Exhibit 10.17


 


Execution Version


 




 





 


LIMITED LIABILITY COMPANY AGREEMENT


 


OF


 


1 MADISON OFFICE HOLDINGS LLC


 










 


Dated as of: April 29, 2005




 


 





 





















 


TABLE OF
CONTENTS


 


	
  I.

  	
  DEFINED
  TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.01

  	
  Defined Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.02

  	
  Other Defined Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  II.

  	
  ORGANIZATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.01

  	
  Formation and Continuation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.02

  	
  Name and Principal Place of Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.03

  	
  Term

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.04

  	
  Registered Agent, Registered Office and
  Foreign Qualification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.05

  	
  Purpose

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)  The purpose of the Company
  shall be:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.06

  	
  Separateness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
  MEMBERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.01

  	
  Admission of Members

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.02

  	
  Limitation on Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.03

  	
  Third-Party Debt Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.04

  	
  GKK Special Decision-Making Rules

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
  CAPITAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.01

  	
  Initial Capital Contributions.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.02

  	
  Additional Capital Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.03

  	
  Capital Contributions and Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.04

  	
  Capital Accounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.05

  	
  No Further Capital Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.06

  	
  Financing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.07

  	
  Book Basis Adjustments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  INTERESTS IN THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.01

  	
  Percentage Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.02

  	
  Return of Capital

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.03

  	
  Ownership

  	
   

  



 





















 


	
   

  	
  5.04

  	
  Waiver of Partition; Nature of Interests in
  the Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
  ALLOCATIONS AND DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.01

  	
  Allocations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.02

  	
  Special Allocations and Compliance with
  Section 704(b)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.03

  	
  Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.04

  	
  Distributions in Liquidation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.05

  	
  [Intentionally omitted.]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.06

  	
  Tax
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.07

  	
  Tax Matters Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.08

  	
  Section 704(c)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
  MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.01

  	
  Management

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.02

  	
  Services and Fees; Affiliate Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.03

  	
  Duties and Conflicts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.04

  	
  Company Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.05

  	
  Officers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
  BUY-SELL AND CALL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.01

  	
  Buy-Sell Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.02

  	
  Call Provision

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.03

  	
  Termination of Other Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
  BOOKS AND RECORDS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.01

  	
  Books and Records

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.02

  	
  Accounting and Fiscal Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.03

  	
  Reports

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.04

  	
  The Company Accountant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.05

  	
  Distributions and Reserves

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.06

  	
  The Budget and Operating Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
  TRANSFER OF INTERESTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.01

  	
  No Transfer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.02

  	
  Permitted Transfers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.03

  	
  Transferees

  	
   

  



 





















 


	
   

  	
  10.04

  	
  Admission of Additional Members

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.05

  	
  Override on Permitted Transfers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.01

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
  DISSOLUTION AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.01

  	
  Dissolution

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.02

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.03

  	
  Liquidating Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.01

  	
  Covenants, Representations and Warranties
  of the Members

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.02

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.03

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.04

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.05

  	
  Attorney Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.06

  	
  Captions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.07

  	
  Pronouns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.08

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.09

  	
  Extension Not a Waiver

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.10

  	
  Creditors Not Benefited

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.11

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.12

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.13

  	
  Publicity

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.14

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.15

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.16

  	
  Mandatory Arbitration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.17

  	
  Broker

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  - Initial Budget

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  -
  Form of Leasing and Property Management Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  - Form of
  Asset Management Agreement

  	
   

  
					



 





















 


	
  EXHIBIT D

  	
  - Project Modifications
  Under Consideration With CSFB

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
  - Form of Reimbursement and Indemnity Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
  -  Example of
  Operation of Calculation Set Forth in Section 4.03(b)(iii)

  	
   

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.01(a)  -Contract and Due Diligence Costs

  	
   

  
	
   

  	
   

  
	
  SCHEDULE 4.01(b)  -Closing Date Contributions

  	
   

  



 





















 


LIMITED LIABILITY COMPANY AGREEMENT

OF

1 MADISON OFFICE HOLDINGS LLC


 


This LIMITED LIABILITY COMPANY AGREEMENT of 1
Madison Office Holdings LLC is made and entered into as of April 29, 2005,
by and between SLG Madison Investment LLC, a Delaware limited liability company
(together with its permitted successors and assigns, the “SLG Member”),
and GKK Madison Investment LLC, a Delaware limited liability company (together
with its permitted successors and assigns, the “GKK Member”).


 


R E C I T A L S:


 


WHEREAS, the SLG Member is a wholly owned subsidiary
of SLG;


 


WHEREAS, the GKK Member is a wholly owned subsidiary
of GKK;


 


WHEREAS, the SLG Member and the
GKK Member have formed the Company in order to engage in the business of
acquiring, owning, managing and disposing of the Property;


 


WHEREAS, the Company was formed on April 12,
2005, pursuant to the Delaware Act, and there has been filed a
Certificate of Formation of the Company with the office of the Secretary of
State of the State of Delaware;


 


WHEREAS, the Company is the sole member of 1 Madison
Office Mezz C LLC, a bankruptcy-remote “special purpose entity” organized as a
Delaware limited liability company (“Mezz C LLC”) which, in turn, is the
sole member of 1 Madison Office Mezz B LLC, a bankruptcy-remote “special
purpose entity” organized as a Delaware limited liability company (“Mezz B
LLC”) which, in turn, is the sole member of 1 Madison Office Mezz A LLC, a
bankruptcy-remote “special purpose entity” organized as a Delaware limited
liability company (“Mezz A LLC”) which, in turn, is the sole member of 1
Madison Office Fee LLC, a bankruptcy-remote “special purpose entity” organized
as a Delaware limited liability company (“Fee LLC”);


 


WHEREAS, 1 Madison Venture LLC and Column Financial,
Inc, (“Column”) collectively as buyer, have entered into a purchase and
sale agreement for the acquisition of the Property (the “Purchase Agreement”);


 


WHEREAS, SL Green Operating Partnership, L.P. has
obtained a 15-year, fixed- rate financing commitment from Column to finance a
portion of the purchase price payable under the Purchase Agreement, as more
fully set forth in that certain Commitment Letter, dated March 29, 2005,
of Column to SL Green Operating Partnership, L.P. (the “Financing Commitment”);


 





















 


WHEREAS, Fee LLC has entered into that certain
Assignment Agreement, dated as of April 29, 2005, pursuant to which Fee
LLC is to acquire all rights, title and interest to the Property and the
Financing Commitment;


 


WHEREAS, the parties hereto desire to provide for
the respective rights, obligations and interests of the parties to each other
and to the Company; and


 


WHEREAS, this Agreement shall apply to and govern
the management and operation of the Company from the date hereof and shall bind
each and every present and future Member of the Company.


 


NOW, THEREFORE, the parties hereto hereby agree as follows:


 


I.  DEFINED TERMS


 


1.01         Defined Terms.  As used in this Agreement, the following
terms have the meanings set forth below:


 


“Acceptable Transfer
Terms” has the meaning set forth in Section 10.02 hereof.


 


“Acquisition Financing” means the financing for
the acquisition of the Property contemplated by the Financing Commitment.


 


“Additional Capital Contribution” means, with
respect to any Member, any Mandatory Capital Contribution and Agreed Capital
Contribution made by such Member to the Company pursuant to Section 4.02
or Section 4.03 hereof.


 


“Adjusted Capital Account
Deficit” means, with respect to any Member for any taxable year of the
Company, the deficit balance, if any, in such Member’s Capital Account as of
the end of such taxable year, after giving effect to the following adjustments:


 


(a)         Credit to such Capital Account any amounts that such Member is
obligated to restore or is deemed obligated to restore as described in the
penultimate sentence of Treasury Regulation Section 1.704-2(g)(1) and
in Treasury Regulation Section 1.704-2(i)(5); and


 


(b)        Debit to such Capital
Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6).


 


“Affiliate” means,
with respect to any Person, (a) any other Person directly or indirectly
controlling, controlled by, or under common control with such Person, or (b) any
other Person owning or controlling 10% or more of the outstanding voting
interests of such Person, or (c) any officer, general partner or managing
member of such Person, or (d) any other Person which is an officer,
general partner, managing member or 


 


2





















 


holder
of 10% or more of the outstanding voting interests of any other Person
described in clauses (a) through (c) of this definition.


 


“Agreed Capital
Contribution” has the meaning set forth in Section 4.02 hereof.


 


“Agreement” means
this Limited Liability Company Agreement, including any exhibits or schedules
attached hereto, as the same may be further amended or restated from time to
time pursuant to the terms of this Agreement.


 


“Asset Management
Agreement” has the meaning set forth in Section 7.02(a).


 


“Book Basis” means,
with respect to any asset of the Company, the adjusted basis of such asset for
federal income tax purposes; provided, however, that (a) if
any asset is contributed to the Company, the initial Book Basis of such asset
shall equal its fair market value on the date of contribution (as agreed to by
the Members), and (b) if the Capital Accounts of the Members are adjusted
pursuant to Treasury Regulation Section 1.704-1(b) to reflect the
fair market value of any asset of the Company, the Book Basis of such asset
shall be adjusted to equal its respective fair market value as of the time of
such adjustment (as agreed to by the Members), in accordance with such Treasury
Regulation.  The Book Basis of all assets
of the Company shall be adjusted thereafter by depreciation or amortization as
provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(g) and any
other adjustment to the basis of such assets other than depreciation or
amortization.


 


“Budget” means the
consolidated annual budget covering the Company’s and the Subsidiaries’
anticipated operations, as approved by the Members and in effect from time to
time pursuant to Section 9.06 hereof.


 


“Budget and Operating
Plan” means collectively, the Budget and the Operating Plan for the Company
and the Subsidiaries, as approved by the Members.


 


“Business Day” means
any day that is not a Saturday, Sunday or a day on which banks are required or
permitted to be closed in the State of New York.


 


“Buy-Sell Notice” has
the meaning set forth in Section 8.01 hereof.


 


“Buy-Sell Value” has
the meaning set forth in Section 8.01(b) hereof.


 


“Capital Account”
means the separate account maintained for each Member under Section 4.04
hereof.


 


“Capital Contribution”
means, with respect to any Member, any Initial Capital Contribution and
Additional Capital Contribution made by such Member to the Company pursuant to
this Agreement.


 


“Certificate of Formation”
has the meaning set forth in Section 2.01 hereof.


 


3





















 


“Clock Tower Property” means the two-basement
and fifty-story structure (commonly known as the “Clock Tower”) located at One
Madison Avenue, New York, New York.  The
Clock Tower Property is not part of the Property.  


 


“Closing Date” means
the date of this Agreement.


 


 “Code” means the Internal Revenue Code
of 1986, as amended.  Any reference
herein to any specific section or sections of the Code shall be deemed to
include a reference to any corresponding provision of future laws.


 


“Company” means the
limited liability company formed pursuant to the Certificate of Formation and
operated pursuant to the terms of this Agreement.


 


“Company Accountant”
has the meaning set forth in Section 9.04 hereof.


 


“Company Minimum Gain”
means “partnership minimum gain” as defined in Treasury Regulation Section 1.704-2(d).


 


“Condominium Declaration” means that certain Condominium Declaration
under Article 9-B of the Real Property Law of the State of New York
establishing a plan for condominium ownership of the Property, dated December 28,
2001 and recorded in the Office of the Register of the City of New York, New
York County on December 31, 2002 in Reel 3418, Page 0954 as amended
by the Amendment to Declaration dated as of December 17, 2003 and recorded
in the Office of the Register of the City of New York, New York County on February 25,
2005 under CFRN 2005000115754.


 


“Confidential Information”
has the meaning set forth in Section 13.15(a) hereof.


 


“Contributing Member”
has the meaning set forth in Section 4.03(b) hereof.


 


“Control” when used
with respect to any Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person whether through the ownership of voting securities, by contract or
otherwise.


 


“CSFB” means Credit
Suisse First Boston (USA), Inc.


 


“Delaware Act” means
the Delaware Limited Liability Company Act, as amended from time to time.


 


“Election” has the
meaning set forth in Section 8.01(d) hereof.


 


“Eligibility Requirements” means an entity that
has total assets (in name or under management) in excess of six hundred million
dollars ($600,000,000) and (except with respect to a pension advisory firm or
similar fiduciary) capital/statutory surplus or shareholder’s equity in excess
of two hundred fifty million dollars ($250,000,000) and is regularly engaged in
the business of owning and operating, or originating and holding


 


4





















 


loans secured directly or
indirectly by, properties similar to the Property in major metropolitan areas.


 


“Embargoed Person”
has the meaning set forth in Section 13.01(a)(ix) hereof.


 


“Expenses” means, for any period, the sum of
the total gross cash expenditures of the Company during such period, including
without limitation (a) all cash operating expenses (including all fees,
commissions, expenses and allowances paid to any third party or paid or
reimbursed to any Member or any of its Affiliates pursuant to any contract or
otherwise as permitted hereunder), (b) all debt service payments, (c) all
expenditures which are treated as capital expenditures (as distinguished from
expense deductions) under GAAP, (d) all real estate taxes, personal property
taxes and sales taxes, (e) all deposits to the Company’s Reserve Accounts
pursuant to Section 9.05, (f) all costs and expenditures related to any
acquisition, sale, lease, disposition, financing, refinancing, monetization or
securitization of any asset of the Company or its Subsidiaries (or any interest
therein) and (g) all cash contributions, loans or advances directly or
indirectly made to any Subsidiary; provided, however, that
Expenses shall not include (i) any payment or expenditure to the extent (A) the
sources of funds used for such payment or expenditure are not included in
Revenues or (B) such payment or expenditure is paid out of any Company Reserve
Account, (ii) any expenditure properly attributable to the liquidation of the
Company, or (iii) non-cash expenses such as depreciation or amortization.  In addition, a reference to the “Expenses” of
a Subsidiary shall refer to the total gross cash expenses of such Subsidiary
(subject to the exclusions described in clauses (A) and (B) of the preceding
sentence), without duplication of any Expenses of the Company or any other Subsidiary.


 


“Fee LLC” has the
meaning set forth in the recital paragraphs of this Agreement.


 


“Financing Commitment” has the meaning set
forth in the recital paragraphs of this Agreement.


 


“GAAP” has the
meaning set forth in Section 9.02 hereof.


 


“GKK” means GKK Capital LP, a Delaware limited
liability company, which is the sole member of the GKK Member.


 


“GKK Corp” means Gramercy Capital Corp., a
Delaware corporation, which is the sole member of the GKK Member.


 


“GKK Member” has the meaning set forth in the
Preamble of this Agreement.


 


“GKK Member Certificate” has the meaning set forth in Section 13.01(c)(ii) hereof.


 


5





















 


“GKK Member LLC Agreement” has the meaning set forth in Section 13.01(c)(ii) hereof.


 


“Indemnified Party”
has the meaning set forth in Section 11.01(a) hereof.


 


“Initial Budget” has
the meaning set forth in Section 9.06.


 


“Initial Capital
Contributions” means, with respect to any Member, the cash contributions to
the capital of the Company made by such Member pursuant to Section 4.01 of
this Agreement.


 


“Interest” means,
with respect to any Member at any time, the interest of such Member in the
Company at such time, including the right of such Member to any and all of the
benefits to which such Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all of the terms
and provisions of this Agreement.


 


“Leasing and Property
Management Agreement” has the meaning set forth in Section 7.02(b).


 


“Lender” means
Column, the lender under the Loans.


 


“Liquidating Member”
means the SLG Member.


 


“Loans” means,
collectively, the Mortgage Loan and the Mezzanine Loans.


 


 “Loss” means, for each taxable year or
other period, an amount equal to the Company’s items of taxable deduction and
loss for such year or other period, determined in accordance with Section 703(a) of
the Code (including all items of loss or deduction required to be stated
separately under Section 703(a)(1) of the Code), with the following
adjustments:


 


(a)         Any expenditures of the Company described in Section 705(a)(2)(B) of
the Code or treated as Section 705(a)(2)(B) expenditures under
Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Loss, will be considered an item of Loss;


 


(b)        Loss resulting from any disposition of any assets of the Company
(including the Property) with respect to which gain or loss is recognized for
federal income tax purposes will be computed by reference to the Book Basis of
such property, notwithstanding that the adjusted tax basis of such property may
differ from its Book Basis;


 


(c)         In lieu of
depreciation, amortization and other cost recovery deductions taken into
account in computing taxable income or loss, there will be taken 


 


6





















 


into
account depreciation for the taxable year or other period as determined in
accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g);


 


(d)        Any items of deduction and loss specially allocated pursuant to Section 6.08
shall not be considered in determining Loss; and


 


(e)         Any decrease to Capital Accounts as a result of any adjustment to the
Book Basis of Company assets pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shall
constitute an item of Loss.


 


“Major Decision” has
the meaning set forth in Section 7.01(d) hereof.


 


“Managing Member” has
the meaning set forth in Section 7.01(c) hereof.


 


“Mandatory Capital
Contribution” has the meaning set forth in Section 4.02 hereof.


 


“Material Notices”
has the meaning set forth in Section 13.03 hereof.


 


“Member” or “Members”
means one or more (as the case may be) of the SLG Member, the GKK Member and
any other Person who, from time to time, is admitted as a member of the Company
in accordance with this Agreement and applicable law, so long as such Person
continues as a member of the Company.


 


“Member Minimum Gain”
means the Company’s “partner nonrecourse debt minimum gain” as defined in
Treasury Regulation Section 1.704-2(i)(2).


 


“Member Nonrecourse
Deductions” means “partner nonrecourse deductions” as defined in Treasury
Regulation Section 1.704-2(i)(2).


 


“Mezz A LLC” has the
meaning set forth in the recital paragraphs of this Agreement.


 


“Mezzanine Loans”
means, collectively, those certain mezzanine loans made to Mezz A LLC, Mezz B
LLC and Mezz C LLC pursuant to those certain Mezzanine Loan Agreements of even
date herewith.


 


“Mezz B LLC” has the
meaning set forth in the recital paragraphs of this Agreement.


 


“Mezz C LLC” has the
meaning set forth in the recital paragraphs of this Agreement.


 


“Mortgage Loan” means
that certain mortgage loan made by Column to Fee LLC in connection with the
acquisition of the Property pursuant to that certain Loan Agreement of even
date herewith.


 


7





















 


“Necessary Expenses”
means expenses of the Company and/or the Subsidiaries to fund (a) real
estate taxes, assessments and utility charges, (b) any payment due in
connection with any financing obtained by the Company, (c) any repair
necessary to protect the life, health or safety of any Person or to prevent or
mitigate material damage to the Property, (d) immediately necessary
expenditures, regular periodic maintenance and repairs, and additions or
modifications to the Property to comply with applicable laws or insurance
requirements, (e) legal compliance and reporting requirements, compliance
with any final orders, judgments or other proceedings and all costs and
expenses related thereto, (f) costs and expenses expressly and
specifically set forth in any approved Budget and Operating Plans to the extent
there is not sufficient net cash flow to pay such costs and expenses, and (g) any
other payment, the failure of which to make could in the judgment of the
Managing Member (1) result in the creation and imposition of a lien (or
the expansion in scope or other modification of a pre-existing lien), whether
at law or in equity, against the Company or any of its current or future assets
or rights, (2) result in a default under any contract or agreement to
which the Company is a party or (3) result in a risk of loss of life or
serious bodily injury to any Person.


 


“Net Cash Flow”
means, for any period, the excess of (a) Revenues for such period over (b) Expenses
for such period.


 


“Net Loss” means, for
any period, the excess of items of Loss over items of Profit, if applicable,
for such period determined without regard to any items of Profit or Loss
allocated pursuant to Section 6.02 hereof.


 


“Net Profit” means,
for any period, the excess of items of Profit over items of Loss, if
applicable, for such period determined without regard to any items of Profit or
Loss allocated pursuant to Section 6.02 hereof.


 


“Non-Contributing Member”
has the meaning set forth in Section 4.03(b) hereof.


 


“Nonrecourse Deductions”
has the meaning set forth in Treasury Regulation Section 1.704-2.


 


 “Officer” has the meaning set forth in Section 7.05.


 


“Operating Plan”
means the overall and annual consolidated strategic and comprehensive operating
plan for the Company and the Subsidiaries covering the Company’s and the
Subsidiaries’ anticipated operations, as approved by the Members and in effect
from time to time pursuant to Section 9.06 hereof.


 


“Partially Adjusted
Capital Account” means, with respect to any Member for any taxable year of
the Company, the Capital Account balance of such Member at the beginning of
such year, adjusted for all contributions and distributions during such year
and all special allocations pursuant to Section 6.02 with respect to such
year but before giving effect to any allocations pursuant to Section 6.01
hereof.


 


8





















 


“Percentage Interests”
means, with respect to each Member, the percentages set forth below opposite
its name (in each case, subject to adjustment as provided in this Agreement):


 




	
  Member

  	
   

  	
  Percentage Interest

  	
   

  
	
  SLG Member

  	
   

  	
  55.0

  	
  %

  
	
  GKK Member

  	
   

  	
  45.0

  	
  %

  






 


“Person” means any
individual, partnership, corporation, limited liability company, trust or other
entity.


 


 “Priority Member Advance” means, with
respect to any Contributing Member, any advance made by such Contributing
Member and designated or characterized by the Contributing Member as a Priority
Member Advance pursuant to Section 4.03(b), including both the Non-Contributing
Member’s share of such amount advanced by the Contributing Member pursuant to Section 4.03(b) to
fund Necessary Expenses and the Contributing Member’s share of such amount
advanced by the Contributing Member pursuant to Section 4.02 hereof;
provided, that, in no event may the aggregate Priority Member Advances
outstanding at any time exceed $1,000,000.00.


 


“Profit” means, for
each taxable year or other period, an amount equal to the Company’s taxable
income and gain for such year or other period, determined in accordance with Section 703(a) of
the Code (including all items of income and gain required to be stated
separately under Section 703(a)(1) of the Code), with the following
adjustments:


 


(a)           Any
income of the Company that is exempt from federal income tax and not otherwise
taken into account in computing Profit or Loss will be added to taxable income;


 


(b)           Gain
resulting from any disposition of any assets of the Company (including the
Property) with respect to which gain or loss is recognized for federal income
tax purposes will be computed by reference to the Book Basis of such property,
notwithstanding that the adjusted tax basis of such property may differ from
its Book Basis;


 


(c)           Any
items specially allocated pursuant to Section 6.08 shall not be considered
in determining Profit; and


 


(d)           Any
increase to Capital Accounts as a result of any adjustment to the Book Basis of
Company assets pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shall
constitute an item of Profit.


 


9





















 


“Prohibited Transferee”
means any publicly traded REIT or other entity which is Controlled by a
publicly traded REIT whose principal assets are, or whose significant assets
consist of, office buildings located in New York City or the surrounding
Tri-State area of New Jersey and Connecticut.


 


“Property” means the
office condominium units (comprising approximately 1,176,911 net rentable
square feet and related common area interests) designated and described by the
unit numbers listed on Schedule 1.01 attached hereto together with certain
common elements, each located within the “South Tower” at One Madison Avenue,
New York, New York.  For the avoidance of
doubt, the Property does not include any interest in the Clock Tower Property.


 


 “Purchase Agreement” has the meaning
set forth in the recital paragraphs of this Agreement.


 


“Qualified Institutional
Transferee” means: (a) the SLG Member or any of its wholly owned
Affiliates; (b) the GKK Member or any of its wholly owned Affiliates; (c) any
bank, savings and loan association, investment bank, insurance company, trust
company, commercial credit corporation, pension plan, pension fund, pension
advisory firm, mutual fund, money management firm, “qualified institutional
buyer” within the meaning of Rule 144A of the Securities Act of 1933, as
amended, which satisfies the Eligibility Requirements; (d) any entity
controlling, controlled by or under control with any of the foregoing, an
investment fund, limited liability company, limited partnership or general
partnership in or for which a nationally recognized manager of investment funds
in debt or equity interests relating to commercial real estate (or an entity
that is otherwise an Qualified Institutional Transferee) acts as the managing
partner or managing member and at least 50.01% of the equity interests in such
investment vehicle are owned directly or indirectly by entities that are
otherwise Qualified Institutional Transferees; (e) any entity controlling,
controlled by or under common control with any of the transferees described in
the foregoing clauses (a) through (e) of this definition.  For the avoidance of doubt, a Prohibited
Transferee shall not qualify as a Qualified Institutional Transferee for
purposes of this Agreement.


 


“Reserve Accounts”
has the meaning set forth in Section 9.05 hereof.


 


“Residential Component”
shall mean the residential condominium units located within the building known
as 1 Madison Avenue, New York, New York, which are not a part of the Property.


 


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


 


“Revenues” means, for
any period, the sum of the total gross cash revenues received by the Company
during such period, including all receipts of the Company from (a) proceeds
from the sale or disposition of all or any portion of any assets of the 


 


10





















 


Company
(including the Property) or the issuance or sale by the Company of any
securities or additional interests in the Company, (b) rent (including
additional rent and percentage rent) paid to the Company, (c) concessions,
(d) expense reimbursements, (e) condemnation or casualty proceeds
related to the condemnation of or casualty loss with regard to all or any portion
of the assets of the Company (including the Property) not used for restoration
(including any and all insurance awards with regard thereto), (f) proceeds
from rent or business interruption insurance, if any, (g) funds made
available to the extent such funds are withdrawn from the Company’s Reserve
Accounts and deposited into the Company’s operating accounts, (h) proceeds
from the financing, refinancing, residential condominium conversion,
monetization or securitization of the Company or any assets of the Company
(including the Property), or any interest therein and (i) other revenues
and receipts realized by the Company, including, without limitation,
distributions and other payments and amounts received directly or indirectly
from the Subsidiaries; provided, however, that Revenues shall not
include any revenue or receipt realized by the Company incident to the
liquidation of the Company.  In
addition, a reference to the “Revenues” of a Subsidiary shall refer to the
total gross cash revenues of such Subsidiary (other than those realized by such
Subsidiary, if any, upon the liquidation of such Subsidiary), without
duplication of any Revenues of the Company or any other Subsidiary.


 


“SLG” means SL Green
Operating Partnership, L.P., a Delaware limited partnership, or its permitted
successors and assigns.


 


“SLG Corp” means SL
Green Realty Corp., a Maryland corporation.


 


 “SLG Member”
has the meaning set forth in the Preamble of this Agreement.


 


“SLG Member Certificate” has the meaning set forth in Section 13.01(b)(ii) hereof.


 


“SLG Member LLC Agreement” has the meaning set forth in Section 13.01(b)(ii) hereof.


 


“Subsidiary” or “Subsidiaries”
means one or all (as the case may be) of Mezz C LLC, Mezz B LLC, Mezz A LLC,
Fee LLC, and any other wholly owned subsidiary(ies) of the Company organized in
accordance with the terms of this Agreement to directly or indirectly hold the
Property.


 


“Subsidiary Operating
Agreement” has the meaning set forth in Section 2.05(b) hereof.


 


 “Target Account” means, with respect to
any Member for any taxable year of the Company, the excess (which may be either
a positive balance or a negative balance) of (a) an amount equal to the
hypothetical distribution of any such Member would receive if all assets of the
Company, including cash, were sold for cash equal to their Book Basis 


 


11





















 


(taking
into account any adjustments to Book Basis for such year), all liabilities
(including prepayment penalties, yield maintenance fees and similar costs) of
the Company were then satisfied according to their terms (limited, with respect
to each nonrecourse liability, to the Book Basis of the assets securing such
liability) and all remaining proceeds from such sale were distributed pursuant
to Section 6.03 over (b) the sum of (i) the amount if any which
such Member is unconditionally obligated to contribute to the capital of the
Company of Company and (ii) such Member’s Share of Company Minimum Gain
and Member Minimum Gain as determined pursuant to Treasury Regulation Section 1.704-2
immediately prior to such sale.


 


“Target Interest” has
the meaning set forth in Section 10.02(d) hereof.


 


“Tax Matters Partner”
has the meaning set forth in Section 6.07 hereof.


 


“Transfer” has the
meaning set forth in Section 10.01 hereof.


 


“Transfer Election”
has the meaning set forth in Section 10.02(d) hereof.


 


“Transfer Response Period”
has the meaning set forth in Section 10.02(d) hereof.


 


“Transfer ROFR Notice”
has the meaning set forth in Section 10.02(d) hereof.


 


“Treasury Regulation”
or “Regulation” means, with respect to any referenced provision, such
provision of the regulations of the United States Department of the Treasury or
any successor provision.


 


“U.S. Government
Blacklists” shall mean, (i) the two (2) lists maintained by the
United States Department of Commerce (Denied Persons and Entities; the Denied
Persons), (ii) the list maintained by the United States Department of
Treasury (Specially Designated Nationals and Blocked Persons), and (iii) the
list by the United States Department of State (Terrorist Organizations and
Debarred Parties).


 


1.02         Other Defined Terms.  As used in this Agreement,
unless otherwise specified, (a) all references to Sections, Articles or
Exhibits are to Sections, Articles or Exhibits of this Agreement, (b) each
accounting term has the meaning assigned to it in accordance with the United
States GAAP, (c) all Exhibits, Schedules, Addenda and other attachments to
this Agreement are specifically incorporated into and made a part of this
Agreement by any reference thereto in this Agreement, (d) the terms “include”
and “including” shall be construed as if followed by the phrase “without
limitation”, and (e) all terms used in this Agreement which are not
defined in this Article I shall have the meaning set forth elsewhere in
this Agreement.


 


12





















 


II.  ORGANIZATION


 


2.01         Formation and Continuation.  (a) From and after the
date of this Agreement, the Members hereby agree to continue the Company as a
limited liability company under and pursuant to the Delaware Act, upon and
subject to the terms and conditions set forth in this Agreement.  The Percentage Interest of each Member shall
be personal property for all purposes. 
The Managing Member is hereby authorized to file and record any
amendments to the Certificate of Formation and such other documents as may be
approved or permitted by this Agreement or required or appropriate under the
Delaware Act or the laws of any other jurisdiction in which the Company may
conduct business or own property.


 


(b)        Ms. Racquel
Small, is hereby designated as an “authorized person” within the meaning of the
Delaware Act, and has executed, delivered and filed the certificate of
formation of the Company (the “Certificate of Formation”) with the
Secretary of State of the State of Delaware. 
Upon the filing of the Certificate of Formation with the Secretary of
State of the State of Delaware, her powers as an “authorized person” ceased,
and the Managing Member thereupon became the designated “authorized person” and
shall continue as the designated “authorized person” within the meaning of the
Delaware Act.  The Managing Member shall
execute, deliver and file any other certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in
New York and in any other jurisdiction in which the Company may wish to conduct
business.


 


2.02         Name and Principal Place of Business.


 


(a)         The name of the Company shall be 1 Madison Office Holdings LLC.  The Managing Member may change the name of
the Company from time to time and may adopt one or more fictitious names for
use by the Company.  All business of the
Company shall be conducted under such name, and title to all assets of the
Company shall be held in such name.


 


(b)        The principal place of business and office of the Company shall be
initially located at the offices of the Managing Member, at 420 Lexington
Avenue, New York, New York 10170.  The
Managing Member may from time to time change such principal office and place of
business or may change or establish such additional offices or places of
business of the Company as it may deem necessary or appropriate for the
operation of the Company’s business.


 


2.03         Term.  The
term of the Company commenced on the date of the filing of the Certificate of
Formation pursuant to the Delaware Act and shall continue in full force and
effect until the dissolution and termination of the Company pursuant to Article 12,
or unless sooner terminated or further extended by the Managing Member,
pursuant to the provisions of this Agreement.


 


2.04         Registered Agent, Registered Office and
Foreign Qualification.  The name of the Company’s
registered agent for service of process shall be National Registered 


 


13





















 


Agents, Inc.
(“NRAI”), and the address of the Company’s registered agent and the
address of the Company’s registered office in the State of Delaware shall be
East Loockerman Street, Suite 1B, Dover, Delaware 19901.  Effective May 1, 2005, NRAI’s new
address shall be 160 Greentree Drive, Suite 101, Dover, Delaware
19904.  Such agent and such office may be
changed from time to time by the Managing Member Any one of the Members, or any
other Person authorized by the Managing Member, is hereby authorized, for the
purpose of authorizing or qualifying the Company to do business in any state,
territory or dependency of the United States in which it is necessary or
expedient for the Company to transact business, to do any and all acts and
things necessary to obtain from such state, territory or dependency any such
authorization or qualification.


 


2.05         Purpose.


 


(a)           The purpose of the Company shall be:


 


(i)            To acquire, own, hold, lease, operate,
manage, mortgage, encumber, finance, refinance, sell, redevelop, rehabilitate,
improve and otherwise deal with and dispose of, directly or indirectly through
one or more direct or indirect subsidiaries, the Property and the Subsidiaries;


 


(ii)           To conduct all activities reasonably necessary or desirable to
accomplish the foregoing purposes and to do anything necessary or incidental to
any of the foregoing, which in each case, is not a breach of this Agreement;
and


 


(iii)          To engage in any other business or activity approved by the Members
(and the Members acknowledge and agree that each of the foregoing matters in
clauses (i) - (iii) is part of the ordinary business of the Company).


 


(b)        The Company shall, directly or indirectly (as the case may be) own the
Subsidiaries, which, in turn, shall, directly or indirectly (as the case may
be) own the Property.  The organizational
documents of the Subsidiaries (individually, a “Subsidiary Operating
Agreement” and collectively, the “Subsidiary Operating Agreements”)
shall (i) to the extent required by any third-party lender and approved by
the Members, be structured to include any bankruptcy remote-type provisions as
are necessary or required by such third-party lender and (ii) contain such
provisions as will together with the provisions of this Agreement have substantially
the same effect as would be the case if the Property were held or all such
business were conducted by the Company pursuant to the terms of this Agreement,
unless otherwise approved by the Members. 
Unless otherwise determined by the Members, the Managing Member of the
Company shall perform the same or substantially identical services for the
Subsidiaries as the Managing Member performs for the Company.  The Managing Member agrees to perform such
duties, and in such circumstances and with regard to such duties, the Managing
Member shall be subject to the same standards of conduct and shall have the
same rights and obligations with regard to such duties performed or to be
performed on 


 


14





















 


behalf
of a Subsidiary as are set forth in this Agreement with regard to the same or
substantially identical services to be performed for or on behalf of the
Company (including, without limitation, the indemnification and exculpation
rights and obligations of the Managing Member and the removal or termination
provisions, as set forth in this Agreement).


 


(c)         The Company shall not engage in any other business or activity without
the approval of the Members.


 


2.06         Separateness.  The Company and the Subsidiaries shall, at
all times:


 


(a)         maintain
books and records separate from any other Person, and, without limiting the
generality of the foregoing, maintain their own bank accounts in their own
names;


 


(b)        hold
themselves out to the public and all other Persons as legal entities separate
from any Member and other Person;


 


(c)         file
their own tax returns as may be required under applicable law to the extent (1) not
part of a consolidated group filing a consolidated return or (2) not
treated as a division for tax purposes of another taxpayer, and pay any taxes
so required to be paid under applicable law;


 


(d)        not
commingle assets with those of any other Person, including, without limitation,
any of their Members;


 


(e)         conduct
their respective businesses in their respective names and strictly comply with
all organizational formalities to maintain their separate existence;


 


(f)         maintain
and periodically prepare separate financial statements and not consolidate
their financial statements with any other Person for any purpose; provided,
however, that the Company’s assets may be included in a consolidated
financial statement with its Affiliates provided that appropriate notation
shall be made in such consolidated financial statements to indicate the
separateness of the Company and its Affiliates and to indicate that the Company’s
assets and credit are not available to satisfy the debts and other obligations
of its Affiliates.


 


(g)        pay
their own liabilities out of their own funds and not hold out the credit or
assets of any other Person as being able to satisfy the obligations of the
Company or the Subsidiaries;


 


(h)        observe
all formalities required by the Delaware Act and their organizational documents
and operating agreements;


 


(i)          maintain
an “arms-length relationship” with their Affiliates;


 


15





















 


(j)          pay
the salaries of their own employees, if any;


 


(k)         not
hold out their credit or assets as being available to satisfy the obligations
of others;


 


(l)          to
the extent that they share office space with their Members or Affiliates and
pay toward the overhead cost, allocate fairly and reasonably, based on fair
market value, any overhead and expense for shared office space;


 


(m)        use
separate invoices, bank accounts and checks;


 


(n)        not
incur any indebtedness, secured or unsecured, direct or indirect, absolute or
contingent, with any Affiliate, and not pledge any of their assets for the
benefit of any Affiliate;


 


(o)        correct
any known misunderstanding regarding their separate identity;


 


(p)        not
make any loans or advances to any third party other than in the ordinary course
and not acquire the securities of any Member;


 


(q)        maintain
their assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify their individual asset or assets, as the case
may be, from those of any Affiliate or any other Person;


 


(r)         not
engage in any business or own any assets other than as provided in Section 2.05;


 


(s)         direct
any agent acting on their behalf to hold itself out as acting on their behalf;
and


 


(t)         otherwise
hold themselves out as separate legal entities.


 


The provisions of this Section 2.06 shall not be
revised or amended until the Acquisition Financing shall have been repaid or
except as required by any lender thereof.


 


III.
 MEMBERS


 


3.01         Admission of Members.  The SLG Member and the GKK
Member are the initial members of the Company. 
Except as expressly permitted by this Agreement, no other Person shall
be admitted as a member of the Company, and no additional Interests shall be
issued, without the approval of the Members.


 


16





















 


3.02         Limitation on Liability.


 


(a)           Except as otherwise expressly provided in the Delaware Act, the debts,
obligations and liabilities of the Company or any Subsidiary, whether arising
in contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company or such Subsidiary, and no Member shall be obligated
personally for any such debt, obligation or liability of the Company, solely by
reason of being a member of the Company. 
Except as otherwise expressly provided in the Delaware Act or as
provided in Section 11.01(b) hereof, but subject to the provisions of
subparagraph (b) of this Section 3.02, the liability of each Member shall
be limited to the amount of Capital Contributions required to be made by such
Member in accordance with the provisions of this Agreement, but only when and
to the extent the same shall become due and payable pursuant to the provisions
of this Agreement.  Further, no general
or limited partner of any Member, Managing Member, shareholder, member or other
holder of any equity interest of any Member, Managing Member or any officer,
director or employee of any of the foregoing or any of their Affiliates shall
be obligated personally for any debt, obligation or other liability of the
Company or any Subsidiary solely by reason of their being a general or limited
partner of any Member, Managing Member, shareholder or member or other holder
of any equity interest of any Member, Managing Member or officer, director or
employee of any of the foregoing or any of their Affiliates.  Further, failure of the Company or any
Subsidiary to observe any corporate or other formalities or requirements
relating to the exercise of its powers or the management of its business or
affairs under either this Agreement, any Subsidiary Operating Agreement or the
Delaware Act shall not be grounds for any Member, Managing Member, general or
limited partner of any Member, shareholder or member or other holder of any
equity interest of any Member, Managing Member or any officer, director or
employee of any of the foregoing or any of their Affiliates to be held liable
or obligated for any debt, obligation or other liability of the Company or any
Subsidiary.


 


(b)           Notwithstanding any other provision of this
Agreement to the contrary (including the provisions of Section 11.01(b) hereof),
(i) each Member’s liability under this Agreement is explicitly limited to
the assets of such Member, and (ii) neither the Company nor any Member
shall have any recourse against any assets of an Affiliate of another Member or
any past, present or future officers, agents, shareholders, incorporators,
directors, principals (direct or indirect), affiliates, partners, members or
representatives of another Member or any of the assets or property of any of
the foregoing, for the payment or collection of any amount, judgment, judicial
process, arbitration award, fees or costs or for any other obligation or claim
arising out of or based upon this Agreement.


 


(c)           In
accordance with Section 18-1101
of the Delaware Act, no Member, by virtue of its status or actions as a Member
or as Managing Member, shall have any fiduciary duty to any other Member or to
the Company, and any such fiduciary duty that would otherwise exist under the
Delaware Act or applicable law is hereby disclaimed and eliminated to the
fullest extent permitted under the Delaware Act and applicable law.


 


17





















 


(d)           The provisions of this Section 3.02 shall survive the termination
or expiration of this Agreement.


 


3.03         Third-Party Debt Liability.  Subject to the provisions of Section 4.06,
the parties intend that no Member, or any of its Affiliates, shall have any
liability under or in connection with any third-party debt, including liability
with regard to any environmental matters, recourse carve-outs, fraud,
intentional misconduct, theft or other commonly called “bad acts” or with
regard to any other matter, unless otherwise approved by the Members or
pursuant to an agreement entered into by such Member.


 


3.04         GKK
Special Decision-Making Rules.  Any provision to the contrary in this
Agreement notwithstanding, any decision to be taken or approval to be granted
by GKK in connection with the Company (or otherwise in connection with the
matters contemplated by this Agreement) shall, for all purposes under this
Agreement, be deemed effective only if approved by either (i) a
majority of the GKK Corp directors who are deemed independent from SLG Corp or (ii) a
subcommittee of directors designated by such independent directors, in either
case after such consultations among themselves and with any members of the
credit committee of the GKK as such independent directors deem necessary.  For the purposes of this Section 3.04, a
GKK Corp director will be deemed independent from SLG if such director would
not be considered an “interested director” under Delaware law or Section 4350
of NASD’s marketplace listing rules in connection with a transaction
between GKK Corp and SLG Corp.


 


IV.  CAPITAL


 


4.01         Initial Capital Contributions.


 


(a)           Due
Diligence Costs. The SLG Member and its Affiliates have heretofore
incurred, and may hereafter incur, third-party out-of-pocket costs and expenses
in connection with their due diligence analyses and other evaluations of the
Property and the potential acquisition of a separate property located at 200
Park Avenue in New York City, New York (the “Potential Property”),
including, without limitation, engineering and feasibility costs and expenses
and costs and expenses related to or associated with analyzing the Property and
the Potential Property (collectively, the “Contract and Due Diligence Costs”;
such costs shall not include cost allocable to the Residential Component or
legal fees and disbursements incurred in connection with the negotiation of
this Agreement, the schedules and exhibits hereto and any other document
entered into in connection with the transactions contemplated hereby) as set
forth on Schedule 4.01(a). 
The Contract and Due Diligence Costs shall be reduced by the amount of
any reimbursed costs and expenses received from SITQ by the SLG member or its
Affiliates.  On the date of execution of
this Agreement, each Member hereof shall contribute its pro rata
share of the Contract and Due Diligence Costs, based on its respective
Percentage Interest.  If the SLG Member
and its Affiliates have, in the aggregate, contributed more than the SLG Member’s
Percentage Interest of the Contract and Due Diligence Costs, then the Company
shall, upon the execution of this 


 


18





















 


Agreement, refund to the
SLG Member an amount equal to the excess of: (i) the amount the SLG Member
and its Affiliates, in the aggregate, contributed as the Contract and Due
Diligence Cost, above (ii) the product of (A) the
Contract and Due Diligence Costs multiplied by (B) the SLG Member’s
Percentage Interest.


 


(b)           Closing
Date Contributions.  Immediately
following the execution of this Agreement, the Members shall contribute in cash
to the capital of the Company their pro rata share
(based upon their respective Percentage Interests) of any amount by which the
uses of funds set forth on Schedule 4.01(b) attached hereto exceeds
the net proceeds of the Acquisition Financing funded prior to or concurrent
with such contributions.  It is expected
that, on the Closing Date, the Members shall make the following approximate
cash contributions to the capital of the Company (taking into account deposits
made under the Purchase Agreement and Contract and Due Diligence Costs):


 




	
  SLG Member 

  	
   

  	
  $

  	
  76,500,000 

  	
   

  
	
  GKK Member

  	
   

  	
  $

  	
  62,600,000

  	
   

  






 


(c)           Other
Contributions. In addition to the cash contributions described in Sections
4.01(a),(b) and (c), on the Closing Date, the SLG Member shall (i) acquire
from 1 Madison Venture LLC and Column and contribute to the Company (for
further contribution to the Fee LLC) its rights under the Purchase Agreement to
the extent allocable to the Property (inclusive of all deposits made thereunder
allocable to the Property) and (ii) acquire from SLG and contribute to the
Company (for further contribution to the Fee LLC) the Financing Commitment
(inclusive of all deposits’ made thereunder) and all related rate-lock and
interest rate hedging commitments entered into in connection therewith.


 


4.02         Additional
Capital Contributions.  Subject to the provisions of Section 7.01(a) of
this Agreement, in the event that at any time or from time to time additional
funds are required by the Company or any Subsidiary as determined by the
Managing Member, either (a) to fund Necessary Expenses in an amount in
excess of Initial Capital Contributions, reserves and available cash flow (“Mandatory
Capital Contributions”) or (b) to fund any other expense, in an amount
in excess of Initial Capital Contributions, reserves and available cash flow (“Agreed
Capital Contributions”), then the Managing Member shall request that the
Members make such Additional Capital Contribution to the Company on a pro rata basis in accordance with the Members’ respective
Percentage Interest.  The Members shall
have five (5) Business Days from the request by the Managing Member to
contribute their pro rata share of Mandatory
Capital Contributions (based on their relative Percentage Interest).  To the extent approved by the Members, the
Members shall have fifteen (15) Business Days from the request by the Managing
Member to contribute their pro rata share
of Agreed Capital Contributions based on their relative Percentage Interests.  For the avoidance of doubt, Members do not
have the right 


 


19





















 


to approve Mandatory
Capital Contributions but do have the right to approve Agreed Capital
Contributions.


 


4.03         Capital Contributions and Remedies.


 


(a)           All Capital Contributions or advances required by or provided for in
this Article IV shall be made by wire transfer of funds to the Company
account designated by the Managing Member, and any reimbursements or
distributions to any Member required by or provided in this Agreement shall be
made by wire transfer of funds to such account as designated by such Member or
other means mutually acceptable or then commonly used for the receipt and
distribution of proceeds in major commercial transactions.


 


(b)           If either Member (the “Non-Contributing
Member”) fails to timely make any Capital Contribution (or any portion
thereof) required pursuant to Sections 4.01 or 4.02 hereof, and the other
Member (the “Contributing Member”) has made its pro rata
share of such Capital Contribution, then subject to the provisions of Sections
4.03(e) hereof, the Contributing Member may cause any one (but only one)
of the following actions to be taken by delivery of notice to such effect to
the Company and the Non-Contributing Member:


 


(i)            The Contributing Member may advance the
Non-Contributing Member’s pro rata share
of Mandatory Capital Contribution up to an amount of $1,000,000 outstanding at
any time, and the Contributing Member may designate all or any portion of such
Mandatory Capital Contributions made by the Contributing Member in respect of
the related request therefor (including both the Contributing Member’s and the
Non-Contributing Member’s pro rata
portion thereof) as a “Priority Member Advance” (provided, however, such
Priority Member Advance will be considered and treated as Capital Contributions
for federal income tax purposes); or


 


(ii)           The Contributing Member may contribute the Non-Contributing Member’s pro rata share of such requested or required Capital Contributions
and elect to decrease the Percentage Interest of the Non-Contributing Member
(but not below zero) such that, immediately after such decrease, the Percentage
Interest of the Non-Contributing Member shall be a percentage equal to the
Percentage Interest immediately prior to such decrease, less a percentage
expressed as a fraction, the numerator of which is the amount of the Capital
Contribution that such Member failed to contribute, and the denominator of
which is the aggregate amount of the Capital Contributions (other than those
characterized as Priority Member Advances) made by all of the Members prior to
or as of such default (including the applicable Additional Capital
Contributions), and concomitantly, the Percentage Interest of the Contributing
Member shall be increased by the same amount. 
An example of the operation of such calculation is set forth on Exhibit F
attached hereto; or


 


20





















 


(iii)          The Contributing Member may withdraw its share of such requested or
required Capital Contribution.


 


(c)           [Intentionally omitted.]


 


(d)           [Intentionally omitted.]


 


(e)           Notwithstanding any other provision of this Agreement to the contrary,
in the event any Member fails to timely make any Capital Contribution (or any
portion thereof) requested or required pursuant to Sections 4.01 or 4.02 hereof
and the resulting exercise of any remedy in this Agreement results in the
immediate or future imposition of a transfer tax on the Company (or any Member
thereof) or any Subsidiary, the Member that failed to make such Capital
Contribution under Sections 4.01 or 4.02 of this Agreement, shall be liable for
and shall be obligated to directly pay any such transfer tax (and such payment
shall not be deemed to be a Capital Contribution and shall have no effect upon
the allocation provisions or any other equity provisions of this Agreement).


 


(f)            Each
Member acknowledges and agrees that the other Member would not be entering into
this Agreement were it not for (i) the Members agreeing to make the
Capital Contributions provided for in Sections 4.01 and 4.02 of this Agreement,
and (ii) the remedy provisions provided for herein.  Each Member acknowledges and agrees that in
the event any Member fails to make its Capital Contributions pursuant to this
Agreement, the other Member will suffer substantial damages and the remedy
provisions set forth above are fair, just and equitable in all respects and
administratively superior to any other method for determining such
damages.  Each Member hereby agrees that
in the event its Interest in the Company is reduced as described above, it
shall execute and deliver such conveyances, agreements, instruments or other
documents which may be reasonably necessary in the judgment of the other Member
to confirm and render fully effective the remedy provisions set forth above,
including, but not limited to, an assignment of a portion of its Interest in
the Company and any amendments to this Agreement or to the Certificate of
Formation.


 


4.04         Capital Accounts.  A separate Capital Account will
be maintained for each Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv).  Consistent therewith, the Capital Account of
each Member will be determined and adjusted as follows:


 


(a)           Each Member’s Capital Account will be credited with:


 


(i)            Any contributions of cash made by such Member
to the capital of the Company and any advances of cash made by such Member as
Priority Member Advances plus the Book Basis of any property contributed by
such Member to the capital of the Company (net of any liabilities to which such
property is subject or which are assumed by the Company);


 


21





















 


(ii)           The Member’s distributive share of Net Profit and items thereof; and


 


(iii)          Any other increases required by Treasury Regulation Section 1.704-1(b)(2)(iv).


 


(b)           Each Member’s Capital Account will be debited with:


 


(i)            Any distributions of cash made from the
Company to such Member (including all amounts paid or distributed pursuant to
the provisions of Section 6.03 hereof) plus the fair market value of any
property distributed in kind to such Member (net of any liabilities to which
such property is subject or which are assumed by such Member);


 


(ii)           The Member’s distributive share of Net Loss and items thereof; and


 


(iii)          Any other decreases required by Treasury Regulation Section 1.704-1(b)(2)(iv).


 


The
provisions of this Section 4.04 relating to the maintenance of Capital Accounts
have been included in this Agreement to comply with Section 704(b) of
the Code and the Treasury Regulations promulgated thereunder and will be
interpreted and applied in a manner consistent with those provisions.  In the event the Tax Matters Partner shall
determine that it is prudent to modify the manner in which the Capital Accounts
or any debts or credits thereto (including, without limitation, debits or
credits relating to liabilities which are secured by contributed or distributed
property or which are assumed by the Company or any Members) are computed in
order to comply with such Regulations, the Managing Member may make such
modification, provided that it is not likely to have a material effect on the
amounts distributed to any Member pursuant to Section 6.04 hereof upon the
dissolution of the Company.


 


4.05         No Further Capital Contributions.  Except as expressly provided in
this Agreement or with the prior written consent of all the Members, no Member
shall be required or entitled to contribute any other or further capital to the
Company, nor shall any Member be required or entitled to loan any funds to the
Company (provided, however, that for these purposes, amounts
properly incurred by a Member which are reimbursable by the Company pursuant to
and in accordance with the terms of this Agreement shall not be deemed
loans).  No Member will have any
obligation to restore any negative or deficit balance in its Capital Account
upon liquidation or dissolution of the Company (and for purposes of this Section 4.05,
Capital Account shall be deemed to also include the capital account of any
Member for financial or book purposes or as set forth in the Delaware Act or
under common law).  Notwithstanding any
other provision of this Agreement to the contrary, nothing contained herein
will, or is intended or will be deemed to benefit any creditor of the Company
or any Subsidiary or any creditor of any 


 


22





















 


Member,
and no such creditor shall have any rights, interests or claims hereunder, be
entitled to any benefits or be entitled to require the Company or any Member to
demand, solicit or accept any loan, advance or Additional Capital Contribution
for or to the Company or any Subsidiary or to enforce any rights which the
Company, any Subsidiary or any Member may have against any other Member or
which any Member may have against the Company or Subsidiary, pursuant to this
Agreement or otherwise.


 


4.06         Financing.  To the extent so required in any third-party
financing obtained by the Company or a Subsidiary, the Managing Member shall
endeavor to obtain the agreement of such lender in respect of such financing
such that each Member shall have the obligation to enter into and deliver (or
cause to be entered into and delivered by creditworthy affiliates of such
Member acceptable to such lender): (i) customary
exceptions-to-non-recourse guarantees relating to, and only to, the acts or
omissions of such Member and its Affiliates; (ii) payment guarantees; and (iii) other
customary guarantees so required by such lender. The Members shall enter into a
Reimbursement and Indemnity Agreement substantially in the form of Exhibit E
hereto in connection with any such third-party financing.


 


4.07         Book Basis Adjustments.  The Book Basis of all assets will be adjusted
to equal their respective fair market values upon the events set forth in
Treasury Regulation § 1.704-1(b)(2)(iv)(f)(5)(i) and (ii).


 


V.  INTERESTS IN THE COMPANY


 


5.01         Percentage Interests.  With regard to each Member separately, the
initial Percentage Interest of each Member will be as set forth in Section 1.01
hereof (in each case, subject to adjustment as provided in this
Agreement).  The Percentage Interests of
the Members may be adjusted only as set forth in this Agreement.


 


5.02         Return of Capital.  No Member shall be liable for
the return of the Capital Contributions (or any portion thereof) of any other
Member, it being expressly understood and agreed that any such return shall be
made solely from the assets of the Company. 
No Member shall be entitled to withdraw or receive a return of any part
of its Capital Contributions or Capital Account, to receive interest on its
Capital Contributions or Capital Account or to receive any distributions from
the Company, except as expressly provided for in this Agreement or under
applicable law (and for purposes of this Section 5.02, Capital Account
shall be deemed to also include the capital account of any Member for financial
or book purposes or as set forth in the Delaware Act or under common law).


 


5.03         Ownership.  All assets of the Company shall
be owned by the Company, subject to the terms and provisions of this Agreement.


 


23





















 


5.04         Waiver of Partition; Nature of Interests in
the Company.  Except as otherwise expressly
provided for in this Agreement, each of the Members hereby irrevocably waives
any right or power that such Member might have:


 


(a)           To cause the Company, the Subsidiaries or the assets of the Company or
the Subsidiaries to be partitioned;


 


(b)           To cause the appointment of a receiver for all or any portion of the
assets of the Company or any Subsidiary;


 


(c)           To compel any sale of all or any portion of the assets of the Company
or any Subsidiary pursuant to any applicable law; or


 


(d)           To file a complaint or to institute any proceeding at law or in equity,
to cause the termination, dissolution or liquidation of the Company or any
Subsidiary.


 


No
Member shall have any interest in any specific assets of the Company (including
the Property).


 


VI.  ALLOCATIONS AND
DISTRIBUTIONS


 


6.01         Allocations.  For each Company taxable year or portion
thereof, Net Profit and Net Loss shall be allocated (after all allocations
pursuant to Section 6.02 have been made) among the Members so as to make
the Partially Adjusted Capital Accounts of the Members equal, as nearly as
possible, their respective Target Accounts.


 


6.02         Special Allocations and Compliance with Section 704(b).  The following special
allocations shall, except as otherwise provided, be made in the following
order:


 


(a)           Notwithstanding any other provision of this Article VI, if there
is a net decrease in Company Minimum Gain or in any Member Minimum Gain during
any taxable year of the Company, prior to any other allocation pursuant hereto,
such Member shall be specially allocated items of Profit for such year (and, if
necessary, subsequent years) in an amount and manner required by Treasury
Regulation Sections 1.704-2(f) or 1.704-2(i)(4).  The items to be so allocated shall be determined
in accordance with Treasury Regulation Section 1.704-2.


 


(b)           Items of Profit shall be allocated to each Member receiving
distributions pursuant to Section 6.03(a) hereof until the aggregate
items of Profit allocated to such Member under this Section 6.02(b) is
equal to the aggregate amount theretofore distributed (and immediately
available for distribution) pursuant to such clause (other than amounts
constituting a return of capital with respect to Priority Member Advances).


 


24





















 


(c)           Any Member who unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) which causes or increases a negative balance in his or its
adjusted Capital Account shall be allocated items of Profit sufficient to
eliminate such increase or negative balance caused thereby, as quickly as
possible, to the extent required by such Treasury Regulation.


 


(d)           Nonrecourse Deductions for any taxable year of the Company or other
period shall be allocated (as nearly as possible) under Treasury Regulation Section 1.704-2
to the Members, pro rata in proportion to their
respective Percentage Interests.


 


(e)           Any Member Nonrecourse Deductions for any taxable year of the Company
or other period shall be allocated to the Member that made, or guaranteed or is
otherwise liable with respect to the loan to which such Member Nonrecourse
Deductions are attributable in accordance with principles under Treasury
Regulation Section 1.704-2(i).


 


(f)            No allocation of Loss or Net Loss shall be
made to any Member if, as a result of such allocation, such Member would have
an Adjusted Capital Account Deficit.  Any
such disallowed allocation shall be made to the Members entitled to receive such
allocation under Treasury Regulation Section 1.704 in proportion to their
respective Percentage Interests.


 


6.03         Distributions.  Except as provided in Section 6.04, and
subject to Sections 6.05, 6.10 and 9.05 hereof, the Company shall, as soon as
reasonably practical (but no less often than quarterly), make distributions or
payments of Net Cash Flow (to the extent and if available) to the Members in
the following manner and order of priority:


 


(a)           First, an amount of such Net Cash Flow shall be paid (in the order and
priority set forth below), to the Members until each of the Members has
received payments of Net Cash Flow, pursuant to this Section 6.03(a) hereof,
in an aggregate amount (for the current period and all previous periods) equal
to the sum of (i) the aggregate amount of its Priority Member Advances
made pursuant to this Agreement and (ii) a cumulative return thereon
compounded quarterly, at a rate equal to six percent (6%) per annum over the
Contributing Member’s cost of funds calculated based on such Member’s
then-existing credit lines (with payments made pursuant to this Section 6.03(b) deemed
to be made first with respect to the interest described in clause (ii) hereof
and then with respect to the aggregate amount of such aggregate Priority Member
Advances described in clause (i) hereof); and


 


(b)           Thereafter, any remaining Net Cash Flow shall be distributed to the
Members pro rata in accordance with and in
proportion to their respective Percentage Interests, as adjusted pursuant to
the provisions of Section 4.03 of this Agreement.


 


25





















 


6.04         Distributions in Liquidation.  Upon the dissolution and
winding-up of the Company, the proceeds of sale and other assets of the Company
distributable to the Members under Section 12.02(c)(iii) shall be
distributed, not later than the latest time specified for such distributions
pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2) to
the Members in accordance with their respective positive Capital Account
balances (after adjustment to reflect the allocations pursuant to this Article VI).  With the approval of the Managing Member, a pro rata portion of the distributions that would otherwise
be made to the Members under the preceding sentence may be distributed to a
trust established (for the benefit of the Members) for the purposes of
liquidating Company and Subsidiary assets, collecting amounts owed to the
Company or any Subsidiary and paying any contingent or unforeseen liabilities
or obligations of the Company and the Subsidiaries arising out of or in
connection with the Company or the Subsidiaries.  The assets of any trust established under
this Section 6.04 will be distributed to the Members from time to time by
the trustee of the trust upon approval of the Managing Member in the same
proportions as the amount distributed to the trust by the Company would
otherwise have been distributed to the Members under this Agreement.


 


6.05         [Intentionally omitted.]


 


6.06         Tax Matters.  The Members intend for the Company
to be treated as a partnership under the Code. 
The Managing Member shall make all applicable elections, determinations
and other decisions under the Code, including, without limitation, the
deductibility of a particular item of expense and the positions to be taken on
the Company’s tax return, and shall approve the settlement or compromise of all
audit matters raised by the Internal Revenue Service affecting the Members
generally.  The Members shall each take
reporting positions on their respective federal, state and local income tax
returns consistent with the positions determined for the Company by the
Managing Member.  The Managing Member
shall cause all federal, state and local income and other tax returns to be
timely filed by the Company.


 


6.07         Tax Matters Partner.  The SLG Member shall be the tax
matters partner within the meaning of Section 6231(a)(7) of the Code
(“Tax Matters Partner”) and, subject to Section 6.06, shall
exercise all rights, obligations and duties of a tax matters partner under the
Code.  The Managing Member may in its
discretion designate any other Member as a substitute or alternative tax
matters partner by written notice thereof to all Members.


 


6.08         Section 704(c).  In accordance with Section 704(c) of
the Code and the applicable Treasury Regulations thereunder, income, gain,
loss, deduction and tax depreciation with respect to any property contributed
to the capital of the Company, or with respect to any property which has a Book
Basis different than its adjusted tax basis, shall, solely for federal income
tax purposes, be allocated among the Members so as to take into account any
variation between the adjusted tax basis of such property to the 


 


26





















 


Company and the Book
Basis of such property.  The Company
shall use the “traditional method” without curative allocations.


 


6.09         REIT
Status.  The Members agree to manage
the Company (and cause the Company to manage any other entity in which the
Company owns an interest) in a manner which enables each Member to qualify as a
REIT and which complies with the income, asset and operating requirements of
the Code which are applicable to a REIT. 
In connection therewith, the Members and the Managers shall act in a
manner consistent with that required by applicable law to effect such
compliance.


 


VII.  MANAGEMENT


 


7.01         Management.


 


(a)           Except as otherwise expressly provided in this Agreement or any
Subsidiary Operating Agreement, the business and affairs of the Company
and, indirectly, the Subsidiaries, shall be controlled and managed by the
Managing Member.  The Managing Member
shall, in all cases, act in accordance with customary industry standards and in
accordance with the then-applicable Budget and Operating Plan.  The Managing Member shall regularly consult
with the Members in exercising its authority under this Agreement.


 


(b)           Without limiting the
generality of the foregoing Section 7.01(a), and except as otherwise
expressly provided in this Agreement or any Subsidiary Operating Agreement, the
Managing Member, at the Company’s cost: (i) shall (A) establish the
policies and operating procedures of the Company and the Subsidiaries, (B) implement
all Major Decisions, (C) make decisions (other than Major Decisions and
such other decisions as are reserved to the Members hereunder) as to all
matters which the Company or any Subsidiary has authority to undertake, (D) make
expenditures as are required to implement the then-applicable Budget and
Operating Plan, and (E) make expenditures attributable to Necessary
Expenses; (ii) may delegate such of its powers, duties, responsibilities
and management functions, as it may from time to time determine, to any
officer, employee or agent of any Member, the Company or any Subsidiary; (iii) may,
on behalf of the Company or any Subsidiary, employ, engage or retain any Person
to act as property or asset manager, leasing agent, developer, broker,
accountant, attorney, engineer or in such other capacities as the Managing
Member may determine is necessary or desirable in connection with the Company’s
or any Subsidiary’s business, and the Managing Member shall be entitled to rely
in good faith upon the recommendations, reports and advice given to it by any
such Person in the course of such Person’s professional engagement; (iv) may
perform, or cause to be performed, all of the Company’s or any Subsidiary’s
obligations under any agreement to which the Company or any Subsidiary is a
party; (v) may enter into contracts on behalf of the Company or any
Subsidiary and make expenditures as are required to operate and manage the
Company, the Subsidiaries and the Property; and (vi) may perform any other
act which is necessary or desirable to carry out any of the purposes of the 


 


27





















 


Company or any
Subsidiary.  All decisions made, and actions taken, by the Managing Member in
accordance with the foregoing Section 7.01(a) and this Section 7.01(b) shall
be binding on the Company, the Subsidiaries and all Members, as if such person or
persons had personally made such decision or taken such action.


 


(c)           The
Members hereby designate the SLG Member to act as the Managing Member of the
Company (the “Managing Member”). 
The Managing Member shall be entitled to receive reimbursement for its
out-of-pocket expenses attributable to the performance of its duties as the
Managing Member.  The Managing Member may
only be removed or changed: (i) by unanimous consent of the Members; or (ii) upon
the Managing Member’s resignation at its election.  In the event the Managing Member resigns, the
Members shall appoint a successor Managing Member.  Any
provision to the contrary herein notwithstanding, to the extent any Major
Decision has been approved by the Members or is provided for or contemplated in
the then-applicable Budget or the Operating Plan, the Managing Member shall be
authorized, without any further consent or approval, to act in accordance
therewith.


 


(d)           Any
provision to the contrary in this Section 7.01 notwithstanding, unless
provided for in, or contemplated by, the then-applicable Budget or Operating
Plan (in which case, no additional approval shall be required under this Section 7.01(d)),
no action shall be taken, sum expended, decision made or obligation incurred by
or on behalf of the Company or any Subsidiary with regard to the following
material matters unless the same are approved in writing by all of the Members
(each a “Major Decision”):


 


(i)            approval of the final
forms of the documents that evidence, secure or relate to the Acquisition
Financing, to the extent that the same include any terms that are materially
different from those set forth in the Financing Commitment;


 


(ii)           approval of any easements, amendments to the Condominium Declaration or
similar instruments to be entered into by the Company in connection with the
transactions contemplated on Exhibit D (which approval shall not be
unreasonably withheld by the Members);


 


(iii)          any of the following which would have any material adverse effect on
the Company or the Property:  acquisition
of any land or other real property or interest therein; further subdivision of
the Property; modification of any material land use permits, approvals or
entitlements relating to the Property or of the terms of the Condominium
Declaration or other condominium-related documents.  It is understood and agreed that the
redevelopment of any portion of the Property (including, without limitation,
any portion of the 11th through 13th floors of the “South
Tower”) for residential condominium or any use other than for general office
purposes – other than as set forth on Exhibit D attached hereto 


 


28





















 


attached hereto – shall
be deemed to involve a material adverse effect on the Company and the Property;


 


(iv)          except for the Acquisition Financing, any (i) financing or
refinancing of the Company or any assets of the Company or (ii) financing
or other arrangements under which individual Members would have recourse
liability;


 


(v)           any (i) sale, ground lease or other transfer of, or mortgaging or
the placing or suffering of any other encumbrance on or affecting the Property
or any part or parts thereof, or the sale or other disposition of all or
substantially all of the Company’s assets, or (ii) selection of any broker
or agent in connection with any sale or other transaction;


 


(vi)          execution, modification, termination or waiver of any material rights
under the CSFB’s lease of the Property or other arrangement involving the
rental, use or occupancy of the Property, or any part thereof, by CSFB;


 


(vii)         construction of any material improvements or the making of any material
capital improvements, repairs, alterations or changes in, to or of the Property
or any part thereof, except for such matters as may be expressly provided for
in any Budget or Operating Plan, resulting from an emergency, or as may be
required to be performed under any agreements (such as loan documents or
leases), or pursuant to legal requirements, affecting the Property;


 


(viii)        selecting or varying depreciation and accounting methods and making
other decisions with respect to treatment of various transactions for state or
federal income tax purposes or other financial purposes not otherwise
specifically provided for herein, provided that such methods and decisions
shall be consistent with the other provisions of this Agreement;


 


(ix)           approval of contracts, plans, specifications and drawings prior
relating to construction occurring on the Property; approval of any additions
to and/or alterations of the Property or any portion thereof; and approval of
any modifications of such contracts, plans, specifications and drawings, (it
being understood that with respect to the matters contemplated on Exhibit D,
such approvals will not be unreasonably withheld);


 


(x)            determining any reserves to be established
prior to the distribution of distributable cash to the Members;


 


(xi)           approval of any proposed budget or operating plan and approval of any
modifications to any Budget or Operating Plan;


 


29





















 


(xii)          making
any expenditure or incurring any obligation by or on behalf of the Company
involving an expenditure which is not included in the then current Budget or
provided by Mandatory Capital Contributions or Agreed Capital Contributions
pursuant to Section 4.02 hereof;


 


(xiii)         approval of any contracts with a person related to or affiliated with
the Managing Member or any Member, unless the terms and conditions of such
contract are made at arms length
and shall be for a price and for such other terms as are no less favorable to
the Company and no more favorable to such Affiliate than market terms for
similar services.


 


(xiv)        institution of any legal action or settlement of any legal action
involving more than $100,000 or the settlement of any uninsured claim or legal
action against the Company involving more than $100,000;


 


(xv)         determination of any Agreed Capital Contribution, and the amount of
such Agreed Capital Contribution, if required;


 


(xvi)        any election to admit any other person as a Member to the Company other
than as expressly permitted hereunder without the consent of the Members; or


 


(xvii)       any election to dissolve
the Company other than in accordance with the terms of this Agreement; any
election to merge the Company with any other entity; and any election to file a
bankruptcy or similar insolvency petition on behalf of the Company.


 


(e)           Major Decisions may be introduced for
consideration of the Members only by the Managing Member, except as provided in
Section 8.01 hereof; provided, however, that if any event or circumstance
(other than those introduced for consideration by the GKK Member) arises
outside of the ordinary course of business which would reasonably be expected
to require a Major Decision in the Managing Member’s discretion, the Managing
Member will promptly propose such Major Decisions to the Members for
consideration.  Any provision to the
contrary herein notwithstanding, the Managing Member shall have no power or
authority to authorize or approve any Major Decision or to take any material
action or make any material decision with regard thereto, unless the (i) same
has been approved in writing by the Members, (ii) has been provided for
in, or contemplated by the Budget or, to the extent applicable, the Operating
Plan, or (iii) same qualify as Necessary Expenses in the Managing Member’s
reasonable judgment.


 


(f)            The Members hereby acknowledge that each of
the Members has approved the following (including to the extent such may
constitute Major Decisions):


 


30





















 


(i)            Without
limiting the provisions of Section 7.01(d) hereof, the Project
Modifications Under Consideration with CSFB, attached hereto as Exhibit D;


 


(ii)           Form of
Asset Management Agreement, attached hereto as Exhibit C;


 


(iii)          Form of
Leasing and Property Management Agreement, attached hereto as Exhibit B;


 


(iv)          Form of
Reimbursement and Indemnity Agreement, attached hereto as Exhibit E;
and


 


(v)           The
closings to occur under the Purchase Agreement and the Acquisition Financing
documents.


 


(g)           [Intentionally omitted.]


 


(h)        Except as expressly
provided in this Agreement, no Member, other than Managing Member, shall have
any right or power to participate in or have any control over the Company’s or
any Subsidiary’s business, affairs or operations or to act for or to bind the
Company or any Subsidiary in any matter whatsoever.


 


(i)          [Intentionally omitted.]


 


(j)          If, at the beginning of any calendar year beginning after the date
hereof, the Budget and Operating Plan, or any item or portion thereof, shall
not have been approved in writing by the Members, then:


 


(i)            Any items or portions of such Budget and
Operating Plan and amounts of expenses provided therein which have been so
approved shall become operative immediately and the Managing Member shall be
entitled to expend funds in accordance with those operative portions;


 


(ii)           The Managing Member shall be entitled to expend, in connection with
Necessary Expenses, an amount equal to the actual Necessary Expenses incurred
by the Company or any Subsidiary; and


 


(iii)          The Managing Member shall be entitled to expend, in respect of other
noncapital, recurring expenses in any fiscal quarter of the then-current
calendar year, an amount equal to the lesser of (x) actual expenses incurred by
the Company or any Subsidiary or (y) an amount equal to one hundred ten percent
(110%) of the budgeted amount for the corresponding fiscal quarter of the
immediately preceding calendar year, as set forth on the immediately preceding
calendar year Budget and Operating Plan, after giving 


 


31





















 


effect
to any dispositions or other material changes to the Property during the prior
or current year; provided, however, that if any contract approved
by the Members provides for an automatic increase in costs thereunder after the
beginning of the then-current calendar year, then the Managing Member shall be
entitled to expend the amount of such increase.


 


(k)         Notwithstanding anything to the contrary contained in this Agreement,
the Managing Member shall not be obligated to make any expenditures or advance
any funds on behalf of the Company or any Subsidiary, except from the accounts
of funds of the Company or the applicable Subsidiary, nor shall the Managing
Member be obligated to perform its duties and obligations hereunder if Company
or Subsidiary funds are not available in amounts required to perform such
duties and obligations.


 


7.02         Services and Fees; Affiliate Transactions.


 


(a)         The SLG Member or its Affiliate will perform asset management services
with respect to GKK’s or its Affiliate’s Interest with the terms of an asset
management agreement in the form attached hereto as Exhibit C (the “Asset
Management Agreement”), which form, and which appointment, are hereby
deemed approved by the Members.  Any
changes in the form of the Asset Management Agreement or any amendments or
modifications thereto, or any changes in the schedule of fees previously
approved by the Members, must be approved by the Members.  Any provision to the contrary in this
Agreement notwithstanding, the GKK Member shall have no right to terminate the
Asset Management Agreement unless and until SLG no longer has any direct or
indirect Interest in the Company.


 


(b)        Additionally, the SLG Member or its Affiliate will perform management
services with respect to the Property in accordance with the terms of a leasing
and property management agreement in the form attached hereto as Exhibit B
(the “Leasing and Property Management Agreement”), which form, and which
appointment, are hereby deemed approved by the Members.  Any changes in the form of the Leasing and
Property Management Agreement or any amendments or modifications thereto, or
any changes in the schedule of fees previously approved by the Members,
must be approved by the Members.  Any
provision to the contrary in this Agreement notwithstanding, the GKK Member
shall have no right to terminate the Leasing and Property Management Agreement
unless and until SLG no longer has any direct or indirect Interest in the
Company.


 


(c)         Any agreements with any Member or an Affiliate of any Member must be
approved by all Members, and no fees or compensation will be paid by the
Company or any Subsidiary to any Member or any of its Affiliates, unless the
same has been approved by all Members or expressly and specifically
contemplated in an approved Budget and Operating Plan.


 


32





















 


(d)        In addition to, and notwithstanding, the foregoing provisions of this Section 7.02,
but subject in all cases to the provisions of Section 7.01(d) hereof,
the Managing Member may determine that it is appropriate for the Company to
enter into agreements with one or more third parties to sell, or provide other
professional services with respect to, the Property, the Company or any
Subsidiary, which agreements shall be subject to the approval of the Managing
Member.  The fees for services from such
third parties shall be included in any proposed budget and subject to approval
in accordance with Section 7.01(d)(xi), and shall not exceed the
prevailing competitive fees being charged for such services for similar
properties in the market where the Property is located.


 


7.03         Duties and Conflicts.


 


(a)           The Members, including the Managing Member, shall devote such time to
the business of the Company and the Subsidiaries as they deem to be necessary
or desirable in connection with their respective duties and responsibilities
hereunder.  Except as otherwise provided
in this Agreement or as otherwise approved by all Members, no Member nor any
member, partner, shareholder, officer, director, employee, agent or
representative of any Member shall receive any salary or other remuneration for
its services rendered pursuant to this Agreement.


 


(b)           Each of the Members recognizes that the other Member and its members,
partners, shareholders, officers, directors, employees, agents, representatives
and Affiliates, has or may in the future have other business interests,
activities and investments, some of which may be in conflict or competition
with the business of the Company, and that the other Member and its members,
partners, shareholders, officers, directors, employees, agents, representatives
and Affiliates, are entitled to carry on such other business interests,
activities and investments.  Each of the
Members may engage in or possess an interest in any other business or venture
of any kind, independently or with others, including, without limitation,
owning, financing, acquiring, leasing, promoting, developing, improving,
operating, managing and servicing real property on its own behalf or on behalf
of other entities with which any of the Members is affiliated or otherwise, and
each of the Members may engage in any such activities, whether or not competitive
with the Company or any Subsidiary, without any obligation to offer any
interest in such activities to the Company or any Subsidiary or to the other
Member.  Neither the Company, the
Subsidiaries nor the other Member shall have any right, by virtue of this
Agreement or any Subsidiary Operating Agreement, in or to such activities, or
the income or profits derived therefrom, and the pursuit of such activities,
even if competitive with the business of the Company or any Subsidiary, shall
not be deemed wrongful or improper.  For
the avoidance of doubt, no provision contained herein is intended to modify any
term or condition of that certain Origination Agreement, dated August 2,
2004, by and among GKK, GKK Capital LP and SL Green Operating Partnership, L.P.,
as the same may be amended from time to time.


 


33





















 


7.04         Company
Expenses.  Except as otherwise
provided in this Agreement or in the Leasing and Property Management Agreement
or in the Asset Management Agreement, and except for any costs to be borne by
any third party under any agreement with the Company, the Company shall be
responsible for paying, and shall pay, all direct costs and expenses related to
the business of the Company and any Subsidiary and of acquiring, holding,
owning, developing, redeveloping, operating, managing and leasing the Property,
including, without limitation, transfer taxes in connection with the
acquisition of the Property (or interests in the applicable Subsidiaries), all
fees payable under Section 7.02, costs of financing, fees and
disbursements of attorneys, financial advisors, accountants, appraisers,
brokers and engineers, and all other fees, costs and expenses directly
attributable to the business and operations of the Company or any
Subsidiary.  In the event any such costs
and expenses are or have been paid by any Member, such Member shall be entitled
to be reimbursed for such payment so long as such payment is otherwise in
accordance with the terms of this Agreement, the Leasing and Property
Management Agreement and the Asset Management Agreement.


 


7.05         Officers.


 


(a)           The
Managing Member may, from time to time, appoint one or more officers of the
Company holding such offices of President, Executive Vice President and
Secretary, Treasurer, Assistant Treasurer, Assistant Secretary, or any of them,
or any other offices of the Company as may, from time to time, be established
by the Managing Member (each an “Officer”
and, collectively, the “Officers”). 
Upon such appointment, and subject to the terms of this Agreement, each
Officer shall be vested with the authority, rights and obligations as the
Managing Member may designate; provided, however, (i) that
the Managing Member may, from time to time, in its sole discretion (A) appoint
one or more additional Officers, (B) remove, replace or substitute one or
more Officers and (C) limit or restrict the authority of one or more
Officers, and (ii) that no Officer may be authorized to take any action
which the Managing Member would not validly be allowed to take under the terms
of this Agreement.


 


(b)           Any
Officer, to the extent of his or her power vested in him or her by action of
the Managing Member in accordance with the terms of this Agreement, shall be an
agent of the Company for the purpose of the Company’s business and the actions
of such Officer taken in accordance with such powers shall bind the Company.


 


VIII.  BUY-SELL AND CALL
PROVISIONS


 


8.01         Buy-Sell Provisions.


 


(a)           In the event that the Members are unable to agree upon a Major Decision:
(i) involving the sale or refinancing of the Property proposed to the
Members by (x) the SLG Member at any time for any reason or (y) by the GKK
Member solely in either of the following two circumstances: (1) on the
first Business Day of any year after the tenth (10th) anniversary of the date
of this Agreement, only if the GKK Member 


 


34





















 


reasonably
determines that it will likely incur “phantom income” in the succeeding annual
period; or (2) at any time, in the event that the credit rating of CSFB
falls below a published rating of “BBB” by Standard and Poor’s or “Baa” by
Moody’s; (ii) involving an extension of, or material modification to, the
CSFB space lease, or the re-tenanting of the space currently demised to CSFB
under the CSFB space lease; (iii) involving any material capital
expenditure by the Company or with respect to the Property, other than as set
forth on Exhibit D attached hereto; or (iv) which would
otherwise materially impair the value of the Property, either Member may notify
the other Member of a deadlock with respect to such Major Decision(s) (such
notification, a “Major Decision Deadlock Notice”).  Within thirty (30) calendar days of the
delivery of a Major Decision Deadlock Notice, the GKK Member may deliver a
written notice as described below (the “Buy-Sell Notice”) to the SLG
Member, as set forth below.


 


(b)           The Buy-Sell Notice shall be signed by the GKK Member and shall state
the amount at which the GKK Member values the Property and all other assets of
the Company (the “Buy-Sell Value”).


 


(c)           Within such thirty (30) calendar day period, a copy of the Buy-Sell
Notice shall be delivered to the Company Accountant who shall, within five (5) Business
Days, determine and notify the Members of the amount each Member would receive
if all Company assets were sold for the Buy-Sell Value (less deductions
therefrom for normal and customary charges and expenses incurred in connection
with the sale of real estate in New York City, which shall be imputed, if not
actually incurred, including, without limitation, broker’s commissions,
transfer taxes, if applicable, and other closing costs), all liabilities of the
Company and each Subsidiary (including any loans by any such Member to the
Company or any Subsidiary) were paid in full, and the remaining proceeds were
distributed to the Members in accordance with Section 6.04 (the “Member
Buy/Sell Proceeds”).


 


(d)           The SLG Member shall have the right, exercisable by delivery of notice
in writing (the “Election”) to the GKK Member within thirty (30)
calendar days after the receipt of the Buy-Sell Notice, to elect to either:


 


(i)            sell to the GKK Member all of the SLG Member’s
rights, title and interests in and to its Interest in the Company, interest in
the Subsidiaries, if applicable, and interest in any loans to the Company and
the Subsidiaries, for a cash purchase price equal to the applicable Member
Buy/Sell Proceeds; or


 


(ii)           purchase all of the GKK Member’s rights, title and interests in and to
its Interest in the Company, interest in the Subsidiaries, if applicable, and
interest in any loans to the Company and the Subsidiaries, in each case free of
all liens and encumbrances, for a cash purchase price equal to the applicable
Member Buy/Sell Proceeds.


 


35





















 


Failure
of the SLG Member to give the GKK Member notice of the SLG’s Election shall be
deemed, upon the expiration of such 30-day period, to be an Election to sell
under Section 8.01(d)(i).


 


(e)           Contemporaneously
with the SLG Member’s Election or deemed Election, the purchasing Member shall (i) have
the right to direct the Managing Member on behalf of the Company and otherwise
make decisions on behalf of the Company with respect to (1) the day-to-day
operations of the Company that would otherwise require direction by the
Managing Member, (2) the decisions of the Company that are referred to in Exhibit D
to this Agreement and (3) any Major Decisions other than those identified
in (i)-(iv) of Section 8.01(a); provided, however,
prior to the closing of the purchase under this Section 8.01, all such
direction and decisions shall be consistent with past practices of the Company
and be in the ordinary course of the Company’s business, and (ii) deposit
in escrow with a bank or other financial institution selected by the selling
Member as escrowee an earnest money deposit in cash in an amount equal to ten
percent (10%) multiplied by the purchase price to be paid in connection with
such purchase, and, if such purchasing Member fails to close such purchase as
provided in this Section 8.01(e), then the selling Member may retain such
deposit and either elect to purchase all of the right, title and interest of
the purchasing Member in and to its Interest in the Company and interest in the
Subsidiaries, if applicable, and in any loans to the Company and the
Subsidiaries, for a cash purchase price equal to ninety percent (90%) of the
applicable Member Buy/Sell Proceeds, or exercise any other rights or remedies
available at law or in equity, including the rights set forth in Article XIII
hereof.  All closings of any purchase and
sale under this Section 8.01 will be held at the Company’s principal
office and shall take place no later than that date which is 45 calendar days
after the later of the SLG Member’s Election or deemed Election.


 


(f)            [Intentionally
omitted.]


 


(g)           Each Member shall be entitled to enforce its rights under this Section 8.01
by specific performance.  If the
purchasing Member defaults under this Section 8.01, it shall have no right
to make any future Buy-Sell Notice hereunder. 
No Buy-Sell Notice may be made until all periods for making elections
and performing obligations under any previous Buy-Sell Notice pursuant to this Section 8.01
shall have terminated.


 


(h)           Any Member may freely assign its rights and obligations pursuant to
this Section 8.01 to an wholly-owned Affiliate by delivering notice of
such assignment to the other Member, provided that the assigning Member shall
remain liable for any and all obligations of its assignee, as if such Member
had not assigned its rights pursuant to this Section 8.01(f).


 


(i)            Notwithstanding the foregoing, if the
provisions of Section 10.02(d) of this Agreement have been initiated
by any Member, then no Member 


 


36





















 


may
initiate the provisions of this Section 8.01 until the procedures set
forth in Article X have been completed or terminated pursuant to the terms
thereof.


 


8.02         Call
Provision.


 


(a) At
any time and from
time to time, unless (i) a Major Decision Deadlock Notice has been
delivered and the thirty (30) calendar
day period during which the GKK Member has a right to deliver a Buy-Sell
Notice has yet to expire or (ii) the GKK Member has delivered a Buy-Sell
Notice pursuant to Section 8.01 and the purchasing Member in connection
therewith has not defaulted in respect thereof (as contemplated by Section 8.1(g)),
the SLG Member shall have the right at any time, upon at least thirty (30)
calendar days prior written notice (the “Call Notice”), to cause all or
a portion of the Interest of the GKK Member (and any Member, or other permitted
transferee in accordance with Article X, whose interest derives from the
initial Interest of the GKK Member) to be redeemed by the Company or purchased
by the SLG Member or its Affiliate in full. 
The redemption or purchase price, as the case may be, shall be equal to
the amount that would have been distributed to such Member if the Property and
all other assets of the Company had been sold at the then-fair-market value
thereof (less deductions therefrom for
normal and customary charges and expenses incurred in connection with the sale
of real estate in New York City, which shall be imputed, if not actually
incurred, including, without limitation, broker’s commissions, transfer taxes,
if applicable, and other closing costs), and the proceeds of such sale,
after paying all debts and liabilities of the Company, were distributed to the
Members in accordance with Section 6.03 hereof; provided that, if such
exercise occurs after the expiration of the term of the lease of the Property
to CSFB, the redemption or purchase price (as the case may be) payable to such
Member shall be not less than the value of such Member’s Capital Account in the
Company as determined in accordance with Section 4.04 and the books and
records of the Company.  Unless the SLG
Member and the GKK Member agree upon the fair market value of the Property and
the other assets of the Company (the “Call Provision FMV”)(which
agreements shall be as determined or approved by the independent members of the
Boards of Directors of SLG and GKK), the Call Provision FMV shall be determined
based on an independent third-party appraiser’s determination of the Call
Provision FMV.  Such appraiser shall be
selected as follows: the SLG Member and the GKK Member shall each promptly
choose an independent appraiser (“SLG’s Appraiser” and “GKK’s
Appraiser,” respectively), each of which shall not have performed or been
engaged to perform any appraisal or valuation services for the Company, SLG or
GKK (or any of their respective Affiliates) within the then-preceding three (3) years.  All appraisers shall be MAI appraisers and
have at least ten (10) years experience in commercial real estate
valuation.  If the lower of the two (2) appraisals
so obtained is not less than ninety percent (90%) of the higher of such two (2) appraisals,
the average of such two (2) appraisals shall be the Call Provision
FMV.  In the lower of the two (2) appraisals
so obtained is less than ninety percent (90%) of the higher of such two (2) 
appraisals, then SLG’s Appraiser and GKK’s Appraiser shall promptly select a
third appraiser (the “Third Appraiser”), who shall promptly select the
Call Provision FMV from 


 


37





















 


either the amount stated by either the SLG Appraiser
or the GKK Appraiser and the Third Appraiser shall have no discretion to select
an amount different from either thereof. 
Such selection shall be binding upon the parties and shall immediately
thereafter be the Call Provision FMV for all purposes under this
Agreement.  If SLG’s Appraiser and GKK’s
Appraiser cannot agree on the selection of the Third Appraiser, such Third
Appraiser shall be selected as provided by the Commercial Arbitration Rules of
the American Arbitration Association as in effect on the date hereof for
selection of “arbitrators” in comparable situations.  The cost of the appraisals shall be an
expense of the Company.


 


(b)           Upon
delivery of the Call Notice under Section 8.02(a), the SLG Member shall
have the right to make direct the Managing Member on behalf of the Company and
otherwise make all decisions on behalf of the Company with respect to (A) the
day-to-day operations of the Company that would otherwise require direction by
the Managing Member, (B) the decisions of the Company that are referred to
in Exhibit D to this Agreement and (C) any and all Major
Decisions. In the event of a transfer if any Interest by the GKK Member to a
Prohibited Transferee or other breach or violation of Article X of this
Agreement, the applicable redemption price payable by the SLG Member to the GKK
Member under Section 8.02(a) shall be reduced to an amount equal to
ninety percent (90%) of the Call Provision FMV.


 


(c)           For
the avoidance of doubt, the SLG Member shall have the right to invoke the
provisions of this Section 8.02 even if the parties are engaged in
mandatory arbitration pursuant to Section 13.16 of this Agreement.


 


8.03         Termination of Other Agreements.  If any Member’s Interest is
purchased under this Article VIII or the corresponding provisions of any
Subsidiary Operating Agreement, all other agreements with such Member or its
Affiliates will (at the election of the purchasing Member) be terminated on the
date such Member’s Interest is purchased.


 


IX.  BOOKS AND RECORDS


 


9.01         Books and Records.  The Managing Member shall
maintain, or cause to be maintained, at the expense of the Company, in a manner
customary and consistent with good accounting principles, practices and procedures,
a comprehensive system of office records, books and accounts (which records,
books and accounts shall be and remain the property of the Company) in which
shall be entered fully and accurately each and every financial transaction with
respect to the operations of the Company and each Subsidiary and the ownership
and operation of the Property.  Bills,
receipts and vouchers shall be maintained on file by the Managing Member.  The Managing Member shall maintain said books
and accounts in a safe manner and separate from any records not having to do
directly with the Company.  The Managing
Member shall cause audits to be performed and audited statements and income tax
returns to be prepared as required by Section 9.03 hereof.  Such books and records of account shall be
prepared and maintained by the Managing Member at the principal place of
business of the Company or such other place 


 


38





















 


or
places as may from time to time be determined by the Managing Member.  Each Member or its duly authorized
representative shall have the right to inspect, examine and copy such books and
records of account at the Company’s office during reasonable business hours.


 


9.02         Accounting and Fiscal Year.  The books of the Company and
each Subsidiary shall be kept on the accrual basis in accordance with generally
accepted accounting practices and principles (“GAAP”), and the Company
and each Subsidiary shall report its operations for tax purposes on the accrual
method.  The taxable year of the Company
and each Subsidiary shall end on December 31 of each year, unless a
different taxable year shall be required by the Code.


 


9.03         Reports.


 


(a)           The Managing Member shall prepare at the Company’s expense the
financial reports and other information that the Members may determine are
appropriate, including those provided for in Section 7.03(c).  In any event, the Managing Member shall
prepare or cause to be prepared at the expense of the Company and furnish to
each of the Members: (i) within twenty (20) calendar days after the close
of each fiscal year of the Company, a preliminary and unaudited consolidated
balance sheet of the Company and each Subsidiary dated as of the end of such
fiscal year, a preliminary and unaudited statement of income and expense and a
preliminary and unaudited statement of cash flow; (ii) as early as
practicable but in no event later than seventy-five (75) calendar days after
the close of each fiscal year of the Company, a consolidated balance sheet of
the Company and each Subsidiary dated as of the end of the fiscal year, a
related statement of income and expense and a statement of cash flow, all of
which shall be certified in the customary manner by the Company Accountant; (iii) within
20 days after the close of each fiscal quarter of the Company (other than the
last fiscal quarter in any fiscal year), a consolidated balance sheet of the
Company and each Subsidiary dated as of the end of the fiscal quarter, a
related statement of income and expense and a statement of cash flow; and (iv) within
20 days after the end of each calendar month, a consolidated income statement
for the Company and each Subsidiary and a related statement of cash flow.  In addition, promptly after the end of each
fiscal year and at the expense of the Company, the Managing Member will cause
the Company Accountant to prepare and deliver to each Member a report setting
forth in sufficient detail all such information and data with respect to
business transactions effected by or involving the Company and each Subsidiary
during such fiscal year as will enable the Company and each Member to timely
prepare its federal, state and local income tax returns in accordance with the
laws, rules and regulations then prevailing.  The Managing Member will also cause the
Company Accountant to prepare federal, state and local tax returns required of
the Company, submit those returns to the Members for their approval as early as
practicable but in no event later than ninety (90) calendar days following the
end of the preceding fiscal year and will file the tax returns after they have
been approved by the Members.  In the
event any Member shall not in 


 


39





















 


good
faith be able to approve any such tax return prior to the date required for the
filing thereof, the Managing Member will timely obtain an extension of such
date if such extension is available under applicable law.  The Managing Member shall prepare and
distribute the reports and statements described in this Section 9.03.


 


(b)           All decisions as to accounting principles shall be made by the Managing
Member, subject to the provisions of this Agreement.


 


9.04         The Company Accountant.  The Company shall retain as the regular
accountant and auditor for the Company and each Subsidiary (the “Company
Accountant”) a nationally-recognized accounting firm designated by the
Managing Member.  The fees and expenses
of the Company Accountant shall be a Company expense.  The initial Company Accountant shall be Ernst &
Young, LLP, until such time as the Managing Member shall elect to change
such Company Accountant.


 


9.05         Distributions and Reserves.  The Budget and Operating Plan
will contain provisions governing the payment of distributions (in accordance
with Section 6.03) and establishment of reserves (“Reserve Accounts”),
provided, that, the Managing Member may require reserves be established in
excess of the Reserve Accounts to the extent the Managing Member reasonably
determines that said amounts are required to satisfy (i) requirements of
applicable law, or (ii) Necessary Expenses.  Disputes regarding the reasonableness of the
determination by the Managing Member hereunder will be subject to arbitration
pursuant to Section 13.16 hereof.


 


9.06         The
Budget and Operating Plan. 
The Managing Member shall be responsible for preparing and submitting to
the Members for their approval a proposed budget and strategic operating plan
with regard to the Property and/or the Subsidiaries on a consolidated basis
along with operations of the Company, for each fiscal year.  Within forty-five (45) calendar days after
the date hereof, an initial Budget for the Company and the Subsidiaries (the “Initial
Budget”) shall be attached hereto as Exhibit A.  For each year thereafter, the Budget and
Operating Plan shall be prepared in proposed form by the Managing Member and
submitted by the Managing Member to the Members in draft form by November 1
of each year with respect to the following fiscal year for approval no later
than December 15 of each fiscal year with respect to the following fiscal
year.


 


X.  TRANSFER OF INTERESTS


 


10.01       No Transfer.


 


(a)           Except as expressly permitted or contemplated by this Agreement: (i) no
Member may sell, assign, give, hypothecate, pledge, encumber or otherwise
transfer (“Transfer”), directly or indirectly, all or any portion of its
Interest without the prior written consent of the other Members (which may be
withheld or granted in the sole discretion of such other Members); (ii) GKK
may not Transfer, directly or indirectly, all or any portion of its equity
interest in the GKK Member 


 


40





















 


without
the prior written consent of the SLG Member, which may be withheld or granted
in the sole discretion of the SLG Member; (iii) SLG may not Transfer,
directly or indirectly, all or any portion of its indirect equity interest in
the SLG Member without the prior written consent of the GKK Member, which may
be withheld or granted in the sole discretion of the GKK Member; and (iv) no
Member may Transfer all or any portion of its Interest to a Prohibited
Transferee.


 


(b)           Any Transfer in contravention of clause (i) through clause (iv) of
Section 10.01(a) above shall be null and void.  No Member, without the prior written consent
of the other Member, may resign from the Company, except as a result of such
Member’s involuntary dissolution or final adjudication as bankrupt or in
connection with a permitted Transfer.


 


10.02       Permitted Transfers.


 


(a)           Subject to the provisions of this Section 10.02 and Section 10.05,
the GKK Member may, from time to time and in its sole discretion, without the
consent of the SLG Member, sell or assign its Interest in whole or in part to
any wholly owned and controlled Affiliate of the GKK Member, provided such
transferee agrees to be bound by all the terms, conditions and provisions of
this Agreement (including the provisions of this Article X).  In addition, the GKK Member may, from time to
time, sell or assign up to forty-nine percent (49%) of its Interest in the
Company to a Qualified Institutional Transferee approved by the SLG Member
(which approval shall not be unreasonably withheld, conditioned or delayed),
provided that the GKK Member retains all voting and decision-making authority
with respect to such transferred Interest.


 


(b)           Subject to the provisions of Section 10.05, the SLG Member may,
from time to time and in its sole discretion, without the consent of the GKK
Member, sell or assign its Interest in whole or in part to any wholly owned and
controlled Affiliate of SLG, provided such transferee agrees to be bound by all
the terms, conditions and provisions of this Agreement (including the
provisions of this Article X).  In
connection with the foregoing, the SLG Member shall have the absolute right to
designate any wholly owned and controlled Affiliate transferee as a Member
(including the Managing Member).  In
addition, the SLG Member may, from time to time, sell or assign up to
forty-nine percent (49%) of its Interest in the Company to a Qualified
Institutional Transferee approved by the GKK Member (which approval shall not
be unreasonably withheld, conditioned or delayed), provided that the SLG Member
retains all voting and decision-making authority with respect to such
transferred Interest.


 


(c)           Any permitted Transfer pursuant to subsection (a) or subsection (b) above
shall not relieve the transferor of any of its obligations prior to such
Transfer.  Subject to Sections 10.03 and
10.04, any transferee pursuant to this Section 10.02 shall become a
substitute Member of the Company and each Member and its permitted
transferee(s) shall be treated as one Member for all purposes of this
Agreement.  Except as set forth in the
last sentence of Section 10.02(b) hereof, the provisions of this Section 10.02


 


41





















 


will
not apply to or be deemed to authorize or permit any collateral transfer of, or
grant of a security interest in, a Member’s interest in the Company, or in any
Company property (which transfer or grant shall be subject to the other
provisions of this Agreement).


 


(d)           (i)            Subject to the limitations on transfer as set
forth in Section 10.02(a) and (b), in the event either member (the “Transferring
Member”) receives a written bona fide offer from a third party that is not
an Affiliate of said Member to purchase all or a portion of its Interest (the “Target
Interest”) and said Member desires to Transfer all or a part of its Target
Interest pursuant to the terms of said bona fide offer (“Acceptable Transfer
Terms”), the Transferring Member shall deliver to the other Member (the “Non-Transferring
Member”) notice of the terms of such Acceptable Transfer Terms (“Transfer
ROFR Notice”), including the proposed cash purchase price, other economic
terms and conditions and all other material terms and conditions of such
Acceptable Transfer Terms, and shall include a true and correct copy
thereof.  At any time within forty-five
(45) calendar days after the date the Non-Transferring Member receives the
Transfer ROFR Notice (the “Transfer Response Period”), the
Non-Transferring Member shall have the right, exercisable by delivery of notice
in writing (the “Transfer Election”) to the Transferring Member, to
either:


 


(A)          approve the Acceptable Transfer Terms and
authorize the Transferring Member to attempt to sell or dispose of the Target
Interest in accordance with the Acceptable Transfer Terms; or


 


(B)           elect to purchase all of the Target Interest
for a cash purchase price as set forth in the Acceptable Transfer Terms
(including any assumption of debt, if applicable) and subject to no other terms
and conditions.


 


(ii)           Any election pursuant to subparagraph (B) of Section 10.02(d)(i) above,
shall be made by (1) delivering to the Transferring Member the Transfer
Election, which shall affirmatively state that the Non-Transferring Member is
exercising such option, and (2) depositing in an escrow account at a bank
or other financial institution selected by the Transferring Member (the “Transfer
Escrow Agent”), a deposit equal to five percent (5%) of the purchase price
(the “Transfer Escrow Deposit”) (as set forth in the applicable
Acceptable Transfer Terms).  In such
event, (or in the event of a deemed election to permit a sale pursuant to Section 10.02(d)(iii) below)
the Non-Transferring Member and the Transferring Member shall close the
purchase of the Target Interest and the Transferring Member shall assign the
Target Interest to the Non-Transferring Member or to a designee of the
Non-Transferring Member on the terms and conditions set forth in the Transfer
ROFR Notice, against receipt of payment of the cash portion of the purchase
price and assumption of any debt as aforesaid. 



 


42





















 


All
closings of any purchase and sale under this Section 10.02(d) will be
held at the Company’s principal office and will take place on the closing date
set forth in the applicable Acceptable Transfer Terms.


 


(iii)          If at the expiration of the Transfer Response Period the
Non-Transferring Member neither (A) authorizes the Transferring Member to
sell the applicable Target Interest as provided in Section 10.02(d)(i)(A) above,
or (B) elects to purchase the Target Interest of the Transferring Member
by following the procedures in Section 10.02(d)(i)(B) above, then the
Non-Transferring Member shall be deemed to have authorized and have approved a
Transfer of the Target Interest (subject to Sections 10.02(a) and 10.02(b) hereof)
pursuant to Section 10.02(d)(i)(A) hereof, for a purchase price not
less than the purchase price set forth in the Acceptable Transfer Terms, and
otherwise pursuant to such other terms, conditions and provisions as are
determined appropriate in the reasonable discretion of the Transferring
Member.  In the event the Non-Transferring
Member authorizes or is deemed to have authorized the Transfer of the
applicable Target Interest pursuant to the terms described above, and the
Transferring Member thereafter receives a bona fide offer for the purchase of
the Target Interest from any party for a purchase price which is at least equal
to the purchase price set forth in the Acceptable Transfer Terms, other than as
set forth below in subparagraph (iv) below, the Transferring Member may
consummate the sale of the Target Interest on such terms, without the
requirement of any consent or approval of the Members; provided, the
Transferring Member shall have entered into a binding contract for the transfer
of the Target Interest within one hundred eighty (180) calendar days after the
date on which the Non-Transferring Member authorized or was deemed to have
authorized such transfer, and such transfer must be consummated within the
closing date set forth in the Transfer ROFR Notice.  The failure of the Transferring Member to
enter into such binding contract within the 180-day period referred to in the
immediately preceding sentence or the failure of such transfer to occur within
such closing period shall require the Transferring Member to again deliver to
the Non-Transferring Member an additional Transfer ROFR Notice and to again follow
the procedures set forth in this Section 10.02(d) hereof prior to any
Transfer.


 


(iv)          In the event the Non-Transferring Member Group should
default in its obligation to purchase any Target Interest pursuant to the terms
of this Section 10.02(d), the following shall be the sole and exclusive
remedy for such default: the Interest Transfer Escrow Agent shall immediately
deliver to the Transferring
Member the Transfer Escrow Deposit (such amount shall not be deemed to be a
contribution or distribution of capital, or effect in any way the Capital
Account of any Member, the allocation provisions or any other equity provisions
of this Agreement).


 


43





















 


(e)           Notwithstanding anything to the contrary contained in this Agreement,
no Member shall Transfer, directly or indirectly, all or any portion of its
Interest to a Prohibited Transferee.


 


(f)            Notwithstanding the foregoing, if the
provisions of Section 8.01 or Section 8.02 hereof have been initiated
by any Member, then no Member may not initiate the provisions of this Section 10.02
until the procedures set forth in Section 8.01 or Section 8.02 hereof
have been completed or terminated pursuant to the provisions of Section 8.01
or Section 8.02 hereof.


 


10.03       Transferees.  Notwithstanding anything to the
contrary contained in this Agreement, no Transfer of all or any part of any
Interest shall be made (a) except in compliance with all applicable
securities laws or (b) if such Transfer would violate any loan commitment
or agreement or any mortgage, deed of trust or other security instrument
encumbering all or any portion of the Property or any other asset of the
Company.  Further, no transferee of all
or any portion of any Interest shall be admitted as a substitute Member unless (i) such
Interest is transferred in compliance with the applicable provisions of this
Agreement, (ii) such transferee shall have furnished evidence of
satisfaction of the requirements of Section 10.02 hereof, reasonably
satisfactory to the remaining Member(s), and (iii) such transferee shall
have executed and delivered to the Company such instruments as the remaining
Member(s) reasonably deem necessary or desirable to effectuate the admission of
such transferee as a Member and to confirm the agreement of such transferee to
be bound by all the terms, conditions and provisions of this Agreement with
respect to such Interest.  At the request
of any remaining Member, each such transferee shall also cause to be delivered
to the Company at the transferee’s sole cost and expense, a favorable opinion
of legal counsel reasonably acceptable to the remaining Members, to the effect
that (a) such transferee has the legal right, power and capacity to own
the Interest proposed to be transferred, (b) such Transfer does not
violate any provision of any loan commitment or agreement or any mortgage, deed
of trust or other security instrument encumbering all or any portion of the
Property or any other asset of the Company, and (c) such Transfer does not
violate any federal or state security laws and will not cause the Company to
become subject to the Investment Company Act of 1940, as amended.  As promptly as practicable after the
admission of any Person as a Member, the books and records of the Company shall
be changed to reflect such admission. 
All reasonable costs and expenses incurred by the Company in connection
with any Transfer of any Interest and, if applicable, the admission of any
transferee as a Member shall be paid by such transferee.


 


10.04       Admission of Additional Members.


 


(a)           No person may be admitted as an additional Member of the Company (in
contrast with admission as a substitute Member in connection with a permitted
Transfer) without the consent of the Members.


 


44





















 


(b)           Any additional or substitute Member admitted to the Company shall
execute and deliver documentation in form satisfactory to the Members accepting
and agreeing to be bound by this Agreement, and such other documentation as the
Members shall require in order to effect such Person’s admission as an
additional Member.  The admission of any
Person as an additional Member shall become effective on the date upon which
the name of such person is recorded on the books and records of the Company
following the consent of the Members to such admission.


 


10.05       Override
on Permitted Transfers.


 


(a)           It
is expressly understood and agreed that any Transfer permitted pursuant to this
Article X shall in all instances be prohibited (and, if consummated, shall
be void ab initio) if such Transfer does not
comply with all applicable laws, rules and regulations and other
requirements of governmental authorities, including, without limitation,
Executive Order 13224 (September 23, 2001), the rules and regulations
of the Office of Foreign Assets Control, Department of Treasury, and any
enabling legislation or other Executive Orders in respect thereof.


 


(b)           Each
admitted Member shall be required to make the representations and warranties
set forth in Section 13.01(a) of this Agreement to the other
Member(s) and the Company as of the date of such Member’s admission into the
Company.  Each Member shall be deemed to
make the representations and warranties set forth in Section 13.01(a)(ix)-(xii)
of this Agreement to the Members and the Company on behalf of any Person that
acquires a beneficial ownership interest in such Member as of the date of such
acquisition.


 


XI.  INDEMNIFICATION


 


11.01       Indemnification.


 


(a)           The Company shall, to the fullest extent permitted by applicable law, indemnify,
defend and hold harmless each Member and Managing Member and each general or
limited partner of any Member and Managing Member, each shareholder, member or
other holder of any equity interest in such Member or any officer, director or
employee of any of the foregoing (each an “Indemnified Party”), against
any losses, claims, damages or liabilities to which such Indemnified Party may
become subject in connection with any matter arising out of or incidental to
any act performed or omitted to be performed by any such Indemnified Party in
connection with this Agreement, any Subsidiary Operating Agreement or the
Company’s or any Subsidiary’s business or affairs, including any action or
omission constituting a breach of any fiduciary duties; provided, however,
that such act or omission (i) was taken in good faith, was reasonably
believed by the applicable Indemnified Party to be in the best interest of the
Company or the applicable Subsidiary and was within the scope of authority
granted to such Member or applicable Indemnified Party, (ii) was not a
transaction for which the Indemnified Party received a personal benefit in
violation or 


 


45





















 


breach
of the provisions of this Agreement or any Subsidiary Operating Agreement, (iii) was
not attributable in whole or in part to such Indemnified Party’s breach of this
Agreement or any Subsidiary Operating Agreement or a knowing violation of law,
or (iv) was not attributable in whole or in part to such Indemnified Party’s
fraud, bad faith, willful misconduct or gross negligence.  If an Indemnified Party becomes involved in
any capacity in any action, proceeding or investigation in connection with any
matter arising out of or in connection with this Agreement or any Subsidiary
Operating Agreement or the Company’s or any Subsidiary’s business or affairs,
the Company shall reimburse such Indemnified Party for its reasonable legal and
other reasonable out-of-pocket expenses (including the cost of any
investigation and defense preparation) as they are incurred in connection
therewith, provided that such Indemnified Party shall promptly repay to the
Company the amount of any such reimbursed expenses paid to it if it shall
ultimately be determined that such Indemnified Party was not entitled to be
indemnified by the Company in connection with such action, proceeding or
investigation.  If for any reason (other
than the fraud, gross negligence, intentional misconduct, breach of this
Agreement or any Subsidiary Operating Agreement or a knowing violation of law
by such Indemnified Party or a transaction for which such Indemnified Party
received a personal benefit in violation or breach of the provisions of this
Agreement or any Subsidiary Operating Agreement) the foregoing indemnification
is unavailable to such Indemnified Party, or insufficient to hold it harmless,
then the Company shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage, liability or expense
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and such Indemnified Party on the other hand or,
if such allocation is not permitted by applicable law, to reflect not only the
relative benefits referred to above but also any other relevant equitable
considerations.  Any indemnity under this
Section 11.01(a) shall be paid solely out of and to the extent of
Company assets and shall not be a personal obligation of any Member and in no
event will any Member be required or permitted, without the consent of the
other Member, to contribute additional capital under Article IV to enable
the Company to satisfy any obligation under this Section 11.01.


 


(b)           The provisions of this Section 11.01 shall survive for a period of
six years from the date of dissolution of the Company, provided that if at the
end of such period there are any actions, proceedings or investigations then
pending, an Indemnified Party may so notify the Company and the Members at such
time (which notice shall include a brief description of each such action,
proceeding or investigation and the liabilities asserted therein) and the
provisions of this Section 11.01 shall survive with respect to each such
action, proceeding or investigation set forth in such notice (or any related
action, proceeding or investigation based upon the same or similar claim) until
such date that such action, proceeding or investigation is finally resolved,
and the obligations of the Company under this Section 11.01 shall be
satisfied solely out of Company assets.


 


46





















 


(c)           Notwithstanding anything to the contrary contained in this Agreement,
the obligations of the Company or any Member under this Section 11.01
shall be in addition to any liability which the Company or such Member may
otherwise have and inure to the benefit of such Member, its Affiliates and
their respective members, directors, officers, employees, agents and Affiliates
and any successors, assigns, heirs and personal representatives of such
Persons.


 


XII.  DISSOLUTION AND
TERMINATION


 


12.01       Dissolution.  The Company shall be dissolved
and its business wound up upon the earliest to occur of any of the following
events:


 


(a)           The sale, condemnation or other disposition of all the assets of the
Company and the receipt of all consideration therefor;


 


(b)           The expiration of the period related to the election under Section 13.02(a) hereof;


 


(c)           The expiration of the period set forth in Section 2.03 hereof;


 


(d)           The determination of the Members to dissolve the Company; or


 


(e)           The resignation, expulsion, bankruptcy or dissolution of any Member or
the occurrence of any other event that terminates the continued membership of
any Member in the Company, unless, within 90 days after such event, each of the
remaining Members elects in writing to continue the business of the Company.


 


Without limiting, but
subject to, the other provisions hereof, the assignment of all or any part of a
Member’s Interest permitted hereunder will not result in the dissolution of the
Company.  Except as otherwise
specifically provided in this Agreement, each Member agrees that, without the
consent of the other Member, no Member may withdraw from or cause a voluntary
dissolution of the Company or any Subsidiary. 
In the event any Member withdraws from or causes a voluntary dissolution
of the Company or any Subsidiary in contravention of this Agreement, such withdrawal
or the causing of a voluntary dissolution shall not affect such Member’s
liability for obligations of the Company and the Subsidiaries.


 


12.02       Termination.  In all cases of dissolution of
the Company, the business of the Company shall be wound up and the Company
terminated as promptly as practicable thereafter, and each of the following
shall be accomplished:


 


(a)           The Liquidating Member shall cause to be prepared a statement setting
forth the assets and liabilities of the Company and the Company Subsidiaries as
of the date of dissolution, a copy of which statement shall be furnished to all
of the Members.


 


47





















 


(b)           The Property and all other assets of the Company shall be liquidated by
the Liquidating Member as promptly as possible, but in an orderly and
businesslike and commercially reasonable manner and subject to the provisions
of the Operating Plan then in effect or a liquidating plan approved by the
Managing Member.  The Liquidating Member
may distribute property, interests in Subsidiaries and other assets of the
Company in kind, only with the consent of the Members.


 


(c)           The proceeds of sale and all other assets of the Company shall be
applied and distributed as follows and in the following order of priority:


 


(i)            To the payment of (A) the debts and
liabilities of the Company (including any outstanding amounts due on any
indebtedness encumbering the Property and the other assets of the Company, or
any part thereof) and (B) the expenses of liquidation.


 


(ii)           To the setting up of any reserves which the Liquidating Member and the
Managing Member shall determine to be reasonably necessary for contingent,
unliquidated or unforeseen liabilities or obligations of the Company, any
Subsidiary or any Member arising out of or in connection with the Company or
any Subsidiary.  Such reserves may, in
the discretion of the Liquidating Member, be paid over to a national bank or
national title company selected by it and authorized to conduct business as an
escrowee to be held by such bank or title company as escrowee for the purposes
of disbursing such reserves to satisfy the liabilities and obligations
described above, and at the expiration of such period as the Liquidating Member
may reasonably deem advisable, distributing any remaining balance as provided in
Section 12.02(c)(iii) hereof; provided, however, that,
to the extent that it shall have been necessary, by reason of applicable law or
regulation, to create any reserves prior to any and all distributions which
would otherwise have been made under Section 12.02(c)(i) above and,
by reason thereof, a distribution under Section 12.02(c)(i) has not
been made, then any balance remaining shall first be distributed pursuant to Section 12.02(c)(i) above.


 


(iii)          The balance, if any, to the Members in accordance with Section 6.04
hereof.


 


12.03       Liquidating
Member.  The Liquidating
Member is hereby irrevocably appointed as the true and lawful attorney in the
name, place and stead of each of the Members, such appointment being coupled
with an interest, to make, execute, sign, acknowledge and file with respect to
the Company and all Subsidiaries all papers which shall be necessary or
desirable to effect the dissolution and termination of the Company and each
Subsidiary in accordance with the provisions of this Article XII.  Notwithstanding the foregoing, each Member,
upon the request of the Liquidating Member, shall promptly execute, acknowledge
and deliver all such documents, certificates and other instruments as the
Liquidating Member shall reasonably request to


 


48





















 


effectuate the proper
dissolution and termination of the Company and each Subsidiary, including the
winding up of the business of the Company and each Subsidiary.


 


XIII.  MISCELLANEOUS


 


13.01       Covenants, Representations and Warranties of
the Members.


 


(a)           Each Member represents and warrants to the other Member as follows:


 


(i)            It is duly organized, validly existing and in
good standing under the laws of its jurisdiction of formation with all
requisite power and authority to enter into this Agreement and to conduct the
business of the Company.


 


(ii)           This Agreement constitutes the legal, valid and binding obligation of
the Member enforceable in accordance with its terms, subject to the application
of principles of equity and laws governing insolvency and creditors’ rights
generally.


 


(iii)          No consents or approvals (which have not been obtained) are required
from any governmental authority or other Person for the Member to enter into
this Agreement and be admitted to the Company. 
All limited liability company, corporate or partnership action on the
part of the Member (and its direct or indirect equity owners) necessary for the
authorization, execution and delivery of this Agreement, and the consummation
of the transactions contemplated hereby, have been duly taken.


 


(iv)          The execution and delivery of this Agreement by the Member, and the
consummation of the transactions contemplated hereby, does not conflict with or
contravene the provisions of its organic documents or any agreement or
instrument by which it or its properties are bound or any law, rule,
regulation, order or decree to which it or its properties are subject.


 


(v)           Each Member is acquiring its interest in the Company for investment,
solely for its own account, with the intention of holding such interest for
investment and not with a view to, or for resale in connection with, any
distribution or public offering or resale of any portion of such interest
within the meaning of the Securities Act of 1933 (the “Securities Act”)
or any other applicable federal or state security law, rule or regulation
(“Securities Laws”).


 


(vi)          Each Member acknowledges that it is aware that its interest in the
Company has not been registered under the Securities Act or under any other
Security Law in reliance upon exemptions contained therein.  Each Member understands and acknowledges that
its representations and warranties contained 


 


49





















 


herein
are being relied upon by the Company, the other Member and the constituent
owners of such other Member as the basis for exemption of the issuance of
interest in the Company from registration requirements of the Securities Act
and other Securities Laws.  Each Member
acknowledges that the Company will not and has no obligation to register any
Interest in the Company under the Securities Act or other Securities Laws.


 


(vii)         Each Member acknowledges that prior to its execution of this Agreement,
it received a copy of this Agreement and that it examined this document or
caused this document to be examined by its representative or attorney.  Each Member does hereby further acknowledge
that it or its representative or attorney is familiar with this Agreement, and
with the business and affairs of the Company, and that except as otherwise
specifically provided in this Agreement, it does not desire any further
information or data relating to the Company, any Subsidiary, the Property or
the other Member.  Each Member does
hereby acknowledge that it understands that the acquisition of its Interest in
the Company is a speculative investment involving a high degree of risks and
does hereby represent that it has a net worth sufficient to bear the economic
risk of its investment in the Company and to justify its investing in a highly
speculative venture of this type.


 


(viii)        The
Member is in compliance with Executive Order 13224 (September 23, 2001),
the rules and regulations of the Office of Foreign Assets Control,
Department of Treasury, and any enabling legislation or other Executive Orders
in respect thereof.


 


(ix)           At
all times, including after giving effect to any Transfers permitted pursuant to
this Agreement, (a) none of the funds or other assets of the Member
constitutes property of, or are beneficially owned, directly or indirectly, by
any person, entity or government subject to trade restrictions under U.S. law
(including, but not limited to, the International Emergency Economic Powers
Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C.
App. 1 et seq., and any Executive Orders or regulations promulgated thereunder)
(any such person, entity or government, an “Embargoed Person”) with the
result that the investment in the Member (whether directly or indirectly), is
prohibited by any applicable law, rule, regulation, order or decree is in
violation thereof; (b) no Embargoed Person has any interest of any nature
whatsoever in the Member with the result that the investment in the Member
(whether directly or indirectly), is prohibited by any applicable law, rule,
regulation, order or decree is in violation thereof; and (c) none of the
funds of the Member have been derived from any unlawful activity with the
result that the investment in the Member (whether directly or indirectly), is
prohibited by any applicable law, rule, regulation, order or decree is in
violation thereof.


 


50





















 


(x)            If
applicable to such Member, the Member has implemented a corporate anti-money
laundering plan that is reasonably designed to ensure compliance with
applicable foreign and U.S. anti-money laundering law.


 


(xi)           The
Member is familiar with the U.S. Government Blacklists maintained by applicable
U.S. Federal agencies and none of its investors, officers or directors is on the
U.S. Government Blacklists.


 


(b)           In addition to the representations and warranties set forth above, the
SLG Member represents and warrant to the GKK Member as follows:


 


(i)            The SLG Member is acquiring its interest in
the Company with, and the source of its Capital Contributions is, its own funds
or the funds of SLG, and not the funds of any third-party or equity investor.


 


(ii)           The SLG Member is a
Delaware limited liability company currently existing pursuant to that certain
Limited Liability Company Agreement entered into as of on or about the date of
this Agreement (the “SLG Member LLC Agreement”), and that certain
certificate of formation filed with Secretary of State of Delaware on April 12,
2005 (the “SLG Member Certificate”). 
The aforementioned SLG Member LLC Agreement and SLG Member Certificate
have not been terminated and continue to be in full force and effect.  The only member of the SLG Member is SLG.


 


(c)           The GKK Member represents and warrants to the SLG Member as follows:


 


(i)            The GKK Member is acquiring its interest in
the Company with, and the source of its Capital Contributions is, its own funds
or the funds of GKK, and not the funds of any third-party or equity investor.


 


(ii)           The
GKK Member is a Delaware limited liability company currently existing pursuant
to that certain Limited Liability Company Agreement entered into as of on or
about the date of this Agreement (the “GKK Member LLC Agreement”), and
that certain certificate of formation filed with Secretary of State of Delaware
on April 26, 2005 (the “GKK Member Certificate”).  The aforementioned GKK Member LLC Agreement
and GKK Member Certificate have not been terminated and continue to be in full
force and effect.  The only member of the
GKK Member is GKK.


 


(d)           Subject to the provisions of Section 3.02(b) hereof, each
Member agrees to indemnify and hold harmless the Company and the other Member
and their officers, directors, shareholders, partners, members, employees,
successors and assigns from and against any and all loss, damage, liability or
expense (including costs and attorneys fees) which they may incur by reason of,
or in connection with, any breach of 


 


51





















 


the
foregoing representations and warranties by such Member and all such representations
and warranties shall survive the execution and delivery of this Agreement and
the termination and dissolution of the SLG Member, the GKK Member and/or the
Company.


 


13.02       Further Assurances.  Each Member agrees to execute,
acknowledge, deliver, file, record and publish such further instruments and
documents, and do all such other acts and things as may be required by law, or
as may be reasonably required to carry out the intent and purposes of this
Agreement.


 


13.03       Notices.  All notices of default,
demands, requests for or grants of consents or approvals, which any of the
parties to this Agreement may desire or be required to give hereunder
(collectively, “Material Notices”) shall be in writing and shall be
given by (a) personal delivery, (b) facsimile transmission with proof
of receipt or (c) a nationally recognized overnight courier service, fees
prepaid, addressed as follows:


 


	
  If to the GKK Member,
  to:

  	
   

  	
  c/o Gramercy Capital
  Corp.

  
	
   

  	
   

  	
  420 Lexington Avenue

  
	
   

  	
   

  	
  New York, New York
  10170

  
	
   

  	
   

  	
  Attn: Robert R. Foley

  
	
   

  	
   

  	
  Facsimile No.: (212)
  297-1002

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Morrison &
  Forrester LLP

  
	
   

  	
   

  	
  1290 Avenue of the
  Americas

  
	
   

  	
   

  	
  New York, New York
  10104

  
	
   

  	
   

  	
  Attn: Mark S.
  Edelstein, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212)
  468-7900

  
	
   

  	
   

  	
   

  
	
  If to the SLG Member,
  to:

  	
   

  	
  c/o SL Green Realty
  Corp.

  
	
   

  	
   

  	
  420 Lexington Avenue

  
	
   

  	
   

  	
  New York, New York
  10170

  
	
   

  	
   

  	
  Attn: Andrew S. Levine

  
	
   

  	
   

  	
  Facsimile No.: (212)
  216-1785

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Paul, Hastings,
  Janofsky & Walker LLP

  
	
   

  	
   

  	
  75 East 55th Street

  
	
   

  	
   

  	
  New York, New York
  10022

  
	
   

  	
   

  	
  Attn: Robert J.
  Wertheimer, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212)
  319-4090

  
	
   

  	
   

  	
   

  
	
  With an additional copy
  to:

  	
   

  	
  Paul, Hastings,
  Janofsky & Walker LLP

  
	
   

  	
   

  	
  1055 Washington
  Boulevard

  
	
   

  	
   

  	
  Stamford, Connecticut
  06901

  
	
   

  	
   

  	
  Attn: Mark G.
  Pedretti, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (203)
  674-7707

  



 


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Any Member may designate
another addressee (and/or change its address) for Material Notices hereunder by
a Notice given pursuant to this Section 13.03.  A Notice sent in compliance with the
provisions of this Section 13.03 shall be deemed given on the date of
receipt.  Other than with regard to
Material Notices, communications under this Agreement shall be delivered and
exchanged among the Members in such mutually acceptable form as shall be
conducive to the use and implementation of the materials in question (e.g., by electronic mail or telecopier with regard to the
exchange of periodic financial information). 
Any mutually acceptable method of communication must provide for
confirmation of delivery or refusal thereof.


 


13.04       Governing Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware applicable to agreements made and to be performed wholly within that
State.


 


13.05       Attorney Fees.  If the Company or any Member
obtains a judgment against any Member by reason of the breach of this Agreement
or the failure to comply with the terms hereof, reasonable attorneys’ fees and
costs as fixed by the court shall be included in such judgment.


 


13.06       Captions.  All titles or captions contained
in this Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend, or describe the scope of this
Agreement or the intent of any provision in this Agreement.


 


13.07       Pronouns.  All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, and neuter,
singular and plural, as the identity of the party or parties may require.


 


13.08       Successors and Assigns.  This Agreement shall be binding upon the
parties hereto and their respective executors, administrators, legal
representatives, heirs, successors and assigns, and shall inure to the benefit
of the parties hereto and, except as otherwise provided herein, their
respective executors, administrators, legal representatives, heirs, successors
and assigns.


 


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


 


13.10       Creditors Not Benefited.  Nothing contained in this
Agreement is intended or shall be deemed to benefit any creditor of the
Company, any Subsidiary or any 


 


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Member,
and no creditor of the Company, any Subsidiary or any Member shall be entitled
to require the Company or any Subsidiary to solicit or the Members to make any
Capital Contribution to the Company or any Subsidiary or to enforce any right
which the Company, any Subsidiary or any Member may have against any Member
under this Agreement or otherwise.


 


13.11       Severability.  In case any one or more of the
provisions contained in this Agreement or any application thereof shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and other
application thereof shall not in any way be affected or impaired thereby.


 


13.12       Entire Agreement.  This Agreement contains the
entire agreement between the parties relating to the subject matter hereof and
all prior agreements relative hereto which are not contained herein are
terminated.  Amendments, variations,
modifications or changes herein may be made effective and binding upon the
Members only by the setting forth of same in a document duly executed by each
Member, and any alleged amendment, variation, modification or change herein
which is not so documented shall not be effective as to any Member.


 


13.13       Publicity.  The parties agree that no
Member or any of its advisors shall issue any press release or otherwise
publicize or disclose the terms of this Agreement or the terms of the
acquisition of the Property, without the consent of the Managing Member, except
as such disclosure may be made in the course of normal reporting practices by
any Member to its members, shareholders or partners or as otherwise required by
law or rule of any stock exchange (and prior to any such disclosure the
disclosing Member will notify the other Member and provide it with a copy of
the proposed disclosure and an opportunity to comment thereon before the
disclosure is made).


 


13.14       Counterparts.  This Agreement may be executed
in multiple counterparts, each of which shall be an original but all of which
together shall constitute but one and the same agreement.


 


13.15       Confidentiality.


 


(a)           The terms of this
Agreement and all other business, financial or other information relating
directly to the conduct of the business and affairs of the Company or the
relative or absolute rights or interests of any of the Members that has not
been publicly disclosed pursuant to authorization by the Managing Member
(collectively, the “Confidential Information”) is confidential and
proprietary information of the Company, the disclosure of which would cause
irreparable harm to the Company and the Members.  Accordingly, each Member represents that it
has not and agrees that it will not and will direct its members, shareholders,
partners, directors, officers, agents, advisors and Affiliates not to, disclose
to any Person any Confidential Information or confirm any statement made by
third Persons regarding Confidential 


 


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Information until the
Company has publicly disclosed the Confidential Information (which disclosure
shall be subject to approval by the Members and the Managing Member and has
notified each Member that it has done so; provided, however, that
any Member (or its Affiliates) may disclose such Confidential Information (i) if
required by law or rule of any stock exchange (it being specifically
understood and agreed that anything set forth in a registration statement or
any other document filed pursuant to law will be deemed required by law, and
provided that before making any disclosure of Confidential Information required
by law or rule of any stock exchange, the disclosing Member will notify
the other Member and provide it with a copy of the proposed disclosure and an
opportunity to comment thereon before the disclosure is made), (ii) in
connection with a Transfer of Interests or sale of the Property permitted
hereunder, (iii) as reasonably necessary in connection with any
transaction authorized pursuant to the terms of this Agreement or any Subsidiary
Agreement, (iv) if necessary for it to perform any of its duties or
obligations hereunder or in any property management, leasing, development or
construction management agreement to which it is a party covering the Property,
or (v) to any its attorneys, accountants, lenders and other professional
advisors who agree to maintain a similar confidence.


 


(b)           Subject to the provisions of Section 13.15(a), each Member agrees
not to disclose any Confidential Information to any Person (other than a Person
agreeing to maintain all Confidential Information in strict confidence or a
judge, magistrate or referee in any action, suit or proceeding relating to or
arising out of this Agreement or otherwise), and to keep confidential all
documents (including, without limitation, responses to discovery requests)
containing any Confidential Information. 
Each Member hereby consents in advance to any motion for any protective
order brought by any other Member represented as being intended by the movant
to implement the purposes of this Section 13.15 provided that, if a Member
receives a request to disclose any Confidential Information under the terms of
a valid and effective order issued by a court or governmental agency and the
order was not sought by or on behalf of or consented to by such Member, then
such Member may disclose the Confidential Information to the extent required if
the Member as promptly as practicable notifies the other Member of the
existence, terms and circumstances of the order, consults in good faith with
the other Member on the advisability of taking legally available steps to
resist or to narrow the order, and if disclosure of the Confidential
Information is required, exercises its best efforts to obtain a protective
order or other reliable assurance that confidential treatment will be accorded
to the portion of the disclosed Confidential Information that the other Member
may designate.  The cost (including,
without limitation, attorneys’ fees and expenses) of obtaining a protective
order covering Confidential Information designated by such other Member will be
borne by the Company.


 


(c)           The covenants contained in this Section 13.15 will survive the
Transfer of the Interest of any Member and the dissolution of the Company.


 


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(d)           Notwithstanding anything contained in this Section 13.15 to the
contrary, nothing contained in this Agreement shall be deemed to prevent any
Member from making such disclosures as are required by applicable law,
including, without limitation, Federal or state securities laws.


 


13.16       Mandatory Arbitration.  Except for the Major Decisions described in Section 8.01,
any claim or controversy arising out of or relating to this Agreement,
including, without limitation, any dispute regarding a Major Decision that is
not resolved in accordance with the Buy-Sell Provision hereof (Section 8.01),
shall be resolved by arbitration administered by the American Arbitration
Association (“AAA”) in accordance with its Commercial Arbitration Rules and
its Optional Rules for Emergency Measures of Protection.  Any arbitration shall be held in New York,
New York before a single independent arbitrator.  Such arbitrator (i) shall not have
performed or been engaged to perform any services for the Company, SLG or GKK
(or any of their respective Affiliates) within the then-preceding three (3) years
and (ii) shall have had at least ten (10) years professional
experience in commercial real property development or management in New York
City, New York.  The arbitrator shall be
appointed by agreement of the Members or, if the Members cannot agree on an
arbitrator within fifteen (15) calendar days of the initiation of arbitration,
the arbitrator shall be appointed in accordance with the AAA’s default rules for
the appointment of arbitrators.  The
arbitrator shall apply the substantive laws of the State of Delaware, without
regard to choice of law considerations, and may grant any remedy or relief he
or she deems just and equitable, including, without limitation, provisional,
interim, or injunctive relief (in which case the Member granted such
provisional, interim, or injunctive relief may seek enforcement thereof in any
court of competent jurisdiction, without prejudice to the continued arbitration
of the claim or controversy).  The award
shall be in writing and shall set forth the reasoning on which it is
based.  The award shall be final,
binding, and non-appealable, and judgment upon the award may be entered by any
court of competent jurisdiction.  Any
claim will be time-barred unless arbitration is commenced within one (1) year
after the basis for the claim became known to the Member asserting it.  This time limit may be tolled by written
agreement of the Members.  All issues
relating to the timeliness of claims shall be resolved by the arbitrator. All
matters relating to the enforceability of this arbitration provision and any
award shall be governed by the Federal Arbitration Act, 9 U.S.C. Sec. 1, et
seq.  The pendency of an arbitration
shall not affect the ability of the SLG Member to exercise its rights under the
Call Provision hereof, which may be exercised at any time, except as expressly
set forth in Section 8.02.


 


13.17       Broker.  Each of the Members represent
that neither Member has retained any broker, finder or other commission or fee
agent, and no such person has acted on its behalf in connection with the
acquisition of the Property, its Interest in the Company or any interest in any
Subsidiary or the execution and delivery of 


 


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this
Agreement or any Subsidiary Operating Agreement.  The Members agree that any brokerage fee,
finders fee or similar fee payable to the broker in connection with the
acquisition of the Property, its Interest in the Company or any interest in any
Subsidiary or the execution and delivery of this Agreement or any Subsidiary
Operating Agreement shall be paid by the SLG Member under a separate agreement
between the SLG Member and the broker, and that the SLG Member shall indemnify
and hold the GKK Member harmless in connection therewith.


 


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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date set forth in the
introductory paragraph hereof.


 


	
   

  	
  GKK MEMBER:

  
	
   

  	
   

  
	
   

  	
  GKK Madison Investment LLC, a Delaware

  limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLG MEMBER:

  
	
   

  	
   

  
	
   

  	
  SLG Madison Investment LLC, a Delaware limited

  liability company

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title: