Adjustment Factor shall
be adjusted to equal the amount determined by multiplying the Adjustment Factor
in effect immediately prior to the close of business on the date fixed for
determination of shareholders entitled to receive such distribution by a
fraction (i) the numerator of which shall be such Value of a REIT Share on the
date fixed for such determination and (ii) the denominator of which shall be the
Value of a REIT Share on the dates fixed for such determination less the then
fair market value (as determined by the General Partner, whose determination
shall be conclusive) of the portion of the evidences of indebtedness or assets
so distributed applicable to one REIT Share.

 

Notwithstanding the foregoing, if any of the events in clause (a), (b) or
(c) above occur, no adjustments will be made to the Adjustment Factor for any
class or series of Partnership Interests to the extent that the Partnership
concurrently makes or effects a correlative distribution or payment to all of
the Partners holding Partnership Interests of such class or series, or effects a
correlative split, subdivision, reverse split or combination in respect of the
Partnership Interests of such class or series.  If the Parent REIT effects a
dividend that allows holders of REIT Shares to elect to receive cash or
additional REIT Shares, the Partnership may effect a correlative distribution by
distributing to all Partners holding Partnership Interests of such class or
series a combination of cash and additional Partnership Interests in the same
ratio as the ratio of cash and REIT Shares paid by the Parent REIT (in the
aggregate), without offering Partners an opportunity to elect to receive cash or
additional Partnership Interests.  Any adjustments to the Adjustment Factor
shall become effective immediately after the effective date of such event,
retroactive to the record date, if any, for such event, provided, however, that
any Limited Partner may waive, by written notice to the General Partner, the
effect of any adjustment to the Adjustment Factor applicable to the Partnership
Common Units held by such Limited Partner, and, thereafter, such adjustment will
not be effective as to such Partnership Common Units.  For illustrative
purposes, examples of adjustments to the Adjustment Factor are set forth on
Exhibit B attached hereto.

 

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

 

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

 

“Applicable Percentage” has the meaning set forth in Section 8.6B hereof.

 

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

 

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

 

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

 

(a)                                 the sum, without duplication, of:

 

(i)                                     the Partnership’s Net Income or Net Loss
(as the case may be) for such period,

 

(ii)                                  Depreciation and all other noncash charges
to the extent deducted in determining Net Income or Net Loss for such period,

 

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

 

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

 

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

 

(b)                                 less the sum, without duplication, of:

 

(i)                                     all principal debt payments made during
such period by the Partnership,

 

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

 

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

 

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

 

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

 

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

 

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

 

(viii)                        Notwithstanding the foregoing, Available Cash
shall not include (1) any cash received or reductions in reserves, or take into
account any disbursements made, or reserves established, after dissolution and
the commencement of the liquidation and winding up of the Partnership or (2) any
Capital Contributions, whenever received.

 

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

 

“Capital Account” means, with respect to any Partner, the Capital Account
maintained by the General Partner for such Partner on the Partnership’s books
and records in accordance with the following provisions:

 

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

 

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

 

4

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liabilities of such Partner assumed by the Partnership or that are secured by
any property contributed by such Partner to the Partnership.

 

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

 

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

 

(e)                                  The provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Regulations
Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a
manner consistent with such Regulations.  If the General Partner shall determine
that it is prudent to modify the manner in which the Capital Accounts are
maintained in order to comply with such Regulations, the General Partner may
make such modification provided that such modification will not have a material
effect on the amounts distributable to any Partner without such Partner’s
Consent.  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 that unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.

 

“Capital Account Deficit” has the meaning set forth in Section 13.2C hereof.

 

“Capital Contribution” means, with respect to any Partner, the amount of money
and the initial Gross Asset Value of any Contributed Property that such Partner
contributes to the Partnership pursuant to Section 4.1, 4.2 or 4.3 hereof or is
deemed to contribute pursuant to Section 4.4 hereof or as set forth in any
Partnership Unit Designation.

 

“Cash Amount” means, with respect to a Tendering Party, an amount of cash equal
to the product of (A) the Value of a REIT Share and (B) such Tendering Party’s
REIT Shares Amount determined as of the date of receipt by the General Partner
of such Tendering Party’s Notice of Redemption or, if such date is not a
Business Day, the immediately preceding Business Day; provided, however, that,

 

(a)                                 in the event of a Declination not followed
by an Offering Funding, the Cash Amount shall be an amount of cash equal to the
product of (i) 100% minus such Tendering Party’s Applicable Percentage, and
(ii) the product of the amounts contemplated by clauses (A) and (B) above, and

 

(b)                                 in the event of a Declination followed by an
Offering Funding, the Cash Amount shall be an amount of cash equal to the
product of: (i) the amount contemplated by clause (B) above, (ii)100% minus such
Tendering Party’s Applicable Percentage, and (iii) the Offering Value.  The term
“Offering Value” shall be the quotient obtained by dividing the Offering Funding
Amount by the number of Offering Funding Shares sold in such Offering Funding.

 

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

 

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

 

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

 

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

 

“Company Employees” means the employees of the Partnership, the Parent REIT and
any of their subsidiaries.

 

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

 

“Consent of the Limited Partners” means the Consent of a Majority in Interest of
the Limited Partners, which Consent shall be obtained prior to the taking of any
action for which it is required by this Agreement and, except as otherwise
provided in this Agreement, may be given or withheld by a Majority in Interest
of the Limited Partners.

 

“Contributed Property” means each item of Property or other asset, in such form
as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or deemed contributed by the Partnership to a
“new” partnership pursuant to Code Section 708).

 

“Controlled Entity” means, as to any Limited Partner, (a) any corporation more
than fifty percent (50%) of the outstanding voting stock of which is owned by
such Limited Partner or such Limited Partner’s Family Members, (b) any trust,
whether or not revocable, of which such Limited Partner or such Limited
Partner’s Family Members are the sole beneficiaries, (c) any partnership of
which such Limited Partner is the managing partner and in which such Limited
Partner or such Limited Partner’s Family Members hold partnership interests
representing at least twenty-five percent (25%) of such partnership’s capital
and profits and (d) any limited liability company of which such Limited Partner
is the manager or managing member and in which such Limited Partner or such
Limited Partner’s Family Members hold membership interests representing at least
twenty-five percent (25%) of such limited liability company’s capital and
profits.

 

“Cut-Off Date” means the fifth (5th) Business Day after the General Partner’s
receipt of a Notice of Redemption.

 

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

 

“Declination” has the meaning set forth in Section 8.6D hereof.

 

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

 

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

 

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

 

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

 

“Family Members” means, as to a Person that is an individual, such Person’s
spouse, ancestors, descendants (whether by blood or by adoption), brothers and
sisters and inter vivos or testamentary trusts of which only such Person and his
spouse, ancestors, descendants (whether by blood or by adoption), brothers and
sisters are beneficiaries.

 

“Funding Debt” means any Debt incurred by or on behalf of the Parent REIT for
the purpose, in whole or in part, of providing funds to the Partnership.

 

“General Partner” means Arbor Realty GPOP, Inc., a Delaware corporation, and its
successors and assigns, as the general partner of the Partnership in their
capacities as general partner of the Partnership; provided, however, that as the
context requires, references herein to the General Partner shall also mean the
General Partner’s corporate parent, the Parent REIT.

 

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

 

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

 

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:

 

(a)                                 The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market value
of such asset as determined by the General Partner and agreed to by the
contributing Partner.  In any case in which the General Partner and the
contributing Partner are unable to agree as to the gross fair market value of
any contributed asset or assets, such gross fair market value shall be
determined by Appraisal.

 

(b)                                 The Gross Asset Values of all Partnership
assets immediately prior to the occurrence of any event described in clause (i),
clause (ii), clause (iii), clause (iv) or clause (v) hereof shall be adjusted to
equal their respective gross fair market values, as determined by the General
Partner using such reasonable method of valuation as it may adopt, as of the
following times:

 

(i)                                     the acquisition of an additional
interest in the Partnership (other than in connection with the execution of this
Agreement but including, without limitation, acquisitions pursuant to
Section 4.2 hereof or contributions or deemed contributions by the General
Partner pursuant to Section 4.2 hereof) by a new or existing Partner in exchange
for more than a de minimis Capital Contribution or the grant of an interest in
the Partnership (other than a de minimis interest) as consideration for the
provision of services to or for the benefit of the Partnership, if the General
Partner reasonably determines that such adjustment is necessary or appropriate
to reflect the relative economic interests of the Partners in the Partnership;

 

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

 

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

 

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

 

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

 

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

 

(d)                                 The Gross Asset Values of Partnership assets
shall be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but
only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subsection (d) to the extent that the General Partner reasonably determines that
an adjustment pursuant to subsection (b) above is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subsection (d).

 

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

 

“Holder” means either (a) a Partner or (b) an Assignee, owning a Partnership
Unit, that is treated as a member of the Partnership for federal income tax
purposes.

 

“Incapacity” or “Incapacitated” means, (a) as to any Partner who is an
individual, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her person
or his or her estate; (b) as to any Partner that is a corporation or limited
liability company, the filing of a certificate of dissolution, or its
equivalent, or the revocation of the corporation’s charter; (c) as to any
Partner that is a partnership, the dissolution and commencement of winding up of
the partnership; (d) as to any Partner that is an estate, the distribution by
the fiduciary of the estate’s entire interest in the Partnership; (e) as to any
trustee of a trust that is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (f) 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 (i) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (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 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) above is not
vacated within ninety (90) days after the expiration of any such stay.

 

“Indemnitee” means (a) any Person made a party to a proceeding by reason of its
status as (i) the General Partner, (ii) the Parent REIT or (iii) a director of
the General Partner or the Parent REIT or an officer or employee of the
Partnership, the Parent REIT or the General Partner and (b) 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.

 

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“Independent Director” shall have the meaning assigned to such term under the
rules and regulations of the principal national securities exchange or
interdealer quotation system on which the REIT Shares are now listed.

 

“Initial Limited Partner” means Arbor Realty LPOP, Inc., a Delaware corporation.

 

“Interest” means interest, original issue discount and other similar payments or
amounts paid by the Partnership for the use or forbearance of money.

 

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

 

“Junior Share”  means a share of capital stock of the Parent REIT now or
hereafter authorized or reclassified that has dividend rights, or rights upon
liquidation, winding up and dissolution, that are inferior or junior to the REIT
Shares.

 

“Limited Partner” means any Person named as a Limited Partner in Exhibit A
attached hereto, as such Exhibit A 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 in the Partnership.

 

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

 

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

 

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

 

“Majority in Interest of the Limited Partners” means Limited Partners (excluding
any Limited Partner that is directly or indirectly wholly-owned by the Parent
REIT) holding more than fifty percent (50%) of the outstanding Partnership
Common Units held by all Limited Partners (excluding any Limited Partner that is
directly or indirectly wholly-owned by the Parent REIT).

 

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

 

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

 

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

 

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

 

(c)                                  In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subsection (b) or subsection (c) of
the definition of “Gross Asset Value,” the amount of such adjustment shall be

 

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taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;

 

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

 

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

 

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

 

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

 

“New Partnership Audit Procedures” means Subchapter C of Chapter 63 of Subtitle
F of the Code, as modified by Section 1101 of the Bipartisan Budget Act of 2015,
Pub. L. No. 114-74, and any successor statutes thereto or Regulations
promulgated thereunder.

 

“New Securities” means (a) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase REIT
Shares or Preferred Shares, excluding Preferred Shares, Junior Shares and grants
under the Stock Option Plans, or (b) any Debt issued by the General Partner that
provides any of the rights described in clause (a).

 

“Nonrecourse Deductions” has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).

 

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

 

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

 

“Offering Funding” has the meaning set forth in Section 8.6D(2) hereof.

 

“Offering Funding Amount” means the dollar amount equal to (a) the product of
(i) the number of Offering Funding Shares sold in an Offering Funding and
(ii) the offering price per share of such Offering Funding Shares in such
Offering Funding, less (b) the aggregate underwriting discounts and commissions
in such Offering Funding.

 

“Offering Funding Shares” has the meaning set forth in Section 8.6D(2) hereof.

 

“Ownership Limit” means the applicable restriction or restrictions on ownership
of shares of the Parent REIT imposed under the Charter.

 

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“Paired Common Unit” has the meaning set forth in the Pairing Agreement.

 

“Pairing Agreement” means the Pairing Agreement by and among the Parent REIT,
the Partnership, and ACM, dated as of July 14, 2016.

 

“Parent REIT” means Arbor Realty Trust, Inc., a Maryland corporation that
intends to be taxed as a REIT and the corporate parent of the General Partner
and the Initial Limited Partner.

 

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

 

“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse
Debt, equal to the Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i)(3).

 

“Partner Nonrecourse Debt” has the meaning set forth in Regulations
Section 1.704-2(b)(4).

 

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

 

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

 

“Partnership Common Unit” means a fractional share of the Partnership Interests
of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but does not
include any Partnership Preferred Unit or any other Partnership Unit specified
in a Partnership Unit Designation or this Agreement as being other than a
Partnership Common Unit; provided, however, that the General Partner Interest
and the Limited Partner Interests shall have the differences in rights and
privileges as specified in this Agreement.  The ownership of Partnership Common
Units may (but need not, in the sole and absolute discretion of the General
Partner) be evidenced by the form of certificate for Partnership Common Units
attached hereto as Exhibit D.

 

“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 expressed as a number of Partnership Common Units, Partnership Preferred
Units or other Partnership Units.

 

“Partnership Junior Unit” means a fractional share of the Partnership Interests
that the General Partner has authorized pursuant to Section 4.1 or Section 4.2
or Section 4.3 hereof that has distribution rights, or rights upon liquidation,
winding up and dissolution, that are inferior or junior to the Partnership
Common Units.

 

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

 

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

 

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

 

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“Partnership Unit” shall mean a Partnership Common Unit, a Partnership Preferred
Unit, a Partnership Junior Unit or any other fractional share of the Partnership
Interests that the General Partner has authorized pursuant to Section 4.1,
Section 4.2 or Section 4.3  hereof.

 

“Partnership Unit Designation” shall have the meaning set forth in Section 4.2
hereof.

 

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

 

“Percentage Interest” means, as to each Partner, its interest, if any, in the
Partnership Common Units as determined by dividing the Partnership Common Units
owned by such Partner by the total number of Partnership Common Units then
outstanding as specified in Exhibit A attached hereto, as such Exhibit may be
amended from time to time.  To the extent that the Partnership issues more than
one class or series of Partnership Interests, the interest of such class or
series shall be determined as set forth in this Agreement or any amendment
hereto.

 

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

 

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

 

“Primary Offering Notice” has the meaning set forth in Section 8.6F(4) hereof.

 

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

 

“Publicly Traded” means having common equity securities listed or admitted to
trading on any U.S. national securities exchange.

 

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

 

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

 

“Qualifying Party” means (a) a Limited Partner, (b) an Additional Limited
Partner, or (c) a Substituted Limited Partner succeeding to all or part of a
Limited Partner Interest of (i) a Limited Partner, or (ii) an Additional Limited
Partner, in each case other than the Initial Limited Partner.

 

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

 

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

 

“Regulatory Allocations” has the meaning set forth in Section 6.3B(8) hereof.

 

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

 

“REIT Consideration” means the aggregate number of REIT Shares equal to the
product of the REIT Shares Amount and the Applicable Percentage.

 

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“REIT Party” means the Parent REIT, the General Partner, the Initial Limited
Partner or any Qualified REIT Subsidiary.

 

“REIT Payment” has the meaning set forth in Section 15.11 hereof.

 

“REIT Requirements” means the requirements for qualification as a REIT under the
Code and regulations, including, without limitation, the distribution
requirements contained in Section 857(a) of the Code.

 

“REIT Share” means a share of the Parent REIT’s Common Stock, par value $.01 per
share.

 

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

 

“Related Party” means, with respect to any Person, any other Person whose
ownership of shares of the General Partner’s capital stock would be attributed
to the first such Person under Code Section 544 (as modified by Code
Section 856(h)(1)(B)).

 

“Rights” has the meaning set forth in the definition of “REIT Shares Amount.”

 

“SEC” means the Securities and Exchange Commission.

 

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

 

“Services Agreement” means any management, development or advisory agreement
with a property and/or asset manager for the provision of property management,
asset management, leasing, development and/or similar services with respect to
the Properties and any agreement for the provision of services of accountants,
legal counsel, appraisers, insurers, brokers, transfer agents, registrars,
developers, financial advisors and other professional services.

 

“Single Funding Notice” has the meaning set forth in Section 8.6D(3) hereof.

 

“Special Preferred Units” have the meaning set forth in Section 4.10 hereof.

 

“Special Voting Preferred Stock” means shares of Special Voting Preferred Stock,
$0.01 par value per share, of Parent REIT, as designated by articles
supplementary to the Charter and subject to the Pairing Agreement.

 

“Specified Redemption Date” means the later of (a) the tenth (10th) Business Day
after the receipt by the General Partner of a Notice of Redemption or (b) in the
case of a Declination followed by an Offering Funding, the Business Day next
following the date of the closing of the Offering Funding; provided, however,
that no Specified Redemption Date with respect to any Partnership Common Units
shall occur during the Twelve-Month Period applicable to such Partnership Common
Units; provided, further, that the Specified Redemption Date, as well as the
closing of a Redemption, or an acquisition of Tendered Units by a REIT Party
pursuant to Section 8.6B hereof, on any Specified Redemption Date, may be
deferred, in the REIT Party’s sole and absolute discretion, for such time (but
in any event not more than one hundred fifty (150) days in the aggregate) as may
reasonably be required to effect, as applicable, (i) an Offering Funding or
other necessary funding arrangements, (ii) compliance with the Securities Act or
other law (including, but not limited to, (1) state “blue sky” or other
securities laws and (2) the expiration or termination

 

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of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended) and (iii) satisfaction or waiver of other
commercially reasonable and customary closing conditions and requirements for a
transaction of such nature.

 

“Stock Option Plan” means any stock option plan hereafter adopted by the
Partnership or the Parent REIT.

 

“Subsidiary” means, with respect to any Person, any other Person (which is not
an individual) of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.

 

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

 

“Successor Shares Amount” has the meaning set forth in Section 11.2D(3) hereof.

 

“Surviving Partnership” has the meaning set forth in Section 11.2D(3) hereof.

 

“Tax Items” has the meaning set forth in Section 6.4A hereof.

 

“Tendered Units” has the meaning set forth in Section 8.6A hereof.

 

“Tendering Party” has the meaning set forth in Section 8.6A hereof.

 

“Terminating Capital Transaction” means any sale or other disposition of all or
substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership; except that sales or
other dispositions of assets to a Subsidiary will not be deemed a Terminating
Capital Transaction.

 

“Termination Transaction” means any Transfer of all or any portion of the Parent
REIT’s interest in the General Partner in connection with, or the other
occurrence of, (a) a merger, consolidation or other combination involving the
Parent REIT and any other Person, (b) a sale, lease, exchange or other transfer
of all or substantially all of the assets of the Parent REIT not in the ordinary
course of its business, whether in a single transaction or a series of related
transactions, (c) a reclassification, recapitalization or change of the
outstanding REIT Shares (other than a change in par value, or from par value to
no par value, or as a result of a stock split, stock dividend or similar
subdivision), (d) the adoption of any plan of liquidation or dissolution of the
Parent REIT, or (e) a Transfer of all or any portion of the Parent REIT’s
interest in the General Partner; provided, however, that a Termination
Transaction shall not include any Transfer effected in accordance with
Section 11.1C or Section 11.2C.

 

“Transaction Consideration” has the meaning set forth in
Section 11.2D(2) hereof.

 

“Transfer,” when used with respect to a Partnership Unit, or all or any portion
of a Partnership Interest, means any sale, assignment, bequest, conveyance,
devise, gift (outright or in trust), pledge, encumbrance, hypothecation,
mortgage, exchange, transfer or other disposition or act of alienation, whether
voluntary or involuntary or by operation of law; provided, however, that when
the term is used in Article XI hereof, “Transfer” does not include (a) any
Redemption of Partnership Common Units by the Partnership, or acquisition of
Tendered Units by a REIT Party, pursuant to Section 8.6 hereof or (b) any
redemption of Partnership Units pursuant to any Partnership Unit Designation. 
The terms “Transferred” and “Transferring” have correlative meanings.

 

“Twelve-Month Period” means, as to any Partnership Interest, a twelve-month
period ending on the day before the first (1st) anniversary of a Qualifying
Party’s first becoming a Holder of such Partnership Interest; provided, however,
that the General Partner may, by written agreement with a Qualifying Party,
shorten or lengthen the Twelve-Month Period to a period that is shorter or
longer than twelve (12) months with respect to a Qualifying Party.

 

“Unitholder” means the General Partner or any Holder of Partnership Units.

 

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“Value” means, on any date of determination with respect to a REIT Share, the
average of the daily Market Prices for ten (10) consecutive trading days
immediately preceding the date of determination except that, as provided in
Section 4.4B. hereof, the Market Price for the trading day immediately preceding
the date of exercise of a stock option under any Stock Option Plans shall be
substituted for such average of daily market prices for purposes of Section 4.4
hereof; provided, however, that for purposes of Section 8.6, the “date of
determination” shall be the date of receipt by the General Partner of a Notice
of Redemption or, if such date is not a Business Day, the immediately preceding
Business Day.  The term “Market Price” on any date shall mean, with respect to
any class or series of outstanding REIT Shares, the Closing Price for such REIT
Shares on such date.  The “Closing Price” on any date shall mean the last sale
price for such REIT Shares, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, for such
REIT Shares, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if such REIT Shares are not listed or
admitted to trading on the New York Stock Exchange, as reported on the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such REIT Shares are listed
or admitted to trading or, if such REIT Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price, or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotation system that may then be in use or, if
such REIT Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such REIT Shares selected by the Board of Directors of the General
Partner or, in the event that no trading price is available for such REIT
Shares, the fair market value of the REIT Shares, as determined in good faith by
the Board of Directors of the General Partner.

 

In the event that the REIT Shares Amount includes Rights (as defined in the
definition of “REIT Shares Amount”) 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.

 

ARTICLE II

 

ORGANIZATIONAL MATTERS

 

Section 2.1                                    Organization.  The Partnership is
a limited partnership organized pursuant to the provisions of the Act and upon
the terms and subject to the conditions set forth in this Agreement.  Except as
expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act.  The Partnership Interest of each Partner shall be personal
property for all purposes.

 

Section 2.2                                    Name.  The name of the
Partnership is “Arbor Realty Limited Partnership.”   The Partnership’s business
may be conducted under any other name or names deemed advisable by the General
Partner, including the name of the General Partner or any Affiliate thereof. 
The words “Limited Partnership,” “LP,” “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 Partners of
such change in the next regular communication to the Partners.

 

Section 2.3                                    Registered Office and Agent;
Principal Office.  The address of the registered office of the Partnership in
the State of Delaware is located at 1209 Orange Street, Wilmington, Delaware,
19801, and the registered agent for service of process on the Partnership in the
State of Delaware at such registered office is The Corporation Trust Company. 
The principal office of the Partnership is located at 333 Earle Ovington Blvd.,
Suite 900, Uniondale, NY 11553, 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.

 

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Section 2.4                                    Power of Attorney.

 

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

 

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

 

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

 

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

 

B.                                    The foregoing power of attorney is hereby
declared to be irrevocable and a special power coupled with an interest, in
recognition of the fact that each of the Limited Partners and Assignees will be
relying upon the power of the General Partner or the Liquidator to act as
contemplated by this Agreement in any filing or other action by it on behalf of
the Partnership, and it shall survive and not be affected by the subsequent
Incapacity of any Limited Partner or Assignee and the Transfer of all or any
portion of such Limited Partner’s or Assignee’s Partnership Units or Partnership
Interest 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 the Liquidator, acting in good faith pursuant to such power of
attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses that may be available to contest, negate or disaffirm the action of the
General Partner or the 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 the Liquidator’s request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.

 

Section 2.5                                    Term.  Pursuant to
Section 17-217(d) of the Act, the term of the Partnership commenced on June 24,
2003 and shall continue until the Partnership is dissolved pursuant to the
provisions of Article XIII hereof or as otherwise provided by law.

 

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ARTICLE III

 

PURPOSE

 

Section 3.1                                    Purpose and Business.  The
purpose and nature of the Partnership is to conduct any business, enterprise or
activity permitted by or under the Act; provided, however, such business and
arrangements and interests may be limited to and conducted in such a manner as
to permit the Parent REIT, in the sole and absolute discretion of the General
Partner, at all times to be classified as a REIT.  In connection with the
foregoing, the Partnership shall have full power and authority to enter into,
perform and carry out contracts of any kind, to borrow and lend money and to
issue and guarantee evidence of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien and, directly or indirectly, to
acquire and construct additional Properties necessary, useful or desirable in
connection with its business.

 

Section 3.2                                    Powers.

 

A.                                    The Partnership shall be empowered to do
any and all acts and things necessary, appropriate, proper, advisable,
incidental to or convenient for the furtherance and accomplishment of the
purposes and business described herein and for the protection and benefit of the
Partnership.

 

B.                                    The Partnership may contribute from time
to time Partnership capital or Property to one or more of its Subsidiaries or
newly formed entities solely in exchange for equity interests therein (or in a
wholly-owned subsidiary entity thereof).

 

C.                                    Notwithstanding any other provision in
this Agreement, the General Partner may cause the Partnership not to take, or to
refrain from taking, any action that, in the judgment of the General Partner, in
its sole and absolute discretion, (i) could adversely affect the ability of the
Parent REIT to continue to qualify as a REIT, (ii) could subject the Parent REIT
to any additional taxes under Code Section 857 or Code Section 4981 or any other
related or successor provision of the Code, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over Parent
REIT or the General Partner, their securities or the Partnership.

 

Section 3.3                                    Partnership Only for Partnership
Purposes.  This Agreement shall not be deemed to create a company, venture or
partnership between or among the Partners with respect to any activities
whatsoever other than the activities within the purposes of the Partnership as
specified in Section 3.1 hereof.  Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind, commit or
assume any obligation or responsibility on behalf of the Partnership, its
properties or any other Partner.  No Partner, in its capacity as a Partner under
this Agreement, shall be responsible or liable for any indebtedness or
obligation of another Partner, and the Partnership shall not be responsible or
liable for any indebtedness or obligation of any Partner, incurred either before
or after the execution and delivery of this Agreement by such Partner, except as
to those responsibilities, liabilities, indebtedness or obligations incurred
pursuant to and as limited by the terms of this Agreement and the Act.

 

Section 3.4                                    Representations and Warranties by
the Parties.

 

A.                                    Each Partner (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner, respectively) that is an individual represents and warrants to each
other Partner that (i) the consummation of the transactions contemplated by this
Agreement to be performed by such Partner will not result in a breach or
violation of, or a default under, any material agreement by which such Partner
or any of such Partner’s property is bound, or any statute, regulation, order or
other law to which such Partner is subject, (ii) subject to the last sentence of
this Section 3.4A, such Partner is neither a “foreign person” within the meaning
of Code Section 1445(f) nor a “foreign partner” within the meaning of Code
Section 1446(e), (iii) such Partner does not own, directly or indirectly,
(a) nine and nine tenths percent (9.9%) or more of the total combined voting
power of all classes of stock entitled to vote, or nine and nine tenths percent
(9.9%) or more of the total number of shares of all classes of stock, of any
corporation that is a tenant of either (I) the Parent REIT, the General Partner
or any Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member or (b) an
interest of nine and nine tenths percent (9.9%) or more in the assets or net
profits of any tenant of either (I) the Parent REIT, the General Partner or any
Qualified REIT Subsidiary, (II) the

 

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Partnership or (III) any partnership, venture, or limited liability company of
which the Parent REIT, the General Partner, any Qualified REIT Subsidiary or the
Partnership is a member and (iv) this Agreement is binding upon, and enforceable
against, such Partner in accordance with its terms.  Notwithstanding anything
contained herein to the contrary, in the event that the representation contained
in the foregoing clause (ii) would be inaccurate if given by a Partner, such
Partner (w) shall not be required to make and shall not be deemed to have made
such representation, if it delivers to the General Partner in connection with or
prior to its execution of this Agreement written notice that it may not
truthfully make such representation, (x) hereby agrees that it is subject to,
and hereby authorizes the General Partner to withhold, all withholdings to which
such a “foreign person” or “foreign partner”, as applicable, is subject under
the Code and (y) hereby agrees to cooperate fully with the General Partner with
respect to such withholdings, including by effecting the timely completion and
delivery to the General Partner of all governmental forms required in connection
therewith.

 

B.                                    Each Partner (including, without
limitation, each Additional Limited Partner or Substituted Limited Partner as a
condition to becoming an Additional Limited Partner or a Substituted Limited
Partner, respectively) that is not an individual represents and warrants to each
other Partner(s) that (i) all transactions contemplated by this Agreement to be
performed by it have been duly authorized by all necessary action, including,
without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or shareholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its partnership or operating agreement, trust
agreement, articles, charter or bylaws, as the case may be, any material
agreement by which such Partner or any of such Partner’s properties or any of
its partners, members, beneficiaries, trustees or shareholders, as the case may
be, is or are bound, or any statute, regulation, order or other law to which
such Partner or any of its partners, members, trustees, beneficiaries or
shareholders, as the case may be, is or are subject, (iii) subject to the last
sentence of this Section 3.4B, such Partner is neither a “foreign person” within
the meaning of Code Section 1445(f) nor a “foreign partner” within the meaning
of Code Section 1446(e), (iv) such Partner does not own, directly or indirectly,
(a) nine and nine tenths percent (9.9%) or more of the total combined voting
power of all classes of stock entitled to vote, or nine and eight nine percent
(9.9%) or more of the total number of shares of all classes of stock, of any
corporation that is a tenant of either (I) the Parent REIT, the General Partner
or any Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member or (b) an
interest of nine and nine tenths percent (9.9%) or more in the assets or net
profits of any tenant of either (I) the Parent REIT, the General Partner or any
Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture or limited liability company for which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member and
(v) this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms.  Notwithstanding anything contained herein to the
contrary, in the event that the representation contained in the foregoing clause
(iii) would be inaccurate if given by a Partner, such Partner (w) shall not be
required to make and shall not be deemed to have made such representation, if it
delivers to the General Partner in connection with or prior to its execution of
this Agreement written notice that it may not truthfully make such
representation, (x) hereby agrees that it is subject to, and hereby authorizes
the General Partner to withhold, all withholdings to which such a “foreign
person” or “foreign partner”, as applicable, is subject under the Code and
(y) hereby agrees to cooperate fully with the General Partner with respect to
such withholdings, including by effecting the timely completion and delivery to
the General Partner of all internal revenue forms required in connection
therewith.

 

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

 

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

 

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Limited Partner, the admission of such Additional Limited Partner or Substituted
Limited Partner as a Limited Partner in the Partnership) and the dissolution,
liquidation and termination of the Partnership.

 

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

 

ARTICLE IV

 

CAPITAL CONTRIBUTIONS

 

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

 

Section 4.2                                    Issuances of Additional
Partnership Interests.

 

A.                                    General.  The General Partner is hereby
authorized to cause the Partnership to issue additional Partnership Interests,
in the form of Partnership Units, for any Partnership purpose, at any time or
from time to time, to the Partners (including the General Partner) or to other
Persons, and to admit such Persons as Additional Limited Partners, for such
consideration and on such terms and conditions as shall be established by the
General Partner in its sole and absolute discretion, all without the approval of
any Limited Partners.  Without limiting the foregoing, the General Partner is
expressly authorized to cause the Partnership to issue Partnership Units
(i) upon the conversion, redemption or exchange of any Debt, Partnership Units
or other securities issued by the Partnership, (ii) for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership, and
(iii) in connection with any merger of any other Person into the Partnership or
any Subsidiary of the Partnership if the applicable merger agreement provides
that Persons are to receive Partnership Units in exchange for their interests in
the Person merging into the Partnership or any Subsidiary of the Partnership. 
Subject to Delaware law, any additional Partnership Interests may be issued in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as shall be determined by the General Partner, in its
sole and absolute discretion without the approval of any Limited Partner, and
set forth in this Agreement or a written document thereafter attached to and
made an exhibit to this Agreement (each, a “Partnership Unit Designation”). 
Without limiting the generality of the foregoing, the General Partner shall have
authority to specify (a) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (b) the right of each such class or series of Partnership Interests
to share in Partnership distributions; (c) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; (d) the voting rights, if any, of each such class or series of
Partnership Interests; and (e) the conversion, redemption or exchange rights
applicable to each such class or series of Partnership Interests.  Upon the
issuance of any additional Partnership Interest, the General Partner shall amend
Exhibit A as appropriate to reflect such issuance.

 

B.                                    Issuances to the General Partner.  No
additional Partnership Units shall be issued to the General Partner or the
Initial Limited Partner unless (i) the additional Partnership Units are issued
to all Partners in proportion to their respective Percentage Interests with
respect to the class of Partnership Units so issued, (ii) (a) the additional
Partnership Units are (x) Partnership Common Units issued in connection with an
issuance of REIT Shares, or (y) Partnership Units (other than Partnership Common
Units) issued in connection with an issuance, conversion or exercise of
Preferred Shares, New Securities or other interests in the Parent REIT (other
than REIT Shares), which Preferred Shares, New Securities or other interests
have designations, preferences and other rights, terms and provisions that are
substantially the same as the designations, preferences and other rights, terms
and provisions of

 

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the additional Partnership Units issued to the General Partner or the Initial
Limited Partner, and (b) the Parent REIT contributes or otherwise causes to be
transferred to the Partnership the cash proceeds or other consideration received
in connection with the issuance of such REIT Shares, Preferred Shares, New
Securities or other interests in the Parent REIT, (iii) the additional
Partnership Units are issued upon the conversion, redemption or exchange of
Debt, Partnership Units or other securities issued by the Partnership, or
(iv) the additional Partnership Units are issued pursuant to Sections 4.3B, 4.4,
4.6 or Section 4.7.

 

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

 

Section 4.3                                    Additional Funds and Capital
Contributions.

 

A.                                    General.  The General Partner may, at any
time and from time to time, determine that the Partnership requires additional
funds (“Additional Funds”) for the acquisition or development of additional
Properties, for the redemption of Partnership Units or for such other 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 4.3 without the approval of any Limited Partners.

 

B.                                    Additional Capital Contributions.  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 (of cash or property), 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 General Partner and
the Limited Partners shall be adjusted to reflect the issuance of such
additional Partnership Units.

 

C.                                    Loans by Third Parties.  The General
Partner, on behalf of the Partnership, may obtain any Additional Funds by
causing the Partnership to incur Debt 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 Debt would be deemed to occur by virtue of the Transfer by any Limited
Partner of any Partnership Interest, or (ii) such Debt is recourse to any
Partner (unless the Partner otherwise agrees).

 

D.                                    General Partner Loans.  The General
Partner, on behalf of the Partnership, may obtain any Additional Funds by
causing the Partnership to incur Debt with the General Partner or the Parent
REIT (each, a “General Partner Loan”) if (i) such Debt is, to the extent
permitted by law, on substantially the same terms and conditions (including
interest rate, repayment schedule, and conversion, redemption, repurchase and
exchange rights) as Funding Debt incurred by the General Partner or the Parent
REIT, the net proceeds of which are lent to the Partnership to provide such
Additional Funds, or (ii) such Debt is on terms and conditions no less favorable
to the Partnership than would be available to the Partnership from any third
party; provided, however, that the Partnership shall not incur any such Debt if
(a) a breach, violation or default of such Debt would be deemed to occur by
virtue of the Transfer by any Limited Partner of any Partnership Interest, or
(b) such Debt is recourse to any Partner (unless the Partner otherwise agrees).

 

E.                                     Issuance of Securities by the Parent
REIT.  The Parent REIT shall not issue any additional REIT Shares, Preferred
Shares, Junior Shares or New Securities unless the Parent REIT contributes the
cash proceeds or other consideration received from the issuance of such
additional REIT Shares, Preferred Shares, Junior Shares or New Securities, as
the case may be, and from the exercise of the rights contained in any such
additional New Securities, to the General Partner or the Initial Limited Partner
and the General Partner or the Initial Limited Partner, as the case may be,
shall contribute such proceeds to the Partnership in exchange for (x) in the
case of an issuance of REIT Shares, Partnership Common Units, or (y) in the case
of an issuance of Preferred Shares, Junior Shares or New Securities, Partnership
Units with designations, preferences and other rights, terms and provisions that
are substantially the same as the designations, preferences and other rights,
terms and provisions of such Preferred Shares, Junior Shares or New Securities;
provided, however, that notwithstanding the foregoing, the General Partner may
issue REIT Shares, Preferred Shares, Junior Shares or New Securities
(a) pursuant to Section 4.4 or Section 8.6B hereof, (b) pursuant to a dividend
or distribution (including any stock split) of REIT Shares, Preferred Shares,
Junior Shares or New Securities to all of the holders of REIT Shares, Preferred
Shares, Junior Shares or New Securities, as the case may

 

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be, (c) upon a conversion, redemption or exchange of Preferred Shares, (d) upon
a conversion of Junior Shares into REIT Shares, (e) upon a conversion,
redemption, exchange or exercise of New Securities, or (f) in connection with an
acquisition of Partnership Units or any other property or asset to be owned,
directly or indirectly, by the Parent REIT (including assets owned by the
General Partner or the Initial Limited Partner).  In the event of any issuance
of additional REIT Shares, Preferred Shares, Junior Shares or New Securities by
the Parent REIT, and the contribution to the General Partner or the Initial
Limited Partner of the cash proceeds or other consideration received from such
issuance, and the contribution to the Partnership, by the General Partner or the
Initial Limited Partner, as the case may be, of such proceeds, the Partnership
shall pay the Parent REIT’s expenses associated with such issuance, including
any underwriting discounts or commissions (it being understood that payment of
some or all of such expenses may be made by the Parent REIT on behalf of the
Partnership out of the gross proceeds of such issuance prior to the contribution
of such proceeds by the Parent REIT to the General Partner or the Initial
Limited Partner, as the case may be).

 

Section 4.4                                    Stock Option Plan.

 

A.                                    Options Granted to Company Employees and
Independent Directors.  If at any time or from time to time, in connection with
a Stock Option Plan, a stock option granted to a Company Employee or an
Independent Director is duly exercised:

 

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

 

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

 

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

 

B.                                    Special Valuation Rule.  For purposes of
this Section 4.4, in determining the Value of a REIT Share, only the trading
date immediately preceding the exercise of the relevant stock option under the
Stock Option Plan shall be considered.

 

C.                                    Future Stock Incentive Plans.  Nothing in
this Agreement shall be construed or applied to preclude or restrain the General
Partner or the Parent REIT from adopting, modifying or terminating stock
incentive plans, including any Stock Option Plan, for the benefit of employees,
directors or other business associates of the General Partner, the Parent REIT,
the Partnership or any of their Affiliates.  The Limited Partners acknowledge
and agree that, in the event that any such plan is adopted, modified or
terminated by the General Partner or Parent REIT amendments to this Section 4.4
may become necessary or advisable and that any approval or consent of the
Limited Partners required pursuant to the terms of this Agreement in order to
effect any such amendments requested by the General Partner shall not be
unreasonably withheld or delayed.

 

Section 4.5                                    No Interest; No Return.  No
Partner shall be entitled to interest on its Capital Contribution or on such
Partner’s Capital Account.  Except as provided herein or by law, no Partner
shall have any right to demand or receive the return of its Capital Contribution
from the Partnership.

 

Section 4.6                                    Conversion or Redemption of
Preferred Shares.

 

A.                                    Conversion of Preferred Shares.  If, at
any time, any of the Preferred Shares are converted into REIT Shares, in whole
or in part, then a number of Partnership Preferred Units equal to the number of
Preferred Shares so converted shall automatically be converted into a number of
Partnership Common Units equal to (i) the number of

 

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REIT Shares issued upon such conversion divided by (ii) the Adjustment Factor
then in effect, and the Percentage Interests of the General Partner and the
Limited Partners shall be adjusted to reflect such conversion.

 

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

 

Section 4.7                                    Conversion or Redemption of
Junior Shares.

 

A.                                    Conversion of Junior Shares.  If, at any
time, any of the Junior Shares are converted into REIT Shares, in whole or in
part, then a number of Partnership Common Units equal to (i) the number of REIT
Shares issued upon such conversion divided by (ii) the Adjustment Factor then in
effect shall be issued to the General Partner, and the Percentage Interests of
the General Partner and the Limited Partners shall be adjusted to reflect such
conversion.

 

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

 

Section 4.8                                    Other Contribution Provisions. 
In the event that any Partner is admitted to the Partnership and is given a
Capital Account in exchange for services rendered to the Partnership, unless
otherwise determined by the General Partner in its sole and absolute discretion,
such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such partner in cash and such Partner had
contributed the cash to the capital of the Partnership.  In addition, with the
consent of the General Partner, one or more Limited Partners may enter into
contribution agreements with the Partnership which have the effect of providing
a guarantee of certain obligations of the Partnership.

 

Section 4.9                                    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” under and as such term is defined in Section 7704(b) of the Code.

 

Section 4.10                             Special Preferred Units.  In accordance
with Section 4.3E, the Parent REIT shall contribute the proceeds of the issuance
of shares of Special Voting Preferred Stock to the Initial Limited Partner.  The
Initial Limited Partner shall contribute such proceeds to the Partnership in
exchange for a number of Special Preferred Units of the Partnership (the
“Special Preferred Units”) equal to the number of shares of Special Voting
Preferred Stock issued by the Parent REIT.  The holder of each Special Preferred
Unit shall receive a Capital Account, and be entitled to a preferential
distribution in liquidation, of $.01 per Special Preferred Unit.  Ownership of a
Special Preferred Unit shall not entitle the holder thereof to any allocation of
profits or losses of the Partnership.  To the extent that shares of Special
Voting Preferred Stock are redeemed by the Parent REIT, a like number of Special
Preferred Units shall have been first redeemed by the Partnership for the same
price per Special Preferred Unit and in accordance with the terms of the Pairing
Agreement.  Except as otherwise provided herein or required by law, the
ownership of a Special Preferred Unit shall not entitle the holder thereof to
any voting rights hereunder.  The Special Preferred Units shall be owned and
held solely by the Initial Limited Partner.

 

Section 4.11                             Restricted Units.  In accordance with
Section 4.3E, to the extent the Parent REIT issues shares of restricted common
stock pursuant to a stock incentive plan, the Partnership shall issue to the
Initial Limited Partner an equal number of Partnership Common Units that are
subject to forfeiture in the event that such shares of restricted common stock
are forfeited.

 

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ARTICLE V

 

DISTRIBUTIONS

 

Section 5.1                                    Requirement and Characterization
of Distributions.  Subject to the terms of any Partnership Unit Designation, the
General Partner shall cause the Partnership to distribute quarterly all, or such
portion as the General Partner may in its sole and absolute discretion
determine, of Available Cash generated by the Partnership during such quarter to
the Holders of Partnership Common Units in accordance with their respective
Percentage Interests of Partnership Common Units on such Partnership Record
Date.  Distributions payable with respect to any Partnership Common Units that
were not outstanding during the entire quarterly period in respect of which any
distribution is made (other than any Partnership Units issued to a REIT Party in
connection with the issuance of REIT Shares by the Parent REIT) shall be
prorated based on the portion of the period that such units were outstanding. 
The General Partner in its sole and absolute discretion may distribute to the
Unitholders Available Cash on a more frequent basis and provide for an
appropriate Partnership Record Date.  Notwithstanding anything herein to the
contrary, the General Partner shall make such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with the Parent REIT’s
qualification as a REIT, to cause the Partnership to distribute sufficient
amounts to enable the Parent REIT to pay shareholder dividends that will
(a) satisfy the REIT Requirements, and (b) except to the extent otherwise
determined by the General Partner, avoid any federal income or excise tax
liability of the Parent REIT.

 

Section 5.2                                    Distributions in Kind.  No right
is given to any Unitholder to demand and receive property other than cash as
provided in this Agreement.  The General Partner may determine, in its sole and
absolute discretion, to make a distribution in kind of Partnership assets to the
Unitholders, and such assets shall be distributed in such a fashion as to ensure
that the fair market value is distributed and allocated in accordance with
Articles V, VI and X hereof.

 

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

 

Section 5.4                                    Distributions Upon Liquidation. 
Notwithstanding the other provisions of this Article V, net proceeds from a
Terminating Capital Transaction, and any other cash received or reductions in
reserves made after commencement of the liquidation of the Partnership, shall be
distributed to the Unitholders in accordance with Section 13.2 hereof.

 

Section 5.5                                    Distributions to Reflect Issuance
of Additional Partnership Units.  In the event that the Partnership issues
additional Partnership Units pursuant to the provisions of Article IV hereof,
subject to Section 7.3D, the General Partner is hereby authorized to make such
revisions to this Article V as it determines are necessary or desirable to
reflect the issuance of such additional Partnership Units, including, without
limitation, making preferential distributions to certain classes of Partnership
Units.

 

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

 

ARTICLE VI

 

ALLOCATIONS

 

Section 6.1                                    Timing and Amount of Allocations
of Net Income and Net Loss.  Net Income and Net Loss of the Partnership shall be
determined and allocated with respect to each Partnership Year of the
Partnership as of the end of each such year.  Except as otherwise provided in
this Article XI and subject to Section 11.6C hereof, an allocation to a
Unitholder of a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.

 

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Section 6.2                                    General Allocations.

 

A.                                    In General. Subject to the terms of any
Partnership Unit Designation and Section 4.10, except as otherwise provided in
this Article VI and subject to Section 11.6C hereof, Net Income and Net Loss
shall be allocated to each of the Holders of Partnership Common Units in
accordance with their respective Percentage Interests at the end of each
Partnership Year.

 

B.                                    Allocations to Reflect Issuance of
Additional Partnership Units.  In the event that the Partnership issues
additional Partnership Units pursuant to the provisions of Article IV hereof,
the General Partner is hereby authorized to make such revisions to this
Section 6.2 as it determines are necessary or desirable to reflect the terms of
the issuance of such additional Partnership Units, including, without
limitation, making preferential allocations to certain classes of Partnership
Units.

 

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

 

A.                                    Special Allocations Regarding Partnership
Preferred Units.  If any Partnership Preferred Units are redeemed pursuant to
Section 4.6B hereof (treating a full liquidation of the General Partner Interest
for purposes of this Section 6.3A as including a redemption of any then
outstanding Partnership Preferred Units pursuant to Section 4.6B hereof), for
the Partnership Year that includes such redemption (and, if necessary, for
subsequent Partnership Years) (a) gross income and gain shall be allocated to
the General Partner to the extent that the amounts paid or payable with respect
to the Partnership Preferred Units so redeemed (or treated as redeemed) exceed
the aggregate Capital Contributions (net of liabilities assumed or taken subject
to by the Partnership) per Partnership Preferred Unit allocable to the
Partnership Preferred Units so redeemed (or treated as redeemed) and
(b) deductions and losses shall be allocated to the General Partner to the
extent that the aggregate Capital Contributions (net of liabilities assumed or
taken subject to by the Partnership) per Partnership Preferred Unit allocable to
the Partnership Preferred Units so redeemed (or treated as redeemed) exceed the
amount paid or payable with respect to the Partnership Preferred Units so
redeemed (or treated as redeemed).

 

B.                                    Regulatory Allocations.

 

(1)                                 Minimum Gain Chargeback.  Except as
otherwise provided in Regulations Section 1.704-2(f), notwithstanding the
provisions of Section 6.2 hereof, or any other provision of this Article VI, if
there is a net decrease in Partnership Minimum Gain during any Partnership Year,
each Holder of Partnership Units shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Holder’s share of the net decrease in Partnership
Minimum Gain, as determined under Regulations Section 1.704-2(g).  Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Holder pursuant thereto.  The items to
be allocated shall be determined in accordance with Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2).  This Section 6.3B(1) is intended to qualify as
a “minimum gain chargeback” within the meaning of Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith.

 

(2)                                 Partner Minimum Gain Chargeback.  Except as
otherwise provided in Regulations Section 1.704-2(i)(4) or in
Section 6.3B(1) hereof, if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership Year, each
Holder of Partnership Units who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(5), shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Holder’s share of the net decrease in Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i)(4).  Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each General Partner, Limited Partner and other Holder pursuant
thereto.  The items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2).  This Section 6.3B(2) is
intended to qualify as a “chargeback of partner nonrecourse debt minimum gain”
within the meaning of Regulations Section 1.704-2(i) and shall be interpreted
consistently therewith.

 

(3)                                 Nonrecourse Deductions and Partner
Nonrecourse Deductions.  Any Nonrecourse Deductions for any Partnership Year
shall be specially allocated to the Holders of Partnership

 

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

 

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

 

(5)                                 Gross Income Allocation.  In the event that
any Holder of Partnership Units has a deficit Capital Account at the end of any
Partnership Year that is in excess of the sum of (1) the amount (if any) that
such Holder is obligated to restore to the Partnership upon complete liquidation
of such Holder’s Partnership Interest (including, the Holder’s interest in
outstanding Partnership Preferred Units and other Partnership Units) and (2) the
amount that such Holder is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
each such Holder shall be specially allocated items of Partnership income and
gain in the amount of such excess to eliminate such deficit as quickly as
possible, provided that an allocation pursuant to this Section 6.3B(5) shall be
made if and only to the extent that such Holder would have a deficit Capital
Account in excess of such sum after all other allocations provided in this
Article VI have been tentatively made as if this Section 6.3B(5) and
Section 6.3B(4) hereof were not in the Agreement.

 

(6)                                 Limitation on Allocation of Net Loss.  To
the extent that any allocation of Net Loss would cause or increase an Adjusted
Capital Account Deficit as to any Holder of Partnership Units, such allocation
of Net Loss shall be reallocated among the other Holders of Partnership Units in
accordance with their respective Partnership Units, subject to the limitations
of this Section 6.3B(6).

 

(7)                                 Section 754 Adjustment.  To the extent that
an adjustment to the adjusted tax basis of any Partnership asset pursuant to
Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4),
to be taken into account in determining Capital Accounts as the result of a
distribution to a Holder of Partnership Units in complete liquidation of its
interest in the Partnership, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Holders in accordance with
their Partnership Common Units in the event that Regulations Section 1.704-
1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such distribution was made
in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

(8)                                 Curative Allocations.  The allocations set
forth in Sections 6.3B(1), (2), (3), (4), (5), (6) and (7) hereof (the
“Regulatory Allocations”) are intended to comply with certain regulatory
requirements, including the requirements of Regulations Sections 1.704-1(b) and
1.704-2. Notwithstanding the provisions of Section 6.1 hereof, the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Holders of Partnership Units so that to the
extent possible without violating the requirements giving rise to the Regulatory
Allocations, the net amount of such allocations of other items and the
Regulatory Allocations to each Holder of a Partnership Unit shall be equal to
the net amount that would have been allocated to each such Holder if the
Regulatory Allocations had not occurred.

 

C.                                    Special Allocations Upon Liquidation. 
Notwithstanding any provision in this Article VI to the contrary, in the event
that the Partnership disposes of all or substantially all of its assets in a
transaction that will lead to a liquidation of

 

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the Partnership pursuant to Article XIII hereof, then any Net Income or Net Loss
realized in connection with such transaction and thereafter (and, if necessary,
constituent items of income, gain, loss and deduction) shall be specially
allocated among the Partners as required so as to cause liquidating
distributions pursuant to Section 13.2A(4) hereof to be made in the same amounts
and proportions as would have resulted had such distributions instead been made
pursuant to Article V hereof (other than Section 5.4 hereof).

 

D.                                    Allocation of Excess Nonrecourse
Liabilities.  The Partnership shall allocate “nonrecourse liabilities” (within
the meaning of Regulations Section 1.752-1(a)(2)) of the Partnership that are
secured by multiple Properties under any reasonable method chosen by the General
Partner in accordance with Regulations Section 1.752-3(a)(3)(b).  The
Partnership shall allocate “excess nonrecourse liabilities” of the Partnership
under any method approved under Regulations Section 1.752-3(a)(3) as chosen by
the General Partner.  For purposes of determining a Holder’s proportional share
of the “excess nonrecourse liabilities” of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Holder’s interest in Partnership profits
shall be equal to such Holder’s share of Partnership Units.

 

Section 6.4                                    Tax Allocations.

 

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

 

B.                                    Allocations Respecting
Section 704(c) Revaluations.  Notwithstanding Section 6.4A hereof, Tax Items
with respect to Property that is contributed to the Partnership with a Gross
Asset Value that varies from its basis in the hands of the contributing Partner
immediately preceding the date of contribution shall be allocated among the
Holders of Partnership Common Units for income tax purposes pursuant to
Regulations promulgated under Code Section 704(c) so as to take into account
such variation.  The Partnership shall account for such variation under any
method approved under Code Section 704(c) and the applicable Regulations as
chosen by the General Partner, including, without limitation, the “remedial
allocation method” as described in Regulations Section 1.704-3(d).  In the event
that the Gross Asset Value of any partnership asset is adjusted pursuant to
subsection (b) of the definition of “Gross Asset Value” (provided in Article I
hereof), subsequent allocations of Tax Items with respect to such asset shall
take account of the variation, if any, between the adjusted basis of such asset
and its Gross Asset Value in the same manner as under Code Section 704(c) and
the applicable Regulations.

 

ARTICLE VII

 

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 Partners with or without cause, except with
the consent of the General Partner.  In addition to the powers now or hereafter
granted to a general partner of a limited partnership under applicable law or
that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof including
Section 7.3, shall have full power and authority to do all things deemed
necessary or desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.2 hereof and to effectuate the
purposes set forth in Section 3.1 hereof, including, without limitation:

 

(1)                                 the making of any expenditures, the lending
or borrowing of money (including, without limitation, making prepayments on
loans and borrowing money or selling assets to permit the Partnership to make
distributions to its Partners in such amounts as will permit the Parent REIT (so
long as the Parent REIT desires to maintain or restore its status as a REIT) to
avoid the payment of any federal income tax (including, for this purpose, any
excise tax pursuant to Code Section 4981) and to make distributions sufficient
to permit the Parent REIT to maintain or restore REIT status or otherwise to
satisfy

 

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

 

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

 

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

 

(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 operations and activities of
the Parent REIT, the General Partner, the Partnership or any of the
Partnership’s Subsidiaries, the lending of funds to other Persons (including,
without limitation, the Partnership’s Subsidiaries) and the repayment of
obligations of the Partnership, its Subsidiaries and any other Person in which
the Partnership has an equity investment, and the making of capital
contributions to and equity investments in the Partnership’s Subsidiaries;

 

(5)                                 the management, operation, leasing,
landscaping, repair, alteration, demolition, replacement or improvement of any
Property, including, without limitation, any Contributed Property, or other
asset of the Partnership or any Subsidiary, whether pursuant to a Services
Agreement or otherwise;

 

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

 

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

 

(8)                                 the maintenance of such insurance for the
benefit of the Partnership and the Partners as it deems necessary or
appropriate, including, without limitation, (i) casualty, liability and other
insurance on the Properties and (ii) liability insurance for the Indemnitees
hereunder;

 

(9)                                 the formation of, or acquisition of an
interest in, and the contribution of property to, any further limited or general
partnerships, limited liability companies, joint ventures or other relationships
that it deems desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to, any Subsidiary and any other
Person in which it has an equity investment from time to time); provided,
however, that, as long as the Parent REIT has determined to continue to qualify
as a REIT, the General Partner may not engage in any such formation, acquisition
or contribution that would cause the Parent REIT to fail to qualify as a REIT
within the meaning of Code Section 856(a);

 

(10)                          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

 

27

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legal proceedings, administrative proceedings, arbitrations or other forms of
dispute resolution, the incurring of legal expense, and the indemnification of
any Person against liabilities and contingencies to the extent permitted by law;

 

(11)                          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 of Property or
contribution or loan of funds by the Partnership to such Persons);

 

(12)                          except as otherwise specifically set forth in this
Agreement, the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of valuation as it may
adopt; provided that such methods are otherwise consistent with the requirements
of this Agreement;

 

(13)                          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;

 

(14)                          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;

 

(15)                          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;

 

(16)                          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;

 

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

 

(18)                          the issuance of additional Partnership Units, as
appropriate and in the General Partner’s sole and absolute discretion, in
connection with Capital Contributions by Additional Limited Partners and
additional Capital Contributions by Partners pursuant to Article IV hereof;

 

(19)                          the selection and dismissal of Company Employees
(including, without limitation, employees having titles or offices such as
president, vice president, secretary and treasurer), and agents, outside
attorneys, accountants, consultants and contractors of the Partnership or the
General Partner, the determination of their compensation and other terms of
employment or hiring and the delegation to any such Company Employee the
authority to conduct the business of the Partnership in accordance with the
terms of this Agreement; and

 

(20)                          an election to dissolve the Partnership pursuant
to Section 13.1C hereof.

 

B.                                    Each of the Limited Partners agrees that,
except as provided in Section 7.3 hereof, 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, the Act or any
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.

 

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

 

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

 

Section 7.2                                    Certificate of Limited
Partnership.  To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all 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, the District of Columbia or any other jurisdiction, in
which the Partnership may elect to do business or own property.  Except as
otherwise required under the Act, the General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any
amendment thereto to any Limited Partner.  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 to the extent provided by applicable
law) in the State of Delaware and any other state, or the District of Columbia
or other jurisdiction, in which the Partnership may elect to do business or own
property.

 

Section 7.3                                    Restrictions on General Partner’s
Authority.

 

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

 

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

 

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

 

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

 

(4)                                 performing any act that would subject a
Limited Partner to liability as a general partner in any jurisdiction or any
other liability except as provided Section 10.4 hereof or under the Act; or

 

(5)                                 entering into any contract, mortgage, loan
or other agreement that prohibits or restricts the ability of (a) the General
Partner, the Parent REIT or the Partnership from satisfying its obligations
under Section 8.6 hereof in full or (b) a Limited Partner from exercising its
rights under Section 8.6 hereof to effect a Redemption in full, except, in
either case, with the written consent of such Limited Partner affected by the
prohibition or restriction.

 

B.                                    The General Partner shall not, without the
prior Consent of the Limited Partners, except as provided in Sections 4.2A, 5.5,
6.2B and 7.3C hereof, amend, modify or terminate this Agreement.

 

C.                                    Notwithstanding Section 7.3B hereof, 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;

 

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

 

(3)                                 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;

 

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

 

(5)                                 to reflect such changes as are reasonably
necessary for the Parent REIT to maintain or restore its status as a REIT or to
satisfy the REIT Requirements;

 

(6)                                 to modify the manner in which Capital
Accounts are computed (but only to the extent set forth in the definition of
“Capital Account” or contemplated by the Code or the Regulations);

 

(7)                                 to address any future amendments to or
Regulations promulgated under the New Partnership Audit Procedures; and

 

(8)                                 to issue additional Partnership Interests in
accordance with Section 4.2.

 

D.                                    Notwithstanding Sections 7.3B and 7.3C
hereof, this Agreement shall not be amended, and no action may be taken by the
General Partner, without the Consent of each Partner adversely affected thereby,
if such amendment or action would (i) convert a Limited Partner Interest in the
Partnership into a General Partner Interest (except as a result of the General
Partner acquiring such Partnership Interest), (ii) modify the limited liability
of a Limited Partner, (iii) alter the rights of any Partner to receive the
distributions to which such Partner is entitled, pursuant to Article V or
Section 13.2A hereof, or alter the allocations specified in Article VI hereof
(except, in any case, as permitted pursuant to Sections 4.2, 5.5, 6.2B and 7.3C
hereof), (iv) alter or modify the Redemption rights, Cash Amount, REIT
Consideration, or REIT Shares Amount as set forth in Sections 8.6 and 11.2
hereof, or amend or modify any related definitions, or (v) amend this
Section 7.3D; 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.  Further, no amendment may alter the restrictions on the General
Partner’s authority set forth elsewhere in this Section 7.3 without the Consent
specified therein.  Any such amendment or action consented to by any Partner
shall be effective as to that Partner, notwithstanding the absence of such
consent by any other Partner.

 

Section 7.4                                    Reimbursement of the General
Partner.

 

A.                                    The General Partner shall not be
compensated for its services as general partner of the Partnership except as
provided in this Agreement (including the provisions of Articles V and VI hereof
regarding distributions, payments and allocations to which it may be entitled in
its capacity as the General Partner).

 

B.                                    Subject to Sections 7.4C and 15.11 hereof,
the Partnership shall be liable for, and shall reimburse the General Partner and
the Parent REIT on a monthly basis, or such other basis as the General Partner
may determine in its sole and absolute discretion, for all sums expended in
connection with the Partnership’s business, including, without limitation,
(i) expenses relating to the ownership of interests in and management and
operation of, or for the benefit of, the Partnership, (ii) compensation of
officers and employees, including, without limitation, payments under future
compensation plans of the Parent REIT that may provide for stock units, or
phantom stock, pursuant to which employees of the Parent REIT will receive
payments based upon dividends on or the value of REIT Shares, (iii) director
fees and expenses and (iv) all costs and expenses of the Parent REIT being a
public company, including costs of filings with the SEC, reports and other
distributions to its shareholders; provided, however, that the amount of any
reimbursement shall be reduced by any interest earned by the Parent REIT with
respect to bank accounts or other instruments or accounts held by it on behalf
of the Partnership as permitted pursuant to Section 7.5 hereof.  Such

 

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reimbursements shall be in addition to any reimbursement of the General Partner
as a result of indemnification pursuant to Section 7.7 hereof.

 

C.                                    To the extent practicable, Partnership
expenses shall be billed directly to and paid by the Partnership and, subject to
Section 15.11 hereof, reimbursements to the General Partner or any of its
Affiliates by the Partnership pursuant to this Section 7.4 shall be treated as
non-income reimbursements, and not as “guaranteed payments” within the meaning
of Code Section 707(c) or other form of gross income.

 

Section 7.5                                    Outside Activities of the General
Partner.  The General Partner and the Parent REIT shall not directly or
indirectly enter into or conduct any business, other than in connection with
(a) the ownership, acquisition and disposition of Partnership Interests, (b) the
management of the business of the Partnership, (c) the operation of the Parent
REIT as a reporting company with a class (or classes) of securities registered
under the Exchange Act, (d) the Parent REIT’s operations as a REIT, (e) the
offering, sale, syndication, private placement or public offering of stock,
bonds, securities or other interests, (f) financing or refinancing of any type
related to the Partnership or its assets or activities, (g) any of the foregoing
activities as they relate to a Subsidiary of the Partnership or of the General
Partner and (h) such activities as are incidental thereto.  Nothing contained
herein shall be deemed to prohibit the General Partner from executing guarantees
of Partnership debt for which it would otherwise be liable in its capacity as
General Partner.  Subject to Section 7.3B hereof, the Parent REIT shall not own
any assets or take title to assets (other than temporarily in connection with an
acquisition prior to contributing such assets to the Partnership) other
(i) interests in Qualified REIT Subsidiaries, including without limitation, the
General Partner and the Initial Limited Partner, (ii) Partnership Interests, and
(ii) such cash and cash equivalents, bank accounts or similar instruments or
accounts as the Parent REIT deems reasonably necessary, taking into account
Section 7.1D hereof and the requirements necessary for the Parent REIT to carry
out its responsibilities contemplated under this Agreement and the Charter and
to qualify as a REIT.  Notwithstanding the foregoing, if the Parent REIT
acquires assets in its own name and owns Property other than through the
Partnership, the Partners agree to negotiate in good faith to amend this
Agreement, including, without limitation, the definition of “Adjustment Factor,”
to reflect such activities and the direct ownership of assets by the Parent
REIT.  The Parent REIT and any Affiliates of the Parent REIT 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 Subsidiaries or other Persons in which it has an
equity investment, and such Persons may borrow funds from the Partnership, on
terms and conditions established in the sole and absolute discretion of the
General Partner.  The foregoing authority shall not create any right or benefit
in favor of any Subsidiary or any other Person.

 

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

 

C.                                    Except as expressly permitted by this
Agreement, neither the General Partner nor any of its Affiliates shall sell,
transfer or convey any property to 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 funded by
the Partnership for the benefit of employees of the Parent REIT, 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 or any of the Partnership’s Subsidiaries.

 

E.                                     The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, any
Services Agreement with Affiliates of any of the Partnership or the General
Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.

 

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Section 7.7                                    Indemnification.

 

A.                                    To the fullest extent permitted by
applicable law, the Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities (whether joint or several),
expenses (including, without limitation, attorney’s fees and other legal fees
and expenses), judgments, fines, settlements and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership (“Actions”) as set forth in this Agreement in which such Indemnitee
may be involved, or is threatened to be involved, as a party or otherwise;
provided, however, that the Partnership shall not indemnify an Indemnitee
(i) for the act or omission of the Indemnitee material to the matter giving rise
to the proceeding which was committed in bad faith or was the result of active
and deliberate dishonesty; (ii) for any transaction for which such Indemnitee
received an improper personal benefit (in money, property or services) in
violation or breach of any provision of this Agreement; or (iii) in the case of
a criminal proceeding, for an unlawful act or omission by the Indemnitee for
which the Indemnitee had reasonable cause to believe was unlawful.  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.  It is the intention of this Section 7.7A that the Partnership
indemnify each Indemnitee to the fullest extent permitted by law.  The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7A.  The termination of any proceeding by conviction
of an Indemnitee or upon a plea of nolo contendere or its equivalent by an
Indemnitee, or an entry of an order of probation against an Indemnitee prior to
judgment, does not create a presumption that such Indemnitee acted in a manner
contrary to that specified in this Section 7.7A with respect to the subject
matter of such proceeding.  Any indemnification pursuant to this Section 7.7
shall be made only out of the assets of the Partnership, and neither the 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.                                    To the fullest extent permitted by law,
expenses incurred by an Indemnitee who is a party to a proceeding or otherwise
subject to or the focus of or is involved in any Action shall be paid or
reimbursed by the Partnership as incurred by the Indemnitee in advance of the
final disposition of the Action upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee’s good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7A has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.

 

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

 

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

 

E.                                     Any liabilities which an Indemnitee
incurs as a result of acting on behalf of the Partnership, the Parent REIT or
the General Partner (whether as a fiduciary or otherwise) in connection with the
operation, administration or maintenance of an employee benefit plan or any
related trust or funding mechanism (whether such liabilities are in the form of
excise taxes assessed by the IRS, penalties assessed by the Department of Labor,
restitutions to such a plan or trust or other funding mechanism or to a
participant or beneficiary of such plan, trust or other funding mechanism, or
otherwise) shall be treated as liabilities or judgments or fines under this
Section 7.7, unless such liabilities arise as a result of (i) the act or
omission of the Indemnitee material to the matter giving rise to the proceeding
which was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) any transaction for which such

 

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Indemnitee received an improper personal benefit (in money, property or
services) in violation or breach of any provision of this Agreement; or (iii) in
the case of a criminal proceeding, an unlawful act or omission by the Indemnitee
for which the Indemnitee had reasonable cause to believe was unlawful.

 

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

 

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

 

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

 

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

 

Section 7.8                                    Liability of the General Partner.

 

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

 

B.                                    The Limited Partners expressly acknowledge
that the General Partner is acting for the benefit of the Partnership, the
Limited Partners and the General Partner’s shareholders collectively and that
the General Partner is under no obligation to give priority to the separate
interests of the Limited Partners or the General Partner’s shareholders
(including, without limitation, the tax consequences to Limited Partners,
Assignees or the General Partner’s shareholders) in deciding whether to cause
the Partnership to take (or decline to take) any actions.

 

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

 

D.                                    To the extent that, at law or in equity,
the General Partner has duties (including fiduciary duties) and liabilities
relating thereto to the Partnership or the Limited Partners, the General Partner
shall not be liable to the Partnership or to any other Partner for its good
faith reliance on the provisions of this Agreement.  The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of the
General Partner otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such General Partner.

 

E.                                     Notwithstanding anything herein to the
contrary, except for fraud, willful misconduct or gross negligence, or pursuant
to any express indemnities given to the Partnership by any Partner pursuant to
any other written instrument, no Partner shall have any personal liability
whatsoever, to the Partnership or to the other Partner(s), for the debts or
liabilities of the Partnership or the Partnership’s obligations hereunder, and
the full recourse of the other Partner(s) shall be limited to the interest of
that Partner in the Partnership.  To the fullest extent permitted by law, no
officer, director or shareholder of the General Partner or Parent REIT shall be
liable to the Partnership for money damages except for (i) active and deliberate
dishonesty established by a non-appealable final judgment or (ii) actual receipt
of an improper benefit or profit in money, property or services.  Without
limitation of the foregoing, and

 

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except for fraud, willful misconduct or gross negligence, or pursuant to any
such express indemnity, no property or assets of any Partner, other than its
interest in the Partnership, shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment (or other judicial
process) in favor of any other Partner(s) and arising out of, or in connection
with, this Agreement.  This Agreement is executed by the officers of the General
Partner solely as officers of the same and not in their own individual
capacities.

 

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

 

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, 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 that 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 a duly appointed attorney or
attorneys-in-fact.  Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty that is permitted or required to be done
by the General Partner hereunder.

 

D.                                    Notwithstanding any other provision 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
Parent REIT to continue to qualify as a REIT, (ii) for the Parent REIT otherwise
to satisfy the REIT Requirements, (iii) to avoid the Parent REIT incurring any
taxes under Code Section 857 or Code Section 4981, 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 with other Partners or Persons, shall have
any ownership interest in such Partnership assets or any portion thereof.  Title
to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner.  The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement.  All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.

 

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

 

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or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expediency
of any act or action of the General Partner or its representatives.  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 in good faith thereon or
claiming thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (iii) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.

 

ARTICLE VIII

 

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.1                                    Limitation of Liability.  The
Limited Partners shall have no liability under this Agreement (other than for
breach thereof) except as expressly provided in Section 10.4 or under the Act.

 

Section 8.2                                    Management of Business.  No
Limited Partner or Assignee (other than the General Partner, any of its
Affiliates or any officer, director, member, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operations, management or control
(within the meaning of the Act) of the Partnership’s business, transact any
business in the Partnership’s name or have the power to sign documents for or
otherwise bind the Partnership.  The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, member,
employee, partner, agent, representative, or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.

 

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

 

Section 8.4                                    Return of Capital.  Except
pursuant to the rights of Redemption set forth in Section 8.6 hereof, no Limited
Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein.  Except to
the extent provided in Article VI hereof or otherwise expressly provided in this
Agreement, no Limited Partner or Assignee shall have priority over any other
Limited Partner or Assignee either as to the return of Capital Contributions or
as to profits, losses or distributions.

 

Section 8.5                                    Adjustment Factor.  The
Partnership shall notify any Limited Partner that is a Qualifying Party, on
request, of the then current Adjustment Factor or any change made to the
Adjustment Factor.

 

Section 8.6                                    Redemption Rights of Qualifying
Parties.

 

A.                                    After the Twelve-Month Period applicable
to such Partnership Common Units and subject to Section 11.6D, a Qualifying
Party, but no other Limited Partner or Assignee, shall have the right (subject
to the terms and conditions

 

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set forth herein) to require the Partnership to redeem (a “Redemption”) all or a
portion of the Partnership Common Units held by such Qualifying Party (such
Partnership Common Units being hereafter “Tendered Units”) in exchange for the
Cash Amount payable on the Specified Redemption Date.  Any Redemption shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
such Qualifying Party (the “Tendering Party”) when exercising the Redemption
right.  The Partnership’s obligation to effect a Redemption, however, shall not
arise or be binding against the Partnership (i) until and unless there has been
a Declination and (ii) before the Business Day following the Cut-Off Date. 
Regardless of the binding or non-binding nature of a pending Redemption, a
Tendering Party shall have no right to receive distributions with respect to any
Tendered Units (other than the Cash Amount) paid after delivery of the Notice of
Redemption, whether or not the Partnership Record Date for such distribution
precedes or coincides with such delivery of the Notice of Redemption; provided,
however, that in the event that the General Partner on behalf of the Partnership
elects to fund the Cash Amount with the proceeds of an Offering Funding pursuant
to Section 8.6D hereof, the Tendering Party’s right to receive distributions
shall not be suspended as hereinbefore provided and such Tendering Party shall
have the right to receive distributions actually made hereunder prior to the
date of the closing of the Offering Funding the proceeds of which are used to
pay the Cash Amount.  In the event of a Redemption, the Cash Amount shall be
delivered as a certified check payable to the Tendering Party or, in the General
Partner’s sole and absolute discretion, in immediately available funds.

 

B.                                    Notwithstanding the provisions of
Section 8.6A hereof, on or before the close of business on the Cut-Off Date, the
REIT Parties may, in their sole and absolute discretion but subject to the
Ownership Limit and the transfer restrictions and other limitations of the
Charter, elect to acquire, some or all of the Tendered Units from the Tendering
Party (such percentage being referred to as the “Applicable Percentage”) in
exchange for the REIT Consideration.  In making such election, the REIT Parties
shall act in a fair, equitable and reasonable manner that neither prefers one
group or class of Qualifying Parties over another nor discriminates against a
group or class of Qualifying Parties.  If any REIT Party so elects, on the
Specified Redemption Date the Tendering Party shall sell the Applicable
Percentage of the Tendered Units to the REIT Party in exchange for the REIT
Consideration.  The Tendering Party shall submit (i) such information,
certification or affidavit as the Parent REIT may reasonably require in
connection with the application of the Ownership Limit and other restrictions
and limitations of the Charter to any such acquisition and (ii) such written
representations, investment letters, legal opinions or other instruments
necessary, in the view of the REIT Party to effect compliance with the
Securities Act.  In the event of a purchase of any Tendered Units by a REIT
Party pursuant to this Section 8.6B, the Tendering Party shall no longer have
the right to cause the Partnership to effect a Redemption of such Tendered
Units, and, upon notice to the Tendering Party by a REIT Party given on or
before the close of business on the Cut-Off Date, that the REIT Party has
elected to acquire some or all of the Tendered Units pursuant to this
Section 8.6B, the obligation of the Partnership to effect a Redemption of the
Tendered Units as to which the notice by the REIT Party relates shall not accrue
or arise.  The REIT Consideration shall be delivered by the REIT Party as duly
authorized, validly issued, fully paid and non-assessable REIT Shares and, if
applicable, Rights, free of any pledge, lien, encumbrance or restriction, other
than the Ownership Limit and other restrictions provided in the Charter, the
Bylaws of the Parent REIT, the Securities Act and relevant state securities or
“blue sky” laws.  Neither any Tendering Party whose Tendered Units are acquired
by a REIT Party pursuant to this Section 8.6B, any Partner, any Assignee nor any
other interested Person shall have any right to require or cause the Parent REIT
to register, qualify or list any REIT Shares owned or held by such Person,
whether or not such REIT Shares are issued pursuant to this Section 8.6B, with
the SEC, with any state securities commissioner, department or agency, under the
Securities Act or the Exchange Act or with any stock exchange; provided,
however, that this limitation shall not be in derogation of any registration or
similar rights granted pursuant to any other written agreement between the
Parent REIT and any such Person.  Notwithstanding any delay in such delivery,
the Tendering Party shall be deemed the owner of such REIT Shares and Rights for
all purposes, including, without limitation, rights to vote or consent, receive
dividends, and exercise rights, as of the Specified Redemption Date.  REIT
Shares issued upon an acquisition of the Tendered Units by the Parent REIT
pursuant to this Section 8.6B may contain such legends regarding restrictions
under the Securities Act and applicable state securities laws as the Parent REIT
in good faith determines to be necessary or advisable in order to ensure
compliance with such laws.

 

C.                                    Notwithstanding the provisions of Sections
8.6A and 8.6B hereof, no Tendering Party shall have any rights (including any
right to a Redemption pursuant to Section 8.6A) under this Agreement that would
otherwise be prohibited under the Charter with respect to the Ownership Limit. 
To the extent that any attempted Redemption or acquisition of the Tendered Units
by a REIT Party pursuant to Section 8.6B hereof would be in violation of this
Section 8.6C, it shall be null and void ab initio, and the Tendering Party shall
not acquire any rights or economic interests in REIT Shares otherwise issuable
by the Parent REIT under Section 8.6B hereof.

 

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D.                                    To the extent that the REIT Parties
decline or fail to exercise their purchase rights for all Tendered Units
pursuant to Section 8.6B hereof following receipt of a Notice of Redemption (a
“Declination”):

 

(1)                                 The General Partner shall give notice of
such Declination to the Tendering Party on or before the close of business on
the Cut-Off Date.  The failure of the General Partner to give notice of such
Declination by the close of business on the Cut-Off Date shall itself constitute
a Declination.

 

(2)                                 Subject to Section 11.6D, the Parent REIT on
behalf of the Partnership may elect to raise funds for the payment of all or any
percentage of the Cash Amount either (a) by contribution by a REIT Party of
funds from the proceeds of a private placement or registered public offering
(each, an “Offering Funding”) by the Parent REIT of a number of REIT Shares or
other securities of the Parent REIT (“Offering Funding Shares”) or (b) from any
other sources (including, but not limited to, the sale of any Property and the
incurrence of additional Debt) available to the Partnership.

 

(3)                                 If an Offering Funding has been elected by
the General Partner, promptly upon the General Partner ‘s receipt of the Notice
of Redemption and the General Partner giving notice of its Declination, the
General Partner shall give notice (a “Single Funding Notice”) to all Qualifying
Parties then holding a Partnership Interest (or an interest therein) and having
Redemption rights pursuant to this Section 8.6 and require that all such
Qualifying Parties elect whether or not to effect a Redemption of their
Partnership Common Units to be funded through an Offering Funding.  In the event
that any such Qualifying Party elects to effect such a Redemption, it shall give
notice thereof and of the number of Partnership Common Units to be made subject
thereto in writing to the General Partner within ten (10) Business Days after
receipt of the Single Funding Notice, and such Qualifying Party shall be treated
as a Tendering Party for all purposes of this Section 8.6.  In the event that a
Qualifying Party does not so elect, it shall be deemed to have waived its right
to effect a Redemption; provided, however, that the General Partner shall not be
required to acquire Partnership Common Units pursuant to this Section 8.6D more
than twice within a calendar year from a particular Qualifying Party.

 

E.                                     Notwithstanding the provisions of
Section 8.6B hereof, a REIT Party shall not, under any circumstances, elect to
acquire Tendered Units in exchange for the REIT Consideration if such exchange
would be prohibited under the Charter.

 

F.                                      Notwithstanding anything herein to the
contrary (but subject to Section 8.6C hereof), with respect to any Redemption
(or any tender of Partnership Common Units for Redemption if the Tendered Units
are acquired by a REIT Party pursuant to Section 8.6B hereof) pursuant to this
Section 8.6:

 

(1)                                 All Partnership Common Units acquired by the
General Partner pursuant to Section 8.6B hereof may, at the election of the
General Partner, be converted into and deemed to be a General Partner Interest
comprised of the same number of Partnership Common Units.

 

(2)                                 Subject to the Ownership Limit, no Tendering
Party may effect a Redemption for less than five hundred (500) Partnership
Common Units or, if such Tendering Party holds (as a Limited Partner or,
economically, as an Assignee) less than five hundred (500) Partnership Common
Units, all of the Partnership Common Units held by such Tendering Party.

 

(3)                                 Each Tendering Party (a) may effect a
Redemption only once in each fiscal quarter of a twelve-month period, unless
otherwise permitted by the General Partner, in its sole and absolute discretion
and (b) may not effect a Redemption during the period after the Partnership
Record Date with respect to a distribution and before the record date
established by the Parent REIT for a distribution to its shareholders of some or
all of its portion of such Partnership distribution.

 

(4)                                 Notwithstanding anything herein to the
contrary, with respect to any Redemption or acquisition of Tendered Units by a
REIT Party pursuant to Section 8.6B hereof, in the event that the General
Partner gives notice to all Limited Partners (but excluding any Assignees) then
owning Partnership Interests (a “Primary Offering Notice”) that the Parent REIT
desires to effect a primary offering of its

 

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equity securities, then, unless the General Partner otherwise consents,
commencement of the actions denoted in Section 8.6D hereof as to an Offering
Funding, if any, with respect to any Notice of Redemption thereafter received,
whether or not the Tendering Party is a Limited Partner, may be delayed until
the earlier of (a) the completion of the primary offering or (b) ninety (90)
days following the giving of the Primary Offering Notice.

 

(5)                                 Without the consent of the General Partner,
no Tendering Party may effect a Redemption within ninety (90) days following the
closing of any prior Offering Funding.

 

(6)                                 The consummation of such Redemption (or an
acquisition of Tendered Units by a REIT Party pursuant to Section 8.6B hereof,
as the case may be) shall be subject to the expiration or termination of the
applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

 

(7)                                 Subject to Section 8.6A, the Tendering Party
shall continue to own (subject, in the case of an Assignee, to the provision of
Section 11.5 hereof) all Partnership Common Units subject to any Redemption, and
be treated as a Limited Partner or an Assignee, as applicable, with respect to
such Partnership Common Units for all purposes of this Agreement, until such
Partnership Common Units are either paid for by the Partnership pursuant to
Section 8.6A hereof or transferred to a REIT Party and paid for, by the issuance
of the REIT Shares, pursuant to Section 8.6B hereof on the Specified Redemption
Date.  Until a Specified Redemption Date and an acquisition of the Tendered
Units by a REIT Party pursuant to Section 8.6B hereof, the Tendering Party shall
have no rights as a shareholder of the Parent REIT with respect to the REIT
Shares issuable in connection with such acquisition.

 

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

 

(9)                                 No Limited Partner may require a Redemption
hereunder to the extent that the issuance of REIT Consideration pursuant to
Section 8.6B hereof would violate ownership limitations contained in the Charter
or would violate any REIT Requirement (notwithstanding that any such Tendered
Units could otherwise be acquired for cash pursuant to Section 8.6A hereof).

 

(10)                          No Tendering Party may require a Redemption
hereunder if the issuance of REIT Consideration would be likely to cause the
acquisition of such REIT Consideration by such Tendering Party to be
“integrated” with any other distribution of common stock of the Parent REIT or
of Limited Partnership Interests for purposes of complying with the Securities
Act.

 

For purposes of determining compliance with the restrictions set forth in this
Section 8.6F, all Partnership Common Units beneficially owned by a Related Party
of a Tendering Party shall be considered to be owned or held by such Tendering
Party.

 

G.                                    In connection with an exercise of
Redemption rights pursuant to this Section 8.6, the Tendering Party shall submit
the following to the General Partner, in addition to the Notice of Redemption:

 

(1)                                 A written affidavit, dated the same date as
the Notice of Redemption, (a) disclosing the actual and constructive ownership,
as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares
by (i) such Tendering Party and (ii) any Related Party and (b) representing
that, after giving effect to the Redemption or an acquisition of the Tendered
Units by the General Partner pursuant to Section 8.6B hereof, neither the
Tendering Party nor any Related Party will own REIT Shares in excess of the
Ownership Limit;

 

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(2)                                 A written representation that neither the
Tendering Party nor any Related Party has any intention to acquire any
additional REIT Shares prior to the closing of the Redemption or an acquisition
of the Tendered Units by a REIT Party pursuant to Section 8.6B hereof on the
Specified Redemption Date; and

 

(3)                                 An undertaking to certify, at and as a
condition to the closing of (i) the Redemption or (ii) the acquisition of the
Tendered Units by a REIT Party pursuant to Section 8.6B hereof on the Specified
Redemption Date, that either (a) the actual and constructive ownership of REIT
Shares by the Tendering Party and any Related Party remain unchanged from that
disclosed in the affidavit required by Section 8.6G(1) or (b) after giving
effect to the Redemption or an acquisition of the Tendered Units by a REIT Party
pursuant to Section 8.6B hereof, neither the Tendering Party nor any Related
Party shall own REIT Shares in violation of the Ownership Limit.

 

Section 8.7                                    Partnership Right to Call Limited
Partner Interests.  Notwithstanding any other provision of this Agreement, on
and after the date on which the aggregate Percentage Interests of the Limited
Partners (excluding any REIT Party) are less than one percent (1%), the
Partnership shall have the right, but not the obligation, from time to time and
at any time to redeem any and all outstanding Limited Partner Interests
(excluding those held by any REIT Party) by treating any Limited Partner as a
Tendering Party who has delivered a Notice of Redemption pursuant to Section 8.6
hereof for the amount of Partnership Common Units to be specified by the General
Partner, in its sole and absolute discretion, by notice to such Limited Partner
that the Partnership has elected to exercise its rights under this Section 8.7. 
Such notice given by the General Partner to a Limited Partner pursuant to this
Section 8.7 shall be treated as if it were a Notice of Redemption delivered to
the General Partner by such Limited Partner.  For purposes of this Section 8.7,
(a) any Limited Partner (whether or not otherwise a Qualifying Party) may, in
the General Partner’s sole and absolute discretion, be treated as a Qualifying
Party that is a Tendering Party and (b) the provisions of Sections 8.6F(2),
8.6F(3) and 8.6F(5) hereof shall not apply, but the remainder of Section 8.6
hereof shall apply, mutatis mutandis.

 

Section 8.8                                    Mergers.  The General Partner
shall not permit the Partnership to be a party to any consolidation, merger,
combination or other transaction pursuant to which the Partnership Common Units
are converted or changed into or exchanged for partnership interests and/or
other securities of another operating partnership in an UPREIT or similar
structure, in each case without the affirmative vote of the holders of at least
a majority of the outstanding Paired Common Units, voting separately as a class,
unless upon consummation of any such consolidation, merger, combination or other
transaction, the holders of Paired Common Units shall receive shares of stock or
beneficial interest or other equity securities with preferences, rights and
privileges not materially inferior to the preferences, rights and privileges of
the Special Voting Preferred Stock (which shares of stock or beneficial interest
or other equity securities shall be issued by the parent REIT of such operating
partnership).  This Section 8.8 shall not be amended or modified without the
prior consent of the holders of at least a majority of the Paired Common Units.

 

ARTICLE IX

 

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1                                    Records and Accounting.

 

A.                                    The General Partner shall keep or cause to
be kept at the principal office of the Partnership those records and documents
required to be maintained by the Act and other books and records deemed by the
General Partner to be appropriate with respect to the Partnership’s business,
including, 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 for, 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.

 

B.                                    The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles, or on such other basis
as the General Partner determines to be necessary or appropriate.  To the extent
permitted by sound accounting practices and principles, the

 

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Partnership and the General Partner may operate with integrated or consolidated
accounting records, operations and principles.

 

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

 

Section 9.3                                    Reports.

 

A.                                    As soon as practicable, but in no event
later than one hundred five (105) days after the close of each Partnership Year,
the General Partner shall cause to be mailed to each Limited Partner of record
as of the close of the Partnership Year an annual report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared on a consolidated basis with the General Partner, for such Partnership
Year, presented in accordance with generally accepted accounting principles,
such statements to be audited by a nationally recognized firm of independent
public accountants selected by the 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 of record as of the last day of the
calendar quarter a report containing unaudited financial statements of the
Partnership, or of the General Partner if such statements are prepared on a
consolidated basis with the General Partner, and such other information as may
be required by applicable law or regulation or as the General Partner determines
to be appropriate.

 

C.                                    The General Partner may satisfy its
obligations under Section 9.3A and Section 9.3B by posting or making available
the reports specified in such sections on a website maintained by a REIT Party,
or through the Parent REIT’s filing of annual and quarterly reports with the
SEC.

 

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

 

ARTICLE X

 

TAX MATTERS

 

Section 10.1                             Preparation of Tax Returns.  The
General Partner shall arrange for the preparation and timely filing of all
returns with respect to Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable effort to furnish, within ninety (90) days after the
close of each taxable year, an estimate of the information to be included in
Schedule K-1 or analogous schedule for each Partner reflecting such Partner’s
pro rata share of income, gain, loss, deductions and credits for such taxable
year, and, within one hundred fifty (150) days after the close of each taxable
year, a final Schedule K-1 or analogous schedule for each Partner.  The Limited
Partners shall promptly provide the General Partner with such information
relating to the Contributed Properties, including tax basis and other relevant
information, as may be reasonably requested by the General Partner from time to
time.

 

Section 10.2                             Tax Elections.  Except as otherwise
provided herein, the General Partner shall, in its sole and absolute discretion,
determine whether to make or revoke any available election pursuant to the Code,
including, but not limited to, the election under Code Section 754.

 

Section 10.3                             Tax Matters Partner.

 

A.                                    The General Partner shall be the “tax
matters partner” of the Partnership for federal income tax purposes and the
Partnership’s “partnership representative” (within the meaning of Section 6223
of the New Partnership Audit Procedures).  The tax matters partner shall receive
no compensation for its services.  All third-party costs and expenses incurred
by the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership in addition to
any reimbursement pursuant to Section 7.4 hereof.  Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm to assist
the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is

 

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reasonable.  At the request of any Limited Partner, the General Partner agrees
to consult with such Limited Partner with respect to the preparation and filing
of any returns and with respect to any subsequent audit or litigation relating
to such returns; provided, however, that the filing of such returns shall be in
the sole and absolute discretion of the General Partner.

 

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

 

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

 

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

 

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

 

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

 

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

 

(6)                                 to make any elections on behalf of the
Partnership, including any election permitted to be made pursuant to the New
Partnership Audit Procedures or any other section of the Code or the Treasury
Regulations promulgated thereunder; and

 

(7)                                 to take any other action on behalf of the
Partners 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 hereof shall be fully applicable to the tax matters partner in
its capacity as such.

 

Section 10.4                             Withholding.  Each Limited Partner
hereby authorizes the Partnership to withhold from or pay on behalf of or with
respect to such Limited Partner any amount of federal, state, local or foreign
taxes that the 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 Code
Section 1441, Code Section 1442, Code Section 1445, Code Section 1446 or any
assessment under the New Partnership Audit Procedures).  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

 

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be made unless (i) the Partnership withholds such payment from a distribution
that 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 that would, but for such
payment, be distributed to the Limited Partner.  Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner’s Partnership Interest to secure such Limited Partner’s
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.4.  In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.4 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 lent such amount to such defaulting Limited Partner and
shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner (including, without limitation, the right to receive
distributions).  Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in The Wall Street Journal,
plus four (4) percentage points (but not higher than the maximum lawful rate)
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.

 

Section 10.5                             Organizational Expenses.  The
Partnership shall elect to deduct expenses, if any, incurred by it in organizing
the Partnership ratably over a 60 month period as provided in Section 709 of the
Code.

 

ARTICLE XI

 

TRANSFERS AND WITHDRAWALS

 

Section 11.1                             Transfer.

 

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

 

B.                                    No Partnership Interest shall be
Transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article XI.  Any Transfer or purported Transfer of
a Partnership Interest not made in accordance with this Article XI shall be null
and void ab initio.

 

C.                                    Notwithstanding the other provisions of
this Article XI (other than Section 11.6D hereof), the Partnership Interests of
the General Partner may be Transferred, in whole or in part, at any time or from
time to time, to the Parent REIT or 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 11.1C 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 11.1C, the transferor Partner shall be
relieved of all its obligations under this Agreement.  The provisions of
Section 11.2B (other than the last sentence thereof), 11.3, 11.4A and 11.5
hereof shall not apply to any Transfer permitted by this Section 11.1C.

 

D.                                    No Transfer of any Partnership Interest
may be made to a lender to the Partnership or any Person who is related (within
the meaning of Section 1.752-4(b) of the Regulations) to any lender to the
Partnership whose loan constitutes a Nonrecourse Liability, without the consent
of the General Partner in its sole and absolute discretion; provided that as a
condition to such consent, the lender will be required to enter into an
arrangement with the Partnership and the General Partner to redeem or exchange
for the REIT Consideration any Partnership Units in which a security interest is
held by such lender concurrently with such time as such lender would be deemed
to be a partner in the Partnership for purposes of allocating liabilities to
such lender under Section 752 of the Code.

 

Section 11.2                             Transfer of General Partner’s
Partnership Interest.

 

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

 

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B.                                    Except as set forth in Section 11.1C,
Section 11.2C or Section 11.2D, the General Partner shall not withdraw from the
Partnership and shall not Transfer all or any portion of its interest in the
Partnership (whether by sale, disposition, statutory merger or consolidation,
liquidation or otherwise).  Upon any Transfer of such a Partnership Interest in
accordance with such provisions, 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 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 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 the bankruptcy of the General
Partner, a Majority in Interest of the Limited Partners may elect to continue
the Partnership business by selecting a successor General Partner in accordance
with the Act.

 

C.                                    Notwithstanding Section 11.2B, 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.

 

D.                                    The Parent REIT shall not engage in, or
cause or permit, a Termination Transaction, unless:

 

(1)                                 the Consent of the Limited Partners is
obtained (which consent may be given or withheld in the sole and absolute
discretion of the Limited Partners);

 

(2)                                 in connection with any such Termination
Transaction, each holder of Partnership Common Units (other than the REIT
Parties) will receive, or will have the right to elect to receive, for each
Partnership Common Unit, an amount of cash, securities or other property equal
to the product of the Adjustment Factor and the greatest amount of cash,
securities or other property paid to a holder of one REIT Share in consideration
of one REIT Share pursuant to the terms of such Termination Transaction;
provided that if, in connection with such Termination Transaction, a purchase,
tender or exchange offer shall have been made to and accepted by the holders of
a majority of the outstanding REIT Shares, each holder of Partnership Common
Units (other than the REIT Parties) will receive, or will have the right to
elect to receive, the greatest amount of cash, securities or other property
which such holder of Partnership Common Units would have received had it
exercised its right to Redemption pursuant to Section 8.6 and received REIT
Shares in exchange for its Partnership Common Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted
such purchase, tender or exchange offer and then such Termination Transaction
shall have been consummated (the fair market value, at the time of the
Termination Transaction, of the amount specified herein with respect to each
Partnership Common Unit is referred to as the “Transaction Consideration”); or

 

(3)                                 all of the following conditions are met: 
(i) substantially all of the assets directly or indirectly owned by the
Partnership prior to the announcement of the Termination Transaction are,
immediately after the Termination Transaction, owned directly or indirectly by
the Partnership or another limited partnership or limited liability company
which is the survivor of a merger, consolidation or combination of assets with
the Partnership (in each case, the “Surviving Partnership”); (ii) the Surviving
Partnership is classified as a partnership for U.S. Federal income tax purposes;
(iii) the Limited Partners (other than the Initial Limited Partner) that held
Partnership Common Units immediately prior to the consummation of such
Termination Transaction own a percentage interest of the Surviving Partnership
based on the relative fair market value of the net assets of the Partnership and
the other net assets of the Surviving Partnership immediately prior to the
consummation of such transaction; (iv) the rights of such Limited Partners with
respect to the Surviving Partnership include:  (x) if the Parent REIT or its
successor is a REIT with a single class of Publicly Traded common equity
securities, the right to redeem their interests in the Surviving Partnership at
any time for either:  (1) a number of such REIT’s Publicly Traded common equity
securities with a fair market value, as of the date of consummation of such
Termination Transaction, equal to the Transaction Consideration, subject to
antidilution adjustments comparable to

 

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those set forth in the definition of “Adjustment Factor” herein (the “Successor
Shares Amount”); or (2) cash in an amount equal to the fair market value of the
Successor Shares Amount at the time of such redemption, determined in a manner
consistent with the definition of “Value” herein; or (y) if the Parent REIT or
its successor is not a REIT with a single class of Publicly Traded common equity
securities, the right to redeem their interests in the Surviving Partnership at
any time for cash in an amount equal to the Transaction Consideration; and
(v) the General Partner determines, in good faith, that the other rights of such
Limited Partners with respect to the Surviving Partnership, in the aggregate,
are not materially less favorable than those of Limited Partners holding
Partnership Common Units immediately prior to the consummation of such
transaction.

 

Section 11.3                             Transfer of Limited Partners’
Partnership Interests.

 

A.                                    General. No Limited Partner shall Transfer
all or any portion of its Partnership Interest to any transferee without the
consent of the General Partner, which consent may be withheld in its sole and
absolute discretion, provided, however, that subject to Section 11.3E hereof,
ACM may distribute some or all of its Partnership Interests to its owners, and
any Limited Partner that is an individual may transfer all or any portion of his
Partnership Interest to his immediate family or a trust for his immediate family
without the consent of the General Partner, provided, further, that the General
Partner has the right not to admit such transferee as a Limited Partner in the
Partnership.

 

B.                                    Conditions to Transfer Consent.  Without
limiting the generality of Section 11.3A hereof, it is expressly understood and
agreed that the General Partner will not consent to any Transfer of all or any
portion of any Partnership Interest pursuant to Section 11.3A above unless such
Transfer meets each of the following conditions:

 

(1)                                 Qualified Transferee.  Such Transfer is made
only to a single Qualified Transferee; provided, however, that, for such
purposes, all Qualified Transferees that are Affiliates, or that comprise
investment accounts or funds managed by a single Qualified Transferee and its
Affiliates, shall be considered together to be a single Qualified Transferee.

 

(2)                                 Assumption of Obligations.  The transferee
in such Transfer assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest; provided, that no such Transfer
(unless made pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its sole and absolute discretion.  Notwithstanding the foregoing, any transferee
of any Transferred Partnership Interest shall be subject to any and all
ownership limitations contained in the Charter that may limit or restrict such
transferee’s ability to exercise its Redemption rights, including, without
limitation, the Ownership Limit.  Any transferee, whether or not admitted as a
Substituted Limited Partner, shall take subject to the obligations of the
transferor hereunder.  Unless admitted as a Substituted Limited Partner, no
transferee, whether by a voluntary Transfer, by operation of law or otherwise,
shall have any rights hereunder, other than the rights of an Assignee as
provided in Section 11.5 hereof.

 

(3)                                 Effective Date.  Such Transfer is effective
as of the first day of a fiscal quarter of the Partnership.

 

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

 

D.                                    Opinion of Counsel.  In connection with
any proposed Transfer of a Limited Partner Interest, the General Partner shall
have the right to receive an opinion of counsel reasonably satisfactory to it to
the effect that the proposed Transfer may be effected without registration under
the Securities Act and will not otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Interests Transferred.

 

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

 

Section 11.4                             Substituted Limited Partners.

 

A.                                    A transferee of the interest of a Limited
Partner pursuant to a Transfer consented to by the General Partner pursuant to
Section 11.3A may be admitted as a Substituted Limited Partner only with the
consent of the General Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion.  The failure or refusal by
the General Partner to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or the General Partner.  Subject to the foregoing, an Assignee
shall not be admitted as a Substituted Limited Partner until and unless it
furnishes to the General Partner (i) evidence of acceptance, in form and
substance satisfactory to the General Partner, of all the terms, conditions and
applicable obligations of this Agreement, (ii) a counterpart signature page to
this Agreement executed by such Assignee and (iii) such other documents and
instruments as may be required or advisable, in the sole and absolute discretion
of the General Partner, to effect such Assignee’s admission as a Substituted
Limited Partner.

 

B.                                    A transferee who has been admitted as a
Substituted Limited Partner in accordance with this Article XI 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 and number of Partnership Units of such Substituted Limited Partner and
to eliminate or adjust, if necessary, the name, address and number of
Partnership Units of the predecessor of such Substituted Limited Partner.

 

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

 

Section 11.6                             General Provisions.

 

A.                                    No Limited Partner may withdraw from the
Partnership other than as a result of a permitted Transfer of all of such
Limited Partner’s Partnership Units in accordance with this Article XI, with
respect to which the transferee becomes a Substituted Limited Partner, or
pursuant to a redemption (or acquisition by the General Partner) of all of its
Partnership Units pursuant to a Redemption under Section 8.6 hereof and/or
pursuant to any Partnership Unit Designation.

 

B.                                    Any Limited Partner who shall Transfer all
of its Partnership Units in a Transfer (i) consented to by the General Partner
pursuant to this Article XI where such transferee was admitted as a Substituted
Limited Partner, (ii) pursuant to the exercise of its rights to effect a
redemption of all of its Partnership Units pursuant to a Redemption under
Section 8.6 hereof and/or pursuant to any Partnership Unit Designation or
(iii) to the General Partner, whether or not pursuant to Section 8.6B hereof,
shall cease to be a Limited Partner.

 

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C.                                    If any Partnership Unit is Transferred in
compliance with the provisions of this Article XI, or is redeemed by the
Partnership, or acquired by the General Partner pursuant to Section 8.6 hereof,
on any day other than the first day of a Partnership Year, then Net Income, Net
Losses, each item thereof and all other items of income, gain, loss, deduction
and credit attributable to such Partnership Unit for such Partnership Year shall
be allocated to the transferor Partner or the Tendering Party, as the case may
be, and, in the case of a Transfer or assignment other than a Redemption, to the
transferee Partner, by taking into account their varying interests during the
Partnership Year in accordance with Code Section 706(d), using the “interim
closing of the books” method or another permissible method selected by the
General Partner.  Solely for purposes of making such allocations, each of such
items for the calendar month in which a Transfer occurs shall be allocated to
the transferee Partner and none of such items for the calendar month in which a
Transfer or a Redemption occurs shall be allocated to the transferor Partner or
the Tendering Party, as the case may be, if such Transfer occurs on or before
the fifteenth (15th) day of the month, otherwise such items shall be allocated
to the transferor. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before the
date of such Transfer, assignment or Redemption shall be made to the transferor
Partner or the Tendering Party, as the case may be, and, in the case of a
Transfer other than a Redemption, all distributions of Available Cash thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.

 

D.                                    In no event may any Transfer or assignment
of a Partnership Interest by any Partner (including any Redemption, any
acquisition of Partnership Units by the General Partner or any other acquisition
of Partnership Units by the Partnership) be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii) in
violation of applicable law; (iii) of any component portion of a Partnership
Interest, such as the Capital Account, or rights to distributions, separate and
apart from all other components of a Partnership Interest; (iv) in the event
that such Transfer would cause the Parent REIT to cease to comply with the REIT
Requirements; (v) if such Transfer would, in the opinion of counsel to the
Partnership, Parent REIT or the General Partner, cause a termination of the
Partnership for federal or state income tax purposes (except as a result of the
Redemption (or acquisition by a REIT Party) of all Partnership Common Units held
by all Limited Partners); (vi) if such Transfer would, in the opinion of legal
counsel to the Partnership, cause the Partnership to cease to be classified as a
partnership for federal income tax purposes (except as a result of the
Redemption (or acquisition by a REIT Party) of all Partnership Common Units held
by all Limited Partners); (vii) if such Transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA, a
“party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified
person” (as defined in Code Section 4975(c)); (viii) if such Transfer would, in
the opinion of legal counsel to the Partnership, cause any portion of the assets
of the Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; (ix) if such Transfer
requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws; (x) if such Transfer causes the
Partnership to become a “publicly traded partnership,” as such term is defined
in Code Section 469(k)(2) or Code 7704(b); (xi) if such Transfer causes the
Partnership (as opposed to the General Partner) to become a reporting company
under the Exchange Act; or (xii) if such Transfer subjects the Partnership to
regulation under the Investment Company Act of 1940, the Investment Advisors Act
of 1940 or ERISA, each as amended.

 

ARTICLE XII

 

ADMISSION OF PARTNERS

 

Section 12.1                             Admission of Successor General
Partner.  A successor to all of the General Partner’s General Partner Interest
pursuant to Section 11.2 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 successor 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.

 

Section 12.2                             Admission of Additional Limited
Partners.

 

A.                                    After the date hereof, a Person (other
than an existing Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner
(i) evidence of acceptance, in form and substance satisfactory to the

 

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General Partner, of all of the terms and conditions of this Agreement,
including, without limitation, the power of attorney granted in Section 2.4
hereof, (ii) a counterpart signature page to this Agreement executed by such
Person and (iii) such other documents or instruments as may be required in the
sole and absolute discretion of the 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.

 

C.                                    If any Additional Limited Partner is
admitted to the Partnership on any day other than the first day of a Partnership
Year, then Net Income, Net Losses, each item thereof and all other items of
income, gain, loss, deduction and credit allocable among Partners and Assignees
for such Partnership Year shall be allocated pro rata 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 Code
Section 706(d), using the “interim closing of the books” method or another
permissible method selected by the General Partner.  Solely for purposes of
making such allocations, each of such items for the calendar month in which an
admission of any Additional Limited Partner occurs shall be allocated among all
the Partners and Assignees including such Additional Limited Partner, in
accordance with the principles described in Section 11.6C hereof.  All
distributions of Available Cash with respect to which the Partnership Record
Date is before the date of such admission shall be made solely to Partners and
Assignees other than the Additional Limited Partner, and all distributions of
Available Cash thereafter shall be made to all the Partners and Assignees
including such Additional Limited Partner.

 

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.

 

Section 12.4                             Limit on Number of Partners.  Unless
otherwise permitted by the General Partner, no Person shall be admitted to the
Partnership as an Additional Limited Partner if the effect of such admission
would be to cause the Partnership to have a number of Partners (including as
Partners for this purpose those Persons indirectly owning an interest in the
Partnership through another partnership, a limited liability company, a
subchapter S corporation or a grantor trust) that would cause the Partnership to
become a reporting company under the Exchange Act.

 

ARTICLE XIII

 

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

 

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

 

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

 

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

 

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D.                                    the occurrence of a Terminating Capital
Transaction; or

 

E.                                     the Redemption (or acquisition by the
General Partner) of all Partnership Units other than Partnership Units held by
the 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.  After the occurrence of a Liquidating Event, 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 that there is no remaining General Partner or
the General Partner has dissolved, become bankrupt within the meaning of the Act
or ceased to operate, any Person elected by a Majority in Interest of the
Limited Partners (the General Partner or such other Person being referred to
herein as the “Liquidator”)) shall be responsible for overseeing the winding up
and dissolution of the Partnership and shall take full account of the
Partnership’s liabilities and property, and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include shares of stock in the General Partner) shall be applied and
distributed in the following order:

 

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

 

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

 

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

 

(4)                                 Subject to the terms of any Partnership Unit
Designation, the balance, if any, to the General Partner, the Limited Partners
and any Assignees in accordance with and in proportion to their positive Capital
Account balances, 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 XIII.

 

B.                                    Notwithstanding the provisions of
Section 13.2A hereof that require liquidation of the assets of the Partnership,
but subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership’s assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2A 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 event that the Partnership is
“liquidated” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
distributions shall be made pursuant to this Article XIII to the Partners and
Assignees that have positive Capital Accounts in compliance with Regulations
Section 1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive
Capital Account balances.  If the General Partner has a deficit balance in its
Capital Account (after giving

 

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effect to all contributions, distributions and allocations for all taxable
years, including the year during which such liquidation occurs) (a “Capital
Account Deficit”), the General Partner shall make a contribution to the capital
of the Partnership equal to the amount of such deficit.  No Partner other than
the General Partner shall be required to make any contribution to the capital of
the Partnership with respect to a Capital Account Deficit, if any, of such
Partner, and such Capital Account Deficit shall not be considered a debt owed to
the Partnership or any other person for any purpose whatsoever.  In the sole and
absolute discretion of the General Partner or the Liquidator, a pro rata portion
of the distributions that would otherwise be made to the Partners pursuant to
this Article XIII may be:

 

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

 

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

 

Section 13.3                             Deemed Distribution and
Recontribution.  Notwithstanding any other provision of this Article XIII, in
the event that the Partnership is liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the
Partnership’s Property shall not be liquidated, the Partnership’s liabilities
shall not be paid or discharged and the Partnership’s affairs shall not be wound
up.  Instead, for federal income tax purposes the Partnership shall be deemed to
have contributed all of its assets and liabilities to a new partnership in
exchange for an interest in the new partnership; and, immediately thereafter,
distributed interests in the new partnership to the Partners in accordance with
their respective Capital Accounts in liquidation of the Partnership, and the new
partnership is deemed to continue the business of the Partnership.  Nothing in
this Section 13.3 shall be deemed to have constituted any Assignee as a
Substituted Limited Partner without compliance with the provisions of
Section 11.4 hereof.

 

Section 13.4                             Rights of Limited Partners.  Except as
otherwise provided in this Agreement, (a) each Limited Partner shall look solely
to the assets of the Partnership for the return of its Capital Contribution,
(b) no Limited Partner shall have the right or power to demand or receive
property other than cash from the Partnership and (c) no Limited Partner (other
than any Limited Partner who holds Partnership Preferred Units, to the extent
specifically set forth herein and in the applicable Partnership Unit
Designation) shall have priority over any other Limited Partner as to the return
of its Capital Contributions, distributions or allocations.

 

Section 13.5                             Notice of Dissolution.  In the event
that a Liquidating Event occurs or an event occurs that would, but for an
election or objection by one or more Partners pursuant to Section 13.1 hereof,
result in a dissolution of the Partnership, the General Partner shall, within
thirty (30) days thereafter, provide written notice thereof to each of the
Partners and, in the General Partner’s sole and absolute discretion or as
required by the Act, to all other parties with whom the Partnership regularly
conducts business (as determined in the sole and absolute discretion of the
General Partner), and the General Partner may, or, if required by the Act,
shall, publish notice thereof in a newspaper of general circulation in each
place in which the Partnership regularly conducts business (as determined in the
sole and absolute discretion of the General Partner).

 

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

 

Section 13.7                             Reasonable Time for Winding-Up.  A
reasonable time shall be allowed for the orderly winding-up of the business and
affairs of the Partnership and the liquidation of its assets pursuant to
Section 13.2 hereof, in order to minimize any

 

49

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

 

ARTICLE XIV

PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

 

Section 14.1                             Procedures for Actions and Consents of
Partners.  The actions requiring consent or approval of Limited Partners
pursuant to this Agreement, including Section 7.3 hereof, or otherwise pursuant
to applicable law, are subject to the procedures set forth in this Article XIV.

 

Section 14.2                             Amendments.  Amendments to this
Agreement may be proposed by the General Partner or by a Majority in Interest of
the Limited Partners.  Following such proposal, the General Partner shall submit
any proposed amendment to the Limited Partners.  The General Partner shall seek
the written consent of the Limited Partners on the proposed amendment or shall
call a meeting to vote thereon and to transact any other business that the
General Partner may deem appropriate.  For purposes of obtaining a written
consent, the General Partner may require a response within a reasonable
specified time, but not less than fifteen (15) days, and failure to respond in
such time period shall constitute a consent that is consistent with the General
Partner’s recommendation with respect to the proposal; provided, however, that
an action shall become effective at such time as requisite consents are received
even if prior to such specified time.

 

Section 14.3                             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 a Majority in Interest of the Limited Partners.  The
call 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 Partners
is permitted or required under this Agreement, such vote or Consent may be given
at a meeting of Partners or may be given in accordance with the procedure
prescribed in Section 14.3B hereof.

 

B.                                    Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement for the action in question).  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
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 it 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 its attorney-in-fact.  No proxy shall be valid after the expiration
of eleven (11) months from the date thereof unless otherwise provided in the
proxy (or there is receipt of a proxy authorizing a later date).  Every proxy
shall be revocable at the pleasure of the 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.  The use of
proxies will be governed in the same manner as in the case of corporations
organized under the General Corporation Law of Delaware (including Section 212
thereof).

 

D.                                    Each meeting of 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 in its sole and absolute
discretion.  Without limitation, meetings of Partners may be conducted in the
same manner as meetings of the General Partner’s shareholders and may be held at
the same time as, and as part of, the meetings of the General Partner’s
shareholders.

 

50

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ARTICLE XV

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 (including by telecopy, facsimile, or
commercial courier service) to the Partner or Assignee at the address set forth
in Exhibit A or such other address of which the Partner shall notify the General
Partner in writing.

 

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” or “Sections” are to
Articles and Sections of this Agreement.

 

Section 15.3                             Pronouns and Plurals.  Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns, pronouns and verbs shall include the plural and vice versa.

 

Section 15.4                             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                             Waiver.

 

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

 

B.                                    The restrictions, conditions and other
limitations on the rights and benefits of the Limited Partners contained in this
Agreement, and the duties, covenants and other requirements of performance or
notice by the Limited Partners, are for the benefit of the Partnership and,
except for an obligation to pay money to the Partnership, may be waived or
relinquished by the General Partner, in its sole and absolute discretion, on
behalf of the Partnership in one or more instances from time to time and at any
time; provided, however, that any such waiver or relinquishment may not be made
if it would have the effect of (i) creating liability for any other Limited
Partner, (ii) causing the Partnership to cease to qualify as a limited
partnership, (iii) reducing the amount of cash otherwise distributable to the
Limited Partners, (iv) resulting in the classification of the Partnership as an
association or publicly traded partnership taxable as a corporation or
(v) violating the Securities Act, the Exchange Act or any state “blue sky” or
other securities laws; provided, further, that any waiver relating to compliance
with the Ownership Limit or other restrictions in the Charter shall be made and
shall be effective only as provided in the Charter.

 

Section 15.7                             Counterparts.  This Agreement may be
executed in counterparts, all of which together shall constitute one agreement
binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.  Each party shall become
bound by this Agreement immediately upon affixing its signature hereto.

 

Section 15.8                             Applicable Law.  This Agreement shall
be construed and enforced in accordance with and governed by the laws of the
State of Delaware, without regard to the principles of conflicts of law.  In the
event of a conflict between any provision of this Agreement and any
non-mandatory provision of the Act, the provisions of this Agreement shall
control and take precedence.

 

51

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Section 15.9                             Entire Agreement.  This Agreement
amends and restates the Second Amended Partnership Agreement and contains all of
the understandings and agreements between and among the Partners with respect to
the subject matter of this Agreement and the rights, interests and obligations
of the Partners with respect to the Partnership.

 

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

 

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

 

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

 

provided, however, that REIT Payments in excess of the amounts set forth in
clauses (i) and (ii) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the Parent REIT’s ability to qualify as a
REIT.  To the extent that REIT Payments may not be made in a Partnership Year as
a consequence of the limitations set forth in this Section 15.11, such REIT
Payments shall carry over and shall be treated as arising in the following
Partnership Year.  The purpose of the limitations contained in this
Section 15.11 is to prevent the Parent REIT from failing to qualify as a REIT
under the Code by reason of any REIT Party’s share of items, including
distributions, reimbursements, fees, expenses or indemnities, receivable
directly or indirectly from the Partnership, and this Section 15.11 shall be
interpreted and applied to effectuate such purpose.

 

Section 15.12                      No Partition.  No Partner nor any
successor-in-interest to a Partner shall have the right while this Agreement
remains in effect to have any property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have such
property of the Partnership partitioned, and each Partner, on behalf of itself
and its successors and assigns hereby waives any such right.  It is the
intention of the Partners that the rights of the parties hereto and their
successors-in-interest to Partnership property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Partners and
their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.

 

Section 15.13                      No Third-Party Rights Created Hereby.  The
provisions of this Agreement are solely for the purpose of defining the
interests of the Partners, inter se; and no other person, firm or entity (i.e.,
a party who is not a signatory hereto or a permitted successor to such signatory
hereto) shall have any right, power, title or interest by way of subrogation or
otherwise, in and to the rights, powers, title and provisions of this
Agreement.  No creditor or other third party having dealings with the
Partnership (other than as expressly set forth herein with respect to
Indemnitees) shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans to the Partnership or to pursue
any other right or remedy hereunder or at law or in equity.  None of the rights
or obligations of the Partners herein set forth to make Capital Contributions or
loans to the Partnership shall be deemed an asset of

 

52

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the Partnership for any purpose by any creditor or other third party, nor may
any such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or any of the Partners.

 

Section 15.14                      No Rights as Stockholders.  Nothing contained
in this Agreement shall be construed as conferring upon the Holders of
Partnership Units any rights whatsoever as stockholders of the General Partner,
including without limitation any right to receive dividends or other
distributions made to stockholders of the General Partner or to vote or to
consent or receive notice as stockholders in respect  of any meeting of
stockholders for the election of directors of the General Partner or any other
matter.

 

[The next page is the signature page.]

 

53

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

 

 

GENERAL PARTNER:

 

 

 

ARBOR REALTY GPOP, INC.

 

 

 

 

 

 

 

By:

/s/ Paul Elenio

 

Name:

Paul Elenio

 

Title: 

Chief Financial Officer

 

 

 

 

 

 

 

INITIAL LIMITED PARTNER:

 

 

 

ARBOR REALTY LPOP, INC.

 

 

 

 

 

 

 

By:

/s/ Paul Elenio

 

Name:

Paul Elenio

 

Title: 

Chief Financial Officer

 

 

 

 

 

 

 

LIMITED PARTNERS:

 

 

 

ARBOR COMMERCIAL MORTGAGE, LLC

 

 

 

 

 

 

 

By:

/s/ Paul Elenio

 

Name:

Paul Elenio

 

Title: 

Chief Financial Officer

 

 

 

 

 

 

 

PARENT REIT:

 

 

 

ARBOR REALTY TRUST, INC.

 

 

 

 

 

 

 

By:

/s/ Paul Elenio

 

Name:

Paul Elenio

 

Title: 

Chief Financial Officer

 

--------------------------------------------------------------------------------

 

As of July 14, 2016

 

Exhibit A

 

PARTNERS AND PARTNERSHIP UNITS

 

Name and Address of Partners

 

Partnership Units (Type and Amount)

 

Percentage Interests

General Partner:

 

 

 

 

 

 

 

 

 

ARBOR REALTY GPOP, INC.

333 Earle Ovington Boulevard, Suite 900 Uniondale, NY 11553

 

[          ] Common Units

 

[  ]%

 

 

 

 

 

Limited Partners:

 

 

 

 

 

 

 

 

 

ARBOR REALTY LPOP, INC.

333 Earle Ovington Boulevard, Suite 900 Uniondale, NY 11553

 

[          ] Common Units
21,230,769 Special Preferred Units
1,551,500 Series A Preferred Units
1,260,000 Series B Preferred Units
900,000 Series C Preferred Units

 

[  ]%

 

 

 

 

 

ARBOR COMMERCIAL MORTGAGE, LLC

[           ]
[           ]

 

21,230,769 Common Units

 

[  ]%

 

A-1

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Exhibit B

 

EXAMPLES REGARDING ADJUSTMENT FACTOR

 

For purposes of the following examples, it is assumed that (a) the Adjustment
Factor in effect on December 30, 2002 is 1.0 and (b) on January 1, 2003 (the
“Partnership Record Date” for purposes of these examples), prior to the events
described in the examples, there are 100 REIT Shares issued and outstanding.

 

Example 1

 

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

 

1.0 *  200  = 2.0

100

 

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

 

Example 2

 

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

 

1.0 *                     {(100+100)}                           =1.1111

100+  {(100+{100*$4.00}

{$5.00})}

 

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

 

Example 3

 

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

 

1.0*             {$5.00}              = 1.25

{$5.00 - $1.00}

 

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

 

B-1

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Exhibit C

 

NOTICE OF REDEMPTION

 

To:                             Arbor Realty GPOP, Inc.
333 Earle Ovington Boulevard
Suite 900
Uniondale, New York 11553

 

The undersigned Limited Partner or Assignee hereby irrevocably tenders for
Redemption         Partnership Common Units in Arbor Realty Limited Partnership
in accordance with the terms of the Agreement of Limited Partnership of Arbor
Realty Limited Partnership, as the same may be amended and/or supplemented from
time to time (the “Agreement”), and the Redemption rights referred to therein. 
The undersigned Limited Partner or Assignee:

 

(a)                                 undertakes (i) to surrender such Partnership
Common Units and any certificate therefor at the closing of the Redemption and
(ii) to furnish to the General Partner, prior to the Specified Redemption Date,
the documentation, instruments and information required under Section 8.6G of
the Agreement;

 

(b)                                 directs that the certified check
representing the Cash Amount, or the REIT Shares Amount, as applicable,
deliverable upon the closing of such Redemption be delivered to the address
specified below;

 

(c)                                  represents, warrants, certifies and agrees
that:

 

(i)                                     the undersigned Limited Partner or
Assignee is a Qualifying Party,

 

(ii)                                  the undersigned Limited Partner or
Assignee has, and at the closing of the Redemption will have, good, marketable
and unencumbered title to such Partnership Common Units, free and clear of the
rights or interests of any other person or entity,

 

(iii)                               the undersigned Limited Partner or Assignee
has, and at the closing of the Redemption will have, the full right, power and
authority to tender and surrender such Partnership Common Units as provided
herein, and

 

(iv)                              the undersigned Limited Partner or Assignee
has obtained the consent or approval of all persons and entities, if any, having
the right to consent to or approve such tender and surrender; and

 

(d)                                 acknowledges that he will continue to own
such Partnership Common Units until and unless either (i) such Partnership
Common Units are acquired by a REIT Party pursuant to Section 8.6B of the
Agreement or (ii) such redemption transaction closes.

 

C-1

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All capitalized terms used herein and not otherwise defined shall have the same
meaning ascribed to them respectively in the Agreement.

 

Dated:

 

 

 

 

 

 

 

Name of Limited Partner or Assignee:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Signature of Limited Partner or Assignee)

 

 

 

 

 

 

 

 

(Street Address)

 

 

 

 

 

 

 

 

(City)

(State)

(Zip Code)

 

 

 

 

 

 

 

 

Signature Guaranteed by:

 

 

 

 

 

 

 

 

 

 

 

 

Issue Check Payable to:

 

 

 

 

 

Please insert social security

 

 

or identifying number:

 

 

 

C-2

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Exhibit D

 

FORM OF UNIT CERTIFICATE

 

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “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 SATISFACTORY TO THE PARTNERSHIP, 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 ACT AND UNDER
APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.  IN ADDITION, THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE AGREEMENT OF LIMITED PARTNERSHIP OF ARBOR REALTY LIMITED PARTNERSHIP, AS THE
SAME MAY BE AMENDED AND/OR SUPPLEMENTED FROM TIME TO TIME, A COPY OF WHICH
MAY BE OBTAINED FROM ARBOR REALTY TRUST, INC. AT ITS PRINCIPAL EXECUTIVE OFFICE.

 

Certificate Number              

 

ARBOR REALTY LIMITED PARTNERSHIP
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE

 

This certifies that
                                                             
is the owner of                                   

 

FULLY PAID PARTNERSHIP COMMON UNITS OF
ARBOR REALTY LIMITED PARTNERSHIP

 

transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed.  This
Certificate and the Partnership Common Units represented hereby are issued and
shall be held subject to all of the provisions of the Agreement of Limited
Partnership of Arbor Realty Limited Partnership, as the same may be amended
and/or supplemented from time to time.

 

IN WITNESS WHEREOF, the undersigned has signed this Certificate.

 

Dated:

 

 

 

 

 

 

By:

 

 

D-1

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