Exhibit 10.14

 

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BLACKSTONE REAL ESTATE MANAGEMENT ASSOCIATES INTERNATIONAL II 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

1.1.

  

Definitions

   1

1.2.

  

Terms Generally

   10

ARTICLE II GENERAL PROVISIONS

   10

2.1.

  

General Partner and Limited Partners

   10

2.2.

  

Formation; Name

   11

2.3.

  

Term

   11

2.4.

  

Purpose; Powers

   11

2.5.

  

Place of Business

   12

2.6.

  

Feeder Vehicle

   12

ARTICLE III MANAGEMENT

   13

3.1.

  

General Partner

   13

3.2.

  

Limited Partners

   13

3.3.

  

Partner Voting, etc.

   13

3.4.

  

Management

   13

3.5.

  

Responsibilities of Partners

   13

3.6.

  

[Intentionally Omitted].

   13

3.7.

  

Exculpation and Indemnification

   13

3.8.

  

Tax Representation

   15

ARTICLE IV CAPITAL OF THE PARTNERSHIP

   15

4.1.

  

Capital Contributions by Partners

   15

4.2.

  

Interest

   23

4.3.

  

Withdrawals of Capital

   23

ARTICLE V PARTICIPATION IN PROFITS AND LOSSES

   23

5.1.

  

General Accounting Matters

   23

5.2.

  

Capital Accounts

   24

5.3.

  

Profit Sharing Percentages

   25

5.4.

  

Allocations of Net Income (Loss)

   25

5.5.

  

Liability of General and Limited Partners

   26

5.6.

  

[Intentional Omitted].

   26

5.7.

  

Repurchase Rights, etc.

   27

5.8.

  

Distributions

   27

5.9.

  

Business Expenses

   33

 

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

   33

6.1.

  

Additional Partners

   33

6.2.

  

Withdrawal of Partners

   33

6.3.

  

Partnership Interests Not Transferable

   35

6.4.

  

General Partner Withdrawal

   35

6.5.

  

Satisfaction and Discharge of a Withdrawn Partner’s Interest

   35

6.6.

  

[Intentionally omitted].

   39

6.7.

  

Termination of Partnership

   40

6.8.

  

Certain Tax Matters

   40

6.9.

  

Special Basis Adjustments

   41

ARTICLE VII Dissolution

   41

7.1.

  

Dissolution

   41

7.2.

  

Final Distribution

   41

7.3.

  

No Obligation to Restore Capital Accounts

   42

ARTICLE VIII MISCELLANEOUS

   42

8.1.

  

Submission to Jurisdiction; Waiver of Jury Trial

   42

8.2.

  

Ownership and Use of the Firm Name

   43

8.3.

  

Written Consent

   43

8.4.

  

Letter Agreements; Schedules

   44

8.5.

  

Governing Law

   44

8.6.

  

Successors and Assigns; Third Party Beneficiaries

   44

8.7.

  

Partner’s Will

   44

8.8.

  

Confidentiality

   45

8.9.

  

Notices

   45

8.10.

  

Counterparts

   45

8.11.

  

Power of Attorney

   45

8.12.

  

Cumulative Remedies

   45

8.13.

  

Legal Fees

   45

8.14.

  

Entire Agreement

   45

 

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BLACKSTONE REAL ESTATE MANAGEMENT ASSOCIATES INTERNATIONAL II L.P.

SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Blackstone Real
Estate Management Associates International II L.P. (the “Partnership”) dated as
of May 31, 2007, by and among BREA International (Cayman) II Ltd., a Cayman
Islands exempted 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 July 11, 2005, which was filed
with the Registrar of Corporations (Alberta).

The original partnership agreement of the Partnership was executed as of
July 11, 2005 (the “Existing Agreement”).

The Existing Agreement was amended and restated in its entirety by the Amended
and Restated Agreement of Limited Partnership, dated August 5, 2005, 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

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

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

“Alternative Vehicle” means any investment vehicle or structure formed pursuant
to paragraph 2.7 of the BREP International II Partnership Agreement or any other
"Alternative Vehicle" (as defined in any other BREP International II
Agreements).

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

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“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.

“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.

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

“BFREP International II” means Blackstone Family Real Estate Partnership
International II L.P., an Alberta, Canada limited partnership.

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

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

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

“BREA International (Delaware) II” means Blackstone Real Estate Associates
International II L.P., a Delaware limited partnership.

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

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

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

“BREP International II” means the collective reference to: (i) Blackstone Real
Estate Partners International II L.P., 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 partnership agreement for the partnership referred
to in clause (i) above, and (iii) any investment vehicle formed to co-invest
with the partnership referred to in clause (i) above using third party capital
and that potentially pays Carried Interest Distributions (as such term is used
in such partnership agreement).

 

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“BREP International II Agreement” means the Amended and Restated Agreement of
Limited Partnership, dated the date hereof or other date set forth therein, of
the partnership referred to in clause (i) of the definition of “BREP
International II” in this Article I, and any other BREP International II
partnership agreement.

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

“Carried Interest” shall mean (i) distributions to the general partner of BREP
International II (including BREA International (Delaware) II) pursuant to
paragraphs 4.2.1(c) and (d), paragraphs 4.2.2(c) and (d) and paragraph 4.2.8 of
the BREP International II Agreement (or similar provisions of investment
vehicles formed after the date hereof) and (ii) any other carried interest
payable pursuant to the BREP International II 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 among 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 Partnership, any Other Fund GP or their affiliates (in any capacity),
excluding Holdings, in respect of Carried Interest. For purposes of determining
any "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 and subject to any written agreements between
a Partner and the Partnership or an affiliate thereof: (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 Partners
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 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

 

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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 of by an accepted plea of guilty or nolo contendre) 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 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 BREP International II
Agreement, and any other clawback amount payable to the limited partners of BREP
International II pursuant to any BREP International II Agreement, as applicable.

“Clawback Provisions” shall mean paragraphs 4.2.9 and 9.2.6 of the BREP
International II Agreement and any other similar provisions in any other BREP
International II 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 BREP International II
Investments and certain expenses of BREP International II.

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

“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.

 

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“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 JPMorgan Chase Bank as its
prime rate and (b) 5%, or (ii) the highest rate of interest permitted under
applicable law.

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

“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) 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 set forth 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).

 

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

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

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

“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.”

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

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

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

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

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

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

“Holdings” means Blackstone Holdings V 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 BREP International II investments.

 

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“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 set forth in Section 5.8(e).

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

“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 set forth in Section 5.8(e).

“Net Carried Interest Distribution Recontribution Amount” has the meaning set
forth 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 or other
requirements.

 

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

“Other Fund GPs” means BRE Associates International II, BREA International II,
BRECA International II, BREA International (Delaware) II and any other entity
(other than the Partnership) 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 member or partner of any Other
Fund GP shall be considered an “Other Fund GP” for purposes hereof; provided
further, that the foregoing exclusion of such estate planning vehicles shall in
no way limit such 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.

“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, 2000,
C.P.-3, 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 BREP International II 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 other 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 BREP International II Investment
to be made by the general partner of BREP International II (including, without
limitation, BREA International (Delaware) II), 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 II and indirectly, through BREA
International II, to the general partner of BREP International II (including,
without limitation, BREA International (Delaware) II).

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

 

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“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).

“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 Ratings Group, 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 August 5, 2005, 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.

 

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“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 set forth in
Section 5.8(e).

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

“Unrealized Net Income (Loss)” attributable to any BREP International II
Investment as of any date means the Net Income (Loss) that would be realized by
the Partnership with respect to such BREP International II Investment if BREP
International II’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 BREP
International II to the Partnership (indirectly) pursuant to the BREP
International II Agreement with respect to such BREP International II Investment
were made on such date. “Unrealized Net Income (Loss)” attributable to any other
Investment as of any date means the Net Income (Loss) that would be realized by
the 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).

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

ARTICLE II

GENERAL PROVISIONS

2.1. 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.

 

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2.2. Formation; Name. The Partnership was formed upon the filing and recording
of a Certificate with the Registrar of Corporations on July 12, 2005 (L.P.
No. 11813029) 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 II L.P.

2.3. Term. The term of the Partnership shall continue until December 31, 2055,
unless earlier dissolved and terminated in accordance with this Agreement.

2.4. Purpose; Powers. (a) The purpose and character of the business of the
Partnership shall be, directly or indirectly through subsidiaries or affiliates,
(i) to serve as a limited partner of BREA International II 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, a member of limited liability
companies, 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;

(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;

 

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(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;

(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.

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.

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 interest holders 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 interest holder therein and
(ii) applying the provisions of Article IV as though the interest holder were a
direct Limited Partner in the Partnership.

(b) If any interest holder 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 interest holder’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 interest holders 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.

 

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ARTICLE III

MANAGEMENT

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.

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.

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.

(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.

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.

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.

3.6. [Intentionally Omitted].

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

 

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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 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

 

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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.

3.8. Tax Representation. Each Limited Partner certifies that (A) if the Limited
Partner is a United States person (as defined in the Code) (x) (i) the Limited
Partner’s name, social security number (or, if applicable, employer
identification 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 a United States person (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) if the Limited Partner is not a United States
person (as defined in the Code) (x) (i) the information on the completed IRS
Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States
Tax Withholding (“W-8BEN”) or other applicable form, including but not limited
to IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Partnership, or
Certain U.S. Branches for United States Tax Withholding (“W-8IMY”), or otherwise
is correct and (ii) the Limited Partner will complete and return the applicable
IRS form, including but not limited to a W-8BEN or W-8IMY, and (y) (i) the
Limited Partner is not a United States person (as defined in the Code) and
(ii) the Limited Partner will notify the Partnership within 60 days of any
change of such 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.

ARTICLE IV

CAPITAL OF THE PARTNERSHIP

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 BREP International II 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.)$10. Notwithstanding
the foregoing, the unfunded amount

 

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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 Agreement or SMD Agreement 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) 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.

(d) (i) The Partners and the Withdrawn 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 the 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 concurrently
increases the Existing Partners’ Holdback Percentage to 21%. The General Partner
may not increase the Deceased Partners’ Holdback

 

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Percentage beyond 24% unless the General Partner 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
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’ 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

 

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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 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

 

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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 Partnership’s books and records, 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
Pledgable Blackstone Interests) 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 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

 

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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 BREP International II, 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

 

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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 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.

(vi) (A) 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.

 

  (B) In lieu of the foregoing, any Existing Partner may pledge with respect to
any in-kind distribution the Special Firm Collateral referred to in asset
category 9 in the Partnership’s books and records; provided, that the initial
contribution of such Special Firm Collateral shall initially equal 130% of the
required Holdback Amount for a period of 90 days, and thereafter shall equal at
least 115% of the required Holdback Amount. Paragraphs 4.1(d)(viii)(C) and
(D) shall apply to such Special Firm Collateral. To the extent such Special Firm
Collateral exceeds the applicable minimum percentage of the required Holdback
Amount specified in the first sentence of this clause (vii)(B), the related
Partner may obtain a release of such excess amount from 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

 

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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 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).

 

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  (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.

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.

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

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).

“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

 

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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. The
General Partner may adjust Net Income (Loss) as it deems 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 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.

(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.

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

 

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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.

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 (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.

(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 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.

5.4. Allocations of Net Income (Loss). (a) Except as provided in Sections 5.4(d)
and 5.4(e), Net Income for each BREP International II Investment shall be
allocated to the Capital Accounts related to such BREP International II
Investment of all the Partners participating in such BREP International II
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

 

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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 BREP International II and allocated
(indirectly) to the Partnership with respect to its pro rata share thereof
(based on capital contributions made (indirectly) to BREP International II)
shall be allocated to the Partners in accordance with each Partner’s Non-Carried
Interest Sharing Percentage with respect to the Investment giving rise to such
loss suffered by BREP International II and (ii) Net Loss relating to realized
losses suffered by BREP International II 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) (subject to adjustment pursuant to
Section 5.8(e)).

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

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.

(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.

5.6. [Intentional Omitted].

 

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5.7. Repurchase Rights, etc. The General Partner may from time to time establish
such repurchase rights and/or other requirements with respect to the Partners’
interests in partnership assets (including BREP International II 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 not vested 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 to any thereto as it
may determine on a case by case basis.

5.8. Distributions.

(a) (i) The Partnership shall make distributions of available cash (subject to
reserves and adjustments established by the General Partner as provided in
Section 5.1) 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). 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 Sections
4.1(d) and 5.8(e), 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. At any time that a sale,
exchange, transfer or other disposition by BREP International II of a portion of
an Investment is being considered by the Partnership (a “Disposable
Investment”), at the election of the General Partner each Partner’s Interest
with respect to such Investment shall be vertically divided into two separate
Interests, an Interest attributable to the Disposable Investment (a Partner’s
“Class B Interest”), and an Interest attributable to such Investment excluding
the Disposable Investment (a Partner’s “Class A Interest”). Distributions
(including those resulting from a sale, transfer, exchange or other disposition
by BREP International II) relating to a Disposable Investment (with respect to
both Carried Interest and Non-Carried Interest) shall be made only to holders of
Class B Interests with respect to such Investment in accordance with their
Profit Sharing Percentages relating to such Class B Interests, and distributions
(including those resulting from the sale, transfer, exchange or the disposition
by BREP International II) relating to an Investment excluding such Disposable
Investment (with respect to both Carried Interest and Non-Carried Interest)
shall be made only to holders of Class A Interests with respect to such
Investment in accordance with their respective Profit Sharing Percentages
relating to such Class A Interests. Except as provided above, distributions of
cash or other property with respect to each category of Net Income (Loss) shall
be allocated among the Partners in the same proportions as the allocations of
Net Income (Loss) of each such category.

(ii) The General Partner may distribute to individual Partners (including any
Investor Limited Partner) at any time interests in investments of the
Partnership as it shall determine.

(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 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.

 

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(c) The General Partner may provide that the Partner interest of any Partner or
employee (including such 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. 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 to contribute to BREP International
II, directly or indirectly through one or more affiliates, a Clawback Amount or
Giveback Amount payable pursuant to the Clawback Provisions or Giveback
Provisions, as the case may be, the 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 (and/or Non-Carried Interest in the case of a Giveback Amount)
(the “Recontribution Amount”) which equals (I) the product of (a) such Partner’s
or Withdrawn Partner’s Carried Interest Give Back Percentage and (b) the
aggregate Clawback Amount payable by the Partnership in the case of Clawback
Amounts and (II) with respect to a Giveback, such Partner’s pro rata share of
prior distributions of Carried Interest and/or Non-Carried Interest in
connection with (a) the BREP International II Investment giving rise to the
Giveback Amount, (b) if the amounts contributed pursuant to clause (II)(a) above
are insufficient to satisfy such Giveback Amount, BREP International II
Investments other than the one giving rise to such obligation, but only those
amounts received by the Partners with an interest in the BREP International II
Investment referred to in clause (II)(a) above and (c) if the Giveback Amount is
unrelated to a specific BREP International II Investment, all BREP International
II Investments. Each Partner and Withdrawn Partner shall promptly contribute to
the Partnership, along with satisfying his comparable obligations to the Other
Fund GPs, if any, 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 (and/or Non-Carried Interest in the case of
Giveback Amounts) (the “Net Recontribution Amount”), irrespective of the fact
that the amounts in the Trust Account may be sufficient on an aggregate basis to
satisfy the Partnership’s, BRE Holdings V’s, BREA International II’s and the
Other Fund GPs’ obligation under the Clawback Provisions and/or Giveback
Provisions; provided, that to the extent a Partner’s or Withdrawn Partner’s
share of the amount paid with respect to the Clawback Amount

 

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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 or Giveback
Provisions will probably materialize (and an estimate of the aggregate amount of
such obligations); provided further, that any amount from a Partner’s Trust
Account used to pay any Giveback Amount (or such lesser amount as may be
required by the General Partner) shall be contributed by such Partner to such
Partner’s Trust Account no later than 30 days after the Net Recontribution
Amount is paid with respect to such Giveback.

 

  (B) To the extent any Partner or Withdrawn Partner has satisfied any 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 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 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 and the Other Fund GPs’ 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 or a partner or other
equity holder in any Other Fund GP (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 in the case of Clawback Amounts, and Profit
Sharing Percentages in the case of Giveback Amounts (as more fully described in
clause (II) of Section 5.8(d)(i)(A) above)), such amounts as are necessary to
fulfill the Defaulting Party’s obligation to pay such Defaulting Party’s Net
Recontribution Amount (a “Deficiency 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 or Giveback Amount, as the case may be, at least
20 Business Days prior to the latest date that the Partnership, and the Other
Fund GPs, if applicable, are permitted to pay the Clawback Amount or Giveback
Amount, as the case may be; provided, that, subject to Section 5.8(e), no
Partner or Withdrawn Partner shall as a result of such Deficiency Contribution
be required to contribute an amount in excess of 150% of the amount of

 

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the Net Recontribution Amount initially requested from such Partner or Withdrawn
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
other 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.

 

  (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 BREP International II Agreement) on BREP International II
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
BREP International II 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 BREP International II Investment (the “Subject Investment”)
that have been reduced under the BREP International II 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 BREP International II) from the Subject Investment
(such reduction, the “Loss Amount”);

 

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  (B) determine the amount of Carried Interest distributions otherwise
distributable to such Partner with respect to the Subject Investment (indirectly
through the Partnership from BREP International II) 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 Amount exceeds (y) the aggregate amount of
prior Carried Interest distributions less the amount of tax thereon, calculated
based on the Assumed Tax Rate (as defined in the BREP International II
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 JPMorgan Chase 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.

 

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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 BREP International II
Investments which gave rise to the Clawback Amount (i.e., the Losses that
followed the last BREP International II Investment with respect to which Carried
Interest distributions were made), based on such Partner’s Carried Interest
Sharing Percentage in such BREP International II 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

 

  (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 Percentages (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.

 

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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 BREP International II Agreement.

5.9. Business Expenses. The Partnership shall reimburse the Partners for
reasonable travel, entertainment and miscellaneous expenses incurred by them in
their participation of the Partnership’s affairs 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

6.1. Additional Partners (a) Effective on the first day of any month (or on such
other date as shall be determined by the General Partner in its sole
discretion), 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.

(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.

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

 

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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) 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.

(i) 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 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.

 

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(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.

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; and provided further, that a Special Limited Partner may assign, for
estate planning purposes, up to 25% of his Profit Sharing Percentage to any
estate planning trust, limited partnership or limited liability company with
respect to which a 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 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 any 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(a), 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.

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 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.

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.

(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

 

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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) 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
to receive, at the time or times specified in 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.

 

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(f) 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.

(g) For purposes of clause (y) of paragraph (e)(i) 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.

(h) 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)(i)
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.

(i) [Intentionally omitted].

(j) 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 paragraph (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)

 

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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.

(k) 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.

(l) 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 JPMorgan Chase Bank in New York City, as its prime rate and (y) the maximum
rate of interest permitted by applicable law. The “due date” of amounts payable
by a Withdrawn 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.

(m) 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.

(n) 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),

 

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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.

(o) 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.

(p) 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.

(q) 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.

(r) 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.

(s) Each Limited Partner hereby irrevocably appoints the General Partner as such
Limited Partner’s true and lawful agent, representative and attorney-in-fact,
each acting alone, in such Limited Partner’s name, place and stead, to make,
execute, sign and file, on behalf of such Limited Partner, any and all
agreements, instruments, consents, ratifications, documents and certificates
which the General Partner deems necessary or advisable in connection with any
transaction or matter contemplated by or provided for in Section 3.3. or this
Section 6.5, including, without limitation, the performance of any obligation of
such Limited Partner or the Partnership or the exercise of any right of such
Limited Partner or the Partnership. Such power of attorney is coupled with an
interest and shall survive and continue in full force and effect notwithstanding
the Withdrawal from the Partnership of any Limited Partner for any reason and
shall not be affected by the death, disability or incapacity of such Limited
Partner.

6.6. [Intentionally omitted].

 

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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 Sections 5.9 and 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.

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 Regulations 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). In addition, this Agreement shall be considered to contain a
“qualified income offset” as provided in Regulations
Section 1.704-1(b)(2)(ii)(d).

(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 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

 

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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.

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 Regulations 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

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 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.

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;

 

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(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 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.

7.3. No Obligation to Restore Capital Accounts. Except as provided in Sections
4.1 and 5.8(d), or in the case of unrecouped advances pursuant to Section 5.8(b)
or as otherwise provided herein 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

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.

(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.

 

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(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.

8.2. Ownership and Use of the Firm Name. Notwithstanding anything in this
Agreement to the contrary, 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 is 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 licenses 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, royalty free basis in connection
with its 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 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 partnership 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.

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.

 

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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.

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.

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 BREP International II, 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.

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.

 

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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.

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 by hand delivery (including any courier service) or telecopy
to any Partner at its address or telecopy number shown in the Partnership’s
books and records or, if given to the General Partner or the Partnership, at the
address or telecopy number of the Partnership in New York City. Each such notice
shall be effective (i) if given by telecopy, upon dispatch, and (ii) if given by
hand delivery, when delivered to the address of such Partner, the General
Partner or the Partnership specified as aforesaid.

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

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.

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.

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 provision of this Agreement
relating to the Holdback, the Clawback Amount, the Giveback Amount or the
Recontribution Amount, the “losing” party to such dispute shall promptly
reimburse the “victorious party” for all reasonable legal fees and expenses
incurred in connection with such dispute (such determination to be made by the
relevant adjudicator). Any amounts due under this Section 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.

8.14. Entire Agreement. This Agreement between the initial limited partner of
the Partnership and the General Partner embody the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein or in the Instrument. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein or in the Instrument. Subject to
Section 8.4, this Agreement and the Instrument supersede 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) II LTD. By:  

/s/ Stephen A. Schwarzman

Name:   Stephen A. Schwarzman Title:   Director LIMITED PARTNERS: BLACKSTONE
HOLDINGS V L.P. By:   Blackstone Holdings V GP L.P, its General Partner By:  
Blackstone Holdings V GP Management (Delaware) L.P., its general partner By:  
Blackstone Holdings V 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) II
LTD. By:  

/s/ Stephen A. Schwarzman

Name:   Stephen A. Schwarzman Title:   Director