CRT Properties Inc.

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bgx5VAOSZ5/hI2K554AQsRRQ3Ya+wwdEt/EONwmvNjbLyUvqRGKHHVEp+6dfsqSO 2iOYvgGMCl2ZbvQnsV24YQ== 0000950144-04-010646.txt : 20041108 0000950144-04-010646.hdr.sgml : 20041108 20041108162114 ACCESSION NUMBER: 0000950144-04-010646 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041108 DATE AS OF CHANGE: 20041108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRT PROPERTIES INC CENTRAL INDEX KEY: 0000835664 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 592898045 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09997 FILM NUMBER: 041126017 BUSINESS ADDRESS: STREET 1: 225 NE MIZNER BLVD STREET 2: SUITE 200 CITY: BOCA RATON STATE: FL ZIP: 33432 BUSINESS PHONE: 561-447-1874 MAIL ADDRESS: STREET 1: 225 NE MIZNER BLVD STREET 2: SUITE 200 CITY: BOCA RATON STATE: FL ZIP: 33432 FORMER COMPANY: FORMER CONFORMED NAME: KOGER EQUITY INC DATE OF NAME CHANGE: 19940520 10-Q 1 g91635e10vq.htm CRT PROPERTIES INC. CRT Properties Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		For the quarterly period ended SEPTEMBER 30, 2004 or


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		For the transition period from _________________ to _________________

Commission File Number 1-9997

CRT PROPERTIES, INC.

(Exact name of registrant as specified in its charter)


FLORIDA (State or other jurisdiction of incorporation or organization)		59-2898045 (I.R.S. Employer Identification No.)


225 NE MIZNER BOULEVARD, SUITE 200 BOCA RATON, FLORIDA (Address of principal executive offices)		33432 (Zip Code)

Registrant’s telephone number, including area code: (561) 395-9666

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class Common Stock, $.01 par value		Outstanding at October 29, 2004 26,862,347 shares

CRT PROPERTIES, INC. AND SUBSIDIARIES

INDEX


	PAGE NO.
PART I. FINANCIAL INFORMATION

Report of Independent Registered Public Accounting Firm		3

Item 1. Financial Statements (Unaudited):

Condensed Consolidated Balance Sheets— September 30, 2004 and December 31, 2003		4

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2004 and 2003		5

Condensed Consolidated Statement of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2004		6

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 and 2003		7

Notes to Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2004 and 2003		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3.Quantitative and Qualitative Disclosures About Market Risk		27

Item 4.Controls and Procedures		28

PART II.OTHER INFORMATION

Item 1. Legal Proceedings		29

Item 5. Other Information		29

Item 6. Exhibits and Reports on Form 8-K		31

Signatures and Exhibits		33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
CRT Properties, Inc.
Boca Raton, Florida:

We have reviewed the accompanying condensed consolidated balance sheet of CRT Properties, Inc. and subsidiaries (the “Company”), formerly Koger Equity, Inc. and subsidiaries as of September 30, 2004, and the related condensed consolidated statements of operations for the three-month and nine-month periods ended September 30, 2004 and 2003, of changes in shareholders’ equity for the nine-month period ended September 30, 2004 and of cash flows for the nine-month periods ended September 30, 2004 and 2003. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2003, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 5, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

DELOITTE & TOUCHE LLP
West Palm Beach, Florida
November 1, 2004

CRT PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)


	September 30,			December 31,
	2004			2003
ASSETS
Real Estate Investments:
Operating properties:
Land	$	149,853		$	119,973
Buildings		1,016,263			838,430
Furniture and equipment		3,734			3,599
Accumulated depreciation		(205,843	)		(179,569	)

Operating properties, net		964,007			782,433
Undeveloped land held for investment		14,575			10,975
Undeveloped land held for sale		3,039			3,041
Cash and cash equivalents		4,845			9,163
Restricted cash		14,024			11,114
Accounts receivable, net of allowance for uncollectible accounts of $1,196 and $939		19,378			16,236
Investment in unconsolidated entity		3,240			—
Other assets		30,935			15,239

TOTAL ASSETS	$	1,054,043		$	848,201

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Mortgages and loans payable	$	517,025		$	408,716
Accounts payable		2,784			4,299
Accrued real estate taxes payable		10,850			1,853
Accrued liabilities — other		11,108			11,016
Dividends payable		9,700			7,824
Advance rents and security deposits		7,016			6,846

Total Liabilities		558,483			440,554

Minority interest		6,844			4,672

Shareholders’ Equity:
Preferred stock, $.01 par value; 50,000,000 shares authorized; liquidation preference of $25 per share; 2,990,000 shares issued and outstanding		30			30
Common stock, $.01 par value; 100,000,000 shares authorized; 35,361,691 and 30,011,225 shares issued; 26,857,025 and 21,495,956 shares outstanding		354			300
Capital in excess of par value		650,131			546,968
Notes receivable from stock sales to related parties		(1,292	)		(5,092	)
Accumulated other comprehensive loss		(241	)		(241	)
Dividends in excess of net income		(28,768	)		(7,405	)
Treasury stock, at cost; 8,504,666 and 8,515,269 shares		(131,498	)		(131,585	)

Total Shareholders’ Equity		488,716			402,975

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,054,043		$	848,201

See notes to unaudited condensed consolidated financial statements.

CRT PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)


	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2004			2003			2004			2003
REVENUES
Rental and other rental services	$	40,974		$	35,163		$	121,373		$	107,407
Management fees		89			—			263			331
Other		—			—			—			5

Total operating revenues		41,063			35,163			121,636			107,743

EXPENSES
Property operations		16,114			13,907			47,686			41,949
Depreciation and amortization		10,479			7,925			29,615			24,537
General and administrative		4,146			2,385			10,157			8,415
Direct costs of management fees		—			—			—			88
Other		47			36			157			103

Total operating expenses		30,786			24,253			87,615			75,092

OPERATING INCOME		10,277			10,910			34,021			32,651

OTHER INCOME AND (EXPENSE)
Equity in earnings of unconsolidated entity		65			—			306			—
Interest income		53			39			315			179
Mortgage and loan interest, including amortization of deferred loan costs of $584 and $370 for the three months and $1,336 and $1,095 for the nine months		(8,155	)		(7,289	)		(22,981	)		(22,059	)

Total other income and (expense)		(8,037	)		(7,250	)		(22,360	)		(21,880	)

INCOME BEFORE GAIN ON SALE OR DISPOSITION OF ASSETS, INCOME TAXES, AND MINORITY INTEREST		2,240			3,660			11,661			10,771
Gain on sale or disposition of assets		—			—			—			589

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST		2,240			3,660			11,661			11,360
Income tax expense (benefit)		—			(1	)		—			(22	)

NET INCOME BEFORE MINORITY INTEREST		2,240			3,661			11,661			11,382
Minority Interest		72			—			72			—

NET INCOME		2,168			3,661			11,589			11,382
Dividends on preferred stock		(1,588	)		(371	)		(4,764	)		(371	)

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	580		$	3,290		$	6,825		$	11,011

EARNINGS PER SHARE:
Basic	$	0.02		$	0.15		$	0.26		$	0.52

Diluted	$	0.02		$	0.15		$	0.25		$	0.52

WEIGHTED AVERAGE SHARES:
Basic		26,855			21,332			26,590			21,314

Diluted		27,180			21,455			26,919			21,377

See notes to unaudited condensed consolidated financial statements.

CRT PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN

SHAREHOLDERS’ EQUITY

(Unaudited)

(In thousands)



	Preferred Stock				Common Stock				Capital in Excess		Notes Receivable			Accumulated Other			Dividends In Excess						Total Share-
	Shares		Par		Shares		Par		of Par		from Stock			Comprehensive			of Net			Treasury			holders’
	Issued		Value		Issued		Value		Value		Sales			Loss			Income			Stock			Equity
BALANCE AT DECEMBER 31, 2003		2,990	$	30		30,011	$	300	$	546,968	$	(5,092	)	$	(241	)	$	(7,405	)	$	(131,585	)	$	402,975
Common stock sold						5,175		52		100,283											87			100,422
Options exercised						175		2		2,880														2,882
Dividends declared																		(32,952	)					(32,952	)
Stock loan repayments												3,800												3,800
Net Income																		11,589						11,589

BALANCE AT SEPTEMBER 30, 2004		2,990	$	30		35,361	$	354	$	650,131	$	(1,292	)	$	(241	)	$	(28,768	)	$	(131,498	)	$	488,716

See notes to unaudited condensed consolidated financial statements.

CRT PROPERTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and In Thousands)


	Nine Months
	Ended September 30,
	2004			2003
OPERATING ACTIVITIES
Net income	$	11,589		$	11,382
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of unconsolidated entity		(306	)		—
Minority interest expense		72			—
Depreciation and amortization		29,615			24,537
Amortization of deferred loan costs		1,336			1,095
Provision for uncollectible accounts		388			488
Gain on sale or disposition of assets		—			(589	)
Changes in assets and liabilities:
Increase in receivables and other assets		(10,224	)		(928	)
Increase in accounts payable, accrued liabilities and other liabilities		7,751			6,980

Net cash provided by operating activities		40,221			42,965

INVESTING ACTIVITIES
Property acquisitions		(125,718	)		(33,103	)
Tenant improvements to first generation space		(6,533	)		(3,300	)
Tenant improvements to second generation space		(3,106	)		(3,448	)
Building improvements		(9,975	)		(3,857	)
Deferred tenant costs		(3,784	)		(1,585	)
Additions to furniture and equipment		(135	)		(213	)
Increase in restricted cash		(2,910	)		(3,086	)
Proceeds from sale of assets		—			1,580
Investment in unconsolidated entity		(2,934	)		—

Net cash used in investing activities		(155,095	)		(47,012	)

FINANCING ACTIVITIES
Proceeds from exercise of stock options		2,882			317
Proceeds from issuance of preferred stock		—			72,145
Proceeds from sales of common stock		100,422			204
Proceeds from mortgages and loans		82,490			36,000
Principal payments on mortgages and loans payable		(50,055	)		(73,570	)
Contributions from minority interest		2,100			—
Stock loan repayment		3,800			—
Dividends paid		(31,083	)		(22,374	)

Net cash provided by financing activities		110,556			12,722

Net (decrease) increase in cash and cash equivalents		(4,318	)		8,675
Cash and cash equivalents — beginning of period		9,163			4,627

Cash and cash equivalents — end of period	$	4,845		$	13,302

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for income taxes	$	5		$	—

Cash paid during the period for interest	$	21,456		$	20,757

Non cash item-assumption of debt from real estate acquisitions	$	75,874		$	—

Non cash item-issuance of limited partner units for real estate acquisitions	$	2,041		$	—

See notes to unaudited condensed consolidated financial statements.

CRT PROPERTIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS

ENDED SEPTEMBER 30, 2004 AND 2003

(Unaudited)

1. ORGANIZATION. CRT Properties, Inc. (“CRT” or the “Company”), a Florida corporation formerly known as Koger Equity, Inc., was incorporated in 1988 to own and manage commercial office buildings and other income-producing properties. CRT is a self-administered and self-managed real estate investment trust (a “REIT”) and its common stock and preferred stock are listed on the New York Stock Exchange under the ticker symbol “CRO” and “CROPRA”, respectively. As of September 30, 2004, CRT owned or had interests in 134 office buildings containing 10.8 million rentable square feet, primarily located within 21 suburban office projects and two urban centers in 12 metropolitan areas in the Southeastern United States, Maryland and Texas.

2. BASIS OF PRESENTATION. The condensed consolidated financial statements have been prepared by CRT. All material intercompany transactions and accounts have been eliminated in consolidation. The financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission related to interim financial statements.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2003, included in the Company’s Form 10-K Annual Report for the year ended December 31, 2003. The accompanying balance sheet at December 31, 2003 has been derived from the audited financial statements at that date and is condensed.

All adjustments which, in the opinion of management, are necessary to fairly present the results for the interim periods have been made. Certain prior year amounts have been reclassified in order to conform to the current year presentation. Results of operations for the three and nine months ended September 30, 2004 are not necessarily indicative of the results to be expected for future periods or for the full year.

New Accounting Standards. In November 2002, the FASB issued FASB Interpretation (“FIN”) No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees of Indebtedness of Others.” FIN No. 45 requires certain guarantees to be recorded at fair value and also requires significant new disclosures related to guarantees, even when the likelihood of making any payments under the guarantee is remote. FIN No. 45 generally applies to contracts or indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying variable that is related to an asset, liability, or an equity security of the guaranteed party. FIN No. 45 is effective for guarantees issued or modified after December 31, 2002. The Company adopted FIN No. 45 effective January 1, 2003. The Company’s adoption of FIN No. 45 has not had a material impact on its condensed consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative methods of transition to the fair value method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure provisions of SFAS No. 123 to require prominent disclosure about the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. SFAS No. 148 does not amend SFAS No. 123 to require companies to account for their employee stock-based awards using the fair value method. However, the disclosure provisions are required for all companies with stock-based employee compensation, regardless of whether they utilize the fair value method of accounting described in SFAS No. 123 or the intrinsic value method described in APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 148’s transition provisions are effective for fiscal years ending after December 15, 2002. The Company adopted the interim disclosure provisions of SFAS No. 148 effective January 1, 2003. The Company’s adoption of SFAS No. 148 has not had a material impact on its condensed consolidated financial statements.

In December 2003, FASB Interpretation No. (“FIN”) 46(R), “Consolidation of Variable Interest Entities” was issued. FIN 46(R) replaces FIN 46 and addresses consolidation by business enterprises of variable interest entities. The provisions of FIN 46(R) are effective for the first reporting period that ends after December 15, 2003 for variable interests in those entities commonly referred to as special-purpose entities. Application of the provisions of FIN 46(R) for all other entities is effective for the first reporting period ending after March 15, 2004. The Company’s adoption of FIN 46(R) has not had a material impact on its consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133. This statement was effective for contracts entered into or modified after June 30, 2003. The Company’s adoption of SFAS No. 149 has not had a material impact on its consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003 (July 1, 2003 for calendar quarter companies). The Company adopted SFAS No. 150 effective July 1, 2003. The Company’s adoption of SFAS No. 150 has not had a material impact on its consolidated financial statements.

In December 2003, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” (SAB No. 104), which codifies, revises and rescinds certain sections of SAB No. 101, “Revenue Recognition”, in order to make this interpretive guidance consistent with current authoritative guidance. The Company’s adoption of SAB No. 104 did not have a material impact on its consolidated financial statements.

3. SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES. The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities. These estimates are based on historical experience and various other factors that are believed to be reasonable under the circumstances. However, actual results could differ from the Company’s estimates under different assumptions or conditions. On an ongoing basis, the Company evaluates the reasonableness of its estimates.

The Company believes the following significant accounting policies affect the significant estimates and assumptions used in the preparation of its condensed consolidated financial statements:

Investments in Real Estate. Rental property and improvements, including interest and other costs capitalized during construction, are included in real estate investments and are stated at cost. Expenditures for ordinary maintenance and repairs are expensed to operations as they are incurred. Significant renovations and improvements, which improve or extend the useful life of the assets, are capitalized. Except for amounts attributed to land, rental property and improvements are depreciated as described below.

The Company recognizes gains on the sale of property in accordance with SFAS No. 66. Revenues from sales of property are recognized when a significant down payment is received, the earnings process is complete and the collection of any remaining receivables is reasonably assured.

Acquisitions of Real Estate. The Company assesses the fair value of acquired tangible and intangible assets, including land, buildings, tenant improvements, above and below market leases, origination costs, acquired in-place leases, other identified intangible assets and assumed liabilities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” and allocates the purchase price to the acquired assets and assumed liabilities, including land at appraised value and buildings at replacement cost. The Company assesses and considers fair value based on estimated cash

flow projections that utilize appropriate discount and/or capitalization rates, as well as available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions. Results of operations of acquired entities are included in consolidated earnings from the date of acquisition. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company also considers an allocation of purchase price of other acquired intangibles, including acquired in-place leases that may have a customer relationship intangible value, including (but not limited to) the nature and extent of the existing relationship with the tenants, the tenant’s credit quality and expectations of lease renewals.

Depreciation and Amortization. The Company computes depreciation on its operating properties using the straight-line method based on estimated useful lives of 3 to 39 years. A significant portion of the acquisition cost of each operating property is allocated to the acquired buildings (usually 85% to 90%). The allocation of the acquisition cost to buildings and the determination of the useful lives are based on the Company’s estimates. If the Company were to allocate acquisition costs inappropriately to buildings or to incorrectly estimate the useful lives of its operating properties, it may be required to adjust future depreciation expense. Deferred tenant costs (leasing commissions and tenant relocation costs) are amortized over the term of the related leases.

Impairment of Long-Lived Assets. The Company’s long-lived assets include investments in real estate. The Company assesses impairment of long-lived assets whenever changes or events indicate that the carrying value may not be recoverable. The Company assesses impairment of operating properties based on the operating cash flows of the properties. In performing its assessment, the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. During the quarter and nine months ended September 30, 2004, no impairment charges were recorded. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges.

Revenue Recognition. Rental income is generally recognized over the lives of leases according to provisions of the underlying lease agreements. Certain leases provide for tenant occupancy during periods for which no rent is due or where minimum rent payments increase during the term of the lease. For these leases, the Company records rental income for the full term of each lease on a straight-line basis. For the quarters ended September 30, 2004 and 2003, the recognition of rental revenues on a straight-line basis for applicable leases increased rental revenues by $1,492,000 and $802,000, respectively, over the amount which would have been recognized based upon the contractual provisions of these leases. For the nine months ended September 30, 2004 and 2003, the recognition of rental revenues on a straight-line basis for applicable leases increased rental revenues by $4,148,000 and $3,172,000, respectively, over the amount which would have been recognized based upon the contractual provisions of these leases.

The Company has historically generated management fees and leasing commissions by providing on-site property management and leasing services to a limited number of third party owners. Management fees are generally earned monthly and are based on a percentage of the managed properties’ monthly rental and other operating revenues. Leasing commissions are earned when the Company, on behalf of the third party owner, negotiates or assists in the negotiation of new leases, renewals and expansions of existing leases, and are generally based on a percentage of rents to be received under the initial term of the respective leases.

Allowances for Doubtful Accounts. The Company maintains allowances for doubtful accounts for estimated losses due to the inability of its tenants to make required payments for rents and other rental services. In assessing the recoverability of these receivables, the Company makes assumptions regarding the financial condition of the tenants based primarily on past payment trends and certain financial information that tenants submit to the Company. If the financial condition of the Company’s tenants were to deteriorate and result in an impairment of their ability to make payments, the Company may be required to increase its allowances by recording additional bad debt expense. Likewise, should the financial condition of its tenants improve and result in payments or settlements of previously reserved amounts, the Company may be required to record a reduction in bad debt expense.

Federal Income Taxes. The Company is qualified and has elected tax treatment as a real estate investment trust under the Internal Revenue Code (a “REIT”). A corporate REIT is a legal entity that owns income-producing real property, and through distributions of income to its shareholders, is permitted to reduce or avoid the payment of federal income taxes at the corporate level.

To maintain qualification as a REIT, the Company must, among other requirements, distribute to shareholders at least 90 percent of REIT taxable income. To the extent that the Company pays dividends equal to 100 percent of REIT taxable income, the earnings of the Company are taxed at the shareholder level. However, the use of net operating loss carryforwards, which may reduce REIT taxable income to zero, are limited for alternative minimum tax purposes. Distributed capital gains on sales of real estate are not subject to tax at the REIT level; however, undistributed capital gains are taxed at the REIT level. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes and will not be able to qualify as a REIT for four subsequent taxable years. Although CRT Realty Services, Inc. (“CRTRSI”), a taxable REIT subsidiary, is consolidated with the Company for financial reporting purposes, this entity is subject to federal income tax and files separate federal and state income tax returns.

Stock Options. Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” requires expanded disclosures of stock-based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply Accounting Principles Board Opinion No. 25 (“APB 25”), which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. As a result, there were no stock options charged to income during the three and nine months ended September 30, 2004 and 2003. The Company has continued to apply APB 25 to its stock based compensation awards to employees and has disclosed the required pro forma effect on net income and earnings per share as follows:


	Three Months
	Ended September 30,
	2004			2003
Net income — As reported	$	2,168,000		$	3,661,000
Dividends on preferred shares		(1,588,000	)		(371,000	)
Stock-based employee compensation expense determined under fair value method for all forfeitures (awards)		—			(364,000	)

Pro forma net income	$	580,000		$	2,926,000

EARNINGS PER SHARE:
Basic-as reported	$	0.02		$	0.15

Basic-pro forma	$	0.02		$	0.14

Diluted-as reported	$	0.02		$	0.15

Diluted-pro forma	$	0.02		$	0.14


	Nine Months
	Ended September 30,
	2004			2003
Net income — As reported	$	11,589,000		$	11,382,000
Dividends on preferred shares		(4,764,000	)		(371,000	)
Stock-based employee compensation expense determined under fair value method for all forfeitures (awards)		94,000			(791,000	)

Pro forma net income	$	6,919,000		$	10,220,000

EARNINGS PER SHARE:
Basic-as reported	$	0.26		$	0.52

Basic-pro forma	$	0.26		$	0.48

Diluted-as reported	$	0.25		$	0.52

Diluted-pro forma	$	0.26		$	0.48

Investment in Unconsolidated Entity. The Company accounts for an investment in an unconsolidated entity using the equity method of accounting, as it does not have a controlling interest over the operating and financial policies of the joint venture. As a result, the assets and liabilities of the joint venture are not included in the Company’s balance sheet. FASB Interpretation (“FIN”) No. 46®, “Consolidation of Variable Interest Entities,” requires existing unconsolidated Variable Interest Entities (“VIE”) to be consolidated by their primary beneficiaries. The primary beneficiary of a VIE is the party that absorbs a majority of the entity’s expected losses or receives a majority of its expected residual returns, or both. The Company accounts for its investment in an unconsolidated entity using the equity method of accounting rather than consolidation under FIN 46® since the Company has determined that it is not the primary beneficiary of the entity. This investment was initially recorded at cost and subsequently adjusted for equity in earnings and cash contributions and distributions.

Fair Value of Financial Instruments. The Company believes the carrying amount of its financial instruments (temporary investments, accounts receivable, and accounts payable) is a reasonable estimate of fair value of these instruments. Based on an estimated market interest rate of 8.0 percent, the fair value of the Company’s mortgages and loans payable would be approximately $531.2 million at September 30, 2004.

Fair Value of In-Place Leases. SFAS No. 142 “Goodwill and Other Intangible Assets,” requires the separate recognition of intangible assets acquired as part of an asset acquisition, including the value attributable to leases in place and certain customer relationships. The Company intends to amortize these intangible assets on a straight-line basis over the remaining term of the existing leases (generally averages 4 to 5 years). As of September 30, 2004, the Company had recorded as intangible assets (before accumulated amortization), the estimated value of leases in place as follows (in thousands):


	As of
	September 30,2004
Three Ravinia	$	274,000
The Lakes on Post Oak		1,500,000
Tollway Crossing		272,000
CIGNA Plaza		228,000
Atlantic Center Plaza		9,401,000
McGinnis Park		329,000

Total fair value of leases	$	12,004,000

The Company is currently evaluating any other intangible assets that may have arisen resulting from its more recent acquisitions including the Decoverly Office Park in Rockville, Maryland, Baymeadows Way in Jacksonville, Florida, and Westchase Corporate Center in Houston, Texas.

Cash and Cash Equivalents. Cash in excess of daily requirements is invested in short-term monetary securities. Such temporary cash investments have an original maturity of less than three months and are deemed to be cash equivalents for purposes of the condensed consolidated financial statements.

Restricted Cash. Restricted cash represents amounts contractually placed in escrow for purposes of making payments for certain future building improvements, tenant allowances, leasing commissions, real estate taxes, and debt service.

4. STATEMENTS OF CASH FLOWS. On January 13, 2004, the Company issued 5,175,000 shares of its common stock (including 675,000 shares issued in connection with the exercise of an over-allotment option granted to the Company’s underwriter) at a price to the public of $20.45 per share. The net proceeds of the offering ($100.2 million) were used to pay down the Company’s revolving credit facility ($15 million), fund the Decoverly acquisition ($42.2 million) as well as a portion of the Atlantic Center Plaza acquisition ($40.5 million) and for general corporate purposes. On January 27, 2004, the Company acquired Atlantic Center Plaza, a

twenty-three story 502,000 square foot office building located in Atlanta, Georgia, for a purchase price of $116.5 million plus closing and other costs. Under the terms of the acquisition agreement, the Company assumed a 3-year variable interest rate secured loan of approximately $75.9 million with an interest rate of LIBOR (1.6% at September 30, 2004) plus 160 basis points. Simultaneously, at closing, the Company assumed a second 3-year variable interest rate secured loan of $10.0 million with an interest rate of LIBOR plus 600 basis points and immediately prepaid the loan in full. The Company funded the remainder of the purchase price with a portion of the net proceeds ($40.5 million) from its January 2004 common stock offering.

On April 2, 2004, the Company acquired four properties, including two Class A office buildings, a ground lease and an undeveloped parcel of land located in the Decoverly Office Park in Rockville, Maryland for a purchase price of $42.0 million plus closing and other costs. The two three-story office buildings aggregate approximately 155,000 square feet of rentable space. The undeveloped land parcel contains 3.2 acres with an approved site plan for a four-story 105,000 square foot office building. The funds required for this acquisition were provided by the proceeds from the Company’s January 2004 common stock offering.

On July 23, 2004 the Company acquired a five-story, 224,000 square foot, single-tenant, class “A” office building located at 7777 Baymeadows Way in Jacksonville, Florida, for a purchase price of $20.8 million, plus closing and other costs. As part of this transaction, the Company issued 33,202 DownREIT limited partnership units in exchange for a $760,985 contribution from a related minority partner (Thomas J. Crocker, the Company’s Chief Executive Officer) in a joint venture with the Company (see Note 9). The Company received an additional minority interest contribution of $154,107 from an unrelated third party. This building also has an adjacent six-story parking garage. The acquisition of the Baymeadows Way property was financed in part with the proceeds of a secured loan in the amount of approximately $13.8 million, which bears interest at a fixed rate of 5.55% and matures in 2014.

On August 16, 2004, the Company acquired the Westchase Corporate Center located in Houston, Texas; a six-story, 184,000 square foot, class “A” office building for a purchase price of $20.3 million, plus closing and other costs. As part of this transaction, the Company issued 28,584 DownREIT limited partnership units in exchange for a $639,015 contribution from a related minority partner (Thomas J. Crocker, the Company’s Chief Executive Officer) in a joint venture with the Company (see Note 9). The Company received an additional minority interest contribution of $545,893 from an unrelated third party. The Company financed the acquisition of the Westchase property in part with the proceeds of a secured loan totaling approximately $15.2 million, which bears interest at a fixed rate of 5.39% and matures in 2014.

5. EARNINGS PER SHARE. Basic earnings per common share has been computed based on the weighted average number of shares of common stock outstanding for each period. Diluted earnings per common share is similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares underlying the options had been issued. The treasury stock method is used to calculate dilutive shares which reduces the gross number of dilutive shares by the number of shares purchasable from the proceeds of the options assumed to be exercised.

For the three and nine months ended September 30, 2004 and 2003, earnings per common share is calculated as follows (in thousands except per share data):


	Three Months
	Ended September 30,
	2004		2003
EARNINGS PER COMMON AND DILUTIVE POTENTIAL COMMON SHARE:
Net Income available to common shareholders	$	580	$	3,290

Shares:
Weighted average number of common shares outstanding – Basic		26,855		21,332

EARNINGS PER SHARE – BASIC	$	0.02	$	0.15

Shares:
Weighted average number of common shares outstanding – Basic		26,855		21,332
Effect of dilutive securities (a):
Stock options		325		123

Adjusted weighted average common shares – Diluted		27,180		21,455

EARNINGS PER SHARE – DILUTED	$	0.02	$	0.15


	Nine Months
	Ended September 30,
	2004		2003
EARNINGS PER COMMON AND DILUTIVE POTENTIAL COMMON SHARE:
Net Income available to common shareholders	$	6,825	$	11,011

Shares:
Weighted average number of common shares outstanding – Basic		26,590		21,314

EARNINGS PER SHARE – BASIC	$	0.26	$	0.52

Shares:
Weighted average number of common shares outstanding – Basic		26,590		21,314
Effect of dilutive securities (a):
Stock options		329		63

Adjusted weighted average common shares – Diluted		26,919		21,377

EARNINGS PER SHARE – DILUTED	$	0.25	$	0.52

(a) Shares issuable were derived using the “Treasury Stock Method” for all dilutive potential shares. The Company excluded approximately 125,000 antidilutive stock options from the above calculation for the three and nine months ended September 30, 2004.

6. MORTGAGES AND LOANS PAYABLE. At September 30, 2004, the Company had $517,025,000 of loans outstanding, which are collateralized by mortgages on all but nine of the Company’s buildings. Annual maturities for mortgages and loans payable are summarized as follows (in thousands):


Year Ending December 31,
2004	$	78,463
2005		6,067
2006		23,657
2007		122,046
2008		89,545
Subsequent Years		197,247

Total	$	517,025

On April 21, 2004, the Company amended and extended the loan agreement governing its $75.9 million loan with MetLife assumed in connection with the acquisition of Atlantic Center Plaza. As part of the amendment, the existing variable interest rate (LIBOR plus 160 basis points) will remain in place until December 31, 2004 and the Company will draw an additional $4.1 million prior to December 31, 2004. Effective January 1, 2005, the rate will be fixed at 5.49% until December 31, 2014.

In August 2004, the Company replaced its previous $100 million secured revolving credit facility, which was scheduled to mature in December 2004, with a new $165 million secured revolving credit facility, which has a three-year term and a one-year extension option and is scheduled to expire on August 23, 2007.

7. DIVIDENDS. The Company paid quarterly dividends on its common stock of $0.35 per share on February 5, 2004, May 6, 2004, and August 5, 2004, to shareholders of record on December 31, 2003, March 31, 2004, and June 30, 2004, respectively. During the quarter ended September 30, 2004, the Company’s Board of Directors declared a quarterly dividend on its common stock of $0.35 per share payable on October 31, 2004, to shareholders of record on September 30, 2004.

On February 17, 2004, the Company’s Board of Directors declared a dividend on its preferred stock of $0.53125 per share paid on March 15, 2004, to shareholders of record on March 1, 2004. This preferred dividend covered the period December 15, 2003 through March 14, 2004. On May 26, 2004, the Company’s Board of Directors declared a dividend on its preferred stock of $0.53125 per share paid on June 15, 2004, to shareholders of record on June 1, 2004. This preferred dividend covered the period March 15, 2004 through June 14, 2004. On August 26, 2004, the Company’s Board of Directors declared a dividend on its preferred stock of $0.53125 per share paid on September 15, 2004, to shareholders of record on September 1, 2004. This preferred dividend covered the period June 15, 2004 through September 14, 2004.

8. SEGMENT REPORTING. The Company operates in one business segment, the ownership and management of commercial real estate. The Company’s primary business is the ownership, development, and operation of income-producing office properties. Management operates each property as an individual operating segment and has aggregated these operating segments into a single segment for financial reporting purposes due to the fact that all of the individual operating segments have similar economic characteristics. As of September 30, 2004, all of the Company’s operations were located in the Southeastern United States, Maryland and Texas.

9. NOTES RECEIVABLE FROM STOCK SALES. On February 17, 2000, and in conjunction with the Company’s plan (the “Repurchase Plan”) to repurchase up to 2.65 million shares of common stock (the “Shares”), the Company entered into an agreement to, from time to time, loan to Mr. Thomas J. Crocker, Chief Executive Officer, and Mr. Robert E. Onisko, former Chief Financial Officer (collectively, the “Officers”), certain amounts in connection with their purchase of up to 500,000 shares and 150,000 shares, respectively, of the Company’s common stock (collectively the “Loan Stock”). For Loan Stock purchases consummated pursuant to the Company’s 1998 Equity and Cash Incentive Plan, the Company had agreed to advance up to 100% of the purchase price of the shares. For Loan Stock purchases consummated in the open market or pursuant to the Repurchase Plan, the Company had agreed to advance up to 50% of the purchase price of the shares. Each Officer’s loan was collateralized by any Loan Stock purchased by such Officer. Aside from an Officer’s equity interest in Loan Shares, the Company has limited or no personal recourse against an Officer for the principal amount of any outstanding loan balance. The Officers, under the terms of the plan, are personally obligated to make any

and all interest payments. Each loan bears interest at 150 basis points over the applicable LIBOR rate, which interest is payable quarterly. The outstanding principal amount of each loan and all accrued but unpaid interest is due on the earlier of (i) February 17, 2010 or (ii) the second anniversary of the Officer’s termination by the Company for cause. During the three and nine months ended September 30, 2004, Thomas J. Crocker made interest payments of $7,524 and $56,881 and Robert E. Onisko made interest payments of $9,052 and $25,834, respectively. As of July 1, 2004, Mr. Crocker had purchased 320,370 shares of Loan Stock and the aggregate outstanding principal balance of his loans was approximately $3,800,000 all of which had been repaid as of July 26, 2004. For some time, the Company’s Board of Directors has considered the possibility of eliminating any further commitment to loan funds to Mr. Crocker and to have Mr. Crocker’s loans repaid in full, in the belief that eliminating this arrangement would be in the Company’s best interest. Based on a proposal initially submitted by Mr. Crocker and approved by a special committee comprised of the Company’s independent directors as well as the Company’s entire board of directors, on July 16, 2004, the Company and Mr. Crocker entered into a definitive agreement whereby: (1) Mr. Crocker agreed to repay the outstanding loans and terminate his rights to future loans upon the acquisition of the Baymeadows property; (2) the Company agreed to make a one time payment of $540,000 to Mr. Crocker as additional compensation to defray a portion of the costs and expenses incurred by Mr. Crocker in connection with his negotiation of the agreement with the Company; and (3) the Company and Mr. Crocker agreed to co-invest in a joint venture to acquire the Baymeadows and Westchase properties (the “Properties”), acquired during the quarter ended September 30, 2004. The joint venture arrangement between the Company and Mr. Crocker was created in part to effect for the benefit of Mr. Crocker a tax-deferred, like-kind exchange of a hotel in Boca Raton, Florida for the Properties. This arrangement requires the Company to protect Mr. Crocker’s ability to defer recognition of taxable gains through certain restrictions on the Company’s ability to sell or finance the Properties. Mr. Crocker contributed $1.4 million and owns approximately 10% of the joint venture in the form of a DownREIT limited partnership interest. The one time payment of $540,000 was made to Mr. Crocker on July 30, 2004. Mr. Crocker repaid his outstanding loans in full on July 26, 2004. The arrangements above are described in detail in a Form 8-K filed by the Company on July 30, 2004. As of September 30, 2004, Mr. Onisko has purchased 102,490 shares of Loan Stock and the aggregate outstanding principal balance of his loans was approximately $1,292,000. The Company has no discretion or termination right under this agreement since the Company’s loan to Mr. Onisko was made under the terms of a contract which precedes the Sarbanes-Oxley Act.

10. COMMON STOCK. On January 13, 2004, the Company issued 5,175,000 shares of its common stock (including 675,000 shares issued in connection with the exercise of an over-allotment option granted to the Company’s underwriter) at a price to the public of $20.45 per share. The net proceeds of the offering were used to pay down the Company’s revolving credit facility ($15 million), fund the Decoverly acquisition ($42.2 million) as well as a portion of the Atlantic Center Plaza acquisition ($40.5 million) and for general corporate purposes.

11. SUBSEQUENT EVENTS. On October 4, 2004, the Company sold approximately 14.5 acres of undeveloped land located across the street from its Atlanta Gwinnet Center for approximately $3.25 million. This transaction resulted in a gain of approximately $293,000.

On September 30, 2004, the Company entered into a purchase and sale agreement with East Las Olas Investors II, WLD Realty, Ltd., and Halmos Holdings, Inc. to acquire the partnership interests in two class “A” office buildings located in the central business district of Fort Lauderdale, Florida. On October 15, 2004, after further discussions between the parties, the purchase price was fixed at $138.6 million (plus closing and other costs) and the Company deposited $5 million in earnest money. The office buildings, known as the Las Olas Centre, comprise approximately 470,000 rentable square feet and, as of September 30, 2004, was 87% occupied. The transaction is expected to close during the fourth quarter of 2004 and will be financed with a 10-year, $99 million fixed interest rate loan with the remainder to be drawn on the Company’s line of credit.

On October 14, 2004, the Company announced plans to develop a $90 million, 20-story, 335,000-square-foot, class “A” office tower in a joint venture with The Related Companies of New York.

On November 2, 2004, the Company entered into a purchase and sale agreement with the WHML-S Real Estate Limited Partnership to acquire a 437,000 rentable square foot class “A” office building for a purchase price of approximately $39 million (plus closing and other costs). The building, located in Dallas, Texas, is comprised of two interconnected towers consisting of Tower 1 with 8 floors, and Tower 2 with 11 floors, and is situated on approximately 10.1 acres with an attached four-story parking garage. In connection with this acquisition, the Company will enter into a joint venture with Wilcox Capital Group, whereby the Company will own 75% of the venture. Pending the Company’s successful completion of due diligence on the property, the acquisition of Signature Place would be expected to close during the fourth quarter of 2004 and will be financed with proceeds from a non-recourse mortgage and the balance of the equity required of the Company will be drawn on the Company’s revolving line of credit. As of September 30, 2004, the Signature Place office building was 65% leased.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Estimates and certain other matters discussed in this report may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although CRT Properties, Inc. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions; there can be no assurance that its expectations will be attained. Certain factors could cause actual results to differ materially from the Company’s expectations, including those set forth as risk factors in the Company’s SEC reports and filings, including its Annual Report on Form 10-K for the year ended December 31, 2003. Included among these factors are changes in general economic conditions, including changes in the economic conditions affecting industries in which its principal tenants compete; its ability to timely lease or re-lease space at current or anticipated rents to creditworthy tenants; its ability to achieve economies of scale over time; the demand for tenant services beyond those traditionally provided by landlords; changes in interest rates; changes in operating costs; its ability to attract and retain high-quality personnel at a reasonable cost in a highly competitive labor environment; future demand for its debt and equity securities; its ability to refinance its debt on reasonable terms at maturity; and its ability to complete current and future development projects on schedule and on budget. Many of these factors are beyond the Company’s ability to control or predict. Forward-looking statements are not guarantees of performance. For forward-looking statements contained or incorporated by reference herein, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes appearing elsewhere in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

CRT’s revenues are dependent in part on the occupancy of its portfolio of office buildings. Over the past few years, as a struggling national economy resulted in white-collar job losses and a general oversupply of office space in many markets, occupancy rates declined in most of the markets CRT serves. The office building sector continues to experience comparatively low occupancy rates in most markets. As of September 30, 2004, CRT’s portfolio was 80% occupied compared to 82% as of September 30, 2003 and 81% as of December 31, 2003. CRT uses numerous approaches to maintain and increase occupancy, including prioritizing efforts to retain existing tenants, using rental concessions such as free rent and improvement allowances, offering market-specific broker incentives and employing highly skilled and proactive management and leasing professionals.

CRT’s leases have an overall average lease term of approximately five years. In any given year, the Company generally renews over half of its expiring office leases; however, for those office leases that are not renewed, the Company must remarket the vacated office space. Since rental rates generally decline as vacancy rates increase (and vice versa), the Company may lease the vacated space at terms less favorable than the terms of the expired lease. The amount of rental concessions given, such as free rent or improvement allowances, will also impact effective rental rates.

On September 11, 2003, the Company acquired Tollway Crossing (a three-story building) and CIGNA Plaza (a five-story building) in Dallas, Texas for approximately $33.1 million. The two office buildings combined contain approximately 280,000 square feet of rentable space. The funds required for this acquisition were provided by the proceeds from the Company’s September 10, 2003 preferred stock issuance. As of September 30, 2004, Tollway Crossing and CIGNA Plaza were 100% and 95% occupied, respectively.

On December 30, 2003, the Company completed a joint venture agreement with Triangle W/Development to acquire a 75% interest in two five-story office buildings encompassing 202,000 square feet and 8.5 acres of undeveloped land suitable for development located in the McGinnis Park office complex in Atlanta, Georgia. The Company contributed approximately $13.9 million to pay off an existing mortgage plus an additional amount for closing costs and working capital, funded from its secured line of credit. The joint venture assumed an existing mortgage on the undeveloped land of approximately $978,000. As of September 30, 2004, the McGinnis Park office buildings were 58% leased.

the property’s rentable space was leased. Under the terms of the acquisition agreement, the Company assumed a 3-year variable interest rate secured loan of approximately $75.9 million with an interest rate of LIBOR (1.65% at September 30, 2004) plus 160 basis points. Simultaneously, at closing, the Company assumed a second 3-year variable interest rate secured loan of $10.0 million with an interest rate of LIBOR plus 600 basis points and immediately prepaid the loan in full. The Company funded the remainder of the purchase price with a portion of the net proceeds from its January 2004 common stock offering.

On April 2, 2004, the Company acquired four properties, including two Class A four-story office buildings, a ground lease and an undeveloped parcel of land located in the Decoverly Office Park in Rockville, Maryland for a purchase price of $42.0 million plus closing and other costs. The two three-story office buildings aggregate approximately 155,000 square feet of rentable space and were 93% occupied as of September 30, 2004. The undeveloped land parcel contains 3.2 acres with an approved site plan for a four-story 105,000 square foot office building. The funds required for this acquisition were provided by the proceeds from the Company’s January 2004 common stock offering.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements that appear elsewhere in this quarterly report on Form 10-Q. A full summary of the significant accounting policies used in preparing the consolidated financial statements is set forth in Note 3 to those statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingencies at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ materially from estimates made. The Company believes that the specific accounting policies discussed below are critical in preparing its consolidated financial statements due to the increased level of assumptions used or estimates made in determining their impact on its consolidated financial statements.

Revenue Recognition. The Company generates principally all of its operating revenues from leasing space to various tenants in office buildings owned by the Company. Tenants include for-profit companies across a number of industries as well as various federal and state departments and agencies. The Company’s twenty five largest tenants comprise over half of the Company’s occupied space and generate over half of the Company’s annual operating revenues. Rental income generally commences at the inception of the lease (as opposed to actual move-in date) and is recognized based on the terms of the individual leases. Many of the Company’s leases call for annual fixed increases in rental payments and in such case, rental income is recognized over the terms of the lease on a straight-line basis. Certain other leases call for annual increases based upon an inflation index, such as the Consumer Price Index. For these leases, since the annual dollar increase in rental income cannot be determined at the inception of the lease, rental income increases each year after applying the inflation index. Where rental concessions (such as free rent) are given to tenants, the Company also recognizes rental income on a straight-line basis over the full term of the leases. The Company may require certain tenants to pay a security deposit in addition to their first month’s rent; the Company records such security deposits as a liability. Many of the Company’s leases require tenants to pay their prorata portion of property operating expenses in addition to their base rent, such amounts typically being in excess of a “base year” amount.

Impairment or Disposal of Long-Lived Assets. The Company evaluates its real estate assets quarterly to assess whether any impairment indicators are present that affect the recovery of the carrying amount. Changes in the supply or demand of tenants for the Company’s properties could impact its ability to lease available space. Should a significant amount of available space exist for an extended period, the Company’s investment in a particular office building may be impaired.

Real estate assets are classified as held for sale or held and used in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. In accordance with SFAS No. 144, the Company records assets held for sale at the lower of carrying amount or fair value less costs to sell. With respect to assets classified as operating properties, the Company periodically reviews these assets to determine whether its carrying amount will be recovered. A long-lived asset is considered impaired if its carrying value exceeds the estimated fair value. Fair value is based on the estimated and realizable contract sales price (if available) for the asset less estimated costs to sell. If a sales price is not available, the estimated undiscounted cash flows of the asset for the remaining estimated holding period are used to determine if the carrying value is recoverable. Upon impairment, the Company would recognize an impairment loss to reduce the carrying value of the long-lived asset to its estimated fair value. The Company’s estimate of fair value and cash flows to be generated from its properties requires it to make assumptions that are highly subjective and based on a variety of factors, including but not limited to: existing leases, future leasing and terminations, market rental rates, capital improvements, tenant improvements, leasing commissions, inflation and other variables. If one or more assumptions proves incorrect or if the Company’s assumptions change, the recognition of an impairment loss on one or more properties may be necessary in the future, which would result in a decrease in net income. No impairment losses were recognized for the nine months ending September 30, 2004.

Depreciation. Depreciation of buildings and parking garages is computed using the straight-line method over an estimated useful life of 3 to 39 years. Depreciation of building improvements is computed using the straight-line method over the estimated useful life of the improvement. Tenant improvements are generally amortized over the term of the respective leases. If the Company were to incorrectly estimate the useful lives of its operating properties, it may be required to adjust future depreciation expense. Therefore, a

change in the estimated useful lives assigned to buildings and improvements would result in either an increase or decrease in depreciation expense, which would result in an increase or decrease in net income.

Cost of Real Estate Acquired. The Company accounts for its acquisitions of real estate in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations,” which requires the fair value of the real estate acquired to be allocated to the acquired tangible assets, consisting of land, building, building improvements and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above and below market leases, customer relationships, lease costs and the value of in-place leases.

The allocation to intangible assets is based upon various factors including the above or below market component of in–place leases, the value of in-place leases, leasing commissions, legal fees and the value of customer relationships. The value allocable to the above or below market component of an acquired in-place lease is determined based upon the present value (using an interest rate which reflects the risks associated with the lease) of the difference between (i) the contractual amounts to be paid pursuant to the lease over its remaining term, and (ii) management’s estimate of the amounts that would be paid using current fair market rates over the remaining term of the lease. The amounts allocated to above or below market leases are included in other assets in the balance sheet and are amortized to rental income over the average remaining term of the respective leases. The remaining purchase price is allocated among various categories of tangible assets (building and land) and is based upon management’s determination of the value of the property as if it were vacant using discounted cash flow models. Factors considered by management include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases. Differing assumptions and methods could result in different estimates of fair value and thus, a different purchase price allocation and corresponding increase or decrease in depreciation and amortization expense.

Allowance for Doubtful Accounts. Accounts receivable are reduced by an allowance for amounts that may become uncollectible in the future. Our receivable balance is comprised primarily of rents and operating expense recoveries due from tenants. Changes in general economic conditions, or in the industries in which our tenants operate, could impact our tenants’ ability to honor their lease obligations, which could in turn affect our recorded revenues and estimates of the collectibility of our receivables. Revenue from real estate rentals is recognized and accrued as earned on a pro rata basis over the term of the lease. The Company regularly evaluates the adequacy of its allowance for doubtful accounts considering such factors as credit quality of our tenants, delinquency of payment, historical trends and current economic conditions. The Company provides an allowance for doubtful accounts for tenant balances that are over 90 days past due and for specific tenant receivables for which collection is considered doubtful. Actual write-offs may differ from these estimates, which could result in an increase or decrease in bad debt expense.

OFF-BALANCE SHEET ARRANGEMENTS

On January 12, 2004, the Company, through a newly formed subsidiary DownREIT limited partnership called Koger BFC, Ltd., acquired all of the partnership interests in Broward Financial Center (“BFC”) in downtown Fort Lauderdale, Florida, in a joint venture with an affiliate of Investcorp Properties Limited of New York (“Investcorp”), for approximately $60.1 million. BFC is a single twenty-four story building containing approximately 326,000 rentable square feet. CRT has a 30% interest in the joint venture. Approximately 14% of the existing partnership interests in BFC were owned by entities in which the Company’s Chief Executive Officer, Thomas J. Crocker had a 50% ownership interest (“Crocker Affiliate”). The decision to acquire BFC and the terms thereof were approved by the members of the Company’s board of directors and finance committee without the participation of Mr. Crocker. Investcorp, as the joint venture partner acquiring 70% of the economic interests, played a substantial role in negotiating the purchase. The Company acquired the partnership interests held by Crocker Affiliate by issuing 97,948 limited partnership units (“Units”) in exchange for the contribution of its partnership interests. The Units will be entitled to receive quarterly distributions equivalent to the quarterly dividend declared on the Company’s common stock. Commencing on the first anniversary of the transaction, Crocker Affiliate can cause the Units to be redeemed in exchange for cash (at a price per Unit equal to the lesser of the per share price for a share of the Company’s common stock at the time of redemption and the average per share closing price of the Company’s common stock for the thirty trading days preceding the redemption) or, at the Company’s option, shares of the Company’s common stock (one share of the Company’s common

stock per Unit). The Company’s total investment in this joint venture is $5.3 million including DownREIT minority contributions ($2.1 million) and closing costs. The Company accounts for this investment using the equity method of accounting as it does not have a controlling interest over the operating and financial policies of the joint venture, nor is it the primary beneficiary under FIN 46®. As a result, the assets and liabilities of this joint venture are not included in the Company’s balance sheet. This investment was recorded initially at cost and subsequently adjusted for equity in earnings and cash contributions and distributions.

RECENT DEVELOPMENTS

On October 4, 2004, the Company sold approximately 14.5 acres of undeveloped land located across the street from its Atlanta Gwinnet Center for approximately $3.25 million. This transaction resulted in a gain of approximately $293,000.

On October 14, 2004, the Company announced plans to develop a $90 million, 20-story, 335,000-square-foot, class “A” office tower in a joint venture with The Related Companies of New York.

On November 2, 2004, the Company entered into a purchase and sale agreement with the WHML-S Real Estate Limited Partnership to acquire a 437,000 rentable square foot class “A” office building for a purchase price of approximately $39 million (plus closing and other costs). The building, located in Dallas, Texas, is comprised of two interconnected towers consisting of Tower 1 with 8 floors, and Tower 2 with 11 floors, are situated on approximately 10.1 acres with an attached four-story parking garage. In connection with this acquisition, the Company will enter into a joint venture with Wilcox Capital Group, whereby the Company will own 75% of the venture. Pending the Company’s successful completion of due diligence on the property, the acquisition of Signature Place would be expected to close during the fourth quarter of 2004 and will be financed with proceeds from a non-recourse mortgage and the balance of the equity required of the Company will be drawn on the Company’s revolving line of credit. As of September 30, 2004, the Signature Place office building was 65% leased.

RESULTS OF OPERATIONS

Rental and other rental services revenues totaled $40,974,000 for the quarter ended September 30, 2004, compared to $35,163,000 for the quarter ended September 30, 2003. Rental and other rental services revenues totaled $121,373,000 for the nine months ended September 30, 2004, compared to $107,407,000 for the nine months ended September 30, 2003. These increases resulted primarily from an increase in revenues resulting from the acquisition of Atlantic Center Plaza in January 2004 ($3,862,000 and $9,904,000 for the quarter and nine months ended September 30, 2004, respectively), CIGNA Plaza and Tollway Crossing in September 2003 ($1,171,000 and $4,600,000 for the quarter and nine months ended September 30, 2004, respectively), Decoverly in April 2004 ($1,240,000 and $2,376,000 for the quarter and nine months ended September 30, 2004, respectively), Westchase Corporate Center and Baymeadows Way during the third quarter of 2004 ($945,000 for the quarter and nine months ended September 30, 2004, respectively) and McGinnis Park in December 2003 ($510,000 and $1,571,000 for the quarter and nine months ended September 30, 2004, respectively). The effect of this increase was partially offset by a decrease in rental revenues from the Lakes on Post Oak property acquired in December 2002 ($172,000 and $1,315,000 for the quarter and nine months ended September 30, 2004, respectively), the Three Ravinia Drive property acquired in January 2002 ($480,000 and $1,008,000 for the quarter and nine months ended September 30, 2004, respectively), and a decline in rental revenues from the Company’s portfolio of assets acquired

prior to January 1, 2002 of $1,403,000 and $3,523,000 for the quarter and nine months ended September 30, 2004, respectively, as compared to the same period in 2003. At September 30, 2004, the Company’s buildings were on average 80 percent occupied with an average rental rate of $17.71 per rentable square foot. At September 30, 2003, the Company’s buildings were on average 82 percent occupied with an average rental rate of $17.28 per rentable square foot.

Property operations expense includes such charges as utilities, real estate taxes, janitorial, maintenance, property insurance, provision for uncollectible rents and management costs. Property operations expense increased $2,207,000 and $5,737,000 for the three and nine months ended September 30, 2004, compared to the same period in 2003. These increases were due primarily to operations expense resulting from the acquisition of Atlantic Center Plaza in January 2004 ($1,068,000 and $3,310,000 for the quarter and nine months ended September 30, 2004), Decoverly in April 2004 ($435,000 and $830,000 for the quarter and nine months ended September 30, 2004) and CIGNA Plaza and Tollway Crossing in September 2003 ($696,000 and $2,055,000 for the quarter and nine months ended September 30, 2004, respectively). Theses increases were partially offset by a decrease in operating expenses from the Three Ravinia Drive property acquired in January 2002 ($349,000 and $560,000 for the quarter and nine months ended September 30, 2004, respectively.

The amount of property operations expense and its percentage of total rental revenues for the applicable periods are as follows:


			Percent of
			Rental and Other
Period	Amount		Rental Services Revenues
September 30, 2004—Quarter	$	16,114,000		39.3	%
September 30, 2003—Quarter	$	13,907,000		39.6	%
September 30, 2004—Nine Months	$	47,686,000		39.3	%
September 30, 2003—Nine Months	$	41,949,000		39.1	%

Depreciation expense has been calculated on the straight-line method based upon the useful lives of the Company’s depreciable assets, generally 3 to 39 years. Depreciation expense increased $1,722,000 and $4,358,000 for the three and nine months ended September 30, 2004, respectively, compared to the same period in 2003. These increases were due primarily to depreciation resulting from the Company’s acquisition of Atlantic Center Plaza in January 2004 ($962,000 and $2,108,000 for the quarter and nine months ended September 30, 2004, respectively), McGinnis Park in December 2003 ($288,000 and $489,000 for the quarter and nine months ended September 30, 2004, respectively), Decoverly in April 2004 ($146,000 and $292,000 for the quarter and nine months ended September 30, 2004, respectively) and CIGNA Plaza and Tollway Crossing in September 2003 ($171,000 and $512,000 for the quarter and nine months ended September 30, 2004, respectively).

General and administrative expenses increased $1,761,000 and $1,742,000 for the three and nine months ended September 30, 2004, respectively, compared to the same period in 2003. These increases were the result of a one-time payment of $540,000 made during the quarter on behalf of the Company’s Chief Executive Officer (as described in Note 9 to the condensed consolidated financial statements), as well as an overall increase in payroll related costs ($403,000 and $709,000 for the quarter and nine months ended September 30, 2004, respectively) and administrative costs, including costs incurred in connection with changing the Company name and compliance with the Sarbanes-Oxley Act of 2002 ($521,000 and $740,000 for the quarter and nine months ended September 30, 2004, respectively).

Amortization expense increased $832,000 and $720,000 for the three and nine months ended September 30, 2004, respectively, as compared to the same period in 2003. These increases were due primarily to the amortization of the fair value of acquired leases for Atlantic Center Plaza ($667,000 for the three and nine months ended September 30, 2004).

Mortgage and loan interest expense increased $866,000 and $922,000 for the three and nine months ended September 30, 2004, respectively, compared to the same period in 2003. These increases were primarily the result of an increase in interest expense due

to a mortgage indebtedness assumed in connection with the acquisition of Atlantic Center Plaza in January 2004 and a decrease in the average outstanding balance on the Company’s line of credit since September 30, 2003.

Net income decreased $1,493,000 for the quarter and increased $207,000 for the nine months ended September 30, 2004, respectively, as compared to the same period in 2003. This quarterly decrease was primarily due to an increase in depreciation and amortization expense and property operating costs incurred in connection with the Company’s recent acquisition of Atlantic Center Plaza. During the third quarter of 2004, the Company completed its evaluation of, and recorded an intangible asset for the fair value of leases acquired in the Atlantic Center Plaza transaction. As a result, the Company recorded $667,000 of additional amortization expense. The Company paid $1,588,000 and $4,764,000 in dividends to preferred shareholders for the quarter and nine months ended September 30, 2004, respectively. No such dividends were paid during the quarter or nine months ended September 30, 2003, since the preferred stock was issued in September 2003. As a result, net income available to common shareholders declined by $2,710,000 and $4,186,000 for the quarter and nine months ended September 30, 2004, respectively, as compared to the same period in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities— During the nine months ended September 30, 2004, the Company generated approximately $40.2 million in net cash from operating activities, approximately $2.7 million less than the comparable period of 2003. The Company’s decreased generation of cash from operations is primarily attributable to an increase in the aggregate rate of accounts receivable and other assets (approximately $9.3 million). The decrease in cash generated by operations was partly offset by an increase in depreciation and amortization (approximately $5.1 million) and a growth in the rate of increases in accounts payable ($771,000).

The Company’s primary internal sources of cash are the collection of rents from buildings owned by the Company. As a REIT for federal income tax purposes, the Company must, among other requirements, pay out annually as dividends, at least 90 percent of its REIT taxable income (which, due to non-cash charges, including depreciation and net operating loss carryforwards, may be substantially less than cash flow from operating activities). In the past, the Company has paid out dividends in amounts at least equal to its REIT taxable income. The Company believes that its cash flow from operating activities will be sufficient to cover debt service payments and to pay the dividends required to maintain REIT status through 2004. Dividends are determined quarterly by the Company’s board of directors.

The level of cash flow generated by rents depends primarily on the occupancy rates of the Company’s buildings and changes in rental rates on new and renewed leases and under escalation provisions in existing leases. At September 30, 2004, leases representing approximately 5.2 percent of the gross annualized rent from the Company’s properties, without regard to the exercise of options to renew, were due to expire during the remainder of 2004. These scheduled expirations represent leases for space in buildings located in 17 of the 24 centers or locations in which the Company owns buildings. Certain of these tenants may not renew their leases or may reduce their demand for space. During the nine months ended September 30, 2004, leases were renewed on approximately 58.7 percent of the Company’s rentable square feet that were scheduled to expire during the nine-month period. Current market conditions in certain markets may require that rental rates at which leases are renewed or at which vacated space is leased be lower than rental rates under existing leases. Based upon the amount of leases that will expire during 2004 and the competition for tenants in the markets in which the Company operates, the Company has and expects to continue to offer incentives to certain new and renewal tenants. These incentives may include the payment of tenant improvement costs and, in certain markets, reduced rents during initial lease periods.

Governmental tenants (including the State of Florida and the United States Government) which account for approximately 19.5 percent of the Company’s occupied space at September 30, 2004 may be subject to budget reductions in times of recession and governmental austerity measures. Consequently, there can be no assurance that governmental appropriations for rents may not be reduced. Additionally, certain of the private sector tenants that have contributed to the Company’s rent stream may reduce their current demands, or curtail their future need, for additional office space.

The Company believes that the markets in which it operates provide significant growth potential due to their diverse economies, expanding metropolitan areas, skilled work force and moderate labor costs. However, cash from operations could be reduced if economic conditions result in lower occupancy rates and lower rental income for the Company’s buildings, which may in turn affect the amount of dividends paid by the Company.

Investing Activities— At September 30, 2004, substantially all of the Company’s invested assets were in real properties or joint ventures invested in real properties and the Company’s primary use of cash for investing activities was property acquisitions. Of the $155.1 million utilized in investing activities in the nine months ended September 30, 2004, $125.7 million was for property acquisitions. An additional $23.4 million was used for tenant and building improvements, as well as deferred tenant costs during the period. Improvements to the Company’s existing properties have been financed through internal operations and lender required escrow accounts for The Lakes on Post Oak.

On January 27, 2004, the Company acquired Atlantic Center Plaza, a twenty-three story 502,000 square foot building located in Atlanta, Georgia, for a purchase price of $116.5 million plus closing and other costs. The Company initially allocated approximately $10.0 million and $108.1 million of the net purchase price to value of the acquired land and building, respectively.

During the first quarter of 2004, the Company acquired a 30% interest in a joint venture that owns the Broward Financial Center, resulting in a total investment of $5.3 million (including closing costs and fees) which includes a DownREIT minority contribution of $2.1 million.

On April 2, 2004, the Company acquired four properties, including two Class A office buildings, a ground lease and an undeveloped parcel of land located in the Decoverly Office Park in Rockville, Maryland for a purchase price of $42.0 million plus closing and other costs. The two three-story office buildings aggregate approximately 155,000 square feet of rentable space. The undeveloped land parcel contains 3.2 acres with an approved site plan for a four-story 105,000 square foot office building. The Company initially allocated approximately $19.7 million and $22.8 million of the net purchase price to value of the acquired land and buildings, respectively.

On July 23, 2004 the Company acquired a five-story, 224,000 square foot, single-tenant, class “A” office building located at 7777 Baymeadows Way in Jacksonville, Florida, for a purchase price of $20.8 million, plus closing and other costs. As part of this transaction, the company issued 33,200 Down REIT limited partnership units in exchange for a $760,985 contribution from a related minority partner (Thomas J. Crocker, the Company’s Chief Executive Officer) in a joint venture with the Company (see Note 9). The Company received an additional minority interest contribution of $154,107 from an unrelated third party. The Company initially allocated approximately $2.4 million and $18.6 million of the net purchase price to value of the acquired land and building, respectively.

On August 16, 2004, the Company acquired the Westchase Corporate Center located in Houston, Texas; a six-story, 184,000 square foot, class “A” office building for a purchase price of $20.3 million, plus closing and other costs. As part of this transaction, the Company issued 28,583 DownREIT limited partnership units in exchange for a $639,015 contribution from a related minority partner (Thomas J. Crocker, the Company’s Chief Executive Officer) in a joint venture with the Company (see Note 9). The Company received an additional minority interest contribution of $545,893 from an unrelated third party. The Company initially allocated approximately $2.1 million and $18.7 million of the net purchase price to value of the acquired land and building, respectively.

Financing Activities— The Company generated $110.6 million and $12.7 million of cash in financing activities during the nine months ended September 30, 2004 and September 30, 2003, respectively. For the nine months ended September 30, 2004, the Company’s largest sources of cash from financing activities were proceeds from the sales of common stock ($100.4 million) and proceeds from mortgages and loans ($82.5 million). In the same time period, the Company’s largest uses of cash for financing activities were principal payments on mortgages and loans payable ($50.1 million) and dividends paid ($31.1 million). For the nine months ended September 30, 2003, the Company’s largest sources of cash for financing activities were proceeds from mortgages and loans ($36.0 million) and proceeds from the sale of preferred stock ($72.1 million). In the same period, the Company’s primary uses of

cash for financing activities were principal payments on mortgages and loans payable ($73.6 million) and dividends paid ($22.4 million).

On January 13, 2004, the Company issued 5,175,000 shares of its common stock (including 675,000 shares issued in connection with the exercise of an over-allotment option granted to the Company’s underwriter) at a price to the public of $20.45 per share. The net proceeds of the offering ($100.2 million) were used to pay down the Company’s revolving credit facility ($15 million), fund the Decoverly acquisition as well as a portion of the Atlantic Center Plaza acquisition, and for general corporate purposes.

The Company has a $165 million secured revolving credit facility of which $24.0 million had been borrowed as of September 30, 2004. At September 30, 2004, the Company had a total of nine buildings that were unencumbered consisting of four buildings in Charlotte, North Carolina, one building in Jacksonville, Florida, two buildings in Rockville, Maryland and two buildings in Atlanta, Georgia. Loan maturities and normal amortization of mortgages and loans payable are expected to total approximately $78.4 million during the remainder of calendar year 2004, including a $77.0 million mortgage note payable to Column Financial maturing in December 2004, which has three one-year extension options available.

On April 21, 2004, the Company amended and extended the loan agreement governing its $75.9 million loan assumed in connection with the acquisition of Atlantic Center Plaza. As part of the amendment, the existing variable interest rate (LIBOR plus 160 basis points) will remain in place until December 31, 2004 and the Company will draw an additional $4.1 million prior to December 31, 2004. Effective January 1, 2005, the rate will be fixed at 5.49% until January 1, 2015.

The Company has on file with the SEC a shelf registration statement under which common stock, preferred stock and debt securities are available for issuance from time to time by the Company. At September 30, 2004, the Company had $500 million available under this shelf registration for future issuances of securities. The amount and timing of future sales of Company securities will depend on market conditions, operating cash flow, asset sales and the specific needs of the Company. The Company may from time to time sell securities beyond the amount needed to meet capital requirements in order to allow for the early repayment of long-term debt, the redemption of preferred stock, the reduction of short-term debt or for other general corporate purposes.

CONTRACTUAL OBLIGATIONS
(In thousands)


			Less than							More than
			One							Five
	Total		year			1-3 years		3-5 years		years
Long-Term Debt Obligations(a)	$	517,025	$	77,000	(c)	$	143,412	$	191,747	$	104,866
Purchase Obligations (b)		3,000		3,000

(a) Increases in interest rates on variable rate debt could increase the Company’s interest expense and adversely affect cash flow and the ability to pay dividends to shareholders. The Company may be required to purchase interest rate protection products in connection with future variable rate debt, which may further increase borrowing costs. The Company’s use of leverage can adversely impact its operation, cash flow, and ability to make distributions and its financial condition will be negatively impacted if it cannot repay or refinance its indebtedness as it becomes due. The Company is subject to risks normally associated with debt financing, including: the risk that its cash flow will be insufficient to meet required payments of principal and interest; the risk that the existing debt with respect to its properties, which in most cases will not have been fully amortized at maturity, will not be able to be refinanced; and the risk that the terms of any refinancing of any existing debt will not be as favorable as the terms of the existing debt.

(b) This purchase obligation consists of a contractual commitment related to the renovation of The Lakes on Post Oak in Houston, Texas. In connection with the loan of the Lakes on Post Oak, the Company obtained a $1,705,000 letter of credit in lieu of additional cash escrows for tenant improvements and leasing commissions.

As of September 30, 2004 and December 31, 2003, the Company’s mortgage notes payable were comprised of the following (in thousands):

As of

September 30,

December 31,

Current

Maturity

Mortgage

2004

2003

Interest Rate

Date

Variable rate mortgages (a)

176,876

93,468

3.25% to 4.63%

December 2004 to January 2015

Fixed rate mortgages

340,149

315,248

5.26% to 8.33%

December 2006 to September 2014

Total mortgage notes payable

517,025

408,716

(a) Effective January 1, 2005, $75,876,000 of the variable rate mortgages will be converted to a 5.49% fixed rate mortgage which has a maturity of January 1, 2005.

The weighted average interest rate on the Company’s mortgages was 6.01% and 6.64% as of September 30, 2004 and December 31, 2003, respectively.

FUNDS FROM OPERATIONS

Funds from Operations (“FFO”) is a non-GAAP financial measure that is a widely used performance measure for real estate companies and is provided as a supplemental measure of operating performance. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. The National Association of Real Estate Investment Trusts (“NAREIT”) adopted the definition of FFO in order to promote an industry standard measure of REIT financial and operating performance. FFO adds back historical cost depreciation, which assumes the value of real estate assets diminishes predictably in the future. NAREIT defines FFO as net income (loss) (computed in accordance with generally accepted accounting principles (GAAP), excluding gains (losses) from sales of property, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.

Given the nature of the Company’s business as a real estate owner and operator, the Company believes that FFO is helpful to investors as a starting point in measuring its operational performance because in excluding real estate related depreciation and amortization, and gains and losses from sales of property, it provides a supplemental performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. In addition, since most equity REITs provide FFO information to investors, FFO can also be a useful supplemental measure for comparing the Company’s results to other equity REITs.

FFO excludes depreciation and amortization, however, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact the Company’s results from operations, the utility of FFO as a measure of performance is limited. Moreover, while the Company believes its computation of FFO conforms to the NAREIT definition, it may not be comparable to FFO reported by REITs that interpret the definition differently or that do not define FFO in accordance with the NAREIT definition at all. Accordingly, FFO (i) should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company’s financial performance, (ii) is not an alternative

to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity, and (iii) is not indicative of funds available to fund the Company’s cash needs, including its ability to pay dividends or make distributions, because of needed capital replacement or expansion, debt service obligations, or other cash commitments and uncertainties.

The following presents the Company’s reconciliation of net income to FFO available to common shareholders for the three and nine months ended September 30, 2004 and 2003 (in thousands):


	Three Months
	Ended September 30,
	2004			2003
	(in thousands)
Net income	$	2,168		$	3,661
Dividends on preferred stock		(1,588	)		(371	)
Real estate related depreciation		8,871			7,147
Real estate related depreciation – unconsolidated entity		58			—
Real estate related amortization – deferred tenant costs		692			436
Real estate related amortization – fair value of acquired leases		784			378
Minority interest share of add-backs					55
Gain on sale of non-operating assets		—			—

FFO available to common shareholders	$	11,040		$	11,251


	Nine Months
	Ended September 30,
	2004			2003
	(in thousands)
Net income	$	11,589		$	11,382
Dividends on preferred stock		(4,764	)		(371	)
Real estate related depreciation		26,127			21,728
Real estate related depreciation – unconsolidated entity		329			—
Real estate related amortization – deferred tenant costs		2,019			1,264
Real estate related amortization – fair value of acquired leases		1,100			1,303
Minority interest share of add-backs		55
Gain on sale of non-operating assets		—			(589	)

FFO available to common shareholders	$	36,455		$	34,717

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk. The Company currently has a $165 million secured revolving credit facility and term loans with variable interest rates. The Company may incur additional variable rate debt in the future to meet its financing needs. Increases in interest rates on such debt could increase the Company’s interest expense, which would adversely affect the Company’s cash flow and its ability to pay dividends to its shareholders. The Company has not entered into any interest rate hedge contracts in order to mitigate the interest rate risk with respect to the secured revolving credit facility. As of September 30, 2004, the Company had $176.9 million

outstanding under loans with variable interest rates. If the weighted average interest rate on this variable rate debt were 100 basis points higher or lower, annual interest expense would be increased or decreased by approximately $1,769,000. On April 21, 2004, the Company amended its $75.9 million loan, effective January 1, 2005, assumed in connection with its acquisition of Atlantic Center Plaza, to convert to a fixed interest rate of 5.49% and extend the loan maturity date to January 1, 2015. Additionally, the Company had $340.1 million outstanding under loans with fixed interest rates as of September 30, 2004. The Company may incur additional fixed rate debt in the future to meet its financing needs. If the market interest rate on this fixed rate debt were 100 basis points lower, the fair value of the Company’s fixed rate debt would increase to $354.3 million.

Item 4. Controls and Procedures.

The Company carried out an evaluation, with the participation of the Company’s management, including its chief executive officer and its principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Company’s chief executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. The Company’s management, including the chief executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

The Company is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal controls. This results in refinements to processes throughout the Company. However, there has been no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2004 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no significant changes in the Company’s internal controls over financial statements or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this quarterly report on Form 10-Q.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 5. Other Information

(a) The following table sets forth, with respect to each office project or location at September 30, 2004, gross square feet, rentable square feet, percentage leased, and the average annual rent per rentable square foot leased.


								Average
								Annual
	Gross		Rentable					Rent Per
	Square		Square		Percent			Square
Office Project/Location	Feet		Feet (5)		Leased (1)			Foot (2)
Atlanta Atlantic Center Plaza (3)		507,700		501,521		88	%	$	26.58
Atlanta Chamblee		1,199,800		1,128,607		89	%		18.39
Atlanta Gwinnett		274,400		262,806		89	%		19.28
Atlanta McGinnis Park (3)		212,400		202,243		58	%		17.16
Atlanta Perimeter		184,000		181,862		59	%		18.57
Atlanta Three Ravinia (3)		845,000		804,876		63	%		17.84	(4)
Charlotte University		190,600		182,891		60	%		18.26
Charlotte Vanguard		548,200		526,408		54	%		14.91
Dallas Cigna Plaza (3)		133,600		127,226		95	%		22.73
Dallas Tollway Crossing (3)		159,800		152,163		100	%		22.87
Houston Post Oak (3)		1,265,000		1,201,116		73	%		17.88
Houston Westchase Corporate Center (3)		194,000		184,259		94	%		22.83
Jacksonville Baymeadows		793,400		751,387		93	%		13.46	(4)
Jacksonville Baymeadows Way (3)		236,000		224,281		100	%		9.50	(4)
Jacksonville JTB		436,000		416,773		100	%		12.52	(4)
Memphis Germantown		562,600		533,017		87	%		18.00
Orlando Central		699,700		615,963		82	%		16.78
Orlando Lake Mary		318,000		303,546		81	%		17.11
Orlando University		405,200		383,749		75	%		19.39
Richmond Paragon		154,300		145,127		94	%		19.32
St. Petersburg		715,500		672,085		81	%		17.00
Tallahassee		960,300		835,840		73	%		16.89
Washington D.C. Decoverly (3)		162,500		154,787		93	%		24.05

Total		11,158,000		10,492,533

Weighted Average – Total Company						80	%	$	17.71

Weighted Average – Same Store						81	%	$	16.76

Weighted Average – Acquisition						78	%	$	19.67

(1) The percent leased rates have been calculated by dividing total rentable square feet occupied in an office building by total rentable square feet in such building.

(2) Rental rates are computed by dividing (a) total annualized base rents (which excludes expense pass-through and reimbursements) for an office project or location as of September 30, 2004 by (b) the rentable square feet applicable to such total annualized rents.

(3) Properties acquired subsequent to January 1, 2002.

(4) Includes the effect of leases where tenants who occupy all or a substantial portion of an entire office building pay substantially all operating costs in addition to base rent.

(5) Does not include investment in unconsolidated entity that contains 325,583 of rentable square feet and was 86% occupied at September 30, 2004.

(b) The following schedule sets forth for all of the Company’s buildings (i) the number of leases which will expire during the remainder of calendar year 2004 (without regard to any renewals), calendar years 2005 through 2012, and years subsequent to 2012, (ii) the total rentable area in square feet covered by such leases, (iii) the percentage of total rentable square feet represented by such leases, (iv) the average annual rent per square foot for such leases, (v) the current annualized base rents represented by such leases, and (vi) the percentage of gross annualized base rents contributed by such leases. This information is based on the buildings owned by the Company on September 30, 2004 and on the terms of leases in effect as of September 30, 2004, on the basis of then existing base rentals, and without regard to the exercise of options to renew. Furthermore, the information below does not reflect that some leases have provisions for early termination for various reasons, including, in the case of government entities, lack of budget appropriations. Leases were renewed on approximately 58.7 percent of the Company’s rentable square feet which were scheduled to expire during the nine months ended September 30, 2004.


					Percentage of			Average				Percentage
					Total Square			Annual Rent		Total		of Total
	Number of		Number of		Feet Leased			per Square		Annualized		Annual Rents
	Leases		Square Feet		Represented by			Foot Under		Rents Under		Represented by
Period	Expiring		Expiring		Expiring Leases			Expiring Leases		Expiring Leases		Expiring Leases
2004		128		455,551		5.4	%	$	17.12	$	7,798,191		5.2	%
2005		216		1,033,737		12.3	%		17.68		18,275,872		12.3	%
2006		184		1,285,672		15.3	%		18.23		23,439,615		15.7	%
2007		163		1,319,763		15.7	%		18.09		23,871,739		16.0	%
2008		97		1,059,367		12.6	%		18.26		19,313,807		13.0	%
2009		81		1,521,710		18.1	%		17.72		26,964,830		18.1	%
2010		25		265,357		3.2	%		16.92		4,488,996		3.0	%
2011		18		266,400		3.2	%		14.95		3,983,050		2.7	%
2012		12		194,474		2.3	%		23.00		4,4,72,605		3.0	%
Thereafter		14		1,004,382		11.9	%		16.21		16,279,998		11.0	%

Total		938		8,406,413		100.0	%	$	17.71	$	148,888,703		100.0	%

(c) On September 30, 2004, the Company entered into a purchase and sale agreement with East Las Olas Investors II, WLD Realty, Ltd., and Halmos Holdings, Inc. to acquire the partnership interests in two class “A” office buildings located in the central business district of Fort Lauderdale, Florida. On October 15, 2004, after further discussions between the parties, the purchase price was fixed at $138.6 million (plus closing and other costs) and the Company deposited $5 million in earnest money. The office buildings, known as the Las Olas Centre, comprise approximately 470,000 rentable square feet and, as of September 30, 2004, was 87% occupied. The transaction is expected to close during the fourth quarter of 2004 and will be financed with a 10-year, $99 million fixed interest rate loan with the remainder to be drawn on the Company’s line of credit.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits


Number		Description
10.1		Third Amended and Restated Agreement of Limited Partnership of CRT BMWCX, LTD., dated August 16, 2004, by & between CRTP OP LP, Thomas J. Crocker, CCA III, Inc., and Westchase Corporate Center Associates, LTD.

10.2		Agreement of Sale of Partnership Interests, dated September 30, 2004, by and between Koger Acquisition, LLC, East Las Olas Investors II, WLD Realty, Ltd., and Halmos Holdings, Inc.

10.3		Reinstatement and First Amendment to Agreement of Sale of Partnership Interests, dated October 15, 2004, by & between Koger Acquisition, LLC, East Las Olas Investors II, WLD Realty, Ltd., and Halmos Holdings, Inc.

15		Letter re: Unaudited interim financial information.

31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act

31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act

32		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act

(b) Reports on Form 8-K

On July 1, 2004, the Company filed a Form 8-K (dated June 23, 2004) reporting under Item 5, Other Events, the amendment of its articles of incorporation to change its name to CRT Properties, Inc., and providing under Item 7, Financial Statements and Exhibits, the Koger Equity, Inc. News Release, dated June 23, 2004.

On July 19, 2004, the Company furnished a Form 8-K (dated July 14, 2004), reporting under Item 9, Regulation FD, a) the ringing of the closing bell at the New York Stock Exchange by its CEO, Thomas J. Crocker on Friday, July 16, 2004 and that it would be added to the S&P Small Cap 600 Real Estate Investment Trusts Sub-Industry Index and b) the announcement of its quarterly conference call to discuss second quarter 2004 financial results and providing under Item 7, Financial Statements and Exhibits, a) the CRT Properties, Inc. News Release, dated July 14, 2004 and b) the CRT Properties, Inc. News Release dated July 15, 2004.

On July 30, 2004, the Company filed a Form 8-K (dated July 30, 2004), reporting under Item 5, Other Events, that it terminated its loan commitment to its CEO, Thomas J. Crocker, under a stock purchase loan agreement, with the full amount of outstanding loans paid in cash outlining the steps taken to achieve the loan termination. The Company announced that it completed its acquisition of a mid-rise office building in Jacksonville, Florida, in a deal valued at approximately $20.8 million. The Company also announced that it executed a binding agreement to acquire the Westchase Corporate Center in Houston, Texas, in a deal valued at approximately $19.6 million. The Company provided under Item 7, Financial Statements and Exhibits, the CRT Properties, Inc. News Release, dated July 30, 2004.

On August 5, 2004, the Company furnished a Form 8-K (dated August 3, 2004) reporting under Item 9, Regulation FD Disclosure, the announcement of its quarterly results for the period ended June 30, 2004, and related supplemental information, dated June 30, 2004, and providing under Item 7, Financial Statements and Exhibits, the CRT Properties, Inc. News Release, dated August 3, 2004 and related supplemental information.

On August 26, 2004, the Company furnished a Form 8-K (dated August 24, 2004) reporting under Item 7.01, Regulation FD Disclosure, the closing of a $165 million secured revolving credit facility, and providing under Item 9.01, Financial Statements and Exhibits, the CRT Properties, Inc. News Release, dated August 24, 2004.

On August 31, 2004, the Company furnished a Form 8-K (dated August 26, 2004) reporting under Item 7.01, Regulation FD Disclosure, the announcement of a quarterly dividend on preferred stock, and providing under Item 7, Financial Statements and Exhibits, the CRT Properties, Inc. News Release, dated August 26, 2004.

On September 20, 2004, the Company furnished a Form 8-K (dated September 17, 2004) reporting under Item 7.01, Regulation FD Disclosure, the announcement of a quarterly dividend on common stock, and providing under Item 7, Financial Statements and Exhibits, the CRT Properties, Inc. News Release, dated September 17, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		CRT PROPERTIES, INC. Registrant
Dated: November 8, 2004		/s/ Steven A. Abney Steven A. Abney Vice President, Finance and Chief Accounting Officer (Principal Financial Officer) CRT Properties, Inc.

EX-10.1 2 g91635exv10w1.txt AGREEMENT OF LIMITED PARTNERSHIP EXHIBIT 10.1 EXECUTION COPY THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CRT BMWCX, LTD. a Florida limited partnership THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE PARTNERSHIP INTERESTS ISSUED UNDER THIS AGREEMENT MAY BE SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH HEREIN Dated as of August 16, 2004 TABLE OF CONTENTS

-i- SECTION 7.4 Responsibility for Expenses............................................ 42 SECTION 7.5 Other Business of General Partner...................................... 43 SECTION 7.6 Contracts with General Partner......................................... 44 SECTION 7.7 Indemnification........................................................ 44 SECTION 7.8 Liability of Indemnitees............................................... 46 SECTION 7.9 Other Matters Concerning the General Partner........................... 47 SECTION 7.10 Title to Partnership Assets........................................... 47 SECTION 7.11 Reliance by Third Parties............................................. 48 SECTION 7.12 Treatment of and Limitation on Payments to General Partner............ 48 ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS........................................... 49 SECTION 8.1 Limitation of Liability................................................ 50 SECTION 8.2 Management of Business................................................. 50 SECTION 8.3 Outside Activities of Limited Partners................................. 50 SECTION 8.4 Return of Capital; Priority among Limited Partners..................... 51 SECTION 8.5 Rights of Limited Partners Relating to the Partnership................. 51 SECTION 8.6 Redemption Rights of Qualifying Parties................................ 52 SECTION 8.7 Partnership Right to Call Limited Partner Interests.................... 56 SECTION 8.8 General Provisions Related to Exercise of Redemption Rights and Call Rights under Sections 8.6 and 8.7............................. 56 ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS............................................... 57 SECTION 9.1 Records and Accounting................................................. 57 SECTION 9.2 Fiscal Year............................................................ 58 SECTION 9.3 Reports................................................................ 58 ARTICLE 10 TAX MATTERS......................................................................... 58 SECTION 10.1 Preparation of Tax Returns............................................ 58 SECTION 10.2 Tax Elections......................................................... 59 SECTION 10.3 Tax Matters Partner................................................... 59 SECTION 10.4 Withholding........................................................... 60 SECTION 10.5 Electing Large Partnership............................................ 61 SECTION 10.6 Organization Expenses................................................. 61 ARTICLE 11 TRANSFERS AND WITHDRAWALS........................................................... 61 SECTION 11.1 Transfer.............................................................. 61 SECTION 11.2 Transfer of General Partner's Partnership Interest.................... 61 SECTION 11.3 Limited Partners' Rights to Transfer.................................. 62 SECTION 11.4 Substituted Limited Partners.......................................... 64 SECTION 11.5 Assignees............................................................. 65 SECTION 11.6 General Provisions.................................................... 65 ARTICLE 12 ADMISSION OF PARTNERS............................................................... 66 SECTION 12.1 Admission of Successor General Partner................................ 66 SECTION 12.2 Admission of Additional Limited Partners.............................. 67 SECTION 12.3 Amendment of Agreement and Certificate of Limited Partnership......... 67

-ii- SECTION 12.4 Admission of New General Partner...................................... 67 SECTION 12.5 Limit on Number of Partners........................................... 68 ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION............................................ 68 SECTION 13.1 Dissolution........................................................... 68 SECTION 13.2 Winding up............................................................ 68 SECTION 13.3 Deemed Liquidation.................................................... 70 SECTION 13.4 Rights of Limited Partners............................................ 71 SECTION 13.5 Notice of Dissolution................................................. 71 SECTION 13.7 Reasonable Time for Winding-up........................................ 71 ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS............... 71 SECTION 14.1 Procedures for Actions and Consents of Partners....................... 71 SECTION 14.2 Amendments............................................................ 72 SECTION 14.3 Meetings of the Partners.............................................. 72 ARTICLE 15 GENERAL PROVISIONS.................................................................. 73 SECTION 15.1 Addresses and Notice.................................................. 73 SECTION 15.2 Titles and Captions................................................... 73 SECTION 15.3 Pronouns and Plurals.................................................. 73 SECTION 15.4 Further Action........................................................ 73 SECTION 15.5 Fair Value............................................................ 73 SECTION 15.6 Binding Effect........................................................ 73 SECTION 15.7 Waiver................................................................ 74 SECTION 15.8 Counterparts.......................................................... 74 SECTION 15.9 Applicable Law; Etc................................................... 74 SECTION 15.10 Confidentiality...................................................... 75 SECTION 15.11 Entire Agreement..................................................... 75 SECTION 15.12 Invalidity of Provisions............................................. 76 SECTION 15.13 No Partition......................................................... 76 SECTION 15.14 No Third-Party Rights Created Hereby................................. 76 SECTION 15.15 Remedies Not Exclusive............................................... 76

LIST OF EXHIBITS Exhibit A - Partners and Addresses Exhibit B - Form of Redemption Notice Exhibit C - Form of Partner Schedule Exhibit D - Form of Partnership Unit Certificate -iii- THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CRT BMWCX, LTD. THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CRT BMWCX, LTD., f/k/a as Crocker Center Associates III, Ltd., dated as of August 16, 2004 (the "Effective Date"), is entered into by and among CRTP OP LP, a Delaware limited partnership, as the General Partner ("CRTP OP" or "General Partner"), and Thomas J. Crocker ("Crocker"), CCA III, Inc., a Florida corporation ("CCA III"), and Westchase Corporate Center Associates, Ltd., a Texas limited partnership ("WCCA" or "New Limited Partner"), as the Limited Partners. ARTICLE 1 DEFINED TERMS The following definitions shall be applied to the terms used in this Agreement for all purposes, unless otherwise clearly indicated to the contrary. "Accrual Period" has the meaning specified in Section 5.1. "Accrued and Unpaid Preferred Return Amount" means (i) in respect of one or more Tendered Units exchanged exclusively for cash pursuant to Section 8.6.A, 8.6.B or 8.6.C, the excess of (a) the aggregate Preferred Return Per Unit accrued in respect of such Tendered Units from the issuance of such Units through the Specified Redemption Date over (b) the aggregate amount distributed, or to be distributed, in respect of such Tendered Units pursuant to Section 5.1, as applicable, from the issuance of such Units through the later of (w) the Specified Redemption Date or (x) if the distributions to be made pursuant to Section 5.1 to the Partners of record as of the last Partnership Record Date to fall prior to the Specified Redemption Date have not been made on or prior to such Specified Redemption Date, but are to be made following such date, the date on which such distributions are to be made, and (ii) in respect of one or more Tendered Units exchanged for REIT Shares (determined without regard to whether the Accrued and Unpaid Preferred Return Amount of such Tendered Units is paid for in cash or REIT Shares), the excess of (a) the aggregate Preferred Return Per Unit accrued in respect of such Tendered Units from the issuance of such Units through the last Partnership Record Date to fall prior to the Specified Redemption Date over (b) the aggregate amount distributed, or to be distributed, in respect of such Tendered Units pursuant to Section 5.1 from the issuance of such Units through the later of (y) the Specified Redemption Date or (z) if the distributions to be made pursuant to Section 5.1 to the Partners of record as of the last Partnership Record Date to fall prior to the Specified Redemption Date have not been made on or prior to such Specified Redemption Date, but are to be made following such date, the date on which such distributions are to be made. "Act" means the Florida Revised Uniform Limited Partnership Act Sections 620.101-620.205, as it may be amended from time to time, and any successor statute. "Actions" has the meaning set forth in Section 7.7.A. "Acquisition Financing" means, as the context requires, collectively or individually, the Baymeadows Acquisition Financing and/or the Westchase Acquisition Financing. "Additional Limited Partner" means a Person admitted to the Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2 and shown as such on the books and records of the Partnership. "Adjusted Capital Account" means, with respect to any Partner, the balance, if any, in such Partner's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (a) increase such Partner's Capital Account balance by any amounts that such Partner is obligated to restore pursuant to this Agreement or by operation of law upon liquidation of such Partner's Partnership Interest or is deemed to be obligated to restore pursuant to the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (b) reduce such Partner's Capital Account by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of "Adjusted Capital Account" is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. "Adjustment Factor" means 1.0; provided, however, that in the event that CRT (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) splits or subdivides its outstanding REIT Shares or (iii) effects a reverse split or otherwise combines its outstanding REIT Shares into a smaller number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (1) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time) and (2) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination. Any adjustments to the Adjustment Factor shall become effective immediately after the effective date of such event, retroactive to the record date, if any, for such event. "Affiliate" means, with respect to any Person, any Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, "control" when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. -2- "Agreement" means this Third Amended and Restated Agreement of Limited Partnership of CRT BMWCX, LTD., as it may be amended, supplemented or restated from time to time. "Applicable Percentage" has the meaning set forth in Section 8.6.B. "Appraisal" means, with respect to any assets, the written opinion of an independent third party experienced in the valuation of similar assets, selected by the General Partner in good faith. Such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the General Partner is fair, from a financial point of view, to the Partnership. "Assignee" means a Person to whom one or more Partnership Units have been Transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5. "Available Cash" means with respect to any period for which such calculation is being made: (a) all cash revenues and funds received by the Partnership from whatever source (excluding the proceeds of any Terminating Capital Transaction) plus the amount of any reduction (including, without limitation, a reduction resulting because the General Partner determines such amounts are no longer necessary) in reserves, working capital accounts or other cash or similar balances of the Partnership referred to in clause (b)(iv) below; (b) less the sum of the following: (i) all interest, principal and other debt payments made during such period by the Partnership (including interest, principal and other payments made in respect of any Shortfall Loan); (ii) all cash expenditures (including capital expenditures) made by the Partnership during such period; (iii) investments in any entity (including loans made to the entity) to the extent that such investments are not otherwise described in clauses (b)(i) or (ii); and (iv) the amount of any increase during such period in reserves, working capital accounts or other cash or similar balances that the General Partner determines is necessary or appropriate to meet the needs of the Partnership in its sole and absolute discretion. Notwithstanding the foregoing, Available Cash shall not include any cash received or reductions in reserves, working capital accounts or other cash or similar balances, or take into account any disbursements made or reserves established, after dissolution and the commencement of the winding up and liquidation of the Partnership. -3- "Baymeadows" means the Replacement Property consisting of the land and buildings located at 7777 Baymeadows Way, Jacksonville, Florida 32256. "Baymeadows Acquisition Financing" means the mortgage financing from Nomura Credit & Capital, Inc. in the original principal amount of $13,800,000 incurred by Baymeadows Owner in connection with the acquisition of Baymeadows. "Baymeadows GP" means CRT BM GP LLC, a Florida limited liability company that is a wholly owned Subsidiary of the Partnership. "Baymeadows Net Income and Baymeadows Net Loss" means the Net Income and Net Loss attributable (as determined in the reasonable discretion of the General Partner) to the Partnership's interest (direct and indirect through the Baymeadows GP) in the Baymeadows Owner and Baymeadows, which amount shall, in the interest of clarity, take account of any expenses or other costs incurred by the Partnership and attributable or allocable (as determined in the reasonable discretion of the General Partner) to the Partnership's direct or indirect interest in Baymeadows Owner and Baymeadows. "Baymeadows Owner" means CRT Baymeadows Ltd., a Florida limited partnership in which the partnership holds a 99% interest as a limited partner and Baymeadows GP holds a 1% interest as the general partner. "Bottom Guaranty" is defined in Section 4.3. "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York or Boca Raton, Florida are authorized or required by law to close. "Capital Account" means, with respect to any Partner, the Capital Account maintained by the General Partner for such Partner on the Partnership's books and records in accordance with the following provisions: (a) To each Partner's Capital Account, there shall be added (I) such Partner's Capital Contributions and (II) such Partner's share of Net Income and any items in the nature of income or gain that are specially allocated pursuant to Section 6.3. (b) From each Partner's Capital Account, there shall be subtracted (I) the amount of cash and the Gross Asset Value of any other property distributed to such Partner pursuant to any provision of this Agreement (net of all liabilities secured by such distributed property or subject to which the Partner is considered to assume or take the property, pursuant to Code Section 752) and (II) such Partner's share of Net Losses and any items in the nature of expenses, deductions or losses that are specially allocated pursuant to Section 6.3. (c) In the event any interest in the Partnership is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent that it relates to the Transferred interest. -4- (d) In determining the principal amount of any liability for purposes of subsections (a) and (b), there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations. (e) The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner consistent with such Regulations. "Capital Contribution" means, with respect to any Partner, the amount of money and the Gross Asset Value, as of the time of contribution, of any Contributed Property that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or 4.4 (net of all liabilities secured by such property or subject to which the Partnership is considered to assume or take the property, pursuant to Code Section 752). "Cash Amount" means an amount of cash equal to the product of (i) the Value of a REIT Share and (ii) the REIT Shares Amount, determined as of the applicable Valuation Date. "CCA III" is defined in the Preamble hereto. "Certificate" means the Certificate of Limited Partnership of Crocker Center Associates III, Ltd. as filed in the office of the Secretary of State of Florida on November 1, 1985, as last amended by that certain Amendment to the Amended and Restated Certificate of Limited Partnership of Crocker Center Associates III, Ltd. filed with the Secretary of State of Florida on July 22, 2004 pursuant to which the name of the Partnership was changed to "CRT BMWCX, LTD." and CRTP OP was named as the General Partner of the Partnership in place of CCA III, as further amended from time to time in accordance with the terms of this Agreement and the Act. "Charter" means the Amended and Restated Articles of Incorporation of CRT filed with the Secretary of State of the State of Florida on May 19, 1994, as amended, supplemented or restated from time to time. "Class" shall mean a group of Partnership Units issued to Limited Partners, all of which are issued in the same transaction or a series of related transactions and have the same terms and conditions. Each separate Class of Partnership Units may be given a designation, such as "Class A", "Class B", "Class C", etc. "Class A Amount" is defined in the Partner Schedule of the holder of Class A Partnership Units. "Code" means the Internal Revenue Code of 1986, as amended and in effect from time to time or any successor statute thereto, as interpreted by the applicable Regulations thereunder. Any reference in this Agreement to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law. "Consent" means the consent to, approval of, or vote in favor of a proposed action by a Partner given in accordance with Article 14. -5- "Consent of the Limited Partners" means the Consent of a Majority in Interest of the Limited Partners holding each Class of Partnership Units (or in the case of Section 7.3.C, a Majority in Interest of the Limited Partners holding each Class of adversely affected Partnership Units), which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by a Majority in Interest of the Limited Partners in their sole and absolute discretion. "Contributed Property" means each Property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership. "Contribution Percentage" means (i) with respect to any Limited Partner, the Contribution Percentage as set forth on such Limited Partner's Partner Schedule (which may be zero), as the same may be adjusted from time to time in connection with the admission of Additional Limited Partners and (ii) with respect to the General Partner, that percentage equal to 100% minus the aggregate Contribution Percentages of the Limited Partners. In addition to its overall Contribution Percentage, a Limited Partner may have a specific Contribution Percentage for each Replacement Property. "Crocker" is defined in the Preamble hereto. "Crocker Limited Partner" means, so long as any of the following Persons holds Partnership Units: (i) Crocker, (ii) CCA III and (iii) any Assignee or Substitute Limited Partner of Crocker or CCA III under this Agreement that is a Designated Party or Qualified Descendant of Crocker or CCA III if (and only if) the federal income tax basis of such Substituted Limited Partner or Assignee in his Partnership Interest is determined, directly or indirectly, by reference to the federal income tax basis of Crocker or CCA III. "CRT" means CRT Properties, Inc., a Florida corporation formerly known as Koger Equity, Inc. "CRT/Crocker Parties" means CRTP OP and all of the Crocker Limited Partners. "CRTP OP" is defined in the Preamble hereto. "Cut-Off Date" means the thirty-ninth (39th) calendar day (or, if such day is not a Business Day, then the immediately preceding Business Day) after the General Partner's receipt of a Notice of Redemption. "Debt" means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person's interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such Person that, in accordance with generally accepted accounting principles, should be capitalized. -6- "Declination" has the meaning set forth in Section 8.6.C. "Deficit Contributions" is defined in Section 4.4.C. "Depreciation" means, for each Fiscal Year or other applicable period, an amount equal to the federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that, if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or period, "Depreciation" shall be in an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that, if the federal income tax depreciation, amortization or other cost recovery deduction for such asset for such year or period is zero, "Depreciation" shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner. "Designated Party" means as to any Limited Partner, a Person designated as such on such Limited Partner's Partner Schedule then in effect. "Effective Date" has the meaning set forth in the preamble to this Agreement. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Event of Dissolution" has the meaning set forth in Section 13.1. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "Exempt Transaction" means any of the following, from time to time occurring: (i) any repayment or prepayment (including deemed repayment or prepayment) of all or any portion of Acquisition Financing (or any replacement or refinancing thereof) resulting from bankruptcy or foreclosure (including a deed in lieu of foreclosure after acceleration), condemnation or other event described in Section 1033 of the Code, (ii) repayment or refinancing of any Acquisition Financing at less than the original amount thereof in the event a casualty occurs in respect of a portion of Replacement Property securing such indebtedness. "Fiscal Year" means the fiscal year of the Partnership, which shall be the calendar year. "General Partner" means CRTP OP LP, a Delaware limited partnership, and its successors and assigns, in their capacities as general partner of the Partnership. "General Partner Interest" means the Partnership Interest held by the General Partner, which Partnership Interest is an interest as a general partner under the Act. A General Partner Interest may be expressed as a number of Partnership Units. "GP Payment" has the meaning specified in Section 7.12.B. -7- "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (a) The initial Gross Asset Value of any asset contributed by a Limited Partner to the Partnership shall be its gross fair market value, as set forth on the Partner Schedule with respect to such Limited Partner. (b) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values upon (i) the acquisition of an additional interest in the Partnership by any new or existing Partner in exchange for a more than de minimis Capital Contribution, (ii) the distribution by the Partnership to a Partner of more than a de minimis amount of property as consideration for an interest and (iii) the liquidation of the Partnership. (c) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution as determined by the distributee and the General Partner, provided that, if the distributee is the General Partner or if the distributee and the General Partner cannot agree on such a determination, such gross fair market value shall be determined by Appraisal. (d) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m). (e) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subsection (a), (b) or subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder. "Incapacity" or "Incapacitated" means, (i) as to any Partner or Assignee who is an individual, death, total physical disability, as reasonably determined by the General Partner, or entry by a court of competent jurisdiction adjudicating such Partner or Assignee incompetent to manage his or her person or his or her estate; (ii) as to any Partner that is a corporation, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Partner that is a partnership or limited liability company, the dissolution and commencement of winding up of the partnership or limited liability company; (iv) as to any Partner that is an estate, the distribution by the fiduciary of the estate's entire interest in the Partnership; (v) as to any trustee of a trust that is a Partner, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter -8- in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and delivers a general assignment for the benefit of the Partner's creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner's properties, (f) any involuntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after its commencement, (g) the appointment without the Partner's consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment, or (h) an appointment referred to in clause (g) above is not vacated within ninety (90) days after the expiration of any such stay. "Indemnitee" means (i) any Person made a party to a proceeding by reason of its status as (A) the General Partner or (B) a director of the General Partner or an officer or employee of the Partnership or the General Partner and (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion. "IRS" means the Internal Revenue Service. "Limited Partner" means any Person named as a Limited Partner in Exhibit A attached to this Agreement, as such Exhibit A may be amended from time to time, or any Substituted Limited Partner or Additional Limited Partner, in such Person's capacity as a Limited Partner in the Partnership. "Limited Partner Interest" means a Partnership Interest of a Limited Partner representing a fractional part of the Partnership Interests of all Limited Partners and including any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement and the Limited Partner's Partner Schedule, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of Partnership Units. Partnership Units issued to Limited Partners in the same transaction or a series of related transactions and having the same terms and conditions may be treated as a Class of Partnership Units separate from all other Partnership Units and may be given a designation, such as "Class A", "Class B", "Class C", etc. "Liquidator" has the meaning set forth in Section 13.2.A. "Majority in Interest" of the Limited Partners, or of a group thereof, or of the Limited Partners that hold a specified Class of Partnership Units means those Limited Partners or holders of such Class of Partnership Units (other than any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by CRT) holding in the aggregate at least fifty and one one-hundredths percent (50.01%) of the aggregate Partnership Units (or Class of Partnership Units, as applicable) of all Limited Partners (all holders of such Class or such group of Limited -9- Partners, as applicable) (other than any Limited Partner fifty percent (50%) or more of whose equity is owned, directly or indirectly, by CRT). "Net Income" or "Net Loss" means, for each Fiscal Year of the Partnership, an amount equal to the Partnership's taxable income or loss for such year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (a) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of "Net Income" or "Net Loss" shall be added to (or subtracted from, as the case may be) such taxable income (or loss); (b) Any expenditure of the Partnership described in Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of "Net Income" or "Net Loss," shall be subtracted from (or added to, as the case may be) such taxable income (or loss); (c) In the event that the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) of the definition of "Gross Asset Value," the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset; (d) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; (e) To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner's interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; (f) In lieu of the depreciation , amortization and other cost recovery deduction taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such period , computed in accordance with the definition of "Depreciation"; and (g) Notwithstanding any other provision of this definition of "Net Income" or "Net Loss," any item that is specially allocated pursuant to Section 6.3 shall not be taken into account in -10- computing Net Income or Net Loss to the extent provided in Section 6.3. The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Section 6.3 shall be determined by applying rules analogous to those set forth in this definition of "Net Income" or "Net Loss." "New Limited Partner" is defined in the Preamble hereto. "Nonrecourse Deductions" has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Fiscal Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c). "Nonrecourse Liability" has the meaning set forth in Regulations Section 1.752-1(a)(2). "Notice of Redemption" means a Notice of Redemption substantially in the form of Exhibit B attached to this Agreement. "Notional Westchase Liquidating Distribution" means a hypothetical distribution wherein (i) Westchase and all other property directly or indirectly held by the Partnership (including cash) in respect of or related to Westchase (including property held by the Westchase Owner and the Westchase GP) were sold for cash equal to its then Gross Asset Value (taking into account any Depreciation allowable for such period with respect to such property), (ii) all liabilities of the Westchase Owner and the Westchase GP and all liabilities of the Partnership to the extent they relate (as determined by the General Partner in its reasonable discretion) to Westchase, the Westchase Owner or the Westchase GP, including all liabilities encumbering or associated with such property, were satisfied in cash according to their terms (limited, with respect to each nonrecourse liability of each entity, to the assets securing such liability), and (iii) the net proceeds of such hypothetical transactions and all cash (attributable to Westchase, the Westchase Owner and the Westchase GP) otherwise available (after satisfaction of such liabilities) were distributed in full pursuant to Section 5.1 hereof. "Other Net Income and Other Net Loss" means any Net Income and any Net Loss that is not (in the reasonable discretion of the General Partner) Baymeadows Net Income, Westchase Net Income, Baymeadows Net Loss or Westchase Net Loss. "Outside Limited Partner" means a Limited Partner in which CRT holds no direct or indirect beneficial interest. "Ownership Limit" means the applicable restriction on ownership of shares of CRT imposed under the Charter. "Partially Adjusted Westchase Memorandum Account" means, with respect to the holders of the Class A Partnership Units (taken in the aggregate as a group) or the CRT/Crocker Parties (taken in the aggregate as a group), a memorandum account increased by (i) any Westchase Capital Contributions made by any such group and (ii) any allocations to such group of Westchase Net Income pursuant to Section 6.2A(2) and any items in the nature of income or gain that are attributable to Westchase (as determined by the General Partner in its reasonable discretion) and that are specially allocated pursuant to Section 6.3 and decreased by (i) any -11- Westchase Distributions received by such group and (ii) any allocations to such group of Westchase Net Loss pursuant to Section 6.2.A(3) and any items in the nature of income or gain that are attributable to Westchase (as determined by the General Partner in its reasonable discretion) and that are specially allocated pursuant to Section 6.3. For purposes of making allocations pursuant to Section 6.2.A(2) and 6.2.A(3) such memorandum account shall be calculated as of the beginning of any taxable period and adjusted (X) by adding an amount equal to such group's share of the Partnership Minimum Gain and Partner Minimum Gain (and attributable, in each case, solely to Westchase, as determined by the General Partner in its reasonable discretion) not otherwise required to be taken into account under Section 6.3 during such taxable period, and (ii) for all Westchase Contributions and Westchase Distributions made by or to such group during such period, and all special allocations to such group pursuant to Section 6.3 with respect to such taxable period, but before giving effect to any allocation of Westchase Net Income or Westchase Net Loss for the period under Section 6.2.A(2) and 6.2.A(3). "Partner" means the General Partner or a Limited Partner, and "Partners" means the General Partner and the Limited Partners. "Partner Minimum Gain" means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3). "Partner Nonrecourse Debt" has the meaning set forth in Regulations Section 1.704-2(b)(4). "Partner Nonrecourse Deductions" has the meaning set forth in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Fiscal Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2). "Partner Schedule" means a schedule, substantially in the form attached hereto as Exhibit C and executed by the General Partner and a Limited Partner that acquires a Limited Partner Interest, that sets forth, among other things, (a) the Gross Asset Values, as determined by the General Partner and agreed to by the contributing Limited Partner, for any Contributed Properties contributed by such contributing Limited Partner (or, in the case of a Substituted Limited Partner, such Partner's predecessor in interest), (b) the number of Partnership Units issued or transferred to such Limited Partner, (c) the Preferred Return Per Unit or other economic terms of the Partnership Units issued to such Limited Partner and (c) such other terms and conditions as are agreed upon by the General Partner and such Limited Partner. "Partnership" means the limited partnership formed under the Act and pursuant to this Agreement, and any successor to such limited partnership. "Partnership Interest" means an ownership interest in the Partnership and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and -12- provisions of this Agreement. A Partnership Interest may be expressed as a number of Partnership Units. "Partnership Minimum Gain" has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Fiscal Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d). "Partnership Record Date" means the record date established by the General Partner for the distribution of Available Cash pursuant to Section 5.1. "Partnership Unit" or "Unit" means a fractional share of the Partnership Interest of a Partner issued pursuant to Section 4.1, 4.2 or 4.4, provided, however, that Partnership Units representing the General Partner Interest and the various Classes of Limited Partner Interests shall have differences in rights and privileges as specified in this Agreement and the relevant Partner Schedules. The ownership of Partnership Units may (but need not, in the sole and absolute discretion of the General Partner) be evidenced by the form of certificate for Partnership Units attached hereto as Exhibit D. "Permitted Call Date" means for a Limited Partner, the date specified as the "Permitted Call Date" in the Partnership Schedule of such Limited Partner, and for an Assignee, the date specified as the "Permitted Call Date" in the Partnership Schedule of the Limited Partner the Partnership Units of which were Transferred, in one or a succession of Transfers, to such Assignee. "Permitted Tender Date" means for a Limited Partner, the date specified as the "Permitted Tender Date" in the Partnership Schedule of such Limited Partner, and for an Assignee, the date specified as the "Permitted Tender Date" in the Partnership Schedule of the Limited Partner the Partnership Units of which were Transferred, in one or a succession of Transfers, to such Assignee. "Permitted Transfer" has the meaning set forth in Section 11.3.A. "Person" means an individual or a corporation, partnership, trust, estate, unincorporated organization, association, limited liability company or other entity. "Preferred Return Per Unit" means as to a Limited Partner or an Assignee, the amount specified on the Partner Schedule of such Limited Partner (or in the case of an Assignee, the Partner Schedule of the Limited Partner whose Partnership Units were transferred to such Assignee, whether directly or by another Assignee) as the Preferred Return Per Unit for such Limited Partner, which amount is distributable quarterly from Available Cash as provided in Section 5.1. The Preferred Return Per Unit need not be the same amount for each Limited Partner or Assignee or with respect to each Partnership Unit. "Prior Partnership Agreement" means the Agreement of Limited Partnership of the Partnership, as amended, restated and in effect immediately prior to the Effective Date and the execution and delivery of this Agreement. -13- "Properties" means any assets and property of the Partnership such as, but not limited to, interests in real property and personal property, including, without limitation, fee interests, interests in ground leases, interests in limited liability companies, joint ventures or partnerships, interests in mortgages, and Debt instruments as the Partnership may hold from time to time. "Purchase Consideration" has the meaning specified in Section 8.6.B. "Qualified Descendant" means as to any Limited Partner, any one of those Persons listed as Qualified Descendants on such Limited Partner's Partner Schedule then in effect. "Redemption" has the meaning set forth in Section 8.6.A. "Redemption Consideration" has the meaning specified in Section 8.6.A. "Regulations" means the applicable income tax regulations under the Code, whether such regulations are in proposed, temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Regulatory Allocations" has the meaning set forth in Section 6.3.A(8). "REIT" means a real estate investment trust qualifying under Code Section 856. "REIT Requirements" has the meaning set forth in Section 5.5. "REIT Share" means a share of CRT's Common Stock, par value $.01 per share. "REIT Shares Amount" means a number of REIT Shares equal to the product of (a) the number of Tendered Units and (b) the Adjustment Factor; provided, however, that, in the event that CRT issues to all holders of REIT Shares rights, options, warrants or convertible or exchangeable securities entitling CRT's shareholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the "Rights") and such Rights do not expire or lapse prior to the relevant Specified Redemption Date, then the REIT Shares Amount as of such Specified Redemption Date shall also include such Rights that a holder of that number of REIT Shares would be entitled to receive. "Related Party" means, with respect to any Person, any other Person whose ownership of shares of the General Partner's capital stock would be attributed to the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)). "Replacement Properties" means one or more improved commercial real estate projects or properties acquired for the purpose of completing a tax deferred, like kind exchange of the Boca Marriott pursuant to Section 1031 of the Code (the "Initial Replacement Properties") and any Property acquired by the Partnership or Partnership Subsidiary in exchange therefore pursuant to a further like kind exchange pursuant to Section 1031 of the Code. "Required Redemption Percentage" shall have the meaning set forth in Section 8.6.C. -14- "Restriction Termination Date" is defined in the Partner Schedule of Crocker and CCA III. "Rights" has the meaning set forth in the definition of "REIT Shares Amount." "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "Shortfall Contribution" is defined in Section 4.4C. "Shortfall Contribution Memorandum Account" is defined in Section 4.4C. "Shortfall Loan" is defined in Section 4.4.C. "Shortfall Preferred Return" is defined in Section 4.4.C. "Specified Redemption Date" means the fortieth (40th) calendar day (or, if such day is not a Business Day, the next following Business Day) after the receipt by the General Partner of a Notice of Redemption; provided, however, that the Specified Redemption Date, as well as the closing of a Redemption, or an acquisition of Tendered Units by the General Partner pursuant to Section 8.6.B, on any Specified Redemption Date, may be deferred for such time as may reasonably be required to effect compliance with the Securities Act, the HSR Act, or other applicable laws (including, but not limited to, state "blue sky" or other securities laws) and the requirements of the New York Stock Exchange (or such other securities exchange on which REIT Shares are then traded), provided that the General Partner shall limit the period of deferral to no more than the minimum period reasonably required to effect such compliance. "Step-Down Date" shall have the meaning set forth on the Partner Schedule of the New Limited Partner. "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; provided, however, that, with respect to the Partnership, "Subsidiary" means solely a partnership or limited liability company (taxed, for federal income tax purposes, as a partnership and not as an association or publicly traded partnership taxable as a corporation) of which the Partnership is a member unless the General Partner has received an unqualified opinion from independent counsel of recognized standing, or a ruling from the IRS, that the ownership of shares of stock of a corporation or other entity will not jeopardize CRT's status as a REIT, in which event the term "Subsidiary" shall include the corporation or other entity which is the subject of such opinion or ruling. "Substituted Limited Partner" means an Assignee who is admitted as a Limited Partner to the Partnership pursuant to Section 11.4. The term "Substituted Limited Partner" shall not include any Additional Limited Partner. -15- "Target Westchase Memorandum Account" means, with respect to the holders of the Class A Partnership Units (taken in the aggregate as a group) or the CRT/Crocker Parties (taken in the aggregate as a group), as of any date, a memorandum account (which may have either a positive or negative balance) equal to the amount distributable to such group in a Notional Westchase Liquidating Distribution as of such date. "Tax Items" has the meaning set forth in Section 6.4.A. "Tendered Units" has the meaning set forth in Section 8.6.A. "Tendering Party" has the meaning set forth in Section 8.6.A. "Terminating Capital Transaction" means any sale or other disposition of all or substantially all of the assets of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership but shall not include any such sale or disposition wherein the partnership or any Partnership Subsidiary uses the proceeds thereof to acquire Replacement Property. "Transfer," when used with respect to a Partnership Unit or all or any portion of a Partnership Interest, means any direct or indirect sale, assignment, bequest, conveyance, devise, gift (outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange, transfer or any other disposition or act of alienation, whether voluntary or involuntary or by operation of law; provided, however, that, when the term is used in Article 11, Transfer does not include any Redemption of Partnership Units by the Partnership, or acquisition of Tendered Units from the Limited Partners by the General Partner, pursuant to Section 8.6 or Section 8.7. The terms "Transferred" and "Transferring", as well as the term "Transfer" when used as a verb or an adjective, have correlative meanings. "Unitholder" means (a) the General Partner, (b) a Limited Partner, or (c) an Assignee owning one or more Partnership Units that is treated as a member of the Partnership for federal income tax purposes. "Valuation Date" means (a) in the case of a tender of Class C Partnership Units for Redemption, the date of receipt by the General Partner of a Notice of Redemption or, if such date is not a Business Day, the immediately preceding Business Day or (b) in any other case, the date specified in this Agreement. "Value of a REIT Share" means on any Valuation Date with respect to a REIT Share, the higher of (i) the market price on the Valuation Date and (ii) average of the daily market prices for the thirty (30) consecutive trading days immediately preceding the Valuation Date. The market price for any such trading day shall be: (a) if the REIT Shares are listed or admitted to trading on any securities exchange or the Nasdaq Stock Market's National Market System, the closing price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices on such day, in either case as reported in the principal consolidated transaction reporting system, -16- (b) if the REIT Shares are not listed or admitted to trading on any securities exchange or the Nasdaq Stock Market's National Market System, 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 (c) if the REIT Shares are not listed or admitted to trading on any securities exchange or the Nasdaq Stock Market's National Market System and no such last reported sale price or closing bid and asked prices are available, the average of the reported high bid and low asked prices on such day, as reported by a reliable quotation source designated by the General Partner, or if there shall be no bid and asked prices on such day, the average of the high bid and low asked prices, as so reported, on the most recent day (not more than ten (10) days prior to the date in question) for which prices have been so reported; provided, however, that, if there are no bid and asked prices reported during the applicable period prior to the date in question, the Value of a REIT Share 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. "WCCA" is defined in the Preamble hereto. "Westchase" means the Replacement Property comprising the approximately 184,529 square foot office building known as Westchase Corporate Center located at 10111 Richmond Avenue, Houston, Texas. "Westchase Acquisition Financing" means the mortgage financing from Nomura Credit & Capital, Inc. in the original principal amount of $15,190,000 incurred by Westchase Owner in connection with the acquisition of Westchase. "Westchase Contributions" means Capital Contributions in respect of Westchase, the Westchase GP or the Westchase Owner (as determined by the General Partner in its reasonable discretion). "Westchase Contribution Percentage" means (i) with respect to any Limited Partner that is a holder of Class A Partnership Units, the Westchase Contribution Percentage as set forth on such Limited Partner's Partner Schedule (which may be zero), as the same may be adjusted from time to time in connection with the admission of Additional Limited Partners and (ii) with respect to the Crocker/CRT Parties in the aggregate, that percentage equal to 100% minus the aggregate Westchase Contribution Percentages of the holders of Class A Partnership Units. "Westchase Distributions " means distributions of cash and the Gross Asset Value, as of the time of distribution, of any property (net of all liabilities secured by such distributed property or subject to which a Partner is considered to assume or take the property, pursuant to Code Section 752) made by the Partnership, in each case, in respect of Westchase, the Westchase GP or the Westchase Owner (as determined by the General Partner in its reasonable discretion). -17- "Westchase GP" means CRT WC GP LLC, a Delaware limited liability company that is a wholly owned Subsidiary of the Partnership. "Westchase Net Income and Westchase Net Loss" means the Net Income and Net Loss attributable (in the reasonable discretion of the General Partner) to the Partnership's interest (direct and indirect through the Westchase GP) in the Westchase Owner and Westchase, which amount shall, in the interest of clarity, take account of any expenses or other costs incurred by the Partnership and attributable or allocable (as determined in the reasonable discretion of the General Partner) to the Partnership's direct or indirect interest in Westchase Owner and Westchase. "Westchase Owner" means CRT Westchase LP, a Delaware limited partnership in which the partnership holds a 99% interest as a limited partner and Westchase GP holds a 1% interest as the general partner. "Westchase Partnership Agreement" means the Limited Partnership Agreement of Westchase Owner, dated as of AUGUST __, 2004, as from time to time in effect. "Westchase Preference Percentage" means (i) with respect to any Limited Partner that is a holder of Class A Partnership Units, the Westchase Preference Percentage as set forth on such Limited Partner's Partner Schedule (which may be zero), as the same may be adjusted from time to time in connection with the admission of Additional Limited Partners and (ii) with respect to the Crocker/CRT Parties in the aggregate, that percentage equal to 100% minus the aggregate Westchase Preference Percentages of the holders of Class A Partnership Units. ARTICLE 2 ORGANIZATIONAL MATTERS SECTION 2.1 Continuation of Partnership. WCCA is hereby admitted to the Partnership as an Additional Limited Partner and the General Partner and the Limited Partners hereby agree to continue the Partnership as a limited partnership pursuant to the provisions of the Act and upon the terms and subject to the conditions set forth in this Agreement. This Agreement amends, restates and supersedes in its entirety the Prior Partnership Agreement. Except as expressly provided in this Agreement to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. No Partner has any interest in any Partnership property, and the Partnership Interest of each Partner shall be personal property for all purposes. SECTION 2.2 Name. The name of the Partnership is "CRT BMWCX, LTD.". The Partnership's business may be conducted under that name and/or any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate of the General Partner. The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be included in the Partnership's name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change -18- the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners. SECTION 2.3 Registered Office and Agent; Principal Office. The registered office of the Partnership shall be located at 225 NE Mizner Boulevard, Suite 200, Boca Raton, Florida 33432, or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Florida as the General Partner deems advisable. SECTION 2.4 Power of Attorney. A. Scope. Each Limited Partner and each Assignee hereby irrevocably constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to: (1) execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, the Certificate and all amendments, supplements or restatements thereof) that the General Partner or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Florida and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (c) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; and (d) all instruments relating to the admission, withdrawal, removal or substitution of any Partner pursuant to, or other events described in, Article 11, 12 or 13 or the Capital Contribution of any Partner; and (2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the General Partner, to evidence or confirm any vote, consent, approval, agreement or other action that is made or given by the Limited Partner under this Agreement or is consistent with the terms of this Agreement. Nothing contained in this Section 2.4 shall be construed as authorizing the General Partner to amend this Agreement except in accordance with Article 14 or as may be otherwise expressly provided for in this Agreement. B. Irrevocability. The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of the fact that each of the Limited Partners will be relying upon the power of the General Partner to act as contemplated by this -19- Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the Transfer of all or any portion of such Limited Partner's or Assignee's Partnership Units and shall extend to such Limited Partner's or Assignee's heirs, successors, assigns and personal representatives. Each Limited Partner or Assignee shall execute and deliver to the General Partner or the Liquidator, within fifteen (15) days after receipt of the General Partner's or the Liquidator's request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator, as the case may be, deems necessary to effectuate this Agreement and the purposes of the Partnership. SECTION 2.5 Term. The term of the Partnership commenced as of November 1, 1985, the date that the Certificate was filed in the office of the Secretary of State of Florida in accordance with the Act, and shall continue until December 31, 2104 unless the Partnership is dissolved sooner pursuant to the provisions of Article 13 or as otherwise provided by law. ARTICLE 3 PURPOSE SECTION 3.1 Purpose and Business. The purpose and nature of the Partnership is to (i) acquire, own, sell, encumber, exchange or otherwise dispose of Replacement Properties either directly or by ownership of interests in one or more Partnership Subsidiaries, (ii) through the ownership of the Partnership Subsidiaries, cause the Partnership Subsidiaries to own, manage, operate, lease, sell, encumber, exchange or otherwise dispose of, maintain, and repair Replacement Properties and (iii) engage and carry on all other general business activities incidental or reasonably related to the foregoing; provided, however, that such businesses, enterprises and activities shall be limited and conducted in such a manner (to the extent within the reasonable control of the General Partner) as to permit CRT at all times to be classified as a REIT, unless the General Partner provides notice to the Partnership that CRT intends to cease or has ceased to qualify as a REIT. SECTION 3.2 Powers. The Partnership shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described in this Agreement and for the protection and benefit of the Partnership; provided that the Partnership shall not take any action that could, and shall not refrain from taking any action if failure to take such action could, in the judgment of the General Partner, in its sole and absolute discretion (i) adversely affect the ability of CRT to continue to qualify as a REIT, (ii) subject CRT to any additional taxes under Code Section 857 or Code Section 4981 or (iii) violate any law or regulation of any governmental body or agency having jurisdiction over CRT, the General Partner, its securities or the Partnership, unless such action (or failure to act) shall have been specifically consented to by the General Partner in writing. -20- SECTION 3.3 Partnership Only for Purpose Specified. The Partnership shall be a limited partnership only for the purpose specified in Section 3.1, and this Agreement shall not be deemed to create a company, venture or partnership between or among the Partners with respect to any activities whatsoever other than the activities within the purpose of the Partnership as specified in Section 3.1. Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act. SECTION 3.4 Representations and Warranties by the Limited Partners. A. Individual Limited Partners. Each Limited Partner that is an individual (including, without limitation, each Additional Limited Partner and Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to the Partnership, the General Partner and each other Limited Partner that (i) the consummation of the transactions contemplated by this Agreement to be performed by such Limited Partner will not result in a breach or violation of, or a default under, any agreement by which such Limited Partner or any of such Limited Partner's property is bound, or any statute, regulation, order or other law to which such Limited Partner is subject, (ii) such Limited Partner is not a "foreign person" within the meaning of Code Section 1445(f), (iii) such Limited Partner does not and will not, without the prior written consent of the General Partner and CRT, actually own or constructively own (under the attribution rules of Code Section 318, as modified by Code Section 856(d)(5)) (a) stock representing nine and eight-tenths percent (9.8%) or more of the total combined voting power of all classes of stock entitled to vote, or nine and eight-tenths percent (9.8%) or more of the total number of shares of all classes of stock, of any corporation that is a tenant of any of (I) CRT, (II) the General Partner, (III) the Partnership or (IV) any partnership, venture or limited liability company of which CRT, the General Partner or the Partnership is a partner or member or (b) an interest of nine and eight-tenths percent (9.8%) or more in the assets or net profits of any tenant (other than a corporation) of any of (I) CRT, (II) the General Partner, (III) the Partnership or (IV) any partnership, venture or limited liability company of which the CRT, the General Partner or the Partnership is a partner or member, and (iv) this Agreement is binding upon, and enforceable against, such Limited Partner in accordance with its terms. B. Limited Partners That Are Entities. Each Limited Partner that is not an individual (including, without limitation, each Additional Limited Partner and Substituted Limited Partner as a condition to becoming a Limited Partner, Additional Limited Partner or a Substituted Limited Partner) represents and warrants to the Partnership, the General Partner and each other Limited Partner that (i) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or shareholder(s), as the -21- case may be, as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws, as the case may be, any agreement by which such Limited Partner or any of such Limited Partner's properties or any of its partners, members, beneficiaries, trustees or shareholders, as the case may be, is or are bound, or any statute, regulation, order or other law to which such Limited Partner or any of its partners, members, trustees, beneficiaries or shareholders, as the case may be, is or are subject, (iii) such Limited Partner is not a "foreign person" within the meaning of Code Section 1445(f), (iv) such Limited Partner does not and will not, without the prior written consent of the General Partner and CRT, actually own or constructively own (under the attribution rules of Code Section 318, as modified by Code Section 856(d)(5)) (a) stock representing nine and eight-tenths percent (9.8%) or more of the total combined voting power of all classes of stock entitled to vote, or nine and eight-tenths percent (9.8%) or more of the total number of shares of all classes of stock, of any corporation that is a tenant of any of (I) CRT, (II) the General Partner, (III) the Partnership or (IV) any partnership, venture or limited liability company of which CRT, the General Partner or the Partnership is a partner or member or (b) an interest of nine and eight-tenths percent (9.8%) or more in the assets or net profits of any tenant (other than a corporation) of any of (I) CRT, (II) the General Partner, (III) the Partnership or (IV) any partnership, venture or limited liability company of which CRT, the General Partner or the Partnership is a partner or member; provided, however, that one or more Affiliates of WCCA may lease up to 5,000 sq. ft. of Westchase provided that New Limited Partner and its Affiliates do not and will not actually own or constructively own (under the attribution rules of Code Section 318, as modified by Code Section 856(d)(5)) either stock representing nine and eight-tenths percent (9.8%) or more of any class of stock of, or, as applicable, an interest representing nine and eight-tenths percent (9.8%) or more of the net assets or profits of: (I) CRT, or (II) the General Partner, and (v) this Agreement is binding upon, and enforceable against, such Limited Partner in accordance with its terms. C. Disclosure of Interests Owned. Upon the request of the General Partner from time to time, each Limited Partner (including, without limitation, each Additional Limited Partner and Substituted Limited Partner) will disclose in writing to the General Partner (i) the amount of REIT Shares or other shares of capital stock of CRT that it actually owns or constructively owns and (ii) any ownership in the stock, assets or net profits of any corporation or other entity from which CRT, the General Partner or the Partnership, directly or indirectly, derives rental income from real property. D. Securities Law Representations. Each Partner (including, without limitation, each Additional Limited Partner and Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) represents, warrants and agrees that (i) it is an "accredited investor" as defined in Rule 501 promulgated under the Securities Act, (ii) it has acquired its interest in the Partnership for its own account for investment only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, (iii) it has sufficient knowledge and experience in investing in companies similar to the Partnership so as to be able to evaluate the risks and merits of its investment in the Partnership, (iv) it has made an investigation of the Partnership and its business and has had an opportunity to discuss the Partnership's business, management and financial affairs with the General Partner, (v) it is able financially to bear the risks of an investment in the Partnership, (vi) it was not organized for the -22- specific purpose of acquiring Partnership Units, and (vii) it understands that the Partnership Units issued to it have not been registered under the Securities Act by reason of their issuance in a transaction exempt from the registration requirements of such Act, that such Partnership Units must be held indefinitely unless a subsequent disposition of such Units is registered under the Securities Act or is exempt from such registration, and that such Partnership Units, if certificated, will bear a legend to such effect. E. Anti Money-Laundering. Each Limited Partner (including, without limitation, each Additional Limited Partner and Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) acknowledges that the Partnership seeks to comply with all applicable laws concerning money laundering and related activities and, in furtherance of such efforts, hereby represent, warrant and covenants that to the best of its knowledge based upon reasonable diligence and investigation: (i) no consideration that it has contributed or will contribute to the Partnership shall originate from, nor will they be routed through, a foreign shell bank or a bank organized or chartered under the laws of a Non-Cooperative Jurisdiction; (ii) no consideration that it has contributed or will contribute to the Company has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (iii) no consideration that it has contributed or will contribute to the Partnership shall cause the Partnership or the General Partner to be in violation of the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986 or the United States International Money Laundering Abatement and Anti-Terrorism Financing Act of 2001. Each Limited Partner shall promptly notify the General Partner if any of the representations in this Section 3.4.E. ceases to be true and accurate with respect to itself. Each Limited Partner agrees to provide to the General Partner any additional information that the General Partner deems necessary or appropriate to ensure compliance with all applicable laws concerning money laundering and similar activities. Each Limited Partner understands and agrees that if at any time it is discovered that any of the foregoing representations in this Section 3.4.E. are incorrect, or if otherwise required by applicable law or regulation related to money laundering and similar activities, the General Partner may, in its sole discretion, undertake appropriate actions to ensure compliance with applicable law or regulation. Each Limited Partner further understands that the Partnership or the General Partner may release confidential information about it and, if applicable, any underlying beneficial ownership, to proper authorities if the General Partner, in its sole discretion, determines that it is in the best interests of the Partnership in light of relevant rules and regulations concerning money laundering and similar activities. F. Survival of Representations and Warranties. The representations and warranties contained in this Section 3.4 shall survive the execution and delivery of this Agreement by each Limited Partner (and, in the case of an Additional Limited Partner or a Substituted Limited Partner, the admission of such Additional Limited Partner or Substituted Limited Partner as a Limited Partner in the Partnership) and the dissolution, liquidation and termination of the Partnership. The General Partner may, in its sole and absolute discretion on behalf of the -23- Partnership and its Partners, grant waivers and exceptions to the representations and warranties contained in this Section 3.4, but any such waiver or exception must be in writing, must refer to this Section 3.4.F and must describe with particularity the representation or warranty as to which such waiver or exception shall apply. G. No Reliance. Each Limited Partner, as a condition to becoming a Limited Partner hereby acknowledges that no representations as to potential profit, tax consequences of any sort (including, without limitation, the tax consequences resulting from making a Capital Contribution, being admitted to the Partnership or being allocated Tax Items), cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Limited Partner shall not constitute a representation or warranty of any kind or nature, express or implied. ARTICLE 4 CAPITAL CONTRIBUTIONS SECTION 4.1 Capital Contributions of the Initial Partners. At the time of the execution of this Agreement, each Limited Partner shall make the Capital Contributions set forth in the Partner Schedule for such Partner, and the General Partner shall make a Capital Contribution in an amount sufficient to cause the aggregate of the Capital Contributions made by the General Partner through the date hereof and not previously distributed to equal the amount shown on Exhibit A attached hereto. Each Limited Partner shall own Partnership Units in the amount set forth for such Partner in the Partner Schedule with respect to such Partner, as the same may be amended from time to time. The General Partner shall initially own Partnership Units in the amount set forth for the General Partner on Exhibit A attached hereto. Except as provided in a particular Partner Schedule, by law, in Section 4.3, 4.4, 8.6.C or 10.4 or as otherwise expressly set forth in this Agreement, the Partners and their Affiliates shall have no obligation or right to make any additional Capital Contributions or loans to the Partnership, any Partnership Subsidiary or any partnership, venture or limited liability company of which the Partnership is a partner or member. SECTION 4.2 Additional Limited Partners. Only with the Consent of the Limited Partners, the General Partner may admit one or more Additional Limited Partners to the Partnership from time to time, on such terms and conditions and for such Capital Contributions as may be established by the General Partner. Capital Contributions by Additional Limited Partners shall be set forth in one or more Partner Schedules. Each Person making such a Capital Contribution and executing a Partner Schedule shall be admitted to the Partnership as an Additional Limited Partner, with such number of Partnership Units and such Preferred Return Per Unit and other rights as may be set forth in such Partner Schedule. No Partner shall be obligated to restore any deficit in its Capital Account. SECTION 4.3 Loans by Third Parties. -24- Subject to any restrictions set forth in the Partner Schedule of any Limited Partner, the Partnership may incur or assume Debt, or enter into other similar credit, guarantee, financing or refinancing arrangements, for any purpose (including, without limitation, in connection with any further acquisition of Properties from any Person, to make distributions pursuant to Section 5.1, or to effect a Redemption), upon such terms as the General Partner determines appropriate; provided, however, that any Debt shall be nonrecourse to the General Partner unless the General Partner otherwise agrees and the General Partner has obtained the Consent of the Limited Partners, not to be unreasonably withheld (it being understood and agreed that it shall be reasonable for any Limited Partners to withhold its consent to any financing that is recourse to the General Partner that would result in a material adverse tax consequence to such Limited Partner or their permitted transferees as a result of such debt being recourse to the General Partner); provided, further, that the General Partner may in its sole and absolute discretion and without the consent of any of the Limited Partners guarantee "non-recourse carveouts" and/or enter into an environmental indemnity and/or arrange for or provide, directly or through any Affiliate, one or more letters of credit in lieu of cash collateral or cash reserves in favor of any lender in connection with any financing or refinancing of any debt encumbering any Property and/or incur trade Debt in the ordinary course or otherwise incur Debt in the ordinary course in respect of expenses or services that would otherwise be reimbursable hereunder. The Partners hereby acknowledge that, provided there is no liability to the Limited Partners, General Partner or the Partnership in respect thereof (hereunder or otherwise), the General Partner shall, without the Consent of the Limited Partners, permit (or require any lender to the Baymeadows Owner or Westchase Owner to permit) the Crocker Limited Partners to provide a guarantee of up to the "bottom" $5,000,000, in the aggregate, of one or more mortgage loans securing real property assets directly or indirectly owned by the Partnership or any other Debt of the Partnership (a "Bottom Guaranty"). The General Partner shall cause the Partnership to maintain the Westchase Acquisition Financing and Baymeadows Acquisition Financing and shall not permit the repayment or refinancing of any such Acquisition Financing prior to the Restriction Termination Date, provided that notwithstanding the foregoing, except in the case of an Exempt Transaction, (x) the Partnership may repay any such Acquisition Financing in accordance with the schedule of required payments of such indebtedness or to the extent otherwise required under the applicable loan documents of such indebtedness, provided that aggregate amount of such indebtedness shall at no time prior to the Restriction Termination Date be less than $23,200,000, (y) the Partnership shall be permitted to refinance or replace any such Acquisition Financing with Debt in an amount not less than the then outstanding principal amount of the Acquisition Financing being refinanced or replaced provided that aggregate amount of such indebtedness shall at no time prior to the Restriction Termination Date be less than $23,200,000. The Partners acknowledge and agree that the foregoing provision is made for the sole benefit of the Crocker Limited Partners and that the General Partner and the Partnership shall have no liability to the Partners or the Partnership for breach of the covenants contained in this paragraph except for liability to the Crocker Limited Partners, such liability being limited as expressly provided in the Partner Schedule of Crocker and CCA III with respect to the Partnership. SECTION 4.4 Additional Funding and Capital Contributions. -25- A. General. The General Partner may, at any time and from time to time, determine that the Partnership requires additional funds for to meet the operating or capital requirements or needs of the Partnership, any Partnership Subsidiary or any Replacement Property. Additional funds required by the Partnership may be raised by the Partnership, at the election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.4 or, alternatively, the terms of Section 4.3. All Additional Capital Contributions shall be in cash unless otherwise approved by the General Partner with the Consent of the Limited Partners or as otherwise set out in any Limited Partner's Partner Schedule. No Limited Partner shall have any obligation to make further Capital Contributions to the Partnership, except as set forth herein, in such Limited Partner's Partner Schedule or as required by the Act. B. General Partner Loans. If and to the extent such Debt is permitted under Section 4.3 hereof, the General Partner or its Affiliates may loan all or a portion of any required additional funds to the Partnership on terms and conditions no less favorable to the Partnership than would be available to the Partnership from any third party; provided that this Section 4.4.B. shall not apply to Shortfall Loans. C. Additional Contributions. (1) Additional Capital to Fund Redemptions. The General Partner shall contribute 100% of the amount of any Capital Contributions required to effect a Redemption. (2) Additional Limited Partners. Upon the admission of any Additional Limited Partner in accordance with Section 4.2 hereof, such Additional Limited Partner shall make, and the General Partner and Partnership shall accept the Capital Contributions to be made by such Additional Limited Partner in accordance with such Additional Limited Partner's Partner Schedule. (3) Deficit Contributions; Shortfall Loan; Shortfall Contributions. If at any time (and from time to time) following the date hereof, the General Partner reasonably determines that additional capital contributions ("Deficit Contributions") are required to meet the operating or capital requirements or needs of the Partnership, any Property Partnership or any Property, then, in any such event, the General Partner shall give written notice (a "Call Notice") to each of the Limited Partners requesting that each Limited Partner contribute its Contribution Percentage applicable to the Property for which such Deficit Contribution is needed with such Call Notice setting forth the amount of the required Deficit Contributions, the Property(ies) for which it is needed, the applicable Contribution Percentage(s) for each Limited Partner with respect to each such Property and the amount of each Partner's share of such Deficit Contributions. The date for contribution of Deficit Contributions shall be the date set forth in the Call Notice, provided that such date shall not be less than ten (10) days from the date of such notice. If any Partner (a "Non-Contributing Partner") elects not to contribute any portion of its applicable Contribution Percentage of any Deficit Contributions, then each Partner who has contributed all of its Contribution Percentage of such Deficit Contribution (a "Contributing Partner") may, but shall not be required to, elect one of the following: -26- (X) Shortfall Contribution. Make a Capital Contribution (a "Shortfall Contribution") to fund the amounts not contributed by such Non-Contributing Partner(s). If more than one Contributing Partner elects to make a Shortfall Contribution, then, in such event, such Shortfall Contributions shall be provided by such electing Contributing Partners pro rata based on their applicable Contribution Percentages or in such other proportion as they may agree. If all of the Limited Partners are Non-Contributing Partners, then the General Partner may elect to cancel such call for Deficit Contributions and make a Shortfall Contribution for the aggregate amount of the Deficit Contributions called for in the Call Notice. Each Shortfall Contribution shall be added to the Contributing Partner's Shortfall Contribution Memorandum Account and shall be entitled to a preferred return at a compound annual rate equal to twelve percent (12%), which return shall accrue daily on the basis of a 360 day year ("Shortfall Preferred Return"). Contributing Partners shall be entitled to receive distributions in respect of Shortfall Contributions and Shortfall Preferred Return as set forth in Section 5.1. Distributions made in respect of Shortfall Preferred Return and Shortfall Contributions shall be applied first to reduce the amount of accrued and unpaid Shortfall Preferred Return and then to reduce the amount of unrecovered Shortfall Contributions. For purposes of determining the amount to be distributed in respect of any Shortfall Contribution and Shortfall Preferred Return accrued thereon, a memorandum account (a "Shortfall Contribution Memorandum Account") shall be maintained for each Partner representing the unrecovered amount of any Shortfall Contributions made by such Partner and all accrued and unpaid Shortfall Preferred Return thereon. Such Shortfall Contribution Memorandum Account shall be (A) increased by the amount of each Shortfall Contribution made by such Partner and all accrued and unpaid Shortfall Preferred Return thereon (which shall accrue and be added daily on the basis of a 360 day year) and (B) decreased by all distributions made to such Partner in respect of its Shortfall Contributions and Shortfall Preferred Return as provided in Section 5.1. (Y) Shortfall Loan. Make a loan (a "Shortfall Loan") to any Non-Contributing Partner (and not to the Partnership) in an amount equal to such Non-Contributing Partner's Contribution Percentage of such Deficit Contributions by paying such amount directly to the Partnership and specifying by notice to the Partners given within two (2) Business Days after such funding, that such loan is being made to the Non-Contributing -27- Partner, in which case said amount shall be deemed to have been contributed to the Partnership by the Non-Contributing Partner for purposes of determining the Capital Contributions made by the Non-Contributing Partner, but the Non-Contributing Partner shall still be deemed to be a Non-Contributing Partner for all purposes hereunder until such Shortfall Loan has been repaid in full. Each Shortfall Loan shall bear interest at a compound annual rate equal to twelve percent (12%) (but in no event higher than the rate permitted by applicable law). Interest on each Shortfall Loan shall accrue daily in the basis of a 360 day year and be payable monthly in arrears. Payments made in respect of Shortfall Loans shall be deemed first to be repayment of interest accrued on such Shortfall Loans and then to be repayment of the principal amount thereof. Repayment of any such Shortfall Loan made to the Non-Contributing Partner shall be effected by the Partners causing the Partnership to pay directly to the Contributing Partner(s) all distributions otherwise payable to the Non-Contributing Partner under this Agreement as and when payable, instead of making such distributions to the Non-Contributing Partner (with such distributions being deemed for all purposes to have been made to the Non-Contributing Partner and then paid by the Non-Contributing Partner to the Contributing Partner(s) making such Shortfall Loan) until such Shortfall Loan has been repaid in full with interest. If the General Partner or its Affiliate has arranged for or provided a letter of credit in favor of any lender as permitted hereunder, if any draw on such letter of credit should occur, the entire amount of such draw shall automatically be deemed to be a Shortfall Contribution made by the General Partner. The General Partners shall thereupon give a Call Notice with respect thereto (provided that the time period for answering such call notice shall be reduced from 10 days to 5 days). As and to the extent the other Partners contribute their respective Contribution Percentages of the amount of such draw within such 5 day period, the amount of the deemed Shortfall Contribution shall be reduced such that the ultimate Shortfall Contribution (if any) determined at the end of such 5 day period shall be consistent with clause (X) above as if the Call Notice had been given prior to such draw and the Shortfall Contribution made at the end of such 5 day period. Nothing herein shall prevent the General Partner from giving a Call Notice prior to any such draw. SECTION 4.5 No Interest; No Return. No Partner shall be entitled to interest on its Capital Contribution or on such Partner's Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or receive the return of its Capital Contribution from the Partnership. SECTION 4.6 No Preemptive Rights. Except to the extent expressly granted by the General Partner pursuant to a written agreement or as otherwise expressly provided herein, no person shall have any preemptive, -28- preferential or other similar right with respect to (a) additional Capital Contributions or loans to the Partnership, or (b) issuance or sale of any Partnership Units. ARTICLE 5 DISTRIBUTIONS SECTION 5.1 Requirement and Characterization of Distributions. Except as otherwise provided in this Section 5.1, the General Partner shall cause the Partnership to distribute quarterly all of the Partnership's Available Cash to the Unitholders who are Unitholders on the Partnership Record Date with respect to such quarter (the "Accrual Period") as follows: A. First, to the holders of Class A Partnership Units (if any), the Class A Amount, pro rata in proportion to their respective Class A Partnership Units; B. Second, to holders of Class C Partnership Units, an amount equal to the aggregate Preferred Return Per Unit accrued during the current and all prior Accrual Periods in respect of all Class C Partnership Units outstanding as of such Partnership Record Date and not previously distributed pursuant to this Section 5.1.B; provided, however that to the extent there is not sufficient Available Cash to distribute pursuant to this Section 5.1.B to pay all accrued and unpaid Preferred Return Per Unit for all outstanding Class C Partnership Units as of such Partnership Record Date, such Available Cash as is available to be distributed pursuant to this Section 5.1B shall be distributed to such holders of Class C Partnership Units in proportion to such Unitholders' respective shares, as of such Partnership Record Date, of the aggregate accrued and unpaid Preferred Return Per Unit for all such outstanding Class C Partnership Units; and C. Third, the balance, one hundred percent (100%) to the General Partner. The General Partner in its sole and absolute discretion may distribute to the Unitholders Available Cash in accordance with the foregoing priorities on a more frequent basis and provide for an appropriate record date. Notwithstanding anything to the contrary contained herein, (i) in no event may a Unitholder receive a distribution of Available Cash with respect to a Partnership Unit if such Unitholder is entitled to receive a dividend from CRT or a distribution from the General Partner, as applicable, with respect to a REIT Share or an interest in the General Partner for which such Partnership Unit has been exchanged and (ii) prior to making any distributions of Available Cash pursuant to Section 5.1.A or 5.1.B, Available Cash shall first be distributed to the Partners in accordance with the positive balances in their Shortfall Contribution Memorandum Accounts (if any) until each such balance equals zero (0) (such distributions, to the extent they do not represent a return of capital, shall constitute guaranteed payments within the meaning of Code Section 707(c) and shall be so treated by the Partnership and all Partners and shall not be treated as distributions for the purpose of computing the Partners' Capital Accounts). Further notwithstanding anything herein to the contrary, all Available Cash of the Partnership in respect of periods or portions thereof ending prior to the Effective Date and the admission of New Limited Partner as a Partner shall be distributed as provided in the Prior Partnership Agreement. -29- SECTION 5.2 Distributions in Kind. No Unitholder has any right to demand and receive property other than cash. The General Partner may determine, in its sole and absolute discretion, to make a distribution in kind to the Unitholders of Property, and such Property shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5 and 6. SECTION 5.3 Amounts Withheld. All amounts withheld pursuant to the Code or any provisions of any state or local tax law and Section 10.4 with respect to any allocation, payment or distribution to any Unitholder shall be treated as amounts paid or distributed to such Unitholder pursuant to Section 5.1 for all purposes under this Agreement. SECTION 5.4 Distributions upon Liquidation. Notwithstanding the other provisions of this Article 5, net proceeds from a Terminating Capital Transaction, and any other cash received, or reductions in reserves, working capital accounts or other cash or similar balances of the Partnership made, after commencement of the liquidation of the Partnership, shall be distributed to the Unitholders in accordance with Section 13.2. SECTION 5.5 REIT Distribution Requirement. The General Partner shall make such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with CRT's qualification as a REIT, to cause the Partnership to distribute amounts sufficient to enable CRT to pay shareholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations (the "REIT Requirements") and (b) avoid any federal income or excise tax liability imposed by the Code. SECTION 5.6 Restricted Distributions. Notwithstanding any provision to the contrary contained in this Agreement, neither the Partnership nor the General Partner, on behalf of the Partnership, shall make a distribution to any Unitholder on account of its Partnership Interest or interest in Partnership Units if such distribution would violate Section 620.147 of the Act or other applicable law. ARTICLE 6 ALLOCATIONS SECTION 6.1 Timing and Amount of Allocations of Net Income and Net Loss. Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Fiscal Year of the Partnership as of the end of each such year. Except as otherwise provided in this Article 6, and subject to Sections 11.6.C and 12.2.C, an allocation to a Unitholder of a share of Net Income or Net Loss, Baymeadows Net Income or Baymeadows Net Loss, or Westchase Net Income or Westchase Net Loss, or Other Income or Other Net Loss, as the case may be, shall be treated as an allocation of the same share of each item of income, gain, -30- loss or deduction that is taken into account in computing Net Income or Net Loss, Baymeadows Net Income or Baymeadows Net Loss, or Westchase Net Income or Westchase Net Loss, or Other Income or Other Net Loss, as the case may be. SECTION 6.2 General Allocations. Except as otherwise provided in this Article 6 (including Section 6.2.E) and subject to Sections 11.6.C and 12.2.C, Net Income and Net Loss for a Fiscal Year shall be allocated as follows: A. Initial Allocations. Net Income and Net Loss shall first be allocated as provided in this Section 6.2.A. Amounts allocated in the aggregate to the CRT/Crocker Parties shall be further allocated among the CRT/Crocker Parties as provided in Section 6.2.B. Amounts allocated in the aggregate to the holders of Class A Units shall be further allocated among such Persons as provided in Section 6.2.C. (1) BM Allocations. Baymeadows Net Income and Baymeadows Net Loss shall each be allocated 98% to the CRT/Crocker Parties on the one hand, and 2% to the holders of the Class A Partnership Units on the other hand. (2) WC Net Income Allocations. Westchase Net Income shall be allocated to the CRT/Crocker Parties on the one hand, and the holders of the Class A Partnership Units on the other hand, so as to reduce proportionately the differences between their respective Partially Adjusted Westchase Memorandum Accounts and their Target Westchase Memorandum Accounts. (3) WC Net Loss Allocations. Westchase Net Loss shall be allocated to the CRT/Crocker Parties on the one hand, and the holders of the Class A Partnership Units on the other hand, so as to reduce proportionately the differences between their respective Partially Adjusted Westchase Memorandum Accounts and their Target Westchase Memorandum Accounts. B. CRT/Crocker Allocations. Except as otherwise provided in this Article 6 (including Section 6.2.E) and subject to Sections 11.6.C and 12.2.C, amounts of Net Income and Net Loss (which, in the interest of clarity, does not include Other Net Income or Other Net Loss) allocated in the aggregate to the CRT/Crocker Parties pursuant to Section 6.2.A shall be further allocated among the CRT/Crocker Parties as follows: (1) Net Income. (a) First, to the General Partner, to the extent of any negative balance in its Adjusted Capital Account; (b) Second, to each Limited Partner and Assignee, an amount equal to the excess, if any, of (a) the aggregate amount of Net Loss and Depreciation allocated for all Fiscal Years pursuant to Section 6.2.B(2)(d) hereof in respect of all Partnership Units held by such Limited Partner or Assignee at any time during the subject Fiscal -31- Year over (b) the aggregate amount of Net Income allocated for all prior Fiscal Years pursuant to this Section 6.2.B(1)(b) in respect of such Partnership Units; (c) Third, to each Limited Partner and Assignee, an amount equal to the excess, if any, of (a) the aggregate Preferred Return Per Unit accrued during all Accrual Periods ending prior to or in the subject Fiscal Year in respect of all Partnership Units held by such Limited Partner or Assignee at any time during the subject Fiscal Year (whether or not actually distributed) over (b) the aggregate of the amounts allocated for all prior Fiscal Years pursuant to this Section 6.2(B)(1)(c) in respect of such Partnership Units (and not previously reversed by allocations pursuant to Section 6.2.B(2)(c)); (d) Fourth, to the General Partner, an amount equal to the excess, if any, of (a) the aggregate amount of Net Loss allocated to the General Partner pursuant to Section 6.2B(2)(b) for all prior Fiscal Years over (b) the aggregate amount of Net Income allocated to the General Partner pursuant to this Section 6.2.B(1)(d) for all prior Fiscal Years; and (e) Fifth, the balance, one hundred percent (100%), to the General Partner. (2) Net Loss. (a) First, to the General Partner, an amount equal to the excess, if any, of (a) the aggregate amount of Net Income allocated to the General Partner pursuant to Section 6.2.B(1)(e) for all prior Fiscal Years over (b) the sum of (I) the aggregate amount of Net Loss allocated to the General Partner pursuant to this Section 6.2.B(2)(a) for all prior Fiscal Years and (II) the aggregate amount distributed to the General Partner pursuant to Section 5.1.C; (b) Second, to the General Partner, until its Adjusted Capital Account is reduced to zero; (c) Third, to each Limited Partner and Assignee, an amount equal to the excess, if any, of (a) the aggregate amount of Net Income allocated for all prior Fiscal Years pursuant to Section 6.2.B(1)(c) in respect of all Partnership Units held by such Limited Partner or Assignee at any time during the subject Fiscal Year over (b) the sum of (I) the aggregate amount of Net Loss allocated for all prior Fiscal Years pursuant to this Section 6.2.B(2)(c) in respect of such Partnership Units and (II) the aggregate amount distributed in respect of such Partnership Units pursuant to Section 5.1.B; -32- (d) Fourth, to the Limited Partners and Assignees, in proportion to their respective Adjusted Capital Accounts until such Capital Accounts are reduced to zero; and (e) Fifth, the balance, one hundred percent (100%), to the General Partner. C. Class A Allocations. Except as otherwise provided in this Article 6 and subject to Sections 11.6.C and 12.2.C, amounts of Net Income and Net Loss allocated in the aggregate to the holders of Class A Partnership Units pursuant to Section 6.2.A shall be further allocated among such holders pro rata to their Capital Contributions. D. Other Net Income and Other Net Loss. Subject to Section 6.2.E., Other Net Income and Other Net Loss shall be allocated solely to the General Partner. E. Prior Net Income and Net Loss. Notwithstanding anything herein to the contrary, (a) all Net Income or Net Loss of the Partnership in respect of periods or portions thereof ending prior to the admission of CRTP OP to the Partnership shall be allocated as provided in the First Amended and Restated Limited Partnership Agreement of Crocker Center Associates III, Ltd. and (b) all Net Income or Net Loss of the Partnership in respect of periods or portions thereof ending after the admission of CRTP OP to the Partnership but prior to the Effective Date and the admission of New Limited Partner as a Limited Partner shall be allocated as provided in the Prior Partnership Agreement. SECTION 6.3 Additional Allocation Provisions. Notwithstanding the foregoing provisions of this Article 6: A. Regulatory Allocations. (1) Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(f), if there is a net decrease in Partnership Minimum Gain during any Fiscal Year, each Unitholder shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Unitholder's share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Unitholder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(1) is intended to qualify as a "minimum gain chargeback" within the meaning of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith. (2) Partner Minimum Gain Chargeback. Except as otherwise provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.A(1), if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year, each Unitholder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year -33- (and, if necessary, subsequent years) in an amount equal to such Unitholder's share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each General Partner, Limited Partner and other Unitholder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.A(2) is intended to qualify as a "chargeback of partner nonrecourse debt minimum gain" within the meaning of Regulations Section 1.704-2(i) and shall be interpreted consistently therewith. (3) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any Nonrecourse Deductions related to Baymeadows (as determined by the General Partner) for any Fiscal Year shall be allocated 98% to the General Partner and 2% to the holders of Class A Partnership Units (pro rata to the number of Class A Units held by them) and any Nonrecourse Deductions related to Westchase (as determined by the General Partner) for any Fiscal Year shall be allocated to the General Partner and to the holders of the Class A Partnership Units, based on their respective Westchase Contribution Percentages. Any Partner Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Unitholder(s) who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Section 1.704-2(i). (4) Qualified Income Offset. If any Unitholder unexpectedly receives in any Fiscal Year an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Unitholder for such taxable year (and, if necessary, subsequent taxable years) in an amount and manner sufficient to eliminate, to the extent required by such Regulations, the deficit in the Adjusted Capital Account of such Unitholder as quickly as possible, provided that an allocation pursuant to this Section 6.3.A(4) shall be made if and only to the extent that such Unitholder would have a deficit in its Adjusted Capital Account after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.A(4) were not in the Agreement. It is intended that this Section 6.3.A(4) qualify and be construed as a "qualified income offset" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and it shall be interpreted consistently therewith. (5) Gross Income Allocation. In the event that any Unitholder has a deficit Capital Account at the end of any Fiscal Year that is in excess of the sum of (i) the amount (if any) that such Unitholder is obligated to restore to the Partnership upon complete liquidation of such Unitholder's Partnership Interest and (ii) the amount that such Unitholder is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Unitholder shall be specially allocated items of Partnership income and gain in the amount of such excess to eliminate such deficit as quickly as possible, provided that an allocation pursuant to this Section 6.3.A(5) shall be made if and only to the extent that such Unitholder would have a deficit Capital Account in excess of such sum after all other -34- allocations provided in this Article 6 have been tentatively made as if Sections 6.3.A(4) and 6.3.A(5) were not in the Agreement. (6) Limitation on Allocation of Net Loss. To the extent that any allocation of Net Loss or Depreciation would cause or increase a deficit in the Adjusted Capital Account of any Unitholder, such allocation of Net Loss shall be reallocated among the other Unitholders in accordance with their respective Partnership Units, subject to the limitations of this Section 6.3.A(6). (7) Section 754 Adjustment. To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Unitholder in complete liquidation of its interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Unitholders in accordance with their Partnership Units in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Unitholders to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies. (8) Curative Allocations. The allocations set forth in Sections 6.3.A(1), (2), (3), (4), (5), (6) and (7) (the "Regulatory Allocations") are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Section 6.2, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Unitholders so that, to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each Unitholder shall be equal to the net amount that would have been allocated to each such Unitholder if the Regulatory Allocations had not occurred. In applying this Section 6.3.A(8), there shall be taken into account future Regulatory Allocations under Sections 6.3.A(1) and (2) that, although not yet made, are likely to offset other Regulatory Allocations previously made under Section 6.3.A(3). B. Depreciation. To the extent not classified as a Nonrecourse Deduction or a Partner Nonrecourse Deduction, and allocated under Section 6.3.A(3) hereof, Depreciation for each Fiscal Year that is included in the Net Income or Net Loss allocated to the CRT/Crocker Parties pursuant to Section 6.2.A shall then be allocated, pursuant to Section 6.2.B, solely to the General Partner (and Net Income and Net Loss allocated pursuant to Section 6.2.B shall not include Depreciation). C. Allocation of Excess Nonrecourse Liabilities. Any "excess nonrecourse liabilities" of the Partnership, within the meaning of Regulations Section 1.752-3(a)(3), shall be allocated: (1) First, to the Crocker Limited Partners, pro rata, in accordance with the respective Class C Units held by the Crocker Limited Partners, to the extent of their built-in -35- gain on their section 704(c) property (but only to the extent such section 704(c) built-in gain exceeds the section 704(c) built-in gain allocated to the Crocker Limited Partners pursuant to Regulations Section 1.752-3(a)(2), it being understood and agreed that the aggregate amount of liabilities allocated to the Crocker Limited Partners pursuant to Regulations Section 1.752-3(a)(2) and "excess nonrecourse liabilities" allocated to the Crocker Limited Partners pursuant to this Section 6.3.C(1) shall not exceed $24 million) (all within the meaning of Regulations Section 1.752-3); and (2) Second, to the General Partner. SECTION 6.4 Tax Allocations. A. In General. Except as otherwise provided in this Section 6.4, for federal income tax purposes, each item of Partnership income, gain, loss and deduction (collectively, "Tax Items") shall be allocated among the Unitholders in the same manner as its correlative item of "book" income, gain, loss or deduction is allocated pursuant to Sections 6.2 and 6.3. B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding Section 6.4.A, Tax Items with respect to Property that is contributed to the Partnership with a Gross Asset Value that varies from its basis in the hands of the contributing Partner immediately preceding the date of contribution shall be allocated among the Unitholders for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. In the event that the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (b) or (c) of the definition of "Gross Asset Value", subsequent allocations of income , gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c). The Partnership shall account for such variation using the "traditional method," as described in Regulations Section 1.704-3(b). SECTION 6.5 Other Provisions. A. Other Allocations upon Change in Law. In the event that the Code or any Regulations require allocations of items of income, gain, loss, deduction or credit different from those set forth in this Article 6, the General Partner is hereby authorized to make new allocations in reliance on the Code and such Regulations, and no such new allocation shall give rise to any claim or cause of action by any Partner. B. Consistent Tax Reporting. The Partners acknowledge and are aware of the income tax consequences of the allocations made by this Article 6 and hereby agree to be bound by the provisions of this Article 6 in reporting their shares of Net Income, Net Losses and other items of income, gain, loss, deduction and credit for federal, state and local income tax purposes. C. Substantial Economic Effect. It is the intent of the Partners that the allocations of Net Income and Net Loss under the 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 Code Section 704(b). Article 6 and other relevant provisions of this Agreement shall be interpreted in a manner consistent with the intent. In furtherance of the foregoing, the General Partner is hereby directed to resolve any ambiguity in the provisions of this Agreement in a manner that will preserve and protect allocations provided -36- for in this Article 6 for federal income tax purposes and, subject to the last sentence hereof, to adopt such curative provisions to this Article 6 as the General Partner may deem necessary. Notwithstanding the foregoing, no Partner shall have the right to require or compel any distribution of cash or property not authorized or provided for by the provisions of this Agreement, and the General Partner shall not have the right to alter any distribution of cash or property provided for by the provisions of this Agreement on the ground that such action is necessary to cause the provisions hereof to conform to the Regulations under Code Section 704(b). ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS SECTION 7.1 Management. A. Powers of General Partner. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. Notwithstanding anything in this Agreement to the contrary, the General Partner may not be removed by the Limited Partners with or without cause. In addition to the powers now or hereafter granted to a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions of this Agreement, including Section 7.3 and the Partner Schedule of any Limited Partner, shall have full power and authority to do all things deemed necessary or desirable by it to conduct the business of the Partnership, to exercise all powers set forth in Section 3.2 and to effectuate the purposes set forth in Section 3.1, including, without limitation: (1) the making of any expenditures, the lending or borrowing of money (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit CRT (so long as CRT qualifies as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to its shareholders sufficient to permit CRT to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by deed to secure debt, mortgage, deed of trust or other lien or encumbrance on the Partnership's assets), the incurring of any obligations that it deems necessary for the conduct of the activities of the Partnership, and the satisfaction of any such indebtedness, liabilities or obligations; (2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership; (3) the acquisition, sale, conveyance, mortgage, pledge, encumbrance, hypothecation, contribution, transfer, exchange or other disposition of any assets of the -37- Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger, consolidation, reorganization or other combination of the Partnership with or into another entity on such terms as the General Partner deems proper. (4) the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose and on any terms that it sees fit, consistent with and subject to the terms of this Agreement, including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership's Subsidiaries, the lending of funds to other Persons (including, without limitation, the Partnership's Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to and equity investments in the Partnership's Subsidiaries, the holding of any real, personal and mixed property of the Partnership in the name of the Partnership or in the name of a nominee or trustee (subject to Section 7.10), the creation, by grant or otherwise, of easements or servitudes, and the performance of any and all acts necessary or appropriate to the operation of the Partnership assets including, without limitation, applications for rezoning, objections to rezoning, constructing, altering, improving, repairing, renovating, rehabilitating, razing, demolishing or condemning any improvements or property of the Partnership; (5) the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property, including, without limitation, any Contributed Property, or other asset of the Partnership or any Subsidiary; (6) the negotiation, execution and performance of any contracts, leases, conveyances or other instruments (including with Affiliates of the Partnership on an arm's-length basis) that the General Partner considers useful or necessary to the conduct of the Partnership's operations or the implementation of the General Partner's powers under this Agreement, including contracting with property managers (including, without limitation, as to any Contributed Property or other Property, contracting on an arm's-length basis with the contributing or any other Limited Partner or its Affiliates, or the General Partner or its Affiliates, for property management services), contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership's assets; (7) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, and the collection and receipt of revenues, rents and income of the Partnership; (8) the selection and dismissal of employees of the Partnership or the General Partner (including, without limitation, employees having titles such as "president," "vice president," "secretary" and "treasurer"), and the engagement and dismissal of agents, outside attorneys, accountants, engineers, appraisers, consultants, contractors and other -38- professionals on behalf of the Partnership or the General Partner and the determination of their compensation and other terms of employment or hiring; (9) the maintenance of such insurance for the benefit of the Partnership and the Partners as it deems necessary or appropriate; (10) the formation of, or acquisition of an interest in, and the contribution of property to, any limited or general partnerships, limited liability companies, joint ventures, corporations, or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, any Subsidiary and any other Person in which it has an equity investment from time to time); (11) the control of any matters affecting the rights and obligations of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law; (12) the undertaking of any action in connection with the Partnership's direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons); (13) the determination of the fair market value of any Property distributed in kind using such reasonable method of valuation as it may adopt; (14) the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner's contribution of property or assets to the Partnership; (15) the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership; (16) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person; (17) the exercise or non-exercise of any rights (including consent, voting or approval rights) or remedies of the Partnership as a member, limited partner or joint venturer or other holder of a direct or indirect interest in any other Person; (18) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, -39- guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement; and (19) subject to the terms of Sections 4.2 and 4.4.C, the issuance of additional Partnership Units, in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4. B. No Approval Required for Above Powers. Each of the Limited Partners agrees that the General Partner is authorized to execute, deliver, perform and take the above-mentioned agreements, transactions and actions on behalf of the Partnership without any further act, approval or vote of the Partners (except where the consent of one or more Limited Partners is expressly required by this Agreement). The execution, delivery or performance by the General Partner or the Partnership of any agreement, transaction or action authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement or of any duty stated or implied by law or equity. C. Reserves. At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time. D. No Obligations to Consider Tax Consequences to Limited Partners. In exercising its authority under this Agreement or under any Partner Schedule, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Limited Partner of any action taken (or not taken) by it, unless otherwise provided in such Limited Partner's Partner Schedule. The General Partner and the Partnership shall not have liability to a Limited Partner for monetary damages or otherwise for losses sustained, liabilities incurred or benefits not derived by such Limited Partner in connection with any decision or action of the General Partner which could affect the tax liability of any Limited Partner, provided that the General Partner has acted pursuant to its authority under this Agreement and such Limited Partner's Partner Schedule. SECTION 7.2 Certificate of Limited Partnership. To the extent that such action is determined by the General Partner to be reasonable and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Florida and each other state, the District of Columbia or any other jurisdiction in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5.A(3), the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a -40- limited partnership (or a partnership in which the limited partners have limited liability) in the State of Florida and any other state, or the District of Columbia or other jurisdiction in which the Partnership may elect to do business or own property. SECTION 7.3 Restrictions on General Partner's Authority. A. General. The General Partner shall not, without the prior Consent of the Limited Partners: (1) take any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise permitted by or provided in this Agreement; or (2) possess Partnership property or assign any rights in specific Partnership property, for other than a Partnership purpose except as otherwise provided in this Agreement; or (3) acquire any real property or improvements other than Replacement Properties. B. Permitted Amendments. The General Partner shall have the power, without the Consent of the Limited Partners, to amend this Agreement as may be required to facilitate or implement any of the following purposes: (1) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners; (2) to reflect the admissions, substitutions, terminations or withdrawals of Partners made in accordance with this Agreement or the termination of the Partnership in accordance with this Agreement, and to amend Exhibit A in connection with any such admission, substitution, termination or withdrawal; (3) to reflect a change that is of an inconsequential nature and does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with the provisions of this Agreement; (4) to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state governmental agency or contained in federal or state law; (5) to reflect such changes as are reasonably necessary for the General Partner (directly or indirectly) to maintain the status of CRT as a REIT or to satisfy the REIT Requirements; -41- (6) to modify the manner in which Capital Accounts are computed (but only to the extent set forth in the definition of "Capital Account"); and (7) to make such changes as are reasonably necessary for the Partnership to maintain its status as a partnership for federal income tax purposes. At the request of the General Partner, each Limited Partner shall execute and deliver to the General Partner and the Partnership such instruments as are necessary to confirm and/or effect any amendment permitted by this Section 7.3.B. C. Actions Requiring the Consent of Limited Partners Adversely Affected Partners and Assignees. Except as provided in Section 7.3.B, none of the following actions shall be taken without the Consent of the Limited Partners and Assignees that would be adversely affected by such action: (1) any action or amendment of this Agreement that would: (a) alter rights of the Partner or Assignee to receive distributions pursuant to Article 5, Section 13.2.A(4) or the relevant Partner Schedule, or the allocations specified in Article 6 (except in any case as permitted pursuant to Article 4), (b) alter or modify the Redemption rights, Cash Amount or REIT Shares Amount as set forth in Section 8.6, or amend or modify any related definitions, or (c) amend this Section 7.3.C; or (2) the registration of Partnership Units under the Securities Act or the taking of other steps to facilitate the existence of a public market for Partnership Units. Further, no amendment may alter the restrictions on the General Partner's authority set forth elsewhere in this Section 7.3 without the consent specified therein. SECTION 7.4 Responsibility for Expenses. A. No Compensation. The General Partner shall not be compensated for its services as general partner of the Partnership except as provided in this Section 7.4 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments and allocations to which it may be entitled in its capacity as the General Partner). B. Responsibility for Partnership Expenses; Reimbursement of the General Partner. Subject to Section 7.12, the Partnership shall be responsible for and shall pay all expenses relating to the Partnership's ownership of its assets and the operations of, or for the benefit of, the Partnership (including without limitation any expenses incurred in connection with winding up the affairs of and liquidating the Partnership pursuant to Section 13.2), and the General Partner shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all expenses it incurs relating to the -42- Partnership's ownership of its assets and the operations of, or for the benefit of, the Partnership, including, without limitation, the actual cost of goods, materials and services related to (i) Partnership operations, (ii) Partnership accounting, (iii) communications with Partners, (iv) legal services, (v) tax services, (vi) computer services, (vii) risk management, (viii) mileage and travel expenses and (ix) such other operational and administrative expenses as are necessary for the prudent organization and operation of the Partnership. "Actual cost of goods and materials" means the actual cost to the General Partner or any of its Affiliates of goods and materials used for or by the Partnership obtained from entities not affiliated with the General Partner, and "actual cost of administrative services" means the pro rata cost of personnel (as if such persons were employees of the Partnership) providing administrative services to the Partnership. Any reimbursements pursuant to this Section 7.4.B. shall be in addition to any reimbursement of the General Partner as a result of indemnification pursuant to Section 7.7. C. Responsibility for Organizational or Issuance Expenses. Each of the Partners shall be responsible for and shall pay all expenses incurred by it relating to the negotiation, execution and delivery of this Agreement (including expenses relating to the issuance of Partnership Units issued in connection with the execution hereof), as well as other costs of acquisition incurred by it with respect to funds or properties acquired by the Partnership or by the General Partner and immediately contributed to or agreed at the option of the Partnership to be contributed to the Partnership on the date hereof. Except as provided in Section 7.12 and the immediately preceding sentence, the Partnership shall be responsible for and shall pay (or shall reimburse the General Partner for) all expenses hereafter incurred relating to the organization of the Partnership (including expenses relating to the issuance of Partnership Units), as well as other costs of capital raising or acquisition incurred by the Partnership or General Partner with respect to funds or properties acquired by the Partnership or by the General Partner and immediately contributed to or agreed at the option of the Partnership to be contributed to the Partnership, all of which expenses are considered by the Partners to constitute expenses of, and for the benefit of, the Partnership. SECTION 7.5 Other Business of General Partner. The General Partner may engage independently or with others in other business ventures of every nature and description, including, without limitation, the ownership of other properties, the making or management of other investments and the participation as a partner in other partnerships. Nothing in this Agreement shall be deemed to prohibit the General Partner or any employee or Affiliate of the General Partner from dealing with, or otherwise engaging in business with, Persons transacting business with the Partnership, or from providing services related to the purchase, sale, financing, management, development or operation of real or personal property and receiving compensation therefor. Neither the Partnership nor any Partner shall have any right by virtue of this Agreement or the Partnership relationship created hereby in or to such other ventures or activities or to the income or proceeds derived therefrom, and the pursuit of such ventures, even if competitive with the business of the Partnership, shall not be deemed wrongful or improper. Notwithstanding and without limiting the foregoing, the General Partner may directly or indirectly through an affiliate or subsidiary in the ordinary course of its business, for its own account or for the account of others, acquire, own, develop, manage, operate, lease and otherwise deal with any property including property adjacent to or near the Properties and in connection therewith the General Partner may actively solicit tenants for such -43- other property even if such tenants are existing tenants or prospective tenants of the Properties without violating any duty to the Partners of this Partnership and without any obligation to make any lease offer to such tenants with respect to the Properties, any or all of which conflicts (actual or apparent) and any issues of self dealing or neglect of the General Partner's fiduciary duty which might otherwise be implicated thereby being knowingly and expressly waived by all of the Partners of this Partnership. SECTION 7.6 Contracts with General Partner. 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, or enter into any agreement, for the provision of services to the Partnership or otherwise, except pursuant to transactions or agreements that are determined by the General Partner in good faith to be fair and reasonable and to have terms that are comparable to or more favorable to the Partnership than those available from third parties on an arm's-length basis. The Partners acknowledge and agree that the General Partner, CRT or one or more of their respective Affiliates or any Affiliate of WCCA shall provide property management services for each Replacement Property, and be compensated therefor, unless otherwise agreed by the General Partner or set forth in any Limited Partner's Partner Schedule; and, subject to the first sentence of this Section 7.6, the Partners consent to the Partnership or any Partnership Subsidiary entering into a property management agreement with any such Person for the provisions of such services. SECTION 7.7 Indemnification. A. General. Except as otherwise provided in Section 7.12, to the fullest extent permitted by applicable law, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, attorney's fees and other legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, that relate to the operations of the Partnership ("Actions") as set forth in this Agreement in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise; provided, however, that the Partnership shall not indemnify an Indemnitee for gross negligence, willful misconduct, bad faith, or a knowing violation of the law. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty, indemnity, or otherwise, for or related to any indebtedness of the Partnership or any Subsidiary of the Partnership, and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A. The termination of any proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, does not create a presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7.A with respect to the subject matter of such proceeding. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the -44- Partnership, and neither the General Partner nor any Limited Partner shall have any obligation to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7. B. In Advance of Final Disposition. Except as otherwise provided in Section 7.12, to the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or otherwise subject to or the focus of or is involved in any Action may be paid or reimbursed by the Partnership as incurred by the Indemnitee in advance of the final disposition of the Action upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee's good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in Section 7.7.A has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct was not met. C. No Effect on Other Rights. The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written agreement with such Indemnitee or in a writing pursuant to which such Indemnitee is indemnified. D. Insurance. The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of any of the Indemnitees and such other Persons as the General Partner shall in its sole and absolute discretion 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 or under applicable law. E. Employee Benefit Plans. Any liabilities which an Indemnitee incurs as a result of acting on behalf of the Partnership or, to the extent such actions relate to the Partnership or persons performing services for the Partnership, the General Partner (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the IRS, penalties assessed by the Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities or judgments or fines under this Section 7.7, unless such liabilities arise as a result of such Indemnitee's willful misconduct, bad faith, or a knowing violation of the law. F. No Personal Liability of Partners. In no event may an Indemnitee subject any of the Partners to personal liability by reason of the indemnification provisions set forth in this Agreement. G. Interested Transactions. An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with -45- respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement. H. Binding Effect; Amendments. The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the rights of an Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted. SECTION 7.8 Liability of Indemnitees. A. General. Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable or accountable in damages or otherwise to the Partnership, any Partners or any Assignees for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or of any act or omission, except in the case of gross negligence, willful misconduct, bad faith, or a knowing violation of the law by such Indemnitee. Each Partner shall be liable to the Partnership and the other Partners for any direct (and not consequential or incidental) damages, losses sustained, liabilities incurred or benefits not derived (to the extent the same are not reimbursed by insurance proceeds or indemnities from third parties) as a result of errors in judgment or mistakes of fact or law or of any act or omission that, in any such case, constitutes (i) a breach by such Partner of its obligations or duties under this Agreement that constitutes gross negligence, willful misconduct, bad faith, or a knowing violation of the law or (ii) any fraud perpetrated by such Partner or its Affiliates. B. No Obligation to Consider Interests of Limited Partners. The Limited Partners expressly acknowledge that the General Partner is acting for the benefit of the Partnership, the partners of the General Partner (and, indirectly, the shareholders of CRT) and the Limited Partners collectively, and that, subject to Section 7.3.C or in any Limited Partner's Partner Schedule, the General Partner is under no obligation to give the priority or consideration to the separate interests of the Limited Partners in deciding whether to cause the Partnership to take (or decline to take) any actions, including, the disposition of Properties of the Partnership, and that 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 does not violate the terms of any written agreement between the Partnership and one or more Limited Partners. C. Performance of General Partner's Duties. Subject to its obligations and duties as General Partner set forth in Section 7.1.A, the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it under this Agreement either directly or indirectly or by or through its employees or agents. The General Partner shall not be responsible for any simple negligence on the part of any such agent appointed and supervised by it in good faith nor shall the General Partner be responsible for any misconduct, gross negligence or simple negligence on the part of any Affiliates of WCCA -46- serving as property manager of Westchase or otherwise appointed and serving as an agent of the Partnership or any Partnership Subsidiary or any employee or agent of any of them. D. Amendments. Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on any Indemnitee's liability to the Partnership and the Limited Partners under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted. E. Duties of General Partner. To the extent that, at law or in equity, the General Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Limited Partners, the General Partner shall not be liable to the Partnership or to any other Partner for its good faith reliance on the provisions of this Agreement. SECTION 7.9 Other Matters Concerning the General Partner. A. Reliance on Documents. The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties. B. Reliance on Consultants and Advisers. The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers, architects, engineers, environmental consultants and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance in good faith upon the opinion of such Persons as to matters that the General Partner reasonably believes to be within such Person's professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion. C. Action Through Officers and Attorneys. The General Partner shall have the right, in respect of any of its powers or obligations under this Agreement, to act through any of its duly authorized officers and a duly appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the power of attorney, have full power and authority to do and perform all and every act and duty that is permitted or required to be done by the General Partner under this Agreement. D. Actions to Maintain REIT Status or Avoid Taxation of CRT. Notwithstanding any other provisions of this Agreement or the Act, but subject to the limitations set forth in Section 7.3.C, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of CRT to continue to qualify as a REIT, (ii) for CRT otherwise to satisfy the REIT Requirements or (iii) to avoid CRT incurring any taxes under Code Section 857 or Code Section 4981, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners. SECTION 7.10 Title to Partnership Assets. -47- Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively with other Partners or Persons, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner or such nominee or Affiliate for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held. SECTION 7.11 Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without the consent or approval of any other Partner or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership unless and until such Person shall be notified in writing that the General Partner does not have such authority under the Agreement, and, unless and until such Person shall have been so notified, such Person shall be entitled to deal with the General Partner as if it were the Partnership's sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any action taken by such Person prior to the receipt by such Person of written notice that the General Partner did not have the requisite authority to authorize such action. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expediency of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder, unless and until such Person shall be notified otherwise in writing, that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership. SECTION 7.12 Treatment of and Limitation on Payments to General Partner. A. Reimbursement and Indemnification Payments. If and to the extent that any payments to the General Partner pursuant to Section 7.4 or 7.7 would constitute gross income to the General Partner (as opposed to a repayment of advances made on behalf of the Partnership), -48- those amounts shall constitute guaranteed payments within the meaning of Code Section 707(c), and shall be so treated by the Partnership and all Partners, and shall not be treated as distributions for purposes of computing the Partners' Capital Accounts. B. Limitation on Payments to General Partner. To the extent that any amount paid or credited to the General Partner or its officers, directors, employees or agents or any other Person pursuant to Section 7.4 or 7.7 or pursuant to clause (ii) of Section 5.1 would constitute gross income of CRT that is not described in Code Section 856(c)(2) or 856(c)(3) (a "GP Payment") then, notwithstanding any other provisions of this Agreement, the amount of such GP Payment for any fiscal year shall not exceed the lesser of: (i) an amount equal to the excess, if any, of (1) four and eight tenths percent (4.8%) of CRT's total gross income (not including any GP Payments or gross income from prohibited transactions) for the fiscal year over (2) the amount of gross income derived by CRT from sources other than those described in subsections (A) through (H) of Code Section 856(c)(2), but not including the amount of any GP Payments or gross income from prohibited transactions); or (ii) an amount equal to the excess, if any, of (1) twenty-four and eight tenths percent (24.8%) of CRT's total gross income (not including any GP Payments or gross income from prohibited transactions) for the fiscal year over (2) the amount of gross income derived by CRT from sources other than those described in subsections (A) through (I) of Code Section 856(c)(3) (but not including the amount of any GP Payments or gross income from prohibited transactions); Notwithstanding the foregoing, GP Payments in excess of the amounts set forth in paragraphs (i) and (ii) may be made if and to the extent that the General Partner, as a condition precedent, obtains an opinion of tax counsel that the receipt of such excess amounts would not adversely affect CRT's ability to qualify as a REIT. To the extent that GP Payments may not be made in a Fiscal Year due to the above limitations, such GP Payments shall carry over and be treated as arising in the following Fiscal Year(s) (subject again to limitation as set forth above in those years), for a maximum of seven years (treating amounts payable as first being paid from the earliest year such amounts were carried over, and the next succeeding years in chronological order). If any GP Payment is carried over for such seven-year period and not paid, such amount shall no longer be an obligation of the Partnership. If a GP Payment is inadvertently made in an amount in excess of the limitations in this Section 7.12.B, such excess payments shall be treated as a permitted loan from the Partnership to the General Partner, to be repaid as soon as practicable following discovery of the overpayment. -49- ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS SECTION 8.1 Limitation of Liability. Except as otherwise provided by the Act, this Agreement or as otherwise set forth in a Limited Partner's Partner Schedule, no Limited Partner, in its capacity as such, shall be obligated for any debt, obligation or other liability of the Partnership, whether arising in contract, tort or otherwise. SECTION 8.2 Management of Business. No Limited Partner or Assignee (other than any of the General Partner's Affiliates or any officer, director, employee, partner, member, agent, or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership's business, transact any business in the Partnership's name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or any officer, director, employee, partner, member, agent, or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners under this Agreement. SECTION 8.3 Outside Activities of Limited Partners. Subject to any agreements entered into by a Limited Partner or its Affiliates with CRT, the General Partner, the Partnership or a Subsidiary (including, without limitation, any employment agreement), any Limited Partner and any Assignee, and any officer, director, employee, agent, trustee, Affiliate or shareholder of any Limited Partner may engage independently or with others in other business ventures of every nature and description, including, without limitation, the ownership of other properties, the making or management of other investments and the participation as a partner in other partnerships. Nothing in this Agreement shall be deemed to prohibit any Limited Partner or any employee or Affiliate of a Limited Partner from dealing with, or otherwise engaging in business with, Persons transacting business with the Partnership, or from providing services related to the purchase, sale, financing, management, development or operation of real or personal property and receiving compensation therefor. Neither the Partnership nor any Partner shall have any right by virtue of this Agreement or the partnership relationship created hereby in any business ventures or activities of any Limited Partner or Assignee or to the income or proceeds derived therefrom, and the pursuit of such ventures, even if competitive with the business of the Partnership, shall not be deemed wrongful or improper. Subject to such agreements, none of the Limited Partners nor any other Person shall have any right by virtue of this Agreement or the partnership relationship established by this Agreement in any business ventures or activities of any other Person or to the income or proceeds derived therefrom, and such Person shall have no obligation pursuant to this Agreement, subject to any agreements entered into by a Limited Partner or its Affiliates with CRT or its Affiliates, the General Partner, the Partnership or a Subsidiary, to offer any interest in any such business ventures to the Partnership, any Limited Partner or any such other Person, even if such opportunity is of a character that, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person. -50- SECTION 8.4 Return of Capital; Priority among Limited Partners. Except pursuant to the rights of Redemption set forth in Section 8.6, no Limited Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein. Except to the extent provided in Article 5, 6, or 13, or as otherwise expressly provided in this Agreement or a Partner Schedule, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions or as to profits, losses or distributions. SECTION 8.5 Rights of Limited Partners Relating to the Partnership. A. Copies of Business Records. In addition to other rights provided by this Agreement or by the Act, and except as limited by Section 8.5.C, each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partner's interest as a limited partner in the Partnership, upon written demand with a statement of the purpose of such demand and at such Limited Partner's own expense: (1) to obtain a copy of the Partnership's federal, state and local income tax returns for each Fiscal Year; (2) to obtain a current list of the name and last known business, residence or mailing address of each Partner; (3) to obtain a copy of this Agreement and the Certificate and all amendments hereto and thereto, together with executed copies of all powers of attorney pursuant to which this Agreement, the Certificate and all amendments hereto and thereto have been executed; (4) to obtain true and full information regarding the amount of cash and a description and statement of any other property or services contributed by each Partner and that each Partner has agreed to contribute in the future, and the date on which each became a Partner; and (5) to obtain a copy of (i) the most recent annual and quarterly reports filed with the SEC by CRT pursuant to the Exchange Act and (ii) each report or other written communication sent to the shareholders of CRT. B. Notification of Adjustment Factor, Etc. On written request, the Partnership shall notify any Limited Partner of the then current Adjustment Factor or any change made to the Adjustment Factor or the REIT Shares Amount or the Preferred Return Per Unit applicable to such Limited Partner. C. Confidential Information. Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information with respect to the Partnership that the Partnership or the General Partner is required by law or by agreements with unaffiliated third parties to keep confidential. -51- SECTION 8.6 Redemption Rights of Qualifying Parties. A. General. Each Limited Partner and each Assignee shall have the right, on or after the Permitted Tender Date for such Limited Partner or Assignee, as the case may be, subject to the terms and conditions set forth in Sections 8.6 and 11.3.C, to require the Partnership to redeem all or a portion of the Class C Partnership Units held by such Limited Partner or Assignee (such Class C Partnership Units being hereafter called the "Tendered Units") in exchange (a "Redemption") for an amount, payable on the Specified Redemption Date, equal to the sum of the Cash Amount and the Accrued and Unpaid Preferred Return Amount (the "Redemption Consideration"). Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Limited Partner or Assignee when exercising the Redemption right (the "Tendering Party"). The Partnership's obligation to effect a Redemption, however, shall not arise or be binding against the Partnership before the first Business Day following the Cut-Off Date. In the event of a Redemption, an amount equal to the Redemption Consideration shall be delivered to the Tendering Party in immediately available funds. B. General Partner's Assumption of Redemption Obligation. Notwithstanding the provisions of Section 8.6.A, at or before the close of business on the Cut-Off Date, the General Partner may, in its sole and absolute discretion but subject to the Ownership Limit and the transfer restrictions and other limitations of the Charter, elect to acquire some or all (such percentage being referred to as the "Applicable Percentage") of the Tendered Units from the Tendering Party in exchange for REIT Shares or a payment in immediately available funds. The General Partner shall make such election by giving written notice to the Tendering Party at or before the close of business on the Cut-Off Date of its intention to acquire some or all of the Tendered Units, which notice shall specify the Applicable Percentage of Tendered Units to be acquired by the General Partner. If the General Partner so elects, on the Specified Redemption Date the Tendering Party shall sell such number of the Tendered Units to the General Partner in exchange for aggregate consideration (the "Purchase Consideration") comprised of both (i) either, at the election of the General Partner, (x) a number of REIT Shares equal to the product of the REIT Shares Amount and the Applicable Percentage or (y) an amount equal to the product of the Cash Amount and the Applicable Percentage and (ii) an amount equal to the product of the Accrued and Unpaid Preferred Return Amount and the Applicable Percentage, provided that the amount specified in this clause (ii) shall be paid in immediately available funds unless the General Partner will issue REIT Shares pursuant to clause (i), in which case the General Partner may, in its sole discretion, pay the amount specified in this clause (ii) by delivering a number of REIT Shares equal to the product of the Accrued and Unpaid Preferred Amount and the Applicable Percentage divided by the Value of a REIT Share as of the Valuation Date. In the event of a purchase of the Tendered Units pursuant to this Section 8.6.B, the Tendering Party shall no longer have the right to cause the Partnership to effect a Redemption of such Tendered Units, and, upon notice to the Tendering Party by the General Partner, given on or before the close of business on the Cut-Off Date, that the General Partner has elected to acquire some or all of the Tendered Units pursuant to this Section 8.6.B, the obligation of the Partnership to effect a Redemption of the Tendered Units as to which the General Partner's notice relates shall not accrue or arise. The cash portion of the Purchase Consideration, if any, shall be delivered to the Tendering Party in immediately available funds. The portion of the Purchase Consideration to be paid in REIT Shares, if any, shall be delivered by the General Partner as duly authorized, validly issued, fully paid and nonassessable REIT Shares and, if applicable, Rights, free of any -52- pledge, lien, encumbrance or restriction, other than the Ownership Limit and other restrictions provided in the Charter, the Bylaws of the General Partner, the Securities Act and relevant state securities or "blue sky" laws. Notwithstanding any delay in the delivery of certificates of any REIT Shares or Rights, the Tendering Party shall be deemed the owner of such REIT Shares and Rights for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the Specified Redemption Date. Neither any Tendering Party all or a portion of whose Tendered Units are acquired by the General Partner pursuant to this Section 8.6.B, any other Partner, any Assignee nor any other interested Person shall have any right to require or cause the General Partner to register, qualify or list any REIT Shares owned or held by such Person, whether or not such REIT Shares are issued pursuant to this Section 8.6.B, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange. REIT Shares issued upon an acquisition of the Tendered Units by the General Partner pursuant to this Section 8.6.B may contain such legends regarding restrictions under the Securities Act, applicable state securities laws and the Charter as the General Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws. C. General Partner's Determination Not to Purchase Tendered Units. In the event that the General Partner declines or fails to exercise its purchase rights pursuant to Section 8.6.B following receipt of a Notice of Redemption (such event, a "Declination"): (1) The General Partner shall give notice of such Declination to the Tendering Party on or before the close of business on the Cut-Off Date; provided, that, if the General Partner does not give either notice of its intention to acquire some or all of the Tendered Units pursuant to Section 8.6.B or notice of its Declination at or prior to the close of business on the Cut-Off Date, the General Partner shall be deemed to have given notice of a Declination. (2) The Partnership shall be required to redeem from the Tendering Partner that percentage (the "Required Redemption Percentage") of the Tendered Units which the General Partner does not elect to purchase pursuant to Section 8.6.B, in exchange for an amount, payable in immediately available funds on the Specified Redemption Date, equal to the product of (i) the Required Redemption Percentage and (ii) the sum of the Cash Amount and the Accrued and Unpaid Preferred Return Amount. In the event that the Partnership has insufficient liquid assets to permit it to effect such Redemption, the Partnership may elect to raise funds for the payment of the product of (x) the Required Redemption Percentage and (y) the sum of the Cash Amount and any Accrued and Unpaid Preferred Return Amount from any sources available to the Partnership (including, but not limited to, the sale of any Property and the incurrence of additional Debt; provided, that, the General Partner shall be required to contribute to the Partnership in accordance with Section 4.4 any funds required for such Redemption not otherwise raised by the Partnership. D. Limitations Imposed by Charter. Notwithstanding the provisions of Section 8.6.B, the General Partner shall not, under any circumstances, elect to acquire Tendered Units in exchange for REIT Shares if such exchange would be prohibited under the Charter. -53- E. Additional Provisions Applicable to Redemptions and Purchases Pursuant to Section 8.6. Notwithstanding anything herein to the contrary, with respect to any Redemption (or any tender of Partnership Units for Redemption if the Tendered Units are acquired by the General Partner pursuant to Section 8.6.B) pursuant to this Section 8.6: (1) All Class C Partnership Units acquired by the General Partner pursuant to Section 8.6.B shall automatically, and without further action required, be converted into and deemed to be General Partner Interests comprised of the same number of Partnership Units. (2) No Tendering Party may transfer to the Partnership or to the General Partner pursuant to this Section 8.6 a number of Class C Partnership Units less than the lesser of (i) that number of Partnership Units having a value (determined by multiplying the Cash Amount and the number of Partnership Units proposed to be redeemed) of not less than $100,000 or (ii) all of the remaining Partnership Units owned by such Tendering Party; provided, however that a Tendering Party must redeem all of its remaining Partnership Units in connection with its fourth Redemption. (3) Each Tendering Party may effect a Redemption no more than two times in each twelve-month period, with the initial twelve-month period beginning on the Permitted Tender Date for such Tendering Party and each subsequent twelve-month period beginning on each successive annual anniversary of such Permitted Tender Date, unless the restriction contained in this Section 8.6.E(3) is waived by the General Partner in its sole and absolute discretion. (4) The consummation of such Redemption (or an acquisition of Tendered Units by the General Partner pursuant to Section 8.6.B, as the case may be) shall be subject to compliance with the applicable requirements, if any, under the HSR Act. (5) The Tendering Party shall continue to own (subject, in the case of an Assignee, to the provisions of Section 11.5) all Class C Partnership Units subject to any Redemption, and be treated as a Limited Partner or an Assignee, as applicable, with respect such Class C Partnership Units for all purposes of this Agreement, until such Partnership Units are either paid for by the Partnership pursuant to Section 8.6.A or Section 8.6.C or transferred to the General Partner and paid for, either by the transfer of the REIT Shares and Rights, if applicable, to the Tendering Party on the books and records of CRT or by the delivery of immediately available funds to the Tendering Party, pursuant to Section 8.6.B, on the Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Units by the General Partner in exchange for REIT Shares pursuant to Section 8.6.B, the Tendering Party shall have no rights as a shareholder of CRT with respect to the REIT Shares issuable in connection with such acquisition. (6) Restrictions on Subsequent Transfers of REIT Shares. Without the consent of the General Partner or CRT, in each instance, and in addition to any restrictions on transfer under applicable securities laws or the Charter, each Tendering Party who receives REIT Shares agrees that it shall not transfer more than one-half of the REIT -54- Shares received in any Redemption in any twelve month period (commencing on the date of the Redemption) until the expiration of the twenty-fourth full calendar month after the applicable Redemption. (7) Expiration of Redemption Rights After Event of Dissolution. The rights granted to Limited Partners and Assignees under this Section 8.6 shall expire on the earlier of (i) the making of liquidating distributions pursuant to Section 13.2 and (ii) 2:00 p.m. (Boca Raton time) on the sixtieth (60th) Business Day after the General Partner has given the Partners notice of the occurrence of an Event of Dissolution pursuant to Section 13.5, time being of the essence. F. Documents and Information to Be Submitted by Tendering Party. In connection with and as a condition to an exercise of Redemption rights pursuant to this Section 8.6, the Tendering Party shall submit the following to the General Partner, in addition to the Notice of Redemption: (1) A written affidavit, dated the same date as, and accompanying, the Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and (ii) any Related Party and (b) representing that, after giving effect to the Redemption or an acquisition of the Tendered Units by the General Partner pursuant to Section 8.6.B, neither the Tendering Party nor any Related Party will own REIT Shares in excess of the Ownership Limit; provided, however, that if the Tendering Party is unable to make the representation specified in Section 8.6.F(1)(b) as of the date of the Notice of Redemption due solely to an amendment to the Charter made on or after the date of this Agreement (other than an amendment to the Charter made to ensure compliance of the General Partner with the requirements of the Code for qualifying for taxation as a REIT), then the Tendering Party shall notify the General Partner of its inability to make such representation and, to the extent (but only to the extent) that an exchange of the Tendered Units for REIT Shares pursuant to Section 8.6.B would violate the Ownership Limit as then in effect, but would not have violated the Ownership Limit as in effect on the date of this Agreement (as reduced by any amendment to the Charter made to ensure compliance of the General Partner with the requirements of the Code for qualifying for taxation as a REIT), such Tendering Party shall be entitled to receive cash in exchange for its Partnership Units. (2) An undertaking, dated the same date as, and accompanying, the Notice of Redemption, to certify, at and as a condition to the closing of (i) the Redemption or (ii) the acquisition of the Tendered Units by the General Partner pursuant to Section 8.6.B on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares by the Tendering Party and any Related Party remain unchanged from that disclosed in the affidavit required by Section 8.6.F(1) or (b) after giving effect to the Redemption or an acquisition of the Tendered Units by the General Partner pursuant to Section 8.6.B, neither the Tendering Party nor any Related Party shall own REIT Shares in violation of the Ownership Limit; and -55- (3) Such written representations, investment letters, legal opinions or other instruments necessary, in the General Partner's view, to effect compliance with the Securities Act or the HSR Act. SECTION 8.7 Partnership Right to Call Limited Partner Interests. A. Call Right in the Event Outstanding Units of Class Fall Below Ten Percent of Original Level. Notwithstanding any other provision of this Agreement (but subject to Section 8.8), on any date on which the aggregate outstanding number of Class C Partnership Units is less than ten percent (10%) of the number of Partnership Units of such Class originally issued, the Partnership shall have the right, but not the obligation, from time to time and at any time (until the making of liquidating distributions pursuant to Section 13.2), by notifying in writing each Limited Partner and Assignee holding Class C Partnership Units that the Partnership has elected to exercise its rights under this Section 8.7.A, to treat the Limited Partners and Assignees holding Class C Partnership Units as Tendering Parties who have each delivered a Notice of Redemption pursuant to Section 8.6 for all of their respective Class C Partnership Units. B. Call Right. Notwithstanding any other provision of this Agreement with respect to any Limited Partner, from and after the earlier of (i) such Limited Partner's Permitted Call Date or (ii) the sale or other disposition the Replacement Properties in a taxable transaction or (iii) the occurrence of an Event of Dissolution, the General Partner shall have the right, but not the obligation, from time to time and at any time (until the making of liquidating distributions pursuant to Section 13.2), by notifying in writing such Limited Partner and its Assignees that the Partnership has elected to exercise its rights under this Section 8.7.B, to treat all (but not less than all) of such Limited Partner's and its Assignees as Tendering Parties (and, in the case of (iii), all but not less than all of all Limited Partners and their Assignees as Tendering Parties) who have each delivered a Notice of Redemption pursuant to Section 8.6 for all of their respective Class C Partnership Units; provided, however, that the General Partner or Partnership may specify a Specified Redemption Date that is less than forty (40) days after the date of such notice. C. Mechanics. Notice given by the General Partner to a Limited Partner or Assignee pursuant to Section 8.7.A or 8.7.B shall be treated as if it were a Notice of Redemption delivered to the General Partner by such Limited Partner or Assignee. For purposes of this Section 8.7, (a) any Limited Partner or Assignee to whom such notice has been given under Section 8.7.A or 8.7.B shall be treated as a Tendering Party and (b) the provisions of Sections 8.6.E(2) and 8.6.E(3) shall not apply, but the remainder of Section 8.6 shall apply with such adjustments as shall be necessary in the circumstances. D. Applicable to Class C Only. The rights of the General Partner and Limited Partner under Sections 8.6 and 8.7 are applicable only to Class C Partnership Units. SECTION 8.8 General Provisions Related to Exercise of Redemption Rights and Call Rights under Sections 8.6 and 8.7. A. No Obligation To Consider Interests of Other Partners/Assignees or Partnership. The Partners expressly acknowledge and agree that each of the General Partner, each Limited -56- Partner or Assignee and the Partnership, in exercising its rights under Section 8.6 or 8.7, is acting for the benefit of itself and that such Persons do not have any obligation or duty (fiduciary or otherwise) to give priority or consideration to the separate interests of such other Persons in exercising such right and shall not be liable for monetary damages for losses sustained, liabilities incurred (including tax liabilities), or benefits not derived (including tax benefits) by such other Persons in connection therewith so long as such rights are exercised in accordance with the terms hereof. In particular, the Partners expressly acknowledge and agree that the Partnership, the General Partner and the Limited Partners shall have the right to exercise their respective rights of redemption or call rights under Sections 8.6 or 8.7 after or in connection with an Event of Dissolution or in connection with the sale or other disposition of any other Partnership Property notwithstanding the fact that the consideration payable to the Limited Partners (whether in cash or REIT Shares) to consummate any such Redemption may be more or less than such persons would otherwise receive under Article 5 or Article 13 if no such rights had been exercised. B. Ability to Delay Distributions to Accommodate Redemption. Notwithstanding Article 5 or Article 13 to the contrary, the General Partner, if a Limited Partner or Assignee has given or is deemed to have given a Notice of Redemption under Sections 8.6 or 8.7 and the applicable Redemption has not yet occurred, then the General Partner shall be entitled, in its sole and absolute discretion to delay any distributions otherwise payable pursuant to Section 5.1 or Section 13.2 until such Redemption has been consummated in accordance with the terms hereof. C. Priority. The fact that a Tendering Party may have given a Notice of Redemption under Section 8.6 hereof shall not in any way limit or restrict the rights of the Partnership or General Partner to exercise its call rights pursuant to Section 8.7 with respect to the Units for which a Notice of Redemption has not been given. ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS SECTION 9.1 Records and Accounting A. Maintenance of Records. The General Partner shall keep or cause to be kept at the principal office of the Partnership appropriate books and records with respect to the Partnership's business, including, without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 8.5.A or 9.3. Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on, or be in the form of, punch cards, magnetic tape, photographs, micrographics or any other information storage device, provided that the records so maintained are convertible into clearly legible written form within a reasonable period of time. B. Accounting Method. The books of the Partnership shall be maintained, for financial reporting purposes, on the same basis as the books of CRT (which, as of the date hereof, is the accrual basis), or on such other basis as the General Partner determines to be necessary or appropriate. To the extent permitted by sound accounting practices and principles, the Partnership and the General Partner may operate with integrated or consolidated accounting records, operations and principles. For federal income tax purposes, the books of the Partnership -57- shall be maintained on the same basis as the books of CRT (which, as of the date hereof, is the accrual basis) or on such other basis as the General Partner determines to be necessary or appropriate. SECTION 9.2 Fiscal Year. The Fiscal Year of the Partnership shall be the calendar year. SECTION 9.3 Reports. A. Annual Reports. As soon as practicable, but in no event later than one hundred five (105) days after the close of each Fiscal Year, the General Partner shall cause to be mailed to each Limited Partner, of record as of the close of the Fiscal Year, an annual report containing the balance sheet of the Partnership as of December 31 of such Fiscal Year and the related statements of income, cash flows and Partner's capital for the one-year period ending as of such December 31, certified by the General Partner. B. Quarterly Reports. As soon as practicable, but in no event later than one hundred five (105) days after the close of each calendar quarter (except the last calendar quarter of each year), the General Partner shall cause to be mailed to each Limited Partner of record as of the last day of the calendar quarter, a report containing an unaudited balance sheet of the Partnership as of the end of such calendar quarter and the related statements of income, cash flows and Partner's capital for such quarter and such other information as may be required by applicable law or regulation or as the General Partner determines to be appropriate. C. Annual Budget and Other Periodic Reports. Promptly upon request of any Limited Partner, the General Partner shall provide to such Limited Partner a copy of the Annual Budget prepared by or on behalf of the Partnership in respect of the Partnership and each Replacement Property approved by the General Partner and then in effect and copies of any other periodic or other periodic reports prepared by the property manager of each Replacement Property in the form prepared by such property manager. ARTICLE 10 TAX MATTERS SECTION 10.1 Preparation of Tax Returns. The General Partner shall arrange for the preparation and timely filing of all returns with respect to Partnership income, gains, deductions, losses and other items required of the Partnership for federal and state income tax purposes and shall use all reasonable efforts to furnish, within ninety (90) days of the close of each taxable year, the tax information reasonably required by Limited Partners for federal and state income tax reporting purposes. The General Partners shall use all reasonable efforts to provide the Limited Partners with a copy of any federal or state income tax returns at least fifteen (15) days prior to filing such returns; it being understood that the final contents of such returns shall be in the sole and absolute discretion of the General Partners. The Limited Partners shall promptly provide the General Partner with such information relating to the Contributed Properties, including tax basis, a schedule of previous -58- depreciation deductions, and other relevant information, as may be reasonably requested by the General Partner from time to time. SECTION 10.2 Tax Elections. Except as otherwise provided in this Agreement, the General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Code Section 754 and the election to use the "recurring item" method of accounting provided under Code Section 461(h) with respect to property taxes imposed on the Partnership's Properties; provided, however, that, if the "recurring item" method of accounting is elected with respect to such property taxes, the Partnership shall pay the applicable property taxes prior to the date provided in Code Section 461(h) for purposes of determining economic performance. The General Partner shall have the right to seek to revoke any such election (including, without limitation, any election under Code Sections 461(h) and 754) upon the General Partner's determination in its sole and absolute discretion that such revocation is in the best interests of the Partners. SECTION 10.3 Tax Matters Partner. A. General. The General Partner shall be the "tax matters partner" of the Partnership for federal income tax purposes. The tax matters partner shall receive no compensation for its services. All third-party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership in addition to any reimbursement pursuant to Section 7.4. Nothing herein shall be construed to restrict the Partnership from engaging an accounting firm to assist the tax matters partner in discharging its duties hereunder. At the request of any Limited Partner, the General Partner agrees to consult with such Limited Partner with respect to any audit of or litigation relating to any income tax return; provided, however, that the conduct of any such audit or litigation shall be in the sole and absolute discretion of the General Partner. Pursuant to Code Section 6223(c), upon receipt of notice from the IRS of the beginning of an administrative proceeding with respect to the Partnership, the tax matters partner shall furnish the IRS with the name, address and profits interest of each of the Limited Partners, provided that such information is provided to the Partnership by the Limited Partners. The Limited Partners shall provide such information to the Partnership as the General Partner shall reasonably request. B. Authority of Tax Matters Partner. The tax matters partner is authorized, but not required: (1) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a "tax audit" and such judicial proceedings being referred to as "judicial review"), and in the settlement agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner or (ii) -59- who is a "notice partner" (as defined in Code Section 6231) or a member of a "notice group" (as defined in Code Section 6223(b)(2)); (2) in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a "final adjustment") is mailed or otherwise delivered to the tax matters partner, to seek judicial review of such final adjustment, including the filing of a petition for readjustment with the United States Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership's principal place of business is located; (3) to intervene in any action brought by any other Partner for judicial review of a final adjustment; (4) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition, complaint or other document) for judicial review with respect to such request; (5) to enter into an agreement with the IRS to extend the period for assessing any tax that is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and (6) to take any other action on behalf of the Partners in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations. The taking of any action and the incurring of any expense by the tax matters partner in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in Section 7.7 shall be fully applicable to the tax matters partner in its capacity as such. SECTION 10.4 Withholding. Each Limited Partner hereby authorizes the Partnership to withhold from or pay on behalf of or with respect to such Limited Partner any amount of federal, state, local or foreign taxes that the General Partner determines that the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Code Section 1441, 1442, 1445 or 1446. Any amount paid on behalf of or with respect to a Limited Partner shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner within fifteen (15) days after notice from the General Partner that such payment must be made unless (i) the Partnership withholds such payment from a distribution that would otherwise be made to the Limited Partner or (ii) the General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of the Available Cash of the Partnership that would, but for such payment, be distributed to the Limited Partner. Any amounts withheld pursuant to the foregoing clause (i) or (ii) shall be treated as having been distributed to such Limited Partner. Each Limited Partner -60- hereby unconditionally and irrevocably grants to the Partnership a security interest in such Limited Partner's Partnership Interest to secure such Limited Partner's obligation to pay to the Partnership any amounts required to be paid pursuant to this Section 10.4. In the event that a Limited Partner fails to pay any amounts owed to the Partnership pursuant to this Section 10.4 when due, the General Partner may, in its sole and absolute discretion, elect to make the payment to the Partnership on behalf of such defaulting Limited Partner, and in such event shall be deemed to have loaned such amount to such defaulting Limited Partner and shall succeed to all rights and remedies of the Partnership as against such defaulting Limited Partner (including, without limitation, the right to receive distributions otherwise payable by the Partnership to such defaulting Limited Partner). Any amounts payable by a Limited Partner under this Section 10.4 shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal, plus four (4) percentage points (but not higher than the maximum lawful rate) from the date such amount is due (i.e., fifteen (15) days after demand) until such amount is paid in full. Each Limited Partner shall take such actions as the Partnership or the General Partner shall request in order to perfect or enforce the security interest created under this Section 10.4. SECTION 10.5 Electing Large Partnership. In the event such election becomes available, the General Partner, in its sole discretion, may cause the Partnership to elect to be an "electing large partnership" under Code Section 775. In that case, the General Partner shall be the person authorized to act on behalf of the Partnership in any federal or related state income tax proceeding for purposes of Code Section 6255 and shall be authorized to undertake any and all actions on behalf of the Partnership to the maximum extent contemplated under Code Sections 6240 through 6255 (including, without limitation, to bind the Partnership and all Partners with respect to any settlement of any proceeding). SECTION 10.6 Organization Expenses. The General Partner may in its sole and absolute discretion cause the Partnership to elect to deduct expenses, if any, incurred in organizing the Partnership ratably over a 60-month period as provided in Code Section 709. ARTICLE 11 TRANSFERS AND WITHDRAWALS SECTION 11.1 Transfer. No Partnership Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11. Any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio. No part of the interest of a Partner shall be subject to the claims of any creditor, to any spouse for alimony or support, or to legal process, or may be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement. -61- SECTION 11.2 Transfer of General Partner's Partnership Interest. The General Partner shall not withdraw as the General Partner from the Partnership and shall not Transfer all or any portion of its General Partner Interest in the Partnership (whether by sale, disposition or otherwise) without the Consent of the Limited Partners, which Consent may be given or withheld in the sole and absolute discretion of the Limited Partners; provided, however, that the General Partner may Transfer its General Partner Interest in connection with a merger or consolidation of CRT with or into any other entity or a sale or exchange of all or substantially all of its assets or all or substantially all of the assets of CRT; provided, further, that the Consent of the Limited Partners shall not be required for any of the following: (a) at any time and from time to time the General Partner, directly or indirectly, may transfer its General Partner Interests to CRT or any Subsidiary of CRT , (b) at any time and from time to time the shareholders of CRT may Transfer shares in (or other securities issued by) CRT and CRT may issue additional shares or securities (of any type or class) and repurchase its shares or other securities, and (c) CRT may Transfer any direct or indirect interest in the General Partner. Upon any Transfer of a General Partner Interest pursuant to the Consent of the Limited Partners or otherwise in accordance with the provisions of this Section 11.2, the transferee shall become a successor General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner, once such transferee has executed such instruments as may be necessary to effectuate the admission of the transferee to the Partnership and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired. It is a condition to any Transfer otherwise permitted hereunder that the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such Transferred Partnership Interest, and such Transfer shall relieve the transferor General Partner of its obligations under this Agreement without the Consent of the Limited Partners. In the event that the General Partner withdraws from the Partnership, in violation of this Agreement or otherwise, or otherwise dissolves or terminates, or upon the bankruptcy of the General Partner, all of the remaining Partners may elect to continue the Partnership business by selecting a successor General Partner in accordance with the Act. SECTION 11.3 Limited Partners' Rights to Transfer. A. General. No Limited Partner shall Transfer all or any portion of its Partnership Interest without the prior written consent of the General Partner, which consent may be given or withheld by the General Partner in its sole and absolute discretion; provided, however, that a Limited Partner may, without the prior written consent of the General Partner, Transfer all or a part of such Partnership Interest to any Designated Party of such Limited Partner or any Qualified Descendant of such Limited Partner; provided, further that each such Transfer to such Qualified Descendant or Designated Party, as applicable, shall be subject to the provisions and requirements of Sections 11.3.B (to the extent applicable), 11.3.C and 11.3.D, including without limitation, that the Designated Party or Qualified Descendant, as the case may be, is an "accredited investor" as defined in Rule 501 promulgated under the Securities Act (any such Transfer to a Designated Party or Qualified Descendant or any other Transfer consented to by the General Partner is hereinafter referred to as a "Permitted Transfer"). In order to effect any Transfer (including a Permitted Transfer), the Limited Partner must deliver to the General Partner a duly executed copy of the instrument making such Transfer, and such instrument must evidence the written acceptance by the transferee of, and compliance with, all of the terms and -62- conditions of this Agreement and represent that such assignment was made in accordance with all applicable laws and regulations. B. Generally Applicable Restrictions on Transfers and Other Dispositions (Including Redemptions and Sales to the General Partner). In addition to any other restrictions on Transfer contained in this Agreement, in no event may any Transfer or other assignment or disposition of a Partnership Interest by any Limited Partner (including any Permitted Transfer, any Redemption, any acquisition of Partnership Units by the General Partner or any other acquisition of Partnership Units by the Partnership) be made, without the consent of the General Partner in its sole and absolute discretion: (1) to any Person who lacks the legal right, power or capacity to own a Partnership Interest; (2) to any Person, if the number of Partnership Units transferred to such Person is not at least equal to the lesser of (i) the number of whole Partnership Units having a value, as of the effective date of the Transfer, of more than $50,000 or (ii) all of the remaining Partnership Units owned by such Transferring Partner; (3) in violation of applicable law; (4) of any component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Interest; (5) in the event that such Transfer would cause CRT to cease to comply with the REIT Requirements or could subject CRT to any additional taxes under Code Section 857 or 4981; (6) if such Transfer would, in the opinion of counsel to the Partnership or the General Partner, cause a termination of the Partnership for federal or state income tax purposes (except as a result of the Redemption (or acquisition by the General Partner) of all Partnership Units held by all Limited Partners); (7) if such Transfer would, in the opinion of legal counsel to the Partnership, cause the Partnership either (i) to cease to be classified as a partnership or (ii) to be classified as a publicly traded partnership, in either case for federal income tax purposes (except as a result of the Redemption (or acquisition by the General Partner) of all Partnership Units held by all Limited Partners); (8) if such Transfer would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as defined in ERISA Section 3(14)) or a "disqualified person" (as defined in Code Section 4975(e)(2)); (9) if such Transfer would, in the opinion of legal counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.2-101; -63- (10) if the General Partner shall not have received an opinion of counsel reasonably satisfactory to it to the effect that the proposed Transfer may be effected without registration under the Securities Act or any other applicable federal or state securities laws and will not otherwise violate any federal or state securities laws or regulations applicable to the Partnership or the Partnership Interests Transferred; (11) in the case of a Transfer other than a Redemption or an acquisition by the General Partner of Partnership Units in exchange for REIT Shares or cash, if the General Partner shall not have received from the proposed transferee an accredited investor questionnaire in form and substance reasonably satisfactory to the General Partner and, in the case of an acquisition by the General Partner of Partnership Units in exchange for REIT Shares, if the General Partner and CRT shall not have received from the Transferring Limited Partner an accredited investor questionnaire in form and substance reasonably satisfactory to the General Partner and CRT; (12) if such Transfer would cause the Partnership (as opposed to the General Partner or CRT) to become a reporting company under the Exchange Act; or (13) if such Transfer would subject the Partnership to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended. C. Assumption of Obligations. It is a condition to any Transfer otherwise permitted under this Agreement (whether or not such Transfer is a Permitted Transfer) that the transferee assume by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such Transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation in which all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner, in its sole and absolute discretion. Notwithstanding the foregoing, any transferee of any Transferred Partnership Interest shall be subject to any and all ownership limitations (including, without limitation, the Ownership Limit) contained in the Charter that may limit or restrict such transferee's ability to exercise its Redemption rights. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor under this Agreement. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights under this Agreement, other than the rights of an Assignee as provided in Section 11.5. D. Incapacity. If a Limited Partner is subject to Incapacity (other than bankruptcy), the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner's estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner possessed to Transfer all or any part of its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership. SECTION 11.4 Substituted Limited Partners. -64- A. Consent of General Partner Required. No Limited Partner shall have the right to substitute any transferee as a Limited Partner in its place. A transferee of the interest of a Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner, which consent may be given or withheld by the General Partner in its sole and absolute discretion. Subject to the foregoing, a transferee shall not be admitted as a Substituted Limited Partner until and unless it furnishes to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all the terms, conditions and applicable obligations of this Agreement, including, without limitation, the power of attorney granted in Section 2.4, (ii) a Partner Schedule executed by such Assignee and (iii) such other documents and instruments as may be required or advisable, in the reasonable discretion of the General Partner, to effect such transferee's admission as a Substituted Limited Partner. B. Rights and Duties of Substituted Limited Partners. A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement. C. Amendment of Exhibit A; New Partner Schedule. Upon the admission of a Substituted Limited Partner, the General Partner shall amend Exhibit A to reflect the name and address of such Substituted Limited Partner and to eliminate, if necessary, the name and address of the predecessor of such Substituted Limited Partner. In addition, the Substituted Limited Partner and the General Partner shall execute a Partner Schedule with respect to such Substituted Limited Partner, which Partner Schedule shall supersede, to the extent necessary, the Partner Schedule for the predecessor of such Substituted Limited Partner. SECTION 11.5 Assignees. If the General Partner, in its sole and absolute discretion, does not consent (and is not deemed to consent) pursuant to Section 11.4 to the admission of any permitted transferee under Section 11.3 as a Substituted Limited Partner, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Net Income, Net Losses and other items of income, gain, loss, deduction and credit of the Partnership attributable to the Partnership Units assigned to such transferee but not the right to Transfer the Partnership Units as otherwise provided in this Article 11, and shall not be deemed to be a holder of Partnership Units for any other purpose under this Agreement (other than for the purposes of the Partnership's call right pursuant to Section 8.7 or as otherwise expressly provided herein), or entitled to effect a Consent or vote with respect to such Partnership Units on any matter presented to the Limited Partners for approval. In the event that any such transferee desires to make a further assignment of any such Partnership Units, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of Partnership Units. SECTION 11.6 General Provisions. A. Withdrawal of Limited Partner. No Limited Partner may withdraw from the Partnership other than as a result of a Permitted Transfer of all of such Limited Partner's -65- Partnership Units in accordance with this Article 11 or pursuant to a Redemption (or acquisition by the General Partner) of all of its Partnership Units under Section 8.6. B. Transfer of All Partnership Units by Limited Partner. Any Limited Partner who shall Transfer all of its Partnership Units in a Transfer (i) permitted pursuant to this Article 11, (ii) pursuant to the exercise of its rights to effect a Redemption of all of its Partnership Units under Section 8.6 or (iii) to the General Partner, whether or not pursuant to Section 8.6.B, shall cease to be a Limited Partner. C. Allocation of Income and Distributions. If any Partnership Unit is Transferred in compliance with the provisions of this Article 11, or is redeemed by the Partnership or acquired by the General Partner pursuant to Section 8.6, on any day other than the first day of a Fiscal Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit attributable to such Partnership Unit for such Fiscal Year shall be allocated to the transferor Partner or the Tendering Party, as the case may be, and, in the case of a Transfer or assignment other than a Redemption, to the transferee Partner (including, without limitation, the General Partner in the case of an acquisition of Partnership Units pursuant to Section 8.6) or Assignee, by taking into account their varying interests during the Fiscal Year in accordance with Code Section 706(d), using the "daily proration" or "interim closing of the books" method or another permissible method selected by the General Partner. Solely for purposes of making such allocations, the General Partner, in its sole and absolute discretion, may determine that each of such items for the calendar month in which a Transfer, Redemption or assignment occurs shall be allocated to the transferee Partner or Assignee, and none of such items for the calendar month in which a Transfer or a Redemption occurs shall be allocated to the transferor Partner or the Tendering Party, as the case may be, if such Transfer occurs on or before the fifteenth (15th) day of the month; otherwise such items for such calendar month shall be allocated to the transferor Partner. All distributions of Available Cash attributable to such Partnership Unit with respect to which the Partnership Record Date is before the date of such Transfer or assignment or, in the case of a Redemption or acquisition by the General Partner pursuant to Section 8.6, before the date of the applicable Specified Redemption Date, shall be made to the transferor Partner or the Tendering Party, as the case may be, and, in the case of a Transfer other than a Redemption, all distributions of Available Cash thereafter attributable to such Partnership Unit shall be made to the transferee Partner or Assignee. ARTICLE 12 ADMISSION OF PARTNERS SECTION 12.1 Admission of Successor General Partner. A successor to all of the General Partner's General Partner Interest pursuant to Section 11.2 who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective upon such Transfer. Any such successor shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms, conditions and applicable obligations of this Agreement and such other documents or instruments as may be required to effect the admission. -66- SECTION 12.2 Admission of Additional Limited Partners. A. General. After the date hereof, a Person (other than an existing Partner) who is permitted to make a Capital Contribution to the Partnership in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all of the terms, conditions and applicable obligations of this Agreement, including, without limitation, the power of attorney granted in Section 2.4, (ii) a Partner Schedule executed by such Person and (iii) such other documents or instruments as may be required in the sole and absolute discretion of the General Partner in order to effect such Person's admission as an Additional Limited Partner. B. Consent of General Partner Required. Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the consent of the General Partner and the Consent of the Limited Partners, which consents may be given or withheld in the General Partner's and the Limited Partners' sole and absolute discretion. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the consent of the General Partner and the Consent of the Limited Partners to such admission. C. Allocation of Income and Distributions. If any additional Partner is admitted to the Partnership on any day other than the first day of a Fiscal Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit allocable among Partners and Assignees for such Fiscal Year shall be allocated among such Additional Limited Partner and all other Partners and Assignees by taking into account their varying interests during the Fiscal Year in accordance with Code Section 706(d), using the "daily proration" or the "interim closing of the books" method or another permissible method selected by the General Partner. Solely for purposes of making such allocations, each of such items for the calendar month in which an admission of any Additional Limited Partner occurs shall be allocated among all the Partners and Assignees including such Additional Limited Partner, in accordance with the principles described in Section 11.6.C. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees other than the Additional Limited Partner, and all distributions of Available Cash thereafter shall be made to all the Partners and Assignees including such Additional Limited Partner. SECTION 12.3 Amendment of Agreement and Certificate of Limited Partnership. For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement (including an amendment of Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4. -67- SECTION 12.4 Admission of New General Partner. Upon execution and delivery of this Agreement by the General Partner, such General Partner shall be admitted to the Partnership as a General Partner, whereupon CCA III shall automatically be deemed to have converted to a Limited Partner without any further action required by any Partner hereunder. SECTION 12.5 Limit on Number of Partners. No Person shall be admitted to the Partnership as a Substituted Limited Partner or an Additional Limited Partner if the effect of such admission would be to cause the Partnership to have more than five hundred (500) Partners, including as Partners for this purpose those Persons indirectly owning an interest in the Partnership through a partnership, a limited liability company, a subchapter S corporation or a grantor trust, or otherwise cause the Partnership to become a reporting company under the Exchange Act. ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION SECTION 13.1 Dissolution. The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner shall continue the business of the Partnership without dissolution. The Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (an "Event of Dissolution"), but in no other event: A. the expiration of its term as provided in Section 2.5; B. an event of withdrawal, as defined in the Act (including, without limitation, bankruptcy), of the sole General Partner unless, within ninety (90) days after the withdrawal, all of the remaining Partners agree in writing, in their sole and absolute discretion, to continue the business of the Partnership and to the appointment, effective as of the date of withdrawal, of a successor General Partner; C. entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act; D. the occurrence of a Terminating Capital Transaction; or E. the Redemption (or acquisition by the General Partner) of all Partnership Units other than Partnership Units held by the General Partner. SECTION 13.2 Winding up. A. General. Upon the occurrence of an Event of Dissolution, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of its creditors and Partners. After the occurrence of an Event of Dissolution, no Partner shall take any action that is inconsistent with, or not necessary to or -68- appropriate for, the winding up of the Partnership's business and affairs (it being understood that a Partner/Assignee shall have the right to exercise its redemption or call rights, if as and to the extent applicable, after an Event of Dissolution, subject to compliance with Sections 8.6, 8.7 and 8.8 hereof, as applicable). The General Partner (or, in the event that there is no remaining General Partner or the General Partner has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any Person elected by a majority in interest of the Limited Partners (the General Partner or such other Person being referred to herein as the "Liquidator")) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership's liabilities and property, and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock in CRT) shall be applied and distributed in the following order: (1) First, to the payment and discharge of all of the Partnership's debts and liabilities to creditors other than the Partners and their Assignees (whether by payment or the making of reasonable provision for payment thereof); (2) Second, to the payment and discharge of all of the Partnership's debts and liabilities to the General Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4; (3) Third, to the payment and discharge of all of the Partnership's debts and liabilities to the other Partners and any Assignees (whether by payment or the making of reasonable provision for payment thereof), pro rata in accordance with amounts owed to each such Partner and Assignee; (4) Fourth, to the Partners in accordance with the positive balances in their Shortfall Contribution Memorandum Accounts (if any) until each such balance equals zero (0); (5) Fifth, to the holders of Class A Partnership Units (pro rata to their Class A Partnership Units), an amount they would receive if the Partnership were to distribute all then Available Cash pursuant to Section 5.1 (treating for this purpose the proceeds of any Terminating Capital Transaction as Available Cash); and (6) Sixth, to the CRT/Crocker Parties, in accordance with their respective Capital Accounts. The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13, other than the reimbursement of its expenses. B. Where Immediate Sale of Partnership's Assets Impractical. Notwithstanding the provisions of Section 13.2.A that require liquidation of the assets of the Partnership, but subject to the order of priorities set forth in such Section, if prior to or upon dissolution of the Partnership, the Liquidator determines that an immediate sale of part or all of the Partnership's assets would be impractical or would cause undue loss to the Partners, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those -69- necessary to satisfy liabilities of the Partnership (including to those Partners who are creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2.A, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Partners, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt. C. Compliance with Timing Requirements of Regulations; Allowance for Contingent or Unforeseen Liabilities or Obligations. In the event that the Partnership is "liquidated," within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made to the Partners and Assignees in the manner and order of priority specified in Section 13.2.A by the end of the taxable year in which such liquidation occurs (or, if later, within 90 days of such liquidation). If any Partner has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever. In the sole and absolute discretion of the General Partner or the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Partners and Assignees pursuant to this Article 13 may be: (i) distributed to a liquidating trust established for the benefit of the Partners and Assignees for the purpose of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership (the assets of any such trust shall be distributed to the Partners and Assignees from time to time, in the reasonable discretion of the General Partner, in the same proportions as the amount distributed to such trust by the Partnership would otherwise have been distributed to the Partners and Assignees pursuant to this Agreement); or (ii) withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be distributed to the Partners and Assignees in the manner and order of priority set forth in Section 13.2.A as soon as practicable. SECTION 13.3 Deemed Liquidation. Notwithstanding any other provision of this Article 13, in the event that the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but no Event of Dissolution has occurred, the Partnership's Property shall not be liquidated, the Partnership's liabilities shall not be paid or discharged, and the Partnership's affairs shall not be wound up. Instead, for federal income tax purposes and for purposes of maintaining Capital Accounts, the Partnership shall be deemed to have contributed the Property, subject to all Partnership liabilities, to a new partnership in exchange for all of the interests in such new partnership, and immediately thereafter, the Partnership shall be deemed to have distributed the interests in such new partnership to the Partners in accordance with their respective Capital Accounts in the -70- Partnership. Each Partner's capital account in the new partnership shall equal its Capital Account in the Partnership immediately prior to such deemed contribution and distribution. SECTION 13.4 Rights of Limited Partners. Except as otherwise provided in this Agreement, (i) each Limited Partner shall look solely to the assets of the Partnership for the return of its Capital Contribution, (ii) no Limited Partner shall have the right or power to demand or receive property other than cash from the Partnership and (c) no Limited Partner shall have priority over any other Limited Partner as to the return of its Capital Contributions, distributions or allocations. SECTION 13.5 Notice of Dissolution. In the event that an Event of Dissolution occurs or an event occurs that would, but for an election or objection by one or more Partners pursuant to Section 13.1, result in a dissolution of the Partnership, the General Partner shall, within thirty (30) days of such event, provide written notice of the event to each of the Partners and, in the General Partner's sole and absolute discretion or as required by the Act, to all other parties with whom the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner), and the General Partner may, or, if required by the Act, shall, publish notice of the event in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner). SECTION 13.6 Cancellation of Certificate of Limited Partnership. Upon the completion of the liquidation of the Partnership as provided in Section 13.2, the Partnership shall be terminated, a certificate of cancellation shall be filed with the State of Florida, all qualifications of the Partnership as a foreign limited partnership or association in jurisdictions other than the State of Florida shall be canceled, and such other actions as may be necessary to terminate the Partnership shall be taken. SECTION 13.7 Reasonable Time for Winding-up. A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 in order to minimize any losses otherwise attendant to such winding-up, and the provisions of this Agreement shall remain in effect between the Partners during the period of liquidation. ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS SECTION 14.1 Procedures for Actions and Consents of Partners. The actions requiring consent or approval of Partners pursuant to this Agreement, including Section 7.3, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14. -71- SECTION 14.2 Amendments. Amendments to this Agreement may be proposed by the General Partner, and, unless otherwise expressly specified in this Agreement, shall require the written consent of both the General Partner and the Consent of the Limited Partners. The General Partner shall seek the written consent of the Limited Partners on the proposed amendment or shall call a meeting to vote on the proposal and to transact any other business that the General Partner may deem appropriate. For purposes of obtaining a written consent, the General Partner may require a response within a reasonable specified time, but not less than twenty (20) days, and failure to respond in such time period shall constitute a consent that is consistent with the General Partner's recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite consents are received even if prior to such specified time. This Section 14.2 shall not limit the rights of the General Partner or the Limited Partners under Section 7.3. SECTION 14.3 Meetings of the Partners. A. General. Meetings of the Partners may be called by the General Partner. Notice of any such meeting shall be given to all Partners not less than seven (7) days nor more than thirty (30) days prior to the date of such meeting. The notice shall state the nature of the business to be transacted. Partners may vote in person or by proxy at such meeting. Whenever the vote or Consent of Partners is permitted or required under this Agreement, such vote or Consent may be given at a meeting of Partners or may be given in accordance with the procedure prescribed in Section 14.3.B. B. Action by Written Consent. Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a written consent setting forth the action so taken is signed by the General Partner and by Majority in Interest of the Limited Partners (or such other group of Partners as is expressly required by this Agreement for the action in question). Such consent may be in one instrument or in several instruments, and shall have the same force and effect as a vote of the General Partner and Majority in Interest of the Limited Partners (or such other group of Partners as is expressly required by this Agreement). Such consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. C. Proxies. Each Limited Partner may authorize any Person or Persons to act for him by proxy on all matters in which a Limited Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited Partner or his attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date of the proxy unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall, unless otherwise specifically provided in the proxy, be revocable at the pleasure of the Limited Partner executing it, such revocation to be effective upon the Partnership's receipt of written notice of such revocation from the Limited Partner executing such proxy. D. Conduct of Meeting. Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the -72- conduct of the meeting as the General Partner or such other Person deems appropriate in its sole and absolute discretion, including establishment of a Partnership Record Date for such meeting. ARTICLE 15 GENERAL PROVISIONS SECTION 15.1 Addresses and Notice. Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or three (3) Business Days after being sent by certified United States mail, postage prepaid, return receipt requested, or upon confirmed receipt by other means of written communication (including by telecopy, facsimile, other wire transmission, or by commercial courier) (i) in the case of a Partner, to such Partner at the address set forth in Exhibit A (or, if Exhibit A has not been amended to reflect the address of any Limited Partner, the Partner Schedule with respect to such Limited Partner) or such other address of which the Partner shall notify the General Partner in writing and (ii) in the case of an Assignee, to the address of which such Assignee shall notify the General Partner in writing. SECTION 15.2 Titles and Captions. All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions of this Agreement. Except as specifically provided otherwise, references to "Articles" or "Sections" are to Articles and Sections of this Agreement. SECTION 15.3 Pronouns and Plurals. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. SECTION 15.4 Further Action. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement. SECTION 15.5 Fair Value. To the fullest extent permitted by the Act and applicable law, each Limited Partner hereby acknowledges and agrees that for the purposes of Section 620.205 of the Act, the "fair value" of its Partnership Interest shall not exceed, and each Limited Partner agrees to accept, the Redemption Consideration or Purchase Consideration (paid in cash or REIT Shares as permitted hereunder) for all of its Partnership Units that would otherwise be payable to such Limited Partner pursuant to a Redemption initiated by the Limited Partner or the Partnership at such time. -73- SECTION 15.6 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, legal representatives and permitted successors and assigns. SECTION 15.7 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition. The restrictions, conditions and other limitations on the rights and benefits of the Limited Partners contained in this Agreement, and the representations, duties, covenants and other requirements of performance or notice by the Limited Partners, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the General Partner, in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time; provided, however, that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Limited Partner, (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners, (iv) resulting in the classification of the Partnership as an association or publicly traded partnership taxable as a corporation or (v) violating the Securities Act, the Exchange Act or any state "blue sky" or other securities laws; provided, further, that any waiver relating to compliance with the Ownership Limit or other restrictions in the Charter shall be made and shall be effective only as provided in the Charter. SECTION 15.8 Counterparts. This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties to this Agreement, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature to this Agreement or upon execution of a Partner Schedule. SECTION 15.9 Applicable Law; Etc. A. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Florida, without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence. B. Each of the Partners hereby waives trial by jury in any action arising out of matters related to this Agreement, which waiver is informed and voluntary. C. Each Partner hereby irrevocably and unconditionally (i) submits itself and its property, solely for the purposes of any legal action or proceeding relating to this Agreement or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive jurisdiction of the State Courts of Florida and Texas and the U.S. District Court for the Southern District of Florida and the Houston Division of the U.S. District Court for the Southern District of Texas (collectively, the "Courts"), (ii) consents to the bringing of any such action or proceeding in the Courts and waives any objection that it may now or hereafter have to the venue -74- or any such action or proceeding in any such court and (iii) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. D. If any Partner brings any action or suit against any other Partner or the Partnership by reason of any breach of any of the covenants, agreements or provisions of this Agreement, then, in such event, the prevailing party, as determined in such action or suit, shall be entitled to have and recover from the other party or parties all costs and expenses of such action or suit, including, without limitation, reasonable attorneys' fees and expenses resulting therefrom, it being understood and agreed that the determination of the prevailing party shall be included in the matters which are the subject of such action or suit. SECTION 15.10 Confidentiality. The terms of this Agreement and all other business, financial and other information relating to the conduct of the business and affairs of the Partnership or the relative or absolute rights or interests of any of the Partners (collectively, "Confidential Information") that has not been disclosed pursuant to authorization by the General Partner is confidential and proprietary information of the Partnership. Accordingly, each Partner agrees that it will not disclose Confidential Information to any Person or confirm any statement made by any Person regarding Confidential Information unless and until the Partnership has disclosed such Confidential Information pursuant to authorization by the General Partner and has notified each Partner that it has done so or such information is/has become public knowledge (other than as a result of a breach of this Section 15.10); provided, however, that any Partner (or its Affiliates) may disclose such Confidential Information if required by law (it being specifically understood and agreed that anything set forth in a registration statement or any other document filed pursuant to law will be deemed required by law) or generally accepted accounting principles or if necessary for it to perform any of its duties or obligations hereunder. For the avoidance of doubt, the Partners acknowledge and agree that (i) in connection with CRT's reporting requirements that Confidential Information, including, without limitation, the Partnership's balance sheet and income statement financial data and such other Confidential Information as may be required by law from time to time as reasonably determined by CRT at the time, (ii) each of the Partners may disclose Confidential Information to its partners, and may disclose Confidential Information to its lenders, accountants, attorneys and other advisors and investors, and (iii) CRT may disclose Confidential Information consistent with customary practice by similar REITS. Notwithstanding the foregoing, except as reasonably necessary to comply with applicable securities laws, each Partner (and each employee, representative, or other agent of a Partner) may disclose to any and all Persons, of any kind, the tax treatment and the tax structure of the Partnership and all materials of any kind (including opinions or other tax analyses) that are provided to such Partner relating to such tax treatment and tax structure. For this purpose, "tax structure" is limited to any facts relevant to the U.S. federal income tax treatment of the Partnership and does not include any information relating to the identity and capital subscriptions of the Partners. The covenants contained in this Section 15.10 shall survive any transfer of Partnership Units. -75- SECTION 15.11 Entire Agreement. This Agreement, together with the Partner Schedules executed by the Limited Partners, contains all of the understandings and agreements between and among the Partners with respect to the subject matter of this Agreement and the rights, interests and obligations of the Partners with respect to the Partnership. SECTION 15.12 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. SECTION 15.13 No Partition. The Partners agree that the Partnership properties are not and will not be suitable for partition. No Partner nor any successor-in-interest to a Partner shall have the right while this Agreement remains in effect to have any property of the Partnership partitioned, or to file a complaint or institute any proceeding at law or in equity to have any property of the Partnership partitioned or sold, and each Partner, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Partners that the rights of the parties hereto and their successors-in-interest to Partnership property, as among themselves, shall be governed by the terms of this Agreement, and that the rights of the Partners and their successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement. SECTION 15.14 No Third-Party Rights Created Hereby. The provisions of this Agreement are solely for the purpose of defining the interests of the Partners, inter se; and no other Person (i.e., a party who is not a signatory to this Agreement or a permitted successor to such a signatory) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. 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 to the Partnership or to pursue any other right or remedy hereunder or at law or in equity. 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 any such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or any of the Partners. SECTION 15.15 Remedies Not Exclusive. Any remedies contained in this Agreement for breaches of obligations under this Agreement shall not be deemed to be exclusive and shall not impair the right of any party to exercise any other right or remedy, whether for damages, injunction or otherwise. [The remainder of this page has intentionally been left blank.] -76- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. GENERAL PARTNER: CRTP OP LP By: CRTP GP LLC By: CRT PROPERTIES, INC. By: /s/ Thomas C. Brockwell Name: Thomas C. Brockwell Title: Executive Vice President LIMITED PARTNERS: CCA III, INC. By: /s/ Thomas J. Crocker Name: Thomas J. Crocker Title: President /s/ Thomas J. Crocker Thomas J. Crocker WESTCHASE CORPORATE CENTER ASSOCIATES, LTD., a Texas limited partnership By: MEANS KNAUS INVESTMENT COMPANY, LLC, a Texas limited liability company By:/s/ Douglas A. Knaus Printed Name:Douglas A. Knaus Title:Manager -77- JOINDER The undersigned hereby joins in this Agreement solely for the purpose of guaranteeing the performance of the General Partner's obligations under Section 8.6 hereof to pay the Redemption Consideration or Purchase Consideration to any Tendering Party as and to the extent required under the Agreement. CRT Properties, Inc. By: /s/ Thomas C. Brockwell Executive Vice President -78- EXHIBIT A PARTNERS AND ADDRESSES GENERAL PARTNER: CRTP OP LP Cash contribution: 225 NE Mizner Boulevard, Suite 200 Number of Partnership Units: Boca Raton, Florida 33432 Attention: President Facsimile: (561) 794-7712 LIMITED PARTNERS: Thomas J. Crocker. See Partner Schedule c/o 225 NE Mizner Boulevard, Suite 200 Boca Raton, Florida 33432 Facsimile: (561) 794-7712 CCA III, Inc. See, Partner Schedule c/o 225 NE Mizner Boulevard, Suite 200 Boca Raton, Florida 33432 Attn: Thomas J. Crocker Facsimile: (561) 794-7712 Westchase Corporate Center Associates, Ltd. See, Partner Schedule c/o Means-Knaus Partners, L.P. 3100 Monticello Avenue, Suite 250 Dallas, Texas 75205 Attention: Steven A. Means Telephone: (214) 269-3001 Facsimile: (214) 946-5544 A-1 EXHIBIT B NOTICE OF REDEMPTION To: CRTP OP LP 225 NE Mizner Boulevard, Suite 200 Boca Raton, Florida 33432 Attention: Chief Accounting Officer The undersigned Limited Partner or Assignee hereby irrevocably tenders for Redemption __________ Class C Partnership Units in CRT BMWCX, LTD. in accordance with the terms of the Third Amended and Restated Agreement of Limited Partnership of CRT BMWCX, LTD., dated as of August __, 2004, as amended (the "Agreement"), and the Redemption rights referred to therein. The undersigned Limited Partner or Assignee: (a) undertakes (i) to surrender such Class C Partnership Units and any certificate therefor at the closing of the Redemption and (ii) to furnish to the General Partner, prior to the Specified Redemption Date, the documentation, instruments and information required under Section 8.6.F of the Agreement; (b) directs that the certified check representing the Cash Amount deliverable upon the closing of such Redemption be delivered to the address specified below; (c) represents, warrants, certifies and agrees that: (1) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, good, marketable and unencumbered title to such Class C Partnership Units, free and clear of the rights or interests of any other person or entity, (2) the undersigned Limited Partner or Assignee has, and at the closing of the Redemption will have, the full right, power and authority to tender and surrender such Class C Partnership Units as provided herein, and (3) the undersigned Limited Partner or Assignee has obtained the consent or approval of all persons and entities, if any, having the right to consent to or approve such tender and surrender; and (d) acknowledges that he will continue to own such Class C Partnership Units until and unless either (1) such Class C Partnership Units are acquired by the General Partner pursuant to Section 8.6.B of the Agreement or (2) such Redemption transaction closes. B-1 Each capitalized term used herein and not otherwise defined shall have the same meaning as is ascribed to it in the Agreement. Dated: ______________ Name of Limited Partner or Assignee: __________________________________________ (Signature of Limited Partner or Assignee) __________________________________________ (Street Address) __________________________________________ (City) (State) (Zip Code) __________________________________________ Signature Guaranteed by: __________________________________________ Issue Check Payable to: __________________________________________ Social Security or identifying number: __________________________________________ B-2 EXHIBIT C FORM OF PARTNER SCHEDULE New And Additional Limited Partner Version PARTNER SCHEDULE CRT BMWCX, LTD. THIS PARTNER SCHEDULE is executed by CRTP OP LP, a Delaware limited partnership (the "General Partner"), and the party named below (the "New Partner") in respect of CRT BMWCX, LTD., a Florida limited partnership f/k/a Crocker Center Associates III, Ltd. (the "Partnership"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the [Third] Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of __________ __, 2004 (the "Agreement"). 1. NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF NEW PARTNER: __________________________________________________________________________ __________________________________________________________________________ TIN:______________________________________________________________________ 2. CAPITAL CONTRIBUTIONS BY NEW PARTNER: Cash contribution: $________________________ Contributed Properties:
Gross Amount of Indebtedness Assumed Net Value of Description of Asset or to which the Contributed Contributed Contributed Property Value Property is Subject Property - -------------------- ----- ------------------------------ ------------ ____________________ _____ ______________________________ ____________ ____________________ _____ ______________________________ ____________ ____________________ _____ ______________________________ ____________ ____________________ _____ ______________________________ ____________
Total Capital Contribution: $________________________ C-1 3. PARTNERSHIP UNITS AND PREFERRED RETURN PER UNIT: Number of Partnership Units issued to New Partner: ____________ Class of Partnership Units issued: ____________ Capital Contribution Represented by Each Partnership Unit: $___________ Preferred Return Per Unit: 4. ADMISSION OF NEW PARTNER: The New Partner is admitted to the Partnership as an Initial/Additional Limited Partner. The General Partner hereby consents to such admission. 5. DESIGNATED PARTIES AND QUALIFIED DESCENDANTS: Designated Parties: Qualified Descendants: 6. PERMITTED TENDER DATE: The Permitted Tender Date for the New Partner shall be the __ anniversary of the Closing Date. 7. AGREEMENT: The New Partner acknowledges receipt of a copy of, and agrees to be bound by, the Agreement, as it may be amended from time to time. The New Partner specifically confirms (a) the representations and warranties contained in Section 3.4 of such Agreement, as it may be amended from time to time, and (b) the grant of the power of attorney set forth in Section 2.4 of such Agreement. 8. ADDITIONAL TERMS AND CONDITIONS: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ C-2 IN WITNESS WHEREOF, the parties have executed this Partner Schedule as of the date indicated below. Dated: _________________, 2004 "GENERAL PARTNER": CRTP OP LP By: CRTP GP LLC, its general partner By:____________________________ Name: Title: "NEW PARTNER": C-3 EXHIBIT D THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO SUCH SALE, TRANSFER OR OTHER DISPOSITION, UNLESS THE HOLDER HEREOF COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND CERTAIN OTHER PROVISIONS AS SET FORTH IN THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CRT BMWCX, LTD., DATED AS OF __________, 2004, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE PARTNERSHIP. Certificate No. ____ CRT BMWCX, LTD. FORMED UNDER THE LAWS OF THE STATE OF FLORIDA This certifies that _________________ is the owner of ___________________ FULLY PAID PARTNERSHIP UNITS OF CRT BMWCX, LTD. (the "Partnership"), transferable on the books of the Partnership in person or by duly authorized attorney on the surrender of this Certificate properly endorsed. This Certificate and the Partnership Units represented hereby are issued and shall be held subject to all of the provisions of the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of _______, 2004, as the same may be amended and/or supplemented from time to time. IN WITNESS WHEREOF, the undersigned has signed this Certificate. Dated: By:_________________________________________ EX-10.2 3 g91635exv10w2.txt AGREEMENT OF SALE OF PARTNERSHIP EXHIBIT 10.2 AGREEMENT OF SALE OF PARTNERSHIP INTERESTS THIS AGREEMENT OF SALE OF PARTNERSHIP (the "AGREEMENT") is entered into as of this the 30 day of September, 2004, by and among, EAST LAS OLAS INVESTORS II, a Florida general partnership ("ELOI"), WLD REALTY, LTD., a Florida limited partnership ("WLD"), and HALMOS HOLDINGS, INC., a Florida corporation ("HALMOS")(ELOI, WLD and Halmos are sometimes individually referred to herein as a "SELLER" and collectively as the "SELLERS"), ELO ASSOCIATES II, LTD., a Florida Limited Partnership (the "PARTNERSHIP") and KOGER ACQUISITION, LLC, a Florida limited liability company, and its successors and assigns as permitted hereunder ("BUYER"). RECITALS A. Each Seller owns the partnership interests in the Partnership identified on EXHIBIT A attached hereto and the Sellers own, in the aggregate, one hundred percent (100%) of the partnership interests (collectively, the "PARTNERSHIP INTERESTS") of the Partnership; B. The Partnership is the owner of the following: (i) the real property located at 450 East Las Olas Boulevard, Ft. Lauderdale, Florida which property is more fully described on EXHIBIT B-1 attached hereto, together with all tenements, hereditaments, easements, privileges, reversions, remainders and other rights and appurtenances belonging or in any manner appertaining thereto, including all reversionary interests in and to adjoining or abutting rights-of-way (collectively, the "LAND"); (ii) the buildings, structures, fixtures and other improvements on the Land including (i) the office building located on the Land, and (ii) the parking garage located on the Land (collectively, clauses (i) and (ii), the "450 OFFICE BUILDING"); (iii) Unit No. 1, of LAS OLAS CENTRE II, A CONDOMINIUM, according to the Declaration of Condominium thereof, as recorded in Official Records Book 29877, Page 1855, of the Public Records of Broward County, Florida, consisting of office space, retail space and an attached parking facility (collectively, the "CONDOMINIUM UNIT") which property is more fully described on EXHIBIT B-2 attached hereto; (iv) the Personal Property (as hereinafter defined); (v) the Intangibles (as hereafter defined); (vi) the Leases (as hereinafter defined) and the other assets and rights herein described, on the terms and conditions set forth in this Agreement. (vii) As used herein, (i) the Land, the 450 Office Building, the Condominium Unit, the Leases, the Intangibles and the Personal Property are collectively referred to herein as the "PROPERTY", and (ii) the Land, the 450 Office Building and the Condominium Unit are collectively referred to herein as the "REAL PROPERTY." B. Buyer desires to acquire from each Seller, and each Seller desires to sell to Buyer, the Partnership Interests owned by such Seller, upon the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises, the mutual representations, warranties, covenants and agreements hereinafter contained, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, Buyer agrees to purchase from each Seller, and each Seller agrees to sell, assign, transfer and deliver to Buyer, the Partnership Interests owned by each such Seller, on the terms and conditions set forth in this Agreement. Section 1. DEFINITIONS AND REFERENCES. The following terms, as used in this Agreement, have the following meanings and references unless the context is inconsistent therewith: "AGREEMENT DATE" means the first date upon which this Agreement has been executed and delivered by each Seller and Buyer. "AFFILIATE" means a person or entity that controls, is in common control with or is controlled by, another person or entity; and for such purpose, "control" of a Person (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the legal power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise "APPROVED TITLE" is defined in SECTION 4.1 of this Agreement. "ASSIGNMENT AGREEMENT" is defined in SECTION 3 of this Agreement. "ASSOCIATION" means the condominium association created by the Declaration of Condominium pursuant to which the condominium unit is located. "ASSOCIATION ESTOPPEL" means an estoppel certificate from the Association in the form attached hereto as FORM 5. "BROKER" means Holliday Fenoglio Fowler, L.P. "BUSINESS DAY" means any day upon which commercial banks in the County are required to be open for business. "BUYER" is defined in the introductory paragraph hereto. "CAM CHARGES" is defined in SECTION 10.5(E) of this Agreement. -2- "CLOSING" means the consummation of the sale and transfer of the Partnership Interests by Sellers to Buyer and payment of the Purchase Price by Buyer to Sellers, pursuant to SECTION 10 of this Agreement. "CLOSING COMMITMENT" means the modified or endorsed Title Commitment, or the Title Policy, to be delivered to Buyer at Closing as set forth in SECTION 4.2 of this Agreement. "CLOSING DATE" means the date upon which the Closing occurs, as set forth in SECTION 10.1 of this Agreement. "CONDOMINIUM UNIT" is defined in the Recitals. "CONTRACTS" is defined in SECTION 5.2.6 of this Agreement. "COUNTY" means Broward County, a political subdivision of the State of Florida. "CURE PERIOD" is defined in SECTION 4.1 of this Agreement. "DEPOSIT" is defined in SECTION 2.2(B) of this Agreement. "DESIGNATED CONTRACTS" is defined in SECTION 7.7. "ELOA" means ELOA, Ltd., a Florida limited partnership which was merged with and into Partnership. "ELOI" is defined in the introductory paragraph hereto. "ENVIRONMENTAL LAWS" is defined in SECTION 5.2.8 of this Agreement. "ESCROW AGENT" means White & Case LLP, 200 South Biscayne Boulevard, Suite 4900, Miami, Florida 33131, Telephone: (305) 371-2700, Facsimile: (305) 358-5744. "ESTOPPEL CERTIFICATE" means a certificate dated no earlier than the Agreement Date, in the form (i) attached hereto as FORM 2 from a tenant of the Real Property, or (ii) attached to such Tenant's Lease, without modification or supplement (other than de minimis changes or changes permitted by Form 2). "EXCLUDED ASSETS" means the collective reference to (i) any unrestricted cash and cash equivalents held in bank or other accounts in the name of the Partnership in excess of the amount necessary to satisfy drafts drawn upon such accounts which have not cleared (it being understood and agreed that security deposits held pursuant to Leases and any other deposits held by any third party with respect to the Property will not constitute Excluded Assets), (ii) all prepaid assets and deposits for which proration or adjustment provision is not made hereunder, (iii) tax refunds and tax credits for which proration or adjustment provision is not made hereunder and which are solely attributable to the period prior to the Closing Date, (iv) any other rights to payment for events which occurred prior to the Closing Date and for which no -3- proration or adjustment provision is made hereunder, (v) the Partnership's rights to refunds due with respect to insurance policies maintained by the Partnership on or prior to the Closing Date which have accrued prior to the Closing Date or result from the Partnership's cancellation of such insurance policies effective on the Closing Date and (vi) all rights to the claim filed in the Renaissance bankruptcy and any payment received by the Partnership with respect to the claim filed by the Partnership in the Renaissance bankruptcy. "EXISTING LENDER" is defined in SECTION 6.9 of this Agreement. "EXISTING LOAN" is defined in SECTION 6.9 of this Agreement. "EXISTING LOAN BALANCE" shall mean the outstanding principal balance of the Existing Loan plus all accrued but unpaid interest thereon as of the Closing Date but specifically excluding any Existing Loan Costs, Prepayment Costs, penalty interest, late fees or similar charges. "EXISTING LOAN COSTS" means the collective reference to any and all application fees, assumption fees, transfer fees or other fees or payments and all other costs and expenses (including, without limitation, attorneys fees and costs) charged by the holder(s) of the Existing Loan and/or such holder(s) servicers or agents in connection with the transfer of the Partnership Interests to Buyer and the Partnership maintaining the Existing Loan, but specifically excluding any interest accrued prior to the Closing Date, penalty interest, late fees or similar charges relating to periods prior to Closing. "EXISTING LOAN ESCROWS" shall mean any tax, insurance, tenant improvement, deferred maintenance, capital improvement or other escrow accounts or deposits maintained by the Partnership with the Existing Lender (or its designees) in connection with the Existing Loan. "EXISTING SURVEY" means collectively the survey prepared by Michael G. Purmot and Associates, Inc. dated November 7, 2001 with respect to the real property in which the Condominium Unit is located and the survey dated November 15, 2001 with respect to the 450 Office Building. "FINANCIALLY RESPONSIBLE PARTY" means Terry W. Stiles. "FIRST DEPOSIT" is defined in SECTION 2.2(A) of this Agreement. "HALMOS" is defined in the introductory paragraph hereto. "HAZARDOUS SUBSTANCES" means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any federal or state law related to human health or the environmental, as currently in effect as of the date of this Agreement, (ii) petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) friable asbestos, (vi) flammable explosives, (vii) infectious materials, (viii) radioactive materials, (ix) mold, mildew or any other biological toxins or (x) hazardous to human health or to the environment. "INCLUDE," "INCLUDING" and "INCLUDED," and their derivatives, are not limiting. "INSPECTION COMMENCEMENT DATE" is defined in SECTION 8.1 of this Agreement. -4- "INSPECTION INDEMNITY" is defined in SECTION 8.1 of this Agreement. "INSPECTION MATERIALS" is defined in SECTION 8.1 of this Agreement. "INSPECTION PERIOD" is defined in SECTION 8.1 of this Agreement. "INSPECTION TERMINATION DATE" is defined in SECTION 8.1 of this Agreement. "INTANGIBLES" means all of the Partnership's right, title and interest, if any, in and to: (i) the Designated Contracts, (ii) assignable and unexpired warranties and guaranties issued to Partnership with respect to the Property, (iii) assignable permits, licenses and approvals with respect to the Real Property, (iv) logos or symbols used by the Partnership exclusively with respect to the Property and (v) the benefits of insurance policies maintained by the Partnership insuring the Property or Partnership for the period prior to the Closing (specifically excluding refunds of insurance premiums resulting from the cancellation of such policies). "LAND" is defined in the Recitals. "LEASES" means all leases, licenses and other agreements, whether oral or written, for the use or occupancy of any portion of the Real Property as identified on SCHEDULE 5.2.7 attached hereto or entered into as permitted by the terms of this Agreement. "LENDER ESTOPPEL" means an estoppel certificate from the Existing Lender dated no earlier than the Agreement Date which contains the material information contained on FORM 4 attached hereto. "LIMITED PARTNERSHIP AGREEMENT" is defined in SECTION 5.1.9 of this Agreement. "MATERIAL ADVERSE CHANGE" means one or more events or occurrences (excluding events or occurrences which result in damages for which the Sellers are required to indemnify the Buyer hereunder) which individually or in the aggregate, has a material and adverse effect on the Partnership. "MAXIMUM LIABILITY" is defined in SECTION 5.4.2. "MINIMUM ESTOPPEL REQUIREMENTS" means (i) one hundred percent (100%) of the tenants of the Real Property whose Leases demise premises of 10,000 square feet or more (the "REQUIRED TENANTS"), and (ii) tenants which, in the aggregate, occupy not less than seventy percent (70%) of the remaining net rentable space leased in the Real Property; provided that with respect to the Tenants other than the Required Tenants, if Sellers are unable to obtain Estoppel Certificates from seventy percent of the remaining tenants it may (but shall not be required to) provide with respect to twenty percent (20%) of such Tenants a Seller Estoppel in lieu of an Estoppel Certificate. "PARTNERSHIP" is defined in the introductory paragraph hereto. "PARTNERSHIP INTEREST" is defined in the Recitals. -5- "PERMIT" means all permits, approvals, orders, entitlements, rights, licenses and other authorizations held or procured by and/or issued to Partnership and/or ELOA and governing or applicable or relating to the design and/or planning, development, construction upon, furnishing, equipping, use, operation or maintenance of the Property, or any portion thereof. "PERMITTED EXCEPTIONS" means the title exceptions set forth in Schedule B, Section 2 of the Title Commitment approved or deemed approved by Buyer, the liens and security interests of the Existing Loan if and only if the Buyer elects to maintain the Existing Loan, any matters set forth on the Survey approved or deemed approved by Buyer and any other matter permitted hereby or deemed to be permitted hereby. "PERSON" means any natural person, corporation, limited liability company, business trust, joint venture, association, company, partnership, sole proprietorship, governmental agency or political subdivision thereof or other legal entity. "PERSONAL PROPERTY" means all personal property owned by the Partnership and used or held for use exclusively in connection with the operation of the Real Property, including Intangibles, appliances, furniture, carpeting, draperies and curtains, tools and supplies, plans and specifications, operating manuals, maintenance and other items of personal property (excluding the Excluded Assets and the Proprietary Materials), including those items listed on Exhibit C. "PREPAYMENT COSTS" means the collective reference to any and all prepayment premiums, prepayment penalties, yield maintenance payments, defeasance costs and expenses, any other similar fees and costs and all other costs and expenses charged by the holder(s) of the Existing Loan and/or such holder(s) servicers or agents in connection with the prepayment or defeasance of the Existing Loan on or before the Closing Date, but specifically excluding any interest accrued prior to the Closing Date, penalty interest, late fees or similar charges relating to periods prior to Closing. "PROPRIETARY MATERIALS" means materials not directly related to the leasing, maintenance and/or management of the Real Property, such as the Partnership's or Seller's internal memoranda, financial projections, budgets other than the 2004 and draft 2005 budget, appraisals and similar proprietary or confidential information, and proprietary software of the Partnership's or Seller's agent or attorney. "PRO-RATA SHARE" shall mean, with respect to each of WLD and Halmos, a percentage equal to the percentage of the Partnership Interests owned by each as reflected on EXHIBIT A attached hereto. "PURCHASE PRICE" is defined in SECTION 2.1 of this Agreement. "REAL PROPERTY" is defined in the Recitals. "RECORDS" is defined in SECTION 8.2 of this Agreement. "RELEASE" means if Buyer elects to maintain the Existing Loan, a release by the Existing Lender of Terry W. Stiles, in a form reasonably satisfactory to him, from all personal liability under guaranties and -6- indemnifications issued by him in connection with the Existing Loan to the extent that such liability is attributable to acts, omissions or events occurring solely from and after the Closing Date. "RENT ROLL" means the rent roll for the Property attached hereto as SCHEDULE 5.2.10 of this Agreement. "REPORTS" is defined in SECTION 6.7 of this Agreement. "SECOND DEPOSIT" is defined in SECTION 2.2(B) of this Agreement. "SELLER(S)" is defined in the introductory paragraph hereto. "SELLER ESTOPPEL" means an estoppel certificate from Sellers in the form attached hereto as FORM 3. "SELLER'S KNOWLEDGE" means, and is limited to, the actual knowledge, as of an applicable date, without inquiry, of Rocco Ferrera and Judy Carter. "SELLERS' OWNERSHIP PERIOD" is defined in Section 5.2.13 of this Agreement. "SELLER PARTIES" or "SELLER PARTY" means each Seller and its partners and the members, partners, beneficial owners, shareholders, officers, directors, agents, employees, property manager, controlling persons and Affiliates of each Seller. "SURVEY" means the survey of the Land and the Condominium Unit to be prepared by the Surveyor, as set forth in SECTION 4.3 of this Agreement. "SURVEYOR" means the surveyor who prepares the Survey, or such other licensed Florida land surveyor as to which Seller and Buyer may mutually agree. "SURVIVAL PERIOD" is defined in SECTION 5.4.2 of this Agreement. "TENANT(S)" means a tenant(s) pursuant to a Lease(s). "TENANT INDUCEMENT COSTS" means any out-of-pocket payment required under a Lease to be paid by the Landlord thereunder to or for the benefit of the Tenant thereunder which is in the nature of a tenant inducement, including tenant improvement costs, lease buy-out costs, and moving, design and refurbishment allowances; but excluding lost income resulting from any free rental period, it being agreed that Sellers will bear the loss resulting from any free rental period prior to the Closing Date and Buyer will bear such loss from and after the Closing Date. "THRESHOLD AMOUNT" is defined in SECTION 7.6 of this Agreement. "TITLE AGENT" means the title agent designated by Buyer for the Underwriters issuing the Title Commitment and the Title Policy. "TITLE COMMITMENT" means the ALTA Form B Owner Marketability Title Insurance Commitment issued or to be issued by the Title Agent to Buyer (and to Buyer's institutional lender, if applicable) with respect to the Real -7- Property, as set forth in SECTION 4.1, which will include copies of all matters for which exception is made in Schedule B, Section 2 thereof. "TITLE DEFECT(S)" is defined in SECTION 4.1 of this Agreement. "TITLE DEFECT NOTICE" is defined in SECTION 4.1 of this Agreement. "TITLE POLICY" means the ALTA Form B Owner Marketability Title Insurance Policy to be issued by the Title Agent to Partnership (and Buyer's institutional lender, if applicable) pursuant to the Title Commitment. "UNDERWRITER(S)" means a nationally recognized title insurer reasonably acceptable to Buyer and Seller, for and upon whom the Title Commitment and Title Policy are to be written and issued. "WLD" is defined in the introductory paragraph hereto. Section 2. Purchase Price and Terms of Payment. 2.1 PURCHASE PRICE. The purchase price for the Partnership Interest will be the sum of ONE HUNDRED THIRTY MILLION THREE HUNDRED SIXTY THOUSAND AND NO/100 DOLLARS ($130,360,000.00) and (i) LESS the Existing Loan Balance if the Buyer elects to maintain the Existing Loan or (ii) PLUS the amount of the Prepayment Costs, if the Buyer does not elect to maintain the Existing Loan (the "PURCHASE PRICE"), subject to the prorations and adjustments for which provision is made elsewhere in this Agreement. 2.2 TERMS OF PAYMENT. The Purchase Price will be paid as follows: (a) upon execution of this Agreement by Sellers and Buyer, Buyer will deliver to Escrow Agent, via wire transfer of immediately available funds, the sum of One Million and No/100 Dollars ($1,000,000.00) (the "FIRST DEPOSIT"); (b) on or before the Inspection Termination Date, Buyer will deliver to Escrow Agent, via wire transfer of immediately available funds, an additional sum of Four Million and No/100 Dollars ($4,000,000.00) (the "SECOND DEPOSIT") (the First Deposit and the Second Deposit, if made, are collectively referred to herein as the "Deposit"); (c) subject to SECTION 2.3(A), the balance of the Purchase Price, subject to the prorations and adjustments for which provision is made elsewhere in this Agreement, will be paid by Buyer to Sellers by wire transfer of immediately available funds at Closing. The Deposit will be held in trust by Escrow Agent and disbursed to Sellers, or returned to Buyer, as provided herein. The Deposit will be deposited by Escrow -8- Agent upon receipt in an interest-bearing account in a banking institution the deposits of which are insured by the Federal Deposit Insurance Corporation. All interest earned thereon will be credited and disbursed as part of the Deposit. 2.3 BUYER FINANCING AND ASSUMPTION OF EXISTING LOAN. (a) Buyer may seek to maintain the Existing Loan in place as of the Closing or Buyer may seek institutional or other financing for the purchase of the Partnership Interests; provided, however, that Buyer's ability to obtain such financing and/or the receipt by Buyer of the consent by the holder of the Existing Loan to Buyer's acquisition of the Partnership Interests, are not, and will not be, conditions precedent to Buyer's obligations pursuant to this Agreement. At the Closing, Buyer covenants and agrees either (i) to maintain the Existing Loan and to pay all Existing Loan Costs or (ii) to pay in full the Existing Loan including the amount of any Prepayment Costs utilizing a portion of the Purchase Price. The failure of the Existing Lender to approve the acquisition by Buyer of the Partnership Interests, for any reason or for no reason, shall require Buyer, if Buyer fails to timely terminate this Agreement in accordance with SECTION 8.1 of this Agreement, to pay off in full the Existing Loan at the Closing utilizing a portion of the Purchase Price. If Buyer elects to maintain the Existing Loan, Sellers will cooperate with Buyer (at no cost or expense to Sellers or the Partnership) in obtaining the approval of the Existing Lender with respect to the Buyer's acquisition of the Partnership Interests. Section 3. TITLE TO PARTNERSHIP INTERESTS. At Closing, each Seller will convey to Buyer all of such Seller's right, title and interest to the Partnership Interests of the Partnership by a duly executed Assignment Agreement, the form of which is set forth on FORM 1. Section 4. TITLE EVIDENCE. 4.1 TITLE COMMITMENT. Within ten (10) days after the Inspection Commencement Date, Sellers will deliver to Buyer a copy of the Partnership's most recent title insurance policy with respect to the Real Property (the "EXISTING TITLE POLICY"), and Buyer, at Buyer's sole cost and expense, will cause the Title Agent to deliver to Buyer a Title Commitment (with a copy to Sellers) in an amount equal to the Purchase Price, with such affirmative assurances and endorsements as reasonably may be obtainable and requested by Buyer, and having an effective date subsequent to the Agreement Date. The Title Commitment will commit the Underwriter, upon satisfaction of the requirements set forth therein, to issue a Title Policy to the Partnership in the amount of the Purchase Price, subject only to the Permitted Exceptions. Within five (5) days of Buyer's receipt of the Title Commitment and Survey (but in any event not later than three (3) days prior to the Inspection Termination Date), Buyer will notify Sellers in writing (a "TITLE DEFECT NOTICE") of any title and/or survey defect(s) (the "TITLE DEFECTS") Buyer desires Sellers to cure. Sellers, at its sole option, may attempt to cure the Title Defects identified in the Title Defect Notice prior to the Inspection Termination Date (the "CURE PERIOD"), or Sellers may elect not to cure such Title Defects; provided, however, if the Title Commitment reveals the existence of a mortgage, lien, monetary judgment, security interest, past due tax or assessment or other similar encumbrance of a monetary nature against the Real Property (a "MONETARY LIEN" [Existing Loan is excluded from this definition if Buyer elects to -9- maintain Existing Loan]), then Sellers shall pay any amount due in satisfaction of each such Monetary Lien. If one or more Monetary Liens have not been satisfied before the Closing Date, then Buyer and Escrow Agent may, at Buyer's option, satisfy such Monetary Liens at Closing from the proceeds of the Purchase Price. If Sellers elect not, or are unable, to cure such Title Defects during the Cure Period, Buyer may elect to terminate this Agreement, by written notice delivered to Sellers within three (3) days after Sellers have advised Buyer that they elect not, or are unable to cure, such Title Defects, and thereafter (i) this Agreement will be null and void and the parties hereto will have no further rights or obligations hereunder, except obligations of Sellers and Buyer hereunder that expressly survive any such termination, and (ii) the Deposit and accrued interest earned thereon shall be returned to Buyer. The Title Commitment and Survey approved by Buyer (revised, if applicable, to reflect Sellers' cure or removal of Title Defects as aforesaid), or, if Buyer neither approves title nor timely terminates this Agreement pursuant to SECTION 8.4(A), title shown by the Title Commitment and Survey as existing on the Inspection Termination Date, will constitute the approved title (the "APPROVED TITLE"). 4.2 CLOSING COMMITMENT. At Closing, Buyer will cause the Title Agent to issue to Buyer a "marked up" duplicate original of, the Title Commitment (the "CLOSING COMMITMENT") reflecting that all requirements of the Title Commitment have been fulfilled or waived, eliminating the "gap exception" and extending the effective date of coverage through delivery of the Assignment Agreement to Buyer. 4.3 SURVEY. Buyer hereby acknowledges that Buyer has received the Existing Survey. Prior to the Inspection Termination Date Buyer, at its expense, will cause the Surveyor to prepare and deliver to Buyer and Sellers a current survey of the Real Property (the "SURVEY"). The Survey will conform to the Minimum Technical Standards for Land Surveying promulgated pursuant to Section 472.027, Florida Statutes, and will show and describe the exterior boundaries and corner markers or monuments of the Land, the size and location of the improvements, any encroachments, easements, rights-of-way or other conditions to which the Land is subject, matters for which exception is made in Schedule B, Section 2 of the Title Commitment which can be physically located by survey, and the legal description and area of the Real Property. If the Survey shows any encroachment, hiatus or other condition, which affects the marketability of title to the Real Property, Buyer will have the right to object to such condition as a Title Defect pursuant to provisions of SECTION 4.1 hereof. Section 5. SELLERS' REPRESENTATIONS AND WARRANTIES. 5.1 SELLERS' REPRESENTATIONS. Each Seller represents solely with respect to itself, and as to no other Seller, as of the Agreement Date as follows: 5.1.1 ORGANIZATION. Such Seller is duly formed, validly existing and in good standing under the laws of the jurisdiction of their respective organization. 5.1.2 AUTHORITY/CONSENT. Such Seller possesses all requisite power and authority, and has taken or will by Closing have taken all actions as required by its organizational documents and applicable law to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement. -10- 5.1.3 LITIGATION. No action, suit or other proceeding is pending or, to such Seller's knowledge, has been threatened in writing that concerns or involves its Partnership Interest in any manner. 5.1.4 BANKRUPTCY. No bankruptcy, insolvency, reorganization or similar action or proceeding, whether voluntary or involuntary, is pending, or, to such Seller's knowledge, threatened, against it. 5.1.5 OTHER SALES AGREEMENTS. Such Seller has not entered into any other contract or letter of intent to sell its Partnership Interests, the Property or any part thereof which is currently in effect. 5.1.6 OWNERSHIP. Such Seller owns legally and beneficially the Partnership Interests identified on EXHIBIT A as being owned by such Seller, free and clear of all liens, encumbrances, claims and rights of others (other than as specifically set forth in the Limited Partnership Agreement). Such Seller has not heretofore assigned or encumbered any of its Partnership Interests (other than as specifically set forth in the Limited Partnership Agreement), and further has no knowledge of any liens, encumbrances, claims or rights of others in any of the Partnership Interests except the other Sellers as provided in the Limited Partnership Agreement. 5.1.7 LEASES. Except as set forth on SCHEDULE 5.1.7, neither such Seller nor an Affiliate of such Seller is a Tenant to any Lease. 5.1.8 FOREIGN PERSON. Such Seller is not a "foreign person," "foreign trust" or "foreign corporation" within the meaning of the United States Foreign Investment in Real Property Tax Act of 1980 and the Internal Revenue Code of 1986, as subsequently amended. 5.1.9 SECURITIES COMPLIANCE. Such Seller has not received written notice of any violations of any state of federal securities laws in connection with the operation of the Partnership or the capital raising activities of the Partnership. 5.2 SELLERS REPRESENTATIONS. Sellers represent to Buyer as of the Agreement date as follows: 5.2.1 ORGANIZATION. The Partnership is duly formed, validly existing and in good standing under the laws of the State of Florida. 5.2.2 AUTHORITY/CONSENT. The Partnership is the sole owner, in fee simple, of the Property. The Partnership possesses all requisite power and authority, and has taken or will by Closing have taken all actions as required by its organizational documents and applicable law to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement. 5.2.3 LITIGATION. Except as set forth on SCHEDULE 5.2.3, no action, suit or other proceeding is pending or, to Seller's Knowledge, has been threatened in writing that concerns or involves the Partnership or the Property. -11- 5.2.4 BANKRUPTCY. No bankruptcy, insolvency, reorganization or similar action or proceeding, whether voluntary or involuntary, is pending, or, to Seller's Knowledge, threatened, against the Partnership. 5.2.5 OTHER SALES AGREEMENTS. The Partnership has not entered into any other contract or letter of intent to sell the Property or any part thereof which is currently in effect. 5.2.6 CONTRACTS. Except for the contracts ("CONTRACTS") referenced on the list attached hereto as SCHEDULE 5.2.6, there are no contracts of construction, employment, management, service, or supply or any other contracts or agreements in effect entered into by the Partnership or ELOA; provided that the failure to schedule any non-material contract which may be terminated by the Partnership on not more than thirty (30) days notice without premium or penalty shall not constitute a breach of this representation. 5.2.7 LEASES. Except for the Leases and leases, amendments or other occupancy agreements which may be entered into by the Partnership pursuant to SECTION 7.2 hereof, there are no leases, rental agreements, licenses, license agreements or other occupancy agreements with tenants in effect which will affect the Property after Closing. To Sellers' Knowledge, each Lease is in full force and effect, no rent has been paid more than one month in advance, and no tenant is entitled to any credits or offsets against its rental obligation except as set forth in such Lease. To Sellers' knowledge, except as may be described in SCHEDULE 5.2.7 attached hereto, there exists no default by Partnership or any Tenant under any of the Leases. Neither Sellers nor the Partnership have received any notice of lease termination from any Tenant, and neither have Sellers nor the Partnership received any notice that any such Tenant has filed any insolvency or bankruptcy proceedings. To Sellers' Knowledge, SCHEDULE 5.2.7 hereto identifies all outstanding brokerage agreements with respect to the Leases. Sellers have provided Buyer with full and complete copies of all Leases, including all amendments and modifications thereto, prior to the execution of this Agreement by Buyer and Sellers. Subject to Section 7.2 below, Sellers have caused the Partnership to pay, or will cause the Partnership to pay at or prior to Closing, all tenant improvement allowances and other amounts that have become due and payable to any Tenant under any of the Leases as of the Closing Date. 5.2.8 VIOLATIONS OF LAW. Neither Sellers nor the Partnership has received written notice from any governmental authority of any material violation of any federal, state, county or municipal laws, ordinances, orders, regulations and requirements affecting the Property or any portion thereof (including the conduct of business operations thereon) which are unresolved. In addition, except as may be included in the Inspection Materials or otherwise disclosed in writing to Buyer, neither Sellers nor the Partnership has received any written notice from any governmental authorities with respect to (i) any special assessments or proposed increases in the assessed value of the Property (except as set forth in the current Notice of Proposed Property Taxes); (ii) any condemnation or eminent domain proceedings affecting the Property; or (iii) except with respect to issues disclosed in any environmental report(s) furnished to Buyer by Sellers as a part of the Inspection Materials or otherwise obtained by Buyer, or otherwise disclosed by Sellers to Buyer in writing, any violation of any Environmental Law or any zoning, health, fire safety or other law, regulation or code applicable to the Property which remains outstanding or any investigation, administrative order, consent order or agreement with respect to Hazardous Substances. As used herein, the term "ENVIRONMENTAL LAW" means any -12- law, statute, ordinance, rule, regulation, order or determination of any governmental authority or agency affecting the Property and pertaining to health or the environment including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1982 ("CERCLA") and the Resource Conservation and Recovery Act of 1986. 5.2.9 STORAGE TANKS. Except with respect to the storage tank for the on site generator and issues disclosed in the Inspection Materials, or otherwise disclosed by Sellers to Buyer in writing, to Sellers' Knowledge, no underground storage tanks are currently located at the Property. 5.2.10 RENT ROLL. Attached hereto as SCHEDULE 5.2.10 is a rent roll, which will include delinquencies, security deposits, brokerage commissions payable and tenant improvement allowances, for the Property which is true and correct in all material respects as of the Agreement Date. 5.2.11 OUTSTANDING DEBT. The Partnership does not have any liabilities of any nature, known or unknown, fixed or contingent, including liabilities evidenced by bonds, debentures, notes, guaranties or other similar instruments, except for the liabilities set forth on SCHEDULE 5.2.11 attached hereto and incorporated herein by reference. 5.2.12 OPERATING STATEMENTS AND GENERAL LEDGERS. Sellers have delivered or made available to Buyer true, complete and correct copies of the current operating statements and general ledgers with respect to the Property, which operating statements accurately and fairly present the results of operations of the Property for the periods then ended. 5.2.13 EMPLOYEES. From and after the formation of Partnership and ELOA, to and including the day prior to the Closing Date ("SELLERS' OWNERSHIP PERIOD"), the Partnership and ELOA has not had, and will not on the Closing Date have, any employees. 5.2.14 TAXES. The Partnership has not made an election under Regulations Section 301.7701-(3)(a) to be treated as an association taxable as a corporation. The Partnership has filed or obtained extensions of all federal, state, local and foreign income, excise, franchise, real estate, sales and use and other tax returns heretofore required by law to be filed by them. All taxes, including, without limitation, all federal, state, county, local, foreign or other income, property, sales, use, franchise, value added, employees' income withholding, social if security, unemployment and other taxes, of any nature whatsoever which have been incurred or become due or payable by the Partnership, including any fines or penalties with respect thereto or interest thereon, whether disputed or not (collectively, "TAXES"), have been paid in full by the Partnership. All deposits, Taxes and other assessments and levies required by law to be made, withheld, collected or provided for by the Partnership, including deposits with respect to Taxes constituting employees' income withholding taxes, have been duly made, withheld, collected or provided for and have been paid over to the proper federal, state or local authority, or are held by the applicable Person for such payment. No liens arising from or in a connection with Taxes have been filed and are currently in effect against the Partnership, except for liens for Taxes which are not yet due. The Partnership has not executed or filed with the IRS or any other taxing authority any -13- agreement or document extending, or having the effect of extending, the period for assessment or collection of any Taxes. The Partnership is not a party to any tax sharing agreement or arrangement. No audits or investigations are pending or, to the Sellers' Knowledge, threatened with respect to any tax returns or taxes of the Partnership. All real estate taxes on the Property for the year 2003 and the years prior thereto have been paid. No written claim has been received by the Partnership from any authority in any jurisdiction where the Partnership does not file Tax Returns that are, or may be, subject to taxation by that jurisdiction. There currently is no appeal pending for any prior year's property tax assessment with respect to the Property. 5.2.15 INSURANCE. A list of all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, and employees under which Partnership or its affiliates may derive any material benefit is set forth on SCHEDULE 5.2.15 hereof, and true, correct and complete copies (other than in de minimus respects) of such policies and bonds have been delivered to Buyer prior to the Agreement Date. There is no claim by Partnership pending under any of such policies or bonds as to which coverage has been questioned, reserved, denied or disputed by the underwriters of such policies or bonds or their agents. SCHEDULE 5.2.15 lists all outstanding claims and settlements under any insurance policies or bonds that have arisen during the time Partnership has owned the Property. Partnership finances the payment of its insurance premiums. All premium financing payments due and payable under all such policies and bonds have been paid, and to Seller's Knowledge, Partnership is otherwise in compliance with the terms and conditions of all such policies and bonds, except where the failure to so comply would not result in the inability of the Partnership to collect fully under such policy or policies. Except as set forth on SCHEDULE 5.2.15, such policies of insurance and bonds are in full force and effect. Neither Sellers nor Partnership has received written notice of any threatened termination of any such policies or bonds. Neither Sellers nor Partnership has received any written notices from any insurance companies of any defect or inadequacies in the Property which have not been rectified. 5.2.16 ORGANIZATIONAL DOCUMENTS. Sellers have delivered or made available to Buyer a true, complete and correct copy of the Limited Partnership Agreement of the Partnership (the "LIMITED PARTNERSHIP AGREEMENT"). The Limited Partnership Agreement constitutes all of the documents, agreements and instruments with respect to the governance, management and organization of the Partnership. The Limited Partnership Agreement shall not have been amended, modified, supplemented, terminated or otherwise changed in any manner as of the Closing Date. 5.2.17 SINGLE PURPOSE ENTITY. Neither Partnership nor ELOA has conducted since its inception any business other than owning, developing, constructing, operating, maintaining, financing, and leasing the Property (on the portion thereof formerly owned by ELOA) and has not owned any asset which is not related or incidental thereto. 5.3 SURVIVAL AND SELLER'S MAXIMUM LIABILITY. The representations and warranties set forth in this SECTION 5 shall survive only for the period, and pursuant to the terms, set forth in SECTIONS 5.4.2 AND 5.4.3. 5.4 SELLER INDEMNITY. 5.4.1 Subject in all respects to the terms and conditions set forth in SECTIONS 5.4.2 AND 5.4.3. below, from and after the Closing, Sellers, jointly and severally shall indemnify and defend Buyer and its respective -14- affiliates, officers, managers, partners, directors, owners, members, shareholders and successors and assigns (collectively, "BUYER INDEMNITEES") against and hold Buyer Indemnitees harmless from all claims, demands, liabilities, losses, damages, judgments, deficiencies, costs and expenses, including reasonable attorneys' fees and disbursements, that may be suffered or incurred by Buyer as to any Retained Liability (as herein defined). "RETAINED LIABILITY" shall mean any obligation, liability (fixed or contingent or known or unknown) or costs, expenses of the Sellers: (1) under or with respect to the Partnership Interests, any Lease, Contract, Permit, Permitted Exception, or commission agreement or other agreement (whether or not now in effect) arising or accruing during Sellers' Ownership Period; or (2) in connection with any claim or suit that is asserted or filed against the Partnership or that is asserted or filed against any of the Sellers, but which accrued prior to the Closing based on events that occurred solely prior to the Closing, including but not limited to the litigation listed on Schedule 5.2.3 (the litigation listed on Schedule 5.2.3, the "ADA Litigation") and the claims set forth on Schedule 5.2.15 (the litigation scheduled on Schedule 5.2.3 and the claims listed on Schedule 5.2.15, collectively the "Scheduled Matters"); or (3) resulting from any breach of any representation or warranty expressly made by Sellers in this Agreement or from any breach by Sellers of any covenant, agreement or obligation undertaken by Sellers in this Agreement or in any certificate or document delivered by Sellers to Buyer at Closing pursuant to this Agreement. The parties hereby acknowledge and agree that "RETAINED Liabilities" shall not mean any obligation, liability (fixed or contingent or known or unknown) or costs, expenses of the Sellers expressly taken into account on the settlement statement to be delivered hereunder or expressly assumed in accordance with the terms hereof. The Sellers, in consultation with Buyer, shall retain control of the ADA Litigation; provided, however, that Sellers may not settle the ADA Litigation (i) in a manner that does not result in the violations of the Americans with Disabilities Act ("ADA") asserted by the plaintiffs in the ADA Litigation being corrected in a manner which causes the items at issue in such litigation to be in compliance with the ADA and (ii) without the approval of the Buyer, such approval not to be unreasonably withheld. 5.4.2 Except as otherwise provided in SECTION 5.4.3, (i) the Sellers' collective maximum aggregate liability under this Agreement, any Seller Estoppel(s) delivered by Sellers to Buyer hereunder, any other agreement or instrument delivered by Sellers to Buyer in connection with this transaction contemplated hereby or otherwise in connection with the transaction contemplated hereby shall in no event exceed Two Million Dollars ($2,000,000) in the aggregate (the "MAXIMUM LIABILITY") and (ii) each of WLD's and Halmos's individual maximum aggregate liability under this Agreement, any Seller Estoppel(s) delivered by Sellers to Buyer hereunder, any other agreement or instrument delivered by Sellers to Buyer in connection with the transaction contemplated hereby shall in no event exceed the product of (a) its Pro-Rata Share and (b) $2,000,000. Except as otherwise provided in SECTION 5.4.3 notice of any claim made by Buyer hereunder must be given within one (1) year following the Closing (the "SURVIVAL PERIOD"). Buyer shall be deemed to have waived any claim of breach (i) if Buyer has not provided written notice thereof to Sellers prior to the expiration of the Survival Period or (ii) if the Buyer has given timely notice of a claim of breach, such claim is disputed and Buyer fails to commence a legal action to satisfy its claimed indemnification right with respect to such claim within two (2) years following the Closing. Notwithstanding anything contained in this Agreement to the contrary, in no event shall Sellers be liable or accountable for any damages with respect to its indemnification obligations under this Agreement, unless and until all such -15- damages for which Sellers would be liable hereunder exceed in the aggregate $50,000 (in which event such liability shall extend to all of such damages up to and in excess of such amount). 5.4.3 Notwithstanding anything to the contrary contained in this Agreement, (i) each Seller's Maximum Liability shall not limit the amount of damages that the Buyer can recover for a breach by any Seller of any of its representations or warranties contained in SECTIONS 5.1(1), 5.2.13, 5.2.14, 5.2.16 OR 5.2.17 hereof (ii) the Survival Period shall not apply to a breach by such Seller of any of its representations or warranties contained in SECTIONS 5.1, 5.2.13, 5.2.14, 5.2.16 OR 5.2.17 hereof and (iii) the amount of each Seller's Maximum Liability shall not be reduced by the amount of any insurance proceeds received by Buyer or the Partnership after the Closing Date on account of any claims or liabilities also covered by each Seller's Maximum Liability; provided however, Buyer agrees that in the event Buyer or the Partnership receives any insurance proceeds which, together with any amounts paid by Sellers to Buyer or such Partnership hereunder is in excess of the full amount of any claim made by Buyer or such Partnership hereunder, then Buyer or such Partnership shall promptly return such excess amount to Sellers. Section 6. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby represents and warrants to Sellers as follows, each and all of which shall be true and correct as of the Agreement Date and as of the Closing Date: 6.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida; has all requisite power and authority to own its properties and assets and to carry on its business as now being conducted; and has taken or will by Closing have taken all actions required by its organizational documents and applicable law to execute and deliver this Agreement and to consummate the transactions contemplated by this Agreement. 6.2 NO VIOLATION. That (i) this Agreement does not violate the terms of any other contract or agreement to which Buyer is a party or successor party, (ii) Buyer has the full right and authority to purchase the Partnership Interests and consummate all of the transactions hereby contemplated, and that no other party has any ownership or other interest therein, (iii) the individuals executing this Agreement on the Buyer's behalf are authorized to bind Buyer to all terms of this Agreement by their signatures hereto, and (iv) all consents required to be obtained from any other parties in connection with the purchase of the Partnership Interests and consummate all of the transactions hereby contemplated have in fact been obtained. 6.3 COMMERCIAL BUYER. Buyer is a sophisticated buyer with respect to the Partnership Interests, has adequate information concerning the business and financial condition of the Partnership and the Property to make an informed decision regarding the purchase of the Partnership Interests and has - --------------- (1) While there is no limit on each Seller's liability with respect to each Seller's breach of a representation contained in Section 5.1, each Seller's liability for a breach of a representation contained in Section 5.1 is limited to damages resulting from its breach and no Seller shall have any liability for damages resulting from another Seller's breach of a representation contained in Section 5.1. -16- independently made its own analysis and decision to enter into this Agreement and acquire the Partnership Interests, except that Buyer has relied upon the representations, warranties, covenants, and agreements of Sellers contained in this Agreement. Buyer acknowledges that Sellers have not made and do not make any representation or warranty, whether express or implied, except as expressly set forth in this Agreement and that, except as set forth herein, the Partnership Interests are being purchased and the Property is being accepted by Sellers in their respective "as is" condition for all purposes. Buyer acknowledges that the sale of the Partnership Interests by Sellers to Buyer is absolute and irrevocable, and that Buyer shall have no recourse to any Seller, except with respect to breaches of representations, warranties, covenants and agreements expressly set forth in this Agreement, and pursuant to the indemnities contained herein and subject to the limitations set forth in this Agreement. Buyer acknowledges that the consideration paid pursuant hereto for the purchase of the Partnership Interests may differ both in kind and amount from any payments or distributions which may ultimately be received with respect thereto. 6.4 SECURITIES ACT. Buyer represents, understands and acknowledges to and with the Sellers that (i) the Partnership Interests to be acquired by the Buyer pursuant to this Agreement are being acquired for its own account, not as a nominee or agent for any other Person and without a view to the distribution of such Partnership Interests or any interest therein in violation of the Securities Act the Securities Act of 1933, as amended (the "SECURITIES ACT"), (ii) Buyer is an "accredited investor" within the meaning of Rule 501(a) under Regulation D ("REGULATION D") promulgated under the Securities Act by the Securities and Exchange Commission and has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Partnership Interests, and Buyer is capable of bearing the economic risks of such investment and is able to bear the complete loss of its investment in the Partnership Interests, and (iii) Buyer acknowledges that the Partnership Interests have not been registered, and will not be registered by Sellers, under the Securities Act and understands that the Partnership Interests must be held indefinitely unless they are subsequently registered under the Securities Act or such sale is permitted pursuant to an available exemption from such registration requirement. 6.5 BANKRUPTCY. No bankruptcy, insolvency, reorganization or similar action or proceeding, whether voluntary or involuntary, is pending, or, to Buyer's knowledge threatened, against Buyer. 6.6 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. BUYER AGREES THAT BUYER WILL PERFORM APPROPRIATE, THOROUGH, CUSTOMARY AND ADEQUATE EXAMINATIONS AND INVESTIGATIONS OF THE PARTNERSHIP AND PROPERTY PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD. BUYER HEREBY REPRESENTS THAT BUYER IS A SOPHISTICATED DEVELOPER, BUYER AND OPERATOR OF PROPERTY, AND THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT HEREOF, BUYER WILL RELY SOLELY UPON ITS EXAMINATIONS AND INSPECTIONS IN PURCHASING THE -17- PARTNERSHIP INTERESTS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, SELLERS HAVE NOT MADE AND DO NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE QUALITY, PATENT OR LATENT PHYSICAL OR ENVIRONMENTAL CONDITION, EXPENSES, LEGAL STATUS, ZONING, TAX CONSEQUENCES, UTILITIES, OPERATIONS, HISTORY OR PROJECTIONS, COMPLIANCE WITH LAWS, VALUE OR UTILITY OF THE PARTNERSHIP OR PROPERTY OR ANY OTHER MATTER OR THING AFFECTING OR RELATED TO THE PARTNERSHIP, THE PROPERTY OR THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY AND/OR OF FITNESS FOR A PARTICULAR PURPOSE), WHICH MIGHT BE PERTINENT IN CONSIDERING WHETHER TO PURCHASE THE PARTNERSHIP INTERESTS OR TO ENTER INTO THIS AGREEMENT; AND BUYER HEREBY EXPRESSLY ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS OR WARRANTIES (EXPRESS OR IMPLIED) HAVE BEEN MADE. SELLERS ARE NOT LIABLE OR BOUND IN ANY MANNER BY ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED, GUARANTEES, OR ANY PROMISES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PARTNERSHIP, PROPERTY OR THE VALUE THEREOF, MADE OR FURNISHED BY ANY BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON REPRESENTING OR PURPORTING TO REPRESENT SELLERS. BUYER REPRESENTS TO SELLERS THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PARTNERSHIP AND PROPERTY, INCLUDING THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR APPROPRIATE TO SATISFY ITSELF AS TO THE CONDITION OF THE PARTNERSHIP AND PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SUCH INVESTIGATIONS AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLERS OR THEIR AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, BUYER WILL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS (INCLUDING, WITHOUT LIMITATION, THE EXISTENCE OF MOLD, MILDEW AND OTHER BIOLOGICAL TOXINS OR HAZARDOUS SUBSTANCES), MAY NOT HAVE BEEN REVEALED BY BUYER'S INVESTIGATIONS, AND BUYER, UPON CLOSING, WILL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLERS (AND SELLERS' OFFICERS, DIRECTORS, PARTNERS, BENEFICIAL OWNERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLERS (AND SELLERS' OFFICERS, DIRECTORS, PARTNERS, BENEFICIAL OWNERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL AND ENVIRONMENTAL CONDITIONS, VIOLATIONS -18- OF ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY AND ALL ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PARTNERSHIP INTERESTS OR THE PROPERTY, EXCEPT TO THE EXTENT ACTIONABLE AS A BREACH OF AN EXPRESS REPRESENTATION BY ANY SELLER PURSUANT TO THIS AGREEMENT. BUYER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED UNDER ENVIRONMENTAL LAWS OR OTHERWISE AFTER THE DATE OF CLOSING, SUCH CLEAN-UP, REMOVAL OR REMEDIATION WILL NOT BE THE RESPONSIBILITY OF, AND WILL BE PERFORMED AT NO COST TO, SELLERS EXCEPT TO THE EXTENT ACTIONABLE AS A BREACH OF AN EXPRESS REPRESENTATION BY ANY SELLER PURSUANT TO THIS AGREEMENT. 6.7 REPORTS. Buyer hereby acknowledges that Sellers have delivered to Buyer a copy of the environmental reports described on SCHEDULE 6.7 attached hereto (collectively, the "REPORTS"). 6.8 NO RELIANCE ON RECORDS, REPORTS OR OTHER INSPECTION MATERIALS. Unless otherwise expressly stated herein, Sellers make no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by any Seller to Buyer in connection with the transaction contemplated hereby, including, but not limited to, the Reports, Records or the other Inspection Materials. Buyer acknowledges and agrees that all Inspection Materials and other materials, data and information prepared by third parties unaffiliated with Sellers and delivered by Sellers to Buyer in connection with the transaction which is the subject of this Agreement are provided to Buyer as a convenience only and that any reliance on or use of such materials, data or information by Buyer is at the sole risk of Buyer. Buyer agrees that Buyer will not attempt to assert any liability against any Seller Party for furnishing such information or with respect to the content of any such information. 6.9 EXISTING LOAN. Buyer acknowledges that the Real Property is encumbered by a first lien mortgage loan held by Teachers Insurance and Annuity Association of America (the "EXISTING LENDER") and evidenced by the mortgage described in the Existing Title Policy and certain other documents executed in connection therewith (such loan, the "EXISTING LOAN"). Section 7. SELLERS COVENANTS. 7.1 CONDUCT OF BUSINESS. Sellers agree that between the Agreement Date and the Closing Date, Sellers will cause the Partnership to operate and conduct its business in the ordinary course and in material compliance with all laws and to carry on its business substantially in the manner as heretofore conducted. Without limiting the foregoing, Sellers will cause the Partnership to file all sales tax returns which are due prior to the Closing Date and pay all sales tax which is, or should have been, reflected on such returns. Notwithstanding anything herein to the contrary, Sellers may cause the Partnership to assign and/or transfer the Excluded Assets out of the Partnership and, if such transfer and/or assignment is not, for any reason, -19- effectuated prior to Closing, Buyer shall, at no cost or expense to Buyer or the Partnership, cause such Excluded Assets to be transferred or assigned to the Sellers following the Closing. The obligations set forth in the preceding sentence shall survive the Closing for a period of one (1) year from the Closing Date. 7.2 LEASES AND CONTRACTS. (a) Prior to three Business Days before the Inspection Termination Date, the Partnership may, without Buyer's approval or consent (i) enter into new Leases, and/or modify, cancel, extend or otherwise change the terms, covenants or conditions of existing Leases, (ii) enter into any new Contracts terminable without material penalty on not more than thirty (30) days notice, and (iii) create any easements or similar rights with respect to the Property in the ordinary course of business (and any such easements or rights will be deemed Permitted Exceptions for all purposes). Sellers promptly, but in no event later than three Business Days prior to the expiration of the Inspection Period, will deliver to Buyer a copy of any Lease, Contract or other agreement executed by Partnership with respect to the Property as set forth in this SECTION 7.2(A). (b) Commencing on the third Business Day before the expiration of the Inspection Period, Sellers will cause the Partnership to deliver to Buyer a copy of any renewal or modification of an existing Lease or of any new Lease that the Partnership proposes to execute between the date which is three Business Days prior to the Inspection Termination Date and the Closing Date. Buyer agrees to notify the Partnership in writing within five (5) Business Days after its receipt thereof of its approval or disapproval, including all Tenant Inducement Costs and leasing commissions to be incurred in connection therewith. In the event that Buyer informs the Partnership that Buyer does not approve the renewal or expansion of the existing Lease or the new Lease, then the Partnership will not enter into the disapproved Lease, modification or renewal. In the event that Buyer fails to notify the Partnership in writing of Buyer's approval or disapproval within the five (5) day period, such failure conclusively will be deemed the approval by Buyer. 7.3 SERVICES. Sellers will cause the Partnership to provide all services with respect to the Real Property in accordance with the Partnership's customary past practices. 7.4 INSURANCE. Sellers will cause the Partnership to maintain with respect to the Property insurance in the amounts and coverages existing as of the Agreement Date. 7.5 GOVERNMENTAL NOTICES. In the event that, prior to Closing, Sellers and/or the Partnership receives any written notice from the City, County or any other governmental or quasi-governmental authority having jurisdiction over the Property of a violation or alleged violation of any statute, law, ordinance, rule, permit, regulation or agreement governing the ownership, planning, development, construction, occupancy, use or maintenance of any portion of the Property, or of any permit, approval or authorization issued in connection therewith or of any contemplated or pending investigation with respect thereto, or regarding Hazardous Substances on the Real Property or any other property adjacent to the Real Property, Sellers promptly will deliver (or cause Partnership to deliver) a copy of such notice to Buyer; and after the Inspection Termination Date, Buyer will have the option (but will not be required) either to (i) participate with Sellers and/or Partnership (as -20- applicable) in responding to such notice, or (ii) seek independently to intervene in such proceeding for the purpose of protecting Buyer's interests in and with respect to the Property. 7.6 NEGATIVE COVENANTS. Sellers hereby covenant and agree that pending the Closing or until the earlier termination of this Agreement they will not and will not permit Partnership to: (i) issue any additional interest in the Partnership or issue any warrant, option or other right to purchase any interest in the Partnership or any security convertible into an interest in the Partnership; (ii) organize any subsidiary, acquire any capital stock or other equity securities of any Person, or acquire any equity or other ownership interest in any business; (iii) acquire any new real property nor sell, transfer or otherwise convey any real property or the Partnership Interests or otherwise contract to do either (except as provided in Section 7.1(A) above with respect to easements); (iv) grant any mortgage with respect to the Property; (v) encumber or pledge or place any lien upon the Property or any part thereof or interest therein; (vi) incur any additional liabilities that will not be paid on or before the Closing Date or prorated pursuant to this Agreement; or (vii) enter into any Contract which may not be terminated upon thirty (30) days notice without penalty or premium. 7.7 CONTRACTS. To the extent that Partnership may terminate Contracts without incurring liability costs or penalties, the Contracts will be cancelled at Closing unless Buyer advises Seller at least thirty (30) days prior to the Closing Date of its desire to retain any of the Contracts (the "DESIGNATED CONTRACTS"). 7.8 AUDIT. The Buyer needs to obtain an audit of revenue and certain expenses of the Property for the year ended December 31, 2003 and a compilation of revenue and certain expenses of the Property for the period from January 1, 2004 through the Closing Date (pursuant to the Securities and Exchange Commission Rule 3-14 of Regulation S-X), Sellers agree to use commercially reasonable efforts to cooperate with, and to cause its accountants, property management staff and auditors to reasonably cooperate and assist with this project. The audit shall be performed by the Buyer's current certified public accountants and shall be conducted at Partnership's offices, or at such other location as Sellers may reasonably request. ELOI in its capacity as general partner of Partnership, and Partnership's current property management company's authorized representative, will execute and deliver to Buyer an audit representation letter substantially in the form attached to this Agreement as Exhibit D. All costs and expenses incurred by Sellers in connection with any such audit project shall be borne by Buyer. The audit representation letter is -21- being provided as an accommodation to the Buyer and any representations provided therein are not intended to, and shall not be deemed to be, representations by Sellers and/or ELOI individually under this Agreement for which Sellers have any liability to Buyer hereunder. Section 8. INSPECTION PERIOD. 8.1 INSPECTION PERIOD. Buyer will have the right, during the period (the "INSPECTION PERIOD") from and after August 19, 2004 (the "INSPECTION COMMENCEMENT DATE") through and until 5:00 P.M. (Fort Lauderdale, Florida time) on October 6, 2004 (the "INSPECTION TERMINATION DATE"), to inspect the physical and other conditions of or with respect to the Partnership and the Property, including the right to make engineering and soil tests, analyses and other investigations of the latter, to review, and to make and retain copies of, all of the contracts, leases, permits, maps, plats, plans and specifications, surveys, notices, licenses, books, records, environmental studies, reports and all other materials and information pertaining to the Partnership or use of the Real Property or any part thereof which are in the possession or control of Sellers (collectively the "INSPECTION MATERIALS"), and to investigate and/or review any other facts, circumstances or matters which Buyer deems relevant to its proposed purchase of the Partnership Interests, including the right to meet with and interview Tenants, provided that Buyer gives Sellers reasonable advance written notice of the identity of each Tenant with which Buyer proposes to meet and the time and place of each meeting with each such Tenant, and give Sellers the right to have a representative present at all times during each such meeting and interview (it being understood and agreed that such meetings will be Buyer's sole contacts with Tenants concerning the Property or the transaction which is the subject of this Agreement); provided, that Buyer, its agents or employees, will not enter upon the Real Property, without twenty four (24) hours prior written notice to Sellers, and all tests or inspections will be scheduled and conducted in a manner which does not violate any Lease and which does not unreasonably interfere with the usual and customary conduct of business of the Partnership on the Real Property. Sellers agree reasonably to make available to Buyer at the Property the Inspection Materials that Buyer reasonably requests. Buyer hereby agrees to indemnify, protect and hold harmless the Partnership and each Seller, and each of the other Seller Parties (the "INSPECTION INDEMNITY") from and against any and all claims, demands, losses, costs, damages, expenses or liabilities, including those related to or arising out of death or injury to persons or damage to property, or for construction or other liens, including reasonable attorneys' fees, related to, caused by or occurring in connection with Buyer's inspections (including inspections which were performed prior to the Agreement Date) of or concerning the Partnership or the Property. The Inspection Indemnity will survive expiration or termination of this Agreement, whether as a result of Closing or otherwise for a period of one (1) year from the Agreement Date. 8.2 RECORDS. During the Inspection Period, Sellers will provide Buyer, upon its request, access to all (i) all financial information, books, records, accounts, plans, specifications, agreements, leases, permits, notices, licenses, books, reports, environmental studies, and analyses of the Partnership, other than the Proprietary Materials, and (ii) environmental reports, title policies, structural reports, and leases regarding the Property, in the possession or control of Sellers and/or the Partnership's property manager, agents or independent contractors (collectively, the "RECORDS"). Buyer will be permitted to copy items identified by Buyer during the Inspection -22- Period. If the Closing does not occur, any documents copied or otherwise obtained by Buyer from Sellers will be returned to Sellers or destroyed by Buyer and all information obtained by Buyer from the Partnership's property manager, agents or independent contractors will be kept confidential pursuant to SECTION 16.11 hereof. 8.3 NORMAL BUSINESS HOURS. All Records and all inspections, investigations and/or inquiries with respect thereto will be made and/or conducted between the hours of 9 a.m. and 5 p.m. at the management office of the Property and access thereto will be made available to Buyer at all times upon reasonable advance notice. 8.4 TERMINATION BY BUYER. (a) Buyer will have the right, to be exercised by written notice to Sellers and Escrow Agent, at any time during the Inspection Period to terminate this Agreement for any reason which Buyer in its sole and absolute discretion deems appropriate, and upon termination pursuant to this SECTION 8.4(A), then, the Deposit (to the extent made) and any interest accrued thereon will be refunded to Buyer and thereafter this Agreement will be null and void and the parties will have no further rights or obligations hereunder, except with respect to Inspection Indemnity and as set forth in SECTION 8.1 of this Agreement. If Buyer elects to terminate this Agreement pursuant to this SECTION 8.4(A), Buyer will promptly return to Seller all Reports, Records, Inspection Materials, and all other documents and other materials provided by Seller to Buyer, and copies of all studies, evaluations, test reports and similar information which Buyer have caused to be produced by third parties, in connection with its investigations pursuant to this SECTION 8. (b) In the event that the Inspection Termination Date occurs on a Saturday, Sunday or other legal holiday, such date will be extended to the next succeeding regular business day. Section 9. CONDITIONS PRECEDENT. 9.1 SELLERS CONDITIONS. The obligation of Sellers to consummate the transaction which is the subject of this Agreement is and will be subject to the fulfillment on or before the date of Closing of all of the following conditions, any or all of which may be waived by Sellers in their sole discretion: (a) Sellers will have received the Purchase Price as adjusted pursuant to and payable in the manner provided in this Agreement; (b) Buyer will have delivered to Sellers all of the items required to be delivered to Sellers pursuant to the terms of this Agreement, including those described in SECTION 10.4 hereof; (c) All representations and warranties of Buyer contained in this Agreement will be true and correct in all material respects as of the Closing Date; (d) Buyer will have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Buyer as of Closing Date; and -23- (e) Buyer will have caused the Partnership to enter into, effective as of the Closing, a two (2) year nonterminable management agreement with the current management company for the Property upon terms and conditions mutually agreed upon by Buyer and management company prior to the Inspection Termination Date. (f) If the Buyer elects to maintain the Existing Loan, the Sellers shall receive the Release at the Closing. 9.2 BUYER CONDITIONS. The obligation of Buyer to consummate the transaction which is the subject of this Agreement is and will be subject to the fulfillment on or before the date of Closing of all of the following conditions, any or all of which may be waived by Buyer in its sole discretion: (a) Sellers will have delivered to Buyer all of the items required to be delivered to Buyer pursuant to the terms of this Agreement, including those provided in SECTION 10.3; (b) Sellers will have performed and reserved, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Sellers as of the Closing Date; and (c) No later than five (5) days prior to Closing, Sellers shall have delivered to Buyer Estoppel Certificates satisfying the Minimum Estoppel Requirements.(2) If any Estoppel Certificate obtained by Sellers shall contain any modifications or supplements from the form of certificate attached hereto as FORM 2 or the form attached to the Tenant's Lease in question (other than de minimis changes and changes permitted thereby), then the Buyer shall have the right to approve any such modifications or supplements and changes permitted hereby from the applicable Lease(s) (such approval may be withheld or conditioned in Purchasers' sole and absolute discretion) and, if Buyer does not approve same, and Sellers do not agree to correct the discrepancy, then such Estoppel Certificate shall not be counted towards satisfying the Minimum Estoppel Requirements. Moreover, notwithstanding anything contained herein to the contrary, if the Minimum Estoppel Requirements shall not be satisfied, then Sellers shall not be deemed to be in default under this Agreement, and the Buyer shall, at the Buyer's option, elect prior to the Closing Date either to (i) terminate this Agreement and all parties hereto shall be relieved of any further liability arising out of or from this Agreement (except for the obligations hereunder specifically designated as surviving such termination) and the Deposit and accrued interest thereon shall be returned to the Buyer, or (ii) waive the condition precedent set forth in this Section 9.2(C) and proceed to the Closing as scheduled, subject, however, to all other conditions precedent set forth in this Agreement (PROVIDED, HOWEVER, that either party, upon written notice given prior to the Closing Date, may extend the Closing Date for up to thirty (30) days in the aggregate in order to allow Sellers to obtain such Estoppel Certificates, it being understood and agreed that any such extension shall not be in derogation of any rights or conditions in favor of the parties under this Agreement; - --------------- (2) Sellers agree to promptly deliver Estoppel Certificates to Buyer as they are received from tenants. -24- (d) If the Buyer does not elect to maintain the Existing Loan, upon the payment of the Purchase Price by the Buyer, the Existing Loan and Prepayment Costs shall be paid-off by Sellers (at Sellers' sole cost and expense) at or prior to Closing; (e) There shall not have occurred a Material Adverse Change between the Inspection Termination Date and the Closing Date; (f) The Title Company shall have signed and issued to Buyer and Partnership at the Closing or is able to do so upon payment of the applicable costs and premium an ALTA extended coverage Owner's Policy of Title Insurance with liability in the full amount of the Purchase Price containing the endorsements and affirmative insurance coverage that Buyer has requested, subject only to the Permitted Encumbrances (excluding the Existing Loan unless it is maintained by Buyer) insuring Partnership as the owner of good and marketable fee simple title to the Real Property, dated the date of the Closing (the "TITLE POLICY"); (g) There shall exist no breach of any of Sellers' representations, warranties or certifications set forth in this Agreement as of the Closing Date, as if made as of the Closing Date; PROVIDED, HOWEVER, that the foregoing condition shall be deemed satisfied notwithstanding (w) a change in the representations and warranties in SECTION 5.2.3 so long as the matters described therein (1) do not exceed $2,000,000 in the aggregate, and (2) do not prevent the Closing, (x) a change in the representations and warranties set forth in SECTION 5.2.7 and SECTION 5.2.10 hereof as a result of actions permitted under SECTION 7 hereof, (y) de minimus claims, settlements or other matters which are disclosed by Seller's update of the second and third and last sentence of SECTION 5.2.15 hereof; or (z) any debt which is disclosed by Seller's update of SCHEDULE 5.2.11, if and only if, such debt was not prohibited from being incurred under SECTION 7 hereof and such debt is prorated under Section 10 hereof. (h) Not later than five (5) Business Days prior to the Closing Date, Sellers shall have delivered to Buyer the Lender Estoppel; (i) Not later than five (5) Business Days prior to the Inspection Termination Date, Sellers shall have delivered to Buyer the Association Estoppel; (j) The Partnership shall have terminated any and all management agreements existing between Partnership and any Affiliate of any Seller other than the management agreement contemplated by SECTION 9.1(E) and Section 9.2(K); (k) The current management company will have entered into a two (2) year nonterminable management agreement with the Partnership, effective as of the Closing Date, for the Property upon terms and conditions mutually agreed upon by Buyer and management company prior to the Inspection Termination Date. Section 10. CLOSING. 10.1 TIME AND PLACE. Unless extended pursuant to the provisions of this Agreement, the Closing will take place commencing at 9:00 A.M. at the office of Berger Singerman, P.A., 350 East Las Olas Boulevard, Suite 1000, Fort Lauderdale, Florida 33301, or such other place as mutually agreed, on the thirty (30) days following the Inspection Termination Date. In the event -25- that the applicable date falls upon a Saturday, Sunday or other legal holiday, the Closing will occur on the next succeeding Business Day. 10.2 EXPENSES. (a) At or prior to Closing, Buyer will pay all costs and expenses associated with Buyer's financing; the cost of preparation of the Title Commitment, the premium for the Title Policy, and the costs for mortgagee title insurance policy and any endorsements thereto; all costs related to or arising out of Buyer's due diligence investigations and analyses and, to the extent applicable, all Existing Loan Costs or Prepayments Costs. (b) Each party will pay any fees due to its attorneys or other consultants. 10.3 DELIVERY OF DOCUMENTS BY SELLERS. At the Closing, in addition to any other documents specifically required to be delivered or acts required to be done pursuant to this Agreement, Sellers will deliver, or cause to be delivered, to Buyer the following: (a) the duly executed Assignment; (b) certified copies of resolutions of each Seller authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; (c) such affidavit(s) or certifications as reasonably and customarily may be required to induce the Title Agent and/or Underwriter to issue the Closing Commitment(s) to Buyer at Closing; (d) an affidavit stating that (i) there are no unpaid bills for labor, materials or services to the Real Property and, within the ninety (90) prior to Closing, the Partnership has not entered into any agreement or contract with any party for the furnishing of labor, services or materials which could be the basis for any claims against the Real Property; and (ii) no Person has any right or claim to possession of the Real Property, other than Tenants, as tenants only, under the Leases; (e) an affidavit complying with the provisions of Section 1445(b)(2) of the Internal Revenue Code of 1954, as amended, stating that Sellers are not foreign persons; (f) a certificate (the "CLOSING CERTIFICATE"), dated as of the Closing Date and executed on behalf of Sellers by duly authorized officers thereof, stating that the representations and warranties of Sellers contained in this Agreement are true and correct as of the Closing Date (with appropriate modifications of those representations and warranties made in SECTION 5 hereof to reflect any changes therein, or identifying any representation or warranty which is not, or no longer is, true and correct and setting forth the state of facts giving rise to the change); (g) the Leases, Designated Contracts, guaranties and warranties, equipment leases, parking agreements and licenses and permits, if any, in the possession of Sellers or Sellers' agents, together with all leasing and property files and records related to the ownership, operation, leasing and -26- maintenance of the Real Property (excluding, however, the Proprietary Materials). Buyer, at no material expense to Buyer, will make available to Sellers, for a period of three (3) years after Closing, all instruments, files and records delivered to Buyer hereunder, for the purpose of responding to any legal requirement, tax audit, tax return preparation or litigation threatened or brought against Sellers, which right will survive the Closing; (h) to the extent in the possession of Sellers or their agent(s) or property manager, all keys, electronic pass cards or devices to all entrance doors to, and equipment and utility rooms and vault boxes located in, the Real Property, which keys and electronic pass cards or devices will be tagged for identification and which delivery may be accomplished by Sellers or their agent(s) or property manager depositing such items in the management office in the Real Property. (i) if the Buyer does not elect to maintain the Existing Loan, deliver a payoff letter or other reasonable evidence of satisfaction of the Existing Loan; (j) deliver resignations of any and all officers of the Partnership in the form attached hereto as FORM 6 and releases from such officers for any claim for compensation in the form attached hereto as FORM 7; (k) deliver a balance sheet of the Partnership dated as of the date immediately prior to the Closing Date ("CLOSING BALANCE SHEET") which fairly presents in all material respects the assets and liabilities of the Partnership as of the date of such statement, and which shall be prepared in accordance with GAAP (except for adjustments hereafter provided), subject to customary year end adjustments and without the inclusion of footnotes thereto and reflecting the adjustments provided on SCHEDULE 10.3(K); (l) deliver a release from each Seller in the form attached hereto as FORM 8; (m) Sellers shall cause the Financially Responsible Party to execute and deliver a Guarantee in the form attached hereto as FORM 9 (a "GUARANTEE"); (n) current Good Standing Certificates for Partnership and Sellers; (o) Tenant notification letters if requested by Buyer in a form provided by Buyer and reasonably approved by Sellers within ten (10) Business Days prior to Closing; (p) any other documents, instruments or agreements reasonably necessary to effectuate the transactions contemplated by this Agreement and reasonably requested by Purchasers or their representatives; provided that Sellers shall not be obligated to cause the delivery of any such instrument or document that would increase or expand Sellers' obligations or liability under this Agreement (other than in de minimus respects); (q) an amendment of the Certificate of Limited Partnership of Partnership, which shall be prepared by, and be in form, scope and substance satisfactory to Buyer; (r) resignation of each member of the Board and officer of the Association who is affiliated with a Seller in the form attached hereto as FORM 10; -27- (s) the books and records of the Association to the extent in Sellers' or Partnership's possession; (t) deliver a Certificate of Net Worth of Halmos executed by Halmos in the form attached hereto as FORM 11; and (u) deliver a Certificate of Net Worth of WLD executed by WLD in the form attached hereto as FORM 12. 10.4 DELIVERY OF DOCUMENTS BY BUYER. At the Closing, in addition to any other documents specifically required to be delivered or required to be done pursuant to this Agreement, Buyer will deliver, or cause to be delivered, to Sellers: (a) the duly executed Assignment; (b) by bank wire transfer of immediately available funds (directly or by payment to Title Agent for Sellers' account) the appropriate balance of the Purchase Price due and will instruct Escrow Agent to deliver the Deposit to Sellers (directly or by payment to Title Agent for Sellers' account); (c) a certified copy of resolutions of Buyer authorizing the execution and delivery of this Agreement and consummation of the transactions contemplated hereby; and (d) deliver a release from the Partnership in the form attached hereto as FORM 13. 10.5 PRORATIONS. Sellers and Buyer agree that Buyer is acquiring the Partnership Interests from Sellers pursuant to this Agreement. However, at the Closing, Sellers and Buyer agree to prorate the income and expenses of the Property to the same extent as if Buyer was acquiring the Property from the Partnership in a real property transaction, provided that any adjustments that would be attributed to the Partnership, as a seller of real property, will be attributed to Sellers in the proration calculations. (a) Except as otherwise specifically set forth in this Agreement, ad valorem property taxes and other revenues and expenses of, and impounds, prepayments or deposits affecting or related to, the Property (excluding insurance costs and premiums), and rent theretofore received pursuant to the Leases for the month in which the Closing occurs, will be prorated between Sellers and Buyer as of the Closing Date. Ad valorem property taxes will be prorated on the basis of the 2004 Trim Notice received with respect to the Real Property, with maximum discount allowed by law. Any Closing proration of taxes will be reprorated at the request of either party when the final actual tax bill for the year of Closing is available. Special assessment liens certified, or for which the work has been substantially completed, as of the Closing Date will be paid by Sellers. Sellers will deliver to Buyer, or Buyer will receive a credit against the Purchase Price in the amount of, any security deposits held as of Closing by Sellers pursuant to the Leases. The Sellers shall receive a credit for the amount of the Existing Loan Escrow. -28- (b) Notwithstanding anything contained above to the contrary, Sellers and Buyer agree that all rents received after Closing will be applied first to rentals then currently due, and any rent received in excess of the rents or other charges then currently due (net of costs of collection, if any) will be applied on account of delinquencies in the order of occurrence. In the event that after Closing Buyer receives (a) rental payments applicable in part to the month in which Closing occurs, or (b) other payments in excess of the rents then due, Sellers' portion thereof, less Sellers' pro rata portion of any costs of collection, will be remitted promptly by Buyer to Sellers. Sellers may pursue the collection of any past due rents directly against Tenants who are no longer in possession after Closing, and Buyer will cooperate at no cost to it with Sellers in connection therewith. (c) Intentionally left blank. (d) Buyer will be responsible for the payment of (i) all Tenant Inducement Costs and leasing commissions which become due and payable (whether before or after Closing) (A) as a result of any renewals or modifications of existing Leases between the Agreement Date and the Inspection Termination Date, (B) under any new Leases, approved or deemed approved in accordance with SECTION 7.2(B) hereof, entered into between the Inspection Termination Date and the date of Closing, or entered into by Buyer after the Closing. Sellers shall receive a credit for all Tenant Inducement Costs and leasing commissions to the extent paid by Sellers or Partnership prior to Closing with respect to the Leases described in the immediately preceding sentence equal to the amount, if any, determined by multiplying (i) all amounts paid by the Partnership for Tenant Inducement Costs with respect to such Leases, and (ii) a fraction the numerator of which is the number of days in the lease term after the Closing Date and the denominator of which is the total number of days in the lease term. If the Tenant Inducement Costs are attributable to an expansion, the proration of such costs shall be based upon the lease term of the expansion space. The Buyer shall pay all Tenant Inducement Costs and leasing commissions due to the existing Leases which become due and payable from and after the date of Closing. The Buyer shall receive a credit for all Tenant Inducement Costs and leasing commissions with respect to existing Leases if such costs have not been paid at Closing. With respect to any unpaid Tenant Inducement Costs and leasing commissions for which Buyer is obligated hereunder, Buyer will expressly assume those obligations and indemnify and hold Sellers harmless with respect thereto pursuant to an assumption and indemnity agreement in form and substance reasonably satisfactory to Sellers and Buyer. (e) In the event that, as of Closing, Sellers and Buyer are unable to make an exact determination of any items of income and expense (including, without limitation, rents and annual operating expenses subject to reimbursement by Tenants under the Leases (the "CAM CHARGES") to be adjusted as of the Closing Date), Sellers and Buyer will cooperate for sixty (60) days after the Closing Date to make such final determinations (except for the bill for real estate taxes and final determination of CAM Charges, which may not be available within such sixty (60) day period). On or before the sixtieth (60th) day after the Closing Date, Sellers and Buyer will complete the calculation of any sums not adjusted at Closing (other than taxes and CAM Charges), and the party from whom any net payment is due will promptly remit the sum due in immediately available funds. Promptly after the actual ad valorem real property taxes due for the year of Closing are determinable, any estimated tax proration made at Closing will be reprorated as set forth above. Further, promptly after the final -29- accounting has been made with respect to actual CAM Charges for the year in which Closing occurs has been completed, if the total CAM Charges due from Tenants exceeds the amount actually collected from Tenants for such year, Buyer will make a diligent good faith to collect from each Tenant the amount of such excess payable pursuant to its Lease, and promptly upon receipt thereof will remit to Sellers the pro rata share of each "catch up" payment. (f) DEFICIT NET WORTH. The Buyer shall receive a credit for the amount, if any, by which the net worth of Partnership reflected on the Closing Balance Sheet is less than zero. (g) POSITIVE NET WORTH. The Sellers shall receive a credit for the amount, if any, by which the net worth of Partnership reflected on the Closing Balance Sheet exceeds zero. (h) Buyer shall receive a credit of $120,000 with respect to the termination of the Wolfgang Puck Express ("Puck") lease (if the Partnership has not negotiated a lease termination with respect to the Puck lease prior to the Closing Buyer shall cause all rights with respect to payments under the Puck lease to be assigned to Sellers and shall cooperate with Sellers, at no cost or expense to Buyer, with respect to Seller's collection efforts with respect to Puck lease). If after the Closing, the lease is not terminated and Wolfgang Puck becomes a tenant in good standing of the Property then Buyer shall refund the $120,000 credit to Sellers. (i) POST-CLOSING ADJUSTMENTS. Within one hundred twenty (120) days following the Closing, Sellers and Buyer shall reasonably cooperate in determining and making post-closing adjustments. If a dispute arises regarding the post-closing adjustments identified in such 120 day period (it being understood and agreed that such dispute shall not extend the 120-day period under the immediately preceding sentence), the Buyer and Sellers shall promptly and jointly engage one of the "Big 4" accounting firms to determine the disputed post-closing adjustment(s). The conclusion of said accounting firm with respect to the disputed matter shall be conclusive and binding on the parties absent manifest error. Each of the Buyer and Sellers shall pay one-half of the cost of the services of the accounting firm. (j) The provisions of this SECTION 10.5 will survive Closing for a period of one (1) year after the Closing. 10.6 EXECUTION AND DELIVERY OF CLOSING STATEMENT. At Closing, in addition to any other documents required to be executed and delivered in counterparts by both parties, Sellers and Buyer will execute and deliver to each other closing statements accounting for sums adjusted or disbursed at Closing. Section 11. BROKERS. Sellers' represent and warrant to Buyer that there has been no broker, sales representative, finder, or agent involved in this transaction who would be entitled to a commission or other compensation on account of its relationship with Sellers, except Broker. Buyer represents and warrants to Sellers that there has been no broker, sales representative, finder or agent involved in this transaction who would be entitled to a commission or other compensation on account of its relationship with Buyer. At the Closing, if and only if the Closing occurs, Sellers shall pay to Broker a fee pursuant to a separate agreement between Broker and Sellers. Buyer agrees to and do hereby indemnify and hold Sellers' harmless of and from any and all claims, damages, actions or suits (including all court costs and attorneys' fees) arising out of -30- or relating to any alleged agreement by Buyer to pay a commission or other compensation to any broker, sales representative, finder or agent in connection with this transaction. Sellers' agrees to and does hereby indemnify and hold Buyer harmless of and from any and all claims, damages, actions or suits (including all court costs and attorneys' fees) arising out of or relating to any alleged agreement by Sellers to pay a commission or other compensation to any broker, sales representative, finder or agent in connection with this transaction (including with respect to any claim for payment made by Broker relating to this Agreement). Section 12. DEFAULT. 12.1 BUYER'S DEFAULT. If Buyer defaults in its obligation pursuant to the Agreement (provided, however, for non-monetary matters, Buyer shall have ten (10) Business Days after receipt of written notice from Sellers to cure such default), Sellers' sole remedy will be to terminate this Agreement, and in such event Escrow Agent will deliver the Deposit and all interest accrued thereon to Sellers as agreed and liquidated damages in full settlement of all claims of Sellers against Buyer related to the transactions which are the subject of this Agreement, it being specifically understood and agreed that in such event Sellers will suffer damages otherwise incapable of precise ascertainment; and thereafter this Agreement will be null and void and the parties hereto will have no further rights or obligations hereunder except with respect to the Inspection Indemnity and as set forth in SECTION 15.11 of this Agreement. Notwithstanding anything in the preceding sentence to the contrary, in the event that Buyer fails to make either the First Deposit or the Second Deposit in the time periods required hereunder and otherwise does not terminate this Agreement in accordance with SECTION 8.4 above, such failure shall be deemed an election by Buyer to terminate this Agreement under SECTION 8.4 and the Deposit, if any, and interest earned thereon shall be returned to Buyer. 12.2 SELLERS' DEFAULT. 12.2.1 Except as provided in SECTION 12.2.2, in the event Sellers default in their obligations pursuant to this Agreement (provided, however, Sellers shall have ten (10) Business Days after receipt of written notice from Buyer to cure such default), Buyers may, at Buyers' sole option and as Buyers' sole remedy, (a) receive a full refund of the Deposits and all interest accrued thereon and terminate this Agreement, or (b) maintain an action for specific performance of the terms of this Agreement; provided that a complaint seeking specific performance is filed not later than forty-five (45) days after Sellers' alleged failure or refusal, failing which Buyers' sole remedy will be as set forth in subparagraph (a) hereof. Except as provided in SECTION 12.2.2, Buyers hereby waive and disclaim any right to monetary damages. 12.2.2 In the event Seller wrongfully conveys the Partnership Interests or the Partnership wrongfully convey the Property to a third party prior to Closing and the remedy of specific performance is not available to Buyer, then Buyer shall have all remedies available at law or in equity, subject, however, to the Maximum Liability. 12.3 In no event whatsoever shall Buyer be entitled to any damages, rights or remedies against any Seller as a result of any default of Sellers hereunder, other than as specifically set forth in Sections 12.2.1 through 12.2.2 and Section 5.4. -31- Section 13. RISK OF LOSS. 13.1 CASUALTY. Sellers will bear all risk of loss occurring to or upon any portion of the Property prior to transfer of the Property by Sellers to Buyer pursuant to the terms of this Agreement. In the event that a "material" portion of the Property is damaged or destroyed prior to Closing, Buyer may, at its option, (a) terminate this Agreement by written notice to Sellers, upon which the Deposit, and all interest accrued thereon, promptly will be returned to Buyer, and thereafter the parties will have no further rights or obligations hereunder except with respect to the Inspection Indemnity, or (b) proceed to Closing and receive from Seller all insurance proceeds with respect to such damage or destruction, and the amount of any deductible relating thereto. In the event that less than a "material" portion of the Property is damaged or destroyed prior to Closing, Buyer will be obligated to proceed to Closing notwithstanding such damage or destruction, in which event Sellers will deliver or assign to Buyer at Closing all insurance proceeds with respect to such damage or destruction and the amount of any deductible related thereto. 13.2 CONDEMNATION. In the event that a "material" portion of the Property is taken by eminent domain or condemnation proceeding prior to Closing, Buyer may either (a) proceed to close notwithstanding the eminent domain or condemnation proceeding, in which event Sellers will assign to Buyer its entire right, title and interest in and to any award in such condemnation proceeding, or (b) terminate this Agreement by delivering written notice of termination to Sellers upon which the Deposit, and all interest accrued thereon, promptly will be refunded to Buyer and thereafter this Agreement will be null and void and the parties will have no further rights or obligations hereunder except with respect to the Inspection Indemnity. In the event that a "material" portion of the Property is taken by eminent domain or condemnation proceeding prior to Closing, Buyer will be obligated to proceed to Closing notwithstanding such proceeding, in which event Sellers will assign to Buyer its entire right, title and interest in and to any award. Sellers agree promptly to notify Buyer of any eminent domain or condemnation proceeding. 13.3 MATERIALITY. For purposes of this Section 13, a "material" casualty or condemnation event will include any damage or taking involving (i) more than $500,000 in repair and/or replacement costs or loss of value of the Property (as promptly determined by Partnership's insurance adjuster as applicable to a casualty), (ii) more than five percent (5%) of the Tenants, or (iii) the loss of access (excluding temporary [less than thirty (30) days] losses) to the public streets and/or to the parking garage used in connection with the operation of the Property and/or the loss of 10 or more parking spaces. Section 14. ESCROW AGENT. 14.1 OBLIGATIONS OF ESCROW AGENT. Buyer and Sellers hereby acknowledge that Escrow Agent undertakes hereunder to perform only such duties as are expressly set forth herein and other duties or obligations will be inferred against Escrow Agent. 14.2 RELIANCE. Escrow Agent (i) may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, (ii) may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and (iii) may assume that any person -32- purporting to give any writing, notice, advice or instruction in connection with the provisions hereof has been duly authorized to do so. 14.3 INDEMNITY. Buyer and Sellers hereby agree, jointly and severally, to indemnify Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or any other expense, fees or charges of any character or nature whatsoever, which it may incur or with which it may be threatened by reason of its acting as Escrow Agent hereunder, except to the extent resulting from Escrow Agent's gross negligence, fraud or willful misconduct; and in connection therewith, to indemnify Escrow Agent against any and all expenses, including attorneys' fees and the cost of defending any action, suit or proceedings or resisting any claim; provided, that with respect to any such claims, liabilities, losses, actions, suits, proceedings, costs or expenses relating to a dispute between Sellers and Buyer, as between Sellers and Buyer the non-prevailing party will be the primary obligor with respect to the foregoing indemnity. 14.4 INTERPLEADER. If there is any disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety, of any action contemplated by Escrow Agent hereunder, Escrow Agent may, at its sole discretion, file an action in interpleader to resolve such disagreement. Escrow Agent will be indemnified for all costs, including reasonable attorneys' fees, in connection with the aforesaid interpleader action, and will be fully protected in suspending all or a part of its activities under this Agreement until a final judgment in the interpleader action is received. 14.5 COUNSEL. Escrow Agent may consult with counsel of its own choice will have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. Escrow Agent will otherwise not be liable for any mistakes of fact or error of judgment, or for any acts or omissions of any kind unless caused by its willful misconduct or gross negligence. Buyer acknowledges that Escrow Agent is also acting as counsel to Sellers, and agrees that Escrow Agent's duties pursuant to this SECTION 14 will not be deemed a conflict of interest affecting such representation of Sellers. 14.6 RESIGNATION. Escrow Agent may resign upon 15 days' written notice to Buyer and Sellers. If a successor Escrow Agent is not appointed within such 15-day period, Escrow Agent may petition a court of competent jurisdiction to name a successor. Section 15. MISCELLANEOUS. 15.1 LITIGATION. In the event of any litigation between Sellers and Buyer concerning the terms of this Agreement, the prevailing party will be entitled to reimbursement of its reasonable costs and expenses, including attorneys' fees, incurred in trial, appellate and postjudgment proceedings. 15.2 NOTICES. Notices required or permitted to be given pursuant to the terms of this Agreement will be delivered in person or sent by certified mail, return receipt requested, postage prepaid, by recognized contract carrier providing signed receipt for delivery, and will be deemed delivered on the date of delivery, if in person on the date actually received, if sent by mail or contract carrier. Notices will be delivered at the following -33- addresses/facsimile numbers, subject to the right of any party to change the address/facsimile number at which it is to receive notice by written notice to the other party: To Seller: Stiles Corporation 300 SE 2nd Street Fort Lauderdale, FL 33301 Attention: Rocco Ferrera Telephone: (954) 627-9300 Facsimile: (954) 627-9399 Copy to: Berger Singerman, P.A. 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, FL 33301 Attention: James L. Berger, Esq. Telephone: (954) 525-9900 Facsimile: (954) 523-2872 To Buyer: CRT Acquisition, LLC 225 N.W. Mizner Blvd., #200 Boca Raton, Florida 33432 Attention: William J. Wedge, Esq. Todd Amara Telephone: 561-447-1855 Facsimile: 561-394-7712 Copy to: White & Case LLP Wachovia Financial Center, Suite 4900 200 South Biscayne Boulevard Miami, Florida 33131-2352 Attention: K. Lawrence Gragg, Esq. Telephone: (305) 371-2700 Facsimile: (305) 358-5744 To Escrow Agent: White & Case LLP Wachovia Financial Center, Suite 4900 200 South Biscayne Boulevard Miami, Florida 33131-2352 Attention: K. Lawrence Gragg, Esq. Telephone: (305) 371-2700 Facsimile: (305) 358-5744 -34- 15.3 INTEGRATION AND SEVERABILITY. This Agreement and the attachments hereto set forth the entire understanding of Buyer and Seller with the respect to the matters which are the subject of this Agreement, superseding and/or incorporating all prior or contemporaneous oral or written agreements, and may be changed, modified, or amended only by an instrument in writing executed by the party against whom the enforcement of any such change, modification or amendment is sought. Any provision of this Agreement that is prohibited or unenforceable will be ineffective to the extent of such prohibition or invalidity without invalidating the remaining portions hereof. 15.4 SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit of and be binding upon, and is intended solely for the benefit of, the parties hereto, and their respective heirs, personal representatives, successors, and assigns; and no third party will have any rights, privileges or other beneficial interests herein or hereunder. Buyer shall not assign this Agreement without the prior written consent of Sellers, which consent may be withheld in Sellers' sole discretion. Any such permitted assignment shall not relieve Buyer from any liability under this Agreement. Notwithstanding anything herein to the contrary, Buyer may without the consent of Sellers, assign Buyer's interest in this Agreement to an Affiliate. 15.5 COUNTERPARTS. This Agreement may be executed in counterparts, and all such executed counterparts shall constitute the same agreement. It shall be necessary to account for only one such counterpart in proving this Agreement. 15.6 SEVERABILITY. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect. 15.7 NO THIRD PARTY BENEFICIARY. The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Sellers and Buyer only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing. 15.8 TIME. Time is of the essence with respect to all matters set forth in this Agreement. 15.9 NO RECORDATION. Neither this Agreement nor any memorandum of the terms hereof will be recorded or otherwise placed of public record and any breach of this covenant will, unless the party not placing same of record is otherwise in default hereunder, entitle the party not placing same of record to pursue its rights and remedies pursuant to SECTION 13. 15.10 ENERGY-EFFICIENCY RATING. In accordance with Florida Statutes ss.553.996, Buyer may have the energy-efficiency rating of the Property determined. Buyer acknowledges that they have received from Sellers a copy of The Florida Building Energy-Efficiency Rating System Brochure as provided by the State of Florida Department of Community Affairs. -35- 15.11 CONFIDENTIALITY. The existence and contents of this Agreement and the matters disclosed by any due diligence review undertaken by Buyer in connection with the transaction herein contemplated and any additional information furnished by Sellers to Buyer hereunder from time to time will be kept confidential and shall not be disclosed to any third parties without the consent of both parties hereto, except for any disclosure that may be required by law to be made to Buyer's affiliates, investors, accountants, lenders, lawyers and experts and any applicable governmental or quasi-governmental authorities. Each party recognizes the need to disclose aspects of this transaction to its respective affiliates, investors, accountants, lenders, attorneys and other consultants. No party is responsible for the actions of third parties as to the disclosure of confidential information, but each party agrees to inform its accountants, lenders, attorneys and other consultants of the confidentiality of this transaction and all such other information and, upon request of the other, agrees to use reasonable efforts to obtain confidentiality agreements from such third parties. 15.12 PUBLIC DISCLOSURE. Sellers and Buyer agree that they will jointly control the text, and issuance, of any public press releases or statements pertaining to this Agreement or the transactions contemplated hereunder prior to Closing and that any public disclosure shall not disclose the individual partners or owners of Sellers; provided, however, the foregoing shall not apply to any disclosure required under law or stock exchange rules. The parties agree to reasonably cooperate with each other to implement the foregoing. The terms of this SECTION 15.2 shall survive the Closing or earlier termination of this Agreement. 15.13 CONSTRUCTION. Headings and similar structural elements set forth in this Agreement are intended for ease of reference only, and are not intended, and will not be construed, to reflect the intention of the parties or to affect the substance of this Agreement. This Agreement has been negotiated at arm's length between Sellers and Buyer, each represented by legal counsel of its choice and having an ample opportunity to negotiate the form and substance hereof, and therefore in construing the provisions of this Agreement the parties will be deemed to have had equal roles in drafting. 15.14 GOVERNMENTAL APPROVALS. Nothing contained in this Agreement shall be construed as authorizing Buyer to apply for a zoning change, variance, subdivision maps, lot line adjustment, or other discretionary governmental act, approval or permit with respect to the Property prior to the Closing, and Buyer agrees not to do so. Buyer agrees not to submit any reports, studies or other documents, including, without limitation, plans and specifications, impact statements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to any governmental agency, or any amendment or modification to any such instruments or documents prior to the Closing. Buyer's obligation to purchase the Property shall not be subject to or conditioned upon Buyer's obtaining any variances, zoning amendments, subdivision maps, lot line adjustment or other discretionary governmental act, approval or permit. 15.15 TAX DEFERRED EXCHANGE. 15.15.1 Buyer acknowledges that Sellers may seek to implement a like kind exchange of the Property under Section 1031 of the Code. Buyer agrees to cooperate with Sellers in effecting such exchange, including executing and delivering documents to and in the name of, and delivering the Purchase -36- Price to, such other persons or entities as Sellers may designate. Sellers shall indemnify Buyer with respect to any costs directly incurred in connection with such Section 1031 exchange by Sellers and such cooperation, except such de minimus cost of its attorneys and other advisors as may be required in connection with the review of any documents which relate to the proposed Section 1031 exchange. 15.15.2 Buyer hereunder desires to exchange other property of like kind and qualifying use within the meaning of Section 1031 of the Internal Revenue Code of 1986, as amended and the Regulations promulgated thereunder, for title in the Real Property which is the subject of this contract. Buyer expressly reserves the right to assign its rights, but not its obligations, hereunder to a Qualified Intermediary as provided in IRC Reg. 1.1031 (k)-1(g)(4) on or before the Closing Date. Buyer shall indemnify Sellers with respect to any costs directly incurred in connection with such Section 1031 exchange by Buyer and such cooperation, except such de minimus cost of its attorneys and other advisors as may be required in connection with the review of any documents which relate to the proposed Section 1031 exchange. 15.16 DISCHARGE, SURVIVAL AND LIABILITY. The delivery of the Assignment by Sellers, and the acceptance thereof by Buyer, shall be deemed to be the full performance and discharge of every covenant and obligation on the part of Sellers to be performed hereunder except for the obligations which specifically survive Closing. Notwithstanding anything to the contrary set forth in this Agreement or otherwise, the liability of each Seller under this Agreement shall be several liability. 15.17 WAIVER OF TRIAL BY JURY. Sellers and Buyer, to the extent they may legally do so, hereby expressly waive any right to trial by jury of any claim, demand, action, cause of action, or proceeding arising under or with respect to this Agreement, or in any way connected with, or related to, or incidental to, the dealings of the parties hereto with respect to this Agreement or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and irrespective of whether sounding in contract, tort, or otherwise. To the extent they may legally do so, Sellers and Buyer hereby agree that any such claim, demand, action, cause of action, or proceeding shall be decided by a court trial without a jury and that any party hereto may file an original counterpart or a copy of this Section with any court as written evidence of the consent of the other party or parties hereto to waiver of its or their right to trial by jury. 15.18 GOVERNING LAW. This Agreement is governed by and will be construed in accordance with the laws of the State of Florida, and in the event of any litigation concerning the terms of this Agreement, exclusive venue thereof will be in the County. 15.19 RADON GAS, MOLD AND MILDEW. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of Radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding Radon and Radon testing may be obtained from your county public health unit. Mold and mildew are naturally occurring biological substances in buildings and other structures located in the State of Florida, may present health risks to person who are -37- exposed to it over time. Buyer is advised to inspect the Property with respect to the existence of mold, mildew and other biological toxins and substances which may be located in the Property. 15.20 NO HIRING. For a period of two (2) years following the Closing, Buyer shall not hire directly, nor will they permit any of their Affiliates to hire, any employees of Sellers or any Affiliate of any Sellers who was involved in managing the Real Property. This provision shall survive the Closing. 15.21 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which will constitute the same instrument. [Signatures on Next Page] -38- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date(s) hereinafter set forth. WITNESSED BY: PARTNERSHIP: ELO ASSOCIATES II, LTD., a Florida limited partnership By: EAST LAS OLAS INVESTORS II, a Florida general partner /s/ PAULA NEWMAN By: SEOLA II, Ltd., a Florida limited - --------------------------- partnership, its general partner Name: Paula Newman By: SEOLA II, Inc., a Florida corporation, its general partner /s/ JUDY SHERMAN - ---------------------------- Name: Judy Sherman By: /s/ ROCCO FERRERA ----------------------------------- Name: Rocca Ferrera Title: Vice President Date: September 30, 2004 SELLERS: WLD REALTY, LTD., a Florida limited partnership /s/ ROBERT J. PUCK By: DL Trust, General Partner - ---------------------------- Name: Robert J. Puck By: /s/ DAVID W. HORITZ ------------------------------------- Name: David W. Horitz Title: Trustee /s/ VIRGINIA J. BAKER - ---------------------------- Name: Virginia J. Baker Date: September 29, 2004 HALMOS HOLDINGS, INC., a Florida corporation /s/ CYNTHIA ELLIS By: /s/ STEVEN HALMOS - ---------------------------- ------------------------------------- Name: Cynthia Ellis Name: Steven Halmos Title: President /s/ DENISE MCCORMACK - ---------------------------- Name: Denis McCormack Date: October 1, 2004 -39- EAST LAS OLAS INVESTORS II, a Florida general partnership By: SEOLA II, Ltd., a Florida limited partnership, its general partner /s/ PAULA NEWMAN By: SEOLA II, Inc., a Florida corporation, - ------------------------------- its general partner Name: Paula Newman By: /s/ ROCCO FERRERA -------------------------------------- Name: Rocca Ferrera /s/ JUDY SHERMAN Title: Vice President - ------------------------------- Name: Judy Sherman Date: September 29, 2004 BUYER: KOGER ACQUISITION, LLC, a Florida limited liability company By: /s/ THOMAS J. CROCKER -------------------------------------- Name: Thomas J. Crocker /s/ ANGELO J. BIANCO Title: Chief Executive Officer - ------------------------------- Name: Angelo J. Bianco Date: September 30, 2004 - ------------------------------- Name: -40- JOINDER The undersigned joins in and consents to this Agreement for the purposes of acknowledging that it shall be paid the Broker Fee if, and only if, Closing shall occur, and shall not hold Sellers (or any of them) or Buyer responsible for any compensation or commissions in the event that Closing fails to occur. HOLLIDAY FENOGLIO FOWLER, L.P., A TEXAS LIMITED PARTNERSHIP By: Holliday GP Corporation, Its General Partner By: /s/ J. Daniel Carlo --------------------------------------- Name: J. DANIEL CARLO Title: SENIOR MANAGING DIRECTOR -41- Escrow Agent hereby agrees to hold and disburse the Deposit pursuant to the provisions of the foregoing Agreement. WHITE & CASE LLP By: /s/ K. Lawrence Gragg ----------------------------------- Its: Date: September 30, 2004 -42- EX-10.3 4 g91635exv10w3.txt FIRST AMEND. TO AGREEMENT OF SALE OF PARTNERSHIP EXHIBIT 10.3 REINSTATEMENT AND FIRST AMENDMENT TO AGREEMENT OF SALE OF PARTNERSHIP INTERESTS THIS REINSTATEMENT AND FIRST AMENDMENT TO AGREEMENT OF SALE OF PARTNERSHIP INTERESTS dated October 15, 2004 ("REINSTATEMENT AND AMENDMENT") is entered into by and among EAST LAS OLAS INVESTORS II, a Florida general partnership ("ELOI"), WLD REALTY, LTD., a Florida limited partnership ("WLD"), and HALMOS HOLDINGS, INC., a Florida corporation ("HALMOS") (ELOI, WLD and Halmos are sometimes individually referred to herein as a "SELLER" and collectively as the "SELLERS"), ELO ASSOCIATES II, LTD., a Florida Limited Partnership (the "PARTNERSHIP") and KOGER ACQUISITION, LLC, a Florida limited liability company, and its successors and assigns as permitted hereunder ("PURCHASER"). W I T N E S S E T H: WHEREAS, the parties previously entered into that certain Agreement of Sale of Partnership Interests made as of the 30th day of September, 2004 ("AGREEMENT," all capitalized terms used but not otherwise defined in this Reinstatement and Amendment will have the meaning set forth in the Agreement); WHEREAS, pursuant to Section 8.4 of the Agreement, Seller timely terminated the Agreement; and WHEREAS, the parties are mutually desirous of reinstating and modifying the Agreement in accordance with the terms set forth in this Reinstatement and Amendment. NOW THEREFORE, for and in consideration of the premises and for Ten ($10.00) Dollars and other good and valuable considerations to each in hand paid, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. RECITALS. The recitals are true and correct and are incorporated herein by reference. In the event of any conflict between the terms of the Agreement and the terms of this Reinstatement and Amendment, the terms of this Reinstatement and Amendment shall control. 2. REINSTATEMENT. The Agreement is hereby reinstated and shall be in full force and effect, as amended hereby. 3. PURCHASE PRICE. Section 2.1 of the Agreement is deleted in its entirety and the following is inserted in lieu thereof: "The purchase price for the Partnership Interest will be the sum of ONE HUNDRED TWENTY NINE MILLION TWO HUNDRED THIRTY-FIVE THOUSAND AND NO/100 DOLLARS ($129,235,000.00) and (i) LESS the Existing Loan Balance if the Buyer elects to maintain the Existing Loan or (ii) PLUS the amount of the Prepayment Costs, if the Buyer does not elect to maintain the Existing Loan (the "PURCHASE PRICE"), subject to the prorations and adjustments for which provision is made elsewhere in this Agreement." -1- 4. SCHEDULED MATTERS. Notwithstanding anything in the Agreement to the contrary, (i) the Maximum Liability shall not be limited to the amount of damages that Buyer may recover from Seller pursuant to Sellers indemnification obligation with respect to the ADA Litigation and (ii) Seller indemnification obligation with respect to the ADA Litigation shall not be subject to the limitation contained in the last sentence of Section 5.4.2 of the Agreement. For lack of doubt, payments by the Sellers of their indemnification obligation with respect to the ADA Litigation shall not be (i) included in calculating whether Sellers have paid the Maximum Liability, (ii) limited by the Maximum Liability limitation, (iii) limited by the requirement that indemnifiable damages must first exceed $50,000 prior to Sellers becoming liable for such indemnification obligation and (iv) included in calculating whether Sellers indemnification obligations under the Agreement have exceeded the $50,000 amount provided for in the last sentence of Section 5.4.2. 5. LIABILITY. Notwithstanding anything in the Agreement to the contrary, Sellers shall not be liable to Buyer for a breach of a representation or warranty set forth in Section 5.2.18 unless and until one of the Sellers or in the case of ELOI one of its constituent entities (i) is Bankrupt and (ii) the bankruptcy court administering such entity's bankruptcy case orders a substantive consolidation of the assets and liability of the Partnership with those of the Bankrupt entity. For the purposes of this Section 5, "Bankrupt" shall mean, with respect to any Seller or constituent entity of ELOI, if such entity shall place itself or allow itself to be placed, voluntarily or involuntarily, under the protection of the law of any jurisdiction relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts. 6. SECTION 5.4.3. Subsection (ii) of the first sentence of Section 5.4.3 is deleted in its entirety and the following is inserted in lieu thereof: "(ii) the Survival Period shall not apply to a breach by such Seller for any of its representations or warranties contained in SECTIONS 5.1, 5.2.13, 5.2.14, 5.2.16, 5.2.17 OR 5.2.18 hereof and"... 7. CRACKED PANELS. Sellers will replace at their sole cost and expense the cracked coquina panels described in the summary prepared by Marmol Export (a copy of which is attached hereto as EXHIBIT "A") and Sellers shall have no obligation to replace any other coquina panels. The cost of replacing such panels will not be included in calculating whether (i) Sellers have reached the Maximum Liability with respect to their indemnification obligation under the Agreement or (ii) Sellers indemnification obligations under the Agreement have exceeded the $50,000 amount provided for in the last sentence of section 5.4.2. Such replacement will be accomplished on or before January 1, 2005 and will be completed to the reasonable satisfaction of Purchaser. 8. SEPARATENESS REPRESENTATION. The following is added as a new Section 5.2.18: At all times prior to the Closing, the Partnership: (a) has not owned any asset other than (i) the Property, and (ii) incidental personal property necessary for the operation of the Property; (b) has not engaged in any business other than the construction, development, ownership, management and operation of the Property; -2- (c) has not entered into any contract or agreement with any partner or affiliate of Partnership or any affiliate of any such partner of Partnership, except upon terms and conditions that are intrinsically fair and reasonably similar to those that would be available on an arms-length basis with third parties other than an affiliate; (d) has not incurred any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (i) the secured indebtedness (all of which has been satisfied in full except the Existing Loan), and (ii) trade payables or accrued expenses incurred in the ordinary course of business of operating the Property; (e) has not made any loans or advances to any third party (including any general partner or affiliate of Partnership) ; (f) has been solvent and is able to pay its debts from its assets as the same shall become due; (g) has done or caused to be done all things necessary to preserve its existence and partnership formalities; (h) has conducted and operated its business in substantially the same manner as presently conducted and operated; (i) has maintained books and records and bank accounts separate from those of its affiliates, including its partners; (j) has at all times held itself out to the public as, a legal entity separate and distinct from any other entity (including any partner or affiliate); (k) has filed its own tax returns; (l) has maintained adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; (m) has not sought the dissolution or winding up, in whole or in part, of Partnership; (n) except for the merger of ELOA with and into Partnership, has not entered into any transaction of merger or consolidation, or acquired by purchase or otherwise all or substantially all of the business or assets of, or any stock or beneficial ownership of, any entity; (o) has not commingled the funds and other assets of Partnership with those of any partner or affiliate, or any other person; (p) has maintained its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any affiliate or any other person; -3- (q) has, and any partner of Partnership has, at all times since its formation, observed all legal and customary formalities regarding its formation and will continue to observe all legal and customary formalities; and (r) has not held itself out to be responsible for the debts or obligations of any other person. 9. INSPECTION PERIOD. The Buyer acknowledges and agrees that the Inspection Period has expired and that the First Deposit and Second Deposit are non-refundable except as otherwise specifically provided under the Agreement. 10. MANAGEMENT AGREEMENT. (a) Subsection (e) of Section 9.1 is deleted in its entirety and "Intentionally left blank" is inserted in lieu thereof. (b) Subsection (k) of Section 9.2 is deleted in its entirety and "Intentionally left blank" is inserted in lieu threof. (c) The word "and" is deleted in subsection (t) of Section 10.3 and the period at the end of subsection (u) of Section 10.3 is deleted and replaced with "; and". (d) The following is added as a new subsection (v) of Section 10.3: "(v) deliver a Management and Leasing Agreement executed by Stiles Corporation substantially in the form attached hereto as FORM 14." (e) The word "and" is deleted in subsection (c) of Section 10.4 and the period at the end of subsection (d) of Section 10.4 is deleted and replaced with "; and". (f) The following is added as a new subsection (e) of Section 10.4: "(e) deliver a Management and Leasing Agreement executed by Partnership and CRTP OP LP substantially in the form attached hereto as FORM 14." 11. CLOSING DATE AND CLOSING EXTENSIONS. (a) CLOSING DATE. Section 10.1 is hereby deleted in its entirety and the following is inserted in lieu thereof: "Unless extended pursuant to the provisions of this Agreement, the Closing will take place commencing at 9:00 A.M. at the office of Berger Singerman, P.A., 350 East Las Olas Boulevard, Suite 1000, Fort Lauderdale, Florida 33301, or such other place as mutually agreed, on the thirty-third (33rd) day following the date of this Reinstatement and Amendment. In the event that the applicable date falls upon a Saturday, Sunday or other legal holiday, the Closing will occur on the next succeeding Business Day." (b) CLOSING EXTENSION. Purchaser will have the right to extend the Closing Date for up to two (2) consecutive fifteen (15) day periods by delivering an additional deposit in the amount of $4,000,000 to the Escrow Agent for each such period (such additional deposit(s) will be added to, and included as part of, the "Deposit" for all purposes under the Agreement). In the event -4- Purchaser exercises its first right to extend the Closing Date as aforementioned, the First Deposit and Second Deposit ($5,000,000) will be released to Seller. At such time, the First Deposit and Second Deposit will be non-refundable except as specifically provided under the Agreement. In any event, the First Deposit and Second Deposit and any additional Deposit posted under this Section 10(b) will be a credit against the Purchase Price at Closing. 12. RATIFICATION. All terms and conditions of the Agreement not hereby amended or modified shall remain in full force and effect and binding on the parties. 13. COUNTERPARTS. This Reinstatement and Amendment may be executed by facsimile and/or in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [SIGNATURES ON NEXT PAGE] -5- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date(s) hereinafter set forth. WITNESSED BY: PARTNERSHIP: ELO ASSOCIATES II, LTD., a Florida limited partnership By: EAST LAS OLAS INVESTORS II, a Florida general partner By: SEOLA II, Ltd., a Florida limited partnership, its general partner /s/ J. SCOTT MACHARIN By: SEOLA II, Inc., a Florida corporation, - --------------------------- its general partner Name:J. Scott Macharin By: /s/ Rocco Ferrera ---------------------------------------- Name: Rocco Ferrera /s/ MICHAEL S. FRIEDMAN Title: Vice President - --------------------------- Name: Michael S. Friedman Date: October 15, 2004 SELLERS: WLD REALTY, LTD., a Florida limited partnership /s/ JANE GLATZ By: DL Trust, General Partner - --------------------------- Name: Jane Glatz By: /s/ David W. Horvitz ---------------------------------------- Name: David W.Horvitz - --------------------------- Title: Trustee - --------------------------- Date: October 14, 2004 Name: HALMOS HOLDINGS, INC., a Florida corporation /s/ PAULA NEWMAN By: /s/ Steven Holmes - --------------------------- -------------------------------------------- Name: Paula Newman Name: Steven Homes Title: President Date: October 14, 2004 /s/ JUDY SHERMAN - --------------------------- Name: Judy Sherman -6- EAST LAS OLAS INVESTORS II, a Florida general partnership /s/ J. SCOTT MARKHAM By: SEOLA II, Ltd., a Florida limited - -------------------------- partnership, its general partner Name: J. Scott Markham By: SEOLA II, Inc., a Florida corporation, its general partner /s/ MICHAEL S. FRIEDMAN - -------------------------- By: /s/ Rocco Ferrera Name: Michael S. Friedman -------------------------------------- Name: Rocca Ferrera Title: Vice-President Date: October 14, 2004 PURCHASER: KOGER ACQUISITION, LLC, a Florida limited liability company /s/ WILLIAM J. WEDGE By: /s/ Thomas C. Brockwell - -------------------------- ------------------------------------- Name: William J. Wedge Name: Thomas C. Brockwell Title: Executive Vice President Date: , 2004 /s/ JACKIE KARPEN - -------------------------- Name: Jackie Karpen -7- EX-15 5 g91635exv15.htm LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION Letter re: Unaudited Interim Financial Information

EXHIBIT 15
November 1, 2004
CRT Properties, Inc.
225 NE Mizner Blvd Suite 200
Boca Raton, Florida 33432
We have made a review, in accordance with standards of the Public Company Accounting Oversight Board (United States), of the unaudited interim financial information of CRT Properties, Inc. and subsidiaries, formerly Koger Equity, Inc. and subsidiaries, for the periods ended September 30, 2004 and 2003, as indicated in our report dated November 1, 2004; because we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, is incorporated by reference in Registration Statement No. 33-55179 of CRT Properties, Inc. on Form S-3, Registration Statement No. 33-54617 of CRT Properties, Inc. on Form S-8, Registration Statement No. 33-54621 of CRT Properties, Inc. on Form S-8, Registration Statement No. 333-20975 of CRT Properties, Inc. on Form S-3, Registration Statement No. 333-23429 of CRT Properties, Inc. on Form S-8, Registration Statement No. 333-37919 of CRT Properties, Inc. on Form S-3, Registration Statement No. 333-33388 of CRT Properties, Inc. on Form S-8 and Registration Statement No. 333-38712 of CRT Properties, Inc. on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
West Palm Beach, Florida

EX-31.1 6 g91635exv31w1.htm SEC 302 CHIEF EXECUTIVE OFFICER CERTIFICATION Sec 302 Chief Executive Officer Certification

EXHIBIT 31.1
CERTIFICATE OF
PRINCIPAL EXECUTIVE OFFICER
1. I have reviewed this quarterly report on Form 10-Q of CRT Properties, Inc.:
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 8, 2004 /s/ Thomas J. Crocker
Thomas J. Crocker
Chief Executive Officer
(Principal Executive Officer)
CRT Properties, Inc.

EX-31.2 7 g91635exv31w2.htm SEC 302 CHIEF FINANCIAL OFFICER CERTIFICATION Sec 302 Chief Financial Officer Certification

EXHIBIT 31.2
CERTIFICATE OF
PRINCIPAL FINANCIAL OFFICER
1. I have reviewed this quarterly report on Form 10-Q of CRT Properties, Inc.:
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 8, 2004 /s/ Steven A. Abney
Steven A. Abney
Vice President, Finance and
Chief Accounting Officer
(Principal Financial Officer)
CRT Properties, Inc.

EX-32 8 g91635exv32.htm SEC 906 CEO & CFO CERTIFICATION Sec 906 CEO & CFO Certification

EXHIBIT 32
CERTIFICATE OF
PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
Each of the undersigned hereby certifies in his capacity as an officer of CRT Properties, Inc. (the “Company”) that he has reviewed this quarterly report and, to the best of his knowledge and belief, the quarterly report of the Company on Form 10-Q for the quarterly period ended September 30, 2004 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, that the quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the report not misleading, and that the information contained in such report fairly presents, in all material respects, the financial condition of the Company at the end of such period and the results of operations and cash flows of the Company for such period.

Dated: November 8, 2004 /s/ Thomas J. Crocker
Thomas J. Crocker
Chief Executive Officer
(Principal Executive Officer)
CRT Properties, Inc.

Dated: November 8, 2004 /s/ Steven A. Abney
Steven A. Abney
Vice President, Finance and
Chief Accounting Officer
(Principal Financial Officer)
CRT Properties, Inc.

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(1)		The percent leased rates have been calculated by dividing total rentable square feet occupied in an office building by total rentable square feet in such building.

(2)		Rental rates are computed by dividing (a) total annualized base rents (which excludes expense pass-through and reimbursements) for an office project or location as of September 30, 2004 by (b) the rentable square feet applicable to such total annualized rents.

(3)		Properties acquired subsequent to January 1, 2002.

(4)		Includes the effect of leases where tenants who occupy all or a substantial portion of an entire office building pay substantially all operating costs in addition to base rent.

(5)		Does not include investment in unconsolidated entity that contains 325,583 of rentable square feet and was 86% occupied at September 30, 2004.


Dated: November 8, 2004		/s/ Thomas J. Crocker Thomas J. Crocker Chief Executive Officer (Principal Executive Officer) CRT Properties, Inc.