Exhibit 10.13

 

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BLACKSTONE REAL ESTATE MANAGEMENT ASSOCIATES INTERNATIONAL L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

DATED AS OF MAY 31, 2007

 

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TABLE OF CONTENTS

 

          Page ARTICLE I DEFINITIONS    1

Section 1.1.

   Definitions    1

Section 1.2.

   Terms Generally    10 ARTICLE II GENERAL PROVISIONS    10

Section 2.1.

   General Partner and Limited Partners    10

Section 2.2.

   Formation; Name    10

Section 2.3.

   Term    10

Section 2.4.

   Purpose; Powers    10

Section 2.5.

   Place of Business    12

Section 2.6.

   Feeder Vehicle    12 ARTICLE III MANAGEMENT    12

Section 3.1.

   General Partner    12

Section 3.2.

   Limited Partners    12

Section 3.3.

   Partner Voting, etc.    12

Section 3.4.

   Management    13

Section 3.5.

   Responsibilities of Partners    13

Section 3.6.

   [Intentionally omitted]    13

Section 3.7.

   Exculpation and Indemnification    13

Section 3.8.

   Tax Representation    14 ARTICLE IV CAPITAL OF THE PARTNERSHIP    15

Section 4.1.

   Capital Contributions by Partners    15

Section 4.2.

   Interest    21

Section 4.3.

   Withdrawals of Capital    21 ARTICLE V PARTICIPATION IN PROFITS AND LOSSES   
21

Section 5.1.

   General Accounting Matters    21

 

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Section 5.2.

   Capital Accounts    23

Section 5.3.

   Profit Sharing Percentages    23

Section 5.4.

   Allocations of Net Income (Loss)    24

Section 5.5.

   Liability of General and Limited Partners    24

Section 5.6.

   [Intentionally omitted.]    25

Section 5.7.

   Repurchase Rights, etc.    25

Section 5.8.

   Distributions    25

Section 5.9.

   Business Expenses    30

ARTICLE VI ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS; SATISFACTION AND
DISCHARGE OF PARTNERSHIP INTERESTS; TERMINATION

   30

Section 6.1.

   Additional Partners    30

Section 6.2.

   Withdrawal of Partners    31

Section 6.3.

   Partnership Interests Not Transferable    32

Section 6.4.

   General Partner Withdrawal    32

Section 6.5.

   Satisfaction and Discharge of a Withdrawn Partner’s Interest    33

Section 6.6.

   [Intentionally omitted]    37

Section 6.7.

   Termination of Partnership    37

Section 6.8.

   Certain Tax Matters    37

Section 6.9.

   Special Basis Adjustments    38 ARTICLE VII Dissolution    38

Section 7.1.

   Dissolution    38

Section 7.2.

   Final Distribution    39

Section 7.3.

   No Obligation to Restore Capital Accounts    39 ARTICLE VIII MISCELLANEOUS   
39

Section 8.1.

   Submission to Jurisdiction; Waiver of Jury Trial    39

Section 8.2.

   Ownership and Use of the Firm Name    40

Section 8.3.

   Written Consent    41

 

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Section 8.4.

   Letter Agreements; Schedules    41

Section 8.5.

   Governing Law    41

Section 8.6.

   Successors and Assigns; Third Party Beneficiaries    41

Section 8.7.

   Partner’s Will    42

Section 8.8.

   Confidentiality    42

Section 8.9.

   Notices    42

Section 8.10.

   Counterparts    42

Section 8.11.

   Power of Attorney    42

Section 8.12.

   Cumulative Remedies    42

Section 8.13.

   Legal Fees    42

Section 8.14.

   Entire Agreement    43

 

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BLACKSTONE REAL ESTATE MANAGEMENT ASSOCIATES INTERNATIONAL L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Blackstone Real
Estate Management Associates International L.P. (the “Partnership”), dated as of
May 31, 2007, by and among BREA International (Cayman) Ltd., a Cayman Islands
limited company (“BREA (Cayman)” or the “General Partner”), and the limited
partners (including special limited partners) as provided on the signature pages
hereto, as Limited Partners.

PRELIMINARY STATEMENT

The Partnership was formed under the laws of Alberta, Canada pursuant to a
Certificate of Limited Partnership, dated as of December 20, 2000, which was
filed with the Registrar of Corporations (Alberta) (L.P. No. 9114760).

The original partnership agreement of the Partnership was executed as of
December 20, 2000 (the “Existing Agreement”).

The Existing Agreement was amended and restated in its entirety by the Amended
and Restated Agreement of Limited Partnership, dated as of July 26, 2001, of the
Partnership (as amended to date, the “First Amended and Restated Agreement”)

The parties hereto now wish to amend and restate the First Amended and Restated
Agreement in its entirety as of the date hereof and as hereinafter set forth.
Accordingly, the parties agree as follows:

ARTICLE I

DEFINITIONS

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

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

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

“BCP” means the collective reference to Blackstone Capital Partners L.P., a
Delaware limited partnership, and any other investment vehicle established in
accordance with the terms of Blackstone Capital Partners L.P.’s partnership
agreement to invest in lieu of Blackstone Capital Partners L.P. on behalf of one
or more of the partners thereof.

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

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“BCP III” means the collective reference to Blackstone Capital Partners III
Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore
Capital Partners III L.P., a Cayman Islands exempted limited partnership, and
any other investment vehicle established pursuant to paragraph 2.7 of the
respective partnership agreements of either of such partnerships.

“BFREP International” means Blackstone Family Real Estate Partnership
International - A L.P. and Blackstone Family Real Estate Partnership
International - B L.P., each an Alberta, Canada limited partnership.

“BRE Associates” means BRE Associates International L.P., an Alberta, Canada
limited partnership.

“BREA (Cayman)” has the meaning set forth in the Preamble.

“BREA International” means Blackstone Real Estate Associates International
(Alberta) L.P., an Alberta, Canada limited partnership.

“BREA International (Delaware)” means Blackstone Real Estate Associates
International L.P., a Delaware limited partnership, domesticated as a limited
partnership in the State of Delaware pursuant to Section 17-215 of the Delaware
Revised Uniform Limited Partnership Act.

“BRECA International” means Blackstone Real Estate Capital Associates
International L.P., an Alberta, Canada limited partnership, and any other
partnership with terms substantially similar to the terms set forth in the BRECA
International Partnership Agreement and formed in connection with the
participation by one or more partners of BRECA International in investments in
Securities issued by non-U.S. Issuers.

“BRECA International Partnership Agreement” means the Amended and Restated
Agreement of Limited Partnership of Blackstone Real Estate Capital Associates
International L.P., dated as of the date hereof, as amended from time to time.

“BREH International” means Blackstone Real Estate Holdings International - A
L.P. and Blackstone Real Estate Holdings International - B L.P., each an
Alberta, Canada limited partnership.

“BREI” means the collective reference to: (i) Blackstone Real Estate Partners
International I.D L.P., Blackstone Real Estate Partners International I.D.2 L.P.
and Blackstone Real Estate Partners International I.E L.P., each a limited
partnership formed or to be formed under the laws of the United Kingdom pursuant
to the Limited Partnerships Act 1907 of the United Kingdom, (ii) any other
investment vehicle established pursuant to Article 2 of the respective
partnership agreements for any of the partnerships referred to in clause
(i) above, and (iii) any investment vehicle formed to co-invest with any of the
partnerships referred to in clause (i) above using third party capital and that
potentially pays a Carried Interest.

“BREI Agreement” means the Amended and Restated Agreements of Limited
Partnership, each dated January 19, 2001 or other date set forth therein, of the
partnerships referred to in clause (i) of the definition of “BREI” in this
Article I, and any other BREI partnership agreement.

 

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“BREI Investment” means the Partnership’s indirect interest in a specific BREI
investment pursuant to the BREI Agreement in its capacity as an indirect partner
of BREI, but does not include any direct or indirect investment by the
Partnership on a side-by-side basis in any BREI investment.

“Carried Interest” shall mean (i) distributions to the general partner of BREI
(including BREA International (Delaware)) pursuant to paragraphs 4.2.1(c) and
(d), paragraphs 4.2.2(c) and (d) and paragraph 4.2.7 of the BREI Agreement (or
similar provisions of investment vehicles formed after the date hereof) and
(ii) any other carried interest payable pursuant to the BREI Agreement. In each
case of (i) and (ii) above, except as determined by the Managing Member, the
amount shall not be less any costs, fees and expenses of the Partnership with
respect thereto and less reasonable reserves for payment of costs, fees and
expenses of the Partnership that are anticipated with respect thereto (in each
case which the General Partner may allocate amongst all or any portion of the
Investments as it determines in good faith is appropriate).

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

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

“Cause” means the occurrence or existence of any of the following with respect
to any Partner, as determined fairly, reasonably, on an informed basis and in
good faith by the General Partner: (i) (w) any breach by any Partner of any
provision of any non-competition agreement, (x) any material breach of this
Agreement or any rules or regulations applicable to such Partner that are
established by the General Partner, (y) such Partner’s deliberate failure to
perform his or her duties to the Partner, or (z) such Partner’s committing to or
engaging in any conduct or behavior that is or may be harmful to the Partnership
in a material way as determined by the General Partner; provided, that in the
case of any of the foregoing clauses (w), (x), (y) and (z), the General Partner
has given such Partner written notice (a “Notice of Breach”) within fifteen days
after the General Partner becomes aware of such action and such Partner fails to
cure such breach, failure to perform or conduct or behavior within fifteen days
after receipt of such Notice of Breach from the General Partner (or such longer
period, not to exceed an additional fifteen days, as shall be reasonably
required for such cure, provided that such Partner is diligently pursuing such
cure); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or
similar conduct against the Partnership; or (iii) conviction (on the basis of a
trial or by an accepted plea of guilty or nolo contendere) of a felony or crime
(including any misdemeanor charge involving moral turpitude, false statements or
misleading omissions, forgery, wrongful taking, embezzlement, extortion or
bribery), or a determination by a court of competent jurisdiction, by a
regulatory body or by a self-regulatory body having authority with respect to
securities laws, rules or regulations of the applicable securities industry,
that such Partner individually has violated any applicable securities

 

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laws or any rules or regulations thereunder, or any rules of any such
self-regulatory body (including, without limitation, any licensing requirement),
if such conviction or determination has a material adverse effect on (A) such
Partner’s ability to function as a Partner of the Partnership, taking into
account the services required of such Partner and the nature of the
Partnership’s business or (B) the business of the Partnership.

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

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

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

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

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

“Clawback Provisions” shall mean paragraphs 4.2.8 and 9.2.6 of the BREI
Agreement and any other similar provisions in any other BREI Agreement existing
heretofore or hereafter entered into.

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

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

“Commitment Agreement” shall mean a commitment agreement by which a Partner has
committed to fund certain amounts with respect to the BREI Investments and
certain expenses of BREI.

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

“Controlled Entity” when used with reference to another person means any person
controlled by such other person.

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

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

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

 

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

“Disabling Event” means (a) the withdrawal of a General Partner, other than in
accordance with Section 6.2(b)(ii), (b) the incapacity of a General Partner,
(c) if a General Partner (i) makes an assignment for the benefit of its
creditors, (ii) files a voluntary petition in bankruptcy, (iii) is adjudged a
bankrupt or insolvent or has entered against it an order for relief in any
bankruptcy or insolvency proceeding, (iv) files a petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, (v) files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against it in proceeding described in clause
(iv), or (v) seeks, consents to, or acquiesces in, the appointment of a trustee,
receiver or liquidator of the General Partner or of all or substantially all of
its properties, or (d) any other event that causes the General Partner to cease
to be a general partner of the Partnership as provided in the Partnership Act.

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

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

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

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

“Excess Tax-Related Amount” has the meaning specified in Section 5.8(e).

“Excluded Item” has the meaning set forth in Section 5.1(b).

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

“Feeder Vehicle” shall mean any Limited Partner formed to serve as a collective
investment vehicle for real estate-related investments in the United Kingdom
which invests all or a portion of its investable resources in the Partnership.

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

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

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

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

 

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“GAAP” means U.S. generally accepted accounting principles.

“General Partner” means BREA (Cayman) and any person admitted to the Partnership
as an additional General Partner in accordance with the provisions of this
Agreement, until such time as such person ceases to be a general partner of the
Partnership as provided herein or in the Partnership Act.”

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

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

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

“Holdings” means Blackstone Holdings IV L.P., a Delaware limited partnership.

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

“Inflation Index” means (i) the GNP deflator, which is the fixed-weighted price
index representing the average change in the United States gross national
product as published in the Survey of Current Business by the National Income
and Wealth Division of the Bureau of Economic Analysis of the U.S. Department of
Commerce, or (ii) such other index measuring changes in economic prices in the
United States as shall be selected by the General Partner.

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

“Interest” means a limited partnership interest in the Partnership, including
those which are held by a Retaining Withdrawn Partner. An Interest held by the
Feeder Vehicle shall, and any other Interest may be, segregated into multiple
Interests for all purposes hereof.

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

“Investor Limited Partner” means any Limited Partner so designated at the time
of its admission as a partner of the Partnership.

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

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

“Limited Partner” means any person who is shown on the books and records of the
Partnership as a Limited Partner of the Partnership, including any Special
Limited Partner, any Investor Limited Partner and any Nonvoting Limited Partner.

“Loss Amount” has the meaning specified in Section 5.8(e).

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

 

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

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

“Net Carried Interest Distribution” has the meaning specified in Section 5.8(e).

“Net Carried Interest Distribution Recontribution Amount” has the meaning
specified in Section 5.8(e).

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

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

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

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

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

“Nonvoting Limited Partner” has the meaning set forth in Section 6.1(a).

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

“Partner” means any person who is a partner of the Partnership, whether a
General Partner or a Limited Partner in whatsoever Partner Category.

 

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

“Partnership” has the meaning set forth in the Preamble.

“Partnership Act” means the Partnership Act (Revised Statutes of Alberta 1980,
Chap. P-2, et seq.), as it may be amended from time to time, and any successor
to such statute.

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

“Qualifying Fund” means any fund designated by the General Partner as a
“Qualifying Fund”.

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

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

“Required Amounts” means amounts equal to the Partnership’s portion of the
required capital contribution in respect of any BREI Investment to be made by
the general partner of BREI (including, without limitation, BREA International
(Delaware)), as determined by the General Partner from time to time, which
amounts shall be used by the Partnership to fund capital contributions to BREA
International and indirectly, through BREA International, to the general partner
of BREI (including, without limitation, BREA International (Delaware)).

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

“Retaining Withdrawn Partner” shall mean a Withdrawn Partner who has retained a
partnership interest in the Partnership, pursuant to Section 6.5(f) or
otherwise. A Retaining Withdrawn Partner shall be considered a Partner for all
purposes hereof.

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

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

 

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

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

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

“Special Limited Partner” means any of the persons shown on the books and
records of the Partnership as a Special Limited Partner and any person admitted
to the Partnership as an additional Special Limited Partner in accordance with
the provisions of this Agreement.

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

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

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

“Total Disability” means the inability of a Limited Partner substantially to
perform the obligations required of such Limited Partner (in its capacity as
such or in any other capacity with respect to any affiliate of the Partnership)
for a period of six consecutive months by reason of physical or mental illness
or incapacity and whether arising out of sickness, accident or otherwise.

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

“Trust Agreement” means the Trust Agreement, dated as of July 26, 2001, as
amended to date, among the Partners, the Trustee(s) and certain other persons
that may receive distributions in respect of or relating to Carried Interest
from time to time.

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

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

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

“Unadjusted Carried Interest Distributions” has the meaning specified in
Section 5.8(e).

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

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

 

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realized by the Partnership with respect to such Investment if such Investment
were sold on such date for cash in an amount equal to its value on such date
(determined in accordance with Section 5.1(e)).

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

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

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

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

ARTICLE II

GENERAL PROVISIONS

Section 2.1. General Partner and Limited Partners. The Partners may be General
Partners or Limited Partners. The General Partner is BREA (Cayman). The Limited
Partners shall be as shown on the books and records of the Partnership.

Section 2.2. Formation; Name. The Partnership was formed upon the filing and
recording of a Certificate with the Registrar of Corporations on December 20,
2000 (L.P. No. 9114760) and is hereby continued as a limited partnership
pursuant to the Partnership Act and shall conduct its activities under the name
of Blackstone Real Estate Management Associates International L.P.

Section 2.3. Term. The term of the Partnership shall continue until December 31,
2050, unless earlier dissolved and terminated in accordance with this Agreement.

Section 2.4. Purpose; Powers. (a) The purpose of the Partnership shall be,
directly or indirectly through subsidiaries or affiliates, (i) to serve as a
limited partner of BREA International or of any Other Fund GP and perform the
obligations of a limited partner specified in such entities’ respective
partnership or similar agreements, (ii) to serve as general partner or limited
partner of other partnerships and hold interests in companies, corporations and
other entities, (iii) to carry on such other businesses for profit, perform such
other services and make such other investments for profit as are deemed
desirable by the General Partner, subject to the Partner vote requirements set
forth in Section 3.3, (iv) any other lawful purpose, and (v) to do all things
necessary and incidental thereto.

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

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

 

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

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

(iv) to borrow or raise money from time to time and to issue promissory notes,
drafts, bills of exchange, warrants, bonds, debentures and other negotiable and
non-negotiable instruments and evidences of indebtedness, to secure payment of
the principal of any such indebtedness and the interest thereon by mortgage,
pledge, conveyance or assignment in trust of, or the granting of a security
interest in, the whole or any part of the property of the Partnership, whether
at the time owned or thereafter acquired, to guarantee the obligations of others
and to buy, sell, pledge or otherwise dispose of any such instrument or evidence
of indebtedness;

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

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

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

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

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

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

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

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

 

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

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

Section 2.5. Place of Business. The Partnership shall maintain an office and
principal place of business at 345 Park Avenue, New York, New York 10154 U.S.A.,
or such other place or places as may from time to time be designated by the
General Partner.

Section 2.6. Feeder Vehicle. (a) The Interest of the Feeder Vehicle shall be
treated as Interests held by more than one Limited Partner for purposes of
determining the appropriate treatment of the Feeder Vehicle in connection
herewith, in light of the multiple interestholders in the Feeder Vehicle. This
shall include (i) reflecting on the books and records of the Partnership a
separate Interest held by the Feeder Vehicle with respect to each interestholder
therein and (ii) applying the provisions of Article IV as though the
interestholder were a direct Limited Partner in the Partnership.

(b) If any interestholder of the Feeder Vehicle fails to make a Capital
Contribution to the Feeder Vehicle, the Feeder Vehicle may be treated as a
Defaulting Limited Partner in accordance with the provisions hereof, but solely
with respect to such interestholder’s indirect interest in the Partnership.

(c) In the case of any vote of Limited Partners under this Agreement or any law,
the Feeder Vehicle shall vote its Interest in proportion to the votes on such
matter of the interestholders thereof, based on their pro rata interest therein,
that are unaffiliated with the General Partner.

(d) The General Partner may make any adjustments to the Interest of the Feeder
Vehicle to accomplish the overall objectives of this Section 2.6; provided, that
such adjustments shall in no way have a materially adverse effect on the
Interests of any other Partner.

ARTICLE III

MANAGEMENT

Section 3.1. General Partner. BREA (Cayman) shall be the “General Partner.” A
General Partner may not be removed without its consent. The management of the
business and affairs of the Partnership shall be vested in the General Partner
as provided in Section 3.4.

Section 3.2. Limited Partners. The Limited Partners shall be the parties set
forth on the books and records of the Partnership as Limited Partners as of the
date hereof.

Section 3.3. Partner Voting, etc.

(a) Meetings of the Partners may be held only when called by the General
Partner.

(b) Except as may be expressly required or permitted by the Partnership Act,
Limited Partners as such shall have no right to, and shall not, take part in the
control of the Partnership’s business or act for or bind the Partnership, and
shall have only the rights and powers of a limited partner as provided in both
the Partnership Act and this Agreement.

 

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

Section 3.4. Management. (a) The full management, control and operation of the
Partnership and the formulation and execution of business and investment policy
shall be vested in the General Partner, and the General Partner shall have full
control over the business and affairs of the Partnership. The General Partner
shall, in the General Partner’s discretion, exercise all powers necessary and
convenient for the purposes of the Partnership, including, without limitation,
those enumerated in Section 2.4, on behalf and in the name of the Partnership.
If there shall be more than one General Partner, any action by the General
Partners shall require the unanimous approval of the General Partners. All
decisions and determinations (howsoever described herein) to be made by the
General Partner pursuant to this Agreement shall be made in the General
Partner’s discretion, subject only to the express terms and conditions of this
Agreement.

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

Section 3.5. Responsibilities of Partners. The General Partner may from time to
time establish such rules and regulations applicable to Partners the General
Partner deem appropriate.

Section 3.6. [Intentionally omitted].

Section 3.7. Exculpation and Indemnification. (a) Liability to Partners.
Notwithstanding any other provision of this Agreement, whether express or
implied, to the fullest extent permitted by law, no Partner nor any of such
Partner’s representatives, agents or advisors nor any partner, member, officer,
employee, representative, agent or advisor of the Partnership or any of its
Affiliates (individually, a “Covered Person” and collectively, the “Covered
Persons”) shall be liable to the Partnership or any other Partner for any act or
omission (in relation to the Partnership, this Agreement, any related document
or any transaction or investment contemplated hereby or thereby) taken or
omitted by a Covered Person (other than any act or omission constituting Cause),
unless there is a final and non-appealable judicial determination and/or
determination of an arbitrator that such Covered Person did not act in good
faith and in what such Covered Person reasonably believed to be in, or not
opposed to, the best interests of the Partnership and within the authority
granted to such Covered Person by this Agreement, and, with respect to any
criminal act or proceeding, had reasonable cause to believe that such Covered
Person’s conduct was unlawful. Each Covered Person shall be entitled to rely in
good faith on the advice of legal counsel to the Partnership, accountants and
other experts or professional advisors, and no action taken by any Covered
Person in reliance on such advice shall in any event subject such person to any
liability to any Partner or the Partnership. To the extent that, at law or in
equity, a Partner has duties (including fiduciary duties) and liabilities
relating thereto to the Partnership or to another Partner, to the fullest extent
permitted by law, such Partner acting under this Agreement shall not be liable
to the Partnership or to any such other Partner for its good faith reliance on
the provisions of this Agreement. The provisions of this Agreement, to the
extent that they expand or restrict the duties and liabilities of a Partner
otherwise existing at law or in equity, are agreed by the Partners, to the
fullest extent permitted by law, to modify to that extent such other duties and
liabilities of such Partner.

(b) Indemnification. To the fullest extent permitted by law, the Partnership
shall indemnify and hold harmless (but only to the extent of the Partnership’s
assets (including, without limitation, the remaining Commitments of the
Partners) each Covered Person from and against any and all

 

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

Section 3.8. Tax Representation. Each Limited Partner certifies that
(A) (x) (i) the Limited Partner’s name, social security number and address
provided to the Partnership and its Affiliates pursuant to an IRS Form W-9,
Payer’s Request for Taxpayer Identification Number Certification (“W-9”) or
otherwise are correct and (ii) the Limited Partner will complete and return a
W-9, and (y) (i) the Limited Partner is not a non-resident alien individual (as
defined in the Code) and (ii) the Limited Partner will notify the Partnership
within 60 days of a change to foreign (non-United States) status or
(B) (x) (i) the information on the completed IRS Form W-8BEN, Certificate of
Foreign Status of Beneficial Owner for United States Tax Withholding, (“W-8BEN”)
or otherwise is correct and (ii) the Limited Partner will complete and return a
W-8BEN and (y) (i) the Limited Partner is a non-resident alien individual (as
defined in the Code) and (ii) the Limited Partner will notify the Partnership
within 60 days of change of foreign (non-United States) status. The Limited
Partner agrees to properly execute and provide to the Partnership in a timely
manner any tax documentation that may be reasonably required by the General
Partner.

 

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ARTICLE IV

CAPITAL OF THE PARTNERSHIP

Section 4.1. Capital Contributions by Partners. (a) Except as agreed by the
Managing Member and a Regular Member, such Limited Partner shall not be required
to make capital contributions to the Partnership at such times and in such
amounts as are required to fund the Required Amounts, as determined by the
General Partner from time to time; provided, that (i) such additional capital
contributions may be made pro rata among the Limited Partners based upon the
allocation of the Carried Interest in each BREI Investment by the General
Partner and (ii) additional capital contributions in excess of Required Amounts
which are to be used for ongoing business operations (as distinct from financing
legal or other specific liabilities of the Partnership) (including those
specifically set forth in Sections 4.1(d) and 5.8(d)); provided further, that
the General Partner may excuse any Nonvoting Limited Partner from making capital
contributions to fund Required Amounts as provided in the books and records of
the Partnership. Limited Partners (other than Special Limited Partners) shall
not be required to make additional capital contributions to the Partnership
except (i) as a condition of an increase in such Limited Partner’s Profit
Sharing Percentage, or (ii) as specifically set forth in this Agreement;
provided, however, that the General Partner and any Limited Partner (other than
a Special Limited Partner) may agree from time to time that such Limited Partner
shall make an additional capital contribution to the Partnership; provided
further that each Investor Limited Partner shall maintain its capital account at
a level equal to the product of (i) its Profit Sharing Percentage from time to
time and (ii) the total capital of the Partnership; provided further, that the
foregoing in no way limits any other provision of this Agreement (including
without limitation, Sections 5.8(d) and (e) and 6.5) or of any written agreement
between a Partner and the Partnership or an Affiliate thereof which requires the
making of any such additional capital contribution. If required by applicable
law, the maximum amount of capital a Limited Partner is obligated to contribute
to the Partnership shall be disclosed in a Certificate filed in accordance with
the Partnership Act; and provided further, that the General Partner shall be
required to make a maximum capital contribution of (U.S.)$1,000. Notwithstanding
the foregoing, the unfunded amount of any Limited Partner’s commitment to make
capital contributions to the Partnership (such Limited Partner’s “Unfunded
Commitment”) may be determined and redetermined by the General Partner from time
to time (including, without limitation, any redetermination that results in a
reduction in such Limited Partner’s Unfunded Commitment, which reduction may be
retroactive); provided that each Limited Partner agrees to make capital
contributions in the full amount of such Limited Partner’s Unfunded Commitment
at any time, on condition that the General Partner does not thereafter make a
redetermination that results in a reduction in such Limited Partner’s Unfunded
Commitment and subject to all other terms and conditions set forth herein and/or
in any other agreement relating thereto; and provided further, that, following
an initial determination of a Limited Partner’s commitment such Limited
Partner’s Unfunded Commitment shall not be increased without the consent of such
Limited Partner. Any provision of this Agreement to the contrary
notwithstanding, no capital contribution shall become due and payable or be
required to be made by any Partner, unless and until it shall be called by the
General Partner for the purposes set forth herein or in the Commitment
Agreements or SMD Agreements of such Partner.

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

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

 

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

(ii) The Holdback Percentage may not be reduced for any individual Partner as
compared to the other Partners in his Partner Category (except as provided in
clause (iv) below). The General Partner may only reduce the Holdback Percentages
among the Partner Categories on a proportionate basis; provided, that the
Holdback Percentage applicable to Holdings may not be increased or decreased
without its consent. For example, if the Holdback Percentage for Existing
Partners is decreased to 12.5%, the Holdback Percentage for Retaining Withdrawn
Partners and Deceased Partners shall be reduced to 17.5% and 20%, respectively.
Any reduction in the Holdback Percentage for any Partner shall apply only to
distributions relating to Carried Interest made after the date of such
reduction.

(iii) The Holdback Percentage may not be increased for any individual Partner as
compared to the other Partners in his Partner Category (except as provided in
clause (iv) below). The General Partner may not increase the Retaining Withdrawn
Partners’ Holdback Percentage beyond 21% unless the General Partner increases
the Existing Partners’ Holdback Percentage to 21%. The General Partner may not
increase the Deceased Partners’ Holdback Percentage beyond 24% unless it
increases the Holdback Percentage for both Existing Partners and Retaining
Withdrawn Partners to 24%. The General Partner may not increase the Holdback
Percentage of any Partner Category beyond 24% unless such increase applies
equally to all Partner Categories. Any increase in the Holdback Percentage for
any Partner shall apply only to distributions relating to Carried Interest made
after the date of such increase. The foregoing shall in no way prevent the
General Partner from proportionately increasing the Holdback Percentage of any
Partner Category (following a reduction of the Holdback Percentages below the
Initial Holdback Percentages), if the resulting Holdback Percentages are
consistent with the above. For example, if the General Partner reduces the
Holdback Percentages for Existing Partners, Retaining Withdrawn Partners and
Deceased Partners to 12.5%, 17.5% and 20%, respectively, the General Partner
shall have the right to subsequently increase the Holdback Percentages to the
Initial Holdback Percentages.

(iv) (A) Notwithstanding anything contained herein to the contrary, the
Partnership may increase or decrease the Holdback Percentage for any Partner in
any Partner Category (in such capacity, the “Subject Partner”) pursuant to a
majority vote of the Special Limited Partners and of the special limited
partners of BRE Associates (a “Holdback Vote”); provided, that, notwithstanding
anything to the contrary contained herein, the Holdback Percentage applicable to
the General Partner shall not be increased or decreased without its prior
written consent; provided further, that a Subject Partner’s Holdback Percentage
shall not be (I) increased prior to such time as such Subject Partner (x) is
notified by the Partnership of the decision to increase such Subject Partner’s
Holdback Percentage and (y) has, if requested by such Subject Partner, been
given 30 days to gather and provide information to the Partnership for

 

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consideration before a second Holdback Vote (requested by the Subject Partner)
and (II) decreased unless such decrease occurs subsequent to an increase in a
Subject Partner’s Holdback Percentage pursuant to a Holdback Vote under this
clause (iv); provided further, that such decrease shall not exceed an amount
such that such Subject Partner’s Holdback Percentage is less than the prevailing
Holdback Percentage for such Subject Partner’s Partner Category; provided
further, that a Partner or a special limited partner of BRE Associates shall not
vote to increase a Subject Partner’s Holdback Percentage unless such voting
partner determines, in his good faith judgment, that the facts and circumstances
indicate that it is reasonably likely that such Subject Partner, or any of his
successors or assigns (including his estate or heirs) who at the time of such
vote holds the Partnership interest or otherwise has the right to receive
distributions relating thereto, will not be capable of satisfying any
Recontribution Amounts that may become due.

(B) A Holdback Vote shall take place at a Partnership meeting, which shall also
include the special limited partners of BRE Associates. Each Special Limited
Partner or special limited partner of BRE Associates shall be entitled to cast
one vote with respect to the Holdback Vote regardless of such Special Limited
Partner’s interest in the Partnership or special limited partner of BRE
Associates’s interest in BRE Associates, as the case may be. Such vote may be
cast by any such Special Limited Partner or special limited partner in person or
by proxy.

(C) If the result of the second Holdback Vote is an increase in a Subject
Partner’s Holdback Percentage, such Subject Partner may submit the decision to
an arbitrator, the identity of which is mutually agreed upon by both the Subject
Partner and the Partnership; provided, that if the Partnership and the Subject
Partner cannot agree upon a mutually satisfactory arbitrator within 10 days of
the second Holdback Vote, each of the Partnership and the Subject Partner shall
request its candidate for arbitrator to select a third arbitrator satisfactory
to such candidates; provided further, that if such candidates fail to agree upon
a mutually satisfactory arbitrator within 30 days of such request, the then
sitting President of the American Arbitration Association shall unilaterally
select the arbitrator. Each Subject Partner that submits the decision of the
Partnership pursuant to the second Holdback Vote to arbitration and the
Partnership shall estimate their reasonably projected out-of-pocket expenses
relating thereto and each such party shall, to the satisfaction of the
arbitrator and prior to any determination being made by the arbitrator, pay the
total of such estimated expenses (i.e., both the Subject Partner’s and the
Partnership’s expenses) into an escrow account to be controlled by Simpson
Thacher & Bartlett LLP, as escrow agent (or such other comparable law firm as
the Partnership and Subject Partner shall agree). The arbitrator shall direct
the escrow agent to pay out of such escrow account all expenses associated with
such arbitration (including costs leading thereto) and to return to the
“victorious” party the entire amount of funds such party paid into such escrow
account. If the amount contributed to the escrow account by the losing party is
insufficient to cover the expenses of such arbitration, such “losing” party
shall then provide any additional funds necessary to cover such costs to such
“victorious” party. For purposes hereof, the “victorious” party shall be the
Partnership, if the Holdback Percentage ultimately determined by the arbitrator
is closer to the percentage determined in the second Holdback Vote than it is to
the prevailing Holdback Percentage for the Subject Partner’s Partner Category;
otherwise, the Subject Partner shall be the “victorious” party. The party that
is not the “victorious” party shall be the “losing” party.

(D) In the event of a decrease in a Subject Partner’s Holdback Percentage
(1) pursuant to a Holdback Vote under this clause (iv) or (2) pursuant to a
decision of an arbitrator under paragraph (C) of this clause (iv), the
Partnership shall release and distribute to such Subject Partner any Trust
Amounts (and the Trust Income thereon (except as expressly

 

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provided herein with respect to using Trust Income as Firm Collateral)) which
exceed the required Holdback of such Subject Partner (in accordance with such
Subject Partner’s reduced Holdback Percentage) as though such reduced Holdback
Percentage had applied since the increase of the Subject Partner’s Holdback
Percentage pursuant to a previous Holdback Vote under this clause (iv).

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

(B) If upon a sale or other realization of all or any portion of any Firm
Collateral (a “Firm Collateral Realization”), the remaining Firm Collateral is
insufficient to cover any Partner’s or Withdrawn Partner’s Excess Holdback
requirement, then up to 100% of the net proceeds otherwise distributable to such
Partner or Withdrawn Partner from such Firm Collateral Realization (including
distributions subject to the repayment of financing sources as in the case of
items (5) and (6) in the books and records of the Partnership) shall be paid
into the Trust Account to fully satisfy such Excess Holdback requirement
(allocated to such Partner or Withdrawn Partner) and shall be deemed to be Trust
Amounts for purposes hereunder. Any net proceeds from such Firm Collateral
Realization in excess of the amount necessary to satisfy such Excess Holdback
requirement shall be distributed to such Partner or Withdrawn Partner.

(C) Upon any valuation or revaluation of Firm Collateral that results in a
decreased valuation of such Firm Collateral so that such Firm Collateral is
insufficient to

 

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cover any Partner’s or Withdrawn Partner’s Excess Holdback requirement
(including upon a Firm Collateral Realization, if net proceeds therefrom and the
remaining Firm Collateral are insufficient to cover any Partner’s or Withdrawn
Partner’s Excess Holdback requirement), the Partnership shall provide notice of
the foregoing to such Partner or Withdrawn Partner and such Partner or Withdrawn
Partner shall, within 30 days of receiving such notice, contribute cash (or
additional Firm Collateral) to the Trust Account in an amount necessary to
satisfy his Excess Holdback requirement. If any such Partner or Withdrawn
Partner defaults upon his obligations under this clause (C), then
Section 5.8(d)(ii) shall apply thereto; provided, that the first sentence of
Section 5.8(d)(ii) shall be deemed inapplicable to a default under this clause
(C); provided further, that for purposes of applying Section 5.8(d)(ii) to a
default under this clause (C): (1) the term “Defaulting Party” where such term
appears in such Section 5.8(d)(ii) shall be construed as “defaulting party” for
purposes hereof and (2) the terms “Net Recontribution Amount” and
“Recontribution Amount” where such terms appear in such Section 5.8(d)(ii) shall
be construed as the amount due pursuant to this clause (C).

(vi) Any Partner or Withdrawn Partner may (i) obtain the release of any Trust
Amounts (but not the Trust Income thereon which shall remain in the Trust
Account and allocated to such Partner or Withdrawn Partner) or Firm Collateral,
in each case, held in the Trust Account for the benefit of such Partner or
Withdrawn Partner or (ii) require the Partnership to distribute all or any
portion of amounts otherwise required to be placed in the Trust Account (whether
cash or Firm Collateral), by obtaining a letter of credit for the benefit of the
Trustee(s) (an “L/C”) in such amounts. Any Partner or Withdrawn Partner choosing
to furnish an L/C to the Trustee(s) (in such capacity, an “L/C Partner”) shall
deliver to the Trustee(s) an unconditional and irrevocable L/C from a commercial
bank whose (A) short-term deposits are rated at least A-1 by S&P and P-1 by
Moody’s (if the L/C is for a term of 1 year or less), or (B) long-term deposits
are rated at least A+ by S&P or A1 by Moody’s (if the L/C is for a term of 1
year or more) (each a “Required Rating”). If the relevant rating of the
commercial bank issuing such L/C drops below the relevant Required Rating, the
L/C Partner shall supply to the Trustee(s), within 30 days of such occurrence, a
new L/C from a commercial bank whose relevant rating is at least equal to the
relevant Required Rating, in lieu of the insufficient L/C. In addition, if the
L/C has a term expiring on a date earlier than the latest possible termination
date of BREI, the Trustee(s) shall be permitted to drawdown on such L/C if the
L/C Partner fails to provide a new L/C from a commercial bank whose relevant
rating is at least equal to the relevant Required Rating, at least 30 days prior
to the stated expiration date of such existing L/C. The Trustee(s) shall notify
an L/C Partner 10 days prior to drawing on any L/C. The Trustee(s) may (as
directed by the Partnership in the case of clause (1) below) draw down on an L/C
only if (1) such a drawdown is necessary to satisfy an L/C Partner’s obligation
relating to the Partnership’s obligations under the Clawback Provisions or
(2) an L/C Partner has not provided a new L/C from a commercial bank whose
relevant rating is at least equal to the relevant Required Rating (or the
requisite amount of cash and/or Firm Collateral (to the extent permitted
hereunder)), at least 30 days prior to the stated expiration of an existing L/C
in accordance with this clause (vi). The Trustee(s), as directed by the
Partnership, shall return to any L/C Partner his L/C upon (1) termination of the
Trust Account and satisfaction of the Partnership’s obligations, if any, in
respect of the Clawback Provisions, (2) an L/C Partner satisfying his entire
Holdback obligation in cash and Firm Collateral (to the extent permitted
hereunder), or (3) the release, by the Trustee(s), as directed by the
Partnership, of all amounts in the Trust Account to Partners or Withdrawn
Partners. If an L/C Partner satisfies a portion of his Holdback obligation in
cash and/or Firm Collateral (to the extent permitted hereunder) or if the
Trustee(s), as directed by the Partnership, release a portion of the amounts in
the Trust Account to the Partners or Withdrawn Partners in the Partner Category
of such L/C Partner, an L/C Partner’s L/C may be reduced by an amount
corresponding to such portion satisfied in cash and/or Firm Collateral (to the
extent permitted hereunder) or such portion

 

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released by the Trustee(s), as directed by the Partnership; provided, that in no
way shall the general release of any Trust Income cause an L/C Partner to be
permitted to reduce the amount of an L/C by any amount.

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

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

(B) If upon a distribution, withdrawal, sale, liquidation or other realization
of all or any portion of any Special Firm Collateral (a “Special Firm Collateral
Realization”), the remaining Special Firm Collateral (which shall not include
the amount of Firm Collateral that consists of a Qualifying Fund and is being
used in connection with an Excess Holdback) is insufficient to cover any
Partner’s or Withdrawn Partner’s Holdback (when taken together with other means
of satisfying the Holdback as provided herein (i.e., cash contributed to the
Trust Account or an L/C in the Trust Account)), then up to 100% of the net
proceeds otherwise distributable to such Partner or Withdrawn Partner from such
Special Firm Collateral Realization (which shall not include the amount of Firm
Collateral that consists of a Qualifying Fund and is being used in connection
with an Excess Holdback) shall be paid into the Trust (and allocated to such
Partner or Withdrawn Partner) to fully satisfy such Holdback and shall be deemed
thereafter to be Trust Amounts for purposes hereunder. Any net proceeds from
such Special Firm Collateral Realization in excess of the amount necessary to
satisfy such Holdback (excluding any Excess Holdback) shall be distributed to
such Partner or Withdrawn Partner. To the extent a Qualifying Fund distributes
Securities to a Partner or Withdrawn Partner in connection with a Special Firm
Collateral Realization, such Partner or Withdrawn Partner shall be required to
promptly fund such Partner’s or Withdrawn Partner’s deficiency with respect to
his Holdback in cash or an L/C.

(C) Upon any valuation or revaluation of the Special Firm Collateral and/or any
adjustment in the Applicable Collateral Percentage applicable to a Qualifying
Fund, if such Partner’s or Withdrawn Partner’s Special Firm Collateral valued at
less than such Partner’s Holdback (excluding any Excess Holdback) as provided in
the books and records of the Partnership, taking into account other permitted
means of satisfying the Holdback hereunder, the Partnership shall provide notice
of the foregoing to such Partner or Withdrawn Partner and, within 10 business
days of receiving such notice, such Partner or Withdrawn Partner shall

 

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contribute cash or additional Special Firm Collateral to the Trust Account in an
amount necessary to make up such deficiency. If any such Partner or Withdrawn
Partner defaults upon his obligations under this clause (C), then
Section 5.8(d)(ii) shall apply thereto; provided, that clause (A) of the first
sentence of Section 5.8(d)(ii) shall be deemed inapplicable to such default;
provided further, that for purposes of applying Section 5.8(d)(ii) to a default
under this clause (C): (I) the term “Defaulting Party” where such term appears
in such Section 5.8(d)(ii) shall be construed as “defaulting party” for purposes
hereof and (II) the terms “Net Recontribution Amount” and “Recontribution
Amount” where such terms appear in such Section 5.8(d)(ii) shall be construed as
the amount due pursuant to this clause (C).

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

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

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

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

ARTICLE V

PARTICIPATION IN PROFITS AND LOSSES

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

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

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

 

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

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

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

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

 

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

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

(b) As of the end of each accounting period or, in the case of a contribution to
the Partnership by one or more of the Partners or a distribution by the
Partnership to one or more of the Partners, at the time of such contribution or
distribution, (i) the appropriate capital accounts of each Partner shall be
credited with the following amounts: (A) the amount of cash and the value of any
property contributed by such Partner to the capital of the Partnership during
such accounting period, (B) the Net Income allocated to such Partner for such
accounting period and (C) the interest credited on the balance of such Partner’s
capital for such accounting period pursuant to Section 4.3; and (ii) the
appropriate capital accounts of each Partner shall be debited with the following
amounts: (x) the amount of cash, the principal amount of any subordinated
promissory note of the Partnership referred to in Section 6.5(k) (as such amount
is paid) and the value of any property distributed to such Partner during such
accounting period and (y) the Net Loss allocated to such Partner for such
accounting period.

Section 5.3. Profit Sharing Percentages. (a) Prior to the beginning of each
annual accounting period, the General Partner shall (i) establish the Profit
Sharing Percentage of each Partner in each category of Net Income (Loss) for
such annual accounting period pursuant to Section 5.1(a) taking into account
such factors as the General Partner deems appropriate, including those referred
to in Section 5.1(d), and (ii) disclose such Profit Sharing Percentages as
required by the Partnership Act; provided, however, that (i) the General Partner
may elect to establish Profit Sharing Percentages in Net Income (Loss) from any
Investment acquired by the Partnership during such accounting period at the time
such Investment is acquired in accordance with paragraph (d) below and (ii) Net
Income (Loss) for such accounting period from any Investment shall be allocated
in accordance with the Profit Sharing Percentages in such Investment established
in accordance with paragraph (d) below. The General Partner may establish
different Profit Sharing Percentages for any Partner in different categories of
Net Income (Loss). In the case of the Withdrawal of a Partner, such former
Partner’s Profit Sharing Percentages shall be allocated by the General Partner
to one or more of the remaining Partners as the General Partner shall determine.
In the case of the admission of any Partner to the Partnership as an additional
Partner, the Profit Sharing Percentages of the other Partners shall be reduced
by an amount equal to the Profit Sharing Percentage allocated to such new
Partner pursuant to Section 6.1(b); such reduction of each other Partner’s
Profit Sharing Percentage shall be pro rata based upon such Partner’s Profit
Sharing Percentage as in effect immediately prior to the admission of the new
Partner. Notwithstanding the foregoing, the General Partner may also adjust the
Profit Sharing Percentage of any Partner for any annual accounting period at the
end of such annual accounting period in its sole discretion.

(b) The General Partner may elect to allocate to the Partners less than 100% of
the Profit Sharing Percentages of any category for any annual accounting period
at the time specified in Section 5.3(a) for the annual fixing of Profit Sharing
Percentages (any remainder of such Profit Sharing Percentages being called an
“Unallocated Percentage”); provided, however, that any Unallocated Percentage in
any category of Net Income (Loss) for any annual accounting period that is not
allocated by

 

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the General Partner within 90 days after the end of such accounting period shall
be deemed to be allocated among the Partners (including Holdings) in the manner
determined by the General Partner in its sole discretion.

(c) Unless otherwise determined by the General Partner in a particular case,
(i) Profit Sharing Percentages in Net Income (Loss) from any Investment shall be
allocated in proportion to the Partners’ respective capital contributions in
respect of such Investment and (ii) Profit Sharing Percentages in Net Income
(Loss) from each Investment shall be fixed at the time such Investment is
acquired and shall not thereafter change, subject to any repurchase rights or
other requirements established by the General Partner pursuant to Section 5.7.
The General Partner shall have no Profit Sharing Percentage in Net Income (Loss)
from any Investment, but shall receive its pro rata share, based on its capital
contribution, of earnings on short-term and temporary investments of the
Partnership.

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

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

(c) Notwithstanding Section 5.4(a) above, Net Income relating to Carried
Interest allocated after the allocation of a Net Loss pursuant to clause (ii) of
Section 5.4(b) shall be allocated in accordance with such Carried Interest Give
Back Percentages until such time as the Partners have been allocated Net Income
relating to Carried Interest equal to the aggregate amount of Net Loss
previously allocated in accordance with clause (ii) of Section 5.4(b). Withdrawn
Partners shall remain Partners for purposes of allocating such Net Loss with
respect to Carried Interest.

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

(e) The General Partner may authorize from time to time advances to Partners
against their allocable shares of Net Income (Loss).

Section 5.5. Liability of General and Limited Partners. (a) General Partner
shall have unlimited liability for the satisfaction and discharge of all losses,
liabilities and expenses of the Partnership.

 

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(b) Each Limited Partner (including each Special Limited Partner) and former
Limited Partner shall be liable for the satisfaction and discharge of all
losses, liabilities and expenses of the Partnership allocable to him pursuant to
Section 5.4, but only to the extent of his aggregate contribution to the
Partnership pursuant to this Agreement. Except as otherwise provided in the
following sentence, in no event shall any Limited Partner (including any Special
Limited Partner) or former Limited Partner be obligated to make any additional
capital contribution to the Partnership in excess of his aggregate capital
contribution to the Partnership pursuant to Section 4.1, or have any liability
in excess of such aggregate capital contribution for the satisfaction and
discharge of the losses, liabilities and expenses of the Partnership. In no way
does any of the foregoing limit any Partner’s obligations under Section 4.1(d)
or 5.8(d) or otherwise to make capital contributions as provided hereunder.
Notwithstanding anything contained herein, each Partner agrees that the exercise
of any right or power provided in this Agreement shall not make any Limited
Partner liable as a general partner.

Section 5.6. [Intentionally omitted.]

Section 5.7. Repurchase Rights, etc. The General Partner may from time to time
establish repurchase rights and/or other requirements with respect to the
Partners’ interests in partnership assets (including BREI Investments) as the
General Partner may determine. The General Partner shall, prior to the
dissolution of the Partnership, have authority to (a) withhold any distribution
otherwise payable to any Partner until any such repurchase rights have lapsed or
any such other requirements are satisfied, (b) pay any distribution to any
Partner that is Contingent as of the distribution date and require the refund of
any portion of such distribution that is Contingent as of the Withdrawal Date of
such Partner, (c) amend any previously established repurchase rights or other
requirements from time to time and (d) make such exceptions thereto as it may
determine on a case by case basis.

Section 5.8. Distributions.

(a) (i) The Partnership shall make distributions of available cash (subject to
reserves and other adjustments as provided herein) or other property to Partners
at such times and in such amounts as are determined by the General Partner. The
General Partner shall determine the availability for distribution of, and shall
distribute, cash or other property separately for each category of Net Income
(Loss) established pursuant to Section 5.1(a). Subject to Section 5.8(e),
distributions of cash or other property with respect to Non-Carried Interest
shall be made among the Partners in accordance with their respective Non-Carried
Interest Sharing Percentages, and, subject to Section 4.1(d), distributions of
cash or other property with respect to Carried Interest shall be made among
Partners in accordance with their respective Carried Interest Sharing
Percentages.

(ii) Special Limited Partner or itself a total percentage of any investment in
excess of the aggregate Profit Sharing Percentage of such Special Limited
Partner or itself, respectively, and (iii) the percentage so distributed of any
investment to any Investor Limited Partner shall not exceed such Partner’s
Profit Sharing Percentage of such distribution.

(b) Subject to the Partnership’s having sufficient available cash in the
reasonable judgment of the General Partner, the Partnership shall make cash
distributions to each Partner with respect to each Fiscal Year of the
Partnership in an aggregate amount at least equal to the total U.S. Federal, New
York State and New York City income and other taxes that would be payable by
such Partner with respect to all categories of Net Income (Loss) allocated to
such Partner for such Fiscal Year, the amount of which shall be calculated
(i) on the assumption that each Partner is an individual subject to the then
prevailing maximum U.S. Federal, New York State and New York City income tax
rates, (ii) taking into account the deductibility of state and local income and
other taxes for U.S. Federal income tax purposes and (iii) taking into account
any differential in applicable rates due to the type and character of

 

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Net Income (Loss) allocated to such Partner. Notwithstanding the provisions of
the foregoing sentence, the General Partner may refrain from making any
distribution if, in the reasonable judgment of the General Partner, such
distribution is prohibited by, or in violation of, the Partnership Act.

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

(d) (i) (A) If the Partnership is obligated under the Clawback Provisions to
contribute a Clawback Amount to BREI, the Partnership shall call for such
amounts as are necessary to satisfy such obligations as determined by the
General Partner, in which case each Partner and Withdrawn Partner shall
contribute to the Partnership in cash, when and as called by the Partnership,
such an amount of prior distributions by the Partnership (and the Other Fund
GPs) with respect to Carried Interest (the “Recontribution Amount”) which equals
the product of (a) a Partner’s or Withdrawn Partner’s Carried Interest Give Back
Percentage and (b) the aggregate Clawback Amount payable by the Partnership.
Each Partner and Withdrawn Partner shall promptly contribute to the Partnership,
along with satisfying his comparable obligations to the Other Fund GPs, upon
such call such Partner’s or Withdrawn Partner’s Recontribution Amount, less the
amount paid out of the Trust Account on behalf of such Partner or Withdrawn
Partner by the Trustee(s) pursuant to written instructions from the Partnership,
or if applicable, any of the Other Fund GPs with respect to Carried Interest
(the “Net Recontribution Amount”), irrespective of the fact that the amounts in
the Trust Account may be sufficient on an aggregate basis to satisfy the
Partnership’s and Other Fund GPs’ obligation under the Clawback Provisions;
provided, that to the extent a Partner’s or Withdrawn Partner’s share of the
amount paid with respect to the Clawback Amount exceeds his Recontribution
Amount, such excess shall be repaid to such Partner or Withdrawn Partner as
promptly as reasonably practicable, subject to clause (ii) below; provided
further, that such written instructions from the Partnership shall specify each
Partner’s and Withdrawn Partner’s Recontribution Amount. Prior to such time, the
Partnership may, in its discretion (but shall be under no obligation to),
provide notice that in the Partnership’s judgment, the potential obligations in
respect of the Clawback Provisions will probably materialize (and an estimate of
the aggregate amount of such obligations).

 

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

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

 

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

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

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

(i) At the time the Partnership is making Carried Interest distributions in
connection with a BREI Investment (the “Subject Investment”) that have been
reduced under the BREI Agreement as a result of one or more Loss Investments,
the General Partner shall calculate amounts distributable to or due from each
such Partner as follows:

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

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

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

To the extent that the Net Carried Interest Distribution for a Partner as
calculated in this clause (i) is a negative number, the General Partner shall
(I) notify such Partner, at or prior to the time such Carried Interest
distributions are actually made to the Partners, of his obligation to
recontribute to the Partnership prior Carried Interest distributions (a “Net
Carried Interest Distribution Recontribution Amount”), up to the amount of such
negative Net Carried Interest Distribution, and (II) to the extent amounts
recontributed pursuant to clause (I) are insufficient to satisfy such negative
Net Carried Interest Distribution Amount, reduce future Carried Interest
distributions otherwise due such Partner, up to the amount of such remaining
negative Net Carried Interest Distribution. If a Partner’s (x) Net Carried
Interest Distribution Recontribution

 

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Amount exceeds (y) the aggregate amount of prior Carried Interest distributions
less the amount of tax thereon, calculated based on the Assumed Tax Rate (as
defined in the BREI Agreement) in effect in the Fiscal Years of such
distributions (the “Excess Tax-Related Amount”), then such Partner may, in lieu
of paying such Partner’s Excess Tax-Related Amount, defer such amounts as set
forth below. Such deferred amount shall accrue interest at the rate of interest
publicly announced from time to time by The Chase Manhattan Bank in New York
City, as its prime rate. Such deferred amounts shall be reduced and repaid by
the amount of Carried Interest otherwise distributable to such Partner in
connection with future Carried Interest distributions until such balance is
reduced to zero. Any deferred amounts shall be payable in full upon the earlier
of (i) such time as the Clawback Amount is determined (as provided herein) and
(ii) such time as the Partner becomes a Withdrawn Partner.

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

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

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

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

(ii) In the case of Clawback Amounts which are required to be contributed to the
Partnership as otherwise provided herein, the obligation of the Partners with
respect to any Clawback Amount shall be adjusted by the General Partner as
follows:

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

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

 

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

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

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

It is agreed and acknowledged that this Section 5.8(e) is an agreement among the
Partners and in no way modifies the obligations of each Partner regarding the
Clawback Amount as provided in the BREI Agreement.

Section 5.9. Business Expenses. The Partnership shall reimburse the Partners for
reasonable travel, entertainment and miscellaneous expenses incurred by them in
the conduct of the Partnership’s business in accordance with rules and
regulations established by the General Partner from time to time.

ARTICLE VI

ADDITIONAL PARTNERS; WITHDRAWAL OF PARTNERS;

SATISFACTION AND DISCHARGE OF

PARTNERSHIP INTERESTS; TERMINATION

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

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

 

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

(d) The admission of an additional Partner will be evidenced by (i) the
execution of a counterpart copy of this Agreement by such additional Partner or
the execution of an amendment to this Agreement by all the Partners (including
the additional Partner), as determined by the General Partner, and (ii) the
filing of any certificates or notifications pursuant to the Partnership Act. In
addition, each additional Partner shall sign a counterpart copy of the Trust
Agreement or any other writing evidencing the intent of such person to become a
party to the Trust Agreement that is accepted by the General Partner on behalf
of the Partnership.

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

(b) (i) Upon the death or Incompetence of any Limited Partner, or the occurrence
of any other mandatory Withdrawal event under the Partnership Act with respect
to any Limited Partner, such Limited Partner shall thereupon cease to be a
Limited Partner.

(ii) The General Partner may not assign or transfer all or any portion of its
interest in the Partnership without the prior consent of all the Limited
Partners. Each Limited Partner agrees not to withhold its consent in the event
an assignment or transfer has been approved by Limited Partners whose Profit
Sharing Percentages exceed two-thirds of the Profit Sharing Percentages of all
Limited Partners (in each case, as last determined as of the date of the
consent). Notwithstanding the foregoing or any other provision of this
Agreement, the General Partner may, at any time prior to any Disabling Event
with respect to such General Partner and without the consent of any other
Partner, convert or merge into, or otherwise assign or transfer its interest as
the General Partner of the Partnership to, any other person, and such person
will succeed to the position of general partner of the Partnership, with all the
rights, powers and obligations associated therewith, provided that any
individuals who are shareholders of the General Partner will control and own (in
the aggregate), directly or indirectly, not less than a majority of the equity
interests in such other person. The Partners, upon the request of the General
Partner, agree to provide the General Partner a written ratification of such
succession. If the General Partner is converted to another type of entity
pursuant to this Section 6.2(b)(ii), the General Partner will not cease to be
the General Partner of the Partnership and, upon such conversion, the
Partnership will continue without dissolution. If a merger of the General
Partner into another person pursuant to this Section 6.2(b)(ii) will not result
in the General Partner being the surviving entity of the merger, the person that
will be the surviving entity in the merger with the General Partner will itself
be admitted to the Partnership as an additional general partner of the
Partnership immediately preceding the merger upon its execution of a counterpart
to this Agreement and, upon such merger, the Partnership will continue without
dissolution. Any purported assignment or transfer pursuant to this
Section 6.2(b)(ii) which is not in accordance

 

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with this Agreement shall be null and void. The General Partner shall not cease
to be the general partner of the Partnership upon the collateral assignment of,
or the pledging or granting of a security interest in, its entire interest in
the Partnership.

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

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

(e) The withdrawal from the Partnership of any Partner shall not, in and of
itself, affect the obligations of the other Partners to continue the Partnership
during the remainder of its term. A Withdrawn General Partner shall remain
liable for all obligations of the Partnership incurred while it was a General
Partner and resulting from its acts or omissions as a General Partner to the
fullest extent provided by law.

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

Section 6.4. General Partner Withdrawal. Except as contemplated by
Section 6.2(b)(ii), withdrawal by a General Partner is not permitted. The
General Partner may, in accordance with Section 6.2(b)(ii), transfer or assign
its interest as a general partner in the Partnership. A person who is admitted

 

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as an additional or substitute General Partner shall thereby become a General
Partner and shall have the right to manage the affairs and take part in the
control of the Partnership and to vote as a Partner to the extent of the
interest in the Partnership so acquired. The General Partner shall not cease to
be the general partner of the Partnership upon the collateral assignment of or
the pledging or granting of a security interest in its entire interest in the
Partnership.

Section 6.5. Satisfaction and Discharge of a Withdrawn Partner’s Interest.
(a) As used in this Agreement, (i) the term “Withdrawn Partner” shall mean a
Limited Partner whose interest in the Partnership has been terminated for any
reason, including the occurrence of an event specified in Section 6.2, and shall
include, unless the context requires otherwise, the estate or legal
representatives of any such Partner, (ii) the term “Withdrawal Date” shall mean
the date of the Withdrawal from the Partnership of a Withdrawn Partner and
(iii) the term “Settlement Date” shall mean the date as of which a Withdrawn
Partner’s interest in the Partnership is settled as determined under paragraph
(b) below. The provisions of this Section 6.5 are subject to any written
agreement between a Withdrawn Partner and the General Partner in accordance with
Section 8.4.

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

(c) In the event of the Withdrawal of a Limited Partner, the General Partner
shall, promptly after such Withdrawn Partner’s Settlement Date (i) determine and
allocate to the Withdrawn Partner’s capital account such Withdrawn Partner’s
allocable share of the Net Income (Loss) of the Partnership for the period
ending on such Settlement Date in accordance with Article V and (ii) credit the
Withdrawn Partner’s capital account with interest in accordance with
Section 5.2. In making the foregoing calculations, the General Partner shall be
entitled to establish such reserves (including reserves for taxes, bad debts,
unrealized losses, actual or threatened litigation or any other expenses,
contingencies or obligations) as it deems appropriate. Except as provided in
this Section 6.5(c) and unless otherwise determined by the General Partner in a
particular case, a Withdrawn Partner shall not be entitled to receive any
amounts or Unallocated Percentage in respect of the accounting period during
which such Partner Withdraws from the Partnership (whether or not previously
awarded or allocated) or any amounts or Unallocated Percentage in respect of
prior accounting periods that have not been paid or allocated (whether or not
previously awarded) as of such Withdrawn Partner’s Withdrawal Date.

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

(e) (i) Upon the Withdrawal from the Partnership of a Partner, such Withdrawn
Partner thereafter shall not, except as expressly provided in this Section 6.5,
have any rights of a Partner (including voting rights), and, except as expressly
provided in this Section 6.5, such Withdrawn Partner shall not have any interest
in the Partnership’s Net Income (Loss), distributions, Investments or other
assets. If a Partner Withdraws from the Partnership for any reason other than
for Cause pursuant to Section 6.2, then the Withdrawn Partner shall be entitled
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Section 6.5(i) below, in satisfaction and discharge in full of the Withdrawn
Partner’s interest in the Partnership, (x) payment equal to the aggregate credit
balance, if any, as of the Settlement Date of the Withdrawn Partner’s capital
accounts, (excluding any capital account or portion thereof attributable to any
Investment) and (y) the Withdrawn Partner’s percentage interest attributable to
each Investment in which the Withdrawn Partner has an interest as of the
Settlement Date as provided in paragraph (f) below (which shall be settled in
accordance with paragraph (f) below), subject to all the terms and conditions of
paragraphs (a)-(q) of this Section 6.5. If the amount determined pursuant to
clause (x) above is an aggregate negative balance, the Withdrawn Partner shall
pay the amount thereof to the Partnership upon demand by the General Partner on
or after the date of the statement referred to in Section 6.5(i) below;
provided, however, that if the Withdrawn Partner was solely a Limited Partner
(other than a Special Limited Partner) on his Withdrawal Date, such payment
shall be required only to the extent of any amounts payable to such Withdrawn
Partner pursuant to this Section 6.5. Any aggregate negative balance in the
capital accounts of a Withdrawn Partner who was solely a Limited Partner
(including a Special Limited Partner), upon the settlement of such Withdrawn
Partner’s interest in the Partnership pursuant to this Section 6.5, shall be
allocated among the other Partners’ capital accounts in accordance with their
respective Profit Sharing Percentages in the categories of Net Income (Loss)
giving rise to such negative balance as determined by the General Partner as of
such Withdrawn Partner’s Settlement Date. In the settlement of any Withdrawn
Partner’s interest in the Partnership, no value shall be ascribed to goodwill,
the Partnership name or in anticipation of any value the Partnership or any
successor thereto might have in the event the Partnership or any interest
therein were to be sold in whole or in part. (ii) Notwithstanding clause (i) of
this Section 6.5(e), in the case of a Partner whose Withdrawal resulted from
such Partner’s death or Incompetence, such Partner’s estate or legal
representative, as the case may be, may elect, at the time described below, to
receive a Nonvoting Limited Partner Interest and retain such Partner’s Profit
Sharing Percentage in all (but not less than all) illiquid investments of the
Partnership in lieu of a cash payment (or Note) in settlement of that portion of
the Withdrawn Partner’s interest. The election referred to above shall be made
within 60 days after the Withdrawn Partner’s Settlement Date, based on a
statement of the settlement of such Withdrawn Partner’s interest in the
Partnership pursuant to Section 6.5.

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

(g) The General Partner may elect, in lieu of payment in cash of any amount
payable to a Withdrawn Partner pursuant to paragraph (e) above, to have the
Partnership issue the Withdrawn Partner a subordinated promissory note as
provided in paragraph (k) below and/or to distribute in kind to the Withdrawn
Partner such Withdrawn Partner’s pro rata share (as determined by the General
Partner) of any securities or other investments of the Partnership. If any
securities or other investments are distributed in kind to a Withdrawn Partner
under this paragraph (g), the amount described in clause (x) of paragraph
(e) shall be reduced by the value of such distribution as valued on the latest
balance sheet of the Partnership in accordance with generally accepted
accounting principles or, if not appearing on such balance sheet, as reasonably
determined by the General Partner.

 

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(h) [Intentionally omitted].

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

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

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

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

 

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

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

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

(n) The payments to a Withdrawn Partner pursuant to this Section 6.5 may be
conditioned on the compliance by such Withdrawn Partner with any lawful and
reasonable (under the circumstances) restrictions against engaging or investing
in a business competitive with that of the Partnership or any of its
subsidiaries and Affiliates for a period not exceeding two years determined by
the General Partner. Upon written notice to the General Partner, any Withdrawn
Partner who is subject to noncompetition restrictions established by the General
Partner pursuant to this paragraph (o) may elect to forfeit the principal amount
payable in the final installment of his subordinated promissory note under
paragraph (k) above, together with interest to be accrued on such installment
after the date of forfeiture, in lieu of being bound by such restrictions;
provided that if the principal amount of such final installment would exceed
(U.S.)$10 million, such Withdrawn Partner shall be required to forfeit only
(U.S.)$10 million thereof and shall still be entitled to receive any remaining
balance of such final installment as and when due.

(o) In addition to the foregoing, the General Partner shall have the right to
pay a Withdrawn Partner (other than the General Partner) a discretionary
additional payment in an amount and based upon such circumstances and conditions
as it determines to be relevant. The provisions of this Section 6.5 shall apply
to any Investor Limited Partner relating to a Limited Partner and to any
transferee of any interest of such Partner pursuant to Section 6.3 if such
Partner Withdraws from the Partnership.

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

 

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

Section 6.6. [Intentionally omitted].

Section 6.7. Termination of Partnership. The General Partner may dissolve the
Partnership at any time on not less than 60 days’ notice of the dissolution date
given to the other Partners. Upon the dissolution of the Partnership, the
Partners’ respective interests in the Partnership shall be valued and settled in
accordance with the procedures set forth in Section 6.5 which provide for
allocations to the capital accounts of the Partners and distributions in
accordance with the capital account balances of the Partners.

Section 6.8. Certain Tax Matters. (a) All items of income, gain, loss, deduction
and credit of the Partnership shall be allocated among the Partners for U.S.
Federal, state and local income tax purposes in the same manner as such items of
income, gain, loss, deduction and credit shall be allocated among the Partners
pursuant to this Agreement, except as may otherwise be provided herein or by the
Code or other applicable law. To the extent U.S. Treasury Regulations
promulgated pursuant to Subchapter K of the Code (including under Sections
704(b) and (c) of the Code) or other applicable law require allocations for tax
purposes that differ from the foregoing allocations, the General Partner may
determine the manner in which such tax allocations shall be made so as to comply
more fully with such Treasury Regulations or other applicable law and, at the
same time, preserve the economic relationships among the Partners as set forth
in this Agreement. In the event there is a net decrease in partnership minimum
gain or partner nonrecourse debt minimum gain (determined in accordance with the
principles of Regulation Sections 1.704-2(d) and 1.704-2(i)) during any
Partnership taxable 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 its respective share of such net decrease during such
year, determined pursuant to Regulations Sections 1.704-2(g) and 1.704-2(i)(5).
The items to be so allocated shall be determined in accordance with Regulations
Section 1.704-2(f).

(b) The General Partner shall cause to be prepared all U.S. Federal, state and
local tax returns of the Partnership for each year for which such returns are
required to be filed and, after approval of such returns by the General Partner,
shall cause such returns to be timely filed. The General Partner shall determine
the appropriate treatment of each item of income, gain, loss, deduction and
credit of the Partnership and the accounting methods and conventions under the
tax laws of the United States, the several states and other relevant
jurisdictions as to the treatment of any such item or any other method or
procedure related to the preparation of such tax returns. The General Partner
may cause the Partnership to make or refrain from making any and all elections
permitted by such tax laws. Each Partner agrees that he shall not, unless he
provides prior notice of such action to the Partnership, (i) treat, on his
individual income tax returns, any item of income, gain, loss, deduction or
credit relating to his interest in the Partnership in a manner inconsistent with
the treatment of such item by the Partnership as reflected on the Form K-1 or
other information statement furnished by the Partnership to such Partner for use
in preparing his income tax returns or (ii) file any claim for refund relating
to any such item based on, or which would result in, such inconsistent
treatment. In respect of an income tax audit of any tax return of the
Partnership, the filing of any amended return or claim for refund in connection
with any item of income, gain, loss, deduction or credit reflected on any tax
return of the Partnership, or any administrative

 

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or judicial proceedings arising out of or in connection with any such audit,
amended return, claim for refund or denial of such claim, (A) the Tax Matters
Partner (as defined below) shall be authorized to act for, and his decision
shall be final and binding upon, the Partnership and all Partners except to the
extent a Partner shall properly elect to be excluded from such proceeding
pursuant to the Code, (B) all expenses incurred by the Tax Matters Partner in
connection therewith (including, without limitation, attorneys’, accountants’
and other experts’ fees and disbursements) shall be expenses of the Partnership
and (C) no Partner shall have the right to (1) participate in the audit of any
Partnership tax return, (2) file any amended return or claim for refund in
connection with any item of income, gain, loss, deduction or credit reflected on
any tax return of the Partnership (unless he provides prior notice of such
action to the Partnership as provided above), (3) participate in any
administrative or judicial proceedings conducted by the Partnership or the Tax
Matters Partner arising out of or in connection with any such audit, amended
return, claim for refund or denial of such claim, or (4) appeal, challenge or
otherwise protest any adverse findings in any such audit conducted by the
Partnership or the Tax Matters Partner or with respect to any such amended
return or claim for refund filed by the Partnership or the Tax Matters Partner
or in any such administrative or judicial proceedings conducted by the
Partnership or the Tax Matters Partner. The Partnership and each Partner hereby
designate any Partner selected by the General Partner as the “tax matters
partner” for purposes of Section 6231(a)(7) of the Code (the “Tax Matters
Partner”). To the fullest extent permitted by applicable law, each Partner
agrees to indemnify and hold harmless the Partnership and all other Partners
from and against any and all liabilities, obligations, damages, deficiencies and
expenses resulting from any breach or violation by such Partner of the
provisions of this Section 6.8 and from all actions, suits, proceedings,
demands, assessments, judgments, costs and expenses, including reasonable
attorneys’ fees and disbursements, incident to any such breach or violation.

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

Section 6.9. Special Basis Adjustments. In connection with any assignment or
transfer of a Partnership interest permitted by the terms of this Agreement, the
General Partner may cause the Partnership, on behalf of the Partnership and at
the time and in the manner provided in Code regulation Section 1.754-1(b), to
make an election to adjust the basis of the Partnership’s property in the manner
provided in Sections 734(b) and 743(b) of the Code.

ARTICLE VII

DISSOLUTION

Section 7.1. Dissolution. The Partnership shall be dissolved and subsequently
terminated:

(a) pursuant to Section 6.7;

(b) upon the expiration of the Term; or

(c) upon the occurrence of a Disabling Event with respect to a General Partner
or any other event causing a dissolution of the Partnership under the
Partnership Act; provided that the Partnership will not be dissolved or required
to be wound up in connection with a Disabling Event with respect to a General
Partner if: (i) at the time of the occurrence of such event there is at least
one other general partner of the Partnership who is hereby authorized to, and
elects to, carry on the business of the Partnership; or (ii) all remaining
Partners consent to the continuation of the business of the Partnership

 

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within 90 days following the occurrence of any such event, which consent will
not be withheld by any Limited Partner if a Majority of the Remaining Partners
agree in writing to so continue the business of the Partnership. A “Majority of
Remaining Partners” means remaining Partners who, as of the date of such
consent, have aggregate capital account balances representing at least a
majority in amount of the total capital account balances of all the remaining
Partners.

Section 7.2. Final Distribution. Within 120 calendar days after the effective
date of dissolution of the Partnership, the assets of the Partnership shall be
distributed in the following manner and order:

(i) to the payment of the expenses of the winding-up, liquidation and
dissolution of the Partnership;

(ii) to pay all creditors of the Partnership, other than Partners, either by the
payment thereof or the making of reasonable provision therefor;

(iii) to establish reserves, in amounts established by the General Partner or
such liquidator, to meet other liabilities of the Partnership; and

(iv) to pay, in accordance with the terms agreed among them and otherwise on a
pro rata basis, all creditors of the Partnership that are Partners, either by
the payment thereof or the making of reasonable provision therefor.

The remaining assets of the Partnership shall be applied and distributed among
the Partners in accordance with the procedures set forth in Section 6.5 which
provide for allocations to the capital accounts of the Partners and
distributions in accordance with the capital account balances of the Partners.
For purposes of the application of this Section 7.2 and determining capital
accounts on liquidation, all unrealized gains, losses and accrued income and
deductions of the Partnership shall be treated as realized and recognized
immediately before the date of distribution.

Section 7.3. No Obligation to Restore Capital Accounts. Except as provided in
Sections 4.1 and 5.8(d) and as may otherwise be required by law, no Partner
whose capital account balance is a negative or deficit amount (either during the
existence of the Partnership or upon liquidation) shall have any obligation to
return any amounts previously distributed to such Partner or to contribute cash
or other assets to the Partnership to restore or make up the deficit in such
Partner’s impaired capital account.

ARTICLE VIII

MISCELLANEOUS

Section 8.1. Submission to Jurisdiction; Waiver of Jury Trial.

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

 

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(b) Notwithstanding the provisions of paragraph (a), the General Partner may
bring, or may cause the Partnership to bring, on behalf of the General Partner
or the Partnership or on behalf of one or more Partners, an action or special
proceeding in any court of competent jurisdiction for the purpose of compelling
a party to arbitrate, seeking temporary or preliminary relief in aid of an
arbitration hereunder, and/or enforcing an arbitration award and, for the
purposes of this paragraph (b), each Partner (i) expressly consents to the
application of paragraph (c) of this Section 8.1 to any such action or
proceeding, (ii) agrees that proof shall not be required that monetary damages
for breach of the provisions of this Agreement would be difficult to calculate
and that remedies at law would be inadequate, and (iii) irrevocably appoints the
General Partner as such Partner’s agent for service of process in connection
with any such action or proceeding and agrees that service of process upon any
such agent, who shall promptly advise such Partner of any such service of
process, shall be deemed in every respect effective service of process upon the
Partner in any such action or proceeding.

(c)(i) EACH PARTNER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS
LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT
IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION 8.1, OR ANY JUDICIAL
PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATION ARISING OUT
OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary judicial
proceedings include any suit, action or proceeding to compel arbitration, to
obtain temporary or preliminary judicial relief in aid of arbitration, or to
confirm an arbitration award. The parties acknowledge that the forum(s)
designated by this paragraph (c) have a reasonable relation to this Agreement,
and to the parties’ relationship with one another.

(ii) The parties hereby waive, to the fullest extent permitted by applicable
law, any objection which they now or hereafter may have to personal jurisdiction
or to the laying of venue of any such ancillary suit, action or proceeding
brought in any court referred to in the preceding paragraph of this Section 8.1
and such parties agree not to plead or claim the same.

(d) Notwithstanding any provision of this Agreement to the contrary, this
Section 8.1 shall be construed to the maximum extent possible to comply with the
laws of the State of Delaware, including the Delaware Uniform Arbitration Act
(10 Del. C. § 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless,
it shall be determined by a court of competent jurisdiction that any provision
or wording of this Section 8.1, including any rules of the International Chamber
of Commerce, shall be invalid or unenforceable under the Delaware Arbitration
Act, or other applicable law, such invalidity shall not invalidate all of this
Section 8.1. In that case, this Section 8.1 shall be construed so as to limit
any term or provision so as to make it valid or enforceable within the
requirements of the Delaware Arbitration Act or other applicable law, and, in
the event such term or provision cannot be so limited, this Section 8.1 shall be
construed to omit such invalid or unenforceable provision.

Section 8.2. Ownership and Use of the Firm Name. The Partnership acknowledges
that Blackstone Financial Services Inc. (“BFS”), a Delaware corporation with a
principal place of business at 345 Park Avenue, New York, New York 10154, (or
its successors or assigns) is the sole and exclusive owner of the mark and name
BLACKSTONE and that the ownership of, and the right to use, sell or otherwise
dispose of, the firm name or any abbreviation or modification thereof which
consists of or includes BLACKSTONE, shall belong exclusively to BFS, which
company (or its predecessors, successors or assigns) has licensed the
Partnership to use BLACKSTONE in its name. The Partnership acknowledges that BFS
owns the service mark BLACKSTONE for various services and that the Partnership
is using the BLACKSTONE mark and name on a non-exclusive, non-sublicensable and

 

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non-assignable basis in connection with its business and authorized activities
with the permission of BFS. All services rendered by the Partnership under the
BLACKSTONE mark and name will be rendered in a manner and with quality levels
that are consistent with the high reputation heretofore developed for the
BLACKSTONE mark by BFS and its affiliates and licensees. The Partnership
understands that BFS may terminate its right to use BLACKSTONE at any time in
BFS sole discretion by giving the Partnership written notice of termination.
Promptly following any such termination, the Partnership will take all steps
necessary to change its company name to one which does not include BLACKSTONE or
any confusingly similar term and cease all use of BLACKSTONE or any term
confusingly similar thereto as a service mark or otherwise.

Section 8.3. Written Consent. Any action required or permitted to be taken by a
vote of Partners at a meeting may be taken without a meeting if a Majority in
Interest of the Partners consent thereto in writing.

Section 8.4. Letter Agreements; Schedules. The General Partner may, or may cause
the Partnership to, enter into separate letter agreements with certain Partners
with respect to Profit Sharing Percentages or any other matter, in each case on
terms and conditions not inconsistent with this Agreement; provided that,
notwithstanding the foregoing, any terms of this Agreement may be made subject
to any such letter agreements to the extent provided elsewhere herein. If
required by applicable law, such separate letter agreements, or any provision
thereof or information contained therein, shall be filed, or disclosed in a
Certificate filed, in accordance with the Partnership Act. The General Partner
may from time to time execute and deliver to the Partners Schedules which set
forth the then current capital balances and Profit Sharing Percentages of the
Partners and any other matters deemed appropriate by the General Partner. Such
Schedules shall be for information purposes only and shall not be deemed to be
part of this Agreement for any purpose whatsoever.

Section 8.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Alberta, Canada, without regard to
conflicts of law principles. In particular, the Partnership is formed pursuant
to the Partnership Act, and the mutual rights, duties and liabilities of the
General Partner and Limited Partners (including the Special Limited Partners)
shall be as provided therein, except as herein otherwise expressly provided. If
any provision of this Agreement shall be held to be invalid, such provision
shall be given its meaning to the maximum extent permitted by law and the
remainder of this Agreement shall not be affected thereby.

Section 8.6. Successors and Assigns; Third Party Beneficiaries. This Agreement
shall be binding upon and shall, subject to the penultimate sentence of
Section 6.3, inure to the benefit of the parties hereto, their respective heirs
and personal representatives, and any successor to a trustee of a trust which is
or becomes a party hereto; provided that no person claiming by, through or under
a Partner (whether such Partner’s heir, personal representative or otherwise),
as distinct from such Partner itself, shall have any rights as, or in respect
to, a Partner (including the right to approve or vote on any matter or to notice
thereof) except the right to receive only those distributions expressly payable
to such person pursuant to Article VI. Any Partner or Withdrawn Partner shall
remain liable for the obligations under this Agreement (including any Net
Recontribution Amounts) of any transferee of all or any portion of such
Partner’s or Withdrawn Partner’s interest in the Partnership, unless waived by
the General Partner in accordance with applicable law. The Partnership shall, if
the General Partner determines, in its good faith judgment, based on the
standard set forth in Section 5.8(d)(ii)(A), to pursue such transferee, pursue
payment (including any Net Recontribution Amounts) from the transferee with
respect to any such obligations. Nothing in this Agreement is intended, nor
shall anything herein be construed, to confer any rights, legal or equitable, on
any person other than the Partners and their respective legal representatives,
heirs, successors and permitted assigns. Notwithstanding the foregoing, the
provisions of Sections 5.8(d)(i) and (iii) shall inure to the benefit of the
limited partners or other investors in BREI, and such limited partners or
investors shall have the right to enforce the provisions thereof to the extent
the Partnership does not otherwise do so.

 

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Section 8.7. Partner’s Will. Each Partner and Withdrawn Partner shall include in
his or her will a provision that addresses certain matters in respect of his or
her obligations relating to the Partnership that is satisfactory to the General
Partner and each such Partner and Withdrawn Partner shall confirm annually to
the Partnership, in writing, that such provision remains in his current will.
Where applicable, any estate planning trust of such Partner or Withdrawn Partner
to which a portion of such Partner’s or Withdrawn Partner’s Interest is
transferred shall include a provision substantially similar to such provision
and the trustee of such trust shall confirm annually to the Partnership, in
writing, that such provision or its substantial equivalent remains in such
trust. In the event any Partner or Withdrawn Partner fails to comply with the
provisions of this Section 8.7 after the Partnership has notified such Partner
or Withdrawn Partner of his failure to so comply and such failure to so comply
is not cured within 30 days of such notice, the Partnership may withhold any and
all distributions to such Partner until the time at which such party complies
with the requirements of this Section 8.7.

Section 8.8. Confidentiality. By executing this Agreement, each Partner
expressly agrees, at all times during the term of the Partnership and thereafter
and whether or not at the time a Partner of the Partnership, to maintain the
confidentiality of, and not to disclose to any person other than the
Partnership, another Partner or a person designated by the Partnership, any
information relating to the business, financial structure, financial position or
financial results, clients or affairs of the Partnership that shall not be
generally known to the public or the securities industry, except as otherwise
required by law or by any regulatory or self-regulatory organization having
jurisdiction; provided, however, that any corporate Partner may disclose any
such information it is required by law, rule, regulation or custom to disclose.

Section 8.9. Notices. Whenever notice is required or permitted by this Agreement
to be given, such notice shall be in writing (including telecopy or similar
writing) and shall be given to any Partner at its address or telecopy number
shown in the Partnership’s books and records or, if given to the General
Partner, at the address of the Partnership provided herein. Each such notice
shall be effective (i) if given by telecopy, upon dispatch, (ii) if given by
mail, when deposited in the mails (first class postage prepaid) addressed as
aforesaid and (iii) if given by any other means, when delivered to the address
of such Partner or the General Partner specified as aforesaid.

Section 8.10. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument.

Section 8.11. Power of Attorney. Each Partner hereby irrevocably appoints each
General Partner as such Partner’s true and lawful representative and
attorney-in-fact, acting alone, in such Partner’s name, place and stead, to
make, execute, sign and file all instruments, documents and certificates which,
from time to time, may be required to set forth any amendment to this Agreement
or may be required by this Agreement or by the laws of Canada, the Province of
Alberta or any other jurisdiction in which the Partnership shall determine to do
business, or any political subdivision or agency thereof, to execute, implement
and continue the valid and subsisting existence of the Partnership. Such power
of attorney is coupled with an interest and shall survive and continue in full
force and effect notwithstanding the subsequent Withdrawal from the Partnership
of any Partner for any reason and shall not be affected by the disability or
incapacity of such Partner.

Section 8.12. Cumulative Remedies. Rights and remedies under this Agreement are
cumulative and do not preclude use of other rights and remedies available under
applicable law.

Section 8.13. Legal Fees. Except as more specifically provided herein, in the
event of a legal dispute (including litigation, arbitration or mediation)
between any Partner or Withdrawn Partner and the Partnership, arising in
connection with any party seeking to enforce Section 4.1(d) or any other

 

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provision of this Agreement relating to the Holdback, the Clawback Amount or the
Recontribution Amount, the “losing” party to such dispute shall promptly
reimburse the “victorious party” for all reasonable legal fees and expenses
incurred in connection with such dispute (such determination to be made by the
relevant adjudicator). Any amounts due under this Section 8.13 shall be paid
within 30 days of the date upon which such amounts are due to be paid and such
amounts remaining unpaid after such date shall accrue interest at the Default
Rate.

Section 8.14. Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings, other than those expressly set forth or referred to
herein. Subject to Section 8.4, this Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.

 

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

 

GENERAL PARTNER: BREA INTERNATIONAL (CAYMAN) LTD. By:   /s/ Stephen A.
Schwarzman   Name: Stephen A. Schwarzman   Title: Director LIMITED PARTNERS:
BLACKSTONE HOLDINGS IV L.P.

By: Blackstone Holdings IV GP L.P.,

its General Partner

By: Blackstone Holdings IV GP Management L.L.C.,

its General Partner

By:   /s/ Stephen A. Schwarzman   Name: Stephen A. Schwarzman   Title:
Authorized Person All other Limited Partners now and hereafter admitted pursuant
to powers of attorney now and hereafter granted to the General Partner By:  
BREA INTERNATIONAL (CAYMAN) LTD. By:   /s/ Stephen A. Schwarzman   Name: Stephen
A. Schwarzman   Title: Director