Exhibit 10.19

 

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BREA V L.L.C.

SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

DATED AS OF MAY 31, 2007

 

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TABLE OF CONTENTS

 

          Page

ARTICLE I DEFINITIONS

   1

1.1. Definitions

   1

1.2. Terms Generally

   10

ARTICLE II GENERAL PROVISIONS

   10

2.1. Managing, Regular and Special Members

   10

2.2. Formation; Name; Foreign Jurisdictions

   11

2.3. Term

   11

2.4. Purpose; Powers

   11

2.5. Place of Business

   12

ARTICLE III MANAGEMENT

   13

3.1. Managing Member

   13

3.2. Member Voting, etc

   13

3.3. Management

   13

3.4. Responsibilities of Members

   17

3.5. Exculpation and Indemnification

   17

3.6. Tax Representation

   18   

ARTICLE IV CAPITAL OF THE COMPANY

   19

4.1. Capital Contributions by Members

   19

4.2. Interest

   24

4.3. Withdrawals of Capital

   24

ARTICLE V PARTICIPATION IN PROFITS AND LOSSES

   25

5.1. General Accounting Matters

   26

5.2. Capital Accounts

   26

5.3. Profit Sharing Percentages

   26

5.4. Allocations of Net Income (Loss)

   27

5.5. Liability of Members

   28

5.6. [Intentionally omitted.]

   28

5.7. Repurchase Rights, etc

   28

5.8. Distributions

   28

5.9 Business Expenses

   34

ARTICLE VI ADDITIONAL MEMBERS; WITHDRAWAL OF MEMBERS; SATISFACTION AND DISCHARGE
OF COMPANY INTERESTS; TERMINATION

   34

6.1. Additional Members

   34

6.2. Withdrawal of Members

   34

6.3. Company Interests Not Transferable

   35

6.4. Consequences upon Withdrawal of a Member

   35

6.5. Satisfaction and Discharge of a Withdrawn Member’s Interest

   36

6.6. Dissolution of the Company

   40

6.7. Certain Tax Matters

   40

6.8. Special Basis Adjustments

   41   

ARTICLE VII MISCELLANEOUS

   42

7.1. Submission to Jurisdiction; Waiver of Jury Trial

   42

7.2. Ownership and Use of the Company Name

   43

7.3. Written Consent

   43

7.4. Letter Agreements; Schedules

   43

7.5. Governing Law; Separability of Provisions

   43

7.6. Successors and Assigns

   43

7.7. Confidentiality

   44

7.8. Notices

   44

7.9. Counterparts

   44

7.10. Power of Attorney

   44

7.11. Member’s Will

   44

7.12. Cumulative Remedies

   45

7.13. Legal Fees

   45

7.14. Entire Agreement

   45

 

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BREA V L.L.C.

SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of BREA V L.L.C.
(the “Company”), dated as of May 31, 2007, by and among Blackstone Holdings III
L.P., a Delaware limited partnership (the “Managing Member” or “Holdings”), the
other members of the Company as provided on the signature pages hereto, and such
other persons that are admitted to the Company as members after the date hereof
in accordance herewith.

W I T N E S S E T H

WHEREAS, the Company was formed under the LLC Act (defined below) pursuant to a
certificate of formation filed in the office of the Secretary of State of the
State of Delaware on November 3, 2005;

WHEREAS, the original limited liability company agreement of the Company was
executed as of November 3, 2005 (the “Original Operating Agreement”);

WHEREAS, the Original Operating Agreement was amended and restated in its
entirety by the Amended and Restated Limited Liability Company Agreement, dated
as of December 14, 2005, of the Company (as amended to date, the “First Amended
and Restated Operating Agreement”); and

WHEREAS, the parties hereto now wish to amend and restate the First Amended and
Restated Operating Agreement in its entirety as of the date hereof and as more
fully set forth below;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1. Definitions. Unless the context otherwise requires, the following terms
shall have the following meanings for purposes of this Agreement:

“Affiliate” when used with reference to another person means any person (other
than the Company), directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with, such other person.

“Agreement” means this Second Amended and Restated Limited Liability Company
Agreement, as it may be further amended, supplemented, restated or otherwise
modified from time to time.

“Alternative Vehicle” means any investment vehicle or structure formed pursuant
to paragraph 2.7.1 of the BREP V Partnership Agreement or any other “Alternative
Vehicle” (as defined in any other BREP V Agreements).

“Applicable Collateral Percentage” shall have the meaning with respect to any
Firm Collateral and any Special Firm Collateral, in each case, as set forth in
the books and records of the Company with respect thereto.

“BCP” means Blackstone Capital Partners L.P., a Delaware limited partnership,
and any investment vehicle established in accordance with the terms of
Blackstone Capital Partners L.P.’s

 

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partnership agreement to invest in lieu of Blackstone Capital Partners L.P. on
behalf of one or more of the partners thereof.

“BCP II” means Blackstone Capital Partners II Merchant Banking Fund L.P., a
Delaware limited partnership formerly known as Blackstone Domestic Capital
Partners II L.P., Blackstone Offshore Capital Partners II L.P., a Cayman Islands
exempted limited partnership, and any investment vehicle established pursuant to
paragraph 2.7 of the respective partnership agreement of either of such
partnerships.

“BCP III” means Blackstone Capital Partners III Merchant Banking Fund L.P., a
Delaware limited partnership, Blackstone Offshore Capital Partners III L.P., a
Cayman Islands exempted limited partnership, and any other investment vehicle or
structure formed to invest in lieu thereof (in whole or in part).

“BCP IV” is the collective reference to Blackstone Capital Partners IV L.P., a
Delaware limited partnership, and any other investment vehicle or structure
formed to invest in lieu thereof (in whole or in part).

“BCP V” is the collective reference to (i) Blackstone Capital Partners V L.P., a
Delaware limited partnership, and any Alternative Vehicle relating thereto,
(ii) BCP V-S L.P., a Delaware limited partnership, and any Alternative Vehicle
relating thereto, and (iii) any Parallel Fund formed in connection with either
of such partnerships.

“BFREP V” means Blackstone Family Real Estate Partnership V L.P., a Delaware
limited partnership.

“BFREP V Partnership Agreement” means the Amended and Restated Agreement of
Limited Partnership of BFREP V, dated as of the date hereof, as amended,
supplemented or otherwise modified from time to time.

“Blackstone Capital Commitment” has the meaning set forth in the BREP V
Partnership Agreement.

“Blackstone Co-Investment Rights” has the meaning set forth in the BREP V
Partnership Agreement.

“BRE Holdings V” means BRE Holdings V L.P., a Delaware limited partnership to be
formed.

“BRE Holdings V Partnership Agreement” means the Amended and Restated Agreement
of Limited Partnership of BRE Holdings V L.P., to be dated as of a date after
the formation thereof, as amended, supplemented or otherwise modified from time
to time.

“BREA V” means Blackstone Real Estate Associates V L.P., a Delaware limited
partnership.

“BREA V Partnership Agreement” means the Amended and Restated Agreement of
Limited Partnership of BREA V, to be dated as of the date hereof, as amended,
supplemented or otherwise modified from time to time.

 

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“BREA V Sub” means BREA V Sub L.L.C., a Delaware limited liability company to be
formed, which limited liability company will serve as the general partner of
BREA V.

“BREA V Sub LLC Agreement” means the Amended and Restated Limited Liability
Company Agreement of BREA V Sub, to be dated as of a date after the formation
thereof, as amended, supplemented or otherwise modified from time to time.

“BRECA V” means Blackstone Real Estate Capital Associates V L.P., a Delaware
limited partnership, and any other partnership or other entity with terms
substantially similar to the terms of that partnership and formed after the date
hereof in connection with the indirect participation by one or more partners
thereof who receive Carried Interest.

“BRECA V Partnership Agreement” means the Amended and Restated Agreement of
Limited Partnership of Blackstone Real Estate Capital Associates V L.P., dated
as of the date hereof, as amended, supplemented or otherwise modified from time
to time, and any other BRECA V partnership agreement.

“BREH V” means Blackstone Real Estate Holdings V L.P., a Delaware limited
partnership.

“BREMA V” means Blackstone Real Estate Management Associates V L.P., a Delaware
limited partnership, whose general partner is the Company.

“BREMA V Partnership Agreement” means the Amended and Restated Agreement of
Limited Partnership of Blackstone Real Estate Management Associates V L.P.,
dated as of the date hereof, as it may be further amended, supplemented or
otherwise modified from time to time.

“BREP V” means (i) Blackstone Real Estate Partners V L.P., Blackstone Real
Estate Partners V.TE.1 L.P., Blackstone Real Estate Partners V.TE.2 L.P. and
Blackstone Real Estate Partners V.F L.P., each a Delaware limited partnership,
(ii) any other Parallel Funds or other Supplemental Capital Vehicles (each as
defined in the BREP V Partnership Agreement), or (iii) any other investment
vehicle established pursuant to Article 2 of the respective partnership
agreements for any of the partnerships referred to in clause (i) above.

“BREP V Agreements” means the BREP V Partnership Agreement and any other BREP V
partnership agreements.

“BREP V Investment” means the Company’s indirect interest in a specific BREP V
investment pursuant to the BREP V Partnership Agreement in its capacity as an
indirect partner of BREP V.

“BREP V Partnership Agreement” means the Amended and Restated Agreements of
Limited Partnership, each dated as of the date hereof or other date set forth
therein, of the partnerships referred to in clause (i) of the definition of
“BREP V” in this Article I, and any other BREP V partnership agreement, as the
same may be amended, supplemented or otherwise modified.

“Carried Interest” shall mean (i) distributions to the general partner of BREP V
pursuant to paragraphs 4.2.1(c) and (d), paragraphs 4.2.2(c) and (d) and
paragraph 4.2.8 of the BREP V Partnership Agreement (or similar provisions of
investment vehicles formed after the date hereof) and (ii) any other carried
interest payable pursuant to the BREP V Partnership Agreement. In the

 

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case of each of (i) and (ii) above, except as determined by the Managing Member,
the amount shall not be less any costs, fees and expenses of the Company with
respect thereto and less reasonable reserves for payment of costs, fees and
expenses of the Company that are anticipated with respect thereto (in each case
which the Managing Member may allocate among all or any portion of the
Investments as they determine in good faith is appropriate).

“Carried Interest Give Back Percentage” shall mean, for any Member or Withdrawn
Member, subject to Section 5.8(e), the percentage determined by dividing (A) the
aggregate amount of distributions received by such Member or Withdrawn Member
from the Company, any Other Fund GPs or their affiliates, excluding Holdings, in
respect of Carried Interest by (B) the aggregate amount of distributions made to
all Members, Withdrawn Members or any other person by the Company, any Other
Fund GP or their affiliates (in any capacity), excluding Holdings, in respect of
Carried Interest. For purposes of determining “Carried Interest Give Back
Percentage” hereunder, all Trust Amounts contributed to the Trust by the
Company, Other Fund GPs or their affiliates on behalf of a Member or Withdrawn
Member (but not the Trust Income thereon) shall be deemed to have been initially
distributed or paid to the Members and Withdrawn Members as members or partners
of the Company, any of the Other Fund GPs or their affiliates.

“Carried Interest Sharing Percentage” means, with respect to each Investment,
the percentage interest of a Member in Carried Interest from such Investment set
forth in the books and records of the Company.

“Cause” means the occurrence or existence of any of the following with respect
to any Member, as determined fairly, reasonably, on an informed basis and in
good faith by the Managing Member: (i) (w) any breach by any Member of any
provision of any non-competition agreement, (x) any material breach of this
Agreement or any rules or regulations applicable to such Member that are
established by the Managing Member, (y) such Member’s deliberate failure to
perform his or her duties to the Company, or (z) such Member’s committing to or
engaging in any conduct or behavior that is or may be harmful to the Company in
a material way as determined by the Managing Member; provided, that in the case
of any of the foregoing clauses (w), (x), (y) and (z), the Managing Member has
given such Member written notice (a “Notice of Breach”) within fifteen days
after the Managing Member becomes aware of such action and such Member fails to
cure such breach, failure to perform or conduct or behavior within fifteen days
after receipt of such Notice of Breach from the Managing Member (or such longer
period, not to exceed an additional fifteen days, as shall be reasonably
required for such cure, provided that such Member is diligently pursuing such
cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or
similar conduct against the Company; or (iii) conviction (on the basis of a
trial or by an accepted plea of guilty or nolo contendere) of a felony or crime
(including any misdemeanor charge involving moral turpitude, false statements or
misleading omissions, forgery, wrongful taking, embezzlement, extortion or
bribery), or a determination by a court of competent jurisdiction, by a
regulatory body or by a self-regulatory body having authority with respect to
securities laws, rules or regulations of the applicable securities industry,
that such Member individually has violated any applicable securities laws or any
rules or regulations thereunder, or any rules of any such self-regulatory body
(including, without limitation, any licensing requirement), if such conviction
or determination has a material adverse effect on (A) such Member’s ability to
function as a Member of the Company, taking into account the services required
of such Member and the nature of the Company’s business or (B) the business of
the Company.

“Charitable Organization” means an organization described in Section 170(c) of
the Code (without regard to Section 170(c)(2)(A) thereof).

 

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“Class A Interest” has the meaning set forth in Section 5.8(a)(i).

“Class B Interest” has the meaning set forth in Section 5.8(a)(i).

“Clawback Adjustment Amount” has the meaning set forth in Section 5.8(e)(ii)(C).

“Clawback Amount” shall mean the “Clawback Amount” and the “Interim Clawback
Amount”, both as set forth in Article One of the BREP V Partnership Agreement
and any other clawback amount payable to the limited partners of BREP V pursuant
to any BREP V Partnership Agreement, as applicable.

“Clawback Provisions” shall mean paragraphs 4.2.9 and 9.2.8 of the BREP V
Partnership Agreement and any other similar provisions in any other BREP V
Agreement existing heretofore or hereafter entered into.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute. Any reference herein to a particular provision of the
Code shall mean, where appropriate, the corresponding provision in any successor
statute.

“Commitment”, with respect to any Member, has the meaning set forth in such
Member’s Commitment Agreement or SMD Agreement.

“Commitment Agreements” means a commitment agreement by which a Member has
committed to fund certain amounts with respect to the BREP V Investments and
certain expenses of BREP V.

“Company” has the meaning set forth in the preamble hereto.

“Contingent” means subject to repurchase rights and/or other requirements.

“Deceased Member” shall mean any Member or Withdrawn Member who has died or who
suffers from Incompetence. For purposes hereof, references to a Deceased Member
shall refer collectively to the Deceased Member and the estate and heirs or
legal representative of such Deceased Member, as the case may be, that have
received such Deceased Member’s interest in the Company.

“Defaulting Party” has the meaning set forth in Section 5.8(d)(ii)(A).

“Default Interest Rate” shall mean the lower of (i) the sum of (a) the rate of
interest per annum publicly announced from time to time by JPMorgan Chase Bank,
a New York banking corporation, as its prime rate and (b) 5%, or (ii) the
highest rate of interest permitted under applicable law.

“Deficiency Contribution” has the meaning set forth in Section 5.8(d)(ii)(A).

“Disposable Investment” has the meaning set forth in Section 5.8(a)(i).

“Estate Planning Vehicle” has the meaning set forth in Section 6.3.

“Excess Holdback” has the meaning set forth in Section 4.1(d)(v)(A).

“Excess Holdback Percentage” has the meaning set forth in Section 4.1(d)(v)(A).

 

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“Excess Tax-Related Amount” has the meaning set forth in Section 5.8(e)(i)(C).

“Existing Member” shall mean any Member who is neither a Retaining Withdrawn
Member nor a Deceased Member.

“Firm Collateral” shall mean a Member’s or Withdrawn Member’s interest in one or
more partnerships or limited liability companies, in either case affiliated with
the Company, and certain other assets of such Member or Withdrawn Member, in
each case that has been pledged or made available to the Trustee(s) to satisfy
all or any portion of the Excess Holdback of such Member or Withdrawn Member as
more fully described in the Company’s books and records; provided, that for all
purposes hereof (and any other agreement (e.g., the Trust Agreement) that
incorporates the meaning of the term “Firm Collateral” by reference), references
to “Firm Collateral” shall include “Special Firm Collateral”, excluding
references to “Firm Collateral” in Section 4.1(d)(v) and Section 4.1(d)(viii).

“Firm Collateral Realization” has the meaning set forth in Section 4.1(d)(v)(B)
with respect to Firm Collateral, and Section 4.1(d)(viii)(B) with respect to
Special Firm Collateral.

“Fiscal Year” shall mean a calendar year, or any other period chosen by the
Managing Member.

“Fund GP” means the Company and the Other Fund GPs.

“GAAP” has the meaning specified in Section 5.1(a).

“Giveback” shall mean an “Investment-Specific Giveback”, as such term is defined
in Article One of the BREP V Partnership Agreement.

“Giveback Amount” shall mean an “Investment-Specific Giveback Amount”, as such
term is defined in Article One of the BREP V Partnership Agreement.

“Giveback Provisions” shall mean paragraph 3.4.3 of the BREP V Partnership
Agreement and any other similar provisions in any other BREP V Agreement
existing heretofore or hereafter entered into.

“Holdback” has the meaning set forth in Section 4.1(d)(i).

“Holdback Percentage” has the meaning set forth in Section 4.1(d)(i).

“Holdback Vote” has the meaning set forth in Section 4.1(d)(iv)(A).

“Holdings” has the meaning set forth in the preamble hereto.

“Incompetence” means, with respect to any Member, the determination by the
Managing Member in its sole discretion, after consultation with a qualified
medical doctor, that such Member is incompetent to manage his person or his
property.

“Initial Holdback Percentages” has the meaning set forth in Section 4.1(d)(i).

“Interest” means a limited liability company interest (as defined in § 18-101(8)
of the LLC Act) in the Company, including those that are held by a Retaining
Withdrawn Member.

 

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“Investment” means any investment (direct or indirect) of the Company designated
by the Managing Member from time to time as an investment in which the Members’
respective interests shall be established and accounted for on a basis separate
from the Company’s other businesses, activities and investments, including BREP
V Investments.

“Investor Special Member” means any Special Member so designated at the time of
its admission by the Managing Member as a Member of the Company.

“L/C” has the meaning set forth in Section 4.1(d)(vi).

“L/C Member” has the meaning set forth in Section 4.1(d)(vi).

“LLC Act” means the Delaware Limited Liability Company Act, 6 Del.C. § 18-101,
et seq., as it may be amended from time to time, and any successor to such Act.

“Loss Amount” has the meaning set forth in Section 5.8(e)(i)(A).

“Loss Investment” has the meaning set forth in Section 5.8(e).

“Majority in Interest of the Members” on any date (a “vote date”) means one or
more persons who are Members (including the Managing Member but excluding
Nonvoting Special Members) on the vote date and who, as of the last day of the
most recent accounting period ending on or prior to the vote date (or as of such
later date on or prior to the vote date selected by the Managing Member as of
which the Members’ capital account balances can be determined), have aggregate
capital account balances representing at least a majority in amount of the total
capital account balances of all the persons who are Members (including the
Managing Member but excluding Nonvoting Special Members) on the vote date.

“Managing Member” has the meaning specified in the preamble hereto.

“Member” means any person who is a member of the Company, including the Regular
Members, the Managing Member and the Special Members. Except as otherwise
specifically provided herein, no group of Members, including the Special Members
and any group of Members in the same Member Category, shall have any right to
vote as a class on any matter relating to the Company, including, but not
limited to, any merger, reorganization, dissolution or liquidation.

“Member Category” shall mean the Managing Member, Existing Members, Retaining
Withdrawn Members or Deceased Members, each referred to as a group for purposes
hereof.

“Moody’s” means Moody’s Investors Services, Inc., or any successor thereto.

“Net Carried Interest Distribution” has the meaning set forth in
Section 5.8(e)(i)(C).

“Net Carried Interest Distribution Recontribution Amount” has the meaning set
forth in Section 5.8(e)(i)(C).

“Net Income (Loss)” has the meaning set forth in Section 5.1(a).

“Net Recontribution Amount” has the meaning set forth in Section 5.8(d)(i)(A).

 

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“Non-Carried Interest” means, with respect to each Investment, all amounts of
distributions, other than Carried Interest, received by the Company with respect
to such Investment, less any costs, fees and expenses of the Company with
respect thereto and less reasonable reserves for payment of costs, fees and
expenses of the Company that are anticipated with respect thereto, in each case
which the Managing Member may allocate to all or any portion of the Investments
as they may determine in good faith is appropriate.

“Non-Carried Interest Sharing Percentage” means, with respect to each
Investment, the percentage interest of a Member in Non-Carried Interest from
such Investment set forth in the books and records of the Company.

“Non-Contingent” means generally not subject to repurchase rights or other
requirements.

“Nonvoting Special Member” has the meaning set forth in Section 6.1(a).

“Other Fund GPs” means BREMA V, BRE Holdings V, BREA V, BRECA V, and any other
entity (other than the Company) through which any Member, Withdrawn Member or
any other person directly receives any amounts of Carried Interest, and any
successor thereto; provided, that this includes any other entity which has in
its organizational documents a provision which indicates that it is a “Fund GP”
or an “Other Fund GP”; provided further, that notwithstanding any of the
foregoing, none of Holdings, any estate planning vehicle established for the
benefit of family members of any Member or any member or partner of any Other
Fund GP shall be considered an “Other Fund GP” for purposes hereof; provided
further, that the foregoing exclusion of such estate planning vehicles shall in
no way limit such Members’ obligations pursuant to Section 5.8(d).

“Parallel Fund” means any additional collective investment vehicles (or other
similar arrangements) formed pursuant to paragraph 2.8 of the BREP V Partnership
Agreement.

“Profit Sharing Percentage” means the “Carried Interest Sharing Percentage” and
“Non-Carried Interest Sharing Percentage” of each Member; provided, that any
references in this Agreement to Profit Sharing Percentages made (a) in
connection with voting or voting rights or (b) capital contributions with
respect to Investments (including Section 5.3(a)) shall mean the “Non-Carried
Interest Sharing Percentage” of each Member; provided further, that any
reference in this Agreement to Profit Sharing Percentages that specifically
refers to Net Income unrelated to BREP V shall continue to refer to the amount
of each Member’s percentage interest in a category of Net Income (Loss)
established by the Managing Member from time to time pursuant to Section 5.3.

“Qualifying Fund” means any fund designated by the Managing Member as a
“Qualifying Fund”.

“Recontribution Amount” has the meaning set forth in Section 5.8(d)(i)(A).

“Regular Member” shall mean any Member, excluding the Managing Member and any
Special Member.

“Repurchase Period” has the meaning set forth in Section 5.8(c).

“Required Amounts” has the meaning set forth in Section 4.1(a).

 

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“Required Rating” has the meaning set forth in Section 4.1(d)(vi).

“Retaining Withdrawn Member” shall mean a Withdrawn Member who has retained an
Interest, pursuant to Section 6.5(f) or otherwise. A Retaining Withdrawn Member
shall be considered a Nonvoting Special Member for all purposes hereof.

“Securities” means any debt or equity securities of an Issuer and its
subsidiaries and other Controlled Entities constituting part of an Investment,
including without limitation common and preferred stock and interests in limited
partnerships or limited liability companies (including warrants, rights, put and
call options and other options relating thereto or any combination thereof),
notes, bonds, debentures, trust receipts and other obligations, instruments or
evidences of indebtedness, choses in action, other property or interests
commonly regarded as securities, interests in real property, whether improved or
unimproved, interests in oil and gas properties and mineral properties,
short-term investments commonly regarded as money-market investments, bank
deposits and interests in personal property of all kinds, whether tangible or
intangible.

“Settlement Date” has the meaning set forth in Section 6.5(a).

“SMD Agreements” means the agreements between the Company and/or one or more of
its affiliates and the Members, pursuant to which each Member undertakes certain
obligations with respect to the Company and/or its affiliates. The SMD
Agreements are hereby incorporated by reference as between the Company and the
relevant Member.

“Special Firm Collateral” means interests in a Qualifying Fund or other assets
that have been pledged to the Trustee(s) to satisfy all or any portion of a
Member’s or Withdrawn Member’s Holdback (excluding any Excess Holdback) as more
fully described in the Company’s books and records.

“Special Firm Collateral Realization” has the meaning set forth in
Section 4.1(d)(viii)(B).

“Special Member” means any person shown on the books and records of the Company
as a Special Member of the Company, including any Nonvoting Special Member, and
any Investor Special Member.

“S&P” means Standard & Poor’s Ratings Group, and any successor thereto.

“Subject Investment” has the meaning set forth in Section 5.8(e)(i).

“Subject Member” has the meaning set forth in Section 4.1(d)(iv)(A).

“Total Disability” means the inability of a Member substantially to perform the
services required of a Regular Member for a period of six consecutive months by
reason of physical or mental illness or incapacity and whether arising out of
sickness, accident or otherwise.

“Trust Account” has the meaning set forth in the Trust Agreement.

“Trust Agreement” means the Trust Agreement, dated as of December 14, 2005, as
amended to date, among the Members, the Trustee(s) and certain other persons
that may receive distributions in respect of or relating to Carried Interest
from time to time.

“Trust Amount” has the meaning set forth in the Trust Agreement.

 

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“Trust Income” has the meaning set forth in the Trust Agreement.

“Trustee(s)” has the meaning set forth in the Trust Agreement.

“Unadjusted Carried Interest Distributions” has the meaning set forth in
Section 5.8(e)(i)(B).

“Unallocated Percentage” has the meaning set forth in Section 5.3(b).

“Unrealized Net Income (Loss)” attributable to any BREP V Investment as of any
date means the Net Income (Loss) that would be realized by the Company with
respect to such BREP V Investment if BREP V’s entire portfolio of investments
were sold on such date for cash in an amount equal to their aggregate value on
such date (determined in accordance with Section 5.1(d)) and all distributions
payable by BREP V to the Company (indirectly) pursuant to the BREP V Partnership
Agreement with respect to such BREP V Investment were made on such date.
“Unrealized Net Income (Loss)” attributable to any other Investment as of any
date means the Net Income (Loss) that would be realized by the Company with
respect to such Investment if such Investment were sold on such date for cash in
an amount equal to its value on such date (determined in accordance with
Section 5.1).

“Withdraw” or “Withdrawal” with respect to a Member means a Member ceasing to be
a member of the Company (except as a Retaining Withdrawn Member) for any reason
(including death, disability, removal, resignation or retirement, whether such
is voluntary or involuntary), unless the context shall limit the type of
withdrawal to a specific reason, and “Withdrawn” with respect to a Member means,
as aforesaid, a Member who has ceased to be a member of the Company.

“Withdrawal Date” has the meaning set forth in Section 6.5(a).

“Withdrawn Member” has the meaning set forth in Section 6.5(a).

1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The term “person” includes individuals, partnerships (including
limited liability partnerships), companies (including limited liability
companies), joint ventures, corporations, trusts, governments (or agencies or
political subdivisions thereof) and other associations and entities. The words
“include”, “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”.

ARTICLE II

GENERAL PROVISIONS

2.1. Managing, Regular and Special Members. The Members may be Managing Members,
Regular Members or Special Members (including Nonvoting Special Members and
Investor Special Members). The Managing Member as of the date hereof is
Holdings. The Regular Members as of the date hereof are those persons shown as
Regular Members on the signature pages hereof, and the Special Members as of the
date hereof are persons shown as Special Members on the signature pages hereof.

 

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2.2. Formation; Name; Foreign Jurisdictions. The Company was formed and is
hereby continued as a limited liability company pursuant to the LLC Act and
shall continue to conduct its activities under the name of BREA V L.L.C. The
certificate of formation of the Company may be amended and/or restated from time
to time by the Managing Member, as an “authorized person” (within the meaning of
the LLC Act). The Managing Member is further authorized to execute and deliver
and file any other certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in a jurisdiction in which
the Company may wish to conduct business.

2.3. Term. The term of the Company shall continue until December 31, 2055,
unless earlier dissolved and its affairs wound up in accordance with this
Agreement.

2.4. Purpose; Powers. (a) The purpose of the Company shall be, directly or
indirectly through subsidiaries or affiliates, (i) to serve as sole member of
BREA V Sub and perform the functions of the sole member specified in the BREA V
Sub LLC Agreement, (ii) to serve as a general partner of BREMA V and BRECA V and
perform the functions of the general partner specified in the BREMA V
Partnership Agreement and of a general partner specified in the BRECA V
Partnership Agreement, (iii) to invest in Investments and to acquire and invest
in Securities or other property (directly or indirectly), (iv) to serve as a
general partner or limited partner of other partnerships and perform the
functions of a general partner or limited partner specified in the respective
partnership agreements, as amended, supplemented or otherwise modified from time
to time, of any such partnership, (v) to serve as a member of limited liability
companies and perform the functions of a member specified in the respective
limited liability company agreements, as amended, supplemented or otherwise
modified from time to time, of any such limited liability company, (vi) to carry
on such other businesses, perform such other services and make such other
investments as are deemed desirable by the Managing Member and as are permitted
under the LLC Act, the BREA V Sub LLC Agreement, the BREMA V Partnership
Agreement, the BRE Holdings V Partnership Agreement, the BRECA V Partnership
Agreement, and the respective partnership agreements, as amended, supplemented
or otherwise modified from time to time, of any partnership referred to in
clause (iv) above, and the respective limited liability company agreements, as
amended, supplemented or otherwise modified from time to time, of any limited
liability company referred to in clause (v) above, (vii) any other lawful
purpose, and (viii) to do all things necessary, desirable, convenient or
incidental thereto.

(b) In furtherance of its purpose, the Company shall have all powers necessary,
suitable or convenient for the accomplishment of its purposes, alone or with
others, as principal or agent, including the following:

(i) to buy, sell and otherwise acquire investments, whether such investments are
readily marketable or not;

(ii) to invest and reinvest the cash assets of the Company in money-market or
other short-term investments;

(iii) to hold, receive, mortgage, pledge, lease, transfer, exchange or otherwise
dispose of, grant options with respect to, and otherwise deal in and exercise
all rights, powers, privileges and other incidents of ownership or possession
with respect to, all property held or owned by the Company;

(iv) to borrow or raise money from time to time and to issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other negotiable and
non-negotiable instruments and evidences of indebtedness, to secure payment of
the principal of any such indebtedness and the interest thereon by mortgage,
pledge, conveyance or assignment in

 

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trust of, or the granting of a security interest in, the whole or any part of
the property of the Company, whether at the time owned or thereafter acquired,
to guarantee the obligations of others and to buy, sell, pledge or otherwise
dispose of any such instrument or evidence of indebtedness;

(v) to lend any of its property or funds, either with or without security, at
any legal rate of interest or without interest;

(vi) to have and maintain one or more offices within or without the State of
Delaware, and in connection therewith, to rent or acquire office space, engage
personnel and compensate them and do such other acts and things as may be
advisable or necessary in connection with the maintenance of such office or
offices;

(vii) to open, maintain and close accounts, including margin accounts, with
brokers;

(viii) to open, maintain and close bank accounts and draw checks and other
orders for the payment of moneys;

(ix) to engage accountants, auditors, custodians, investment advisers, attorneys
and any and all other agents and assistants, both professional and
nonprofessional, and to compensate any of them as may be necessary or advisable;

(x) to form or cause to be formed and to own the stock of one or more
corporations, whether foreign or domestic, to form or cause to be formed and to
participate in partnerships and joint ventures, whether foreign or domestic and
to form or cause to be formed and be a member or manager or both of one or more
limited liability companies;

(xi) to enter into, make and perform all contracts, agreements and other
undertakings as may be necessary, convenient, advisable or incident to carrying
out its purposes;

(xii) to sue and be sued, to prosecute, settle or compromise all claims against
third parties, to compromise, settle or accept judgment to claims against the
Company, and to execute all documents and make all representations, admissions
and waivers in connection therewith;

(xiii) to distribute, subject to the terms of this Agreement, at any time and
from time to time to the Members cash or investments or other property of the
Company, or any combination thereof; and

(xiv) to take such other actions necessary, desirable, convenient or incidental
thereto and to engage in such other businesses as may be permitted under
Delaware law.

2.5. Place of Business. The Company shall maintain an office and principal place
of business at 345 Park Avenue, New York, New York 10154 or such other place or
places as the Managing Member may designate from time to time. The Company shall
maintain a registered office at The Corporation Trust Company, 1209 Orange
Street, New Castle County, Wilmington, Delaware 19801. The name and address of
the Company’s registered agent is The Corporation Trust Company, 1209 Orange
Street, New Castle County, Wilmington, Delaware 19801. The Managing Member may
from time to time change the registered agent or office by an amendment to the
certificate of formation of the Company.

 

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ARTICLE III

MANAGEMENT

3.1. Managing Member. (a) Holdings shall be an original managing member (the
“Managing Member”). The Managing Member shall cease to be the Managing Member
only if it (i) Withdraws from the Company for any reason, (ii) consents in its
sole discretion to resign as the Managing Member, or (iii) becomes the subject
of a Final Event. The Managing Member may not be removed without its consent.
There may be one or more Managing Members. In the event that one or more other
Managing Members is admitted to the Company as such, all references herein to
the “Managing Member” in the singular form shall be deemed to also refer to such
other Managing Members as may be appropriate. The relative rights and
responsibilities of such Managing Members will be as agreed upon from time to
time between them.

(b) Upon the Withdrawal from the Company or voluntary resignation of the last
remaining Managing Member, all of the powers formerly vested therein pursuant to
this Agreement and the LLC Act shall be exercised by a Majority in Interest of
the Members.

3.2. Member Voting, etc. (a) Meetings of the Members may be called only by the
Managing Member.

(b) Except as otherwise expressly provided herein and except as may be expressly
required by the LLC Act, Special Members as such shall have no right to, and
shall not, take part in the management or control of the Company’s business or
act for or bind the Company, and shall have only the rights and powers granted
to Special Members herein.

(c) To the extent a Member is entitled to vote with respect to any matter
relating to the Company, such Member shall not be obligated to abstain from
voting on any matter (or vote in any particular manner) because of any interest
(or conflict of interest) of such Member (or any affiliate thereof) in such
matter.

3.3. Management. (a) The management, control and operation of the Company and
the formulation and execution of business and investment policy shall be vested
in the Managing Member. The Managing Member shall, in its discretion, exercise
all powers necessary and convenient for the purposes of the Company, including
those enumerated in Section 2.4, on behalf and in the name of the Company. All
decisions and determinations (howsoever described herein) to be made by the
Managing Member pursuant to this Agreement shall be made in its sole discretion,
subject only to the express terms and conditions of this Agreement.

(b) The Managing Member and any other person designated by the Managing Member,
each acting individually, is hereby authorized and empowered, as an authorized
person of the Company or an authorized person of the Managing Member, in each
case within the meaning of the LLC Act, or otherwise (the Managing Member hereby
authorizing and ratifying any of the following actions):

(i) to execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the
Company and/or in the name and on behalf of the Company as general partner of
each Partnership (as hereinafter defined)) any agreement of the Company
(including, without limitation, any Partnership Agreement (as hereinafter
defined)) or of any Partnership (and any amendments, restatements and/or
supplements thereof), the certificate of formation of the Company (and any
amendments, restatements and/or supplements thereof), the certificate of limited
partnership of each

 

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Partnership (and any amendments, restatements and/or supplements thereof) and
any other certificates, notices, applications and other documents (and any
amendments, restatements and/or supplements thereof) to be filed with any
government or governmental or regulatory body, including, without limitation,
any such document that may be necessary for the Company or any Partnership to
qualify to do business in a jurisdiction in which the Company or such
Partnership desires to do business;

(ii) to execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the
Company and/or in the name and on behalf of Company as general partner of BREMA
V in its capacity as general partner of each Blackstone Partnership (as
hereinafter defined)) any agreement of BREMA V (including, without limitation,
each Blackstone Partnership Agreement (as hereinafter defined)) or of any
Blackstone Partnership (and any amendments, restatements and/or supplements
thereof), the certificate of limited partnership of each Blackstone Partnership
(and any amendments, restatements and/or supplements thereof) and any other
certificates, notices, applications and other documents (and any amendments,
restatements and/or supplements thereof) to be filed with any government or
governmental or regulatory body, including, without limitation, any such
document that may be necessary for any Blackstone Partnership to qualify to do
business in a jurisdiction in which such Blackstone Partnership desires to do
business;

(iii) to execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the
Company as sole member of BREA V Sub, on BREA V’s own behalf or in BREA V’s
capacity as general partner of BREA V on its own behalf or in its capacity as
general partner of BREP V), any of the following:

(A) any agreement, certificate, instrument or other document of BREA V Sub, BREA
V or BREP V (and any amendments, restatements and/or supplements thereof),
including, without limitation, the following: (I) the BREP V Partnership
Agreement and the BREA V Partnership Agreement, (II) Subscription Agreements on
behalf of BREP V, (III) side letters issued in connection with investments in
BREP V, and (IV) such other agreements, instruments, certificates and other
documents as may be necessary or desirable in furtherance of BREA V Sub’s, BREA
V’s or BREP V’s purposes (and any amendments, restatements and/or supplements of
any of the foregoing referred to in (I) through (IV) hereof);

(B) the certificates of formation, certificate of limited partnership and/or
other organizational documents of BREA V Sub, BREA V and BREP V (and any
amendments, restatements and/or supplements thereof); and

(C) any other certificates, notices, applications and other documents (and any
amendments, restatements and/or supplements thereof) to be filed with any
government or governmental or regulatory body, including, without limitation,
any such document that may be necessary for BREA V Sub, BREA V and BREP V to
qualify to do business in a jurisdiction in which BREA V Sub, BREA V or BREP V
desires to do business;

(iv) to execute and deliver and/or file (including any such action, directly or
indirectly through one or more other entities, in the name and on behalf of the
Company as sole member of BREA V Sub in its capacity as general partner of BREA
V in its capacity as general partner of each Blackstone Entity) any agreement of
BREA V (including, without limitation, each

 

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Blackstone Entity Agreement) or of any Blackstone Entity (and any amendments,
restatements and/or supplements thereof), the certificate of limited partnership
of each Blackstone Entity (and any amendments, restatements and/or supplements
thereof) and any other certificates, notices, applications and other documents
(and any amendments, restatements and/or supplements thereof) to be filed with
any government or governmental or regulatory body, including, without
limitation, any such document that may be necessary for any Blackstone Entity to
qualify to do business in a jurisdiction in which such Blackstone Entity desires
to do business;

(v) to prepare or cause to be prepared, and to sign, execute and deliver and/or
file (including any such action in the name and on behalf of the Company and/or
in the name and on behalf of the Company as general partner of each Partnership)
(A) such documents, instruments, certificates and agreements as may be necessary
or desirable in furtherance of the Company’s or such Partnership’s purposes,
(B) any certificates, forms, notices, applications and other documents to be
filed with any government or governmental or regulatory body on behalf of the
Company and/or such Partnership, (C) any certificates, forms, notices,
applications and other documents that may be necessary or advisable in
connection with any bank account of the Company or such Partnership or any
banking facilities or services that may be utilized by the Company or such
Partnership, and all checks, notes, drafts and other documents of the Company or
such Partnership that may be required in connection with any such bank account
or any such banking facilities or services, (D) resolutions with respect to any
of the foregoing matters (which resolutions, when executed by any person
authorized as provided in this Section 3.3(b), each acting individually, shall
be deemed to have been adopted by the Members and Managing Member, the Company
and any Partnership, as applicable, for all purposes), and (E) any amendments,
restatements and/or supplements of any of the foregoing;

(vi) to prepare or cause to be prepared, and to sign, execute and deliver and/or
file (including any such action, directly or indirectly through one or more
other entities, in the name and on behalf of the Company and/or in the name and
on behalf of the Company as general partner BREMA V in its capacity as a general
partner of each Blackstone Partnership) (A) such documents, instruments,
certificates and agreements as may be necessary or desirable in furtherance of
BREMA V’s or such Blackstone Partnership’s purposes, (B) any certificates,
forms, notices, applications and other documents to be filed with any government
or governmental or regulatory body on behalf of BREMA V and/or such Blackstone
Partnership, (C) any certificates, forms, notices, applications and other
documents that may be necessary or advisable in connection with any bank account
of BREMA V or such Blackstone Partnership or any banking facilities or services
that may be utilized by BREMA V or such Blackstone Partnership, and all checks,
notes, drafts and other documents of BREMA V or such Blackstone Partnership that
may be required in connection with any such bank account or any such banking
facilities or services, (D) resolutions with respect to any of the foregoing
matters (which resolutions, when executed by any person authorized as provided
in this Section 3.3(b), each acting individually, shall be deemed to have been
adopted by the Members and Managing Member, the Company, BREMA V or any
Blackstone Partnership, as applicable, for all purposes), and (E) any
amendments, restatements and/or supplements of any of the foregoing;

(vii) to prepare or cause to be prepared, and to sign, execute and deliver
and/or file (including any such action, directly or indirectly through one or
more other entities, in the name and on behalf of the Company as sole member of
BREA V Sub, on its own behalf or in its capacity as general partner of BREA V on
its own behalf or in its capacity as general partner of BREP V): (A) such
documents, instruments, certificates and agreements as may be necessary or
desirable in furtherance of BREA V Sub’s, BREA V’s or BREP V’s purposes, (B) any
certificates, forms, notices, applications and other documents to be filed with
any government or

 

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governmental or regulatory body on behalf of BREA V Sub, BREA V and/or BREP V,
(C) any certificates, forms, notices, applications and other documents that may
be necessary or advisable in connection with any bank account of BREA V Sub,
BREA V and/or BREP V or any banking facilities or services that may be utilized
by BREA V Sub, BREA V and/or BREP V, and all checks, notes, drafts and other
documents of BREA V Sub, BREA V and/or BREP V that may be required in connection
with any such bank account or any such banking facilities or service,
(D) resolutions with respect to any of the foregoing matters (which resolutions,
when executed by any person authorized as provided in this Section 3.3(b), each
acting individually, shall be deemed to have been adopted by the Members and
Managing Member, the Company, BREA V Sub, BREA V or BREP V, as applicable, for
all purposes), and (E) any amendments, restatements and/or supplements of any of
the foregoing; and

(viii) to prepare or cause to be prepared, and to sign, execute and deliver
and/or file (including any such action, directly or indirectly through one or
more other entities, in the name and on behalf of the Company as sole member of
BREA V Sub in its capacity as general partner of BREA V in its capacity as
general partner of each Blackstone Entity) (A) such documents, instruments,
certificates and agreements as may be necessary or desirable in furtherance of
any Blackstone Entity’s purposes, (B) any certificates, forms, notices,
applications and other documents to be filed with any government or governmental
or regulatory body on behalf of any Blackstone Entity, (C) any certificates,
forms, notices, applications and other documents that may be necessary or
advisable in connection with any bank account of any Blackstone Entity or any
banking facilities or services that may be utilized by any Blackstone Entity,
and all checks, notes, drafts and other documents of any Blackstone Entity that
may be required in connection with any such bank account or any such banking
facilities or services, (D) resolutions with respect to any of the foregoing
matters (which resolutions, when executed by any person authorized as provided
in this Section 3.3(b), each acting individually, shall be deemed to have been
adopted by the Members and Managing Member, the Company, BREA V Sub, BREA V or
any Blackstone Entity, as applicable, for all purposes, and (E) any amendments,
restatements and/or supplements of any of the foregoing.

The authority granted to any person (other than the Managing Member) in this
Section 3.3(b) may be revoked at any time by the Managing Member by an
instrument in writing signed by the Managing Member. As used in this
Section 3.3(b), the following terms have the following meanings: “Blackstone
Entities” means, collectively, BREH V and any other limited partnership (other
than BREP V) of which BREA V is the general partner. “Blackstone Entity
Agreements” means, collectively, the limited partnership or other governing
agreements, as amended, restated and/or supplemented, of the Blackstone
Entities. “Blackstone Partnerships” means, collectively, BRE Holdings V, BFREP V
and any other limited partnership of which BREMA V is the general partner,
“Blackstone Partnership Agreements” means, collectively, the limited partnership
agreements, as amended, restated and/or supplemented, of the Blackstone
Partnerships. “Partnerships” means, collectively, BREMA V, BRECA V and any other
limited partnership of which the Company is the general partner. “Partnership
Agreements” means, collectively, the limited partnership agreements, as amended,
restated and/or supplemented, of the Partnerships.

Notwithstanding any provision of this Agreement or any other agreement to the
contrary, (x) each and every agreement, certificate, instrument, notice, form,
application or other document of the Company, BREA V Sub, BREA V, BREP V, BREMA
V, any Blackstone Entity, any Blackstone Partnership or any Partnership referred
to in this Section 3.3 (whether specifically or in general terms) (and any
amendments, restatements and/or supplements of any thereof thereof) is hereby
authorized, ratified, approved and confirmed in all respects, on behalf of the
Company, BREA V Sub, BREA V, BREP V, BREMA V, any Blackstone Entity, any
Blackstone Partnership or any Partnership (each in all

 

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applicable capacities); (y) each of the Company, BREA V Sub, BREA V, BREP V,
BREMA V, any Blackstone Entity, any Blackstone Partnership or any Partnership is
hereby authorized, to execute and deliver, and to perform the applicable
entity’s obligations (including, without limitation, serving as general partner,
sole member or in any other capacity) under, each such agreement, certificate,
instrument, notice, form, application or other document (and any amendment,
restatement and/or supplement of any thereof); and (z) to take any action, in
the applicable capacity, contemplated by or arising out of each such agreement,
certificate, instrument, notice, form, application or other document (and any
amendment, restatement and/or supplement of any thereof), in each and every one
of the foregoing cases (x), (y) and (z), without the need for any further act,
vote or consent of any person

3.4. Responsibilities of Members. (a) Unless otherwise determined by the
Managing Member in a particular case, each Regular Member shall devote
substantially all his time and attention to the businesses of the Company and
its affiliates, and each Special Member shall not be required to devote any time
or attention to the businesses of the Company or its affiliates.

(b) All outside business or investment activities of the Members (including
outside directorships or trusteeships), shall be subject to such rules and
regulations as are established by the Managing Member from time to time.

(c) The Managing Member may from time to time establish such other rules and
regulations applicable to Members or other employees as the Managing Member
deems appropriate, including rules governing the authority of Members or other
employees to bind the Company to financial commitments or other obligations.

3.5. Exculpation and Indemnification. (a) Liability to Members. Notwithstanding
any other provision of this Agreement, whether express or implied, to the
fullest extent permitted by law, no Member nor any of such Member’s
representatives, agents or advisors nor any partner, member, officer, employee,
representative, agent or advisor of the Company or any of its affiliates
(individually, a “Covered Person” and collectively, the “Covered Persons”) shall
be liable to the Company or any other Member for any act or omission (in
relation to the Company, this Agreement, any related document or any transaction
or investment contemplated hereby or thereby) taken or omitted by a Covered
Person (other than any act or omission constituting Cause), unless there is a
final and non-appealable judicial determination and/or determination of an
arbitrator that such Covered Person did not act in good faith and in what such
Covered Person reasonably believed to be in, or not opposed to, the best
interests of the Company and within the authority granted to such Covered Person
by this Agreement, and, with respect to any criminal act or proceeding, had
reasonable cause to believe that such Covered Person’s conduct was unlawful.
Each Covered Person shall be entitled to rely in good faith on the advice of
legal counsel to the Company, accountants and other experts or professional
advisors, and no action taken by any Covered Person in reliance on such advice
shall in any event subject such person to any liability to any Member or the
Company. To the extent that, at law or in equity, a Member has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to another
Member, to the fullest extent permitted by law, such Member acting under this
Agreement shall not be liable to the Company or to any such other Member for its
good faith reliance on the provisions of this Agreement. The provisions of this
Agreement, to the extent that they expand or restrict the duties and liabilities
of a Member otherwise existing at law or in equity, are agreed by the Members,
to the fullest extent permitted by law, to modify to that extent such other
duties and liabilities of such Member.

(b) Indemnification. To the fullest extent permitted by law, the Company shall
indemnify and hold harmless (but only to the extent of the Company’s assets
(including, without limitation, the remaining Commitments of the Members) each
Covered Person from and against any and all claims, damages, losses, costs,
expenses and liabilities (including, without limitation, amounts paid in

 

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satisfaction of judgments, in compromises and settlements, as fines and
penalties and legal or other costs and reasonable expenses of investigating or
defending against any claim or alleged claim), joint and several, of any nature
whatsoever, known or unknown, liquidated or unliquidated (collectively,
“Losses”), arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, in which the
Covered Person may be involved, or threatened to be involved, as a party or
otherwise, by reason of such Covered Person’s management of the affairs of the
Company or which relate to or arise out of or in connection with the Company,
its property, its business or affairs (other than claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative, arising
out of any act or omission of such Covered Person constituting Cause); provided,
that a Covered Person shall not be entitled to indemnification under this
Section with respect to any claim, issue or matter if there is a final and
non-appealable judicial determination and/or determination of an arbitrator that
such Covered Person did not act in good faith and in what such Covered Person
reasonably believed to be in, or not opposed to, the best interest of the
Company and within the authority granted to such Covered Person by this
Agreement, and, with respect to any criminal act or proceeding, had reasonable
cause to believe that such Covered Person’s conduct was unlawful; provided
further, that if such Covered Person is a Member or a Withdrawn Member, such
Covered Person shall bear its share of such Losses in accordance with such
Covered Person’s Profit Sharing Percentage in the Company as of the time of the
actions or omissions that gave rise to such Losses. To the fullest extent
permitted by law, expenses (including legal fees) incurred by a Covered Person
(including, without limitation, the Managing Member) in defending any claim,
demand, action, suit or proceeding may, with the approval of the Managing
Member, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Company of a written undertaking by or on behalf of the Covered Person to
repay such amount to the extent that it shall be subsequently determined that
the Covered Person is not entitled to be indemnified as authorized in this
Section, and the Company and its affiliates shall have a continuing right of
offset against such Covered Person’s interests/investments in the Company and
such affiliates and shall have the right to withhold amounts otherwise
distributable to such Covered Person to satisfy such repayment obligation. If a
Member institutes litigation against a Covered Person which gives rise to an
indemnity obligation hereunder, such Member shall be responsible, up to the
amount of such Member’s Interests and remaining Commitment, for such Member’s
pro rata share of the Company’s expenses related to such indemnity obligation,
as determined by the Managing Member. The Company may purchase insurance, to the
extent available at reasonable cost, to cover losses, claims, damages or
liabilities covered by the foregoing indemnification provisions. Members will
not be personally obligated with respect to indemnification pursuant to this
Section.

3.6. Tax Representation. Each Member certifies that (A) if the Member is a
United States person (as defined in the Code) (x) (i) the Member’s name, social
security number (or, if applicable, employer identification number) and address
provided to the Company and its affiliates pursuant to an IRS Form W-9, Payer’s
Request for Taxpayer Identification Number Certification (“W-9”) or otherwise
are correct and (ii) the Member will complete and return a W-9, and (y) (i) the
Member is a United States person (as defined in the Code) and (ii) the Member
will notify the Company within 60 days of a change to foreign (non-United
States) status or (B) if the Member is not a United States person (as defined in
the Code) (x) (i) the information on the completed IRS Form W-8BEN, Certificate
of Foreign Status of Beneficial Owner for United States Tax Withholding
(“W-8BEN”) or other applicable form, including but not limited to IRS Form
W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or Certain
U.S. Branches for United States Tax Withholding (“W-8IMY”), or otherwise is
correct and (ii) the Member will complete and return the applicable IRS form,
including but not limited to a W-8BEN or W-8IMY, and (y) (i) the Member is not a
United States person (as defined in the Code) and (ii) the Member will notify
the Company within 60 days of any change of such status. The Member agrees to
properly execute and provide to the Company in a timely manner any tax
documentation that may be reasonably required by the Managing Member.

 

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ARTICLE IV

CAPITAL OF THE COMPANY

4.1. Capital Contributions by Members. (a) Except as agreed by the Managing
Member and a Regular Member, such Regular Member shall not be required to make
capital contributions equal to the Required Amounts as determined by the
Managing Member from time to time; provided, that (i) such additional capital
contributions may be made pro rata among the Regular Members based upon the
allocation of the Carried Interest in each BREP V Investment by the Managing
Member and (ii) additional capital contributions in excess of the Required
Amounts which are to be used for ongoing business operations (as distinct from
financing, legal or other specific liabilities of the Company. Special Members
shall not be required to make additional capital contributions to the Company
except (i) as a condition of an increase in such Special Member’s Profit Sharing
Percentage or (ii) as specifically set forth in this Agreement; provided, that
the Managing Member and any Special Member may agree from time to time that such
Special Member shall make an additional capital contribution to the Company;
provided further, that each Investor Special Member shall maintain its capital
account at a level equal to the product of (i) its Profit Sharing Percentage
from time to time and (ii) the total capital of the Company.

(b) Each capital contribution by a Member shall be credited to the appropriate
capital account of such Member in accordance with Section 5.2.

(c) The Managing Member may elect on a case by case basis to (i) cause the
Company to loan any Member (including any additional Member admitted to the
Company pursuant to Section 6.1) the amount of any capital contribution required
to be made by such Member or (ii) permit any Member (including any additional
Member admitted to the Company pursuant to Section 6.1 but excluding any Members
that are also executive officers of The Blackstone Group L.P.) to make a
required capital contribution to the Company in installments in kind, in each
case on terms (including valuation of contributed property in the case of in
kind contributions permitted by the Managing Member) determined by the Managing
Member.

(d)(i) The Members and the Withdrawn Members have entered into the Trust
Agreement, pursuant to which certain amounts of the distributions relating to
the Carried Interest will be paid to the Trustee(s) for deposit in the Trust
Account (such amounts to be paid to the Trustee(s) for deposit in the Trust
Account constituting a “Holdback”). The Managing Member shall determine, as set
forth below, the percentage of each distribution of Carried Interest that shall
be withheld for each Member Category (such withheld percentage constituting such
Member Category’s “Holdback Percentage”). The applicable Holdback Percentages
initially shall be 0% for the Managing Member, 15% for Existing Members (other
than the Managing Member), 21% for Retaining Withdrawn Members and 24% for
Deceased Members (the “Initial Holdback Percentages”).

(ii) The Holdback Percentage may not be reduced for any individual Member as
compared to the other Members in his Member Category (except as provided in
clause (iv) below). The Managing Member may only reduce the Holdback Percentages
among the Member Categories on a proportionate basis. For example, if the
Holdback Percentage for Existing Members is decreased to 12.5%, the Holdback
Percentage for Retaining Withdrawn Members and Deceased Members shall be reduced
to 17.5% and 20%, respectively. Any reduction in the Holdback Percentage for any
Member shall apply only to distributions relating to Carried Interest made after
the date of such reduction.

(iii) The Holdback Percentage may not be increased for any individual Member as
compared to the other Members in his Member Category (except as provided in
clause (iv) below). The Managing Member may not increase the Retaining Withdrawn
Members’ Holdback

 

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Percentage beyond 21% unless the Managing Member concurrently increases the
Existing Members’ Holdback Percentage to the Holdback Percentage of the
Retaining Withdrawn Members. The Managing Member may not increase the Deceased
Members’ Holdback Percentage beyond 24% unless the Managing Member increases the
Holdback Percentage for both Existing Members and Retaining Withdrawn Members to
24%. The Managing Member may not increase the Holdback Percentage of any Member
Category beyond 24% unless such increase applies equally to all Member
Categories. Any increase in the Holdback Percentage for any Member shall apply
only to distributions relating to Carried Interest made after the date of such
increase. The foregoing shall in no way prevent the Managing Member from
proportionately increasing the Holdback Percentage of any Member Category
(following a reduction of the Holdback Percentages below the Initial Holdback
Percentages), if the resulting Holdback Percentages are consistent with the
above. For example, if the Managing Member reduces the Holdback Percentages for
Existing Members, Retaining Withdrawn Members and Deceased Members to 12.5%,
17.5% and 20%, respectively, the Managing Member shall have the right to
subsequently increase the Holdback Percentages to the Initial Holdback
Percentages.

(iv)(A) Notwithstanding anything contained herein to the contrary, the Company
may increase or decrease the Holdback Percentage for any Member in any Member
Category (in such capacity, the “Subject Member”) pursuant to a majority vote of
the Regular Members (a “Holdback Vote”); provided, that, notwithstanding
anything to the contrary contained herein, the Holdback Percentage applicable to
the Managing Member shall not be increased or decreased without its prior
written consent; provided further, that a Subject Member’s Holdback Percentage
shall not be (I) increased prior to such time as such Subject Member (x) is
notified by the Company of the decision to increase such Subject Member’s
Holdback Percentage and (y) has, if requested by such Subject Member, been given
30 days to gather and provide information to the Company for consideration
before a second Holdback Vote (requested by the Subject Member) or (II)
decreased unless such decrease occurs subsequent to an increase in a Subject
Member’s Holdback Percentage pursuant to a Holdback Vote under this clause (iv);
provided further, that such decrease shall not exceed an amount such that such
Subject Member’s Holdback Percentage is less than the prevailing Holdback
Percentage for the Member Category of such Subject Member; provided further,
that a Member shall not vote to increase a Subject Member’s Holdback Percentage
unless such voting Member determines, in his good faith judgment, that the facts
and circumstances indicate that it is reasonably likely that such Subject
Member, or any of his successors or assigns (including his estate or heirs) who
at the time of such vote holds the Interest or otherwise has the right to
receive distributions relating thereto, will not be capable of satisfying any
Recontribution Amounts that may become due.

(B) A Holdback Vote shall take place at a Company meeting. Each Regular Member
shall be entitled to cast one vote with respect to the Holdback Vote regardless
of such Regular Member’s interest in the Company. Such vote may be cast by any
Regular Member in person or by proxy.

(C) If the result of the second Holdback Vote is an increase in a Subject
Member’s Holdback Percentage, such Subject Member may submit the decision to an
arbitrator, the identity of which is mutually agreed upon by both the Subject
Member and the Company; provided, that if the Company and the Subject Member
cannot agree upon a mutually satisfactory arbitrator within 10 days of the
second Holdback Vote, each of the Company and the Subject Member shall request
their candidate for arbitrator to select a third arbitrator satisfactory to such
candidates; provided further, that if such candidates fail to agree upon a
mutually satisfactory arbitrator within 30 days of such request, the then
sitting President of the American Arbitration Association shall unilaterally
select the arbitrator. Each Subject Member that submits the decision of the
Company pursuant to the second Holdback Vote to arbitration and the Company
shall estimate their reasonably projected out-of-pocket expenses relating
thereto, and each such party shall, to the satisfaction of the arbitrator and
prior to any determination being

 

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made by the arbitrator, pay the total of such estimated expenses (i.e., both the
Subject Member’s and the Company’s expenses) into an escrow account to be
controlled by Simpson Thacher & Bartlett LLP, as escrow agent (or such other
comparable law firm as the Company and the Subject Member shall agree). The
arbitrator shall direct the escrow agent to pay out of such escrow account all
expenses associated with such arbitration (including costs leading thereto) and
to return to the “victorious” party the entire amount of funds such party paid
into such escrow account. If the amount contributed to the escrow account by the
losing party is insufficient to cover the expenses of such arbitration, such
“losing” party shall then provide any additional funds necessary to cover such
costs to such “victorious” party. For purposes hereof, the “victorious” party
shall be the Company if the Holdback Percentage ultimately determined by the
arbitrator is closer to the percentage determined in the second Holdback Vote
than it is to the prevailing Holdback Percentage for the Subject Member’s Member
Category; otherwise, the Subject Member shall be the “victorious” party. The
party that is not the “victorious” party shall be the “losing” party.

(D) in the event of a decrease in a Subject Member’s Holdback Percentage
(1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a
decision of an arbitrator under paragraph (C) of this clause (iv), the Company
shall release and distribute to such Subject Member any Trust Amounts (and the
Trust Income thereon (except as expressly provided herein with respect to using
Trust Income as Firm Collateral)) which exceed the required Holdback of such
Subject Member (in accordance with such Subject Member’s reduced Holdback
Percentage) as though such reduced Holdback Percentage had applied since the
increase of the Subject Member’s Holdback Percentage pursuant to a previous
Holdback Vote under this clause (iv).

(v)(A) If a Member’s Holdback Percentage exceeds 15% (such percentage in excess
of 15% constituting the “Excess Holdback Percentage”), such Member may satisfy
the portion of his Holdback obligation in respect of his Excess Holdback
Percentage (such portion constituting such Member’s “Excess Holdback”), and such
Member (or a Withdrawn Member with respect to amounts contributed to the Trust
Account while he was a Member), to the extent his Excess Holdback obligation has
previously been satisfied in cash, may obtain the release of the Trust Amounts
(but not the Trust Income thereon which shall remain in the Trust Account and
allocated to such Member or Withdrawn Member) satisfying such Member’s or
Withdrawn Member’s Excess Holdback obligation, by pledging or otherwise making
available to the Company, on a first priority basis (except as provided below),
all or any portion of his Firm Collateral in satisfaction of his Excess Holdback
obligation. Any Member seeking to satisfy all or any portion of the Excess
Holdback utilizing Firm Collateral shall sign such documents and otherwise take
such other action as is necessary or appropriate (in the good faith judgment of
the Managing Member) to perfect a first priority security interest in, and
otherwise assure the ability of the Company to realize on (if required), such
Firm Collateral; provided, that, in the case of entities listed in the Company’s
books and records, in which Members are permitted to pledge their interests
therein to finance all or a portion of their capital contributions thereto
(“Pledgable Blackstone Interests”), to the extent a first priority security
interest is unavailable because of an existing lien on such Firm Collateral, the
Member or Withdrawn Member seeking to utilize such Firm Collateral shall grant
the Company a second priority security interest therein in the manner provided
above; provided further, that (x) in the case of Pledgable Blackstone Interests,
to the extent that neither a first priority nor a second priority security
interest is available, or (y) if the Managing Member otherwise determines in its
good faith judgment that a security interest in Firm Collateral (and the
corresponding documents and actions) are not necessary or appropriate, the
Member or Withdrawn Member shall (in the case of either clause (x) or (y) above)
irrevocably instruct in writing the relevant partnership, limited liability
company or other entity listed in the Company’s books and records to remit any
and all net proceeds resulting from a Firm Collateral Realization on such Firm
Collateral to the Trustee(s) as more fully provided in clause (B) below. The
Company shall, at the request of any Member or Withdrawn Member, assist such
Member or Withdrawn Member in taking such action necessary to enable such Member
or Withdrawn Member to use Firm Collateral as provided hereunder.

 

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(B) If upon a sale or other realization of all or any portion of any Firm
Collateral (a “Firm Collateral Realization”), the remaining Firm Collateral is
insufficient to cover any Member’s or Withdrawn Member’s Excess Holdback
requirement, then up to 100% of the net proceeds otherwise distributable to such
Member or Withdrawn Member from such Firm Collateral Realization (including
distributions subject to the repayment of financing sources as in the case of
Pledgable Blackstone Interests) shall be paid into the Trust Account to fully
satisfy such Excess Holdback requirement (allocated to such Member or Withdrawn
Member) and shall be deemed to be Trust Amounts for purposes hereunder. Any net
proceeds from such Firm Collateral Realization in excess of the amount necessary
to satisfy such Excess Holdback requirement shall be distributed to such Member
or Withdrawn Member.

(C) Upon any valuation or revaluation of Firm Collateral that results in a
decreased valuation of such Firm Collateral so that such Firm Collateral is
insufficient to cover any Member’s or Withdrawn Member’s Excess Holdback
requirement (including upon a Firm Collateral Realization, if net proceeds
therefrom and the remaining Firm Collateral are insufficient to cover any
Member’s or Withdrawn Member’s Excess Holdback requirement), the Company shall
provide notice of the foregoing to such Member or Withdrawn Member and such
Member or Withdrawn Member shall, within 30 days of receiving such notice,
contribute cash (or additional Firm Collateral) to the Trust Account in an
amount necessary to satisfy his Excess Holdback requirement. If any such Member
or Withdrawn Member defaults upon his obligations under this clause (C), then
Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of the first
sentence of Section 5.8(d)(ii) shall be deemed inapplicable to a default under
this clause (C); provided further, that for purposes of applying
Section 5.8(d)(ii) to a default under this clause (C): (I) the term “Defaulting
Party” where such term appears in such Section 5.8(d)(ii) shall be construed as
“defaulting party” for purposes hereof and (II) the terms “Net Recontribution
Amount” and “Recontribution Amount” where such terms appear in such
Section 5.8(d)(ii) shall be construed as the amount due pursuant to this clause
(C).

(vi) Any Member or Withdrawn Member may (A) obtain the release of any Trust
Amounts (but not the Trust Income thereon which shall remain in the Trust
Account and allocated to such Member or Withdrawn Member) or Firm Collateral, in
each case, held in the Trust Account for the benefit of such Member or Withdrawn
Member or (B) require the Company to distribute all or any portion of amounts
otherwise required to be placed in the Trust Account (whether cash or Firm
Collateral), by obtaining a letter of credit (an “L/C”) for the benefit of the
Trustee(s) in such amounts. Any Member or Withdrawn Member choosing to furnish
an L/C to the Trustee(s) (in such capacity, an “L/C Member”) shall deliver to
the Trustee(s) an unconditional and irrevocable L/C from a commercial bank whose
(x) short-term deposits are rated at least A-1 by S&P and P-1 by Moody’s (if the
L/C is for a term of 1 year or less), or (y) long-term deposits are rated at
least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1 year or more)
(each a “Required Rating”). If the relevant rating of the commercial bank
issuing such L/C drops below the relevant Required Rating, the L/C Member shall
supply to the Trustee(s), within 30 days of such occurrence, a new L/C from a
commercial bank whose relevant rating is at least equal to the relevant Required
Rating, in lieu of the insufficient L/C. In addition, if the L/C has a term
expiring on a date earlier than the latest possible termination date of BREP V,
the Trustee(s) shall be permitted to drawdown on such L/C if the L/C Member
fails to provide a new L/C from a commercial bank whose relevant rating is at
least equal to the relevant Required Rating, at least 30 days prior to the
stated expiration date of such existing L/C. The Trustee(s) shall notify an L/C
Member 10 days prior to drawing on any L/C. The Trustee(s) may (as directed by
the Company in the case of clause (I) below) draw down on an L/C only if
(I) such a drawdown is necessary to satisfy an L/C Member’s obligation relating
to the Company’s obligations under the Clawback Provisions or (II) an L/C Member
has not

 

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provided a new L/C from a commercial bank whose relevant rating is at least
equal to the relevant Required Rating (or the requisite amount of cash and/or
Firm Collateral (to the extent permitted hereunder)), at least 30 days prior to
the stated expiration of an existing L/C in accordance with this clause (vi).
The Trustee(s), as directed by the Company, shall return to any L/C Member his
L/C upon (1) the termination of the Trust Account and satisfaction of the
Company’s obligations, if any, in respect of the Clawback Provisions, (2) an L/C
Member satisfying his entire Holdback obligation in cash and Firm Collateral (to
the extent permitted hereunder), or (3) the release, by the Trustee(s), as
directed by the Company, of all amounts in the Trust Account to the Members or
Withdrawn Members. If an L/C Member satisfies a portion of his Holdback
obligation in cash and/or Firm Collateral (to the extent permitted hereunder) or
if the Trustee(s), as directed by the Company, release a portion of the amounts
in the Trust Account to the Members or Withdrawn Members in the Member Category
of such L/C Member, the L/C of an L/C Member may be reduced by an amount
corresponding to such portion satisfied in cash and/or Firm Collateral (to the
extent permitted hereunder) or such portion released by the Trustee(s), as
directed by the Company; provided, that in no way shall the general release of
any Trust Income cause an L/C Member to be permitted to reduce the amount of an
L/C by any amount.

(vii)(A) Any in-kind distributions by the Company relating to Carried Interest
shall be made in accordance herewith as though such distributions consisted of
cash. The Company may direct the Trustee(s) to dispose of any in-kind
distributions held in the Trust Account at any time. The net proceeds therefrom
shall be treated as though initially contributed to the Trust Account.

(B) In lieu of the foregoing, any Existing Member may pledge with respect to any
in-kind distribution the Special Firm Collateral referred to in asset category 6
on the Company’s books and records; provided, that the initial contribution of
such Special Firm Collateral shall initially equal 130% of the required Holdback
Amount for a period of 90 days, and thereafter shall equal at least 115% of the
required Holdback Amount. Paragraphs 4.1(d)(viii)(C) and (D) shall apply to such
Special Firm Collateral. To the extent such Special Firm Collateral exceeds the
applicable minimum percentage of the required Holdback Amount specified in the
first sentence of this clause (vii)(B), the related Member may obtain a release
of such excess amount from the Trust Account.

(viii)(A) Any Regular Member or Withdrawn Member may satisfy all or any portion
of his Holdback (excluding any Excess Holdback), and such Member or a Withdrawn
Member may, to the extent his Holdback (excluding any Excess Holdback) has been
previously been satisfied in cash or by the use of an L/C as provided herein,
obtain a release of Trust Amounts (but not the Trust Income thereon which shall
remain in the Trust Account and allocated to such Member or Withdrawn Member)
that satisfy such Member’s or Withdrawn Member’s Holdback (excluding any Excess
Holdback) by pledging to the Trustee(s) on a first priority basis all of his
Special Firm Collateral in a particular Qualifying Fund, which at all times must
equal or exceed the amount of the Holdback distributed to the Member or
Withdrawn Member (as more fully set forth below). Any Member seeking to satisfy
such Member’s Holdback utilizing Special Firm Collateral shall sign such
documents and otherwise take such other action as is necessary or appropriate
(in the good faith judgment of the Managing Member) to perfect a first priority
security interest in, and otherwise assure the ability of the Trustee(s) to
realize on (if required), such Special Firm Collateral.

(B) If upon a distribution, withdrawal, sale, liquidation or other realization
of all or any portion of any Special Firm Collateral (a “Special Firm Collateral
Realization”), the remaining Special Firm Collateral (which shall not include
the amount of Firm Collateral that consists of a Qualifying Fund and is being
used in connection with an Excess Holdback) is insufficient to cover any
Member’s or Withdrawn Member’s Holdback (when taken together with other means of
satisfying the Holdback as provided herein (i.e., cash contributed to the Trust
Account or an L/C in the Trust Account)),

 

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then up to 100% of the net proceeds otherwise distributable to such Member or
Withdrawn Member from such Special Firm Collateral Realization (which shall not
include the amount of Firm Collateral that consists of a Qualifying Fund or
other asset and is being used in connection with an Excess Holdback) shall be
paid into the Trust (and allocated to such Member or Withdrawn Member) to fully
satisfy such Holdback and shall be deemed thereafter to be Trust Amounts for
purposes hereunder. Any net proceeds from such Special Firm Collateral
Realization in excess of the amount necessary to satisfy such Holdback
(excluding any Excess Holdback) shall be distributed to such Member or Withdrawn
Member. To the extent a Qualifying Fund distributes Securities to a Member or
Withdrawn Member in connection with a Special Firm Collateral Realization, such
Member or Withdrawn Member shall be required to promptly fund such Member’s or
Withdrawn Member’s deficiency with respect to his Holdback in cash or an L/C.

(C) Upon any valuation or revaluation of the Special Firm Collateral and/or any
adjustment in the Applicable Collateral Percentage applicable to a Qualifying
Fund (as provided in the Company’s books and records), if such Member’s or
Withdrawn Member’s Special Firm Collateral is valued at less than such Member’s
Holdback (excluding any Excess Holdback) as provided in the Company’s books and
records, taking into account other permitted means of satisfying the Holdback
hereunder, the Company shall provide notice of the foregoing to such Member or
Withdrawn Member and, within 10 business days of receiving such notice, such
Member or Withdrawn Member shall contribute cash or additional Special Firm
Collateral to the Trust Account in an amount necessary to make up such
deficiency. If any such Member or Withdrawn Member defaults upon his obligations
under this clause (C), then Section 5.8(d)(ii) shall apply thereto; provided,
that the first sentence of Section 5.8(d)(ii) shall be deemed inapplicable to
such default; provided further, that for purposes of applying Section 5.8(d)(ii)
to a default under this clause (C): (I) the term “Defaulting Party” where such
term appears in such Section 5.8(d)(ii) shall be construed as “defaulting party”
for purposes hereof and (II) the terms “Net Recontribution Amount” and
“Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall
be construed as the amount due pursuant to this clause (C).

(D) Upon a Member becoming a Withdrawn Member, at any time thereafter the
Managing Member may revoke the ability of such Withdrawn Member to use Special
Firm Collateral as set forth in this Section 4.1(d)(viii), notwithstanding
anything else in this Section 4.1(d)(viii). In that case the provisions of
clause (C) above shall apply to the Withdrawn Member’s obligation to satisfy the
Holdback (except that 30 days’ notice of such revocation shall be given), given
that the Special Firm Collateral is no longer available to satisfy any portion
of the Holdback (excluding any Excess Holdback).

(E) Nothing in this Section 4.1(d)(viii) shall prevent any Member or Withdrawn
Member from using any amount of such Member’s interest in a Qualifying Fund as
Firm Collateral; provided that at all times Section 4.1(d)(v) and this
Section 4.1(d)(viii) are each satisfied.

4.2. Interest. Interest on the balances of the Members’ capital (excluding
capital invested in Investments and, if deemed appropriate by the Managing
Member, capital invested in any other investment of the Company) shall be
credited to the Members’ capital accounts at the end of each accounting period
pursuant to Section 5.2, or at any other time as determined by the Managing
Member, at rates determined by the Managing Member from time to time, and shall
be charged as an expense of the Company.

4.3. Withdrawals of Capital. The Members may not withdraw capital from the
Company except (i) for distributions of cash or other property pursuant to
Section 5.8, (ii) as otherwise expressly provided in this Agreement or (iii) as
determined by the Managing Member.

 

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ARTICLE V

PARTICIPATION IN PROFITS AND LOSSES

5.1. General Accounting Matters. (a) Net Income (Loss) shall be determined by
the Managing Member at the end of each accounting period and shall be allocated
as described in Section 5.4.

(b) “Net Income (Loss)” from any activity of the Company for any accounting
period (other than Net Income (Loss) from Investments described below) means
(i) the gross income realized by the Company from such activity during such
accounting period less (ii) all expenses of the Company, and all other items
that are deductible from gross income, for such accounting period that are
allocable to such activity (determined as provided below).

“Net Income (Loss)” from any Investment for any accounting period in which such
Investment has not been sold or otherwise disposed of means (i) the gross amount
of dividends, interest or other income received by the Company from such
Investment during such accounting period less (ii) all expenses of the Company
for such accounting period that are allocable to such Investment (determined as
provided below).

“Net Income (Loss)” from any Investment for the accounting period in which such
Investment is sold or otherwise disposed of means (i) the sum of the gross
proceeds from the sale or other disposition of such Investment and the gross
amount of dividends, interest or other income received by the Company from such
Investment during such accounting period less (ii) the sum of the cost or other
basis to the Company of such Investment and all expenses of the Company for such
accounting period that are allocable to such Investment.

Net Income (Loss) shall be determined in accordance with the accounting method
used by the Company for U.S. federal income tax purposes with the following
adjustments: (i) any income of the Company that is exempt from U.S. federal
income taxation and not otherwise taken into account in computing Net Income
(Loss) shall be added to such taxable income or loss; (ii) if any asset has a
value on the books of the Company that differs from its adjusted tax basis for
U.S. federal income tax purposes, any depreciation, amortization or gain
resulting from a disposition of such asset shall be calculated with reference to
such value; (iii) upon an adjustment to the value of any asset on the books of
the Company pursuant to Regulation Section 1.704-1(b)(2), the amount of the
adjustment shall be included as gain or loss in computing such taxable income or
loss; (iv) any expenditures of the Company not deductible in computing taxable
income or loss, not properly capitalizable and not otherwise taken into account
in computing Net Income (Loss) pursuant to this definition shall be treated as
deductible items; (v) any income from an Investment that is payable to Company
employees in respect of “phantom interests” in such Investment awarded by the
Managing Member to employees shall be included as an expense in the calculation
of Net Income (Loss) from such Investment, and (vi) items of income and expense
(including interest income and overhead and other indirect expenses) of the
Company, Holdings and other affiliates of the Company shall be allocated among
the Company, Holdings and such affiliates, among various Company activities and
Investments and between accounting periods, in each case as determined by the
Managing Member. Any adjustments to Net Income (Loss) by the Managing Member,
including adjustments for items of income accrued but not yet received,
unrealized gains, items of expense accrued but not yet paid, unrealized losses,
reserves (including reserves for taxes, bad debts, actual or threatened
litigation, or any other expenses, contingencies or obligations) and other
appropriate items shall be made in accordance with U.S. generally accepted
accounting principles (“GAAP”); provided, that the Managing Member shall not be
required to make any such adjustment.

 

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(c) An accounting period shall be a Fiscal Year, except that, at the option of
the Managing Member, an accounting period will terminate and a new accounting
period will begin on the admission date of an additional Member or the
Settlement Date of a Withdrawn Member, if any such date is not the first day of
a Fiscal Year. If any event referred to in the preceding sentence occurs and the
Managing Member do not elect to terminate an accounting period and begin a new
accounting period, then the Managing Member may make such adjustments as it
deems appropriate to the Members’ Profit Sharing Percentages for the accounting
period in which such event occurs (prior to any allocations of Unallocated
Percentages or adjustments to Profit Sharing Percentages pursuant to
Section 5.3) to reflect the Members’ average Profit Sharing Percentages during
such accounting period; provided, that the Profit Sharing Percentages of Members
in Net Income (Loss) from Investments acquired during such accounting period
will be based on Profit Sharing Percentages in effect when each such Investment
was acquired.

(d) In establishing Profit Sharing Percentages and allocating Unallocated
Percentages pursuant to Section 5.3, the Managing Member may consider such
factors as it deems appropriate.

(e) All determinations, valuations and other matters of judgment required to be
made for accounting purposes under this Agreement shall be made by the Managing
Member and approved by the Company’s independent accountants. Such approved
determinations, valuations and other accounting matters shall be conclusive and
binding on all Members, all Withdrawn Members, their successors, heirs, estates
or legal representatives and any other person, and to the fullest extent
permitted by law no such person shall have the right to an accounting or an
appraisal of the assets of the Company or any successor thereto.

5.2. Capital Accounts. (a) There shall be established for each Member on the
books of the Company, to the extent and at such times as may be appropriate, one
or more capital accounts as the Managing Member may deem to be appropriate for
purposes of accounting for such Member’s interests in the capital and Net Income
(Loss) of the Company.

(b) As of the end of each accounting period or, in the case of a contribution to
the Company by one or more of the Members or a distribution by the Company to
one or more of the Members, at the time of such contribution or distribution,
(i) the appropriate capital accounts of each Member shall be credited with the
following amounts: (A) the amount of cash and the value of any property
contributed by such Member to the capital of the Company during such accounting
period, (B) the Net Income allocated to such Member for such accounting period
and (C) the interest credited on the balance of such Member’s capital for such
accounting period pursuant to Section 4.2; and (ii) the appropriate capital
accounts of each Member shall be debited with the following amounts: (x) the
amount of cash, the principal amount of any subordinated promissory note of the
Company referred to in Section 6.5(k) (as such amount is paid) and the value of
any property distributed to such Member during such accounting period and
(y) the Net Loss allocated to such Member for such accounting period.

5.3. Profit Sharing Percentages. (a) Prior to the beginning of each annual
accounting period, the Managing Member shall establish the profit sharing
percentage (the “Profit Sharing Percentage”) of each Member in each category of
Net Income (Loss) for such annual accounting period pursuant to Section 5.1(a)
taking into account such factors as the Managing Member deems appropriate,
including those referred to in Section 5.1(c); provided, that (i) the Managing
Member may elect to establish Profit Sharing Percentages in Net Income (Loss)
from any Investment acquired by the Company during such accounting period at the
time such Investment is acquired in accordance with paragraph (d) below and
(ii) Net Income (Loss) for such accounting period from any Investment shall be
allocated in accordance with the Profit Sharing Percentages in such Investment
established in accordance with

 

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paragraph (d) below. The Managing Member may establish different Profit Sharing
Percentages for any Member in different categories of Net Income (Loss). In the
case of the Withdrawal of a Member, such former Member’s Profit Sharing
Percentages shall be allocated by the Managing Member to one or more of the
remaining Members. In the case of the admission of any Member to the Company as
an additional Member, the Profit Sharing Percentages of the other Members shall
be reduced by an amount equal to the Profit Sharing Percentage allocated to such
new Member pursuant to Section 6.1(b); such reduction of each other Member’s
Profit Sharing Percentage shall be pro rata based upon such Member’s Profit
Sharing Percentage as in effect immediately prior to the admission of the new
Member. Notwithstanding the foregoing, the Managing Member may also adjust the
Profit Sharing Percentage of any Member for any annual accounting period at the
end of such annual accounting period in its sole discretion.

(b) The Managing Member may elect to allocate to the Members less than 100% of
the Profit Sharing Percentages of any category for any annual accounting period
at the time specified in Section 5.3(a) for the annual fixing of Profit Sharing
Percentages (any remainder of such Profit Sharing Percentages being called an
“Unallocated Percentage); provided, that any Unallocated Percentage in any
category of Net Income (Loss) for any annual accounting period that is not
allocated by the Managing Member within 90 days after the end of such accounting
period shall be deemed to be allocated among all Members (including the Managing
Member) in the manner determined by the Managing Member in its sole discretion.

(c) Unless otherwise determined by the Managing Member in a particular case,
(i) Profit Sharing Percentages in Net Income (Loss) from any Investment shall be
established in proportion to the Members’ respective capital contributions in
respect of such Investment and (ii) Profit Sharing Percentages in Net Income
(Loss) from each Investment shall be fixed at the time such Investment is
acquired and shall not thereafter change, subject to any repurchase rights
established by the Managing Member pursuant to Section 5.7.

5.4. Allocations of Net Income (Loss). (a) Except as provided in Sections 5.4(d)
and 5.4(e), Net Income of the Company for each Investment shall be allocated to
the capital accounts related to such Investment of all the Members participating
in such Investment (including the Managing Member): first, in proportion to and
to the extent of the amount of Non-Carried Interest (other than amounts
representing a return of capital contributions) or Carried Interest distributed
to the Members; second, to Members that received Non-Carried Interest (other
than amounts representing a return of capital contributions) or Carried Interest
in years prior to the years such Net Income is being allocated to the extent
such Non-Carried Interest (other than amounts representing a return of capital
contributions) or Carried Interest exceeded Net Income allocated to such Members
in such earlier years; and third, to the Members in the same manner that such
Non-Carried Interest (other than amounts representing a return of capital
contributions) or Carried Interest would have been distributed if cash were
available to distribute with respect thereto.

(b) Net Loss of the Company shall be allocated as follows: (i) Net Loss relating
to realized losses suffered by BREP V and allocated to the Company with respect
to its pro rata share thereof (based on capital contributions made to BREP V)
shall be allocated to the Members in accordance with each Member’s Non-Carried
Interest Sharing Percentage with respect to the Investment giving rise to such
loss suffered by BREP V and (ii) Net Loss relating to realized losses suffered
by BREP V and allocated to the Company with respect to the Carried Interest
shall be allocated in accordance with a Member’s (including Withdrawn Member’s)
Carried Interest Give Back Percentage (as of the date of such loss) (subject to
adjustment pursuant to Section 5.8(e)).

(c) Notwithstanding Section 5.4(a) above, Net Income relating to Carried
Interest allocated after the allocation of a Net Loss pursuant to clause (ii) of
Section 5.4(b) shall be allocated in

 

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accordance with such Carried Interest Give Back Percentages until such time as
the Members have been allocated Net Income relating to Carried Interest equal to
the aggregate amount of Net Loss previously allocated in accordance with clause
(ii) of Section 5.4(b). Withdrawn Members shall remain Members for purposes of
allocating such Net Loss with respect to Carried Interest.

(d) To the extent the Company has any Net Income (Loss) for any accounting
period unrelated to BREP V, such Net Income (Loss) will be allocated in
accordance with Profit Sharing Percentages prevailing at the beginning of such
accounting period, except as provided in Section 5.4(e).

(e) The Managing Member may authorize from time to time advances to Members
against their allocable shares of Net Income (Loss).

5.5. Liability of Members. Except as otherwise provided in the LLC Act or as
expressly provided in this Agreement, no Member shall be personally obligated
for any debt, obligation or liability of the Company or of any other Member
solely by reason of being a Member. In no event shall any Member or Withdrawn
Member (i) be obligated to make any capital contribution or payment to or on
behalf of the Company or (ii) have any liability to return distributions
received by such Member from the Company, in each case except as specifically
provided in Sections 4.1(d) or 5.8 or otherwise in this Agreement, as such
Member shall otherwise expressly agree in writing or as may be required by
applicable law.

5.6. [Intentionally omitted.]

5.7. Repurchase Rights, etc. The Managing Member may from time to time establish
such repurchase rights and/or other requirements with respect to the Members’
Interests relating to BREP V Investments as the Managing Member may determine.
The Managing Member shall have authority to (a) withhold any distribution
otherwise payable to any Member until any such repurchase rights have lapsed or
any such requirements have been satisfied, (b) pay any distribution to any
Member that is Contingent as of the distribution date and require the refund of
any portion of such distribution that is Contingent as of the Withdrawal Date of
such Member, (c) amend any previously established repurchase rights or other
requirements from time to time and (d) make such exceptions thereto as it may
determine on a case by case basis.

5.8. Distributions. (a) (i) The Company shall make distributions of available
cash (subject to reserves and other adjustments as provided herein) or other
property to Members at such times and in such amounts as are determined by the
Managing Member. The Managing Member shall, if it deems it appropriate,
determine the availability for distribution of, and distribute cash or other
property separately for each category of Net Income (Loss) established pursuant
to Section 5.1(a). Distributions of cash or other property with respect to
Non-Carried Interest shall be made among the Members in accordance with their
respective Non-Carried Interest Sharing Percentages, and, subject to Sections
4.1(d) and 5.8(e), distributions of cash or other property with respect to
Carried Interest shall be made among Members in accordance with their respective
Carried Interest Sharing Percentages. At any time that a sale, exchange,
transfer or other disposition by BREP V of a portion of an Investment is being
considered by the Company (a “Disposable Investment”), at the election of the
Managing Member each Member’s Interest with respect to such Investment shall be
vertically divided into two separate Interests, an Interest attributable to the
Disposable Investment (a Member’s “Class B Interest”), and an Interest
attributable to such Investment excluding the Disposable Investment (a Member’s
“Class A Interest”). Distributions (including those resulting from a sale,

 

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transfer, exchange or other disposition by BREP V) relating to a Disposable
Investment (with respect to both Carried Interest and Non-Carried Interest)
shall be made only to holders of Class B Interests with respect to such
Investment in accordance with their Profit Sharing Percentages relating to such
Class B Interests, and distributions (including those resulting from the sale,
transfer, exchange or other disposition by BREP V) relating to an Investment
excluding such Disposable Investment (with respect to both Carried Interest and
Non-Carried Interest) shall be made only to holders of Class A Interests with
respect to such Investment in accordance with their respective Profit Sharing
Percentages relating to such Class A Interests. Except as provided above,
distributions of cash or other property with respect to each category of Net
Income (Loss) shall be allocated among the Members in the same proportions as
the allocations of Net Income (Loss) of each such category.

(b) Subject to the Company’s having sufficient available cash in the reasonable
judgment of the Managing Member, the Company shall make cash distributions to
each Member with respect to each Fiscal Year of the Company in an aggregate
amount at least equal to the total Federal, New York State and New York City
income and other taxes that would be payable by such Member with respect to all
categories of Net Income (Loss) allocated to such Member for such Fiscal Year,
the amount of which shall be calculated (i) on the assumption that each Member
is an individual subject to the then prevailing maximum Federal, New York State
and New York City income tax rates, (ii) taking into account the deductibility
of state and local income and other taxes for Federal income tax purposes and
(iii) taking into account any differential in applicable rates due to the type
and character of Net Income (Loss) allocated to such Member. Notwithstanding the
provisions of the foregoing sentence, the Managing Member may refrain from
making any distribution if, in the reasonable judgment of the Managing Member,
such distribution is prohibited by § 18-607 of the LLC Act.

(c) The Managing Member may provide that the Member Interest of any Member or
employee (including such Member’s or employee’s right to distributions and
investments of the Company related thereto) may be subject to repurchase by the
Company during such period as the Managing Member shall determine (a “Repurchase
Period”). Any Contingent distributions from investments subject to repurchase
rights will be withheld by the Company and will be distributed to the recipient
thereof (together with interest thereon at rates determined by the Managing
Member from time to time) as the recipient’s rights to such distributions become
Non-Contingent (by virtue of the expiration of the applicable Repurchase Period
or otherwise). The Managing Member may elect in an individual case to have the
Company distribute any Contingent distribution to the applicable recipient
thereof irrespective of whether the applicable Repurchase Period has lapsed. If
a Member Withdraws from the Company for any reason other than his death, Total
Disability or Incompetence, the undistributed share of any investment that
remains Contingent as of the applicable Withdrawal Date shall be repurchased by
the Company at a purchase price determined at such time by the Managing Member.
Unless determined otherwise by the Managing Member, the repurchased portion
thereof will be allocated among the remaining Members with interests in such
investment in proportion to their respective percentage interests in such
investment, or if no other Member has a percentage interest in such specific
investment, to the Managing Member; provided, that the Managing Member may
allocate the Withdrawn Member’s share of a repurchased investment attributable
to the period after the Withdrawn Member’s Withdrawal Date on any basis it may
determine, including to existing or new Members who did not previously have
interests in such investment, except that, in any event, each Investor Special
Member shall be allocated a share of such unrealized investment income equal to
its respective Profit Sharing Percentage of such unrealized investment income.

(d)(i) (A) If the Company is obligated to contribute to BREP V, directly or
indirectly through one or more affiliates, a Clawback Amount or Giveback Amount
payable pursuant to the Clawback Provisions or Giveback Provisions, as the case
may be, the Company shall call for such amounts as are necessary to satisfy such
obligations as determined by the Managing Member, in which case each Member and
Withdrawn Member shall contribute to the Company, in cash, when and as called by
the Company, such an amount of prior distributions by the Company (and the Other
Fund GPs) with respect to Carried Interest (and/or Non-Carried Interest in the
case of Giveback Amounts) (the “Recontribution Amount”) which equals (I) the
product of (a) a Member’s or Withdrawn Member’s

 

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Carried Interest Give Back Percentage and (b) the aggregate Clawback Amount
payable by the Company in the case of Clawback Amounts and (II) with respect to
a Giveback, such Member’s pro rata share of prior distributions of Carried
Interest and/or Non-Carried Interest in connection with (a) the BREP V
Investment giving rise to the Giveback Amount, (b) if the amounts contributed
pursuant to clause (II)(a) above are insufficient to satisfy such Giveback
Amount, BREP V Investments other than the one giving rise to such obligation,
but only those amounts received by the Members with an interest in the BREP V
Investment referred to in clause (II)(a) above and (c) if the Giveback Amount is
unrelated to a specific BREP V Investment, all BREP V Investments. Each Member
and Withdrawn Member shall promptly contribute to the Company, along with
satisfying his comparable obligations to the Other Fund GPs, if any, upon such
call such Member’s or Withdrawn Member’s Recontribution Amount, less the amount
paid out of the Trust Account on behalf of such Member or Withdrawn Member by
the Trustee(s) pursuant to written instructions from the Company, or if
applicable, any of the Other Fund GPs with respect to Carried Interest (and/or
Non-Carried Interest in the case of Giveback Amounts) (the “Net Recontribution
Amount”), irrespective of the fact that the amounts in the Trust Account may be
sufficient on an aggregate basis to satisfy the Company’s, BREA V’s, BRE
Holdings V’s, BREMA V’s and the Other Fund GPs’ obligation under the Clawback
Provisions and/or Giveback Provisions; provided, that to the extent a Member’s
or Withdrawn Member’s share of the amount paid with respect to the Clawback
Amount or the Giveback Provisions exceeds his Recontribution Amount, such excess
shall be repaid to such Member or Withdrawn Member as promptly as reasonably
practicable, subject to clause (ii) below; provided further, that such written
instructions from the Company shall specify each Member’s and Withdrawn Member’s
Recontribution Amount. Prior to such time, the Company may, in its discretion
(but shall be under no obligation to), provide notice that in the Company’s
judgment, the potential obligations in respect of the Clawback Provisions or the
Giveback Provisions will probably materialize (and an estimate of the aggregate
amount of such obligations); provided further, that any amount from a Member’s
Trust Account used to pay any Giveback Amount (or such lesser amount as may be
required by the Managing Member) shall be contributed by such Member to such
Member’s Trust Account no later than 30 days after the Net Recontribution Amount
is paid with respect to such Giveback.

(B) To the extent any Member or Withdrawn Member has satisfied any Holdback
obligation with Firm Collateral, such Member or Withdrawn Member shall, within
10 days of the Company’s call for Recontribution Amounts, make a cash payment
into the Trust Account in an amount equal to the amount of the Holdback
obligation satisfied with such Firm Collateral, or such lesser amount such that
the amount in the Trust Account allocable to such Member or Withdrawn Member
equals the sum of (I) such Member’s or Withdrawn Member’s Recontribution Amount
and (II) any similar amounts payable to any of the Other Fund GPs. Immediately
upon receipt of such cash, the Trustee(s) shall take such steps as are necessary
to release such Firm Collateral of such Member or Withdrawn Member equal to the
amount of such cash payment. If the amount of such cash payment is less than the
amount of Firm Collateral of such Member or Withdrawn Member, the balance of
such Firm Collateral if any, shall be retained to secure the payment of
Deficiency Contributions, if any, and shall be fully released upon the
satisfaction of the Company’s and the Other Fund GPs’ obligation to pay the
Clawback Amount. The failure of any Member or Withdrawn Member to make a cash
payment in accordance with this clause (B) (to the extent applicable) shall
constitute a default under Section 5.8(d)(ii) as if such cash payment hereunder
constitutes a Net Recontribution Amount under Section 5.8(d)(ii).

(ii)(A) In the event any Member or Withdrawn Member (a “Defaulting Party”) fails
to recontribute all or any portion of such Defaulting Party’s Net Recontribution
Amount for any reason, the Company shall require all other Members and Withdrawn
Members to contribute, on a pro rata basis (based on each of their respective
Carried Interest Give Back Percentages in the case of Clawback Amounts, and
Profit Sharing Percentages in the case of Giveback Amounts (as more fully
described in clause (II) of Section 5.8(d)(i)(A) above)), such amounts as are
necessary to fulfill the Defaulting Party’s obligation to pay such Defaulting
Party’s Net Recontribution Amount (a “Deficiency

 

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Contribution”) if the Managing Member determines in its good faith judgment that
the Company will be unable to collect such amount in cash from such Defaulting
Party for payment of the Clawback Amount or Giveback Amount, as the case may be,
at least 20 Business Days prior to the latest date that the Company, and the
Other Fund GPs, if applicable, are permitted to pay the Clawback Amount or
Giveback Amount, as the case may be; provided, that, subject to Section 5.8(e),
no Member or Withdrawn Member shall as a result of such Deficiency Contribution
be required to contribute an amount in excess of 150% of the amount of the Net
Recontribution Amount initially requested from such Member or Withdrawn Member
in respect of such default. Thereafter, the Managing Member shall determine in
its good faith judgment that the Company should either (1) not attempt to
collect such amount in light of the costs associated therewith, the likelihood
of recovery and any other factors considered relevant in the good faith judgment
of the Managing Member or (2) pursue any and all remedies (at law or equity)
available to the Company against the Defaulting Party, the cost of which shall
be a Company expense to the extent not ultimately reimbursed by the Defaulting
Party. It is agreed that the Company shall have the right (effective upon such
Defaulting Party becoming a Defaulting Party) to set-off as appropriate and
apply against such Defaulting Party’s Net Recontribution Amount any amounts
otherwise payable to the Defaulting Party by the Company or any affiliate
thereof (including amounts unrelated to Carried Interest, such as returns of
capital and profit thereon). Each Member and Withdrawn Member hereby grants to
the Company a security interest, effective upon such Member or Withdrawn Member
becoming a Defaulting Party, in all accounts receivable and other rights to
receive payment from any affiliate of the Company and agrees that, upon the
effectiveness of such security interest, the Company may sell, collect or
otherwise realize upon such collateral. In furtherance of the foregoing, each
Member and Withdrawn Member hereby appoints the Company as its true and lawful
attorney-in-fact with full irrevocable power and authority, in the name of such
Member or Withdrawn Member or in the name of the Company, to take any actions
which may be necessary to accomplish the intent of the immediately preceding
sentence. The Company shall be entitled to collect interest on the Net
Recontribution Amount of a Defaulting Party from the date such Recontribution
Amount was required to be contributed to the Company at a rate equal to the
Default Interest Rate.

(B) Any Member’s or Withdrawn Member’s failure to make a Deficiency Contribution
shall cause such Member or Withdrawn Member to be a Defaulting Party with
respect to such amount. The Company shall first seek any remaining Trust Amounts
(and Trust Income thereon) allocated to such Member or Withdrawn Member to
satisfy such Member’s or Withdrawn Member’s obligation to make a Deficiency
Contribution before seeking cash contributions from such Member or Withdrawn
Member in satisfaction of such Member’s or Withdrawn Member’s obligation to make
a Deficiency Contribution.

(iii) A Member’s or Withdrawn Member’s obligation to make contributions to the
Company under this Section 5.8(d) shall survive the termination of the Company.

(e) The Members acknowledge that the Managing Member will (and is hereby
authorized to) take such steps as it deems appropriate, in its good faith, to
further the objective of providing for the fair and equitable treatment of all
Members, including by allocating Writedowns and Losses (as defined in the BREP V
Partnership Agreement) on BREP V Investments that have been the subject of a
Writedown and/or Losses (each, a “Loss Investment”) to those Members who
participated in such Loss Investments based on their Carried Interest Sharing
Percentage therein to the extent that such Members receive or have received
Carried Interest distributions from other BREP V Investments. Consequently and
notwithstanding anything herein to the contrary, adjustments to Carried Interest
distributions shall be made as set forth in this Section 5.8(e).

(i) At the time the Company is making Carried Interest distributions in
connection with a BREP V Investment (the “Subject Investment”) that have been
reduced under the

 

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BREP V Partnership Agreement as a result of one or more Loss Investments, the
Managing Member shall calculate amounts distributable to or due from each such
Member as follows:

(A) determine each Member’s share of each such Loss Investment based on his
Carried Interest Sharing Percentage in each such Loss Investment (which may be
zero) to the extent such Loss Investment has reduced the Carried Interest
distributions otherwise available for distribution to all Members (indirectly
through the Company from BREP V) from the Subject Investment (such reduction,
the “Loss Amount”);

(B) determine the amount of Carried Interest distributions otherwise
distributable to such Member with respect to the Subject Investment (indirectly
through the Company from BREP V) before any reduction in respect of the amount
determined in clause (A) above (the “Unadjusted Carried Interest
Distributions”); and

(C) subtract (I) the Loss Amounts relating to all Loss Investments from (II) the
Unadjusted Carried Interest Distributions for such Member, to determine the
amount of Carried Interest distributions to actually be paid to such Member
(“Net Carried Interest Distribution”).

To the extent that the Net Carried Interest Distribution for a Member as
calculated in this clause (i) is a negative number, the Managing Member shall
(I) notify such Member, at or prior to the time such Carried Interest
distributions are actually made to the Members, of his obligation to
recontribute to the Company prior Carried Interest distributions (a “Net Carried
Interest Distribution Recontribution Amount”), up to the amount of such negative
Net Carried Interest Distribution, and (II) to the extent amounts recontributed
pursuant to clause (I) are insufficient to satisfy such negative Net Carried
Interest Distribution amount, reduce future Carried Interest distributions
otherwise due such Member, up to the amount of such remaining negative Net
Carried Interest Distribution. If a Member’s (x) Net Carried Interest
Distribution Recontribution Amount exceeds (y) the aggregate amount of prior
Carried Interest distributions less the amount of tax thereon, calculated based
on the Assumed Tax Rate (as defined in the BREP V Partnership Agreement) in
effect in the Fiscal Years of such distributions (the “Excess Tax-Related
Amount”), then such Member may, in lieu of paying such Member’s Excess
Tax-Related Amount, defer such amounts as set forth below. Such deferred amount
shall accrue interest at the Prime Rate. Such deferred amounts shall be reduced
and repaid by the amount of Carried Interest otherwise distributable to such
Member in connection with future Carried Interest distributions until such
balance is reduced to zero. Any deferred amounts shall be payable in full upon
the earlier of (i) such time as the Clawback is determined (as provided herein)
and (ii) such time as the Member becomes a Withdrawn Member.

To the extent there is an amount of negative Net Carried Interest Distribution
with respect to a Member remaining after the application of this clause (i),
notwithstanding clause (II) of the preceding paragraph, such remaining amount of
negative Net Carried Interest Distribution shall be allocated to the other
Members pro rata based on each of their Carried Interest Sharing Percentages in
the Subject Investment.

A Member who fails to pay a Net Carried Interest Distribution Recontribution
Amount promptly upon notice from the Managing Member (as provided above) shall
be deemed a Defaulting Party for all purposes hereof.

 

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A Member may satisfy in part any Net Carried Interest Distribution
Recontribution Amount from cash that is then subject to a Holdback, to the
extent that the amounts that remain subject to a Holdback satisfy the Holdback
requirements hereof as they relate to the reduced amount of aggregate Carried
Interest distributions received by such Member (taking into account any Net
Carried Interest Distribution Recontribution Amount contributed to the Company
by such Member).

Any Net Carried Interest Distribution Recontribution Amount contributed by a
Member, including amounts of cash subject to a Holdback as provided above, shall
increase the amount available for distribution to the other Members as Carried
Interest distributions with respect to the Subject Investment; provided, that
any such amounts then subject to a Holdback may be so distributed to the other
Members to the extent a Member receiving such distribution has satisfied the
Holdback requirements with respect to such distribution (taken together with the
other Carried Interest distributions received by such Member to date).

(ii) In the case of Clawback Amounts which are required to be contributed to the
Company as otherwise provided herein, the obligation of the Members with respect
to any Clawback Amount shall be adjusted by the Managing Member as follows:

(A) determine each Member’s share of any Losses in any BREP V Investments which
gave rise to the Clawback Amount (i.e., the Losses that followed the last BREP V
Investment with respect to which Carried Interest distributions were made),
based on such Member’s Carried Interest Sharing Percentage in such BREP V
Investments;

(B) determine each Member’s obligation with respect to the Clawback Amount based
on such Member’s Carried Interest Give Back Percentage as otherwise provided
herein; and

(C) subtract the amount determined in clause (B) above from the amount
determined in clause (A) above with respect to each Member to determine the
amount of adjustment to each Member’s share of the Clawback Amount (a Member’s
“Clawback Adjustment Amount”).

A Member’s share of the Clawback Amount shall for all purposes hereof be
decreased by such Member’s Clawback Adjustment Amount, to the extent it is a
negative number (except to the extent expressly provided below). A Member’s
share of the Clawback Amount shall for all purposes hereof be increased by such
Member’s Clawback Adjustment Amount (to the extent it is a positive number);
provided, that in no way shall a Member’s aggregate obligation to satisfy a
Clawback Amount as a result of this clause (ii) exceed the aggregate Carried
Interest distributions received by such Member. To the extent a positive
Clawback Adjustment Amount remains after the application of this clause
(ii) with respect to a Member, such remaining Clawback Adjustment Amount shall
be allocated to the Members (including any Member whose Clawback Amount was
increased pursuant to this clause (ii)) pro rata based on their Carried Interest
Give Back Percentages (determined without regard to this clause (ii)).

Any distribution or contribution adjustments pursuant to this Section 5.8(e) by
the Managing Member shall be based on its good faith judgment, and no Member
shall have any claim against the Company, the Managing Member or any other
Members as a result of any adjustment made as set forth above. This
Section 5.8(e) applies to all Members, including Withdrawn Members.

 

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It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Members and in no way modifies the obligations of each Member regarding the
Clawback as provided in the BREP V Partnership Agreement.

5.9 Business Expenses. The Company shall reimburse the Members for reasonable
travel, entertainment and miscellaneous expenses incurred by them in the conduct
of the Company’s business in accordance with rules and regulations established
by the Managing Member from time to time.

ARTICLE VI

ADDITIONAL MEMBERS; WITHDRAWAL OF MEMBERS;

SATISFACTION AND DISCHARGE OF

COMPANY INTERESTS; TERMINATION

6.1. Additional Members. (a) Effective on the first day of any month (or on such
other date as shall be determined by the Managing Member in its sole
discretion), the Managing Member shall have the right to admit one or more
additional persons into the Company as Regular Members or Special Members. The
Managing Member shall determine and negotiate with the additional Member all
terms of such additional Member’s participation in the Company, including the
additional Member’s initial capital contribution and Profit Sharing Percentage.
Each additional Member shall have such voting rights as may be determined by the
Managing Member from time to time unless, upon the admission to the Company of
any Special Member, the Managing Member shall designate that such Special Member
shall not have such voting rights (any such Special Member being called a
“Nonvoting Special Member”). Any additional Member shall, as a condition to
becoming a Member, agree to become a party to, and be bound by the terms and
conditions of, the Trust Agreement.

(b) The Profit Sharing Percentages to be allocated to an additional Member as of
the date such Member is admitted to the Company, together with the pro rata
reduction in all other Members’ Profit Sharing Percentages as of such date,
shall be established by the Managing Member pursuant to Section 5.3.

(c) An additional Member shall be required to contribute to the Company his pro
rata share of the Company’s total capital, excluding capital in respect of
Investments in which such Member does not acquire any interests, at such times
and in such amounts as shall be determined by the Managing Member in accordance
with Section 4.1.

(d) The admission of an additional Member will be evidenced by (i) the execution
of a counterpart copy of this Agreement by such additional Member or (ii) the
execution of an amendment to this Agreement by all the Members (including the
additional Member), as determined by the Managing Member. In addition, each
additional Member shall sign a counterpart copy of the Trust Agreement or any
other writing evidencing the intent of such person to become a party to the
Trust Agreement that is accepted by the Managing Member on behalf of the
Company.

6.2. Withdrawal of Members. (a) Any Member may Withdraw voluntarily from the
Company on the last day of any calendar month (or on such other date as shall be
determined by the Managing Member in its sole discretion), on not less than 15
days’ prior written notice by such Member to the Managing Member (or on such
shorter notice period as may be mutually agreed upon between such Member and the
Managing Member); provided, that a Member may not voluntarily Withdraw without
the consent of the Managing Member if such Withdrawal would (i) cause the
Company to be in default under any of its contractual obligations or (ii) in the
reasonable judgment of the Managing Member, have a material adverse effect on
the Company or its business.

 

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(b) Upon the Withdrawal of any Member, including by the occurrence of any
withdrawal event under the LLC Act with respect to any Member, such Member shall
thereupon cease to be a Member, except as expressly provided herein.

(c) Upon the Total Disability of a Regular Member, such Member shall thereupon
cease to be a Regular Member; provided, that the Managing Member may elect to
admit such Withdrawn Member to the Company as a Nonvoting Special Member with
such Interest as the Managing Member may determine. The determination of whether
any Member has suffered a Total Disability shall be made by the Managing Member
in its sole discretion after consultation with a qualified medical doctor. In
the absence of agreement between the Managing Member and such Member, each party
shall nominate a qualified medical doctor and the two doctors shall select a
third doctor, who shall make the determination as to Total Disability.

(d) If the Managing Member determines or with a Majority in Interest of the
Members that it shall be in the best interests of the Company for any Member
(including any Member who has given notice of voluntary Withdrawal pursuant to
paragraph (a) above) to Withdraw from the Company (whether or not Cause exists),
such Member, upon written notice by the Managing Member to such Member, shall be
required to Withdraw as of a date specified in such notice, which date shall be
on or after the date of such notice. If the Managing Member requires any Member
to Withdraw for Cause, such notice shall state that it has been given for Cause
and shall describe the particulars thereof in reasonable detail.

(e) The withdrawal from the Company of any Member shall not, in and of itself,
affect the obligations of the other Members to continue the Company during the
remainder of its term.

6.3. Company Interests Not Transferable. No Member may sell, assign, pledge or
otherwise transfer or encumber all or any portion of such Member’s Interest
other than as permitted by written agreement between such Member and the
Company; provided, that this Section 6.3 shall not impair transfers by operation
of law, transfers by will or by other testamentary instrument occurring by
virtue of the death or dissolution of a Member, or transfers required by trust
agreements; provided further, that a Regular Member may transfer, for estate
planning purposes, up to 25% of his Profit Sharing Percentage to any estate
planning trust, limited partnership, or limited liability company with respect
to which a Regular Member controls investments related to any interest in the
Company held therein (an “Estate Planning Vehicle”). Each Estate Planning
Vehicle will be a Nonvoting Special Member. Such Regular Member and the
Nonvoting Special Member shall be jointly and severally liable for all
obligations of both such Regular Member and such Nonvoting Special Member with
respect to the Company (including the obligation to make additional capital
contributions), as the case may be. The Managing Member may at its sole option
exercisable at any time require any Estate Planning Vehicle to withdraw from the
Company on the terms of this Article VI. Except as provided in the second
proviso to the first sentence of this Section 6.3(a), no assignee, legatee,
distributee, heir or transferee (by conveyance, operation of law or otherwise)
of the whole or any portion of any Member’s Interest shall have any right to be
a Member without the prior written consent of the Managing Member (which consent
may be withheld without giving reason therefor). Notwithstanding the granting of
a security interest in the entire Interest of any Member, such Member shall
continue to be a Member of the Company.

6.4. Consequences upon Withdrawal of a Member. (a) The Withdrawal of a Regular
Member shall not dissolve the Company if at the time of such Withdrawal there
are one or more remaining Regular Members and any one or more of such remaining
Regular Members continue the business of the Company (any and all such remaining
Regular Members being hereby authorized to continue the

 

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business of the Company without dissolution and hereby agreeing to do so).
Notwithstanding Section 6.4(b), if upon the Withdrawal of a Regular Member there
shall be no remaining Regular Member, the Company shall be dissolved and shall
be wound up unless, within 90 days after the occurrence of such Withdrawal, all
remaining Special Members agree in writing to continue the business of the
Company and to the appointment, effective as of the date of such Withdrawal, of
one or more Regular Members.

(b) The Company shall not be dissolved, in and of itself, by the Withdrawal of
any Member, but shall continue with the surviving or remaining Members as
members thereof in accordance with and subject to the terms and provisions of
this Agreement.

6.5. Satisfaction and Discharge of a Withdrawn Member’s Interest. (a) As used in
this Agreement, (i) the term “Withdrawn Member” shall mean a Member whose
interest in the Company has been terminated for any reason, including the
occurrence of an event specified in Section 6.2, and shall include, unless the
context requires otherwise, the estate or legal representatives of any such
Member, (ii) the term “Withdrawal Date” shall mean the date of the Withdrawal
from the Company of a Withdrawn Member and (iii) the term “Settlement Date”
shall mean the date as of which a Withdrawn Member’s Interest is settled as
determined under paragraph (b) below. Notwithstanding the foregoing, any Regular
Member who Withdraws from the Company, and all or any portion of whose Interest
is retained as a Special Member, shall be considered a Withdrawn Member for all
purposes hereof.

(b) Except where a later date for the settlement of a Withdrawn Member’s
interest in the Company may be agreed to by the Managing Member and a Withdrawn
Member, a Withdrawn Member’s Settlement Date shall be his Withdrawal Date;
provided, that if a Withdrawn Member’s Withdrawal Date is not the last day of a
month, then the Managing Member may elect for such Withdrawn Member’s Settlement
Date to be the last day of the month in which his Withdrawal Date occurs. During
the interval, if any, between a Withdrawn Member’s Withdrawal Date and
Settlement Date, such Withdrawn Member shall have the same rights and
obligations with respect to Capital Contributions interest on capital,
allocations of Net Income (Loss) and distributions as would have applied had
such Withdrawn Member remained a Member of the Company during such period.

(c) In the event of the Withdrawal of a Member, the Managing Member shall
promptly after such Withdrawn Member’s Settlement Date (i) determine and
allocate to the Withdrawn Member’s capital account such Withdrawn Member’s
allocable share of the Net Income (Loss) of the Company for the period ending on
such Settlement Date in accordance with Article V and (ii) credit the Withdrawn
Member’s capital account with interest in accordance with Section 5.2. In making
the foregoing calculations, the Managing Member shall be entitled to establish
such reserves (including reserves for taxes, bad debts, unrealized losses,
actual or threatened litigation or any other expenses, contingencies or
obligations) as it deems appropriate. Unless otherwise determined by the
Managing Member in a particular case, a Withdrawn Member shall not be entitled
to receive any Unallocated Percentage in respect of the accounting period during
which such Member Withdraws from the Company (whether or not previously awarded
or allocated) or any Unallocated Percentage in respect of prior accounting
periods that have not been paid or allocated (whether or not previously awarded)
as of such Withdrawn Member’s Withdrawal Date.

(d) From and after the Settlement Date of the Withdrawn Member, the Withdrawn
Member’s Profit Sharing Percentages shall, unless otherwise allocated by the
Managing Member pursuant to Section 5.3(a), be deemed to be Unallocated
Percentages (except for Profit Sharing Percentages with respect to Investments
as provided in paragraph (f) below).

 

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(e)(i) Upon the Withdrawal from the Company of a Member, such Withdrawn Member
thereafter shall not, except as expressly provided in this Section 6.5, have any
rights of a Member (including voting rights), and, except as expressly provided
in this Section 6.5, such Withdrawn Member shall not have any interest in the
Company’s Net Income (Loss), distributions, Investments or other assets. If a
Member Withdraws from the Company for any reason other than for Cause pursuant
to Section 6.2, then the Withdrawn Member shall be entitled to receive, at the
time or times specified in Section 6.5(i) below, in satisfaction and discharge
in full of the Withdrawn Member’s Interest, (x) payment equal to the aggregate
credit balance, if any, as of the Settlement Date of the Withdrawn Member’s
capital accounts, (excluding any capital account or portion thereof attributable
to any Investment) and (y) the Withdrawn Member’s percentage interest
attributable to each Investment in which the Withdrawn Member has an interest as
of the Settlement Date as provided in paragraph (f) below (which shall be
settled in accordance with paragraph (f) below), subject to all the terms and
conditions of paragraphs (a)-(r) of this Section 6.5. If the amount determined
pursuant to clause (x) above is an aggregate negative balance, the Withdrawn
Member shall pay the amount thereof to the Company upon demand by the Managing
Member on or after the date of the statement referred to in paragraph (i) below;
provided, that if the Withdrawn Member was solely a Special Member on his
Withdrawal Date, such payment shall be required only to the extent of any
amounts payable to such Withdrawn Member pursuant to this Section 6.5. Any
aggregate negative balance in the capital accounts of a Withdrawn Member who was
solely a Special Member, upon the settlement of such Withdrawn Member’s Interest
pursuant to this Section 6.5, shall be allocated among the other Members’
capital accounts in accordance with their respective Profit Sharing Percentages
in the categories of Net Income (Loss) giving rise to such negative balance as
determined by the Managing Member as of such Withdrawn Member’s Settlement Date.
In the settlement of any Withdrawn Member’s interest in the Company, no value
shall be ascribed to goodwill, the Company name or the anticipation of any value
the Company or any successor thereto might have in the event the Company or any
interest therein were to be sold in whole or in part.

(ii) Notwithstanding clause (i) of this Section 6.5(e), in the case of a Member
whose Withdrawal resulted from such Member’s death or Incompetence, such
Member’s estate or legal representative, as the case may be, may elect, at the
time described below, to receive a Nonvoting Special Member Interest and retain
such Member’s Profit Sharing Percentage in all (but not less than all) illiquid
investments of the Company in lieu of a cash payment (or Note) in settlement of
that portion of the Withdrawn Member’s interest. The election referred to above
shall be made within 60 days after the Withdrawn Member’s Settlement Date, based
on a statement of the settlement of such Withdrawn Member’s interest in the
Company pursuant to this Section 6.5.

(f) For purposes of clause (y) of paragraph (e)(i) above, a Withdrawn Member’s
“percentage interest” means his Profit Sharing Percentage as of the Settlement
Date in the relevant Investment. The Withdrawn Member shall retain his
percentage interest in such Investment and shall retain his capital account or
portion thereof attributable to such Investment, in which case such Withdrawn
Member (a “Retaining Withdrawn Member”) shall become and remain a Special Member
for such purpose (and, if the Managing Member so designates, such Special Member
shall be a Nonvoting Special Member). The Interests of a Retaining Withdrawn
Member pursuant to this paragraph (f) shall be subject to the terms and
conditions applicable to Interests of any kind hereunder and such other terms
and conditions as are established by the Managing Member. At the option of the
Managing Member in their sole discretion, the Managing Member and the Retaining
Withdrawn Member may agree to have the Company acquire such interests without
the approval of the other Members; provided, that the Managing Member shall
reflect in the books and records of the Company the terms of any acquisition
pursuant to this sentence.

(g) The Managing Member may elect, in lieu of payment in cash of any amount
payable to a Withdrawn Member pursuant to paragraph (e) above, to have the
Company issue to the

 

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Withdrawn Member a subordinated promissory note as provided in paragraph (k)
below and/or to distribute in kind to the Withdrawn Member such Withdrawn
Member’s pro rata share (as determined by the Managing Member) of any securities
or other investments of the Company. If any securities or other investments are
distributed in kind to a Withdrawn Member under this paragraph (g), the amount
described in clause (x) of paragraph (e)(i) shall be reduced by the value of
such distribution as valued on the latest balance sheet of the Company in
accordance with generally accepted accounting principles or, if not appearing on
such balance sheet, as reasonably determined by the Managing Member.

(h) [Intentionally omitted].

(i) Within 120 days after each Settlement Date, the Managing Member shall submit
to the Withdrawn Member a statement of the settlement of such Withdrawn Member’s
interest in the Company pursuant to this Section 6.5 together with any cash
payment, subordinated promissory note (as referred to in paragraph (k) below)
and in kind distributions, to be made to such Member as shall be determined by
the Managing Member. The Managing Member shall submit to the Withdrawn Member
supplemental statements with respect to additional amounts payable to or by the
Withdrawn Member in respect of the settlement of his interest in the Company
(e.g., payments in respect of Investments pursuant to paragraph (f) above or
adjustments to reserves pursuant to paragraph (j) below) promptly after such
amounts are determined by the Managing Member. To the fullest extent permitted
by law, such statements and the valuations on which they are based shall be
accepted by the Withdrawn Member without examination of the accounting books and
records of the Company or other inquiry. Any amounts payable by the Company to a
Withdrawn Member pursuant to this Section 6.5 shall be subordinate in right of
payment and subject to the prior payment or provision for payment in full of
claims of all present or future creditors of the Company or any successor
thereto arising out of matters occurring prior to the applicable date of payment
or distribution; provided, that such Withdrawn Member shall otherwise rank pari
passu in right of payment (x) with all persons who become Withdrawn Members and
whose Withdrawal Date is within one year before the Withdrawal Date of the
Withdrawn Member in question and (y) with all persons who become Withdrawn
Members and whose Withdrawal Date is within one year after the Withdrawal Date
of the Withdrawn Member in question.

(j) If the aggregate reserves established by the Managing Member as of the
Settlement Date in making the foregoing calculations should prove, in the
determination of the Managing Member, to be excessive or inadequate, the
Managing Member may elect, but shall not be obligated, to pay the Withdrawn
Member or his estate such excess, or to charge the Withdrawn Member or his
estate such deficiency, as the case may be.

(k) Any amounts owed by the Withdrawn Member to the Company at any time on or
after the Settlement Date (e.g., outstanding Company loans or advances to such
Withdrawn Member) shall be offset against any amounts payable or distributable
by the Company to the Withdrawn Member at any time on or after the Settlement
Date or shall be paid by the Withdrawn Member to the Company, in each case as
determined by the Managing Member. All cash amounts payable by a Withdrawn
Member to the Company under this Section 6.5 shall bear interest from the due
date to the date of payment at a floating rate equal to the lesser of (x) the
rate of interest publicly announced from time to time by JPMorgan Chase Bank in
New York City as its prime rate and (y) the maximum rate of interest permitted
by applicable law. The “due date” of amounts payable by a Withdrawn Member
pursuant to Section 6.5(i) above shall be 120 days after a Withdrawn Member’s
Settlement Date. The “due date” of amounts payable to or by a Withdrawn Member
in respect of Investments for which the Withdrawn Member has retained a
percentage interest in accordance with paragraph (f) above shall be 120 days
after realization with respect to such Investment. The “due date” of any other
amounts payable by a Withdrawn Member shall be 60 days after the date such
amounts are determined to be payable.

 

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(l) At the time of the settlement of any Withdrawn Member’s interest in the
Company pursuant to this Section 6.5, the Managing Member may, to the fullest
extent permitted by applicable law, impose any restrictions they deem
appropriate on the assignment, pledge, encumbrance or other transfer by such
Withdrawn Member of any interest in any Investment retained by such Withdrawn
Member, any securities or other investments distributed in kind to such
Withdrawn Member or such Withdrawn Member’s right to any payment from the
Company.

(m) If a Member is required to Withdraw from the Company for Cause pursuant to
Section 6.2(d), then his Interest shall be settled in accordance with paragraphs
(a)-(m) of this Section 6.5; provided, that the Managing Member may elect (but
shall not be required) to apply any or all the following terms and conditions to
such settlement.

(i) In settling the Withdrawn Member’s interest in any Investment in which he
has an interest as of his Settlement Date, the Managing Member may elect to
(A) determine the Unrealized Net Income (Loss) attributable to each such
Investment as of the Settlement Date and allocate to the appropriate capital
account of the Withdrawn Member his allocable share of such Unrealized Net
Income (Loss) for purposes of calculating the aggregate balance of such
Withdrawn Member’s capital account pursuant to clause (x) of paragraph (e)(i)
above, (B) credit or debit, as applicable, the Withdrawn Member with the balance
of his capital account or portion thereof attributable to each such Investment
as of his Settlement Date without giving effect to the Unrealized Net Income
(Loss) from such Investment as of his Settlement Date, which shall be forfeited
by the Withdrawn Member or (C) apply the provisions of paragraph (f) above,
provided, that the maximum amount of Net Income (Loss) allocable to such
Withdrawn Member with respect to any Investment shall equal such Member’s
percentage interest of the Unrealized Net Income, if any, attributable to such
Investment as of the Settlement Date (the balance of such Net Income (Loss), if
any, shall be allocated as determined by the Managing Member). The Withdrawn
Member shall not have any continuing interest in any Investment to the extent an
election is made pursuant to (A) or (B) above.

(ii) Any amounts payable by the Company to the Withdrawn Member pursuant to this
Section 6.5 shall be subordinate in right of payment and subject to the prior
payment in full of claims of all present or future creditors of the Company or
any successor thereto arising out of matters occurring prior to or on or after
the applicable date of payment or distribution.

(n) The payments to a Withdrawn Member pursuant to this Section 6.5 may be
conditioned on the compliance by such Withdrawn Member with any lawful and
reasonable (under the circumstances) restrictions against engaging or investing
in a business competitive with that of the Company or any of its subsidiaries
and affiliates for a period not exceeding two years determined by the Managing
Member. Upon written notice to the Managing Member, any Withdrawn Member who is
subject to noncompetition restrictions established by the Managing Member
pursuant to this paragraph (o) may elect to forfeit the principal amount payable
in the final installment of his subordinated promissory note under paragraph
(k) above, together with interest to be accrued on such installment after the
date of forfeiture, in lieu of being bound by such restrictions.

(o) In addition to the foregoing, the Managing Member shall have the right to
pay a Withdrawn Member (other than a Managing Member) a discretionary additional
payment in an amount and based upon such circumstances and conditions as it
determines to be relevant.

(p) The provisions of this Section 6.5 shall apply to any Investor Special
Member relating to a Regular Member or Special Member and to any transferee of
any interest of such Member pursuant to Section 6.3 if such Member Withdraws
from the Company.

 

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(q)(i) The Company will assist a Withdrawn Member or his estate or guardian, as
the case may be, in the settlement of the Withdrawn Member’s Interest in the
Company. Third party costs incurred by the Company in providing this assistance
will be borne by the Withdrawn Member or his estate.

(ii) The Company may reasonably determine in good faith to retain outside
professionals to provide the assistance to Withdrawn Members or their estates or
guardians, as referred to above. In such instances, the Company will obtain the
prior approval of a Withdrawn Member or his estate or guardian, as the case may
be, prior to engaging such professionals. If the Withdrawn Member (or his estate
or guardian) declines to incur such costs, the Company will provide such
reasonable assistance as and when it can so as not to interfere with the
Company’s day-to-day operating, financial, tax and other related
responsibilities to the Company and the Members.

(r) Each Member (other than the Managing Member) hereby irrevocably appoints the
Managing Member as such Member’s true and lawful agent, representative and
attorney-in-fact, each acting alone, in such Member’s name, place and stead, to
make, execute, sign and file, on behalf of such Member, any and all agreements,
instruments, documents and certificates which the Managing Member deems
necessary or advisable in connection with any transaction or matter contemplated
by or provided for in this Section 6.5, including, without limitation, the
performance of any obligation of such Member or the Company or the exercise of
any right of such Member or the Company. Such power of attorney is coupled with
an interest and shall survive and continue in full force and effect
notwithstanding the Withdrawal from the Company of any Member for any reason and
shall not be affected by the death, disability or incapacity of such Member.

6.6. Dissolution of the Company. The Managing Member may dissolve the Company
prior to the expiration of its term at any time on not less than 60 days’ notice
of the dissolution date given to the other Members. Upon the dissolution of the
Company, and following the payment of creditors of the Company and the making of
provisions for the payment of any contingent, conditional or unmatured claims
known to the Company as required under the LLC Act, the Members’ respective
interests in the Company shall be valued and settled in accordance with the
procedures set forth in Sections 5.8 and 6.5 which provide for allocations to
the capital accounts of the Members and distributions in accordance with the
capital account balances of the Members. The Managing Member shall be the
liquidators. In the event that the Managing Member is unable to serve as
liquidators, a liquidating trustee shall be chosen by affirmative vote of a
Majority in Interest of the Members voting at a meeting of Members (excluding
Nonvoting Special Members).

6.7. Certain Tax Matters. (a) All items of income, gain, loss, deduction and
credit of the Company shall be allocated among the Members for Federal, state
and local income tax purposes in the same manner as such items of income, gain,
loss, deduction and credit shall be allocated among the Members pursuant to this
Agreement, except as may otherwise be provided herein or by the Code or other
applicable law. To the extent Treasury Regulations promulgated pursuant to
Subchapter K of the Code (including under Sections 704(b) and (c) of the Code)
or other applicable law require allocations for tax purposes that differ from
the foregoing allocations, the Managing Member may determine the manner in which
such tax allocations shall be made so as to comply more fully with such Treasury
Regulations or other applicable law and, at the same time, preserve the economic
relationships among the Members as set forth in this Agreement. In the event
there is a net decrease in partnership minimum gain or partner nonrecourse debt
minimum gain (determined in accordance with the principles of Regulations
Sections 1.704-2(d) and 1.704-2(i)) during any taxable year of the Company, each
Member shall be specially allocated items of Company income and gain for such
year (and, if necessary, subsequent years) in an amount equal to its respective
share of such net decrease during such year, determined pursuant to Regulations
Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(f). In addition, this
Agreement shall be considered to contain a “qualified income offset” as provided
in Regulations Section 1.704-1(b)(2)(ii)(d).

 

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(b) The Managing Member shall cause to be prepared all Federal, state and local
tax returns of the Company for each year for which such returns are required to
be filed and, after approval of such returns by the Managing Member, shall cause
such returns to be timely filed. The Managing Member shall determine the
appropriate treatment of each item of income, gain, loss, deduction and credit
of the Company and the accounting methods and conventions under the tax laws of
the United States, the several states and other relevant jurisdictions as to the
treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The Managing Member may cause the Company to
make or refrain from making any and all elections permitted by such tax laws.
Each Member agrees that he shall not, unless he provides prior notice of such
action to the Company, (i) treat, on his individual income tax returns, any item
of income, gain, loss, deduction or credit relating to his interest in the
Company in a manner inconsistent with the treatment of such item by the Company
as reflected on the Form K-1 or other information statement furnished by the
Company to such Member for use in preparing his income tax returns or (ii) file
any claim for refund relating to any such item based on, or which would result
in, such inconsistent treatment. In respect of an income tax audit of any tax
return of the Company, the filing of any amended return or claim for refund in
connection with any item of income, gain, loss, deduction or credit reflected on
any tax return of the Company, or any administrative or judicial proceedings
arising out of or in connection with any such audit, amended return, claim for
refund or denial of such claim, (A) the Tax Matters Member (as defined below)
shall be authorized to act for, and his decision shall be final and binding
upon, the Company and all Members except to the extent a Member shall properly
elect to be excluded from such proceeding pursuant to the Code, (B) all expenses
incurred by the Tax Matters Member in connection therewith (including, without
limitation, attorneys’, accountants’ and other experts’ fees and disbursements)
shall be expenses of the Company and (C) no Member shall have the right to
(1) participate in the audit of any Company tax return, (2) file any amended
return or claim for refund in connection with any item of income, gain, loss,
deduction or credit reflected on any tax return of the Company (unless he
provides prior notice of such action to the Company as provided above),
(3) participate in any administrative or judicial proceedings conducted by the
Company or the Tax Matters Member arising out of or in connection with any such
audit, amended return, claim for refund or denial of such claim, or (4) appeal,
challenge or otherwise protest any adverse findings in any such audit conducted
by the Company or the Tax Matters Member or with respect to any such amended
return or claim for refund filed by the Company or the Tax Matters Member or in
any such administrative or judicial proceedings conducted by the Company or the
Tax Matters Member. The Company and each Member hereby designate any Member
selected by the Managing Member as the “tax matters partner” for purposes of
Section 6231(a)(7) of the Code (the “Tax Matters Member”). To the fullest extent
permitted by applicable law, each Member agrees to indemnify and hold harmless
the Company and all other Members from and against any and all liabilities,
obligations, damages, deficiencies and expenses resulting from any breach or
violation by such Member of the provisions of this Section 6.7 and from all
actions, suits, proceedings, demands, assessments, judgments, costs and
expenses, including reasonable attorneys’ fees and disbursements, incident to
any such breach or violation.

(c) Each individual Member shall provide to the Company copies of each Federal,
state and local income tax return of such Member (including any amendment
thereof) within 30 days after filing such return.

6.8. Special Basis Adjustments. In connection with any assignment or transfer of
a Company interest permitted by the terms of this Agreement, the Managing Member
may cause the Company, on behalf of the Members and at the time and in the
manner provided in Code Regulations Section 1.754-1(b), to make an election to
adjust the basis of the Company’s property in the manner provided in Sections
734(b) and 743(b) of the Code.

 

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ARTICLE VII

MISCELLANEOUS

7.1. Submission to Jurisdiction; Waiver of Jury Trial. (a) Any and all disputes
which cannot be settled amicably, including any ancillary claims of any party,
arising out of, relating to or in connection with the validity, negotiation,
execution, interpretation, performance or non-performance of this Agreement
(including the validity, scope and enforceability of this arbitration provision)
shall be finally settled by arbitration conducted by a single arbitrator in New
York in accordance with the then-existing Rules of Arbitration of the
International Chamber of Commerce. If the parties to the dispute fail to agree
on the selection of an arbitrator within thirty (30) days of the receipt of the
request for arbitration, the International Chamber of Commerce shall make the
appointment. The arbitrator shall be a lawyer and shall conduct the proceedings
in the English language. Performance under this Agreement shall continue if
reasonably possible during any arbitration proceedings.

(b) Notwithstanding the provisions of paragraph (a), the Managing Member may
bring, or may cause the Company to bring, on behalf of the Managing Member or
the Company or on behalf of one or more Members, an action or special proceeding
in any court of competent jurisdiction for the purpose of compelling a party to
arbitrate, seeking temporary or preliminary relief in aid of an arbitration
hereunder, and/or enforcing an arbitration award and, for the purposes of this
paragraph (b), each Member (i) expressly consents to the application of
paragraph (c) of this Section 7.1 to any such action or proceeding, (ii) agrees
that proof shall not be required that monetary damages for breach of the
provisions of this Agreement would be difficult to calculate and that remedies
at law would be inadequate, and (iii) irrevocably appoints the Managing Member
as such Member’s agent for service of process in connection with any such action
or proceeding and agrees that service of process upon any such agent, who shall
promptly advise such Member of any such service of process, shall be deemed in
every respect effective service of process upon the Member in any such action or
proceeding.

(c)(i) EACH MEMBER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS
LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT
IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 7.1, OR ANY JUDICIAL
PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT
OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial
proceedings include any suit, action or proceeding to compel arbitration, to
obtain temporary or preliminary judicial relief in aid of arbitration, or to
confirm an arbitration award. The parties acknowledge that the fora designated
by this paragraph (c) have a reasonable relation to this Agreement, and to the
parties’ relationship with one another.

(ii) The parties hereby waive, to the fullest extent permitted by applicable
law, any objection which they now or hereafter may have to personal jurisdiction
or to the laying of venue of any such ancillary suit, action or proceeding
brought in any court referred to in the preceding paragraph of this Section 7.1
and such parties agree not to plead or claim the same.

(d) Notwithstanding any provision of this Agreement to the contrary, this
Section 7.1 shall be construed to the maximum extent possible to comply with the
laws of the State of Delaware, including the Delaware Uniform Arbitration Act
(10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless,
it shall be determined by a court of competent jurisdiction that any provision
or wording of this Section 7.1, including any rules of the International Chamber
of Commerce,

 

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shall be invalid or unenforceable under the Delaware Arbitration Act, or other
applicable law, such invalidity shall not invalidate all of this Section 7.1. In
that case, this Section 7.1 shall be construed so as to limit any term or
provision so as to make it valid or enforceable within the requirements of the
Delaware Arbitration Act or other applicable law, and, in the event such term or
provision cannot be so limited, this Section 7.1 shall be construed to omit such
invalid or unenforceable provision.

7.2. Ownership and Use of the Company Name. The Company acknowledges that
Blackstone Financial Services Inc. (“BFS”), a Delaware corporation with a
principal place of business at 345 Park Avenue, New York, New York 10154, (or
its successors or assigns) is the sole and exclusive owner of the mark and name
BLACKSTONE and that the ownership of, and the right to use, sell or otherwise
dispose of, the firm name or any abbreviation or modification thereof which
consists of or includes BLACKSTONE, shall belong exclusively to BFS, which
company (or its predecessors, successors or assigns) has licensed the Company to
use BLACKSTONE in its name. The Company acknowledges that BFS owns the service
mark BLACKSTONE for various services and that the Company is using the
BLACKSTONE mark and name on a non-exclusive, non-sublicensable and
non-assignable basis in connection with its business and authorized activities
with the permission of BFS. All services rendered by the Company under the
BLACKSTONE mark and name will be rendered in a manner and with quality levels
that are consistent with the high reputation heretofore developed for the
BLACKSTONE mark by BFS and its affiliates and licensees. The Company understands
that BFS may terminate its right to use BLACKSTONE at any time in BFS sole
discretion by giving the Company written notice of termination. Promptly
following any such termination, the Company will take all steps necessary to
change its company name to one which does not include BLACKSTONE or any
confusingly similar term and cease all use of BLACKSTONE or any term confusingly
similar thereto as a service mark or otherwise.

7.3. Written Consent. Any action required or permitted to be taken by a vote of
Members at a meeting may be taken without a meeting if a Majority in Interest of
the Members consent thereto in writing.

7.4. Letter Agreements; Schedules. The Managing Member may, or may cause the
Company to, enter into separate letter agreements with certain Members, officers
or employees with respect to Profit Sharing Percentages, benefits or any other
matter, in each case on terms and conditions not inconsistent with this
Agreement; provided, that, notwithstanding the foregoing, any terms of this
Agreement may be made subject to any such letter agreements to the extent
provided elsewhere herein. The Managing Member may from time to time execute and
deliver to the Members schedules which set forth the then current capital
balances and Profit Sharing Percentages of the Members and any other matters
deemed appropriate by the Managing Member. Such schedules shall be for
information purposes only and shall not be deemed to be part of this Agreement
for any purpose whatsoever.

7.5. Governing Law; Separability of Provisions. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
regard to principles of conflict of laws. In particular, the Company has been
formed pursuant to the LLC Act, and the rights and liabilities of the Members
shall be as provided therein, except as herein otherwise expressly provided. If
any provision of this Agreement shall be held to be invalid, such provision
shall be given its meaning to the maximum extent permitted by law and the
remainder of this Agreement shall not be affected thereby.

7.6. Successors and Assigns. This Agreement shall be binding upon and shall,
subject to the penultimate sentence of Section 6.3(a), inure to the benefit of
the parties hereto, their respective heirs and personal representatives, and any
successor to a trustee of a trust which is or becomes a party hereto; provided,
that no person claiming by, through or under a Member (whether such Member’s
heir, personal representative or otherwise), as distinct from such Member
itself, shall have any rights as,

 

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or in respect to, a Member (including the right to approve or vote on any matter
or to notice thereof) except the right to receive only those distributions
expressly payable to such person pursuant to Article VI. Any Member or Withdrawn
Member shall remain liable for the obligations under this Agreement (including
any Net Recontribution Amounts) of any transferee of all or any portion of such
Member’s or Withdrawn Member’s interest in the Company, unless waived by the
Managing Member. The Company shall, if the Managing Member determine, in their
good faith judgment, based on the standard set forth in Section 5.8(d)(ii)(A),
to pursue such transferee, pursue payment (including any Net Recontribution
Amounts) from the transferee with respect to any such obligations. Nothing in
this Agreement is intended, nor shall anything herein be construed, to confer
any rights, legal or equitable, in any person other than the Members and their
respective legal representatives, heirs, successors and permitted assigns.
Notwithstanding the foregoing, the provisions of Sections 5.8(d)(i) and
(iii) shall inure to the benefit of the limited partners or other investors in
BREP V, and such limited partners or investors shall have the right to enforce
the provisions thereof to the extent the Company does not otherwise do so.

7.7. Confidentiality. By executing this Agreement, each Member expressly agrees,
at all times during the term of the Company and thereafter and whether or not at
the time a Member of the Company, to maintain the confidentiality of, and not to
disclose to any person other than the Company, another Member or a person
designated by the Company, any information relating to the business, financial
structure, financial position or financial results, clients or affairs of the
Company that shall not be generally known to the public or the securities
industry, except as otherwise required by law or by any regulatory or
self-regulatory organization having jurisdiction; provided, that any corporate
Member may disclose any such information it is required by law, rule, regulation
or custom to disclose.

7.8. Notices. Whenever notice is required or permitted by this Agreement to be
given, such notice shall be in writing (including telecopy or similar writing)
and shall be given by hand delivery (including any courier service) or telecopy
to any Member at its address or telecopy number shown in the Company’s books and
records or, if given to the Managing Member or the Company, at the address of
the Company provided herein. Each such notice shall be effective (i) if given by
telecopy, upon dispatch, and (ii) if given by hand delivery, when delivered to
the address of such Member or Managing Member or the Company specified as
aforesaid.

7.9. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original and all of which together shall constitute a
single instrument.

7.10. Power of Attorney. Each Member hereby irrevocably appoints the Managing
Member as such Member’s true and lawful representative and attorney-in-fact,
each acting alone, in such Member’s name, place and stead, to make, execute,
sign and file all instruments, documents and certificates which, from time to
time, may be required to set forth any amendment to this Agreement or may be
required by this Agreement or by the laws of the United States of America, the
State of Delaware or any other state in which the Company shall determine to do
business, or any political subdivision or agency thereof, to execute, implement
and continue the valid and subsisting existence of the Company. Such power of
attorney is coupled with an interest and shall survive and continue in full
force and effect notwithstanding the subsequent Withdrawal from the Company of
any Member for any reason and shall not be affected by the subsequent disability
or incapacity of such Member.

7.11. Member’s Will. Each Member and Withdrawn Member shall include in his or
her will a provision that addresses certain matters in respect of his or her
obligations relating to the Company that is satisfactory to the Managing Member
and each such Member and Withdrawn Member shall confirm annually to the Company,
in writing, that such provision remains in his current will. Where applicable,
any estate planning trust of such Member or Withdrawn Member to which a portion
of such Member’s or Withdrawn Member’s Interest is transferred shall include a
provision substantially similar to such provision and the trustee of such trust
shall confirm annually to the Company, in writing, that such provision or its
substantial equivalent remains in such trust. In the event any Member or
Withdrawn Member fails to comply with the provisions of this Section 7.11 after
the Company has notified such

 

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Member or Withdrawn Member of his failure to so comply and such failure to so
comply is not cured within 30 days of such notice, the Company may withhold any
and all distributions to such Member until the time at which such party complies
with the requirements of this Section 7.11.

7.12. Cumulative Remedies. Rights and remedies under this Agreement are
cumulative and do not preclude use of other rights and remedies available under
applicable law.

7.13. Legal Fees. Except as more specifically provided herein, in the event of a
legal dispute (including litigation, arbitration or mediation) between any
Member or Withdrawn Member and the Company, arising in connection with any party
seeking to enforce Section 4.1(d) or any other provision of this Agreement
relating to the Holdback, the Clawback Amount, the Giveback Amount or the
Recontribution Amount, the “losing” party to such dispute shall promptly
reimburse the “victorious party” for all reasonable legal fees and expenses
incurred in connection with such dispute (such determination to be made by the
relevant adjudicator). Any amounts due under this Section 7.13 shall be paid
within 30 days of the date upon which such amounts are due to be paid and such
amounts remaining unpaid after such date shall accrue interest at the Default
Interest Rate.

7.14. Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein. Subject to Section 7.4, this Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year first above written. In the event that it is impracticable to
obtain the signature of any of the Members to this Agreement, this Agreement
shall be binding among the other Members executing the same.

 

MANAGING MEMBER: BLACKSTONE HOLDINGS III L.P. By:  

Blackstone Holdings III GP L.L.C.,

  its General Partner By:  

/s/ Stephen A. Schwarzman

Name:   Stephen A. Schwarzman Title:   Authorized Person

 

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