Document:

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EXHIBIT 10.3

THIRD AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

BIOMED REALTY, L.P.

          THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF BIOMED REALTY, L.P., A
Maryland limited partnership (the “Partnership”), dated as of December 28, 2006, is entered
into by and among BioMed Realty Trust, Inc., a Maryland corporation (the “Company”), as the
General Partner, and the Persons whose names are set forth on Exhibit A attached hereto, as the
Limited Partners, together with any other Persons who become Partners in the Partnership as
provided herein.

          WHEREAS, the limited partnership was formed on April 30, 2004 and an original agreement of limited
partnership was entered into between the Company, as general partner, and Alan D. Gold, as limited
partner (the “Original Partnership Agreement”);

          WHEREAS, the Original Partnership Agreement was amended and restated by that certain Amended and
Restated Agreement of Limited Partnership of BioMed Realty, L.P., dated as of August 11, 2004 (the
“First Amended and Restated Partnership Agreement”), by and between the Company, as general partner
and limited partner, and Alan D. Gold, as limited partner (together, the “Current
Partners”), in connection with the initial public offering of the Company’s common stock;

          WHEREAS, the First Amended and Restated Partnership Agreement, by and among the current Partners
was amended and restated by the Second Amended and Restated Agreement of Limited Partnership of the
Partnership (the “Second Amended and Restated Partnership Agreement”), dated August 13,
2004; and

          WHEREAS, the Current Partners and the Partnership believe it is desirable and in the best interest
of the Partnership to amend and restate the Second Amended and Restated Partnership Agreement, in
its entirety, as set forth herein.

          NOW, THEREFORE, BE IT RESOLVED, that the Current Partners and the Partnership hereby amend and
restate the First Amended and Restated Partnership Agreement as follows:

ARTICLE 1.

DEFINED TERMS

Section 1.1
Definitions.

          The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.

 

 

          “Act” means the Maryland Revised Uniform Limited Partnership Act, as it may be amended from
time to time, and any successor to such statute.

          “Additional Funds” shall have the meaning set forth in Section 4.3.A.

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

          “Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit balance,
if any, in such Partner’s Capital Account as of the end of the relevant fiscal year, after giving
effect to the following adjustments:

	 	(i)	 	such deficit shall be decreased by any amounts which such Partner is
obligated to restore pursuant to this Agreement or is deemed to be obligated to
restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate
sentence of each of Regulations Sections 1.704-2(i)(5) and 1.704-2(g)(1); and
	 
	 	(ii)	 	such deficit shall be increased by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

          The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith. A positive balance in a Partner’s Capital Account, after giving effect to the
adjustments described above in clauses (i) and (ii), is referred to in this Agreement as an
“Adjusted Capital Account Balance.”

          “Adjustment Date” means, with respect to any Capital Contribution, the close of business on
the Business Day last preceding the date of the Capital Contribution, provided,
that if such Capital Contribution is being made by the General Partner in respect of the
proceeds from the issuance of REIT Shares (or the issuance of the General Partner’s securities
exercisable for, convertible into or exchangeable for REIT Shares), then the Adjustment Date shall
be as of the close of business on the Business Day last preceding the date of the issuance of such
securities.

          “Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under common control with such Person. Control of any Person means
the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise, and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.

          “Agreed Value” means (i) in the case of any Contributed Property set forth in Exhibit A and
as of the time of its contribution to the Partnership, the Agreed Value of such property as set
forth in Exhibit A; (ii) in the case of any Contributed Property not set forth in Exhibit A and as
of the time of its contribution to the Partnership, the fair market value of such property or other
consideration as determined by the General Partner, reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject when contributed; and
(iii) in the case of any property distributed to a Partner by the Partnership,

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the fair market
value of such property as determined by the General Partner at the time such property is
distributed, reduced by any liabilities either assumed by such Partner upon such distribution or to
which such property is subject at the time of the distribution as determined under Section 752 of
the Code and the Regulations thereunder.

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

          “Appraisal” means with respect to any assets, the opinion of an independent third party
experienced in the valuation of similar assets, selected by the General Partner in good faith; such
opinion may be in the form of an opinion by such independent third party that the value for such
property or asset as set by the General Partner is fair, from a financial point of view, to the
Partnership.

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

          “Available Cash” means, with respect to any period for which such calculation is being
made,

	 	(i)	 	the sum of:

     a. the Partnership’s Net Income or Net Loss (as the case may be) for such
period,

     b. Depreciation and all other noncash charges deducted in determining Net
Income or Net Loss for such period,

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

     d. the excess of the net proceeds from the sale, exchange, disposition, or
refinancing of Partnership property for such period over the gain (or loss, as the
case may be) recognized from any such sale, exchange, disposition, or
refinancing during such period (excluding any sale or other disposition of all or
substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of all or
substantially all of the assets of the Partnership), and

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

	 	(ii)	 	less the sum of:

     a. all principal debt payments made during such period by the Partnership,

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     b. capital expenditures made by the Partnership during such period,

     c. investments in any entity (including loans made thereto) to the extent that
such investments are not otherwise described in clauses (ii)(a) or (b),

     d. all other expenditures and payments not deducted in determining Net Income
or Net Loss for such period,

     e. any amount included in determining Net Income or Net Loss for such period
that was not received by the Partnership during such period,

     f. the amount of any increase in reserves established during such period which
the General Partner determines are necessary or appropriate in its sole and absolute
discretion,

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

     h. any amount paid in redemption of any Limited Partner Interest or Partnership
Units, including any Cash Amount paid.

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

          “Book-up Event” means an event described in any of clauses (b)(i) through (v) of the
definition of Gross Asset Value.

          “Book-up Value” has the meaning set forth in Section 6.3.B.

          “Business Day” means any day except a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to be closed.

          “Capital Account” means, with respect to any Partner, the Capital Account maintained for
such Partner in accordance with the following provisions:

          (a) To each Partner’s Capital Account there shall be added such Partner’s Capital Contributions,
such Partner’s share of Net Income and any items in the nature of income or gain which are
specially allocated pursuant to Section  6.3, and the amount of any Partnership liabilities assumed by such Partner or which are
secured by any property distributed to such Partner.

          (b) From each Partner’s Capital Account there shall be subtracted the amount of cash and the Gross
Asset Value of any property distributed to such Partner pursuant to any provision of this
Agreement, such Partner’s distributive share of Net Losses and any items in the nature of expenses
or losses which are specially allocated pursuant to Section 6.3, and the amount of any
liabilities of such Partner assumed by the Partnership or which are secured by any

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property
contributed by such Partner to the Partnership (except to the extent already reflected in the
amount of such Partner’s Capital Contribution).

          (c) In the event any interest in the Partnership is transferred in accordance with the terms of
this Agreement (which does not result in a termination of the Partnership for federal income tax
purposes), the transferee shall succeed to the Capital Account of the transferor to the extent it
relates to the transferred interest.

          (d) In determining the amount of any liability for purposes of subsections (a) and (b) hereof,
there shall be taken into account Code Section 752(c) and any other applicable provisions of the
Code and Regulations.

          (e) The foregoing provisions and the other provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2, and
shall be interpreted and applied in a manner consistent with such Regulations. In the event the
General Partner shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto (including, without limitation, debits or credits
relating to liabilities which are secured by contributed or distributed property or which are
assumed by the Partnership, the General Partner, or the Limited Partners) are computed in order to
comply with such Regulations, the General Partner may make such modification, provided
that it is not likely to have a material effect on the amounts distributable to any Person
pursuant to Article 13 of this Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain
equality between the Capital Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b) or Section 1.704-2.

          “Capital Contribution” means, with respect to any Partner, the amount of money and the
initial Gross Asset Value of any property (other than money) contributed to the Partnership by such
Partner (net of any liabilities assumed by the Partnership relating to such property and any
liability to which such property is subject).

          “Cash Amount” means, with respect to any Partnership Units subject to a Redemption, an
amount of cash equal to the Deemed Partnership Interest Value attributable to such Partnership
Units.

          “Certificate” means the Certificate of Limited Partnership relating to the Partnership
filed in the office of the State Department of Assessments and Taxation of Maryland on April 30,
2004, as amended from time to time in accordance with the terms hereof and the Act.

          “Charter” means the Articles of Incorporation of the General Partner filed with the
Maryland State Department of Assessments and Taxation on April 30, 2004, as amended or restated
from time to time.

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     “Code” means the Internal Revenue Code of 1986, as amended from time to time or any
successor statute thereto. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future law.

     “Consent” means the consent to, approval of, or vote on a proposed action by a Partner
given in accordance with Article 14.

     “Consent of the Limited Partners” means the Consent of a Majority in Interest of the
Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withheld by a Majority in Interest of the Limited
Partners, unless otherwise expressly provided herein, in their sole and absolute discretion.

     “Consent of the Partners” means the Consent of Partners holding Percentage Interests
that in the aggregate are equal to or greater than fifty percent (50%) of the aggregate Percentage
Interests of all Partners, which Consent shall be obtained prior to the taking of any action for
which it is required by this Agreement and may be given or withheld by such Partners, in their sole
and absolute discretion.

     “Constructively Own” means ownership under the constructive ownership rules described
in Exhibit C.

     “Contributed Property” means each property or other asset, in such form as may be
permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership (or,
to the extent provided in applicable Regulations, deemed contributed to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).

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

     “Deemed Partnership Interest Value” means, as of any date with respect to any class of
Partnership Interests, the Deemed Value of the Partnership Interests of such class multiplied by
the applicable Partner’s Percentage Interest of such class.

     “Deemed Value of the Partnership Interests” means, as of any date with respect to any
class or series of Partnership Interests, (i) the total number of Partnership Units of the General
Partner in such class or series of Partnership Interests (as provided for in Sections 4.1
and 4.3.B) issued and outstanding as of the close of business on such date multiplied by
the Fair Market Value determined as of such date of a share of capital stock of the General Partner
which corresponds to such class or series of Partnership Interests, as adjusted (x) pursuant to
Section 

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7.5 (in the event the General Partner acquires material assets, other than on behalf
of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions,
reverse stock splits and combinations, distribution of warrants or options and distributions of
evidences of indebtedness or assets not received by the General Partner pursuant to a pro rata
distribution by the Partnership; (ii) divided by the Percentage Interest of the
General Partner in such class or series of Partnership Interests on such date; provided,
that if no outstanding shares of capital stock of the General Partner correspond to a class
of series of Partnership Interests, the Deemed Value of the Partnership Interests with respect to
such class or series shall be equal to an amount reasonably determined by the General Partner.

     “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 other 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 other period,
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
other period bears to such beginning adjusted tax basis; provided, however, that if
the federal income tax depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.

     “Economic Capital Account Balance” shall mean the Capital Account balance of an LTIP
Unitholder as computed for book purposes but, for purposes of this definition, not reduced by the
amount of any Tax Distributions to such LTIP Unitholder, plus the amount of such Partner’s share of
any Partner Minimum Gain or Partnership Minimum Gain, in either case to the extent attributable to
such Partner’s ownership of LTIP Units.

     “Effective Date” means the date of closing of the initial public offering of REIT
Shares upon which date the contributions set forth on Exhibit A shall become effective.

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

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission promulgated thereunder and any successor
statute thereto.

     “Fair Market Value” means, with respect to any share of capital stock of the General
Partner, the average of the daily market price for the ten (10) consecutive trading days
immediately preceding the date with respect to which “Fair Market Value” must be determined
hereunder or, if such date is not a Business Day, the immediately preceding Business Day. The
market price for each such trading day shall be: (i) if such shares are listed or admitted to
trading on any securities exchange or the Nasdaq National Market, the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the closing bid and asked
prices on such day, (ii) if such shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market, the last reported sale price on such day or, if no sale
takes place on such day, the average of the closing bid and asked prices on such day, as reported

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by a reliable quotation source designated by the General Partner, or (iii) if such shares are
not listed or admitted to trading on any securities exchange or the Nasdaq National Market and no
such last reported sale price or closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent day (not more than
ten (10) days prior to the date in question) for which prices have been so reported;
provided that, if there are no bid and asked prices reported during the ten (10)
days prior to the date in question, the Fair Market Value of such shares shall be determined by the
General Partner acting in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT Shares Amount for such
shares includes rights that a holder of such shares would be entitled to receive, then the Fair
Market Value of such rights shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its reasonable judgment,
appropriate; and provided, further that, in connection with determining the
Deemed Value of the Partnership Interests for purposes of determining the number of additional
Partnership Units issuable upon a Capital Contribution funded by an underwritten public offering of
shares of capital stock of the General Partner, the Fair Market Value of such shares shall be the
public offering price per share of such class of capital stock sold. Notwithstanding the
foregoing, the General Partner in its reasonable discretion may use a different “Fair Market Value”
for purposes of making the determinations under subparagraph (b) of the definition of “Gross Asset
Value” and Section 4.3.D in connection with the contribution of Property or cash to the
Partnership by a third party, provided such value shall be based upon the value per REIT
Share (or per Partnership Unit) agreed upon by the General Partner and such third party for
purposes of such contribution.

     “Forfeitable LTIP Units” has the meaning set forth in Section 4.6 hereof.

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

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

     “Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for
federal income tax purposes, except as follows:

     (a) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership
shall be the gross fair market value of such asset, as determined by the contributing Partner and
the General Partner (as set forth on Exhibit A attached hereto, as such Exhibit may be amended from
time to time); provided, that if the contributing Partner is the General Partner,
then, except with respect to the General Partner’s initial Capital Contribution which shall be
determined as set forth on Exhibit A, the determination of the fair market value of the contributed
asset shall be determined (i) by the price paid by the General Partner if the asset is acquired by
the General Partner contemporaneously with its contribution to the Partnership, (ii) by Appraisal,
if otherwise acquired by the General Partner, (iii) by the amount of cash if the asset is cash, and
(iv) as reasonably determined by the General Partner if the asset is REIT Shares or other shares of
capital stock of the Company.

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     (b) The Gross Asset Values of all Partnership assets shall be adjusted to equal their
respective gross fair market values, as determined by the General Partner using such reasonable
method of valuation as it may adopt, provided, however, that for such purpose, the
net value of all of the Partnership assets, in the aggregate, shall be equal to the Deemed Value of
the Partnership Interests of all classes of Partnership Interests then outstanding, regardless of
the method of valuation adopted by the General Partner, immediately prior to the times listed
below:

	 	(i)	 	the acquisition of an additional interest in the Partnership by
a new or existing Partner in exchange for more than a de minimis Capital
Contribution, if the General Partner reasonably determines that such adjustment
is necessary or appropriate to reflect the relative economic interests of the
Partners in the Partnership;
	 
	 	(ii)	 	the distribution by the Partnership to a Partner of more than a
de minimis amount of Partnership property as consideration for an interest in
the Partnership if the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
	 
	 	(iii)	 	the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g);
	 
	 	(iv)	 	at such other times as the General Partner shall reasonably
determine necessary or advisable in order to comply with Regulations Sections
1.704-1(b) and 1.704-2; and
	 
	 	(v)	 	in connection with the grant of an interest in the Partnership
(other than a de minimis interest) as consideration for the provision of
services to or for the benefit of the Partnership by an existing Partner acting
in a partner capacity or by a new Partner acting in a partner capacity or in
anticipation of becoming a Partner (including the grant of any LTIP Units).

     (c) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross
fair market value of such asset on the date of distribution as determined by the distributee and
the General Partner, or if the distributee and the General Partner cannot agree on such a
determination, by Appraisal.

     (d) The Gross Asset Values of Partnership 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); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to
the extent that the General Partner reasonably determines that an adjustment pursuant to
subparagraph (b) is necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this subparagraph (d).

     (e) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant
to subparagraph (a), (b) or (d), such Gross Asset Value shall thereafter be

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adjusted by the Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.

     (f) Upon a Book-up Event, the Gross Asset Value of each Partnership asset shall be determined
as provided in Section 6.3.B(1).

     “Holder” means either the Partner or Assignee owning a Partnership Unit, that is
treated as a partner of the Partnership for federal income tax purposes.

     “Immediate Family” means, with respect to any natural Person, such natural Person’s
estate or heirs or current spouse or former spouse, parents, parents-in-law, children (whether
natural, adopted or by marriage), siblings and grandchildren and any trust or estate, all of the
beneficiaries of which consist of such Person or such Person’s spouse or former spouse, parents,
parents-in-law, children, siblings or grandchildren.

     “Incapacity” or “Incapacitated” means, (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction adjudicating him or
her incompetent to manage his or her Person or his or her estate; (ii) as to any corporation which
is a Partner, the filing of a certificate of dissolution, or its equivalent, for the corporation or
the revocation of its charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any
trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a
new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences
a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy,
insolvency or other similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner’s creditors, (d) the
Partner files an answer or other pleading admitting or failing to contest the material allegations
of a petition filed against the Partner in any proceeding of the nature described in clause (b)
above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver
or liquidator for the Partner or for all or any substantial part of the Partner’s properties, (f)
any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency
or other similar law now or hereafter in effect has not been dismissed within 120 days after the
commencement thereof, (g) the appointment without the Partner’s consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within 90 days of such appointment,
or (h) an appointment referred to in clause (g) is not vacated within 90 days after the expiration
of any such stay.

     “Indemnitee” means (i) any Person subject to a claim or demand or made or threatened
to be made a party to, or involved or threatened to be involved in, an action, suit or proceeding
by reason of his or her status as (A) the General Partner or (B) a director or officer of the
Partnership or the General Partner, and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from time to time

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(whether before or after the event giving rise to potential liability), in its sole and
absolute discretion.

     “IRS” means the United States Internal Revenue Service.

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

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

     “Liquidating Event” shall have the meaning set forth in Section 13.1.

     “Liquidator” shall have the meaning set forth in Section 13.2.A.

     “LTIP Equalization Date” has the meaning set forth in Section 6.3.B(1).

     “LTIP Forfeiture Agreement” means each Long Term Incentive Plan (LTIP) Unit Agreement
entered into by a LTIP Unitholder upon acceptance of a grant of LTIP Units (as such agreement may
be amended, modified or supplemented from time to time).

     “LTIP Unit” means a Partnership Unit which is designated as an “LTIP Unit”, which
represents a profits interest in future appreciation and certain distributions of Available Cash,
and which has the rights, preferences and other privileges designated in Section 4.6 hereof and
elsewhere in this Agreement in respect of Holders of LTIP Units. The allocation of LTIP Units
among the Partners shall be set forth on Exhibit A, as may be amended from time to time by the
General Partner as it approves the grant of additional LTIP Units. An LTIP Unit shall be deemed to
be a Partnership Unit (A) that may be the subject of a Redemption only when both (i) the LTIP Unit
has become a Non-Forfeitable LTIP Unit and (ii) the LTIP Equalization Date has occurred as provided
in Section 4.6, and (B) for purposes of distributions of Available Cash and allocations to the
extent provided in Sections 4.6.B, 5.1 and 6.3.B.

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

     “Majority in Interest of the Limited Partners” means Limited Partners holding in the
aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate
Percentage Interests of all Limited Partners.

     “Net Income” or “Net Loss” means for each fiscal year of the Partnership, an
amount equal to the Partnership’s taxable income or loss for such fiscal year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income, gain loss, or

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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 Partnership that is exempt from federal income tax and not otherwise
taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be added to such taxable income or loss;

     (b) Any expenditures of the Partnership 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 Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss shall be subtracted from such taxable income or loss;

     (c) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to
subparagraph (b) or subparagraph (c) of the definition of Gross Asset Value, the amount of such
adjustment shall be taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;

     (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;

     (f) To the extent an adjustment to the adjusted tax basis of any Partnership 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)(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 Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

     (g) Notwithstanding any other provision of this definition of Net Income or Net Loss, any
items which are specially allocated pursuant to Section 6.3 shall not be taken into account
in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss,
or deduction available to be specially allocated pursuant to Section 6.3 shall be
determined by applying rules analogous to those set forth in this definition of Net Income or Net
Loss.

     “New Securities” means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase REIT Shares or other shares
of capital stock of the General Partner, excluding in each case, grants under any Stock Plan, or
(ii) any Debt issued by the General Partner that provides any of the rights described in clause
(i).

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     “Non-Forfeitable LTIP Units” has the meaning set forth in Section 4.6.D(1) hereof.

     “Nonrecourse Deductions” shall have the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined
in accordance with the rules of Regulations Section 1.704-2(c).

     “Nonrecourse Liability” shall have the meaning set forth in Regulations Section
1.752-1(a)(2).

     “Notice of Redemption” means the Notice of Redemption substantially in the form of
Exhibit B to this Agreement.

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

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

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

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

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

     “Partnership Unit Economic Balance” has the meaning set forth in Section 6.3.B(3).

     “Partnership Interest” means, an ownership interest in the Partnership of either a
Limited Partner or the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement, together with all
obligations of such Person to comply with the terms and provisions of this Agreement. There may be
one or more classes or series of Partnership Interests as provided in Section 4.3. A
Partnership Interest may be expressed as a number of Partnership Units. Unless otherwise expressly
provided for by the General Partner at the time of the original issuance of any Partnership
Interests, all Partnership Interests (whether of a Limited Partner or a General Partner) shall be
of the same class or series.

     “Partnership Minimum Gain” shall have the meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase

13

 

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

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

     “Partnership Unit” or “Unit” means, with respect to any class of Partnership
Interest, a fractional, undivided share of such class of Partnership Interest issued pursuant to
Sections 4.1 and 4.3. The ownership of Partnership Units may be evidenced by a certificate
for units substantially in the form of Exhibit D hereto or as the General Partner may determine
with respect to any class of Partnership Units issued from time to time under Section 4.1 and
4.3. Partnership Units include LTIP Units to the extent set forth in the definition of “LTIP
Units.”

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

     “Percentage Interest” means, as to a Partner holding a class or series of Partnership
Interests, its interest in such class or series as determined by dividing the Partnership Units of
such class or series owned by such Partner by the total number of Partnership Units of such class
then outstanding as specified in Exhibit A attached hereto, as such Exhibit may be amended from
time to time. If the Partnership issues more than one class or series of Partnership Interests,
the interest in the Partnership among the classes or series of Partnership Interests shall be
determined as set forth in the amendment to the Partnership Agreement setting forth the rights and
privileges of such additional classes or series of Partnership Interest, if any, as contemplated by
Section 4.3.D.

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

     “Plan Asset Regulation” means the regulations promulgated by the United States
Department of Labor in Title 29, Code of Federal Regulations, Part 2510, Section 101.3, and any
successor regulations thereto.

     “Pledge” shall have the meaning set forth in Section 11.3.A.

     “Post-Grant Gains” shall have the meaning set forth in Section 6.3.B hereof.

     “Properties” means such interests in real property and personal property including
without limitation, fee interests, interests in ground leases, interests in joint ventures,
interests in mortgages, and Debt instruments as the Partnership may hold from time to time.

     “Qualifying Party” means (a) an Additional Limited Partner; (b) a Family Member, or a
lending institution as the pledgee of a Pledge, who is the transferee in a Permitted Transfer; (c)
a Substituted Limited Partner succeeding to all or part of the Limited Partner Interest of (i) an
Additional Limited Partner or (ii) a Family Member, or a lending institution who is the pledgee of
a Pledge, who is the transferee in a Permitted Transfer; or (d) an LTIP

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Unitholder with respect to Non-Forfeitable LTIP Units with respect to which the LTIP
Equalization Date has occurred.

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

     “Qualified Transferee” means an “Accredited Investor” as such term is defined in Rule
501 promulgated under the Securities Act.

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

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

     “Regulatory Allocations” shall have the meaning set forth in Section
6.3.A(viii).

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

     “REIT Requirements” shall have the meaning set forth in Section 5.1.

     “REIT Share” means a share of common stock, par value $0.01 per share, of the General
Partner.

     “REIT Shares Amount” means, as of any date, an aggregate number of REIT Shares equal
to the number of Tendered Units, as adjusted (x) pursuant to Section 7.5 (in the event the
General Partner acquires material assets, other than on behalf of the Partnership) and (y) for
stock dividends and distributions, stock splits and subdivisions, reverse stock splits and
combinations, distributions of rights, warrants or options, and distributions of evidences of
indebtedness or assets relating to assets not received by the General Partner pursuant to a
pro rata distribution by the Partnership.

     “Safe Harbor Election” has the meaning set forth in Section 4.6.B(2).

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder and any successor
statute thereto.

     “Specified Redemption Date” means the day of receipt by the General Partner of a
Notice of Redemption.

     “Stock Plan” means any stock incentive, stock option, stock ownership or employee
benefits plan of the General Partner.

     “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, joint venture or other entity of which a majority of (i) the voting

15

 

power of the voting equity securities or (ii) the outstanding equity interests is owned,
directly or indirectly, by such Person.

     “Subsidiary Partnership” means any partnership or limited liability company that is a
Subsidiary of the Partnership.

     “Substituted Limited Partner” means a Person who is admitted as a Limited Partner to
the Partnership pursuant to Section 11.4.

     “Surviving Partnership” shall have the meaning set forth in Section 11.2.B(2).

     “Tax Distributions” shall have the meaning set forth in Section 4.6.D(4) hereof.

     “Tax Items” shall have the meaning set forth in Section 6.4.A.

     “Tenant” means any tenant from which the General Partner derives rent either directly
or indirectly through partnerships, including the Partnership, or Qualified REIT Subsidiaries.

     “Tendered
Units” shall have the meaning set forth in
Section 8.6.A.

     “Tendering
Partner” shall have the meaning set forth in
Section 8.6.A.

     “Termination Transaction” shall have the meaning set forth in Section 11.2.B.

Section 1.2 Rules of Construction

     Unless otherwise indicated, all references herein to “REIT,” “REIT
Requirements,” “REIT Shares” and “REIT Shares Amount” with respect to the
General Partner shall apply only with reference to the Company.

ARTICLE 2.

ORGANIZATIONAL MATTERS

Section 2.1 Organization

     The Partnership is a limited partnership formed pursuant to the provisions of the Act and upon
the terms and conditions set forth in this Agreement. Except as expressly provided herein, the
rights and obligations of the Partners and the administration and termination of the Partnership
shall be governed by the Act. The Partnership Interest of each Partner shall be personal property
for all purposes.

Section 2.2 Name

     The name of the Partnership is BioMed Realty, L.P. The Partnership’s business may be
conducted under any other name or names deemed advisable by the General Partner, including the name
of the General Partner or any Affiliate thereof. The words “Limited Partnership,” “L.P.,” “Ltd.”
or similar words or letters shall be included in the Partnership’s name where necessary for the
purposes of complying with the laws of any jurisdiction that so

16

 

requires. The General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited Partners of such change
in the next regular communication to the Limited Partners.

Section 2.3 Registered Office and Agent; Principal Office

     The name and address of the registered office and registered agent of the Partnership in the
State of Maryland are James J. Hanks, Jr., care of Venable LLP, 1800 Mercantile Bank & Trust Bldg.,
2 Hopkins Plaza, Baltimore, MD 21201. The address of the principal office of the Partnership in
the State of Maryland is c/o Venable LLP at such address. The principal office of the Partnership
is located at 17140 Bernardo Center Drive, Suite 222, San Diego, California 92128, or such other
place as the General Partner may from time to time designate by notice to the other Partners. The
Partnership may maintain offices at such other place or places within or outside the State of
Maryland as the General Partner deems advisable.

Section 2.4 Power of Attorney

     A. Each Limited Partner and each Assignee constitutes and appoints the General Partner,
any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those
acting singly, in each case with full power of substitution, as its true and lawful agent
and attorney-in-fact, with full power and authority in its name, place and stead to:

          (1) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices (a) all certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments or restatements thereof)
that the General Partner or the Liquidator deems appropriate or necessary to form, qualify
or continue the existence or qualification of the Partnership as a limited partnership (or a
partnership in which the Limited Partners have limited liability) in the State of Maryland
and in all other jurisdictions in which the Partnership may conduct business or own
property; (b) all instruments that the General Partner or any Liquidator deems appropriate
or necessary to reflect any amendment, change, modification or restatement of this Agreement
in accordance with its terms; (c) all conveyances and other instruments or documents that
the General Partner or any Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation; (d) all instruments relating
to the admission, withdrawal, removal or substitution of any Partner pursuant to, or other
events described in, Articles 11, 12 or 13 or the Capital
Contribution of any Partner; and (e) all certificates, documents and other instruments
relating to the determination of the rights, preferences and privileges of Partnership
Interests; and

          (2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers,
certificates and other instruments appropriate or necessary, in the sole and absolute
discretion of the General Partner or any Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action which is made or given by the
Partners hereunder or is consistent with the terms of this Agreement or

17

 

appropriate or necessary, in the sole discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to
amend this Agreement except in accordance with Article 14 or as may be otherwise expressly
provided for in this Agreement.

     B. The foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, in recognition of the fact that each of the Partners will be
relying upon the power of the General Partner and any Liquidator to act as contemplated by
this Agreement in any filing or other action by it on behalf of the Partnership, and it
shall survive and not be affected by the subsequent Incapacity of any Limited Partner or
Assignee and the transfer of all or any portion of such Limited Partner’s or Assignee’s
Partnership Units and shall extend to such Limited Partner’s or Assignee’s heirs,
successors, assigns and personal representatives. Each such Limited Partner or Assignee
hereby agrees to be bound by any representation made by the General Partner or any
Liquidator, acting in good faith pursuant to such power of attorney; and each such Limited
Partner or Assignee hereby waives any and all defenses which may be available to contest,
negate or disaffirm the action of the General Partner or any Liquidator, taken in good faith
under such power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or any Liquidator, within 15 days after receipt of the General Partner’s
or Liquidator’s request therefor, such further designation, powers of attorney and other
instruments as the General Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.

Section 2.5 Term

     The term of the Partnership commenced on April 30, 2004 and shall continue until December 31,
2104 unless it is dissolved sooner pursuant to the provisions of Article 13 or as otherwise
provided by law.

ARTICLE 3.

PURPOSE

Section 3.1 Purpose and Business

     The purpose and nature of the business to be conducted by the Partnership is (i) to conduct
any business that may be lawfully conducted by a limited partnership organized pursuant to the Act,
(ii) to enter into any partnership, joint venture or other similar arrangement to engage in any
business described in the foregoing clause (i) or to own interests in any entity engaged, directly
or indirectly, in any such business and (iii) to do anything necessary or incidental to the
foregoing, provided, however, that such business shall be limited to and conducted
in such a manner as to permit the General Partner at all times to be classified as a REIT for
federal income tax purposes, unless the General Partner ceases to qualify as a REIT for reasons
other than the conduct of the business of the Partnership. In connection with the foregoing, and
without limiting the General Partner’s right in its sole discretion to cease

18

 

qualifying as a REIT, the Partners acknowledge that the General Partner’s current status as a
REIT inures to the benefit of all the Partners and not solely the General Partner.

Section 3.2 Powers

     The Partnership is empowered to do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and
business described herein and for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest in other entities,
to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of
indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, acquire,
own, manage, improve and develop real property, and lease, sell, transfer and dispose of real
property; provided, however, notwithstanding anything to the contrary in this
Agreement, the Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could adversely affect
the ability of the General Partner to continue to qualify as a REIT, (ii) absent the consent of the
General Partner, which may be given or withheld in its sole and absolute discretion, could subject
the General Partner to any taxes under Section 857 or Section 4981 of the Code, or (iii) could
violate any law or regulation of any governmental body or agency having jurisdiction over the
General Partner or its securities, unless any such action (or inaction) under the foregoing clauses
(i), (ii) or (iii) shall have been specifically consented to by the General Partner in writing.

Section 3.3 Partnership Only for Purposes Specified

     The Partnership shall be a partnership only for the purposes specified in Section 3.1,
and this Agreement shall not be deemed to create a partnership among the Partners with respect to
any activities whatsoever other than the activities within the purposes of the Partnership as
specified in Section 3.1. Except as otherwise provided in this Agreement, no Partner shall
have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of
the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner
under this Agreement, shall be responsible or liable for any indebtedness or obligation of another
Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of
any Partner, incurred either before or after the execution and delivery of this Agreement by such
Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred
pursuant to and as limited by the terms of this Agreement and the Act.

Section 3.4 Representations and Warranties by the Parties

     A. Each Partner that is an individual represents and warrants to each other Partner
that (i) such Partner has the legal capacity to enter into this Agreement and perform such
Partner’s obligations hereunder, (ii) the consummation of the transactions contemplated by
this Agreement to be performed by such Partner will not result in a breach or violation of,
or a default under, any agreement by which such Partner or any of such Partner’s property is
or are bound, or any statute, regulation, order or other law to which such Partner is
subject, (iii) such Partner is a “United States person” within the

19

 

meaning of Section 7701(a)(30) of the Code, and (iv) this Agreement is binding upon,
and enforceable against, such Partner in accordance with its terms.

     B. Each Partner that is not an individual represents and warrants to each other Partner
that (i) its execution and delivery of this Agreement and all transactions contemplated by
this Agreement to be performed by it have been duly authorized by all necessary action,
including without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or stockholder(s), as the case may be, as required, (ii) the
consummation of such transactions shall not result in a breach or violation of, or a default
under, its certificate of limited partnership, partnership agreement, trust agreement,
limited liability company operating agreement, charter or bylaws, as the case may be, any
agreement by which such Partner or any of such Partner’s properties or any of its partners,
beneficiaries, trustees or stockholders, as the case may be, is or are bound, or any
statute, regulation, order or other law to which such Partner or any of such Partner’s
properties or any of its partners, trustees, beneficiaries or stockholders, as the case may
be, is or are subject, (iii) such Partner is a “United States person” within the meaning of
Section 7701(a)(30) of the Code and (iv) this Agreement is binding upon, and enforceable
against, such Partner in accordance with its terms.

     C. Each Partner represents, warrants, and agrees that it has acquired and continues to
hold its interest in the Partnership for its own account for investment only and not for the
purpose of, or with a view toward, the resale or distribution of all or any part thereof,
nor with a view toward selling or otherwise distributing such interest or any part thereof
at any particular time or under any predetermined circumstances. Each Partner further
represents and warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate investments, and that
it has a sufficiently high net worth that it does not anticipate a need for the funds it has
invested in the Partnership in what it understands to be a highly speculative and illiquid
investment. Each Partner represents, warrants and agrees that such Partner is an
“accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the
Securities Act).

     D. Each Partner acknowledges that (i) the Partnership Units (and any REIT Shares that
might be exchanged therefor) have not been registered under the Securities Act and may not
be transferred unless they are subsequently registered under the Securities Act or an
exemption from such registration is available (it being understood that the Partnership has
no intention of so registering the Partnership Units), (ii) a restrictive legend in the form
set forth in Exhibit D shall be placed on the certificates representing the Partnership
Units, and (iii) a notation shall be made in the appropriate records of the Partnership
indicating that the Partnership Units are subject to restrictions on transfer.

     E. Each Limited Partner further represents, warrants, covenants and agrees as follows:

          (1) Except as provided in Exhibit E, at any time such Partner actually or
Constructively Owns a 25% or greater capital interest or profits interest in the

20

 

Partnership, it does not and will not, without the prior written consent of the General
Partner, actually own or Constructively Own (a) with respect to any Tenant that is a
corporation, any stock of such Tenant, and (b) with respect to any Tenant that is not a
corporation, any interests in either the assets or net profits of such Tenant.

          (2) Except as provided in Exhibit F, at any time such Partner actually or
Constructively Owns a 25% or greater capital interest or profits interest in the
Partnership, it does not, and agrees that it will not without the prior written consent of
the General Partner, actually own or Constructively Own, any stock in the General Partner,
other than any REIT Shares or other shares of capital stock of the General Partner such
Partner may acquire (a) as a result of an exchange of Tendered Units pursuant to Section
8.6 or (b) upon the exercise of options granted or delivery of REIT Shares pursuant to
any Stock Plan, in each case subject to the ownership limitations set forth in the General
Partner’s Charter.

          (3) Upon request of the General Partner, it will disclose to the General Partner the
amount of REIT Shares or other shares of capital stock of the General Partner that it
actually owns or Constructively Owns.

          (4) It understands that if, for any reason, (a) the representations, warranties or
agreements set forth in E(1) or (2) above are violated, or (b) the
Partnership’s actual or Constructive Ownership of REIT Shares or other shares of capital
stock of the General Partner violates the limitations set forth in the Charter, then (x)
some or all of the Redemption rights of the Partners may become non-exercisable, and (y)
some or all of the REIT Shares owned by the Partners may be automatically transferred to a
trust for the benefit of a charitable beneficiary, as provided in the Charter.

          (5) Without the consent of the General Partner, which may be given or withheld in its
sole discretion, no Partner shall take any action that would cause the Partnership at any
time to have more than 100 partners (including as partners those persons indirectly owning
an interest in the Partnership through a partnership, limited liability company, S
corporation or grantor trust (such entity, a “flow through entity”), but only if
substantially all of the value of such person’s interest in the flow through entity is
attributable to the flow through entity’s interest (direct or indirect) in the Partnership).

     F. The representations and warranties contained in Sections 3.4 shall survive
the execution and delivery of this Agreement by each Partner and the dissolution and
winding-up of the Partnership.

     G. Each Partner hereby acknowledges that no representations as to potential profit,
cash flows, funds from operations or yield, if any, in respect of the Partnership or the
General Partner have been made by any Partner or any employee or representative or Affiliate
of any Partner, and that projections and any other information, including, without
limitation, financial and descriptive information and documentation, which may have been in
any manner submitted to such Partner shall not constitute any representation or warranty of
any kind or nature, express or implied.

21

 

Section 3.5 Certain ERISA Matters

     Each Partner acknowledges that the Partnership is intended to qualify as a “real estate
operating company” (as such term is defined in the Plan Asset Regulation). The General Partner may
structure the investments in, relationships with and conduct with respect to Properties and any
other assets of the Partnership so that the Partnership will be a “real estate operating company”
(as such term is defined in the Plan Asset Regulation).

ARTICLE 4.

CAPITAL CONTRIBUTIONS

Section 4.1 Capital Contributions of the Partners

     At the time of their respective execution of this Agreement, the Partners shall make or shall
have made Capital Contributions as set forth in Exhibit A to this Agreement. The Partners shall
own Partnership Units of the class or series and in the amounts set forth in Exhibit A and shall
have a Percentage Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the extent necessary to
reflect accurately exchanges, redemptions, Capital Contributions, the issuance of additional
Partnership Units or similar events having an effect on a Partner’s Percentage Interest. Except as
required by law, as otherwise provided in Sections 4.3, 4.4 and 10.5, or as
otherwise agreed to by a Partner and the Partnership, no Partner shall be required or permitted to
make any additional Capital Contributions or loans to the Partnership. Unless otherwise specified
by the General Partner at the time of the creation of any class of Partnership Interests, the
corresponding class or series of capital stock for any Partnership Units issued shall be REIT
Shares.

Section 4.2 Loans by Third Parties

     Subject to Section 4.3, the Partnership may incur Debt, or enter into other similar
credit, guarantee, financing or refinancing arrangements for any purpose (including, without
limitation, in connection with any further acquisition of Properties) with any Person that is not
the General Partner upon such terms as the General Partner determines appropriate; provided
that, the Partnership shall not incur any Debt that is recourse to the General Partner,
except to the extent otherwise agreed to by the General Partner in its sole discretion.

Section 4.3 Additional Funding and Capital Contributions

     A. General. The General Partner may, at any time and from time to time
determine that the Partnership requires additional funds (“Additional Funds”) for
the acquisition of additional Properties or for such other Partnership purposes as the
General Partner may determine. Additional Funds may be raised by the Partnership, at the
election of the General Partner, in any manner provided in, and in accordance with, the
terms of this Section 4.3. No Person shall have any preemptive, preferential or
similar right or rights to subscribe for or acquire any Partnership Interest, except as set
forth in this Section 4.3.

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     B. Issuance of Additional Partnership Interests. The General Partner, in its
sole and absolute discretion, may raise all or any portion of the Additional Funds by
accepting additional Capital Contributions of cash. The General Partner may also accept
additional Capital Contributions of real property or any other non-cash assets. In
connection with any such additional Capital Contributions (of cash or property), the General
Partner is hereby authorized to cause the Partnership from time to time to issue to Partners
(including the General Partner) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) additional Partnership
Units or other Partnership Interests in one or more classes, or one or more series of any of
such classes, with such designations, preferences and relative, participating, optional or
other special rights, powers, and duties, including rights, powers, and duties senior to
then existing Limited Partner Interests, all as shall be determined by the General Partner
in its sole and absolute discretion subject to Maryland law, and as set forth by amendment
to this Agreement, including without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction, and credit to such class or series of Partnership Interests;
(ii) the right of each such class or series of Partnership Interests to share in Partnership
distributions; (iii) the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; and (iv) the right to vote, including,
without limitation, the Limited Partner approval rights set forth in Section 11.2.A;
provided, that no such additional Partnership Units or other Partnership
Interests shall be issued to the General Partner unless either (a) (1) the additional
Partnership Interests are issued in connection with the grant, award, or issuance of shares
of the General Partner pursuant to Section 4.3.C below, which shares have
designations, preferences, and other rights (except voting rights) such that the economic
interests attributable to such shares are substantially similar to the designations,
preferences and other rights of the additional Partnership Interests issued to the General
Partner in accordance with this Section 4.3.B, and (2) the General Partner shall
make a Capital Contribution to the Partnership in an amount equal to the net proceeds raised
in connection with such issuance, or (b) the additional Partnership Interests are issued to
all Partners holding Partnership Interests in the same class in proportion to their
respective Percentage Interests in such class. The General Partner’s determination that
consideration is adequate shall be conclusive insofar as the adequacy of consideration
relates to whether the Partnership Interests are validly issued and paid. In the event that
the Partnership issues additional Partnership Interests pursuant to this Section
4.3.B, the General Partner shall make such revisions to this Agreement (including but
not limited to the revisions described in Section 5.4, Section 6.2.C, and
Section 8.6) as it determines are necessary to reflect the issuance of such
additional Partnership Interests. Without limiting the foregoing, the General Partner is
expressly authorized to cause the Partnership to issue Partnership Units for no tangible
value or for less than fair market value, so long as the General Partner concludes in good
faith that such issuance of Partnership Interests is in the best interests of the
Partnership.

     C. Issuance of REIT Shares or Other Securities by the General Partner. The
General Partner shall not issue any additional REIT Shares, other shares of capital stock of
the General Partner or New Securities (other than REIT Shares issued pursuant to Section
8.6 or such shares, stock or securities pursuant to a dividend or distribution
(including any stock split) to all of its stockholders or all of its stockholders who hold a

23

 

particular class of stock of the General Partner) unless (i) the General Partner shall
cause the Partnership to issue to the General Partner, Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership having
designations, preferences and other rights, all such that the economic interests thereof are
substantially similar to those of the REIT Shares, other shares of capital stock of the
General Partner or New Securities issued by the General Partner and (ii) the General Partner
shall make a Capital Contribution of the net proceeds from the issuance of such additional
REIT Shares, other shares of capital stock or New Securities, as the case may be, and from
the exercise of the rights contained in such additional New Securities, as the case may be.
Without limiting the foregoing, the General Partner is expressly authorized to issue REIT
Shares, other shares of capital stock of the General Partner or New Securities for no
tangible value or for less than fair market value, and the General Partner is expressly
authorized to cause the Partnership to issue to the General Partner corresponding
Partnership Interests, so long as (x) the General Partner concludes in good faith that such
issuance of Partnership Interests is in the interests of the Partnership; and (y) the
General Partner contributes all proceeds, if any, from such issuance and exercise to the
Partnership.

     In connection with the General Partner’s initial public offering of REIT Shares, any other
issuance of REIT Shares, other capital stock of the General Partner or New Securities, the General
Partner shall contribute to the Partnership, any net proceeds raised in connection with such
issuance; provided, that the General Partner may use a portion of the net proceeds
from any offering to acquire Partnership Units or other assets (provided such other assets are
contributed to the Partnership pursuant to the terms of this Agreement; and provided
further that if the net proceeds actually received by the General Partner are less than the
gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or
incurred in connection with such issuance then, except to the extent such net proceeds are used to
acquire Partnership Units, the General Partner shall be deemed to have made a Capital Contribution
to the Partnership in the amount equal to the sum of the net proceeds of such issuance plus the
amount of such underwriter’s discount and other expenses paid by the General Partner (which
discount and expense shall be treated as an expense for the benefit of the Partnership for purposes
of Section 7.4)). In the case of issuances of REIT Shares, other capital stock of the
General Partner or New Securities pursuant to any Stock Plan at a discount from fair market value
or for no value, the amount of such discount representing compensation to the employee, as
determined by the General Partner, shall be treated as an expense for the benefit of the
Partnership for purposes of Section 7.4 and, as a result, the General Partner shall be
deemed to have made a Capital Contribution to the Partnership in an amount equal to the sum of any
net proceeds of such issuance plus the amount of such expense.

     D. Percentage Interest Adjustments in the Case of Capital Contributions for
Partnership Units. Upon the acceptance of additional Capital Contributions in exchange
for any class or series of Partnership Units, the Percentage Interest in such class or
series of Partnership Units shall be equal to a fraction, the numerator of which is equal to
the amount of cash and the Agreed Value of the Property contributed as of the time such
additional Capital Contributions are made (an “Adjustment Date”) and the denominator
of which is equal to the sum of (i) the Deemed Value of the Partnership Interests of such
class or series (computed as of the Business Day immediately preceding the Adjustment

24

 

Date) and (ii) the aggregate Agreed Value of additional Capital Contributions
contributed by all Partners and/or third parties to the Partnership on such Adjustment Date
in such class or series of Partnership Interests. The Percentage Interest of each other
Partner holding Partnership Interests of such class or series not making a full pro
rata Capital Contribution shall be adjusted to equal a fraction, the numerator of
which is equal to the sum of (i) the Deemed Partnership Interest Value of such Limited
Partner in respect of such class or series (computed as of the Business Day immediately
preceding the Adjustment Date) and (ii) the Agreed Value of additional Capital
Contributions, if any, made by such Partner to the Partnership in such class or series of
Partnership Interests as of such Adjustment Date, and the denominator of which is equal to
the sum of (i) the Deemed Value of the Partnership Interests of such class or series
(computed as of the Business Day immediately preceding the Adjustment Date), plus
(ii) the aggregate Agreed Value of additional Capital Contributions contributed by all
Partners and/or third parties to the Partnership on such Adjustment Date in such class or
series. Provided, however, solely for purposes of calculating a Partner’s Percentage
Interest pursuant to this Section 4.3.D, (i) in the case of cash Capital
Contributions by the General Partner funded by an offering of REIT Shares or other shares of
capital stock of the General Partner and (ii) in the case of the contribution of properties
by the General Partner which were acquired by the General Partner in exchange for REIT
Shares or other shares of capital stock of the General Partner immediately prior to such
contribution, the General Partner shall be issued a number of Partnership Units equal and
corresponding to the number of such shares issued by the General Partner in exchange for
such cash or Properties, the Partnership Units held by the other Partners shall not be
adjusted, and the Partners’ Percentage Interests shall be adjusted accordingly. The General
Partner shall promptly give each Partner written notice of its Percentage Interest, as
adjusted.

Section 4.4 Other Contribution Provisions

     In the event that any Partner is admitted to the Partnership and is given (or is treated as
having received) a Capital Account at the time of admission in exchange for services rendered to
the Partnership, such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner had contributed such cash
to the capital of the Partnership. In addition, with the consent of the General Partner, in its
sole discretion, one or more Limited Partners may enter into agreements with the Partnership, in
the form of a guarantee or contribution agreement, which have the effect of providing a guarantee
of certain obligations of the Partnership.

Section 4.5 No Preemptive Rights

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

     Section 4.6 LTIP Units.

25

 

     A. Grant of LTIP Units. The General Partner may from time to time, but not less
frequently than once in each calendar year beginning with 2007 unless it otherwise
determines, cause the Partnership to grant LTIP Units to any Person rendering services to
the Partnership in each year for services rendered by such Person to the Partnership, in its
capacity as a Partner, or in anticipation of becoming a Partner, and admit any such Person
as a Limited Partner. Subject to the following provisions of this Section and the special
provisions of Sections 4.8, 6.3.B and 14.3, LTIP Units shall be treated as Partnership
Units, with all of the rights, privileges and obligations attendant thereto. For purposes
of computing the Partners’ Percentage Interests, LTIP Units shall be treated as Partnership
Units. Exhibit A sets forth the initial grants of LTIP Units issued as of the date hereof.
The General Partner may grant LTIP Units to any Person at any time, in its sole and
absolute discretion.

     B. Status of LTIP Units.

          (1) LTIP Units shall be fully vested when granted to a Person, but shall be subject to
forfeiture as provided in this Section 4.6. The value of an LTIP Unit upon issuance (and
the Economic Capital Account Balance of an LTIP Unitholder with respect to such LTIP Units
upon issuance) shall be zero, the amount of distributions such LTIP Unit would produce for
an LTIP Unitholder if the Partnership’s assets were sold for their Gross Asset Value as of
such issuance date (it being agreed that apart from applicable distributions of Available
Cash from operations, an LTIP Unit may only share in distributions of sale and liquidation
proceeds from a Partnership asset to the extent of income allocated to the holder thereof
under Section 6.3.B that is attributable to the appreciation in value of such asset after
such LTIP Unit’s grant date, all as provided in Sections 5.1 and 6.3.B).

          (2) Safe Harbor Election and Forfeiture Allocations:

               (a) The Partners agree that the General Partner is authorized and directed to make an
election, on behalf of itself and of all Partners, to have the “Safe Harbor” of Section 3.03
of IRS Notice 2005-43 (or the corresponding provision in any Revenue Procedure or regulation
issued in execution of the provisions of such Notice) (the “Safe Harbor”) apply irrevocably
with respect to all LTIP Units transferred in connection with the performance of services by
a Partner in a partner capacity, or in anticipation of becoming a Partner (such election,
the “Safe Harbor Election”). The Safe Harbor Election shall be effective as of the date
hereof. The Partnership and each Partner agrees to comply with all requirements of the Safe
Harbor with respect to all interests in the Partnership transferred in connection with the
performance of services by a Partner in a partner capacity or in anticipation of becoming a
Partner, whether such Partner was admitted as a Partner or as the transferee of a previous
Partner. The General Partner shall cause the Partnership to comply with all record-keeping
requirements and other administrative requirements with respect to the Safe Harbor as shall
be required by proposed or final regulations relating thereto.

               (b) In connection with the Safe Harbor Election, the Partners agree that (I) each LTIP
Unit issued hereunder is a “Safe Harbor Partnership Interest”

26

 

within the meaning of section 3.02 of IRS Notice 2005-43 (or the corresponding
provision in any Revenue Procedure or regulation issued in relation to the provisions of
such Notice or successor pronouncement) representing a profits interest received for
services rendered or to be rendered to or for the benefit of the Partnership by the LTIP
Unitholder in his or her capacity as a Partner or in anticipation of becoming a Partner, and
(II) the fair market value of the Safe Harbor Partnership Interest upon receipt by the LTIP
Unitholder as of the date of issuance is zero, representing the liquidation value of such
interest upon receipt (with such valuation being consented to and hereby approved by all
Partners).

               (c) Each Partner hereby agrees (I) to comply with all requirements of the Safe Harbor
Election with respect to each LTIP Unitholder’s Safe Harbor Partnership Interest, and (II)
that to the extent that such profits interest is forfeited after the date hereof and to the
extent that allocations of income have been made to LTIP Unitholder with respect thereto and
have not been matched with corresponding amounts of distributions with respect thereto, the
Partnership shall make special forfeiture allocations of gross items of deduction or loss
(including, as may be permitted by or under Treasury Regulations to be adopted, notional
items of deduction or loss) in accordance with the Treasury Regulations to be adopted under
Sections 704(b) and 83 of the Code.

               (d) The General Partner shall file or cause the Partnership to file all returns,
reports and other documentation as may be required, as reasonably determined by the General
Partner, to perfect and maintain the Safe Harbor Election with respect to transfers of each
LTIP Unitholder’s Safe Harbor Partnership Interest.

               (e) The General Partner is hereby authorized, directed and empowered, without further
vote or action of the Partners, to amend the Agreement as necessary to comply with the Safe
Harbor requirements in order to provide for a Safe Harbor Election and the ability to
maintain the same, and shall have the authority to execute any such amendment by and on
behalf of each Partner pursuant to the power of attorney granted by this Agreement. Any
undertaking by the Partners necessary to enable or preserve a Safe Harbor Election may be
reflected in such amendments and, to the extent so reflected, shall be binding on each
Partner. The General Partner and the Partnership hereby (1) approve the adoption of the
BioMed Realty Trust, Inc. and BioMed Realty L.P. 2004 Incentive Award Plan, (2) approve the
filing of Section 83(b) elections for each employee granted LTIP Units and (3) ratify the
form of LTIP Forfeiture Agreement and all of the exhibits attached thereto. Each employee
granted LTIP Units shall file a Section 83(b) election.

               (f) Each Partner agrees to cooperate with the General Partner to perfect and maintain
any Safe Harbor Election, and to timely execute and deliver any documentation with respect
thereto reasonably requested by the General Partner, at the expense of the Company.

               (g) No Transfer of any interest in the Partnership by a Partner shall be effective
unless prior to such Transfer, the assignee or intended recipient of such

27

 

interest shall have agreed in writing to be bound by the provisions of this Section
4.6.B(2), in a form reasonably satisfactory to the General Partner.

          (3) No Conversion to Partnership Units Required. Subject to the tax allocations
required to be made to an LTIP Unitholder pursuant to Section 6.4 following a Book-up Event,
an LTIP Unit automatically is treated as a Partnership Unit when the LTIP Equalization Date
has occurred under Section 6.3.B (i.e., when an LTIP Unitholder has been allocated book gain
upon a Book-up Event pursuant to Section 6.3.B or allocated actual income from the sale of
Partnership assets in an amount necessary to cause the LTIP Unitholder’s book Capital
Account with respect to such LTIP Unit to equal the Partnership Unit Economic Balance per
Unit), but only Non-Forfeitable LTIP Units may be the subject of a Redemption election by an
LTIP Unitholder. LTIP Units may not be sold within two (2) years of the date of grant of
such LTIP Units without the prior written consent of the General Partner, which may be
withheld in the General Partner’s sole and absolute discretion. Until the LTIP Equalization
Date has occurred with respect to an LTIP Unit, (i) such LTIP Unit may not be the subject of
a Redemption election by the LTIP Unitholder, and (ii) such LTIP Unit will participate like
a Partnership Unit in distributions of Available Cash from operations and only participate
in sale and liquidation proceeds with respect to a Partnership asset to the extent of income
allocated to the holder thereof under Section 6.3.B that is attributable to the appreciation
in value of such asset after the issuance date of such LTIP Unit, all as provided in
Sections 5.1 and 6.3.B.

          (4) Adjustments to LTIP Units.

               (a) If an Adjustment Event (as defined below) occurs, then the General Partner shall
make a corresponding adjustment to the LTIP Units (to maintain a one-for-one conversion and
economic equivalence ratio between Partnership Units and LTIP Units, upon the LTIP
Equalization Date occurring under Section 6.3.B).

               (b) The following shall be “Adjustment Events”: (A) the Partnership makes a
distribution on all outstanding Partnership Units in Partnership Units, (B) the Partnership
subdivides the outstanding Partnership Units into a greater number of units or combines the
outstanding Partnership Units into a smaller number of units, or (C) the Partnership issues
any Partnership Units in exchange for its outstanding Partnership Units by way of a
reclassification or recapitalization of its Partnership Units. If more than one Adjustment
Event occurs, the adjustment to the LTIP Units need be made only once using a single formula
that takes into account each and every Adjustment Event as if all Adjustment Events occurred
simultaneously.

               (c) For the avoidance of doubt, the following shall not be Adjustment Events: (x) the
issuance of Partnership Units in a financing, reorganization, acquisition or other similar
business transaction, (y) the issuance of Partnership Units pursuant to any employee benefit
or compensation plan or distribution reinvestment plan, or (z) the issuance of any
Partnership Units to the General Partner in respect of a capital contribution to the
Partnership of proceeds from the sale of securities by the General Partner.

28

 

               (d) If the Partnership takes an action affecting the Partnership Units other than
actions specifically described above as “Adjustment Events” and in the good faith discretion
of the General Partner such action would require an adjustment to the LTIP Units to maintain
the one-to-one correspondence described above, the General Partner shall make such
adjustment to the LTIP Units, to the extent permitted by law, in such manner and at such
time as the General Partner, in its good faith discretion, may determine to be appropriate
under the circumstances.

               (e) If an adjustment is made to the LTIP Units as herein provided, the Partnership
shall promptly file in the books and records of the Partnership an officer’s certificate
setting forth such adjustment and a brief statement of the facts requiring such adjustment,
which certificate shall be conclusive evidence of the correctness of such adjustment absent
manifest error. Promptly after filing of such certificate, the Partnership shall mail a
notice to each LTIP Unitholder setting forth the adjustment to his or her LTIP Units and the
effective date of such adjustment.

     C. Priority. Upon the LTIP Equalization Date occurring under Section 6.3.B, the LTIP
Units shall rank pari passu with the Partnership Units as to the payment of regular and
special periodic or other distributions and distributions upon sale of assets, liquidation,
dissolution or winding up. As to the payment of distributions and as to distribution of
assets upon sale, liquidation, dissolution or winding up, any class or series of Partnership
Units or Partnership Interests which by its terms specifies that it shall rank junior to, on
a parity with, or senior to the Partnership Units shall also rank junior to, or pari passu
with, or senior to, as the case may be, the LTIP Units.

     D. Special Provisions. LTIP Units shall be subject to the following special
provisions:

          (1) LTIP Forfeiture Agreements and Transferability. LTIP Units may, in the sole
discretion of the General Partner, be issued subject to forfeiture and additional
restrictions on transfer pursuant to the terms of an LTIP Forfeiture Agreement. The terms
of an LTIP Forfeiture Agreement may be modified by the General Partner from time to time in
its sole discretion, subject to any restrictions on amendment imposed by the relevant LTIP
Forfeiture Agreement, if applicable. LTIP Units that no longer are subject to forfeiture
under the terms of an LTIP Forfeiture Agreement are referred to as “Non-Forfeitable LTIP
Units”; all other LTIP Units shall be treated as “Forfeitable LTIP Units.” Subject to the
terms of any LTIP Forfeiture Agreement and upon the LTIP Equalization Date occurring under
Section 6.3.B, an LTIP Unitholder shall be entitled to transfer or redeem his or her
Non-Forfeitable LTIP Units to the same extent, and subject to the same restrictions as
holders of Partnership Units are entitled to transfer their Partnership Units pursuant to
Article 11.

          (2) Forfeiture. Unless otherwise specified in the LTIP Forfeiture Agreement, upon the
occurrence of any event specified in an LTIP Forfeiture Agreement as resulting in either the
right of the Partnership or the General Partner to repurchase LTIP Units at a specified
purchase price or some other forfeiture of any LTIP Units, then if the Partnership or the
General Partner exercises such right to repurchase or forfeiture in

29

 

accordance with the applicable LTIP Forfeiture Agreement, then the relevant LTIP Units
shall immediately, and without any further action, be treated as cancelled and no longer
outstanding for any purpose. Unless otherwise specified in the LTIP Forfeiture Agreement,
no consideration or other payment shall be due with respect to any LTIP Units that have been
forfeited, other than any distributions declared with respect to a Partnership Record Date
prior to the effective date of the forfeiture in which such LTIP Units are permitted to
share. In connection with any repurchase or forfeiture of LTIP Units, the balance of the
portion of the Capital Account of the Holder that is attributable to all of his or her LTIP
Units shall be reduced by the amount, if any, by which it exceeds the target balance
contemplated by Section 6.3.B, calculated with respect to the Holder’s remaining LTIP Units,
if any, through the use of forfeiture allocations under Section 4.6.B(2)(C).

          (3) Allocations. LTIP Units shall generally be treated as Partnership Units for
purposes of Article 6, but shall also receive certain special allocations of income or gain
under Sections 6.3 and 6.4.

          (4) Redemption. The Redemption Right provided to Limited Partners under Section 8.6
shall not apply with respect to LTIP Units unless and until the LTIP Equalization Date
occurs under Section 6.3.B, and then only with respect to LTIP Units that are
Non-Forfeitable LTIP Units.

          (5) Legend. Any certificate evidencing an LTIP Unit shall bear an appropriate legend
indicating that additional terms, conditions and restrictions on transfer, including without
limitation any LTIP Forfeiture Agreement, apply to the LTIP Unit.

          (6) Voting. LTIP Units shall have the voting rights provided in Section 14.3.

          (7) LTIP Unit Grants. Exhibit A shows the LTIP Units granted as of the date hereof
under the BioMed Realty Trust, Inc. and BioMed Realty L.P. 2004 Incentive Award Plan. The
forfeiture provisions for LTIP Units shall expire ratably one-third on each 12-month
anniversary of the grant of such LTIP Units unless otherwise determined by the General
Partner prior to the grant of such LTIP Units.

          (8) Tax Distributions to LTIP Unitholders. To the extent distributions to an LTIP
Unitholder are insufficient to accomplish the following, the General Partner shall cause the
Partnership to make periodic tax distributions to each LTIP Unitholder on or before the date
estimated taxes would be due to be paid by such LTIP Unitholder on the income or gain
allocated to such LTIP Unitholder by the Partnership with respect to such LTIP Unitholder’s
LTIP Units (“Tax Distributions”). The amount of Tax Distributions to be made by the
Partnership to each LTIP Unitholder shall be an advance against distributions otherwise
distributable to such LTIP Unitholder (including amounts payable on a redemption thereof)
and shall equal the excess of (1) the sum of the combined, cumulative federal and state
income tax liability that such LTIP Unitholder would recognize by reason of allocations of
taxable income with respect to such LTIP

30

 

Units if such LTIP Unitholder were an individual residing in California who was subject
to the maximum federal and state income tax rates on the income recognized, computed by
taking into account (a) the deductibility of state taxes for federal income tax purposes,
(b) the character of the income recognized as capital or ordinary, (c) the impact of Section
470 of the Code on the ability of the Partnership or the LTIP Unitholders to utilize losses
or deductions, and (d) applicable holding periods (but not taking into account any of the
LTIP Unitholder’s actual tax attributes), over (2) the cumulative distributions (including
Tax Distributions) theretofore made (or currently being made) to such LTIP Unitholder by the
Partnership with respect to such LTIP Units.

Section 4.7 No Interest; No Return. No Partner shall be entitled to interest on its
Capital Contribution or on such Partner’s Capital Account. Except as provided herein or by law, no
Partner shall have any right to demand or receive the return of its Capital Contribution from the
Partnership.

Section 4.8 LTIP Units Characterized as Partnership Units.

     A. Non-Forfeitable LTIP Units shall be treated as Partnership Units for all purposes
from and after the occurrence of the LTIP Equalization Date under Section 6.3.B, and special
allocations of income or gain under Section 4.6.B(2)(C) and Section 6.3, and tax allocations
required to be made under Section 6.4 after a Book-up Event, shall continue to be made to
the Non-Forfeitable LTIP Units to the extent required by this Agreement. Forfeitable LTIP
Units shall remain subject to the applicable forfeitability provisions from the date hereof.
All LTIP Units shall be subject to the two (2) year holding period prior to sale under
Section 4.6.B(3).

     B. Until the LTIP Equalization Date has occurred with respect to such LTIP Units, the
provisions of Sections 4.6.B(1) and (3) shall apply with respect to such LTIP Units.

ARTICLE 5.

DISTRIBUTIONS

Section 5.1 Requirement and Characterization of Distributions

     The General Partner shall cause the Partnership to distribute quarterly all, or such portion
as the General Partner may in its discretion determine, Available Cash generated by the Partnership
to the Partners who are Partners on the applicable Partnership Record Date with respect to such
distribution, (1) first, with respect to any class or series of Partnership Interests that are
entitled to any preference in distributions, in accordance with the rights of such class or series
of Partnership Interests (and within such class or series, pro rata in proportion to the respective
Percentage Interests on the applicable Partnership Record Date), and (2) second, with respect to
any class or series of Partnership Interests that are not entitled to any preference in
distributions, pro rata to each such class or series in accordance with the terms of such class or
series to the Partners who are Partners of such class or series on the Partnership Record Date with
respect to such distribution (and within each such class or series, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date). Unless otherwise

31

 

expressly provided for herein or in an agreement, if any, entered into in connection with the
creation of a new class or series of Partnership Interests created in accordance with Article
4, no Partnership Interest shall be entitled to a distribution in preference to any other
Partnership Interest. The General Partner shall take such reasonable efforts, as determined by it
in its sole and absolute discretion and consistent with its qualification as a REIT, to cause the
Partnership to distribute sufficient amounts to enable the General Partner, for so long as the
General Partner has determined to qualify as a REIT, to pay stockholder dividends that will (a)
satisfy the requirements for qualifying as a REIT under the Code and Regulations (“REIT
Requirements”), and (b) except to the extent otherwise determined by the General Partner, avoid the
imposition of any federal income or excise tax liability on the General Partner. An LTIP
Unitholder shall be entitled to share in all distributions of Available Cash as if each LTIP Unit
were a Partnership Unit, but until the LTIP Equalization Date has occurred with respect to an LTIP
Unit, such LTIP Unit may only participate in sale and liquidation proceeds from an asset to the
extent of income allocated to the holder thereof under Section 6.3.B that is attributable to the
appreciation            in value of such asset after the LTIP Unit issuance date for such LTIP Unit.

Section 5.2 Distributions in Kind

     Except as expressly provided herein, no right is given to any Partner to demand and receive
property other than cash. The General Partner may determine, in its sole and absolute discretion,
to make a distribution in-kind to the Partners of Partnership assets, and such assets shall be
distributed in such a fashion as to ensure that the fair market value is distributed and allocated
in accordance with Articles 5, 6 and 10.

Section 5.3 Distributions Upon Liquidation

     Notwithstanding Section 5.1, proceeds from a Liquidating Event shall be distributed to
the Partners in accordance with Section 13.2.

Section 5.4 Distributions to Reflect Issuance of Additional Partnership Interests

     In the event that the Partnership issues additional Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Section 4.3.B or 4.3.C, the
General Partner shall make such revisions to this Article 5 as it determines are necessary
to reflect the issuance of such additional Partnership Interests. In the absence of any agreement
to the contrary, an Additional Limited Partner shall be entitled to the distributions set forth in
Section 5.1 (without regard to this Section 5.4) with respect to the period during
which the closing of its contribution to the Partnership occurs, multiplied by a fraction the
numerator of which is the number of days from and after the date of such closing through the end of
the applicable period, and the denominator of which is the total number of days in such period.

ARTICLE 6.

ALLOCATIONS

Section 6.1 Timing and Amount of Allocations of Net Income and Net Loss

     Net Income and Net Loss of the Partnership shall be determined and allocated with respect to
each Partnership Year of the Partnership as of the end of each such year. Subject

32

 

to the other provisions of this Article 6, an allocation to a Partner of a share of
Net Income or Net Loss shall be treated as an allocation of the same share of each item of income,
gain, loss or deduction that is taken into account in computing Net Income or Net Loss.

Section 6.2 General Allocations

     A. Allocation of Net Income and Net Losses.

          (1) Net Income. Except as otherwise provided in Section 6.3, Net Income for
any Partnership Year shall be allocated to the Partners in the following manner and order of
priority:

               (a) First, to the General Partner in an amount equal to the remainder, if any, of the
cumulative Net Losses allocated to the General Partner pursuant to Section
6.2.A.2(c) for all prior Partnership Years minus the cumulative Net Income allocated to
the General Partner pursuant to this Section 6.2.A.(1)(a) for all prior Partnership
Years;

               (b) Second, to each Limited Partner in an amount equal to the remainder, if any, of the
cumulative Net Losses allocated to each such Limited Partner pursuant to Section
6.2.A.2(b) for all prior Partnership Years minus the cumulative Net Income allocated to
such Limited Partner pursuant to this Section 6.2.A.(1)(b) for all prior Partnership
Years;

               (c) Third, to the General Partner and the Limited Partners in proportion, and in an
amount equal, to the remainder, if any, of the cumulative Net Losses allocated to each such
Partner pursuant to Section 6.2.A.2(a) for all prior Partnership Years minus the
cumulative Net Income allocated to each Partner pursuant to this Section
6.2.A.(1)(c) for all prior Partnership Years;

               (d) Fourth, to each of the Partners in accordance with their respective Percentage
Interests.

     To the extent the allocations of Net Income set forth above in any paragraph of this
Section 6.2.A.(1) are not sufficient to entirely satisfy the allocation set forth in such
paragraph, such allocation shall be made in proportion to the total amount that would have been
allocated pursuant to such paragraph without regard to such shortfall.

          (2) Net Losses. Except as otherwise provided in Section 6.3, Net
Losses for any Partnership Year shall be allocated to the Partners in the following manner
and order of priority:

               (a) First, to the General Partner and the Limited Partners in accordance with their
respective Percentage Interests (to the extent consistent with this Section
6.2.A(2)(a)) until the Adjusted Capital Account Balance (ignoring for this purpose any
amounts a Partner is obligated to contribute to the capital of the Partnership or is deemed
obligated to contribute pursuant to Regulations Section 1.704-1(b)(2)(ii)(c)(2)) of each
such Partner is zero;

33

 

               (b) Second, to the Limited Partners to the extent of, and in proportion to, their
Adjusted Capital Account Balance; and

               (c) Third, to the General Partner.

     B. Allocations to Reflect Issuance of Additional Partnership Interests In the
event that the Partnership issues additional Partnership Interests to the General Partner, a
Limited Partner or any Additional Limited Partner pursuant to Section 4.3, the
General Partner shall make such revisions to this Section 6.2 as it determines are
necessary to reflect the terms of the issuance of such additional Partnership Interests,
including making preferential allocations to certain classes of Partnership Interests in
accordance with any method selected by the General Partner.

Section 6.3 Additional Allocation Provisions

     Notwithstanding the foregoing provisions of this Article 6:

     A. Ordering Rule for Allocations Regarding LTIP Units. To the extent any
Partnership income is allocable to LTIP Unitholders prior to the LTIP Equalization Date, any
such income shall first be allocated to those LTIP Unitholders with the earliest grant date
when compared to all such other LTIP Unitholders, until the LTIP Equalization Date is
reached for such earlier granted LTIP Units.

     B. Special Allocations Regarding LTIP Units.

          (1) Notwithstanding the provisions of Section 6.2 above, but subject to the prior
allocation of income, gain, deduction and loss any class of Partnership Interests ranking
senior to the LTIP Units with respect to return of capital or any preferential or priority
return, any Post-Grant Gains occurring at a Book-up Event shall first be allocated to the
Holders of LTIP Units until the Economic Capital Account Balance of each such LTIP
Unitholder, to the extent attributable to his or her ownership of LTIP Units (determined
without reduction for Tax Distributions made to such LTIP Unitholder), is equal to (i) the
then Partnership Unit Economic Balance, multiplied by (ii) the number of his or her LTIP
Units (the date on which sufficient Post-Grant Gains and other Net Income and other items of
income have been so allocated to an LTIP Unitholder to achieve such equality is referred to
as the “LTIP Equalization Date” with respect to such LTIP Unitholder’s LTIP Units). To the
extent that the Partnership has gross income for any period (as computed for book purposes)
prior to the occurrence of the LTIP Equalization Date with respect to an LTIP Unitholder’s
LTIP Units, other than gross income attributable to Post-Grant Gains and Depreciation
recapture, such income (including items of gross income if necessary) shall first be
allocated to such LTIP Unitholder to the extent of its distributions from the Partnership
(other than distributions attributable to Post-Grant Gains and Tax Distributions), if any,
with respect to such period (without any double counting of income allocations).

          (2) Prior to the LTIP Equalization Date with respect to all LTIP Unitholders,
Post-Grant Gains attributable to the appreciation in value of a Partnership asset occurring
after the grant of LTIP Units to LTIP Unitholders (other than those

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occurring at a Book-up Event) shall be allocated as follows: (i) first, such Post-Grant
Gains shall be allocated to LTIP Unitholders until the LTIP Equalization Date has occurred
with respect to their LTIP Units, and (ii) the balance of any such Post-Grant Gains
remaining, if any, shall be allocated among the LTIP Unitholders and the holders of
Partnership Units who are not LTIP Unitholders, pro rata, in proportion to their respective
Percentage Interests. From and after the LTIP Equalization Date with respect to LTIP Units,
all allocations of Net Income or Net Loss and all distributions of Available Cash, shall be
made to the Holders of Partnership Units, including the subject LTIP Units, pro rata, in
proportion to their respective Percentage Interests.

          (3) “Post-Grant Gains” means (i) in the case of Post-Grant Gains being determined upon
a Book-up Event, the excess of (A) the income or gain that would be realized in connection
with the hypothetical sale of all of the assets of the Partnership for an amount equal to
(x) the price per Share (treating as “Shares” for this purpose any rights, options,
warrants, or convertible or exchangeable securities of the General Partner as exercised) as
of the Book-up Event (or such other fair market valuation methodology for valuing the
Partnership’s assets per Partnership Unit as is reasonably adopted by the General Partner
from time to time) multiplied by (y) the number of outstanding Partnership Units (including
LTIP Units) and outstanding Shares (the “Book-up Value”), over (B) the aggregate Gross Asset
Value of all of the Partnership’s assets when an LTIP Unit was issued (with the Gross Asset
Value of each Partnership asset immediately after such Book-up Event being determined by
allocating the Book-up Value among the Partnership’s assets in any reasonable manner
determined by the General Partner (which may include the relative values of such assets as
of the dates when the LTIP Unit was issued)), and (ii) in the case of an actual sale of an
asset, the excess of the actual amount realized on such sale over the Gross Asset Value of
such asset at the time such LTIP Units were granted (without taking into account any
Depreciation claimed on such asset after such issuance of such LTIP Units). The “Economic
Capital Account Balances” of the Holders of LTIP Units shall mean their Capital Account
balances, plus the amount of their shares of any Partner Minimum Gain or Partnership Minimum
Gain, in either case to the extent attributable to their ownership of LTIP Units, but not
reduced by the amount of any Tax Distributions. Similarly, the “Partnership Unit Economic
Balance” shall mean (i) the Capital Account Balance of the General Partner, plus the amount
of the General Partner’s share of any Partner Minimum Gain or Partnership Minimum Gain, in
either case to the extent attributable to the General Partner’s ownership of Partnership
Units and computed on a hypothetical basis after taking into account all allocations through
the date on which any allocation is made under this Section 6.3.B, divided by (ii) the
number of the General Partner’s Partnership Units. Any allocations required to be made to
LTIP Unitholders under this Section 6.3.B shall be made among the LTIP Unitholders in
proportion to the aggregate amount thereof required to be allocated to each of them under
this Section 6.3.B. The parties agree that the intent of Section 6.3.B is to make the
Capital Account balance associated with each LTIP Unit be economically equivalent to the
Capital Account balance associated with the General Partner’s Partnership Units (on a
per-Unit basis), but only if and to the extent provided in this Section 6.3.B. After a
Book-up Event has occurred with respect to an LTIP Unit, allocations of gain (as computed
for tax purposes not for book purposes) shall thereafter be made to the LTIP Unitholder
pursuant to Section 6.4.

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     C. Regulatory Allocations.

          (i) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section
1.704-2(f), notwithstanding the provisions of Section 6.2, or any other provision of this
Article 6, if there is a net decrease in Partnership Minimum Gain during any Partnership
Year, each Holder shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease
in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective amounts required to
be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in
accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
6.3.C(i) is intended to qualify as a “minimum gain chargeback” within the meaning of Regulation
Section 1.704-2(f) which shall be controlling in the event of a conflict between such Regulation
and this Section 6.3.C(i).

          (ii) Partner Minimum Gain Chargeback. Except as otherwise provided in Regulations
Section 1.704-2(i)(4), and notwithstanding the provisions of Section 6.2, or any other
provision of this Article 6 (except Section 6.3.C(i)), if there is a net decrease
in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year,
each Holder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated
items of Partnership income and gain for such year (and, if necessary, subsequent years) in an
amount equal to such Holder’s share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Holder pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.3.C(ii) is intended to qualify as a “chargeback of partner nonrecourse debt
minimum gain” within the meaning of Regulation Section 1.704-2(i) which shall be controlling in the
event of a conflict between such Regulation and this Section 6.3.C(ii).

          (iii) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Holders in accordance with
their respective Percentage Interests. Any Partner Nonrecourse Deductions for any Partnership Year
shall be specially allocated to the Holder(s) 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 Sections 1.704-2(b)(4) and 1.704-2(i).

          (iv) Qualified Income Offset. If any Holder unexpectedly receives an adjustment,
allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
items of Partnership income and gain shall be allocated, in accordance with Regulations Section
1.704-1(b)(2)(ii)(d), to the Holder in an amount and manner sufficient to eliminate, to the extent
required by such Regulations, the Adjusted Capital Account Deficit of the Holder as quickly as
possible provided that an allocation pursuant to this Section 6.3.C(iv) shall be made if
and only to the extent that such Holder would have an Adjusted Capital Account Deficit after all
other allocations provided in this Article 6 have been tentatively made as if this

36

 

Section 6.3.C(iv) were not in this Agreement. It is intended that this Section
6.3.C(iv) qualify and be construed as a “qualified income offset” within the meaning of
Regulations 1.704-1(b)(2)(ii)(d), which shall be controlling in the event of a conflict between
such Regulations and this Section 6.3.C(iv).

          (v) Gross Income Allocation. In the event any Holder has a deficit Capital Account at
the end of any Partnership Year which is in excess of the sum of (1) the amount (if any) such
Holder is obligated to restore to the Partnership, and (2) the amount such Holder is deemed to be
obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be
specially allocated items of Partnership income and gain in the amount of such excess as quickly as
possible, provided, that an allocation pursuant to this Section 6.3.C(v)
shall be made if and only to the extent that such Holder would have a deficit Capital Account in
excess of such sum after all other allocations provided in this Article 6 have been
tentatively made as if this Section 6.3.C(v) and Section 6.3.C(iv) were not in this
Agreement.

          (vi) Limitation on Allocation of Net Loss. To the extent any allocation of Net Loss
would cause or increase an Adjusted Capital Account Deficit as to any Holder, such allocation of
Net Loss shall be reallocated among the other Holders in accordance with their respective
Percentage Interests, subject to the limitations of this Section 6.3.C(vi).

          (vii) Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis
of any Partnership 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 Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of
a distribution to a Holder in complete liquidation of his interest in the Partnership, 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 Holders in accordance with their interests in the
Partnership in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the
Holders to whom such distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.

          (viii) Curative Allocation. The allocations set forth in Sections 6.3.C(i),
(ii), (iii), (iv), (v), (vi), and (vii) (the
“Regulatory Allocations”) are intended to comply with certain regulatory requirements,
including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the
provisions of Sections 6.1 and 6.2, the Regulatory Allocations shall be taken into
account in allocating other items of income, gain, loss and deduction among the Holders so that, to
the extent possible, the net amount of such allocations of other items and the Regulatory
Allocations to each Holder shall be equal to the net amount that would have been allocated to each
such Holder if the Regulatory Allocations had not occurred.

     For purposes of determining a Holder’s proportional share of the “excess nonrecourse
liabilities” of the Partnership within the meaning of Regulations Section 1.752-3(a)(3), each
Holder’s interest in Partnership profits shall be such Holder’s Percentage Interest.

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Section 6.4 Tax Allocations

     A. In General. Except as otherwise provided in this Section 6.4, for
income tax purposes each item of income, gain, loss and deduction (collectively, “Tax
Items”) shall be allocated among the Holders of Partnership Units in the same manner as
its correlative item of “book” income, gain, loss or deduction is allocated pursuant to
Sections 6.2 and 6.3.

     B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding Section
6.4.A, Tax Items with respect to (i) Partnership property that is contributed to the
Partnership by a Partner with a Gross Asset Value that differs from its adjusted tax basis
in the hands of the Contributing Partner immediately preceding the date of contribution and
(ii) all Partnership assets following the allocation of Post-Grant Gains in connection with
a Book-up Event under Section 6.3.B, shall be allocated among the Holders of Partnership
Units for income tax purposes pursuant to Regulations promulgated under Section 704(c) of
the Code, so as to take into account the variation between book Capital Accounts and tax
capital accounts under Regulation Section 1.704-1(b)(2)(iv)(f). The Partnership shall
account for such variation under the “traditional method” under Regulations Section
1.704-3(b) with respect to LTIP Units and with respect to Partnership property that is
contributed to the Partnership in connection with the General Partner’s initial public
offering. With respect to other properties contributed to the Partnership, the Partnership
shall account for such variation under any reasonable method consistent with Section 704(c)
of the Code and the applicable regulations as chosen by the General Partner. In the event
the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (b) of
the definition of Gross Asset Value (provided in Article 1), subsequent allocations of Tax
Items with respect to such asset shall take account of the variation, if any, between the
adjusted basis of such asset and its Gross Asset Value in the same manner as under Section
704(c) of the Code and the applicable regulations consistent with the requirements of
Regulations Section 1.704-1(b)(2)(iv)(g) using any method approved under Section 704(c) of
the Code and the applicable regulations as chosen by the General Partner, provided, however,
that the “traditional method” as described in Regulations Section 1.704-3(b) shall be used
with respect to LTIP Units and Partnership Property that is contributed to the Partnership
in connection with the General Partner’s initial public offering.

ARTICLE 7.

MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1 Management

     A. Except as otherwise expressly provided in this Agreement, all management powers over
the business and affairs of the Partnership are and shall be exclusively vested in the
General Partner, and no Limited Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Limited Partners with or without cause, except with the
consent of the General Partner. In addition to the powers now or hereafter granted a
general partner of a limited partnership under

38

 

applicable law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to the other provisions hereof including
Sections 7.3 and 11.2, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the Partnership (including,
without limitation, all actions consistent with allowing the General Partner at all times to
qualify as a REIT unless the General Partner voluntarily terminates its REIT status), to
exercise all powers set forth in Section 3.2 and to effectuate the purposes set
forth in Section 3.1, including, without limitation:

          (1) the making of any expenditures, the lending or borrowing of money (including,
without limitation, making prepayments on loans and borrowing money to permit the
Partnership to make distributions to its Partners in such amounts as will permit the General
Partner (so long as the General Partner has determined to qualify as a REIT) to avoid the
payment of any federal income tax (including, for this purpose, any excise tax pursuant to
Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit
the General Partner to maintain REIT status), the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by mortgage, deed of trust or other lien or
encumbrance on all or any of the Partnership’s assets) and the incurring of any obligations
it deems necessary for the conduct of the activities of the Partnership;

          (2) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Partnership, the registration of any class of securities of the Partnership under the
Exchange Act, and the listing of any debt securities of the Partnership on any exchange;

          (3) subject to the provisions of Section 11.2, the acquisition, disposition,
mortgage, pledge, encumbrance, hypothecation or exchange of any assets of the Partnership or
the merger or other combination of the Partnership with or into another entity;

          (4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation of all
or any assets of the Partnership, and the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it sees fit, including, without limitation, the financing of the
conduct or the operations of the General Partner or the Partnership, the lending of funds to
other Persons (including, without limitation, the General Partner or any Subsidiaries of the
Partnership) and the repayment of obligations of the Partnership, any of its Subsidiaries
and any other Person in which it has an equity investment, and the making of capital
contributions to its Subsidiaries;

          (5) the management, operation, leasing, landscaping, repair, alteration, demolition or
improvement of any real property or improvements owned by the Partnership or any Subsidiary
of the Partnership;

39

 

          (6) the negotiation, execution, and performance of any contracts, leases, conveyances
or other instruments that the General Partner considers useful or necessary to the conduct
of the Partnership’s operations or the implementation of the General Partner’s powers under
this Agreement, including contracting with contractors, developers, consultants,
accountants, legal counsel, other professional advisors and other agents and the payment of
their expenses and compensation out of the Partnership’s assets;

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

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

          (9) the maintenance of such insurance for the benefit of the Partnership and the
Partners and directors and officers of the Partnership or the General Partner as it deems
necessary or appropriate;

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

          (11) the control of any matters affecting the rights and obligations of the
Partnership, including the settlement, compromise, submission to arbitration or any other
form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt
or damages, due or owing to or from the Partnership, the commencement or defense of suits,
legal proceedings, administrative proceedings, arbitration or other forms of dispute
resolution, and the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution, the incurring
of legal expense, and the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;

          (12) the undertaking of any action in connection with the Partnership’s direct or
indirect investment in any Person (including, without limitation, contributing or loaning
Partnership funds to, incurring indebtedness on behalf of, or guarantying the obligations of
any such Persons);

40

 

          (13) subject to the other provisions in this Agreement, the determination of the fair
market value of any Partnership property distributed in kind using such reasonable method of
valuation as it may adopt, provided, that such methods are otherwise
consistent with requirements of this Agreement;

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

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

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

          (17) the exercise, directly or indirectly through any attorney-in-fact acting under a
general or limited power of attorney, of any right, including the right to vote, appurtenant
to any asset or investment held by the Partnership;

          (18) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other
Person in which the Partnership has a direct or indirect interest, or jointly with any such
Subsidiary or other Person;

          (19) the exercise of any of the powers of the General Partner enumerated in this
Agreement on behalf of any Person in which the Partnership does not have an interest
pursuant to contractual or other arrangements with such Person;

          (20) the making, execution and delivery of any and all deeds, leases, notes, deeds to
secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts,
guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in
writing necessary or appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner enumerated in this Agreement;

          (21) the issuance of additional Partnership Interests, as appropriate, in connection
with the contribution of Additional Funds pursuant to Section 4.3;

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

          (23) the amendment and restatement of Exhibit A hereto to reflect accurately at all
times the Capital Contributions and Percentage Interests of the Partners as the same are
adjusted from time to time to the extent necessary to reflect redemptions, Capital
Contributions, the issuance of Partnership Units, the admission of any Additional Limited
Partner or any Substituted Limited Partner or otherwise, which amendment and

41

 

restatement, notwithstanding anything in this Agreement to the contrary, shall not be
deemed an amendment to this Agreement, as long as the matter or event being reflected in
Exhibit A hereto otherwise is authorized by this Agreement;

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

          (25) the delegation to another Person of any powers now or hereafter granted to the General
Partner.

     B. Each of the Limited Partners agrees that the General Partner is authorized to
execute, deliver and perform the above-mentioned agreements and transactions on behalf of
the Partnership without any further act, approval or vote of the Partners, notwithstanding
any other provisions of this Agreement (except as provided in Section 7.3 or
11.2), the Act or any applicable law, rule or regulation to the fullest extent
permitted under the Act or other applicable law, rule or regulation. The execution,
delivery or performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by the General
Partner of any duty that the General Partner may owe the Partnership or the Limited Partners
or any other Persons under this Agreement or of any duty stated or implied by law or equity.

     C. At all times from and after the date hereof, the General Partner may cause the
Partnership to obtain and maintain (i) casualty, liability and other insurance on the
properties of the Partnership and (ii) liability insurance for the Indemnities hereunder.

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

     E. Each of the Limited Partners acknowledges that, in exercising its authority under
this Agreement, the General Partner may, but shall be under no obligation to, take into
account the tax consequences to any Partner (including the General Partner) of any action
taken (or not taken) by the General Partner. The General Partner and the Partnership shall
not have liability to a Partner under this Agreement as a result of any income tax liability
incurred by a Limited Partner as a result of an action (or inaction) by the General Partner
pursuant to its authority under this Agreement.

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

42

 

Section 7.2 Certificate of Limited Partnership

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

Section 7.3 Restrictions on General Partner’s Authority

     A. The General Partner may not take any action in contravention of an express
prohibition or limitation of this Agreement without the written Consent of the Limited
Partners and may not (i) perform any act that would subject a Limited Partner to liability
as a general partner in any jurisdiction or any other liability except as provided herein or
under the Act; or (ii) enter into any contract, mortgage, loan or other agreement (other
than that certain Revolving Loan Agreement dated as of August 2004 by and among the Company,
the Partnership, the other borrowers and lenders party thereto, U.S. Bank National
Association, as Administrative Agent, Lead Arranger and Swing Loan Bank, Keybank National
Association, as Syndication Agent, and Royal Bank of Canada, as Documentation Agent, as
amended from time to time) that prohibits or restricts, or has the effect of prohibiting or
restricting, the ability of a Limited Partner to exercise its rights to a Redemption in
full, except in each case with the written consent of such Limited Partner.

     B. The General Partner shall not, without the prior Consent of the Partners (in
addition to any Consent of the Limited Partners required by any other provision hereof), or
except as provided in Section 7.3.C, amend, modify or terminate this Agreement.

     C. Notwithstanding Section 7.3.B, the General Partner shall have the exclusive
power to amend this Agreement as may be required to facilitate or implement any of the
following purposes:

          (1) to add to the obligations of the General Partner or surrender any right or power
granted to the General Partner or any Affiliate of the General Partner for the benefit of
the Limited Partners;

          (2) to reflect the issuance of additional Partnership Interests pursuant to
Sections 4.3.B, 5.4 and 6.2B. or the admission, substitution, termination,
or withdrawal

43

 

of Partners in accordance with this Agreement (which may be effected through the
replacement of Exhibit A with an amended Exhibit A);

          (3) to set forth or amend the designations, rights, powers, duties and preferences of
the holders of any additional Partnership Interests issued pursuant to Article 4;

          (4) to reflect a change that is of an inconsequential nature and does not adversely
affect the Limited Partners in any material respect, or to cure any ambiguity, correct or
supplement any provision in this Agreement not inconsistent with law or with other
provisions, or make other changes with respect to matters arising under this Agreement that
will not be inconsistent with law or with the provisions of this Agreement;

          (5) to satisfy any requirements, conditions, or guidelines contained in any order,
directive, opinion, ruling or regulation of a federal or state agency or contained in
federal or state law;

          (6) to reflect such changes as are reasonably necessary for the General Partner to
maintain its status as a REIT, including changes which may be necessitated due to a change
in applicable law (or an authoritative interpretation thereof) or a ruling of the IRS;

          (7) to modify, as set forth in the definition of “Capital Account,” the manner
in which Capital Accounts are computed; and

     (8) to amend or modify any provision of this Agreement in connection with a Termination
Transaction.

     The General Partner will provide notice to the Limited Partners when any action under this
Section 7.3.C is taken.

     D. Notwithstanding Sections 7.3.B and 7.3.C, this Agreement shall not
be amended with respect to any Partner adversely affected, and no action may be taken by the
General Partner, without the Consent of such Partner adversely affected if such amendment or
action would (i) convert a Limited Partner’s interest in the Partnership into a general
partner’s interest (except as the result of the General Partner acquiring such interest),
(ii) modify the limited liability of a Limited Partner, (iii) alter rights of the Partner to
receive distributions pursuant to Article 5 or Section 13.2.A(4), or the
allocations specified in Article 6 (except as permitted pursuant to Sections
4.3, 5.4, 6.2.B and Section 7.3.C(3)), (iv) materially alter or
modify the rights to a Redemption or the REIT Shares Amount as set forth in Section
8.6, and related definitions hereof, or (v) amend this Section 7.3.D. Further,
no amendment may alter the restrictions on the General Partner’s authority set forth
elsewhere in this Section 7.3 or in Section 11.2.B without the Consent
specified in such section. This Section 7.3.D does not require unanimous consent of
all Partners adversely affected unless the amendment is to be effective against all partners
adversely affected.

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Section 7.4 Reimbursement of the General Partner

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

     B. The Partnership shall be responsible for and shall pay all expenses relating to the
Partnership’s and the General Partner’s organization, the ownership of its assets and its
operations. The General Partner is hereby authorized to pay compensation for accounting,
administrative, legal, technical, management and other services rendered to the Partnership.
Except to the extent provided in this Agreement, the General Partner and its Affiliates
shall be reimbursed on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all expenses that the General Partner and
its Affiliates incur relating to the ownership and operation of, or for the benefit of, the
Partnership (including, without limitation, administrative expenses); provided,
that the amount of any such reimbursement shall be reduced by any interest earned by
the General Partner with respect to bank accounts or other instruments or accounts held by
it on behalf of the Partnership. The Partners acknowledge that all such expenses of the
General Partner are deemed to be for the benefit of the Partnership. Such reimbursement
shall be in addition to any reimbursement made as a result of indemnification pursuant to
Section 7.7 hereof. In the event that certain expenses are incurred for the benefit
of the Partnership and other entities (including the General Partner), such expenses will be
allocated to the Partnership and such other entities in such a manner as the General Partner
in its sole and absolute discretion deems fair and reasonable. All payments and
reimbursements hereunder shall be characterized for federal income tax purposes as expenses
of the Partnership incurred on its behalf, and not as expenses of the General Partner.

     C. If the General Partner shall elect to purchase from its stockholders REIT Shares for
the purpose of delivering such REIT Shares to satisfy an obligation under any dividend
reinvestment program adopted by the General Partner, any employee stock purchase plan
adopted by the General Partner, or any similar obligation or arrangement undertaken by the
General Partner in the future or for the purpose of retiring such REIT Shares, the purchase
price paid by the General Partner for such REIT Shares and any other expenses incurred by
the General Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be advanced to the General Partner or reimbursed to the General
Partner, subject to the condition that: (i) if such REIT Shares subsequently are sold by the
General Partner, the General Partner shall pay to the Partnership any proceeds received by
the General Partner for such REIT Shares (which sales proceeds shall include the amount of
dividends reinvested under any dividend reinvestment or similar program; provided,
that a transfer of REIT Shares for Partnership Units pursuant to Section 8.6
would not be considered a sale for such purposes); and (ii) if such REIT Shares are not
retransferred by the General Partner within thirty (30) days after the purchase thereof, or
the General Partner otherwise determines not to retransfer such REIT Shares, the General
Partner, shall cause the Partnership to redeem a number of Partnership Units held by the
General Partner equal to the number of such REIT Shares,

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as adjusted (x) pursuant to Section 7.5 (in the event the General Partner
acquires material assets, other than on behalf of the Partnership) and (y) for stock
dividends and distributions, stock splits and subdivisions, reverse stock splits and
combinations, distributions of rights, warrants or options, and distributions of evidences
of indebtedness or assets relating to assets not received by the General Partner pursuant to
a pro rata distribution by the Partnership (in which case such advancement
or reimbursement of expenses shall be treated as having been made as a distribution in
redemption of such number of Partnership Units held by the General Partner).

     D. As set forth in Section 4.3, the General Partner shall be treated as having
made a Capital Contribution in the amount of all expenses that it incurs relating to the
General Partner’s offering of REIT Shares, other shares of capital stock of the General
Partner or New Securities.

     E. If and to the extent any reimbursements to the General Partner pursuant to this
Section 7.4 constitute gross income of the General Partner (as opposed to the
repayment of advances made by the General Partner on behalf of the Partnership), such
amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the
Code, shall be treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners’ Capital Accounts.

Section 7.5 Outside Activities of the General Partner

     A. Except in connection with a transaction authorized in Section 11.2, without
the Consent of the Limited Partners, the General Partner shall not, directly or indirectly,
enter into or conduct any business, other than in connection with the ownership, acquisition
and disposition of Partnership Interests as a General Partner and the management of the
business of the Partnership, its operation as a public reporting company with a class (or
classes) of securities registered under the Exchange Act, its operation as a REIT and such
activities as are incidental to the same. Without the Consent of the Limited Partners, the
General Partner shall not, directly or indirectly, participate in or otherwise acquire any
interest in any real or personal property, except its General Partner Interest, its minority
interest in any Subsidiary Partnership(s) that the General Partner holds in order to
maintain such Subsidiary Partnership’s status as a partnership, and such bank accounts,
similar instruments or other short term investments as it deems necessary to carry out its
responsibilities contemplated under this Agreement and the Charter. In the event the
General Partner desires to contribute cash to any Subsidiary Partnership to acquire or
maintain an interest of 1% or less in the capital of such partnership, the General Partner
may acquire or maintain an interest of 1% or less in the capital of such partnership, and
the General Partner may acquire such cash from the Partnership as a loan or in exchange for
a reduction in the General Partner’s Partnership Units, in an amount equal to the amount of
such cash divided by the Fair Market Value of a REIT Share on the day such cash is received
by the General Partner. Notwithstanding the foregoing, the General Partner may acquire
Properties or other assets in exchange for REIT Shares or cash, to the extent such
Properties or other assets are immediately contributed by the General Partner to the
Partnership, pursuant to the terms described in

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Section 4.3.D. Any Limited Partner Interests acquired by the General Partner,
whether pursuant to exercise by a Limited Partner of its right of Redemption, or otherwise,
shall be automatically converted into a General Partner Interest comprised of an identical
number of Partnership Units with the same rights, priorities and preferences as the class or
series so acquired. The General Partner may also own one hundred percent (100%) of the
stock or interests of one or more Qualified REIT Subsidiaries or limited liability
companies, respectively, provided that any such entity shall be subject to the limitations
of this Section 7.5.A. If, at any time, the General Partner acquires material assets (other
than Partnership Interests or other assets on behalf of the Partnership) the definition of
“REIT Shares Amount” and the definition of “Deemed Value of Partnership Interests”
shall be adjusted, as reasonably determined by the General Partner, to reflect the relative
Fair Market Value of a share of capital stock of the General Partner relative to the Deemed
Partnership Interest Value of the related Partnership Unit. The General Partner’s General
Partner Interest in the Partnership, its minority interest in any Subsidiary Partnership(s)
(held directly or indirectly through a Qualified REIT Subsidiary) that the General Partner
holds in order to maintain such Subsidiary Partnership’s status as a partnership, and
interests in such short-term liquid investments, bank accounts or similar instruments as the
General Partner deems necessary to carry out its responsibilities contemplated under this
Agreement and the Charter are interests which the General Partner is permitted to acquire
and hold for purposes of this Section 7.5.A.

     B. In the event the General Partner exercises its rights under the Charter to purchase
REIT Shares, other capital stock of the General Partner or New Securities, as the case may
be, then the General Partner shall cause the Partnership to purchase from it a number of
Partnership Units equal to the number of REIT Shares, other capital stock of the General
Partner or New Securities, as the case may be, so purchased on the same terms that the
General Partner purchased such REIT Shares, other capital stock of the General Partner or
New Securities, as the case may be.

Section 7.6 Contracts with Affiliates

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

     B. Except as provided in Section 7.5.A, the Partnership may transfer assets to
joint ventures, other partnerships, corporations or other business entities in which it is
or thereby becomes a participant upon such terms and subject to such conditions consistent
with this Agreement and applicable law as the General Partner in its sole discretion deems
advisable.

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

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Partnership, the General Partner, or any of the Partnership’s Subsidiaries. The
General Partner also is expressly authorized to cause the Partnership to issue to it
Partnership Units corresponding to REIT Shares issued by the General Partner pursuant to any
Stock Plan or any similar or successor plan and to repurchase such Partnership Units from
the General Partner to the extent necessary to permit the General Partner to repurchase such
REIT Shares in accordance with such plan.

     D. Except as expressly permitted by this Agreement, neither the General Partner nor any
of its Affiliates shall sell, transfer or convey any property to, or purchase any property
from, the Partnership, directly or indirectly, except pursuant to transactions that are
determined by the General Partner in good faith to be fair and reasonable.

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

Section 7.7 Indemnification

     A. To the fullest extent permitted by law, the Partnership shall indemnify an
Indemnitee from and against any and all losses, claims, damages, liabilities, joint or
several, expenses (including legal fees and expenses), judgments, fines, settlements, and
other amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, unless it is established that: (i) the
act or omission of the Indemnitee was material to the matter giving rise to the proceeding
and either was committed in bad faith, fraud or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money,
property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful. Without limitation, the
foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the
Partnership (including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one or more
indemnity agreements consistent with the provisions of this Section 7.7 in favor of
any Indemnitee having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent, or any entry of an order of probation prior to judgment,
does not create a presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 7.7.A. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and any
insurance proceeds from the liability policy covering the General Partner and any
Indemnitee, and neither the General Partner nor any Limited Partner shall have any
obligation to contribute to the capital of the Partnership or otherwise provide funds to
enable the

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Partnership to fund its obligations under this Section 7.7, except to the
extent otherwise expressly agreed to by such Partner and the Partnership.

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

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

     D. The Partnership may, but shall not be obligated to, purchase and maintain insurance,
on behalf of the Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be incurred by such
Person in connection with the Partnership’s activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability under the
provisions of this Agreement.

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

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

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

     H. The provisions of this Section 7.7 are for the benefit of the Indemnitees,
their heirs, successors, assigns and administrators and shall not be deemed to create any
rights for the benefit of any other Persons. Any amendment, modification or repeal of this
Section 7.7 or any provision hereof shall be prospective only and shall not in any

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way affect the limitations on the Partnership’s liability to any Indemnitee under this
Section 7.7 as in effect immediately prior to such amendment, modification or repeal
with respect to claims arising from or relating to matters occurring, in whole or in part,
prior to such amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

     I. If and to the extent any reimbursements to the General Partner pursuant to this
Section 7.7 constitute gross income of the General Partner (as opposed to the
repayment of advances made by the General Partner on behalf of the Partnership) such amounts
shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall
be treated consistently therewith by the Partnership and all Partners, and shall not be
treated as distributions for purposes of computing the Partners’ Capital Accounts.

     J. Any indemnification hereunder is subject to, and limited by, the provisions of
Section 10-107 of the Act.

     K. In the event the Partnership is made a party to any litigation or otherwise incurs
any loss or expense as a result of or in connection with any Partner’s personal obligations
or liabilities unrelated to Partnership business, such Partner shall indemnify and reimburse
the Partnership for all such loss and expense incurred, including legal fees, and the
Partnership interest of such Partner may be charged therefor. The liability of a Partner
under this Section 7.7.K shall not be limited to such Partner’s Partnership
Interest, but shall be enforceable against such Partner personally.

Section 7.8 Liability of the General Partner

     A. Notwithstanding anything to the contrary set forth in this Agreement, none of the
General Partner nor any of its officers, directors, agents or employees shall be liable or
accountable in damages or otherwise to the Partnership, any Partners or any Assignees, or
their successors or assigns, for losses sustained, liabilities incurred or benefits not
derived as a result of errors in judgment or mistakes of fact or law or any act or omission
if the General Partner acted in good faith.

     B. The Limited Partners expressly acknowledge that the General Partner is acting for
the benefit of the Partnership, the Limited Partners and the General Partner’s stockholders
collectively. The General Partner is under no obligation to give priority to the separate
interests of the Limited Partners or the General Partner’s stockholders (including, without
limitation, the tax consequences to Limited Partners or Assignees or to stockholders) in
deciding whether to cause the Partnership to take (or decline to take) any actions. If
there is a conflict between the interests of the stockholders of the General Partner on one
hand and the Limited Partners on the other, the General Partner shall endeavor in good faith
to resolve the conflict in a manner not adverse to either the stockholders of the General
Partner or the Limited Partners; provided, however, that for so long as the
General Partner, owns a controlling interest in the Partnership, any such conflict that
cannot be resolved in a manner not adverse to either the stockholders of the General Partner
or the Limited Partners shall be resolved in favor of the stockholders.

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The General Partner shall not be liable under this Agreement to the Partnership or to
any Partner for monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions; provided,
that the General Partner has acted in good faith.

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

     D. Any amendment, modification or repeal of this Section 7.8 or any provision
hereof shall be prospective only and shall not in any way affect the limitations on the
liability of the General Partner and any of its officers, directors, agents and employee’s
liability to the Partnership and the Limited Partners under this Section 7.8 as in
effect immediately prior to such amendment, modification or repeal with respect to claims
arising from or relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.9 Other Matters Concerning the General Partner

     A. The General Partner may rely and shall be protected in acting or refraining from
acting upon any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties.

     B. The General Partner may consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other consultants and advisers selected by
it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as
to matters which such General Partner reasonably believes to be within such Person’s
professional or expert competence shall be conclusively presumed to have been done or
omitted in good faith and in accordance with such opinion.

     C. The General Partner shall have the right, in respect of any of its powers or
obligations hereunder, to act through any of its duly authorized officers and a duly
appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent provided
by the General Partner in the power of attorney, have full power and authority to do and
perform all and every act and duty which is permitted or required to be done by the General
Partner hereunder.

     D. Notwithstanding any other provisions of this Agreement or any non-mandatory
provision of the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or advisable
in order to protect the ability of the General Partner, for so long as the

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General Partner has determined to qualify as a REIT, to (i) continue to qualify as a
REIT or (ii) avoid the General Partner incurring any taxes under Section 857 or Section 4981
of the Code, is expressly authorized under this Agreement and is deemed approved by all of
the Limited Partners.

Section 7.10 Title to Partnership Assets

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

Section 7.11 Reliance by Third Parties

     Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter
into any contracts on behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership’s sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other remedies which may
be available against such Person to contest, negate or disaffirm any action of the General Partner
in connection with any such dealing. In no event shall any Person dealing with the General Partner
or its representatives be obligated to ascertain that the terms of this Agreement have been
complied with or to inquire into the necessity or expedience of any act or action of the General
Partner or its representatives. Each and every certificate, document or other instrument executed
on behalf of the Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the
time of the execution and delivery of such certificate, document or instrument, this Agreement was
in full force and effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the Partnership and
(iii) such certificate, document or instrument was duly executed and delivered in accordance with
the terms and provisions of this Agreement and is binding upon the Partnership.

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ARTICLE 8.

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1 Limitation of Liability

     The Limited Partners shall have no liability under this Agreement except as expressly provided
in this Agreement or under the Act.

Section 8.2 Management of Business

     No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any
officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such) shall take part in the operations, management
or control (within the meaning of the Act) of the Partnership’s business, transact any business in
the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership.
The transaction of any such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners or Assignees under this Agreement.

Section 8.3 Outside Activities of Limited Partners

     Subject to any agreements entered into by a Limited Partner or its Affiliates with the General
Partner, Partnership or a Subsidiary, any Limited Partner and any officer, director, employee,
agent, trustee, Affiliate or stockholder of any Limited Partner shall be entitled to and may have
business interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition with the Partnership
or that are enhanced by the activities of the Partnership. Neither the Partnership nor any
Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person
shall have any rights by virtue of this Agreement or the partnership relationship established
hereby in any business ventures of any other Person, other than the Limited Partners benefiting
from the business conducted by the General Partner, and such Person shall have no obligation
pursuant to this Agreement to offer any interest in any such business ventures to the Partnership,
any Limited Partner or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be taken by such
Person.

Section 8.4 Return of Capital

     Except pursuant to the rights of Redemption set forth in Section 8.6, no Limited
Partner shall be entitled to the withdrawal or return of his or her Capital Contribution, except to
the extent of distributions made pursuant to this Agreement or upon termination of the Partnership
as provided herein. No Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital Contributions, or as otherwise expressly
provided in this Agreement, or as to profits, losses, distributions or credits.

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Section 8.5 Rights of Limited Partners Relating to the Partnership

     A. In addition to other rights provided by this Agreement or by the Act, and except as
limited by Section 8.5.C, each Limited Partner shall have the right, for a purpose
reasonably related to such Limited Partner’s interest as a limited partner in the
Partnership, upon written demand with a statement of the purpose of such demand and at such
Limited Partner’s expense:

          (1) to obtain a copy of the most recent annual and quarterly reports filed with the
Securities and Exchange Commission by the General Partner pursuant to the Exchange Act, and
each communication sent to the stockholders of the General Partner;

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

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

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

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

     B. The Partnership shall notify each Limited Partner in writing of any adjustment made
in the calculation of the REIT Shares Amount within a reasonable time after the date such
change becomes effective.

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

Section 8.6 Redemption Rights

     A. On or after (i) the first anniversary of the Effective Date, with respect to the
Partnership Units acquired on or contemporaneously with the Effective Date, or (ii) the date
of issuance of any other Partnership Units, or on or after such later date as expressly
provided in an agreement entered into between the Partnership and any Limited Partner, each
Limited Partner shall have the right (subject to the terms and conditions set

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forth herein and in any other such agreement, as applicable) to require the Partnership
to redeem all or a portion of the Partnership Units held by such Limited Partner (such
Partnership Units being hereafter referred to as “Tendered Units”) in exchange for
the Cash Amount (a “Redemption”); provided that the terms of such Partnership Units
do not provide that such Partnership Units are not entitled to a right of Redemption.
Unless otherwise expressly provided in this Agreement or in a separate agreement entered
into between the Partnership and the holders of such Partnership Units, all Partnership
Units shall be entitled to a right of Redemption hereunder. The Tendering Partner shall
have no right, with respect to any Partnership Units so redeemed, to receive any
distributions paid on or after the Specified Redemption Date. Any Redemption shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by the Limited
Partner who is exercising the right (the “Tendering Partner”). The Cash Amount
shall be payable to the Tendering Partner within ten (10) days of the Specified Redemption
Date in accordance with the instructions set forth in the Notice of Redemption.

     B. Notwithstanding Section 8.6.A above, if a Limited Partner has delivered to
the General Partner a Notice of Redemption then the General Partner may, in its sole and
absolute discretion (subject to the limitations on ownership and transfer of REIT Shares set
forth in the Charter), elect to acquire some or all of the Tendered Units from the Tendering
Partner in exchange for the REIT Shares Amount (as of the Specified Redemption Date) and, if
the General Partner so elects, the Tendering Partner shall sell the Tendered Units to the
General Partner in exchange for the REIT Shares Amount. In such event, the Tendering
Partner shall have no right to cause the Partnership to redeem such Tendered Units. The
General Partner shall promptly give such Tendering Partner written notice of its election,
and the Tendering Partner may elect to withdraw its redemption request at any time prior to
the acceptance of the cash or REIT Shares Amount by such Tendering Partner.

     C. The REIT Shares Amount, if applicable, shall be delivered as duly authorized,
validly issued, fully paid and nonassessable REIT Shares and, if applicable, free of any
pledge, lien, encumbrance or restriction, other than those provided in the Charter, the
Bylaws of the General Partner, the Securities Act, relevant state securities or blue sky
laws and any applicable registration rights agreement with respect to such REIT Shares
entered into by the Tendering Partner. Notwithstanding any delay in such delivery (but
subject to Section 8.6.E), the Tendering Partner shall be deemed the owner of such
REIT Shares for all purposes, including without limitation, rights to vote or consent, and
receive dividends, as of the Specified Redemption Date. In addition, the REIT Shares for
which the Partnership Units might be exchanged shall also bear a legend which generally
provides the following:

     THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE CORPORATION’S MAINTENANCE
OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST (“REIT”) UNDER THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED
IN THE CORPORATION’S ARTICLES OF AMENDMENT AND

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RESTATEMENT, (i) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION’S
COMMON STOCK IN EXCESS OF 9.8% (BY VALUE OR BY NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF
THE OUTSTANDING COMMON STOCK OF THE CORPORATION; (ii) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY
OWN SHARES OF COMMON STOCK THAT WOULD RESULT IN THE CORPORATION BEING “CLOSELY HELD” UNDER SECTION
856(h) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (iii) NO
PERSON MAY TRANSFER SHARES OF COMMON STOCK IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF
THE CORPORATION BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR
CONSTRUCTIVELY OWNS, OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN, SHARES OF COMMON STOCK IN
VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE
RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SHARES OF COMMON STOCK REPRESENTED HEREBY
WILL BE AUTOMATICALLY TRANSFERRED TO THE TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE
CHARITABLE BENEFICIARIES. IN ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND
CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS
DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED
ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN VIOLATION OF THE
RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL TERMS IN THIS LEGEND THAT ARE DEFINED IN
THE ARTICLES OF AMENDMENT AND RESTATEMENT OF THE CORPORATION SHALL HAVE THE MEANINGS ASCRIBED TO
THEM IN THE ARTICLES OF AMENDMENT AND RESTATEMENT OF THE CORPORATION, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND OWNERSHIP, WILL BE
FURNISHED TO EACH HOLDER OF SHARES OF COMMON STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH
A COPY MAY BE DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.

     D. Each Limited Partner covenants and agrees with the General Partner that all Tendered
Units shall be delivered to the General Partner free and clear of all liens, claims and
encumbrances whatsoever and should any such liens, claims and/or encumbrances exist or arise
with respect to such Tendered Units, the General Partner shall be under no obligation to
acquire the same. Each Limited Partner further agrees that, in the event any state or local
property transfer tax is payable as a result of the transfer of its Tendered Units to the
General Partner (or its designee), such Limited Partner shall assume and pay such transfer
tax.

     E. Notwithstanding the provisions of Section 8.6.A, 8.6.B,
8.6.C or any other provision of this Agreement, a Limited Partner (i) shall not be
entitled to effect a Redemption for cash or an exchange for REIT Shares to the extent the
ownership or right to acquire REIT Shares pursuant to such exchange by such Partner on the
Specified Redemption Date could cause such Partner or any other Person, or, in the opinion
of counsel selected by the General Partner, may cause such Partner or any other Person, to

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violate the restrictions on ownership and transfer of REIT Shares set forth in the
Charter and (ii) shall have no rights under this Agreement to acquire REIT Shares which
would otherwise be prohibited under the Charter. To the extent any attempted Redemption or
exchange for REIT Shares would be in violation of this Section 8.6.E, it shall be
null and void ab initio and such Limited Partner shall not acquire any rights or economic
interest in the cash otherwise payable upon such Redemption or the REIT Shares otherwise
issuable upon such exchange.

     F. Notwithstanding anything herein to the contrary (but subject to Section
8.6.E), with respect to any Redemption or exchange for REIT Shares pursuant to this
Section 8.6:

          (1) All Partnership Units acquired by the General Partner pursuant thereto shall
automatically, and without further action required, be converted into and deemed to be
Limited Partner Interests comprised of the same number and class of Partnership Units.

          (2) Without the consent of the General Partner, each Limited Partner may not effect a
Redemption for less than 1,000 Partnership Units or, if the Limited Partner holds less than
1,000 Partnership Units, all of the Partnership Units held by such Limited Partner.

          (3) Without the consent of the General Partner, each Limited Partner may not effect a
Redemption during the period after the Partnership Record Date with respect to a
distribution and before the record date established by the General Partner for a
distribution to its stockholders of some or all of its portion of such distribution.

          (4) The consummation of any Redemption or exchange for REIT Shares shall be subject to
the expiration or termination of the applicable waiting period, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

          (5) Each Tendering Partner shall continue to own all Partnership Units subject to any
Redemption or exchange for REIT Shares, and be treated as a Limited Partner with respect to
such Partnership Units for all purposes of this Agreement, until such Partnership Units are
transferred to the General Partner and paid for or exchanged on the Specified Redemption
Date. Until a Specified Redemption Date, the Tendering Partner shall have no rights as a
stockholder of the General Partner with respect to such Tendering Partner’s Partnership
Units.

     G. In the event that the Partnership issues additional Partnership Interests to any
Additional Limited Partner pursuant to Section 4.3.B, the General Partner shall make
such revisions to this Section 8.6 as it determines are necessary to reflect the
issuance of such additional Partnership Interests.

     H. Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that it determines to be necessary or appropriate to cause the partnership to
comply with any withholding requirements established under the Code or any other federal, state or
local law that apply upon a Redemption or exchange of Tendered Units. If

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a Tendering Partner believes that it is exempt from withholding upon a Redemption or exchange
of Tendered Units, such Partner must furnish the General Partner a FIRPTA certificate or other
documentation requested by the General Partner is a form acceptable to the General Partner. If the
Partnership or the General Partner is required to withhold and pay over to any taxing authority any
amount upon a Redemption or exchange of Tendered Units and the Cash Amount or the REIT Shares
Amount, as the case may be, equals or exceeds the amount of tax required to be withheld, the amount
withheld shall be treated as an amount received by such Partner in redemption of its Tendered
Units. If the Cash Amount or the REIT Shares Amount, as the case may be, is less than the amount
of tax required to be withheld, the Tendering Partner shall not receive any Cash Amount or REIT
Shares Amount, and the Tendering Partner shall contribute the excess of the amount of tax required
to be withheld over the Cash Amount or REIT Shares Amount before such excess taxes are required to
be paid to the taxing authority.

ARTICLE 9.

BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1 Records and Accounting

     The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnership’s business, including without
limitation, all books and records necessary to provide to the Limited Partners any information,
lists and copies of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its business may be kept on,
or be in the form of any information storage device, provided, that the records so
maintained are convertible into clearly legible written form within a reasonable period of time.
The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an
accrual basis in accordance with generally accepted accounting principles.

Section 9.2 Fiscal Year

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

Section 9.3 Reports

     A. As soon as practicable, but in no event later than 105 days after the close of each
Partnership Year, or such earlier date as they are filed with the Securities and Exchange
Commission, the General Partner shall cause to be mailed to each Limited Partner as of the
close of the Partnership Year, an annual report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely on a
consolidated basis with the General Partner, for such Partnership Year, presented in
accordance with generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the General
Partner.

     B. As soon as practicable, but in no event later than 45 days after the close of each
calendar quarter (except the last calendar quarter of each year), or such earlier date as
they are filed with the Securities and Exchange Commission, the General Partner shall cause
to be mailed to each Limited Partner as of the last day of the calendar quarter, a

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report containing unaudited financial statements of the Partnership, or of the General
Partner, if such statements are prepared solely on a consolidated basis with the applicable
law or regulation, or as the General Partner determines to be appropriate.

Section 9.4 Nondisclosure of Certain Information

     Notwithstanding the provisions of Sections 9.1 and 9.3, the General Partner
may keep confidential from the Limited Partners any information that the General Partner believes
to be in the nature of trade secrets or other information the disclosure of which the General
Partner in good faith believes is not in the best interest of the Partnership or which the
Partnership is required by law or by agreements with unaffiliated third parties to keep
confidential.

ARTICLE 10.

TAX MATTERS

Section 10.1 Preparation of Tax Returns

     The General Partner shall arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items required of the Partnership for
federal and applicable state income tax purposes and shall use all reasonable efforts to furnish,
within 90 days of the close of each taxable year, the tax information reasonably required by
Limited Partners for federal and applicable state income tax reporting purposes. Each Limited
Partner shall promptly provide the General Partner with any information reasonably requested by the
General Partner relating to any Contributed Property contributed (directly or indirectly) by such
Limited Partner to the Partnership.

Section 10.2 Tax Elections

     Except as otherwise provided herein, the General Partner shall, in its sole and absolute
discretion, determine whether to make any available election pursuant to the Code, including the
election under Section 754 of the Code. The General Partner shall have the right to seek to revoke
any such election (including without limitation, any election under Section 754 of the Code) upon
the General Partner’s determination in its sole and absolute discretion that such revocation is the
best interests of the Partners.

Section 10.3 Tax Matters Partner

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

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

          (1) to enter into any settlement with the IRS with respect to any administrative or
judicial proceedings for the adjustment of Partnership items required to

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be taken into account by a Partner for income tax purposes (such administrative
proceedings being referred to as a “tax audit” and such judicial proceedings being
referred to as “judicial review”), and in the settlement agreement the tax matters
partner may expressly state that such agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant
to the Code and Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on behalf of such
Partner or (ii) who is a “notice partner” (as defined in Section 6231 of the Code)
or a member of a “notice group” (as defined in Section 6223(b)(2) of the Code);

          (2) in the event that a notice of a final administrative adjustment at the Partnership
level of any item required to be taken into account by a Partner for tax purposes (a
“final adjustment”) is mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for readjustment with the Tax
Court or the United States Claims Court, or the filing of a complaint for refund with the
District Court of the United States for the district in which the Partnership’s principal
place of business is located;

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

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

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

          (6) to take any other action on behalf of the Partners of the Partnership in connection
with any tax audit or judicial review proceeding to the extent permitted by applicable law
or regulations.

     The taking of any action and the incurring of any expense by the tax matters partner in
connection with any such proceeding, except to the extent required by law, is a matter in the sole
and absolute discretion of the tax matters partner and the provisions relating to indemnification
of the General Partner set forth in Section 7.7 shall be fully applicable to the tax
matters partner in its capacity as such.

     C. The tax matters partner shall receive no compensation for its services. All third
party costs and expenses incurred by the tax matters partner in performing its duties as
such (including legal and accounting fees) shall be borne by the Partnership. Nothing
herein shall be construed to restrict the Partnership from engaging an accounting firm to
assist the tax matters partner in discharging its duties hereunder, so long as the
compensation paid by the Partnership for such services is reasonable.

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Section 10.4 Organizational Expenses

     The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the
Partnership ratably over a 180-month period as provided in Section 709 of the Code.

Section 10.5 Withholding

     Each Limited Partner hereby authorizes the Partnership to withhold from or pay on behalf of or
with respect to such Limited Partner any amount of federal, state, local, or foreign taxes that the
General Partner determines that the Partnership is required to withhold or pay with respect to any
amount distributable or allocable to such Limited Partner pursuant to this Agreement, including,
without limitation, any taxes required to be withheld or paid by the Partnership pursuant to
Sections 1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf of or with respect to a
Limited Partner shall constitute a receivable of the Partnership from such Limited Partner, which
receivable shall be paid by such Limited Partner within 15 days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such payment from a
distribution which would otherwise be made to the Limited Partner or (ii) the General Partner
determines, in its sole and absolute discretion, that such payment may be satisfied out of the
available funds of the Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as
having been distributed to such Limited Partner. Each Limited Partner hereby unconditionally and
irrevocably grants to the Partnership a security interest in such Limited Partner’s Partnership
Interest to secure such Limited Partner’s obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. Any amounts payable by a Limited Partner
hereunder shall bear interest at the base rate on corporate loans at large United States money
center commercial banks, as published from time to time in the Wall Street Journal, plus
two percentage points (but not higher than the maximum lawful rate) from the date such amount is
due (i.e., 15 days after demand) until such amount is paid in full. Each Limited Partner
shall take such actions as the Partnership or the General Partner shall request in order to perfect
or enforce the security interest created hereunder.

ARTICLE 11.

TRANSFERS AND WITHDRAWALS

Section 11.1 Transfer

     A. The term “transfer,” when used in this Article 11 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which a Partner purports
to assign its Partnership Interest to another Person and includes a sale, assignment, gift
(outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise. The term “transfer” when used in this Article 11
does not include any Redemption or exchange for REIT Shares pursuant to Section 8.6,
except as otherwise provided herein. No part of the interest of a Limited Partner shall be
subject to the claims of any creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered except as may
be specifically provided for in this Agreement or consented to by the General Partner.

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     B. No Partnership Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article 11. Any transfer
or purported transfer of a Partnership Interest not made in accordance with this Article
11 shall be null and void ab initio unless otherwise consented to by the General Partner
in its sole and absolute discretion.

Section 11.2 Transfer of General Partner’s Partnership Interest

     A. Except in connection with a Termination Transaction permitted under Section
11.2.B, the General Partner shall not withdraw from the Partnership and shall not
transfer all or any portion of its interest in the Partnership (whether by sale, statutory
merger or consolidation, liquidation or otherwise), other than to an Affiliate, without the
Consent of the Limited Partners, which may be given or withheld by each Limited Partner in
his, her or its sole and absolute discretion, and only upon the admission of a successor
General Partner pursuant to Section 12.1. Upon any transfer of a Partnership
Interest in accordance with the provisions of this Section 11.2, the transferee
shall become a Substitute General Partner for all purposes herein, and shall be vested with
the powers and rights of the transferor General Partner, and shall be liable for all
obligations and responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and to confirm
the agreement of such transferee to be bound by all the terms and provisions of this
Agreement with respect to the Partnership Interest so acquired. It is a condition to any
transfer otherwise permitted hereunder that the transferee assumes, by operation of law or
express agreement, all of the obligations of the transferor General Partner under this
Agreement with respect to such transferred Partnership Interest, and no such transfer (other
than pursuant to a statutory merger or consolidation wherein all obligations and liabilities
of the transferor General Partner are assumed by a successor corporation by operation of
law) shall relieve the transferor General Partner of its obligations under this Agreement
without the Consent of the Limited Partners, in their reasonable discretion. In the event
the General Partner withdraws from the Partnership in violation of this Agreement or
otherwise, or otherwise dissolves or terminates, or upon the Incapacity of the General
Partner, all of the remaining Partners may elect to continue the Partnership business by
selecting a Substitute General Partner in accordance with the Act.

     B. The General Partner shall not engage in any merger, consolidation or other
combination with or into another person, sale of all or substantially all of its assets or
any reclassification, recapitalization or change of its outstanding equity interests
(“Termination Transaction”) unless either clause (a) or (b) below is satisfied:

               (a) in connection with such Termination Transaction all Limited Partners either will
receive, or will have the right to elect to receive, for each Partnership Unit an amount of
cash, securities, or other property equal to the product of the REIT Shares Amount and the
greatest amount of cash, securities or other property paid to a holder of one REIT Share in
consideration of one REIT Share at any time during the period commencing upon and continuing
after the date on which the Termination Transaction is consummated; provided,
that, if, in connection with the Termination Transaction, a purchase, tender or
exchange offer shall have been made to

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and accepted by the holders of more than fifty percent (50%) of the outstanding REIT
Shares, each holder of Partnership Units shall receive, or shall have the right to elect to
receive, the greatest amount of cash, securities, or other property which such holder would
have received had it exercised its right to Redemption (as set forth in Section 8.6)
and received REIT Shares in exchange for its Partnership Units immediately prior to the
expiration of such purchase, tender or exchange offer and had thereupon accepted such
purchase, tender or exchange offer and then such Termination Transaction shall have been
consummated; or

               (b) the following conditions are met: (i) substantially all of the assets directly or
indirectly owned by the surviving entity are held directly or indirectly by the Partnership
or another limited partnership or limited liability company which is the survivor of a
merger, consolidation or combination of assets with the Partnership (in each case, the
“Surviving Partnership”); (ii) the holders of Partnership Units own a percentage
interest of the Surviving Partnership based on the relative fair market value of the net
assets of the Partnership and the other net assets of the Surviving Partnership immediately
prior to the consummation of such transaction; (iii) the rights, preferences and privileges
of such holders in the Surviving Partnership are at least as favorable as those in effect
immediately prior to the consummation of such transaction and as those applicable to any
other limited partners or non-managing members of the Surviving Partnership; and (iv) such
rights of the Limited Partners include at least one of the following: (a) the right to
redeem their interests in the Surviving Partnership for the consideration available to such
persons pursuant to Section 11.2.B(2)(a); or (b) the right to redeem their
Partnership Units for cash on terms equivalent to those in effect with respect to their
Partnership Units immediately prior to the consummation of such transaction, or, if the
ultimate controlling person of the Surviving Partnership has publicly traded common equity
securities, such common equity securities, with an exchange ratio based on the determination
of relative fair market value of such securities and the REIT Shares.

Section 11.3 Limited Partners’ Rights to Transfer

     A. Prior to the first anniversary of the Effective Date, no Limited Partner shall
transfer all or any portion of its Partnership Interest to any transferee without the
consent of the General Partner, which consent may be withheld in its sole and absolute
discretion; provided, however, that any Limited Partner may, at any time
(whether prior to or after such one-year period), without the consent of the General
Partner, (i) transfer all or any portion of its Partnership Interest to the General Partner,
(ii) transfer all or any portion of its Partnership Interest to an Affiliate, another
original Limited Partner or to an Immediate Family Member, subject to the provisions of
Section 11.6, (iii) transfer all or any portion of its Partnership Interest to a
trust for the benefit of a charitable beneficiary or to a charitable foundation, subject to
the provisions of Section 11.6, and (iv) subject to the provisions of Section
11.6, pledge (a “Pledge”) all or any portion of its Partnership Interest to a
lending institution, which is not an Affiliate of such Limited Partner, as collateral or
security for a bona fide loan or other extension of credit, and transfer such pledged
Partnership Interest to such lending institution in connection with the exercise of remedies
under such loan or extension or credit, and the transfer of such pledged

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Partnership Interest by the lender to any transferee. After such anniversary, each
Limited Partner or Assignee (resulting from a transfer made pursuant to clauses (i)-(iv) of
the proviso of the preceding sentence) shall have the right to transfer all or any portion
of its Partnership Interest, subject to the provisions of Section 11.6 and the
satisfaction of each of the following conditions (in addition to the right of each such
Limited Partner or Assignee to continue to make any such transfer permitted by clauses
(i)-(iv) of such proviso without satisfying either of the following conditions):

          (1) General Partner Right of First Refusal. The transferring Partner shall
give written notice of the proposed transfer to the General Partner, which notice shall
state (i) the identity of the proposed transferee, and (ii) the amount and type of
consideration proposed to be received for the transferred Partnership Units. The General
Partner shall have ten (10) days upon which to give the transferring Partner notice of its
election to acquire the Partnership Units on the proposed terms. If it so elects, it shall
purchase the Partnership Units on such terms within ten (10) days after giving notice of
such election. If it does not so elect, the transferring Partner may transfer such
Partnership Units to a third party, on economic terms no more favorable to the transferee
than the proposed terms, subject to the other conditions of this Section 11.3.

          (2) Qualified Transferee. Any transfer of a Partnership Interest shall be made
only to Qualified Transferees.

     It is a condition to any transfer otherwise permitted hereunder that the transferee assumes by
operation of law or express agreement all of the obligations of the transferor Limited Partner
under this Agreement with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities
of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve
the transferor Partner of its obligations under this Agreement without the approval of the General
Partner, in its reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership limitations contained in
the Charter, which may limit or restrict such transferee’s ability to exercise its Redemption
rights, and to the representations in Section 3.4.D. Any transferee, whether or not
admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor
hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary
transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights
of an Assignee as provided in Section 11.5.

     B. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee,
committee, guardian, conservator, or receiver of such Limited Partner’s estate shall have
all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited
Partners, for the purpose of settling or managing the estate, and such power as the
Incapacitated Limited Partner possessed to transfer all or any part of his or its interest
in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.

     C. The General Partner may prohibit any transfer otherwise permitted under Section
11.3 by a Limited Partner of his or her Partnership Units if, in the opinion of

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legal counsel to the Partnership, such transfer would require the filing of a
registration statement under the Securities Act by the Partnership or would otherwise
violate any federal or state securities laws or regulations applicable to the Partnership or
the Partnership Unit.

Section 11.4 Substituted Limited Partners

     A. No Limited Partner shall have the right to substitute a transferee as a Limited
Partner in his or her place (including any transferee permitted by Section 11.3).
The General Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4 as a
Substituted Limited Partner, which consent may be given or withheld by the General Partner
in its sole and absolute discretion. The General Partner’s failure or refusal to permit a
transferee of any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action, whether at law or in equity, against the Partnership or any Partner.

     B. A transferee who has been admitted as a Substituted Limited Partner in accordance
with this Article 11 shall have all the rights and powers and be subject to all the
restrictions and liabilities of a Limited Partner under this Agreement. The admission of
any transferee as a Substituted Limited Partner shall be subject to the transferee executing
and delivering to the General Partner an acceptance of all of the terms and conditions of
this Agreement (including without limitation, the provisions of Section 2.4 and such
other documents or instruments as may be required to effect the admission), each in form and
substance satisfactory to the General Partner) and the acknowledgment by such transferee
that each of the representations and warranties set forth in Section 3.4 are true
and correct with respect to such transferee as of the date of the transfer of the
Partnership Interest to such transferee and will continue to be true to the extent required
by such representations and warranties.

     C. Upon the admission of a Substituted Limited Partner, the General Partner shall amend
Exhibit A to reflect the name, address, number of Partnership Units, and Percentage Interest
of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name,
address and interest of the predecessor of such Substituted Limited Partner.

Section 11.5 Assignees

     If the General Partner, in its sole and absolute discretion, does not consent to the admission
of any permitted transferee under Section 11.3 as a Substituted Limited Partner, as
described in Section 11.4, such transferee shall be considered an Assignee for purposes of
this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain and loss attributable to the Partnership
Units assigned to such transferee, the rights to transfer the Partnership Units provided in this
Article 11, the right of Redemption provided in Section 8.6, but shall not be
deemed to be a holder of Partnership Units for any other purpose under this Agreement, and shall
not be entitled to effect a Consent

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with respect to such Partnership Units on any matter presented to the Limited Partners for
approval (such Consent remaining with the transferor Limited Partner). In the event any such
transferee desires to make a further assignment of any such Partnership Units, such transferee
shall be subject to all the provisions of this Article 11 to the same extent and in the
same manner as any Limited Partner desiring to make an assignment of Partnership Units.
Notwithstanding anything contained in this Agreement to the contrary, as a condition to becoming an
Assignee, any prospective Assignee must first execute and deliver to the Partnership an
acknowledgment that each of the representations and warranties set forth in Section 3.4 are
true and correct with respect to such prospective Assignee as of the date of the prospective
assignment of the Partnership Interest to such prospective Assignee and will continue to be true to
the extent required by such representations or warranties.

Section 11.6 General Provisions

     A. No Limited Partner may withdraw from the Partnership other than as a result of (i) a
permitted transfer of all of such Limited Partner’s Partnership Units in accordance with
this Article 11 and the transferee(s) of such Partnership Units being admitted to
the Partnership as a Substituted Limited Partner or (ii) pursuant to the exercise of its
right of Redemption of all of such Limited Partner’s Partnership Units under Section
8.6; provided that after such transfer, exchange or redemption such Limited Partner owns
no Partnership Interest.

     B. Any Limited Partner who shall transfer all of such Limited Partner’s Partnership
Units in a transfer permitted pursuant to this Article 11 where such transferee was
admitted as a Substituted Limited Partner or pursuant to the exercise of its rights of
Redemption of all of such Limited Partner’s Partnership Units under Section 8.6
shall cease to be a Limited Partner; provided that after such transfer, exchange or
redemption such Limited Partner owns no Partnership Interest.

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

     D. If any Partnership Interest is transferred, assigned or redeemed during any
quarterly segment of the Partnership’s Partnership Year in compliance with the provisions of
this Article 11 or transferred or redeemed pursuant to Section 8.6, on any
day other than the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items attributable to such Partnership Interest for such Partnership
Year shall be divided and allocated between the transferor Partner and the transferee
Partner by taking into account their varying interests during the Partnership Year using a
method selected by the General Partner that is in accordance with Section 706(d) of the
Code. Except as otherwise agreed by the General Partner, all distributions of Available
Cash with respect to which the Partnership Record Date is before the date of such transfer,
assignment, exchange or redemption shall be made to the transferor Partner, and all
distributions of Available Cash thereafter, in the case of a transfer or assignment other
than a redemption, shall be made to the transferee Partner.

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     E. In addition to any other restrictions on transfer herein contained, including
without limitation the provisions of this Article 11 and Section 2.6, in no
event may any transfer or assignment of a Partnership Interest by any Partner (including
pursuant to a Redemption or exchange for REIT Shares by the Partnership or the General
Partner) be made (i) to any person or entity who lacks the legal right, power or capacity to
own a Partnership Interest; (ii) in violation of applicable law; (iii) except with the
consent of the General Partner, which may be given or withheld in its sole and absolute
discretion, of any component portion of a Partnership Interest, such as the Capital Account,
or rights to distributions, separate and apart from all other components of a Partnership
Interest; (iv) except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, if in the opinion of legal counsel to the
Partnership such transfer could cause a termination of the Partnership for federal or state
income tax purposes (except as a result of the Redemption or exchange for REIT Shares of all
Partnership Interests held by all Limited Partners or pursuant to a transaction expressly
permitted under Section 11.2); (v) if in the opinion of counsel to the Partnership
such transfer could cause the Partnership to cease to be classified as a partnership for
federal income tax purposes (except as a result of the Redemption or exchange for REIT
Shares of all Partnership Interests held by all Limited Partners); (vi) if such transfer
could, in the opinion of counsel to the Partnership, cause the Partnership to become, with
respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as
defined in Section 3(14) of ERISA) or a “disqualified person” (as defined in Section 4975(c)
of the Code); (vii) if such transfer could, in the opinion of counsel to the Partnership,
cause any portion of the assets of the Partnership to constitute assets of any employee
benefit plan pursuant to Department of Labor Regulations Section 2510.2-101; (viii) if such
transfer requires the registration of such Partnership Interest pursuant to any applicable
federal or state securities laws; (ix) except with the consent of the General Partner, which
may be given or withheld in its sole and absolute discretion, if such transfer (1) could be
treated as effectuated through an “established securities market” or a “secondary market”
(or the substantial equivalent thereof) within the meaning of Section 7704 of the Code, (2)
could cause the Partnership to become a “publicly traded partnership,” as such term is
defined in Sections 469(k)(2) or 7704(b) of the Code, (3) could be in violation of
Section 3.4.E(5), or (4) could cause the Partnership to fail one or more of the Safe
Harbors (as defined below); (x) if such transfer subjects the Partnership to be regulated
under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or the
Employee Retirement Income Security Act of 1974, each as amended; (xi) except with the
consent of the General Partner, which may be given or withheld in its sole discretion, if
the transferee or assignee of such Partnership Interest is unable to make the
representations set forth in Section 3.4.C; (xii) if such transfer is made to a
lender to the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a
Nonrecourse Liability, except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion; and provided, that, as a condition to granting
such consent the lender may be required to enter into an arrangement with the Partnership
and the General Partner to redeem or exchange for the REIT Shares Amount any Partnership
Units in which a security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating liabilities to
such

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lender under Section 752 of the Code; or (xiii) if in the opinion of legal counsel for
the Partnership such transfer could adversely affect the ability of the General Partner to
continue to qualify as a REIT or, except with the consent of the General Partner, which may
be given or withheld in its sole and absolute discretion, subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code.

     F. The General Partner shall monitor the transfers of interests in the Partnership
(including any acquisition of Partnership Units by the Partnership or the General Partner)
to determine (i) if such interests could be treated as being traded on an “established
securities market” or a “secondary market (or the substantial equivalent thereof)” within
the meaning of Section 7704 of the Code and (ii) whether such transfers of interests could
result in the Partnership being unable to qualify for the “safe harbors” set forth in
Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS
setting forth safe harbors under which interests will not be treated as “readily tradable on
a secondary market (or the substantial equivalent thereof)” within the meaning of Section
7704 of the Code) (the “Safe Harbors”). The General Partner shall have the
authority (but shall not be required) to take any steps it determines are necessary or
appropriate in its sole and absolute discretion to prevent any trading of interests which
could cause the Partnership to become a “publicly traded partnership” within the meaning of
Code Section 7704, or any recognition by the Partnership of such transfers, or to ensure
that one or more of the Safe Harbors is met.

ARTICLE 12.

ADMISSION OF PARTNERS

Section 12.1 Admission of Successor General Partner

     A successor to all of the General Partner’s General Partner Interest pursuant to Section
11.2 who is proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective upon such transfer. Any such transferee shall carry
on the business of the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the Partnership an acceptance
of all of the terms and conditions of this Agreement and such other documents or instruments as may
be required to effect the admission. In the case of such admission on any day other than the first
day of a Partnership Year, all items attributable to the General Partner Interest for such
Partnership Year shall be allocated between the transferring General Partner and such successor as
provided in Article 11.

Section 12.2 Admission of Additional Limited Partners

     A. After the admission to the Partnership of the initial Limited Partners on the date
hereof, a Person who makes a Capital Contribution to the Partnership in accordance with this
Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon
furnishing to the General Partner (i) evidence of acceptance in form satisfactory to the
General Partner of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 and (ii) such

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other documents or instruments as may be required in the discretion of the General
Partner in order to effect such Person’s admission as an Additional Limited Partner.

     B. Notwithstanding anything to the contrary in this Section 12.2, no Person
shall be admitted as an Additional Limited Partner without the consent of the General
Partner, which consent may be given or withheld in the General Partner’s sole and absolute
discretion. The admission of any Person as an Additional Limited Partner shall become
effective on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the receipt of the Capital Contribution in respect of
such Limited Partner and the consent of the General Partner to such admission. If any
Additional Limited Partner is admitted to the Partnership on any day other than the first
day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other
items allocable among Partners and Assignees for such Partnership Year shall be allocated
among such Limited Partner and all other Partners and Assignees by taking into account their
varying interests during the Partnership Year using a method selected by the General Partner
that is in accordance with Section 706(d) of the Code. All distributions of Available Cash
with respect to which the Partnership Record Date is before the date of such admission shall
be made solely to Partners and Assignees other than the Additional Limited Partner (other
than in its capacity as an Assignee) and, except as otherwise agreed to by the Additional
Limited Partners and the General Partner, all distributions of Available Cash thereafter
shall be made to all Partners and Assignees including such Additional Limited Partner.

Section 12.3 Amendment of Agreement and Certificate of Limited Partnership

     For the admission to the Partnership of any Partner, the General Partner shall take all steps
necessary and appropriate under the Act to amend the records of the Partnership and, if necessary,
to prepare as soon as practical an amendment of this Agreement (including an amendment of Exhibit
A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this
purpose exercise the power of attorney granted pursuant to Section 2.4.

ARTICLE 13.

DISSOLUTION AND LIQUIDATION

Section 13.1 Dissolution

     The Partnership shall not be dissolved by the admission of Substituted Limited Partners or
Additional Limited Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General
Partner (selected as described in Section 13.1.B below) shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following (each a “Liquidating Event”):

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

     B. an event of withdrawal of the General Partner, as defined in the Act, unless, within
90 days after the withdrawal, all of the remaining Partners agree in writing,

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in their sole and absolute discretion, to continue the business of the Partnership and
to the appointment, effective as of the date of withdrawal, of a substitute General Partner;

     C. subject to compliance with Section 11.2 an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;

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

     E. any sale or other disposition of all or substantially all of the assets of the
Partnership or a related series of transactions that, taken together, result in the sale or
other disposition of all or substantially all of the assets of the Partnership;

     F. the Incapacity of the General Partner, unless all of the remaining Partners in their
sole and absolute discretion agree in writing to continue the business of the Partnership
and to the appointment, effective as of a date prior to the date of such Incapacity, of a
substitute General Partner;

     G. the Redemption or exchange for REIT Shares of all Partnership Units (other than
those of the General Partner) pursuant to this Agreement; or

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

Section 13.2 Winding Up

     A. Upon the occurrence of a Liquidating Event, the Partnership shall continue solely
for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and Partners. No Partner shall take any action that
is inconsistent with, or not necessary to or appropriate for, the winding up of the
Partnership’s business and affairs. The General Partner (or, in the event there is no
remaining General Partner, any Person elected by a Majority in Interest of the Limited
Partners (the “Liquidator”)) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership’s liabilities
and property and the Partnership property shall be liquidated as promptly as is consistent
with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent
determined by the General Partner, include shares of stock in the General Partner) shall be
applied and distributed in the following order:

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

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

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

          (4) The balance, if any, to the General Partner and Limited Partners in accordance with
their positive Capital Account balances, determined after taking into account all Capital
Account adjustments for all prior periods and the Partnership taxable year during which the
liquidation occurs (other than those made as a result of the liquidating distribution set
forth in this Section 13.2.A(4)).

The General Partner shall not receive any additional compensation for any services performed
pursuant to this Article 13 other than reimbursement of its expenses as provided in
Section 7.4.

     B. Notwithstanding the provisions of Section 13.2.A which require liquidation
of the assets of the Partnership, but subject to the order of priorities set forth therein,
if prior to or upon dissolution of the Partnership the Liquidator determines that an
immediate sale of part or all of the Partnership’s assets would be impractical or would
cause undue loss to the Partners, the Liquidator may, in its sole and absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or distribute
to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions
of Section 13.2.A, undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in-kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in-kind are in the best
interest of the Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at such time.
The Liquidator shall determine the fair market value of any property distributed in kind
using such reasonable method of valuation as it may adopt.

Section 13.3 Capital Contribution Obligation

     If any Partner has a deficit balance in his or her Capital Account (after giving effect to all
contributions, distributions and allocations for the taxable years, including the year during which
such liquidation occurs), such Partner shall have no obligation to make any contribution to the
capital of the Partnership with respect to such deficit, and such deficit at any time shall not be
considered a debt owed to the Partnership or to any other Person for any purpose whatsoever, except
to the extent otherwise expressly agreed to by such Partner and the Partnership.

Section 13.4 Compliance with Timing Requirements of Regulations

     In the discretion of the Liquidator or the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited Partners pursuant to
this Article 13 may be:

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

          (2) withheld or escrowed to provide a reasonable reserve for Partnership liabilities
(contingent or otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership, provided, that such withheld or
escrowed amounts shall be distributed to the General Partner and Limited Partners in the
manner and priority set forth in Section 13.2.A as soon as practicable.

Section 13.5 Deemed Distribution and Recontribution

     Notwithstanding any other provision of this Article 13, in the event the Partnership
is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating
Event has occurred, the Partnership’s property shall not be liquidated, the Partnership’s
liabilities shall not be paid or discharged, and the Partnership’s affairs shall not be wound up.
Instead, the Partnership shall be deemed to have contributed all of its assets and liabilities to a
new partnership in exchange a for an interest in the new partnership. Immediately thereafter, the
Partnership shall be deemed to distribute interests in the new partnership to the General Partner
and Limited Partners in proportion to their respective interests in the Partnership in liquidation
of the Partnership.

Section 13.6 Rights of Limited Partners

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

Section 13.7 Notice of Dissolution

     In the event a Liquidating Event occurs or an event occurs that would, but for provisions of
Section 13.1, result in a dissolution of the Partnership, the General Partner shall, within
30 days thereafter, provide written notice thereof to each of the Partners and to all other parties
with whom the Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general circulation in each
place in which the Partnership regularly conducts business (as determined in the discretion of the
General Partner).

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Section 13.8 Cancellation of Certificate of Limited Partnership

     Upon the completion of the liquidation of the Partnership cash and property as provided in
Section 13.2, the Partnership shall be terminated and the Certificate and all
qualifications of the Partnership as a foreign limited partnership in jurisdictions other than the
State of Maryland shall be cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.

Section 13.9 Reasonable Time for Winding-Up

     A reasonable time shall be allowed for the orderly winding-up of the business and affairs of
the Partnership and the liquidation of its assets pursuant to Section 13.2, in order to
minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement
shall remain in effect between the Partners during the period of liquidation.

Section 13.10 Waiver of Partition

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

ARTICLE 14.

AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

Section 14.1 Amendments

     A. The actions requiring consent or approval of the Partners or of the Limited Partners
pursuant to this Agreement, including Section 7.3, or otherwise pursuant to
applicable law, are subject to the procedures in this Article 14.

     B. Amendments to this Agreement requiring the consent or approval of Limited Partners
may be proposed by the General Partner or by Limited Partners holding twenty-five percent
(25%) or more of the Partnership Interests held by Limited Partners. Following such
proposal, the General Partner shall submit any proposed amendment to the Partners or to the
Limited Partners, as applicable. The General Partner shall seek the written consent of the
Limited Partners on the proposed amendment or shall call a meeting to vote thereon and to
transact any other business that it may deem appropriate. For purposes of obtaining a
written consent, the General Partner may require a response within a reasonable specified
time, but not less than 15 days, and failure to respond in such time period shall constitute
a consent which is consistent with the General Partner’s recommendation (if so recommended)
with respect to the proposal; provided, that, an action shall become
effective at such time as requisite consents are received even if prior to such specified
time.

Section 14.2 Action by the Partners

     A. Meetings of the Partners may be called by the General Partner and shall be called
upon the receipt by the General Partner of a written request by Limited Partners holding
twenty-five percent (25%) or more of the Partnership Interests held by Limited Partners.
The notice shall state the nature of the business to be transacted. Notice of any

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such meeting shall be given to all Partners not less than seven days nor more than 30
days prior to the date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or Consent of the Limited Partners or of the Partners is
permitted or required under this Agreement, such vote or Consent may be given at a meeting
of Partners or may be given in accordance with the procedure prescribed in Section
14.1.

     B. Any action required or permitted to be taken at a meeting of the Partners may be
taken without a meeting if a written consent setting forth the action so taken is signed by
the percentage as is expressly required by this Agreement for the action in question. Such
consent may be in one instrument or in several instruments, and shall have the same force
and effect as a vote of the Percentage Interests of the Partners (expressly required by this
Agreement). Such consent shall be filed with the General Partner. An action so taken shall
be deemed to have been taken at a meeting held on the effective date so certified.

     C. Each Limited Partner may authorize any Person or Persons to act for him by proxy on
all matters in which a Limited Partner is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. Every proxy must be signed by the
Limited Partner or his attorney-in-fact. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Limited Partner executing it.

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

     E. On matters on which Limited Partners are entitled to vote, each Limited Partner
shall have a vote equal to the number of Partnership Units held.

14.3 Voting Rights of LTIP Units. LTIP Unitholders shall (a) have those voting rights
required from time to time by applicable law, if any, (b) have the same voting rights as a holder
of Partnership Units, with the LTIP Units voting as a single class with the Partnership Units and
having one vote per LTIP Unit; and (c) have the additional voting rights that are expressly set
forth below. So long as any LTIP Units that were granted on a particular date remain outstanding,
the Partnership shall not, without the affirmative vote of the LTIP Unitholders who hold at least a
majority of the LTIP Units which were granted on such specific date and are outstanding at the
time, given in person or by proxy, either in writing or at a meeting (voting separately as a
class), amend, alter or repeal, whether by merger, consolidation or otherwise, the provisions of
the Partnership Agreement applicable to LTIP Units so as to materially and adversely affect any
right, privilege or voting power of the LTIP Units which were granted on such specific date or the
LTIP Unitholders as such, unless such amendment, alteration, or repeal affects equally, ratably and
proportionately the rights, privileges and voting powers of the holders of Partnership Units; but
subject, in any event, to the following provisions:

     A. With respect to any transaction, so long as the LTIP Units are treated in accordance with
Section 4.8 hereof, the consummation of such transaction shall not be deemed to

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materially and adversely affect such rights, preferences, privileges or voting powers of the
LTIP Units or the LTIP Unitholders as such; and

     B. Any creation or issuance of any Partnership Units or of any class or series of Partnership
Interest including without limitation additional Partnership Units, LTIP Units, whether ranking
senior to, junior to, or on a parity with the LTIP Units with respect to distributions and the
distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting powers of the LTIP
Units or the LTIP Unitholders as such.

The foregoing special voting provisions affecting LTIP Unitholders will not apply if, at or prior
to the time when the act with respect to which such vote would otherwise be required will be
effected, all outstanding LTIP Units shall have had their applicable LTIP Equalization Date occur.

ARTICLE 15.

GENERAL PROVISIONS

Section 15.1 Addresses and Notice

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

Section 15.2 Titles and Captions

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

Section 15.3 Pronouns and Plurals

     Whenever the context may require, any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.

Section 15.4 Further Action

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

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Section 15.5 Binding Effect

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

Section 15.6 Creditors

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

Section 15.7 Waiver

     No failure or delay by any party to insist upon the strict performance of any covenant, duty,
agreement or condition of this Agreement or to exercise any right or remedy consequent upon any
breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or
condition.

Section 15.8 Counterparts

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

Section 15.9 Applicable Law

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

Section 15.10 Invalidity of Provisions

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

Section 15.11 Entire Agreement

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

Section 15.12 No Rights as Stockholders

     Nothing contained in this Agreement shall be construed as conferring upon the holders of
Partnership Units any rights whatsoever as stockholders of the General Partner, including without
limitation any right to receive dividends or other distributions made to

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stockholders of the General Partner or to vote or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the election of directors of the General
Partner or any other matter.

Section 15.13 Article 8 Opt-In

     The Partnership hereby irrevocably elects that all Partnership Interests in the Partnership
shall be “securities” governed by Article 8 of the Uniform Commercial Code as in effect in the
State of California and each other applicable jurisdiction. Each certificate evidencing
Partnership Interests in the Partnership shall bear the following legend: “This certificate
evidences an interest in BioMed Realty, L.P. and shall be a security governed by Article 8 of the
Uniform Commercial Code as in effect in the State of California and, to the extent permitted by
applicable law, each other applicable jurisdiction.” This provision shall not be amended, and any
purported amendment to this provision shall not take effect, until all outstanding certificates
have been surrendered for cancellation.

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

	 	 	 	 	 
	General Partner:	 BIOMED REALTY TRUST, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ GARY A. KREITZER
 	 
	 	 	Name:  	Gary A. Kreitzer 	 
	 	 	Title:  	Executive Vice President 	 
	 

1EX-10.1

 

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AGREEMENT, dated as of January 2, 2007, is made by and between The Connecticut Water
Company, a Connecticut corporation having its principal place of business in Clinton, Connecticut,
(“Company”), Connecticut Water Service, Inc., a Connecticut corporation and holder of all of the
outstanding capital stock of Company (“Parent”) and Marshall T. Chiaraluce resident of Stonington,
Connecticut (“Employee”).

WITNESSETH:

     WHEREAS, Company and Parent desire to reward Employee for Employee’s valuable, dedicated
service to Company and Parent should Employee’s service be terminated under circumstances
hereinafter described: and

     WHEREAS, Employee and Company entered into an Employment Agreement dated May 9, 2001; and

     WHEREAS, the parties wish to amend the Agreement to comply with Section 409A of the Internal
Revenue Code of 1986, as amended;

     WHEREAS, Employee has been and continues to be employed by Company and Parent in an Employee
capacity and the parties wish to enter into an Amended and Restated Employment Agreement between
Employee and Company and Parent dated as of January 2, 2007 which becomes effective upon a
“Change-in-Control,” as defined herein, of Company or Parent; and

     WHEREAS, Employee, Company and Parent are willing to enter into this Amended and Restated
Employment Agreement (“Agreement”) on the terms herein set forth;

     NOW, THEREFORE, to assure Company and Parent of Employee’s continued dedication and the
availability of Employee’s advice and counsel in the event of any such proposal, to induce Employee
to remain in the employ of Company and Parent and to reward Employee for Employee’s valuable
dedicated service to Company and Parent should Employee’s service be terminated under circumstances
hereinafter described, and for other good and valuable consideration, the receipt and adequacy of
which each party acknowledges, effective January 2, 2007, Company, Parent and Employee agree as
follows:

     1. Definitions. For purposes of this Agreement, the following terms shall have the
following meanings:

          (a) “Cause” shall mean Employee’s serious, willful misconduct in respect of Employee’s duties
under this Agreement, including conviction for a felony or perpetration by Employee of a common law
fraud upon Company or Parent which has resulted or is likely to

 

 

result in material economic damage to Company or Parent, as determined by a vote of at least
seventy-five percent (75%) of all of the Directors (excluding Employee) of each of Company’s and
Parent’s Board of Directors;

          (b) “Change-in-Control” shall be deemed to have occurred if after the date hereof (i) a public
announcement shall be made or a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the “Act”)
disclosing that any Person (as defined below), other than Company or Parent or any employee benefit
plan sponsored by Company or Parent, is the beneficial owner (as the term is defined in Rule 13d-3
under the Act) directly or indirectly, of twenty percent (20%) or more of the total voting power
represented by Company’s or Parent’s then outstanding voting common stock (calculated as provided
in paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire voting common stock);
or (ii) any Person, other than Company or Parent or any employee benefit plan sponsored by Company
or Parent, shall purchase shares pursuant to a tender offer or exchange offer to acquire any voting
common stock of Company or Parent (or securities convertible into such voting common stock) for
cash, securities or any other consideration, provided that after consummation of the offer, the
Person in question is the beneficial owner directly or indirectly, of twenty percent (20%) or more
of the total voting power represented by Company’s or Parent’s then outstanding voting common stock
(all as calculated under clause (i)); or (iii) the stockholders of Company or Parent shall approve
(A) any consolidation or merger of Company or Parent in which Company or Parent is not the
continuing or surviving corporation (other than a merger of Company or Parent in which holders of
the outstanding capital stock of Company or Parent immediately prior to the merger have the same
proportionate ownership of the outstanding capital stock of the surviving corporation immediately
after the merger as immediately before), or pursuant to which the outstanding capital stock of
Company or Parent would be converted into cash, securities or other property, or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related transactions) of all
or substantially all the assets of Company or Parent; or (iv) there shall have been a change in the
composition of the Board of Directors of Company or Parent at any time during any consecutive
twenty-four (24) month period such that “continuing directors” cease for any reason to constitute
at least a majority of the Board unless the election, or the nomination for election of each new
Director was approved by a vote of at least two-thirds (2/3) of the Directors then still in office
who were Directors at the beginning of such period; or (v) the Board of Directors of Company or
Parent, by a vote of a majority of all the Directors (excluding Employee) adopts a resolution to
the effect that a “Change-in-Control” has occurred for purposes of this Agreement.

          (c) “Disability” shall mean the incapacity of Employee by illness or any other cause as
determined under the long-term disability insurance plan of Company in effect at the time in
question, or if no such plan is in effect, then such incapacity of Employee as prevents Employee
from performing the essential functions of Employee’s position with or without reasonable
accommodation for a period in excess of two hundred forty (240) days (whether or not consecutive),
or one hundred eighty (180) days consecutively, as the case may be, during any twelve (12) month
period.

          (d) “Effective Date” shall be the date on which a Change-in-Control occurs.

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Anything in this Agreement to the contrary notwithstanding, if Employee’s employment is
terminated prior to the date on which a Change-in-Control occurs, and it is reasonably demonstrated
that such termination (i) was at the request of a third party who has taken steps reasonably
calculated to effect a Change-in-Control or (ii) otherwise arose in connection with or anticipation
of a Change-in-Control, then for all purposes of this Agreement the “Effective Date” shall mean the
date immediately prior to the date of such termination.

          (e) “Good Reason” shall mean the occurrence of any action which (i) removes or changes
Employee’s title or reduces Employee’s job responsibilities or base salary; (ii) results in a
significant worsening of Employee’s work conditions; or (iii) moves Employee’s place of employment
to a location that increases Employee’s commute by more than thirty (30) miles over the length of
Employee’s commute from Employee’s place of principal residence at the time the move is requested.
For purposes of this subparagraph (e), any good faith determination by Employee that any such
action has occurred shall be conclusive. Notwithstanding the foregoing, at any time during the
period commencing on the Effective Date and ending on the 30th day after the first
anniversary of the Effective Date, except for purposes of Paragraph 5(g), “Good Reason” shall mean
any reason or no reason.

          (f) “Person” shall mean any individual, corporation, partnership, company or other entity,
and shall include a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934.

     2. Employment.

          (a) As of the Effective Date, Company hereby agrees to continue to employ Employee and
Employee agrees to remain in the employ of Company for the Term of this Agreement upon the terms
and conditions hereinafter set forth. Subject to the provisions of subparagraph (b) of this
Paragraph 2, and to the provisions of Paragraph 6 below, “Term” shall mean a continuously
renewing period of three (3) years commencing on the Effective Date.

          (b) At any time during the Term, the Board of Directors of Company and Parent may, by written
notice to Employee, advise Employee of their desire to modify or amend any of the terms or
provisions of this Agreement or to delete or add any terms or provisions. Any such notice
(“Notice”) shall describe the proposed modifications in reasonable detail. In the event a Notice
shall be given to Employee, then Company, Parent and Employee agree to discuss the proposed
modification(s) and to attempt in good faith to reach agreement with respect thereto and to reduce
such agreement to writing in an amendment to be executed by all the parties (“Amendment”). If a
Notice is given hereunder and an Amendment shall not have been executed on or before the sixtieth
(60th) day following the date on which Notice is given, then the Term shall thereupon be
automatically converted to a fixed period ending three (3) years after the expiration of such sixty
(60) days.

     3. Duties of Employment.

          (a) During the Term, Employee’s position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least commensurate in

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all material respects with the most significant of those held, exercised and assigned at any
time during the ninety (90)-day period immediately preceding the Effective Date and Employee’s
services shall be performed at such location as Employee shall determine.

          (b) During the Term, Employee will serve Company faithfully, diligently and competently and
will devote full-time to Employee’s employment and will hold, in addition to the offices held on
the Effective Date, such other Employee offices of Company or Parent, or their respective
subsidiaries and affiliates, to which Employee may be elected, appointed or assigned by the Boards
of Directors of Company or Parent from time to time and will discharge such Employee duties in
connection therewith. Nothing in this Agreement shall preclude Employee, with the prior approval
of the Board of Directors of Company, from devoting reasonable periods of time required for (i)
serving as a director or member of a committee of any organization involving no conflict of
interest with Company or Parent, or (ii) engaging in charitable, religious and community
activities, provided, that such directorships, memberships or activities do not materially
interfere with the performance of Employee’s duties hereunder.

     4. Compensation. During the Term, Company shall pay to Employee as compensation for
the services to be rendered by Employee hereunder the following:

          (a) A base salary at a rate equal to the highest base salary paid or payable to Employee by
Company during the twelve (12)-month period immediately preceding the month in which the Effective
Date occurs, or such larger sum as the Company may from time to time determine in connection with
regular periodic performance reviews pursuant to Company’s policies and practices. Such
compensation shall be payable in accordance with the normal payroll practices of Company. Employee
shall receive an annual increase in base salary at each normal pay adjustment date during the Term,
but no later than one (1) year after the date of Employee’s last increase and annually thereafter
during the Term, of not less than the percentage increase in the cost-of-living since Employee’s
last pay adjustment, as measured by the Consumer Price Index-All Urban Consumers of the U.S. Bureau
of Labor Statistics.

          (b) In addition, Company shall pay to Employee an annual bonus, payable in cash or other
form of compensation, for which he would have been eligible in accordance with the Company’s
practice or plan in effect at that time for annual bonuses for said employee for the year
preceding the fiscal year in which the Effective Date occurs.

     5. Benefits. During the Term, Employee shall be entitled to the following benefits:

          (a) Incentive, Savings and Retirement Plans. In addition to base salary and bonus
payable as hereinabove provided, Employee shall be entitled to participate during the Term in all,
savings and retirement plans, practices, policies and programs applicable to employees of Company
as may be in effect from time to time. Such plans, practices, policies and programs, in the
aggregate, shall provide Employee with compensation, benefits and reward opportunities at least as
favorable as the most favorable of such compensation, benefits and reward opportunities provided
by Company for Employee under such plans, practices, policies and programs as in effect at any
time during the ninety (90)-day period immediately preceding the Effective Date or, if more
favorable to Employee, as provided at any time thereafter with

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respect to other key employees of Company or Parent.

          (b) Welfare Benefit Plans. During the Term, Employee and/or Employee’s family, as
the case may be, shall be eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs applicable to Employee employees of
Company (including, without limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life,) at least as favorable as the most favorable of such
plans, practices, policies and programs in effect at any time during the ninety (90)-day period
immediately preceding the Effective Date or, if more favorable to Employee and/or Employee’s
family, as in effect at any time thereafter with respect to other key employees of Company or
Parent.

          (c) Expenses. During the Term, Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by Employee in accordance with the most
favorable policies, practices and procedures of Company in effect at any time during the ninety
(90)-day period immediately preceding the Effective Date or, if more favorable to Employee, as in
effect at any time thereafter with respect to other key employees of Company or Parent.

          (d) Fringe Benefits. During the Term, Employee shall be entitled to fringe benefits,
including use of an automobile and payment of related expenses or payment of an allowance for
automobile related expenses, in accordance with the most favorable plans, practices, programs and
policies of Company in effect at any time during the ninety (90)-day period immediately preceding
the Effective Date or, if more favorable to Employee, as in effect at any time thereafter with
respect to other key employees of Company or Parent.

          (e) Office and Support Staff. During the Term, Employee shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to secretarial and
other assistance, at least equal to the most favorable of the foregoing provided to Employee by
Company at any time during the ninety (90)-day period immediately preceding the Effective Date or,
if more favorable to Employee, as provided at any time thereafter with respect to other key
employees of Company or Parent.

          (f) Vacation. During the Term, Employee shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of Company as in effect
at any time during the ninety (90)-day period immediately preceding the Effective Date or, if more
favorable to Employee, as in effect at any time thereafter with respect to other key employees of
Company or Parent.

          (g) Stay-on Bonus: (i) If Employee is employed on a date on which the Board of Directors
of Company or Parent approves a transaction described in clause (iii) of Paragraph 1(b) and the
shareholders of Company or Parent, as applicable subsequently approve such transaction, provided
that such transaction qualifies as a “Change in Control” within the meaning of Section 409A of the
Code and regulations issued thereunder, Employee shall receive a lump sum equal to the base salary
of Employee, at the rate in effect immediately prior to such date, plus an amount equal to the
target percentage of the midpoint of Employee’s salary grade under the Company’s Officers Incentive
Program for the year in which such date occurs;

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provided Employee is employed on the fifth (5th) day following the closing of such
transaction. Payment hereunder shall be made on the fifth (5th) business day following
the closing of such a transaction. (ii) If the Employee’s employment is terminated by the
Company following such approval by the applicable Board of Directors of a transaction described in
subparagraph (i) of this Paragraph (g) (provided that such transaction qualifies as a “Change in
Control” within the meaning of Section 409A of the Code and regulations issued thereunder), and
prior to the fifth (5th) day following the closing of such transaction for any reason
other than for Cause, or Employee’s death, or Employee’s attainment of age sixty-five
(65), or if Employee’s employment is terminated during such period by reason of Employee’s
Disability, or if Employee shall voluntarily terminate Employee’s employment during such period
for Good Reason, then, in addition to the amounts payable to Employee pursuant to Section 7,
Employee shall be paid a lump sum equal to the base salary of Employee, at the rate in effect
immediately prior to the date of termination, plus an amount equal to the target percentage of the
midpoint of Employee’s salary grade under the Company’s Officers Incentive Program for the year in
which termination occurs. Payment under (ii) shall be made on the later of the first day of the
seventh (7th) month following the Employee’s termination of Employment, or on the fifth
(5th) business day following the closing of such transaction.

     6. End of Term and Notice of Termination.

          (a) End of Term. The Term shall end upon the occurrence of any of the following
events:

	 	(i)	 	Termination of Employee’s employment by Company for Cause.
	 
	 	(ii)	 	The voluntary termination of Employee’s
employment by Employee other than for Good Reason.
	 
	 	(iii)	 	The death of Employee.
	 
	 	(iv)	 	Employee’s attainment of age sixty-five (65).
	 
	 	(v)	 	Full compliance by Company with the provisions
of Paragraph 7(e) below, if Employee’s employment shall have been
terminated by Company during the Term for any reason other
than Cause, or if Employee’s employment shall have been terminated
by reason of Employee’s Disability, or if Employee shall have
voluntarily terminated Employee’s employment during the Term for Good
Reason.

          (b) Notice of Termination. Any termination by Company for Cause or by Employee for
Good Reason or on account of Employee’s Disability shall be communicated by notice to the other
party hereto given in accordance with Section 16 of this Agreement. For purposes of this
Agreement, a “notice” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee’s employment under

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the provision so indicated and (iii) if the date of termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice).

          (c) Date of Termination. The date of termination means the date of receipt of the
notice of termination or any later date specified therein, as the case may be; provided,
however, that (i) if Employee’s employment is terminated by Company other than for Cause
or on account of Employee’s Disability, the date of termination shall be the date on which Company
notifies Employee of such termination and (ii) if Employee’s employment is terminated by reason of
death, the date of termination shall be the date of death of Employee.

          (d) Termination of Employment. In order for the Employee to be considered to have
terminated employment with the Company, the Employee must have incurred a separation from service
from the Company (and all related companies) within the meaning of Section 409A of the Code.

     7. Payment Upon Termination.

          (a) If Employee’s employment is terminated by Company for Cause, as defined in Paragraph
1(a), the obligations of Company under this Agreement shall cease and Employee shall forfeit all
right to receive any compensation or other benefits under this Agreement except only compensation
or benefits accrued or earned and vested (if applicable) by Employee as of the date of
termination, including base salary through the date of termination, benefits payable under the
terms of any qualified or nonqualified retirement plans or deferred compensation plans maintained
by Company, any accrued vacation pay as of the date of termination not yet paid by Company and any
benefits required to be paid by law such as continued health care coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) (collectively, the “Accrued
Obligations”).

          (b) If Employee shall voluntarily terminate Employee’s employment during the Term, other than
for Good Reason, as defined in Paragraph 1(e), the obligations of Company under this Agreement
shall cease and Employee shall forfeit all right to receive any compensation or other benefits
under this Agreement except only the Accrued Obligations.

          (c) In the event of the death of Employee during the Term, then, in addition to the Accrued
Obligations and any other benefits which may be payable by Company in respect of the death of
Employee, the base salary then payable hereunder shall continue to be paid at the then current
rate for a period of six (6) months after such death to such beneficiary as shall have been
designated in writing by Employee, or if no effective designation exists, then to the estate of
Employee. Such payment shall be made in accordance with the Company’s normal payment practice.

          (d) If Employee’s employment is terminated by reason of Employee’s attainment of age
sixty-five (65), the obligations of Company under this Agreement shall cease and Employee shall
forfeit all right to receive any compensation or other benefits under this Agreement except only
the Accrued Obligations.

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          (e) If Employee’s employment is terminated by Company during the Term for any reason other
than for Cause, or Employee’s death, or Employee’s attainment of age sixty-five (65), or if
Employee’s employment is terminated during the Term by reason of Employee’s Disability, or if
Employee shall voluntarily terminate Employee’s employment during the Term for Good Reason,
Employee shall be entitled to receive, and Company shall be obligated to pay and provide Employee,
the following amounts:

               (i) An amount in consideration of the covenants by Executive set forth in Paragraphs 8 and 9
below to be determined by a nationally recognized independent certified public accounting firm
selected and retained by Company to be the reasonable value of said covenants as of the date of
termination of Employee’s employment, but in no event shall such amount be greater than the
aggregate value of the benefits provided in subparagraphs (e)(ii), (iii), (iv), (v) and (viii)
hereinbelow. The benefits otherwise payable to Executive pursuant to said subparagraphs shall be
offset by the amount, if any, payable to Executive in respect of the covenants by Employee set
forth in Paragraphs 8 and 9 below. Said amount paid in consideration of the covenants by Executive
set forth in Paragraphs 8 and 9 below shall be paid in accordance with subparagraphs (e)(ii),
(iii), (iv), (v) and (viii) below, and this subparagraph (i) shall not alter the time or form of
payment of such amounts.

               (ii) An amount equal to three (3) times the base salary of Employee, at the rate in effect
immediately prior to the date of termination, plus an amount equal to three (3) times the target
percentage of the midpoint of Employee’s salary grade under the Company’s Officers Incentive
Program for the year in which termination occurs if the employee is a participant in such plan at
the time of the Change-in-Control. There shall be subtracted from the aggregate amount determined
in accordance with the immediately preceding sentence the amount, if any, payable to Employee under
any then effective severance pay plan of Company. Such amount so determined shall be divided into
thirty-six (36) equal amounts. Seven (7) such equal amounts shall be paid to the Employee on the
date which is seven (7) months following the date of termination of employment. The twenty-nine
(29) remaining equal amounts shall be payable on the first day of each month subsequent to the date
of the first payment (one payment per month) until the payments are completed. Payments shall be
treated as supplemental wage payments under applicable Treasury Regulations subject to federal tax
withholding at the flat percentage rate applicable thereto.

               (iii) An amount equal to the aggregate amounts that Company would have contributed on behalf
of Employee under Company’s qualified defined contribution retirement plan(s), if any such plan(s)
shall be in effect (other than amounts attributable to Employee’s before-tax contributions to such
plan(s)) plus estimated earnings thereon had Employee continued in the employ of Company for the
three (3)-year period commencing on the date of termination and made contributions under said
plan(s) at a rate, as a percentage of salary, equal to the rate at which Employee had made
contributions to said plan(s) in the plan year immediately preceding Employee’s termination, to be
payable in a lump sum to Employee thirty (30) days after the expiration of the two (2) year
non-competition period specified in Paragraph 9(a) of this Agreement and in no event earlier than
seven (7) months following the Employee’s termination of employment, provided that Employee shall
not have breached said non-competition provisions.

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               (iv) An amount equal to the difference between: (A) benefits which would have been payable to
Employee under any deferred compensation agreement between Company and Employee, if any such
agreement shall be in effect, had Employee continued in the employ of Company for the three
(3)-year period commencing on the date of termination, received compensation at least equal to that
specified in Paragraph 4 of this Agreement during such time, and deferred pursuant to said deferred
compensation agreement the amount of compensation specified therein; and (B) the benefits actually
payable to Employee under such deferred compensation agreement; such amount to be payable in a lump
sum to Employee thirty (30) days after the expiration of the two (2) year non-competition period
specified in Paragraph 9(a) of this Agreement and in no event earlier than seven (7) months
following the Employee’s termination of employment, provided that Employee shall not have breached
said non-competition provisions.

               (v) Additional retirement benefits equal to the difference between: (A) the annual pension
benefits that would have been payable to Employee under Company’s qualified defined benefit
retirement plan (the “Plan”) and under any nonqualified supplemental Employee retirement plan
covering Employee (the “Supplemental Plan”), if any such Plan or Supplemental Plan shall be in
effect, if Employee had been continued in the employ of Company for the three (3)-year period
commencing on the date of termination and had received compensation at least equal to that
specified in Paragraph 4(a) of this Agreement during such time and had been fully vested in the
benefits payable under any such Plan and Supplemental Plan; and (B) the annual benefits actually
payable to Employee under any such Plan and Supplemental Plan. The discounted present value of
such additional benefits, shall be payable to Employee in a lump sum, as calculated by the
independent actuary for the Plan using the assumptions specified in the Plan, thirty (30) days
after the expiration of the two (2) year non-competition period specified in Paragraph 9(a) of this
Agreement and in no event earlier than seven (7) months following the Employee’s termination of
employment, provided that Employee shall not have breached said non-competition provisions.

               (vi) At the date of termination of Employee’s employment, Employee shall be fully vested in
any form of compensation previously granted to Employee (other than benefits payable under a
qualified retirement plan), such as, by way of example only, restricted stock, stock options, and
performance share awards.

               (vii) If Employee’s employment is terminated by reason of Employee’s Disability, Employee
shall be entitled to receive, in addition to the other benefits provided under this Paragraph 7(e),
disability benefits payable in accordance with any bona fide disability plan maintained by Company
or Parent, to the extent Employee qualifies for benefits under the terms of such bona fide
disability plan.

               (viii) A lump sum cash payment equal to three (3) times the sum of the average of the annual
contributions, payments, credits or allocations made by the Company on behalf of the Employee for
coverage under all life, health, disability and similar welfare benefit plans and programs and
other perquisites maintained by the Company during the three (3) calendar year period preceding his
termination of employment. Such payment shall be made on the first day of the seventh
(7th) month following the Employee’s termination of employment.

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               (ix) Company shall reimburse Employee for the amount of any reasonable legal or accounting
fees and expenses incurred by Employee to obtain or enforce any right or benefit provided to
Employee by Company hereunder or as confirmed or acknowledged hereunder, provided that no such
reimbursement shall be made earlier than seven (7) months following the Employee’s termination and
in no event any later than December 31 of the second calendar year following the calendar year in
which the termination of employment occurred.

               (x) Company shall provide the Employee with reasonable outplacement services from a firm
selected by the Company for a period of one (1) year commencing on the date of termination, or
until Employee accepts other employment, if earlier.

     8. Confidential Information. Employee understands that in the course of Employee’s
employment by Company, Employee will receive or have access to confidential information concerning
the business or purposes of Company and Parent, and which Company and Parent desire to protect.
Such confidential information shall be deemed to include, but not be limited to, Company’s
customer lists and information, and employee lists, including, if known, personnel information and
data. Employee agrees that Employee will not, at any time during the period ending two (2) years
after the date of termination of Employee’s employment, reveal to anyone outside Company or Parent
or use for Employee’s own benefit any such information without specific written authorization by
Company or Parent. Employee further agrees not to use any such confidential information or trade
secrets in competing with Company or Parent at any time during or in the two (2) year period
immediately following the date of termination of Employee’s employment with Company.

     9. Covenants by Employee Not to Compete With Company or Parent.

          (a) Upon the date of termination of Employee’s employment with Company for any reason,
Employee covenants and agrees that Employee will not at any time during the period of two (2)
years from and after such date of termination directly or indirectly in any manner or under any
circumstances or conditions whatsoever be or become interested, as an individual, partner,
principal, agent, clerk, employee, stockholder, officer, director, trustee, or in any other
capacity whatsoever, except as a nominal owner of stock of a public corporation, in any other
business which, at the date of Employee’s termination, is a Competitor (as defined herein), either
directly or indirectly, with Company or Parent, or engage or participate in, directly or
indirectly (whether as an officer, director, employee, partner, consultant, holder of an equity or
debt investment, lender or in any other manner or capacity), or lend Employee’s name (or any part
or variant thereof) to, any business which, at the date of Employee’s termination, is a
Competitor, either directly or indirectly, with Company or Parent, or as a result of Employee’s
engagement or participation would become, a Competitor, either directly or indirectly, with any
aspect of the business of Company or Parent as it exists at the time of Employee’s termination, or
solicit any officer, director, employee or agent of Company or Parent or any subsidiary or
affiliate of Company or Parent to become an officer, director, employee or agent of Employee,
Employee’s respective affiliates or anyone else. Ownership, in the aggregate, of less than one
percent (1 %) of the outstanding shares of capital stock of any corporation with one or more
classes of its capital stock listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a violation of the foregoing provision. For the
purposes

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of this Agreement, a Competitor is any business which is similar to the business of Company
or Parent or in any way in competition with the business of Company or Parent within any of the
then-existing water utility service areas of Company.

          (b) Employee hereby acknowledges that Employee’s services are unique and extraordinary, and
are not readily replaceable, and hereby expressly agrees that Company and Parent, in enforcing the
covenants contained in Paragraphs 8 and 9 herein, in addition to any other remedies provided for
herein or otherwise available at law, shall be entitled in any court of equity having jurisdiction
to an injunction restraining Employee in the event of a breach, actual or threatened, of the
agreements and covenants contained in these Paragraphs.

          (c) The parties hereto believe that the restrictive covenants of these Paragraphs are
reasonable. However, if at any time it shall be determined by any court of competent jurisdiction
that these Paragraphs or any portion of them as written, are unenforceable because the restrictions
are unreasonable, the parties hereto agree that such portions as shall have been determined to be
unreasonably restrictive shall thereupon be deemed so amended as to make such restrictions
reasonable in the determination of such court, and the said covenants, as so modified, shall be
enforceable between the parties to the same extent as if such amendments had been made prior to the
date of any alleged breach of said covenants.

          (d) The provisions of this Paragraph 9 shall not apply if Company and Parent shall be
prohibited under Paragraph 15 below from making any payments to Employee pursuant to Paragraph 7
above.

     10. No Obligation to Mitigate. So long as Employee shall not be in breach of any
provision of Paragraph 8 or 9, Employee shall have no duty to mitigate damages in the event of a
termination and if Employee voluntarily obtains other employment (including self-employment), any
compensation or profits received or accrued, directly or indirectly, from such other employment
shall not reduce or otherwise affect the obligations of Company and Parent to make payments
hereunder.

     11. Resignation. In the event that Employee’s services hereunder are terminated under
any of the provisions of this Agreement (except by death), Employee agrees that Employee will
deliver Employee’s written resignation as an officer of Company or Parent, or their subsidiaries
and affiliates, to the Board of Directors, such resignation to become effective immediately, or, at
the option of the Board of Directors, on a later date as specified by the Board.

     12. Insurance. Company shall have the right at its own cost and expense to apply for
and to secure in its own name, or otherwise, life, health or accident insurance or any or all of
them covering Employee, and Employee agrees to submit to the usual and customary medical
examination and otherwise to cooperate with Company in connection with the procurement of any such
insurance, and any claims thereunder.

     13. Release. As a condition of receiving payments or benefits provided for in this
Agreement, at the request of Company or Parent, Employee shall execute and deliver for the
benefit of Company and Parent, and any subsidiary or affiliate of Company or Parent, a general

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release in the form set forth in Attachment A, and such release shall become effective in
accordance with its terms. The failure or refusal of Employee to sign such a release or the
revocation of such a release shall cause the termination of any and all obligations of Company
and Parent to make payments or provide benefits hereunder, and the forfeiture of the right of
Employee to receive any such payments and benefits. Employee acknowledges that Company and
Parent have advised Employee to consult with an attorney prior to signing this Agreement and
that Employee has had an opportunity to do so.

     14. Additional Benefits. In addition to the other benefits payable to Employee
pursuant to this Agreement, in the event that any payment or benefit received or to be received by
Employee under this Agreement (a “Payment”) is subject to the excise tax (the “Excise Tax”)
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any
successor to such Section, as determined by a nationally recognized independent certified public
accounting firm selected by the Company (the “Tax Advisor”), then the Company shall make an
additional payment to Employee in a lump sum seven (7) months following termination in an amount
such that after receipt of such lump sum and payment of all excise and income taxes imposed with
respect to such receipt and receipt of the Payment, Employee will have received an after-tax
amount equal to the amount the Employee would have received had the Excise Tax had not been
applicable to the Payment. The determination of the Tax Advisor as provided herein shall be
completed not later than forty-five (45) days following Employee’s date of termination of
employment, and such determination shall be communicated in writing to Company, with a copy to
Employee within said forty-five (45) day period. The determination of the Tax Advisor as provided
herein shall be deemed conclusive and binding on Company and Employee. Company shall pay the fees
and other costs of the Tax Advisor hereunder.

     15. Regulatory Limitation. Notwithstanding any other provision of this Agreement,
Company shall not be obligated to make, and Employee shall have no right to receive, any payment,
benefit or amount under this Agreement which would violate any law, regulation or regulatory order
applicable to Company or Parent at the time such payment, benefit or amount is due (“Prohibited
Payment”). In such event, however, payment shall be made at the earliest date at which Company
reasonably anticipates that the making of the payment will not cause such a violation.

     16. Notices. All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person to Employee or to the Secretary of Company and Parent,
or if mailed, postage prepaid, registered or certified mail, addressed, in the case of Employee,
to Employee’s last known address as carried on the personnel records of Company, and, in the case
of Company and Parent, to the corporate headquarters, attention of the Secretary, or to such other
address as the party to be notified may specify by notice to the other party.

     17. Successors and Binding Agreement.

          (a) Company and Parent will require any successor, whether direct or indirect, by purchase,
merger, consolidation or otherwise to all or substantially all of the business and/or assets of
Company and/or Parent, as the case may be, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that Company and Parent are required

-12-

 

to perform it. Failure of Company and Parent to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this Agreement. As used in this
Agreement, “Company” and “Parent” shall include any successor to Company’s and/or Parent’s, as the
case may be, business and/or assets as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.

          (b) This Agreement shall inure to the benefit of, and be enforceable by, Employee’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee dies while any amount is still payable hereunder, all such
amounts shall be paid in accordance with the terms of this Agreement to Employee’s devisee,
legatee or other designee or, if there is no such designee, to Employee’s estate.

     18. Arbitration. Any dispute which may arise between the parties hereto may, if both
parties agree, be submitted to binding arbitration in the State of Connecticut in accordance with
the Rules of the American Arbitration Association; provided that any such dispute shall first be
submitted to Company’s Board of Directors in an effort to resolve such dispute without resort to
arbitration.

     19. Severability. If any of the terms or conditions of this Agreement shall be
declared void or unenforceable by any court or administrative body of competent jurisdiction, such
term or condition shall be deemed severable from the remainder of this Agreement, and the other
terms and conditions of this Agreement shall continue to be valid and enforceable.

     20. Amendment. This Agreement may be modified or amended only by an instrument in
writing executed by the parties hereto.

     21. Construction. This Agreement shall supersede and replace all prior agreements
and understandings between the parties hereto on the subject-matter covered hereby.
This Agreement shall be governed and construed under the laws of the State of Connecticut. Words
of the masculine gender mean and include correlative words of the feminine gender. Paragraph
headings are for convenience only and shall not be considered a part of the terms and provisions
of the Agreement.

     22. Deferred Compensation. This Agreement has been prepared with reference to
Section 409A of the Internal Revenue Code and should be interpreted and administered in a manner
consistent with Section 409A. In the event that any part of this Agreement is determined to be in
violation of 409A, such part of the Agreement shall be automatically revised to be in compliance
with 409A in such way as most closely approximates the intent of the parties.

     23. Assignment Prohibited. Benefits hereunder shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Employee, his spouse, beneficiary, or estate, and any attempt to
anticipate, alienate, transfer, assign or attach the same shall be void. The Employee, his
spouse, beneficiary or estate shall only have a contractual right to benefits hereunder and shall
have

-13-

 

the status of general unsecured creditors.

     IN WITNESS WHEREOF, Company and Parent have caused this Agreement to be executed by an
authorized officer, and Employee has hereunto set Employee’s
hand, this 2nd day of January 2007.

	 	 	 	 	 	 	 
	 	 	The Connecticut Water Company	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Michele G. DiAcri	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     Assistant Corporate Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	Connecticut Water Service, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Michele G. DiAcri	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	      Assistant Corporate Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Marshall T. Chiaraluce	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Marshall T. Chiaraluce	 	 

-14-

 

ATTACHMENT A

RELEASE

     We advise you to consult an attorney before you sign this Release. You have until the
date which is seven (7) days after the Release is signed and returned to                                         
(“Company”) to change your mind and revoke your Release. Your Release shall not become
effective or enforceable until after that date.

     In consideration for the benefits provided under your Employment Agreement dated
                                                            
 with Company and                                                             
 (“Parent”), and
more specifically enumerated in Exhibit 1 hereto, by your
signature below you agree to accept such benefits and not to make any claims of any kind against
Company, its past and present and future parent corporations, subsidiaries, divisions,
subdivisions, affiliates and related companies or their successors and assigns, including without
limitation Parent, or any and all past, present and future Directors, officers, fiduciaries or
employees of any of the foregoing (all parties referred to in the foregoing are hereinafter
referred to as the “Releasees”) before any agency, court or other forum, and you agree to release
the Releasees from all claims, known or unknown, arising in any way from any actions taken by the
Releasees up to the date of this Release, including, without limiting the foregoing, any claim for
wrongful discharge or breach of contract or any claims arising under the Age Discrimination in
Employment Act of 1967, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Employee Retirement Income Security Act of 1974, Connecticut’s Fair Employment
Practices Act or any other federal, state or local statute or regulation and any claim for
attorneys’ fees, expenses or costs of litigation.

     THE PRECEDING PARAGRAPH MEANS THAT BY SIGNING THIS RELEASE YOU WILL HAVE WAIVED ANY RIGHT YOU
MAY HAVE TO BRING A LAWSUIT OR MAKE ANY LEGAL CLAIM AGAINST THE RELEASEES BASED ON ANY ACTIONS
TAKEN BY THE RELEASEES UP TO THE DATE OF THIS RELEASE.

     By signing this Release, you further agree as follows:

     1. You have read this Release carefully and fully understand its terms;

     2. You have had at least twenty-one (21) days to consider the terms of the Release;

     3. You have seven (7) days from the date you sign this Release to revoke it by written
notification to Company. After this seven (7) day period, this Release is final and
binding and may not be revoked;

     4. You have been advised to seek legal counsel and have had an opportunity to do so;

     5. You would not otherwise be entitled to the benefits provided under your Employment
Agreement with Company and Parent had you not agreed to waive any right you have to bring a lawsuit
or legal claim against the Releasees; and

 

 

     6. Your agreement to the terms set forth above is voluntary.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Signature:	 	 	 	 	 	 	 	Date:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Received by:	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 

	 	 

 

 

EXHIBIT 1

1.

2.

3.

4.

5.

etc.

NOTE: THIS EXHIBIT IS TO BE COMPLETED AT THE TIME OF TERMINATION TO REFLECT ALL BENEFITS AND
PAYMENTS MADE UNDER THE EMPLOYMENT AGREEMENT.

Acknowledged and Agreed:

	 	 	 	 	 
	THE CONNECTICUT WATER COMPANY	 	EMPLOYEE
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 Its	 	 
	 
	 	 	 	 
	CONNECTICUT WATER SERVICE	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	 

	 	 Its

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