FIRST AMENDED AND RESTATED 
AGREEMENT OF LIMITED PARTNERSHIP
OF 
EMPIRE STATE REALTY OP, L.P.

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

Dated as of October 1, 2013

 
 
 

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

CONTENTS
Clause
Page

Article I DEFINED TERMS1
Article II ORGANIZATIONAL MATTERS19
Section 2.01. Organization.19
Section 2.02. Name.19
Section 2.03. Registered Office and Agent; Principal Office.19
Section 2.04. Power of Attorney.19
Section 2.05. Term.21
Section 2.06. Partnership Interests as Securities.21
Article III PURPOSE21
Section 3.01. Purpose and Business.21
Section 3.02. Powers.21
Section 3.03. Partnership Only for Partnership Purposes Specified.22
Section 3.04. Representations and Warranties by the Parties.22
Article IV CAPITAL CONTRIBUTIONS24
Section 4.01. Capital Contributions of the Partners.24
Section 4.02. Classes and Series of Partnership Units.24
Section 4.03. Issuances of Additional Partnership Interests.25
Section 4.04. Additional Funds and Capital Contributions.26
Section 4.05. Equity Incentive Plan.28
Section 4.06. LTIP Units.29
Section 4.07. Conversion of LTIP Units.32
Section 4.08. No Interest; No Return.34
Section 4.09. Other Contribution Provisions.34
Section 4.10. Not Taxable as a Corporation.35
Section 4.11. No Third Party Beneficiary.35
Article V DISTRIBUTIONS35

 
 
 

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

Section 5.01. Requirement and Characterization of Distributions.35
Section 5.02. Interests in Property not Held Through the Partnership.36
‑Kind.
36

Section 5.04. Amounts Withheld.36
Section 5.05. Distributions Upon Liquidation.36
Section 5.06. Distributions to Reflect Issuance of Additional Partnership
Units.37
Section 5.07. Restricted Distributions.37
Article VI ALLOCATIONS37
Section 6.01. Timing and Amount of Allocations of Net Income and Net Loss.37
Section 6.02. General Allocations.37
Section 6.03. Additional Allocation Provisions.39
Section 6.04. Tax Allocations.42
Article VII MANAGEMENT AND OPERATIONS OF BUSINESS43
Section 7.01. Management.43
Section 7.02. Certificate of Limited Partnership.48
Section 7.03. Restrictions on General Partner's Authority.48
Section 7.04. Reimbursement of the General Partner.50
Section 7.05. Outside Activities of the General Partner.51
Section 7.06. Contracts with Affiliates.52
Section 7.07. Indemnification.52
Section 7.08. Liability of the General Partner.54
Section 7.09. Other Matters Concerning the General Partner.56
Section 7.10. Title to Partnership Assets.56
Section 7.11. Reliance by Third Parties.57
Article VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS57
Section 8.01. Limitation of Liability.57
Section 8.02. Management of Business.57
Section 8.03. Outside Activities of Limited Partners.57
Section 8.04. Return of Capital.58
Section 8.05. Adjustment Factor.58
Section 8.06. Redemption Rights.58

 
 
 

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

Article IX BOOKS, RECORDS, ACCOUNTING AND REPORTS60
Section 9.01. Records and Accounting.60
Section 9.02. Partnership Year.61
Section 9.03. Reports.61
Article X TAX MATTERS61
Section 10.01. Preparation of Tax Returns.61
Section 10.02. Tax Elections.62
Section 10.03. Tax Matters Partner.62
Section 10.04. Withholding.63
Section 10.05. Organizational Expenses.64
Article XI TRANSFERS AND WITHDRAWALS64
Section 11.01. Transfer.64
Section 11.02. Transfer of General Partner's Partnership Interest.65
Section 11.03. Transfer of Limited Partners' Partnership Interests.66
Section 11.04. Substituted Limited Partners.67
Section 11.05. Assignees.68
Section 11.06. General Provisions.69
Article XII ADMISSION OF PARTNERS71
Section 12.01. Admission of Successor General Partner.71
Section 12.02. Admission of Additional Limited Partners.71
Section 12.03. Amendment of Agreement and Certificate of Limited Partnership.72
Section 12.04. Limit on Number of Partners.72
Section 12.05. Admission.72
Section 12.06. Certificates.72
Section 12.07. Mutilated, Destroyed, Lost or Stolen Certificates.72
Section 12.08. Record Holders.73
Article XIII DISSOLUTION, LIQUIDATION AND TERMINATION74
Section 13.01. Dissolution.74
Section 13.02. Winding Up.74
Section 13.03. Deemed Distribution and Recontribution.77

 
 
 

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

Section 13.04. Rights of Limited Partners.78
Section 13.05. Notice of Dissolution.78
Section 13.06. Cancellation of Certificate of Limited Partnership.78
‑Up.
78

Article XIV PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS;
MEETINGS78
Section 14.01. Procedures for Actions and Consents of Partners.78
Section 14.02. Amendments.79
Section 14.03. Meetings of the Partners.79
Article XV GENERAL PROVISIONS81
Section 15.01. Addresses and Notice.81
Section 15.02. Titles and Captions.81
Section 15.03. Pronouns and Plurals.81
Section 15.04. Further Action.81
Section 15.05. Binding Effect.81
Section 15.06. Waiver.81
Section 15.07. Counterparts.82
Section 15.08. Applicable Law.82
Section 15.09. Entire Agreement.82
Section 15.10. Invalidity of Provisions.83
Section 15.11. Limitation to Preserve REIT Qualification.83
Section 15.12. No Partition.83
Section 15.13. No Third-Party Rights Created Hereby.84
Section 15.14. No Rights as Stockholders of General Partner.84
Section 15.15. Creditors.84

 
 
 

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

 

THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF EMPIRE STATE
REALTY OP, L.P., dated as of October 1, 2013 is entered into by and among Empire
State Realty Trust, Inc., a Maryland corporation (the "General Partner"), and
the Limited Partners (defined below).
WHEREAS, a Certificate of Limited Partnership of the Partnership was filed in
the office of the Secretary of State of the State of Delaware on November 28,
2011;
WHEREAS, the General Partner and the Initial Limited Partner entered into an
Agreement of Limited Partnership of Empire State Realty OP, L.P., dated as of
November 28, 2011, pursuant to which the Partnership was formed (the "Original
Agreement"); and
WHEREAS, the General Partner and the Initial Limited Partner desire to amend and
restate the Original Agreement in its entirety by entering into this Agreement;
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 to amend
and restate the Original Agreement in its entirety and agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:

 
1
 

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

 

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.
"Additional Funds" has the meaning set forth in Section 4.04(a) hereof.
"Additional Limited Partner" means a Person who is admitted to the Partnership
as a Limited Partner pursuant to Section 4.03 and Section 12.02 hereof.
"Adjusted Capital Account" means the Capital Account maintained for each Partner
as of the end of each Fiscal Year (i) increased by any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704‑2(g)(1) and 1.704‑2(i)(5) and (ii) decreased by the
items described in Regulations Sections 1.704‑1(b)(2)(ii)(d)(4),
1.704‑1(b)(2)(ii)(d)(5) and 1.704‑1(b)(2)(ii)(d)(6). The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704‑1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in such Partner's Adjusted Capital Account as of the
end of the relevant Partnership Year or other applicable period.
"Adjustment Event" shall have the meaning set forth in Section 4.06(a) hereof.
"Adjustment Factor" means 1.0; provided, however, that in the event that:
(i)    the General Partner (a) declares or pays a dividend on its outstanding
REIT Shares wholly or partly in REIT Shares or makes a distribution to all
holders of its outstanding REIT Shares wholly or partly in REIT Shares,
(b) splits or subdivides its outstanding REIT Shares or (c) effects a reverse
stock split or otherwise combines its outstanding REIT Shares into a smaller
number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying
the Adjustment Factor previously in effect by a fraction, (i) the numerator of
which shall be the number of REIT Shares issued and outstanding on the record
date for such dividend, distribution, split, subdivision, reverse split or
combination (assuming for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has occurred as of such time) and
(ii) the denominator of which shall be the actual number of REIT Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, split, subdivision, reverse split or
combination;
(ii)    the General Partner distributes any rights, options or warrants to all
holders of its REIT Shares to subscribe for or to purchase or to otherwise
acquire REIT Shares (or other securities

 
2
 

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

 

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 (a) the numerator of which
shall be the number of REIT Shares issued and outstanding on the record date
(or, if later, the date such Distributed Rights become exercisable) plus the
maximum number of REIT Shares purchasable under such Distributed Rights and
(b) the denominator of which shall be the number of REIT Shares issued and
outstanding on the record date (or, if later, the date 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 date 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 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;
(iii)    the General Partner shall, by dividend or otherwise, distribute to all
holders of its REIT Shares evidences of its indebtedness or assets (including
securities, but excluding any dividend or distribution referred to in
subsection (i) or (ii) above), which evidences of indebtedness or assets relate
to assets not received by the General Partner or its Subsidiaries 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 stockholders of the General Partner 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 REIT, whose
determination shall be conclusive) of the portion of the evidences of
indebtedness or assets so distributed applicable to one REIT Share; and
(iv)    an entity other than an Affiliate of the General Partner shall become
General Partner pursuant to any merger, consolidation or combination of the
General Partner with or into another entity (the "Successor Entity"), the
Adjustment Factor shall be adjusted by multiplying the Adjustment Factor by the
number of shares of the Successor Entity into which one REIT Share is converted
pursuant to such merger, consolidation or combination, determined as of the date
of such merger, consolidation or combination.
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. Notwithstanding the foregoing, the Adjustment Factor shall not
be adjusted in connection with an event described in clauses (i) or (ii) above
if, in connection with such event, the Partnership makes a distribution of cash,
Partnership Units, REIT Shares and/or rights, options or warrants to acquire
Partnership Units and/or REIT Shares with respect to all applicable OP Units
(including LTIP Units) or effects a reverse split of, or otherwise combines, the
OP Units (including LTIP Units), as applicable, that

 
3
 

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

 

is comparable as a whole in all material respects with such an event, or if in
connection with an event described in clause (iv) above, the consideration in
Section 11.02 hereof is paid.
"Affiliate" means, with respect to any Person, (i) any Person directly or
indirectly controlling or controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. 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 First Amendment and Restated Agreement of Limited
Partnership of Empire State Realty OP, L.P., as it may be amended, supplemented
or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have been
Transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.05
hereof.
"Available Cash" means, with respect to any period for which such calculation is
being made, the amount of cash available for distribution by the Partnership as
determined by the General Partner in its sole and absolute discretion.
"Board of Directors" means the board of directors of the General Partner.
"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.
"Bylaws" means the Bylaws of the General Partner, as amended, supplemented or
restated from time to time.
"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 6.03 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

 
4
 

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

 

expenses or losses that are specially allocated pursuant to Section 6.03 hereof,
and the principal amount of any liabilities of such Partner assumed by the
Partnership or that are secured by any property contributed by such Partner to
the Partnership.
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 may, in its
sole discretion, (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 13.02(c) hereof.
"Capital Account Limitation" has the meaning set forth in Section 4.07(b)
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 or is deemed to contribute to the Partnership
pursuant to Section 4.04 hereof.
"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.
"Certificate" means a certificate issued in global form in accordance with the
rules and regulations of the Depositary or in such other form as may be adopted
by the General Partner, issued by the Partnership evidencing ownership of one or
more Partnership Units or a certificate, in such form as may be adopted by the
General Partner, issued by the Partnership evidencing ownership of one or more
other Partnership Interests.

 
5
 

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

 

"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership filed in the office of the Secretary of State of
the State of Delaware on November 28, 2011, as amended from time to time in
accordance with the terms hereof and the Act.
"Charity" means an entity described in Section 501(c)(3) of the Code or any
trust all the beneficiaries of which are such entities.
"Charter" means the Articles of Incorporation of the General Partner as filed
with the State Department of Assessments and Taxation of Maryland, as amended,
supplemented or restated from time to time.
"Class A REIT Share" means a share of the General Partner's class A common
stock, par value $0.01 per share. Where relevant in this Agreement, "Class A
REIT Share" includes shares of the General Partner's class A common stock, par
value $0.01 per share, issued upon conversion of Preferred Shares, Junior Shares
or Class B REIT Shares.
"Class B REIT Share" means a share of the General Partner's class B common
stock, par value $0.01 per share.
"Closing Price" has the meaning set forth in the definition of "Value."
"Code" means the Internal Revenue Code of 1986, as amended and in effect from
time to time or any successor statute thereto, as interpreted by the applicable
Regulations thereunder. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"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.
"Constituent Person" shall have the meaning set forth in Section 4.07(f).
"Contributed Entity" has the meaning set forth in the definition of
"Indemnitee."
"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) net of any liabilities assumed
by the Partnership relating to such Contributed Property and any liability to
which such Contributed Property is subject.
"Controlled Entity" means, as to any Partner, (a) any corporation more than
twenty five percent (25%) of the outstanding voting stock of which is owned by
such Partner and such Partner's Family Members and Affiliates, (b) any trust,
whether or not revocable, of which such Partner and such Partner's Family
Members and Affiliates are the sole initial income beneficiaries, (c) any
partnership of which such Partner or such Partner's Family Members and
Affiliates are the managing partners and in which such Partner, such Partner's
Family Members and Affiliates hold partnership interests representing at least
twenty-five percent (25%) of such partnership's capital and profits and (d) any
limited liability company of which such Partner or such Partner's Family Members
and

 
6
 

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

 

Affiliates are the managers and in which such Partner, such Partner's Family
Members and Affiliates hold membership interests representing at least
twenty-five percent (25%) of such limited liability company's capital and
profits.
"Conversion Date" shall have the meaning set forth in Section 4.07(b).
"Conversion Notice" shall have the meaning set forth in Section 4.07(b).
"Conversion Right" shall have the meaning set forth in Section 4.07(a).
"Debt" means, as to any Person, as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
that, in accordance with generally accepted accounting principles, should be
capitalized.
"Depositary" means, with respect to any Partnership units issued in global form,
The Depository Trust Company and its successors and permitted assigns.
"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."
"DRO Amount" means the amount specified on Exhibit C with respect to any DRO
Partner, as such Exhibit may be amended from time to time.
"DRO Partner" means a Partner who has agreed in writing to be a DRO Partner and
has agreed and is obligated to make certain contributions, not in excess of such
DRO Partner's DRO Amount, to the Partnership with respect to such Partner's
Capital Account Deficit upon the occurrence of certain events.
"Economic Capital Account Balances" has the meaning set forth in Section 6.03(c)
hereof.

 
7
 

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

 

"Effective Date" means the date of closing of the initial public offering of
Class A REIT Shares.
"Equity Incentive Plan" means any equity incentive plan hereafter adopted by the
Partnership or the General Partner, including the General Partner's 2011 equity
incentive plan.
"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 Member" means, as to a Person that is an individual, such Person's
spouse, ancestors (whether by blood or by adoption or step-ancestors by
marriage), descendants (whether by blood or by adoption or step-descendants by
marriage), brothers and sisters, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law and descendants (whether by blood
or by adoption or step-descendants by marriage) of a brother or sister and any
limited liability company or inter vivos or testamentary trusts (whether
revocable or irrevocable) of which only such Person, his or her spouse,
ancestors (whether by blood or by adoption or step-ancestors by marriage),
descendants (whether by blood or by adoption or step-descendants by marriage),
brothers and sisters, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, sister-in-law and descendants (whether by blood or by adoption
or step-descendants by marriage) of a brother or sister are initial income
beneficiaries.
"Forced Redemption" shall have the meaning set forth in Section 4.07(c).
"Forced Redemption Notice" shall have the meaning set forth in Section 4.07(c).
"Funding Debt" means the incurrence of any Debt for the purpose of providing
funds to the Partnership by or on behalf of the General Partner or any wholly
owned subsidiary of the General Partner.
"General Partner" means Empire State Realty Trust, Inc., and its successors and
assigns, as the general partner of the Partnership.
"General Partner Employee" means any employee of the Partnership, the General
Partner and any of their subsidiaries.
"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
Units.
"General Partner Loan" has the meaning set forth in Section 4.04(d) hereof.
"Governmental Entity" means any federal, state, county, city, local or foreign
governmental, administrative or regulatory authority, commission, committee,
agency or body (including any court, tribunal or arbitral body).

 
8
 

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

 

"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 in its sole discretion.
(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) or
clause (iv) hereof shall be adjusted to equal their respective gross fair market
values, as determined by the General Partner in its sole discretion 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 4.02 hereof or contributions or
deemed contributions by the General Partner pursuant to Section 4.02 hereof) by
a new or existing Partner in exchange for more than a de minimis Capital
Contribution, 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; provided, that the issuance of any LTIP Unit shall
be deemed to require a recalculation pursuant to this subsection;
(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); and
(iv)    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 an independent third party experienced in the valuation of similar
assets, selected by the General Partner in good faith.
(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

 
9
 

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

 

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 partner of the Partnership for federal income tax
purposes.
"Incapacity" or "Incapacitated" means, (i) as to any Partner who is an
individual, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her person
or his or her estate; (ii) as to any Partner that is a corporation or limited
liability company, the filing of a certificate of dissolution, or its
equivalent, or the revocation of the corporation's charter; (iii) as to any
Partner that is a partnership, the dissolution and commencement of winding up of
the partnership; (iv) as to any Partner that is an estate, the distribution by
the fiduciary of the estate's entire interest in the Partnership; (v) as to any
trustee of a trust that is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any 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 120 days after the
commencement thereof, (g) the appointment without the Partner's consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or stayed
within 90 days of such appointment, or (h) an appointment referred to in
clause (g) above is not vacated within 90 days after the expiration of any such
stay.
"Indemnitee" means (i) any Person made a party to a proceeding by reason of its
status as (A) the General Partner or any successor thereto or (B) an officer or
director, as applicable, of the Partnership, the General Partner or a Subsidiary
thereof (including by reason of being named a Person who is about to become a
director) and (ii) such other Persons (including (A) Affiliates of the General
Partner or the Partnership, (B) a present or former member, manager,
shareholder, director, limited partner, general partner, officer or controlling
person of (1) Malkin Holdings LLC, (2) an entity that owned an interest in one
of the 18 real properties or two acres of land that are going to be or were
contributed to the General Partner, the Partnership or their subsidiaries (each
such entity, a "Contributing Entity") in the General Partner's initial public
offering or (3) any direct

 
10
 

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

 

or indirect partner or member, or any employee benefit plan or other enterprise
thereof (provided, that, in the case such direct or indirect partner or member
owns direct or indirect interests in any properties not being contributed to the
General Partner, the Partnership or their subsidiaries in the General Partners'
initial public offering, only to the extent such service relates to the business
of Malkin Holdings LLC or any Contributing Entity) or (C) any agent for
participants in any Contributing Entity or any direct or indirect partner or
member thereof (provided, that, in the case such direct or indirect partner or
member owns direct or indirect interests in any properties not being contributed
to the General Partner or the Partnership, only to the extent such service
relates to the business of Malkin Holdings LLC or any Contributing Entity)) 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.
"Independent Directors" means the independent directors of the Board of
Directors of General Partner as determined by the rules and regulations of the
New York Stock Exchange then in effect.
"Initial Limited Partner" means Anthony E. Malkin.
"IPO" means a public offering of the common stock of the General Partner.
"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 General Partner now or
hereafter authorized or reclassified that has dividend rights, or rights upon
liquidation, winding up and dissolution, that are junior in rank to the REIT
Shares.
"Junior Unit" means a fractional share of the Partnership Interests that the
General Partner has authorized pursuant to Section 4.01, 4.03 or 4.04 hereof
that has distribution rights, or rights upon liquidation, winding up and
dissolution, that are junior in rank to the OP Units.
"Limited Partner" means any Person named as a Limited Partner in the books and
records of the Partnership or the Transfer Agent, 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 OP Units, LTIP Units, Preferred Units, Junior Units or other
Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.01 hereof.
"Liquidating Gains" has the meaning set forth in Section 6.03(c) hereof.
"Liquidator" has the meaning set forth in Section 13.02(a) hereof.

 
11
 

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

 

"LTIP Award" means each or any, as the context requires, LTIP Award issued under
any Equity Incentive Plan.
"LTIP Unit" means a Partnership Unit which is designated as an LTIP Unit and
which has the rights, preferences and other privileges and restrictions,
qualifications, and limitations set forth in Section 4.06 hereof (except as may
be varied by the designations applicable to any particular class or series of
LTIP Units) and elsewhere in this Agreement (including any exhibit hereto
creating any new class or series of LTIP Units) or in the Equity Incentive Plan
or the award, vesting, or other agreement pursuant to which an LTIP Unit is
granted to the holder thereof. The allocation of LTIP Units among the Partners
shall be set forth in the books and records of the Partnership or the Transfer
Agent, as may be amended from time to time.
"LTIP Unitholder" means a Partner that holds LTIP Units.
"LV Safe Harbor" has the meaning set forth in Section 10.02(b) hereof.
"LV Safe Harbor Election" has the meaning set forth in Section 10.02(b) hereof.
"LV Safe Harbor Interests" has the meaning set forth in Section 10.02(b) hereof.
"Majority in Interest of the Outside Limited Partners" means Limited Partners
(excluding for this purpose (i) any Limited Partnership Interests held by the
General Partner or its Subsidiaries, (ii) any Person of which the General
Partner or its Subsidiaries directly or indirectly owns or controls more than
50% of the voting interests and (iii) any Person directly or indirectly owning
or controlling more than 50% of the outstanding interests of the General
Partner) holding in the aggregate Percentage Interests that are greater than 50%
of the aggregate Percentage Interests of all such Limited Partners of all
classes who are not excluded for the purpose of granting Consent to the
applicable action.
"Market Price" has the meaning set forth in the definition of "Value."
"National Securities Exchange" means an exchange registered with the SEC under
Section 6(a) of the Exchange Act or any other exchange (domestic or foreign, and
whether or not so registered) designated by the General Partner as a National
Securities Exchange.
"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);

 
12
 

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

 

(b)    Any expenditure of the Partnership described in Code Section 705(a)(2)(B)
or treated as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations
Section 1.704‑1(b)(2)(iv)(i), and not otherwise taken into account in computing
Net Income (or Net Loss) pursuant to this definition of "Net Income" or "Net
Loss," shall be subtracted from (or added to, as the case may be) such taxable
income (or loss);
(c)    In the event the Gross Asset Value of any Partnership asset is adjusted
pursuant to subsection (b) or subsection (c) of the definition of "Gross Asset
Value," the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Net Income or
Net Loss;
(d)    Gain or loss resulting from any disposition of property with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Gross Asset Value;
(e)    In lieu of the depreciation, amortization and other cost recovery
deductions that would otherwise be taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Partnership Year;
(f)    To the extent that an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704‑1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) 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 6.03 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 6.03 hereof shall be determined by
applying rules analogous to those set forth in this definition of "Net Income"
or "Net Loss."
"New Securities" means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase REIT
Shares, Preferred Shares or Junior Shares, except that "New Securities" shall
not mean any Preferred Shares, Junior Shares or grants under the Equity
Incentive Plans or (ii) any Debt issued by the REIT that provides any of the
rights described in clause (i).
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704‑2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704‑2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752‑1(a)(2).

 
13
 

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

 

"Notice of Redemption" means the Notice of Redemption substantially in the form
of Exhibit B attached to this Agreement.
"OP Unit" means a Series 60 OP Unit, a Series 250 OP Unit, a Series ES OP Unit
or a Series PR OP Unit, but does not include any LTIP Unit, Preferred Unit,
Junior Unit or any other Partnership Unit specified in a Partnership Unit
Designation as being other than an OP 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.
"OP Unit Economic Balance" has the meaning set forth in Section 6.03(c) hereof.
"Original Agreement" means the original Agreement of Limited Partnership, dated
as of November 28, 2011.
"Outside Interest" has the meaning set forth in Section 5.02 hereof.
"Ownership Limit" means the applicable restriction or restrictions on ownership
of shares of the General Partner imposed under the Charter.
"Partner" means the General Partner or a Limited Partner, and "Partners" means
the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner Nonrecourse
Debt, equal to the Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704‑2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704‑2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704‑2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined
in accordance with the rules of Regulations Section 1.704‑2(i)(2).
"Partnership" means the limited partnership formed under the Act and pursuant to
this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the Partnership 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. There may be one or more
classes or series of Partnership Interests. A Partnership Interest may be
expressed as a number of OP Units, LTIP Units, Preferred Units, Junior Units or
other Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704‑2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in

 
14
 

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

 

Partnership Minimum Gain, for a Partnership Year shall be determined in
accordance with the rules of Regulations Section 1.704‑2(d).
"Partnership Record Date" means the record date established by the General
Partner in its sole discretion (a) for determining the identity of the Record
Holders entitled to notice of, or to vote at, any meeting of Partners or
entitled to vote by ballot or give approval of Partnership action in writing
without a meeting or entitled to exercise rights in respect of any lawful action
of Partners or (b)  for the distribution of Available Cash pursuant to
Section 5.01 hereof, which record date shall generally be the same as the record
date established by the General Partner for a distribution to its stockholders
of some or all of its portion of such distribution.
"Partnership Unit" shall mean an OP Unit, an LTIP Unit, a Preferred Unit, a
Junior Unit or any other fractional share of the Partnership Interests that the
General Partner has authorized pursuant to Section 4.01, 4.02, 4.03 or 4.04
hereof.
"Partnership Unit Designation" has the meaning set forth in Section 4.03 hereof.
"Partnership Unit Distribution" shall have the meaning set forth in
Section 4.06(a) hereof.
"Partnership Year" means the fiscal year of the Partnership and the
Partnership's taxable year for federal income tax purposes, each of which shall
be the calendar year unless otherwise required under the Code.
"Percentage Interest" means, (i) as to any holder of OP Units (subject to
Section 4.06(a)), the quotient obtained by dividing the number of OP Units owned
by such Partner as shown in the books and records of the Partnership or the
Transfer Agent by the total number of OP Units then outstanding as specified in
the books and records of the Partnership or the Transfer Agent, as such the
books and records may be amended from time to time and (ii) as to a Partner
holding any class (other than OP Units) or series of Partnership Interests, its
interest in such class or series as determined by dividing the Partnership Units
of such class or series owned by such Partner as shown in the books and records
of the Partnership or the Transfer Agent by the total number of Partnership
Units of such class then outstanding as specified in the books and records of
the Partnership or the Transfer Agent, as such the books and records may be
amended from time to time. If the Partnership issues additional classes or
series of Partnership Interests other than as contemplated herein, the interest
in the Partnership among the classes or series of Partnership Interests shall be
determined as set forth in the amendment to the Partnership Agreement setting
forth the rights and privileges of such additional classes or series of
Partnership Interest, if any, as contemplated by Section 4.03(a).
"Person" means an individual or a corporation, partnership (general or limited),
trust, estate, custodian, nominee, unincorporated organization, association,
limited liability company or any other individual or entity in its own or any
representative capacity.
"Preferred Share" means a share of capital stock of the General Partner now or
hereafter authorized or reclassified that has dividend rights, or rights upon
liquidation, winding up and dissolution, that are superior or prior to the REIT
Shares.

 
15
 

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

 

"Preferred Unit" means a fractional share of the Partnership Interests that the
General Partner has authorized pursuant to Sections 4.01, 4.03 or 4.04 hereof
that has distribution rights, or rights upon liquidation, winding up and
dissolution, that are superior or prior to the OP Units.
"Properties" means any assets and property of the Partnership such as, but not
limited to, interests in real property and personal property, including, without
limitation, fee interests, interests in ground leases, easements and rights of
way, interests in limited liability companies, joint ventures or partnerships,
interests in mortgages, and Debt instruments as the Partnership may hold from
time to time and "Property" shall mean any one such asset or property.
"Publicly Traded" means listed or admitted to trading on the New York Stock
Exchange, the American Stock Exchange, the NASDAQ Stock Market or another
National Securities Exchange or any successor to the foregoing.
"Qualified Assets" means any of the following assets: (i) interests, rights,
options, warrants or convertible or exchangeable securities of the Partnership;
(ii) Debt issued by the Partnership or any Subsidiary thereof in connection with
the incurrence of Funding Debt; (iii) equity interests in Qualified REIT
Subsidiaries and limited liability companies (or other entities disregarded from
their sole owner for U.S. federal income tax purposes, including wholly owned
grantor trusts) whose assets consist solely of Qualified Assets; (iv) up to a
one percent (1%) equity interest in any partnership or limited liability company
at least ninety-nine percent (99%) of the equity of which is owned, directly or
indirectly, by the Partnership; (v) cash held for payment of administrative
expenses or pending distribution to security holders of the General Partner or
any wholly owned Subsidiary thereof or pending contribution to the Partnership;
and (vi) other tangible and intangible assets that, taken as a whole, are de
minimis in relation to the net assets of the Partnership and its Subsidiaries.
"Qualified REIT Subsidiary" means any Subsidiary of the General Partner that is
a "qualified REIT subsidiary" within the meaning of Code Section 856(i).
"Qualified Transferee" means an "Accredited Investor" as defined in Rule 501
promulgated under the Securities Act.
"Record Holder" means the Person in whose name a Partnership Unit is registered
on the books and records of the Transfer Agent as of the opening of business on
a particular Business Day, or with respect to other Partnership Interests, the
Person in whose name any such other Partnership Interest is registered on the
books and records of the Partnership which the General Partner has caused to be
kept as of the opening of business on such Business Day.
"Recourse Liabilities" means the amount of liabilities owed by the Partnership
(other than Nonrecourse Liabilities and liabilities to which Partner Nonrecourse
Deductions are attributable in accordance with Section 1.704-(2)(i) of the
Regulations).
"Redemption" has the meaning set forth in Section 8.06(a) hereof.

 
16
 

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

 

"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 6.03(a)(vii)
hereof.
"REIT" means a real estate investment trust qualifying under Code Section 856.
"REIT Payment" has the meaning set forth in Section 15.11 hereof.
"REIT Requirements" has the meaning set forth in Section 5.01 hereof.
"REIT Share" means Class A REIT Shares and Class B REIT Shares.
"REIT Shares Amount" means a number of Class A 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 General Partner issues to all holders of
REIT Shares as of a certain record date rights, options, warrants or convertible
or exchangeable securities entitling the General Partner's stockholders 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 Class A REIT Shares would be entitled to receive, expressed, where
relevant hereunder, in a number of Class A REIT Shares determined by the General
Partner in good faith.
"Rights" has the meaning set forth in the definition of "REIT Shares Amount."
"SEC" means the United States Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Series 60 OP Unit" means a fractional share of the Partnership Interests that
is designated as a Series 60 Operating Partnership Unit and issued pursuant to
Sections 4.01 and 4.02 hereof.
"Series 250 OP Unit" means a fractional share of the Partnership Interests that
is designated as a Series 250 Operating Partnership Unit and issued pursuant to
Sections 4.01 and 4.02 hereof.
"Series ES OP Unit" means a fractional share of the Partnership Interests that
is designated as a Series ES Operating Partnership Unit and issued pursuant to
Sections 4.01 and 4.02 hereof.
"Series PR OP Unit" means a fractional share of the Partnership Interests that
is designated as a Series PR Operating Partnership Unit and issued pursuant to
Sections 4.01 and 4.02 hereof.

 
17
 

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

 

"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.
"Specified Redemption Date" means the 10th Business Day following receipt by the
General Partner of a Notice of Redemption; provided, that, if the Class A REIT
Shares are not Publicly Traded, the Specified Redemption Date means the 30th
Business Day following receipt by the General Partner of a Notice of Redemption.
"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 11.04 hereof.
"Successor Entity" has the meaning set forth in the definition of "Adjustment
Factor."
"Tax Items" has the meaning set forth in Section 6.04(a) hereof.
"Tendered Units" has the meaning set forth in Section 8.06(a) hereof.
"Tendering Partner" has the meaning set forth in Section 8.06(a) hereof.
"Tendering Party" has the meaning set forth in Section 8.06(a) hereof.
"Terminating Capital Transaction" means any sale or other disposition of all or
substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
"Termination Transaction" has the meaning set forth in Section 11.02(b) hereof.
"Transaction" shall have the meaning set forth in Section 4.07(f).
"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 Units by the Partnership or the General Partner, or
acquisition of Tendered Units by the General Partner, pursuant to Section 8.06
hereof or (b) any redemption of Partnership Units pursuant to any Partnership
Unit Designation. The terms "Transferred" and "Transferring" have correlative
meanings.

 
18
 

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

 

"Transfer Agent" means, with respect to any Partnership Units, such bank, trust
company or other Person (including the Partnership or one of its Affiliates) as
shall be appointed from time to time by the General Partner to act as registrar
and transfer agent for such Partnership Units; provided that if no Transfer
Agent is specifically designated for such Partnership Units, the General Partner
shall act in such capacity.
"Unvested LTIP Units" has the meaning set forth in Section 4.06(c)(i) hereof.
"U.S. GAAP" means U.S. generally accepted accounting principles consistently
applied.
"Value" means, on any date of determination with respect to a REIT Share, the
average of the daily Market Prices for ten consecutive trading days immediately
preceding the date of determination except that, as provided in Section 4.05(b)
hereof, the Market Price for the trading day immediately preceding the date of
exercise of a stock option under any Equity Incentive Plan shall be substituted
for such average of daily market prices for purposes of Section 4.05 hereof;
provided, however, that for purposes of Section 8.06, 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 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 that a holder of REIT
Shares would be entitled to receive, then the Value of such Rights shall be
determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.
"Vested LTIP Units" has the meaning set forth in Section 4.06(c)(i) hereof.
"Vesting Agreement" means each or any, as the context implies, Equity Incentive
Plan entered into by an LTIP Unitholder upon acceptance of an award of LTIP
Units under an Equity Incentive Plan.

 
19
 

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

 

ARTICLE II    

ORGANIZATIONAL MATTERS
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.
Name. The name of the Partnership is "Empire State Realty OP, L.P." The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "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.
Registered Office and Agent; Principal Office. The address of the registered
office of the Partnership in the State of Delaware is located at 2711
Centerville Road, Suite 400, Wilmington, Delaware 19808, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office is Corporation Service Company. The principal office of the
Partnership is located at One Grand Central Place, 60 E. 42nd Street, New York,
New York 10165 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.
Power of Attorney.
(a)    By executing this Agreement, each Limited Partner and each Assignee
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:
(i)    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 of Limited
Partnership 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

 
20
 

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

 

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
(ii)    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
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. Notwithstanding
anything else set forth in this Section 2.04(b), no Limited Partner shall incur
any personal liability for any action of the General Partner or the Liquidator
taken under such power of attorney.
.    Term. Pursuant to Sections 17‑201(b) and 17‑801 of the Act, the term of the
Partnership commenced on November 28, 2011 and shall continue perpetually,
unless it is dissolved pursuant to the provisions of Article XIII hereof or as
otherwise provided by law.

 
21
 

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

 

Partnership Interests as Securities. All Partnership Interests shall be
securities within the meaning of, and governed by, (i) Article 8 of the Delaware
Uniform Commercial Code and (ii) Article 8 of the Uniform Commercial Code of any
other applicable jurisdiction.
ARTICLE III    

PURPOSE
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 General Partner, in its sole and
absolute discretion, at all times to be classified as a REIT unless the General
Partner, in accordance with its Charter and Bylaws, in its sole discretion has
chosen to cease to qualify as a REIT or has chosen not to attempt to qualify as
a REIT for any reason or for reasons whether or not related to the business
conducted by the Partnership. Without limiting the General Partner's right in
its sole discretion to cease qualifying as a REIT, the Partners acknowledge that
the qualification of the General Partner as a REIT inures to the benefit of all
Partners and not solely to the General Partner or its Affiliates. 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.
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 to
one or more 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 General Partner to
continue to qualify as a REIT, (ii) could subject the General Partner 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 the
General Partner, its securities or the Partnership.
Partnership Only for Partnership Purposes Specified. 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 3.01 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

 
22
 

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

 

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.
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) represents and
warrants to, and covenants with, each other Partner that (i) the consummation of
the transactions contemplated by this Agreement to be performed by such Partner
will not result in a breach or violation of, or a default under, any material
agreement by which such Partner or any of such Partner's property is bound, or
any statute, regulation, order or other law to which such Partner is subject,
(ii) subject to the last sentence of this Section 3.04(a), 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) 9.8% or more of the total combined
voting power of all classes of stock entitled to vote, or 9.8% or more of the
total number of shares of all classes of stock, of any corporation that is a
tenant of either (I) the General Partner or any Qualified REIT Subsidiary,
(II) the Partnership or (III) any partnership, venture or limited liability
company of which the General Partner, any Qualified REIT Subsidiary or the
Partnership is a direct or indirect member or (b) an interest of 9.8% or more in
the assets or net profits of any tenant of either (I) the General Partner or any
Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture, or limited liability company of which the General Partner, any
Qualified REIT Subsidiary or the Partnership is a direct or indirect member,
(iv) such Partner has the legal capacity to enter into this Agreement and
perform such Partner's obligations hereunder 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 (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 acquiring Series PR OP Units (including, without limitation,
each Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner)
represents, warrants and agrees that it has acquired and continues to hold its
interest in the Partnership for its own account for investment purposes only and
not for the purpose of, or with a view toward, the resale or distribution of all
or any part thereof in violation of applicable laws, and not with a view toward
selling or otherwise

 
23
 

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

 

distributing such interest or any part thereof at any particular time or under
any predetermined circumstances in violation of applicable laws. Each Partner
acquiring Series PR OP Units further represents and warrants that it is a
sophisticated investor, able and accustomed to handling sophisticated financial
and tax 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.
(c)    The representations and warranties contained in Sections 3.04(a) and
3.04(b) hereof shall survive the execution and delivery of this Agreement by
each Partner (and, in the case of an Additional Limited Partner or a Substituted
Limited Partner, the admission of such Additional Limited Partner or Substituted
Limited Partner as a Limited Partner in the Partnership) and the dissolution,
liquidation and termination of the Partnership.
(d)    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) hereby acknowledges that no
representations as to potential profit, cash flows, funds from operations or
yield, if any, in respect of the Partnership or the General Partner have been
made by the General Partner, any Partner or any employee or representative or
Affiliate of the General Partner or 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.
(e)    Notwithstanding the foregoing, the General Partner may, in its sole and
absolute discretion, permit the modification of any of the representations and
warranties contained in Sections 3.04(a) and 3.04(b) above as applicable to any
Partner (including, without limitation any Additional Limited Partner or
Substituted Limited Partner or any transferee of either), provided, that such
representations and warranties, as modified, shall be set forth in either (i) a
Partnership Unit Designation applicable to the Partnership Units held by such
Partner or (ii) a separate writing addressed to the Partnership and the General
Partner
(f)    When a Person (such as a broker, dealer, bank, trust company or clearing
corporation or an agent of any of the foregoing) is acting as nominee, agent or
in some other representative capacity for another Person in acquiring and/or
holding OP Units, the representations made in this Section 3.04 shall be made by
the beneficial owner of OP Units held by the nominee.
ARTICLE IV    

CAPITAL CONTRIBUTIONS
Capital Contributions of the Partners.
(d)    Capital Contributions. Each Partner has made a Capital Contribution to
the Partnership and owns Partnership Units in the amount and designation set
forth for such Partner on the books and records of the Partnership or the
Transfer Agent, as the same may be amended, or caused to be amended, from time
to time by the General Partner to the extent necessary to reflect

 
24
 

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

 

accurately sales, exchanges, conversions or other Transfers, redemptions,
Capital Contributions, the issuance of additional Partnership Units, or similar
events having an effect on a Partner's ownership of Partnership Units. Except as
provided by law or in Section 4.04, 10.04 or 13.02(d) hereof, the Partners shall
have no obligation or right to make any additional Capital Contributions or
loans to the Partnership.
(e)    General Partnership Interest. A number of Series PR OP Units held by the
General Partner equal to one percent (1%) of all outstanding OP Units shall be
deemed to be the General Partner Interest of the General Partner. All other
Partnership Units held by the General Partner shall be deemed to be Limited
Partner Interests and shall be held by the General Partner in its capacity as a
Limited Partner in the Partnership.
Classes and Series of Partnership Units. From and after the Effective Date,
until such time as additional classes or series of Partnership Units are created
pursuant to Section 4.03(a) below, the Partnership shall have two classes of
Partnership Units, entitled "OP Units" and "LTIP Units." From and after the
Effective Date, until such time as additional series of OP Units are created
pursuant to Section 4.03(a) below, the OP Units shall consist of four series of
Partnership Units, entitled "Series 60 Operating Partnership Units," "Series 250
Operating Partnership Units," "Series ES Operating Partnership Units and "Series
PR Operating Partnership Units." Subject to Section 4.06, OP Units, LTIP Units,
or Partnership Units of any additional class or series, at the election of the
General Partner, in its sole and absolute discretion, may be issued to newly
admitted Partners in exchange for any Capital Contributions by such Partners
and/or the provision of services by such Partners. Any Partnership Unit that is
not specifically designated by the General Partner as being of a particular
class or series shall be deemed to be a Series PR OP Unit. Each of the Series PR
OP Units, Series 60 OP Units, Series 250 OP Units and Series ES OP Units shall
have the same rights as to distributions and liquidations and shall vote
together as a single class of OP Units on all matters which the holders of OP
Units have the right to approve, as set forth herein.
Issuances of Additional Partnership Interests.
(g)    General. Notwithstanding Section 7.03(b) hereof, 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.
Any Partnership Unit that is not specifically designated by the General Partner
as being of a particular class or series shall be deemed to be a Series PR OP
Unit. Subject to Delaware law, any additional Partnership Interests may be
issued in

 
25
 

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

 

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 a written document thereafter attached to and made an exhibit to
this Agreement which exhibit shall be an amendment to this Agreement and shall
be incorporated herein by this reference (each, a "Partnership Unit
Designation"). 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 (on a pari passu, junior or preferred basis) 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. Nothing in this Agreement
shall prohibit the General Partner from issuing Partnership Units for less than
fair market value if the General Partner concludes in good faith that such
issuance is in the best interest of the Partnership. Upon the issuance of any
additional Partnership Interest, the General Partner shall cause such issuance
to be reflected in the books and records of the Partnership or the Transfer
Agent, as appropriate.
(h)    Issuances to the General Partner. No additional Partnership Units shall
be issued to the General 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) OP Units issued in connection with an
issuance of REIT Shares or (y) Partnership Units (other than OP Units) issued in
connection with an issuance of Preferred Shares, Junior Shares, New Securities
or other interests in the General Partner (other than REIT Shares), which
Preferred Shares, Junior Shares, New Securities or other interests have
designations, preferences and other rights, terms and provisions that are
substantially the same as the designations, preferences and other rights, terms
and provisions of the additional Partnership Units issued to the General Partner
and (b) the General Partner directly or indirectly contributes or otherwise
causes to be transferred to the Partnership the cash proceeds or other
consideration, if any, received in connection with the issuance of such REIT
Shares, Preferred Shares, Junior Shares, New Securities or other interests in
the General Partner or (iii) the additional Partnership Units are issued upon
the conversion, redemption or exchange of Debt, Partnership Units or other
securities issued by the Partnership. In the event that the Partnership issues
additional Partnership Units pursuant to this Section 4.03(b), the General
Partner shall make such revisions to this Agreement (including but not limited
to the revisions described in Sections 6.02(b) and 8.06) as it determines are
necessary to reflect the issuance of such additional Partnership Interests,
without the approval of any Limited Partner.
(i)    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.
Additional Funds and Capital Contributions.

 
26
 

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

 

(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 4.04 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 4.03 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 or REIT Shares; provided, however, that the Partnership
shall not incur any such Debt if any Partner would be personally liable for the
repayment of such Debt (unless such Partner otherwise agrees).
(d)    General Partner Loans. The General Partner, on behalf of the Partnership,
may obtain any Additional Funds by causing the Partnership to incur Debt to the
General Partner (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, the net
proceeds of which are loaned to the Partnership to provide such Additional Funds
or (ii) such Debt is on terms and conditions no less favorable to the
Partnership than would be available to the Partnership from any third party;
provided, however, that the Partnership shall not incur any such Debt if (a) a
breach, violation or default of such Debt would be deemed to occur by virtue of
the Transfer 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 General Partner. The General Partner shall
not issue any additional REIT Shares, Preferred Shares, Junior Shares or New
Securities unless the General Partner contributes directly or indirectly the
cash proceeds or other consideration, if any, 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 Partnership in exchange for (x) in the case of
an issuance of REIT Shares, Partnership 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

 
27
 

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

 

notwithstanding the foregoing, the General Partner may issue REIT Shares,
Preferred Shares, Junior Shares or New Securities (a) pursuant to Section 4.05
or 8.06(b) hereof, (b) pursuant to a dividend or distribution (including any
stock split) wholly or partly 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 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) pursuant to share grants or awards made pursuant to any
equity incentive plan of the General Partner. In the event of any issuance of
additional REIT Shares, Preferred Shares, Junior Shares or New Securities by the
General Partner, and the direct or indirect contribution to the Partnership, by
the General Partner, of the cash proceeds or other consideration received from
such issuance, if any, the Partnership shall pay the General Partner's expenses
associated with such issuance, including any underwriting discounts or
commissions (it being understood that if the proceeds actually received by the
General Partner are less than the gross proceeds of such issuance as a result of
any underwriter's discount or other expenses paid or incurred by the General
Partner in connection with such issuance, then the General Partner shall be
deemed to have made a Capital Contribution to the Partnership in the amount of
the gross proceeds of such issuance and the Partnership shall be deemed
simultaneously to have reimbursed the General Partner pursuant to
Section 7.04(b) for the amount of such underwriter's discount or other
expenses). Nothing in this Agreement shall prohibit the General Partner from
issuing Partnership Units for less than fair market value if the General Partner
concludes in good faith that such issuance is in the best interest of the
Partnership.
(f)    Redemption of Securities of the General Partner. Except as otherwise
provided in Section 8.06(b), if, at any time, any REIT Shares, Preferred Shares,
Junior Shares or New Securities are redeemed or otherwise repurchased (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 or repurchase, redeem or repurchase an equal number of
Partnership Units held by the General Partner, in the case of REIT Shares, or,
in the case of Preferred Shares, Junior Shares or New Securities, an equal
number of Partnership Units held by the General Partner 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 upon the same terms and
for the same price per Partnership Unit as such REIT Shares, Preferred Shares,
Junior Shares or New Securities are redeemed. If, at any time, any REIT Shares
are redeemed or otherwise repurchased by the General Partner, the Partnership
shall, immediately prior to such redemption or repurchase, redeem or repurchase
a number of Partnership Units held by the General Partner equal to the quotient
of (i) the REIT Shares so redeemed or repurchased, divided by (ii) the
Adjustment Factor then in effect, such redemption or repurchase to be upon the
same terms and for the same price per Partnership Unit (after giving effect to
application of the Adjustment Factor) as such REIT Shares are redeemed or
repurchased.
Equity Incentive Plan.
(a)    Options Granted to General Partner Employees and Independent Directors.
If at any time or from time to time, in connection with an Equity Incentive
Plan, a stock

 
28
 

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

 

option granted for REIT Shares to a General Partner Employee or Independent
Director is duly exercised:
(i)    the General Partner shall, as soon as practicable after such exercise,
make or cause to be made directly or indirectly a Capital Contribution to the
Partnership in an amount equal to the exercise price paid to the General Partner
by such exercising party in connection with the exercise of such stock option.
(ii)    Notwithstanding the amount of the Capital Contribution actually made
pursuant to Section 4.05(a)(i) hereof, the General Partner shall be deemed to
have contributed directly or indirectly to the Partnership, as a Capital
Contribution, in consideration of an additional Limited Partner Interest
(expressed in and as additional Partnership Units), an amount equal to the Value
of a Class A REIT Share as of the date of exercise multiplied by the number of
Class A REIT Shares then being issued in connection with the exercise of such
stock option.
(iii)    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 4.05(a)(ii) hereof.
(b)    Special Valuation Rule. For purposes of this Section 4.05, in determining
the Value of a Class A REIT Share, only the trading date immediately preceding
the exercise of the relevant stock option under the Equity Incentive Plan shall
be considered.
(c)    Future Equity Incentive Plans. Nothing in this Agreement shall be
construed or applied to preclude or restrain the General Partner from adopting,
modifying or terminating any Equity Incentive Plan, for the benefit of
employees, directors or other business associates of the General Partner, 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, amendments to this Section 4.05 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.
LTIP Units.
(a)    Issuance of LTIP Units. The General Partner may from time to time issue
LTIP Units, in one or more classes or series established in accordance with
Section 4.03, to Persons who provide services to the Partnership, for such
consideration as the General Partner may determine to be appropriate, and admit
such Persons as Limited Partners. Any provision herein relating to LTIP Units or
LTIP Unitholders may be varied by the provisions applicable to an individual
class or series of LTIP Units. Except to the extent a Capital Contribution is
made with respect to an LTIP Unit, each LTIP Unit is intended to qualify as a
profits interest in the Partnership within the meaning of the Code, the
Regulations, and any published guidance by the IRS with respect thereto. Subject
to the following provisions of this Section 4.06 and the special provisions of
Sections 4.07 and 6.03(c), LTIP Units shall be treated as OP Units, with all of
the rights, privileges and obligations attendant thereto. For purposes of
computing the Partners' Percentage Interests, holders of LTIP

 
29
 

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

 

Units shall be treated as holders of OP Units and LTIP Units shall be treated as
OP Units. In particular, the Partnership shall maintain at all times a
one-to-one correspondence between LTIP Units and OP Units for conversion,
distribution and other purposes, including without limitation complying with the
following procedures:
(i)    If an Adjustment Event (as defined below) occurs, then the General
Partner shall make a corresponding adjustment to the LTIP Units to maintain the
same correspondence between OP Units and LTIP Units as existed prior to such
Adjustment Event. The following shall be Adjustment Events: (A) the Partnership
makes a distribution on all outstanding OP Units in Partnership Units, (B) the
Partnership subdivides the outstanding OP Units into a greater number of units
or combines the outstanding OP Units into a smaller number of units, or (C) the
Partnership issues any Partnership Units in exchange for its outstanding OP
Units by way of a reclassification or recapitalization of its OP Units. If more
than one Adjustment Event occurs, the adjustment to the 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 OP 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 LTIP Units to maintain the one-to-one
correspondence described above, the General Partner shall have the right to make
such adjustment to the LTIP Units, to the extent permitted by law and by any
Equity Incentive Plan, in such manner and at such time as the General Partner,
in its sole discretion, may determine to be appropriate under the circumstances.
If an adjustment is made to the LTIP Units as herein provided the Partnership
shall promptly file in the books and records of the 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 LTIP Unitholder
setting forth the adjustment to his or her LTIP Units and the effective date of
such adjustment; and
(ii)    Unless otherwise provided in an LTIP Award or Vesting Agreement or by
the General Partner with respect to any particular class or series of LTIP
Units, the LTIP Unitholders shall, when, as and if authorized and declared by
the General Partner out of assets legally available for that purpose, be
entitled to receive distributions in an amount per LTIP Unit equal to the
distributions per OP Unit (the "Partnership Unit Distribution"), paid to holders
of OP Units on such Partnership Record Date established by the General Partner
with respect to such distribution. So long as any LTIP Units are outstanding, no
distributions (whether in cash or in kind) shall be authorized, declared or paid
on OP Units, unless equal distributions have been or contemporaneously are
authorized, declared and paid on the LTIP Units. Subject to the terms of any
LTIP Award or Vesting Agreement, an LTIP Unitholder shall be entitled to
transfer his or her LTIP Units to the same extent, and subject to the same
restrictions as holders of Series PR OP Units are entitled to transfer their
Series PR OP Units pursuant to Article XI of this Agreement.

 
30
 

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

 

(b)    Priority. Subject to the provisions of this Section 4.06 and the special
provisions of Section 6.03(c), the LTIP Units shall rank pari passu with the OP
Units as to the payment of regular and special periodic or other distributions
and, subject to Sections 13.02(a)(iv) and 13.02(c) distribution of assets upon
liquidation, dissolution or winding up. As to the payment of distributions and
as to distribution of assets upon liquidation, dissolution or winding up, any
class or series of Partnership Units or Partnership Interests which by its terms
specifies that it shall rank junior to, on a parity with, or senior to the OP
Units shall also rank junior to, or pari passu with, or senior to, as the case
may be, the LTIP Units.
(c)    Special Provisions. LTIP Units shall be subject to the following special
provisions:
(i)    Vesting Agreements. 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 a Vesting Agreement. The terms of any 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
Vesting Agreement or by the Equity Incentive Plan, if applicable. LTIP Units
that have vested under the terms of a Vesting Agreement are referred to as
"Vested LTIP Units;" all other LTIP Units shall be treated as "Unvested LTIP
Units."
(ii)    Forfeiture. Unless otherwise specified in the Vesting Agreement, upon
the occurrence of any event specified in a Vesting Agreement as resulting in
either the right of the Partnership or the General Partner to repurchase LTIP
Units at a specified purchase price or some other forfeiture of any LTIP Units,
then if the Partnership or the General Partner exercises such right to
repurchase or forfeiture in accordance with the applicable Vesting Agreement,
the relevant LTIP Units shall immediately, and without any further action, be
treated as cancelled and no longer outstanding for any purpose. Unless otherwise
specified in the Vesting Agreement, no consideration or other payment shall be
due with respect to any LTIP Units that have been forfeited, other than any
distributions declared with respect to a Partnership Record Date prior to the
effective date of the forfeiture. In connection with any repurchase or
forfeiture of LTIP Units, the balance of the portion of the Capital Account of
the LTIP Unitholder that is attributable to all of his or her LTIP Units shall
be reduced by the amount, if any, by which it exceeds the target balance
contemplated by Section 6.03(c), calculated with respect to the LTIP
Unitholder's remaining LTIP Units, if any.
(iii)    Allocations. LTIP Unitholders shall be entitled to certain special
allocations of gain under Section 6.03(c).
(iv)    Redemption. The Redemption right provided to Limited Partners under
Section 8.06 shall not apply with respect to LTIP Units unless and until they
are converted to Series PR OP Units as provided in clause (v) below and
Section 4.07.
(v)    Conversion to OP Units. Vested LTIP Units are eligible to be converted
into Series PR OP Units under Section 4.07.

 
31
 

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

 

(d)    Voting. Unless otherwise provided in an LTIP Award or Vesting Agreement
or by the General Partner with respect to any particular class or series of LTIP
Units, LTIP Unitholders shall (a) have the same voting rights as a holder of OP
Units, with the LTIP Units voting as a single class with the OP Units and having
one vote per LTIP Unit; and (b) have the additional voting rights that are
expressly set forth below. Unless otherwise provided in an LTIP Award or Vesting
Agreement or by the General Partner with respect to any particular class or
series of LTIP Units, so long as any LTIP Units remain outstanding, the
Partnership shall not, without the affirmative vote of the holders of at least a
majority of the LTIP Units outstanding at the time that would be adversely
affected by the proposed action, given in person or by proxy, either in writing
or at a meeting (voting separately as a class), amend, alter or repeal, whether
by merger, consolidation or otherwise, the provisions of this Agreement
applicable to LTIP Units as such so as to materially and adversely affect any
right, privilege or voting power of the LTIP Units or the LTIP Unitholders as
such, unless such amendment, alteration, or repeal affects equally, ratably and
proportionately in all material respects the rights, privileges and voting
powers of the holders of OP Units; but subject, in any event, to the following
provisions:
(i)    With respect to any Transaction, so long as the LTIP Units are treated in
accordance with Section 4.07(f) hereof, the consummation of such Transaction
shall not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers of the LTIP Units or the LTIP Unitholders as such;
and
(ii)    Any creation or issuance of any Partnership Units or of any class or
series of Partnership Interest including without limitation additional OP Units,
LTIP Units or Preferred Units, whether ranking senior to, junior to, or on a
parity with the LTIP Units with respect to distributions and the distribution of
assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
powers of the LTIP Units or the LTIP Unitholders as such.
The foregoing voting provisions will not apply if, at or prior to the time when
the act with respect to which such vote would otherwise be required will be
effected, all outstanding LTIP Units shall have been converted into OP Units.
Conversion of LTIP Units.
(a)    Unless otherwise provided in an LTIP Award or Vesting Agreement or by the
General Partner with respect to any particular class or series of LTIP Units, an
LTIP Unitholder shall have the right (the "Conversion Right"), at his or her
option, at any time to convert all or a portion of his or her Vested LTIP Units
into Series PR OP Units; provided, however, that a holder may not exercise the
Conversion Right for less than 1,000 Vested LTIP Units or, if such holder holds
less than 1,000 Vested LTIP Units, all of the Vested LTIP Units held by such
holder. LTIP Unitholders shall not have the right to convert Unvested LTIP Units
into Series PR OP Units until they become Vested LTIP Units; provided, however,
that when an LTIP Unitholder is notified of the expected occurrence of an event
that will cause his or her Unvested LTIP Units to become Vested LTIP Units, such
LTIP Unitholder may give the Partnership a Conversion Notice conditioned upon
and effective as of the time of vesting and such Conversion Notice, unless
subsequently revoked by the LTIP Unitholder, shall be accepted by the
Partnership subject to such condition. The General Partner

 
32
 

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

 

shall have the right at any time to cause a conversion of Vested LTIP Units into
Series PR OP Units. In all cases, the conversion of any LTIP Units into Series
PR OP Units shall be subject to the conditions and procedures set forth in this
Section 4.07.
(b)    Unless otherwise provided in an LTIP Award or Vesting Agreement or by the
General Partner with respect to any particular class or series of LTIP Units, a
holder of Vested LTIP Units may convert such Units into an equal number of fully
paid and nonassessable Series PR OP Units, giving effect to all adjustments (if
any) made pursuant to Section 4.06. Notwithstanding the foregoing, in no event
may a holder of Vested LTIP Units convert a number of Vested LTIP Units that
exceeds (x) the Economic Capital Account Balance of such Limited Partner, to the
extent attributable to its ownership of LTIP Units, divided by (y) the OP Unit
Economic Balance, in each case as determined as of the effective date of
conversion (the "Capital Account Limitation"). In order to exercise his or her
Conversion Right, an LTIP Unitholder shall deliver a notice (a "Conversion
Notice") in the form attached as Exhibit D to the Partnership (with a copy to
the General Partner) not less than 10 nor more than 60 days prior to a date (the
"Conversion Date") specified in such Conversion Notice; provided, however, that
if the General Partner has not given to the LTIP Unitholders notice of a
proposed or upcoming Transaction (as defined below in Section 4.07(f)) at least
30 days prior to the effective date of such Transaction, then LTIP Unitholders
shall have the right to deliver a Conversion Notice until the earlier of (x) the
10th day after such notice from the General Partner of a Transaction or (y) the
third business day immediately preceding the effective date of such Transaction.
A Conversion Notice shall be provided in the manner provided in Section 15.01.
Each LTIP Unitholder covenants and agrees with the Partnership that all Vested
LTIP Units to be converted pursuant to this Section 4.07(b) shall be free and
clear of all liens. Notwithstanding anything herein to the contrary, a holder of
LTIP Units may deliver a Notice of Redemption pursuant to Section 8.06(a) of
this Agreement relating to those Series PR OP Units that will be issued to such
holder upon conversion of such LTIP Units into Series PR OP Units in advance of
the Conversion Date; provided, however, that the redemption of such Series PR OP
Units by the Partnership shall in no event take place until after the Conversion
Date. For clarity, it is noted that the objective of this paragraph is to put an
LTIP Unitholder in a position where, if he or she so wishes, the Series PR OP
Units into which his or her Vested LTIP Units will be converted can be redeemed
by the Partnership simultaneously with such conversion, with the further
consequence that, if the General Partner elects to assume the Partnership's
redemption obligation with respect to such Series PR OP Units under
Section 8.06(b) of this Agreement by delivering to such holder Class A REIT
Shares rather than cash, then such holder can have such Class A REIT Shares
issued to him or her simultaneously with the conversion of his or her Vested
LTIP Units into Series PR OP Units. The General Partner shall reasonably
cooperate with an LTIP Unitholder to coordinate the timing of the different
events described in the foregoing sentence.
(c)    The Partnership, at any time at the election of the General Partner, may
cause any number of Vested LTIP Units held by an LTIP Unitholder to be converted
(a "Forced Redemption") into an equal number of Series PR OP Units, giving
effect to all adjustments (if any) made pursuant to Section 4.06; provided,
however, that the Partnership may not cause Forced Redemption of any LTIP Units
that would not at the time be eligible for conversion at the option of such LTIP
Unitholder pursuant to Section 4.07(b). In order to exercise its right of Forced
Redemption, the Partnership shall deliver a notice (a "Forced Redemption
Notice") in the form

 
33
 

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

 

attached as Exhibit E to the applicable LTIP Unitholder not less than 10 nor
more than 60 days prior to the Conversion Date specified in such Forced
Redemption Notice. A Forced Redemption Notice shall be provided in the manner
provided in Section 15.01.
(d)    A conversion of Vested LTIP Units for which the holder thereof has given
a Conversion Notice or the Partnership has given a Forced Redemption Notice
shall occur automatically after the close of business on the applicable
Conversion Date without any action on the part of such LTIP Unitholder, as of
which time such LTIP Unitholder shall be credited on the books and records of
the Partnership or the Transfer Agent with the issuance as of the opening of
business on the next day of the number of Series PR OP Units issuable upon such
conversion. After the conversion of LTIP Units as aforesaid, the Partnership
shall deliver to such LTIP Unitholder, upon his or her written request, a
certificate of the General Partner certifying the number of Series PR OP Units
and remaining LTIP Units, if any, held by such person immediately after such
conversion. The Assignee of any Limited Partner pursuant to Article XI hereof
may exercise the rights of such Limited Partner pursuant to this Section 4.07
and such Limited Partner shall be bound by the exercise of such rights by the
Assignee.
(e)    For purposes of making future allocations under Section 6.03(c) and
applying the Capital Account Limitation, the portion of the Economic Capital
Account balance of the applicable LTIP Unitholder that is treated as
attributable to his or her LTIP Units shall be reduced, as of the date of
conversion, by the product of the number of LTIP Units converted and the OP Unit
Economic Balance.
(f)    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 OP 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 OP Units shall be exchanged
for or converted into the right, or the holders of such Units shall otherwise be
entitled, to receive cash, securities or other property or any combination
thereof (any of the foregoing being referred to herein as a "Transaction"), then
the General Partner shall, immediately prior to the Transaction, exercise its
right to cause a Forced Redemption with respect to the maximum number of LTIP
Units then eligible for conversion, taking into account any allocations that
occur in connection with the Transaction or that would occur in connection with
the Transaction if the assets of the Partnership were sold at the Transaction
price or, if applicable, at a value determined by the General Partner in good
faith using the value attributed to the Partnership Units in the context of the
Transaction (in which case the Conversion Date shall be the effective date of
the Transaction).
In anticipation of such Forced Redemption and the consummation of the
Transaction, the Partnership shall use commercially reasonable efforts to cause
each LTIP Unitholder to be afforded the right to receive in connection with such
Transaction in consideration for the Series PR OP Units into which his or her
LTIP Units will be converted the same kind and amount of cash, securities and
other property (or any combination thereof) receivable upon the consummation of
such Transaction by a holder of the same number of Series PR OP Units, assuming
such holder of Series PR OP Units is not a Person with which the Partnership
consolidated or into which the Partnership

 
34
 

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

 

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 OP 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 LTIP Unitholder of such election, and shall use
commercially reasonable efforts to afford the LTIP Unitholders the right to
elect, by written notice to the General Partner, the form or type of
consideration to be received upon conversion of each LTIP Unit held by such
holder into Series PR OP Units in connection with such Transaction. If an LTIP
Unitholder fails to make such an election, such holder (and any of its
transferees) shall receive upon conversion of each LTIP Unit held by him or her
(or by any of his or her transferees) the same kind and amount of consideration
that a holder of a Series PR OP Unit would receive if such Series PR OP Unit
holder failed to make such an election.
Subject to the rights of the Partnership and the General Partner under any
Vesting Agreement and any Equity Incentive Plan, the Partnership shall use
commercially reasonable effort to cause the terms of any Transaction to be
consistent with the provisions of this Section 4.07(f) and to enter into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of any LTIP Unitholders whose LTIP Units will not be converted into
Series PR OP Units in connection with the Transaction that will (i) contain
provisions enabling the holders of LTIP Units that remain outstanding after such
Transaction to convert their LTIP Units into securities as comparable as
reasonably possible under the circumstances to the Series PR OP Units and
(ii) preserve as far as reasonably possible under the circumstances the
distribution, special allocation, conversion, and other rights set forth in this
Agreement for the benefit of the LTIP Unitholders.
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.
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.
Not Taxable as a Corporation. 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 taxable as a corporation under
Code Section 7704.
No Third Party Beneficiary. No creditor or other third party having dealings
with the Partnership shall have the right to enforce the right or obligation of
any Partner to make Capital Contributions or loans or to pursue any other right
or remedy hereunder or at law or in equity, it being understood and agreed that
the provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns.

 
35
 

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

 

None of the rights or obligations of the Partners herein set forth to make
Capital Contributions or loans to the Partnership shall be deemed an asset of
the Partnership for any purpose by any creditor or other third party, nor may
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 of any of the Partners. In addition, it is the
intent of the parties hereto that no distribution to any Limited Partner shall
be deemed a return of money or other property in violation of the Act. However,
if any court of competent jurisdiction holds that, notwithstanding the
provisions of this Agreement, any Limited Partner is obligated to return such
money or property, such obligation shall be the obligation of such Limited
Partner and not of the General Partner. Without limiting the generality of the
foregoing, a deficit Capital Account of a Partner shall not be deemed to be a
liability of such Partner nor an asset or property of the Partnership.
ARTICLE V    

DISTRIBUTIONS
Requirement and Characterization of Distributions. Subject to the terms of any
Partnership Unit Designation, the General Partner may cause the Partnership to
distribute at least 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 Units on such
Partnership Record Date with respect to such quarter: (1) first, with respect to
any Partnership Interests that are entitled to any preference in distribution,
in accordance with the rights of such class(es) of Partnership Interests (and,
within such class(es), pro rata in proportion to the respective Percentage
Interests on such Partnership Record Date) and (2) second, with respect to any
Partnership Interests that are not entitled to any preference in distribution,
in accordance with the rights of such class of Partnership Interests (and,
within such class, pro rata in proportion to the respective Percentage Interests
on such Partnership Record Date). At the election of the General Partner,
distributions payable with respect to any Partnership Units that were not
outstanding during the entire quarterly period in respect of which any
distribution is made may be prorated based on the portion of the period that
such Partnership Units were outstanding.
The General Partner in its sole and absolute discretion may distribute to the
Holders 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 its qualification as a REIT, to
cause the Partnership to distribute sufficient amounts to enable the General
Partner, for so long as the General Partner has determined to qualify as a REIT,
to pay stockholder dividends that will (a) satisfy the requirements for its
qualification as a REIT under the Code and Regulations (the "REIT Requirements")
and (b) except to the extent otherwise determined by the General Partner, in its
sole and absolute discretion, avoid any federal income or excise tax liability
of the General Partner.
Each distribution in respect of a Partnership Unit shall be paid by the
Partnership, directly or through the Transfer Agent or through any other Person
or agent, only to the Record Holder of such Partnership Unit as of the
Partnership Record Date set for such distribution. Such payment shall constitute
full payment and satisfaction of the Partnership's liability in respect of such
payment,

 
36
 

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

 

regardless of any claim of a Person who may have an interest in such payment by
reason of an assignment or otherwise.
Interests in Property not Held Through the Partnership. To the extent amounts
distributed by the Partnership are attributable to amounts received from a
property in which the General Partner or any Affiliate of the General Partner
holds a direct or indirect interest (other than through the Partnership) (an
"Outside Interest"), (i) such amounts distributed to the General Partner will be
reduced so as to take into account amounts received pursuant to the Outside
Interest and (ii) the amounts distributed to the Limited Partners will be
increased to the extent necessary so that the overall effect of the distribution
is to distribute what would have been distributed had such Outside Interest been
held through the Partnership (treating any distribution made in respect of the
Outside Interest as if such distribution had been received by the General
Partner).
Distributions In‑Kind. ‑No right is given to any Partner 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 Holders, and such assets shall be distributed in
such a fashion as to ensure that the fair market value is distributed and
allocated in accordance with Articles V, VI and X hereof.
Amounts Withheld. All amounts withheld pursuant to the Code or any provisions of
any state or local tax law and Section 10.04 hereof with respect to any
allocation, payment or distribution to any Holder shall be treated as amounts
paid or distributed to such Holder pursuant to Section 5.01 hereof for all
purposes under this Agreement.
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 Holders in
accordance with Section 13.02 hereof.
Distributions to Reflect Issuance of Additional Partnership Units.
Notwithstanding Section 7.03(b) hereof, in the event that the Partnership issues
additional Partnership Units pursuant to the provisions of Article IV hereof,
subject to Section 7.03(d), 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.
Restricted Distributions. Notwithstanding any provision to the contrary
contained in this Agreement, neither the Partnership nor the General Partner, on
behalf of the Partnership, shall make a distribution to any Holder 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

 
37
 

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

 

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 VI, and subject to Section 11.06(c) hereof,
an allocation to a Holder 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.
General Allocations.
(g)    Allocations of Net Income and Net Loss.
(i)    Net Income. Except as otherwise provided herein, Net Income for any
Partnership Year or other applicable period shall be allocated in the following
order and priority:
(A)    First, to the General Partner to the extent the cumulative Net Loss
allocated to the General Partner pursuant to subparagraph (ii)(F) below exceeds
the cumulative Net Income allocated to the General Partner pursuant to this
subparagraph (i)(A);
(B)    Second, to each DRO Partner until the cumulative Net Income allocated to
such DRO Partner pursuant to this subparagraph (i)(B) equals the cumulative Net
Loss allocated to such DRO Partner under subparagraph (ii)(E) below (and, among
the DRO Partners, pro rata in proportion to their respective percentages of the
cumulative Net Loss allocated to all DRO Partners pursuant to
subparagraph (ii)(E) below);
(C)    Third, to the General Partner until the cumulative Net Income allocated
to the General Partner pursuant to this subparagraph (i)(C) equals the
cumulative Net Loss allocated to the General Partner pursuant to
subparagraph (ii)(D) below;
(D)    Fourth, to the holders of any Partnership Interests that are entitled to
any preference in distribution upon liquidation until the cumulative Net Income
allocated under this subparagraph (i)(D) equals the cumulative Net Loss
allocated to such Partners under subparagraph (ii)(C);
(E)    Fifth, to the holders of any Partnership Units that are entitled to any
preference in distribution in accordance with the rights of any other class of
Partnership Units until each such Partnership Unit has been allocated, on a
cumulative basis pursuant to this subparagraph (i)(E), Net Income equal to the
amount of distributions received which are attributable to the preference of
such class of Partnership Unit (and, within such class, pro rata in proportion
to the respective Percentage Interests as of the last day of the period for
which such allocation is made); and
(F)    Thereafter, with respect to Partnership Units that are not entitled to
any preference in distribution or with respect to which distributions are not
limited to any preference in distribution, pro rata to each such class in
accordance with the terms of such class (and, within such class, pro rata in
proportion to the respective Percentage Interests as of the last day of the
period for which such allocation is being made).

 
38
 

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

 

(ii)    Net Loss. Except as otherwise provided herein, Net Loss for any
Partnership Year or other applicable period shall be allocated in the following
order and priority:
(A)    First, to each holder of Partnership Units in proportion to and to the
extent of the amount by which the cumulative Net Income allocated to such
Partner pursuant to subparagraph (i)(F) above exceeds, on a cumulative basis,
the sum of (a) distributions with respect to such Partnership Units pursuant to
clause (2) of Section 5.01 and (b) Net Loss allocated to such Partner pursuant
to this subparagraph (ii)(A);
(B)    Second, with respect to classes of Partnership Units that are not
entitled to any preference in distribution or with respect to which
distributions are not limited to any preference in distribution, pro rata to
each such class in accordance with the terms of such class (and within such
class, pro rata in proportion to the respective Percentage Interests as of the
last day of the period for which such allocation is being made); provided, that
Net Loss shall not be allocated to any Partner pursuant to this
subparagraph (ii)(B) to the extent that such allocation would cause such Partner
to have an Adjusted Capital Account Deficit (or increase any existing Adjusted
Capital Account Deficit) (determined in each case (1) with respect to a Partner
who also holds classes of Partnership Units that are entitled to any preferences
in distribution upon liquidation, by subtracting from such Partners' Adjusted
Capital Account the amount of such preferred distribution to be made upon
liquidation and (2) by not including in the Partners' Adjusted Capital Accounts
any amount that a Partner is obligated to contribute to the Partnership with
respect to any deficit in its Capital Account pursuant to Section 13.02(d)) at
the end of such Partnership Year or other applicable period;
(C)    Third, with respect to classes of Partnership Units that are entitled to
any preference in distribution upon liquidation, in reverse order of the
priorities of each such class (and within each such class, pro rata in
proportion to their respective Percentage Interests as of the last day of the
period for which such allocation is being made); provided, that Net Loss shall
not be allocated to any Partner pursuant to this subparagraph (ii)(C) to the
extent that such allocation would cause such Partner to have an Adjusted Capital
Account Deficit (or increase any existing Adjusted Capital Account Deficit)
(determined in each case by not including in the Partners' Adjusted Capital
Accounts any amount that a Partner is obligated to contribute to the Partnership
with respect to any deficit in its Capital Account pursuant to Section 13.02(d))
at the end of such Partnership Year or other applicable period;
(D)    Fourth, to the General Partner in an amount equal to the excess of
(a) the amount of the Partnership's Recourse Liabilities over (b) the aggregate
DRO Amounts of all DRO Partners;
(E)    Fifth, to and among the DRO Partners, in proportion to their respective
DRO Amounts, until such time as the DRO Partners as a group have been allocated
cumulative Net Loss pursuant to this subparagraph (ii)(E) equal to the aggregate
DRO Amounts of all DRO Partners; and
(F)    Thereafter, to the General Partner.

 
39
 

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

 

(h)    Allocations to Reflect Issuance of Additional Partnership Units.
Notwithstanding Section 7.03(b) hereof, 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 6.02 as it determines are necessary or desirable to reflect the terms of
the issuance of such additional Partnership Units.
Additional Allocation Provisions. Notwithstanding the foregoing provisions of
this Article VI:
(d)    Regulatory Allocations.
(vi)    Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704‑2(f), notwithstanding the provisions of Section 6.02 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 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 6.03(a)(i) is intended to qualify as a "minimum gain chargeback" within
the meaning of Regulations Section 1.704‑2(f) and shall be interpreted
consistently therewith.
(vii)    Partner Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704‑2(i)(4) or in Section 6.03(a)(i) hereof, if there is a
net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
during any Partnership Year, each Holder who has a share of the Partner Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704‑2(i)(5), shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Holder's 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 6.03(a)(ii)
is intended to qualify as a "chargeback of partner nonrecourse debt minimum
gain" within the meaning of Regulations Section 1.704‑2(i) and shall be
interpreted consistently therewith.
(viii)    Nonrecourse Deductions and Partner Nonrecourse Deductions. Any
Nonrecourse Deductions for any Partnership Year shall be specially allocated to
the Holders of OP Units in accordance with their OP 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).

 
40
 

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

 

(ix)    Qualified Income Offset. If any Holder unexpectedly receives an
adjustment, allocation or distribution described in Regulations
Section 1.704‑1(b)(2)(ii)(d)(4), (5), or (6), items of Partnership income and
gain shall be allocated, in accordance with Regulations
Section 1.704‑1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient
to eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of such Holder as quickly as possible. It is intended that this
Section 6.03(a)(iv) qualify and be construed as a "qualified income offset"
within the meaning of Regulations Section 1.704‑1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
(x)    Gross Income Allocation. In the event that any Holder has an Adjusted
Capital Account Deficit at the end of any Partnership Year, 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.
(xi)    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 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 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.
(xii)    Curative Allocations. The allocations set forth in Sections 6.03(a)(i),
(ii), (iii), (iv), (v), and (vi) 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 6.01 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.
(e)    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) and (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.
(f)    Special Allocations Regarding LTIP Units. Notwithstanding the provisions
of Section 6.02 above, Liquidating Gains shall first be allocated to the LTIP
Unitholders until the Economic Capital Account Balances of such Holders, to the
extent attributable to their ownership of LTIP Units, are equal to (i) the OP
Unit Economic Balance, multiplied by (ii) the

 
41
 

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

 

number of their LTIP Units. For this purpose, "Liquidating Gains" means net
capital gains realized in connection with the actual or hypothetical sale of all
or substantially all of the assets of the Partnership, including but not limited
to net capital gain realized in connection with an adjustment to the Gross Asset
Value of Partnership assets under Code Section 704(b). The "Economic Capital
Account Balances" of the LTIP Unitholders will be equal to their Capital Account
balances to the extent attributable to their ownership of LTIP Units, plus the
amount of their allocable share of any Partner Minimum Gain or Partnership
Minimum Gain attributable to such LTIP Units. Similarly, the "OP 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 OP 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 6.03(c) (including, without limitation,
any expenses of the Partnership reimbursed to the General Partner pursuant to
Section 7.04(b)), divided by (ii) the number of the General Partner's OP Units.
Any such allocations shall be made among the LTIP Unitholders in proportion to
the amounts required to be allocated to each under this Section 6.03(c). The
parties agree that the intent of this Section 6.03(c) 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 OP Units (on a
per‑OP Unit/LTIP Unit basis). The General Partner shall be permitted to
interpret this Section 6.03(c) or to amend this Agreement to the extent
necessary and consistent with this intention.
(g)    Allocations to Reflect Outside Interests. Any income or loss to the
Partnership associated with an Outside Interest shall be specially allocated so
as to take into account amounts received by, and income or loss allocated to,
the General Partner or any Affiliate of the General Partner with respect to such
Outside Interest so that the overall effect is to allocate income or loss in the
same manner as would have occurred had such Outside Interest been held through
the Partnership (treating any allocation in respect of the Outside Interest as
if such allocation had been made to the General Partner).
.    Tax Allocations.
(e)    In General. Except as otherwise provided in this Section 6.04, 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 Units in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections 6.02
and 6.03 hereof.
(f)    Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.04(a) hereof, Tax Items with respect to Property that is contributed
to the Partnership with a Gross Asset Value that varies from its basis in the
hands of the contributing Partner immediately preceding the date of contribution
shall be allocated among the Holders of Partnership 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);
provided, however, that the "traditional method" shall be used

 
42
 

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

 

for any assets acquired by the Partnership pursuant to the contribution, merger
and other contracts and agreements entered into by the Partnership or the
General Partner in connection with the IPO. 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 or under any method approved under Code Section 7.04(c) and the
applicable Regulations as chosen by the General Partner.
(g)    Notwithstanding the foregoing provisions of this Agreement, the General
Partner in its sole discretion shall make such allocations as may be needed to
ensure that allocations are in accordance with the interests of the Partners of
the Partnership, within the meaning of the Code and Regulations. The General
Partner shall determine all matters concerning allocations for tax purposes not
expressly provided for herein in its sole discretion. Notwithstanding anything
to the contrary contained in this Agreement, the proper administration of the
Partnership and for preservation of uniformity of OP Units within a particular
series (i.e., Series 60 OP Units, Series 250 OP Units, and Series ES OP Units),
the General Partner may (A) amend the provisions of this Agreement as
appropriate (i) to reflect the proposal or promulgation of Regulations under
Section 704(b) or Section 704(c) of the Code or (ii) otherwise to preserve or
achieve uniformity of OP Units within Series 60 OP Units, Series 250 OP Units,
and Series ES OP Units, and (B) adopt and employ or modify such conventions and
methods of the General Partner determines in his sole discretion to be
appropriate for (i) the determination of Tax Items and the allocation of such
Tax Items among Partners and between transferors and transferees under this
Agreement pursuant to the Code and Regulations promulgated thereunder, (ii) the
determination of the identities and tax classifications of Partners, (iii) the
valuation of the Partnership's assets and the determination of tax basis, (iv)
the allocation of asset values and tax basis, (v) the adoption and maintenance
of accounting methods, and (vi) taking into account differences between the
Gross Asset Values of the assets of the Partnership and adjusted tax basis
pursuant to Section 704(c) of the Code and the Regulations promulgated
thereunder.
(h)    Allocations that would otherwise be made to a Partner under the
provisions of this Article VI shall instead be made to the beneficial owner of
OP Units held by a nominee in any case in which the nominee has furnished the
identity of such owner to the Partnership in accordance with Section 6031(c) of
the Code, or pursuant to any other method determined by the General Partner in
its sole discretion.
ARTICLE VII    

MANAGEMENT AND OPERATIONS OF BUSINESS
Management.
(i)    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

 
43
 

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

 

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, without limitation,
Section 7.03, 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 3.02 hereof and to effectuate the
purposes set forth in Section 3.01 hereof, including, without limitation:
(i)    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 in such
amounts as will permit the General Partner (so long as the General Partner
desires to maintain or restore its qualification as a REIT) to avoid the payment
of any income or excise tax under the Code and to make distributions to its
stockholders sufficient to permit the General Partner to maintain or restore
REIT qualification or otherwise to satisfy the REIT Requirements), the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including the securing
of same by deed to secure debt, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the incurring of any obligations
that it deems necessary for the conduct of the activities of the Partnership;
(ii)    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, the registration of any class of
securities of the Partnership under the Exchange Act and the listing of any debt
securities of the Partnership on any exchange;
(iii)    subject to Section 11.02 hereof, 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;
(iv)    the mortgage, pledge, encumbrance or hypothecation of any assets of the
Partnership, the assignment of any assets of the Partnership in trust for
creditors or on the promise of the assignee to pay the debts of the Partnership,
the use of the assets of the Partnership (including, without limitation, cash on
hand) for any purpose consistent with the terms of this Agreement and on any
terms that it sees fit, including, without limitation, the financing of the
operations and activities of 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;
(v)    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 it sees fit, including, without limitation, the financing of the
conduct of the operations of the General

 
44
 

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

 

Partner, the Partnership or any of the Partnership's Subsidiaries, the lending
of funds to other Persons (including, without limitation, the General Partner
and its Subsidiaries and the Partnership's Subsidiaries) and the repayment of
obligations of the Partnership and its Subsidiaries and any other Person in
which the Partnership has an equity investment and the making of capital
contributions to its Subsidiaries;
(vi)    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;
(vii)    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, government authorities, accountants, legal
counsel, other professional advisors and other agents (including the Transfer
Agent) and the payment of their expenses and compensation out of the
Partnership's assets;
(viii)    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;
(ix)    the maintenance of such insurance (including, without limitation,
directors and officers insurance) for the benefit of the Partnership and the
Partners (including, without limitation, the General Partner) as the General
Partner deems necessary or appropriate, including, without limitation,
(i) casualty, liability and other insurance on the Properties and (ii) liability
insurance for the Indemnitees hereunder;
(x)    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 the General Partner 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 General Partner desires to maintain or restore its qualification as a
REIT, the General Partner may not engage in any such formation, acquisition or
contribution that would cause it to fail to qualify as a REIT;
(xi)    the filing of applications, communicating and otherwise dealing with any
and all governmental agencies having jurisdiction over, or in any way affecting,
the Partnership's assets or any other aspect of the Partnership business;
(xii)    the taking of any action necessary or appropriate to comply with all
regulatory requirements applicable to the Partnership in respect of its
business, including preparing or causing to be prepared all financial statements
required under applicable regulations and

 
45
 

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

 

contractual undertakings and all reports, filings and documents, if any,
required under the Exchange Act, the Securities Act, or by National Securities
Exchange requirements;
(xiii)    the control of any matters affecting the rights and obligations of the
Partnership, including the settlement, compromise, submission to arbitration or
any other form of dispute resolution, or abandonment, of any claim, cause of
action, liability, debt or damages, due or owing to or from the Partnership, the
commencement or defense of suits, legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, the incurring of legal
expense, and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xiv)    the undertaking of any action in connection with the Partnership's
direct or indirect investment in any Subsidiary or any other Person (including,
without limitation, the contribution or loan of funds by the Partnership to such
Persons);
(xv)    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;
(xvi)    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;
(xvii)    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;
(xviii)    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;
(xix)     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;
(xx)    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;
(xxi)    the issuance of additional Partnership Units, as appropriate and in the
General Partner's sole and absolute discretion, in connection with Capital
Contributions by

 
46
 

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

 

Additional Limited Partners and additional Capital Contributions by Partners
pursuant to Article IV hereof;
(xxii)    the selection and dismissal of General Partner 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 General Partner Employee the authority to conduct the
business of the Partnership in accordance with the terms of this Agreement;
(xxiii)    the distribution of cash to acquire Partnership Units held by a
Limited Partner in connection with a Limited Partner's exercise of its
Redemption right under Section 8.06 hereof;
(xxiv)    maintaining, or causing to be maintained, the books and records of the
Partnership or the Transfer Agent to reflect accurately at all times the Capital
Contributions and Percentage Interests of the Partners as the same are adjusted
from time to time to the extent necessary to reflect redemptions, Capital
Contributions, the number of Partnership Units (including any issuance thereof),
the admission of any Additional Limited Partner or any Substituted Limited
Partner or otherwise;
(xxv)    the determination regarding whether a payment to a Partner who
exercises its Redemption Right under Section 8.06 that is assumed by the General
Partner will be paid in the form of the Cash Amount or the REIT Shares Amount,
except as such determination may be limited by Section 8.06.
(xxvi)    the collection and receipt of revenues and income of the Partnership;
(xxvii)    the registration of any class of securities of the Partnership under
the Securities Act or the Exchange Act;
(xxviii)    the entering into of listing agreements with any National Securities
Exchange and the listing of any securities of the Partnership on any such
exchange;
(xxix)     the delisting of some or all of the Partnership Units from, or
requesting that trading be suspended on, any National Securities Exchange;
(xxx)    an election to dissolve the Partnership pursuant to Section 13.01(d)
hereof; and
(xxxi)    the taking of any action necessary or appropriate to enable the
General Partner to qualify as a REIT (so long as the General Partner desires to
maintain or restore its qualification as a REIT).
(j)    Each of the Limited Partners agrees that, except as provided in
Section 7.03 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

 
47
 

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

 

of the Partners, notwithstanding any other provision of this Agreement, the Act
or any applicable law, rule or regulation and, in the absence of any specific
corporate action on the part of the General Partner to the contrary, the taking
of any action or the execution of any such document or writing by an officer of
the General Partner, in the name and on behalf of the General Partner, in its
capacity as the general partner of the Partnership, shall conclusively evidence
(1) the approval thereof by the General Partner, in its capacity as the general
partner of the Partnership, (2) the General Partner's determination that such
action, document or writing is necessary or desirable to conduct the business
and affairs of the Partnership, exercise the powers of the Partnership under
this Agreement and the Act or effectuate the purposes of the Partnership, or any
other determination by the General Partner required by this Agreement in
connection with the taking of such action or execution of such document or
writing, and (3) the authority of such officer with respect thereto.
(k)    At all times from and after the date hereof, the General Partner may
cause the Partnership to obtain and maintain (i) casualty, liability and other
insurance on the Properties and (ii) liability insurance for the Indemnitees
hereunder.
(l)    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.
(m)    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 (or not
taken) by it. Except as may be provided in a separate written agreement between
the Partnership and the Limited Partners, the General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of a 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 provided, that the General Partner has acted in
good faith and pursuant to its authority under this Agreement.
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 of
Limited Partnership 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 of Limited Partnership 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.

 
48
 

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

 

Restrictions on General Partner's Authority.
(i)    The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written consent
of a Majority in Interest of the Outside Limited Partners and may not
(1) perform any act that would subject a Limited Partner to liability as a
general partner in any jurisdiction or any other liability except as provided
herein or under the Act; or (2) enter into any contract, mortgage, loan or other
agreement that expressly prohibits or restricts (a) the General Partner or the
Partnership from performing its specific obligations under Section 8.06 hereof
in full or (b) a Limited Partner from exercising its rights under Section 8.06
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.
(j)    The General Partner shall not, without the written consent of a Majority
in Interest of the Outside Limited Partners, except as provided in
Sections 4.03(a), 5.06, 6.02(b), 6.03(c), 6.04(c) and 7.03(c) hereof, amend,
modify or terminate this Agreement.
(k)    Notwithstanding Sections 7.03(b) and 14.02, the General Partner shall
have the exclusive power, without the prior consent of the Limited Partners, to
amend this Agreement as may be required to facilitate or implement any of the
following purposes:
(i)    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;
(ii)    to reflect the admission, substitution or withdrawal of Partners or the
termination of the Partnership in accordance with this Agreement, and to cause
the Partnership or the Transfer Agent to amend its books and records in
connection with such admission, substitution or withdrawal;
(iii)    to reflect a change that is of an inconsequential nature or does not
adversely affect the Limited Partners as such 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;
(iv)    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;
(v)    to set forth or amend the designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to distributions,
qualifications or terms or conditions of redemption of the holders of any
additional Partnership Units or Partnership Interests issued or established
pursuant to this Agreement;
(vi)    (a) to reflect such changes as are reasonably necessary for the General
Partner to maintain or restore its qualification as a REIT or to satisfy the
REIT Requirements; or

 
49
 

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

 

(b) to reflect the Transfer of all or any part of a Partnership Interest among
the General Partner, and any Qualified REIT Subsidiary or entity that is
disregarded as an entity separate from the General Partner for U.S. federal
income tax purposes;
(vii)    to modify either or both the manner in which items of Net Income or Net
Loss are allocated pursuant to Article VI or the manner in which Capital
Accounts are adjusted, computed or maintained (but only to the extent set forth
in the definition of "Capital Account" or contemplated by the Code or the
Regulations);
(viii)    to issue additional Partnership Interests in accordance with
Section 4.03;
(ix)    to reflect any other modification to this Agreement as is reasonably
necessary for the business or operations of the Partnership or the General
Partner and which does not violate Section 7.03(d);
(x)    as may be required to reflect the admission, substitution, termination or
withdrawal of Partners or an increase or decrease in a Partner's DRO Amount in
accordance with this Agreement (which may be affected through the replacement of
Exhibit C with an amended Exhibit C);
(xi)    as may be required to facilitate the trading of Series 60 OP Units,
Series 250 OP Units or Series ES OP Units (including any division of such series
or other actions to facilitate the uniformity of tax items and attributes within
each such series of OP Units listed on a National Securities Exchange);
(xii)    as may be required to comply with any rules, regulation, guideline or
requirement of any National Securities Exchange on which the Series 60 OP Units,
Series 250 OP Units or Series ES OP Units are or will be listed; and
(xiii)    for the purposes contemplated by Section 11.03(e).
The General Partner will provide notice to the Limited Partners whenever any
action under this Section 7.03(c) is taken.
(l)    Notwithstanding Sections 7.03(b) and 7.03(c) 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 13.02(a)(iv) hereof, or
alter the allocations specified in Article VI hereof (except, in any case, as
permitted pursuant to Sections 4.03, 7.03(c) and Article VI hereof), (iv) alter
or modify the Redemption rights, Cash Amount or REIT Shares Amount as set forth
in Section 8.06 hereof, or amend or modify any related definitions, (v) alter or
modify Section 11.02 hereof or (vi) amend this Section 7.03(d). Further, no
amendment may alter the restrictions on the

 
50
 

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

 

General Partner's authority set forth elsewhere in this Section 7.03 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.
Reimbursement of the General Partner.
(g)    Except as provided in this Section 7.04 and elsewhere in this Agreement
(including the provisions of Articles V and VI regarding distributions, payments
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.
(h)    The Partnership shall be responsible for and shall pay all expenses
relating to the Partnership's and the General Partner's organization, the
ownership of their assets and their operations. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Partnership. Except to the extent
provided in this Agreement, the General Partner and its Affiliates shall be
reimbursed on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all expenses that the General
Partner and its Affiliates incur relating to the ownership and operation of, or
for the benefit of, the Partnership (including, without limitation,
administrative expenses); provided, that the amount of any such reimbursement
shall be reduced by any interest earned by the General Partner with respect to
bank accounts or other instruments or accounts held by it on behalf of the
Partnership. The Partners acknowledge that all such expenses of the General
Partner are deemed to be for the benefit of the Partnership. Such reimbursement
shall be in addition to any reimbursement made as a result of indemnification
pursuant to Section 7.07 hereof. In the event that certain expenses are incurred
for the benefit of the Partnership and other entities (including the General
Partner), such expenses will be allocated to the Partnership and such other
entities in such a manner as the General Partner in its sole and absolute
discretion deems fair and reasonable. All payments and reimbursements hereunder
shall be characterized for federal income tax purposes as expenses of the
Partnership incurred on its behalf, and not as expenses of the General Partner.
(i)    If the General Partner shall elect to purchase from its stockholders REIT
Shares for the purpose of delivering such REIT Shares to satisfy an obligation
under any dividend reinvestment program adopted by the General Partner, any
employee stock purchase plan adopted by the General Partner or any similar
obligation or arrangement undertaken by the General Partner in the future or for
the purpose of retiring such REIT Shares, the purchase price paid by the General
Partner for such REIT Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be advanced to the General Partner or reimbursed to the
General Partner, subject to the condition that: (1) if such REIT Shares
subsequently are sold by the General Partner, the General Partner shall pay or
cause to be paid to the Partnership any proceeds received by the General Partner
for such REIT Shares (which sales proceeds shall include the amount of dividends
reinvested under any dividend reinvestment or similar program; provided, that a
transfer of REIT Shares for Partnership Units pursuant to Section 8.06 would not
be considered a sale for such purposes); and (2) if such REIT Shares are not
retransferred by the General Partner within 30 days after the purchase thereof,
or the General Partner otherwise determines not to retransfer such REIT Shares,
the General Partner shall cause the Partnership to redeem a number of
Partnership Units held by the General Partner equal to the

 
51
 

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

 

number of such REIT Shares, as adjusted for stock dividends and distributions,
stock splits and subdivisions, reverse stock splits and combinations,
distributions of rights, warrants or options, and distributions of evidences of
indebtedness or assets relating to assets not received by the General Partner
pursuant to a pro rata distribution by the Partnership (in which case such
advancement or reimbursement of expenses shall be treated as having been made as
a distribution in redemption of such number of Partnership Units held by the
General Partner).
(j)    As set forth in Section 4.03, the General Partner shall be treated as
having made a Capital Contribution in the amount of all expenses that it incurs
relating to the its offering of REIT Shares, Preferred Shares, Junior Shares or
New Securities.
(k)    If and to the extent any reimbursements to the General Partner pursuant
to this Section 7.04 constitute gross income of the General Partner (as opposed
to the repayment of advances made by the General Partner on behalf of the
Partnership), such amounts shall constitute guaranteed payments with respect to
capital within the meaning of Code Section 707(c), shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
Outside Activities of the General Partner. Without the consent of a Majority in
Interest of the Outside Limited Partners, the General Partner 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 General
Partner as a reporting company with a class of securities registered under the
Exchange Act, (d) the offering, sale, syndication, private placement or public
offering of stock, bonds, securities or other interests, (e) financing or
refinancing of any type related to the Partnership or its assets or activities,
(f) any of the foregoing activities as they relate to a Subsidiary of the
Partnership, and (g) such activities as are incidental thereto. Nothing
contained herein shall be deemed to prohibit the General Partner from
(i) executing guarantees of Partnership Debt for which it would otherwise be
liable in its capacity as General Partner, (ii) holding such bank accounts or
similar instruments or accounts in its name as it deems necessary to carry out
its responsibilities and purposes as contemplated under this Agreement and its
organizational documents (provided, that accounts held on behalf of the
Partnership to permit the General Partner to carry out its responsibilities
under this Agreement shall be considered to belong to the Partnership and the
interest earned thereon shall, subject to Section 7.04(b), be applied for the
benefit of the Partnership) or (iii) acquiring Qualified Assets.
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)    The Partnership may transfer assets to joint ventures, limited liability
companies, partnerships, corporations, business trusts or other business
entities in which it is or

 
52
 

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

 

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 General Partner, 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.
Indemnification.
(a)    The Partnership shall, to the maximum extent permitted by applicable law
in effect from time to time, indemnify, and, without requiring a preliminary
determination of the ultimate entitlement to indemnification, pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to each
Indemnitee; provided, however, that the Partnership shall not indemnify an
Indemnitee (1) for material acts or omissions that were committed in bad faith
or were the result of active and deliberate dishonesty, (2) 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 (3) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to
a loan guaranty or otherwise (unless otherwise provided by the terms of any such
guaranty or other instrument), 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 7.07 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. 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 7.07(a). The termination of any proceeding by
conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, does not create a presumption that such Indemnitee acted in a
manner contrary to that specified in this Section 7.07(a) with respect to the
subject matter of such proceeding. Any indemnification pursuant to this
Section 7.07 shall be made only out of the assets

 
53
 

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

 

of the Partnership and any insurance proceeds from the liability policy covering
the General Partner and any Indemnitees, 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 7.07.
(b)    To the fullest extent permitted by law, and without requiring a
preliminary determination of the Indemnitee's ultimate entitlement to
indemnification under Section 7.07(a) above, 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 proceeding shall be paid or reimbursed by the Partnership as
incurred by the Indemnitee in advance of the final disposition of the proceeding
upon receipt by the Partnership of (1) 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 7.07(b) has
been met and (2) 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 7.07 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 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 7.07, unless such liabilities arise as a
result of (1) material acts or omissions that were committed in bad faith or
were the result of active and deliberate dishonesty, (2) any transaction in
which such Indemnitee received an improper personal benefit in money, property
or services in violation or breach of any provision of this Agreement or
applicable law, or (3) in the case of any criminal proceeding, the Indemnitee
had reasonable cause to believe that the act or omission 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.

 
54
 

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

 

(g)    An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.07 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 7.07 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 7.07 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 7.07 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)    If and to the extent any payments to the General Partner pursuant to this
Section 7.07 constitute gross income to the General Partner (as opposed to the
repayment of advances made on behalf of the Partnership) such amounts shall be
treated as "guaranteed payments" for the use of capital within the meaning of
Code Section 707(c), shall be treated consistently therewith by the Partnership
and all Partners, and shall not be treated as distributions for purposes of
computing the Partners' Capital Accounts.
Liability of the General Partner.
(a)    Notwithstanding anything to the contrary set forth in this Agreement, to
the maximum extent that Delaware law in effect from time to time permits,
neither the General Partner or 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 its own
stockholders collectively and that the General Partner is under no obligation to
give priority to the separate interests of the Limited Partners or its own
stockholders (including, without limitation, the tax consequences to Limited
Partners, Assignees or its own stockholders) in deciding whether to cause the
Partnership to take (or decline to take) any actions. If there is a conflict
between the interests of the stockholders of the General Partner on one hand and
the Limited Partners on the other, the Limited Partners expressly acknowledge
that the General Partner will fulfill its fiduciary duties to such Limited
Partners by acting in the best interests of the stockholders of the General
Partner. The General Partner shall not be liable under this Agreement to the
Partnership or to any Partner for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions; provided, that the General Partner has acted in good faith.
(c)    Subject to its obligations and duties as General Partner set forth in
Section 7.01 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

 
55
 

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

 

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.
(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
stockholder of the General Partner shall be liable to the Partnership for money
damages except for (1) active and deliberate dishonesty established by a
nonappealable final judgment or (2) actual receipt of an improper benefit or
profit in money, property or services. Without limitation of the foregoing, and
except for fraud, willful misconduct or gross negligence, or pursuant to any
such express indemnity, no property or assets of any Partner, other than its
interest in the Partnership, shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment (or other judicial
process) in favor of any other Partner(s) and arising out of, or in connection
with, this Agreement. This Agreement is executed by the directors of the General
Partner solely as directors of the same and not in their own individual
capacities.
(f)    Any amendment, modification or repeal of this Section 7.08 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 7.08 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.
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.

 
56
 

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

 

(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 (1) to protect the ability of the General Partner to continue
to qualify as a REIT or the Partnership to be taxed as a partnership,
(2) without limitation of the foregoing clause (1) or clause (3), for the
General Partner otherwise to satisfy the REIT Requirements, or the Partnership
to satisfy the "qualifying income" requirement of Code Section 7704(c), or (3)
without limitation of the foregoing clauses (1) or (2), to avoid the General
Partner or the Partnership incurring any income or excise taxes under the Code,
is expressly authorized under this Agreement and is deemed approved by all of
the Limited Partners.
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.
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 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 (1) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (2) the Person

 
57
 

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

 

executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(3) 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
Limitation of Liability. The Limited Partners shall have no liability under this
Agreement (other than for breach thereof) except as expressly provided in
Sections 10.04, 13.02(d) or under the Act.
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 director 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, stockholder 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.
Outside Activities of Limited Partners. Subject to any agreements entered into
pursuant to Section 7.06(e) hereof and any other agreements entered into by a
Limited Partner or its Affiliates with the General Partner, the Partnership or
any Affiliate thereof (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 7.06(e) hereof and any
other agreements entered into by a Limited Partner or its Affiliates with the
General Partner, the Partnership or any Affiliate thereof, 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.
Return of Capital. Except pursuant to the rights of Redemption set forth in
Section 8.06 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, upon

 
58
 

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

 

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.
Adjustment Factor. The Partnership shall notify any Limited Partner, on request,
of the then current Adjustment Factor or any change made to the Adjustment
Factor.
Redemption Rights.
(j)    On or after the date 12 months after the date of the initial issuance of
the OP Units, each Limited Partner shall have the right (subject to the terms
and conditions set forth herein and in any other such agreement, as applicable)
to require the Partnership to redeem all or a portion of the OP Units held by
such Limited Partner (such OP Units being hereafter referred to as "Tendered
Units") in exchange for the Cash Amount (a "Redemption") unless the terms of
such OP Units or a separate agreement entered into between the Partnership and
the holder of such OP Units provide that such OP Units are not entitled to a
right of Redemption or provide for a shorter or longer period before such Holder
may exercise such right of Redemption or impose conditions on the exercise of
such right of Redemption. The Tendering Partner shall have no right, with
respect to any OP Units so redeemed, to receive any distributions paid on or
after the Specified Redemption Date. Any Redemption shall be exercised pursuant
to a Notice of Redemption delivered to the General Partner by the Limited
Partner who is exercising the right (the "Tendering Partner"). The Cash Amount
shall be payable to the Tendering Partner on the Specified Redemption Date.
(k)    Notwithstanding Section 8.06(a) above, if a Limited Partner has delivered
to the General Partner a Notice of Redemption then the General Partner may, in
its sole and absolute discretion, (subject to the limitations on ownership and
transfer of REIT Shares set forth in the Charter) elect to assume and satisfy
the Partnership's Redemption obligation and acquire some or all of the Tendered
Units from the Tendering Partner in exchange for the REIT Shares Amount (as of
the Specified Redemption Date) and, if the General Partner so elects, the
Tendering Partner shall sell the Tendered Units to the General Partner in
exchange for the REIT Shares Amount. In such event, the Tendering Partner shall
have no right to cause the Partnership to redeem such Tendered Units. The
General Partner shall give such Tendering Partner written notice of its election
on or before the close of business on the fifth Business Day after the its
receipt of the Notice of Redemption.
(l)    The REIT Shares Amount, if applicable, shall be delivered as duly
authorized, validly issued, fully paid and nonassessable Class A REIT Shares
and, if applicable, free of any pledge, lien, encumbrance or restriction, other
than those provided in the Charter or the Bylaws of the General Partner, the
Securities Act, relevant state securities or blue sky laws and any applicable
registration rights agreement with respect to such Class A REIT Shares entered
into by the Tendering Partner. Notwithstanding any delay in such delivery (but
subject to Section 8.06(e)), the Tendering Partner shall be deemed the owner of
such Class A REIT Shares for all purposes, including without limitation, rights
to vote or consent, and receive dividends, as of the Specified Redemption Date.
In addition, the Class A REIT Shares for which the Partnership Units might be
exchanged shall also bear the legend set forth in the Charter.

 
59
 

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

 

(m)    Each Limited Partner covenants and agrees with the General Partner that
all Tendered Units shall be delivered to the General Partner 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
General Partner 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 the General
Partner (or its designee), such Limited Partner shall assume and pay such
transfer tax.
(n)    Notwithstanding the provisions of Sections 8.06(a), 8.06(b), 8.06(c) or
any other provision of this Agreement, a Limited Partner (i) shall not be
entitled to effect a Redemption for cash or an exchange for Class A REIT Shares
to the extent the ownership or right to acquire Class A REIT Shares pursuant to
such exchange by such Partner on the Specified Redemption Date could cause such
Partner or any other Person to violate the restrictions on ownership and
transfer of Class A REIT Shares set forth in the Charter of the General Partner
and (ii) shall have no rights under this Agreement to acquire Class A REIT
Shares which would otherwise be prohibited under the Charter. To the extent any
attempted Redemption or exchange for Class A REIT Shares would be in violation
of this Section 8.06(e), it shall be null and void ab initio and such Limited
Partner shall not acquire any rights or economic interest in the cash otherwise
payable upon such Redemption or the Class A REIT Shares otherwise issuable upon
such exchange.
(o)    Notwithstanding anything herein to the contrary (but subject to
Section 8.06(e)), with respect to any Redemption or exchange for Class A REIT
Shares pursuant to this Section 8.06: (i) each Series 60 OP Unit, Series 250 OP
Unit, or Series ES OP Unit acquired by the General Partner pursuant thereto
shall automatically and without further action required, be converted into a
Series PR OP Units, on a one-to-one basis; (ii) a portion of the OP Units
acquired by the General Partner pursuant thereto shall automatically, and
without further action required, be converted into and deemed to be General
Partner Interests and all other OP Units shall be deemed to be Limited Partner
Interests and held by the General Partner in its capacity as a Limited Partner
in the Partnership such that, immediately after such Redemption, the
requirements of Section 4.01(b) continue to be met; (iii) without the consent of
the General Partner, each Limited Partner may effect a Redemption only one time
in each fiscal quarter; (iv) without the consent of the General Partner, each
Limited Partner may not effect a Redemption for less than 1,000 OP Units or, if
the Limited Partner holds less than 1,000 OP Units, all of the OP Units held by
such Limited Partner; (v) without the consent of the General Partner, each
Limited Partner 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 General Partner for a distribution to its stockholders
of some or all of its portion of such distribution; (vi) the consummation of any
Redemption or exchange for Class A REIT Shares 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; and (vii) each
Tendering Partner shall continue to own all OP Units subject to any Redemption
or exchange for Class A REIT Shares, and be treated as a Limited Partner with
respect to such OP Units for all purposes of this Agreement, until such OP Units
are transferred to the General Partner and paid for or exchanged on the
Specified Redemption Date. Until a Specified Redemption Date, the Tendering
Partner shall have no rights as a stockholder of the General Partner with
respect to such Tendering Partner's OP Units.

 
60
 

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

 

(p)    In the event that the Partnership issues additional Partnership Interests
to any Additional Limited Partner pursuant to Section 4.04, the General Partner
shall make such revisions to this Section 8.06 as it determines are necessary to
reflect the issuance of such additional Partnership Interests.
ARTICLE IX    

BOOKS, RECORDS, ACCOUNTING AND REPORTS
Records and Accounting.
(m)    The General Partner shall keep or cause to be kept at the principal
office of the Partnership or the Transfer Agent, as applicable, 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 8.05 or 9.03 hereof.
Any records maintained by or on behalf of the Partnership or the Transfer Agent
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. The books of the
Partnership shall be maintained, for financial reporting purposes, on an accrual
basis in accordance with generally U.S. GAAP.
(n)    The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP, 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 Partnership
and the General Partner may operate with integrated or consolidated accounting
records, operations and principles. The Partnership also shall maintain its tax
books on the accrual basis.
Partnership Year. The Partnership Year of the Partnership shall be the calendar
year.
Reports.
(a)    As soon as practicable, but in no event later than the date on which the
General Partner mails its annual report to its stockholders, the General Partner
shall cause to be mailed to each Limited Partner an annual report, as of the
close of the most recently ended Partnership Year, containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the Partnership, for such
Partnership Year, presented in accordance with U.S. GAAP, such statements to be
audited by a nationally recognized firm of independent public accountants
selected by the General Partner.
(b)    If and to the extent that the General Partner mails quarterly reports to
its stockholders, as soon as practicable, but in no event later than the date on
such reports are mailed, the General Partner shall cause to be mailed to each
Limited Partner a report containing unaudited financial statements, as of the
last day of such fiscal quarter, of the Partnership, or of the General

 
61
 

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

 

Partner if such statements are prepared solely on a consolidated basis with the
Partnership, and such other information as may be required by applicable law or
regulations, or as the General Partner determines to be appropriate.
(c)    The General Partner shall have satisfied its obligations under
Sections 9.03(a) and 9.03(b) by posting or making available the reports required
by this Section 9.03 on the website maintained from time to time by the
Partnership provided, that such reports are able to be printed or downloaded
from such website.
(d)    At the request of any Limited Partner, the General Partner shall provide
access to the books, records and work paper upon which the reports required by
this Section 9.03 are based, to the extent required by the Act.
ARTICLE X    

TAX MATTERS
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 90 days of the close of each taxable year, the tax information
reasonably required by Limited Partners for federal and state income tax
reporting purposes. 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.
Tax Elections.
(e)    Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code, including, but not limited to, the election under Code
Section 754 and the election to use the "recurring item" method of accounting
provided under Code Section 461(h) with respect to property taxes imposed on the
Partnership's Properties. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, any election under Code
Sections 461(h) and 754) upon the General Partner's determination in its sole
and absolute discretion that such revocation is in the best interests of the
Partners.
(f)    Without limiting the foregoing, the Partners, intending to be legally
bound, hereby authorize the General Partner, on behalf of the Partnership, to
make an election (the "LV Safe Harbor Election") to have the "liquidation value"
safe harbor provided in Proposed Treasury Regulation § 1.83-3(1) and the
Proposed Revenue Procedure set forth in Internal Revenue Service Notice 2005-43,
as such safe harbor may be modified when such proposed guidance is issued in
final form or as amended by subsequently issued guidance (the "LV Safe Harbor"),
apply to any interest in the Partnership transferred to a service provider while
the LV Safe Harbor Election remains effective, to the extent such interest meets
the LV Safe Harbor requirements (collectively, such interests are referred to as
"LV Safe Harbor Interests"). The Tax Matters Partner is authorized

 
62
 

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

 

and directed to execute and file the LV Safe Harbor Election on behalf of the
Partnership and the Partners. The Partnership and the Partners (including any
person to whom an interest in the Partnership is transferred in connection with
the performance of services) hereby agree to comply with all requirements of the
LV Safe Harbor (including forfeiture allocations) with respect to all LV Safe
Harbor Interests and to prepare and file all U.S. federal income tax returns
reporting the tax consequences of the issuance and vesting of LV Safe Harbor
Interests consistent with such final LV Safe Harbor guidance. The Partnership is
also authorized to take such actions as are necessary to achieve, under the LV
Safe Harbor, the effect that the election and compliance with all requirements
of the LV Safe Harbor referred to above would be intended to achieve under
Proposed Treasury Regulation § 1.83-3, including amending this Agreement.
Tax Matters Partner.
(f)    The General Partner shall be the "tax matters partner" of the Partnership
for federal income tax purposes. The tax matters partner shall receive no
compensation for its services. All third-party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership in addition to
any reimbursement pursuant to Section 7.04 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 reasonable.
(g)    The tax matters partner is authorized, but not required:
(i)    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));
(ii)    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;
(iii)    to intervene in any action brought by any other Partner for judicial
review of a final adjustment;

 
63
 

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

 

(iv)    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;
(v)    to enter into an agreement with the IRS to extend the period for
assessing any tax that is attributable to any item required to be taken into
account by a Partner for tax purposes, or an item affected by such item; and
(vi)    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 7.07 hereof shall be fully applicable to the tax matters partner in
its capacity as such.
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 Sections 1441, 1442, 1445, 1446, or 1471-1474 and
the Treasury Regulations thereunder. Any amount paid on behalf of or with
respect to a Limited Partner, in excess of any withheld amounts shall constitute
a loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within 15 days after notice from the General Partner that
such payment must 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 Cash 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 10.04. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.04
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner (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 percentage points (but not
higher than the maximum lawful rate) from the date such amount is due (i.e.,
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.

 
64
 

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

 

Organizational Expenses. The Partnership shall elect to amortize expenses, if
any, incurred by it in organizing the Partnership ratably over a 180‑month
period as provided in Code Section 709.
ARTICLE XI    

TRANSFERS AND WITHDRAWALS
Transfer.
(g)    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.
(h)    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 unless consented to by the
General Partner in its sole and absolute discretion.
(i)    Except in accordance with the terms and conditions set forth in this
Article XI, 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 Class A REIT
Shares 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 Code
Section 752.
Transfer of General Partner's Partnership Interest.
(h)    The General Partner may not transfer any of its Partnership Interests
except in connection with (i) a transaction permitted under Section 11.02(b),
(ii) any merger (including a triangular merger), consolidation or other
combination with or into another Person following the consummation of which the
equity holders of the surviving entity are substantially identical to the
stockholders of the General Partner, (iii) a transfer to any Subsidiary of the
General Partner or (iv) as otherwise expressly permitted under this Agreement,
nor shall the General Partner withdraw as General Partner except in connection
with a transaction permitted under Section 11.02(b) or any merger,
consolidation, or other combination permitted under clause (ii) of this
Section 11.02(a).
(i)    The General Partner shall not engage in any merger (including, without
limitation, a triangular merger), consolidation or other combination with or
into another Person (other than any transaction permitted by Section 11.02(a)),
any sale of all or substantially all of its assets or any reclassification,
recapitalization or change of outstanding REIT Shares (other than a change in
par value, or from par value to no par value, or as a result of a subdivision or
combination as described in the definition of "Adjustment Factor") ("Termination
Transaction"), unless (i) it receives the consent of a Majority in Interest of
the Outside Limited Partners, (ii) following such merger or other consolidation,
substantially all of the assets of the surviving entity consist of OP

 
65
 

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

 

Units or (iii) in connection with which all Partners (other than the General
Partner) who hold OP Units either will receive, or will have the right to
receive, for each OP 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 REIT Shares in consideration of
one such REIT Share at any time during the period from and after the date on
which the Termination Transaction is consummated; provided, however, that, if in
connection with the Termination Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of the percentage
required for the approval of mergers under the organizational documents of the
General Partner, each holder of OP Units shall receive, or shall have the right
to receive without any right of Consent set forth above in this
Section 11.02(b), the greatest amount of cash, securities, or other property
which such holder would have received had it exercised the Redemption Right and
received Class A REIT Shares in exchange for its OP Units immediately prior to
the expiration of such purchase, tender or exchange offer and had thereupon
accepted such purchase, tender or exchange offer.
(j)    The General Partner shall not enter into an agreement or other
arrangement providing for or facilitating the creation of a General Partner
other than the General Partner, unless the successor General Partner executes
and delivers a counterpart to this Agreement in which such General Partner
agrees to be fully bound by all of the terms and conditions contained herein
that are applicable to a General Partner.
Transfer of Limited Partners' Partnership Interests.
(q)    No Limited Partner shall Transfer all or any portion of its Partnership
Interest to any transferee without the written consent of the General Partner,
which consent may be withheld in its sole and absolute discretion; provided,
however, that any Limited Partner may, at any time, without the consent or
approval of the General Partner, (i) Transfer all or part of its Partnership
Interest to any Family Member (including a Transfer by a Family Member that is
an inter vivos or testamentary trust (whether revocable or irrevocable) to a
Family Member that is a beneficiary of such trust), any Charity, any Controlled
Entity or any Affiliate or (ii) pledge all or any portion of its Partnership
Interest to a lending institution as collateral or security for a bona fide loan
or other extension of credit, and Transfer such pledged Partnership Interest to
such lending institution in connection with the exercise of remedies under such
loan or extension of credit. To the extent such a Transfer is made to a
Controlled Entity or any Affiliate and such Transferee thereafter ceases to be a
Controlled Entity or Affiliate of the Transferor, then a Transfer shall be
deemed to occur at such time as such Transferee ceases to be a Controlled Entity
or any Affiliate of the Transferor. Notwithstanding the foregoing provisions of
this Section 11.03, for so long as a series of OP Units is listed on a National
Securities Exchange, OP Units of such series shall be freely transferable,
without the consent of the General Partner, pursuant to sales of such OP Units
on a National Securities Exchange subject to the following: (i) this Section
11.03; (ii) Section 11.04; (iii) Section 11.06; (iv) any contractual provisions
that are binding on such Partner; and (v) any provisions of applicable law,
including U.S. federal or state securities laws or rules and regulations of the
SEC, any state securities commission or any other applicable securities laws of
a Governmental Entity (including those outside the jurisdiction of the United
States of America) with jurisdiction over such Transfer

 
66
 

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

 

or that have the effect of rendering unavailable any exemption under applicable
law relied upon for a prior transfer of such.
(r)    Without limiting the generality of Section 11.03(a) hereof, it is
expressly understood and agreed that, to the extent the General Partner has the
right to consent to any Transfer pursuant to Section 11.03(a) above, the General
Partner will not consent to any Transfer of all or any portion of any
Partnership Interest pursuant to Section 11.03(a) above unless such Transfer
meets each of the following conditions:
(i)    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.
(ii)    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 11.05 hereof.
(iii)    Such Transfer is effective as of the first day of a fiscal quarter of
the Partnership.
(s)    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.
(t)    Subject to the last sentence of this Section 11.03(d), 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. The foregoing provisions of this Section 11.03(d) shall
not apply to a series of OP

 
67
 

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

 

Units that is listed on a National Securities Exchange, for so long as such a
series of OP Units is listed on a National Securities Exchange.
(u)    The General Partner may impose restrictions on the Transfer of a Limited
Partner Interest if it receives an opinion of counsel reasonably to the effect
that such restrictions are necessary in order to comply with any federal or
state securities laws or regulations applicable to the Partnership or the
Partnership Interests. The General Partner may impose such restrictions by
amending this Agreement without the approval of the Partners.
Substituted Limited Partners.
(g)    Except as set forth in Section 11.04(b) below, a transferee of the
interest of a Limited Partner in accordance with Section 11.03(a) 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. Except as set forth in Section 11.04(b) and 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, including, without
limitation, the power of attorney granted in Section 2.04 hereof, (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.
(h)    Notwithstanding Section 11.04(a) above, for so long as the Series 250 OP
Units, Series 60 OP Units or Series ES OP Units are listed on a National
Securities Exchange, upon the acceptance by each transferee of the Transfer of
OP Units of any such series (including any nominee holder or agent or
representative acquiring such OP Units for the account of another Person),
subject to compliance with Section 11.06 with respect to such Transfer, (i) each
transferee of such OP Units (including any nominee holder or an agent or
representative acquiring such OP Units for the account of another Person) shall
be admitted to the Partnership as a Substituted Limited Partner with respect to
the OP Units so Transferred to such transferee when any such Transfer or
admission is reflected in the books and records of the Partnership or the
Transfer Agent, and such transferee shall become the record holder of the OP
Units so Transferred, and (ii) each such acceptance shall constitute (w) the
agreement by each such transferee to be bound by the terms of this Agreement,
(x) a grant by each such transferee of the power of attorney in Section 2.04
hereof, (y) the making by each such transferee of the representations and
warranties contained in this Agreement, including without limitation, the
representations and warranties contained in Sections 3.04(a) and 3.04(b) hereof,
if applicable, and (z) the making by each such transferee of the consents and
waivers contained in this Agreement. Each transferee of OP Units 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. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall

 
68
 

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

 

have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement.
(i)    Upon the admission of a Substituted Limited Partner, the General Partner
shall cause the Substitute Limited Partner to be registered on the books and
records of the Transfer Agent or otherwise cause the Partnership to amend its
books and records 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.
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 required to be
consented to by the General Partner pursuant to Section 11.03(a), 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.
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 8.06 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 or otherwise permitted 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 8.06 hereof
and/or pursuant to any Partnership Unit Designation, or (iii) to the General
Partner, whether or not pursuant to Section 8.06(b) hereof, shall cease to be a
Limited Partner.
(c)    Subject to Section 6.04, 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 8.06 hereof,
on any day other than the first day of a Partnership Year,

 
69
 

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

 

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) and the corresponding Regulations, using the "interim closing of
the books" method or another permissible method selected by the General Partner
(unless the General Partner in its sole and absolute discretion elects to adopt
a daily, weekly or monthly proration period, in which case Net Income or Net
Loss shall be allocated based upon the applicable method selected by the General
Partner). 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 General Partner to cease to comply with the REIT Requirements;
(v) except with the consent of the General Partner, if such Transfer, in the
opinion of counsel to the Partnership or the General Partner, would create a
significant risk that the Partnership would terminate for federal or state
income tax purposes; (vi) if such Transfer would, in the opinion of legal
counsel to the Partnership, cause the Partnership to cease to be classified as a
partnership for federal income tax purposes (except as a result of the
Redemption (or acquisition by the General Partner) of all Partnership 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) without the consent of the
General Partner, to any benefit plan investor within the meaning of Department
of Labor Regulations Section 2510.3‑101(f), as modified by Section 3(42) of
ERISA, or as would otherwise cause participation by benefit plan investors to be
"significant" for the purposes of ERISA; (ix) except with the consent of the
General Partner, if such Transfer would, in the opinion of legal counsel to the
Partnership or the General Partner, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.3‑101; (x) if such Transfer
requires the registration of such Partnership Interest pursuant to any
applicable federal or state securities laws to the extent such Partnership
Interest is not then so registered; (xi) except with the consent of the General
Partner, if such Transfer would, in the opinion of legal counsel to the
Partnership or the General Partner, adversely affect the ability of the General
Partner to continue to qualify as a REIT or would subject the General Partner to
any income or excise taxes under the Code; (xii) except with the consent of the
General Partner, if 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 (provided, that this
clause (xii) shall not be

 
70
 

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

 

the basis for limiting or restricting in any manner the exercise of a Redemption
right unless, and only to the extent that, in the absence of such limitation or
restriction, in the opinion of legal counsel to the Partnership, there is a
significant risk that the Partnership will be treated as a "publicly traded
partnership" and, by reason thereof, taxable as a corporation); (xiii) 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;
provided, however, that (1) clause (viii) shall not apply to a series of OP
Units that is listed on a National Securities Exchange, so long as such series
of OP units is listed on a National Securities Exchange and (2) clause (xii)
shall not apply to a series of OP Units that is listed on a National Securities
Exchange, so long as such series of OP units is listed on a National Securities
Exchange and the Partnership is not treated as a "publicly traded partnership."
(e)    Nothing contained in this Article XI, or elsewhere in this Agreement,
shall preclude the settlement of any transactions involving Partnership Units
entered into through the facilities of any National Securities Exchange on which
such Partnership Units are listed for trading. The fact that the settlement of
any transaction occurs shall not negate the effect of any other provision of
this Article XI, or elsewhere in this Agreement, and any transferee in such a
transaction shall be subject to all of the provisions and limitations set forth
in this Article XI or elsewhere in this Agreement.
ARTICLE XII    

ADMISSION OF PARTNERS
Admission of Successor General Partner. A successor to all of the General
Partner's General Partner Interest pursuant to Section 11.02 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.
Admission of Additional Limited Partners.
(v)    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 General Partner, of all of the terms and
conditions of this Agreement, including, without limitation, the power of
attorney granted in Section 2.04 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 and the satisfaction of all the conditions set forth in this
Section 12.02.
(w)    Notwithstanding anything to the contrary in this Section 12.02, no Person
shall be admitted as an Additional Limited Partner without the consent of the
General Partner, which

 
71
 

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

 

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.
(x)    Subject to Section 6.04, 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 11.06(c) hereof. All
distributions of Available Cash with respect to which the Partnership Record
Date is before the date of such admission shall be made solely to Partners and
Assignees other than the Additional Limited Partner, and all distributions of
Available Cash thereafter shall be made to all the Partners and Assignees
including such Additional Limited Partner.
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 books and records of the
Partnership and, if necessary, to prepare as soon as practical an amendment of
this Agreement and, if required by law, shall prepare and file an amendment to
the Certificate of Limited Partnership and may for this purpose exercise the
power of attorney granted pursuant to Section 2.04.
Limit on Number of Partners. Except if Partnership Units are listed on a
National Securities Exchange or 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 that would cause the Partnership to become a reporting
company under the Exchange Act.
Admission. A Person shall be admitted to the Partnership as a Limited Partner of
the Partnership only upon strict compliance, and not upon substantial
compliance, with the requirements set forth in this Agreement for admission to
the Partnership as an Additional Limited Partner. Concurrently with, and as
evidence of, the admission of an Additional Limited Partner, the General Partner
shall cause the Partnership or the Transfer Agent to amend its books and records
to reflect the name, address and number of Partnership Units of such Additional
Limited Partner.
Certificates.  Notwithstanding anything otherwise to the contrary herein, unless
the General Partner shall determine otherwise in respect of some or all of any
or all classes of Partnership Interests, Partnership Interests shall not be
evidenced by Certificates. To the extent Certificates are issued, such
Certificates shall be executed on behalf of the Partnership by the General
Partner (and by any appropriate officer of the General Partner on behalf of the
General Partner). No Certificate evidencing Partnership Units which are
registered on the book and records of the Transfer Agent

 
72
 

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

 

shall be valid for any purpose until it has been countersigned by the Transfer
Agent; provided however that if the General Partner elects to issue Certificates
evidencing such Partnership Units in global form, the Certificates evidencing
Partnership Units shall be valid upon receipt of a certificate from the Transfer
Agent certifying that the Certificates evidencing Partnership Units have been
duly registered in accordance with the directions of the Partnership.
Mutilated, Destroyed, Lost or Stolen Certificates.
(a)    If any mutilated Certificate evidencing Partnership Units is surrendered
to the Transfer Agent or any mutilated Certificate evidencing other Partnership
Interests is surrendered to the General Partner, the appropriate officers of the
General Partner on behalf of the General Partner on behalf of the Partnership
shall execute, and, if applicable, the Transfer Agent shall countersign and
deliver in exchange therefor, a new Certificate evidencing the same number and
type of Partnership Interests as the Certificate so surrendered.
(b)    The appropriate officers of the General Partner on behalf of the General
Partner on behalf of the Partnership shall execute and deliver, and, if
applicable, the Transfer Agent shall countersign a new Certificate in place of
any Certificate previously issued if the Record Holder of the Certificate:
(xiv)    makes proof by affidavit, in form and substance satisfactory to the
General Partner, that a previously issued Certificate has been lost, destroyed
or stolen;
(xv)    requests the issuance of a new Certificate before the General Partner
has notice that the Certificate has been acquired by a purchaser for value in
good faith and without notice of an adverse claim;
(xvi)    if requested by the General Partner, delivers to the General Partner a
bond, in form and substance satisfactory to the General Partner, with surety or
sureties and with fixed or open penalty as the General Partner, in its sole
discretion, may direct to indemnify the Partnership, the Partners, the General
Partner and, if applicable, the Transfer Agent against any claim that may be
made on account of the alleged loss, destruction or theft of the Certificate;
and
(xvii)    satisfies any other reasonable requirements imposed by the General
Partner.
If a Record Holder fails to notify the General Partner within a reasonable
period of time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Limited Partner Interests represented by the
Certificate is registered before the Partnership, the General Partner or the
Transfer Agent receives such notification, the Record Holder shall be precluded
from making any claim against the Partnership, the General Partner or the
Transfer Agent for such transfer or for a new Certificate.
(c)    As a condition to the issuance of any new Certificate under this
Section 12.07, the General Partner may require the payment of a sum sufficient
to cover any tax or other

 
73
 

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

 

governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Transfer Agent, if applicable)
reasonably connected therewith.
Record Holders. The Partnership shall be entitled to recognize the Record Holder
as the owner with respect to any Partnership Interest and, accordingly, shall
not be bound to recognize any equitable or other claim to or interest in such
Partnership Interest on the part of any other Person, regardless of whether the
Partnership shall have actual or other notice thereof, except as otherwise
provided by law or any applicable rule, regulation, guideline or requirement of
any National Securities Exchange on which such Partnership Interests are listed
for trading. Without limiting the foregoing, when a Person (such as a broker,
dealer, bank, trust company or clearing corporation or an agent of any of the
foregoing) is acting as nominee, agent or in some other representative capacity
for another Person in acquiring and/or holding Partnership Interests, as between
the Partnership on the one hand, and such other Persons on the other, such
representative Person shall be the Record Holder of such Partnership Interest.
ARTICLE XIII    

DISSOLUTION, LIQUIDATION AND TERMINATION
Dissolution. The Partnership shall not be dissolved by the admission of
Additional Limited Partners or Substituted 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"):
(y)    a final and nonappealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and nonappealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless, prior
to the entry of such order or judgment, a Majority in Interest of the remaining
Outside 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 a date prior to the date of such order or judgment, of a
successor General Partner;
(z)    an election to dissolve the Partnership made by the General Partner in
its sole and absolute discretion, with or without the Consent of a Majority in
Interest of the Outside Limited Partners;
(aa)    entry of a decree of judicial dissolution of the Partnership pursuant to
the provisions of the Act;
(bb)    the occurrence of a Terminating Capital Transaction; or
(cc)    the Redemption (or acquisition by the General Partner) of all
Partnership Units other than Partnership Units held by the General Partner; or

 
74
 

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

 

(dd)    the Incapacity or withdrawal of the General Partner, unless all of the
remaining Partners in their sole and absolute discretion agree in writing to
continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such Incapacity, of a substitute General Partner.
Winding Up.
(j)    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 Outside 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:
(i)    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);
(ii)    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 7.04 hereof;
(iii)    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
(iv)    The balance, if any, to the General Partner, the Limited Partners and
any Assignees in accordance with their 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.
(k)    Notwithstanding the provisions of Section 13.02(a) hereof that require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation

 
75
 

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

 

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 13.02(a) hereof, undivided interests in such Partnership assets as the
Liquidator deems not suitable for liquidation. Any such distributions in kind
shall be made only if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interest of the Partners, and shall be
subject to such conditions relating to the disposition and management of such
properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property distributed in
kind using such reasonable method of valuation as it may adopt.
(l)    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 any
Partner has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs) (a "Capital Account Deficit"),
such Partner shall not be required to make any contribution to the capital of
the Partnership with respect to such Capital Account Deficit and such Capital
Account Deficit shall not be considered a debt owed to the Partnership or any
other person for any purpose whatsoever.
(m)    Notwithstanding the provisions of Section 13.02(c), (i) if the General
Partner has a Capital Account Deficit, the General Partner shall contribute to
the capital of the Partnership the amount necessary to restore such Capital
Account Deficit balance to zero; (ii) if a DRO Partner has a Capital Account
Deficit, such DRO Partner shall be obligated to make a contribution to the
Partnership with respect to such DRO Partner's Capital Account Deficit balance
upon a liquidation of the Partnership or a "liquidation" of such Partner's
Partnership Interest within the meaning of Regulations
Section 1.704‑1(b)(2)(ii)(g) (which term shall include a redemption by the
Partnership of such DRO Partner's Partnership Interest upon exercise of the
Redemption right) in an amount equal to the lesser of (x) such DRO Partner's
Capital Account Deficit balance or (y) such DRO Partner's DRO Amount; and
(iii) the second sentence of Section 13.02(c) shall not apply with respect to
any other Partner to the extent, but only to the extent, that such Partner
previously has agreed in writing, with the consent of the General Partner, to
undertake an express obligation to restore all or any portion of a deficit that
may exist in its Capital Account upon a liquidation of the Partnership. Solely
for purposes of determining a DRO Partner's Capital Account balance upon a
liquidation of such Partner's Partnership Interest, the General Partner shall
redetermine the Gross Asset Value of the Partnership's assets on such date based
upon the principles set forth in the definition of "Gross Asset Value," and
shall take into account the DRO Partner's allocable share of any unrealized gain
or unrealized loss resulting from such adjustment in determining the DRO
Partner's Capital Account balance. No Partner shall have any right to become a
DRO Partner, to increase its DRO Amount, or otherwise agree to restore any
portion of any Capital Account Deficit without the express written consent of
the General Partner, in its sole and absolute discretion. The General Partner
shall not have the right to eliminate or decrease any Partner's DRO Amount
without the written consent of such Partner unless otherwise agreed to by the
parties. Any contribution required of a Partner under

 
76
 

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

 

this Section 13.02(d) shall be made on or before the later of (i) the end of the
Partnership Year in which the interest is liquidated or (ii) the ninetieth
(90th) day following the date of such liquidation. The proceeds of any
contribution to the Partnership made by a DRO Partner with respect to such DRO
Partner's Capital Account Deficit balance shall be treated as a Capital
Contribution by such DRO Partner and the proceeds thereof shall be treated as
assets of the Partnership to be applied as set forth in Section 13.02(a).
(n)    In furtherance of Section 13.02(d)(ii), a DRO Partner shall cease to be a
DRO Partner upon a disposition of all of such DRO Partner's remaining OP Units
(including upon an exercise of a Redemption right) six months after the date of
such disposition unless at the time of, or during the six-month period
following, such disposition, there has been any of the following:
(i)    an entry of a decree or order for relief in respect of the Partnership by
a court having jurisdiction over a substantial part of the Partnership's assets,
or the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Partnership or of any
substantial part of its property, or ordering the winding up or liquidation of
the Partnership's affairs, in an involuntary case under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law; or
(ii)    the commencement against the Partnership of an involuntary case under
the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law; or
(iii)    the commencement by the Partnership of a voluntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to the entry of an order for relief in an involuntary case under
any such law or the consent by it to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Partnership or of any substantial part of its property,
or the making by it of a general assignment for the benefit of creditors, or the
failure of the Partnership generally to pay its debts as such debts become due
or the taking of any action in furtherance of any of the foregoing; or
(iv)    the Partnership becoming insolvent.
Following the passage of the six-month period described in this
Section 13.02(e), a DRO Partner shall cease to be a DRO Partner at the first
time, if any, that all of the conditions set forth in (i) through (iv) above are
not in existence.
(o)    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:
(i)    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

 
77
 

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

 

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 or the Liquidator, 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
(ii)    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 13.02(a) hereof as soon as practicable.
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 13.03 shall be deemed
to have constituted any Assignee as a Substituted Limited Partner without
compliance with the provisions of Section 11.04 hereof.
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 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.
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 13.01 hereof, result in a dissolution of the Partnership,
the General Partner shall, within 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).
Cancellation of Certificate of Limited Partnership. Upon the completion of the
liquidation of the Partnership cash and property as provided in Section 13.02
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

 
78
 

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

 

than the State of Delaware shall be cancelled, and such other actions as may be
necessary to terminate the Partnership shall be taken.
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 13.02 hereof, in order to minimize
any 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
Procedures for Actions and Consents of Partners. The actions requiring consent
or approval of Limited Partners pursuant to this Agreement, including
Section 7.03 hereof, or otherwise pursuant to applicable law, rule or
regulation, are subject to the procedures set forth in this Article XIV.
Amendments. Amendments to this Agreement requiring Consent of the Limited
Partners may be proposed only by the General Partner. 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 10 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. Notwithstanding
anything to the contrary in this Agreement, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
contemplated by Section 7.03(c) or as is otherwise contemplated by this
Agreement.
Meetings of the Partners.
(f)    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 Outside Limited Partners (unless such requirement
conflicts with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the OP Units are listed for trading, in which case
the rule, regulation, guideline or requirement of such National Securities
Exchange shall govern). The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Record Holders not
less than seven days nor more than 90 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 14.03(e) hereof.

 
79
 

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

 

(g)    For purposes of determining the Partners entitled to notice of or to vote
at a meeting of the Partners or to give approvals without a meeting as provided
in Section 14.03(e), the General Partner may set a Partnership Record Date,
which shall not be less than 10 nor more than 90 days before (i) the date of the
meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the OP Units are
listed for trading, in which case the rule, regulation, guideline or requirement
of such National Securities Exchange shall govern) or (ii) in the event that
approvals are sought without a meeting, the date by which Partners are requested
in writing by the General Partner to give such approvals. If the General Partner
does not set a Partnership Record Date, then (x) the Partnership Record Date for
determining the Partners entitled to notice of or to vote at a meeting of the
Partners shall be the close of business on the day immediately preceding the day
on which notice of the meeting is given, and (y) the Partnership Record Date for
determining the Partners entitled to give approvals without a meeting shall be
the date the first written approval is filed with the General Partner in
accordance with Section 14.03(e) hereof.
(h)    At any meeting of Partners, the presence in person or by proxy of
Partners entitled to cast a majority of all the votes entitled to be cast at
such meeting on any matter shall constitute a quorum; but this section shall not
affect any requirement under any applicable law or this Agreement for the vote
necessary for the approval of any matter. The Partners present either in person
or by proxy, at a meeting which has been duly called and at which a quorum has
been established, may continue to transact business until adjournment,
notwithstanding the withdrawal from the meeting of enough Partners to leave
fewer than would be required to establish a quorum.
(i)     When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting and a new Partnership Record Date need not be
fixed, if the time and place thereof are announced at the meeting at which the
adjournment is taken, unless such adjournment shall be for more than 120 days.
At the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than 120 days or if a new Partnership Record Date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given in accordance with
this Section 14.03.
(j)    If authorized by the General Partner, 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) (unless such requirement
conflicts with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the OP Units are listed for trading, in which case
the rule, regulation, guideline or requirement of such National Securities
Exchange shall govern). The General Partner may specify that any written
consent, if any, for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner in its sole discretion. 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.

 
80
 

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

 

(k)    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 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 Delaware General
Corporation Law (including Section 212 thereof).
(l)    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 stockholders and may be held at the same time as, and as part of, the
meetings of the General Partner's stockholders.
(m)    On matters on which Limited Partners are entitled to vote, each Limited
Partner holding OP Units shall have a vote equal to the number of OP Units held.
(n)    Except as otherwise expressly provided in this Agreement, the Consent of
Holders of Partnership Interests representing a majority of the Partnership
Interests of the Limited Partners shall control.
(o)    All references in this Agreement to votes of, or other acts that may be
taken by, the Holders of Partnership Interests shall be deemed to be references
to the votes or acts of the Record Holders of such Partnership Interests.
ARTICLE XV    

GENERAL PROVISIONS
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 or
electronic communication (including by telecopy, facsimile, electronic mail or
commercial courier service) to the Partner or Assignee at the address set forth
in the books and records of the Partnership or the Transfer Agent or such other
address of which the Partner shall notify the General Partner in accordance with
this Section 15.01.
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.

 
81
 

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

 

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.
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.
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.
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.
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.
Applicable Law.
(a)    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.
(b)    Each Partner hereby (i) submits to the non-exclusive jurisdiction of any
state or federal court sitting in the State of New York (collectively, the "New
York Courts"), with respect to any dispute arising out of this Agreement or any
transaction contemplated hereby to the extent such courts would have subject
matter jurisdiction with respect to such dispute, (ii) irrevocably waives, and
agrees not to assert by way of motion, defense, or otherwise, in any such
action, any claim that it is not subject personally to the jurisdiction of any
of the New York Courts, that its property is exempt or immune from attachment or
execution, that the action is brought in an inconvenient forum, or that the
venue of the action is improper, (iii) agrees that notice or the service of
process in any action, suit or proceeding arising out of or relating to this
Agreement or the

 
82
 

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

 

transactions contemplated hereby shall be properly served or delivered if
delivered to such Partner at such Partner's last known address as set forth in
the Partnership's books and records, and (iv) irrevocably waives any and all
right to trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
Entire Agreement. This Agreement contains all of the understandings and
agreements between and among the Partners with respect to the subject matter of
this Agreement and the rights, interests and obligations of the Partners with
respect to the Partnership. Notwithstanding the immediately preceding sentence,
the Partners hereby acknowledge and agree that the General Partner, without the
approval of any Limited Partner, may enter into side letters or similar written
agreements with Limited Partners that are not Affiliates of the General Partner,
executed contemporaneously with the admission of such Limited Partner to the
Partnership, affecting the terms hereof, as negotiated with such Limited Partner
and which the General Partner in its sole discretion deems necessary, desirable
or appropriate. The parties hereto agree that any terms, conditions or
provisions contained in such side letters or similar written agreements with a
Limited Partner shall govern with respect to such Limited Partner
notwithstanding the provisions of this Agreement.
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.
Limitation to Preserve REIT Qualification. Notwithstanding anything else in this
Agreement, to the extent that the amount paid, credited, distributed or
reimbursed by the Partnership to the General Partner or its officers, directors,
employees or agents, whether as a reimbursement, fee, expense or indemnity (a
"REIT Payment"), would constitute gross income to the General Partner for
purposes of Code Section 856(c)(2) or Code Section 856(c)(3), then,
notwithstanding any other provision of this Agreement, the amount of such REIT
Payments, as selected by the 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 the General Partner, shall not exceed the lesser of:
(i)    an amount equal to the excess, if any, of (a) 4.9% of the General
Partner's total gross income (but excluding the amount of any REIT Payments) for
the Partnership Year that is described in subsections (A) through (H) of Code
Section 856(c)(2) over (b) the amount of gross income (within the meaning of
Code Section 856(c)(2)) derived by the General Partner from sources other than
those described in subsections (A) through (H) of Code Section 856(c)(2) (but
not including the amount of any REIT Payments); or
(ii)    an amount equal to the excess, if any, of (a) 24% of the General
Partner's total gross income (but excluding the amount of any REIT Payments) for
the Partnership Year that is described in subsections (A) through (I) of Code
Section 856(c)(3) over (b) the amount of gross income (within the meaning of
Code Section 856(c)(3)) derived by the General Partner from sources other than
those described in subsections (A) through (I) of Code Section 856(c)(3) (but
not including the amount of any REIT Payments); provided, however, that REIT
Payments in excess of the amounts set forth in clauses (i) and (ii) above may be
made if the General Partner,

 
83
 

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

 

as a condition precedent, obtains an opinion of tax counsel that the receipt of
such excess amounts shall not adversely affect the General Partner's ability to
qualify as a REIT. To the extent that REIT Payments may not be made in a
Partnership Year as a consequence of the limitations set forth in this
Section 15.11, 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 General Partner from failing
to qualify as a REIT by reason of the General Partner's share of items,
including distributions, payments, 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.
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.
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 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.
No Rights as Stockholders of General Partner. 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.
Creditors. Other than as expressly set forth herein with respect to Indemnitees,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
[signature page follows]

 
84
 

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

 

IN WITNESS WHEREOF, this First Amended and Restated Agreement of Limited
Partnership has been executed as of the date first written above.
GENERAL PARTNER:
EMPIRE STATE REALTY TRUST, INC.
By:
/s/ Anthony E. Malkin                
Name: Anthony E. Malkin
Title: Chief Executive Officer and President

ALL LIMITED PARTNERS

* * * * * * * * * ** * * * ** * * * ** * * * ** * * * *
Each Limited Partner named on the applicable Consent Form and/or named as a
Limited Partner in the books and records of the Partnership or the Transfer
Agent.
* * * * * * * * * ** * * * ** * * * ** * * * ** * * * *

 
85
 

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

A
Exhibit A
[OMITTED]

 
1
 

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

 
2
 

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

B
Exhibit B

NOTICE OF REDEMPTION
To:
Empire State Realty Trust, Inc.
[Address]

The undersigned Limited Partner or Assignee hereby irrevocably tenders for
Redemption _______ [SERIES ___ OP Units] (the "OP Units") in Empire State Realty
OP, L.P. in accordance with the terms of the First Amended and Restated
Agreement of Limited Partnership of Empire State Realty OP, L.P., dated as of
_________, 2012 (the "Agreement"), and the Redemption rights referred to
therein. The undersigned Limited Partner or Assignee:
(a)    undertakes (i) to surrender such OP 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 8.06(g) 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 OP
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 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 OP Units until and unless
either (1) such OP Units are acquired by the General Partner pursuant to
Section 8.06(b) of the Agreement or (2) such redemption transaction closes.

 
1
 

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

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

 
2
 

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

 
Name of Limited Partner or Assignee:
   
   
 
(Signature of Limited Partner or Assignee)
   
 
(Street Address)
         
 
(City) (State) (Zip Code)
Signature Medallion Guaranteed by:
   

 
3
 

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

Issue Check Payable/Class A REIT Shares to:

Name:
   
 

 
   
Please insert social security or identifying number:
   

 
4
 

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

C
Exhibit C

DRO PARTNERS AND DRO AMOUNTS
DRO PARTNER
DRO AMOUNT
 
 
 
 
 
 
 
 
 
 

 
1
 

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

D
Exhibit D

NOTICE OF ELECTION BY PARTNER TO CONVERT LTIP UNITS INTO OP UNITS
The undersigned Holder of LTIP Units hereby irrevocably (i) elects to convert
the number of LTIP Units in Empire State Realty OP, L.P. (the "Partnership") set
forth below into Series PR OP Units in accordance with the terms of the Amended
and Restated Agreement of Limited Partnership of the Partnership, as amended;
and (ii) directs that any cash in lieu of Series PR OP Units that may be
deliverable upon such conversion be delivered to the address specified below.
The undersigned hereby represents, warrants, and certifies that the undersigned
(a) has title to such LTIP Units, free and clear of the rights of interests of
any other person or entity other than the Partnership; (b) has the full right,
power, and authority to cause the conversion of such LTIP Units as provided
herein; and (c) has obtained the consent or approval of all persons or entitles,
if any, having the right to consent or approve such conversion.
Name of Holder:                                             

(Please Print: Exact Name as Registered with Partnership)
Number of LTIP Units to be Converted:                    
Date of this Notice:                                
                                            

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

(Street Address)
                                            

(City)                    (State)                (Zip Code)
Signature Medallion Guaranteed by:                                

 
1
 

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

E
Exhibit E

NOTICE OF ELECTION BY PARTNERSHIP TO FORCE CONVERSION OF LTIP UNITS INTO OP
UNITS
Empire State Realty OP, L.P. (the "Partnership") hereby irrevocably elects to
cause the number of LTIP Units held by the Holder of LTIP Units set forth below
to be converted into Series PR OP Units in accordance with the terms of the
Amended and Restated Agreement of Limited Partnership of the Partnership, as
amended.
Name of Holder:                                             

(Please Print: Exact Name as Registered with Partnership)
Number of LTIP Units to be Converted:                    
Date of this Notice:                                

 
- E-1-