Exhibit 10.1

 

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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

CARR REALTY HOLDINGS, L.P.

 

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December 31, 2003

 

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TABLE OF CONTENTS

 

ARTICLE 1 DEFINED TERMS

   1

ARTICLE 2 ORGANIZATIONAL MATTERS

   13 Section 2.1       

Organization

   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       

Issuances of Additional Partnership Interests

   16 Section 4.3       

No Preemptive Rights

   18

ARTICLE 5 DISTRIBUTIONS

   18 Section 5.1       

Requirement and Characterization of Distributions

   18 Section 5.2       

Guaranteed Payment

   21 Section 5.3       

Amounts Withheld

   21 Section 5.4       

Distributions Upon Liquidation

   21

ARTICLE 6 ALLOCATIONS

   21 Section 6.1       

Allocations For Capital Account Purposes

   21

ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS

   22 Section 7.1       

Management

   22 Section 7.2       

Certificate of Limited Partnership

   25 Section 7.3       

Restrictions on General Partner’s Authority

   25 Section 7.4       

Reimbursement of the General Partner

   26 Section 7.5       

Outside Activities of the General Partner

   26 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

   30 Section 7.11     

Reliance by Third Parties

   31 Section 7.12     

Partnership Operations

   31

ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

   32 Section 8.1       

Limitation of Liability

   32 Section 8.2       

Management of Business

   32

 

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Section 8.3       

Outside Activities of Limited Partners

   32 Section 8.4       

Return of Capital

   33 Section 8.5       

Rights of Limited Partners Relating to the Partnership

   33 Section 8.6       

Redemption Right

   34

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

   35

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 General Partner’s Partnership Interest

   39 Section 11.3     

Limited Partners’ Rights to Transfer

   40 Section 11.4     

Substituted Limited Partners

   40 Section 11.5     

Assignees

   41 Section 11.6     

General Provisions

   41

ARTICLE 12 ADMISSION OF PARTNERS

   42 Section 12.1     

Admission of Successor General Partner

   42 Section 12.2     

Admission of Additional Limited Partners

   42 Section 12.3     

Amendment of Agreement and Certificate of Limited Partnership

   43

ARTICLE 13 DISSOLUTION AND LIQUIDATION

   43 Section 13.1     

Dissolution

   43 Section 13.2     

Winding Up

   44 Section 13.3     

Compliance with Timing Requirements of Regulations

   45 Section 13.4     

Deemed Distribution and Recontribution

   46 Section 13.5     

Rights of Limited Partners

   46 Section 13.6     

Notice of Dissolution

   46 Section 13.7     

Cancellation of Certificate of Limited Partnership

   46 Section 13.8     

Reasonable Time for Winding-Up

   47 Section 13.9     

Waiver of Partition

   47

ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

   47 Section 14.1     

Amendments

   47 Section 14.2     

Meetings of the Partners

   48

 

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ARTICLE 15 GENERAL PROVISIONS

   49 Section 15.1     

Addresses and Notice

   49 Section 15.2     

Titles and Captions

   49 Section 15.3     

Pronouns and Plurals

   50 Section 15.4     

Further Action

   50 Section 15.5     

Binding Effect

   50 Section 15.6     

Creditors

   50 Section 15.7     

Waiver

   50 Section 15.8     

Counterparts

   50 Section 15.9     

Applicable Law

   50 Section 15.10   

Invalidity of Provisions

   51

 

EXHIBIT A

INTENTIONALLY OMITTED

 

EXHIBIT B

CAPITAL ACCOUNT MAINTENANCE

 

EXHIBIT C

SPECIAL ALLOCATION RULES

 

EXHIBIT D

VALUE OF CONTRIBUTED PROPERTY

 

EXHIBIT E

NOTICE OF REDEMPTION

 

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AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

CARR REALTY HOLDINGS, L.P.

 

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of December
31, 2003 and effective as of the Effective Time, is entered into by CarrAmerica
Realty Corporation, a Maryland corporation, as the General Partner, for itself
and on behalf of the Limited Partners of the Partnership.

 

WHEREAS, CRLP and Carr Realty LP Holdings, L.L.C. entered into that certain
Agreement of Limited Partnership of the Partnership on December 23, 2003 (the
“Original Agreement”);

 

WHEREAS, pursuant to the merger described in that certain Agreement and Plan of
Merger dated as of December 23, 2003, by and among CRLP, Carr Realty GP
Holdings, LLC, a Delaware limited liability company, Carr Realty Merger
Subsidiary, L.P., a Delaware limited partnership, the Partnership, and Carr
Realty LP Holdings, LLC, a Delaware limited liability company, (i) each Class A,
Class B and Class C Unit (as defined in the CRLP Agreement) of limited
partnership interest in CRLP issued and outstanding as of December 31, 2003,
immediately prior to the Effective Time, ceased to be outstanding and was
converted into and exchanged for the right to receive one Class A, Class B and
Class C unit of limited partnership interest in the Partnership, respectively,
and (ii) the General Partner Interest (as defined in the CRLP Agreement) in CRLP
issued and outstanding as of December 31, 2003, immediately prior to the
Effective Time, ceased to be outstanding and was automatically converted into
and exchanged for the right to receive the General Partner Interest in the
Partnership;

 

WHEREAS, the Partners intend that the Partnership is and will be treated as the
continuation of CRLP for federal income tax purposes; and

 

WHEREAS, the partners desire to amend and restate in its entirety the Original
Agreement to reflect the rights and obligations of the Partners as they existed
under the CRLP Agreement and to cause the Agreement to be, as of the date
hereof, substantially identical to the CRLP 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 agree to continue the
Partnership as a limited partnership under the Act, 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.

 

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“Additional Limited Partner” means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 4.2 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 Year (i) increased by any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the
items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6). The foregoing definition
of Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.

 

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

 

“Adjusted Property” means any property the Carrying Value of which has been
adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
distributed by, and recontributed 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, (i) any Person directly or
indirectly controlling, controlled by or under common control with such Person,
(ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above.

 

“Agreed Value” means (i) in the case of any Contributed Property set forth in
Exhibit D and as of the time of its contribution to the Partnership, the Agreed
Value of such property as set forth in Exhibit D, (ii) in the case of any
Contributed Property not set forth in Exhibit D and as of the time of its
contribution to the Partnership, the 704(c) Value of such property or other
consideration, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed, and
(iii) 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.

 

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

 

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“Agreement and Plan of Merger” means that certain Agreement and Plan of Merger
dated as of December 23, 2003, by and among CRLP, Carr Realty GP Holdings, LLC,
a Delaware limited liability company, Carr Realty Merger Subsidiary, L.P., a
Delaware limited partnership, the Partnership, and Carr Realty LP Holdings, LLC,
a Delaware limited liability company, as it may be amended, supplemented or
restated from time to time.

 

“Articles of Incorporation” means the Articles of Incorporation of the General
Partner filed in the State of Maryland on July 9, 1992, as amended or restated
from time to time.

 

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

 

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

 

(a) the Partnership’s Net Income or Net Loss (as the case may be) for such
period, taking into account all Guaranteed Payments deducted with respect to
such period (without regard to adjustments resulting from allocations described
in Sections 1.A-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 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 (or loss, as the case may
be) 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 principal debt payments made during such period by the Partnership,

 

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

 

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

 

(f) the amount of any increase in reserves established during such period which
the General Partner determines are 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.

 

“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 New York, New York 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 Section
4.1 or 4.2 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 Property charged to the Partners’ Capital
Accounts 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.

 

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

 

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

 

“Class A” means the Partners who are holders of Class A Units.

 

“Class A Share” means that portion of Available Cash for a Distribution Period
to be distributed with respect to Class A as determined by multiplying the
amount of Available Cash for such Distribution Period by the fraction set forth
in Section 5.1.B.1 hereof.

 

“Class A Unit” means a Partnership Unit other than any other Partnership Unit
that is specifically designated by the General Partner pursuant to Section 4.2
as being of another class of Partnership Units.

 

“Class C” means the Partners who are holders of Class C Units.

 

“Class C Share” means that portion of Available Cash for a Distribution Period
to be distributed with respect to Class C as determined by multiplying the
amount of Available Cash for such Distribution Period by the fraction set forth
in Section 5.1.B.2 hereof (as such fraction may be adjusted in accordance with
Section 5.1.B hereof).

 

“Class C Unit” means a Partnership Unit with such designations, preferences,
rights, powers and duties as are described in or pursuant to Section 4.2.F
hereof.

 

“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 future law.

 

“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 (or deemed contributed to the Partnership on termination and
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 General
Partner (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

 

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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 (assuming
for such purposes 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. 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.

 

“CRLP” means Carr Realty, L.P., a Delaware limited partnership.

 

“CRLP Agreement” means that certain Fourth Amended and Restated Agreement of
Limited Partnership of CRLP dated July 31, 2002.

 

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

 

“Depreciation” means, for each fiscal year, an amount equal to the federal
income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, 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 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” means any calendar quarter or shorter period with respect
to which a distribution of Available Cash is to be made to the Partners by the
Partnership.

 

“Effective Time” means 4:00 p.m. on December 31, 2003, or at such later time as
the parties to the Agreement and Plan of Merger shall agree upon and designate
in the Certificate of Merger filed pursuant to the Agreement and Plan of Merger
with the Delaware Secretary of State in accordance with applicable law.

 

“General Partner” means CarrAmerica Realty Corporation or its successors as
general partner of the Partnership.

 

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“General Partner Interest” means a Partnership Interest held by the General
Partner that is a general partnership interest. A General Partner Interest may
be expressed as a number of Partnership Units.

 

“Guaranteed Payment” means, with respect to each Partner holding Class A Units,
an amount equal to the product of (x) twenty-eight and three quarters cents
($0.2875) (except for the distribution made with respect to the quarter ended
June 30, 2002, for which the number shall be thirty-two and one half cents
($0.325)) and (y) the number of Class A Units held as of the Partnership Record
Date by the Partner to whom a Guaranteed Payment is being made pursuant to
Section 5.2. “Guaranteed Payment” means, with respect to each Partner holding
Class C Units, an amount equal to the product of (x) twenty-eight and three
quarters cents ($0.2875), (y) the number of Class C Units held as of the
Partnership Record Date by the Partner to whom a Guaranteed Payment is being
made pursuant to Section 5.2, and (z) a fraction, the numerator of which is
equal to the number of days in the calendar quarter to which the Partnership
Record Date relates for which the Class C Units held by such Partner were issued
and outstanding and the denominator of which is the number of days in such
calendar quarter. In the event that Class C Units which have been issued on
different dates are outstanding on the last day of a calendar quarter, then the
Class C Units issued on each particular date shall be treated as a separate
series of Partnership Units for purposes of determining the amount of the
Guaranteed Payment (and the formula set forth in the preceding sentence shall be
modified for each separate series of Class C Units).

 

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

 

“Immediate Family” means, with respect to any natural Person, such natural
Person’s spouse, parents, descendants, nephews, nieces, brothers, and sisters.

 

“Incapacity” or “Incapacitated” means, (i) as to any individual Partner, death,
total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his Person or his 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 charter, (iii) as
to any partnership which is a Partner, the dissolution and commencement of
winding up of the partnership, (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,

 

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receiver or liquidator for the Partner or for all or any substantial part of the
Partner’s properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner’s
consent or acquiescence of a trustee, receiver of liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) 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
status as (A) the General Partner or (B) a director or officer of the
Partnership or the General Partner, and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.

 

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

 

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

 

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

 

“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
Exhibit B. Once 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
Exhibit B. Once 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.

 

“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

 

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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 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 E to this Agreement.

 

“Original CRLP Limited Partner” means a Limited Partner who became a limited
partner of CRLP on February 16, 1993, and who owns one or more Original CRLP
Limited Partnership Units on the date action is called for under Section 13.1.

 

“Original CRLP Limited Partnership Unit” means a Partnership Unit (1) issued to
a Limited Partner in exchange for a Partnership Unit of CRLP that was acquired
by a Limited Partner on February 16, 1993 and (2) held by such Original CRLP
Limited Partner on the date action is called for under Section 13.1.

 

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

 

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

 

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

 

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

 

“Partner Register” means the register of Partners maintained by the General
Partner in the books and records of the Partnership, which shall include the
name, address, number of Partnership Units, deemed capital contributions and
Percentage Interest of each Partner.

 

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

 

“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

 

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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 Partnership Minimum Gain, for a Partnership Year shall
be determined in accordance with the rules of Regulations Section 1.704-2(d).

 

“Partnership Record Date” means the record date established by the General
Partner for the distribution of Available Cash pursuant to Section 5.1 hereof or
Guaranteed Payments pursuant to Section 5.2 hereof, which record date shall be
the same as the record date established by the General Partner for a
distribution to its shareholders of some or all of its portion of such
distribution.

 

“Partnership Unit” means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2. The number of
Partnership Units outstanding and the Percentage Interests in the Partnership
represented by such Partnership Units are set forth in the Partner Register, as
such Partner Register may be amended from time to time. The ownership of
Partnership Units may be evidenced by a certificate in a form approved by the
General Partner.

 

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

 

“Percentage Interest” means, as to a Partner, its interest in the Partnership as
determined by dividing the Partnership Units owned by such Partner by the total
number of Partnership Units then outstanding and as specified in the Partner
Register, as such Partner Register may be amended from time to time.

 

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

 

“Recapture Income” means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or 743 of the Code)
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 General Partner in its sole and absolute discretion. A
Redeeming Partner shall have no right, without the General Partner’s consent, to
receive the Redemption Amount in the form of the REIT Shares Amount.

 

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

 

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

 

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

 

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

 

“REIT Shares Amount” shall mean a number of REIT Shares equal to the product of
the number of Partnership Units offered for redemption by a Redeeming Partner,
multiplied by the Conversion Factor; provided that in the event the General
Partner issues to all holders of 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,
the “rights”) then the REIT Shares Amount shall also include such rights that a
holder of that number of REIT Shares would be entitled to receive.

 

“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.

 

“704(c) Value” of any Contributed Property means the value of such property as
set forth in Exhibit D, or if no value is set forth in Exhibit D, 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)
Value of Contributed Properties in a single or integrated transaction among each
separate property on a basis proportional to its fair market values.

 

“Specified Redemption Date” means the tenth Business Day after receipt by the
General Partner of a Notice of Redemption; provided that if the General Partner
combines its outstanding REIT Shares into a smaller number of REIT Shares, no
Specified Redemption Date shall occur prior to the effective date of such
combination.

 

“Subsidiary” means, with respect to any Person, any corporation 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.

 

“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,

 

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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.

 

“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 General Partner 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 securities exchange or the
NASDAQ-National Market System, the closing price, regular way, on such day, 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 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, or (iii) if the
REIT Shares are not listed or admitted to trading on any 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; provided that if there are no
bid and asked prices reported during the ten (10) days prior to the date in
question, the Value of the REIT Shares 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. In the
event the REIT Shares Amount includes rights that a holder of REIT Shares would
be entitled to receive, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.

 

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ARTICLE 2

ORGANIZATIONAL MATTERS

 

  Section 2.1 Organization

 

The Partnership is a limited partnership organized pursuant to the provisions of
the Act and upon the terms and conditions set forth in the Original Agreement.
The Partners hereby continue the Partnership and amend and restate 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 Carr Realty Holdings, L.P. The Partnership’s
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words “Limited Partnership,” “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
is located at 1209 Orange Street, Wilmington, Delaware, and the registered agent
for service of process on the Partnership in the State of Delaware at such
registered office is Corporation Trust Company. The principal office of the
Partnership is 1850 K Street, N.W., Washington, D.C., or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems advisable.

 

  Section 2.4 Power of Attorney

 

A. Each Limited Partner and each Assignee 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

 

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Certificate and all amendments or restatements thereof) that the General Partner
or the Liquidator deems appropriate or necessary to form, qualify or continue
the existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the Partnership may conduct
business or own property, (b) all instruments that the General Partner 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 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, 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, 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, to effectuate the terms or intent of this Agreement.

 

Nothing contained herein shall be construed as authorizing the General Partner
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 to act as
contemplated by this Agreement in any filing or other action by it on behalf of
the Partnership, and it shall survive and not be affected by the subsequent
Incapacity of any Limited Partner or Assignee and the transfer of all or any
portion of such Limited Partner’s or Assignee’s Partnership Units 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, 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, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner’s request therefor, such further designation, powers of
attorney and other instruments as the General Partner

 

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or the Liquidator, as the case may be, deems necessary to effectuate this
Agreement and the purposes of the Partnership.

 

  Section 2.5 Term

 

The term of the Partnership commenced on December 23, 2003 and shall continue
until December 31, 2091, unless it 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 General Partner at
all times to be classified as a REIT, unless the General Partner ceases to
qualify as a REIT, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing, and (iii) to do
anything necessary or incidental to the foregoing.

 

  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, provided that the Partnership shall
not take, or refrain from taking, any action which, in the judgment of the
General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to continue to qualify as a REIT, (ii) could
subject the General Partner to any additional taxes under Section 857 or 4981 of
the Code, or (iii) could violate any law or regulation of any governmental body
or agency having jurisdiction over the General Partner or its securities, unless
such action (or inaction) shall have been specifically consented to by the
General Partner in writing.

 

ARTICLE 4

CAPITAL CONTRIBUTIONS

 

  Section 4.1 Capital Contributions of the Partners

 

At the Effective Time, the Partners shall be deemed to have made the Capital
Contributions set forth in the Partner Register, which sets forth the Capital
Contributions actually made by or deemed to have been made by the Partners to
CRLP as of December 31, 2003, immediately prior to the Effective Time. To the
extent the

 

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Partnership acquires any property by the merger of any other Person into the
Partnership, Persons who receive Partnership Interests in exchange for their
interests in the Person merging into the Partnership shall become Partners and
shall be deemed to have made Capital Contributions as provided in the applicable
merger agreement and as set forth in the Partner Register, as amended to reflect
such deemed Capital Contributions. The Partners shall own Partnership Units in
the amounts set forth in the Partner Register and shall have a Percentage
Interest in the Partnership as set forth in the Partner Register, which
Percentage Interest shall be adjusted in the Partner Register from time to time
by the General Partner to the extent necessary to reflect accurately
redemptions, Capital Contributions, the issuance of additional Partnership
Units, or similar events having an effect on a Partner’s Percentage Interest. A
number of Partnership Units held by the General Partner equal to one percent
(1%) of all outstanding Partnership Units shall be deemed to be the General
Partner Partnership Units and shall be the General Partnership Interest. Except
as provided in Sections 4.2 and 10.5, the Partners shall have no obligation to
make any additional Capital Contributions or loans to the Partnership.

 

  Section 4.2 Issuances of Additional Partnership Interests

 

A. The General Partner is hereby authorized to cause the Partnership from time
to time to issue to Partners or other Persons other than the General Partner
(including, without limitation, in connection with the contribution of property
to the Partnership) additional Partnership Units or other Partnership Interests
in one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion subject to Delaware law, including, without
limitation, (i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership Interests, (ii)
the right of each such class or series of Partnership Interests to share in
Partnership distributions, and (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership.

 

B. The General Partner may make Capital Contributions to the Partnership at such
times and in such amounts as the General Partner, in its sole and absolute
discretion, may determine advisable, but under no circumstances shall the
General Partner be obligated to make any such Capital Contribution. In exchange
for each such Capital Contribution, the Partnership shall issue to the General
Partner (i) that number of Class A or Class C Units equal to (a) the amount of
the Capital Contribution divided by (b) the per Unit fair market value, as
determined in good faith by the General Partner, of the underlying assets of the
Partnership or (ii) additional Partnership Units or other Partnership Interests,
other than Class A or Class C Units, in one or more classes, or one or more
series of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to Limited Partnership Interests, all as shall
be determined by the General Partner in good faith, subject to Delaware law,
including, without limitation, (x) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests, (y) the right of each such class or series of Partnership
Interests to share in Partnership distributions, and (z) the rights of each such

 

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class or series of Partnership Interests upon dissolution and liquidation of the
Partnership; provided that, in connection with an issuance of Partnership Units
and/or Partnership Interests, pursuant to clause (ii) of this Section 4.2.B, (q)
such Partnership Units and/or Partnership Interests are issued in connection
with an issuance of shares of the General Partner, which shares have
designations, preferences and other rights, all such that the economic interests
are substantially similar to the designations, preferences and other rights of
the additional Partnership Units and/or Partnership Interests issued to the
General Partner in accordance with clause (ii) of this Section 4.2.B, and (r)
the General Partner shall make a Capital Contribution to the Partnership in an
amount equal to the proceeds raised in connection with the issuance of such
shares of the General Partner.

 

C. The General Partner may issue additional REIT Shares or rights, options,
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase REIT Shares (“New Securities”) at such times and in
such amounts and for such consideration as the General Partner, in its sole and
absolute discretion, determines. Under no circumstances shall the General
Partner be obligated to contribute to the Partnership all or any part of the
proceeds from any issuance of such New Securities or from the exercise of rights
contained in such New Securities, and the General Partner may, in its sole and
absolute discretion, retain all such proceeds, to be used by the General Partner
as it determines, in its sole and absolute discretion, to be advisable.

 

D. The General Partner shall cause the Partnership to issue up to 1,266,900
Partnership Units upon the exercise of the options granted pursuant to the 1993
Carr Realty Option Plan or the 1993 Carr Services Option Plan (together “the
Plans”) in accordance with the terms of the Plans. Units issued upon the
exercise of options granted under the Carr Realty Option Plan shall be issued to
the holder of such option for an amount equal to the exercise price with respect
to such option. Units issued in connection with the exercise of an option under
the Carr Services Option Plan shall be sold to Carr Real Estate Services, Inc.
(“CRES”), for delivery to the employee exercising an option under the CRES Plan
at a price equal to the Value of a REIT Share on the date of exercise (as
defined in the Plans) of an option by such employee. Notwithstanding Section
11.3, Partnership Units delivered to CRES in connection with the exercise of an
option by a CRES employee may be transferred to such employee, whereupon such
employee shall be admitted as an Additional Limited Partner for all purposes
hereunder.

 

E. [Intentionally omitted]

 

F. Under the authority granted to it by Section 4.2.A, the General Partner has
established an additional class of Partnership Units entitled “Class C Units”
that is available to be issued in lieu of Class A Units, at the election of the
General Partner, in its sole and absolute discretion, to newly admitted Partners
in exchange for the contribution by such Partners of cash, real estate
partnership interests, stock, notes, other assets or other consideration. Except
as otherwise provided below and in Section 5.1.B hereof, each Class C Unit shall
have the same designations, rights, preferences, powers and duties as each Class
A Unit:

 

  (1)

The amount of Available Cash distributable with respect to Class C Units shall
be determined in accordance with Section 5.1.B hereof,

 

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and the Guaranteed Payment with respect to Class C Units shall be computed as
set forth in the definition of “Guaranteed Payment” as set forth in Article 1 of
this Agreement.

 

  (2) Each Class C Unit shall be converted automatically into a Class A Unit on
the day immediately following the Partnership Record Date for the Distribution
Period (as defined in Section 5.1.B) in which the Class C Unit was issued,
without the requirement for any action by either the Partnership or the Partner
holding the Class C Unit.

 

  (3) [Intentionally omitted]

 

  (4) A holder of either Class C Units or Class A Units into which Class C Units
have been converted pursuant to clause (2) above shall be subject to the
restrictions on transfer imposed by Section 11.3 of this Agreement (in addition
to any other restrictions on transfer as may be set forth in the contribution
agreement or amendment to this Agreement pursuant to which such Class C Units
were issued).

 

  (5) The General Partner shall cause Class C Units to be issued by the
Partnership only pursuant to an amendment to this Agreement, which amendment
shall designate that the newly issued Partnership Units are Class C Units. The
General Partner shall have the right, in its sole and absolute discretion,
subject to Section 4.2.A above, to determine whether the Partnership should
issue Class A Units, Class C Units (or one or more series thereof), or another
class of Partnership Interests in connection with a contribution of property,
other assets or other consideration, to the Partnership.

 

  Section 4.3 No Preemptive Rights

 

No Person shall have any preemptive, preferential or other similar right with
respect to (i) additional Capital Contributions or loans to the Partnership or
(ii) issuance or sale of any Partnership Units.

 

ARTICLE 5

DISTRIBUTIONS

 

  Section 5.1 Requirement and Characterization of Distributions

 

A. Except as set forth in Section 5.1.B, the General Partner shall distribute at
least quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter or shorter period. Except as set forth in Section 5.1.B and in Exhibit
G, all distributions of Available Cash shall be made to the Partners in
accordance with their respective Percentage

 

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Interests on such Partnership Record Date; provided that in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit if such Partner is entitled to receive a distribution out of such Available
Cash with respect to a REIT Share for which such Unit has been redeemed or
exchanged. The General Partner shall take such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with its qualification
as a REIT, to distribute Available Cash to the Limited Partners so as to
preclude any such distribution or portion thereof from being treated as part of
a sale of property to the Partnership by a Limited Partner under Section 707 of
the Code or the Regulations thereunder; provided that the General Partner and
the Partnership shall not have liability to a Limited Partner under any
circumstances as a result of any distribution to a Limited Partner being so
treated.

 

B. If for any quarter or shorter period with respect to which a distribution is
to be made (a “Distribution Period”) Class C Units are outstanding on the
Partnership Record Date for such Distribution Period, the General Partner shall
allocate the Available Cash with respect to such Distribution Period between the
Partners who are holders of Class A Units (“Class A”) and the Partners who are
holders of Class C Units (“Class C”) as follows:

 

  (1) Class A shall receive that portion of the Available Cash (the “Class A
Share”) determined by multiplying the amount of Available Cash by the following
fraction:

 

         A x Y         

(A x Y)+(C x X)

 

  (2) Class C shall receive that portion of the Available Cash (the “Class C
Share”) determined by multiplying the amount of Available Cash by the following
fraction:

 

         C x X         

(A x Y)+(C x X)

 

  (3) For purposes of the foregoing formulas, (i) “A” equals the number of Class
A Units outstanding on the Partnership Record Date for such Distribution Period;
(ii) ”C” equals the number of Class C Units outstanding on the Partnership
Record Date for such Distribution Period; (iii) “Y” equals the number of days in
the Distribution Period; and (iv) “X” equals the number of days in the
Distribution Period for which the Class C Units were issued and outstanding.

 

The Class A Share shall be distributed among Partners holding Class A Units on
the Partnership Record Date for the Distribution Period in accordance with the
number of Class A Units held by each Partner on such Partnership Record Date;

 

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provided that in no event may a Partner receive a distribution of Available Cash
with respect to a Class A Unit if a Partner is entitled to receive a
distribution out of such Available Cash with respect to a REIT Share for which
such Class A Unit has been redeemed or exchanged. The Class C Share shall be
distributed among the Partners holding Class C Units on the Partnership Record
Date for the Distribution Period in accordance with the number of Class C Units
held by each Partner on such Partnership Record Date. In no event shall any
Class C Units be entitled to receive any distribution of Available Cash for any
Distribution Period ending prior to the date on which such Class C Units are
issued.

 

C. In the event that Class C Units which have been issued on different dates are
outstanding on the Partnership Record Date for any Distribution Period, then the
Class C Units issued on each particular date shall be treated as a separate
series of Partnership Units for purposes of making the allocation of Available
Cash for such Distribution Period among the holders of Partnership Units (and
the formula for making such allocation, and the definitions of variables used
therein, shall be modified accordingly). Thus, for example, if two series of
Class C Units are outstanding on the Partnership Record Date for any
Distribution Period, the allocation formula for each series, “Series C1” and
“Series C2,” would be as follows:

 

  (1) Series C1 shall receive that portion of the Available Cash determined by
multiplying the amount of Available Cash by the following fraction:

 

                 C1 x X1                 

(A x Y)+(C1 x X1)+(C2 x X2)

 

  (2) Series C2 shall receive that portion of the Available Cash determined by
multiplying the amount of Available Cash by the following fraction:

 

                 C2 x X2                 

(A x Y)+(C1 x X1)+(C2 x X2)

 

  (3) For purposes of the foregoing formulas the definitions set forth in
Section 5.1.B.3 remain the same except that (i) “C1” equals the number of
Partnership Units in Series C1 outstanding on the Partnership Record Date for
such Distribution Period; (ii) ”C2” equals the number of Partnership Units in
Series C2 outstanding on the Partnership Record Date for such Distribution
Period; (iii) “X1” equals the number of days in the Distribution Period for
which the Partnership Units in Series C1 were issued and outstanding; and (iv)
“X2” equals the number of days in the Distribution Period for which the
Partnership Units in Series C2 were issued

 

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  Section 5.2 Guaranteed Payment

 

The Partnership shall pay quarterly to each Partner who is a Partner on the
Partnership Record Date with respect to such quarter an amount of cash equal to
such Partner’s Guaranteed Payment; provided that under no circumstance shall the
General Partner or any Limited Partner (i) be obligated to loan or contribute or
otherwise make available money or property to the Partnership in order to enable
the Partnership to make a Guaranteed Payment or (ii) otherwise have personal
liability for the payment of the Guaranteed Payment. Amounts paid pursuant to
this Section 5.2 are intended to 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 5.3 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 General Partner, the Limited Partners or Assignees shall be
treated as amounts distributed to the General Partner, Limited Partners, or
Assignees pursuant to Section 5.1 for all purposes under this Agreement.

 

  Section 5.4 Distributions Upon Liquidation

 

Proceeds from a Terminating Capital Transaction shall be distributed to the
Partners in accordance with Section 13.2.

 

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. Net Income. After giving effect to the special allocations set forth in
Section 1 of Exhibit C, Net Income shall be allocated (i) first, to the General
Partner to the extent that Net Losses previously allocated to the General
Partner pursuant to the last sentence of Section 6.1.B of this Agreement and the
last sentence of Section 6.1.B of the CRLP Agreement exceed Net Income
previously allocated to the General Partner pursuant to this clause (i) of
Section 6.1.A of this Agreement and clause (i) of Section 6.1.A of the CRLP
Agreement, and (ii) thereafter, Net Income shall be allocated to the Partners in
accordance with their respective Percentage Interests.

 

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B. Net Losses. After giving effect to the special allocations set forth in
Section 1 of Exhibit C, Net Losses shall be allocated to the Partners in
accordance with their respective Percentage Interests, provided that Net Losses
shall not be allocated to any Limited Partner pursuant to this Section 6.1.B to
the extent that such allocation would cause such Limited Partner to have an
Adjusted Capital Account Deficit at the end of such taxable year (or increase
any existing Adjusted Capital Account Deficit). All Net Losses in excess of the
limitations set forth in this Section 6.1.B shall be allocated to the General
Partner.

 

C. Allocation of Nonrecourse Debt. For purposes of Regulations Section
1.752-3(a), the Partners agree that Nonrecourse Liabilities of the Partnership
in excess of the sum of (i) the amount of Partnership Minimum Gain and (ii) the
total amount of Nonrecourse Built-in Gain shall be allocated among the Partners
in accordance with their respective Percentage Interests.

 

D. Recapture Income. 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.

 

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 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 General Partner (so long as the General Partner qualifies as a REIT)
to avoid 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

 

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shareholders sufficient to permit the General Partner to maintain REIT status),
the assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness (including the securing
of same by mortgage, deed of trust or other lien or encumbrance on the
Partnership’s assets) and the incurring of any 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;

 

  (3) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of any assets of the Partnership or the merger or other combination
of the Partnership with or into another entity (all of the foregoing subject to
any prior approval which may be 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 it sees fit, including, without limitation, the financing of the
conduct of the operations of the General Partner, the Partnership or any of the
Partnership’s Subsidiaries, the lending of funds to other Persons (including the
Partnership’s Subsidiaries) 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 its Subsidiaries;

 

  (5) 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;

 

  (6) the distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;

 

  (7) the selection and dismissal of employees of the Partnership or the General
Partner (including, without limitation, employees having titles such as
“president”, vice president”, “secretary” and “treasurer”), and agents, outside
attorneys, accountants, consultants and contractors of the General Partner or
the Partnership and the determination of their compensation and other terms of
employment or hiring;

 

  (8) the maintenance of such insurance for the benefit of the Partnership and
the Partners as it deems necessary or appropriate;

 

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  (9) the formation of, or acquisition of an interest in, and the contribution
of property to, any further limited or general partnerships, joint ventures or
other 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);

 

  (10) the control of any matters affecting the rights and obligations of the
Partnership, including the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation, and the indemnification of
any Person against liabilities and contingencies to the extent permitted by law;

 

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

 

  (12) the determination of the fair market value of any Partnership property
distributed in kind using such reasonable method of valuation as it may adopt.

 

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. 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 obtain and maintain (i) casualty, liability and other
insurance on the properties of the Partnership and (ii) liability insurance for
the Indemnitees hereunder.

 

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

 

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.

 

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  Section 7.2 Certificate of Limited Partnership

 

The General Partner has previously filed the Certificate with the Secretary of
State of Delaware. To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state 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 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’s Authority

 

A. The General Partner may not, without the written Consent of all of the
Limited Partners, take any action in contravention of this Agreement, including,
without limitation:

 

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

 

  (2) possess Partnership property, or assign any rights in specific Partnership
property, for other than a Partnership purpose except as otherwise provided in
this Agreement;

 

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

 

  (4) perform any act that would subject a Limited Partner to liability as a
general partner in any jurisdiction or any other liability except as provided
herein or under the Act.

 

B. Except as provided in Article 13 hereof, the General Partner may not 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, consolidation or other combination with any other
Person) without the Consent of holders of two-thirds of the outstanding
Partnership Units.

 

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  Section 7.4 Reimbursement of the General Partner

 

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 general partner of the Partnership.

 

B. The General Partner shall be reimbursed on a monthly basis, or such other
basis as the General Partner may determine in its sole and absolute discretion,
for all expenses it incurs relating to the operation of, or for the benefit of,
the Partnership. The General Partner shall determine in good faith the amount of
expenses incurred by it related to the operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the benefit of
the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such a
manner as the General Partner in its sole and absolute discretion deems fair and
reasonable. Such reimbursements shall be in addition to any reimbursement to the
General Partner as a result of indemnification pursuant to Section 7.7 hereof.

 

C. The General Partner also shall be reimbursed for all expenses it incurs
relating to any issuance of additional Partnership Interests or REIT Shares (in
such case based on the percentage of the net proceeds therefrom contributed or
otherwise made available to the Partnership) pursuant to Section 4.2 hereof.

 

  Section 7.5 Outside Activities of the General Partner

 

A. The General Partner shall devote to the Partnership such time as may be
necessary for the proper performance of its duties as General Partner, but the
General Partner is not required, and is not expected, to devote its full time to
the performance of such duties. Subject to any agreement entered into pursuant
to Section 7.6.E hereof and any other agreements entered into by the General
Partner or its Affiliates with the Partnership or a Subsidiary, the General
Partner and any officer, director, employee, agent, trustee, Affiliate or
shareholder of the General Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership (including, without limitation, owning and operating real estate and
incurring indebtedness in its own name, whether or not the proceeds of such
indebtedness are used for the benefit of the Partnership), including, without
limitation, engaging in other business interests and activities in direct or
indirect competition with the Partnership. Neither the Partnership nor any
Partners shall have any right by virtue of this Agreement or the partnership
relationship established hereby in or to such other ventures or activities or to
the income or proceeds derived therefrom, and the pursuit of such ventures, even
if competitive with the business of the Partnership, shall not be deemed
wrongful or improper. Neither the General Partner nor any Affiliate of the
General Partner shall be obligated to present any particular opportunity to the
Partnership even if such opportunity is of a character which, if presented to
the Partnership, could be taken by the Partnership, and, regardless of whether
or not such opportunity is competitive with the Partnership, the General Partner
or any Affiliate of the General Partner shall have the right to take for its own
account (individually or as a trustee, partner or fiduciary), or to recommend to
others, any such particular opportunity. The General Partner and any Affiliates
of the General

 

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Partner may acquire Limited Partnership Interests and shall be entitled to
exercise all rights of a Limited Partner relating to such Limited Partnership
Interests.

 

B. The General Partner may, from time to time in its sole and absolute
discretion, purchase and/or redeem REIT Shares (including, without limitation,
in connection with a stock repurchase or similar program). In the event that the
General Partner purchases and/or redeems REIT Shares, then the General Partner
shall purchase and/or redeem such REIT Shares with its own funds and not from
the proceeds of any sale of Units to the Partnership; provided, however, that if
the Partnership purchases Units pro rata from all Partners, the General Partner
may use the proceeds it receives from any such sale of Units to purchase and/or
redeem REIT Shares.

 

C. The General Partner shall not make any extraordinary distributions of cash or
property to its shareholders or effect a merger or sale of all or substantially
all of its assets without notifying the Limited Partners of its intention to
make such distribution or effect such merger or sale at least 20 business days
prior to the record date to determine shareholders eligible to receive such
distribution or to vote upon the approval of such merger or sale.

 

  Section 7.6 Contracts with Affiliates

 

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

 

B. Except as provided in Section 7.5.A, 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.

 

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, or borrow funds from, or lend funds to, the
Partnership, directly or indirectly, except pursuant to transactions that are on
terms that are fair and reasonable and no less favorable to the Partnership than
would be obtained from an unaffiliated third party.

 

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

 

E. The General Partner is expressly authorized to enter into, in the name and on
behalf of the Partnership, a right of first opportunity arrangement and other
conflict

 

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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.

 

  Section 7.7 Indemnification

 

A. The Partnership shall indemnify an Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
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 as set forth in this Agreement in which any 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. The termination of any proceeding
by judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this
Section 7.7.A. The termination of any proceeding by conviction or upon a plea of
nolo contendere or its equivalent, or an entry of an order of probation prior to
judgment, creates a rebuttable presumption that the 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.

 

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

 

C. The indemnification provided by this Section 7.7 shall be in addition to any
other rights to which an Indemnitee or any other Person may be entitled under
any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity.

 

D. The Partnership may 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.

 

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E. For purposes of this Section 7.7, (i) 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, (ii) 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 (iii) 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 the Limited Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.

 

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

 

H. The provisions of this Section 7.7 are for the benefit of the Indemnitees,
their heirs, successors, assigns and administrators and shall not be deemed to
create any rights for the benefit of any other Persons.

 

  Section 7.8 Liability of the General Partner

 

A. Notwithstanding anything to the contrary set forth in this Agreement, the
General Partner 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 of any act or omission if the General Partner
acted in good faith.

 

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

 

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

 

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 General Partner to continue to
qualify as a REIT or (ii) to avoid the General Partner incurring any taxes under
Section 857 or 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

 

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the name of the General Partner or any nominee or Affiliate of the General
Partner shall be held by the General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement; 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. 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 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 such Person shall be entitled to deal with the General
Partner as if it were the Partnership’s sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies 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.

 

  Section 7.12 Partnership Operations

 

A. The General Partner intends to use reasonable efforts to cause the
Partnership to operate in a manner (including, without limitation, incurring
indebtedness, establishing and maintaining cash reserves, and undertaking and
financing recurring and non-recurring capital expenditures) that enables the
Partnership to maintain a distribution rate per Class A Unit that is equal to
the distribution rate per REIT Share payable to holders of common stock of the
General Partner (after taking into account any appropriate adjustments in Class
A Units and REIT Shares to reflect stock splits, stock dividends and other
similar adjustments). The General Partner agrees that it will act in good faith
in attempting to accomplish the foregoing objective, but there is no assurance
that such objective will be accomplished and neither the General Partner nor the
Partnership shall have any liability for the failure to achieve such objective
so long as the General Partner acts in good faith.

 

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B. Notwithstanding Section 14.1.A hereof, the General Partner shall not amend
this Section 7.12 in a manner that adversely affects the Limited Partners
without the Consent of a majority of the Percentage Interests of the Limited
Partners, excluding Limited Partnership Interests held by the General Partner.

 

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 a Subsidiary, any Limited Partner 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 in direct or indirect competition with 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 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.

 

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  Section 8.4 Return of Capital

 

Except pursuant to the right of redemption set forth in Section 8.6, no Limited
Partner shall be entitled to the withdrawal or return of his Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or, except to the
extent provided by Exhibit C hereof or as permitted by Section 4.2.B, or
otherwise expressly provided in this Agreement, as to profits, losses or
distributions.

 

  Section 8.5 Rights of Limited Partners Relating to the Partnership

 

A. In addition to 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 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:

 

  (1) to obtain a copy of the most recent annual and quarterly reports filed
with the Securities and Exchange Commission by the General Partner 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 and all amendments
thereto, together with executed copies of all powers of attorney pursuant to
which this Agreement, the Certificate 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 in writing of any change
made to the Conversion Factor within ten (10) Business Days of the date such
change becomes effective.

 

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

 

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information that (i) the General Partner 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 (ii) the
Partnership is required by law or by agreements with unaffiliated third parties
to keep confidential.

 

  Section 8.6 Redemption Right

 

A. Subject to Section 8.6.C, each Limited Partner or Assignee, other than the
General Partner, shall have the right (the “Redemption Right”) to require the
Partnership to redeem on a Specified Redemption Date all or a portion of the
Partnership Units held by such Limited Partner at a redemption price equal to
and in the form of the Redemption Amount to be paid by the Partnership. The
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the General Partner by the Limited Partner who is exercising the redemption
right (the “Redeeming Partner”). A Limited Partner may not exercise the
Redemption Right for less than one thousand (1,000) Partnership Units or, if
such Limited Partner holds less than one thousand (1,000) Partnership Units, all
of the Partnership Units held by such Partner. The Redeeming Partner shall have
no right, with respect to any Partnership Units so redeemed, to receive any
distributions or Guaranteed Payments paid after the Specified Redemption Date.

 

B. Notwithstanding the provisions of Section 8.6.A, the General Partner may, in
its sole and absolute discretion, assume directly and satisfy a Redemption Right
by paying to the Redeeming Partner the Redemption Amount on the Specified
Redemption Date, whereupon the General Partner shall acquire the Partnership
Units offered for redemption by the Redeeming Partner and shall be treated for
all purposes of this Agreement as the owner of such Partnership Units. In the
event the General Partner shall exercise its right to satisfy the Redemption
Right in the manner described in the preceding sentence, the Partnership shall
have no obligation to pay any amount to the Redeeming Partner with respect to
such Redeeming Partner’s exercise of the Redemption Right, and each of the
Redeeming Partner, the Partnership, and the General Partner shall treat the
transaction between the General Partner and the Redeeming Partner as a sale of
the Redeeming Partner’s Partnership Units to the General Partner for federal
income tax purposes. Each Redeeming Partner agrees to execute such documents as
the General Partner may reasonably require in connection with the issuance of
REIT Shares upon exercise of the Redemption Right.

 

C. Notwithstanding the provisions of Sections 8.6.A and 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
would be prohibited under the Articles of Incorporation.

 

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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 appropriate books and records 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 and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles.

 

  Section 9.2 Fiscal Year

 

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

 

  Section 9.3 Reports

 

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

 

B. As soon as practicable, but in no event later than one hundred five (105)
days after the close of each calendar quarter (except the last calendar quarter
of each year), the General Partner shall make available to each Limited Partner,
if requested, as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the General Partner, if
such statements are prepared solely on a consolidated basis with the General
Partner, and such other information as may be required by applicable law or
regulation, or as the General Partner determines to be appropriate.

 

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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 all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.

 

  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; provided, however, that the General Partner shall make the election
under Section 754 of the Code in accordance with applicable regulations
thereunder. The General Partner shall have the right to seek to revoke any such
election (including, without limitation, the election under Section 754 of the
Code) 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 6223(c)(3) 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 and profit interest of each of the Limited Partners;
provided, however, that such information is provided to the Partnership by the
Limited Partners.

 

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

 

  1)

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

 

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“notice partner” (as defined in Section 6231 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 United States Claims Court,
or the filing of a complaint for refund with the District Court of the United
States for the district in which the Partnership’s principal place of business
is located;

 

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

 

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

 

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

 

  6) to take any other action on behalf of the Partners of 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
his duties as such (including legal and accounting fees) 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 his
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 Section 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 (including, without limitation, the right to receive
distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus four percentage points (but not higher than the maximum lawful rate) from
the date such amount is due (i.e., 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 its General Partner Interest to another Person or by
which a Limited Partner purports to assign its Limited Partnership Interest to
another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term “transfer” when used in this Article 11 does not include any redemption
of Partnership Units by a Limited Partner or acquisition of Partnership Units
from a Limited Partner by the General Partner pursuant to Section 8.6.

 

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

 

  Section 11.2 Transfer of General Partner’s Partnership Interest

 

A. The General Partner may not transfer any of its General Partner Interest or
Limited Partnership Interests or withdraw as General Partner except as provided
in Section 11.2.B or in connection with a transaction described in Section
11.2.C or 11.2.D.

 

B. The General Partner may transfer Limited Partnership Interests held by it
either to the Partnership in accordance with Section 7.5.B hereof or to a
purported holder of REIT Shares in accordance with the provisions of Article 5
of the Articles of Incorporation.

 

C. Except as otherwise provided in Section 11.2.D, the General Partner shall not
engage in any merger, consolidation or other business combination with or into
another Person or a sale of all or substantially all of its assets (a
“Transaction”), unless either (i) the Board of Directors of the General Partner
determines in good faith that the Transaction likely will not have a material
adverse effect on the value of the Limited Partnership Interests (determined
without regard to any tax consequences to Limited Partners as a result of the
Transaction) or (ii) a majority of the Percentage Interests of the Limited
Partners, excluding Limited Partnership Interests held by the General Partner,
Consents to the Transaction.

 

D. Notwithstanding Section 11.2.C, the General Partner may engage in a merger,
consolidation or other business combination if (i) substantially all of the
consideration that stockholders of the General Partner are retaining or
receiving in connection with the Transaction is a common equity interest in the
surviving company and

 

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(ii) the surviving company (if not the General Partner) is assuming all of the
obligations of the General Partner under the Partnership Agreement.

 

  Section 11.3 Limited Partners’ Rights to Transfer

 

A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E and 11.4, a
Limited Partner (other than the General Partner) may transfer, with or without
the consent of the General Partner, all or any portion of his Partnership
Interest, or any of such Limited Partner’s rights as a Limited Partner, provided
that prior written notice of such proposed transfer is delivered to the General
Partner.

 

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 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 interest in the Partnership. The
Incapacity of a Limited Partner, in and of itself, shall not dissolve or
terminate the Partnership.

 

C. The General Partner may prohibit any transfer by a Limited Partner of his
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 or would otherwise violate any federal or state securities laws or
regulations applicable to the Partnership or the Partnership Unit.

 

D. No transfer by a Limited Partner of his Partnership Units 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, or (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.

 

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,
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 exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held 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

 

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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.

 

C. Upon the admission of a Substituted Limited Partner, the General Partner
shall amend the Partner Register 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 under Section 11.3 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
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain, loss and Recapture Income
attributable to the Partnership Units assigned to such transferee, but shall not
be deemed to be a holder of Partnership Units for any other purpose under this
Agreement, and shall not be entitled to 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
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 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 his Partnership Units in a
transfer permitted pursuant to this Article 11 or pursuant to 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.

 

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D. If any Partnership Interest is transferred 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, Net Income, Net Losses,
each item thereof and all other items attributable to such interest (other than
Guaranteed Payments payable under Section 5.2) for such fiscal year shall be
divided and allocated between the transferor Partner and the transferee Partner
by taking into account their varying interests during the fiscal 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 redemption occurs shall be
allocated to the Person who is a Partner as of midnight on the last day of said
month. All distributions of Available Cash and payments of Guaranteed Payments
with respect to which the Partnership Record Date is before the date of such
transfer or redemption shall be made to the transferor Partner, and all
distributions of Available Cash and payments of Guaranteed Payments thereafter
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’s General Partner Interest pursuant to
Section 11.2 hereof who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
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.

 

  Section 12.2 Admission of Additional Limited Partners

 

A. A Person who makes a Capital Contribution to the Partnership in accordance
with this Agreement or who exercises an option to receive Partnership Units
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 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

 

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and records of the Partnership, following the consent of the General Partner to
such admission.

 

  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 the Partner Register) and, if
required by law, shall prepare and file an amendment to the Certificate and may
for this purpose exercise the power of attorney granted pursuant to Section 2.4
hereof.

 

ARTICLE 13

DISSOLUTION AND LIQUIDATION

 

  Section 13.1 Dissolution

 

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

 

A. the expiration of its term as provided in Section 2.5 hereof;

 

B. 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 the
withdrawal all 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 substitute General Partner;

 

C. from and after the Effective Time through December 31, 2012, an election to
dissolve the Partnership made by the General Partner, unless any Original CRLP
Limited Partner who holds one or more Original CRLP Limited Partnership Units
objects in writing to such dissolution within thirty (30) days of receiving
written notice of such election from the General Partner;

 

D. from and after January 1, 2013 through December 31, 2042, an election to
dissolve the Partnership made by the General Partner, unless Original CRLP
Limited Partners holding at least five percent (5%) of the Original CRLP Limited
Partnership Units object in writing to such dissolution within thirty (30) days
of receiving written notice of such election from the General Partner;

 

E. on or after January 1, 2043, an election to dissolve the Partnership made by
the General Partner, in its sole and absolute discretion;

 

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

 

G. the sale of all or substantially all of the assets and properties of the
Partnership; or

 

H. a final and non-appealable judgment is entered by a court with appropriate
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.

 

  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
“Liquidator”)) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership’s
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock in the General Partner) shall be applied and distributed
in the following order:

 

  (1) First, to the 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 (other than the Guaranteed Payment);

 

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

 

  (4) Fourth, to the payment of the Guaranteed Payment; and

 

  (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.

 

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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.

 

  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 any
Partner has a deficit balance in his Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall have no
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 purpose whatsoever. In the
discretion of the General Partner, 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:

 

(A) 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 of 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 General Partner, 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

 

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(B) withheld 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
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.

 

  Section 13.4 Deemed Distribution and Recontribution

 

Notwithstanding any other provision of this Article 13, in the event the
Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership’s
property shall not be liquidated, the Partnership’s liabilities shall not be
paid or discharged, and the Partnership’s affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Property in
kind to the General Partner and Limited Partners, who shall be deemed to have
assumed and taken such property subject to all Partnership liabilities, all in
accordance with their respective Capital Accounts. Immediately thereafter, the
General Partner and Limited Partners shall be deemed to have recontributed the
Partnership property in kind to the Partnership, which shall be deemed to have
assumed and taken such property subject to all such liabilities.

 

  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 his Capital
Contribution and shall have no right or power to demand or receive property
other than cash from the Partnership. No Limited Partner shall have priority
over any other Limited Partner as to the return of his Capital Contributions,
distributions, or allocations.

 

  Section 13.6 Notice of Dissolution

 

In the event a Liquidating Event occurs or an event occurs that would, but for
provisions of 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 and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts business
(as determined in the discretion of the General Partner).

 

  Section 13.7 Cancellation of Certificate of Limited Partnership

 

Upon the completion of the liquidation of the Partnership cash and property as
provided in Section 13.2 hereof, the Partnership shall be terminated and the
Certificate 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.

 

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  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.

 

ARTICLE 14

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

 

  Section 14.1 Amendments

 

A. Amendments to this Agreement may be proposed by the General Partner or by any
Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests. Following such proposal, the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek the
written vote 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 vote, 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 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 Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partnership Interests held by the General Partner).

 

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;

 

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  (3) to set forth the rights, powers, duties, and preferences of the holders of
any additional Partnership Interests issued pursuant to Section 4.2.A or Section
4.2.B 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 will provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.

 

C. Notwithstanding Section 14.1.A 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’s interest, (ii) modify the limited liability of a Limited Partner,
(iii) alter rights of the Partner to receive distributions pursuant to Article
5, 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
related definitions hereof, (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 without the Consent specified in
that section.

 

D. Notwithstanding Section 14.1.A hereof, the General Partner shall not amend
Section 4.2.B, 7.5, 7.6, 11.2 or 14.2 without the Consent of a majority of the
Percentage Interests of the Limited Partners excluding Limited Partnership
Interests held by the General Partner.

 

  Section 14.2 Meetings of the Partners

 

A. Meetings of the Partners may be called by the General Partner and shall be
called upon the receipt by the General Partner of a written request by Limited
Partners holding 25 percent or more of the Partnership Interests. The call shall
state the nature of the business to be transacted. Notice of any such meeting
shall be given to all Partners not less than seven days nor more than 30 days
prior to the date of such meeting. Partners may vote in person or by proxy at
such meeting. Whenever the vote or Consent of Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of Partners
or may be given in accordance with the procedure prescribed in

 

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Section 14.1 hereof. Except as otherwise expressly provided in this Agreement,
the Consent of holders of a majority of the Percentage Interests 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 Percentage Interests 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 Percentage Interests of the
Partners (or such other percentage as is expressly required by this Agreement).
Such consent shall be filed with the General Partner. An action so taken shall
be deemed to have been taken at a meeting held on the effective date so
certified.

 

C. Each Limited Partner may authorize any Person or Persons to act for 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. No proxy shall be valid after the expiration of 11 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.

 

D. Each meeting of Partners shall be conducted by the General Partner or such
other Person as the General Partner may appoint pursuant to such rules for the
conduct of the meeting as the General Partner or such other Person deems
appropriate.

 

ARTICLE 15

GENERAL PROVISIONS

 

  Section 15.1 Addresses and Notice

 

Any notice, demand, request or report required or permitted to be given or made
to a Partner or Assignee under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class United
States mail or by other means of written communication to the Partner or
Assignee at the address set forth in the Partner Register or such other address
as the Partners shall notify the General Partner in writing.

 

  Section 15.2 Titles and Captions

 

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

 

- 49 -

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  Section 15.3 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 15.4 Further Action

 

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

 

  Section 15.5 Binding Effect

 

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

 

  Section 15.6 Creditors

 

None of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.

 

  Section 15.7 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 15.8 Counterparts

 

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

 

  Section 15.9 Applicable Law

 

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

 

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  Section 15.10 Invalidity of Provisions

 

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

 

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

 

GENERAL PARTNER:

CARRAMERICA REALTY CORPORATION

By:

 

/s/ Linda A. Madrid

   

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

Name:

 

Linda A. Madrid

Title:

 

Managing Director – General Counsel & Corp. Secretary

 

LIMITED PARTNERS:

By:

  CarrAmerica Realty Corporation, as Attorney-in-Fact for the Limited Partners  
 

By:

 

/s/ Linda A. Madrid

       

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

   

Name:

 

Linda A. Madrid

   

Title:

  Managing Director – General Counsel & Corp. Secretary

 

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

EXHIBIT A

 

Intentionally Omitted

 

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

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). As of the
Effective Time of the Agreement, the Capital Account of each Partner shall equal
such Partner’s capital account with respect to its interest in CRLP as of
December 31, 2003, immediately prior to the Effective Time. Thereafter, such
Capital Account shall be increased by (i) the amount of all Capital
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.A 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.B 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 purpose determined in accordance with
Section 703(a) of the Code (for this purpose all items of income, gain, loss or
deduction require 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 1.704-1(b)(2)(iv)(m).

 

  (2) The computation of all items of income, gain, loss 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 in 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.

 

  (4) In lieu of the depreciation, amortization, and other cash 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.

 

  (6) Any items specially allocated under Section 2 of Exhibit C hereof shall
not be taken into account.

 

C. Generally, a transferee of a Partnership Unit shall succeed to a pro rata
portion of the Capital Account of the transferor; provided, however, that, if
the transfer causes a termination of the Partnership under Section 708(b)(1)(B)
of the Code, the Partnership’s properties shall be deemed to have been
distributed in liquidation of the Partnership to the Partners (including the
transferee of a Partnership Interest) and recontributed by such Partners in
reconstitution of the Partnership. In any event, the Carrying Values of the
Partnership properties shall be adjusted immediately prior to such deemed
distribution pursuant to Section 1.D.(2) hereof. The Capital Accounts of such
reconstituted Partnership shall be maintained in accordance with the principles
of this Exhibit B.

 

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 Values 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

 

- 3 -

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

 

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 such unrealized Gain or Unrealized Loss, 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, 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).

 

E. The provisions of 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 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 in order
to comply with such Regulations, the General Partner may make such modification,
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-(b).

 

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 hereof.

 

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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 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 Section 1.704-2(f)(6). This Section 1.A. is intended to comply
with the minimum gain chargeback requirements in Regulations Section 1.704-2(f)
and for purposes of this Section 1.A. only, each Partner’s Adjusted Capital
Account Deficit shall be determined prior to any other allocations pursuant to
Section 6.1 of the Agreement with respect to such fiscal year and without regard
to any decrease in Partner Minimum Gain during such fiscal year.

 

B. Partner Minimum Gain Chargeback. Notwithstanding any other provision of
Section 6.1 of the 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 fiscal year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
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)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i)(4). This Section
1.B. is intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently therewith.
Solely for purposes of this 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 fiscal year,
other than allocation 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 shall be

 

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

specifically 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 taxable period 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 which does satisfy such requirements.

 

E. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any
fiscal 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)(2).

 

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.

 

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.

 

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 that takes 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

 

- 2 -

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

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 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 as its
correlative items 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 in 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
this Exhibit C.

 

C. To the extent Treasury Regulations promulgated pursuant to Section 704(c) of
the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the agreed 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.

 

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EXHIBIT D

 

VALUE OF CONTRIBUTED PROPERTY

 

Underlying Property

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

   704(c) Value

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

   Agreed Value

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

International Square

   $ 143,457,708    $ 55,176,000

1730 Pennsylvania

     33,668,893      13,497,385

2550 M Street

     27,332,666      11,919,666

900 19th Street

     24,867,852      3,044,852

1747 Pennsylvania

     27,120,302      12,319,802

1255 23rd Street

     30,475,660      2,626,844

2445 M Street

     27,391,434      8,632,734

AARP Headquarters

     35,814,576      653,136

1776 Eye Street

     2,582,156      332,156

Willard Office/Hotel

     6,436,750      1,954,150

1575 Eye Street

     728,270      261,250

Bond Building

     5,942,450      110,000     

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

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

  

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

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

     $ 365,818,717    $ 110,527,975     

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

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

  

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

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

 

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EXHIBIT E

 

NOTICE OF REDEMPTION

 

The undersigned hereby irrevocably (i) redeems                          Limited
Partnership Units in Carr Realty Holdings, L.P. in accordance with the terms of
the Amended and Restated Limited Partnership Agreement of Carr Realty Holdings,
L.P. and the Redemption Right referred to therein, (ii) surrenders such Limited
Partnership Units and all right, title and interest therein, and (iii) directs
that the Cash Amount or REIT Shares (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.

 

Dated:                     

 

                                Name of Limited  Partner:

                           

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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:

 

Please insert social security or identifying number:

 

Name: