Execution


 


BBD1 HOLDINGS LLC


 


LIMITED LIABILITY COMPANY AGREEMENT


 


between


 


GKK BBD1 OWNER LLC,


 


and


 


FYF NET LEASE LLC


 


Dated as of


August 17, 2012


 



    	 



    	 



    

 


Table
of Contents


 


	 	 	PAGE
	 	 	 
	ARTICLE I. CERTAIN DEFINITIONS	2
	1.1	Certain Defined Terms	2
	 	 	 
	ARTICLE II. FORMATION OF THE COMPANY	15
	2.1	Formation of the Company	15
	2.2	Company Name	15
	2.3	Purposes, Powers and Business of the Company	15
	2.4	Principal Place of Business and Address	16
	2.5	Term	16
	2.6	Agent for Service and Registered Office	16
	2.7	Membership Interests	17
	2.8	Authorized Person	17
	 	 	
	ARTICLE III. CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS	17
	3.1	Contributions	17
	3.2	Additional Capital Contributions	18
	3.3	Effect of Failure to Make a Required Capital Contribution	19
	3.4	Capital Accounts, Allocations and Related Matters	21
	3.5	Allocations and Related Matters	23
	3.6	Method of Payment	25
	3.7	Partnership Classification for Tax Purposes	25
	 	 	 
	ARTICLE IV. DISTRIBUTIONS	26
	4.1	Distributions	26
	4.2	Withholding Requirements	27
	4.3	Promote Allocation Adjustment Event	27
	 	 	 
	ARTICLE V. MANAGEMENT AND OPERATIONS	28
	5.1	Managing Member	28
	5.2	Matters Requiring Approval of all Members	29
	5.3	Approved Budget	31
	5.4	Cooperation	32
	5.5	Indemnity	32
	5.6	Limitations on Indemnity	32
	5.7	Company Liabilities	33
	5.8	Guarantees	33
	5.9	Legal Title to Company Property	33
	5.10	Other Activities of Members	33
	 	 	 
	ARTICLE VI. TRANSFER OF MEMBERSHIP INTERESTS	34
	6.1	Permitted Transfers of Membership Interests	34
	6.2	Permitted Transfers and Requested Sale	34


 



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	6.3	Unauthorized Transfers	37
	6.4	Actions Following a Transfer	38
	6.5	No Withdrawal	38
	6.6	Mortgage or Pledge of Membership Interest	38
	 	 	 
	ARTICLE VII. DISSOLUTION AND LIQUIDATION	39
	7.1	Dissolution	39
	7.2	Statement of Intent to Dissolve	39
	7.3	Procedures	39
	7.4	Termination of the Company	40
	 	 	 
	ARTICLE VIII. FISCAL AND ADMINISTRATIVE MATTERS	40
	8.1	Fiscal Year	40
	8.2	Deposits	40
	8.3	Checks, Drafts, Etc	40
	8.4	Books and Records	40
	8.5	Administrative Matters	42
	8.6	Compliance with Securities Laws	42
	 	 	 
	ARTICLE IX. FEES	43
	9.1	Asset Management Agreement and Fee	43
	9.2	Property Management	43
	9.3	Other Fees	43
	 	 	 
	ARTICLE X. MISCELLANEOUS	44
	10.1	Representations	44
	10.2	Notices	44
	10.3	Extension Not a Waiver	46
	10.4	Entire Agreement; Amendments	46
	10.5	Publicity	47
	10.6	Governing Law	47
	10.7	Venue	47
	10.8	Arbitration of Certain Disputes.	47
	10.9	Headings	49
	10.10	Severability	49
	10.11	No Suits by Holders	49
	10.12	Failure to Enforce Provision	49
	10.13	Involvement of the Company in Certain Proceedings	49
	10.14	Waiver of Partition and Certain Other Rights	49
	10.15	Interpretation	50
	10.16	Assignment	50
	10.17	Counterparts	50
	10.18	Brokers	50
	10.19	Exclusivity	50


 



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BBD1 HOLDINGS LLC


 


Limited Liability Company Agreement


 


The parties to this LIMITED
LIABILITY COMPANY AGREEMENT (this “Agreement”), dated as of August 17, 2012, are BBD1 Holdings LLC (the
“Company”), and GKK BBD1 Owner LLC, a Delaware limited liability company (together with its successors
and assigns, “Gramercy Member”), with offices at c/o Gramercy Capital Corp., 420 Lexington Avenue, 18th
Floor, New York, NY 10170, and FYF Net Lease LLC, a Delaware limited liability company (together with its successors and assigns,
“Garrison Member”), with offices at c/o Garrison Investment Management LLC, 1350 Avenue of the Americas,
9th Floor, New York, NY 10019 (each, a “Member”, and, collectively, the “Members”).


 


WHEREAS, the Company
was formed under the provisions of the Act by the filing of a certificate of formation of the Company with the Delaware Secretary
of State;


 


WHEREAS, KBS Acquisition
Sub-Owner 2, LLC, a Delaware limited liability company (together with its successors and assigns, “Seller”),
is the owner of one hundred percent (100%) of the outstanding membership interests (the “Target Membership Interests”)
of each of (i) First States Investor 5000A, LLC, a Delaware limited liability company (“5000A”), (ii)
GKK Independence Square Lot, LLC, a Delaware limited liability company (“ISL”) and (iii) AFR Defeasance
Pool 1, LLC, a Delaware limited liability company (“AFR” and, collectively with 500A and ISL, the “Target
Companies” and each a “Target Company”);


 


WHEREAS, 5000A and ISL
are each the owners of certain real property interests described in the Purchase Agreement (defined below) (the “Properties”
and each, a “Property”) and AFR is the owner of certain securities assets described in the Purchase Agreement;


 


WHEREAS, pursuant to
that certain Agreement for Sale of Membership Interests, dated the date hereof (as the same may hereafter be amended, the “Purchase
Agreement”), by and between Seller and the Company, Seller agreed to sell, assign and convey to the Company all of
Seller’s right, title and interest in and to the Target Membership Interests, on the terms and conditions set forth in the
Purchase Agreement;


 


WHEREAS, the Members
each desire to set forth their respective rights and obligations relating to the Company and the Target Companies, as well as certain
other provisions governing or pertaining to conduct and affairs of the Members and the Company.


 



    	 



    	 



    

 


NOW, THEREFORE, in consideration
of the premises and the mutual covenants herein contained, the parties hereto do hereby agree that, effective as of the date hereof,
the parties to this Agreement agree as follows:


 


ARTICLE
I.



CERTAIN DEFINITIONS


 


1.1           Certain
Defined Terms. As used in this Agreement, in addition to the terms defined elsewhere herein, the following terms have the meanings
specified below:


 


“5000A”
has the meaning assigned to it in the Preamble.


 


“Acceptance
Notice” has the meaning assigned to it in Section 6.2.2.


 


“Act”
has the meaning assigned to it in Section 2.1.


 


“Additional
Capital Contribution” means a Capital Contribution made or deemed made by any Member after the date hereof.


 


“Adjusted
Capital Account Balance” means with respect to any Member, the balance, if any, in such Member’s Capital Account
as of a specified time, after giving effect to the following adjustments:


 


(i)          credit
to such Capital Account any amounts that such Member is obligated to restore or is deemed obligated to restore pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii), Treasury Regulation Section 1.704-2(g)(1) and Treasury Regulation Section 1.704-2(i)(5) or
any successor provisions; and


 


(ii)         debit
to such Capital Account reasonably expected adjustments, allocations and distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).


 


“Adjusted
Capital Account Deficit” means with respect to any Member, the deficit, if any, of such Member’s Adjusted Capital
Account Balance as of a specified time.


 


“Adjusted
Capital Percentage” shall mean, with respect to any Member, the percentage represented by a fraction, (i) the numerator
of which is the amount of the Adjusted Capital Contributions made or deemed made by such Member and (ii) the denominator of which
is the aggregate amount of all Adjusted Capital Contributions made or deemed made by all of the Members.


 



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“Adjusted
Capital Contributions” shall mean, with respect to any Member, the Capital Contributions made or deemed made by such
Member, including without limitation, all Additional Capital Contributions deemed made by such Member upon conversion of a Default
Loan through a Cram-Down Contribution pursuant to Section 3.3.4 hereof.


 


“Advance
Repayment Contribution” has the meaning assigned in Section 3.2.3.


 


“Advancing
Member” has the meaning assigned in Section 3.2.3.


 


“Affiliate”
means (a) with respect to any Member any natural person, corporation, partnership, limited liability company, joint venture, association
or other business or legal entity (i) directly or indirectly controlling, controlled by or under common control with such Member,
(ii) directly or indirectly owning or controlling 20% or more of the outstanding voting securities of such Member, (iii) any
officer, director, principals or partners of any the foregoing, (iv) family members of such Member, limited to spouse, siblings,
parents and children, or (v) trusts for the benefit of said family members and (b) with respect to the Company, any natural
person, corporation, partnership, limited liability company, joint venture, association or other business or legal entity (i) directly
or indirectly controlling, controlled by or under common control with the Company, (ii) owning or controlling 20% or more of the
outstanding voting securities or interest in the Company or (iii) that is an Affiliate of a Member.


 


“Agreement”
has the meaning assigned to it in the Preamble.


 


“Alternative
Rate” means a rate of interest equal to the rate quoted in the Wall Street Journal as the “prime rate”
plus one hundred (100) basis points per annum.


 


“Annual Budget”
has the meaning assigned to it in Section 5.3.1.


 


“Approved
Budget” has the meaning assigned to it in Section 5.3.1.


 


“Arbitral
Dispute” has the meaning assigned to it in Section 10.8.


 


“Asset Management
Agreement” has the meaning assigned in Section 9.1.


 


“Asset Management
Fee” has the meaning assigned to it in Section 9.1.


 



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“Book Basis”
means with respect to any asset, the asset’s adjusted basis for federal income tax purposes; provided, however,
that:


 


(i)          the
initial Book Basis of the Stock shall be the amount of the Gramercy Member’s Closing Date Contribution set forth on Schedule
A-2 hereto less the portion thereof contributed as cash;


 


(ii) the
Book Basis of all of the Company’s assets shall be adjusted to equal their respective gross fair market values (taking
Code Section 7701(g) into account), as determined by the Members as of the following times: (A) the acquisition of an
additional interest in the Company by any new or existing Member in exchange for more than a de minimis capital contribution;
(B) the distribution by the Company to a Member of more than a de minimis amount of Company property in exchange for an
interest in the Company; (C) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
(D) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services
to or for the benefit of the Company by an existing Member acting in a partner capacity, or by a new Member acting in a
partner capacity or in anticipation of becoming a Member; and (E) at such other times as reasonably determined by the
Managing Members; provided, however, that the adjustments pursuant to clauses (B), (C) and (D) above shall be
made only if the Managing Members reasonably determine that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Members in the Company;


 


(iii)        any
adjustments to the adjusted basis of any asset of the Company pursuant to Section 734 or Section 743 of the Code shall be taken
into account in determining such asset’s Book Basis in a manner consistent with Treasury Regulation Section 1.704-1(b)(2)(iv)(m);
and


 


(iv)        the
Book Basis of any Company asset distributed or deemed distributed by the Company to any Member shall be adjusted immediately prior
to such distribution to equal its gross fair market value as of the date of distribution, as reasonably determined by the Managing
Members and approved by the other Member.


 


If the Book Basis of
an asset has been adjusted pursuant to clauses (iii) or (iv) above, to the extent and in the manner permitted in the Treasury Regulations,
adjustments to such Book Basis for Depreciation with respect to such asset shall be calculated by reference to Book Basis, instead
of tax basis.


 


“Business
Plan” has the meaning assigned to it in Section 5.1.


 


“Capital
Account” has the meaning assigned to it in Section 3.4.1(a).


 



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“Capital
Contribution” means the contribution of any property or cash to the Company by or on behalf of a Member.


 


“Capital
Transaction” means a financing, refinancing, insurance recovery, condemnation award, easement sale, sale or other
disposition of all or any part of the Target Companies, the Target Membership Interests or their assets, and any other transaction
the proceeds of which, in accordance with generally accepted accounting principles, are considered to be capital in nature.


 


“Cause”
has the meaning assigned to it in the Asset Management Agreement entered into between the Company and the Gramercy Member (or its
Affiliate).


 


“Certificate
of Formation” means the Certificate of Formation of BBD1 Holdings LLC, filed in the Office of the Secretary of State
of the State of Delaware.


 


“Chair”
has the meaning assigned to it in Section 10.8(a).


 


“Closing”
has the meaning assigned to that term in the Purchase Agreement.


 


“Closing
Date” means the date of the Closing.


 


“Closing
Date Contribution” has the meaning assigned to it in Section 3.2.2.


 


“Closing
Date Contributions” has the meaning assigned to it in Section 3.2.2.


 


“Code”
means the Internal Revenue Code of 1986, as amended.


 


“Collateral”
has the meaning assigned to it in Section 7.1.


 


“Commercial
Lender” has the meaning assigned to it in Section 6.6.


 


“Company”
has the meaning assigned to it in the Preamble.


 


“Company
Price” has the meaning assigned to it in Section 6.2.2.


 



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“Contributing
Member” has the meaning assigned to it in Section 3.3.1.


 


“Contribution
Agreement” has the meaning assigned to it in Section 5.8.


 


“Controlled
Affiliate” means (a) with respect to Gramercy Member, (i) any investment fund (a “GKK Fund) which has
GKK or any Affiliate thereof as its sole investment manager or adviser and (ii) any corporation, partnership, limited liability
company or other business or legal entity, 100% of the outstanding voting securities and interests in which are owned and controlled,
directly or indirectly, by GKK, and which in either case directly or indirectly owns the Gramercy Member as of the date hereof
and (b) with respect to Garrison Member, (i) any investment fund (a “Garrison Fund) which has GIML or any Affiliate
thereof as its investment manager or adviser and (ii) any corporation, partnership, limited liability company or other business
or legal entity, 100% of the outstanding voting securities and interests in which are owned and controlled, directly or indirectly,
by GIML, and which in either case directly or indirectly owns the Garrison Member as of the date hereof.


 


“Controls”
(includes the correlative meanings of “controlled by”, “controlling” and “under common control with”),
means the effective power, directly or indirectly, to direct or cause the direction of the management and policies of such person,
trust, corporation, partnership, venture or other entity.


 


“Cram-Down
Contribution” has the meaning assigned to it in Section 3.3.4.


 


“Default
Loan” has the meaning assigned to it in Section 3.3.3.


 


“Depreciation”
means, for each taxable year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such taxable year, except that (i) with respect to any asset the Book
Basis of which differs from its adjusted tax basis for federal income tax purposes at the beginning of such taxable year and which
difference is being eliminated by use of the “remedial method” as defined by Treasury Regulation Section 1.704-3(d),
Depreciation for such taxable year shall be the amount of book basis recovered for such taxable year under the rules prescribed
by Treasury Regulation Section 1.704-3(d)(2), and (ii) with respect to any other asset the Book Basis of which differs from its
adjusted tax basis for federal income tax purposes at the beginning of such taxable year, Depreciation shall be an amount which
bears the same ratio to such beginning Book Basis as the federal income tax depreciation, amortization, or other cost recovery
deduction for such taxable year bears to such beginning adjusted tax basis; provided, that in the case of clause (ii) above, if
the adjusted tax basis for federal income tax purposes of an asset at the beginning of such taxable year is zero, Depreciation
shall be determined with reference to such beginning Book Basis using any reasonable method selected by the Tax Matters Partner
with the consent of the other Members.


 



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“Dissolution
Event” has the meaning assigned to it in Section 7.1.


 


“Emergency”
shall mean any situation where (a) immediate action for the protection of a Property, tenants or other persons is required to remedy
a condition presenting imminent risk of injury to persons or material damage to property, (b) repairs or payment of premiums are
necessary to avoid the suspension of insurance or to comply with legal requirements, a violation of which would expose any Member,
the Company, any Target Company or their subsidiaries to any legal liability; or (c) moneys are required to (i) cure a material
default by the Company, as the landlord or tenant under a lease; (ii) pay real estate taxes and insurance premiums that are more
than thirty (30) days past due; or (iii) make payments to cure any event of default under or otherwise to comply with requirements
under loan documents, including to a lender, or to meet any payment obligation thereunder where the failure to make such payment
would be reasonably likely to constitute or result in an event of default thereunder, or would be reasonably likely to cause interest
or fees to accrue at a default or penalty rate.


 


“Emergency
Advance” has the meaning assigned in Section 3.2.3.


 


“Emergency
Contribution” has the meaning assigned in Section 3.2.3.


 


“Escrowed
Amount” has the meaning assigned to it in Section 6.2.3.


 


“Expenses”
means for any period for which such Expenses are being determined, the sum of the total gross expenditures of the Company during
such period, including (a) all cash operating expenses (including all management fees, commissions and other fees, expenses and
allowances paid to any Member or its Affiliate), (b) all debt service payments of the Company and (c) all expenditures by the Company
which are treated as capital expenditures (as distinguished from expense deductions) under generally accepted accounting principles;
provided, however, that Expenses shall not include any payments or expenditures to the extent paid out of reserve
accounts or from any other source other than Revenues.


 


“Financing
Contingency Period” has the meaning assigned to that term in the Purchase Agreement.


 


“First States”
has the meaning assigned to it in Section 9.2.


 


“GAAC”
has the meaning assigned to it in the Senior Loan definition.


 


“Garrison
Member” has the meaning assigned to it in the Preamble.


 



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“GIML”
means Garrison Investment Management LLC, together with its successors.


 


“GKK”
has the meaning assigned to it in Section 5.1.


 


“Gramercy
Member” has the meaning assigned to it in the Preamble.


 


“Indemnified
Person” has the meaning assigned to it in Section 5.5.


 


“Indemnified
Persons” has the meaning assigned to it in Section 5.5.


 


“Initial
Contribution” has the meaning assigned to it in Section 3.1.1.


 


“Initial
Contributions” has the meaning assigned to it in Section 3.1.1.


 


“Interest
Rate” means the rate per annum equal to fifteen percent (15%) per annum, compounded monthly in arrears.


 


“ISL”
has the meaning assigned to it in the Preamble.


 


“KBS Indemnity”
means any guarantees or indemnities made by Affiliates of the Company to Seller in connection with the Loan Assumption.


 


“Liquidating
Agent” has the meaning assigned to it in Section 7.3.1.


 


“Loan Assumption”
has the meaning assigned to it in definition of Senior Loan.


 


“Lockout
Period” means the period commencing on the date hereof and ending on the date that is thirty (30) months after the
date hereof


 


“Major Decision”
has the meaning assigned to it in Section 5.2.1.


 



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“Managing
Members” means, collectively and acting jointly, Gramercy Member and Garrison Member unless and until either (i)
a Member is removed as a Managing Member pursuant to Section 3.3.2 hereof or (ii) the Adjusted Capital Percentage of a Member is
equal to or less than thirty percent (30.0%), in which event such Member shall cease to be a Managing Member; in which case the
other Member shall be the sole Managing Member (and references herein to Managing Members shall thereafter be deemed a reference
to that sole Managing Member).


 


“Master Lease”
means that certain Amended and Restated Master Lease Agreement, dated as of January 1, 2005, between 5000A, as landlord, and Bank
of America, N.A., as tenant.


 


“Member”
has the meaning assigned to it in the Preamble.


 


“Members”
has the meaning assigned to it in the Preamble.


 


“Membership
Interest” has the meaning assigned to it in Section 2.7.


 


“Net Amount”
has the meaning assigned to it in Schedule A-2.


 


“Net Cash
Flow” means, for any period for which such sum is being computed, the excess of (a) Revenues for the Company during
such period over (b) the Expenses for the Company during such period.


 


“Net Proceeds
of a Capital Transaction” means the net proceeds (including any released reserves) of a Capital Transaction after
payment of or reduction for (a) the debts and liabilities of the applicable Target Company to the extent paid or satisfied in connection
with such transaction, including, without limitation, outstanding loans and any accrued interest thereon or any prepayment penalty
or other premium or fee payable in connection therewith, (b) if appropriate, the application of such proceeds to their intended
use (e.g., capital or leasehold improvements or repairs (or reserves therefor) or restoration, or repayment of any outstanding
loans), (c) the payment of any and all costs and expenses incurred in connection with the transaction, including, without limitation,
attorneys’ fees and disbursements, brokerage fees, transfer or similar taxes, any and all reasonable and customary transaction
costs, and, if appropriate, the costs and expenses incurred in connection with the dissolution and liquidation of the Company,
and (d) reserves established from time to time in such amounts and for such purposes as the Managing Members shall determine
each in its good faith judgment.


 


“Net Profits”
and “Net Losses” means for any period the taxable income or loss, respectively, of the Company for such
period, in each case as determined for U.S. federal income tax purposes, but computed with the following adjustments:


 



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(i)        items
of income, gain, loss and deduction (including, without limitation, gain or loss on the disposition of any Company asset and depreciation
or other cost recovery deduction or expense) shall be computed based upon the Book Basis of the Company’s assets rather than
upon such assets’ adjusted bases for U.S. federal income tax purposes;


 


(ii)       any
tax-exempt income received by the Company shall be deemed for these purposes only to be an item of gross income;


 


(iii)      any
expenditure of the Company described in Section 705(a)(2)(B) of the Code (or treated as described therein pursuant to Treasury
Regulations under Section 704(b) of the Code) shall be treated as a deductible expense;


 


(iv)      there
shall be taken into account any separately stated items under Section 702(a) of the Code;


 


(v)       if
the Book Basis of any Company asset is adjusted pursuant to clauses (ii) or (iv) of the definition thereof, the amount of such
adjustment shall be taken into account in the period of adjustment as gain or loss from the disposition or deemed disposition of
such asset for purposes of computing Net Profits and Net Losses; and


 


(vi)      items
of income, gain, loss, or deduction or credit allocated pursuant to Section 3.5.2 shall not be taken into account.


 


“Non-Contributing
Member” has the meaning assigned to it in Section 3.3.1.


 


“Non-Transferring
Member” has the meaning assigned to it in Section 6.2.1.


 


“Offer Decision
Date” has the meaning assigned to it in Section 6.2.2.


 


“Offer Notice”
has the meaning assigned to it in Section 6.2.1.


 


“Offer Price”
has the meaning assigned to it in Section 6.2.1.


 


“Outside
Date” has the meaning assigned to it in Section 6.2(e).


 


“Parallel
LLC” has the meaning assigned to it in Section 5.1.


 


“Person”
means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability
company, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.


 



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“Portfolio
Sale” has the meaning assigned to it in Section 6.2(e).


 


“Prime Rate”
means the prime rate of interest announced from time to time by Citibank, N.A. (or if Citibank, N.A. shall no longer exist or announce
a prime rate of interest, the prime rate of interest announced from time to time by the largest commercial bank headquartered in
New York, New York).


 


“Promote
Allocation Adjustment Event” means any of the following shall have occurred:


 


(a)          If
Gramercy Member, an asset manger that is an Affiliate of Gramercy Member under an Asset Management Agreement (an “Affiliate
Manager”), or GKK shall be adjudicated as bankrupt or insolvent, or if any petition for bankruptcy pursuant to federal
bankruptcy law, or any similar pleading in under federal or state law, shall be filed by or against, or consented to, by Gramercy
Member, an Affiliate Manager, or GKK, respectively; provided, however, if such adjudication, petition or proceeding was involuntary
and not consented to by such Gramercy Member, Affiliate Manager or GKK (as applicable) or any of their respective Affiliates, upon
the same not being discharged, stayed or dismissed within one hundred-twenty (120) days following its determination, filing or
commencement, as the case may be;


 


(b)          if
Gramercy Member, an Affiliate Manager or Gordon Dugan, Ben Harris, Peter Tubesing or Allan Rothschild (or, to the extent that one
or more of such individuals no longer occupy their current capacities with respect to the Company or its direct or indirect subsidiaries
or property, any successor officer or employee of GKK or any of its Affiliates who undertakes substantially similar duties of any
of such individuals with respect to the Company or its direct or indirect subsidiaries or property) (such individuals (including
any successors pursuant to this clause), a “Gramercy Person”): (i) is convicted or indicted by a governmental
entity of a felony involving dishonesty that has a material adverse effect on the Company, (ii) commits fraud or willful misconduct
with respect to the Company and which conduct has a material adverse effect on the Company (or its direct or indirect subsidiaries
or property taken as a whole) and the Garrison Member, (iii) intentionally misappropriates funds derived from the Properties or
the Company or any of its subsidiaries, for which (A) GKK or its Affiliate shall not have taken commercially reasonable actions,
following written notice to it of the occurrence of any such misconduct, to cause such misconduct to cease including, without limitation,
causing the termination or suspension of the employment of such Person responsible for such misconduct to the extent permissible
under applicable labor and employment law and (B) with respect to misappropriation by a Gramercy Person, GKK or its Affiliate shall
not have made restitution to the Company for the amount misappropriated minus any deductible under applicable insurance policies,
or (iv) in the case of any sub-manager of the Properties appointed by an Affiliate Manager who misappropriates funds derived from
the Properties or the Company or any of its subsidiaries, fails to promptly take commercially reasonable actions, following written
notice to it of the occurrence of such misconduct, to cause such sub-manager to cease such misconduct, cure or pay any damages
caused and terminate the employment of any Person responsible for such misconduct (to the extent permissible under the contractual
arrangement with such sub-manager, and applicable labor and employment law).


 



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“Properties”
has the meaning assigned to it in the Preamble.


 


“Property”
has the meaning assigned to it in the Preamble.


 


“Property
Management Agreement” has the meaning assigned to it in Section 9.2.


 


“Property
Management Fee” has the meaning assigned to it in Section 9.2.


 


“Public Filings”
has the meaning assigned to it in Section 10.5.


 


“Purchase
Agreement” has the meaning assigned to it in the Preamble.


 


“Purchase Agreement
Termination Right” means any right that the Company has to terminate the Purchase Agreement pursuant to the terms of
the Purchase Agreement.


 


“Readjustment
Date” has the meaning assigned to it in Section 10.8(h).


 


“Regulatory
Allocations” has the meaning assigned to it in Section 3.5.2.5.


 


“REIT”
has the meaning assigned to it in Section 5.1.


 


“Requested
Sale” has the meaning assigned to it in Section 6.2.2.


 


“Requested
Sale Notice” has the meaning assigned to it in Section 6.2.2.


 


“Requested
Sale Price” has the meaning assigned to it in Section 6.2.2.


 



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“Return on
Equity” means, with respect to each Member, an amount equal to ten percent (10%) per annum calculated on the aggregate
amount of Adjusted Capital Contributions of such Member and accrued and unpaid Return on Equity from time to time outstanding,
in each case accrued in arrears on a daily basis and compounded monthly in arrears.


 


“Revenues”
means for any period for which such Revenues are being determined, the total gross revenues of the Company received by the Company
during such period, including, without limitation, all receipts of the Company from (a) the Target Companies (including distributions)
and (b) other revenues and receipts realized by the Company from operations and customarily included in gross receipts or
cash flow from operations. Notwithstanding the foregoing, the term “Revenues” shall not include any Capital Contributions.


 


“Sale Closing”
has the meaning assigned to it in Section 6.2.3(b).


 


“Sale Interest”
has the meaning assigned to it in Section 6.2.1.


 


“Seller”
has the meaning assigned to it in the Preamble.


 


“Senior Lender”
means a lender under a Senior Loan.


 


“Senior Loan”
means either (i) the loan or loans made to the Company (or one or more direct or indirect wholly owned subsidiaries) to finance
the acquisition of the Properties, together with interest accrued thereon or (ii) if the same is assumed by the Company (but not
otherwise), that certain loan, in the original principal amount of $440,000,000, made by German American Capital Corporation, a
Maryland corporation (“GACC”), to 5000A, as evidenced by that certain Amended and Restated Loan and Security
Agreement, dated as of October 1, 2003, between GACC and 5000A (the “Loan Assumption”). (As used in this
definition, the term “loan” shall include credit enhancement, which is secured by a first mortgage lien, that is provided
to secure the payment obligations of a bond issuer, and/or a mezzanine loan made in connection with such loan.)


 


“Senior Loan
Guarantees” means any guarantees made by Affiliates of the Company in connection with any Senior Loan.


 


“Stock”
has the meaning assigned to it in Section 3.2.2.


 


“Target Companies”
has the meaning assigned to it in the Preamble.


 



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“Target Company”
has the meaning assigned to it in the Preamble.


 


“Target Membership
Interests” has the meaning assigned to it in the Preamble.


 


“Tax Matters
Partner” has the meaning assigned to it in Section 8.5.1.


 


“Taxing Authority”
has the meaning assigned to it in Section 4.2.


 


“Terminating
Member” has the meaning assigned to it in Section 3.1.2.


 


“Transfer”
means the direct or indirect transfer, sale, assignment or other disposition of any part or all of a Membership Interest or any
other interest in the Company (as the context requires), whether voluntarily, by operation of law, merger or otherwise (including,
without limitation, by virtue of a Transfer of any equity or other interest in any direct or indirect holding company of a Member).


 


“Transferring
Member” has the meaning assigned to it in Section 6.2.1.


 


“Tribunal”
has the meaning assigned to it in Section 10.8(a).


 


“Trigger
Notice” has the meaning assigned to it in Section 6.2.1.


 


“TRS”
means a "taxable REIT subsidiary" within the meaning of Section 856(l) of the Code.


 


“Unreturned
Equity” means, with respect to each Member at any time, the aggregate amount of all Adjusted Capital Contributions
made or deemed made by such Member less the aggregate amount of distributions made to such Member prior to that time in accordance
with Section 4.1(a)(ii) or deemed distributed to such Member prior to that time in accordance with Section 4.2 (but
only to the extent the funds withheld from a distribution pursuant to Section 4.2 would have been distributed pursuant to
Section 4.1(a)(ii) had such withholding not been made).


 



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ARTICLE
II.



FORMATION OF THE COMPANY


 


2.1           Formation
of the Company. The Company is hereby formed as a limited liability company pursuant to the Delaware Limited Liability Company
Act, as amended (the “Act”). This Agreement shall constitute the limited liability company operating
agreement among the Members. Prior to, or promptly following, the execution and delivery hereof, the Members shall make all filings
and do all other acts as may be necessary or appropriate from time to time to continue to comply with all requirements for the
operation of a limited liability company in the State of Delaware, including, without being limited, to any requirements required
to reflect the qualification of the Company from time to time in all other jurisdictions where the Company shall conduct its business
in accordance with this Agreement. The Company is a separate legal entity. All ownership interests in the Company will be governed
by this Agreement and, except as modified by this Agreement, by the Act.


 


2.2           Company
Name. The name of the Company is “BBD1 HOLDINGS LLC”; provided, however, that, subject to all applicable
laws, unless a Member reasonably objects, the business of the Company may be conducted under any other name or names deemed necessary
or advisable by the Managing Members, as long as such name does not include or incorporate all or any part of the name of any Members
or their respective Affiliates. In this regard, the Managing Members shall file, or cause to be filed, all such fictitious name
or similar filings as may be appropriate from time to time.


 


2.3           Purposes,
Powers and Business of the Company.


 


(a)          The
purpose and business of the Company shall be (i) to own, pledge, encumber, finance or refinance,
syndicate, sell, exchange and otherwise deal with and dispose of the Target Companies and the Target Membership Interests;
and (ii) to indirectly hold, lease, finance, refinance, improve, renovate, alter, operate, manage, license, mortgage or otherwise
deal with the Properties. The Company may engage in any and all acts necessary, advisable or incidental to the carrying out
of the obligations attendant to the foregoing, provided such acts shall be specifically permitted hereunder or are taken with the
written consent of the Members.


 


(b)          The
Company shall not commingle its funds with those of any Affiliate or any other entity. Funds and other assets of the Company shall
be separately identified and segregated. All of the Company’s assets shall at all times be held by or on behalf of the Company,
and, if held on behalf of the Company by another entity, shall at all times be kept identifiable (in accordance with customary
usages) as assets owned by the Company. The Company shall maintain its own separate bank accounts, payroll and books of account.


 


(c)          The
Company shall pay from its own assets (including contributions by the Members) all obligations of any kind incurred by the Company.


 



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(d)          The
Company shall take all appropriate action necessary to ensure its existence as a limited liability company in good standing under
the laws of the State of Delaware and shall otherwise comply with all formalities required by the Act. The Company shall maintain
its books, records, resolutions and agreements as official records.


 


(e)          All
financial statements, accounting records and other organizational documents of the Company shall be maintained separately from
those of any Affiliate or any other entity and the Company shall otherwise observe all corporate or other organizational formalities.


 


(f)          The
annual financial statements of the Company shall disclose, in accordance with and to the extent required under generally accepted
accounting principles, all transactions between the Company and its Affiliates (including, without limitation, Affiliates of each
Member).


 


(g)          The
Company shall at all times hold itself out to the public (including any Affiliate’s creditors) as a separate and distinct
entity operating under the Company’s own name, and the Company shall act solely in its own name and through its own authorized
agents, and the Company shall correct any known misunderstanding regarding the Company’s status as a separate and distinct
entity.


 


(h)          The
Company shall pay out of its own funds (including contributions of Members) salaries, if any, of its employees, if any, and shall
reimburse any Affiliate for any service provided to the Company by such Affiliate.


 


(i)          The
Company shall not acquire the obligations or securities of the Members.


 


(j)          The
Company shall maintain adequate capital in light of its contemplated business and purposes.


 


(k)          Notwithstanding
anything herein to the contrary, this Section 2.3 shall not prohibit any Person that is treated as a disregarded entity
within the meaning of Treasury Regulation Section 301.7701-2(c) from being included in a federal, state or local tax return of
the federal tax owner of its assets.


 


2.4           Principal
Place of Business and Address. The principal place of business of the Company shall be located at c/o Gramercy Capital Corp.,
420 Lexington Avenue, 18th Floor, New York, NY 10170 or at such other place as the Managing Members may designate. The Company
may maintain offices and other facilities from time to time at such other locations as may be deemed necessary or advisable by
the Managing Members.


 


2.5           Term.
The existence of the Company shall commence as of the date of filing of the Certificate of Formation and shall continue until terminated
or dissolved under applicable law or the provisions of this Agreement.


 


2.6           Agent
for Service and Registered Office. The agent for service of process upon the Company shall be c/o National Registered Agents,
Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904 or such other agent as may be designated from time to time by the Members.
The registered office of the Company in the State of Delaware shall be in care of such agent for service of process or such other
address as may be designated from time to time by the Members.


 



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2.7           Membership
Interests. The owners of the Company will be known as Members. The interest of a Member in the Company will be designated as
a “Membership Interest.” Membership Interests are personal property and a Member has no interest in specific
property of the Company. Except for specific rights or obligations of a Member as set forth herein, all Membership Interests will
be of equal standing, and there will be no preferences, rights, limitations or restrictions among or between them.


 


2.8           Authorized
Person. From and after the date hereof, the Managing Members shall have the power, authority and obligation to execute, deliver
and file any other certificates (and any amendments and/or restatements thereof) necessary for the Company to maintain its legal
and lawful existence and to qualify to do business in any other jurisdiction in which the Company may wish to conduct business.


 


ARTICLE
III.



CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS


 


3.1           Contributions.


 


3.1.1           On
the date hereof, each Member has made or is deemed to have made a Capital Contribution to the Company in the amount set forth opposite
such Member’s name on Schedule A-1 hereto (collectively, the “Initial Contributions”
and each, an “Initial Contribution”).


 


3.1.2           In
the event that either Member (a “Terminating Member”) shall notify the other Member prior to the expiration
of the Financing Contingency Period that it elects to have the Company terminate the Purchase Agreement pursuant to section 4.3.2
of the Purchase Agreement, then such Terminating Member shall be entitled to a return of its Initial Contribution in cash. If the
other Member elects to have the Company not terminate the Purchase Agreement pursuant to such section 4.3.2 of the Purchase Agreement,
then such other Member shall immediately make an additional Capital Contribution to the Company to provide funds to the Company
necessary for the Company to return to the Terminating Member its Initial Capital Contribution (without regard to Section 4.1
below), and immediately upon receipt of such funds the Company shall effect such return of capital. If the other Member is also
a Terminating Member, then the Company shall return the Initial Capital Contribution of each Terminating Member promptly after
the Deposit (as defined in the Purchase Agreement) is returned to the Company pursuant to such section 4.3.2 of the Purchase Agreement.


 



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3.2           Additional
Capital Contributions.


 


3.2.1           Except
as expressly set forth in this Agreement, no Member shall be required or permitted to (i) make any additional Capital Contributions
or (ii) make any loan to the Company.


 


3.2.2           On
the Closing Date, (i) the Garrison Member shall contribute cash in the amount set forth on Schedule A-2 and (ii)
the Gramercy Member shall contribute common stock of Gramercy Capital Corp. (NYSE: GKK) in the amount required under the Purchase
Agreement (the “Stock”) and cash in the cumulative amount set forth on Schedule A-2 (collectively,
the “Closing Date Contributions” and each, a “Closing Date Contribution”);
provided that, if the Company had a Purchase Agreement Termination Right exercisable prior to the Closing and a Member had notified
the other Member that such Member elects to have the Company terminate the Purchase Agreement pursuant to such Purchase Agreement
Termination Right within the relevant time period provided in the Purchase Agreement for such termination, then notwithstanding
the foregoing such Member shall have no obligation to make any Closing Date Contribution. The Closing Date Contributions shall
be used by the Company to pay the purchase price due under the Purchase Agreement, all other costs and expenses incurred or payable
by the Company under the Purchase Agreement in connection with the acquisition of the Target Membership Interests, and all other
fees and expenses agreed to by the Members. The agreed value of each Closing Date Contribution is set forth on Schedule A-2.


 


3.2.3           If
(i) either Member determines that additional funds are necessary in the event of an Emergency or (ii) either Member determines
that additional funds are required (x) to avoid, prevent or cure a default under the Senior Loan, or (y) in connection with the
matters described in clause (c) of the definition of “Emergency” hereunder, such Member (the “Advancing
Member”), may advance any or all of such additional funds to the Company (an “Emergency Advance”)
simultaneously with the Advancing Member’s request for an Additional Capital Contribution (an “Advance Repayment
Contribution”) from the other Member in an amount equal to the Emergency Advance multiplied by the non-Advancing
Member’s Adjusted Capital Percentage (the “Emergency Contribution”). The Emergency Contribution
will be deemed a Default Loan made in accordance with the provisions of Section 3.3.3 (but at an interest rate initially
equal to the Alternative Rate for the period from the date such Emergency Advance was made until the date that is ten (10) business
days after the receipt of the Advance Repayment Contribution request by the non-Advancing Member, and thereafter at the Interest
Rate in accordance with Section 3.3.3).


 


3.2.4           Other
than as set forth above in this Section 3.2, the Members shall contribute to the Company as Additional Capital Contributions
in accordance with their Adjusted Capital Percentages, funds to the extent requested by the Managing Members for the ownership,
development, construction, operation, maintenance, leasing and management of the Properties, within ten (10) days of request by
the Managing Members to the Members, but only to the extent such Additional Capital Contribution is expressly provided for (and
is to be applied for the purposes and in the amounts set forth) in the Business Plan or the then effective Approved Budget or has
otherwise been approved by all Members.


 



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3.3           Effect
of Failure to Make a Required Capital Contribution.


 


3.3.1           If
a Member (the “Non-Contributing Member”) fails to timely make a Capital Contribution (or any portion
thereof) that it is required to make pursuant to Section 3.2, and the other Member (the “Contributing Member”)
has made its required Capital Contribution pursuant to Section 3.2, then the Contributing Member may exercise the rights
and remedies set forth in this Section 3.3 by delivery of a written notice of such election to the Company and the Non-Contributing
Member. The Members, for themselves and on behalf of the Company, acknowledge and agree that the remedies provided for in this
Section 3.3 shall be the sole and exclusive rights and remedies with respect to any failure of a Member to make a Capital
Contribution (or any portion thereof) that it is required to make pursuant to this Section 3.3.


 


3.3.2           If
a Member fails to make the Closing Date Capital Contribution it is required to make pursuant to Section 3.2.2 as and when
required under Section 3.2.2, the Contributing Member may advance the Non-Contributing Member’s Closing Date Contribution
and upon making such advance the Non-Contributing Member shall cease to be a Member (and shall cease to be a Managing Member) of
the Company and all right, title and interest of the Non-Contributing Member under this Agreement or otherwise in respect of the
Company (including in respect of any Membership Interest) shall automatically and irrevocably be terminated, and all Capital Contributions
theretofore contributed by such Non-Contributing Member (other than its Initial Contribution to the extent returnable to such Member
pursuant to Section 3.1.2, and other than any Capital Contributions contributed by such Member prior to the time it elected to
have the Company terminate the Purchase Agreement pursuant to the proviso of the first sentence of Section 3.2.2) shall
be forfeited and such forfeited Capital Contributions shall thereupon be transferred to the account of the Contributing Member
(but shall be used by the Contributing Member to pay the purchase price due under the Purchase Agreement); and any Capital Contributions
of such Non-Contributing Member not constituting such forfeited Capital Contributions shall be promptly returned to such Non-Contributing
Member without regard to Section 4.1 below and the Contributing Member shall make an additional Capital Contribution to
the Company to provide funds to the Company necessary for the Company to return such non-forfeited Capital Contributions to the
Non-Contributing Member. Each Member agrees that it is not entitled to make less than the full amount of the Capital Contribution
it is required to make pursuant to Section 3.2.2, and any attempt to make a partial Capital Contribution pursuant to Section
3.2.2 shall be rejected by the Company and of no force or effect. For the avoidance of doubt, if the Non-Contributing Member
under this Section 3.3.2 is the Gramercy Member, upon making the Gramercy Member’s Closing Date Contribution the Asset
Management Agreement with Gramercy Member or its Affiliate shall be terminated.


 



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3.3.3           If
a Member fails to make a Capital Contribution (or any portion thereof), other than a Capital Contribution required under Section
3.2.2, the Contributing Member may loan to the Non-Contributing Member, by contributing to the Company on its behalf, all or
any part of the amount which the Non-Contributing Member failed to contribute to the Company (each such loan, a “Default
Loan”) and such Default Loan shall be treated as an Additional Capital Contribution by the Non-Contributing Member.
Subject to Section 3.2.3, each Default Loan shall bear interest at the Interest Rate while the Default Loan is outstanding
and be due and payable, together with any accrued interest thereon, in full on or before the third (3rd) anniversary of the date
on which such Default Loan was made, provided that prior thereto all distributions of Net Cash Flow which would otherwise be made
to the Non-Contributing Member under Section 4.1(a) or Section 7.3.3, as the case may be, shall instead be paid to
the Contributing Member towards repayment of the Default Loans owed to such Contributing Member, together with accrued and unpaid
interest thereon, until all such Default Loans and interest are repaid in full. Further, the Non-Contributing Member hereby irrevocably
grants to the Contributing Member a continuing, first priority security interest in and lien upon the Non-Contributing Member’s
Membership Interest (together with all proceeds thereof and entitlements appurtenant thereto, including, without limitation, all
rights to distributions of Available Cash) to secure the repayment of any Default Loan owed by such Non-Contributing Member and
the accrued interest thereon and such Contributing Member shall have all rights and remedies to which a secured party is entitled
under the Uniform Commercial Code of Delaware, as amended, and any other applicable law. Each Member hereby authorizes the other
Member to file any financing statement (and amendments and continuations thereof) as is necessary or such other Member deems desirable
to perfect the security interest and lien granted pursuant to the foregoing. So long as a Default Loan is outstanding, the Non-Contributing
Member shall have the right to repay the Default Loan (and interest then due and owing), in whole or in part, by sending a written
notice to the Contributing Member of its intention to repay such Default Loan, which notice will not be effective unless it contains
the amount to be repaid, including interest accrued through the date of repayment, and the date it intends to make such payment,
which date must be at least ten (10) days after the date the Contributing Member receives such notice.


 


3.3.4           At
any time after the date that is sixty (60) days after the date that a Default Loan is made, including during the ten (10) day notice
period referred to in Section 3.3.3, and at the election of the Contributing Member by written notice to the Company, a
Default Loan may be converted (effective immediately upon delivery of such notice to the Company) into an Additional Capital Contribution
of the Contributing Member in an amount equal to one hundred fifty percent (150%) multiplied the principal of and unpaid interest
on such Default Loan outstanding at the time of such conversion (each, a “Cram-Down Contribution”). Upon
such election, (i) such Default Loan will no longer be outstanding, (ii) the Non-Contributing Member shall be treated as receiving
a distribution of its Capital Contributions equal to the principal amount of such Default Loan, (iii) the Contributing Member’s
Capital Account shall be increased by amount of the Cram-Down Contribution, and the Non-Contributing Member’s Capital Account
shall be decreased by an amount equal to the principal and unpaid interest on such Default Loan so converted, and (iv) the Contributing
Member shall be deemed to have made an Additional Capital Contribution equal to such Cram-Down Contribution as of the date on which
such Default Loan is converted into a Cram-Down Contribution. At the time of a Cram-Down Contribution, the Adjusted Capital Percentage
of each of the Contributing Member and the Non-Contributing Member shall be adjusted to reflect the Adjusted Capital Contributions
made or deemed made by each Member immediately after giving effect to such Cram-Down Contribution. In no event shall the Non-Contributing
Member’s Adjusted Capital Percentage be reduced below zero. Once a Cram-Down Contribution has been made no subsequent payment
or tender in respect of that Cram-Down Contribution or the Default Loan shall affect the Adjusted Capital Contributions or the
Adjusted Capital Percentages of the Members, as adjusted in accordance with this Section 3.3.4 in relation to that Cram-Down
Contribution.


 



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3.3.5           In
addition, if a Member fails to make any single Capital Contribution, other than a Capital Contribution required under Section
3.2.2, which is in excess of ten million dollars ($10,000,000.00) (which amount in excess of ten million dollars ($10,000,000.00)
is, for the avoidance of doubt, such Member’s several obligation and not the joint obligation of the Members), such Contributing
Member may invoke the sale procedures in Section 6.2 by delivering a Trigger Notice under Section 6.2.1 (and for
purposes of Section 6.2.1 no Lockout Period shall apply).


 


3.3.6           If
a Member has made a Capital Contribution under Section 3.2.2, and the other Member failed to make the Capital Contribution
it is required to make under Section 3.2.2, then prior to electing to make a Default Loan in respect of such required Capital
Contribution of the Non-Contributing Member pursuant to Section 3.3.3, the Contributing Member may withdraw its corresponding
Additional Capital Contribution (in which case the Contributing Member shall not be entitled to make such Default Loan in respect
of that capital call).


 


3.4          Capital
Accounts, Allocations and Related Matters.


 


3.4.1           Capital
Accounts.


 


(a)          A
capital account (“Capital Account”) shall be maintained for each Member in accordance with Section 704(b)
of the Code and Treasury Regulations Sections 1.704-1(b) and 1.704-2. The Capital Account balance of each Member as of the date
hereof shall be equal to such Member’s Initial Capital Contribution as of the date hereof.


 


(b)          The
Capital Account of each Member shall be increased by (i) the amount of any cash contributed by such Member to the capital of the
Company, (ii) with respect to the Stock contributed by the Gramercy Member, the amount the Stock is valued under the Purchase Agreement
as a credit to the purchase price thereunder, (iii) such Member’s share of Net Profits (as determined in accordance with
Section 3.5.1) and (iv) any items of Profit allocated to such Member pursuant to Section 3.5.2.


 



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(c)          The
Capital Account of each Member shall be decreased by (i) the amount of all cash distributions to such Member, (ii) the Book Basis
of any property distributed to such Member by the Company (net of liabilities that the Company is considered to assume, or take
property subject to), (iii) such Member’s share of Net Losses (as determined in accordance with Section 3.5.1), and
(iv) any items of Loss allocated to such Member pursuant to Section 3.5.2.


 


(d)          No
Member shall be required to restore any negative balance in its Capital Account except as otherwise provided herein.


 


(e)          In
the event that all or a portion of a Membership Interest in the Company is transferred in accordance with the terms of this Agreement,
the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Membership Interest.


 


(f)          The
Capital Account of each Member shall be adjusted to reflect any adjustment to the Book Basis of the Company’s assets attributable
to the application of Sections 734 or 743 of the Code to the extent and in the manner required pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(m).


 


(g)          Except
as otherwise provided in this Agreement, whenever it is necessary to determine the Capital Account balance of any Member, the Capital
Account balance of such Member shall be determined after giving effect to all allocations pursuant to Article III and all
contributions and distributions made prior to the time as of which such determination is to be made.


 


3.4.2           Advances
from Members. Loans and other advances by Members to the Company will not be deemed a Capital Contribution to, or be reflected
on the balance of, any Capital Account, except as provided in Section 3.3. Solely to the extent that any such advance was
made to fund an expense authorized pursuant to the terms hereof (including budgets approved in accordance with the terms hereof),
the amount of such advance will be a debt due from the Company to such Member and, except as otherwise expressly provided in this
Agreement or as agreed between such Member and the Company at the time such funds are advanced, will be repaid as soon as practicable
to such Member.


 


3.4.3           No
Interest. Except as otherwise expressly set forth in Article IV hereof or Section 3.3 with respect to Default
Loans, no interest will be paid by the Company (a) on any Capital Contribution, (b) on the balance of any Capital Account
or (c) on any advance to the Company from any Member.


 



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3.5          Allocations
and Related Matters.


 


3.5.1           Allocations
of Net Profit and Net Loss. After the application of Section 3.5.2, Net Profit and Net Loss for any taxable year, or
portion thereof, shall be allocated among the Members in a manner such that the Capital Account of each Member, immediately after
making such allocation, and after taking into account actual distributions made during such taxable year, or portion thereof, is,
as nearly as possible, equal (proportionately) to (i) the distributions that would be made to such Member pursuant to Section
7.3.3 hereof if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their Book Basis, all
Company liabilities, including the Company’s share of any liability of any entity treated as a partnership for U.S. federal
income tax purposes in which the Company is a partner, were satisfied (limited with respect to each nonrecourse liability to the
Book Basis of the assets securing such liability) and the net assets of the Company were distributed in accordance with Section
7.3.3 to the Members immediately after making such allocation, minus (ii) such Member’s share of Company minimum gain
and Member nonrecourse debt minimum gain determined pursuant to Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), computed
immediately prior to the hypothetical sale of assets. Subject to the other provisions of this Section 3.5, an allocation
to a Member of a share of Net Profit or Net Loss shall be treated as an allocation of the same share of each item of income, gain,
loss or deduction that is taken into account in computing Net Profit or Net Loss.


 


3.5.2       Regulatory
Allocations.


 


3.5.2.1.      
Notwithstanding any other provision of this Agreement, (i) “partner nonrecourse deductions” (as defined in Treasury
Regulation Section 1.704-2(i)), if any, of the Company shall be allocated for each period to the Member that bears the economic
risk of loss within the meaning of Treasury Regulation Section 1.704-2(i) and (ii) “nonrecourse deductions” (as defined
in Treasury Regulation Section 1.704-2(b)) and “excess nonrecourse liabilities” (as defined in Treasury Regulation
Section 1.752-3(a)), if any, of the Company shall be allocated to the Members pro rata in accordance with their respective Membership
Interests.


 


3.5.2.2.      
This Agreement shall be deemed to include “qualified income offset,” “minimum gain chargeback” and “partner
nonrecourse debt minimum gain chargeback” provisions within the meaning of the Treasury Regulations under Section 704(b)
of the Code. Accordingly, notwithstanding any other provision of this Agreement, items of gross income shall be allocated to the
Members on a priority basis to the extent and in the manner required by such provisions.


 


3.5.2.3.      
To the extent that Net Loss or items of loss or deduction otherwise allocable to a Member hereunder would cause such Member to
have an Adjusted Capital Account Deficit as of the end of the taxable year to which such Net Loss, or items of loss or deduction,
relate (after taking into account the allocation of all items of income and gain for such taxable period), such Net Loss, or items
of loss or deduction, shall not be allocated to such Member and instead shall be allocated to the Members in accordance with Section
3.5.1 as if such Member were not a Member.


 



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3.5.2.4.      
If any Member has an Adjusted Capital Account Deficit at the end of any taxable year that is in excess of the sum of the amount
such Member is obligated to restore pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5),
each such Member shall be specially allocated items of income and gain in the amount of such excess as quickly as possible, provided
that an allocation pursuant to this Section 3.5.2.4 shall be made only if and to the extent that such Member would have
a deficit Capital Account in excess of such sum after all other allocations provided for in this Section 3.5 have been made
as if Section 3.5.2.3 and this Section 3.5.2.4 were not in this Agreement.


 


3.5.2.5.      
Any allocations required to be made pursuant to Section 3.5.2.1 through 3.5.2.4 (the “Regulatory Allocations”)
(other than allocations, the effects of which are likely to be offset in the future by other special allocations) shall be taken
into account, to the extent permitted by the Treasury Regulations, in computing subsequent allocations of income, gain, loss or
deduction pursuant to Section 3.5.1 so that the net amount of any items so allocated and all other items allocated to each
Member shall, to the extent possible, be equal to the amount that would have been allocated to each Member pursuant to Section
3.5.1 had such Regulatory Allocations under this Section 3.5.2 not occurred.


 


3.5.2.6.      
It is intended that prior to a distribution of the proceeds from a liquidation of the Company pursuant to Section 7.3.3,
the positive Capital Account balance of each Member shall be equal to the amount that such Member is entitled to receive pursuant
to Section 7.3.3. Accordingly, notwithstanding anything to the contrary in this Section 3.5, to the extent permissible
under Sections 704(b) of the Code and the Treasury Regulations thereunder, Net Profit and Net Loss and, if necessary, items of
gross income and gross deductions, of the Company for the year of liquidation of the Company (or, if earlier, the year in which
all or substantially all of the Company’s assets are sold, transferred or disposed of) shall be allocated among the Members
so as to bring the positive Capital Account balance of each Member as close as possible to the amount that such Member would receive
if the Company were liquidated and all the proceeds were distributed in accordance with Section 7.3.3.


 


3.5.3       Tax
Allocations.


 


3.5.3.1.      
For federal income tax purposes, except as otherwise provided in this Section 3.5.3, each item of income, gain, loss and
deduction shall be allocated among the Members in the same manner as its corresponding item of book income, gain, loss or deduction
is allocated pursuant to this Section 3.5.


 



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3.5.3.2.      
In accordance with Sections 704(b) and 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss and deduction
with respect to any Company asset contributed (or deemed contributed) to the capital of the Company shall, solely for federal income
tax purposes, be allocated among the Members so as to take into account any variation between the adjusted basis of such Company
asset for federal income tax purposes and its Book Basis upon its contribution (or deemed contribution). If the Book Basis of any
Company asset is adjusted, subsequent allocations of taxable income, gain, loss and deduction with respect to such Company asset
shall take account of any variation between the adjusted basis of such Company asset for federal income tax purposes and the Book
Basis of such Company asset in the manner prescribed under Code Sections 704(b) and 704(c) and the Treasury Regulations thereunder.
Any elections or decisions relating to such allocations shall be made by the Tax Matters Partner with the consent of the other
Members.


 


3.5.3.3.     
If a Member acquires a Membership Interest, redeems all or a portion of its Membership Interest or transfers a Membership Interest
during a taxable year, the Net Profit or Net Loss (and other items referred to in Sections 3.5.1 and 3.5.2) attributable
to any such Membership Interest for such taxable year shall be allocated between the transferor and the transferee by closing the
books of the Company as of the date of the transfer, or by any other method permitted under Section 706 of the Code and the Treasury
Regulations thereunder that is selected by the Tax Matters Partner with the consent of the other Members.


 


3.5.3.4.      
The provisions of this Section 3.5 (and other related provisions in this Agreement) pertaining to the allocation of items
of Company income, gain, loss, deductions, and credits shall be interpreted consistently with the Treasury Regulations, and to
the extent unintentionally inconsistent with such Treasury Regulations, shall be deemed to be modified to the extent necessary
to make such provisions consistent with the Treasury Regulations.


 


3.6           Method
of Payment. All advances, loans or additional contributions to the capital of the Company will be made by means of a check
or draft payable to the order of the Company or by wire transfer of immediately available funds to the account of the Company,
or to such other account or by such other method as the Managing Members specify, subject to the reasonable approval of the other
Members.


 


3.7           Partnership
Classification for Tax Purposes. Each Member recognizes and intends that for federal income tax purposes the Company will be
classified as a partnership, and the Members will not make any election or take any action which would cause the relationship of
the Members under this Agreement to be excluded from the application of all or any part of Subchapter K of Chapter 1 of Subtitle
A of the Code or from any successor provisions to Subchapter K under the Code or from any similar provisions of applicable state
laws.


 



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ARTICLE
IV.




DISTRIBUTIONS


 


4.1           Distributions.


 


(a)          The
Net Cash Flow of the Company (including the Net Proceeds of a Capital Transaction), after deducting therefrom such reasonable reserves
for other liabilities and obligations of the Company as the Managing Members may establish which are either in the Business Plan,
an Approved Budget or approved by the Members (such approval not to be unreasonably withheld, conditioned or delayed), shall be
distributed to the Members as and when the Managing Members shall determine, but at least on a quarterly basis, in the following
order and priority:


 


(i)          First,
to each Member pro rata in accordance with their respective Unreturned Equity amount, as a Return on Equity, until the then compounded,
accrued and unpaid Return on Equity of each Member is reduced to zero;


 


(ii)         Second,
to each Member pro rata in accordance with their respective Unreturned Equity amounts, until such time as each Member’s Unreturned
Equity amount is reduced to zero; and


 


(iii)        Thereafter,
(a) (I) ten percent (10%) to the Gramercy Member and (II) ninety percent (90%) to the Members in accordance with their respective
Adjusted Capital Percentages, or (b) if a Promote Allocation Adjustment Event has occurred pursuant to Section 4.3, (I)
five percent (5%) to the Gramercy Member and (II) ninety-five percent (95%) to the Members in accordance with their respective
Adjusted Capital Percentages.


 


For the avoidance
of doubt, Net Cash Flow of the Company shall be distributed pursuant to the foregoing priorities with respect to unpaid Return
on Equity amounts and Unreturned Equity amounts outstanding at the time of such distribution, without regard to any previous reduction
of any such amount to zero.


 


(b)          Notwithstanding
the foregoing, at any time that a Default Loan is outstanding, any distributions to be made to the Non-Contributing Member pursuant
to Section 4.1(a) shall be deemed to be distributed to the Non-Contributing Member and shall be paid to the Contributing
Member until such Contributing Member has received repayment in full of the aggregate principal amount of its Default Loans made
pursuant to this Agreement plus any interest accrued thereon (with such payments deemed to be made first with respect to the interest
and then with respect to the principal amount of such aggregate Default Loans).


 



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4.2           Withholding
Requirements. The Company will at all times be entitled to make payments with respect to each Member in amounts required to
discharge any obligation of the Company to withhold or make payments to any U.S. federal, state, local or foreign taxing authority
(“Taxing Authority”) with respect to any distribution or allocation of income or gain to such Member
and to withhold (or deduct) the same from distributions to such Member. Any funds withheld from a distribution by reason of this
Section 4.2 shall nonetheless be deemed distributed to the Member in question for all purposes under this Agreement. If
the Company makes any payment to a Taxing Authority in respect of a Member hereunder that is not withheld from actual distributions
to the Member, then the Member shall reimburse the Company for the amount of such payment, on demand, plus interest, compounded
annually, on such amount from the date of such payment until such amount is repaid (or deducted from a distribution) to the Company
at the Prime Rate, plus two percentage points (but not higher than the maximum lawful rate). The amount of a Member’s reimbursement
obligation under this Section 4.2, to the extent not paid, shall be deducted from the distributions to such Member; any
amounts so deducted shall constitute a repayment of such Member’s obligation hereunder. Each Member’s reimbursement
obligation under this Section 4.2 shall continue after such Member transfers its interest in the Company or after a withdrawal
by such Member. Each Member agrees to furnish the Company with any representations and forms as shall reasonably be requested by
the Company to assist it in determining the extent of, and in fulfilling, any withholding obligations it may have. Each Member
agrees to indemnify and hold harmless the Company and the other Members from and against any liability with respect to taxes, interest
or penalties which may be asserted by reason of the failure to deduct and withhold tax on amounts distributable or allocable to
such Member. Any amount payable as indemnity hereunder by a Member will be paid promptly to the Company, and if not so paid, the
Company will be entitled to retain any distributions due to such Member for all such amounts.


 


4.3           Promote
Allocation Adjustment Event. If Garrison Member determines in its commercially reasonable judgment that a Promote Allocation
Adjustment Event has occurred, it may deliver written notice thereof to the Gramercy Member specifically alleging the facts upon
which such Promote Allocation Adjustment Event is based (and no Promote Allocation Adjustment Event shall occur absent Garrison
Member delivering such notice). Within ten (10) days of receipt of such notice, Gramercy Member may dispute whether a Promote Allocation
Adjustment Event has in fact occurred, by delivering written notice thereof to the Garrison Member, and such dispute shall be resolved
by arbitration in accordance with Section 10.8. For the avoidance of doubt, during the resolution of any dispute under Section
10.8 with respect to whether a Promote Allocation Adjustment Event has occurred, distributions shall continue to be made under
Section 4.1(a)(iii) assuming no Promote Allocation Adjustment Event has occurred (but shall be subject to reconciliation
under Section 10.8(h)). If, after receipt of such notice from Garrison Member, Gramercy Member does not timely deliver written
notice disputing whether a Promote Allocation Adjustment Event has occurred, such Promote Allocation Adjustment Event shall be
deemed to have occurred from the date of such notice from the Garrison Member.


 



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ARTICLE
V.



MANAGEMENT AND OPERATIONS


 


5.1           Managing
Member. (a) All management powers over the business and affairs of the Company are and shall be exclusively vested in the
Managing Members acting jointly, and the Managing Members shall jointly exercise control and management power over the business
and affairs of the Company; except that the Gramercy Member (or its Affiliate) shall be vested with the authority to conduct the
day-to-day operations of the Company pursuant to and in accordance with the Asset Management Agreement (when executed). Each Managing
Member shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized
officers. The Gramercy Member shall prepare a business plan for each of the Properties (the “Business Plan”),
which shall be subject to the approval of each of the Members (not to be unreasonably withheld, conditioned or delayed) and shall
include plans to market and sell, and the approved parameters for selling, certain Properties. The Members hereby approve all
actions taken pursuant to the Asset Management Agreement which are necessary or reasonably determined to be in furtherance of
carrying out the Business Plan, provided that no such action would result in deviation from the Business Plan. The Garrison Member
acknowledges that Gramercy Capital Corp. (“GKK”) is a real estate investment trust (“REIT”)
and Gramercy Member acknowledges that one or more of the funds that may invest in the Garrison Member is a REIT, and each acknowledges
that sales of properties by the Company could subject GKK or affiliates of GIML to a prohibited transaction tax. At the request
of either Member, prior to beginning the process of selling or otherwise disposing of any Property, the Members agree to use commercially
reasonable efforts to assist and consent to achieve certain tax structuring efficiencies, including the transfer of such Property
to a separate limited liability company jointly owned by a Member or a TRS owned by such Member (or an Affiliate of such Member)
(as such Member may elect) and by the other Member or a TRS owned by such other Member (or an Affiliate of such Member) (as such
other Member may elect) (the “Parallel LLC”). The organizational documents of the Parallel LLC or any
other ownership structure shall have comparable terms to those of the Company’s organizational documents. The non-requesting
Member’s interest in and rights and obligations with respect to the Parallel LLC or any other ownership structure will be
comparable to its interest in and rights and obligations with respect to the Company, and any TRS’s interest in and rights
and obligations with respect to the Parallel LLC will be comparable to the requesting Member’s interest in and rights and
obligations with respect to the Company. The Parallel LLC and any other ownership structure is intended to preserve the economics
of the Company with respect to any Property transferred to such Parallel LLC or other ownership structure. In addition, each Member
agrees to use reasonable efforts to assist and consent, at no cost or liability to it, to any other structure requested by the
other Member that will avoid or minimize exposure of each Member to the prohibited transactions tax. The requesting Member shall
bear all reasonable out of pocket expenses of the other Member in facilitating a Parallel LLC or other ownership structure under
this Section 5.1 (and if such structure is at the request or for the benefit of both Members, reasonable out of pocket expenses
shall be shared one-half each). The Members agree to use reasonable efforts to insure that any cash waterfall of distributions
in a Parallel LLC or any other structure shall be functionally aggregated with the distributions contained in Section 4.1 hereof
to the fullest extent possible, so that the Members receive the same distributions had such Parallel LLC or other structure not
been in effect; and to the extent achieving such functional aggregation is not practicable, the Members shall enter into mutual
"turnover" or other supplemental arrangements to ensure that cash payments ultimately received by each Member (together
with its Affiliates) are equivalent to the distributions such Member would have received had such Parallel LLC or other ownership
structure not been introduced.


 



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(b)          In
addition to the powers granted to the Managing Members under any other provision of this Agreement, the Managing Members shall
have, subject to the express limitations imposed by this Agreement, full power and authority to do all things reasonably deemed
necessary by it to conduct the business of the Company and to effectuate the purposes set forth in Section 2.3.


 


5.2           Matters
Requiring Approval of all Members.


 


5.2.1           For
the avoidance of doubt, and notwithstanding anything to the contrary contained in this Agreement or in the Asset Management Agreement,
no Member, acting individually, shall have the right to cause the Company or any of its subsidiaries to take any action in furtherance
of a Major Decision without the prior written consent of all Members. As used herein, a “Major Decision”
shall mean any of the following actions:


 


(i)          any
changes in the purposes of the Company as set forth in Section 2.3(a) or engaging in any other business not directly related
to the purpose of the Company;


 


(ii)         entering
into any agreement or other arrangement with a Member or any of its Affiliates (including any advance from a Member pursuant to
Section 3.4.2), or any direct or indirect modification, supplement, amendment, extension, renewal or change of any such
agreement or other arrangement, other than as set forth in Article IX; provided, however, that enforcement, decisions and
actions under the Asset Management Agreement with respect to an asset manager that is an Affiliate of a Member shall be delegated
solely to the Member who is not an Affiliate of such asset manager, subject to and in accordance with the provisions of Section
9.1;


 


(iii)        paying
or contracting to pay any consideration or compensation to any Member or any of its Affiliates, other than as set forth in Article
IX, or paying or contracting to pay any consideration or compensation to any third party (including, without limitation, property
manager, agent, broker or facilitator) if any such payment is or will be shared (whether directly or indirectly, including by
way of discount, rebate, fee, pass through, or otherwise) with any Member or any of its Affiliates;


 



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(iv)        approving
the material terms and conditions of the Senior Loan and any other indebtedness of the Company (other than trade payables incurred
in the ordinary course of business or in accordance with the Business Plan);


 


(v)         the
sale or disposition of any Properties or other material assets of the Company, other than sales and dispositions which satisfy
the parameters set forth in the Business Plan;


 


(vi)        admitting
any additional Members, taking any action with the intent of diluting the interests of any Member (other than as provided for
elsewhere in this Agreement) or acquiring an ownership interest in any Person;


 


(vii)       approving
or disapproving the Approved Budget set forth in Section 5.3 hereof, and approving or disapproving any other material modifications
to the Approved Budget;


 


(viii)      requiring
any additional Capital Contributions not set forth in Section 3.2.1 or Section 3.2.2 or in any Contribution Agreement,
other than additional Capital Contributions that are (a) for any expenditure in an Approved Budget, (b) for ordinary course capital
expenditures in an aggregate amount not to exceed $100,000 or (c) costs required in the case of an Emergency Advance; provided,
that in all events, other than with respect to an expenditure in respect of an Emergency, the Managing Members shall provide the
Members with at least ten (10) Business Days written notice of such anticipated expenditure (which notice shall describe the anticipated
expenditure, why the expenditure is required, and the alternatives (if any) to making such expenditure) and the Managing Members
shall consult with the Members prior to incurring such expenditure;


 


(ix)         the
institution or settlement of any lawsuit, claim, counterclaim or other legal proceeding by or against the Company or any direct
or indirect subsidiary of the Company with an amount at issue or risk in excess of $250,000 in the aggregate, including without
limitation, confessing a judgment against the Company, accepting the settlement, compromise or payment of any claim asserted against
the Company or any of its property and assets (including, without limitation, claims covered by the policies of insurance maintained
by or on behalf of the Company), or asserted by the Company in respect of the foregoing;


 


(x)          lending
Company funds to any Person;


 


(xi)         distributing
or advancing funds of the Company other than in accordance with this Agreement;


 



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(xii)        amending
this Agreement in any manner which adversely affects a Member;


 


(xiii)       filing
a voluntary bankruptcy petition, making an assignment for the benefit of creditors, or consenting to any proceeding for bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, relief of debtors, dissolution or liquidation or similar proceedings;


 


(xiv)      the
execution of any agreement, contract or understanding or other arrangement to effectuate a Major Decision and the amendment or
modification of any agreement, contract or understanding or other arrangement the execution of which constituted a Major Decision;


 


(xv)       entering
into any modification, amendment or other change with respect to the Master Lease; or


 


(xvi)      replacing
Jones Lang LaSalle Americas, Inc., as sub-property manager with respect to the Properties.


 


Notwithstanding anything to the contrary
in this Agreement, in the event that any Member’s Adjusted Capital Percentage is less than twenty percent (20%), such Member’s
consent shall not be required for the Managing Member to take an action that is a Major Decision or for any other action which
otherwise requires the consent of such Member hereunder, other than (A) any action described in clause (xii) above
and (B) entering into any agreement or other arrangement with a Member or any of its Affiliates, or any modification, supplement,
amendment, extension, renewal or change of any such agreement or other arrangement to the extent such agreement, arrangement,
modification, supplement, amendment, extension, renewal or change is not on arms-length terms.


 


5.3           Approved
Budget.


 


5.3.1           The
Gramercy Member shall promptly prepare a budget covering the period from the date hereof through December 31, 2012 for the approval
of the Members (such approval not to be unreasonably withheld, conditioned or delayed). For each fiscal year of the Company, the
Managing Members shall prepare a proposed annual budget (each, including the initial budget covering the period from the date
hereof through December 31, 2012, an “Annual Budget”) for the Company, and submit such budget to the
Members for their approval (such approval not to be unreasonably withheld, conditioned or delayed) not later than November 1 of
the previous fiscal year. Each Annual Budget approved by the Members in accordance with the terms and provisions hereof shall
be referred to as an “Approved Budget”. Until such time as the Members approve a proposed Annual Budget,
the most recent Approved Budget shall apply. The Managing Members shall operate the Company substantially in accordance with such
Approved Budget and shall be authorized to incur expenditures in accordance with the Approved Budget and as otherwise provided
herein.


 



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5.4           Cooperation.
Upon the Company’s request, each Member shall make its respective officers, directors and other representatives available
to provide guidance to the Managing Members with respect to the ongoing operation, development, redevelopment of and all other
matters pertaining to the Properties.


 


5.5           Indemnity.
To the fullest extent permitted by the Act, the Company, to the extent of its assets legally available for that purpose, will
indemnify and hold harmless, the Members and each of their Affiliates, and any member, partner, shareholder, director, officer,
agent, affiliate and professional or other advisor of such Member or Affiliate (collectively, the “Indemnified Persons”)
from and against any and all loss, cost, damage, expense (including, without limitation, fees and expenses of attorneys and other
advisors and any court costs incurred by any Indemnified Person) or liability by reason of anything any Indemnified Person does
or refrains from doing for, or in connection with the business or affairs of, the Company, except to the extent that it is finally
judicially determined by a court of competent jurisdiction that the loss, cost, damage, expense or liability resulted primarily
from the Indemnified Person’s or any of its Affiliates’ fraud, gross negligence, willful misconduct, or willful breach
of a material provision of this Agreement. Subject to the foregoing, the Company may pay in advance or reimburse reasonable expenses
(including advancing reasonable costs of defense) incurred by the Indemnified Person who is or is threatened to be named or made
a defendant or a respondent in a proceeding concerning the business and affairs of the Company.


 


5.6           Limitations
on Indemnity.


 


5.6.1           Additional
Indemnity. The Company, with the unanimous written consent of all the Members, may indemnify any of the Indemnified Persons
for any loss, cost, damage, expense or liability for which the Indemnified Persons would not be entitled to mandatory indemnification
under Section 5.5.


 


5.6.2           Waiver
of Indemnity Rights. An Indemnified Person may waive the benefits of indemnification under Section 5.5, but only by
an instrument in writing executed by such Indemnified Person.


 


5.6.3           Rights
Not Exclusive. The rights to indemnification under Section 5.5 are not exclusive of other rights which any Indemnified
Person may otherwise have at law or in equity, including, without limitation, common law rights to indemnification or contribution.
Nothing in this Section 5.6 will affect the rights or obligations of any Person (or the limitations on those rights or
obligations) under any other agreement or instrument to which that Person is a party.


 



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5.7           Company
Liabilities. All liabilities of the Company, including without limitation, indemnity obligations under Section 5.5,
will be liabilities of the Company as an entity, and will be paid or satisfied from the assets of the Company. Except as may be
provided for in a written agreement signed by such Member or Affiliate thereof (including, without limitation, in any Senior Loan
Guarantees), no liability of the Company will be payable in whole or in part by any Member in its capacity as a Member or by any
member, partner, shareholder, director, officer, agent, Affiliate or advisor of any Member or its Affiliates and no Member shall
be required to make any Capital Contributions to satisfy such obligations.


 


5.8           Guarantees.
Each of Gramercy Member and Garrison Member each agree that it shall act in good faith in negotiating and agreeing to any Senior
Loan Guarantees and/or a KBS Indemnity requested from it or its respective Affiliates (who shall be similarly creditworthy), provided
that the terms and conditions of any such guarantee or indemnity shall be in accordance with customary industry practice and subject
to the prior approval of each Member acting in its commercially reasonable discretion. Simultaneously with and as a condition
to providing any such Senior Loan Guarantee or KBS Indemnity, the Members shall enter into a contribution and sharing agreement
in form and substance mutually acceptable to the Members (the “Contribution Agreement”) which shall
provide, among other matters, for how payments under such agreements shall be allocated between the parties and treated under
this Agreement. For the avoidance of doubt, neither the Company nor any Member shall have any liabilities or obligations with
respect to any liabilities or obligations of GKK under that certain Representation and Indemnity Agreement, made as of the date
hereof, by and among GKK, Seller and KBS Real Estate Investment Trust, Inc., a Maryland corporation.


 


5.9           Legal
Title to Company Property. Legal title to Company property shall be held solely in the name of the Company.


 


5.10         Other
Activities of Members. Neither this Agreement nor any activity undertaken on behalf of the Company shall prevent any of the
Members or any of the Affiliates of the Members, or any person owning any direct or indirect interest in a Member, individually
or jointly with others, from engaging in any other activities or businesses or from making investments, whether or not those activities,
businesses or investments are similar in nature to, or may be competitive with, the business of the Company. Subject to the foregoing,
the Members shall have no obligation to account to the Company or to one another for any profits or other benefits derived from
other activities, businesses or investments to Company or to the other Members. The Members shall not be obligated to present
to the Company or to any other Members of the Company any particular investment opportunity, regardless of whether such opportunity
is of such character that the Company could take it if such opportunity were presented to the Company, and the Members shall have
the right to take for their own accounts, or to recommend to others, any such investment opportunity.


 



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ARTICLE
VI.



TRANSFER OF MEMBERSHIP INTERESTS


 


6.1           Permitted
Transfers of Membership Interests. Except as specifically permitted herein, no Member may effect a Transfer of a Membership
Interest in whole or in part (it being agreed that any such Transfer resulting from a transfer by a direct or indirect holding
company of a Member shall nonetheless be deemed to be a Transfer effected by such Member).


 


6.2           Permitted
Transfers and Requested Sale.


 


6.2.1           Notwithstanding
anything to the contrary in this Agreement, from and after the expiration of the Lockout Period, if a Member seeks to Transfer
all or any portion of its Membership Interest, such Member shall be entitled to sell such Membership Interest only pursuant to
the provisions of this Section 6.2 (provided that such Member complies with the provisions of Section 6.4). The
Member (the “Transferring Member”) that desires to sell all or any portion of its Membership Interest
shall first give a written notice (the “Trigger Notice”) to the other Member (the “Non-Transferring
Member”) of such desire and stating that the Transferring Member elects to sell its entire Membership Interest (the
“Sale Interest”). Within thirty (30) days of receipt of the Trigger Notice, the Non-Transferring Member
may deliver a written notice (the “Offer Notice) stating the aggregate cash price which the Non-Transferring
Member would be willing to pay in order to purchase one hundred (100%) of the Membership Interests based on the enterprise value
of the Company (the “Company Price”) and the other material terms of the proposed purchase and sale,
and making an irrevocable offer to the Transferring Member to purchase the Sale Interest at the deemed Offer Price (which amount
need not be stated in the Offer Notice). The cash price which the Non-Transferring Member is willing to pay for the Sale Interest
(the “Offer Price”) shall be deemed to be the aggregate amount that the Transferring Member would hypothetically
receive as a distribution if the Company Price were paid wholly in cash and the full amount thereof were distributed to the Members
on the date of the Offer Notice as Net Cash Proceeds in accordance with the order of priority set forth in Section 4.1 hereof,
without any deductions (including any deductions for any reserves). For the avoidance of doubt, under no circumstances may any
Member sell less than its entire Membership Interest.


 


6.2.2           If
the Transferring Member elects to sell to the Non-Transferring Member the Sale Interest for the Offer Price, then, on or before
the date which is forty-five (45) days after delivery of the Offer Notice (the “Offer Decision Date”),
the Transferring Member shall send a notice to the Non-Transferring Member of such election and accepting the offer made in the
Offer Notice (the “Acceptance Notice”). Alternatively, the Transferring Member may send a notice (the
“Requested Sale Notice”) by the Offer Decision Date to the other Member requiring the Company to sell
the Company’s direct or indirect interests in the remaining Properties (a “Requested Sale”) for
a price no less than 105% multiplied by the Company Price (the “Requested Sale Price”).


 


6.2.3           If
the Transferring Member so notifies the Non-Transferring Member on or before the Offer Decision Date that it elects to sell the
Sale Interest in accordance with this Section 6.2, then:


 



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(a)          the
Non-Transferring Member shall be deemed to have irrevocably elected to buy, and the Transferring Member shall be deemed to have
irrevocably elected to sell, the Sale Interest for the Offer Price and upon the terms set forth in the Offer Notice and otherwise
in accordance with this Section 6.2;


 


(b)          the
Non-Transferring Member shall, within fifteen (15) business days of receipt of the Acceptance Notice, deposit in escrow, in an
interest-bearing account, with a nationally recognized escrow agent located in New York City jointly selected by the Members pursuant
to a customary and reasonable escrow agreement, an amount equal to (such amount, the “Escrowed Amount”)
(i) ten million dollars ($10,000,000.00) or (ii) in the event the Non-Transferring Member has previously made a deposit in escrow
under this Section 6.2.3 that was forfeited pursuant to clause (e) of this Section 6.2.3, twenty million dollars
($20,000,000.00);


 


(c)          the
transfer of the Sale Interest shall occur at a closing (the “Sale Closing”) on a date no more than ninety
(90) days after the date the Transferring Member delivers written notice of its acceptance of the Offer Notice, where the following
transactions shall occur:


 


(i)          the
Non-Transferring Member shall pay or cause to be paid (or tender) to the Transferring Member the Offer Price for the Sale Interest
being purchased;


 


(ii)         if
there is Default Loan outstanding in favor of the Transferring Member, the Non-Transferring Member shall also pay or cause to
be paid the aggregate principal amount of its Default Loan outstanding plus all interest accrued thereon, if there is Default
Loan outstanding in favor of the Non-Transferring Member, the Non-Transferring Member shall set off from the Offer Price the aggregate
principal amount of its Default Loan outstanding plus all interest accrued thereon,


 


(iii)        the
Transferring Member and Non-Transferring Member shall pay, pro rata in accordance with their respective Adjusted Capital Percentage,
all transfer and filing fees due and payable in connection with the sale and purchase of the Sale Interest and furnish the other
Member with satisfactory proof of such payment; if the Transferring Member fails to cause all such transfer and filing fees to
be paid, the Non-Transferring Member may cause such transfer and filing fees to be paid and deduct the amount of such transfer
and filing fees from the purchase price;


 


(iv)        the
Non-Transferring Member and the Transferring Member shall make adjustments of available cash and liabilities at the closing date
with respect to the Sale Interest as if the books of the Company had been closed on the date of the Sale Closing;


 



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(v)         upon
receipt (or tender) of the Offer Price, the Sale Interest of the Transferring Member shall be deemed transferred and the Transferring
Member shall convey and assign by assignment with general warranty of title to the Non-Transferring Member (or its designee) the
entire Sale Interest, free and clear of all liens, claims and encumbrances other than liens and encumbrances created by this Agreement
or in connection with the Senior Loan, and the Non-Transferring Member shall execute and deliver an assumption agreement by which
it assumes the obligations of the Transferring Member as a Member under this Agreement accruing from and after the date of the
sale of such Sale Interest to the Non-Transferring Member; and


 


(vi)        the
Transferring Member agrees and shall be obligated to protect, indemnify, and hold harmless the Non-Transferring Member from and
against all losses, costs (including, without limitation, reasonable attorneys’ fees and costs of litigation), expenses,
liabilities and obligations which are attributable to the Sale Interest prior to the date of the sale of such Sale Interest to
the Non-Transferring Member, subject to (A) a monetary cap of one million dollars ($1,000,000) for all claims and (B) a time limit
excluding any claims not raised by written notice from the Non-Transferring to the Transferring Member within one year from the
date of the Sale Closing (or, with respect to underlying claims made under the Master Lease as a result of the tenant’s
audit rights thereunder, claims not raised by written notice from the Non-Transferring to the Transferring Member within three
(3) years from the end of the calendar year in which the Sale Closing occurs), and the Transferring Member shall execute and deliver
to the Non-Transferring Member all documents which may be reasonably requested by the Non-Transferring Member to confirm and evidence
the sale and purchase of such Sale Interest.


 


(d)          All
Net Cash Flow received by the Company during the period from the date the Offer Notice is delivered to but excluding the date
of the Sale Closing shall, to the extent not previously delivered, be distributed to the Members immediately before consummation
of the sale on the date of the Sale Closing pursuant to Section 4.1 (or reflected as a closing adjustment).


 


(e)          If
the Transferring Member fails to transfer the Sale Interest to the Non-Transferring Member in accordance with this Section
6.2 or otherwise fails to comply with its obligations under this Section 6.2, the Non-Transferring Member shall have
all rights and remedies available pursuant to law and in equity, including but not limited to (a) the right to enforce their respective
rights under this Section 6.2 by specific performance and to bring an action for damages, against the Transferring Member
and (b) the right to deem the Offer Notice withdrawn and the Transferring Member shall not be entitled to deliver another Offer
Notice. If the Transferring Member fails to timely deliver an Acceptance Notice or a Requested Sale Notice, the Offer Notice shall
be deemed withdrawn and the Transferring Member shall not be entitled to deliver another Offer Notice.


 



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(f)          If
the Non-Transferring Member fails to timely deliver an Offer Notice, which failure continues for a period of five (5) business
days after receipt of a further notice from the Transferring Member, the Transferring Member may send a Requested Sale Notice
with no Requested Sale Price minimum (and the provisions of clause (g) shall apply without regard to any Requested Sale Price
requirements set forth therein). If the Non-Transferring Member, after having timely delivered an Offer Notice which the Transferring
Member timely accepts, fails to consummate the purchase for any reason (other than by reason of default by the Transferring Member)
within the time period prescribed by Section 6.2.3, the Transferring Member may retain the Escrowed Amount as liquidated
damages, and the Transferring Member may send a Requested Sale Notice with no Requested Sale Price minimum (and the provisions
of clause (g) shall apply without regard to any Requested Sale Price requirements set forth therein).


 


(g)          If
the Transferring Member has timely elected to request a Requested Sale, or it has delivered a Requested Sale Notice under clause
(f) above, the Transferring Member shall be authorized to use commercially reasonable efforts to cause the Company to sell (the
“Portfolio Sale”) all of the Company’s direct or indirect interests in the remaining Properties
(including retaining a nationally recognized real estate broker, familiar with the marketing of asset similar to the Properties,
selected by the Transferring Member on behalf of the Company) which, for the avoidance of doubt, must be an “all cash”
sale on arms-length terms to a bona fide third party, and may be structured as asset and/or equity sales, but in no event for
less than the Requested Sale Price (except where the Requested Sale Notice is delivered pursuant to clause (f) above, in which
case no Requested Sale Price shall be applicable), however, that any Portfolio Sale must close on or before the date that is twelve
(12) months after the date the Transferring Member elects a Requested Sale (the “Outside Date”). The
Transferring Member shall reasonably consult with and keep the Non-Transferring Member apprised of the status and ongoing efforts
to effectuate a Portfolio Sale; and the Non-Transferring Member shall cooperate in good faith, and use its commercially reasonable
effects to assist in and support, the Portfolio Sale process. If no Portfolio Sale closes on or before the Outside Date, the Requested
Sale Notice (and related Trigger Notice and Offer Notice) shall be deemed withdrawn and no Member may Transfer its Membership
Interest without again complying with the provisions of this Section 6.2. For the avoidance of doubt, all cash proceeds of a Portfolio
Sale will be distributed in cash to the Members in accordance with the order of priority set forth in Section 4.1 hereof. Notwithstanding
anything in this Section 6.2 to the contrary, a Member may effect a Transfer of its Membership Interests to any of its Controlled
Affiliates without having to comply with the provisions of this Section 6.2.


 


6.3           Unauthorized
Transfers. Any purported Transfer by a Member which does not comply with the provisions of this Article VI will be
null and void, and the transferee under any such purported Transfer will acquire no title or ownership thereby but will hold such
Membership Interests for the benefit of the other Members. Notwithstanding the provisions of this Agreement to the contrary, no
Transfer that shall otherwise be permitted by this Article VI shall be permitted if such Transfer would result in the violation
of the terms of any financing or any other agreement to which the Company is a party or by which its assets are affected, to the
extent previously approved by the Members.


 






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6.4           Actions
Following a Transfer. The Company will not recognize any Transfer of a Membership Interest by a Member unless all costs incurred
by the Company to effect such Transfer have been paid by the Member who is transferring its interest and there is filed with the
Company a written and dated notification of such Transfer, in form and substance reasonably satisfactory to the Company, executed
and acknowledged by the Member who is transferring its interest and the transferee and such notification (a) contains the
agreement by the transferee to be bound by all the terms and conditions of this Agreement and (b) represents that such Transfer
was made in accordance with all applicable securities laws and regulations. Any Transfer will be recognized by the Company as
effective on the date of receipt of such notification by the Company.


 


6.5           No
Withdrawal. Except following a Transfer of its Membership Interest in accordance with the terms of this Agreement, without
first obtaining the written consent of the other Member (which consent may be withheld by the other Member in its sole discretion),
no Member may resign from the Company or effect a partial or complete withdrawal from the Company and no Member will be entitled
to withdraw any portion of its contribution or capital account, or to receive any distribution from the Company, except as otherwise
provided in this Agreement.


 


6.6           Mortgage
or Pledge of Membership Interest. No Member may mortgage, pledge or hypothecate all or any portion of its direct Membership
Interest in the Company, except each Member shall have the right to pledge its Membership Interest to the other Member. Any such
mortgage, pledge or hypothecation made in violation of this Section 6.6 shall be void ab initio. Notwithstanding
the foregoing, a Member may collaterally assign its interests in the profits of the Company payable pursuant to this Agreement
or otherwise and the proceeds of its Membership Interest to an Affiliate or to a lender provided that such lender shall agree
in writing (a) that the assignment shall not confer upon such assignee any right or power to participate in the management
of the Company, (b) that it has been assigned an interest solely in the economic interests in the Company and profits and proceeds
held by the assigning Member, (c)  that any rights so granted shall be at all times subject to the terms of this Agreement,
and (d) that in no event shall such Affiliate or lender become a Member in the Company or have the right to exercise any
rights under this Agreement as a result of any foreclosure or other remedy exercised by such lender.


 



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ARTICLE
VII.



DISSOLUTION AND LIQUIDATION


 


7.1           Dissolution.
This Agreement will terminate and the Company will be dissolved upon the occurrence of any of the following events (each, a “Dissolution
Event”):


 


(a)          Upon
the entry of a final judgment, order or decree of a court of competent jurisdiction adjudicating the Company to be bankrupt and
the expiration without appeal of the period, if any, allowed by applicable law in which to appeal;


 


(b)          By
the unanimous written agreement of all of the Members; or


 


(c)          Upon
the disposition of substantially all of the Company’s assets and the discontinuance of its business activities other than
activities in the nature of winding up.


 


Upon the occurrence
of a Dissolution Event, the business of the Company shall be wound up as provided in this Article VII unless the remaining
Members consent to the continuation of the business of the Company within ninety (90) days following the occurrence of a Dissolution
Event. Upon the occurrence of a Dissolution Event, if the remaining Members fail to consent to a continuation of the business
of the Company, then the portion of the Company’s assets that has been pledged to any lender as collateral pursuant to a
loan to the Company (the “Collateral”) shall not be liquidated in accordance with the terms of this
Agreement without the lender’s prior consent and the lender may continue to exercise all of its rights with respect to the
loan, including, without limitation, those rights relating to the Collateral until the indebtedness evidenced by the loan and
any document relating thereto has been paid in full or otherwise completely discharged.


 


7.2           Statement
of Intent to Dissolve. In accordance with the Act, as soon as possible following the occurrence and continuance of a Dissolution
Event, the Liquidating Agent will cause to be executed and filed a statement of intent to dissolve the Company in such form as
is prescribed by the Secretary of State of Delaware.


 


7.3           Procedures.


 


7.3.1           Liquidation
of Assets. In the event of the dissolution of the Company, the authorized Member or the person required by law to wind up
the Company’s affairs (such Member or other person being referred to herein as the “Liquidating Agent”)
will commence to wind up the affairs of the Company and liquidate its assets as promptly as is consistent with obtaining the fair
value thereof. In connection with any such winding up and liquidation, a financial statement of the Company as of the date of
dissolution will be prepared and furnished to all the Members by the Liquidating Agent.


 


7.3.2           Authority
of Liquidating Agent. In connection with the winding up and dissolution of the Company, the Liquidating Agent will have all
of the rights and powers with respect to the assets and liabilities of the Company that an authorized Member or a manager would
have pursuant to the Act or any other applicable law.


 



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7.3.3           Distribution
of Assets. Following the payment of, or provision for, all debts and liabilities of the Company and all expenses of liquidation,
and subject to the right of the Liquidating Agent to set up such cash reserves as the Liquidating Agent may deem reasonably necessary
for any contingent or unforeseen liabilities or obligations of the Company, the proceeds of the liquidation and any other funds
(or other remaining Company assets) of the Company will be distributed in cash to the Members in accordance with the order of
priority set forth in Section 4.1 hereof.


 


7.3.4           No
Recourse to Assets of Members. Each Member will look solely to the assets of the Company for all distributions with respect
to the Company and such Member’s capital contributions thereto and share of profits or losses, and will have no recourse
therefor (upon dissolution of the Company or otherwise) against any other Members.


 


7.4           Termination
of the Company. Upon the completion of the liquidation of the Company and the distribution of all assets of the Company and
other funds, the Company and this Agreement will terminate and the Liquidating Agent will have the authority to take or cause
to be taken such actions as are necessary or reasonable in order to obtain a certificate of dissolution of the Company as well
as any and all other documents required by the Act or any other applicable law to effectuate the dissolution and termination of
the Company.


 


ARTICLE
VIII.



FISCAL AND ADMINISTRATIVE MATTERS


 


8.1           Fiscal
Year. The fiscal year and the taxable year of the Company will begin on the first day of January and end on the last day of
December of each year, unless otherwise unanimously agreed to by the Members.


 


8.2           Deposits.
All funds of the Company will be deposited from time to time to the credit of the Company in such, banks, trust companies or other
depositories as the Managing Members may select.


 


8.3           Checks,
Drafts, Etc. All checks, drafts or other orders for the payment of money, and all notes or other evidences of indebtedness
issued in the name of the Company will be signed by such Person or Persons and in such manner as the Managing Members from time
to time shall authorize and designate in writing.


 


8.4           Books
and Records. The Company will maintain books and records relating to the assets and income of the Company and the payment
of expenses of, and liabilities or claims against or assumed by, the Company in such detail and for such period of time as may
be necessary to enable it to make full and proper accounting in respect thereof and to comply with applicable provisions of law.
The Managing Members shall keep accurate and complete minutes and records of the Company and books and records of account of the
Company, which will be kept at the principal place of business of the Company, which shall be in New York, New York.


 



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8.4.1           Right
of Inspection. Any Member of the Company will have the right to examine, at any reasonable time or times, upon reasonable
notice and for any purpose, the minutes and records of the Company and the books and records of account of the Company, and to
make copies thereof. Upon the written request of any Member of the Company, the Managing Members will cause to be made available
to such Member the most recent financial statements, bank statements, copies of paid and unpaid bills, contracts, leases and any
other existing agreement between the Company and third parties or Affiliates of the Company, showing in reasonable detail its
assets and liabilities and the results of its operations. Such inspection may be made by any agent or duly appointed attorney
of the Member making such request.


 


8.4.2           Financial
Records. The Managing Members shall cause all books and records of account of the Company to be maintained and reported based
upon generally accepted accounting principles.


 


8.4.3           Annual
Reports and Financial Statements. As soon as practicable after the close of each fiscal year, but in no event later than one
hundred twenty (120) days following the close of such fiscal year, the Managing Members shall deliver to the other Members:


 


(a)          A
financial report of the Company for such fiscal year, including a balance sheet and a profit and loss statement, changes in financial
position, cash flow (all of which (except for the reports of cash flow and other reports prepared on a cash basis) shall be prepared
in accordance with generally accepted accounting principles as the same may be modified by the approval of the Members). In addition,
the foregoing financial report shall be audited and reported upon by the accounting firm selected by the Managing Members and
at the cost of the Company.


 


(b)          A
report from Managing Members showing (i) distributions to the Members and (ii) such other matters as may be reasonably requested
by any Member relating to the financial affairs and/or the operations of the Company.


 


8.4.4           Quarterly
Reports. Within 30 days after the end of each calendar quarter, the Managing Members shall deliver to itself and the other
Members a financial report of the Company containing the information described in Sections 8.4.3.(a) and 8.4.3.(b)
for such calendar quarter, which report shall be unaudited.


 


8.4.5           Reports
in Connection with Senior Loan. The Managing Members agree to deliver to the other Members a copy of any report prepared in
connection with the Senior Loan and delivered to the Senior Lender. 


 



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8.5           Administrative
Matters.


 


8.5.1           Tax
Matters Partner. The Gramercy Member will serve as the “Tax Matters Partner” (as defined in Code Section 6231).
The Tax Matters Partner is authorized and required to represent the Company, at the Company’s expense, in connection with
all examinations of the Company’s affairs by tax authorities, including administrative and judicial proceedings, and to
expend Company funds for professional services and costs associated therewith. The Tax Matters Partner shall have the power to
make or revoke any elections now or hereafter required or permitted to be made by the Code or any state or local or foreign law
with the consent of the other Members.


 


8.5.2           Cooperation.
The other Members agree to cooperate with the Tax Matters Partner and to do or refrain from doing any or all things reasonably
requested by the Tax Matters Partner with respect to the conduct of such proceedings and the preparation of all returns pursuant
to Section 8.5.4.


 


8.5.3           Reporting
to Members. The Tax Matters Partner will keep the other Members informed of all material matters that may come to its attention
in its capacity as Tax Matters Partner, and will permit the other Members to attend, any material meetings with any taxation or
auditing authority.


 


8.5.4           Filings.
The Managing Members will arrange for the preparation and timely filing of all returns required to be filed by the Company and
the distribution of Forms K-1 or other similar forms to the other Members. The Managing Members shall use its commercially reasonable
efforts to deliver Forms K-1 to each Member no later than June 30 of each year.


 


8.6           Compliance
with Securities Laws. The Company will file with the Securities and Exchange Commission and other applicable federal and state
governmental agencies such reports and other documents, if any, and take any other actions necessary to comply with federal or
state securities laws.


 



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ARTICLE
IX.



FEES


 


9.1           Asset
Management Agreement and Fee. The Members acknowledge and agree that it is the intention of the Members that the Company shall
enter into an Asset Management Agreement (the “Asset Management Agreement”) with the Gramercy Member
(or its Affiliate) promptly after the date hereof. The terms and conditions of the Asset Management Agreement shall require the
consent of the Members, not to be unreasonably withheld or delayed. Pursuant to the Asset Management Agreement, the Company shall
pay the Gramercy Member (or its designee) an annual asset management fee, paid on a monthly basis in arrears, equal to one percent
(1%) of allocated equity values for the Properties agreed upon by mutual consent of the Members prior to the Closing and calculated
on a weighted average basis during the applicable period (the “Asset Management Fee”). Notwithstanding
anything herein to the contrary, if the asset manager under an Asset Management Agreement is a Member or an Affiliate of a Member,
any and all decisions and actions taken by the Company regarding whether any default has occurred and the enforcement of any rights
or remedies under the Asset Management Agreement in connection with any default shall be delegated solely to the Member that is
not an asset manager or an Affiliate of such asset manager, such decisions and actions to be taken by such Member in its commercially
reasonable judgment; provided, however, that the Member to whom such rights are delegated must have an Adjusted Capital Percentage
of at least twenty percent (20%) as of both the date of the applicable decision or action is taken and the date such action or
decision is effective. Any dispute regarding whether a default has occurred and whether the enforcement of any rights or remedies
under the Asset Management Agreement in connection with any default have been taken in a Member’s commercially reasonable
judgment shall be resolved by arbitration in accordance with Section 10.8. In addition, if the Asset Management Agreement
with the Gramercy Member (or its Affiliate) is terminated for Cause, the Company shall enter into a replacement asset management
agreement with an asset manager selected by Garrison Member, which shall be a reputable and nationally recognized asset manager
with experience managing assets similar to the Properties (which may be an Affiliate of the Garrison Member that fulfills the
preceding requirements), on terms substantially the same as the Asset Management Agreement (whereupon references in this Agreement
to the Asset Management Agreement shall be deemed to be references to such replacement asset management agreement)


 


9.2           Property
Management. The Members acknowledge and agree that 5000A has entered into that certain Management Agreement, dated as of June
30, 2003 (the “Property Management Agreement”) with First States Management Corp., LLC (“First
States”), an Affiliate of the Gramercy Member. The terms and conditions of the Property Management Agreement, including
the payment of all fees thereunder (the “Property Management Fee”), are hereby approved by the Members.
The Members acknowledge that First States may retain third parties to perform duties under the Property Management Agreement pursuant
to the terms thereof.


 


9.3           Other
Fees. Other than the Asset Management Fee and the Property Management Fee no Member and no employee of any Member, as such,
shall be entitled to any salary or other compensation (including reimbursement for overhead expenses unless and to the extent
set forth in the Approved Budget) from the Company for any services rendered or to be rendered by it to the Company.


 



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ARTICLE
X.



MISCELLANEOUS


 


10.1         Representations.
Each Member represents and warrants to the other Member that:


 


(a)          this
Agreement has been duly executed and delivered by such Member and constitutes the legal, valid and binding obligations of such
Member, enforceable against such entity in accordance with its terms. The execution and delivery by each entity of the Agreement
does not, and the consummation of the transactions contemplated hereby will not, conflict with, result in any violation of or
default, or give rise to the creation of any lien upon the properties or assets of such Member, under any contract to which such
Member is a party, any provision of such Member’s organizational documents, or any judgment or law; and


 


(b)          it
understands that (A) an investment in the Company involves substantial and a high degree of risk, (B) no federal or state agency
has passed on the offer and sale of the Membership Interests to such Person, (C) it must bear the economic risk of such Member’s
investment in the Company for an indefinite period of time, since such Person’s Membership Interests has not been registered
for sale under the Securities Act of 1933 and, therefore, cannot be sold or otherwise transferred unless subsequently registered
under the Securities Act of 1933 or an exemption from such registration is available, and the Membership Interests of such Member
cannot be sold or otherwise transferred unless registered under applicable state securities or blue sky laws or an exemption from
such registration is available, (D) there is no established market for the Membership Interests of such Membership Interests and
no public market will develop and (E) such Member’s principals have such knowledge and experience in real estate and, other
financial and business matters that they are capable of evaluating the merits and risks of an investment in the Company; and


 


10.2         Notices.
All notices, requests or other communications required or permitted to be made in accordance with this Agreement will be in writing
and will be delivered personally or by registered or certified mail, return receipt requested or overnight courier to the Members
at the addresses set forth below:


 


If to Gramercy Member:


 


c/o Gramercy Capital
Corp.

420 Lexington Avenue

New York, NY 10170

Attention: Chief Executive Officer

Telephone No: (212) 297-1000

Fax No.: (212) 297-1090


 



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With copies to:


 


c/o Gramercy Capital
Corp.

420 Lexington Avenue

New York, NY 10170

Attention: Office of General Counsel

Telephone No: (212) 297-1000

Fax No.: (212) 297-1090


 


and


 


Skadden, Arps, Slate, Meagher &
Flom LLP

4 Times Square

New York, NY 10036

Attention: Harvey Uris

Telephone No: (212) 735-2212

Fax No.: (917) 777-2212


 


If to Garrison Member:


 


c/o Garrison Investment Management
LLC

1350 Avenue of the Americas

9th Floor

New York, NY 10019

Attention: Eric Rosenthal

Telephone No: (212) 372-9563

Fax No.: (212) 372-9525


 


With a copies to:


 


c/o Garrison Investment Management
LLC

1350 Avenue of the Americas

9th Floor

New York, NY 10019

Attention: Julian Weldon, General Counsel

Telephone No: (212) 372-9546

Fax No.: (212) 898-9075


 


and


 


Allen & Overy LLP

1221 Avenue of the Americas

21st Floor

New York, NY 10020

Attention: Thomas D. Abbondante, Esq

Telephone No: (212) 610-6300

Fax No.: (212) 610-6399


 



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10.2.1           All
such notices will be deemed to have been duly delivered: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail (postage prepaid), if mailed by certified or registered mail return receipt requested;
and on the day delivered, if sent by an air courier guaranteeing overnight delivery. Any notice for a meeting required to be delivered
hereunder may also be given via e-mail to the applicable parties.


 


10.2.2           Any
Member may change the address at which it is to receive notices under this Agreement by furnishing written notice in accordance
with the provisions of this Section 10.1 to the Company.


 


10.2.3           Whenever
any notice is required to be given by law or this Agreement, a waiver thereof in writing, signed by the Person entitled to such
notice, whether before or after the time of the event for which notice is to be given, will be deemed equivalent to such notice.
Attendance of a Member at a meeting will constitute a waiver of notice of such meeting, except when such Member attends such meeting
for the express purpose of objecting, at the beginning of the meeting, to the transaction of any Company business because the
meeting has not been properly called or convened and does not further participate in the business of the meeting.


 


10.3         Extension
Not a Waiver. No delay or omission in the exercise of any power, remedy or right herein provided or otherwise available to
any party hereto will impair or affect the right of such party thereafter to exercise the same. Any extension of time or other
indulgence granted to any party hereunder will not otherwise alter or affect any power, remedy or right of any other party hereto,
or the obligations of the party to whom such extension or indulgence is granted.


 


10.4         Entire
Agreement; Amendments. This Agreement sets forth the entire agreement between the parties relating to the subject matter hereof
and all prior agreements relative thereto that are not contained herein or therein are terminated. Amendments, variations, modifications
or changes herein may be made effective and binding upon the parties hereto by, and only by, a written agreement duly executed
by the Members in accordance with the provisions hereof and any alleged amendment, variation, modification or change herein which
is not so documented will not be effective as to any party hereto.


 



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10.5         Publicity.
No Member will issue any press release or otherwise publicize or disclose the terms of this Agreement except as mutually agreed,
as such disclosure may be made in the course of normal reporting practices by a Member to its members, shareholders, partners,
directors or officers or as otherwise required by law. Notwithstanding the foregoing and anything to the contrary in this Agreement,
nothing contained herein shall impair any Member’s (or any Member’s affiliate’s) right to disclose information
relating to this Agreement or the Property (a) to any consultants that are engaged by, work for or are acting on behalf of, any
securities dealers and/or broker dealers evaluating such Member or its affiliates, (b) in connection with any filings (collectively,
“Public Filings”) (including any amendment or supplement to any S-11 filing) with governmental
agencies (including the United States Securities and Exchange Commission) by any REIT holding an interest (direct or indirect)
in such Member, (c) to any broker/dealers in such Member’s or any such REIT’s broker/dealer network and any of the
REIT’s or such Member’s investors and (d) to the extent that any Public Filings mention a Member or an Affiliate of
such Member specifically, such Member may confirm the existence of this Agreement or respond to any matters related to such Member
or its Affiliate disclosed in such filings in response to inquiries it receives. Prior to Gramercy Member or any Affiliate of
Gramercy Member making any Public Filings that specifically mention Garrison Member or any of its Affiliates, Gramercy Member
shall reasonably consult with Garrison Member regarding the nature of such Public Filings and any content thereof which mentions
Garrison Member or any of its Affiliates.


 


10.6         Governing
Law. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED UNDER AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF DELAWARE WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.


 


10.7         Venue.
Subjection to Section 10.8, any action or other legal proceeding brought under this Agreement will be subject to the jurisdiction
of any court of competent jurisdiction in the Borough of Manhattan in the State of New York or the United States District Court
for the Southern District of the New York. Each of the Members consents to the jurisdiction of New York for actions or legal proceedings
brought by any other Members or the Company and waives any objection which it may have to the laying of the venue of such suit,
action or proceeding in any of such courts.


 


10.8         Arbitration
of Certain Disputes. Any dispute, controversy or claim with respect to the issue of (i) whether a default has occurred by
asset manager under the Asset Management Agreement, or whether a Member has enforced any rights or remedies in connection with
any default (including, without limitation, any termination of the Asset Management Agreement) using commercially reasonable judgment
as required under Section 9.1, or (ii) whether, pursuant to Section 4.3, a Promote Allocation Adjustment Event has
occurred (each, an “Arbitral Dispute”) shall be submitted to mandatory, final and binding arbitration
before the American Arbitration Association, in accordance with the Commercial Arbitration Rules in effect at the time of filing
of the demand for arbitration, subject to the provisions of this Section 10.8. Any question as to whether a dispute is
an Arbitral Dispute shall be resolved by the Tribunal appointed pursuant to Section 10.8(a) below.


 



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(a)          There
shall be three arbitrators. Each Member shall appoint one arbitrator within thirty (30) days of the receipt by respondent of a
copy of the demand for arbitration.  The two arbitrators so appointed shall nominate the third and presiding arbitrator (the
“Chair”) within thirty (30) days of the appointment of the second arbitrator (the three arbitrators
shall be collectively referred to as the “Tribunal”). If either Member fails to appoint an arbitrator,
or if the two-party appointed arbitrators fail to appoint the Chair, within the time periods specified herein, such arbitrator
shall, at the request of either Party, be appointed by the American Arbitration Association.


 


(b)          The
language of the arbitration shall be English. The place of arbitration shall be New York County, New York.


 


(c)          The
arbitration shall be the sole and exclusive forum for resolution of the Arbitral Dispute, and the award shall be in writing, state
the reasons for the award and be final and binding. Judgment thereon may be entered in any court of competent jurisdiction.


 


(d)          By
agreeing to arbitration, the Members do not intend to deprive any court of its jurisdiction to issue a pre-arbitral injunction,
pre-arbitral attachment, or other order in aid of arbitration proceedings and the enforcement of any award. Without prejudice
to such provisional remedies as may be available under the jurisdiction of a court, the Tribunal shall have full authority to
grant provisional remedies and to direct the Members to request that any court modify or vacate any temporary or preliminary relief
issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that
effect.


 


(e)          Each
of the Members irrevocably consents to service of process in accordance with the Notice provision set forth in Section 10.2.


 


(f)          The
prevailing Member, as determined by the Tribunal, shall be entitled to recover its reasonable costs and attorneys’ fees
from the non-prevailing Party.


 


(g)          In
the case of clause (i) in the definition of Arbitral Dispute, unless and until the Tribunal renders a judgment in favor the Member
who is asserting that a default has occurred by asset manager under the Asset Management Agreement, or is seeking to enforce rights
or remedies in connection with any default, such purported assertion or enforcement shall not be effective pending the judgment
of the Tribunal.


 


(h)          In
the case of clause (ii) in the definition of Arbitral Dispute, unless and until the Tribunal renders a judgment in favor of the
Garrison Member, such purported Promote Allocation Adjustment Event shall be given effect as of the date Gramercy Member received
written notice from Garrison Member under Section 4.3 alleging that such Promote Allocation Adjustment Event occurred (the
“Readjustment Date”). In that case, Gramercy Member shall remit to the Company all distributions it
received from and after the Readjustment Date that it would not have received had the Promote Allocation Adjustment Event been
given effect on the Readjustment Date. All such funds remitted by Gramercy Member pursuant to the previous sentence shall be distributed
by the Company to Garrison Member as a reconciliation of amounts that should have been distributed to it under Section 4.1(iii)(b).


 



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10.9         Headings.
Sections, subheadings and other headings used in this Agreement are in no way intended to describe, interpret, define, or limit
the scope, extent, or intent of this Agreement, or any provision hereof.


 


10.10         Severability.
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will not invalidate the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable any such
provision in any other jurisdiction.


 


10.11         No
Suits by Holders. No Member will have any right by virtue of any provision of this Agreement to institute any action or proceeding
in law or in equity against any party other than the Company or the other Members upon or under or with respect to the assets
of the Company.


 


10.12         Failure
to Enforce Provision. The failure of any Member to seek redress for a violation, or to insist upon the strict performance,
of any covenant or condition of this Agreement will not prevent a subsequent act, which would have originally constituted a violation,
from having the effect of an original violation.


 


10.13         Involvement
of the Company in Certain Proceedings. If any Member becomes involved in legal proceedings unrelated to the business of the
Company in which the Company is called upon to provide information, the Member will indemnify and hold harmless the Company against
all costs and expenses, including, without limitation, fees and expenses of attorneys and other advisors, incurred by the Company
in preparing or producing the required information or in resisting any request for production or obtaining a protective order
limiting the availability of the information actually provided by the Company.


 


10.14         Waiver
of Partition and Certain Other Rights. Except as otherwise provided herein, each of the Members irrevocably waives any right
or power that such Member might have:


 


10.14.1         to
cause the Company or any of the assets of the Company to be partitioned;


 


10.14.2         to
cause the appointment of a receiver for all or any portion of the assets of the Company;


 


10.14.3         to
compel any sale of all or any portion of the assets of the Company other than as set forth in Section 6.2; and


 



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10.14.4         to
file a complaint, or to institute a proceeding at law or in equity, to cause the dissolution or liquidation of the Company.


 


Each of the Members
has been induced to enter into this Agreement in reliance upon the waivers set forth in this Section 10.14, and without
those waivers no Member would have entered into this Agreement.


 


10.15         Interpretation.
All pronouns and variations thereof will be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity
of the individual or other entity may require.


 


10.16         Assignment.
Other than as expressly set forth in Article VI, This Agreement may not be assigned by any party hereto without the prior written
consent of the other parties. This Agreement will be binding upon and inure to the benefit of the parties and their respective
successors, executors, administrators, personal representatives and permitted assigns.


 


10.17         Counterparts.
This Agreement may be executed in one or more counterparts, all of which, taken together, shall constitute one and the same agreement.


 


10.18         Brokers.
Each Member represents and warrants to the other Members that it has not dealt with any agent or broker in connection with this
Agreement or the transactions contemplated hereby. Each Member covenants and agrees to pay, indemnify, defend and hold the other
Members harmless from and against any and all losses, costs, liabilities, claims, damages or expenses (including, without limitation,
reasonable attorneys’ fees and expense) arising out of its breach of the representation and warranty set forth in the immediately
preceding sentence. The obligations of each Member under this Section 10.18 shall survive the expiration or termination
of this Agreement.


 


10.19         Exclusivity.
Each Member acknowledges and agrees that, from the date hereof until the later of (A) the Closing Date and (B) if the Purchase
Agreement is terminated in accordance with its terms prior to the Closing Date, the date that is three (3) months after the date
of such termination, it shall work exclusively with the other Member to acquire all or any portion of the Target Membership Interests
and/or the Properties, and that it will not during such period initiate, solicit or enter into any discussions or negotiations
with any other third party with respect to the acquisition of all or any portion of the Target Membership Interests and/or Properties.


 



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


 


	 	MEMBERS:
	 	 
	 	GKK BBD1 OWNER LLC, a Delaware limited liability 

company
	 	 
	 	By:	/s/ Benjamin P. Harris
	 	 	Benjamin P. Harris
	 	 	President


 


[SIGNATURES CONTINUED
ON FOLLOWING PAGE]


 



    	 



    	 



    

 


	 	FYF NET LEASE LLC, a Delaware limited liability 

company
	 	 
	 	By:	/s/ Julian Weldon
	 	 	Name: Julian Weldon
	 	 	Title: Secretary


 


[SIGNATURES
CONTINUED ON FOLLOWING PAGE]


 



    	 



    	 



    

 


	 	THE COMPANY:
	 	 
	 	BBD1 HOLDINGS LLC, a Delaware limited liability 

company
	 	 
	 	By:	GKK BBD1 OWNER LLC, a Delaware limited 

liability company, its Managing Member
	 	 	 
	 	 	By:	/s/ Benjamin P. Harris
	 	 		Benjamin P. Harris 
	 	 		President 
	 	 	 	 
	 	By:	FYF NET LEASE LLC, a Delaware limited liability 

company,
    its Managing Member
	 	 	 
	 	 	By:	/s/ Julian Weldon
	 	 		Name: Julian Weldon 
	 	 		Title: Secretary 


 



    	 



    	 



    

 


Schedule A-1


 


Initial Contributions


 


	Name of
 Member	 	Initial
 Contribution	 
	 	 	 	 	 
	GRAMERCY MEMBER	 	$	200,000.00	 
	 	 	 	 	 
	GARRISON MEMBER	 	$	200,000.00	 



 



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Schedule A-2


 


Closing Date Contributions


 


	Name of
 Member	 	Closing Date
 Contribution
	 	 	 
	GRAMERCY MEMBER	 	$[____] [insert (i) (purchase price minus loan proceeds (“Net Amount”)
    x 50%) minus (ii) Gramercy Member Initial Contribution]
	 	 	 
	GARRISON MEMBER	 	$[____] [insert (i) (Net Amount x 50%) minus (ii) Garrison Member Initial Contribution]


 


The Net Amount shall be adjusted by Managing
Members as follows:


 


(A) increased (without
duplication) by (i) the amount of any costs and expenses incurred or payable by the Company in connection with the acquisition
of the Target Membership Interests including, without limitation, fees and expenses of the Senior Loan and (ii) the amount of
prorations on the Closing Date under the Purchase and Sale Agreement which are in favor of the Seller, and


 


(B) decreased (without
duplication) by the amount of prorations on the Closing Date under the Purchase and Sale Agreement which are in favor of the Company.


 



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