**Exhibit 10.17**

 

Execution Version

 

 

 

**LIMITED LIABILITY COMPANY AGREEMENT**

** **

**OF**

** **

**1 MADISON OFFICE HOLDINGS LLC**

** **

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** **

**Dated as of: April 29, 2005**

** **

** **

 

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**TABLE OFCONTENTS**

 
| 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                                                      |   |

 

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|   | 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                                                  |   |

 

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|           | 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                |                                                      |
|                |                                                           |                                                           |        |  |

 

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| 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       |                                                                           |

 

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**LIMITED LIABILITY COMPANY AGREEMENTOF1 MADISON OFFICE HOLDINGS LLC**

** **

This **LIMITED LIABILITY COMPANY AGREEMENT** of 1Madison 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 (togetherwith its permitted successors and assigns, the “GKK Member”).

 

**R E C I T A L S:**

** **

**WHEREAS**, the SLG Member is a wholly owned subsidiaryof SLG;

 

**WHEREAS**, the GKK Member is a wholly owned subsidiaryof GKK;

 

**WHEREAS**, the SLG Member and theGKK Member have formed the Company in order to engage in the business ofacquiring, 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 aCertificate of Formation of the Company with the office of the Secretary ofState of the State of Delaware;

 

**WHEREAS**, the Company is the sole member of 1 MadisonOffice Mezz C LLC, a bankruptcy-remote “special purpose entity” organized as aDelaware limited liability company (“Mezz C LLC”) which, in turn, is thesole member of 1 Madison Office Mezz B LLC, a bankruptcy-remote “specialpurpose entity” organized as a Delaware limited liability company (“Mezz BLLC”) which, in turn, is the sole member of 1 Madison Office Mezz A LLC, abankruptcy-remote “special purpose entity” organized as a Delaware limitedliability company (“Mezz A LLC”) which, in turn, is the sole member of 1Madison Office Fee LLC, a bankruptcy-remote “special purpose entity” organizedas 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 andsale agreement for the acquisition of the Property (the “Purchase Agreement”);

 

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

 

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

 

**WHEREAS**, the parties hereto desire to provide forthe respective rights, obligations and interests of the parties to each otherand to the Company; and

 

**WHEREAS**, this Agreement shall apply to and governthe management and operation of the Company from the date hereof and shall bindeach 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 followingterms have the meanings set forth below:

 

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

 

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

 

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

 

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

 

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

 

(b)        Debit to such CapitalAccount 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 indirectlycontrolling, controlled by, or under common control with such Person, or (b) anyother Person owning or controlling 10% or more of the outstanding votinginterests of such Person, or (c) any officer, general partner or managingmember of such Person, or (d) any other Person which is an officer,general partner, managing member or 

 

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

 

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

 

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

 

“Asset ManagementAgreement” 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 forfederal income tax purposes; provided, however, that (a) ifany asset is contributed to the Company, the initial Book Basis of such assetshall equal its fair market value on the date of contribution (as agreed to bythe Members), and (b) if the Capital Accounts of the Members are adjustedpursuant to Treasury Regulation Section 1.704-1(b) to reflect thefair market value of any asset of the Company, the Book Basis of such assetshall be adjusted to equal its respective fair market value as of the time ofsuch adjustment (as agreed to by the Members), in accordance with such TreasuryRegulation.  The Book Basis of all assetsof the Company shall be adjusted thereafter by depreciation or amortization asprovided in Treasury Regulation Section 1.704-1(b)(2)(iv)(g) and anyother adjustment to the basis of such assets other than depreciation oramortization.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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“Clock Tower Property” means the two-basementand fifty-story structure (commonly known as the “Clock Tower”) located at OneMadison Avenue, New York, New York.  TheClock Tower Property is not part of the Property.  

 

“Closing Date” meansthe date of this Agreement.

 

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

 

“Company” means thelimited liability company formed pursuant to the Certificate of Formation andoperated 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 Declarationunder Article 9-B of the Real Property Law of the State of New Yorkestablishing 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, NewYork County on December 31, 2002 in Reel 3418, Page 0954 as amendedby the Amendment to Declaration dated as of December 17, 2003 and recordedin 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 usedwith respect to any Person means the possession, directly or indirectly, of thepower to direct or cause the direction of the management and policies of suchPerson whether through the ownership of voting securities, by contract orotherwise.

 

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

 

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

 

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

 

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

 

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loans secured directly orindirectly 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 ofthe total gross cash expenditures of the Company during such period, includingwithout limitation (a) all cash operating expenses (including all fees,commissions, expenses and allowances paid to any third party or paid orreimbursed to any Member or any of its Affiliates pursuant to any contract orotherwise as permitted hereunder), (b) all debt service payments, (c) allexpenditures which are treated as capital expenditures (as distinguished fromexpense deductions) under GAAP, (d) all real estate taxes, personal propertytaxes and sales taxes, (e) all deposits to the Company’s Reserve Accountspursuant to Section 9.05, (f) all costs and expenditures related to anyacquisition, sale, lease, disposition, financing, refinancing, monetization orsecuritization of any asset of the Company or its Subsidiaries (or any interesttherein) and (g) all cash contributions, loans or advances directly orindirectly made to any Subsidiary; provided, however, thatExpenses shall not include (i) any payment or expenditure to the extent (A) thesources of funds used for such payment or expenditure are not included inRevenues or (B) such payment or expenditure is paid out of any Company ReserveAccount, (ii) any expenditure properly attributable to the liquidation of theCompany, or (iii) non-cash expenses such as depreciation or amortization.  In addition, a reference to the “Expenses” ofa Subsidiary shall refer to the total gross cash expenses of such Subsidiary(subject to the exclusions described in clauses (A) and (B) of the precedingsentence), without duplication of any Expenses of the Company or any other Subsidiary.

 

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

 

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

 

“GAAP” has themeaning set forth in Section 9.02 hereof.

 

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

 

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

 

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

 

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

 

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“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” hasthe meaning set forth in Section 9.06.

 

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

 

“Interest” means,with respect to any Member at any time, the interest of such Member in theCompany at such time, including the right of such Member to any and all of thebenefits 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 termsand provisions of this Agreement.

 

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

 

“Lender” meansColumn, 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 orother period, an amount equal to the Company’s items of taxable deduction andloss for such year or other period, determined in accordance with Section 703(a) ofthe Code (including all items of loss or deduction required to be statedseparately under Section 703(a)(1) of the Code), with the followingadjustments:

 

(a)         Any expenditures of the Company described in Section 705(a)(2)(B) ofthe Code or treated as Section 705(a)(2)(B) expenditures underTreasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise takeninto 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 forfederal income tax purposes will be computed by reference to the Book Basis ofsuch property, notwithstanding that the adjusted tax basis of such property maydiffer from its Book Basis;

 

(c)         *In lieu* ofdepreciation, amortization and other cost recovery deductions taken intoaccount in computing taxable income or loss, there will be taken 

 

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

 

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

 

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

 

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

 

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

 

“Mandatory CapitalContribution” 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 andany other Person who, from time to time, is admitted as a member of the Companyin accordance with this Agreement and applicable law, so long as such Personcontinues as a member of the Company.

 

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

 

“Member NonrecourseDeductions” means “partner nonrecourse deductions” as defined in TreasuryRegulation Section 1.704-2(i)(2).

 

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

 

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

 

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

 

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

 

“Mortgage Loan” meansthat certain mortgage loan made by Column to Fee LLC in connection with theacquisition of the Property pursuant to that certain Loan Agreement of evendate herewith.

 

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“Necessary Expenses”means expenses of the Company and/or the Subsidiaries to fund (a) realestate taxes, assessments and utility charges, (b) any payment due inconnection with any financing obtained by the Company, (c) any repairnecessary to protect the life, health or safety of any Person or to prevent ormitigate material damage to the Property, (d) immediately necessaryexpenditures, regular periodic maintenance and repairs, and additions ormodifications to the Property to comply with applicable laws or insurancerequirements, (e) legal compliance and reporting requirements, compliancewith any final orders, judgments or other proceedings and all costs andexpenses related thereto, (f) costs and expenses expressly andspecifically set forth in any approved Budget and Operating Plans to the extentthere is not sufficient net cash flow to pay such costs and expenses, and (g) anyother payment, the failure of which to make could in the judgment of theManaging Member (1) result in the creation and imposition of a lien (orthe expansion in scope or other modification of a pre-existing lien), whetherat law or in equity, against the Company or any of its current or future assetsor rights, (2) result in a default under any contract or agreement towhich the Company is a party or (3) result in a risk of loss of life orserious bodily injury to any Person.

 

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

 

“Net Loss” means, forany 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 Lossallocated pursuant to Section 6.02 hereof.

 

“Net Profit” means,for any period, the excess of items of Profit over items of Loss, ifapplicable, for such period determined without regard to any items of Profit orLoss 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 operatingplan for the Company and the Subsidiaries covering the Company’s and theSubsidiaries’ anticipated operations, as approved by the Members and in effectfrom time to time pursuant to Section 9.06 hereof.

 

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

 

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“Percentage Interests”means, with respect to each Member, the percentages set forth below oppositeits 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 anyindividual, partnership, corporation, limited liability company, trust or otherentity.

 

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

 

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

 

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

 

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

 

(c)           Anyitems specially allocated pursuant to Section 6.08 shall not be consideredin determining Profit; and

 

(d)           Anyincrease to Capital Accounts as a result of any adjustment to the Book Basis ofCompany assets pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f) shallconstitute an item of Profit.

 

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

 

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

 

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

 

“Qualified InstitutionalTransferee” means: (a) the SLG Member or any of its wholly ownedAffiliates; (b) the GKK Member or any of its wholly owned Affiliates; (c) anybank, savings and loan association, investment bank, insurance company, trustcompany, commercial credit corporation, pension plan, pension fund, pensionadvisory firm, mutual fund, money management firm, “qualified institutionalbuyer” within the meaning of Rule 144A of the Securities Act of 1933, asamended, which satisfies the Eligibility Requirements; (d) any entitycontrolling, controlled by or under control with any of the foregoing, aninvestment fund, limited liability company, limited partnership or generalpartnership in or for which a nationally recognized manager of investment fundsin debt or equity interests relating to commercial real estate (or an entitythat is otherwise an Qualified Institutional Transferee) acts as the managingpartner or managing member and at least 50.01% of the equity interests in suchinvestment vehicle are owned directly or indirectly by entities that areotherwise Qualified Institutional Transferees; (e) any entity controlling,controlled by or under common control with any of the transferees described inthe foregoing clauses (a) through (e) of this definition.  For the avoidance of doubt, a ProhibitedTransferee shall not qualify as a Qualified Institutional Transferee forpurposes 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 knownas 1 Madison Avenue, New York, New York, which are not a part of the Property.

 

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

 

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

 

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Company(including the Property) or the issuance or sale by the Company of anysecurities or additional interests in the Company, (b) rent (includingadditional rent and percentage rent) paid to the Company, (c) concessions,(d) expense reimbursements, (e) condemnation or casualty proceedsrelated to the condemnation of or casualty loss with regard to all or any portionof the assets of the Company (including the Property) not used for restoration(including any and all insurance awards with regard thereto), (f) proceedsfrom rent or business interruption insurance, if any, (g) funds madeavailable to the extent such funds are withdrawn from the Company’s ReserveAccounts and deposited into the Company’s operating accounts, (h) proceedsfrom 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 revenuesand receipts realized by the Company, including, without limitation,distributions and other payments and amounts received directly or indirectlyfrom the Subsidiaries; provided, however, that Revenues shall notinclude any revenue or receipt realized by the Company incident to theliquidation of the Company.  Inaddition, a reference to the “Revenues” of a Subsidiary shall refer to thetotal gross cash revenues of such Subsidiary (other than those realized by suchSubsidiary, if any, upon the liquidation of such Subsidiary), withoutduplication of any Revenues of the Company or any other Subsidiary.

 

“SLG” means SL GreenOperating Partnership, L.P., a Delaware limited partnership, or its permittedsuccessors and assigns.

 

“SLG Corp” means SLGreen 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 inaccordance with the terms of this Agreement to directly or indirectly hold theProperty.

 

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

 

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

 

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

 

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

 

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

 

“Transfer” has themeaning 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, suchprovision of the regulations of the United States Department of the Treasury orany successor provision.

 

“U.S. GovernmentBlacklists” shall mean, (i) the two (2) lists maintained by theUnited States Department of Commerce (Denied Persons and Entities; the DeniedPersons), (ii) the list maintained by the United States Department ofTreasury (Specially Designated Nationals and Blocked Persons), and (iii) thelist by the United States Department of State (Terrorist Organizations andDebarred Parties).

 

1.02         Other Defined Terms.  As used in this Agreement,unless otherwise specified, (a) all references to Sections, Articles orExhibits are to Sections, Articles or Exhibits of this Agreement, (b) eachaccounting term has the meaning assigned to it in accordance with the UnitedStates GAAP, (c) all Exhibits, Schedules, Addenda and other attachments tothis Agreement are specifically incorporated into and made a part of thisAgreement by any reference thereto in this Agreement, (d) the terms “include”and “including” shall be construed as if followed by the phrase “withoutlimitation”, and (e) all terms used in this Agreement which are notdefined in this Article I shall have the meaning set forth elsewhere inthis Agreement.

 

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II.  ORGANIZATION

 

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

 

(b)        Ms. RacquelSmall, is hereby designated as an “authorized person” within the meaning of theDelaware Act, and has executed, delivered and filed the certificate offormation of the Company (the “Certificate of Formation”) with theSecretary of State of the State of Delaware. Upon the filing of the Certificate of Formation with the Secretary ofState of the State of Delaware, her powers as an “authorized person” ceased,and the Managing Member thereupon became the designated “authorized person” andshall continue as the designated “authorized person” within the meaning of theDelaware Act.  The Managing Member shallexecute, deliver and file any other certificates (and any amendments and/orrestatements thereof) necessary for the Company to qualify to do business inNew York and in any other jurisdiction in which the Company may wish to conductbusiness.

 

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 ofthe Company from time to time and may adopt one or more fictitious names foruse by the Company.  All business of theCompany shall be conducted under such name, and title to all assets of theCompany shall be held in such name.

 

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

 

2.03         Term.  Theterm of the Company commenced on the date of the filing of the Certificate ofFormation pursuant to the Delaware Act and shall continue in full force andeffect 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 andForeign Qualification.  The name of the Company’sregistered agent for service of process shall be National Registered 

 

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Agents, Inc.(“NRAI”), and the address of the Company’s registered agent and theaddress of the Company’s registered office in the State of Delaware shall beEast Loockerman Street, Suite 1B, Dover, Delaware 19901.  Effective May 1, 2005, NRAI’s newaddress shall be 160 Greentree Drive, Suite 101, Dover, Delaware19904.  Such agent and such office may bechanged from time to time by the Managing Member Any one of the Members, or anyother Person authorized by the Managing Member, is hereby authorized, for thepurpose of authorizing or qualifying the Company to do business in any state,territory or dependency of the United States in which it is necessary orexpedient for the Company to transact business, to do any and all acts andthings necessary to obtain from such state, territory or dependency any suchauthorization 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 throughone or more direct or indirect subsidiaries, the Property and the Subsidiaries;

 

(ii)           To conduct all activities reasonably necessary or desirable toaccomplish the foregoing purposes and to do anything necessary or incidental toany 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 inclauses (i) - (iii) is part of the ordinary business of the Company).

 

(b)        The Company shall, directly or indirectly (as the case may be) own theSubsidiaries, which, in turn, shall, directly or indirectly (as the case maybe) own the Property.  The organizationaldocuments of the Subsidiaries (individually, a “Subsidiary OperatingAgreement” and collectively, the “Subsidiary Operating Agreements”)shall (i) to the extent required by any third-party lender and approved bythe Members, be structured to include any bankruptcy remote-type provisions asare necessary or required by such third-party lender and (ii) contain suchprovisions as will together with the provisions of this Agreement have substantiallythe same effect as would be the case if the Property were held or all suchbusiness 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 theCompany shall perform the same or substantially identical services for theSubsidiaries as the Managing Member performs for the Company.  The Managing Member agrees to perform suchduties, and in such circumstances and with regard to such duties, the ManagingMember shall be subject to the same standards of conduct and shall have thesame rights and obligations with regard to such duties performed or to beperformed on 

 

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behalfof a Subsidiary as are set forth in this Agreement with regard to the same orsubstantially identical services to be performed for or on behalf of theCompany (including, without limitation, the indemnification and exculpationrights and obligations of the Managing Member and the removal or terminationprovisions, as set forth in this Agreement).

 

(c)         The Company shall not engage in any other business or activity withoutthe approval of the Members.

 

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

 

(a)         maintainbooks and records separate from any other Person, and, without limiting thegenerality of the foregoing, maintain their own bank accounts in their ownnames;

 

(b)        holdthemselves out to the public and all other Persons as legal entities separatefrom any Member and other Person;

 

(c)         filetheir own tax returns as may be required under applicable law to the extent (1) notpart of a consolidated group filing a consolidated return or (2) nottreated as a division for tax purposes of another taxpayer, and pay any taxesso required to be paid under applicable law;

 

(d)        notcommingle assets with those of any other Person, including, without limitation,any of their Members;

 

(e)         conducttheir respective businesses in their respective names and strictly comply withall organizational formalities to maintain their separate existence;

 

(f)         maintainand periodically prepare separate financial statements and not consolidatetheir financial statements with any other Person for any purpose; provided,however, that the Company’s assets may be included in a consolidatedfinancial statement with its Affiliates provided that appropriate notationshall be made in such consolidated financial statements to indicate theseparateness of the Company and its Affiliates and to indicate that the Company’sassets and credit are not available to satisfy the debts and other obligationsof its Affiliates.

 

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

 

(h)        observeall formalities required by the Delaware Act and their organizational documentsand operating agreements;

 

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

 

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

 

(k)         nothold out their credit or assets as being available to satisfy the obligationsof others;

 

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

 

(m)        useseparate invoices, bank accounts and checks;

 

(n)        notincur any indebtedness, secured or unsecured, direct or indirect, absolute orcontingent, with any Affiliate, and not pledge any of their assets for thebenefit of any Affiliate;

 

(o)        correctany known misunderstanding regarding their separate identity;

 

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

 

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

 

(r)         notengage in any business or own any assets other than as provided in Section 2.05;

 

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

 

(t)         otherwisehold themselves out as separate legal entities.

 

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

 

III. MEMBERS

 

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

 

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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 arisingin contract, tort or otherwise, shall be solely the debts, obligations andliabilities of the Company or such Subsidiary, and no Member shall be obligatedpersonally for any such debt, obligation or liability of the Company, solely byreason of being a member of the Company. Except as otherwise expressly provided in the Delaware Act or asprovided in Section 11.01(b) hereof, but subject to the provisions ofsubparagraph (b) of this Section 3.02, the liability of each Member shallbe limited to the amount of Capital Contributions required to be made by suchMember in accordance with the provisions of this Agreement, but only when andto the extent the same shall become due and payable pursuant to the provisionsof this Agreement.  Further, no generalor limited partner of any Member, Managing Member, shareholder, member or otherholder 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 shallbe obligated personally for any debt, obligation or other liability of theCompany or any Subsidiary solely by reason of their being a general or limitedpartner of any Member, Managing Member, shareholder or member or other holderof any equity interest of any Member, Managing Member or officer, director oremployee of any of the foregoing or any of their Affiliates.  Further, failure of the Company or anySubsidiary to observe any corporate or other formalities or requirementsrelating to the exercise of its powers or the management of its business oraffairs under either this Agreement, any Subsidiary Operating Agreement or theDelaware Act shall not be grounds for any Member, Managing Member, general orlimited partner of any Member, shareholder or member or other holder of anyequity interest of any Member, Managing Member or any officer, director oremployee of any of the foregoing or any of their Affiliates to be held liableor obligated for any debt, obligation or other liability of the Company or anySubsidiary.

 

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

 

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

 

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(d)           The provisions of this Section 3.02 shall survive the terminationor 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 anyliability under or in connection with any third-party debt, including liabilitywith regard to any environmental matters, recourse carve-outs, fraud,intentional misconduct, theft or other commonly called “bad acts” or withregard to any other matter, unless otherwise approved by the Members orpursuant to an agreement entered into by such Member.

 

3.04         GKKSpecial Decision-Making Rules.  Any provision to the contrary in thisAgreement notwithstanding, any decision to be taken or approval to be grantedby GKK in connection with the Company (or otherwise in connection with thematters contemplated by this Agreement) shall, for all purposes under thisAgreement, be deemed effective only if approved by either (i) amajority of the GKK Corp directors who are deemed independent from SLG Corp or (ii) asubcommittee of directors designated by such independent directors, in eithercase after such consultations among themselves and with any members of thecredit committee of the GKK as such independent directors deem necessary.  For the purposes of this Section 3.04, aGKK Corp director will be deemed independent from SLG if such director wouldnot be considered an “interested director” under Delaware law or Section 4350of NASD’s marketplace listing rules in connection with a transactionbetween GKK Corp and SLG Corp.

 

IV.  CAPITAL

 

4.01         Initial Capital Contributions.

 

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

 

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

 

(b)           ClosingDate Contributions.  Immediatelyfollowing the execution of this Agreement, the Members shall contribute in cashto the capital of the Company their *pro rata* share(based upon their respective Percentage Interests) of any amount by which theuses of funds set forth on Schedule 4.01(b) attached hereto exceedsthe net proceeds of the Acquisition Financing funded prior to or concurrentwith such contributions.  It is expectedthat, on the Closing Date, the Members shall make the following approximatecash contributions to the capital of the Company (taking into account depositsmade under the Purchase Agreement and Contract and Due Diligence Costs):

 

| SLG Member |   | $ | 76,500,000 |   |
|------------|--------|---|------------|--------|
| GKK Member |   | $ | 62,600,000 |   |

 

(c)           OtherContributions. In addition to the cash contributions described in Sections4.01(a),(b) and (c), on the Closing Date, the SLG Member shall (i) acquirefrom 1 Madison Venture LLC and Column and contribute to the Company (forfurther contribution to the Fee LLC) its rights under the Purchase Agreement tothe extent allocable to the Property (inclusive of all deposits made thereunderallocable to the Property) and (ii) acquire from SLG and contribute to theCompany (for further contribution to the Fee LLC) the Financing Commitment(inclusive of all deposits’ made thereunder) and all related rate-lock andinterest rate hedging commitments entered into in connection therewith.

 

4.02         AdditionalCapital Contributions.  Subject to the provisions of Section 7.01(a) ofthis Agreement, in the event that at any time or from time to time additionalfunds are required by the Company or any Subsidiary as determined by theManaging Member, either (a) to fund Necessary Expenses in an amount inexcess of Initial Capital Contributions, reserves and available cash flow (“MandatoryCapital Contributions”) or (b) to fund any other expense, in an amountin excess of Initial Capital Contributions, reserves and available cash flow (“AgreedCapital Contributions”), then the Managing Member shall request that theMembers make such Additional Capital Contribution to the Company on a *pro rata* basis in accordance with the Members’ respectivePercentage Interest.  The Members shallhave five (5) Business Days from the request by the Managing Member tocontribute their *pro rata* share of MandatoryCapital Contributions (based on their relative Percentage Interest).  To the extent approved by the Members, theMembers shall have fifteen (15) Business Days from the request by the ManagingMember to contribute their *pro rata* shareof Agreed Capital Contributions based on their relative Percentage Interests.  For the avoidance of doubt, Members do nothave the right 

 

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to approve MandatoryCapital Contributions but do have the right to approve Agreed CapitalContributions.

 

4.03         Capital Contributions and Remedies.

 

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

 

(b)           If either Member (the “Non-ContributingMember”) fails to timely make any Capital Contribution (or any portionthereof) required pursuant to Sections 4.01 or 4.02 hereof, and the otherMember (the “Contributing Member”) has made its *pro rata*share of such Capital Contribution, then subject to the provisions of Sections4.03(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 tothe Company and the Non-Contributing Member:

 

(i)            The Contributing Member may advance theNon-Contributing Member’s *pro rata* shareof Mandatory Capital Contribution up to an amount of $1,000,000 outstanding atany time, and the Contributing Member may designate all or any portion of suchMandatory Capital Contributions made by the Contributing Member in respect ofthe related request therefor (including both the Contributing Member’s and theNon-Contributing Member’s *pro rata*portion thereof) as a “Priority Member Advance” (provided, however, suchPriority Member Advance will be considered and treated as Capital Contributionsfor 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 Contributionsand elect to decrease the Percentage Interest of the Non-Contributing Member(but not below zero) such that, immediately after such decrease, the PercentageInterest of the Non-Contributing Member shall be a percentage equal to thePercentage Interest immediately prior to such decrease, less a percentageexpressed as a fraction, the numerator of which is the amount of the CapitalContribution that such Member failed to contribute, and the denominator ofwhich is the aggregate amount of the Capital Contributions (other than thosecharacterized as Priority Member Advances) made by all of the Members prior toor as of such default (including the applicable Additional CapitalContributions), and concomitantly, the Percentage Interest of the ContributingMember shall be increased by the same amount. An example of the operation of such calculation is set forth on Exhibit Fattached hereto; or

 

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(iii)          The Contributing Member may withdraw its share of such requested orrequired 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 anyportion thereof) requested or required pursuant to Sections 4.01 or 4.02 hereofand the resulting exercise of any remedy in this Agreement results in theimmediate or future imposition of a transfer tax on the Company (or any Memberthereof) or any Subsidiary, the Member that failed to make such CapitalContribution under Sections 4.01 or 4.02 of this Agreement, shall be liable forand shall be obligated to directly pay any such transfer tax (and such paymentshall not be deemed to be a Capital Contribution and shall have no effect uponthe allocation provisions or any other equity provisions of this Agreement).

 

(f)            EachMember acknowledges and agrees that the other Member would not be entering intothis Agreement were it not for (i) the Members agreeing to make theCapital 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 inthe event any Member fails to make its Capital Contributions pursuant to thisAgreement, the other Member will suffer substantial damages and the remedyprovisions set forth above are fair, just and equitable in all respects andadministratively superior to any other method for determining suchdamages.  Each Member hereby agrees thatin the event its Interest in the Company is reduced as described above, itshall execute and deliver such conveyances, agreements, instruments or otherdocuments which may be reasonably necessary in the judgment of the other Memberto confirm and render fully effective the remedy provisions set forth above,including, but not limited to, an assignment of a portion of its Interest inthe Company and any amendments to this Agreement or to the Certificate ofFormation.

 

4.04         Capital Accounts.  A separate Capital Account willbe maintained for each Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv).  Consistent therewith, the Capital Account ofeach 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 Memberto the capital of the Company and any advances of cash made by such Member asPriority Member Advances plus the Book Basis of any property contributed bysuch Member to the capital of the Company (net of any liabilities to which suchproperty is subject or which are assumed by the Company);

 

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(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 theCompany to such Member (including all amounts paid or distributed pursuant tothe provisions of Section 6.03 hereof) plus the fair market value of anyproperty distributed in kind to such Member (net of any liabilities to whichsuch 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).

 

Theprovisions of this Section 4.04 relating to the maintenance of Capital Accountshave been included in this Agreement to comply with Section 704(b) ofthe Code and the Treasury Regulations promulgated thereunder and will beinterpreted and applied in a manner consistent with those provisions.  In the event the Tax Matters Partner shalldetermine that it is prudent to modify the manner in which the Capital Accountsor any debts or credits thereto (including, without limitation, debits orcredits relating to liabilities which are secured by contributed or distributedproperty or which are assumed by the Company or any Members) are computed inorder to comply with such Regulations, the Managing Member may make suchmodification, provided that it is not likely to have a material effect on theamounts distributed to any Member pursuant to Section 6.04 hereof upon thedissolution of the Company.

 

4.05         No Further Capital Contributions.  Except as expressly provided inthis Agreement or with the prior written consent of all the Members, no Membershall be required or entitled to contribute any other or further capital to theCompany, nor shall any Member be required or entitled to loan any funds to theCompany (provided, however, that for these purposes, amountsproperly incurred by a Member which are reimbursable by the Company pursuant toand in accordance with the terms of this Agreement shall not be deemedloans).  No Member will have anyobligation to restore any negative or deficit balance in its Capital Accountupon 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 anyMember for financial or book purposes or as set forth in the Delaware Act orunder common law).  Notwithstanding anyother provision of this Agreement to the contrary, nothing contained hereinwill, or is intended or will be deemed to benefit any creditor of the Companyor any Subsidiary or any creditor of any 

 

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Member,and no such creditor shall have any rights, interests or claims hereunder, beentitled to any benefits or be entitled to require the Company or any Member todemand, solicit or accept any loan, advance or Additional Capital Contributionfor or to the Company or any Subsidiary or to enforce any rights which theCompany, any Subsidiary or any Member may have against any other Member orwhich any Member may have against the Company or Subsidiary, pursuant to thisAgreement or otherwise.

 

4.06         Financing.  To the extent so required in any third-partyfinancing obtained by the Company or a Subsidiary, the Managing Member shallendeavor to obtain the agreement of such lender in respect of such financingsuch that each Member shall have the obligation to enter into and deliver (orcause to be entered into and delivered by creditworthy affiliates of suchMember acceptable to such lender): (i) customaryexceptions-to-non-recourse guarantees relating to, and only to, the acts oromissions of such Member and its Affiliates; (ii) payment guarantees; and (iii) othercustomary guarantees so required by such lender. The Members shall enter into aReimbursement and Indemnity Agreement substantially in the form of Exhibit Ehereto in connection with any such third-party financing.

 

4.07         Book Basis Adjustments.  The Book Basis of all assets will be adjustedto equal their respective fair market values upon the events set forth inTreasury 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, theinitial Percentage Interest of each Member will be as set forth in Section 1.01hereof (in each case, subject to adjustment as provided in thisAgreement).  The Percentage Interests ofthe Members may be adjusted only as set forth in this Agreement.

 

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

 

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

 

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

 

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

 

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

 

(c)           To compel any sale of all or any portion of the assets of the Companyor 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 anySubsidiary.

 

NoMember shall have any interest in any specific assets of the Company (includingthe Property).

 

VI.  ALLOCATIONS ANDDISTRIBUTIONS

 

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

 

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

 

(a)           Notwithstanding any other provision of this Article VI, if thereis a net decrease in Company Minimum Gain or in any Member Minimum Gain duringany 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, ifnecessary, subsequent years) in an amount and manner required by TreasuryRegulation Sections 1.704-2(f) or 1.704-2(i)(4).  The items to be so allocated shall be determinedin accordance with Treasury Regulation Section 1.704-2.

 

(b)           Items of Profit shall be allocated to each Member receivingdistributions pursuant to Section 6.03(a) hereof until the aggregateitems of Profit allocated to such Member under this Section 6.02(b) isequal to the aggregate amount theretofore distributed (and immediatelyavailable for distribution) pursuant to such clause (other than amountsconstituting a return of capital with respect to Priority Member Advances).

 

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(c)           Any Member who unexpectedly receives an adjustment, allocation ordistribution 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 itsadjusted Capital Account shall be allocated items of Profit sufficient toeliminate such increase or negative balance caused thereby, as quickly aspossible, to the extent required by such Treasury Regulation.

 

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

 

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

 

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

 

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

 

(a)           First, an amount of such Net Cash Flow shall be paid (in the order andpriority set forth below), to the Members until each of the Members hasreceived 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) equalto the sum of (i) the aggregate amount of its Priority Member Advancesmade pursuant to this Agreement and (ii) a cumulative return thereoncompounded quarterly, at a rate equal to six percent (6%) per annum over theContributing Member’s cost of funds calculated based on such Member’sthen-existing credit lines (with payments made pursuant to this Section 6.03(b) deemedto be made first with respect to the interest described in clause (ii) hereofand then with respect to the aggregate amount of such aggregate Priority MemberAdvances described in clause (i) hereof); and

 

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

 

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6.04         Distributions in Liquidation.  Upon the dissolution andwinding-up of the Company, the proceeds of sale and other assets of the Companydistributable to the Members under Section 12.02(c)(iii) shall bedistributed, not later than the latest time specified for such distributionspursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2) tothe Members in accordance with their respective positive Capital Accountbalances (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 otherwisebe made to the Members under the preceding sentence may be distributed to atrust established (for the benefit of the Members) for the purposes ofliquidating Company and Subsidiary assets, collecting amounts owed to theCompany or any Subsidiary and paying any contingent or unforeseen liabilitiesor obligations of the Company and the Subsidiaries arising out of or inconnection with the Company or the Subsidiaries.  The assets of any trust established underthis Section 6.04 will be distributed to the Members from time to time bythe trustee of the trust upon approval of the Managing Member in the sameproportions as the amount distributed to the trust by the Company wouldotherwise have been distributed to the Members under this Agreement.

 

6.05         [Intentionally omitted.]

 

6.06         Tax Matters.  The Members intend for the Companyto be treated as a partnership under the Code. The Managing Member shall make all applicable elections, determinationsand other decisions under the Code, including, without limitation, thedeductibility of a particular item of expense and the positions to be taken onthe Company’s tax return, and shall approve the settlement or compromise of allaudit matters raised by the Internal Revenue Service affecting the Membersgenerally.  The Members shall each takereporting positions on their respective federal, state and local income taxreturns consistent with the positions determined for the Company by theManaging Member.  The Managing Membershall cause all federal, state and local income and other tax returns to betimely filed by the Company.

 

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

 

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

 

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Company and the BookBasis of such property.  The Companyshall use the “traditional method” without curative allocations.

 

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

 

VII.  MANAGEMENT

 

7.01         Management.

 

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

 

(b)           Without limiting thegenerality of the foregoing Section 7.01(a), and except as otherwiseexpressly provided in this Agreement or any Subsidiary Operating Agreement, theManaging Member, at the Company’s cost: (i) shall (A) establish thepolicies and operating procedures of the Company and the Subsidiaries, (B) implementall Major Decisions, (C) make decisions (other than Major Decisions andsuch other decisions as are reserved to the Members hereunder) as to allmatters which the Company or any Subsidiary has authority to undertake, (D) makeexpenditures as are required to implement the then-applicable Budget andOperating Plan, and (E) make expenditures attributable to NecessaryExpenses; (ii) may delegate such of its powers, duties, responsibilitiesand management functions, as it may from time to time determine, to anyofficer, 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 Personto act as property or asset manager, leasing agent, developer, broker,accountant, attorney, engineer or in such other capacities as the ManagingMember may determine is necessary or desirable in connection with the Company’sor any Subsidiary’s business, and the Managing Member shall be entitled to relyin good faith upon the recommendations, reports and advice given to it by anysuch Person in the course of such Person’s professional engagement; (iv) mayperform, or cause to be performed, all of the Company’s or any Subsidiary’sobligations under any agreement to which the Company or any Subsidiary is aparty; (v) may enter into contracts on behalf of the Company or anySubsidiary and make expenditures as are required to operate and manage theCompany, the Subsidiaries and the Property; and (vi) may perform any otheract which is necessary or desirable to carry out any of the purposes of the 

 

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Company or anySubsidiary.  All decisions made, and actions taken, by the Managing Member inaccordance with the foregoing Section 7.01(a) and this Section 7.01(b) shallbe binding on the Company, the Subsidiaries and all Members, as if such person orpersons had personally made such decision or taken such action.

 

(c)           TheMembers hereby designate the SLG Member to act as the Managing Member of theCompany (the “Managing Member”). The Managing Member shall be entitled to receive reimbursement for itsout-of-pocket expenses attributable to the performance of its duties as theManaging Member.  The Managing Member mayonly be removed or changed: (i) by unanimous consent of the Members; or (ii) uponthe Managing Member’s resignation at its election.  In the event the Managing Member resigns, theMembers shall appoint a successor Managing Member.  Anyprovision to the contrary herein notwithstanding, to the extent any MajorDecision has been approved by the Members or is provided for or contemplated inthe then-applicable Budget or the Operating Plan, the Managing Member shall beauthorized, without any further consent or approval, to act in accordancetherewith.

 

(d)           Anyprovision to the contrary in this Section 7.01 notwithstanding, unlessprovided for in, or contemplated by, the then-applicable Budget or OperatingPlan (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 byor on behalf of the Company or any Subsidiary with regard to the followingmaterial matters unless the same are approved in writing by all of the Members(each a “Major Decision”):

 

(i)            approval of the finalforms of the documents that evidence, secure or relate to the AcquisitionFinancing, to the extent that the same include any terms that are materiallydifferent from those set forth in the Financing Commitment;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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(xii)          makingany expenditure or incurring any obligation by or on behalf of the Companyinvolving an expenditure which is not included in the then current Budget orprovided by Mandatory Capital Contributions or Agreed Capital Contributionspursuant to Section 4.02 hereof;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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(i)            Withoutlimiting the provisions of Section 7.01(d) hereof, the ProjectModifications Under Consideration with CSFB, attached hereto as Exhibit D;

 

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

 

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

 

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

 

(v)           Theclosings to occur under the Purchase Agreement and the Acquisition Financingdocuments.

 

(g)           [Intentionally omitted.]

 

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

 

(i)          [Intentionally omitted.]

 

(j)          If, at the beginning of any calendar year beginning after the datehereof, the Budget and Operating Plan, or any item or portion thereof, shallnot have been approved in writing by the Members, then:

 

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

 

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

 

(iii)          The Managing Member shall be entitled to expend, in respect of othernoncapital, recurring expenses in any fiscal quarter of the then-currentcalendar year, an amount equal to the lesser of (x) actual expenses incurred bythe 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 theimmediately preceding calendar year, as set forth on the immediately precedingcalendar year Budget and Operating Plan, after giving 

 

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effectto any dispositions or other material changes to the Property during the prioror current year; provided, however, that if any contract approvedby the Members provides for an automatic increase in costs thereunder after thebeginning of the then-current calendar year, then the Managing Member shall beentitled 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 advanceany funds on behalf of the Company or any Subsidiary, except from the accountsof funds of the Company or the applicable Subsidiary, nor shall the ManagingMember be obligated to perform its duties and obligations hereunder if Companyor Subsidiary funds are not available in amounts required to perform suchduties and obligations.

 

7.02         Services and Fees; Affiliate Transactions.

 

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

 

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

 

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

 

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(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 toenter into agreements with one or more third parties to sell, or provide otherprofessional services with respect to, the Property, the Company or anySubsidiary, which agreements shall be subject to the approval of the ManagingMember.  The fees for services from suchthird parties shall be included in any proposed budget and subject to approvalin accordance with Section 7.01(d)(xi), and shall not exceed theprevailing competitive fees being charged for such services for similarproperties in the market where the Property is located.

 

7.03         Duties and Conflicts.

 

(a)           The Members, including the Managing Member, shall devote such time tothe business of the Company and the Subsidiaries as they deem to be necessaryor desirable in connection with their respective duties and responsibilitieshereunder.  Except as otherwise providedin this Agreement or as otherwise approved by all Members, no Member nor anymember, partner, shareholder, officer, director, employee, agent orrepresentative of any Member shall receive any salary or other remuneration forits 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, representativesand Affiliates, has or may in the future have other business interests,activities and investments, some of which may be in conflict or competitionwith the business of the Company, and that the other Member and its members,partners, shareholders, officers, directors, employees, agents, representativesand Affiliates, are entitled to carry on such other business interests,activities and investments.  Each of theMembers may engage in or possess an interest in any other business or ventureof 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 behalfof other entities with which any of the Members is affiliated or otherwise, andeach of the Members may engage in any such activities, whether or not competitivewith the Company or any Subsidiary, without any obligation to offer anyinterest in such activities to the Company or any Subsidiary or to the otherMember.  Neither the Company, theSubsidiaries nor the other Member shall have any right, by virtue of thisAgreement or any Subsidiary Operating Agreement, in or to such activities, orthe income or profits derived therefrom, and the pursuit of such activities,even if competitive with the business of the Company or any Subsidiary, shallnot be deemed wrongful or improper.  Forthe avoidance of doubt, no provision contained herein is intended to modify anyterm 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.

 

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7.04         CompanyExpenses.  Except as otherwiseprovided in this Agreement or in the Leasing and Property Management Agreementor in the Asset Management Agreement, and except for any costs to be borne byany third party under any agreement with the Company, the Company shall beresponsible for paying, and shall pay, all direct costs and expenses related tothe 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 theacquisition of the Property (or interests in the applicable Subsidiaries), allfees payable under Section 7.02, costs of financing, fees anddisbursements of attorneys, financial advisors, accountants, appraisers,brokers and engineers, and all other fees, costs and expenses directlyattributable to the business and operations of the Company or anySubsidiary.  In the event any such costsand expenses are or have been paid by any Member, such Member shall be entitledto be reimbursed for such payment so long as such payment is otherwise inaccordance with the terms of this Agreement, the Leasing and PropertyManagement Agreement and the Asset Management Agreement.

 

7.05         Officers.

 

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

 

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

 

VIII.  BUY-SELL AND CALLPROVISIONS

 

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 theMembers by (x) the SLG Member at any time for any reason or (y) by the GKKMember solely in either of the following two circumstances: (1) on thefirst Business Day of any year after the tenth (10th) anniversary of the dateof this Agreement, only if the GKK Member 

 

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reasonablydetermines that it will likely incur “phantom income” in the succeeding annualperiod; or (2) at any time, in the event that the credit rating of CSFBfalls below a published rating of “BBB” by Standard and Poor’s or “Baa” byMoody’s; (ii) involving an extension of, or material modification to, theCSFB space lease, or the re-tenanting of the space currently demised to CSFBunder the CSFB space lease; (iii) involving any material capitalexpenditure by the Company or with respect to the Property, other than as setforth on Exhibit D attached hereto; or (iv) which wouldotherwise materially impair the value of the Property, either Member may notifythe other Member of a deadlock with respect to such Major Decision(s) (suchnotification, a “Major Decision Deadlock Notice”).  Within thirty (30) calendar days of thedelivery of a Major Decision Deadlock Notice, the GKK Member may deliver awritten notice as described below (the “Buy-Sell Notice”) to the SLGMember, as set forth below.

 

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

 

(c)           Within such thirty (30) calendar day period, a copy of the Buy-SellNotice shall be delivered to the Company Accountant who shall, within five (5) BusinessDays, determine and notify the Members of the amount each Member would receiveif all Company assets were sold for the Buy-Sell Value (less deductionstherefrom for normal and customary charges and expenses incurred in connectionwith the sale of real estate in New York City, which shall be imputed, if notactually incurred, including, without limitation, broker’s commissions,transfer taxes, if applicable, and other closing costs), all liabilities of theCompany and each Subsidiary (including any loans by any such Member to theCompany or any Subsidiary) were paid in full, and the remaining proceeds weredistributed to the Members in accordance with Section 6.04 (the “MemberBuy/Sell Proceeds”).

 

(d)           The SLG Member shall have the right, exercisable by delivery of noticein 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’srights, title and interests in and to its Interest in the Company, interest inthe Subsidiaries, if applicable, and interest in any loans to the Company andthe Subsidiaries, for a cash purchase price equal to the applicable MemberBuy/Sell Proceeds; or

 

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

 

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

 

(e)           Contemporaneouslywith the SLG Member’s Election or deemed Election, the purchasing Member shall (i) havethe right to direct the Managing Member on behalf of the Company and otherwisemake decisions on behalf of the Company with respect to (1) the day-to-dayoperations of the Company that would otherwise require direction by theManaging Member, (2) the decisions of the Company that are referred to in Exhibit Dto this Agreement and (3) any Major Decisions other than those identifiedin (i)-(iv) of Section 8.01(a); provided, however,prior to the closing of the purchase under this Section 8.01, all suchdirection and decisions shall be consistent with past practices of the Companyand be in the ordinary course of the Company’s business, and (ii) depositin escrow with a bank or other financial institution selected by the sellingMember as escrowee an earnest money deposit in cash in an amount equal to tenpercent (10%) multiplied by the purchase price to be paid in connection withsuch purchase, and, if such purchasing Member fails to close such purchase asprovided in this Section 8.01(e), then the selling Member may retain suchdeposit and either elect to purchase all of the right, title and interest ofthe purchasing Member in and to its Interest in the Company and interest in theSubsidiaries, if applicable, and in any loans to the Company and theSubsidiaries, for a cash purchase price equal to ninety percent (90%) of theapplicable Member Buy/Sell Proceeds, or exercise any other rights or remediesavailable at law or in equity, including the rights set forth in Article XIIIhereof.  All closings of any purchase andsale under this Section 8.01 will be held at the Company’s principaloffice and shall take place no later than that date which is 45 calendar daysafter the later of the SLG Member’s Election or deemed Election.

 

(f)            [Intentionallyomitted.]

 

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

 

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

 

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

 

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mayinitiate the provisions of this Section 8.01 until the procedures setforth in Article X have been completed or terminated pursuant to the termsthereof.

 

8.02         CallProvision.

 

(a) Atany time and fromtime to time, unless (i) a Major Decision Deadlock Notice has beendelivered and the thirty (30) calendarday period during which the GKK Member has a right to deliver a Buy-SellNotice has yet to expire or (ii) the GKK Member has delivered a Buy-SellNotice pursuant to Section 8.01 and the purchasing Member in connectiontherewith 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 ora portion of the Interest of the GKK Member (and any Member, or other permittedtransferee in accordance with Article X, whose interest derives from theinitial Interest of the GKK Member) to be redeemed by the Company or purchasedby the SLG Member or its Affiliate in full. The redemption or purchase price, as the case may be, shall be equal tothe amount that would have been distributed to such Member if the Property andall other assets of the Company had been sold at the then-fair-market valuethereof (less deductions therefrom fornormal and customary charges and expenses incurred in connection with the saleof real estate in New York City, which shall be imputed, if not actuallyincurred, 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 theMembers in accordance with Section 6.03 hereof; provided that, if suchexercise occurs after the expiration of the term of the lease of the Propertyto CSFB, the redemption or purchase price (as the case may be) payable to suchMember shall be not less than the value of such Member’s Capital Account in theCompany as determined in accordance with Section 4.04 and the books andrecords of the Company.  Unless the SLGMember and the GKK Member agree upon the fair market value of the Property andthe other assets of the Company (the “Call Provision FMV”)(whichagreements shall be as determined or approved by the independent members of theBoards of Directors of SLG and GKK), the Call Provision FMV shall be determinedbased on an independent third-party appraiser’s determination of the CallProvision FMV.  Such appraiser shall beselected as follows: the SLG Member and the GKK Member shall each promptlychoose an independent appraiser (“SLG’s Appraiser” and “GKK’sAppraiser,” respectively), each of which shall not have performed or beenengaged to perform any appraisal or valuation services for the Company, SLG orGKK (or any of their respective Affiliates) within the then-preceding three (3) years.  All appraisers shall be MAI appraisers andhave at least ten (10) years experience in commercial real estatevaluation.  If the lower of the two (2) appraisalsso 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 ProvisionFMV.  In the lower of the two (2) appraisalsso 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 athird appraiser (the “Third Appraiser”), who shall promptly select theCall Provision FMV from 

 

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either the amount stated by either the SLG Appraiseror the GKK Appraiser and the Third Appraiser shall have no discretion to selectan amount different from either thereof. Such selection shall be binding upon the parties and shall immediatelythereafter be the Call Provision FMV for all purposes under thisAgreement.  If SLG’s Appraiser and GKK’sAppraiser cannot agree on the selection of the Third Appraiser, such ThirdAppraiser shall be selected as provided by the Commercial Arbitration Rules ofthe American Arbitration Association as in effect on the date hereof forselection of “arbitrators” in comparable situations.  The cost of the appraisals shall be anexpense of the Company.

 

(b)           Upondelivery of the Call Notice under Section 8.02(a), the SLG Member shallhave the right to make direct the Managing Member on behalf of the Company andotherwise make all decisions on behalf of the Company with respect to (A) theday-to-day operations of the Company that would otherwise require direction bythe Managing Member, (B) the decisions of the Company that are referred toin Exhibit D to this Agreement and (C) any and all MajorDecisions. In the event of a transfer if any Interest by the GKK Member to aProhibited Transferee or other breach or violation of Article X of thisAgreement, the applicable redemption price payable by the SLG Member to the GKKMember under Section 8.02(a) shall be reduced to an amount equal toninety percent (90%) of the Call Provision FMV.

 

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

 

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

 

IX.  BOOKS AND RECORDS

 

9.01         Books and Records.  The Managing Member shallmaintain, or cause to be maintained, at the expense of the Company, in a mannercustomary 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 whichshall be entered fully and accurately each and every financial transaction withrespect to the operations of the Company and each Subsidiary and the ownershipand operation of the Property.  Bills,receipts and vouchers shall be maintained on file by the Managing Member.  The Managing Member shall maintain said booksand accounts in a safe manner and separate from any records not having to dodirectly with the Company.  The ManagingMember shall cause audits to be performed and audited statements and income taxreturns to be prepared as required by Section 9.03 hereof.  Such books and records of account shall beprepared and maintained by the Managing Member at the principal place ofbusiness of the Company or such other place 

 

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

 

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

 

9.03         Reports.

 

(a)           The Managing Member shall prepare at the Company’s expense thefinancial reports and other information that the Members may determine areappropriate, including those provided for in Section 7.03(c).  In any event, the Managing Member shallprepare or cause to be prepared at the expense of the Company and furnish toeach of the Members: (i) within twenty (20) calendar days after the closeof each fiscal year of the Company, a preliminary and unaudited consolidatedbalance sheet of the Company and each Subsidiary dated as of the end of suchfiscal year, a preliminary and unaudited statement of income and expense and apreliminary and unaudited statement of cash flow; (ii) as early aspracticable but in no event later than seventy-five (75) calendar days afterthe close of each fiscal year of the Company, a consolidated balance sheet ofthe Company and each Subsidiary dated as of the end of the fiscal year, arelated statement of income and expense and a statement of cash flow, all ofwhich shall be certified in the customary manner by the Company Accountant; (iii) within20 days after the close of each fiscal quarter of the Company (other than thelast fiscal quarter in any fiscal year), a consolidated balance sheet of theCompany and each Subsidiary dated as of the end of the fiscal quarter, arelated statement of income and expense and a statement of cash flow; and (iv) within20 days after the end of each calendar month, a consolidated income statementfor the Company and each Subsidiary and a related statement of cash flow.  In addition, promptly after the end of eachfiscal year and at the expense of the Company, the Managing Member will causethe Company Accountant to prepare and deliver to each Member a report settingforth in sufficient detail all such information and data with respect tobusiness transactions effected by or involving the Company and each Subsidiaryduring such fiscal year as will enable the Company and each Member to timelyprepare its federal, state and local income tax returns in accordance with thelaws, rules and regulations then prevailing.  The Managing Member will also cause theCompany Accountant to prepare federal, state and local tax returns required ofthe Company, submit those returns to the Members for their approval as early aspracticable but in no event later than ninety (90) calendar days following theend of the preceding fiscal year and will file the tax returns after they havebeen approved by the Members.  In theevent any Member shall not in 

 

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

 

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

 

9.04         The Company Accountant.  The Company shall retain as the regularaccountant and auditor for the Company and each Subsidiary (the “CompanyAccountant”) a nationally-recognized accounting firm designated by theManaging Member.  The fees and expensesof 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 changesuch Company Accountant.

 

9.05         Distributions and Reserves.  The Budget and Operating Planwill contain provisions governing the payment of distributions (in accordancewith Section 6.03) and establishment of reserves (“Reserve Accounts”),provided, that, the Managing Member may require reserves be established inexcess of the Reserve Accounts to the extent the Managing Member reasonablydetermines that said amounts are required to satisfy (i) requirements ofapplicable law, or (ii) Necessary Expenses.  Disputes regarding the reasonableness of thedetermination by the Managing Member hereunder will be subject to arbitrationpursuant to Section 13.16 hereof.

 

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

 

X.  TRANSFER OF INTERESTS

 

10.01       No Transfer.

 

(a)           Except as expressly permitted or contemplated by this Agreement: (i) noMember may sell, assign, give, hypothecate, pledge, encumber or otherwisetransfer (“Transfer”), directly or indirectly, all or any portion of itsInterest without the prior written consent of the other Members (which may bewithheld or granted in the sole discretion of such other Members); (ii) GKKmay not Transfer, directly or indirectly, all or any portion of its equityinterest in the GKK Member 

 

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withoutthe prior written consent of the SLG Member, which may be withheld or grantedin the sole discretion of the SLG Member; (iii) SLG may not Transfer,directly or indirectly, all or any portion of its indirect equity interest inthe SLG Member without the prior written consent of the GKK Member, which maybe withheld or granted in the sole discretion of the GKK Member; and (iv) noMember may Transfer all or any portion of its Interest to a ProhibitedTransferee.

 

(b)           Any Transfer in contravention of clause (i) through clause (iv) ofSection 10.01(a) above shall be null and void.  No Member, without the prior written consentof the other Member, may resign from the Company, except as a result of suchMember’s involuntary dissolution or final adjudication as bankrupt or inconnection 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 theconsent of the SLG Member, sell or assign its Interest in whole or in part toany wholly owned and controlled Affiliate of the GKK Member, provided suchtransferee agrees to be bound by all the terms, conditions and provisions ofthis Agreement (including the provisions of this Article X).  In addition, the GKK Member may, from time totime, sell or assign up to forty-nine percent (49%) of its Interest in theCompany 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 authoritywith 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 GKKMember, sell or assign its Interest in whole or in part to any wholly owned andcontrolled Affiliate of SLG, provided such transferee agrees to be bound by allthe terms, conditions and provisions of this Agreement (including theprovisions of this Article X).  Inconnection with the foregoing, the SLG Member shall have the absolute right todesignate any wholly owned and controlled Affiliate transferee as a Member(including the Managing Member).  Inaddition, the SLG Member may, from time to time, sell or assign up toforty-nine percent (49%) of its Interest in the Company to a QualifiedInstitutional Transferee approved by the GKK Member (which approval shall notbe unreasonably withheld, conditioned or delayed), provided that the SLG Memberretains all voting and decision-making authority with respect to suchtransferred Interest.

 

(c)           Any permitted Transfer pursuant to subsection (a) or subsection (b) aboveshall not relieve the transferor of any of its obligations prior to suchTransfer.  Subject to Sections 10.03 and10.04, any transferee pursuant to this Section 10.02 shall become asubstitute Member of the Company and each Member and its permittedtransferee(s) shall be treated as one Member for all purposes of thisAgreement.  Except as set forth in thelast sentence of Section 10.02(b) hereof, the provisions of this Section 10.02

 

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willnot apply to or be deemed to authorize or permit any collateral transfer of, orgrant of a security interest in, a Member’s interest in the Company, or in anyCompany property (which transfer or grant shall be subject to the otherprovisions of this Agreement).

 

(d)           (i)            Subject to the limitations on transfer as setforth in Section 10.02(a) and (b), in the event either member (the “TransferringMember”) receives a written bona fide offer from a third party that is notan Affiliate of said Member to purchase all or a portion of its Interest (the “TargetInterest”) and said Member desires to Transfer all or a part of its TargetInterest pursuant to the terms of said bona fide offer (“Acceptable TransferTerms”), the Transferring Member shall deliver to the other Member (the “Non-TransferringMember”) notice of the terms of such Acceptable Transfer Terms (“TransferROFR Notice”), including the proposed cash purchase price, other economicterms and conditions and all other material terms and conditions of suchAcceptable Transfer Terms, and shall include a true and correct copythereof.  At any time within forty-five(45) calendar days after the date the Non-Transferring Member receives theTransfer ROFR Notice (the “Transfer Response Period”), theNon-Transferring Member shall have the right, exercisable by delivery of noticein writing (the “Transfer Election”) to the Transferring Member, toeither:

 

(A)          approve the Acceptable Transfer Terms andauthorize the Transferring Member to attempt to sell or dispose of the TargetInterest in accordance with the Acceptable Transfer Terms; or

 

(B)           elect to purchase all of the Target Interestfor a cash purchase price as set forth in the Acceptable Transfer Terms(including any assumption of debt, if applicable) and subject to no other termsand 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 TransferElection, which shall affirmatively state that the Non-Transferring Member isexercising such option, and (2) depositing in an escrow account at a bankor other financial institution selected by the Transferring Member (the “TransferEscrow Agent”), a deposit equal to five percent (5%) of the purchase price(the “Transfer Escrow Deposit”) (as set forth in the applicableAcceptable Transfer Terms).  In suchevent, (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 thepurchase of the Target Interest and the Transferring Member shall assign theTarget Interest to the Non-Transferring Member or to a designee of theNon-Transferring Member on the terms and conditions set forth in the TransferROFR Notice, against receipt of payment of the cash portion of the purchaseprice and assumption of any debt as aforesaid. 

 

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Allclosings of any purchase and sale under this Section 10.02(d) will beheld at the Company’s principal office and will take place on the closing dateset forth in the applicable Acceptable Transfer Terms.

 

(iii)          If at the expiration of the Transfer Response Period theNon-Transferring Member neither (A) authorizes the Transferring Member tosell 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 Memberby following the procedures in Section 10.02(d)(i)(B) above, then theNon-Transferring Member shall be deemed to have authorized and have approved aTransfer 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 notless than the purchase price set forth in the Acceptable Transfer Terms, andotherwise pursuant to such other terms, conditions and provisions as aredetermined appropriate in the reasonable discretion of the TransferringMember.  In the event the Non-TransferringMember authorizes or is deemed to have authorized the Transfer of theapplicable Target Interest pursuant to the terms described above, and theTransferring Member thereafter receives a bona fide offer for the purchase ofthe Target Interest from any party for a purchase price which is at least equalto the purchase price set forth in the Acceptable Transfer Terms, other than asset forth below in subparagraph (iv) below, the Transferring Member mayconsummate the sale of the Target Interest on such terms, without therequirement of any consent or approval of the Members; provided, theTransferring Member shall have entered into a binding contract for the transferof the Target Interest within one hundred eighty (180) calendar days after thedate on which the Non-Transferring Member authorized or was deemed to haveauthorized such transfer, and such transfer must be consummated within theclosing date set forth in the Transfer ROFR Notice.  The failure of the Transferring Member toenter into such binding contract within the 180-day period referred to in theimmediately preceding sentence or the failure of such transfer to occur withinsuch closing period shall require the Transferring Member to again deliver tothe Non-Transferring Member an additional Transfer ROFR Notice and to again followthe procedures set forth in this Section 10.02(d) hereof prior to anyTransfer.

 

(iv)          In the event the Non-Transferring Member Group shoulddefault in its obligation to purchase any Target Interest pursuant to the termsof this Section 10.02(d), the following shall be the sole and exclusiveremedy for such default: the Interest Transfer Escrow Agent shall immediatelydeliver to the TransferringMember the Transfer Escrow Deposit (such amount shall not be deemed to be acontribution or distribution of capital, or effect in any way the CapitalAccount of any Member, the allocation provisions or any other equity provisionsof this Agreement).

 

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

 

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

 

10.03       Transferees.  Notwithstanding anything to thecontrary contained in this Agreement, no Transfer of all or any part of anyInterest shall be made (a) except in compliance with all applicablesecurities laws or (b) if such Transfer would violate any loan commitmentor agreement or any mortgage, deed of trust or other security instrumentencumbering all or any portion of the Property or any other asset of theCompany.  Further, no transferee of allor any portion of any Interest shall be admitted as a substitute Member unless (i) suchInterest is transferred in compliance with the applicable provisions of thisAgreement, (ii) such transferee shall have furnished evidence ofsatisfaction of the requirements of Section 10.02 hereof, reasonablysatisfactory to the remaining Member(s), and (iii) such transferee shallhave executed and delivered to the Company such instruments as the remainingMember(s) reasonably deem necessary or desirable to effectuate the admission ofsuch transferee as a Member and to confirm the agreement of such transferee tobe bound by all the terms, conditions and provisions of this Agreement withrespect to such Interest.  At the requestof any remaining Member, each such transferee shall also cause to be deliveredto the Company at the transferee’s sole cost and expense, a favorable opinionof legal counsel reasonably acceptable to the remaining Members, to the effectthat (a) such transferee has the legal right, power and capacity to ownthe Interest proposed to be transferred, (b) such Transfer does notviolate any provision of any loan commitment or agreement or any mortgage, deedof trust or other security instrument encumbering all or any portion of theProperty or any other asset of the Company, and (c) such Transfer does notviolate any federal or state security laws and will not cause the Company tobecome subject to the Investment Company Act of 1940, as amended.  As promptly as practicable after theadmission of any Person as a Member, the books and records of the Company shallbe changed to reflect such admission. All reasonable costs and expenses incurred by the Company in connectionwith any Transfer of any Interest and, if applicable, the admission of anytransferee 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 (incontrast with admission as a substitute Member in connection with a permittedTransfer) without the consent of the Members.

 

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

 

10.05       Overrideon Permitted Transfers.

 

(a)           Itis expressly understood and agreed that any Transfer permitted pursuant to thisArticle X shall in all instances be prohibited (and, if consummated, shallbe void *ab initio*) if such Transfer does notcomply with all applicable laws, rules and regulations and otherrequirements of governmental authorities, including, without limitation,Executive Order 13224 (September 23, 2001), the rules and regulationsof the Office of Foreign Assets Control, Department of Treasury, and anyenabling legislation or other Executive Orders in respect thereof.

 

(b)           Eachadmitted Member shall be required to make the representations and warrantiesset forth in Section 13.01(a) of this Agreement to the otherMember(s) and the Company as of the date of such Member’s admission into theCompany.  Each Member shall be deemed tomake 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 thatacquires a beneficial ownership interest in such Member as of the date of suchacquisition.

 

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 orlimited partner of any Member and Managing Member, each shareholder, member orother holder of any equity interest in such Member or any officer, director oremployee of any of the foregoing (each an “Indemnified Party”), againstany losses, claims, damages or liabilities to which such Indemnified Party maybecome subject in connection with any matter arising out of or incidental toany act performed or omitted to be performed by any such Indemnified Party inconnection with this Agreement, any Subsidiary Operating Agreement or theCompany’s or any Subsidiary’s business or affairs, including any action oromission constituting a breach of any fiduciary duties; provided, however,that such act or omission (i) was taken in good faith, was reasonablybelieved by the applicable Indemnified Party to be in the best interest of theCompany or the applicable Subsidiary and was within the scope of authoritygranted to such Member or applicable Indemnified Party, (ii) was not atransaction for which the Indemnified Party received a personal benefit inviolation or 

 

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breachof the provisions of this Agreement or any Subsidiary Operating Agreement, (iii) wasnot attributable in whole or in part to such Indemnified Party’s breach of thisAgreement 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’sfraud, bad faith, willful misconduct or gross negligence.  If an Indemnified Party becomes involved inany capacity in any action, proceeding or investigation in connection with anymatter arising out of or in connection with this Agreement or any SubsidiaryOperating Agreement or the Company’s or any Subsidiary’s business or affairs,the Company shall reimburse such Indemnified Party for its reasonable legal andother reasonable out-of-pocket expenses (including the cost of anyinvestigation and defense preparation) as they are incurred in connectiontherewith, provided that such Indemnified Party shall promptly repay to theCompany the amount of any such reimbursed expenses paid to it if it shallultimately be determined that such Indemnified Party was not entitled to beindemnified by the Company in connection with such action, proceeding orinvestigation.  If for any reason (otherthan the fraud, gross negligence, intentional misconduct, breach of thisAgreement or any Subsidiary Operating Agreement or a knowing violation of lawby such Indemnified Party or a transaction for which such Indemnified Partyreceived a personal benefit in violation or breach of the provisions of thisAgreement or any Subsidiary Operating Agreement) the foregoing indemnificationis unavailable to such Indemnified Party, or insufficient to hold it harmless,then the Company shall contribute to the amount paid or payable by suchIndemnified Party as a result of such loss, claim, damage, liability or expensein such proportion as is appropriate to reflect the relative benefits receivedby 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 therelative benefits referred to above but also any other relevant equitableconsiderations.  Any indemnity under thisSection 11.01(a) shall be paid solely out of and to the extent ofCompany assets and shall not be a personal obligation of any Member and in noevent will any Member be required or permitted, without the consent of theother Member, to contribute additional capital under Article IV to enablethe Company to satisfy any obligation under this Section 11.01.

 

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

 

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

 

XII.  DISSOLUTION ANDTERMINATION

 

12.01       Dissolution.  The Company shall be dissolvedand its business wound up upon the earliest to occur of any of the followingevents:

 

(a)           The sale, condemnation or other disposition of all the assets of theCompany 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 orthe occurrence of any other event that terminates the continued membership ofany Member in the Company, unless, within 90 days after such event, each of theremaining Members elects in writing to continue the business of the Company.

 

Without limiting, butsubject to, the other provisions hereof, the assignment of all or any part of aMember’s Interest permitted hereunder will not result in the dissolution of theCompany.  Except as otherwisespecifically provided in this Agreement, each Member agrees that, without theconsent of the other Member, no Member may withdraw from or cause a voluntarydissolution of the Company or any Subsidiary. In the event any Member withdraws from or causes a voluntary dissolutionof the Company or any Subsidiary in contravention of this Agreement, such withdrawalor the causing of a voluntary dissolution shall not affect such Member’sliability for obligations of the Company and the Subsidiaries.

 

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

 

(a)           The Liquidating Member shall cause to be prepared a statement settingforth the assets and liabilities of the Company and the Company Subsidiaries asof the date of dissolution, a copy of which statement shall be furnished to allof the Members.

 

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

 

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

 

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

 

(ii)           To the setting up of any reserves which the Liquidating Member and theManaging Member shall determine to be reasonably necessary for contingent,unliquidated or unforeseen liabilities or obligations of the Company, anySubsidiary or any Member arising out of or in connection with the Company orany Subsidiary.  Such reserves may, inthe discretion of the Liquidating Member, be paid over to a national bank ornational title company selected by it and authorized to conduct business as anescrowee to be held by such bank or title company as escrowee for the purposesof disbursing such reserves to satisfy the liabilities and obligationsdescribed above, and at the expiration of such period as the Liquidating Membermay reasonably deem advisable, distributing any remaining balance as provided inSection 12.02(c)(iii) hereof; provided, however, that,to the extent that it shall have been necessary, by reason of applicable law orregulation, to create any reserves prior to any and all distributions whichwould otherwise have been made under Section 12.02(c)(i) above and,by reason thereof, a distribution under Section 12.02(c)(i) has notbeen 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 6.04hereof.

 

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

 

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effectuate the properdissolution and termination of the Company and each Subsidiary, including thewinding up of the business of the Company and each Subsidiary.

 

XIII.  MISCELLANEOUS

 

13.01       Covenants, Representations and Warranties ofthe Members.

 

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

 

(i)            It is duly organized, validly existing and ingood standing under the laws of its jurisdiction of formation with allrequisite power and authority to enter into this Agreement and to conduct thebusiness of the Company.

 

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

 

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

 

(iv)          The execution and delivery of this Agreement by the Member, and theconsummation of the transactions contemplated hereby, does not conflict with orcontravene the provisions of its organic documents or any agreement orinstrument 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 forinvestment and not with a view to, or for resale in connection with, anydistribution or public offering or resale of any portion of such interestwithin 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 theCompany has not been registered under the Securities Act or under any otherSecurity Law in reliance upon exemptions contained therein.  Each Member understands and acknowledges thatits representations and warranties contained 

 

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hereinare being relied upon by the Company, the other Member and the constituentowners of such other Member as the basis for exemption of the issuance ofinterest in the Company from registration requirements of the Securities Actand other Securities Laws.  Each Memberacknowledges that the Company will not and has no obligation to register anyInterest 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 orcaused this document to be examined by its representative or attorney.  Each Member does hereby further acknowledgethat it or its representative or attorney is familiar with this Agreement, andwith the business and affairs of the Company, and that except as otherwisespecifically provided in this Agreement, it does not desire any furtherinformation or data relating to the Company, any Subsidiary, the Property orthe other Member.  Each Member doeshereby acknowledge that it understands that the acquisition of its Interest inthe Company is a speculative investment involving a high degree of risks anddoes hereby represent that it has a net worth sufficient to bear the economicrisk of its investment in the Company and to justify its investing in a highlyspeculative venture of this type.

 

(viii)        TheMember 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 Ordersin respect thereof.

 

(ix)           Atall times, including after giving effect to any Transfers permitted pursuant tothis Agreement, (a) none of the funds or other assets of the Memberconstitutes property of, or are beneficially owned, directly or indirectly, byany person, entity or government subject to trade restrictions under U.S. law(including, but not limited to, the International Emergency Economic PowersAct, 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 theresult that the investment in the Member (whether directly or indirectly), isprohibited by any applicable law, rule, regulation, order or decree is inviolation thereof; (b) no Embargoed Person has any interest of any naturewhatsoever 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 thefunds of the Member have been derived from any unlawful activity with theresult that the investment in the Member (whether directly or indirectly), isprohibited by any applicable law, rule, regulation, order or decree is inviolation thereof.

 

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

 

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

 

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

 

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

 

(ii)           The SLG Member is aDelaware limited liability company currently existing pursuant to that certainLimited Liability Company Agreement entered into as of on or about the date ofthis Agreement (the “SLG Member LLC Agreement”), and that certaincertificate 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 Certificatehave 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 inthe Company with, and the source of its Capital Contributions is, its own fundsor the funds of GKK, and not the funds of any third-party or equity investor.

 

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

 

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

 

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theforegoing representations and warranties by such Member and all such representationsand warranties shall survive the execution and delivery of this Agreement andthe termination and dissolution of the SLG Member, the GKK Member and/or theCompany.

 

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

 

13.03       Notices.  All notices of default,demands, requests for or grants of consents or approvals, which any of theparties to this Agreement may desire or be required to give hereunder(collectively, “Material Notices”) shall be in writing and shall begiven by (a) personal delivery, (b) facsimile transmission with proofof receipt or (c) a nationally recognized overnight courier service, feesprepaid, 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 designateanother addressee (and/or change its address) for Material Notices hereunder bya Notice given pursuant to this Section 13.03.  A Notice sent in compliance with theprovisions of this Section 13.03 shall be deemed given on the date ofreceipt.  Other than with regard toMaterial Notices, communications under this Agreement shall be delivered andexchanged among the Members in such mutually acceptable form as shall beconducive to the use and implementation of the materials in question (*e.g.*, by electronic mail or telecopier with regard to theexchange of periodic financial information). Any mutually acceptable method of communication must provide forconfirmation of delivery or refusal thereof.

 

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

 

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

 

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

 

13.07       Pronouns.  All pronouns and any variationsthereof 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 theparties hereto and their respective executors, administrators, legalrepresentatives, heirs, successors and assigns, and shall inure to the benefitof the parties hereto and, except as otherwise provided herein, theirrespective executors, administrators, legal representatives, heirs, successorsand assigns.

 

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

 

13.10       Creditors Not Benefited.  Nothing contained in thisAgreement is intended or shall be deemed to benefit any creditor of theCompany, any Subsidiary or any 

 

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Member,and no creditor of the Company, any Subsidiary or any Member shall be entitledto require the Company or any Subsidiary to solicit or the Members to make anyCapital Contribution to the Company or any Subsidiary or to enforce any rightwhich the Company, any Subsidiary or any Member may have against any Memberunder this Agreement or otherwise.

 

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

 

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

 

13.13       Publicity.  The parties agree that noMember or any of its advisors shall issue any press release or otherwisepublicize or disclose the terms of this Agreement or the terms of theacquisition of the Property, without the consent of the Managing Member, exceptas such disclosure may be made in the course of normal reporting practices byany Member to its members, shareholders or partners or as otherwise required bylaw or rule of any stock exchange (and prior to any such disclosure thedisclosing Member will notify the other Member and provide it with a copy ofthe proposed disclosure and an opportunity to comment thereon before thedisclosure is made).

 

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

 

13.15       Confidentiality.

 

(a)           The terms of thisAgreement and all other business, financial or other information relatingdirectly to the conduct of the business and affairs of the Company or therelative or absolute rights or interests of any of the Members that has notbeen publicly disclosed pursuant to authorization by the Managing Member(collectively, the “Confidential Information”) is confidential andproprietary information of the Company, the disclosure of which would causeirreparable harm to the Company and the Members.  Accordingly, each Member represents that ithas not and agrees that it will not and will direct its members, shareholders,partners, directors, officers, agents, advisors and Affiliates not to, discloseto any Person any Confidential Information or confirm any statement made bythird Persons regarding Confidential 

 

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Information until theCompany has publicly disclosed the Confidential Information (which disclosureshall be subject to approval by the Members and the Managing Member and hasnotified each Member that it has done so; provided, however, thatany Member (or its Affiliates) may disclose such Confidential Information (i) ifrequired by law or rule of any stock exchange (it being specificallyunderstood and agreed that anything set forth in a registration statement orany other document filed pursuant to law will be deemed required by law, andprovided that before making any disclosure of Confidential Information requiredby law or rule of any stock exchange, the disclosing Member will notifythe other Member and provide it with a copy of the proposed disclosure and anopportunity to comment thereon before the disclosure is made), (ii) inconnection with a Transfer of Interests or sale of the Property permittedhereunder, (iii) as reasonably necessary in connection with anytransaction authorized pursuant to the terms of this Agreement or any SubsidiaryAgreement, (iv) if necessary for it to perform any of its duties orobligations hereunder or in any property management, leasing, development orconstruction management agreement to which it is a party covering the Property,or (v) to any its attorneys, accountants, lenders and other professionaladvisors who agree to maintain a similar confidence.

 

(b)           Subject to the provisions of Section 13.15(a), each Member agreesnot to disclose any Confidential Information to any Person (other than a Personagreeing to maintain all Confidential Information in strict confidence or ajudge, magistrate or referee in any action, suit or proceeding relating to orarising out of this Agreement or otherwise), and to keep confidential alldocuments (including, without limitation, responses to discovery requests)containing any Confidential Information. Each Member hereby consents in advance to any motion for any protectiveorder brought by any other Member represented as being intended by the movantto implement the purposes of this Section 13.15 provided that, if a Memberreceives a request to disclose any Confidential Information under the terms ofa valid and effective order issued by a court or governmental agency and theorder was not sought by or on behalf of or consented to by such Member, thensuch Member may disclose the Confidential Information to the extent required ifthe Member as promptly as practicable notifies the other Member of theexistence, terms and circumstances of the order, consults in good faith withthe other Member on the advisability of taking legally available steps toresist or to narrow the order, and if disclosure of the ConfidentialInformation is required, exercises its best efforts to obtain a protectiveorder or other reliable assurance that confidential treatment will be accordedto the portion of the disclosed Confidential Information that the other Membermay designate.  The cost (including,without limitation, attorneys’ fees and expenses) of obtaining a protectiveorder covering Confidential Information designated by such other Member will beborne by the Company.

 

(c)           The covenants contained in this Section 13.15 will survive theTransfer 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 thecontrary, nothing contained in this Agreement shall be deemed to prevent anyMember 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 isnot resolved in accordance with the Buy-Sell Provision hereof (Section 8.01),shall be resolved by arbitration administered by the American ArbitrationAssociation (“AAA”) in accordance with its Commercial Arbitration Rules andits 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 haveperformed 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) yearsand (ii) shall have had at least ten (10) years professionalexperience in commercial real property development or management in New YorkCity, New York.  The arbitrator shall beappointed by agreement of the Members or, if the Members cannot agree on anarbitrator within fifteen (15) calendar days of the initiation of arbitration,the arbitrator shall be appointed in accordance with the AAA’s default rules forthe appointment of arbitrators.  Thearbitrator shall apply the substantive laws of the State of Delaware, withoutregard to choice of law considerations, and may grant any remedy or relief heor she deems just and equitable, including, without limitation, provisional,interim, or injunctive relief (in which case the Member granted suchprovisional, interim, or injunctive relief may seek enforcement thereof in anycourt of competent jurisdiction, without prejudice to the continued arbitrationof the claim or controversy).  The awardshall be in writing and shall set forth the reasoning on which it isbased.  The award shall be final,binding, and non-appealable, and judgment upon the award may be entered by anycourt of competent jurisdiction.  Anyclaim will be time-barred unless arbitration is commenced within one (1) yearafter the basis for the claim became known to the Member asserting it.  This time limit may be tolled by writtenagreement of the Members.  All issuesrelating to the timeliness of claims shall be resolved by the arbitrator. Allmatters relating to the enforceability of this arbitration provision and anyaward shall be governed by the Federal Arbitration Act, 9 U.S.C. Sec. 1, etseq.  The pendency of an arbitrationshall not affect the ability of the SLG Member to exercise its rights under theCall Provision hereof, which may be exercised at any time, except as expresslyset forth in Section 8.02.

 

13.17       Broker.  Each of the Members representthat neither Member has retained any broker, finder or other commission or feeagent, and no such person has acted on its behalf in connection with theacquisition of the Property, its Interest in the Company or any interest in anySubsidiary or the execution and delivery of 

 

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

 

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IN WITNESS WHEREOF, theparties hereto have executed this Agreement as of the date set forth in theintroductory 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:                                                                |   |   |
|            |                                                                       |  |  |  |  |

 

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