Exhibit 10.1

 

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

CATELLUS OPERATING LIMITED PARTNERSHIP

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TABLE OF CONTENTS

 

          Page

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ARTICLE 1 - DEFINED TERMS

   1

ARTICLE 2 - ORGANIZATIONAL MATTERS

   13

Section 2.1

   Formation and Continuation    13

Section 2.2

   Name    13

Section 2.3

   Registered Office and Agent; Principal Office    13

Section 2.4

   Power of Attorney    13

Section 2.5

   Term    15

ARTICLE 3 - PURPOSE

   15

Section 3.1

   Purpose and Business    15

Section 3.2

   Powers    15

ARTICLE 4 - CAPITAL CONTRIBUTIONS

   15

Section 4.1

   Capital Contributions of the Partners    15

Section 4.2

   Future Issuances of Additional Partnership Interests    16

Section 4.3

   Contribution of Proceeds of Issuance of REIT Shares    17

Section 4.4

   Other Contribution Provisions    18

Section 4.5

   No Preemptive Rights    18

Section 4.6

   No Interest on Capital    18

ARTICLE 5 - DISTRIBUTIONS

   18

Section 5.1

   Requirement and Characterization of Distributions    18

Section 5.2

   Amounts Withheld    19

Section 5.3

   Distributions Upon Liquidation    19

Section 5.4

   Revisions to Reflect Issuance of Additional Partnership Interests    19

ARTICLE 6 - ALLOCATIONS

   20

Section 6.1

   Allocations For Capital Account Purposes    20

ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS

   21

Section 7.1

   Management    21

Section 7.2

   Certificate of Limited Partnership    25

Section 7.3

   Restrictions on General Partner Authority    25

Section 7.4

   Reimbursement of the General Partner and the Company; DRIPs and Repurchase
Programs    26

Section 7.5

   Outside Activities of the General Partner    27

Section 7.6

   Contracts with Affiliates    27

Section 7.7

   Indemnification    28

Section 7.8

   Liability of the General Partner    29

Section 7.9

   Other Matters Concerning the General Partner    30

Section 7.10

   Title to Partnership Assets    31

Section 7.11

   Reliance by Third Parties    31

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ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

   32

Section 8.1

   Limitation of Liability    32

Section 8.2

   Management of Business    32

Section 8.3

   Outside Activities of Limited Partners    32

Section 8.4

   Return of Capital    32

Section 8.5

   Rights of Limited Partners Relating to the Partnership    33

Section 8.6

   Redemption Right    33

ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS

   35

Section 9.1

   Records and Accounting    35

Section 9.2

   Fiscal Year    35

Section 9.3

   Reports    36

ARTICLE 10 - TAX MATTERS

   36

Section 10.1

   Preparation of Tax Returns    36

Section 10.2

   Tax Elections    36

Section 10.3

   Tax Matters Partner    36

Section 10.4

   Organizational Expenses    38

Section 10.5

   Withholding    38

ARTICLE 11 - TRANSFERS AND WITHDRAWALS

   39

Section 11.1

   Transfer    39

Section 11.2

   Transfer of the Company’s General Partner Interest and Limited Partner
Interest; Extraordinary Transactions    39

Section 11.3

   Limited Partners’ Rights to Transfer    40

Section 11.4

   Substituted Limited Partners    41

Section 11.5

   Assignees    42

Section 11.6

   General Provisions    42

ARTICLE 12 - ADMISSION OF PARTNERS

   43

Section 12.1

   Admission of Successor General Partner    43

Section 12.2

   Admission of Additional Limited Partners    43

Section 12.3

   Amendment of Agreement and Certificate of Limited Partnership    44

ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION

   44

Section 13.1

   Dissolution    44

Section 13.2

   Winding Up    45

Section 13.3

   Compliance with Timing Requirements of Regulations    47

Section 13.4

   Deemed Termination    47

Section 13.5

   Rights of Limited Partners    47

Section 13.6

   Notice of Dissolution    48

Section 13.7

   Termination of Partnership and Cancellation of Certificate of Limited
Partnership    48

Section 13.8

   Reasonable Time for Winding-Up    48

Section 13.9

   Waiver of Partition    48

Section 13.10

   Liability of Liquidator    48

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ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

   48

Section 14.1

   Amendments    48

Section 14.2

   Meetings of the Partners    50

ARTICLE 15 - ARBITRATION OF DISPUTES

   51

ARTICLE 16 - GENERAL PROVISIONS

   51

Section 16.1

   Addresses and Notice    51

Section 16.2

   Titles and Captions    52

Section 16.3

   Pronouns and Plurals    52

Section 16.4

   Further Action    52

Section 16.5

   Binding Effect    52

Section 16.6

   Creditors    52

Section 16.7

   Waiver    52

Section 16.8

   Counterparts    52

Section 16.9

   Applicable Law    53

Section 16.10

   Invalidity of Provisions    53

Section 16.11

   No Rights as Shareholders    53

Section 16.12

   Confidentiality    53

Section 16.13

   Entire Agreement    53

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EXHIBITS           Exhibit A    -    Partners Contributions and Partnership
Interests Exhibit B    -    Capital Account Maintenance Exhibit C    -   
Special Allocation Rules Exhibit D    -    Notice of Redemption

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AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

CATELLUS OPERATING LIMITED PARTNERSHIP

 

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of December
1, 2003 (this “Agreement”), is entered into by and between Catellus Development
Corporation, a Delaware corporation, as the General Partner of Catellus
Operating Limited Partnership, a Delaware limited partnership (the
“Partnership”), and Catellus REIT, LLC, a Delaware limited liability company, as
a Limited Partner of the Partnership, together with any other Persons who become
Partners of the Partnership as provided herein.

 

WHEREAS, the Partnership was formed on April 10, 2003, and on that date the
Partnership adopted an original agreement of limited partnership (the “Original
Agreement”);

 

WHEREAS, Catellus REIT, LLC was the sole limited partner of the Partnership
immediately prior to the execution and delivery of this Agreement;

 

WHEREAS, Catellus Development Corporation was the general partner of the
Partnership immediately prior to the execution and delivery of this Agreement;
and

 

WHEREAS, Catellus Development Corporation and Catellus REIT, LLC desire to amend
and restate the Original Agreement effective upon the execution and delivery of
this Agreement and continue the business of the Partnership pursuant to this
Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby amend and restate the
Original Agreement in its entirety and agree to continue the Partnership as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time, as follows:

 

ARTICLE 1 - 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, as it may be
amended from time to time, and any successor to such statute.

 

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

 

“Adjusted Capital Account” means the Capital Account maintained for each Partner
as of the end of each Partnership taxable year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to

 

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restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is
intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

“Adjusted Capital Account Deficit” means, with respect to any Partner, the
deficit balance, if any, in such Partner’s Adjusted Capital Account as of the
end of the relevant Partnership taxable year.

 

“Adjusted Property” means any property, the Carrying Value of which has been
adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
contributed to the Partnership for federal income tax purposes upon a
termination thereof pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value of such
property is further adjusted pursuant to Exhibit B hereof.

 

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
For purposes of this definition, “control,” when used with respect to any
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing. No officer, director or shareholder of
the General Partner shall be considered an Affiliate of the General Partner
solely as a result of serving in such capacity or being a shareholder of the
General Partner.

 

“Agreed Value” means (i) in the case of any Contributed Property as of the time
of its contribution to the Partnership, the 704(c) Value of such property,
reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed, and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership’s Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the Regulations
thereunder. The aggregate Agreed Value of any Contributed Property contributed
or deemed contributed by each Partner is as set forth on Exhibit A.

 

“Agreement” means this Amended and Restated Agreement of Limited Partnership, as
it may be amended, supplemented or restated from time to time, including by way
of adoption of a Certificate of Designations.

 

“Arbitrator” has the meaning set forth in Article 15 hereof.

 

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

 

“Available Cash” means, with respect to any period for which such calculation is
being made, (i) the sum of:

 

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(a) the Partnership’s Net Income or Net Loss, as the case may be, for such
period (without regard to adjustments resulting from allocations described in
Sections 1.A through 1.E of Exhibit C);

 

(b) Depreciation and all other noncash charges deducted in determining Net
Income or Net Loss for such period;

 

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

 

(d) the excess of proceeds from the sale, exchange, disposition, or refinancing
of Partnership property for such period over the gain recognized from such sale,
exchange, disposition, or refinancing during such period (excluding Terminating
Capital Transactions); and

 

(e) all other cash received by the Partnership for such period that was not
included in determining Net Income or Net Loss for such period.

 

(ii) less the sum of:

 

(a)all interest, principal and other debt payments made by the Partnership
during such period;

 

(b) capital expenditures made by the Partnership during such period;

 

(c) investments made by the Partnership during such period in any entity
(including loans made thereto) to the extent that such investments are not
otherwise described in clause (ii)(a) or (ii)(b);

 

(d) all other expenditures and payments not deducted in determining Net Income
or Net Loss for such period;

 

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

 

(f) the amount of any increase in reserves during such period which the General
Partner determines to be necessary or appropriate in its sole and absolute
discretion; and

 

(g) the amount of any working capital accounts and other cash or similar
balances which the General Partner determines to be necessary or appropriate, in
its sole and absolute discretion.

 

Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.

 

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“Book-Tax Disparities” means, with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Partner’s share of the Partnership’s Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner’s Capital Account balance as maintained pursuant to Exhibit
B and the hypothetical balance of such Partner’s Capital Account computed as if
it had been maintained strictly in accordance with federal income tax accounting
principles.

 

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

 

“Capital Account” means the Capital Account maintained for a Partner pursuant to
Exhibit B hereof.

 

“Capital Contribution” means, with respect to any Partner, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Sections
4.1, 4.2, 4.3 or 4.4 hereof.

 

“Carrying Value” means (i) with respect to a Contributed Property or Adjusted
Property, the 704(c) Value of such property, reduced (but not below zero) by all
Depreciation with respect to such Contributed Property or Adjusted Property, as
the case may be, charged to the Partners’ Capital Accounts following the
contribution of or adjustment with respect to such property; and (ii) with
respect to any other Partnership property, the adjusted basis of such property
for federal income tax purposes, all as of the time of determination. The
Carrying Value of any property shall be adjusted from time to time in accordance
with Exhibit B hereof, and to reflect changes, additions or other adjustments to
the Carrying Value for dispositions and acquisitions of Partnership properties,
as deemed appropriate by the General Partner.

 

“Cash Amount” means an amount of cash equal to the Value on the Valuation Date
of the REIT Shares Amount.

 

“Certificate of Designations” means an amendment to this Agreement that sets
forth the designations, rights, powers, duties and preferences of holders of any
Partnership Interests issued pursuant to Section 4.2.A, which amendment is in
the form of a certificate signed by the General Partner and appended to this
Agreement. A Certificate of Designations is not the exclusive manner in which
such an amendment may be effected. The General Partner may adopt a Certificate
of Designations without the consent of the Limited Partners to the extent
permitted pursuant to Section 14.1.B hereof.

 

“Certificate of Incorporation” means the Certificate of Incorporation or other
organizational document governing the General Partner, as amended or restated
from time to time.

 

“Certificate of Limited Partnership” means the Certificate of Limited
Partnership relating to 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.

 

4

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“Code” means the Internal Revenue Code of 1986, as amended and in effect from
time to time, 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 any succeeding law.

 

“Common Unit” means a Partnership Unit which is designated as a Common Unit and
which has the rights, preferences and other privileges designated herein in
respect of Common Unitholders. The allocation of Common Units among the Partners
shall be set forth on Exhibit A, as may be amended from time to time.

 

“Common Unitholder” means a Partner that holds Common Units.

 

“Company” means Catellus Development Corporation, a Delaware corporation, or its
successor.

 

“Consent” means the consent or approval of a proposed action by a Partner given
in accordance with Section 14.2 hereof.

 

“Contributed Property” means each property or other asset, in such form as may
be permitted by the Act (but excluding cash), contributed or deemed contributed
to the Partnership (including deemed contributions to the Partnership on
reconstitution thereof pursuant to Section 708 of the Code). Once the Carrying
Value of a Contributed Property is adjusted pursuant to Exhibit B hereof, such
property shall no longer constitute a Contributed Property for purposes of
Exhibit B hereof, but shall be deemed an Adjusted Property for such purposes.

 

“Conversion Factor” means 1.0, provided that in the event that the Company (i)
declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Shares in REIT
Shares; (ii) subdivides its outstanding REIT Shares or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purpose that such dividend, distribution, subdivision or
combination has occurred as of such time), and 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,
subdivision or combination. Notwithstanding the foregoing, no adjustment to the
Conversion Factor shall be made as a result of the payment of any special
dividend to holders of outstanding REIT Shares in connection with the REIT
Conversion. Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event (provided, however, if a Notice of Redemption is
given prior to such a record date and the Specified Redemption Date is after
such a record date, then the adjustment to the Conversion Factor shall, with
respect to such redeeming Partner, be retroactive to the date of such Notice of
Redemption, provided that such dividend, distribution, subdivision or
combination occurs as of the effective date of such event). It is intended that
adjustments to the Conversion Factor are to be made in order to avoid unintended
dilution or anti-dilution as a result of transactions in which REIT Shares are
issued, redeemed or exchanged without a corresponding issuance, redemption or
exchange of Common Units or of Preferred Units that are

 

5

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convertible into Common Units. If, prior to a Specified Redemption Date, Rights
(other than Rights issued pursuant to an employee benefit plan or other
compensation arrangement) were issued and have expired, and such Rights were
issued with an exercise price that, together with the purchase price for such
Rights, was below fair market value in relation to the security or other
property to be acquired upon the exercise of such Rights, and such Rights were
issued to all holders of outstanding REIT shares or the General Partner cannot
in good faith represent that the issuance of such Rights benefited the Limited
Partners, then the Conversion Factor applicable upon a Notice of Redemption
shall be equitably adjusted in a manner consistent with anti-dilution provisions
in warrants and other instruments in the case of such a below market issuance or
exercise price. A similar equitable adjustment to protect the value of Common
Units shall be made in all events if any Rights issued under a “Shareholder
Rights Plan” became exercisable and expired prior to a Specified Redemption
Date.

 

“Depreciation” means, for each taxable year or other 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 Carrying Value of an asset differs from its adjusted basis
for federal income tax purposes at the beginning of such year or other period,
Depreciation shall be an amount which bears the same ratio to such beginning
Carrying 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 is
zero, Depreciation shall be determined with reference to such beginning Carrying
Value using any reasonable method selected by the General Partner.

 

“Distribution Period” has the meaning set forth in Section 5.1 hereof.

 

“Extraordinary Transaction” shall mean, with respect to the Company, the
occurrence of one or more of the following events: (i) a merger (including a
triangular merger), consolidation or other combination with or into another
Person; (ii) the direct or indirect sale, lease, exchange or other transfer of
all or substantially all of its assets in one transaction or a series of related
transactions; (iii) any reclassification, recapitalization or change of its
outstanding equity interests (other than a change in par value, or from par
value to no par value, or as a result of a split, dividend or similar
subdivision); or (iv) the adoption of any plan of liquidation or dissolution of
the Company (whether or not in compliance with the provisions of this
Agreement).

 

“Filing Date” has the meaning set forth in Article 15 hereof.

 

“Full Distribution Period” has the meaning set forth in Section 5.1 hereof.

 

“General Partner” means the Company, in its capacity as the general partner of
the Partnership, or its successor, as general partner of the Partnership.

 

“General Partner Interest” means a Partnership Interest held by the General
Partner, in its capacity as general partner. A General Partner Interest may be
expressed as a number of Partnership Units.

 

6

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

 

“Incapacity” or “Incapacitated” means, (i) as to any natural person which is a
Partner, death, total physical disability or entry by a court of competent
jurisdiction of an order adjudicating him or her incompetent to manage his or
her Person or estate; (ii) as to any corporation which is a Partner, the filing
of a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its certificate of incorporation; (iii) as to any partnership or
limited liability company which is a Partner, the dissolution and commencement
of winding up of the partnership or the limited liability company; (iv) as to
any estate which is a Partner, the distribution by the fiduciary of the estate’s
entire interest in the Partnership; (v) as to any trustee of a trust which 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 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 of or against such Partner under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred twenty (120) days after the commencement
thereof; (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)
which has been stayed 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 his,
her or its status as (a) the General Partner, (b) a Limited Partner, or (c) a
director or officer of the Partnership or the General Partner, and (ii) such
other Persons (including Affiliates of the General Partner, a Limited Partner or
the Partnership) as the General Partner may designate from time to time (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.

 

“Limited Partner” means any Person (including the Company) named as a Limited
Partner on Exhibit A attached hereto, as such Exhibit 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 of the Partnership.

 

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

 

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

 

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

 

“Net Income” means, for any taxable period, the excess, if any, of the
Partnership’s items of income and gain for such taxable period over the
Partnership’s items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for on Exhibit B. If an item of income, gain, loss or deduction that
has been included in the initial computation of Net Income is subjected to the
special allocation rules in Exhibit C, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such item.

 

“Net Loss” means, for any taxable period, the excess, if any, of the
Partnership’s items of loss and deduction for such taxable period over the
Partnership’s items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
federal income tax accounting principles, subject to the specific adjustments
provided for on Exhibit B. If an item of income, gain, loss or deduction that
has been included in the initial computation of Net Loss is subjected to the
special allocation rules in Exhibit C, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.

 

“Newly Issued Unit” has the meaning set forth in Section 5.1 hereof.

 

“New Partnership” has the meaning set forth in Section 13.4 hereof.

 

“New Securities” has the meaning set forth in Section 4.2 hereof.

 

“Nonrecourse Built-in Gain” means, with respect to any Contributed Properties or
Adjusted Properties that are subject to a mortgage or negative pledge securing a
Nonrecourse Liability, the amount of any taxable gain that would be allocated to
the Partners pursuant to Section 2.B of Exhibit C if such properties were
disposed of in a taxable transaction in full satisfaction of such liabilities
and for no other consideration.

 

“Nonrecourse Deductions” has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership
taxable 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 D to this Agreement.

 

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

 

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

 

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

 

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

 

“Partnership Interest” means an ownership interest in the Partnership
representing a Capital Contribution 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 Units.

 

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

 

“Partnership Record Date” means the record date established by the General
Partner for (i) the distribution of Available Cash with respect to Common Units
pursuant to Section 5.1 hereof, which record date shall, unless otherwise
determined by the General Partner, be the same as the record date established by
the Company for a distribution to its common shareholders of some of all of its
portion of such distribution, or (ii) if applicable, for determining the
Partners entitled to vote on or consent to any proposed action for which the
consent or approval of the Partners is sought pursuant to Section 14.2 hereof.

 

“Partnership Unit” or “Unit” means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2, 4.3
and 4.4 (and includes any class or series of Preferred Units established after
the date hereof). The number of Partnership Units outstanding and (in the case
of Common Units) the Percentage Interest in the Partnership represented by such
Partnership Units are set forth on Exhibit A attached hereto, as such Exhibit
may be amended from time to time. The ownership of Partnership Units shall be
evidenced by such form of certificate for Units as the General Partner adopts
from time to time unless the General Partner determines that the Partnership
Units shall be uncertificated securities.

 

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

 

“Percentage Interest” means, as to a Partner, its percentage interest as a
Common Unitholder determined by dividing the Common Units owned by such Partner
by the total number of Common Units then outstanding and as specified on Exhibit
A attached hereto, as such Exhibit may be amended from time to time.

 

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“Person” means a natural person, corporation, partnership (whether general or
limited), limited liability company, trust, estate, unincorporated organization,
association, custodian, nominee or any other individual or entity in its own or
any representative capacity.

 

“Preferred Unit” means a limited partnership interest (of any series), other
than a Common Unit, represented by a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder and which is designated
as a “Preferred Unit” (or as a particular class or series of Preferred Units)
herein and which has the rights, preferences and other privileges designated
herein (including by way of a Certificate of Designations) in respect of a
Preferred Unitholder. The allocation of Preferred Units among the Partners shall
be set forth on Exhibit A, as may be amended from time to time.

 

“Preferred Unitholder” means a Limited Partner that holds Preferred Units (of
any class or series).

 

“Qualified REIT Subsidiary” means any Subsidiary of the General Partner that is
a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code.

 

“Recapture Income” means any gain recognized by the Partnership upon the
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.

 

“Redeeming Partner” has the meaning set forth in Section 8.6 hereof.

 

“Redemption Amount” means either the Cash Amount or the REIT Shares Amount, as
determined by the Company, in its sole and absolute discretion. A Redeeming
Partner shall have no right, without the Company’s consent, which consent may be
given or withheld in the Company’s sole and absolute discretion, to receive the
Redemption Amount in the form of the REIT Shares Amount.

 

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

 

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

 

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

 

“REIT Conversion” means the overall plan adopted by the Company to restructure
its business operations so that it will qualify as a REIT for federal income tax
purposes.

 

“REIT Share” shall mean a share of common stock of the Company.

 

“REIT Shares Amount” shall mean a number of REIT Shares equal to the product of
(x) the number of Common Units offered for redemption by a Redeeming Partner
multiplied by (y) the Conversion Factor in effect on the date of receipt by the
Partnership of a Notice of Redemption, provided that, in the event the Company
has previously issued to all holders of

 

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REIT Shares rights, options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase REIT Shares, or any
other securities or property (collectively, “Rights”), and the Rights have not
expired at the Specified Redemption Date, then the REIT Shares Amount shall also
include that number of Rights that were issuable to a holder of the REIT Shares
Amount or REIT Shares on the applicable record date relating to the issuance of
such Rights.

 

“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case
may be, of the Partnership recognized for federal income tax purposes resulting
from a sale, exchange or other disposition of Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not allocated pursuant to
Section 2.B(1)(a) or 2.B(2)(a) of Exhibit C to eliminate Book-Tax Disparities.

 

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

 

“704(c) Value” of any Contributed Property means the fair market value of such
property or other consideration at the time of contribution, as determined by
the General Partner using such reasonable method of valuation as it may adopt;
provided, however, that the 704(c) Value of any property deemed contributed to
the Partnership for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code shall be determined
in accordance with Exhibit B hereof. Subject to Exhibit B hereof, the General
Partner shall, in its sole and absolute discretion, use such method as it deems
reasonable and appropriate to allocate the aggregate of the 704(c) Values of
Contributed Properties in a single or integrated transaction among the separate
properties on a basis proportional to their respective fair market values.

 

“Specified Redemption Date” means the tenth (10th) Business Day after receipt by
the Partnership (with a copy to the Company) of a Notice of Redemption; provided
that if the Company combines its outstanding REIT Shares, no Specified
Redemption Date shall occur after the record date of such combination of REIT
Shares and prior to the effective date of such combination.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership or
other entity 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.

 

“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.

 

“Unrealized Gain” attributable to any item of Partnership property means, as of
any date of determination, the excess, if any, of (i) the fair market value of
such property (as determined under Exhibit B hereof) as of such date over (ii)
the Carrying Value of such property (prior to any adjustment to be made pursuant
to Exhibit B hereof) as of such date.

 

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“Unrealized Loss” attributable to any item of Partnership property means, as of
any date of determination, the excess, if any, of (i) the Carrying Value of such
property (prior to any adjustment to be made pursuant to Exhibit B hereof) as of
such date over (ii) the fair market value of such property (as determined under
Exhibit B hereof) as of such date.

 

“Valuation Date” means the date of receipt by the Partnership of a Notice of
Redemption or, if such date is not a Business Day, the first Business Day
thereafter.

 

“Value” means, with respect to a REIT Share, the average of the daily market
price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) if the
REIT Shares are listed or admitted to trading on any national securities
exchange or the Nasdaq National Market System, the closing price on such day as
reported by such national securities exchange or the Nasdaq National Market
System, or if no such sale takes place on such day, the average of the closing
bid and asked prices on such day; (ii) if the REIT Shares are not listed or
admitted to trading on any national securities exchange or the Nasdaq National
Market System, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on such day,
as reported by a reliable quotation source designated by the General Partner;
(iii) if the REIT Shares are not listed or admitted to trading on any national
securities exchange or the Nasdaq National Market System and no such last
reported sale price or closing bid and asked prices are available, the average
of the reported high bid and low asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or if there shall
be no bid and asked prices on such day, the average of the high bid and low
asked prices, as so reported, on the most recent day (not more than ten (10)
days prior to the date in question) for which prices have been so reported; or
(iv) if none of the conditions set forth in clauses (i), (ii), or (iii) is met
then, unless the holder of the REIT Shares or Units and the General Partner
otherwise agree, with respect to a REIT Share per Common Unit offered for
redemption, the amount that a holder of one Common Unit would receive if each of
the assets of the Partnership were sold for its fair market value on the
Specified Redemption Date, the Partnership were to pay all of its outstanding
liabilities, and the remaining proceeds were to be distributed to the Partners
in accordance with the terms of this Agreement. Such Value shall be determined
by the General Partner, acting in good faith and based upon a commercially
reasonable estimate of the amount that would be realized by the Partnership if
each asset of the Partnership (and each asset of each partnership, limited
liability company, trust, joint venture or other entity in which the Partnership
owns a direct or indirect interest) were sold to an unrelated purchaser in an
arms’ length transaction where neither the purchaser nor the seller were under
any economic compulsion to enter into the transaction (without regard to any
discount in value as a result of the Partnership’s minority interest in any
property or any illiquidity of the Partnership’s interest in any property). In
the event the REIT Shares Amount includes Rights, 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, provided that the Value of any rights issued pursuant to
a “Shareholder Rights Plan” shall be deemed to have no value unless a
“triggering event” shall have occurred (i.e., if the Rights issued pursuant
thereto are no longer “attached” to the REIT Shares and are able to trade
independently).

 

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ARTICLE 2 - ORGANIZATIONAL MATTERS

 

Section 2.1 Formation and Continuation

 

The Partnership was formed as a limited partnership organized pursuant to the
provisions of the Act by the filing of the Certificate of Limited Partnership
with the Delaware Secretary of State on April 10, 2003 and upon the terms and
conditions set forth in the Original Agreement. The Partners hereby agree to
continue the Partnership upon the terms and conditions set forth in this
Agreement (which amends and restates and supercedes the Original Agreement in
its entirety). 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 Catellus Operating 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,” “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 Limited Partners of such change in the next regular communication to the
Limited Partners.

 

Section 2.3 Registered Office and Agent; Principal Office

 

The address of the registered office of the Partnership in the State of Delaware
and the name and address of the registered agent for service of process on the
Partnership in the State of Delaware is Corporation Service Company, 2711
Centreville Road, Suite 400, Wilmington, Delaware 19808. The principal business
office of the Partnership shall be 201 Mission Street, San Francisco, California
94105. The General Partner may from time to time designate in its sole and
absolute discretion another registered agent or another location for the
registered office or principal place of business, and shall provide the Limited
Partners with notice of such change promptly following its effective date. 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 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, acknowledge, deliver, file and record in the appropriate
public offices (a) all certificates, documents and other instruments (including,
without limitation, this Agreement and the Certificate of Limited Partnership
and all amendments or restatements thereof) that the General Partner or any
Liquidator deems

 

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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) in the State of Delaware and
in all other jurisdictions in which the Partnership may or plans to conduct
business or own property; (b) all instruments that the General Partner deems
appropriate or necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (c) all conveyances
and other instruments or documents that the General Partner or any 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 instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article 11, 12 or 13 hereof or the Capital
Contribution of any Partner and (e) all certificates, documents and other
instruments relating to the determination of the rights, preferences and
privileges of Partnership Interests; and

 

(2) execute, swear to, seal, 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 any Liquidator, to
make, evidence, give, confirm or ratify any vote, consent, approval, agreement
or other action which is made or given by the Partners hereunder or is
consistent with the terms of this agreement or appropriate or necessary, in the
sole discretion of the General Partner or any Liquidator, to effectuate the
terms or intent of this Agreement.

 

Nothing contained herein shall be construed as authorizing the General Partner
or any 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
power coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner and any
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 or the
transfer of all or any portion of such Limited Partner’s or Assignee’s
Partnership Units 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 any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or any Liquidator, within fifteen (15) days after receipt of the
General Partner’s or such Liquidator’s request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
any Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.

 

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Section 2.5 Term

 

The term of the Partnership commenced on April 10, 2003 and shall continue until
December 31, 2102, unless the Partnership is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.

 

ARTICLE 3 - PURPOSE

 

Section 3.1 Purpose and Business

 

The purpose and nature of the business to be conducted by the Partnership is (i)
to conduct any business that may be lawfully conducted by a limited partnership
organized pursuant to the Act; provided, however, that such business shall be
limited to and conducted in such a manner as to permit the Company at all times
to be qualified as a REIT, unless the Company is not qualified or ceases to
qualify as a REIT for any reason or reasons other than the conduct of the
business of the Partnership; (ii) to enter into any partnership, joint venture,
limited liability company or other similar arrangement to engage in any of the
foregoing or to own interests in any entity engaged, directly or indirectly, in
any of the foregoing; and (iii) to do anything necessary or incidental to the
foregoing. In connection with the foregoing, and without limiting the Company’s
right, in its sole discretion, to cease qualifying as a REIT, the Partners
acknowledge that the Company’s status as a REIT inures to the benefit of all of
the Partners and not solely the General Partner or its Affiliates.

 

Section 3.2 Powers

 

The Partnership is 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, including, without limitation, full
power and authority, directly or through its ownership interest in other
entities, to enter into, perform and carry out contracts of any kind, borrow
money and issue evidences of indebtedness whether or not secured by mortgage,
deed of trust, pledge or other lien, acquire, own, manage, improve and develop
real property, and lease, sell, transfer and dispose of real property; provided,
however, that the Partnership shall not take, or omit to take, any action which,
in the judgment of the General Partner, in its sole and absolute discretion, (i)
could adversely affect the ability of the Company to achieve or maintain
qualification as a REIT; (ii) could subject the Company to any additional taxes
under Section 857 or Section 4981 of the Code or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
Company or its securities, unless any such action (or inaction) under the
foregoing clauses (i), (ii) or (iii) shall have been specifically consented to
by the Company in writing.

 

ARTICLE 4 - CAPITAL CONTRIBUTIONS

 

Section 4.1 Capital Contributions of the Partners

 

A. Each Partner listed on Exhibit A has previously made, prior to the execution
of this Agreement, a Capital Contribution to the Partnership as specified in the
Original Agreement in exchange for its Partnership Units and Partnership
Interest set forth on Exhibit A.

 

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B. The Partners shall own Partnership Units in the amounts set forth on Exhibit
A, and have Percentage Interests as set forth on Exhibit A, which number of
Partnership Units and Percentage Interest shall be adjusted from time to time on
Exhibit A by the General Partner to the extent necessary to accurately reflect
the issuance of additional Partnership Units, the redemption of Partnership
Units, additional Capital Contributions and similar events having an effect on a
Partner’s Percentage Interest occurring after the date hereof in accordance with
the terms of this Agreement.

 

C. A number of Common Units held by the General Partner equal to one percent
(1%) of all outstanding Common Units shall be deemed to be the General Partner
Partnership Units and shall be the General Partner Interest. All other
Partnership Units held by the General Partner shall be deemed to be Limited
Partner Interests and shall be held by the General Partner in its capacity as a
Limited Partner in the Partnership.

 

D. To the extent the Partnership acquires any property (or an indirect interest
therein) by the merger of any other Person into the Partnership or with or into
a Subsidiary of the Partnership in a triangular merger, Persons who receive
Partnership Interests in exchange for their interests in the Person merging into
the Partnership or with or into a Subsidiary of the Partnership shall become
Partners and shall be deemed to have made Capital Contributions as provided in
the applicable merger agreement (or if not so provided, as determined by the
General Partner in its sole discretion) and as set forth on Exhibit A, as
amended to reflect such deemed Capital Contributions.

 

E. Except as provided in Sections 4.2, 4.3, 10.5, and 13.3, the Partners shall
have no obligation to make any additional Capital Contributions or loans to the
Partnership.

 

Section 4.2 Future Issuances of Additional Partnership Interests

 

A. The General Partner is hereby authorized, in its sole and absolute discretion
and without the approval of the Limited Partners to cause the Partnership from
time to time to issue to the Partners (including the General Partner and its
Affiliates) or other Persons (including, without limitation, in connection with
the contribution of cash and other property to the Partnership) additional
Partnership Units or other Partnership Interests in one or more classes, or in
one or more series of any of such classes, with such designations, preferences
and relative, participating, optional or other special rights, powers and duties
all as shall be determined by the General Partner in its sole and absolute
discretion subject to Delaware law, including, without limitation, (i) rights,
powers and duties senior to one or more classes or series of Partnership
Interests and any other Common Units outstanding or thereafter issued; (ii) the
rights to an allocation of items of Partnership income, gain, loss, deduction
and credit to each such class or series of Partnership Interests; (iii) the
rights of each such class or series of Partnership Interests to share in
Partnership distributions; and (iv) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership;
provided that no such additional Partnership Units or other Partnership
Interests shall be issued to the General Partner, unless either (a)(1) the
additional Partnership Interests are issued in connection with the

 

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grant, award or issuance of REIT Shares or other equity interests in the
Company, which REIT shares or other equity interests have designations,
preferences and other rights such that the economic interests attributable to
such REIT Shares or other equity interests are substantially similar to the
designations, preferences and other rights of the additional Partnership
Interests issued to the General Partner in accordance with this Section 4.2.A,
and (2) the Company shall make a Capital Contribution to the Partnership in an
amount equal to any proceeds raised in connection with such issuance or (b) the
additional Partnership Interests are issued to all Partners in proportion to
their respective Percentage Interests. In addition, the General Partner may
acquire Partnership Units from other Partners pursuant to this Agreement. In the
event that the Partnership issues Partnership Interests pursuant to this Section
4.2.A, the General Partner shall make such revisions to this Agreement (without
any requirement of receiving approval of the Limited Partners) including, but
not limited to, the revisions described in Section 5.4, Section 6.1 and Section
8.6 hereof, as it deems necessary to reflect the issuance of such additional
Partnership Interests and the special rights, powers and duties associated
therewith.

 

B. From and after the date hereof, the Company shall not issue any additional
REIT Shares (other than REIT Shares issued pursuant to Section 8.6), or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase REIT Shares (collectively “New Securities”) other
than to all holders of REIT Shares unless (i) the General Partner shall cause
the Partnership to issue to the Company, Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights, all such that the economic
interests are substantially similar to those of the New Securities and (ii) the
Company contributes to the Partnership the proceeds from the issuance of such
New Securities and from the exercise of rights contained in such New Securities.
Without limiting the foregoing, the Company is expressly authorized to issue New
Securities for no tangible value or for less than fair market value, and the
General Partner is expressly authorized to cause the Partnership to issue to the
Company corresponding Partnership Interests, so long as (a) the General Partner
concludes in good faith that such issuance is in the interests of the Company
and the Partnership (for example, and not by way of limitation, the issuance of
REIT Shares and corresponding Units pursuant to an employee stock purchase plan
providing for employee grants or purchases of REIT Shares or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise) and
(b) the Company contributes all proceeds, if any, from such issuance and
exercise to the Partnership.

 

Section 4.3 Contribution of Proceeds of Issuance of REIT Shares

 

In connection with any other issuance of New Securities pursuant to Section 4.2,
the Company shall contribute to the Partnership any proceeds (or a portion
thereof) raised in connection with such issuance; provided that if the proceeds
actually received by the Company are less than the gross proceeds of such
issuance as a result of any underwriter’s discount or other expenses paid or
incurred in connection with such issuance, then the Company shall be deemed to
have made a Capital Contribution to the Partnership in the amount equal to the
sum of the net proceeds of such issuance plus the amount of such underwriter’s
discount and other expenses paid by the Company (which discount and expense
shall be treated as an expense for the benefit of the Partnership for purposes
of Section 7.4). In the case of employee acquisitions of New Securities at a
discount from fair market value or for no value in connection with a grant

 

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of New Securities, the amount of such discount representing compensation to the
employee, as determined by the General Partner, shall be treated as an expense
of the issuance of such New Securities.

 

Section 4.4 Other Contribution Provisions

 

If any Partner is admitted to the Partnership and is given a positive Capital
Account balance in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership as if the Partnership had
compensated such Partner in cash, and such Partner had contributed such cash to
the capital of the Partnership.

 

Section 4.5 No Preemptive Rights

 

Except to the extent expressly granted by the Partnership pursuant to another
agreement, no Person shall have any preemptive, preferential or other similar
right with respect to (i) Capital Contributions or loans to the Partnership or
(ii) the issuance or sale of any Partnership Units or other Partnership
Interests.

 

Section 4.6 No Interest on Capital

 

No Partner shall be entitled to interest on its Capital Contributions or its
Capital Account. Except as provided herein or by law, no Partner shall have any
right to withdraw any part of its Capital Account or to demand or receive the
return of its Capital Contributions.

 

ARTICLE 5 - DISTRIBUTIONS

 

Section 5.1 Requirement and Characterization of Distributions

 

A. Subject to the rights and preferences of any outstanding class or series of
Preferred Units expressly provided for in an agreement (including a Certificate
of Designations), and except as provided in Section 5.1.B, the General Partner
shall distribute at least quarterly an amount equal to one hundred percent
(100%) of Available Cash, or such lesser amount as the General Partner may in
its sole and absolute discretion determine, generated by the Partnership during
such quarter or shorter period to the Common Unitholders who are Partners on the
Partnership Record Date with respect to such quarter or shorter period in
accordance with their respective Percentage Interests on such Partnership Record
Date; provided that in no event may a Partner receive a distribution of
Available Cash with respect to a Common Unit if such Partner is entitled to
receive a distribution out of such Available Cash with respect to a REIT Share
for which such Common Unit has been exchanged or redeemed and such distribution
shall instead be made to the Company. The General Partner shall take such
reasonable efforts, as determined by it in its sole and absolute discretion and
consistent with the Company’s qualification as a REIT, to cause the Partnership
to distribute Available Cash (i) to permit the Company to satisfy the
requirements for qualifying as a REIT under the Code, including applicable
shareholder distribution requirements and (ii) except to the extent otherwise
determined by the General Partner, to minimize any federal income or excise tax
liability of the General Partner. Unless otherwise expressly provided for herein
or in an agreement (including a Certificate of Designations) at the time a new
class of Partnership Interests is created in accordance with Article 4 hereof,
no Partnership Interest shall be entitled to a distribution in preference to any
other Partnership Interest.

 

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B. Notwithstanding the provisions of Section 5.1.A above or any other provision
of this Agreement, if for any quarter or shorter period with respect to which a
distribution is to be made (a “Distribution Period”), a “Newly Issued Unit” (as
such term is defined below) is outstanding on the Partnership Record Date for
such Distribution Period, there shall not be distributed in respect of such
Newly Issued Unit the amount (the “Full Distribution Amount”) that would
otherwise be distributed in respect of such Common Unit in accordance with
Section 5.1.A. Rather, the General Partner shall cause to be distributed with
respect to each such Newly Issued Unit an amount equal to the Full Distribution
Amount multiplied by a fraction, the numerator of which equals the number of
days such Newly Issued Unit has been outstanding during the Distribution Period
and the denominator of which equals the total number of days in such
Distribution Period. Any Available Cash not distributed to the holders of Units
by operation of this Section 5.1.B shall be retained by the Partnership and
applied toward future distributions or payment of Partnership expenses. The
General Partner may, in its sole discretion, with respect to any distribution,
waive the application of this Section 5.1.B such that a Newly Issued Unit shall
receive the Full Distribution Amount (or any greater amount than would otherwise
be received under this Section 5.1.B but not in excess of the Full Distribution
Amount). For purposes of this Section 5.1.B, the term “Newly Issued Unit” shall
mean, with respect to any Distribution Period, a Common Unit issued during such
Distribution Period, except that the term “Newly Issued Unit” shall not include
(i) a Common Unit issued to the Company as a result of the contribution by it of
proceeds from the issuance of New Securities (as contemplated by Sections 4.2
and 4.3) or (ii) (unless otherwise provided by the General Partner) any Common
Units issued in connection with a split on or unit dividend of the Common Units.

 

Section 5.2 Amounts Withheld

 

All amounts withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.5 hereof with respect to any allocation, payment or
distribution to the Partners or Assignees shall be treated as amounts
distributed to the Partners or Assignees pursuant to Section 5.1 for all
purposes under this Agreement.

 

Section 5.3 Distributions Upon Liquidation

 

Proceeds from a Terminating Capital Transaction and any other cash received or
reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section
13.2.

 

Section 5.4 Revisions to Reflect Issuance of Additional Partnership Interests

 

In the event that the Partnership issues additional Partnership Interests to the
General Partner or any Additional Limited Partner pursuant to Article 4 hereof,
the General Partner shall make such revisions to this Article 5 as it deems
necessary to reflect the issuance of such additional Partnership Interests and
any special rights, duties or powers with respect thereto. Such revisions shall
not require the consent or approval of any other Partner.

 

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ARTICLE 6 - ALLOCATIONS

 

Section 6.1 Allocations For Capital Account Purposes

 

For purposes of maintaining the Capital Accounts and in determining the rights
of the Partners among themselves, the Partnership’s items of income, gain, loss
and deduction (computed in accordance with Exhibit B hereof) shall be allocated
among the Partners in each taxable year (or portion thereof) as provided herein
below.

 

A. After taking into account the provisions of Section 6.1.B below, Net Income
shall be allocated

 

(1) First, to the Partners in the same ratio and reverse order as Net Loss was
allocated to such Partners pursuant to Sections 6.1.C(2), (3), and (4) for all
fiscal years until the aggregate amount allocated to such Partners pursuant to
such provisions of Section 6.1.C equals the aggregate amount allocated pursuant
to this Section 6.1.A(1); and

 

(2) Thereafter, Net Income shall be allocated to the Partners in accordance with
their respective Percentage Interests.

 

B. Notwithstanding the provisions of Section 6.1.A above, items of gross income
shall first be allocated to the holders of each class of Preferred Units, (a) on
a class by class basis (1) in the order of priority in which each such class is
entitled to receive distributions pursuant to the provisions of Section 5.1
and/or the applicable Certificate of Designations and (2) in an amount equal to
the aggregate distributions made to each such class of Preferred Units pursuant
to the provisions of Section 5.1 and/or the applicable Certificate of
Designations (other than distributions properly treated as return of capital),
and (b) within each such class of Preferred Units in proportion to the
distributions with respect to such class referred to in clause (a)(2) above
received by each holder of Preferred Units (other than distributions properly
treated as return of capital).

 

C. After giving effect to the special allocations set forth in Section 1 of
Exhibit C attached hereto, Net Losses shall be allocated to the Partners in the
following order:

 

(1) First, in the same ratio and reverse order as Net Income was allocated to
the Partners pursuant to the provisions of Section 6.1.A(2) for all fiscal years
until the aggregate amount of Net Income previously allocated to such Partners
pursuant to such provisions of Section 6.1.A(2) equals the aggregate amount of
Net Loss allocated to such Partners pursuant to this Section 6.1.C(1);

 

(2) Second, to the Partners, in proportion to their Percentage Interests until
each Partner’s Adjusted Capital Account balance has been reduced to zero,
excluding, for this purpose, the portion of any such Capital Account
attributable to Capital Contributions made with respect to Preferred Units;

 

(3) Third, to the holders of each class of Preferred Units, on a class by class
basis, in the reverse priority in which each such class is entitled to
distributions

 

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pursuant to the provisions of Section 5.1 and/or the applicable Certificate of
Designations attached hereto, and within such class to each holder of such class
of Preferred Units, pro rata, in proportion to the portion of their Adjusted
Capital Account balance attributable to Capital Contributions made with respect
to such class of Preferred Units until such portion of their Adjusted Capital
Account balance has been reduced to zero; and

 

(4) Fourth, 100% to the General Partner.

 

D. The Partners agree that Nonrecourse Liabilities of the Partnership shall be
allocated among the Partners in accordance with the provisions of Regulations
Section 1.752-3, as modified by any guidance published by the IRS, or as
otherwise reasonably interpreted.

 

E. Any gain allocated to the Partners upon the sale or other taxable disposition
of any Partnership asset shall, to the extent possible, after taking into
account other required allocations of gain pursuant to Exhibit C, be
characterized as Recapture Income in the same proportions and to the same extent
as such Partners have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.

 

F. In the event that the Partnership issues additional Partnership Interests to
the General Partner, or any Additional Limited Partner pursuant to Article 4
hereof, the General Partner shall make such revisions to this Section 6.1 as it
determines are necessary to reflect the terms of the issuance of such additional
Partnership Interests, including making preferential allocations to certain
classes of Partnership Interests. Such revisions shall not require the consent
or approval of any other Partner.

 

ARTICLE 7 - MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section 7.1 Management

 

A. Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs of the Partnership are and shall be
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to Section 7.3 hereof, 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
to permit the Partnership to make distributions to its Partners in such amounts
as will permit the Company (so long as the Company qualifies as a REIT) to
minimize the payment of any federal income tax (including, for this purpose, any
excise tax pursuant to Section 4981 of the Code) and to make distributions to
its shareholders in amounts sufficient to permit the Company to maintain REIT
status), the assumption or guaranty

 

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of, or other contracting for, indebtedness and other liabilities, the issuance
of evidence of indebtedness (including the securing of the same by deed,
mortgage, deed of trust or other lien or encumbrance on the Partnership’s
assets) and the incurring of any other obligations 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, the registration of any class of
securities of the Partnership under the Securities Exchange Act of 1934, as
amended, and the listing of any debt securities of the Partnership on any
exchange;

 

(3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of any or all of the assets of the Partnership (including the
exercise or grant of any conversion, option, privilege, or subscription right or
other right available in connection with any assets at any time held by the
Partnership) or the merger or other combination of the Partnership with or into
another entity on such terms as the General Partner deems proper (all of the
foregoing subject to any prior approval only to the extent required by Section
7.3 hereof);

 

(4) 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 the General Partner deems proper, including, without limitation, the
financing of the conduct of the operations of the Company, the Partnership or
any Subsidiary of the Company and/or the Partnership, the lending of funds to
other Persons (including, without limitation, the Company or any Subsidiary of
the Partnership and/or the Company) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which it has an equity
investment, and the making of capital contributions to any of its Subsidiaries;

 

(5) the management, operation, leasing, landscaping, repair, alteration,
demolition or improvement of any real property or improvements owned by the
Partnership or any Subsidiary of the Partnership or any Person in which the
Partnership has made a direct or indirect equity investment;

 

(6) the negotiation, execution, and performance of any contracts, 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;

 

(8) the holding, managing, investing and reinvesting of cash and other assets of
the Partnership;

 

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(9) the collection and receipt of revenues and income of the Partnership;

 

(10) the establishment of one or more divisions of the Partnership, the
selection and dismissal of employees of the Partnership (including, without
limitation, employees having titles such as “president,” “vice president,”
“secretary” and “treasurer” of the Partnership), and agents, outside attorneys,
accountants, consultants and contractors of the Partnership, and the
determination of their compensation and other terms of employment or hiring
including waivers of conflicts of interest and the payment of their expenses and
compensation out of the Partnership’s assets;

 

(11) the maintenance of such insurance for the benefit of the Partnership, the
Partners and directors and officers thereof as it deems necessary or
appropriate;

 

(12) the formation of, or acquisition of an interest in, and the contribution of
property to, any other corporations, limited or general partnerships, joint
ventures or other entities or relationships that it deems desirable (including,
without limitation, the acquisition of interests in, and the contributions of
property to, its Subsidiaries and any other Person in which it has an equity
investment from time to time), provided that, as long as the Company has
determined to continue to qualify as a REIT, the Partnership may not engage in
any such formation, acquisition or contribution that would cause the Company to
fail to qualify as a REIT;

 

(13) 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,
arbitration 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;

 

(14) the undertaking of any action in connection with the Partnership’s direct
or indirect investment in its Subsidiaries or any other Person (including,
without limitation, the contribution or loan of funds by the Partnership to such
Persons, incurring indebtedness on behalf of, or guarantying the obligations of,
any such Persons);

 

(15) the determination of the fair market value of any Partnership property
distributed in kind using such reasonable method of valuation as the General
Partner may adopt;

 

(16) 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;

 

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(17) 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;

 

(18) 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;

 

(19) the making, execution and delivery of any and all deeds, leases, notes,
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;

 

(20) the maintenance of the Partnership’s books and records;

 

(21) the issuance of additional Partnership Units, as appropriate, in connection
with Capital Contributions by Additional Limited Partners and additional Capital
Contributions by Partners pursuant to Article 4 hereof;

 

(22) the distribution of cash to acquire Partnership Units held by a Limited
Partner in connection with a Limited Partner’s exercise of its Redemption Right
under Section 8.6 hereof; and

 

(23) to do any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a “publicly traded partnership” for
purposes of Section 7704 of the Code, including but not limited to imposing
restrictions on transfers and restrictions on redemptions.

 

B. Each of the Limited Partners agrees that 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 (except as
provided in Section 7.3), the Act or any applicable law, rule or regulation, to
the fullest extent permitted under the Act or other 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 at any and all times working capital
accounts and other cash or similar balances in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time, including upon liquidation of the Partnership under Article
13.

 

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D. At all times from and after the date hereof, the General Partner may cause
the Partnership to obtain and maintain (i) casualty, liability and other
insurance on the properties of the Partnership, (ii) liability insurance for the
Indemnities hereunder and (iii) such other insurance as the General Partner, in
its sole and absolute discretion, determines to be necessary.

 

E. 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 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

 

The General Partner’s predecessor has previously filed the Certificate of
Limited Partnership with the Secretary of State of the State of Delaware as
required by the Act. To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate of Limited Partnership
and do all of 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, or the District of
Columbia, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(4) hereof, the General Partner shall not
be required, before or after filing, to deliver or mail a copy of the
Certificate of Limited Partnership or any amendment thereto to any Limited
Partner. The General Partner shall use all reasonable efforts to cause to be
filed such other certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, or the District of
Columbia, in which the Partnership may elect to do business or own property.

 

Section 7.3 Restrictions on General Partner Authority

 

A. The General Partner may not take any action in contravention of an express
prohibition or limitation of this Agreement without the written Consent of
Limited Partners holding a majority of the Common Units of the Limited Partners
(including Limited Partner Units held by the Company or its Affiliates), or such
other percentage of the Limited Partners as may be specifically provided for
under a provision of this Agreement.

 

B. Except as provided in Article 13, the General Partner may not directly or
indirectly, cause the Partnership to sell, exchange, transfer or otherwise
dispose of all or substantially all of the Partnership’s assets in a single
transaction or a series of related transactions (including by way of merger
(including a triangular merger), consolidation or other combination with any
other Persons except (i) if such merger, sale or other transaction is in
connection with an Extraordinary Transaction permitted under Section 11.2(B)
hereof or (ii) with the Consent of the Limited Partners holding a majority of
the Common Units of the Limited Partners (excluding Limited Partner Units held
by the Company or its Affiliates).

 

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Section 7.4 Reimbursement of the General Partner and the Company; DRIPs and
Repurchase Programs

 

A. Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments,
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as the General Partner of the Partnership.

 

B. The Partnership shall be responsible for and shall pay all expenses relating
to the Partnership’s organization, the ownership of its assets and its
operations. The General Partner shall be reimbursed on a monthly basis, or such
other basis as it may determine in its sole and absolute discretion, for all
expenses that it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, (i) expenses
relating to the operation of the Company and to the management and
administration of any Subsidiary of the Company, the Partnership or Affiliates
of the Partnership, such as auditing expenses and filing fees, (ii) compensation
of the Company’s officers and employees including, without limitation, payments
under the Company’s employee benefit plans that provide for stock units, or
other phantom stock, pursuant to which employees of the General Partner will
receive payments based upon dividends on or the value of REIT Shares, (iii)
director fees and expenses and (iv) all costs and expenses of being a public
company, including costs of filings with the Securities and Exchange Commission,
reports and other distributions to its shareholders); provided that the amount
of any such reimbursement shall be reduced by any interest earned by the General
Partner with respect to bank accounts or other instruments or accounts held by
it on behalf of the Partnership. The Partners acknowledge that all such expenses
of the General Partner are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.7 hereof.

 

C. In the event that the Company shall elect to purchase from its shareholders
REIT Shares in connection with a share repurchase or similar program or for the
purpose of delivering such REIT Shares to satisfy an obligation under any
dividend reinvestment program or equity purchase plan adopted by the Company,
any employee stock purchase plan adopted by the Company, or any similar
obligation or arrangement undertaken by the Company in the future or for the
purpose of retiring such REIT Shares, the purchase price paid by the Company for
such REIT Shares and any other expenses incurred by the Company in connection
with such purchase shall be considered expenses of the Partnership and shall be
advanced to the Company or reimbursed to the Company, subject to the conditions
that: (i) if such REIT Shares subsequently are sold by the Company, the Company
shall pay to the Partnership any proceeds received by the Company for such REIT
Shares (which sales proceeds shall include the amount of dividends reinvested
under any dividend reinvestment or similar program, provided that a transfer of
REIT Shares for Partnership Units pursuant to Section 8.6 would not be
considered a sale for such purposes) and (ii) if such REIT Shares are not
retransferred by the Company within thirty (30) days after the purchase thereof,
or the Company otherwise determines not to retransfer such REIT Shares, the
Company, as General Partner, shall cause the Partnership to redeem a number of
Common Units held by the Company, as a Limited Partner, equal to the quotient
obtained by dividing the number of such REIT Shares by the Conversion Factor (in
which case such advancement or reimbursement of Partnership expenses shall be
treated as having been made as a distribution in redemption of such number of
Units held by the Company).

 

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D. If and to the extent any reimbursement made pursuant to this Section 7.4 is
determined for federal income tax purposes not to constitute a payment of
expenses to the Partnership, the amount so determined shall constitute a
guaranteed payment with respect to capital within the meaning of Section 707(c)
of the Code, shall be treated consistently therewith by the Partnership and all
Partners and shall not be treated as a distribution for purposes of computing
the Partners’ Capital Accounts.

 

Section 7.5 Outside Activities of the General Partner

 

The General Partner shall not directly or indirectly enter into or conduct any
business other than in connection with the ownership, acquisition and
disposition of Partnership Interests and the management of the business of the
Partnership, and such activities as are incidental thereto. The General Partner
and any Affiliates of the General Partner 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 any
Subsidiary 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, the Partnership may transfer assets to
joint ventures, other partnerships, corporations 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 are 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, or
purchase any property from, 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, stock option plans, and similar plans
funded by the Partnership for the benefit of employees of the General Partner,
the Partnership, any Subsidiary of the Partnership or any Affiliate of any of
them in respect of services performed, directly or indirectly, for the benefit
of the Partnership, the General Partner, or any Subsidiary of the Partnership.

 

E. The General Partner is expressly authorized to enter into, in the name and on
behalf of the Partnership, a right of first opportunity arrangement and other
conflict avoidance agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.

 

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Section 7.7 Indemnification

 

A. To the fullest extent permitted by Delaware law, the Partnership shall
indemnify each Indemnitee from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including, without limitation,
attorneys 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 or the Company as set forth in
this Agreement, in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established that: (i) the act or
omission of the Indemnitee was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) the Indemnitee actually received an improper
personal benefit in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to believe that the act
or omission was unlawful. Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty (except a
guaranty by a Limited Partner of nonrecourse indebtedness of the Partnership or
as otherwise provided in any such 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. 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, creates
a rebuttable presumption that such Indemnitee acted in a manner contrary to that
specified in this Section 7.7.A. 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. Reasonable expenses incurred by an Indemnitee or expected to be incurred by
an Indemnitee shall be paid or reimbursed by the Partnership in advance of the
final disposition of any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative made or threatened against an
Indemnitee 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 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 unless otherwise provided in a written agreement pursuant to which
such Indemnitee is indemnified.

 

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D. The Partnership may, but shall not be obligated to, purchase and maintain
insurance, on behalf 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. For purposes of this Section 7.7, the Partnership shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.

 

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

 

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

 

H. The provisions of this Section 7.7 are for the benefit of the Indemnitees,
their employees, officers, directors, trustees, 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 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. If and to the extent any payments to the General Partner pursuant to this
section 7.7 constitute gross income to the General Partner (as opposed to the
repayment of advances made on behalf of the Partnership), such amounts shall
constitute guaranteed payments within the meaning of Section 707(c) of the Code,
shall be treated consistently therewith by the Partnership and all Partners and
shall not be treated as distributions for purposes of computing the Partners’
Capital Accounts.

 

Section 7.8 Liability of the General Partner

 

A. Notwithstanding anything to the contrary set forth in this Agreement, the
General Partner and its officers and directors shall not be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses sustained
or liabilities incurred as a result of errors in judgment or mistakes of fact or
law or of any act or omission unless the General Partner acted in bad faith and
the act or omission was material to the matter giving rise to the loss,
liability or benefit not derived.

 

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B. The Limited Partners expressly acknowledge that, the General Partner is
acting on behalf of the Partnership and the shareholders of the Company
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners in deciding whether to cause the
Partnership to take (or decline to take) any actions (including, as stated in
Section 7.1.E, the tax consequences to the Limited Partners or Assignees), and
that the General Partner shall not be liable for monetary damages for losses
sustained, liabilities incurred, or benefits not derived by Limited Partners in
connection with such decisions, provided that the General Partner has acted in
good faith.

 

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

 

D. 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 which such 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
duly appointed 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 which is permitted or
required to be done by the General Partner hereunder.

 

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D. Notwithstanding any other provisions 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 Company to continue to qualify as a
REIT, or (ii) to minimize taxes incurred by the Company under Section 857 or
Section 4981 of the Code, 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, 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 or such nominee or Affiliate for the use
and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable if failure to so vest such title
would have a material adverse effect on the Partnership. 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 consent or approval of any other Partner or
Person, to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any contracts on behalf of the Partnership,
and take any and all actions on behalf of the Partnership and such Person shall
be entitled to deal with the General Partner as if the General Partner were the
Partnership’s sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies which 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 expedience 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 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.

 

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ARTICLE 8 - RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.1 Limitation of Liability

 

The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement, including Section 10.5 hereof, 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, 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 operation, 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, employee, partner, agent 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
Partnership or any of its Subsidiaries, any Limited Partner (other than the
Company) and any officer, director, employee, agent, trustee, Affiliate 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
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee. None of the Limited Partners (other than the Company) nor any other
Person shall have any rights by virtue of this Agreement or the Partnership
relationship established hereby in any business ventures of any other Person and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, 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 Redemption Right set forth in Section 8.6, 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 by Exhibit C hereof or as otherwise expressly provided in
this Agreement, or any Certificate of Designations, 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 Rights of Limited Partners Relating to the Partnership

 

A. In addition to the other rights provided by this Agreement or by the Act, and
except as limited by Section 8.5.C hereof, each Limited Partner shall have the
right, for a business purpose reasonably related to such Limited Partner’s
interest as a limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at such Limited Partner’s own
expense (including such copying and administrative charges as the General
Partner may establish from time to time):

 

(1) to obtain a copy of the most recent annual and quarterly reports filed with
the Securities and Exchange Commission by the Company pursuant to the Securities
Exchange Act of 1934;

 

(2) to obtain a copy of the Partnership’s federal, state and local income tax
returns for each Partnership Year;

 

(3) to obtain a current list of the name and last known business, residence or
mailing address of each Partner;

 

(4) to obtain a copy of this Agreement and the Certificate of Limited
Partnership and all amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate of Limited
Partnership and all amendments thereto have been executed; and

 

(5) to obtain true and full information regarding the amount of cash and a
description and statement of any other property or services contributed by each
Partner and which each Partner has agreed to contribute in the future, and the
date on which each became a Partner.

 

B. The Partnership shall notify each Limited Partner, upon request, of the then
current Conversion Factor and the REIT Shares Amount per Common Unit and, with
reasonable detail, how the same was determined.

 

C. Notwithstanding any other provision of this Section 8.5, the General Partner
may keep confidential from the Limited Partners, for such period of time as the
General Partner determines in its sole and absolute discretion to be reasonable,
any information that (i) the General Partner reasonably believes to be in the
nature of trade secrets or other information, the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or its business or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.

 

Section 8.6 Redemption Right

 

A. Subject to Sections 8.6.B and 8.6.C hereof, at any time on or after the first
anniversary date of the issuance of a Partnership Unit to a Limited Partner
pursuant to Article 4 hereof (or such other date as may be mutually agreed upon
by the General Partner and a Limited Partner), each Limited Partner (other than
the Company) shall have the right (the “Redemption Right”) to require the
Partnership to redeem on a Specified Redemption Date all or a portion of

 

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the Common Units held by such Limited Partner at a redemption price per Common
Unit equal to and in the form of the Cash Amount to be paid by the Partnership.
The Redemption Right shall be exercised pursuant to a Notice of Redemption
delivered to the Partnership (with a copy to the Company) by the Limited Partner
who is exercising the Redemption Right (the “Redeeming Partner”); provided,
however, that the Partnership shall not be obligated to satisfy such Redemption
Right if the Company elects to purchase the Common Units subject to the Notice
of Redemption pursuant to Section 8.6.B. A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Common Units or, if such
Limited Partner holds less than one thousand (1,000) Common Units, all of the
Common Units held by such Partner. The Redeeming Partner shall have no right,
with respect to any Common Units so redeemed, to receive any distributions paid
on or after the Specified Redemption Date. The Assignee of any Limited Partner
may exercise the rights of such Limited Partner pursuant to this Section 8.6,
and such Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Assignee. In
connection with any exercise of such rights by an Assignee on behalf of a
Limited Partner, the Cash Amount shall be paid by the Partnership directly to
such Assignee and not to such Limited Partner.

 

B. Notwithstanding the provisions of Section 8.6.A, upon an election by a
Limited Partner to exercise the Redemption Right, the Company may, in its sole
and absolute discretion (subject to the limitations on ownership and transfer of
REIT Shares set forth in the Certificate of Incorporation of the Company), elect
to assume directly and satisfy a Redemption Right by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as the Company
determines in its sole and absolute discretion whereupon the Company shall
acquire the Common Units offered for redemption by the Redeeming Partner and
shall be treated for all purposes of this Agreement as the owner of such Common
Units. If the Company shall elect to exercise its right to purchase Common Units
under this Section 8.6.B with respect to a Notice of Redemption, it shall so
notify the Redeeming Partner within five (5) Business Days after the receipt by
it of such Notice of Redemption. Unless the Company shall exercise its right to
purchase Common Units from the Redeeming Partner pursuant to this Section 8.6.B,
the Company shall not have any obligation to the Redeeming Partner or the
Partnership with respect to the Redeeming Partner’s exercise of the Redemption
Right. In the event the Company shall exercise its right to purchase Common
Units with respect to the exercise of a Redemption Right in the manner described
in the first sentence of this Section 8.6.B, the Partnership shall have no
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner’s exercise of such Redemption Right, and each of the Redeeming
Partner, the Partnership, and the Company shall treat the transaction between
the Company and the Redeeming Partner, for federal income tax purposes, as a
sale of the Redeeming Partner’s Common Units to the Company. Each Redeeming
Partner agrees to execute such documents as the Company may reasonably require
in connection with the issuance of REIT Shares upon exercise of the Redemption
Right.

 

C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a Partner
shall not be entitled to exercise the Redemption Right pursuant to Section 8.6.A
if the delivery of REIT Shares to such Partner on the Specified Redemption Date
by the Company pursuant to Section 8.6.B (regardless of whether or not the
Company would in fact exercise its rights under Section 8.6.B) would be
prohibited under the Certificate of Incorporation of the Company or prohibited
under applicable federal or state securities laws or regulations.

 

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D. If, pursuant to Section 8.6 B, the Company elects to pay the Redeeming
Partner the Redemption Amount in the form of REIT Shares, the total number of
REIT Shares to be paid to the Redeeming Partner in exchange for the Redeeming
Partner’s Common Units shall be the applicable REIT Shares Amount. If this
amount is not a whole number of REIT Shares, the Redeeming Partner shall be paid
(i) that number of REIT Shares which equals the nearest whole number less than
such amount plus (ii) an amount of cash which the Company determines, in its
reasonable discretion, to represent the fair value of the remaining fractional
REIT Share which would otherwise be payable to the Redeeming Partner.

 

E. All Common Units delivered for redemption shall be delivered to the
Partnership or the Company, as the case may be, free and clear of all liens, and
notwithstanding anything contained herein to the contrary, neither the General
Partner nor the Partnership shall be under any obligation to acquire Common
Units which are or may be subject to liens. If any state or local property
transfer tax is payable as a result of the transfer of Common Units to the
Partnership or the General Partner pursuant to the Redemption Right, the
Redeeming Partner shall assume and pay such transfer tax.

 

F. In the event that the Partnership issues additional Partnership Interests
pursuant to Section 4.2.A hereof, the General Partner shall make such revisions
to this Section 8.6 as it determines are necessary to reflect the issuance of
such additional Partnership Interests (including setting forth any restrictions
on the exercise of the Redemption Right with respect to such Partnership
Interests).

 

ARTICLE 9 - BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1 Records and Accounting

 

The General Partner shall keep or cause to be kept at the principal office of
the Partnership those records and documents required to be maintained by the Act
and other books and records deemed by the General Partner to be appropriate with
respect to the Partnership’s business, including, without limitation, all books
and records necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section 9.3 hereof.
Any records maintained by or on behalf of the Partnership in the regular course
of its business may be kept on, or be in the form of, punch cards, magnetic
tape, photographs, micrographics or any other information storage device,
provided that the records so maintained are convertible into clearly legible
written form within a reasonable period of time. The books of the Partnership
shall be maintained for financial reporting purposes in accordance with
generally accepted accounting principles or such other basis as the General
Partner determines to be necessary or appropriate. Sufficient records shall be
maintained to adjust the financial reporting books to report taxable income to
taxing authorities.

 

Section 9.2 Fiscal Year

 

The fiscal year of the Partnership shall be the calendar year.

 

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Section 9.3 Reports

 

A. As soon as practicable, but in no event later than the date on which the
Company mails its annual report to its shareholders, the General Partner shall
cause to be mailed to each Limited Partner, as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the Company if such statements are prepared solely on a consolidated basis with
the Company, 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 the date on which the
Company files its quarterly reports with the Securities and Exchange Commission,
the General Partner shall cause to be mailed to each Limited Partner, a report
containing unaudited financial statements of the Partnership, or of the Company,
if such statements are prepared solely on a consolidated basis with the Company,
and such other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.

 

ARTICLE 10 - TAX MATTERS

 

Section 10.1 Preparation of Tax Returns

 

The General Partner shall arrange for the preparation and timely filing of all
returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use reasonable efforts to furnish, within ninety (90) days of the close of each
Partnership Year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.

 

Section 10.2 Tax Elections

 

Except as otherwise provided herein, the General Partner shall, in its sole and
absolute discretion, determine whether to make any available election pursuant
to the Code. The General Partner shall have the right to seek to revoke any tax
election it makes upon the General Partner’s determination, in its sole and
absolute discretion, that such revocation is in the best interests of the
Partners.

 

Section 10.3 Tax Matters Partner

 

A. The General Partner shall be the “tax matters partner” of the Partnership for
federal income tax purposes. Pursuant to Section 6230(e) of the Code, upon
receipt of notice from the IRS of the beginning of an administrative proceeding
with respect to the Partnership, the tax matters partner shall furnish the IRS
with the name, address, taxpayer identification number, and profit interest of
each of the Limited Partners and the Assignees; provided, however, that such
information is provided to the Partnership by the Limited Partners and the
Assignees.

 

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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 (a) 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 (b) who is a
“notice partner” (as defined in Section 6231(a)(8) of the Code) or a member of a
“notice group” (as defined in Section 6223(b)(2) of the Code);

 

(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 Tax Court or the filing of a complaint for
refund with the United States Claims Court or 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 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 which is attributable to any item required to be taken account of 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 or the Partnership 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 of this Agreement shall be fully applicable to the tax matters
partner in its capacity as such.

 

C. 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. 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.

 

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Section 10.4 Organizational Expenses

 

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

 

Section 10.5 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 Sections 1441, 1442, 1445, or 1446 of the Code. 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 which 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
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such 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 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner. Without limitation, in such event the General
Partner shall have the right to receive distributions that would otherwise be
distributable to such defaulting Limited Partner until such time as such loan,
together with all interest thereon, has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) 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, or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue 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.

 

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ARTICLE 11 - TRANSFERS AND WITHDRAWALS

 

Section 11.1 Transfer

 

A. The term “transfer,” when used in this Article 11 with respect to a
Partnership Unit, shall be deemed to refer to a transaction by which the General
Partner purports to assign all or any part of its General Partner Interest to
another Person or by which a Limited Partner purports to assign all or any part
of its Limited Partner Interest to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by operation of law or otherwise. The term “transfer” when
used in this Article 11 does not include any redemption of Partnership Interests
by the Partnership from a Limited Partner or any acquisition of Partnership
Units from a Limited Partner by the Company pursuant to Section 8.6. No part of
the interest of a Limited Partner shall be subject to the claims of any
creditor, 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 or consented to in writing by the
General Partner.

 

B. No Partnership Interest may 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.

 

Section 11.2 Transfer of the Company’s General Partner Interest and Limited
Partner Interest; Extraordinary Transactions

 

A. The Company may not transfer any of its General Partner Interest or withdraw
as General Partner, or transfer any of its Limited Partner Interest, or engage
in an Extraordinary Transaction, except, in any such case, (i) if such
Extraordinary Transaction, or such withdrawal or transfer, is pursuant to an
Extraordinary Transaction that is permitted under Section 11.2.B, (ii) if
Limited Partners holding a majority of the Common Units of the Limited Partners
(excluding Limited Partner Units held by the Company or its Affiliates) Consent
to such withdrawal or transfer or Extraordinary Transaction or (iii) if such
transfer is to an entity that is wholly-owned by the Company and is a Qualified
REIT Subsidiary under Section 856(i) of the Code.

 

B. The General Partner is permitted to engage in the following transactions
without the approval or vote of the Limited Partners:

 

(1) an Extraordinary Transaction in connection with which all Limited Partners
either will receive, or will have the right to elect to receive, for each Common
Unit an amount of cash, securities, or other property at least as equal to the
product of (x) the REIT Shares Amount multiplied by (y) the greatest amount of
cash, securities or other property paid to a holder of one REIT Share in
consideration of one such REIT Share pursuant to the terms of the Extraordinary
Transaction during the period from and after the date on which the Extraordinary
Transaction is consummated; provided that, if, in connection with the
Extraordinary Transaction, a purchase, tender or exchange offer shall have been
made to and accepted by the holders of the outstanding REIT Shares,

 

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each holder of Common Units shall receive, or shall have the right to elect to
receive, the greatest amount of cash, securities, or other property which such
holder would have received had it exercised its Redemption Right (as set forth
in Section 8.6) and received REIT Shares in exchange for its Common Units
immediately prior to the expiration of such purchase, tender or exchange offer
and had thereupon accepted such purchase, tender or exchange offer and then such
Extraordinary Transaction shall have been consummated; and

 

(2) an Extraordinary Transaction if: (a) immediately after such Extraordinary
Transaction, substantially all of the assets directly or indirectly owned by the
surviving entity, other than Common Units held by the General Partner, are owned
directly or indirectly by the Partnership or another limited partnership or
limited liability company which is the survivor of a merger, consolidation or
combination of assets with the Partnership (in each case, the “Surviving
Partnership”); (b) the rights, preferences and privileges of the Common
Unitholders in the Surviving Partnership are at least as favorable as those in
effect immediately prior to the consummation of such transaction and as those
applicable to any other limited partners or non-managing members of the
Surviving Partnership (who have, in either case, the rights of a “common” equity
holder); and (c) such rights of the Common Unitholders include the right to
exchange their Common Unit equivalent interests in the Surviving Partnership for
at least one of: (x) the consideration available to such Common Unitholders
pursuant to Section 11.2.B(1) or (y) if the ultimate controlling person of the
Surviving Partnership has publicly traded common equity securities, such common
equity securities, with an exchange ratio based on the relative fair market
value of such securities (as determined pursuant to Section 11.2.C) and the REIT
Shares.

 

C. In connection with any transaction permitted by Section 11.2.B, the relative
fair market values shall be reasonably determined by the General Partner as of
the time of such transaction and, to the extent applicable, shall be no less
favorable to the Limited Partners than the relative values reflected in the
terms of such transaction.

 

Section 11.3 Limited Partners’ Rights to Transfer

 

A. Subject to the provisions of Sections 11.3.B, 11.3.D, 11.3.E, and 11.4 or in
connection with the exercise of a Redemption Right pursuant to Section 8.6, a
Limited Partner (other than the Company) may not transfer, all or any portion of
its Partnership Interest, or any of such Limited Partner’s economic rights as a
Limited Partner without the prior written consent of the General Partner, which
consent may be given or withheld in the General Partner’s sole and absolute
discretion.

 

B. 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 of 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 his or its Partnership Interest. The
Incapacity of a Limited Partner, in and of itself, shall not dissolve or
terminate the Partnership.

 

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C. Without limiting the foregoing, the General Partner may prohibit any transfer
by a Limited Partner of its Partnership Units if, in the opinion of legal
counsel to the Partnership, such transfer would require filing of a registration
statement under the Securities Act of 1933, as amended, or would otherwise
violate any federal or state securities laws or regulations applicable to the
Partnership or the Partnership Units.

 

D. No transfer by a Limited Partner of its Partnership Units (including a
redemption or exchange pursuant to Section 8.6) may be made to 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; (ii) such
transfer is effectuated through an “established securities market” or a
“secondary market (or the substantial equivalent thereof)” within the meaning of
Section 7704 of the Code; (iii) 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 Section 3(14) of ERISA) or a “disqualified
person” (as defined in Section 4975(c) of the Code); (iv) such transfer would,
in the opinion of legal counsel for 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; (v) such
transfer would subject the Partnership to be regulated under the Investment
Company Act of 1940, the Investment Advisors Act of 1940 or the Employee
Retirement Income Security Act of 1974, each as amended; or (vi) in the opinion
of legal counsel for the Partnership, such transfer likely would cause the
Company to no longer qualify as a REIT or would subject the Company to any
additional taxes under Section 857 or Section 4981 of the Code.

 

E. No transfer of any Partnership Units 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,
which consent may be given or withheld by 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 for the Cash Amount any Partnership Units in which a
security interest is held by such lender simultaneously with the time at which
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 11.4 Substituted Limited Partners

 

A. No Limited Partner shall have the right to substitute a transferee as a
Limited Partner in his place. The General Partner shall, however, have the right
to consent to the admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.4 as a Substituted Limited Partner, which consent
may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner’s failure or refusal 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 any 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. The admission of any

 

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transferee as a Substituted Limited Partner shall be conducted upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement and such other documents or instruments
as may be required to effect the admission.

 

C. Upon the admission of a Substituted Limited Partner, the General Partner
shall amend Exhibit A to reflect the name, address, number of Partnership Units
and Percentage Interest of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and interest 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 permitted transferee as a Substituted Limited Partner, as
described in Section 11.4, such transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be deemed to have had assigned to
it, and shall be entitled to receive distributions from the Partnership and the
share of Net Income, Net Losses, Recapture Income, and any other items, gain,
loss deduction and credit of the Partnership attributable to the Partnership
Units assigned to such transferee, but except as otherwise provided in Section
8.6.A hereof shall not be deemed to be a holder of Partnership Units for any
other purpose under this Agreement, and shall not be entitled to vote such
Partnership Units in any matter presented to the Limited Partners for a vote
(such Partnership Units being deemed to have been voted on such matter in the
same proportion as all other Partnership Units held by Limited Partners are
voted). In the event any such transferee desires to make a further assignment of
any such Partnership Units, such transferee shall be subject to all of 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 or pursuant to redemption of all of its
Partnership Units under Section 8.6.

 

B. Any Limited Partner who shall transfer all of its Partnership Units in a
transfer permitted pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all Assignees of such Partnership Units as
Substitute Limited Partners. Similarly, any Limited Partner who shall transfer
all of its Partnership Units pursuant to a redemption of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.

 

C. Transfers pursuant to this Article 11 may only be made on the first day of a
fiscal quarter of the Partnership, unless the General Partner otherwise agrees.

 

D. If any Partnership Interest is transferred or assigned during any quarterly
segment of the Partnership’s fiscal year in compliance with the provisions of
this Article 11 or redeemed or transferred pursuant to Section 8.6 on any day
other than the first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items attributable to such interest for such
Partnership Year shall be divided and allocated between the transferor Partner
and the transferee Partner by taking into account their varying interests during
the

 

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Partnership Year in accordance with Section 706(d) of the Code, using the
interim closing of the books method. Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer or
assignment occurs shall be allocated to the transferee Partner, and none of such
items for the calendar month in which a redemption occurs shall be allocated to
the Redeeming Partner; provided, however, that the General Partner may adopt
such other conventions relating to allocations in connection with transfers,
assignments or redemptions as it determines are necessary or appropriate. 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 Redeeming Partner, as the case may be, and in the case of a transfer or
assignment other than a redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the transferee
Partner.

 

ARTICLE 12 - ADMISSION OF PARTNERS

 

Section 12.1 Admission of Successor General Partner

 

A successor to all of the 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 upon such
transfer. Any such transferee 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. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Section 11.6.D hereof.

 

Section 12.2 Admission of Additional Limited Partners

 

A. After the date hereof, a Person 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 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 and (ii) such
other documents or instruments as may be required in the 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 written 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 written 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

 

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thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated 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 Section 706(d) of the Code, using
any convention permitted by law and selected by the General Partner. Solely for
purposes of making such allocations, each such item for the calendar month in
which an admission of any Additional Limited Partner occurs shall be allocated
among all of the Partners and Assignees, including such Additional Limited
Partner; provided, however, that the General Partner may adopt such other
conventions relating to allocations to Additional Limited Partners as it
determines are necessary or appropriate. 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 of 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 of Limited Partnership
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.

 

ARTICLE 13 - DISSOLUTION, LIQUIDATION AND TERMINATION

 

Section 13.1 Dissolution

 

A. The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, only upon the first to occur of any of the
following (each, a “Liquidating Event”):

 

(1) the expiration of its term as provided in Section 2.5 hereof;

 

(2) an event of withdrawal of the General Partner, as defined in the Act (other
than an event of bankruptcy), unless, within ninety (90) days after such event
of withdrawal a “majority in interest” (as defined below) of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a successor General
Partner;

 

(3) from and after the date of this Agreement through December 31, 2053, an
election to dissolve the Partnership made by the General Partner with the
Consent of Partners holding ninety percent (90%) of the outstanding Limited
Partner Units (including Limited Partner Units held by the Company);

 

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(4) on or after January 1, 2054, an election to dissolve the Partnership made by
the General Partner, in its sole and absolute discretion;

 

(5) entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Act;

 

(6) the sale of all or substantially all of the assets and properties of the
Partnership; or

 

(7) a final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to the entry of such order or judgment all of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.

 

B. As used in this Article 13, a “majority in interest” shall refer to Partners
(excluding the General Partner) who hold more than fifty percent (50%) of the
outstanding Percentage Interests not 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.
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 there is no remaining General Partner, 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
common stock in the Company) shall be applied and distributed in the following
order:

 

(1) First, to the payment and discharge of all of the Partnership’s debts and
liabilities to creditors other than the Partners;

 

(2) Second, to the payment and discharge of all of the Partnership’s debts and
liabilities to the General Partner;

 

(3) Third, to the payment and discharge of all of the Partnership’s debts and
liabilities to the other Partners;

 

(4) Fourth, to the holders of Partnership Interests that are entitled to any
preference in distribution upon liquidation in accordance with the rights of any
such class or series of Partnership Interests (and, within each class or series,
to each holder thereof pro rata in proportion to its respective Percentage
Interests in such class); and

 

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(5) The balance, if any, to the General Partner and Limited Partners in
accordance with their Capital Accounts, 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.

 

B. Notwithstanding the provisions of Section 13.2.A hereof which 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 discretion of the Liquidator, a pro rata portion of the distributions
that would otherwise be made to the General Partner and Limited Partners
pursuant to this Article 13 may be:

 

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

 

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Section 13.3 Compliance with Timing Requirements of Regulations

 

In the event 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 General Partner and Limited Partners who have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).

 

If at such time as the Partnership (or the General Partner’s interest therein)
is “liquidated” within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g), the General Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years or portions thereof, including the year during which such
liquidation occurs), the General Partner shall contribute to the capital of the
Partnership the amount necessary to restore such deficit balance to zero in
compliance with Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(3). If at such
time as the Partnership (or any Limited Partner’s interest therein) is
“liquidated” within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g) any Limited Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years or portions thereof, including the year during which such
liquidation occurs), no such Limited Partner shall have any obligation to make
any contribution to the capital of the Partnership with respect to such deficit
and such deficit shall not be considered a debt owed to the Partnership or to
any other Person for any purposes whatsoever, except to the extent otherwise
agreed to by such Partner and the General Partner. Any contribution required of
a Partner hereunder shall be made on or before the later of (i) the end of the
Partnership Year in which the interest of such Partner is liquidated or (ii) the
ninetieth (90th) day following the date of such liquidation.

 

Section 13.4 Deemed Termination

 

Notwithstanding any other provision of this Article 13, in the event the
Partnership is considered “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 and for purposes of maintaining Capital
Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed to have
(i) contributed the Partnership property in kind to a new partnership (the “New
Partnership”), which shall be deemed to have assumed and taken such property
subject to all Partnership liabilities in exchange for all of the interests in
such New Partnership and (ii) distributed such interests to the Partners
pursuant to the provisions of this Agreement in liquidation of the Partnership,
subsequent to which the New Partnership shall be referred to as the Partnership
for all purposes of this Agreement.

 

Section 13.5 Rights of Limited Partners

 

Except as otherwise provided in this Agreement, each Limited Partner shall look
solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.

 

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Section 13.6 Notice of Dissolution

 

In the event a Liquidating Event occurs or an event occurs that would, but for
the provisions of an election or objection by one or more Partners pursuant to
Section 13.1, 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.

 

Section 13.7 Termination of Partnership and Cancellation of Certificate of
Limited Partnership

 

Upon the completion of the liquidation of the Partnership’s assets, as provided
in Section 13.2 hereof, the Partnership shall be terminated, a certificate of
cancellation shall be filed, and all qualifications of the Partnership as a
foreign limited partnership in jurisdictions other than the State of Delaware
shall be canceled and such other actions as may be necessary to terminate the
Partnership shall be taken.

 

Section 13.8 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.

 

Section 13.9 Waiver of Partition

 

Each Partner hereby waives any right to partition of the Partnership property.

 

Section 13.10 Liability of Liquidator

 

Any Liquidator shall be indemnified and held harmless by the Partnership in the
same manner and to the same degree as an Indemnitee may be indemnified pursuant
to Section 7.7 hereof.

 

ARTICLE 14 - AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

 

Section 14.1 Amendments

 

A. Amendments to this Agreement may only be proposed by the General Partner.
Following such proposal, the General Partner shall submit any proposed amendment
to the Limited Partners. The General Partner shall seek the written consent of
the Partners on the proposed amendment or shall call a meeting to vote thereon
and to transact any other business that it 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 vote which is consistent with the
General Partner’s recommendation with respect to the proposal. Except as
provided in Section 13.1.C(3), 14.1.B, 14.1.C or 14.1.D, a proposed amendment
shall be adopted and be effective as an amendment hereto if it is approved by
the General Partner and it receives the Consent of Limited Partners holding a
majority of the Common Units held by Limited Partners (including Limited

 

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Partner Units held by the Company or its Affiliates); provided that an action
shall become effective at such time as the requisite consents are received by
the General Partner even if prior to such specified time.

 

B. Notwithstanding Section 14.1.A, 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, termination, or withdrawal of
Partners in accordance with this Agreement (which may be effected through the
replacement of Exhibit A with an amended Exhibit A);

 

(3) to set forth and reflect in the Agreement the designations, rights, powers,
duties, and preferences of the holders of any additional Partnership Interests
issued pursuant to Section 4.2.A hereof;

 

(4) 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; and

 

(5) 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.

 

The General Partner shall provide written notice to the Limited Partners when
any action under this Section 14.1.B is taken in the next regular communication
to the Limited Partners.

 

C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement shall not be
amended without the Consent of each Partner adversely affected if such amendment
would (i) convert a Limited Partner’s interest in the Partnership into a General
Partner Interest; (ii) modify the limited liability of a Limited Partner in a
manner adverse to such Limited Partner; (iii) alter rights of the Partner
(except in connection with the issuance of additional Partnership Interests and
the relative rights, powers and duties incident thereto) to receive
distributions pursuant to Article 5 or Article 13 or the allocations specified
in Article 6 (except as permitted pursuant to Section 4.2 and Section 14.1.B(3)
hereof); (iv) alter or modify the Redemption Right and REIT Shares Amount as set
forth in Sections 8.6 and 11.2.B, and the related definitions, in a manner
adverse to such Partner; (v) cause the termination of the Partnership prior to
the time set forth in Sections 2.5 or 13.1 or (vi) amend this Section 14.1.C.
Further, no amendment may alter the restrictions on the General Partner’s
authority set forth in Section 7.3.B without the Consent specified in that
section.

 

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D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the General Partner
shall not (except in connection with amendments made to reflect the issuance of
additional Partnership Interests and the relative rights, powers and duties
incident thereto) amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2 without the
Consent of Limited Partners holding a majority of the Common Units held by
Limited Partners, excluding Limited Partner Units held by the Company or its
Affiliates.

 

Section 14.2 Meetings of the Partners

 

A. Meetings of the Partners may only be called by the General Partner. The
request 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 the
Partners is permitted or required under this Agreement, such vote or Consent may
be given at a meeting of the Partners or may be given in accordance with the
procedure prescribed in Section 14.1.A hereof. Except as otherwise expressly
provided in this Agreement, the Consent of holders of a majority of the Common
Units held by Limited Partners (including Limited Partnership Common Units held
by the Company) shall control.

 

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 Common Units of the Partners (or such other
percentage as is expressly required by this Agreement). 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 Common Units 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 him 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 his
attorney-in-fact. A proxy may be granted in writing, by means of electronic
transmission or as otherwise permitted by applicable law. No proxy shall be
valid after the expiration of twelve (12) months from the date thereof unless
otherwise provided in the proxy. 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.

 

D. Each meeting of the 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. Without limitation, meetings of Partners may be conducted in the
same manner as meetings of the shareholders of the Company and may be held at
the same time, and as part of, meetings of the shareholders of the Company.

 

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ARTICLE 15 - ARBITRATION OF DISPUTES

 

Notwithstanding anything to the contrary contained in this Agreement, all
claims, disputes and controversies between the parties hereto (including,
without limitation, any claims, disputes and controversies between the
Partnership and any one or more of the Partners and any claims, disputes and
controversies among any two or more Partners ) arising out of or in connection
with this Agreement or the Partnership created hereby, relating to the validity,
construction, performance, breach, enforcement or termination thereof, or
otherwise arising out of or relating to this Agreement, the management of the
Partnership, or the acts or omissions of the General Partner that are not
resolved by mutual agreement shall be resolved solely and exclusively by binding
arbitration to be conducted before JAMS, Inc. in San Francisco, California,
before a single arbitrator (the “Arbitrator”).

 

The parties covenant and agree that the arbitration shall commence within ninety
(90) days of the date on which a written demand for arbitration is filed by any
party hereto (the “Filing Date”). The Arbitrator’s decision and award shall be
made and delivered within one hundred and eighty (180) days of the Filing Date.
The Arbitrator’s decision shall be binding and conclusive on all parties. The
parties understand and agree that the Arbitrator shall not have power to award
damages in excess of actual compensatory damages and the Arbitrator shall not
multiply actual damages or award punitive damages or any other damages that are
specifically excluded under this Agreement, each party hereby irrevocably
waiving any claim to such damages.

 

Each of the parties hereto irrevocably and unconditionally consents to the
exclusive jurisdiction of JAMS, Inc. to all matters within the scope of this
Article 15 and that they will participate in the arbitration in good faith. The
parties hereto further consent to the jurisdiction of the courts of the State of
Delaware for the purposes of enforcing the arbitration provisions of this
Article 15. Each party further irrevocably waives any objection to proceeding
before JAMS, Inc. based upon lack of personal jurisdiction or to the laying of
venue and further irrevocably and unconditionally waives and agrees not to make
a claim in any court that arbitration before JAMS, Inc. has been brought in an
inconvenient forum. Each of the parties hereto hereby consents to service of
process by registered mail at the address to which notices are to be given. Each
of the parties hereto agrees that its submission to jurisdiction and its consent
to service of process by mail is made for the express benefit of the other
parties hereto. The provisions of this Article 15 shall survive the dissolution
of the Partnership. Nothing contained herein shall be deemed to give the
Arbitrator any authority, power, or right to alter, change, amend, modify, add
to, or subtract from any of the provisions of this Agreement.

 

ARTICLE 16 - GENERAL PROVISIONS

 

Section 16.1 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 certified first
class United States mail, return receipt requested, nationally recognized
overnight delivery service or facsimile transmission (with receipt confirmed) to
the Partner or Assignee at the address set forth on Exhibit A or such other
address of which the Partner shall notify the General Partner in writing.

 

51

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Section 16.2 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” and “Sections” are
to Articles and Sections of this Agreement.

 

Section 16.3 Pronouns and Plurals

 

Whenever the context may require, any pronoun 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 16.4 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 16.5 Binding Effect

 

Subject to the terms set forth herein, 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 16.6 Creditors

 

Other than as expressly set forth herein with respect to the Indemnitiees, none
of the provisions of this Agreement shall be for the benefit of, or shall be
enforceable by, any creditor of the Partnership.

 

Section 16.7 Waiver

 

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.

 

Section 16.8 Counterparts

 

This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all of 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.

 

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Section 16.9 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.

 

Section 16.10 Invalidity of Provisions

 

If any provision of this Agreement shall to any extent be held void or
unenforceable (as to duration, scope, activity, subject or otherwise) by a court
of competent jurisdiction, such provision shall be deemed to be modified so as
to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable. In such event, the
remainder of this Agreement (or the application of such provision to persons or
circumstances other than those in respect of which it is deemed to be void or
unenforceable) shall not be affected thereby. Each other provision of this
Agreement, unless specifically conditioned upon the voided aspect of such
provision, shall remain valid and enforceable to the fullest extent permitted by
law; any other provisions of this Agreement that are specifically conditioned on
the voided aspect of such invalid provision shall also be deemed to be modified
so as to constitute a provision conforming as nearly as possible to the original
provision while still remaining valid and enforceable to the fullest extent
permitted by law.

 

Section 16.11 No Rights as Shareholders

 

Nothing contained in this Agreement shall be construed as conferring upon the
holders of Partnership Units any rights whatsoever as shareholders of the
Company, including without limitation, any right to receive dividends or other
distributions made to shareholders or to vote or consent or to receive notice as
shareholders in respect of any meeting of shareholders for the election of
directors of the Company or any other matter.

 

Section 16.12 Confidentiality

 

Notwithstanding anything herein or any other express or implied agreement,
arrangement or understanding to the contrary, the parties acknowledge and agree
that (i) any obligations of confidentiality contained herein and therein do not
apply and have not applied from the commencement of discussions between the
General Partner, the Partnership and the Limited Partners to the tax treatment
and tax structure of the transactions contemplated by this Agreement (and any
related transactions or agreements) and (ii) each party to this Agreement (and
each of its employees, representatives or other agents) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure
of the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure. This authorization to disclose the tax
treatment and tax structure is limited to the extent that confidentiality is
required to comply with any applicable securities laws.

 

Section 16.13 Entire Agreement

 

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

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Agreement of Limited Partnership as of the date first written above.

 

GENERAL PARTNER:

 

CATELLUS DEVELOPMENT CORPORATION,

a Delaware corporation

By:

 

/s/ Nelson C. Rising

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

   

Nelson C. Rising

Its:

 

Chief Executive Officer and Chairman

LIMITED PARTNER:

CATELLUS REIT, LLC,

a Delaware limited liability company

By:

 

/s/ C. William Hosler

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C. William Hosler

Its:

 

Senior Vice President

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FORM OF LIMITED PARTNER SIGNATURE PAGE

FOR PARTNERS ADMITTED AFTER DECEMBER 1, 2003

 

The undersigned, desiring to become one of the within named Limited Partners of
Catellus Operating Limited Partnership, hereby becomes a party to the Amended
and Restated Agreement of Limited Partnership of Catellus Operating Limited
Partnership by and among Catellus Development Corporation and such Limited
Partners, dated as of December 1, 2003, as amended. The undersigned agrees that
this signature page may be attached to any counterpart of said Agreement of
Limited Partnership.

 

Signature Line for Limited Partner:

   [Name]      By:   

 

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

         

Name:

         

Title:

         

Date:

Address of Limited Partner:

       

 

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Exhibit A

 

[Exhibit A, setting forth names of the Partners and interests owned,

is maintained separately with the books and records of the Partnership]

 

A-1

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Exhibit B

 

Capital Account Maintenance

 

1. Capital Accounts of the Partners

 

A. The Partnership shall maintain for each Partner a separate Capital Account in
accordance with the rules of Regulations Section 1.704-1(b)(2)(iv). Such Capital
Account shall be increased by (i) the amount of all Capital Contributions and
any other deemed contributions made by such Partner to the Partnership pursuant
to this Agreement; and (ii) all items of Partnership income and gain (including
income and gain exempt from tax) computed in accordance with Section 1.B hereof
and allocated to such Partner pursuant to Section 6.1 of the Agreement and
Exhibit C hereof, and decreased by (x) the amount of cash or Agreed Value of all
actual and deemed distributions of cash or property made to such Partner
pursuant to this Agreement; and (y) all items of Partnership deduction and loss
computed in accordance with Section 1.B hereof and allocated to such Partner
pursuant to Section 6.1 of the Agreement and Exhibit C hereof.

 

B. For purposes of computing the amount of any item of income, gain, deduction
or loss to be reflected in the Partners’ Capital Accounts, unless otherwise
specified in this Agreement, the determination, recognition and classification
of any such item shall be the same as its determination, recognition and
classification for federal income tax purposes determined in accordance with
Section 703(a) of the Code (for this purpose all items of income, gain, loss or
deduction required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss), with the following
adjustments:

 

       (1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Partnership, provided that the amounts of any
adjustments to the adjusted bases of the assets of the Partnership made pursuant
to Section 734 of the Code as a result of the distribution of property by the
Partnership to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners’ Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section 1.704(b)(2)(iv)(m)(4).

 

       (2) The computation of all items of income, gain, and deduction shall be
made without regard to the fact that items described in Sections 705(a)(1)(B) or
705(a)(2)(B) of the Code are not includable gross income or are neither
currently deductible nor capitalized for federal income tax purposes.

 

       (3) Any income, gain or loss attributable to the taxable disposition of
any Partnership property shall be determined as if the adjusted basis of such
property as of such date of disposition were equal in amount to the
Partnership’s Carrying Value with respect to such property as of such date.

 

B-1

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       (4) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such fiscal year.

 

       (5) In the event the Carrying Value of any Partnership Asset is adjusted
pursuant to Section 1.D hereof, the amount of any such adjustment shall be taken
into account as gain or loss from the disposition of such asset.

 

C. A transferee (including an Assignee) of a Partnership Unit shall succeed to a
pro rata portion of the Capital Account of the transferor.

 

  D.  (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Value of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of the Agreement.

 

       (2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior to the distribution by the
Partnership to a Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c) immediately prior to
the liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), provided, however, that adjustments pursuant to clauses
(a) and (b) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.

 

       (3) In accordance with Regulations Section 1.704-1(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as of the time any such asset is
distributed.

 

       (4) In determining Unrealized Gain or Unrealized Loss for purposes of
this Exhibit B, the aggregate cash amount and fair market value of all
Partnership assets (including cash or cash equivalents) shall be determined by
the General Partner using such reasonable method of valuation as it may adopt,
or in the case of a liquidating distribution pursuant to Article 13 of the
Agreement, shall be determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate value among the
assets of the Partnership (in such manner as it determines in its sole and
absolute discretion to arrive at a fair market value for individual properties).

 

B-2

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E. The provisions of this Agreement (including this Exhibit B and other Exhibits
to this Agreement) relating to the maintenance of Capital Accounts are intended
to comply with Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify (i) the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed; or (ii) the manner in
which items are allocated among the Partners for federal income tax purposes in
order to comply with such Regulations or to comply with Section 704(c) of the
Code, the General Partner may make such modification without regard to Article
14 of the Agreement, provided that it is not likely to have a material effect on
the amounts distributable to any Person pursuant to Article 13 of the Agreement
upon the dissolution of the Partnership. 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 unanticipated events might otherwise
cause this Agreement not to comply with Regulations Section 1.704-1(b). In
addition, the General Partner may adopt and employ such methods and procedures
for (i) the maintenance of book and tax capital accounts; (ii) the determination
and allocation of adjustments under Sections 704(c), 734 and 743 of the Code;
(iii) the determination of Net Income, Net Loss, taxable income and loss and
items thereof under this Agreement and pursuant to the Code; (iv) the adoption
of reasonable conventions and methods for the valuation of assets and the
determination of tax basis; (v) the allocation of asset value and tax basis; and
(vi) conventions for the determination of cost recovery, depreciation and
amortization deductions, as it determines in its sole discretion are necessary
or appropriate to execute the provisions of this Agreement, to comply with
federal and state tax laws, and are in the best interest of the Partners.

 

2. No Interest

 

No interest shall be paid by the Partnership on Capital Contributions or on
balances in Partners’ Capital Accounts.

 

3. No Withdrawal

 

No Partner shall be entitled to withdraw any part of his Capital Contribution or
his Capital Account or to receive any distribution from the Partnership, except
as provided in Articles 4, 5, 7 and 13 of the Agreement.

 

B-3

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Exhibit C

 

Special Allocation Rules

 

1. Special Allocation Rules

 

Notwithstanding any other provision of the Agreement or this Exhibit C, the
following special allocations shall be made in the following order:

 

A. Minimum Gain Chargeback. Notwithstanding the provisions of Section 6.1 of the
Agreement or any other provisions of this Exhibit C, if there is a net decrease
in Partnership Minimum Gain during any Partnership taxable year, each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Partner’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 Partner
pursuant thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 1.A is
intended to comply with the minimum gain chargeback requirements in Regulations
Section 1.704-2(f) and shall be interpreted consistently therewith. Solely for
purposes of this Section 1.A, each Partner’s Adjusted Capital Account Deficit
shall be determined prior to any other allocations pursuant to Section 6.1 of
Partner Minimum Gain during such Partnership taxable year.

 

B. Partner Minimum Gain Chargeback. Notwithstanding any other provision of
Section 6.1 of this Agreement or any other provisions of this Exhibit C (except
Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership taxable year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.702-2(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
Partner’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 Partner
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 1.B is
intended to comply with the minimum gain chargeback requirement in Regulations
Section 1.704-2(i)(4) and shall be interpreted consistently therewith. Solely
for purposes of the Section 1.B, each Partner’s Adjusted Capital Account Deficit
shall be determined prior to any other allocations pursuant to Section 6.1 of
the Agreement or this Exhibit with respect to such Partnership taxable year,
other than allocations pursuant to Section 1.A hereof.

 

C. Qualified Income Offset. In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
and after giving effect to the allocations required under Sections 1.A and 1.B
hereof such Partner has an Adjusted Capital Account Deficit, items of
Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain for the Partnership taxable

 

C-1

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year) shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its Adjusted
Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible.

 

D. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership taxable
year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership’s Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio to the
numerically closest ratio for such Partnership taxable year which would satisfy
such requirements.

 

E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any
Partnership taxable year shall be specially allocated to the Partner 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).

 

F. Code Section 754 Adjustments. To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code
is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken
into account in determining Capital Accounts, 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 item of gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Regulations.

 

G. Curative Allocations. The allocations set forth in Section 1.A through 1.F of
this Exhibit C (the “Regulatory Allocations”) are intended to comply with
certain requirements of the Regulations under Section 704(b) of the Code. The
Regulatory Allocations may not be consistent with the manner in which the
Partners intend to divide Partnership distributions. Accordingly, the General
Partner is hereby authorized to divide other allocations of income, gain,
deduction and loss among the Partners so as to prevent the Regulatory
Allocations from distorting the manner in which Partnership distributions will
be divided among the Partners. In general, the Partners anticipate that, if
necessary, this will be accomplished by specially allocating other items of
income, gain, loss and deduction among the Partners so that the net amount of
the Regulatory Allocations and such special allocations to each person is zero.
However, the General Partner will have discretion to accomplish this result in
any reasonable manner; provided, however, that no allocation pursuant to this
Section 1.G shall cause the Partnership to fail to comply with the requirements
of Regulations Sections 1.704-1(b)(2)(ii)(d), -2(e) or -2(i).

 

2. Allocations for Tax Purposes

 

A. Except as otherwise provided in this Section 2, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated among
the Partners in the same manner as its correlative item of “book” income, gain,
loss or deduction is allocated pursuant to Section 6.1 of the Agreement and
Section 1 of this Exhibit C, provided however, gain on the sale

 

C-2

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of property contributed subsequent to the date on which this Amended and
Restated Agreement of Limited Partnership is effective and with respect to which
the traditional method is elected shall first be allocated to solely to the
Partners who contributed such Property, pro rata, in proportion to their
Percentage Interests, to the extent allocations to non-contributing Partners of
depreciation deductions with respect to such Contributed Property have been
limited by the so-called “ceiling rule” as described in Treasury Regulation
Section 1.704-3(c)(3)(iii)(B), and further provided, no such special allocation
of gain for tax purposes shall be made with respect to properties contributed
prior to the date in which this Amended and Restated Agreement of Limited
Partnership is effective.

 

B. In an attempt to eliminate Book-Tax Disparities attributable to a Contributed
Property or Adjusted Property, items of income, gain, loss, and deduction shall
be allocated for federal income tax purposes among the Partners as follows:

 

  (1)  (a) In the case of a Contributed Property, such items attributable
thereto shall be allocated among the Partners, consistent with the principles of
Section 704(c) of the Code and the Regulations thereunder, to take into account
the variation between the 704(c) Value of such property and its adjusted basis
at the time of contribution; and

 

        (b) any item of Residual Gain or Residual Loss attributable to a
Contributed Property shall be allocated among the Partners in the same manner as
its correlative item of “book” gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.

 

  (2)  (a) In the case of an Adjusted Property, such items shall

 

(1) first, be allocated among the Partners in a manner consistent with the
principles of Section 704(c) of the Code and the Regulations thereunder to take
into account the Unrealized Gain or Unrealized Loss attributable to such
property and the allocations thereof pursuant to Exhibit B; and

 

(2) second, in the event such property was originally a Contributed Property, be
allocated among the Partners in a manner consistent with Section 2.B(1) of this
Exhibit C; and

 

        (b) any item of Residual Gain or Residual Loss attributable to an
Adjusted Property shall be allocated among the Partners in the same manner its
correlative item of “book” gain or loss is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.

 

  (3) all other items of income, gain, loss and deduction shall be allocated
among the Partners the same manner as their correlative item of “book” gain or
loss is allocated pursuant to Section 6.1 of the Agreement and Section 1 of the
Exhibit C.

 

C-3

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C. To the extent that the Treasury Regulations promulgated pursuant to Section
704(c) of the Code permit the Partnership to utilize alternative methods to
eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall have the authority to elect the method
to be used by the Partnership and such election shall be binding on all
Partners.

 

3. No Withdrawal

 

No Partner shall be entitled to withdraw any part of his Capital Contribution or
his Capital Account or to receive any distribution from the Partnership, except
as provided in Articles 4, 5, 8 and 13 of the Agreement.

 

C-4

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Exhibit D

 

Notice of Redemption

 

The undersigned Limited Partner hereby irrevocably (i) redeems             
Common Units in Catellus Operating Limited Partnership in accordance with the
terms of the Amended and Restated Agreement of Limited Partnership of Catellus
Operating Limited Partnership and the Redemption Right referred to therein; (ii)
surrenders such Common Units and all right, title and interest therein; and
(iii) directs that the Cash Amount or REIT Shares Amount (as determined by the
General Partner) deliverable upon exercise of the Redemption Right be delivered
to the address specified below, and if REIT Shares are to be delivered, such
REIT Shares be registered or placed in the name(s) and at the address(es)
specified below. The undersigned hereby, represents, warrants, and certifies
that the undersigned (a) has marketable and unencumbered title to such Common
Units, free and clear of the rights or interests of any other person or entity;
(b) has the full right, power, and authority to redeem and surrender such Common
Units as provided herein; and (c) has obtained the consent or approval of all
persons or entities, if any, having the right to consent or approve such
redemption and surrender.

 

Dated:                        

Name of Limited Partner:                                      
                                  

                                Please Print

 

 

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(Signature of Limited Partner)

 

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(Street Address)

 

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(City)                            (State)                     (Zip Code)

Signature Guaranteed by:

 

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If REIT Shares are to be issued, issue to:

 

Name:                                                                 

Please insert social security or identifying number:                            

 

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