Exhibit 10.6

TAX RECEIVABLE AGREEMENT

dated as of

June 18, 2007

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Table of Contents

 

          Page  

ARTICLE I

DEFINITIONS

   Section 1.01.   Definitions    2  

ARTICLE II

DETERMINATION OF REALIZED TAX BENEFIT

        Section 2.01.   Basis Adjustment    7 Section 2.02.   Exchange Basis
Schedule    7 Section 2.03.   Tax Benefit Schedule    8 Section 2.04.  
Procedures, Amendments    8  

ARTICLE III

TAX BENEFIT PAYMENTS

        Section 3.01.   Payments    9 Section 3.02.   No Duplicative Payments   
9 Section 3.03.   Pro Rata Payments    10  

ARTICLE IV

TERMINATION

        Section 4.01.   Early Termination and Breach of Agreement    10 Section
4.02.   Early Termination Notice    11 Section 4.03.   Payment upon Early
Termination    11  

ARTICLE V

SUBORDINATION AND LATE PAYMENTS

        Section 5.01.   Subordination.    11 Section 5.02.   Late Payments by
the Corporate Taxpayer    12  

ARTICLE VI

NO DISPUTES; CONSISTENCY; COOPERATION

        Section 6.01.   Limited Partner Group Member Participation in the
Corporate Taxpayer’s and Partnerships’ Tax Matters    12 Section 6.02.  
Consistency    12 Section 6.03.   Cooperation    12

 

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    ARTICLE VII        MISCELLANEOUS    Section 7.01.   Notices    13
Section 7.02.   Counterparts    13 Section 7.03.   Entire Agreement; No Third
Party Beneficiaries    13 Section 7.04.   Governing Law    14 Section 7.05.  
Severability    14 Section 7.06.   Successors; Assignment; Amendments; Waivers
   14 Section 7.07.   Titles and Subtitles    15 Section 7.08.   Resolution of
Disputes    15 Section 7.09.   Reconciliation    16 Section 7.10.   Withholding
   17 Section 7.11.   Affiliated Corporations of Other Blackstone Holdings
General Partners; Admission of the Corporate Taxpayer into a Consolidated Group;
Transfers of Corporate Assets    17 Section 7.12.   Confidentiality    18
Section 7.13.   Partnership Agreement    19 Section 7.14.   Partnerships    19
Section 7.15.   Headings    19

 

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This TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”),
dated as of June 18, 2007, is hereby entered into by and among Blackstone
Holdings I/II GP Inc., a Delaware corporation (the “Corporate Taxpayer”),
Blackstone Holdings I L.P., a Delaware limited partnership (“Blackstone Holdings
I”), Blackstone Holdings II L.P., a Delaware limited partnership (“Blackstone
Holdings II”) (together with all other Persons (as defined herein) in which the
Corporate Taxpayer acquires a partnership interest, member interest or similar
interest after the date hereof and who executes and delivers a joinder
contemplated in Section 7.11, the “Partnerships”), and each of the undersigned
parties hereto identified as “Limited Partners.”

RECITALS

WHEREAS, the Limited Partners hold interests as partners or members of entities
(the “Prior Entities”) and are selling such interests to the Corporate Taxpayer
(the “Initial Sale”) as described in the Form S-1 Registration Statement of The
Blackstone Group L.P., a Delaware limited partnership (the “Parent”);

WHEREAS, the Limited Partners hold limited partner interests (“Partnership
Units”) in each of the Partnerships, each of which is treated as a partnership
for U.S. Federal income tax purposes;

WHEREAS, the Corporate Taxpayer is the general partner of each of the
Partnerships;

WHEREAS, the Partnership Units, together with limited partner interests in the
other Blackstone Holdings Partnerships (as defined below), are exchangeable with
the Corporate Taxpayer and the Parent for Common Units (the “Common Units”) in
the Parent, subject to the provisions of the Exchange Agreement (as defined
below);

WHEREAS, the Prior Entities, the Partnerships, and each of their direct and
indirect subsidiaries, will have in effect an election under Section 754 of the
Internal Revenue Code of 1986, as amended (the “Code”), for the Taxable Year in
which the Initial Sale occurs and for each Taxable Year in which an exchange of
Partnership Units for Common Units occurs, which elections are intended
generally to result in an adjustment to the tax basis of the assets owned by the
Partnerships (solely with respect to the Corporate Taxpayer) at the time of an
exchange of Partnership Units for Common Units or any other acquisition of
Partnership Units for cash or other consideration, including the Initial Sale
(collectively, an “Exchange”) (such time, the “Exchange Date”) (such assets and
any asset whose tax basis is determined, in whole or in part, by reference to
the adjusted basis of any such asset, the “Original Assets”) by reason of such
Exchange and the receipt of payments under this Agreement;

WHEREAS, the income, gain, loss, expense and other Tax items of (i) the
Partnerships solely with respect to the Corporate Taxpayer may be affected by
the Basis Adjustment (defined below) and (ii) the Corporate Taxpayer may be
affected by the Imputed Interest (as defined below);

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WHEREAS, the parties to this Agreement desire to make certain arrangements with
respect to the effect of the Basis Adjustment and Imputed Interest on the actual
liability for Taxes of the Corporate Taxpayer;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants
and agreements set forth herein, and intending to be legally bound hereby, the
parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. Definitions. As used in this Agreement, the terms set forth in
this Article I shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such first Person.

“Agreed Rate” means LIBOR plus 100 basis points.

“Agreement” is defined in the Recitals of this Agreement.

“Amended Schedule” is defined in Section 2.04(b) of this Agreement.

“Basis Adjustment” means the adjustment to the tax basis of an Original Asset
under Section 732 of the Code (in situations where, as a result of one or more
Exchanges, a Partnership becomes an entity that is disregarded as separate from
its owner for tax purposes), Section 1012 of the Code, or Sections 743(b) and
754 of the Code (in situations where, following an Exchange, a Partnership
remains in existence as an entity for tax purposes) and, in each case,
comparable sections of state, local and foreign tax laws (as calculated under
Section 2.01 of this Agreement) as a result of an Exchange and the payments made
pursuant to this Agreement. Notwithstanding any other provision of this
Agreement, the amount of any Basis Adjustment resulting from an Exchange of one
or more Partnership Units shall be determined without regard to any Pre-Exchange
Transfer of such Partnership Units and as if any such Pre-Exchange Transfer had
not occurred.

“Blackstone Holdings General Partners” means, collectively, the Corporate
Taxpayer, Blackstone Holdings III GP L.P., a Delaware limited partnership
(“Blackstone Holdings III”), Blackstone Holdings IV GP L.P., a Delaware limited
partnership (“Blackstone Holdings IV”), and Blackstone Holdings V GP L.P., a
Québec société en commandite (“Blackstone Holdings V”).

“Blackstone Holdings Partnerships” means, collectively, Blackstone Holdings I,
Blackstone Holdings II, Blackstone Holdings III L.P., a Delaware limited
partnership (“Blackstone Holdings III”), Blackstone Holdings IV L.P., a Québec
société en commandite (“Blackstone Holdings IV”), and Blackstone Holdings V
L.P., a Québec société en commandite (“Blackstone Holdings V”).

 

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“Business Day” means Monday through Friday of each week, except that a legal
holiday recognized as such by the government of the United States of America or
the State of New York shall not be regarded as a Business Day.

“Change of Control” means the occurrence of any Person, other than a Person
approved by the current General Partner, becoming the general partner of the
Parent.

“Common Units” is defined in the Recitals of this Agreement.

“Code” is defined in the Recitals of this Agreement.

“Control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise.

“Corporate Taxpayer” is defined in the Recitals of this Agreement.

“Corporate Taxpayer Return” means the federal Tax Return and/or state and/or
local and/or foreign Tax Return, as applicable, of the Corporate Taxpayer filed
with respect to Taxes of any Taxable Year.

“Default Rate” means LIBOR plus 500 basis points.

“Determination” shall have the meaning ascribed to such term in Section 1313(a)
of the Code or similar provision of state, local and foreign tax law, as
applicable, or any other event (including the execution of a Form 870-AD) that
finally and conclusively establishes the amount of any liability for Tax.

“Early Termination Date” means the date of an Early Termination Notice for
purposes of determining the Early Termination Payment.

“Early Termination Notice” is defined in Section 4.02 of this Agreement.

“Early Termination Schedule” is defined in Section 4.02 of this Agreement.

“Early Termination Payment” is defined in Section 4.03(b) of this Agreement.

“Early Termination Rate” means the lesser of (i) 6.5% and (ii) LIBOR plus 100
basis points.

“Exchange” is defined in the Recitals of this Agreement.

“Exchange Agreement” means the Exchange Agreement, dated as of the date hereof,
among the Parent, the Corporate Taxpayer and the limited partners of Blackstone
Holdings from time to time.

 

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“Exchange Basis Schedule” is defined in Section 2.02 of this Agreement.

“Exchange Date” is defined in the Recitals of this Agreement.

“Exchange Payment” is defined in Section 5.01.

“Excluded Assets” is defined in Section 7.11(c) of this Agreement.

“Expert” is defined in Section 7.09 of this Agreement.

“General Partner” means Blackstone Management L.L.C., a Delaware limited
liability company and the general partner of the Parent.

“Initial Sale” is defined in the Recitals of this Agreement.

“Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or
483 or other provision of the Code and any similar provision of state, local and
foreign tax law with respect to the Corporate Taxpayer’s payment obligations
under this Agreement.

“LIBOR” means for each month (or portion thereof) during any period, an interest
rate per annum equal to the rate per annum reported, on the date two days prior
to the first day of such month, on the Telerate Page 3750 (or if such screen
shall cease to be publicly available, as reported on Reuters Screen page “LIBO”
or by any other publicly available source of such market rate) for London
interbank offered rates for U.S. dollar deposits for such month (or portion
thereof).

“Limited Partner” means the parties hereto other than the Corporate Taxpayer and
each other individual who from time to time executes a joinder agreement.

“Limited Partner Group Member” has the meaning assigned to such term in the
Amended and Restated Limited Liability Company Agreement of the General Partner,
as it may be amended, supplemented or restated from time to time.

“Market Value” shall mean the closing price of the Common Units on the
applicable Exchange Date on the national securities exchange or interdealer
quotation system on which such Common Units are then traded or listed, as
reported by the Wall Street Journal; provided that if the closing price is not
reported by the Wall Street Journal for the applicable Exchange Date, then the
Market Value shall mean the closing price of the Common Units on the Business
Day immediately preceding such Exchange Date on the national securities exchange
or interdealer quotation system on which such Common Units are then traded or
listed, as reported by the Wall Street Journal; provided further, that if the
Common Units are not then listed on a National Securities Exchange or
Interdealer Quotation System, “Market Value” shall mean the cash consideration
paid for Common Units, or the fair market value of the other property delivered
for Common Units, as determined by the board of directors of the General Partner
in good faith.

“Material Objection Notice” has the meaning set forth in Section 4.02.

 

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“Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the tax
basis that such asset would have had at such time if no Basis Adjustment had
been made.

“Non-Stepped Up Tax Liability” means, with respect to any Taxable Year, the
liability for Taxes of i) the Corporate Taxpayer or ii) any Partnership in which
the Corporate Taxpayer owns an interest but only with respect to Taxes imposed
on such Partnership and allocable to the Corporate Taxpayer, in each case using
the same methods, elections, conventions and similar practices used on the
relevant Corporate Taxpayer Return, but using the Non-Stepped Up Tax Basis
instead of the tax basis of the Original Assets and excluding any deduction
attributable to the Imputed Interest.

“Objection Notice” has the meaning set forth in Section 2.04(a).

“Original Assets” is defined in the Recitals of this Agreement.

“Parent” is defined in the Recitals of this Agreement.

“Partnerships” is defined in the Recitals of this Agreement.

“Partnership Agreement” means, with respect to a Partnership, the Amended and
Restated Limited Partnership Agreement of such Partnership.

“Partnership Units” is defined in the Recitals of this Agreement.

“Payment Date” means any date on which a payment is required to be made pursuant
to this Agreement.

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

“Pre-Exchange Transfer” means any transfer (including upon the death of a
Limited Partner) of one or more Partnership Units (i) that occurs prior to an
Exchange of such Partnership Units, and (ii) to which Section 743(b) of the Code
applies.

“Prior Entities” is defined in the Recitals of this Agreement.

“Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the
Non-Stepped Up Tax Liability over the actual liability for Taxes of i) the
Corporate Taxpayer or ii) any Partnership in which the Corporate Taxpayer owns
an interest but only with respect to Taxes imposed on such Partnership and
allocable to Corporate Taxpayer for such Taxable Year, in each case using the
“with or without” methodology. If all or a portion of the actual tax liability
for Taxes for the Taxable Year arises as a result of an audit by a Taxing
Authority of any Taxable Year, such liability shall not be included in
determining the Realized Tax Benefit unless and until there has been a
Determination.

“Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the
actual liability for Taxes of i) the Corporate Taxpayer or ii) any Partnership
in which the

 

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Corporate Taxpayer owns an interest but only with respect to Taxes imposed on
such Partnership and allocable to the Corporate Taxpayer over the Non-Stepped Up
Tax Liability for such Taxable Year, in each case using the “with or without”
methodology. If all or a portion of the actual tax liability for Taxes for the
Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable
Year, such liability shall not be included in determining the Realized Tax
Detriment unless and until there has been a Determination.

“Reconciliation Dispute” has the meaning set forth in Section 7.09.

“Reconciliation Procedures” shall mean those procedures set forth in
Section 7.09 of this Agreement.

“Schedule” means any Exchange Basis Schedule, Tax Benefit Schedule and the Early
Termination Schedule.

“Subsidiaries” means, with respect to any Person, as of any date of
determination, any other Person as to which such Person, owns, directly or
indirectly, or otherwise controls more than 50% of the voting power or other
similar interests or the sole general partner interest or managing member or
similar interest of such Person.

“Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.

“Tax Benefit Schedule” is defined in Section 2.03 of this Agreement.

“Tax Return” means any return, declaration, report or similar statement required
to be filed with respect to Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.

“Taxable Year” means a taxable year as defined in Section 441(b) of the Code or
comparable section of state, local or foreign tax law, as applicable, (and,
therefore, for the avoidance of doubt, may include a period of less than 12
months for which a Tax Return is made) ending on or after the Exchange Date in
which there is a Basis Adjustment due to an Exchange.

“Taxes” means any and all U.S. federal, state, local and foreign taxes,
assessments or similar charges measured with respect to net income or profits
and any interest related to such Tax.

“Taxing Authority” shall mean any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory authority.

“Treasury Regulations” means the final, temporary and proposed regulations under
the Code promulgated from time to time (including corresponding provisions and
succeeding provisions) as in effect for the relevant taxable period.

 

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“Valuation Assumptions” shall mean, as of an Early Termination Date, the
assumptions that (1) in each Taxable Year ending on or after such Early
Termination Date, the Corporate Taxpayer will have taxable income sufficient to
fully utilize the deductions arising from the basis Adjustment and the Imputed
Interest during such Taxable Year, (2) the federal income tax rates and state,
local and foreign income tax rates that will be in effect for each such Taxable
Year will be those specified for each such Taxable Year by the Code and other
law as in effect on the Early Termination Date, (3) any loss carryovers or
carryback generated by the Basis Adjustment or the Imputed Interest and
available as of the date of the Early Termination Schedule will be utilized by
the Corporate Taxpayer on a pro rata basis from the date of the Early
Termination Schedule through the scheduled expiration date of such loss
carryovers or carrybacks, (4) any non-amortizable assets are deemed to be
disposed of (A) with respect to private equity fund related assets, pro-rata
over the number of years remaining under the original fund agreement until
expected liquidation (without extensions) of the applicable fund (or, if such
expected liquidation date has passed, on the Early Termination Date) and
(B) with respect to all other assets, on the fifteenth anniversary of the
earlier of the Basis Adjustment and the Early Termination Date and (5) if an
Early Termination is effected prior to an Exchange of Partnership Units, clause
(i) of Section 2.01 shall be read to include the Market Value of the Common
Units and cash that would be transferred if the Exchange occurred on the Early
Termination Date.

ARTICLE II

DETERMINATION OF REALIZED TAX BENEFIT

Section 2.01. Basis Adjustment. The Corporate Taxpayer and the Partnerships, on
the one hand, and the applicable Limited Partner, on the other hand, acknowledge
that, as a result of an Exchange, the Corporate Taxpayer’s basis in the
applicable Original Assets shall be increased by the excess, if any, of (i) the
sum of (x) the Market Value of the Common Units, cash or other consideration
transferred to the applicable Limited Partner pursuant to the Exchange as
payment for the exchanged Partnership Units, plus (y) the amount of payments
made pursuant to this Agreement with respect to such Exchange plus (z) the
amount of debt allocated to the Partnership Units acquired pursuant to such
Exchange over (ii) the Corporate Taxpayer’s share of the basis of the Original
Assets immediately after the Exchange attributable to the Partnership Units
exchanged, determined as if (x) each Partnership remains in existence as an
entity for tax purposes, and (y) no Partnership made the election provided by
Section 754 of the Code. For the avoidance of doubt, payments made under this
Agreement shall not be treated as resulting in a Basis Adjustment to the extent
such payments are treated as Imputed Interest.

Section 2.02. Exchange Basis Schedule. Within 90 calendar days after the filing
of the U.S. federal income tax return of the Corporate Taxpayer for each Taxable
Year in which any Exchange has been effected, the Corporate Taxpayer shall
deliver to the applicable Limited Partner a schedule (the “Exchange Basis
Schedule”) that shows for purposes of Taxes, (i) the actual unadjusted tax basis
of the Original Assets as of each applicable Exchange Date, (ii) the Basis
Adjustment with respect to the Original Assets as a result of the Exchanges
effected in such Taxable Year, calculated in the aggregate, (iii) the period or
periods, if any, over which the Original Assets are amortizable and/or
depreciable and (iv) the period or periods, if any, over which each Basis
Adjustment is amortizable and/or depreciable (which, for non-amortizable assets
shall be based on the Valuation Assumptions).

 

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Section 2.03. Tax Benefit Schedule. Within 90 calendar days after the filing of
the U.S. federal income tax return of the Corporate Taxpayer for any Taxable
Year in which there is a Realized Tax Benefit or Realized Tax Detriment, the
Corporate Taxpayer shall provide to the applicable Limited Partner a schedule
showing the calculation of the Realized Tax Benefit or Realized Tax Detriment
for such Taxable Year (a “Tax Benefit Schedule”). The Schedule will become final
as provided in Section 2.04(a) and may be amended as provided in Section 2.04(b)
(subject to the procedures set forth in Section 2.04(b)).

Section 2.04. Procedures, Amendments.

(a) Procedure. Every time the Corporate Taxpayer delivers to the applicable
Limited Partner an applicable Schedule under this Agreement, including any
Amended Schedule delivered pursuant to Section 2.04(b), but excluding any Early
Termination Schedule or amended Early Termination Schedule, the Corporate
Taxpayer shall also (x) deliver to the applicable Limited Partner schedules and
work papers providing reasonable detail regarding the preparation of the
Schedule and (y) allow the applicable Limited Partner reasonable access at no
cost to the appropriate representatives at the Corporate Taxpayer in connection
with a review of such Schedule. The applicable Schedule shall become final and
binding on all parties unless the applicable Limited Partner Group Member,
within 30 calendar days after receiving an Exchange Basis Schedule or amendment
thereto or 30 calendar days after receiving a Tax Benefit Schedule or amendment
thereto, provides the Corporate Taxpayer with notice of a material objection to
such Schedule (“Objection Notice”) made in good faith; provided, for the sake of
clarity, only Limited Partner Group Members shall have the right to object to
any Schedule or Amended Schedule pursuant to this Section 2.04. If the parties,
for any reason, are unable to successfully resolve the issues raised in such
notice within 30 calendar days of receipt by the Corporate Taxpayer of an
Objection Notice, if with respect to an Exchange Basis Schedule, or 30 calendar
days of receipt by the Corporate Taxpayer of an Objection Notice, if with
respect to a Tax Benefit Schedule, after such Schedule was delivered to the
applicable Limited Partner, the Corporate Taxpayer and the applicable Limited
Partner shall employ the reconciliation procedures as described in Section 7.09
of this Agreement (the “Reconciliation Procedures”).

(b) Amended Schedule. The applicable Schedule for any Taxable Year may be
amended from time to time by the Corporate Taxpayer (i) in connection with a
Determination affecting such Schedule, (ii) to correct material inaccuracies in
the Schedule identified as a result of the receipt of additional factual
information relating to a Taxable Year after the date the Schedule was provided
to the applicable Limited Partner, (iii) to comply with the Expert’s
determination under the Reconciliation Procedures, (iv) to reflect a material
change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable
Year attributable to a carryback or carryforward of a loss or other tax item to
such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit
or Realized Tax Detriment for such Taxable Year attributable to an amended Tax
Return filed for such Taxable Year, or (vi) to adjust the Exchange Basis
Schedule to take into account payments made pursuant to this Agreement (such
Schedule, an “Amended Schedule”).

 

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ARTICLE III

TAX BENEFIT PAYMENTS

Section 3.01. Payments.

(a) Payments. Within five (5) calendar days of a Tax Benefit Schedule delivered
to an applicable Limited Partner becoming final in accordance with
Section 2.04(a), the Corporate Taxpayer shall pay to the applicable Limited
Partner for such Taxable Year the Tax Benefit Payment determined pursuant to
Section 3.01(b). Each such Tax Benefit Payment shall be made by wire transfer of
immediately available funds to a bank account of the applicable Limited Partner
previously designated by such Limited Partner to the Corporate Taxpayer or as
otherwise agreed by the Corporate Taxpayer and the applicable Limited Partner.
For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of
estimated tax payments, including, without limitation, federal income tax
payments.

(b) A “Tax Benefit Payment” means an amount, not less than zero, equal to 85% of
the sum of the Net Tax Benefit and the Interest Amount. The “Net Tax Benefit”
shall equal: (1) the Corporate Taxpayer’s Realized Tax Benefit, if any, for a
Taxable Year plus (2) the amount of the excess Realized Tax Benefit reflected on
an Amended Tax Benefit Schedule for a previous Taxable Year over the Realized
Tax Benefit (or Realized Tax Detriment (expressed as a negative number))
reflected on the Tax Benefit Schedule for such previous Taxable Year, minus
(3) an amount equal to the Corporate Taxpayer’s Realized Tax Detriment (if any)
for the current or any previous Taxable Year, minus (4) the amount of the excess
Realized Tax Benefit reflected on a Tax Benefit Schedule for a previous Taxable
Year over the Realized Tax Benefit (or Realized Tax Detriment (expressed as a
negative number)) reflected on the Amended Tax Benefit Schedule for such
previous Taxable Year; provided, however, that to the extent of the amounts
described in 3.01(b)(2), (3) and (4) were taken into account in determining any
Tax Benefit Payment in a preceding Taxable Year, such amounts shall not be taken
into account in determining a Tax Benefit Payment attributable to any other
Taxable Year; provided, further, for the avoidance of doubt, no applicable
Limited Partner shall be required to return any portion of any previously made
Tax Benefit Payment. The “Interest Amount” shall equal the interest on the Net
Tax Benefit calculated at the Agreed Rate from the due date (without extensions)
for filing the Corporate Taxpayer Return with respect to Taxes for such Taxable
Year until the Payment Date. Notwithstanding the foregoing, for each Taxable
Year ending on or after the date of a Change of Control, all Tax Benefit
Payments, whether paid with respect to Partnership Units that were exchanged
(i) prior to the date of such Change of Control or (ii) on or after the date of
such Change of Control, shall be calculated by utilizing Valuation Assumptions
(1), (3), and (4), substituting in each case the terms “the closing date of a
Change of Control” for an “Early Termination Date”.

Section 3.02. No Duplicative Payments. It is intended that the above provisions
of this Agreement will not result in duplicative payment of any amount
(including interest) required under this Agreement. It is also intended that the
provisions of this Agreement provide that 85% of the Corporate Taxpayer’s
Realized Tax Benefit and Interest Amount is paid to the Limited Partners
pursuant to this Agreement. The provisions of this Agreement shall be construed
in the appropriate manner as such intentions are realized.

 

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Section 3.03. Pro Rata Payments. For the avoidance of doubt, to the extent the
Corporate Taxpayer’s deduction with respect to the Basis Adjustment is limited
in a particular Taxable Year or the Corporate Taxpayer lacks sufficient funds to
satisfy its obligations to make all Tax Benefit Payments due in a particular
taxable year, the limitation on the deduction, or the Tax Benefit Payments that
may be made, as the case may be, shall be taken into account or made for each
applicable Limited Partner on a pro rata basis relative to the total amount of
deductions with respect to the aggregate Basis Adjustments for all of the
applicable Limited Partners.

ARTICLE IV

TERMINATION

Section 4.01. Early Termination and Breach of Agreement.

(a) The Corporate Taxpayer may terminate this Agreement with respect to all of
the Partnership Units held (or previously held and exchanged) by all Limited
Partners at any time by paying to all of the applicable Limited Partners the
Early Termination Payment; provided, however, that this Agreement shall only
terminate upon the receipt of the Early Termination Payment by all Limited
Partners, and provided, further, that the Corporate Taxpayer may withdraw any
notice to execute its termination rights under this Section 4.01(a) prior to the
time at which any Early Termination Payment has been paid. Upon payment of the
Early Termination Payments by the Corporate Taxpayer, neither the applicable
Limited Partners nor the Corporate Taxpayer shall have any further payment
obligations under this Agreement in respect of such Limited Partners, other than
for any (a) Tax Benefit Payment agreed to by the Corporate Taxpayer and the
applicable Limited Partner as due and payable but unpaid as of the Early
Termination Notice and (b) Tax Benefit Payment due for the Taxable Year ending
with or including the date of the Early Termination Notice (except to the extent
that the amount described in clause (b) is included in the Early Termination
Payment). If an Exchange occurs after the Corporate Taxpayer exercises its
termination rights under this Section 4.01(a), the Corporate Taxpayer shall have
no obligations under this Agreement with respect to such Exchange.

(b) In the event that the Corporate Taxpayer breaches any of its material
obligations under this Agreement, whether as a result of failure to make any
payment when due, failure to honor any other material obligation required
hereunder or by operation of law as a result of the rejection of this Agreement
in a case commenced under the Bankruptcy Code or otherwise, then all obligations
hereunder shall be accelerated and such obligations shall be calculated as if an
Early Termination Notice had been delivered on the date of such breach and shall
include, but not be limited to, (1) the Early Termination Payment calculated as
if an Early Termination Notice had been delivered on the date of a breach,
(2) any Tax Benefit Payment agreed to by the Corporate Taxpayer and any Limited
Partners as due and payable but unpaid as of the date of a breach, and (3) any
Tax Benefit Payment due for the Taxable Year ending with or including the date
of a breach. Notwithstanding the foregoing, in the event that the Corporate
Taxpayer breaches this Agreement, the Limited Partners shall be entitled to
elect to receive the amounts set forth in (1), (2) and (3), above or to seek
specific performance of the terms hereof. The parties agree that the failure to
make any payment due pursuant to this Agreement within three months of the date
such payment is due shall be deemed to be a breach of a material

 

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obligation under this Agreement for all purposes of this Agreement, and that it
will not be considered to be a breach of a material obligation under this
Agreement to make a payment due pursuant to this Agreement within three months
of the date such payment is due.

(c) The undersigned parties agree that the aggregate value of the Tax Benefit
Payments cannot be ascertained with any reasonable certainty for U.S. federal
income tax purposes.

Section 4.02. Early Termination Notice. If the Corporate Taxpayer chooses to
exercise its right of early termination under Section 4.01 above, the Corporate
Taxpayer shall deliver to the applicable Limited Partner notice of such
intention to exercise such right (“Early Termination Notice”) and a schedule
(the “Early Termination Schedule”) specifying the Corporate Taxpayer’s intention
to exercise such right and showing in reasonable detail the calculation of the
Early Termination Payment. The applicable Early Termination Schedule shall
become final and binding on all parties unless the applicable Limited Partner
Group Member, within 30 calendar days after receiving the Early Termination
Schedule thereto provides the Corporate Taxpayer with notice of a material
objection to such Schedule made in good faith (“Material Objection Notice”);
provided, for the sake of clarity, only Limited Partner Group Members shall have
the right to object to any Schedule or Amended Schedule pursuant to this
Section 4.02. If the parties, for any reason, are unable to successfully resolve
the issues raised in such notice within 30 calendar days after receipt by the
Corporate Taxpayer of the Material Objection Notice, the Corporate Taxpayer and
the applicable Limited Partner Group Member shall employ the Reconciliation
Procedures as described in Section 7.09 of this Agreement.

Section 4.03. Payment upon Early Termination. (a) Within three calendar days
after agreement between the applicable Limited Partner and the Corporate
Taxpayer of the Early Termination Schedule, the Corporate Taxpayer shall pay to
the applicable Limited Partner an amount equal to the Early Termination Payment.
Such payment shall be made by wire transfer of immediately available funds to a
bank account designated by the applicable Limited Partner or as otherwise agreed
by the Corporate Taxpayer and the applicable Limited Partner.

(b) The “Early Termination Payment” as of the date of the delivery of an Early
Termination Schedule shall equal with respect to the applicable Limited Partner
the present value, discounted at the Early Termination Rate as of such date, of
all Tax Benefit Payments that would be required to be paid by the Corporate
Taxpayer to the applicable Limited Partner beginning from the Early Termination
Date assuming the Valuation Assumptions are applied.

ARTICLE V

SUBORDINATION AND LATE PAYMENTS

Section 5.01. Subordination. Notwithstanding any other provision of this
Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment
required to be made by the Corporation to the applicable Partner under this
Agreement (an “Exchange Payment”) shall rank subordinate and junior in right of
payment to any principal, interest or other amounts due and payable in respect
of any obligations in respect of indebtedness for borrowed money of the
Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari
passu with all current or future unsecured obligations of the Corporation that
are not Senior Obligations.

 

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Section 5.02. Late Payments by the Corporate Taxpayer. The amount of all or any
portion of any Tax Benefit Payment not made to the applicable Limited Partner
when due under the terms of this Agreement shall be payable together with any
interest thereon, computed at the Default Rate and commencing from the date on
which such Exchange Payment was due and payable.

ARTICLE VI

NO DISPUTES; CONSISTENCY; COOPERATION

Section 6.01. Limited Partner Group Member Participation in the Corporate
Taxpayer’s and Partnerships’ Tax Matters. Except as otherwise provided herein,
the Corporate Taxpayer shall have full responsibility for, and sole discretion
over, all Tax matters concerning the Corporate Taxpayer and the Partnerships,
including without limitation the preparation, filing or amending of any Tax
Return and defending, contesting or settling any issue pertaining to Taxes.
Notwithstanding the foregoing, the Corporate Taxpayer shall notify the
applicable Limited Partner Group Member of, and keep the applicable Limited
Partner Group Member reasonably informed with respect to the portion of any
audit of the Corporate Taxpayer and the Partnerships by a Taxing Authority the
outcome of which is reasonably expected to affect the applicable Limited Partner
Group Member’s rights and obligations under this Agreement, and shall provide to
the applicable Limited Partner Group Member reasonable opportunity to provide
information and other input to the Corporate Taxpayer, the Partnerships and
their respective advisors concerning the conduct of any such portion of such
audit; provided, however, that the Corporate Taxpayer and the Partnerships shall
not be required to take any action that is inconsistent with any provision of
any of the Partnership Agreements.

Section 6.02. Consistency. The Corporate Taxpayer and the applicable Limited
Partner agree to report and cause to be reported for all purposes, including
federal, state, local and foreign Tax purposes and financial reporting purposes,
all Tax-related items (including without limitation the Basis Adjustment and
each Tax Benefit Payment) in a manner consistent with that specified by the
Corporate Taxpayer in any Schedule required to be provided by or on behalf of
the Corporate Taxpayer under this Agreement.

Section 6.03. Cooperation. The applicable Limited Partner shall (a) furnish to
the Corporate Taxpayer in a timely manner such information, documents and other
materials as the Corporate Taxpayer may reasonably request for purposes of
making any determination or computation necessary or appropriate under this
Agreement, preparing any Tax Return or contesting or defending any audit,
examination or controversy with any Taxing Authority, (b) make itself available
to the Corporate Taxpayer and its representatives to provide explanations of
documents and materials and such other information as the Corporate Taxpayer or
its representatives may reasonably request in connection with any of the matters
described in clause (a) above, and (c) reasonably cooperate in connection with
any such matter, and the Corporate Taxpayer shall reimburse the applicable
Limited Partner for any reasonable third-party costs and expenses incurred
pursuant to this Section.

 

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ARTICLE VII

MISCELLANEOUS

Section 7.01. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed duly given and
received (a) on the date of delivery if delivered personally, or by facsimile
upon confirmation of transmission by the sender’s fax machine if sent on a
Business Day (or otherwise on the next Business Day) or (b) on the first
Business Day following the date of dispatch if delivered by a recognized
next-day courier service. All notices hereunder shall be delivered as set forth
below, or pursuant to such other instructions as may be designated in writing by
the party to receive such notice:

If to the Corporate Taxpayer, to:

c/o The Blackstone Group L.P.

345 Park Avenue

New York, NY 10154

(T) (212) 583-5000

Attention: Chief Legal Officer

with a copy to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

(T) (212) 455-2000

(F) (212) 735-2502

Attention: Joshua Ford Bonnie, Esq.

If to the applicable Limited Partner, to:

The address and facsimile number set forth in the records of the Partnerships.

Any party may change its address or fax number by giving the other party written
notice of its new address or fax number in the manner set forth above.

Section 7.02. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Agreement.

Section 7.03. Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their respective successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

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Section 7.04. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.

Section 7.05. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

Section 7.06. Successors; Assignment; Amendments; Waivers.

(a) No Limited Partner may assign this Agreement to any person without the prior
written consent of the Corporate Taxpayer; provided, however, (i) that, to the
extent Partnership Units are effectively transferred in accordance with the
terms of the Partnership Agreements and any other agreements the Limited
Partners may have entered into with the Parent, the Corporate Taxpayer and/or
any of the other Blackstone Holdings General Partners or Blackstone Holdings
Partnerships, the transferring Limited Partner shall assign to the transferee of
such Partnership Units the transferring Limited Partner’s rights under this
Agreement with respect to such transferred Partnership Units, as long as such
transferee has executed and delivered, or, in connection with such transfer,
executes and delivers, a joinder to this Agreement, in form and substance
reasonably satisfactory to the Corporate Taxpayer, agreeing to become a “Limited
Partner” for all purposes of this Agreement, except as otherwise provided in
such joinder, and (ii) that, once an Exchange has occurred, any and all payments
that may become payable to a Limited Partner pursuant to this Agreement with
respect to such Exchange may be assigned to any Person or Persons, as long as
any such Person has executed and delivered, or, in connection with such
assignment, executes and delivers, a joinder to this Agreement, in form and
substance reasonably satisfactory to the Corporate Taxpayer, agreeing to be
bound by Section 7.12 and acknowledging specifically the last sentence of the
next paragraph. For the avoidance of doubt: (A) to the extent a Limited Partner
Group Member or other Person transfers Partnership Units to a Limited Partner
Group Member pursuant to the relevant Partnership Agreements, the Limited
Partner Group Member receiving such Partnership Units shall have all rights
under this Agreement with respect to such transferred Partnership Units as such
Limited Partner Group Members has, under this Agreement, with respect to the
other Partnership Units held by him; and (B) the requirement to execute and
deliver a joinder pursuant to this Section 7.06(a) shall not be construed as
requiring such execution and delivery prior to an assignment becoming effective.

(b) Notwithstanding the provisions of Section 7.06(a), no transferee described
in clause (i) of Section 7.06(a) shall have the right to enforce the provisions
of Section 2.04, 4.02, 6.01 or 6.02 of this Agreement, and no assignee described
in clause (ii) of Section 7.06(a) shall have any rights under this Agreement
except for the right to enforce its right to receive payments under this
Agreement.

 

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(c) No provision of this Agreement may be amended unless such amendment is
approved in writing by the Corporate Taxpayer, on behalf of themselves and the
respective Partnerships they Control, and by Limited Partner Group Members who
would be entitled to receive at least two-thirds of the Early Termination
Payments payable to all Limited Partner Group Members hereunder if the Corporate
Taxpayer had exercised its right of early termination on the date of the most
recent Exchange prior to such amendment (excluding, for purposes of this
sentence, all payments made to any Limited Partner Group Member pursuant to this
Agreement since the date of such most recent Exchange); provided, that no such
amendment shall be effective if such amendment will have a disproportionate
effect on the payments certain Limited Partners will or may receive under this
Agreement unless all such Limited Partners disproportionately effected consent
in writing to such amendment. No provision of this Agreement may be waived
unless such waiver is in writing and signed by the party against whom the waiver
is to be effective.

(d) All of the terms and provisions of this Agreement shall be binding upon,
shall inure to the benefit of and shall be enforceable by the parties hereto and
their respective successors, assigns, heirs, executors, administrators and legal
representatives. The Corporate Taxpayer shall require and cause any direct or
indirect successor (whether by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Corporate Taxpayer, by
written agreement, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Corporate Taxpayer would be
required to perform if no such succession had taken place. Notwithstanding
anything to the contrary herein, in the event an Limited Partner Group Member
transfers his Partnership Units to a Permitted Transferee (as defined in each
Partnership Agreement), excluding any other Limited Partner Group Member, such
Limited Partner Group Member shall have the right, on behalf of such transferee,
to enforce the provisions of Sections 2.04, 4.02 or 6.01 with respect to such
transferred Partnership Units.

Section 7.07. Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

Section 7.08. Resolution of Disputes.

(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.

 

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Performance under this Agreement shall continue if reasonably possible during
any arbitration proceedings.

(b) Notwithstanding the provisions of paragraph (a), the Corporate Taxpayer may
bring 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 Limited Partner (i) expressly
consents to the application of paragraph (c) of this Section 7.08 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 Corporate Taxpayer as such Limited Partner’s agent for service of
process in connection with any such action or proceeding and agrees that service
of process upon such agent, who shall promptly advise such Limited Partner of
any such service of process, shall be deemed in every respect effective service
of process upon the Limited Partner in any such action or proceeding.

(c) (i) EACH LIMITED PARTNER 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 7.08, 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 7.08
and such parties agree not to plead or claim the same.

Section 7.09. Reconciliation. In the event that the Corporate Taxpayer and the
applicable Limited Partner Group Member are unable to resolve a disagreement
with respect to the matters governed by Sections 2.04, 4.02 and 6.02 within the
relevant period designated in this Agreement (“Reconciliation Dispute”), the
Reconciliation Dispute shall be submitted for determination to a nationally
recognized expert (the “Expert”) in the particular area of disagreement mutually
acceptable to both parties. The Expert shall be a partner in a nationally
recognized accounting firm or a law firm, and the Expert shall not, and the firm
that employs the Expert shall not, have any material relationship with the
Corporate Taxpayer or the applicable Limited Partner Group Member or other
actual or potential conflict of interest. If the parties are unable to agree on
an Expert within fifteen (15) days of receipt by the respondent(s) of written
notice of a Reconciliation Dispute, the Expert shall be appointed by the
International Chamber of Commerce Centre for Expertise. The Expert shall resolve
any matter relating to the Exchange Basis Schedule or an amendment thereto or
the Early Termination Schedule or an amendment thereto within 30 calendar days
and shall resolve any matter relating to a Tax Benefit Schedule or an amendment
thereto within 15 calendar days or as soon thereafter as is reasonably

 

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practicable, in each case after the matter has been submitted to the Expert for
resolution. Notwithstanding the preceding sentence, if the matter is not
resolved before any payment that is the subject of a disagreement is due or any
Tax Return reflecting the subject of a disagreement is due, such payment shall
be made on the date prescribed by this Agreement and such Tax Return may be
filed as prepared by the Corporate Taxpayer, subject to adjustment or amendment
upon resolution. The costs and expenses relating to the engagement of such
Expert or amending any Tax Return shall be borne by the Corporate Taxpayer;
except as provided in the next sentence. The Corporate Taxpayer and each
applicable Limited Partner Group Member shall bear their own costs and expenses
of such proceeding, unless the Limited Partner Group Member has a prevailing
position that is more than 10% of the payment at issue, in which case the
Corporate Taxpayer shall reimburse such Limited Partner Group Member for any
reasonable out-of-pocket costs and expenses in such proceeding. Any dispute as
to whether a dispute is a Reconciliation Dispute within the meaning of this
Section 7.09 shall be decided by the Expert. The Expert shall finally determine
any Reconciliation Dispute and the determinations of the Expert pursuant to this
Section 7.09 shall be binding on the Corporate Taxpayer and the applicable
Limited Partner Group Member and may be entered and enforced in any court having
jurisdiction.

Section 7.10. Withholding. The Corporate Taxpayer shall be entitled to deduct
and withhold from any payment payable pursuant to this Agreement such amounts as
the Corporate Taxpayer is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld and paid over to the
appropriate Taxing Authority by the Corporate Taxpayer, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
applicable Limited Partner.

Section 7.11. Affiliated Corporations of Other Blackstone Holdings General
Partners; Admission of the Corporate Taxpayer into a Consolidated Group;
Transfers of Corporate Assets.

(a) The other Blackstone Holdings General Partners shall provide that all
provisions of this Agreement shall correspondingly apply, including the payment
of Tax Benefit Payments by any corporation owned directly or indirectly in whole
or in part, now or in the future, by other Blackstone Holdings General Partners,
with respect to any Realized Tax Benefit with respect to limited partner
interests in other Blackstone Holdings Partnerships, that are part of the
Exchange and in which such corporation owns an interest, under the same terms
and conditions as set forth in this Agreement, and the other Blackstone Holdings
General Partners shall cause such corporation to execute and deliver a joinder
to this Agreement to such effect. If either (i) the Parent or any other
Blackstone Holdings General Partner elects to be treated as a corporation for
tax purposes, or (ii) the Parent holds any other Blackstone Holdings General
Partner directly or indirectly through an entity that is treated as a
corporation for tax purposes, then the provisions of this Agreement shall apply
(w) to such other Blackstone Holdings General Partner in the same manner as it
applies to the Corporate Taxpayer and (x) to each partnership, limited
partnership and limited liability company Controlled by any other Blackstone
Holdings General Partner as if each such entity were a Partnership; provided
that, if any Partnership Units or limited partner interests in other Blackstone
Holdings Partnerships were Exchanged prior to an event described in clause
(i) or (ii) above, then (y) such Exchange shall be treated for purposes of this
Agreement as having occurred immediately after such event at the Fair Market

 

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Value in existence at the time of such prior Exchange, and (z) the entity that
is to be treated in the same manner as the Corporate Taxpayer shall be required
to make the same Tax Benefit Payments pursuant to the terms of this Agreement
that it would have been required to make had it been treated in the same manner
as the Corporate Taxpayer on the date of such Exchange; provided, however, that
such Tax Benefit Payments shall be payable only with respect to (I) Original
Assets that are still owned at the time of the event described in clause (i) or
(ii) above, and (II) taxable years of such entity ending on or after the date of
the event described in clause (i) or (ii) above. The parties agree that the
terms of this Agreement will be applied to any corporation under this
Section 7.11 only if the aggregate Tax Benefit Payments payable with respect to
such corporation are reasonably expected to be more than $10 million.

(b) If the Corporate Taxpayer becomes a member of an affiliated or consolidated
group of corporations that files a consolidated income tax return pursuant to
Sections 1501 et seq. of the Code or any corresponding provisions of state,
local or foreign law, then: (i) the provisions of this Agreement shall be
applied with respect to the group as a whole; and (ii) Tax Benefit Payments
shall be computed with reference to the consolidated taxable income of the group
as a whole.

(c) Notwithstanding any other provision of this Agreement, if Parent acquires
one or more assets that, as of an Exchange Date, have not been contributed to
the Corporate Taxpayer (other than Parent’s interests in the other Blackstone
Holdings General Partners) (such assets, “Excluded Assets”), then all Tax
Benefit Payments due hereunder shall be computed as if such assets had been
contributed to the Corporate Taxpayer on a pro rata basis on the date such
assets were first acquired by Parent; provided, however, that if an Excluded
Asset consists of stock in a corporation, then, for purposes of this
Section 7.11(c), (i) such corporation (and any corporation Controlled by such
corporation) shall be deemed to have contributed its assets to the Corporate
Taxpayer in a transaction described in Section 351 of the Code, and (ii) the
Corporate Taxpayer shall be deemed to have contributed all such assets to the
Partnerships, in each case on the date on which the Parent acquired stock of
such corporation.

(d) If any entity that is obligated to make an Exchange Payment hereunder
transfers one or more assets to a corporation with which such entity does not
file a consolidated tax return pursuant to Section 1501 of the Code, such
entity, for purposes of calculating the amount of any Exchange Payment (e.g.,
calculating the gross income of the entity and determining the Realized Tax
Benefit of such entity) due hereunder, shall be treated as having disposed of
such asset in a fully taxable transaction on the date of such contribution. The
consideration deemed to be received by such entity shall be equal to the Fair
Market Value of the contributed asset, plus (i) the amount of debt to which such
asset is subject, in the case of a contribution of an encumbered asset or
(ii) the amount of debt allocated to such asset, in the case of a contribution
of a partner interest.

Section 7.12. Confidentiality. Each Limited Partner and assignee acknowledges
and agrees that the information of the Corporate Taxpayer is confidential and,
except in the course of performing any duties as necessary for the Corporate
Taxpayer and its Affiliates, as required by law or legal process or to enforce
the terms of this Agreement, shall keep and retain in the strictest confidence
and not to disclose to any Person all confidential matters, acquired pursuant to
this Agreement, of the Corporate Taxpayer or any Person included within the
Parent

 

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and their respective Affiliates and successors and the other Limited Partners,
including, without limitation, the identity of the beneficial holders of
interests in any fund or account managed by the Parent or any of its
Subsidiaries, confidential information concerning the Parent, any Person
included within the Parent and their respective Affiliates and successors, the
other Limited Partners and any fund, account or investment managed by any Person
included within the Parent, including marketing, investment, performance data,
fund management, credit and financial information, and other business affairs of
the Corporate Taxpayer, any Person included within the Parent and their
respective Affiliates and successors, the other Limited Partners and any fund,
account or investment managed directly or indirectly by any Person included
within the Corporate Taxpayer learned by the Limited Partner heretofore or
hereafter. This clause 7.12 shall not apply to (i) any information that has been
made publicly available by the Corporate Taxpayer or any of its Affiliates,
becomes public knowledge (except as a result of an act of such Limited Partner
in violation of this Agreement) or is generally known to the business community
and (ii) the disclosure of information to the extent necessary for a Limited
Partner to prepare and file his or her tax returns, to respond to any inquiries
regarding the same from any taxing authority or to prosecute or defend any
action, proceeding or audit by any taxing authority with respect to such
returns. Notwithstanding anything to the contrary herein, each Limited Partner
(and each employee, representative or other agent of such Limited Partner) may
disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of (x) the Corporate Taxpayer and (y) any of its
transactions, and all materials of any kind (including opinions or other tax
analyses) that are provided to the Limited Partners relating to such tax
treatment and tax structure.

If a Limited Partner or assignee commits a breach, or threatens to commit a
breach, of any of the provisions of this Section 7.12, the Corporate Taxpayer
shall have the right and remedy to have the provisions of this Section 7.12
specifically enforced by injunctive relief or otherwise by any court of
competent jurisdiction without the need to post any bond or other security, it
being acknowledged and agreed that any such breach or threatened breach shall
cause irreparable injury to the Corporate Taxpayer or any of its Subsidiaries or
the other Limited Partners and the accounts and funds managed by the Corporate
Taxpayer and that money damages alone shall not provide an adequate remedy to
such Persons. Such rights and remedies shall be in addition to, and not in lieu
of, any other rights and remedies available at law or in equity.

Section 7.13. Partnership Agreement. This Agreement shall be treated as part of
the partnership agreement of each Partnership as described in Section 761(c) of
the Code, and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury
Regulations.

Section 7.14. Partnerships. The Corporate Taxpayer hereby agrees that, to the
extent it acquires a general partner interest, managing member interest or
similar interest in any Person after the date hereof, it shall cause such Person
to execute and deliver a joinder to this Agreement and become a “Partnership”
for all purposes of this Agreement.

Section 7.15. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Corporate Taxpayer and each Limited Partner have duly
executed this Agreement as of the date first written above.

 

BLACKSTONE HOLDINGS I/II GP INC.

By:  

/s/ Stephen A. Schwarzman

Name:   Stephen A. Schwarzman Title:   Chairman and Chief Executive Officer
BLACKSTONE HOLDINGS I L.P. By:   Blackstone Holdings I/II GP Inc., its general
partner By:  

/s/ Stephen A. Schwarzman

Name:   Stephen A. Schwarzman Title:   Chairman and Chief Executive Officer
BLACKSTONE HOLDINGS II L.P. By:   Blackstone Holdings I/II GP Inc., its general
partner By:  

/s/ Stephen A. Schwarzman

Name:   Stephen A. Schwarzman Title:   Chairman and Chief Executive Officer

 

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AIG BG Holdings Inc. By:  

/s/ Win J. Neuger

Name:   Win J. Neuger Title:   President

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LIMITED PARTNERS All other Limited Partners, pursuant to the powers of attorney
now and hereafter executed in favor of, and granted and delivered to Stephen A.
Schwarzman pursuant to Section 8.9 of that certain Contribution and Sale
Agreement, dated as of the date hereof, by and among the Partnership, Blackstone
Holdings I/II GP Inc., Blackstone Holdings III GP L.L.C., Blackstone Holdings IV
GP L.P., Blackstone Holdings V GP L.P., Blackstone Holdings I/II Limited Partner
Inc., Blackstone Holdings I L.P., Blackstone Holdings II L.P., Blackstone
Holdings III L.P., Blackstone Holdings IV L.P., Blackstone Holdings V L.P., and
the other parties thereto. By:  

/s/ Stephen A. Schwarzman

Name:   Stephen A. Schwarzman Title:   Attorney-in-fact