Document:

exv10w58

 

Exhibit 10.58

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 16th day of
November, 2007 (“Effective Date”), by and between FIDELITY NATIONAL INFORMATION SERVICES, INC., a
Georgia corporation (the “Company”), and GARY A. NORCROSS (the “Employee”).

RECITALS:

     WHEREAS, Fidelity Information Services, Inc., a subsidiary of Company, (“Subsidiary”) and
Employee previously entered into a letter agreement dated April 1, 2003 and amended from time to
time (“Prior Agreement”) specifying payments and benefits payable to Employee; and

     WHEREAS, Company desires to terminate the Prior Agreement and enter into this Agreement to
recognize Employee’s superior performance and continuing value to the Company and its shareholders;
and

     WHEREAS, Employee desires to continue his employment with the Company on the terms and
conditions provided herein

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

     1. Purpose and Release. The purpose of this Agreement is to terminate the Prior
Agreement, to recognize Employee’s significant contributions to the overall financial performance
and success of the Company, to protect the Company’s business interests through the addition of
restrictive covenants, and to provide a single, integrated document which shall provide the basis
for Employee’s continued employment by the Company. In consideration of the execution of this
Agreement and the termination of the Prior Agreement, Employee releases all rights and claims that
Employee has, had or may have arising under such Prior Agreement.

     2. Employment and Duties. Subject to the terms and conditions of this Agreement, the
Company employs Employee to serve in an executive capacity as the President and Chief Operating
Officer of Transaction Processing Services. The business lines that comprise “Transaction
Processing Services” are described in the Company’s 2007 SEC filings. Employee shall devote
substantially all of his business time, attention and best efforts to the performance of his duties
hereunder and shall not engage in any other business, profession or occupation for compensation or
otherwise without the express written consent of the Chief Executive Officer or Board of Directors
(“Board”), other than personal, personal investment, charitable, or civic matters which do not
conflict with Employee’s duties. Employee accepts such employment and agrees to undertake and
discharge the duties, functions and responsibilities commensurate with said position and as they
are from time to time assigned to Employee by the Chief Executive Officer or Board.

     3. Term. The term of this Agreement shall commence on the Effective Date and shall
continue for a period of three (3) years ending on the third anniversary of the Effective Date,
subject to prior termination as set forth in Section 8 (the “Employment Term”). The Employment Term
shall be extended automatically for one (1) additional year on the first

 

 

anniversary of the Effective Date and for an additional year each anniversary thereafter
unless and until either party gives written notice to the other not to extend the Employment Term
before such extension would be effectuated. Notwithstanding any termination of the Employment Term
or the Employee’s employment, the Employee and the Company agree that Sections 8 through 10 shall
remain in effect until all obligations and benefits that accrued prior to that termination are
satisfied thereunder.

     4. Salary. During the Employment Term, the Company shall pay the Employee an annual
base salary, before deducting all applicable withholdings, of no less than $575,000.00 per year,
payable at the time and in be manner dictated by the Company’s standard payroll policies. Such
minimum annual base salary may be periodically reviewed and increased at the Company’s discretion
to reflect, among other matters, cost of living increases and performance results (such annual base
salary, including any increases pursuant to this Section 4, the “Annual Base Salary”).

     5. Other Compensation and Fringe Benefits. In addition to any executive bonus,
pension, deferred compensation and long-term incentive plans which the Company may from · time to
time make available to the Employee, the Employee shall be entitled to the following during the
Employment Term:

	 	(a)	 	the standard Company benefits enjoyed by the Company’s other top executives as
a group;
	 
	 	(b)	 	medical and other insurance coverage (for the Employee and any covered
dependents) provided by the Company to its other top executives as a group;
	 
	 	(c)	 	supplemental disability insurance sufficient to provide two-thirds of the
Employee’s pre-disability Annual Base Salary;
	 
	 	(d)	 	an annual incentive bonus opportunity (“Annual Bonus”) for each calendar year
included in the Employment Term, with such opportunity to be earned based upon
attainment of performance objectives established by the Compensation Committee (the
“Committee”) of the Board. The Employee’s target Annual Bonus opportunity shall be not
less than one hundred and fifty percent (150%) of the Employee’s Annual Base Salary.
The Employee’s target Annual Bonus opportunity may be periodically reviewed and
increased (but not decreased without the Employee’s express written consent) at the
discretion of the Company. Subject to Section 8, the Annual Bonus shall become fully
vested at the end of each calendar year within the Employment Term and shall be paid no
later than March 15th of the following year; and
	 
	 	(e)	 	participation in the Company’s equity incentive plans.

     6. Vacation. For and during each calendar year within the Employment Term, the
Employee shall be entitled to reasonable paid vacation periods consistent with his positions with
the Company and in accordance with the Company’s standard policies, or as the Board may approve. In
addition, the Employee shall be entitled to such holidays consistent with the Company’s standard
policies or as the Company may approve.

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     7. Expense Reimbursement. In addition to the compensation and benefits provided
herein, the Company shall, upon receipt of appropriate documentation, reimburse the Employee each
month for his reasonable travel, lodging, entertainment, promotion and other ordinary and necessary
business expenses to the extent such reimbursement is permitted under the Company’s expense
reimbursement policy.

     8. Termination of Employment. The Company or the Employee may terminate the Employee’s
employment at any time and for any reason in accordance with Subsection 8(a) below. The Employment
Term shall be deemed to have ended on the last day of the Employee’s employment. The Employment
Term shall terminate automatically upon the Employee’s death.

	 	(a)	 	Notice of Termination. Any purported termination of the Employee’s
employment (other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with the
notice provisions contained in Section 26. For purposes of this Agreement, a ''Notice
of Termination” shall mean a notice that indicates the Date of Termination (as that
term is defined in Section 8(b) and, with respect to a termination due to Disability,
Cause or Good Reason, sets forth in reasonable detail the facts and circumstances that
are alleged to provide a basis for such termination. A Notice of Termination from the
Company shall specify whether the termination is with or without Cause or due to the
Employee’s Disability. A Notice of Termination from the Employee shall specify whether
the termination is with or without Good Reason or due to Disability.
	 
	 	(b)	 	Date of Termination. For purposes of this Agreement, “Date of
Termination” shall mean the date specified in the Notice of Termination (but in no
event shall such date be earlier than the thirtieth (30th) day following the
date the Notice of Termination is given, unless expressly agreed to by the parties
hereto) or the date of the Employee’s death.
	 
	 	(c)	 	No Waiver. The failure to set forth any fact or circumstance in a
Notice of Termination, which fact or circumstance was not known to the party giving the
Notice of Termination when the notice was given, shall not constitute a waiver of the
right to assert such fact or circumstance in an attempt to enforce any right under or
provision of this Agreement.
	 
	 	(d)	 	Cause. For purposes of this Agreement, “Cause” means the Employee’s (i)
persistent failure to perform duties consistent with a commercially reasonable standard
of care (other than due to a physical or mental impairment); (ii) willful neglect of
duties (other than due to a physical or mental impairment); (iii) conviction of, or
pleading nolo contendere to, criminal or other illegal activities involving dishonesty;
(iv) material breach of this Agreement or (v) impeding, or failing to materially
cooperate with, an investigation authorized by the Board. No act or failure to act
directly related to Company action or inaction that constitutes Good Reason shall
constitute Cause under this Agreement if the Employee has provided a Notice of
Termination based on such Good Reason event prior to the Company’s giving of the Notice
of Termination for Cause. The Employee’s termination for Cause shall be effective when
and if a resolution is duly adopted

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	 	 	 	by an affirmative vote of at least three fourths (3/4) of the Board (less the
Employee if the Employee is a Director), stating that, in the good faith opinion of
the Board, the Employee is guilty of the conduct described in the Notice of
Termination and such conduct constitutes Cause under this Agreement; provided,
however, that the Employee shall have been given reasonable opportunity (i) to cure
any act or omission that constitutes Cause if capable of cure and (ii), together
with counsel, during the thirty (30) day period following the receipt by the
Employee of the Notice of Termination and prior to the adoption of the Board’s
resolution, to be heard by the Board.
	 
	 	(e)	 	Disability. For purposes of this Agreement, the Employee shall be
deemed to have a Disability if the Employee is entitled to long-term disability
benefits under the Company’s long-term disability plan or policy, as the case may be,
as in effect on the Date of Termination.
	 
	 	(f)	 	Good Reason. For purposes of this Agreement, the term “Good Reason”
means (x) a Change in Control, provided Employee gives Notice of Termination during the
period commencing sixty (60) days and expiring three hundred and sixty-five (365) days
after such Change in Control, or (y) the occurrence (without the Employee’s express
written consent) during the Employment Term of any of the following acts or failures to
act by the Company:

	 	(i)	 	an adverse change in the Employee’s title, the assignment to
the Employee of duties materially inconsistent with the Employee’s position as
President and Chief Operating Officer, Transaction Processing Services, or a
substantial diminution in the Employee’s authority;
	 
	 	(ii)	 	the material breach by the Company of any of its other
obligations under this Agreement;
	 
	 	(iii)	 	the Company gives the Employee notice of its intent not to
extend the Employment Term, any time during the one (1) year period immediately
following a Change in Control;
	 
	 	(iv)	 	following a Change in Control, the relocation of the Employee’s
primary place of employment to a location more than fifty (50) miles from the
Employee’s primary place of employment immediately prior to the Change in
Control (currently 601 Riverside Avenue, Jacksonville, Florida 32204); or
	 
	 	(v)	 	the failure of the Company to obtain the assumption of this
Agreement as contemplated in Section 22.

Notwithstanding the foregoing, the Board placing the Employee on a paid leave for up to sixty (60)
days pending the determination of whether there is a basis to terminate the Employee for Cause,
shall not constitute Good Reason. The Employee’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason
hereunder; provided, however, that no such event described above shall constitute

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Good Reason unless the Employee has given a Notice of Termination to the Company specifying the
condition or event relied upon for such termination within ninety (90) days from the Employee’s
actual knowledge of the occurrence of such event and, if capable of cure, the Company has’ failed
to cure the condition or event constituting Good Reason within the thirty (30) day period following
receipt of the Employee’s Notice of Termination.

     9. Obligations of the Company upon Termination.

	 	(a)	 	Termination by the Company for other than Cause or Disability or
Termination by the Employee for Good Reason. If the Employee’s employment is
terminated by the Company for any reason other than Cause or Disability or by the
Employee for Good Reason:

	 	(i)	 	the Company shall pay to the Employee, (A) within five (5)
business days after the Date of Termination, any earned but unpaid Annual Base
Salary and any expense reimbursement payments owed to the Employee, and (B)
within five (5) business days after the Date of Termination or, if later, by
March 15 of the year in which the Date of Termination occurs, any earned but
unpaid Annual Bonus payments relating to the prior calendar year (the “Accrued
Obligations”);
	 
	 	(ii)	 	the Company shall pay to the Employee, within thirty (30)
business days after the Date of Termination, a prorated Annual Bonus based on
(A) the target Annual Bonus opportunity in the year in which the Date of
Termination occurs or the prior year if no target Annual Bonus opportunity has
yet been determined and (B) the fraction of the year the Employee was employed;
	 
	 	(iii)	 	the Company shall pay to the Employee, within thirty (30)
business days after the Date of Termination, a lump-sum payment equal to 300%
of the sum of (x) the Employee’s Annual Base Salary in effect immediately prior
to the Date of Termination (disregarding any reduction in Annual Base Salary to
which the Employee did not expressly consent in writing) and (y) the highest
Annual Bonus paid to the Employee by the Company within the three years
preceding his termination of employment or, if higher, the highest target
Annual Bonus opportunity in the year in which the Date of Termination occurs;
	 
	 	(iv)	 	all stock option, restricted stock and other equity-based
incentive awards granted by the Company that were outstanding but not vested as
of the Date of Termination shall become immediately vested and/or payable, as
the case may be; and
	 
	 	(v)	 	for a three (3) year period after the Date of Termination, the
Company will provide or cause to be provided to the Employee (and any covered
dependents), with life and health insurance benefits (but not disability
insurance benefits) substantially similar to those the Employee and any covered
dependents were receiving immediately prior to the Notice of

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	 	 	 	Termination at the same level of benefits and at the same dollar cost to the
Employee as is available to the Company’s executive officers generally,
provided that the Employee’s continued receipt of such benefits is possible
under the general terms and provisions of the applicable plans and programs,
and provided further, that such benefits would not be taxable to the
Employee or subject to Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”). In the event that the Employee’s participation in any
such plan or program is prohibited, the Company shall, at its expense,
arrange to provide the Employee with benefits substantially similar to those
which the Employee would otherwise have been entitled to receive under such
plans and programs from which his continued participation is prohibited. If
the Company arranges to provide the Employee and covered dependents with
life and health insurance benefits, those benefits will be reduced to the
extent comparable benefits are received by, or made available to, the
Employee (at no greater cost to the Employee) by another employer during the
three (3) year period following the Employee’s Date of Termination. The
Employee must report to the Company any such benefits that he receives or
that are made available. In lieu of the benefits described in this Section
10(a)(v), the Company, in its sole discretion, may elect to pay to the
Employee a lump sum cash payment equal to the monthly premiums that would
have been paid by the Company to provide such benefits to the Employee for
each month such coverage is not provided under this Section 10(a)(v).
Nothing in this Section 10(a)(v) will extend the COBRA continuation coverage
period.

The Company shall provide the Employee with advance written notice of the date of the first
anniversary of any Change in Control.

	 	(b)	 	Termination by the Company for Cause or by the Employee without Good
Reason. If the Employee’s employment is terminated by the Company for Cause or by
the Employee without Good Reason, the Company’s only obligation under this Agreement
shall be payment of any Accrued Obligations and any expense reimbursement payments owed
to Employee.
	 
	 	(c)	 	Termination Due to Death or Disability. If the Employee’s employment is
terminated due to death or Disability, the Company shall pay to the Employee (or to the
Employee’s estate or personal representative in the case of the Employee’s death),
within thirty (30) business days after the Date of Termination, (i) any Accrued
Obligations and (ii) a prorated Annual Bonus based on (A) the target Annual Bonus
opportunity in the year in which the Date of Termination occurs or the prior year if no
target Annual Bonus opportunity has yet been determined and (B) the fraction of the
year the Employee was employed.
	 
	 	(d)	 	Definition of Change in Control. For purposes of this Agreement, the
term “Change in Control” shall mean that the conditions set forth in anyone of the
following subsections shall have been satisfied:

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	 	(i)	 	the acquisition, directly or indirectly, by any “person”
(within the meaning of Section 3(a)(9) of the Securities and Exchange Act of
1934, as amended (the “Exchange Act”) and used in Sections 13(d) and 14(d)
thereof) of “beneficial ownership” (within the meaning of Rule 13d-3 of the
Exchange Act) of securities of the Company possessing more than fifty percent
(50%) of the total combined voting power of all outstanding securities of the
Company;
	 
	 	(ii)	 	a merger or consolidation in which the Company is not the
surviving entity, except for a transaction in which the holders of the
outstanding voting securities of the Company immediately prior to such merger
or consolidation hold, in the aggregate, securities possessing more than fifty
percent (50%) of the total combined voting power of all outstanding voting
securities of the surviving entity immediately after such merger or
consolidation;
	 
	 	(iii)	 	a reverse merger in which the Company is the surviving entity
but in which securities possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of the Company are
transferred to or acquired by a person or persons different from the persons
holding those securities immediately prior to such merger;
	 
	 	(iv)	 	during any period of two (2) consecutive years during the
Employment Term or any extensions thereof, individuals, who, at the beginning
of such period, constitute the Board, cease for any reason to constitute at
least a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then in office who
were directors at the beginning of the period.
	 
	 	(v)	 	the sale, transfer or other disposition (in one transaction or
a series of related transactions) of assets of the Company that have a total
fair market value equal to or more than one-third of the total fair market
value of all of the assets of the Company immediately prior to such sale,
transfer or other disposition, other than a sale, transfer or other disposition
to an entity (x) which immediately following such sale, transfer or other
disposition owns, directly or indirectly, at least fifty percent (50%) of the
Company’s outstanding voting securities or (y) fifty percent (50%) or more of
whose outstanding voting securities is immediately following such sale,
transfer or other disposition owned, directly or indirectly, by the Company.
For purposes of the foregoing clause, the sale of stock of a subsidiary of the
Company (or the assets of such subsidiary) shall be treated as a sale of assets
of the Company; or
	 
	 	(vi)	 	the approval by the stockholders of a plan or proposal for the
liquidation or dissolution of the Company.

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For purposes of this Agreement, no event or transaction that is entered into, is contemplated by,
or occurs as a result of the proposed spin-off of the Company’s Lender Processing Services division
as publicly announced on October 25, 2007 shall constitute a Change in Control.

     10. Excise Tax Gross-up Payments.

	 	(a)	 	If any payments or benefits paid or provided or to be paid or provided to the
Employee or for his benefit pursuant to the terms of this Agreement or otherwise in
connection with, or arising out of, his employment with the Company or its subsidiaries
or the termination thereof (a “Payment” and, collectively, the: “Payments”) would be
subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, then,
except as otherwise provided in this Section 10(a), the Employee will be entitled to
receive an additional payment (a “Gross- Up Payment”) in an amount such that, after
payment by the Employee of all income taxes, all employment taxes and any Excise Tax
imposed upon the Gross-Up Payment (including any related interest and penalties), the
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax (including
any related interest and penalties) imposed upon the Payments. Notwithstanding the
foregoing, if the amount of the Payments does not exceed by more than 3% the amount
that would be payable to the Employee if the Payments were reduced to one dollar less
than what would constitute a “parachute payment” under Section 280G of the Code (the
“Scaled Back Amount”), then the Payments shall be reduced, in a manner determined by
the Employee, to the Scaled Back Amount, and the Employee shall not be entitled to any
Gross-Up Payment.
	 
	 	(b)	 	An initial determination of (i) whether a Gross-Up Payment is required pursuant
to this Agreement, and, if applicable, the amount of such Gross-Up Payment or (ii)
whether the Payments must be reduced to the Scaled Back Amount and, if so the amount of
such reduction, will be made at the Company’s expense by all accounting firm selected
by the Company. The accounting firm will provide its determination, together with
detailed supporting calculations and documentation to the Company and the Employee
within ten (10) business days after the date of termination of Employee’s employment,
or such other time as may be reasonably requested by the Company or the Employee. If
the accounting firm determines that no Excise Tax is payable by the Employee with
respect to a Payment or Payments, it will furnish the Employee with an opinion to that
effect. If a Gross Up Payment becomes payable, such Gross-Up Payment will be paid by
the Company to the Employee within thirty (30) business days of the receipt of the
accounting firm’s determination. If a reduction in Payments is required, such reduction
shall be effectuated within thirty (30) business days of the receipt of the accounting
firm’s determination. Within ten (10) business days after the accounting firm delivers
its determination to the Employee, the Employee will have the right to dispute the
determination. The existence of a dispute will not in any way affect the Employee’s
right to receive a Gross-Up Payment in accordance with the determination. If there is
no dispute, the determination will be binding, final, and conclusive upon the Company
and the Employee. If there is a dispute, the Company and the Employee will together
select. a second accounting firm, which will review the determination and the
Employee’s basis for the dispute and

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	 	 	 	then will render its own determination, which will be binding, final, and conclusive
on the Company and on the Employee for purposes of determining whether a Gross-Up
Payment is required pursuant to this Section 10(b) or whether a reduction to the
Scaled Back Amount is required, as the case may be. If as a result of any dispute
pursuant to this Section 10(b) a Gross-Up Payment is made or additional Gross-Up
Payments are made, such Gross-Up Payment(s) will be paid by the Company to be
Employee within thirty (30) business days of the receipt of the second accounting
firm’s determination. The Company will bear all costs associated with the second
accounting firm’s determination, unless such determination does not result in
additional Gross-Up Payments to the Employee or unless such determination does not
mitigate the reduction in Payments required to arrive at the Scaled Back Amount, in
which case all such costs will be borne by the Employee.
	 
	 	(c)	 	For purposes of determining the amount of the Gross-Up Payment and, if
applicable, the Scaled Back Amount, the Employee will be deemed to pay federal income
taxes at the highest marginal rate of federal income taxation in · the calendar year in
which the Gross-Up Payment is to be made or the Scaled Bick Amount is determined, as
the · case may be, and applicable state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Employee’s residence on the date of
termination of Employee’s employment, net of the maximum reduction in federal income
taxes that would be obtained from deduction of those state and local taxes.
	 
	 	(d)	 	As a result of the uncertainty in the application of Section 4999 of the Code,
it is possible that Gross-Up Payments which will not have been made by the Company
should have been made, the Employee’s Payments will be reduced to the Scaled Back
Amount when they should not have been or the Employee’s Payments are reduced to a
greater extent than they should have been (an “Underpayment”) or Gross-Up Payment s are
made by the Company which should not have been made, the Employee’s Payments are not
reduced to the Scaled Back Amount when they should have been or they are not reduced to
the extent they should have been (an “Overpayment”). If it is determined that an
Underpayment has occurred, the accounting firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the
Company to or for the benefit of Employee. If it is determined that an Overpayment has
occurred, the accounting firm shall determine the amount of the Overpayment that has
occurred and any such Overpayment (together with interest at the rate provided in
Section 1274(b)(2) of the Code) shall be promptly paid by the Employee (to the extent
he has received a refund if the applicable Excise Tax has been paid to the Internal
Revenue Service) to or for the benefit of the Company; provided, however, that if the
Company determines that such repayment obligation would be or result in an unlawful
extension of credit under Section 13(k) of the Exchange Act, repayment shall not be
required. The Employee shall cooperate, to the extent his expenses are reimbursed by
the Company, with an} reasonable requests by the Company in connection with any contest
or dispute with the Internal Revenue Service in connection with the Excise Tax.

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	 	(e)	 	The Employee shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require a payment resulting in at
Underpayment. Such notification shall be given as soon as practicable but no later than
ten (10) business days after the Employee is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date or which such claim
is requested to be paid. The Employee shall not pay such claim prior to the expiration
of the thirty (30) day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Employee in writing prior to
the expiration of such period that it desires to contest such claim, the Employee
shall:

	 	(i)	 	give the Company any information reasonably requested by the
Company relating to such claim;
	 
	 	(ii)	 	take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by 3J attorney reasonably selected by the Company;
	 
	 	(iii)	 	cooperate with the Company in good faith in order effectively
to contest such claim; and
	 
	 	(iv)	 	permit the Company to participate in any proceeding relating to
such claim;

	 	 	 	provided, however, that the Company shall bear and pay directly all cost and
expenses (including additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold the Employee harmless, on an after-tax
basis, for any Excise Tax or income tax (including related interest and penalties
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 10(e), the Company
shall control all proceedings taken in connection with such contest and, at its sol
option, may pursue or forgo any and all administrative appeals, proceedings hearings
and conferences with the taxing authority in respect of such claim an may, at its
sole option, either direct the Employee to pay the tax claimed and sue for a refund
or contest the claim in any permissible manner, and the Employee agrees to prosecute
such contest to a. determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, a the Company shall
determine; provided, however, that if the Company directs the Employee to pay such
claim and sue for a refund, the Company shall advance the amount of such payment to
the Employee, on an interest-free basis and shall indemnify and hold the Employee
harmless, on an after-tax basis, from any Excise Tax or income tax (including
related interest or penalties) imposed with respect to such advance or with respect
to any imputed income with respect to such advance. The Company’s control of the
contest shall be limited to issues that may impact Gross-Up Payments or reduction in
Payments under this Section 10,
and the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.

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	 	(f)	 	If, after the receipt by the Employee of an amount advanced by the Company
pursuant to Section 10(e), the Employee becomes entitled to receive any refund with
respect to such claim, the Employee shall (subject to the Company’s complying with the
requirements of Section 10(e)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto).
If, after the receipt by the Employee of an amount advanced by the Company pursuant to
Section 10(e), a determination is made that the Employee shall not be entitled to any
refund with respect to such claim and the Company does not notify the Employee in
writing of its intent to contest such denial of refund prior to the expiration of
thirty (30) days after such determination, then such advance shall be forgiven and
shall not be required to be repaid.

     11. Non-Delegation of Employee’s Rights. The obligations, rights and benefits of the
Employee hereunder are personal and may not be delegated, assigned or transferred in any manner
whatsoever, nor are such obligations, rights or benefits subject to involuntary alienation,
assignment or transfer.

     12. Confidential Information. Employee acknowledges that in his capacity as an
employee of the Company he will occupy a position of trust and confidence and he further
acknowledges that he will have access to and learn substantial information about the Company and
its affiliates and their operations that is confidential or not generally known in the industry
including, without limitation, information that relates to purchasing, sales, customers, marketing,
and the Company’s and its affiliates’ financial positions and financing arrangements. The Employee
agrees that all such information is proprietary or confidential, or constitutes trade secrets and
is the sole property of the Company and/or its affiliates, as the case may be. The Employee will
keep confidential, and will not reproduce, copy or disclose to any other person or firm, any such
information or any documents or information relating to the Company’s or its affiliates’ methods,
processes, customers, accounts, analyses, systems, charts, programs, procedures, correspondence or
records, or any other documents used or owned by the Company or any of its affiliates, nor will the
Employee advise, discuss with or in any way assist any other person, firm or entity in obtaining or
learning about any of the items described in this Section 12.
Accordingly, the Employee agrees that during the Employment Term and at all times thereafter he
will not disclose, or permit or encourage anyone else to disclose, any such information, nor will
he utilize any such information, either along or with others, outside the scope of his duties and
responsibilities with the Company and its affiliates.

     13. Non-Competition During Employment Term. The Employee agrees that, during the
Employment Term, he will devote substantially all his business time and effort, and give undivided
loyalty, to the Company and its affiliates, and he will not engage in any way whatsoever, directly
or indirectly, in any business that is competitive with the Company or its affiliates, nor solicit
customers, suppliers or employees of the Company or affiliates on behalf of, or in any other manner
work for or assist any business which is competitive with the Company or its affiliates. In
addition, during the Employment Term, the Employee will undertake no planning for or organization
of any business activity competitive with the work he performs as an

11

 

employee of the Company, and the Employee will not combine or conspire with any other employee
of the Company or any other person for the purpose of organizing any such competitive business
activity.

     14. Non-Competition After Employment Term. The parties acknowledge that as an
executive officer of the Company the Employee will acquire substantial knowledge and information
concerning the business of the Company and its affiliates as a result of his employment. The
parties further acknowledge that the scope of business in which the Company and its affiliates are
engaged as of the Effective Date is national and very competitive and one in which few companies
can successfully compete. Competition by an executive officer such as the Employee in that business
after the Employment Term is terminated would severely injure the Company and its affiliates.
Accordingly, for a period of one (1) year after the Employee’s employment terminates for any reason
whatsoever, except as otherwise stated herein below, the Employee agrees (a) not to become an
employee, consultant, advisor, principal, partner or substantial shareholder of any firm or
business that in any way competes with the Company or its affiliates in any of their
presently-existing or then-existing products and markets; and (b), on behalf of any such
competitive firm or business, not to solicit any person or business that was at the time of such
termination and remains a customer or prospective customer, a supplier or prospective supplier, or
an employee of the Company or an affiliate. Notwithstanding any of the foregoing provisions to the
contrary, the Employee shall not be subject to the restrictions set forth in this Section 14 under
the following circumstances:

	 	(a)	 	if the Employee’s employment is terminated by the Company without Cause;
	 
	 	(b)	 	if the Employee’s employment is terminated as a result of the Company’s
unwillingness to extend the Employment Term;
	 
	 	(c)	 	if the Employee terminates employment for Good Reason; or
	 
	 	(d)	 	if the Employee terminates employment without Good Reason, any time during the
one (1) year period immediately following a Change in Control.

     15. Return of Company Documents. Upon termination of the Employment Term, Employee
shall return immediately to the Company all records and documents of or pertaining to the Company
or its affiliates and shall not make or retain any copy or extract of any such record or document,
am other property of the Company or its affiliates.

     16. Improvements and Inventions. Any and all improvements or inventions, which the
Employee may make or participate in during the Employment Term, unless wholly unrelated to the
business of the Company and its affiliates and produced not in the scope of Employee’s employment
hereunder, shall be the sole and exclusive property of the Company. The Employee will, whenever
requested by the Company, execute and deliver any and all documents which the Company shall deem
appropriate in order to apply for and obtain patents for improvements or inventions or in order to
assign and convey to the Company the sole and exclusive right, title and interest in and to such
improvements, inventions, patents or applications.

12

 

     17. Actions. The parties agree and acknowledge that the rights conveyed by this
Agreement are of a unique and special nature and that the Company will not have an adequate
remedy at law in the event of a failure by the Employee to abide by its terms and conditions,
nor will money damages adequately compensate for such injury. It is, therefore, agreed between and
hereby acknowledged by the parties that, in the event of a breach by the Employee of any of his
obligations contained in this Agreement, the Company shall have the right, among other rights, to
damages sustained thereby and to obtain an injunction or decree of specific performance from any
court of competent jurisdiction to restrain or compel the Employee to perform as agreed herein. The
Employee hereby acknowledges that obligations under Sections 12, 14, 15, 16, 17, 18 and 19 shall
survive the termination of his employment and he shall be bound by their terms at all times
subsequent to the termination of his employment for the periods specified therein. Nothing herein
contained shall in any way limit or exclude any other right granted by law or equity to the
Company.

     18. Release. Notwithstanding any provision herein to the contrary, the Company will
require that, prior to payment of any amount or provision of any benefit under Section 9 or payment
of any Gross-Up Payment pursuant to Section 10 of this Agreement (other than due to the Employee’s
death), the Employee shall have executed a complete release of the Company and its affiliates and
related parties it such form as is reasonably required by the Company, and any waiting periods
contained in such release shall have expired.

     19. No Mitigation. The Company agrees that, if the Employee’s employment hereunder is
terminated during the Employment Term, the Employee is not required to seek other employment or to
attempt in any way to reduce any amounts payable to the Employee by the Company hereunder. Further,
the amount of any payment or benefit provided for hereunder (other than pursuant to Section 9(a)(v)
hereof) shall not be reduced by any compensation earned by the Employee as the result of employment
by another employer, by retirement benefits or otherwise.

     20. Entire Agreement and Amendment. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter of this Agreement, and
supersedes and replaces all prior agreements, understandings and commitments with respect to such
subject matter, including, without limitation, the Prior Agreement. This Agreement may be amended
only by a written document signed by both parties to this Agreement.

     21. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Florida, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Plan to the substantive law of
another jurisdiction. Any litigation pertaining to this Agreement shall be adjudicated in courts
located in Duval County, Florida.

     22. Successors. In addition to any obligations imposed by law upon any successor to
the Company, the Company 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
the Company, to expressly assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such succession had taken place.
As used in this Agreement, “Company” shall mean the Company as herein before defined and any such
successor that expressly assumes this Agreement or otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.

13

 

     23. Counterparts. This Agreement may be executed in counterparts, each of which shall,
be deemed an original, but all of which together shall constitute one and the same instrument.

     24. Attorneys’ Fees. If any party finds it necessary to employ legal counsel or to
bring an action at law or other proceedings against the other party to interpret or enforce any of
the terms hereof, the party prevailing in any such action or other proceeding shall be paid by the
other party its reasonable legal fees, court costs, litigation expenses, all as determined by the
court and not a jury; provided, however, that on or after a Change in Control, if any party finds
it necessary to employ legal counsel or to bring an action at law or other proceedings against the
other party to interpret or enforce any of the terms hereof, the Company shall pay (on an ongoing
basis) to the Employee to the fullest extent permitted by law; all legal fees, court costs and
litigation expenses reasonably incurred by the Employee or others on his behalf (such amounts
collectively referred to as the “Reimbursed Amounts”); provided, further, that the Employee shall
reimburse the Company for the Reimbursed Amounts if it is determined that a majority of the
Employee’s claims or defenses were frivolous or without merit.

     25. Severability. If any section, subsection or provision hereof is found for any
reason whatsoever to be invalid or inoperative, that section, subsection or provision shall be
deemed severable and shall not affect the force and validity of any other provision of this
Agreement. If any covenant herein is determined by a court to be overly broad thereby making the
covenant unenforceable, the parties agree and it is their desire that such court shall substitute a
reasonable judicially enforceable limitation in place of the offensive part of the covenant and
that as so modified the covenant shall be as fully enforceable as if set forth herein by the
parties themselves in the modified form. The covenants of the Employee in this Agreement shall each
be construed as an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of the Employee against the Company, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants in this Agreement.

     26. Notices. Any notice, request, or instruction to be given hereunder shall be in
Writing and shall be deemed given when personally delivered or three (3) days after being sent by
United States Certified Mail, postage prepaid, with Return Receipt Requested, to the parties at
their respective addresses set forth below:

     To the Company:

Fidelity National Information Services, Inc.

601 Riverside Avenue

Jacksonville, FL 32204

Attention: General Counsel

     To the Employee:

Gary A. Norcross

601 Riverside Avenue

Jacksonville, FL 32204

14

 

     27. Waiver of Breach. The waiver by any party of the provisions of this Agreement
shall not operate or be construed as a waiver of any prior or subsequent breach by the other party.

     28. Tax Withholding. The Company or an affiliate may deduct from all compensation and
benefits payable under this Agreement any taxes or witholdings the Company is required to deduct
pursuant to state, federal or loca1 laws.

     29. Code Section 409A. To the extent applicable, it is intended that this Agreement
and any payment made hereunder shall comply with the requirements of Section 409A of the Code, and
any related regulations or other guidance promulgated with respect to such Section by the U.S.
Department of the Treasury or the Internal Revenue Service (“Code Section 409A”). Any provision
that would cause the Agreement or any payment hereof to fail to satisfy Code Section 409A shall
have no force or effect until amended to comply with Code Section 409A, which amendment may be
retroactive to the extent permitted by Code Section 409A.

     IN WITNESS WHEREOF the parties have executed this Agreement to be effective as of the date
first set forth above.

	 	 	 	 	 
	 

	 	FIDELITY NATIONAL INFORMATION SERVICES, INC.
	 	 
	 
	 	 	 	 
	 

	 	By: /s/ Lee A. Kennedy	 	 
	 

	 	Its: President and Chief Executive Officer	 	 
	 
	 	 	 	 
	 

	 	GARY A. NORCROSS	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ Gary A. Norcross	 	 
	 

	 	 	 	 

15exv10w18

 

Exhibit 10.18

AGREEMENT OF LIMITED PARTNERSHIP

OF

LIBERTY WASHINGTON, LP

 

 

TABLE OF CONTENTS

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

i

 

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

- ii -

 

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

- iii -

 

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

- iv -

 

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

	 	 	 
	Exhibit A -

	 	Form of Development Management Agreement
	Exhibit B -

	 	Form of Management and Leasing Agreement
	Exhibit C -

	 	List of Contributed Properties
	Exhibit D -

	 	Current Debt of the Company
	Exhibit E -

	 	Business Plan for 2007
	Exhibit F -

	 	Reserved
	Exhibit G -

	 	Form of Leasing Update

- v -

 

	 	 	 
	Exhibit H -

	 	Recitals
	Exhibit I -

	 	Initial Yield Parameters
	Exhibit J -

	 	Report of Independent Public Accountants
	Exhibit K -

	 	Due Diligence for New Acquisitions
	Exhibit L -

	 	Due Diligence for New Developments and Redevelopments
	Exhibit M -

	 	Insurance Requirements

-vi-

 

AGREEMENT OF LIMITED PARTNERSHIP

OF

LIBERTY WASHINGTON, LP

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

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

ARTICLE I

CERTAIN DEFINITIONS

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

- 2 -

 

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

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

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

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

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

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

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

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

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

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

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

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

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

- 3 -

 

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

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

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

     “Fiscal Year” means the calendar year.

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

     “General Partner” means Liberty Washington Venture, LLC.

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

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

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

- 4 -

 

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

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

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

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

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

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

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

- 5 -

 

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

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

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

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

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

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

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

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

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

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

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

- 6 -

 

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

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

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

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

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

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

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

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

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

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

- 7 -

 

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

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

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

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

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

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

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

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

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

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

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

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

- 8 -

 

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

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

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

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

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

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

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

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

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

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

- 9 -

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

- 10 -

 

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

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

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

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

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

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

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

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

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

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

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

- 11 -

 

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

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

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

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

ARTICLE II

ORGANIZATION AND PURPOSE

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

- 12 -

 

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

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

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

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

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

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

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

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

     2.09 Representations and Warranties.

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

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

- 13 -

 

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

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

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

ARTICLE III

CAPITAL

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

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

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

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

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

- 14 -

 

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

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

     3.02 Additional Capital Contributions.

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

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

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

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

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

- 15 -

 

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

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

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

     3.04 Capital Accounts.

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

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

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

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

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

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

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

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

ARTICLE IV

ALLOCATIONS

     4.01 Allocation of Profits and Losses. 

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

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

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

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

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

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

- 18 -

 

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

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

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

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

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

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

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

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

     4.04 Other Allocation Rules.

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

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

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

ARTICLE V

DISTRIBUTIONS

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

 - 20 - 

 

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

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

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

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

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

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

 - 21 - 

 

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

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

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

     5.06 Offsets.

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

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

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

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

ARTICLE VI

MANAGEMENT

     6.01 Management and Control of Company Business.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 - 24 - 

 

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

     6.02 Delegation; Standards; Indemnification.

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

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

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

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

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

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

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

 - 25 - 

 

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

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

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

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

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

 - 26 - 

 

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

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

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

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

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

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

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

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

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

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

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

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

 - 28 - 

 

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

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

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

     6.07 Regular Meetings.

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

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

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

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

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

 - 31 - 

 

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

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

     6.11 Withholding of Tax on Certain Company Distributions.

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

 - 32 - 

 

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

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

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

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

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

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

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

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

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

 - 33 - 

 

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

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

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

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

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

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

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

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

     6.13 Prohibited Transactions.

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

 - 34 - 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

     6.19 Loan Provisions. 

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

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

     6.20 Project Financing.

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

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

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

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

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

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

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

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

ARTICLE VII

COMPENSATION OF PARTNERS; PAYMENT OF COMPANY EXPENSES

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

     7.02 Company Expenses.

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

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

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ARTICLE VIII

COMPANY BOOKS, RECORDS AND STATEMENTS

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

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

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

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

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

               (i) Balance Sheet prepared on an accrual basis;

               (ii) Income Statement prepared on an accrual basis;

               (iii) Statement of Cash Flows;

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

               (v) Notes to the financial statements as appropriate;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

               (i) The name of the insurer;

               (ii) The risks insured;

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

               (iv) The expiration date of the policy; and

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

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

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

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

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

     8.06 Tax Matters.

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

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

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

     8.07 Certain Elections.

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

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

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

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

ARTICLE IX

DEFAULT PROVISIONS

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

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

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

          (c) The Bankruptcy of such Partner;

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

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

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

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

ARTICLE X

TRANSFER OF PARTNERSHIP INTERESTS;

SALE OF PROPERTY

     10.01 Transfer. 

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

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

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     10.02 Approved Transfers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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ARTICLE XI

DISSOLUTION AND LIQUIDATION

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

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

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

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

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

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

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

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

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

     11.05 Liquidation.

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

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

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

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

ARTICLE XII

BUY-SELL

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

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

- 50 -

 

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

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

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

ARTICLE XIII

ACQUISITIONS, NEW DEVELOPMENTS AND REDEVELOPMENTS

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

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

     13.03 New Acquisitions.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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ARTICLE XIV

MISCELLANEOUS PROVISIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	 	 	 	 	 
	PARTNER	 	PERCENTAGE INTEREST
	 
	NEW YORK STATE
	 	 	 	 
	COMMON RETIREMENT FUND
	 	 	75	%

Thomas P. Dinapoli, Comptroller of the

State of New York, as Trustee of the

Common Retirement Fund

	 	 	 	 	 
	By:

	 	/s/ NICK SMIRENSKY	 	 
	 

	 	 

Name: Nick Smirensky
	 	 
	 

	 	Title: Deputy Comptroller	 	 

Addresses for Notices:

New York State Common Retirement Fund

c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Comptroller for Real Estate

Fax No.: 212-383-1331

Telephone No.: 212-383-1508

with copies to:

New York State Common Retirement Fund

c/o Office of the State Comptroller

59 Maiden Lane, 30th Floor

New York, NY 10038-4502

Attn: Assistant Deputy Counsel

Fax No.: 212-681-1331

Telephone No.: 212-383-1330

with copies to:

Cox, Castle & Nicholson LLP

2049 Century Park East, 28th Floor

Los Angeles, CA 90067-3284

Attn: Amy H. Wells, Esq.

Fax No.: 310-277-7889

Telephone No.: 310-284-2233

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with copies to:

Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Jerome Claeys

Fax No.: 312-251-5445

Telephone No.: 312-541-6740

and with copies to:

Heitman Capital Management LLC

191 North Wacker Drive

Suite 2500

Chicago, IL 60606

Attn: Anthony Ferrante

Fax No.: (312) 541-6789

Telephone No.: (312) 251-5458

[Signatures Continued on Next Page]

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[Signatures Continued from Previous Page]

	 	 	 	 	 
	PARTNER	 	PERCENTAGE INTEREST
	 
	LIBERTY WASHINGTON VENTURE, LLC
	 	 	25	%

By Liberty Property Limited Partnership,

its sole member

By Liberty Property Trust,

its sole general partner

	 	 	 	 	 
	By:

	 	/s/ MICHAEL T. HAGAN	 	 
	Name:

	 	 

MICHAEL T. HAGAN
	 	 
	Title:

	 	CHIEF INVESTMENT OFFICER	 	 
	 
	 	 	 	 
	By:

	 	/s/ WILLIAM P. HANKOWSKY	 	 
	Name:

	 	 

WILLIAM P. HANKOWSKY
	 	 
	Title:

	 	CHAIRMAN, PRESIDENT AND CEO	 	 

Addresses for Notices:

500 Chesterfield Parkway

Great Valley Corporate Center

Malvern, PA 19355

Attn: Michael T. Hagan

Fax No. 610-644-4129

Telephone No. 610-648-1716

with copy to:

Wolf, Block, Schorr and Solis-Cohen

1650 Arch Street, 22nd Floor

Philadelphia, PA 19103-2097

Attention: Herman C. Fala

Facsimile: 215-405-2976

- 61 -

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