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                                                                    Exhibit 10.2

                        GLADSTONE COMMERCIAL CORPORATION

                           2003 EQUITY INCENTIVE PLAN

                             ADOPTED: JUNE 10, 2003
                     APPROVED BY STOCKHOLDERS: JUNE 10, 2003
                         TERMINATION DATE: JUNE 9, 2013

1.         PURPOSES.

           (a)  ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are Employees, Directors and Consultants.

           (b)  AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

           (c)  GENERAL PURPOSE. The Company, by means of the Plan, seeks to
retain the services of the group of persons eligible to receive Stock Awards, to
secure and retain the services of new members of this group and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.

2.         DEFINITIONS.

           (a)  "AFFILIATE" means any parent corporation or subsidiary
corporation of the Company, whether now or hereafter existing, as those terms
are defined in Sections 424(e) and (f), respectively, of the Code and any
investment adviser or external management company providing services to the
Company.

           (b)  "BOARD" means the Board of Directors of the Company.

           (c)  "CAPITALIZATION ADJUSTMENT" has the meaning ascribed to that
term in Section 11(a).

           (d)  "CHANGE IN CONTROL" means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

                (i) any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company's then outstanding securities
other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
(A) on account of the acquisition of securities of the Company by an
institutional investor, any affiliate thereof or any other Exchange Act Person
that acquires the Company's securities in a transaction or series of related
transactions that are primarily a private financing transaction for the Company
or (B) solely because the level of Ownership held by any

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Exchange Act Person (the "Subject Person") exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person
becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur;

                (ii) there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company if, immediately after
the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction;

                (iii) the stockholders of the Company approve or the Board
approves a plan of complete dissolution or liquidation of the Company, or a
complete dissolution or liquidation of the Company shall otherwise occur;

                (iv) there is consummated a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportion as their
Ownership of the Company immediately prior to such sale, lease, license or other
disposition; or

           The term Change in Control shall not include a sale of assets, merger
or other transaction effected exclusively for the purpose of changing the
domicile of the Company.

           Notwithstanding the foregoing or any other provision of this Plan,
the definition of Change in Control (or any analogous term) in an individual
written agreement between the Company or any Affiliate and the Participant shall
supersede the foregoing definition with respect to Stock Awards subject to such
agreement (it being understood, however, that if no definition of Change in
Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition shall apply).

           (e)  "CODE" means the Internal Revenue Code of 1986, as amended.

           (f)  "COMMITTEE" means a committee of one or more members of the
Board appointed by the Board in accordance with Section 3(c).

           (g)  "COMMON STOCK" means the common stock of the Company.

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           (h)  "COMPANY" means Gladstone Commercial Corporation, a Maryland
corporation.

           (i)  "CONSULTANT" means any person, including an advisor, (i) engaged
by the Company or an Affiliate to render consulting or advisory services and who
is compensated for such services or (ii) serving as a member of the Board of
Directors of an Affiliate and who is compensated for such services. However, the
term "Consultant" shall not include Directors who are not compensated by the
Company for their services as Directors, and the payment of a director's fee by
the Company for services as a Director shall not cause a Director to be
considered a "Consultant" for purposes of the Plan.

           (j)  "CONTINUOUS SERVICE" means that the Participant's service with
the Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant's service with the Company or an Affiliate, shall not terminate a
Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant to an Affiliate or to a Director shall
not constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave. Notwithstanding the foregoing, a leave of absence
shall be treated as Continuous Service for purposes of vesting in a Stock Award
only to such extent as may be provided in the Company's leave of absence policy
or in the written terms of the Participant's leave of absence.

           (k)  "CORPORATE TRANSACTION" means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

                (i) a sale or other disposition of all or substantially all, as
determined by the Board in its discretion, of the consolidated assets of the
Company and its Subsidiaries;

                (ii) a sale or other disposition of at least ninety percent
(90%) of the outstanding securities of the Company;

                (iii) a merger, consolidation or similar transaction following
which the Company is not the surviving corporation; or

                (iv) a merger, consolidation or similar transaction following
which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of securities, cash
or otherwise.

           (l)  "COVERED EMPLOYEE" means the chief executive officer and the
four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

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           (m)  "DIRECTOR" means a member of the Board.

           (n)  "DISABILITY" means the permanent and total disability of a
person within the meaning of Section 22(e)(3) of the Code.

           (o)  "EMPLOYEE" means any person employed by the Company or an
Affiliate. Service as a Director or payment of a director's fee by the Company
for such service or for service as a member of the Board of Directors of an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.

           (p)  "ENTITY" means a corporation, partnership or other entity.

           (q)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

           (r)  "EXCHANGE ACT PERSON" means any natural person, Entity or
"group" (within the meaning of Section 13(d) or 14(d) of the Exchange Act),
except that "Exchange Act Person" shall not include (A) the Company or any
Subsidiary of the Company, (B) any employee benefit plan of the Company or any
Subsidiary of the Company or any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary of the Company,
(C) an underwriter temporarily holding securities pursuant to an offering of
such securities, or (D) an Entity Owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company.

           (s)  "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock determined as follows:

                (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

                (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

           (t)  "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

           (u)  "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not
currently an employee or officer of the Company or its parent or a subsidiary,
does not receive compensation, either directly or indirectly, from the Company
or its parent or a subsidiary, for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which disclosure
would not be required under Item 404(a) of Regulation S-K promulgated pursuant
to the Securities Act ("Regulation S-K")), does not possess an interest in any
other transaction for which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in

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a business relationship for which disclosure would be required pursuant to Item
404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee
director" for purposes of Rule 16b-3.

           (v)  "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

           (w)  "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

           (x)  "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

           (y)  "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

           (z)  "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

           (aa) "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an "affiliated corporation" who
receives compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the taxable year, has not been an officer
of the Company or an "affiliated corporation", and does not receive remuneration
from the Company or an "affiliated corporation," either directly or indirectly,
in any capacity other than as a Director or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.

           (bb) "OWN," "OWNED," "OWNER," "OWNERSHIP" A person or Entity shall be
deemed to "Own," to have "Owned," to be the "Owner" of, or to have acquired
"Ownership" of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

           (cc) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

           (dd) "PLAN" means this Gladstone Commercial Corporation 2003 Equity
Incentive Plan.

           (ee) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

           (ff) "SECURITIES ACT" means the Securities Act of 1933, as amended.

           (gg) "STOCK AWARD" means any right granted under the Plan, including
an Option, a stock bonus and a right to acquire restricted stock.

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           (hh) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

           (ii) "SUBSIDIARY" means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, Owned by the Company, and (ii) any partnership in which the Company
has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%).

           (jj) "TEN PERCENT STOCKHOLDER" means a person who Owns (or is deemed
to Own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3.         ADMINISTRATION.

           (a)  ADMINISTRATION BY BOARD. The Board shall administer the Plan
unless and until the Board delegates administration to a Committee, as provided
in Section 3(c).

           (b)  POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

                (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

                (ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

                (iii) To effect, at any time and from time to time, with the
consent of any adversely affected Optionholder, (1) the reduction of the
exercise price of any outstanding Option under the Plan, (2) the cancellation of
any outstanding Option under the Plan and the grant in substitution therefor of
(A) a new Option under the Plan covering the same or a different number of
shares of Common Stock, (B) a stock bonus, (C) the right to acquire restricted
stock, and/or (D) cash, or (3) any other action that is treated as a repricing
under generally accepted accounting principles.

                (iv) To amend the Plan or a Stock Award as provided in Section
12.

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                (v) To terminate or suspend the Plan as provided in Section 13.

                (vi) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company and that are not in conflict with the provisions of the Plan.

           (c)  DELEGATION TO COMMITTEE.

                (i) GENERAL. The Board may delegate administration of the Plan
to a Committee or Committees of one (1) or more members of the Board, and the
term "Committee" shall apply to any person or persons to whom such authority has
been delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan.

                (ii) SECTION 162(m) AND RULE 16B-3 COMPLIANCE. In the discretion
of the Board, the Committee may consist solely of two or more Outside Directors,
in accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. In addition, the Board or
the Committee may delegate to a committee of one or more members of the Board
the authority to grant Stock Awards to eligible persons who are either (a) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Stock Award, (b) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code, or
(c) not then subject to Section 16 of the Exchange Act.

           (d)  EFFECT OF BOARD'S DECISION. All determinations, interpretations
and constructions made by the Board in good faith shall not be subject to review
by any person and shall be final, binding and conclusive on all persons.

4.         SHARES SUBJECT TO THE PLAN.

           (a)  SHARE RESERVE. Subject to the provisions of Section 11(a)
relating to Capitalization Adjustments, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate six hundred twenty
five thousand (625,000) shares.

           (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award
shall for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, or if any shares of Common Stock issued to a
Participant pursuant to a Stock Award are forfeited back to or repurchased by
the Company because of or in connection with the failure to meet a contingency
or condition required to vest such shares in the Participant, the shares of
Common Stock that have not been acquired, as well as such Stock Award or the
shares of Common Stock forfeited or repurchased under such Stock Award shall
revert to and again become available for issuance under the Plan; provided,
however, that subject to the provisions of Section 11(a) relating to
Capitalization Adjustments, the aggregate maximum number of shares of Common

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Stock that may be issued as Incentive Stock Options shall be six hundred twenty
five thousand (625,000) shares.

           (b)  SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

5.         ELIGIBILITY.

           (a)  ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options
may be granted only to Employees. Stock Awards other than Incentive Stock
Options may be granted to Employees, Directors and Consultants.

           (b)  TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock on the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

           (c)  SECTION 162(m) LIMITATION ON ANNUAL GRANTS. Subject to the
provisions of Section 11(a) relating to Capitalization Adjustments, no Employee
shall be eligible to be granted Options covering more than three hundred twelve
thousand five hundred (312,500) shares of Common Stock during any calendar year.

           (d)  CONSULTANTS. A Consultant shall not be eligible for the grant of
a Stock Award if, at the time of grant, a Form S-8 Registration Statement under
the Securities Act ("Form S-8") is not available to register either the offer or
the sale of the Company's securities to such Consultant because of the nature of
the services that the Consultant is providing to the Company, because the
Consultant is not a natural person, or because of any other rule governing the
use of Form S-8, unless the Company determines both (i) that such grant (A)
shall be registered in another manner under the Securities Act (e.g., on a Form
S-3 Registration Statement) or (B) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act,
if applicable, and (ii) that such grant complies with the securities laws of all
other relevant jurisdictions.

           (e)  LIMITATION ON OWNERSHIP. Unless otherwise approved by the
Board, no Stock Award may be granted to a Participant who, upon exercise of all
Options then held by such Participant, would Own in excess of 9.8% of the
outstanding shares of capital stock of the Company.

6.         OPTION PROVISIONS.

           Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
shall be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but, subject
to such differing provisions as may be contained in any individually negotiated
written agreement between the Company and a Participant, each Option shall
include (through incorporation of provisions hereof by reference in the Option
or otherwise) the substance of each of the following provisions:

           (a)  TERM. Subject to the provisions of Section 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date on which it was granted.

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           (b)  EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of Section 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

           (c)  EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the Common Stock subject to the Option
on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

           (d)  CONSIDERATION. The purchase price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is exercised
or (ii) at the discretion of the Board at the time of the grant of the Option
(or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to
the Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). To the extent applicable state
corporate laws so require, payment of the Common Stock's "par value," as defined
by applicable state statutes, shall be made in cash and not by deferred payment

           In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid (1) the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement and (2) the treatment of the Option as a
variable award for financial accounting purposes.

           (e)  TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

           (f)  TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option shall be transferable to the extent provided in the Option
Agreement. If the Nonstatutory Stock

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Option does not provide for transferability, then the Nonstatutory Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

           (g)  VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this Section 6(g) are subject to any Option provisions governing
the minimum number of shares of Common Stock as to which an Option may be
exercised.

           (h)  TERMINATION OF CONTINUOUS SERVICE. In the event that an
Optionholder's Continuous Service terminates (other than upon the Optionholder's
death or Disability), the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise such Option as of the date
of termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified in the Option Agreement, the Option
shall terminate.

           (i)  EXTENSION OF TERMINATION DATE. An Optionholder's Option
Agreement may also provide that if the exercise of the Option following the
termination of the Optionholder's Continuous Service (other than upon the
Optionholder's death or Disability) would be prohibited at any time solely
because the issuance of shares of Common Stock would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in Section
6(a) or (ii) the expiration of a period of three (3) months after the
termination of the Optionholder's Continuous Service during which the exercise
of the Option would not be in violation of such registration requirements.

           (j)  DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified herein, the Option shall
terminate.

           (k)  DEATH OF OPTIONHOLDER. In the event that (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent

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the Optionholder was entitled to exercise such Option as of the date of death)
by the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder's death pursuant to Section 6(e) or 6(f), but only
within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death (or such longer or shorter period specified in the
Option Agreement or (2) the expiration of the term of such Option as set forth
in the Option Agreement. If, after death, the Option is not exercised within the
time specified herein, the Option shall terminate.

           (l)  EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionholder may elect at any time before the
Optionholder's Continuous Service terminates to exercise the Option as to any
part or all of the shares of Common Stock subject to the Option prior to the
full vesting of the Option. Any unvested shares of Common Stock so purchased may
be subject to a repurchase option in favor of the Company or to any other
restriction the Board determines to be appropriate. The Company will not
exercise its repurchase option until at least six (6) months (or such longer or
shorter period of time required to avoid a charge to earnings for financial
accounting purposes) have elapsed following exercise of the Option unless the
Board otherwise specifically provides in the Option.

7.         PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

           (a)  STOCK BONUS AWARDS. Each stock bonus agreement shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate. The terms and conditions of stock bonus agreements may change from
time to time, and the terms and conditions of separate stock bonus agreements
need not be identical, but each stock bonus agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

                (i) CONSIDERATION. A stock bonus may be awarded in consideration
for past services actually rendered to the Company or an Affiliate for its
benefit.

                (ii) VESTING. Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.

                (iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event that a Participant's Continuous Service terminates, the Company may
reacquire any or all of the shares of Common Stock held by the Participant that
have not vested as of the date of termination under the terms of the stock bonus
agreement. The Company will not exercise its repurchase option until at least
six (6) months (or such longer or shorter period of time required to avoid a
change to earnings for financial accounting purposes) have elapsed following
receipt of the stock bonus unless otherwise specifically provided in the stock
bonus agreement.

                (iv) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the stock bonus agreement shall be transferable by the Participant only
upon such terms and conditions as are set forth in the stock bonus agreement, as
the Board shall determine in its

                                       11
<PAGE>

discretion, so long as Common Stock awarded under the stock bonus agreement
remains subject to the terms of the stock bonus agreement.

           (b)  RESTRICTED STOCK AWARDS. Each restricted stock purchase
agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The terms and conditions of the restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

                (i) PURCHASE PRICE. The purchase price of restricted stock
awards shall not be less than eighty-five percent (85%) of the Common Stock's
Fair Market Value on the date such award is made or at the time the purchase is
consummated.

                (ii) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that to the extent applicable state corporate
laws so require, payment of the Common Stock's "par value," as defined by
applicable state statutes, shall be made in cash and not by deferred payment.

                (iii) VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.

                (iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event that a Participant's Continuous Service terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock held
by the Participant that have not vested as of the date of termination under the
terms of the restricted stock purchase agreement. The Company will not exercise
its repurchase option until at least six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes) have elapsed following the purchase of the restricted stock unless
otherwise provided in the restricted stock purchase agreement.

                (v) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as Common Stock awarded under the restricted stock purchase
agreement remains subject to the terms of the restricted stock purchase
agreement.

8.         COVENANTS OF THE COMPANY.

           (a)  AVAILABILITY OF SHARES. During the terms of the Stock Awards,
the Company shall keep available at all times the number of shares of Common
Stock required to satisfy such Stock Awards.

                                       12
<PAGE>

           (b)  SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

9.         USE OF PROCEEDS FROM STOCK.

           Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.

10.        MISCELLANEOUS.

           (a)  ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Stock Award may first be exercised
or the time during which a Stock Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.

           (b)  STOCKHOLDER RIGHTS. No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to such Stock Award unless and until such Participant
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

           (c)  NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or
any instrument executed or Stock Award granted pursuant thereto shall confer
upon any Participant any right to continue to serve the Company or an Affiliate
in the capacity in effect at the time the Stock Award was granted or shall
affect the right of the Company or an Affiliate to terminate (i) the employment
of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant's agreement
with the Company or an Affiliate or (iii) the service of a Director pursuant to
the Bylaws of the Company or an Affiliate, and any applicable provisions of the
corporate law of the state in which the Company or the Affiliate is
incorporated, as the case may be.

           (d)  INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that
the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionholder during any calendar year (under all plans of the
Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof that exceed such limit (according to the order in
which they were granted) shall be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of a Stock Award Agreement.

                                       13
<PAGE>

           (e)  INVESTMENT ASSURANCES. The Company may require a Participant, as
a condition of exercising or acquiring Common Stock under any Stock Award, (i)
to give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.

           (f)  WITHHOLDING OBLIGATIONS. To the extent provided by the terms of
a Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; provided, however, that no
shares of Common Stock are withheld with a value exceeding the minimum amount of
tax required to be withheld by law (or such lesser amount as may be necessary to
avoid variable award accounting); or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.

11.        ADJUSTMENTS UPON CHANGES IN STOCK.

           (a)  CAPITALIZATION ADJUSTMENTS. If any change is made in, or other
event occurs with respect to, the Common Stock subject to the Plan or subject to
any Stock Award without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company (each a "Capitalization Adjustment"), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to Sections 4(a) and 4(b) and the maximum number of securities subject
to award to any person pursuant to Section 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive.

                                       14
<PAGE>

(The conversion of any convertible securities of the Company shall not be
treated as a transaction "without receipt of consideration" by the Company.)

           (b)  DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to the completion of such dissolution or liquidation, and
shares of Common Stock subject to the Company's repurchase option may be
repurchased by the Company notwithstanding the fact that the holder of such
stock is still in Continuous Service.

           (c)  CORPORATE TRANSACTION. In the event of a Corporate Transaction,
any surviving corporation or acquiring corporation may assume or continue any or
all Stock Awards outstanding under the Plan or may substitute similar stock
awards for Stock Awards outstanding under the Plan (it being understood that
similar stock awards include, but are not limited to, awards to acquire the same
consideration paid to the stockholders or the Company, as the case may be,
pursuant to the Corporate Transaction), and any reacquisition or repurchase
rights held by the Company in respect of Common Stock issued pursuant to Stock
Awards may be assigned by the Company to the successor of the Company (or the
successor's parent company), if any, in connection with such Corporate
Transaction. In the event that any surviving corporation or acquiring
corporation does not assume or continue any or all such outstanding Stock Awards
or substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted and
that are held by Participants whose Continuous Service has not terminated prior
to the effective time of the Corporate Transaction, the vesting of such Stock
Awards (and, if applicable, the time at which such Stock Awards may be
exercised) shall (contingent upon the effectiveness of the Corporate
Transaction) be accelerated in full to a date prior to the effective time of
such Corporate Transaction as the Board shall determine (or, if the Board shall
not determine such a date, to the date that is five (5) days prior to the
effective time of the Corporate Transaction), the Stock Awards shall terminate
if not exercised (if applicable) at or prior to such effective time, and any
reacquisition or repurchase rights held by the Company with respect to such
Stock Awards held by Participants whose Continuous Service has not terminated
shall (contingent upon the effectiveness of the Corporate Transaction) lapse.
With respect to any other Stock Awards outstanding under the Plan that have not
been assumed, continued or substituted, the vesting of such Stock Awards (and,
if applicable, the time at which such Stock Award may be exercised) shall not be
accelerated, unless otherwise provided in a written agreement between the
Company or any Affiliate and the holder of such Stock Award, and such Stock
Awards shall terminate if not exercised (if applicable) prior to the effective
time of the Corporate Transaction.

           (d)  CHANGE IN CONTROL. A Stock Award held by any Participant whose
Continuous Service has not terminated prior to the effective time of a Change in
Control may be subject to additional acceleration of vesting and exercisability
upon or after such event as may be provided in the Stock Award Agreement for
such Stock Award or as may be provided in any other written agreement between
the Company or any Affiliate and the Participant, but in the absence of such
provision, no such acceleration shall occur.

                                       15
<PAGE>

12.        AMENDMENT OF THE PLAN AND STOCK AWARDS.

           (a)  AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 11(a) relating to
Capitalization Adjustments, no amendment shall be effective unless approved by
the stockholders of the Company to the extent stockholder approval is necessary
to satisfy the requirements of Section 422 of the Code.

           (b)  STOCKHOLDER APPROVAL. The Board, in its sole discretion, may
submit any other amendment to the Plan for stockholder approval, including, but
not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to Covered Employees.

           (c)  CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

           (d)  NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the Participant and (ii) the
Participant consents in writing.

           (e)  AMENDMENT OF STOCK AWARDS. The Board at any time, and from time
to time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

13.        TERMINATION OR SUSPENSION OF THE PLAN.

           (a)  PLAN TERM. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on the day before the
tenth (10th) anniversary of the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.

           (b)  NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Stock Award granted while the
Plan is in effect except with the written consent of the Participant.

14.        EFFECTIVE DATE OF PLAN.

           The Plan shall become effective as determined by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

                                       16
<PAGE>

15.        CHOICE OF LAW.

           The law of the State of Maryland shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state's conflict of laws rules.

                                     * * * *

List of Attachments

Attachment I:  Form of Stock Option Agreement
Attachment II:  Form of Grant Notice
Attachment III:  Form of Notice of Exercise

                                       17
<PAGE>

                                  Attachment I

                         Form of Stock Option Agreement

<PAGE>

                                                      AWARD NO._________________
                                                      NAME: ____________________

                        GLADSTONE COMMERCIAL CORPORATION
                           2003 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
              (INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

           Pursuant to your Stock Option Grant Notice ("GRANT NOTICE") and this
Stock Option Agreement, Gladstone Commercial Corporation ("COMPANY") has granted
you an option under its 2003 Equity Incentive Plan ("PLAN") to purchase the
number of shares of the Company's Common Stock indicated in your Grant Notice at
the exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

           The details of your option are as follows:

           1.   VESTING. Subject to the limitations contained herein, your
                option will vest as provided in your Grant Notice, provided that
                vesting will cease upon the termination of your Continuous
                Service.

           2.   NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of
                Common Stock subject to your option and your exercise price per
                share referenced in your Grant Notice may be adjusted from time
                to time for Capitalization Adjustments.

           3.   EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in
                your Grant Notice (i.e., the "Exercise Schedule" indicates that
                "Early Exercise" of your option is permitted) and subject to the
                provisions of your option, you may elect at any time that is
                both (i) during the period of your Continuous Service and (ii)
                during the term of your option, to exercise all or part of your
                option, including the nonvested portion of your option;
                provided, however, that:

                a.   a partial exercise of your option shall be deemed to cover
                     first vested shares of Common Stock and then the earliest
                     vesting installment of unvested shares of Common Stock;

                b.   any shares of Common Stock so purchased from installments
                     that have not vested as of the date of exercise shall be
                     subject to the purchase option in favor of the Company as
                     described in the Company's form of Early Exercise Stock
                     Purchase Agreement;

                c.   you shall enter into the Company's form of Early Exercise
                     Stock Purchase Agreement with a vesting schedule that will
                     result in the same vesting as if no early exercise had
                     occurred; and

                                       1.
<PAGE>

                d.   if your option is an Incentive Stock Option, then, to the
                     extent that the aggregate Fair Market Value (determined at
                     the time of grant) of the shares of Common Stock with
                     respect to which your option plus all other Incentive Stock
                     Options you hold are exercisable for the first time by you
                     during any calendar year (under all plans of the Company
                     and its Affiliates) exceeds one hundred thousand dollars
                     ($100,000), your option(s) or portions thereof that exceed
                     such limit (according to the order in which they were
                     granted) shall be treated as Nonstatutory Stock Options.

           4.   METHOD OF PAYMENT. Payment of the exercise price is due in full
                upon exercise of all or any part of your option. You may elect
                to make payment of the exercise price in cash or by check or in
                any other manner PERMITTED BY YOUR GRANT NOTICE, which may
                include one or more of the following:

                a.   In the Company's sole discretion at the time your option is
                     exercised and provided that at the time of exercise the
                     Common Stock is publicly traded and quoted regularly in The
                     Wall Street Journal, pursuant to a program developed under
                     Regulation T as promulgated by the Federal Reserve Board
                     that, prior to the issuance of Common Stock, results in
                     either the receipt of cash (or check) by the Company or the
                     receipt of irrevocable instructions to pay the aggregate
                     exercise price to the Company from the sales proceeds.

                b.   Provided that at the time of exercise the Common Stock is
                     publicly traded and quoted regularly in The Wall Street
                     Journal, by delivery of already-owned shares of Common
                     Stock either that you have held for the period required to
                     avoid a charge to the Company's reported earnings
                     (generally six (6) months) or that you did not acquire,
                     directly or indirectly from the Company, that are owned
                     free and clear of any liens, claims, encumbrances or
                     security interests, and that are valued at Fair Market
                     Value on the date of exercise. "Delivery" for these
                     purposes, in the sole discretion of the Company at the time
                     you exercise your option, shall include delivery to the
                     Company of your attestation of ownership of such shares of
                     Common Stock in a form approved by the Company.
                     Notwithstanding the foregoing, you may not exercise your
                     option by tender to the Company of Common Stock to the
                     extent such tender would violate the provisions of any law,
                     regulation or agreement restricting the redemption of the
                     Company's stock.

                c.   Pursuant to the following deferred payment alternative:

                     1) Not less than one hundred percent (100%) of the
                          aggregate exercise price, plus accrued interest, shall
                          be due four (4) years from date of exercise or, at the
                          Company's election, upon termination of your
                          Continuous Service.

                                       2.
<PAGE>

                     2) Interest shall be compounded at least annually and
                          shall be charged at the minimum rate of interest
                          necessary to avoid (1) the treatment as interest,
                          under any applicable provisions of the Code, of any
                          amounts other than amounts stated to be interest under
                          the deferred payment arrangement and (2) the treatment
                          of the Option as a variable award for financial
                          accounting purposes.

                     3) If so required by applicable state corporate law,
                          payment of the Common Stock's "par value," as defined
                          in the applicable corporate statute, shall be made in
                          cash and not by deferred payment.

                     4) In order to elect the deferred payment alternative,
                          you must, as a part of your written notice of
                          exercise, give notice of the election of this payment
                          alternative and, in order to secure the payment of the
                          deferred exercise price to the Company hereunder, if
                          the Company so requests, you must tender to the
                          Company a promissory note and a pledge agreement
                          covering the purchased shares of Common Stock, both in
                          form and substance satisfactory to the Company, or
                          such other or additional documentation as the Company
                          may request.

           5.   WHOLE SHARES. You may exercise your option only for whole shares
                of Common Stock.

           6.   SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
                contrary contained herein, you may not exercise your option
                unless the shares of Common Stock issuable upon such exercise
                are then registered under the Securities Act or, if such shares
                of Common Stock are not then so registered, the Company has
                determined that such exercise and issuance would be exempt from
                the registration requirements of the Securities Act. The
                exercise of your option also must comply with other applicable
                laws and regulations governing your option, and you may not
                exercise your option if the Company determines that such
                exercise would not be in material compliance with such laws and
                regulations.

           7.   TERM. You may not exercise your option before the commencement
                or after the expiration of its term. Subject to such differing
                terms that may be included in an individually negotiated written
                agreement between you and the Company, the term of your option
                commences on the Date of Grant and expires upon the earliest of
                the following:

                A.   three (3) months after the termination of your Continuous
                     Service for any reason other than your Disability or death,
                     provided that if during any part of such three (3) month
                     period your option is not exercisable solely because of the
                     condition set forth in Section 6, your option shall not
                     expire until the earlier of the Expiration Date or until it
                     shall have been

                                       3.
<PAGE>

                     exercisable for an aggregate period of three (3) months
                     after the termination of your Continuous Service;

                b.   twelve (12) months after the termination of your Continuous
                     Service due to your Disability;

                c.   eighteen (18) months after your death if you die either
                     during your Continuous Service or within three (3) months
                     after your Continuous Service terminates;

                d.   the Expiration Date indicated in your Grant Notice; or

                e.   the day before the tenth (10th) anniversary of the Date of
                     Grant.

           If your option is an Incentive Stock Option, note that to obtain the
federal income tax advantages associated with an Incentive Stock Option, the
Code requires that at all times beginning on the date of grant of your option
and ending on the day three (3) months before the date of your option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your option under certain circumstances for your benefit but
cannot guarantee that your option will necessarily be treated as an Incentive
Stock Option if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your option more than three (3) months after the date your employment
with the Company or an Affiliate terminates.

           8.   EXERCISE.

                a.   You may exercise the vested portion of your option (and the
                     unvested portion of your option if your Grant Notice so
                     permits) during its term by delivering a Notice of Exercise
                     (in a form designated by the Company) together with the
                     exercise price to the Secretary of the Company, or to such
                     other person as the Company may designate, during regular
                     business hours, together with such additional documents as
                     the Company may then require.

                b.   By exercising your option you agree that, as a condition to
                     any exercise of your option, the Company may require you to
                     enter into an arrangement providing for the payment by you
                     to the Company of any tax withholding obligation of the
                     Company arising by reason of (1) the exercise of your
                     option, (2) the lapse of any substantial risk of forfeiture
                     to which the shares of Common Stock are subject at the time
                     of exercise, or (3) the disposition of shares of Common
                     Stock acquired upon such exercise.

                c.   If your option is an Incentive Stock Option, by exercising
                     your option you agree that you will notify the Company in
                     writing within fifteen (15) days after the date of any
                     disposition of any of the shares of the Common Stock issued
                     upon exercise of your option that occurs within two (2)
                     years after

                                       4.
<PAGE>

                     the date of your option grant or within one (1) year after
                     such shares of Common Stock are transferred upon exercise
                     of your option.

                d.   By exercising your option you agree that you shall not
                     sell, dispose of, transfer, make any short sale of, grant
                     any option for the purchase of, or enter into any hedging
                     or similar transaction with the same economic effect as a
                     sale, any shares of Common Stock or other securities of the
                     Company held by you, for a period of time specified by the
                     managing underwriter(s) (not to exceed one hundred eighty
                     (180) days) following the effective date of a registration
                     statement of the Company filed under the Securities Act
                     ("LOCK UP PERIOD"); provided, however, that nothing
                     contained in this section shall prevent the exercise of a
                     repurchase option, if any, in favor of the Company during
                     the Lock Up Period. You further agree to execute and
                     deliver such other agreements as may be reasonably
                     requested by the Company and/or the underwriter(s) that are
                     consistent with the foregoing or that are necessary to give
                     further effect thereto. In order to enforce the foregoing
                     covenant, the Company may impose stop-transfer instructions
                     with respect to your shares of Common Stock until the end
                     of such period. The underwriters of the Company's stock are
                     intended third party beneficiaries of this Section 8(d) and
                     shall have the right, power and authority to enforce the
                     provisions hereof as though they were a party hereto.

           9.   TRANSFERABILITY. Your option is not transferable, except by will
                or by the laws of descent and distribution, and is exercisable
                during your life only by you, except that if your option is a
                nonstatutory stock option, you may assign or grant your option
                to a trust, individual retirement account or pension plan for
                your benefit. Notwithstanding the foregoing, by delivering
                written notice to the Company, in a form satisfactory to the
                Company, you may designate a third party who, in the event of
                your death, shall thereafter be entitled to exercise your
                option.

           10.  OPTION NOT A SERVICE CONTRACT. Your option is not an employment
                or service contract, and nothing in your option shall be deemed
                to create in any way whatsoever any obligation on your part to
                continue in the employ of the Company or an Affiliate, or of the
                Company or an Affiliate to continue your employment. In
                addition, nothing in your option shall obligate the Company or
                an Affiliate, their respective stockholders, Boards of
                Directors, Officers or Employees to continue any relationship
                that you might have as a Director or Consultant for the Company
                or an Affiliate.

           11.  WITHHOLDING OBLIGATIONS.

                a.   At the time you exercise your option, in whole or in part,
                     or at any time thereafter as requested by the Company, you
                     hereby authorize withholding from payroll and any other
                     amounts payable to you, and otherwise agree to make
                     adequate provision for (including by means of a "cashless
                     exercise" pursuant to a program developed under Regulation
                     T as promulgated by the Federal Reserve Board to the extent
                     permitted by the Company), any sums required to satisfy the
                     federal, state, local and

                                       5.
<PAGE>

                     foreign tax withholding obligations of the Company or an
                     Affiliate, if any, which arise in connection with the
                     exercise of your option.

                b.   Upon your request and subject to approval by the Company,
                     in its sole discretion, and compliance with any applicable
                     legal conditions or restrictions, the Company may withhold
                     from fully vested shares of Common Stock otherwise issuable
                     to you upon the exercise of your option a number of whole
                     shares of Common Stock having a Fair Market Value,
                     determined by the Company as of the date of exercise, not
                     in excess of the minimum amount of tax required to be
                     withheld by law (or such lower amount as may be necessary
                     to avoid variable award accounting). If the date of
                     determination of any tax withholding obligation is deferred
                     to a date later than the date of exercise of your option,
                     share withholding pursuant to the preceding sentence shall
                     not be permitted unless you make a proper and timely
                     election under Section 83(b) of the Code, covering the
                     aggregate number of shares of Common Stock acquired upon
                     such exercise with respect to which such determination is
                     otherwise deferred, to accelerate the determination of such
                     tax withholding obligation to the date of exercise of your
                     option. Notwithstanding the filing of such election, shares
                     of Common Stock shall be withheld solely from fully vested
                     shares of Common Stock determined as of the date of
                     exercise of your option that are otherwise issuable to you
                     upon such exercise. Any adverse consequences to you arising
                     in connection with such share withholding procedure shall
                     be your sole responsibility.

                c.   You may not exercise your option unless the tax withholding
                     obligations of the Company and/or any Affiliate are
                     satisfied. Accordingly, you may not be able to exercise
                     your option when desired even though your option is vested,
                     and the Company shall have no obligation to issue a
                     certificate for such shares of Common Stock or release such
                     shares of Common Stock from any escrow provided for herein
                     unless such obligations are satisfied.

           12.  NOTICES. Any notices provided for in your option or the Plan
                shall be given in writing and shall be deemed effectively given
                upon receipt or, in the case of notices delivered by mail by the
                Company to you, five (5) days after deposit in the United States
                mail, postage prepaid, addressed to you at the last address you
                provided to the Company.

           13.  GOVERNING PLAN DOCUMENT. Your option is subject to all the
                provisions of the Plan, the provisions of which are hereby made
                a part of your option, and is further subject to all
                interpretations, amendments, rules and regulations, which may
                from time to time be promulgated and adopted pursuant to the
                Plan. In the event of any conflict between the provisions of
                your option and those of the Plan, the provisions of the Plan
                shall control.

                                    * * * * *

                                       6.
<PAGE>

                                  Attachment II
                              Form of Grant Notice

<PAGE>

                                                      Award No. _________

                                                     NAME: _____________________

                        GLADSTONE COMMERCIAL CORPORATION
                            STOCK OPTION GRANT NOTICE
                          (2003 EQUITY INCENTIVE PLAN)

Gladstone Commercial Corporation (the "Company"), pursuant to its 2003 Equity
Incentive Plan (the "Plan"), hereby grants to Optionholder an option to purchase
the number of shares of the Company's Common Stock set forth below. This option
is subject to all of the terms and conditions as set forth herein and in the
Stock Option Agreement, the Plan and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety.

Optionholder:
                                          --------------------------------------
Date of Grant:
                                          --------------------------------------
Vesting Commencement Date:
                                          --------------------------------------
Number of Shares Subject to Option:
                                          --------------------------------------
Exercise Price (Per Share):
                                          --------------------------------------
Total Exercise Price:
                                          --------------------------------------
Expiration Date:
                                          --------------------------------------

TYPE OF GRANT:     |_| Incentive Stock Option(1)  |_|  Nonstatutory Stock Option

EXERCISE SCHEDULE: |_| Same as Vesting Schedule   |_|  Early Exercise Permitted

VESTING SCHEDULE:  [TO BE ADDED]
PAYMENT:           By one or a combination of the following items (described in
                   the Stock Option Agreement):

                       By cash or check
                       Pursuant to a Regulation T Program if the Shares are
                       publicly traded
                       By delivery of already-owned shares if the Shares are
                       publicly traded

ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock Option
Agreement and the Plan. Optionholder further acknowledges that as of the Date of
Grant, this Grant Notice, the Stock Option Agreement and the Plan set forth the
entire understanding between Optionholder and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written
agreements on that subject with the exception of (i) options previously granted
and delivered to Optionholder under the Plan, and (ii) the following agreements
only:

           OTHER AGREEMENTS:             ---------------------------------------

                                         ---------------------------------------

GLADSTONE COMMERCIAL CORPORATION               OPTIONHOLDER:

By:
    -----------------------------              ---------------------------------
            Signature                                      Signature

Title:                                         Date:
       --------------------------                   ----------------------------

Date:
     ----------------------------

ATTACHMENTS:  Stock Option Agreement, 2003 Equity Incentive Plan and Notice of
              Exercise

--------------------------
(1) If this is an incentive stock option, it (plus your other outstanding
incentive stock options) cannot be first exercisable for more than $100,000 in
any calendar year. Any excess over $100,000 is a nonstatutory stock option.

<PAGE>

                                 Attachment III

                           Form of Notice of Exercise

<PAGE>

                               NOTICE OF EXERCISE

Gladstone Commercial Corporation
1750 Tysons Blvd.
Fourth Floor
McLean, VA  22102
                                               Date of Exercise: _______________
Ladies and Gentlemen:

       This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.

       Type of option (check one):     Incentive  |_|      Nonstatutory  |_|

       Stock option dated:                   _______________

       Number of shares as
       to which option is
       exercised:                            _______________

       Certificates to be
       issued in name of:                    _______________

       Total exercise price:                 $______________

       Cash payment delivered
       herewith:                             $______________

       Promissory Note delivered
       herewith:                             $______________

       Value of ________ shares of
       Gladstone Commercial Corporation
       stock delivered herewith(2):          $______________

       By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the 2003 Equity Incentive Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option, and
(iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any of the
shares of Common Stock issued upon exercise of this option that occurs within
two (2) years after the date

--------------------------
(2) Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.

<PAGE>

of grant of this option or within one (1) year after such shares of Common Stock
are issued upon exercise of this option.

       I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:

       [I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" and "control securities" under Rule 144
promulgated under the Securities Act. I warrant and represent to the Company
that I have no present intention of distributing or selling said Shares, except
as permitted under the Securities Act and any applicable state securities laws.]

       I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.

                                Very truly yours,

                                -----------------------------
<PAGE>
                        GLADSTONE COMMERCIAL CORPORATION

                                 FIRST AMENDMENT
                                       TO
                           2003 EQUITY INCENTIVE PLAN

                                    RECITALS

      A. On June 10, 2003, the Board of Directors and stockholders of GLADSTONE
COMMERCIAL CORPORATION, a Maryland corporation (the "COMPANY"), adopted the 2003
Equity Incentive Plan (the "PLAN").

      B. By action of the Board of Directors and stockholders on July 17, 2003,
the Company adopted the following amendment to the Plan:

                                    AMENDMENT

      1. Section 4(a) of the Plan shall be amended and restated in its entirety
to read as follows:

      (A) SHARE RESERVE. Subject to the provisions of Section 11(a) relating to
      Capitalization Adjustments, the capital stock that may be issued pursuant
      to Stock Awards shall not exceed in the aggregate seven hundred fifty nine
      thousand (759,000).

      2. Except as set forth in this First Amendment, the Plan shall be
unaffected hereby and shall remain in full force and effect.

                                      * * *

      I hereby certify that the foregoing amendment to the Plan was duly adopted
by the Board of Directors and stockholders of Gladstone Commercial Corporation
on July 17, 2003.

      Executed on this 17th day of July, 2003.

                                                    /s/ Terry L. Brubaker
                                            ------------------------------------
                                            Terry L. Brubaker, COO and Secretary<PAGE>
                                                                    EXHIBIT 10.3

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                    GLADSTONE COMMERCIAL LIMITED PARTNERSHIP

                                 JULY 17, 2003

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                                      Page
                                                                                                                      ----
<S>                                                                                                                   <C>
ARTICLE I  DEFINED TERMS..............................................................................................  1

ARTICLE II PARTNERSHIP FORMATION AND IDENTIFICATION...................................................................  7
2.1   FORMATION.......................................................................................................  7
2.2   NAME, OFFICE AND REGISTERED AGENT...............................................................................  7
2.3   PARTNERS........................................................................................................  8
2.4   TERM AND DISSOLUTION............................................................................................  8
2.5   FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP.....................................................  8
2.6   CERTIFICATES DESCRIBING PARTNERSHIP UNITS.......................................................................  8

ARTICLE III BUSINESS OF THE PARTNERSHIP...............................................................................  9

ARTICLE IV  CAPITAL CONTRIBUTIONS AND ACCOUNTS........................................................................  9
4.1   CAPITAL CONTRIBUTIONS...........................................................................................  9
4.2   ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS..............................  9
4.3   ADDITIONAL FUNDING.............................................................................................. 11
4.4   CAPITAL ACCOUNTS................................................................................................ 11
4.5   PERCENTAGE INTERESTS............................................................................................ 11
4.6   NO INTEREST ON CONTRIBUTIONS.................................................................................... 11
4.7   RETURN OF CAPITAL CONTRIBUTIONS................................................................................. 11
4.8   NO THIRD-PARTY BENEFICIARY...................................................................................... 11

ARTICLE V  PROFIT AND LOSS; DISTRIBUTIONS............................................................................. 12
5.1   ALLOCATION OF PROFIT AND LOSS................................................................................... 12
5.2   DISTRIBUTIONS OF CASH........................................................................................... 13
5.3   REIT DISTRIBUTION REQUIREMENTS.................................................................................. 14
5.4   NO RIGHT TO DISTRIBUTIONS IN KIND............................................................................... 15
5.5   LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS.................................................................. 15
5.6   DISTRIBUTIONS UPON LIQUIDATION.................................................................................. 15
5.7   SUBSTANTIAL ECONOMIC EFFECT..................................................................................... 15

ARTICLE VI  RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER..................................................... 15
6.1   MANAGEMENT OF THE PARTNERSHIP................................................................................... 15
6.2   DELEGATION OF AUTHORITY......................................................................................... 17
6.3   INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.................................................................. 17
6.4   LIABILITY OF THE GENERAL PARTNER................................................................................ 19
6.5   REIMBURSEMENT OF GENERAL PARTNER................................................................................ 20
6.6   OUTSIDE ACTIVITIES.............................................................................................. 20
6.7   EMPLOYMENT OR RETENTION OF AFFILIATES........................................................................... 21
6.8   GENERAL PARTNER PARTICIPATION................................................................................... 21
6.9   TITLE TO PARTNERSHIP ASSETS..................................................................................... 21
6.10  REDEMPTION OF GENERAL PARTNER PARTNERSHIP UNITS................................................................. 21

ARTICLE VII  CHANGES IN GENERAL PARTNER................................................................................ 21
7.1   TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST........................................................... 21
7.2   ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER.......................................................... 23
7.3   EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL PARTNER...................................... 23
7.4   REMOVAL OF A GENERAL PARTNER..................................................................................... 24
</Table>

                                        i
<PAGE>

<Table>
<S>                                                                                                                     <C>
ARTICLE VIII  RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS........................................................... 24
8.1   MANAGEMENT OF THE PARTNERSHIP.................................................................................... 24
8.2   POWER OF ATTORNEY................................................................................................ 24
8.3   LIMITATION ON LIABILITY OF LIMITED PARTNERS...................................................................... 25
8.4   OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR AFFILIATE........................................... 25
8.5   EXCHANGE RIGHT................................................................................................... 25
8.6   DUTIES AND CONFLICTS............................................................................................. 26

ARTICLE IX  TRANSFERS OF LIMITED PARTNERSHIP INTERESTS................................................................. 27
9.1   PURCHASE FOR INVESTMENT.......................................................................................... 27
9.2   RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS........................................................ 27
9.3   ADMISSION OF SUBSTITUTE LIMITED PARTNER.......................................................................... 28
9.4   RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS..................................................................... 29
9.5   EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A LIMITED PARTNER.................................... 29
9.6   JOINT OWNERSHIP OF INTERESTS..................................................................................... 29

ARTICLE X  BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS.................................................................. 29
10.1  BOOKS AND RECORDS................................................................................................ 29
10.2  CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS...................................................................... 30
10.3  FISCAL AND TAXABLE YEAR.......................................................................................... 30
10.4  ANNUAL TAX INFORMATION AND REPORT................................................................................ 30
10.5  TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.................................................... 30
10.6  REPORTS TO LIMITED PARTNERS...................................................................................... 30

ARTICLE XI  AMENDMENT OF AGREEMENT; MEETINGS........................................................................... 31
11.1  AMENDMENT........................................................................................................ 31
11.2  MEETINGS OF PARTNERS............................................................................................. 31

ARTICLE XII  MERGER, EXCHANGE OR CONVERSION............................................................................ 33
12.1  MERGER, EXCHANGE OR CONVERSION OF PARTNERSHIP.................................................................... 33
12.2  APPROVAL OF PLAN OF MERGER, EXCHANGE OR CONVERSION............................................................... 33
12.3  RIGHTS OF DISSENTING LIMITED PARTNERS............................................................................ 34

ARTICLE XIII  GENERAL PROVISIONS....................................................................................... 35
13.1  NOTICES.......................................................................................................... 35
13.2  SURVIVAL OF RIGHTS............................................................................................... 35
13.3  ADDITIONAL DOCUMENTS............................................................................................. 35
13.4  SEVERABILITY..................................................................................................... 36
13.5  ENTIRE AGREEMENT................................................................................................. 36
13.6  PRONOUNS AND PLURALS............................................................................................. 36
13.7  HEADINGS......................................................................................................... 36
13.8  COUNTERPARTS..................................................................................................... 36
13.9  GOVERNING LAW; VENUE............................................................................................. 36
13.10 ACKNOWLEDGEMENT AS TO EXCULPATION AND INDEMNIFICATION............................................................ 36

INDEX OF EXHIBITS......................................................................................................
</Table>

                                       ii
<PAGE>

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                    GLADSTONE COMMERCIAL LIMITED PARTNERSHIP

                                 JULY 17, 2003

This Agreement of Limited Partnership (this "AGREEMENT") is entered into
effective as of this 17th day of July 2003, by and among Gladstone Commercial
Corporation, a Maryland corporation (the "GENERAL PARTNER"), Gladstone
Commercial Partners, LLC, a Delaware limited liability company (the "ORIGINAL
LIMITED PARTNER"), and the Limited Partner(s) set forth or which may, in the
future, be set forth on Exhibit A hereto, as amended from time to time, with
respect to Gladstone Commercial Limited Partnership (the "PARTNERSHIP"), a
limited partnership formed under the laws of the State of Delaware, pursuant to
a Certificate of Limited Partnership filed with the Office of the Secretary of
State of the State of Delaware effective as of May 28, 2003.

                                    RECITALS

WHEREAS, the parties hereto desire to enter into this Agreement in order to set
forth the terms and conditions under which the Partnership will be operated as
well as the rights, obligations, and limitations of the General Partner and the
Limited Partners with respect to each other and the Partnership as a whole;

NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between
the parties hereto, and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the parties, the parties
hereto agree as follows:

                                    AGREEMENT

                                   ARTICLE 1

                                  DEFINED TERMS

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

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

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

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

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

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

                                       1
<PAGE>

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

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

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

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

"ARTICLES OF INCORPORATION" means the Articles of Incorporation of the General
Partner filed with the Maryland State Department of Assessments and Taxation, as
amended or restated from time to time.

"BOARD OF DIRECTORS" means the Board of Directors of the General Partner.

"CAPITAL ACCOUNT" has the meaning provided in Section 4.4 hereof.

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

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

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

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

"COMMISSION" means the U.S. Securities and Exchange Commission.

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

"COMPETENT INDEPENDENT EXPERT" means a Person with no material current or prior
business or personal relationship with the General Partner or the Partnership
who is engaged to a substantial extent in the business of rendering opinions
regarding the value of assets of the type held by the Partnership and who is
qualified to perform

                                       2
<PAGE>

such work. Membership in a nationally recognized appraisal society such as the
American Institute of Real Estate Appraisers or the Society of Real Estate
Appraisers shall be conclusive evidence of such qualification.

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

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

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

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

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

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

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

"GENERAL PARTNER" means Gladstone Commercial Corporation, a Maryland
corporation, and any Person who becomes a substitute or additional General
Partner as provided herein, and any successors thereto.

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

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

                                       3
<PAGE>

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

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

"INDEPENDENT DIRECTOR" means a director of the General Partner who is not on the
date of determination (i) an officer or employee of the General Partner or the
Adviser or any of their respective Affiliates or (ii) a lessee of any Property.

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

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

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

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

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

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

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

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

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

                                       4
<PAGE>

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

"OFFERING" means the initial offer and sale by the General Partner and the
purchase by the Underwriters (as defined in the Prospectus) of REIT Shares for
sale to the public.

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

"PARTNER" means any General Partner or Limited Partner.

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

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

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

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

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

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

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

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

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

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

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

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

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

                                       5
<PAGE>

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

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

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

"REIT SHARE" means a share of common stock in the General Partner (or Successor
Entity, as the case may be).

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

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

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

"SERVICE" means the Internal Revenue Service.

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

                                       6
<PAGE>

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

"SUBSIDIARY PARTNERSHIP" means any partnership, limited liability company or
other entity taxed as a partnership for federal income tax purposes in which
interests are owned by the General Partner or by a wholly-owned Subsidiary or
Subsidiaries of the General Partner.

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

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

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

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

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

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

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

                                    ARTICLE 2

                    PARTNERSHIP FORMATION AND IDENTIFICATION

         2.1 FORMATION. The Partnership is a limited partnership formed pursuant
to the Act and upon the terms and conditions set forth in this Agreement.

         2.2 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership is
"Gladstone Commercial Limited Partnership." The registered office and principal
place of business of the Partnership shall be 1750 Tysons Boulevard, Fourth
Floor, McLean, Virginia 22102. The General Partner may at any time change the
location of such office, provided the General Partner gives notice to the
Partners of any such change. The name and address of the Partnership's
registered agent is The Corporation Trust Incorporated, 300 East Lombard Street,

                                       7
<PAGE>

Baltimore, Maryland 21202. The sole duty of the registered agent as such is to
forward to the Partnership any notice that is served on it as registered agent.

         2.3 PARTNERS.

                  (a) The General Partner of the Partnership is Gladstone
Commercial Corporation, a Maryland corporation. Its principal place of business
is the same as that of the Partnership.

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

         2.4 TERM AND DISSOLUTION.

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

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

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

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

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

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

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

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

                                       8
<PAGE>

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

                                    ARTICLE 3

                           BUSINESS OF THE PARTNERSHIP

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

                                    ARTICLE 4

                       CAPITAL CONTRIBUTIONS AND ACCOUNTS

         4.1 CAPITAL CONTRIBUTIONS. The General Partner and the Original Limited
Partner have made Capital Contributions to the Partnership in exchange for the
Partnership Units set forth opposite their names on Exhibit A, all of which are
Common Units. At such time as Additional Limited Partners are admitted to the
Partnership, each shall make Capital Contributions as set forth opposite their
names on Exhibit A, as it may be amended from time to time.

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

                  (a) Issuances of Additional Partnership Interests.

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

                                       9
<PAGE>

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

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

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

Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership.

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

                  (b) Certain Deemed Contributions of Proceeds of Issuance of
REIT Shares. In connection with any and all issuances of REIT Shares, the
General Partner shall make directly or directly and through the Original Limited
Partner Capital Contributions to the Partnership of the proceeds therefrom,
provided, that if the proceeds actually received and contributed by the General
Partner are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other fees or expenses paid or incurred in connection
with such issuance, then the General Partner (or the General Partner together
with the Original Limited Partner, as applicable) shall be deemed to have made
Capital Contributions to the Partnership in the aggregate amount of the gross
proceeds of such

                                       10
<PAGE>

issuance and the Partnership shall be deemed simultaneously to have paid such
offering expenses in accordance with Section 6.5 hereof and in connection with
the required issuance of additional Partnership Units for such Capital
Contributions pursuant to Section 4.2(a) hereof. Upon any such Capital
Contribution by the General Partner, the General Partner's Capital Account shall
be increased by the actual amount of its Capital Contribution pursuant to
Section 4.4 hereof.

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

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

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

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

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

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

         4.8 NO THIRD PARTY BENEFICIARY. No creditor or other third party having
dealings with the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners herein
set forth to make Capital Contributions or loans to the Partnership shall be
deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or

                                       11
<PAGE>

pledged or encumbered by the Partnership to secure any debt or other obligation
of the Partnership or of any of the Partners. In addition, it is the intent of
the parties hereto that no distribution to any Limited Partner shall be deemed a
return of money or other property in violation of the Act. However, if any court
of competent jurisdiction holds that, notwithstanding the provisions of this
Agreement, any Limited Partner is obligated to return such money or property,
such obligation shall be the obligation of such Limited Partner and not of the
General Partner. Without limiting the generality of the foregoing, a deficit
Capital Account of a Partner shall not be deemed to be a liability of such
Partner nor an asset or property of the Partnership.

                                    ARTICLE 5

                         PROFIT AND LOSS; DISTRIBUTIONS

         5.1 ALLOCATION OF PROFIT AND LOSS.

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

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

                                       12
<PAGE>

Section 1.704-2(i)(4) for any Partnership taxable year, then, subject to the
exceptions set forth in Regulations Section 1.704-2(g), items of gain and income
shall be allocated among the Partners, in accordance with Regulations Section
1.704-2(i)(4) and the ordering rules contained in Regulations Section
1.704-2(j). A Partner's "interest in partnership profits" for purposes of
determining its share of the nonrecourse liabilities of the Partnership within
the meaning of Regulations Section 1.752- 3(a)(3) shall be such Partner's
Percentage Interest.

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

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

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

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

         5.2 DISTRIBUTIONS OF CASH.

                  (a) Subject to paragraph (b), the Partnership shall distribute
cash on a quarterly (or, at the election of the General Partner, more frequent)
basis, in an amount determined by the General Partner in its sole and absolute
discretion, to the Partners who are Partners on the Partnership Record Date with
respect to such quarter (or other distribution period) in the following manner:
(i) first, to the General Partner in an amount equal to the GP Minimum Return
with respect to the fiscal year of the General Partner; (ii) second, to the
Limited Partners pro rata among them in proportion to the their respective
Unpaid Return, if any, owing to each such Limited Partners with

                                       13
<PAGE>

respect to prior fiscal years, in an amount equal to their respective Unpaid
Return for such prior fiscal years owing to each such Limited Partner; (iii)
third, after the establishment of reasonable cash reserves to meet REIT Expenses
and other obligations of the Partnership, as determined in the sole and absolute
discretion of the General Partner, to the General Partner and the Limited
Partners in such aggregate amount as may be determined by the General Partner in
its sole and absolute discretion to be allocated among the General Partner and
the Limited Partners such that each Limited Partner will receive an amount equal
to its LP Return for such fiscal year; and (iv) finally, to the Partners in
accordance with and in proportion to their respective Percentage Interests;
provided, however, that if a new or existing Partner acquires an additional
Partnership Interest in exchange for a Capital Contribution on any date other
than a Partnership Record Date, the cash distribution attributable to such
additional Partnership Interest relating to the Partnership Record Date next
following the issuance of such additional Partnership Interest shall be reduced
to the proportion thereof which equals (i) the number of days that such
additional Partnership Interest is held by such Partner divided by (ii) the
number of days between such Partnership Record Date and the immediately
preceding Partnership Record Date.

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

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

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

         5.3 REIT DISTRIBUTION REQUIREMENTS. The General Partner shall use its
reasonable efforts to cause the Partnership to distribute amounts sufficient to
enable the General Partner to pay stockholder dividends that will allow the
General Partner to (a) meet its distribution requirement for qualification as a
REIT as set forth in

                                       14
<PAGE>

Section 857 of the Code and (b) avoid any federal income or excise tax liability
imposed by the Code, other than to the extent the General Partner elects to
retain and pay income tax on its net capital gain.

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

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

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

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

                                    ARTICLE 6

                             RIGHTS, OBLIGATIONS AND
                          POWERS OF THE GENERAL PARTNER

         6.1 MANAGEMENT OF THE PARTNERSHIP.

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

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

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

                                       15
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                                       16
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

         6.3 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.

                  (a) The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including reasonable legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership as set forth in this Agreement
in which any Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise, as a result of acting on behalf of or performing services
for the Partnership, only if it is determined that (i) the Indemnitee acted in
good faith and (ii) that the Indemnitee reasonably believed that the act or
omission was in the Partnership's best interests, or if the act or omission was
outside the Indemnitee's official capacity as a general partner of the
Partnership, that the act or omission was at least not opposed to the
Partnership's best

                                       17
<PAGE>

interests. Notwithstanding the foregoing, each Indemnitee shall be liable,
responsible and accountable, and the Partnership shall not be liable to an
Indemnitee, other than for reasonable expenses actually incurred by the
Indemnitee with respect to a proceeding in which (i) the Indemnitee is found
liable on the basis that the Indemnitee improperly received personal benefit,
whether or not the benefit resulted from an action taken in the Indemnitee's
official capacity, or (ii) the Indemnitee is found liable to the Partnership or
the Limited Partners. The Partnership shall not indemnify or hold harmless the
Indemnitee: (a) in the case in which the Indemnitee is an Independent Director,
if the loss or liability was the result of gross negligence or willful
misconduct by the Indemnitee, or (b) in any other case, if the loss or liability
was the result of negligence or misconduct by the Indemnitee. The termination of
any proceeding by judgment, order or settlement does not create a presumption
that the Indemnitee did not meet the requisite standard of conduct set forth in
this Section 6.3(a). The termination of any proceeding by conviction or upon a
plea of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, does not alone determine that the Indemnitee acted in a
manner contrary to that specified in this Section 6.3(a). Any indemnification
pursuant to this Section 6.3 shall be made only out of the assets of the
Partnership.

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

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

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

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

         (f) For purposes of this Section 6.3, (i) the Partnership shall be
deemed to have requested an Indemnitee to serve as a fiduciary of an employee
benefit plan whenever the performance by the Indemnitee of its duties to the
Partnership also imposes duties on the Indemnitee, or otherwise involves
services by the Indemnitee to the plan or participants or beneficiaries of the
plan; (ii) excise taxes assessed on an Indemnitee with respect to an employee
benefit plan pursuant to applicable law shall constitute fines within the
meaning of this Section 6.3; and

                                       18
<PAGE>

(iii) actions taken or omitted by the Indemnitee with respect to an employee
benefit plan in the performance of its duties for a purpose reasonably believed
by it to be in the interest of the participants and beneficiaries of the plan
shall be deemed to be for a purpose which is not opposed to the best interests
of the Partnership.

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

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

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

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

         6.4 LIABILITY OF THE GENERAL PARTNER.

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

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<PAGE>

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

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

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

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

         6.5 REIMBURSEMENT OF GENERAL PARTNER.

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

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

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

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<PAGE>

         6.7 EMPLOYMENT OR RETENTION OF AFFILIATES.

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

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

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

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

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

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

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

                                    ARTICLE 7

                           CHANGES IN GENERAL PARTNER

         7.1 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.

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

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

                                       21
<PAGE>

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

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

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

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

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

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

                                       22
<PAGE>

                  (e) Notwithstanding anything in this Article 7,

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

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

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

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

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

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

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

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

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

                                       23
<PAGE>

         7.4 REMOVAL OF A GENERAL PARTNER.

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

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

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

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

                                    ARTICLE 8

                             RIGHTS AND OBLIGATIONS
                             OF THE LIMITED PARTNERS

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

         8.2 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably appoints
the General Partner its true and lawful attorney-in-fact, who may act for each
Limited Partner and in its name, place and stead, and for its use and benefit,
sign, acknowledge, swear to, deliver, file or record, at the appropriate public
offices, any and all

                                       24
<PAGE>

documents, certificates, and instruments as may be deemed necessary or desirable
by the General Partner to carry out fully the provisions of this Agreement and
the Act in accordance with their terms, which power of attorney is coupled with
an interest and shall survive the death, dissolution or legal incapacity of the
Limited Partner, or the transfer by the Limited Partner of any part or all of
its Partnership Interest.

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

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

         8.5 EXCHANGE RIGHT.

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

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

                                       25
<PAGE>

Partner's exercise of such Exchange Right, and each of the Exchanging Partner
and the General Partner shall treat the transaction between the General Partner
and the Exchanging Partner for federal income tax purposes as a sale of the
Exchanging Partner's Partnership Units to the General Partner. Each Exchanging
Partner agrees to execute such documents as the General Partner may reasonably
require in connection with the issuance of REIT Shares to such Exchanging
Partner upon exercise of its Exchange Right.

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

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

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

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

         8.6 DUTIES AND CONFLICTS. The General Partner recognizes that the
Limited Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that such Persons are entitled to carry on
such other business interests, activities and investments. The Limited Partners
and their Affiliates may engage in or possess an interest in

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<PAGE>

any other business or venture of any kind, independently or with others, on
their own behalf or on behalf of other entities with which they are affiliated
or associated, and such Persons may engage in any activities, whether or not
competitive with the Partnership, without any obligation to offer any interest
in such activities to the Partnership or to any Partner. Neither the Partnership
nor any Partner shall have any right, by virtue of this Agreement, in or to such
activities, or the income or profits derived therefrom, and the pursuit of such
activities, even if competitive with the business of the Partnership, and such
activities shall not be deemed wrongful or improper.

                                    ARTICLE 9

                   TRANSFERS OF LIMITED PARTNERSHIP INTERESTS

         9.1 PURCHASE FOR INVESTMENT.

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

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

         9.2 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.

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

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

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

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

                                       27
<PAGE>

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

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

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

         9.3 ADMISSION OF SUBSTITUTE LIMITED PARTNER.

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

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

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

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

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

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

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

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

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

                                       28
<PAGE>

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

         9.4 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.

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

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

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

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

                                   ARTICLE 10

                   BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS

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

                                       29
<PAGE>

         10.2 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.

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

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

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

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

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

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

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

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

         10.6 REPORTS TO LIMITED PARTNERS.

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

                                       30
<PAGE>

presented in accordance with generally accepted accounting principles. The
annual financial statements shall be audited by accountants selected by the
General Partner.

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

                                   ARTICLE 11

                        AMENDMENT OF AGREEMENT; MEETINGS

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

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

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

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

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

                  (e) any amendment to this Article 11.

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

         11.2 MEETINGS OF PARTNERS.

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

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

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

                                       31
<PAGE>

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

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

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

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

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

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

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

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                                   ARTICLE 12

                         MERGER, EXCHANGE OR CONVERSION

         12.1 MERGER, EXCHANGE OR CONVERSION OF PARTNERSHIP.

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

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

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

         12.2 APPROVAL OF PLAN OF MERGER, EXCHANGE OR CONVERSION.

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

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

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

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

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

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

                                       33
<PAGE>

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

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

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

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

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

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

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

         12.3 RIGHTS OF DISSENTING LIMITED PARTNERS.

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

                                       34
<PAGE>

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

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

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

                                   ARTICLE 13

                               GENERAL PROVISIONS

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

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

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

                                       35
<PAGE>

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

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

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

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

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

         13.9 GOVERNING LAW; VENUE.

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

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

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

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

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

                            [SIGNATURE PAGE FOLLOWS]

                                       36
<PAGE>

           IN WITNESS WHEREOF, the parties hereto have hereunder affixed their
signatures to this Agreement of Limited Partnership of Gladstone Commercial
Limited Partnership as of the 17th day of July, 2003.

GENERAL PARTNER:

GLADSTONE COMMERCIAL CORPORATION

By: /s/ David Gladstone
   -------------------------------------------
Name:  David Gladstone
Title: Chairman and Chief Executive Officer

ORIGINAL LIMITED PARTNER:

GLADSTONE COMMERCIAL PARTNERS, LLC

By: /s/ David Gladstone
   -------------------------------------------
Name:  David Gladstone
Title: Managing Member

<PAGE>

                                INDEX OF EXHIBITS

<Table>
<S>         <C>
EXHIBIT A - Partners, Capital Contributions and Partnership Units

EXHIBIT B - Notice of Exercise of Exchange Right

EXHIBIT C - Certification of Non-Foreign Status
</Table>

<PAGE>
                                    EXHIBIT A

              PARTNERS, CAPITAL CONTRIBUTIONS AND PARTNERSHIP UNITS

                              As of July 17, 2003

<Table>
<Caption>
                                                               Agreed Value of
                                                 Cash              Property
                     Partners                Contribution        Contribution        Partnership Units      Percentage Interest
------------------------------------------- ---------------- --------------------- ----------------------- -----------------------
<S>                                         <C>              <C>                   <C>                     <C>
GENERAL PARTNER:                               $________             N/A                 ____ Units                ____%

Gladstone Commercial Corporation
1750 Tysons Blvd.
Fourth Floor
McLean, Virginia 22102

ORIGINAL LIMITED PARTNER:
Gladstone Commercial Partners, LLC
1750 Tysons Blvd.
Fourth Floor
McLean, Virginia 22102                         $________             N/A                _____ Units                ____%

ADDITIONAL LIMITED PARTNERS: [none]
</Table>

<PAGE>

                                    EXHIBIT B

                      NOTICE OF EXERCISE OF EXCHANGE RIGHT

In accordance with Section 8.5 the Agreement of Limited Partnership of Gladstone
Commercial Limited Partnership, as amended (the "AGREEMENT"), the undersigned
hereby irrevocably (i) presents for exchange ___________ Partnership Units in
Gladstone Commercial Limited Partnership in accordance with the terms of the
Agreement and the Exchange Right referred to therein; (ii) surrenders such
Partnership Units and all right, title and interest therein; and (iii) directs
that the Cash Amount or REIT Shares Amount (as defined in the Agreement) as
determined by the General Partner deliverable upon exercise of the Exchange
Right be delivered to the address specified below, and if REIT Shares (as
defined in the Agreement) are to be delivered, such REIT Shares be registered or
placed in the name(s) and at the address(es) specified below.

Dated:
      ------------------------

                                             -------------------------------
                                             (Signature of Limited Partner)

                                             -------------------------------
                                             (Printed Name of Limited Partner)

                                             Mailing Address and Phone No.:

                                             -------------------------------

                                             -------------------------------

                                             -------------------------------
           (   )
            ---   -------------------------

If REIT Shares are to be issued, issue to:

Name:
      -----------------------------------

Mailing Address and Phone No.:

-----------------------------------------

-----------------------------------------

-----------------------------------------

(   )
 ---   ----------------------------------

Social security or other tax identification number:
                                                   -------------------------

<PAGE>

                                    EXHIBIT C

For Exchanging Partners that are entities:

                       CERTIFICATION OF NON-FOREIGN STATUS

Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), in the event of a disposition by a non-U.S. person of a partnership
interest in a partnership in which (i) 50% or more of the value of the gross
assets consists of United States real property interests ("USRPIs"), as defined
in section 897(c) of the Code, and (ii) 90% or more of the value of the gross
assets consists of USRPIs, cash, and cash equivalents, the transferee will be
required to withhold 10% of the amount realized by the non-U.S. person upon the
disposition. To inform Gladstone Commercial Corporation (the "General Partner")
and Gladstone Commercial Limited Partnership (the "Partnership") that no
withholding is required with respect to the redemption by _______________
("Partner") of its units of limited partnership interest in the Partnership, the
undersigned hereby certifies the following on behalf of Partner:

1. Partner is not a foreign corporation, foreign partnership, foreign trust, or
foreign estate, as those terms are defined in the Code and the Treasury
regulations thereunder.

2. The U.S. employer identification number of Partner is _____________________.

3. The principal business address of Partner is:
______________________________________________________________ and Partner's
place of incorporation is __________.

4. Partner agrees to inform the Company if it becomes a foreign person at any
time during the three-year period immediately following the date of this notice.

5. Partner understands that this certification may be disclosed to the Internal
Revenue Service by the General Partner and that any false statement contained
herein could be punished by fine, imprisonment, or both.

                                    PARTNER:

                                    ----------------------------------------
                                    (entity name)

                                    By:
                                       -------------------------------------
                                    Name:
                                         -----------------------------------
                                    Title:
                                          ----------------------------------

Under penalties of perjury, I declare that I have examined this certification
and, to the best of my knowledge and belief, it is true, correct, and complete,
and I further declare that I have authority to sign this document on behalf of
Partner.

Date:                               Name:
     --------------------------            ---------------------------------
                                    Title:
                                           ---------------------------------

<PAGE>

For Exchanging Partners that are individuals:

                       CERTIFICATION OF NON-FOREIGN STATUS

Under Section 1445(e) of the Internal Revenue Code of 1986, as amended (the
"Code"), in the event of a disposition by a non-U.S. person of a partnership
interest in a partnership in which (i) 50% or more of the value of the gross
assets consists of United States real property interests ("USRPIs"), as defined
in section 897(c) of the Code, and (ii) 90% or more of the value of the gross
assets consists of USRPIs, cash, and cash equivalents, the transferee will be
required to withhold 10% of the amount realized by the non-U.S. person upon the
disposition. To inform Gladstone Commercial Corporation (the "General Partner")
and Gladstone Commercial Limited Partnership (the "Partnership") that no
withholding is required with respect to my redemption of my units of limited
partnership interest in the Partnership, I, _______________, hereby certify the
following:

1. I am not a nonresident alien for purposes of U.S. income taxation.

2. My U.S. taxpayer identification number (social security number) is
   _________________.

3. My home address is: __________________________________________________.

4. I agree to inform the General Partner promptly if I become a nonresident
alien at any time during the three-year period immediately following the date of
this notice.

5. I understand that this certification may be disclosed to the Internal Revenue
Service by the General Partner and that any false statement contained herein
could be punished by fine, imprisonment, or both.

                                           Name:
                                                -------------------------------

Under penalties of perjury, I declare that I have examined this certification
and, to the best of my knowledge and belief, it is true, correct, and complete.

Date:
     --------------------------

                                           Name:
                                                -------------------------------

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