Document:

EX-10.1

 

EXHIBIT 10.1

AMENDED AND RESTATED

MANAGEMENT AND ADVISORY AGREEMENT

               THIS AMENDED AND RESTATED MANAGEMENT AND ADVISORY AGREEMENT is made as January 18, 2005 (the
“Agreement”) by and among ARBOR REALTY TRUST, INC., a Maryland corporation (“Parent
REIT”), ARBOR REALTY LIMITED PARTNERSHIP, a Delaware limited partnership (the “Operating
Partnership”), ARBOR REALTY SR, INC., a Maryland corporation (“Sub-REIT” and together
with the Parent REIT and the Operating Partnership, the “Company”), and ARBOR COMMERCIAL
MORTGAGE, LLC, a New York limited liability company (together with its permitted assigns,
“Manager”).

WITNESSETH:

               WHEREAS, Parent REIT, Manager and the Operating Partnership have entered into that certain
Management and Advisory Agreement, dated as of July 1, 2003 (the “Original Management
Agreement”).

               WHEREAS, Parent REIT currently conducts its operations and makes substantially all of its
investments through the Operating Partnership;

               WHEREAS, Parent REIT intends to cause the Operating Partnership to contribute substantially
all of the assets directly or indirectly held by the Operating Partnership to Sub-REIT in exchange
for shares of common stock of Sub-REIT;

               WHEREAS, a subsidiary of the Sub-REIT has been formed in order to issue debt and equity
securities collateralized by certain of the assets to be contributed by the Operating Partnership
to Sub-REIT (the “CDO Financing”);

               WHEREAS, in order to maintain Parent REIT’s qualification as a REIT (as defined below) upon
consummation of the CDO Financing, Parent REIT intends to make its investments primarily through
the Sub-REIT and its subsidiaries and cause Sub-REIT to qualify as a REIT for federal income tax
purposes; and

               WHEREAS, Parent REIT, Manager and the Operating Partnership desire to amend and restate the
Original Management Agreement in its entirety on the terms and conditions hereinafter set forth in
order to add Sub-REIT as a party.

               NOW THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto
agree as follows:

          1. Definitions. The following terms have the meanings assigned them:

               (a) “Agreement” has the meaning assigned in the first paragraph.

 

 

               (b) “Board of Directors” means the Board of Directors of Parent REIT.

               (c) “Change of Control” means a change in the direct or indirect (i) beneficial
ownership of more than fifty percent (50%) of the combined voting power (of any Person together
with any affiliates of such Person or Persons otherwise associated or acting in concert with such
Person) of Manager’s then outstanding equity interests, or (ii) power to direct or control the
management policies of Manager, whether through the ownership of beneficial equity interests,
common directors or officers, by contract or otherwise. Change of Control shall not include public
offerings of the capital stock of Manager or any assignment of this Agreement by Manager as
permitted hereby and in accordance with the terms hereof.

               (d) “Code” means the Internal Revenue Code of 1986, as amended.

               (e) “Common Share” means a share of capital stock of Parent REIT now or hereafter
authorized and issued as common voting stock of Parent REIT.

               (f) “Company” has the meaning assigned in the first paragraph.

               (g) “Company Account” has the meaning assigned in Section 5.

               (h) “Company Target Investments” means multifamily and commercial mortgage loans and
customized financing transactions, including bridge loans, mezzanine loans, preferred equity
investments, note acquisitions and participation interests in owners of real properties.

               (i) “Company Termination Notice” has the meaning assigned in Section 13(b).

               (j) “Deferred Interest” has the meaning assigned in Section 8(c).

               (k) “Effective Termination Date” has the meaning assigned in Section 13(b).

               (l) “Excess Funds” has the meaning assigned in Section 2(f).

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

               (n) “Expenses” has the meaning assigned in Section 9.

               (o) “Funds from Operations” has the meaning assigned by the National Association of
Real Estate Investment Trusts and means net income (computed in accordance with GAAP) excluding
gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization
on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures.

               (p) “GAAP” means generally accepted accounting principles in effect in the U.S. on the
date such principles are applied, consistently applied.

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               (q) “Governing Instruments” means, with respect to any Person, the articles of
incorporation and bylaws in the case of a corporation, the certificate of limited partnership (if
applicable) and partnership agreement in the case of a general or limited partnership or the
articles of formation and operating agreement in the case of a limited liability company.

               (r) “Guidelines” has the meaning assigned in Section 2(b)(i).

               (s) “Incentive Fee” has the meaning assigned in Section 8(d)(i).

               (t) “Incentive Fee Payment” has the meaning assigned in Section 8(d)(ii).

               (u) “Independent Directors” means the members of the Board of Directors who are not
officers or employees of Manager or the Company and who are otherwise “independent” in accordance
with Parent REIT’s Governing Instruments.

               (v) “Invested Equity” has the meaning assigned in Section 8(a)(i).

               (w) “Investment Company Act” means the Investment Company Act of 1940, as amended.

               (x) “Investments” means the investments of the Company.

               (y) “Management Fee” has the meaning assigned in Section 8(a)(i).

               (z) “Management Fee Payment” has the meaning assigned in Section 8(a)(ii).

               (aa) “Manager” has the meaning assigned in the first paragraph.

               (bb) “Manager Indemnified Party” has the meaning assigned in Section 11(b).

               (cc) “Manager Parties” has the meaning assigned in Section 3(b).

               (dd) “Manager Target Investments” has the meaning assigned in Section 3(c).

               (ee) “Manager Termination Notice” has the meaning assigned in Section 13(d).

               (ff) “Notice of Proposal to Negotiate” has the meaning assigned in Section 13(c).

               (gg) “Non-Competition Agreement” means that certain Non-Competition Agreement, dated
as of July 1, 2003, among Parent REIT, the Operating Partnership and Principal.

               (hh) “OP Unit” means a unit of partnership interest in the Operating Partnership now
or hereafter authorized and issued as a unit of partnership interest in the Operating Partnership.

               (ii) “Operating Partnership” has the meaning assigned in the first paragraph.

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               (jj) “Parent REIT” has the meaning assigned in the first paragraph.

               (kk) “Person” means any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.

               (ll) “Principal” means Ivan Kaufman, an individual.

               (mm) “REIT” means a corporation or trust which qualifies as a real estate investment
trust in accordance with Sections 856 through 860 of the Code.

               (nn) “Services Agreement” means that certain Services Agreement, dated as of July 1,
2003, among Parent REIT, the Operating Partnership and Manager.

               (oo) “Subsidiary” means any entity of which Parent REIT directly or indirectly owns
the majority of the outstanding voting equity interests, any partnership, the general partner of
which is Parent REIT or any subsidiary of Parent REIT and any limited liability company, the
managing member of which is Parent REIT or any subsidiary of Parent REIT.

               (pp) “Ten Year U.S. Treasury Rate” means the arithmetic average of the weekly average
yield to maturity for actively traded current coupon U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of ten (10) years) published by the Federal Reserve Board during a
fiscal year, or, if such rate is not published by the Federal Reserve Board, any Federal Reserve
Bank or agency or department of the federal government selected by the Company. If the Company
determines in good faith that the Ten Year U.S. Treasury Rate cannot be calculated as provided
above, then the rate will be the arithmetic average of the per annum average yields to maturities,
based upon closing asked prices on each business day during a quarter, for each actively traded
marketable U.S. Treasury fixed interest rate security with a final maturity date not less than
eight (8) and not more than twelve (12) years from the date of the closing asked prices as chosen
and quoted for each business day in each such quarter in New York City by at least three (3)
recognized dealers in U.S. government securities selected by the Company.

               (qq) “U.S.” means United States of America.

          2. Appointment and Duties of Manager.

               (a) Appointment. The Company hereby appoints Manager to manage the Investments of the
Company subject to the further terms and conditions set forth in this Agreement, and Manager hereby
agrees to use its commercially reasonable efforts to perform each of the duties set forth herein.
The appointment of Manager shall be exclusive to Manager except to the extent that Manager
otherwise agrees, in its sole and absolute discretion, and except to the extent that Manager elects
pursuant to the terms of this Agreement to cause the duties of Manager hereunder to be provided by
third parties.

               (b) Duties. Manager, in its capacity as manager of the Investments and the day-to-day
operations of the Company, at all times will be subject to the supervision of the

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Board of
Directors and the board of directors of the Sub-REIT and will have only such functions and
authority as the Company may delegate to it, including, without limitation, the functions and
authority identified herein and delegated to Manager hereby. Manager will be responsible for the
day-to-day operations of the Company and will perform (or cause to be performed) such services and
activities relating to the Investments and operations of the Company as may be appropriate,
including, without limitation:

                    (i) serving as the Company’s consultant with respect to the periodic review of the
investment criteria and parameters for Investments, borrowings and operations, any
modifications to which shall be approved by a majority of the Independent Directors (such
policy guidelines as are in effect on the date hereof, as the same may be modified with such
approval, the “Guidelines”), and other policies for approval by the Board of
Directors;

                    (ii) investigation, analysis and selection of investment opportunities;

                    (iii) with respect to prospective investments by the Company and dispositions of
Investments, conducting negotiations with real estate brokers, sellers and purchasers, and
their respective agents and representatives, investment bankers, mortgage bankers and owners
of privately and publicly held real estate companies;

                    (iv) coordinating and managing operations of any joint venture or co-investment
interests held by the Company and conducting all matters with the joint venture or
co-investment partners;

                    (v) providing executive and administrative personnel, office space and office services
required in rendering services to the Company;

                    (vi) administering the day to day operations of the Company and performing and
supervising the performance of such other administrative functions necessary in the
management of the Company as may be agreed upon by Manager and the Board of Directors,
including, without limitation, collection of interest, fee and other income, payment of the
Company’s debts and obligations, payment of dividends or distributions to the holders of the
Common Shares and maintenance of appropriate back-office infrastructure to perform such
administrative functions;

                    (vii) communicating on behalf of the Company with the holders of any equity or debt
securities of the Parent REIT or its Subsidiaries as required to satisfy the reporting and
other requirements of any governmental entities or agencies or trading markets and to
maintain effective relations with such holders;

                    (viii) counseling the Company in connection with policy decisions to be made by the
Board of Directors or the board of directors or similar governing bodies of the
Subsidiaries;

                    (ix) evaluating and recommending to the Board of Directors hedging strategies and, as
the Board of Directors shall request or Manager shall deem appropriate, engaging in hedging
activities on behalf of the Company, in a manner consistent with

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such strategies, as so
modified from time to time, Parent REIT’s status as a REIT, Sub-REIT’s status as a REIT and
the Guidelines;

                    (x) counseling Parent REIT and Sub-REIT regarding the maintenance of their status as
REITs and monitoring compliance with the various REIT qualification tests and other rules
set out in the Code and the Treasury Regulations promulgated thereunder;

                    (xi) counseling the Company regarding the maintenance of its exemption from the
Investment Company Act and monitoring compliance with the requirements for maintaining such
exemption;

                    (xii) assisting the Company in developing criteria for debt and equity financing that
is specifically tailored to the Company’s investment objectives, making available to the
Company its knowledge and experience with respect to Company Target Investments and other
real estate and real estate-related transactions and serving as the originating lender of
such investments comprising Company Target Investments;

                    (xiii) representing and making recommendations to the Company in connection with its
investment in a diversified portfolio of Company Target Investments and other real estate
transactions with select borrowers and principals;

                    (xiv) investing and re-investing any moneys and securities of the Company (including
investing in short-term investments pending investment in Investments, payment of fees,
costs and expenses or payments of dividends or distributions to stockholders and partners of
the Company) and advising the Company with respect to its capital structure and capital
raising;

                    (xv) causing the Company to retain qualified accountants and legal counsel, as
applicable, to assist in developing appropriate accounting and compliance procedures and
testing systems with respect to financial reporting obligations, as applicable, and Parent
REIT and Sub-REIT’s compliance with the provisions of the Code applicable to REITs and the
Treasury Regulations promulgated thereunder and to conduct quarterly compliance reviews with
respect thereto;

                    (xvi) causing the Company to qualify to do business in all applicable jurisdictions and
to obtain and maintain all appropriate licenses;

                    (xvii) assisting the Company in complying with all regulatory requirements applicable
to the Company in respect of its business activities, including preparing or causing to be
prepared all financial statements required under applicable regulations and contractual
undertakings and all reports and documents required under the Exchange Act;

                    (xviii) taking all necessary actions to enable the Company to make required tax filings
and reports, including, with respect to Parent REIT and Sub-REIT, soliciting stockholders
for required information to the extent provided by the provisions of the Code applicable to
REITs and the Treasury Regulations promulgated thereunder;

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                    (xix) handling and resolving all claims, disputes or controversies (including all
litigation, arbitration, settlement or other proceedings or negotiations) in which the
Company may be involved or to which the Company may be subject arising out of the Company’s
day-to-day operations, subject to such limitations or parameters as may be imposed from time
to time by the Board of Directors;

                    (xx) using commercially reasonable efforts to cause expenses incurred by or on behalf
of the Company to be reasonable, customary and within any budgeted parameters or expense
guidelines set by the Board of Directors from time to time;

                    (xxi) using commercially reasonable efforts to cause the Company to comply with all
applicable laws; and

                    (xxii) performing such other services as may be required from time to time for
management and other activities relating to the Investments of the Company as the Board of
Directors shall reasonably request or Manager shall deem appropriate under particular
circumstances.

               (c) Subcontracts. Manager may enter into agreements with other parties, including its
affiliates, for the purpose of engaging one or more property and/or asset managers for and on
behalf, and at the sole cost and expense, of the Company to provide property management, asset
management, leasing, development and/or similar services to the Company with respect to the
Investments, pursuant to property management agreement(s) and/or asset management agreement(s) with
terms which are then customary for agreements regarding the management of assets similar in type,
quality and value to the assets of the Company; provided, that any such agreements entered into
with affiliates of Manager shall be (i) on terms no more favorable to such affiliate then would be
obtained from a third party on an arm’s-length basis, and (ii) to the extent the same do not fall
within the provisions of the Guidelines, approved by a majority of the Independent Directors.

               (d) Service Providers. Manager may retain for and on behalf of the Company such
services of accountants, legal counsel, appraisers, insurers, brokers, transfer agents, registrars,
developers, investment banks, financial advisors, banks, other lenders and other Persons, including
Manager’s affiliates, as Manager deems necessary or advisable in connection with the management and
operations of the Company; provided, that any agreements entered into with affiliates of Manager to
perform any such services shall be (i) on terms no more favorable to such affiliate then would be
obtained from a third party on an arm’s-length basis, and (ii) to the extent the same do not fall
within the provisions of the Guidelines, approved by a majority of the Independent Directors. The
Company shall pay all expenses, and reimburse Manager for Manager’s expenses incurred on its
behalf, in connection with any such services to the extent such expenses are reimbursable by the
Company to Manager pursuant to Section 9.

               (e) Reporting Requirements.

                    (i) As frequently as Manager may deem necessary or advisable, or at the direction of
the Board of Directors, Manager shall prepare, or cause to be prepared, with respect to any
Investment (i) at the Company’s sole cost and expense, an appraisal

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prepared by an
independent real estate appraiser, (ii) reports and information on the Company’s operations
and Investment performance, and (iii) such other information reasonably requested by the
Company. The Company shall pay all expenses, and reimburse Manager for Manager’s expenses
incurred on its behalf, in connection with the foregoing clauses (ii) and (iii) to the
extent such expenses are reimbursable by the Company to Manager pursuant to Section 9.

               (f) Manager shall prepare, or cause to be prepared, at the sole cost and expense of the
Company, all reports, financial or otherwise, with respect to Parent REIT, the Operating
Partnership, Sub-REIT and the other Subsidiaries reasonably required by the Board of Directors in
order for Parent REIT, the Operating Partnership, Sub-REIT and the other Subsidiaries to comply
with their Governing Instruments or any other materials required to be filed with any governmental
entity or agency, and shall prepare, or cause to be prepared, all materials and data necessary to
complete such reports and other materials including, without limitation, an annual audit of the
Company’s books of account by a nationally recognized independent accounting firm of good
reputation.

                    (i) Manager shall prepare regular reports for the Board of Directors to enable the
Board of Directors to review the Company’s acquisitions, portfolio composition and
characteristics, credit quality, performance and compliance with the Guidelines and policies
approved by the Board of Directors.

               (g) Excess Funds. Notwithstanding anything contained in this Agreement to the
contrary, except to the extent that the payment of additional moneys is proven by the Company to
have been required as a direct result of Manager’s acts or omissions which result in the right of
the Company to terminate this Agreement pursuant to Section 15 and except as expressly provided in
Section 11(c), Manager shall not be required to expend money (“Excess Funds”) in excess of
that contained in any applicable Company Account or otherwise made available by the Company to be
expended by Manager hereunder.

               (h) Reliance by Manager. In performing its duties under this Section 2, Manager shall
be entitled to rely reasonably on qualified experts and professionals (including, without
limitation, accountants, legal counsel and other professional service providers) hired by Manager.

          3. Dedication; Right of First Refusal; Exclusivity; Survival.

               (a) Devotion of Time. Manager will provide a dedicated management team, including the
Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer of Manager, to
provide the management services to be provided by Manager to the Company hereunder, the members of
which team shall devote such of their time to the
management of the Company as the Independent Directors deem necessary and appropriate,
commensurate with the level of activity of the Company from time to time. The Company shall have
the benefit of Manager’s best judgment and effort in rendering services and, in furtherance of the
foregoing, Manager shall not undertake activities which, in its reasonable judgment, will
substantially adversely affect the performance of its obligations under this Agreement.

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               (b) Additional Activities; Right of First Refusal. Except to the extent set forth in
Section 3(a) and subject to the provisions of this Section 3(b), Manager and any of its affiliates,
and any of the officers and employees of any of the foregoing (the “Manager Parties”), may
engage in other businesses and render services of any kind to any other Person, including
investment in, or advisory service to others investing in, Company Target Investments and other
real estate and real estate-related transactions; provided, however, prior to any Manager Party
engaging in transactions involving or rendering services relating to Company Target Investments
other than on behalf of or to the Company, if (i) such transaction is consistent with the Company’s
investment objectives and within the Guidelines, and (ii) the parameters of the transaction are of
a character which would not adversely affect the status of Parent REIT or Sub-REIT as REITs,
Manager shall offer such investment opportunity to the Company by delivering to the Company’s
credit committee a written description thereof containing the economic and other material terms of
the transaction. The credit committee shall have five (5) days to accept or reject the offer by a
majority vote of the members of the credit committee. If the credit committee rejects the offer,
Manager shall present the investment opportunity to the Independent Directors who shall have five
(5) days to accept or reject the offer by majority vote. If the Independent Directors reject the
offer and allow Manager to pursue the investment opportunity, any Manager Party may pursue the same
provided the economic and other material terms thereof are not materially more beneficial to the
applicable Manager Party than the economic and other material terms to the Company would have been
under the transaction described in the original offer. If the economic and other material terms of
the transaction to be engaged in by the applicable Manager Party are modified so that the benefits
thereof to the applicable Manager Party are materially more beneficial to the applicable Manager
Party than such terms to the Company would have been under the transaction described in the
original offer, then Manager must offer the revised transaction opportunity to the Company and the
provisions of this Section 3(b) shall apply to the revised offer as though it were an original
offer. If the Company accepts, either by majority vote of the credit committee or the Independent
Directors, an investment opportunity offered by Manager hereunder, the Company must reimburse
Manager for its expenses relating thereto to the extent the same would be reimbursable by the
Company to Manager pursuant to Section 9. For the avoidance of doubt, the Manager Parties may not
pursue an investment opportunity offered to the Company hereunder without the Independent
Directors’ permission to do so as otherwise contemplated in this Section 3(b).

               (c) Manager Exclusivity Rights. Manager and any other Manager Party may, and the
Company agrees not to, pursue any investment opportunities consisting of multifamily and commercial
mortgage loans that meet the underwriting and approval guidelines of (i) Fannie Mae, (ii) the
Federal Housing Administration, and (iii) conduit commercial lending programs secured by first
liens on real property (collectively, “Manager Target Investments”).

               (d) Officers, Employees, Etc. Manager, members, partners, officers, employees and
agents of Manager or affiliates of Manager may serve as directors, officers,
employees, agents, nominees or signatories for Parent REIT, the Operating Partnership,
Sub-REIT or any other Subsidiary, to the extent permitted by their Governing Instruments, as may be
amended from time to time, or by any resolutions duly adopted by the Board of Directors pursuant to
Parent REIT’s Governing Instruments. When executing documents or otherwise acting in such
capacities for Parent REIT, the Operating Partnership, Sub-REIT or such other

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Subsidiary, such
Persons shall use their respective titles with respect to Parent REIT, the Operating Partnership,
Sub-REIT or such other Subsidiary.

               (e) Survival; Origination Period. For a period of one (1) year following the
expiration or earlier termination of this Agreement, Manager shall continue (and have the exclusive
right, if (i) the Company did not terminate this Agreement for cause, or (ii) Manager terminated
this Agreement for cause, as cause for each party is determined in accordance with Section 15) to
serve as the originating lender of investments comprising Company Target Investments as
contemplated under Section 2(b)(xii), and the provisions and terms of Sections 3(b), 3(c) and 8(b)
shall continue to apply. For the avoidance of doubt, Manager will not earn the Management Fee or
the Incentive Fee during this one (1) year period.

          4. Agency. Manager shall act as agent of the Company in making, acquiring, financing
and disposing of Investments, disbursing and collecting the Company’s funds, paying the debts and
fulfilling the obligations of the Company, supervising the performance of professionals engaged by
or on behalf of the Company and handling, prosecuting and settling any claims of or against the
Company, the Board of Directors, holders of Parent REIT, the Operating Partnership, Sub-REIT or any
other Subsidiary’s securities or the Company’s representatives or properties.

          5. Bank Accounts. At the direction of the Board of Directors, Manager may establish
and maintain one or more bank accounts in the name of Parent REIT, the Operating Partnership,
Sub-REIT or any other Subsidiary (any such account, a “Company Account”), collect and
deposit funds into any such Company Account or Company Accounts and disburse funds from any such
Company Account or Company Accounts, under such terms and conditions as the Board of Directors may
approve. Manager shall from time-to-time render appropriate accountings of such collections and
payments to the Board of Directors and, upon request, to the auditors of Parent REIT.

          6. Records; Confidentiality.

               (a) Records. Manager shall maintain appropriate books of account and records relating
to services performed under this Agreement, and such books of account and records shall be
accessible for inspection by representatives of Parent REIT, the Operating Partnership, Sub-REIT or
any other Subsidiary at any time during normal business hours upon one (1) business day’s advance
written notice.

               (b) Confidentiality. Manager shall keep confidential any nonpublic information
obtained in connection with the services rendered under this Agreement and shall
not disclose any such information (or use the same except in furtherance of its duties under
this Agreement), except: (i) with the prior written consent of the Board of Directors; (ii) to
legal counsel, accountants and other professional advisors, so long as Manager informs such Persons
of the confidential nature of such information and directs them to treat such information
confidentially; (iii) to appraisers in the ordinary course of business; (iv) to governmental
officials having jurisdiction over Manager; (v) as required by law or legal process to which
Manager or any Person to whom disclosure is permitted hereunder is a party or in connection with
Manager’s assertion in any judicial or nonjudicial proceeding of any claim, counterclaim or defense
against

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the Company; or (vi) information which has previously become available through the actions
of a Person other than Manager not resulting from Manager’s violation of this Section 6(b). The
provisions of this Section 6(b) shall survive the expiration or earlier termination of this
Agreement.

          7. Obligations of Manager; Restrictions.

               (a) Asset Representations and Warranties. Manager shall require each seller or
transferor of investment assets to the Company to make such representations and warranties
regarding such assets as may, in the judgment of Manager, be necessary and appropriate. In
addition, Manager shall take such other action as it deems necessary or appropriate with regard to
the protection of the Investments.

               (b) Restrictions. Manager shall refrain from any action that, in its sole judgment
made in good faith, (i) is not in compliance with the Guidelines, (ii) would adversely affect the
status of Parent REIT or Sub-REIT as REITs, or (iii) would violate any law, rule or regulation of
any governmental body or agency having jurisdiction over Parent REIT, the Operating Partnership,
Sub-REIT or any other Subsidiary or that would otherwise not be permitted by such Person’s
Governing Instruments. If Manager is ordered to take any such action by the Board of Directors,
Manager shall promptly notify the Board of Directors of Manager’s judgment that such action would
adversely affect such status or violate any such law, rule or regulation or Governing Instruments.
Notwithstanding the foregoing, Manager, its directors, officers, stockholders and employees shall
not be liable to Parent REIT, the Operating Partnership, Sub-REIT or any other Subsidiary, the
Board of Directors, Parent REIT or Sub-REIT’s stockholders or the Operating Partnership’s partners
for any act or omission by Manager, its directors, officers, stockholders or employees except as
provided in Section 11.

               (c) Interested Party Transaction. Manager shall not (i) consummate any transaction
which would involve the acquisition by the Company of property in which Manager or any of its
affiliates has an ownership interest or the sale by the Company of property to Manager or any of
its affiliates, or (ii) under circumstances where Manager is subject to an actual or potential
conflict of interest because it manages both the Company and another Person (not an affiliate of
the Company) with which the Company has a contractual relationship, take any action constituting
the granting to such other Person of a waiver, forebearance or other relief, or the enforcement
against such other Person of remedies, under or with respect to the applicable contract, unless
such transaction or action, as the case may be and in each case, is approved by a majority of the
Independent Directors.

               (d) Joint Ventures. The Company shall not invest in joint ventures with Manager or
any of its affiliates, unless such Investment is (i) made in accordance with the Guidelines, and
(ii) approved in advance by a majority of the Independent Directors.

               (e) Board of Director Review. The Board of Directors periodically reviews the
Guidelines and the Company’s portfolio of Investments. If a majority of the Independent Directors
determine in their periodic review of transactions that a particular transaction does not comply
with the Guidelines, then a majority of the Independent Directors will consider what corrective
action, if any, can be taken.

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               (f) Insurance. Manager shall at all times during the term of this Agreement
(including the initial term and any renewal term) maintain a tangible net worth equal to or greater
than $1,000,000. In addition, Manager shall maintain “errors and omissions” insurance coverage and
such other insurance coverage which is customarily carried by property, asset and investment
managers performing functions similar to those of Manager under this Agreement with respect to
assets similar to the Investments of the Company, in an amount which is comparable to that
customarily maintained by other managers or servicers of similar assets.

          8. Compensation.

               (a) Management Fee.

                    (i) During the term of this Agreement, the Company shall pay Manager an annual
management fee (the “Management Fee”) based on Equity, as follows:

                         (A) 0.75% per annum of Equity up to $400,000,000 of Equity;

                         (B) in the event that Equity is greater than $400,000,000, the amount set forth
in clause (A) above plus 0.625% per annum of Equity in excess of $400,000,000 and up
to $800,000,000; and

                         (C) in the event that Equity is greater than $800,000,000, the amounts set
forth in clauses (A) and (B) above plus 0.5% per annum of Equity in excess of
$800,000,000.

“Equity” means, computed in accordance with GAAP as of the end of each calendar month, (1)
the total equity of Parent REIT and all limited partners of the Operating Partnership, plus or
minus, as applicable (2) any unrealized gains, losses or other items that do not affect realized
net income of the Operating Partnership.

                    (ii) The Management Fee shall be payable in arrears in cash, in monthly installments,
and Manager shall calculate each installment thereof (taking into account any reductions of
the Management Fee pursuant to Section 8(c) hereof and Section 1(c) of the Services
Agreement), and deliver such calculation to the Board of Directors, within fifteen (15) days
following the last day of each calendar month. The
Company shall pay Manager each installment of the Management Fee (each, a
“Management Fee Payment”) within twenty (20) days following the last day of the
calendar month with respect to which such Management Fee Payment is payable.

                    (iii) The provisions of this Section 8(a) shall survive the expiration or earlier
termination of this Agreement; provided, however, the Management Fee is subject to
adjustment pursuant to and in accordance with the provisions of Section 13(c).

               (b) Origination Fees. With respect to Manager’s origination of Company Target
Investments consisting of bridge and mezzanine loans pursuant to Section 2(b)(xii), the Company
shall pay Manager an amount equal to the origination fee paid by the borrower thereunder, up to a
maximum amount of one percent (1.0%) of the original principal amount of

12

 

such loan. Any remaining
portion of the origination fee shall be retained by the Company. The provisions of this Section
8(b) shall survive the expiration or earlier termination of this Agreement and the one-year
origination period described in Section 3(e).

               (c) Waiver of Deferred Interest. Manager agrees to cooperate with the Company with
respect to the characterization of exit fees payable by the applicable borrower under any of the
Investments as interest or deferred interest pursuant to the terms of the applicable loan documents
(“Deferred Interest”) in such a manner that the characterization thereof as interest or
deferred interest is reasonably likely to be accepted for U.S. federal income tax purposes. With
respect to Investments other than the initial assets contributed by Manager to the Operating
Partnership on July 1, 2003, Manager shall use commercially reasonable efforts to structure the
applicable loan documents in a manner intended to achieve such characterization of exit fees. With
respect to the Investments whose terms provide for the payment of Deferred Interest, the Company
agrees to waive any or all Deferred Interest payable in accordance with the terms of the applicable
loan documents or if such borrowers refinance their respective loans with permanent financing
consisting of Manager Target Investments. To the extent that any such Deferred Interest is so
waived, the Management Fee Payment due to Manager for the month in which such waiver is made shall
be reduced by an amount equal to fifty percent (50%) of the amount of the Deferred Interest waived.
In the event the aggregate of any such debits then available and unapplied against a Management
Fee Payment exceeds the amount of the Management Fee Payment payable for any given calendar month,
the excess unapplied debit shall be carried over and applied as a credit against the Management Fee
Payment otherwise payable in the next succeeding calendar month or months until fully applied. In
the event, upon the expiration or earlier termination of this Agreement, any excess debits remain
to be applied against the Management Fee Payments, Manager shall pay to the Company the amount of
such excess unapplied debits.

               (d) Incentive Fee.

                    (i) In addition to the Management Fee, the Company shall pay Manager an annual
incentive fee (the “Incentive Fee”) on a cumulative, but not compounding, basis,
equal to the product of (A) twenty-five percent (25%) of the dollar amount by which (1)(a)
the Operating Partnership’s Funds from Operations (before giving effect to payment of the
Incentive Fee) per OP Unit (based on the weighted average number of OP Units outstanding,
including OP Units issued to Parent REIT
corresponding to outstanding Common Shares), plus (b) gains (or losses) from debt
restructuring and sales of property per OP Unit (based on the weighted average number of OP
Units outstanding, including OP Units issued to Parent REIT corresponding to outstanding
Common Shares), exceed (2) the product of (a) the weighted average (based on Common Shares
and OP Units) of (i) the book value per OP Unit of the net assets contributed by Manager to
the Operating Partnership on July 1, 2003, (ii) $15, (iii) the offering price per Common
Share (including Common Shares issued upon the exercise of warrants or options) at any
secondary Common Share offerings by Parent REIT (adjusted for any prior capital dividends or
distributions), and (iv) the issue price per OP Unit for subsequent contributions to the
Operating Partnership, and (b) the greater of (i) nine and one-half percent (9.5%) per
annum, and (ii) the Ten Year U.S. Treasury Rate plus three and one-half percent (3.5%) per
annum, and (B) the weighted average number of OP

13

 

Units outstanding, including OP Units
issued to Parent REIT corresponding to outstanding Common Shares.

                    (ii) The Incentive Fee shall be payable annually in arrears; provided, however, Manager
shall receive quarterly installments thereof in advance, and Manager shall calculate each
such installment based on the period of twelve (12) months ending on the last day of the
fiscal quarter with respect to which such installment is payable (provided, for calendar
year 2003, such calculations shall be based on the period of three (3) or six (6) months, as
applicable, ending on the last day of the fiscal quarter with respect to which such
installment is payable), and deliver such calculation to the Board of Directors, within
forty-five (45) days following the last day of each fiscal quarter. The Company shall pay
Manager each installment of the Incentive Fee (each, an “Incentive Fee Payment”)
within sixty (60) days following the last day of the fiscal quarter with respect to which
such Incentive Fee Payment is payable.

                    (iii) Twenty-five percent (25%) of the Incentive Fee shall (subject to the remaining
provisions of this Section 8(d)(iii)) be payable to Manager in Common Shares, and the
remainder thereof shall be paid in cash; provided, Manager may (subject to the remaining
provisions of this Section 8(d)(iii)) elect, by so indicating in the installment calculation
delivered to Board of Directors, to receive more than twenty-five percent (25%) of the
Incentive Fee in the form of Common Shares; provided, however, Manager may not receive
payment of any portion of the Incentive Fee in the form of Common Shares, either
automatically or by election, if such payment would result a violation of the Common Share
ownership restrictions set forth in Parent REIT’s Governing Instruments. For purposes of
determining the Common Share equivalent of the amount of the Incentive Fee payable in Common
Shares, (A) prior to the date the Common Shares are publicly traded, each Common Share shall
have a value equal to the book value per Common Share on the last day of the fiscal quarter
with respect to which the Incentive Fee is being paid, and (B) from and after the date the
Common Shares are publicly traded, each Common Share shall have a value equal to the average
of the closing price per Common Share of the last (20) trading days of the fiscal quarter
with respect to which the Incentive Fee is being paid. Manager’s receipt of Common Shares
in accordance herewith shall be subject to all applicable securities exchange rules and
securities laws (including, without limitation, prohibitions on insider trading).

                    (iv) Each Incentive Fee Payment shall be deemed to be an advance of a portion of the
Incentive Fee payable for the subject fiscal year. Manager shall calculate the Incentive
Fee payable during the immediately preceding fiscal year (or partial fiscal year, if
applicable, following the expiration or earlier termination of this Agreement), and deliver
such calculation to the Board of Directors, within seventy-five (75) days following (A) the
last day of each fiscal year during the term, and (B) the date of expiration or earlier
termination of this Agreement. If the amount of the Incentive Fee for such fiscal year (or
partial fiscal year, if applicable) exceeds the sum of the Incentive Fee Payments made
during such fiscal year (or partial fiscal year, if applicable), the Company shall pay
Manager the amount of such underpayment, subject to the provisions of Section 8(d)(iii),
within fifteen (15) days after the date Manager delivers such calculation to the Board of
Directors. If the amount of the Incentive Fee for such fiscal

14

 

year (or partial fiscal year,
if applicable) is less than the sum of the Incentive Fee Payments made during such fiscal
year (or partial fiscal year, if applicable), Manager shall refund to the Company the amount
of such overpayment, in cash, within fifteen (15) days after the date Manager delivers such
calculation to the Board of Directors.

                    (v) The provisions of this Section 8(d) shall survive the expiration or earlier
termination of this Agreement.

          9. Expenses. The Company shall pay all of its expenses and shall reimburse Manager
for documented expenses of Manager incurred on its behalf in accordance with this Agreement
(collectively, the “Expenses”). Expenses include all costs and expenses which are
expressly designated elsewhere in this Agreement as the Company’s expenses, together with the
following:

               (a) expenses in connection with the issuance and transaction costs incident to the
acquisition, disposition and financing of Investments;

               (b) legal, accounting, tax and auditing fees and expenses of third parties for services
rendered for the Company by providers retained by Manager;

               (c) compensation, benefits and expenses of the Independent Directors and the Company’s
employees;

               (d) travel and other out-of-pocket expenses incurred by the Company’s employees in connection
with the purchase, financing, refinancing, sale or other disposition of Investments;

               (e) compensation and expenses of the Company’s custodian and transfer agent, if any;

               (f) the cost of liability insurance to indemnify (i) the Company’s directors and officers,
(ii) Manager and its directors and employees, and (iii) the underwriters in connection with any
securities offerings of Parent REIT, the Operating Partnership, Sub-REIT or any other Subsidiary;

               (g) any litigation, arbitration or similar costs incurred by Manager on behalf of the Company
relating to or arising from any claim, dispute or action brought by or against the Company;

               (h) costs associated with the establishment and maintenance of any credit facilities or other
indebtedness of the Company (including, without limitation, commitment and origination fees, legal
fees, closing and other costs) or any securities offerings of Parent REIT, the Operating
Partnership, Sub-REIT or any other Subsidiary;

               (i) costs incurred in raising capital for the Company, including fees and expenses of
investment banks, financial advisors, banks and other lenders;

15

 

               (j) key man life insurance costs for the Chief Executive Officer of Parent REIT;

               (k) expenses relating to interest payments, dividends or distributions in cash or any other
form made or caused to be made by the Board of Directors to or on account of the holders of
securities or units of Parent REIT, the Operating Partnership, Sub-REIT or any other Subsidiary,
including, without limitation, in connection with any dividend reinvestment plan;

               (l) expenses relating to the production and distribution of communications to holders of
securities or units of Parent REIT, the Operating Partnership, Sub-REIT or any other Subsidiary and
other bookkeeping and clerical work necessary to maintain relations with the holders of such
securities or units and to comply with the continuous reporting and other requirements of
governmental entities or agencies, including, without limitation, (i) costs of preparing and filing
required reports with the Securities and Exchange Commission, (ii) costs payable by Parent REIT to
any transfer agent or registrar in connection with the listing and/or trading of the Common Shares
on any exchange, (iii) fees payable by Parent REIT to any such exchange in connection with its
listing, and (iv) costs of preparing, printing and mailing Parent REIT’s annual report to its
shareholders and proxy materials with respect to any meeting of Parent REIT’s shareholders;

               (m) other costs and expenses relating to the Company’s business and investment operations,
including, without limitation, the costs and expenses of acquiring, owning, protecting,
maintaining, developing and disposing of Investments, including taxes, license fees and appraisal,
reporting, audit and legal fees; and

               (n) such other extraordinary or non-recurring expenses as are incurred by Manager in
connection with the performance of its services hereunder, provided, to the extent the same are
incurred with respect to matters that do not fall within the provisions of the Guidelines, such
expenses are approved by a majority of the Independent Directors.

               Without regard to the amount of compensation received under this Agreement by Manager, Manager
shall bear the following expenses: (i) the wages and salaries of Manager’s officers and employees;
(ii) rent attributable to the offices occupied by Manager separate from the office maintained for
the Company; and (iii) all other “overhead” expenses of Manager. The foregoing notwithstanding,
Manager agrees that it shall provide, at its expense, office space to the Company’s employees.

          10. Expense
Reports and Reimbursements.  Manager shall prepare a statement documenting
the Expenses incurred during, and deliver the same to the Company within forty-five (45) days
following, each fiscal quarter. Expenses incurred by Manager on behalf of the Company shall be
reimbursed by the Company within sixty (60) days following each fiscal quarter. The provisions of
this Section 10 shall survive the expiration or earlier termination of this Agreement and the
one-year origination period described in Section 3(e).

          11. Limits of Manager Responsibility; Indemnification.

               (a) Limits
of Manager Responsibility.  Manager assumes no responsibility under this
Agreement other than to render the services set forth herein in good faith and shall not

16

 

be responsible for any action of the Board of Directors in following or declining to follow any advice
or recommendations of Manager, including as set forth in Section 7(b). Manager, its members,
managers, officers and employees will not be liable to Parent REIT, Sub-REIT, the Operating
Partnership, any other Subsidiary, the Board of Directors, Parent REIT or the Sub-REIT’s
stockholders, the Operating Partnership’s partners or any other Subsidiary’s stockholders or
partners for any acts or omissions by Manager, its members, managers, officers or employees
pursuant to or in accordance with this Agreement, except as otherwise expressly provided in Section
11(c).

               (b) Indemnification
by Company.  Parent REIT, Sub-REIT and/or the Operating
Partnership shall, to the full extent lawful, reimburse, indemnify and hold Manager, its members,
managers, officers and employees and each other Person, if any, controlling Manager (each, a
“Manager Indemnified Party”) harmless for and from any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’
fees and disbursements), excluding any claims by Manager’s employees relating to the terms and
conditions of their employment by Manager, in respect of or arising out of (i) any acts or
omissions of such Manager Indemnified Party made in good faith in the performance of Manager’s
duties hereunder and not constituting such Manager Indemnified Party’s bad faith, willful
misconduct, gross negligence or material breach (beyond any applicable cure period) of Manager’s
duties under this Agreement, and (ii) the Company’s or any of its shareholder’s, director’s,
officer’s or employee’s bad faith, willful misconduct, gross negligence or material breach (beyond
any applicable cure period) of the Company’s obligations under this Agreement.

               (c) Indemnification
by Manager.  Manager shall, to the full extent lawful, reimburse,
indemnify and hold each of Parent REIT, Sub-REIT and the Operating Partnership, its shareholders,
directors, officers and employees and each other Person, if any, controlling Parent REIT, Sub-REIT
or the Operating Partnership harmless for and from any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’
fees and disbursements) in respect of or arising out of (i) Manager’s or any of its member’s,
manager’s, officer’s or employee’s bad faith, willful misconduct, gross negligence or material
breach (beyond any applicable cure period) of
Manager’s duties under this Agreement, and (ii) any claims by Manager’s employees relating to
the terms and conditions of their employment by Manager.

               (d) Survival.
 The provisions of this Section 11 shall survive the expiration or
earlier termination of this Agreement and the one-year origination period described in Section
3(e).

          12. No
Joint Venture.  Nothing in this Agreement shall be construed to make the
Company and Manager partners or joint venturers or impose any liability as such on either of them.

          13. Term; Termination.

     (a) Term.
 This Agreement shall remain in full force and effect for a period of two
(2) years following the date hereof and, unless terminated by the Company or Manager as

17

 

set forth below, shall be renewed automatically for successive one (1) year periods thereafter, until this
Agreement is terminated in accordance with the terms hereof.

               (b) Non-Renewal/Termination
Without Cause by Company.  If the Company elects not to
renew this Agreement at the expiration of the initial term or any renewal term thereafter as set
forth in Section 13(a), or otherwise desires at any time after the expiration of the initial term
to terminate this Agreement without cause, the Company shall deliver to Manager at least six (6)
months’ prior written notice thereof (the “Company Termination Notice”). In the Company
Termination Notice, the Company shall specify the date, not less than six (6) months from the date
of the Company Termination Notice, on which this Agreement shall terminate (the “Effective
Termination Date”). For the avoidance of doubt, the Company shall not have the right to
terminate this Agreement without cause during the initial term hereof.

               (c) Unfair
Manager Compensation.  The Company may terminate this Agreement in
accordance with the terms and provisions of Section 13(b), effective upon six (6) months’ prior
written notice to Manager and payment to Manager of a termination fee equal to two (2) times the
amount of the Management Fee and the Incentive Fee earned by Manager during the period of twelve
(12) full calendar months most recently ended prior to such termination, for any reason. If such
reason arises from a decision made by majority vote of the Independent Directors that the
Management Fee payable to Manager is unfair, the Company shall not have the foregoing termination
right in the event Manager agrees to continue to perform its duties hereunder at a fee that the
Independent Directors determine to be fair; provided, however, Manager shall have the right to
renegotiate the Management Fee by delivering to the Company, not less than three (3) months prior
to the pending Effective Termination Date, written notice (a “Notice of Proposal to
Negotiate”) of its intention to renegotiate the Management Fee. Thereupon, the Company and
Manager shall endeavor to negotiate the Management Fee in good faith. Provided that the Company
and Manager agree to a revised Management Fee (or other compensation structure) within three (3)
months following the Company’s receipt of the Notice of Proposal to Negotiate, the Company
Termination Notice shall be deemed of no force and effect, and this Agreement shall continue in
full force and effect on the terms stated herein,
except that the Management Fee shall be the revised Management Fee (or other compensation
structure) then agreed upon by the Company and Manager. The Company and Manager agree to execute
and deliver an amendment to this Agreement setting forth such revised Management Fee promptly upon
reaching an agreement regarding same. In the event that the Company and Manager are unable to
agree to a revised Management Fee during such three (3) month period, this Agreement shall
terminate on the Effective Termination Date. The Company’s obligation to pay the termination fee
set forth in this Section 13(c) shall survive the termination of this Agreement.

               (d) Non-Renewal/Termination
Without Cause by Manager.  If Manager elects not to renew
this Agreement at the expiration of the initial term or any renewal term thereafter as set forth in
Section 13(a), or otherwise desires at any time after the expiration of the initial term to
terminate this Agreement without cause, Manager shall deliver to the Company at least six (6)
months’ prior written notice thereof (the “Manager Termination Notice”). In the Manager
Termination Notice, Manager shall specify the date, not less than six (6) months from the date of
the Manager Termination Notice, on which this Agreement shall terminate. This Agreement shall
terminate on the date specified in the Manager Termination Notice. For the avoidance of

18

 

doubt, Manager shall not have the right to terminate this Agreement without cause during the initial term
hereof.

               (e) Termination Fees.

                    (i)
Payable by Company.  In the event the Company elects not to renew or
terminates this Agreement without cause as permitted under Section 13(b) as a result of its
decision to manage its assets internally, the Company shall pay to Manager, on the effective
date of such termination, a termination fee equal to the amount of the Management Fee and
the Incentive Fee earned by Manager during the period of twelve (12) full calendar months
most recently ended prior to such termination. In the event the Company elects not to renew
or terminates this Agreement without cause for any reason other than a decision to manage
its assets internally, the termination fee payable by the Company to Manager shall be equal
to two (2) times the amount of the Management Fee and the Incentive Fee earned by Manager
during the period of twelve (12) full calendar months most recently ended prior to such
termination. The Company’s obligation to pay a termination fee shall survive the
termination of this Agreement.

                    (ii)
Payable by Manager.  Prior to the third (3rd) anniversary of the date
hereof, in the event Manager: (A) elects not to renew or terminates this Agreement without
cause (but only as permitted under Section 13(d)) within two (2) years after a Change of
Control occurred or within two (2) years after Manager executed an agreement that would
result in a Change of Control; or (B) delivered a Manager Termination Notice indicating its
election not to renew or to terminate this Agreement (but only as permitted under Section
13(d)), then a Change of Control occurs or Manager executes an agreement that will result in
a Change of Control within one (1) year thereafter, Manager shall pay to the Company, on the
effective date of termination of this Agreement, a termination fee equal to two (2) times
the amount of the Management Fee and the Incentive Fee earned by Manager during the period
of twelve (12) full calendar months most recently ended prior to such termination. Manager’s obligation to pay such termination fee shall
survive the termination of this Agreement.

               (f) Survival.
 If this Agreement is terminated pursuant to this Section 13, such
termination shall be without any further liability or obligation of either party to the other,
except as otherwise expressly provided herein.

          14. Assignment.

               (a) Manager
Assignment.  Except as set forth in Section 14(c), this Agreement shall
terminate at the Company’s election and without payment of any termination fee, and any such
assignment shall be null and void, in the event of its assignment, in whole or in part, by Manager,
unless Manager obtains the prior written consent of Parent REIT and a majority of the Independent
Directors; provided, however, no such consent shall be required in the case of an assignment by
Manager to any affiliate whose day-to-day business and operations are managed and supervised by
Principal. Any permitted assignment by Manager shall bind the assignee in the same manner as
Manager is bound by the terms of this Agreement, and Manager shall be liable to the Company for all
errors or omissions of the assignee under any such

19

 

assignment. In addition, the assignee shall
execute and deliver to the Company a counterpart of this Agreement naming such assignee as Manager.
For purposes of this Section 14(a) and Section 14(c), “affiliate” means any Person controlling,
controlled by or under common control with Manager, and “control” means the direct or indirect
ownership of at least fifty-one percent (51%) of the beneficial equity interests in and voting
power of such Person (and “controlling” and “under common control with” have meanings correlative
to the foregoing).

               (b) Parent
REIT Assignment.  This Agreement shall not be assigned by Parent REIT
without Manager’s prior written consent; provided, however, no such consent shall be required in
the case of an assignment by Parent REIT to (i) a Subsidiary to which Parent REIT is also assigning
its general partnership interest in the Operating Partnership, or (ii) a REIT or other organization
which is a successor (by merger, consolidation or purchase of assets) to Parent REIT, in which case
such successor organization shall be bound under this Agreement and by the terms of such assignment
in the same manner as Parent REIT is bound by the terms of this Agreement.

               (c) Manager
Affiliate Subcontract and Partial Assignment.  Notwithstanding any
provision of this Agreement, Manager may subcontract and assign any or all of its responsibilities
under Sections 2(b), (c) and (d) to any of its affiliates whose day-to-day business and operations
are managed and supervised by Principal in accordance with the terms of this Agreement applicable
to any such subcontract or assignment, and the Company hereby consents to any such subcontract and
assignment. In addition, provided that Manager provides prior written notice to the Company for
informational purposes only, nothing contained in this Agreement shall preclude any pledge,
hypothecation or other transfer of any amounts payable to Manager under this Agreement.

          15. Termination for Cause.

               (a) By
Company.  The Company may terminate this Agreement, by a majority vote of the
Independent Directors and without payment of a termination fee, if:

                    (i) Manager commits fraud or acts or fails to act in a manner that constitutes gross
negligence in the performance of its duties hereunder;

                    (ii) Manager misappropriates or embezzles Company funds;

                    (iii) Manager commits some other willful violation of this Agreement in its corporate
capacity (as distinguished from the acts of any employees of Manager which are taken without
the complicity of Principal);

                    (iv) Parent REIT removes Principal from the position of Chief Executive Officer of
Parent REIT for cause (as cause is defined in and interpreted in accordance with the
Non-Competition Agreement);

                    (v) a Change of Control occurs;

                    (vi) Principal is no longer Chief Executive Officer of Manager (provided such condition
is not a result of Principal’s death, disability or incapacity); or

20

 

                    (vii) Manager defaults in the performance or observance of any material term, condition
or covenant contained in this Agreement to be performed or observed on its part, and such
default continues for a period of thirty (30) days after written notice thereof from the
Company specifying such default and requesting that the same be remedied within such thirty
(30) day period; provided, however, Manager shall have an additional sixty (60) days to cure
such default if (A) such default cannot reasonably be cured with in thirty (30) days but can
be cured within ninety (90) days, and (B) Manager shall have commenced to cure such default
within the initial thirty (30) day period and thereafter diligently proceeds to cure the
same within ninety (90) days of the date of the Company’s original notice of the default.

Termination of this Agreement pursuant to this Section 15(a) shall become effective, in case of the
foregoing (A) clauses (i) through (iv), upon seven (7) days’ prior written notice to Manager, (B)
clauses (v) and (vi), upon thirty (30) days’ prior written notice to Manager, and (C) clause (vii),
in the event of Manager’s failure to cure and provided the Company has delivered to Manager a
termination notice, upon the expiration of the applicable cure period.

               (b) By
Manager.  Manager may terminate this Agreement, without payment of a
termination fee, if the Company defaults in the performance or observance of any material term,
condition or covenant contained in this Agreement to be performed or observed on its part, and such
default continues for a period of thirty (30) days after written notice thereof from Manager
specifying such default and requesting that the same be remedied within such thirty (30) day
period. This Agreement shall terminate, in the event of the Company’s failure to cure and provided
Manager has delivered to the Company a termination notice, upon the expiration of such thirty (30)
day cure period.

          16. Action
Upon Termination or Expiration of Origination Period.  From and after the
effective date of termination of this Agreement pursuant to Sections 13, 14 or 15 or the expiration
of the origination period described in Section 3(e), as applicable, Manager shall not be entitled
to compensation for further services under this Agreement but shall be paid all compensation
accruing to the date of termination or expiration of the origination period, as applicable, and a
termination fee, if applicable. Upon such termination or expiration, Manager shall forthwith:

               (a) after deducting any accrued compensation and reimbursement for Expenses to which it is
then entitled, pay over to the Company all money collected and held for the account of the Company
pursuant to this Agreement;

               (b) deliver to the Board of Directors a full accounting, including a statement showing all
payments collected and all money held by it, covering the period following the date of the last
accounting furnished to the Board of Directors with respect to the Company; and

               (c) deliver to the Board of Directors all property and documents of the Company provided to or
obtained by Manager pursuant to or in connection with this Agreement, including all copies and
extracts thereof in whatever form, then in Manager’s possession or under its control.

21

 

          17. Release
of Money or other Property Upon Written Request.  Manager agrees that any
money or other property of the Company held by Manager under this Agreement shall be held by
Manager as custodian for the Company, and Manager’s records shall be clearly and appropriately
marked to reflect the ownership of such money or other property by the Company. Upon the receipt
by Manager of a written request signed by a duly authorized officer of the Company requesting
Manager to release to the Company any money or other property then held by Manager for the account
of the Company under this Agreement, Manager shall release such money or other property to the
Company within a reasonable period of time, but in no event later than sixty (60) days following
such request. Manager shall not be liable to the Company, the Independent Directors, Parent REIT
or Sub-REIT’s stockholders or the Operating Partnership’s partners for any acts or omissions by the
Company in connection with the money or other property released to the Company in accordance with
the terms hereof. The Company shall indemnify Manager and its members, managers, officers and
employees against any and all expenses, losses, damages, liabilities, demands, charges and claims
of any nature whatsoever which arise in connection with Manager’s release of such money or other
property to the Company in accordance with the terms of this Section 17. Indemnification pursuant
to this Section 17 shall be in addition to any right of Manager to indemnification under Section
11.

          18. Notices.
 Unless expressly provided otherwise in this Agreement, all notices,
requests, demands and other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received when delivered against
receipt or upon actual receipt of (a) personal delivery, (b) delivery by a reputable overnight
courier, (c) delivery by facsimile transmission against answerback, or (d) delivery by registered or
certified mail, postage prepaid, return receipt requested, addressed as set forth below:

	 	 	 
	If to Parent REIT, Sub-REIT
	 	 
	or the Operating Partnership:

	 	Arbor Realty Trust, Inc.
	

	 	333 Earle Ovington Boulevard, Suite 900
	

	 	Uniondale, New York 11553
	

	 	Attention: Frederick C. Herbst
	

	 	Facsimile: 516-832-8043
	 
	 	 
	If to Manager:

	 	Arbor Commercial Mortgage, LLC
	

	 	333 Earle Ovington Boulevard
	

	 	Uniondale, New York 11553
	

	 	Attention: Frederick C. Herbst
	

	 	Facsimile: 516-832-8043

               Any party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 18 for the
giving of notice.

          19. Binding
Nature of Agreement; Successors and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns as provided in this Agreement.

22

 

          20. Entire
Agreement.  This Agreement contains the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter of this Agreement. The
express terms of this Agreement control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms of this Agreement. This Agreement may not be modified or
amended other than by an agreement in writing signed by the parties hereto.

          21. Governing
Law.  This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed, interpreted and
enforced in accordance with the laws of the State of New York, notwithstanding any New York or
other conflict-of-law provisions to the contrary.

          22. Indulgences,
Not Waivers.  Neither the failure nor any delay on the part of a
party to exercise any right, remedy, power or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege
preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such waiver.

          23. Titles
Not to Affect Interpretation.  The titles of sections, paragraphs and
subparagraphs contained in this Agreement are for convenience only, and they neither form a part of
this Agreement nor are they to be used in the construction or interpretation of this Agreement.

          24. Execution
in Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts of this Agreement, individually or
taken together, shall bear the signatures of all of the parties reflected hereon as the
signatories.

          25. Provisions
Separable.  The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered invalid or unenforceable
by virtue of the fact that for any reason any other or others of them may be invalid or
unenforceable in whole or in part.

          26. Principles
of Construction.  Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context requires. All references to
recitals, sections, paragraphs and schedules are to the recitals, sections, paragraphs and
schedules in or to this Agreement unless otherwise specified.

23

 

          27. Amendments.
 This Agreement may be amended only in a writing signed by the parties
hereto; provided the same has been approved by a majority of the Independent Directors. The
approval of the holders of the Common Shares shall not be required for any amendments to this
Agreement.

          28. References to Original Management Agreement

     Any reference to the Original Management Agreement in any other document executed in
connection with the Original Management Agreement or this Agreement shall be deemed to refer to
this Agreement.

[NO FURTHER TEXT ON THIS PAGE]

24

 

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

	 	 	 	 	 
	 	Manager:

ARBOR COMMERCIAL MORTGAGE, LLC,

a New York limited liability company

 	 
	 	By:  	/s/ Frederick C. Herbst
 	 
	 	 	Name:  	Frederick C. Herbst 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	Parent REIT:

ARBOR REALTY TRUST, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ Frederick C. Herbst
 	 
	 	 	Name:  	Frederick C. Herbst 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	Operating Partnership:

ARBOR REALTY LIMITED PARTNERSHIP,

a Delaware limited partnership

By: Arbor Realty GPOP, Inc.,

a Delaware corporation,

its general partner

 	 
	 	By:  	/s/ Frederick C. Herbst
 	 
	 	 	Name:  	Frederick C. Herbst 	 
	 	 	Title:  	Treasurer 	 
	 
	 	Sub-REIT:

ARBOR REALTY SR, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ Frederick C. Herbst
 	 
	 	 	Name:  	Frederick C. Herbst 	 
	 	 	Title:  	Chief Financial OfficerEX-10.4

 

EXHIBIT 10.4

SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

ARBOR REALTY LIMITED PARTNERSHIP

a Delaware limited partnership

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),

OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,

TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH

REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP

AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM

AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT

THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE

EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER

APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

dated as of January 18, 2005

 

 

ARTICLE I DEFINED TERMS

ARTICLE II ORGANIZATIONAL MATTERS

	 	 	 	 	 	 	 
	Section 2.1

	 	Organization.
	 	 	15	 
	 
	 	 	 	 	 	 
	Section 2.2

	 	Name.
	 	 	15	 
	 
	 	 	 	 	 	 
	Section 2.3

	 	Registered Office and Agent; Principal Office.
	 	 	15	 
	 
	 	 	 	 	 	 
	Section 2.4

	 	Power of Attorney.
	 	 	15	 
	 
	 	 	 	 	 	 
	Section 2.5

	 	Term.
	 	 	16	 
	 
	 	 	 	 	 	 
	ARTICLE III PURPOSE

	 
	 	 	 	 	 	 
	Section 3.1

	 	Purpose and Business.
	 	 	16	 
	 
	 	 	 	 	 	 
	Section 3.2

	 	Powers.
	 	 	17	 
	 
	 	 	 	 	 	 
	Section 3.3

	 	Partnership Only for Partnership Purposes.
	 	 	17	 
	 
	 	 	 	 	 	 
	Section 3.4

	 	Representations and Warranties by the Parties.
	 	 	17	 
	 
	 	 	 	 	 	 
	ARTICLE IV CAPITAL CONTRIBUTIONS

	 
	 	 	 	 	 	 
	Section 4.1

	 	Capital Contributions of the Partners.
	 	 	19	 
	 
	 	 	 	 	 	 
	Section 4.2

	 	Issuances of Additional Partnership Interests.
	 	 	19	 
	 
	 	 	 	 	 	 
	Section 4.3

	 	Additional Funds and Capital Contributions.
	 	 	20	 
	 
	 	 	 	 	 	 
	Section 4.4

	 	Stock Option Plan.
	 	 	21	 
	 
	 	 	 	 	 	 
	Section 4.5

	 	No Interest; No Return.
	 	 	22	 
	 
	 	 	 	 	 	 
	Section 4.6

	 	Conversion or Redemption of Preferred Shares.
	 	 	22	 
	 
	 	 	 	 	 	 
	Section 4.7

	 	Conversion or Redemption of Junior Shares.
	 	 	22	 
	 
	 	 	 	 	 	 
	Section 4.8

	 	Other Contribution Provisions.
	 	 	22	 
	 
	 	 	 	 	 	 
	Section 4.9

	 	Not Publicly Traded.
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 4.10

	 	Warrants.
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 4.11

	 	Class A Preferred Units.
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 4.12

	 	Restricted Units.
	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE V DISTRIBUTIONS

	 
	 	 	 	 	 	 
	Section 5.1

	 	Requirement and Characterization of Distributions.
	 	 	23	 
	 
	 	 	 	 	 	 
	Section 5.2

	 	Distributions in Kind.
	 	 	24	 
	 
	 	 	 	 	 	 
	Section 5.3

	 	Amounts Withheld.
	 	 	24	 
	 
	 	 	 	 	 	 
	Section 5.4

	 	Distributions Upon Liquidation.
	 	 	24	 
	 
	 	 	 	 	 	 
	Section 5.5

	 	Distributions to Reflect Issuance of Additional Partnership Units.
	 	 	24	 
	 
	 	 	 	 	 	 
	Section 5.6

	 	Restricted Distributions.
	 	 	24	 
	 
	 	 	 	 	 	 
	ARTICLE VI ALLOCATIONS

	 
	 	 	 	 	 	 
	Section 6.1

	 	Timing and Amount of Allocations of Net Income and Net Loss.
	 	 	24	 
	 
	 	 	 	 	 	 
	Section 6.2

	 	General Allocations.
	 	 	24	 
	 
	 	 	 	 	 	 
	Section 6.3

	 	Additional Allocation Provisions.
	 	 	25	 

i

 

	 	 	 	 	 	 	 
	Section 6.4

	 	Tax Allocations.
	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS

	 
	 	 	 	 	 	 
	Section 7.1

	 	Management.
	 	 	27	 
	 
	 	 	 	 	 	 
	Section 7.2

	 	Certificate of Limited Partnership.
	 	 	30	 
	 
	 	 	 	 	 	 
	Section 7.3

	 	Restrictions on General Partner’s Authority.
	 	 	31	 
	 
	 	 	 	 	 	 
	Section 7.4

	 	Reimbursement of the General Partner.
	 	 	32	 
	 
	 	 	 	 	 	 
	Section 7.5

	 	Outside Activities of the General Partner.
	 	 	32	 
	 
	 	 	 	 	 	 
	Section 7.6

	 	Contracts with Affiliates.
	 	 	33	 
	 
	 	 	 	 	 	 
	Section 7.7

	 	Indemnification.
	 	 	33	 
	 
	 	 	 	 	 	 
	Section 7.8

	 	Liability of the General Partner.
	 	 	35	 
	 
	 	 	 	 	 	 
	Section 7.9

	 	Other Matters Concerning the General Partner.
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 7.10

	 	Title to Partnership Assets.
	 	 	36	 
	 
	 	 	 	 	 	 
	Section 7.11

	 	Reliance by Third Parties.
	 	 	36	 
	 
	 	 	 	 	 	 
	ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

	 
	 	 	 	 	 	 
	Section 8.1

	 	Limitation of Liability.
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 8.2

	 	Management of Business.
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 8.3

	 	Outside Activities of Limited Partners.
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 8.4

	 	Return of Capital.
	 	 	37	 
	 
	 	 	 	 	 	 
	Section 8.5

	 	Adjustment Factor.
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 8.6

	 	Redemption Rights of Qualifying Parties.
	 	 	38	 
	 
	 	 	 	 	 	 
	Section 8.7

	 	Partnership Right to Call Limited Partner Interests.
	 	 	41	 
	 
	 	 	 	 	 	 
	Section 8.8

	 	Mergers.
	 	 	42	 
	 
	 	 	 	 	 	 
	ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS

	 
	 	 	 	 	 	 
	Section 9.1

	 	Records and Accounting.
	 	 	42	 
	 
	 	 	 	 	 	 
	Section 9.2

	 	Partnership Year.
	 	 	42	 
	 
	 	 	 	 	 	 
	Section 9.3

	 	Reports.
	 	 	42	 
	 
	 	 	 	 	 	 
	ARTICLE X TAX MATTERS

	 
	 	 	 	 	 	 
	Section 10.1

	 	Preparation of Tax Returns.
	 	 	43	 
	 
	 	 	 	 	 	 
	Section 10.2

	 	Tax Elections.
	 	 	43	 
	 
	 	 	 	 	 	 
	Section 10.3

	 	Tax Matters Partner.
	 	 	43	 
	 
	 	 	 	 	 	 
	Section 10.4

	 	Withholding.
	 	 	44	 
	 
	 	 	 	 	 	 
	Section 10.5

	 	Organizational Expenses.
	 	 	44	 
	 
	 	 	 	 	 	 
	ARTICLE XI TRANSFERS AND WITHDRAWALS

	 
	 	 	 	 	 	 
	Section 11.1

	 	Transfer.
	 	 	45	 
	 
	 	 	 	 	 	 
	Section 11.2

	 	Transfer of General Partner’s Partnership Interest.
	 	 	45	 
	 
	 	 	 	 	 	 
	Section 11.3

	 	Transfer of Limited Partners’ Partnership Interests.
	 	 	46	 

ii

 

	 	 	 	 	 	 	 
	Section 11.4

	 	Substituted Limited Partners.
	 	 	47	 
	 
	 	 	 	 	 	 
	Section 11.5

	 	Assignees.
	 	 	47	 
	 
	 	 	 	 	 	 
	Section 11.6

	 	General Provisions.
	 	 	47	 
	 
	 	 	 	 	 	 
	ARTICLE XII ADMISSION OF PARTNERS

	 
	 	 	 	 	 	 
	Section 12.1

	 	Admission of Successor General Partner.
	 	 	48	 
	 
	 	 	 	 	 	 
	Section 12.2

	 	Admission of Additional Limited Partners.
	 	 	49	 
	 
	 	 	 	 	 	 
	Section 12.3

	 	Amendment of Agreement and Certificate of Limited Partnership.
	 	 	49	 
	 
	 	 	 	 	 	 
	Section 12.4

	 	Limit on Number of Partners.
	 	 	49	 
	 
	 	 	 	 	 	 
	ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION

	 
	 	 	 	 	 	 
	Section 13.1

	 	Dissolution.
	 	 	49	 
	 
	 	 	 	 	 	 
	Section 13.2

	 	Winding Up.
	 	 	50	 
	 
	 	 	 	 	 	 
	Section 13.3

	 	Deemed Distribution and Recontribution.
	 	 	51	 
	 
	 	 	 	 	 	 
	Section 13.4

	 	Rights of Limited Partners.
	 	 	51	 
	 
	 	 	 	 	 	 
	Section 13.5

	 	Notice of Dissolution.
	 	 	52	 
	 
	 	 	 	 	 	 
	Section 13.6

	 	Cancellation of Certificate of Limited Partnership.
	 	 	52	 
	 
	 	 	 	 	 	 
	Section 13.7

	 	Reasonable Time for Winding-Up.
	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE XIV PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS;

	AMENDMENTS; MEETINGS

	 
	 	 	 	 	 	 
	Section 14.1

	 	Procedures for Actions and Consents of Partners.
	 	 	52	 
	 
	 	 	 	 	 	 
	Section 14.2

	 	Amendments.
	 	 	52	 
	 
	 	 	 	 	 	 
	Section 14.3

	 	Meetings of the Partners.
	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE XV GENERAL PROVISIONS

	 
	 	 	 	 	 	 
	Section 15.1

	 	Addresses and Notice.
	 	 	53	 
	 
	 	 	 	 	 	 
	Section 15.2

	 	Titles and Captions.
	 	 	53	 
	 
	 	 	 	 	 	 
	Section 15.3

	 	Pronouns and Plurals.
	 	 	53	 
	 
	 	 	 	 	 	 
	Section 15.4

	 	Further Action.
	 	 	53	 
	 
	 	 	 	 	 	 
	Section 15.5

	 	Binding Effect.
	 	 	53	 
	 
	 	 	 	 	 	 
	Section 15.6

	 	Waiver.
	 	 	53	 
	 
	 	 	 	 	 	 
	Section 15.7

	 	Counterparts.
	 	 	54	 
	 
	 	 	 	 	 	 
	Section 15.8

	 	Applicable Law.
	 	 	54	 
	 
	 	 	 	 	 	 
	Section 15.9

	 	Entire Agreement.
	 	 	54	 
	 
	 	 	 	 	 	 
	Section 15.10

	 	Invalidity of Provisions.
	 	 	54	 
	 
	 	 	 	 	 	 
	Section 15.11

	 	Limitation to Preserve REIT Status.
	 	 	54	 
	 
	 	 	 	 	 	 
	Section 15.12

	 	No Partition.
	 	 	55	 
	 
	 	 	 	 	 	 
	Section 15.13

	 	No Third-Party Rights Created Hereby.
	 	 	55	 
	 
	 	 	 	 	 	 
	Section 15.14

	 	No Rights as Stockholders.
	 	 	55	 
	 
	 	 	 	 	 	 
	Section 15.15

	 	Parent REIT.
	 	 	55	 

iii

 

	 	 	 	 	 	 	 
	Section 15.16

	 	References to First Amended Partnership Agreement.
	 	 	55	 

iv

 

	 	 	 	 	 	 	 
	Exhibit A

	 	PARTNERS AND PARTNERSHIP UNITS
	 	A-1
	 	 
	 
	 	 	 	 	 	 
	Exhibit B

	 	EXAMPLES REGARDING FACTOR
	 	B-1	 	 
	 
	 	 	 	 	 	 
	Exhibit C

	 	NOTICE OF REDEMPTION
	 	C-1	 	 
	 
	 	 	 	 	 	 
	Exhibit D

	 	FORM OF UNIT CERTIFICATE
	 	D-1	 	 

v

 

SECOND AMENDED AND RESTATED AGREEMENT

OF

LIMITED PARTNERSHIP

OF

ARBOR REALTY LIMITED PARTNERSHIP

               THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARBOR REALTY LIMITED
PARTNERSHIP (the “Partnership”), dated as of January 18, 2005, is entered into by and among
ARBOR REALTY GPOP, INC., a Delaware corporation (the “General Partner”), ARBOR REALTY LPOP,
INC., a Delaware corporation (the “Initial Limited Partner”), ARBOR COMMERCIAL MORTGAGE,
LLC, a New York limited liability company, as a limited partner (“ACM” and together with
the Initial Limited Partner, the “Limited Partners”) and ARBOR REALTY TRUST, INC., a
Maryland corporation that intends to elect to be taxed as a real estate investment trust (the
“Parent REIT”).

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

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

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

               WHEREAS, the General Partner, the Limited Partners and the Parent REIT desire to amend the
Amended Partnership Agreement so as to allow for the transfer of assets from the Partnership to
Arbor Realty SR, Inc. (the “Sub-REIT”), a Maryland corporation that intends to elect to be
taxed as a real estate investment trust.

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

ARTICLE I

DEFINED TERMS

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

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

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

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

               “Additional Limited Partner” means a Person who is admitted to the Partnership as a
Limited Partner pursuant to Section 4.2 and Section 12.2 hereof and who is shown as such on the
books and records of the Partnership.

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

 

 

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

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

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

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

                                        (i)       the Parent REIT (a) declares or pays a dividend on its outstanding REIT
Shares in REIT Shares or makes a distribution to all holders of its outstanding
REIT Shares in REIT Shares, (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 Parent REIT distributes any rights, options or warrants to all
holders of its REIT Shares to subscribe for or to purchase or to otherwise acquire
REIT Shares (or other securities or rights convertible into, exchangeable for or
exercisable for REIT Shares) at a price per share less than the Value of a REIT
Share on the record date for such distribution (each a “Distributed Right”), then
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 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
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; 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; and

                                        (iii)       the Parent REIT shall, by dividend or otherwise, distribute to all
holders of its REIT Shares evidences of its indebtedness or assets (including
securities, but excluding any dividend or distribution referred to in subsection
(i) above), which evidences of indebtedness or assets relate to assets not received
by the Parent REIT pursuant to a pro rata distribution by the Partnership, then the
Adjustment Factor shall be adjusted to equal the amount determined by multiplying
the Adjustment Factor in effect immediately prior to the close of business on the
date fixed for determination of shareholders entitled to receive such distribution
by a fraction (i) the numerator of which shall be such Value of a REIT Share on the
date fixed for such determination and (ii) the denominator of which shall be the
Value of a REIT Share on the dates fixed for such determination less the then fair
market value (as determined by the General Partner, whose determination shall be
conclusive)

2

 

of the portion of the evidences of indebtedness or assets so distributed
applicable to one REIT Share.

Any adjustments to the Adjustment Factor shall become effective immediately after the effective
date of such event, retroactive to the record date, if any, for such event, provided, however, that
any Limited Partner may waive, by written notice to the General Partner, the effect of any
adjustment to the Adjustment Factor applicable to the Partnership Common Units held by such Limited
Partner, and, thereafter, such adjustment will not be effective as to such Partnership Common
Units. For illustrative purposes, examples of adjustments to the Adjustment Factor are set forth
on Exhibit B attached hereto.

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

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

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

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

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

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

                                (i)       the sum, without duplication, of:

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

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

                                        (3)       the amount of any reduction in reserves of the Partnership referred to in
clause (ii)(6) below (including, without limitation, reductions resulting because
the General Partner determines such amounts are no longer necessary),

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

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

3

 

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

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

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

                                        (3)      investments in any entity (including loans made thereto) to the extent
that such investments are not otherwise described in clause (ii)(1) or clause
(ii)(2) above,

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

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

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

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

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

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

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

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

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

4

 

               E.      The provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. If the General Partner shall determine that
it is prudent to modify the manner in which the Capital Accounts are maintained in order to comply
with such Regulations, the General Partner may make such modification provided that such
modification will not have a material effect on the amounts distributable to any Partner without
such Partner’s Consent. The General Partner also shall (i) make any adjustments that are necessary
or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of
Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in
accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii) make any appropriate
modifications in the event that unanticipated events might otherwise cause this Agreement not to
comply with Regulations Section 1.704-1(b) or Section 1.704-2.

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

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

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

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

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

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

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

               “Class A Preferred Units” have the meaning set forth in Section 4.11 hereof.

               “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.

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

5

 

               “Consent” means the consent to, approval of, or vote in favor of a proposed action by
a Partner given in accordance with Article 14 hereof.

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

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

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

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

               “Debt” means, as to any Person, as of any date of determination, (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.

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

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

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

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

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

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

6

 

trusts of which only such Person and his spouse, ancestors, descendants (whether by blood or by
adoption), brothers and sisters are beneficiaries.

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

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

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

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

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

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

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

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

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

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

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

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

7

 

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

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

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

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

               “Incapacity” or “Incapacitated” means, (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 one hundred twenty (120) days after the
commencement thereof, (g) the appointment without the Partner’s consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) above is not vacated within ninety
(90) days after the expiration of any such stay.

               “Indemnitee” means (i) any Person made a party to a proceeding by reason of its status
as (A) the General Partner, (B) the Parent REIT or (C) a director of the General Partner or the
Parent REIT or an officer or employee of the Partnership, the Parent REIT or the General Partner
and (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the event giving rise to
potential liability), in its sole and absolute discretion.

               “Independent Director” shall have the meaning assigned to such term in the Charter,
provided that if the Parent REIT has completed a Qualified Public Offering, the term “Independent
Director” shall have the meaning assigned to such term under the rules and regulations of the
principal national securities exchange or interdealer quotation system on which the REIT Shares are
then listed.

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

8

 

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

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

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

               “Limited Partner” means any Person named as a Limited Partner in Exhibit A attached
hereto, as such Exhibit A may be amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person’s capacity as a Limited Partner in the Partnership.

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

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

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

               “Majority in Interest of the Limited Partners” means Limited Partners holding more
than fifty percent (50%) of the outstanding Partnership Common Units held by all Limited Partners.

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

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

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

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

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

9

 

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

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

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

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

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

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

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

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

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

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

               “Pairing Agreement” means the Pairing Agreement by and among the Parent REIT, the
General Partner, the Initial Limited Partner, the Partnership, and ACM, dated as of July 1, 2003.

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

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

10

 

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

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

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

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

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

               “Partnership Interest” means an ownership interest in the Partnership held by either a
Limited Partner or the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement, together with all
obligations of such Person to comply with the terms and provisions of this Agreement. A
Partnership Interest may be expressed as a number of Partnership Common Units, Partnership
Preferred Units or other Partnership Units.

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

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

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

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

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

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

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

               “Percentage Interest” means, as to each Partner, its interest, if any, in the
Partnership Common Units as determined by dividing the Partnership Common Units owned by such
Partner by the total number of Partnership Common Units then outstanding as specified in Exhibit A
attached hereto, as such

11

 

Exhibit may be amended from time to time. To the extent that the Partnership issues more than one
class or series of Partnership Interests, the interest of such class or series shall be determined
as set forth in this Agreement or any amendment hereto.

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

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

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

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

               “Qualified Public Offering” means the sale in a public offering registered under the
Securities Act of shares of common stock in which the REIT Shares are listed on a national
securities exchange or interdealer quotation system.

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

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

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

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

               “Registration Rights Agreement” means the Registration Rights Agreement between Parent
REIT and JMP Securities LLC, dated as of July 1, 2003.

               “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 6.3.B(viii) hereof.

               “Restricted Partnership Common Units” has the meaning set forth in Section 4.12
hereof.

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

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

               “REIT Partner” means (a) a Partner, including, without limitation, the General
Partner, that is, or has made an election to qualify as, a REIT, (b) any Qualified REIT Subsidiary
of any Partner that is, or has made an election to qualify as, a REIT and (c) any Partner that is a
Qualified REIT Subsidiary of a REIT.

               “REIT Party” means the Parent REIT, the General Partner and/or the Initial Limited
Partner.

12

 

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

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

               “REIT Share” means a share of the Parent REIT’s Common Stock, par value $.01 per
share. Where relevant in this Agreement, “REIT Shares” includes shares of the Parent REIT’s Common
Stock, par value $.01 per share, issued upon conversion of Preferred Shares or Junior Shares.

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

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

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

               “SEC” means the Securities and Exchange Commission.

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

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

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

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

               “Specified Redemption Date” means the later of (a) the tenth (10th) Business Day after
the receipt by the General Partner of a Notice of Redemption or (b) in the case of a Declination
followed by an Offering Funding, the Business Day next following the date of the closing of the
Offering Funding; provided, however, that the Specified Redemption Date, as well as the closing of
a Redemption, or an acquisition of Tendered Units by a REIT Party pursuant to Section 8.6.B hereof,
on any Specified Redemption Date, may be deferred, in the REIT Party’s sole and absolute
discretion, for such time (but in any event not more than one hundred fifty (150) days in the
aggregate) as may reasonably be required to effect, as applicable, (i) an Offering Funding or other
necessary funding arrangements, (ii) compliance with the Securities Act or other law (including,
but not limited to, (a) state “blue sky” or other securities laws and (b) the expiration or
termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as

13

 

amended) and (iii) satisfaction or waiver of other commercially reasonable and customary closing
conditions and requirements for a transaction of such nature.

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

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

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

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

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

               “Tendering Party” has the meaning set forth in Section 8.6.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; except that sales or other dispositions of assets to a Subsidiary will not be deemed a
Terminating Capital Transaction.

               “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 11 hereof, “Transfer” does not include (a) any Redemption of
Partnership Common Units by the Partnership, or acquisition of Tendered Units by a REIT Party,
pursuant to Section 8.6 hereof or (b) any redemption of Partnership Units pursuant to any
Partnership Unit Designation. The terms “Transferred” and “Transferring” have correlative
meanings.

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

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

14

 

is available for such REIT Shares, the fair market value of the REIT Shares, as determined in good
faith by the Board of Directors of the General Partner.

          In the event that the REIT Shares Amount includes Rights (as defined in the definition of
“REIT Shares Amount”) that a holder of REIT Shares would be entitled to receive, then the Value of
such Rights shall be determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment, appropriate.

               “Warrants” mean warrants to purchase additional Partnership Common Units pursuant to
the Warrant Agreement.

               “Warrant Agreement” means the Warrant Agreement between the Partnership, the Parent
REIT, and ACM, dated as of July 1, 2003.

ARTICLE II

ORGANIZATIONAL MATTERS

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

               Section 2.2           Name. The name of the Partnership is “Arbor Realty Limited Partnership.”
The Partnership’s business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate thereof. The words
“Limited Partnership,” “LP,” “L.P.,” “Ltd.” or similar words or letters shall be included in the
Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may change the name of
the Partnership at any time and from time to time and shall notify the Partners of such change in
the next regular communication to the Partners.

               Section 2.3           Registered Office and Agent; Principal Office. The address of the
registered office of the Partnership in the State of Delaware is located at 1209 Orange Street,
Wilmington, Delaware, 19801, and the registered agent for service of process on the Partnership in
the State of Delaware at such registered office is The Corporation Trust Company. The principal
office of the Partnership is located at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY 11553,
or such other place as the General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places within or outside the
State of Delaware as the General Partner deems advisable.

               Section 2.4           Power of Attorney.

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

                                        (1)      execute, swear to, seal, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate and all
amendments, supplements or restatements thereof) that the General Partner or the
Liquidator deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability to the extent
provided by applicable law) in the State of Delaware and in all other jurisdictions
in which the Partnership may conduct business or own property; (b) all instruments
that the General Partner or the Liquidator deems appropriate or necessary to
reflect any amendment, change, modification or restatement of this Agreement in
accordance

15

 

with its terms; (c) all conveyances and other instruments or documents that
the General Partner or the Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a certificate of cancellation; (d) all
conveyances and other instruments or documents that the General Partner or the
Liquidator deems appropriate or necessary to reflect the distribution or exchange
of assets of the Partnership pursuant to the terms of this Agreement; (e) all
instruments relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article 11, Article 12 or
Article 13 hereof or the Capital Contribution of any Partner; and (f) all
certificates, documents and other instruments relating to the determination of the
rights, preferences and privileges relating to Partnership Interests; and

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

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

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

               Section 2.5           Term. Pursuant to Section 17-217(d) of the Act, the term of the
Partnership commenced on June 24, 2003 and shall continue until the Partnership is dissolved
pursuant to the provisions of Article 13 hereof or as otherwise provided by law.

ARTICLE III

PURPOSE

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

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               Section 3.2           Powers.

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

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

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

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

               Section 3.4           Representations and Warranties by the Parties.

               A.           Each Partner (including, without limitation, each Additional Limited Partner or Substituted
Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited
Partner, respectively) that is an individual represents and warrants to each other Partner that (i)
the consummation of the transactions contemplated by this Agreement to be performed by such Partner
will not result in a breach or violation of, or a default under, any material agreement by which
such Partner or any of such Partner’s property is bound, or any statute, regulation, order or other
law to which such Partner is subject, (ii) subject to the last sentence of this Section 3.4.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) nine and nine tenths percent (9.9%) or more of the total combined voting power of
all classes of stock entitled to vote, or nine and nine tenths percent (9.9%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant of either (I) the
Parent REIT, the General Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III)
any partnership, venture or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member or (b) an interest of nine
and nine tenths percent (9.9%) or more in the assets or net profits of any tenant of either (I) the
Parent REIT, the General Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III)
any partnership, venture, or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member and (iv) this Agreement is
binding upon, and enforceable against, such Partner in accordance with its terms. Notwithstanding
anything contained herein to the contrary, in the event that the representation contained in the
foregoing clause (ii) would be inaccurate if given by a Partner, such Partner (w) shall not be
required to make and shall not be deemed to have made such representation, if it delivers to the
General Partner in connection with or prior to its execution of this Agreement written notice that
it may not truthfully make such representation, (x) hereby agrees that it is subject to, and hereby
authorizes the General Partner to withhold, all withholdings to which such a “foreign person” or
“foreign partner”, as applicable, is subject under the Code and (y) hereby agrees to cooperate
fully with the General Partner with respect to such withholdings, including by effecting the timely
completion and delivery to the General Partner of all governmental forms required in connection
therewith.

17

 

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

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

               D.           The representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C 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.

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

18

 

ARTICLE IV

CAPITAL CONTRIBUTIONS

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

               Section 4.2           Issuances of Additional Partnership Interests.

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

               B.           Issuances to the General Partner. No additional Partnership Units shall be issued
to the General Partner or the Initial Limited Partner unless (i) the additional Partnership Units
are issued to all Partners in proportion to their respective Percentage Interests with respect to
the class of Partnership Units so issued, (ii) (a) the additional Partnership Units are (x)
Partnership Common Units issued in connection with an issuance of REIT Shares, or (y) Partnership
Units (other than Partnership Common Units) issued in connection with an issuance, conversion or
exercise of Preferred Shares, New Securities or other interests in the Parent REIT (other than REIT
Shares), which Preferred Shares, New Securities or other interests have designations, preferences
and other rights, terms and provisions that are substantially the same as the designations,
preferences and other rights, terms and provisions of the additional Partnership Units issued to
the General Partner or the Initial Limited Partner, and (b) the Parent REIT contributes or
otherwise causes to be transferred to the Partnership the cash proceeds or other consideration
received in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or
other interests in the Parent REIT, (iii) the additional Partnership Units are issued upon the
conversion, redemption or exchange of Debt, Partnership Units or other securities issued by the
Partnership, or (iv) the additional Partnership Units are issued pursuant to Sections 4.3B, 4.4,
4.6 or Section 4.7.

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

               Section 4.3           Additional Funds and Capital Contributions.

               A.           General. The General Partner may, at any time and from time to time, determine
that the Partnership requires additional funds (“Additional Funds”) for the acquisition or
development of additional Properties, for the redemption of Partnership Units or for such other
purposes as the General Partner may determine in its sole and absolute discretion. Additional
Funds may be obtained by the Partnership, at the election of the General Partner, in any manner
provided in, and in accordance with, the terms of this Section 4.3 without the approval of any
Limited Partners.

               B.           Additional Capital Contributions. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by accepting Capital Contributions from any Partners
or other Persons. In connection with any such Capital Contribution (of cash or property), the
General Partner is hereby authorized to cause the Partnership from time to time to issue additional
Partnership Units (as set forth in Section 4.2 above) in consideration therefor and the Percentage
Interests of the General Partner and the Limited Partners shall be adjusted to reflect the issuance
of such additional Partnership Units. Simultaneously with the execution of this Agreement, the
Initial Limited Partner will contribute 100% of the outstanding shares of common stock of Arbor
Realty SR, Inc. to the Partnership in consideration of the Partnership’s non pro rata distribution
of $1,000 to the Initial Limited Partner for the purchase of such shares. Pursuant to this
Section 4.1(B), the General
Partner is authorized to accept such Capital Contribution by the Initial Limited Partner on behalf
of the Partnership.

               C.           Loans by Third Parties. The General Partner, on behalf of the Partnership, may
obtain any Additional Funds by causing the Partnership to incur Debt to any Person upon such terms
as the General Partner determines appropriate, including making such Debt convertible, redeemable
or exchangeable for Partnership Units; provided, however, that the Partnership shall not incur any
such Debt if (i) a breach, violation or default of such Debt would be deemed to occur by virtue of
the Transfer by any Limited Partner of any Partnership Interest, or (ii) such Debt is recourse to
any Partner (unless the Partner otherwise agrees).

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

               E.           Issuance of Securities by the Parent REIT.

                                        (1) The Parent REIT shall contribute the cash proceeds or other
consideration received from any issuances, since the formation of the
Partnership, of REIT Shares, Preferred Shares, Junior Shares or New Securities,
as the case may be, and from the exercise of the rights contained in any such
additional New Securities, to the General Partner or the Initial Limited
Partner and the General Partner or the Initial Limited Partner, as the case may
be, shall contribute such proceeds to the Partnership in exchange for (x) in
the case of an issuance of REIT Shares, Partnership Common Units, or (y) in the
case of an issuance of Preferred Shares, Junior Shares or New Securities,
Partnership Units with designations, preferences and other rights, terms and
provisions that are substantially the same as the designations, preferences and
other rights, terms and provisions of such Preferred Shares, Junior Shares or
New Securities.

20

 

                                        (2) The General Partner and the Initial Limited Partner shall contribute
any cash or other consideration that each have received from the Parent REIT,
since the formation of the Partnership, to the Partnership in exchange for
Partnership Common Units.

                                        (3) The Parent REIT shall not issue any additional REIT Shares, Preferred
Shares, Junior Shares or New Securities unless the Parent REIT contributes the
cash proceeds or other consideration received from the issuance of such
additional REIT Shares, Preferred Shares, Junior Shares or New Securities, as
the case may be, and from the exercise of the rights contained in any such
additional New Securities, to the General Partner or the Initial Limited
Partner and the General Partner or the Initial Limited Partner, as the case may
be, shall contribute such proceeds to the Partnership in exchange for (x) in
the case of an issuance of REIT Shares, Partnership Common Units, or (y) in the
case of an issuance of Preferred Shares, Junior Shares or New Securities,
Partnership Units with designations, preferences and other rights, terms and
provisions that are substantially the same as the designations, preferences and
other rights, terms and provisions of such Preferred Shares, Junior Shares or
New Securities; provided, however, that notwithstanding the foregoing, the
General Partner may issue REIT Shares, Preferred Shares, Junior Shares or New
Securities (a) pursuant to Section 4.4 or Section 8.6.B hereof, (b) pursuant to
a dividend or distribution (including any stock split) of REIT Shares,
Preferred Shares, Junior Shares or New Securities to all of the
holders of REIT Shares, Preferred Shares, Junior Shares or New Securities,
as the case may be, (c) upon a conversion, redemption or exchange of Preferred
Shares, (d) upon a conversion of Junior Shares into REIT Shares, (e) upon a
conversion, redemption, exchange or exercise of New Securities, or (f) in
connection with an acquisition of a property or other asset to be owned,
directly or indirectly, by the General Partner if the General Partner
determines that such acquisition is in the best interests of the Partnership.
In the event of any issuance of additional REIT Shares, Preferred Shares,
Junior Shares or New Securities by the Parent REIT, and the contribution to the
General Partner or the Initial Limited Partner of the cash proceeds or other
consideration received from such issuance, and the contribution to the
Partnership, by the General Partner or the Initial Limited Partner, as the case
may be, of such proceeds, the Partnership shall pay the Parent REIT’s expenses
associated with such issuance, including any underwriting discounts or
commissions (it being understood that payment of some or all of such expenses
may be made by the Parent REIT on behalf of the Partnership out of the gross
proceeds of such issuance prior to the contribution of such proceeds by the
Parent REIT to the General Partner or the Initial Limited Partner, as the case
may be).

               Section 4.4           Stock Option Plan.

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

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

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

21

 

number of REIT Shares then being issued in connection with the exercise of such
stock option.

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

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

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

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

               Section 4.6           Conversion or Redemption of Preferred Shares.

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

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

               Section 4.7           Conversion or Redemption of Junior Shares.

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

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

               Section 4.8           Other Contribution Provisions. In the event that any Partner is admitted
to the Partnership and is given a Capital Account in exchange for services rendered to the
Partnership, unless otherwise determined by the General Partner in its sole and absolute
discretion, such transaction shall be treated

22

 

by the Partnership and the affected Partner as if the
Partnership had compensated such partner in cash and such Partner had contributed the cash to the
capital of the Partnership. In addition, with the consent of the General Partner, one or more
Limited Partners may enter into contribution agreements with the Partnership which have the effect
of providing a guarantee of certain obligations of the Partnership.

               Section 4.9           Not Publicly Traded. The General Partner, on behalf of the Partnership,
shall use its best efforts not to take any action which would result in the Partnership being a
“publicly traded partnership” under and as such term is defined in Section 7704(b) of the Code.

               Section 4.10           Warrants. Warrants to purchase additional Partnership Common Units shall be issued in the amounts and
pursuant to the terms of the Warrant Agreement. Partnership Common Units shall be issued upon the
exercise of the Warrants in accordance with the Warrant Agreement.

               Section 4.11           Class A Preferred Units.In accordance with Section 4.3E, the Parent REIT
shall contribute the proceeds of the issuance of shares of Special Voting Preferred Stock to the
Initial Limited Partner. The Initial Limited Partner shall contribute such proceeds to the
Partnership in exchange for a number of Class A Preferred Units equal to the number of shares of
Special Voting Preferred Stock issued by the Parent REIT. The holder of each Class A Preferred
Unit shall receive a Capital Account, and be entitled to a preferential distribution in
liquidation, of $.01 per Class A Preferred Unit. Ownership of a Class A Preferred Unit shall not
entitle the holder thereof to any allocation of profits or losses of the Partnership. To the
extent that shares of Special Voting Preferred Stock are redeemed by the Parent REIT, a like number
of Class A Preferred Units shall have been first redeemed by the Partnership for the same price per
Class A Preferred Unit and in accordance with the terms of the Pairing Agreement. Except as
otherwise provided herein or required by law, the ownership of a Class A Preferred Unit shall not
entitle the holder thereof to any voting rights hereunder. The Class A Preferred Units shall be
owned and held solely by the Initial Limited Partner.

               Section 4.12           Restricted Units.In accordance with Section 4.3E, to the extent the
Parent REIT issues shares of restricted common stock pursuant to a stock incentive plan, the
Partnership shall issue to the Initial Limited Partner an equal number of Partnership Common Units
that are subject to a similar vesting schedule, forfeiture provisions and other terms and
conditions that correspond to those of the restricted common stock (“Restricted Partnership Common
Units”).

ARTICLE V

DISTRIBUTIONS

               Section 5.1           Requirement and Characterization of Distributions. Subject to the terms
of any Partnership Unit Designation, the General Partner shall cause the Partnership to distribute
quarterly all, or such portion as the General Partner may in its sole and absolute discretion
determine, of Available Cash generated by the Partnership during such quarter to the Holders of
Partnership Units on such Partnership Record Date with respect to such quarter: (i) 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
(ii) 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). Notwithstanding the preceding sentence, in the event that items of Partnership
income are specially allocated pursuant to Section 6.3E hereof (relating to the absence of an
effective registration statement for the sale of shares of common stock of the Parent REIT),
distributions with respect to Partnership Common Units shall first be made in accordance with such
allocations, with any excess distributed pro rata in accordance with the preceding sentence.
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 shall be prorated based on the
portion of the period that such units were outstanding. The General Partner in its sole and
absolute discretion may distribute to the Unitholders Available Cash on a more frequent basis and
provide for an appropriate Partnership Record Date. Notwithstanding anything herein to the
contrary, the General Partner shall make such reasonable efforts, as determined by it in its sole
and absolute discretion and consistent with the Parent REIT’s qualification as a REIT, to cause the
Partnership to

23

 

distribute sufficient amounts to enable the Parent REIT to pay shareholder dividends
that will (a) satisfy the REIT Requirements, and (b) except to the extent otherwise determined by
the General Partner, avoid any federal income or excise tax liability of the Parent REIT.

               Section 5.2           Distributions in Kind. No right is given to any Unitholder to demand and
receive property other than cash as provided in this Agreement. The General Partner may determine,
in its sole and absolute discretion, to make a distribution in kind of Partnership assets to the
Unitholders, and such assets shall be distributed in such a fashion as to ensure that the fair
market value is distributed and allocated in accordance with Articles 5, 6 and 10 hereof.

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

               Section 5.4           Distributions Upon Liquidation. Notwithstanding the other provisions of
this Article 5, net proceeds from a Terminating Capital Transaction, and any other cash received or
reductions in reserves made after commencement of the liquidation of the Partnership, shall be
distributed to the Unitholders in accordance with Section 13.2 hereof.

               Section 5.5           Distributions to Reflect Issuance of Additional Partnership Units. In the
event that the Partnership issues additional Partnership Units pursuant to the provisions of
Article 4 hereof, subject to Section 7.3.D, the General Partner is hereby authorized to make such
revisions to this Article 5 as it determines are necessary or desirable to reflect the issuance of
such additional Partnership Units, including, without limitation, making preferential distributions
to certain classes of Partnership Units.

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

ARTICLE VI

ALLOCATIONS

               Section 6.1           Timing and Amount of Allocations of Net Income and Net Loss. Net Income
and Net Loss of the Partnership shall be determined and allocated with respect to each Partnership
Year of the Partnership as of the end of each such year. Except as otherwise provided in this
Article 6, and subject to Section 11.6.C hereof, an allocation to a Unitholder of a share of Net
Income or Net Loss shall be treated as an allocation of the same share of each item of income,
gain, loss or deduction that is taken into account in computing Net Income or Net Loss.

               Section 6.2           General Allocations.

               A.           In General. Subject to the terms of any Partnership Unit Designation and Section
4.11, except as otherwise provided in this Article 6 and subject to Section 11.6.C hereof, Net
Income and Net Loss shall be allocated to each of the Holders of Partnership Common Units in
accordance with their respective Percentage Interests at the end of each Partnership Year.

               B.           Allocations to Reflect Issuance of Additional Partnership Units. In the event that
the Partnership issues additional Partnership Units pursuant to the provisions of Article 4 hereof,
the General Partner is hereby authorized to make such revisions to this Section 6.2 as it
determines are necessary or desirable to reflect the terms of the issuance of such additional
Partnership Units, including, without limitation, making preferential allocations to certain
classes of Partnership Units.

24

 

               Section 6.3           Additional Allocation Provisions. Notwithstanding the foregoing
provisions of this Article 6:

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

               B.           Regulatory Allocations.

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

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

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

25

 

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

                                (v)      Gross Income Allocation. In the event that any Holder of
Partnership Units has a deficit Capital Account at the end of any Partnership Year
that is in excess of the sum of (1) the amount (if any) that such Holder is
obligated to restore to the Partnership upon complete liquidation of such Holder’s
Partnership Interest (including, the Holder’s interest in outstanding Partnership
Preferred Units and other Partnership Units) and (2) the amount that such Holder is
deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be
specially allocated items of Partnership income and gain in the amount of such
excess to eliminate such deficit as quickly as possible, provided that an
allocation pursuant to this Section 6.3.B(v) shall be made if and only to the
extent that such Holder would have a deficit Capital Account in excess of such sum
after all other allocations provided in this Article 6 have been tentatively made
as if this Section 6.3.B(v) and Section 6.3.B(iv) hereof were not in the Agreement.

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

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

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

26

 

               C.           Special Allocations Upon Liquidation. Notwithstanding any provision in this
Article VI to the contrary, in the event that the Partnership disposes of all or substantially all
of its assets in a transaction that will lead to a liquidation of the Partnership pursuant to
Article 13 hereof, then any Net Income or Net Loss realized in connection with such transaction and
thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be
specially allocated among the Partners as required so as to cause liquidating distributions
pursuant to Section 13.2.A(4) hereof to be made in the same amounts and proportions as would have
resulted had such distributions instead been made pursuant to Article 5 hereof (other than Section
5.4 hereof).

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

               E.           Reserved.

               F.           Exercise of Warrants. To the extent that a Partnership Unit is issued upon
exercise of a Warrant described in Section 4.10, and the value of such Partnership Unit differs
from the amount paid therefor (including the amount, if any, paid in connection with the issuance
of such Warrant), such difference shall be allocated among the Partners in the manner prescribed by
Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s), or any successor provision thereto.

               Section 6.4           Tax Allocations.

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

               B.           Allocations Respecting Section 704(c) Revaluations. Notwithstanding Section 6.4.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 Common Units
for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take
into account such variation. The Partnership shall account for such variation under any method
approved under Code Section 704(c) and the applicable Regulations as chosen by the General Partner,
including, without limitation, the “remedial allocation method” as described in Regulations Section
1.704-3(d). In the event that the Gross Asset Value of any partnership asset is adjusted pursuant
to subsection (b) of the definition of “Gross Asset Value” (provided in Article 1 hereof),
subsequent allocations of Tax Items with respect to such asset shall take account of the variation,
if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as
under Code Section 704(c) and the applicable Regulations.

ARTICLE VII

MANAGEMENT AND OPERATIONS OF BUSINESS

               Section 7.1           Management.

               A.           Except as otherwise expressly provided in this Agreement, all management powers over the
business and affairs of the Partnership are and shall be exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise control or management
power over the

27

 

business and affairs of the Partnership. The General Partner may not be removed by
the Partners with or without cause, except with the consent of the General Partner. In addition to
the powers now or hereafter granted to a general partner of a limited partnership under applicable
law or that are granted to the General Partner under any other provision of this Agreement, the
General Partner, subject to the other provisions hereof including Section 7.3, shall have full
power and authority to do all things deemed necessary or desirable by it to conduct the business of
the Partnership, to exercise all powers set forth in Section 3.2 hereof and to effectuate the
purposes set forth in Section 3.1 hereof, including, without limitation:

                                        (1)      the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and borrowing money or
selling assets to permit the Partnership to make distributions to its Partners in
such amounts as will permit the Parent REIT (so long as the Parent REIT desires to
maintain or restore its status as a REIT) to avoid the payment of any federal
income tax (including, for this purpose, any excise tax pursuant to Code Section
4981) and to make distributions sufficient to permit the Parent REIT to maintain or
restore REIT status or otherwise to satisfy the REIT Requirements), the assumption
or guarantee of, or other contracting for, indebtedness and other liabilities, the
issuance of evidences of indebtedness (including the securing of same by deed to
secure debt, mortgage, deed of trust or other lien or encumbrance on the
Partnership’s assets) and the incurring of any obligations that it deems necessary
for the conduct of the activities of the Partnership;

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

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

                                        (4)      the mortgage, pledge, encumbrance or hypothecation of any assets of the
Partnership, the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms that it sees fit, including, without limitation, the
financing of the operations and activities of the Parent REIT, the General Partner,
the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to
other Persons (including, without limitation, the Partnership’s Subsidiaries) and
the repayment of obligations of the Partnership, its
Subsidiaries and any other Person in which the Partnership has an equity
investment, and the making of capital contributions to and equity investments in
the Partnership’s Subsidiaries;

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

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

                                        (7)      the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement, the holding, management, investment

28

 

and
reinvestment of cash and other assets of the Partnership, and the collection and
receipt of revenues, rents and income of the Partnership;

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

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

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

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

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

                                        (13)      the enforcement of any rights against any Partner pursuant to
representations, warranties, covenants and indemnities relating to such Partner’s
contribution of property or assets to the Partnership;

                                        (14)      the exercise, directly or indirectly, through any attorney-in-fact acting
under a general or limited power of attorney, of any right, including the right to
vote, appurtenant to any asset or investment held by the Partnership;

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

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

29

 

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

                                        (18)      the issuance of additional Partnership Units, as appropriate and in the
General Partner’s sole and absolute discretion, in connection with Capital
Contributions by Additional Limited Partners and additional Capital Contributions
by Partners pursuant to Article 4 hereof;

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

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

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

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

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

               Section 7.2           Certificate of Limited Partnership. To the extent that such action is
determined by the General Partner to be reasonable and necessary or appropriate, the General
Partner shall file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the limited partners
have limited liability) under the laws of the State of Delaware and each other state, the District
of Columbia or any other jurisdiction, in which the Partnership may elect to do business or own
property. Except as otherwise required under the Act, the General Partner shall not be required,
before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to
any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed
such other certificates or documents as may be reasonable and necessary or appropriate for the
formation, continuation, qualification and operation of a limited partnership (or a partnership in
which the limited partners have limited liability to the extent provided by applicable law) in the
State of Delaware and any other state, or the District of Columbia or other jurisdiction, in which
the Partnership may elect to do business or own property.

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               Section 7.3           Restrictions on General Partner’s Authority.

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

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

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

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

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

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

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

               C.           Notwithstanding Section 7.3.B hereof, the General Partner shall have the power, without the
Consent of the Limited Partners, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:

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

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

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

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

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

31

 

REIT
Requirements; or (b) to reflect the Transfer of all or any part of a Partnership
Interest between the General Partner or Initial Limited Partner and any Qualified
REIT Subsidiary;

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

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

               D.           Notwithstanding Sections 7.3.B and 7.3.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 5 or Section 13.2.A hereof, or alter the allocations specified in Article 6 hereof (except,
in any case, as permitted pursuant to Sections 4.2, 5.5, 6.2.B and 7.3.C hereof), (iv) alter or
modify the Redemption rights, Cash Amount, REIT Consideration, or REIT Shares Amount as set forth
in Sections 8.6 and 11.2 hereof, or amend or modify any related definitions, or (v) amend this
Section 7.3.D; provided, however, that the Consent of each Partner adversely affected shall not be
required for any amendment or action that affects all Partners holding the same class or series of
Partnership Units on a uniform or pro rata basis. Further, no amendment may alter the restrictions
on the General Partner’s authority set forth elsewhere in this Section 7.3 without the Consent
specified therein. Any such amendment or action consented to by any Partner shall be effective as
to that Partner, notwithstanding the absence of such consent by any other Partner.

               Section 7.4           Reimbursement of the General Partner.

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

               B.           Subject to Sections 7.4.C and 15.11 hereof, the Partnership shall be liable for, and shall
reimburse the General Partner and the Parent REIT on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all sums expended in
connection with the Partnership’s business, including, without limitation, (i) expenses relating to
the ownership of interests in and management and operation of, or for the benefit of, the
Partnership, (ii) compensation of officers and employees, including, without limitation, payments
under future compensation plans of the Parent REIT that may provide for stock units, or phantom
stock, pursuant to which employees of the Parent REIT will receive payments based upon dividends on
or the value of REIT Shares, (iii) director fees and expenses and (iv) if the Parent REIT becomes a
public company, all costs and expenses of the Parent REIT being a public company, including costs
of filings with the SEC, reports and other distributions to its shareholders; provided, however,
that the amount of any reimbursement shall be reduced by any interest earned by the Parent REIT
with respect to bank accounts or other instruments or accounts held by it on behalf of the
Partnership as permitted pursuant to Section 7.5 hereof. Such reimbursements shall be in addition
to any reimbursement of the General Partner as a result of indemnification pursuant to Section 7.7
hereof.

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

               Section 7.5           Outside Activities of the General Partner. The General Partner and the
Parent REIT shall not directly or indirectly enter into or conduct any business, other than in
connection with (a) the ownership, acquisition and disposition of Partnership Interests as General
Partner, (b) the management of the business of the Partnership, (c) if the Parent REIT becomes a
reporting company with a class (or classes) of

32

 

securities registered under the Exchange Act, the
operation of the Parent REIT as such, (d) the Parent REIT’s operations as a REIT, (e) the offering,
sale, syndication, private placement or public offering of stock, bonds, securities or other
interests, (f) financing or refinancing of any type related to the Partnership or its assets or
activities, (g) any of the foregoing activities as they relate to a Subsidiary of the Partnership
or of the General Partner and (h) such activities as are incidental thereto. Nothing contained
herein shall be deemed to prohibit the General Partner from executing guarantees of Partnership
debt for which it would otherwise be liable in its capacity as General Partner. Subject to Section
7.3.B hereof, the Parent REIT shall not own any assets or take title to assets (other than
temporarily in connection with an acquisition prior to contributing such assets to the Partnership)
other than interests in the General Partner, The Initial Limited Partner, Subsidiaries of the
Partnership and other than such cash and cash equivalents, bank accounts or similar instruments or
accounts as the Parent REIT deems reasonably necessary, taking into account Section 7.1.D hereof
and the requirements necessary for the Parent REIT to carry out its responsibilities contemplated
under this Agreement and the Charter and to qualify as a REIT. Notwithstanding the foregoing, if
the Parent REIT acquires assets in its own name and owns Property other than through the
Partnership, the Partners agree to negotiate in good faith to amend this Agreement, including,
without limitation, the definition of “Adjustment Factor,” to reflect such activities and the
direct ownership of assets by the Parent REIT. The Parent REIT and any Affiliates of the Parent
REIT may acquire Limited Partner Interests and shall be entitled to exercise all rights of a
Limited Partner relating to such Limited Partner Interests.

               Section 7.6           Contracts with Affiliates.

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

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

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

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

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

               Section 7.7           Indemnification.

               A.           To the fullest extent permitted by applicable law, the Partnership shall indemnify each
Indemnitee from and against any and all losses, claims, damages, liabilities (whether joint or
several), expenses (including, without limitation, attorney’s fees and other legal fees and
expenses), judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that
relate to the operations of the Partnership (“Actions”) as set forth in this Agreement in which
such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise;
provided, however, that the Partnership shall not indemnify an Indemnitee (i) for the act or
omission of the Indemnitee material to the matter giving rise to the proceeding which was committed
in bad faith or was

33

 

the result of active and deliberate dishonesty; (ii) for any transaction for
which such Indemnitee received an improper personal benefit (in money, property or services) in
violation or breach of any provision of this Agreement; or (iii) in the case of a criminal
proceeding, for an unlawful act or omission by the Indemnitee for which the Indemnitee had
reasonable cause to believe was unlawful. Without limitation, the foregoing indemnity shall extend
to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness
of the Partnership or any Subsidiary of the Partnership (including, without limitation, any
indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken
subject to), and the General Partner is hereby authorized and empowered, on behalf of the
Partnership, to enter into one or more indemnity agreements consistent with the provisions of this
Section 7.7 in favor of any Indemnitee having or potentially having liability for any such
indebtedness. It is the intention of this Section 7.7.A that the Partnership indemnify each
Indemnitee to the fullest extent permitted by law. The termination of any proceeding by judgment,
order or settlement does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.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 7.7.A
with respect to the subject matter of such proceeding. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the capital of the
Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this
Section 7.7.

               B.           To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party
to a proceeding or otherwise subject to or the focus of or is involved in any Action shall be paid
or reimbursed by the Partnership as incurred by the Indemnitee in advance of the final disposition
of the Action upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the
Partnership as authorized in this Section 7.7.A has been met, and (ii) a written undertaking by or
on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.

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

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

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

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

34

 

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

               H.           The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision
hereof shall be prospective only and shall not in any way affect the obligations of the Partnership
or the limitations on the Partnership’s liability to any Indemnitee under this Section 7.7 as in
effect immediately prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such claims may arise or be asserted.

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

               Section 7.8           Liability of the General Partner.

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

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

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

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

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

35

 

Partnership, shall be subject to levy, execution or
other enforcement procedures for the satisfaction of any judgment (or other judicial process) in
favor of any other Partner(s) and arising out of, or in connection with, this Agreement. This
Agreement is executed by the officers of the General Partner solely as officers of the same and not
in their own individual capacities.

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

               Section 7.9           Other Matters Concerning the General Partner.

               A.           The General Partner may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith to be genuine and to
have been signed or presented by the proper party or parties.

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

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

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

               Section 7.10           Title to Partnership Assets. Title to Partnership assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually or collectively with other Partners or
Persons, shall have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more nominees, as the General Partner may determine, including Affiliates
of the General Partner. The General Partner hereby declares and warrants that any Partnership
assets for which legal title is held in the name of the General Partner or any nominee or Affiliate
of the General Partner shall be held by the General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement. All Partnership assets shall be
recorded as the property of the Partnership in its books and records, irrespective of the name in
which legal title to such Partnership assets is held.

               Section 7.11           Reliance by Third Parties. Notwithstanding anything to the contrary in
this Agreement, any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without the consent or approval of any other Partner
or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership
and to enter into any contracts on behalf of the

36

 

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 (i) at the time
of the execution and delivery of such certificate, document or instrument, this Agreement was in
full force and effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the Partnership and
(iii) such certificate, document or instrument was duly executed and delivered in accordance with
the terms and provisions of this Agreement and is binding upon the Partnership.

ARTICLE VIII

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

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

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

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

               Section 8.4           Return of Capital. Except pursuant to the rights of Redemption set forth
in Section 8.6 hereof, no Limited Partner shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon
termination of the Partnership as provided herein. Except to the extent provided in Article 6
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.

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

               Section 8.6           Redemption Rights of Qualifying Parties.

               A.           Subject to Section 11.6.D, a Qualifying Party, but no other Limited Partner or Assignee,
shall have the right (subject to the terms and conditions set forth herein) to require the
Partnership to redeem (a “Redemption”) all or a portion of the Partnership Common Units held by
such Qualifying Party (such Partnership Common Units being hereafter “Tendered Units”) in exchange
for the Cash Amount payable on the Specified Redemption Date. Any Redemption shall be exercised
pursuant to a Notice of Redemption delivered to the General Partner by such Qualifying Party (the
“Tendering Party”) when exercising the Redemption right. The Partnership’s obligation to effect a
Redemption, however, shall not arise or be binding against the Partnership (i) until and unless
there has been a Declination and (ii) before the Business Day following the Cut-Off Date.
Regardless of the binding or non-binding nature of a pending Redemption, a Tendering Party shall
have no right to receive distributions with respect to any Tendered Units (other than the Cash
Amount) paid after delivery of the Notice of Redemption, whether or not the Partnership Record Date
for such distribution precedes or coincides with such delivery of the Notice of Redemption;
provided, however, that in the event that the General Partner on behalf of the Partnership elects
to fund the Cash Amount with the proceeds of an Offering Funding pursuant to Section 8.6.D hereof,
the Tendering Party’s right to receive distributions shall not be suspended as hereinbefore
provided and such Tendering Party shall have the right to receive distributions actually made
hereunder prior to the date of the closing of the Offering Funding the proceeds of which are used
to pay the Cash Amount. In the event of a Redemption, the Cash Amount shall be delivered as a
certified check payable to the Tendering Party or, in the General Partner’s sole and absolute
discretion, in immediately available funds.

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

38

 

receive dividends, and exercise
rights, as of the Specified Redemption Date. REIT Shares issued upon an acquisition of the
Tendered Units by the Parent REIT pursuant to this Section 8.6.B may contain such legends regarding
restrictions under the Securities Act and applicable state securities laws as the Parent REIT in
good faith determines to be necessary or advisable in order to ensure compliance with such laws.

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

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

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

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

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

Any proceeds from an Offering Funding that are in excess of the aggregate Cash Amount paid to all
Tendering Parties pursuant to this Section 8.6.D shall be for the sole benefit of the Parent REIT.
The Parent REIT shall make a Capital Contribution of such amounts to the Partnership for an
additional General Partner Interest. Any such contribution shall entitle the General Partner to an
equitable Percentage Interest adjustment.

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

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

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

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

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

                                        (4)      Notwithstanding anything herein to the contrary, with respect to any
Redemption or acquisition of Tendered Units by a REIT Party pursuant to Section
8.6.B hereof, in the event that the General Partner gives notice to all Limited
Partners (but excluding any Assignees) then owning Partnership Interests (a
“Primary Offering Notice”) that the Parent REIT desires to effect a primary
offering of its equity securities, then, unless the General Partner otherwise
consents, commencement of the actions denoted in Section 8.6.D hereof as to an
Offering Funding, if any, with respect to any Notice of Redemption thereafter
received, whether or not the Tendering Party is a Limited Partner, may be delayed
until the earlier of (a) the completion of the primary offering or (b) ninety (90)
days following the giving of the Primary Offering Notice.

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

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

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

                                        (8)      Each Limited Partner covenants and agrees with the REIT Party that all
Tendered Units shall be delivered to the appropriate REIT Party free

40

 

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

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

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

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

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

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

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

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

               Section 8.7           Partnership Right to Call Limited Partner Interests.Notwithstanding any
other provision of this Agreement, on and after the date on which the aggregate Percentage
Interests of the Limited Partners are less than one percent (1%), the Partnership shall have the
right, but not the obligation, from time to time and at any time to redeem any and all outstanding
Limited Partner Interests by treating any Limited Partner as a Tendering Party who has delivered a
Notice of Redemption pursuant to Section 8.6 hereof for the amount of Partnership Common Units to
be specified by the General Partner, in its sole and absolute discretion, by notice to such Limited
Partner that the Partnership has elected to exercise its rights under this Section 8.7. Such
notice given by the General Partner to a Limited Partner pursuant to this Section 8.7 shall be
treated as if it

41

 

were a Notice of Redemption delivered to the General Partner by such Limited
Partner. For purposes of this Section 8.7, (a) any Limited Partner (whether or not otherwise a
Qualifying Party) may, in the General Partner’s sole and absolute discretion, be treated as a
Qualifying Party that is a Tendering Party and (b) the provisions of Sections 8.6.F(2), 8.6.F(3)
and 8.6.F(5) hereof shall not apply, but the remainder of Section 8.6 hereof shall apply, mutatis
mutandis.

               Section 8.8           Mergers.

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

ARTICLE IX

BOOKS, RECORDS, ACCOUNTING AND REPORTS

               Section 9.1           Records and Accounting.

               A.           The General Partner shall keep or cause to be kept at the principal office of the
Partnership those records and documents required to be maintained by the Act and other books and
records deemed by the General Partner to be appropriate with respect to the Partnership’s business,
including, without limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant to Section 8.5.A or
Section 9.3 hereof. Any records maintained by or on behalf of the Partnership in the regular
course of its business may be kept on, or be in the form for, magnetic tape, photographs,
micrographics or any other information storage device, provided that the records so maintained are
convertible into clearly legible written form within a reasonable period of time.

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

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

               Section 9.3           Reports.

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

               B.           As soon as practicable, but in no event later than one hundred five (105) days after the
close of each calendar quarter (except the last calendar quarter of each year), the General Partner
shall cause to be mailed to each Limited Partner of record as of the last day of the calendar
quarter a report containing

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unaudited financial statements of the Partnership, or of the General
Partner if such statements are prepared solely on a consolidated basis with the General Partner,
and such other information as may be required by applicable law or regulation or as the General
Partner determines to be appropriate.

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

ARTICLE X

TAX MATTERS

               Section 10.1
          Preparation
of Tax Returns.  The General Partner shall arrange for the
preparation and timely filing of all returns with respect to Partnership income, gains, deductions,
losses and other items required of the Partnership for federal and state income tax purposes and
shall use all reasonable effort to furnish, within ninety (90) days 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.

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

               Section 10.3           Tax Matters Partner.

               A.           The General Partner shall be the “tax matters partner” of the Partnership for federal
income tax purposes. The tax matters partner shall receive no compensation for its services. All
third-party costs and expenses incurred by the tax matters partner in performing its duties as such
(including legal and accounting fees and expenses) shall be borne by the Partnership in addition to
any reimbursement pursuant to Section 7.4 hereof. Nothing herein shall be construed to restrict
the Partnership from engaging an accounting firm to assist the tax matters partner in discharging
its duties hereunder, so long as the compensation paid by the Partnership for such services is
reasonable. At the request of any Limited Partner, the General Partner agrees to consult with such
Limited Partner with respect to the preparation and filing of any returns and with respect to any
subsequent audit or litigation relating to such returns; provided, however, that the filing of such
returns shall be in the sole and absolute discretion of the General Partner.

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

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

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

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refund with the District Court of the United States
for the district in which the Partnership’s principal place of business is located;

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

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

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

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

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

               Section 10.4
          Withholding.  Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any amount of federal,
state, local or foreign taxes that the General Partner determines that the Partnership is required
to withhold or pay with respect to any amount distributable or allocable to such Limited Partner
pursuant to this Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Code Section 1441, Code Section 1442, Code Section 1445 or Code
Section 1446. Any amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner
within fifteen (15) days after notice from the General Partner that such payment must be made
unless (i) the Partnership withholds such payment from a distribution that would otherwise be made
to the Limited Partner or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the Available Funds of the Partnership that would, but
for such payment, be distributed to the Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in such Limited
Partner’s Partnership Interest to secure such Limited Partner’s obligation to pay to the
Partnership any amounts required to be paid pursuant to this Section 10.4. In the event that a
Limited Partner fails to pay any amounts owed to the Partnership pursuant to this Section 10.4 when
due, the General Partner may, in its sole and absolute discretion, elect to make the payment to the
Partnership on behalf of such defaulting Limited Partner, and in such event shall be deemed to have
lent such amount to such defaulting Limited Partner and shall succeed to all rights and remedies of
the Partnership as against such defaulting Limited Partner (including, without limitation, the
right to receive distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center commercial banks,
as published from time to time in The Wall Street Journal, plus four (4) percentage points (but
not higher than the maximum lawful rate) from the date such amount is due (i.e., fifteen (15) days
after demand) until such amount is paid in full. Each Limited Partner shall take such actions as
the Partnership or the General Partner shall request in order to perfect or enforce the security
interest created hereunder.

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

ARTICLE XI

TRANSFERS AND WITHDRAWALS

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               Section 11.1           Transfer.

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

               B.           No Partnership Interest shall be Transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article 11. Any Transfer or purported Transfer of
a Partnership Interest not made in accordance with this Article 11 shall be null and void ab
initio.

               C.           Notwithstanding the other provisions of this Article 11 (other than Section 11.6.D hereof),
the Partnership Interests of the General Partner may be Transferred, in whole or in part, at any
time or from time to time, to any Person that is, at the time of such Transfer, a Qualified REIT
Subsidiary. Any transferee of the entire General Partner Interest pursuant to this Section 11.1.C
shall automatically become, without further action or Consent of any Limited Partners, the sole
general partner of the Partnership, subject to all the rights, privileges, duties and obligations
under this Agreement and the Act relating to a general partner. Upon any Transfer permitted by this
Section 11.1.C, the transferor Partner shall be relieved of all its obligations under this
Agreement. The provisions of Section 11.2.B (other than the last sentence thereof), 11.3, 11.4.A
and 11.5 hereof shall not apply to any Transfer permitted by this Section 11.1.C.

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

               Section 11.2           Transfer of General Partner’s Partnership Interest.

               A.           The General Partner may not Transfer any of its General Partner Interest or withdraw from
the Partnership except as provided in Sections 11.1.C, 11.2.B and 11.2.C hereof. In every instance
where the General Partner’s ability to merge, transfer its General Partner Interest, or withdraw
from the Partnership is limited pursuant to this Section 11.2, the Parent REIT’s ability to merge or transfer its stock of
the General Partner shall be similarly limited.

               B.           Except as set forth in Section 11.1.C above and Section 11.2.C below, the General Partner
shall not withdraw from the Partnership and shall not Transfer all or any portion of its interest
in the Partnership (whether by sale, disposition, statutory merger or consolidation, liquidation or
otherwise) without the Consent of the Limited Partners, which Consent may be given or withheld in
the sole and absolute discretion of the Limited Partners. Upon any Transfer of such a Partnership
Interest pursuant to the Consent of the Limited Partners and otherwise in accordance with the
provisions of this Section 11.2.B, the transferee shall become a successor General Partner for all
purposes herein, and shall be vested with the powers and rights of the transferor General Partner,
and shall be liable for all obligations and responsible for all duties of the General Partner, once
such transferee has executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and provisions of this
Agreement with respect to the Partnership Interest so acquired. It is a condition to any Transfer
otherwise permitted hereunder that the transferee assumes, by operation of law or express
agreement, all of the obligations of the transferor General Partner under this Agreement with
respect to such Transferred Partnership Interest, and such Transfer shall relieve the transferor
General Partner of its obligations under this Agreement without the Consent of the Limited
Partners. In the event that the General Partner withdraws from the Partnership, in violation of
this Agreement or otherwise, or otherwise dissolves or terminates, or upon the bankruptcy of the
General Partner, a Majority in Interest of the Limited Partners may elect to continue the
Partnership business by selecting a successor General Partner in accordance with the Act.

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               C.           Notwithstanding Section 11.2.B, the General Partner may merge with another entity if
immediately after such merger substantially all of the assets of the surviving entity, other than
the General Partner Interest held by the General Partner, are contributed to the Partnership as a
Capital Contribution in exchange for Partnership Units.

               Section 11.3           Transfer of Limited Partners’ Partnership Interests.

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

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

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

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

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

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

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

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

               Section 11.4           Substituted Limited Partners.

               A.           A transferee of the interest of a Limited Partner pursuant to a Transfer consented to by
the General Partner pursuant to Section 11.3.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. Subject to the
foregoing, an Assignee shall not be admitted as a Substituted Limited Partner until and unless it
furnishes to the General Partner (i) evidence of acceptance, in form and substance satisfactory to
the General Partner, of all the terms, conditions and applicable obligations of this Agreement,
(ii) a counterpart signature page to this Agreement executed by such Assignee and (iii) such other
documents and instruments as may be required or advisable, in the sole and absolute discretion of
the General Partner, to effect such Assignee’s admission as a Substituted Limited Partner.

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

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

               Section 11.5
          Assignees.  If the General Partner, in its sole and absolute discretion,
does not consent to the admission of any transferee of any Partnership Interest as a Substituted
Limited Partner in connection with a transfer permitted by the General Partner pursuant to Section
11.3.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 11, 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 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units.

               Section 11.6           General Provisions.

               A.           No Limited Partner may withdraw from the Partnership other than as a result of a permitted
Transfer of all of such Limited Partner’s Partnership Units in accordance with this Article 11,
with respect to which the transferee becomes a Substituted Limited Partner, or pursuant to a
redemption (or acquisition by the General Partner) of all of its Partnership Units pursuant to a
Redemption under Section 8.6 hereof and/or pursuant to any Partnership Unit Designation.

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               B.           Any Limited Partner who shall Transfer all of its Partnership Units in a Transfer (i)
consented to by the General Partner pursuant to this Article 11 where such transferee was admitted
as a Substituted Limited Partner, (ii) pursuant to the exercise of its rights to effect a
redemption of all of its Partnership Units pursuant to a Redemption under Section 8.6 hereof and/or
pursuant to any Partnership Unit Designation or (iii) to the General Partner, whether or not
pursuant to Section 8.6.B hereof, shall cease to be a Limited Partner.

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

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

ARTICLE XII

ADMISSION OF PARTNERS

               Section 12.1
          Admission
of Successor General Partner.  A successor to all of the
General Partner’s General Partner Interest pursuant to Section 11.2 hereof who is proposed to be
admitted as a successor General Partner shall be admitted to the Partnership as the General
Partner, effective immediately

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prior to such Transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the admission shall be subject to
the successor General Partner executing and delivering to the Partnership an acceptance of all of
the terms and conditions of this Agreement and such other documents or instruments as may be
required to effect the admission.

               Section 12.2           Admission of Additional Limited Partners.

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

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

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

               Section 12.3
          Amendment
of Agreement and Certificate of Limited Partnership.  For the
admission to the Partnership of any Partner, the General Partner shall take all steps necessary and
appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as
soon as practical an amendment of this Agreement (including an amendment of Exhibit A) and, if
required by law, shall prepare and file an amendment to the Certificate and may for this purpose
exercise the power of attorney granted pursuant to Section 2.4 hereof.

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

ARTICLE XIII

DISSOLUTION, LIQUIDATION AND TERMINATION

               Section 13.1
          Dissolution.  The Partnership shall not be dissolved by the admission of
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of

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this Agreement. Upon the withdrawal of the General Partner, any successor General
Partner shall continue the business of the Partnership without dissolution. However, the
Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of
the following (each a “Liquidating Event”):

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

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

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

               D.           the occurrence of a Terminating Capital Transaction; or

               E.           the Redemption (or acquisition by the General Partner) of all Partnership Units other than
Partnership Units held by the General Partner.

               Section 13.2           Winding Up.

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

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

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

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

                                        (4)      Subject to the terms of any Partnership Unit Designation, the balance, if
any, to the General Partner, the Limited Partners and any Assignees in accordance
with and in proportion to their positive Capital Account balances, after giving
effect to all contributions, distributions and allocations for all periods.

The General Partner shall not receive any additional compensation for any services performed
pursuant to this Article 13.

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               B.           Notwithstanding the provisions of Section 13.2.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 of
any assets except those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and
in accordance with the provisions of Section 13.2.A hereof, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall
be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable and equitable and
to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.

               C.           In the 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 13 to the Partners and
Assignees that have positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive Capital Account balances.
If the General Partner has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including the year during which
such liquidation occurs) (a “Capital Account Deficit”), the General Partner shall make a
contribution to the capital of the Partnership equal to the amount of such deficit. No Partner
other than the General Partner shall be required to make any contribution to the capital of the
Partnership with respect to a Capital Account Deficit, if any, of such Partner, and such Capital
Account Deficit shall not be considered a debt owed to the Partnership or any other person for any
purpose whatsoever. In the sole and absolute discretion of the General Partner or the Liquidator,
a pro rata portion of the distributions that would otherwise be made to the Partners pursuant to
this Article 13 may be:

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

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

               Section 13.3
          Deemed
Distribution and Recontribution.  Notwithstanding any other
provision of this Article 13, in the event that the Partnership is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership’s
Property shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged and
the Partnership’s affairs shall not be wound up. Instead, for federal income tax purposes the
Partnership shall be deemed to have contributed all of its assets and liabilities to a new
partnership in exchange for an interest in the new partnership; and, immediately thereafter,
distributed interests in the new partnership to the Partners in accordance with their respective
Capital Accounts in liquidation of the Partnership, and the new partnership is deemed to continue
the business of the Partnership. Nothing in this Section 13.3 shall be deemed to have constituted
any Assignee as a Substituted Limited Partner without compliance with the provisions of Section
11.4 hereof.

               Section 13.4
          Rights
of Limited Partners.  Except as otherwise provided in this
Agreement, (a) each Limited Partner shall look solely to the assets of the Partnership for the
return of its Capital Contribution, (b) no Limited Partner shall have the right or power to demand
or receive property other than cash

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from the Partnership and (c) no Limited Partner (other than any
Limited Partner who holds Partnership Preferred Units, to the extent specifically set forth herein
and in the applicable Partnership Unit Designation) shall have priority over any other Limited
Partner as to the return of its Capital Contributions, distributions or allocations.

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

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

               Section 13.7           Reasonable Time for Winding-Up. A reasonable time shall be allowed for
the orderly winding-up of the business and affairs of the Partnership and the liquidation of its
assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon
such winding-up, and the provisions of this Agreement shall remain in effect between the Partners
during the period of liquidation.

ARTICLE XIV

PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

               Section 14.1
          Procedures
for Actions and Consents of Partners.  The actions requiring
consent or approval of Limited Partners pursuant to this Agreement, including Section 7.3 hereof,
or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article
14.

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

               Section 14.3           Meetings of the Partners.

               A.           Meetings of the Partners may be called by the General Partner and shall be called upon the
receipt by the General Partner of a written request by a Majority in Interest of the Limited
Partners. The call shall state the nature of the business to be transacted. Notice of any such
meeting shall be given to all Partners not less than seven (7) days nor more than thirty (30) days
prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote or Consent of Partners is
permitted or required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section 14.3.B hereof.

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               B.           Any action required or permitted to be taken at a meeting of the Partners may be taken
without a meeting if a written consent setting forth the action so taken is signed by a majority of
the Percentage Interests of the Partners (or such other percentage as is expressly required by this
Agreement for the action in question). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of the Percentage
Interests of the Partners (or such other percentage as is expressly required by this Agreement).
Such consent shall be filed with the General Partner. An action so taken shall be deemed to have
been taken at a meeting held on the effective date so certified.

               C.           Each Limited Partner may authorize any Person or Persons to act for it by proxy on all
matters in which a Limited Partner is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited
Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy
authorizing a later date). Every proxy shall be revocable at the pleasure of the Limited Partner
executing it, such revocation to be effective upon the Partnership’s receipt of written notice of
such revocation from the Limited Partner executing such proxy. The use of proxies will be governed
in the same manner as in the case of corporations organized under the General Corporation Law of
Delaware (including Section 212 thereof).

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

ARTICLE XV

GENERAL PROVISIONS

               Section 15.1
          Addresses
and Notice.  Any notice, demand, request or report required or
permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first class United States
mail or by other means of written communication (including by telecopy, facsimile, or commercial
courier service) to the Partner or Assignee at the address set forth in Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.

               Section 15.2
          Titles
and Captions.  All article or section titles or captions in this
Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof. Except as
specifically provided otherwise, references to “Articles” or “Sections” are to Articles and
Sections of this Agreement.

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

               Section 15.4
          Further
Action.  The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.

               Section 15.5
          Binding
Effect.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

               Section 15.6           Waiver.

53

 

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

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

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

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

               Section 15.9
          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.

               Section 15.10
          Invalidity
of Provisions.  If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not be affected thereby.

               Section 15.11
          Limitation
to Preserve REIT Status.  Notwithstanding anything else in
this Agreement, to the extent that the amount paid, credited, distributed or reimbursed by the
Partnership to any REIT 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
REIT 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 such REIT Partner shall not exceed the
lesser of:

                                        (i)      an amount equal to the excess, if any, of (a) four and nine-tenths percent
(4.9%) of the REIT 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 REIT 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) twenty-four percent (24%)
of the REIT 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

54

 

Code Section 856(c)(3) over (b) the amount of gross income (within the meaning
of Code Section 856(c)(3)) derived by the REIT 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, as a condition precedent, obtains an opinion
of tax counsel that the receipt of such excess amounts shall not adversely affect the REIT
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 any REIT Partner from
failing to qualify as a REIT under the Code by reason of such REIT Partner’s share of items,
including distributions, reimbursements, fees, expenses or indemnities, receivable directly or
indirectly from the Partnership, and this Section 15.11 shall be interpreted and applied to
effectuate such purpose.

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

               Section 15.13
          No
Third-Party Rights Created Hereby.  The provisions of this Agreement
are solely for the purpose of defining the interests of the Partners, inter se; and no other
person, firm or entity (i.e., a party who is not a signatory hereto or a permitted successor to
such signatory hereto) shall have any right, power, title or interest by way of subrogation or
otherwise, in and to the rights, powers, title and provisions of this Agreement. No creditor or
other third party having dealings with the Partnership (other than as expressly set forth herein
with respect to Indemnitees) shall have the right to enforce the right or obligation of any Partner
to make Capital Contributions or loans to the Partnership or to pursue any other right or remedy
hereunder or at law or in equity. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may any such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of
the Partnership or any of the Partners.

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

               Section 15.15
          Parent
REIT.  Parent REIT is the corporate parent of the General Partner
and the Initial Limited Partner, and derives certain benefits from the structure established by
this Agreement and is a party hereto. Parent REIT shall not, however, have any Capital Account or
other direct right to any allocations or distributions by the Partnership hereunder.

               Section 15.16
          References
to First Amended Partnership Agreement.  Any reference to the
First Amended Partnership Agreement in any document execution in connection therewith or with this
Agreement shall be deemed to refer to this Agreement.

[The next page is the signature page.]

55

 

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

	 	 	 	 	 
	 	GENERAL PARTNER:

ARBOR REALTY GPOP, INC.

 	 
	 	By:  	/s/ Walter K. Horn	 
	 	 	Name:  	Walter K. Horn 	 
	 	 	Title:  	Secretary 	 
	 

	 	 	 	 	 
	 	INITIAL LIMITED PARTNER:

ARBOR REALTY LPOP, INC.

 	 
	 	By:  	/s/ Walter K. Horn 	 
	 	 	Name:  	Walter K. Horn 	 
	 	 	Title:  	Secretary 	 
	 

	 	 	 	 	 
	 	LIMITED PARTNER:

ARBOR COMMERCIAL MORTGAGE, LLC

 	 
	 	By:  	/s/ Walter K. Horn 	 
	 	 	Name:  	Walter K. Horn 	 
	 	 	Title:  	Secretary 	 
	 

	 	 	 	 	 
	 	PARENT REIT:

ARBOR REALTY TRUST, INC.

 	 
	 	By:  	/s/ Walter K. Horn 	 
	 	 	Name:  	Walter K. Horn 	 
	 	 	Title:  	Secretary 	 
	 

 

 

As of January ___, 2005

Exhibit A

PARTNERS AND PARTNERSHIP UNITS

	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Name and Address of Partners	 	 	Partnership Units (Type and	 	 	Percentage Interests	 
	 	 	 	 	Amount)	 	 	 	 
	 	General Partner:
	 	 	 	 	 	 	 	 	 
	 	ARBOR REALTY GPOP, INC.

	 	 	                     Common Units

	 	 	 	.1	%	 
	 	Limited Partners:
	 	 	 	 	 	 	 	 	 
	 	ARBOR REALTY LPOP, INC.

	 	 	                     Common Units

[32,942] Restricted Common Units

3,776,069 Class A Preferred Units
	 	 	[___]%

[___]%

N/A
	 
	 	ARBOR COMMERCIAL

MORTGAGE LLC

	 	 	3,776,069 Common Units

	 	 	 	[___]	%	 
	 

A-1

 

Exhibit B

EXAMPLES REGARDING ADJUSTMENT FACTOR

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

Example 1

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

1.0 * 200 = 2.0

100

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

Example 2

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

1.0 *           {(100+100)}                = 1.1111

100+{(100+{100*$4.00}     

{$5.00})}

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

Example 3

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

1.0*           {$5.00}            = 1.25

{$5.00 — $1.00}

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

B-1

 

Exhibit C

NOTICE OF REDEMPTION

		
	To: 	Arbor Realty GPOP, Inc.

333 Earle Ovington Boulevard

Suite 900

Uniondale, New York 11553

               The undersigned Limited Partner or Assignee hereby irrevocably tenders for Redemption                     
Partnership Common Units in Arbor Realty Limited Partnership in accordance with the terms of the
Second Amended and Restated Agreement of Limited Partnership of Arbor Realty Limited Partnership,
dated as of                           , 200[4] (the “Agreement”), and the Redemption rights referred to therein.
The undersigned Limited Partner or Assignee:

                                (a)      undertakes (i) to surrender such Partnership Common Units and any certificate therefor at
the closing of the Redemption and (ii) to furnish to the General Partner, prior to the Specified
Redemption Date, the documentation, instruments and information required under Section 8.6.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 Partnership
Common Units, free and clear of the rights or interests of any other person or
entity,

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

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

                                (d)      acknowledges that he will continue to own such Partnership Common Units until and unless
either (1) such Partnership Common Units are acquired by a REIT Party pursuant to Section 8.6.B of
the Agreement or (2) such redemption transaction closes.

C-1

 

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

Dated:                     

	 	 	 
	

	 	Name of Limited Partner or Assignee:
	 
	 	 
	

	 	

	 
	 	 
	

	 	

	

	 	(Signature of Limited Partner or Assignee)
	 
	 	 
	

	 	

	

	 	(Street Address)
	 
	 	 
	

	 	

	

	 	(City)                                (State)                                          (Zip Code)
	 
	 	 
	

	 	Signature Guaranteed by:
	 
	 	 
	 
	 	 
	

	 	

	 
	 	 
	Issue Check Payable to:
	 	 
	

	 	

	 
	 	 
	Please insert social security

or identifying number:
	 	 
	

	 	

C-2

 

Exhibit D

FORM OF UNIT CERTIFICATE

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO THE
PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS. IN
ADDITION, THE LIMITED PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SECOND AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARBOR REALTY LIMITED PARTNERSHIP, DATED AS OF
                          , 200[4] A COPY OF WHICH MAY BE OBTAINED FROM ARBOR REALTY TRUST, INC. AT ITS
PRINCIPAL EXECUTIVE OFFICE.

Certificate Number                     

ARBOR REALTY LIMITED PARTNERSHIP

FORMED UNDER THE LAWS OF THE STATE OF DELAWARE

	 	 
	This certifies that	 

	 	 
	is the owner of	 
	 

FULLY PAID PARTNERSHIP COMMON UNITS OF

ARBOR REALTY LIMITED PARTNERSHIP

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

IN WITNESS WHEREOF, the undersigned has signed this Certificate.

               Dated:

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	 	 
	 	 	 	 
	 

D-1

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