Exhibit 10.1

 

AMENDMENT NO. 4
TO
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
KITE REALTY GROUP, L.P.

 

This Amendment No. 4 to the Amended and Restated Agreement of Limited
Partnership of Kite Realty Group, L.P. (this “Amendment”) is made as of
February 28, 2019 by Kite Realty Group Trust, a Maryland real estate investment
trust, as sole general partner (the “Company”) of Kite Realty Group, L.P., a
Delaware limited partnership (the “Partnership”), pursuant to the authority
granted to the Company in the Amended and Restated Agreement of Limited
Partnership of Kite Realty Group, L.P., dated as of August 16, 2004, as amended
by Amendment No. 1, dated as of December 7, 2010, as further amended by
Amendment No. 2, dated as of March 12, 2012, and as further amended by Amendment
No. 3, dated as of July 28, 2014 (the “Partnership Agreement”), for the purpose
of issuing additional Partnership Units in the form of LTIP Units that
participate only in appreciation (referred to as “Class AO LTIP Units”).
Capitalized terms used and not defined herein shall have the meanings set forth
in the Partnership Agreement.

 

WHEREAS, the Company and the Partnership desire to provide for an additional
form of equity incentive to certain persons who provide services to or for the
benefit of the Partnership in the form of Partnership Units which shall be
designated “Class AO LTIP Units”; and

 

WHEREAS, the Company and the Partnership desire to amend the Partnership
Agreement, in accordance Section 4.2 of the Partnership Agreement, to provide
for the Class AO LTIP Units, having the designations, preferences and other
rights as described herein.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
Partnership Agreement is hereby amended as follows:

 

1.                                      Amendments to the Partnership Agreement.
The Company and the Partnership hereby amend the Partnership Agreement as
follows:

 

A.                                    Article I of the Partnership Agreement is
hereby amended to add the following definitions:

 

“Book-Up Target” for each LTIP Unit means the lesser of (i) the Class A Unit
Economic Balance as determined on the date such LTIP Unit was granted and as
reduced (not to less than zero) by allocations of Liquidating Gains pursuant to
Section 6.1.E and reallocations of Class A Unit Balances to such LTIP Unit as a
result of a forfeiture of an LTIP Unit, as determined by the General Partner and
(ii) the amount required to be allocated to such LTIP Unit for the Economic
Capital Account Balance, to the extent attributable to such LTIP Unit, to be
equal to the Class A Unit Economic Balance. Notwithstanding the foregoing, the
Book-Up Target shall be equal to zero for any LTIP Unit for which the Economic
Capital Account Balance attributable to such LTIP Unit has, at any time, reached
an amount equal to the Class A Unit Economic Balance determined as of such time.

 

“Class AO LTIP Unit” means a Partnership Unit which is designated as a Class AO
LTIP Unit and which has the rights, preferences and other privileges designated
in Exhibit J hereof.  The allocation of Class AO LTIP Units among the Partners
shall be set forth on Exhibit A, as it may be amended or restated from time to
time.

 

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

 

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B.                                    The definitions in Article I of the
Partnership Agreement set forth below are amended as set forth below:

 

“LTIP Units” means a Partnership Unit which is designated as an LTIP Unit and
which has the rights, preferences and other privileges designated in Sections
4.6 and 4.7 and elsewhere in this Agreement in respect of holders of LTIP Units.
The allocation of LTIP Units among the Partners shall be set forth on Exhibit A,
as it may be amended or restated from time to time.  For the avoidance of doubt,
a Vested LTIP Unit that has been converted from a Class AO LTIP Unit is an LTIP
Unit, and will be treated as an LTIP effective as of the date of such
conversion.

 

“Partnership Interest” means a Limited Partnership Interest, a General
Partnership Interest, LTIP Units and Class AO LTIP Units and includes any and
all benefits to which the holder of such a Partnership Interest may be entitled
as provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A Partnership Interest
may be expressed as a number of Partnership Units.

 

C.                               Article IV of the Partnership Agreement is
hereby amended to add the following new Section 4.8:

 

Section 4.8.  Issuance of Class AO LTIP Units.  The Partnership shall be
authorized to issue Partnership Units of a series designated as “Class AO LTIP
Units”.  Class AO LTIP Units are intended to qualify as profits interests in the
Partnership and, for the avoidance of doubt, shall not be treated as
compensation for services, and no Class AO LTIP Unit shall have any Capital
Account as of the time of issuance. Class AO LTIP Units shall have the terms set
forth in Exhibit J attached hereto and made part hereof.  Distributions made
with respect to Class AO LTIP Units shall be adjusted as necessary to ensure
that the amount apportioned to each Class AO LTIP Unit does not exceed the
amount attributable to the Class AO LTIP Unit’s share of Partnership net income
or gain realized after the date such Class AO LTIP Unit was issued by the
Partnership (including in connection with an adjustment to the Carrying Value of
Partnership assets under Section 1.D of Exhibit B of this Agreement).  If
distributions are reduced in accordance with the preceding sentence for a
taxable year due to insufficient net income or gain for such year, distributions
shall be made up in subsequent taxable years when there is sufficient net income
or gain.  The intent of this Section 4.8 is to ensure that any Class AO LTIP
Units qualify as “profits interests” under Revenue Procedure 93-27, 1993-2 C.B.
343 (June 9, 1993) and Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3,
2001), and this Section 4.8 shall be interpreted and applied consistently
therewith.  The General Partner at its discretion may amend this Section 4.8 and
Exhibit J to ensure that any Class AO LTIP Units will qualify as “profits
interests” under Revenue Procedure 93-27, 1993-2 C.B. 343 (June 9, 1993) and
Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001) (and any other
similar rulings or regulations that may be in effect at such time).

 

D.                                    Section 6.1.E of the Partnership Agreement
is hereby amended and restated in its entirety as follows:

 

E. Special Allocations Regarding LTIP Units. Notwithstanding the provisions of
 Section 6.1.A, Liquidating Gains shall first be allocated to the LTIP
Unitholders until their Economic Capital Account Balances, to the extent
attributable to their ownership of LTIP Units, are equal to (i) the Class A Unit
Economic Balance, multiplied by (ii) the number of their LTIP Units, plus the
aggregate net amount of Net Income and Net Loss allocated to such LTIP Units
prior to the Distribution Participation Date with respect to such LTIP Units
less the amount of any Special LTIP Unit Distributions with respect to such LTIP
Units, provided, however, that no such Liquidating Gains will be allocated with
respect to any particular LTIP Unit unless and to the extent that such
Liquidating Gains, when aggregated with other Liquidating Gains realized since
the issuance of such LTIP Unit, exceed Liquidating Losses realized since the
issuance of such LTIP Unit. After giving effect to the special allocations set
forth in Section 1 of Exhibit C hereto, and notwithstanding the provisions of
Sections 6.1.A and 6.1.B above, in the event that, due to distributions with
respect to Class A Units in which the LTIP Units do not participate or
otherwise, the Economic Capital Account Balances of any present or former holder
of LTIP Units, to the extent attributable to the holder’s ownership of LTIP
Units, exceed the target balance specified above, then Liquidating Losses shall
be

 

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allocated to such holder to the extent necessary to reduce or eliminate the
disparity. In the event that Liquidating Gains or Liquidating Losses are
allocated under this Section 6.1.E, Net Income allocable under clause
6.1.A(6) and any Net Losses shall be recomputed without regard to the
Liquidating Gains or Liquidating Losses so allocated. For this purpose,
“Liquidating Gains” means net gains that are or would be realized in connection
with the actual or hypothetical sale of all or substantially all of the assets
of the Partnership, including but not limited to net capital gain realized in
connection with an adjustment to the value of Partnership assets under
Section 704(b) of the Code made pursuant to Section 1.D of Exhibit B of the
Partnership Agreement. “Liquidating Losses” means any net capital loss realized
in connection with any such event. The “Economic Capital Account Balances” of
the LTIP Unitholders and Class AO LTIP Unitholders, respectively, will be equal
to their Capital Account balances to the extent attributable to their ownership
of LTIP Units or Class AO LTIP Units, as the case may be. Similarly, the
“Class A Unit Economic Balance” shall mean (i) the Capital Account balance of
the General Partner, plus the amount of the General Partner’s share of any
Partner Minimum Gain or Partnership Minimum Gain, in either case to the extent
attributable to the General Partner’s ownership of Class A Units and computed on
a hypothetical basis after taking into account all allocations through the date
on which any allocation is made under this Section 6.1.E, but prior to the
realization of any Liquidating Gains, divided by (ii) the number of the General
Partner’s Class A Units. Any such allocations shall be made among the LTIP
Unitholders in the following order: (i) first, to Vested LTIP Units that have
been converted from Class AO LTIP Units, (ii) second, to Vested LTIP Units held
for more than two years, (iii) third, to Vested LTIP Units held for two years or
less, (iv) fourth, to Unvested LTIP Units that have remaining vesting conditions
that only require continued employment or service to the Partnership, the
General Partner, the General Partner Entity or an Affiliate of either for a
certain period of time (with such Liquidating Gains being attributed in order of
vesting from soonest vesting to latest vesting), and (v) fifth, to other
Unvested LTIP Units (with such Liquidating Gains being attributed in order of
issuance from earliest issued to latest issued). The parties agree that the
intent of this Section 6.1.E is to make the Capital Account balance associated
with each LTIP Unit to be economically equivalent to the Capital Account balance
associated with the General Partner’s Class A Units (on a per-Unit basis, other
than differences resulting from the allocation of Net Income and Net Loss
allocated to such LTIP Units prior to the Distribution Participation Date with
respect to such LTIP Units in excess of the amount of Special LTIP Unit
Distributions paid with respect to such LTIP Units), provided that Liquidating
Gains are of a sufficient magnitude to do so upon a sale of all or substantially
all of the assets of the Partnership, or upon an adjustment to the Partners’
Capital Accounts pursuant to Section 1.D of Exhibit B. To the extent the LTIP
Unitholders receive a distribution in excess of their Capital Accounts, such
distribution will be a guaranteed payment under Section 707(c) of the Code.

 

E.                                    Section 6.1 of the Partnership Agreement
is hereby amended to add the following new Subsection 6.1.F:

 

F.  Special Allocations with Respect to Class AO LTIP Units.  The principles of
Section 6.1.E shall apply in respect of allocation of Liquidating Gains and
Liquidating Losses to unvested Class AO LTIP Units as if they were unvested LTIP
Units, until the Economic Capital Account Balance per Class AO LTIP Unit is, as
nearly as possible, equal to the product of (x) the number of Class A Units into
which such Class AO LTIP Unit is convertible (as if such Class AO LTIP Unit were
vested), and (y) the Class A Unit Economic Balance, applying correlative changes
to the Book-Up Target for this purpose. The parties agree that the intent of
this Section 6.1.F is to make the Capital Account balance associated with each
Class AO LTIP Unit economically equivalent to the Class A Unit Economic Balance
(on an “as converted” basis), but only if the Partnership has recognized
cumulative net gains with respect to its assets since the issuance of the
relevant Class AO LTIP Unit, and to achieve the economic result consistent with
Exhibit J.

 

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F.                                     Section 8.6 of the Partnership Agreement
is hereby amended to add the following new Subsection 8.6.G:

 

G.  Class AO LTIP Unit Exception and Redemption of Class A Units Issued Upon
Conversion of LTIP Units Into Which Class AO LTIP Units Were Converted.  Holders
of Class AO LTIP Units shall not be entitled to the Redemption Right provided
for in Section 8.6.A of this Agreement, unless and until such Class AO LTIP
Units (i) have been converted into LTIP Units and (ii) such LTIP Units have
subsequently been converted into Class A Units (or any other class or series of
Partnership Units entitled to such Redemption Right), in each case in accordance
with their terms. Notwithstanding the foregoing, and except as otherwise
permitted by the award, plan or other agreement pursuant to which a Class AO
LTIP Unit was issued, the Redemption Right shall not be exercisable with respect
to any Class A Unit issued upon conversion of an LTIP Unit into which a Class AO
LTIP Unit was previously converted until on or after the date that is two years
after the date on which the Class AO LTIP Unit was issued, provided however,
that the first sentence of Subsection 8.6.A(i) shall not apply with respect to
Class A Units issued upon conversion of LTIP Units into which Class AO LTIP
Units were previously converted.  For the avoidance of doubt, the foregoing
prohibition shall no longer apply upon (i) the termination of employment of the
applicable holder of Class AO LTIP Units with the General Partner or its
affiliates (a) by the General Partner (or its successor) without “Cause” (as
defined in the applicable Class AO LTIP Unit agreement) or (b) the applicable
holder of Class AO LTIP Units for “Good Reason” (as defined in the applicable
Class AP LTIP Unit agreement) or (ii) the occurrence of a “Corporate
Transaction” (as defined in the applicable Class AO LTIP Unit agreement).

 

G.                                   Clause 1.D.(2) of Exhibit B — Capital
Account Maintenance of the Partnership Agreement is hereby amended and restated
in its entirety as follows:

 

(2)                                 Such adjustments shall be made as of the
following times: (a) immediately prior to the acquisition of an additional
interest in the Partnership by any new or existing Partner in exchange for more
than a de minimis Capital Contribution; (b) immediately prior to the
distribution by the Partnership to a Partner of more than a de minimis amount of
property as consideration for an interest in the Partnership; (c) immediately
prior to the liquidation of the Partnership within the meaning of Regulations
Section 1.704-l(b)(2)(ii)(g); (d) immediately prior to the issuance of any LTIP
Units; and € immediately prior to the issuance of any Class AO LTIP Units,
provided, however, that adjustments pursuant to clauses (a), (b), (d) and
(e) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.

 

H.                                   New Exhibit J —DESIGNATION OF THE
PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO DISTRIBUTIONS, QUALIFICATIONS AND TERMS AND CONDITIONS OF
REDEMPTION OF THE CLASS AO (“APPRECIATION ONLY”) UNITS is added to the
Partnership Agreement.

 

2.                                      Except as modified herein, all terms and
conditions of the Partnership Agreement shall remain in full force and effect,
which terms and conditions the Company hereby ratifies and confirms.

 

3.                                      This Amendment shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to conflicts of law.

 

4.                                      If any provision of this Amendment 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.

 

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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
first set forth above.

 

 

 

KITE REALTY GROUP TRUST

 

As sole general partner of Kite Realty Group, L.P.

 

 

 

 

 

By:

/s/ Scott E. Murray

 

Name:

Scott E. Murray

 

Title:

Executive Vice President, General Counsel and Corporate Secretary

 

 

[Signature Page to Amendment No. 4 to the Amended and Restated Agreement

of Limited Partnership of Kite Realty Group, L.P.]

 

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EXHIBIT J
DESIGNATION OF THE PREFERENCES, CONVERSION
AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS,
LIMITATIONS AS TO DISTRIBUTIONS, QUALIFICATIONS AND TERMS
AND CONDITIONS OF REDEMPTION
OF THE CLASS AO (“APPRECIATION ONLY”) LTIP UNITS

 

The following are the terms of the Class AO (“Appreciation Only”) LTIP Units:

 

1.                                      Vesting.

 

A.                                    Vesting, Generally. Class AO LTIP Units
may, in the sole discretion of the General Partner, be issued subject to
vesting, forfeiture and additional restrictions on transfer pursuant to the
terms of an award, vesting or other similar agreement (a “Class AO LTIP Unit
Vesting Agreement”). The terms of any Class AO LTIP Unit Vesting Agreement may
be modified by the General Partner from time to time in its sole discretion,
subject to any restrictions on amendment imposed by the relevant Class AO LTIP
Unit Vesting Agreement or by the terms of any plan pursuant to which the
Class AO LTIP Units are issued, if applicable. Class AO LTIP Units that have
vested and are no longer subject to forfeiture under the terms of a Class AO
LTIP Unit Vesting Agreement are referred to as “Vested Class AO LTIP Units”; all
other Class AO LTIP Units are referred to as “Unvested Class AO LTIP Units”.

 

B.                                    Forfeiture or Transfer of Unvested
Class AO LTIP Units. Unless otherwise specified in the relevant Class AO LTIP
Unit Vesting Agreement, upon the occurrence of any event specified in a Class AO
LTIP Unit Vesting Agreement as resulting in either the forfeiture of any
Class AO LTIP Units, or the right of the Partnership or the General Partner to
repurchase Class AO LTIP Units at a specified purchase price, then upon the
occurrence of the circumstances resulting in such forfeiture or if the
Partnership or the General Partner exercises such right to repurchase, then the
relevant Class AO LTIP Units shall immediately, and without any further action,
be treated as cancelled or transferred to the General Partner, as applicable,
and no longer outstanding for any purpose. Unless otherwise specified in the
Class AO LTIP Unit Vesting Agreement, no consideration or other payment shall be
due with respect to any Class AO LTIP Units that have been forfeited, other than
any distributions declared with a record date prior to the effective date of the
forfeiture.

 

C.                                    Legend. Any certificate evidencing a
Class AO LTIP Unit shall bear an appropriate legend indicating that additional
terms, conditions and restrictions on transfer, including without limitation
provisions set forth in the Class AO LTIP Unit Vesting Agreement, apply to the
Class AO LTIP Unit.

 

2.                                      Distributions.

 

Commencing as of the date as may be specified in the Class AO LTIP Unit Vesting
Agreement or other documentation pursuant to which Class AO LTIP Units are
issued, or if no such date is specified, the grant date (“Class AO LTIP Unit
Distribution Participation Date”), for any quarterly or other period, holders of
such Class AO LTIP Units shall be entitled to receive, if, when and as
authorized by the General Partner out of funds legally available for the payment
of distributions, regular cash distributions in an amount per Class AO LTIP Unit
equal to the product of (i) the distribution payable on each Class A Unit for
the corresponding quarterly or other period, multiplied by (ii) the percentage
that is specified as the Class AO LTIP Unit Sharing Percentage in the Class AO
LTIP Unit Vesting Agreement or other documentation pursuant to which Class AO
LTIP Units are issued, or if no such percentage is specified, 10% (“Class AO
LTIP Unit Sharing Percentage”).  Distributions on the Class AO LTIP Units, if
authorized, shall be payable on such dates and in such manner as may be
authorized by the General Partner (any such date, a “Distribution Payment
Date”); provided that the Distribution Payment Date and the record date for
determining which holders of Class AO LTIP Units are entitled to receive a
distribution shall be the same as the corresponding dates relating to the
corresponding distribution on the Class A Units.

 

As soon as practicable after conversion of a Class AO LTIP Unit to a Vested LTIP
Unit in accordance with Section 5 below, the holder of such Vested LTIP Unit
will be entitled to receive in a lump sum a portion of any regular cash
distributions made in respect of Class A Units, if any, equal to (x) the total
aggregate amount that would have been payable to such holder if such Vested LTIP
Units had been Class A Units during the period between grant

 

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of the Class AO LTIP Units and conversion to Vested LTIP Units, for the
quarterly or other period to which such distributions relate (assuming such
Class AO LTIP Units were held for the entire quarter or other period), less
(y) the total aggregate amount all distributions previously made with respect to
the Class AO LTIP Units to which such Vested LTIP Units relate during the period
between grant of the Class AO LTIP Units and conversion to Vested LTIP Units.

 

Vested LTIP Units shall have the right to receive distributions from the
Partnership as set forth on the Agreement.

 

3.                                      Allocations.

 

Commencing with the portion of the taxable year of the Partnership that begins
on the date any Class AO LTIP Units are entitled to distributions pursuant to
Section 2 above, such Class AO LTIP Units shall be allocated Net Income in an
amount equal to the total amount distributed to that Class AO LTIP Unit with
respect to such period. The General Partner is authorized in its discretion to
delay or accelerate the participation of the Class AO LTIP Units in allocations
of Net Income or to adjust the allocations made under this Section 3 to
effectuate the purposes of the economic arrangement contemplated by the parties
and to ensure that the Class AO LTIP Units will be respected as “profits
interests” for U.S. federal income tax purposes, as contemplated by Section 4.8
of the Agreement.

 

4.                                      Adjustments.

 

If an Adjustment Event (as defined below) occurs, then the General Partner shall
make a corresponding adjustment to each Class AO LTIP Unit to adjust by the same
increment for which a Class A Unit was adjusted, provided that to the extent
that the Value of a common Share was less than the applicable Class AO LTIP Unit
Participation Threshold as of the date of an Adjustment Event, the adjustment
for a Class AO LTIP Unit shall only be for the amount by which the increment of
the Class A Unit adjustment would have exceeded such Class AO LTIP Unit
Participation Threshold, provided that, notwithstanding the foregoing, if an
Adjustment Event occurs, the General Partner may make such adjustments to the
Class AO LTIP Units as it determines to be appropriate in order to achieve the
intended economics of the Class AO LTIP Units. The following shall be
“Adjustment Events”: (A) the Partnership makes a distribution on all outstanding
Class A Units in Partnership Units, (B) the Partnership subdivides the
outstanding Class A Units into a greater number of units or combines the
outstanding Class A Units into a smaller number of units, or (C) the Partnership
issues any Partnership Units in exchange for its outstanding Class A Units by
way of a reclassification or recapitalization of its Class A Units. If more than
one Adjustment Event occurs, the adjustment to the Class AO LTIP Units need be
made only once using a single formula that takes into account each and every
Adjustment Event as if all Adjustment Events occurred simultaneously. For the
avoidance of doubt, the following shall not be Adjustment Events: (x) the
issuance of Partnership Units in a financing, reorganization, acquisition or
other similar business transaction, (y) the issuance of Partnership Units
pursuant to any employee benefit or compensation plan or distribution
reinvestment plan, or (z) the issuance of any Partnership Units to the General
Partner in respect of a capital contribution to the Partnership of proceeds from
the sale of securities by the General Partner. If the Partnership takes an
action affecting the Class A Units other than actions specifically described
above as Adjustment Events and in the opinion of the General Partner such action
would require an adjustment to the Class AO LTIP Units to effect the adjustments
described above, the General Partner shall have the right to make such
adjustment to the Class AO LTIP Units, to the extent permitted by law and by the
terms of any plan pursuant to which the Class AO LTIP Units have been issued, in
such manner and at such time as the General Partner, in its sole discretion, may
determine to be appropriate under the circumstances to effect the adjustments
described above. If an adjustment is made to the Class AO LTIP Units as herein
provided the Partnership shall promptly file in the books and records of the
Partnership an officer’s certificate setting forth such adjustment and a brief
statement of the facts requiring such adjustment, which certificate shall be
conclusive evidence of the correctness of such adjustment absent manifest error.
Promptly after filing of such certificate, the Partnership shall mail a notice
to each holder of Class AO LTIP Units setting forth the adjustment to his or her
Class AO LTIP Units and the effective date of such adjustment.

 

5.                                      No Liquidation Preference.

 

The Class AO LTIP Units shall have no liquidation preference.

 

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6.                                      Right to Convert Class AO LTIP Units
into Class A Units.

 

A.                                    Class AO LTIP Unit Conversion Right. A
holder of Class AO LTIP Units shall have the right (the “Class AO LTIP Unit
Conversion Right”), at his or her option, at any time to convert all or a
portion of his or her Vested Class AO LTIP Units into Vested LTIP Units, in
accordance with the provisions of Section 6.B below. Holders of Class AO LTIP
Units shall not have the right to convert Unvested Class AO LTIP Units into
Vested LTIP Units until they become Vested Class AO LTIP Units; provided,
however, that when a holder of Class AO LTIP Units is notified of the expected
occurrence of an event that will cause his or her Unvested Class AO LTIP Units
to become Vested Class AO LTIP Units, such Person may give the Partnership a
Class AO LTIP Unit Conversion Notice conditioned upon and effective as of the
time of vesting, and such Class AO LTIP Unit Conversion Notice, unless
subsequently revoked by the holder of the Class AO LTIP Units prior to
conversion, shall be accepted by the Partnership subject to such condition. The
General Partner shall have the right at any time to cause a conversion of Vested
Class AO LTIP Units into Vested LTIP Units. In all cases, the conversion of any
Class AO LTIP Units into Vested LTIP Units shall be subject to the conditions
and procedures set forth in this Section 6.

 

B.                                    Number of Units Convertible. A holder of
Vested Class AO LTIP Units may convert such Vested Class AO LTIP Units into a
number (or fraction thereof) of fully paid and non-assessable Vested LTIP Units,
giving effect to all adjustments (if any) made pursuant to Section 4 equal to
the Class AO LTIP Unit Conversion Factor (as defined below).

 

“Class AO LTIP Unit Conversion Factor” shall mean the quotient of (i) the excess
of the Value of a common Share as of the date of conversion over the Class AO
LTIP Unit Participation Threshold (as defined below) for such Vested Class AO
LTIP Unit, divided by (ii) the Value of a common Share as of the date of
conversion.

 

“Class AO LTIP Unit Participation Threshold” shall mean, for each Class AO LTIP
Unit, the amount specified as such in the relevant Class AO LTIP Unit Vesting
Agreement or other documentation pursuant to which such Class AO LTIP Unit is
granted. The Class AO LTIP Unit Participation Threshold of a Class AO LTIP Unit
is intended to be the Value of a common Share as of the date of issuance of such
Class AO LTIP Unit.

 

C.                                    Notice. In order to exercise his or her
Class AO LTIP Unit Conversion Right, a holder of Class AO LTIP Units shall
deliver a notice (a “Class AO LTIP Unit Conversion Notice”) in the form attached
as Attachment A to this Exhibit J to the Partnership not less than 10 nor more
than 60 days prior to a date (the “Conversion Date”) specified in such Class AO
LTIP Unit Conversion Notice. Each holder of Class AO LTIP Units covenants and
agrees with the Partnership that all Vested Class AO LTIP Units to be converted
pursuant to this Section 6 shall be free and clear of all liens. Notwithstanding
anything herein to the contrary or the holding period requirement of
Section 8.6A(i) of the Agreement (but subject to the remainder of Section 8.6 of
the Agreement), a holder of Class AO LTIP Units may deliver a Redemption Notice
pursuant to Section 8.6 of the Agreement relating to those Vested LTIP Units
that will be issued to such holder upon conversion of such Class AO LTIP Units
into Vested LTIP Units in advance of the Conversion Date; provided, however,
that the redemption of such Vested LTIP Units by the Partnership shall in no
event take place until the Conversion Date. For clarity, it is noted that the
objective of this paragraph is to put a holder of Class AO LTIP Units in a
position where, if he or she so wishes, the Vested LTIP Units into which his or
her Vested Class AO LTIP Units will be converted can be redeemed by the
Partnership simultaneously with such conversion notwithstanding such Vested LTIP
Units were not held for one (1) year, with the further consequence that, if the
General Partner elects to assume the Partnership’s redemption obligation with
respect to such Vested LTIP Units under Section 8.6 of the Agreement by
delivering to such holder Shares rather than cash, then such holder can have
such Shares issued to him or her simultaneously with the conversion of his or
her Vested Class AO LTIP Units into Vested LTIP Units. The General Partner shall
cooperate with a holder of Class AO LTIP Units to coordinate the timing of the
different events described in the foregoing sentence.

 

D.                                    Class AO LTIP Unit Forced Conversion. The
Partnership, at any time at the election of the General Partner, may cause any
number of Vested Class AO LTIP Units held by a holder of Class AO LTIP Units to
be converted (a “Class AO LTIP Unit Forced Conversion”) into a number of Vested
LTIP Units equal to the Class AO LTIP Unit Conversion Factor, giving effect to
all adjustments (if any) made pursuant to Section 4, and may cause any number of
such resulting Vested LTIP Units to be converted into a number of Class A Units
in accordance with Exhibit E of the Agreement; provided that the Partnership may
not cause a Class AO LTIP Unit Forced Conversion of any Class AO LTIP Units that
would not at the time be eligible for conversion at the option of the holder of
such

 

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Class AO LTIP Units pursuant to Section 6.B above. In order to exercise its
right to cause a Class AO LTIP Unit Forced Conversion, the Partnership shall
deliver a notice (a “Class AO LTIP Unit Forced Conversion Notice”) in the form
attached as Attachment B to this Exhibit J to the applicable holder not less
than 10 nor more than 60 days prior to the Conversion Date specified in such
Class AO LTIP Unit Forced Conversion Notice. A Class AO LTIP Unit Forced
Conversion Notice shall be provided in the manner provided in Section 15.1 of
the Agreement.

 

E.                                          Conversion Procedures. A conversion
of Vested Class AO LTIP Units for which the holder thereof has given a Class AO
LTIP Unit Conversion Notice or the Partnership has given a Class AO LTIP Unit
Forced Conversion Notice shall occur automatically after the close of business
on the applicable Conversion Date without any action on the part of such holder
of Class AO LTIP Units, as of which time such holder of Class AO LTIP Units
shall be credited on the books and records of the Partnership with the issuance
as of the opening of business on the next day of the number of Class A Units
issuable upon such conversion. After the conversion of Class AO LTIP Units as
aforesaid, the Partnership shall deliver to such holder of Class AO LTIP Units,
upon his or her written request, a certificate of the General Partner certifying
the number of Vested LTIP Units and remaining Class AO LTIP Units, if any, held
by such Person immediately after such conversion.

 

F.                                           Treatment of Capital Account. For
purposes of making future allocations under the Agreement, the Economic Capital
Account Balance of the applicable Class AO LTIP Unitholder shall be reduced, as
of the date of conversion, by the amount of such Economic Capital Account
Balance attributable to the converted Class AO LTIP Units.

 

G.                                         Mandatory Conversion in Connection
with a Transaction. If the Partnership or the General Partner shall be a party
to any transaction (including without limitation a merger, consolidation, unit
exchange, self tender offer for all or substantially all Class A Units or other
business combination or reorganization, or sale of all or substantially all of
the Partnership’s assets, but excluding any transaction which constitutes an
Adjustment Event), in each case as a result of which Class A Units shall be
exchanged for or converted into the right, or the holders of Class A Units shall
otherwise be entitled, to receive cash, securities or other property or any
combination thereof (each of the foregoing being referred to herein as a
“Transaction”), then the General Partner shall, immediately prior to the
Transaction, exercise its right to cause a Class AO LTIP Unit Forced Conversion
with respect to all Class AO LTIP Units then eligible for conversion, taking
into account any allocations that occur in connection with the Transaction or
that would occur in connection with the Transaction if the assets of the
Partnership were sold at the Transaction price or, if applicable, at a value
determined by the General Partner in good faith using the value attributed to
the Partnership Units in the context of the Transaction (in which case the
Conversion Date shall be the effective date of the Transaction and the
conversion shall occur immediately prior to the effectiveness of the
Transaction).

 

In anticipation of such Class AO LTIP Unit Forced Conversion and the
consummation of the Transaction, the Partnership shall use commercially
reasonable efforts to cause each holder of Class AO LTIP Units to be afforded
the right to receive in connection with such Transaction in consideration for
the Vested LTIP Units and Class A Units into which his or her Class AO LTIP
Units will be converted into the same kind and amount of cash, securities and
other property (or any combination thereof) receivable upon the consummation of
such Transaction by a holder of the same number of Class A Units (after giving
effect to the Class AO LTIP Unit Conversion Factor in the case of Class AO LTIP
Units), assuming such holder of Class A Units is not a Person with which the
Partnership consolidated or into which the Partnership merged or which merged
into the Partnership or to which such sale or transfer was made, as the case may
be (a “Constituent Person”), or an affiliate of a Constituent Person. In the
event that holders of Class A Units have the opportunity to elect the form or
type of consideration to be received upon consummation of the Transaction, prior
to such Transaction the General Partner shall give prompt written notice to each
holder of Class AO LTIP Units of such election, and shall use commercially
reasonable efforts to afford such holders the right to elect, by written notice
to the General Partner, the form or type of consideration to be received upon
conversion of each Class AO LTIP Unit held by such holder into Class A Units in
connection with such Transaction. If a holder of Class AO LTIP Units fails to
make such an election, such holder (and any of its transferees) shall receive
upon conversion of each Class AO LTIP Unit held by him or her (or by any of his
or her transferees) the same kind and amount of consideration that a holder of a
Class A Unit would receive if such holder of Class A Units failed to make such
an election.

 

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7.                                      Redemption at the Option of the
Partnership.

 

Class AO LTIP Units will not be redeemable at the option of the Partnership;
provided, however, that the foregoing shall not prohibit the Partnership from
repurchasing Class AO LTIP Units from the holder thereof if and to the extent
such holder agrees to sell such Class AO LTIP Unit.

 

8.                                      Voting Rights.

 

A.                                         Voting with Class A Units. Except as
provided in Section 8.B, holders of Class AO LTIP Units shall not have the right
to vote on any matters submitted to a vote of the Limited Partners.

 

B.                                         Special Approval Rights. Holders of
Class AO LTIP Units shall only (a) have those voting rights required from time
to time by non-waivable provisions of applicable law, if any, and (b) have the
additional voting rights that are expressly set forth in this Section 8.B. The
General Partner and/or the Partnership shall not, without the affirmative vote
of holders of more than 50% of the then outstanding Class AO LTIP Units affected
thereby, given in person or by proxy, either in writing or at a meeting (voting
separately as a class), take any action that would materially and adversely
alter, change, modify or amend, whether by merger, consolidation or otherwise,
the rights, powers or privileges of such Class AO LTIP Units, subject to the
following exceptions:

 

(i)                                          no separate consent of the holders
of Class AO LTIP Units will be required if and to the extent that any such
alteration, change, modification or amendment would equally, ratably and
proportionately alter, change, modify or amend the rights, powers or privileges
of the Class A Units (in which event the holders of Class AO LTIP Units shall
only have such voting rights, if any, as provided in Section 14.1 of the
Agreement in accordance with Section 8.A above);

 

(ii)                                       with respect to any merger,
consolidation or other business combination or reorganization, so long as the
Class AO LTIP Units either (x) are converted into Class A Units immediately
prior to the effectiveness of the transaction, (y) remain outstanding with the
terms thereof materially unchanged, or (z) if the Partnership is not the
surviving entity in such transaction, are exchanged for a security of the
surviving entity with terms that are materially the same with respect to rights
to allocations, distributions, redemption, conversion and voting as the Class AO
LTIP Units and without any income, gain or loss expected to be recognized by the
holder upon the exchange for federal income tax purposes (and with the terms of
the Class A Units or such other securities into which the Class AO LTIP Units
(or the substitute security therefor) are convertible materially the same with
respect to rights to allocations, distributions, redemption, conversion and
voting), such merger, consolidation or other business combination or
reorganization shall not be deemed to materially and adversely alter, change,
modify or amend the rights, powers or privileges of the Class AO LTIP Units,
provided further, that if some, but not all, of the Class AO LTIP Units are
converted into Class A Units immediately prior to the effectiveness of the
transaction (and neither clause (y) or (z) above is applicable), then the
consent required pursuant to this Section will be the consent of the holders of
more than 50% of the Class AO LTIP Units to be outstanding following such
conversion, Vested LTIP Units and Class A Units outstanding voting together as a
single class pursuant to Section 8.A above;

 

(iii)                                    any creation or issuance of any Class A
Units or of any class of series of Class A Units or Preference Units of the
Partnership (whether ranking junior to, on a parity with or senior to the
Class AO LTIP Units or with respect to payment of distributions, redemption
rights and the distribution of assets upon liquidation, dissolution or winding
up), which either (x) does not require the consent of the holders of Class A
Units or (y) does require such consent and is authorized by a vote of the
holders of Class A Units, Vested LTIP Units and Class AO LTIP Units voting
together as a single class pursuant to Section 8.A above, together with any
other class or series of units of limited partnership interest in the
Partnership upon which like voting rights have been conferred, shall not be
deemed to materially and adversely alter, change, modify or amend the rights,
powers or privileges of the Class AO LTIP Units;

 

(iv)                                   any waiver by the Partnership of
restrictions or limitations applicable to any outstanding Class AO LTIP Units
with respect to any holder or holders thereof shall not be deemed to materially
and adversely alter, change, modify or amend the rights, powers or privileges of
the Class AO LTIP Units with respect to other holders. The foregoing voting
provisions will not apply if, as of or prior to the time when the action with
respect to

 

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which such vote would otherwise be required will be taken or be effective, all
outstanding Class AO LTIP Units shall have been converted and/or redeemed, or
provision is made for such redemption and/or conversion to occur as of or prior
to such time; and

 

(v)                                      the General Partner shall have the
power, without the consent of holders of Class AO LTIP Units, to amend the
Agreement as may be required to reflect any change to the Agreement not
otherwise specifically permitted by this Section 8.B that the General Partner
deems necessary or appropriate in its sole discretion, provided that such change
does not adversely affect or eliminate any right granted to holders of Class AO
LTIP Units requiring their approval.

 

9.                                      Other.

 

If there is a change in applicable tax law such that the Class AO LTIP Units
become taxable to the holder of such Class AO LTIP Units as ordinary income, the
Partnership, at any time at the election of the General Partner, may cause the
Class AO LTIP Units to be restructured and/or substituted for other awards in a
way that permits a tax deduction to the Partnership or the General Partner while
preserving substantially similar pre-tax economics to the holder of such
Class AO LTIP Units.

 

* * *

 

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Attachment A to Exhibit J

 

Notice of Election by Partner to Convert Class AO LTIP Units into Vested LTIP
Units

 

The undersigned holder of Class AO LTIP Units hereby irrevocably elects to
convert the number of Vested Class AO LTIP Units in Kite Realty Group, L.P. 
(the “Partnership”) set forth below into Vested LTIP Units in accordance with
the terms of the Limited Partnership Agreement of the Partnership, as amended.
The undersigned hereby represents, warrants, and certifies that the undersigned:
(a) has title to such Class AO LTIP Units, free and clear of the rights or
interests of any other person or entity other than the Partnership; (b) has the
full right, power, and authority to cause the conversion of such Class AO LTIP
Units as provided herein; and (c) has obtained the consent or approval of all
persons or entities, if any, having the right to consent or approve such
conversion.

 

Name of Holder:

 

(Please Print: Exact Name as Registered with Partnership)

 

Number of Class AO LTIP Units to be Converted:

 

 

Conversion Date:

 

 

 

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

 

 

(Street Address)

 

 

(City)

(State)

(Zip Code)

 

 

Signature Guaranteed by:

 

 

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Attachment B to Exhibit J

 

Notice of Election by Partnership to Force Conversion
of Class AO LTIP Units into Vested LTIP Units

 

Kite Realty Group, L.P. (the “Partnership”) hereby irrevocably elects to cause
the number of Class AO LTIP Units held by the holder of Class AO LTIP Units set
forth below to be converted into Vested LTIP Units in accordance with the terms
of the Limited Partnership Agreement of the Partnership.

 

Name of Holder:

 

(Please Print: Exact Name as Registered with Partnership)

 

Number of Class AO LTIP Units to be Converted:

 

 

Conversion Date:

 

 

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