EX-10.1






FIRST AMENDED AND RESTATED




AGREEMENT OF LIMITED PARTNERSHIP




OF




GLADSTONE COMMERCIAL LIMITED PARTNERSHIP




JANUARY 26, 2006




This First Amended and Restated Agreement of Limited Partnership (this “AGREEMENT”) is entered into
effective as of this 26th day of January 2006, by and among GCLP Business Trust I, a
Massachusetts business trust (the “ORIGINAL LIMITED PARTNER”), GCLP Business Trust II, a
Massachusetts business trust (the “GENERAL PARTNER”), Gladstone Commercial Corporation, a Maryland
corporation that is not a Partner of the Partnership (“GLADSTONE COMMERCIAL CORPORATION”) and the
Limited Partner(s) set forth or which may, in the future, be set forth on Exhibit A hereto, as
amended from time to time.



RECITALS




WHEREAS, Gladstone Commercial Limited Partnership (the “PARTNERSHIP”), was formed as a limited
partnership formed under the laws of the State of Delaware, pursuant to a Certificate of Limited
Partnership filed with the Office of the Secretary of State of the State of Delaware effective as
of May 28, 2003.



WHEREAS, pursuant to Article XI of the Agreement of Limited Partnership of the Partners (the
“ORIGINAL AGREEMENT”), the General Partner desires to amend and restate the Original Agreement.



NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between the parties hereto,
and of other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, the parties hereto agree to amend and restate the Original Agreement
in its entirety as follows and to continue the operation of the Partnership on the terms and
subject to the conditions set forth herein.



AGREEMENT




ARTICLE 1




DEFINED TERMS




The following defined terms used in this Agreement shall have the meanings specified below:



“ACT” means the Delaware Revised Uniform Limited Partnership Act, as it may be amended from time to
time.



“ADDITIONAL FUNDS” has the meaning set forth in Section 4.3 hereof.



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



“ADDITIONAL SECURITIES” means any additional REIT Shares (other than REIT Shares issued in
connection with an exchange pursuant to Section 8.5 hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or purchase REIT
Shares, as set forth in Section 4.2(a)(ii).



“ADMINISTRATIVE EXPENSES” means (i) all administrative and operating costs and expenses incurred by
the Partnership, (ii) those administrative costs and expenses of Gladstone Commercial Corporation,
including any salaries or other payments to directors, officers or employees of Gladstone
Commercial Corporation, and any accounting and legal expenses of Gladstone Commercial Corporation,
which expenses, the Partners have agreed, are expenses of the Partnership and not Gladstone
Commercial Corporation, and (iii) to the extent not included in clause (ii) above, REIT Expenses;
provided, however, that Administrative Expenses shall not include any administrative costs and
expenses incurred by Gladstone Commercial Corporation that are attributable to Properties or
partnership interests in a Subsidiary Partnership that are owned by Gladstone Commercial
Corporation directly.



“ADVISER” or “ADVISERS” means the Person or Persons, if any, appointed, employed or contracted with
by Gladstone Commercial Corporation pursuant to its Articles of Incorporation and responsible for
directing or performing the day-to-day business affairs of Gladstone Commercial Corporation,
including any Person to whom the Adviser subcontracts all or substantially all of such functions.



“AFFILIATE” or “AFFILIATED” means, with respect to any Person, (i) any Person directly or
indirectly owning, controlling or holding, with the power to vote, 10% or more of the outstanding
voting securities of such other Person; (ii) any Person 10% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held, with the power to vote, by such
other Person; (iii) any Person directly or indirectly controlling, controlled by or under common
control with such other Person; (iv) any executive officer, director, trustee or general partner of
such other Person; and (v) any legal entity for which such Person acts as an executive officer,
director, trustee or general partner.



“AGREED VALUE” means (i) the fair market value of a Partner’s non-cash Capital Contribution as of
the date of contribution as agreed to by such Partner and the General Partner as of the date of
contribution as set forth on Exhibit A hereto, as it may be amended from time to time, or (ii) in
the case of any contribution or distribution of property other than cash not set forth on Exhibit
A, the fair market value of such property as determined by the General Partner at the time such
property is contributed or distributed, reduced by liabilities either assumed by the Partnership or
Partner upon such contribution or distribution or to which such property is subject when the
property is contributed or distributed.



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



“ARTICLES OF INCORPORATION” means the Articles of Incorporation of Gladstone Commercial Corporation
filed with the Maryland State Department of Assessments and Taxation, as amended or restated from
time to time.



“BOARD OF DIRECTORS” means the Board of Directors of Gladstone Commercial Corporation.



“CAPITAL ACCOUNT” has the meaning provided in Section 4.4 hereof.



“CAPITAL CONTRIBUTION” means the total amount of cash, cash equivalents, and the Agreed Value of
any Property or other asset contributed or agreed to be contributed, as the context requires, to
the Partnership by each Partner pursuant to the terms of the Agreement. Any reference to the
Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor
holder of the Partnership Interest of such Partner.



“CASH AMOUNT” means an amount of cash equal to the Value of the REIT Shares Amount on the date of
receipt by the General Partner of an Exchange Notice.



“CERTIFICATE” means any instrument or document that is required under the laws of the State of
Delaware, or any other jurisdiction in which the Partnership conducts business, to be signed and
sworn to by the Partners of the Partnership (either by themselves or pursuant to the
power-of-attorney granted to the General Partner in Section 8.2 hereof) and filed for recording in
the appropriate public offices within the State of Delaware or such other jurisdiction to perfect
or maintain the Partnership as a limited partnership, to effect the admission, withdrawal, or
substitution of any Partner from or to the Partnership, or to protect the limited liability of the
Limited Partners as limited partners under the laws of the State of Delaware or such other
jurisdiction.



“CODE” means the Internal Revenue Code of 1986, as amended, and as hereafter amended from time to
time. Reference to any particular provision of the Code shall mean that provision in the Code at
the date hereof and any successor provision of the Code.



“COMMISSION” means the U.S. Securities and Exchange Commission.



“COMMON UNITS” means Partnership Units issued by the Partnership to the General Partner or its
Subsidiaries in connection with the issuance of REIT Shares.



“COMPETENT INDEPENDENT EXPERT” means a Person with no material current or prior business or
personal relationship with the General Partner or the Partnership who is engaged to a substantial
extent in the business of rendering opinions regarding the value of assets of the type held by the
Partnership and who is qualified to perform such work. Membership in a nationally recognized
appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real
Estate Appraisers shall be conclusive evidence of such qualification.



“CONVERSION FACTOR” means 1.0, provided, that in the event that Gladstone Commercial Corporation
(i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a
distribution to all holders of its outstanding REIT Shares in REIT Shares, (ii) subdivides its
outstanding REIT Shares, or (iii) combines its outstanding REIT Shares into a smaller number of
REIT Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of REIT Shares issued and outstanding on the
record date for such dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of such time), and the
denominator of which shall be the actual number of REIT Shares (determined without the above
assumption) issued and outstanding on such date, and provided further, that in the event that an
entity other than an Affiliate of Gladstone Commercial Corporation shall become General Partner
pursuant to any merger, consolidation or combination of Gladstone Commercial Corporation with or
into another entity (the “SUCCESSOR ENTITY”), the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by the number of shares of the Successor Entity into which one
REIT Share is converted pursuant to such merger, consolidation or combination, determined as of the
date of such merger, consolidation or combination. Any adjustment to the Conversion Factor shall
become effective immediately after the effective date of such event retroactive to the record date,
if any, for such event; provided, however, that if the General Partner receives an Exchange Notice
after the record date, but prior to the effective date of such dividend, distribution, subdivision
or combination, the Conversion Factor shall be determined as if the General Partner had received
the Exchange Notice immediately prior to the record date for such dividend, distribution,
subdivision or combination.



“DISSENTING LIMITED PARTNER” has the meaning provided in Section 12.3(a) hereof.



“EVENT OF BANKRUPTCY” as to any Person means (i) the filing of a petition for relief as to such
Person as debtor or bankrupt under the Bankruptcy Code of 1978 or similar provision of law of any
jurisdiction (except if such petition is contested by such Person and has been dismissed within 90
days); (ii) the insolvency or bankruptcy of such Person as finally determined by a court
proceeding; (iii) the filing by such Person of a petition or application to accomplish the same or
for the appointment of a receiver or a trustee for such Person or a substantial part of his assets;
and (iv) the commencement of any proceedings relating to such Person as a debtor under any other
reorganization, arrangement, insolvency, adjustment of debt or liquidation law of any jurisdiction,
whether now in existence or hereinafter in effect, either by such Person or by another, provided,
that if such proceeding is commenced by another, such Person indicates his approval of such
proceeding, consents thereto or acquiesces therein, or such proceeding is contested by such Person
and has not been finally dismissed within 90 days.



“EXCHANGE AMOUNT” means either the Cash Amount or the REIT Shares Amount, as selected by the
General Partner in its sole and absolute discretion pursuant to Section 8.5(b) hereof.



“EXCHANGE NOTICE” means a Notice of Exercise of Exchange Right, as defined in Section 8.5(a) hereof
and substantially in the form of Exhibit B hereto.



“EXCHANGE RIGHT” has the meaning provided in Section 8.5(a) hereof.



“EXCHANGING PARTNER” has the meaning provided in Section 8.5(a) hereof.



“GENERAL PARTNER” means GCLP Business Trust II, a Massachusetts business trust, and any Person who
becomes a substitute or additional General Partner as provided herein, and any successors thereto.



“GENERAL PARTNERSHIP INTEREST” means a Partnership Interest held by the General Partner that is a
general partnership interest.



“GP CAPITAL” means the aggregate of Capital Contributions of cash made by the General Partner in
accordance with Sections 4.1 and 4.2 hereof.



“GP MINIMUM RETURN” means such amount as may be necessary or required to allow the General Partner
to make distributions to Gladstone Commercial Corporation to meet its distribution requirement for
qualification as a REIT as set forth in Section 857 of the Code and to avoid any federal income or
excise tax liability imposed by the Code.



“INDEMNITEE” means (i) any Person made a party to a proceeding by reason of its status as the
General Partner, the Adviser or a director, officer or employee of the General Partner, the Adviser
or the Partnership, and (ii) such other Persons (including Affiliates of the General Partner or the
Partnership) as the General Partner may designate from time to time, in its sole and absolute
discretion.



“INDEPENDENT DIRECTOR” means a director of Gladstone Commercial Corporation who is not on the date
of determination (i) an officer or employee of Gladstone Commercial Corporation or the Adviser or
any of their respective Affiliates or (ii) a lessee of any Property.



“JOINT VENTURE” means any joint venture or partnership arrangement in which the Partnership is a
co-venturer or general partner established to acquire or hold Properties, Mortgages or other
investments of the General Partner.



“LIMITED PARTNER” means the Original Limited Partner, any Person named as a Limited Partner on
Exhibit A attached hereto, and any Person who becomes a Substitute or Additional Limited Partner in
such person’s capacity as a Limited Partner in the Partnership.



“LIMITED PARTNERSHIP INTEREST” means the ownership interest of a Limited Partner in the Partnership
at any particular time, including the right of such Limited Partner to any and all benefits to
which such Limited Partner may be entitled as provided in this Agreement and in the Act, together
with the obligations of such Limited Partner to comply with all the provisions of this Agreement
and of such Act.



“LIQUIDATING EVENT” has the meaning set forth in Section 2.4 hereof.



“LOSS” has the meaning provided in Section 5.1(f) hereof.



“LP CAPITAL” means the aggregate of Capital Contributions in cash or cash equivalents and the
Agreed Value of any non-cash contributions to the Partnership made by a Limited Partner in
accordance with Sections 4.1 and 4.2 hereof.



“LP RETURN” means, with regard to any Limited Partner, an amount equal to the aggregate cash
dividends that would have been payable to such Limited Partner with respect to the applicable
fiscal period if such Limited Partner had owned REIT Shares equal in number to the number of
Partnership Units owned by such Limited Partner during such fiscal period.



“MORTGAGE” means, in connection with mortgage financing provided, invested in or purchased by the
Partnership, any note, deed of trust, security interest or other evidence of indebtedness or
obligations, which is secured or collateralized by real property owned by the borrower under such
note, deed of trust, security interest or other evidence of indebtedness or obligations.



“NET CAPITAL PROCEEDS” means the net cash proceeds received by the Partnership in connection with
(i) any Sale, (ii) any borrowing or refinancing of borrowing(s) by the Partnership, (iii) any
condemnation or deeding in lieu of condemnation of all or a portion of any Property, (iv) any
collection in respect of property, hazard, or casualty insurance (but not business interruption
insurance) or any damage award; or (v) any other transaction the proceeds of which, in accordance
with generally accepted accounting principles, are considered to be capital in nature, in each
case, after deduction of (a) all costs and expenses incurred by the Partnership with regard to such
transactions (including, without limitation, any repayment of any indebtedness required to be
repaid as a result of such transaction or which the General Partner elects to pay out of the
proceeds of such transaction, together with accrued interest and premium, if any, thereon and any
sales commissions or other costs or expenses due and payable to any Person in connection therewith,
including to a Partner or its Affiliates), and (b) all amounts expended by the Partnership for the
acquisition of additional Properties, Mortgages or other investments or for capital repairs or
improvements to any Property with such cash proceeds.



“OFFER” has the meaning set forth in Section 7.1(c)(ii) hereof.



“OFFERING” means the initial offer and sale by Gladstone Commercial Corporation and the purchase by
the Underwriters (as defined in the Prospectus) of REIT Shares for sale to the public.



“ORIGINAL LIMITED PARTNER” means the Limited Partner designated as such on Exhibit A hereto.



“PARTNER” means any General Partner or Limited Partner.



“PARTNER NONRECOURSE DEBT MINIMUM GAIN” has the meaning set forth in Regulations Section
1.704-2(i). A Partner’s share of Partner Nonrecourse Debt Minimum Gain shall be determined in
accordance with Regulations Section 1.704-2(i)(5).



“PARTNERSHIP” means Gladstone Commercial Limited Partnership, a Delaware limited partnership.



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



“PARTNERSHIP MINIMUM GAIN” has the meaning set forth in Regulations Section 1.704-2(b)(2). In
accordance with Regulations Section 1.704-2(d), the amount of Partnership Minimum Gain is
determined by first computing, for each Partnership nonrecourse liability, any gain the Partnership
would realize if it disposed of the property subject to that liability for no consideration other
than full satisfaction of the liability, and then aggregating the separately computed gains. A
Partner’s share of Partnership Minimum Gain shall be determined in accordance with Regulations
Section 1.704-2(g)(1).



“PARTNERSHIP RECORD DATE” means the record date established by the General Partner for the
distribution of cash pursuant to Section 5.2 hereof, which record date shall be the same as the
record date established by Gladstone Commercial Corporation for a distribution to its stockholders
of some or all of its portion of such distribution.



“PARTNERSHIP UNIT” means a fractional, undivided share of the Partnership Interests of all Partners
issued hereunder. The allocation of Partnership Units among the Partners shall be as set forth on
Exhibit A, as it may be amended from time to time. All Partnership Units issued to the General
Partner or its Subsidiaries shall be Common Units or Preferred Units.



“PERCENTAGE INTEREST” means the percentage ownership interest in the Partnership of each Partner,
as determined by dividing the number of Partnership Units owned by a Partner by the aggregate
number of Partnership Units owned by all Partners. The Percentage Interest of each Partner shall
be as set forth on Exhibit A, as it may be amended from time to time.



“PERSON” means any individual, partnership, corporation, joint venture, limited liability company,
trust or other entity.



“PREFERRED UNITS” has the meaning provided in Section 4.2(a)(i)(1) hereof.



“PROFIT” has the meaning provided in Section 5.1(f) hereof.



“PROPERTY” means any industrial or commercial real property or any other investment in which the
Partnership holds an ownership interest, either directly or pursuant to the Partnership’s ownership
of an interest in a subsidiary which owns an interest in any such industrial or commercial real
property or other investment.



“PROSPECTUS” means the final prospectus delivered to purchasers of REIT Shares in the Offering.



“REGULATIONS” means the Federal Income Tax Regulations, including temporary or proposed
regulations, issued under the Code, as amended and as hereafter amended from time to time.
Reference to any particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.



“REIT” means a real estate investment trust under Sections 856 through 860 of the Code.



“REIT EXPENSES” means (i) costs and expenses relating to the formation and continuity of existence
and operation of Gladstone Commercial Corporation and any Subsidiaries thereof (which Subsidiaries
shall, for purposes hereof, be included within the definition of Gladstone Commercial Corporation),
including taxes, fees and assessments associated therewith, any and all costs, expenses or fees
payable to any director, officer, or employee of Gladstone Commercial Corporation, (ii) costs and
expenses relating to (A) any registration and public offering of securities by Gladstone Commercial
Corporation, the net proceeds of which were used to make a contribution to the Partnership, and (B)
all statements and reports incidental thereto, including, without limitation, underwriting
discounts and selling commissions applicable to any such offering of securities, and any costs and
expenses associated with any claims made by any holders of such securities or any underwriters or
placement agents thereof, (iii) costs and expenses associated with any repurchase of any securities
by Gladstone Commercial Corporation, (iv) costs and expenses associated with the preparation and
filing, of any periodic or other reports and communications by Gladstone Commercial Corporation
under federal, state or local laws or regulations, including filings with the Commission, (v) costs
and expenses associated with compliance by Gladstone Commercial Corporation with laws, rules and
regulations promulgated by any regulatory body, including the Commission and any securities
exchange, (vi) costs and expenses associated with any section 401(k) plan, incentive plan, bonus
plan or other plan providing for compensation for the employees of Gladstone Commercial
Corporation, (vii) costs and expenses incurred by Gladstone Commercial Corporation relating to any
issuance or redemption of Partnership Interests or REIT Shares, and (viii) all other operating or
administrative costs of Gladstone Commercial Corporation incurred in the ordinary course of its
business on behalf of or in connection with the Partnership.



“REIT PREFERRED SHARES” has the meaning provided in Section 4.2(a)(i)(1) hereof.



“REIT SHARE” means a share of common stock in Gladstone Commercial Corporation (or Successor
Entity, as the case may be).



“REIT SHARES AMOUNT” means a number of REIT Shares equal to the product of the number of
Partnership Units offered for exchange by an Exchanging Partner, multiplied by the Conversion
Factor as adjusted to and including the Specified Exchange Date; provided that in the event
Gladstone Commercial Corporation issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling the stockholders to subscribe for or purchase REIT
Shares, or any other securities or property (collectively, the “RIGHTS”), and the rights have not
expired at the Specified Exchange Date, then the REIT Shares Amount shall also include the rights
issuable to a holder of the REIT Shares on the record date fixed for purposes of determining the
holders of REIT Shares entitled to such rights.



“SALE” means any transaction or series of transactions whereby (i) the Partnership directly or
indirectly (except as described in other subsections of this definitions) sells, grants, transfers,
conveys or relinquishes its ownership of any Property or portion thereof, including the lease of
any Property consisting of a building only, and including any event with respect to any Property
which gives rise to a significant amount of insurance proceeds or condemnation awards; (ii) the
Partnership directly or indirectly (except as described in other subsections of this definition)
sells, grants, transfers, conveys or relinquishes its ownership of all or substantially all the
interest of the Partnership in any Joint Venture in which it is a co-venturer or partner; (iii) any
Joint Venture directly or indirectly (except as described in other subsections of this definition)
in which the Partnership as a co-venturer or partner sells, grants, transfers, conveys or
relinquishes its ownership of any Property or portion thereof, including any event with respect to
any Property which gives rise to insurance claims or condemnation awards; (iv) the Partnership
directly or indirectly (except as described in other subsections of this definition) sells, grants,
conveys or relinquishes its interest in any Mortgage or portion thereof (including with respect to
any Mortgage, all payments thereunder or in satisfaction thereof other than regularly scheduled
interest payments) of amounts owed pursuant to such Mortgage and any event with respect to a
Mortgage which gives rise to a significant amount of insurance proceeds or similar awards, or (v)
the Partnership directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys or relinquishes its ownership of any other asset
(other than investments in bank accounts, money market funds or other current assets) not
previously described in this definition or any portion thereof.



“SECURITIES ACT” means the Securities Act of 1933, as amended.



“SERVICE” means the Internal Revenue Service.



“SPECIFIED EXCHANGE DATE” means the first business day of the month first occurring after the
expiration of 60 calendar days from the date of receipt by the General Partner of the Exchange
Notice.



“SUBSIDIARY” means, with respect to any Person, any corporation or other entity of which a
majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity
interests is owned, directly or indirectly, by such Person.



“SUBSIDIARY PARTNERSHIP” means any partnership, limited liability company or other entity taxed as
a partnership for federal income tax purposes in which interests are owned by Gladstone Commercial
Corporation or by a wholly-owned Subsidiary or Subsidiaries of Gladstone Commercial Corporation.



“SUBSTITUTE LIMITED PARTNER” means any Person admitted to the Partnership as a Limited Partner
pursuant to Section 9.3 hereof.



“SUCCESSOR ENTITY” has the meaning provided in the definition of “Conversion Factor” contained
herein.



“SURVIVOR” has the meaning set forth in Section 7.1(d) hereof.



“TRANSACTION” has the meaning set forth in Section 7.1(c) hereof.



“TRANSFER” has the meaning set forth in Section 9.2(a) hereof.



“UNPAID RETURN” means any accrued but unpaid LP Return or GP Minimum Return less (i) all amounts
distributed by the Partnership to a Limited Partner or the General Partner in reduction thereof,
and (ii) all amounts distributed to the applicable Partner pursuant to clause (iv) of Section
5.2(a) hereof.



“VALUE” means, with respect to any security, the average of the daily market price of such security
for the ten consecutive trading days immediately preceding the date as of which such Value is to be
determined. The market price for each such trading day shall be: (i) if the security is listed or
admitted to trading on any securities exchange, the sale price, regular way, on such day, or if no
such sale takes place on such day, the average of the closing bid and asked prices, regular way, on
such day; (ii) if the security is not listed or admitted to trading on any securities exchange, the
last reported sale price on such day or, if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable quotation source designated by
the General Partner; or (iii) if the security is not listed or admitted to trading on any
securities exchange and no such last reported sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked prices on such day, as reported by a
reliable quotation source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so reported, on the most
recent day (not more than ten days prior to the date in question) for which prices have been so
reported; provided, that if there are no bid and asked prices reported during the ten days prior to
the date in question, the value of the security shall be determined by the General Partner acting
in good faith on the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event the security includes any additional rights, then
the value of such rights shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its reasonable judgment,
appropriate.



ARTICLE 2




PARTNERSHIP FORMATION AND IDENTIFICATION




2.1 CONTINUATION. The Partnership is a limited partnership formed pursuant to the Act
and upon the terms and conditions set forth in this Agreement. The Partners hereby agree to
continue the Partnership pursuant to the Act and upon the terms and conditions set forth in this
Agreement.



2.2 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership is “Gladstone
Commercial Limited Partnership.” The registered office and principal place of business of the
Partnership shall be 1750 Tysons Boulevard, Fourth Floor, McLean, Virginia 22102. The General
Partner may at any time change the location of such office, provided the General Partner gives
notice to the Partners of any such change. The name and address of the Partnership’s registered
agent is The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202.
The sole duty of the registered agent as such is to forward to the Partnership any notice that is
served on it as registered agent.



2.3 PARTNERS.



(a) The General Partner of the Partnership is GCLP Business Trust II, a Massachusetts
business trust. Its principal place of business is the same as that of the Partnership.



(b) The Limited Partners are those Persons identified as Limited Partners (including
the Original Limited Partner) on Exhibit A hereto, as it may be amended from time to time.



2.4 TERM AND DISSOLUTION.



(a) The term of the Partnership shall continue in full force and effect until December
31, 2075, except that the Partnership shall be dissolved earlier upon the first to occur of any of
the following events (“LIQUIDATING EVENTS”):



(i) the occurrence of an Event of Bankruptcy as to a General Partner or the
dissolution, death, removal or withdrawal of a General Partner unless the business of the
Partnership is continued pursuant to Section 7.3(b) hereof, provided, that if a General Partner is
on the date of such occurrence a partnership, the dissolution of such General Partner as a result
of the dissolution, death, withdrawal, removal or Event of Bankruptcy of a partner in such
partnership shall not be an event of dissolution of the Partnership if the business of such General
Partner is continued by the remaining partner or partners thereof, either alone or with additional
partners, and such General Partner and such partners comply with any other applicable requirements
of this Agreement;



(ii) the passage of 90 days after the sale or other disposition of all or
substantially all of the assets of the Partnership (provided, that if the Partnership receives an
installment obligation as consideration for such sale or other disposition, the Partnership shall
continue, unless sooner dissolved under the provisions of this Agreement, until such time as such
obligation is paid in full);



(iii) the exchange of all Limited Partnership Interests (other than any of such
interests held by the General Partner or Affiliates of the General Partner) pursuant to Section 8.5
hereof; or



(iv) the election by the General Partner that the Partnership should be dissolved.



(b) Upon dissolution of the Partnership (unless the business of the Partnership is
continued pursuant to Section 7.3(b) hereof), the General Partner (or its trustee, receiver,
successor or legal representative) shall amend or cancel the Certificate and liquidate the
Partnership’s assets and apply and distribute the proceeds thereof in accordance with Section 5.6
hereof. Notwithstanding the foregoing, the liquidating General Partner may either (i) defer
liquidation of, or withhold from distribution for a reasonable time, any assets of the Partnership
(including those necessary to satisfy the Partnership’s debts and obligations), or (ii) distribute
the assets to the Partners in kind.



2.5 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The General Partner
shall execute, acknowledge, record and file, at the expense of the Partnership, the Certificate and
any and all amendments thereto and all requisite fictitious name statements and notices in such
places and jurisdictions as may be necessary to cause the Partnership to be treated as a limited
partnership under, and otherwise to comply with, the laws of each state or other jurisdiction in
which the Partnership conducts business.



2.6 CERTIFICATES DESCRIBING PARTNERSHIP UNITS. At the request of a Limited Partner,
the General Partner may, at its option and in its discretion, issue a certificate summarizing the
terms of such Limited Partner’s interest in the Partnership, including the number of Partnership
Units owned as of the date of such certificate. If issued, any such certificates (a) shall be in
form and substance as approved by the General Partner, (b) shall not be negotiable, and (c) shall
bear a legend substantially similar to the following:



“THIS CERTIFICATE IS NOT NEGOTIABLE. THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE ARE
GOVERNED BY AND TRANSFERABLE ONLY IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT OF LIMITED
PARTNERSHIP OF GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, AS AMENDED FROM TIME TO TIME.”



ARTICLE 3 




BUSINESS OF THE PARTNERSHIP




The purpose and nature of the business to be conducted by the Partnership is (a) to conduct any
business that may be lawfully conducted by a limited partnership organized pursuant to the Act,
provided, however, that such business shall be limited to and conducted in such a manner as to
permit Gladstone Commercial Corporation at all times to qualify as a REIT, unless Gladstone
Commercial Corporation otherwise ceases to qualify as a REIT, (b) to enter into any partnership,
joint venture or other similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing, and (c) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, and without limiting Gladstone
Commercial Corporation’s right in its sole and absolute discretion to cease qualifying as a REIT,
the Partners acknowledge that Gladstone Commercial Corporation’s current status as a REIT and the
avoidance of income and excise taxes on Gladstone Commercial Corporation inures to the benefit of
all the Partners. Notwithstanding the foregoing, the Limited Partners agree that Gladstone
Commercial Corporation may terminate its status as a REIT under the Code at any time to the full
extent permitted under its Articles of Incorporation. The General Partner shall be empowered to do
any and all acts and things necessary or prudent to ensure that the Partnership will not be
classified as a “publicly traded partnership” for purposes of Section 7704 of the Code.



ARTICLE 4 




CAPITAL CONTRIBUTIONS AND ACCOUNTS




4.1 CAPITAL CONTRIBUTIONS. As of the date hereof, the Partners have made Capital
Contributions to the Partnership in exchange for the Partnership Units set forth opposite their
names on Exhibit A. At such time as Additional Limited Partners are admitted to the Partnership,
each shall make Capital Contributions as set forth opposite their names on Exhibit A, as it may be
amended from time to time.



4.2 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL PARTNERSHIP
INTERESTS. Except as provided in this Section 4.2 or in Section 4.3, the Partners shall have no
right or obligation to make any additional Capital Contributions or loans to the Partnership. The
General Partner may contribute additional capital to the Partnership, from time to time, and
receive additional Partnership Units in respect thereof in the manner contemplated by this Section
4.2.



(a) Issuances of Additional Partnership Interests.



(i) General. The General Partner is hereby authorized to cause the Partnership to
issue additional Partnership Interests in the form of Partnership Units for any Partnership
purpose, at any time or from time to time, to the Partners (including the General Partner) or to
other Persons for such consideration and on such terms and conditions as shall be established by
the General Partner in its sole and absolute discretion, all without the approval of any Limited
Partners. Any additional Partnership Interests issued thereby may be issued in one or more classes,
or one or more series of any of such classes, with such designations, preferences and relative
participating, optional or other special rights, powers and duties, including rights, powers and
duties senior to Limited Partnership Interests, all as shall be determined by the General Partner
in its sole and absolute discretion and without the approval of any Limited Partner, subject to
Delaware law, including, without limitation, (A) the allocations of items of Partnership income,
gain, loss, deduction and credit to each such class or series of Partnership Interests; (B) the
right of each such class or series of Partnership Interests to share in Partnership distributions;
and (C) the rights of each such class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; provided, however, that no additional Partnership Interests shall
be issued to the General Partner or the Original Limited Partner unless:



(1) the additional Partnership Interests are issued in connection with an issuance of
REIT Shares of, or other shares of or interests in, Gladstone Commercial Corporation which shares
or interests (“REIT PREFERRED SHARES”) have designations, preferences and other rights such that
the economic interests are substantially similar to the designations, preferences and other rights
of the additional Partnership Interests issued to the General Partner by the Partnership in
accordance with this Section 4.2 (“PREFERRED UNITS”), and Gladstone Commercial Corporation shall
make a capital contribution to the General Partner and/or the Original Limited Partner, and the
General Partner, on its own or with the Original Limited Partner, to make a Capital Contribution to
the Partnership in an amount equal to the aggregate proceeds raised in connection with the issuance
of such REIT Shares or REIT Preferred Shares, as the case may be, of Gladstone Commercial
Corporation;



(2) the additional Partnership Interests are issued in exchange for property or other
assets owned by the General Partner or Original Limited Partner with a fair market value, as
determined by the General Partner, in good faith, equal to the value of the Partnership Interests;
or



(3) the additional Partnership Interests are issued to all Partners in proportion to
their respective Percentage Interests.



Without limiting the foregoing, the General Partner is expressly authorized to cause the
Partnership to issue Partnership Units for less than fair market value, so long as the General
Partner concludes in good faith that such issuance is in the best interests of the General Partner
and the Partnership. Attached hereto as Schedule 4.2(a)(1) is the Agreement of Limited Partnership
Designation of 7.75% Series A Cumulative Redeemable Preferred Units.



(ii) Issuance of Additional Securities. Gladstone Commercial Corporation shall not
issue any additional REIT Shares (other than REIT Shares issued in connection with an exchange made
pursuant to Section 8.5 hereof) or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase REIT Shares (collectively, “ADDITIONAL
SECURITIES”) other than to all holders of REIT Shares, unless (A) the General Partner shall cause
the Partnership to issue to the General Partner (or to the General Partner and the Original Limited
Partner), as the General Partner may designate, Partnership Interests or rights, options, warrants
or convertible or exchangeable securities of the Partnership having designations, preferences and
other rights such that the economic interests are substantially similar to those of the Additional
Securities, and (B) Gladstone Commercial Corporation contributes the proceed from the issuance of
such Additional Securities and from any exercise of rights contained in such Additional Securities,
through the General Partner (or the General Partner and the Original Limited Partner), to the
Partnership; provided, however, that Gladstone Commercial Corporation is allowed to issue
Additional Securities in connection with an acquisition of a Property or other asset to be held
directly by Gladstone Commercial Corporation, but if and only if, such direct acquisition and
issuance of Additional Securities have been approved and determined to be in the best interests of
Gladstone Commercial Corporation and the Partnership by a majority of the Independent Directors.
Without limiting the foregoing, Gladstone Commercial Corporation is expressly authorized to issue
Additional Securities for less than fair market value, and to cause the Partnership to issue to the
General Partner (or to the General Partner and the Original Limited Partner) corresponding
Partnership Interests, so long as (1) Gladstone Commercial Corporation concludes in good faith that
such issuance is in the best interests of Gladstone Commercial Corporation and the Partnership,
including without limitation, the issuance of REIT Shares and corresponding Partnership Units
pursuant to an employee share purchase plan providing for employee purchases of REIT Shares at a
discount from fair market value or employee stock options that have an exercise price that is less
than the fair market value of the REIT Shares, either at the time of issuance or at the time of
exercise, and (2) Gladstone Commercial Corporation contributes through the General Partner or
through the General Partner and the Original Limited Partner all proceeds from such issuance to the
Partnership. For example, in the event Gladstone Commercial Corporation issues REIT Shares for a
cash purchase price and contributes all of the proceeds of such issuance to the Partnership as
required hereunder, the General Partner shall be issued a number of additional Partnership Units
equal to the product of (A) the number of such REIT Shares issued by Gladstone Commercial
Corporation, the proceeds of which were so contributed, multiplied by (B) a fraction, the numerator
of which is 100%, and the denominator of which is the Conversion Factor in effect on the date of
such contribution.



(b) Certain Deemed Contributions of Proceeds of Issuance of REIT Shares. In
connection with any and all issuances of REIT Shares, Gladstone Commercial Corporation shall make
through the General Partner and through the Original Limited Partner Capital Contributions to the
Partnership of the proceeds therefrom, provided, that if the proceeds actually received and
contributed by the General Partner are less than the gross proceeds of such issuance as a result of
any underwriter’s discount or other fees or expenses paid or incurred in connection with such
issuance, then the General Partner (or the General Partner together with the Original Limited
Partner, as applicable) shall be deemed to have made Capital Contributions to the Partnership in
the aggregate amount of the gross proceeds of such issuance and the Partnership shall be deemed
simultaneously to have paid such offering expenses in accordance with Section 6.5 hereof and in
connection with the required issuance of additional Partnership Units for such Capital
Contributions pursuant to Section 4.2(a) hereof. Upon any such Capital Contribution by the General
Partner, the General Partner’s Capital Account shall be increased by the actual amount of its
Capital Contribution pursuant to Section 4.4 hereof.



(c) Repurchases of Gladstone Commercial Corporation Shares. If Gladstone Commercial
Corporation shall repurchase shares of any class of its capital stock, all costs incurred in
connection with such repurchase shall be reimbursed to the General Partner by the Partnership
pursuant to Section 6.5 hereof and the General Partner shall cause the Partnership to redeem an
equivalent number of Partnership Interests of the appropriate class held by the General Partner
(which, in the case of REIT Shares, shall be a number equal to the quotient of the number of such
REIT Shares divided by the Conversion Factor) in the manner provided in Section 6.10.



4.3 ADDITIONAL FUNDING. If the General Partner determines that it is in the best
interests of the Partnership to provide for additional Partnership funds (“ADDITIONAL FUNDS”) for
any Partnership purpose, the General Partner may (a) cause the Partnership to obtain such funds
from outside borrowings, or (b) elect to have the General Partner or any of its Affiliates provide
such Additional Funds to the Partnership through loans or otherwise.



4.4 CAPITAL ACCOUNTS. A separate capital account (a “CAPITAL ACCOUNT”) shall be
established and maintained for each Partner in accordance with Regulations Section
1.704-1(b)(2)(iv). If (a) a new or existing Partner acquires an additional Partnership Interest in
exchange for more than a de minimis Capital Contribution, (b) the Partnership distributes to a
Partner more than a de minimis amount of Partnership property as consideration for the redemption
of a Partnership Interest, or (c) the Partnership is liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue the property of the Partnership to
its fair market value (as determined by the General Partner, in its sole and absolute discretion,
and taking into account Section 7701(g) of the Code) in accordance with Regulations Section 1.704-
l(b)(2)(iv)(f). When the Partnership’s property is revalued by the General Partner, the Capital
Accounts of the Partners shall be adjusted in accordance with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to be adjusted to
reflect the manner in which the unrealized gain or loss inherent in such property (that has not
been reflected in the Capital Accounts previously) would be allocated among the Partners pursuant
to Section 5.1 hereof if there were a taxable disposition of such property for its fair market
value (as determined by the General Partner, in its sole and absolute discretion, and taking into
account Section 7701(g) of the Code) on the date of the revaluation.



4.5 PERCENTAGE INTERESTS. If the number of outstanding Partnership Units increases or
decreases during a taxable year, each Partner’s Percentage Interest shall be adjusted by the
General Partner effective as of the date of each such increase or decrease to a percentage equal to
the number of Partnership Units held by such Partner divided by the aggregate number of Partnership
Units outstanding after giving effect to such increase or decrease. In such event, the General
Partner shall revalue the property of the Partnership and the Capital Account for each Partner
shall be adjusted as set forth in Section 4.4 hereof. If the Partners’ Percentage Interests are
adjusted pursuant to this Section 4.5, the Profit and Loss for the taxable year in which the
adjustment occurs shall be prorated between the part of the year ending on the day when the
Partnership’s property is revalued by the General Partner and the part of the year beginning on the
following day and, as so divided, shall be allocated to the Partners based on their Percentage
Interests before adjustment, and their adjusted Percentage Interests, respectively, either (a) as
if the taxable year had ended on the date of the adjustment or (b) based on the number of days in
each part. The General Partner, in its sole and absolute discretion, shall determine which method
shall be used to allocate Profit and Loss for the taxable year in which an adjustment occurs, as
may be required or permitted under Section 706 of the Code.



4.6 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to interest on its
Capital Contribution.



4.7 RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled to withdraw any
part of its Capital Contribution or its Capital Account or to receive any distribution from the
Partnership, except as specifically provided in this Agreement. Except as otherwise provided
herein, there shall be no obligation to return to any Partner or withdrawn Partner any part of such
Partner’s Capital Contribution for so long as the Partnership continues in existence.



4.8 NO THIRD PARTY BENEFICIARY. No creditor or other third party having dealings with
the Partnership shall have the right to enforce the right or obligation of any Partner to make
Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in
equity, it being understood and agreed that the provisions of this Agreement shall be solely for
the benefit of, and may be enforced solely by, the parties hereto and their respective successors
and assigns. None of the rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any
purpose by any creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure
any debt or other obligation of the Partnership or of any of the Partners. In addition, it is the
intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return
of money or other property in violation of the Act. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to
return such money or property, such obligation shall be the obligation of such Limited Partner and
not of the General Partner. Without limiting the generality of the foregoing, a deficit Capital
Account of a Partner shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership.



ARTICLE 5




PROFIT AND LOSS; DISTRIBUTIONS




5.1 ALLOCATION OF PROFIT AND LOSS.



(a) Profit and Loss. After giving effect to the special allocations set forth in
Sections 5.1(c), (d) and (e), Profit for each fiscal year of the Partnership shall be allocated as
follows: (i) first, to the General Partner until the cumulative Profit allocated to the General
Partner under this clause (i) equals the cumulative Loss allocated to the General Partner under
clause (z) of this Section 5.1(a), (ii) second, to the Partners, pro rata, in accordance with and
in proportion to their respective Partnership Interests, in amounts equal to the amount of cash
distributed to the Partners pursuant to Section 5.2(a) hereof with respect to such fiscal year;
(iii) third, to the extent the amount of Profit for such fiscal year exceeds the amount of cash
distributed to the Partners pursuant to Section 5.2(a) hereof, such excess shall be allocated to
the General Partner and the Limited Partners in amounts and in proportion to the cumulative Loss
allocated to the General Partner pursuant to clause (y) of this Section 5.1(a) and the cumulative
Loss allocated to the Limited Partners pursuant to clause (x) of this Section 5.1(a), respectively;
and (iv) finally, the balance, if any, of Profit shall be allocated to the Partners in accordance
with and in proportion to their respective Percentage Interests. Notwithstanding the foregoing,
however, it is the intent of the Partners that allocations of Profit to the Limited Partners be
such that the amount of Profit allocated to each Limited Partner be equal to the amount of income
that would have been allocated to such Limited Partner with respect to the applicable fiscal period
if such Limited Partner had owned REIT Shares equal in number to the number of Partnership Units
owned by such Limited Partner during such fiscal period, and if, for any reason in any fiscal
period, the foregoing allocations of Profit result in any material variation from this concept,
Profit for such fiscal period shall instead be allocated to each Limited Partner in an amount equal
to the aggregate amount of income that would have been allocated to such Limited Partner with
respect to such fiscal period if such Limited Partner had owned REIT Shares equal in number to the
number of Partnership Units owned by such Limited Partner during such fiscal period. After giving
effect to the special allocations set forth in Sections 5.1(c), (d) and (e), Loss for a fiscal year
of the Partnership shall be allocated as follows: (w) first, to the Partners, pro rata, in
accordance with and in proportion to their respective Partnership Interests, until the cumulative
Loss allocated to each Partner under this clause (w) equals the cumulative Profit allocated to each
Partner under clause (iv) of this Section 5.1(a); (x) second, to the Limited Partners in an amount
equal to each such Limited Partner’s Capital Account balance prior to the allocation made under
this clause (x); (y) third, to the General Partner in an amount equal to the General Partner’s
Capital Account balance prior to the allocation made under this clause (y); and (z) fourth, to the
General Partner to the extent that any further allocation of Loss to Limited Partners would result
in any such Limited Partners having a deficit balance in their Capital Accounts.



(b) Gross Income Allocation to Preferred Unitholders. Prior to giving effect to any
other allocation in Section 5.1, gross income of the Partnership shall be allocated first to the
holders of Preferred Units in an amount equal to the excess (if any) of (i) the cumulative
distributions in respect of all classes of Preferred Units made through the end of the taxable year
for which such allocation shall be made (other than distributions which are treated as being in
satisfaction of the liquidation preference of such Preferred Units), over (ii) the cumulative
allocations of gross income to the holders of such Preferred Units pursuant to this Section 5.1(b)
prior to such allocation for such taxable year.



(c) Minimum Gain Chargeback. Notwithstanding any provision to the contrary herein,
(i) any expense of the Partnership that is a “nonrecourse deduction” within the meaning of
Regulations Section 1.704-2(b)(1) shall be allocated in accordance with the Partners’ respective
Percentage Interests, (ii) any expense of the Partnership that is a “partner nonrecourse deduction”
within the meaning of Regulations Section 1.704-2(i)(2) shall be allocated to the Partner that
bears the “economic risk of loss” of such deduction in accordance with Regulations Section 1.704-
2(i)(1), (iii) if there is a net decrease in Partnership Minimum Gain within the meaning of
Regulations Section 1.704-2(f)(1) for any Partnership taxable year, then, subject to the exceptions
set forth in Regulations Section 1.704-2(f)(2), (3), (4) and (5), items of gain and income shall be
allocated among the Partners in accordance with Regulations Section 1.704-2(f) and the ordering
rules contained in Regulations Section 1.704-2(j), and (iv) if there is a net decrease in Partner
nonrecourse debt minimum gain within the meaning of Regulations Section 1.704-2(i)(4) for any
Partnership taxable year, then, subject to the exceptions set forth in Regulations Section
1.704-2(g), items of gain and income shall be allocated among the Partners, in accordance with
Regulations Section 1.704-2(i)(4) and the ordering rules contained in Regulations Section
1.704-2(j). A Partner’s “interest in partnership profits” for purposes of determining its share of
the nonrecourse liabilities of the Partnership within the meaning of Regulations Section 1.752-
3(a)(3) shall be such Partner’s Percentage Interest.



(d) Qualified Income Offset. If a Partner receives in any taxable year an
adjustment, allocation, or distribution described in subparagraphs (4), (5), or (6) of Regulations
Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such Partner’s Capital
Account that exceeds the sum of such Partner’s shares of Partnership Minimum Gain and Partner
nonrecourse debt minimum gain, as determined in accordance with Regulations Sections 1.704-2(g) and
1.704-2(i), such Partner shall be allocated specially for such taxable year (and, if necessary,
later taxable years) items of income and gain in an amount and manner sufficient to eliminate such
deficit Capital Account balance as quickly as possible as provided in Regulations Section
1.704-1(b)(2)(ii)(d). After the occurrence of an allocation of income or gain to a Partner in
accordance with this Section 5.1(c), to the extent permitted by Regulations Section 1.704-1(b),
items of expense or loss shall be allocated to such Partner in an amount necessary to offset the
income or gain previously allocated to such Partner under this Section 5.1(c).



(e) Capital Account Deficits. Loss shall not be allocated to a Limited Partner to
the extent that such allocation would cause a deficit in such Partner’s Capital Account (after
reduction to reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and
(6)) to exceed the sum of such Partner’s shares of Partnership Minimum Gain and Partner nonrecourse
debt minimum gain. Any Loss in excess of that limitation shall be allocated to the General Partner.
After the occurrence of an allocation of Loss to the General Partner in accordance with this
Section 5.1(d), to the extent permitted by Regulations Section 1.704-1(b), Profit shall be
allocated to the General Partner in an amount necessary to offset the Loss previously allocated to
the General Partner under this Section 5.1(d).



(f) Allocations Between Transferor and Transferee. If a Partner transfers any part
or all of its Partnership Interest, the distributive shares of the various items of Profit and Loss
allocable among the Partners during such fiscal year of the Partnership shall be allocated between
the transferor and the transferee Partner either (i) as if the Partnership’s fiscal year had ended
on the date of the transfer, or (ii) based on the number of days of such fiscal year that each was
a Partner without regard to the results of Partnership activities in the respective portions of
such fiscal year in which the transferor and the transferee were Partners. The General Partner, in
its sole and absolute discretion, shall determine which method shall be used to allocate the
distributive shares of the various items of Profit and Loss between the transferor and the
transferee Partner.



(g) Definitions of Profit and Loss. “PROFIT” and “LOSS” and any items of income,
gain, expense, or loss referred to in this Agreement shall be determined in accordance with federal
income tax accounting principles, as modified by Regulations Section 1.704-1(b)(2)(iv), except that
Profit and Loss shall not include items of income, gain and expense that are specially allocated
pursuant to Sections 5.1(b), 5.1(c), or 5.1(d). All allocations of income, Profit, gain, Loss, and
expense (and all items contained therein) for federal income tax purposes shall be identical to all
allocations of such items set forth in this Section 5.1, except as otherwise required by Section
704(c) of the Code and Regulations Section 1.704-1(b)(4). The General Partner shall have the
authority, in its sole and absolute discretion and without the need for consent from any Partner,
to elect the method or methods to be used by the Partnership for allocating items of income, gain,
expense and deductions as required by Section 704(c) of the Code, including election of a method
that may result in one or more Partners receiving or being allocated a disproportionately larger
share of items of Partnership income, gain, expense or deduction, and any such election shall be
binding on all Partners.



5.2 DISTRIBUTIONS OF CASH.



(a) The General Partner shall cause the Partnership to distribute when and as disclosed
by the General Partner, out of funds legally available for the payment thereof, preferential
distributions (the “Preferred Unit Distributions”) in respect of all series of Preferred Units in
the aggregate amount of dividends and other distributions in respect of the related preferred stock
(provided the net proceeds from the issuance of such preferred stock shall have theretofore been
contributed to the Partnership) paid by Gladstone Commercial Corporation to holders of such
preferred stock, contemporaneous with the payment of such preferred stock dividends and other
distributions. After making the Preferred Unit Distributions and subject to paragraph (b), the
Partnership shall distribute cash on a quarterly (or, at the election of the General Partner, more
frequent) basis, in an amount determined by the General Partner in its sole and absolute
discretion, to the Partners who are Partners on the Partnership Record Date with respect to such
quarter (or other distribution period) in the following manner: (i) first, to the General Partner
in an amount equal to the GP Minimum Return with respect to the fiscal year of the General Partner;
(ii) second, to the Limited Partners pro rata among them in proportion to the their respective
Unpaid Return, if any, owing to each such Limited Partners with respect to prior fiscal years, in
an amount equal to their respective Unpaid Return for such prior fiscal years owing to each such
Limited Partner; (iii) third, after the establishment of reasonable cash reserves to meet REIT
Expenses and other obligations of the Partnership, as determined in the sole and absolute
discretion of the General Partner, to the General Partner and the Limited Partners in such
aggregate amount as may be determined by the General Partner in its sole and absolute discretion to
be allocated among the General Partner and the Limited Partners such that each Limited Partner will
receive an amount equal to its LP Return for such fiscal year; and (iv) finally, to the General
Partner and the holders of Common Units, pro rata, in accordance with and in proportion to their
respective Percentage Interests; provided, however, that if a new or existing Partner acquires an
additional Partnership Interest in exchange for a Capital Contribution on any date other than a
Partnership Record Date, the cash distribution attributable to such additional Partnership Interest
relating to the Partnership Record Date next following the issuance of such additional Partnership
Interest shall be reduced to the proportion thereof which equals (i) the number of days that such
additional Partnership Interest is held by such Partner divided by (ii) the number of days between
such Partnership Record Date and the immediately preceding Partnership Record Date.



(b) Notwithstanding any other provision of this Agreement, the General Partner is
authorized to take any action that it determines to be necessary or appropriate to cause the
Partnership to comply with any withholding requirements established under the Code or any other
federal, state or local law including, without limitation, the requirements of Sections 1441, 1442,
1445 and 1446 of the Code. To the extent that the Partnership is required to withhold and pay over
to any taxing authority any amount resulting from the allocation or distribution of income to a
Partner or its assignee (including by reason of Section 1446 of the Code), either (i) if the actual
amount to be distributed to the Partner or assignee equals or exceeds the amount required to be
withheld by the Partnership, the amount withheld shall be treated as a distribution of cash in the
amount of such withholding to such Partner or assignee, or (ii) if the actual amount to be
distributed to the Partner or assignee is less than the amount required to be withheld by the
Partnership, the amount required to be withheld shall be treated as a loan (a “PARTNERSHIP LOAN”)
from the Partnership to the Partner or assignee on the day the Partnership pays over such amount to
a taxing authority. A Partnership Loan shall be repaid through withholding by the Partnership with
respect to subsequent distributions to the applicable Partner or assignee. In the event that a
Limited Partner (a “DEFAULTING LIMITED PARTNER”) fails to pay any amount owed to the Partnership
with respect to the Partnership Loan within 15 days after demand for payment thereof is made by the
Partnership on the Limited Partner, the General Partner, in its sole and absolute discretion, may
elect to make the payment to the Partnership on behalf of such Defaulting Limited Partner. In such
event, on the date of payment, the General Partner shall be deemed to have extended a loan (a
“GENERAL PARTNER LOAN”) to the Defaulting Limited Partner in the amount of the payment made by the
General Partner and shall succeed to all rights and remedies of the Partnership against the
Defaulting Limited Partner as to that amount. Without limitation, the General Partner shall have
the right to receive any distributions that otherwise would be made by the Partnership to the
Defaulting Limited Partner until such time as the General Partner Loan has been paid in full, and
any such distributions so received by the General Partner shall be treated as having been received
by the Defaulting Limited Partner and immediately paid to the General Partner. Any amounts treated
as a Partnership Loan or a General Partner Loan pursuant to this Section 5.2(b) shall bear interest
at the lesser of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in The Wall Street Journal, or (B) the maximum
lawful rate of interest on such obligation, such interest to accrue from the date the Partnership
or the General Partner, as applicable, is deemed to extend the loan until such loan is repaid in
full.



(c) To the extent not utilized for expenses of the Partnership or for investment in
additional Properties, the General Partner may, in its discretion, cause the Partnership to
distribute Net Capital Proceeds in such amount as shall be determined by the General Partner in its
discretion in accordance with the provisions of Section 5.2(a) hereof.



(d) In no event may a Partner receive a distribution of cash with respect to a
Partnership Unit if such Partner is entitled to receive a cash dividend as the holder of record of
a REIT Share for which all or part of such Partnership Unit has been or will be exchanged, and the
Unpaid Return with respect to such Partnership Unit shall be deemed to be reduced by the amount of
any such cash dividend.



5.3 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use its reasonable
efforts to cause the Partnership to distribute amounts sufficient to enable Gladstone Commercial
Corporation to pay stockholder dividends that will allow Gladstone Commercial Corporation to (a)
meet its distribution requirement for qualification as a REIT as set forth in Section 857 of the
Code and (b) avoid any federal income or excise tax liability imposed by the Code, other than to
the extent Gladstone Commercial Corporation elects to retain and pay income tax on its net capital
gain.



5.4 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be entitled to demand
property other than cash in connection with any distributions by the Partnership.



5.5 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding any of the
provisions of this Article 5, no Partner shall have the right to receive and the General Partner
shall not have the right to make a distribution that includes a return of all or part of a
Partner’s Capital Contributions, unless after giving effect to the return of a Capital
Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner for
the return of its Capital Contribution, does not exceed the fair market value of the Partnership’s
assets.



5.6 DISTRIBUTIONS UPON LIQUIDATION. Upon liquidation of the Partnership, after
payment of, or adequate provision for, debts and obligations of the Partnership, including any
Partner loans, any remaining assets of the Partnership shall be distributed to all Partners with
positive Capital Accounts in accordance with their respective positive Capital Account balances.
For purposes of the preceding sentence, the Capital Account of each Partner shall be determined
after the following adjustments: (i) all adjustments made in accordance with Sections 5.1 and 5.2
resulting from Partnership operations and from all sales and dispositions of all or any part of the
Partnership’s assets (including adjustments reflecting any deemed Profit or Loss attributable to
assets distributed in kind), and (ii) allocating any available Profit first to the General Partner
in an amount equal to the excess of (A) the value of the Partnership Units it received in exchange
for Capital Contributions of the proceeds of an issuance of REIT Shares pursuant to Section 4.2(b)
hereof over (B) the actual amount of its Capital Contributions pursuant to Section 4.2(b) hereof
(i.e., as a result of any underwriters’ discount or other expenses paid or incurred in connection
with such issuance). Any distributions pursuant to this Section 5.6 shall be made by the end of the
Partnership’s taxable year in which the liquidation occurs (or, if later, within 90 days after the
date of the liquidation). To the extent deemed advisable by the General Partner, appropriate
arrangements (including the use of a liquidating trust) may be made to assure that adequate funds
are available to pay any contingent debts or obligations.



5.7 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners that the
allocations of Profit and Loss under this Agreement have substantial economic effect (or be
consistent with the Partners’ interests in the Partnership in the case of the allocation of losses
attributable to nonrecourse debt) within the meaning of Section 704(b) of the Code as interpreted
by the Regulations promulgated pursuant thereto. Article 5 and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with such intent.



ARTICLE 6 




RIGHTS, OBLIGATIONS AND

POWERS OF THE GENERAL PARTNER




6.1 MANAGEMENT OF THE PARTNERSHIP.



(a) Except as otherwise expressly provided in this Agreement, the General Partner
shall have full, complete and exclusive discretion to manage and control the business of the
Partnership for the purposes herein stated, and shall make all decisions affecting the business and
assets of the Partnership. Subject to the restrictions specifically contained in this Agreement,
the powers and obligations, as the context requires, of the General Partner shall include, without
limitation, the authority to take the following actions on behalf of the Partnership:



(i) to acquire, purchase, own, operate, lease and dispose of any real property and
any other property or assets including, but not limited to notes, Mortgages, partnership or joint
venture interests or securities, that the General Partner determines are necessary or appropriate
or in the best interests of the business of the Partnership;



(ii) to construct buildings and make other improvements on the Properties owned or
leased by the Partnership;



(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership
Interests or any securities (including secured and unsecured debt obligations of the Partnership,
debt obligations of the Partnership convertible into any class or series of Partnership Interests,
or options, rights, warrants or appreciation rights relating to any Partnership Interests) of the
Partnership;



(iv) to borrow or lend money for the Partnership, issue or receive evidences of
indebtedness in connection therewith, refinance, increase the amount of, modify, amend or chance
the terms of, or extend the time for the payment of, any such indebtedness, and secure such
indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;



(v) to pay, either directly or by reimbursement, for all operating costs and general
administrative expenses of the Partnership to third parties or to the General Partner or its
Affiliates as set forth in this Agreement;



(vi) to guarantee or become a co-maker of indebtedness of the General Partner or any
Affiliate thereof, refinance, increase the amount of, modify, amend or change the terms of, or
extend the time for the payment of, any such guarantee or indebtedness, and secure such guarantee
or indebtedness by mortgage, deed of trust, pledge or other lien on the Partnership’s assets;



(vii) to use assets of the Partnership (including, without limitation, cash on hand)
for any purpose consistent with this Agreement, including, without limitation, payment, either
directly or by reimbursement, of all operating costs and general administrative expenses of the
General Partner, the Partnership or any Subsidiary of either, to third parties or to the General
Partner as set forth in this Agreement;



(viii) to lease all or any portion of any of the Partnership’s assets, whether or not
the terms of such leases extend beyond the termination date of the Partnership and whether or not
any portion of the Partnership’s assets so leased are to be occupied by the lessee, or, in turn,
subleased in whole or in part to others, for such consideration and on such terms as the General
Partner may determine;



(ix) to prosecute, defend, arbitrate, or compromise any and all claims or liabilities
in favor of or against the Partnership, on such terms and in such manner as the General Partner may
reasonably determine, and similarly, to prosecute, settle or defend litigation with respect to the
Partners, the Partnership, or the Partnership’s assets;



(x) to file applications, communicate, and otherwise deal with any and all
governmental agencies having jurisdiction over, or in any way affecting, the Partnership’s assets
or any other aspect of the Partnership business;



(xi) to make or revoke any election permitted or required of the Partnership by any
taxing authority;



(xii) to maintain such insurance coverage for public liability, fire and casualty,
and any and all other insurance for the protection of the Partnership, for the conservation of
Partnership assets, or for any other purpose convenient or beneficial to the Partnership, in such
amounts and such types, as it shall determine from time to time;



(xiii) to determine whether or not to apply any insurance proceeds for any Property
to the restoration of such Property or to distribute the same;



(xiv) to establish one or more divisions of the Partnership, to hire and dismiss
employees of the Partnership or any division of the Partnership, and to retain legal counsel,
accountants, consultants, real estate brokers, and such other persons, as the General Partner may
deem necessary or appropriate in connection with the Partnership business and to pay such persons
remuneration as the General Partner may deem reasonable and proper;



(xv) to retain other services of any kind or nature in connection with Partnership
business and to pay such remuneration as the General Partner may deem reasonable and proper for
same;



(xvi) to negotiate and conclude agreements on behalf of the Partnership with respect
to any of the rights, powers and authority conferred upon the General Partner;



(xvii) to maintain accurate accounting records and to file promptly all federal,
state and local income tax returns on behalf of the Partnership;



(xviii) to distribute Partnership cash or other Partnership assets in accordance with
this Agreement;



(xix) to form or acquire an interest in, and contribute property to, any further
limited or general partnerships, joint ventures, limited liability companies or other entities or
relationships that it deems desirable (including, without limitation, the acquisition of interests
in, and the contributions of property to, its Subsidiaries and any other Person in which it has an
equity interest from time to time);



(xx) to establish Partnership reserves for working capital, capital expenditures,
contingent liabilities, or any other valid Partnership purpose;



(xxi) to merge, consolidate or combine the Partnership with or into another Person;



(xxii) to do any and all acts and things necessary or prudent to ensure that the
Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704
of the Code; and



(xxiii) to take such other action, execute, acknowledge, swear to or deliver such
other documents and instruments, and perform any and all other acts that the General Partner deems
necessary or appropriate for the formation, continuation and conduct of the business and affairs of
the Partnership (including, without limitation, all actions consistent with allowing Gladstone
Commercial Corporation at all times to qualify as a REIT unless Gladstone Commercial Corporation
voluntarily terminates its REIT status) and to possess and enjoy all of the rights and powers of a
general partner as provided by the Act.



(b) Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General Partner shall not
have any obligations hereunder except to apply Partnership funds to the extent that Partnership
funds are reasonably available to it for the performance of such duties, and nothing herein
contained shall be deemed to authorize or require the General Partner, in its capacity as such, to
expend its individual funds for payment to third parties or to undertake any individual liability
or obligation on behalf of the Partnership.



6.2 DELEGATION OF AUTHORITY. The General Partner may delegate any or all of its
powers, rights and obligations hereunder, and may appoint, employ, contract or otherwise deal with
any Person (including without limitation the Adviser, its officers and agents and officers or other
agents of the Partnership or the General Partner appointed by the General Partner) for the
transaction of the business of the Partnership, which Person may, under supervision of the General
Partner, perform any acts or services for the Partnership as the General Partner may approve.



6.3 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.



(a) The Partnership shall indemnify an Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including reasonable legal fees
and expenses), judgments, fines, settlements, and other amounts arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that
relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee
may be involved, or is threatened to be involved, as a party or otherwise, as a result of acting on
behalf of or performing services for the Partnership, only if it is determined that (i) the
Indemnitee acted in good faith and (ii) that the Indemnitee reasonably believed that the act or
omission was in the Partnership’s best interests, or if the act or omission was outside the
Indemnitee’s official capacity as a general partner of the Partnership, that the act or omission
was at least not opposed to the Partnership’s best interests. Notwithstanding the foregoing, each
Indemnitee shall be liable, responsible and accountable, and the Partnership shall not be liable to
an Indemnitee, other than for reasonable expenses actually incurred by the Indemnitee with respect
to a proceeding in which (i) the Indemnitee is found liable on the basis that the Indemnitee
improperly received personal benefit, whether or not the benefit resulted from an action taken in
the Indemnitee’s official capacity, or (ii) the Indemnitee is found liable to the Partnership or
the Limited Partners. The Partnership shall not indemnify or hold harmless the Indemnitee: (a) in
the case in which the Indemnitee is an Independent Director, if the loss or liability was the
result of gross negligence or willful misconduct by the Indemnitee, or (b) in any other case, if
the loss or liability was the result of negligence or misconduct by the Indemnitee. The termination
of any proceeding by judgment, order or settlement does not create a presumption that the
Indemnitee did not meet the requisite standard of conduct set forth in this Section 6.3(a). The
termination of any proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, does not alone determine that the Indemnitee
acted in a manner contrary to that specified in this Section 6.3(a). Any indemnification pursuant
to this Section 6.3 shall be made only out of the assets of the Partnership.



(b) Notwithstanding anything to the contrary contained in the provisions of
subsection (a) of this Section 6.3, the Partnership shall not provide indemnification for any loss,
liability or expense arising from or out of an alleged violation of federal or state securities
laws by an Indemnitee unless one or more of the following conditions are met: (i) there has been a
successful adjudication on the merits of each count involving alleged securities law violations as
to the particular Indemnitee, (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular Indemnitee, or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular Indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the court considering
the request for indemnification has been advised of the position of the Commission and of the
published position of any state securities regulatory authority in which securities of the
Partnership were offered or sold as to indemnification for violations of securities laws.



(c) The Partnership shall pay or reimburse reasonable legal expenses and other costs
incurred by an Indemnitee in advance of final disposition of a proceeding if all of the following
are satisfied: (i) the proceeding relates to acts or omissions with respect to the performance of
duties for services on behalf of the Partnership, (ii) the Indemnitee provides the Partnership with
written affirmation of the Indemnitee’s good faith belief that the Indemnitee has met the standard
of conduct necessary for indemnification by the Partnership as authorized in this Section 6.3,
(iii) the legal proceeding was initiated by a third party who is not a stockholder of the General
Partner or, if by a stockholder of the General Partner acting in his or her capacity as such, a
court of competent jurisdiction approves such advancement, and (iv) the Indemnitee provides the
Partnership with a written agreement to repay the amount paid or reimbursed by the Partnership,
together with the applicable legal rate of interest thereon, if it is ultimately determined that
the Indemnitee did not comply with the requisite standard of conduct and is not entitled to
indemnification.



(d) The Indemnification provided by this Section 6.3 shall be in addition to any
other rights to which an Indemnitee or any other Person may be entitled under any agreement,
pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity.



(e) The Partnership may purchase and maintain insurance or establish other
arrangements, including without limitation trust arrangements and letters of credit on behalf of or
to secure indemnification obligations owed to the Indemnitees and such other Persons as the General
Partner shall determine against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership’s activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability under the
provisions of this Agreement.



(f) For purposes of this Section 6.3, (i) the Partnership shall be deemed to have
requested an Indemnitee to serve as a fiduciary of an employee benefit plan whenever the
performance by the Indemnitee of its duties to the Partnership also imposes duties on the
Indemnitee, or otherwise involves services by the Indemnitee to the plan or participants or
beneficiaries of the plan; (ii) excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute fines within the meaning of this Section
6.3; and (iii) actions taken or omitted by the Indemnitee with respect to an employee benefit plan
in the performance of its duties for a purpose reasonably believed by it to be in the interest of
the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.



(g) In no event may an Indemnitee subject the Limited Partners to personal liability
by reason of the indemnification provisions set forth in this Agreement.



(h) An Indemnitee shall not be denied indemnification in whole or in part under this
Section 6.3 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.



(i) The provisions of this Section 6.3 are for the benefit of the Indemnitees, their
heirs, successors, assigns and administrators and shall not be deemed to create any rights in or be
for the benefit of any other Persons.



(j) Any amendment, modification or repeal of this Section 6.3 or any provision hereof
shall be prospective only and shall not in any way affect the indemnification of an Indemnitee by
the Partnership under this Section 6.3 as in effect immediately prior to such amendment,
modification or repeal with respect to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when claims relating to such matters may arise or
be asserted.



6.4 LIABILITY OF THE GENERAL PARTNER.



(a) Notwithstanding anything to the contrary set forth in this Agreement, the General
Partner shall not be liable for monetary damages to the Partnership or any Partners for losses
sustained or liabilities incurred as a result of errors in judgment or any act or omission if the
General Partner acted in good faith. The General Partner shall not be in breach of any duty that
the General Partner may owe to the Limited Partners or the Partnership or any other Persons under
this Agreement or of any duty stated or implied by law or equity, provided, the General Partner,
acting in good faith, abides by the terms of this Agreement. In addition, to the extent the General
Partner or any officer, director, employee, agent or stockholder of the General Partner performs
its duties in accordance with the standards provided by the Act, as it may be amended from time to
time, or under any successor statute thereto, such Person or Persons shall have no liability by
reason of being or having been the General Partner, or by reason of being an officer, director,
employee, agent or stockholder of the General Partner. To the maximum extent that the Act and the
general laws of the State of Delaware, in effect from time to time, permit limitation of the
liability of general partner of a limited partnership, the General Partner and its officers,
directors, employees, agents and stockholders shall not be liable to the Partnership or to any
Partner for money damages except to the extent that (i) the General Partner or its officers,
directors, employees, agents or stockholders actually received an improper benefit or profit in
money, property or services, in which case the liability shall not exceed the amount of the benefit
or profit in money, property or services actually received; or (ii) a judgment or other final
adjudication adverse to the General Partner or one or more of its officers, directors, employees,
agents or stockholders is entered in a proceeding based on a finding in the proceeding that the
action or failure to act of the General Partner or one or more of its officers, directors,
employees, agents or stockholders was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. Neither the amendment nor repeal of
this Section 6.4(a), nor the adoption or amendment of any other provision of this Agreement
inconsistent with this Section 6.4(a), shall apply to or affect in any respect the applicability of
the preceding sentence with respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption. In the absence of any Delaware statute limiting the liability of the
General Partner or its directors or officers for money damages in a suit by or on behalf of the
Partnership or by any Partner, the General Partner and the officers, directors, employees, agents
and stockholders of the General Partner shall not be liable to the Partnership or to any Partner
for money damages except to the extent that (i) the General Partner or one or more of its officers,
directors, employees, agents or stockholders actually received an improper benefit or profit in
money, property or services, in which case the liability shall not exceed the amount of the benefit
or profit in money, property or services actually received; or (ii) a judgment or other final
adjudication adverse to the General Partner or one or more of its officers, directors, employees,
agents or stockholders is entered in a proceeding based on a finding in the proceeding that the
action of the General Partner or one or more of its officers, directors, employees or stockholders
action or failure to act was the result of active and deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding.



(b) The Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership, itself and its stockholders collectively, that the General Partner is
under no obligation to consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all,
of the Limited Partners) in deciding whether to cause the Partnership to take (or decline to take)
any actions. In the event of a conflict between the interests of its stockholders on the one hand
and the Limited Partners on the other, the General Partner shall endeavor in good faith to resolve
the conflict in a manner not adverse to either its stockholders or the Limited Partners; provided,
however, that for so long as the General Partner directly owns a controlling interest in the
Partnership, any such conflict that the General Partner, in its sole and absolute discretion,
determines cannot be resolved in a manner not adverse to either its stockholders or the Limited
Partners shall be resolved in favor of its stockholders. The General Partner shall not be liable
for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited
Partners in connection with such decisions, provided that the General Partner has acted in good
faith.



(c) Subject to its obligations and duties as General Partner set forth in Section 6.1
hereof, the General Partner may exercise any of the powers granted to it under this Agreement and
perform any of the duties imposed upon it hereunder either directly or by or through its agents.
The General Partner shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by it in good faith.



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



(e) Any amendment, modification or repeal of this Section 6.4 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the General Partner’s
liability to the Partnership and the Limited Partners under this Section 6.4 as in effect
immediately prior to such amendment, modification or repeal with respect to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of when claims
relating to such matters may arise or be asserted.



6.5 REIMBURSEMENT OF GENERAL PARTNER.



(a) Except as provided in this Section 6.5 and elsewhere in this Agreement (including
the provisions of Articles 5 and 6 regarding distributions, payments, and allocations to which it
may be entitled), the General Partner shall not be compensated for its services as general partner
of the Partnership.



(b) The General Partner shall be reimbursed on a monthly basis, or such other basis
as the General Partner may determine in its sole and absolute discretion, for all REIT Expenses and
Administrative Expenses.



6.6 OUTSIDE ACTIVITIES. Subject to Section 6.8 hereof, the Articles of Incorporation
and any agreements entered into by the General Partner or its Affiliates with the Partnership or a
Subsidiary, or any officer, director, employee, agent, trustee, Affiliate or stockholder of the
General Partner, the General Partner shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership, including business
interests and activities substantially similar or identical to those of the Partnership. Neither
the Partnership nor any of the Limited Partners shall have any rights by virtue of this Agreement
in any such business ventures, interests or activities. None of the Limited Partners or any other
Person shall have any rights by virtue of this Agreement or the partnership relationship
established hereby in any such business ventures, interests or activities, and the General Partner
shall have no obligation pursuant to this Agreement to offer any interest in any such business
ventures, interests and activities to the Partnership or any Limited Partner, even if such
opportunity is of a character which, if presented to the Partnership or any Limited Partner, could
be taken by such Person.



6.7 EMPLOYMENT OR RETENTION OF AFFILIATES.



(a) Any Affiliate of the General Partner may be employed or retained by the
Partnership and may otherwise deal with the Partnership (whether as an adviser, buyer, lessor,
lessee, manager, property management agent, asset manager, furnisher of goods or services, broker,
agent, lender or otherwise) and may receive from the Partnership any compensation, price, or other
payment therefor which the General Partner determines to be fair and reasonable.



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



(c) The Partnership may transfer assets to joint ventures, limited liability
companies, other partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions as the General Partner deems
to be consistent with this Agreement and applicable law.



(d) Except as expressly permitted by this Agreement, neither the General Partner nor
any of its Affiliates shall sell, transfer or convey any property to, or purchase any property
from, the Partnership, directly or indirectly, except pursuant to transactions that are on terms
that are fair and reasonable to the Partnership.



6.8 GLADSTONE COMMERCIAL CORPORATION PARTICIPATION. Gladstone Commercial Corporation
agrees that all business activities of Gladstone Commercial Corporation, including activities
pertaining to the acquisition, development or ownership of industrial or commercial real property
or other property, including Mortgages, shall be conducted through the Partnership or one or more
Subsidiary Partnerships; provided, however, that Gladstone Commercial Corporation is allowed to
make a direct acquisition, but if and only if, such acquisition is made in connection with the
issuance of Additional Securities, which direct acquisition and issuance have been approved and
determined to be in the best interests of Gladstone Commercial Corporation and the Partnership by a
majority of the Independent Directors.



6.9 TITLE TO PARTNERSHIP ASSETS. Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity,
and no Partner, individually or collectively, shall have any ownership interest in such Partnership
assets or any portion thereof; provided, that title to any or all of the Partnership assets may be
held in the name of the Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The General Partner hereby
declares and warrants that any Partnership assets for which legal title is held in the name of the
General Partner or any nominee or Affiliate of the General Partner shall be held by such Person for
the use and benefit of the Partnership in accordance with the provisions of this Agreement;
provided, that the General Partner shall use its best efforts to cause legal title to such assets
to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records, irrespective of the name in
which legal title to such Partnership assets is held.



6.10 REDEMPTION OF GENERAL PARTNER PARTNERSHIP UNITS. In the event Gladstone
Commercial Corporation redeems any REIT Shares or REIT Preferred Shares, then the General Partner
shall cause the Partnership to purchase from the General Partner or the Original Limited Partner a
number of Common Units or Preferred Units, as the case may be, on the same terms upon which
Gladstone Commercial Corporation redeemed such REIT Shares or REIT Preferred Shares. Moreover, if
Gladstone Commercial Corporation makes a cash tender offer or other offer to acquire REIT Shares or
REIT Preferred Shares or otherwise purchases REIT Shares or REIT Preferred Shares, then the General
Partner shall cause the Partnership to make a corresponding offer to the General Partner or the
Original Limited Partner to acquire, or shall otherwise purchase, an equal number of Common Units
or Preferred Units, as the case may be, held by the General Partner or Original Limited Partner. In
the event any REIT Shares or REIT Preferred Shares are redeemed by Gladstone Commercial Corporation
pursuant to such offer, the Partnership shall redeem an equivalent number of the General Partner’s
or the Original Limited Partner’s Common Units or Preferred Units, as the case may be, for an
equivalent purchase price.



ARTICLE 7 




CHANGES IN GENERAL PARTNER




7.1 TRANSFER OF THE GENERAL PARTNER’S PARTNERSHIP INTEREST.



(a) The General Partner shall not transfer all or any portion of its General
Partnership Interest or withdraw as General Partner except as provided in or in connection with a
transaction contemplated by Sections 7.1(c), 7.1(d) or 7.1(e).



(b) The General Partner agrees that the Percentage Interest for it will at all times,
be in the aggregate, at least 0.2%.



(c) Except as otherwise provided in Section 7.1(d) or (e) hereof, Gladstone
Commercial Corporation shall not engage in any merger, consolidation or other combination with or
into another Person or sale of all or substantially all of its assets (other than in connection
with a change in Gladstone Commercial Corporation’s state of incorporation or organizational form),
which, in any such case, results in a change of control of Gladstone Commercial Corporation (a
“TRANSACTION”), unless:



(i) the consent of Limited Partners (other than the General Partner or any
Subsidiary) holding more than 50% of the Percentage Interests of the Limited Partners (other than
those held by the General Partner or any Subsidiary) is obtained; or



(ii) as a result of such Transaction all Limited Partners are granted the right to
receive for each Partnership Unit an amount of cash, securities, or other property equal to the
product of the Conversion Factor and the greatest amount of cash, securities or other property paid
in the Transaction to a holder of one REIT Share in consideration of the transfer of one REIT
Share; provided, that if, in connection with the Transaction, a purchase, tender or exchange offer
(“OFFER”) shall have been made to and accepted by the holders of more than 50% of the outstanding
REIT Shares, each holder of Partnership Units shall be given the option to exchange its Partnership
Units for the greatest amount of cash, securities, or other property which a Limited Partner would
have received had it (A) exercised its Exchange Right and (B) sold, tendered or exchanged pursuant
to the Offer the REIT Shares received upon exercise of the Exchange Right immediately prior to the
expiration of the Offer; or



(iii) Gladstone Commercial Corporation is the surviving entity in the Transaction and
either (A) the holders of REIT Shares do not receive cash, securities, or other property in the
Transaction or (B) all Limited Partners (other than the General Partner or any Subsidiary) receive
an amount of cash, securities, or other property (expressed as an amount per REIT Share) that is no
less than the product of the Conversion Factor and the greatest amount of cash, securities, or
other property (expressed as an amount per REIT Share) received in the Transaction by any holder of
REIT Shares.



(d) Notwithstanding Section 7.1(c), Gladstone Commercial Corporation may merge with
or into or consolidate with another entity if immediately after such merger or consolidation (i)
substantially all of the assets of the successor or surviving entity (the “SURVIVOR”), other than
Partnership Units held by the General Partner, are contributed, directly or indirectly, to the
Partnership as a Capital Contribution in exchange for Partnership Units with a fair market value
equal to the value of the assets so contributed as determined by the Survivor in good faith and
(ii) the Survivor expressly agrees to assume all obligations of Gladstone Commercial Corporation
and the General Partner, as appropriate, hereunder. Upon such contribution and assumption, the
Survivor shall have the right and duty to amend this Agreement as set forth in this Section 7.1(d).
The Survivor shall in good faith arrive at a new method for the calculation of the Cash Amount, the
REIT Shares Amount and the Conversion Factor for a Partnership Unit after any such merger or
consolidation so as to approximate the existing method for such calculation as closely as
reasonably possible. Such calculation shall take into account, among other things, the kind and
amount of securities, cash and other property that was receivable upon such merger or consolidation
by a holder of REIT Shares or options, warrants or other rights relating thereto, and which a
holder of Partnership Units could have acquired had such Partnership Units been exchanged
immediately prior to such merger or consolidation. Such amendment to this Agreement shall provide
for adjustments to such method of calculation, which shall be as nearly equivalent as may be
practicable to the adjustments provided for herein with respect to the Conversion Factor. The
Survivor also shall in good faith modify the definition of REIT Shares and make such amendments to
Section 8.5 hereof so as to approximate the existing rights and obligations set forth in Section
8.5 as closely as reasonably possible. The above provisions of this Section 7.1(d) shall similarly
apply to successive mergers or consolidations permitted hereunder.



In respect of any transaction described in the preceding paragraph, Gladstone Commercial
Corporation is required to use its commercially reasonable efforts to structure such transaction to
avoid causing the Limited Partners to recognize a gain for federal income tax purposes by virtue of
the occurrence of or their participation in such transaction, provided, such efforts are consistent
with the exercise of the Board of Directors’ fiduciary duties to the stockholders of Gladstone
Commercial Corporation under applicable law.



(e) Notwithstanding anything in this Article 7,



(i) a General Partner may transfer all or any portion of its General Partnership
Interest to (A) a wholly-owned Subsidiary of such General Partner or (B) the owner of all of the
ownership interests of such General Partner, and following a transfer of all of its General
Partnership Interest, may withdraw as General Partner; and



(ii) Gladstone Commercial Corporation may engage in a transaction not required by law
or by the rules of any national securities exchange on which the REIT Shares are listed to be
submitted to the vote of the holders of the REIT Shares.



7.2 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER. A Person shall be
admitted as a substitute or additional General Partner of the Partnership only if the following
terms and conditions are satisfied:



(a) the Person to be admitted as a substitute or additional General Partner shall
have accepted and agreed to be bound by all the terms and provisions of this Agreement by executing
a counterpart hereof and such other documents or instruments as may be required or appropriate in
order to effect the admission of such Person as a General Partner, a certificate evidencing the
admission of such Person as a General Partner shall have been filed for recordation and all other
actions required by Section 2.5 hereof in connection with such admission shall have been performed;



(b) if the Person to be admitted as a substitute or additional General Partner is a
corporation or a partnership, it shall have provided the Partnership with evidence satisfactory to
counsel for the Partnership of such Person’s authority to become a General Partner and to be bound
by the terms and provisions of this Agreement; and



(c) counsel for the Partnership shall have rendered an opinion (relying on such
opinions from other counsel in the state or any other jurisdiction as may be necessary) that the
admission of the Person to be admitted as a substitute or additional General Partner is in
conformity with the Act, and that none of the actions taken in connection with the admission of
such Person as a substitute or additional General Partner will cause (i) the Partnership to be
classified other than as a partnership for federal income tax purposes, or (ii) the loss of any
Limited Partner’s limited liability.



7.3 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL PARTNER.



(a) Upon the occurrence of an Event of Bankruptcy as to a General Partner (and its
removal pursuant to Section 7.4(a) hereof) or the death, withdrawal, removal or dissolution of a
General Partner (except that, if a General Partner is, on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner
in, such partnership shall be deemed not to be a dissolution of such General Partner if the
business of such General Partner is continued by the remaining partner or partners thereof), the
Partnership shall be dissolved and terminated unless the Partnership is continued pursuant to
Section 7.3(b) hereof. The merger of the General Partner with or into any entity that is admitted
as a substitute or successor General Partner pursuant to Section 7.2 hereof shall not be deemed to
be the withdrawal, dissolution or removal of the General Partner.



(b) Following the occurrence of an Event of Bankruptcy as to a General Partner (and
its removal pursuant to Section 7.4(a) hereof) or the death, withdrawal, removal or dissolution of
a General Partner (except that, if a General Partner is, on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to, or removal of a partner
in, such partnership shall be deemed not to be a dissolution of such General Partner if the
business of such General Partner is continued by the remaining partner or partners thereof), the
Limited Partners, within 90 days after such occurrence, may elect to continue the business of the
Partnership for the balance of the term specified in Section 2.4 hereof by selecting, subject to
Section 7.2 hereof and any other provisions of this Agreement, a substitute General Partner by
consent of a majority in interest of the Limited Partners. If the Limited Partners elect to
continue the business of the Partnership and admit a substitute General Partner, the relationship
with the Partners and of any Person who has acquired an interest of a Partner in the Partnership
shall be governed by this Agreement.



7.4 REMOVAL OF A GENERAL PARTNER.



(a) Upon the occurrence of an Event of Bankruptcy as to, or the dissolution of, a
General Partner, such General Partner shall be deemed to be removed automatically; provided,
however, that if a General Partner is on the date of such occurrence a partnership, the withdrawal,
death, dissolution, Event of Bankruptcy as to or removal of a partner in such partnership shall be
deemed not to be a dissolution of the General Partner if the business of such General Partner is
continued by the remaining partner or partners thereof. The Limited Partners may not remove the
General Partner, with or without cause.



(b) If a General Partner has been removed pursuant to this Section 7.4 and the
Partnership is continued pursuant to Section 7.3 hereof, such General Partner shall promptly
transfer and assign its General Partnership Interest in the Partnership to the substitute General
Partner approved by a majority in interest of the Limited Partners in accordance with Section
7.3(b) hereof and otherwise admitted to the Partnership in accordance with Section 7.2 hereof. At
the time of assignment, the removed General Partner shall be entitled to receive from the
substitute General Partner the fair market value of the General Partnership Interest of such
removed General Partner as reduced by any damages caused to the Partnership by such General
Partner’s removal. Such fair market value shall be determined by an appraiser mutually agreed upon
by the General Partner and Limited Partners holding more than 50% of the Percentage Interests of
the Limited Partners within 10 days following the removal of the General Partner. In the event that
the parties are unable to agree upon an appraiser, the removed General Partner and Limited Partners
holding more than 50% of the Percentage Interests of the Limited Partners shall each select an
appraiser. Each such appraiser shall complete an appraisal of the fair market value of the removed
General Partner’s General Partnership Interest within 30 days of the General Partner’s removal, and
the fair market value of the removed General Partner’s General Partnership Interest shall be the
average of the two appraisals; provided, however, that if the higher appraisal exceeds the lower
appraisal by more than 20% of the amount of the lower appraisal, the two appraisers, no later than
40 days after the removal of the General Partner, shall select a third appraiser who shall complete
an appraisal of the fair market value of the removed General Partner’s General Partnership Interest
no later than 60 days after the removal of the General Partner. In such case, the fair market value
of the removed General Partner’s General Partnership Interest shall be the average of the two
appraisals closest in value.



(c) The General Partnership Interest of a removed General Partner, during the time
after removal until the date of transfer under Section 7.4(b), shall be converted to that of a
special Limited Partner; provided, however, such removed General Partner shall not have any rights
to participate in the management and affairs of the Partnership, and shall not be entitled to any
portion of the income, expense, Profit, gain or Loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners. Instead, such removed General Partner shall
receive and be entitled only to retain distributions or allocations of such items that it would
have been entitled to receive in its capacity as General Partner, until the transfer is effective
pursuant to Section 7.4(b).



(d) All Partners shall have given and hereby do give such consents, shall take such
actions and shall execute such documents as shall be legally necessary and sufficient to effect all
the foregoing provisions of this Section 7.4.



ARTICLE 8 




RIGHTS AND OBLIGATIONS

OF THE LIMITED PARTNERS




8.1 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not participate in the
management or control of Partnership business nor shall they transact any business for or on behalf
of the Partnership, nor shall they have the power to sign for or bind the Partnership, such powers
being vested solely and exclusively in the General Partner.



8.2 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably appoints the General
Partner its true and lawful attorney-in-fact, who may act for each Limited Partner and in its name,
place and stead, and for its use and benefit, sign, acknowledge, swear to, deliver, file or record,
at the appropriate public offices, any and all documents, certificates, and instruments as may be
deemed necessary or desirable by the General Partner to carry out fully the provisions of this
Agreement and the Act in accordance with their terms, which power of attorney is coupled with an
interest and shall survive the death, dissolution or legal incapacity of the Limited Partner, or
the transfer by the Limited Partner of any part or all of its Partnership Interest.



8.3 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited Partner shall be liable
for any debts, liabilities, contracts or obligations of the Partnership. A Limited Partner shall be
liable to the Partnership only to make payments of its Capital Contribution, if any, as and when
due hereunder. After its Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital Contributions or other
payments or lend any funds to the Partnership.



8.4 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR AFFILIATE. No
Limited Partner shall at any time, either directly or indirectly, own any stock or other interest
in the General Partner or in any Affiliate thereof, if such ownership by itself or in conjunction
with other stock or other interests owned by other Limited Partners would, in the opinion of
counsel for the Partnership, jeopardize the classification of the Partnership as a partnership for
federal income tax purposes. The General Partner shall be entitled to make such reasonable inquiry
of the Limited Partners as is required to establish compliance by the Limited Partners with the
provisions of this Section 8.4.



8.5 EXCHANGE RIGHT.



(a) Subject to Sections 8.5(b), 8.5(c), 8.5(d) and 8.5(e) hereof, and subject to the
potential modification of any rights or obligations provided for herein by agreement(s) between the
Partnership and any one or more Limited Partners with respect to Partnership Units held by them,
each Limited Partner which is not an Affiliate of the General Partner shall have the right (the
“EXCHANGE RIGHT”) to require the Partnership to redeem on a Specified Exchange Date all or a
portion of the Partnership Units held by such Limited Partner at an exchange price equal to and in
the form of the Exchange Amount to be paid by the Partnership; provided, that such redemption shall
not occur before the date that is one year following the closing of the initial public offering of
shares of Gladstone Commercial Corporation’s common stock, subject to any restriction agreed to in
writing between the Limited Partner who is exercising the Exchange Right (the “EXCHANGING PARTNER”)
and the General Partner. The Exchange Right shall be exercised pursuant to the delivery of an
Exchange Notice to the Partnership (with a copy to the General Partner) by the Exchanging Partner;
provided, however, that the Partnership shall, in its sole and absolute discretion, have the option
to deliver either the Cash Amount or the REIT Shares Amount; provided, further, that the
Partnership shall not be obligated to satisfy such Exchange Right if the General Partner elects to
purchase the Partnership Units subject to the Exchange Notice; and provided further, that no
Limited Partner may deliver more than two Exchange Notices during each calendar year. A Limited
Partner may not exercise the Exchange Right for less than 1,000 Partnership Units or, if such
Limited Partner holds less than 1,000 Partnership Units, all of the Partnership Units held by such
Partner. The Exchanging Partner shall have no right, with respect to any Partnership Units so
exchanged, to receive any distribution paid with respect to such Partnership Units if the record
date for such distribution is on or after the Specified Exchange Date.



(b) Notwithstanding the provisions of Section 8.5(a), a Limited Partner that
exercises the Exchange Right shall be deemed to have also offered to sell the Partnership Units
described in the Exchange Notice to the General Partner, and the General Partner may, in its sole
and absolute discretion, elect to purchase directly and acquire such Partnership Units by paying to
the Exchanging Partner either the Cash Amount or the REIT Shares Amount, as elected by the General
Partner (in its sole and absolute discretion), on the Specified Exchange Date, whereupon the
General Partner shall acquire the Partnership Units offered for exchange by the Exchanging Partner
and shall be treated for all purposes of this Agreement as the owner of such Partnership Units. If
the General Partner shall elect to exercise its right to purchase Partnership Units under this
Section 8.5(b) with respect to an Exchange Notice, it shall so notify the Exchanging Partner within
five business days after the receipt by the General Partner of such Exchange Notice. Unless the
General Partner (in its sole and absolute discretion) shall exercise its right to purchase
Partnership Units from the Exchanging Partner pursuant to this Section 8.5(b), the General Partner
shall have no obligation to the Exchanging Partner or the Partnership with respect to the
Exchanging Partner’s exercise of an Exchange Right. In the event the General Partner shall exercise
its right to purchase Partnership Units with respect to the exercise of an Exchange Right in the
manner described in the first sentence of this Section 8.5(b), the Partnership shall have no
obligation to pay any amount to the Exchanging Partner with respect to such Exchanging Partner’s
exercise of such Exchange Right, and each of the Exchanging Partner and the General Partner shall
treat the transaction between the General Partner and the Exchanging Partner for federal income tax
purposes as a sale of the Exchanging Partner’s Partnership Units to the General Partner. Each
Exchanging Partner agrees to execute such documents as Gladstone Commercial Corporation may
reasonably require in connection with the issuance of REIT Shares to such Exchanging Partner upon
exercise of its Exchange Right.



(c) Notwithstanding the provisions of Sections 8.5(a) and 8.5(b), a Limited Partner
shall not be entitled to exercise the Exchange Right if the delivery of REIT Shares to such Partner
on the Specified Exchange Date by the General Partner pursuant to Section 8.5(b) (regardless of
whether or not the General Partner would in fact exercise its rights under Section 8.5(b)) would
(i) result in such Partner or any other person owning, directly or indirectly, REIT Shares in
excess of the ownership limitations described in the Articles of Incorporation and calculated in
accordance therewith, (ii) result in REIT Shares being owned by fewer than 100 persons (determined
without reference to any rules of attribution), except as provided in the Articles of
Incorporation, (iii) result in Gladstone Commercial Corporation being “closely held” within the
meaning of Section 856(h) of the Code, (iv) cause Gladstone Commercial Corporation to own, directly
or constructively, 10% or more of the ownership interests in a tenant of Gladstone Commercial
Corporation’s, the Partnership’s, or a Subsidiary Partnership’s real property within the meaning of
Section 856(d)(2)(B) of the Code, or (v) cause the acquisition of REIT Shares by such Partner to be
“integrated” with any other distribution of REIT Shares for purposes of complying with the
registration provisions of the Securities Act. The General Partner, in its sole and absolute
discretion, may waive any of the restrictions on exchange set forth in this Section 8.5(c);
provided, however, that in the event any such restriction is waived, the Exchanging Partner shall
be paid the Cash Amount.



(d) Any Cash Amount to be paid to an Exchanging Partner pursuant to this Section 8.5
shall be paid on the Specified Exchange Date; provided, however, that the General Partner may elect
to cause the Specified Exchange Date to be delayed for up to 180 days to the extent required for
Gladstone Commercial Corporation to cause additional REIT Shares to be issued to provide financing
to be used to make such payment of the Cash Amount or otherwise. Notwithstanding the foregoing, the
General Partner agrees to use its best efforts to cause the closing of the acquisition of exchanged
Partnership Units hereunder to occur as quickly as reasonably possible.



(e) Notwithstanding any other provision of this Agreement, the General Partner is
authorized to take any action that it determines to be necessary or appropriate to cause the
Partnership to comply with any withholding requirements established under the Code or any other
federal, state or local law that apply upon an Exchanging Partner’s exercise of the Exchange Right.
If an Exchanging Partner believes that it is exempt from such withholding upon the exercise of the
Exchange Right, such Partner must furnish the General Partner with a FIRPTA Certificate in the form
attached hereto as Exhibit C. If the Partnership or the General Partner is required to withhold and
pay over to any taxing authority any amount upon an Exchanging Partner’s exercise of the Exchange
Right and if the Exchange Amount equals or exceeds the amount required to be withheld, the amount
required to be withheld shall be treated as an amount received by such Partner upon exchange of its
Partnership Units. If, however, the Exchange Amount is less than the amount required to be
withheld, the Exchanging Partner shall not receive any portion of the Exchange Amount, the Exchange
Amount shall be treated as an amount received by such Partner upon exchange of its Partnership
Units, and the Partner shall contribute the excess of the amount withheld over the Exchange Amount
to the Partnership before the Partnership is required to pay over such excess to a taxing
authority.



(f) Notwithstanding any other provision of this Agreement, the General Partner shall
place appropriate restrictions on the ability of the Limited Partners to exercise their Exchange
Rights as and if deemed necessary to ensure that the Partnership does not constitute a “publicly
traded partnership” under Section 7704 of the Code. If and when the General Partner determines that
imposing such restrictions is necessary, the General Partner shall give prompt written notice
thereof (a “RESTRICTION NOTICE”) to each of the Limited Partners, which notice shall be accompanied
by a copy of an opinion of counsel to the Partnership which states that, in the opinion of such
counsel, restrictions are necessary in order to avoid the Partnership being treated as a “publicly
traded partnership” under Section 7704 of the Code.



8.6 DUTIES AND CONFLICTS. The General Partner recognizes that the Limited 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 Limited
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 to offer any interest in such
activities to the Partnership or to any Partner. Neither the Partnership nor any Partner shall have
any right, by virtue of this Agreement, in or to such activities, or the income or profits derived
therefrom, and the pursuit of such activities, even if competitive with the business of the
Partnership, and such activities shall not be deemed wrongful or improper.



ARTICLE 9 




TRANSFERS OF LIMITED PARTNERSHIP INTERESTS




9.1 PURCHASE FOR INVESTMENT.



(a) Each Limited Partner hereby represents and warrants to the General Partner and to
the Partnership that the acquisition of its Partnership Interest is made as a principal for its
account for investment purposes only and not with a view to the resale or distribution of such
Partnership Interest.



(b) Each Limited Partner agrees that it will not sell, assign or otherwise transfer
its Partnership Interest or any fraction thereof, whether voluntarily or by operation of law or at
judicial sale or otherwise, to any Person who does not make the representations and warranties to
the General Partner set forth in Section 9.1(a) above.



9.2 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.



(a) Subject to the provisions of Sections 9.2(b), 9.2(c) and 9.2(d), no Limited
Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of
its Limited Partnership Interest, or any of such Limited Partner’s economic rights as a Limited
Partner, whether voluntarily or by operation of law or at judicial sale or otherwise (collectively,
a “TRANSFER”), without the consent of the General Partner, which consent may be granted or withheld
in its sole and absolute discretion. Any such purported transfer undertaken without such consent
shall be considered to be null and void ab initio and shall not be given effect. The General
Partner may require, as a condition of any Transfer to which it consents, that the transferor
assume all costs incurred by the Partnership in connection therewith.



(b) No Limited Partner may withdraw from the Partnership other than as a result of:
(i) a permitted Transfer (i.e., a Transfer consented to as contemplated by paragraph (a) above or
paragraph (c) below or a Transfer made pursuant to Section 9.5 below) of all of its Partnership
Units pursuant to this Article 9 or (ii) a Transfer pursuant to an exchange of all of its
Partnership Units pursuant to Section 8.5 above. Upon the permitted Transfer or exchange of all of
a Limited Partner’s Partnership Units, such Limited Partner shall cease to be a Limited Partner.



(c) Subject to Sections 9.2(d) and 9.2(e), a Limited Partner may Transfer, with the
consent of the General Partner, all or a portion of its Partnership Units to (i) a parent or
parent’s spouse, natural or adopted descendants, a spouse of any such descendant, a brother or
sister, or a trust created by such Limited Partner for the benefit of such Limited Partner and/or
any such person(s), for which trust such Limited Partner or any such person(s) is a trustee, (ii) a
corporation controlled by a Person or Persons named in (i) above, or (iii) if the Limited Partner
is an entity, its beneficial owners.



(d) No Limited Partner may effect a Transfer of its Limited Partnership Interest, in
whole or in part, if, in the opinion of legal counsel for the Partnership, such proposed Transfer
would require the registration of the Limited Partnership Interest under the Securities Act, or
would otherwise violate any applicable federal or state securities or blue sky law (including
investment suitability standards).



(e) No Transfer by a Limited Partner of its Partnership Units, in whole or in part,
may be made to any Person if (i) in the opinion of legal counsel for the Partnership, the transfer
would result in the Partnership’s being treated as an association taxable as a corporation (other
than a qualified REIT subsidiary within the meaning of Section 856(i) of the Code), (ii) in the
opinion of legal counsel for the Partnership, it would adversely affect the ability of Gladstone
Commercial Corporation to continue to qualify as a REIT or subject Gladstone Commercial Corporation
to any additional taxes under Section 857 or Section 4981 of the Code, or (iii) in the opinion of
legal counsel for the Partnership, such would cause the Partnership to be treated as a “publicly
traded partnership” within the meaning of Section 7704 of the Code.



(f) Any Transfer in contravention of any of the provisions of this Article 9 shall be
void ab initio and ineffectual and shall not be binding upon, or recognized by, the General Partner
or the Partnership.



(g) Prior to the consummation of any Transfer under this Article 9, the transferor
and/or the transferee shall deliver to the General Partner such opinions, certificates and other
documents as the General Partner shall request in connection with such Transfer.



9.3 ADMISSION OF SUBSTITUTE LIMITED PARTNER.



(a) Subject to the other provisions of this Article 9, an assignee of the Limited
Partnership Interest of a Limited Partner (which shall be understood to include any purchaser,
transferee, donee or other recipient of any disposition of such Limited Partnership Interest) shall
be deemed admitted as a Limited Partner of the Partnership only with the consent of the General
Partner and upon the satisfactory completion of the following:



(i) the assignee shall have accepted and agreed to be bound by the terms and
provisions of this Agreement by executing a counterpart or an amendment thereof, including a
revised Exhibit A, and such other documents or instruments as the General Partner may require in
order to effect the admission of such Person as a Limited Partner;



(ii) to the extent required, an amended Certificate evidencing the admission of such
Person as a Limited Partner shall have been signed, acknowledged and filed for record in accordance
with the Act;



(iii) the assignee shall have delivered a letter containing the representation set
forth in Section 9.1(a) hereof and the agreement set forth in Section 9.1(b) hereof;



(iv) if the assignee is a corporation, partnership or trust, the assignee shall have
provided the General Partner with evidence satisfactory to counsel for the Partnership of the
assignee’s authority to become a Limited Partner under the terms and provisions of this Agreement;



(v) the assignee shall have executed a power of attorney containing the terms and
provisions set forth in Section 8.2 hereof;



(vi) the assignee shall have paid all legal fees and other expenses of the
Partnership and the General Partner and filing and publication costs in connection with its
substitution as a Limited Partner; and



(vii) the assignee shall have obtained the prior written consent of the General
Partner to its admission as a Substitute Limited Partner, which consent may be given or denied in
the exercise of the General Partner’s sole and absolute discretion.



(b) For the purpose of allocating Profit and Loss and distributing cash received by
the Partnership, a Substitute Limited Partner shall be treated as having become, and appearing in
the records of the Partnership as, a Partner upon the filing of the Certificate described in
Section 9.3(a)(ii) hereof or, if no such filing is required, the later of the date specified in the
transfer documents or the date on which the General Partner has received all necessary instruments
of transfer and substitution.



(c) The General Partner shall cooperate with the Person seeking to become a
Substitute Limited Partner by preparing the documentation required by this Section 9.3 and making
all official filings and publications. The Partnership shall take all such action as promptly as
practicable after the satisfaction of the conditions in this Article 9 to the admission of such
Person as a Limited Partner of the Partnership.



9.4 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.



(a) Subject to the provisions of Sections 9.1 and 9.2 hereof, except as required by
operation of law, the Partnership shall not be obligated for any purposes whatsoever to recognize
the assignment by any Limited Partner of its Partnership Interest until the Partnership has
received notice thereof.



(b) Any Person who is the assignee of all or any portion of a Limited Partner’s
Limited Partnership Interest, but who does not become a Substitute Limited Partner and desires to
make a further assignment of such Limited Partnership Interest, shall be subject to all the
provisions of this Article 9 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of its Limited Partnership Interest.



9.5 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A LIMITED PARTNER.
The occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a Limited Partner or
a final adjudication that a Limited Partner is incompetent (which term shall include, but not be
limited to, insanity) shall not cause the termination or dissolution of the Partnership, and the
business of the Partnership shall continue if an order for relief in a bankruptcy proceeding is
entered against a Limited Partner, the trustee or receiver of his estate or, if he dies, his
executor, administrator or trustee, or, if he is finally adjudicated incompetent, his committee,
guardian or conservator, and any such Person shall have the rights of such Limited Partner for the
purpose of settling or managing his estate property and such power as the bankrupt, deceased or
incompetent Limited Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of the assignee as a
Substitute Limited Partner.



9.6 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be acquired by two
individuals as joint tenants with right of survivorship, provided, that such individuals either are
married or are related and share the same personal residence. The written consent or vote of both
owners of any such jointly-held Partnership Interest shall be required to constitute the action of
the owners of such Partnership Interest; provided, however, that the written consent of only one
joint owner will be required if the Partnership has been provided with evidence satisfactory to the
counsel for the Partnership that the actions of a single joint owner can bind both owners under the
applicable laws of the state of residence of such joint owners. Upon the death of one owner of a
Partnership Interest held in a joint tenancy with a right of survivorship, the Partnership Interest
shall become owned solely by the survivor as a Limited Partner and not as an assignee. The
Partnership need not recognize the death of one of the owners of a jointly held Partnership
Interest until it shall have received notice of such death. Upon notice to the General Partner from
either owner, the General Partner shall cause the Partnership Interest to be divided into two equal
Partnership Interests, which shall thereafter be owned separately by each of the former joint
owners.



ARTICLE 10 




BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS




10.1 BOOKS AND RECORDS. At all times during the continuance of the Partnership, the
Partners shall keep or cause to be kept at the Partnership’s specified office true and complete
books of account maintained in accordance with generally accepted accounting principles, including
(a) a current list of the full name and last-known business address of each Partner; (b) a copy of
the Certificate of Limited Partnership and all certificates of amendment thereto; (c) copies of the
Partnership’s federal, state and local income tax returns and reports; (d) copies of the Agreement
and any financial statements of the Partnership for the three most recent years; and (e) all
documents and information required under the Act. Any Partner or its duly authorized
representative, and any stockholder of Gladstone Commercial Corporation, upon paying the costs of
collection, duplication and mailing, shall be entitled to inspect or copy such records during
ordinary business hours.



10.2 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.



(a) All funds of the Partnership not otherwise invested shall be deposited in one or
more accounts maintained in such banking or brokerage institutions as the General Partner shall
determine, and withdrawals shall be made only on such signature or signatures as the General
Partner may, from time to time, determine.



(b) All deposits and other funds not needed in the operation of the business of the
Partnership may be invested by the General Partner in investment grade instruments (or investment
companies whose portfolio consists primarily thereof), government obligations, certificates of
deposit, bankers’ acceptances and municipal notes and bonds. The funds of the Partnership shall not
be commingled with the funds of any other Person except for such commingling as may necessarily
result from an investment in those investment companies permitted by this Section 10.2(b).



10.3 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the Partnership shall be
the calendar year.



10.4 ANNUAL TAX INFORMATION AND REPORT. The General Partner will use commercially
reasonable efforts to supply within 75 days after the end of each fiscal year of the Partnership to
each person who was a Limited Partner at any time during such year the tax information necessary to
file such Limited Partner’s individual tax returns as shall be reasonably required by law, and in
all events the General Partner shall furnish such information within the time required by
applicable law.



10.5 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.



(a) The General Partner shall be the Tax Matters Partner of the Partnership within
the meaning of Section 6231(a)(7) of the Code. As Tax Matters Partner, the General Partner shall
have the right and obligation to take all actions authorized and required, respectively, by the
Code for the Tax Matters Partner. The General Partner shall have the right to retain professional
assistance in respect of any audit of the Partnership by the Service and all out-of-pocket expenses
and fees incurred by the General Partner on behalf of the Partnership as Tax Matters Partner shall
constitute Partnership expenses. In the event the General Partner receives notice of a final
Partnership adjustment under Section 6223(a)(2) of the Code, the General Partner shall either (i)
file a court petition for judicial review of such final adjustment within the period provided under
Section 6226(a) of the Code, a copy of which petition shall be mailed to all Limited Partners on
the date such petition is filed, or (ii) mail a written notice to all Limited Partners, within such
period, that describes the General Partner’s reasons for determining not to file such a petition.



(b) All elections required or permitted to be made by the Partnership under the Code
or any applicable state or local tax law shall be made by the General Partner in its sole and
absolute discretion.



(c) In the event of a transfer of all or any part of the Partnership Interest of any
Partner, the Partnership, at the option and in the sole and absolute discretion of the General
Partner, may elect pursuant to Section 754 of the Code to adjust the basis of the Properties.
Notwithstanding anything contained in Article 5 of this Agreement, any adjustments made pursuant to
Section 754 shall affect only the successor-in-interest to the transferring Partner and in no event
shall be taken into account in establishing, maintaining or computing Capital Accounts for the
other Partners for any purpose under this Agreement. Each Partner will furnish the Partnership with
all information necessary to give effect to such election.



10.6 REPORTS TO LIMITED PARTNERS.



(a) As soon as practicable after the close of each fiscal quarter (other than the
last quarter of the fiscal year), the General Partner shall cause to be mailed to each Limited
Partner a quarterly report containing financial statements of the Partnership, or of Gladstone
Commercial Corporation if such statements are prepared solely on a consolidated basis with
Gladstone Commercial Corporation, for such fiscal quarter presented in accordance with generally
accepted accounting principles. As soon as practicable after the close of each fiscal year, the
General Partner shall cause to be mailed to each Limited Partner an annual report containing
financial statements of the Partnership, or of Gladstone Commercial Corporation if such statements
are prepared solely on a consolidated basis with Gladstone Commercial Corporation, for such fiscal
year, presented in accordance with generally accepted accounting principles. The annual financial
statements shall be audited by accountants selected by the General Partner, or by Gladstone
Commercial Corporation if such statements are prepared solely on a consolidated basis with
Gladstone Commercial Corporation.



(b) Any Partner shall further have the right to a private audit of the books and
records of the Partnership, provided such audit is made for Partnership purposes and at the expense
of the Partner desiring it, and it is made during normal business hours.



ARTICLE 11 




AMENDMENT OF AGREEMENT; MEETINGS




11.1 AMENDMENT. The General Partner’s consent shall be required for any amendment to
this Agreement. The General Partner, without the consent of the Limited Partners, may amend this
Agreement in any respect; provided, however, that the following amendments shall require the
consent of Limited Partners holding more than 50% of the Percentage Interests of the Limited
Partners:



(a) any amendment affecting the operation of the Conversion Factor or the Exchange
Right (except as otherwise provided herein) in a manner adverse to the Limited Partners;



(b) any amendment that would adversely affect the rights of the Limited Partners to
receive the distributions payable to them hereunder, other than with respect to the issuance of
additional Partnership Units pursuant to Section 4.2 hereof;



(c) any amendment that would alter the Partnership’s allocations of Profit and Loss
to the Limited Partners, other than with respect to the issuance of additional Partnership Units
pursuant to Section 4.2 hereof;



(d) any amendment that would impose on the Limited Partners any obligation to make
additional Capital Contributions to the Partnership; or



(e) any amendment to this Article 11.



The foregoing notwithstanding, the approval of any amendment to this Agreement that shall be part
of a plan of merger, plan of exchange or plan of conversion involving the Partnership or the
Partnership Interests shall be governed by Article 12.



11.2 MEETINGS OF PARTNERS.



(a) The Partners may but shall not be required to hold any annual, periodic or other
formal meetings. Meetings of the Partners may be called by the General Partner or by any Limited
Partner or Limited Partners holding at least 10% of the Partnership Units in the Partnership.



(b) The Partner or Partners calling the meeting may designate any place within the
State of Delaware as the place of meeting for any meeting of the Partners; and Partners holding at
least a majority of the Partnership Units in the Partnership may designate any place outside the
State of Delaware as the place of meeting for any meeting of the Partners. If no designation is
made, or if a special meeting is called, the place of meeting shall be the principal place of
business of the Partnership.



(c) Except as provided in Section 11.2(d), written notice stating the place, day and
hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered
not less than ten (10) nor more than ninety (90) days before the date of the meeting, either
personally or by mail, by or at the direction of the Partner or Partners calling the meeting, to
each Partner entitled to vote at such meeting and to each Partner not entitled to vote who is
entitled to notice of the meeting.



(d) Anything in this Agreement to the contrary notwithstanding, with respect to any
meeting of the Partners, any Partner who in person or by proxy shall have waived in writing notice
of the meeting, either before or after such meeting, or who shall attend the meeting in person or
by proxy, shall be deemed to have waived notice of such meeting unless such Partner attends for the
express purpose of objecting, at the beginning of the meeting, and does so object to the
transaction of any business because the meeting is not lawfully called or convened.



(e) If all of the Partners shall meet at any time and place, either within or outside
of the State of Delaware, in person or by proxy, and consent to the holding of a meeting at such
time and place, such meeting shall be valid without call or notice, and at such meeting lawful
action may be taken.



(f) For the purpose of determining Partners entitled to notice of or to vote at any
meeting of Partners or any adjournment thereof, the date on which notice of the meeting is mailed
shall be the record date. When a determination of Partners entitled to vote at any meeting of
Partners has been made as provided in this Section, such determination shall apply to any
adjournment thereof.



(g) Partners holding at least a majority of the Partnership Units entitled to vote at
a meeting, represented in person or by proxy, shall constitute a quorum at any meeting of Partners.
In the absence of a quorum at any such meeting, Partners holding at least a majority of Partnership
Units so represented may adjourn the meeting to another time and place. Any business which might
have been transacted at the original meeting may be transacted at any adjourned meeting at which a
quorum is present. No notice of an adjourned meeting need be given if the time and place are
announced at the meeting at which the adjournment is taken unless the adjournment is for more than
120 days. The Partners present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal during such meeting of that number Partnership Units
whose absence would cause less than a quorum to be present.



(h) If a quorum is present, the affirmative vote of Partners holding a majority of
the Partnership Units entitled to vote, present in person or represented by proxy, shall be binding
on all Partners, unless the vote of a greater or lesser proportion or number of Partnership Units
or Partners is otherwise required by applicable law or by this Agreement. Unless otherwise
expressly provided herein or required under applicable law, Partners who have an interest (economic
or otherwise) in the outcome of any particular matter upon which the Partners’ vote or consent is
required may vote or consent upon any such matter and their Partnership Units, vote or consent, as
the case may be, shall be counted in the determination of whether the requisite matter was approved
by the Partners.



(i) At all meetings of Partners, a Partner may vote in person or by proxy executed in
writing by the Partner or by the Partner’s duly authorized attorney-in-fact. Such proxy shall be
filed with the General Partner before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the proxy.



(j) Action required or permitted to be taken at a meeting of Partners may be taken
without a meeting if the action is evidenced by one or more written consents or approvals
describing the action taken and signed by sufficient Partners or Partners holding sufficient
Partnership Units, as the case may be, to approve such action had such action been properly voted
on at a duly called meeting of the Partners. Action taken under this Section 11.2(j) is effective
when the requisite Partners or Partners with the requisite Partnership Units, as the case may be,
have signed the consent or approval, unless the consent specifies a different effective date.



ARTICLE 12 




MERGER, EXCHANGE OR CONVERSION




12.1 MERGER, EXCHANGE OR CONVERSION OF PARTNERSHIP.



(a) The Partnership may (i) adopt a plan of merger and may merge with or into one or
more domestic or foreign limited partnerships or other entities with the resulting entity being one
or more surviving entities, (ii) adopt a plan of exchange by which a domestic or foreign limited
partnership or other entity is to acquire all of the outstanding Partnership Interests of the
Partnership in exchange for cash, securities or other property of the acquiring domestic or foreign
limited partnership or other entity or (iii) adopt a plan of conversion and convert to a foreign
limited partnership or other entity. Any such plan of merger, plan of exchange, or plan of
conversion shall otherwise comply with the requirements of this Agreement and the Act.



(b) Any merger pursuant to a plan of merger described in Section 12.1(a)(i) hereof
shall be conditioned upon the merger being permitted by the laws under which each other entity that
is a party to the merger is incorporated or organized or by the constituent documents of such other
entity that are not inconsistent with such laws. Any exchange pursuant to a plan of exchange
described in Section 12.1(a)(ii) hereof shall be conditioned upon the issuance of shares or other
interests of the acquiring foreign limited partnership or other entity being permitted by the laws
under which such foreign limited partnership or other entity is incorporated or organized or is not
inconsistent with such laws. Any conversion pursuant to a plan of conversion described in Section
12.1(a)(iii) hereof shall be conditioned upon such conversion being permitted by, or not
inconsistent with, the laws of the jurisdiction in which the converted entity is to be
incorporated, formed or organized and the incorporation, formation or organization of the converted
entity is effected in compliance with such laws.



(c) The Partnership may adopt a plan of merger, plan of exchange or plan of
conversion if the General Partner acts upon and the Limited Partners (if required by Section 12.2
below) approve the plan of merger, plan of exchange or plan of conversion in the manner prescribed
in Section 12.2 below.



12.2 APPROVAL OF PLAN OF MERGER, EXCHANGE OR CONVERSION.



(a) Except as provided by Section 12.2(g) below, after acting on a plan of merger,
plan of exchange or plan of conversion in the manner prescribed by Section 12.2(b)(i), the General
Partner shall submit the plan of merger, plan of exchange or plan of conversion for approval by the
Limited Partners.



(b) Except as provided by Section 12.2(f) below, for a plan of merger, plan of
exchange or plan of conversion to be approved:



(i) the General Partner shall adopt a resolution recommending that the plan of
merger, plan of exchange or plan of conversion be approved by the Limited Partners, unless the
General Partner determines that for any reason it should not make that recommendation, in which
case the General Partner shall adopt a resolution directing that the plan of merger, plan of
exchange or plan of conversion be submitted to the Limited Partners for approval without
recommendation; and



(ii) the Limited Partners entitled to vote on the plan of merger, plan of exchange or
plan of conversion must approve the plan.



(c) The General Partner may condition its submission to the Limited Partners of a
plan of merger, plan of exchange or plan of conversion, and the effectiveness of such plan, on any
basis, including without limitation that a specified percentage of the Percentage Interests of the
Limited Partners in excess of a majority of the Percentage Interests of the Limited Partners be
required for the approval of the plan of merger, plan of exchange or plan of conversion.



(d) The General Partner shall notify each Limited Partner, whether or not entitled to
vote, of the meeting of the Limited Partners at which the plan of merger, plan of exchange or plan
of conversion is to be submitted for approval in accordance with this Section 12.2 and applicable
law. The notice shall be given at least twenty (20) days before the meeting and shall state that
the purpose, or one of the purposes, of the meeting is to consider the plan of merger, plan of
exchange or plan of conversion and shall contain or be accompanied by a copy or summary of the
plan. Any such approval may be by written consent of the requisite Limited Partners as would be
required to approve the plan at any meeting where all the Limited Partners are present.



(e) Unless the General Partner (acting pursuant to Section 12.2(c)) requires a
greater vote, the vote of the Limited Partners required for approval of a plan of merger, plan of
exchange or plan of conversion shall be the affirmative vote of the holders of more than 50% of the
Percentage Interests of the Limited Partners entitled to vote thereon.



(f) Unless applicable law otherwise requires (in which case the approval of the
Limited Partners shall continue to be required and the foregoing provisions of this Section 12.2
shall continue to apply), (1) approval by the Limited Partners on a plan of exchange shall not be
required, and the foregoing provisions of this Section 12.2 do not apply, if the Partnership is the
acquiring entity in the plan of exchange, and (2) approval by the Limited Partners on a plan of
merger or a plan of conversion shall not be required and the foregoing provisions of this Section
12.2 do not apply, if:



(i) a limited partnership is the sole surviving or resulting entity;



(ii) the partnership agreement of the surviving or resulting limited partnership will
not materially differ from this Agreement before the merger or conversion in any manner other than
as to applicable law or other insignificant conforming differences;



(iii) Limited Partners who held Limited Partnership Interests immediately before the
effective date of the merger or conversion will hold interests in the surviving or resulting entity
in the same proportions, immediately after the effective date of the merger or conversion; and



(iv) the General Partner adopts a resolution approving the plan of merger or plan of
conversion.



(g) After a plan of merger, plan of exchange or plan of conversion is approved, and
at any time before the merger, exchange or conversion has become effective, the plan of merger,
plan of exchange or plan of conversion may be abandoned (subject to any contractual rights by any
of the entities that are a party thereto), without action by the Limited Partners, in accordance
with the procedures set forth in the plan of merger, plan of exchange or plan of conversion or, if
no such procedures are set forth in the plan, in the manner determined by the General Partner.



12.3 RIGHTS OF DISSENTING LIMITED PARTNERS.



(a) In the absence of fraud in the transaction, the remedy provided by this Section
12.3 to a Limited Partner voting against any merger, exchange or conversion or objecting to a
merger, exchange or conversion approved by the written consent of Limited Partners (a “DISSENTING
LIMITED PARTNER”) is the exclusive remedy for the recovery of the value of his Limited Partnership
interests or money damages with respect to the transaction. If the existing, surviving, or new
corporation or limited partnership (foreign or domestic) or other entity, as the case may be,
complies with the requirements of this Section 12.3, any Dissenting Limited Partner who fails to
comply with the requirements of this Section 12.3 shall not be entitled to bring suit for the
recovery of the value of his Limited Partnership interests or money damages with respect to the
transaction. A “Dissenting Limited Partner” in respect of any merger, exchange or conversion shall
expressly exclude any Limited Partner who votes in favor of the related plan of merger, plan of
exchange or plan of conversion or who abstains or fails to timely vote therefor. In the event of a
plan of merger, plan of exchange or plan of conversion approved by written consent, a “Dissenting
Limited Partner” in respect of any related merger, exchange or conversion shall expressly exclude
Limited Partners who provide such written consent and Limited Partners who fail to object to the
merger, exchange or conversion and demands payment for such Limited Partner’s Limited Partnership
Interest in writing to the General Partner within twenty (20) days after notice to the Limited
Partners of the receipt by the Partnership of written consents sufficient to approve such merger,
exchange or conversion. All such Limited Partners who are not included within the definition of
Dissenting Limited Partner in respect of any merger, exchange or conversion shall participate in
the merger, exchange or conversion according to the approved plan of merger, plan of exchange or
plan of conversion.



(b) Any Dissenting Limited Partner who has opted for payment for his Limited
Partnership interests shall not thereafter be entitled to vote or exercise any other rights of a
Limited Partner except the right to receive payment for his Limited Partnership interests and the
right to maintain an appropriate action to obtain relief on the ground that the transaction would
be or was fraudulent. Limited Partnership Interests of Dissenting Limited Partners for which
payment has been made shall not thereafter be considered outstanding for the purposes of any
subsequent vote of the Limited Partners.



(c) Within twenty (20) days after a Dissenting Limited Partner votes against any plan
of merger, plan of exchange or plan of conversion which is approved by a vote of the Limited
Partners, or in connection with a Limited Partner’s objection to any plan of merger, plan of
exchange or plan of conversion approved by the written consent of the Limited Partners, the
Dissenting Limited Partner may demand by written notice to the General Partner that payment for his
Limited Partnership Interest be made. Upon receipt of such a payment demand, the General Partner
shall (i) make a notation on the records of the Partnership that such demand has been made and (ii)
within a reasonable period of time after the later of the receipt of a payment demand or the
consummation of the merger, exchange or conversion, cause the Partnership to pay to the Dissenting
Limited Partner the fair value of such Dissenting Limited Partner’s Partnership Interest without
interest. The fair value of a Dissenting Limited Partner’s Partnership Interest shall be an amount
equal to the Dissenting Limited Partner’s pro rata share (as would be determined under Section 5.6
hereof if the Partnership were liquidating) of the appraised value of the net assets of the
Partnership based on an appraisal of all assets of the Partnership from a Competent Independent
Expert. The assets of the Partnership shall be appraised on a consistent basis. The appraisal shall
be based on an evaluation of all relevant information and shall include the current value of the
Partnership’s assets as of the date immediately prior to the proposed merger, exchange or
conversion. The appraisal shall assume an orderly liquidation of the Partnership’s assets over a
twelve (12) month period, shall consider other balance sheet items, and shall be net of the assumed
cost of sale. The terms of the engagement of the appraiser shall clearly state that the engagement
is for the benefit of the Partnership and its Limited Partners. A summary of the independent
appraisal, including all material assumptions underlying the appraisal, shall be provided to
Dissenting Limited Partners in connection with the payment of the fair value of their Limited
Partnership Interests.



(d) If a Dissenting Limited Partner shall fail to make a payment demand within the
period provided in Section 12.3(c) hereof or, in respect of a plan of merger, plan of exchange or
plan of conversion approved by written consent of the Limited Partners, shall fail to provide
notice of dissent within the period set forth in Section 12.3(a) hereof, such Dissenting Limited
Partner and all persons claiming under him shall be conclusively presumed to have approved and
ratified the merger, conversion or exchange and shall be bound thereby, the right of such
Dissenting Limited Partner to be paid the fair value of his Limited Partnership Interest shall
cease, and his status as a Limited Partner shall be restored without prejudice to any proceedings
which may have been taken during the interim, and such Dissenting Limited Partner shall be entitled
to receive any distributions made to Limited Partners in the interim.



ARTICLE 13 




GENERAL PROVISIONS




13.1 NOTICES. All communications required or permitted under this Agreement shall be
in writing and shall be deemed to have been given when delivered personally or upon deposit in the
United States mail, registered, postage prepaid return receipt requested, to the Partners at the
addresses set forth in Exhibit A attached hereto; provided, however, that any Partner may specify a
different address by notifying the General Partner in writing of such different address. Notices to
the Partnership shall be delivered at or mailed to its specified office.



13.2 SURVIVAL OF RIGHTS. Subject to the provisions hereof limiting transfers, this
Agreement shall be binding upon and inure to the benefit of the Partners and the Partnership and
their respective legal representatives, successors, transferees and assigns.



13.3 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all further acts and
execute, swear to, acknowledge and deliver all further documents which may be reasonable,
necessary, appropriate or desirable to carry out the provisions of this Agreement or the Act.



13.4 SEVERABILITY. If any provision of this Agreement shall be declared illegal,
invalid, or unenforceable in any jurisdiction, then such provision shall be deemed to be severable
from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity
or unenforceability shall not affect the remainder hereof.



13.5 ENTIRE AGREEMENT. This Agreement and exhibits attached hereto constitute the
entire Agreement of the Partners and supersede all prior written agreements and prior and
contemporaneous oral agreements, understandings and negotiations with respect to the subject matter
hereof, except as otherwise set forth herein.



13.6 PRONOUNS AND PLURALS. When the context in which words are used in the Agreement
indicates that such is the intent, words in the singular number shall include the plural and the
masculine gender shall include the neuter or female gender as the context may require.



13.7 HEADINGS. The Article and Section headings in this Agreement are for convenience
only and shall not be used in construing the scope of this Agreement or any particular Article or
Section hereof.



13.8 COUNTERPARTS. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original copy and all of which together shall constitute one and the
same instrument binding on all parties hereto, notwithstanding that all parties shall not have
signed the same counterpart.



13.9 GOVERNING LAW; VENUE.



(a) This Agreement shall be governed by, and interpreted and construed in accordance
with, the internal laws of the State of Delaware (without regard to its conflicts of law
principles); provided, however, that any cause of action for violation of federal or state
securities law shall not be governed by this Section 13.9(a).



(b) Venue for the adjudication of any claim or dispute arising out of this Agreement
shall be proper only in the state or federal courts resident in the federal Eastern District of the
Commonwealth of Virginia, and all parties to this Agreement hereby consent to such venue and agree
that it shall not be inconvenient and not subject to review by any court other than such courts in
Virginia.



(c) The parties hereto intend and agree that the courts of the jurisdictions in which
any Partner is formed and in which any Partner conducts its business should afford full faith and
credit to any judgment rendered by a court of the Commonwealth of Virginia against such Partner or
any other Partner, under this Agreement, and the parties hereto each intend and agree that such
courts should hold that the Virginia courts have jurisdiction to enter a valid, in personam
judgment against each Partner.



(d) The parties hereto agree that service of any summons and complaint, and other
process which may be served in any suit, action or other proceeding, may be made by mailing via
U.S. certified or registered mail or by hand-delivering a copy of such process to the Partner at
its address set forth in Exhibit A or as otherwise specified pursuant to Section 13.1.



13.10 ACKNOWLEDGEMENT AS TO EXCULPATION AND INDEMNIFICATION. THE PARTIES HERETO
ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS EXCULPATION AND INDEMNIFICATION IN RESPECT OF
THE ACTIONS OR OMISSIONS OF THE GENERAL PARTNER AND DIRECTORS, OFFICERS AND AFFILIATES OF THE
GENERAL PARTNER BY THE PARTNERSHIP EVEN IF SUCH ACTIONS OR OMISSIONS CONSTITUTE NEGLIGENCE OF SUCH
PERSONS.



[SIGNATURE PAGE FOLLOWS]




1



IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this First
Amended and Restated Agreement of Limited Partnership of Gladstone Commercial Limited Partnership
as of the 26th day of January, 2006.



GENERAL PARTNER:



GCLP Business Trust II



By: /s/ David Gladstone 





Name: David Gladstone

Title: Trustee



By: /s/ Harry Brill 





Name: Harry Brill

Title: Trustee



ORIGINAL LIMITED PARTNER:



GCLP Business Trust I



By: /s/ David Gladstone 





Name: David Gladstone

Title: Trustee



By: /s/ Harry Brill 





Name: Harry Brill

Title: Trustee



GLADSTONE COMMERCIAL CORPORATION



Gladstone Commercial Corporation



By: /s/ David Gladstone 


Name: David Gladstone

Title: Chairman and Chief Executive Officer



2




GLADSTONE COMMERCIAL LIMITED PARTNERSHIP

SCHEDULE 4.2(a)(1) TO FIRST AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

DESIGNATION OF

7.75% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS





	(i)	 	Designation and Number. A series of Preferred Units, designated the “7.75% Series A
Cumulative Redeemable Preferred Units” (the “Series A Preferred Units”), is hereby
established. The number of Series A Preferred Units shall be 1,000,000.






	(ii)	 	Maturity. The Series A Preferred Units have no stated maturity and will not be
subject to any sinking fund or mandatory redemption.






	(iii)	 	Rank. The Series A Preferred Units, with respect to distribution rights and rights
upon liquidation, dissolution or winding up of the Partnership, will rank (i) senior to all
classes or series of Common Units of the Partnership, and to all Partnership Interests ranking
junior to the Series A Preferred Units with respect to distribution rights or rights upon
liquidation, dissolution or winding up of the Partnership; (ii) on a parity with all
Partnership Interests issued by the Partnership, the terms of which Preferred Units
specifically provide that such Partnership Interests rank on a parity with the Series A
Preferred Units with respect to distribution rights or rights upon liquidation, dissolution or
winding up of the Partnership (the “Parity Preferred Units”); and (iii) junior to all existing
and future indebtedness of the Partnership. The term “Parity Preferred Units” does not include
convertible debt securities, which will rank senior to the Series A Preferred Units prior to
conversion.






	(iv)	 	Distributions. (a) Holders of the Series A Preferred Units are entitled to receive,
when and as declared by the General Partner out of funds legally available for the payment of
distributions, preferential cumulative cash distributions at the rate of 7.75% per annum of
the Liquidation Preference (as defined below) per Series A Preferred Unit (equivalent to a
fixed annual amount of $1.875 per Series A Preferred Unit). Distributions on the Series A
Preferred Units shall be cumulative from (but excluding) the date of original issue and shall
be payable monthly in arrears. The first distribution will be payable on February 28, 2006
and monthly thereafter on the last day of the month, or, if not a business day, on the next
succeeding business day (each, a “Distribution Payment Date”). The first distribution, which
will be payable on February 28, 2006, will be for more than a full month. Such distribution
and any distribution payable on the Series A Preferred Units for any partial distribution
period will be computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions will be payable to holders of record as they appear in the ownership records of
the Partnership at the close of business on the applicable record date, which shall be the
date designated by the General Partner of the Partnership that is not more than 30 nor less
than 10 days prior to such Distribution Payment Date (each, a “Distribution Record Date”).






(b) No distributions on Series A Preferred Units shall be declared by the General Partner
or paid or set apart for payment by the Partnership at any time that the terms and
provisions of any agreement of the Partnership, including any agreement relating to its
indebtedness, prohibits such declaration, payment or setting apart for payment or provides
that such declaration, payment or setting apart for payment of such distributions would
constitute a breach thereof or a default thereunder, or if such declaration or payment shall
be restricted or prohibited by law.




(c) Notwithstanding the foregoing, distributions on the Series A Preferred Units will
accumulate whether or not the Partnership has earnings, whether or not there are funds
legally available for the payment of such distributions and whether or not such
distributions are declared. Accumulated but unpaid distributions on the Series A Preferred
Units will not bear interest and holders of the Series A Preferred Units will not be
entitled to any distributions in excess of full cumulative distributions described above.
Except as set forth in the next sentence, no distributions will be declared or paid or set
apart for payment on any Partnership Interests or any other series of Parity Preferred Units
or any series or class of equity securities ranking junior to the Series A Preferred Units
(other than a distribution of the Partnership’s Common Units or any other class of
Partnership Interests ranking junior to the Series A Preferred Units as to distributions and
upon liquidation) for any period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum sufficient for the payment
thereof is set apart for such payment on the Series A Preferred Units for all past
distribution periods and the then current distribution period. When distributions are not
declared and paid in full (or a sum sufficient for such full payment is not so set apart)
upon the Series A Preferred Units and any other series of Parity Preferred Units, all
distributions declared upon the Series A Preferred Units and any other series of Parity
Preferred Units shall be allocated pro rata so that the amount of distributions declared per
Series A Preferred Unit and such other series of Parity Preferred Units shall in all cases
bear to each other the same ratio that accrued and unpaid distributions per Series A
Preferred Unit and such other series of Parity Preferred Units (which shall not include any
accrual in respect of unpaid distributions for prior distribution periods if such Parity
Preferred Units do not have a cumulative distribution) bear to each other.




(d) Except as provided in the immediately preceding paragraph, unless full cumulative
distributions on the Series A Preferred Units have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof is set apart for payment
for all past distribution periods and the then current distribution period, no distributions
(other than in Common Units or other Partnership Interests ranking junior to the Series A
Preferred Units as to distributions and upon liquidation) shall be declared or paid or set
aside for payment nor shall any other distribution be declared or made upon the Common
Units, or any other Partnership Interests in the Partnership ranking junior to or on a
parity with the Series A Preferred Units as to distributions or upon liquidation, nor shall
any Common Units, or any other Partnership Interests in the Partnership ranking junior to or
on a parity with the Series A Preferred Units as to distributions or upon liquidation be
redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or
made available for a sinking fund for the redemption of any such shares) by the Partnership.
Holders of Series A Preferred Units shall not be entitled to any distribution, whether
payable in cash, property or securities, in excess of full cumulative distributions on the
Series A Preferred Units as provided above. Any distribution payment made on Series A
Preferred Units shall first be credited against the earliest accrued but unpaid distribution
due with respect to such Series A Preferred Units which remains payable.




	(v)	 	Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Partnership, the holders of Series A Preferred Units are
entitled to be paid out of the assets of the Partnership legally available for distribution to
its partners a liquidation preference of $25 per Series A Preferred Unit (the “Liquidation
Preference”), plus an amount equal to any accumulated and unpaid distributions to and
including the date of payment, but without interest, before any distribution of assets is made
to holders of Common Units or any other class or series of Partnership Interests in the
Partnership that ranks junior to the Series A Preferred Units as to liquidation rights. The
Partnership will promptly provide to the holders of Series A Preferred Units written notice of
any event triggering the right to receive such Liquidation Preference. After payment of the
full amount of the Liquidation Preference, plus any accumulated and unpaid distributions to
which they are entitled, the holders of Series A Preferred Units will have no right or claim
to any of the remaining assets of the Partnership. The consolidation or merger of the
Partnership with or into any other partnership, corporation, trust or entity or of any other
partnership or corporation with or into the Partnership, or the sale, lease or conveyance of
all or substantially all of the property or business of the Partnership, shall not be deemed
to constitute a liquidation, dissolution or winding up of the Partnership.






	(vi)	 	Redemption. (a) The Series A Preferred Units are not redeemable prior to January
30, 2011. However, shares of Partnership Units owned by a Limited Partner in excess of 9.8%
in value of outstanding Partnership Units will be deemed “excess units,” and the Partnership
will have the right to purchase those excess units from the Limited Partner. On and after
January 30, 2011, the Partnership, at its option upon not less than 30 nor more than 60 days’
written notice, may redeem the Series A Preferred Units, in whole or in part, at any time or
from time to time, for cash at a redemption price of $25 per Series A Preferred Unit, plus all
accumulated and unpaid distributions thereon to the date fixed for redemption (except for
excess units), without interest. Holders of Series A Preferred Units to be redeemed shall
surrender such Series A Preferred Units at the place designated in such notice and upon such
surrender shall be entitled to the redemption price and any accumulated and unpaid
distributions payable upon such redemption. If notice of redemption of any Series A Preferred
Units has been given and if the Partnership has set aside funds necessary for such redemption
in trust for the benefit of the holders of any Series A Preferred Units so called for
redemption, then from and after the redemption date distributions will cease to accrue on such
Series A Preferred Units, such Series A Preferred Units shall no longer be deemed outstanding
and all rights of the holders of such Series A Preferred Units will terminate, except the
right to receive the redemption price. If less than all of the outstanding Series A Preferred
Units are to be redeemed, the Series A Preferred Units to be redeemed shall be selected pro
rata (as nearly as may be practicable without creating fractional Series A Preferred Units) or
by any other equitable method determined by the General Partner.






(b) Unless full cumulative distributions on all Series A Preferred Units shall have been or
contemporaneously are declared and paid or declared and a sum sufficient for the payment
thereof set apart for payment for all past distribution periods and the then current
distribution period, no Series A Preferred Units shall be redeemed unless all outstanding
Series A Preferred Units are simultaneously redeemed and in such event the Partnership shall
not purchase or otherwise acquire directly or indirectly any Series A Preferred Units
(except by exchange for Partnership Interests of the Partnership ranking junior to the
Series A Preferred Units as to distributions and upon liquidation); provided, however, that
the foregoing shall not prevent the purchase or acquisition of Series A Preferred Units
pursuant to a purchase or exchange offer made on the same terms to holders of all
outstanding Series A Preferred Units.




(c) Notice of redemption will be mailed by the Partnership, postage prepaid, not less than
30 nor more than 60 days prior to the redemption date, addressed to the respective holders
of record of the Series A Preferred Units to be redeemed at their respective addresses as
they appear on the transfer records of the Partnership. No failure to give such notice or
any defect therein or in the mailing thereof shall affect the validity of the proceedings
for the redemption of any Series A Preferred Units except as to the holder to whom notice
was defective or not given. Each notice shall state: (i) the redemption date; (ii) the
redemption price; (iii) the number of Series A Preferred Units to be redeemed; (iv) the
place or places where the Series A Preferred Units are to be surrendered for payment of the
redemption price; and (v) that distributions on the shares to be redeemed will cease to
accrue on such redemption date. If less than all of the Series A Preferred Units held by any
holder are to be redeemed, the notice mailed to such holder shall also specify the number of
Series A Preferred Units held by such holder to be redeemed.




(d) Immediately prior to any redemption of Series A Preferred Units, the Partnership shall
pay, in cash, any accumulated and unpaid distributions through the redemption date, unless a
redemption date falls after a Distribution Record Date and prior to the corresponding
Distribution Payment Date, in which case each holder of Series A Preferred Units at the
close of business on such Distribution Record Date shall be entitled to the distribution
payable on such shares on the corresponding Distribution Payment Date notwithstanding the
redemption of such shares before such Distribution Payment Date.




	(vii)	 	Voting Rights. Holders of the Series A Preferred Units will not have any voting
rights.






	(viii)	 	Conversion. The Series A Preferred Units are not redeemable for, convertible into or
exchangeable for any other property or securities of the Partnership.






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