Document:

Exhibit 10.1

 

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

 

In consideration of the terms set forth herein, the Parties hereinafter
identified agree, as of the date all the Parties have executed this Settlement
Agreement and Mutual Release (“Settlement Agreement”), as follows:

 

1.0                               Parties
to the Settlement Agreement: 
This Settlement Agreement is entered into by and among EnBW Energy
Solutions GmbH, ENVICA Kat GmbH, E&EC Energy & Environmental
Consultants GmbH, SCR-Tech GmbH, SCR-Tech LLC, CESI-SCR, Inc., Catalytica
Energy Systems, Inc., ENVICA GmbH, CESI-Tech
Technologies, Inc., Hans-Ulrich Hartenstein, and Brigitte
Hartenstein (the “Hartensteins”).  Each
aforementioned entity or person is referred to herein individually as a “Party”
and collectively as the “Parties.”

 

2.0                               Recitals:

 

2.1                               In March 2001,
ENVICA Kat, GmbH (“ENVICA”), a German corporation that developed SCR catalyst
regeneration processes, and Energy & Environment Consultants GmbH (“E&EC”),
a German consulting company, formed SCR-Tech GmbH in Germany for marketing SCR
catalyst regeneration technologies process worldwide.  SCR-Tech GmbH then formed SCR-Tech LLC in May 2001
for marketing and performing this process in North America.  In March 2002, EnBW Energy Solutions
GmbH (“EnBW”), a German energy company, also became a shareholder of SCR-Tech
GmbH and in 2003 of SCR-Tech LLC.  ENVICA
through SCR-Tech GmbH and EnBW directly granted a license for their individual
U.S. patented SCR catalyst regeneration technologies (“IP Rights”) to SCR-Tech
LLC for its use in North America.  

 

1

 

2.2                               Hans Hartenstein was
selected to serve as President and Brigitte Hartenstein was selected to serve
as Vice President and Chief Financial Officer of SCR-Tech, LLC and entered into
employment agreements on or about December 31, 2001.

 

2.3                               WHEREAS,
CESI-SCR, Inc. and its parent company, Catalytica Energy Systems, Inc.
(“Catalytica”) entered into a Membership and Asset Purchase Agreement (‘the
MIAPA”) to purchase SCR-Tech LLC on January 21, 2004 and the IP Rights of
ENVICA and EnBW.  Pursuant to the terms
of that purchase and sale, the Hartensteins were required to enter into
amendments of their employment agreements, as well as employee invention and
confidential information agreements, all of which contain various provisions
including non-compete and confidentiality provisions.  There were subsequent amendments to the
employment agreements on or about July 30, 2004.  The Hartensteins’ employment agreements,
amended employment agreements, and employee invention and confidentiality
information agreements, collectively are referred to herein as the “Hartensteins’
Employment and Confidentiality Agreements.”

 

2.4                               On February 15,
2005, the Hartensteins notified SCR-Tech LLC of their “good reason” termination
of the employment agreements and the amended employment agreements on the basis
that their authority had been depleted by various business decisions by
CESI-SCR, Inc., making them ineffective in their roles with SCR-Tech
LLC.  On March 18, 2005, Catalytica
and SCR-Tech LLC sent the Hartensteins Notices of Termination, on the basis
they had violated the terms of the employment agreements and the amended
employment agreements.

 

2.5                               Since the terminations
referred to in Section 2.4, CESI-SCR, Inc., neither Catalytica or
SCR-Tech LLC has paid any monies to SCR-Tech GmbH, ENVICA, EnBW, or the
Hartensteins, although payments have been demanded.

 

2

 

2.6                               The Parties agree that
it would be in the interest of all Parties to resolve their differences and to
settle and compromise all claims that they have or may have against one
another.

 

3.0                               Settlement Terms

 

3.1                               Settlement
Amount:  CESI-SCR, Inc. will
pay, or cause to be paid, to SCR-Tech GmbH the sum of Eight Hundred Fifty Thousand
Dollars ($850,000) and to EnBW Energy Solutions GmbH the sum of Six Hundred
Fifty Thousand Dollars ($650,000) (the “Settlement Amount”), upon the signature
of all Parties to the Settlement Agreement. The signature page of each
Party shall be faxed to Lloyd Winawer of Wilson Sonsini, attorneys for
Catalytica, who shall notify Catalytica when he has received all faxed
signatures of the Parties to this Settlement Agreement.  At that time, Catalytica will wire the entire
Settlement Amount to the accounts designated in writing on Exhibit E.  The Parties will notify Mr. Winawer of
the receipt of the wired monies and at that time will send the original
signature pages to Mr. Winawer by overnight mail. The Settlement
Agreement shall be of no force and effect unless and until the wired monies are
received at the designated accounts as confirmed in writing by the financial institutions
receiving the wires.  If the monies are
not wired within two (2) business days of notification of the receipt of
the faxed signature pages as confirmed in writing by the financial
institution sending the wire, Mr. Winawer shall return the faxed signature
pages in his possession of all Parties (except Catalytica, CESI-SCR, Inc.,
CESI-Tech Technologies, Inc. and SCR-Tech, LLC) to counsel for the
Hartensteins.  The original signature pages shall be
sent by overnight mail to Mr. Winawer within two (2) business days of
receipt of the wire.  If the wire has
been received, but the original signature pages are not received within
four (4) business days after such receipt, then the Parties agree that the
facsimile signature pages shall be deemed to be original signature pages.  Payment of the Settlement Amount shall be in
full satisfaction of all amounts required to be paid under the MIAPA, and any
agreements relating to the

 

3

 

MIAPA (including the Hartensteins’ Employment and Confidentiality
Agreements) whether such amounts presently are due and owing or are to be paid
in the future.

 

3.2                               Mutual
Release:  

 

Effective from and after receipt by EnBW and SCR Tech GmbH of the
Settlement Amount, each Party, on behalf of itself and its predecessors,
successors, parents, subsidiaries, affiliates, segments or divisions, present
or former directors, officers, managers, investors, stockholders, employees,
and agents, hereby expressly, fully and forever releases and discharges all
other Parties, including the Parties’ predecessors, successors, parents,
subsidiaries, affiliates, segments or divisions, present or former directors,
officers, managers, investors, stockholders, employees, and agents from  any and all claims, debts, actions, causes of
action, liability, demands, damages, and losses of whatever kind or nature, in
law or in equity, known or unknown, suspected or unsuspected, that each Party
ever had, or now has, against the other Parties, including all claims arising
out of, or related in any respect, to the MIAPA, and any agreement related to
the MIAPA including but not limited to the Hartensteins’ Employment and
Confidentiality Agreements and any and all amendments.  

 

3.3                               Section 1542
Waiver:  To the extent that the
Parties are waiving “unknown” claims as well as known claims in Section 3.2,
the Parties expressly waive any protection against such waivers, including any
law or provision similar to Section 1542 of the California Civil Code
which provides as follows:

 

A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially effected the settlement with the
debtor.

 

4

 

3.4                               Compromise
of Disputed Claims:  This
Settlement Agreement shall not be considered an admission of liability and/or
responsibility by any of Party herein, each of which continues to deny any and
all liability and disclaims such responsibility.

 

4.0                               Miscellaneous
Provisions

 

4.1                               Termination
of Obligations Under the MIAPA and Related Agreements:  

 

Each Party is deemed to have satisfied and performed all of its
obligations and requirements under the MIAPA and related agreements and shall
have no remaining obligations and requirements under the MIAPA and any
agreements related to the MIAPA, including but not limited to the Hartensteins’
Employment and Confidentiality Agreements and any and all amendments.  

 

4.2                               Exhibits:  ENVICA and Catalytica agree to enter into
the Territory Restriction Agreement included as Exhibit A hereto, ENVICA and
Catalytica agree to enter into the Confidentiality Agreement included as Exhibit B
hereto, EnBW and Catalytica agree to enter into the Confidentiality Agreements
included as Exhibit C hereto, and the Hartensteins and SCR-Tech LLC agree
to enter into the Confidentiality Agreement included as Exhibit D
hereto.  Exhibits A, B, C, and D
individually are referred to herein as a “Settlement Agreement Exhibit” and
collectively as the “Settlement Agreement Exhibits.”  No violation of any Settlement Agreement Exhibit shall
constitute a breach by any Party of the Settlement Agreement.  Liability for a violation or breach of any
Settlement Agreement Exhibit shall be limited to the respective Parties to
such Settlement Agreement Exhibit as follows:  (a) no Party other than ENVICA and
Catalytica shall have any rights, obligations, or liability with respect to the
Settlement Agreement Exhibit attached hereto Exhibit A; (b) no
Party other than Envica and Catalytica shall have any rights, obligations, or
liability with respect to the Settlement Agreement Exhibit attached hereto
as Exhibit B; (c) no Party other than EnBW and Catalytica shall have
any rights, obligations, or liability with respect to the

 

5

 

Settlement Agreement Exhibit attached hereto as Exhibit C;
and (d) no Party other than the Hartensteins and SCR-Tech LLC shall have
any rights, obligations, or liability with respect to the Settlement Agreement Exhibit attached
hereto as Exhibit D.

 

4.3 Entire Agreement:  This Settlement Agreement and the Settlement
Agreement Exhibits constitute the entire agreement and understanding among the
Parties with respect to the settlement of claims and other matters set forth
herein, and supersedes and replaces any prior agreements and understandings,
whether oral or written, between and among them, with respect to such matters.

 

4.4                               No
Oral Modification:  The Parties
understand and agree that this Settlement Agreement shall not be changed or
amended in any respect, except by a writing executed by all of the Parties
hereto or their authorized representatives.

 

4.5                               Severability:  Any determination of invalidity, illegality,
or unenforceability of any provision of this Settlement Agreement, as
determined by a court of competent jurisdiction, shall not affect the validity,
legality, or enforceability of any other provision.

 

4.6                               Governing
Law; Jurisdiction, and Venue:  

 

(a)                                  This
Settlement Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.

 

(b)                                 The
Parties to this Settlement Agreement irrevocably consents to the exclusive
jurisdiction and venue of any court within the State of New York, in connection
with any matter based upon or arising out of this Settlement Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Delaware

 

6

 

for such persons and waives and covenants not to assert or plead any
objection which they might otherwise have to such jurisdiction, venue and such
process.

 

4.7                               Counterparts
and Facsimile Signatures:  This
Settlement Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement, it being understood that all
Parties need not sign the same counterpart. 
This Settlement Agreement may be executed in whole or in part by
facsimile signatures any of which shall be deemed to be an original signature.

 

4.8                               Signers
Authority:  Each individual
signing the Settlement Agreement hereby represents and warrants that the Party
on whose behalf such individual executes this Settlement Agreement has
authorized such individual to execute this Settlement Agreement on such Party’s
behalf.

 

4.9                               Assignment:  Each Party hereby represents and warrants
that it has not assigned, conveyed or granted any right, option, or interest
in, or otherwise transferred in any manner whatsoever to any person or entity,
any right, claim, or obligation that is the subject of this Settlement
Agreement.

 

4.10                        Publication:  Each Party acknowledges and agrees that
Catalytica may issue a press release announcing the material terms of this
Settlement Agreement and that a copy of this Settlement Agreement may be
included as an exhibit to future filings by Catalytica with the United States
Securities and Exchange Commission.

 

WHEREFORE, the undersigned, on the dates set forth below, subscribe
their hands to this Settlement Agreement, acknowledge their assent to the terms
and conditions set forth herein, and agree to the foregoing.

 

7

 

	
   

  	
  CATALYTICA ENERGY SYSTEMS, INC.

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By: 

  	
   s/ Rob Zack

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President, CEO and CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CESI-SCR, INC.

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By:

  	
   s/William J. McMahon

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENBW ENERGY SOLUTIONS GMBH

  
	
   

  	
   

  
	
  DATE:

  	
  December 16, 2005

  	
   

  	
  By:

  	
   s/Werner Goetz

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENVICA KAT GMBH

  
	
   

  	
   

  
	
  DATE:

  	
  December 16, 2005

  	
   

  	
  By:

  	
   s/Frank Ebinger

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENVICA GMBH

  
	
   

  	
   

  
	
  DATE:

  	
  December 16, 2005

  	
   

  	
  By:

  	
   s/Frank Ebinger

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  E&EC ENERGY & ENVIRONMENTAL CONSULTANTS GMBH

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By:

  	
   s/Hans-Ulrich Hartenstein

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
							

 

8

 

	
   

  	
  SCR-TECH LLC

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By:

  	
   s/William J. McMahon

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SCR-TECH GMBH

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
  December 16, 2005

  	
   

  	
  By:

  	
   s/Frank Ebinger

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CESI-TECH TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By:

  	
   s/William J. McMahon

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By:

  	
  s/Hans-Ulrich Hartenstein

  	
   

  
	
   

  	
   

  	
  HANS-ULRICH HARTENSTEIN

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By:

  	
  s/Brigitte
  Hartenstein

  	
   

  
	
   

  	
   

  	
  BRIGITTE HARTENSTEIN

  
								

 

9

 

EXHIBIT A

 

TERRITORIAL RESTRICTION AGREEMENT BETWEEN 

CATALYTICA ENERGY SYSTEMS, INC. AND ENVICA
KAT GMBH

 

This Territorial Restriction Agreement (this “Agreement”) is entered
into between Catalytica Energy Systems, Inc. (“Catalytica”) and ENVICA Kat
GmbH (“ENVICA”) (each, a “Party” and together the “Parties”), effective as of
the date of the Settlement Agreement and Mutual Release of which this Agreement
is an Exhibit.

 

Now, therefore, the
Parties agree as follows:

 

I.                                         Definitions:

 

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

 

a)                                      “Affiliate” means any director, executive officer or manager
of a Party and any entity that controls, is controlled by or is under common
control with a Party, but only so long as such control exists.  For purposes of this definition, “control”
will mean direct or indirect ownership of more than fifty percent (50%) of the
shares of the respective entity entitled to vote in the election of directors
(or, in the case of an entity that is not a corporation, for the election of
the corresponding managing authority).

 

b)                                     “Business” means the business of (i) the cleaning,
treatment and regeneration of selective catalytic reduction (“SCR”) catalyst, (ii) SCR management
and SCR consulting services, (iii) research and development of SCR
catalyst treatment, management, cleaning and regeneration, and (iv) all
SCR activities related thereto.

 

c)                                      “Closing Date” means February 20, 2004.

 

d)                                     “Covered Technology” means Technology which relate to the
following steps of the Business: 

 

•                  Disassembling the modules (if
required e.g. in case of some multi-layer plate or corrugated plate catalyst)
and mechanical cleaning (ash removal and vacuuming, especially in between plate
layers);

 

•                  Soaking the catalyst in a
water-based solution at a controlled pH and temperature;

 

•                  Ultrasonic deep cleaning in a
water-based solution at a controlled pH, temperature, agitation, and movement
as a preparation for further treatment and replenishment of active ingredients;

 

•                  Neutralization in a water-based
solution at a controlled pH and temperature;

 

•                  Multi-stage rinsing in DI water at a
controlled temperature and conductivity;

 

•                  Drying the clean
catalyst;

 

1

 

•                  Replenishing active ingredients in a
concentration- and temperature-controlled DI water-based solution;

 

•                  Drying the
regenerated catalyst; and

 

•                  Final inspection and packaging for
shipment.

 

and is based on the transferred intellectual property rights from ENVICA as listed below:

 

Registered
IP transferred by ENVICA

 

	
  No.

  	
   

  	
  USA/Canada

  application

  	
   

  	
  Action

  USPTO

  	
   

  	
  (1) Title

  	
   

  	
  Priority

  	
   

  	
  Examin.

  request

  	
   

  	
  PCT

  applic.

  
	
  DE 198
  29 916

  	
   

  	
  US:
  6,241,826

  Can: 2,336,562

  	
   

  	
  Patent
  granted

  	
   

  	
  Process
  for regenerating catalytic converters

  	
   

  	
  06.07.1998

  	
   

  	
  yes

  	
   

  	
  yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Patent
  ownership in the process of being transferred to ENVICA GmbH.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DE
  102 41 004.6

  	
   

  	
  US:
  Yes

  Can: Yes

  	
   

  	
  None

  	
   

  	
  Process
  for the regeneration of iron contaminated denitrifying catalysts

  	
   

  	
  05.09.2002

  	
   

  	
  yes

  	
   

  	
  yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  earliest possible time for National Phases is May 2004. With
  international examination Request further 10 months later.

  
	
   

  	
   

  	
   

  
	
  DE
  102 42 081.5

  	
   

  	
  US:
  Yes

  Can: Yes

  	
   

  	
  None

  	
   

  	
  Process
  for regeneration of denitrifying catalysts contaminated by phosphorus

  	
   

  	
  11.09.2002

  	
   

  	
  yes

  	
   

  	
  yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The earliest
  possible time for National Phases is May 2004. With international
  examination Request further 10 months later.

  

 

e)                                      “Improvements” means all
improvements, modifications, enhancements and refinements of Covered Technology
that are developed by or for any of ENVICA or its Affiliates with the exception
of all “Arbeitnehmererfindungen” according to the German “Arbeitnehmererfindungsgesetz”
following the Closing Date through December 31, 2014. 

 

f)                                        “NAFTA Territories” means the United States of America, Canada
and Mexico, and any other member countries of the North American Free Trade
Agreement as of Closing Date, and territories and possessions of the foregoing
within which the North American Free Trade Agreement applies as of the Closing
Date.

 

g)                                     “Person” means any individual, corporation, partnership,
limited liability company or any other form of business entity.

 

2

 

II.                                     Territorial Restrictions for Covered Technology.

 

a)                                      From
and after the Closing Date, Catalytica shall use, and shall cause each of its
Affiliates to use, the Covered Technology solely in the NAFTA Territories and
in no other country in the world, and Catalytica shall not license or transfer,
and shall cause each of its Affiliates not to license or transfer, to any other
Person, any of the Covered Technology, except in each case solely in the NAFTA
Territories.  Catalytica and its
Affiliates shall not use any Catalytica Improvements in ENVICA’s Business
outside of the NAFTA Territories.  Catalytica
and its Affiliates shall not use the Covered Technology for regeneration of SCR
catalysts that to the knowledge of Catalytica are intended for use outside the
NAFTA Territories.  Catalytica agrees not
to assert against ENVICA under Catalytica’s Patents issuing on Catalytica
Improvements any claim based on ENVICA’s use of Covered Technology in the
conduct of ENVICA’s Business outside of the NAFTA Territories.  Catalytica shall be the sole owner of
Catalytica Improvements, including all patents thereto.

 

b)                                     From
and after the Closing Date, Catalytica shall not disclose, and shall cause each
of its Affiliates not to disclose, to any other Person, any of the Covered
Technology, except for licensing purposes and for disclosures in connection
with pursuing patent protection, in each case solely in the NAFTA Territories,
and in scientific publications or speaking subject to ENVICAs’ prior written
consent (such consent not to be unreasonably withheld).  Without limiting the generality of the
foregoing, Catalytica shall, and shall cause each of its Affiliates to protect
the confidentiality of the Covered Technology by using the same degree of care
to prevent the unauthorized use, dissemination, or publication of the Covered
Technology as Catalytica uses to protect its other confidential information,
but no less than a reasonable degree of care. 
Catalytica further agrees that it will not disclose, and will cause each
of its Affiliates not to disclose, the Covered Technology to any person, except
to its employees, contractors, or agents who need to know the Covered
Technology and have signed a non-use and non-disclosure agreement with
obligations no less stringent than the obligations of this Agreement prior to
any disclosure of the Covered Technology. 
Catalytica agrees to promptly inform ENVICA in writing of any disclosure
of the Covered Technology, whether intentional or not, which violates the
provisions of this Agreement.  Further,
Catalytica shall be responsible and liable for any breach of this agreement by
any of Catalytica’s licensees of the Covered Technology.  Catalytica may, but shall have no obligation
to, disclose Catalytica Improvements to the ENVICA, including copies of
invention disclosures or patent applications with respect to such Catalytica Improvements.  

 

c)                                From
and after the Closing Date, ENVICA shall use, and shall cause each of its
Affiliates to use, the Covered Technology solely outside of the NAFTA
Territories, and ENVICA shall not license or transfer, and shall cause each of
its Affiliates not to license or transfer, to any other Person, any of the
Covered Technology, except in each case solely outside of the NAFTA
Territories.  ENVICA and their Affiliates
shall not use the Covered Technology for regeneration of SCR catalysts that to
the knowledge of ENVICA are intended for use in the NAFTA Territories.  ENVICA and their Affiliates shall use any
Improvements solely outside of the NAFTA Territories. 

 

d)                                     From
and after the Closing Date, ENVICA shall not disclose, and shall cause each of
its Affiliates not to disclose, to any other Person, any of the Covered
Technology, except for

 

3

 

licensing purposes and for disclosures in connection
with pursuing patent protection, in each case solely outside of the NAFTA
Territories, and in scientific publications or speaking subject to Catalytica’s
prior written consent (such consent not to be unreasonably withheld).  Without limiting the generality of the
foregoing, ENVICA shall, and shall cause each of its respective Affiliates to
protect the confidentiality of the Covered Technology by using the same degree
of care to prevent the unauthorized use, dissemination, or publication of the
Covered Technology as such ENVICA uses to protect its other confidential
information, but no less than a reasonable degree of care.  ENVICA further agrees that it will not
disclose, and will cause each of its Affiliates not to disclose, the Covered
Technology to any person, except to its employees, contractors, or agents who
need to know the Covered Technology and have signed a non-use and
non-disclosure agreement with obligations no less stringent than the
obligations of this agreement prior to any disclosure of the Covered
Technology.   ENVICA agrees to promptly
inform Catalytica in writing of disclosure of the Covered Technology, whether
intentional or not, which violates the provisions of this agreement.  Further, ENVICA shall be responsible and
liable for any breach of this agreement by any of the ENVICA’ licensees of the
Covered Technology.

 

e)                                      ENVICA
on the one hand and the Catalytica on the other hand acknowledges and agrees
that the other party would be irreparably damaged in the event that any of the
provisions of this agreement were not performed in accordance with the specific
terms or were otherwise breached. 
Accordingly, ENVICA on the one hand and Catalytica on the other hand
agree that the other party shall be entitled to, in addition to any other
remedies that may be available to such party upon any such violation, to
enforce such covenants and agreements by specific performance, injunction
relief or any other means available to such party at law or in equity to
prevent breaches of the provisions of this agreement.

 

f)                                        In all cases with respect to Covered
Technology and Improvements, ENVICA shall retain the exclusive right to use the
Covered Technology and Improvements in ENVICA’s Business outside of the NAFTA
Territories.

 

g)                                     Neither Catalytica nor ENVICA shall
attempt to directly or indirectly evade the restrictions set forth in this Article II,
whether by sale, exchange, merger or similar transactions.

 

III.                                 Miscellaneous 

 

(a)                                  This
Agreement constitutes the entire agreement and understanding among the Parties
with respect to the matters set forth herein, and supersedes and replaces any
prior agreements and understandings, whether oral or written, between and among
them, with respect to such matters.

 

(b)                                 The Parties understand
and agree that this Agreement shall not be changed or amended in any respect,
except by a writing executed by all of the Parties hereto or their authorized
representatives.

 

(c)                                  Any
determination of invalidity, illegality, or unenforceability of any provision
of this Agreement, as determined by a court of competent jurisdiction, shall
not affect the validity, legality, or enforceability of any other provision.

 

4

 

(d)                                 This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.

 

(e)                                  The
Parties to this Agreement irrevocably consents to the exclusive jurisdiction
and venue of any court within the State of New York, in connection with any
matter based upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner authorized by
the laws of the State of Delaware for such persons and waives and covenants not
to assert or plead any objection which they might otherwise have to such
jurisdiction, venue and such process.

 

(f)                                    This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, it being understood that all Parties
need not sign the same counterpart.  This
Agreement may be executed in whole or in part by facsimile signatures any of
which shall be deemed to be an original signature.

 

(g)                                 Each
individual signing the Agreement hereby represents and warrants that the Party
on whose behalf such individual executes this Agreement has authorized such
individual to execute this Agreement on such Party’s behalf.

 

WHEREFORE, the undersigned, on the dates set forth below, subscribe
their hands to this Agreement, acknowledge their assent to the terms and
conditions set forth herein, and agree to the foregoing.

 

	
   

  	
  CATALYTICA ENERGY SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
   

  	
  By:

  	
  s/Rob Zack

  	
   

  
	
   

  	
   

  	
  Rob Zack

  
	
   

  	
   

  	
  President and CEO

  
	
   

  	
   

  
	
   

  	
  ENVICA KAT GMBH

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE:

  	
  December 16, 2005

  	
   

  	
  By:

  	
  s/Frank Ebinger

  	
   

  
	
   

  	
  Name:

  	
  Frank Ebinger

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
								

 

5

 

EXHIBIT B

 

CONFIDENTIALITY AGREEMENT BETWEEN

CATALYTICA ENERGY SYSTEMS, INC. AND ENVICA KAT GMBH

 

This Confidentiality Agreement (this “Agreement”) is made and entered
into as of December 9, 2005 (the “Effective Date”) between Catalytica
Energy Systems, Inc. (“Catalytica”) and Envica Kat GmbH (“ENVICA”).  

 

1.0                               Purpose

 

The parties wish to set forth their agreement regarding ENVICA’s
continuing obligation to protect confidential information as set forth in the January 21,
2004 Membership Interests and Asset Purchase Agreement (MIAPA), and Catalytica’s
right to use such information.  

 

As used herein, “Acquired Assets” refers to the assets Catalytica
obtained through the MIAPA, as set forth in and pursuant to Schedules 2.1(b) and
11.15 of that agreement, including the assets obtained from ENVICA.  

 

As used herein, “Transferred Technology” refers to all technology –
that is, all tangible embodiments of Intellectual Property Rights, including
technology, technical information, business information and software, systems,
files, records, databases, drawings, artwork, designs, displays, audio-visual
works, devices, hardware, apparatuses, documentation, manuals, specifications,
flow charts, web pages, customer lists, supplier lists, equipment lists,
electronic and other data, and other tangible embodiments of, or materials
describing or disclosing, technical or business data, concepts, recipes,
formulas, operating procedures, know-how, show-how, techniques, Trade Secrets,
inventions (whether patentable or unpatentable), algorithms, formulae,
processes, routines, databases, works of authorship and the like – listed or
described in Schedules 2.1(b) and 11.15 of
the MIAPA.

 

As used herein, “Intellectual Property Rights” refers to any and all
rights throughout the NAFTA Territories in, arising out of, or associated with
any of the following: (i) all utility models and design and utility
patents and applications therefore (including the right to file national patent
applications in the NAFTA Territories based on any patents or patent
applications filed outside the NAFTA Territories) and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof (collectively, “Patents”);
(ii) all inventions (whether patentable or not), invention disclosures and
improvements, all trade secrets, proprietary information, know how and
technology, including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, pricing and cost information, and
business and marketing plans and proposals (collectively, “Trade Secrets”); (iii) all works
of authorship, copyrights, mask works, copyright and mask work registrations
and applications (collectively, “Copyrights”);
(iv) all industrial designs and any registrations and applications
therefor (collectively, “Industrial
Designs”); (v) all trade names, logos, trademarks and service
marks; trademark and service mark registrations and applications

 

1

 

(collectively, “Trademarks”);
(vi) all computer software, databases and data collections (including
knowledge databases, customer lists and customer databases) (collectively, “Software”); (vii) rights to
Uniform Resource Locators, Web site addresses and domain names (collectively, “Web Rights”); (viii) any similar,
corresponding or equivalent rights to any of the foregoing (collectively, “Other IP Rights”); and (ix) all
translations, adoptions, derivations, and combinations thereof, including
goodwill associated with any of the foregoing. 
“Intellectual Property Rights”
expressly excludes any and all rights anywhere in the world other than within
the NAFTA Territories arising out of or associated with any Patents (including
the right to file PCT and/or national patent applications outside the NAFTA
Territories based on any patents or patent applications filed within the NAFTA
Territories, subject to Catalytica’s rights pursuant to Section 3.0 of
this agreement), Trade Secrets, Copyrights, Industrial Designs, Trademarks,
Software, Web Rights, Other IP Rights or any translations, adoptions, derivations,
and combinations thereof, including goodwill associated with any of the
foregoing.

 

As used herein, “Employees” means any current, former or rehired
employee, consultant, officer, or director of SCR Tech LLC or any of its
subsidiaries.

 

As used herein, the “Business” means the business operated by the SCR
Tech LLC up to the execution of the MIAPA providing for (i) the cleaning,
treatment and regeneration of selective catalytic reduction (“SCR”) catalyst, (ii) SCR
management and SCR consulting services, (iii) research and development of
SCR catalyst treatment, management, cleaning and regeneration, and (iv) all
SCR activities related thereto in the NAFTA Territories.  

 

2.0                               Confidentiality

 

ENVICA agrees that non-public information regarding the Acquired Assets
(other than Transferred Technology) and non-public information relating to the
Business obtained in any investigation pursuant to Section 11.1 of the
MIAPA shall be deemed to be the Confidential Information of Catalytica and
shall not be used or disclosed by ENVICA. 
Except as (i) may be required by law or any listing agreement with
a national securities exchange or (ii) disclosed by Catalytica or its
affiliates, (a) ENVICA  shall not
disclose the existence of the MIAPA or this Confidentiality Agreement or any
terms hereof or thereof, except under an obligation of confidentiality to
accountants, attorneys, investors, lenders, acquirors and advisors in
connection with financings, mergers or acquisitions of ENVICA, EnBW Energy
Solutions GmbH, SCR Tech GmbH or E&EC Environmental Consultants GmbH or to
attorneys solely for the purpose of evaluating or litigating disputes arising
hereunder, and (b) no party shall issue any statement or communication to
any third party (other than their respective agents) regarding the subject
matter of the MIAPA or the transactions contemplated by the MIAPA, including,
if applicable, the termination of MIAPA and the reasons therefor, without the
consent of the other party, which consent shall not be unreasonably withheld.

 

In addition, ENVICA hereby further agrees to maintain and preserve the
confidential information pertaining to the Acquired Assets, including
reasonable efforts to preserve confidentiality of information disclosed to
third parties under confidentiality provisions in agreements retained by ENVICA.

 

2

 

ENVICA hereby represents and warrants that it has not violated the
terms of this Confidentiality Agreement at any time from and after February 20,
2004.

 

3.0                               Use
Of Confidentiality Information

 

Subject to the Territorial Restriction Agreement between Catalytica and
ENVICA, but otherwise notwithstanding anything to the contrary contained herein
or in any other agreement of ENVICA, including any agreement between ENVICA and
any employee of ENVICA, ENVICA hereby consents to Catalytica’s unrestricted,
sublicensable and transferable right to use, disclose and exploit in any manner
and without restriction any and all confidential information (i) disclosed
by or embodied in any of the Acquired Assets (other than Transferred
Technology) or (ii) which is disclosed to, or learned by, Catalytica in
connection with the transactions contemplated by the MIAPA or to or by the
Employees to the extent consisting of business or technical information
pertaining to the Business retained in non-tangible form by the Employees.  To the extent that any Employee may be bound
by any agreement or policy of ENVICA that would in any way limit or restrict
the rights of Catalytica to confidential information under this Section 3.0,
ENVICA shall not assert, enforce or otherwise exercise its rights under such
agreement or policy against any Employee or Catalytica.  In addition, ENVICA hereby further agrees to
maintain and preserve the confidential information pertaining to the Acquired
Assets, including reasonable efforts to preserve confidentiality of information
disclosed to third parties under confidentiality provisions in agreements
retained by ENVICA.

 

4.0                               Terms

 

The obligations of ENVICA regarding Confidential Information set forth
in paragraph 2.0 shall continue in perpetuity.

 

5.0                               Miscellaneous

 

5.1                                 No
party may assign or otherwise transfer this Agreement without the prior written
consent of the other party.  Subject to
the foregoing, this Agreement shall bind and inure to the benefit of the
parties hereto and their successors and assigns.

 

5.2                                 This
Agreement shall be governed by the laws of the State of Delaware, regardless of
the law that might otherwise govern under applicable principles of conflicts of
laws. 

 

5.3                                 Each
party to this Agreement irrevocably consents to the exclusive jurisdiction and
venue of any court within the State of New York, in connection with any matter
based upon or arising out of this Agreement or the matters contemplated herein,
agrees that process may be served in any manner authorized by the laws of the
State of Delaware for such persons and waives and covenants not to assert or
plead any objection which a party might otherwise have to such jurisdiction,
venue and

 

3

 

such process.

 

5.4                                 Any
determination of invalidity, illegality, or unenforceability of any provision
of this Agreement, as determined by a court of competent jurisdiction, shall
not affect the validity, legality, or enforceability of any other provision.

 

5.5                                 Each
party understands and agrees that this Agreement shall not be changed or
amended in any respect, except by a writing executed by all of the parties
hereto or their authorized representatives.

 

5.6                                 This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, it being understood that all parties
need not sign the same counterpart.  This
Agreement may be executed in whole or in part by facsimile signatures any of
which shall be deemed to be an original signature.

 

WHEREFORE, the undersigned, on the dates set forth below, subscribe
their hands to this Confidentiality Agreement, acknowledge their assent to the
terms and conditions set forth herein, and agree to the foregoing.

 

	
  DATE:

  	
  December 16, 2005

  	
  ENVICA Kat GmbH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  s/Frank Ebinger

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
  December 15, 2005

  	
  Catalytica Energy Systems, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  s/Rob Zack

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President, CEO and CFO

  	
   

  
								

 

4

 

EXHIBIT C

 

CONFIDENTIALITY AGREEMENT BETWEEN CATALYTICA ENERGY

SYSTEMS, INC. AND ENBW ENERGY SOLUTIONS GMBH

 

This Confidentiality Agreement (this “Agreement”) is made and entered
into as of December 9, 2005 (the “Effective Date”) between Catalytica
Energy Systems, Inc. (“Catalytica”) and EnBW Energy Solutions GmbH (“EnBW”)
and 

 

1.0                               Purpose

 

The parties wish to set forth their agreement regarding EnBW’s
continuing obligation to protect confidential information as set forth in the January 21,
2004 Membership Interests and Asset Purchase Agreement (MIAPA), and Catalytica’s
right to use such information.  

As used herein, “Acquired Assets” refers to the assets Catalytica
obtained through the MIAPA, as set forth in and pursuant to Schedules 2.1(b) and
11.15 of that agreement, including
the assets obtained from EnBW.  

 

As used herein, “Transferred Technology” refers to all technology –
that is, all tangible embodiments of Intellectual Property Rights, including
technology, technical information, business information and software, systems,
files, records, databases, drawings, artwork, designs, displays, audio-visual
works, devices, hardware, apparatuses, documentation, manuals, specifications,
flow charts, web pages, customer lists, supplier lists, equipment lists,
electronic and other data, and other tangible embodiments of, or materials
describing or disclosing, technical or business data, concepts, recipes,
formulas, operating procedures, know-how, show-how, techniques, Trade Secrets,
inventions (whether patentable or unpatentable), algorithms, formulae,
processes, routines, databases, works of authorship and the like – listed or
described in Schedules 2.1(b) and 11.15 of
the MIAPA.

 

As used herein, “Intellectual Property Rights” refers to any and all
rights throughout the NAFTA Territories in, arising out of, or associated with
any of the following: (i) all utility models and design and utility
patents and applications therefor (including the right to file national patent
applications in the NAFTA Territories based on any patents or patent
applications filed outside the NAFTA Territories) and all reissues, divisions,
renewals, extensions, provisionals, continuations and continuations-in-part
thereof (collectively, “Patents”);
(ii) all inventions (whether patentable or not), invention disclosures and
improvements, all trade secrets, proprietary information, know how and
technology, including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, pricing and cost information, and
business and marketing plans and proposals (collectively, “Trade Secrets”); (iii) all works
of authorship, copyrights, mask works, copyright and mask work registrations
and applications (collectively, “Copyrights”);
(iv) all industrial designs and any registrations and applications
therefor (collectively, “Industrial
Designs”); (v) all trade names, logos, trademarks and service marks;
trademark and service mark registrations and applications (collectively, “Trademarks”); (vi) all computer
software, databases and data collections (including

 

1

 

knowledge databases, customer lists and customer databases)
(collectively, “Software”); (vii) rights
to Uniform Resource Locators, Web site addresses and domain names
(collectively, “Web Rights”); (viii) any
similar, corresponding or equivalent rights to any of the foregoing
(collectively, “Other IP Rights”);
and (ix) all translations, adoptions, derivations, and combinations
thereof, including goodwill associated with any of the foregoing.  “Intellectual
Property Rights” expressly excludes any and all rights anywhere in the
world other than within the NAFTA Territories arising out of or associated with
any Patents (including the right to file PCT and/or national patent
applications outside the NAFTA Territories based on any patents or patent
applications filed within the NAFTA Territories, subject to Catalytica’s rights
pursuant to Section 3.0 of this agreement), Trade Secrets, Copyrights,
Industrial Designs, Trademarks, Software, Web Rights, Other IP Rights or any
translations, adoptions, derivations, and combinations thereof, including
goodwill associated with any of the foregoing.

 

As used herein, “Employees” means any current, former or rehired
employee, consultant, officer, or director of SCR Tech LLC or any of its
subsidiaries.

 

As used herein, the “Business” means the business operated by the SCR
Tech LLC up to the execution of the MIAPA providing for (i) the cleaning,
treatment and regeneration of selective catalytic reduction (“SCR”) catalyst, (ii) SCR
management and SCR consulting services, (iii) research and development of
SCR catalyst treatment, management, cleaning and regeneration, and (iv) all
SCR activities related thereto in the NAFTA Territories.  

 

2.0                               Confidentiality

 

EnBW agrees that non-public information regarding the Acquired Assets
(other than Transferred Technology) and non-public information relating to the
Business obtained in any investigation pursuant to Section 11.1 of the
MIAPA shall be deemed to be the Confidential Information of Catalytica and
shall not be used or disclosed by EnBW. 
Except as (i) may be required by law or any listing agreement with
a national securities exchange or (ii) disclosed by Catalytica or its
affiliates, (a) EnBW  shall not
disclose the existence of the MIAPA or this Confidentiality Agreement or any
terms hereof or thereof, except under an obligation of confidentiality to
accountants, attorneys, investors, lenders, acquirors and advisors in
connection with financings, mergers or acquisitions of EnBW, Envica Kat GmbH,
SCR Tech GmbH or E&EC Environmental Consultants GmbH or to attorneys solely
for the purpose of evaluating or litigating disputes arising hereunder, and (b) no
party shall issue any statement or communication to any third party (other than
their respective agents) regarding the subject matter of the MIAPA or the
transactions contemplated by the MIAPA, including, if applicable, the
termination of MIAPA and the reasons therefor, without the consent of the other
party, which consent shall not be unreasonably withheld.

 

In addition, EnBW hereby further agrees to maintain and preserve the
confidential information pertaining to the Acquired Assets, including
reasonable efforts to preserve confidentiality of information disclosed to
third parties under confidentiality provisions in agreements retained by EnBW.

 

2

 

EnBW hereby represents and warrants that it has not violated the terms
of this Confidentiality Agreement at any time from and after February 20,
2004.

 

3.0                               Use Of
Confidential Information

 

Notwithstanding anything to the contrary contained herein or in any
other agreement of EnBW, including any agreement between EnBW and any
employee of EnBW, EnBW hereby consents to Catalytica’s unrestricted,
sublicensable and transferable right to use, disclose and exploit in any manner
and without restriction any and all confidential information (i) disclosed
by or embodied in any of the Acquired Assets (other than Transferred
Technology) or (ii) which is disclosed to, or learned by, Catalytica in
connection with the transactions contemplated by the MIAPA or to or by the
Employees to the extent consisting of business or technical information
pertaining to the Business retained in non-tangible form by the Employees.  To the extent that any Employee may be bound
by any agreement or policy of EnBW that would in any way limit or restrict the
rights of Catalytica to confidential information under this Section 3.0,
EnBW shall not assert, enforce or otherwise exercise its rights under such
agreement or policy against any Employee or Catalytica.  In addition, EnBW hereby further agrees to
maintain and preserve the confidential information pertaining to the Acquired
Assets, including reasonable efforts to preserve confidentiality of information
disclosed to third parties under confidentiality provisions in agreements
retained by EnBW.

 

4.0                               Term

 

The obligations of EnBW regarding Confidential Information set forth in
paragraph 2.0 shall continue in perpetuity.

 

5.0                               Miscellaneous

 

5.1                                 No
party may assign or otherwise transfer this Agreement without the prior
written consent of the other party. 
Subject to the foregoing, this Agreement shall bind and inure to the
benefit of the parties hereto and their successors and assigns.

 

5.2                                 This
Agreement shall be governed by the laws of the State of Delaware, regardless of
the law that might otherwise govern under applicable principles of conflicts of
laws.

 

5.3                                 Each
party to this Agreement irrevocably consents to the exclusive jurisdiction and
venue of any court within the State of New York, in connection with any matter
based upon or arising out of this Agreement or the matters contemplated herein,
agrees that process may be served in any manner authorized by the laws of the
State of Delaware for such persons and waives and covenants not to assert or
plead any objection which a party might otherwise have to such jurisdiction,
venue and such process.

 

3

 

5.4                                 Any
determination of invalidity, illegality, or unenforceability of any provision
of this Agreement, as determined by a court of competent jurisdiction, shall
not affect the validity, legality, or enforceability of any other provision.

 

5.5                                 Each
party understands and agrees that this Agreement shall not be changed or
amended in any respect, except by a writing executed by all of the parties
hereto or their authorized representatives.

 

5.6                                 This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, it being understood that all parties
need not sign the same counterpart.  This
Agreement may be executed in whole or in part by facsimile signatures any of
which shall be deemed to be an original signature.

 

WHEREFORE, the undersigned, on the dates set forth below, subscribe
their hands to this Confidentiality Agreement, acknowledge their assent to the
terms and conditions set forth herein, and agree to the foregoing.

 

	
  DATE: December 16, 2005

  	
  EnBW Energy Solutions GmbH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/Werner Goetz

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  
	
  DATE: December 15, 2005

  	
  Catalytica Energy Systems, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/Rob Zack

  	
   

  
	
   

  	
  Title:

  	
  President, CEO and CFO

  	
   

  
							

 

4

 

EXHIBIT D

 

CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENT AMONG SCR-TECH LLC, HANS-ULRICH
HARTENSTEIN AND BRIGITTE HARTENSTEIN

 

This Confidentiality and Invention Assignment Agreement (this “Agreement”)
is made and entered into as of December 9, 2005 (the “Effective Date”)
among SCR-Tech LLC (“SCR-Tech”), Hans-Ulrich Hartenstein and Brigitte
Hartenstein.  Hans-Ulrich Hartenstein and
Brigitte Hartenstein herein are collectively referred to as the “Hartensteins”.

 

1.0                               Purpose

 

The
parties wish to set forth their agreement regarding the Hartensteins’ treatment
of confidential information obtained, and inventions conceived, during their
employment with SCR-Tech.

 

2.0                               Non-Disclosure

 

The Hartensteins agree, now and hereafter, to hold in strictest
confidence, and not to use or to disclose to other persons or entities without
the written consent of SCR-Tech, any confidential information of SCR-Tech.  The Hartensteins understand that “Confidential
Information” means any SCR-Tech proprietary
information, technical data, trade secrets or know-how, including but not
limited to test results and reports, software, developments, inventions,
processes, formulas (including but not limited to any recipes, formulae, and
chemical lists related to SCR-Tech’s SCR catalyst cleaning, regeneration or
rejuvenation processes that were either developed by SCR-Tech or made available
to SCR-Tech by EnBW Energy Solutions GmbH and/or ENVICA Kat, GmbH), technology,
designs, drawings, engineering, hardware configuration information, financial
results and projections.  The
Hartensteins further understand that Confidential Information includes all
non-public information regarding any interests or assets transferred by ENVICA
GmbH, ENVICA Kat GmbH, E&EC, Energy & Environment Consultants
GmbH, EnBW Energy Solutions GmbH, and SCR-Tech GmbH to SCR-Tech, LLC, CESI-SCR, Inc.,
and CESI-Tech Technologies, Inc. as well as any non-public information
obtained during the due diligence process performed by CESI as part of the
transaction that is the subject of this resolution.  The Hartensteins further understand that
Confidential Information does not include any of the foregoing items:

 

(a)                                  which
have become generally known publicly or otherwise available through no wrongful
act of the Hartensteins or of others who were under confidentiality obligations
as to the item or items involved.

 

(b)                                 which
have been known by the Hartensteins prior to its disclosure by SCR-Tech.

 

(c )                               which
have been or are subsequently disclosed to the Hartensteins by a third party
who did not acquire such information under an obligation of confidentiality
from or through SCR-Tech.

 

1

 

(d)                                 which
the Hartensteins independently developed without the use of Confidential
Information as demonstrated by written evidence of independent development.

 

The Hartensteins agree that they shall take reasonable measures to
protect the secrecy of and avoid disclosure of all such Confidential
Information.  The Hartensteins hereby
represent and warrant that they have not, since January 21, 2004, engaged
in any act(s) that would have constituted a violation of the terms of this
Confidentiality and Invention Assignment Agreement had it been in effect from
such time through the present.

 

3.0                               Acknowledgement Of Return Of Materials

 

The
Hartensteins herein acknowledge that they have conducted a complete search for
and turned over any information that was the property of SCR-Tech at the time
of the termination of their employment with SCR-Tech.

 

4.0                               Acknowledgement Of Assignment Of Inventions

 

The Hartensteins acknowledge that they previously assigned to SCR-Tech,
all their right, title, and interest in the one invention that was developed
during their employment by SCR-Tech, generally known as the “Process for
decoating washcoat catalyst substrate” (the “Invention”) and that no other
inventions were developed during their tenure.

 

5.0                               Acknowledgement
Of Patent And Copyright Registration Cooperation Obligations

 

The Hartensteins acknowledge that they will agree to assist SCR-Tech or
its designee, at SCR-Tech’s expense, in every proper way to secure SCR-Tech’s
rights in the Invention  described
hereinabove, and any copyrights, patents, mask work rights or other
intellectual property rights in the United States, that SCR-Tech shall deem
necessary. The Hartensteins further agree that they will execute or cause to be
executed, when it is in their power to do so, any such instrument or papers to
effectuate SCR-Tech’s rights in the Invention. 
If SCR-Tech is unable because of one or both of the Hartensteins’ mental
or physical incapacity to secure their signature(s) to apply for or to pursue
any application for any United States patents or copyright registrations
covering the Invention assigned to SCR-Tech the Hartensteins then hereby
irrevocably designate and appoint SCR-Tech and its duly authorized officers and
agents as their agent and attorney in fact, to act for and on the Hartensteins’
behalf and stead to execute and file any such applications and to do all other
lawfully permitted acts to further the prosecution and issuance of letters
patent or copyright registrations thereon with the same legal force and effect
as if executed by the Hartensteins.

 

2

 

6.0                               Term

 

The
obligations of the Hartensteins regarding non-disclosure set forth in paragraph
2.0 shall continue in perpetuity. The obligation of the Hartensteins outlined
in paragraph 5.0 will expire one (1) year from the date this document is
executed by the Hartensteins.

 

7.0                               Miscellaneous

 

7.1                                 No party may assign or otherwise transfer this Agreement without the prior
written consent of the other party; provided however, SCR-Tech may assign or
transfer this Agreement in connection with a merger, acquisition, sale of
substantially all its assets or other such corporate reorganization.  Subject to the foregoing, this Agreement
shall bind and inure to the benefit of the parties hereto and their successors
and assigns.

 

7.2                                 This Agreement shall be governed by the laws of the
State of North Carolina, regardless of the law that might otherwise govern
under applicable principles of conflicts of laws.

 

7.3                                 Each party to this Agreement irrevocably consents to
the exclusive jurisdiction and venue of any court within the State of North
Carolina, Mecklenburg County, in connection with any matter based upon or
arising out of this Agreement or the matters contemplated herein.  Each party agrees that process may be served
in any manner authorized by the laws of the State of North Carolina for such
persons and waives and covenants not to assert or plead any objection which a
party might otherwise have to such jurisdiction, venue and such process.

 

7.4                                 Any determination of invalidity, illegality, or
unenforceability of any provision of this Agreement, as determined by a court
of competent jurisdiction, shall not affect the validity, legality, or
enforceability of any other provision.

 

7.5                                 Each party understands and agrees that this Agreement
shall not be changed or amended in any respect, except by a writing executed by
all of the parties hereto or their authorized representatives.

 

7.6                                 This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.  This Agreement may be executed in whole or in
part by facsimile signatures any of which shall be deemed to be an original
signature.

 

3

 

WHEREFORE, the undersigned, on the dates set forth below, subscribe
their hands to this Confidentiality and Invention Assignment Agreement,
acknowledge their assent to the terms and conditions set forth herein, and
agree to the foregoing.

 

	
  DATE: December 15, 2005

  	
  SCR-TECH, LLC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  s/William J. McMahon

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE: December 15, 2005

  	
  By:

  	
  s/Hans-Ulrich Hartenstein

  	
   

  
	
   

  	
   

  	
     HANS-ULRICH HARTENSTEIN

  
	
   

  	
   

  
	
   

  	
   

  
	
  DATE: December 15, 2005

  	
  By:

  	
  s/Brigitte Hartenstein

  	
   

  
	
   

  	
   

  	
  BRIGITTE HARTENSTEIN

  
							

 

4

 

EXHIBIT E

 

WIRING INSTRUCTIONS

 

 

Wire Transfer Instructions from EnBW Energy Solutions GmbH

 

	
  Beneficiary:

  	
   

  	
  EnBW Energy Solutions GmbH,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Kriegsbergstr. 11, 70174
  Stuttgart/ Germany

  
	
   

  	
   

  	
   

  
	
  Bank:

  	
   

  	
  Landesbank Stuttgart,

  
	
   

  	
   

  	
   

  
	
  Phone:

  
	
  IBAN (International Bank Account Number):

  	
   

  	
  DE 97 6005 0101 7402 0523 05

  
	
  BIC (International Bank Code ):

  	
   

  	
  SOLA DE ST

  
	
  Bank of Correspondence in the USA:

  
	
  Other Wire Information:

  	
   

  	
  a)  effective

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b)  Purchase Price CESI

  
							

 

 

Wire Transfer Instructions from SCR-Tech GmbH

 

	
  Beneficiary:

  	
   

  	
  SCR-Tech GmbH,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Kriegsbergstr. 11, 70174
  Stuttgart/ Germany

  
	
   

  	
   

  	
   

  
	
  Bank:

  	
   

  	
  Volksbank Oberberg eG,
  Bahnhofstr.3, 51674 Wiehl

  
	
   

  	
   

  	
   

  
	
  Phone:

  	
   

  	
  +49 2262 984-132

  	
  (Mr. Birkholz)

  
	
  IBAN (International Bank Account Number)     :

  	
   

  	
  DE 87 384 621 35 2133 007 167

  
	
  BIC (International Bank Code for Volksbank):

  	
   

  	
  GENODED1WIL

  
	
  Via
  SWIFT-Code (International Code for WGZ Bank, which will transfer the money to
  Volksbank):

  	
   

  	
  GENODEDD (WGZ Bank Dusseldorf)

  
	
  Bank of
  Correspondence in the USA:

  	
   

  	
  Citibank in New York

  
	
  Other Wire
  Information:

  	
   

  	
  a)  SWIFT URGENT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c)  effective

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d)  Purchase Price CESI

  
								

 

1Exhibit 10.1

 

 

FIRST AMENDED
AND RESTATED

 

AGREEMENT OF
LIMITED PARTNERSHIP

 

OF

 

REPUBLIC
PROPERTY LIMITED PARTNERSHIP

 

 

Dated as of December
20, 2005

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I
  DEFINED TERMS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II
  ORGANIZATIONAL MATTERS

  	
  13

  
	
  Section 2.1

  	
  Organization

  	
  13

  
	
  Section 2.2

  	
  Name

  	
  14

  
	
  Section 2.3

  	
  Registered
  Office And Agent; Principal Office

  	
  14

  
	
  Section 2.4

  	
  Term

  	
  15

  
	
   

  	
   

  
	
  ARTICLE III
  PURPOSE

  	
  15

  
	
  Section 3.1

  	
  Purpose And
  Business

  	
  15

  
	
  Section 3.2

  	
  Powers

  	
  15

  
	
   

  	
   

  
	
  ARTICLE IV
  CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS

  	
  16

  
	
  Section 4.1

  	
  Capital
  Contributions Of The Partners

  	
  16

  
	
  Section 4.2

  	
  Issuances Of
  Partnership Interests

  	
  16

  
	
  Section 4.3

  	
  No
  Preemptive Rights

  	
  17

  
	
  Section 4.4

  	
  Other
  Contribution Provisions

  	
  17

  
	
  Section 4.5

  	
  No Interest
  On Capital

  	
  18

  
	
   

  	
   

  
	
  ARTICLE V
  DISTRIBUTIONS

  	
  18

  
	
  Section 5.1

  	
  Requirement
  And Characterization Of Distributions

  	
  18

  
	
  Section 5.2

  	
  Amounts
  Withheld

  	
  21

  
	
  Section 5.3

  	
  Distributions
  Upon Liquidation

  	
  21

  
	
  Section 5.4

  	
  Revisions To
  Reflect Issuance Of Partnership Interests

  	
  21

  
	
   

  
	
  ARTICLE VI
  ALLOCATIONS

  	
  21

  
	
  Section 6.1

  	
  Allocations
  For Capital Account Purposes

  	
  21

  
	
  Section 6.2

  	
  Revisions To
  Allocations To Reflect Issuance Of Partnership Interests

  	
  24

  
	
   

  
	
  ARTICLE VII
  MANAGEMENT AND OPERATIONS OF BUSINESS

  	
  24

  
	
  Section 7.1

  	
  Management

  	
  24

  
	
  Section 7.2

  	
  Certificate
  of Limited Partnership

  	
  28

  
	
  Section 7.3

  	
  Title to
  Partnership Assets

  	
  29

  
	
  Section 7.4

  	
  Reimbursement
  of the General Partner

  	
  29

  
	
  Section 7.5

  	
  Outside
  Activities of the General Partner; Relationship of Shares to Partnership
  Units; Funding Debt

  	
  32

  
	
  Section 7.6

  	
  Transactions
  With Affiliates

  	
  34

  
	
  Section 7.7

  	
  Indemnification

  	
  34

  
	
  Section 7.8

  	
  Liability of
  the General Partner

  	
  36

  
	
  Section 7.9

  	
  Other
  Matters Concerning the General Partner

  	
  37

  
	
  Section 7.10

  	
  Reliance By
  Third Parties

  	
  38

  
	
  Section 7.11

  	
  Restrictions
  on General Partner’s Authority

  	
  39

  
	
  Section 7.12

  	
  Loans by
  Third Parties

  	
  39

  

 

 

	
  ARTICLE VIII
  RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

  	
  39

  
	
  Section 8.1

  	
  Limitation
  of Liability

  	
  39

  
	
  Section 8.2

  	
  Management
  of Business

  	
  39

  
	
  Section 8.3

  	
  Outside
  Activities of Limited Partners

  	
  40

  
	
  Section 8.4

  	
  Return of
  Capital

  	
  40

  
	
  Section 8.5

  	
  Rights of
  Limited Partners Relating to the Partnership

  	
  40

  
	
  Section 8.6

  	
  Redemption
  Right

  	
  42

  
	
   

  	
   

  
	
  ARTICLE IX
  BOOKS, RECORDS, ACCOUNTING AND REPORTS

  	
  45

  
	
  Section 9.1

  	
  Records and
  Accounting

  	
  45

  
	
  Section 9.2

  	
  Fiscal Year

  	
  45

  
	
  Section 9.3

  	
  Reports

  	
  45

  
	
   

  	
   

  
	
  ARTICLE X
  TAX MATTERS

  	
  46

  
	
  Section 10.1

  	
  Preparation
  of Tax Returns

  	
  46

  
	
  Section 10.2

  	
  Tax
  Elections

  	
  46

  
	
  Section 10.3

  	
  Tax Matters
  Partner

  	
  46

  
	
  Section 10.4

  	
  Organizational
  Expenses

  	
  48

  
	
  Section 10.5

  	
  Withholding

  	
  48

  
	
   

  	
   

  
	
  ARTICLE XI
  TRANSFERS AND WITHDRAWALS

  	
  49

  
	
  Section 11.1

  	
  Transfer

  	
  49

  
	
  Section 11.2

  	
  Transfers of
  Partnership Interests of General Partner

  	
  49

  
	
  Section 11.3

  	
  Limited
  Partners’ Rights to Transfer

  	
  50

  
	
  Section 11.4

  	
  Substituted
  Limited Partners

  	
  52

  
	
  Section 11.5

  	
  Assignees

  	
  53

  
	
  Section 11.6

  	
  General
  Provisions

  	
  53

  
	
   

  	
   

  
	
  ARTICLE XII
  ADMISSION OF PARTNERS

  	
  55

  
	
  Section 12.1

  	
  Admission of
  a Successor General Partner

  	
  55

  
	
  Section 12.2

  	
  Admission of
  Additional Limited Partners

  	
  55

  
	
  Section 12.3

  	
  Amendment of
  Agreement and Certificate of Limited Partnership

  	
  56

  
	
   

  	
   

  
	
  ARTICLE XIII
  DISSOLUTION AND LIQUIDATION

  	
  56

  
	
  Section 13.1

  	
  Dissolution

  	
  56

  
	
  Section 13.2

  	
  Winding Up

  	
  57

  
	
  Section 13.3

  	
  Compliance
  With Timing Requirements of Regulations; Restoration of Deficit Capital
  Accounts

  	
  58

  
	
  Section 13.4

  	
  Rights of
  Limited Partners

  	
  60

  
	
  Section 13.5

  	
  Notice of
  Dissolution

  	
  60

  
	
  Section 13.6

  	
  Cancellation
  of Certificate of Limited Partnership

  	
  60

  
	
  Section 13.7

  	
  Reasonable
  Time for Winding Up

  	
  61

  
	
  Section 13.8

  	
  Waiver of
  Partition

  	
  61

  
	
  Section 13.9

  	
  Liability Of
  Liquidator

  	
  61

  

 

ii

 

	
  ARTICLE XIV AMENDMENT OF PARTNERSHIP
  AGREEMENT; MEETINGS

  	
  61

  
	
  Section 14.1

  	
  Amendments

  	
  61

  
	
  Section 14.2

  	
  Meetings of the Partners

  	
  63

  
	
   

  	
   

  
	
  ARTICLE XV GENERAL PROVISIONS

  	
  64

  
	
  Section 15.1

  	
  Addresses and Notice

  	
  64

  
	
  Section 15.2

  	
  Titles and Captions

  	
  64

  
	
  Section 15.3

  	
  Pronouns And Plurals

  	
  65

  
	
  Section 15.4

  	
  Further Action

  	
  65

  
	
  Section 15.5

  	
  Binding Effect

  	
  65

  
	
  Section 15.6

  	
  Creditors

  	
  65

  
	
  Section 15.7

  	
  Waiver

  	
  65

  
	
  Section 15.8

  	
  Counterparts

  	
  65

  
	
  Section 15.9

  	
  Applicable Law

  	
  65

  
	
  Section 15.10

  	
  Invalidity Of Provisions

  	
  66

  
	
  Section 15.11

  	
  Power Of Attorney

  	
  66

  
	
  Section 15.12

  	
  Entire Agreement

  	
  67

  
	
  Section 15.13

  	
  No Rights As Shareholders

  	
  67

  
	
  Section 15.14

  	
  Limitation To Preserve REIT Status

  	
  67

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  EXHIBIT A

  	
  FORM OF PARTNER REGISTRY

  	
   

  
	
  EXHIBIT B

  	
  CAPITAL ACCOUNT MAINTENANCE

  	
   

  
	
  EXHIBIT C

  	
  SPECIAL ALLOCATION RULES

  	
   

  
	
  EXHIBIT D

  	
  NOTICE OF REDEMPTION

  	
   

  
	
  EXHIBIT E

  	
  FORM OF DRO REGISTRY

  	
   

  
	
  EXHIBIT A

  	
  PARTNER REGISTRY

  	
   

  
				

 

iii

 

FIRST
AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

REPUBLIC PROPERTY LIMITED PARTNERSHIP

 

THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated
as of December 20, 2005, is entered into by and among Republic Property Trust ,
a Maryland real estate investment trust, as the General Partner, and the
Persons whose names are set forth on the Partner Registry (as hereinafter
defined) as Limited Partners, together with any other Persons who become
Partners in Republic Property Limited
Partnership (the “Partnership”) as provided herein.

 

WHEREAS, the partners of the Partnership entered into that certain
Agreement of Limited Partnership of the Partnership dated as of July 19, 2005
(the “Original Agreement”).

 

NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
to amend and restate the Prior Agreement in its entirety and agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:

 

ARTICLE I

DEFINED TERMS

 

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

 

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

 

“Additional Limited Partner” means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.2 hereof and who is shown as a
Limited Partner on the Partnership Registry.

 

“Adjusted Capital Account” means the Capital Account maintained for
each Partner as of the end of each Fiscal Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and
(ii) decreased by the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6). The foregoing
definition of Adjusted Capital Account is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.

 

“Adjusted Capital Account Deficit” means, with respect to any Partner,
the deficit balance, if any, in such Partner’s Adjusted Capital Account as of
the end of the relevant Fiscal Year.

 

 

“Adjusted Property” means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B.

 

“Affiliate” means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or
more of the outstanding voting interests of such Person, (iii) any Person
of which such Person owns or controls ten percent (10%) or more of the voting
interests or (iv) any officer, director, general partner or trustee of
such Person or any Person referred to in clauses (i), (ii), and (iii) above.
For purposes of this definition, “control,” when used with respect to any
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.

 

“Aggregate DRO Amount” means the aggregate balances of the DRO Amounts,
if any, of all DRO Partners, if any, as determined on the date in question.

 

“Agreed Value” means (i) in the case of any Contributed Property,
the Section 704(c) Value of such property as of the time of its
contribution to the Partnership, reduced by any liabilities either assumed by
the Partnership upon such contribution or to which such property is subject
when contributed; and (ii) in the case of any property distributed to a
Partner by the Partnership, the Partnership’s Carrying Value of such property
at the time such property is distributed, reduced by any indebtedness either
assumed by such Partner upon such distribution or to which such property is
subject at the time of distribution in the case of either (i) or (ii) as
determined under Section 752 of the Code and the regulations thereunder.

 

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

 

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

 

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

 

(a)           all
cash revenues and funds received by the Partnership from whatever source
(excluding the proceeds of any Capital Contribution, unless otherwise
determined by the General Partner in its sole and absolute discretion) plus the
amount of any reduction (including, without limitation, a reduction resulting
because the General Partner determines such amounts are no longer necessary) in
reserves of the Partnership, which reserves are referred to in clause (b)(iv) below;

 

(b)           less
the sum of the following (except to the extent made with the proceeds of any
Capital Contribution):

 

(i)            all
interest, principal and other debt-related payments made during such period by
the Partnership,

 

2

 

(ii)           all
cash expenditures (including capital expenditures) made by the Partnership
during such period,

 

(iii)          investments
in any entity (including loans made thereto) to the extent that such
investments are permitted under this Agreement and are not otherwise described
in clauses (b)(i) or (ii), and

 

(iv)          the
amount of any increase in reserves established during such period which the
General Partner determines is necessary or appropriate in its sole and absolute
discretion (including any reserves that may be necessary or appropriate to
account for distributions required with respect to Partnership Interests having
a preference over other classes of Partnership Interests).

 

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

 

“Book-Tax Disparities” means, with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property
and the adjusted basis thereof for federal income tax purposes as of such date.
A Partner’s share of the Partnership’s Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner’s Capital Account balance as maintained pursuant to Exhibit B
and the hypothetical balance of such Partner’s Capital Account computed as if
it had been maintained strictly in accordance with federal income tax
accounting principles.

 

“Business Day” means any day except a Saturday, Sunday or other day on
which commercial banks in Indianapolis, Indiana are authorized or required by
law to close.

 

“Capital Account” means the Capital Account maintained for a Partner
pursuant to Exhibit B. The initial Capital Account balance for each
Partner who is a Partner on the date hereof shall be the amount set forth opposite
such Partner’s name on the Partner Registry.

 

“Capital Contribution” means, with respect to any Partner, any cash and
the Agreed Value of Contributed Property which such Partner contributes or is
deemed to contribute to the Partnership.

 

“Carrying Value” means (i) with respect to a Contributed Property
or Adjusted Property, the Section 704(c) Value of such property
reduced (but not below zero) by all Depreciation with respect to such
Contributed Property or Adjusted Property, as the case may be, charged to the
Partners’ Capital Accounts and (ii) with respect to any other Partnership
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall
be adjusted from time to time in accordance with Exhibit B, and to reflect
changes, additions (including capital improvements thereto) or other
adjustments to

 

3

 

the Carrying
Value for dispositions and acquisitions of Partnership properties, as deemed
appropriate by the General Partner.

 

“Cash Amount” means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.

 

“Certificate of Limited Partnership” means the Certificate of Limited
Partnership relating to the Partnership filed in the office of the Delaware
Secretary of State, as amended from time to time in accordance with the terms
hereof and the Act.

 

“Class A” has the meaning set forth in Section 5.1.C.

 

“Class A Share” has the meaning set forth in Section 5.1.C.

 

“Class A Unit” means any Partnership Unit that is not specifically
designated by the General Partner as being of another specified class of
Partnership Units.

 

“Class B” has the meaning set forth in Section 5.1.C.

 

“Class B Share” has the meaning set forth in Section 5.1.C.

 

“Class B Unit” means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.

 

“Code” means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the
Code shall be deemed to include a reference to any corresponding provision of
future law.

 

“Consent” means the consent or approval of a proposed action by a
Partner given in accordance with Article XIV.

 

“Consent of the Outside Limited Partners” means the Consent of Limited
Partners (excluding for this purpose (i) any Limited Partnership Interests
held by the General Partner or the General Partner Entity, (ii) any Person
of which the General Partner or the General Partner Entity directly or
indirectly owns or controls more than fifty percent (50%) of the voting
interests and (iii) any Person directly or indirectly owning or
controlling more than fifty percent (50%) of the outstanding voting interests
of the General Partner or the General Partner Entity) holding Partnership
Interests representing more than fifty percent (50%) of the Percentage Interest
of the Class A Units of all Limited Partners which are not excluded pursuant
to (i), (ii) and (iii) above.

 

“Contributed Property” means each property or other asset contributed
to the Partnership, in such form as may be permitted by the Act, but excluding
cash contributed or deemed contributed to the Partnership. Once the Carrying
Value of a Contributed Property is adjusted pursuant to Exhibit B, such
property shall no longer constitute a Contributed Property for purposes of Exhibit B,
but shall be deemed an Adjusted Property for such purposes.

 

4

 

“Conversion Factor” means 1.0; provided that, if the General Partner
Entity (i) declares or pays a dividend on its outstanding Shares in Shares
or makes a distribution to all holders of its outstanding Shares in Shares, (ii) subdivides
its outstanding Shares or (iii) combines its outstanding Shares into a
smaller number of Shares, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination; and provided
further that if an entity shall cease to be the General Partner Entity (the “Predecessor
Entity”) and another entity shall become the General Partner Entity (the “Successor
Entity”), the Conversion Factor shall be adjusted by multiplying the Conversion
Factor by a fraction, the numerator of which is the Value of one Share of the
Predecessor Entity, determined as of the date when the Successor Entity becomes
the General Partner Entity, and the denominator of which is the Value of one
Share of the Successor Entity, determined as of that same date. (For purposes
of the second proviso in the preceding sentence, if any shareholders of the
Predecessor Entity will receive consideration in connection with the
transaction in which the Successor Entity becomes the General Partner Entity,
the numerator in the fraction described above for determining the adjustment to
the Conversion Factor (that is, the Value of one Share of the Predecessor
Entity) shall be the sum of the greatest amount of cash and the fair market
value (as determined in good faith by the General Partner) of any securities
and other consideration that the holder of one Share in the Predecessor Entity
could have received in such transaction (determined without regard to any
provisions governing fractional shares).) Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of the event
retroactive to the record date, if any, for the event giving rise thereto, it
being intended that (x) adjustments to the Conversion Factor are to be made to
avoid unintended dilution or anti-dilution as a result of transactions in which
Shares are issued, redeemed or exchanged without a corresponding issuance,
redemption or exchange of Partnership Units and (y) if a Specified Redemption
Date shall fall between the record date and the effective date of any event of
the type described above, that the Conversion Factor applicable to such
redemption shall be adjusted to take into account such event.

 

“Convertible Funding Debt” has the meaning set forth in Section 7.5.F.

 

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

 

5

 

“Declaration of Trust” means the Declaration of Trust relating to the
General Partner filed in the State of Maryland, as amended or restated from
time to time.

 

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

 

“Distribution Period” has the meaning set forth in Section 5.1.C.

 

“DRO Amount” means the amount specified in the DRO Registry with
respect to any DRO Partner, as such DRO Registry may be amended from time to
time.

 

“DRO Partner” means a Partner who has agreed in writing to be a DRO
Partner and has agreed and is obligated to make certain contributions, not in
excess of such DRO Partner’s DRO Amount, to the Partnership with respect to any
deficit balance in such Partner’s Capital Account upon the occurrence of
certain events. A DRO Partner who is obligated to make any such contribution
only upon liquidation of the Partnership shall be designated in the DRO
Registry as a Part I DRO Partner and a DRO Partner who is obligated to
make any such contribution to the Partnership either upon liquidation of the
Partnership or upon liquidation of such DRO Partner’s Partnership Interest
shall be designated in the DRO Registry as a Part II DRO Partner.

 

“DRO Registry” means the DRO Registry maintained by the General Partner
in the books and records of the Partnership containing substantially the same
information as would be necessary to complete the Form of DRO Registry
attached hereto as Exhibit E.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fiscal Year” means the fiscal year of the Partnership, which shall be
the calendar year as provided in Section 9.2.

 

“Funding Debt” means any Debt incurred for the purpose of providing
funds to the Partnership by or on behalf of the General Partner Entity (or any
wholly owned subsidiary of either the General Partner or the General Partner
Entity).

 

“General Partner” means Republic Property Trust, a Maryland real estate
investment trust, or its successor or permitted assignee, as general partner of
the Partnership.

 

“General Partner Entity” means the General Partner; provided, however,
that if (i) the common shares of beneficial interest (or other comparable
equity interests) of the General Partner are at any time not Publicly Traded
and (ii) the common shares of beneficial interest (or

 

6

 

other
comparable equity interests) of an entity that owns, directly or indirectly,
fifty percent (50%) or more of the common shares of beneficial interest (or
other comparable equity interests) of the General Partner are Publicly Traded,
the term “General Partner Entity” shall refer to such entity whose common
shares of beneficial interest (or other comparable equity securities) are
Publicly Traded. If both requirements set forth in clauses (i) and (ii) above
are not satisfied, then the term “General Partner Entity” shall mean the
General Partner.

 

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

 

“General Partner Payment” has the meaning set forth in Section 15.14
hereof.

 

“IRS” means the Internal Revenue Service, which administers the
internal revenue laws of the United States.

 

“Immediate Family” means, with respect to any natural Person, such natural
Person’s spouse, parents, descendants, nephews, nieces, brothers, and sisters.

 

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

 

7

 

“Indemnitee” means (i) any Person made a party to a proceeding by
reason of its status as (A) the General Partner, (B) the General
Partner Entity, (C) a Limited Partner, or (D) a trustee, director or
officer of the Partnership, the General Partner or the General Partner Entity
and (ii) such other Persons (including Affiliates of the General Partner
or the General Partner Entity, a Limited Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.

 

“Limited Partner” means any Person named as a Limited Partner in the
Partner Registry or any Substituted Limited Partner or Additional Limited
Partner, in such Person’s capacity as a Limited Partner in the Partnership.

 

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

 

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

 

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

 

“Net Income” means, for any taxable period, the excess, if any, of the
Partnership’s items of income and gain for such taxable period over the
Partnership’s items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance
with Exhibit B. If an item of income, gain, loss or deduction that has
been included in the initial computation of Net Income is subjected to the
special allocation rules in Exhibit C, Net Income or the resulting
Net Loss, whichever the case may be, shall be recomputed without regard to such
item.

 

“Net Loss” means, for any taxable period, the excess, if any, of the
Partnership’s items of loss and deduction for such taxable period over the
Partnership’s items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with Exhibit B.
If an item of income, gain, loss or deduction that has been included in the
initial computation of Net Loss is subjected to the special allocation rules in
Exhibit C, Net Loss or the resulting Net Income, whichever the case may
be, shall be recomputed without regard to such item.

 

“New Securities” means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase Shares, excluding grants under any Share Option Plan, or (ii) any
Debt issued by the General Partner Entity that provides any of the rights
described in clause (i).

 

“Nonrecourse Built-in Gain” means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse

 

8

 

Liability, the
amount of any taxable gain that would be allocated to the Partners pursuant to Section 2.B
of Exhibit C if such properties were disposed of in a taxable transaction
in full satisfaction of such liabilities and for no other consideration.

 

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

 

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

 

“Notice of Redemption” means a Notice of Redemption substantially in
the form of Exhibit D.

 

“Original Agreement” has the meaning set forth in the recitals hereto.

 

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

 

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

 

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

 

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

 

“Partner Registry” means the Partner Registry maintained by the General
Partner in the books and records of the Partnership, which contains
substantially the same information as would be necessary to complete the form
of the Partner Registry attached hereto as Exhibit A.

 

“Partnership” has the meaning set forth in the recitals hereto.

 

“Partnership Interest” means any partnership interest in the
Partnership and includes any and all benefits to which the holder of such a
partnership interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.

 

“Partnership Minimum Gain” has the meaning set forth in Regulations Section 1.704-2(b)(2),
and the amount of Partnership Minimum Gain, as well as any net increase or
decrease in Partnership Minimum Gain, for a Fiscal Year shall be determined in
accordance with the rules of Regulations Section 1.704-2(d).

 

9

 

“Partnership Record Date” means the record date established by the
General Partner either (i) for the distribution of Available Cash pursuant
to Section 5.1 hereof, which record date shall be the same as the record
date established by the General Partner Entity for a distribution to its
shareholders of some or all of its portion of such distribution, or (ii) if
applicable, for determining the Partners entitled to vote on or consent to any
proposed action for which the consent or approval of the Partners is sought
pursuant to Section 14.2 hereof.

 

“Partnership Unit” means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to

Sections 4.1 and 4.2, and includes Class A Units, Class B Units, and
any other classes or series of Partnership Units established after the date
hereof. The number of Partnership Units outstanding and the Percentage
Interests in the Partnership represented by such Partnership Units are set
forth in the Partner Registry.

 

“Percentage Interest” means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding.  For purposes of determining the Percentage
Interest of the Class A Units at any time when there are Class B
Units outstanding, all Class B Units shall be treated as Class A
Units.

 

“Person” means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.

 

“Predecessor Entity” has the meaning set forth in the definition of “Conversion
Factor” herein.

 

“Publicly Traded” means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.

 

“Qualified Assets” means any of the following assets: (i) interests,
rights, options, warrants or convertible or exchangeable securities of the
Partnership; (ii) Debt issued by the Partnership or any Subsidiary thereof
in connection with the incurrence of Funding Debt; (iii) equity interests
in Qualified REIT Subsidiaries and limited liability companies whose assets
consist solely of Qualified Assets; (iv) up to a one percent (1%) equity
interest in any partnership or limited liability company at least ninety-nine
percent (99%) of the equity of which is owned, directly or indirectly, by the
Partnership; (v) cash held for payment of administrative expenses or
pending distribution to security holders of the General Partner Entity or any
wholly owned Subsidiary thereof or pending contribution to the Partnership; and
(vi) other tangible and intangible assets that, taken as a whole, are de
minimis in relation to the net assets of the Partnership and its Subsidiaries.

 

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

 

10

 

“Recapture Income” means any gain recognized by the Partnership
(computed without regard to any adjustment pursuant to Section 734 or Section 743
of the Code) upon the disposition of any property or asset of the Partnership,
which gain is characterized either as ordinary income or as “unrecaptured Section 1250 gain” (as defined in Section 1(h)(6) of
the Code) because it represents the recapture of depreciation deductions
previously taken with respect to such property or asset.

 

“Recourse Liabilities” means the amount of liabilities owed by the
Partnership (other than Nonrecourse Liabilities and liabilities to which
Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-(2)(i) of
the Regulations).

 

“Redeeming Partner” has the meaning set forth in Section 8.6.A.

 

“Redemption Amount” means either the Cash Amount or the Shares Amount,
as determined by the General Partner, in its sole and absolute discretion;
provided that if the Shares are not Publicly Traded at the time a Redeeming
Partner exercises its Redemption Right, the Redemption Amount shall be paid
only in the form of the Cash Amount unless the Redeeming Partner, in its sole
and absolute discretion, consents to payment of the Redemption Amount in the
form of the Shares Amount. A Redeeming Partner shall have no right, without the
General Partner’s consent, in its sole and absolute discretion, to receive the
Redemption Amount in the form of the Shares Amount.

 

“Redemption Right” has the meaning set forth in Section 8.6.A.

 

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

 

“REIT” means an entity that qualifies as a real estate investment trust
under the Code.

 

“REIT Requirements” has the meaning set forth in Section 5.1.A.

 

“Residual Gain” or “Residual Loss” means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to
eliminate Book-Tax Disparities.

 

“Safe Harbor” has the meaning set forth in Section 11.6.F.

 

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

 

“Section 704(c) Value” of any Contributed Property means the
fair market value of such property at the time of contribution as determined by
the General Partner using such reasonable method of valuation as it may adopt;
provided, however, subject to Exhibit B, the General Partner shall, in its
sole and absolute discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate of the Section 704(c) Value of
Contributed Properties in a

 

11

 

single or
integrated transaction among each separate property on a basis proportional to
its fair market values.

 

“Share” means a share of beneficial interest (or other comparable
equity interest) of the General Partner Entity. Shares may be issued in one or
more classes or series in accordance with the terms of the Declaration of Trust
(or, if the General Partner is not the General Partner Entity, the
organizational documents of the General Partner Entity). If there is more than
one class or series of Shares, the term “Shares” shall, as the context
requires, be deemed to refer to the class or series of Shares that corresponds
to the class or series of Partnership Interests for which the reference to
Shares is made. When used with reference to Class A Units, the term “Shares”
refers to common shares of beneficial interest (or other comparable equity
interest) of the General Partner Entity.

 

“Share Option Plan” means any equity incentive plan of the General
Partner, the General Partner Entity, the Partnership and/or any Affiliate of
the Partnership.

 

“Shares Amount” means a number of Shares equal to the product of the
number of Partnership Units offered for redemption by a Redeeming Partner times
the Conversion Factor; provided that, if the General Partner Entity issues to
holders of Shares securities, rights, options, warrants or convertible or exchangeable
securities entitling such holders to subscribe for or purchase Shares or any
other securities or property (collectively, the “rights”), then the Shares
Amount shall also include such rights that a holder of that number of Shares
would be entitled to receive unless the Partnership issues corresponding rights
to holders of Partnership Units.

 

“Specified Redemption Date” means the tenth Business Day after receipt
by the General Partner of a Notice of Redemption or such shorter period as the
General Partner, in its sole and absolute discretion may determine; provided
that, if the Shares are not Publicly Traded, the Specified Redemption Date
means the thirtieth Business Day after receipt by the General Partner of a
Notice of Redemption.

 

“Subsidiary” means, with respect to any Person, any corporation,
limited liability company, trust, partnership or joint venture, or other entity
of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.

 

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

 

“Successor Entity” has the meaning set forth in the definition of “Conversion
Factor” herein.

 

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

 

“Unrealized Gain” attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the
fair market value of such property (as determined

 

12

 

under Exhibit B)
as of such date, over (ii) the Carrying Value of such property (prior to
any adjustment to be made pursuant to Exhibit B) as of such date.

 

“Unrealized Loss” attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B) as of such date, over (ii) the fair market value of such
property (as determined under Exhibit B) as of such date.

 

“Valuation Date” means the date of receipt by the General Partner of a
Notice of Redemption or, if such date is not a Business Day, the first Business
Day thereafter.

 

“Value” means, with respect to one Share of a class of outstanding
Shares of the General Partner Entity that are Publicly Traded, the average of
the daily market price for the ten consecutive trading days immediately
preceding the date with respect to which value must be determined. The market
price for each such trading day shall be the closing price, regular way, on
such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day. If the outstanding Shares of the
General Partner Entity are Publicly Traded and the Shares Amount includes, in
addition to the Shares, rights or interests that a holder of Shares has
received or would be entitled to receive, then the Value of such rights shall
be determined by the General Partner acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate. If the Shares of the General Partner Entity are not Publicly
Traded, the Value of the Shares Amount per Partnership Unit offered for
redemption (which will be the Cash Amount per Partnership Unit offered for
redemption payable pursuant to Section 8.6.A) means the amount that a
holder of one Partnership Unit would receive if each of the assets of the
Partnership were to be sold for its fair market value on the Specified
Redemption Date, the Partnership were to pay all of its outstanding
liabilities, and the remaining proceeds were to be distributed to the Partners
in accordance with the terms of this Agreement. Such Value shall be determined
by the General Partner, acting in good faith and based upon a commercially
reasonable estimate of the amount that would be realized by the Partnership if
each asset of the Partnership (and each asset of each partnership, limited
liability company, trust, joint venture or other entity in which the
Partnership owns a direct or indirect interest) were sold to an unrelated
purchaser in an arms’ length transaction where neither the purchaser nor the
seller were under economic compulsion to enter into the transaction (without
regard to any discount in value as a result of the Partnership’s minority
interest in any property or any illiquidity of the Partnership’s interest in
any property).

 

ARTICLE II

ORGANIZATIONAL MATTERS

 

Section 2.1             Organization

 

A.            Organization,
Status and Rights.  The Partnership
is a limited partnership organized pursuant to the provisions of the Act and
upon the terms and conditions set forth in the Original Agreement. The Partners
hereby confirm and agree to their status as partners of the Partnership and to
continue the business of the Partnership on the terms set forth in this

 

13

 

Agreement.
Except as expressly provided herein, the rights and obligations of the Partners
and the administration and termination of the Partnership shall be governed by
the Act. The Partnership Interest of each Partner shall be personal property
for all purposes.

 

B.            Qualification of
Partnership.  The Partners (i) agree
that if the laws of any jurisdiction in which the Partnership transacts
business so require, the appropriate officers or other authorized
representatives of the Partnership shall file, or shall cause to be filed, with
the appropriate office in that jurisdiction, any documents necessary for the
Partnership to qualify to transact business under such laws; and (ii) agree
and obligate themselves to execute, acknowledge and cause to be filed for
record, in the place or places and manner prescribed by law, any amendments to
the Certificate of Limited Partnership as may be required, either by the Act,
by the laws of any jurisdiction in which the Partnership transacts business, or
by this Agreement, to reflect changes in the information contained therein or
otherwise to comply with the requirements of law for the continuation,
preservation and operation of the Partnership as a limited partnership under
the Act.

 

C.            Representations.  Each Partner represents and warrants that
such Partner is duly authorized to execute, deliver and perform its obligations
under this Agreement and that the Person, if any, executing this Agreement on
behalf of such Partner is duly authorized to do so and that this Agreement is
binding on and enforceable against such Partner in accordance with its terms.

 

Section 2.2             Name

 

The name of the Partnership shall be Republic Property Limited Partnership.  The Partnership’s business may be conducted
under any other name or names deemed advisable by the General Partner,
including the name of any of the General Partner or any Affiliate thereof. The
words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall
be included in the Partnership’s name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. The General
Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited Partners.

 

Section 2.3             Registered Office And Agent; Principal Office

 

The address of the registered office of the Partnership in the State of
Delaware shall be located at Corporation Trust Center, 1209 Orange Street,
Wilmington County of New Castle, Delaware 19801, and the registered agent for
service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be 1280 Maryland Avenue, SW, Suite 280, Washington,
D.C. 20024 or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware
as the General Partner deems advisable.

 

14

 

Section 2.4             Term

 

The term of the Partnership commenced on July 19, 2005, and shall
continue until dissolved pursuant to the provisions of Article XIII or as
otherwise provided by law.

 

ARTICLE III

PURPOSE

 

Section 3.1             Purpose And Business

 

The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted
by a limited partnership organized pursuant to the Act; (ii) to enter into
any corporation, partnership, joint venture, trust, limited liability company
or other similar arrangement to engage in any of the foregoing or the ownership
of interests in any entity engaged, directly or indirectly, in any of the
foregoing; and (iii) to do anything necessary or incidental to the
foregoing; provided, however, that any business shall be limited to and
conducted in such a manner as to permit the General Partner and, if different,
the General Partner Entity at all times to be classified as a REIT, unless the
General Partner or General Partner Entity, as applicable, in its sole and
absolute discretion has chosen to cease to qualify as a REIT or has chosen not
to attempt to qualify as a REIT for any reason or reasons whether or not related
to the business conducted by the Partnership. In connection with the foregoing,
and without limiting the General Partner or the General Partner Entity’s right,
in its sole and absolute self discretion, to cease qualifying as a REIT, the
Partners acknowledge that the status of the General Partner Entity as a REIT
inures to the benefit of all the Partners and not solely to the General
Partner, the General Partner Entity or their Affiliates.

 

Section 3.2             Powers

 

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

 

15

 

ARTICLE IV

CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS

 

Section 4.1             Capital Contributions Of The Partners

 

Prior to the execution of this Agreement, the Partners have made the
Capital Contributions as set forth in the Partner Registry. On the date hereof,
the Partners own Partnership Units in the amounts set forth in the Partner
Registry and have Percentage Interests in the Partnership as set forth in the
Partner Registry.  The number of
Partnership Units and Percentage Interest shall be adjusted in the Partner
Registry from time to time by the General Partner to the extent necessary to
reflect accurately exchanges, redemptions, Capital Contributions, the issuance
of additional Partnership Units or similar events having an effect on a Partner’s
Percentage Interest occurring after the date hereof in accordance with the
terms of this Agreement. To the extent the Partnership acquires any property by
the merger of any other Person into the Partnership or any of its Subsidiaries,
Persons who receive Partnership Interests in exchange for their interests in
the Person merging into the Partnership or any Subsidiary shall become Partners
and shall be deemed to have made Capital Contributions as provided in the
applicable merger agreement and as set forth in the Partner Registry.  One thousand (1,000) Partnership Units shall
be deemed to be the General Partner’s Partnership Units and shall be the
General Partnership Interest of the General Partner. All other Partnership
Units held by the General Partner shall be deemed to be Limited Partnership
Interests and shall be held by the General Partner in its capacity as a Limited
Partner in the Partnership. Except as provided in Sections 7.5, 10.5, and 13.3
hereof, the Partners shall have no obligation to make any additional Capital
Contributions or provide any additional funding to the Partnership (whether in
the form of loans, repayments of loans or otherwise). Except as otherwise set
forth in Section 13.3 hereof, no Partner shall have any obligation to
restore any deficit that may exist in its Capital Account, either upon a
liquidation of the Partnership or otherwise, provided that such Capital Account
deficit did not arise by reason of distributions in violation of this Agreement
or applicable law or other actions in violation of this Agreement or applicable
law.

 

Section 4.2             Issuances Of Partnership Interests

 

A.            General. The
General Partner is hereby authorized to cause the Partnership from time to time
to issue to Partners (including the General Partner and its Affiliates) or
other Persons (including, without limitation, in connection with the
contribution of property to the Partnership or any of its Subsidiaries) Partnership
Units or other Partnership Interests in one or more classes, or in one or more
series of any of such classes, with such designations, preferences and
relative, participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to one or more other classes of
Partnership Interests, all as shall be determined, subject to applicable
Delaware law, by the General Partner in its sole and absolute discretion,
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests, (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions, (iii) the
rights of each such class or series of Partnership Interests upon dissolution
and liquidation of the Partnership, (iv) the rights, if any, of each such
class to vote on matters that require the vote or

 

16

 

Consent of the
Limited Partners, and (v) the consideration, if any, to be received by the
Partnership; provided that no such Partnership Units or other Partnership
Interests shall be issued to the General Partner unless either (a) the
Partnership Interests are issued in connection with the grant, award or
issuance of Shares or other equity interests in the General Partner (including
a transaction described in Section 7.4.F) having designations, preferences
and other rights such that the economic interests attributable to such Shares
or other equity interests are substantially similar to the designations,
preferences and other rights (except voting rights) of the Partnership
Interests issued to the General Partner in accordance with this Section 4.2.A
or (b) the additional Partnership Interests are issued to all Partners
holding Partnership Interests in the same class in proportion to their
respective Percentage Interests in such class. If the Partnership issues
Partnership Interests pursuant to this Section 4.2.A, the General Partner
shall make such revisions to this Agreement (including but not limited to the
revisions described in Section 5.4, Section 6.2 and Section 8.6)
as it deems necessary to reflect the issuance of such Partnership Interests.
The designation of any newly issued class or series of Partnership Interests
may provide a formula for treating such Partnership Interests solely for
purposes of voting on or consenting to any matter that requires the vote or
Consent of the Limited Partners as set forth in one or more of Sections 7.5.A,
7.11.A, 7.11.B, 11.2.B, 13.1(i), 13.1(ii), 13.1(vi), 14.1.A, 14.1.C, 14.2.A,
and 14.2.B of this Agreement as the equivalent of a specified number (including
any fraction thereof) of Class A Units.

 

B.            Classes of
Partnership Units. From and after the date of the Agreement, the
Partnership shall have two classes of Partnership Units entitled “Class A
Units” and “Class B Units” and such additional classes of Partnership
Units as may be created by the General Partner pursuant to Section 4.2.A.  Class A Units, Class B Units, or a
class of Partnership Interests created pursuant to Section 4.2.A, at the
election of the General Partner, in its sole and absolute discretion, may be
issued to newly admitted Partners in exchange for the contribution by such
Partners of cash, real estate partnership interests, stock, notes or other
assets or consideration; provided that any Partnership Unit that is not
specifically designated by the General Partner as being of a particular class
shall be deemed to be a Class A Unit. Each Class B Unit shall be
converted automatically into a Class A Unit on the day immediately
following the Partnership Record Date for the Distribution Period in which such
Class B Unit was issued, without the requirement for any action by the
General Partner, the Partnership or the Partner holding the Class B Unit.

 

Section 4.3             No Preemptive Rights

 

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

 

Section 4.4             Other Contribution Provisions

 

A.            General. If any
Partner is admitted to the Partnership and is given a Capital Account in
exchange for services rendered to the Partnership, such transaction shall be
treated by

 

17

 

the
Partnership and the affected Partner as if the Partnership had compensated such
Partner in cash, and the Partner had made a Capital Contribution of such cash
to the capital of the Partnership.

 

B.            Mergers. To the
extent the Partnership acquires any property (or an indirect interest therein)
by the merger of any other Person into the Partnership or with or into a
Subsidiary of the Partnership in a triangular merger, Persons who receive
Partnership Interests in exchange for their interest in the Person merging into
the Partnership or with or into a Subsidiary of the Partnership shall become
Partners and shall be deemed to have made Capital Contributions as provided in
the applicable merger agreement (or if not so provided, as determined by the
General Partner in its sole and absolute discretion) and as set forth in the
Partner Registry.

 

Section 4.5             No Interest On Capital

 

No Partner shall be entitled to interest on its Capital Contributions
or its Capital Account.

 

ARTICLE V

DISTRIBUTIONS

 

Section 5.1             Requirement And Characterization Of Distributions

 

A.            General. The
General Partner shall distribute at least quarterly an amount equal to one
hundred percent (100%) of the Available Cash of the Partnership with respect to
such quarter or shorter period to the Partners in accordance with the terms
established for the class or classes of Partnership Interests held by such
Partners who are Partners on the respective Partnership Record Date with
respect to such quarter or shorter period as provided in Sections 5.1.B, 5.1.C
and 5.1.D and in accordance with the respective terms established for each
class of Partnership Interest. Notwithstanding anything to the contrary
contained herein, in no event may a Partner receive a distribution of Available
Cash with respect to a Partnership Unit for a quarter or shorter period if such
Partner is entitled to receive a distribution with respect to a Share for which
such Partnership Unit has been redeemed or exchanged. Unless otherwise
expressly provided for herein, or in the terms established for a new class or
series of Partnership Interests created in accordance with Article IV
hereof, no Partnership Interest shall be entitled to a distribution in
preference to any other Partnership Interest. The General Partner shall make
such reasonable efforts, as determined by it in its sole and absolute
discretion and consistent with the qualification of the General Partner Entity
as a REIT, to distribute Available Cash (a) to Limited Partners so as to
preclude any such distribution or portion thereof from being treated as part of
a sale of property to the Partnership by a Limited Partner under Section 707
of the Code or the Regulations thereunder; provided, that, none of the General
Partner, the General Partner Entity, and the Partnership shall have liability
to a Limited Partner under any circumstances as a result of any distribution to
a Limited Partner being so treated, and (b) to the General Partner in an
amount sufficient to enable the General Partner Entity to make distributions to
its shareholders that will enable the General Partner Entity to (1) satisfy
the requirements for qualification as a

 

18

 

REIT under the
Code and the Regulations (the “REIT Requirements”), and (2) avoid any
federal income or excise tax liability.

 

B.            Method.  (i) Each holder of Partnership Interests
that is entitled to any preference in distribution shall be entitled to a
distribution in accordance with the rights of any such class of Partnership
Interests (and, within such class, pro rata in proportion to the respective
Percentage Interests on such Partnership Record Date); and

 

(ii)           To
the extent there is Available Cash remaining after the payment of any
preference in distribution in accordance with the foregoing clause (i), with
respect to Partnership Interests that are not entitled to any preference in
distribution, such Available Cash shall be distributed pro rata to each such
class in accordance with the terms of such class (and, within each such class,
pro rata in proportion to the respective Percentage Interests on such
Partnership Record Date).

 

C.            Distributions When Class B
Units Are Outstanding. If for any quarter or shorter period with respect to
which a distribution is to be made (a “Distribution Period”) Class B Units
are outstanding on the Partnership Record Date for such Distribution Period,
the General Partner shall allocate the Available Cash with respect to such
Distribution Period available for distribution with respect to the Class A
Units and Class B Units collectively between the Partners who are holders
of Class A Units (“Class A”) and the Partners who are holders of Class B
Units (“Class B”) as follows:

 

(1)           Class A
shall receive that portion of the Available Cash (the “Class A Share”)
determined by multiplying the amount of Available Cash by the following
fraction:

 

 

(2)           Class B
shall receive that portion of the Available Cash (the “Class B Share”)
determined by multiplying the amount of Available Cash by the following
fraction:

 

 

(3)           For
purposes of the foregoing formulas, (i) “A” equals the number of Class A
Units outstanding on the Partnership Record Date for such Distribution Period; (ii) “B”
equals the number of Class B Units outstanding on the Partnership Record
Date for such Distribution Period; (iii) “Y” equals the number of days in the
Distribution Period; and (iv) “X” equals the number of days in the
Distribution Period for which the Class B Units were issued and
outstanding.

 

19

 

The Class A Share shall be distributed pro rata among Partners
holding Class A Units on the Partnership Record Date for the Distribution
Period in accordance with the number of Class A Units held by each Partner
on such Partnership Record Date; provided that in no event may a Partner
receive a distribution of Available Cash with respect to a Class A Unit if
a Partner is entitled to receive a distribution with respect to a Share for
which such Class A Unit has been redeemed or exchanged. If the Class B
Units were issued on the same date, the Class B Share shall be distributed
pro rata among the Partners holding Class B Units on the Partnership
Record Date for the Distribution Period in accordance with the number of Class B
Units held by each Partner on such Partnership Record Date. In no event shall
any Class B Units be entitled to receive any distribution of Available
Cash for any Distribution Period ending prior to the date on which such Class B
Units are issued.

 

D.            Distributions When Class B
Units Have Been Issued on Different Dates. If Class B Units which have
been issued on different dates are outstanding on the Partnership Record Date
for any Distribution Period, then the Class B Units issued on each
particular date shall be treated as a separate series of Partnership Units for
purposes of making the allocation of Available Cash for such Distribution
Period among the holders of Partnership Units (and the formula for making such
allocation, and the definitions of variables used therein, shall be modified
accordingly). Thus, for example, if two series of Class B Units are
outstanding on the Partnership Record Date for any Distribution Period, the
allocation formula for each series, “Series B1” and “Series B2” would
be as follows:

 

(1)           Series B1
shall receive that portion of the Available Cash determined by multiplying the
amount of Available Cash by the following fraction:

 

 

(2)           Series B2
shall receive that portion of the Available Cash determined by multiplying the
amount of Available Cash by the following fraction:

 

 

(3)           For
purposes of the foregoing formulas the definitions set forth in Section 5.1.C(3) remain
the same except that (i) “B1” equals the number of Partnership Units in Series B1
outstanding on the Partnership Record Date for such Distribution Period; (ii) “B2”
equals the number of Partnership Units in Series B2 outstanding on the
Partnership Record Date for such Distribution Period; (iii) ”X1” equals
the number of days in the Distribution Period for which the Partnership Units
in Series B1 were issued and outstanding; and (iv) “X2” equals the
number of days in the Distribution Period for which the Partnership Units in Series B2
were issued and outstanding.

 

20

 

Section 5.2             Amounts Withheld

 

All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees, as the case may be, pursuant to Section 5.1
for all purposes under this Agreement.

 

Section 5.3             Distributions Upon Liquidation

 

Proceeds from a Liquidating Event shall be distributed to the Partners
in accordance with Section 13.2.

 

Section 5.4             Revisions To Reflect Issuance Of Partnership Interests

 

If the Partnership issues Partnership Interests to the General Partner
or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article V and the Partner
Registry in the books and records of the Partnership as it deems necessary to
reflect the issuance of such additional Partnership Interests without the
consent or approval of any other Partner.

 

ARTICLE VI

ALLOCATIONS

 

Section 6.1             Allocations For Capital Account Purposes

 

For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership’s items of income,
gain, loss and deduction (computed in accordance with Exhibit B) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.

 

A.            Net Income.  After giving effect to the special
allocations set forth in Section 1 of Exhibit C of the Partnership
Agreement, Net Income shall be allocated:

 

(1)           first,
to the General Partner to the extent that Net Losses previously allocated the
General Partner pursuant to Section 6.1.B(6) exceed Net Income
previously allocated to the General Partner pursuant to this clause (1);

 

(2)           second,
to each DRO Partner until the cumulative Net Income allocated such DRO Partner
under this clause (2) equals the cumulative Net Losses allocated such DRO
Partner under Section 6.1.B(5) (with any Net Income to be allocated
for a Fiscal Year hereunder to be allocated among the DRO Partners, pro rata in
proportion to the excess of the cumulative Net Losses allocated to such DRO
Partners pursuant to Section 6.1.B(5) hereof over the Net Income
previously allocated to such DRO Partners under this clause (2));

 

21

 

(3)           third,
to the General Partner until the cumulative Net Income allocated under this
clause (3) equals the cumulative Net Losses allocated the General Partner
under Section 6.1.B(4);

 

(4)           fourth,
to the holders of any Partnership Interests that are entitled to any preference
upon liquidation until the cumulative Net Income allocated under this clause (4) equals
the cumulative Net Losses allocated to such Partners under Section 6.1.B(3) (with
any Net Income to be allocated for a Fiscal Year hereunder to be allocated among
the holders of such Partnership Interests, pro rata in proportion to the excess
of the cumulative Net Losses previously allocated to such Partners pursuant to Section 6.1.B(3) hereof
over the Net Income allocated to such Partners under this clause (4));

 

(5)           fifth,
to the holders of any Partnership Interests that are entitled to any preference
in distribution in accordance with the rights of any other class of Partnership
Interests until each such Partnership Interest has been allocated, on a
cumulative basis pursuant to this clause (5), Net Income equal to the amount of
distributions payable that are attributable to the preference of such class of
Partnership Interests whether or not paid (and, within such class, pro rata in
proportion to the respective Percentage Interests as of the last day of the
period for which such allocation is being made); and

 

(6)           thereafter,
with respect to Partnership Interests that are not entitled to any preference
in distribution or with respect to which distributions are not limited to any
preference in distribution, pro rata to each such class in accordance with the
terms of such class (and, within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the period for which such
allocation is being made) provided, however, that income allocated with
respect to any period during which Class B Units were outstanding shall be
allocated among the Class A Units and the Class B Units in a manner
that is consistent with and proportionate to the manner in which Available Cash
was distributed with respect to such Units.

 

B.            Net Losses.  After giving effect to the special
allocations set forth in Section 1 of Exhibit C, Net Losses shall be
allocated:

 

(1)           first,
to the holders of Partnership Interests, in proportion to, and to the extent
that, their share of the Net Income previously allocated pursuant to Section 6.1.A(6) exceeds,
on a cumulative basis, the sum of (a) distributions with respect to such
Partnership Interests pursuant to clause (ii) of Section 5.1.B and (b) Net
Losses allocated under this clause (1);

 

(2)           second,
with respect to classes of Partnership Interests that are not entitled to any
preference in distribution upon liquidation, pro rata to each such class in
accordance with the terms of such class (and, within such class, pro rata in
proportion to the respective Percentage Interests as of the last day of the
period

 

22

 

for which such
allocation is being made); provided that Net Losses shall not be allocated to
any Partner pursuant to this Section 6.1.B(2) to the extent that such
allocation would cause such Partner to have an Adjusted Capital Account Deficit
(or increase any existing Adjusted Capital Account Deficit) (determined in each
case (i) by not including in the Partners’ Adjusted Capital Accounts any
amount that a Partner is obligated to contribute to the Partnership with
respect to any deficit in its Capital Account pursuant to Section 13.3 and
(ii) in the case of a Partner who also holds classes of Partnership
Interests that are entitled to any preferences in distribution upon
liquidation, by subtracting from such Partners’ Adjusted Capital Account the
amount of such preferred distribution to be made upon liquidation) at the end
of such taxable year (or portion thereof);

 

(3)           third,
with respect to classes of Partnership Interests that are entitled to a
preference in distribution upon liquidation, in reverse order of the priorities
of each such class (and within each such class, pro rata in proportion to their
respective Percentage Interests as of the last day of the period for which such
allocation is being made); provided that Net Losses shall not be allocated to
any Partner pursuant to this Section 6.1.B(3) to the extent that such
allocation would cause such Partner to have an Adjusted Capital Account Deficit
(or increase any existing Adjusted Capital Account Deficit) (determined in each
case by not including in the Partners’ Adjusted Capital Accounts any amount
that a Partner is obligated to contribute to the Partnership with respect to
any deficit in its Capital Account pursuant to Section 13.3) at the end of
such taxable year (or portion thereof);

 

(4)           fourth,
to the General Partner in an amount equal to the excess of (a) the amount
of the Partnership’s Recourse Liabilities over (b) the Aggregate DRO
Amount;

 

(5)           fifth,
to and among the DRO Partners, in proportion to their respective DRO Amounts,
until such time as the DRO Partners as a group have been allocated cumulative
Net Losses pursuant to this clause (5) equal to the Aggregate DRO Amount;
and

 

(6)           thereafter,
to the General Partner.

 

C.            Allocation of
Nonrecourse Debt. For purposes of Regulation Section 1.752-3(a), the
Partners agree that Nonrecourse Liabilities of the Partnership in excess of the
sum of (i) the amount of Partnership Minimum Gain and (ii) the total
amount of Nonrecourse Built-in Gain shall be allocated by the General Partner
by taking into account facts and circumstances relating to each Partner’s
respective interest in the profits of the Partnership. For this purpose, the
General Partner shall have the sole and absolute discretion in any fiscal year
to allocate such excess Nonrecourse Liabilities among the Partners in any
manner permitted under Code Section 752 and the Regulations thereunder.

 

D.            Recapture Income.  Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall, to the extent
possible after taking into account

 

23

 

other required
allocations of gain pursuant to Exhibit C, be characterized as Recapture
Income in the same proportions and to the same extent as such Partners have
been allocated any deductions directly or indirectly giving rise to the
treatment of such gains as Recapture Income.

 

Section 6.2             Revisions To Allocations To Reflect Issuance Of
Partnership Interests

 

If the Partnership issues Partnership Interests to the General Partner
or any Limited Partner pursuant to Article IV hereof, the General Partner
shall make such revisions to this Article VI and the Partner Registry in
the books and records of the Partnership as it deems necessary to reflect the
terms of the issuance of such Partnership Interests, including making
preferential allocations to classes of Partnership Interests that are entitled
thereto. Such revisions shall not require the consent or approval of any other
Partner.

 

ARTICLE VII

MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section 7.1             Management

 

A.            Powers of General
Partner. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and
shall be exclusively vested in the General Partner, and no Limited Partner
shall have any right to participate in or exercise control or management power
over the business and affairs of the Partnership. The General Partner may not
be removed by the Limited Partners with or without cause (unless the Shares of
the General Partner Entity corresponding to Partnership Units are not Publicly
Traded, in which case the General Partner may be removed with or without cause
by the Consent of the Partners holding Partnership Interests representing more
than 50% of the Percentage Interest of the Class A Units). In addition to
the powers now or hereafter granted a general partner of a limited partnership
under applicable law or which are granted to the General Partner under any
other provision of this Agreement, the General Partner, subject to Section 7.11,
shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 and to effectuate the purposes set forth
in Section 3.1, including, without limitation:

 

(1)           the
making of any expenditures, the lending or borrowing of money (including,
without limitation, making prepayments on loans and borrowing money to permit
the Partnership to make distributions to its Partners in such amounts as are
required under Section 5.1.A or will permit the General Partner Entity (so
long as the General Partner Entity qualifies as a REIT) to avoid the payment of
any federal income tax (including, for this purpose, any excise tax pursuant to
Section 4981 of the Code) and to make distributions to its shareholders
sufficient to permit the General Partner Entity to maintain its REIT status),
the assumption or guarantee of, or other contracting for, indebtedness and
other liabilities including, without limitation, the assumption or guarantee of
the debt of the General Partner, its Subsidiaries or the Partnership’s
Subsidiaries, the issuance of evidences of

 

24

 

indebtedness
(including the securing of same by mortgage, deed of trust or other lien or
encumbrance on the Partnership’s assets) and the incurring of any obligations
the General Partner deems necessary for the conduct of the activities of the
Partnership;

 

(2)           the
making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business
or assets of the Partnership;

 

(3)           the
acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership (including acquisition
of any new assets, the exercise or grant of any conversion, option, privilege
or subscription right or other right available in connection with any assets at
any time held by the Partnership) or the merger or other combination of the
Partnership or any Subsidiary with or into another entity on such terms as the
General Partner deems proper;

 

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

 

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

 

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

 

(7)           the
mortgage, pledge, encumbrance or hypothecation of any assets of the
Partnership;

 

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

 

25

 

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

 

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

 

(11)         the
selection, designation of powers, authority and duties and the dismissal of
employees of the Partnership (including, without limitation, employees having
titles such as “president,” “vice president,” “secretary” and “treasurer”) and
agents, outside attorneys, accountants, consultants and contractors of the
Partnership and the determination of their compensation and other terms of
employment or hiring;

 

(12)         the
maintenance of such insurance for the benefit of the Partnership and the
Partners as it deems necessary or appropriate;

 

(13)         the
formation of, or acquisition of an interest in, and the contribution of
property to, any further limited or general partnerships, joint ventures,
limited liability companies or other relationships that it deems desirable
(including, without limitation, the acquisition of interests in, and the
contributions of funds or property to, or making of loans to, its Subsidiaries
and any other Person in which it has an equity investment from time to time, or
the incurrence of indebtedness on behalf of such Persons or the guarantee of
the obligations of such Persons); provided that, as long as the General Partner
Entity has determined to continue to qualify as a REIT, the Partnership may not
engage in any such formation, acquisition or contribution that would cause the
General Partner Entity to fail to qualify as a REIT;

 

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

 

(15)         the
determination of the fair market value of any Partnership property distributed
in kind, using such reasonable method of valuation as the General Partner may
adopt;

 

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

 

26

 

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

 

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

 

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

 

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

 

(21)         the
determination regarding whether a payment to a Partner who exercises its
Redemption Right under Section 8.6 that is assumed by the General Partner will
be paid in the form of the Cash Amount or the Shares Amount, except as such
determination may be limited by Section 8.6.

 

(22)         the
acquisition of Partnership Interests in exchange for cash, debt instruments and
other property;

 

(23)         the
maintenance of the Partner Registry in the books and records of the Partnership
to reflect the Capital Contributions and Percentage Interests of the Partners
as the same are adjusted from time to time to the extent necessary to reflect
redemptions, Capital Contributions, the issuance of Partnership Units, the
admission of any Additional Limited Partner or any Substituted Limited Partner
or otherwise; and

 

(24)         the
registration of any class of securities of the Partnership under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
and the listing of any debt securities of the Partnership on any exchange.

 

B.            No Approval by
Limited Partners. Except as provided in Section 7.11, each of the
Limited Partners agrees that the General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions on behalf
of the Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement, the Act or any
applicable law, rule or regulation, to the full extent permitted under the
Act or other applicable law. The execution, delivery or performance by the
General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall be in the sole and absolute

 

27

 

discretion of
the General Partner without consideration of any other obligation or duty,
fiduciary or otherwise, of the Partnership or the Limited Partners and shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.

 

C.            Insurance.  At all times from and after the date hereof,
the General Partner may cause the Partnership to obtain and maintain (i) casualty,
liability and other insurance on the properties of the Partnership and its
Subsidiaries and (ii) liability insurance for the Indemnitees hereunder
and (iii) such other insurance as the General Partner, in its sole and
absolute discretion, determines to be necessary.

 

D.            Working Capital and
Other Reserves. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain working capital
reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time, including upon
liquidation of the Partnership under Section 13.

 

E.             No Obligations to
Consider Tax Consequences of Limited Partners. In exercising their
authority under this Agreement, the General Partner (which for the purposes of
this Section 7.1.E shall include, the board of trustees of the General
Partner) may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
(or not taken) by the General Partner. The General Partner and the Partnership
shall not have liability to a Limited Partner for monetary or other damages or
otherwise for losses sustained, liabilities incurred or benefits not derived by
such Limited Partner in connection with any decisions, provided that the
General Partner has acted in good faith and pursuant to its authority under
this Agreement and any decisions or actions taken or not taken in accordance
with the terms of this Agreement shall not constitute a breach of any duty owed
to the Partnership or the Limited Partners by law or equity, fiduciary or
otherwise.

 

Section 7.2             Certificate of Limited Partnership

 

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

 

28

 

Section 7.3             Title to Partnership Assets

 

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

 

Section 7.4             Reimbursement of the General Partner

 

A.            No Compensation.  Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments and allocations to which it may be entitled),
the General Partner shall not receive payments from the Partnership or
otherwise be compensated for its services as the general partner of the
Partnership.

 

B.            Responsibility for
Partnership and General Partner and General Partner Entity Expenses. The
Partnership shall be responsible for and shall pay all expenses relating to the
Partnership’s organization, the ownership of its assets and its operations. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to or resulting from the ownership and operation
of, or for the benefit of, the Partnership (including, without limitation,
expenses related to the operations of the General Partner and the General
Partner Entity and to the management and administration of any Subsidiaries of
the General Partner, the General Partner Entity or the Partnership or
Affiliates of the Partnership, such as auditing expenses and filing fees);
provided that (i) the amount of any such reimbursement shall be reduced by
(x) any interest earned by the General Partner with respect to bank accounts or
other instruments or accounts held by it on behalf of the Partnership as
permitted in Section 7.5.A (which interest is considered to belong to the
Partnership and shall be paid over to the Partnership to the extent not applied
to reimburse the General Partner for expenses hereunder); and (y) any amount derived
by the General Partner from any investments permitted in Section 7.5.A; (ii) the
Partnership shall not be responsible for any taxes that the General Partner or
General Partner Entity would not have been required to pay if that entity
qualified as a REIT or any taxes imposed on the General Partner or General
Partner Entity by reason of that entity’s failure to distribute to its
shareholders an amount equal to its taxable income; (iii) the Partnership
shall not be responsible for expenses or liabilities incurred by the General Partner
in connection with any business or assets of the General Partner other than its
ownership of Partnership Interests or operation of the business of the
Partnership or ownership of interests in Qualified Assets to the extent
permitted in Section 7.5.A; and (iv) the Partnership shall not be
responsible for any expenses or liabilities of the General Partner that are
excluded from the scope of the indemnification provisions of Section 7.7.A

 

29

 

by reason of
the provisions of clause (i), (ii) or (iii) thereof. The General
Partner shall determine in good faith the amount of expenses incurred by it or
the General Partner Entity related to the ownership of Partnership Interests or
operation of, or for the benefit of, the Partnership. If certain expenses are
incurred that are related both to the ownership of Partnership Interests or
operation of, or for the benefit of, the Partnership and to the ownership of
other assets (other than Qualified Assets as permitted under Section 7.7.A)
or the operation of other businesses, such expenses will be allocated to the
Partnership and such other entities (including the General Partner and General
Partner Entity) owning such other assets or businesses in such a manner as the
General Partner in its sole and absolute discretion deems fair and reasonable.
Such reimbursements shall be in addition to any reimbursement to the General
Partner and the General Partner Entity pursuant to Section 10.3.C and as a
result of indemnification pursuant to Section 7.7. All payments and
reimbursements hereunder shall be characterized for federal income tax purposes
as expenses of the Partnership incurred on its behalf, and not as expenses of
the General Partner or General Partner Entity.

 

C.            Partnership
Interest Issuance Expenses. The General Partner shall also be reimbursed
for all expenses it incurs relating to any issuance of Partnership Interests,
Shares, Debt of the Partnership, Funding Debt of the General Partner or rights,
options, warrants or convertible or exchangeable securities pursuant to Article IV
(including, without limitation, all costs, expenses, damages and other payments
resulting from or arising in connection with litigation related to any of the
foregoing), all of which expenses are considered by the Partners to constitute
expenses of, and for the benefit of, the Partnership.

 

D.            Purchases of Shares
by the General Partner Entity. If the General Partner exercises its rights
under the Declaration of Trust (or, in the event the General Partner Entity’s
only assets are interests in the General Partner, interests in the Partnership
and cash or similar instruments, the General Partner Entity the General Partner
Entity Exercises its rights under its organizational documents) to purchase
Shares or otherwise elects to purchase from its shareholders Shares in
connection with a share repurchase or similar program or for the purpose of
delivering such Shares to satisfy an obligation under any dividend reinvestment
or equity purchase program adopted by the General Partner Entity, any employee
equity purchase plan adopted by the General Partner Entity or any similar
obligation or arrangement undertaken by the General Partner Entity in the
future, the purchase price paid by the General Partner Entity for those Shares
and any other expenses incurred by the General Partner Entity in connection
with such purchase shall be considered expenses of the Partnership and shall be
reimbursable to the General Partner Entity, subject to the conditions that: (i) if
those Shares subsequently are to be sold by the General Partner Entity, the
General Partner Entity shall pay to the Partnership any proceeds received by
the General Partner Entity for those Shares (provided that a transfer of Shares
for Partnership Units pursuant to Section 8.6 would not be considered a
sale for such purposes); and (ii) if such Shares are not retransferred by
the General Partner Entity within thirty (30) days after the purchase thereof,
the General Partner shall cause the Partnership to cancel a number of
Partnership Units (rounded to the nearest whole Partnership Unit) held by the
General Partner equal to the product attained by multiplying the number of
those Shares by a fraction, the numerator of which is one and the denominator
of which is the Conversion Factor.

 

30

 

E.             Reimbursement not
a Distribution. Except as set forth in the succeeding sentence, if and to
the extent any reimbursement made pursuant to this Section 7.4 is
determined for federal income tax purposes not to constitute a payment of
expenses of the Partnership, the amount so determined shall constitute a
guaranteed payment with respect to capital within the meaning of Section 707(c) of
the Code, shall be treated consistently therewith by the Partnership and all
Partners and shall not be treated as a distribution for purposes of computing
the Partners’ Capital Accounts.  Amounts
deemed paid by the Partnership to the General Partner in connection with
redemption of Partnership Units pursuant to clause (ii) of subparagraph (D) above
shall be treated as a distribution for purposes of computing the Partner’s
Capital Accounts.

 

F.             Funding for
Certain Capital Transactions. In the event that the General Partner Entity
shall undertake to acquire (whether by merger, consolidation, purchase, or
otherwise) the assets or equity interests of another Person and such
acquisition shall require the payment of cash by the General Partner Entity
(whether to such Person or to any other selling party or parties in such
transaction or to one or more creditors, if any, of such Person or such selling
party or parties), (i) the Partnership shall advance to the General
Partner Entity the cash required to consummate such acquisition if, and to the
extent that, such cash is not to be obtained by the General Partner Entity
through an issuance of Shares described in Section 4.2 or pursuant to a
transaction described in Section 7.5.B, (ii) the General Partner
Entity shall, upon consummation of such acquisition, transfer to the
Partnership (or cause to be transferred to the Partnership), in full and
complete satisfaction of such advance and as required by Section 7.5, the
assets or equity interests of such Person acquired by the General Partner
Entity in such acquisition (or equity interests in Persons owning all of such
assets or equity interests), and (iii) pursuant to and in accordance with Section 4.2
and Section 7.5.B, the Partnership shall issue to the General Partner
Partnership Interests and/or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights that are substantially the same as those of any additional Shares,
other equity securities, New Securities and/or Convertible Funding Debt, as the
case may be, issued by the General Partner Entity in connection with such
acquisition (whether issued directly to participants in the acquisition
transaction or to third parties in order to obtain cash to complete the
acquisition).  In addition to, and
without limiting, the foregoing, in the event that the General Partner Entity
engages in a transaction in which (x) the General Partner Entity (or a
wholly owned direct or indirect Subsidiary of the General Partner Entity)
merges with another entity (referred to as the “Parent Entity”) that is
organized in the “UPREIT format” (i.e., where the Parent Entity holds
substantially all of its assets and conducts substantially all of its
operations through a partnership, limited liability company or other entity
(referred to as an “Operating Entity”)) and the General Partner Entity survives
such merger, (y) such Operating Entity merges with or is otherwise acquired by
the Partnership in exchange in whole or in part for Partnership Interests, and
(z) the General Partner Entity is required or elects to pay part of the
consideration in connection with such merger involving the Parent Entity in the
form of cash and part of the consideration in the form of Shares, the Partnership
shall distribute to the General Partner with respect to its existing
Partnership Interest an amount of cash sufficient to complete such transaction
and the General Partner shall cause the Partnership to cancel a number of
Partnership Units (rounded to the nearest whole number) held by the General
Partner equal to the product attained by multiplying the number of additional
Shares of the General Partner Entity that the General Partner Entity would have
issued to the

 

31

 

Parent Entity
or the owners of the Parent Entity in such transaction if the entire
consideration therefor were to have been paid in Shares by a fraction, the
numerator of which is one and the denominator of which is the Conversion
Factor.

 

Section 7.5             Outside Activities of the General Partner;
Relationship of Shares to Partnership Units; Funding Debt

 

A.            General.
Without the Consent of the Outside Limited Partners, the General Partner shall
not, directly or indirectly, enter into or conduct any business other than in
connection with the ownership, acquisition and disposition of Partnership
Interests as General Partner or Limited Partner and the management of the
business of the Partnership and such activities as are incidental thereto.
Without the Consent of the Outside Limited Partners, the assets of the General
Partner shall be limited to Partnership Interests and permitted debt
obligations of the Partnership (as contemplated by Section 7.5.F), so that
Shares and Partnership Units are completely fungible except as otherwise
specifically provided herein; provided that the General Partner shall be
permitted to hold such bank accounts or similar instruments or accounts in its
name as it deems necessary to carry out its responsibilities and purposes as
contemplated under this Agreement and its organizational documents (provided
that accounts held on behalf of the Partnership to permit the General Partner
to carry out its responsibilities under this Agreement shall be considered to
belong to the Partnership and the interest earned thereon shall, subject to Section 7.4.B,
be applied for the benefit of the Partnership); and, provided further that, the
General Partner shall be permitted to acquire Qualified Assets.

 

B.            Repurchase of
Shares and Other Securities. If the General Partner Entity exercises its
rights under the Declaration of Trust (or, if the General Partner is not the
General Partner Entity, the organizational documents of the General Partner
Entity) to purchase Shares or otherwise elects to purchase from the holders
thereof Shares, other equity securities of the General Partner Entity, New
Securities or Convertible Funding Debt, then the General Partner shall cause
the Partnership to purchase from the General Partner (i) in the case of a
purchase of Shares, that number of Partnership Units of the appropriate class
equal to the product obtained by multiplying the number of Shares purchased by
the General Partner Entity times a fraction, the numerator of which is one and
the denominator of which is the Conversion Factor, or (ii) in the case of
the purchase of any other securities on the same terms and for the same
aggregate price that the General Partner Entity purchased such securities.

 

C.            Forfeiture of
Shares. If the Partnership or the General Partner acquires Shares as a
result of the forfeiture of such Shares under a restricted or similar share,
share bonus or similar share plan, then the General Partner shall cause the
Partnership to cancel, without payment of any consideration to the General Partner,
that number of Partnership Units of the appropriate class equal to the number
of Shares so acquired, and, if the Partnership acquired such Shares, it shall
transfer such Shares to the General Partner for cancellation.

 

D.            Issuances of Shares
and Other Securities. The General Partner shall not grant, award, or issue
any additional Shares (other than Shares issued pursuant to Section 8.6
hereof or pursuant to a dividend or distribution (including any share split) of
Shares to all of its shareholders that results in an adjustment to the
Conversion Factor pursuant to clause (i), (ii) or

 

32

 

(iii) of
the definition thereof), other equity securities of the General Partner, New
Securities or Convertible Funding Debt unless (i) the General Partner
shall cause, pursuant to Section 4.2.A hereof, the Partnership to issue to
the General Partner, Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests are
substantially the same as those of such additional Shares, other equity
securities, New Securities or Convertible Funding Debt, as the case may be, and
(ii) the General Partner transfers to the Partnership, as an additional
Capital Contribution, the proceeds from the grant, award, or issuance of such
additional Shares, other equity securities, New Securities or Convertible
Funding Debt, as the case may be, or from the exercise of rights contained in
such additional Shares, other equity securities, New Securities or Convertible
Funding Debt, as the case may be (or, in the case of an acquisition described
in Section 7.4.F in which all or a portion of the cash required to consummate
such acquisition is to be obtained by the General Partner Entity through an
issuance of Shares described in Section 4.2, the General Partner complies
with such Section 7.4.F).  Without
limiting the foregoing, the General Partner is expressly authorized to issue
additional Shares, other equity securities, New Securities or Convertible
Funding Debt, as the case may be, for less than fair market value, and the
General Partner is expressly authorized, pursuant to Section 4.2.A hereof,
to cause the Partnership to issue to the General Partner corresponding
Partnership Interests, (for example, and not by way of limitation, the issuance
of Shares and corresponding Partnership Units pursuant to a share purchase plan
providing for purchases of Shares, either by employees or shareholders, at a
discount from fair market value or pursuant to employee share options that have
an exercise price that is less than the fair market value of the Shares, either
at the time of issuance or at the time of exercise) as long as (a) the
General Partner concludes in good faith that such issuance is in the interests
of the General Partner and the Partnership and (b) the General Partner transfers
all proceeds from any such issuance or exercise to the Partnership as an
additional Capital Contribution.

 

E.             Share Option Plan.
If at any time or from time to time, the General Partner sells or otherwise
issues Shares pursuant to any Share Option Plan, the General Partner shall
transfer the proceeds of the sale of such Shares, if any, to the Partnership as
an additional Capital Contribution in exchange for an amount of additional
Partnership Units equal to the number of Shares so sold divided by the
Conversion Factor.

 

F.             Funding Debt.
The General Partner or the General Partner Entity or any wholly owned
Subsidiary of either of them may incur a Funding Debt, including, without
limitation, a Funding Debt that is convertible into Shares or otherwise
constitutes a class of New Securities (“Convertible Funding Debt”), subject to
the condition that the General Partner, the General Partner Entity or such
Subsidiary, as the case may be, lend to the Partnership the net proceeds of
such Funding Debt; provided that Convertible Funding Debt shall be issued in
accordance with the provisions of Section 7.5.D above; and, provided
further that the General Partner, the General Partner Entity or such Subsidiary
shall not be obligated to lend the net proceeds of any Funding Debt to the
Partnership in a manner that would be inconsistent with the General Partner’s
or General Partner Entity’s ability to remain qualified as a REIT. If the
General Partner, General Partner Entity or such Subsidiary incurs any Funding
Debt, the loan to the Partnership shall be on terms and conditions, including
interest rate, repayment schedule, costs and expenses and

 

33

 

other
financial terms, substantially the same as are applicable with respect to or
incurred in connection with such Funding Debt.

 

G.            Capital
Contributions of the General Partner. 
The Capital Contributions by the General Partner pursuant to

Sections 7.5.D and 7.5.E will be deemed to equal the cash contributed by
the General Partner plus (a) in the case of cash contributions funded by
an offering of any equity interests in or other securities of the General
Partner, the offering costs attributable to the cash contributed to the
Partnership to the extent not reimbursed under Section 7.4.C and (b) in
the case of Partnership Units issued pursuant to Section 7.5.E, an amount
equal to the difference between the Value of the Shares sold pursuant to any
Share Option Plan and the net proceeds of such sale.

 

H.            Tax Loans. The
General Partner may in its sole and absolute discretion, cause the Partnership
to make an interest free loan to the General Partner or the General Partner
Entity provided that the proceeds of such loans are used to satisfy any tax
liabilities of the General Partner or the General Partner Entity, as
applicable.

 

Section 7.6             Transactions With Affiliates

 

A.            Transactions with
Certain Affiliates. Except as expressly permitted by this Agreement with
respect to any non-arms’ length transaction with an Affiliate, the Partnership
shall not, directly or indirectly, sell, transfer or convey any property to, or
purchase any property from, or borrow funds from, or lend funds to, any Partner
or any Affiliate of the Partnership that is not also a Subsidiary of the
Partnership, except pursuant to transactions that are determined in good faith
by the General Partner to be on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party.

 

B.            Conflict Avoidance.
The General Partner is expressly authorized to enter into, in the name and on
behalf of the Partnership, a non-competition arrangement and other conflict
avoidance agreements with various Affiliates of the Partnership and General
Partner on such terms as the General Partner, in its sole and absolute
discretion, believes are advisable.

 

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

 

Section 7.7             Indemnification

 

A.            General. The
Partnership shall indemnify each Indemnitee to the fullest extent provided by
the Act from and against any and all losses; claims; damages; liabilities,
joint or several; expenses (including, without limitation, attorneys fees and
other legal fees and expenses); judgments; fines; settlements and other amounts;
in any case arising from or in connection with any and all claims, demands,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, incurred by the Indemnitee and relating to the

 

34

 

Partnership or
the General Partner or the General Partner Entity or the operation of, or the
ownership of property by, the Indemnitee, Partnership or the General Partner or
the General Partner Entity as set forth in this Agreement in which any such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court of
competent jurisdiction that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either was committed
in bad faith or was the result of active and deliberate dishonesty, (ii) the
Indemnitee actually received an improper personal benefit in money, property or
services or (iii) in the case of any criminal proceeding, the Indemnitee
had reasonable cause to believe that the act or omission was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guarantee, contractual obligation for any
indebtedness or other obligation or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or
settlement does not create a presumption that the Indemnitee did not meet the
requisite standard of conduct set forth in this Section 7.7.A. The
termination of any proceeding by conviction or upon a plea of nolo contendere
or its equivalent, or an entry of an order of probation prior to judgment,
creates a rebuttable presumption that the Indemnitee acted in a manner contrary
to that specified in this Section 7.7.A with respect to the subject matter
of such proceeding. Any indemnification pursuant to this Section 7.7 shall
be made only out of the assets of the Partnership, and any insurance proceeds
from the liability policy covering the General Partner and any Indemnitee, and
neither the General Partner nor any Limited Partner shall have any obligation
to contribute to the capital of the Partnership or otherwise provide funds to
enable the Partnership to fund its obligations under this Section 7.7.

 

B.            Reimbursement of
Expenses. Reasonable expenses expected to be incurred by an Indemnitee
shall be paid or reimbursed by the Partnership in advance of the final
disposition of any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative made or threatened against an
Indemnitee upon receipt by the Partnership of (i) a written affirmation by
the Indemnitee of the Indemnitee’s good faith belief that the standard of
conduct necessary for indemnification by the Partnership as authorized in this Section 7.7.A
has been met and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.

 

C.            No Limitation of
Rights. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement
pursuant to which such Indemnitee is indemnified.

 

D.            Insurance. The
Partnership may purchase and maintain insurance on behalf of the Indemnitees
and such other Persons as the General Partner shall determine against any
liability that may be asserted against or expenses that may be incurred by such
Person in connection with

 

35

 

the
Partnership’s activities, regardless of whether the Partnership would have the
power to indemnify such Indemnitee or Person against such liability under the
provisions of this Agreement.

 

E.             No Personal
Liability for Partners. In no event may an Indemnitee subject any of the
Partners to personal liability by reason of the indemnification provisions set
forth in this Agreement.

 

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

 

G.            Benefit. The
provisions of this Section 7.7 are for the benefit of the Indemnitees,
their employees, officers, directors, trustees, heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit of
any other Persons. Any amendment, modification or repeal of this Section 7.7,
or any provision hereof, shall be prospective only and shall not in any way
affect the limitation on the Partnership’s liability to any Indemnitee under
this Section 7.7 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or related to
matters occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such claims may arise or be asserted.

 

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

 

I.              Exception to
Indemnification. Notwithstanding anything to the contrary in this
Agreement, the General Partner shall not be entitled to indemnification hereunder
for any loss, claim, damage, liability or expense for which the General Partner
is obligated to indemnify the Partnership under any other agreement between the
General Partner and the Partnership.

 

Section 7.8             Liability of the General Partner

 

A.            General.
Notwithstanding anything to the contrary set forth in this Agreement, the
General Partner (which for the purposes of this Section 7.8 shall include
the directors, trustees and officers of the General Partner) shall not be
liable for monetary or other damages to the Partnership, any Partners or any
Assignees for losses sustained, liabilities incurred or benefits not derived as
a result of errors in judgment or mistakes of fact or law or of any act or
omission unless the General Partner acted in bad faith and the act or omission
was material to the matter giving rise to the loss, liability or benefit not
derived.

 

B.            Obligation to
Consider Interests of General Partner Entity.  The Limited Partners expressly acknowledge
that the General Partner, in considering whether to dispose of any of the

 

36

 

Partnership
assets, shall take into account the tax consequences to the General Partner
Entity of any such disposition and shall have no liability whatsoever to the
Partnership or any Limited Partner for decisions that are based upon or
influenced by such tax consequences.

 

C.            No Obligation to
Consider Separate Interests of Limited Partners or Shareholders. The
Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership, its shareholders, and the shareholders of the
General Partner Entity, that, except as set forth herein, the General Partner
is under no obligation to consider the separate interests of the Limited
Partners (including, without limitation, the tax consequences to Limited
Partners or Assignees) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner shall not be liable
for monetary or other damages for losses sustained, liabilities incurred or
benefits not derived by Limited Partners in connection with any decisions or
actions made or taken or declined to be made or taken, provided that the
General Partner has acted pursuant to its authority under this Agreement;
provided however, the General Partner acknowledges that, in the event of a
conflict of interest between the shareholders of the General Partner and the
Limited Partners, the General Partner shall endeavor in good faith to resolve
the conflict in a manner not adverse to either such shareholders or Limited
Partners, and, if the General Partner, in its sole discretion as General
Partner, determines that a conflict cannot be resolved in a manner not adverse
to either such shareholders or Limited Partners, the conflict will be resolved
in favor of such shareholders.

 

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

 

E.             Effect of
Amendment. Notwithstanding any other provision contained herein, any
amendment, modification or repeal of this Section 7.8 or any provision
hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner’s liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.

 

F.             Limitations of
Fiduciary Duty.  Sections 7.1.B,
7.1.E and this Section 7.8 and any other Section of this Agreement
limiting the liability of the General Partner and/or its trustees, directors
and officers shall constitute an express limitation of any duties, fiduciary or
otherwise, that they would owe the Partnership or the Limited Partners if such
duty would be imposed by any law, in equity or otherwise.

 

Section 7.9             Other Matters Concerning the General Partner

 

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

 

B.            Reliance on
Advisors. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants
and advisers selected by it, and any act taken or omitted to be taken in
reliance upon the opinion of such Persons as to matters which the General
Partner reasonably believes to be within such

 

37

 

Person’s
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.

 

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

 

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

 

Section 7.10           Reliance By Third Parties

 

Notwithstanding anything to the contrary in this Agreement, any Person dealing
with the Partnership shall be entitled to assume that the General Partner has
full power and authority, without consent or approval of any other Partner or
Person, to encumber, sell or otherwise use in any manner any and all assets of
the Partnership, to enter into any contracts on behalf of the Partnership and
to take any and all actions on behalf of the Partnership, and such Person shall
be entitled to deal with the General Partner as if the General Partner were the
Partnership’s sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may
be available against such Person to contest, negate or disaffirm any action of
the General Partner in connection with any such dealing, in each case except to
the extent that such action imposes, or purports to impose, liability on the
Limited Partner. In no event shall any Person dealing with the General Partner
or its representatives be obligated to ascertain that the terms of this Agreement
have been complied with or to inquire into the necessity or expedience of any
act or action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and (iii) such
certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.

 

38

 

Section 7.11           Restrictions on General Partner’s Authority

 

A.            Consent Required.
The General Partner may not take any action in contravention of an express
prohibition or limitation of this Agreement without the written Consent of (i) all
Partners adversely affected or (ii) such lower percentage of the
Partnership Interests held by Limited Partners as may be specifically provided
for under a provision of this Agreement or the Act.  The preceding sentence shall not apply to any
limitation or prohibition in this Agreement that expressly authorizes the
General Partner to take action (either in its discretion or in specified
circumstances) so long as the General Partner acts within the scope of such
authority.

 

B.            Sale of All Assets
of the Partnership. Except as provided in Article XIII, the General
Partner may not, directly or indirectly, cause the Partnership to sell,
exchange, transfer or otherwise dispose of all or substantially all of the
Partnership’s assets in a single transaction or a series of related
transactions (including by way of merger (including a triangular merger),
consolidation or other combination with any other Persons) without the Consent
of the Partners holding Partnership Interests representing more than fifty
percent (50%) of the Percentage Interest of the Class A Units, provided,
however, that the foregoing limitation shall not apply to any leases of all or
substantially all of the Partnership’s assets entered into by the Partnership
in order to satisfy any REIT Requirements.

 

Section 7.12           Loans by Third Parties

 

The Partnership may incur Debt, or enter into similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any acquisition of property and any
borrowings from, or guarantees of Debt of the General Partner or any of its
Affiliates) with any Person upon such terms as the General Partner determines
appropriate.

 

ARTICLE VIII

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.1             Limitation of Liability

 

The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5, or
under the Act.

 

Section 8.2             Management of Business

 

No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates, or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership’s business, transact any
business in the Partnership’s name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or

 

39

 

any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.

 

Section 8.3             Outside Activities of Limited Partners

 

Subject to Section 7.5 hereof, and subject to any agreements
entered into pursuant to Section 7.6.B hereof and to any other agreements
entered into by a Limited Partner or its Affiliates with the General Partner
Entity, the General Partner, the Partnership or a Subsidiary, any Limited
Partner (other than the General Partner) and any officer, director, employee,
agent, trustee, Affiliate or shareholder of any Limited Partner shall be
entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests
and activities in direct or indirect competition with the Partnership. Neither
the Partnership nor any Partners shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee. None of the
Limited Partners (other than the General Partner) or any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person (other than the
General Partner to the extent expressly provided herein), and no Person (other
than the General Partner) shall have any obligation pursuant to this Agreement
to offer any interest in any such business venture to the Partnership, any
Limited Partner or any such other Person, even if such opportunity is of a
character which, if presented to the Partnership, any Limited Partner or such
other Person, could be taken by such Person.

 

Section 8.4             Return of Capital

 

Except pursuant to the right of redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions (except as permitted
by Section 4.2.A) or, except to the extent provided by Exhibit C or
as permitted by Sections 4.2.A, 5.1.B(i), 6.1.A and 6.1.B, or otherwise
expressly provided in this Agreement, as to profits, losses, distributions or
credits.

 

Section 8.5             Rights of Limited Partners Relating to the Partnership

 

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

 

(1)           to
obtain a copy of the most recent annual and quarterly reports filed with the
Securities and Exchange Commission by either the General Partner Entity or the
Partnership, if any, pursuant to the Exchange Act;

 

40

 

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

 

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

 

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

 

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

 

(6)           other
information regarding the affairs of the Partnership as is just and reasonable.

 

B.            Notice of
Conversion Factor. The Partnership shall notify each Limited Partner upon
request (i) of the then current Conversion Factor and (ii) of any
changes to the Conversion Factor.

 

C.            Notice of
Extraordinary Transaction of the General Partner Entity. The General
Partner Entity shall not make any extraordinary distributions of cash or
property to its shareholders or effect a merger (including, without limitation,
a triangular merger), consolidation or other combination with or into another
Person, a sale of all or substantially all of its assets or any other similar
extraordinary transaction without providing written notice to the Limited
Partners of its intention to make such distribution or effect such merger,
consolidation, combination, sale or other extraordinary transaction at least
twenty (20) Business Days prior to the record date to determine shareholders
eligible to receive such distribution or to vote upon the approval of such
merger, sale or other extraordinary transaction (or, if no such record date is
applicable, at least twenty (20) Business Days before consummation of such
merger, sale or other extraordinary transaction), which notice shall describe
in reasonable detail the action to be taken; provided, however, that the General
Partner, in its sole and absolute discretion, may shorten the required notice
period of not less than twenty (20) Business Days prior to the record date to
determine the shareholders eligible to vote upon a merger transaction (but not
any of the other transactions covered by this Section 8.5.C.) to a period
of not less than ten (10) calendar days (thereby continuing to afford the
holders of Partnership Units the opportunity to redeem Partnership Units under Section 8.6
on or prior to the record date for the shareholder vote on the merger
transaction) so long as (i) the General Partner Entity will be the
surviving entity in such merger transaction, (ii) immediately following
the merger transaction, Persons who held voting securities of the General
Partner Entity immediately prior to such merger transaction (and any related
transactions) will hold, solely by reason of the ownership of voting securities
of the General Partner Entity immediately prior to the merger transaction,
voting securities of the General Partner Entity representing not less than
fifty-one percent (51%) of the total combined voting power of all outstanding
voting securities of the General Partner Entity after such merger

 

41

 

transaction,
and (iii) in the event that in connection with such merger transaction the
Partnership will merge with another entity, the Partnership will be the
surviving entity in such merger. This provision for such notice shall not be
deemed (i) to permit any transaction that otherwise is prohibited by this
Agreement or requires a Consent of the Partners or (ii) to require a
Consent on the part of any one or more of the Limited Partners to a transaction
that does not otherwise require Consent under this Agreement. Each Limited
Partner agrees, as a condition to the receipt of the notice pursuant hereto, to
keep confidential the information set forth therein until such time as the
General Partner Entity has made public disclosure thereof and to use such
information during such period of confidentiality solely for purposes of
determining whether to exercise the Redemption Right; provided, however, that a
Limited Partner may disclose such information to its attorney, accountant
and/or financial advisor for purposes of obtaining advice with respect to such
exercise so long as such attorney, accountant and/or financial advisor agrees
to receive and hold such information subject to this confidentiality
requirement.

 

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

 

Section 8.6             Redemption Right

 

A.            General. (i) Subject
to Section 8.6.C, at any time on or after one year following the date of
the initial issuance thereof (which, in the event of the transfer of a Class A
Unit or Class B Unit, shall be deemed to be the date that the Class A
Unit (or corresponding Class B Unit) or such Class B Unit, as the
case may be, was issued to the original recipient thereof for purposes of this Section 8.6),
the holder of a Partnership Unit (if other than the General Partner or the
General Partner Entity or any Subsidiary of either the General Partner or the
General Partner Entity) shall have the right (the “Redemption Right”) to
require the Partnership to redeem such Partnership Unit, with such redemption
to occur on the Specified Redemption Date and at a redemption price equal to
and in the form of the Cash Amount to be paid by the Partnership. Any such
Redemption Right shall be exercised pursuant to a Notice of Redemption
delivered to the Partnership (with a copy to the General Partner) by the holder
of the Partnership Units who is exercising the Redemption Right (the “Redeeming
Partner”). A Limited Partner may exercise the Redemption Right from time to
time, without limitation as to frequency, with respect to part or all of the
Partnership Units that it owns, as selected by the Limited Partner, provided
that a Limited Partner may not exercise the Redemption Right for less than one thousand
(1,000) Partnership Units of a particular class unless such Redeeming Partner
then holds less than one thousand (1,000) Partnership Units in that class, in
which event the Redeeming Partner must exercise the Redemption Right for all of
the Partnership Units held by such Redeeming Partner in that class, and
provided further that, with respect to a Limited Partner which is an entity,
such Limited Partner may exercise the Redemption Right for less than one

 

42

 

thousand
(1,000) Partnership Units without regard to whether or not such Limited Partner
is exercising the Redemption Right for all of the Partnership Units held by
such Limited Partner as long as such Limited Partner is exercising the
Redemption Right on behalf of one or more of its equity owners in respect of
one hundred percent (100%) of such equity owners’ interests in such Limited
Partner. For purposes hereof, a Class A Unit issued upon conversion of a Class B
Unit shall be deemed to have been issued when the Class B Unit was issued.

 

(ii)           The
Redeeming Partner shall have no right with respect to any Partnership Units so
redeemed to receive any distributions paid in respect of a Partnership Record
Date after the Specified Redemption Date with respect to such Partnership
Units.

 

(iii)          The
Assignee of any Limited Partner may exercise the rights of such Limited Partner
pursuant to this Section 8.6, and such Limited Partner shall be deemed to
have assigned such rights to such Assignee and shall be bound by the exercise
of such rights by such Limited Partner’s Assignee. In connection with any
exercise of such rights by such Assignee on behalf of such Limited Partner, the
Cash Amount shall be paid by the Partnership directly to such Assignee and not
to such Limited Partner.

 

(iv)          If
the General Partner Entity provides notice to the Limited Partners, pursuant to
Section 8.5.C hereof, the Redemption Right shall be exercisable, without
regard to whether the Partnership Units have been outstanding for any specified
period, during the period commencing on the date on which the General Partner
Entity provides such notice and ending on the record date to determine
shareholders eligible to receive such distribution or to vote upon the approval
of such merger, sale or other extraordinary transaction (or, if no such record
date is applicable, at least twenty (20) Business Days before the consummation
of such merger, sale or other extraordinary transaction). If this subparagraph (iv) applies,
the Specified Redemption Date is the date on which the Partnership and the
General Partner receive notice of exercise of the Redemption Right, rather than
ten (10) Business Days after receipt of the notice of redemption.

 

B.            General Partner Entity
Assumption of Redemption Right. (i) If a Limited Partner has delivered
a Notice of Redemption, the General Partner Entity may, in its sole and
absolute discretion (subject to the limitations on ownership and transfer of Shares
set forth in the Declaration of Trust), elect to assume directly and satisfy a
Redemption Right.  If such election is
made by the General Partner Entity, the Partnership shall determine whether the
General Partner Entity shall pay the Redemption Amount in the form of the Cash
Amount or the Shares Amount.  The
Partnership’s decision regarding whether such payment shall be made in the form
of the Cash Amount or the Shares Amount shall be made by the General Partner,
in its capacity as the general partner of the Partnership and in its sole and
absolute discretion.  Payment of the
Redemption Amount in the form of Shares shall be in Shares registered for
resale under Section 12 of the Exchange Act and listed for trading on the
exchange or national market on which the Shares are Publicly Traded and the
issuance of Shares upon redemption shall be registered under the Securities Act
or, at the election of the General Partner Entity resale of the Shares issued
upon redemption shall be registered (so long as the Redeeming Partner provides
all information required for such registration), and, provided further that, if
the Shares are not Publicly Traded at the time a Redeeming Partner exercises
its Redemption Right, the Redemption Amount shall be paid only in the form of
the Cash Amount unless the Redeeming Partner, in its sole and absolute

 

43

 

discretion,
consents to payment of the Redemption Amount in the form of the Shares Amount),
on the Specified Redemption Date, upon such payment the General Partner Entity
shall acquire the Partnership Units offered for redemption by the Redeeming
Partner and shall be treated for all purposes of this Agreement as the owner of
such Partnership Units. Unless the General Partner Entity, in its sole and
absolute discretion, shall exercise its right to assume directly and satisfy
the Redemption Right, the General Partner Entity shall not have any obligation
to the Redeeming Partner or to the Partnership with respect to the Redeeming Partner’s
exercise of the Redemption Right. If the General Partner Entity shall exercise
its right to assume directly and satisfy the Redemption Right in the manner
described in the first sentence of this Section 8.6B and shall fully
perform its obligations in connection therewith, the Partnership shall have no
right or obligation to pay any amount to the Redeeming Partner with respect to
such Redeeming Partner’s exercise of the Redemption Right, and each of the
Redeeming Partner, the Partnership and the General Partner Entity shall, for
federal income tax purposes, treat the transaction between the General Partner
Entity and the Redeeming Partner as a sale of the Redeeming Partner’s
Partnership Units to the General Partner Entity. Nothing contained in this Section 8.6.B
shall imply any right of the General Partner Entity to require any Limited
Partner to exercise the Redemption Right afforded to such Limited Partner
pursuant to Section 8.6.A.

 

(ii)           If
the General Partner determines that the General Partner Entity shall pay the
Redeeming Partner the Redemption Amount in the form of Shares (and assuming, in
the event that the Shares are not Publicly Traded, that the Limited Partner
consents to receive such Shares) the total number of Shares to be paid to the
Redeeming Partner in exchange for the Redeeming Partner’s Partnership Units
shall be the applicable Shares Amount. If this amount is not a whole number of
Shares, the Redeeming Partner shall be paid (i) that number of Shares
which equals the nearest whole number less than such amount plus (ii) an
amount of cash which the General Partner Entity determines, in its reasonable
discretion, to represent the fair value of the remaining fractional Share which
would otherwise be payable to the Redeeming Partner.

 

(iii)          Each
Redeeming Partner agrees to execute such documents as the General Partner
Entity may reasonably require in connection with the issuance of Shares upon
exercise of the Redemption Right.

 

C.            Exceptions to
Exercise of Redemption Right. Notwithstanding the provisions of Sections
8.6.A and 8.6.B, a Partner shall not be entitled to exercise the Redemption
Right pursuant to Section 8.6.A if (but only as long as) the delivery of
Shares to such Partner on the Specified Redemption Date would be (i) prohibited
under the restrictions on the ownership or transfer of Shares in the
Declaration of Trust (or, if the General Partner is not the General Partner
Entity, the organizational documents of the General Partner Entity) or (ii) prohibited
under applicable federal or state securities laws or regulations (in each case
regardless of whether the General Partner Entity would in fact assume and
satisfy the Redemption Right).

 

D.            No Liens on
Partnership Units Delivered for Redemption. Each Limited Partner covenants
and agrees that all Partnership Units delivered for redemption shall be
delivered to the Partnership or the General Partner Entity, as the case may be,
free and clear of all liens; and, notwithstanding anything contained herein to
the contrary, neither the General Partner Entity nor the Partnership shall be
under any obligation to acquire Partnership Units which are or may be

 

44

 

subject to any
liens. Each Limited Partner further agrees that, if any state or local property
transfer tax is payable as a result of the transfer of its Partnership Units to
the Partnership or the General Partner Entity, such Limited Partner shall
assume and pay such transfer tax.

 

E.             Additional
Partnership Interests; Modification of Holding Period. If the Partnership
issues Partnership Interests to any Additional Limited Partner pursuant to Article IV,
the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such Partnership Interests
(including setting forth any restrictions on the exercise of the Redemption
Right with respect to such Partnership Interests which differ from those set
forth in this Agreement), provided that no such revisions shall materially
adversely affect the rights of any other Limited Partner to exercise its
Redemption Right without that Limited Partner’s prior written consent. In
addition, the General Partner may, with respect to any holder or holders of
Partnership Units, at any time and from time to time, as it shall determine in
its sole and absolute discretion, (i) reduce or waive the length of the
period prior to which such holder or holders may not exercise the Redemption
Right or (ii) reduce or waive the length of the period between the
exercise of the Redemption Right and the Specified Redemption Date.

 

ARTICLE IX

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1             Records and Accounting

 

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

 

Section 9.2             Fiscal Year

 

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

 

Section 9.3             Reports

 

A.            Annual Reports.
As soon as practicable, but in no event later than the date on which the
General Partner Entity mails its annual report to its shareholders, the General
Partner Entity shall cause to be mailed to each Limited Partner an annual
report, as of the close of the most recently ended Fiscal Year, containing
financial statements of the Partnership, or of the General Partner Entity (and,
if different, the General Partner) if such statements are prepared on

 

45

 

a consolidated
basis with the Partnership, for such Fiscal Year, presented in accordance with
generally accepted accounting principles, such statements to be audited by a
nationally recognized firm of independent public accountants selected by the
General Partner Entity.

 

B.            Quarterly Reports.
If and to the extent that the General Partner Entity mails quarterly reports to
its shareholders, as soon as practicable, but in no event later than the date
on such reports are mailed, the General Partner Entity shall cause to be mailed
to each Limited Partner a report containing unaudited financial statements, as
of the last day of such fiscal quarter, of the Partnership, or of the General
Partner Entity or the General Partner if such statements are prepared on a
consolidated basis with the Partnership, and such other information as may be
required by applicable law or regulation, or as the General Partner determines
to be appropriate.

 

ARTICLE X

TAX MATTERS

 

Section 10.1           Preparation of Tax Returns

 

The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.

 

Section 10.2           Tax Elections

 

Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code (including the election under Section 754 of the
Code). The General Partner shall have the right to seek to revoke any such
election upon the General Partner’s determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.

 

Section 10.3           Tax Matters Partner

 

A.            General. The
General Partner shall be the “tax matters partner” of the Partnership for
federal income tax purposes. Pursuant to Section 6223(c)(3) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address, taxpayer identification number and
profit interest of each of the Limited Partners and any Assignees; provided,
however, that such information is provided to the Partnership by the Limited
Partners.

 

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

 

46

 

(1)           to
enter into any settlement with the IRS with respect to any administrative or
judicial proceedings for the adjustment of Partnership items required to be
taken into account by a Partner for income tax purposes (such administrative
proceedings being referred to as a “tax audit” and such judicial proceedings
being referred to as “judicial review”), and in the settlement agreement the
tax matters partner may expressly state that such agreement shall bind all
Partners, except that such settlement agreement shall not bind any Partner (i) who
(within the time prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner shall not have
the authority to enter into a settlement agreement on behalf of such Partner or
(ii) who is a “notice partner” (as defined in Section 6231(a)(8) of
the Code) or a member of a “notice group” (as defined in Section 6223(b)(2) of
the Code);

 

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

 

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

 

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

 

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

 

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

 

(7)           to
take any other action required by the Code and Regulations in connection with
its role as tax matters partner.

 

The taking of any action and the incurring of any expense by the tax
matters partner in connection with any audit or proceeding referred to in (6),
except to the extent required by law, is a matter in the sole and absolute
discretion of the tax matters partner and the provisions relating to
indemnification of the General Partner set forth in Section 7.7 shall be
fully applicable to the tax matters partner in its capacity as such.

 

47

 

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

 

Section 10.4           Organizational Expenses

 

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

 

Section 10.5           Withholding

 

Each Limited Partner hereby authorizes the Partnership, and the General
Partner Entity in the event the General Partner Entity elects to satisfy the
Redemption Right pursuant to Section 8.6B, to withhold from or pay on
behalf of or with respect to such Limited Partner any amount of federal, state,
local, or foreign taxes that the General Partner determines that the
Partnership is required to withhold or pay with respect to any cash or property
distributable, allocable or otherwise transferred to such Limited Partner
pursuant to this Agreement, including, without limitation, any taxes required
to be withheld or paid by the Partnership pursuant to Section 1441, 1442,
1445, or 1446 of the Code. Any amount paid on behalf of or with respect to a
Limited Partner shall constitute a loan by the Partnership or the General
Partner Entity to such Limited Partner, which loan shall be repaid by such
Limited Partner within fifteen (15) days after notice from the General Partner
or the General Partner Entity that such payment must be made unless (i) the
Partnership or the General Partner Entity withholds such payment from a
distribution which would otherwise be made to the Limited Partner or (ii) the
General Partner determines, in its sole and absolute discretion, that such
payment may be satisfied out of the available funds of the Partnership which
would, but for such payment, be distributed to the Limited Partner. Any amounts
withheld pursuant to the foregoing clauses (i) or (ii) shall be
treated as having been distributed or otherwise paid to such Limited Partner.
Each Limited Partner hereby unconditionally and irrevocably grants to the
Partnership a security interest in such Limited Partner’s Partnership Interest
to secure such Limited Partner’s obligation to pay to the Partnership any
amounts required to be paid pursuant to this Section 10.5. If a Limited
Partner fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect
to make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the Partnership
as against such defaulting Limited Partner (including, without limitation, the
right to receive distributions). Any amounts payable by a Limited Partner
hereunder shall bear interest at the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
The Wall Street Journal, plus four (4) percentage points (but not higher
than the maximum rate that may be charged under law) from the date such amount
is due (i.e., fifteen (15) days after demand) until such amount is paid

 

48

 

in full. Each
Limited Partner shall take such actions as the Partnership or the General
Partner shall request to perfect or enforce the security interest created
hereunder.

 

ARTICLE XI

TRANSFERS AND WITHDRAWALS

 

Section 11.1           Transfer

 

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

 

B.            General. No
Partnership Interest shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article XI. Any
transfer or purported transfer of a Partnership Interest not made in accordance
with this Article XI shall be null and void.

 

Section 11.2           Transfers of Partnership Interests of General Partner

 

A.            General.  The General Partner may not transfer any of
its Partnership Interests except in connection with (i) a transaction
permitted under Section 11.2.B, (ii) any merger (including a
triangular merger), consolidation or other combination with or into another Person
following the consummation of which the equity holders of the surviving entity
are substantially identical to the shareholders of the General Partner Entity,
or (iii) as otherwise expressly permitted under this Agreement, nor shall
the General Partner withdraw as General Partner except in connection with a
transaction permitted under Section 11.2.B or any merger, consolidation,
or other combination permitted under clause (ii) of this Section 11.2.A.

 

B.            Specific
Transactions Prohibited. The General Partner Entity shall not engage in any
merger (including a triangular merger), consolidation or other combination with
or into another Person (other than any transaction permitted by Section 11.2.A),
sale of all or substantially all of its assets or any reclassification,
recapitalization or change of outstanding Shares (other than a change in par
value, or from par value to no par value, or as a result of a subdivision or
combination as described in the definition of “Conversion Factor”) (“Termination
Transaction”), unless (i) the Termination Transaction has been approved by
the Consent of the Partners holding Partnership Interests representing more
than fifty percent (50%) of the

 

49

 

Percentage
Interest of the Class A Units, (ii) following such merger or other
consolidation, substantially all of the assets of the surviving entity consist
of Partnership Units and (iii) in connection with which all Partners
either will receive, or will have the right to receive, for each Unit an amount
of cash, securities, or other property equal to the product of the Conversion
Factor and the greatest amount of cash, securities or other property paid to a
holder of Shares, if any, corresponding to such Unit in consideration of one such
Share at any time during the period from and after the date on which the
Termination Transaction is consummated; provided that, if, in connection with
the Termination Transaction, a purchase, tender or exchange offer shall have
been made to and accepted by the holders of the percentage required for the
approval of mergers under the organizational documents of the General Partner
Entity, each holder of Partnership Units shall receive, or shall have the right
to receive without any right of Consent set forth above in this subsection B,
the greatest amount of cash, securities, or other property which such holder
would have received had it exercised the Redemption Right and received Shares
in exchange for its Partnership Units immediately prior to the expiration of
such purchase, tender or exchange offer and had thereupon accepted such
purchase, tender or exchange offer. The General Partner shall not enter into an
agreement or other arrangement providing for or facilitating the creation of a
General Partner Entity other than the General Partner, unless the successor
General Partner Entity executes and delivers a counterpart to this Agreement in
which such General Partner Entity agrees to be fully bound by all of the terms
and conditions contained herein that are applicable to a General Partner
Entity.

 

Section 11.3           Limited Partners’ Rights to Transfer

 

A.            General. Except
to the extent expressly permitted in Sections 11.3.B and 11.3.C or in
connection with the exercise of a Redemption Right pursuant to Section 8.6,
a Limited Partner may not transfer all or portion of its Partnership Interest,
or any of such Limited Partner’s rights as a Limited Partner, without the prior
written consent of the General Partner, which consent may be withheld in the
General Partner’s sole and absolute discretion. Any transfer otherwise
permitted under Sections 11.3.B and 11.3.C shall be subject to the conditions
set forth in Section 11.3.D, 11.3.E and 11.3.F, and all permitted
transfers shall be subject to Section 11.5 and Section 11.6.

 

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

 

C.            Permitted Transfers.
A Limited Partner may transfer, with or without the consent of the General
Partner, all or a portion of its Partnership Interest (i) in the case of a
Limited Partner who is an individual, to a member of his Immediate Family, any
trust formed for the benefit of himself and/or members of his Immediate Family,
or any partnership, limited liability company, joint venture, corporation or
other business entity comprised only of himself and/or

 

50

 

members of his
Immediate Family and entities the ownership interests in which are owned by or
for the benefit of himself and/or members of his Immediate Family, (ii) in
the case of a Limited Partner which is a trust, to the beneficiaries of such
trust, (iii) in the case of a Limited Partner which is a partnership,
limited liability company, joint venture, corporation or other business entity
to which Units were transferred pursuant to clause (i) above, to its
partners, owners or stockholders, as the case may be, who are members of the
Immediate Family of or are actually the Person(s) who transferred Partnership
Units to it pursuant to clause (i) above, (iv) in the case of a
Limited Partner which acquired Partnership Units as of the date hereof and
which is a partnership, limited liability company, joint venture, corporation
or other business entity, to its partners, owners, stockholders or Affiliates
thereof, as the case may be, or the Persons owning the beneficial interests in
any of its partners, owners or stockholders or Affiliates thereof (it being
understood that this clause (iv) will apply to all of each Person’s
Interests whether the Partnership Units relating thereto were acquired on the
date hereof or hereafter), (v) in the case of a Limited Partner which is a
partnership, limited liability company, joint venture, corporation or other
business entity other than any of the foregoing described in clause (iii) or
(iv), in accordance with the terms of any agreement between such Limited
Partner and the Partnership pursuant to which such Partnership Interest was
issued, (vi) pursuant to a gift or other transfer without consideration, (vii) pursuant
to applicable laws of descent or distribution, (viii) to another Limited
Partner and (ix) pursuant to a grant of security interest or other
encumbrance effectuated in a bona fide transaction or as a result of the
exercise of remedies related thereto, subject to the provisions of Section 11.3.F
hereof. A trust or other entity will be considered formed “for the benefit” of
a Partner’s Immediate Family even though some other Person has a remainder
interest under or with respect to such trust or other entity.

 

D.            No Transfers Violating
Securities Laws. The General Partner may prohibit any transfer of
Partnership Units by a Limited Partner unless it receives a written opinion of
legal counsel (which opinion and counsel shall be reasonably satisfactory to
the Partnership) to such Limited Partner to the effect that such transfer would
not require filing of a registration statement under the Securities Act or
would not otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Unit or, at the option of the
Partnership, an opinion of legal counsel to the Partnership to the same effect.

 

E.             No Transfers
Affecting Tax Status of Partnership. No transfer of Partnership Units by a
Limited Partner (including a redemption or exchange pursuant to Section 8.6)
may be made to any Person if (i) in the opinion of legal counsel for the
Partnership, there is a material risk that it would result in the Partnership
being treated as an association taxable as a corporation for federal income tax
purposes or would result in a termination of the Partnership for federal income
tax purposes (except as a result of the redemption or exchange for Shares of
all Partnership Units held by all Limited Partners other than the General
Partner or the General Partner Entity or any Subsidiary of the General Partner
or the General Partner Entity or pursuant to a transaction expressly permitted
under Section 7.11.B or Section 11.2), (ii) in the opinion of
legal counsel for the Partnership, there is a risk that it would adversely
affect the ability of the General Partner Entity to continue to qualify as a
REIT or would subject the General Partner Entity to any additional taxes under Section 857
or Section 4981 of the Code or (iii) 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 (provided that

 

51

 

this clause (iii) shall
not be the basis for limiting or restricting in any manner the exercise of the
Redemption Right under Section 8.6 unless, and only to the extent that,
outside tax counsel provides to the General Partner an opinion to the effect
that, in the absence of such limitation or restriction, there is a material risk
that the Partnership will be treated as a “publicly traded partnership” and, by
reason thereof, taxable as a corporation).

 

F.             No Transfers to
Holders of Nonrecourse Liabilities. No pledge or transfer of any
Partnership Units may be made to a lender to the Partnership or any Person who
is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership whose loan otherwise constitutes
a Nonrecourse Liability unless (i) the General Partner is provided prior
written notice thereof and (ii) the lender enters into an arrangement with
the Partnership and the General Partner to exchange or redeem for the
Redemption Amount any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such
lender under Section 752 of the Code.

 

Section 11.4           Substituted Limited Partners

 

A.            Consent of General
Partner. No Limited Partners shall have the right to substitute a
transferee as a Limited Partner in its place. The General Partner shall,
however, have the right to consent to the admission of a transferee of the
interest of a Limited Partner pursuant to this Section 11.4 as a
Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion. The General Partner’s
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership, the General Partner Entity, or any Partner. The General
Partner hereby grants its consent to the admission as a Substituted Limited
Partner to any bona fide financial institution that loans money or otherwise
extends credit to a holder of Partnership Units and thereafter becomes the
owner of such Partnership Units pursuant to the exercise by such financial
institution of its rights under a pledge of such Partnership Units granted in
connection with such loan or extension of credit.

 

B.            Rights of
Substituted Partner. A transferee who has been admitted as a Substituted
Limited Partner in accordance with this Article XI shall have all the
rights and powers and be subject to all the restrictions and liabilities of a
Limited Partner under this Agreement. The admission of any transferee as a
Substituted Limited Partner shall be conditioned upon the transferee executing
and delivering to the Partnership an acceptance of all the terms and conditions
of this Agreement (including, without limitation, the provisions of Section 15.11)
and such other documents or instruments as may be required to effect the
admission.

 

C.            Partner Registry.
Upon the admission of a Substituted Limited Partner, the General Partner shall
update the Partner Registry in the books and records of the Partnership as it
deems necessary to reflect such admission in the Partner Registry.

 

52

 

Section 11.5                                 Assignees

 

If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as
a Substituted Limited Partner, as described in Section 11.4, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive
distributions from the Partnership and the share of Net Income, Net Losses,
gain, loss and Recapture Income attributable to the Partnership Units assigned
to such transferee, and shall have the rights granted to the Limited Partners
under Section 8.6, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled to
vote such Partnership Units in any matter presented to the Limited Partners for
a vote (such Partnership Units being deemed to have been voted on such matter
in the same proportion as all other Partnership Units held by Limited Partners
are voted). If any such transferee desires to make a further assignment of any
such Partnership Units, such transferee shall be subject to all the provisions
of this Article XI to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership Units.

 

Section 11.6                                 General Provisions

 

A.            Withdrawal of
Limited Partner. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such Limited Partner’s
Partnership Units in accordance with this Article XI or pursuant to
redemption of all of its Partnership Units under Section 8.6.

 

B.            Termination of
Status as Limited Partner. Any Limited Partner who shall transfer all of
its Partnership Units in a transfer permitted pursuant to this Article XI
or pursuant to redemption of all of its Partnership Units under Section 8.6
shall cease to be a Limited Partner.

 

C.            Timing of Transfers.
Transfers pursuant to this Article XI may only be made upon three (3) Business
Days prior notice, unless the General Partner otherwise agrees.

 

D.            Allocations. If
any Partnership Interest is transferred during any quarterly segment of the
Partnership’s fiscal year in compliance with the provisions of this Article XI
or redeemed or transferred pursuant to Section 8.6, Net Income, Net
Losses, each item thereof and all other items attributable to such interest for
such fiscal year shall be divided and allocated between the transferor Partner
and the transferee Partner by taking into account their varying interests
during the fiscal year in accordance with Section 706(d) of the Code
and the corresponding Regulations, using the interim closing of the books
method (unless the General Partner, in its sole and absolute discretion, elects
to adopt a daily, weekly, or a monthly proration period, in which event Net
Income, Net Losses, each item thereof and all other items attributable to such
interest for such fiscal year shall be prorated based upon the applicable
method selected by the General Partner). Solely for purposes of making such
allocations, each of such items for the calendar month in which the transfer or
redemption occurs shall be allocated to the Person who is a Partner as of
midnight on the last day of said month. All distributions of Available Cash
attributable to any Partnership Unit with respect to which the Partnership
Record Date is before

 

53

 

the date of
such transfer, assignment or redemption shall be made to the transferor Partner
or the Redeeming Partner, as the case may be, and, in the case of a transfer or
assignment other than a redemption, all distributions of Available Cash
thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.

 

E.             Additional
Restrictions. In addition to any other restrictions on transfer herein
contained, including without limitation the provisions of this Article XI
and Article VII, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including pursuant to Section 8.6) be made
without the express consent of the General Partner, in its sole and absolute
discretion, (i) to any person or entity who lacks the legal right, power
or capacity to own a Partnership Interest; (ii) in violation of applicable
law; (iii) of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of legal
counsel to the Partnership there is a material risk that such transfer would
cause a termination of the Partnership for federal or state income tax purposes
(except as a result of the redemption or exchange for Shares of all Partnership
Units held by all Limited Partners other than the General Partner, the General
Partner Entity, or any Subsidiary of either, or pursuant to a transaction
expressly permitted under Section 7.11.B or Section 11.2); (v) if
in the opinion of counsel to the Partnership, there is a material risk that
such transfer would cause the Partnership to cease to be classified as a
partnership for federal income tax purposes (except as a result of the
redemption or exchange for Shares of all Units held by all Limited Partners
other than the General Partner, the General Partner Entity, or any Subsidiary
of either, or pursuant to a transaction expressly permitted under Section 7.11.B
or Section 11.2); (vi) if such transfer requires the registration of
such Partnership Interest pursuant to any applicable federal or state
securities laws; (vii) 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 Partnership to become a “publicly traded partnership,” as such term
is defined in Section 469(k)(2) or Section 7704(b) of the
Code (provided that, this clause (vii) shall not be the basis for limiting
or restricting in any manner the exercise of the Redemption Right under Section 8.6
unless, and only to the extent that, outside tax counsel provides to the
General Partner an opinion to the effect that, in the absence of such
limitation or restriction, there is a material risk that the Partnership will
be treated as a “publicly traded partnership” and, by reason thereof, taxable
as a corporation); (viii) if such transfer subjects the Partnership or the
activities of the Partnership to regulation under the Investment Company Act of
1940, the Investment Advisors Act of 1940 or ERISA, each as amended; or (ix) if
in the opinion of legal counsel for the Partnership, there is a risk that such
transfer would cause the General Partner Entity to fail to continue to qualify
as a REIT or subject the General Partner Entity to any additional taxes under Section 857
or Section 4981 of the Code.

 

F.             Avoidance of “Publicly
Traded Partnership” Status. The General Partner shall monitor the transfers
of interests in the Partnership to determine (i) if such interests are
being traded on an “established securities market” or a “secondary market (or
the substantial equivalent thereof)” within the meaning of Section 7704 of
the Code and (ii) whether additional transfers of interests would result
in the Partnership being unable to qualify for at least one of the “safe
harbors” set forth in Regulations Section 1.7704-1 (or such other guidance
subsequently published by the IRS setting forth safe harbors under which
interests will not be treated as 

 

54

 

“readily
tradable on a secondary market (or the substantial equivalent thereof)” within
the meaning of Section 7704 of the Code) (the “Safe Harbors”). The General
Partner shall take all steps reasonably necessary or appropriate to prevent any
trading of interests or any recognition by the Partnership of transfers made on
such markets and, except as otherwise provided herein, to insure that at least
one of the Safe Harbors is met; provided, however, that the foregoing shall not
authorize the General Partner to limit or restrict in any manner the right of
any holder of a Partnership Unit to exercise the Redemption Right in accordance
with the terms of Section 8.6 unless, and only to the extent that, outside
tax counsel provides to the General Partner an opinion to the effect that, in
the absence of such limitation or restriction, there is a material risk that
the Partnership will be treated as a “publicly traded partnership” and, by
reason thereof, taxable as a corporation.

 

ARTICLE XII

ADMISSION OF PARTNERS

 

Section 12.1                                 Admission of a Successor General
Partner

 

A successor to all of the General Partner’s General Partnership
Interest pursuant to Section 11.2 who is proposed to be admitted as a
successor General Partner shall be admitted to the Partnership as the General
Partner, effective upon such transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In such case, the admission
shall be subject to such successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.

 

Section 12.2                                 Admission of Additional Limited
Partners

 

A.            General. No
Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent shall be given or withheld in the General
Partner’s sole and absolute discretion. A Person who makes a Capital
Contribution to the Partnership in accordance with this Agreement or who
exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner and only upon furnishing to the General Partner (i) evidence
of acceptance in form satisfactory to the General Partner of all of the terms
and conditions of this Agreement, including, without limitation, the power of
attorney granted in Section 15.11 and (ii) such other documents or
instruments as may be required in the discretion of the General Partner to
effect such Person’s admission as an Additional Limited Partner. The admission
of any Person as an Additional Limited Partner shall become effective on the
date upon which the name of such Person is recorded on the books and records of
the Partnership, following the consent of the General Partner to such
admission.

 

B.            Allocations to
Additional Limited Partners. If any Additional Limited Partner is admitted
to the Partnership on any day other than the first day of a Fiscal Year, then
Net Income, Net Losses, each item thereof and all other items allocable among
Partners and Assignees for

 

55

 

such Fiscal
Year shall be allocated among such Additional Limited Partner and all other
Partners and Assignees by taking into account their varying interests during
the Fiscal Year in accordance with Section 706(d) of the Code, using
the interim closing of the books method (unless the General Partner, in its
sole and absolute discretion, elects to adopt a daily, weekly or monthly
proration method, in which event Net Income, Net Losses, and each item thereof
would be prorated based upon the applicable period selected by the General
Partner). Solely for purposes of making such allocations, each of such items
for the calendar month in which an admission of any Additional Limited Partner
occurs shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited
Partner, and all distributions of Available Cash thereafter shall be made to
all the Partners and Assignees including such Additional Limited Partner.

 

Section 12.3                                 Amendment of Agreement and
Certificate of Limited Partnership

 

For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment to the Partner
Registry) and, if required by law, shall prepare and file an amendment to the
Certificate of Limited Partnership and may for this purpose exercise the power
of attorney granted pursuant to Section 15.11 hereof.

 

ARTICLE XIII

DISSOLUTION AND LIQUIDATION

 

Section 13.1                                 Dissolution

 

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

 

(i)                                     an
event of withdrawal of the General Partner (other than an event of bankruptcy),
unless within ninety (90) days after the withdrawal, the written Consent of the
Outside Limited Partners to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a substitute General
Partner is obtained;

 

(ii)                                  through
December 31, 2055, an election to dissolve the Partnership made by the
General Partner with the Consent of Partners holding Partnership Interests
representing ninety percent (90%) of the Percentage Interest of the Class A
Units;

 

56

 

(iii)                               an
election to dissolve the Partnership made by the General Partner, in its sole
and absolute discretion after December 31, 2055;

 

(iv)                              entry
of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Act;

 

(v)                                 the
sale of all or substantially all of the assets and properties of the
Partnership for cash or for marketable securities; or

 

(vi)                              a
final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to or at the time of the entry of such order or judgment, the
written Consent of the Outside Limited Partners is obtained to continue the
business of the Partnership and to the appointment, effective as of a date
prior to the date of such order or judgment, of a substitute General Partner.

 

Section 13.2                                 Winding Up

 

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

 

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

 

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

 

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

 

(4)                                  Fourth,
to the holders of Partnership Interests that are entitled to any preference in
distribution upon liquidation in accordance with the rights of any such class
or

 

57

 

series of
Partnership Interests (and, within each such class or series, to each holder
thereof pro rata based on its Percentage Interest in such class); and

 

(5)                                  The
balance, if any, to the Partners in accordance with their Capital Accounts,
after giving effect to all contributions, distributions, and allocations for
all periods.

 

The General Partner shall not receive any additional compensation for
any services performed pursuant to this Article XIII.

 

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

 

Section 13.3                                 Compliance With Timing Requirements
of Regulations; Restoration of Deficit Capital Accounts

 

A.            Timing of
Distributions. If the Partnership is “liquidated” within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
under this Article XIII to the General Partner and Limited Partners who
have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article XIII may be: (A) distributed to a
trust established for the benefit of the General Partner and Limited Partners
for the purposes of liquidating Partnership assets, collecting amounts owed to
the Partnership and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising out of or in
connection with the Partnership (in which case the assets of any such trust
shall be distributed to the General Partner and Limited Partners from time to
time, in the reasonable discretion of the General Partner, in the same
proportions as the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners
pursuant to this Agreement); or (B) withheld to provide a reasonable
reserve for Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the Partnership;
provided that such withheld amounts shall be distributed to the General Partner
and Limited Partners as soon as practicable.

 

58

 

B.            Restoration of
Deficit Capital Accounts Upon Liquidation of the Partnership. If any
Partner has a deficit balance in its Capital Account (after giving effect to
all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), such Partner shall
have no obligation to make any contribution to the capital of the Partnership
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever,
except as otherwise set forth in this Section 13.3.B, or as otherwise
expressly agreed in writing by the affected Partner and the Partnership after
the date hereof.  Notwithstanding the
foregoing, (i) if the General Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions, and
allocations for all Partnership Years or portions thereof, including the year
during which such liquidation occurs), the General Partner shall contribute to
the capital of the Partnership the amount necessary to restore such deficit
balance to zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3);
(ii) if a DRO Partner has a deficit balance in its Capital Account (after
giving effect to all contributions, distributions, and allocations for all
Partnership Years or portions thereof, including the year during which such
liquidation occurs), such DRO Partner shall be obligated to make a contribution
to the Partnership with respect to any such deficit balance in such DRO Partner’s
Capital Account upon a liquidation of the Partnership in an amount equal to the
lesser of such deficit balance or such DRO Partner’s DRO Amount; and (iii) the
first sentence of this Section 13.3.B shall not apply with respect to any
other Partner to the extent, but only to such extent, that such Partner
previously has agreed in writing, with the consent of the General Partner, to
undertake an express obligation to restore all or any portion of a deficit that
may exist in its Capital Account upon a liquidation of the Partnership.  No Limited Partner shall have any right to
become a DRO Partner, to increase its DRO Amount, or otherwise agree to restore
any portion of any deficit that may exist in its Capital Account without the
express written consent of the General Partner, in its sole and absolute
discretion.  Any contribution required of
a Partner under this Section 13.3.B. shall be made on or before the later
of (i) the end of the Partnership Year in which the interest is liquidated
or (ii) the ninetieth (90th) day following the date of such
liquidation.  The proceeds of any
contribution to the Partnership made by a DRO Partner with respect to a deficit
in such DRO Partner’s Capital Account balance shall be treated as a Capital
Contribution by such DRO Partner and the proceeds thereof shall be treated as
assets of the Partnership to be applied as set forth in Section 13.2.A.

 

C.            Restoration of
Deficit Capital Accounts Upon a Liquidation of a Partner’s Interest by Transfer.
If a DRO Partner’s interest in the Partnership is “liquidated” within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g) (other than in
connection with a liquidation of the Partnership) which term shall include a
redemption by the Partnership of such DRO Partner’s interest upon exercise of the
Redemption Right, and such DRO Partner is designated on Exhibit E as Part II
DRO Partner, such DRO Partner shall be required to contribute cash to the
Partnership equal to the lesser of (i) the amount required to increase its
Capital Account balance as of such date to zero, or (ii) such DRO Partner’s
DRO Amount. For this purpose, (i) the DRO Partner’s deficit Capital
Account balance shall be determined by taking into account all contributions,
distributions, and allocations for the portion of the Fiscal Year ending on the
date of the liquidation or redemption, and (ii) solely for purposes of
determining such DRO Partner’s Capital Account balance, the General Partner
shall redetermine the Carrying Value of the

 

59

 

Partnership’s
assets on such date based upon the principles set forth in Sections 1.D.(3) and
(4) of Exhibit B hereto, and shall take into account the DRO Partner’s
allocable share of any Unrealized Gain or Unrealized Loss resulting from such
redetermination in determining the balance of its Capital Account. The amount
of any payment required hereunder shall be due and payable within the time
period specified in the second to last sentence of Section 13.3.B.

 

D.            Effect of the Death
of a DRO Partner. After the death of a DRO Partner who is an individual,
the executor of the estate of such DRO Partner may elect to reduce (or
eliminate) the DRO Amount of such DRO Partner. Such elections may be made by
such executor by delivering to the General Partner within two hundred and
seventy (270) days of the death of such Limited Partner, a written notice
setting forth the maximum deficit balance in its Capital Account that such
executor agrees to restore under this Section 13.3, if any. If such
executor does not make a timely election pursuant to this Section 13.3
(whether or not the balance in the applicable Capital Account is negative at
such time), then the DRO Partner’s estate (and the beneficiaries thereof who
receive distributions of Partnership Interests therefrom) shall be deemed a DRO
Partner with a DRO Amount in the same amount as the deceased DRO Partner. Any
DRO Partner which itself is a partnership for federal income tax purposes may
likewise elect, after the date of its partner’s death to reduce (or eliminate)
its DRO Amount by delivering a similar notice to the General Partner within the
time period specified above, and in the absence of any such notice the DRO
Amount of such DRO Partner shall not be reduced to reflect the death of any of
its partners.

 

Section 13.4                                 Rights of Limited Partners

 

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

 

Section 13.5                                 Notice of Dissolution

 

If a Liquidating Event occurs or an event occurs that would, but for
provisions of an election or objection by one or more Partners pursuant to Section 13.1,
result in a dissolution of the Partnership, the General Partner shall, within
thirty (30) days thereafter, provide written notice thereof to each of the
Partners and to all other parties with whom the Partnership regularly conducts
business (as determined in the discretion of the General Partner).

 

Section 13.6                                 Cancellation of Certificate of
Limited Partnership

 

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

 

60

 

Section 13.7                                 Reasonable Time for Winding Up

 

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

 

Section 13.8                                 Waiver of Partition

 

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

 

Section 13.9                                 Liability Of Liquidator

 

The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7.

 

ARTICLE XIV

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

 

Section 14.1                                 Amendments

 

A.            General.
Amendments to this Agreement may be proposed by the General Partner or by any
Limited Partner holding Partnership Interests representing twenty-five percent
(25%) or more of the Percentage Interest of the Class A Units. Following
such proposal (except an amendment governed by Section 14.1.B), the
General Partner shall submit any proposed amendment to the Limited Partners.
The General Partner shall seek the written Consent of the Partners as set forth
in this Section 14.1 on the proposed amendment or shall call a meeting to
vote thereon and to transact any other business that it may deem appropriate.
For purposes of obtaining a written Consent, the General Partner may require a
response within a reasonable specified time, but not less than fifteen (15)
days, and failure to respond in such time period shall constitute a vote in
favor of the recommendation of the General Partner. A proposed amendment shall
be adopted and be effective as an amendment hereto if it is approved by the
General Partner and, except as provided in Section 14.1.B, 14.1.C or
14.1.D, it receives the Consent of the Partners holding Partnership Interests
representing more than fifty percent (50%) of the Percentage Interest of the Class A
Units.

 

B.            Amendments Not
Requiring Limited Partner Approval. Notwithstanding Section 14.1.A but
subject to Section 14.1.C, the General Partner shall have the power,
without the Consent or approval of the Limited Partners, to amend this
Agreement as may be required to facilitate or implement any of the following
purposes:

 

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

 

61

 

(2)                                  to
reflect the admission, substitution, termination, or withdrawal of Partners in
accordance with this Agreement (which may be effected through the replacement
of the Partner Registry with an amended Partner Registry);

 

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

 

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

 

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

 

(6)                                  to
modify the method by which Partners’ Capital Accounts, or any debits or credits
thereto, are computed , in accordance with Section 1.E of Exhibit C
to this Agreement; and

 

(7)                                  to include
provisions in the Agreement that may be referenced in any rulings, regulations,
notices, announcements, or other guidance regarding the federal income tax
treatment of compensatory partnership interests issued and made effective after
the date hereof or in connection with any elections that the General Partner
determines to be necessary or advisable in respect of any such guidance.  Any such amendment may include, without
limitation, (a) a provision authorizing or directing the General Partner
to make any election under the such guidance, (b) a covenant by the
Partnership and all of the Partners to agree to comply with the such guidance, (c) an
amendment to the capital account maintenance provisions and the allocation
provisions contained in Exhibit B or Exhibit C of this
Agreement so that such provisions comply with (I) the provisions of the
Code and the Treasury Regulations as they apply to the issuance of compensatory
partnership interests and (II) the requirements of such Guidance and any
election made by the General Partner with respect thereto, including, a
provision requiring “forfeiture allocations” as appropriate.  Any such
amendments to this Agreement shall be binding upon all Members.

 

The General Partner shall notify the Limited Partners in writing when
any action under this Section 14.1.B is taken in the next regular
communication to the Limited Partners or within 90 days of the date thereof,
whichever is earlier.

 

C.            Amendments
Requiring Limited Partner Approval (Excluding the General Partner).
Notwithstanding Section 14.1.A, without the Consent of the Outside Limited
Partners, the General Partner shall not amend Section 4.2.A, Section 7.1.A
(second sentence only), Section 7.5,

 

62

 

Section 7.6,
Section 7.8, Section 7.11.B, Section 11.2, Section 13.1
(other than Section 13.1(ii) which can be amended only with a Consent
of Partners holding Partnership Interests representing 90% or more of the
Percentage Interest of the Class A Units (including Partnership Units held
by the General Partner), the last sentence of Section 11.4.A (provided
that no such amendment shall in any event adversely affect the rights of any
lender who made a loan or who extended credit and received in connection
therewith a pledge of Partnership Units prior to the date such amendment is
adopted unless, and only to the extent such lender consents thereto), this Section 14.1.C
or Section 14.2.

 

D.            Other Amendments
Requiring Certain Limited Partner Approval. Notwithstanding anything in
this Section 14.1 to the contrary, this Agreement shall not be amended
with respect to any Partner adversely affected without the Consent of such
Partner adversely affected, or to any Assignee who is a bona fide financial
institution that loans money or otherwise extends credit to a holder of
Partnership Units that is adversely affected, but in either case only if such amendment
would (i) convert such Limited Partner’s interest in the Partnership into
a general partner’s interest, (ii) modify the limited liability of such
Limited Partner, (iii) amend Section 7.11.A, (iv) amend Article V
or Article VI (except as permitted pursuant to Sections 4.2, 5.4, 6.2 and
14.1(B)(3)), (v) amend Section 8.6 or any defined terms set forth in Article I
that relate to the Redemption Right (except as permitted in Section 8.6.E),
or (vi) amend Sections 11.3 or 11.5, or add any additional restrictions to
Section 11.6.E or amend Section 14.1.B(4) or this Section 14.1.D.

 

E.             Amendment and
Restatement of Partner Registry Not an Amendment.  Notwithstanding anything in this Article XIV
or elsewhere in this Agreement to the contrary, any amendment and restatement
of the Partner Registry by the General Partner to reflect events or changes
otherwise authorized or permitted by this Agreement shall not be deemed an
amendment of this Agreement and may be done at any time and from time to time,
as determined by the General Partner without the Consent of the Limited
Partners and without any notice requirement.

 

Section 14.2                                 Meetings of the Partners

 

A.            General. Meetings
of the Partners may be called by the General Partner and shall be called upon
the receipt by the General Partner of a written request by Limited Partners
holding Partnership Interests representing twenty-five percent (25%) or more of
the Percentage Interest of the Class A Units. The call shall state the
nature of the business to be transacted. Notice of any such meeting shall be
given to all Partners not less than seven (7) days nor more than thirty
(30) days prior to the date of such meeting. Partners may vote in person or by
proxy at such meeting. Whenever the vote or Consent of Partners (including any
subset of Partners) is permitted or required under this Agreement, such vote or
Consent may be given at a meeting of Partners or may be given in accordance
with the procedure prescribed in Section 14.1.A. Except as otherwise
expressly provided in this Agreement, the Consent of holders of Partnership
Interests representing a majority of the Percentage Interests of the Class A
Units shall control.

 

B.            Actions Without a
Meeting. Except as otherwise expressly provided by this Agreement, any
action required or permitted to be taken at a meeting of the Partners may be
taken without a meeting if a written consent setting forth the action so taken
is signed by Partners

 

63

 

holding
Partnership Interests representing more than fifty percent (50%) (or such other
percentage as is expressly required by this Agreement) of the Percentage
Interest of the Class A Units. Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of
Partners. Such consent shall be filed with the General Partner. An action so
taken shall be deemed to have been taken at a meeting held on the date on which
written consents from the Partners holding the required Percentage Interest of
the Class A Units have been filed with the General Partner. This provision
for action without a meeting shall not be deemed (i) to permit any action
that otherwise is prohibited by this Agreement or that requires any greater
level of Consent than that specified in this paragraph or (ii) to require
a Consent on the part of any Partner (or the approval of any person) to an
action that does not otherwise require Consent or approval under this
Agreement.

 

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

 

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

 

ARTICLE XV

GENERAL PROVISIONS

 

Section 15.1                                 Addresses and Notice

 

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

 

Section 15.2                                 Titles and Captions

 

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

 

64

 

Section 15.3                                 Pronouns And Plurals

 

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

 

Section 15.4                                 Further Action

 

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

 

Section 15.5                                 Binding Effect

 

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

 

Section 15.6                                 Creditors

 

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

 

Section 15.7                                 Waiver

 

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

 

Section 15.8                                 Counterparts

 

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

 

Section 15.9                                 Applicable Law

 

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

 

65

 

Section 15.10                          Invalidity Of Provisions

 

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

 

Section 15.11                          Power Of Attorney

 

A.            General. Each
Limited Partner and each Assignee who accepts Partnership Units (or any rights,
benefits or privileges associated therewith) is deemed to irrevocably
constitute and appoint the General Partner, any Liquidator and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in
each case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead
to:

 

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

 

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

 

66

 

Nothing contained in this Section 15.11 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement
except in accordance with Article XIV hereof or as may be otherwise
expressly provided for in this Agreement.

 

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

 

Section 15.12                          Entire Agreement

 

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

 

Section 15.13                          No Rights As Shareholders

 

Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as shareholders
(or owners of any other form of equity interest) of the General Partner or
General Partner Entity, including, without limitation, any right to receive
dividends or other distributions made to shareholders of the General Partner or
the General Partner Entity, or to vote or to consent or receive notice as
shareholders in respect to any meeting of shareholders for the election of
trustees or directors of the General Partner or General Partner Entity or any
other matter.

 

Section 15.14                          Limitation To Preserve REIT Status

 

To the extent that any amount paid or credited to the General Partner
or any of its officers, trustees, employees or agents pursuant to Section 7.4
or Section 7.7 would constitute gross income to the General Partner for
purposes of Section 856(c)(2) or

856(c)(3) of the Code (a “General Partner Payment”) then, notwithstanding
any other provision of this Agreement, the amount of such General Partner
Payment for any fiscal year shall not exceed the lesser of:

 

67

 

(i)            an
amount equal to the excess, if any, of (a) 4% of the General Partner’s
total gross income (within the meaning of Section 856(c)(3) of the
Code but not including the amount of any General Partner Payments) for the
fiscal year which is described in subsections (A) though (H) of Section 856(c)(2) of
the Code over (b) the amount of gross income (within the meaning of Section 856(c)(2) of
the Code) derived by the General Partner from sources other than those
described in subsections (A) through (H) of Section 856(c)(2) of
the Code (but not including the amount of any General Partner Payments); or

 

(ii)           an
amount equal to the excess, if any of (a) 24% of the General Partner’s
total gross income (but not including the amount of any General Partner
Payments) for the fiscal year which is described in subsections (A) through
(I) of Section 856(c)(3) of the Code over (b) the amount of
gross income (within the meaning of Section 856(c)(3) of the Code but
not including the amount of any General Partner Payments) derived by the
General Partner from sources other than those described in subsections (A) through
(I) of Section 856(c)(3) of the Code;

 

provided, however, that General Partner
Payments in excess of the amounts set forth in subparagraphs (i) and (ii) above
may be made if the General Partner, as a condition precedent, obtains an
opinion of tax counsel that the receipt of such excess amounts would not
adversely affect the General Partner’s ability to qualify as a REIT. To the
extent General Partner Payments may not be made in a year due to the foregoing
limitations, such General Partner Payments shall carry over and be treated as
arising in the following year, provided, however, that such amounts shall not
carry over for more than five years, and if not paid within such five year
period, shall expire; provided further, that (i) as General Partner
Payments are made, such payments shall be applied first to carry over amounts
outstanding, if any, and (ii) with respect to carry over amounts for more
than one Fiscal Year, such payments shall be applied to the earliest Fiscal
Year first.

 

68

 

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

 

 

	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  
	
   

  	
  Republic Property Trust

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark R. Keller

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: Mark R. Keller

  
	
   

  	
   

  
	
   

  	
  Title:  
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LIMITED PARTNERS:

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Republic Property Trust,

  
	
   

  	
   

  	
  as Attorney-in-Fact for the

  
	
   

  	
   

  	
  Limited Partners

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark R. Keller

  
	
   

  	
   

  
	
   

  	
  Name: Mark R. Keller

  
	
   

  	
   

  
	
   

  	
  Title:  
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For purposes of Section 8.6 hereof:

  
	
   

  	
   

  
	
   

  	
  Republic Property Trust

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark R. Keller

  
	
   

  	
   

  
	
   

  	
  Name: Mark R. Keller

  
	
   

  	
   

  
	
   

  	
  Title:  
  Chief Executive Officer

  
					

 

69

 

EXHIBIT A

 

FORM OF
PARTNER REGISTRY

 

	
   

  	
   

  	
  CLASS A AND CLASS B UNITS

  	
   

  
	
  Name
  And Address Of Partner

  	
   

  	
  Partnership

  Units

  	
   

  	
  Initial

  Capital

  Account

  	
   

  	
  Percentage

  Interest (1)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GENERAL PARTNER:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIMITED PARTNERS:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL CLASS A AND CLASS B UNITS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.00000

  	
  %

  

 

NOTES:

 

(1) For purposes of this calculation,
the Class A Units and Class B Units are treated as one class.

 

A-1

 

EXHIBIT B

 

CAPITAL
ACCOUNT MAINTENANCE

 

1.             Capital Accounts of the Partners

 

A.            The Partnership shall
maintain for each Partner a separate Capital Account in accordance with the rules of
Regulations Section l.704-l(b)(2)(iv). Such Capital Account shall be
increased by (i) the amount of all Capital Contributions and any other
deemed contributions made by such Partner to the Partnership pursuant to this
Agreement and (ii) all items of Partnership income and gain (including
income and gain exempt from tax) computed in accordance with Section 1.B
hereof and allocated to such Partner pursuant to Section 6.1 of the
Agreement and Exhibit C thereof, and decreased by (x) the amount of cash
or Agreed Value of property actually distributed or deemed to be distributed to
such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and
allocated to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C
thereof.

 

B.            For purposes of
computing the amount of any item of income, gain, deduction or loss to be
reflected in the Partners’ Capital Accounts, unless otherwise specified in this
Agreement, the determination, recognition and classification of any such item
shall be the same as its determination, recognition and classification for
federal income tax purposes determined in accordance with Section 703(a) of
the Code (for this purpose all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss), with the following
adjustments:

 

(1)           Except
as otherwise provided in Regulations Section 1.704-1(b)(2)(iv)(m), the
computation of all items of income, gain, loss and deduction shall be made
without regard to any adjustments to the adjusted bases of the assets of the
Partnership pursuant to Sections 734 or 743 of the Code, provided that the
amounts of any adjustments to the adjusted bases of the assets of the
Partnership made pursuant to Section 734 of the Code as a result of the
distribution of property by the Partnership to a Partner (to the extent that
such adjustments have not previously been reflected in the Partners’ Capital
Accounts) shall be reflected in the Capital Accounts of the Partners in the
manner and subject to the limitations prescribed in Regulations Section l.704-1(b)(2)(iv)(m)(4).

 

(2)           The
computation of all items of income, gain, and deduction shall be made without
regard to the fact that items described in Sections 705(a)(l)(B) or
705(a)(2)(B) of the Code are not includible in gross income or are neither
currently deductible nor capitalized for federal income tax purposes.

 

(3)           Any
income, gain or loss attributable to the taxable disposition of any Partnership
property shall be determined as if the adjusted basis of such property as of
such date of disposition were equal in amount to the Partnership’s Carrying
Value with respect to such property as of such date.

 

B-1

 

(4)           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.

 

(5)           In
the event the Carrying Value of any Partnership Asset is adjusted pursuant to Section 1.D
hereof, the amount of any such adjustment shall be taken into account as gain
or loss from the disposition of such asset.

 

(6)           Any
items specially allocated under Section 2 of Exhibit C to the
Agreement hereof shall not be taken into account.

 

C.            A transferee
(including any Assignee) of a Partnership Unit shall succeed to a pro rata
portion of the Capital Account of the transferor in accordance with Regulations
Section 1.704-1(b)(2)(iv)(l).

 

D.            (1) Consistent
with the provisions of Regulations Section 1.704-1(b)(2)(iv)(f), and as
provided in Section 1.D(2), the Carrying Values of all Partnership assets
shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of the times of
the adjustments provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of
each such property and allocated pursuant to Section 6.1 of the Agreement.

 

(2)           Such
adjustments shall be made as of the following times: (a) immediately prior
to the acquisition of an additional interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Capital Contribution; (b) immediately
prior to the distribution by the Partnership to a Partner of more than a de
minimis amount of property as consideration for an interest in the Partnership;
and (c) immediately prior to the liquidation of the Partnership within the
meaning of Regulations Section 1.704-l(b)(2)(ii)(g), provided, however,
that adjustments pursuant to clauses (a) and (b) above shall be made
only if the General Partner determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Partners in the
Partnership.

 

(3)           In
accordance with Regulations Section 1.704- l(b)(2)(iv)(e), the Carrying
Value of Partnership assets distributed in kind shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as of the time any such asset is distributed.

 

(4)           In
determining Unrealized Gain or Unrealized Loss for purposes of this Exhibit B,
the aggregate cash amount and fair market value of all Partnership assets
(including cash or cash equivalents) shall be determined by the General Partner
using such reasonable method of valuation as it may adopt, or in the case of a
liquidating distribution pursuant to Article XIII of the Agreement, shall
be determined and allocated by the Liquidator using such reasonable methods of valuation
as it may adopt. The General Partner, or the Liquidator, as the case may be,
shall allocate such aggregate fair market value among the assets of the
Partnership in such manner as it determines in its sole and absolute discretion
to arrive at a fair market value for individual properties.

 

B-2

 

E.             The provisions of the
Agreement (including this Exhibit B and the other Exhibits to the
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 (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership,
the General Partner, or the Limited Partners) are computed in order to comply
with such Regulations, the General Partner may make such modification without
regard to Article XIV of the Agreement, provided that it is not likely to
have a material effect on the amounts distributable to any Person pursuant to Article XIII
of the Agreement upon the dissolution of the Partnership. The General Partner
also shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the Capital Accounts of the Partners and the amount
of Partnership capital reflected on the Partnership’s balance sheet, as
computed for book purposes, in accordance with Regulations Section l.704-l(b)(2)(iv)(q),
and (ii) make any appropriate modifications in the event unanticipated
events might otherwise cause this Agreement not to comply with Regulations Section l.704-1(b).

 

2.             No Interest

 

No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners’ Capital Accounts.

 

3.             No Withdrawal

 

No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.

 

B-3

 

EXHIBIT C

 

SPECIAL
ALLOCATION RULES

 

1.             Special Allocation Rules.

 

Notwithstanding any other provision of the Agreement or this Exhibit C,
the following special allocations shall be made in the following order:

 

A.            Minimum Gain
Chargeback. Notwithstanding the provisions of Section 6.1 of the
Agreement or any other provisions of this Exhibit C, if there is a net
decrease in Partnership Minimum Gain during any Fiscal Year, each Partner shall
be specially allocated items of Partnership income and gain for such year (and,
if necessary, subsequent years) in an amount equal to such Partner’s share of
the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined in accordance with
Regulations Section 1.704-2(f)(6). This Section 1.A is intended to
comply with the minimum gain chargeback requirements in Regulations Section 1.704-2(f) and
for purposes of this Section 1.A only, each Partner’s Adjusted Capital
Account Deficit shall be determined prior to any other allocations pursuant to Section 6.1
of the Agreement or this Exhibit C with respect to such Fiscal Year and
without regard to any decrease in Partner Minimum Gain during such Fiscal Year.

 

B.            Partner Minimum
Gain Chargeback. Notwithstanding any other provision of Section 6.1 of
this Agreement or any other provisions of this Exhibit C (except Section 1.A
hereof), if there is a net decrease in Partner Minimum Gain attributable to a
Partner Nonrecourse Debt during any Fiscal Year, each Partner who has a share
of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Partner’s share of the
net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(5).
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each General Partner and Limited
Partner pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4). This Section 1.B
is intended to comply with the minimum gain chargeback requirement in such Section of
the Regulations and shall be interpreted consistently therewith.  Solely for purposes of this Section 1.B,
each Partner’s Adjusted Capital Account Deficit shall be determined prior to
any other allocations pursuant to Section 6.1 of the Agreement or this Exhibit C
with respect to such Fiscal Year, other than allocations pursuant to Section 1.A
hereof.

 

C.            Qualified Income
Offset. In the event any Partner unexpectedly receives any adjustments,
allocations or distributions described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4),
l.704-1(b)(2)(ii)(d)(5), or 1.704-l(b)(2)(ii)(d)(6), and after giving effect to
the allocations required under Sections 1.A and 1.B hereof with respect to such
Fiscal Year, such Partner has an Adjusted Capital Account Deficit, items of
Partnership income and gain (consisting of a pro rata

 

C-1

 

portion of
each item of Partnership income, including gross income and gain for the Fiscal
Year) shall be specifically allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 1.C is intended to
constitute a “qualified income offset” under Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.

 

D.            Gross Income
Allocation. In the event that any Partner has an Adjusted Capital Account
Deficit at the end of any Fiscal Year (after taking into account allocations to
be made under the preceding paragraphs hereof with respect to such Fiscal
Year), each such Partner shall be specially allocated items of Partnership
income and gain (consisting of a pro rata portion of each item of Partnership
income, including gross income and gain for the Fiscal Year) in an amount and
manner sufficient to eliminate, to the extent required by the Regulations, its
Adjusted Capital Account Deficit.

 

E.             Nonrecourse
Deductions. Except as may otherwise be expressly provided by the General
Partner pursuant to Section 4.2 with respect to other classes of
Partnership Units, Nonrecourse Deductions for any Fiscal Year shall be
allocated only to the Partners holding Class A Units and Class B
Units in accordance with their respective Percentage Interests. If the General
Partner determines in its good faith discretion that the Partnership’s
Nonrecourse Deductions must be allocated in a different ratio to satisfy the
safe harbor requirements of the Regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio for such Fiscal Year to the
numerically closest ratio which would satisfy such requirements.

 

F.             Partner
Nonrecourse Deductions. 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 Sections
1.704-2(b)(4) and 1.704-2(i).

 

G.            Adjustments
Pursuant to Code Sections 743 and 734. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, 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 item of 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 adjusted pursuant to such Section of
the Regulations.

 

2.             Allocations for Tax Purposes

 

A.            Except as otherwise
provided in this Section 2, for federal income tax purposes, each item of
income, gain, loss and deduction shall be allocated among the Partners in the
same manner as its correlative item of “book” income, gain, loss or deduction
is allocated pursuant to Section 6.1 of the Agreement and Section 1
of this Exhibit C.

 

C-2

 

B.            In an attempt to
eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, and deduction shall be
allocated for federal income tax purposes among the Partners as follows:

 

(1)           (a)           In
the case of a Contributed Property, such items attributable thereto shall be
allocated among the Partners consistent with the principles of Section 704(c) of
the Code to take into account the variation between the Section 704(c) Value
of such property and its adjusted basis at the time of contribution (taking
into account Section 2.C of this Exhibit C); and

 

(b)           any
item of Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Partners in the same manner as its correlative
item of “book” gain or loss is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.

 

(2)           (a)           In
the case of an Adjusted Property, such items shall

 

(i)            first,
be allocated among the Partners in a manner consistent with the principles of Section 704(c) of
the Code to take into account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations thereof pursuant to Exhibit B;

 

(ii) second,
in the event such property was originally a Contributed Property, be allocated
among the Partners in a manner consistent with Section 2.B(1) of this
Exhibit C; and

 

(b)           any
item of Residual Gain or Residual Loss attributable to an Adjusted Property
shall be allocated among the Partners in the same manner its correlative item
of “book” gain or loss is allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.

 

(3)           all
other items of income, gain, loss and deduction shall be allocated among the
Partners the same manner as their correlative item of “book” gain or loss is
allocated pursuant to Section 6.1 of the Agreement and Section 1 of
this Exhibit C.

 

C.            To the extent
Regulations promulgated pursuant to Section 704(c) of the Code permit
a Partnership to utilize alternative methods to eliminate the disparities
between the Carrying Value of property and its adjusted basis, the General
Partner shall, subject to any agreements binding the Partnership and/or the
General Partner, have the authority to elect the method to be used by the
Partnership and such election shall be binding on all Partners.

 

C-3

 

EXHIBIT D

 

NOTICE
OF REDEMPTION

 

The undersigned hereby irrevocably (i) redeems                  
Partnership Units in Republic Property Limited Partnership in accordance with
the terms of the Agreement of Limited Partnership of Republic Property Limited
Partnership , as amended, and the Redemption Right referred to therein, (ii) surrenders
such Partnership Units and all right, title and interest therein and (iii) directs
that the Cash Amount or Shares Amount (as determined by the General Partner)
deliverable upon exercise of the Redemption Right be delivered to the address
specified below, and if Shares are to be delivered, such Shares be registered
or placed in the name(s) and at the address(es) specified below. The undersigned
hereby represents, warrants, and certifies that the undersigned (a) has
marketable and unencumbered title to such Partnership Units, free and clear of
the rights of or interests of any other person or entity, (b) has the full
right, power and authority to redeem and surrender such Partnership Units as
provided herein and (c) has obtained the consent or approval of all
persons or entities, if any, having the right to consult or approve such
redemption and surrender.

 

	
  Dated:

  	
   

  	
   

  	
  Name of Limited Partner:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature of Limited Partner)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Street Address)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (City)

  	
  (State)

  	
  (Zip Code)

  
	
   

  	
   

  
	
   

  	
  Signature Guaranteed by:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  IF SHARES ARE TO BE ISSUED, ISSUE TO:

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Social Security or tax identifying number:

  	
   

  
							

 

D-1

 

EXHIBIT E

 

FORM OF
DRO REGISTRY

 

	
  PART I
  DRO PARTNERS

  	
   

  	
  DRO AMOUNT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PART II
  DRO PARTNERS

  	
   

  	
   

  

 

E-1

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