Exhibit 10.1

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THIRD AMENDED AND RESTATED

 

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

GKK CAPITAL LP

 

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Dated as of April 19, 2006

 

 

 

 

TABLE OF CONTENTS

 

        Page           ARTICLE I DEFINED TERMS   1           ARTICLE II
ORGANIZATIONAL MATTERS   11 Section 2.01.   Organization   11 Section 2.02.  
Name   11 Section 2.03.   Registered Office and Agent; Principal Office   12
Section 2.04.   Term   12           ARTICLE III PURPOSE   12 Section 3.01.  
Purpose and Business   12 Section 3.02.   Powers   12 Section 3.03.  
Partnership Only for Purposes Specified   13           ARTICLE IV CAPITAL
CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS   13 Section 4.01.  
Capital Contributions of the Partners   13 Section 4.02.   Issuances of
Partnership Interests   13 Section 4.03.   No Preemptive Rights   15 Section
4.04.   Other Contribution Provisions   15 Section 4.05.   No Interest on
Capital   15           ARTICLE V DISTRIBUTIONS   15 Section 5.01.   Requirement
and Characterization of Distributions   15 Section 5.02.   Amounts Withheld   17
Section 5.03.   Distributions Upon Liquidation   17 Section 5.04.   Revisions to
Reflect Issuance of Additional Partnership Interests   17           ARTICLE VI
ALLOCATIONS   17 Section 6.01.   Allocations For Capital Account Purposes   17
Section 6.02.   Revisions to Allocations to Reflect Issuance of Additional
Partnership Interests   19           ARTICLE VII MANAGEMENT AND OPERATIONS OF
BUSINESS   19 Section 7.01.   Management   19 Section 7.02.   Certificate of
Limited Partnership   22 Section 7.03.   Title to Partnership Assets   22
Section 7.04.   Reimbursement of the General Partner   23 Section 7.05.  
Outside Activities of the General Partner   24

  

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        Page           Section 7.06.   Transactions with Affiliates   25 Section
7.07.   Indemnification   25 Section 7.08.   Liability of the General Partner  
27 Section 7.09.   Other Matters Concerning the General Partner   28 Section
7.10.   Reliance by Third Parties   29 Section 7.11.   Restrictions on General
Partner’s Authority   29 Section 7.12.   Loans by Third Parties   30          
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS   30 Section 8.01.  
Limitation of Liability   30 Section 8.02.   Management of Business   30 Section
8.03.   Outside Activities of Limited Partners   30 Section 8.04.   Return of
Capital   30 Section 8.05.   Rights of Limited Partners Relating to the
Partnership   31 Section 8.06.   Class A Redemption Right   32 Section 8.07.  
Redemption of Class B Units   34           ARTICLE IX BOOKS, RECORDS, ACCOUNTING
AND REPORTS   34 Section 9.01.   Records and Accounting   34 Section 9.02.  
Fiscal Year   34 Section 9.03.   Reports   34           ARTICLE X TAX MATTERS  
35 Section 10.01.   Preparation of Tax Returns   35 Section 10.02.   Tax
Elections   35 Section 10.03.   Tax Matters Partner   35 Section 10.04.  
Organizational Expenses   37 Section 10.05.   Withholding   37           ARTICLE
XI TRANSFERS AND WITHDRAWALS   37 Section 11.01.   Transfer   37 Section 11.02.
  Transfers of Partnership Interests of General Partner   38 Section 11.03.  
Limited Partners’ Rights to Transfer   38 Section 11.04.   Substituted Limited
Partners   39 Section 11.05.   Assignees   40

  

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        Page           Section 11.06.   General Provisions   40          
ARTICLE XII ADMISSION OF PARTNERS   42 Section 12.01.   Admission of Successor
General Partner   42 Section 12.02.   Admission of Additional Limited Partners  
42 Section 12.03.   Amendment of Agreement and Certificate of Limited
Partnership   43           ARTICLE XIII DISSOLUTION AND LIQUIDATION   43 Section
13.01.   Dissolution   43 Section 13.02.   Winding Up   43 Section 13.03.  
Compliance with Timing Requirements of Regulations   44 Section 13.04.   Deemed
Distribution and Recontribution   45 Section 13.05.   Rights of Limited Partners
  45 Section 13.06.   Notice of Dissolution   45 Section 13.07.   Cancellation
of Certificate of Limited Partnership   45 Section 13.08.   Reasonable Time for
Winding Up   45 Section 13.09.   Waiver of Partition   46 Section 13.10.  
Liability of Liquidator   46           ARTICLE XIV AMENDMENT OF PARTNERSHIP
AGREEMENT; MEETINGS   46 Section 14.01.   Amendments   46 Section 14.02.  
Meetings of the Partners   47           ARTICLE XV GENERAL PROVISIONS   48
Section 15.01.   Addresses and Notice   48 Section 15.02.   Titles and Captions
  48 Section 15.03.   Pronouns and Plurals   48 Section 15.04.   Further Action
  48 Section 15.05.   Binding Effect   49 Section 15.06.   Creditors   49
Section 15.07.   Waiver   49 Section 15.08.   Counterparts   49 Section 15.09.  
Applicable Law   49 Section 15.10.   Invalidity of Provisions   49 Section
15.11.   Power of Attorney   49

 

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        Page           Section 15.12.   Entire Agreement   50 Section 15.13.  
No Rights as Stockholders   50 Section 15.14.   Limitation to Preserve REIT
Status   51

 

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 THIRD AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

GKK CAPITAL LP

 

THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
April 19, 2006 is made by Gramercy Capital Corp., a Maryland corporation, as the
General Partner of and a Limited Partner in the Partnership and each of the
other persons listed on the signature pages hereto, for the purpose of amending
and restating the Second Amended and Restated Agreement of Limited Partnership
of the Partnership dated as of December 14, 2005 by and among the General
Partner, SL Green Operating Partnership, L.P., GKK Manager LLC, and certain
other Persons (as defined below) (the “First Amended and Restated Partnership
Agreement”).

 

WHEREAS, the Partnership desires to modify the distribution and redemption
provisions of the Second Amended and Restated Partnership Agreement applicable
to the Class B Units.

 

WHEREAS, pursuant to Section 14.01.B the General Partner is hereby amending and
restating the Second Amended and Restated Partnership Agreement to reflect the
modification in distribution and redemption provisions applicable to the Class B
Units.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby amend and restate the Second
Amended and Restated Partnership Agreement as follows:

 

ARTICLE I

DEFINED TERMS

 

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

 

“Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §
17-101, et seq., as it may be amended from time to time, and any successor to
such statute.

 

“Additional Limited Partner” means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 12.02 hereof and who is shown as such on the
books and records of the Partnership.

 

“Adjusted Capital Account” means the Capital Account maintained for each Partner
as of the end of each Partnership Year (i) increased by any amounts which such
Partner is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the
items described in Regulations Sections1.704-l(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-l(b)(2)(ii) (d)(6).The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently
therewith.

 

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

 

 

 

 

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

 

“Adjustment Date” has the meaning set forth in Section 4.02.B hereof.

 

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

 

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

 

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

 

“Articles of Incorporation” means the Articles of Incorporation or other
organizational document governing the General Partner, as amended or restated
from time to time.

 

“Assignee” means a Person to whom one or more Partnership Units have been
transferred in a manner permitted under this Agreement, but who has not become a
Substituted Limited Partner, and who has the rights set forth in Section 11.05
hereof.

 

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

 

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

 

“Capital Account” means the Capital Account maintained for a Partner pursuant to
Exhibit B hereto.

 

“Capital Contribution” means, with respect to any Partner, any cash, cash
equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.01 or 4.02 hereof.

 

 

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

 

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

 

“Certificate” means the Certificate of Limited Partnership relating to the
Partnership filed in the office of the Delaware Secretary of State on April 21,
2004, as amended from time to time in accordance with the terms hereof and the
Act.

 

“Class A Unit” means Class A Units of the Partnership.

 

“Class A Unit Economic Balance” has the meaning set forth in Section 6.01.D.

 

“Class B Distribution Percentage” means, as of a particular date, with respect
to SL Green, the SLG Class B Distribution Percentage and, with respect to all
other Persons, the Standard Class B Distribution Percentage.

 

“Class B Unit” means a profits interest issued pursuant to Section 4.02.D.

 

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

 

“Consent” means the consent or approval of a proposed action by a Partner given
in accordance with Section 14.02 hereof.

 

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

 

“Conversion Factor” means 1.0; provided that in the event that the General
Partner Entity (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of
Shares(determined without the above assumption) issued and outstanding on the
record date for such dividend, distribution, subdivision or combination; and
provided, further that in the event that an entity shall cease to be the General
Partner Entity (the “Predecessor Entity”) and another entity shall become the
General Partner Entity (the “Successor Entity”), the Conversion Factor shall be
adjusted by multiplying the Conversion Factor by a

 

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fraction, the numerator of which is the Value of one share of the Predecessor
Entity, determined as of the time immediately prior to when the Successor Entity
becomes the General Partner Entity, and the denominator of which is the Value of
one Share of the Successor Entity determined as of that same date. For purposes
of the second proviso in the preceding sentence, in the event that any
stockholders of the Predecessor Entity will receive consideration in connection
with the transaction in which the Successor Entity becomes the General Partner
Entity, the numerator in the fraction described above for determining the
adjustment to the Conversion Factor(that is, the Value of one Share of the
Predecessor Entity) shall be the sum of the greatest amount of cash and the fair
market value of any securities and other consideration that the holder of one
Share in the Predecessor Entity could have received in such transaction
(determined without regard to any provisions governing fractional shares). Any
adjustment to the Conversion Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for the
event giving rise thereto; it being intended that (x) adjustments to the
Conversion Factor are to be made in order to avoid unintended dilution or
anti-dilution as a result of transactions in which Shares are issued, redeemed
or exchanged without a corresponding issuance, redemption or exchange of
Partnership Units and (y) if a Specified Redemption Date shall fall between the
record date and the effective date of any event of the type described above,
that the Conversion Factor applicable to such redemption shall be adjusted to
take into account such event.

 

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

 

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

 

“Economic Capital Account Balance” has the meaning set forth in Section 6.01.D.

 

“Effective Date” means the date of the closing of the General Partner’s initial
public offering.

 

“Equity Award Agreement” means an equity award agreement entered into between SL
Green and/or SL Green Realty Corp. and a director, officer or employee of the
General Partner, the Manager, SL Green or SL Green Realty Corp. or other Person
pursuant to the SL Green Realty Corp. 2005 Stock Option and Incentive Plan
pursuant to which SL Green or SL Green Realty Corp. transfers Class B Units to
such Person subject to forfeiture to, or repurchase at less than fair market
value by, SL Green or any other Person upon the occurrence of certain events.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

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

 

“Funding Debt” means the incurrence of any Debt by or on behalf of the General
Partner for the purpose of providing funds to the Partnership.

 

“Funds From Operations” means net income available to holders of Partnership
Units (other than Class B Units and preferred Partnership Units, if any, issued
subsequent to the date hereof) computed in accordance with GAAP, excluding gains
(or losses) from sales of property, plus depreciation and amortization on real
estate assets, and after adjustments for unconsolidated partnerships and joint
ventures.

 

“General Partner” means Gramercy Capital Corp., a Maryland corporation, or its
successors as general partner of the Partnership.

 

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

 

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

 

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

 

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

 

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

 

“Incapacity” or “Incapacitated” means, (i) as to any individual Partner, death,
total physical disability or entry by a court of competent jurisdiction
adjudicating such Partner incompetent to manage his or her Person or estate,(ii)
as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter, (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership, (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate’s entire interest in
the Partnership, (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee) or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner’s
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a

 

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trustee, receiver or liquidator for the Partner or for all or any substantial
part of the Partner’s properties, (f) any proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect has not been dismissed within one hundred twenty
(120) days after the commencement thereof, (g) the appointment without the
Partner’s consent or acquiescence of a trustee, receiver or liquidator has not
been vacated or stayed within ninety (90) days of such appointment or (h) an
appointment referred to in clause (g) is not vacated within ninety (90) days
after the expiration of any such stay.

 

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

 

“Limited Partner” means any Person named as a Limited Partner in Exhibit A
attached hereto, as such Exhibit may be amended and restated from time to time,
or any Substituted Limited Partner or Additional Limited Partner, in such
Person’s capacity as a Limited Partner in the Partnership.

 

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

 

“Liquidating Event” has the meaning set forth in Section 13.01 hereof.

 

“Liquidator” has the meaning set forth in Section 13.02.A hereof.

 

“LTIP Units” means the Partnership Units designated as such having the rights,
powers, privileges, restrictions, qualifications and limitations set forth in
Exhibit E hereto.

 

“Manager” means GKK Manager LLC, a Delaware limited liability company.

 

“Management Agreement” means the agreement entered into by and between Gramercy
Capital Corp., a Maryland corporation, GKK Capital LP, a Maryland limited
partnership (the “Operating Partnership”), and GKK Manager LLC, a Delaware
limited liability company.

 

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

 

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

 

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“New Securities” means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase shares of
capital stock (or other comparable equity interest) of the General Partner,
excluding grants under any Stock Option Plan, or (ii) any Debt issued by the
General Partner that provides any of the rights described in clause (i).

 

“Nonrecourse Built-in Gain” means, with respect to any Contributed Properties or
Adjusted Properties that are subject to a mortgage or negative pledge securing a
Nonrecourse Liability, the amount of any taxable gain that would be allocated to
the Partners pursuant to Section 2.B of Exhibit C hereto if such properties were
disposed of in a taxable transaction in full satisfaction of such liabilities
and for no other consideration.

 

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

 

“Nonrecourse Liability” has the meaning set forth in Regulations
Section1.752-1(a)(2).

 

“Notice of Redemption” means a Notice of Redemption substantially in the form of
Exhibit B attached hereto.

 

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

 

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

 

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

 

“Partner Nonrecourse Deductions” has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined
in accordance with the rules of Regulations Section1.704-2(i)(2).

 

“Partnership” means the limited partnership formed under the Act and continued
upon the terms and conditions set forth in this Agreement, and any successor
thereto.

 

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

 

“Partnership Minimum Gain” has the meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net
increase or decrease in Partnership Minimum Gain, for a Partnership Year shall
be determined in accordance with the rules of Regulations Section1.704-2(d).

 

“Partnership Record Date” means the record date established by the General
Partner either (i) for distributions pursuant to Section 5.01 hereof, which
record date shall be the same as the record date established by the General
Partner Entity for a distribution to its stockholders of some or all of its
portion of such distribution received by the General Partner if the shares of
common stock (or comparable equity interests) of the General Partner Entity are
Publicly Traded, or (ii) if applicable, for determining the

 

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Partners entitled to vote on or consent to any proposed action for which the
consent or approval of the Partners is sought pursuant to Section14.02 hereof.

 

“Partnership Unit” means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.01 and 4.02 hereof, and
includes Class A Units, Class B Units, LTIP Units and any other classes or
series of Partnership Units established after the date hereof. The number of
Partnership Units outstanding and the Percentage Interests represented by such
Partnership Units are set forth in Exhibit A hereto, as such Exhibit may be
amended and restated from time to time. The ownership of Partnership Units may
be evidenced by a certificate in a form approved by the General Partner.

 

“Partnership Year” means the fiscal year of the Partnership, which shall be the
calendar year.

 

“Percentage Interest” means, as to a Partner holding a class of Partnership
Interests, its interest in such class, determined by dividing the Partnership
Units of such class owned by such Partner by the total number of Partnership
Units of such class then outstanding as specified in Exhibit A attached hereto,
as such exhibit may be amended and restated from time to time, multiplied by the
aggregate Percentage Interest allocable to such class of Partnership Interests.

 

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

 

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

 

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

 

“Recapture Income” means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 743 of the Code) upon the
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.

 

“Redeeming Partner” has the meaning set forth in Section 8.06.A hereof.

 

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

 

“Redemption Right” has the meaning set forth in Section 8.06.A hereof.

 

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

 

8

 

 

“REIT” means a real estate investment trust under Section 856 of the Code.

 

“REIT Requirements” has the meaning set forth in Section 5.01.A hereof.

 

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

 

“Safe Harbor” has the meaning set forth in Section 11.06.F hereof.

 

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

 

“704(c) Value” of any Contributed Property means the fair market value of such
property at the time of contribution as determined by the General Partner using
such reasonable method of valuation as it may adopt. Subject to Exhibit B
hereto, the General Partner shall, in its sole and absolute discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate of the
704(c) Values of Contributed Properties in a single or integrated transaction
among each separate property on a basis proportional to their fair market
values.

 

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

 

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

 

“SL Green” means SL Green Operating Partnership, L.P., a Delaware limited
partnership.

 

“SLG Class B Distribution Percentage” means, as of a particular date, the
percentage obtained by dividing (i) 81.58 minus the number of Class B Units
transferred by SL Green to other Persons after December 14, 2005 and on or
before such date (other than Unvested Award Class B Units) and the number of
Vested Award Class B Units plus the number of Class B Units acquired by SL Green
from other Persons after December 14, 2005 and on or before such date (other
than Unvested Award Class B Units forfeited to, or repurchased at less than fair
market value by, SL Green pursuant to an Equity Award Agreement) by (ii) the
aggregate number of Class B Units outstanding as of such date.

 

“Specially Distributed Assets” has the meaning set forth in Section 7.05.A
hereof.

 

9

 

 

“Specified Redemption Date” means the tenth Business Day after receipt by the
General Partner of a Notice of Redemption; provided that, if the Shares are not
Publicly Traded, the Specified Redemption Date means the thirtieth Business Day
after receipt by the General Partner of a Notice of Redemption.

 

“Standard Class B Distribution Percentage” means, with respect to a Person as of
a particular date, the percentage obtained by dividing the number of Class B
Units held by such Person (other than Unvested Award Class B Units) by the
aggregate number of Class B Units outstanding as of such date.

 

“Stock Option Plan” means any stock incentive plan of the General Partner, the
Partnership or any Affiliate of the Partnership or the General Partner.

 

“Stockholders Equity” means the aggregate gross proceeds from all sales of
Partnership Units (other than Class B Units and preferred Partnership Units, if
any, issued subsequent to the date hereof).

 

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

 

“Substituted Limited Partner” means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.04 hereof.

 

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

 

“Terminating Capital Transaction” means any sale or other disposition of all or
substantially all of the assets of the Partnership for cash or a related series
of transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership for cash.

 

“Termination Transaction” has the meaning set forth in Section 11.02.B hereof.

 

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

 

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

 

“Unvested Award Class B Unit” means any Class B Unit that has been transferred
by SL Green or SL Green Realty Corp. to another Person pursuant to an Equity
Award Agreement and remains subject to forfeiture to, or repurchase at less than
fair market value by, SL Green or any other Person pursuant to such Equity Award
Agreement.

 

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

 

“Value” means, with respect to any outstanding Shares of the General Partner
Entity that are Publicly Traded, the average of the daily market price for the
ten (10) consecutive trading days immediately preceding the date with respect to
which value must be determined or, if such date is not a Business Day, the
immediately preceding Business Day. The market price for each such trading day
shall

 

10

 

 

be the closing price, regular way, on such day, or if no such sale takes place
on such day, the average of the closing bid and asked prices on such day. In the
event that the outstanding Shares of the General Partner Entity are Publicly
Traded and the Shares Amount includes rights that a holder of Shares would be
entitled to receive, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event that the Shares of the General Partner Entity are not Publicly Traded, the
Value of the Shares Amount per Partnership Unit offered for redemption (which
will be the Cash Amount per Partnership Unit offered for redemption payable
pursuant to Sections 8.06 and 8.07 hereof) means the amount that a holder of one
Partnership Unit would receive if each of the assets of the Partnership were to
be sold for its fair market value on the Specified Redemption Date, the
Partnership were to pay all of its outstanding liabilities, and the remaining
proceeds were to be distributed to the Partners in accordance with the terms of
this Agreement. Such Value shall be determined by the General Partner, acting in
good faith and based upon a commercially reasonable estimate of the amount that
would be realized by the Partnership if each asset of the Partnership (and each
asset of each Partnership, limited liability company, joint venture or other
entity in which the Partnership owns a direct or indirect interest) were sold to
an unrelated purchaser in an arms’ length transaction where neither the
purchaser nor the seller were under economic compulsion to enter into the
transaction (without regard to any discount in value as a result of the
Partnership’s minority interest in any property or any illiquidity of the
Partnership’s interest in any property). In connection with determining the
value of the Partnership Interest for purposes of determining the number of
additional Partnership Units issuable upon a Capital Contribution funded by an
underwritten public offering of shares of capital stock (or other comparable
equity interest) of the General Partner, the Value of such shares shall be the
public offering price per share of such class of the capital stock (or other
comparable equity interest) sold.

 

“Vested Award Class B Unit” means any Class B Unit that has been transferred by
SL Green or SL Green Realty Corp. to another Person pursuant to an Equity Award
Agreement and is no longer subject to forfeiture to, or repurchase at less than
fair market value by, SL Green or any other Person pursuant to such Equity Award
Agreement (except for a Class B Unit that was forfeited to, or repurchased at
less than fair market value by, SL Green or another Person pursuant to an Equity
Award Agreement).

 

ARTICLE II

ORGANIZATIONAL MATTERS

 

Section 2.01.          Organization

 

The Partnership is a limited partnership organized pursuant to the provisions of
the Act and upon the terms and conditions set forth in the Agreement. Except as
expressly provided herein to the contrary, the rights and obligations of the
Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.

 

Section 2.02.          Name

 

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

 

11

 

 

Section 2.03.          Registered Office and Agent; Principal Office

 

The address of the registered office of the Partnership in the State of Delaware
shall be located at 9 East Loockerman Street, Suite #1B in the City of Dover,
County of Kent, Delaware 19901 and the registered agent for service of process
on the Partnership in the State of Delaware at such registered office shall be
National Registered Agents, Inc. The principal office of the Partnership shall
be 420 Lexington Avenue, New York, New York, 10170 or such other place as the
General Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other place or places
within or outside the State of Delaware as the General Partner deems advisable.

 

Section 2.04.          Term

 

The term of the Partnership commenced on April 21, 2004, the date on which the
Certificate was filed in the office of the Secretary of State of the State of
Delaware in accordance with the Act, and shall continue until December 31, 2103,
unless it is dissolved sooner pursuant to the provisions of Article XIII hereof
or as otherwise provided by law.

 

ARTICLE III

PURPOSE

 

Section 3.01.          Purpose and Business

 

The purpose and nature of the business to be conducted by the Partnership is (i)
to conduct any business that may be lawfully conducted by a limited partnership
organized pursuant to the Act; provided, however, that such business shall be
limited to and conducted in such a manner as to permit the General Partner
Entity at all times to be classified as a REIT, unless the General Partner
ceases to qualify or is not qualified as a REIT for any reason or reasons not
related to the business conducted by the Partnership; (ii) to enter into any
partnership, joint venture, limited liability company or other similar
arrangement to engage in any of the foregoing or the ownership of interests in
any entity engaged, directly or indirectly, in any of the foregoing; and (iii)
to do anything necessary or incidental to the foregoing. In connection with the
foregoing, the Partners acknowledge that the status of the General Partner
Entity as a REIT inures to the benefit of all the Partners and not solely the
General Partner or its Affiliates.

 

Section 3.02.          Powers

 

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

 

12

 

 

Section 3.03.          Partnership Only for Purposes Specified

 

The Partnership shall be a partnership only for the purposes specified in
Section 3.01 above, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.01 above.

 

ARTICLE IV

CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS

 

Section 4.01.          Capital Contributions of the Partners

 

A.    Capital Contributions. Prior to the date hereof, certain Partners made
Capital Contributions to the Partnership. Exhibit A hereto reflects the Capital
Contributions made by each Partner, the Partnership Units assigned to each
Partner and the Percentage Interest in the Partnership represented by such
Partnership Units. The Capital Accounts of the Partners and the Carrying Values
of the Partnership’s Assets have been and will continue to be determined
pursuant to Section I.D of Exhibit B hereto to reflect the Capital Contributions
made.

 

B.     General Partnership Interest. A number of Partnership Units held by the
General Partner equal to one percent (1%) of all outstanding Partnership Units
shall be deemed to be the General Partnership Interest. All other Partnership
Units held by the General Partner shall be deemed to be Limited Partner
Interests and shall be held by the General Partner in its capacity as a Limited
Partner in the Partnership.

 

C.     Capital Contributions By Merger. To the extent the Partnership acquires
any property by the merger of any other Person into the Partnership, Persons who
receive Partnership Interests in exchange for their interests in the Person
merging into the Partnership shall become Partners and shall be deemed to have
made Capital Contributions as provided in the applicable merger agreement and as
set forth in Exhibit A hereto.

 

D.    No Obligation to Make Additional Capital Contributions. Except as provided
in Sections 7.05 and 10.05 hereof, the Partners shall have no obligation to make
any additional Capital Contributions or provide any additional funding to the
Partnership (whether in the form of loans, repayments of loans or otherwise). No
Partner shall have any obligation to restore any deficit that may exist in its
Capital Account, either upon a liquidation of the Partnership or otherwise.

 

Section 4.02.          Issuances of Partnership Interests

 

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

 

13

 

 

upon dissolution and liquidation of the Partnership; provided, that no such
Partnership Units or other Partnership Interests shall be issued to the General
Partner unless either (a) the Partnership Interests are issued in connection
with the grant, award or issuance of Shares or other equity interests in the
General Partner having designations, preferences and other rights such that the
economic interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other rights (except
voting rights) of the additional Partnership Interests issued to the General
Partner in accordance with this Section 4.02.A or (b) the Partnership Interests
are issued to all Partners holding Partnership Interests in the same class in
proportion to their respective Percentage Interests in such class. In the event
that the Partnership issues Partnership Interests pursuant to this Section
4.02.A, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Section 5.04, Section
6.02 and Section 8.06 hereof) as it deems necessary to reflect the issuance of
such additional Partnership Interests.

 

B.     Percentage Interest Adjustments in the Case of Capital Contributions for
Class A Units. Upon the acceptance of additional Capital Contributions in
exchange for Class A Units, the Percentage Interest related thereto shall be
equal to a fraction, the numerator of which is equal to the amount of cash, if
any, plus the Agreed Value of Contributed Property, if any, contributed with
respect to such additional Partnership Units and the denominator of which is
equal to the sum of (i) value of the Partnership Interests for all outstanding
Class A Units (computed as of the Business Day immediately preceding the date on
which the additional Capital Contributions are made (an “Adjustment Date”)) plus
(ii) the aggregate amount of additional Capital Contributions contributed to the
Partnership on such Adjustment Date in respect of such additional Class A Units.
The Percentage Interest of each other Partner holding Class A Units not making a
full pro rata Capital Contribution shall be adjusted to a fraction the numerator
of which is equal to the sum of (i) the value of such Limited Partner (computed
as of the Business Day immediately preceding the Adjustment Date) plus (ii) the
amount of additional Capital Contributions (such amount being equal to the
amount of cash, if any, plus the Agreed Value of Contributed Property, if any,
so contributed), if any, made by such Partner to the Partnership in respect of
such Class A Units as of such Adjustment Date and the denominator of which is
equal to the sum of (i) the value of the outstanding Class A Units (computed as
of the Business Day immediately preceding such Adjustment Date) plus (ii) the
aggregate amount of the additional Capital Contributions contributed to the
Partnership on such Adjustment Date in respect of such additional Class A Units.
For purposes of calculating a Partner’s Percentage Interest of Class A Units
pursuant to this Section 4.02.B, cash Capital Contributions by the General
Partner will be deemed to equal the cash contributed by the General Partner plus
(a) in the case of cash contributions funded by an offering of any equity
interests in or other securities of the General Partner, the offering costs
attributable to the cash contributed to the Partnership, and (b) in the case of
Class A Units issued pursuant to Section 7.05.E hereof, an amount equal to the
difference between the Value of the Shares sold pursuant to any Stock Option
Plan and the net proceeds of such sale.

 

C.     Classes of Partnership Units. From and after the Effective Date, subject
to Section 4.02.A above, the Partnership shall have two classes of Partnership
Units, entitled “Class A Units” and “Class B Units.” From and after December 14,
2005, the Partnership shall have an additional class of Partnership Units,
entitled “LTIP Units.” Class A Units may be issued to newly admitted Partners in
exchange for the contribution by such Partners of cash, real estate partnership
interests, stock, notes or other assets or consideration.

 

D.    Issuance of Class B Units. On the Effective Date, the General Partner
issued 100 Class B Units to the Manager. The Manager immediately assigned 85 of
such Units to SL Green, which assignment was reflected on Exhibit A. There was
no obligation to contribute any capital in connection until issuance of the
Class B Units. The initial Capital Accounts of the Holders of the Class B Units
in respect of such Units was zero. All Class B Units issued under this Agreement
are intended to qualify as “profits interests” under Revenue Procedure 93-27,
1993-2 C.B. 343 (June 9, 1993) and Revenue

 

14

 

 

Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001), and this Section 4.02.D
shall be interpreted and applied consistently therewith. The General Partner at
its discretion may amend this Section 4.02.D to ensure that any Class B Units
granted after the date of this Agreement will qualify as “profits interests”
under Revenue Procedure 93-27, 1993-2 C.B. 343 (June 9, 1993) and Revenue
Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001) (and any other similar
rulings or regulations that may be in effect at such time).

 

E.     Issuance of LTIP Units. From time to time the General Partner may issue
LTIP Units to Persons providing services to or for the benefit of the
Partnership. LTIP Units shall have the rights, powers, privileges, restrictions,
qualifications and limitations specified in Exhibit E hereto. LTIP Units are
intended to qualify as profits interests in the Partnership and for the
avoidance of doubt, the provisions of Section 4.04 shall not apply to the
issuance of LTIP Units.

 

Section 4.03.          No Preemptive Rights

 

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

 

Section 4.04.          Other Contribution Provisions

 

In the event that any Partner is admitted to the Partnership and is given a
Capital Account in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as if
the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.

 

Section 4.05.          No Interest on Capital

 

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

 

ARTICLE V

DISTRIBUTIONS

 

Section 5.01.          Requirement and Characterization of Distributions

 

A.    General. Except as otherwise provided herein, the General Partner shall
make distributions at such times and in such amounts as it may determine. Such
distributions shall be made to the Partners who are Partners on the Partnership
Record Date for such distribution. Notwithstanding anything to the contrary
contained herein, in no event may a Partner receive a distribution with respect
to a Partnership Unit for a quarter or shorter period if such Partner is
entitled to receive a distribution relating to such period with respect to a
Share for which such Partnership Unit has been redeemed or exchanged. Unless
otherwise expressly provided for herein or in an agreement at the time a new
class of Partnership Interests is created in accordance with Article IV hereof,
no Partnership Interest shall be entitled to a distribution in preference to any
other Partnership Interest. The General Partner shall make such reasonable
efforts, as determined by it in its sole and absolute discretion and consistent
with the qualification of the General Partner Entity as a REIT, to make
distributions (a) to Limited Partners so as to preclude any such distribution or
portion thereof from being treated as part of a sale of property by a Limited
Partner under Section 707 Code or the Regulations thereunder; provided that, the
General Partner and the Partnership

 

15

 

 

shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated, and (b) to the
General Partner in an amount sufficient to enable the General Partner Entity to
pay stockholder dividends that will (1) satisfy the requirements for
qualification as a REIT under the Code and the Regulations (the “REIT
Requirements”) and (2) avoid any federal income or excise tax liability for the
General Partner Entity.

 

B.     Method. Distributions shall be made (i) first, to the holders of Class B
Units as provided in Section 5.01.C hereof, and to each other holder of a
Partnership Interest that is entitled to any preference in distribution, in
accordance with the rights of any such class of Partnership Interests, and (ii)
thereafter, to the holders of Class A Units and each other class of Partnership
Interests ranking in parity to the Class A Units (including, without limitation,
the LTIP Units if and to the extent they are then entitled to participate in
such distributions pursuant to Section 2 of Exhibit E hereto), in proportion to
the relative Percentage Interests of each such class of Partnership Interests.
All distributions within a class of Partnership Units shall be pro rata in
proportion to the respective Percentage Interests on the applicable Partnership
Record Date.

 

C.     Distributions When Class B Units Are Outstanding. Holders of Class B
Units shall receive quarterly distributions for each calendar quarter (or
portion thereof) in an aggregate amount equal to 25% of the amount, if any, by
which (i) the sum of Funds From Operations plus any gains (or losses) from debt
restructuring or property sales exceeds (ii) the product of the Partnership’s
weighted average Stockholders Equity multiplied by 2.375% (such percentage to be
prorated for any partial quarter). These distributions shall be paid to Holders
of Class B Units within 45 days after the end of each quarter. These
distributions shall be recalculated at the end of each calendar year beginning
with 2004, as 25% of the amount by which (A) annual Funds From Operations plus
any gains (or losses) from debt restructuring and gains (or losses) or property
sales for such calendar year (or part thereof) exceeds (B) the Partnership’s
weighted average Stockholders Equity for such year multiplied by 9.5% (such
percentage to be prorated for any partial year). To the extent quarterly
distributions exceed the annual recalculated amount, the Holders of Class B
Units shall refund the excess to the Partnership, and to the extent the annual
recalculated amount exceeds the quarterly distributions made for such year, such
excess shall be paid by the Partnership to such Holders within 90 days after the
end of such calendar year. Distributions (and any refunds of distributions) made
pursuant to this Section 5.01.C shall be apportioned, subject to Section 5.01.D,
among the holders of Class B Units pro rata in accordance with their Class B
Distribution Percentages, determined as of the date of such distribution (or, in
the case of any refund, as of the date of the distribution(s) with respect to
which such refund is attributable).

 

D.    Class B Units Intended to Qualify as Profits Interests. Distributions made
pursuant to this Section 5.01 shall be adjusted as necessary to ensure that the
amount apportioned to each Class B Unit does not exceed the amount attributable
to items of Partnership income or gain realized after the date such Class B Unit
was issued by the Partnership. The intent of this Section 5.01.D is to ensure
that any Class B Units issued after the date of this Agreement qualify as
“profits interests” under Revenue Procedure 93-27, 1993-2 C.B. 343 (June 9,
1993) and Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001), and
Section 5.01 shall be interpreted and applied consistently therewith. The
General Partner at its discretion may amend this Section 5.01.D to ensure that
any Class B Units granted after the date of this Agreement will qualify as
“profits interests” under Revenue Procedure 93-27, 1993-2 C.B. 343 (June 9,
1993) and Revenue Procedure 2001-43, 2001-2 C.B. 191 (August 3, 2001) (and any
other similar rulings or regulations that may be in effect at such time).

 

16

 

 

Section 5.02.          Amounts Withheld

 

All amounts withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.05 hereof with respect to any allocation, payment
or distribution to the General Partner, the Limited Partners or Assignees shall
be treated as amounts distributed to the General Partner, Limited Partners or
Assignees pursuant to Section 5.01 above for all purposes under this Agreement.

 

Section 5.03.          Distributions Upon Liquidation

 

Proceeds from a Terminating Capital Transaction shall be distributed to the
Partners in accordance with Section 13.02 hereof.

 

Section 5.04.          Revisions to Reflect Issuance of Additional Partnership
Interests

 

In the event that the Partnership issues additional Partnership Interests to the
General Partner or any Additional Limited Partner pursuant to Article IV hereof,
the General Partner shall make such revisions to this Article V as it deems
necessary to reflect the issuance of such additional Partnership Interests. Such
revisions shall not require the consent or approval of any other Partner.

 

ARTICLE VI

ALLOCATIONS

 

Section 6.01.          Allocations For Capital Account Purposes

 

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

 

A.    Net Income. After giving effect to the special allocations set forth in
Section 1 of Exhibit C hereto, Net Income shall be allocated (i) first, to the
General Partner to the extent that Net Losses previously allocated to the
General Partner, on a cumulative basis, pursuant to the last sentence of Section
6.01.B below exceed Net Income previously allocated to the General Partner, on a
cumulative basis, pursuant to this clause (i) of Section 6.01.A, (ii) second, to
Holders of Class B Units and to the holders of any other Partnership Interests
that are entitled to any preference in distribution in accordance with the
rights of any such class of Partnership Interests until each such Partnership
Interest has been allocated, on a cumulative basis pursuant to this clause (ii),
Net Income equal to the sum of the amount of distributions theretofore received
(or to be received with respect to the fiscal year of the Partnership in which
such Net Income accrues) with respect to such Partnership Interests pursuant to
clause (i) of Section 5.01.B hereof and the amount of any prior allocations of
Net Losses to such class of Partnership Interests pursuant to Section 6.01.B.(i)
below (and, within such class, pro rata in proportion to the respective
interests in such class as of the last day of the period for which such
allocation is being made) and (iii) third, with respect to Partnership Interests
that are not entitled to any preference in the allocation of Net Income, pro
rata to each such class in accordance with the terms of such class (and, within
such class, pro rata in proportion to the respective interests in such class as
of the last day of the period for which such allocation is being made).

 

B.     Net Losses. After giving effect to the special allocations set forth in
Section 1 of Exhibit C hereto, Net Losses shall be allocated (i) first, to the
Holders of Class B Units and to holders of any other Partnership Interests that
are entitled to any preference in distribution in accordance with the rights of
any

 

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such class of Partnership Interests to the extent that any prior allocations of
Net Income to such class of Partnership Interests pursuant to Section 6.01.A
(1)(ii) above exceed, on a cumulative basis, distributions theretofore received
(or to be received with respect to the fiscal year of the Partnership in which
such Net Income accrues) with respect to such Partnership Interests pursuant to
clause (i) of Section 5.01.B hereof (and, within such class, pro rata in
proportion to the respective interests in such class as of the last day of the
period for which such allocation is being made) and (ii) second, with respect to
classes of Partnership Interests that are not entitled to any preference in
distribution, pro rata to each such class in accordance with the terms of such
class (and, within such class, pro rata in proportion to the respective
interests in such class as of the last day of the period for which such
allocation is being made); provided that, Net Losses shall not be allocated to
any Limited Partner pursuant to this Section 6.01.B to the extent that such
allocation would cause such Limited Partner to have an Adjusted Capital Account
Deficit (or increase any existing Adjusted Capital Account Deficit) at the end
of such taxable year (or portion thereof). All Net Losses in excess of the
limitations set forth in this Section 6.01.B shall be allocated to the General
Partner.

 

C.     Recapture Income. Any gain allocated to the Partners upon the sale or
other taxable disposition of any Partnership asset shall, to the extent possible
after taking into account other required allocations of gain pursuant to Exhibit
C hereto, be characterized as Recapture Income in the same proportions and to
the same extent as such Partners have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as Recapture Income.

 

D.    Special Allocations. With Respect to LTIP Units. After giving effect to
the special allocations set forth in Section 1 of Exhibit C hereto, and
notwithstanding the provisions of Sections 6.01.A and 6.01.B above, but subject
to the prior allocation of income and gain under clauses 6.01.A (i) and (ii)
above, any Liquidating Gains shall first be allocated to the holders of LTIP
Units until the Economic Capital Account Balances of such holders, to the extent
attributable to their ownership of LTIP Units, are equal to (i) the Class A Unit
Economic Balance, multiplied by (ii) the number of their LTIP Units; provided
that no such Liquidating Gains will be allocated with respect to any particular
LTIP Unit unless and to the extent that such Liquidating Gains, when aggregated
with other Liquidating Gains realized since the issuance of such LTIP Unit,
exceed Liquidating Losses realized since the issuance of such LTIP Unit. After
giving effect to the special allocations set forth in Section 1 of Exhibit C
hereto, and notwithstanding the provisions of Sections 6.01.A and 6.01.B above,
in the event that, due to distributions with respect to Class A Units in which
the LTIP Units do not participate or otherwise, the Economic Capital Account
Balance of any present or former holder of LTIP Units, to the extent
attributable to the holder’s ownership of LTIP Units, exceeds the target balance
specified above, then Liquidating Losses shall be allocated to such holder to
the extent necessary to reduce or eliminate the disparity. In the event that
Liquidating Gains or Liquidating Losses are allocated under this Section 6.01.D,
Net Income allocable under clause 6.01.A (iii) and any Net Losses shall be
recomputed without regard to the Liquidating Gains or Liquidating Losses so
allocated. For this purpose, “Liquidating Gains” means any net capital gain
realized in connection with the actual or hypothetical sale of all or
substantially all of the assets of the Partnership, including but not limited to
net capital gain realized in connection with an adjustment to the Carrying Value
of Partnership assets under Section 1.D of Exhibit B to this Agreement.
Similarly, “Liquidating Losses” means any net capital loss realized in
connection with any such event. The “Economic Capital Account Balances” of the
holders of LTIP Units will be equal to their Capital Account balances, plus the
amount of their shares of any Partner Minimum Gain or Partnership Minimum Gain,
in either case to the extent attributable to their ownership of LTIP Units.
Similarly, the “Class A Unit Economic Balance” shall mean (i) the Capital
Account balance of the General Partner, plus the amount of the General Partner’s
share of any Partner Minimum Gain or Partnership Minimum Gain, in either case to
the extent attributable to the General Partner’s ownership of Class A Units and
computed on a hypothetical basis after taking into account all allocations
through the date on which any allocation is made under this Section 6.01.D,
divided by (ii) the number of the General

 

18

 

 

Partner’s Class A Units. Any such allocations shall be made among the holders of
LTIP Units in proportion to the amounts required to be allocated to each under
this Section 6.01.D. The parties agree that the intent of this Section 6.01.D is
to make the Capital Account balance associated with each LTIP Unit economically
equivalent to the Capital Account balance associated with the General Partner’s
Class A Units (on a per-unit basis), but only if the Partnership has recognized
cumulative net gains with respect to its assets since the issuance of the
relevant LTIP Unit.

 

Section 6.02.          Revisions to Allocations to Reflect Issuance of
Additional Partnership Interests

 

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

 

ARTICLE VII

MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section 7.01.          Management

 

A.    Powers of General Partner. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership are and shall be exclusively vested in the General Partner, and no
Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Limited Partners with or without cause;
provided, however, that if the Shares (or comparable equity securities) of the
General Partner Entity are not Publicly Traded, the General Partner maybe
removed with cause with the Consent of the Limited Partners. In addition to the
powers now or hereafter granted a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Sections 7.06 and
7.11 below, shall have full power and authority to do all things deemed
necessary or desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.02 hereof and to effectuate the
purposes set forth in Section 3.01 hereof, including, without limitation:

 

(1)  the making of any expenditures, the lending or borrowing of money or will
permit the General Partner Entity (as long as the General Partner Entity
qualifies as a REIT) to avoid the payment of any federal income tax (including,
for this purpose, any excise tax pursuant to Section 4981 of the Code) and to
make distributions to its stockholders sufficient to permit the General Partner
Entity to maintain REIT status, the assumption or guarantee of, or other
contracting for, indebtedness and other liabilities, the issuance of evidences
of indebtedness (including the securing of same by mortgage, deed of trust or
other lien or encumbrance on the Partnership’s assets) and the incurring of any
obligations the General Partner deems necessary for the conduct of the
activities of the Partnership;

 

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

 

19

 

 

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

 

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

 

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

 

(6)  the mortgage, pledge, encumbrance or hypothecation of any assets of the
Partnership, and the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the terms of this
Agreement and on any terms it sees fit, including, without limitation, the
financing of the conduct or the operations of the General Partners or the
Partnership, the lending of funds to other Persons (including, without
limitation, any Subsidiaries of the Partnership) and the repayment of
obligations of the Partnership, any of its Subsidiaries and any other Person in
which it has an equity investment;

 

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

 

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

 

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

 

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

 

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

 

(12)         the formation of, or acquisition of an interest (including
non-voting interests in entities controlled by Affiliates of the Partnership or
third parties) in, and the contribution of property to, any further limited or
general partnerships, joint ventures, limited liability companies or other
relationships that it deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of funds or property, or the
making of loans, to its Subsidiaries

 

20

 

 

and any other Person in which it has an equity investment from time to time or
the incurrence of indebtedness on behalf of such Persons or the guarantee of
obligations of such Persons); provided that, as long as the General Partner has
determined to qualify as a REIT, the Partnership may not engage in any such
formation, acquisition or contribution that would cause the General Partner to
fail to qualify as a REIT);

 

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

 

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

 

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

 

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

 

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

 

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

 

(19)         the distribution of cash to acquire Partnership Units held by a
Limited Partner in connection with a Limited Partner’s exercise of its
Redemption Right under Section 8.06 hereof; and

 

(20)         the amendment and restatement of Exhibit A hereto to reflect
accurately at all times the Capital Contributions and Percentage Interests of
the Partners as the same are adjusted from time to time to the extent necessary
to reflect redemptions, Capital Contributions, the issuance of Partnership
Units, the admission of any Additional Limited Partner or any Substituted
Limited Partner or otherwise, which amendment and restatement, notwithstanding
anything in this Agreement to the contrary, shall not be deemed an amendment of
this Agreement, as long as the matter or event being reflected in Exhibit A
hereto otherwise is authorized by this Agreement.

 

B.     No Approval by Limited Partners. Except as provided in Section 7.11
below, each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned

 

21

 

 

agreements and transactions on behalf of the Partnership without any further
act, approval or vote of the Partners, notwithstanding any other provision of
this Agreement, the Act or any applicable law, rule or regulation, to the full
extent permitted under the Act or other applicable law. The execution, delivery
or performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the Partnership
or the Limited Partners or any other Persons under this Agreement or of any duty
stated or implied by law or equity.

 

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

 

D.    Working Capital and Other Reserves. At all times from and after the date
hereof, the General Partner may cause the Partnership to establish and maintain
working capital reserves in such amounts as the General Partner, in its sole and
absolute discretion, deems appropriate and reasonable from time to time,
including upon liquidation of the Partnership pursuant to Section 13.02 hereof.

 

E.     No Obligations to Consider Tax Consequences of Limited Partners.

 

In exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner (including the General Partner) of any action taken (or not taken) by
it. The General Partner and the Partnership shall not have liability to a
Limited Partner for monetary damages or otherwise for losses sustained,
liabilities incurred or benefits not derived by such Limited Partner in
connection with such decisions, provided that the General Partner has acted in
good faith and pursuant to its authority under this Agreement.

 

Section 7.02.          Certificate of Limited Partnership

 

The General Partner has previously filed the Certificate with the Secretary of
State of Delaware. To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or other jurisdiction in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.05.A (4) hereof, the General Partner shall not be required, before
or after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, the District of Columbia or other jurisdiction in which the
Partnership may elect to do business or own property.

 

Section 7.03.          Title to Partnership Assets

 

Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partners, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby declares
and warrants that any Partnership assets for which legal title is held in the
name

 

22

 

 

of the General Partner or any nominee or Affiliate of the General Partner shall
be held by the General Partner for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.

 

Section 7.04.          Reimbursement of the General Partner

 

A.    No Compensation. Except as provided in this Section 7.04 and elsewhere in
this Agreement (including the provisions of Articles V and VI hereof regarding
distributions, payments and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.

 

B.     Responsibility for Partnership Expenses. The Partnership shall be
responsible for and shall pay all expenses relating to the Partnership’s
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the management and administration of any Subsidiaries of the General Partner or
the Partnership or Affiliates of the Partnership such as auditing expenses and
filing fees); provided that, the amount of any such reimbursement shall be
reduced by (i) any interest earned by the General Partner with respect to bank
accounts or other instruments or accounts held by it as permitted in Section
7.05.A below and (ii) any amount derived by the General Partner from any
investments permitted in Section 7.05.A below; and, provided further, that the
General Partner shall not be reimbursed for (i) income tax liabilities or (ii)
filing or similar fees in connection with maintaining the General Partner’s
continued corporate existence that are incurred by the General Partner. The
General Partner shall determine in good faith the amount of expenses incurred by
it related to the ownership and operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the benefit of
the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such a
manner as the General Partner in its sole and absolute discretion deems fair and
reasonable. Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.03.C hereof and as a result of
indemnification pursuant to Section 7.07 below. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as expenses of
the Partnership incurred on its behalf, and not as expenses of the General
Partner.

 

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

 

D.    Reimbursement not a Distribution. If and to the extent any reimbursement
made pursuant to this Section 7.04 is determined for federal income tax purposes
not to constitute a payment of expenses of the Partnership, the amount so
determined shall be treated as a distribution to the General Partner and there
shall be a corresponding special allocation of gross income to the General
Partner, for purposes of computing the Partners’ Capital Accounts.

 

23

 

 

Section 7.05.          Outside Activities of the General Partner

 

A.            General. Notwithstanding anything in this Agreement to the
contrary, it is expressly understood and agreed that the General Partner may, if
it determines such action to be in the best interests of the REIT or the
Partnership, elect to cause some or all of the assets of the Partnership
(including cash expected to be utilized to purchase assets that will be so held)
to be distributed to and held directly by the General Partner (the “Specially
Distributed Assets”). Concurrently with any such distribution, the General
Partner shall (i) amend Section 5.01 of this Agreement so as to provide that,
from and after the date of such distribution, each Partner other than the
General Partner will receive the same distributions that it would have received
had the Specially Distributed Assets been held by the Partnership rather than
directly by the General Partner (and a corresponding adjustment shall be made to
the distributions to be made to the General Partner); and (ii) make such further
amendments to this Agreement (including, without limitation, to the income and
loss allocation provisions of Section 6.01 hereof) as may be necessary or
appropriate to effect the intention of the parties that the Partners be placed,
as nearly as possible, in the same position they would have been in had such
Specially Distributed Assets been held by the Partnership rather than directly
by the General Partner; provided, however, that the General Partner shall in no
event be required to make contributions to the Partnership to fund distributions
to the other Partners.

 

B.     Repurchase of Shares. In the event the General Partner exercises its
rights under the Articles of Incorporation to purchase Shares or otherwise
elects to purchase from its stockholders Shares in connection with a stock
repurchase or similar program or for the purpose of delivering such shares to
satisfy an obligation under any dividend reinvestment or stock purchase program
adopted by the General Partner, any employee stock purchase plan adopted by the
General Partner or any similar obligation or arrangement undertaken by the
General Partner in the future, then the General Partner shall cause the
Partnership to purchase from the General Partner that number of Partnership
Units of the appropriate class equal to the product obtained by multiplying the
number of Shares purchased by the General Partner times a fraction, the
numerator of which is one and the denominator of which is the Conversion Factor,
on the same terms and for the same aggregate price that the General Partner
purchased such Shares.

 

C.     Forfeiture of Shares. In the event the Partnership or the General Partner
acquires Shares as a result of the forfeiture of such Shares under a restricted
or similar share plan, then the General Partner shall cause the Partnership to
cancel that number of Partnership Units of the appropriate class equal to the
number of Shares so acquired divided by the Conversion Factor, and, if the
Partnership acquired such Shares, it shall transfer such Shares to the General
Partner for cancellation.

 

D.    Issuances of Shares. After the Effective Date, the General Partner shall
not grant, award, or issue any additional Shares (other than Shares issued
pursuant to Section 8.06 hereof or pursuant to a dividend or distribution
(including any stock split) of Shares to all of its stockholders), other equity
securities of the General Partner or New Securities unless (i) the General
Partner shall cause, pursuant to Section 4.02.A hereof, the Partnership to issue
to the General Partner Partnership Interests or rights, options, warrants or
securities of the Partnership having designations, preferences and other rights,
all such that the economic interests are substantially the same as those of such
additional Shares, other equity securities or New Securities, as the case may
be, and (ii) the General Partner transfers to the Partnership, as an additional
Capital Contribution, the proceeds from the grant, award, or issuance of such
additional Shares, other equity securities or New Securities, as the case may
be, or from the exercise of rights contained in such additional Shares, other
equity securities or New Securities, as the case may be. Without limiting the
foregoing, the General Partner is expressly authorized to issue additional
Shares, other equity securities or New Securities, as the case maybe, for less
than fair market value, and the General Partner is expressly authorized,
pursuant to Section 4.02.A hereof, to cause the Partnership to issue to the
General Partner corresponding Partnership Interests, as long as (a) the General
Partner

 

24

 

 

concludes in good faith that such issuance is in the interests of the General
Partner and the Partnership (for example, and not by way of limitation, the
issuance of Shares and corresponding Partnership Units pursuant to a stock
purchase plan providing for purchases of Shares, either by employees or
stockholders, at a discount from fair market value or pursuant to employee stock
options that have an exercise price that is less than the fair market value of
the Shares, either at the time of issuance or at the time of exercise) and (b)
the General Partner transfers all proceeds from any such issuance or exercise to
the Partnership as an additional Capital Contribution.

 

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

 

F.     Funding Debt. The General Partner may incur a Funding Debt, including,
without limitation, a Funding Debt that is convertible into Shares or otherwise
constitutes a class of New Securities, subject to the condition that the General
Partner lends to the Partnership the net proceeds of such Funding Debt;
provided, that the General Partner shall not be obligated to lend the net
proceeds of any Funding Debt to the Partnership in a manner that would be
inconsistent with the General Partner’s ability to remain qualified as a REIT.
If the General Partner enters into any Funding Debt, the loan to the Partnership
shall be on comparable terms and conditions, including interest rate, repayment
schedule and costs and expenses, as are applicable with respect to or incurred
in connection with such Funding Debt.

 

Section 7.06.          Transactions with Affiliates

 

A.    Transactions with Certain Affiliates. Except (i) as expressly permitted by
this Agreement (other than Section 7.01.A hereof which shall not be considered
authority for a transaction that otherwise would be prohibited by this Section
7.06.A) and (ii) all transactions with SL Green or its Affiliates contemplated
by the General Partner’s initial public offering, the Partnership shall not,
directly or indirectly, sell, transfer or convey any property to, or purchase
any property from, or borrow funds from, or lend funds to, any Partner or any
Affiliate of the Partnership or the General Partner or the General Partner
Entity that is not also a Subsidiary of the Partnership, except pursuant to
transactions that are on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party.

 

B.     Benefit Plans. The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and adopt on
behalf of the Partnership employee benefit plans funded by the Partnership for
the benefit of employees of the General Partner, the Partnership, Subsidiaries
of the Partnership, SL Green, the Manager or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership’s Subsidiaries.

 

C.     Conflict Avoidance. The General Partner is expressly authorized to enter
into, in the name and on behalf of the Partnership, a right of first opportunity
arrangement and other conflict avoidance agreements with various Affiliates of
SL Green, the Manager, the Partnership and General Partner on such terms as the
General Partner, in its sole and absolute discretion, believes are advisable.

 

Section 7.07.          Indemnification

 

A.    General. The Partnership shall indemnify each Indemnitee from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements and other amounts arising from or in

 

25

 

 

connection with any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative incurred by the Indemnitee and
relating to the Partnership or the General Partner or the formation or
operations of, or the ownership of property by, either of them as set forth in
this Agreement in which any such Indemnitee may be involved, or is threatened to
be involved, as a party or otherwise, unless it is established by a final
determination of a court of competent jurisdiction that: (i) the act or omission
of the Indemnitee was material to the matter giving rise to the proceeding and
either was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the Indemnitee actually received an improper personal benefit
in money, property or services or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guarantee, contractual
obligations for any indebtedness or other obligations or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.07
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.07.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.07.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.07 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitees, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.07.

 

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

 

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

 

D.    Insurance. The Partnership may purchase and maintain insurance on behalf
of the Indemnitees and such other Persons as the General Partner shall determine
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership’s activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.

 

E.     Benefit Plan Fiduciary. For purposes of this Section 7.07, (i) the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services

 

26

 

 

by, it to the plan or participants or beneficiaries of the plan, (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 7.07 and (iii) actions taken or omitted by the Indemnitee with respect
to an employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be i n the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.

 

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

 

G.     Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.07 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.

 

H.    Benefit. The provisions of this Section 7.07 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.07, or any provision hereof,
shall be prospective only and shall not in any way affect the limitation on the
Partnership’s liability to any Indemnitee under this Section 7.07 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or related to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

 

I.      Indemnification Payments Not Distributions. If and to the extent any
payments to the General Partner pursuant to this Section 7.07 constitute gross
income to the General Partner (as opposed to the repayment of advances made on
behalf of the Partnership), such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners’ Capital Accounts.

 

Section 7.08.          Liability of the General Partner

 

A.    General. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its directors and officers shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained, liabilities incurred or benefits not derived as a result
of errors in judgment or mistakes of fact or law or of any act or omission if
the General Partner or its directors and officers acted in good faith.

 

B.     No Obligation to Consider Separate Interests of Limited Partners or
Stockholders. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and the General Partner’s
stockholders collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to Limited Partners or Assignees or to such
stockholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions. In the event of a conflict between the interests of the
stockholders of the General Partner Entity on one hand and the Limited Partners
on the other, the General Partner shall endeavor in good faith to resolve the
conflict in manner not adverse to either the stockholders of the General Partner
Entity or the Limited Partners; provided, however, that for so long as the
General Partner Entity, directly, or the General Partner, owns a controlling
interest in the Partnership, any such conflict that cannot be resolved in a
manner not adverse to either the stockholders of the General Partner Entity or
the Limited Partners shall be resolved in favor of the stockholders. The General
Partner shall not be liable for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived

 

27

 

 

by Limited Partners in connection with such decisions, provided that the General
Partner has acted in good faith.

 

C.     Actions of Agents. Subject to its obligations and duties as General
Partner set forth in Section 7.01.A above, the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its employees or
agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such employee or agent appointed by the General
Partner in good faith.

 

D.    Effect of Amendment. Any amendment, modification or repeal of this Section
7.08 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner’s liability to the Partnership and
the Limited Partners under this Section 7.08 as in effect immediately prior to
such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.

 

E.     Certain Definitions. Whenever in this Agreement the General Partner is
permitted or required to make a decision (i) in its “sole discretion “or
“discretion,” or under a similar grant of authority or latitude, the General
Partner shall be entitled to consider such interests and factors as it desires
and may consider its own interests, and shall have no duty or obligation to give
any consideration to any interest of or factors affecting the Partnership or the
Limited Partners, or (ii) in its “good faith” or under another express standard,
the General Partner shall act under such express standard and shall not be
subject to any other or different standards imposed by this Agreement or by law
or any other agreement contemplated herein.

 

Section 7.09.          Other Matters Concerning the General Partner

 

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

 

B.     Reliance on Advisors. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisors selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which the
General Partner reasonably believes to be within such Person’s professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.

 

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

 

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

 

28

 

 

Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.

 

Section 7.10.          Reliance by Third Parties

 

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

 

Section 7.11.          Restrictions on General Partner’s Authority

 

A.    Consent Required. The General Partner may not take any action in
contravention of an express prohibition or limitation of this Agreement without
the written Consent of (i) all Partners adversely affected or (ii) such lower
percentage of the Limited Partner Interests as may be specifically provided for
under a provision of this Agreement or the Act.

 

B.     Sale of All Assets of the Partnership. Except as provided in Article XIII
hereof, the General Partner may not, directly or indirectly, cause the
Partnership to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership’s assets in a single transaction or a
series of related transactions (including by way of merger (including a
triangular merger), consolidation or other combination with any other Persons)
(i) if such merger, sale or other transaction is in connection with a
Termination Transaction permitted under Section 11.02.B hereof, without the
Consent of the Partners holding a majority of Percentage Interests (including
the effect of any Partnership Units held by the General Partner) or (ii)
otherwise, without the Consent of the Limited Partners.

 

29

 

 

Section 7.12.          Loans by Third Parties

 

The Partnership may incur Debt, or enter into similar credit, guarantee,
financing or refinancing arrangements for any purpose (including, without
limitation, in connection with any acquisition of property or other assets) with
any Person that is not the General Partner upon such terms as the General
Partner determines appropriate; provided that, the Partnership shall not incur
any Debt that is recourse to the General Partner, except to the extent otherwise
agreed to by the General Partner in its sole discretion.

 

ARTICLE VIII

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.01.          Limitation of Liability

 

The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement, including Section 10.05 hereof, or under
the Act.

 

Section 8.02.          Management of Business

 

No Limited Partner or Assignee (other than the General Partner, any of its
Affiliates or any officer, director, employee, partner, agent or trustee of the
General Partner, the Partnership or any of their Affiliates, in their capacity
as such) shall take part in the operation, management or control (within the
meaning of the Act) of the Partnership’s business, transact any business in the
Partnership’s name or have the power to sign documents for or otherwise bind the
Partnership. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, partner, agent or trustee of
the General Partner, the Partnership or any of their Affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.

 

Section 8.03.          Outside Activities of Limited Partners

 

Subject to Section 7.05 hereof, and subject to any agreements entered into
pursuant to Section 7.06.C hereof and to any other agreements entered into by a
Limited Partner or its Affiliates with the Partnership or a Subsidiary, any
Limited Partner (other than the General Partner) and any officer, director,
employee, agent, trustee, Affiliate or stockholder of any Limited Partner shall
be entitled to and may have business interests and engage in business activities
in addition to those relating to the Partnership, including business interests
and activities in direct or indirect competition with the Partnership. Neither
the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. None of
the Limited Partners (other than the General Partner) nor any other Person shall
have any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person (other than the
General Partner to the extent expressly provided herein), and such Person shall
have no obligation pursuant to this Agreement to offer any interest in any such
business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.

 

Section 8.04.          Return of Capital

 

Except pursuant to the right of redemption set forth in Section 8.06 below, no
Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein.

 

30

 

 

No Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital Contributions (except as
permitted by Section 4.02.A hereof) or, except to the extent provided by Exhibit
C hereto or as permitted by Sections 4.02.A, 5.01.B, 6.01.A (ii) and 6.01.B (i)
hereof or otherwise expressly provided in this Agreement, as to profits, losses,
distributions or credits.

 

Section 8.05.          Rights of Limited Partners Relating to the Partnership

 

A.    General. In addition to other rights provided by this Agreement or by the
Act, and except as limited by 8.05.D below, each Limited Partner shall have the
right, for a purpose reasonably related to such Limited Partner’s interest as a
limited partner in the Partnership, upon written demand with a statement of the
purpose of such demand and at such Limited Partner’s own expense:

 

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

 

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

 

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

 

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

 

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

 

B.     Notice of Conversion Factor. The Partnership shall notify each Limited
Partner upon request of the then current Conversion Factor and any changes that
have been made thereto.

 

C.     Notice of Extraordinary Transaction of the General Partner Entity. The
General Partner Entity shall not make any extraordinary distributions of cash or
property to its stockholders or effect a merger (including without limitation, a
triangular merger), a sale of all or substantially all of its assets or any
other similar extraordinary transaction without notifying the Limited Partners
of its intention to make such distribution or effect such merger, sale or other
extraordinary transaction at least twenty (20) Business Days prior to the record
date to determine stockholders eligible to receive such distribution or to vote
upon the approval of such merger, sale or other extraordinary transaction (or,
if no such record date is applicable, at least twenty (20) Business Days before
consummation of such merger, sale or other extraordinary transaction). This
provision for such notice shall not be deemed (i) to permit any transaction that
otherwise is prohibited by this Agreement or requires a Consent of the Partners
or (ii) to require a Consent of the Limited Partners to a transaction that does
not otherwise require Consent under this Agreement. Each Limited Partner agrees,
as a condition to the receipt of the notice pursuant hereto, to keep
confidential the information set forth therein until such time as the General
Partner Entity has made public disclosure thereof and to use such information
during such period of confidentiality solely for purposes of determining whether
or not to exercise the Redemption Right; provided, however, that a Limited
Partner may disclose such information to its attorney, accountant and/or
financial advisor for purposes of obtaining advice with respect to such exercise
so long as such attorney, accountant and/or financial advisor agrees to receive
and hold such information subject to this confidentiality requirement.

 

31

 

 

D.    Confidentiality. Notwithstanding any other provision of this Section 8.05,
the General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that (i) the General Partner
reasonably believes to be in the nature of trade secrets or other information
the disclosure of which the General Partner in good faith believes is not in the
best interests of the Partnership or could damage the Partnership or its
business or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.

 

Section 8.06.          Class A Redemption Right

 

A.    General. (i)  Subject to Section 8.06.C below, on or after the date two
(2) years after the issuance of a Class A Unit to a Limited Partner pursuant to
Article IV hereof, the holder of a Class A Unit (if other than the General
Partner or the General Partner Entity) shall have the right (the “Redemption
Right”) to require the Partnership to redeem such Class A Unit on a Specified
Redemption Date and at a redemption price equal to and in the form of the Cash
Amount to be paid by the Partnership. Any such Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the Partnership (with
a copy to the General Partner) by the Limited Partner who is exercising the
Redemption Right (the “Redeeming Partner”). A Limited Partner may not exercise
the Redemption Right for less than one thousand (1,000) Class A Units or, if
such Redeeming Partner holds less than one thousand (1,000) Class A Units, for
less than all of the Class A Units held by such Redeeming Partner.

 

(ii)           The Redeeming Partner shall have no right with respect to any
Class A Units so redeemed to receive any distributions paid after the Specified
Redemption Date.

 

(iii)          The Assignee of any Limited Partner may exercise the rights of
such Limited Partner pursuant to this Section 8.06 and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and shall be bound
by the exercise of such rights by such Limited Partner’s Assignee. In connection
with any exercise of the such rights by such Assignee on behalf of such Limited
Partner, the Cash Amount shall be paid by the Partnership directly to such
Assignee and not to such Limited Partner.

 

(iv)          Notwithstanding the foregoing, the Redemption Right shall not be
exercisable with respect to any Class A Unit issued upon conversion of an LTIP
Unit until on or after the date that is two years after the date on which the
LTIP Unit was issued, provided however, that the foregoing restriction shall not
apply if the Redemption Right is exercised by a LTIP Unit holder in connection
with a transaction that falls within the definition of a “change of control”
under the agreement or agreements pursuant to which the LTIP Units were issued
to him or her and provided further that the two (2) year requirement set forth
in the first sentence of Section 8.06.A(i) shall not apply with respect to Class
A Units issued upon conversion of LTIP Units.

 

B.     General Partner Assumption of Right. (i) If a Limited Partner has
delivered a Notice of Redemption, the General Partner may, in its sole and
absolute discretion (subject to any limitations on ownership and transfer of
Shares set forth in the Articles of Incorporation), elect to assume directly and
satisfy a Redemption Right by paying to the Redeeming Partner either the Cash
Amount or the Shares Amount, as the General Partner determines in its sole and
absolute discretion (provided that payment of the Redemption Amount in the form
of Shares shall be in Shares registered under Section 12 of the Exchange Act and
listed for trading on the exchange or national market on which the Shares are
Publicly Traded, and provided, further that, in the event that the Shares are
not Publicly Traded at the time a Redeeming Partner exercises its Redemption
Right, the Redemption Amount shall be paid only in the form of the Cash Amount
unless the Redeeming Partner, in its sole and absolute discretion, consents to
payment of the Redemption Amount in the form of the Shares Amount), on the
Specified Redemption Date, whereupon the General Partner shall acquire the Class
A Units offered for redemption by the

 

32

 

 

Redeeming Partner and shall be treated for all purposes of this Agreement as the
owner of such Partnership Units. Unless the General Partner, in its sole and
absolute discretion, shall exercise its right to assume directly and satisfy the
Redemption Right, the General Partner shall not have any obligation to the
Redeeming Partner or to the Partnership with respect to the Redeeming Partner’s
exercise of the Redemption Right. In the event the General Partner shall
exercise its right to satisfy the Redemption Right in the manner described in
the first sentence of this Section 8.06.B and shall fully perform its
obligations in connection therewith, the Partnership shall have no right or
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner’s exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership and the General Partner shall, for federal income tax
purposes, treat the transaction between the General Partner and the Redeeming
Partner as a sale of the Redeeming Partner’s Partnership Units to the General
Partner. Nothing contained in this Section 8.06.B shall imply any right of the
General Partner to require any Limited Partner to exercise the Redemption Right
afforded to such Limited Partner pursuant to Section 8.06.A above.

 

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

 

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

 

C.     Exceptions to Exercise of Redemption Right. Notwithstanding the
provisions of Sections 8.06.A and 8.06.B above, a Partner shall not be entitled
to exercise the Redemption Right pursuant to Section 8.06.A above if (but only
as long as) the delivery of Shares to such Partner on the Specified Redemption
Date (i) would be prohibited under the Articles of Incorporation or (ii) as long
as the Shares are Publicly Traded, would be prohibited under applicable federal
or state securities laws or regulations (in each case regardless of whether the
General Partner would in fact assume and satisfy the Redemption Right).

 

D.    No Liens on Partnership Units Delivered for Redemption. Each Limited
Partner covenants and agrees with the General Partner that all Partnership Units
delivered for redemption (including Partnership Units redeemed under Section
8.07) shall be delivered to the Partnership or the General Partner, as the case
may be, free and clear of all liens, and, notwithstanding anything contained
herein to the contrary, neither the General Partner nor the Partnership shall be
under any obligation to acquire Partnership Units which are or may be subject to
any liens. Each Limited Partner further agrees that, in the event any state or
local property transfer tax is payable as a result of the transfer of its
Partnership Units to the Partnership or the General Partner, such Limited
Partner shall assume and pay such transfer tax.

 

E.     Additional Partnership Interests. In the event that the Partnership
issues Partnership Interests to any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such amendments to this
Section 8.06 as it determines are necessary to reflect the issuance of such
Partnership Interests (including setting forth any restrictions on the exercise
of the Redemption Right with respect to such Partnership Interests).

 

33

 

 

Section 8.07.          Redemption of Class B Units

 

The Class B Units shall be subject to mandatory redemption if the Management
Agreement is terminated or not renewed. The General Partner shall send notice of
Class B Unit redemption or non-renewal within ten days after the General Partner
sends or receives notice of termination or non-renewal of the Management
Agreement. The redemption date shall be the date on which termination or
non-renewal of the Management Agreement is effective. If the Management
Agreement is terminated pursuant to Section 13(d) of the Management Agreement or
not renewed by the General Partner pursuant to Section 13(b) of the Management
Agreement, the redemption amount, to be paid in cash or by wire transfer on the
redemption date, shall be equal to two times of the higher of the annual
distributions on a Class B Unit relating to either of the two most recently
completed calendar years; provided that if immediately following such
termination or non-renewal the General Partner becomes self-managed in
connection with an internalization of the Manager pursuant to a separate
agreement 13(the “Internalization Agreement”) between the Manager and the
General Partner and/or a subsidiary of the General Partner, the redemption
amount shall be $100.14 In such event, the consideration to be paid for such
internalization shall be as set forth in the Internalization Agreement. If the
Management Agreement is terminated by the General Partner pursuant to Section
13(c) of the Management Agreement or not renewed by the Manager pursuant to
Section 13(b) of the Management Agreement, the aggregate redemption amount shall
be $100. Upon any such redemption, the Class B Units will also be entitled to
receive any distributions payable with respect to periods through the redemption
date. If such distribution amounts cannot be calculated on or by the redemption
date, they shall be calculated and paid as promptly as possible thereafter, but
in no event later than 30 days after the redemption date.

 

ARTICLE IX

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.01.          Records and Accounting

 

The General Partner shall keep or cause to be kept at the principal office of
the Partnership appropriate books and records with respect to the Partnership’s
business, including, without limitation, all books and records necessary to
provide to the Limited Partners any information, lists and copies of documents
required to be provided pursuant to Section 9.03 below. Any records maintained
by or on behalf of the Partnership in the regular course of its business may be
kept on, or be in the form of, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided that the records
so maintained are convertible into clearly legible written form within a
reasonable period of time. The books of the Partnership shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles.

 

Section 9.02.          Fiscal Year

 

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

 

Section 9.03.          Reports

 

A.    Annual Reports. As soon as practicable, but in no event later than the
date on which the General Partner Entity mails its annual report to its
stockholders, the General Partner shall cause to be mailed to each Limited
Partner an annual report, as of the close of the most recently ended Partnership
Year, containing financial statements of the Partnership, or of the General
Partner Entity if such statements are prepared solely on a consolidated basis
with the Partnership, for such Partnership Year,

 

34

 

 

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

 

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

 

ARTICLE X

TAX MATTERS

 

Section 10.01.        Preparation of Tax Returns

 

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

 

Section 10.02.        Tax Elections

 

A.    Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. The General Partner shall have the right to seek to revoke
any such election (including, without limitation, an election under Section 754
of the Code) upon the General Partner’s determination in its sole and absolute
discretion that such revocation is in the best interests of the Partners.

 

B.     To the extent provided for in Treasury Regulations, revenue rulings,
revenue procedures and/or other IRS guidance issued after the date hereof, the
Partnership is hereby authorized to, and at the direction of the General Partner
shall, elect a safe harbor under which the fair market value of any Partnership
Interests issued after the effective date of such Treasury Regulations (or other
guidance) will be treated as equal to the liquidation value of such Partnership
Interests (i.e., a value equal to the total amount that would be distributed
with respect to such interests if the Partnership sold all of its assets for
their fair market value immediately after the issuance of such Partnership
Interests, satisfied its liabilities (excluding any non-recourse liabilities to
the extent the balance of such liabilities exceeds the fair market value of the
assets that secure them) and distributed the net proceeds to the Partners under
the terms of this Agreement). In the event that the Partnership makes a safe
harbor election as described in the preceding sentence, each Partner hereby
agrees to comply with all safe harbor requirements with respect to transfers of
such Partnership Interests while the safe harbor election remains effective.

 

Section 10.03.        Tax Matters Partner

 

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

 

35

 

 

Limited Partners and any Assignees; provided, however, that such information is
provided to the Partnership by the Limited Partners.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner
and the provisions relating to indemnification of the General Partner set forth
in Section 7.07 hereof shall be fully applicable to the tax matters partner in
its capacity as such.

 

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

 

36

 

 

Section 10.04.        Organizational Expenses

 

The Partnership shall elect to deduct expenses, if any, incurred by it in
organizing the Partnership ratably over a sixty (60) month period as provided in
Section 709 of the Code.

 

Section 10.05.        Withholding

 

Each Limited Partner hereby authorizes the Partnership to withhold from or pay
on behalf of or with respect to such Limited Partner any amount of federal,
state, local, or foreign taxes that the General Partner determines that the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
recourse loan by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner’s Partnership Interest to secure
such Limited Partner’s obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.05. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.05
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner (including, without
limitation, the right to receive distributions). Any amounts payable by a
Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus four (4) percentage points (but
not higher than the maximum lawful rate) from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.

 

ARTICLE XI

TRANSFERS AND WITHDRAWALS

 

Section 11.01.        Transfer

 

A.    Definition. The term “transfer,” when used in this Article XI with respect
to a Partnership Interest or a Partnership Unit, shall be deemed to refer to a
transaction by which the General Partner purports to assign all or any part of
its General Partnership Interest to another Person or by which a Limited Partner
purports to assign all or any part of its Limited Partner Interest to another
Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition by law or otherwise.
The term “transfer” when used in this Article XI does not include any redemption
or repurchase of Partnership Units by the Partnership from a Partner (including
the General Partner), acquisition of Partnership Units from a Limited Partner by
the General Partner pursuant to Section 8.06 hereof or otherwise or any
conversion of LTIP Units into Class A Units. No part of the interest of a
Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or

 

37

 

 

support, or to legal process, and may not be voluntarily or involuntarily
alienated or encumbered except as may be specifically provided for in this
Agreement.

 

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

 

Section 11.02.        Transfers of Partnership Interests of General Partner

 

A.    Except for transfers of Partnership Units to the Partnership as provided
in Section 7.05 or Section 8.06 hereof, the General Partner may not transfer any
of its Partnership Interest except (i) in connection with a transaction
described in Section 11.02.B below (ii) to a wholly-owned Subsidiary or (iii) as
otherwise expressly permitted under this Agreement, nor shall the General
Partner withdraw as General Partner except in connection with a transaction
described in Section11.02.B below.

 

B.     The General Partner shall not engage in any merger (including a
triangular merger), consolidation or other combination with or into another
person, sale of all or substantially all of its assets or any reclassification,
recapitalization or change of outstanding Shares (other than a change in par
value, or from par value to no par value, or as a result of a subdivision or
combination as described in the definition of “Conversion Factor”) (“Termination
Transaction”), unless the Termination Transaction has been approved by the
Consent of the Partners holding a majority or more of the then outstanding
Percentage Interests (including the effect of any Partnership Units held by the
General Partner) and in connection with which all Limited Partners either will
receive, or will have the right to elect to receive, for each Partnership Unit
an amount of cash, securities, or other property equal to the product of the
Conversion Factor and the greatest amount of cash, securities or other property
paid to a holder of Shares, if any, corresponding to such Partnership Unit that
was issued pursuant to Section 4.02.A hereof in consideration of one such Share
at any time during the period from and after the date on which the Termination
Transaction is consummated; provided that, if, in connection with the
Termination Transaction, a purchase, tender or exchange offer shall have been
made to and accepted by the holders of more than fifty percent (50%) of the
outstanding Shares, each holder of Partnership Units shall receive, or shall
have the right to elect to receive, the greatest amount of cash, securities, or
other property which such holder would have received had it exercised the
Redemption Right and received Shares in exchange for its Partnership Units
immediately prior to the expiration of such purchase, tender or exchange offer
and had thereupon accepted such purchase, tender or exchange offer.

 

Section 11.03.        Limited Partners’ Rights to Transfer

 

A.    General. A Limited Partner may not transfer any of such Limited Partner’s
rights as a Limited Partner without the consent of the General Partner, which
consent the General Partner may withhold in its sole discretion; provided,
however, that no consent shall be required for a transfer or assignment by the
Manager or SL Green or its Affiliate of its Class B Units or the rights to
receive distributions pursuant to Class B Units to an officer, director or
employee of the General Partner, the Manager or SL Green.

 

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

 

38

 

 

C.     No Transfers Violating Securities Laws. The General Partner may prohibit
any transfer of Partnership Units by a Limited Partner if, in the opinion of
legal counsel to the Partnership, such transfer would require filing of a
registration statement under the Securities Act or would otherwise violate any
federal, or state securities laws or regulations applicable to the Partnership
or the Partnership Unit.

 

D.    No Transfers Affecting Tax Status of Partnership. No transfer of
Partnership Units by a Limited Partner (including a redemption or exchange
pursuant to Section 8.06 hereof) may be made to any Person if (i) in the opinion
of legal counsel for the Partnership, it would result in the Partnership being
treated as an association taxable as a corporation for federal income tax
purposes or would result in a termination of the Partnership for federal income
tax purposes (except as a result of the redemption or exchange for Shares of all
Partnership Units held by all Limited Partners other than the General Partner or
the General Partner Entity or any Subsidiary of either the General Partner or
the General Partner Entity or pursuant to a transaction expressly permitted
under Section 7.11.B or Section 11.02 hereof), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
General Partner Entity to continue to qualify as a REIT or would subject the
General Partner Entity to any additional taxes under Section 857 or Section 4981
of the Code or (iii) such transfer is effectuated through an “established
securities market” or a “secondary market (or the substantial equivalent
thereof)” within the meaning of Section 7704 of the Code.

 

E.     No Transfers to Holders of Nonrecourse Liabilities. No pledge or transfer
of any Partnership Units may be made to a lender to the Partnership, or to any
Person who is related (within the meaning of Section 1.752-4(b) of the
Regulations) to any lender to the Partnership, whose loan constitutes a
Nonrecourse Liability without the consent of the General Partner, in its sole
and absolute discretion; provided that, as a condition to such consent the
lender will be required to enter into an arrangement with the Partnership and
the General Partner to exchange or redeem for the Redemption Amount any
Partnership Units transferred or in which a security interest is held
simultaneously with the time at which such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.

 

F.     Transfer Register. The General Partner shall keep a register for the
Partnership on which the transfer, pledge or release of Partnership Units shall
be shown and pursuant to which entries shall be made to effect all transfers,
pledges or releases as required by Sections 8-207,8-313(1) and 8-321 of the
Uniform Commercial Code, as amended, in effect in the States of New York and
Delaware; provided, however, that if there is any conflict between such
requirements, the provisions of the Delaware Uniform Commercial Code shall
govern. The General Partner shall (i) place proper entries in such register
clearly showing each transfer and each pledge and grant of security interest and
the transfer and assignment pursuant thereto, such entries to be endorsed by the
General Partner and (ii) maintain the register and make the register available
for inspection by all of the Partners and their pledgees at all times during the
term of this Agreement. Nothing herein shall be deemed a consent to any pledge
or transfer otherwise prohibited under this Agreement.

 

Section 11.04.    Substituted Limited Partners

 

A.    Consent of General Partner. No Limited Partner shall have the right to
substitute a transferee as a Limited Partner in its place without the consent of
the General Partner to the admission of a transferee of the interest of a
Limited Partner pursuant to this Section 11.04 as a Substituted Limited Partner,
which consent may be given or withheld by the General Partner in its sole and
absolute discretion. The General Partner’s failure or refusal to permit a
transferee of any such interests to become a Substituted Limited Partner shall
not give rise to any cause of action against the Partnership or any Partner;
provided that a transfer which does not require consent of the General Partner
under Section 11.03A shall not require the General Partner’s consent under this
section.

 

39

 

 

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

 

C.     Amendment and Restatement of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend and restate
Exhibit A hereto to reflect the name, address, Capital Account, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address, Capital Account and
Percentage Interest of the predecessor of such Substituted Limited Partner.

 

Section 11.05.    Assignees

 

If the General Partner, in its sole and absolute discretion, does not consent to
the admission of any permitted transferee under Section 11.03 above as a
Substituted Limited Partner, as described in Section 11.04 above, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited partner
interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain, loss and Recapture
Income attributable to the Partnership Units assigned to such transferee, and
shall have the rights granted to the Limited Partners under Section 8.06 hereof
but shall not be deemed to be a holder of Partnership Units for any other
purpose under this Agreement, and shall not be entitled to vote such Partnership
Units in any matter presented to the Limited Partners for a vote (such
Partnership Units being deemed to have been voted on such matter in the same
proportion as all other Partnership Units held by Limited Partners are voted).
In the event any such transferee desires to make a further assignment of any
such Partnership Units, such transferee shall be subject to all the provisions
of this Article XI to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of Partnership Units.

 

Section 11.06.    General Provisions

 

A.    Withdrawal of Limited Partner. No Limited Partner may withdraw from the
Partnership other than as a result of a permitted transfer of all of such
Limited Partner’s Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.06
hereof.

 

B.     Termination of Status as Limited Partner. Any Limited Partner who shall
transfer all of its Partnership Units in a transfer permitted pursuant to this
Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.06 hereof shall cease to be a Limited Partner.

 

C.     Timing of Transfers. Transfers pursuant to this Article XI may only be
made on the first day of a fiscal quarter of the Partnership, unless the General
Partner otherwise agrees.

 

D.    Allocations. If any Partnership Interest is transferred during any
quarterly segment of the Partnership’s fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to
Section 8.06 hereof, Net Income, Net Losses, each item thereof and all other
items attributable to such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee Partner by taking
into account their varying interests during the fiscal year in accordance with
Section 706(d) of the Code, using the interim closing of the books method
(unless the General Partner, in

 

40

 

 

its sole and absolute discretion, elects to adopt a daily, weekly, or a monthly
proration period, in which event Net Income, Net Losses, each item thereof and
all other items attributable to such interest for such fiscal year shall be
prorated based upon the applicable method selected by the General Partner).
Solely for purposes of making such allocations, each of such items for the
calendar month in which the transfer or redemption occurs shall be allocated to
the Person who is a Partner as of midnight on the last day of said month. All
distributions attributable to any Partnership Unit with respect to which the
Partnership Record Date is before the date of such transfer, assignment or
redemption shall be made to the transferor Partner or the Redeeming Partner, as
the case may be, and, in the case of a transfer or assignment other than a
redemption, all distributions thereafter attributable to such Partnership Unit
shall be made to the transferee Partner.

 

E.     Additional Restrictions. In addition to any other restrictions on
transfer herein contained, including without limitation the provisions of this
Article XI, in no event may any transfer or assignment of a Partnership Interest
by any Partner (including pursuant to Section 8.06 hereof) be made without the
express consent of the General Partner, in its sole and absolute discretion,
(i) to any person or entity who lacks the legal right, power or capacity to own
a Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest except as permitted by Section 11.03A; (iv) if in the
opinion of legal counsel to the Partnership such transfer would cause a
termination of the Partnership for federal or state income tax purposes (except
as a result of the redemption or exchange for Shares of all Partnership Units
held by all Limited Partners or pursuant to a transaction expressly permitted
under Section 7.11.B or Section 11.02 hereof); (v) if in the opinion of counsel
to the Partnership, such transfer would cause the Partnership to cease to be
classified as a partnership for federal income tax purposes (except as a result
of the redemption or exchange for Shares of all Partnership Units held by all
Limited Partners or pursuant to a transaction expressly permitted under
Section 7.11.B or Section 11.02 hereof); (vi) if such transfer would cause the
Partnership to become, with respect to any employee benefit plan subject to
Title I of ERISA, a “party-in-interest” (as defined in Section 3(14) of ERISA)
or a “disqualified person” (as defined in Section 4975(c) of the Code);
(vii) without the consent of the General Partner, to any “benefit plan investor”
within the meaning of Department of Labor Regulations Section 2510.3-101(f);
(viii) if such transfer would, in the opinion of counsel to the Partnership,
cause any portion of the assets of the Partnership to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations
Section 2570.3-101; (ix) if such transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (x) if such transfer is effectuated through an “established securities
market” or a “secondary market” (or the substantial equivalent thereof) within
the meaning of Section 7704 of the Code or such transfer causes the Partnership
to become a “publicly traded partnership,” as such term is defined in
Section 469(k)(2) or Section 7704(b) of the Code; (xi) if such transfer subjects
the Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or the Employee Retirement Income Security Act
of 1974, each as amended; (xii) if such transfer could adversely affect the
ability of the General Partner Entity to remain qualified as a REIT; or (xiii)
if in the opinion of legal counsel for the Partnership, such transfer would
adversely affect the ability of the General Partner Entity to continue to
qualify as a REIT or subject the General Partner Entity to any additional taxes
under Section 857 or Section 4981 of the Code.

 

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

 

41

 

 

equivalent thereof) within the meaning of Section 7704 of the Code (the “Safe
Harbors”). The General Partner shall take all steps reasonably necessary or
appropriate to prevent any trading of interests or any recognition by the
Partnership of transfers made on such markets and, except as otherwise provided
herein, to insure that at least one of the Safe Harbors is met.

 

ARTICLE XII

ADMISSION OF PARTNERS

 

Section 12.01.    Admission of Successor General Partner

 

A successor to all of the General Partner’s General Partnership Interest
pursuant to Section 11.02 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner’s executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.

 

Section 12.02.    Admission of Additional Limited Partners

 

A.    General. No Person shall be admitted as an Additional Limited Partner
without the consent of the General Partner, which consent shall be given or
withheld in the General Partner’s sole and absolute discretion. A Person who
makes a Capital Contribution to the Partnership in accordance with this
Agreement, including, without limitation, pursuant to Section 4.01.C hereof, or
who exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner and only upon furnishing to the General Partner (i) evidence of
acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the power of
attorney granted in Section 15.11 hereof and (ii) such other documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person’s admission as an Additional Limited Partner. The
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General Partner to such
admission.

 

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

 

42

 

 

Section 12.03.    Amendment of Agreement and Certificate of Limited Partnership

 

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

 

ARTICLE XIII

DISSOLUTION AND LIQUIDATION

 

Section 13.01.    Dissolution

 

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

 

(i)        the expiration of its term as provided in Section 2.04 hereof;

 

(ii)        an event of withdrawal of the General Partner, as defined in the Act
(other than an event of bankruptcy), unless, within ninety (90) days after the
withdrawal a “majority in interest” (as defined below) of the remaining Partners
Consent in writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a substitute General
Partner;

 

(iii)        an election to dissolve the Partnership made by the General
Partner, in its sole and absolute discretion, on or after January 1, 2054;

 

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

 

(v)        a final and nonappealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and nonappealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to or within ninety days after of the entry of such order or judgment a
“majority in interest” (as defined below) of the remaining Partners Consent in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.

 

As used herein, a “majority in interest” shall refer to Partners (excluding the
General Partner) who hold more than fifty percent (50%) of the outstanding
Percentage Interests not held by the General Partner.

 

Section 13.02.    Winding Up

 

A.    General. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is in consistent with, or not necessary to
or appropriate for, the winding up of the Partnership’s business and affairs.
The General

 

43

 

 

Partner (or, in the event there is no remaining General Partner, any Person
elected by a majority in interest of the Limited Partners (the “Liquidator”))
shall be responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership’s liabilities and
property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
(which may, to the extent determined by the General Partner, include equity or
other securities of the General Partner or any other entity) shall be applied
and distributed in the following order:

 

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

 

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

 

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

 

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

 

B.     Deferred Liquidation. Notwithstanding the provisions of Section 13.02.A
above which require liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership’s assets would be impractical or would cause undue loss to
the Partners, the Liquidator may, in its sole and absolute discretion, defer for
a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Partnership (including to those Partners as
creditors) or distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.02.A above, undivided
interests in such Partnership assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in the good
faith judgment of the Liquidator, such distributions in kind are in the best
interest of the Partners, and shall be subject to such conditions relating to
the disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation of such
properties at such time. The Liquidator shall determine the fair market value of
any property distributed in kind using such reasonable method of valuation as it
may adopt.

 

Section 13.03.    Compliance with Timing Requirements of Regulations

 

Subject to Section 13.04 below, in the event the Partnership is “liquidated”
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions
shall be made pursuant to this Article XIII to the General Partner and Limited
Partners who have positive Capital Accounts in compliance with Regulations
Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in its
Capital Account (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit, and
such deficit shall not be considered a debt owed to the Partnership or to any
other Person for any purpose whatsoever. In the discretion of the General
Partner, a pro rata portion of the distributions that would otherwise be made to
the General Partner and Limited Partners pursuant to this Article XIII may be: 
(A) distributed to a trust established for the benefit of the General Partner
and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership (in which case the
assets of any such trust shall be distributed to the General Partner and

 

44

 

 

Limited Partners from time to time, in the reasonable discretion of the General
Partner, in the same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement); or (B) withheld to provide a
reasonable reserve for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld amounts shall be distributed to the
General Partner and Limited Partners as soon as practicable.

 

Section 13.04.    Deemed Distribution and Recontribution

 

Notwithstanding any other provision of this Article XIII, in the event the
Partnership is deemed liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership’s property shall not be liquidated, the Partnership’s liabilities
shall not be paid or discharged and the Partnership’s affairs shall not be wound
up. Instead, for federal income tax purposes and for purposes of maintaining
Capital Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed
to have distributed its assets in kind to the General Partner and Limited
Partners, who shall be deemed to have assumed and taken such assets subject to
all Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners shall
be deemed to have recontributed the Partnership assets in kind to the
Partnership, which shall be deemed to have assumed and taken such assets subject
to all such liabilities.

 

Section 13.05.    Rights of Limited Partners

 

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

 

Section 13.06.    Notice of Dissolution

 

In the event a Liquidating Event occurs or an event occurs that would, but for
provisions of an election or objection by one or more Partners pursuant to
Section 13.01 above, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts
business(as determined in the discretion of the General Partner).

 

Section 13.07.    Cancellation of Certificate of Limited Partnership

 

Upon the completion of the liquidation of the Partnership cash and property as
provided in Section 13.02 above, the Partnership shall be terminated and the
Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.

 

Section 13.08.    Reasonable Time for Winding Up

 

A reasonable time shall be allowed for the orderly winding up of the business
and affairs of the Partnership and the liquidation of its assets pursuant to
Section 13.02 above, in order to minimize any losses otherwise attendant upon
such winding-up, and the provisions of this Agreement shall remain in effect
among the Partners during the period of liquidation.

 

45

 

 

Section 13.09.    Waiver of Partition

 

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

 

Section 13.10.    Liability of Liquidator

 

The Liquidator shall be indemnified and held harmless by the Partnership in the
same manner and to the same degree as an Indemnitee may be indemnified pursuant
to Section 7.11 hereof.

 

ARTICLE XIV

AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

 

Section 14.01.    Amendments

 

A.    General. Amendments to this Agreement may be proposed by the General
Partner or by any Limited Partners holding twenty-five percent (25%) or more of
the Partnership Interests. Following such proposal (except an amendment pursuant
to Section 14.01.B below), the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
vote of the Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem appropriate. For
purposes of obtaining a written vote, the General Partner may require a response
within a reasonable specified time, but not less than fifteen (15) days, and
failure to respond in such time period shall constitute a vote which is
consistent with the General Partner’s recommendation with respect to the
proposal. Except as provided in Section 14.01.B, 14.01.C or 14.01.D below, a
proposed amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Consent of Partners
holding a majority of the Percentage Interests of the Limited Partners
(including Limited Partner Interests held by the General Partner).

 

B.     Amendments Not Requiring Limited Partner Approval. Notwithstanding
Section 14.01.A or Section 14.01.C hereof, the General Partner shall have the
power, without the Consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:

 

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

 

(2)  to reflect the admission, substitution, termination or withdrawal of any
Partner in accordance with this Agreement;

 

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

 

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

 

(5)  to adjust the terms hereof to reflect any Specially Distributed Property,
as contemplated in Section 7.05.A hereof; and

 

46

 

 

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

 

The General Partner shall notify the Limited Partners when any action under this
Section 14.01.B is taken in the next regular communication to the Limited
Partners.

 

C.     Amendments Requiring Limited Partner Approval (Excluding General
Partner). Notwithstanding Section 14.01.A above, without the Consent of the
Limited Partners (not including Limited Partner Interests held by the General
Partner), the General Partner shall not amend Section 4.02.A, Section 7.01.A
(second sentence only), Section 7.05, Section 7.06, Section 7.08, Section 11.02,
Section 13.01, this Section 14.01.C or Section 14.02.

 

D.    Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.01 to the contrary, this Agreement
shall not be amended with respect to any Partner adversely affected without the
Consent of such Partner adversely affected if such amendment would (i) convert a
Limited Partner’s interest in the Partnership into a general partner’s interest,
(ii) modify the limited liability of a Limited Partner, (iii) amend
Section 7.11.A, (iv) amend Article V, Article VI, or Section13.02.A(3) (except
as permitted pursuant to Sections 4.02, 5.01.D, 5.04, 6.02 and 14.01(B)(3)),
(v) amend Section 8.06 or any defined terms set forth in Article I that relate
to the Redemption Right (except as permitted in Section 8.06.E), or (vi) amend
this Section 14.01.D. Moreover, this Agreement may be amended by the General
Partner to provide that certain Limited Partners have the obligation, upon
liquidation of their interests in the Partnership (within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g)), to restore to the Partnership the
amounts of their negative Capital Account balances, if any, for the benefit of
creditors of the Partnership or Partners with positive Capital Account balances
or both, together with any necessary corresponding amendments (including
corresponding amendments to Sections 6.01.A, 6.01.B and Exhibit C), with the
consent of only such Limited Partners and of any other Limited Partners already
subject to such a restoration obligation whose restoration obligation may be
affected by such amendment.

 

E.     Amendment and Restatement of Exhibit A Not An Amendment. Notwithstanding
anything in this Article XIV or elsewhere in this Agreement to the contrary, any
amendment and restatement of Exhibit A hereto by the General Partner to reflect
events or changes otherwise authorized or permitted by this Agreement, whether
pursuant to Section 7.01.A (20) hereof or otherwise, shall not be deemed an
amendment of this Agreement and may be done at any time and from time to time,
as necessary by the General Partner without the Consent of the Limited Partners.

 

Section 14.02.    Meetings of the Partners

 

A.    General. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests. The notice of meeting shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.01.A above. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including Limited
Partner Interests held by the General Partner) shall control.

 

47

 

 

B.     Actions Without a Meeting. Any action required or permitted to be taken
at a meeting of the Partners may be taken without a meeting if a written consent
setting forth the action so taken is signed by a majority of the Percentage
Interests of the Partners (or such other percentage as is expressly required by
this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.

 

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

 

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

 

ARTICLE XV

 

GENERAL PROVISIONS

 

Section 15.01.    Addresses and Notice

 

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

 

Section 15.02.    Titles and Captions

 

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

 

Section 15.03.    Pronouns and Plurals

 

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

 

Section 15.04.    Further Action

 

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

 

48

 

 

Section 15.05.    Binding Effect

 

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

 

Section 15.06.    Creditors

 

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

 

Section 15.07.    Waiver

 

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

 

Section 15.08.    Counterparts

 

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

 

Section 15.09.    Applicable Law

 

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

 

Section 15.10.    Invalidity of Provisions

 

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

 

Section 15.11.    Power of Attorney

 

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

 

(1)           execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate and all
amendments or restatements thereof) that the General Partner or any Liquidator
deems appropriate or necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may conduct business or own
property, (b) all instruments that the General Partner or any Liquidator deems
appropriate or necessary to reflect any amendment, change,

 

49

 

 

modification or restatement of this Agreement in accordance with its terms,
(c) all conveyances and other instruments or documents that the General Partner
or any Liquidator deems appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation, (d) all
instruments relating to the admission, withdrawal, removal or substitution of
any Partner pursuant to, or other events described in, Article XI, XII or XIII
hereof or the Capital Contribution of any Partner and (e) all certificates,
documents and other instruments relating to the determination of the rights,
preferences and privileges of Partnership Interests; and

 

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

 

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

 

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

 

Section 15.12.    Entire Agreement

 

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

 

Section 15.13.    No Rights as Stockholders

 

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

 

50

 

 

Section 15.14.    Limitation to Preserve REIT Status

 

To the extent that any amount paid or credited to the General Partner or its
officers, directors, employees or agents pursuant to Section 7.04 or
Section 7.07 hereof would constitute gross income to the General Partner Entity
for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a “General Partner
Payment”) then, notwithstanding any other provision of this Agreement, the
amount of such General Partner Payments for any fiscal year shall not exceed the
lesser of:

 

(i)            an amount equal to the excess, if any, of (a) 4.20% of the
General Partner Entity’s total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in subsections
(A) though (H) of Section 856(c)(2) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(2) of the Code) derived by the
General Partner Entity from sources other than those described in subsections
(A) through (H) of Section 856(c)(2) of the Code (but not including the amount
of any General Partner Payments); or

 

(ii)           an amount equal to the excess, if any of (a) 25% of the General
Partner Entity’s total gross income (but not including the amount of any General
Partner Payments) for the fiscal year which is described in subsections
(A) through (I) of Section 856(c)(3) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(3) of the Code) derived by the
General Partner Entity from sources other than those described in subsections
(A) through (I) of Section 856(c)(3) of the Code (but not including the amount
of any General Partner Payments);

 

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

 

51

 

 

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

 

  GENERAL PARTNER:       GRAMERCY CAPITAL CORP.       By: /s/ Marc Holliday    
  Name: Marc Holliday     Title: President and Chief Executive Officer        
LIMITED PARTNERS:       SL GREEN OPERATING PARTNERSHIP, L.P.       By: SL Green
Realty Corp., its general partner       By: /s/ Andrew S. Levine       Name:
Andrew S. Levine     Title: Executive Vice President         GKK MANAGER LLC    
  By: /s/ Andrew S. Levine       Name: Andrew S. Levine     Title: Executive
Vice President

 

 

 

 

 CLASS B UNITHOLDER SIGNATURE PAGE

 

The undersigned holder of Class B Units in GKK Capital LP hereby consents to and
enters into this Third Amended and Restated Agreement of Limited Partnership of
GKK Capital LP.

 

Signature Line for Class B Unitholder:

 

        Name:   Date: March [  ], 2006

 

 

 

   

THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF

GPT PROPERTY TRUST LP (F/K/A GKK CAPITAL LP)

 

EXHIBIT A

PARTNERS AND PARTNERSHIP INTERESTS

Revised as of 5/3/13

 

Class A Units     Percentage Interests

Limited Partner Interest Holder

Gramercy Property Trust Inc. (f/k/a Gramercy

Capital Corp.)

99%    

General Partner Interest Holder

Gramercy Property Trust Inc. (f/k/a Gramercy

Capital Corp.)

1%     Class B Units       None N/A     LTIP Units       None N/A*

 

 

*Note: LTIP Units with a maximum aggregate value equal to $24,000,000 have been
reserved for certain executive officers of Gramercy Property Trust Inc. (“GPT”)
pursuant to GPT’s 2012 Long-Term Outperformance Plan, subject to the achievement
of performance-based vesting hurdles as set forth in the plan. As 5/3/13, no
LTIP Units had been earned, vested or deemed issued under the plan.

 

 

A-1

 

 

EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE

 

1.             Capital Accounts of the Partners

 

A.            The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section 1.704-l(b)(2)(iv). 
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.01 of the
Agreement and Exhibit C hereof, and decreased by (x) the amount of cash or
Agreed Value of all actual and deemed distributions of cash or property made to
such Partner pursuant to this Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.01 of the Agreement and Exhibit C hereof.

 

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

 

(1)           Except as otherwise provided in Regulations Section
1.704-l(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Partnership, provided that the amounts of any
adjustments to the adjusted bases of the assets of the Partnership made pursuant
to Section 734 of the Code as a result of the distribution of property by the
Partnership to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners’ Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section 1.704-l(b)(2)(iv)(m)(4).

 

(2)           The computation of all items of income, gain, and deduction shall
be made without regard to the fact that items described in Sections 705(a)(1)(B)
or 705(a)(2)(B) of the Code are not includable in gross income or are neither
currently deductible nor capitalized for federal income tax purposes.

 

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

 

(4)           In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such fiscal year.

 

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

 

B-1

 

 

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

 

C.            Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor, including where the transfer causes a termination of the Partnership
under Section 708(b)(1)(B) of the Code, in which case the Capital Account of the
transferee and the Capital Accounts of the other holders of Partnership Units in
the terminated Partnership shall carry over to the new Partnership that is
formed, for federal income tax purposes, as a result of the termination. In such
event, the Carrying Values of the Partnership properties in the reconstituted
Partnership shall remain the same as they were in the terminated Partnership and
the Capital Accounts of such reconstituted Partnership shall be maintained in
accordance with the principles of this Exhibit B.

 

D.            (1)  Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Values of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.01 of the Agreement.

 

(2)           Such adjustments shall be made as of the following times: 
(a) immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior to the acquisition of a more
than de minimis additional interest in the Partnership by any new or existing
Partner as consideration for the provision of services to or for the benefit of
the Partnership in a partner capacity or in anticipation of becoming a partner;
(c) immediately prior to the distribution by the Partnership to a Partner of
more than a de minimis amount of property as consideration for an interest in
the Partnership; and (d) immediately prior to the liquidation of the Partnership
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) (except for a
liquidation resulting from the termination of the Partnership under Section
708(b)(1)(B) of the Code), provided however that adjustments pursuant to
clauses (a), (b) and (c) above shall be made only if the General Partner
determines that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership.

 

(3)           In accordance with Regulations Section 1.704- l(b)(2)(iv)(e), the
Carrying Value of Partnership assets distributed in kind (other than in
connection with the termination of the Partnership under Section 708(b)(1)(B) of
the Code) shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of the time any
such asset is distributed.

 

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

 

E.             The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations

 

B-2

 

 

Section 1.704-l(b), and shall be interpreted and applied in a manner consistent
with such Regulations. In the event the General Partner shall determine that it
is prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto (including, without limitation, debits or credits relating to
liabilities which are secured by contributed or distributed property or which
are assumed by the Partnership, the General Partner, or the Limited Partners)
are computed in order to comply with such Regulations, the General Partner may
make such modification without regard to Article XIV of the Agreement, provided
that it is not likely to have a material effect on the amounts distributable to
any Person pursuant to Article XIII of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership’s balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b).

 

2.             No Interest

 

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

 

3.             No Withdrawal

 

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

 

B-3

 

 

EXHIBIT C
SPECIAL ALLOCATION RULES

 

1.             Special Allocation Rules.

 

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

 

A.            Minimum Gain Chargeback.  Notwithstanding the provisions of
Section 6.01 of the Agreement or any other provisions of this Exhibit C, if
there is a net decrease in Partnership Minimum Gain during any Partnership Year,
each Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner’s share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and, for purposes of this Section 1.A only, each
Partner’s Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.01 of this Agreement with respect to
such Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.

 

B.            Partner Minimum Gain Chargeback.  Notwithstanding any other
provision of Section 6.01 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations
Section1.704-2(i) (5), shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to such Partner’s share of the net decrease in Partner Minimum Gain attributable
to such Partner Nonrecourse Debt, determined in accordance with Regulations
Section1.704-2(i) (5). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i) (4). This Section 1.B is intended
to comply with the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith. Solely for purposes
of this Section 1.B, each Partner’s Adjusted Capital Account Deficit shall be
determined prior to any other allocations pursuant to Section 6.01 of the
Agreement or this Exhibit with respect to such Partnership Year, other than
allocations pursuant to Section 1.A hereof.

 

C.            Qualified Income Offset.  In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5),
or1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of Partnership income and
gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership Year) shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as quickly as
possible. This Section 1.C is intended to constitute a “qualified income offset”
under Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

 

D.            Gross Income Allocation.  In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs hereof
with respect to such Partnership Year), each such Partner shall be specially

  

C-1

 

 

allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit.

 

E.             Nonrecourse Deductions.  Nonrecourse Deductions for any
Partnership Year shall be allocated to the holders of Class A Units in
accordance with their respective Percentage Interests. If the General Partner
determines in its good faith discretion that the Partnership’s Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe harbor
requirements of the Regulations promulgated under Section 704(b) of the Code,
the General Partner is authorized, upon notice to the Limited Partners, to
revise the prescribed ratio for such Partnership Year to the numerically closest
ratio which would satisfy such requirements.

 

F.             Partner Nonrecourse Deductions.  Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).

 

G.            Code Section 754 Adjustments.  To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section1.704-l(b)(2)(iv)(m), to
be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.

 

H.            Forfeiture Allocations.  Upon a forfeiture of any unvested
Partnership Interest by any Partner, gross items of income, gain, loss or
deduction shall be allocated to such Partner if and to the extent required by
final Treasury Regulations promulgated after the Effective Date to ensure that
allocations made with respect to all unvested Partnership Interests are
recognized under Code Section 704(b).

 

2.             Allocations for Tax Purposes

 

A.            Except as otherwise provided in this Section 2, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of “book” income,
gain, loss or deduction is allocated pursuant to Section 6.01 of the Agreement
and Section 1 of this Exhibit C.

 

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

 

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

 

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

 

C-2

 

 

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

 

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

 

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

 

(d)           any item of Residual Gain or Residual Loss attributable to an
Adjusted Property shall be allocated among the Partners in the same manner its
correlative item of “book” gain or loss is allocated pursuant to Section 6.01 of
the Agreement and Section 1 of this Exhibit C.

 

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

  

C-3

 

 

EXHIBIT D
NOTICE OF REDEMPTION

 

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

 

Dated: Name of Limited Partner: (Signature of Limited Partner)   (Street
Address)   If Shares are to be issued, issue to:   Name:   Please insert social
security or identifying number:

 

D-1

 

 

EXHIBIT E

 

GKK CAPITAL LP

 

DESIGNATION OF THE RIGHTS, POWERS, PRIVILEGES,

RESTRICTIONS, QUALIFICATIONS AND LIMITATIONS

OF THE LTIP UNITS

 

The following are the terms of the LTIP Units:

 

1.             Vesting.

 

A.            Vesting, Generally.  LTIP Units may, in the sole discretion of the
General Partner, be issued subject to vesting, forfeiture and additional
restrictions on transfer pursuant to the terms of an award, vesting or other
similar agreement (a “Vesting Agreement”).  The terms of any Vesting Agreement
may be modified by the General Partner from time to time in its sole discretion,
subject to any restrictions on amendment imposed by the relevant Vesting
Agreement or by the terms of any plan pursuant to which the LTIP Units are
issued, if applicable.  LTIP Units that have vested and are no longer subject to
forfeiture under the terms of a Vesting Agreement are referred to as “Vested
LTIP Units”; all other LTIP Units are referred to as “Unvested LTIP Units.” 
Subject to the terms of any Vesting Agreement, a holder of LTIP Units shall be
entitled to transfer his or her LTIP Units to the same extent, and subject to
the same restrictions as holders of Class A Units are entitled to transfer their
Class A Units pursuant to Article XI of the Agreement.

 

B.            Forfeiture or Transfer of Unvested LTIP Units.  Unless otherwise
specified in the relevant Vesting Agreement, upon the occurrence of any event
specified in a Vesting Agreement as resulting in either the forfeiture of any
LTIP Units, or the right of the Partnership or the General Partner to repurchase
LTIP Units at a specified purchase price, then upon the occurrence of the
circumstances resulting in such forfeiture or if the Partnership or the General
Partner exercises such right to repurchase, then the relevant LTIP Units shall
immediately, and without any further action, be treated as cancelled or
transferred to the General Partner, as applicable, and no longer outstanding for
any purpose.  Unless otherwise specified in the Vesting Agreement, no
consideration or other payment shall be due with respect to any LTIP Units that
have been forfeited, other than any distributions declared with a record date
prior to the effective date of the forfeiture.  In connection with any
forfeiture or repurchase of LTIP Units, the balance of the portion of the
Capital Account of the holder that is attributable to all of his or her LTIP
Units shall be reduced by the amount, if any, by which it exceeds the target
balance contemplated by Section 6.01.D of the Agreement, calculated with respect
to the holder’s remaining LTIP Units, if any.

 

C.            Legend.  Any certificate evidencing an LTIP Unit shall bear an
appropriate legend indicating that additional terms, conditions and restrictions
on transfer, including without limitation any Vesting Agreement, apply to the
LTIP Unit.

 

2.             Distributions.

 

A.            LTIP Distribution Amount.  Commencing from the Distribution
Participation Date (as defined below) established for any LTIP Units, for any
quarterly or other period holders of such LTIP Units shall be entitled to
receive, if, when and as authorized by the General Partner out of funds legally
available for the payment of distributions, regular cash distributions in an
amount per unit equal to the distribution payable on each Class A Unit for the
corresponding

  

E-1

 

  

quarterly or other period (or, if applicable, for that portion of the quarterly
or other period that begins on the Distribution Participation Date) (the “LTIP
Distribution Amount”).  In addition, from and after the Distribution
Participation Date, LTIP Units shall be entitled to receive, if, when and as
authorized by the General Partner out of funds or other property legally
available for the payment of distributions, non-liquidating special,
extraordinary or other distributions in an amount per unit equal to the amount
of any non-liquidating special, extraordinary or other distributions payable on
the Class A Units which may be made from time to time.  LTIP Units shall also be
entitled to receive, if, when and as authorized by the General Partner out of
funds or other property legally available for the payment of distributions,
distributions representing proceeds of a sale or other disposition of all or
substantially all of the assets of the Partnership in an amount per unit equal
to the amount of any such distributions payable on the Class A Units, whether
made prior to, on or after the Distribution Participation Date, provided that
the amount of such distributions shall not exceed the positive balances of the
Capital Accounts of the holders of such LTIP Units to the extent attributable to
the ownership of such LTIP Units.  Distributions on the LTIP Units, if
authorized, shall be payable on such dates and in such manner as may be
authorized by the General Partner (any such date, a “Distribution Payment
Date”); provided that the Distribution Payment Date and the record date for
determining which holders of LTIP Units are entitled to receive a distribution
shall be the same as the corresponding dates relating to the corresponding
distribution on the Class A Units.

 

B.            Distribution Participation Date.  The “Distribution Participation
Date” for each LTIP Units will be either (i) with respect to LTIP Units granted
pursuant to the General Partner’s 2005 Long-Term Outperformance Program (the
“2005 Outperformance Program”), the applicable Valuation Date (as defined in the
Vesting Agreement of each Person granted LTIP Units under the 2005
Outperformance Program) or (ii) with respect to other LTIP Units, such date as
may be specified in the Vesting Agreement or other documentation pursuant to
which such LTIP Units are issued.

 

3.             Allocations.

 

Commencing with the portion of the taxable year of the Partnership that begins
on the Distribution Participation Date established for any LTIP Units, such LTIP
Units shall be allocated Net Income and Net Loss in amounts per LTIP Unit equal
to the amounts allocated per Class A Unit.  The allocations provided by the
preceding sentence shall be subject to the proviso to the first sentence of
Section 6.01.B of the Agreement.  The General Partner is authorized in its
discretion to delay or accelerate the participation of the LTIP Units in
allocations of Net Income and Net Loss, or to adjust the allocations made after
the Distribution Participation Date, so that the ratio of (i) the total amount
of Net Income or Net Loss allocated with respect to each LTIP Unit in the
taxable year in which that LTIP Unit’s Distribution Participation Date falls, to
(ii) the total amount distributed to that LTIP Unit with respect to such period,
is more nearly equal to such ratio as computed for the Class A Units held by the
General Partner.

 

4.             Adjustments.

 

The Partnership shall maintain at all times a one-to-one correspondence between
LTIP Units and Class A Units for conversion, distribution and other purposes,
including without limitation complying with the following procedures; provided
that the foregoing is not intended to alter the Capital Account Limitation (as
defined in Section 7.C of this Exhibit E), the special allocations pursuant to
Section 6.01.D of the Partnership Agreement, differences between non-liquidating
distributions to be made with respect to the LTIP Units and Class A Units prior
to the Distribution Participation Date for such LTIP Units, differences between
liquidating distributions to be made with respect to the LTIP Units and Class A
Units pursuant to Section 13.02 of the

  

E-2

 

 

Partnership Agreement or Section 2.A of this Exhibit E in the event that the
Capital Accounts attributable to the LTIP Units are less than those attributable
to the Class A Units due to insufficient special allocations pursuant to Section
6.01.D of the Partnership Agreement or related provisions.  If an Adjustment
Event (as defined below) occurs, then the General Partner shall make a
corresponding adjustment to the LTIP Units to maintain such one-for-one
correspondence between Class A Units and LTIP Units.  The following shall be
“Adjustment Events”:  (A) the Partnership makes a distribution on all
outstanding Class A Units in Partnership Units, (B) the Partnership subdivides
the outstanding Class A Units into a greater number of units or combines the
outstanding Class A Units into a smaller number of units, or (C) the Partnership
issues any Partnership Units in exchange for its outstanding Class A Units by
way of a reclassification or recapitalization of its Class A Units.  If more
than one Adjustment Event occurs, the adjustment to the LTIP Units need be made
only once using a single formula that takes into account each and every
Adjustment Event as if all Adjustment Events occurred simultaneously.  For the
avoidance of doubt, the following shall not be Adjustment Events: (x) the
issuance of Partnership Units in a financing, reorganization, acquisition or
other similar business transaction, (y) the issuance of Partnership Units
pursuant to any employee benefit or compensation plan or distribution
reinvestment plan, or (z) the issuance of any Partnership Units to the General
Partner in respect of a capital contribution to the Partnership of proceeds from
the sale of securities by the General Partner.  If the Partnership takes an
action affecting the Class A Units other than actions specifically described
above as Adjustment Events and in the opinion of the General Partner such action
would require an adjustment to the LTIP Units to maintain the one-to-one
correspondence described above, the General Partner shall have the right to make
such adjustment to the LTIP Units, to the extent permitted by law and by the
terms of any plan pursuant to which the LTIP Units have been issued, in such
manner and at such time as the General Partner, in its sole discretion, may
determine to be appropriate under the circumstances.  If an adjustment is made
to the LTIP Units as herein provided the Partnership shall promptly file in the
books and records of the Partnership an officer’s certificate setting forth such
adjustment and a brief statement of the facts requiring such adjustment, which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error.  Promptly after filing of such certificate, the
Partnership shall mail a notice to each holder of LTIP Units setting forth the
adjustment to his or her LTIP Units and the effective date of such adjustment.

 

5.             Ranking.

 

The LTIP Units shall rank on parity with the Class A Units in all respects,
subject to the proviso in the first sentence of Section 4 of this Exhibit E.

 

6.             No Liquidation Preference.

 

The LTIP Units shall have no liquidation preference.

 

7.             Right to Convert LTIP Units into Class A Units.

 

A.            Conversion Right.  A holder of LTIP Units shall have the right
(the “Conversion Right”), at his or her option, at any time to convert all or a
portion of his or her Vested LTIP Units into Class A Units.  Holders of LTIP
Units shall not have the right to convert Unvested LTIP Units into Class A Units
until they become Vested LTIP Units; provided, however, that when a holder of
LTIP Units is notified of the expected occurrence of an event that will cause
his or her Unvested LTIP Units to become Vested LTIP Units, such Person may give
the Partnership a Conversion Notice conditioned upon and effective as of the
time of vesting, and such Conversion Notice, unless subsequently revoked by the
holder of the LTIP Units, shall be accepted by the Partnership subject to such
condition.  The General Partner shall have the right at

 

E-3

 

 

any time to cause a conversion of Vested LTIP Units into Class A Units.  In all
cases, the conversion of any LTIP Units into Class A Units shall be subject to
the conditions and procedures set forth in this Section 7.

 

B.            Number of Units Convertible. A holder of Vested LTIP Units may
convert such Vested LTIP Units into an equal number of fully paid and
non-assessable Class A Units, giving effect to all adjustments (if any) made
pursuant to Section 4.  Notwithstanding the foregoing, in no event may a holder
of Vested LTIP Units convert a number of Vested LTIP Units that exceeds (x) the
Economic Capital Account Balance of such holder, to the extent attributable to
its ownership of LTIP Units, divided by (y) the Class A Unit Economic Balance,
in each case as determined as of the effective date of conversion (the “Capital
Account Limitation”).

 

C.            Notice.  In order to exercise his or her Conversion Right, a
holder of LTIP Units shall deliver a notice (a “Conversion Notice”) in the form
attached as Attachment A to this Exhibit E to the Partnership not less than 10
nor more than 60 days prior to a date (the “Conversion Date”) specified in such
Conversion Notice.  Each holder of LTIP Units covenants and agrees with the
Partnership that all Vested LTIP Units to be converted pursuant to this Section
7 shall be free and clear of all liens.  Notwithstanding anything herein to the
contrary, a holder of LTIP Units may deliver a Redemption Notice pursuant to
Section 8.06 of the Agreement relating to those Class A Units that will be
issued to such holder upon conversion of such LTIP Units into Class A Units in
advance of the Conversion Date; provided, however, that the redemption of such
Class A Units by the Partnership shall in no event take place until the
Conversion Date.  For clarity, it is noted that the objective of this paragraph
is to put a holder of LTIP Units in a position where, if he or she so wishes,
the Class A Units into which his or her Vested LTIP Units will be converted can
be redeemed by the Partnership simultaneously with such conversion, with the
further consequence that, if the General Partner elects to assume the
Partnership’s redemption obligation with respect to such Class A Units under
Section 8.06 of the Agreement by delivering to such holder Shares rather than
cash, then such holder can have such Shares issued to him or her simultaneously
with the conversion of his or her Vested LTIP Units into Class A Units.  The
General Partner shall cooperate with a holder of LTIP Units to coordinate the
timing of the different events described in the foregoing sentence.

 

D.            Forced Conversion.  The Partnership, at any time at the election
of the General Partner, may cause any number of Vested LTIP Units held by a
holder of LTIP Units to be converted (a “Forced Conversion”) into an equal
number of Class A Units, giving effect to all adjustments (if any) made pursuant
to Section 4; provided, that the Partnership may not cause a Forced Conversion
of any LTIP Units that would not at the time be eligible for conversion at the
option of the holder of such LTIP Units pursuant to Section 7.B above.  In order
to exercise its right to cause a Forced Conversion, the Partnership shall
deliver a notice (a “Forced Conversion Notice”) in the form attached as
Attachment B to this Exhibit E to the applicable holder not less than 10 nor
more than 60 days prior to the Conversion Date specified in such Forced
Conversion Notice.  A Forced Conversion Notice shall be provided in the manner
provided in Section 15.01 of the Agreement.

 

E.             Conversion Procedures.  A conversion of Vested LTIP Units for
which the holder thereof has given a Conversion Notice or the Partnership has
given a Forced Conversion Notice shall occur automatically after the close of
business on the applicable Conversion Date without any action on the part of
such holder of LTIP Units, as of which time such holder of LTIP Units shall be
credited on the books and records of the Partnership with the issuance as of the
opening of business on the next day of the number of Class A Units issuable upon
such conversion.  After the conversion of LTIP Units as aforesaid, the
Partnership shall deliver to such holder of LTIP Units, upon his or her written
request, a certificate of the General Partner certifying the number of

  

E-4

 

 

Class A Units and remaining LTIP Units, if any, held by such Person immediately
after such conversion.

 

F.             Treatment of Capital Account.  For purposes of making future
allocations under Section 6.01.D of the Agreement and applying the Capital
Account Limitation, the portion of the Economic Capital Account balance of the
applicable holder of LTIP Units that is treated as attributable to his or her
LTIP Units shall be reduced, as of the date of conversion, by the product of the
number of LTIP Units converted multiplied by the Class A Unit Economic Balance.

 

G.            Mandatory Conversion in Connection with a Transaction.  If the
Partnership or the General Partner shall be a party to any transaction
(including without limitation a merger, consolidation, unit exchange, self
tender offer for all or substantially all Class A Units or other business
combination or reorganization, or sale of all or substantially all of the
Partnership’s assets, but excluding any transaction which constitutes an
Adjustment Event), in each case as a result of which Class A Units shall be
exchanged for or converted into the right, or the holders of Class A Units shall
otherwise be entitled, to receive cash, securities or other property or any
combination thereof (each of the foregoing being referred to herein as a
“Transaction”), then the General Partner shall, immediately prior to the
Transaction, exercise its right to cause a Forced Conversion with respect to the
maximum number of LTIP Units then eligible for conversion, taking into account
any allocations that occur in connection with the Transaction or that would
occur in connection with the Transaction if the assets of the Partnership were
sold at the Transaction price or, if applicable, at a value determined by the
General Partner in good faith using the value attributed to the Partnership
Units in the context of the Transaction (in which case the Conversion Date shall
be the effective date of the Transaction and the conversion shall occur
immediately prior to the effectiveness of the Transaction).

 

In anticipation of such Forced Conversion and the consummation of the
Transaction, the Partnership shall use commercially reasonable efforts to cause
each holder of LTIP Units to be afforded the right to receive in connection with
such Transaction in consideration for the Class A Units into which his or her
LTIP Units will be converted the same kind and amount of cash, securities and
other property (or any combination thereof) receivable upon the consummation of
such Transaction by a holder of the same number of Class A Units, assuming such
holder of Class A Units is not a Person with which the Partnership consolidated
or into which the Partnership merged or which merged into the Partnership or to
which such sale or transfer was made, as the case may be (a “Constituent
Person”), or an affiliate of a Constituent Person.  In the event that holders of
Class A Units have the opportunity to elect the form or type of consideration to
be received upon consummation of the Transaction, prior to such Transaction the
General Partner shall give prompt written notice to each holder of LTIP Units of
such election, and shall use commercially reasonable efforts to afford such
holders the right to elect, by written notice to the General Partner, the form
or type of consideration to be received upon conversion of each LTIP Unit held
by such holder into Class A Units in connection with such Transaction.  If a
holder of LTIP Units fails to make such an election, such holder (and any of its
transferees) shall receive upon conversion of each LTIP Unit held him or her (or
by any of his or her transferees) the same kind and amount of consideration that
a holder of a Class A Unit would receive if such holder of Class A Units failed
to make such an election.

 

Subject to the rights of the Partnership and the General Partner under any
Vesting Agreement and the terms of any plan under which LTIP Units are issued,
the Partnership shall use commercially reasonable effort to cause the terms of
any Transaction to be consistent with the provisions of this Section 7 and to
enter into an agreement with the successor or purchasing entity, as the case may
be, for the benefit of any holders of LTIP Units whose LTIP Units will not be
converted into Class A Units in connection with the Transaction that will (i)
contain provisions enabling the holders of LTIP Units that remain outstanding
after such Transaction to convert their

  

E-5

 

 

LTIP Units into securities as comparable as reasonably possible under the
circumstances to the Class A Units and (ii) preserve as far as reasonably
possible under the circumstances the distribution, special allocation,
conversion, and other rights set forth in the Agreement for the benefit of the
holders of LTIP Units.

 

8.             Redemption at the Option of the Partnership.

 

LTIP Units will not be redeemable at the option of the Partnership; provided,
however, that the foregoing shall not prohibit the Partnership from repurchasing
LTIP Units from the holder thereof if and to the extent such holder agrees to
sell such Units.

 

9.             Voting Rights.

 

A.            Voting with Class A Units.  Holders of LTIP Units shall have the
right to vote on all matters submitted to a vote of the holders of Class A
Units; holders of LTIP Units and Class A Units shall vote together as a single
class, together with any other class or series of units of limited partnership
interest in the Partnership upon which like voting rights have been conferred. 
In any matter in which the LTIP Units are entitled to vote, including an action
by written consent, each LTIP Unit shall be entitled to vote a Percentage
Interest equal on a per unit basis to the Percentage Interest of the Class A
Units.

 

B.            Special Approval Rights.  In addition to, and not in limitation
of, the provisions of Section 9.A above (and notwithstanding anything appearing
to be contrary in the Agreement), the General Partner and/or the Partnership
shall not, without the affirmative consent of the holders of sixty-six and
two-thirds percent (66 2/3%) of the then outstanding LTIP Units, given in person
or by proxy, either in writing or at a meeting, take any action that would
materially and adversely alter, change, modify or amend the rights, powers or
privileges of the LTIP Units; but subject in any event to the following
provisions: (i) no consent of the holders of LTIP Units will be required if and
to the extent that any such alteration, change, modification or amendment would
similarly alter, change, modify or amend the rights, powers or privileges of the
Class A Units; (ii) with respect to the occurrence of any merger, consolidation
or other business combination or reorganization, so long as the LTIP Units
either (x) are all converted into Class A Units immediately prior to the
effectiveness of the transaction, (y) remain outstanding with the terms thereof
materially unchanged or (z) if the Partnership is not the surviving entity in
such transaction, are exchanged for a security of the surviving entity with
terms that are materially the same with respect to rights to allocations,
distributions, redemption, conversion and voting as the LTIP Units and without
any income, gain or loss expected to be recognized by the holder upon the
exchange for federal income tax purposes (and with the terms of the Class A
Units or such other securities into which the LTIP Units (or the substitute
security therefor) are convertible materially the same with respect to rights to
allocations, distributions, redemption, conversion and voting), the occurrence
of any such event shall not be deemed to materially and adversely alter, change,
modify or amend the rights, powers or privileges of the LTIP Units, provided
further, that if some, but not all, of the LTIP Units are converted into Class A
Units immediately prior to the effectiveness of the transaction (and neither
clause (y) or (z) above is applicable), then the consent required pursuant to
this Section will be the consent of the holders of sixty-six and two-thirds
percent (66 2/3%) of the LTIP Units to be outstanding following such conversion;
(iii) any creation or issuance of any Class A Units or of any class of series of
common or preferred units of the Partnership (whether ranking junior to, on a
parity with or senior to the LTIP Units with respect to payment of
distributions, redemption rights and the distribution of assets upon
liquidation, dissolution or winding up), which either (x) does not require the
consent of the holders of Class A Units or (y) does require such consent and is
authorized by a vote of the holders of Class A Units; and LTIP Units voting
together as a single class, together with any

  

E-6

 

 

other class or series of units of limited partnership interest in the
Partnership upon which like voting rights have been conferred, shall not be
deemed to materially and adversely alter, change, modify or amend the rights,
powers or privileges of the LTIP Units; and (iv) any waiver by the Partnership
of restrictions or limitations applicable to any outstanding LTIP Units with
respect to any holder or holders thereof shall not be deemed to materially and
adversely alter, change, modify or amend the rights, powers or privileges of the
LTIP Units with respect to other holders.  The foregoing voting provisions will
not apply if, as of or prior to the time when the action with respect to which
such vote would otherwise be required will be taken or be effective, all
outstanding LTIP Units shall have been converted and/or redeemed, or provision
is made for such redemption and/or conversion to occur as of or prior to such
time.

  

E-7

 

  

Attachment A to Exhibit E

 

Notice of Election by Partner to Convert
LTIP Units into Class A Units

 

The undersigned holder of LTIP Units hereby irrevocably elects to convert the
number of Vested LTIP Units in GKK Capital LP (the “Partnership”) set forth
below into Class A Units in accordance with the terms of the Second Amended and
Restated Agreement of Limited Partnership of the Partnership, as amended.  The
undersigned hereby represents, warrants, and certifies that the undersigned: (a)
has title to such LTIP Units, free and clear of the rights or interests of any
other person or entity other than the Partnership; (b) has the full right,
power, and authority to cause the conversion of such LTIP Units as provided
herein; and (c) has obtained the consent or approval of all persons or entities,
if any, having the right to consent or approve such conversion.

 

  Name of Holder:       (Please Print: Exact Name as Registered with
Partnership)             Number of LTIP Units to be Converted:                
Conversion Date:                             (Signature of Holder: Sign Exact
Name as Registered with Partnership)  

 

            (Street Address)                             (City)   (State)   
(Zip Code)               Signature Guaranteed by:      

 

 

 

 

Attachment B to Exhibit E

 

Notice of Election by Partnership to Force Conversion
of LTIP Units into Class A Units

 

GKK Capital LP (the “Partnership”) hereby irrevocably elects to cause the number
of LTIP Units held by the holder of LTIP Units set forth below to be converted
into Class A Units in accordance with the terms of the Second Amended and
Restated Agreement of Limited Partnership of the Partnership, as amended.

 

  Name of Holder:       (Please Print: Exact Name as Registered with
Partnership)

 

  Number of LTIP Units to be Converted:               Conversion Date: