Exhibit 10.18






Exhibit 10.18




AGREEMENT OF LIMITED PARTNERSHIP


OF



LIBERTY WASHINGTON, LP




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I CERTAIN DEFINITIONS
	 	 	1	 
	ARTICLE II ORGANIZATION AND PURPOSE
	 	 	12	 
	2.01 Continuation of the Company
	 	 	12	 
	2.02 Name of Company
	 	 	13	 
	2.03 Principal Place of Business
	 	 	13	 
	2.04 Purpose
	 	 	13	 
	2.05 Exclusive Activities of Company
	 	 	13	 
	2.06 No Payment of Individual Obligations
	 	 	13	 
	2.07 Title to Assets
	 	 	13	 
	2.08 Term
	 	 	13	 
	2.09 Representations and Warranties
	 	 	13	 
	ARTICLE III CAPITAL
	 	 	14	 
	3.01 Initial Capital Contributions; Other Related Transactions
	 	 	14	 
	3.02 Additional Capital Contributions
	 	 	15	 
	3.03 Failure to Make Capital Contribution
	 	 	15	 
	3.04 Capital Accounts
	 	 	16	 
	3.05 Negative Capital Accounts
	 	 	17	 
	3.06 Return of Capital; No Interest on Amounts in Capital Account
	 	 	17	 
	ARTICLE IV ALLOCATIONS
	 	 	17	 
	4.01 Allocation of Profits and Losses
	 	 	17	 
	4.02 Special Allocations
	 	 	18	 
	4.03 Curative Allocations
	 	 	19	 
	4.04 Other Allocation Rules
	 	 	20	 






i









 






	 	 	 	 	 
	 	 	Page	 
	4.05 Tax Allocations: Code Section 704(c)
	 	 	20	 
	ARTICLE V DISTRIBUTIONS
	 	 	20	 
	5.01 Net Cash Receipts
	 	 	20	 
	5.02 Cash Flow from Liquidating Sale
	 	 	21	 
	5.03 Distributions on Liquidation
	 	 	21	 
	5.04 Distributions in Kind
	 	 	22	 
	5.05 REIT Distributions
	 	 	22	 
	5.06 Offsets
	 	 	22	 
	ARTICLE VI MANAGEMENT
	 	 	23	 
	6.01 Management and Control of Company Business
	 	 	23	 
	6.02 Delegation; Standards; Indemnification
	 	 	25	 
	6.03 Annual Business Plan
	 	 	27	 
	6.04 Matters Requiring Approval of NYSCRF
	 	 	28	 
	6.05 Hazardous Materials
	 	 	30	 
	6.06 Emergency Actions
	 	 	30	 
	6.07 Regular Meetings
	 	 	31	 
	6.08 Special Meetings
	 	 	31	 
	6.09 Third Parties
	 	 	31	 
	6.10 Other Activities of Partners
	 	 	32	 
	6.11 Withholding of Tax on Certain Company Distributions
	 	 	32	 
	6.12 Unrelated Business Taxable Income
	 	 	33	 
	6.13 Prohibited Transactions
	 	 	34	 
	6.14 Deemed Approval
	 	 	35	 
	6.15 Reporting Requirements
	 	 	35	 
	6.16 Action by Partners
	 	 	36	 






- ii -









 






	 	 	 	 	 
	 	 	Page	 
	6.17 Right to Disclose Information
	 	 	36	 
	6.18 Contracts with Affiliates
	 	 	36	 
	6.19 Loan Provisions
	 	 	36	 
	6.20 Project Financing
	 	 	37	 
	6.21 Title Holding Subsidiaries
	 	 	38	 
	6.22 Ratification of Recitals
	 	 	39	 
	ARTICLE VII COMPENSATION OF PARTNERS; PAYMENT OF COMPANY EXPENSES
	 	 	39	 
	7.01 Compensation from Company
	 	 	39	 
	7.02 Company Expenses
	 	 	39	 
	ARTICLE VIII COMPANY BOOKS, RECORDS AND STATEMENTS
	 	 	40	 
	8.01 Books and Records
	 	 	40	 
	8.02 Method of Accounting
	 	 	40	 
	8.03 Fidelity and Other Bonds
	 	 	40	 
	8.04 Financial Statements; Appraisals and Other Information
	 	 	40	 
	8.05 Bank Accounts
	 	 	42	 
	8.06 Tax Matters
	 	 	42	 
	8.07 Certain Elections
	 	 	43	 
	ARTICLE IX DEFAULT PROVISIONS
	 	 	44	 
	9.01 Events of Default
	 	 	44	 
	9.02 Grace Period
	 	 	44	 
	9.03 Remedies Reserved
	 	 	45	 
	ARTICLE X TRANSFER OF PARTNERSHIP INTERESTS; SALE OF PROPERTY
	 	 	45	 
	10.01 Transfer
	 	 	45	 
	10.02 Approved Transfers
	 	 	45	 
	10.03 Withdrawal of a Partner
	 	 	46	 






- iii -









 







	 	 	 	 	 
	 	 	Page	 
	10.04 Admission of Transferee as a Partner
	 	 	47	 
	10.05 Admission of Additional Partners
	 	 	47	 
	ARTICLE XI DISSOLUTION AND LIQUIDATION
	 	 	48	 
	11.01 No Dissolution, etc
	 	 	48	 
	11.02 Events Causing Dissolution
	 	 	48	 
	11.03 Rights to Continue Business of Company
	 	 	48	 
	11.04 Dissolution
	 	 	49	 
	11.05 Liquidation
	 	 	49	 
	11.06 Reasonable Time for Winding Up
	 	 	49	 
	11.07 Termination of Company
	 	 	49	 
	ARTICLE XII BUY-SELL
	 	 	49	 
	12.01 Invoking the Buy-Sell Provision
	 	 	49	 
	12.02 Closing
	 	 	50	 
	12.03 Assumption of Company’s Obligations
	 	 	51	 
	12.04 Payment of Debts
	 	 	51	 
	12.05 Assignment of Rights or Dissolution
	 	 	51	 
	ARTICLE XIII ACQUISITIONS, NEW DEVELOPMENTS AND REDEVELOPMENTS
	 	 	51	 
	13.01 Exclusive Operations
	 	 	51	 
	13.02 Yield Parameters
	 	 	51	 
	13.03 New Acquisitions
	 	 	51	 
	13.04 Initiation of New Developments and Redevelopments
	 	 	53	 
	13.05 Development Management Guaranty
	 	 	53	 
	13.06 Disapproval of Proposed New Development or Redevelopment
	 	 	53	 
	13.07 First Refusal and Repurchase Rights
	 	 	54	 
	ARTICLE XIV MISCELLANEOUS PROVISIONS
	 	 	55	 






- iv -









 






	 	 	 	 	 
	 	 	Page	 
	14.01 Additional Actions and Documents
	 	 	55	 
	14.02 Notices
	 	 	55	 
	14.03 Survival and Reliance
	 	 	56	 
	14.04 Waivers
	 	 	56	 
	14.05 Exercise of Rights
	 	 	56	 
	14.06 Binding Effect
	 	 	56	 
	14.07 Limitation on Benefits of this Agreement
	 	 	56	 
	14.08 Amendment Procedure
	 	 	56	 
	14.09 Entire Agreement
	 	 	56	 
	14.10 Pronouns, Time
	 	 	57	 
	14.11 Headings
	 	 	57	 
	14.12 Governing Law
	 	 	57	 
	14.13 Partner’s Representatives
	 	 	57	 
	14.14 Execution in Counterparts
	 	 	57	 
	14.15 Affirmative Action Policy
	 	 	57	 
	14.16 Advisor
	 	 	57	 
	14.17 Insurance
	 	 	58	 
	14.18 Legal Representation of the Company
	 	 	58	 
	14.19 Special Covenants
	 	 	58	 






	 	 	 
	Exhibit A -

	 	Form of Development Management Agreement
	Exhibit B -

	 	Form of Management and Leasing Agreement
	Exhibit C -

	 	List of Contributed Properties
	Exhibit D -

	 	Current Debt of the Company
	Exhibit E -

	 	Business Plan for 2007
	Exhibit F -

	 	Reserved
	Exhibit G -

	 	Form of Leasing Update






- v -









 







	 	 	 
	Exhibit H -

	 	Recitals
	Exhibit I -

	 	Initial Yield Parameters
	Exhibit J -

	 	Report of Independent Public Accountants
	Exhibit K -

	 	Due Diligence for New Acquisitions
	Exhibit L -

	 	Due Diligence for New Developments and Redevelopments
	Exhibit M -

	 	Insurance Requirements






-vi-









 









AGREEMENT OF LIMITED PARTNERSHIP




OF



LIBERTY WASHINGTON, LP




     THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into as of the 4th day of October,
2007 (the “Effective Date”), by and between LIBERTY WASHINGTON VENTURE, LLC, a Delaware limited
liability company (“General Partner”) as general partner, and NEW YORK STATE COMMON RETIREMENT
FUND, as limited partner (“NYSCRF”), (General Partner and NYSCRF are sometimes referred to
collectively as “Partners”).



     NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, the
parties hereby agree as follows:



ARTICLE I




CERTAIN DEFINITIONS




     Unless the context otherwise specifies or requires, the terms defined in this Article
I shall, for the purposes of this Agreement, have the meaning herein specified. Unless
otherwise specified, all references herein to Articles or Sections are to Articles or Sections of
this Agreement.



     “Acquisition Plan” shall have the meaning set forth in Section 13.03.



     “Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from time
to time (or any corresponding provisions of succeeding law).



     “Additional Capital Contributions” means, with respect to any Partner, the total
amount contributed to the Company by such Partner pursuant to Section 3.02(a).



     “Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit
balance in such Partner’s Capital Account as of the end of the relevant Fiscal Year or period,
after (a) crediting to such Capital Account any amounts which such Partner is deemed to be
obligated to restore to the Company pursuant to the next-to-last sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), and (b) debiting to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.



     “Advisor” has the meaning set forth in Section 14.16.



     “Affiliate” means, when used with reference to a specific Person, any Person directly
or indirectly controlling, controlled by, or under common control with the Person in question. As
used in this definition, the terms “controlling”, “controlled” and “control” mean the possession,
directly or indirectly, of the power to direct or cause the direction of the management and



 









 







policies of a Person, whether through the ownership of voting securities, by contract, or
otherwise.



     “Agreement” means this Agreement of Limited Partnership of Washington, LP, as amended
from time to time.



     “Approved Vendor” means general contractors, subcontractors, surveyors, title
companies, environmental consultants, material suppliers, engineers and other professionals of good
standing and reputation in the geographic region where the Property is located.



     “Annual Business Plan” has the meaning set forth in Section 6.03.



     “Auditor” shall mean such national firm of independent certified public accountants
which shall be selected by the General Partner and reasonably approved by NYSCRF and engaged
annually to audit the books and records of the Company and prepare the tax returns of the Company.
The initial Auditor shall be Ernst & Young LLP.



     “Bankrupt” and “Bankruptcy” each have the meaning set forth in Section
11.02.



     “Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such in any of the States of Illinois, New York, Virginia or Pennsylvania, or the
District of Columbia, shall not be regarded as a Business Day.



     “Call for Capital” has the meaning set forth in Section 3.02(b).



     “Capital Account” means the Capital Account maintained for each Partner pursuant to
Section 3.04.



     “Capital Contributions” means, with respect to any Partner, the total amount
contributed to the capital of the Company by such Partner pursuant to Sections 3.01, 3.02 and
3.03(b).



     “Capital Transaction” means the sale, exchange, condemnation (or similar eminent
domain taking or disposition in lieu thereof), destruction by casualty, financing or refinancing,
or disposition of the Property or any portion thereof.



     “Cause”
means [The confidential material contained herein has been omitted and has been separately filed with the Commission.]



     “Code” means the Internal Revenue Code of 1986, as amended from time to time (or any
corresponding provisions of succeeding law). References to Sections of the Code are to those in
effect on the date of this Agreement and shall include any corresponding future provision of the
Code.



     “Company” means Liberty Washington, LP, a Delaware limited partnership governed by
this Agreement, as it may from time to time be reconstituted.



- 2 -









 





     “Company Minimum Gain” has the meaning set forth in Regulations Sections 1.704-2(b)(2)
and 1.704-2(d).



     “Contributed Entities” means the entities identified as such on Exhibit C.



     “Contributed Interests” means those ownership interests in the Contributed Entities
held by Liberty Property Limited Partnership, which are being contributed to the Company by or on
behalf of the General Partner pursuant to the Contribution Agreement, as identified on Exhibit
C.



     “Contribution Agreement” means that certain Contribution Agreement dated on or about
the date of this Agreement by and among LPLP, NYSCRF and the Company, pursuant to which LPLP is
contributing the Contributed Interests to the Company on behalf of the General Partner, and the
General Partner is receiving a credit to its Capital Account pursuant to Section 3.01.



     “Cost Overrun” has the meaning set forth in the Development Management Agreement.



     “DC Metropolitan Area” shall mean (i) the District of Columbia, (ii) those portions of
the State of Maryland located within the Interstate 495 “Beltway”, and (iii) the Counties of
Loudon, Fairfax and Arlington, Virginia



     “Default” has the meaning set forth in Section 9.01.



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



     “Development Management Agreement” means an agreement, in substantially the form
attached hereto as Exhibit A, to be entered into between the Company or its Subsidiaries
that own Property, and the General Partner (or its Affiliate) from time to time in connection with
New Developments in accordance with ARTICLE XIII, as such agreement may be amended from time to
time as permitted herein.



     “Effective Date” shall have the meaning set forth in the Preamble to this Agreement.



     “Entities” shall mean collectively the Contributed Entities and the Purchased
Entities.



     “ERISA” means the Employee Retirement Income Security Act of 1974 and the regulations
issued thereunder, as amended from time to time, and any successor to such Act.



     “Extraordinary Cash Flow” means the cash proceeds (including, but not limited to, any
applicable condemnation, insurance and refinancing proceeds) realized by the Company as a



- 3 -









 







result of a Capital Transaction, increased by the cash interest payments received on such
proceeds, decreased by the sum of the following: (i) any amounts applied in repayment of
any approved debt, (ii) the amount of such proceeds used, set aside or committed by the Company for
repair or replacement of any portion of the Property; (iii) any expenses, costs or liabilities
incurred by the Company in effecting or obtaining any such Capital Transaction or the proceeds
thereof (including, without limitation, attorneys’ fees, court costs, brokerage fees, commissions,
title insurance and survey costs, recording fees, and transfer taxes), all of which expenses, costs
and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof.



     “Final Plans and Specifications” means the plans and specifications submitted to
NYSCRF by the Company to support a request by the General Partner to commence a New Development in
accordance with the Preliminary Plans and Specifications and approved by NYSCRF.



     “Final Project Budget” means, as to each New Development, the total budget for the
construction and leasing of each New Development prepared by the General Partner in accordance with
the Preliminary Project Budget and approved by NYSCRF.



     “Fiscal Year” means the calendar year.



     “Functional Office Property” means a Property other than a Redevelopment Property that
is acquired, directly or indirectly, at any time by the Company and which at the time of its
acquisition is improved with an existing office building.



     “General Partner” means Liberty Washington Venture, LLC.



     “Gross Asset Value” means, with respect to any asset, such asset’s adjusted basis for
Federal income tax purposes, with the following modifications:



          (a) The initial Gross Asset Value of any asset contributed by a Partner to the Company shall
be the gross fair market value of such asset, as determined by the contributing Partner and the
General Partner, or where the General Partner is the contributing Partner, by the contributing
Partner and NYSCRF. The initial Gross Asset Value of the Interests are set forth on Exhibit
C.




          (b) The Gross Asset Values of all Company assets shall be adjusted to equal their respective
gross fair market values, as determined by the General Partner subject to the approval of NYSCRF,
which shall not unreasonably be withheld, as of the following times: (i) the acquisition of an
additional interest in the Company by any new or existing Partner in exchange for more than a
de minimis Capital Contribution; (ii) the distribution by the Company to a Partner
of more than a de minimis amount of property as consideration for an interest in
the Company; and (iii) the liquidation of the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided, however that adjustments pursuant to clauses (i) and (ii) above
shall be made only if the General Partner reasonably determines that such adjustments are necessary
or appropriate to reflect the relative economic interests of the Partners in the Company.




- 4 -









 








          (c) The Gross Asset Value of any Company asset distributed to any Partner shall be adjusted to
equal the gross fair market value of such asset on the date of distribution as determined in
accordance with Section 5.04.




          (d) The Gross Asset Values of each of the Properties contributed or sold to the Company as of
the Effective Date, and the components thereof, shall be the amounts set forth next to the name of
the Property on Exhibits C and D hereto, subject to adjustment of such Exhibits to
reflect subsequent transactions and the determination of Gross Asset Values as provided for herein.




          (e) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), for purposes of paragraph (f) of the
definition of Profits and Losses and for purposes of Section 4.02(h) hereof; provided,
however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (e) to
the extent the General Partner determines that an adjustment pursuant to subparagraph (b)
above in this definition is necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (e).




          (f) If the Gross Asset Value of an asset has been determined or adjusted pursuant to this
Section, then such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits and Losses.




          (g) This definition of Gross Asset Value is intended to comply with the Internal Revenue Code,
with particular adherence to the provisions of Code Section 704(b) and the Regulations thereunder.




     “Guarantors” shall have the meaning set forth in Section 6.20.



     “Hazardous Materials” mean (i) any “hazardous waste” as defined by the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), as amended from
time to time, and regulations promulgated thereunder (“RCRA”); (ii) any “hazardous substance” as
defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601 et seq.), as amended from time to time, and regulations promulgated
thereunder (“CERCLA”) (including petroleum-based products as described therein); (iii) other
petroleum and petroleum-based products; (iv) asbestos in any quantity or form which would subject
it to regulation under any applicable Hazardous Materials Law (hereinafter defined);
(v) polychlorinated biphenyls; (vi) any substance, the presence of which on the Property is
prohibited by any Hazardous Materials Law; (vii) any “extremely hazardous substance” or “hazardous
chemical” as those terms are defined in the Emergency Planning and Community Right-To-Know Act (42
U.S.C. Section 11001 et seq.) as amended from time to time, and regulations promulgated thereunder;
(viii) any “chemical substance” as that term is defined in the Toxic Substances Control Act (15
U.S.C. Section 2601) as amended from time to time, and regulations promulgated thereunder; (ix) any
hazardous substances identified under the



- 5 -









 







law of the state in which the Property is located; and (x) any other substance, including
toxic substances, which, by any Hazardous Materials Laws, requires special handling in its
collection, storage, treatment, management, recycling or disposal.



     “Hazardous Materials Law” means all Governmental Requirements, including, without
limitation, RCRA and CERCLA, relating to the handling, storage, existence of or otherwise
regulating any hazardous wastes, hazardous substances, toxic substances, radioactive materials,
pollutants, chemicals, contaminants or industrial substances or relating to the removal or
remediation of any of the foregoing.



     “Indemnified Party” has the meaning set forth in Section 6.02(f).



     “Initial Properties” means the Properties owned by the Entities on the date that the
Interests are acquired by the Company pursuant to the Contribution Agreement.



     “Interests” shall mean collectively the Contributed Interests and the Purchased
Interests.



     “IRR” means the annualized discount rate, compounded as of the last day of each
calendar month, which equates the sum of the present value of all contributions made by a Partner
to the Company with the sum of the present value of all distributions made to such Partner by the
Company (including distributions of Net Operating Cash Receipts and distributions of Extraordinary
Cash Flow and the value of any distributions in kind made in accordance with Section 5.04),
as calculated by reputable and generally accepted financial software applications (such as
Microsoft Excel, Lotus 123 and Argus or, if they are no longer available or generally accepted,
such other financial applications as from time to time have the general acceptance of the real
estate finance community). For purposes of the foregoing, all contributions and distributions made
prior to the date of this Agreement shall be deemed to have been made on the date of this
Agreement.



     “Lakeside, LLC” shall have the meaning set forth in the Recitals to this Agreement.



     “Liberty Loan” shall have the meaning set forth in the Recitals to this Agreement.



     “Liberty Loan Documents” shall have the meaning set forth in the Recitals to this
Agreement.



     “Liquidating Sale” means the sale of substantially all of the then remaining
Properties, either in one transaction or in a series of related transactions.



     “Liquidation” means (a) when used with reference to the Company, the earlier of (i)
the date upon which the Company is terminated under Code Section 708(b)(1)(A), (ii) the date upon
which the Company ceases to be a going concern, or (iii) the date upon which the Company dissolves
in accordance with ARTICLE XI, and (b) when used with reference to a Partner, the earlier of (i)
the date upon which there is a liquidation of such Partner, or (ii) the date upon which there is a
liquidation of such Partner’s Partnership Interest for purposes of Code Section 761(d).



- 6 -









 





     “LPLP” means Liberty Property Limited Partnership, a Pennsylvania limited partnership
and the sole member of the General Partner.



     “Management and Leasing Agreement” means the Agreement by and between the Company, or
its Subsidiary that owns Property, and Manager attached hereto as Exhibit B, as amended
from time to time as permitted herein.



     “Manager” means Liberty Property Limited Partnership, a Pennsylvania limited
partnership (an Affiliate of General Partner), or its Affiliate.



     “Merger” means that certain merger between Republic Property Trust, RPLP, Liberty
Property Trust, Liberty Acquisition LLC and Liberty Property Limited Partnership pursuant to that
certain Agreement of Plan and Merger dated July 23, 2007.



     “Merger Loan” shall have the meaning set forth in the Recitals to this Agreement.



     “Net Cash Receipts” means the sum of Net Operating Cash Receipts and Extraordinary
Cash Flow for the applicable period.



     “Net Operating Cash Receipts” means, for any period subject to annual audit as
contemplated by Section 8.04(a) below, the excess of (a) gross cash receipts from
operations (excluding cash proceeds from Capital Transactions and any security or lease deposits
until forfeited or otherwise applied to rent due under the leases) of the Company during such
period in excess of (b) the aggregate of (i) all operating costs and expenses during such period
(not including interest on borrowed money) of the Company paid in cash during such period (without
deduction for any charge for cost recovery, depreciation or other expenses not paid in cash), (ii)
the cost of debt service, including both interest and principal reductions and any applicable fees
under any approved debt (including, without limitation, the Liberty Loan) paid during such period,
and (iii) principal and interest on any Tax Payment Loan. Any increase, from the previous period
to the period under determination, in the amounts of reserves and working capital as reasonably
determined by the General Partner in accordance with the Annual Business Plan shall be treated as a
deduction from Net Operating Cash Receipts for the latter period; and any decrease, from the
previous period to the period under determination, in the amounts of reserves and working capital
as reasonably determined by the General Partner in accordance with the Annual Business Plan shall
be treated as an addition to Net Operating Cash Receipts for the latter period.



     “New Development” means any new improvements constructed by the Company pursuant to
ARTICLE XIII in accordance with the Annual Business Plan or a Development Plan on any Vacant Land
Property owned, directly or indirectly, by the Company.



     “New Development Property” means a Property on which the Company has developed a New
Development at any time during the term of this Agreement.



     “Non-Recourse Carveouts” shall have the meaning set forth in Section 6.20.



- 7 -









 





     “Nonrecourse Deductions” has the meaning set forth in Regulations Section
1.704-2(b)(1). The amount of Nonrecourse Deductions for a Fiscal Year shall be determined in
accordance with the provisions of Regulations Section 1.704-2(c).



     “Nonrecourse Liability” has the meaning set forth in Regulations Section
1.704-2(b)(3).



     “Partner” or “Partners” means General Partner, NYSCRF and such successors,
assigns or additional Partners as may be admitted to the Company pursuant to the terms of this
Agreement.



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



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



     “Partner Nonrecourse Deductions” has the meaning set forth in Regulations Sections
1.704-2(i)(1) and 1.704-2(i)(2).



     “Partnership Interest” means, as to any Partner, all of the interest of such Partner
in the Company including, without limitation, such Partner’s right to a distributive share of the
profits, losses, and distributions of the Company and to a distributive share of Company Assets.



     “Percentage Interest” means, as of the Effective Date, seventy-five percent (75%) for
NYSCRF and twenty-five percent (25%) for General Partner respectively, unless and until changed as
provided in this Agreement.



     “Performance Standards” means (i) achieving leasing rates on renewals and new leases
at each Property substantially consistent with market rates for similar properties in such
submarket, (ii) achieving and maintaining occupancy rates on average for the Properties in a
submarket substantially consistent with occupancy rates for similar type properties in such
submarket, (iii) maintaining in each Fiscal Year on a Company wide basis non-reimbursed capital
expenditures at or below the amounts budgeted in the approved Annual Business Plan, (iv) timely
delivery of financial and managerial reports in accordance with the provisions of Section
8.04 and (v) performance substantially economically consistent with the Annual Business Plan.



     “Person” means any individual, corporation, association, company, limited liability
company, joint venture, trust, estate, or other entity or organization.



     “Preliminary Plans and Specifications” means the plans and specifications submitted to
NYSCRF by the Company to support a request by the General Partner to commence a New Development or
the redevelopment of a Redevelopment Property.



     “Preliminary Project Budget” means the budget for a New Development submitted to
NYSCRF by the Company to support a request by the General Partner to commence a New Development or
the redevelopment of a Redevelopment Property, including a pro forma operating budget.



- 8 -









 





     “Prime Rate” means the prime rate published by the Wall Street Journal, or any
successor publication reasonably approved by the Partners, from time to time.



     “Profits” and “Losses” means, for each Fiscal Year or other period, an amount
equal to the Company’s taxable income or loss for such Year or period, determined in accordance
with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required
to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments:



          (a) Any income of the Company that is exempt from Federal income tax and not otherwise taken
into account in computing Profits or Losses pursuant to this Section shall be added to such taxable
income or loss;



          (b) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to this Section, shall be
subtracted from such taxable income or loss;



          (c) In the event the Gross Asset Value of any Company Asset is adjusted pursuant to any
provision of this Agreement in accordance with the definition of “Gross Asset Value” above, the
amount of such adjustment shall be taken into account as gain or loss from the disposition of such
Asset for purposes of computing Profits or Losses;



          (d) Gain or loss resulting from any disposition of property with respect to which gain or loss
is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;



          (e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into
account in computing such taxable income or loss, there shall be taken into account Depreciation
for such Fiscal Year or other period, computed in accordance with the definition of “Depreciation”
above;



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



          (g) Notwithstanding any other provision of this Section, any items, which are specially
allocated pursuant to Section 4.02, or Section 4.04 shall not be taken into account
in computing Profits or Losses; and



          (h) The amounts of the items of Company income, gain, loss, or deduction available to be
specially allocated pursuant to Sections 4.02 and 4.03 but not previously taken



- 9 -









 







into account because of the restrictions of paragraph (g) shall be determined by applying
rules analogous to those set forth in this Section.



     “Project Financing” shall have the meaning set forth in Section 6.20.



     “Property” or “Properties” means each and all of the real estate including,
but not limited to (i) the land and improvements thereon owned, directly or indirectly, by the
Entities and acquired by the Company by contribution of the Contributed Interests pursuant to the
Contribution Agreement and purchase of the Purchased Interests as described in the Recitals to this
Agreement, (ii) all additional real estate acquired in accordance with the Annual Business Plan or
an Acquisition Plan, and (iii) all improvements, fixtures and personal property owned, directly or
indirectly, by the Company and located thereon, in each case until disposed of by the Company in
accordance with this Agreement. The present and future Properties are comprised of New Development
Properties, Redevelopment Properties, Functional Office Properties, and Vacant Land Properties.



     “Purchase Money Loan Documents” shall have the meaning set forth in the Recitals to
this Agreement.



     “Purchase Money Note” shall have the meaning set forth in the Recitals to this
Agreement.



     “Purchase Price” shall have the meaning set forth in the Recitals to this Agreement.



     “Purchased Entities” shall have the meaning set forth in the Recitals to this
Agreement.



     “Purchased Interests” shall have the meaning set forth in the Recitals to this
Agreement..



     “Recitals” means the recitals set forth on Exhibit H attached hereto.



     “Recourse Obligations” shall have the meaning set forth in Section 6.20.



     “Redevelopment Property” means an improved Property or a land position acquired by the
Company that the Partners mutually agree should be considered as such due to any one or more of the
following factors: existing occupancy; anticipated tenant expirations; amount of capital
expenditures intended to be invested to rehabilitate the Property, or; the anticipated yields on
the investment. The Partners acknowledge that among the Initial Properties, 1129 29th Avenue and
the potential additional Floor Area Ratio that may become available in Republic Park are deemed to
be Redevelopment Property



     “Regulations” means the Income Tax Regulations promulgated under the Code as such
regulations may be amended from time to time (including Temporary Regulations). References to
Sections of the Regulations are to those in effect on the date of this Agreement and shall include
any corresponding future provision of the Regulations.



     “Regulatory Allocations” has the meaning set forth in Section 4.03.



     “REIT” means a “real estate investment trust” within the meaning of the Code.



- 10 -









 





     “RPLP” means Republic Property Limited Partnership, a Delaware limited partnership.



     “Section 12.01 Notice” means the notice given pursuant to Section 12.01 of
this Agreement.



     “Subsidiary” means any entity taxable as a company for federal income tax purposes in
which the Company owns any direct or indirect interest in the profits, losses or capital of the
entity.



     “Tax Matters Partner” has the meaning set forth in Section 8.06(b).



     “Tax Payment Loan” has the meaning set forth in Section 6.11(a).



     “Title Holding Subsidiary” has the meaning set forth in Section 6.21.



     “Transfer” has the meaning set forth in Section 10.01(a)



     “Transferee Partner” means any Partner who has acquired any Partnership Interest by
transfer or otherwise from any other Partner.



     “UBTI” means unrelated business taxable income within the meaning of Section 512 of
the Code.



     “Unleveraged Development IRR” shall mean the IRR for all contributions by and all
distributions to NYSCRF with respect solely to New Development Properties, Redevelopment Properties
and Vacant Land Properties, calculated based on the assumptions that: (a) all funds borrowed by the
Company from third parties from the execution of this Agreement through the Liquidating Sale with
respect to such Properties shall be treated as though such funds had been obtained by the Company
as Capital Contributions from the Partners in proportion to their respective Percentage Interests
at the time of each such borrowing by the Company, (b) all payments of principal and interest on
such borrowed funds with respect to such Properties shall be treated as though such payments had
been distributed by the Company to the Partners in proportion to their respective Percentage
Interests at the time of each such payment, and (c) all such borrowed funds to the extent not
theretofore repaid shall be treated as having been repaid at the time of calculation. If a
contribution, distribution or third-party loan relates partly to one or more New Development
Properties, Redevelopment Properties and Vacant Land Properties, and partly to one or more
Functional Office Properties, the amount thereof (or the amount of principal or interest relating
thereto, in the case of a third-party loan) shall be allocated in an equitable manner based on the
extent to which the respective class of Properties contributed to or was responsible for the amount
in question.



     “Unleveraged IRR Target” shall be satisfied if, in connection with a Liquidating Sale,
both of the following are true: [The confidential material contained herein has been omitted and has been separately filed with the Commission.]



- 11 -









 








     “Unleveraged Functional Office IRR” shall mean the IRR for all contributions by and
all distributions to NYSCRF with respect solely to Functional Office Properties, calculated based
on the assumptions that: (a) all funds borrowed by the Company from third parties from the
execution of this Agreement through the Liquidating Sale with respect to such Properties shall be
treated as though such funds had been obtained by the Company as Capital Contributions from the
Partners in proportion to their respective Percentage Interests at the time of each such borrowing
by the Company, (b) all payments of principal and interest on such borrowed funds with respect to
such Properties shall be treated as though such payments had been distributed by the Company to the
Partners in proportion to their respective Percentage Interests at the time of each such payment,
and (c) all such borrowed funds to the extent not theretofore repaid shall be treated as having
been repaid at the time of calculation. If a contribution, distribution or third-party loan
relates partly to one or more New Development Properties, Redevelopment Properties and Vacant Land
Properties, and partly to one or more Functional Office Properties, the amount thereof (or the
amount of principal or interest relating thereto, in the case of a third-party loan) shall be
allocated in an equitable manner based on the extent to which the respective class of Properties
contributed to or was responsible for the amount in question.



     “Unreturned Capital Contribution” means the cumulative Capital Contributions of a
Partner, reduced, but not below $0, by the cumulative amounts distributed to that Partner pursuant
to Section 5.02(a) hereof.



     “Vacant Land Property” means a Property which is acquired at any time by the Company
and which is either (a) unimproved except for site work, or (b) improved with buildings or
structures which pursuant to the Acquisition Plan relating to such Property are planned to be
substantially demolished by the Company.



     “WillowWood, LLC” shall have the meaning set forth in the Recitals to this Agreement.



ARTICLE II




ORGANIZATION AND PURPOSE




     2.01 Continuation of the Company. A Certificate of Limited Partnership has been filed
with the State of Delaware and a certificate to do business has been filed with the State of
Virginia and the District of Columbia. The Partners hereby form the Company as a limited
partnership pursuant to the provisions of the Act and enter into this Agreement in order to
establish the rights, duties, and relationship of the Partners. The General Partner shall cause
the Company to continuously maintain in the State of Delaware a registered agent and registered
office for services of process, and to continuously maintain the Company’s qualification to do
business in the State of Virginia, the District of Columbia and, if the Company or its Subsidiaries
own Property in Maryland, the State of Maryland. If the laws of any jurisdiction in which the
Company transacts business so require, the General Partner shall file, with the appropriate office
in that jurisdiction, all documents necessary for the Company to qualify to transact business. The
Partners shall execute, acknowledge, and cause to be filed for record, in the place or places



- 12 -









 




and manner prescribed by law, any amendments to this Agreement as may be required, either by
the Act, by the laws of any jurisdiction in which the Company transacts business, or by this
Agreement, to reflect changes in the information contained herein or otherwise to comply with the
requirements of law for the continuation, preservation, and operation of the Company as a
partnership under the Act.




     2.02 Name of Company. The name of the Company shall be Liberty Washington, LP, and
all business of the Company shall be conducted in such name.



     2.03 Principal Place of Business. The principal place of business of the Company
shall be located at 500 Chesterfield Parkway, Malvern, PA 19355, or such other place or places as
the General Partner may from time to time determine, provided that the General Partner shall give
written notice thereof to the Partners within five (5) days after the effective date of any such
change. The General Partner may establish and maintain such other offices and additional places of
business of the Company as it deems appropriate.



     2.04 Purpose. The purpose of the Company shall be: (a) to acquire, own, develop,
re-develop, improve, operate, lease and manage office properties in the DC Metropolitan Area, (b)
to sell and otherwise dispose of any or all such properties, (c) to undertake any and all actions
necessary or incidental to any of the foregoing activities, and (d) to take or cause to be taken
all actions and to perform or cause to be performed all functions necessary or appropriate to
promote the business of the Company and to realize and carry out its purposes.



     2.05 Exclusive Activities of Company. Except as otherwise provided in this Agreement,
the Company shall not engage in any other activity or business other than as specified under
Section 2.04, and no Partner shall have any authority to hold itself out as the agent of
any other Partner or as a Partner of the Company with respect to any other business or activity.



     2.06 No Payment of Individual Obligations. The Partners shall use the Company’s
credit and assets solely for the benefit of the Company. No asset of the Company shall be
transferred or encumbered for or in payment of any individual obligation of any Partner.



     2.07 Title to Assets. All Company assets shall be owned by and held in the name of
the Company or in the name of a wholly-owned subsidiary of the Company. No Partner shall have any
ownership interest in any Company asset in its individual name or right, and each Partner’s
interest in the Company shall be personal property for all purposes.



     2.08 Term. The Company shall continue in perpetuity unless and until the Company is
dissolved and liquidated in accordance with the provisions of ARTICLE XI.



     2.09 Representations and Warranties.



          (a) Each Partner hereby represents and warrants to the Company and to the other Partners that:



               (i) it is duly organized, validly existing, and in good standing under applicable law, it has
full and unrestricted right, authority and power to enter into this Agreement



- 13 -









 







and to perform its obligations hereunder; this Agreement constitutes a valid and binding
obligation of such Partner, enforceable in accordance with its terms; and



               (ii) the representations and warranties made by such Partner in the Contribution Agreement are
true and correct in all material respects on and as of the date of this Agreement.



          (b) The representations
and warranties made by each Partner under Section 2.09(a)(i)
shall be deemed to have been remade by such Partner as of the date of each Call for Capital and
each Capital Contribution pursuant to such Call, and shall survive the dissolution and liquidation
of the Company or such Partner.



ARTICLE III




CAPITAL




     3.01 Initial Capital Contributions; Other Related Transactions. In accordance with
the Contribution Agreement, the following events and transactions have occurred, or will occur, on
or before the Effective Date:



          (a) On or before the Effective Date, NYSCRF has made a contribution to the Company in the
amount of $415,063,748.00, which amount shall be credited to NYSCRF’s Capital Account.



          (b) On or before the Effective Date, LPLP, on behalf of the General Partner, has contributed
or shall contribute and convey the Contributed Interests to the Company, in satisfaction of the
Merger Loan, to the extent thereof, and the balance as a contribution to the capital of the
Company. The Contributed Interests shall be free and clear of all liens, security interests,
pledges, assignments, claims, options, encumbrances, charges, commitments, and equitable interests
or rights of others, of any kind whatsoever, other than the Liberty Loan. On the Effective Date,
the Property owned directly or indirectly by the Contributed Entities shall be free and clear of
all mortgages and other liens and encumbrances, except for the Assumed Financing (defined below) or
as otherwise approved under the Contribution Agreement. Simultaneously with the contribution to
the Company of the Contributed Interests, LPLP has or shall contribute to the Company, on behalf of
the General Partner, the lender’s rights and interests in and to the Purchase Money Loan Documents.
The foregoing contributions described in this Section 3.01(b) have an aggregate value for
purposes of this Agreement of $138,354,583.00, which amount shall be credited to the Capital
Account of the General Partner.



          (c) Certain of the Properties owned (directly or indirectly) by certain of the Entities have
existing mortgage financing with those lenders, and in those amounts, identified on Exhibit
D hereto (the “Assumed Financing”). By acceptance of the contribution of the Contributed
Interests to the Company and the purchase of the Purchased Interests by the Company, the Company
shall be deemed to have assumed the Assumed Financing.



          (d) By virtue of the assignment to, and assumption by, the Company of the Liberty Loan
Documents, as described in the Recitals to this Agreement, the Company shall be



- 14 -









 







deemed to have obtained secured financing in the principal amount of $59,500,000.00. The
principal amount of, and interests securing the Liberty Loan are depicted on Exhibit D.



          (e) The Partners acknowledge that the contribution amounts set forth in Section
3.01(a) and Section 3.01(b) include estimated closing costs of the Company, and the
Partners intend to adjust their initial capital contributions based on a reconciliation and
proration of such costs undertaken post-Closing in accordance with the Contribution Agreement.



     3.02 Additional Capital Contributions.



          (a) NYSCRF and the General Partner shall each make Additional Capital Contributions to the
Company in proportion to their Percentage Interests from time to time as may be required to (i)
fund the costs of development, construction and lease-up (net of the proceeds of any third-party
debt incurred for such development activities) of any New Development or Redevelopment pursuant to
ARTICLE XIII (but not including Cost Overruns which shall be the responsibility of the
Development Manager under the Development Management Agreement), or (ii) fund the acquisition costs
(net of the proceeds of any third-party debt incurred for such acquisition) of any additional
Property acquired by the Company in accordance with a jointly-approved Acquisition Plan adopted
pursuant to Section 13.03. The Partners expect and intend that, except in the case of the
development, construction and lease-up costs of the New Developments and Redevelopments and the
acquisition costs for additional property acquisitions, any cash requirements of the Company will
be provided from the rentals received by the Company and, if approved by the Partners, by loans
from one or more Partners, at such Partners’ option, and loans from third parties, and no Partner
shall be required to make any additional capital contribution to the Company therefor.



          (b) When required pursuant to Section 3.02(a), each Partner shall contribute in cash
its respective Additional Capital Contribution to the Company on not less than ten (10) days prior
written notice after the General Partner’s call therefor (each a “Call for Capital”).



          (c) If any amounts shall become due and payable under the Purchase Money Loan Documents, the
General Partner shall make an Additional Capital Contribution to the Company equal to twenty-five
percent (25%) of all such amounts.



     3.03 Failure to Make Capital Contribution. If any Partner fails to make any Capital
Contribution required to be made by such Partner under Section 3.01 or Section 3.02
within 10 days after the same becomes due and payable (the “Defaulting Partner”), one or more of
the other Partners (the “Contributing Partner”) may (but without obligation to do so), within 15
days after the expiration of said 10-day period, contribute to the Company an additional amount
equal to the Defaulting Partner’s unpaid Capital Contribution and elect to treat such contribution
as provided in either Section 3.03(a) or Section 3.03(b). If the Contributing
Partner fails to make such election within said 15-day period, it shall be deemed to have elected
to treat such contribution as provided in Section 3.03(b).



          (a) The Contributing Partner may treat such contribution as a loan to the Defaulting Partner
(to be due and payable solely out of distributions otherwise payable to the Defaulting Partner
hereunder) followed by a contribution of the proceeds thereof to the Company



- 15 -









 







to fund the Capital Contribution otherwise required to be made from the Defaulting Partner.
Until the loan to the Defaulting Partner shall have been repaid together with interest at the rate
equal to the Prime Rate plus five percentage points, or the maximum rate permitted under applicable
law, whichever is less, calculated upon the outstanding principal balance of such loan as of the
first day of each month, all distributions otherwise to be made to the Defaulting Partner hereunder
shall be distributed, for the Defaulting Partner’s account, by payment of the same to the
Contributing Partner, and shall be applied against the balance owed by the Defaulting Partner to
the Contributing Partner.



          (b) [The confidential material contained herein has
been omitted and has been separately filed with the Commission.]



          (c) Any change in Percentage Interests pursuant to this Section 3.03(b) shall not
affect the amount of any Partner’s Capital Contributions for purposes of determining the amount to
which such Partner is entitled pursuant to Section 5.02(a), to the extent attributable to
Section 5.02(a).



     3.04 Capital Accounts.



          (a) The Company shall establish and maintain a separate Capital Account for each Partner in
accordance with the following provisions:



               (i) To each Partner’s Capital Account there shall be credited (A) the amount of money
contributed by such Partner to the Company, (B) the fair market value of property contributed by
such Partner to the Company (net of any liabilities secured by such property that the Company is
considered to assume or take subject to under Code Section 752) (the Partners agreeing that the
fair market value of the Properties contributed by the General Partner to the Partnership on the
date of this Agreement have fair market values equal to their Gross Asset Value as set forth in
Section 3.01), and (C) such Partner’s distributive share of Profits and any items in the
nature of income or gain which are specially allocated to such Partner pursuant to ARTICLE IV; and



               (ii) To each Partner’s Capital Account there shall be debited (A) the amount of money
distributed to such Partner by the Company, (B) the fair market value of any



- 16 -









 







Company Asset distributed to such Partner by the Company (net of any liabilities secured by
such Asset that such Partner is considered to assume or take subject to under Code Section 752),
and (C) such Partner’s distributive share of Losses and any items in the nature of expenses or
losses which are properly allocated to such Partner pursuant to any Section of ARTICLE IV.



     The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such Regulations. In the event the
General Partner shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations,
the General Partner may make such modification, provided that it will not have any adverse effect
on the amounts distributable to any Partner pursuant to this Agreement. The General Partner also
shall (1) make any adjustments that are necessary or appropriate to maintain equality between the
combined Capital Accounts of the Partners and the total amount of Company capital reflected on the
Company’s balance sheet, as computed for book purposes in accordance with Regulations Section
1.704-1(b)(2)(iv)(g), and (2) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) subject,
however, to the limitation on modifications having any adverse effect on amounts to be distributed
to a Partner as provided in the preceding sentence. Any questions with respect to a Partner’s
Capital Account shall be resolved by the General Partner in its reasonable discretion, applying
principles consistent with this Agreement.



          (b) Any transferee of a portion or all of a Partner’s Partnership Interest shall succeed to
the Capital Account of the transferor Partner to the extent it relates to the Partnership Interest
transferred.



     3.05 Negative Capital Accounts. Except to the extent Partners are required to make
contributions to the capital of the Company under Section 3.01 and Section 3.02, no
Partner shall be required to pay to the Company or to any other Partner any deficit or negative
balance which may exist in such Partner’s Capital Account from time to time or upon Liquidation of
the Company. A negative Capital Account shall not be considered a loan from or an asset of the
Company.



     3.06 Return of Capital; No Interest on Amounts in Capital Account. Except upon
dissolution of the Company or as may be expressly set forth in this Agreement, no Partner shall
have the right to demand or receive the return of any of its aggregate Capital Contributions or any
part of its Capital Account or be entitled to receive any interest on its Capital Contributions or
its outstanding Capital Account balance.



ARTICLE IV




ALLOCATIONS




     4.01 Allocation of Profits and Losses. 



          (a) After giving effect to the allocations required by Section 4.03 of this Agreement,
if any, and subject to the other limitations in this ARTICLE IV, Profits and Losses



- 17 -









 







for any taxable year of the Partnership shall be allocated to the Capital Accounts of the
Partners so as to produce, as nearly as possible, Capital Account balances for the Partners (taking
into account all prior allocations and distributions) which equal the amount to which the Partners
would be entitled as a liquidating distribution from the Partnership upon a hypothetical
liquidation in which the net proceeds were distributed in accordance with the priorities set forth
in Section 5.02 and as if the net proceeds available for distribution were an amount equal
to the aggregate positive balance in the Partners’ Capital Accounts computed after taking into
account all allocations of Profits and Losses (or items thereof) for the taxable year, including
those pursuant to this Section 4.01.



          (b) If the allocation of all or any portion of Partnership Losses for a taxable year (or items
thereof) would cause or increase a negative balance in the Adjusted Capital Account of any Limited
Partner, such Loss (or item thereof) shall be allocated to those Limited Partners, if any, having
positive remaining Adjusted Capital Account balances. Any remaining amount of such Partnership
Losses (or items thereof) shall be allocated 100 percent (100%) to the General Partner.



     4.02 Special Allocations. The following special allocations shall be made in the
following order:



          (a) Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding any other
provision of this ARTICLE IV, if there is a net decrease in Company Minimum Gain with respect to
any Fiscal Year, each Partner shall be specially allocated items of Company income and gain for
such Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Partner’s share
of the net decrease in Company Minimum Gain, determined in accordance with Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 4.03(a) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.



          (b) Except as otherwise provided in Regulations Section 1.704-2(i)(4), notwithstanding any
other provisions of this ARTICLE IV, if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year, each Person who has a share
of the Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items
of Company income and gain for such Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Partner’s share of the net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 4.02(b) is intended to comply with the minimum gain chargeback
requirement in Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.




- 18 -











 





          (c) In the event any Partner unexpectedly receives any adjustments, allocations or
distributions described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
Company income and gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account
Deficit of such Partner as quickly as possible, provided that an allocation pursuant to this
Section 4.02(c) shall be made if and only to the extent that such Partner would have an
Adjusted Capital Account Deficit after all other allocations provided for in this ARTICLE IV have
been tentatively made as if this Section 4.02(c) were not in this Agreement.




          (d) In the event any Partner has a deficit Capital Account at the end of any Company Fiscal
Year which is in excess of the sum such Partner is obligated, or is deemed to be obligated, to
restore pursuant to the next-to-last sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Partner shall be specially allocated items of Company income and gain in
the amount of such excess as quickly as possible, provided that an allocation pursuant to this
Section 4.02(d) shall be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other allocations provided for in this
ARTICLE IV have been tentatively made as if this Section 4.02(d) and Section
4.02(c) were not in this Agreement.




          (e) In the event that the Profits available to be allocated to the Partners for any Fiscal
Year pursuant to Section 4.01 are less than the maximum amount otherwise allocable to them
pursuant thereto, then there shall be specially allocated to the Partners items of Company income
and gain equal to such maximum amount.




          (f) Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated
among the Partners in the same manner as if they were Losses for such Year or period.




          (g) Any Partner Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the
Partner who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with Regulations Section
1.704-2(i)(1).




          (h) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to
Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Sections
1.704-1(b)(2)(iv)(m) (2) or (4) to be taken into account in determining Capital Accounts as the
result of a distribution to a Partner in complete liquidation of such Partner’s interest in the
Company, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such
basis) and such gain or loss shall be specially allocated to the Partners in a manner consistent
with the manner in which their Capital Accounts are required to be so adjusted.




     4.03 Curative Allocations. The allocations set forth in Section 4.02, other
than Section 4.02(e) (the “Regulatory Allocations”), are intended to comply with certain
requirements of the Regulations. It is the
intent of the Partners that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of other items



 - 19 - 









 







of
Company income, gain, loss, or deduction pursuant to this Section 4.03. Therefore,
notwithstanding any other provision of this ARTICLE IV (other than the Regulatory Allocations), the
General Partner shall make such offsetting special allocations of Company income, gain, loss, or
deduction in whatever manner it determines appropriate so that, after such offsetting allocations
are made, each Partner’s Capital Account balance is, to the extent possible, equal to the Capital
Account balance such Partner would have had if the Regulatory Allocations were not part of this
Agreement and all Company items were allocated pursuant to Sections 4.01, and 4.04.
In exercising its discretion under this Section 4.03, the General Partner shall take into
account future Regulatory Allocations under Sections 4.02(a) and (b) that, although
not yet made, are likely to offset other Regulatory Allocations previously made under Sections
4.02(f) and 4.02(g).



     4.04 Other Allocation Rules.



          (a) For purposes of determining the Profits, Losses, or any other items allocable to any
period, Profits, Losses, and any such other items shall be determined on a daily, monthly, or other
basis, as determined by the General Partner using any permissible method under Code Section 706 and
the Regulations thereunder.




          (b) Except as otherwise provided in this Agreement, all items of Company income, gain, loss,
deduction, and any other allocations not otherwise provided for shall be divided among the Partners
in the same proportions as they share Profits and Losses, as the case may be, for the year.




     4.05 Tax Allocations: Code Section 704(c). In accordance with Code Section 704(c) and
the Regulations thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes, be allocated among the
Partner so as to take account of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance
with the definition of “Gross Asset Value” above). In the event the Gross Asset Value of any
Company asset is adjusted pursuant to any provision of this Agreement in accordance with such
definition, subsequent allocations of income, gain, loss and deduction with respect to such asset
shall take into account any variation between the adjusted basis of such asset for Federal income
tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the
Regulations thereunder. Any elections or other decisions relating to such allocations shall be
made by the General Partner in accordance with the “Traditional Method” described in Regulations
Section 1.704-3(b). Allocations pursuant to this Section 4.05 are solely for purposes of
Federal, state, and local taxes and shall not affect, or in any way be taken into account in
computing, any Partner’s Capital Account or share of Profits, Losses or other items, or
distributions pursuant to any provision of this Agreement.



ARTICLE V




DISTRIBUTIONS




     5.01 Net Cash Receipts. Subject to year end adjustments based on annual audit
contemplated at Section 8.04 below and in the definition of Net Operating Cash Receipts, and



 - 20 - 









 







the corresponding adjustment of distributions as soon as practicable after such audit, Net Cash
Receipts (including, without limitation, Extraordinary Cash Flow from Capital Transactions that do
not constitute a Liquidating Sale – e.g., the sale of one or more, but less than all, of the
Properties) shall be distributed by the Company to the Partners in proportion to their Percentage
Interests [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.], by wire transfer to an account as directed from time to time by each of the
Partners. Concurrently with each such distribution the General Partner shall provide to each
Partner an explanation of the sources of such Net Cash Receipts, detailed on a Property-by-Property
basis.



     5.02 Cash Flow from Liquidating Sale. Except as provided in Section 5.03,
Extraordinary Cash Flow from a Liquidating Sale shall be distributed by the Company in the
following order of priority:



          (a) First, to the Partners until the Partners have received distributions pursuant to this
Section 5.02(a) equal to the amount of their Unreturned Capital Contributions (and in the
same proportion as the Unreturned Capital Contribution of a Partner bears to the aggregate
Unreturned Capital Contributions of all Partners) until the Unreturned Capital Contribution amount
of each Partner equals $0.00;




          (b) Next, to the Partners in the amount needed to cause the aggregate distributions to meet
the Unleveraged IRR Target amount, and in the same proportion as the Percentage Interests of the
Partners at the time of the distribution.




          (c) Next, the balance, if any, [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]% to NYSCRF and [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]% to the General Partner; provided,
however, that if such balance consists, in whole or in part, of Extraordinary Cash Flow from New
Development Properties, Redevelopment Properties or Vacant Land Properties (as determined in
accordance with the allocation rules set forth in the definition of Unleveraged Development IRR)
(such portion of the balance being referred to herein as the “Development Portion”), then the
Development Portion shall instead be distributed as follows if either of the following conditions
is met: [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]




     5.03 Distributions on Liquidation. If prior to a Liquidating Sale the Company shall
have undergone one or more Capital Transactions with respect to which the Extraordinary Cash Flow
would have been eligible, if it had been received in a Liquidating Sale as of the date of such
Capital Transaction, for
distribution pursuant to Section 5.02(c), then, upon the subsequent occurrence of an
actual Liquidating Sale, the Partners shall re-calculate the Partners’ respective distributions of
Extraordinary Cash Flow resulting from such Capital Transaction or Capital Transactions pursuant to
Section 5.02 rather than Section 5.01, and NYSCRF shall pay to the General Partner a sum
(the “True-up Sum”) equal to that portion of the distributions made to NYSCRF on account of such
Capital Transaction or Capital Transactions which is to be re-allocated to the General Partner
pursuant to this Section 5.03. Notwithstanding any provision in this Agreement which might
otherwise operate to limit the liability of a Partner for any other purpose, such provision shall
not limit the liability of NYSCRF for its obligation to pay the True-



 - 21 - 









 







up Sum in accordance with the
provisions of this Section 5.03. NYSCRF shall be personally liable for the True-up Sum.



     5.04 Distributions in Kind. All distributions shall be made in cash and no Company
assets shall be distributed in kind without the consent of all of the Partners except as provided
in Section 10.02(a). Any assets distributed in kind shall be valued for such purpose at
their fair market value as of the date of distribution as determined by an independent appraiser
selected by the General Partner with the approval of NYSCRF, and shall be treated for the purposes
of this ARTICLE V as if the Company had sold such assets at such value and distributed the proceeds
of such sale to the Partner or Partners receiving such assets.



     5.05 REIT Distributions. At the option of the General Partner, the Company shall
take, and the General Partner is authorized to take, reasonable action which in the opinion of tax
counsel selected by the General Partner and reasonably acceptable to NYSCRF, is necessary and
consistent with the General Partner’s (or its Affiliate’s) qualification as a REIT, to distribute
sufficient amounts pursuant to this ARTICLE V to enable the General Partner to pay shareholder
dividends that will (i) enable the General Partner to satisfy the requirements for qualifying as a
REIT under the Code and Regulations; and (ii) enable the General Partner (or its Affiliate that is
a REIT) to avoid any material federal income or excise tax liability of the General Partner (or its
Affiliate that is a REIT) as a result of its status as a REIT, assuming for purposes of this
determination that the only items on the federal income tax return of the General Partner (or such
Affiliate that is a REIT) are the items shown on its Schedule K-1 received from the Company and all
cash distributions received from the Company (less a reasonable allowance for non-deductible
administrative costs) have been paid as dividends to the shareholders of the General Partner on the
day after such distributions are received from the Company. Any distribution made pursuant to this
Section 5.05 shall be made to all Partners in accordance with ARTICLE V. In no event shall
NYSCRF incur any cost or expense as a result of this Section 5.05.



     5.06 Offsets.



          (a) Provided that the Manager under the Management and Leasing Agreement is an Affiliate of
the General Partner, then in the event that any amounts due from the Manager
to the Company under the Management and Leasing Agreement are unpaid and overdue, NYSCRF may
cause the Company, after notice to the Manager, to offset the unpaid portion of such amounts
claimed against the Manager against amounts due to the General Partner under this Agreement, and
further provided that if there is any dispute between the Manager and the Company or NYSCRF as to
whether the claim against the Manager is valid, the amount sought to be withheld shall be escrowed
until the first to occur of the matter being resolved or the Manager, after written notice from the
Company, no longer contesting the validity of the claim, with the interest earned thereon being
paid to the party who is ultimately determined to be entitled to the amount claimed or, if it is
determined that each party is entitled to a portion of the amount in dispute, pro rata based on the
amount paid to each.




          (b) Provided that the Development Manager under the Development Management Agreement is an
Affiliate of the General Partner, then in the event that any amounts due from the Development
Manager to the Company under the Development Management Agreement are unpaid and overdue, NYSCRF
may cause the Company, after notice to the



 - 22 - 









 






Development Manager, to offset the unpaid portion of
such amounts claimed against the Development Manager against amounts due to the General Partner
under this Agreement, and further provided that if there is any dispute between the Development
Manager and the Company or NYSCRF as to whether the claim against the Development Manager is valid,
the amount sought to be withheld shall be escrowed until the first to occur of the matter being
resolved or the Development Manager, after written notice from the Company, no longer contesting
the validity of the claim, with the interest earned thereon being paid to the party who is
ultimately determined to be entitled to the amount claimed or, if it is determined that each party
is entitled to a portion of the amount in dispute, pro rata based on the amount paid to each.




          (c) Provided that the General Partner is an Affiliate of LPLP, in the event that NYSCRF
obtains a final non-appealable judgment against LPLP under the Contribution Agreement that is not
paid when due, NYSCRF may cause the Company to offset the unpaid portion of such judgment against
amounts due to the General Partner under this Agreement.




ARTICLE VI




MANAGEMENT




     6.01 Management and Control of Company Business.



          (a) Subject to the limitations and restrictions set forth in Section 6.04 and
elsewhere in this Agreement and subject to and consistent with the Annual Business Plan, the
General Partner shall have full, exclusive, and complete discretion to manage and control the
business and affairs of the Company and shall have all of the rights, powers, authorities and
discretions necessary to carry out the purposes of the Company which may be possessed by a General
Partner under the Act, exercisable without the consent or approval of any Partner, including
without limitation, the right, power, authority and discretion to:




               (i) Borrow money and issue evidences of indebtedness, and secure the same by mortgages, deeds
of trust, security interests, pledges, or other liens on all or any part of the Company’s assets,
provided that such financing shall expressly provide that NYSCRF has no
personal liability for the obligations of the Company (unless NYSCRF agrees in writing to
waive the requirement that such language be set forth in the documents), and further provided that
the total outstanding principal amount of mortgage debt secured by all the Properties shall not at
the time of issuance of such debt [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]. The
Partners expressly acknowledge and agree that the Assumed Financing and the Liberty Loan have been
authorized by the Partners.



               (ii) Operate, manage, maintain, use, lease and sublease Company assets;



               (iii) Employ or retain such persons (any of whom may be Affiliates of a Partner, including the
General Partner or an Affiliate of the General Partner, subject to the limitations contained in
Section 6.02(e)) as may be necessary or appropriate for the conduct of the Company’s
business, including permanent, temporary, or part-time employees and



 - 23 - 









 







independent attorneys,
accountants, architects, engineers, consultants, contractors and other professionals, and delegate
to them any of its rights, powers, authorizations, discretions, duties and responsibilities;



               (iv) Renegotiate with borrowers or lenders for the purchase or repayment of loans at
discounted amounts or modifications in the terms of loans;



               (v) Acquire, own, hold, construct, reconstruct, develop, redevelop, rehabilitate, sell,
exchange, transfer, or otherwise deal in assets and property as may be necessary or convenient for
the purposes and business of the Company;



               (vi) Sell, publicly or privately, contract to sell and grant options to purchase any Company
asset, for such prices and upon such terms and conditions, whether for cash or deferred payments,
as it determines;



               (vii) Incur expenses and enter into, guarantee, perform, and carry out contracts or
commitments of any kind, assume obligations, and execute, deliver, acknowledge, and file documents
in furtherance of the purposes and business of the Company;



               (viii) Obtain and maintain insurance against liability or other loss with respect to the
activities and assets of the Company;



               (ix) Pay, collect, compromise, arbitrate, litigate, or otherwise adjust, contest, or settle
any and all claims or demands of or against the Company;



               (x) Invest in interest-bearing accounts and short-term investments, including, without
limitation, bankers’ acceptances, obligations of Federal, state, and local governments and their
agencies, money market funds registered under the Investment Company Act of 1940, high-grade
commercial paper, and time deposits and certificates of deposit of commercial banks or savings
banks;



               (xi) Exercise the rights of the Company, and perform the obligations of the Company, under all
covenants, declarations, easements and restrictions encumbering or benefiting the Properties;



               (xii) Form direct or indirect wholly-owned Subsidiaries of the Company to the extent necessary
or desirable in connection with obtaining construction or permanent financing permitted herein, and
to remove and replace the manager of any such Subsidiary of the Company which is a limited
liability company and amend any organizational document governing such Subsidiary; and



               (xiii) Engage in any other kinds of activities and enter into and perform any other
obligations necessary to, in connection with, or incidental to, the accomplishment of the purposes
and business of the Company, so long as such activities and obligations may be lawfully engaged in
or performed by a Company under the Act.



     The acts of the General Partner shall bind the Company when within the scope of the General
Partner’s authority.



 - 24 - 









 





          (b) NYSCRF is an investor only and shall have no right to participate in the management or
control of the business or affairs of the Company, or to sign for or bind the Company; provided,
however, that NYSCRF shall have the approval rights set forth in Section 6.04 and elsewhere
in this Agreement.




     6.02 Delegation; Standards; Indemnification.



          (a) Subject to the terms of this Agreement, the General Partner may, at any time, delegate any
of its powers, duties and responsibilities to an Affiliate. Any delegation pursuant to this
Section 6.02(a) shall not, however, relieve the General Partner of any of its obligations
hereunder.




          (b) The Company shall enter into, or cause its Subsidiary that owns Property to enter into:




               (i) a Development Management Agreement with the General Partner or its Affiliate to oversee
the construction and development of each New Development and each Redevelopment; and



               (ii) a Management and Leasing Agreement with the General Partner or its Affiliate to cover the
management and leasing of each Property owned, directly or indirectly, by the Partnership. The
management fees, leasing commissions and finders’ fees payable for the services shall be as set
forth in the Management and Leasing Agreement provided that such fees shall not at any time exceed
the then current market rates for such services in the area in which the affected Property is
located. Notwithstanding the foregoing, in the event that lender approval is not obtained for the
assumption of any of the Assumed Financing prior to the contribution or sale of the applicable
Entity to the Company, the then-existing management agreement for such Entity (the “Existing
Management Agreement”) shall remain in place and effective until such approval is obtained or such
Assumed Financing is paid off, defeased or refinanced; provided, however, that as between the
“Manager” and the “Owner” under such Existing Management
Agreement, the fees and obligations set forth in the form of Management and Leasing Agreement
attached hereto as Exhibit B shall control. By executing this Agreement on behalf of the
General Partner, LPLP hereby consents to and agrees to be bound by the immediately preceding
sentence.



          (c) It is the intention of the Partners that, to the extent feasible, all other actions taken
on behalf of the Company shall be taken by the General Partner or its authorized delegates, subject
to the provisions of this Agreement and the approval rights of NYSCRF pursuant to Section
6.04.




          (d) The General Partner shall perform its duties hereunder with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like character and with
like aims, for the exclusive benefit and protection of the Company, except that the General Partner
shall not be required to diversify the Company’s assets.




          (e) In the performance of its duties and responsibilities and the exercise of its right,
power, authority and discretion under this Agreement:





 - 25 - 









 








               (i) the General Partner shall act solely in the interests of the Company; and



               (ii) neither the General Partner nor any Affiliate of the General Partner shall (A) deal with
the assets of the Company in its own interests or for its own account; (B) in any capacity act in
any transaction involving the Company on behalf of any party whose interests are adverse to the
interests of the Company; or (C) receive any compensation or consideration for its own personal
account from any party dealing with the Company or proposing to deal with the Company in connection
with a transaction involving any portion or all of the Property (other than fees for the rendering
of maintenance services to the Properties as approved in the Annual Business Plan, provided that
the cost of such services will be reimbursed to the General Partner at a rate equal to the General
Partner’s direct costs for those services, plus a reasonable allocation of overhead related to
providing such services).



          (f) The Company (but not any Partner) shall indemnify, defend and hold harmless the General
Partner and the trustees, officers, directors and employees of the General Partner and its
Affiliates (collectively the “Indemnified Party”) in the event it was or is a party or is
threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of any acts or omissions, or
alleged acts or omissions, arising out of the activities of the Indemnified Party on behalf of the
Company, or in furtherance of the interests of the Company, against any and all costs, losses,
damages or expenses of any nature whatsoever for which such Indemnified Party has not otherwise
been reimbursed (including attorneys’ fees, judgments, fines and accounts paid in settlement)
actually and reasonably incurred by the Indemnified Party in connection with such action, suit or
proceeding so long as the Indemnified Party reasonably believed that its actions were within the
scope of this Agreement and the Indemnified Party did not act fraudulently or in bad faith or in a
manner constituting negligence or willful misconduct or in breach of the standards set forth in
Section 6.02(d), or violate securities laws or criminal laws. The
termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of
nolo contendere or its equivalent shall not of itself (except insofar as such
judgment, order, settlement or plea shall itself specifically provide) create a presumption that
the Indemnified Party acted fraudulently or in bad faith or acted in a manner constituting
negligence or willful misconduct. The indemnification rights of the Indemnified Party set forth in
this Section 6.02(f) shall be cumulative of and in addition to, any and all rights,
remedies, and recourse to which it shall be entitled whether pursuant to the provisions of this
Agreement, at law, or in equity.




          (g) To the extent permitted by applicable law and except as otherwise provided in this
Agreement, the General Partner shall not be answerable for the default or misconduct of any third
party agent, investment advisory service, attorney, appraiser, consultant, contractor, engineer,
real estate managing agent, accountant or bookkeeper if such Person is not an Affiliate of the
General Partner and if selected by the General Partner with reasonable care, unless the General
Partner knowingly participates in such wrongdoing, has actual knowledge thereof and fails to take
reasonable remedial action, or through negligence in the performance of its own specific
responsibilities under this Agreement has enabled such wrongdoing to occur.




          (h) Neither the Company nor any Partner shall have any claim against the General Partner by
reason of any act or omission of the General Partner, nor against NYSCRF by




 - 26 - 









 







reason of any act or
omission of NYSCRF, except where such claim is based on gross negligence, actual fraud, material,
deliberate or willful breach of this Agreement, or intentional tortious misconduct.
Notwithstanding anything to the contrary contained herein or in any other agreement executed in
connection herewith, but subject to the last sentence of Section 5.03, the General Partner
expressly agrees that NYSCRF shall not be liable personally or otherwise for any breach or default
by NYSCRF under this Agreement or any other agreement executed in connection with this Agreement,
except to the extent of, and only to the extent of, the NYSCRF’s Partnership Interest in the
Company. Except only for NYSCRF’s Partnership Interest in the Company, no assets of NYSCRF may be
liened, encumbered, attached, levied or executed upon to satisfy any liability of or judgment
against NYSCRF arising out of this Agreement or any other agreement executed in connection with
this Agreement.




     6.03 Annual Business Plan. The Annual Business Plan shall be the blue print for the
management of the business of the Company. The Annual Business Plan for calendar year 2007 is
attached hereto as Exhibit E. No later than [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.], and each [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] thereafter, the General Partner shall prepare and deliver to NYSCRF for its review and approval a
proposed Annual Business Plan for the next Fiscal Year. NYSCRF shall, within [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] days
after receipt, provide the General Partner with written comments thereto, and if the Annual
Business Plan for the succeeding year is not previously agreed to, the parties shall meet no later
than [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] of the then current year to agree on such Annual Business Plan. If for any reason
at the beginning of any year the Annual Business Plan for such year has not been agreed to, the
Company shall continue to operate in accordance with the Annual Business Plan for the prior year,
except that [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]. Each Annual
Business Plan shall, among other information, contain the following information, consistent with
the form attached hereto as Exhibit E:



          (a) a summary of the conditions of the leasing, sales and development marketplace in the DC
Metropolitan Area (and the General Partner shall forward to NYSCRF copies of marketing reports
prepared by third-party real estate firms received by the General Partner summarizing the
conditions of leasing and development in the marketplace for commercial office properties in which
the various portions of the Property are located);




          (b) the annual operating budget, which shall include the estimated revenues and expenses
(including debt service), any anticipated Call for Capital pursuant to Section 3.02(a) and
the regular capital expenditures, all for the ensuing Fiscal Year, and a leasing plan for each of
the Properties (which leasing plan shall include any proposed changes to the standard form lease;
tenant requirements and rental rates; estimated improvements; costs of re-tenanting; leasing
commissions; and other non-recurring extraordinary capital expenditures, if any, for the affected
Property);




          (c) the amounts of proposed reserves and contingency funds;





 - 27 - 









 








          (d) the recommendation of the General Partner with respect to debt financing to be issued by
the Company in the ensuing Fiscal Year;




          (e) the recommendation of the General Partner with respect to the sale of any one or more of
the Properties in the ensuing Fiscal Year




          (f) the recommendation of the General Partner with respect to any New Developments to be
initiated in the ensuing Fiscal Year, together with a summary of all ongoing development activities
under any Development Management Agreements then in effect, and a proposed development budget for
all such recommended and ongoing projects; and




          (g) such additional information as may be necessary or appropriate to fully inform the
Partners of all matters relevant to the Company and, if their approval is required, to enable the
Partners to make an informed decision with respect to their approval of such Plan, or as any
Partner shall reasonably have requested;




          (h) and whenever necessary to reflect a material change in any of the information contained in
the Annual Business Plan as last submitted to NYSCRF, the General Partner shall submit such changes
to NYSCRF for its approval, and upon such approval, such amended Plan shall become the Annual
Business Plan.




     6.04 Matters Requiring Approval of NYSCRF. In addition to any other matter pertaining
to the Company set forth herein that requires the approval of NYSCRF and in addition to the right
of NYSCRF pursuant to Section 6.18, the following actions or decisions with respect to or
affecting the Company or Company’s assets shall require the approval of NYSCRF prior to any action
by the General Partner (except to the
extent that the matter in question is included in, and budgeted for or permitted by, other
than in the case of Section 6.04(k), the then applicable Annual Business Plan):



[The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]



 - 28 - 









 






     6.05 Hazardous Materials. The General Partner shall not knowingly conduct or
authorize and shall use its reasonable efforts to prevent a release of Hazardous Materials at any
of the Properties and shall promptly notify NYSCRF in writing of any pending or threatened
investigation or inquiry by any governmental authority in connection with any Hazardous Materials
relating to a Property or of the occurrence of a release of Hazardous Materials at any Property.
The General Partner shall promptly notify NYSCRF in writing if the General Partner becomes aware of
any release of Hazardous Materials in violation of law originating on the Property, or of any such
release originating in a neighboring property that threatens the Property.



     6.06 Emergency Actions. In the event that it is necessary to make expenditures which
are not provided for in the Annual Business Plan, or to take any other action which requires the
approval of NYSCRF under Section 6.04, but which is required under emergency court order,
executive order or legislation, or which the General Partner, in good faith, believes appropriate
in an emergency to avoid risk to life or health or facilitate the preservation of any portion or
all



 - 30 - 









 







of the Company’s assets, and the General Partner reasonably determines that there is
insufficient time to obtain such approval and that any delay in making such expenditures or taking
such action could result in a violation of law or materially adversely affect the value of the
Company assets or could materially increase the risk to life or health, then the General Partner
shall be authorized to bind the Company for any expenditures or in any other action taken on behalf
of the Company in such emergency. The General Partner shall notify NYSCRF of any exercise of its
power and authority under this Section as soon as practicable thereafter.



     6.07 Regular Meetings.



          (a) The Partners shall meet annually at a time and place determined by the General Partner and
reasonably approved by NYSCRF, for a report on the current Fiscal Year’s activities, a review of
the most recent financial statements and, when available, a presentation of the next Fiscal Year’s
Annual Business Plan, as well as to consider and decide such matters as may be specified by the
General Partner or by prior written notice from any Partner to the General Partner. Without
limiting the foregoing, the annual meetings shall include a discussion and analysis of (i)
anticipated acquisitions and development activities for the ensuing year, and (ii) whether the
Company should continue to hold or should sell each Property and any changes in the projected
period of continuing to hold any portion or all of the Property. Reasonable notice shall be
provided to the Partners of the time and place of such meeting and the matters to be decided or
discussed. Any proposal requiring action of the Partners shall be provided to the Partners a
minimum of ten (10) business days prior to such meeting. Participation in meetings
may be by means of conference telephone call or similar telecommunications whereby all
individuals participating in the meeting can hear, and speak to, each other at the same time.




          (b) Voting shall take place at meetings, provided, however, that any Partner may, at any time
and without a meeting therefor, notify the General Partner of its vote on any matter requiring such
vote, and the General Partner shall tabulate the vote and notify the Partners of such vote promptly
thereafter. Voting under this Agreement shall take place in writing and the General Partner shall
thereafter confirm the result of the vote of the Partners on any matter in writing.




          (c) Any action which may be taken by the Partners at any meeting may be taken without a
meeting pursuant to written consent of all of the Partners.




     6.08 Special Meetings. Any Partner may call a special meeting of the Partners at any
time. All of the provisions set forth above with respect to regular meetings shall also apply to
any special meetings.



     6.09 Third Parties. Notwithstanding anything to the contrary contained herein, the
General Partner may execute a certificate that, except in the case of any matter which requires the
approval of NYSCRF pursuant to Section 6.04, may be conclusively relied upon by any third
party (without any further inquiry whatsoever) stating that any action or proposed action does not
require the approval or consent of the Partners under this Agreement or that such approval or
consent has been obtained, and any action taken by the General Partner in connection therewith
shall in fact be the act of, and bind, the Company. The foregoing shall not relieve the General
Partner from any liability it may have to the Company or the Partners if, in fact, such action or



 - 31 - 









 







proposed action did require the approval or consent of any Partner and such consent or approval was
not obtained.



     6.10 Other Activities of Partners. Any Partner and its Affiliates may have other
business interests and may engage in other business ventures of any nature or description
whatsoever, whether presently existing or hereafter created, and whether or not competitive with
the business of the Company or any Partner, provided, however, that during the term of this
Agreement the General Partner and its Affiliates shall not acquire or own any office property in
the DC Metropolitan Area, except as permitted in ARTICLE XIII below. The rights of NYSCRF under
this Section 6.10 are personal to NYSCRF and shall not be enforceable by any assignee or
transferee, whether voluntarily or involuntarily or by operation of law, of the rights of NYSCRF
under this Agreement, other than a transferee of NYSCRF pursuant to Section 10.02(b).



     6.11 Withholding of Tax on Certain Company Distributions.



          (a) Unless treated as a Tax Payment Loan, any amount paid by the Company for or with respect
to any Partner on account of any withholding tax or other tax payable with
respect to the income, profits or distributions of the Company pursuant to the Code, the
Regulations or any state or local statute, regulation or ordinance requiring such payment (a
“Withholding Tax Act”) shall be treated as a distribution to such Partner for all purposes of this
Agreement, consistent with the character or source of the income, profits or cash that gave rise to
the payment or withholding obligation. To the extent that the amount required to be remitted by
the Company under the Withholding Tax Act exceeds the amount then otherwise distributable to such
Partner, unless and to the extent that funds shall have been provided by such Partner pursuant to
the last sentence of this Section 6.11(a), the excess shall constitute a loan from the
Company to such Partner (a “Tax Payment Loan”). Any such Tax Payment Loan shall be payable upon
demand and shall bear interest, from the date that the Company makes the payment to the relevant
taxing authority, at the lesser of: (i) the Prime Rate plus two percentage points per annum, or
(ii) the highest rate permitted by applicable law, compounded monthly (but in no event higher than
the highest interest rate permitted by applicable law). During such time as any Tax Payment Loan
to any Partner (or the interest thereon) remains unpaid, all future distributions otherwise to be
made to such Partner under this Agreement shall be distributed for such Partner’s account by
applying the amount of any such distributions first to the payment of any unpaid interest on such
Tax Payment Loan and then to the repayment of the principal thereof, and no such future
distributions shall be paid to such Partner until all of such principal and interest has been paid
in full, but all such amounts shall, for purposes of this Agreement, be treated as a distribution
to such Partner. If the amount required to be remitted by the Company under the Withholding Tax
Act exceeds the amount then otherwise distributable to a Partner, the Company shall notify such
Partner at least five (5) Business Days in advance of the date upon which the Company would be
required to make a Tax Payment Loan under this Section 6.11(a) (the “Tax Payment Loan
Date”) and provide such Partner the opportunity to pay to the Company on or before the Tax Payment
Loan Date, all or a portion of such deficit. If any Tax Payment Loan is not fully repaid before
the earlier of (a) removal of the Partner receiving the Tax Payment Loan, or (b) liquidation of the
Company, such Partner shall remit any remaining portion of the principal and interests payable on
the Tax Payment Loan to the Company.




 - 32 - 









 








          (b) The General Partner shall have the authority to take all actions necessary to enable the
Company to comply with the provisions of any Withholding Tax Act applicable to the Company and to
carry out the provisions of this Section 6.11. Nothing in this Section 6.11 shall
create any obligation on the General Partner to advance funds to the Company or to borrow funds
from third parties in order to make any payments on account of any liability of the Company under a
Withholding Tax Act.




     6.12 Unrelated Business Taxable Income. The General Partner shall use commercially
reasonable efforts to avoid taking any action which it knows or reasonably should know would (a)
cause any indebtedness of the Company to not qualify for the exception to “acquisition
indebtedness” under Code Section 514(c)(9)(A), or (b) otherwise cause NYSCRF to have a substantial
risk of recognizing UBTI (assuming, for this purpose, that NYSCRF is an organization subject to the
tax imposed by Code Section 511(a)(1)), provided that any transaction which General Partner
determines will create UBTI for NYSCRF shall require NYSCRF’s prior approval. By way of example
and without limiting the generality of the foregoing, the General Partner shall use its best
efforts to ensure that:



          (a) With respect to any lease executed on behalf of the Company:




               (i) The determination of the amount of rent shall not be expressed in whole or in part as a
percentage of the income or profits derived by the lessee from the space leased (other than an
amount based on a fixed percentage or percentages of gross receipts or gross sales);



               (ii) Not more than ten percent (10%) of the rent shall be expressly attributable to personal
property, determined at the time the personal property is placed in service by the lessee (and not
by reference to any allocation contained in the lease documents);



               (iii) If subleasing is permitted, the Company may not share in any net profit derived by the
tenant from any sublease, and the tenant thereunder may not sublease all or any portion of its
leasehold interest in violation of paragraph (i);



               (iv) No services shall be performed for the tenant other than services usually or customarily
rendered to tenants in connection with office space; and



               (v) All tenant payments under the lease shall be designated as “rent” or “additional rent”.



          (b) The General Partner shall not engage in, or cause the Company to engage in, any activity
that would cause all or any part of the Property to be considered stock in trade or other property
of a kind which would properly be includable in inventory if on hand at the close of the taxable
year or property held primarily for sale to customers in the ordinary course of a trade or business
of the Company. NYSCRF acknowledges that a decision to sell or otherwise dispose of any property
of the Company may cause the Company to engage in commercially reasonable sales activities and the
Company and the General Partner are authorized to engage in such activities with respect to Company
property to the extent that such sale is authorized or permitted under this Agreement.





 - 33 - 









 








          (c) With respect to any indebtedness incurred by the Company:




               (i) The price for any acquired or improved real property will be fixed at the time of the
acquisition of the property or the time of the completion of any such improvement;



               (ii) The amount of any indebtedness or any other amount payable with respect to such
indebtedness, or the time for making any payment of any such amount, shall not be dependent, in
whole or in part, upon any revenue, income, or profits derived from such real property;



               (iii) Any property acquired by the Company will not be subsequently leased to the seller or to
any person who bears a relationship to such seller that is described in Code Section 267(b) or
707(b);



               (iv) Any property of the Company will neither be acquired from nor leased to a person that
bears a relationship to the Limited Partner or the Company which is
described in subparagraph (C), (E) or (G) of Code Section 4975(e)(2) or a person that bears a
relationship, which is described in subparagraph (F) or (H) of Code Section 4975(e)(2), to any
person described in subparagraph (C), (E), or (G) of Code Section 4975(e)(2);



               (v) The Company will not incur indebtedness from any person described in Sections
6.12(c)(iii) or 6.12(c)(iv) in connection with any acquisition or any improvement to
property; and



               (vi) The provisions of this Section 6.12(c) are intended to comply with the
requirements of Code Section 514(c)(9)(B) and should be construed thusly.



     With respect to the foregoing: (A) NYSCRF acknowledges that the requirements of Section
6.12(a) above are satisfied with respect to all existing leases of space in the Properties in
effect as of the date of this Agreement and with respect to the standard forms of “Multi-Tenant
Office Lease” and “Single-Tenant Office Lease” generally utilized by Affiliates of the General
Partner, copies of which the General Partner has previously provided to NYSCRF; and (B) the General
Partner shall notify NYSCRF of any proposed changes in the structure or operation of the Company
not set forth in the Annual Business Plan that might cause the Company or NYSCRF to incur UBTI, and
such change shall not be made without the prior approval of NYSCRF.



     6.13 Prohibited Transactions.



          (a) The General Partner shall use best efforts to avoid taking action which it knows or
reasonably should know would constitute a prohibited transaction (within the meaning of Code
Section 4975(c)) and would cause NYSCRF (assuming, for this purpose, that NYSCRF is a “plan” within
the meaning of Code Section 4975(e)(1)) or any Person who is a disqualified person (within the
meaning of Code Section 4975(e)(2)) with respect to NYSCRF to incur a tax under Code Section 4975,
without NYSCRF’s prior approval.





 - 34 - 









 








          (b) Notwithstanding any other provisions of this Agreement, other than Section
6.13(a), or any non-mandatory provision of the Act, any action of the General Partner on behalf
of the Company or any decision by the General Partner to refrain from acting on behalf of the
Company, based on an opinion of tax counsel selected by the General Partner and reasonably
acceptable to NYSCRF that such action or omission is necessary or advisable in order to: (i)
protect the ability of Liberty Property Trust, a Maryland real estate investment trust which is the
general partner of the sole member of Liberty Washington Venture, LLC, to continue to qualify as a
REIT under the Code, or (ii) avoid Liberty Property Trust incurring any material taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed
approved by all of the Partners.




          (c) At any time when a direct or indirect beneficial interest in the Company is owned by an
entity that has elected to be taxed as a REIT under the Code, neither the Company nor any
Subsidiary shall without the prior written consent of Liberty: (i) acquire any asset that is not
described in Section 856(c)(4)(a) of the Code or any successor provision; (ii) enter into a loan
secured by an interest in real property in which the Company would receive income from a “shared
appreciation provision” as defined in Section 856(j)(5) of the Code; (iii) enter into a loan
in which the interest income depends, directly or indirectly, in whole or in part, on the
income or profits of any person for purposes of Section 856(f) of the Code; (iv) enter into any
lease involving real property where any portion of the rents would be excluded from the definition
of “rents from real property” under Section 856(d)(2) of the Code; or (v) sell any property which,
when sold, would constitute property described in Section 1221(1) of the Code, except when the net
selling price is less than $10,000. Notwithstanding the foregoing, if any of the provisions of
Sections 856 or 857 of the Code are amended so that one of the requirements in clauses (i) through
(v) above becomes irrelevant to the qualification of a REIT as a REIT under the Code and will not
cause adverse tax consequences to a REIT if the requirement is not complied with, such provision
shall no longer apply to the Company.




          (d) In making any determinations under this Agreement in which the classification of any
entity as a “real estate investment trust” for federal income tax purposes is relevant, such
determination or calculation shall be made by assuming that only the items reported on such
entity’s federal income tax return are the items reported on the Partner’s Schedule K-1 received
from the Company (or the entity’s distributive share of such items).




     6.14 Deemed Approval. NYSCRF shall be deemed to have approved and the General Partner
shall not have any liability or responsibility under either Section 6.12 or Section
6.13, to the extent that the action which caused the Company or NYSCRF to incur UBTI or which
constituted a prohibited transaction (a) received the approval of NYSCRF where such approval is
required under this Agreement, or (b) resulted from the Company’s failure to take any action
proposed by the General Partner and submitted to NYSCRF, if such failure was because such proposed
action did not receive the approval of NYSCRF.



     6.15 Reporting Requirements. In addition to any other reporting obligations of the
General Partner contained in this Agreement, the General Partner shall:



          (a) (1) notify NYSCRF of any material fire or other material damage to the Property, and in
such event, arrange for an insurance adjuster reasonably acceptable to NYSCRF



 - 35 - 









 






to view the Property
before repairs are started, but in no event shall Manager settle any losses, complete loss reports,
adjust losses or endorse loss drafts in excess of $250,000 without NYSCRF’s prior consent; and (2)
promptly notify NYSCRF after the General Partner becomes aware of any significant personal injury
or property damage occurring to or claimed by any tenant or third party on or with respect to the
Property;




          (b) notify NYSCRF of the commencement of any action, suit or proceeding against NYSCRF, or
against Manager with respect to the operations of the Property, or otherwise affecting the
Property, other than routine tort claims covered by insurance;




          (c) on or before the 15th day of each month, prepare and submit to NYSCRF a
progress report on leasing activities at the Property for the preceding period, such report to be
in the format customarily used by the General Partner and its Affiliates for its own portfolio; and




          (d) notify NYSCRF when the General Partner receives written notice of any material violation
of law at any portion of the Property, as well as provide NYSCRF with evidence that the
non-compliance has been remedied.




     6.16 Action by Partners. Except as otherwise provided in this Agreement, any action
required or permitted to be taken by the Partners shall require the unanimous consent or approval
of the Partners, unless otherwise required by the Act.



     6.17 Right to Disclose Information. The General Partner shall not be in breach of its
obligations under this Agreement or any other obligations or duties to NYSCRF at law or in equity
(whether under a theory of fiduciary duty or otherwise) if the General Partner or its Affiliates
files this Agreement (and some or all of the exhibits hereto) as an exhibit to a filing it may make
with the Securities Exchange Commission or makes disclosures regarding the transactions governed by
this Agreement to the extent the General Partner or its Affiliates reasonably believe necessary to
enable the General Partner or its Affiliates to comply with federal and state securities laws and
the regulations of the Securities Exchange Commission, the rules of any stock exchange, or in
connection with any filing or registration made by Liberty Property Trust, an Affiliate of the
General Partner, as the issuer of publicly traded securities, or as part of information provided to
its investors and/or financial analysts.



     6.18 Contracts with Affiliates. NYSCRF, acting alone, shall have the right on behalf
of the Company to send any notice of default or termination, to institute or settle legal
proceedings and/or to take such other action as may be necessary or appropriate to enforce the
rights and protect the interests of the Company pursuant to any agreement with the General Partner
or an Affiliate of the General Partner or with respect to any other rights or remedies of the
Company running against or in connection with the General Partner or Affiliate of the General
Partner.



     6.19 Loan Provisions. 



          (a) Each Partner shall, in its reasonable discretion, cooperate to amend this Agreement and
the Certificate of Limited Partnership if required to comply with the requirements of any lender
providing mortgage financing to the Company in accordance with this Agreement.





 - 36 - 









 








          (b) The Partners acknowledge that the Liberty Loan was provided to the Company, and that (with
the consent of NYSCRF, as set forth in Section 6.04(l)) future financing may be provided to
the Company or any Entity, and/or serviced by an Affiliate of the General Partner (the “Affiliate
Lender”). As a result, the interests of the Affiliate Lender, in its capacity as a lender, may be
different from, or in conflict with, the interests of the Partners or the interests of the Company
or any of their respective Affiliates. In recognition of the foregoing and in consideration of the
Affiliate Lender providing or facilitating any such loan, the Partners acknowledge and agree that
the Affiliate Lender is and will be entitled to enforce its rights under
any existing or future loan (and ancillary security) documents with the Company and/or any
Entity and will be entitled to pursue any and all remedies to which it is entitled (including
calling a default under, accelerating or foreclosing on any collateral securing, such loan) even if
doing so would be detrimental to or create a conflict with the Company and/or such Entity or any of
its Partners, and each of the Partners waives, to the fullest extent permitted by law, (i) any
right to object to such enforcement, (ii) any right to assert a claim against the General Partner
or its Affiliates as a result of such conflict of interest, and (iii) any claim for a breach of
fiduciary duty, duty of loyalty, lender liability, equitable subordination or other claims relating
to or arising from the fact that the Affiliate Lender and its Affiliates would have an interest,
directly or indirectly, as both a creditor and a Partner of the Company. In addition, the
classification and treatment for income tax purposes of the Liberty Loan and any other financing
provided by an Affiliate of the General Partner as non-recourse debt or non-recourse liability
shall be made and governed by the Code.




     6.20 Project Financing.



          (a) The Partners expect that the Company will obtain, or cause certain of the Entities to
obtain, debt financing in such amounts, from such lenders, with such security and on such terms and
conditions as shall be determined in accordance with this Agreement (collectively with the Assumed
Financing, the “Project Financing”).




          (b) All Project Financing will be non-recourse to the Company and to all Partners, except
that the General Partner may elect, in its sole discretion, to provide one or more guarantors (the
“Guarantors”) acceptable to the lender to be personally liable for: (i) fraud, environmental
liability, misapplication of tenant security deposits and other types of liabilities (collectively
the “Non-Recourse Carve Outs”) to be set forth in the documents and instruments evidencing the
Project Financing, pursuant to provisions acceptable to the Guarantors; and/or (ii) for such other
liabilities, if any, under the loan as the Guarantors may elect in their sole discretion, pursuant
to documents acceptable to the Guarantors. The personal obligations of the Guarantors as set forth
in such loan documents are referred to herein as the “Recourse Obligations.” The Partners confirm
that LPLP serves as the Guarantor of the Recourse Obligations with respect to the Assumed Financing
and, with respect to the Assumed Financing for WillowWood I-II, Liberty Property Trust also serves
as a Guarantor of the Recourse Obligations.




          (c) With respect to all sums that at any time may be paid by a Guarantor on account of the
Recourse Obligations, the Partners agree that: (i) the Company shall indemnify, defend and hold the
Guarantor harmless from and against all such liabilities and all costs and expenses arising
therefrom, (ii) NYSCRF shall indemnify, defend and hold the Guarantor




 - 37 - 









 







harmless from and against all
such liabilities and all costs and expenses arising from the gross negligence, actual fraud,
material, deliberate and willful breach of this Agreement, or intentional tortious misconduct of
NYSCRF that triggers liability under the Recourse Obligations, and (iii) the Guarantor shall be
subrogated to the rights of the holder of the Project Financing with respect thereto; provided,
however, that the foregoing provisions of (i) and (ii) above shall not apply to any liabilities,
costs or expenses of the Guarantor resulting from its or its Affiliate’s gross negligence, actual
fraud, material, deliberate or willful breach of this Agreement, its guaranty of the Recourse
Obligations or any other documents evidencing the Project Financing, or
intentional tortious misconduct; and provided further that subrogation rights of the Guarantor
shall be totally subordinated in all respect to the rights of the holder of the Project Financing
and shall not be enforceable until satisfaction of all obligations of the Company and the borrower
Entity under the Project Financing.




          (d) At any time while the Recourse Obligations are outstanding in whole or in part, the
Company shall not be authorized to take, and the General Partner shall not permit the Company or
any Entity to take, any action that would result in the triggering of liability under the
Non-Recourse Carve Outs, without the prior written consent of the Guarantors, which may be withheld
for any reason or no reason. Without limiting the generality of the foregoing, without the consent
of the Guarantors, the Company and the Entity shall not be authorized to commence and the General
Partner shall not commence, any voluntary proceeding for bankruptcy, reorganization or similar
relief, and shall not consent to any involuntary petition for such relief if such action would
trigger any liability under the Recourse Obligations. The Partners expressly waive any rights that
they may have at any time, whether under a theory of fiduciary duty or under any other legal or
equitable principle, to compel the Partnership or the Entity to commence a voluntary bankruptcy
proceeding or themselves to initiate an involuntary bankruptcy proceeding, or to assert any claims
against the General Partner or its Affiliates for the failure to file a voluntary proceeding.




     6.21 Title Holding Subsidiaries. Title to each Property may be held by a separate,
single purpose, limited liability company or partnership that is wholly owned by, and whose only
members, partners and/or managers are, the Company and other limited liability companies wholly
owned (directly or indirectly) by the Company (each a “Title Holding Subsidiary”). It shall be the
General Partner’s duty and responsibility to duly form and maintain each Title Holding Subsidiary
and cause each Title Holding Subsidiary to be and remain in good standing in its state of
organization and qualified to do business in each jurisdiction in which it owns property or
otherwise conducts business, to obtain appropriate employer and/or tax identification numbers (to
the extent required) for the Title Holding Subsidiary, and the like. The rights, duties,
responsibilities and authority of the Partners with respect to Title Holding Subsidiaries and
Properties owned through a Title Holding Subsidiary shall be identical to their respective rights,
duties, responsibilities and authority with respect to the Company and Properties owned directly by
the Company. Any provision of this Agreement giving the Partners the right or authority to take
any action or refrain from taking any action, or cause the Company to take any action or refrain
from taking any action, shall be interpreted to give them the identical right or authority with
respect to the appropriate Title Holding Subsidiary. Any provision of this Agreement imposing any
duty or responsibility on the Partners, or limiting their respective rights or authority, with
respect to Properties owned
directly by the Company shall be interpreted to impose the identical
duty, responsibility or limitation on them with respect to Properties owned




 - 38 - 












 




through a Title Holding Subsidiary. The operating agreement for each Title Holding Subsidiary
shall be in a form approved by the Partners.




     6.22 Ratification of Recitals. The Recitals set forth on Exhibit H to this
Agreement are incorporated herein by reference. The Partners hereby ratify and consent to the
transactions described in the Recitals to this Agreement.



ARTICLE VII




COMPENSATION OF PARTNERS; PAYMENT OF COMPANY EXPENSES




     7.01 Compensation from Company. The Company shall pay to the General Partner (or its
Affiliate) the sum of [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] annually as an administrative fee in
compensation for the General Partner’s services required hereunder. Except as aforesaid and as
provided in Section 7.02, no Partner shall receive any compensation from the Company for
any services rendered in its capacity as a Partner. Nothing contained herein shall prevent (i) a
Partner from receiving reasonable compensation for any services rendered to the Company in a
non-Partner capacity or from receiving distributions under ARTICLE V, (ii) the General Partner or
its Affiliate from receiving fees pursuant to the Development Management Agreement, or (iii) the
General Partner or its Affiliate from receiving fees for managing or leasing all or a portion of
the Property pursuant to the Management and Leasing Agreement.



     7.02 Company Expenses.



          (a) The Management and Leasing Agreement shall require the General Partner or its Affiliate,
at its expense and without reimbursement from the Company, to provide the Company with adequate
personnel and office space and all necessary office furnishings and equipment and shall pay the
salaries and other compensation of such personnel and the cost of telephone service, heat and other
utilities and other items of an overhead and administrative nature.




          (b) The Company shall bear all other costs and expenses incurred in connection with the
management and operation of the business and affairs of the Company, or in carrying out the
business, purposes, and objectives of the Company, including without limitation, costs associated
with a proposed transaction that is not consummated for any reason whatsoever. Without limiting
the foregoing, the Company shall bear the costs of all third-party vendors who provide services to
the Company (including without limitation auditors, tax consultants and attorneys). Subject to
Sections 6.04(a) and 6.04(b) to the extent the General Partner or its Affiliates
are able to provide such services to the Company, the General Partner may (subject to the prior
approval of NYSCRF) provide such service to the Company, and the Company will compensate the
General Partner or its Affiliates at a level that will reimburse the direct costs of those
services, plus a reasonable allocation of overhead related to providing such services.




- 39 -









 








ARTICLE VIII




COMPANY BOOKS, RECORDS AND STATEMENTS




     8.01 Books and Records. The General Partner shall establish and maintain accurate,
full and complete Company records and books of account showing assets, liabilities and the Capital
Accounts of the Partners, revenues and expenditures, and all other aspects of the operations,
transactions and cash flows of the Company in accordance with generally accepted accounting
practices and principles consistently applied. The Company shall use the standard accounting
software utilized by the General Partner and its Affiliates for properties in their own portfolio
to keep the accounting books and records of the Company. The General Partner shall also maintain
books sufficient to show the computation of any fees payable pursuant to the Management and Leasing
Agreement and the Development Management Agreement. The Company’s books and accounts shall be
maintained at the principal office of the Company, with copies thereof at such other place or
places, if any, as may be required by law, and any Partner shall have access to the Company books
during ordinary business hours.



     8.02 Method of Accounting. The Company shall use generally accepted accounting
principles, consistently applied, unless otherwise required by applicable law. Any other or
supplemental accounting practices or policies shall be subject to the reasonable approval of
NYSCRF.



     8.03 Fidelity and Other Bonds. If requested by either Partner, the General Partner
shall obtain or cause to be obtained, at the Company’s expense, fidelity and other bonds with
reputable surety companies covering all persons who are signatories on bank accounts of the
Company, which bonds shall indemnify and defend the Partners against any loss resulting from fraud,
theft, dishonesty or other wrongful acts of such persons and shall be in form and substance
satisfactory to the Partners.



     8.04 Financial Statements; Appraisals and Other Information. The General Partner
shall cause the Company to deliver, timely, to NYSCRF, the following:



          (a) On an annual basis within sixty (60) days after the close of each Fiscal Year, annual
audited statements of the operation of the Company, including the following:




               (i) Balance Sheet prepared on an accrual basis;



               (ii) Income Statement prepared on an accrual basis;



               (iii) Statement of Cash Flows;



               (iv) Statement of Changes in Partners’ Equity; and



               (v) Notes to the financial statements as appropriate;


all certified to be correct by the General Partner, together with the opinion of the Auditor with
respect thereto, containing a detailed explanation of all qualifications, if any, contained in such
opinion. If the General Partner is aware that the Auditor’s opinion will be issued with




- 40 -









 




qualifications, the General Partner shall cause drafts of the opinion and the financial statements
to be forwarded to NYSCRF promptly after receipt of such drafts by the General Partner.




               (vi) Such additional financial statements, reports and other information as NYSCRF may
reasonably request; and



               (vii) Report of Independent Public Accountants in substantially the form shown in the
Exhibit J.



          (b) On a monthly basis, by the [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] business day of each calendar month for
the preceding calendar month, the following, unaudited, but all in reasonable detail and certified
to be correct by the General Partner, and in an electronic format on a Property-by-Property basis:




               (i) A current rent roll in form satisfactory to NYSCRF;



               (ii) Balance Sheet, prepared on an accrual basis;



               (iii) Income Statement, prepared on an accrual basis;



               (iv) Budgetary operating statement on a consolidated basis for all Properties, showing
variances from the operating budget together with explanations of any variances in excess of the
greater of $5,000 in any line item or 5% of the annual amount budgeted for such line item;



               (v) A Leasing Update in substantially the format attached hereto as Exhibit G; and



               (vi) Such interim financial statements, reports and other information as NYSCRF may reasonably
request.



          (c) No later than thirty-five (35) days after the end of each quarter of each Fiscal Year, the
General Partner shall prepare and submit to the Partners an unaudited income statement and balance
sheet as of the end of such quarter and a statement of the Capital Accounts for each Partner, and a
report on all lawsuits filed by and served or threatened in writing against the Company, the
General Partner or the Property during such prior quarter.




          (d) To the extent any of the financial statements or reports provided pursuant to paragraphs
(b) or (c) above (other than the statement of Capital Accounts) is presented on a consolidated
basis as among all the Properties, the General Partner shall also cause such statements and reports
to be broken down on a Property-by-Property basis.




          (e) On an annual basis, promptly after the filing thereof, copies of all tax returns or
information returns of the Company to the extent necessary to show any income, distributions,
payments, deductions, or expenses related to or arising out of the ownership or operation of a
Project. At least thirty (30) days prior to filing, the General Partner shall provide drafts of
all tax returns to NYSCRF.




- 41 -









 





          (f) Within fifteen (15) days after the end of a policy year or policy term for each policy of
insurance required to be maintained with respect to the Property, a written report or certificate
showing the following:




               (i) The name of the insurer;



               (ii) The risks insured;



               (iii) The amount of coverage provided by the policy;



               (iv) The expiration date of the policy; and



               (v) For insurance covering property damage, the property insured, the then-current replacement
cost of such property, and the basis upon which such cost was calculated provided that no appraisal
shall be required for such report or certificate.



          (g) The General Partner shall cause the Properties to be appraised by an independent qualified
appraiser designated by the General Partner (i) at the expense of the Company at such times as any
secured lender requires, and (ii) at any other time whenever requested to do so by any Partner, at
the expense of such Partner.




          (h) The General Partner shall cooperate with, and assist NYSCRF in obtaining, at the expense
of NYSCRF, any information that it requests in order to properly value the Company’s assets and its
Partnership Interest. Such information may include, by way of illustration, information obtainable
from an environmental investigation or other physical inspection of the Properties.




          (i) NYSCRF shall have the right, at its sole expense, to cause an audit of the records of the
Company to be conducted by accountants selected by NYSCRF. In the event that such audit discloses
that any payments or reimbursements in favor of NYSCRF or the Company should be adjusted by five
percent (5%) or more, the General Partner shall reimburse NYSCRF for its reasonable out of pocket
costs incurred in conducting the audit.




     8.05 Bank Accounts. All funds received by the Company shall be deposited in the name
of the Company in such checking and savings accounts, time deposits or certificates of deposit, or
other accounts or instruments at such financially sound commercial banks, savings banks and savings
and loan institutions not then controlled, directly or indirectly, by the General Partner and its
Affiliates, as may be designated by the General Partner. The signatories for such accounts and
instruments shall be representatives of the General Partner.



     8.06 Tax Matters.



          (a) The General Partner shall cause to be prepared and filed timely all informational and
other tax returns required to be filed by the Company, and shall deliver copies thereof to the
Partners promptly thereafter. All such returns shall be prepared by or reviewed by the Auditor.




- 42 -









 





          (b) The General Partner is hereby designated as the “Tax Matters Partner” under Code Section
6231(a)(7). The Tax Matters Partner shall manage audits of the Company conducted by the Internal
Revenue Service or other governmental agency pursuant to the audit procedures under the Code and
the regulations issued thereunder, provided that the Tax Matters Partner shall not settle any
matter with the Internal Revenue Service or other governmental agency without the consent of
NYSCRF, which consent shall not be unreasonably withheld. The Company, through the Tax Matters
Partner, is authorized to cooperate with and to monitor the Internal Revenue Service in any audit
that the Internal Revenue Service may conduct of the Company’s books and records and information or
other returns filed by the Company. The Tax Matters Partner shall take all actions necessary to
preserve the rights of the Partners with respect to audits and shall provide the Partners with any
notices of such proceedings and other information as required by law. The Tax Matters Partner
shall keep the Partners timely informed of its activities under this Section. The Company, through
the Tax Matters Partner, may similarly cooperate with and monitor any audit by any other
governmental authority and prepare and file protests or other appropriate responses to such audits.
All costs incurred in connection with the foregoing activities, including legal and accounting
costs, shall be borne by the Company. Any additional expenses with respect to judicial review of
adverse determinations in connection with any such tax audits or the defense of any Partner against
any claim asserted by the Internal Revenue Service or other tax authority of additional tax
liability arising out of its ownership of its interest in the Company shall be borne by the Partner
who wishes to proceed with such judicial review or defense. Unless otherwise expressly prohibited
or restricted pursuant to this Agreement, the Tax Matters Partner may make, refrain from making, or
revoke any and all tax elections which it may deem appropriate, in its sole discretion, on behalf
of the Company.




          (c) Neither the Company nor any Partner shall take any action that would result in the Company
being taxed as other than a “partnership” for federal income tax purposes, including (but not
limited to) electing to be taxed as other than a “partnership” by making such an election on Form
8832, “Entity Classification Election.”




     8.07 Certain Elections.



          (a) In the event that a distribution of any of the Company’s assets is made in the manner
provided in Code Section 734, where a transfer of an interest in the Company permitted by this
Agreement is made in the manner provided in Code Section 743, or in any other circumstance
permitting an election to be made under Section 754 of the Code, then, upon the request and at the
expense of any Partner, the Company shall file an election under Code Section 754, in accordance
with procedures set forth in the applicable Regulations. The Partners’ Capital Accounts shall be
adjusted in accordance with Regulations Section 1.704-1(b)(2)(iv)(m). Each Partner shall provide
the Company with all information necessary to give effect to any election under Code Section 754.




          (b) In the event of any change in the Code or Regulations which could affect any Partner and
with respect to which the Company may elect to either have such change apply, or not apply, then
the Company will make such election or not make such election in a manner that the tax provisions
contained in this Agreement shall remain in effect unless all of the Partners agree that the
Company should make such election or not make such election in another




- 43 -









 




manner; provided, however, that if NYSCRF (at its expense) obtains an opinion, from recognized
tax counsel selected by NYSCRF and reasonably satisfactory to the General Partners, that solely on
account of the Company’s making the election or the Company’s failing to make the election will
(based upon the assumptions set forth in Section 6.12) cause (i) the allocations to NYSCRF
under ARTICLE IV to be UBTI, (ii) NYSCRF no longer to be a “qualified organization” (within the
meaning of Code Section 514(c)(9)(C)), or (iii) any indebtedness of the Company to not qualify for
the exceptions to “acquisition indebtedness” under Code Section 514(c)(9)(A), then the Company
shall make such election or refrain from making such election in the manner specified by NYSCRF,
and the Partners shall promptly modify this Agreement in a manner to maintain as nearly as possibly
the same economic effect on the Partners as would have existed had such election been made or not
been made, as the case may be, to the maximum extent permitted by applicable law, but in no event
shall such change have a negative economic impact on the General Partner.




          (c) ERISA Representations. NYSCRF, in connection with representations made or that
may be made to one or more Lenders regarding the status of the Company as not being an employee
benefit plan as defined in ERISA, and regarding the Company’s assets not being considered to be
“plan assets” pursuant to certain Department of Labor Regulations, represents and warrants to the
Company and the General Partner that NYSCRF is a governmental plan as defined in section 3(32) of
ERISA.




ARTICLE IX




DEFAULT PROVISIONS




     9.01 Events of Default. The occurrence of any one or more of the following events
(each a “Default”) caused or suffered by any Partner shall constitute a default (subject to the
grace periods provided for herein) under this Agreement:



          (a) The failure of such Partner to pay any portion of any Capital Contribution required to be
made by it within ten (10) days of the date when due;




          (b) The failure of such Partner to perform or comply with any of the material covenants,
conditions and agreements of this Agreement or the Contribution Agreement to be performed or
complied with by such Partner other than as set forth in (a) above and to cure such failure
within the time specified in Section 9.02;




          (c) The Bankruptcy of such Partner;




          (d) In the case of the General Partner, the attachment, execution or other judicial seizure of
more than $50,000 of such General Partner’s assets related to the Company, which attachment,
execution or seizure remains undischarged after fifteen (15) days, unless (i) such Partner posts a
sufficient bond within such fifteen (15) day period or (ii) such attachment, execution or seizure
does not have a material effect on such Partner’s ability to satisfy its obligations hereunder.




     9.02 Grace Period. With respect to any Default under Section 9.01(b), the
Partner causing or suffering such Default shall have a grace period of [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] days after
receipt of



- 44 -









 





written notice of such Default to cure such Default, provided, however, that (a) if such
Default is curable but cannot with due diligence and in good faith be cured within such [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] day period and (b) if such Partner forthwith upon notice of such Default commences and proceeds
with due diligence and in good faith to cure such Default and thereafter completes the full cure of
such Default, the grace period with respect to such Default shall be extended for such period as
may be necessary for the curing of such Default with due diligence and in good faith, not to exceed
[The confidential material contained herein has
been omitted and has been separately filed
with the Commission.] days.




     9.03 Remedies Reserved. Upon any Default by any Partner, such Partner shall no longer
have the right to vote on, consent to, approve or otherwise take part in any decision of the
Partners, and, in addition, the other Partners shall each have the rights and remedies specified
herein as well as those available to non-defaulting Partners as a matter of law or equity;
provided, however, that if the defaulting Partner is the General Partner, then it shall continue to
have all of the management rights of the General Partner under this Agreement, and provided further
than if the default by the General Partner constitutes fraud, the General Partner’s management of
the affairs of the Company shall be subject to the reasonable oversight of the Advisor.



ARTICLE X




TRANSFER OF PARTNERSHIP INTERESTS;

SALE OF PROPERTY




     10.01 Transfer. 



          (a) The term “Transfer,” when used with respect to a Partnership Interest, shall include any
direct or indirect sale, assignment, gift, bequest, succession through intestacy, pledge,
hypothecation, mortgage, exchange, or other disposition, except that such term shall not include:
(i) any pledge or mortgage of a Partnership Interest or other hypothecation of or granting of a
security interest in a Partnership Interest in connection with any financing obtained by or on
behalf of the Company and approved pursuant to Section 6.04(l) of this Agreement, or (ii)
the sale, issuance, assignment, gift, bequest, succession through intestacy, pledge, hypothecation,
mortgage, exchange, or other disposition of shares of beneficial interest in Liberty Property Trust
or of limited partnership units in Liberty Property Limited Partnership (or their respective
successors through merger, consolidation or sale of all or substantially all of the assets or
beneficial interests). For purposes of the foregoing, a change in the trustee of any trust that is
a Partner or an Affiliate of any Partner shall not be treated as a Transfer.




          (b) Except as provided in Section 10.02, no Partner may Transfer its Partnership
Interest, in whole or in part, directly or indirectly, without the approval of the other Partners
and, if required by any loan documents entered into by the Company, any third party lender. Any
Transfer or purported Transfer of any Partnership Interest not made in accordance with the
foregoing shall be null and void and in breach of this Agreement.





- 45 -









 







     10.02 Approved Transfers.



          (a) Anything in Section 10.01 to the contrary notwithstanding, the General Partner
may, without the consent of the other Partner, undergo a Transfer, in whole but not in part: [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]




          (b) Anything in Section 10.01 to the contrary notwithstanding, NYSCRF may, without the
consent of the other Partner [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]




          (c) Upon any Transfer undertaken in accordance with Section 10.02, the transferring
Partner shall promptly deliver to the non-transferring Partner (i) an assignment and assumption
agreement, in form and substance reasonably acceptable to the non-transferring Partner, whereby the
transferring Partner assigns, and the transferee accepts and assumes, all of the transferring
Partner’s rights, obligations and liabilities hereunder, and (ii) the other instruments
contemplated by Sections 10.04(b)-(f); provided the requirements of Section
10.04(a) shall not apply to any such Transfer. Upon the delivery to the non-transferring
Partner of the instruments referenced in clauses (i) and (ii) above, if the transfer results in a
new Partner (as opposed to the acquisitions of interests in the existing Partner), the transferring
Partner shall withdraw from the Company in accordance with Section 10.03 and be released
from all liability hereunder, and the transferee shall be deemed admitted as a Partner pursuant to
Section 10.04 and shall be deemed to have assumed all of the rights, duties, obligations
and liabilities of the transferring Partner under this Agreement.




          (d) Anything in this Section 10.02, or otherwise in this Agreement, to the contrary
notwithstanding, no Transfer or assignment of a Partnership Interest shall be made (i) if such
Transfer is effectuated through an “established securities market” or a “secondary market” (or the
substantial equivalent thereof) within the meaning of Section 7704 of the Code or such Transfer
causes the Company to be taxed as a “publicly traded partnership” as such term is defined in
Sections 469(k)(2) or 7704(b) of the Code; or (ii) if such Transfer, in the opinion of counsel
selected by the General Partner and reasonably acceptable to NYSCRF, would not allow Liberty
Property Trust to continue to be taxed as a REIT under the Code or would subject Liberty Property
Trust to any material taxes under Sections 857 or 4981 of the Code..




     10.03 Withdrawal of a Partner. A Partner may voluntarily withdraw from the Company
only upon a Transfer of all of such Partner’s Partnership Interest in accordance with this



- 46 -









 




ARTICLE X. If any Partner withdraws from the Company in violation of this Agreement, it shall
not be entitled to any distributions from the Company as a result of such withdrawal, but shall
remain entitled to those distributions it would be entitled to receive had the withdrawal not
occurred.




     10.04 Admission of Transferee as a Partner. Any Person to whom all of a Partnership
Interest has been transferred pursuant to Section 10.01(b) or Section 10.02 shall
be admitted as a substituted Partner as a result of such transfer to the extent of the Partnership
Interest so transferred only upon the satisfaction of all of the following conditions:



          (a) The unanimous approval of the other Partners, provided however, that no Partner shall
unreasonably withhold its approval to any transferee becoming a substituted Partner if such
transferee in the reasonable judgment of the General Partner has (together with any guarantor of
its obligations) a net worth sufficient to fund any outstanding obligations it might have under
this Agreement and expressly agrees in writing to fulfill such obligations;




          (b) Such transferee’s written acceptance of, and written agreement to be bound by, all of the
terms and provisions of this Agreement;




          (c) Reasonable evidence of the authority of such transferee to become a Partner and to be
bound by all of the terms and provisions of this Agreement;




          (d) The approval of any third party lender if required by any loan documents entered into by
the Company;




          (e) An opinion of counsel reasonably satisfactory to counsel for the Company that such
transfer, and the transferee’s participation in the Company as a Partner, will not (A) adversely
affect the status of a Partner as a REIT (if it is not the transferor), or (B) violate any then
applicable Federal or other securities laws or the rules and regulations of the Securities and
Exchange Commission or the securities commission of any other jurisdiction; and




          (f) The satisfaction of such additional requirements as any Partner may reasonably determine
to assure itself that neither it nor the Company will incur any new or additional liability or
obligation as a result of such transfer or purchase.



Anything herein to the contrary notwithstanding, any transferee who does not become a substituted
Partner shall be only entitled to receive the share of Profits, Losses and distributions of the
Company to which the transferor was entitled with respect to the Partnership Interest so
transferred, and shall not have any right to vote on, consent to, approve or otherwise take part in
any decision of the Partners, or to any of the other rights associated with the ownership of such
Partnership Interest.




     10.05 Admission of Additional Partners. Notwithstanding anything to the contrary
contained in this Agreement, no Person may be admitted as an additional Partner without the
unanimous approval of each the Partners, which approval may be withheld in the sole discretion of
such Partner.



- 47 -









 





ARTICLE XI




DISSOLUTION AND LIQUIDATION




     11.01 No Dissolution, etc. The Company shall not be dissolved by the admission of any
new or additional Partner, and the Partners hereby waive any right they may have to seek a
partition of the Company Assets or to dissolve the Company except in accordance with this
Agreement.



     11.02 Events Causing Dissolution. Subject to Section 11.03, the Company shall
be dissolved and its affairs wound up upon the occurrence of any of the following events:



          (a) The sale or other disposition by the Company of all or substantially all of the Company’s
assets and the collection of all amounts derived from any such sale or other disposition, including
all amounts payable to the Company under any promissory notes or other evidences of indebtedness
taken by the Company in connection with such sale or other disposition (unless the General Partner
shall elect, with the approval of NYSCRF, to distribute such indebtedness to the Partners in
liquidation);




          (b) The withdrawal (except in accordance with Section 10.03), liquidation, dissolution
or Bankruptcy of the General Partner; or




          (c) The occurrence of any event not specified above that, under the Act or other applicable
laws, would cause the dissolution of the Company or that would make it unlawful for the business of
the Company to be continued.



For purposes of this Agreement, the term “Bankruptcy” shall mean, and a Partner shall be deemed
“Bankrupt” upon, (i) the entry of a final and appealable decree or order for relief of such Partner
by a court of competent jurisdiction in any involuntary case involving such Partner under any
bankruptcy, insolvency, or other similar law now or hereafter in effect and the expiration of the
applicable appeals period without any appeal being filed; (ii) the appointment of a receiver,
liquidator, assignee for the benefit of creditors, custodian, trustee, sequestrator, or other
similar agent for such Partner or for any substantial part of such Partner’s assets or property;
(iii) the entry of a final non-appealable order for the winding up or liquidation of such Partner’s
affairs by a court of competent jurisdiction in any involuntary case involving such Partner under
any bankruptcy, insolvency, or other similar law now or hereafter in effect; (iv) the filing with
respect to such Partner of a petition in any such involuntary bankruptcy case which petition
remains undismissed for a period of 90 days; (v) the commencement by such Partner of a voluntary
case under any bankruptcy, insolvency, or other similar law now or hereafter in effect; (vi) the
consent by such Partner to the entry of an order for relief in an involuntary case under any such
law or to the appointment of or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator, or other similar agent for such Partner or for any substantial part of
such Partner’s assets or property; or (vii) the making by such Partner of any general assignment
for the benefit of creditors.




     11.03 Rights to Continue Business of Company. Upon an event described in Sections
11.02(a), 11.02(b) or 11.02(c) (but not an event described in Section
11.02(c) that makes it



- 48 -









 




unlawful for the business of the Company to be continued), the Company thereafter shall be
dissolved and liquidated unless, within 90 days after the event described in such Section, an
election to reconstitute and continue the business of the Company shall be made in writing by all
of the Partners.




     11.04 Dissolution. Except as otherwise provided in Section 11.02 and
Section 11.03, upon the dissolution of the Company, the General Partner (or if the
dissolution is caused by the withdrawal or Bankruptcy of the General Partner, then the Person
designated as liquidating trustee by the remaining Partners, which liquidating trustee shall have
all of the powers of the General Partner under this Agreement for purposes of winding up the
affairs of the Company) shall promptly notify the Partners of such dissolution.



     11.05 Liquidation.



          (a) Except as otherwise provided in Section 11.03, upon the dissolution of the
Company, the General Partner (or other Person responsible for winding up the affairs of the
Company) shall proceed without any unnecessary delay to sell or otherwise liquidate the Company’s
assets and pay or make due provision for the payment of all debts, liabilities, and obligations of
the Company.




          (b) After adequate provision has been made for the payment of all debts, liabilities, and
obligations of the Company, the General Partner (or other Person responsible for winding up the
affairs of the Company) shall distribute the net liquidation proceeds to the Partners in accordance
with ARTICLE V.




     11.06 Reasonable Time for Winding Up. A reasonable time shall be allowed for the
orderly winding up of the business and affairs of the Company and the liquidation of its assets
pursuant to Section 11.05 in order to minimize any losses otherwise attendant upon such a
winding up.



     11.07 Termination of Company. Except as otherwise provided in this Agreement, the
Company shall terminate when all of the Company’s assets shall have been converted into cash and
the net proceeds therefrom, as well as any other liquid assets of the Company, after payment of or
due provision for the payment of all debts, liabilities, and obligations of the Company, shall have
been distributed to the Partners as provided for in Section 11.05, and all instruments
recorded or filed in the manner required by the Act.



ARTICLE XII




BUY-SELL




     12.01 [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]



- 49 -









 





     12.02 [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]



- 50 -









 





     12.03 [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]



     12.04 [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]



     12.05 [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]



ARTICLE XIII




ACQUISITIONS, NEW DEVELOPMENTS AND REDEVELOPMENTS




     13.01 Exclusive Operations Except as expressly provided for in this ARTICLE XIII,
neither the General Partner nor its Affiliates shall, directly or indirectly, purchase, develop or
redevelop office properties within the DC Metropolitan Area.



     13.02 Yield Parameters. The Company’s initial yield parameters are summarized in
Exhibit I. Modification of these parameters shall be subject to the approval of both the
General Partner and NYSCRF.



     13.03 New Acquisitions.  



          (a) The General Partner may propose from time to time in a written recommendation (an
“Acquisition Plan”) to NYSCRF that the Partnership acquire from a third party one or more of the
following: (i) land in the DC Metropolitan Area that is suitably zoned and entitled (with the
exception of site plan approval and building permits) for development as an office building and
which upon acquisition by the Company would be treated as a Vacant Land Property under this
Agreement, (ii) land and improvements in the DC Metropolitan Area that are intended to be
rehabilitated as a Redevelopment Property, or (iii) a Functional Office Property in the DC
Metropolitan Area. The Acquisition Plan shall contain: (i) the maximum purchase price the General
Partner would cause the Company to pay for the subject property, (ii) a description of the office
market within which such property or properties are located, (iii) a summary of the existing leases
(if any) of space within such property or properties, and (iv) with




- 51 -









 




respect only to an Acquisition Plan relating to a proposed Redevelopment Property, a
preliminary capital budget for the renovation costs and a preliminary estimate of the stabilized
rentals projected to be generated from such property after completion of the renovations. NYSCRF
will respond with its approval or disapproval of each Acquisition Plan (or of each property that is
the subject thereof, if more than one) within twenty-five (25) days after receipt of the
Acquisition Plan (and NYSCRF shall have the full 25 day period to respond and elect to participate
in the project even if a shorter period is indicated or identified by the Acquisition Plan). If
NYSCRF fails to respond in such twenty-five (25) day period, it shall be deemed to have disapproved
such Acquisition Plan. The Company shall not undertake the acquisition of any land or buildings
unless the acquisition has been recommended by the General Partner and approved by NYSCRF, either
pursuant to the Annual Budget process or pursuant to an Acquisition Plan. Due diligence respecting
the acquisition of Vacant Land, property suitable as Redevelopment Property and Functional Office
Property shall be undertaken in accordance with the procedures set forth on Exhibit K.




          (b) If the General Partner identifies land in the DC Metropolitan Area that may be suitable
for development as an office building but requires rezoning or other entitlements that are not
available as a matter of right as a condition to such a development and use (a “Speculative
Parcel”), the General Partner (or its Affiliate) shall be free to acquire the Speculative Parcel
for its own account and to pursue all appropriate rezoning, variances or other entitlements
necessary for such development and use. If the General Partner subsequently determines that the
necessary entitlements will not be readily obtainable or that the Speculative Parcel is not
otherwise suitable or feasible for development as an office building, the General Partner (or its
Affiliate) shall be free to sell the Speculative Parcel to any third party on terms acceptable to
the General Partner and such third party. If the General Partner subsequently obtains the
necessary entitlements for development and use of the Speculative Parcel as an office building, the
General Partner (or its Affiliate) shall offer the Speculative Parcel for sale to the Company at a
price equal to the fair market value of the Speculative Parcel, and the General Partner shall
prepare and submit to NYSCRF an Acquisition Plan with respect thereto. The General Partner and
NYSCRF shall endeavor in good faith to agree upon the fair market value of the Speculative Parcel
(as approved with such entitlements), but in no event shall the fair market value of the
Speculative Parcel be less than the sum of (i) the purchase price paid therefor by the General
Partner, plus (ii) all carrying costs incurred with respect to the Speculative Parcel, plus (iii)
all out of pocket costs incurred by the General Partner to obtain the necessary entitlements. If
the parties fail to agree on the fair market value of the Speculative Parcel within sixty (60) days
after the submission of the aforementioned Acquisition Plan, the parties shall endeavor in good
faith to select a qualified appraiser with substantial appraisal experience in the DC Metropolitan
Area commercial real estate market to determine the fair market value of the Speculative Parcel,
and the determination of such appraiser shall be final. If the parties do not agree on the
designation of a single appraiser, each party shall appoint a separate qualified appraiser, and the
appraisers so appointed shall mutually select a third qualified appraiser with substantial
appraisal experience in the DC Metropolitan Area commercial real estate market, and the
determination of fair market value by such third appraiser shall be final




          (c) If NYSCRF disapproves the acquisition of the Speculative Parcel or a parcel identified as
the subject of an Acquisition Plan (an “Acquisition Parcel”) by the Company, the General Partner
(or its Affiliate) shall be free to acquire and develop the Speculative Parcel




- 52 -









 




or Acquisition Parcel for its own account substantially in accordance with the information
submitted to NYSCRF in the Acquisition Plan.




     13.04 Initiation of New Developments and Redevelopments. Upon the General Partner’s
determination that it is appropriate to initiate a New Development on any of the Vacant Land
Properties or to initiate the rehabilitation of a Redevelopment Property (a “Redevelopment”), the
General Partner shall so notify NYSCRF in writing, which notice shall be accompanied by the
following (collectively, a “Development Plan”): (a) Preliminary Plans and Specifications, (b)
leasing commitments, if any, (c) a Preliminary Project Budget, including a pro forma operating
budget, (d) a description of the office market and leasing conditions for the market in which the
New Development or Redevelopment is located, (e) a proposed Sources and Uses of Funds, identifying
any construction financing proposed by the General Partner for funding some or all of the costs of
such project, and (f) any other information in the General Partner’s or its Affiliates’ possession
which would be relevant to NYSCRF’s decision to approve the Company’s proceeding with such New
Development or Redevelopment. Within thirty-five (35) days after receipt, NYSCRF shall elect
either (i) to fund its Percentage Interest of the cost of the New Development or Redevelopment
pursuant to Section 3.02(a) and approve the General Partner or its Affiliate acting as
Development Manager pursuant to a Development Management Agreement, or (ii) to permit the General
Partner or its Affiliate to develop the designated site for its own account. If NYSCRF fails to
respond within such thirty-five-day period, it shall be deemed to have made the election under
clause (ii) above. Due diligence respecting the construction of improvements on Vacant Land shall
be undertaken in accordance with the procedures set forth on Exhibit L.



     13.05 [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]



     13.06 Disapproval of Proposed New Development or Redevelopment. If NYSCRF does not
approve a New Development or Redevelopment, the General Partner or its Affiliate may, within thirty
(30) days after NYSCRF has disapproved the New Development or Redevelopment or after expiration of
the period during which NYSCRF is required to notify the General Partner of its approval, purchase
the Vacant Land Property or Redevelopment Property (whichever is appropriate) on which the New
Development or Redevelopment was proposed by the General Partner, for purposes of developing it in
accordance with the Development Plan that was submitted to NYSCRF under Section 13.04. The
purchase price (the “GP Price”) shall be the sum of (i) the cost to the Company for such Property,
(ii) all non-interest carrying costs incurred by the Company related to its ownership of such
Property such as real estate taxes, security, maintenance and insurance, (iii) interest on the
amount referenced in (i) at the simple rate of



- 53 -









 




seven percent (7%) per annum from the date of the Company’s acquisition of the subject
Property, and (iv) all transfer costs incurred as part of the conveyance, with the exception of
title costs and transfer taxes, which shall be shared by the Company and the General Partner, as
seller and buyer respectively, in a manner consistent with local custom.




     13.07 First Refusal and Repurchase Rights. With respect to any New Development or
Redevelopment that is disapproved (or deemed disapproved) by NYSCRF pursuant to Section
13.04 and with respect to which the General Partner or its Affiliate has elected to purchase
the underlying Property as permitted in Section 13.06, the Company and NYSCRF shall have
the following rights, which will be memorialized in an instrument placed of record against the
Property being transferred:



          (a) [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]




          (b) [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]




          (c) [The confidential material contained herein has
been omitted and has been separately filed
with the Commission.]




- 54 -









 





ARTICLE XIV




MISCELLANEOUS PROVISIONS




     14.01 Additional Actions and Documents. Each Partner shall take or cause to be taken
such further actions and shall execute, acknowledge, deliver, and file such further documents and
instruments, and use reasonable efforts to obtain such consents, as may be necessary or as may be
reasonably requested in order to maintain the Company pursuant to the terms and conditions of this
Agreement.



     14.02 Notices. All notices, demands, requests or other communications (collectively,
“Notices”) which may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be hand delivered or mailed by
first-class, registered or certified mail, return receipt requested, postage prepaid, or
transmitted by telegram, facsimile transmission (at the number set forth below on the signature
page, with the original to be sent the same day by mail as provided above) or by Federal Express or
other recognized overnight delivery service addressed to the recipient at its address set forth
below (or at such other address as the recipient may have theretofore designated in writing). Each
Notice which shall be hand delivered or mailed in the manner described shall be deemed sufficiently
given, served, sent, received, or delivered for all purposes at such time as it is delivered to the
addressee (with the return receipt, the delivery receipt, or the affidavit of messenger being
deemed conclusive (but not exclusive) evidence of such delivery or at such time as delivery is
refused by the addressee upon presentation). Each Notice which shall be by facsimile transmission
in the manner described above shall be deemed sufficiently given, served, sent, received, or
delivered for all purposes at such time as the original is delivered to the addressee or delivery
is refused by the addressee. Subject to the above, all Notices shall be addressed as follows:



- 55 -









 





          (a) If to the Company, at the Company’s principal office, with copies to each Partner; and




          (b) If to any Partner, at the address set forth below its name on the execution page of this
Agreement, or to such other address as any Partner may specify for itself by written notice given
in accordance with this Section.




     14.03 Survival and Reliance. All covenants, agreements, statements, representations,
warranties, and indemnities made in this Agreement shall survive the execution and delivery of this
Agreement and the termination of the Company, and may be relied upon by each of the Partners.



     14.04 Waivers. Except as otherwise provided herein, neither the waiver by a Partner
of a breach of or a default under any of the provisions of this Agreement, nor the failure of a
Partner, on one or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right, remedy, or privilege hereunder shall thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights,
remedies, or privileges hereunder.



     14.05 Exercise of Rights. Except as expressly provided herein, no failure or delay on
the part of a Partner or the Company in exercising any right, power, or privilege hereunder and no
course of dealing between the Partners or between a Partner and the Company shall operate as a
waiver thereof and no single or partial exercise of any right, power, or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. Except as otherwise provided herein, any Partner shall have the right to seek specific
performance of the duties and obligations set forth in this Agreement. The rights and remedies
herein are cumulative and not exclusive of any other rights or remedies which a Partner or the
Company would otherwise have at law or in equity or otherwise.



     14.06 Binding Effect. Subject to any provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the Partners and their respective
successors and assigns.



     14.07 Limitation on Benefits of this Agreement. No person or entity other than the
Partners and the Company is or shall be entitled to bring any action to enforce any provision of
this Agreement against any Partner or the Company. All covenants, undertakings, and agreements set
forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the
Partners (or their respective successors and assigns as permitted hereunder) and the Company.



     14.08 Amendment Procedure. Any amendment to this Agreement shall be in writing and
require the unanimous approval of all of the Partners.



     14.09 Entire Agreement. This Agreement contains the entire agreement among the
Partners with respect to the transactions contemplated herein, and supersedes all prior oral or
written agreements, commitments, or understandings with respect to the matters provided for herein.



- 56 -









 





     14.10 Pronouns, Time. All pronouns and terms hereof and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular, or plural, as the identity of the
person or entity may require. If any period or time set forth in this Agreement begins, ends or
occurs on a day other than a Business Day, then such period or time shall instead begin, end or
occur on the next Business Day.



     14.11 Headings. Article and Section headings contained in this Agreement are inserted
for convenience of reference only, shall not be deemed to be a part of this Agreement for any
purpose, and shall not in any way define or affect the meaning, construction, or scope of any of
the provisions hereof.



     14.12 Governing Law. This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Delaware (but not including the choice of law rules
thereof).



     14.13 Partner’s Representatives. Each Partner shall at all times designate at least
one individual as its representative for the purposes of communicating with the Company and the
other Partners. The Company and each Partner shall be entitled to rely (and shall be protected in
such reliance) on communications from any such representative with respect to required consents and
approvals and other required or desired matters arising under this Agreement. Any Partner may
designate one or more replacement representatives for itself by written notice to the other
Partners. The initial representative of each Partner is set forth below such Partner’s signature
on the execution page of this Agreement.



     14.14 Execution in Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required, and it shall not be necessary that the
signatures of all persons required to bind any party appear on each counterpart, but it shall be
sufficient that the signature of, or on behalf of, each party, or that the signatures of the
Persons required to bind any party, appear on one or more of the counterparts. All counterparts
shall collectively constitute a single agreement. It shall not be necessary in making proof of
this Agreement to produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto. Faxed or electronically
delivered signatures shall be enforceable as originals against the party delivering such
signatures.



     14.15 Affirmative Action Policy. The Partners recognize the benefits of affirmative
action in fostering opportunities for the equal participation of minority and women-owned business
enterprises, and minority and women employees and principals are given the opportunity to
participate in the performance of contracts entered into by the Company. This Company believes the
opportunity for full participation in the free enterprise system by persons traditionally, socially
and economically disadvantaged is essential to obtain social and economic equality. Accordingly,
it is the policy of the Company to foster and promote the participation of such individuals and
business enterprises in its contracts. The Company expects all concerned to afford all persons
equal employment opportunities without discrimination.



     14.16 Advisor. NYSCRF has informed the General Partner, and the General Partner
acknowledges, that NYSCRF has engaged the services of Heitman Capital Management LLC (who, together
with any other entity hereafter appointed by Limited Partner, is referred to herein



- 57 -









 




as “Advisor”) in connection with this Agreement. NYSCRF has named Anthony Ferrante, Jerome J.
Claeys and Howard Edelman (representatives of Advisor) to act as its representatives. The General
Partner agrees that, notwithstanding the identification of the representatives of NYSCRF, other
individuals representing NYSCRF (individually, a “CRF Representative” and, collectively, “CRF
Representatives”) shall be entitled to participate in meetings and other communications between any
the General Partner and NYSCRF, and that any information provided to NYSCRF’s representatives shall
concurrently be provided to any CRF Representative identified in writing to the General Partner.
The General Partner shall have the right to rely on the written approval or disapproval of any
matter from the NYSCRF representatives identified in this Section or otherwise designated by NYSCRF
and identified to the General Partner in writing.




     14.17 Insurance. The Company shall maintain, or cause its Affiliate to maintain,
insurance on the Properties of such types and in such amounts and with such insurers as the General
Partner and NYSCRF shall reasonably agree. Such insurance shall conform to the minimum standards
for property, commercial general liability and fidelity insurance identified in Exhibit M.
Any decision to insure the Properties below these minimum standards shall be subject to the
approval of both the General Partner and NYSCRF.



     14.18 Legal Representation of the Company. Wolf, Block, Schorr and Solis-Cohen LLP
(“Wolf Block”) represented the General Partner in the preparation and negotiation of this
Agreement, and the parties agree that such representation will not disqualify Wolf Block from
representing the Company. Furthermore, if Wolf Block is engaged by the Company to represent the
Company, Wolf Block will not be disqualified from thereafter representing the General Partner or
its Affiliate; provided, however, that the foregoing shall not apply to waive any objection NYSCRF
may have with respect to the representation by Wolf Block of (i) the General Partner or its
Affiliate in litigation against the Company, or (ii) the Company in litigation against the General
Partner or its Affiliate.



     14.19 Special Covenants. So long as any of the Properties is subject to mortgage
financing requiring the borrower to be a “single purpose entity”, the Company shall cause the
Subsidiary that is the subject of such loan to comply with (and to the extent required by the
applicable loan documents, the Company shall comply with) the single purpose entity requirements
set forth in the loan document for such financing.




- 58 -












 






     IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed on
its behalf, as of the day and year first above set forth.



	 	 	 	 	 
	PARTNER	 	PERCENTAGE INTEREST
	 
	NEW YORK STATE
	 	 	 	 
	COMMON RETIREMENT FUND
	 	 	75	%






Thomas P. Dinapoli, Comptroller of the

State of New York, as Trustee of the

Common Retirement Fund




	 	 	 	 	 
	By:

	 	/s/ NICK SMIRENSKY	 	 
	 

	 	 

Name: Nick Smirensky
	 	 
	 

	 	Title: Deputy Comptroller	 	 






Addresses for Notices:




New York State Common Retirement Fund

c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Comptroller for Real Estate

Fax No.: 212-383-1331

Telephone No.: 212-383-1508




with copies to:




New York State Common Retirement Fund

c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Deputy Counsel

Fax No.: 212-681-1331

Telephone No.: 212-383-1330




with copies to:




Cox, Castle & Nicholson LLP

2049 Century Park East, 28th Floor

Los Angeles, CA 90067-3284

Attn: Amy H. Wells, Esq.

Fax No.: 310-277-7889

Telephone No.: 310-284-2233




- 59 -









 





with copies to:




Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Jerome Claeys

Fax No.: 312-251-5445

Telephone No.: 312-541-6740




and with copies to:




Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Anthony Ferrante

Fax No.: (312) 541-6789

Telephone No.: (312) 251-5458




[Signatures Continued on Next Page]




- 60 -









 








[Signatures Continued from Previous Page]




	 	 	 	 	 
	PARTNER	 	PERCENTAGE INTEREST
	 
	LIBERTY WASHINGTON VENTURE, LLC
	 	 	25	%






By Liberty Property Limited Partnership,

its sole member




By Liberty Property Trust,

its sole general partner




	 	 	 	 	 
	By:

	 	/s/ MICHAEL T. HAGAN	 	 
	Name:

	 	 

MICHAEL T. HAGAN
	 	 
	Title:

	 	CHIEF INVESTMENT OFFICER	 	 
	 
	 	 	 	 
	By:

	 	/s/ WILLIAM P. HANKOWSKY	 	 
	Name:

	 	 

WILLIAM P. HANKOWSKY
	 	 
	Title:

	 	CHAIRMAN, PRESIDENT AND CEO	 	 






Addresses for Notices:




500 Chesterfield Parkway

Great Valley Corporate Center

Malvern, PA 19355

Attn: Michael T. Hagan

Fax No. 610-644-4129

Telephone No. 610-648-1716




with copy to:




Wolf, Block, Schorr and Solis-Cohen

1650 Arch Street, 22nd Floor

Philadelphia, PA 19103-2097

Attention: Herman C. Fala

Facsimile: 215-405-2976





- 61 -











 




Exhibit
A


 DEVELOPMENT MANAGEMENT AGREEMENT




This Development Management Agreement (this “Agreement”), dated as of the       day of
                    , 200      by and among                                          (“Owner”), and Liberty Property
Limited Partnership, a Pennsylvania limited partnership (“Development Manager”).



W I T N E S S E T H:




WHEREAS, Owner owns one or more [unimproved parcels of land] [improved parcels of land
intended for redevelopment] located in                     , and more particularly described on
Exhibit A attached hereto and made a part hereof (the “Property”);



WHEREAS, in accordance with the terms and provisions of Owner’s Partnership Agreement, Owner
has elected to develop or redevelop one or more office buildings (the “Improvements”) on
the Property;



WHEREAS, the phrases “develop” and “development” as used in this Agreement shall be deemed to
include the redevelopment of a Redevelopment Property (as defined in the Partnership Agreement) as
context may require;




WHEREAS, Development Manager is an Affiliate of the general partner of Owner; and



WHEREAS, Owner wishes to engage Development Manager to perform the services set forth herein
relating to the Project and Development Manager is willing to accept such engagement, all upon the
terms and conditions hereinafter set forth.



NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Owner and Development
Manager hereby agree as follows (all capitalized terms contained in this Agreement and not
otherwise defined herein are defined in Article XII below):



AGREEMENTS:




ARTICLE I




Appointment and Term of Development Manager




Owner hereby engages Development Manager as the manager for the development of the
Improvements on the Property upon the terms and conditions herein stated. Development Manager
shall perform the Services for the benefit of Owner in accordance with the terms and provisions of
this Agreement. The term of this Agreement shall commence on the date hereof and shall end on the
date upon which the construction of the Improvements on the Property is complete, unless this
Agreement is sooner terminated in accordance with the terms hereof.


 


 









 





ARTICLE II




Services of Development Manager




2.1 Generally. Provided Owner makes funds available and pays the fees and costs
contemplated herein in accordance with the terms of this Agreement (which shall be a condition
precedent to Development Manager’s obligations hereunder), Development Manager shall perform the
following Services in connection with the Project:



2.1.1 Project Budget. Prepare and obtain approval by Owner (which approval shall be
in writing if the General Partner is no longer the general partner of Owner) of the Final Project
Budget within thirty (30) days after receipt of the last GMP Contract, which Final Project Budget
shall set forth the estimated costs in no less detail than the following components: (i) building
costs (allocated among the major trades), (ii) site costs, (iii) the Hard Cost Contingency, (iv)
Soft Costs (on a line item basis), (v) tenant improvement costs and/or allowances, and (vi) leasing
commissions and finders’ fees, and be in a form acceptable to the Construction Lender (if any) for
the Project.




2.1.2 Design Related Duties.




	 	(a)	 	Coordinate the production of the Final Plans and Specifications
for the Improvements;






	 	(b)	 	Endeavor to obtain all drawings and engineering and
architectural renderings and other drawings and specifications prepared for the
Improvements in accordance with the Construction Schedule;






	 	(c)	 	Review with the Owner and obtain Owner’s approval of (x) any
material changes in scope to the Improvements, and (y) all material changes to
the Final Plans and Specifications;






	 	(d)	 	Review with Owner and obtain Owner’s approval of all material
changes to the Construction Contracts;






	 	(e)	 	Submit the Final Plans and Specifications to the General
Contractor for bid to obtain GMP Contracts covering various portions of the
Work;






	 	(f)	 	Coordinate and monitor (1) the application for governmental
permits and approvals required for the construction of the Improvements, and
(2) the compliance with the terms and conditions contained in any such
governmental permit or approval, in any insurance policy required under this
Agreement and affecting or covering the Improvements or in any surety bond
obtained by General Contractor or subcontractor in connection with the
Improvements; and




 


2









 











	 	(g)	 	Coordinate and monitor efforts by the Architect to comply with
all applicable Laws, provided that the ultimate responsibility for such
compliance shall rest with the Architect.






	 	(h)	 	For purposes of Subsections 2.1.2(c) and 2.1.2(d), a “material
change” shall mean a change not otherwise approved by Owner which results in
Cost Overruns or which results in an increase to any line item in the Final
Project Budget in excess of Twenty Five Thousand Dollars ($25,000).






2.1.3 Construction Related Duties.




	 	(a)	 	Finalize and deliver for signature the GMP Contracts and other
Construction Contracts and coordinate, administer and perform the applicable
obligations of Owner under the Construction Contracts, provided that all of the
GMP Contracts shall be with the General Contractor and be a guaranteed maximum
price contract covering the applicable portion of the Work;






(b) Cause the preparation of a Construction Schedule;




	 	(c)	 	Coordinate, administer and implement (x) the application and
approval process in connection with the issuance of building permits, partial
building permits, and temporary or final certificates of occupancy, and (y) the
making of any periodic inspections required by governmental officials and/or
Owner’s and Construction Lender’s inspectors;






	 	(d)	 	Review all proposed changes and change orders to any
Construction Contract;






	 	(e)	 	Identify, analyze and provide recommendations to the Owner with
respect to alternative courses of action for unforeseen conditions, such as
material shortages, work stoppages and/or accidents or casualties, as they
occur;






	 	(f)	 	Review payment applications submitted by any contractors,
obtain Certificates for Payment from the Architect, obtain and review partial
lien waivers, and provide recommendations to Owner, all as more particularly
described in Section 2.1.4;






	 	(g)	 	Cause the preparation and adoption by General Contractor of all
required punch lists for finalizing the Work, coordinate the activities of
contractors to facilitate the satisfactory completion of all the Work
(including procurement of equipment manuals, warranties and guaranties for the
equipment installed in the buildings) and coordinate the waiver or release of
all lien rights;




 


3









 











	 	(h)	 	Assist in bidding and award of subcontracts and advise Owner as
to any changes in the Final Project Budget or the Final Plans and
Specifications resulting therefrom;






	 	(i)	 	Assist Architect in monitoring performance of the Work for
compliance with the Final Plans and Specifications;






	 	(j)	 	Prepare monthly progress reports for Owner (which shall include
revisions to the Construction Schedule, if necessary), identifying performance
against the Construction Schedule, actual versus estimated percentage
completion for each component of the Improvements, and any change in the
Construction Schedule which the General Contractor is requesting. The
requirements of this Section 2.1.3(j) may be satisfied by the submission by
Development Manager of the following materials:






	 	(i)	 	an Internal Draw Request (as defined in Section
2.3.1) accompanied by copies of all backup invoices and the General
Contractor’s application for payment; and






	 	(ii)	 	copies of project meeting minutes (among
Development Manager, the General Contractor and such other parties as
Development Manager may elect) describing the status of the Project
(including timing of construction in relation to the Construction
Schedule); and






	 	(k)	 	Advise Owner of any delays known or anticipated in meeting the
Construction Schedule and of the actual dates on which the various stages of
construction as indicated on the Construction Schedule are started and
completed.






2.1.4 General Duties.




	 	(a)	 	Coordinate and administer the submission of applications to,
and negotiations with, utility companies and municipal and governmental
authorities for agreements relating to the installation of utility and other
services to the Improvements;






	 	(b)	 	Assist contractors in their efforts to arrange for performance
and/or payment bonds(s) with respect to any part of the Work, but only to the
extent such bonds are required by Owner;






	 	(c)	 	Verify that the Architects, engineers, General Contractor and
other contractors employed by the Development Manager in connection with the
Improvements are covered by liability insurance and worker’s compensation
insurance in amounts and coverages satisfactory to Owner,
with waivers of subrogation and contractual indemnification coverages
satisfactory to Owner, to the extent commercially reasonably available;




 


4









 











	 	(d)	 	Hold monthly job meetings with the General Contractor (and
other contractors and subcontractors on an as-needed basis) or as otherwise
requested by Owner during the construction phase of the Improvements, with
Owner and Architect to review the progress of construction toward completion of
the Improvements;






	 	(e)	 	Review all applications for payment and supporting
documentation prepared by the General Contractor and others performing work or
furnishing materials for the Improvements, and deliver copies of all such
applications for payment to Owner and Architect;






	 	(f)	 	Retain or hire all necessary third parties (including, by way
of example and not by way of limitation, contractors, engineers, surveyors,
architects, accountants, attorneys, consultants and other qualified personnel),
in order to accomplish the duties of Development Manager as set forth herein;






	 	(g)	 	In the event of an emergency at the Improvements, take any
action in good faith believed by Development Manager to be required under the
circumstances to protect Owner’s interest in the Improvements;






	 	(h)	 	Effect, institute and supervise all Work, including mechanical
systems, plumbing systems, building construction, landscaping, signage and
sitework, all in accordance with the Final Plans and Specifications as well as
any changes in scope initiated by Owner;






	 	(i)	 	Perform all other obligations provided elsewhere in this
Agreement to be performed by Development Manager or reasonably believed by
Development Manager to be desirable, necessary or appropriate to carry out its
duties hereunder;
	 
	 	(j)	 	Process monthly draw requests; and






	 	(k)	 	Evaluate and make recommendations to Owner pertaining to
changes which do not constitute Permitted Changes.





All contracts with third parties for the benefit of the Improvements shall be signed by the Owner.
Development Manager shall perform its duties and services in a commercially reasonable manner
consistent with the management standards applicable to similar office properties. Development
Manager covenants that it will manage the construction pursuant to the terms of this Agreement and
at the direction and expense of Owner.


 


5









 





2.2 Project Budget; Cost Overruns. Development Manager will supervise the Project to
assure that the cost of the Work performed under those construction cost line items denoted on
the preliminary project budget for the Project, as finally determined in the Final Project
Budget for the Project, are in the aggregate equal to or less than the amounts set forth in such
Final Project Budget. To the extent there are Cost Overruns (other than Cost Overruns for tenant
improvements and leasing commissions), Development Manager shall promptly pay the same or, if the
amount is being contested, provide adequate security therefor, including satisfying the
requirements of any Construction Lender; provided, however, that Development Manager shall not be
responsible for the cost of any change orders required, or Cost Overruns incurred, due to
subsurface conditions at the Property of an unusual nature, unusually severe weather conditions,
labor disputes (unless resulting from company-wide labor difficulties specific to Development
Manager and its affiliates), unavailability of materials or labor (unless resulting from
Development Manager’s lack of reasonable diligence in ordering or procuring same), war, terrorism
or acts of God, other matters beyond the reasonable control of Development Manager, or otherwise
initiated by Owner and not consented to by Development Manager, unless such change orders are
required for the Improvements to comply with Law effective prior to the date hereof. In addition,
Development Manager shall promptly pay Owner all costs incurred by Owner as a result of Development
Manager’s breach of this Agreement (including but not limited to costs incurred by Owner as a
result of Development Manager’s negligent acts or omissions). The Final Project Budget shall
constitute a major control pursuant to which Development Manager shall manage the development and
construction of the applicable Improvements. Consequently, (i) no expense may be incurred or
commitment made by Development Manager which exceeds the amount allocated to that expense category
in the approved Final Project Budget without Owner’s consent, provided that if the Final Project
Budget, after reallocation as provided herein, remains in balance, any actual savings in any line
item or amounts shown in the contingency line item may be used to offset overruns in other line
items and to pay for any Permitted Changes (provided that amounts contained in the tenant
improvement and leasing commissions line items may not be reallocated to pay for any such
overruns), and (ii) the entire Final Project Budget shall not be exceeded without the prior consent
of Owner. For purposes hereof Owner shall be deemed to approve any changes in the Final Project
Budget to the extent such changes directly result from changes to Construction Contracts, if such
changes to the Construction Contracts are signed by Owner. If substantial discrepancies in the
Final Project Budget occur or are anticipated by Development Manager, Development Manager shall
notify Owner immediately of the expected discrepancies and, if requested by Owner, prepare and
submit to Owner a detailed analysis of the anticipated impact of the discrepancies. Any change to
the Final Project Budget requires approval of the Owner, in Owner’s sole and absolute discretion
except as provided herein, and, in the event General Partner is no longer the general partner of
Owner, or if such change will result in Cost Overruns, Owner’s approval must be set forth in
writing.


 


6









 





2.3 Draw Process. Development Manager shall be responsible for coordinating all
construction draws, and until the opening of the applicable Construction Loan (if any), the draw
process shall be controlled by the provisions of this Section 2.3. Thereafter, this
Section shall be deemed modified to the extent required by the Construction Lender. Draws to
finance the construction on the Improvements shall be made no more often than monthly, commencing
approximately one (1) month after the commencement of construction of such Improvements and
terminating upon completion of the Work and issuance of the last certificate of occupancy
required by Law for full occupancy of the Improvements. Funds requested under each draw shall
be used solely to pay for construction, fixturing and soft costs related to the Improvements that
are consistent with the terms of this Agreement. Draw requests for the Project shall be made as
follows:



2.3.1 So long as General Partner is the general partner of Owner, the following procedure
shall apply:




	 	(a)	 	The General Contractor’s application for payment and other
invoices shall be submitted to Development Manager (and to the Architect with
respect to the General Contractor’s application for payment) no later than the
tenth (10th) day of the month following the month in which the work which is
the subject of such application for payment or invoices was completed;






	 	(b)	 	Development Manager shall review the General Contractor’s
application for payment and all other invoices, and the Architect shall review
the General Contractor’s application for payment, and to the extent such are
approved by Development Manager and the Architect, Development Manager shall
submit a draw request in Development Manager’s customary internal form (an
“Internal Draw Request”) to Owner no later than the twenty-first (21st)
day of the month following the month in which the work which is the subject of
such Internal Draw Request was completed;






	 	(c)	 	Owner shall pay the entire amount of the Internal Draw Request
for distribution no later than ten (10) business days after the Internal Draw
Request is submitted to Owner.





2.3.2 Notwithstanding the foregoing provisions of Section 2.3.1, if General Partner is no
longer the general partner of the Owner, then the following procedure shall apply:




	 	(a)	 	within ten (10) days after a draw is requested, Development
Manager will submit a draw request to the Owner in such detail as Owner may
reasonably require designated to the attention of Anthony Ferrante. Such draw
request shall include:






	 	(i)	 	an Application and Certificate for Payment (AIA
Document G702), or other document acceptable to the Owner, containing a
certification by the General Contractor and the applicable Architect
that construction to the date of the draw request is in accordance with
the Final Plans and Specifications and, if applicable, any
recommendations contained in the approved soils report;






	 	(ii)	 	a copy of the General Contractor’s application
for payment, including the General Contractor’s and subcontractors’
conditional lien waivers on progress payments;




 


7









 











	 	(iii)	 	the General Contractor’s and subcontractors’
unconditional lien waivers for progress payments made from the previous
draw;






	 	(iv)	 	a line by line comparison of the budgeted
versus the actual costs and estimate of the percentage of completion
for the Work item covered by such line item; and






	 	(v)	 	all other documents and information reasonably
required by Owner.






	 	(b)	 	Owner shall review the draw request and contact Development
Manager as soon as reasonably practicable in the event Owner has any questions
regarding the draw request or disputes any of the items for which payment is
requested. In the event Owner and Development Manager are unable to agree on
the draw request within twenty (20) days after such is submitted to Owner, the
matter shall be submitted to the Architect, whose decision regarding the draw
request shall be binding upon Owner and Development Manager so that by the
tenth (10th) day of the following month, Owner shall have approved (or, in the
case of a dispute submitted to the Architect for resolution, Owner shall be
deemed to have approved) the draw request and shall pay the entire approved
amount of the draw for distribution to the General Contractor and
subcontractors.





2.4 Employees. Development Manager shall select, employ, pay, supervise and discharge
all employees, independent contractors, and personnel necessary for the performance of Development
Manager’s duties pursuant to the terms hereof, all at the sole cost and expense of the Development
Manager. All personnel used by Development Manager in the construction and operation of the
Improvements shall be employees of Development Manager, employees of an Affiliate of Development
Manager or independent contractors and not employees of the Owner. If General Partner is no longer
the general partner of Owner, members of the project team down to the level of the on-site project
manager shall be subject to Owner’s approval.



2.5 Payments. Development Manager shall check and verify all bills received for
services, work and supplies ordered in connection with the construction on the Improvements. If
such bills relate to materials supplied or work performed on the Improvements, Development Manager
shall obtain all necessary lien waivers evidencing payment of such obligations.



2.6 Items to be Obtained by Development Manager. Development Manager shall obtain or
cause to be obtained all licenses, permits or other instruments required for construction of the
Improvements or any portion thereof at Owner’s expense. All such licenses and permits relating to
construction of the Improvements shall be set forth in the Final Project Budget and shall be
obtained in Owner’s name.


 


8









 





2.7 Completion Guaranty. Prior to the commencement of construction of the Project,
Development Manager shall execute in favor of Owner (and deliver to Owner) (i) a completion
guaranty for the Project in the form attached as Exhibit B hereto and made a part hereof
(the
“Completion Guaranty”) and (ii) an opinion, in a form reasonably accepted to NYSCRF, from
General Partner’s counsel that the Completion Guaranty is duly authorized, executed and enforceable
in accordance with its terms.



2.8 Approval of Owner. Notwithstanding anything contained in this Agreement to the
contrary, where any matter set forth in this Agreement requires the “approval of Owner” (or words
of similar meaning), then (A) so long as General Partner is the general partner of Owner, such
approval shall be deemed given unless Owner notifies Development Manager in writing that such
approval is not given, and (B) in the event General Partner is no longer the general partner of
Owner, then such matter shall be deemed approved by Owner if approved by Owner’s then-current
general partner.



ARTICLE III




Compensation of Development Manager




3.1 As compensation for Development Manager’s development management services rendered under
this Agreement with respect to a New Development Property or Redevelopment Property (as such terms
are defined in the Partnership Agreement), Development Manager shall be paid the following fees:
[select applicable provision]




	 	(a)	 	[for any Project where the Improvements will cost less than
[*], Development Manager will receive a fee in
the amount of [*] of the Hard Costs line item in the Final
Project Budget for such Project;






	 	(b)	 	for any Project where the Improvements will cost between
[*] and [*] Development Manager will receive a fee in the amount of [*] of
the Hard Costs line item in the Final Project Budget for such Project; and






	 	(c)	 	for any Project where the Improvements will cost more than
[*], Development Manager will receive a fee in
the amount of [*] of the Hard Costs line item in the Final
Project Budget for such Project.]





3.2 The fee payable to Development Manager in connection with the Project shall be payable in
equal monthly installments over the period for the Project development as set forth in the
Construction Schedule for the Project. Development Manager shall not be reimbursed for any
employee costs, overhead costs or office equipment, stationery, postage, telephone, bank charges,
travel and all other administration expenses.




 




	*	 	The confidential information contained herein has been omitted and
separately filed with the staff.





 


9









 





ARTICLE IV




Compliance With Laws




4.1 Generally. Development Manager and Owner shall each comply with and abide by (and
shall cause all contractors on the Improvements to comply with and abide by) all Laws with respect
to the Project, all at Owner’s expense unless such failure is the result of a breach of Development
Manager’s obligations hereunder. If Development Manager receives any notice of a violation of any
Law with respect to the Project, Development Manager shall promptly notify Owner and furnish copies
of such notice and provide Owner with a budget to remedy the violation, which budget shall require
Owner’s approval. The cost to cure shall become part of Total Project Costs for the Project.
Development Manager shall remedy the noncompliance and use commercially reasonable efforts to avoid
any penalty to which Owner may be subject by reason of the noncompliance and except (A) with
respect to non-compliance resulting from actions or omissions by Owner or for which Owner is
responsible, (B) with respect to non-compliance which results from changes in applicable Law which
take effect after Owner’s approval of the Final Project Budget, and (C) to the extent the cost to
remedy plus any penalties results in a Cost Overrun for the Project (unless such Cost Overruns are
required to cure a breach by Development Manager of its obligations under this Section 4.1),
Development Manager shall promptly fund the cost of the same. Development Manager shall provide
Owner with evidence that the noncompliance has been remedied.



4.2 Environmental Matters. Except only for such of its employees, if any, as are
fully qualified to do so, Development Manager shall not direct, suffer or permit any of its
employees to at any time handle, use, manufacture, store or dispose of any Hazardous Materials by
or under any Environmental Laws in or about the Improvements, nor shall Development Manager suffer
or permit to the extent within Development Manager’s reasonable control, any Hazardous Materials to
be used in any manner not fully in compliance with all Environmental Laws or for any Hazardous
Materials to be present in the Improvements at levels or in a manner which exceeds a relevant
standard or otherwise requires remediation under Environmental Laws (“Contamination”).
Notwithstanding the foregoing, Development Manager may handle, store, use or dispose of Hazardous
Materials to the extent customary and necessary for the performance of Development Manager’s duties
hereunder, provided that Development Manager shall always handle, store, use and dispose of any
such Hazardous Materials in a safe and lawful manner and never allow Contamination of the Property.
Furthermore, to the extent Contamination exists in any Improvements, Development Manager, at
Owner’s expense, unless Development Manager has breached this Agreement relative to its obligations
hereunder pertaining to Hazardous Materials, shall be responsible for the proper remediation of
such Contamination in accordance with a remediation plan approved by Owner and in accordance with
all applicable laws, ordinances and codes, employing approved contractors and requiring that any
Hazardous Materials removed from the site be disposed of in compliance with all applicable laws.


 


10









 





4.3 Environmental Indemnification. Development Manager shall protect, defend,
indemnify and hold Owner and its officers, partners, members, managers, employees and agents
harmless from and defend them against any and all loss, claims, liability or costs (including,
without limitation, court costs and attorney’s fees) incurred by reason of any failure of
Development Manager to fully comply with all applicable Environmental Laws or other governmental
requirements with respect to the Project unless such failure is a result of Owner, after written
notice, not making funds available therefor, or except to the extent approved by
Owner, the presence, handling, use or disposition in or from the Improvements of any
Hazardous Materials (even though permissible under all applicable Environmental Laws) caused by
Development Manager (expressly excluding any pre-existing condition). The provisions of this
Section shall survive the termination of this Agreement only with respect to any claims or
liability arising from or related to actions occurring prior to such termination. The acceptance
by or on behalf of Owner, or failure by or on behalf of Owner to object to, any Services performed
by or for Development Manager shall not supersede or diminish any obligation or duty of Development
Manager with respect to such Services or render Owner or its respective officers, partners,
members, managers, employees and agents, responsible for any injury or damage suffered by any party
arising out of any act or omission of Development Manager or any subcontractor or sub-subcontractor
in the performance of such Services. Notwithstanding the foregoing, Development Manager shall not
be answerable for the default or misconduct of any environmental consultant, contractor or
engineer, if such environmental consultant, contractor or engineer were selected and retained by
the Development Manager with the same care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a similar capacity and familiar with those matters
would use in the conduct of a similar enterprise with similar aims and in accordance with this
Agreement, unless the Development Manager knowingly participates in such default or misconduct or
fails to take reasonable remedial action, or through negligence in the performance of its own
specific responsibilities hereunder has enabled such default or misconduct to occur.



ARTICLE V




Accounting and Financial Matters




5.1 Books and Records. Development Manager shall keep or cause to be kept at the
Development Manager’s place of business suitable records necessary with regard to the Services
provided hereunder, including all contracts and sub-contracts and one original of each contract and
any other agreement relating to the development of the Property. Such records shall be open to
inspection by Owner or its representatives at any reasonable time. Upon the effective termination
date of this Agreement, all of such records shall be delivered to Owner.


 


11









 





ARTICLE VI




Insurance and Indemnity




6.1 Indemnification of Owner. Development Manager shall indemnify and defend Owner
and its Affiliates, together with the past, present and future shareholders, beneficiaries,
directors, trustees, partners, members, officers, agents and employees of each of them, against and
hold Owner and such other entities and persons harmless from any and all losses, costs, claims,
damages, liabilities and expenses, including, without limitation, reasonable attorneys’ fees,
arising directly or indirectly out of (i) any default by Development Manager under the provisions
of this Agreement, or (ii) any negligence or willful misconduct of Development Manager or any of
its agents or employees, in connection with this Agreement or Development Manager’s services or
work hereunder, whether within or beyond the scope of its duties or authority hereunder. The
provisions of this Section 6.1 shall survive the termination of this
Agreement only with respect to claims arising from or related to actions occuring prior to the
termination hereof. Notwithstanding the foregoing, Development Manager shall not be answerable for
the default or misconduct of any agent, consultant, contractor, engineer, attorney, accountant or
bookkeeper or other professional, if any such agent, consultant, contractor, engineer, attorney,
accountant or bookkeeper or other professional shall have been selected and retained by the
Development Manager with the same care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent person acting in a similar capacity and familiar with those matters would
use in the conduct of a similar enterprise with similar aims and in accordance with this Agreement,
unless the Development Manager knowingly participates in such default or misconduct or fails to
take reasonable remedial action, or through negligence in the performance of its own specific
responsibilities hereunder has enabled such default or misconduct to occur.



6.2 Indemnification of Development Manager. Owner shall indemnify and defend
Development Manager and its Affiliates together with the past, present and future shareholders,
directors, trustees, beneficiaries, partners, members, officers, agents and employees of each of
them, against and hold Development Manager and such other entities and persons harmless from any
and all losses, costs, claims, damages, liabilities and expenses, including, without limitation,
reasonable attorneys’ fee, arising directly or indirectly out of (i) any default by Owner under the
provisions of this Agreement, or (ii) any negligence or willful misconduct of Owner or any of its
partners (other than a partner that is an Affiliate of Development Manager), in connection with its
obligations under this Agreement. The provisions of this Section 6.2 shall survive the
termination of this Agreement.



6.3 Development Manager’s Insurance Responsibility. Development Manager shall
maintain or cause to be maintained, at its sole cost and expense, (i) all legally required
insurance coverage relating to its employees, including, but not limited to, Workers Compensation,
Employer’s Liability and Non-Occupational Disability Insurance, (ii) commercial general liability
with a per occurrence limit of not less than $1,000,000 and $2,000,000 general aggregate; and (iii)
business auto liability with a per accident limit of not less than $1,000,000 overing all owned,
non-owned and hired vehicles used in connection with the Improvements.


 


12









 





6.4 Evidence of Insurance. In the event General Partner is no longer the general
partner of Owner, Development Manager will provide Owner with certificates of insurance or other
satisfactory documentation which evidence that the insurance required under this Agreement is in
full force and effect at all times. Policies required to be obtained hereunder shall name Owner as
an additional insured party and must be endorsed to provide that thirty (30) days’ advance written
notice of cancellation or material change will be given to Owner and Manager. All policies to be
obtained pursuant to this Article VI shall contain waivers of subrogation rights, to the
extent readily available for a minimal additional premium. Owner and Development Manager hereby
waive any and all claims and causes of action against each other to the extent covered by
insurance. All insurance required to be carried by Development Manager, any contractor or
subcontractor shall be written with companies having a rating in the Best’s Key Rating Guide of A:
VIII or better and reasonably acceptable to Owner which companies shall be licensed to do business
in the State where the Improvements are located; provided that if
Construction Lender requires higher standards for insurance than those set forth in this
sentence, all insurance shall comply with such higher standards.



6.5 Contract Documents. Development Manager shall cause to be inserted in any
contract in connection with the Improvements provisions to the effect that the other contracting
party shall indemnify and save harmless Development Manager and Owner from and against all claims,
losses and liability resulting from any damage to the Improvements or injury to, or death of,
persons caused or occasioned by or in connection with or arising out of any action or omissions of
said contracting party or its employees or agents, and from and against all costs, fees, and
attorneys expenses in connection therewith.



6.6 Contractor’s and Subcontractors’ Insurance. Prior to permitting any contractor
(or subcontractor hired by Development Manager) to enter upon the Improvements, or any part
thereof, to commence any work therein, and for the duration of the contract, the Development
Manager shall use commercially reasonable efforts to obtain copies of such contractor’s or
subcontractor’s insurance as follows:




Worker’s Compensation, Employer’s Liability, Automobile Liability and Commercial General
Liability Insurance (including blanket contractual coverage), the last named policy to
include the interests of the Owner and Development Manager as additional insureds and for
not less than a combined single limit of $2,000,000 per occurrence bodily injury and
property damage, unless lower limits are approved beforehand by Owner.




6.7 Development Manager’s Duties in Case of Loss. Development Manager shall:




	 	(a)	 	notify Owner of any fire or other damage to the Improvements,
Owner to arrange for an insurance adjuster to view the Improvements before
repairs are started, but in no event shall Development Manager settle any
losses, complete loss reports, adjust losses or endorse loss drafts without
Owner’s prior consent; and






	 	(b)	 	promptly notify Owner of any personal injury or property damage
occurring to or on the Improvements.





 


13









 









ARTICLE VII




Notices




7.1 All Notices. Any notice, request, demand, instruction or other communication to
be given to either party hereunder, except those required to be delivered at the Closing, shall be
in writing, and shall be deemed to be delivered (a) upon receipt, if delivered by facsimile, (b)
upon receipt if hand delivered, (c) on the first business day after having been delivered to a
national overnight air courier service, or (d) three business days after deposit in registered or
certified mail, return receipt requested, addressed as follows:



	 	 	 	 	 
	 

	 	If to Owner:
	 	Liberty Washington, LP

c/o Liberty Property Trust

500 Chesterfield Parkway

Great Valley Corporate Center

Malvern, Pennsylvania 19355

Attention: Michael T. Hagan

Chief Investment Officer

Fax: 610-644-4129
	 
	 	 	 	 
	 

	 	with additional copies to:
	 	New York State Common Retirement Fund

c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Deputy Counsel

Fax No.: 212-681-1331

Telephone No.: 212-383-1508
	 
	 	 	 	 
	 

	 	with additional copies to:
	 	New York State Common Retirement Fund

c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Deputy Counsel

Fax No.: 212-681-1331

Telephone No.: 212-383-2509
	 
	 	 	 	 
	 

	 	with additional copies to:
	 	Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Jerome Claeys

Fax No.: 312-251-5445

Telephone No.: 312-541-6740






 


14









 





	 	 	 	 	 
	 

	 	and with additional copies to:
	 	Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Anthony Ferrante

Fax No.: (312) 541-6789

Telephone No.: (312) 251-5458
	 
	 	 	 	 
	 

	 	and with additional copies to:
	 	Cox, Castle & Nicholson LLP

2049 Century Park East, 28th Floor

Los Angeles, CA 90067-3284

Attn: Amy H. Wells, Esq.

Fax No.: 310-277-7889

Telephone No.: 310-284-2233
	 
	 	 	 	 
	 

	 	If to Development Manager:
	 	Liberty Property Limited Partnership

c/o Liberty Property Trust

500 Chesterfield Parkway

Great Valley Corporate Center

Malvern, Pennsylvania 19355

Attention: Mr. Michael T. Hagan

Fax: 610-644-4129
	 
	 	 	 	 
	 

	 	and with additional copies to:
	 	Wolf, Block, Schorr and Solis Cohen LLP

1650 Arch Street, 22nd Floor

Philadelphia, Pennsylvania 19103-2097

Attention: Herman C. Fala, Esq.

Fax: 215-405-2976






ARTICLE VIII




Assignment




8.1 This Agreement may be assigned by Development Manager to an Affiliate of Development
Manager without Owner’s prior written consent, provided such assignment shall not release
Development Manager from liability hereunder. Any purported assignment or delegation of
Development Manager’s duties to a non-Affiliate entity without Owner’s consent shall be void and of
no effect. In the event Owner sells the Improvements and seeks to assign this Agreement to the
purchaser, Development Manager shall have the option to terminate this Agreement as of the date of
such purchase.


 


15









 





ARTICLE IX




Relationship of Parties




9.1 Nature of Relationship. In taking any action pursuant to this Agreement,
Development Manager will be acting only as independent contractor, with authority to act in
accordance with the terms of this Agreement and nothing explicit or implied in this Agreement shall
be construed as creating a partnership or joint venture or agency or an employment relationship
between Development Manager (or any person employed by Development Manager) and Owner or any other
relationship between the parties hereto except that of Owner and independent contractor.
Development Manager acknowledges and agrees that it shall act as an independent contractor
hereunder with respect to Owner in connection with Development Manager’s obligations under this
Agreement. In the event that for any reason Development Manager is deemed to be the agent of
Owner, such agency shall be deemed coupled with an
interest in Owner (consisting only of the interest in Owner then held by the General Partner
that is an Affiliate of Development Manager) and irrevocable.



9.2 Communications Between Parties. Owner relies on Development Manager to direct and
control all construction at the Improvements; provided, however, Owner reserves the right to
communicate directly with the contractor and sub-contractors, Development Manager’s accountant or
accountants working on Improvements and all tenants and all other parties contracting with Owner
with respect to the Improvements.



9.3 Confidentiality. Development Manager shall maintain the confidentiality of all
matters pertaining to this Agreement, except as may be required by law; provided, however, that
Development Manager shall not be in breach of its obligations under this Agreement or any other
obligations or duties to Owner, or its partners, at law or in equity (whether under a theory of
fiduciary duty or otherwise) if Development Manager or its Affiliates files this Agreement (and
some or all of the exhibits hereto) as an exhibit to a filing it may make with the Securities
Exchange Commission or makes disclosures regarding the transactions governed by this Agreement to
the extent Development Manager or its Affiliates reasonably believe necessary to enable Development
Manager or its Affiliates to comply with federal and state securities laws and the regulations of
the Securities Exchange Commission, the rules of any stock exchange, or in connection with any
filing or registration made by Liberty Property Trust, an Affiliate of Development Manager, as the
issuer of publicly traded securities, or as part of information provided to its investors and/or
financial analysts.


 


16









 





ARTICLE X




Defaults and Termination




10.1 Default by Development Manager. Development Manager shall be deemed to be in
default hereunder in the event: (i) Development Manager shall fail to keep, observe or perform any
covenant, agreement, term or provision of this Agreement to be kept, observed or performed by the
Development Manager and such default shall continue for a period of thirty (30) days after notice
thereof by Owner to Development Manager, which notice shall to the extent information is reasonably
available to Owner specify the nature of the default and possible cures thereof, provided that,
unless such failure is not susceptible to cure, if within such thirty (30) day period Development
Manager commences curing and continues diligently to cure such failure, then Development Manager
shall have a total of ninety (90) days in which to cure such failure; (ii) a receiver is appointed
to take possession of the assets of Development Manager or a general assignment by Development
Manager for the benefit of creditors, or any action taken or suffered by Development Manager under
any insolvency, bankruptcy, reorganization, moratorium, or other debtor-relief act or statute; or
(iii) the dissolution of Development Manager. Upon the occurrence of an event of default by
Development Manager, and, with respect to (i) above, if General Partner is no longer the general
partner of Owner, Owner shall be entitled to terminate this Agreement, effective ten (10) days
after notice to Development Manager of Owner’s intention to terminate this Agreement, and upon any
such termination, Owner shall have the right to pursue any remedy it may have at law or in equity.



10.2 Default by Owner. Owner shall be deemed to be in default hereunder in the event:
(i) Owner shall fail to keep, observe or perform any covenant, agreement, term or provision of this
Agreement to be kept, observed or performed by the Owner and such default shall continue for a
period of (A) ten (10) days in the case of a monetary default or (B) thirty (30) days for a
non-monetary default after notice thereof by Development Manager to Owner, which notice shall to
the extent information is reasonably available to Development Manager specify the nature of the
default and possible cure thereof, provided that, unless such failure is not susceptible to cure,
if within such thirty (30) day period for a non-monetary default Owner commences curing and
continues diligently to cure such failure, then Owner shall have a total of ninety (90) days in
which to cure such failure; (ii) a receiver is appointed to take possession of the assets of Owner
or an assignment by Owner for the benefit of creditors, or any action taken or suffered by Owner
under any insolvency, bankruptcy, reorganization, moratorium, or other debtor-relief act or
statute; or (iii) of the dissolution of Owner. Upon the occurrence of an event of default by
Owner, Development Manager shall be entitled to terminate this Agreement, effective ten (10) days
after notice to Owner of Development Manager’s intention to terminate this Agreement, and upon any
such termination, Development Manager shall have the right to pursue any remedy it may have at law
or in equity.



10.3 Certain Rights of NYSCRF. In the event that Developer and/or the general partner
of Owner are the subject of a bankruptcy proceeding or similar proceeding in insolvency (including
receivership or the making of an assignment for the benefit of creditors), and if by reason of such
proceeding the New York State Common Retirement Fund (“NYSCRF”) in its capacity as a limited
partner of Owner, is unable to exercise its rights under Section 6.18 of the Owner’s Agreement of
Limited Partnership (respecting the enforcement of remedies under this Agreement) NYSCRF shall be
deemed to be a third party beneficiary of this Agreement solely for the purpose of enforcing the
remedies of the Owner set forth in Section 10.1 above. This Section 10.3 shall be void and of no
further force or effect if, as and when NYSCRF is no longer a limited partner in Owner.


 


17









 





10.4 Orderly Transition. In the event of any termination of this Agreement,
Development Manager shall use its commercially reasonable efforts to effect an orderly transition
of development of the Property to Owner or an agent designated by Owner and to cooperate with
Owner, at Owner’s expense, or such agent.



10.5 Final Settlement of Accounts. Upon the termination of this Agreement,
Development Manager promptly shall:



10.5.1 account for all fees and reimbursements owing to Development Manager to the date of
termination, whereupon Owner shall pay all such sums to Development Manager;



10.5.2 deliver to Owner or to such other person as Owner shall designate, all materials,
supplies, equipment, keys, original leases, contracts, documents, books and records pertaining to
this Agreement and the Property, to the extent belonging to Owner; and



10.5.3 assign without warranty or recourse existing contracts and permits in the name of
Development Manager relating to the Property to Owner or to such party as Owner shall designate.



ARTICLE XI




Miscellaneous




11.1 Governing Law. This Agreement shall be construed and enforceable in accordance
with the laws of the State of Delaware.



11.2 Entire Agreement. This Agreement contains the entire agreement between the
parties and the same shall not be amended, modified or canceled except in writing signed by the
party to be charged.




11.3 Time of Essence. Time is of the essence of this Agreement.



11.4 Successors and Assigns. All terms, conditions and agreements herein set forth
shall inure to the benefit of, and be binding upon the parties and their respective permitted
successors and assigns.



11.5 Waiver. The failure of either party to insist upon strict performance of any
term or provision of this Agreement or to exercise any option, right or remedy herein contained,
shall not be construed as a waiver or as a relinquishment for the future of such term, provision,
option, right or remedy, but the same shall continue and remain in full force and effect. No
waiver by either party of any term or provision hereof shall be deemed to have been made unless
expressed in writing and signed by such party.


 


18









 





11.6 Partial Invalidity. If any portion of this Agreement shall be decreed invalid by
the judgment of a court, this Agreement shall be construed as if such portion had not been inserted
herein except when such construction would constitute a substantial deviation from the general
intent and purpose of this Agreement.



11.7 ERISA and Unrelated Business Taxable Income. Development Manager agrees to use
commercially reasonable efforts to act in accordance with the fiduciary standards of the ERISA, to
the extent Development Manager is subject thereto as a result of services rendered pursuant to this
Agreement. Development Manager shall use its reasonable efforts to avoid taking any action that
would generate unrelated business taxable income under the Code for any of the partners of the
Owner. Development Manager shall abide by any and all procedures established by Owner to avoid
prohibited transactions under ERISA and unrelated business taxable income under the Code.



11.8 Limitation on Owner’s Liability. The obligations of Owner are intended to be
binding only on the assets of the Owner and shall not be personally binding upon, nor shall any
resort be had to, the private properties of its constituent partners, directors, shareholders,
trustees, beneficiaries, officers, members or managers, or any employees or agents of any of them.



11.9 Limitation on Development Manager’s Liability. The obligations of Development
Manager are intended to be binding only on the assets of the Development Manager and shall not be
personally binding upon, nor shall any resort be had to, the private properties of its
shareholders, trustees, beneficiaries, directors, officer, employees or agents provided, however,
the Owner shall retain the right, after notice to the Development Manager, to offset any amounts
claimed against Development Manager hereunder against amounts due General Partner under the
Partnership Agreement, provided if there is any dispute as to whether the claim against Development
Manager is valid the amount sought to be withheld shall be escrowed until the first to occur of the
matter being resolved or Development Manager, after written notice from Owner, no longer contesting
the validity of the claim with the interest earned thereon being paid to the party who is
ultimately determined to be entitled to the amount claimed or if it is determined that each party
is entitled to a portion of the amount in dispute, prorata based on the amount paid to each.



11.10 Non-Discrimination Policy. Development Manager agrees that it will not deny the
benefits of this Agreement to any person, nor discriminate against any employee or applicant for
employment because of race, color, religion, sex, national origin, age or any other applicable
protected classification. Development Manager will take affirmative action to insure that the
evaluation and treatment of employees are free from such discrimination. Development Manager,
unless exempt, further agrees to abide by the terms of all applicable Federal, state and local
non-discrimination provisions, including but not limited to 41 CFR Sec. 60-1.4, such
non-discrimination provisions being incorporated herein by reference. Development Manager shall
include this Non-Discrimination Policy clause in the contract with the General Contractor, and
shall direct the General Contractor to cause such clause to be included in all subcontracts to do
work under this Agreement, and will notify all labor organizations with which it has a collective
bargaining agreement of the obligations hereunder.


 


19









 





11.11 Development Manager’s Representations and Warranties. To the extent any
representation, warranty or other statement contained in this Section 11.11 only is limited
by the phrase “to the knowledge of” or other words of similar import, it shall mean the actual
knowledge of [Michael Hagan, Chief Investment Officer and Richard Casey, Director of Due
Diligence], each without any additional inquiry. Development Manager represents and warrants to
Owner as follows:




(a) Existence; Authority. The execution and delivery of, and Development
Manager’s performance under, this Agreement are within Development Manager’s powers and have
been duly authorized by all requisite action. This Agreement constitutes the legal, valid
and binding obligation of Development Manager, enforceable in accordance with its terms,
subject to laws applicable generally to creditor’s rights. Performance of this Agreement by
Development Manager will not result in any breach of, or constitute any default under, or
result in the imposition of any lien or encumbrance upon the Improvements under any
agreement or other instrument to which Development Manager is a party or by which
Development Manager is bound.




(b) Litigation; No Consent. There is no pending or, to Development Manager’s
knowledge, threatened litigation or administrative proceedings which could
materially and adversely affect the ability of Development Manager to perform any of
its obligations hereunder. No consent or approval of any person or entity or of any
governmental authority is required with respect to the execution and delivery of this
Agreement by Development Manager or the consummation by Development Manager of the
transactions contemplated hereby or the performance by Development Manager of its
obligations hereunder.



ARTICLE XII

Definitions




12.1 “Affiliate” means, when used with reference to a specific Person, any Person
directly or indirectly controlling, controlled by, or under common control with the Person in
question. As used in this definition, the terms “controlling”, “controlled” and “control” mean the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by contract, or
otherwise.



12.2 “Architect” means, for any Improvements to be constructed on the Property, an
architect selected by Development Manager and approved by Owner.




12.3 “Code” means the Internal Revenue Code of 1986, as amended.


 


20









 





12.4 “Construction Contracts” mean all contracts and purchase orders with the General
Contractor, including the GMP Contracts, and specialty trade contractors and suppliers as necessary
to cause the construction of the Improvements.



12.5 “Construction Lender” means the lender which provides the Construction Loan for
the Project.



12.6 “Construction Loan” means the loan which provides the funds necessary to pay for
construction of the Improvements forming part of the Project.



12.7 “Construction Schedule” means the schedule for completion of the various stages
of the Work under the various GMP Contracts for the Project to be prepared by the Development
Manager and shall include therein each major event expected during the construction of the
applicable Improvements.



12.8 “Cost Overruns” mean all cost to complete the Improvements comprising a
particular Project, including all amounts expended under the applicable GMP Contracts (but
excluding financing fees and interest expended for the applicable Construction Loan, real estate
taxes, legal fees and insurance costs, and tenant improvement and leasing commission costs), in
excess of the sum of (i) such costs as shown in the Final Project Budget for Hard Costs and Soft
Costs for the Project, and (ii) the amounts remaining in the Hard Cost Contingency for the Project,
respectively.



12.9 “DC Metropolitan Area” has the meaning ascribed to it in the Partnership
Agreement.




12.10 “Development Manager” means Liberty Property Limited Partnership.



12.11 “Environmental Laws” means all Federal, state and local laws and ordinances
relating to the protection of the environment or the keeping, use or disposition of Hazardous
Materials, substances, or wastes, presently in effect or hereafter adopted, all amendments thereto,
and all rules and regulations issued pursuant to any of the foregoing.




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



12.13 “Final Plans and Specifications” means the plans and specifications submitted
pursuant to Section 2.1.2(a) for the construction of the Improvements comprising the
Project, as approved by Owner.



12.14 “Final Project Budget” means the final project budget, as approved by Owner, for
completion of the applicable Improvements in accordance with the Final Plans and Specifications for
the Project.


 


21









 





12.15 “General Contractor” means the entity selected by the Development Manager to
serve as general contractor for the Project.



12.16 “General Partner” means Liberty Washington Venture, LLC, a Delaware limited
liability company.



12.17 “GMP Contract” means each of the guaranteed maximum price contracts to be
entered into with the General Contractor for portions of the Work.



12.18 “Hard Costs” means the costs shown in the Final Project Budget for all Work to
be performed to construct and complete the applicable Improvements, including (but not limited to)
the various GMP Contracts.



12.19 “Hard Cost Contingency” means the amount shown as such in the preliminary
project budget to cover Hard Costs in excess of those shown in the Final Project Budget for the
Work to be performed under the various GMP Contracts for the Project.



12.20 “Hazardous Materials” means any flammable, explosives, radioactive materials,
hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum
products or derivatives or any substance subject to regulation pursuant to Environmental Laws.



12.21 “Law” or “Laws” means all laws, ordinances, statues, rules, regulations and
codes pertaining to the Improvements, including any determinations of all Federal, state, county or
municipal authorities having jurisdiction over the Improvements.



12.22 “Owner” means                                         .



12.23 “Partnership Agreement” means the Agreement of Limited Partnership of Liberty
Washington, LP dated                     , 2007, as amended from time to time, establishing the Owner.



12.24 “Permitted Changes” means those changes in the Work from what is called for
under the Final Plans and Specifications for the Project and which are either deemed authorized
under this Agreement or are otherwise approved in writing by Owner.



12.25 “Project” means (i) the development and construction of the Improvements on the
Property.



12.26 “Purchase Agreement” means the Contribution Agreement dated                     ,
2007, among Owner, Liberty Property Limited Partnership (“LPLP”) and New York State Common
Retirement Fund.



12.27 “Services” means the development management services described in Article
II.


 


22









 





12.28 “Soft Costs” means the costs shown in the Final Project Budget for all costs
that are not Hard Costs for the Project, such as leasing fees, financing costs, and interest on the
applicable Construction Loan.



12.29 “Total Project Costs” means all actual costs for the construction of the
applicable Improvements in accordance with the Final Plans and Specifications for the Project and
lease-up of the Improvements, including all Hard Costs and Soft Costs actually incurred.



12.30 “Work” means all construction and other activities required under the
Construction Contracts for the Project, including all labor, materials, equipment and other
services to be furnished thereunder to complete the Improvements in accordance with the applicable
Final Plans and Specifications.


 


23









 





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



OWNER:



	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	DEVELOPMENT MANAGER:	 	 
	 
	 	 	 	 	 	 
	LIBERTY PROPERTY LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	By:	 	Liberty Property Trust,	 	 
	 	 	its general partner	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






 


24









 





EXHIBIT A




LEGAL DESCRIPTION OF

THE PROPERTY




 


25









 







EXHIBIT B




FORM OF COMPLETION GUARANTY




COMPLETION GUARANTY




THIS COMPLETION GUARANTY (this “Guaranty”), made as of the     day of                     , 200   , by
LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership, with a mailing address of
500 Chesterfield Parkway, Malvern, Pennsylvania 19355 (“Guarantor”), to and for the benefit of
                                        , (“Owner”), with a mailing address of 500 Chesterfield Parkway,
Malvern, Pennsylvania 19355.



WITNESSETH:




WHEREAS, Owner and Guarantor entered into a Development Management Agreement dated                     ,
2007 (the “Agreement”), pursuant to the terms of which Guarantor has agreed to develop Improvements
on the Property. A copy of the Agreement is attached as Exhibit A hereto and made a part
hereof. All capitalized terms used in this Guaranty and not otherwise defined herein shall have
the meanings ascribed to such terms in the Agreement; and



WHEREAS, pursuant to the requirements of Section 2.7 of the Agreement, Guarantor is providing
this Guaranty for the benefit of Owner with respect to the development of the Project.



NOW, THEREFORE FOR VALUE RECEIVED, and in consideration of the foregoing Recitals and for
other good and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:



AGREEMENTS





1. Completion Guaranty.



(a) Guarantor hereby unconditionally guarantees: (i) the lien-free completion of the Work (1)
on the Project substantially in accordance with the Final Plans and Specifications therefor; and
(2) on or before the completion date set forth in the Construction Schedule for the Project; (ii)
the payment of all Cost Overruns (subject to the limitations set forth in Section 2.2 of the
Agreement) and (iii) payment to Owner of all costs incurred by Owner as a result of Development
Manager’s breach of the Agreement (including but not limited to costs incurred by Owner as a result
of Development Manager’s negligent acts or omissions) (collectively the “Guaranteed Liabilities”).
For purposes hereof, Cost Overruns shall not include costs incurred due to subsurface conditions at
the Property of an unusual nature, unusually severe weather conditions, labor disputes (unless
resulting from company-wide labor difficulties specific to Guarantor and its affiliates),
unavailability of materials or labor (unless resulting from Guarantor’s lack of reasonable
diligence in ordering or procuring same), war, terrorism or acts of God, or other matters beyond
the reasonable control of Guarantor (“Force Majeure”)


 


26









 





(b) Guarantor further agrees to pay all expenses legal and/or otherwise (including but not
limited to court costs and reasonable attorneys’ fees and expenses), paid or incurred by Owner in
endeavoring to collect the Guaranteed Liabilities, or any part hereof, or in enforcing this
Guaranty or in defending any suit based on any act of commission or omission of Owner with respect
to this Guaranty or in connection with any Recovery Claim (as hereinbelow defined) (the
“Enforcement Costs”). The Guaranteed Liabilities and the Enforcement Costs are collectively
referred to as the “Guaranteed Obligations.”



(c) Notwithstanding Section 1(a) above, Guarantor’s obligation to perform the Guaranteed
Obligations is subject to Force Majeure and is conditioned on Owner advancing or causing to be
advanced on a monthly or other basis as required under the general construction contract or the
Development Management Agreement: (i) all Project Costs as set forth in the Project Budget, and
(ii) all increases in the Project Costs resulting from (A) change orders or other changes in the
Work initiated or approved by Owner (other than change orders approved by Owner, where such change
orders are intended to cure a breach by Guarantor of its obligations under the Development
Management Agreement), (B) any breach by Owner of its obligations under the Development Management
Agreement or general construction contract or other actions of Owner that result in increased costs
of the Work or delays in completion thereof, and (C) Force Majeure; provided that so long as
Liberty Washington Venture, LLC (“General Partner”) is the general partner of Liberty Washington,
LP (the “Joint Venture”), the failure of General Partner to fund its share of the amounts described
in clauses (i) and (ii) above (in accordance with the provisions of the Joint Venture’s partnership
agreement) shall not relieve Guarantor of its obligations under this Guaranty.



2. Continuing Guaranty. This Guaranty includes any and all Guaranteed Obligations
arising under successive transactions entered into between Owner and Guarantor continuing,
compromising, extending, increasing, modifying, releasing, or renewing the Guaranteed Obligations
or other terms and conditions thereof, or creating new or additional Guaranteed Obligations after
prior Guaranteed Obligations have been satisfied in whole or in part. To the maximum extent
permitted by law, Guarantor hereby waives any right to revoke this Guaranty.



3. Termination of Guaranty. In the event that the Agreement is terminated for any
reason, this Guaranty shall automatically terminate contemporaneously therewith; provided, however,
that Guarantor shall remain liable for any Guaranteed Liabilities which arise prior to the
termination of the Agreement.



4. Primary Obligations. This Guaranty is a primary and original obligation of
Guarantor, is not merely the creation of a surety relationship, and is an absolute, unconditional,
and continuing guaranty of payment and performance which shall remain in full force and effect
without respect to future changes in conditions, including any change of law, subject to Paragraph
1(c) above. Guarantor agrees that its liability hereunder shall be immediate and shall not be
contingent upon the exercise or enforcement of any lien or realization upon any security or
collateral Owner may at any time possess. Guarantor consents and agrees that Owner shall be under
no obligation to marshal any assets of Guarantor or any other guarantor in favor of Guarantor, or
against or in payment of any or all of the Guaranteed Obligations.


 


27









 






5. Waivers.



(a) Guarantor hereby waives: (1) notice of acceptance hereof; (2) notice of the amount of the
Guaranteed Obligations, subject, however, to Guarantor’s right to make inquiry of Owner to
ascertain the amount of the Guaranteed Obligations at any reasonable time; (3) notice of any fact
that might increase Guarantor’s risk hereunder; (4) notice of presentment for payment, demand,
protest, and notice thereof as to any promissory notes or other instruments, writing or agreements
evidencing Guaranteed Obligations; and (5) all other notices (except if such notice is specifically
required to be given to Guarantor hereunder) and demands to which Guarantor might otherwise be
entitled.



(b) Guarantor hereby waives: (1) any rights to assert against Owner any defense (legal or
equitable), setoff, counterclaim, or claim which Guarantor may now or at any time hereafter have
against any party liable to Owner (other than the defense that the Guaranteed Obligations shall
have been fully and finally performed and indefeasibly paid); (2) any defense, setoff,
counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or
future lack of enforceability of the Guaranteed Obligations; and (3) the benefit of any statute of
limitations affecting Guarantor’s liability hereunder or the enforcement thereof, and any act which
shall defer or delay the operation of any statute of limitations applicable to the Guaranteed
Obligations shall similarly operate to defer or delay the operation of such statute of limitations
applicable to Guarantor’s liability hereunder. Without limiting the generality of the foregoing or
any other provisions of this Guaranty, Guarantor agrees that this Guaranty shall not be discharged,
limited, impaired or affected by the operation of any present or future provision of the United
States Bankruptcy Code or similar statute, or from the decision of any court, including, but not
limited to, any proceedings with respect to the voluntary or involuntary liquidation, dissolution,
sale or other disposition of all or substantially all the assets, the marshalling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, imposition or readjustment of, or other similar proceeding affecting
Guarantor or any guarantors of the Guaranteed Obligations or any of their respective assets, it
being expressly understood and agreed that no such proceeding shall affect, modify, limit or
discharge the liability or obligation of Guarantor hereunder in any manner whatsoever, and that
Guarantor shall continue to remain absolutely liable under this Guaranty to the same extent, and in
the same manner, as if such proceeding had not been instituted.



6. Releases. No release or discharge of any other guarantor, or of any other person
or entity, whether primarily or secondarily liable for or obligated with respect to the Guaranteed
Obligations, or the institution of bankruptcy, receivership, insolvency, reorganization,
dissolution or liquidation proceeding by or against any other guarantor or any other person or
entity, or the entry of any restraining or other order in any such proceeding, shall release or
discharge Guarantor, any other guarantor of the Guaranteed Obligations, or any other person, firm
or corporation liable to Owner of the Guaranteed Obligations, unless and until all of the
Guaranteed Obligations shall have been fully performed and paid.


 


28









 





7. Recovery Claim. Should a claim (“Recovery Claim”) be made upon Owner at any time
for recovery of any amount received by Owner in payment of the Guaranteed Obligations (whether
received from Guarantor pursuant hereto, or otherwise) and should Owner
repay all or part of said amount by reason of (a) any judgment, decree, or order of any court
or administrative body having jurisdiction over Owner or any of its property; or (b) any reasonable
settlement or compromise of any such Recovery Claim effected by Owner with the claimant, Guarantor
shall remain liable to Owner of the amount so repaid to the same extent as if such amount had never
originally been received by Owner, notwithstanding any termination hereof or the return of this
document to Guarantor.




8. Omitted.



9. Payments; Application. All payments to be made hereunder by Guarantor shall be
made in lawful money of the United States of America at the time of payment, shall be made in
immediately available funds, and shall be made without deduction (whether for taxes or otherwise)
of offset. All payments made by Guarantor hereunder shall be applied as follows; first, to all
cost and expenses (including, but not limited to, reasonable attorney’s fees, expenses and court
costs) incurred by Owner in enforcing this Guaranty or in collecting the Guaranteed Obligations;
second, to all accrued and unpaid interest and fees owing to Owner constituting Guaranteed
Obligations, if any; and third, to the balance of the Guaranteed Obligations.



10. Notices. Any notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth above, and shall be deemed to be
delivered (a) upon receipt, if delivered by facsimile, (b) upon receipt if hand delivered, (c) on
the first business day after having been delivered to a national overnight air courier service, or
(d) three business days after deposit in registered or certified mail, return receipt requested.
Except as otherwise specifically required herein, notice of the exercise of any right or option
granted to Owner by this Guaranty is not required to be given.



11. Cumulative Remedies. No remedy under this Guaranty is intended to be exclusive of
any other remedy, but each and every remedy shall be cumulative and in addition to any and every
remedy given hereunder and those provide by law or in equity. No delay or omission by Owner to
exercise any right under this Guaranty shall impair any such right nor be construed to be a waiver
thereof. No failure on the part of Owner to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any other right.



12. Interpretation and Severability of Provisions. The headings of sections and
paragraphs in this Guaranty are for convenience of reference only and shall not be construed in any
way to limit or define the content, scope or intent of the provisions hereof. As used in this
Guaranty, the singular shall include the plural, and masculine, feminine and neuter pronouns shall
be fully interchangeable, where the context so requires. Whenever the words “including”,
“including” or “includes” are used in this Guaranty, they should be interpreted in a non-exclusive
manner as though the words, “without limitation”, immediately following the same. Wherever
possible, each provision of this Guaranty shall be interpreted in such manner as to be effective
and valid under applicable law. If any provision of this Guaranty is prohibited or unenforceable
under applicable law, such provision shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.


 


29









 





13. Entire Agreement; Amendments. This Guaranty constitutes the entire agreement
between Guarantor and Owner pertaining to the subject matter contained herein, and may not be
altered, amended, or modified, nor may any provision hereof be waived or noncompliance therewith
consented to, except by means of a writing executed by Guarantor as to which such consent or
waiver is applicable and by Owner. Any such alteration, amendment, modification, waiver, or
consent shall be effective only to the extent specified therein and for the specific purpose of
which it is given. No course of dealing and no delay or waiver of any right or default under this
Guaranty shall be deemed a waiver of any other similar or dissimilar right or default or otherwise
prejudice the right and remedies hereunder.



14. Successors and Assigns. This Guaranty shall be binding upon Guarantor’s
representatives, successors, and assigns and shall inure to the benefit of the successors and
assigns of Owner.



15. Choice of Law and Venue. THE VALIDITY OF THIS GUARANTY, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF GUARANTOR AND OWNER SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY
AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY SHALL BE TRIED AND
DETERMINED ONLY IN THE STATE OF DELAWARE OR AT THE SOLE OPTION OF OWNER IN ANY OTHER COURT IN WHICH
OWNER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDING AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR HEREBY EXPRESSLY
WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION.


 


30









 





16. Waiver of Jury Trial. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR AND OWNER
HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR
PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS GUARANTY, OR IN ANY WAY CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE DEALINGS OF GUARANTOR OR OWNER WITH RESPECT TO THIS GUARANTY, OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR AND
OWNER HEREBY AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDING SHALL BE
DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT OWNER MAY FILE A COPY OF THIS GUARANTY WITH ANY
COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR TO THE WAIVER OF ITS RIGHT
TO TRIAL BY JURY.



17. Counterparts. This Guaranty may be executed by the parties hereto in counterpart
with the same force and effect as if all parties hereto had executed the same instrument.


 


31









 





IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as of the date set
forth in the first paragraph hereof.



	 	 	 	 	 	 	 	 	 
	 	 	LIBERTY PROPERTY LIMITED 
PARTNERSHIP, a Pennsylvania

limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Liberty Property Trust, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 

	 

	 

	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 






 


32









 





EXHIBIT A





 


33












 





Exhibit
B


MANAGEMENT AND LEASING AGREEMENT




THIS MANAGEMENT AND LEASING AGREEMENT (this “Agreement”) is dated as of                     , 2007
between                     , a Delaware limited liability company, (“Owner”) and Liberty
Property Limited Partnership, a Pennsylvania limited partnership (“Manager”).



W I T N E S S E T H:




WHEREAS, Owner is the owner of certain real properties and the buildings situated thereon
located at the addresses set forth on Exhibit A attached hereto and made a part hereof
(collectively, the “Property”); and



WHEREAS, Owner wishes to engage Manager to perform the services set forth herein and Manager
is willing to accept such engagement, all upon the terms and conditions hereinafter set forth.




NOW, THEREFORE, Owner and Manager hereby agree as follows:



ARTICLE I




Appointment and Term of Manager




Owner hereby engages Manager as the manager of the Property upon the terms and conditions
herein stated, for a term that shall commence on the date of this Agreement and shall terminate as
a whole only pursuant to Section 12.2 hereof or, as to any particular Property, upon the sale of
the Property by Owner.



ARTICLE II




Services of Manager




2.1 Generally. Manager shall manage, operate, maintain, lease and repair the Property
and develop, institute and follow programs and policies to facilitate the operation of the
Property, in compliance with Owner’s directives. Manager shall perform its duties and services in
a commercially reasonable manner consistent with the standards of other buildings similar to the
Property (“Professional Standard”). Manager covenants that it will operate the Property pursuant
to the terms of this Agreement and in accordance with the annual budget and leasing plan prepared
by Owner and delivered to Manager from time to time.




2.2 Bank Accounts and Collection of Income.



On or before the execution hereof, Owner shall establish and designate a bank account or
accounts for the Properties (the “Trust Account”). Manager may endorse any and all checks drawn to
the order of Owner for deposit in the Trust Account. Manager shall have the power to draw on the
Trust Account for the purpose of paying operating expenses (including, without limitation, debt
service and capital expenditures), the Management Compensation to Manager, any other amounts payable pursuant to this Agreement, and net amounts of gross income to Owner
in accordance with the terms of this Agreement.


 


 









 





Owner hereby authorizes Manager to request, demand, collect, receive and receipt for all rent,
charges and other monies payable with respect to the Property. Promptly upon receipt thereof,
Manager shall deposit all income collected from the Property into the Trust Account; it being
understood that all funds so deposited in the Trust Account shall be held in trust for Owner. To
the extent required by the leases, Manager shall prepare and deliver monthly invoices to tenants of
the Property for amounts due under their leases.



2.3 Employees. Manager shall, at Owner’s sole cost and expense, select, employ, pay,
supervise and discharge all employees, independent contractors, and personnel necessary for the
operation, maintenance, and protection of the Property. All personnel used by Manager in the
operation of the Property shall be employees of Manager, employees of an Affiliate of Manager or
independent contractors. Manager shall, upon Owner’s request and at Owner’s cost, bond by a crime
coverage bond Manager and (to the extent specifically requested by Owner) those employees and
officers of Manager who may handle, have access to, or be responsible for, Owner’s monies. Each
such bond shall be in a minimum amount of $500,000 and Owner shall be furnished with a certificate
of each bond.



2.4 Repairs and Maintenance. Manager shall effect, institute and supervise all
ordinary decorations, construction, maintenance, repairs and alterations including, without
limitation, the administration of a preventative maintenance program for all mechanical, electrical
and plumbing systems and equipment for the Property, and shall arrange for all required services,
including, without limitation, window cleaning, heating, air conditioning, ventilation and building
maintenance, and make all repairs under the leases which are the obligation of Owner to the tenants
of the Property, in all cases in accordance with the Professional Standard.



2.5 Contracts. Manager shall negotiate, and shall execute in Owner’s name (or shall
present to Owner for execution), contracts pertaining to the operation, maintenance and service of
the Property, including utility agreements; provided, however, that (i) any such
contract having a term in excess of one year must be terminable by Owner on no more than 30 days’
notice without cause (excluding security and alarm contracts, elevator maintenance contracts and
other contracts that are not customarily terminable on 30 days notice); and (ii) the services are
competitively priced. Manager shall use commercially reasonable efforts to contract with qualified
businesses owned by minorities, women and disabled veterans.



2.6 Supplies and Inventory. Manager shall purchase in an economical manner all
supplies and materials which in the normal course of business are necessary and proper to maintain
and operate the Property. Manager shall use commercially reasonable efforts to obtain for Owner
the benefit of discounts and volume purchasing economies available to Manager and will credit the
same to Owner. All purchases of personal property shall provide that title to such items shall be
in the sole name of Owner.



2.7 Payments. Manager shall check and verify all bills received for services, work
and supplies ordered in connection with the maintenance and operation of the Property and pay or cause to be paid from the Trust Account all such bills, including utility charges, water
charges, insurance premiums and real estate taxes. Manager shall not delay paying any bill so as
to incur penalties or interest charges.


 


2









 





2.8 Items to be Obtained by Manager. Manager shall obtain all licenses, permits or
other instruments required for the operation of the Property or any portion thereof at Owner’s
expense. All such licenses and permits relating to the Property shall be obtained in Owner’s name.



ARTICLE III




Leasing and Lease Obligations




3.1 General. Manager agrees to take all actions reasonably necessary to lease the
Property in accordance with commercially reasonable standards for properties of comparable size and
quality. These actions shall include, but shall not be limited to, preparing (or causing to be
prepared) promotional materials regarding the Property, negotiating and executing, in Owner’s name,
contracts and listing agreements with third-party brokers for the purpose of procuring prospective
tenants, cooperating with outside brokers who represent prospective tenants, and aiding Owner and
its representatives in preparations of plans and specifications and negotiating leases and other
documents necessary for the leasing of the Property. Manager shall negotiate the lease of the
space available in the Property, if vacant or about to become vacant. Manager is authorized to
negotiate, and execute in Owner’s name (or present to Owner for execution), leases for the Property
and to collect on behalf of Owner all sums due under leases at the Property. Manager shall comply
with any special requirements relating to leasing and other matters which may arise as a result of
any agreements or covenants by which Owner may be bound. Manager shall investigate all references
of prospective tenants and exercise reasonable efforts to secure financial information from the
prospective tenants.



3.2 Commissions. In consideration of Manager’s leasing services rendered under this
Agreement, Owner shall pay to Manager a commission (“Leasing Commission”) at rates shown on
Exhibit B titled “Schedule of Commissions.”




	 	(i)	 	The term “Gross Rent” shall mean all rent
coming due from tenants under the leases including minimum annual rent
(including fixed step ups in rent), additional rent, percentage rent
and operating expenses. For purposes of calculating any Leasing
Commissions under this Agreement (but not for purposes of calculating
the Management Compensation), Gross Rent shall exclude CPI increases in
rent.







	 	(ii)	 	The Leasing Commission determined pursuant to
this paragraph and Exhibit B hereof shall be paid as follows:






(1) With respect to Leasing Commissions arising from the initial consummation of a lease,
fifty percent (50%) of the Leasing Commission shall be paid promptly upon (A) delivery of a fully
executed lease by Owner to tenant, and payment of any security deposit and prepaid rent as provided for in the lease, and (B) the balance within
thirty (30) days after tenant accepts the premises and has paid the first monthly installment of
rent.


 


3









 





(2) With respect to Leasing Commissions arising from a tenant exercising an option to extend
the term of its lease or otherwise renewing an existing lease, the full commission shall be paid
upon the commencement of such extension or renewal term.



(3) With respect to Leasing Commissions arising from a tenant expanding the size of its
premises (pursuant to an expansion option or otherwise), the full commission shall be paid promptly
upon the tenant accepting the expansion premises.




	 	(iii)	 	Notwithstanding the termination hereof, Owner
agrees to pay a commission in accordance with the provisions of this
Agreement for any lease which is fully executed as of the termination
date herein (including commissions due upon an extension of the term or
upon an expansion of the premises pursuant to the terms of the lease
that are in effect at the time of termination of this Agreement) in
accordance with Subsection 3.2(ii) above.







	 	(iv)	 	Owner shall pay all commissions due to third
party brokers engaged by tenants and to whom a commission is owed with
respect to any lease at the Property. Manager shall be responsible to
pay (out of the Leasing Commissions) any commission owed to any listing
broker engaged by Manager to provide leasing services to the Property.






ARTICLE IV




Allocation and Payment of Expenses




4.1 Generally Paid by Owner. Except as set forth in Section 4.2, all obligations,
costs or expenses incurred by Manager in the performance of its obligations pursuant to Article
II shall be borne by Owner, including without limitation Manager’s administrative costs and the
salaries and fringe benefits of Manager’s employees involved in the management or operation of the
Property.




4.2 Manager’s Costs. Manager shall not be reimbursed for any of its:



(a) salaries and fringe benefits for Manager’s employees to the extent they are not engaged in
the management or operation of the Property; and



(b) office equipment, stationary, postage, telephone, utilities and all other administration
expenses except to the extent located on site and used of the operation of the Property.


 


4









 





4.3 Payments. Any payments to be made by Manager for the account of Owner shall be
made out of the Trust Account. Manager shall promptly notify Owner if Manager believes there are
insufficient funds in the Trust Account to pay all amounts to be paid hereunder. In the event
there are insufficient funds in the Trust Account to pay all amounts to be paid hereunder, the
Manager may, at Manager’s option: (i) advance the amount of such shortfall for the account of
Owner, whereupon Owner shall promptly reimburse Manager for the funds so advanced, together with
simple interest thereon at an annual rate equal to seven and one-half percent (7.5%) commencing on
the day such advance was made (the “Default Rate”); or (ii) make the payments due hereunder in the
order Manager shall deem appropriate, and withhold any such payments to the extent funds in the
Trust Account are insufficient to make such payments. Owner shall indemnify and defend Manager,
together with its past, present and future officers, partners, directors, trustees, beneficial
owners, shareholders, agents and employees, against and hold Manager and such other parties
harmless from any and all losses, costs, claims, damages, liabilities and expenses, including
without limitation reasonable attorneys’ fees and the fees of other professionals, arising directly
or indirectly as a result of Owner’s failure to provide such additional funds and Manager’s
application of existing funds.



4.4 Advances and Reimbursements. Manager shall not be required to make any advance
to, or for the account of Owner, or to pay any amount except out of funds held or provided as
aforesaid, nor shall Manager be required to incur any extraordinary obligation unless Owner shall
furnish Manager with necessary funds for the discharge thereof.



ARTICLE V




Compensation of Manager




As compensation for Manager’s management services rendered under this Agreement, Owner shall
pay to Manager (in addition to the Leasing Commissions described in Article III of this Agreement)
compensation equal to [select the applicable provision]



(a)
[The confidential material contained herein has been omitted and
has been separately filed with the commission.]
of the Gross Operating Income from the Property for the initial
properties, except the Republic Building;



(b)
[The confidential material contained herein has been omitted and
has been separately filed with the commission.]
 of the Gross Operating Income from the Property for the
Republic Building and future-acquired single-tenant properties; and



(c)
[The confidential material contained herein has been omitted and
has been separately filed with the commission.]
 of the Gross Operating Income from the Property for future-acquired
multi-tenant properties ] (the “Management Compensation”).



For purposes of this Agreement, the term “Gross Operating Income” shall mean all revenues
generated by the Property from whatever source (including, without limitation, all rent, additional
rent and tenant pass-throughs), excluding therefrom only the proceeds of any financing, refinancing
or sale of the Property. The Management Compensation for each calendar month shall be payable to
Manager on the twenty-fifth (25th) day of such month (prorated for any partial month).


 


5









 





ARTICLE VI




Compliance With Laws




To the extent not required to be performed by tenants, Manager shall, at Owner’s expense,
comply with and abide by determinations and ordinances pertaining to the Property of any Federal,
state or municipal authority having jurisdiction thereof of which Manager is aware, including,
without limitation, the Occupational Safety and Health Act. Manager shall remedy any noncompliance
and use commercially reasonable efforts to avoid any penalty to which Owner may be subject by
reason of the noncompliance.



ARTICLE VII




Accounting and Financial Matters




7.1 Books and Records. Manager shall keep or cause to be kept at the Manager’s place
of business suitable books of control and account showing all receipts, expenditures and all other
records necessary or convenient for the recording of the results of operations of the Property and
one original of each contract, occupancy lease, maintenance agreement and any other agreement
relating to the Property. Such accounts, books and records shall be open to inspection by Owner or
its representatives at any reasonable time. Upon the effective termination date of this Agreement,
all of such books and records shall be delivered to Owner. Manager shall cooperate with Owner’s
accountants and auditors in the annual audit of books of account of Owner and in the preparation
and filing of Federal, State, City and any other income and other tax returns required by any
governmental authority.



7.2 Fiscal Year. The fiscal year for the Property shall commence on January 1 and
expire on December 31.



ARTICLE VIII




Insurance and Indemnity




8.1 Indemnification of Manager. Owner shall indemnify and defend Manager, together
with its past, present and future officers, partners, directors, shareholders, trustees, beneficial
owners, agents and employees, against and hold Manager and such other parties harmless from any and
all losses, costs, claims, damages, liabilities and expenses, including without limitation
reasonable attorneys’ fees, arising directly or indirectly out of any matter related to the
Property or any action taken by Manager within the scope of its duties or authority under this
Agreement, excluding only such of the foregoing as result from (i) any default by Manager under the
provisions of this Agreement or (ii) any gross negligence or willful misconduct of Manager, its
beneficiaries, advisors, officers, partners, directors, agents or employees. The provisions of
this Section 8.1 shall survive the termination of this Agreement.


 


6









 





8.2 Indemnification of Owner. Manager shall indemnify and defend Owner, together with
the past, present and future trustees, beneficiaries, advisers, partners, directors, officers,
shareholders, agents and employees of each of them, against and hold Owner and such other entities
and persons harmless from any and all losses, costs, claims, damages, liabilities and expenses, including, without limitation, reasonable attorneys’ fee, arising directly or
indirectly out of (i) any default by Manager under the provisions of this Agreement or (ii) any
gross negligence or willful misconduct of Manager or any of its beneficiaries, advisers, officers,
partners, directors, agents or employees, in connection with this Agreement or Manager’s services
or work hereunder, whether within or beyond the scope of its duties or authority hereunder. The
provisions of this Section 8.2 shall survive the termination of this Agreement.



8.3 Manager’s Insurance Responsibility. Manager shall maintain or cause to be
maintained, at its sole cost and expense, (i) all legally required insurance coverage relating to
its employees, including, but not limited to, Workers Compensation, Employers Liability and
Non-Occupational Disability Insurance; (ii) commercial general liability with a per occurrence
limit of not less than $1,000,000 and $2,000,000 general aggregate; (iii) business auto liability
with a per accident limit of not less than $1,000,000 covering all owned, non-owned and hired
vehicles used in connection with the Property; and (iv) professional liability insurance with a per
occurrence limit of not less than $2,000,000. Manager shall also maintain Errors and Omissions
Insurance in the amount of $1,000,000 covering all officers, agents and employees of Manager. The
Errors and Omissions Insurance shall protect the assets of Owner against losses from the negligent
acts, errors and omissions of such persons. Manager may maintain the aforesaid insurance under
blanket or umbrella policies of insurance.



8.4 Owner’s Insurance Responsibility. Owner shall maintain commercial general
liability insurance coverage (including blanket contractual automobile non-ownership and personal
injury liability) with a combined single limit of not less than $2,000,000 per occurrence for
bodily injury and property damage, as well as all policies and amounts of insurance required to be
carried by the Landlord under leases in effect at the Property from time to time.



8.5 Evidence of Insurance. Manager and Owner will provide each other with
certificates of insurance or other satisfactory documentation which evidence that the insurance
required under this Agreement is in full force and effect at all times. Policies required to be
obtained pursuant to Section 8.3 must be endorsed to provide that 30 days’ advance written
notice of cancellation or material change will be given to Owner. Policies required to be obtained
pursuant to Section 8.4 shall provide that Manager shall be an additional insured. All
policies of casualty or property insurance to be obtained pursuant to this Article VIII shall
contain waivers of subrogation rights, to the extent readily available for a minimal additional
premium; and Owner hereby waives any and all claims and causes of action against Manager to the
extent covered by insurance.



8.6 Contract Documents. Manager shall use commercially reasonable efforts to cause to
be inserted in any new service and supply contract prepared or executed by Manager in connection
with the Property provisions to the effect that the other contracting party shall indemnify, defend
and save harmless Manager and Owner from and against all claims, losses and liability resulting
from any damage to or injury to, or death of, persons or property caused or occasioned by or in
connection with or arising out of any action or omissions of said contracting party or its
employees or agents, and from and against all costs, fees, and attorneys expenses in connection
therewith.


 


7









 





Prior to permitting any contractor, subcontractor or vendor to enter upon the Property, or any
part thereof, to commence any work therein, and for the duration of the contract, the Manager shall
use commercially reasonable efforts to obtain copies of such contractor’s, subcontractor’s or
vendor’s certificates of insurance as follows:



Worker’s Compensation, Employers Liability, Automobile Liability and Commercial General
Liability Insurance (including blanket contractual coverage) the last named policy to include the
interests of the Owner and Manager as additional insured and for not less than a combined single
limit of $2,000,000 per occurrence bodily injury and property damage, unless lower limits are prior
approved by Owner’s insurance representatives.



8.7 Insurance Companies. All insurance required to be carried by Manager and Owner
shall be written with companies having a rating in the Best’s key Rating Guide of A:VIII or better
and shall be licensed to do business in the state in which the Property is located.



ARTICLE IX




Notices




All notices, consents, demands, designations, requests, approvals and other communications
permitted or required to be given under this Agreement shall be in writing and shall be hand
delivered or sent by United States registered or certified mail, return receipt requested, postage
prepaid or overnight courier or by facsimile transmission with a copy by mail and addressed, as the
case may be:



	 	 	 	 	 
	 

	 	To Owner:
	 	c/o Liberty Washington, LP

500 Chesterfield Parkway

Great Valley Corporate Center

Malvern, PA 19355

Attn: Mr. Michael T. Hagan

Fax: (610) 644-4129

	 
	 	 	 	 
	 

	 	 	 	New York State Common Retirement Fund

c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Deputy Comptroller

Fax No.: 212-681-1331

Telephone No.: 212-383-1508
	 
	 	 	 	 
	 

	 	 	 	with copies to:
	 
	 	 	 	 
	 

	 	 	 	New York State Common Retirement Fund






 


8









 





	 	 	 	 	 
	 

	 	 	 	c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Deputy Counsel

Fax No.: 212-681-1331

Telephone No.: 212-383-2509
	 
	 	 	 	 
	 

	 	 	 	with copies to:
	 
	 	 	 	 
	 

	 	 	 	Cox, Castle & Nicholson LLP

2049 Century Park East, 28th Floor

Los Angeles, CA 90067-3284

Attn: Amy H. Wells, Esq.

Fax No.: 310-277-7889

Telephone No.: 310-284-2233

	 
	 	 	 	 
	 

	 	 	 	with copies to:
	 
	 	 	 	 
	 

	 	 	 	Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Jerome Claeys

Fax No.: 312-251-5445

Telephone No.: 312-541-6740
	 
	 	 	 	 
	 

	 	 	 	and with copies to:
	 
	 	 	 	 
	 

	 	 	 	Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Anthony Ferrante

Fax No.: (312) 541-6789

Telephone No.: (312) 251-5458
	 
	 	 	 	 
	 

	 	To Manager:
	 	c/o Liberty Property Trust

500 Chesterfield Parkway

Great Valley Corporate Center

Malvern, PA 19355

Attn: Michael T. Hagan

Fax No. (610) 644-4129

Telephone No. (610) 648-1716

	 
	 	 	 	 
	 

	 	 	 	and with copies to:






	 	 	 	 	 
	 

	 	 	 	Wolf, Block, Schorr and Solis-Cohen LLP

1650 Arch Street, 22nd Floor

Philadelphia, PA 19103-2097

Attn: Herman C. Fala, Esquire

Fax No: (215) 405-2976

Telephone No: (215) 977-2076





 


9









 






Any notice or communication which is hand delivered shall be deemed to have been given on the day
it is delivered or, if mailed as above provided, shall be deemed to have been given on the third
business day after the day on which it shall have been so mailed or on the next business day after
delivery to an overnight courier.



ARTICLE X




Assignment




This Agreement may not be assigned by Manager nor shall Manager delegate any of its duties
hereunder without Owner’s prior written consent except to an Affiliate of Manager (which assignment
shall not relieve Manager of its liability hereunder). The engagement by Manager of attorneys,
accountants, engineers, contractors and other professionals shall not be deemed to be a delegation
of Manager’s duties hereunder. Any purported assignment without such consent shall be void and of
no effect. In the event Owner sells the Property and seeks to assign this Agreement to the
purchaser, Manager shall have the option to terminate this Agreement as of the date of such
purchase.



ARTICLE XI




Relationship of Parties




11.1 Nature of Relationship. In taking any action pursuant to this Agreement, Manager
will be acting only as independent contractor, and not as an agent, with limited authority to act
in Owner’s name only in accordance with the terms of this Agreement and nothing explicit or implied
in this Agreement shall be construed as creating a partnership, joint venture, employment or agency
relationship between Manager (or any person employed by Manager) and Owner or any other
relationship between the parties hereto and Owner and Manager each hereby expressly disavow any
agency or other relationship between Owner and Manager except that of Owner and independent
contractor. Manager acknowledges and agrees that it shall act as an independent contractor
hereunder with respect to Owner in connection with Manager’s obligations under this Agreement.
Without limiting the generality of the foregoing, the parties acknowledge that Manager holds a
direct or indirect partnership interest in Liberty Washington, LP, the direct or indirect owner of
Owner, and agree that if, for any reason, Manager is deemed to be an agent of Owner, such agency
shall be deemed coupled with an interest in Owner (consisting only of the interest in Liberty
Washington, LP then held by the Affiliate of Manager) and irrevocable.


 


10









 





11.2 Communications Between Parties. Owner relies on Manager to direct and control
all operations at the Property; provided, however, Owner reserves the right to communicate directly with the on-site building manager, Manager’s accountant or accountants working on
Property matters and other employees with respect to financial matters, all tenants and tenants’
representatives, all lease prospects, all advertising, management, cleaning and servicing firms
doing work for the Property, and all parties contracting with Owner or Manager with respect to the
Property.



11.3 Confidentiality. Manager shall maintain the confidentiality of all matters
pertaining to this Agreement and all financial operations and transactions relating to the
Property, except as may be required by law; provided, however, that Manager shall not be in breach
of its obligations under this Agreement or any other obligations or duties to Owner, or its
partners, at law or in equity (whether under a theory of fiduciary duty or otherwise) if Manager
or its Affiliates files this Agreement (and some or all of the exhibits hereto) as an exhibit to a
filing it may make with the Securities Exchange Commission or makes disclosures regarding the
transactions governed by this Agreement to the extent the Manager or its Affiliates reasonably
believe necessary to enable the Manager or its Affiliates to comply with federal and state
securities laws and the regulations of the Securities Exchange Commission, the rules of any stock
exchange, or in connection with any filing or registration made by Liberty Property Trust, an
Affiliate of Manager, as the issuer of publicly traded securities, or as part of information
provided to its investors and/or financial analysts.



ARTICLE XII




Defaults and Termination




12.1 Default by Manager. Manager shall be deemed to be in default hereunder in the
event: (i) Manager shall fail to keep, observe or perform any material covenant, agreement, term or
provision of this Agreement to be kept, observed or performed by Manager and such default shall
continue for a period of thirty (30) days after written notice thereof by Owner to Manager;
provided, however, that if such failure is not susceptible of cure within such thirty (30) day
period and Manager has commenced and is diligently attempting to cure such failure, then Manager
shall have an additional sixty (60) days in which to cure such failure; or (ii) a receiver is
appointed to take possession of the assets of Manager or an assignment by Manager for the benefit
of creditors, or any action taken or suffered by Manager under any insolvency, bankruptcy,
reorganization, moratorium, or other debtor-relief act or statute. Upon the occurrence of an event
of default by Manager, Owner shall be entitled to seek specific performance of this Agreement, but
in no event shall Owner be entitled to terminate this Agreement except as set forth in Section 12.2
below.



12.2 Ownership Interests in Owner. In the event that Liberty Property Limited
Partnership or its permitted assignee hereunder, or an Affiliate of such parties, no longer has a
direct or indirect ownership interest in Owner, then either Owner or Manager shall be entitled to
terminate this Agreement upon written notice to the other.


 


11









 





12.3 Orderly Transition. In the event of any termination of this Agreement, Manager
shall use its commercially reasonable efforts to effect an orderly transition of the management and operation of the Property to Owner or an agent designated by Owner and to cooperate with
Owner, at Owner’s expense, or such agent.



12.4 Final Settlement of Accounts. Upon the termination of this Agreement, Manager
promptly shall:




	 	(a)	 	account for and deliver to Owner all receipts, charges and
income from the Property and other monies of Owner in Manager’s possession;







	 	(b)	 	deliver to Owner as received any monies due Owner under this
Agreement but received after such termination;







	 	(c)	 	deliver to Owner or to such other person as Owner shall
designate, all materials, supplies, equipment, keys, original leases,
contracts, documents, books and records pertaining to this Agreement and the
Property;







	 	(d)	 	assign without warranty or recourse existing contracts and
permits in the name of Manager relating to the Property to Owner or to such
party as Owner shall designate; and







	 	(e)	 	within 30 days after the effective date of termination of this
Agreement, cause to be furnished to Owner a summary of the then-current leasing
status of the Property.






12.5 Default by Owner. In the event Owner fails to pay any commission or Management
Compensation due to Manager hereunder (except where such failure is the result of a failure by
Liberty Washington Venture, LLC, the general partner of Owner [the “General Partner"], to provide
funds to Owner in accordance with Owner’s Agreement of Limited Partnership of even date herewith,
as amended from time to time the [“Partnership Agreement"], Manager shall have all of its remedies
available at law or in equity. Additionally, if Owner fails to provide funds necessary for Manager
to carry out its duties hereunder (except for the reasons stated in the parenthetical to the
foregoing sentence), Manager may advance such funds for the account of Owner and Owner shall
promptly thereafter reimburse such funds to Manager together with interest thereon at the Default
Rate. In no event shall Manager be entitled to terminate this Agreement except in accordance with
Section 12.2 above.



ARTICLE XIII




Legal Proceedings




13.1 Cooperation by Manager and Owner. Manager and Owner shall fully cooperate, and
shall cause their respective employees to fully cooperate, at Owner’s expense, in connection with
the prosecution or defense of all legal proceedings affecting the Property; provided, that in the
event a court of applicable jurisdiction rules that Manager or its officers, partners, directors,
shareholders, trustees, beneficial owners, agents or employees has engaged in gross negligence or
willful misconduct with respect to the subject of such proceedings, Manager shall reimburse Owner
for its reasonable attorney fees and costs incurred in prosecuting such proceedings.


 


12









 





ARTICLE XIV




Miscellaneous




14.1 Governing Law. This Agreement shall be construed and enforceable in accordance
with the laws of the state where the Property is located.



14.2 Entire Agreement. This Agreement contains the entire agreement between the
parties and the same shall not be amended, modified or cancelled except in writing signed by the
party to be charged.



14.3 Successors and Assigns. All terms, conditions and agreements herein set forth
shall inure to the benefit of, and be binding upon the parties and their respective permitted
successors and assigns.



14.4 Waiver. The failure of either party to insist upon strict performance of any
term or provision of this Agreement or to exercise any option, right or remedy herein contained,
shall not be construed as a waiver or as a relinquishment for the future of such term, provision,
option, right or remedy, but the same shall continue and remain in full force and effect. No
waiver by either party of any term or provision hereof shall be deemed to have been made unless
expressed in writing and signed by such party.



14.5 Partial Invalidity. If any portion of this Agreement shall be decreed invalid by
the judgment of a court, this Agreement shall be construed as if such portion had not been inserted
herein except when such construction would constitute a substantial deviation from the general
intent and purpose of this Agreement.



14.6 ERISA and Unrelated Business Taxable Income. Manager agrees to use commercially
reasonable efforts to act in accordance with the fiduciary standards of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”) to the extent Manager is subject thereto as a
result of services rendered pursuant to this Agreement. Manager shall use its commercially
reasonable efforts to avoid taking any action that would subject Owner to the tax on unrelated
business taxable income under the Internal Revenue Code, as it exists at the time such action is
taken (the “Code”). Manager shall abide by any and all procedures established by Owner to avoid
prohibited transactions under ERISA and unrelated business taxable income under the Code.



14.7 Limitation on Owner’s Liability. The obligations of Owner are intended to be
binding only on the Property and shall not be personally binding upon, nor shall any resort be had
to, the private properties of its trustees, beneficiaries, advisers, officers, directors, or
shareholders, as applicable, or its investment manager, or the general partners, officers,
directors, or shareholders thereof, as applicable, or any employees or agents of any of them.



14.8 Waiver of Liens. Manager, for itself and any other party acting or claiming
through or under Manager, for and in consideration of this Agreement, does hereby waive and
relinquish all right to file a mechanics’ or other lien, claim or notice of intention to file any
lien or claim, and does hereby covenant, promise and agree that no mechanics’ lien or claim or
other lien or claim of any kind whatsoever shall be filed or maintained against the Property or the improvements thereon by or in the name of Manager or anyone acting or claiming to act by or
through Manager.


 


13









 





14.9 Affiliates. As used herein, the term Affiliate shall mean a party controlling,
controlled by or under common control with the party in question.



14.10 Limitation on Manager’s Liability. The obligations of Manager are intended to
be binding only on the assets of the Manager and shall not be personally binding upon, nor shall
any resort be had to, the private properties of its shareholders, trustees, beneficiaries,
directors, officers, employees or agents, provided, however, the Owner shall retain the right,
after notice to the Manager, to offset any amounts claimed against Manager hereunder against
amounts due General Partner under the Partnership Agreement, and further provided that if there is
any dispute as to whether the claim against Manager is valid, the amount sought to be withheld
shall be escrowed until the first to occur of the matter being resolved or Manager, after written
notice from Owner, no longer contesting the validity of the claim, with the interest earned thereon
being paid to the party who is ultimately determined to be entitled to the amount claimed or, if it
is determined that each party is entitled to a portion of the amount in dispute, pro rata based on
the amount paid to each.


 


14









 





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



OWNER:





 ___________________________________,

a Delaware limited liability company




	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Its:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 






MANAGER:




Liberty Property Limited Partnership,

a Pennsylvania limited partnership





By: Liberty Property Trust, its general partner



	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Its:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 





 


15









 





EXHIBIT A




PROPERTY ADDRESSES 




 


16









 







EXHIBIT B




SCHEDULE OF COMMISSIONS




NEW TENANT, WITH NO OUTSIDE BROKER PARTICIPATION:




Years 1-5 — [*] of Gross Rent Any additional Year of the original term thereafter — [*] of Gross Rent



NEW TENANT, WITH OUTSIDE BROKER PARTICIPATION:




Years
1-5 — [*] of Gross Rent, to be paid [*] to
Manager and [*] to the
outside broker  
Any additional Year of the original
term thereafter — [*] of Gross Rent, to be paid
[*] to Manager and [*] to the outside broker



RENEWAL/EXPANSION TENANT, WITH NO OUTSIDE BROKER PARTICIPATION:




Years
1-5 — [*] of Gross Rent 
Any additional Year of the original term thereafter — [*] of Gross Rent



RENEWAL/EXPANSION TENANT, WITH OUTSIDE BROKER PARTICIPATION:




Years 1-5 — [*] of
Gross Rent, to be paid [*] to Manager
and [*] to the outside broker  
Any
additional Year of the original term thereafter — [*] of Gross
Rent, to be paid [*] to Manager and [*] to the outside broker




 




	*	 	The confidential information contained herein has been
omitted and separately filed with the staff.







 


17












 







EXHIBIT C




List of Entities/Interests and Gross Asset Values




	 	 	 	 	 	 	 
	 	 	 	 	GROSS ASSET VALUE OF	 
	 	 	 	 	CONTRIBUTED	 
	CONTRIBUTED INTERESTS	 	PROPERTY	 	INTERESTS	 
	RKB Pender, LLC (100%)
	 	Pender Business Park	 	$	[*]	 
	 
	 	3922-28 Pender Drive,	 	 	 	 
	 
	 	Fairfax, VA	 	 	 	 
	 
	 	 	 	 	 	 
	RKB CP IV, LLC (100%)
	 	Corporate Pointe IV	 	$	[*]	 
	 
	 	14111 Park Meadow Drive,	 	 	 	 
	 
	 	Chantilly, VA	 	 	 	 
	 
	 	 	 	 	 	 
	RKB Corporate Oaks, LLC (100%)
	 	Corporate Oaks	 	$	[*]	 
	 
	 	625 Herndon Parkway,	 	 	 	 
	 
	 	Herndon, VA	 	 	 	 
	 
	 	 	 	 	 	 
	RPB WillowWood I, LLC (100%)
	 	WillowWood I and II,	 	$	[*]	 
	 
	 	10300 and 10306 Eaton	 	 	 	 
	 
	 	Place, Fairfax, VA	 	 	 	 
	 
	 	 	 	 	 	 
	RPB WillowWood II, LLC (100%)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Republic Park, LLC (100%)
	 	Republic Park (1 - 7)	 	$	[*]	 
	 
	 	13605-15-25-35-45-55-65	 	 	 	 
	 
	 	Dulles Technology Drive,	 	 	 	 
	 
	 	Herndon, VA	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Republic Park  (8)	 	 	 	 
	 
	 	13461 Sunrise Valley	 	 	 	 
	 
	 	Drive, Herndon, VA	 	 	 	 
	 
	 	 	 	 	 	 
	RKB Lakeside Manager LLC
	 	Lakeside I & II	 	$	[*]	 
	(100%) (Owns 0.01% of RKB
	 	14104 and 14120 	 	 	 	 
	Lakeside, LLC)
	 	Newbrook Drive,	 	 	 	 
	 
	 	Chantilly, VA	 	 	 	 
	 
	 	 	 	 	 	 
	RKB Lakeside, LLC (99.9%)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	RKB WillowWood Manager, LLC
	 	WillowWood III and IV	 	$	[*]	 
	(100%) (Owns 1% of RKB
	 	10304 and 10302 Eaton	 	 	 	 
	WillowWood, LLC)
	 	Place, Fairfax, VA	 	 	 	 
	 
	 	 	 	 	 	 
	RKB WillowWood, LLC (99%)
	 	 	 	 	 	 






 



	 	 	 
	*	 	The confidential information contained herein has been omitted and
separately filed with the staff.




 


 









 





	 	 	 	 	 	 	 
	 	 	 	 	GROSS ASSET VALUE OF	 
	 	 	 	 	CONTRIBUTED	 
	CONTRIBUTED INTERESTS	 	PROPERTY	 	INTERESTS	 
	RPT Presidents Park, LLC
	 	Presidents Park I, II & III	 	$	[*]	 
	(99%) (Owns 100% of
	 	13861 Sunrise Valley Drive	 	 	 	 
	Presidents Park I, LLC;
	 	13865 Sunrise Valley Drive	 	 	 	 
	Presidents Park II, LLC;
	 	2525 Network Place	 	 	 	 
	and
Presidents Park III, LLC)
	 	Herndon, VA	 	 	 	 
	RPT Presidents Park Manager
	 	 	 	 	 	 
	LLC (100%) (Owns 1% of RPT
	 	 	 	 	 	 
	Presidents Park, LLC)
	 	 	 	 	 	 







	 	 	 	 	 	 	 
	 	 	 	 	GROSS ASSET VALUE OF	 
	 	 	 	 	CONTRIBUTED	 
	PURCHASED INTERESTS	 	PROPERTY	 	INTERESTS	 
	RPLP I, LLC (100%) (GP and 1%
	 	The Republic Building	 	$	[*]	 
	owner of RPT
1425 Investors, L.P.)
	 	1425 New York Avenue, NW	 	 	 	 
	RPT 1425 Investors, L.P. (99%)
(RPT 1425 Investors, L.P.
	 	Washington, DC	 	 	 	 
	owns 100% of RPT 1425
Holdings LLC. RPT 1425
Holdings LLC owns 100% of RPT
1425 New York Avenue LLC))
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Republic
20th Street, LLC (100%)
	 	1129 20th Street, NW	 	$	[*]	 
	 
	 	Washington, DC	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	TOTAL:	 
	 
	 	 	 	 	 	 
	 
	 	 	 	$	[*]	 






 



	 	 	 
	*	 	The confidential material contained herein has been omitted and
has been separately filed with the staff.





 


 









 







EXHIBIT D




Current Debt of the Company




Assumed Financing




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PRINCIPAL LOAN	 
	 	 	 	 	 	 	BALANCE BEING	 
	BORROWER ENTITY	 	PROPERTY	 	LENDER	 	ASSUMED	 
	RKB Pender LLC
	 	Pender Business Park	 	Capmark Finance,	 	$	[*]	 
	 
	 	3922-28 Pender Drive,	 	Inc., as Master	 	 	 	 
	 
	 	Fairfax, VA	 	Servicer for JP	 	 	 	 
	 
	 	 	 	Morgan Chase Bank	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	RKB CP IV LLC
	 	Corporate Pointe IV	 	Wells Fargo Bank,	 	$	[*]	 
	 
	 	14111 Park Meadow	 	N.A., successor by	 	 	 	 
	 
	 	Drive, Chantilly, VA	 	merger to Wells	 	 	 	 
	 
	 	 	 	Fargo Bank	 	 	 	 
	 
	 	 	 	Minnesota, N.A., as	 	 	 	 
	 
	 	 	 	Trustee for the	 	 	 	 
	 
	 	 	 	Registered Holders	 	 	 	 
	 
	 	 	 	of Credit Suisse	 	 	 	 
	 
	 	 	 	First Boston	 	 	 	 
	 
	 	 	 	Mortgage Securities	 	 	 	 
	 
	 	 	 	Corp., Commercial	 	 	 	 
	 
	 	 	 	Mortgage	 	 	 	 
	 
	 	 	 	Pass-Through	 	 	 	 
	 
	 	 	 	Certificates,	 	 	 	 
	 
	 	 	 	Series 2001-CP4	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	RPT 1425 New York
	 	The Republic Building	 	LaSalle Bank	 	$	[*]	 
	Avenue LLC
	 	1425 New York 	 	National	 	 	 	 
	 
	 	Avenue, NW	 	Association, as	 	 	 	 
	 
	 	Washington, DC	 	Trustee for the	 	 	 	 
	 
	 	 	 	Registered Holders	 	 	 	 
	 
	 	 	 	of Greenwich	 	 	 	 
	 
	 	 	 	Capital Commercial	 	 	 	 
	 
	 	 	 	Funding Corp.,	 	 	 	 
	 
	 	 	 	Commercial Mortgage	 	 	 	 
	 
	 	 	 	Trust 2005-GG5,	 	 	 	 
	 
	 	 	 	Commercial Mortgage	 	 	 	 
	 
	 	 	 	Pass-Through	 	 	 	 
	 
	 	 	 	Certificates,	 	 	 	 
	 
	 	 	 	Series 2005-GG5	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	RKB Corporate Oaks
	 	Corporate Oaks	 	KeyBank National	 	$	[*]	 
	LLC
	 	625 Herndon Parkway,	 	Association	 	 	 	 
	 
	 	Herndon, VA	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 





 



	 	 	 
	*	 	The confidential material contained herein has been omitted and
has been separately filed with the staff.





 


 









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	PRINCIPAL LOAN	 
	 	 	 	 	 	 	BALANCE BEING	 
	BORROWER ENTITY	 	PROPERTY	 	LENDER	 	ASSUMED	 
	RPB WillowWood I LLC
	 	WillowWood I and II	 	Wachovia Bank,	 	$	[*]	 
	and
	 	10300 and 10306 Eaton	 	National	 	 	 	 
	RPB WillowWood II
	 	Place, Fairfax, VA	 	Association, as	 	 	 	 
	LLC
	 	 	 	Servicer for Lehman	 	 	 	 
	 
	 	 	 	Brothers Bank FSB	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Republic Park LLC
	 	Republic Park (1 - 7)	 	KeyBank Real Estate	 	$	[*]	 
	 
	 	13605-15-25-35-45-55-65	 	Capital,	 	 	 	 
	 
	 	Dulles Technology	 	Sub-Servicer for	 	 	 	 
	 
	 	Drive, Herndon, VA	 	Lehman Brothers-UBS	 	 	 	 
	 
	 	and	 	Commercial Mortgage	 	 	 	 
	 
	 	Republic Park  (8)	 	Pass-Through	 	 	 	 
	 
	 	13461 Sunrise Valley	 	Certificates,	 	 	 	 
	 
	 	Drive, Herndon, VA	 	Series 2006-C7	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	TOTAL:	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	$	[*]	 







Liberty Loan




	 	 	 	 	 	 	 	 	 
	BORROWER ENTITY	 	INTERESTS PLEDGED	 	LENDER	 	PRINCIPAL	 
	Liberty Washington,
	 	RKB Lakeside, LLC	 	Liberty Property	 	$	[*]	 
	LP (by assignment
	 	And	 	Limited Partnership	 	 	 	 
	as described in the
	 	RKB WillowWood, LLC	 	(by assignment as	 	 	 	 
	Recitals to this
	 	 	 	described in the	 	 	 	 
	Agreement)
	 	 	 	Recitals to this	 	 	 	 
	 
	 	 	 	Agreement)	 	 	 	 








 



	 	 	 
	*	 	The confidential information contained herein has been omitted and
has been separately filed with the staff.





 


 









 







EXHIBIT E




Annual Business Plan

for 2007




(Final Budget to be Attached by Agreement of the Parties Prior to Execution of this Agreement)



[The
confidential material contained herein has been omitted and has been
separately filed with the staff.]


 


 









 







EXHIBIT F




(Reserved)




 


 









 







EXHIBIT G




Form of Leasing Update




To be agreed upon by the parties at signing.



[The
confidential material contained herein has been omitted and has been
separately filed with the staff.]



 


 









 







EXHIBIT H




Recitals




A. On the day prior to the Effective Date, NYSCRF contributed the sum of $415,063,748.00 to
the Company.




B. On the Effective Date, the following transactions occurred in the following order:



(i) First, prior to completion of the Merger, the Company entered into one or more agreements
with RPLP whereby RPLP agreed to sell, and the Company agreed to purchase, 100% of the ownership
interests (the “Purchased Interests”) in Republic 20th Street, LLC, a Delaware limited liability
company, RPLP I, LLC, a Delaware limited liability company, and RPT 1425 Investors, LP, a Delaware
limited partnership (collectively, the “Purchased Entities”), for an aggregate amount equal to
$76,540,000.00 (the “Purchase Price”).



(ii) Second, prior to completion of the Merger, the Company closed on the purchase of the
Purchased Interests. The consideration for such purchase was a purchase money promissory note from
the Company to RPLP in the full amount of the Purchase Price. The promissory note described in
this Recital B(ii) is referred to herein as the “Purchase Money Note”. The Purchase Money Note was
nonrecourse to the Company and was secured by a pledge by the Company of its ownership interests in
Republic 20th Street LLC and Liberty Property Philadelphia Limited Partnership. The Purchase Money
Note, together with the documents securing the Purchase Money Note, are referred to herein
collectively as the “Purchase Money Loan Documents”. Immediately upon issuance of the Purchase
Money Note, RPLP conveyed the Purchased Interests to the Company.



(iii) Third, prior to completion of the Merger, the General Partner made a loan to RPLP in the
aggregate amount of $59,500,000.00 (the “Liberty Loan”). The Liberty Loan was nonrecourse to RPLP,
secured by a pledge by RPLP to the General Partner of all of RPLP’s interests in RKB Lakeside LLC,
a Delaware limited liability company (“Lakeside, LLC”), and RKB WillowWood LLC, a Delaware limited
liability company (“WillowWood, LLC”), and evidenced by a promissory note and a loan and security
agreement (the “Liberty Loan Documents”). Prior to completion of the Merger, RPLP applied the
proceeds of the Liberty Loan to defease the existing mortgage loans that encumber the assets owned
by Lakeside, LLC and WillowWood, LLC.



(iv) Fourth, prior to completion of the Merger, the Company made a loan to LPLP in an amount
equal to $415,063,748.00 (the “Merger Loan”), which was fully recourse to LPLP and evidenced by a
promissory note from LPLP to the Company. LPLP used the proceeds of the Merger Loan to complete
the Merger.



(v) Fifth, immediately after completion of the Merger, LPLP contributed the Contributed
Interests and its interests in and to the Purchase Money Loan Documents to the Company on behalf of
the General Partner, subject to the Liberty Loan, in satisfaction of the Merger Loan, to the extent
thereof, and the balance as a contribution to the capital of the Company. Contemporaneously with
the contribution of the Contributed Interests to the Company, LPLP assigned, and the Company
assumed, all of LPLP’s interests and obligations as
borrower under the Liberty Loan Documents, including the obligation to make payments under the
note evidencing the Liberty Loan.




 


 









 







EXHIBIT
I


Initial Yield Parameters




The Venture will be subject to minimum
projected hurdle levels of return for acquisitions of
existing buildings or for development land as follows:



The minimum projected initial stabilized
unleveraged capitalization rate (“cap rate”) for existing
buildings in Northern Virginia will be [*] and in the District of Columbia will be [*], while
the minimum unleveraged internal rate of return (“IRR”) for existing buildings in Northern Virginia
will be [*] and in the District of Columbia will be [*].



The minimum projected initial stabilized
unleveraged cap rate for to-be-developed or
to-be-redeveloped buildings in Northern Virginia will be [*] and in the District of Columbia
will be [*], while the minimum unleveraged IRR for to-be-developed or to-be-redeveloped buildings
in Northern Virginia [*] and in the District of Columbia will be [*].




 



	 	 	 
	*	 	The confidential information contained herein has been omitted and has been separately filed with the staff.




 


 











 




EXHIBIT J




Report of Independent Accountants





To the partners of Liberty Washington, LP



In planning and performing our audit of the consolidated financial statements of Liberty
Washington, LP for the year ended December 31, 200_____, we considered its internal control to
determine our auditing procedures for the purpose of expressing our opinion on the consolidated
financial statements and not to provide assurance on internal control. Our consideration of
internal control would not necessarily disclose all matters in internal control that might be
material weaknesses under standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or operation of one or more of
the internal control components does not reduce to a relatively low level the risk that
misstatements caused by errors or fraud in amounts that would be material in relation to the
consolidated financial statements being audited may occur and not be detected within a timely
period by employees in the normal course of performing their assigned functions. However, we noted
no matters involving internal control and its operation that we consider to be material weaknesses
as defined above.



This report is intended solely for the information and use of the partners of Liberty
Washington, LP, management, and others within the organization and is not intended to be and should
not be used by anyone other than these specified parties.



We would be pleased to discuss the above matters or to respond to any questions, at your
convenience.


 


 









 





EXHIBIT K




DUE DILIGENCE AND CLOSING PROCEDURES FOR ACQUISITION OF VACANT

LAND, LAND AND IMPROVEMENTS SUITABLE FOR BEING REHABILITATED AS

REDEVELOPMENT PROPERTY, AND FUNCTIONAL OFFICE PROPERTY




1. Third Party Costs. Upon approval of an Acquisition Plan by NYSCRF, all costs and
expenses of Approved Vendors incurred in connection with the proposed acquisition and any
refundable earnest money deposits to be applied against the purchase price (“Third Party Costs”)
shall be the sole responsibility of the Company. Notwithstanding the above, such Third Party Costs
may be incurred by the Company prior to receipt of NYSCRF’s approval and paid for out of an
“Acquisition Reserve Account” having a total balance in the amount of $100,000 that will be funded
by General Partner and NYSCRF in accordance with their respective partnership interests upon the
formation of the Company and, to the extent necessary to maintain a balance in the amount of
$100,000, at the beginning of each year following such formation. If NYSCRF subsequently approves
the Acquisition Plan, then the amount of funds incurred for Third Party costs pursuant to this
Section shall not be charged against the Acquisition Reserve Account. If NYSCRF subsequently
disapproves the Acquisition Plan, then the amount of funds incurred for Third Party costs pursuant
to this Section shall be charged against and reduce dollar for dollar the Acquisition Reserve
Account. If the funds in the Acquisition Reserve Account are exhausted or are insufficient to pay
required Third Party Costs, such costs shall not be incurred by the Company until NYSCRF has given
its written approval of an Acquisition Plan for the remainder of that year or until the Partners
mutually agree to replenish the Acquisition Reserve Account. Notwithstanding the foregoing, if the
General Partner requires funds in excess of the Acquisition Reserve Account to place a refundable
earnest money deposit prior to NYSCRF’s approval of the corresponding Acquisition Plan, the General
Partner may provide NYSCRF with a signed letter of intent for such transaction, which NYSCRF shall
approve or disapprove within six (6) business days thereafter. If the letter of intent is approved
by NYSCRF, the Partners shall each promptly contribute funds to the Company in accordance with
their respective partnership interests sufficient to fund the refundable deposit contemplated under
the letter of intent.



2. Due Diligence Review. Acquisitions shall be subject to normal and customary due
diligence review to be performed by an Approved Vendor, including, without limitation, an
environmental assessment (using the criteria for a phase I environmental assessment described on
Schedule 1 to this Exhibit), physical inspection report, title review (using a nationally
recognized title insurance company) and survey review (of a survey prepared in accordance with
ALTA/ASCM requirements customarily obtained and sufficient to enable the title company to issue an
ALTA policy of title insurance without a survey exception at closing). General Partner shall use
commercially reasonable efforts to cause all due diligence investigations to be completed and
reports in connection therewith delivered concurrently to NYSCRF and Advisor at least five (5)
business days prior to the end of the due diligence period stated in the purchase contract (the
“Due Diligence Period”); NYSCRF shall have no obligation to approve or disapprove any acquisition
until six (6) days after it has received such materials, but General Partner may terminate the
purchase contract (after making reasonable efforts to extend the Due Diligence Period) if NYSCRF’s
approval is not obtained prior to the end of the Due Diligence Period. General Partner shall
furnish to the Advisor copies of due diligence materials and reports, including the environmental
assessment, physical inspection report, title and survey documents,
final pro forma and financial projections as they are completed. The Advisor, upon completion of
its review, will submit a report to NYSCRF summarizing its conclusions with respect to completed
due diligence and identifying any conditions that would warrant withdrawal of NYSCRF’s approval of
the Acquisition Plan.



 


 









 





3. [The confidential information contained herein has been omitted and separately filed with the
staff.]



4. Capital Call Notice. Provided that the proposed acquisition has not been earlier
terminated, after the expiration of the Due Diligence Period, General Partner shall submit a
written request (a “Capital Call Notice”) to the Advisor setting forth the acquisition price,
closing costs and any other costs to complete the acquisition and NYSCRF’s share of such costs. The
Capital Call Notice will identify wiring instructions including the due date for receipt of
NYSCRF’s share of such costs which shall not be less than six (6) business days after the receipt
of the Capital Call Notice by Advisor. Such due date shall also not be more than one (1) day prior
to the closing of the property acquisition by the Company.



5. Closing: Comfort Letter, Insurance, Closing Statement and Closing Book. At least five
(5) business days prior to closing, General Partner shall cause counsel to the Company to deliver
to the Company a “comfort letter” (i) describing the transaction documentation respecting the
property acquisition that such counsel has either prepared, reviewed or negotiated on behalf of the
Company and confirming that such documentation complies with the Acquisition Plan, or, to the
extent of any variance therefrom, specifying such exceptions, (ii) describing the legal matters
that such counsel has reviewed and considered in connection with the property acquisition
(including, without limitation (to the extent applicable) the purchase and sale agreement, closing
documentation, title, survey, recorded documents disclosed by title, and loan documents) and
specifying any significant and adverse legal issues in connection therewith that remain unresolved,
and (iii) addressing such other matters as may be reasonably requested by either Partner. If the
Company is represented by more than one legal counsel in connection with the acquisition, multiple
comfort letters from such counsel may be obtained to satisfy the foregoing requirements. On or
before closing, General Partner shall cause a certificate of insurance to be issued to the Company
in connection with the property. Within one (1) business day after closing, General Partner shall
deliver to Advisor an executed closing statement. Within thirty (30) days after the Closing Date,
General Partner shall deliver to Advisor a “closing book” containing all fully executed documents
related to the acquisition and acknowledging the receipt and copies of all certificates and
documents (including certificates of insurance) delivered or required in connection with the
closing of the acquisition of the property.




 


ii











 






EXHIBIT L




DUE DILIGENCE AND CLOSING PROCEDURES FOR NEW DEVELOPMENT AND

REDEVELOPMENT PROPERTY




1. Third Party Costs. Upon approval of a Development Plan by NYSCRF, all third party costs
and expenses of Approved Consultants incurred in connection with that New Development or
Redevelopment (“Third Party Costs”) shall be the sole responsibility of the Company.



2. NYSCRF Consultant. Upon receipt of the NYSCRF’s approval of a Development Plan, NYSCRF
may, at is sole cost and expense, appoint an inspecting engineer, contractor and/or architect to
serve as its consultant with respect to the design, development and construction of the New
Development or Redevelopment (collectively, the “NYSCRF Consultant”). The General Partner shall
make available to the NYSCRF Consultant the following materials, to the extent reasonably
available: a final budget, plans, specifications, architect agreement, construction contract, any
engineering contracts, all major subcontracts (including, without limitation, mechanical,
concrete/paving, electrical and structural), construction schedules, soils and other engineering
reports, change orders, building permits, zoning information and utility letters. Notwithstanding
the foregoing, in the event any construction lender for the New Development or Redevelopment
requires the engagement of one or more consultants with a similar function to the NYSCRF
Consultant, NYSCRF may elect to rely on such lender’s consultants rather than engage a separate
NYSCRF Consultant, and the cost thereof shall be a Company expense. General Partner shall
reasonably cooperate (and shall cause the Developer under the Development Management Agreement to
reasonably cooperate) with the NYSCRF Consultant and shall provide the NYSCRF Consultant with
reasonable access to all plans, specifications, drawing, budgets, reports and other documents,
information and materials relevant to the NYSCRF Consultant’s monitoring and evaluation of the
progress and implementation of the design, development and construction of the NEW Development or
Redevelopment.



3. [The confidential information contained herein has been omitted and separately filed with the
staff.]



4. Initial Capital Contribution. Following execution of the Development Management
Agreement, General Partner shall submit to the Advisor and NYSCRF a written request (a “Capital
Call Notice”) for a Capital Contribution to the Company for the development of the project
(“Development Property Capital Contribution”), setting forth the amount and application of the
Development Property Capital Contribution, which shall be in compliance with the Final Project
Budget. The Capital Call Notice will identify wiring instructions including the due date for
receipt of the initial Development Property Capital Contribution, which shall be not be less than
ten (10) business days after the date of receipt of the Capital Call Notice by the Advisor and
NYSCRF.



 


 









 





5. Additional Capital Contributions. As an alternative or supplement to the procedure set
forth in Paragraph 4 above, upon the mutual agreement of the Partners, the Partners may proceed as
follows: General Partner shall prepare regular Capital Call Notices for additional Development
Property Capital Contributions to be made by the Partners with respect to the Approved Development
in accordance with the Final Project Budget. The Capital Call Notices
shall contain (i) a draw request, supported by reasonable backup documentation, and containing such
additional information as may be reasonably required by NYSCRF or Advisor; (ii) a certification by
Liberty representing and warranting that the contents of the draw request are true and correct, and
(iii) contribution date and funding instructions. The Capital Call Notices shall be delivered
concurrently to the Advisor. The Advisor, upon completion of its review, will submit a
recommendation to NYSCRF for funding of the Call for Capital. The partners shall complete the
funding contained in the Capital Call Notice on the tenth (10th) business day after
receipt of the Capital Call Notice. Capital Call Notices shall not be issued more frequently than
once per calendar month. General Partner shall endeavor to deliver the Capital Call Notice to
Advisor in sufficient time to allow for the Company to pay accrued construction costs by the end of
each calendar month, as contemplated in the Development Management Agreement. If General Partner
fails to deliver the Capital Call Notice to Advisor within the time period specified in the
immediately preceding sentence, General Partner shall be solely responsible for any consequential
damages arising by reason of such failure.




 


ii











 





EXHIBIT M




Insurance Requirements




GENERAL REQUIREMENTS





	•	 	Insurance companies must have an AM Best Rating of A/10 or higher for Primary Property,
Liability and Umbrella policies up to $100 million and A/8 for policies in excess of $25
million in limits.







	•	 	CRF entities should be named as Insureds on all policies and Loss Payee on Property
policies.







	•	 	All cancellation clauses must reflect at least 60 days written notice to CRF, except for
non-payment — 15 days if available, otherwise 10 days.







	•	 	Insurance companies must be licensed to do business in states where exposures exist.







	•	 	Certificates and copies of all policies must be submitted to CRF or whomever they
designate.







	•	 	Confirmation of all renewals must be provided within 5 days of the renewal.






REQUIREMENTS FOR PROPERTY INSURANCE




Coverage



“All Risk” on all real property and personal property, loss of income (rents — at least one year)
and extra expense.



1. Extensions





	 	•	 	Flood, including back up of sewers and drains, seepage, and surface water







	 	•	 	Earthquake







	 	•	 	Increased cost of construction







	 	•	 	Building ordinance or Law







	 	•	 	Demolition







	 	•	 	Pollution clean up for contamination of covered property as a result of a covered peril







	 	•	 	Extended period of indemnity, 180 days







	 	•	 	Joint loss clause (if boiler is written separately)







	 	•	 	Terrorism for both certified and non-certified acts







	 	•	 	Off premises power interruption both direct and indirect






2. Valuation Clauses





	 	•	 	Replacement cost on real and personal property







	 	•	 	Actual loss sustained on loss of rents, extra expense






3. Limits





Must reflect values of properties; if written on a blanket basis, blanket limit must reflect
total values at risk; or if written on a loss limit basis, loss limit must be secured to reflect
total insured values (TIV) within any geographic area subject to a single catastrophic event. If
written on a per occurrence loss limit basis for “All Risk perils”, the word “occurrence” shall
not be defined unless the definition is acceptable to CRF; sublimits for Flood and Earthquake
must reflect probable maximum loss (PML).


 


 









 





4. Deductibles




	 	 	 	 	 	 	 	 	 
	Maximum deductibles	 	 
	 	 	 	 	 	 	 	 	 

	“All Risk”	 	$	25,000	 	 	 

	 	 	 	 	 	 	 	 	 

	Flood	 	$	100,000	 	 	(In a flood zone, higher deductibles are
acceptable, up to the maximum that can be
bought back in Federal program.)

	 	 	 	 	 	 	 	 	 

	Earthquake	 	$	100,000	 	 	(In California, Washington state and the “New
Madrid Fault”, no greater than 5% of individual
building value and 5% of 12 months of business
revenue for properties, unless such coverage is
not reasonably available.

	 	 	 	 	 	 	 	 	 

	Windstorm	 	 	2	%	 	 







REQUIREMENTS FOR BOILER & MACHINERY




Coverage



Coverage must be provided for direct damage and loss of income due to any accident to boiler and/or
air conditioning equipment.



1. Extensions





	 	•	 	Water damage







	 	•	 	Expediting expenses







	 	•	 	Ammonia contamination







	 	•	 	Building ordinance







	 	•	 	Joint loss clause (if applicable)







	 	•	 	Hazardous substance clean up for contamination of covered property from a covered peril







	 	•	 	Terrorism for both certified and non-certified acts







	 	•	 	Off Premise Power interruption







	 	•	 	Extended period of indemnity — 60 days






2. Valuation





	 	•	 	Replacement cost of property







	 	•	 	Actual loss sustained on business income






3. Limits





	 	•	 	Must reflect values of properties







	4.	 	Deductibles







	 	•	 	Maximum deductibles

	 
	 	 	 	Direct damage —  $10,000

	 
	 	 	 	Loss of Income —  24 hours





 


- ii -









 






REQUIREMENTS FOR COMMERCIAL GENERAL LIABILITY




	 	 	 	 	 
	 	 	Combined Single	 
	 	 	Limit	 
	1. Coverage/Limit
	 	 	 	 
	•    General aggregate other than Products/Completed Operations

	 	$	2,000,000	 
	•    Products/Completed Operations aggregate

	 	 	1,000,000	 
	•    Personal and advertising injury (any one person)

	 	 	1,000,000	 
	•    Each occurrence

	 	 	1,000,000	 
	•   
Fire/explosion damage legal liability (any one fire/explosion

	 	 	100,000	 
	•    Medical expense (any one person) (except residential where coverage is $0)

	 	 	5,000	 
	 
	 	 	 	 
	2. Extensions
	 	 	 	 
	•    Aggregate must be on a per location basis

	 	 	 	 
	•    Notice of occurrence

	 	 	 	 
	•    Knowledge of occurrence

	 	 	 	 
	•    Unintentional errors and omissions

	 	 	 	 
	•    Pollution from hostile fire, building heating equipment

	 	 	 	 
	•    Cross Liability — severability of interest

	 	 	 	 
	•    Delete contractual exclusion on personal injury coverage part

	 	 	 	 
	•    Terrorism for both certified and non-certified acts

	 	 	 	 
	•    No exclusion for lead, mold and fungus

	 	 	 	 






REQUIREMENTS FOR EXCESS LIABILITY




Coverage must be written on an Umbrella form for the lead carrier. All excess layers (if any)
should be written on a follow form basis.



	 	 	 	 	 
	1. Limits
	 	 	 	 
	•    Minimum acceptable limit is $50,000,000

	 	 	 	 
	 
	 	 	 	 
	2. Extensions
	 	 	 	 
	•    Terrorism for both certified and non-certified acts

	 	 	 	 
	•    Policy should be excess of Commercial General Liability, Automobile and Employers Liability

	 	 	 	 





 


- iii -









 





REQUIREMENTS FOR ENVIRONMENTAL LIABILITY




Coverage is to include remediation legal liability, pollution, legal liability and legal defense.




	 	•	 	Both 1st and 3rd party coverage







	 	•	 	Mold and Fungus — if excluded under Property and/or liability policies







	1.	 	Limits — minimum $5,000,000





 


- iv -









 





REQUIREMENTS FOR CRIME/FIDELITY INSURANCE



Coverage must be provided for acts of dishonesty by employees which result in a loss to CRF,
including the following:




	 	 	Employee dishonesty

	 
	 	 	Money and securities — in

	 
	 	 	Money and securities — out






In addition:




	 	 	Forgery or Alteration

	 
	 	 	Computer fraud






	 	 	 	 	 
	1. Limits
	 	 	 	 
	•   Dishonesty

	 	- a minimum of 4 months’ income
	•   Money and Securities

	 	- maximum cash exposure
	•   Forgery or alteration

	 	- same limit as dishonesty
	•   Computer Fraud

	 	- same limit as dishonesty
	 
	 	 	 	 
	2. Maximum Deductibles
	 	 	 	 
	•   Dishonesty, forgery and computer fraud

	 	- $50,000	 
	•   Money and securities

	 	- $1,000	 






3. Comments




	 	 	Since this policy is typically written in the name of Advisor, CRF
must have confirmation that the policy covers property of CRF if a
loss should occur.






REQUIREMENTS FOR WORKERS COMPENSATION INSURANCE



Statutory Benefits



	 	 	 	 	 
	Employers Liability Limits
	 	 	 	 
	•   Bodily Injury by accident occurrence

	 	- $1,000,000 each occurrence
	•   Bodily Injury by disease

	 	- $1,000,000 policy limit
	•   Bodily Injury by disease

	 	- $1,000,000 each employee






REQUIREMENTS FOR PROFESSIONAL LIABILITY



Errors & Omissions Liability coverage

The Limit should be at least $2,000,000

Maximum deductible of $50,000





 


- v -