Exhibit 10.1
 
Execution Copy

 
LIMITED PARTNERSHIP AGREEMENT
 
OF
 
NET LEASE STRATEGIC ASSETS FUND L.P.
 
Dated as of August 10, 2007
 
 
 

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TABLE OF CONTENTS

Page
 
ARTICLE I
DEFINITIONS 
1

 
 
Section 1.1
Definitions 
1

 
ARTICLE II
FORMATION, DURATION AND PURPOSES; PURCHASE OF INITIAL PROPERTIES 
16

 
 
Section 2.1
Formation 
16

 
 
Section 2.2
Name; Registered Agent and Registered Office
16

 
 
Section 2.3
Principal Office 
16

 
 
Section 2.4
Purposes and Business 
16

 
 
Section 2.5
Term 
16

 
 
Section 2.6
Other Qualifications 
16

 
 
Section 2.7
Limitation on the Rights of Partners 
17

 
 
Section 2.8
Purchase of Qualified Sale Assets 
17

 
 
Section 2.9
Remuneration To Partners 
17

 
ARTICLE III
MANAGEMENT RIGHTS, DUTIES, AND POWERS  OF THE GENERAL PARTNER; TRANSACTIONS
INVOLVING PARTNERS
17

 
 
Section 3.1
Management 
17

 
 
Section 3.2
Actions of the General Partner 
19

 
 
Section 3.3
Authority of the General Partner 
19

 
 
Section 3.4
Major Decisions 
21

 
 
Section 3.5
Preliminary and Annual Plans 
24

 
 
Section 3.6
Qualified Asset Acquisitions 
25

 
 
Section 3.7
Sale of Qualified Assets 
29

 
 
Section 3.8
Partnership Indebtedness 
29

 
 
Section 3.9
Business Opportunity 
30

 
 
Section 3.10
Payments to the Asset Manager of the General Partner 
32

 
 
Section 3.11
Exculpation 
33

 
 
Section 3.12
Indemnification 
34

 
ARTICLE IV
BOOKS AND RECORDS; REPORTS TO PARTNERS
35

 
 
Section 4.1
Books 
35

 
 
Section 4.2
Monthly and Quarterly Reports 
35

 
 
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 TABLE OF CONTENTS
     
 (continued)
         
Page
 
Section 4.3
Annual Reports 
36

 
 
Section 4.4
Accountants; Tax Returns 
36

 
 
Section 4.5
Accounting and Fiscal Year 
36

 
 
Section 4.6
Partnership Funds 
36

 
 
Section 4.7
Insurance 
37

 
ARTICLE V
CONTRIBUTIONS
37

 
 
Section 5.1
Capital Contributions 
37

 
 
Section 5.2
Preferred Equity Capital Contribution 
40

 
 
Section 5.3
Return of Capital Contribution 
40

 
 
Section 5.4
Liability of the Limited Partners 
40

 
 
Section 5.5
No Third Party Beneficiaries 
40

 
ARTICLE VI
MAINTENANCE OF CAPITAL ACCOUNTS; ALLOCATION OF PROFITS AND LOSSES FOR BOOK AND
TAX PURPOSES
41

 
 
Section 6.1
Capital Accounts 
41

 
 
Section 6.2
Profits and Losses 
42

 
 
Section 6.3
Regulatory Allocations 
42

 
 
Section 6.4
Allocation of Tax Items for Tax Purposes 
44

 
 
Section 6.5
Tax Matters Partner 
45

 
 
Section 6.6
Adjustments 
45

 
ARTICLE VII
DISTRIBUTIONS
46

 
 
Section 7.1
Cash Available for Distributions 
46

 
ARTICLE VIII
ARTICLE VIIITRANSFER; REMOVAL OF GENERAL PARTNER
48

 
 
Section 8.1
Prohibition on Transfers and Withdrawals by Partners 
48

 
 
Section 8.2
Removal of LMLP GP as General Partner 
48

 
ARTICLE IX
TERMINATION
49

 
 
Section 9.1
Dissolution 
49

 
 
Section 9.2
Termination 
51

 
 
Section 9.3
Certificate of Cancellation 
51

 
 
Section 9.4
Acts in Furtherance of Liquidation 
51

 
ARTICLE X
REPRESENTATIONS OF THE PARTNERS
51

 
 
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 TABLE OF CONTENTS
     
 (continued)
       

     
  Page

 
Section 10.1
Representations Of Inland
51

 
 
Section 10.2
Representations of the LMLP Partners 
52

 
ARTICLE XI
SPECIAL PARTNER RIGHTS AND OBLIGATIONS
54

 
 
Section 11.1
Right of First Offer 
54

 
 
Section 11.2
Buy/Sell 
55

 
 
Section 11.3
Provisions Applicable to Right of First Offer and Buy/Sell 
56

 
ARTICLE XII
GENERAL PROVISIONS
58

 
 
Section 12.1
Notices 
58

 
 
Section 12.2
Governing Laws 
59

 
 
Section 12.3
Entire Agreement 
59

 
 
Section 12.4
Waiver 
59

 
 
Section 12.5
Validity 
60

 
 
Section 12.6
Terminology; Captions 
60

 
 
Section 12.7
Remedies Not Exclusive 
60

 
 
Section 12.8
Action by the Partners 
60

 
 
Section 12.9
Further Assurances 
60

 
 
Section 12.10
Liability of the Limited Partners
61

 
 
Section 12.11
Binding Effect
61

 
 
Section 12.12
Amendments
61

 
 
Section 12.13
Counterparts
61

 
 
Section 12.14
Waiver of Partition
61

 
 
Section 12.15
No Third Party Beneficiaries
61

 
 
Section 12.16
Expenses
61

 
 
Section 12.17
Jurisdiction; Venue
61

 
 
Section 12.18
Jury Waiver
61

 
 
Section 12.19
REIT Provisions
61

 
 
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  TABLE OF CONTENTS
  (continued)
     
 Page
SCHEDULE 1
NAMES AND CAPITAL COMMITMENT OF PARTNERS/QUALIFIED CONTRIBUTED ASSETS

 
SCHEDULE 2
ACQUISITION PARAMETERS

 
SCHEDULE 2.8
QUALIFIED SALE ASSETS

 
SCHEDULE 3.5
FORM OF ANNUAL PLAN

 
SCHEDULE 3.8
CROSS-DEFAULT PROVISIONS

 
SCHEDULE 3.9
LMLP EXISTING JOINT VENTURE EXCLUSIVITY TERMS

 
SCHEDULE 4.7
INSURANCE REQUIREMENTS

 
SCHEDULE 5.2
PREFERRED EQUITY ASSETS

 
 
 
EXHIBIT A
FORM OF INITIAL ANNUAL PLAN

 
 
EXHIBIT B
FORM OF CONTRIBUTION AGREEMENT

 
 
EXHIBIT C
FORM OF MANAGEMENT AGREEMENT

 
 
EXHIBIT D
FORM OF PURCHASE AGREEMENT

 
 
EXHIBIT E
FORM OF SP SUBSIDIARY PARTNERSHIP AGREEMENT

 
 
EXHIBIT F
FORM OF SP SUBSIDIARY LIMITED LIABILITY COMPANY AGREEMENT

 
 
EXHIBIT G
FORM OF JUNIOR MORTGAGE AGREEMENT

 
 
EXHIBIT H
FORM OF PLEDGE AGREEMENT

 
-iv-
 

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LIMITED PARTNERSHIP AGREEMENT
OF
NET LEASE STRATEGIC ASSETS FUND L.P.
 
  THIS LIMITED PARTNERSHIP AGREEMENT (as it may be amended, modified,
supplemented or restated from time to time, this “Agreement”) of NET LEASE
STRATEGIC ASSETS FUND L.P. (the “Partnership”), made and entered into as of
August 10, 2007 by and among The Lexington Master Limited Partnership, a
Delaware limited partnership (“LMLP”), as a limited partner of the Partnership,
LMLP GP LLC, a Delaware limited liability company (“LMLP GP”), as a general
partner of the Partnership, and Inland American (Net Lease) Sub, LLC, a Delaware
limited liability company (“Inland”), as a limited partner of the Partnership.
 
  LMLP and Inland are sometimes individually referred to herein as a “Limited
Partner” and collectively referred to herein as the “Limited Partners”.  The
Limited Partners and the General Partner are sometimes individually referred to
herein as a “Partner” and collectively referred to herein as the
“Partners”.  LMLP and LMLP GP are sometimes individually referred to herein as a
“LMLP Partner” and collectively referred to herein as the “LMLP Partners”.
 
  In consideration of the covenants and agreements set forth herein, the
Partners hereby agree as follows:
 
ARTICLE I
DEFINITIONS
 
Section 1.1  Definitions.  For the purposes of this Agreement, initially
capitalized terms used herein shall have the following meanings:
 
  “Acquisition Activities” is defined in Section 3.6(f) hereof.
 
  “Acquisition Costs” is defined in Section 3.6(f) hereof.
 
  “Acquisition Fee” is defined in Section 3.6(g) hereof.
 
  “Acquisition Memorandum” shall mean a memorandum with respect to any Proposed
Qualified Asset as provided in Section 3.6(b) hereof.
 
  “Acquisition Parameters” shall mean the guidelines and requirements for any
Proposed Qualified Asset that are set forth on Schedule 2 hereto.
 
  “Acquisition Period” shall mean the period commencing on the date first set
forth above and ending the earliest of (a) the second anniversary of the date
first set forth above and (b) a Removal Event; provided that, if the Acquisition
Period has not ended because of a Removal Event, the Acquisition Period may,
pursuant to Section 3.4 hereof, be extended for a period of six months.
 
 
1

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  “Act” is defined in Section 2.1 hereof.
 
  “Additional Capital Contribution” is defined in Section 5.1(b) hereof.
 
  “Adjusted Capital Account Deficit” shall mean the deficit balance, if any, in
a Partner’s Capital Account at the end of any fiscal year, with the following
adjustments:  (a) credit to such Capital Account any amount that such Partner is
obligated or deemed obligated to restore under Regulations
Section 1.704-1(b)(2)(ii)(c), as well as any additions thereto pursuant to the
next to last sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
after taking into account thereunder any changes during such year in Partnership
Minimum Gain and in the minimum gain attributable to any Partner Nonrecourse
Debt; and (b) debit to such Capital Account the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).  The foregoing definition of
Adjusted Capital Account Deficit is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner
consistent with such intent.
 
  “Affiliate” when used with respect to any particular Person, shall mean
(a) any Person or group of Persons acting in concert that directly or indirectly
through one or more intermediaries controls or is controlled by or is under
common control with such particular Person, (b) any Person that is an officer,
partner, manager, member or trustee of, or serves in a similar capacity with
respect to, such particular Person or of which such particular Person is an
officer, partner, manager, member or trustee or with respect to which such
particular Person serves in a similar capacity, (c) any Person that, directly or
indirectly, is the beneficial owner of 10% or more of any class of voting
securities of, or otherwise has an equivalent beneficial interest in, such
particular Person or of which such particular Person is directly or indirectly
the owner of 10% or more of any class of voting securities or in which such
particular Person has an equivalent beneficial interest or (d) any relative or
spouse of such particular Person.  Notwithstanding the foregoing, (a) neither
LMLP nor LMLP GP shall be deemed to be an Affiliate of Inland and (b) Inland
shall not be deemed to be an Affiliate of the LMLP Partners.  The definition of
“Affiliate” as used in this Agreement shall not be affected by the Regulations
under Code Section 752 describing certain “related” parties.
 
  “Agreement” is defined in the Preamble hereto.  This Agreement shall be the
“partnership agreement” for the Partnership within the meaning of
Section 17-101(12) of the Act.
 
  “Annual Budget” shall mean the annual budget for the Partnership and each
Qualified Asset for any fiscal year, including without limitation a reasonable
description of the amount, source and character of each item of gross income,
expense and services to be rendered in the form attached hereto as Exhibit A,
approved by the Executive Committee as provided in Section 3.5 hereof.
 
  “Annual Plan” is defined in Section 3.5(a) hereof.
 
  “Approved Qualified Asset” is defined in Section 3.6(d) hereof.
 
  “Asset Manager” shall mean (i) so long as LMLP GP is the General Partner,
Lexington Realty Advisors, Inc. or another Affiliate of LMLP, or (ii) so long as
LMLP GP is no

 
2

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longer the General Partner, such other entity, including an Affiliate of Inland,
that may be appointed by the Executive Committee, in each case to provide asset
management services to the Partnership on market terms if a third party manager
is hired or pursuant to the terms of the Management Agreement if an Inland
Affiliate.
 
  “Bankruptcy” of the Partnership or a Partner shall be deemed to have occurred
upon the happening of any of the following:  (a) the filing of an application by
the Partnership or such Partner for, or a consent to, the appointment of a
trustee, receiver or liquidator of its assets; (b) the filing by the Partnership
or such Partner of a voluntary petition or answer in bankruptcy or the filing of
a pleading in any court of record admitting in writing its inability to pay its
debts as such debts come due or seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation; (c) the making by the Partnership or such Partner of
a general assignment for the benefit of creditors; (d) the filing by the
Partnership or such Partner of an answer admitting the material allegations of,
or its consenting to or defaulting in answering, a bankruptcy or insolvency
petition filed against it in any bankruptcy or similar proceeding; (e) the entry
by any court of competent jurisdiction of an order for relief in any bankruptcy
or insolvency proceeding involving the Partnership or such Partner or of an
order, judgment or decree adjudicating the Partnership or such Partner a
bankrupt or insolvent or appointing a trustee, receiver or liquidator of its
assets; or (f) the filing by a third party against the Partnership of such
Partner of an involuntary petition under any bankruptcy or insolvency law, which
petition is not dismissed within sixty (60) days from the date of such filing.
 
  “Book Basis” shall mean, with respect to any asset of the Partnership, the
adjusted basis of such asset for federal income tax purposes; provided, however,
that (a) if any asset is contributed to the Partnership, the initial Book Basis
of such asset shall equal its fair market value on the date of contribution (as
agreed to by the Partners), and (b) if the Capital Accounts of the Partners are
adjusted pursuant to Treasury Regulations Section 1.704-1(b) to reflect the fair
market value of any asset of the Partnership, the Book Basis of such asset shall
be adjusted to equal its respective fair market value as of the time of such
adjustment (as agreed to by the Partners), in accordance with such Treasury
Regulations.  The Book Basis of all assets of the Partnership shall be adjusted
thereafter by depreciation or amortization as provided in Treasury Regulations
Section 1.704-1(b)(2)(iv)(g) and any other adjustment to the basis of such
assets other than depreciation or amortization.
 
  “Book Depreciation” shall mean all deductions attributable to the
depreciation, amortization or other cost recovery, including additions, of any
Qualified Asset or other asset (whether tangible or intangible) acquired by the
Partnership that has a useful life in excess of one year, as such deductions are
computed for federal income tax purposes; provided, that with respect to any
Partnership asset the tax basis of which differs from the Book Value of such
asset, Book Depreciation for any period shall equal (a) the sum total of all
deductions taken during such period attributable to depreciation, amortization
or other cost recovery deduction for federal income tax purposes with respect to
such asset, multiplied by (b) the Book Value of such asset divided by the tax
basis thereof; providedfurther, that if the depreciation, amortization or other
cost recovery deduction for federal income tax purposes with respect to any
Partnership asset for any period is zero ($0.00), Book Depreciation shall be
determined by the Tax Matters Partner

 
3

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 using any reasonable method selected by the Tax Matters Partner that is based
on the Book Value of such asset.
 
  “Book Value” shall mean, with respect to any Partnership asset at any time,
the adjusted basis of such asset for federal income tax purposes, except that
(a) the initial Book Value of any asset contributed by a Partner to the
Partnership shall be the Fair Market Value of such asset, and (b) the Book Value
of all Partnership assets shall be adjusted to equal their Fair Market Values,
as determined in good faith by the General Partner, upon the occurrence of
certain events as described below.  In either case, the Book Value of
Partnership assets shall thereafter be adjusted for Book Depreciation taken into
account with respect to such asset.  Provided the Tax Matters Partner makes an
election to do so as provided under Section 1.704-1(b)(2)(iv)(f) of the
Regulations, the Book Value of Partnership assets shall be adjusted to equal
their Fair Market Value, as determined in good faith by the General Partner, as
of the following times to which the election relates:  (a) the admission of a
new Partner to the Partnership or acquisition by an existing Partner of an
additional interest in the Partnership, provided that the consideration
contributed to the Partnership upon such admission or acquisition is more than a
de minimis amount of money or assets; (b) the distribution by the Partnership to
a Partner of more than a de minimis amount of money or other assets; and (c) the
termination of the Partnership for federal income tax purposes pursuant to Code
Section 708(b)(1)(B).
 
  The Book Value of all Partnership assets shall also be increased (or
decreased) to the extent that adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b) have been taken into
account for purposes of determining Capital Accounts in accordance with
Regulation Section 1.704-1(b)(2)(iv)(m), unless such adjustments have already
been accounted for pursuant to the preceding paragraph.  If the Book Value of an
asset has been determined or adjusted pursuant hereto, such value shall
thereafter be the basis for, and be adjusted by, the depreciation taken into
account with respect to, such asset for purposes of computing Profits and
Losses.  Moreover, notwithstanding the foregoing, the Book Value of any
Partnership asset distributed to any Partner shall be the gross Fair Market
Value of such asset on the date of distribution.
 
  “Business Day” shall mean any day other than a Saturday, Sunday or any day on
which national banks in New York, New York are not open for business.
 
  “Buy/Sell Asset” is defined in Section 11.2(a) hereof.
 
  “Buy/Sell Notice” is defined in Section 11.2(a) hereof.
 
  “Buy/Sell Offer Price” is defined in Section 11.2(a) hereof.
 
  “Buy/Sell Offering Partner” is defined in Section 11.2(a) hereof.
 
  “Buy/Sell Responding Interest Price” is defined in Section 11.2(c) hereof.
 
  “Buy/Sell Responding Partner” is defined in Section 11.2(a) hereof.
 
  “Buy/Sell Response Notice” is defined in Section 11.2(a) hereof.
 
 
4

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  “Capital Account” shall mean, with respect to any Partner, the separate “book”
account which the Partnership shall establish and maintain for such Partner as
provided in Section 6.1 hereof and in accordance with Section 704(b) of the Code
and Regulations Section 1.704-1(b)(2)(iv) and such other provisions of
Section 1.704-1(b) of the Regulations as must be complied with in order for the
Capital Accounts to be determined in accordance with the provisions of said
Regulations.  In furtherance of the foregoing, the Capital Accounts shall be
maintained in compliance with Section 1.704-1(b)(2)(iv) of the Regulations, and
the provisions hereof shall be interpreted and applied in a manner consistent
therewith.
 
  “Capital Call” is defined in Section 5.1(b) hereof.
 
  “Capital Commitment” shall mean, with respect to each Partner, the amount set
forth opposite its name on Schedule 1 hereto, as such Schedule may be amended or
modified from time to time upon the Partners’ unanimous consent.  Any payment of
the Acquisition Fees by Inland shall decrease Inland’s Capital Commitment, and,
in such event, LMLP’s Capital Commitment shall be decreased by 17.65% of the
amount Inland’s Capital Commitment is decreased. 
 
  “Capital Contribution” shall mean, (a) at formation of the Partnership, the
Initial Capital Contributions set forth on Schedule 1 hereto, and (b) at any
particular time thereafter and with respect to any Partner, an amount equal to
the sum of (a) the total amount of cash and (b) the Fair Market Value of any
asset (determined as of the date such asset is contributed by such Partner and
net of any liabilities secured by such asset that the Partnership is considered
to assume or take subject to under Section 752 of the Code), that has in each
case been contributed to the Partnership by such Partner pursuant to Section 5.1
hereof.
 
  “Change of Control” shall be deemed to occur upon (a) any Person (and its
Affiliates) becoming the beneficial owner, directly or indirectly, of more than
fifty percent (50%) of the outstanding partnership interests in LMLP (other than
an LMLP Affiliated Party) and (b) the resignation or removal (including death or
permanent disability) of at least two of the following individuals from the
management of LMLP: Michael L. Ashner, E. Robert Roskind and T. Wilson Eglin.
 
  “Closing” is defined in Section 11.3(c) hereof.
 
  “Closing Date” is defined in Section 11.3(c) hereof.
 
  “Code” shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of future laws.
 
  “Contributed Asset” is defined in the Contribution Agreement.
 
  “Contribution Agreement” shall mean the agreement pursuant to which LMLP
contributes the Qualified Contribution Assets to the Partnership pursuant to
Section 5.1 hereof and shall be in the form attached as Exhibit B to this
Agreement.
 
  “CPI” shall mean the Revised Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the United States Department of
Labor, U.S.  City

 
5

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Average, All Items, based on 2002 as 100.  If the CPI hereafter ceases to use
the 2002 Base as 100, then the CPI with the new base shall be used.  If the
Bureau of Labor Statistics ceases to publish the CPI, then the successor or most
nearly comparable index shall be used.  In the event that the U.S.  Department
of Labor, Bureau of Labor Statistics, changes the publication frequency of the
CPI so that it is not available when required under the Agreement, then the CPI
for the closest preceding month for which a CPI is available shall be used in
place of the CPI no longer available.
 
  “Default Sale Period” is defined in Section 11.3(d) hereof.
 
  “Defaulting Partner” is defined in Section 11.3(b) hereof.
 
  “Deposit” is defined in Section 5.1(d) hereof.
 
  “Distributable Cash” shall mean the amounts distributed pursuant to Sections
7.1(a)(i) and (ii) hereof.
 
  “Economic Interest” shall mean, with respect to any Percentage Interest,
(a) all income, profits, cash flow, proceeds of sales and/or refinancing of the
Qualified Assets, fees or payments of whatever nature and all distributions to
which any Partner would be entitled, now or at any time hereafter, of whatsoever
description or character; (b) all of any Partner’s present and future rights to
and in its Capital Account, whether by way of liquidating distributions or
otherwise, and all of such Partner’s right to receive or share in any surplus of
the Partnership in the event of the dissolution of the Partnership; and (c) all
damages, awards, money and considerations of any kind or character to which any
Partner would be entitled, now or at any time hereafter, arising out of or
derived from any proceeding by or against such Partner in any federal or state
court, under any bankruptcy or insolvency law or under any law relating to
assignments for the benefit of creditors, compositions, extensions or
adjustments of indebtedness, or to any other relief of debtors, or otherwise in
connection with its interest in the Partnership.
 
  “Economic Risk of Loss” shall have the meaning specified in Regulations
Section 1.752-2.
 
  “Enhanced Preferred Equity Return” shall mean the Preferred Equity Return plus
400 basis points.
 
  “Environmental Assessment” shall mean with respect to any Proposed Qualified
Asset, a phase one environmental site assessment performed by a qualified
environmental consultant selected by the General Partner in accordance with the
then current ASTM Standard Practice for Environmental Site Assessments, E1527
and, if required by the General Partner, any additional Phase II sampling,
investigation, monitoring or other activities performed by a qualified
environmental consultant.
 
  “Environmental Law” shall mean every federal, state, county or other
governmental law, statute, ordinance, rule, regulation, requirement, order
(including any consent order), or other binding obligation, injunction, writ or
decision relating to or addressing the environment or hazardous materials,
including, but not limited to, those federal statutes
 
 
6

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

 
commonly referred to as the Clean Air Act, Clean Water Act, Resource
Conservation Recovery Act, Toxic Substances Control Act, Comprehensive
Environmental Response, Compensation and Liability Act and the Endangered
Species Act as well as all regulations promulgated thereunder and all state laws
and regulations equivalent thereto, as each such statute, regulation or state
law or regulation equivalent may be amended from time to time.
 
  “Equity Capital” shall mean the book equity of the Partnership, computed in
accordance with GAAP and based on the monthly average over the fiscal year,
adjusted to exclude the effect of any depreciation, unrealized gains, unrealized
losses and other non-cash items.  For realized gains or losses, the amount of
gain or loss shall be based on unadjusted book value.
 
  “Event of Default” shall mean with respect to or by any Partner (a) the
declaration of Bankruptcy, (b) a failure to timely perform its obligations under
this Agreement (or with respect to the LMLP Partners, the failure by an LMLP
Affiliated Party to timely perform its obligations under the Contribution
Agreement, the Purchase Agreement or the Management Agreement), including the
failure of the General Partner to timely enforce any material term of the
Management Agreement, or other material breach of this Agreement (or with
respect to the LMLP Partners, any other material breach by an LMLP Affiliated
Party of a material provision of the Contribution Agreement, the Purchase
Agreement or the Management Agreement) and the continuation of such failure or
other material breach beyond the applicable grace, notice or cure periods, if
any, including, without limitation, the obligation to make any Additional
Capital Contributions, (c) any attempted assignment, mortgage, pledge, transfer
or other disposition, whether voluntary or involuntary, of its Percentage
Interests (in whole or in part) not expressly permitted in this Agreement, (d)
the dissolution, withdrawal or incapacity of such Partner, which prohibits such
Partner’s ability to continue as a Partner of the Partnership, (e) the
intentional misrepresentation by such Partner or any of its Affiliates of a
material fact involving the Partnership to another Partner or an Affiliate
thereof or to the Partnership, (f) the entry of a final judgment or decree of a
court or governmental agency having proper jurisdiction, declaring such Partner
guilty of a felony involving moral turpitude, fraud or wrongdoing in connection
with any business activity, (g) the misapplication by such Partner or any of its
Affiliates of any assets of the Partnership, or (h) fraud or material and
willful misconduct by such Partner or any of its Affiliates involving the
Partnership or in the performance of its obligations under this Agreement or the
Management Agreement, Contribution Agreement or Purchase Agreement.  The matters
set forth in clauses (b), (c), (e), (f), (g) and (h) above shall not constitute
an Event of Default if such matter does not pertain to wrongdoing involving a
criminal conviction and such matter is cured (including the payment of any
damages) within thirty (30) days following receipt of notice of such failure
from any other Partner, unless such matter by its very nature is incapable of
being cured within such thirty (30) day period and the defaulting Partner has
commenced and is diligently pursuing a cure, in which event such defaulting
Partner shall have a commercially reasonable period not to exceed ninety (90)
days to effect such cure; provided that in the case of matters set forth in (f),
(g) and (h), the cure shall include the removal of the employees or agents
involved in such event from the active management of the Partnership.  So long
as LMLP GP is the General Partner, a breach of Section 3.8(a) or Section 12.19
shall be considered an Event of Default by LMLP, unless such breach (i) has been
cured within ninety (90) days of such breach and a similar breach of Section
3.8(a) has not occurred in the previous twelve (12) months in the case of
Section 3.8(a), (ii) was directly and proximately caused by an action approved
by a
 
 
7

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Supermajority Vote of the Executive Committee or consented to by Inland and
Inland had knowledge of the possibility of such breach.
 
  “Executive Committee” shall mean a committee of five (5) members, consisting
of three (3) members appointed by LMLP and two (2) members appointed by
Inland.  The initial members of the Executive Committee appointed by the LMLP
Partners shall be Michael L. Ashner, T. Wilson Eglin and Brendan P.
Mullinix.  The initial members of the Executive Committee appointed by Inland
shall be Lori Foust and Thomas McGuinness.
 
  “Exclusivity Right” is defined in Section 3.9(a)(ii) hereof.
 
  “Existing Indebtedness” shall mean the existing indebtedness encumbering the
Qualified Contribution Assets and the Qualified Sale Assets, the principal
balances as of August 1, 2007 are respectively set forth on Schedules 1 and 2.8
hereto.
 
  “Extraordinary Call” is defined in Section 5.1(c) hereof.
 
  “Extraordinary Call Cap” is defined in Section 5.1(c) hereof.
 
  “Extraordinary Capital Contribution” is defined in Section 5.1(c) hereof.
 
  “Extraordinary Funding” is defined in Section 5.1(c) hereof.
 
  “Fair Market Value” shall mean an amount (in cash) that a bona fide, willing
buyer under no compulsion to buy and a bona fide, willing and unrelated seller
under no compulsion to sell would pay and accept, respectively, for the purchase
and sale of a Qualified Asset, taking into account any liens, restrictions and
agreements then in effect and binding upon the Qualified Asset or any successor
owner thereof and any options, rights of first refusal or offer or other rights
or options that either burden the Qualified Asset or run to the benefit of the
owner of the Qualified Asset; provided, however, that in determining the Fair
Market Value of any Qualified Asset, none of the options, rights of first
refusal or offer or other rights of the Partners hereunder shall be taken into
consideration.
 
  “General Partner” shall mean the Person appointed general partner of the
Partnership pursuant to the terms of this Agreement. The initial General Partner
shall be LMLP GP.
 
  “Gross Revenues” is defined in Section 3.10(a) hereof.
 
  “IMBC” is defined in Section 3.8(f) hereof.
 
  “Indemnified Party” is defined in Section 3.12(a) hereof.
 
  “Initial Capital Contribution” shall mean, (a) with respect to Inland, the
amount of cash and (b) with respect to each LMLP Partner, the amount of cash
and/or the amount of the Contribution Value (as defined in the Contribution
Agreement), in each case as pursuant to Section 5.1 hereof and made prior to
March 1, 2008 and as set forth on Schedule 1 hereto, which shall be amended and
restated to reflect each such contribution.
 
 
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  “Initiating Partner” is defined in Section 11.3(f) hereof.
 
  “Inland” is defined in the Preamble hereto.
 
  “Inland Priority Return” is defined in Section 7.1(a)(i)(B) hereof.
 
  “Letter Agreement” shall mean that certain Letter Agreement, dated as of the
date first set forth above, among Inland, LMLP and LMLP GP.
 
  “Limited Partner” is defined in the Preamble hereto.
 
  “Liquidating Events” is defined in Section 9.1 hereof.
 
  “Liquidation” shall mean (a) when used with respect to the Partnership, the
date upon which the Partnership ceases to be a going concern, and (b) when used
with respect to any Partner, the earlier of (i) the date upon which there is a
Liquidation of the Partner and (ii) the date upon which such Partner’s entire
interest in the Partnership is terminated other than by transfer, assignment or
other disposition to a Person other than the Partnership.
 
  “Liquidator” shall mean any Person designated as such by a Supermajority Vote
of the Executive Committee.
 
  “Losses” and“Profits” are defined in Section 6.2(b) hereof.
 
  “LMLP” is defined in the Preamble hereto.
 
  “LMLP Affiliated Party” shall mean any LMLP Partner, the Asset Manager and/or
any of their respective Affiliates (but shall in no event include the
Partnership, any SP Subsidiary, Inland or any of its Affiliates).
 
  “LMLP GP” is defined in the Preamble hereto.
 
  “LMLP Partner” is defined in the Preamble hereto.
 
  “LMLP Priority Return” is defined in Section 7.1(a)(i)(C) hereof.
 
  “LMLP Sale Affiliates” shall mean the LMLP Affiliates set forth on Schedule
2.8 hereto that are selling the Qualified Sale Assets to the Partnership
pursuant to Section 2.8 hereof.
 
  “LXP” shall mean Lexington Realty Trust, a Maryland real estate investment
trust, or its successors or assigns.
 
  “Major Decision” is defined in Section 3.4 hereof.
 
  “Majority Vote” shall mean the written consent of three (3) of the five (5)
members of the Executive Committee.
 
 
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  “Management Agreement” shall mean the agreement between the Asset Manager and
the Partnership which shall be substantially in the form attached hereto as
Exhibit C, and which shall provide that the Management Agreement may be
terminated by the Partnership at any time and the terms of which shall be
monitored and enforced by the General Partner.
 
  “Management Fees” shall mean the Property Management Fee and the Partnership
Management Fee.
 
  “Material Modification” shall mean a modification relating to the treatment of
Capital Accounts, distributions and/or allocations hereunder which, when
considered on a cumulative basis with the effect of all other such modifications
previously made, is likely to adversely affect the amount ultimately
distributable or paid to any Partner hereunder as determined by the independent
accountants of the Partnership.
 
  “Net Cash Flow from Operations” shall mean the gross revenues from Partnership
operations (excluding sales or other dispositions or refinancings of Qualified
Assets) less, without duplication, the sum of any portion thereof used to (a)
pay Operating Expenses, general and administrative costs and overhead of the
Partnership, capital improvements, replacements or debt payments, any Management
Fees payable to the General Partner or Asset Manager pursuant to Section 3.10
hereof, any credits reserved pursuant to Section 3.10 hereof, indemnities and
other extraordinary payments made pursuant to this Agreement or to (b) establish
reasonable reserves for Operating Expenses, capital improvements, replacements,
debt payments and contingencies as provided in the Annual Plan, as such reserves
are calculated, established and maintained by the General Partner pursuant to
Section 3.4.  “Net Cash Flow from Operations” shall not be reduced by real
estate depreciation or by cost amortization, cost recovery deductions or similar
allowances, but shall be increased by any reduction of reserves previously
described in an Annual Plan.
 
  “Net Cash from Sales or Refinancings” shall mean the gross cash proceeds from
the sale or other disposition or refinancing or repayment or exercise of
Qualified Assets less (a) any closing, transaction and other costs incurred by
the Partnership in connection with such sale or other disposition or refinancing
or repayment or exercise, as the case may be; (b) the amount required to retire
any debt outstanding against such Qualified Assets; and (c) any amounts required
to fund any related reserves up to the levels required.  Net Cash from Sales or
Refinancings shall be increased by releases of reserves previously funded from
Net Cash from Sales or Refinancings.  “Net Cash from Sales or Refinancings”
shall include all principal and interest payments made with respect to any note
or other obligation received by the Partnership in connection with the sale or
other disposition of any Qualified Asset.
 
  “9% Cash on Cash Return” shall mean, with respect to either Inland or LMLP a
return sufficient to achieve a 9% cash on cash yield calculated by dividing (a)
Distributable Cash distributed to such Partner by (b) the Capital Contributions
(including credited amounts under Section 3.10 hereof) made, plus, (i) solely
with respect to Inland, the Acquisition Fees (if any) paid by Inland, or (ii)
solely with respect to LMLP, 17.65% of the amount the Acquisition Fees (if any)
paid by Inland.
 
 
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  “Nonrecourse Liability” shall mean any Partnership liability (or portion
thereof) the Economic Risk of Loss of which is not borne by any Partner or any
party related to any Partner, as such related party is described in the
applicable Regulations under Code Section 752.
 
  “Non-Parameter Asset” is defined in Section 3.6(c) hereof.
 
  “Offer Price” shall mean the ROFO Offer Price or the Buy/Sell Offer Price, as
applicable.
 
  “Offered Agreement” is defined in Section 11.2(a) hereof.
 
  “O.P. Unit” shall mean a partnership interest in a partnership in which LXP or
its Affiliate is a partner.
 
  “Operating Expenses” shall mean (a) all reasonable and customary costs and
expenses of Third Parties retained in connection with the ownership, leasing,
operation, repair and maintenance of the Qualified Assets and (b) real estate
taxes, insurance premiums, utility charges, rent collection and lease
enforcement costs, brokerage commissions to the extent applicable to the period
in question (but excluding any Acquisition Fees payable to the Asset Manager
under Section 3.6(g) hereof), maintenance expenses, costs of repairs and
replacements (which, under generally accepted accounting principles consistently
applied, may be expensed during the period when made) and management fees
(including any Management Fees payable to the Asset Manager pursuant to
Section 3.10 hereof) in connection with the ownership, leasing, operation,
repair and maintenance of the Qualified Assets.  Operating Expenses shall not
include general and administrative costs and overhead of the Partnership and
debt payments.
 
  “Other Partner(s)” in respect of either or both of the LMLP Partners shall
mean Inland and in respect of Inland shall mean either or both of the LMLP
Partners.
 
  “Partially Adjusted Capital Account” shall mean, with respect to any Partner
for any taxable year of the Partnership, the Capital Account balance of such
Partner at the beginning of such year, adjusted for all contributions and
distributions during such year and all special allocations pursuant to Section
6.3 hereof with respect to such year but before giving effect to any allocations
pursuant to Section 6.2 hereof with respect to such year.
 
  “Partner” is defined in the Preamble hereto.
 
  “Partner Nonrecourse Debt” shall have the meaning set forth in Regulations
Section 1.704-2(b)(4).
 
  “Partner Nonrecourse Debt Minimum Gain” shall have the meaning set forth in
Regulations Section 1.704-2(i)(2).
 
  “Partner Nonrecourse Deductions” is defined in Section 6.3(d) hereof.
 
  “Partnership” is defined in the Preamble hereto.
 
  “Partnership Management Fee” is defined in Section 3.10(b) hereof.
 
 
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  “Partnership Minimum Gain” shall have the meaning set forth in
Section 1.704-2(b)(2) and (d) of the Regulations.
 
  “Percentage Interest” shall mean the entire undivided ownership interest in
the Partnership of any Partner at any particular time, (a) expressed as a
percentage rounded to the nearest one one-hundredth (0.01%), (b) determined at
such time by dividing the total Capital Contributions made by such Partner by
the total Capital Contributions made to the Partnership by all Partners and
(z) as may be adjusted from time to time in accordance with the terms
hereof.  The Percentage Interest of each Partner as of the date first set forth
above shall be as described on Schedule 1 hereto.
 
  “Permitted Expenses” shall mean, for each annual period covered by an Annual
Plan, Operating Expenses, capital improvements, replacements and debt payments
as set forth therein plus, with respect to each budget line item in the Annual
Budget portion of such Annual Plan, the greater of (a) five percent (5%) of each
such budget line item or (b) Twenty Thousand Dollars ($20,000.00); provided,
however, that the aggregate Permitted Expenses (other than the Management Fees
payable to the Asset Manager pursuant to Section 3.10 hereof), when added to all
other obligations incurred or reserve amounts accrued in excess of the
applicable budget line items in such Annual Budget portion of the Annual Plan,
shall not exceed (i) One Hundred Thousand Dollars ($100,000) in any fiscal year
for a particular Qualified Asset or (ii) an average (taking into account all
Qualified Assets then owned by the Partnership) of Fifty Thousand Dollars
($50,000) per Qualified Asset.  Permitted Expenses shall also mean (a) all
reasonable and customary costs and expenses of Third Parties retained in
connection with the Acquisition Activities as provided in Section 3.6(f) hereof,
(b) any reasonable costs or expenses incurred in implementing a Major Decision
approved as provided in Section 3.4 hereof and not otherwise already included in
an Annual Plan, and (c) costs and expenses incurred by and on behalf of the
Partnership in connection with the formation of the Partnership, including legal
fees and costs and expenses associated with assumption or refinancing the
Existing Indebtedness, but excluding fees and expenses set forth in Section
12.16 hereof.
 
  “Person” shall mean any individual, trust (including a business trust),
unincorporated association, corporation, limited liability company, joint stock
company, general partnership, limited partnership, joint venture, governmental
authority or other entity.
 
  “Physical Inspection Report” shall mean a report prepared by a qualified
independent third party engineer, architect or other real estate inspector
selected by the General Partner concerning the physical condition of any
Proposed Qualified Asset.
 
  “Plan Amendment” is defined in Section 3.5(c).
 
  “Preferred Equity” shall mean the Preferred Equity Capital Contribution by
LMLP pursuant to Section 5.2 hereof and allocated among the Preferred Equity
Assets as reasonably determined by LMLP.
 
.  “Preferred Equity Asset” shall mean a Qualified Sale Asset described on
Schedule 5.2 hereof and shall not include any Qualified Refi Asset.
 
 
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  “Preferred Equity Capital Contribution” shall mean the cash contributed to the
Partnership by LMLP pursuant to Section 5.2 hereto.
 
  “Preferred Equity Return” shall mean a cumulative distribution on the
outstanding Preferred Equity paid quarterly in accordance with Section 7.1
hereof at a rate per annum equal to the weighted average interest rate on the
mortgage financing to be secured by the Qualified Refi Assets or the Enhanced
Preferred Equity Return, as applicable.
 
  “Priority Loan” is defined in Section 5.1(a) hereof.
 
  “Priority Return” shall mean the Inland Priority Return and/or the LMLP
Priority Return, as applicable.
 
  “Profits” and “Losses” are defined in Section 6.2(b) hereof.
 
  “Property Management Fee” is defined in Section 3.10(a) hereof.
 
  “Proposed Plan” is defined in Section 3.5(a) hereof.
 
  “Proposed Qualified Asset” is defined in Section 3.6(a) hereof.
 
  “Purchase Agreement” shall mean the agreement pursuant to which the
Partnership purchases the Qualified Sale Assets from the LMLP Sale Affiliates
pursuant to Section 2.8 hereof and each such Purchase Agreement shall be in the
form attached as Exhibit D to this Agreement.
 
  “Purchasing Partner” shall mean the purchasing Partner under Section 11.1 or
Section 11.2 hereof, as the case may be.
 
  “Purchase Price” shall mean (a) with respect to each Qualified Contribution
Asset, the Contribution Value which will be set forth on Schedule 1 to the
Contribution Agreement upon acquisition of the Qualified Contribution Asset, (b)
with respect to each Qualified Sale Asset, the Sales Price which will be set
forth on Schedule 1 to the Purchase Agreement upon acquisition of the Qualified
Sale Asset, and (c) with respect to each other Qualified Asset, the gross
purchase cost of the Qualified Asset.
 
  “Qualified Contribution Assets” shall mean the assets set forth on Schedule 1,
each of which shall be a Qualified Asset upon contribution to the Partnership
pursuant to a Contribution Agreement and Section 5.1(a) hereof.
 
  “Qualified Asset” or “Qualified Assets” shall mean the direct or indirect
interest of the Partnership in (a) each Approved Qualified Asset and
Non-Parameter Asset acquired by the Partnership pursuant to Section 3.6 hereof,
and (b) the Qualified Contribution Assets and the Qualified Sale Assets.
 
  “Qualified Assumed Assets” shall mean the Qualified Contribution Assets and
the Qualified Sale Assets set forth on Schedule 3.8 hereto under the heading
“Qualified Assumed Assets.”
 
 
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  “Qualified Refi Assets” shall mean the Qualified Contribution Assets and the
Qualified Sale Assets set forth on Schedule 3.8 hereto under the heading
“Qualified Refi Assets.”
 
  “Qualified Sale Assets” shall mean the interests of the LMLP Sale Affiliates
in the assets set forth on Schedule 2.8, each of which shall be a Qualified
Asset upon acquisition by the Partnership pursuant to a Purchase Agreement.
 
  “Recoverable Amounts” is defined in Section 3.10(a) hereof.
 
  “Regulations” shall mean the income tax regulations promulgated under the
Code, whether temporary, proposed or finalized, as such regulations may be
amended from time to time (including corresponding provisions of future
regulations).
 
  “Regulatory Allocations” is defined in Section 6.3(f) hereof.
 
  “REIT” shall mean “real estate investment trust” within the meaning of
Sections 856-860 of the Code.
 
  “Removal Event” shall mean (a) an Event of Default caused by an LMLP Partner
or an LMLP Affiliated Party or (b) a Change of Control.
 
  “Required Third Party Price” is defined in Section 11.1(a) hereof.
 
  “Responding Partner” shall mean the ROFO Responding Partner or the Buy/Sell
Responding Partner, as applicable.
 
  “Rights Trigger Date” shall mean the earliest of the following: (a) the fourth
anniversary of the date first set forth above; (b) an Event of Default; (c) a
Change of Control; (d) termination of the Management Agreement by the
Partnership; and (e) a Removal Event.
 
  “ROFO Notice” is defined in Section 11.1(a) hereof.
 
  “ROFO Offer Price” is defined in Section 11.1(a) hereof.
 
  “ROFO Offering Partner” is defined in Section 11.1(a) hereof.
 
  “ROFO Responding Partner” is defined in Section 11.1(a) hereof.
 
  “ROFO Response Notice” is defined in Section 11.1(a) hereof.
 
  “ROFO Terms” is defined in Section 11.1(a) hereof.
 
  “Section 704(c) Property” shall mean (a) each item of property to which
Section 704(c) of the Code or Section 1.704-3(a)(3) of the Regulations applies
that is contributed to the Partnership, and (b) any property owned by the
Partnership which is governed by the principles of Section 704(c) of the Code,
as contemplated by Section 1.704-1(b)(4)(i) and other analogous provisions of
the Regulations.
 
 
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  “Selling Partner” shall mean the selling Partner under Section 11.1 or Section
11.2 hereof, as the case may be.
 
  “SP Subsidiary” shall mean an entity selected by the General Partner which
shall be wholly-owned (directly or indirectly) by the Partnership, the purpose
of which is limited to acquiring, financing, holding for investment, preserving,
managing, operating, improving, leasing, selling, exchanging, transferring and
otherwise using or disposing of a Qualified Asset or Qualified Assets.
 
  “SP Subsidiary Limited Liability Company Agreement” shall mean the limited
liability company agreement of an SP Subsidiary that is the general partner of
another SP Subsidiary, which, except as provided in Section 3.4 hereof, shall be
substantially in the form attached hereto as Exhibit E.
 
  “SP Subsidiary Partnership Agreement” shall mean the limited partnership
agreement of an SP Subsidiary that is the owner of a Qualified Asset, which,
except as provided in Section 3.4 hereof, shall be substantially in the form
attached hereto as Exhibit F.
 
  “SP Subsidiary Agreements” shall mean the SP Subsidiary Limited Liability
Company Agreements and the SP Subsidiary Partnership Agreements.
 
Supermajority Vote” shall mean the written consent of four (4) of the five (5)
members of the Executive Committee.
 
  “Target Account” shall mean, with respect to any Partner for any taxable year
of the Partnership, the excess of (a) an amount (which may be either a positive
balance or a negative balance) equal to the hypothetical distribution (or
contribution) such Partner would receive (or contribute) if all assets of the
Partnership, including cash, were sold for cash equal to their Book Basis
(taking into account any adjustments to Book Basis for such year), all
liabilities (including prepayment penalties, yield maintenance fees and similar
costs) of the Partnership were then satisfied according to their terms (except
that if the nonrecourse liabilities secured by an asset exceed the Book Basis of
such asset, such calculation shall be made assuming that the asset were
transferred to the lender in satisfaction of the debt) and all remaining
proceeds from such sale were distributed pursuant to Section 9.2 over (b) such
Partner’s share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain immediately prior to such sale.
 
  “Tax Depreciation” shall mean with respect to any property owned by the
Partnership depreciation, accelerated cost recovery, or modified cost recovery,
and any other amortization or deduction allowed or allowable for federal, state
or local income tax purposes.
 
.  “Tax Matters Partner” is defined in Section 6.5 hereof.
 
  “Third Parties” shall mean consultants, engineers, environmental consultants,
accountants, attorneys, contractors and subcontractors, brokers or managers, but
excluding any LMLP Affiliated Party.
 
  “Third Party Sale Period” is defined in Section 11.1(b) hereof.
 
 
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ARTICLE II
FORMATION, DURATION AND PURPOSES; PURCHASE OF INITIAL
PROPERTIES
 
Section 2.1  Formation.  Pursuant to the Delaware Revised Uniform Limited
Partnership Act, codified in the Delaware Code Annotated, Title 6, Sections
17-101 to 17-1111, as the same may be amended from time to time (the “Act”), the
Partners agree to form and hereby form the Partnership by entering into this
Agreement.  The Partners hereby acknowledge that a certificate of limited
partnership has been executed and filed in the office of the Delaware Secretary
of State on the date hereof.  The execution and filing of such certificate of
limited partnership with the Delaware Secretary of State is hereby authorized,
ratified and approved by the Partners.  The rights, liabilities and obligations
of any Partner with respect to the Partnership shall be determined in accordance
with the Act and this Agreement.  To the extent anything contained in this
Agreement modifies, supplements or otherwise affects any such right, liability,
or obligation arising under the Act, this Agreement shall supercede the Act to
the extent not restricted thereby.
 
Section 2.2  Name; Registered Agent and Registered Office.  The name of the
Partnership and the name under which the business of the Partnership shall be
conducted shall be “Net Lease Strategic Assets Fund L.P.”  The registered agent
of the Partnership shall be Corporation Service Company, and the registered
office of the Partnership shall be at Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington, Delaware 19808.  The General Partner
may select another such registered agent or registered office from time to time.
 
Section 2.3  Principal Office.  The principal place of business and office of
the Partnership shall be located at c/o The Lexington Master Limited
Partnership, One Penn Plaza, Suite 4015, New York, New York 10119-4015, or at
such other place as the General Partner may determine from time to time.  The
business of the Partnership may also be conducted at such additional place or
places as the General Partner may determine.
 
Section 2.4  Purposes and Business.  The business of the Partnership is to,
directly or indirectly, acquire, finance, refinance, hold for investment,
preserve, manage, operate, improve, lease, sell, exchange, transfer and
otherwise use or dispose of the Qualified Assets as may be, directly or
indirectly, acquired by the Partnership from time to time pursuant to the terms
hereof, which Qualified Assets may be located anywhere in the United States.  In
connection therewith and without limiting the foregoing, the Partnership shall
have the power to dispose of the Qualified Assets in accordance with the terms
of this Agreement and to engage in any and all activities related or incidental
thereto, all for the benefit of the Partners.  
 
Section 2.5  Term.  The term of the Partnership shall commence on the date of
this Agreement and shall continue in full force and effect until terminated
pursuant to the terms hereof.  No Partner may withdraw from the Partnership
without the prior consent of the General Partner, other than as expressly
provided in this Agreement.
 
Section 2.6  Other Qualifications.  The Partnership shall file or record such
documents and take such other actions under the laws of any jurisdiction in
which

 
 
 
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the Partnership does business as are necessary or desirable to permit the
Partnership to do business in any such jurisdiction and to promote the
limitation of liability for the Partners in any such jurisdiction.
 
Section 2.7  Limitation on the Rights of Partners.  Except as otherwise
specifically provided in this Agreement, (a) no Partner shall have the right to
withdraw or retire from, or reduce its contribution to the capital of, the
Partnership; (b) no Partner shall have the right to demand or receive assets
other than cash in return for its Capital Contribution; and (c) no Partner shall
have priority over any other Partner either as to the return of its Capital
Contribution or as to profits or distributions.
 
Section 2.8  Purchase of Qualified Sale Assets.  Contemporaneously with the
execution of this Agreement, the LMLP Sale Affiliates will agree to sell, and
the Partnership will agree to purchase the Qualified Sale Assets pursuant to the
Purchase Agreements described on Schedule 2.8 hereto at the purchase prices set
forth on Schedule 2.8 hereto.  In the event the Qualified Sale Asset located at
3600 Southgate Drive, Danville, Illinois is acquired by the Partnership pursuant
to a Purchase Agreement, LMLP shall be solely responsible for and shall pay
directly the costs incurred to complete the currently contemplated 55,000 square
foot expansion at such Qualified Asset as shown on Schedule 2.8; provided, LMLP
shall only be responsible for such costs up to $1.8 million and shall not be
responsible for any change orders to the current plans and specifications for
such expansion.
 
Section 2.9  Remuneration To Partners.  No Partner is entitled to remuneration
for acting on behalf of the Partnership.  Except as otherwise authorized in this
Agreement, including but not limited to Sections 3.6 and 3.10, no Partner is
entitled to remuneration for acting in the Partnership business.
 
ARTICLE III
MANAGEMENT RIGHTS, DUTIES, AND POWERS
OF THE GENERAL PARTNER; TRANSACTIONS INVOLVING
PARTNERS
 
Section 3.1  Management.
 
(a)  Management by the General Partner.  LMLP GP shall be the General Partner
until (x) a Removal Event, or (y) LMLP GP resigns as the General Partner.  The
General Partner shall manage the investments, business and day-to-day affairs of
the Partnership and shall be responsible for acquisitions and dispositions of
Qualified Assets, subject, however, to the provisions of Section 3.4 hereof with
respect to Major Decisions, of Section 3.6, Section 3.7 and Article XI hereof
with respect to the acquisition or sale of Qualified Assets and any other
provisions of this Agreement concerning the investments, business and day-to-day
affairs of the Partnership.  The General Partner shall use commercially
reasonable efforts to manage the investments, business and day-to-day affairs of
the Partnership in accordance with the Annual Plan approved in accordance with
Section 3.5 hereof.  Any action taken by the General Partner in accordance with
the terms of this Agreement shall constitute the act of and serve to bind the
Partnership.  The General Partner may delegate certain of the tasks that are to
be performed in connection with the acquisition of Qualified Assets, the
management of the
 
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Qualified Assets or the business and day-to-day affairs of the Partnership.  Any
such delegation to third parties provided in the previous sentence shall be at
the cost of the General Partner and supervised by the General Partner and such
delegation shall not relieve the General Partner of any of its obligations
hereunder.  Any right of any Partner to consent to any action requiring its
consent hereunder shall not be diminished or otherwise affected by such
delegation.
 
(b)  Delegation to the Executive Committee.
 
(i)  The Executive Committee shall be delegated the authority to exercise the
authority conferred on it by this Agreement.  No member of the Executive
Committee shall (x) have any interest in or rights under this Agreement, (y) be
admitted as a substitute for any Partner or (z) have any of the rights of a
Partner under the Act or this Agreement.
 
(ii)  Action requiring a Supermajority Vote by the Executive Committee shall be
taken without a meeting by a consent in writing setting forth the action taken,
which shall be signed by at least four (4) of the five (5) members of the
Executive Committee.  Action requiring a Majority Vote of the Executive
Committee shall be taken at a special meeting of the Executive Committee, upon
not less than five (5) Business Days’ prior written notice by the General
Partner to the members of the Executive Committee.  Such meetings shall be held
at the time specified in the notice at a location selected by the General
Partner or, if requested by any member of the Executive Committee, by
teleconference.
 
(iii)  Any member of the Executive Committee may resign at any time by giving
written notice to each Partner.  The resignation of any member of the Executive
Committee shall take effect upon receipt of the notice thereof or at such later
time as shall be specified in such notice; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make such
resignation effective.  The Partner who appointed the resigning Executive
Committee member shall appoint a replacement Executive Committee member within
seven (7) Business Days of such resignation.  Any Partner who appointed an
Executive Committee member may remove such member at any time upon written
notice to the other Partners, which notice shall name and appoint a new
Executive Committee member to replace the Executive Committee member so removed.
 
(iv)  The members of the Executive Committee shall not be entitled to receive
any fees or reimbursement for any expenses for their service in such capacity.
 
(c)  Delegation to the Asset Manager.  The General Partner shall retain the
Asset Manager pursuant to a Management Agreement substantially in the from
attached hereto as Exhibit C and delegate (pursuant to Sections 3.1(a) and (b)
above) to the Asset Manager the management of the Qualified Assets and, during
the Acquisition Period, the performance of the tasks necessary for the
evaluation of Proposed Qualified Assets and the acquisition of Approved
Qualified Assets as contemplated in Section 3.6 hereof.  The Asset Manager shall
(x) have no interest in or rights under this Agreement, (y) not be admitted as a
substitute for any Partner and (z) not have any of the rights of a Partner under
the Act or this Agreement.  Any delegation to the Asset Manager provided in this
Section 3.1(b) shall be

 
 
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supervised by the General Partner and the Executive Committee and such
delegation shall not relieve the General Partner of any of its obligations
hereunder as General Partner.
 
(d)  Right to Rely on Authority of the General Partner.  Any action taken by the
General Partner, acting on behalf of the Partnership pursuant to the authority
conferred thereon in this Agreement, shall be binding on the Partnership.  In no
event shall any Person dealing with the General Partner with respect to the
conduct of the affairs of the Partnership be obligated to ascertain whether the
terms of this Agreement have been complied with, or be obligated to inquire into
the necessity or expediency of any action of the General Partner.
 
(e)  Inland’s Right to Enforce Partnership Rights Against LMLP Affiliated
Parties.  Notwithstanding anything herein to the contrary, if LMLP GP, in its
capacity as General Partner, has failed to enforce any of the Partnership’s
rights against any LMLP Affiliated Party that has defaulted on any obligation
owed to the Partnership under this Agreement, the Contribution Agreement, the
Purchase Agreement or any agreement between the Partnership and any LMLP
Affiliated Party (including the Management Agreement), Inland shall be entitled
to exercise, on behalf of the Partnership and at the expense of the Partnership,
the Partnership’s rights and obligations arising under such agreements all
without the consent or approval of LMLP GP or the Executive Committee.
 
Section 3.2  Actions of the General Partner.
 
(a)  Acts of the General Partner.  Any action required or permitted to be taken
by the General Partner shall be taken by written consent of the General Partner,
and the writing or writings shall be filed with the books and records of the
Partnership.
 
(b)  General Informational Meetings.  The General Partner shall hold
informational meetings with the Partners to review and discuss the Partnership’s
activities and business at least once annually and, so long as LMLP GP is the
general partner and if requested by Inland upon not less than ten (10) Business
Days’ prior written notice, at least once quarterly.  Such meetings shall be
held at a mutually convenient time at a location selected by the General Partner
and teleconferencing will be made available.
 
Section 3.3  Authority of the General Partner.  
 
(a)  Except as otherwise provided in this Article III, the General Partner is
hereby authorized to do the following, for and in the name and on behalf of the
Partnership, as may be necessary, convenient or incidental to the implementation
of the Annual Plan or to the accomplishment of the purposes of the Partnership
(provided, that if any of the following constitutes a Major Decision that is not
specifically set forth in the Annual Plan, the General Partner shall first
obtain the consent of the Executive Committee pursuant to Section 3.4 hereof):
 
(i)  enter into a good faith non-binding letter of intent concerning the
acquisition of a Proposed Qualified Asset.
 
 
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(ii)  acquire by purchase, exchange or otherwise, any Proposed Qualified Asset
consistent with the purposes of the Partnership, but only in accordance with
Sections 3.4 and  3.6 hereof;
 
(iii)  operate, manage and maintain each of the Qualified Assets;
 
(iv)  take such action as is necessary to form, create or set up any SP
Subsidiary that has been approved in accordance with Section 3.6 hereof;
 
(v)  dissolve, terminate or wind-up any SP Subsidiary, provided that any
Qualified Asset held by such SP Subsidiary has been disposed of in accordance
with Article XI hereof or transferred to the Partnership or any other SP
Subsidiary;
 
(vi)  enter into, amend, extend or renew any lease of any Qualified Asset or any
part thereof or interest therein approved as part of the Annual Plan;
 
(vii)  initiate legal proceedings or arbitration with respect to any lease of
any Qualified Asset or part thereof or interest therein; provided that the
initiation of such legal proceedings or arbitration shall have arisen (x) in
connection with any matter of an emergency nature, (y) for the collection of
rent or (z) involving an uninsured claim of less than $100,000;
 
(viii)  dispose of any or all of the Qualified Assets by sale, lease, exchange
or otherwise, and grant an option for the sale, lease, exchange or otherwise of
any or all the Qualified Assets, but only in accordance with Section 3.7 hereof;
 
(ix)  employ and dismiss from employment any and all employees, agents,
independent contractors, attorneys and, subject to Section 3.4 hereof,
independent accountants for the Partnership;
 
(x)  pay all Permitted Expenses (and maintain in reserve the amount of any
credits pursuant to Section 3.10 hereof);
 
(xi)  execute and deliver any and all agreements, contracts, documents,
certifications and instruments necessary or convenient in connection with the
management, maintenance and ownership of the Qualified Assets and in connection
with any other matters with respect to which the General Partner has authority
to act pursuant to the Annual Plan or as set forth in this Section 3.3;
 
(xii)  draw down funds as needed under any approved lines of credit or other
financing previously approved under Section 3.4 hereof;
 
(xiii)  finance or refinance a portion of the purchase price of any Qualified
Asset and incur (and refinance) indebtedness secured by any Qualified Asset, or
any portion thereof or any interest or estate therein and incur any other
secured or unsecured borrowings or other indebtedness;
 
 
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(xiv)  implement those Major Decisions that are specifically set forth in the
Annual Plan or that have been approved by the Executive Committee pursuant to
Section 3.4 below; and
 
(xv)  subject to any conditions expressly provided in this Agreement, engage in
any kind of activity and perform and carry out contracts of any kind necessary
or incidental to or in connection with the accomplishment of the purposes of the
Partnership as may be lawfully carried out or performed by a limited partnership
under the laws of each state in which the Partnership is then formed or
registered or qualified to do business.
 
(b)  Notwithstanding anything in this Agreement to the contrary, but subject to
Section 3.8(a) hereof, LMLP GP or LMLP is hereby authorized to obtain a loan on
behalf of the Partnership or an SP Subsidiary the proceeds of which are to be
used to redeem any allocated portion of the Preferred Equity and satisfy any
first mortgage financing secured by the Preferred Equity Asset related to the
allocated portion of the Preferred Equity being redeemed, so long as the annual
total debt service payments required to be paid on such loan is equal to or less
than the payments that the Partnership is otherwise required to make on the
Preferred Equity being redeemed and the related first mortgage financing being
satisfied.
 
Section 3.4  Major Decisions.  
 
(a)  Major Decisions. Notwithstanding anything to the contrary contained in this
Agreement, but subject to Section 3.3(b), Section 3.4(b) and Section 3.8(e)
hereof, the General Partner shall not take, on behalf of the Partnership, and
shall not permit the Partnership or the Asset Manager to take, any action, make
any decision, expend any sum or undertake or suffer any obligation which comes
within the scope of any Major Decision unless such Major Decision is approved by
the Executive Committee in the manner required by Section 3.4(b) in advance in
writing or as specifically set forth in the Annual Plan.
 
As used herein, “Major Decision” shall mean a decision to take any of the
following actions directly or indirectly through or for an SP Subsidiary:
 
(i)  the acquisition (including any decisions under Section 3.6) by purchase,
exchange or otherwise of any Qualified Asset or other asset and except for the
acquisition of the Qualified Contribution Assets and Qualified Sale Assets;
provided that acquisitions of Qualified Assets shall only occur during the
Acquisition Period;
 
(ii)  the construction, alteration, improvement, repair, rehabilitation, razing,
rebuilding or replacement of any building or other improvements or the making of
any capital improvements, replacements, repairs, alterations or changes in, to
or on any Qualified Asset, or any part thereof, except to the extent provided
for in the Annual Plan; provided that repairs of an emergency nature may be
undertaken without prior approval of a majority of the members of the Executive
Committee provided the General Partner notifies each member of the Executive
Committee in writing thereof within two (2) Business Days following the
commencement of such emergency repairs;
 
(iii)  the reinvestment for restoration purposes of (i) insurance proceeds in
excess of $500,000 received by the Partnership in connection with the

 
 
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damage or destruction of any Qualified Asset or (ii) condemnation proceeds in
excess of $500,000 received by the Partnership in connection with the taking or
settlement in lieu of a threatened taking of all or any portion of any Qualified
Asset; provided that if the determination is made not to reinvest any such
insurance or condemnation proceeds, then so much thereof as may be necessary
shall be applied to the razing or other disposition of the remaining
improvements as may be required by law or by a reasonably prudent property
manager and the balance of such insurance or condemnation proceeds shall be
distributed in accordance with this Agreement;
 
(iv)  the commencement of any case, proceeding or other action seeking
protection for the Partnership as debtor under any existing or future law of any
jurisdiction relating to Bankruptcy, insolvency, reorganization or relief of
debtors; any consent to the entry of an order for relief in or institution of
any case, proceeding or other action brought by any third party against the
Partnership as a debtor under any existing or future law of any jurisdiction
relating to Bankruptcy, insolvency, reorganization or relief of debtors; the
filing of an answer in any involuntary case or proceeding described in the
previous clause admitting the material allegations of the petition therefor or
otherwise failing to contest any such involuntary case or proceeding; the
seeking of or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or any similar official for the Partnership or
for a substantial portion of its Qualified Assets; any assignment for the
benefit of the creditors of the Partnership; or the admission in writing that
the Partnership is unable to pay its debts as they mature or that the
Partnership is not paying its debts as they become due;
 
(v)  the extension of the statute of limitations for assessing or computing any
tax liability against the Partnership or the amount of any Partnership tax item
or to settle any dispute with respect to any income, or any other material, tax;
 
(vi)  a merger, sale or recapitalization of the Partnership or a sale or other
disposition, including a disposition by lease, of any or all of the Qualified
Assets, except in accordance with Article XI hereof;
 
(vii)  the financing or refinancing of, or the increasing of any mortgage
indebtedness encumbering, any Qualified Asset, or any portion thereof or any
interest or estate therein, whether recourse or non-recourse to the Partnership,
or the incurrence of indebtedness secured by any Qualified Asset, or any portion
thereof or any interest or estate therein, or the incurrence of any other
secured or unsecured borrowings or other indebtedness by the Partnership,
including determination of the terms and conditions thereof, and any amendments
to such terms and conditions or otherwise with respect to anything in this
clause (vii) except as contemplated in an Annual Plan or in accordance with
Section 3.4 hereof;
 
(viii)  the approval of the Annual Plan, including any budget line item, and any
amendment to the Annual Plan;
 
(ix)  the incurring of any cost or expense for any fiscal year, other than a
Permitted Expense;
 
 
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(x)  the entering into of any transaction or agreement with or for the benefit
of, or the employment or engagement of, any LMLP Affiliated Party, except as
expressly contemplated in Sections 3.1(c) and 3.10 hereof;
 
(xi)  except as required by the lenders under the loan documents governing
indebtedness of the Partnership, the establishment of a reserve for working
capital, capital expenditures or to pay other costs and expenses incident to
ownership of the Qualified Assets and for such other Partnership purposes in
excess of an aggregate of  (A) $100,000 or (B) $500,000;
 
(xii)  the initiation of legal proceedings or arbitration by the Partnership or
the settlement of any litigation against the Partnership involving an uninsured
claim in excess of (A) $100,000 or (B) $500,000; provided that the initiation of
such legal proceedings or arbitration (x) in connection with any matter of an
emergency nature, or (y) for the collection of rent, shall not be a Major
Decision subject to this Section 3.4(a);
 
(xiii)  with respect to any lease of any Qualified Asset, or part thereof or
interest therein, the entering into, amending, extending or renewing thereof, in
each case not already approved as part of the Annual Plan;
 
(xiv)  the admission of a new Partner to the Partnership or acquisition by an
existing Partner of an additional interest in the Partnership, except in
accordance with Article VIII and XI hereof;
 
(xv)  the engagement of an accounting firm to audit the financial statements of
the Partnership;
 
(xvi)  the extension of the Acquisition Period, which decision to extend shall
be made not less than 60 days prior to the end of the Acquisition Period;
 
(xvii)  making an Extraordinary Call to the Partners to fund an operating
deficit of the Partnership in excess of the Extraordinary Call Cap;
 
(xviii)  except in connection with items set forth in the Annual Budget or items
constituting a Permitted Expense, the entry into any agreement by the
Partnership involving more than $100,000 of consideration or having a term in
excess of 1 year and in all cases any property management agreement or brokerage
agreement;
 
(xix)  the winding up or dissolution of the Partnership;
 
(xx)  any deviation from the SP Subsidiary Agreements, which directly or
indirectly impairs the economic or management rights of the Partnership; and
 
(xxi)  subject to Section 3.3 hereof, the execution of any agreement, contract
or understanding or other arrangement to effectuate a Major Decision.
 
(b)  Vote Required. Major Decisions shall require the following approvals:
 
 
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(i)  A Supermajority Vote shall be required for the Major Decisions set forth in
Section 3.4(a)(i)-(iv), (vi)-(x), (xi)(B), (xii)(B) and (xiii)-(xxi).
 
(ii)  A Majority Vote shall be required for the Major Decisions set forth in
Section 3.4 (v), (xi)(A) and (xii)(A).
 
(c)  Non-Binding Letters of Intent. Notwithstanding the foregoing, the General
Partner shall be authorized to execute non-binding letters of intent with
respect to property and operational actions that constitute Major Decisions.
 
Section 3.5  Preliminary and Annual Plans.
 
(a)  Preparation and Approval of Plans.  The General Partner shall prepare and
deliver to the Executive Committee for its approval or disapproval a proposed
annual plan for the next fiscal year of the Partnership (as further described
below, a “Proposed Plan”).  The Proposed Plan shall cover the Partnership and
each Qualified Asset and shall include:
 
(i)  a proposed Annual Budget covering the Partnership and each Qualified Asset
and a brief narrative description of the material portions thereof;
 
(ii)  a plan of operations for each Qualified Asset, including anticipated
repairs and improvements;
 
(iii)  estimated financing needs and estimated financing costs for the
Partnership and each Qualified Asset;
 
(iv)  estimated cash flow projections for the Partnership and each Qualified
Asset;
 
(v)  a description of tenants then in occupancy in each Qualified Asset;
 
(vi)  a schedule of Qualified Assets, any leases which are expiring during such
fiscal year and the plans for the re-leasing of such Qualified Assets and any
lease restructures (such as subleasing or expansion by a tenant) of which the
General Partner is aware;
 
(vii)  projected capital improvements and capital repairs;
 
(viii)  a description of any Proposed Qualified Assets to the extent identified,
including the terms of acquisition, provided that nothing in the Proposed Plan
shall affect or limit the provisions of Section 3.6 hereof; and
 
(ix)  any other information relative to the management of the Qualified Assets
or the Partnership reasonably requested by any member of the Executive
Committee.
 
 
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The General Partner shall prepare and submit a Proposed Plan to the Executive
Committee on or before November 15th of the year prior to such fiscal year.  The
Executive Committee shall approve or disapprove such revised Proposed Plan no
later than December 15th of the year prior to the fiscal year covered by such
revised Proposed Plan.  Any Proposed Plan approved by the Executive Committee in
accordance with Section 3.4 shall become the annual plan for the next fiscal
year of the Partnership (any Proposed Plan approved by the Executive Committee
for any fiscal year of the Partnership, and as may be amended from time to time
by a Plan Amendment, an “Annual Plan”).  A model of an Annual Plan is attached
as Schedule 3.5 and made a part hereof.  The initial Annual Plan shall be
approved by a Supermajority Vote of the Executive Committee within sixty (60)
days of the date first set forth above.  If the Partnership has not acquired the
Qualified Sale Assets and the Qualified Contribution Assets within sixty (60)
days of the date first set forth above, then within thirty (30) days after the
closing of the last to be acquired of Qualified Sale Assets or Qualified
Contribution Assets, the General Partner shall submit a new Proposed Plan
covering all of the Qualified Assets held by the Partnership for the remainder
of the then current year to the Executive Committee for approval or disapproval
within a thirty (30) day period in accordance with the procedures outlined
herein which Proposed Plan upon approval shall become the Annual Plan.
 
(b)  Dispute Concerning an Annual Budget.  If, prior to the commencement of any
fiscal year, the Executive Committee has disapproved the Proposed Plan because
it could not reach an agreement as to the amount to be allocated to any budget
line item set forth in the Annual Budget portion of the Proposed Plan for such
fiscal year, then (i) as to any such disputed budget line item, the Annual
Budget portion of the Annual Plan for the immediately preceding fiscal year
(exclusive of any non-recurring capital expenditures) shall be controlling but
only with respect to such disputed budget line item (in each case adjusted to
reflect the increases in the CPI for November of such fiscal year over the CPI
for November of such immediately preceding fiscal year) and only until such time
as the Executive Committee has approved the amount to be allocated to such
budget line item, and (ii) as to any budget line item or items that are not in
dispute, the Annual Budget portion of the Proposed Plan shall control.
 
(c)  Amendments to Annual Plans.  If in any Partner’s judgment an Annual Plan
requires amendment, such Partner shall deliver to the Executive Committee a
written notice setting forth the proposed amendment to the Annual Plan and the
basis therefor.  The Executive Committee shall approve or disapprove, in
accordance with Section 3.4 hereof, such proposed amendment within ten (10)
Business Days after receipt thereof, and, if the Executive Committee shall
approve such proposed amendment (any such amendment, a “Plan Amendment”), the
Annual Plan (including, without limitation any amendments to the Annual Budget
portion thereof) shall be amended by the Plan Amendment as set forth in the
written notice described in the preceding sentence.  If the Executive Committee
shall disapprove a Plan Amendment, then the Annual Plan then in effect shall not
be amended pursuant to such disapproved Plan Amendment.
 
Section 3.6  Qualified Asset Acquisitions. 
 
(a)  Generally; Approval by Executive Committee.  During the Acquisition Period,
LMLP GP shall identify net-leased assets that meet the Acquisition

 
 
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Parameters as candidates for acquisition, directly or indirectly, by the
Partnership (any such asset, a “Proposed Qualified Asset”).  LMLP GP or Asset
Manager shall submit the Acquisition Memorandum described in Section 3.6(b)
hereof with respect to the Proposed Qualified Asset or a Non-Parameter Asset
that LMLP GP recommends for acquisition by the Partnership to the Executive
Committee.  The Executive Committee shall have seven (7) Business Days after its
receipt of the Acquisition Memorandum to approve or disapprove of the
acquisition of a Proposed Qualified Asset or Non-Parameter Asset in accordance
with Section 3.4 hereof.
 
(b)  Acquisition Memorandum.  For each Proposed Qualified Asset and
Non-Parameter Asset, LMLP GP or Asset Manager shall deliver to the Executive
Committee an Acquisition Memorandum describing such Proposed Qualified Asset or
Non-Parameter Asset in reasonable detail, including without limitation:
 
(i)  whether it is a Proposed Qualified Asset or a Non-Parameter Asset;
 
(ii)  the size and location thereof;
 
(iii)  the improvements thereon;
 
(iv)  the operating history, if any, financial status and financial projections
(for a minimum of five (5) years, including any anticipated expenditures or
allowances) thereof;
 
(v)  market data, including rental and sales comparables and competitive
submarket survey, if necessary;
 
(vi)  the material findings of all due diligence undertaken to date with respect
thereto, if any, including a summary of any litigation involving the Proposed
Qualified Asset or Non-Parameter Asset and the material findings to date of any
Environmental Assessment and/or Physical Inspection Report;
 
(vii)  photographs and site plans;
 
(viii)  the estimated cost to the Partnership, including the estimated purchase
price and estimated due diligence costs, the amount and material terms of any
mortgage indebtedness to be assumed, incurred or taken subject to;
 
(ix)  the material provisions of the net lease or leases thereon and copies of
such leases (or in the case of proposed leases, drafts or reasonably detailed
abstracts of proposed leases);
 
(x)  the identification of each tenant and financial information relating to
each such tenant;
 
(xi)  such other information and documentation any member of the Executive
Committee may reasonably request and is reasonably available, including the
purchase and sale agreement and loan documents.
 
 
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(c)  Assets Which Do Not Comply With Acquisition Parameters.  LMLP GP may submit
net-leased assets that do not comply in all respects with the Acquisition
Parameters (each, a “Non-Parameter Asset”) to the Executive Committee for
approval pursuant to Section 3.6(a) hereof.
 
(d)  Acquisition of Approved Qualified Assets.  Upon receipt of the written
approval of a majority of the members of the Executive Committee as provided in
Section 3.6(a) above of the acquisition by the Partnership of a Proposed
Qualified Asset or Non-Parameter Asset (any Proposed Qualified Asset or
Non-Parameter Asset so approved, an “Approved Qualified Asset”), LMLP GP or
Asset Manager shall take all commercially reasonable efforts on behalf of the
Partnership to negotiate and execute all documents necessary to acquire the
Approved Qualified Asset pursuant to and in accordance with the terms approved
by the Partners (including formation of an SP Subsidiary, if applicable) and to
complete due diligence that the General Partner deems reasonably necessary,
including (to the extent not already completed) obtaining an Environmental
Assessment and a Physical Inspection Report.  LMLP GP or Asset Manager shall
keep the Executive Committee reasonably informed of the progress of the
Partnership’s acquisition of any Approved Qualified Asset, including the
material findings of all due diligence and of any material matters that arise
during the course thereof.  Upon completion of all due diligence undertaken as
specified above with respect to an Approved Qualified Asset and as a condition
to completing the acquisition of the Approved Qualified Asset, LMLP GP or Asset
Manager shall deliver to the Executive Committee a memorandum summarizing the
material findings of the completed due diligence and any changes in the status
of such Approved Qualified Asset since the date of the Acquisition Memorandum
described in Section 3.6(b) above and the Executive Committee, in accordance
with Section 3.4 hereof, shall confirm its continuing approval of the
acquisition before LMLP GP commits (on a nonrefundable basis) the Partnership’s
funds as provided below.  Upon request by any member of the Executive Committee,
LMLP GP or Asset Manager will provide to the Executive Committee copies of the
Environmental Assessment, the Physical Inspection Report and the survey after
completion thereof.
 
It is understood and agreed that (x) LMLP GP may deposit its own funds, or cause
the Partnership to deposit Partnership funds, as refundable earnest money, and
(y) the Partnership’s funds shall be substituted (and such funds reimbursed to
LMLP GP) or committed, as the case may be, on a nonrefundable basis only after
due diligence is completed and the Executive Committee has confirmed its
continuing approval of the acquisition.  After the Partnership has committed its
funds on a nonrefundable basis in accordance with the prior sentence, if the
terms of the acquisition change in any material respect from the terms described
in the Acquisition Memorandum, such change shall require the consent of a
majority of the members of the Executive Committee.
 
An acquisition of a Approved Qualified Asset shall be made through SP
Subsidiaries utilizing the SP Subsidiary Agreements.
 
Within five (5) Business Days after the closing of the acquisition of an
Approved Qualified Asset, LMLP GP shall deliver to the Partners a closing
statement acknowledging the receipt of and setting forth the application of the
Partners’ Capital Contributions and any other funds of the Partnership used to
acquire such Approved Qualified

 
 
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Asset or to pay closing costs (including an estimate of costs not finalized at
closing, including legal fees and costs) associated therewith.
 
(e)  Disapproved Qualified Assets.  If the Executive Committee (x) disapproves
any Proposed Qualified Asset or any proposed Non-Parameter Asset, (y) fails
after the completion of due diligence to confirm its continuing approval of the
acquisition of an Approved Qualified Asset as provided in Section 3.6(d) above,
or (z) otherwise withdraws its approval of an Approved Qualified Asset as
provided in Section 3.6(d) above, LMLP GP shall not cause or permit the
Partnership to acquire such Proposed Qualified Asset, proposed Non-Parameter
Asset or Approved Qualified Asset and the LMLP Partners or their designee shall
have the right to acquire such Proposed Qualified Asset, proposed Non-Parameter
Asset or Approved Qualified Asset for their own account or with or in connection
with any other Person; provided that such right shall not apply if the members
of the Executive Committee appointed by Inland vote to approve the acquisition
in accordance with Section 3.4 hereof.
 
(f)  Acquisition Costs.  Except as provided in this Section 3.6(f) and in
Section 3.6(g) hereof, LMLP GP or the Asset Manager (as the case may be) shall
be liable for all costs and expenses (“Acquisition Costs”) arising in connection
with the identification or evaluation of, the bidding on and the structuring and
negotiation of and contracting for the acquisition or attempted acquisition of,
and the due diligence undertaken in connection with, any Proposed Qualified
Asset or Approved Qualified Asset (such activities, the “Acquisition
Activities”); provided that:
 
(i)  the Partnership shall (x) reimburse LMLP GP or the Asset Manager (as the
case may be) for all Acquisition Costs and (y) be liable for all reasonable and
customary costs and expenses of Third Parties retained in connection with the
Acquisition Activities related to Approved Qualified Assets;
 
(ii)  the Partnership shall reimburse LMLP GP or the Asset Manager (as the case
may be) for 60% of the Acquisition Costs in connection with Acquisition
Activities related to Proposed Qualified Assets and Approved Qualified Assets
that are disapproved by the Executive Committee;
 
Notwithstanding the foregoing, but subject to Section 3.9 hereof, if for any
reason other than pursuant to Article XI hereof any LMLP Affiliated Party
(instead of the Partnership or an SP Subsidiary) acquires title to any Proposed
Qualified Asset or Approved Qualified Asset, LMLP shall pay all of the costs and
expenses (and reimburse the Partnership for any refundable or nonrefundable
deposits funded by the Partnership in connection with the acquisition of such
asset) incurred or to be incurred in connection with the Acquisition Activities
relating to such Proposed Qualified Asset or Approved Qualified Asset.
 
(g)  Acquisition Fee.  Upon the acquisition of any Approved Qualified Asset by
the Partnership or by an SP Subsidiary (including any Approved Qualified Asset
contributed in whole or in part by LMLP to the Partnership), pursuant to this
Section 3.6, Inland shall pay LMLP GP or the Asset Manager an acquisition fee
(the “Acquisition Fee”) equal to the sum of the gross purchase price of such
acquired Approved Qualified Asset multiplied by 0.425%.
 
 
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For example, if the purchase price of such acquired Approved Qualified Asset
were $25 million, Inland’s Acquisition Fee would equal $106,250.
 
Section 3.7  Sale of Qualified Assets.
 
(a)  Authority to Sell.  Subject to Article XI, the General Partner shall have
no authority to and shall not initiate the sale of any Qualified Asset without
approval by the Executive Committee in accordance with Section 3.4 of this
Agreement.
 
(b)  Assets in Foreclosure.  In the event a lender to the Partnership or a SP
Subsidiary has initiated or threatens to initiate a foreclosure proceeding with
respect to any Qualified Asset securing such lender’s loan to the Partnership or
such SP Subsidiary, and a Partner disagrees as to whether such Qualified Asset
shall be transferred to the lender in satisfaction of such loan, the Partner not
in favor of such transfer shall have the right to purchase such Qualified Asset
from the Partnership for One Dollar ($1.00) provided such Partner assumes such
loan in full and such lender releases the Partnership and any guarantors
therefrom.  No adjustments to the Capital Contributions, Capital Commitments, or
Capital Account shall be made on account of a transfer made in accordance with
this Section 3.7(b).
 
Section 3.8  Partnership Indebtedness.
 
(a)  Maximum Debt.  The Partnership on a consolidated basis with the SP
Subsidiaries shall maintain a total debt plus Preferred Equity of not greater
than seventy-five percent (75%) of the gross acquisition cost of the
Partnership’s Qualified Assets.  The total debt secured by any Qualified Asset
plus the Preferred Equity allocated to such Qualified Asset shall not exceed 75%
of the gross acquisition cost of such Qualified Asset.
 
(b)  Non-Recourse to the Partners.  Notwithstanding anything to the contrary
contained in this Agreement, the Partnership shall not incur debt that is
recourse to the Partners, and the Partners shall not be liable for any debts or
other obligations or liabilities incurred by the Partnership; provided, that, if
a lender will not accept the Partnership as a guarantor for “non-recourse
carve-outs,” LMLP shall provide such “non-recourse carve-out” guarantee.
 
(c)  Cross-Default Provisions.  Unless approved by a Supermajority Vote of the
Executive Committee, the Partnership shall not incur any indebtedness that
contains cross-default provisions, except for cross-default provisions under the
Existing Indebtedness and any first mortgage financing secured by the Qualified
Refi Assets which the Partnership shall obtain pursuant to Section 3.8(f)(i)
hereof.
 
(d)  Loan Terms.  The Partnership shall endeavor to procure indebtedness, the
terms of which will:
 
(i)  not prohibit the replacement of the General Partner or the Asset Manager
with a Person, including an Affiliate of Inland, so long as such Person meets
the standards of the commercial mortgage backed securities market; and
 
 
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(ii)  not prohibit transfers pursuant to Articles VIII or XI hereof;
 
in each case without triggering the due on sale provision, a prepayment penalty
or an assumption fee (other than administrative fees and other nominal lender
fees, including legal costs).
 
(e)  Restriction on Indebtedness.  Notwithstanding anything in this Agreement to
the contrary, the Partnership shall be prohibited from incurring additional
indebtedness on any Preferred Equity Asset without the prior written consent of
LMLP, unless the Preferred Equity related to the Preferred Equity Asset is
simultaneously being repaid.
 
(f)  Debt Placement.
 
(i)  Subject to Sections 3.8(a), (b), (c), (d) and 5.1, the General Partner is
authorized to cause the Partnership, directly or indirectly, to obtain first
mortgage financing secured by the Qualified Refi Assets.
 
(ii)  The Partners agree that (x) the General Partner is authorized, on behalf
of the Partnership, to engage Inland Mortgage Brokerage Corporation (“IMBC”) in
connection with obtaining first mortgage financing secured by the Qualified Refi
Assets, and (y) the Partnership may pay IMBC an aggregate fee of up to 0.20% of
the original principal amount of each such first mortgage financing secured by a
Qualified Refi Asset less any other fees the Partnership is required to pay to a
mortgage broker for obtaining such first mortgage financing.  For any other debt
financings, the Partnership shall give each of IMBC and Concord Debt Holdings
LLC the opportunity to bid to place or originate such debt financing, but the
Partnership shall not be obligated to use either IMBC or Concord Debt Holdings
LLC for such other debt financing.
 
Section 3.9  Business Opportunity.
 
(a)  LMLP.
 
(i)  General. Each LMLP Affiliated Party may each engage in or possess any
interest in other business ventures of any kind, independently or with others,
including but not limited to the ownership, operation and management of
net-leased real estate assets, except as provided in this Section 3.9(a).
 
(ii)  Exclusivity. During the Acquisition Period and except as provided in
Section 3.9(iii) hereof or with respect to obligations to the existing joint
ventures set forth on Schedule 3.9 hereto, (a) the LMLP Affiliated Parties shall
not acquire, or earn any incentive fee for the management or leasing of, any
net-leased assets which satisfy or comply with all of the “Acquisition
Parameters,” and (b) LMLP GP shall make available for purchase by the
Partnership, and the Partnership shall have the right to purchase pursuant to
Section 3.6 hereof, all net-leased assets offered to or discovered by the LMLP
Affiliated Parties which satisfy or comply with all of the “Required Parameters”
comprising the Acquisition Parameters (collectively, the “Exclusivity Right”).
 
 
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(iii)  Acquisition by LMLP Affiliated Parties. Notwithstanding anything to the
contrary contained in this Agreement, any LMLP Affiliated Party may acquire
(A) the assets LMLP GP is required to offer to the Partnership in accordance
with this Section 3.9(a) only (1) if the asset is owned by an LMLP Affiliated
Party or related (through adjacent or common ownership or constitutes land or
other assets underlying or constituting part of an asset owned by an LMLP
Affiliated Party) to an asset owned by an LMLP Affiliated Party, (2) if the
seller will accept only O.P. Units in exchange therefor, (3) if any LMLP
Affiliated Party is required to offer the asset pursuant to an existing joint
venture arrangement, or (4) after the Executive Committee (including at least
one (1) of the two (2) members appointed by Inland) has disapproved such
acquisition as provided in Section 3.4 hereof and (B) assets that it is not
required to offer to the Partnership under this Section 3.9(a).
 
(iv)  Termination of Exclusivity Right. Notwithstanding anything to the contrary
contained in this Agreement, the Exclusivity Right and the provisions of this
Section 3.9(a) shall terminate on the earlier of (A) the expiration of the
Acquisition Period and (B) at such time as the Executive Committee (including at
least one (1) of the two (2) members appointed by Inland) disapproves, within
any consecutive twelve (12) month period, the lesser of (x) four (4) Proposed
Qualified Assets or Approved Qualified Assets pursuant to this Agreement and (x)
the number (but in no event less than three (3)) of Proposed Qualified Assets
and Approved Qualified Assets requiring an equity investment by the Partnership
of at least $100,000,000.00 assuming 70% debt to the proposed purchase price.
 
(v)  LMLP Existing Joint Ventures. From time to time, upon reasonable written
request from Inland, the LMLP Partners shall provide a schedule of the LMLP
Affiliated Parties’ existing joint ventures’ respective investment criteria and
exclusivity terms.  A current list the LMLP Affiliated Parties’ existing joint
ventures’ respective investment criteria and exclusivity terms is set forth on
Schedule 3.9 hereto.
 
(vi)  LMLP Restrictions.
 
(A)  The LMLP Partners shall cause the LMLP Affiliated Parties not to directly
or indirectly solicit or otherwise attempt to persuade any tenant of any
Qualified Asset to vacate the Qualified Asset to purchase, or relocate to,
another asset that is not a Qualified Asset.
 
(B)  LMLP and its Affiliates shall not discriminate against any Qualified Asset
when making a proposal to any existing or prospective tenant in connection with
the leasing of available space.
 
(C)  In the event that an LMLP Affiliated Party leases space to a then tenant of
a Qualified Asset, LMLP GP, so long as it is the General Partner, shall provide
written notice to Inland of such leasing activity.
 
(b)  Inland.  Inland and any of its Affiliates and related parties may engage in
or possess any interest in other business ventures of any kind, independently or
with others, including but not limited to the ownership, operation and
management of net-leased real estate asset.
 
 
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(c)  Duties and Conflicts.  Subject to LMLP GP’s obligation to present
net-leased real estate assets to the Partnership pursuant to Section 3.6 and
Section 3.9(a) hereof, each Partner recognizes that the other Partners and their
Affiliates have or may have other business interests, activities and
investments, some of which may be in conflict or competition with the business
of the Partnership, and that such Persons are entitled to carry on such other
business interests, activities and investments.  The Partners and their
Affiliates may engage in or possess an interest in any other business or venture
of any kind, independently or with others, on their own behalf or on behalf of
other entities with which they are affiliated or associated, and such Persons
may engage in any activities, whether or not competitive with the Partnership,
without any obligation (except as expressed in Sections 3.6 and 3.9(a)) to offer
any interest in such activities to the Partnership or to any Partner.  Except as
provided in Sections 3.6 or 3.9(a), neither the Partnership nor any Partner
shall have any right, by virtue of this Agreement, in such activities, or the
income or profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper.
 
Section 3.10  Payments to the Asset Manager of the General Partner.
 
(a)  Property Management Fee.  The General Partner shall cause the Partnership
to pay to the Asset Manager (or its designee) pursuant to the Management
Agreement an annual Property Management Fee (“Property Management Fee”) equal to
the sum of (x) three percent (3%) of actual gross revenues for the fiscal year
(or applicable portion thereof) derived from Qualified Assets encumbered by
leases that provide for full recovery of the Property Management Fee from the
tenant (“Gross Revenues”), plus (y) on Qualified Assets where the leases do not
provide for full recovery of the Property Management Fee from the tenant, the
amount recoverable for the fiscal year (or applicable portion thereof) from the
tenants of such Qualified Assets for property management expenses under such
leases (“Recoverable Amounts”), payable monthly.
 
(b)  Partnership Management Fee.  The General Partner shall cause the
Partnership to pay to the Asset Manager pursuant to the Management Agreement an
annual Partnership Management Fee (“Partnership Management Fee”) equal to (x) so
long as LMLP GP is the General Partner, Inland’s Percentage Interest multiplied
by three hundred seventy five thousandths of a percent (0.375%) of the Equity
Capital for a fiscal year (pro rated for partial years), or (y) so long as LMLP
GP is no longer the General Partner, three hundred seventy five thousandths of a
percent (0.375%) of the Equity Capital for a fiscal year (pro rated for partial
years), in either case payable monthly and adjusted as provided herein.  Within
thirty (30) days of the Partnership’s receipt of the annual reports described in
Section 4.3 hereof for a fiscal year, the Asset Manager shall provide to the
Partners a written statement of reconciliation (which the Partners shall have
the right to contest) setting forth (x) the Equity Capital for such fiscal year
(or partial year) and the Partnership Management Fee payable to the Asset
Manager in connection therewith, pursuant to this Agreement, (y) the Partnership
Management Fee already paid by the Partnership to the Asset Manager during such
fiscal year (or partial year), and (z) either the amount owed to the Asset
Manager by the Partnership (which shall be the excess, if any, of the
Partnership Management Fee payable to the Asset Manager for such fiscal year (or
partial year) pursuant to this Agreement over the Partnership Management Fee
actually paid by

 
 
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 the Partnership to the Asset Manager for such fiscal year (or partial year)) or
the amount owed to the Partnership by the Asset Manager (which shall be the
excess, if any, of the Partnership Management Fee actually paid by the
Partnership to the Asset Manager for such fiscal year (or partial year) over the
Partnership Management Fee payable to the Asset Manager for such fiscal year
pursuant to this Agreement).  The Asset Manager or the Partnership, as the case
may be, shall pay to the other the amount owed pursuant to clause (z) above
within five (5) Business Days of the receipt by the Partners of the written
statement of reconciliation described in this Section 3.10(b).
 
In addition, a credit in an amount equal to three hundred seventy five
thousandths of a percent (0.375%) of the Equity Capital for a fiscal year (pro
rated for partial years), less the Partnership Management Fee, as adjusted above
(or the applicable portion thereof), shall accrue and be reserved on the
Partnership books until a Capital Call is made by the General Partner in
accordance with Section 5.1(b) hereof, whereupon the amount of the credit shall
be applied, in whole or in part, to the extent necessary to fund LMLP’s pro rata
shares of such Capital Call and will be treated for purposes of this Agreement
as if each pro rata share of such amount were an actual Capital Contribution
made by the respective LMLP Partner which (1) reduces the respective aggregate
Capital Commitment of each LMLP Partner and (2) gives rise to an entitlement to
allocations (but only out of subsequent Profits), and related distributions, in
amounts that reflect the amounts that would have been allocated and distributed
if such notional capital contributions had constituted actual Capital
Contributions, including a return of such notional capital contributions to LMLP
pursuant to Section 7.1 hereof.
 
(c)  Acquisition Fees.  Inland shall pay the Acquisition Fees in accordance with
the provisions of Section 3.6(g).
 
Section 3.11  Exculpation.
 
(a)  LMLP.  No LMLP Affiliated Party nor or any officer, director, trustee,
shareholder, member, manager, partner, employee, Affiliate or agent of any LMLP
Affiliated Party shall be liable, responsible or accountable in damages or
otherwise to the Partnership or any other Partner for any act or omission on
behalf of the Partnership, in good faith and within the scope of the authority
conferred on LMLP GP as General Partner under this Agreement or otherwise under
this Agreement or the Asset Manager, as the case may be, or by law unless such
act or failure to act (i) is or results in a breach of any representation,
warranty or covenant of any LMLP Partner contained in this Agreement or any
other agreement entered into in connection therewith or related thereto,
(ii) was fraudulent or committed in bad faith or (iii) constituted gross
negligence, willful misconduct or a breach of fiduciary duty.
 
(b)  Inland.  None of Inland, or any officer, director, trustee, shareholder,
member, manager, partner, employee, Affiliate or agent of Inland, or any
Affiliate of Inland shall be liable, responsible or accountable in damages or
otherwise to the Partnership or to any other Partner for any act or omission on
behalf of the Partnership, in good faith and within the scope of authority
conferred on Inland under this Agreement or by law unless such act or failure to
act (i) is or results in a breach of any representation, warranty or covenant of
Inland contained in this Agreement or any other agreement entered into in
connection therewith or

 
 
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related thereto, (ii) was fraudulent or committed in bad faith or
(iii) constituted gross negligence, willful misconduct or a breach of fiduciary
duty.
 
(c)  Survival.  The provisions of this Section 3.12 shall survive any
termination of the Partnership or this Agreement.
 
Section 3.12  Indemnification.
 
(a)  By the Partnership.  The Partnership shall indemnify, defend and hold
harmless any Person (an “Indemnified Party”) who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of any act or omission or alleged act or omission arising out of such
Indemnified Party’s activities as (i) a Partner or an officer, director,
trustee, shareholder, member, manager, partner, employee, Affiliate or agent of
the Partner, (ii) the General Partner or the Asset Manager or an officer,
director, trustee, shareholder, member, manager, partner, employee, Affiliate or
agent of any of them on behalf of the Partnership or in furtherance of the
interest of the Partnership, or (iii) LMLP or any LMLP Affiliated Party, but
only if LMLP GP is no longer the General Partner, that is obligated to enter
into a direct financial obligation (including, without limitation, a
“non-recourse carve-out” guarantee) in connection with the financing of any
Qualified Asset, in each case against personal liability, claims, losses,
damages and expenses for which such Indemnified Party has not been reimbursed by
insurance proceeds or otherwise (including reasonable attorneys’ fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by such Indemnified Party in connection with such action, suit or
proceeding and any appeal therefrom, unless such Indemnified Party (A) acted
fraudulently, in bad faith or with gross negligence or willful misconduct or
(B) by such act or failure to act breached any representation, warranty or
covenant contained in this Agreement, which breach had or has a material adverse
effect on the Partnership or any Partner and, if capable of cure, is not cured
within fifteen (15) days after notice thereof by the aggrieved Partner(s).  Any
indemnity by the Partnership under this Agreement shall be provided out of, and
to the extent of, Partnership revenues and assets only, and no Partner shall
have any personal liability on account thereof.  The indemnification provided
under this Section 3.12 shall (x) be in addition to, and shall not limit or
diminish, the coverage of the Partners or any Affiliates under any insurance
maintained by the Partnership and (y) apply to any legal action, suit or
proceeding commenced by a Partner or in the right of a Partner or the
Partnership.  The indemnification provided under this Section 3.12 shall be a
contract right and shall include the right to be reimbursed for reasonable
expenses incurred by any such Indemnified Party within thirty (30) days after
such expenses are incurred.
 
(b)  By the LMLP Partners.  The LMLP Partners, so long as LMLP GP is the General
Partner, shall indemnify and hold harmless Inland and any Affiliate and related
party or agent thereof from and against any liabilities, claims, losses, damages
and expenses incurred by any such person (including reasonable attorneys’ fees,
judgments, fines and amounts paid in settlement) as a result of any act or
omission by any LMLP Affiliated Party which (i) constitutes or results in a
breach of any representation, warranty or covenant of any LMLP Partner contained
in this Agreement or any other agreement entered into in connection herewith or
related hereto, (ii) was performed or omitted fraudulently or in bad faith or
(iii) constituted gross negligence, willful misconduct or breach of fiduciary
duty.

 
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(c)  By Inland.  Inland, so long as LMLP GP is no longer the General Partner,
shall indemnify and hold harmless the LMLP Affiliated Parties or agent thereof
from and against any liabilities, claims, losses, damages and expenses incurred
by any such person (including reasonable attorneys’ fees, judgments, fines and
amounts paid in settlement) as a result of any act or omission by Inland or any
successor General Partner which (i) constitutes or results in a breach of any
representation, warranty or covenant of Inland or any successor General Partner
contained in this Agreement or any other agreement entered into in connection
herewith or related hereto, (ii) was performed or omitted fraudulently or in bad
faith or (iii) constituted gross negligence, willful misconduct or breach of
fiduciary duty.
 
ARTICLE IV
BOOKS AND RECORDS; REPORTS TO PARTNERS
 
Section 4.1  Books.  The General Partner shall maintain or cause to be
maintained separate, full and accurate books and records of the Partnership, and
any Partner or any authorized representative of any Partner, shall have the
right to inspect, examine and copy the same and to meet with employees of the
General Partner responsible for preparing the same at reasonable times during
business hours and upon reasonable notice.  All policies of the Partnership with
respect to the maintenance of such books and records shall be subject to
approval by all of the Partners.
 
Section 4.2  Monthly and Quarterly Reports.
 
(a)  Monthly Reports.  The General Partner shall prepare and distribute to
Inland within twenty (20) days after the last day of each month a report with
respect to the Partnership, which shall include (i) unaudited financial
statements, consisting of at least an operating statement for the monthly period
and year-to-date showing variances from the Annual Budget portion of the Annual
Plan and (ii) a schedule of aged accounts receivable and accounts payable.
Variances from any line item in the Annual Budget exceeding the greater of One
Hundred Thousand Dollars ($100,000) and ten percent (10%) of the amount
allocated to such budget line item through the end of such month shall be
explained in writing, unless already approved by the Executive Committee
pursuant to Section 3.4 hereof.
 
(b)  Quarterly Reports.  The General Partner shall, no later than the thirtieth
(30th) day after the end of each fiscal quarter, prepare and distribute:
 
(i)  a year-to-date consolidated report with respect to the Partnership (with
the last month of each such report comprised of forecasted, rather than actual,
results), prepared in accordance with generally accepted accounting principles,
consistently applied, including (a) a balance sheet, (b) a profit and loss
statement, (c) a statement of changes in the Partners’ Capital Accounts, (d) a
report briefly describing each variance from the applicable budget line item in
the consolidated Annual Budget portion of the Annual Plan exceeding the greater
of One Hundred Thousand Dollars ($100,000) and ten percent (10%) of the amount
allocated to such budget line item through the date of such report, and (e)
calculations in sufficient  detail to verify the accuracy of all fees and other
amounts paid or payable to the Asset  Manager under the Management Agreement;
 
 
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(ii)  a report with respect to each Qualified Asset, including an operating
statement for the quarter and year-to-date showing each variance from the budget
line items in the Annual Budget portion of the Annual  Plan, and a narrative
describing material changes in property operations, physical condition, capital
expenditures and leasing and occupancy; and
 
(iii)  so long as LMLP GP is the General Partner, such other reports, statements
and information regarding the Partnership and Qualified Assets as Inland may
reasonably request from time to time.
 
Section 4.3  Annual Reports.  The General Partner shall prepare and distribute
to Inland within (x) forty-five (45) days after the end of each fiscal year
draft unaudited financial statements with respect to the Partnership, and (y)
within seventy-five (75) days after the end of each fiscal year audited
financial statements with respect to the Partnership.  Such financial statements
shall be prepared in accordance with generally accepted accounting principles,
consistently applied, and shall be audited at the Partnership’s expense by such
nationally recognized firm of independent certified public accountants approved
by the Executive Committee as provided in Section 3.4 hereof.  All reports
delivered pursuant to this Section 4.3 shall also include unaudited calculations
in sufficient detail to verify the accuracy of all distributions paid by the
Partnership.
 
Section 4.4  Accountants; Tax Returns.  The General Partner shall also engage
such nationally recognized firm of independent certified public accountants
approved by the Executive Committee as provided in Section 3.4 hereof to review,
or to sign as preparer, all federal, state and local tax returns which the
Partnership is required to file.  The General Partner will furnish to each
Partner within one hundred twenty (120) days after the end of each calendar
year, or as soon thereafter as is practicable, a Schedule K-1 or such other
statement as is required by the Internal Revenue Service which sets forth such
Partner’s share of the profits or losses and other relevant fiscal items of the
Partnership for such fiscal year.  If requested by a Partner, the General
Partner shall deliver to such Partner copies of any federal, state and local
income tax returns and information returns which the Partnership is required to
file.
 
Section 4.5  Accounting and Fiscal Year.  The General Partner shall keep the
Partnership books and records on the accrual basis.  The fiscal year of the
Partnership shall end on December 31.
 
Section 4.6  Partnership Funds.
 
(a)  Generally.  The funds of the Partnership shall be deposited into such
account or accounts as are designated by the General Partner.  All withdrawals
from or charges against such accounts shall be made by the General Partner or by
those Persons designated from time to time by the General Partner.
 
(b)  Restrictions on Deposits.  Pending distribution or expenditure in
accordance with the terms of this Agreement, funds of the Partnership may be
invested, in the reasonable discretion of the General Partner, in United States
government

 
 
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obligations, insured obligations which are rated not lower than AA by Standard &
Poor’s or have a comparable rating from a nationally recognized rating agency,
collateralized bank time deposits, repurchase agreements, money market funds,
commercial paper which is rated not lower than P-1, certificates of deposit
which are rated not lower than AA by Standard & Poor’s or have a comparable
rating from a nationally recognized rating agency, banker’s acceptances eligible
for purchase by the Federal Reserve and bonds and other evidences of
indebtedness and preferred stock which are rated not lower than AA by Standard &
Poor’s or are of a comparable credit quality.
 
Section 4.7  Insurance.  The General Partner shall cause the tenant or tenants
of each Qualified Asset to maintain insurance thereon of such types and in such
amounts that are in accordance with the applicable lease.  Unless otherwise
determined by Supermajority Vote of the Executive Committee, the General Partner
shall cause the Partnership to obtain, at the Partnership’s expense, such types
and amounts of insurance that the tenant or tenants of any Qualified Asset are
not required to maintain and that are included within the insurance standards
listed on Schedule 4.7 hereto, as may be revised from time to time by a
Supermajority Vote of the Executive Committee.
 
ARTICLE V
CONTRIBUTIONS
 
Section 5.1  Capital Contributions.
 
(a)  Generally; Percentage Interests.  LMLP shall make an Initial Capital
Contribution to the Partnership by contributing to the Partnership cash in an
amount set forth on Schedule 1 hereto and Contributed Assets pursuant to the
Contribution Agreement having a value set forth on Schedule 1 to the
Contribution Agreement.  Inland shall make an Initial Capital Contribution to
the Partnership by contributing to the Partnership cash in the amount set forth
on Schedule 1 hereto; provided, that Inland shall receive a $250,000 credit to
be applied to its Initial Capital Contribution (from the first amounts otherwise
required to be contributed) as satisfaction of its underwriting fees in
connection with the formation of the Partnership.  Except as provided in this
Section 5.1, (i) no Partner shall be obligated to make any Additional Capital
Contribution or Extraordinary Funding to the Partnership and (ii) any Additional
Capital Contribution or Extraordinary Funding shall be made by the Partners in
proportion to their respective Percentage Interests as determined at the time of
the Capital Call or Extraordinary Call.  The Partners shall have the Percentage
Interests in the Partnership set forth opposite each Partner’s name on
Schedule 1 hereto.
 
The aggregate Purchase Price for all of the Qualified Contribution Assets and
Qualified Sale Assets shall be $940,000,000.00, subject to adjustment in
accordance with the Contribution Agreement, the Purchase Agreement and the
Letter Agreement.  Subject to the Contribution Agreement, the Purchase Agreement
and the Letter Agreement, the Qualified Refi Assets shall all be acquired by the
Partnership on the same date, which date shall be not after March 1,
2008.  Simultaneously with the acquisition of the Qualified Refi Assets, (i)
Inland shall make an attendant Initial Capital Contribution in cash in an amount
equal to the product of 0.85 multiplied by the difference between (x) the
aggregate Purchase Price (as adjusted pursuant to the Contribution Agreement,
Purchase Agreement and the Letter Agreement) of the Qualified

 
 
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Refi Assets and (y) the principal balance of any mortgage financing secured by
the Qualified Refi Assets; and (ii) LMLP shall make an attendant Initial Capital
Contribution in a combination of cash and Contributed Assets in an amount equal
to the product of 0.15 multiplied by the sum of the aggregate Purchase Price (as
adjusted in the Contribution Agreement, the Purchase Agreement and the Letter
Agreement) of the Qualified Refi Assets less the principal balance of any
mortgage financing secured by the Qualified Refi Assets.
 
Subject to the Contribution Agreement, the Purchase Agreement and the Letter
Agreement, the Qualified Assumed Assets shall be acquired by the Partnership,
from time to time, prior to March 1, 2008.  Simultaneously with the acquisition
of a Qualified Assumed Asset, (i) Inland shall make an attendant Initial Capital
Contribution in cash in an amount equal to the product of 0.85 multiplied by the
difference between (x) the Purchase Price (as adjusted pursuant to the Purchase
Agreement and the Letter Agreement) of such Qualified Assumed Asset and (y) the
principal balance of any mortgage financing secured by such Qualified Assumed
Asset and the amount of Preferred Equity allocated to such Qualified Assumed
Asset; and (i) LMLP shall make an attendant Initial Capital Contribution in cash
in an amount equal to the product of 0.15 multiplied by the difference between
the Purchase Price (as adjusted pursuant to the Purchase Agreement and the
Letter Agreement) of such Qualified Assumed Asset less the principal balance of
any mortgage financing secured by such Qualified Assumed Asset and the amount of
Preferred Equity allocated to such Qualified Assumed Asset.
 
In the event that the Qualified Refi Assets have been acquired by the
Partnership and LMLP has made a Capital Contribution in excess of 15% of the
aggregated Capital Contributions of the Partners, then the General Partner shall
cause the amount of LMLP's Capital Contribution that is in excess of 15% of the
aggregate Capital Contributions of the Partner’s to accrue and be reserved on
the Partnership books as a credit toward satisfying LMLP's share of any future
Capital Call and such credit shall be treated as if it were an actual capital
contribution for purposes of determining corresponding allocations and
distributions.
 
Notwithstanding anything to the contrary, if (i) the acquisition of the
Qualified Refi Assets does not take place prior to March 1, 2008, then the
Partnership shall not be required to acquire any assets hereunder whatsoever
and, at the election of any Partner the Partnership shall be dissolved in
accordance with Article IX of hereof, or (ii) the weighted average interest rate
on the mortgage financing to be secured by the Qualified Refi Assets is greater
than 7.00% or is less than 6.00%, then the Partnership shall not be required to
acquire any assets hereunder whatsoever and, at the election of any Partner, the
Partnership shall be dissolved in accordance with Article IX hereof.  No
Qualified Assumed Asset shall be acquired by the Partnership (i) unless and
until the Partnership has acquired all of the Qualified Refi Assets in
accordance with the Purchase Agreement and the Contribution Agreement or (ii)
after March 1, 2008.
 
(b)  Additional Capital Contributions.  In the event the Partnership requires
capital to acquire an Approved Qualified Asset during the Acquisition Period,
the General Partner shall be entitled to require, by written notice to the
Partners, an additional Capital Contribution (an “Additional Capital
Contribution”) from the Partners in an amount not in excess of the amount
necessary to acquire such Approved Qualified Asset plus all reasonable and
customary costs and expenses incurred by the Partnership in connection

 
 
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therewith; provided that (x) each Partner shall be required to contribute the
amount determined by multiplying such Partner’s Percentage Interest by the
amount of such Additional Capital Contribution and (y) no Partner shall be
required to contribute the amount described in clause (x) above if such amount,
when added to the total of all of such Partner’s prior Capital Contributions,
exceeds such Partner’s Capital Commitment.  If the General Partner shall provide
to the Partners a written notice calling for an Additional Capital Contribution
(any such notice, a “Capital Call”) setting forth the total amount of such
Additional Capital Contribution, the amount of each Partner’s share of such
Additional Capital Contribution as determined pursuant to clause (x) above and
the due date on which the General Partner is requiring that such Additional
Capital Contribution be contributed to the Partnership, which due date shall be
at least ten (10) Business Days after the date on which the Partners actually
received the Capital Call and not more than one (1) Business Day prior to the
scheduled closing of the acquisition of such Approved Qualified Asset; each
Partner shall contribute its share of such Additional Capital Contribution in
immediately available funds on or before such due date.  If the acquisition of
an Approved Qualified Asset fails to close and the General Partner determines
there will not be a closing within fifteen (15) days of the date of the
originally scheduled closing, the General Partner (x) shall inform the Partners
of such failure and return each Partner’s share of the Additional Capital
Contribution made with respect thereto and (y) each Partner’s Capital
Contribution shall be restored to the level thereof immediately prior to such
Additional Capital Contribution.  If, at any time after the Partners have each
contributed their entire Capital Commitment, the Partners elect to contribute
additional capital, the Partners shall contribute such additional capital in
accordance with their respective Percentage Interests.
 
(c)  Extraordinary Fundings.  In the event the Partnership requires additional
funds to cover any costs and expenses for which the Partnership has insufficient
funds, including tenant improvements and capital expenditures, the General
Partner may make a written request therefor (any such request, an “Extraordinary
Call”) setting forth the amount requested and the due date therefor, which due
date shall be at least ten (10) Business Days after the date on which the
Partners actually received the Extraordinary Call; provided that (i) any amount
requested shall not exceed 5% of the Purchase Price of the Qualified Asset if
such funds are to be used for a specific Qualified Asset or (ii) the aggregate
of all amounts requested shall not exceed $20,000,000 if such funds are to be
used for the Partnership generally (such amount, the “Extraordinary Call Cap”);
provided further that no Partner shall be required to contribute any capital to
the Partnership in excess of such Partner’s Capital Commitment.  Each Partner
shall be required to fund an amount equal to the amount determined by
multiplying such Partner’s Percentage Interest by the amount set forth in such
approved Extraordinary Call (each such Extraordinary Call required to be funded
hereunder, an “Extraordinary Funding”).  Each Extraordinary Funding shall be
made as a supplementary capital contribution by the Partners to the Partnership
(any such contribution, an “Extraordinary Capital Contribution”). Each Partner
shall contribute its share of such Extraordinary Capital Contribution in
immediately available funds on or before the due date in the Extraordinary Call.
 
(d)  Failure to Fund an Additional Capital Contribution or Extraordinary
Funding.  If any Partner (a “Defaulting Partner”) fails to make any Additional
Capital Contribution or Extraordinary Funding which it is required to make under
this Section 5.1 by the due date therefor, then any non-defaulting Partner shall
not be permitted to make such Additional Capital Contribution or Extraordinary
Funding, but may, at its election,

 
 
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make a loan to the Partnership (a “Priority Loan”) in an amount equal to the
amount that Additional Capital Contribution or Extraordinary Funding
required.  Upon election to make a Priority Loan, (i) the non-defaulting Partner
shall loan to the Partnership the amount of the Defaulting Partner’s share of
the Additional Capital Contribution or Extraordinary Funding, as the case may
be, as determined in accordance with Section 5.1(b) or Section 5.1(c), as the
case may be, (ii) such Priority Loan shall bear interest at a rate of 18% per
annum cumulative compounded from the date such Priority Loan is made, (iii) the
Annual Budget portion of the Annual Plan shall be amended to reflect such
Priority Loan, and (iv) such Priority Loan (including interest accrued thereon)
shall be repaid from Net Cash Flow from Operations or Net Cash from Sales or
Refinancing prior to any distribution.
 
Section 5.2  Preferred Equity Capital Contribution.  Upon the acquisition of a
Preferred Equity Asset, LMLP shall make a Preferred Equity Capital Contribution
in the amount determined by LMLP; subject to Section 3.8(a) hereof; provided
that the aggregate Preferred Equity Capital Contribution shall not exceed
$25,000,000.  The General Partner shall update Schedule 5.2 hereto to reflect
the Preferred Equity Capital Contribution and any repayment of Preferred Equity
pursuant to Section 3.3(b) or Section 7.1 hereof.  
 
Section 5.3  Return of Capital Contribution.  Except as otherwise expressly
provided in this Agreement, (a) the Capital Contribution of a Partner will be
returned to that Partner only in the manner and to the extent provided in
Article VII and Article IX hereof and (b) no Partner shall have any right to
demand or receive the return of its Capital Contribution.  In the event the
Partnership is required or compelled to return any Capital Contribution, no
Partner shall have the right to receive assets other than cash.  No Partner
shall be entitled to interest on its Capital Contribution or Capital Account
notwithstanding any disproportion therein as between the Partners.
 
Section 5.4  Liability of the Limited Partners.  No Limited Partner shall have
any personal liability to the Partnership, to any Partner, to the creditors of
the Partnership or to any other Person for any debt, liability or obligation of
the Partnership.  No Limited Partner shall be required to contribute funds or
capital to the Partnership in excess of its Capital Commitment although Limited
Partners may at their option contribute funds in excess of their respective
Capital Commitments pursuant to Section 5.1(c) and Section 5.1(d) hereof.
 
Section 5.5  No Third Party Beneficiaries.  The foregoing provisions of this
Article V are not intended to be for the benefit of any creditor of the
Partnership or any other Person, and no creditor of the Partnership or any other
Person may rely on the commitment of any Partner to make any Capital
Contribution.  Additional Capital Contributions and Extraordinary Fundings are
not payable unless and until the conditions set forth in Section 5.1 hereof have
been satisfied, and no creditor of the Partnership or any other Person shall
have, or be given, any right to cause a Capital Call or Extraordinary Call to be
given by the General Partner.
 
 
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ARTICLE VI
MAINTENANCE OF CAPITAL ACCOUNTS;
ALLOCATION OF PROFITS AND LOSSES
FOR BOOK AND TAX PURPOSES
 
Section 6.1  Capital Accounts.
 
(a)  Generally:  Credits to Capital Accounts.  A Capital Account shall be
established and maintained for each Partner.  Initially, the Capital Account of
each Partner shall be credited with each Partner’s respective Initial Capital
Contribution.  Thereafter, each Partner’s Capital Account shall be credited with
any Additional Capital Contributions or Extraordinary Capital Contributions made
or contributed by such Partner and such Partner’s allocable share of Profits,
any individual items of income and gain allocated to such Partner pursuant to
the provisions of this Article VI, and the amount of additional cash, or the
Fair Market Value of any Partnership asset (net of any liabilities assumed by
the Partnership and liabilities to which the asset is subject), contributed to
the Partnership by such Partner or deemed contributed to the Partnership by such
Partner in accordance with Regulations Section 1.704-1(b)(2)(iv)(c).
 
(b)  Debits to Capital Account.  The Capital Account of each Partner shall be
debited with the Partner’s allocable share of Losses, any individual items of
expenses and loss allocated to such Partner pursuant to the provisions of this
Article VI, the amount of any cash distributed to such Partner and the Fair
Market Value of any Partnership asset (net of any liabilities assumed by the
Partner and liabilities to which the asset is subject) distributed to such
Partner or deemed distributed to such Partner in accordance with Regulations
Section 1.704-1(b)(2)(iv)(c).
 
(c)  Capital Account of Transferee.  In the event that any Percentage Interest
of a Partner is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred Percentage Interest in such Partner.
 
(d)  Adjustments of Book Value.  In the event that the Book Value of any
Partnership asset is adjusted as described in the definition of “Book Value”,
the Capital Accounts of all Partners shall be adjusted in accordance with
Regulation Section 1.704-1(b)(2)(iv)(f) or Regulation
Section 1.704-1(b)(2)(iv)(m), as applicable, to reflect such adjustment.
 
(e)  Compliance with Regulations.  The foregoing provisions and the other
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulation Section 1.704-1(b) and shall be interpreted
and applied in a manner consistent with such Regulation.  In the event that the
General Partner shall determine that it is prudent to modify the manner in which
the Capital Accounts, or any debits or credits thereto, are computed in order to
comply with such Regulation, the General Partner may make such modification;
provided, however, that if such modification constitutes a Material
Modification, it shall become effective only upon the consent of any Partner to
whom such modification would constitute a Material Modification.
 
 
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Section 6.2  Profits and Losses.
 
(a)  Allocation.  For each Partnership taxable year or portion thereof, Profit
and Loss shall be allocated (after all allocations pursuant to Section 6.3
hereof have been made) in such a manner so as to cause the Partially Adjusted
Capital Accounts of the Partners to equal, as nearly as possible, their
respective Target Accounts.
 
(b)  Adjustments to “Profits” and “Losses”.  When used in this Agreement,
“Profits” and “Losses” shall mean, for each fiscal year or other period, an
amount equal to the Partnership’s taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
and otherwise in accordance with the methods of accounting followed by the
Partnership for federal income tax purposes, with the following adjustments:
 
(i)  any income of the Partnership that is exempt from federal income tax and
not otherwise taken into account in computing Profits or Losses shall be added
to such taxable income or loss;
 
(ii)  any items that are specially allocated pursuant to this Agreement shall
not be taken into account in computing Profits or Losses;
 
(iii)  any expenditure of the Partnership described in Section 705(a)(2)(B) of
the Code (or treated as such under Regulation Section 1.704-1(b)(2)(iv)(i)) and
not otherwise taken into account in computing Profits or Losses pursuant to this
Definition shall be deducted from such taxable income or loss;
 
(iv)  any depreciation, amortization and/or cost recovery deductions with
respect to any asset shall be deemed to be equal to the Book Depreciation
available with respect to such asset;
 
(v)  the computation of all items of income, gain, loss and deduction shall be
made without regard to any basis adjustment under Section 743 of the Code;
 
(vi)  in the event the Book Value of any Partnership asset is adjusted pursuant
to the definition of Book Value, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses; and
 
(vii)  gain or loss resulting from any disposition of assets with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Book Value of the asset disposed of,
notwithstanding that the adjusted tax basis of such asset differs from its Book
Value.
 
Section 6.3  Regulatory Allocations.
 
(a)  Minimum Gain Chargeback.  If there is a net decrease in Partnership Minimum
Gain during any fiscal year, each Partner shall be specially allocated items

 
 
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of Partnership income and gain for such fiscal year (and, if necessary,
subsequent fiscal years) in an amount equal to such Partner’s share of the net
decrease in Partnership Minimum Gain, as determined under Regulations
Section 1.704-2(g).  Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each Partner
pursuant thereto.  The items to be so allocated shall be determined in
accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2).  This
Section 6.3(a) is intended to comply with the “minimum gain chargeback”
requirements of Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith.
 
(b)  Chargeback Attributable to Partner Nonrecourse Debt.  If there is a net
decrease in Partner Nonrecourse Debt Minimum Gain during any fiscal year
attributable to a Partner Nonrecourse Debt, each Partner with a share of Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt at
the beginning of such year shall be specially allocated items of income and gain
for such fiscal year (and, if necessary, for subsequent fiscal years) in an
amount equal to such Partner’s share of the net decrease in Partner Nonrecourse
Debt Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4) and (5).  Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto.  The items to be so
allocated shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2).  This Section 6.3(b) is intended to comply with
the “minimum gain chargeback” requirements of Regulations Section 1.704-2(i)(4)
and shall be interpreted consistently therewith.
 
(c)  Qualified Income Offset.  If any Partner unexpectedly receives any
adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) which results in or increases an
Adjusted Capital Account Deficit for the Partner, such Partner shall be
allocated items of income and book gain in an amount and manner sufficient to
eliminate such Adjusted Capital Account Deficit or increase therein as quickly
as possible; provided, that an allocation pursuant to this Section 6.3(c) shall
be made if and only to the extent that such Partner would have an Adjusted
Capital Account Deficit after all other allocations provided in this Article VI
have been tentatively made as if this Section 6.3(c) were not in the
Agreement.  This Section 6.3(c) is intended to constitute a “qualified income
offset” as provided by Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
 
(d)  Partner Nonrecourse Deductions.  Items of Partnership loss, deduction or
Section 705(a)(2)(B) expenditures that are attributable to a Partner Nonrecourse
Debt (“Partner Nonrecourse Deductions”) shall be allocated among the Partners
who bear the Economic Risk of Loss for such Partner Nonrecourse Debt in the
ratio in which they share Economic Risk of Loss for such Partner Nonrecourse
Debt.  This provision is to be interpreted in a manner consistent with the
requirements of Regulations Section 1.704-2(b)(4) and (i)(1).
 
(e)  Limitation on Allocation of Net Loss.  To the extent any allocation of
Losses or other items of loss or deduction would cause or increase an Adjusted
Capital Account Deficit as to any Partner, such allocation shall be reallocated
among the other Partners in accordance with their respective Percentage
Interests, subject to the limitations hereof.
 
 
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(f)  Curative Allocation.  The allocations set forth in this Section 6.3 (the
“Regulatory Allocations”) are intended to comply with certain requirements of
the applicable Regulations promulgated under Code
Section 704(b).  Notwithstanding any other provision of this Article VI, the
Regulatory Allocations shall be taken into account in allocating other operating
Profits, Losses and other items of income, gain, loss and deduction to the
Partners for Capital Account purposes so that, to the extent possible, the net
amount of such allocations of Profits, Losses and other items shall be equal to
the amount that would have been allocated to each Partner if the Regulatory
Allocations had not occurred.
 
Section 6.4  Allocation of Tax Items for Tax Purposes.
 
(a)  Generally.  Subject to Sections 1.704-1(b)(4)(i) and 1.704-1(b)(2)(iv)(m)
of the Regulations and except as otherwise provided in this Article VI,
allocations of income, gain, loss, deduction and credit for federal, state and
local tax purposes shall be allocated to the Partners in the same manner and
amounts as the book items corresponding to such tax items are allocated for
Capital Account purposes.
 
(b)  Recapture Income.  Notwithstanding Section 6.4(a) hereof, if there is a
gain on any sale, exchange or other disposition of Partnership assets and all or
a portion of such gain is characterized as ordinary income by virtue of the
recapture rules of Code Section 1245 or 1250, or under the corresponding
recapture rules of state or local income tax law, as the case may be, then, to
the extent possible, such recapture income for United States and state and local
tax purposes shall be allocated to the Partners in the ratio that they were
allocated Tax Depreciation previously taken and allowed with respect to the
Partnership assets being sold or otherwise disposed of.
 
(c)  Section 754 Adjustments.  Notwithstanding Section 6.4(a) hereof, any
increase or decrease in the amount of any items of income, gain, loss, deduction
or credit for tax purposes attributable to an adjustment to the basis of
Partnership assets made pursuant to a valid election or deemed election under
Sections 732(d), 734, 743, and 754 of the Code, and any increase or decrease in
the amount of any item of credit or tax preference attributable to any such
adjustment, shall be allocated to those Partners entitled thereto under such
law.  Such items shall be excluded in determining the Capital Accounts of the
Partners, except as otherwise provided by Section 1.704-1(b)(2)(iv)(m) of the
Regulations.
 
(d)  Nonrecourse Deductions.  Any “Nonrecourse Deductions” as defined in
Treasury Regulations Section 1.704-2(c) for any fiscal year or other period
shall be specially allocated as items of loss in the manner provided in Treasury
Regulations Section 1.704-2(j)(1)(ii).  Depreciation deductions shall be treated
as Nonrecourse Deductions with respect to a property only to the extent that
such deductions reduce the property’s tax basis below the amount of the
Nonrecourse Liability encumbering the property.
 
(e)  Sharing of Excess Nonrecourse Liabilities.  For purposes of
Section 1.752-3(a)(3) of the Regulations, the excess Nonrecourse Liabilities of
the Partnership shall be allocated one hundred (100%) percent to LMLP.  In the
event it is determined that Inland would be allocated less than its
proportionate share of depreciation in any year as a result

 
 
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of the allocation of liabilities to LMLP, the Partners agree to reallocate the
liabilities in accordance with Percentage Interests.
 
(f)  Section 704(c).  Notwithstanding Section 6.4 hereof, if the Partnership
owns or acquires Section 704(c) Property, or if the Tax Matters Partner makes an
election referred to in the definition of “Book Value” herein, then, solely for
tax purposes and not for Capital Account purposes, Tax Depreciation, and any
gain or loss, attributable to such Section 704(c) Property shall be allocated
between or among the Partners in a manner that takes into account the variation
between such Book Value and such adjusted tax basis, using the traditional
method of allocation, in accordance with the principles of Code Section 704(c)
and the Regulations promulgated thereunder and such method set forth in
Regulations Section 1.704-3(b).
 
Section 6.5  Tax Matters Partner.  The General Partner is hereby designated as
the “tax matters partner” for the Partnership as such term is defined in
Section 6231(a)(7) of the Code (the “Tax Matters Partner”), and all federal,
state and local tax audits and litigation shall be conducted under the direction
of the General Partner.  All expenses incurred with respect to any tax matter
which does or may affect the Partnership, including but not limited to expenses
incurred in connection with Partnership level administrative or judicial tax
proceedings, shall be paid out of Partnership assets, whether or not included in
an Annual Plan.  The Tax Matters Partner shall, promptly upon receipt thereof,
forward to each Partner a copy of any correspondence relating to the Partnership
received from the Internal Revenue Service or any other tax authority which
relates to matters that are of material importance to the Partnership and/or the
Partners.  The Tax Matters Partner shall promptly advise each Partner in writing
of the substance of any material conversation held with any representative of
the Internal Revenue Service which relates to an audit or administrative
proceeding relating to a tax return of the Partnership.  
 
Section 6.6  Adjustments.
 
(a)  Generally.  Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss and deduction and any other allocations not
otherwise provided for shall be divided among the Partners in the same
proportions as they share Profits and Losses, as the case may be, for the year.
 
(b)  Upon Transfer or Change in Percentage Interest.   If any Percentage
Interest is transferred in any fiscal year in accordance with this Agreement, or
if a Partner’s Percentage Interest changes during any fiscal year, all Profits
and Losses attributable to such Percentage Interest for such fiscal year shall
be divided and allocated in accordance with an interim closing of the books as
of the date of a transfer or change.
 
(c)  Amendments to this Article VI.  The General Partner is specifically
authorized by each Partner, upon the advice of the accountants or legal counsel
for the Partnership, to amend this Article VI to comply with any Regulations
with respect to the distributions and allocations of the Partnership and any
such amendment shall become effective; provided, however, that if such amendment
constitutes a Material Modification for any Partner,

 
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then such amendment shall become effective only upon the express written consent
of such Partner.
 
ARTICLE VII
DISTRIBUTIONS
 
Section 7.1  Cash Available for Distributions.
 
(a)  Generally.  Notwithstanding anything herein to the contrary, no
distribution shall be made until all Priority Loans are paid in full.
 
(i)  Following (x) the satisfaction of accrued and unpaid interest on Priority
Loans, in proportion to the outstanding Priority Loans, if any, and (y) the
satisfaction of outstanding principal balances on Priority Loans, in proportion
to the outstanding Priority Loans, if any, the General Partner shall cause the
Partnership to distribute all Net Cash Flow from Operations quarterly on the
15th of January, April, July and October, as follows:
 
(A)  first, to LMLP in an amount equal to the Preferred Equity Return;
 
(B)  second, to Inland until such time as Inland has received cumulative
distributions in an amount sufficient to achieve a 9% Cash-On-Cash Return
(“Inland Priority Return”);
 
(C)  third, to LMLP, until such time as LMLP has received cumulative
distributions in an amount sufficient to achieve a 9% Cash-On-Cash Return (“LMLP
Priority Return”);
 
(D)  fourth, to Inland until all Capital Contributions made by Inland have been
returned (for the purposes of this Section 7.1(a)(i)(D), Capital Contributions
shall include Acquisition Fees (if any) paid by Inland);
 
(E)  fifth, to LMLP until all Capital Contributions made by LMLP or credited on
LMLP’s behalf have been returned (for the purposes of this Section 7.1(a)(i)(E),
Capital Contributions shall include 17.65% of the amount of the Acquisition Fees
(if any) paid by Inland); and
 
(F)  thereafter, (x) so long as LMLP GP is the General Partner, (1) 65% to
Inland and (2) 35% to LMLP, or (y) so long as LMLP GP is no longer the General
Partner, (2) 85% to Inland and (2) 15% to LMLP.
 
(ii)  Following (w) the satisfaction of accrued and unpaid interest on Priority
Loans, in proportion to the outstanding Priority Loans, if any, and (x) the
satisfaction of outstanding principal balances on Priority Loans, in proportion
to the outstanding Priority Loans, if any, the General Partner shall cause the
Partnership to distribute Net Cash from Sales and Financings as soon as
practicable after the receipt of such Net Cash from Sales or Refinancings, as
follows:
 
 
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(A)  first, in the case of Net Cash from Sales and Financings related to a
Preferred Equity Asset, to LMLP in an amount equal to the Preferred Equity
allocated to such Preferred Equity Asset, together with any accrued and unpaid
Preferred Equity Return in respect of such allocated Preferred Equity;
 
(B)  second, to Inland to the extent of any unpaid Inland Priority Return;
 
(C)  third, to LMLP to the extent of any unpaid LMLP Priority Return;
 
(D)  fourth, to Inland until all Capital Contributions made by Inland have been
returned (solely for the purposes of this Section 7.1(a)(i)(D), Capital
Contributions shall include Acquisition Fees (if any) paid by Inland);
 
(E)  fifth, to LMLP until all Capital Contributions made by LMLP or credited on
LMLP’s behalf have been returned (solely for the purposes of this Section
7.1(a)(i)(E), Capital Contributions shall include 17.65% of the amount of the
Acquisition Fees (if any) paid by Inland); and
 
(F)  thereafter, (x) so long as LMLP GP is the General Partner, (1) 65% to
Inland and (2) 35% to LMLP, or (y) so long as LMLP GP is no longer the General
Partner, (2) 85% to Inland and (2) 15% to LMLP.
 
(iii)  In the event the Partnership fails to (i) make a distribution to LMLP in
an amount equal to the Preferred Equity Return for such quarter when such
distribution is required to be made hereunder or (ii) repay any allocated
portion of the Preferred Equity when such repayment is required hereunder, and
such failure remains uncured for 10 days following such event, then LMLP shall
be entitled to the Enhanced Preferred Equity Return following such date unless
and until such failure is cured.
 
(iv)  Distributable Cash shall not be used to acquire Qualified Assets or make
capital improvements on Qualified Assets unless approved in accordance with
Section 3.4 hereof.
 
(b)  Withholdings.  The General Partner is authorized to withhold from
distributions or allocations to any Partner (or, in the event there are
insufficient funds, require such Partner to contribute to the Partnership) and
to pay over to any federal, state or local government any amounts required to be
withheld pursuant to the Code or any provisions of any other federal, state or
local law with respect to any payment, distribution or allocation to the
Partnership or such Partner and shall allocate any such amounts to such Partner
with respect to which such amount was withheld. All amounts so withheld
(including such amounts contributed by the Partner) shall be treated as amounts
distributed to such Partner, and will reduce the amount otherwise distributable
to such Partner, pursuant to this Article VII for all purposes under this
Agreement.
 
(c)  Restrictions on Distributions.  Notwithstanding anything to the contrary
contained in this Section 7.1, the Partnership shall not make a distribution to
the

 
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extent that, at the time of such distribution and after giving effect to such
distribution, all liabilities of the Partnership (other than liabilities to the
Partners on account of their Capital Contributions or liabilities for which the
recourse of creditors is limited to specific assets of the Partnership) shall
exceed the Fair Market Value of the Partnership assets, except that the Fair
Market Value of Qualified Asset that is subject to a liability for which the
recourse of the creditors is limited shall be included in the Partnership assets
only to the extent that the Fair Market Value of such Qualified Asset exceeds
that liability.
 
ARTICLE VIII
TRANSFER; REMOVAL OF GENERAL PARTNER
 
Section 8.1  Prohibition on Transfers and Withdrawals by Partners.  
 
(a)  The Partners shall be prohibited from, directly or indirectly,
transferring, assigning, pledging or hypothecating their respective interests
(or any part of such interests) in the Partnership and any attempted transfer
shall be void ab initio; provided, that the following transfers shall be
permitted:
 
(i)  assignments of a Partner’s interest in the Partnership (but only its entire
interest) to an Affiliate of such Partner, but only upon fifteen (15) days
written notice to the other Partners;
 
(ii)  transfers up to 49% of the ownership interests in a Partner, so long as
the management of such Partner immediately prior to such transfer possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of such Partner following such transfer, whether through
the ability to exercise voting power, by contract or otherwise;
 
(iii)  transfers by inheritance, devise, bequest or by operation of law upon the
death of a natural person; and
 
(iv)  sales, transfers or issuance of shares of capital stock in LXP and
securities convertible into capital stock in LXP, provided a class of capital
stock in LXP is listed on a nationally recognized stock exchange or market.
 
(b)  Except as provided in this Section 8.1 and in Section 8.2,Section 11.1 and
Section 11.2 hereof, the Partners shall be prohibited from withdrawing from the
Partnership.  If any Partner withdraws from the Partnership, it shall be and
remain liable for all obligations and liabilities incurred by it as a Partner,
and shall be liable to the Partnership and the other Partners for all
indemnifications set forth herein and for any liabilities, losses, claims,
damages, costs and expenses (including reasonable attorneys’ fees) incurred by
the Partnership as a result of any withdrawal in breach of this Agreement.
 
Section 8.2  Removal of LMLP GP as General Partner.  Upon a Removal Event,
Inland shall have the right to remove the General Partner for a period of sixty
(60) days following the occurrence of a Removal Event, and if such right is
timely exercised, Inland shall have the right to appoint either Inland or an
Affiliate of Inland as the new

 
 
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General Partner.  Such removal of LMLP GP shall be effective ten (10) Business
Days after receipt by LMLP GP of written notice from Inland.  Upon such removal,
notwithstanding anything in this Agreement or the Management Agreement to the
contrary, (a) LMLP GP shall cease to be a general partner and a partner of the
Partnership; (b) two of the three members of the Executive Committee appointed
by LMLP shall be removed and replacements shall be appointed by Inland; (c) the
Management Agreement shall terminate; and (d) either Inland or one of its
Affiliates shall be appointed the General Partner of the Partnership and this
Agreement shall be amended to reflect such appointment.  
 
ARTICLE IX
TERMINATION
 
Section 9.1  Dissolution.  The Partnership shall dissolve and commence winding
up and liquidating upon the first to occur of any of the following
(collectively, the “Liquidating Events”):
 
(i)  the reduction to cash or cash equivalents (other than purchase money notes
obtained by the Partnership from the sale of Qualified Asset) of the last
remaining Qualified Asset;
 
(ii)  the agreement in writing by the Partners to dissolve the Partnership;
 
(iii)  the entry of a decree of judicial dissolution of the Partnership pursuant
to Section 17-802 of the Act;
 
(iv)  the election of any Partner to dissolve the Partnership on the seventh
anniversary of the date first set forth above or any anniversary thereafter;
 
(v)  all of the Qualified Assets have been sold to LMLP, or its designees, or to
Inland, or its designees, pursuant to the exercise of the Buy/Sell as provided
in Section 11.2 hereof;
 
(vi)  the Bankruptcy of any LMLP Partner or Inland;
 
(vii)  the election of LMLP to dissolve the Partnership after (A) LMLP GP is no
longer the General Partner and (B) a breach by Inland or the General Partner of
(x) Articles VI or VII hereof, which remains uncured for thirty (30) days
following receipt of notice of such breach from LMLP, or (y) Section 12.19
hereof.
 
(viii)  the election of Inland to dissolve the Partnership after the removal of
LMLP GP as the General Partner upon a Removal Event.
 
Section 9.2  Termination.  In all cases of dissolution of the Partnership, the
business of the Partnership shall be wound up and the Partnership terminated as
promptly as practicable thereafter, and each of the following shall be
accomplished:
 
 
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(i)  The Liquidator shall cause to be prepared a statement setting forth the
assets and liabilities of the Partnership as of the date of dissolution, a copy
of which statement shall be furnished to each Partner;
 
(ii)  The Qualified Assets and assets of the Partnership shall be liquidated by
the Liquidator as promptly as possible, but in an orderly and businesslike and
commercially reasonable manner, consistent with maximizing the price to be
received.  The Liquidator in its reasonable discretion shall determine whether
to sell any Qualified Asset at a public or private sale, for such price and on
such terms as the Liquidator shall determine in its sole discretion.  The
Liquidator may, in the exercise of its good faith business judgment and if
commercially reasonable, determine not to sell a portion of the Qualified Assets
and assets of the Partnership, in which event such Qualified Assets and assets
shall be distributed in kind pursuant to clause (iv) below;
 
(iii)  Any Profit or Loss realized by the Partnership upon the sale or other
disposition of its assets pursuant to Section 9.2(ii) above shall be allocated
to the Partners as required by Article VI hereof; and
 
(iv)  The proceeds of sale and all other assets of the Partnership shall be
applied and distributed as follows and in the following order of priority:
 
(A)  To the payment of the debts and liabilities of the Partnership and the
expenses of Liquidation;
 
(B)  To the setting up of any reserves which the Liquidator shall reasonably
determine to be necessary for contingent, unliquidated or unforeseen liabilities
or obligations of the Partnership or the Partners arising out of or in
connection with the Partnership.  Such reserves may, in the discretion of the
Liquidator, be paid over to a national bank or national title company selected
by it and authorized to conduct business as an escrowee to be held by such bank
or title company as escrowee for the purposes of disbursing such reserves to
satisfy the liabilities and obligations described above, and at the expiration
of such period as the Liquidator may reasonably deem advisable, distribute any
remaining balance in the manner set forth below; and
 
(C)  The balance, if any, to the Partners in accordance with Sections 7.1(a)(ii)
and (iii) hereof.
 
No payment or distribution in any of the foregoing categories shall be made
until all payments in each prior category shall have been made in full.  If the
payments due to be made in any of the foregoing categories exceed the remaining
assets available for such purpose, such payment shall be made to the Persons
entitled to receive the same prorata in accordance with the respective amount
due them.
 
Payments described in clause (iv) above must be made in cash.  The Partners
shall continue to share profits, losses and other tax items during the period of
liquidation in the same proportions as before dissolution.
 
 
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Section 9.3  Certificate of Cancellation.  Upon completion of the distribution
of the Partnership’s assets as provided in this Article IX and the completion of
the winding-up of the affairs of the Partnership, the Partnership shall be
terminated, and the Liquidator shall cause the filing of a certificate of
cancellation of the certificate of limited partnership in the office of the
Secretary of State of the State of Delaware in accordance with the Act and shall
take all such other actions as may be necessary to terminate the Partnership in
accordance with the Act and shall take such other actions as may be necessary to
terminate the Partnership’s registration in any other jurisdictions where the
Partnership is registered or qualified to do business.
 
Section 9.4  Acts in Furtherance of Liquidation.  Each Partner or former
Partner, upon the request of the Liquidator, shall promptly execute, acknowledge
and deliver all documents and other instruments as the Liquidator shall
reasonably request to effectuate the proper dissolution and termination of the
Partnership, including the winding up of the business of the Partnership.
 
ARTICLE X
REPRESENTATIONS OF THE PARTNERS
 
Section 10.1  Representations of Inland.  Inland hereby represents and warrants
to the LMLP Partners and the Partnership as follows:
 
(i)  this Agreement constitutes the valid and binding agreement of Inland,
enforceable against Inland in accordance with its terms, subject as to
enforcement of bankruptcy, insolvency and other similar laws affecting the
rights of creditors and to general principles of equity;
 
(ii)  Inland has been duly formed and is validly existing as a limited liability
company in good standing under the laws of the State of Delaware, with all
requisite power and authority to enter into this Agreement, to carry out the
provisions and conditions hereof and to perform all acts necessary or
appropriate to consummate all of the transactions contemplated hereby;
 
(iii)  Inland has all requisite power and authority to enter into this
Agreement, to carry out the provisions and conditions hereof and to perform all
acts necessary or appropriate to consummate all of the transactions contemplated
hereby and no further action by Inland is necessary to authorize the execution
or delivery of this Agreement;
 
(iv)  this Agreement has been duly and validly executed and delivered by Inland
and the execution, delivery and performance hereof by Inland does not and will
not (i) require the approval of any other Person, or (ii) contravene or result
in any breach of or constitute any default under, or result in the creation of
any lien upon Inland’s assets under, any indenture, mortgage, loan agreement,
lease or other agreement or instrument to which Inland is a party or by which
Inland or any of its assets is bound;
 
(v)  the formation of the Partnership does not and the consummation of the
transactions contemplated herein will not result in any violation of the
organizational documents of Inland;
 
 
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(vi)  Inland has the financial capacity to perform its obligations under this
Agreement;
 
(vii)  no finder’s, broker’s or similar fee or commission has been paid or shall
be paid by Inland to any individual or organization in connection with the
formation of the Partnership; provided, however, that Inland may pay fees to
related parties;
 
(viii)  there is no action, suit or proceeding pending or, to its knowledge,
threatened against Inland that questions the validity or enforceability of this
Agreement or, if determined adversely to it, would materially adversely affect
the ability of Inland to perform its obligations hereunder;
 
(ix)  Inland is not the subject of any Bankruptcy;
 
(x)  to Inland’s knowledge, Inland has not received from any governmental agency
any notice of violation of any law, statute or regulation which would have a
material adverse effect on the Partnership;
 
(xi)  to Inland’s knowledge, Inland is not in default in the performance or
observation of any obligation under any agreement or instrument to which it is a
party or by which it or any of its assets is bound, which default would
individually or in the aggregate with other defaults materially adversely affect
the business or financial condition of Inland or the Partnership; and
 
(xii)  Inland (which for the purposes of this Section 10.2(x) includes its
partners, members, principal stockholders owning more than ten percent (10%) of
the outstanding capital stock of Inland, and any other constituent entities) (1)
has not been designated as a “specifically designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website,
http://www.treas.gove/ofac/t11sdn.pdf or at any replacement website or other
replacement official publication of such list, and (2) is currently in
compliance with the regulations of the Office of Foreign Asset Control of the
Department of the Treasury and any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action relating thereto.
 
Section 10.2  Representations of the LMLP Partners.  Each LMLP Partner
represents and warrants to Inland and the Partnership as follows:
 
(i)  this Agreement constitutes the valid and binding agreement of such LMLP
Partner enforceable against such LMLP Partner in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other similar laws
affecting the rights of creditors and to general principles of equity;
 
(ii)  LMLP has been duly formed and is validly existing as a limited partnership
in good standing under the laws of the State of Delaware, with all requisite
power and authority to enter into this Agreement, to carry out the provisions
and conditions

 
 
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hereof and to perform all acts necessary or appropriate to consummate all of the
transactions contemplated hereby;
 
(iii)  LMLP GP has been duly formed and is validly existing as a limited
liability company in good standing under the laws of the State of Delaware, with
all requisite power and authority to enter into this Agreement, to carry out the
provisions and conditions hereof and to perform all acts necessary or
appropriate to consummate all of the transactions contemplated hereby;
 
(iv)  such LMLP Partner has all requisite power and authority to enter into this
Agreement, to carry out the provisions and conditions hereof and to perform all
acts necessary or appropriate to consummate all of the transactions contemplated
hereby and no further action by such LMLP Partner is necessary to authorize the
execution or delivery of this Agreement;
 
(v)  this Agreement has been duly and validly executed and delivered by such
LMLP Partner and the execution, delivery and performance hereof by such LMLP
Partner does not and will not (x) require the approval of any other Person or
(y) contravene or result in any breach of or constitute any default under, or
result in the creation of any lien upon such LMLP Partner’s assets under, any
indenture, mortgage, loan agreement, lease or other agreement or instrument to
which such LMLP Partner or any LMLP Affiliated Party is a party or by which such
LMLP Partner or any of its assets is bound;
 
(vi)  to such LMLP Partner’s knowledge, such LMLP Partner is not in default in
the performance or observation of any obligation under any agreement or
instrument to which it is a party or by which it or any of its assets is bound,
which default would individually or in the aggregate with other defaults
materially adversely affect the business or financial condition of such LMLP
Partner or the Partnership;
 
(vii)  the formation of the Partnership does not and the consummation of the
transactions contemplated herein will not result in any violation of the
organizational documents of such LMLP Partner;
 
(viii)  no finder’s, broker’s or similar fee or commission has been paid or
shall be paid to any individual or organization in connection with the formation
of the Partnership except for fees payable to Wachovia Capital Markets, LLC,
which shall be paid by LMLP and not the Partnership;
 
(ix)  there is no action, suit or proceeding pending or, to its knowledge,
threatened against such LMLP Partner that questions the validity or
enforceability of this Agreement or, if determined adversely to it, would
materially adversely affect the ability of such LMLP Partner to perform its
obligations hereunder;
 
(x)  such LMLP Partner is not the subject of any Bankruptcy;
 
(xi)  to such LMLP Partner’s knowledge, such LMLP Partner has not received from
any governmental agency any notice of violation of any law,

 
 
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statute or regulation which would have a material adverse effect on the
financial condition of such LMLP Partner or of the Partnership;
 
(xii)  each LMLP Partner has the financial capacity to perform its obligations
under this Agreement; and
 
(xiii)  each LMLP Partner (which for the purposes of this Section 10.2(x)
includes its partners, members, principal stockholders owning more than ten
percent (10%) of the outstanding capital stock of such LMLP Partner, and any
other constituent entities) (1) has not been designated as a “specifically
designated national and blocked person” on the most current list published by
the U.S. Treasury Department Office of Foreign Assets Control at its official
website, http://www.treas.gove/ofac/t11sdn.pdf or at any replacement website or
other replacement official publication of such list, and (2) is currently in
compliance with the regulations of the Office of Foreign Asset Control of the
Department of the Treasury and any statute, executive order (including the
September 24, 2001, Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism),
or other governmental action relating thereto.
 
ARTICLE XI
SPECIAL PARTNER RIGHTS AND OBLIGATIONS
 
Section 11.1  Right of First Offer.  
 
(a)  At any time after the Rights Trigger Date, if either Inland or LMLP (except
if the Rights Trigger Date occurs because of an Event of Default by an LMLP
Partner) wishes to sell their Percentage Interest or cause the Partnership to
sell any Qualified Asset (for the purposes of this section, such selling
Partner, the “ROFO Offering Partner”), the ROFO Offering Partner shall deliver a
written notice (a “ROFO Notice”) to the Other Partner (the “ROFO Responding
Partner)”) specifying to the ROFO Responding Partner in writing the terms and
conditions (the “ROFO Terms”) and the price (the “ROFOOffer Price”) at which the
ROFO Offering Partner would be willing to sell their entire Percentage Interest
or the ROFO Offering Partner would be willing to permit the Partnership to sell
any of the Qualifying Assets, as the case may be, to the ROFO Responding
Partner.  Any ROFO Notice shall reference the invocation of this Section 11.1
and shall constitute an irrevocable offer from the ROFO Offering Partner to the
ROFO Responding Partner to sell its entire Percentage Interest or permit the
sale by the Partnership of the stated Qualifying Assets, as the case may be, at
the ROFO Offer Price. If the ROFO Responding Partner does not elect to buy the
ROFO Offering Partner’s entire Percentage Interest or the stated Qualifying
Assets, as the case may be, within forty-five (45) days following receipt of the
ROFO Notice by delivering an election notice to the ROFO Offering Partner (the
“ROFO Response Notice”), subject to Sections 11.1(b) and (c), the ROFO Offering
Partner shall be permitted to sell their entire Percentage Interest or the
stated Qualifying Assets on behalf of the Partnership, as the case may be, to a
bona fide third party pursuant to an arm’s length transaction on terms not more
favorable to such bona fide third party than the ROFO Terms and for an amount
equal to or greater than the ROFO Offer Price (the “Required Third Party Price
and Terms”).  In the event the ROFO Responding Partner fails to timely deliver a
ROFO Response Notice, subject to Sections 11.1(b) and (c), the ROFO Offering

 
 
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Partner shall be permitted to sell its entire Percentage Interest or any of the
Qualifying Assets on behalf of the Partnership, as the case may be, for the
Required Third Party Price and Terms.
 
(b)  In the event the ROFO Offering Partner is permitted to sell its entire
Percentage Interest or the stated Qualifying Assets on behalf of the
Partnership, as the case may be, pursuant to Section 11.1(a) above, the ROFO
Offering Partner shall have the right for a period of six (6) months after the
date of the ROFO Notice (the “Third Party Sale Period”) to sell its entire
Percentage Interest or the stated Qualifying Assets on behalf of the
Partnership, as the case may be, to a bona fide third party for and on the
Required Third Party Price and Terms. In the event the ROFO Offering Partner
fails to consummate the sale of its entire Percentage Interest or the stated
Qualifying Assets on behalf of the Partnership, as the case may be, for the
Required Third Party Price prior to the expiration of the Third Party Sale
Period, the ROFO Offering Partner’s right to sell its entire Percentage Interest
or the stated Qualifying Assets on behalf of the Partnership, as the case may
be, to a bona fide third party will be revoked until such time as the ROFO
Offering Partner has repeated the process set forth in Section 11.1(a) and
provided the ROFO Responding Partner with the right to make its election
pursuant to Section 11.1(a) above.
 
(c)  Any exercise of the provisions of this Section 11.1 is also subject to the
provisions of Section 11.3 below.
 
Section 11.2  Buy/Sell.
 
(a)  Generally.  After the Rights Trigger Date, Inland or LMLP (except if the
Rights Trigger Date occurs because of an Event of Default by an LMLP Partner),
as specified therein (the “Buy/Sell Offering Partner”), may provide the Other
Partner (the “Buy/Sell Responding Partner”) with notice (the “Buy/Sell Notice”)
of a price (the “Buy/Sell Offer Price”) that the Buy/Sell Offering Partner, or
its designated Affiliate(s), is willing to pay to purchase (A) those Qualified
Assets which the Buy/Sell Offering Partner, or its designated Affiliate(s),
desire to purchase if the Buy/Sell Offering Partner, or its designated
Affiliate(s), desire to purchase less than all of the Qualified Assets from the
Partnership, or (B) all of the Qualified Assets if the Buy/Sell Offering
Partner, or its designated Affiliate(s), desire to purchase all of the Qualified
Assets (provided that an offer to purchase all of the Qualified Assets shall be
implemented as a purchase by the Buy/Sell Offering Partner, or its designated
Affiliate(s), of the Percentage Interests of the Buy/Sell Responding Partner)
(such Qualified Assets or such Percentage Interests, as the case may be, the
“Buy/Sell Asset”).  The Buy/Sell Notice shall include, as an attachment thereto,
a bona fide proposed purchase and sale agreement on terms reasonably customary
for the sale of real estate assets or for the sale of partnership interests in a
limited partnership that owns primarily real estate assets (the “Offered
Agreement”).  Upon receipt of the Buy/Sell Notice, the Buy/Sell Responding
Partner shall have forty-five (45) days to provide to the Buy/Sell Offering
Partner a notice (the “Buy/Sell Response Notice”) specifying the Buy/Sell
Responding Partner’s election either, (i) if the Buy/Sell Asset comprises less
than all of the Qualified Assets, to cause the Partnership to sell the Buy/Sell
Asset to the Buy/Sell Offering Partner, or its designated Affiliate(s), at the
Buy/Sell Offer Price pursuant to the Offered Agreement or (y) to purchase (or
have a designated Affiliate(s) purchase) the Buy/Sell Asset from the Partnership
for a purchase price equal to the Buy/Sell Offer Price and on substantially the
same terms and conditions as provided in the Offered Agreement, or,

 
 
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(ii) if the Buy/Sell Asset comprises all of the Qualified Assets, purchase the
Percentage Interest of the Buy/Sell Offering Partner or sell its Percentage
Interest to the Buy/Sell Offering Partner, or its designated Affiliate(s), for a
purchase price equal to the amount the Buy/Sell Responding Partner would receive
under Section 9.2 hereof if the Partnership assets were sold at the Buy/Sell
Offer Price and the Partnership were liquidated and dissolved (the “Buy/Sell
Responding Interest Price”) and on substantially the same terms and conditions
as provided in the Offered Agreement.  Any Buy/Sell Notice made with respect to
all of the Qualified Assets in connection with an Event of Default shall
supersede and render of no further effect any Buy/Sell Notice or ROFO Notice
(x) made with respect to less than all of the Qualified Assets and (y) to which
no Buy/Sell Response Notice or ROFO Response Notice, as the case may be, has
been provided to the Buy/Sell Offering Partner or ROFO Offering Partner, as the
case may be.
 
(b)  Buy/Sell Responding Partner’s Election to Purchase.  If the Responding
Partner timely delivers a Buy/Sell Response Notice that specifies the Buy/Sell
Responding Partner’s election to purchase the Buy/Sell Asset, as described in
Section 11.2(a) above, then the Buy/Sell Responding Partner shall have up to
seventy-five (75) days from the date of the delivery of the Buy/Sell Response
Notice to close the purchase of the Buy/Sell Asset on substantially the same
terms and conditions as contained in the Offered Agreement.
 
(c)  Buy/Sell Responding Partner’s Election not to Purchase.  If the Buy/Sell
Responding Partner timely delivers a Buy/Sell Response Notice that specifies the
Buy/Sell Responding Partner’s election not to purchase the Buy/Sell Asset, or if
the Buy/Sell Responding Partner fails to deliver a timely Buy/Sell Response
Notice, then (i) if the Buy/Sell Asset comprises less than all of the Qualified
Assets, the General Partner shall cause the Partnership to proceed to close the
acquisition of the Buy/Sell Asset at the Buy/Sell Offer Price in accordance with
the terms and conditions of the Offered Agreement, provided, however, that such
closing must take place within the seventy-five (75) day period beginning on the
date of delivery of the Buy/Sell Response Notice, or, (ii) if the Buy/Sell Asset
comprises all of the Qualified Assets, the Buy/Sell Offering Partner shall
purchase the Percentage Interests of the Buy/Sell Responding Partner within the
seventy-five (75) day period described in clause (i) above, for the Buy/Sell
Responding Interest Price.  In determining the amount of the Buy/Sell Responding
Interest Price, it will be assumed that no reserves will be required pursuant to
Section 9.2 hereof.
 
Section 11.3  Provisions Applicable to Right of First Offer and Buy/Sell
 
(a)  The Purchasing Partner shall deliver to a mutually acceptable escrow agent
a non-refundable cash deposit within forty-five (45) days of the Responding
Partner’s actual or deemed notice in an amount equal to the lesser of (i) five
percent (5%) of the Offer Price, as applicable, or (ii) $1,000,000 (the
“Deposit”) to secure the Purchasing Partner’s obligations hereunder.
 
(b)  Closing of any transfer pursuant to Section 11.1 or Section 11.2 above
(“Closing”) shall occur on the thirtieth (30th) day following the date of the
escrow agent's receipt of the Purchasing Partner’s deposit as contemplated by
Section 11.3(b) above (or, if such day is not a Business Day, the next
succeeding Business Day) (the “Closing Date”), at

 
 
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the principal place of business of the Partnership, or at such other time and
place as may be mutually agreed upon by the Purchasing Partner and the Selling
Partner, and (unless otherwise agreed to by the Purchasing Partner and the
Selling Partner) shall be on a cash basis.  At such Closing: (i) the Selling
Partner shall convey all of its Percentage Interest in the Partnership, and, if
applicable, all of their debt claims against the Partnership, and warrant that
such interests and claims are free of all adverse claims and encumbrances
(unless otherwise agreed upon by the Purchasing Partner and the Selling
Partner); (ii) the Purchasing Partner shall pay the Selling Partner the Offer
Price, less a credit for the Deposit (which shall be delivered by the escrow
agent to the Selling Partner and the amount thereof credited against the Offer
Price), and as adjusted by customary closing prorations and customary closing
costs, in cash; and (iii) the Selling Partner, the Purchasing Partner and the
Partnership shall execute and deliver such other documents as may be appropriate
to effect, evidence and perfect the transaction.
 
(c)  Should the Purchasing Partner fail to close the transactions elected
pursuant to Section 11.1 or Section 11.2 above prior to the Closing Date, the
Selling Partner, as its exclusive remedies in the circumstances, (i) shall be
entitled to receive from the escrow agent, as liquidated damages for such
failure, the Deposit deposited pursuant to Section 11.3(b) of this Agreement,
(ii) shall have the right for a period of twelve (12) months after the scheduled
Closing Date (the “Default Sale Period”) to acquire the Purchasing Partner’s
Percentage Interest or interest in the stated Qualified Assets, as the case may
be, for 95% of the Offer Price, and (iii) the Purchasing Partner’s rights
pursuant to Section 11.1 and 11.2 hereof shall be suspended for a period of
twelve (12) months after the scheduled Closing Date.
 
(d)  In connection with a transfer pursuant to Sections 11.1 or 11.2, the
Purchasing Partner may designate an Affiliate or Affiliates to acquire the
Selling Partner’s Percentage Interests or interests in the stated Qualified
Assets, as the case may be, in which event such Affiliate(s) shall acquire such
Percentage Interest or interests in the stated Qualified Assets, as the case may
be, but no such designation or acquisition shall relieve the Purchasing Partner
(as determined without regard to this Section 11.3(e)) from any obligation under
this Article XI.
 
(e)  Each of Inland and LMLP shall have the right to exercise either the Right
of First Offer pursuant to Section 11.1 above or the Buy/Sell pursuant to
Section 11.2 above (such Partner being the “Initiating Partner”); provided,
however, that upon any Initiating Partner’s exercise of either of these
provisions, the Other Partner may not again trigger the provisions of either
Section 11.1 or 11.2 until the termination of all procedures and timeframes
pursuant to the Initiating Partner’s chosen provision.
 
(f)  As a condition to any transfer by either Inland or LMLP of its Percentage
Interest or the stated Qualified Assets by the Partnership, as the case may be,
pursuant to either

 
 
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Section 11.1 or Section 11.2 of this Agreement, the Selling Partner must be
released at the closing from any indemnities, guaranties or other credit
enhancements granted by such Selling Partner on behalf of the Partnership to any
third party relating to the interest being transferred.
 
(g)  As a condition to any transfer by Inland of its Percentage Interest or the
stated Qualified Assets by the Partnership, as the case may be, pursuant to
either Section 11.1 or Section 11.2 of this Agreement, any Preferred Equity
relating to the property that is the subject of the transfer, together with
accrued and unpaid Preferred Equity Return, shall be distributed to LMLP.
 
(h)  If either Inland or LMLP initiates a legal action with respect to any
exercise of the other Partner’s rights under this Article XI, the losing Partner
shall pay all attorneys’ fees and court costs arising in connection with such
legal action.
 
(i)  Each Partner shall bear its own costs, such as due diligence expenses and
consultants’ and attorneys’ fees, incurred in connection with its exercise of,
or response to, any rights under this Article XI.
 
ARTICLE XII
GENERAL PROVISIONS
 
Section 12.1  Notices.
 
(a)  Generally.  All notices, demands, approvals, consents or requests provided
for or permitted to be given pursuant to this Agreement must be in writing.
 
(b)  Manner of Notice.  All notices, demands, approvals, consents and requests
to be sent to the Partnership or any Partner pursuant to the terms hereof shall
be deemed to have been properly given or served, if personally delivered, sent
by recognized messenger or next day courier service, or sent by United States
mail, telex or facsimile transmission to the addresses or facsimile numbers
listed below, and will be deemed received, unless earlier received:  (a) if sent
by express, certified or registered mail, return receipt requested, when
actually received or delivery refused; (b) if sent by messenger or courier, when
actually received; (c) if sent by telex or facsimile transmission, on the date
sent, so long as a confirming notice is sent by messenger or courier or by
express, certified, registered, or first-class mail; (d) if delivered by hand,
on the date of delivery; and (e) if sent by first-class mail, seven days after
it was mailed.  Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice, demand or request sent.

 
If to the Partnership:
Net Lease Strategic Assets Fund L.P.
c/o Lexington Realty Trust
One Penn Plaza, Suite 4015
New York, New York 10119-4015
Attention:  Chief Executive Officer
Fax No.  (212) 594-6600
   
with a copy to:
Inland American (Net Lease) Sub, LLC
c/o Inland American Real Estate Trust, Inc.
2901 Butterfield Road
Oak Brook, Illinois 60523
Attention:
Fax No.:  (630)

 
 
 
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If to the Partnership:
Net Lease Strategic Assets Fund L.P.
c/o Lexington Realty Trust
One Penn Plaza, Suite 4015
New York, New York 10119-4015
Attention:  Chief Executive Officer
Fax No.  (212) 594-6600
   
with a copy to:
Inland American (Net Lease) Sub, LLC
c/o Inland American Real Estate Trust, Inc.
2901 Butterfield Road
Oak Brook, Illinois 60523
Attention:
Fax No.:  (630)
       
If to either LMLP Partner:
c/o Lexington Realty Trust
One Penn Plaza, Suite 4015
New York, New York 10119-4015
Attention:  Chief Executive Officer
Fax No.  (212) 594-6600
   
with a copy of any notice to:
Post, Heymann & Koffler LLP
Wing A, Suite 211
Two Jericho Plaza
Jericho, New York 11753
Attention:  David Heymann, Esq.
Fax No.:  (516) 433-2777
   
If to Inland:
Inland American (Net Lease) Sub, LLC
c/o Inland America Real Estate Trust, Inc.
2901 Butterfield Road
Oak Brook, Illinois 60523
Attention: Lori Foust and Scott Wilton
Fax No.:  (630)
   
and a copy of any
notices to:
Levenfeld Pearlstein LLC
2 North LaSalle, Suite 1300
Chicago, Illinois 60602
Attention:  Marc Joseph and Russell Shapiro
Fax No.:  (312) 346-8434

 
(c)  Right to Change Addresses.  A Partner shall have the right from time to
time and at any time during the term of this Agreement to change its notice
address or addresses by giving to the Other Partners at least ten (10) Business
Days’ prior written notice thereof in the manner provided by this Section 12.1.
 
Section 12.2  Governing Laws.  This Agreement and the obligations of the
Partners hereunder shall be interpreted, construed and enforced in accordance
with the laws of the State of Delaware without regard to its choice of law
provisions.  Except as otherwise provided herein, the rights and obligations of
the Partners and the administration and termination of the Partnership shall be
governed by the Act.
 
Section 12.3  Entire Agreement.  This Agreement (including the exhibits and
schedules hereto) contains the entire agreement between the parties, supercedes
any prior agreements or understandings between them and may not be modified or
amended in any manner other than pursuant to Section 12.12 hereof.
 
Section 12.4  Waiver.  No consent or waiver, express or implied, by any Partner
to or of any breach or default by any other Partner in the performance by the
other Partner of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such other Partner of the same or any other obligations of such other Partner
hereunder.  Failure on the part of any Partner to complain of any act or failure
to act of any of the other Partners or to declare any of the other Partners in
default, irrespective of how long such failure continues, shall not constitute a
waiver by such

 
 
 
59

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Partner of its rights hereunder.  No custom, practice or course of dealings
arising among the Partners in the administration hereof shall be construed as a
waiver or diminution of the right of any Partner to insist upon the strict
performance by any other Partner of the terms, covenants, agreements and
conditions herein contained.
 
Section 12.5  Validity.  If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other Persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
 
Section 12.6  Terminology; Captions.  All personal pronouns used in this
Agreement, whether used in the masculine, feminine, or neuter gender, shall
include all other genders; the singular shall include the plural, and vice versa
and shall refer solely to the parties signatory hereto except where otherwise
specifically provided.  Titles of Articles, Sections, Subsections, Schedules and
Exhibits are for convenience only, and neither limit nor amplify the provisions
of the Agreement itself, and all references herein to Articles, Sections,
Subsections, Schedules and Exhibits shall refer to the corresponding Articles,
Sections, Subsections, Schedules and Exhibits of this Agreement unless specific
reference is made to such Articles, Sections, Subsections, Schedules and
Exhibits of another document or instrument.  Any use of the word “including”
herein shall, unless the context otherwise requires, be deemed to mean
“including without limitation”.
 
Section 12.7  Remedies Not Exclusive.  Except as otherwise provided herein, the
rights and remedies of the Partnership and of the Partners hereunder shall not
be mutually exclusive, i.e., the exercise of one or more of the provisions
hereof shall not preclude the exercise of any other provisions hereof.  Each of
the Partners confirms that damages at law may be an inadequate remedy for a
breach or threatened breach of this Agreement and agrees that in the event of a
breach or threatened breach of any provision hereof, the respective rights and
obligations hereunder shall be enforceable by specific performance, injunction
or other equitable remedy but nothing herein contained is intended to, nor shall
it, limit or affect any rights or rights at law or by statute or otherwise of
any party aggrieved as against the other for breach or threatened breach of any
provision hereof, it being the intention by this section to make clear the
agreement of the Partners that the respective rights and obligations of the
Partners hereunder shall be enforceable in equity as well as at law or
otherwise.
 
Section 12.8  Action by the Partners.  No approval, consent, designation or
other action by a Partner shall be binding upon such Partner unless the same is
in writing and executed on behalf of such Partner by a duly authorized
representative of such Partner.
 
Section 12.9  Further Assurances.  Each of the Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as may
be required or useful to carry out the intent and purpose of this Agreement and
as are not inconsistent with the terms hereof.
 
 
60

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Section 12.10  Liability of the Limited Partners.  Each Limited Partner’s
exposure to liabilities hereunder is limited to its interest in the
Partnership.  No Limited Partner shall be personally liable for the expenses,
liabilities, debts, or obligations of the Partnership.
 
Section 12.11  Binding Effect.  Except as otherwise provided in this Agreement,
every covenant, term, and provision of this Agreement shall be binding upon and
inure to the benefit of the Partners and their respective successors,
transferees, and assigns.
 
Section 12.12  Amendments.  Except as otherwise provided in this Agreement, this
Agreement may not be amended without the written consent of all the Partners.
 
Section 12.13  Counterparts.  This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original, but
all such counterparts together shall constitute but one and the same instrument;
signature and acknowledgment pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature and
acknowledgement pages are physically attached to the same document.  This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and delivery to each of the Partners of a fully
executed original counterpart of this Agreement.
 
Section 12.14  Waiver of Partition.  Each of the Partners hereby irrevocably
waives any and all rights (if any) that it may have to maintain any action for
partition of any of the Qualified Assets to be acquired.
 
Section 12.15  No Third Party Beneficiaries.  Supplementing Section 5.4 hereof,
nothing in this Agreement, expressed or implied, is intended to confer any
rights or remedies upon any Person, other than the Partners and, subject to the
restrictions on assignment contained herein, their respective successors and
assigns.
 
Section 12.16  Expenses. Each party hereto shall pay all of its own legal and
accounting fees and expenses incurred in connection with the formation of the
Partnership and the preparation and negotiation of this Agreement and the
agreements ancillary hereto.
 
Section 12.17  Jurisdiction; Venue. Each party hereto hereby irrevocably and
unconditionally (a) agrees that any action, suit or other legal proceeding
brought in connection with or relating to this Agreement or any matter
contemplated hereby shall be brought exclusively in a court of competent
jurisdiction located in New Castle County, Delaware, whether a state or federal
court, and shall not be brought in any court or forum outside New Castle County,
Delaware; (b) consents and submits to, and agrees that it will not assert (by
way of motion, as a defense or otherwise) that it is not subject to, personal
jurisdiction in connection with any such action, suit or proceeding in any such
court; and (c) waives to the fullest extent permitted by law, and agrees that it
will not assert (by way of motion, as a defense or otherwise), any claim that
the laying of venue of any such action, suit or proceeding in any such court is
improper or that any such action, suit or proceeding brought in any such court
was

 
61

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brought in an inconvenient forum or should be stayed by reason of the pendency
of some other action, suit or other legal proceeding in a court or forum other
than any such court.
 
Section 12.18  Jury Waiver. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, AND AGREES THAT
IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING IN CONNECTION WITH
OR RELATING TO THIS AGREEMENT OR ANY MATTER CONTEMPLATED HEREBY.
 
Section 12.19  REIT Provisions.
 
(a)  The General Partner and the Partnership shall use commercially reasonable
efforts to cause the Partnership to operate as if it were subject to the real
estate investment trust (“REIT”) rules of the Code described below, except as
otherwise permitted by prior written consent of the Partners:
 
(i)  the "75 percent gross income test" set forth in Section 856(c)(3) of the
Code and the "95 percent gross income test" set forth in Section 856(c)(2) of
the Code; and
 
(ii)   the gross assets tests set forth in Section 856(c) of the Code: (A) the
"75 percent asset test" set forth in Section 856(c)(4)(A) of the Code, (B) the
"25 percent asset test" set forth in Section 856(c)(4)(B)(i) of the Code, (C)
the "20 percent value limitation" set forth in Section 856(c)(4)(B)(ii) of the
Code, (D) the "5 percent value limitation" set forth in Section
856(c)(4)(B)(iii)(I) of the Code and (E) the "10 percent vote and value
limitations" set forth in Sections 856(c)(4)(B)(iii)(II) and (III) of the Code.
 
For purposes of the foregoing tests, any ”mezzanine” loans secured by an equity
interest in an entity and any interest therefrom shall not be treated as
satisfying such tests unless such loans and interest are in substantial
compliance with the requirements of Revenue Procedure 2003-65, except as
otherwise permitted by prior written consent of the Partners.
 
(b)  The General Partner and the Partnership shall use commercially reasonable
efforts to cause the Partnership not to dispose of any real property in a
transaction that would be treated as a "prohibited transaction" within the
meaning of Section 857(b)(6)(B)(iii) of the Code, unless (i) the transaction
qualifies for the safe harbor, set forth in Section 857(b)(6)(C) of the Code,
applied to the Partnership as if the Partnership were subject to Section
857(b)(6), taking into account any other “safe harbor” transactions engaged in
by the respective Partner in determining whether seven sales has occurred during
the year, including any such transactions engaged in by a joint venture,
partnership or limited liability company in which such Partner invests (which
information such Partner will provide to the General Partner and Partnership
upon written request), (ii) the transaction is required under this Agreement,
(iii) the property is disposed of in connection with or in lieu of foreclosure,
(iv) the property is transferred in a tax free exchange under the Code, (v) the
Partners consent or (vi) the Executive Committee approves such transaction by a
Supermajority Vote.

 
62

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(c)  The General Partner and the Partnership shall use commercially reasonable
efforts to cause the Partnership to make distributions to the Partners in
compliance with the “90% distribution requirement” of Section 857(a)(1) of the
Code, provided that the General Partner and the Partnership shall not be in
violation of this Section 12.19(c) if:
 
(i)   the Partnership makes the distributions required by Articles 7 and 9 of
this Agreement, and
 
(ii)   if the distributions required by Articles 7 and 9 of this Agreement are
insufficient to satisfy the 90% distribution requirement, the General Partner
and Partnership shall
 
(A)   notify the Partners of the insufficiency,
 
(B)  (B) notify the Partners of whether the Partnership is fully leveraged to
the extent permitted by the debt and preferred equity ratio set forth in Section
3.8(a) of the Agreement (75%), and
 
(C)  (C) (1) if the Partnership’s debt and preferred equity ratio is below the
permitted threshold (75%), the General Partner shall not be required to incur
debt to make additional distributions unless a Partner requests it, in which
case the General Partner and the Partnership shall use commercially reasonable
efforts to cause the Partnership to incur additional debt on commercially
reasonable terms in order to make such additional distributions to the
requesting Partner and (2) if the Partnership’s debt and preferred equity ratio
is at the maximum permitted (75%), the General Partner shall not be required to
incur debt to make additional distributions unless both LMLP and Inland consent,
in which case the General Partner and the Partnership shall use commercially
reasonable efforts to cause the Partnership to incur additional debt on
commercially reasonable terms in order to make such additional distributions to
both Partners.
 
If an amount otherwise available for distribution pursuant to Article 7 of the
Agreement is used to acquire an Approved Qualified Asset or fund a capital
expenditure approved by a Supermajority Vote of the Executive Committee or
consented to by the distributee Partner, such Partner’s share of such
distribution shall be treated as distributed to the Partner for purposes of
satisfying this Section 12.19(c).
 
(d)  Without limiting the foregoing, the General Partner and the Partnership
shall take such other reasonable steps as shall be requested in writing in good
faith by each Partner and its ultimate Parent entity (Inland Real Estate Trust,
Inc. in the case of Inland and Lexington Realty Trust in the case of LMLP),
which the requesting Partner and Parent believe in good faith is necessary in
order for the Parent (and, in the case of LMLP, LMLP) to continue to qualify as
a REIT (determined assuming that, without regard to its investment in the
Partnership, such ultimate Parent entity (or LMLP) otherwise would qualify as a
REIT) and no other reasonable steps or action could be taken by the requesting
Partner or Parent (in lieu of the Partnership taking any requested steps) to
enable the Parent to so qualify.
 
(e)  Notwithstanding anything to the contrary in this Agreement, in no event
shall the General Partner or Partnership have any liability to a Partner or

 
 
63

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Affiliate with respect to its failure to qualify as a REIT so long as the
General Partner and Partnership have acted in good faith and used commercially
reasonable efforts to satisfy the obligations set forth in this Section 12.19.

 

 
 [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
 
 
64

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  IN WITNESS WHEREOF, this Agreement is executed effective as of the date first
set forth above.
 
LMLP GP
 
LMLP GP LLC

By: /s/ T. Wilson Eglin
Name: T. Wilson Eglin
Title: President
 
LMLP
 
THE LEXINGTON MASTER LIMITED PARTNERSHIP

By: Lex GP-1 Trust, its general partner

By: /s/ T. Wilson
Eglin                                                                
Name: T. Wilson Eglin
Title: President
 
INLAND
 
INLAND AMERICAN (NET LEASE) SUB, LLC

By: Inland American Real Estate Trust, Inc.
 
By: _/s/ Lori Foust_____________________
      Name: Lori Foust
      Title:  Treasurer
 
The undersigned hereby unconditionally and irrevocably
guarantees the obligations of Inland American (Net Lease) Sub,
LLC under Sections 3.10(c), 3.11, 3.12 and 5.1:
 
INLAND AMERICAN REAL ESTATE TRUST, INC.
 
By: _/s/ Lori Foust_____________________
      Name: Lori Foust
      Title: Treasurer

 
65

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SCHEDULE 1

 
Names and Capital Commitments of Partners
 
 
Partner Name
 
Capital Commitment
 
Initial Capital Contribution
Percentage Interest
 
       
The Lexington Master Limited Partnership
$22,500,000.00
$[________]
15.00%
       
LMLP GP LLC
$0.00
$0.00
0.00%
       
Inland American (Net Lease) Sub, LLC
$127,500,000.00
$[________]
85.00%

 

 
Qualified Contribution Assets

Property (defined in Contribution Agreement)
           
Primary Tenant
Address
Existing Indebtedness
Contributed Asset (defined in Contribution Agreement)
         
Fee Interest
American Electric Power
420 Riverport Road, Kingport, Tennessee
--
           
Fee Interest
Entergy Services, Inc.
5201 W. Barraque Street, Pine Bluff, Arkansas
--
           
Fee Interest
Lithia Motors
101 Creger, Fort Collins, Colorado
--
           
Fee Interest
Raytheon Company
1200 Jupiter Road, Garland, Texas
--
100% interest in Chader Associates LLC and 60% limited partnership interest in
Eastgar Associates Limited Partnership
Ground Lease
United Technologies Corp.
120 S.E. Parkway Drive, Franklin, Tennessee
--
           
Fee Interest
Wachovia Bank, N.A.
265 Lehigh Street, Allentown, Pennsylvania
--
 

 
Schedule 1-1

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

 

SCHEDULE 2

 
Acquisition Parameters

Required Parameters

·  
Single tenant, net leased, commercial real estate properties in the office,
retail and industrial sectors.

 
·  
Real estate properties that have a specialized use, design or other feature
providing for higher initial capitalization rates than those of more
conventional net leased assets.

 
·  
Not less than $15,000,000 nor greater than $75,000,000 in total acquisition
costs.

 
·  
Real estate properties that are fully occupied and rent bearing at purchase.

 
·  
Tenants are solvent.

 
·  
Real estate properties that have strategic value and/or are mission critical to
tenant’s business.

 
 
Schedule 1-2

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

 

SCHEDULE 2.8

 
Qualified Sale Assets
 
Property (defined in Purchase Agreement)
               
Primary Tenant
Address
Existing Indebtedness
Sold Assets (defined in Purchase Agreement)
LMLP Sale Affiliate
           
Fee interest
Advance PCS, Inc.
2401 Cherahala Boulevard, Knoxville, Tennessee
$5,054,329.68
100% membership interest in Lexington Knoxville Manager LLC
Lexington Tennessee Holdings L.P.
Fee interest
American Golf Corporation
11411 N. Kelly Avenue, Oklahoma City, Oklahoma
--
100% membership interest in LSAC Oklahoma City Manager LLC and 100 limited
partnership interest in LSAC Oklahoma L.P.
LSAC Operating Partnership L.P.
Leasehold interest
ASML Lithography Holding NV
8555 South River Parkway, Tempe, Arizona
$13,415,219.10
100% membership interest in Lexington Tempe Manager LLC and 100% limited
partnership interest in Lexington Tempe L.P.
Lexington Contributions, Inc.
40% tenancy-in-common interest
AT&T Wireless Services, Inc.
3201 Quail Springs Parkway, Oklahoma City, Oklahoma
$14,748,872.00
100% membership interest in Lexington Oklahoma City Manager LLC and 100% limited
partnership interest in Lexington Oklahoma City L.P.
Lexington TIC OK Holdings L.P.
Fee interest
Baker Hughes, Inc.
9110 Grogans Mill Road, Houston, Texas
$23,650,170.60
Fee interest
Texan Christensen Limited Partnership
Fee interest
Baker Hughes, Inc.
2529 West Thorne Drive, Houston, Texas
$7,217,561.16
Fee interest
Texan Training Limited Partnership
Fee interest
Baker Hughes, Inc.
12645 West Airport Road, Sugarland, Texas
$16,371,694.47
Fee interest
Texan Petrolite Limited Partnership
Fee interest
Bay Valley Foods, LLC
2935 Van Vactor Way, Plymouth, Indiana
$6,609,133.18
100% membership interest in LSAC Plymouth Manager LLC and 100% limited
partnership interest in LSAC Plymouth L.P.
LSAC Operating Partnership L.P.
Fee interest
CAE Simuflite, Inc.
29 South Jefferson Road, Hanover,
$16,719,188.84
100% membership interest in LSAC Morris County Manager
LSAC Operating

 
Schedule 2.8-1

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

 
 
 
 
(CAE Inc.)
New Jersey
 
LLC and 99.9% limited partnership interest in LSAC Morris County L.P.
Partnership L.P.
Fee interest
Corning, Inc.
736 Addison Road, Erwin, New York
$9,357,883.09
100% membership interest in Lexington TNI Erwin Manager LLC and 100% limited
partnership interest in Lexington TNI Erwin L.P.
Triple Net Investment Company LLC
Fee interest
Cox Communications, Inc.
1440 East 15th Street, Tucson, Arizona
$2,275,658.74
100% membership interest in Net 2 Cox LLC
Net 3 Acquisition  L.P.
Fee interest
Dana Corporation
6938 Elm Valley Drive, Kalamazoo, Michigan
$17,340,367.78
100% membership interest in Lexington Kalamazoo Manager LLC and 100% limited
partnership interest in Lexington Kalamazoo L.P.
Lepercq Corporate Income Fund L.P.
Leasehold interest
Dana Corporation
730 North Black Branch Road, Elizabethtown, Kentucky
$4,694,433.14
100% interest in to be formed SP Subsidiary
Lexington Elizabethtown 730 Corp.
Leasehold interest
Dana Corporation
750 North Black Branch Road, Elizabethtown, Kentucky
$24,923,414.82
100% interest in to be formed SP Subsidiary
Lexington Elizabethtown 750 Corp.
Leasehold interest
Dana Corporation
10000 Business Boulevard, Dry Ridge, Kentucky
$11,805,918.47
100% interest in to be formed SP Subsidiary
Lexington Dry Ridge Corp.
Leasehold interest
Dana Corporation
301 Bill Byran Boulevard, Hopkinsville, Kentucky
$14,603,212.19
100% interest in to be formed SP Subsidiary
Lexington Hopkinsville Corp.
Leasehold interest
Dana Corporation
4010 Airpark Drive, Owensboro, Kentucky
$10,558,679.56
100% interest in to be formed SP Subsidiary hold interest
Lexington Realty Trust
Fee interest
EDS Information Services, LLC (Electronic Data Systems Corporation)
3600 Army Post Road, Des Moines, Iowa
$22,761,297.00
100% membership interest in Lexington TNI Des Moines Manager LLC and 100%
limited partnership interest in Lexington TNI Des Moines L.P.
Triple Net Investment Company LLC
Fee interest
Georgia Power Company
2500 Patrick Henry Parkway, McDonough, Georgia
$12,675,000.00
100% membership interest in Acquiport McDonough Manager LLC and 100% limited
partnership
Lexington Acquiport Company II, LLC

 
 
Schedule 2.8-2

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

 
 
 
 
 
 
 
interest in Acquiport McDonough L.P.

 
Fee interest
Honeywell, Inc.
19019 N. 59th Avenue, Glendale, Arizona
$14,149,680.39
100% interest in Lexington Manager Glendale LLC
Union Hills Associates
Fee interest
(i)Structure, LLC (Infocrossing, Inc.)
11707 Miracle Hills Drive, Omaha, Nebraska
$8,850,197.37
100% membership interest in LSAC Omaha Manager LLC and 100% limited partnership
interest in LSAC Omaha L.P.
LSAC Operating Partnership L.P.
Leasehold interest
(i)Structure, LLC (Infocrossing, Inc.)
2005 East Technology Circle, Tempe, Arizona
$8,358,519.58
100% membership interest in LSAC Tempe Manager LLC and 100% limited partnership
interest in LSAC Tempe L.P.
LSAC Operating Partnership L.P.
Fee interest
Ivensys Systems, Inc. (Siebe, Inc.)
70 Mechanic Street, Foxboro, Massachusetts
$14,090,991.79
Fee interest
Lepercq Corporate Income Fund L.P.
Fee interest
Kelsey Hayes Company (TRW Automotive)
1200 & 12025 Tech Center Drive, Livonia, Michigan
$10,520,436.70
100% interest in Lexington Livonia L.L.C.
Lepercq Corporate Income Fund L.P.
Fee interest
Kelsey-Seybold Clinic (St. Lukes Episcopal Health System)
11555 University Boulevard, Houston, Texas
$9,788,652.45
100% membership interest in Lexington Sugarland Manager LLC and 100% limited
partnership interest in Lexington Sugarland L.P.
Westport View Corporate Center L.P.
Fee interest (currently under contract)
Litton Loan Servicing L.P. (Credit-Based Asset Servicing and Securitization LLC)
3500 North Loop Court, McDonough, Georgia
--
100% membership interest in NLSAF McDonough Manager LLC and 100% limited
partnership interest in NLSAF McDonough L.P.
Lexington Realty Trust
Fee interest
Montgomery County Management, LLC
17191 St. Lukes Way, Woodlands, Texas
$7,500,000.00
100% membership interest in LSAC Woodlands Manager LLC and 100% limited
partnership interest in LSAC Woodlands L.P.
LSAC Operating Partnership L.P.
Fee interest
Nextel of Texas
1600 Eberhardt Road, Temple, Texas
$8,799,283.19
100% membership interest in Lexington Temple Manager LLC (current Lexington
Temple Trust) and 99% limited partnership

Lexington Realty Trust

 
 
Schedule 2.8-3

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

 
 
 
 
 
 
 
interest in Lexington Temple L.P.

 
Fee interest
Nextel West Corporation
6455 State Highway 303 N.E., Bremerton, Washington
$6,503,818.18
100% membership interest in Lexington Bremerton Manager LLC
Lexington Realty Trust
Fee interest
Northrop Grumman Systems Corp.
3943 Denny Avenue, Pascagoula, Mississippi
--
100% membership interest in LSAC Pascagoula Manager LLC and 100% limited
partnership interest in LSAC Pascagoula L.P.
LSAC Operating Partnership L.P.
Fee interest
Omnipoint Holdings, Inc. (T-Mobile USA, Inc.)
133 First Park Drive, Oakland, Maine
$10,270,681.91
100% membership interest in Acquiport Oakland Manager LLC and 100% limited
partnership interest in Acquiport Oakland L.P.
Lexington Acquiport Company II, LLC
Fee interest
Owens Corning
590 Ecology Lane, Chester, South Carolina
$13,197,624.67
100% interest in a to be formed SP Subsidiary and 100% interest in Lexington
Chester Industrial LLC
Lexington Realty Trust
Fee interest
Owens Corning
1901 49th Avenue, Minneapolis, Minnesota
--
100% membership interest in Lexington Minneapolis L.L.C.
Lepercq Corporate Income Fund L.P.
Fee interest
Parkway Chevrolet, Inc.
25500 SH 249, Tomball, Texas
$9,344,673.76
100% membership interest in LSAC Tomball Manager LLC and 100% limited
partnership interest in LSAC Tomball L.P.
LSAC Operating Partnership L.P.
Fee interest
Seimens Dematic Postal Automation
1404-1501 Nolan Ryan Parkway, Arlington, Texas
$21,010,306.55
100% membership interest in Lexington Arlington Manager LLC and 99.5% limited
partnership interest in Lexington Arlington L.P.
Lexington Acquiport Company II, LLC
Fee interest
Silver Spring Gardens, Inc. (Huntsinger Farms, Inc.)
2424 Alpine Road, Eau Claire, Wisconsin
--
100% membership interest in LSAC Eau Claire Manager LLC and 100% limited
partnership interest in LSAC Eau Claire L.P.
LSAC Operating Partnership L.P.
Fee interest
SKF USA Inc.
324 Industrial Park Road, Franklin, North Carolina
$1,508,477.25
Fee interest
Lexington Realty Trust
Fee interest
Sygma Network, Inc. (Sysco Corporation)
3600 Southgate Drive, Danville, Illinois
$6,217,205.68
100% membership interest in Lexington Danville LLC
Lexington Realty Advisors, Inc.

 
 
Schedule 2.8-4

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

 
 
Fee interest
Tenneco Automotive Operation Company (Tenneco Automotive Inc.)
904 Industrial Road, Marshall, Michigan
--
Fee interest
LXP I, L.P.
Leasehold interest
TI Group Automotive Systems, LLC (TI Automotive LTD)
359 Gateway Drive, Livonia, Georgia
$9,781,993.46
100% membership interest in Lexington Livonia TI Manager LLC and 100% limited
partnership interest in Lexington Livonia TI L.P.
LSAC Operating Partnership L.P.
Fee interest
Time Customer Service, Inc. (Time, Inc.)
10419 North 30th Street, Tampa, Florida
$7,978,117.35
Fee interest
North Tampa Associates
Fee interest
TRW, Inc. (Experian Information Solutions, Inc.)
601 & 701 Experian Parkway, Allen, Texas
$30,582,338.00
100% membership interest in Lexington Allen Manager LLC and 100% limited
partnership interest in Lexington Allen L.P.
Lexington Texas Holdings L.P.
Fee interest
Unisource Worldwide, Inc.
109 Stevens Street, Jacksonville, Florida
--
Fee interest
Lepercq Corporate Income Fund II L.P.
Fee interest
Voicestream PCS I (T-Mobile USA, Inc.)
2999 S.W. 6th Street, Redmond, Oregon
$9,654,317.77
100% membership interest in Lexington Redmond Manager LLC
Lepercq Corporate Income Fund II L.P.
Fee interest
Voicestream PCS II (T-Mobile USA, Inc.)
9601 Renner Boulevard, Lenexa, Kansas
$10,141,927.70
100% membership interest in Acquiport Lenexa Manager LLC
Lexington Acquiport Company II, LLC
Fee interest
Voicestream PCS II (T-Mobile USA, Inc.)
3265 East Goldstone Drive, Meridian, Idaho
$10,079,315.38
100% membership interest in Acquiport Meridian Manager LLC
Lexington Acquiport Company II, LLC
Fee interest
Voicestream PCS II (T-Mobile USA, Inc.)
3711 San Gabrial, Mission, Texas
$6,282,487.42
100% membership interest in Lexington Mission Manager LLC and 99.5% limited
partnership interest in Lexington Mission L.P.
Triple Net Investment Company LLC

 
 
 
 
 
Schedule 2.8-5

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SCHEDULE 3.5

 
Form of Annual Plan
 
[Intentionally Omitted From Filing]
 
 
 

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SCHEDULE 3.8

 
Cross-Default Provisions
 
The mortgages secured by the following two sets of two properties are
cross-collateralized: (1) 730 North Black Branch Road, Elizabethtown, Kentucky
and 730 North Black Branch Road, Elizabethtown, Kentucky, and (3) 1000 Business
Boulevard, Dry Ridge, Kentucky and 4010 Airpark Drive, Owensboro, Kentucky.
 
Qualified Refi Assets
 
Advance PCS, Inc.
2401 Cherahala Boulevard, Knoxville, Tennessee
American Electric Power
420 Riverport Road, Kingport, Tennessee
American Golf Corporation
11411 N. Kelly Avenue, Oklahoma City, Oklahoma
Baker Hughes, Inc.
9110 Grogans Mill Road, Houston, Texas
Baker Hughes, Inc.
2529 West Thorne Drive, Houston, Texas
Baker Hughes, Inc.
12645 West Airport Road, Sugarland, Texas
Cox Communications, Inc.
1440 East 15th Street, Tucson, Arizona
EDS Information Services, LLC (Electronic Data Systems Corporation)
3600 Army Post Road, Des Moines, Iowa
Entergy Services, Inc.
5201 W. Barraque Street, Pine Bluff, Arkansas
Honeywell, Inc.
19019 N. 59th Avenue, Glendale, Arizona
Ivensys Systems, Inc. (Siebe, Inc.)
70 Mechanic Street, Foxboro, Massachusetts
Kelsey Hayes Company (TRW Automotive)
1200 & 12025 Tech Center Drive, Livonia, Michigan
Kelsey-Seybold Clinic (St. Lukes Episcopal Health System)
11555 University Boulevard, Houston, Texas
Lithia Motors
101 Creger, Fort Collins, Colorado
Litton Loan Servicing L.P. (Credit-Based Asset Servicing and Securitization LLC)
3500 North Loop Court, McDonough, Georgia
Nextel of Texas
1600 Eberhardt Road, Temple, Texas
Nextel West Corporation
6455 State Highway 303 N.E., Bremerton, Washington
Northrop Grumman Systems Corp.
3943 Denny Avenue, Pascagoula, Mississippi
Owens Corning
590 Ecology Lane, Chester, South Carolina
Owens Corning
1901 49th Avenue, Minneapolis, Minnesota
Raytheon Company
1200 Jupiter Road, Garland, Texas
Seimens Dematic Postal Automation
1404-1501 Nolan Ryan Parkway, Arlington, Texas
Silver Spring Gardens, Inc. (Huntsinger Farms, Inc.)
2424 Alpine Road, Eau Claire, Wisconsin
SKF USA Inc.
324 Industrial Park Road, Franklin, North Carolina
Tenneco Automotive Operation Company (Tenneco Automotive Inc.)
904 Industrial Road, Marshall, Michigan

 
 
Schedule 3.8-1

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(Tenneco Automotive Inc.)
 
Time Customer Service, Inc. (Time, Inc.)
10419 North 30th Street, Tampa, Florida
Unisource Worldwide, Inc.
109 Stevens Street, Jacksonville, Florida
United Technologies Corp.
120 S.E. Parkway Drive, Franklin, Tennessee
Voicestream PCS I (T-Mobile USA, Inc.)
2999 S.W. 6th Street, Redmond, Oregon
Voicestream PCS II (T-Mobile USA, Inc.)
9601 Renner Boulevard, Lenexa, Kansas
Voicestream PCS II (T-Mobile USA, Inc.)
3265 East Goldstone Drive, Meridian, Idaho
Voicestream PCS II (T-Mobile USA, Inc.)
3711 San Gabrial, Mission, Texas
Wachovia Bank, N.A.
265 Lehigh Street, Allentown, Pennsylvania

 
 
Qualified Assumed Assets
 
Primary Tenant
Address
   
ASML Lithography Holding NV
8555 South River Parkway, Tempe, Arizona
AT&T Wireless Services, Inc.
3201 Quail Springs Parkway, Oklahoma City, Oklahoma
Bay Valley Foods, LLC
2935 Van Vactor Way, Plymouth, Indiana
CAE Simuflite, Inc. (CAE Inc.)
29 South Jefferson Road, Hanover, New Jersey
Corning, Inc.
736 Addison Road, Erwin, New York
Dana Corporation
6938 Elm Valley Drive, Kalamazoo, Michigan
Dana Corporation
730 North Black Branch Road, Elizabethtown, Kentucky
Dana Corporation
750 North Black Branch Road, Elizabethtown, Kentucky
Dana Corporation
10000 Business Boulevard, Dry Ridge, Kentucky
Dana Corporation
301 Bill Byran Boulevard, Hopkinsville, Kentucky
Dana Corporation
4010 Airpark Drive, Owensboro, Kentucky
Georgia Power Company
2500 Patrick Henry Parkway, McDonough, Georgia
(i)Structure, LLC (Infocrossing, Inc.)
11707 Miracle Hills Drive, Omaha, Nebraska
(i)Structure, LLC (Infocrossing, Inc.)
2005 East Technology Circle, Tempe, Arizona
Montgomery County Management, LLC
17191 St. Lukes Way, Woodlands, Texas
Omnipoint Holdings, Inc. (T-Mobile USA, Inc.)
133 First Park Drive, Oakland, Maine
Parkway Chevrolet, Inc.
25500 SH 249, Tomball, Texas
Sygma Network, Inc. (Sysco Corporation)
3600 Southgate Drive, Danville, Illinois
TI Group Automotive Systems, LLC (TI Automotive LTD)
359 Gateway Drive, Livonia, Georgia
TRW, Inc. (Experian Information Solutions, Inc.)
601 & 701 Experian Parkway, Allen, Texas

 
 

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SCHEDULE 3.9

 
LMLP Existing Joint Venture Exclusivity Terms
 

Lex-Win Acquisition LLC– exclusive vehicle through which LMLP and its Affiliates
will enter into any transaction or acquire directly or indirectly, any shares of
common stock of Wells Real Estate Investment Trust, Inc. (“Wells”), any interest
in Wells or any asset owned by Wells.
 
 
 
Schedule 3.9-1

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SCHEDULE 4.7

 
INSURANCE REQUIREMENTS
 
EXHIBIT C
 
INSURANCE REQUIREMENTS
 
The Partnership shall, at a minimum, obtain and maintain, and/or cause the SP
Subsidiaries to obtain and maintain, without interruption, the insurance
coverages stipulated hereunder for the benefit of the Partnership and each
Partner thereof, but only to the extent of such party’s interest in each
Qualified Asset:
 
(a)  Property and Related Insurance.
 
(i)  Qualified Assets.  At all times following commencement of construction of
any above-ground improvements thereon, each Qualified Asset shall be insured on
a 100% Full Replacement Cost basis.  Full Replacement Cost is defined as the
cost of replacing the improvements, together with appurtenances and betterments
in compliance with prevailing building codes, without deduction for physical
depreciation thereof, at the time of replacement of the Qualified Asset,
following a loss.  The value so determined shall be binding and conclusive.  The
policy shall further provide that, in the event of a total or constructive total
loss, the Partnership or SP Subsidiary shall not be unreasonably restricted from
applying the proceeds to the re-building of the improvements at such other
location as the Partnership shall elect.  At all times following commencement of
construction of any vertical improvements thereon, Qualified Assets shall be
insured against physical loss or damage by fire, lightning and other risks and
supplementary perils from time to time included under Special Form policies
including, vandalism and malicious mischief (with agreed amount endorsements),
windstorm, earthquake, and certified and non-certified acts of terrorism.  The
policy shall be endorsed to provide coverage for demolition and increased cost
of construction to conform to local ordinance, and will include “extra expense”
and “expediting expense” coverage.
 
(ii)  Rent Loss/Business Interruption.  The Partnership shall maintain, after
substantial completion of any above-ground improvements, rent loss/business
interruption insurance sufficient to prevent the Partnership or the SP
Subsidiary from being a coinsurer under the terms of the policy, and in an
amount equal to twelve months’ projected gross income from the Qualified
Asset.  The policy must contain an extended period of indemnity endorsement
which provides that after the loss to the Improvements and personal property has
been repaired, the continued loss of income will be insured until the earlier of
such time that such income returns to the same level it was prior to the loss or
the expiration of six (6) months from the date of restoration.  This requirement
shall apply in the event the Partnership, by upon approval of the Executive
Committee by a Supermajority vote,, has elected to offer all or any portion of
the Qualified Asset for rent pursuant to leases or other occupancy agreements.
 
(iii)  Boiler and Machinery.  The Partnership or the SP Subsidiary shall
maintain, after substantial completion of any above-ground improvements, boiler
and machinery insurance covering physical damage to the Qualified Asset and to
the major components of any central heating, air conditioning or ventilation
systems, and such other equipment as is usual for similar properties in the
area.  The policy shall include coverage for business interruption, including
expediting and extra expense, in an amount not less than $500,000.  Unless the
insurance required in subsections (a) (i), (iii) and (iv) is provided on the
same policy or by the same insurance carrier, a Joint Loss Agreement between
separate primary policies will be required.
 
 
Schedule 4.7-1

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

 
 
(iv)  Builder’s Risk.  During the period of any construction, repair,
renovation, restoration or replacement of the improvements or the Qualified
Asset, the Partnership shall obtain and maintain or cause to be obtained and
maintained a completed value “All Risk” Builder’s Risk policy in an amount equal
to one hundred percent (100%) of the replacement cost of the Qualified
Asset.  Coverage should include, but not be limited to, collapse, soft costs,
transit, earthquake, flood, windstorm, terrorism, off-site storage, expediting
expenses, demolition and increased cost of construction (for renovation and/or
additions to existing structures), water damage, permission for partial
occupancy, and automatic reinstatement.  The policy is to be in an amount not
less than the total value of the Qualified Asset (less the value of such
uninsurable items as land, site preparation, grading, paving, parking
lots).  The coverage may be provided as an extension to the property policy in
force if the requirements herein are satisfied, subject to approval by the
Partners of the Partnership.  The Partnership shall cause the contracts with any
contractors to provide that (i) such contractor will be responsible for claims
arising out of such contractor’s negligence, and (ii) except to the extent that
such contractor’s tools and equipment will become part of the job, such tools
and equipment shall not be considered insurable items.
 
(v)  Flood.  If the Qualified Asset is located in a federally designated flood
zone A or V and flood insurance has been made available under the National Flood
Insurance Act of 1968, flood insurance is required in an amount equal to maximum
coverage available, replacement cost, or such amount as a mortgage lender  may
require.
 
(vi)  Earthquake.  If a Qualified Asset is in an area identified by any
governmental, engineering or any hazard underwriting agencies as being subject
to the peril of earthquake, and the project is in a high-risk seismic area
denoted as Zones 3 and 4 under the Uniform Building Code (UBC), appropriate
earthquake insurance coverage as required by lender is required.
 
(b)  Liability.
 
(i)  The Partnership and the SP Subsidiaries shall obtain and maintain
Commercial General Liability insurance on the broadest forms available for
similar risks, written on an “occurrence policy form,” against all claims for
bodily injury, disease or death, property damage, personal injury, certified and
non-certified acts of terrorism products and completed operations, and
contractual liability (deleting any exclusion restricting coverage for
contractual obligations for claims occurring on, in or about the Qualified Asset
and adjoining premises, and for explosion, collapse, and underground property
damage) in an amount of not less than $5,000,000 arising out of any one
occurrence; provided, however that coverage for explosion, collapse, and
underground property damage shall not be required until such time as any
excavation at the Qualified Asset commences, and may be in the form of coverage
carried by the applicable contractor.  Such insurance may be provided under a
primary and an umbrella policy or policies, provided that such umbrella policy
or policies shall not exclude “real estate activities.”  If liability coverage
for any Qualified Asset procured by the contractor is included under any blanket
policy written on an aggregate form, then the annual aggregate limit of
insurance must apply per location.  The policy shall be endorsed to include the
SP Subsidiary, the Partnership, the lender and each Partner thereof as an
additional insured subject to the benefits stipulated under subsection (i)(iv)
hereof. Such insurance will be endorsed as primary and non-contributory with any
other insurance available to the SP Subsidiary, the Partnership, the lender and
each Partner.
 
(ii)  During any period of construction, repair, restoration, renovation or
replacement of the Qualified Asset, the Partnership shall cause the general
contractor to maintain commercial liability insurance (or the Partnership’s or
SP Subsidiary’s and Contractor’s protective liability insurance in the name of
the Partnership or SP Subsidiary and each Partner thereof), with extension for,
but not limited to, products/completed operations, with limits of not less than
$10,000,000 per occurrence.  Completed Operations insurance shall remain in
effect for the length of time statutorily required in the state in which

 
 
Schedule 4.7-2

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

 
the construction occurs. This coverage shall be maintained as was agreed to at
the time of substantial completion of the Qualified Asset and shall be for the
same limits as required above. The Partnership shall also cause the general
contractor to require its subcontractors of any tier to provide confirmation of
commercial liability coverage (including products/completed operations), and
such insurance shall be on a primary and non-contributory basis with a limit of
not less than $1,000,000 per Qualified Asset.  The general contractors and the
subcontractors shall have the Partnership and the SP Subsidiary included on the
insurance required herein as additional insureds.
 
(c)  Worker’s Compensation.  The Partnership and the SP Subsidiaries will
maintain Worker’s Compensation as statutorily required and Employer’s Liability
insurance, or their equivalent, for all of their respective employees, and will
cause any of their agents, contractors and subcontractors of any tier to
maintain similar insurance for all their respective employees, to the fullest
extent required under the laws of the jurisdiction in which a Qualified Asset is
located.
 
(d)  Errors and Omission.  The Partnership will cause any professional
consultants, including, but not limited to, architects and engineers, to
maintain coverage in limits of not less than $1,000,000.
 
(e)  Crime.  The Partnership will maintain crime insurance in an amount of not
less than $1,000,000 for the benefit of the Partnership and each Partner thereof
against loss caused by infidelity of its officers, agents, servants and
employees; and against robbery or burglary both on and off premises.
 
(f)  Other Insurance.  In addition to the above, the Partnership and the SP
Subsidiaries shall maintain all insurance, surety and fidelity bonds in amounts
and for such periods that are deemed to be prudent, or are customarily
maintained by persons or entities operating properties of like kind,
construction and occupancy in the locality of each Qualified Asset.  Compliance
with insurance requirements will not in itself be construed to be a limitation
of the Partnership’s or the SP Subsidiaries’ liability.
 
(g)  All Insurance.  All insurance required herein will be primary and not
excess over, contributory or participating with any other insurance carried by
individual Partners of the Partnership or their respective affiliates or agents.
 
(h)  Other Requirements With Respect to Insurance.  The following provisions
shall apply with respect to all insurance coverage required above:
 
(i)  Insurance Companies:  All insurance required herein shall be issued by
insurance companies of recognized good standing, with a rating of at least A-VII
in Best’s Key Rating Guide, except for loans in excess of $35,000,000 where
required by lender and in in such case a rating of at lease AVII in Best’s Key
Rating Guide, and must be licensed to do business in the state in which the
Qualified Asset is located or must otherwise be acceptable to the
Partnership.  Insurance ratings are subject to the approval of mortgagee.
Coverage under blanket policies may be extended by endorsements provided the
insurers meet the requirements stipulated herein.  Each policy shall not have
more than a $25,000 deductible for any occurrence, except for mandatory
deductibles where required under local regulations, or when required by insurers
for specific catastrophic perils, or with respect to flood insurance pursuant to
Section (a)(v) which deductible shall not exceed $250,000 for any occurrence. An
allowance for deductibles in excess of $25,000 on all-risk policies will be
allowed upon the approval of mortgagee, but in any event cannot exceed $100,000.
 
(ii)  Evidence of Insurance:  The Partnership or the SP Subsidiaries shall
obtain, before the expiration date of each such policy, original policies (or
renewals or extensions of the insurance afforded thereby) or certified
duplicates thereof, or binders evidencing such insurance, or

 
 
Schedule 4.7-3

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

endorsements, or certificates thereof.  Evidence of Property insurance shall be
on ACORD 28 forms acceptable to lenders and naming lender as mortgagee and loss
payee.  Certificates of General Liability shall be on ACORD 25 forms and shall
name lender as additional insured.
 
(iii)  Insurance (Cut-Through Endorsement).  Except to the extent prohibited by
applicable law, insurance placed with a non-admitted insurer or excess and
surplus lines insurer will (upon written request of the Partners) require a
“cut-through” endorsement for reinsurance purposes to allow for recovery
directly from a reinsurer in the event of the primary insurer’s insolvency or
cessation of insurance operations. This will be addressed on a case by case
basis, dependent on the insurance carriers involved.
 
(iv)  Cancellation:  The Partnership shall immediately notify each Partner of
the Partnership of any cancellation of, non-renewal, or such material change as
may adversely affect any insurance policy or coverage in force.  Each policy
shall contain a provision obligating the insurer to send at least thirty (30)
days’ prior written notice to any party included as an additional insured or
loss payee notifying them of the intent to cancel or make such change, and that
any loss otherwise payable to them thereunder shall be paid notwithstanding any
act or negligence on their part or that of the Partnership which might, absent
such provision, result in a forfeiture of all or part of such insurance payment.
 
(v)  Separate Insurance:  Without the prior written consent of all Partners of
the Partnership, neither the Partnership not any SP Subsidiary shall purchase
separate insurance concurrent in form or contributing in the event of loss, with
the insurance required hereunder.
 
(vi)  Payment of Premium.  The Partnership or the applicable SP Subsidiary shall
be solely responsible for, and promptly pay when due, any and all premiums on
all such insurance.
 
 
Schedule 4.7-4

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

 
 

SCHEDULE 5.2

 
Preferred Equity Assets
 
Primary Tenant
Address
Allocation of Preferred Equity
     
ASML Lithography Holding NV
8555 South River Parkway, Tempe, Arizona
 
AT&T Wireless Services, Inc.
3201 Quail Springs Parkway, Oklahoma City, Oklahoma
 
Bay Valley Foods, LLC
2935 Van Vactor Way, Plymouth, Indiana
 
CAE Simuflite, Inc. (CAE Inc.)
29 South Jefferson Road, Hanover, New Jersey
 
Corning, Inc.
736 Addison Road, Erwin, New York
 
Dana Corporation
730 North Black Branch Road, Elizabethtown, Kentucky
 
Dana Corporation
750 North Black Branch Road, Elizabethtown, Kentucky
 
Dana Corporation
10000 Business Boulevard, Dry Ridge, Kentucky
 
Dana Corporation
301 Bill Byran Boulevard, Hopkinsville, Kentucky
 
Dana Corporation
4010 Airpark Drive, Ownesboro, Kentucky
 
Georgia Power Company
2500 Patrick Henry Parkway, McDonough, Georgia
 
(i)Structure, LLC (Infocrossing, Inc.)
11707 Miracle Hills Drive, Omaha, Nebraska
 
(i)Structure, LLC (Infocrossing, Inc.)
2005 East Technology Circle, Tempe, Arizona
 
Montgomery County Management, LLC
17191 St. Lukes Way, Woodlands, Texas
 
Omnipoint Holdings, Inc. (T-Mobile USA, Inc.)
133 First Park Drive, Oakland, Maine
 
Parkway Chevrolet, Inc.
25500 SH 249, Tomball, Texas
 
Sygma Network, Inc. (Sysco Corporation)
3600 Southgate Drive, Danville, Illinois
 
TI Group Automotive Systems, LLC (TI Automotive LTD)
359 Gateway Drive, Livonia, Georgia
 
TRW, Inc. (Experian Information Solutions, Inc.)
601 & 701 Experian Parkway, Allen, Texas
 
Voicestream PCS II (T-Mobile USA, Inc.)
3711 San Gabrial, Mission, Texas
 

 

 
Schedule 5.2-1

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

 
 

 
EXHIBIT A
 

 
Form of Annual Budget
 
[To come]
 
 
Exhibit A-1

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

 
 

 
EXHIBIT B
 

 
Form of Contribution Agreement
 

[Intentionally Omitted From Filing]
 
 
 
Exhibit B-1

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

 

EXHIBIT C
 

 
Form of Management Agreement
 
[Intentionally Omitted From Filing]
 
 
 
Exhibit C-2

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

 

 

 
EXHIBIT D
 

 
Form of Purchase Agreement
 
[Intentionally Omitted From Filing]
 
 
 
Exhibit D-1

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

 

 

 
EXHIBIT E
 

 
SP Subsidiary Limited Liability Company Agreement
 
[Intentionally Omitted From Filing]
 
 
 
Exhibit E-2

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

 

 

 
EXHIBIT F
 

 
SP Subsidiary Partnership Agreement
 
[Intentionally Omitted From Filing]
 
 
 
Exhibit F-1

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